AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 1, 2000
REGISTRATION STATEMENT NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------

ZEBU
(Exact name of registrant as specified in its charter)
------------------

DELAWARE 7374 94-3339273
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of Industrial Identification No.)
incorporation or organization) Classification Code Number)

------------------

595 MARKET STREET, 6TH FLOOR
SAN FRANCISCO, CA 94105
(415) 543-7338

(Address, including zip code and telephone number, including
area code, of registrant's principal executive offices)
------------------
STEVEN H. GERBER
PRESIDENT
ZEBU
595 MARKET STREET, 6TH FLOOR
SAN FRANCISCO, CALIFORNIA 94105
(415) 543-7338

(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------
COPIES TO:

ALAN B. KALIN MICHAEL J. HALLORAN
DANIEL D. MEYERS ROBERT E. SULLIVAN
MCCUTCHEN, DOYLE, BROWN & ENERSEN, LLP PILLSBURY MADISON & SUTRO LLP
3150 PORTER DRIVE 50 FREMONT STREET
PALO ALTO, CALIFORNIA 94304 SAN FRANCISCO, CALIFORNIA 94105

------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:

AS SOON AS PRACTICABLE FOLLOWING THE EFFECTIVE DATE OF THIS REGISTRATION
STATEMENT.
------------------

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

CALCULATION OF REGISTRATION FEE

TITLE OF EACH CLASS OF SECURITIES PROPOSED MAXIMUM AGGREGATE
BEING REGISTERED OFFERING PRICE(1) AMOUNT OF REGISTRATION FEE

Common stock, par value $0.01 per share.......... $64,000,000.00 $17,152.00

(1) Estimated solely for purposes of calculating the registration fee, pursuant
to Rule 457(o).

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and we are not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.

Subject to Completion, Dated , 2000

[ZEBU LOGO]
ZEBU
Shares
Common Stock

This is the initial public offering of Zebu. We are offering [ ] shares of
common stock. We have applied to list our common stock on the Nasdaq National
Market under the symbol "ZEBU."

Investing in our common stock involves risk. See "Risk Factors" beginning on
page 8.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Per Share Total
--------- -----

Public offering price $ $
Underwriting discounts and commissions $ $
Proceeds, before expense, to Zebu

We have granted the underwriters the right to purchase up to additional
shares of common stock to cover any over-allotments.
Deutsche Banc Alex. Brown
U.S. Bancorp Piper Jaffray
Cochran, Caronia & Co.

The date of this prospectus is , 2000

[INSIDE FRONT COVER ARTWORK]

[to be added by amendment]

PROSPECTUS SUMMARY

THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION CONTAINED ELSEWHERE IN THIS
PROSPECTUS. THIS SUMMARY MAY NOT CONTAIN ALL OF THE INFORMATION THAT YOU SHOULD
CONSIDER BEFORE INVESTING IN OUR COMMON STOCK. YOU SHOULD CAREFULLY READ THE
ENTIRE PROSPECTUS, INCLUDING "RISK FACTORS" AND THE FINANCIAL STATEMENTS, BEFORE
MAKING AN INVESTMENT DECISION. IN THIS PROSPECTUS, THE TERMS "ZEBU," "WE," "US,"
AND "OUR" REFER TO ZEBU, AND OUR WHOLLY OWNED SUBSIDIARY, SELECTQUOTE INSURANCE
SERVICES. THE TERM "SELECTQUOTE" REFERS TO OUR WHOLLY OWNED SUBSIDIARY,
SELECTQUOTE INSURANCE SERVICES, BY ITSELF. THE TERM "SELECTTECH" REFERS TO
SELECTTECH, WHICH WE RECENTLY ACQUIRED.

Our Business

We believe that we provide the most effective business-to-business
infrastructure solution to the application processing and
information-connectivity problems of the insurance industry.

We believe that our state-of-the-art technology provides significant time
and cost savings and other efficiencies to insurance carriers, data providers
and distributors in this increasingly competitive marketplace by using a common,
Internet-based platform that facilitates the standardization and transfer of
insurance application information. We use our technology solutions in our retail
business to further our position as one of the largest independent direct
marketers of term life insurance in the United States and to prove the efficacy
of our technology solutions prior to deploying them to the rest of the industry.
We intend to license our technology to as many insurance carriers, agents and
information providers as possible, thereby standardizing the sale and processing
of insurance. Through our business-to-business and business-to-consumer
services, we aspire to "touch" every life insurance policy, either by selling
products directly to consumers or by processing every insurance application.

Our Market Opportunity

Most insurance carriers utilize traditional paper- and labor-intensive
processing for both Internet-generated and traditional agency-sourced
applications at high cost and with substantial delays. We believe there are
significant competitive advantages to insurance marketers and carriers that
implement recent technological developments, including the Internet. To
capitalize on the benefits of Internet-based technology and compete effectively,
we believe that life insurance marketers and carriers must achieve --

- a faster, more efficient application and policy issuance process;

- lower origination and application processing costs;

- more opportunities for consumers to access and compare insurance product
information;

- more choices of insurance products and prices; and

- a consumer-friendly method for obtaining the best coverage at the lowest
possible price.

In attempting to achieve these objectives, insurance businesses face serious
data processing obstacles because their diverse computing environments and
legacy systems are unable to share information easily among insurance carriers,
information providers and general agencies.

Our Solution

Our automated insurance management, or AIM, system solution is based on a
unique, open database architecture that permits:

- improved management of information;

- an advanced data synchronization process which allows data to be moved
between remote work sites faster, more efficiently and in real time; and

- advanced applications utilizing our data distribution process.

The core of our technology solution, our AIM Central Communications System,
or Hub, is a system of hardware, software and modern relational database
technology that facilitates and manages workflow between multiple remote users
in real time. Our AIMSuite software products connect insurance carriers, their
agents and other participants in the life insurance policy application,
underwriting and issuance process to the Hub. We believe that this technology
offers an end-to-end solution to the information processing problems facing life
insurance carriers and agents. We connected the first insurance carrier to our
Hub in April 1998. Today, over 1,000 general agencies and more than 30 insurance
carriers have adopted our technology. Each business day, they collectively
transmit more than 1,000,000 data transactions through our Hub. The number of
new policy applications processed using the Hub currently exceeds 30,000 per
month.

Our Strategy

We aspire to become the acknowledged agent of change for the entire
insurance industry by transforming the way insurance policies are sold,
processed and issued. We intend to become the dominant provider of technology
solutions to the insurance industry, and to strengthen our position as a leading
independent marketer of term life insurance. The key elements of our strategy
include --

- establishing the AIMSuite as the technology standard for the insurance
industry;

- streamlining our operations and increasing our sales efficiency;

- using our technology to process insurance policies for the insurance
industry;

- reducing policy acquisition costs;

- expanding brand awareness and presence;

- expanding our lines of business; and

- expanding the application of the Hub.

Our Company

SelectQuote began business in 1985 as an independent insurance agency, and
markets term life insurance products to consumers in most of the United States.
SelectTech was founded in September 1995 by SelectQuote and two of our current
officers, Steven Gerber and Michael Feroah, to develop data movement and
integration solutions to address insurance industry-wide infrastructure
inefficiencies in the processing of applications and issuance of policies. Zebu
was founded in August 1999. We did not conduct any operations until
December 23, 1999, on which date SelectQuote acquired SelectTech and Zebu
acquired SelectQuote through its merger with Zebu's wholly owned subsidiary. In
these transactions, the shareholders of SelectTech and SelectQuote exchanged
their stock for shares of Zebu stock, and Zebu replaced options and other
securities convertible into shares of SelectTech or SelectQuote stock with
options or convertible securities to acquire shares of Zebu stock.

Our principal executive offices are located at 595 Market Street, 6th Floor,
San Francisco, California 94105, and our telephone number is (415) 543-7338. Our
web sites are located at WWW.AIMSUITE.COM AND WWW.SELECTQUOTE.COM. The
information contained on our web sites does not constitute a part of this
prospectus.
------------------------

UNLESS OTHERWISE INDICATED, THIS PROSPECTUS ASSUMES --

- THAT THE UNDERWRITERS HAVE NOT EXERCISED THEIR OPTION TO EXERCISE THEIR
OVERALLOTMENT OPTION; AND

- ALL SHARES OF PREFERRED STOCK HAVE BEEN CONVERTED INTO 3,139,961 SHARES OF
COMMON STOCK AND ALL CONVERTIBLE DEBENTURES HAVE BEEN CONVERTED INTO
731,420 SHARES OF COMMON STOCK UPON OR IMMEDIATELY PRIOR TO THE CLOSING OF
THIS OFFERING.

Zebu-TM-, SelectQuote-TM-, SelectTech-TM-, AIMSuite-TM-, AIM Quickview-TM-,
AIM GA-TM- and AIM ITS-TM- are our trademarks, service marks and trade names.
This prospectus also includes trademarks, service marks and trade names other
than those identified in this paragraph, each of which is the property of its
respective holder.

The Offering

Common stock offered by Zebu................ shares

Common stock to be outstanding after the
offering.................................. shares

Use of proceeds............................. We intend to use the proceeds of this
offering to expand our technology
installation efforts, to develop new
technology products and services, to expand
our sales and marketing efforts and for
general corporate purposes, including
working capital.

Proposed Nasdaq National Market symbol...... ZEBU

The outstanding share information is based on our shares outstanding as of
December 31, 1999. This information excludes --

- 6,510,635 shares of common stock subject to outstanding options granted
under our 1999 Stock Option Plan as of December 31, 1999 at a weighted
average exercise price of $3.92 per share;

- 3,489,365 shares of common stock reserved for future issuance under our
1999 Stock Option Plan as of December 31, 1999;

- 1,000,000 additional shares of common stock reserved for issuance under
our 1999 Employee Stock Purchase Plan; and

- 2,041,845 shares of common stock issuable upon conversion of shares of
Series E preferred stock that we have agreed to issue in March 2000 under
the terms of an investment agreement dated February 29, 2000.

Summary and Pro Forma Condensed Combined Financial and Operating Data

Six Months Ended December 31, 1999
-------------------------------------------------------
Zebu Pro Forma
Zebu SelectTech Zebu Pro Forma Combined As
Actual Actual Combined Adjusted
-------- ---------- -------------- --------------
(in thousands, except per share data)

Statement of Operations Data:
Revenues................................................... $10,344 $ 1,444 $ 11,307 $
Total operating expenses................................... $11,331 $ 3,808 $ 25,272 $
Net loss................................................... $ (570) $(2,625) $(14,032) $
Basic and diluted net loss per share....................... $ (1.08) $ -- $ (1.35) $
Shares used in computation of basic and diluted net loss
per share................................................ 5,222 -- 10,498
Shares used in computation of basic and diluted net loss
per share assuming conversion of preferred stock and
convertible debentures into 3,139,961 shares and 731,420
shares of common stock, respectively..................... -- 14,369
Unaudited pro forma basic and diluted loss per share, as
converted................................................ -- $ (1.33)

Consolidated Balance Sheet Data:
Cash and cash equivalents.................................. $ 2,845 $ 56 $
Working capital (deficiency) 4,275 (6,222)
Goodwill and other intangible assets....................... 63,009 --
Total assets............................................... 75,130 946
Current liabilities........................................ 6,073 6,826
Long-term liabilities...................................... 845 1,016
Mandatorily redeemable convertible preferred............... 4,744 1,000
Total shareholders' equity (deficit)....................... $63,469 $(7,896) $

As of
December 31, 1999
-----------------

Other Operating Data:
SELECTTECH
AIM QuickView software licenses--carriers................... 33
AIM QuickView software installations--general agencies...... 1,134
AIM GA software installations--general agencies............. 23
SELECTQUOTE
Cumulative policies sold.................................... 253,600
Licensed agents............................................. 39

Six Months Ended
December 31, 1999
------------------

SELECTTECH
Applications submitted to the Hub........................... 204,044
SELECTQUOTE
Leads....................................................... 93,194
Applications................................................ 25,831
Policies sold............................................... 19,131

See Notes 2 and 3 of Notes to Zebu Consolidated Financial Statements for an
explanation of the determination of the number of shares and share equivalents
used in computing pro forma per share amounts.

The Summary and Selected Financial and Operating Data for SelectTech
reflects actual results through December 23, 1999. The Summary Financial and
Operating Data for SelectQuote and the Pro Forma Combined Financial and
Operating Data set forth above includes all our operating results through
December 31, 1999, including the operating results of the acquired SelectTech
business for the last week of December 1999.

The foregoing information gives effect to the following:

- The pro forma combined operating data as of December 31, 1999 accounts for
SelectQuote's acquisition of SelectTech, completed on December 23, 1999,
using the purchase method of accounting and the conversion of preferred
stock as if it had occurred on December 31, 1999; and

- The as adjusted data above reflects the application of the net proceeds
from the sale of shares of common stock offered by us at an assumed
initial public offering price of $ per share, after deducting
estimated underwriting discounts and commissions and offering expenses.

RISK FACTORS

THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER
THE RISKS DESCRIBED BELOW AND THE OTHER INFORMATION IN THIS PROSPECTUS BEFORE
DECIDING TO INVEST IN OUR STOCK. ANY OF THE FOLLOWING RISKS COULD CAUSE THE
TRADING PRICE OF OUR COMMON STOCK TO DECLINE SUBSTANTIALLY.

On a combined basis, our operations have lost money and we expect to continue to
generate substantial operating losses for the next several years.

Although our retail insurance products and services business has been
profitable historically, we currently lose money on our operations overall and
expect to continue to incur substantial operating losses. As we continue to
incur costs to implement new technology in our insurance products and services
operations, increase our marketing expenses to promote market awareness of our
products and services and increase our expenditures for the development of new
software products and services, we expect to have substantial negative cash flow
and to sustain significant operating losses. We may never achieve profitability.
Even if we achieve profitability, we may not be able to sustain it.

SelectTech incurred net losses of $6.0 million from its inception through
June 30, 1999, $3.6 million for the year ended June 30, 1999 and $2.6 million
for the six months ended December 31, 1999. We expect that the recently acquired
SelectTech technology operations will continue to contribute net losses to our
results of operations for the foreseeable future and will generate negative cash
flow from operations for at least the next several years. We expect to incur
substantial expenses to promote the adoption of our Hub technology and AIMSuite
software and continue our development efforts to apply the same technology to
other insurance products and financial services businesses, which could
adversely affect our business, results of operations and financial condition.

In addition, charges for goodwill and other intangible assets resulting from
our acquisition of SelectTech, which total $63.5 million, will be amortized over
the next three years and will result in substantial net losses for us during
each of these years, regardless of other operating results.

We might fail to successfully integrate SelectTech.

We have recently combined SelectQuote and SelectTech. The success of the
combined company will depend, in part, on our ability to fully integrate the
operations and management of both companies. A successful integration will
require, among other things, the integration of SelectTech's technology products
and services into SelectQuote's operations and the coordination of their
research and development, sales and marketing and financial reporting efforts.
We cannot assure you that we will accomplish this integration smoothly or
successfully or that we will realize the anticipated benefits of the SelectTech
acquisition. The success of the integration will require the dedication of
management and other personnel resources which could temporarily distract their
attention from our day-to-day operations. This integration effort may result in
a substantial and unexpected increase in our operating expenses, which could
adversely affect our business, results of operations and financial condition.

A substantial part of our anticipated revenue and net income growth depends on
adoption of our technology by key insurance carriers.

We anticipate that we will earn a substantial amount of our future revenue
from license fees and transaction fees paid by insurance carriers and general
agents who license our AIMSuite software and use our Hub technology. This
strategy will succeed only if we induce the key insurance carriers and service
providers involved in the application process to transfer data using our system.
A failure to achieve widespread market acceptance and adoption of our technology
could

have a material adverse effect on our business, financial condition and results
of operations, and cause the market price of our common stock to decline
substantially. We may fail to achieve widespread adoption of our technology for
a variety of reasons, including the following--

- our technologies may not provide reliable data movement;

- our products may not perform up to industry expectations;

- we may fail to develop, test and ship new software products quickly enough
to address our customers' changing needs;

- companies that view us as a competitor may refuse to license our software;

- other companies may offer superior products;

- our products may deliver an insufficient economic benefit to our
prospective customers; and

- the industry may continue to favor traditional methods of sales,
processing and issuance of insurance policies.

Our operating results might fluctuate significantly and remain uncertain, which
could negatively affect the value of your investment.

Our quarterly and annual operating results, particularly the historical
quarterly operating results from our technology products and services, have
varied greatly. As we increase our sales of insurance policies and our reliance
on technology products and services for significant revenue growth, our
operating results are likely to continue to vary as a result of a variety of
factors.

Many of our current and future costs are fixed. If our revenues fall short
of expectations, we may be unable to adjust our fixed expenses to compensate for
this shortfall on a timely basis, and our results of operations could be harmed.
Further, in order to remain competitive, we might have to make various pricing,
service or marketing decisions that could have a material adverse effect on our
business, results of operations and financial condition.

Because of the fluctuation in operating results that could occur as a result
of these and other factors, period-to-period comparisons of our revenues and
operating results are not necessarily meaningful. Therefore, you should not rely
on these types of comparisons as indicators of our future performance.

In addition, our operating results in future periods might be below the
expectations of securities analysts and investors. Each of these factors could
materially and adversely affect the market price of our common stock. For a
further discussion of the impact of these factors on our operating results,
please refer to "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Factors Affecting Operating Results."

To substantially increase revenues and profits from the sale of insurance
policies, we must implement new software and systems that are still in
development.

We intend to make our SelectQuote sales personnel and insurance products and
services operations more efficient through the implementation of automated rate
calculator, or ARC, software, and a new general agency management system that
will connect our insurance carrier clients and other insurance information
providers through our Hub. A failure to develop and successfully operate this
new software, or to obtain the desired efficiencies, could have a material
adverse effect on our business, financial condition and results of operations.

A lack of quality leads may inhibit growth in commission-based revenues.

We believe that SelectQuote's advertising and marketing techniques for term
life insurance policies historically have generated quality leads, which have
enabled it to maintain a high rate of conversion of leads to policies sold. As
we attempt to substantially increase SelectQuote's sales of term life insurance
policies by implementing new technology and by using SelectQuote's web site as a
sales tool, the quality of leads may decline. Such a decline could inhibit the
growth of our commission-based revenues, reduce our efficiency and increase our
costs, and could have a material adverse effect on our business, financial
condition and results of operations.

Our commission-based revenues and our receivables are highly concentrated among
a small number of carriers, and our business will be harmed if we fail to
maintain or replace revenues from those carriers or fail to collect receivables
from them.

We generate a significant portion of our revenues from commissions paid to
SelectQuote on policies offered by a limited number of carriers. Based on
commissions received, the top five insurance carriers represented by SelectQuote
accounted for 77% of commission-based revenues during the six months ended
December 31, 1999 and 67% during the six months ended December 31, 1998. Of the
top five insurance carriers in the six months ended December 31, 1998, two were
not in the top five in the six months ended December 31, 1999. As we change the
ways in which SelectQuote processes applications and distributes insurance
policies, the number of policies sold on behalf of any of these carriers may
decline.

The identity of the five carriers who have accounted for a significant
portion of SelectQuote's revenues has varied in each of the last three years
based on factors that are beyond our control, such as policy price, terms and
underwriting criteria. To maintain or increase our commission-based revenues, we
must continue to represent a sufficient number of carriers who offer policies
that appeal to consumers and who will fulfill our application requests. As the
volume for any particular carrier declines, SelectQuote must increase the volume
of business for other carriers or we must increase revenues from other sources.
A failure to do so could have a material adverse effect on our business,
financial condition and results of operations.

Our credit risk for receivables collections is also concentrated among a few
carriers. As of December 31, 1999, four carriers accounted for 63% of total
receivables, including receivables acquired from SelectTech, each of whom
accounted for at least 10% of the total. As of June 30, 1999, three carriers
accounted for 51% of total commissions receivable at year end, each of whom
represented at least 10% of the total. Our failure to collect receivables from
any carrier that represents a large percentage of receivables on a timely basis,
or at all, could adversely affect our cash flow or results of operations and
might cause our stock price to fall. For more information, please refer to
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Overview--SelectQuote."

The unpredictability of our commission-based and bonus revenues could cause
fluctuations in our operating results.

We have no control over the commission or bonus rates paid to SelectQuote by
insurance carriers, which represent a significant portion of our revenues. Each
individual insurance carrier controls its own commission and bonus rates. The
mix of products offered by SelectQuote and the carriers that it represents may
vary from time to time. If these variations result in sales of products with
lower commission and bonus rates, our revenues could be adversely affected.

Furthermore, bonus rates increase with the number of premiums paid for new
insurance policies to each individual insurance carrier. In general, if
SelectQuote's customers purchase policies from a smaller number of insurance
carriers, SelectQuote's per policy bonus commissions will be

higher than if its customers purchase the same number of policies from a larger
number of insurance carriers. A consumer's decision to purchase a policy from a
particular insurance carrier typically depends on factors over which we have no
control, including the price and terms of the policy and the rating of the
insurance carrier. Insurance companies change their prices often, for a variety
of reasons. Price increases by an insurance carrier may reduce the number of
policies we place for that carrier, which in turn may reduce the size of our
bonus commission from that carrier. As a result of these factors, we are unable
to control the amount of bonus commissions we receive in any particular quarter
or year. These amounts could fluctuate significantly.

We could experience a substantial drop in our revenues if quality insurance
companies marketing competitive products refuse to appoint us as their agent.

We conduct all of our commission-based business pursuant to agency contracts
with insurance carriers rated "A" or higher by A.M. Best. We cannot assure you
that the carriers with whom SelectQuote currently has agreements will continue
to appoint it as an agent to offer insurance, or that any other insurance
carriers will do so. In addition, agency contracts can be terminated by the
insurance carriers with or without cause and with little or no notice to us. The
loss of agency contracts with SelectQuote's insurance carriers could have a
material adverse effect on our business, financial condition and results of
operations.

We face intense competition in the insurance application processing industry and
the insurance sales industry.

The markets for our current and planned products and services are intensely
competitive and characterized by rapidly changing technology, regulatory
requirements and customer demands. We compete in the market for software and
services used for insurance application processing with companies providing
business-to-business information processing solutions aimed at the insurance
industry, such as ChannelPoint, Intuit and the CyberTech division of Policy
Management Systems, Inc., and will face competition from other information
processing and outsourcing services aimed at the insurance industry. The retail
term life insurance business of SelectQuote has thousands of insurance sales
competitors, both local and national. Some of our competitors and potential
competitors have longer operating histories, larger customer bases, greater
brand recognition and significantly greater financial, marketing, technical and
other resources than we do. These competitors might be able to devote greater
resources to marketing and promotional campaigns, adopt more aggressive pricing
policies and devote substantially more resources to technology and systems
development than we can. New technologies and the expansion of existing
technologies could also increase the competitive pressures on us by enabling our
competitors to offer lower-cost or superior products or service. Increased
competition could diminish the value of our products and services and result in
reduced operating margins and loss of market share. We cannot assure you that we
will be able to compete successfully against current or future competitors. For
more information, please refer to "Business--Competition."

We might be unable to manage rapid growth.

We have expanded our operations rapidly and intend to continue this
expansion after the completion of the offering. In addition to the effects of
the acquisition of SelectTech by SelectQuote, our anticipated growth rate will
place a significant demand on our managerial and operational resources. To
manage our anticipated expansion effectively, we must --

- implement and improve our operating systems, procedures and controls on a
timely basis;

- hire additional key management personnel;

- expand, train and manage our workforce and, in particular, our software
development, sales, marketing and support organizations;

- open offices in other geographic areas;

- implement and manage new distribution channels to penetrate different and
broader markets; and

- manage an increasing number of complex relationships with consumers,
co-marketers and other third parties.

We cannot be certain that our systems, procedures or controls will be
adequate to support our current or future operations, or that our management
will be able to simultaneously manage the desired expansion of our business and
achieve the growth necessary to exploit fully the markets for our products and
services. Failure to manage our growth effectively could have a material adverse
effect on our business, financial condition and results of operations.

Our product and software development efforts are inherently difficult to manage
and keep on schedule, and development delays could increase our costs.

On occasion, we have experienced development delays and related cost
overruns. We cannot be certain that we will not encounter these problems in the
future. We may be unable to meet our new product development schedules if we
cannot readily obtain skilled programmers. A delay of this nature could slow the
growth of our revenues and increase our costs, which could have a material
adverse effect on our business, financial condition and results of operations.
In addition, we cannot be certain that we will successfully develop and market
new products or product enhancements that respond to changes in technology,
industry standards or consumer requirements, or that any product innovations
will achieve the market penetration or price stability necessary for
profitability.

We utilize substantial offshore contract software programming and development
services provided by related parties.

In developing our software products and the Hub, we procure substantial
software programming and testing services from a programmer-based business in
Eastern Europe. This corporation is controlled by two of our executive officers,
Steven H. Gerber and Michael Feroah. The programmers are not U.S. citizens or
residents. We do not own these corporations and cannot direct the activities of
these programmers. Their lack of legal residence status in the U.S. may prevent
us from obtaining critical development, debugging and maintenance services when
needed by us or our licensees. As a result, we may be exposed to revenue losses
and liability to our licensees or their customers.

We utilize substantial third-party contract software programming and development
services that we do not control.

In developing our software products and the Hub, we procure substantial
software programming and testing services from third-party contractors that we
do not control. Although these services are performed under contracts that
specify the required work product and delivery schedules, we cannot directly
control the quality or timing of these services. In addition, if any of these
third-party contractors ceases to provide services to us, we might not be able
to replace the contractor on the same terms, or at all. A failure of these
contractors to perform as expected, or our failure to replace these contractors
if they cease to provide services to us, could have a material adverse effect on
our business, financial condition and results of operations.

If we fail to respond adequately to rapid technological changes, our existing
software products and services will become obsolete or unmarketable.

The market for our technology products and services is characterized by
rapid technological change, which leads to frequent new product and service
introductions and enhancements, uncertain product life cycles, changes in
consumer demands and evolving industry standards. New products and services
based on new technologies or new industry standards could render our existing
products obsolete and unmarketable. We believe that, in order to succeed, we
must continually enhance our current products and develop new products on a
timely basis to keep pace with technological developments and to satisfy the
ever-changing requirements of our customers. We cannot assure you that we will
be successful in meeting these requirements.

Our products might contain defects that could inhibit their market acceptance
and subject us to liability in excess of insurance limitations.

Our software products are complex and might contain undetected errors or
result in system failures. Despite extensive testing, errors might be found in
any of our current or future product offerings. Any errors in our software
products could result in loss of or delay in revenues, loss of market share,
failure to achieve market acceptance, diversion of development resources, injury
to our reputation or damage to our efforts to build brand awareness. Moreover,
we cannot be certain that limitations of liability contained in our customer
contracts will be enforceable, or that insurance coverage will continue to be
available on reasonable terms or in amounts sufficient to cover one or more
large claims, or that our insurer will not disclaim coverage as to any future
claim. Either the successful assertion of one or more large claims that exceed
available insurance coverage or changes in our insurance policies, including
premium increases or the imposition of large deductible or co-insurance
requirements, could cause our expenses to increase and could have a material
adverse effect on our business, results of operations and financial condition.

Revenues and gross margins from our consulting services business are uncertain.

Substantially all of SelectTech's historical revenues came from custom
software development and consulting services provided to insurance carriers.
SelectTech's provision of these services was not, and is not expected to be, the
focus of its business, but was undertaken to provide needed revenue to
SelectTech and to help build relationships with significant insurance carriers.
Due to the complex nature of these services and the present allocation of
skilled programmers and other technical services personnel to SelectQuote, we
cannot assure you that we will generate significant revenue from custom software
development and consulting services in the foreseeable future.

System failures could interrupt our business and cause revenue losses or
liability.

Our success depends, in part, on the efficient and uninterrupted operation
of computer and communications systems which make the Hub available to our
licensees and operate our management and sales systems. Any failure of these
systems could impede the processing of data, customer orders and the day-to-day
management of our business and permanently damage our business reputation and
goodwill. Such a failure could have a material adverse effect on our business,
financial condition and results of operations.

Our systems and operations are vulnerable to damage or interruption from--

- natural disasters, including earthquakes;

- telecommunication failures;

- power losses;

- fires;

- physical and electronic break-ins; and

- sabotage, intentional acts of vandalism or similar events.

We do not presently have fully redundant systems. Despite any precautions we
take, a natural disaster or other unanticipated problem leading to the
corruption or loss of data at the facilities that house our systems could result
in interruptions in the services we provide. The occurrence of any such event
could also lead to systems failure or to a corruption of our data, either of
which could have a material adverse effect on our business, financial condition
and results of operations.

The loss of key personnel or the failure to hire additional personnel could harm
our business.

We depend on the continued services of our key personnel. We expect that we
will need to hire additional personnel in all areas of our operations. The
competition for personnel throughout our industry is intense, particularly in
the San Francisco area, where our headquarters are located. Any of our
personnel, including our management, could terminate their employment with us at
any time for any reason. Currently, we are substantially dependent upon the
services of Charan J. Singh, our Chief Executive Officer, Steven H. Gerber, our
President, David L. Paulsen, our Chief Financial Officer and Chief Operating
Officer-Insurance Products and Services, and Michael L. Feroah, our Chief
Operating Officer-Software Products and Services. The loss of the services of
any of these key executives would materially impede the operation and growth of
our business. Furthermore, our failure to attract new personnel or retain and
motivate our current personnel could have a material adverse effect on our
business, financial condition and results of operations.

We might not be able to protect and enforce our intellectual property rights.

We rely on a combination of copyright, trademark, service mark and trade
secret laws and contractual restrictions to establish and protect our
intellectual property rights. We cannot assure you that these contractual
arrangements or the various other steps we have taken will be sufficient to
protect our intellectual property from infringement or misappropriation. Due to
differences between the legal systems in the U.S. and in some foreign countries,
we may experience difficulties in enforcing our agreements and rights against
foreign contractors and employees of the third-party developers of much of our
software.

We believe that we have taken steps necessary to establish our ownership of
any intellectual property developed by these programmers and to protect our
intellectual property in the jurisdictions where they work. However, we cannot
assure you that the laws of these jurisdictions will provide adequate
protection, or that we will be able to enforce our rights adequately in any
jurisdiction.

We have sought and will continue to seek to obtain the registration of our
trademarks and service marks in the United States. We cannot assure you that
trademark registrations will be issued with respect to pending or future
applications or that our trademarks will be upheld if challenged. Effective
trademark, service mark, copyright and trade secret protection may not be
available in every country in which our services are offered.

Third parties might claim that our intellectual property rights infringe
their proprietary rights. We expect that the number of infringement claims in
our market will increase with further adoption of our software and Hub
technology. These claims, whether meritorious or not, could --

- be time consuming;

- result in costly litigation; or

- require that we enter into royalty or licensing agreements with the
claimants.

Royalty or licensing agreements might not be available on terms we find
acceptable, or might not be available at all. Any infringement claim could have
a material adverse effect on our business, financial condition and results of
operations.

Due to our small size, limited operations and the difficulty of hiring personnel
in our industry, any further acquisitions could strain our managerial,
operational and financial resources.

In the future, we might make acquisitions of, or large investments in,
businesses that offer products, services and technologies that we believe would
help us better provide insurance policy distribution, processing and fulfillment
services. Although historically we have not made acquisitions of, or investments
in, other companies, other than the acquisition of SelectTech, which was an
affiliate of SelectQuote at the time, future acquisitions or investments could
become an important part of our strategy. Any future acquisitions or investments
would present risks, such as difficulty in integrating the technology,
operations or workforce of the acquired business with our own, disruption of our
ongoing businesses and difficulty in realizing the anticipated financial or
strategic benefits of the transaction.

In the event we were to make such an acquisition or large investment, we
might use cash, common stock or a combination of cash and common stock. Our use
of common stock in an acquisition could further dilute the equity interests of
existing stockholders. Amortization of goodwill or other intangible assets
resulting from an acquisition could materially impair our operating results and
financial condition. Furthermore, there can be no assurance that we would be
able to attain acquisition financing, or that any acquisition, if consummated,
would be smoothly integrated into our business. A failure to successfully manage
the risks associated with acquisitions or large investments could have a
material adverse effect on our business, financial condition and results of
operations.

Our success depends on the strength of the term life insurance market.

Because we currently derive nearly all of our revenues from commissions paid
to SelectQuote on consumer purchases of term life insurance and service fees for
transmitting policy application data, our business depends on the strength of
the term life insurance industry generally and consumer demand for term life
insurance policies in particular. If sales of term life insurance policies
decline, our business could be harmed substantially. Further, a decline in
premiums would reduce the size of our commissions. A failure to offset this
reduction by cutting our costs and/or substantially increasing the number of
policies sold by SelectQuote could have a material adverse effect on our
business, financial condition and results of operations.

If the purchase of insurance over the Internet achieves widespread consumer
acceptance and we are unable to develop further our Internet-based retail
capability, our business could be harmed.

We intend to implement a fully integrated, interactive web site for
SelectQuote that will allow consumers to provide biographical and health
information and complete policy applications on-line. The on-line marketing of
insurance policies is a recent phenomenon. The market revenue potential and
profitability of on-line sales of term life insurance policies are highly
uncertain. No firm yet processes term life insurance applications to policy
issuance entirely over the Internet, and we cannot assure you that our efforts
will succeed. However, if consumer demand for Internet-based sales and
distribution of term life insurance policies increases, our failure to develop
further our Internet-based retail capability to meet such demand could have a
material adverse effect on our business, financial condition and results of
operations.

If we become subject to legal liability for any inaccuracy in the information we
disseminate, our business could be harmed.

SelectQuote's retail insurance customers rely upon information we publish
regarding insurance quotes, coverages, exclusions, limitations and ratings. We
might face liability for information we supply to consumers if the information
is inaccurate. The information in SelectQuote's databases, like that in any
database, might contain inaccuracies. Any dissatisfaction by our retail
customers with SelectQuote's methodologies or databases could have a material
adverse effect on our ability to attract new and retain existing customers. To
the extent that any information we provide is inaccurate, we could be liable for
to from both consumers and insurance carriers. In the past, these types of
claims have been brought, sometimes successfully, against on-line services and
print publications. These types of claims also could be time-consuming and
expensive to defend, could divert management's attention and could cause
consumers to lose confidence in our services. As a result, these types of
claims, whether or not successful, could have a material adverse effect on our
business, financial condition and results of operations.

We operate in a heavily regulated industry.

We must comply with the complex rules and regulations of the insurance
department of each jurisdiction in which SelectQuote does business, many of
which impose strict and burdensome guidelines on us regarding our activities as
an insurance agency company and on SelectQuote's individually licensed agents.
Compliance with these rules and regulations can be very costly. Each
jurisdiction's insurance department typically has the power, among other things,
to --

- authorize how, by which personnel, and under what circumstances an
insurance premium can be quoted and published and an insurance policy may
be sold;

- approve which entities can be paid commissions from insurance companies;

- license insurance agents and brokers;

- approve policy forms and regulate some premium rates; and

- regulate advertising, including Internet website content.

Due to the complexity, periodic modification and differing statutory
interpretations of these laws, SelectQuote may not have been, and we might not
be in the future, in compliance with all of these laws at all times. Failure to
comply with these numerous laws could result in fines, additional licensing
requirements or the revocation of our license and/or the license of any of our
agents in any particular jurisdiction. An adverse disciplinary action in any one
jurisdiction generally is required to be reported by the licensee and the
National Association of Insurance Commissioners to the other jurisdictions and,
as a result, could lead to additional compliance investigations and further
disciplinary proceedings. These types of penalties could significantly increase
our general operating expenses, negatively impact our revenues and harm our
business. In addition, even if allegations against us and/or any of our agents
in a regulatory action are determined to be false, negative publicity relating
to the allegations could result in a loss of consumer confidence and significant
damage to our brand. For more information, please refer to
"Business--Regulation."

Authorities might impose limits on the use of personal information gathered
using the Internet.

The privacy of personal information has received much recent attention in
various legislative and regulatory arenas--

- The Financial Services Modernization Act of 1999 requires many federal
agencies to adopt regulations protecting the privacy of consumer data in
both the general business and Internet

context. The Federal Reserve Board has proposed Regulation P, which would
be applicable to a broad range of financial transactions by banks, brokers
and insurers. That proposed regulation could increase our costs of doing
business by requiring additional procedures in collecting and storing
customer data, including transmitting periodic privacy notices and
"opt-out" election documents to customers with respect to their personal
data. The Act also reinforces existing regulations that require on-line
services and web site owners to establish privacy policies. Other federal
agencies are in the process of preparing proposed regulations under the
Act that could impose even stricter substantive and procedural
requirements.

- The Federal Trade Commission has taken an aggressive position in
proceedings against several on-line services, alleging unfair or deceptive
practices in the manner in which these services collected personal
information from users and shared it with third parties. The FTC is
currently conducting studies which may lead to regulations on fair
information practices for Internet businesses, which could restrict the
flow of consumer data over the Internet and impact our business.

- At least 17 states have adopted insurance privacy protection legislation
based on the National Association of Insurance Commissioners Insurance
Information and Privacy Protection Model Act. The Model Act provides for a
fine for knowing violations of the act, and for damage claims by aggrieved
consumers.

Because all of SelectQuote's policy applicants consent to the retrieval of
their personal data, to date these existing regulations and proceedings have not
impacted our operations directly. We cannot assure you, however, that these
legislative and regulatory restrictions will not have a material adverse effect
on our business, financial condition and results of operations in the future.

Several states have proposed legislation that would limit the use of
personal information gathered using the Internet. Any additional changes in
existing laws or the passage of new laws intended to address these issues could,
among other effects--

- create uncertainty in the marketplace that could reduce demand for our
products and services;

- limit our ability to collect and use data from our applicants;

- increase the cost of doing business as a result of litigation costs or
increased service delivery costs; or

- decrease the efficacy of Internet commerce.

These and other potential effects of changes in the Internet's regulatory
framework could have a material adverse effect on our business, financial
condition and results of operations.

Legislation or judicial action relating to the Internet could have a negative
impact on our business.

Due to the increasing popularity and use of the Internet, laws or
regulations could be adopted in the United States or abroad with particular
applicability to the Internet. Governments may enact legislation applicable to
us in areas such as network security, encryption, the use of key escrow,
electronic authentication or digital signatures, illegal and harmful content,
access charges and retransmission activities. Moreover, the applicability to the
Internet of existing laws governing issues such as property ownership, content,
taxation, defamation and personal privacy is uncertain. Any new legislation,
regulation or governmental enforcement of existing regulations could limit the
growth of the Internet, increase our cost of doing business or increase our
legal exposure, any of which could have a material adverse effect on our
business, financial condition and results of operations.

We face risks related to the storage of personal information about our insurance
policy applicants.

We obtain personal information regarding policy applicants, including family
history and medical information, which we retain and transmit via data
processing systems which are designed to be secure and confidential. If someone
penetrates our network security or otherwise misappropriates sensitive data
about our applicants, we could be subject to liability. This liability could
include claims for unauthorized purchases with credit card information,
impersonation or other similar fraud claims, libel, invasion of privacy, misuse
of personal information, such as unauthorized marketing, or other tort claims,
including claims based on injury to personal reputation. Any of these claims
could result in litigation and could have a material adverse effect on our
business, financial condition and results of operations. In addition, the
Financial Services Modernization Act of 1999, discussed above, could result in
the imposition of regulations regarding the storage of personal information.

Any new tax on the sale of our products, the licensing of our technology or our
provision of services could harm our financial condition.

We currently do not collect sales or similar taxes with respect to the sale
of products, the licensing of technology or the provision of services in states
and countries other than states in which we have offices. In October 1998, the
Internet Tax Freedom Act, or ITFA, was signed into law. Among other things, ITFA
imposes a three-year moratorium on discriminatory taxes on e-commerce.
Nonetheless, following the moratorium, one or more states might seek to impose
sales or other tax obligations on companies that engage in on-line commerce
within their jurisdictions. Legislation by one or more states requiring us to
collect sales or other taxes on the sale of products, the licensing of
technology or the provision of services, or requiring that we remit payment of
sales or other taxes for prior periods, could have a material adverse effect on
our business, financial condition and results of operations.

Our stock price might experience wide fluctuations.

The market price of our common stock is likely to be highly volatile and
could be subject to wide fluctuations. Recently, the stock market has
experienced significant price and volume fluctuations, and the market prices of
securities of technology companies, particularly Internet-related companies,
have been highly volatile. Market prices for stocks of Internet-related and
technology companies, particularly following an initial public offering,
frequently reach levels that bear no relationship to the operating performance
of such companies. These market prices generally are not sustainable and are
subject to wide variations. If our common stock trades to unsustainably high
levels following this offering, it is likely that the market price of our common
stock will thereafter experience a material decline.

In the past, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
securities. We could be the target of similar litigation in the future.
Securities litigation could cause us to incur substantial costs, divert
management's attention and resources and harm our financial condition and
results of operations.

The future sale of common stock could negatively affect our stock price.

If our stockholders sell substantial amounts of our stock in the public
market following the offering, including shares issued upon the exercise of
outstanding options and warrants, the market price of our stock could decline.
These sales also might make it more difficult for us to sell equity securities
in the future at a time and price that we deem appropriate. After the offering,
shares of our common stock will be outstanding, assuming no
exercise of the underwriters' over-allotment option and no exercise of
outstanding options or warrants. Of those

shares, the shares sold in the offering will be freely tradable.
The remaining shares are "restricted securities," as that term is
defined in Rule 144, and may be sold in the public market only if registered or
if they qualify for an exemption from registration under Rule 144 or Rule 701
under the Securities Act. All officers, directors and all of our stockholders
owning 1% or more of our common stock have agreed not to sell any shares of
common stock, or any securities convertible into or exercisable or exchangeable
for common stock, for 180 days after the offering without the prior written
consent of Deutsche Bank Securities Inc. Deutsche Bank Securities Inc. may, in
its sole discretion, release all or any portion of the shares subject to these
lockup agreements. For a more detailed description of shares that could be sold
following the offering, please refer to "Shares Eligible for Future Sale."

Investors in the offering will suffer immediate and substantial dilution.

Investors purchasing shares in the offering will incur immediate and
substantial dilution in net tangible book value per share. To the extent
outstanding options to purchase common stock are exercised, there will be
further dilution. For a more detailed description of this dilution, please see
"Dilution."

Our principal stockholders, executive officers and directors have substantial
control over our affairs.

Our executive officers and directors and entities affiliated with them will,
in the aggregate, beneficially own approximately % of our common stock
following this offering. These stockholders acting together will have the
ability to exert substantial influence over all matters requiring approval by
our stockholders, including the election and removal of directors and any
proposed acquisition, consolidation or sale of all or substantially all of our
assets. In addition, they could dictate the management of our business and
affairs. This concentration of ownership could have the effect of delaying,
deferring or preventing a change in control, or impeding an acquisition or
consolidation, takeover or other business combination.

We might spend a substantial portion of the net proceeds in ways with which you
might not agree.

We have not designated any specific use for a significant amount of net
proceeds from the sale of the common stock offered under this prospectus. We
intend to use the proceeds of this offering to expand our technology
installation efforts, develop new technology products and services, expand our
sales and marketing efforts and for general corporate purposes, including
working capital. Accordingly, management will have significant flexibility in
applying the remaining net proceeds of the offering. The failure of management
to apply the remaining net proceeds effectively could have a material adverse
effect on our business, financial condition and results of operations.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

This prospectus contains "forward-looking statements." These forward-looking
statements include, without limitation, statements about the market opportunity
for sales of term life insurance policies and providing processing and
fulfillment services to insurance carriers, our strategy, competition, expected
expense levels and the adequacy of our available cash resources. Our actual
results could differ materially from those expressed or implied by these
forward-looking statements as a result of various factors, including the risk
factors described above and elsewhere in this prospectus. We undertake no
obligation to update publicly any forward-looking statements for any reason,
even if new information becomes available or other events occur in the future.

This prospectus contains statistical data regarding insurance industry and
Internet usage that we obtained from industry publications, including reports
generated by Life Industry Market Research Association and Forrester Research.
These industry publications generally indicate that they have obtained their
information from sources believed to be reliable, but do not guarantee the
accuracy and completeness of their information. Although we believe that the
publications are reliable, we have not independently verified their data.

USE OF PROCEEDS

We estimate that our net proceeds from the sale of the shares
of common stock in the offering will be approximately $ million, after
deducting estimated underwriting discounts and commissions and other offering
expenses. If the underwriters' over-allotment option is exercised in full, our
net proceeds will be approximately $ million.

We intend to use the proceeds of this offering to expand our technology
installation efforts, develop new technology products and services, expand our
sales and marketing efforts and for general corporate purposes, including
working capital. We also might use a portion of the net proceeds, currently
intended for general corporate purposes, to acquire, invest in or enter into
strategic alliances with complementary businesses, technologies, products or
services. We have no present understandings, commitments or agreements with
respect to any material acquisition of, investment in or strategic alliance with
third parties. Pending use of the net proceeds for the above purposes, we intend
to invest the net proceeds in interest bearing, investment grade securities.

DIVIDEND POLICY

Following the completion of this offering, we intend to retain any future
earnings for the development and operations of our business. Accordingly, we do
not anticipate paying cash dividends on our capital stock in the foreseeable
future. SelectQuote paid dividends on its common stock in the amounts of
$378,922, or $0.25 per share, during fiscal 1997, $285,502, or $0.19 per share,
during fiscal 1998, $378,917, or $0.25 per share, during fiscal 1999 and
$94,703, or $0.0625 per share, during the six months ended December 31, 1999.
SelectQuote paid dividends on its preferred stock in the amounts of $199,805
during fiscal 1997, $161,225 during fiscal 1998, $199,805 during fiscal 1999 and
$84,066 during the six months ended December 31, 1999. SelectQuote's existing
line of credit with LaSalle Bank prohibits the payment of dividends to us,
except under certain circumstances. We have not drawn on this line of credit and
expect to terminate it as soon as possible following completion of this
offering. In the event this line of credit is not terminated, the restriction on
the payment of SelectQuote dividends to us effectively limits our ability to pay
dividends.

CAPITALIZATION

The following table sets forth our capitalization:

- On an actual basis as of December 31, 1999;

- On a pro forma basis to reflect the conversion of all outstanding shares
of convertible preferred stock into 3,139,961 shares of our common stock,
and the conversion of all convertible debentures into 731,420 shares of
our common stock; and

- On an as adjusted pro forma basis to reflect the sale of shares of
common stock in this offering at an assumed initial public offering price
of $ per share, less underwriting discounts and commissions and our
estimated offering expenses.

Pro Forma
Actual Pro Forma As Adjusted
-------- --------- -----------

Long-term convertible debt, including current
portion........................................... $ 1,900 $ -- $ --
------- ------- -------
Mandatorily redeemable convertible preferred stock,
$0.01 par value, 50,000 shares issued and
outstanding (actual); no shares issued and
outstanding (pro forma and pro forma as
adjusted)......................................... 4,744 --
Stockholders' equity:
Preferred stock, $0.01 par value, 10,000,000
shares authorized; 2,028,850 issued and
outstanding, (actual); no shares issued and
outstanding (pro forma and pro forma as
adjusted)........................................ 20
Common stock, $0.01 par value, 50,000,000 shares
authorized; 10,497,974 issued and outstanding,
(actual); 14,369,355 shares issued and
outstanding, (pro forma and pro forma as
adjusted)........................................ 105 144
Additional capital.................................. 64,650 71,275
Deferred stock compensation......................... (862) (862)
Retained earnings (deficit)......................... (444) (444)
------- ------- -------
Total stockholders' equity.......................... 63,469 70,113
------- ------- -------
Total capitalization................................ $70,113 $70,113 $
======= ======= =======

The outstanding share information in this table, and in the table set forth
under "Dilution" below, is based on our shares outstanding as of December 31,
1999 and excludes:

- 6,510,635 shares of common stock subject to outstanding options granted
under our 1999 Stock Option Plan and outstanding as of December 31, 1999
at a weighted average exercise price of $3.92 per share;

- 3,489,365 shares of common stock reserved for future issuance under our
1999 Stock Option Plan as of December 31, 1999;

- 1,000,000 additional shares of common stock reserved for issuance under
our 1999 Employee Stock Purchase Plan; and

DILUTION

Our pro forma net tangible book value as of December 31, 1999, was
approximately $7.1 million, or $0.49 per share of common stock. Pro forma net
tangible book value per share is equal to our tangible net assets, less total
liabilities, divided by the number of shares of common stock outstanding, after
giving effect to the conversion of all outstanding shares of preferred stock and
convertible debentures into common stock. Net tangible book value dilution per
share to new investors represents the difference between the amount per share
paid by purchasers of shares of common stock in this offering and the net
tangible book value per share of common stock immediately after completion of
this offering. After giving effect to the sale of shares at the initial
offering price of $ per share and the application of the net proceeds from
this offering, our pro forma net tangible adjusted book value at December 31,
1999 would have been approximately $ million, or $ per share of common
stock. This amount represents an immediate increase in net tangible book value
of $ per share to existing stockholders and an immediate dilution in net
tangible book value of $ per share to new investors. The following table
illustrates this per share dilution:

Assumed initial public offering price per share............. $
Pro forma net tangible book value per share at
December 31, 1999........................................ $
Increase per share attributable to new investors.......... $
Pro forma adjusted net tangible book value per share after
the offering..............................................
-------
Dilution per share to new investors......................... $

The following table summarizes, on a pro forma basis as of December 31,
1999, the total number of shares of common stock purchased from us, assuming the
conversion of all shares of preferred stock and all convertible debentures into
shares of common stock, the total cash consideration paid to us, and the average
price per share paid by our existing stockholders and to be paid by new
investors purchasing shares from us in this offering, before deducting
underwriting discounts and commissions and the estimated offering expenses
payable by us:

Shares Purchased Total Consideration
----------------------- ---------------------- Average Price
Number Percent Amount Percent per Share
------------ -------- ----------- -------- -------------

Existing stockholders..... 14,369,355 % $9,154,497 % $0.637
New investors.............
----------- ------- ---------- ------- ------
Total................... % $ % $

If the underwriters exercise their over-allotment option in full, the number
of shares of common stock held by existing stockholders will be reduced to
% of the total number of shares of common stock to be outstanding after
this offering. In addition, the number of shares of common stock held by the new
investors will be increased to , or % of the total number of
shares of common stock to be outstanding immediately after this offering.

SELECTED FINANCIAL AND OPERATING DATA
(in thousands, except per share amounts)

Zebu

The summary and selected Zebu (formerly SelectQuote) historical financial
data as of June 30, 1998 and 1999 and for the years ended June 30, 1997, 1998
and 1999 are calculated from Zebu's audited financial statements, which are
included in this prospectus. The Zebu summary and selected financial data as of
December 31, 1999 and for the six months ended December 31, 1998 and 1999 are
calculated from unaudited financial statements that are included in this
prospectus. The summary and selected Zebu financial data as of June 30, 1995,
1996 and 1997 and for the years ended June 30, 1995 and 1996 are calculated from
unaudited financial statements, that are not included in this prospectus. The
unaudited financial statements have been prepared by us on a basis consistent
with the audited financial statements and include, in the opinion of our
management, all adjustments consisting only of normal recurring adjustments
necessary for a fair presentation of our results of operations and financial
position for those years.

You should read the following data with the more detailed information
contained in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and our financial statements and the notes to the
financial statements, each of which is included in this prospectus.

Six Months Ended
Year Ended June 30, December 31,
------------------------------------------------------------------- -------------------------
1995 1996 1997 1998 1999 1998 1999
----------- ----------- ----------- ----------- ----------- ----------- -----------

Consolidated Statement of
Operations Data:
Revenues:
Commissions................... $ 10,330 $ 12,482 $ 14,821 $ 18,992 $ 19,941 $ 9,347 $ 10,311
Other revenues................ -- -- -- -- -- -- 33
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total revenues.................. 10,330 12,482 14,821 18,992 19,941 9,347 10,344
---------- ---------- ---------- ---------- ---------- ---------- ----------
Expenses:
Marketing and sales........... 7,027 9,188 13,484 12,709 13,867 7,041 8,151
General and administrative.... 1,242 1,407 1,715 1,650 1,908 1,003 1,260
Software development and
consulting services.......... -- -- -- -- -- -- 108
Amortization of goodwill and
other intangible assets...... -- -- -- -- -- -- 487
Stock-based compensation(*)... -- -- -- -- -- -- 1,325
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total operating expenses........ 8,269 10,595 15,199 14,359 15,775 8,044 11,331
---------- ---------- ---------- ---------- ---------- ---------- ----------
Operating income (loss)......... 2,061 1,887 (378) 4,633 4,166 1,303 (987)
Interest income (expense)....... (15) 52 15 12 42 20 40
Other income (expense).......... 11 115 (28) 36 5 5 1
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before income
tax........................... 2,057 2,054 (391) 4,681 4,213 1,328 (946)
Income tax (benefit)............ 830 803 (162) 1,863 1,685 552 (376)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss)............... $ 1,227 $ 1,251 $ (229) $ 2,818 $ 2,528 $ 776 $ (570)
========== ========== ========== ========== ========== ========== ==========
Income (loss) attributable to
common stockholders........... $ 1,182 $ 1,206 $ (429) $ 2,657 $ 2,328 $ 653 $ (5,654)
========== ========== ========== ========== ========== ========== ==========
Net income (loss) per common
share:
Basic......................... $ 0.24 0.21 (0.09) 0.53 0.47 0.13 (1.08)
Diluted....................... $ 0.18 0.18 (0.09) 0.40 0.36 0.11 (1.08)
Weighted average common shares
outstanding:
Basic......................... 4,982 4,982 4,982 4,982 4,982 4,982 5,222
Diluted....................... 7,011 7,011 4,982 7,011 7,011 7,011 5,222
(*) Stock-based compensation:
Marketing and sales....... $ -- $ -- $ -- $ -- $ -- $ -- $ 681
General and
administrative........... -- -- -- -- -- -- 644
---------- ---------- ---------- ---------- ---------- ---------- ----------
$ -- $ -- $ -- $ -- $ -- $ -- $ 1,325
========== ========== ========== ========== ========== ========== ==========

As of
As of June 30, December 31,
---------------------------------------------------- --------------
1995 1996 1997 1998 1999 1999
-------- -------- -------- -------- -------- --------------

Consolidated Balance Sheet Data:
Cash and cash equivalents................................. $ 818 $ 689 $ 439 $1,267 $ 790 $ 2,845
Working capital........................................... 2,397 2,664 1,656 3,860 5,981 4,275
Goodwill and other intangible assets...................... -- -- -- -- -- 63,009
Total assets.............................................. 4,797 6,192 6,407 8,255 10,208 75,130
Current liabilities....................................... 1,818 2,091 3,197 2,823 2,848 6,073
Long-term liabilities..................................... 240 472 390 239 218 845
Mandatorily redeemable convertible preferred stock........ -- -- -- -- -- 4,744
Stockholders' equity...................................... 2,739 3,629 2,820 5,192 7,142 63,469

SelectTech

The SelectTech summary and selected financial data as of June 30, 1998 and
1999 and for the years ended June 30, 1997, 1998 and 1999 are calculated from
SelectTech's audited financial statements, which are included in this
prospectus. The SelectTech summary and selected data as of December 31, 1999 and
for the six months ended December 31, 1998 and 1999 are calculated from
unaudited financial statements, which are included in this prospectus. The
summary and selected financial data as of June 30, 1997 is calculated from
SelectTech's unaudited balance sheet, which is not included in this prospectus.
The unaudited financial statements have been prepared by us on a basis
consistent with our audited financial statements and include, in the opinion of
our management, all adjustments consisting only of normal recurring adjustments
necessary for a fair presentation of our financial position as of June 30, 1997.

Six Months Ended
Year Ended June 30, December 31,
------------------------------ -------------------
1997 1998 1999 1998 1999
-------- -------- -------- -------- --------

Statement of Operations Data:
Revenues:
Consulting services................................... $1,427 $ 1,361 $ 2,376 $ 1,208 $ 936
License and maintenance............................... -- 16 299 27 142
Transactional services................................ -- 55 297 69 366
------ ------- ------- ------- -------
Total revenues.......................................... 1,427 1,432 2,972 1,304 1,444
------ ------- ------- ------- -------
Expenses:
Software development and consulting services.......... 1,350 2,344 4,759 2,164 3,076
Marketing and sales................................... 138 223 496 250 240
General and administrative............................ 509 850 1,036 465 492
------ ------- ------- ------- -------
Total operating expenses................................ 1,997 3,417 6,291 2,879 3,808
------ ------- ------- ------- -------
Operating loss.......................................... (570) (1,985) (3,319) (1,575) (2,364)
Interest expense........................................ (9) (20) (259) (71) (261)
------ ------- ------- ------- -------
Loss before income tax.................................. (579) (2,005) (3,578) (1,646) (2,625)
Income tax.............................................. 3 -- 1 1 --
------ ------- ------- ------- -------
Net loss................................................ $ (582) $(2,005) $(3,579) $(1,647) $(2,625)
====== ======= ======= ======= =======

As of June 30, As of December 31,
------------------------------ -------------------
1997 1998 1999 1999
-------- -------- -------- -------------------

Balance Sheet Data:
Cash and cash equivalents............................... $ 7 $ 106 $ 36 $ 56
Working capital......................................... (520) (1,103) (3,569) (6,222)
Total assets............................................ 363 798 1,238 946
Current liabilities..................................... 758 1,732 4,526 6,826
Long-term liabilities................................... 11 477 983 1,016
Mandatorily redeemable convertible preferred stock...... -- 1,000 1,000 1,000
Shareholders' equity (deficit).......................... $(406) $(2,411) $(5,271) $(7,896)

PRO FORMA CONDENSED COMBINED AND ACTUAL DATA

The following unaudited pro forma condensed combined statement of operations
of Zebu reflect SelectQuote's acquisition of SelectTech on December 23, 1999,
and Zebu's acquisition of SelectQuote in a simultaneous transaction, as if both
acquisitions had occurred on July 1, 1998. The SelectTech acquisition was
accounted for using the purchase method of accounting, and the acquired assets
and liabilities of SelectTech were recorded at their fair values. Accordingly,
the pro forma combined statement of operations has been prepared assuming the
following:

- The total purchase price, including assumed liabilities of approximately
$7.2 million, is $63.5 million;

- The purchase price has been allocated to the tangible and intangible
assets acquired and liabilities assumed based on their respective fair
values as follows (in thousands):

Goodwill.................................................. $56,387
Purchased software........................................ 6,170
Assembled work force...................................... 864
Customer list............................................. 75
Liabilities............................................... (7,209)
Value of SelectTech stock options assumed................. 5,744

- Intercompany transactions for consulting services of $90,000 for the year
ended June 30, 1999 and $481,000 for the six months ended December 31,
1999 have been eliminated.

- Intercompany transactions for other revenue of $39,000 for the year ended
June 30, 1999 and $0 for the six months ended December 31, 1999 have been
eliminated.

- Amortization of goodwill and other intangible assets totaling
$22.2 million for the year ended June 30, 1999 and $10.6 million for the
six months ended December 31, 1999 has been reflected as a result of the
acquisition of SelectTech.

- Income tax benefits of $1.4 million for the year ended June 30, 1999 and
$223,000 for the six months ended December 31, 1999, reflect the offset of
SelectQuote's income with SelectTech losses.

- The pro forma diluted net loss per share for the year ended June 30, 1999
and the six months ended December 31, 1999 were computed using the
weighted average number of common shares outstanding, including shares
issued in conjunction with the acquisition as if these shares were
outstanding from July 1, 1998.

- The pro forma operating data include the conversion of preferred stock and
exclude the conversion of convertible debentures.

The pro forma statements of operations are not necessarily indicative of
what the actual financial results would have been had the acquisition taken
place on July 1, 1998 and do not purport to indicate the results of future
operations.

The actual as adjusted data below reflect the application of the net
proceeds from the sale of shares of common stock offered by us at
an assumed initial public offering price of $ per share, after deducting
estimated underwriting discounts and commissions and offering expenses.

Six Months Ended December 31, 1999
--------------------------------------------------------------
Zebu SelectTech
Actual Actual Adjustments Pro Forma Combined
-------- ----------- ------------- ---------------------
(in thousands)
--------------------------------------------------------------

Statement of Operations Data:
Revenues:
Commissions............................................... $10,311 $ -- $ -- $ 10,311
Other revenues............................................ 33 1,444 (481) 996
------- ------- -------- --------
Total revenues.............................................. 10,344 1,444 (481) 11,307
------- ------- -------- --------
Expenses:
Marketing and sales....................................... 8,151 240 (226) 8,165
General and administrative................................ 1,260 492 -- 1,752
Software development and consulting services.............. 108 3,076 (255) 2,929
Amortization of goodwill and other intangible assets...... 487 -- 10,614 11,101
Stock-based compensation.................................. 1,325 -- -- 1,325
------- ------- -------- --------
Total operating expenses.................................... 11,331 3,808 10,133 25,272
------- ------- -------- --------
Operating loss.............................................. (987) (2,364) (10,614) (13,965)
Interest income (expense)................................... 40 (261) -- (221)
Other income (expense)...................................... 1 -- -- 1
------- ------- -------- --------
Loss before income tax...................................... (946) (2,625) (10,614) (14,185)
Income tax (benefit)........................................ (376) -- 223 (153)
------- ------- -------- --------
Net loss.................................................... $ (570) $(2,625) $(10,837) $(14,032)
======= ======= ======== ========
Pro forma diluted net loss per share........................ $ (1.12)
========
Shares used to compute pro forma diluted net loss per common
share..................................................... 12,575
========

As of December 31, 1999
------------------------------
Actual Actual, As Adjusted
-------- -------------------

Balance Sheet Data:
Cash and cash equivalents................................... $ 2,845 $
Working capital............................................. 4,275
Goodwill and other intangible assets........................ 63,009
Total assets................................................ 75,130
Current liabilities......................................... 6,073
Long-term liabilities....................................... 845
Mandatorily redeemable convertible preferred stock.......... 4,744
Stockholders' equity........................................ $63,469 $

Year Ended June 30, 1999
------------------------------------------------------------------
Zebu SelectTech
Actual Actual Adjustments Pro Forma Combined
-------- ----------- ------------- -------------------------
(in thousands)
------------------------------------------------------------------

Statement of Operations Data:
Revenues:
Commissions............................................. $19,941 $ -- $ -- $ 19,941
Other revenues.......................................... -- 2,972 (90) 2,882
------- ------- -------- --------
Total revenues............................................ 19,941 2,972 (90) 22,823
------- ------- -------- --------
Expenses:
Marketing and sales..................................... 13,867 496 (80) 14,283
General and administrative.............................. 1,908 1,036 (10) 2,934
Software development and consulting services............ -- 4,759 -- 4,759
Amortization of goodwill and other intangible assets.... -- -- 22,202 22,202
Stock-based compensation................................ -- -- -- --
------- ------- -------- --------
Total operating expenses.................................. 15,775 6,291 22,112 44,178
------- ------- -------- --------
Operating income (loss)................................... 4,166 (3,319) (22,202) (21,355)
Interest income (expense)................................. 42 (259) -- (217)
Other income.............................................. 5 -- -- 5
------- ------- -------- --------
Income (loss) before income tax........................... 4,213 (3,578) (22,202) (21,567)
Income tax................................................ 1,685 1 (1,426) 260
------- ------- -------- --------
Net income (loss)......................................... $ 2,528 $(3,579) $(20,776) $(21,827)
======= ======= ======== ========
Pro forma diluted net loss per share...................... $ (1.74)
========
Shares used to compute pro forma diluted net loss per
common share............................................ 12,527
========

Six Months
Ended
Year Ended June 30, December 31,
--------------------------------------------------------- --------------
1995 1996 1997 1998 1999 1999
--------- --------- --------- --------- --------- --------------

Other Operating Data:

SELECTQUOTE
Leads............................................ 232,228 206,199 296,254 212,045 170,704 93,194
Applications..................................... 27,448 28,862 40,517 47,239 42,470 25,831
Policies sold.................................... 23,127 25,297 33,175 39,875 35,132 19,131
Licensed agents (average)........................ 12 17 16 21 27 35

SELECTTECH
Applications submitted to the Hub:
Variable fee contracts......................... 23,951 137,704 163,010
Fixed fee contract............................. 9,256 35,955 41,034
-------- -------- --------
Total.......................................... 33,207 173,659 204,044

As of
------------------------------------
June 30, December 31,
------------------- --------------
1998 1999 1999
-------- -------- --------------

SELECTQUOTE
Cumulative policies sold..................... 100,990 126,287 159,462 199,337 234,469 253,600

SELECTTECH
AIM QuickView software licenses--carriers.... -- -- -- 17 28 33
AIM QuickView software installations--general
agencies.................................... -- -- -- 180 418 1,134
AIM GA software installations--general
agencies.................................... -- -- -- -- -- 23

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION AND ANALYSIS OF OUR FINANCIAL CONDITION AND RESULTS
OF OPERATIONS SHOULD BE READ TOGETHER WITH "SELECTED FINANCIAL AND OPERATING
DATA" AND "PRO FORMA CONDENSED COMBINED AND ACTUAL DATA" AND OUR FINANCIAL
STATEMENTS AND RELATED NOTES APPEARING ELSEWHERE IN THIS PROSPECTUS. THIS
DISCUSSION AND ANALYSIS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS,
UNCERTAINTIES AND ASSUMPTIONS. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY AS A
RESULT OF MANY FACTORS, INCLUDING BUT NOT LIMITED TO THOSE SET FORTH UNDER "RISK
FACTORS" AND ELSEWHERE IN THIS PROSPECTUS.

Overview

Zebu was formed as a holding company for SelectQuote and SelectTech, which
merged on December 23, 1999. We are accounting for the acquisition of SelectTech
by SelectQuote as a purchase for financial accounting purposes. We are the
successor to SelectQuote, on a consolidated basis, for financial accounting
purposes. Prior to December 23, 1999, Zebu did not have business operations or
activities, and our historical financial data and operating results are those of
SelectQuote and SelectTech on a separate-company basis for all prior periods.
SelectTech has been an early-growth stage company, and accordingly this
discussion and analysis emphasizes the historical results of our retail
insurance operation.

SELECTQUOTE

SelectQuote began business in 1985 as an independent insurance agency, and
is one of the largest independent marketers of term life insurance products sold
to consumers in the United States. SelectQuote sells term life insurance through
direct-response marketing and the Internet. Growth and profitability in
SelectQuote's retail insurance agency business depends primarily on
cost-effectively generating leads and hiring and training qualified sales agents
to convert the leads to applications and process those applications efficiently
to policy issuance. The growth and profitability of this business also depend on
insurance carriers' ability to process large numbers of applications on a timely
basis.

From inception through fiscal 1997, SelectQuote's policies sold and revenues
grew steadily as it built the foundation of its retail business. In fiscal 1997,
SelectQuote substantially increased its operating expenses in order to grow the
business more rapidly. SelectQuote's profits did not increase as expected,
however, because its sales process could not convert the additional leads in a
cost-effective manner. In addition, the carriers' policy applications processing
capacity did not expand adequately to meet the increased volume of applications
that SelectQuote generated. As a result of this experience, SelectQuote changed
its sales process and applied technology provided by SelectTech to enhance its
operating efficiency.

The SelectQuote retail term life insurance business generates revenue in the
form of commissions. Commissions, which are based on the size of policy
premiums, consist of first-year, bonus and renewal commissions that vary by
carrier and product. SelectQuote recognizes full first-year commission revenues
after an insurance carrier's underwriter approves the policy and the customer
has made an initial premium payment. At the time SelectQuote recognizes revenue,
it estimates an allowance, based on historical information, for uncollectible
commissions. SelectQuote can earn annual production bonuses by exceeding targets
for new business premiums and existing-business retention, based on individual
criteria set by each carrier. Production bonuses are paid by the carriers based
on premiums generated during the calendar year and are generally greater in the
fourth calendar quarter. SelectQuote recognizes these bonus revenues when it
receives notification from insurance carriers. SelectQuote recognizes revenue
for renewal commissions when the

insurance carrier notifies SelectQuote that it has received payment for a
renewal premium. Renewal commission rates are significantly less than first-year
commission rates and are not offered by every insurance carrier.

Variations in the amount of time between the submission of a new policy
application and SelectQuote's recognition of commission revenue can
significantly impact our quarterly and annual operating results. The amount of
time between the submission of the consumer's application to the insurance
carrier and underwriting approval has varied, and currently ranges from 29 to
78 days, and currently averages 48 days. The premium amount of insurance sold
and a particular insurance carrier's backlog and processing procedures impact
this time lag significantly and directly.

Also, consumers' policy purchases vary by season. By strategically managing
our advertising expenditures, we endeavor to maintain a level volume of sales
activity per sales agent throughout the year. Nevertheless, our commission
revenues will vary with the number of policies sold from quarter to quarter.

SelectQuote currently offers products from 19 carriers rated in the "A"
categories by A.M. Best Company, that we believe provide the best combination of
price, products and service. The number and composition of these carriers can
vary from period to period. Based on commissions received, the top five
insurance carriers accounted for 77% of commission-based revenues during the six
months ended December 31, 1999 and 67% during the six months ended December 31,
1998. Of the top five insurance carriers in the six months ended December 31,
1998, two were not in the top five in the six months ended December 31, 1999.
The top insurance carrier for the six months ended December 31, 1999 accounted
for 23% of the policies SelectQuote delivered that year, but only accounted for
5% in the six months ended December 31, 1998. For more information, please refer
to "Risk Factors--Our commission-based revenues and receivables are highly
concentrated among a small number of carriers, and our business will be harmed
if we fail to maintain or replace revenues from those carriers or fail to
collect receivables from them."

Operating expenses for SelectQuote's retail term life insurance sales
business consist of both variable and semi-variable expenses, including wages,
benefits and expenses associated with generating leads, selling insurance and
processing insurance applications and maintaining our database and web site.
SelectQuote incurs most of its variable expenses prior to a carrier's approval
of an application and its receipt of any premium on a policy. Selling and
marketing expenses consist primarily of direct advertising and payroll costs to
sell and process life insurance policies. During the past three fiscal years,
SelectQuote's operating expenses also included payments to SelectTech for
software development and computer management services. For more information,
please refer to "Related Party Transactions."

General and administrative expenses for SelectQuote's retail term life
insurance sales business consist primarily of executive and employee
compensation and benefits, professional fees and office expenses, principally
for rent, utilities and equipment. We are expanding our facilities to prepare
for projected growth, and anticipate an increase in rental expense of
approximately 256% in fiscal 2000 compared with fiscal 1999.

SELECTTECH

SelectTech was founded in September 1995 by SelectQuote, Steven H. Gerber
and Michael L. Feroah to develop data movement and integration solutions to
address insurance industry-wide infrastructure inefficiencies in the processing
of applications and issuance of policies. These inefficiencies impeded the
growth of SelectQuote's business and have plagued the life insurance industry in
general.

For all periods prior to the SelectTech acquisition, SelectQuote provided
substantial services and overhead to SelectTech, which was obligated to
reimburse SelectQuote at cost. At the same time, SelectTech provided software
development and consulting services at hourly rates to SelectQuote. For more
information, please refer to "Related Party Transactions--Shared Operations and
Ownership."

In prior periods, SelectTech earned revenues from three sources: software
licenses, Hub transactions processing and custom software development,
consulting and maintenance services. We anticipate that SelectTech's revenues
from Hub processing transactions will continue to grow and will constitute a
substantial part of our revenues in the future. We also anticipate that we will
earn service revenues associated with the installation and maintenance of
AIMSuite software products and from contract projects in which we will assist
insurance carriers and general agents in modifying their data processing systems
to more efficiently process applications and issue policies. We intend to deploy
a substantial percentage of our technical and engineering personnel in the
development of our internal general agency management and new policy application
processing systems, as well as our website. Accordingly, we do not expect that
revenues from custom software development and consulting services will generate
significant revenue in the foreseeable future.

We recognize revenues from software licenses when software revenue
recognition criteria have been met in accordance with American Institute of
Certified Public Accountants Statement of Position, or SOP, 97-2, SOFTWARE
REVENUE RECOGNITION. Under SOP 97-2, software revenue is recognized when a
non-cancelable license agreement has been signed, the product has been shipped,
there are no uncertainties surrounding product acceptance, the fees are fixed
and determinable and collection is probable. The portion of revenues from new
license agreements that relate to our obligations to provide customer support
are deferred and recognized ratably over the contract support period, which is
generally one to four years. Our software maintenance contracts are renewable on
an annual basis. Revenues from maintenance contract renewals are deferred and
recognized ratably over the terms of the agreements. Revenues from software
usage, consulting and other services are recognized as the related services are
provided or as the milestones are completed.

SelectTech's historical expenses have consisted primarily of personnel
expenses and contract services to develop software for SelectQuote and for
SelectTech's insurance carrier customers. During the last three fiscal years,
SelectTech paid a total of $5.8 million to third-party software developers, of
which SelectTech paid $1.8 million to Innovative Information Group, Inc., or
IIG, a firm owned by Steven H. Gerber and Michael L. Feroah, two of our
executive officers and directors. For the same period, SelectTech also paid a
total of $266,740 to Mr. Gerber's consulting company and a total of $500,500 to
Mr. Feroah's consulting company for software development and marketing and
administrative services. SelectTech did not pay wages to Messrs. Gerber and
Feroah until August 1999. As part of our expansion, we expect to continue to
contract with third-party providers, including IIG, for software development
services at a similar level for the foreseeable future.

Over the past three fiscal years, SelectTech paid $1.6 million to
SelectQuote as reimbursement for management services and overhead. For more
information, please refer to "Related Party Transactions--Shared Operations and
Overhead."

Since its inception, SelectTech has incurred significant losses, and as of
June 30, 1999, had an accumulated deficit of $6.0 million. These losses and this
accumulated deficit have resulted primarily from the costs incurred in the
development of the AIMSuite software and the Hub. We intend to continue to
invest heavily in product development, sales and marketing of AIMSuite software
products and believe that our technology business will continue to contribute
net losses to

our results of operations for the foreseeable future. We also expect this
portion of our technology business to generate negative cash flow from
operations for at least the next several years. In addition, charges for
goodwill and other intangible assets resulting from our acquisition of
SelectTech, which total $57.3 million, will be amortized over the next three
years and charges for other identifiable intangible assets, which total $6.2
million, will be amortized over the next two years. These charges will result in
substantial net losses for us during each of these years.

Factors Affecting Operating Results

Our total revenues will fluctuate from quarter to quarter due to many
factors. We expect that revenues from SelectQuote's retail term life insurance
sales will vary with conversion rates from consumers' life insurance
applications, insurance carriers' ability to process applications in a timely
manner and the number of licensed agents that we employ.

We have a limited operating history in the business of providing consulting
services and licensing software and transaction services to life insurance
carriers and their agents, and the markets for these services and software
products evolve rapidly. As a result, we are unable to forecast our revenues
accurately. Revenues from the technology products and services business that we
recently acquired from SelectTech have resulted primarily from insurance
carriers' requests for custom software development and information technology
consulting services. We anticipate a substantial decline in consulting services
revenues for the foreseeable future, as most of our technical personnel
currently are focused on the development and implementation of our general
agency sales and plan administration software and on the integration of
SelectTech's historical operations with our own. Our failure to complete this
development, implementation and integration would have a material adverse effect
on our future revenue growth, business and financial condition. In addition,
continued growth will require that we develop new software products and offer
insurance processing services to the industry. Although our license and
maintenance fees and transaction service fees have grown rapidly, total revenues
from these sources have been insubstantial to date.

We also must further increase the efficiency and scope of our retail
insurance sales business, hire and train more agents and attract more insurance
carrier clients to the AIMSuite software. Failure to do so will materially
affect the amount and timing of our future revenues and could have a material
adverse effect on our business, results of operations and financial condition,
and may cause the market price of our common stock to decline substantially.

Although our expense levels are based in part on our expectations with
regard to future revenues, a substantial portion of our current and future costs
is fixed. We might be unable to adjust spending in a timely manner to compensate
for any unexpected shortfall in revenues. As a result, any significant shortfall
in demand for our products and services relative to our expectations would harm
our business and cause our revenues to decrease. Further, in order to remain
competitive, we might have to make various pricing, service or marketing
decisions that could have a material adverse effect on our business, results of
operations and financial condition. See "Risk Factors--Our operating results
might fluctuate significantly and remain uncertain, which could negatively
affect the value of your investment."

After the offering, we expect to experience significant fluctuations in our
future quarterly operating results due to a variety of factors, many of which
are outside our control, including--

- the number of transactions processed through our Hub;

- technical difficulties or service interruptions;

- our ability to hire or obtain the services of skilled programmers and
consultants;

- our ability to implement technology to improve our application processing
and accommodate our growth;

- the number of insurance policies we sell;

- the ability of insurance companies to process applications and issue
policies on a timely basis;

- the conversion and policy issuance rates of consumers' applications;

- our ability to renew and maintain policies in force;

- our ability to attract and retain a sufficient number of qualified
insurance agents;

- the amount and timing of operating costs, capital expenditures and
possible acquisitions relating to expansion of our business;

- our ability to retain our current executive officers;

- the announcement or introduction of new products and services by us or our
competitors;

- price competition; and

- the timing, cost and availability of advertising.

Based on the foregoing, we believe that our quarterly revenues, expenses and
operating results could vary significantly in the future, and that
period-to-period comparisons should not be relied upon as indications of future
performance.

Due to these and other factors, it is likely that in some future quarters
our operating results will fall below the expectations of securities analysts
and investors, which would cause our stock price to decline. See "Risk
Factors--Our operating results might fluctuate significantly and remain
uncertain, which could negatively affect the value of your investment."

Results of Operations

SELECTQUOTE

The following table sets forth SelectQuote's historical results of
operations expressed as a percentage of revenues:

Six Months Ended
Year Ended June 30, December 31,
------------------------------------ ----------------------
1997 1998 1999 1998 1999
-------- -------- -------- -------- --------

Revenues:
Commissions............................. 100.0 % 100.0% 100.0% 100.0% 99.7 %
Other revenues.......................... -- -- -- 0.0 0.3
------ ------ ------ ------ ------
Total revenues............................ 100.0 100.0 100.0 100.0 100.0
------ ------ ------ ------ ------
Expenses:
Marketing and sales..................... 91.0 66.9 69.5 75.3 78.8
General and administrative.............. 11.5 8.7 9.6 10.7 12.2
Software development and consulting
services............................... -- -- -- -- 1.0
Amortization of goodwill and other
intangibles............................ -- -- -- -- 4.7
Stock-based compensation................ -- -- -- -- 12.8
------ ------ ------ ------ ------
Total operating expenses.................. 102.5 75.6 79.1 86.0 109.5
------ ------ ------ ------ ------
Operating income (loss)................... (2.5) 24.4 20.9 14.0 (9.5)
Interest income........................... 0.1 0.1 0.2 0.2 0.4
Other income (expense).................... (0.2) 0.2 -- -- --
------ ------ ------ ------ ------
Income (loss) before income tax........... (2.6) 24.7 21.1 14.2 (9.1)
Income tax (benefit)...................... (1.1) 9.9 8.4 5.9 (3.6)
------ ------ ------ ------ ------
Net income (loss)......................... (1.5)% 14.8% 12.7% 8.3% (5.5)%
====== ====== ====== ====== ======

SIX MONTHS ENDED DECEMBER 31, 1998 AND 1999

REVENUES. Revenues increased 11% from $9.3 million in the first half of
fiscal 1999 to $10.3 million in the first half of fiscal 2000 primarily
reflecting increases in first-year commissions, renewal commissions and
production bonuses. First-year commissions rose in proportion to an increase in
new policies sold. Renewal commissions increased modestly while production
bonuses rose 19%, faster than SelectQuote's growth in new policies added
reflecting SelectQuote's insurance carriers' preferences for production bonuses
over long-term renewal commissions.

Policies sold increased almost 11% while new leads declined from 94,300
during the six months ended December 31, 1998 to 93,200 in the six-months ended
December 31, 1999. The improved relationship between leads generated and
policies sold reflects the benefit of using sales agents to handle most initial
customer telephone and Internet inquiries under SelectQuote's new sales
approach, which was fully implemented by November 1999.

We anticipate that revenues will be higher than usual during the rest of
fiscal 2000 because consumers applied to purchase a greater number of additional
policies in the six months ended December 31, 1999 compared to the six months
ended December 31, 1998. We believe that this increase in applications resulted
from consumers' motivation to avoid the effects of new insurance regulations,
known as "Triple X," that raised longer-guarantee life insurance prices of many
policies issued after January 1, 2000.

MARKETING AND SALES EXPENSES. Marketing and sales expenses rose 16% from
$7.0 million in the six months ended December 31, 1998 to $8.2 million in the
six months ended December 31, 1999. Although advertising expense remained almost
flat during the latter period, other marketing and sales expenses increased
$1.2 million primarily because of increased personnel costs to manage
significantly increased application and sales volumes and because of increased
emphasis on SelectQuote's website and internal technology. New policies in
process rose 35% in response to better conversions of leads to applications and
consumer response to the Triple X deadline.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased 26% from $1.0 million in the first half of fiscal 1999 to
$1.3 million in the first half of fiscal 2000 primarily because of increased
payroll costs.

SOFTWARE DEVELOPMENT AND CONSULTING SERVICES EXPENSES. These expenses
increased because of the acquisition of SelectTech by SelectQuote in late
December 1999.

STOCK-BASED COMPENSATION EXPENSE. In connection with the grant of stock
options during the six months ended December 31, 1999, SelectQuote recorded an
aggregate deferred compensation expense of $2.2 million, representing the
difference between the estimated fair market value of the common stock and the
option exercise price at the date of grant. This amount is presented as a
reduction of stockholder's equity and is amortized over the vesting period of
the applicable options. These valuations resulted in a charge to operations of
$1.3 million for the six months ended December 31, 1999 and will result in
charges of the remaining $900,000 over the next three years.

YEARS ENDED JUNE 30, 1997, 1998, AND 1999

REVENUES. Commission revenues increased from $14.8 million in fiscal 1997
to $19.0 million in fiscal 1998, and to $19.9 million in fiscal 1999. During
1997, first-year commissions increased substantially in response to
significantly increased advertising. The increased advertising expense also led
to an increase in new policy sales of 31% in 1997, although average commissions
per policy declined and cost per lead increased significantly. Production bonus
revenues were flat in fiscal 1997 due to lower policy production in calendar
1996 compared to calendar 1997.

SelectQuote's total commission revenues increased 28% in fiscal 1998 because
of increases in commission and production bonus revenues. A significant
percentage of the first-year commissions resulted from new leads generated by
increased advertising during the second half of fiscal 1997. Total first-year
commissions increased substantially during fiscal 1998 because of an increase in
new policies approved and an increase in average commissions resulting from
better targeting of advertising. Production bonuses also increased significantly
because of the trailing effects of record premium production in calendar 1997 in
response to the substantially increased advertising in the last half of fiscal
1997.

Revenues increased 5% from fiscal 1998 to fiscal 1999, reflecting an
increase in all three of SelectQuote's commission components: first-year
commissions, renewal commissions and production bonuses. First-year and renewal
commissions increased slightly during the year. Production bonuses increased
significantly from fiscal 1998 to fiscal 1999 because of record sales during the
first six months of calendar 1998. The total number of policies sold during
fiscal 1999 declined, while the average commission earned per policy increased
from the prior year. Leads declined from 212,000 in fiscal 1998 to 170,700 in
fiscal 1999, as SelectQuote reduced its advertising expenditures and increased
the percentage of licensed agents taking prospective customers' initial calls.
Notwithstanding fewer leads and policies sold in fiscal 1999, SelectQuote
maintained its first-year commission revenues at the same level as fiscal 1998.

MARKETING AND SALES EXPENSES. SelectQuote's marketing and sales expenses
declined from $13.5 million in fiscal 1997 to $12.7 million in fiscal 1998, and
increased to $13.9 million in 1999.

Marketing and sales expenses decreased 6% in fiscal 1998 primarily because of a
$2.4 million reduction in advertising expense. This reduction was offset by an
increase in other selling and marketing expenses of $1.6 million from fiscal
1997 to fiscal 1998, primarily as SelectQuote increased staff in response to
record activity levels and added higher-paid licensed sales agents as
SelectQuote began changing its sales process.

Marketing and sales expenses increased 9% in fiscal 1999. Although
advertising expense decreased by $200,000 for the year, other marketing and
sales expenses rose $1.4 million, primarily because of increased costs
attributable to adding licensed agents and support staff in connection with the
change in SelectQuote's sales approach.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
were $1.7 million in fiscal 1997, $1.7 million in fiscal 1998 and $1.9 million
in fiscal 1999 and represented 11.3%, 11.5% and 12.1% of total operating
expenses in fiscal 1997, 1998 and 1999, respectively. Generally, these expenses
have fluctuated in proportion to SelectQuote's total operating expenses.

SELECTTECH

The following table sets forth SelectTech's historical results of operations
expressed as a percentage of revenues:

Six Months Ended
Year Ended June 30, December 31,
------------------------------------ ----------------------
1997 1998 1999 1998 1999
-------- -------- -------- -------- --------

Revenues:
Consulting services..................... 100.0 % 95.0 % 80.0 % 92.6 % 64.8 %
License and maintenance................. -- 1.1 10.0 2.1 9.9
Transactional services.................. -- 3.9 10.0 5.3 25.3
------ ------ ------ ------ ------
Total revenues............................ 100.0 100.0 100.0 100.0 100.0
------ ------ ------ ------ ------
Expenses:
Software development and consulting
services............................... 94.6 163.6 160.1 166.0 213.0
Marketing and sales..................... 9.7 15.6 16.7 19.2 16.6
General and administrative.............. 35.6 59.4 34.9 35.7 34.1
------ ------ ------ ------ ------
Total operating expenses.................. 139.9 238.6 211.7 220.9 263.7
------ ------ ------ ------ ------
Operating loss............................ (39.9) (138.6) (111.7) (120.9) (163.7)
Interest expense.......................... (0.7) (1.4) (8.7) (5.4) (18.1)
------ ------ ------ ------ ------
Loss before income tax.................... (40.6) (140.0) (120.4) (126.3) (181.8)
------ ------ ------ ------ ------
Income tax................................ 0.2 -- -- 0.1 --
------ ------ ------ ------ ------
Net loss.................................. (40.8)% (140.0)% (120.4)% (126.4)% (181.8)%
====== ====== ====== ====== ======

SIX MONTHS ENDED DECEMBER 31, 1998 AND 1999

REVENUES. SelectTech's revenues increased 11% from $1.3 million in the six
months ended December 31, 1998 to $1.4 million in the six months ended
December 31, 1999. Revenues from consulting services dropped from $1.2 million
to $936,000 reflecting a shift away from providing consulting and installation
and integration services to outside parties to enhancing SelectQuote's internal
systems to improve processing and sales techniques. During the six months ended
December 31, 1999, SelectQuote accounted for $481,000 of consulting-services
revenues. License and maintenance revenues increased from $27,000 in the
half-year ended December 31, 1998 to

$142,000 indicating increased usage of SelectTech's AIM Suite software products.
These revenues reflect the amortization of deferred licensing fees that are
amortized ratably over the expected term of the license once the software has
been accepted by the licensee. Transaction service revenues increased from
$69,000 in the earlier period to $366,000 in the latter period. This increase
represents a 433% increase in revenues and a 199% increase in transactions
processed through the Hub.

SOFTWARE DEVELOPMENT AND CONSULTING SERVICES EXPENSES. Software development
and consulting services expenses increased from $2.2 million during the six
months ended December 31, 1998 to $3.1 million during the six months ended
December 31, 1999, including $1.4 million and $920,000 paid to third-party
developers in the six months ended December 31, 1998 and 1999, respectively, of
which $580,000 and $365,000 was paid to IIG, Mr. Gerber's consulting company and
Mr. Feroah's consulting company. The decline in amounts paid to related parties
during the first six months of the current fiscal year resulted from Messrs.
Gerber and Feroah becoming full-time employees. For more information, please
refer to "Related Party Transactions--Research and Development Arrangements."
This increase reflects increased AIMSuite software development, AIMSuite
software installation and integration efforts, and the provision of software
development and management services to SelectQuote.

MARKETING AND SALES EXPENSES. Marketing and sales expenses remained
relatively constant for the six months ended December 31, 1998 and the six
months ended December 31, 1999 because of a limited marketing budget. SelectTech
continued to focus its marketing efforts on attending and participating in
important industry trade shows and on developing marketing and advertising
materials.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expense
increased 6% from $465,000 in the six months ended December 31, 1998 to $492,000
in the six months ended December 31, 1999, due to higher personnel costs.

INTEREST EXPENSE. Net interest expense increased from $71,000 in the six
months ended December 31, 1998 to $261,000 in the six months ended December 31,
1999, reflecting a substantial increase in total debt under 12% senior secured
convertible debentures, notes and bridge loans subsequent to December 31, 1998.

YEARS ENDED JUNE 30, 1997, 1998, AND 1999

REVENUES. SelectTech's revenues were $1.4 million in both fiscal 1997 and
fiscal 1998 and increased to $3.0 million in fiscal 1999 as SelectTech's
business expanded from developing custom software and providing consulting
services to developing and licensing AIM Suite software products. Fiscal 1997
revenues and the bulk of fiscal 1998 revenues came from custom software
development and consulting projects for a few large insurance carriers. During
fiscal 1999, SelectTech's consulting services revenues shifted from custom and
consulting work to installing and integrating AIMSuite products.

License and maintenance fees increased from $16,000 in fiscal 1998 to
$299,000 in fiscal 1999 and related primarily to SelectTech's obligations to
provide customer support during contract periods. License fees are initially
deferred and then amortized ratably over the expected term of the license
agreement. Transactional services revenues increased substantially from $55,000
in fiscal 1998 to $297,000 in fiscal 1999, as more insurance carriers and
existing customers expanded their use of the Hub.

SOFTWARE DEVELOPMENT AND CONSULTING SERVICES EXPENSES. Software development
and consulting services, expenses more than doubled from $2.3 million during
fiscal 1998 to $4.8 million during fiscal 1999, including $1.3 million and
$2.5 million paid to third-party developers in fiscal 1998

and 1999, respectively, of which $639,000 and $1.1 million was paid in fiscal
1998 and 1999, respectively, to IIG, Mr. Gerber's consulting company and
Mr. Feroah's consulting company. This increase reflected an effort by SelectTech
to launch the full line of AIMSuite products and to install and integrate those
products in the customer's existing computing environments.

MARKETING AND SALES EXPENSES. SelectTech's marketing and sales expenses
increased from $138,000 in fiscal 1997 to $223,000 in fiscal 1998 and to
$496,000 in fiscal 1999, due primarily to SelectTech's increased emphasis on
marketing its AIMSuite products, including adding marketing staff, attending
important industry trade shows and developing marketing and advertising
materials.

GENERAL AND ADMINISTRATIVE EXPENSES. SelectTech's general and
administrative expenses increased during the preceding three fiscal years
commensurate with its growth from a staff of eight at the beginning of fiscal
1997 to 44 at the end of fiscal 1999.

INTEREST EXPENSE. Net interest expense increased from $9,000 in fiscal 1997
to $20,000 in fiscal 1998 and to $259,000 in fiscal 1999. Most of the increase
for fiscal 1999 arose from the issuance of $2.5 million of convertible
debentures.

Liquidity and Capital Resources

Upon the acquisition of SelectTech by SelectQuote on December 23, 1999, all
intercompany investments were canceled and all intercompany receivables and
loans were forgiven. As part of the transaction, Zebu issued $2.5 million of
debentures in exchange for the 12% senior secured convertible debentures issued
by SelectTech in October 1998, repaid one of the three outstanding debentures in
the face amount of $600,000, and modified the terms of the two remaining
debentures in the face amount of $950,000 each. These debentures are convertible
into an aggregate of 731,420 shares of our common stock. After the earlier of
July 1, 2000 or the completion of the offering, we may prepay these debentures
in full on 30 days' notice. After the acquisition, Zebu also repaid $750,000 of
12% promissory notes owed by SelectTech.

On December 27, 1999, Zebu sold 50,000 shares of Series D mandatorily
redeemable convertible preferred stock at $100.00 per share, which provided
proceeds of $4.7 million to us, net of a fee paid to Cochran, Caronia & Co. and
legal expenses. These shares will automatically convert into 1,111,111 shares of
our common stock at the closing of this offering.

SELECTQUOTE

Since SelectQuote's formation in 1984, its primary sources of operating
funds have been commissions and bonus revenues and bank and private borrowings.
Through private placements of preferred stock and common stock to individual
investors and conversion of convertible debt, SelectQuote raised $1.8 million.

Net cash provided by operations was $1.3 million in fiscal 1999 and
$2.4 million in fiscal 1998. In each period, cash provided by net income was
partially offset by increases in commissions and other receivables. Net cash
used in operations was $625,000 in fiscal 1997, as SelectQuote had a net
operating loss.

Net cash used in investing activities was $1.1 million in fiscal 1999 and
$777,000 in fiscal 1998. Investment activity consisted primarily of the purchase
of equipment and marketable securities, leasehold improvements, and investments
in SelectTech. Net cash provided by investing activities was $746,000 in fiscal
1997, primarily due to the sale of marketable securities.

Net cash used in financing activities was $686,000 in fiscal 1999, $839,000
in fiscal 1998 and $372,000 in fiscal 1997. SelectQuote paid dividends on its
preferred and common stock of $579,000 in fiscal 1999, $447,000 in fiscal 1998,
and $579,000 in fiscal 1997. SelectQuote also borrowed $300,000 from an
insurance carrier in fiscal 1997 and repaid that amount in fiscal 1998.

SELECTTECH

SelectTech has received all of its funding through the sale of securities to
insurance carrier investors and from SelectQuote--

- In February 1997, SelectQuote provided SelectTech a $200,000 line of
credit bearing 10% annual interest, which was secured by future revenues
earned on existing consulting contracts, rights to any software developed
and a maintenance contract with one insurance carrier. The outstanding
loan balance and the line of credit were canceled in connection with
SelectQuote's acquisition of SelectTech.

- In August and November 1997, SelectTech issued 450,000 shares of
mandatorily redeemable convertible Series A preferred stock for $750,000
to three insurance carriers that also have licensed the AIMSuite software.
In April 1998, SelectQuote purchased 150,000 shares of Series A preferred
stock for $250,000. Each share of the Series A preferred stock other than
SelectQuote's shares, which were canceled, was exchanged for .703455
shares of our common stock in SelectQuote's acquisition of SelectTech.

- During 1998, SelectTech issued promissory notes totaling $425,000 to four
insurance carriers at annual interest rates ranging from 10.0% to 15.0%.
These promissory notes were repaid in October 1998.

- In October 1998, SelectTech entered into a debenture purchase agreement
with three insurance carriers which enabled SelectTech to borrow up to
$2.5 million upon the issuance of 12% senior secured convertible
debentures. The debentures were secured by all of SelectTech's assets and
were convertible into shares of SelectTech common stock. By June 30, 1999,
SelectTech had issued the full $2.5 million of the debentures. In
addition, the debenture holders received warrants to purchase common stock
at $.01 per share for 5.0% of SelectTech's fully diluted capital. In
SelectQuote's acquisition of SelectTech, Zebu issued 498,142 shares of our
common stock in exchange for shares of SelectTech common stock issued upon
exercise of these warrants. On December 27, 1999, we paid off one
debenture holder in full with $600,000. We believe that the debenture
holders will convert their debentures, which represent the right to
acquire 731,420 shares of our common stock, upon the completion of this
offering.

- In June, October and November of 1999, SelectQuote loaned an aggregate of
$750,000 to SelectTech under three promissory notes of $250,000 each
bearing interest at 9.0% annually. All three notes were canceled upon
SelectQuote's acquisition of SelectTech.

- In July 1999, SelectQuote loaned $50,000 to SelectTech, which was repaid
in August 1999.

- In July and August 1999, SelectTech borrowed $750,000 from the three
debenture holders under new notes at a 12.0% annual interest rate.

Net cash used in SelectTech's operations was $2.4 million in fiscal 1999,
$895,000 in fiscal 1998, and $136,000 in fiscal 1997. SelectTech incurred
operating losses with substantial non-cash charges for depreciation and
amortization. Accounts payable and accrued expenses, including payables to
SelectQuote and other related parties, increased in each year, as did software
license fees classified as deferred revenues. Net cash used in investing
activities was applied to capital

expenditures in all three fiscal years. Net cash provided by financing
activities was $2.5 million in fiscal 1999, $1.1 million in fiscal 1998 and
$190,000 in fiscal 1997 from the issuance of our 12% senior secured convertible
debentures and Series A preferred stock.

Anticipated Cash Requirements

We currently expect that the cash proceeds we receive from this offering,
together with our existing cash balances and projected revenues, will be
sufficient to meet our anticipated cash requirements at least until the end of
our 2001 fiscal year. We may need to raise additional capital in order to meet
competitive pressures, support more rapid expansion, develop new lines of
business, acquire related or complementary businesses or technologies and/or
take advantage of unforeseen opportunities. The timing and amounts of working
capital expenditures are difficult to predict, and if they vary materially, we
may require additional financing sooner than anticipated. If we require
additional equity financing, it may be dilutive to our stockholders, and the
equity securities issued in a subsequent offering may have rights or privileges
senior to the holders of our common stock. If debt financing is available, it
may require, as is the case with SelectQuote's existing line of credit,
restrictive covenants with respect to dividends, raising capital and other
financial and operational matters, which could impact or restrict our
operations. If we cannot obtain adequate financing on acceptable terms, we may
be required to reduce the scope of our marketing or operations, which could harm
our business, results of operations and our financial condition.

Market Risk

We do not believe that we have any significant exposure to market risk
related to changes in interest rates, foreign currency exchange rates and equity
prices.

Recent Developments

In February 2000, SelectQuote, our wholly owned subsidiary, obtained a
one-year, $3.0 million line of credit from LaSalle Bank. SelectQuote may borrow
against that line, provided it meets certain financial and other covenants and
conditions. Any borrowings under the line of credit will bear interest at
SelectQuote's election at LaSalle Bank's prime rate or at an interest rate
determined by a formula based upon LIBOR. The line of credit is secured by a
pledge of all of the assets of SelectQuote, including intellectual property
rights, which is senior to the security interest of the holders of our
convertible debentures. It is also guaranteed by four of our principal
stockholders, and that guaranty is secured by a pledge of their Zebu stock,
which represents 35% of Zebu's outstanding stock. We have not drawn on this line
of credit and expect to terminate it as soon as possible after the completion of
the offering. SelectQuote does not currently intend to borrow against the line
before the offering.

In February 2000, we entered into an agreement for the sale of 2,041,845
shares of Series E mandatorily redeemable convertible preferred stock at $5.15
per share a group of accredited investors, including to High Ridge Capital
Partners II, L.P. and several entities controlled by Marsh & McLennan GP
I, Inc. and Marsh & McLennan GP II, Inc. These investors have committed
irrevocably to purchase these shares, subject only to the satisfaction of
closing conditions outside their control. The sale of these shares will provide
proceeds of approximately $10.0 million to us, net of a fee paid to Cochran,
Caronia & Co. and legal expenses. Each share of Series E preferred stock will
convert automatically into one share of our common stock upon the completion of
this offering.

Year 2000 Matters

Many existing software programs are coded to accept only two digit entries
in their date fields. As a result, these programs are unable to distinguish
whether "00" means the year 1900 or the year 2000, which could result in system
failures or miscalculations causing disruptions to operations. Because our
AIMSuite software may interact with external databases for purposes of data
storage, the ability of applications integrated with the AIMSuite software to
comply with Year 2000 requirements is largely dependent on whether any databases
underlying the application are Year 2000 ready. To date, neither Zebu,
SelectQuote nor SelectTech has incurred significant costs in identifying or
evaluating Year 2000 compliance issues. Most of our expenses have related to the
indirect operating costs associated with time spent by employees in the
evaluation process and Year 2000 compliance matters generally. Although we do
not anticipate that these expenses will be material, these expenses, if higher
than anticipated, could adversely affect out operating results. We are not
currently aware of any significant Year 2000 compliance problems relating to our
software for our product offerings or our information technology or
non-information technology systems. Although we consider Year 2000 problems with
our software and systems to be unlikely to occur at this stage, there can be no
assurance that we will not discover Year 2000 compliance problems in our
software for our product offerings that will require substantial revisions or
replacements which could be time-consuming and expensive.

Recently Issued Accounting Pronouncement

SFAS No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES,
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities. Under SFAS No. 133, certain contracts that were not formerly
considered derivatives may now meet the definition of a derivative. This
Statement, as amended, is effective for fiscal years beginning after June 15,
2000. The Company has not fully evaluated the impact of this Statement, but does
not expect it to have a material impact on the Company's net operating results.

BUSINESS

Overview

We believe that we provide the most effective business-to-business
infrastructure solution to the application processing and
information-connectivity problems of the insurance industry. Using our
Internet-based technology, insurance carriers, general agencies, financial
institutions, marketing organizations, medical service and data providers, and
others involved in processing insurance applications and policies, can connect
to our single site and exchange all relevant information for the insurance
application process in real time. Our unique solution creates a common platform
that interconnects the computer systems of all of these users, including their
legacy systems, and simultaneously updates each user's database. This real-time
data synchronization occurs regardless of the number of remote locations
involved in the process. We connected the first insurance carrier to our Hub in
April 1998. Today, over 1,000 general agencies and over 30 insurance carriers
have adopted our technology. Each day, they collectively transmit more than
1,000,000 data transactions through our Hub. The number of new policy
applications processed using the Hub currently exceeds 30,000 per month.

Insurance carriers face an increasingly price competitive marketplace and
continually seek data processing solutions that help to reduce customer
acquisition cost and improve processing efficiency. We believe that our
state-of-the-art technology provides significant time and cost savings and other
efficiencies to insurance carriers in this increasingly competitive marketplace
by using a common, Internet-based platform that facilitates the standardization
and transfer of insurance application information. We intend to license our
technology to as many insurance carriers, agents and information providers as
possible, thereby standardizing the sale and processing of insurance. Our
customers include AIG Life Insurance Company, Allstate Insurance Company,
GE Financial Assurance Holdings Inc. and American General Corporation. For a
complete list of our customers, please refer to "--Technology Products and
Services." By licensing our software, we also enable our business clients,
including insurance carriers, general agencies, financial institutions,
marketing organizations, medical service and data providers, to improve the
effectiveness of their insurance operations and to reduce their customer
acquisition and policy processing costs. We believe that this platform is
extendable into other segments of the insurance industry, such as healthcare and
property and casualty, as well as other industries.

We use our technology solutions in our retail business to further our
position as one of the largest independent direct marketers of term life
insurance in the United States. Our technology, in addition to our Internet- and
telephone-based insurance sales techniques, enables us to offer consumers a
faster, more convenient and less expensive way to purchase life insurance than
traditional methods. Our retail insurance business also provides us the
opportunity to prove the efficacy of our technology solutions prior to deploying
them to the rest of the industry. We are able to build upon our fifteen years
experience in the term life insurance industry to promote our insurance industry
technology solutions.

We offer the insurance industry the opportunity to reduce significantly the
processing time between application submission and policy issuance, which we
believe will provide increased satisfaction and better prices for consumers as
well as improved profitability for our business clients. We believe that the
unique combination of our national general agency appointments, our licensed
agents and our technology provides our customers with a high level of service
and the lowest cost products available from the insurance carriers that we
represent.

Through our business-to-business and business-to-consumer services, we
aspire to "touch" every life insurance policy, either by selling products
directly to consumers or by processing every insurance application.

Industry Background

THE UNITED STATES LIFE INSURANCE MARKET

According to Life Industry Marketing Research Association, or LIMRA, U.S.
consumers paid an estimated $10.3 billion in new individual life insurance
premiums in 1998. New individual term life insurance premiums during the same
period were approximately $2.1 billion, or 20% of the total, up from 13% in
1993. Based on data provided by LIMRA, of the approximately 11.5 million new
individual life insurance policies issued during 1998, we estimate that
approximately 4.1 million were term life policies, up 17% from 1997.

The structure of the traditional life insurance market presents significant
challenges to insurance carriers and consumers:

CHALLENGES TO THE INSURANCE CARRIER. Traditionally, insurance carriers
incur substantial costs in acquiring new policyholders, supporting general
agencies, processing applications and issuing and administering policies. Each
of these steps currently involves inefficiencies and delays related to the
manual and often repetitive collection and transfer of application information
from multiple independent parties. The insurance industry lacks standard
underwriting data requirements and standard formats for the collection and
submission of data, making the traditional application process inefficient.
Insurance underwriting usually involves input from multiple independent parties,
which often results in significant costs, many inefficiencies and delays. In
addition, many applicants fail to complete the underwriting process, which often
results in the insurance carriers incurring significant expense without
receiving any revenue. We believe that the combination of these costs and
inefficiencies make term life insurance a high-cost, low-margin product for the
insurance carrier.

CHALLENGES TO THE CONSUMER. The purchase of insurance is often a difficult
and frustrating process for consumers. The fragmentation of the insurance
industry, which includes more than 1,000,000 licensed agents and numerous
distribution channels, including captive agents, independent agents, banks and
brokerage firms, direct marketers and, more recently, web site operators, has
historically made comparison shopping across a broad range of insurance carriers
extremely difficult and time consuming. The process is further complicated by
the participation of more than 1,700 insurance carriers offering life insurance
products, each with its own policy features, prices and qualifying criteria. The
purchase of life insurance can also involve dealing with unfamiliar information
or high-pressure sales tactics. Additionally, the process requires the consumer
to provide sensitive personal health and family medical history information,
which in the traditional process is provided in a face-to-face meeting. Finally,
applying for life insurance is a time-consuming, paper-and labor-intensive
process, resulting in consumer frustration. Because of these factors, consumers
often regard the purchase of insurance as a negative experience, and many fail
to complete the process.

OUR MARKET OPPORTUNITY

Most insurance carriers utilize traditional paper- and labor-intensive
processing for both Internet-generated and traditional agency-sourced
applications at high cost and with substantial delays. Without broadly based
technology that allows low-cost and efficient data sharing solutions, insurance
carriers, agents, banks and other financial institutions cannot compete
effectively in the insurance marketplace.

We believe that there are significant competitive advantages to insurance
marketers and carriers who take advantage of recent technological developments,
including the Internet. To capitalize on the benefits of Internet-based
technology and compete effectively, we believe that life insurance marketers and
carriers must achieve--

- a faster, more efficient application and policy issuance process;

- lower origination and application processing costs;

- more opportunities for consumers to access and compare insurance product
information;

- more choices of insurance products and prices; and

- a consumer-friendly method for obtaining the best coverage at the lowest
possible price.

In attempting to achieve these objectives, insurance businesses face serious
data processing obstacles. Diverse computing environments are unable to share
existing information easily among insurance carriers, information providers and
general agencies. Differences among computer systems have been a major
impediment to business-to-business data movement and integration among these
parties. Most existing applications were not designed to communicate outside of
the enterprise. Older data movement and integration approaches have been costly,
ineffective and unable to share information. Traditional electronic data
interchange, or EDI, is inflexible, based on pre-defined, fixed data formats
that are not easily adjusted, and often requires difficult point-to-point
integration. EDI is also batch processed, cumbersome, requires expensive private
networks and does not offer real time processing. First-generation Web sites
based on hypertext mark-up language, or HTML, also do not address the
requirements of business-to-business data movement and integration. HTML is
designed chiefly for presentation of data and does not directly support data
exchange between applications. Because these Web sites were designed primarily
for human-to-system communication, they are difficult to incorporate into shared
multi-company business processes that require system-to-system communication.
HTML-based Web systems typically require that data be re-keyed to each new
system. Newer processes, such as extensible mark-up language, or XML, provide a
universal communications mechanism, but require the transmission of large
amounts of unnecessary data because they fail to extract and transmit only the
relevant data. Thus, these processes require substantial customization at each
site and have a high initial cost and maintenance expense. These packages
integrate systems within a single trading partner group, but typically cannot
provide the open-ended, scalable inter-company integration that is critical to
business-to-business data processing among the myriad, diverse and disparate
users engaged in processing insurance policies.

We believe that in order for a system to be effective, it must not only
allow a variety of systems to exchange data, it must interface with legacy
systems, and provide bi-directional data communication without requiring the
information providers to standardize their data. To accomplish these objectives,
the system must--

- be usable by trading partners and business competitors alike;

- be compatible with any data format;

- be fully scalable;

- interconnect a large number of users simultaneously; and

- enable process automation.

Such a system would allow for wide industry acceptance, provide a common
format for data to be exchanged without substantial point-to-point engineering,
be sufficiently flexible to allow the expansion or changing of distribution
channels easily and provide the basis to solve the processing problems of the
insurance industry.

Our Solution

We believe that we provide the most effective business-to-business solution
to the application processing problems of the insurance industry. Our automated
insurance management, or AIM, system solution is based on a unique, open
database architecture that permits improved

management of information, an advanced data synchronization process which allows
data to be moved between remote work sites faster, more efficiently and in real
time, and advanced applications utilizing our data distribution process. Our
system can transfer electronic data generated by any user's data processing
system, regardless of hardware configuration, operating system, database
management software or system protocols. It does not require substantial
conversion cost or effort on the part of insurance carriers to adopt this
system, allowing for the carrier and consumer to benefit immediately. For the
sales distribution process, electronic application data can be transmitted to
the insurance carrier or other information providers in a matter of seconds
instead of days. Application status information moves just as quickly. Our
solution eliminates the need to reduce information to paper again and again in
the application process. There is no practical limit to the number or size of
sites that can send or receive information because the Internet can be used in
all cases. Our system can be connected to any information provider's system for
most insurance applications. It can be modified to provide similar standardized
data transfer and communications connections for most industries.

Our technology, experience and expertise position us to change dramatically
the way insurance is sold and processed. In our 15 years of term life insurance
sales experience with SelectQuote, we have searched for ways to respond to the
significant challenges posed by our growth and by the inefficiencies of the term
life insurance industry in general. In particular, we have witnessed and
experienced the significant information management and paper processing problems
faced by the insurance industry. As a result, we have developed effective
marketing and processing techniques from which we have seen substantial
benefits. In addition, we have become a leader in the application of technology
to the term life insurance industry. In response to the inefficiencies inherent
in the paper- and labor-intensive application processing methods that pervade
the insurance industry, we have developed a comprehensive, integrated,
Internet-based solution to the substantial information management problems faced
both by us and by the life insurance industry generally.

Our Strategy

- ESTABLISH THE AIMSUITE AS THE TECHNOLOGY STANDARD FOR THE INSURANCE
INDUSTRY. Our AIMSuite, with a flexible, open and scalable architecture,
makes the benefits of our key technology available to insurance carriers
and their general agencies, regardless of their internal legacy systems.
Furthermore, we intend for our AIMSuite brand to become synonymous with
the standard for processing technologies in the life insurance industry.
Our technology is platform independent and can be applied to most business
data movement and connectivity needs.

- STREAMLINE OPERATIONS AND INCREASE OUR SALES EFFICIENCY. We believe that
our technology will streamline quotation and application processing and
enable our agents to sell a greater number of policies more profitably,
matching the lead generation capability of our direct marketing expertise.

- USE OUR TECHNOLOGY TO PROCESS INSURANCE POLICIES FOR THE INSURANCE
INDUSTRY. Our goal is to offer insurance carriers and other financial
institutions a compelling alternative to in-house processing of life
insurance marketing, sales, processing and policy delivery by giving them
the opportunity to outsource to us all of their new business processing,
reporting requests and policy updating. This is possible using our system
and technology as they exist today. Our goal is to have our technology
used to process every life insurance policy.

- REDUCE POLICY ACQUISITION COSTS. We believe the insurance carriers whose
policies we sell can continue to reduce their policy acquisition costs
through the use of our technology. We believe this cost reduction will
enable us to offer a competitive product at a lower price.

- EXPAND BRAND AWARENESS AND PRESENCE. We have established ourselves as a
leading independent distributor of term life insurance products. We will
continue to use our direct-response advertising techniques to enhance
consumer recognition of our SelectQuote brand name. We also intend to make
strategic use of Internet advertising and establish relationships with
on-line companies that are a likely source of consumers for our products.

- EXPAND OUR LINES OF RETAIL BUSINESS. Our sales experience and technology
is readily applicable to other forms of insurance and other financial
products. To date, we have focused exclusively on term life insurance
products, but we believe that our processes, technology and ability to
hire appropriately licensed agents will allow us to offer a variety of
insurance products to new and existing consumers.

- EXPAND THE SCOPE OF USE OF THE HUB. We believe that the Hub technology is
adaptable to other segments of the insurance industry, such as healthcare
or property and casualty, as well as other industries that require complex
data movement solutions.

Our Products and Services

The core of our technology solution, our Hub, is a system that facilitates
and manages workflow between remote users in real time. Our AIMSuite software
products connect insurance carriers, their agents and other participants in the
life insurance policy application, underwriting and issuance process to the Hub.
The Hub is an application of hardware, software and modern relational database
technology. Insurance carriers, agents or service providers can send or receive
data in seconds, as opposed to the days required by the traditional, paper-based
process. Required application information is entered only once and then made
available to the other participants in the application process as needed,
thereby reducing duplicate entries and mistakes, saving processing time and
providing better service to the consumer.

We also have developed the Insurance Tele-Information System, or ITS, that
makes information gathered through telephone interviews with prospective
insurance purchasers available to AIMSuite licensees. We offer ITS licenses to
insurance carriers directly, as well as through our strategic alliance with
Intellisys, Inc., a ChoicePoint subsidiary. We also offer our licensees
consulting services to assist them in integrating the AIMSuite software or to
provide custom features. We provide installation, maintenance and support
services to users of AIM QuickView and AIM GA.

To individual consumers, we offer a full range of high quality term life
insurance products. Through our consultative sales process, which we are
enhancing through the development of our automated rate calculation, or ARC,
software, we help the consumer to comparison shop and select the appropriate
policy. We are developing new features to enable applicants to track the status
of their applications with any carrier that has installed the AIMSuite software.

TECHNOLOGY PRODUCTS AND SERVICES

The AIMSuite consists of integrated software programs that enable insurance
carriers, agencies, agents and information providers to process insurance policy
applications, transfer critical applicant data, facilitate policy issuance,
service policies, manage the carrier-agent relationship and manage general
agency operations. All users of AIMSuite software can connect to our Hub data
processing service via the public Internet or virtual private networks, or VPNs.
Our Hub servers run

our Hub software, which converts data transmitted to the Hub into standard
transfer protocols, stores the data and identifies their proper destination. The
Hub is located at our San Francisco, California headquarters.

Only the AIMSuite software can utilize the Hub's real-time data
synchronization capability for application processing and policy issuance and
administration. We license the AIMSuite software to insurance carriers and
authorize them to distribute general agency software components to their
authorized agents. We currently offer new licenses for an AIMSuite system
consisting of the following basic components--

- AIM QuickView, the primary application for data movement via the Hub;

- AIM GA, a full-featured contact management general agency management
system; and

- AIM ITS, a tele-interviewing system that can send and receive data from
the Hub.

Once the carrier and associated information providers have installed the
essential AIMSuite components, utilities convert all data entered into the Hub's
secure storage databases from each information provider's computer systems and
other non-AIMSuite applications into the same life insurance industry standard
NAILBA format. The AIM-standard NAILBA-compliant data allows for the automation
of the application process without the need for modifying legacy systems or
rewriting existing "expert" underwriting systems. The standardized data can then
be distributed securely through the Hub to any site that has been approved for
access to the data.

AIM ITS is a critical part of the AIM Suite processing solution. After the
initial insurance application is submitted to a general agency or insurance
company, the medical information section of every life insurance application
form must be completed for the applicant. AIM ITS provides a platform for the
collection of this information through a telephone interview process. This
information can be combined with all other application information, which is
sent to the telephone interviewing site electronically, and relayed to an
insurance carrier or underwriter for review and approval. An applicant's
disclosure of a health condition will prompt follow-up questions designed to
elicit additional information that the insurance carrier will require to process
the application. This feature reduces the need for additional requests for
information and attending physicians' statements, thus saving time and expense
for all parties.

We have licensed AIM ITS to IntelliSys, which specializes in gathering
information to support life and health insurance underwriting decisions through
telephone call-in centers. IntelliSys makes AIM ITS service available to
carriers who have licensed the complete AIMSuite of software. We receive a fee
from IntelliSys for each new policy application containing AIM ITS data that is
transferred through the Hub.

The following diagram shows how the AIM/Hub solution connects the parties
involved in the life insurance sales cycle:

AIM Hub Internet-based Data Distribution Process

[graphic depicting the parties and software applications that can access the
Hub, and the intelligent distribution of data through the Hub and among these
parties]

We license the AIMSuite software products to insurance carriers that pay us
a license fee payable in two installments: upon execution of the agreement and
upon the customer's acceptance of the software. We also receive a transaction
fee for each life insurance application submitted for processing through the
Hub. Generally, the transaction fee becomes payable when the licensed carrier's
agent connects to the Hub and initially receives the application or submits data
to the Hub. A single fee covers all data processed through the Hub for that
application. We charge our customers an additional fee for each application for
which data is transmitted using AIM ITS, and intend to charge a fee for other
data services that we might provide to the carrier or its agents and agencies.
Our license terms grant the carrier a perpetual, non-exclusive right to use the
software and allow the carriers to distribute copies of the software components
to agents and agencies who are licensed and appointed to sell its life insurance
products. With one exception, we have never licensed the Hub software to any
insurance carrier. We have licensed one complete AIMSuite system, including a
version of the Hub software in executable form, to Allstate Insurance Company
solely for use with its captive agency system, which helped us demonstrate the
feasibility of the Hub technology in external environments.

To date, we have licensed the AIMSuite software to over 30 insurance
carriers that, in turn, have authorized a total of more than 1,000 general
agents and information providers to install the AIM Agency QuickView software
component. We have installed the AIM General Agency software component for 23
general agents. We have current AIMSuite license agreements with the 16
individual carriers identified in the table below. Under some of these license
agreements, we also process transactions for the subsidiaries of the carrier
licensee.

These carriers and their subsidiaries are listed below.

- ------------------------------------------------------------------------------------
AIMSuite
Products
Carriers Covered Under License Covered(1)
- ----------------------------------------------------------------- -----------------

AIG Life Insurance Company GA, QV
Allstate Insurance Company GA, QV
- Allstate New York
- Glenbrook Life
- Lincoln Benefit Life
- Northbrook Life
- Surety Life
American Express Financial Corporation: QV
- American Enterprise Life
American General Corporation GA, QV
- US Life Corporation
- All American Life
- American General Life Brokerage Group
- Old Line Life
American National Insurance Company QV
Federal Kemper Life Assurance Company GA, QV
First-Penn Pacific Life Insurance GA, QV
GE Financial Assurance Holdings, Inc. QV
- American Mayflower
- First Colony Life of Virginia
Legal & General America, Inc. QV
- Banner Life
Lincoln National QV
The Midland Life Insurance Company GA, QV
North American Company for Life and Health Insurance GA, QV
- North American Company for Life and Health Insurance
New York
Protective Life Insurance Corporation GA, QV
- Empire General Life Assurance Corporation
- West Coast Life Insurance Company
Prudential Insurance Company of America QV
Security-Connecticut Life Insurance Company GA, QV
United of Omaha Life Insurance Company GA, QV
- Companion Life
- Mutual of Omaha

- ---------------

(1) GA--AIM General Agency
QV--AIM QuickView

Once a carrier and its agents have installed the QuickView software
component, they can instantly begin sharing data through the Hub. Our objective
is to disseminate the AIMSuite software as widely as possible. For this reason,
we have been licensing this software and providing related services for fees
that we consider low by comparison to other business-to-business applications.
As the number of licenses and installed AIM GA and QuickView sites increase, we
expect our Hub

processing fees to increase significantly. We further believe that, once
carriers and agents begin processing their policy data through the Hub, they
will require additional services from us, including fee-based outsourcing
services that we intend to provide at a price significantly lower than their
current processing costs.

The components of the AIMSuite, which are briefly described in the following
table, offer a wide array of standard and premium, or additional cost, features
and benefits to insurance carriers and their appointed agencies.

- -----------------------------------------------------------------------------------------------------------------

Product Features Benefits

- -----------------------------------------------------------------------------------------------------------------
AIM QUICKVIEW Automates and integrates the seamless Eliminates redundant data entry,
- AIM WEB QUICKVIEW movement of application, case and agent speeds up data movement, increases
- AIM AGENCY QUICKVIEW data throughout the insurance data accuracy and reduces paper.
- AIM CARRIER QUICKVIEW application process.
- Displays all pending case data for - Dramatically reduces case status
numerous carriers. calls from agencies to carriers,
as well as from agents to
agencies.
- Creates one source for all
carriers' pending information,
eliminating the need to access
multiple web sites
- Reduces paper, mailing costs and
reduces delivery time.
- Tracks pending application cases - Eliminates most status calls;
provides real time case updates
and links field offices to tele-
interviewers and paramedical
firms
- Prints policies on-site - Eliminates 2-5 days of policy
issuance time, reduces shipping
costs and shipping delays
- Develops on-line commission reports - Enables instant access to
using open SQL database commission reports; reduces data
entry and improves accuracy
- Substantially improves analysis
of sales data and review of
existing policy data for
additional sales
- Retains policy data on-site - Offers data accessibility 24
hours a day and makes its data
available for use with other
software packages
- Integrates with AIM GA, AIM ITS and - Eliminates duplicate data entry
AIM Carrier QuickView and automates data movement
- Links all carrier new business, - Allows carriers to access their
policy issue and commission systems data in an open environment for
to open SQL database better data review and
statistical analysis
- Standardizes policy data - Consolidates data from multiple
legacy systems into an insurance
industry standard for easier
export to web sites, and provides
field office integration
- Prepares custom reports - Serves as an executive management
report system with enhanced
analytical and graphical
capabilities
- Displays pending data by carrier - Allows management to view pending
data on a single system
- Generates error report - Catches improper data before it
is sent to the field

- -----------------------------------------------------------------------------------------------------------------

Product Features Benefits

- -----------------------------------------------------------------------------------------------------------------
AIM GA Completely integrated and scalable Allows general agency to store all
agency management system, including agency data in one database for
plan administration and system reporting and tracking new
administration integrated with a business, in-force policies,
contact management system licensing and commissions
administration.
- Manages data for unlimited carriers - Allows agencies to contract with
and policies multiple carriers, as well as
market and sell multiple product
lines.
- Cross checks carrier limits during - Improves accuracy of
application entry process applications, reduces returns and
rejections
- Updates policies electronically - Streamlines policy administration
- Automatically stores and checks all - Speeds policy issuance by showing
company policy requirements during exact requirements needed to
application entry process process a case.
- Improves placement ratio with
carriers due to thoroughness of
application at receipt
- Customizes activities - Automates work flows; reduces
overhead
- Integrates word processing, - Reduces typing and allows faster
automatically inserts data into form communication through automation
letters and reports
- Reduces redundant data entry by field - Increases accuracy and office
offices productivity
- Tracks applications through entire - Allows access to policy status
process and information on demand
- Tracks agent leads, contracts, - Increases efficiency of agency
commissions, cases, appointments, operations and legal compliance
licenses and NASD requirements
- Assigns a unique code to every agent - Increases ability to target
and every marketing program provided market, and use advertising and
to the agent sales dollars more efficiently.
- Moves data from the agency's web page - Enables agencies to share data
or other software to an open SQL created by other applications
database
- Reduces multiple data entry
- -----------------------------------------------------------------------------------------------------------------
AIM ITS Insurance application tele-interview Improves interview results and
software with customizable interview accelerates application process
templates; integrated with AIM
QuickView
- Allows carrier-specific application - Improves data entry by following
data entry and processing. forms exactly as written
- Facilitates detailed interviews - Substantially reduces the need
for attending physician statements
- Prompts follow up automatically - Accelerates underwriting process

SALES AND MARKETING

We currently market our technology products and services through our Vice
President of Software Sales and Marketing. Following the offering, we intend to
expand our sales and marketing efforts by hiring sales representatives, account
managers, product managers and marketing managers. We expect that this
additional marketing and sales staff will allow us to expand our current
business to meet our sales objectives.

SERVICE, MAINTENANCE AND CUSTOMER PROJECTS

We provide consulting services and support services performed under
maintenance and support agreements with clients who have custom or standard
products. We provide free maintenance for software defects and charge our
carrier licensees for other services, such as installing AIM GA Software
components at the general agencies. We also can provide our customers with
documentation, training facilities and help desks. In the past, SelectTech has
provided custom software development services to insurance carriers pursuant to
project development contracts. We may offer such services in the future after we
have completed the development and implementation of new technology at
SelectQuote, and if we have additional engineering capacity that is not needed
for continued development, installation, service and support of our AIMSuite
software. We do not expect, however, that revenues from custom software
development and consulting services will generate significant revenue in the
future.

RETAIL INSURANCE SALES

SelectQuote is one of the largest independent marketers of term life
insurance products sold to individuals in the United States. Since 1985, we have
sold more than 250,000 term life insurance policies. SelectQuote's operating
philosophy and strategy from the outset have been to provide the best service
and the lowest cost term life insurance in the shortest possible time from among
America's top life insurance companies. Approximately 80% of the applications
that we have submitted have resulted in the issuance of a policy. We believe
that our conversion rate is higher than that generally applicable to the term
life insurance industry.

SelectQuote has long-standing agency relationships with the 19 insurance
companies it currently represents, each of which has an A.M. Best Company "A"
category rating or better. We have carefully selected these 19 carriers based on
our belief that these companies have consistently offered the best combination
of competitive pricing, product innovation, breadth of products, high-quality
service and reliability. Each of these carriers has appointed us as its general
agent on a national basis. The companies we currently represent include--

- American Mayflower Life Insurance Company of New York (a GE Financial
Assurance company)

- Banner Life Insurance Co. (a Legal & General America company)

- Companion Life (a United of Omaha Life Insurance Company company)

- Continental Assurance Company (a CNA Life company)

- Federal Kemper Life Assurance Company (a CNA Life company)

- Fidelity Life Association, a Mutual Legal Reserve Company (a Zurich Kemper
Life company)

- First Colony Life Insurance Company (a GE Financial Assurance company)

- First Penn-Pacific Life Insurance Company (a Lincoln National Corporation
company)

- Jackson National Life Insurance Company (a Prudential plc company)

- Jackson National of New York

- The Midland Life Insurance Company

- North American Company for Life and Health

- North American Company for Life and Health of New York (a Sammons Group
company)

- Protective Life Insurance Company

- The Travelers Insurance Company

- Travelers Life & Annuity (a member of CitiGroup)

- United of Omaha Life Insurance Company (a Mutual of Omaha company)

- Valley Forge Life Insurance Company (a CNA Life company)

- William Penn Life Insurance Company of New York (a Legal and General
America company)

We sell policies in 48 states and the District of Columbia through licenses
held by our company, an associated corporation or one or more of our employees
in accordance with the requirements of each jurisdiction's insurance department.
We help the consumer comparison shop and then select the appropriate policy. We
have developed or acquired computer software that we employ in generating
comparative quotations for term life insurance. This software also comprises
part of the systems which we have used to gather and transmit applicant data,
track application status and service term life insurance policies for our
consumers. We have installed AIM QuickView internally to facilitate data
transmission and communications during the application process.

We are developing technology designed to allow us to increase our sales
efficiency and lead-to-policy conversion rates, improve our services to
consumers and reduce policy application processing time. We are developing an
agency management system similar to the AIM General Agency management system.
With this system, data from web leads will be entered automatically into the
SelectQuote production database, and applications will be uploaded
electronically to insurance companies or tele-interviewing centers. This new
system will move pending, tracking, commission and other business information
downloaded from insurance carriers or other sites to the SelectQuote production
database and provide application status information directly to the consumer
through the Internet. We intend to implement this new agency management system
in stages during the first nine months of calendar year 2000.

LEAD GENERATION. To operate efficiently, we try to achieve the highest
attainable ratio of commission revenues to advertising and other new business
expenses. Our leads are generated by national radio and television advertising,
the Internet and "word of mouth" referrals. In the year ended June 30, 1999,
SelectQuote generated 170,700 leads, of which 61% came from advertising, 10%
came from the Internet and 29% came from other sources, mainly word of mouth. In
SelectQuote's two most recent quarters, Internet leads increased to 23% and 30%,
respectively, of total leads. Controlling lead costs is a significant factor in
achieving profitability, and controlling lead volumes allows us to match leads
to internal and external processing capacities. In the past, SelectQuote
experienced periods of rapid growth when it could not process all leads
profitably. With the integration of new technology solutions, we expect to
increase our capacity for profitable growth.

LEAD PROCESSING. We receive our leads by telephone or e-mail through our
website. We use an automated call distribution system to route our calls.
Whenever possible, calls or e-mails are routed to one of our insurance agents
who is licensed in the jurisdiction of the caller. That agent will obtain from
the consumer the more detailed information that the insurance carrier will need
in order to determine whether or not to issue a policy. Using our database and
the agent's knowledge of the underwriting criteria of the insurance carriers we
represent, the agent is able to determine the lowest cost policy available from
the carriers we represent to meet the consumer's needs. During this process, the
agent, with the consumer's assistance, completes as much of an application form
as possible. The application is then mailed to the consumer for review,
correction, completion and signature. The completed application is then returned
to us.

If no agent is initially available, calls are routed to an unlicensed
telephone representative, who collects basic data such as name, date of birth,
address and coverage requirements. Overflow calls or calls received outside of
normal business hours are routed to an outside service center, which

collects the same basic data from the consumer. That data is entered into our
computer system. Our software will match the consumer's requirements to the
lowest cost policies offered by the carriers we represent. A computer-generated
report is then mailed to the consumer, and is usually accompanied by an
informational videotape. During this process, we maintain contact with the
consumer through a series of customized letters. Calls received from consumers
who have received a quotation package are connected to a licensed agent.

In response to the dramatic increase in Internet leads, we have established
a group of agents who specialize in responding to these leads. We also have
developed and are continuing to expand our technology to assist these agents.

POLICY ISSUANCE. After review, we send the application to the insurance
carrier, which will gather whatever additional information, such as medical
records and blood tests, is necessary for it to complete its review process. We
assist the insurance carrier in this process by scheduling paramedical
appointments and following up on requests for attending physicians' statements.
We use AIM QuickView to expedite this process. After receipt of all necessary
information, the carrier then determines whether to issue a policy to the
consumer. If the insurance carrier decides not to issue a policy as requested,
the agent will work with the consumer to obtain a different policy from the same
or a different insurance carrier. The agent's goal is again to obtain the lowest
cost and most suitable policy available.

Technology and Development

We believe that we have been able to leverage our understanding of the
insurance market as well as our staff and software development processes to
build robust, open solutions for the insurance industry. The Hub is a
configuration of software, primary and back-up servers, uninterruptible power
supplies, redundant data storage equipment, security firewalls, network products
and standard Internet and VPN connections. Our technology operates in a Windows
environment with most standard client server operating systems, including
Novell, NT, Unix or Linux. The applications software has been written in 32 bit
C++ program language using ODBC to Sybase, Oracle or Microsoft SQL servers.
Users of our technology must obtain licenses from Microsoft for some or all of
the following products: Microsoft Windows NT 4.0, Windows 95 or Windows 98,
Microsoft Exchange, Microsoft Word, Microsoft NT Server, Microsoft SQL Server or
Microsoft Access.

We devote substantial resources to the development of innovative software
products for the insurance market. We invested approximately $390,000 in fiscal
1997, $780,000 in fiscal 1998, $2.6 million in fiscal 1999 and $1.6 million in
the six months ended December 31, 1999 on research and development activities.
This investment included approximately $6,000, $200,000 and $1.1 million in
fiscal 1997, 1998 and 1999, respectively, and $486,000 and $987,000 in the six
months ended December 31, 1998 and 1999, respectively, for customer-sponsored
research and development activities related to the development of new products
or services, or the improvement of existing products or services for the
customer. We intend to continue to devote substantial resources to research and
development for the foreseeable future.

In developing our software products and the Hub, our technology products and
services business has relied extensively on third-party developers, including
operations conducted in Eastern Europe by corporations directly or indirectly
controlled by two of our executive officers and directors, Steve Gerber and
Michael Feroah. Under written software development agreements, all of these
third-party developers, including our related parties, have provided these
services on a project-by-project basis and have been paid for their time and
materials at agreed rates that we consider arm's length. All intellectual
property developed for us by these third-party developers, including our related
parties, and their employees or consultants is assigned to us under these

agreements. The corporations controlled by Messrs. Gerber and Feroah employ and
have employed programmers who are not U.S. citizens or residents, however. See
"Risk Factors--We utilize substantial offshore contract programming and
development services that we do not control." Most of our technical and research
and development engineers who are focused on our core products currently are
based at our San Francisco offices. We rely more on our own staff engineers and
local consultants than on these foreign corporations for our development
outsourcing needs.

Intellectual Property

Our success and ability to compete are substantially dependent upon our
technology and intellectual property. While we rely on copyright, trade secret
and trademark law to protect our technology and intellectual property, we
believe that factors such as the technological and creative skills of our
personnel, new product and service developments, frequent product and service
enhancements and reliable product and service maintenance are more essential to
establishing and maintaining an intellectual property leadership position. We
have no patents or patent applications pending. Others may develop products and
services that are similar or superior to ours.

We generally enter into confidentiality or license agreements with our
employees, consultants and corporate partners and generally control access to
and distribution of our products, documentation and other proprietary
information. Despite our efforts to protect our proprietary rights, unauthorized
parties may attempt to copy or otherwise obtain and use our products, services
or technology. Policing unauthorized use of our proprietary information is
difficult, and the steps we have taken might not prevent misappropriation of our
technology, particularly in foreign countries where the laws may not protect our
proprietary rights as fully as do the laws of the United States.

Substantial litigation regarding intellectual property rights exists in the
technology industry. From time to time, third parties may assert exclusive
patent, copyright, trademark and other intellectual property rights to
technologies and related standards that are important to us. We expect that we
may increasingly be subject to infringement claims as the number of competitors
in our industry segments grows and the functionality of products in different
industry segments overlaps. In addition, we believe that many of our competitors
have filed or intend to file patent applications covering aspects of their
technology that they may claim our intellectual property infringes. Although we
have not been party to any litigation asserting claims that allege infringement
of intellectual property rights, we cannot assure you that we will not be a
party to litigation in the future. Any third party claims, with or without
merit, could be time-consuming to defend, result in costly litigation, divert
management's attention and resources, cause product shipment delays or require
us to enter into royalty or licensing agreements. Such royalty or licensing
agreements, if required, may not be available on terms acceptable to us, if at
all.

Competition

The market for our current and planned products and services is intensely
competitive. We compete with companies providing business-to-business
information processing solutions aimed at the insurance industry, such as
ChannelPoint, Intuit and the CyberTek division of Policy Management
Systems, Inc. We believe that the principal competitive factors include--

- real-time data synchronization;

- completeness of the software solution;

- ease of integration and connectivity with existing and legacy computer
systems;

- data standardization;

- pricing;

- scalability;

- service and support;

- ease of use;

- time to market; and

- acceptance by insurance carriers and their agents and general agencies.

Considering these factors, we believe that we compete favorably with our
competitors. Some of our competitors have substantially greater financial and
marketing resources, and their products have better known brands. In addition to
pressure from our competitors, other barriers to the success and growth of our
business-to-business processing solution for the insurance industry are the
reluctance of carriers, their agents and other information providers to alter
their present ways of doing business, the resistance of technology and
information officers to implementing our complete solution, and the perception
of some carriers and agencies that we are or may become a competitor that they
are unwilling to support. If we are unable to successfully surmount these
barriers and establish the AIMSuite system as the dominant approach to
business-to-business data movement and integration for the insurance industry,
our business, operations and financial condition will be affected adversely and
the market price of our stock is likely to decline substantially.

In SelectQuote's retail business, we compete with traditional insurance
distribution channels, including thousands of insurance agency companies, agents
and brokers, new non-traditional channels, such as commercial banks and savings
and loan associations, and a growing number of direct distributors, including
on-line services such as Quicken InsureMarket, InsWeb Corporation and
Quotesmith.com. Some of our competitors have substantially greater financial and
marketing resources, and their products have better known brands. We believe
that the principal competitive factors in the insurance sales business are
customer service, breadth and geographical penetration of products and service
offerings, efficiency of operations, agent quality and training and the
effectiveness of marketing efforts. We believe that we presently compare
favorably with our competitors in these areas. However, the markets for
insurance sales and information processing are evolving, and we cannot be
certain that we will compete successfully in the future. We anticipate
additional competition in both businesses from other established insurance and
technology enterprises, as well as emerging companies. See "Risk Factors--We
face intense competition in the insurance sales industry."

Regulation

The future regulation of insurance sales via the Internet as a part of the
new and rapidly growing electronic e-commerce business sector is unclear. We
believe that SelectQuote is currently in compliance with all applicable laws and
regulations. We are currently in the process of evaluating whether our
acquisition of SelectQuote requires us to be licensed in any state and, if so,
to obtain such licenses. However, state or federal regulators may interpret
aspects of our business to be in violation of current laws or regulations. Also,
additional state or federal regulations may be adopted, which could have an
adverse impact on us.

The U.S. insurance industry and the marketers of insurance products are
subject to extensive regulation by state and federal governments and by the
District of Columbia. This regulation extends to the operations of insurance
companies, agency companies, agents and brokers and to our service.

We sell policies in 48 states and the District of Columbia through licenses
held by our company, an associated corporation or one or more of our employees
in accordance with the requirements of each jurisdiction's insurance department.
In general, state insurance laws establish supervisory agencies with broad
administrative and supervisory powers to--

- grant and revoke licenses to transact insurance business;

- impose continuing education requirements;

- regulate trade practices;

- require statutory financial statements of insurance companies;

- approve individuals and entities to whom commissions can be paid;

- regulate methods of transacting business and advertising; and

- approve policy forms, and regulate premium rates for some forms of
insurance.

Moreover, existing state insurance laws and regulations require that an
agency company, or an individual within that company, be licensed in the
applicable state in order to quote an insurance premium. State insurance
regulatory authorities regularly make inquiries, hold investigations and
administer market conduct examinations with respect to compliance with
applicable insurance laws and regulations by insurance companies and their
agents. In recent years, a number of insurance agents and the life insurance
companies they represent have been the subject of regulatory proceedings and
litigation relating to alleged improper life insurance pricing and sales
practices. Some of these agents and insurance companies have incurred or paid
substantial amounts in connection with the resolution of these matters. We do
not currently sell the types of life insurance--primarily cash value life
insurance policies such as universal life--which are the usual subjects of these
actions.

In addition, licensing laws applicable to insurance marketing activities and
the receipt of commissions vary by jurisdiction and are subject to
interpretation as to their application to specific activities or transactions.
Our company, an associated corporation, or one or more of our employees is
currently licensed to sell insurance in each of 48 states and the District of
Columbia. We do not permit any of our other, unlicensed employees who have
contact with consumers to provide services which we understand to require an
agent's license. We monitor the regulatory compliance of our sales, marketing
and advertising practices and the related activities of our employees. We also
provide continuing education and training to our staff in an effort to ensure
compliance with applicable insurance laws and regulations. We cannot assure you,
however, that a state insurance department will not make a determination that
one or more of the activities performed by an unlicensed employee constitutes
the transaction of insurance and, thus determine that these activities must be
performed only by licensed personnel, that the company or any of its agents are
liable for fines or penalties, or that we or any of our agents should have our
licenses suspended or revoked. See "Risk Factors--We operate in a heavily
regulated industry."

The federal government currently does not directly regulate the marketing of
most insurance products. However, some products, such as variable life
insurance, must be registered under federal securities laws and the entities
selling these products must be registered with the NASD. We do not currently
sell any federally regulated insurance products. If we elect to sell these
federally regulated products in the future, we would be required to qualify for
and obtain the required licenses and registrations.

Further, we are subject to various federal laws and regulations affecting
matters such as pensions, age and sex discrimination, financial services,
securities and taxation. Recently, the Office of the Comptroller of the Currency
has issued a number of rulings that have expanded the ability of banks to issue
insurance products. The recently enacted Financial Services Modernization Act of
1999 eliminates many restrictions on the affiliation of insurance companies,
banks and securities firms and addresses various consumer protection and privacy
matters. This legislation and other future federal or state legislation, if
enacted, could result in increased regulation of our business.

Employees

As of January 31, 2000, we had 226 full-time employees, including 39
licensed insurance agents. None of our employees is subject to a collective
bargaining agreement, and we believe that our relations with our employees are
good. We believe that our future success will depend in part on our continued
ability to attract, integrate, retain and motivate highly qualified sales,
technical, professional services and managerial personnel, and upon the
continued service of our current personnel. We also use independent contractors
to supplement our work force. None of our personnel is bound by an employment
agreement that prevents the person from terminating his or her relationship with
us at any time for any reason.

Properties

Our executive offices are located in San Francisco, California, in an office
building in which, as of January 31, 2000, we lease an aggregate of
approximately 64,600 square feet. Our lease for approximately 5,300 square feet
expires on April 5, 2000; our lease for approximately 27,600 square feet expires
on November 30, 2002; and our lease for approximately 31,700 square feet expires
on March 31, 2005. In addition, we lease approximately 3,800 square feet of
storage space in a nearby building, under a lease that expires on December 31,
2002.

Legal Proceedings

From time to time, we are subject to legal proceedings and claims in the
ordinary course of business, including claims of alleged infringement of
third-party trademarks and other intellectual property rights by us and our
licensees and claims related to insurance sales and claims. These claims, even
if not meritorious, could result in the expenditure of significant financial and
managerial resources. We are not aware of any legal proceedings or claims that
we believe would materially harm our business or cause our revenues or stock
price to fall.

MANAGEMENT

Directors and Executive Officers

Each of the current executive officers of Zebu named below began active
service on December 23, 1999.

Name Age Position
- ---- -------- --------

Charan J. Singh...................... 51 Chairman of the Board of Directors, Chief Executive
Officer

Steven H. Gerber..................... 53 President, Director

David L. Paulsen..................... 55 Chief Operating Officer--Insurance Products and
Services, Chief Financial Officer, Director

Michael L. Feroah.................... 53 Chief Operating Officer--Software Products and
Services, Chief Technical Officer, Director

Hernan E. Reyes...................... 65 Vice President, Operations--Software Products and
Services

Steven J. Tynan (1), (2)............. 46 Director

Randall J. Wolf (3).................. Director

- ------------------------

(1) Compensation committee member.

(2) Audit committee member.

(3) Director nominee.

CHARAN J. SINGH founded SelectQuote in 1984 and has been Chief Executive
Officer, President and director since its inception. Before founding
SelectQuote, Mr. Singh worked at Charles Schwab & Company. Mr. Singh also served
as the Chairman of the Board of Directors of SelectTech until the recent
acquisition.

STEVEN H. GERBER co-founded SelectTech and served as its President and Chief
Executive Officer and as a director until its acquisition by SelectQuote.
Mr. Gerber has acted as SelectQuote's Chief Information Officer since 1993.
Mr. Gerber is President of Innovative Information Systems, a technology
consulting company and has 25 years of experience in the information systems and
strategic technology consulting industry.

DAVID L. PAULSEN has been SelectQuote's Executive Vice President and Chief
Operating Officer and has served as Chief Financial Officer for both SelectQuote
and SelectTech and a director of SelectTech. Since 1986, he has managed all
phases of SelectQuote's financial, administrative, advertising, human resources,
shareholder relations and other non-sales operations. Mr. Paulsen was employed
from 1973 to 1984 by the accounting firm of Deloitte & Touche in audit and human
resources.

MICHAEL L. FEROAH co-founded SelectTech and has served as its Executive Vice
President, Chief Technology Officer and director until its acquisition by
SelectQuote. From 1992 until his co-founding of SelectTech, Mr. Feroah served as
a software development and technology consultant through his wholly owned
corporation, Zebu International.

HERNAN E. REYES joined SelectTech in 1996 as Vice President of Operations.
From 1994 to 1996, he worked as a consultant and information technology director
at Cirrus Logic. Mr. Reyes has over 38 years of experience in the information
technology business, including more than 20 years at IBM.

STEVEN J. TYNAN was elected a director of Zebu on January 16, 2000.
Mr. Tynan has been a managing member of High Ridge Capital LLC, an investment
advisory firm that manages several private equity funds that invest in insurance
companies and related financial services businesses, since 1999.

RANDALL J. WOLF will become a director of Zebu on completion of the
offering. Mr. Wolf has been a principal of Marsh & McLennan Capital, Inc., an
investment advisory firm that manages private equity funds that invest in
financial services companies and related financial services businesses. From
1993 to 1998, Mr. Wolf served in various positions in the Investment Banking
Division of Goldman, Sachs & Co., most recently as Vice President in the High
Technology Group.

Number, Term, Election and Compensation of Directors

Our bylaws provide that the board of directors will consist of between three
and seven directors, and currently fixes the number of directors at six until
changed by approval of our stockholders or a majority of the directors. Each
director is elected to serve until the next annual meeting of stockholders and
until the election and qualification of his or her successor or his or her
earlier resignation or removal. Our directors do not receive cash compensation
for their services as directors or members of committees of the board of
directors.

Board Committees

We have established an audit committee and a compensation committee
effective as of the closing of this offering. The audit committee will consist
of Messrs. Tynan and Wolf. The functions of the audit committee are to make
recommendations to the board of directors regarding the selection of independent
auditors, review the results and scope of the audit and other services provided
by our independent auditors and evaluate our internal controls. The compensation
committee will consist of Messrs. Tynan, Wolf and a third director to be
appointed to this committee prior to the closing of this offering. The functions
of the compensation committee are to review and approve the compensation and
benefits for our executive officers, administer our stock option and employee
stock purchase plans and make recommendations to the board of directors
regarding these matters.

Compensation Committee Interlocks and Insider Participation

As of the end of our last fiscal year, we did not have a compensation
committee, and all decisions regarding compensation of our executive officers
were made by the board of directors. No executive officer currently serves as a
member of the board of directors or compensation committee of any entity that
has one or more executive officers serving as a member of our board of directors
or our compensation committee, which was established during fiscal year 2000.

Executive Compensation and Management Changes

The following table sets forth information concerning all cash and non-cash
compensation awarded to, earned by or paid to the Chief Executive Officer and
the next most highly compensated executive officer who earned at least $100,000
for services rendered to our predecessor, SelectQuote, during the fiscal year
ended June 30, 1999.

Summary Compensation Table

Annual Compensation
------------------------
Name and Principal Position Salary Bonus
- --------------------------- --------- ---------

Charan J. Singh
Chief Executive Officer................................... $180,000 --

David L. Paulsen
Chief Financial Officer................................... 202,500 --

Compensation of Officers and Management Bonus Plan

In January 1998, we entered into an at-will employment agreement with Hernan
E. Reyes. In February 2000, we entered into at-will employment agreements with
Charan J. Singh, Steven H. Gerber, David L. Paulsen and Michael L. Feroah. These
agreements are automatically renewed for successive one-year periods unless
terminated by either party upon ninety days written notice. The agreements
provide for the minimum salaries and initial bonuses described below and set out
participation in benefit plans available to our executives. Upon termination of
employment without cause or after a change of control, except for a termination
for cause, the executives will receive a severance benefit equal to three years
salary, bonus earned for the position of the portion of the year before
termination, employee benefits for two years and full vesting of all options. No
severance is payable after termination for cause or upon death or disability,
but employee benefits are payable and all options fully vest upon a termination
upon death or disability. The minimum salaries and bonuses for each of these
employees for the fiscal year ending June 30, 2000, the aggregate number of
shares of common stock subject to options held by each of these employees and
the weighted average exercise prices of these options are listed below:

Shares of
Common Weighted Average
Stock Subject to Exercise Price
Base Salary Guaranteed Bonus Options of Options
------------ ----------------- ---------------- ----------------

Mr. Singh..................... $275,000 $100,000 731,080 $3.3865
Mr. Gerber.................... 275,000 100,000 699,060 5.3693
Mr. Paulsen................... 250,000 75,000 1,547,262 3.3610
Mr. Feroah.................... 250,000 75,000 716,807 5.5019
Mr. Reyes..................... 225,000 25,000 800,000 4.0531
--------- -------
Total....................... 4,494,209 $4.1422
========= =======

Limitation of Liability and Indemnification Matters

Our restated certificate of incorporation and bylaws limit the liability of
directors to the maximum extent permitted by Delaware law. Delaware law provides
that directors of a corporation will not be personally liable for monetary
damages for breach of their fiduciary duties as directors, except liability for
any breach of their duty of loyalty to the corporation or its stockholders, acts
or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, unlawful payments of dividends or unlawful stock
repurchases or redemptions, or any transaction from which the director derived
an improper personal benefit. This limitation of liability does not apply to
liabilities arising under the federal securities laws and does not affect the
availability of equitable remedies such as injunctive relief or rescission.

Our bylaws provide that we will indemnify our directors and officers and may
indemnify our employees and other agents to the fullest extent permitted by law.
The bylaws also permit us to secure insurance on behalf of any officer,
director, employee or other agent for any liability arising

out of his or her actions in that capacity, regardless of whether the bylaws
would permit indemnification. We have obtained officer and director liability
insurance with respect to liabilities arising out of specific matters, including
matters arising under the Securities Act.

We have entered into agreements with our directors and executive officers
that, among other things, will indemnify them for specific expenses, including
attorneys' fees, judgments, fines and approved settlement amounts incurred by
them in any action or proceeding, including any action by us or on our behalf,
arising out of the person's services as a director or officer of us or any of
our subsidiaries or any other company or enterprise to which the person provides
services at our request. We are obligated to advance expenses incurred by the
indemnified person prior to the conclusion of any such action or proceeding, in
the absence of a determination, as provided in the agreement, that
indemnification would not be permitted under applicable law. We believe that
these provisions and agreements are necessary, to attract and retain qualified
directors and officers. These agreements also provide officers with the same
limitation of liability for monetary damages that Delaware corporate law and our
restated certificate of incorporation provide to directors.

Benefit Plans

1999 STOCK OPTION PLAN

Our 1999 Stock Option Plan, or the 1999 Plan, which was approved by our
board of directors and stockholder in August 1999, provides for the issuance of
incentive stock options under the Internal Revenue Code of 1986 and nonstatutory
stock options to purchase common stock to employees, non-employee directors or
consultants. A total of 10,000,000 shares of common stock has been authorized
for issuance under the 1999 Plan. The fair market value of the common stock for
purposes of option grants is the closing price of the common stock on the
national securities exchange or market on which it is traded or quoted, or if it
is not traded or quoted on a national securities exchange or market, is
determined by the board of directors. In connection with the transactions in
which SelectTech was acquired by SelectQuote and SelectQuote became Zebu's
wholly owned subsidiary, we assumed all options outstanding under the SelectTech
1997 Stock Option Plan and the SelectQuote 1999 Stock Option Plan. The exercise
price of each assumed option and the number of shares subject to the Option Plan
were adjusted in accordance with the terms of the amended and restated agreement
and plan of reorganization. However, the vesting schedules of all assumed
options remained unchanged. Options currently outstanding generally vest
one-third at the end of the first year and then monthly on a pro rata basis over
the next two years. At January 31, 2000, 6,510,635 shares of common stock were
subject to outstanding options, and 3,489,365 shares of common stock were
available for future option grants, under the 1999 Plan.

1999 EMPLOYEE STOCK PURCHASE PLAN

Our 1999 Employee Stock Purchase Plan, or ESPP, was adopted by our board of
directors and our stockholder in August 1999 and will take effect upon the
closing of this offering. We have reserved 1,000,000 shares of common stock for
issuance under the ESPP. The ESPP is intended to qualify for favorable tax
treatment under Section 423 of the Internal Revenue Code. Generally, the ESPP
will be implemented through a series of offering periods of six months'
duration, with new offering periods commencing on the first trading day after
January 1 and July 1 of each year. However, the first offering period will
commence on the first trading day after the closing of the offering and will
expire on December 31, 2000. Generally, shares may be purchased at the end of
each offering period.

The ESPP will be administered by the compensation committee of our board of
directors. Each of our employees and each employee of any majority-owned
subsidiary of ours who has been employed continuously by us or a majority-owned
subsidiary for at least 5 days prior to commencement of the offering period and
who is customarily employed for more than 20 hours per week and more than five
months per year will be eligible to participate in the ESPP. The ESPP

permits an eligible employee to purchase common stock through payroll
deductions, which may not exceed 10% of his or her compensation, at a price
equal to 85% of the lesser of the fair market value of the common stock on the
first business day of the offering period and the fair market value of the
common stock on the last business day of the purchase period. Employees may
terminate their participation in the ESPP at any time during the offering
period, but they may not change their level of participation in the ESPP at any
time during the offering period. Participation in the ESPP terminates
automatically on the participant's termination of employment with us.

RELATED PARTY TRANSACTIONS

Shared Operations and Ownership

Prior to the acquisition of SelectTech by SelectQuote on December 23, 1999,
SelectQuote shared with SelectTech significant common management interests.
Charan J. Singh, SelectQuote's president and a director, also was chairman of
the board of directors of SelectTech. David L. Paulsen, SelectQuote's executive
vice president, was a director of SelectTech and served as its Chief Financial
Officer and Secretary. Immediately prior to SelectQuote's acquisition of
SelectTech, the directors and executive officers of SelectQuote collectively
owned 18% of SelectTech's outstanding equity securities, taking into account all
rights to acquire capital stock. Furthermore, SelectQuote shareholders held
approximately 64% of the issued and outstanding capital stock of SelectTech
prior to the acquisition. In addition, SelectQuote directly held 150,000 shares
of SelectTech Series A preferred stock, 67 shares of SelectTech common stock and
a promissory note convertible into approximately 120,000 shares of SelectTech
common stock.

In connection with the acquisition of SelectTech by SelectQuote, and the
related merger of SelectQuote with Zebu's wholly owned subsidiary, we issued
5,516,125 shares of our common stock in exchange for all of the outstanding
shares of capital stock of SelectTech, options under our 1999 Stock Option Plan
to purchase 3,388,822 shares of our common stock in substitution for outstanding
options to purchase SelectTech common stock, and $2.5 million principal of 12%
senior secured convertible debentures in exchange for like debentures issued by
SelectTech. We also issued 5,031,805 shares of our common stock and 2,028,850
shares of our convertible preferred stock in exchange for outstanding shares of
common stock and preferred stock of SelectQuote, and issued options under our
1999 Stock Option Plan to purchase 3,121,813 shares of our common stock in
substitution for outstanding options to purchase common stock of SelectQuote.

From SelectTech's formation in September 1995 until December 23, 1999,
SelectQuote provided SelectTech with operating support, including management and
administrative services (such as the services of Messrs. Singh and Paulsen),
telephone and office facilities and other miscellaneous items. SelectQuote
leased $38,000 of computer equipment to SelectTech under a 36-month capital
lease that expired in March 1999 at an implicit interest rate of 9.0%.
SelectQuote also charged SelectTech for services on a cost reimbursement basis.
Total fees for the services provided by SelectQuote were $338,393 in fiscal
1997, $527,009 in fiscal 1998, $708,132 in fiscal 1999, and $903,526 for the six
months ended December 31, 1999. These fees included sublease rental income of
$24,214 in fiscal 1997, $85,302 in fiscal 1998, $134,892 in fiscal 1999, and
$171,348 in the six months ended December 31, 1999. SelectQuote also provided a
substantial portion of SelectTech's working capital through equity investments,
loans and guaranties. See "Management's Discussion and Analysis of Financial
Condition--Liquidity and Capital Resources." All outstanding amounts due to
SelectQuote by SelectTech were forgiven and all equity interests of SelectTech
owned by SelectQuote were canceled in the merger in which SelectQuote acquired
SelectTech.

Research and Development Arrangements

Steven H. Gerber and Michael L. Feroah, two of our executive officers and
directors and former directors and executive officers of SelectTech, are the
sole shareholders of IIG. Effective as of June 1997, SelectTech entered into a
contracting relationship with IIG pursuant to which IIG performed substantially
all of the research and development and consulting work on behalf of SelectTech
until December 23, 1999. IIG utilizes a network of other companies as
subcontractors for the work. Messrs. Gerber and Feroah have an equity interest
in several of these subcontracting companies as well. Under these contracts, IIG
billed SelectTech $285,100, $544,700 and $1,010,300

for fiscal years 1997, 1998 and 1999, respectively. We have assumed SelectTech's
contracts with IIG and outstanding payables of $779,044 at December 31, 1999 on
the acquisition of SelectTech. See "Business--Technology and Development."

Under written agreements with IIG, the various subcontracting companies and
their employees and consultants who performed work for SelectTech assigned all
of the work product and associated intellectual property to SelectTech. We
acquired these rights in the acquisition. However, we cannot assure you that we
will be able to enforce these assignments and our rights to the intellectual
property. In addition, some of the subcontracting companies, employees and
consultants are not U.S. residents and performed the work abroad. Enforcing our
rights against non-U.S. persons could be expensive and difficult. For more
information, please refer to "Risk Factors--We utilize substantial offshore
contract software programming and development services that we do not control."

Employment and Consulting Agreements

During fiscal years 1997, 1998 and 1999, IIG provided software programming
and technical services to SelectQuote to develop new software and modify
existing systems and databases. The amounts paid to IIG were $265,000, $327,000
and $116,000 in fiscal 1997, 1998 and 1999, respectively. During the same three
fiscal years, Mr. Gerber provided consulting services to SelectQuote as its
chief information officer through his personal consulting company and was paid
$130,000 in each of those years.

Equity Investments

On December 27, 1999, we sold 50,000 shares of Series D mandatorily
redeemable convertible preferred stock to High Ridge Capital Partners II, L.P.
for $5.0 million. In connection with this private placement, Steven J. Tynan, a
member of High Ridge, became a member of our board of directors.

In February 2000, we agreed to sell 2,041,845 shares of Series E mandatorily
redeemable convertible preferred stock to a group of accredited investors,
including High Ridge Capital Partners II, L.P. and several entities controlled
by Marsh & McLennan GP I, Inc. and Marsh & McLennan GP II, Inc., for an
aggregate purchase price of approximately $10.5 million. In connection with this
private placement, Randall J. Wolf, a member of Marsh & McLennan Capital, Inc.,
has agreed to become a member of our board of directors following the completion
of this offering.

We believe that the foregoing transactions were in our best interests. These
transactions were negotiated on an arm's length basis and entered into on terms
no less favorable to us than could have been obtained from unaffiliated third
parties and in connection with our bona fide business purposes. As a matter of
policy, all future transactions with related parties will be approved by a
majority of the independent and disinterested members of our Board of Directors.

PRINCIPAL STOCKHOLDERS

The following table sets forth information regarding the beneficial
ownership of our common stock as of January 31, 2000, by: (1) each person known
to beneficially own more than 5% of our common stock; (2) each of our directors;
(3) each executive officer named in the summary compensation table; and (4) all
executive officers and directors as a group. All persons listed have sole voting
and investment power with respect to their shares unless otherwise indicated.
Unless indicated otherwise, the address of each person listed in the table is
c/o Zebu, 595 Market Street, 6th floor, San Francisco, California 94105.

Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to the securities. Shares of common stock issuable pursuant
to options, to the extent those options are currently exercisable or convertible
within 60 days of January 31, 2000, are treated as outstanding for computing the
percentage of the person holding those securities, but are not treated as
outstanding for computing the percentage of any other person. Unless otherwise
noted, each person or group identified possesses sole voting and investment
power with respect to shares, subject to applicable community property laws.
This table does not give effect to the pending sale of 2,032,136 shares of our
Series E preferred stock to High Ridge Capital Partners II, L.P. and several
entities controlled by Marsh & McLennan GP I, Inc. and Marsh & McLennan GP
II, Inc., which will close in March 2000.

Common Stock
-----------------------------------------------------
Percent Ownership
Number of Shares --------------------------------
Name Beneficially Owned Before Offering After Offering
- ---- ------------------ --------------- --------------

Five-Percent Stockholders
Edward and Rose Gamrin(1)............................ 1,817,271 13.3% %
High Ridge Capital Partners II, L.P.................. 1,111,111 8.2
20 Liberty Street
Chester, Connecticut 06412
Burton Petersen...................................... 704,256 5.2
340 Sundance Circle
Palm Desert, California 92211
Directors and Executive Officers
Charan J. Singh(2)................................... 2,149,997 15.6
Steven H. Gerber(3).................................. 1,302,867 9.5
Michael L. Feroah(4)................................. 1,291,699 9.5
Steven J. Tynan(5)................................... 1,111,111 8.2
c/o High Ridge Capital Partners II, L.P.
20 Liberty Street
Chester, Connecticut 06412
David L. Paulsen(6).................................. 931,352 6.6
All directors and executive officers as a group
(seven persons)(7)................................. 7,014,669 47.8

- --------------------------

(1) Includes 4,000 shares held by the 1999 Irrevocable Trust for the Benefit of
Thomas Elias Gamrin, for which Edward and Rose Gamrin disclaim beneficial
ownership.

(2) Includes 97,826 shares held by Sylvia Hajek Singh and options to purchase
281,076 shares of our common stock which are exercisable within 60 days of
January 31, 2000.

(3) Includes 3,207 shares held by Brian Scott Gerber and 9,621 shares held by
Gerber minor children, for which Steven H. Gerber disclaims beneficial
ownership. Includes 8,505 shares of common stock held by Innovative
Information Group, Inc., of which Mr. Gerber is a director and shareholder.
Mr. Gerber disclaims beneficial ownership of the shares of common stock held
by IIG, except to the extent of his pecuniary interest therein. Also
includes options to purchase 20,452 shares of our common stock which are
exercisable within 60 days of January 31, 2000.

(4) Includes 8,505 shares of common stock held by Innovative Information
Group, Inc. of which Mr. Feroah is a director and shareholder. Mr. Feroah
disclaims beneficial ownership of the shares of common stock held by IIG
except to the extent of his pecuniary interest therein.

(5) All shares are owned by High Ridge Capital Partners II, L.P. Mr. Tynan is
president of the corporation that controls the general partner of High Ridge
Capital Partners II, L.P., and could be deemed to be the beneficial owner of
all of its shares. Mr. Tynan disclaims beneficial ownership of the shares of
common stock that it holds except to the extent of his pecuniary interest
therein.

(6) Includes options to purchase 478,615 shares of our common stock which are
exercisable within 60 days of January 31, 2000.

(7) Includes options to purchase 1,016,290 shares of our common stock which are
exercisable within 60 days of January 31, 2000.

DESCRIPTION OF CAPITAL STOCK

The following description of our capital stock and provisions of our
restated certificate of incorporation and bylaws is a summary only and is not a
complete description. The descriptions of the common stock and preferred stock
reflect changes to our capital structure that will occur on or immediately prior
to the closing of the offering under the terms of our restated certificate of
incorporation, including the automatic conversion of all outstanding preferred
stock into common stock, assuming the conversion of all convertible debentures
into common stock, and including the deletion of references to Series A,
Series B, Series C, Series D and Series E preferred stock from our certificate
of incorporation.

Upon completion of the offering, our authorized capital stock will consist
of 100,000,000 shares of common stock, par value $0.01 per share, and 10,000,000
shares of preferred stock, par value $0.01 per share.

Common Stock

As of January 31, 2000, 10,497,974 shares of our common stock were
outstanding and held of record by 136 stockholders. Each holder of our common
stock is entitled to--

- one vote per share;

- dividends as may be declared by our board of directors out of funds
legally available for that purpose, subject to the rights of any preferred
stock that may be outstanding; and

- his, her or its pro rata share in any distribution of our assets after
payment or providing for the payment of liabilities and the liquidation
preference of any outstanding preferred stock in the event of liquidation.

Holders of common stock have no cumulative voting rights, preemptive rights
or redemption rights to purchase or subscribe for any shares of our common stock
or other securities. All the outstanding shares of common stock are fully paid
and nonassessable. As of January 31, 2000, options to purchase 6,510,635 shares
of common stock were outstanding, at a weighted average exercise price of $3.92
per share.

Preferred Stock

Our board of directors has the authority, subject to any limitations
prescribed by Delaware law, to issue shares of preferred stock in one or more
series and to fix and determine the relative rights and preferences of the
shares constituting any series to be established without any further vote or
action by the stockholders. Any shares of preferred stock so issued may have
priority over the common stock with respect to dividend, liquidation and other
rights. On the closing of the offering, no shares of preferred stock will be
outstanding. We have no current intention to issue any shares of preferred
stock.

The board of directors may authorize the issuance of preferred stock with
voting or conversion rights that could adversely affect the voting power or
other rights of the holders of common stock. Although the issuance of preferred
stock could provide flexibility in connection with possible acquisitions and
other corporate purposes, it could also, under some circumstances, have the
effect of delaying, deferring or preventing a change of control.

Antitakeover Effects of Provisions of our Restated Certificate of Incorporation
and Bylaws

Special meetings of the stockholders may be called only by a majority of the
entire board of directors, the Chairman of the board of directors, the Chief
Executive Officer or any individual holder of at least 25% of our outstanding
common stock. The bylaws provide that stockholders seeking to

bring business before, or to nominate directors at, an annual meeting of
stockholders must provide timely notice in writing. To be timely, a
stockholder's notice must be received by our Secretary not less than 120
calendar days nor more than 150 calendar days before the date of our proxy
statement sent to stockholders for the prior year's annual meeting. The bylaws
also contain specific requirements for the form of a stockholder's notice. These
provisions may preclude or deter some stockholders from bringing matters before
the annual meeting or from making nominations of directors, and may have the
effect of delaying, deferring or preventing a change in control of our company.

Waiver of Delaware Antitakeover Statute

Section 203 of the DGCL generally prohibits a publicly held Delaware
corporation from engaging in an acquisition, asset sale or other transaction
resulting in a financial benefit to any person who, together with affiliates and
association, owns, or within three years, did own, 15% or more of a
corporation's voting stock. The prohibition continues for a period of three
years after the date of the transaction in which the person became an owner of
15% or more of the corporation's voting stock unless the business combination is
approved in a prescribed manner. The statute could prohibit or delay, defer or
prevent a change in control of our company. We have waived the provisions of
Section 203 in our certificate of incorporation.

Registration Rights

The registration rights agreement we have entered into with several of our
security holders, including High Ridge Capital Partners II, L.P. and, upon the
closing of the sale of Series E preferred stock, entities controlled by Marsh &
McLennan GP I, Inc. and Marsh & McLennan GP II, Inc., provides the security
holders with conditional rights to cause us to register the security holders'
shares of our common stock under the Securities Act. Under the terms of this
agreement, the security holders acting as a group, or High Ridge or the Marsh &
McLennan parties acting alone, may require us to use our diligent best efforts
to file a registration statement under the Securities Act, at our expense, with
respect to shares of common stock held by such security holders, High Ridge or
the Marsh & McLennan parties, as applicable. We are not required to effect more
than two demand registrations requested by the security holders or one demand
registration requested by High Ridge or the Marsh & McLennan parties. Also, if
we propose to register any of our securities under the Securities Act in a
secondary registration, the security holders, including High Ridge and the
Marsh & McLennan parties, may require us to include their shares of our common
stock in the registration, subject to any limitation set by the underwriters on
the number of shares included in the registration. The agreement also provides
that, following this offering, the security holders may require us to use our
best efforts to file registration statements on Form S-3, at their expense,
provided that the aggregate price to the public for each registration is not
less than $500,000. Such stockholders may assign their registration rights to
any person to whom it transfers at least 32,000 shares of our common stock. The
foregoing registration rights will terminate as to a specific stockholder if,
after the offering, the stockholder will own less than 2% of the shares of our
capital stock, on a fully diluted basis, and can sell all of its shares under
Rule 144 of the Securities Act of 1933, as amended, within a period 90 days. It
appears that few, if any, of the stockholders party to the agreement will retain
registration rights after the offering.

Pursuant to lockup agreements delivered to us by each of the security
holders, these security holders may make no demand for registration of the
shares subject to the registration rights agreement for 180 days following the
closing of this offering.

SHARES ELIGIBLE FOR FUTURE SALE

If our stockholders sell substantial amounts of our stock in the public
market following the offering, then the market price of our stock could fall.
After the offering, shares of our common stock will be outstanding,
assuming no exercise of the underwriters' over-allotment option and no exercise
of outstanding options or warrants. Of those shares, the shares
sold in the offering will be freely tradable, except for any shares purchased by
our "affiliates," as defined in Rule 144 under the Securities Act. The remaining
shares are "restricted securities," as that term is defined in Rule 144, and may
be sold in the public market only if registered or if they qualify for an
exemption from registration under Rule 144 or Rule 701, which rules are
summarized below. All of our officers and directors and almost all of our
stockholders owning more than 1% of outstanding securities prior to the offering
have signed lockup agreements pursuant to which they have agreed not to sell any
shares of common stock, or any securities convertible into or exercisable or
exchangeable for common stock, for 180 days after the offering without the prior
written consent of Deutsche Banc Securities Inc. Deutsche Banc Securities Inc.
may, in its sole discretion, release all or any portion of the shares subject to
the lockup agreements.

The following table depicts securities eligible for future sale:

Total shares outstanding....................................
Total restricted securities.................................
Shares that are freely tradable after the date of this
prospectus under Rule 144(k), subject to the 180-day
lockup agreement..........................................
Shares that are freely tradable 90 days after the date of
this prospectus under Rule 144 or Rule 701, subject to the
180-day lockup agreement..................................
Shares that are freely tradable 180 days after the date of
this prospectus under Rule 144 (subject, in some cases, to
volume limitations), under Rule 144(k) or pursuant to a
registration statement to register for resale shares of
common stock issued on exercise of stock options..........

Following the offering, we intend to file a registration statement under the
Securities Act covering shares of common stock reserved for
issuance under our 1999 stock option plan and our employee stock purchase plan.
Upon expiration of the lockup agreements, at least shares of common
stock will be subject to vested options, based on options outstanding as of
January 31, 2000. The registration statement is expected to be filed and become
effective prior to expiration of the lockup agreements; accordingly, shares
registered under the registration statement will, subject to Rule 144 volume
limitations applicable to affiliates, be available for sale in the open market
immediately after the lockup agreements expire.

In general, Rule 144 provides that any person who has beneficially owned
shares for at least one year, including an affiliate, is generally entitled to
sell, within any three-month period, a number of shares that does not exceed the
greater of 1% of the shares of common stock then outstanding, which will be
approximately shares immediately after the offering, or the
reported average weekly trading volume of the common stock during the four
calendar weeks immediately preceding the date on which notice of the sale is
sent to the Commission. Sales under Rule 144 are subject to manner of sale
restrictions, notice requirements and availability of current public information
concerning us. A person who is not our affiliate and who has not been our
affiliate within three months prior to the sale generally may sell shares
without regard to the limitations of Rule 144, provided that the person has held
the shares for at least one year. Under Rule 144(k), a person who is not deemed
to have been our affiliate at any time during the 90 days preceding a

sale and who has beneficially owned the shares proposed to be sold for at least
two years, is entitled to sell the shares without complying with the manner of
sale, public information, volume limitation or notice provisions of Rule 144.

Any of our employees, directors, officers or consultants holding shares
purchased pursuant to a written compensatory plan or contract, including
options, entered into prior to the offering is entitled to rely on the resale
provisions of Rule 701, which permit nonaffiliates to sell shares without having
to comply with the public information, holding period, volume limitation or
notice requirements of Rule 144 and permit affiliates to sell their Rule 701
shares without having to comply with the holding period restrictions of
Rule 144, in each case beginning 90 days after the date of this prospectus.

REGISTRATION RIGHTS

After this offering, the holders of shares of our common stock,
or their transferees, will be entitled to certain rights with respect to the
registration of those shares under the Securities Act. See "Description of
Capital Stock--Registration Rights." After any registration of these shares,
these shares will become freely tradable without restriction under the
Securities Act. These sales could have a material adverse effect on the trading
price of our common stock.

UNDERWRITING

Under the underwriting agreement dated the date of this prospectus, the
underwriters named below, through their representatives Deutsche Bank
Securities Inc., U.S. Bancorp Piper Jaffray Inc. and Cochran, Caronia Securities
LLC have severally agreed to purchase from us the following respective numbers
of shares of common stock at the public offering price less the underwriting
discounts and commissions set forth on the cover page of this prospectus.

Number
Underwriter of Shares
- ----------- ---------------

Deutsche Bank Securities Inc...............................
U.S. Bancorp Piper Jaffray Inc.............................
Cochran, Caronia Securities LLC............................
-------
Total..................................................
=======

The underwriting agreement provides that the obligations of the several
underwriters to purchase the shares of common stock offered hereby are subject
to the terms and conditions set forth in the underwriting agreement. The
underwriters are obligated to purchase all of the shares of common stock offered
hereby, other than those covered by the over-allotment option described below,
if any of these shares are purchased.

We have been advised that the underwriters propose to offer the shares of
common stock to the public at the initial public offering price set forth on the
cover page of this prospectus and to dealers at a price that represents a
concession not in excess of $ per share under the public offering price. The
underwriters may allow, and these dealers may re-allow, a concession not in
excess of $ per share to other dealers. After the initial public offering, the
offering price and other selling terms may be changed by the representatives of
the underwriters.

We have granted to the underwriters an option, exercisable not later than
30 days after the date of this prospectus, to purchase up to additional
shares of common stock at the public offering price less the underwriting
discounts and commissions set forth on the cover page of this prospectus. The
underwriters may exercise this option only to cover over-allotments made in
connection with the sale of the common stock that we are offering in this
prospectus. To the extent that the underwriters exercise the option, each of the
underwriters will become obligated, subject to conditions, to purchase
approximately the same percentage of additional shares of common stock as the
number of shares of common stock to be purchased by it in the above table bears
to.

We will be obligated, under the option, to sell these shares to the
underwriters to the extent the option is exercised. If any additional shares of
common stock are purchased, the underwriters will offer additional shares on the
same terms as those on which the shares are being offered.

We have agreed to indemnify the underwriters with respect to certain
liabilities, including liabilities under the Securities Act.

Each of our officers and directors and certain of our stockholders has
agreed not to offer, sell, contract to sell or otherwise dispose of, or enter
into any transaction that is designed to, or could be expected to, result in the
disposition of any portion of, any common stock for a period of 180 days after
the date of this prospectus without the prior written consent of Deutsche Bank
Securities Inc. This consent may be given at any time without public notice. We
have entered into a similar agreement. When determining whether to consent to
any release of shares from these lockup agreements, Deutsche Bank
Securities Inc. will consider the reason for requesting the release, the number
of shares for which the release is being requested and the market conditions
prevailing at the time.

The representatives of the underwriters have advised us that the
underwriters do not intend to confirm sales to any account over which they
exercise discretionary authority.

In order to facilitate the offering of the common stock, the underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
market price of the common stock. Specifically, the underwriters may over-allot
shares of the common stock in connection with this offering, thus creating a
short position in the common stock for their own account. Additionally, to cover
these over-allotments or to stabilize the market price of the common stock, the
underwriters may bid for, and purchase, shares of the common stock in the open
market. Finally, the representatives, on behalf of the underwriters, also may
reclaim selling concessions allowed to an underwriter or dealer if the
underwriting syndicate repurchases shares distributed by that underwriter or
dealer. Any of these activities may maintain the market price of the common
stock at a level above that which might otherwise prevail in the open market.
The underwriters are not required to engage in these activities and, if
commenced, may end any of these activities at any time.

Cochran, Caronia Securities LLC, one of the representatives of the
underwriters, was organized and registered as a broker-dealer in July 1998.
Since July 1998, Cochran Caronia has acted as a syndicate member in several
public offerings of equity securities; however, it has not acted as a lead or
co-manager prior to this offering. Cochran Caronia does not have any material
relationship with us or any of our officers, directors or other controlling
persons, except with respect to (1) investment banking services it rendered to
SelectTech in connection with the acquisition and a subsequent sale of our
preferred stock, (2) investment banking services rendered to us in connection
with the sale of Series D preferred stock to High Ridge Capital Partners II,
L.P. and Series E preferred stock sold to High Ridge Capital Partners II, L.P.
and certain limited partnerships of which Marsh & McLennan GP I, Inc. and
Marsh & McLennan GP II, Inc. are general partner, and (3) its contractual
relationship with us under the underwriting agreement entered into in connection
with this offering.

At our request, the underwriters have reserved for sale, at the initial
public offering price, up to shares for our employees, family members of
employees and other third parties. The number of shares of common stock
available for sale to the general public will be reduced to the extent these
reserved shares are purchased. Any reserved shares that are not purchased will
be offered by the underwriters to the general public on the same basis as the
other shares offered by this prospectus.

We estimate that the total expenses of the offering, excluding underwriting
discounts and commissions, will be approximately $ .

Pricing of this Offering

Prior to this offering, there has been no public market for our common
stock. Consequently, the initial public offering price for our common stock will
be determined by negotiation among us and the representatives of the
underwriters. Among the factors to be considered in determining the public
offering price will be:

- prevailing market conditions;

- our results of operations in recent periods;

- the present stage of our development;

- the market capitalizations and stages of development of other companies
that we and the representatives of the underwriters believe to be
comparable to us; and

- estimates of our business potential.

The estimated initial public offering price range set forth on the cover of
this preliminary prospectus is subject to change as a result of market
conditions and other factors.

LEGAL MATTERS

The validity of the common stock being offered hereby will be passed upon
for Zebu by McCutchen, Doyle, Brown & Enersen, LLP, Palo Alto, California.
McCutchen, Doyle, Brown & Enersen, LLP has irrevocably committed to purchase
9,708 shares of our Series E preferred stock in March 2000. Pillsbury Madison &
Sutro LLP, San Francisco, California, is acting as counsel for the underwriters
in connection with certain legal matters relating to the shares of common stock
offered by this prospectus. Chapin Shea McNitt & Carter advises us with respect
to insurance licensing and regulatory matters and has reviewed such statements
in this prospectus.

EXPERTS

The consolidated financial statements of Zebu included in this prospectus
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report appearing herein, and are included in reliance upon the report of
such firm given upon their authority as experts in accounting and auditing.

The financial statements of SelectTech included in this prospectus have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report appearing herein, and are included in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form S-1 with respect
to the common stock in this offering. This prospectus, which constitutes a part
of the registration statement, does not contain all the information set forth in
the registration statement. For further information about us and the shares of
common stock to be sold in the offering, please refer to the registration
statement and the exhibits and schedules thereto.

The registration statement and exhibits may be inspected, without charge,
and copies may be obtained at prescribed rates, at the SEC's Public Reference
Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The registration statement and other information filed with the
SEC is also available at the web site maintained by the SEC at
http://www.sec.gov.

INDEX TO FINANCIAL STATEMENTS

Zebu Consolidated Financial Statements (formerly SelectQuote
Insurance Services)

Independent Auditors' Report................................ F-2

Consolidated Balance Sheets................................. F-3

Consolidated Statements of Operations....................... F-4

Consolidated Statements of Stockholders' Equity............. F-5

Consolidated Statements of Cash Flows....................... F-6

Notes to Consolidated Financial Statements.................. F-7

SelectTech Financial Statements

Independent Auditors' Report................................ F-25

Balance Sheets.............................................. F-26

Statements of Operations.................................... F-27

Statements of Shareholders' Equity (Deficit)................ F-28

Statements of Cash Flows.................................... F-29

Notes to Financial Statements............................... F-30

F-1

INDEPENDENT AUDITORS' REPORT

To the Stockholders and Board of Directors
of Zebu:

We have audited the accompanying consolidated balance sheets of Zebu and its
subsidiary, SelectQuote Insurance Services, as of June 30, 1998 and 1999, and
the related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended June 30, 1999. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Zebu and its subsidiary as of
June 30, 1998 and 1999, and the results of their operations and their cash flows
for each of the three years in the period ended June 30, 1999 in conformity with
generally accepted accounting principles.

/s/ DELOITTE & TOUCHE LLP

San Francisco, California
February 29, 2000

F-2

ZEBU
CONSOLIDATED BALANCE SHEETS

Pro Forma
Stockholders'
June 30, Equity as of
-------------------------- December 31, December 31,
1998 1999 1999 1999
----------- ------------ ------------- -------------
(Unaudited)

ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $1,266,929 $ 789,920 $ 2,845,477
Investments available for sale at fair value.............. 300,000 900,000 --
Commissions and accounts receivable--net of allowance of
$481,585, $542,412 and $635,214, respectively............ 4,231,821 5,325,855 6,016,001
Notes receivable from SelectTech.......................... 200,000 450,000 --
Other receivables from SelectTech......................... 370,174 808,109 --
Other current assets...................................... 314,050 555,181 1,486,443
---------- ----------- -----------
Total current assets.................................... 6,682,974 8,829,065 10,347,921
---------- ----------- -----------
LONG-TERM ASSETS:
Property and equipment, net............................... 1,321,760 1,128,872 1,772,995
Investment in SelectTech.................................. 250,000 250,000 --
Goodwill and other intangible assets...................... -- -- 63,009,377
---------- ----------- -----------
Total long-term assets.................................. 1,571,760 1,378,872 64,782,372
---------- ----------- -----------
TOTAL ASSETS................................................ $8,254,734 $10,207,937 $75,130,293
========== =========== ===========
LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses..................... $1,344,022 $ 912,470 $ 1,793,527
Accrued compensation and benefits......................... 388,070 506,650 690,391
Deferred tax liability.................................... 953,747 1,301,804 497,097
Current portion of deferred rent.......................... 40,050 -- --
Current portion of capital lease obligations.............. 97,526 127,080 125,542
Payables to related party................................. -- -- 779,044
Current portion of deferred liability..................... -- -- 287,189
Senior secured convertible debentures..................... -- -- 1,900,000
---------- ----------- -----------
Total current liabilities............................... 2,823,415 2,848,004 6,072,790
---------- ----------- -----------
LONG-TERM LIABILITIES:
Deferred compensation..................................... 82,195 64,195 40,195
Deferred rent, less current............................... -- 8,404 17,988
Capital lease obligations, less current................... 157,146 145,826 90,589
Deferred liability, less current.......................... -- -- 695,868
---------- ----------- -----------
Total long-term liabilities............................. 239,341 218,425 844,640
---------- ----------- -----------
Total liabilities....................................... 3,062,756 3,066,429 6,917,430
---------- ----------- -----------
MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK, Series
D, $0.01 par value, 50,000 shares authorized, issued and
outstanding (aggregate liquidation preference $5,000,000)
(None pro forma).......................................... -- -- 4,743,776 --
---------- ----------- ----------- -----------
COMMITMENTS AND CONTINGENCIES (Note 10)
STOCKHOLDERS' EQUITY:
Convertible Series A preferred stock, $.01 par value,
2,500,000 shares authorized, 1,137,235 shares issued and
outstanding at June 30, 1998 and 1999 and December 31,
1999 (aggregate liquidation preference $170,585) (None
pro forma)............................................... 11,372 11,372 11,372 --
Convertible Series B preferred stock, $.01 par value,
1,250,000 shares authorized, 821,690 shares issued and
outstanding at June 30, 1998 and 1999 and December 31,
1999 (aggregate liquidation preference $501,231) (None
pro forma)............................................... 8,217 8,217 8,217 --
Convertible Series C preferred stock, $.01 par value,
750,000 shares authorized, 69,925 shares issued and
outstanding at June 30, 1998 and 1999 and December 31,
1999 (aggregate liquidation preference $85,309) (None pro
forma)................................................... 699 699 699 --
Preferred stock, $.01 par value, 5,450,000 shares
authorized, no shares issued and outstanding............. -- -- -- --
Common stock, $.01 par value: 50,000,000 shares
authorized; issued and outstanding: 4,981,849 (June 30,
1998 and 1999), 10,497,974 (December 31,
1999--unaudited), 13,637,935 (pro forma)................. 49,818 49,818 104,980 136,379
Additional capital........................................ 1,766,585 1,766,585 64,649,491 69,382,156
Deferred stock compensation............................... -- -- (861,772) (861,772)
Retained earnings (deficit)............................... 3,355,287 5,304,817 (443,900) (443,900)
---------- ----------- ----------- -----------
Total stockholders' equity.............................. 5,191,978 7,141,508 63,469,087 68,212,863
---------- ----------- ----------- -----------
TOTAL LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND STOCKHOLDERS' EQUITY.................. $8,254,734 $10,207,937 $75,130,293 $75,130,293
========== =========== =========== ===========

See notes to the consolidated financial statements.

F-3

ZEBU

CONSOLIDATED STATEMENTS OF OPERATIONS

Six Months Ended
For the Years Ended June 30, December 31,
------------------------------------------ ---------------------------
1997 1998 1999 1998 1999
------------ ------------ ------------ ------------ ------------
(Unaudited)

REVENUE:
Commission revenue, net.......................... $11,821,938 $15,306,106 $15,559,257 $7,151,136 $ 7,702,819
Production bonuses............................... 2,999,533 3,686,287 4,381,300 2,196,070 2,608,278
Transactional services........................... -- -- -- -- 16,969
Consulting services.............................. -- -- -- -- 10,786
License and maintenance.......................... -- -- -- -- 4,818
----------- ----------- ----------- ---------- -----------
Total revenue.................................. 14,821,471 18,992,393 19,940,557 9,347,206 10,343,670
----------- ----------- ----------- ---------- -----------

OPERATING EXPENSES:
Marketing and sales.............................. 13,483,732 12,709,450 13,866,680 7,040,905 8,151,458
General and administrative....................... 2,054,056 2,176,728 2,615,852 1,297,110 2,163,299
General and administrative expense reimbursement
from SelectTech................................. (338,393) (527,009) (708,132) (294,145) (903,526)
Software development and consulting services..... -- -- -- -- 107,744
Amortization of goodwill and other intangible
assets.......................................... -- -- -- -- 486,623
Stock-based compensation(*)...................... -- -- -- -- 1,324,951
----------- ----------- ----------- ---------- -----------
Total operating expenses....................... 15,199,395 14,359,169 15,774,400 8,043,870 11,330,549
----------- ----------- ----------- ---------- -----------

INCOME (LOSS) FROM OPERATIONS...................... (377,924) 4,633,224 4,166,157 1,303,336 (986,879)

INTEREST INCOME, NET............................... 14,580 11,563 42,246 20,144 39,839

OTHER INCOME (EXPENSE), NET........................ (28,434) 36,469 4,962 4,441 1,230
----------- ----------- ----------- ---------- -----------

INCOME (LOSS) BEFORE INCOME TAXES.................. (391,778) 4,681,256 4,213,365 1,327,921 (945,810)

INCOME TAX EXPENSE (BENEFIT)....................... (162,410) 1,863,003 1,685,113 552,277 (375,862)
----------- ----------- ----------- ---------- -----------

NET INCOME (LOSS).................................. $ (229,368) $ 2,818,253 $ 2,528,252 $ 775,644 $ (569,948)
=========== =========== =========== ========== ===========

INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
(Note 14)........................................ $ (429,173) $ 2,657,028 $ 2,328,447 $ 652,998 $(5,654,014)
=========== =========== =========== ========== ===========

NET INCOME (LOSS) PER COMMON SHARE:................
Basic............................................ $ (0.09) $ 0.53 $ 0.47 $ 0.13 $ (1.08)
Diluted.......................................... $ (0.09) $ 0.40 $ 0.36 $ 0.11 $ (1.08)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:........
Basic............................................ 4,981,849 4,981,849 4,981,849 4,981,849 5,221,681
Diluted.......................................... 4,981,849 7,010,699 7,010,699 7,010,699 5,221,681

PRO FORMA DILUTED NET INCOME (LOSS) PER COMMON
SHARE (UNAUDITED)................................ $ (1.74) $ (1.12)
=========== ===========

SHARES USED TO COMPUTE PRO FORMA DILUTED NET INCOME
(LOSS) PER COMMON SHARE (UNAUDITED).............. 12,526,824 12,575,133
=========== ===========

(*) Stock-based compensation:

Marketing and sales.............................. -- -- -- -- $ 680,483
General and administrative....................... -- -- -- -- 644,468
----------- ----------- ----------- ---------- -----------
$ -- $ -- $ -- $ -- $ 1,324,951
=========== =========== =========== ========== ===========

See notes to consolidated financial statements.

F-4

ZEBU

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Common Stock
------------------------- Preferred Stock
--------------------- Deferred Retained
Par Value Par Value Additional Stock Earnings
Shares Amount Shares Amount Capital Compensation (Deficit)
----------- ----------- --------- --------- ------------ ------------- -----------

BALANCE, JULY 1, 1996.... 4,981,849 $ 49,818 2,028,892 $ 20,288 $ 1,766,585 $ -- $ 1,791,856

NET LOSS................. (229,368)

CASH DIVIDENDS PAID...... (578,727)
---------- ---------- --------- -------- ----------- --------- -----------

BALANCE, JUNE 30, 1997... 4,981,849 49,818 2,028,892 20,288 1,766,585 -- 983,761

NET INCOME............... 2,818,253

CASH DIVIDENDS PAID...... (446,727)
---------- ---------- --------- -------- ----------- --------- -----------

BALANCE, JUNE 30, 1998... 4,981,849 49,818 2,028,892 20,288 1,766,585 -- 3,355,287

NET INCOME............... 2,528,252

CASH DIVIDENDS PAID...... (578,722)
---------- ---------- --------- -------- ----------- --------- -----------

BALANCE, JUNE 30, 1999... 4,981,849 49,818 2,028,892 20,288 1,766,585 -- 5,304,817

SHARES AND OPTIONS ISSUED
IN CONNECTION WITH
SELECTTECH ACQUISITION
(Unaudited)............ 5,516,125 55,162 57,882,906

NET LOSS (Unaudited)..... (569,948)

DEFERRED STOCK
COMPENSATION
(Unaudited)............ (861,772)

VALUE OF PREFERRED STOCK
BENEFICIAL CONVERSION
FEATURE (unaudited).... 5,000,000 (5,000,000)

CASH DIVIDENDS PAID
(Unaudited)............ (178,769)
---------- ---------- --------- -------- ----------- --------- -----------

BALANCE, DECEMBER 31,
1999 (Unaudited)....... 10,497,974 $ 104,980 2,028,892 $ 20,288 $64,649,491 $(861,772) $ (443,900)
========== ========== ========= ======== =========== ========= ===========

Total
Stockholders'
Equity
-------------

BALANCE, JULY 1, 1996.... $ 3,628,547
NET LOSS................. (229,368)
CASH DIVIDENDS PAID...... (578,727)
-----------
BALANCE, JUNE 30, 1997... 2,820,452
NET INCOME............... 2,818,253
CASH DIVIDENDS PAID...... (446,727)
-----------
BALANCE, JUNE 30, 1998... 5,191,978
NET INCOME............... 2,528,252
CASH DIVIDENDS PAID...... (578,722)
-----------
BALANCE, JUNE 30, 1999... 7,141,508
SHARES AND OPTIONS ISSUED
IN CONNECTION WITH
SELECTTECH ACQUISITION
(Unaudited)............ 57,938,068
NET LOSS (Unaudited)..... (569,948)
DEFERRED STOCK
COMPENSATION
(Unaudited)............ (861,772)
VALUE OF PREFERRED STOCK
BENEFICIAL CONVERSION
FEATURE (unaudited).... --
CASH DIVIDENDS PAID
(Unaudited)............ (178,769)
-----------
BALANCE, DECEMBER 31,
1999 (Unaudited)....... $63,469,087
===========

See notes to consolidated financial statements.

F-5

ZEBU

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended
For the Years Ended June 30, December 31,
--------------------------------------- --------------------------
1997 1998 1999 1998 1999
----------- ----------- ----------- ----------- ------------
(Unaudited)

CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss).................................... $ (229,368) $2,818,253 $2,528,252 $ 775,644 $ (569,948)
Adjustments to reconcile net income (loss) to cash
provided by (used in) operating activities:
Depreciation....................................... 501,535 559,101 590,553 292,602 308,410
Amortization of goodwill and intangibles........... -- -- -- -- 486,623
Non-cash stock compensation........................ -- -- -- -- 1,324,951
Loss from SelectTech stock......................... 87,132 -- -- -- --
Deferred tax liability............................. 169,961 (31,556) 348,057 59,888 (804,707)
Changes in operating assets and liabilities:
Commissions and accounts receivable (net).......... (1,529,073) (544,983) (1,094,034) (245,037) (151,526)
Other receivables from SelectTech.................. (119,109) (251,065) (437,935) (249,539) (865,843)
Other.............................................. (100,361) (5,790) (241,131) (69,053) (1,207,399)
Accounts payable and accrued expenses.............. 509,986 (175,717) (431,552) (211,849) 367,723
Accrued compensation and benefits.................. 101,796 116,828 118,580 (17,648) 183,741
Deferred compensation.............................. (4,000) (12,000) (18,000) 6,000 (24,000)
Deferred rent...................................... (13,353) (28,446) (31,646) (19,256) 9,584
----------- ---------- ---------- ---------- -----------
Net cash flow provided by (used in) operating
activities...................................... (624,854) 2,444,625 1,331,144 321,752 (942,391)
----------- ---------- ---------- ---------- -----------
CASH FLOW FROM INVESTING ACTIVITIES:
Property and equipment purchased................... (653,866) (327,074) (271,811) (156,490) (610,186)
Purchases of investments........................... (300,000) (800,000) (1,100,000) -- --
Sales of investments............................... 1,900,000 600,000 500,000 -- 900,000
Investment in SelectTech........................... -- (250,000) -- -- --
Cash acquired in SelectTech acquisition............ -- -- -- -- 56,266
Loans to SelectTech................................ (200,000) -- (250,000) -- (500,000)
----------- ---------- ---------- ---------- -----------
Net cash flow provided by (used in) investing
activities...................................... 746,134 (777,074) (1,121,811) (156,490) (153,920)
----------- ---------- ---------- ---------- -----------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds (repayments) of note payable to insurance
company............................................. 300,000 (300,000) -- -- --
Repayment of senior secured convertible debentures... -- -- -- -- (1,350,000)
Capital lease obligations repaid..................... (93,496) (92,442) (107,620) (48,050) (63,139)
Issuance of Series D preferred stock (net of issuance
costs).............................................. -- -- -- -- 4,743,776
Dividends paid....................................... (578,727) (446,727) (578,722) (312,102) (178,769)
----------- ---------- ---------- ---------- -----------
Net cash flow provided by (used in) financing
activities...................................... (372,223) (839,169) (686,342) (360,152) 3,151,868
----------- ---------- ---------- ---------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . (250,943) 828,382 (477,009) (194,890) 2,055,557
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR........... 689,490 438,547 1,266,929 1,266,929 789,920
----------- ---------- ---------- ---------- -----------
CASH AND CASH EQUIVALENTS, END OF YEAR................. $ 438,547 $1,266,929 $ 789,920 $1,072,039 $ 2,845,477
=========== ========== ========== ========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:......
Cash paid for interest expense....................... $ 62,472 $ 63,589 $ 33,806 $ 25,675 $ 6,974
Cash paid for income taxes........................... $ 499,182 $1,737,445 $1,387,850 $ 257,800 $ 800
NONCASH INVESTING AND FINANCING ACTIVITY:
Purchase of equipment under capital leases........... $ 51,737 $ -- $ 125,854 $ -- $ --
Issuance of common stock in SelectTech acquisition... $50,000,000
Value of SelectTech options assumed.................. $ 5,744,000
Assumption of liabilities of SelectTech.............. $ 7,209,000

See notes to consolidated financial statements.

F-6

ZEBU

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 1997, 1998 AND 1999
AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1999 (UNAUDITED)

1. DESCRIPTION OF BUSINESS

DESCRIPTION OF BUSINESS--Zebu (the "Company"), was incorporated in Delaware
on August 18, 1999 as a holding company for SelectQuote Insurance Services
("SelectQuote"). SelectQuote commenced its activities in July 1984 as an
independent insurance agency. Select Quote sells term life insurance through the
use of direct-response advertising, the internet, mail techniques and toll-free
telephone lines. Customers are provided with a free quote comparing rates from a
variety of insurance companies. SelectQuote relies on a combination of
proprietary and commercially available software to perform its quote service and
to assist in all phases of policy issuance and service.

On August 17, 1999, SelectQuote signed a definitive agreement to acquire
SelectTech, a company that develops software for the insurance industry and
provides related computer consulting. On December 23, 1999, SelectQuote acquired
and merged with SelectTech. Subsequent to the merger, the Company continues to
operate under the tradenames "SelectQuote Insurance Services" and "SelectTech."

The Company's board of directors approved an exchange of 3.286852 Company
shares for each common and preferred share of SelectQuote. Accordingly, all
historical financial information has been restated as if the exchange had been
in effect for all periods presented.

The accompanying consolidated financial statements reflect the combination
of Zebu and SelectQuote at the historical cost of SelectQuote. The combination
is shown retroactively as if it had occurred at the beginning of the earliest
period presented. The consolidated financial statements reflect the operating
results of SelectQuote for all periods presented and the operating results of
SelectTech for the period from December 23, 1999 through December 31, 1999.

2. SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION--All material intercompany transactions and balances have been
eliminated in consolidation.

CASH AND CASH EQUIVALENTS--The Company considers all highly liquid
instruments purchased with an original maturity of three months or less to be
cash equivalents.

INVESTMENTS--The Company accounts for its short-term investments under
Statement of Financial Accounting Standards ("SFAS") No. 115, ACCOUNTING FOR
CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES. SFAS No. 115 requires the
classification of investments in debt and equity securities with readily
determined fair values as "held-to-maturity," "available-for-sale," or
"trading." Management determines the appropriate classification of its debt
securities at the time of purchase and reevaluates such designation as of each
balance sheet date. The Company's debt securities are classified as
available-for-sale and are carried at fair value based on quoted market prices,
with unrealized gains and losses, if material, reported as a component of other
comprehensive income (loss) in stockholders' equity. The difference between cost
and fair value of the Company's debt securities was not material at June 30,
1999 and 1998. The cost of securities sold is based on the specific
identification method.

F-7

ZEBU

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999
AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1999 (UNAUDITED)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
PROPERTY AND EQUIPMENT are stated at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets, which
range generally from three to ten years. Amortization of leasehold improvements
is computed using the straight-line method over the shorter of their estimated
useful life or the term of the lease.

INVESTMENT IN SELECTTECH represents investment in SelectTech's mandatorily
redeemable convertible Series A preferred stock purchased in April 1998, and is
accounted for by the cost method.

Prior to April 1997, the Company owned 50% of SelectTech. In April 1997,
SelectTech changed its status from a limited liability company to a C
corporation. The Board of Directors subsequently approved the payment of a
dividend-in-kind of all the Company's shares of SelectTech stock, which were
written down to an estimated fair value of $0. Consequently, the Company
recorded a realized loss of $87,132. See Note 3 regarding the SelectTech
acquisition.

SOFTWARE DEVELOPMENT COSTS--Costs for the development of new SelectTech
software products and substantial enhancements to existing software products are
expensed as incurred until technological feasibility has been established, at
which time any additional costs would be capitalized in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 86, COMPUTER SOFTWARE
TO BE SOLD, LEASED OR OTHERWISE MARKETED. The costs to develop such software
have not been capitalized as SelectTech generally releases the software once
technological feasibility has been established, and subsequent improvement costs
have not been significant.

Software development costs for SelectQuote software are reported in
accordance with American Institute of Certified Public Accountants ("AICPA")
Statement of Position ("SOP") 98-1, ACCOUNTING FOR THE COSTS OF COMPUTER
SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE.

REVENUE RECOGNITION--The Company's primary revenue source is commissions
from the sale of term life insurance. Such commissions, which are based on a
percentage of the premiums, are significantly higher in the first year of a
policy compared with subsequent periods. In addition, the Company receives
production bonuses from certain insurance companies for exceeding certain target
levels during a specified bonus period.

The Company recognizes annual first-year commissions as revenues when the
policies have been approved by an insurance company underwriter and an initial
premium payment (which may be annual, semiannual, quarterly or monthly) has been
made by the policyholder. Revenues for renewal commissions and production
bonuses are recognized when SelectQuote receives notification from the insurance
companies that such commissions have been earned. An allowance is provided for
estimated first-year and renewal commissions that will not be received due to
nonpayment of premiums and policy cancellations by the policyholder (see
Note 4).

With the acquisition of SelectTech, the Company recognizes software related
revenue in accordance with SOP 97-2, SOFTWARE REVENUE RECOGNITION as amended by
Statement of Position 98-4 ("SOP 98-4"). Additionally, the AICPA issued SOP 98-9
in December 1998, which provides

F-8

ZEBU

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999
AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1999 (UNAUDITED)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
certain amendments to SOP 97-2, and was effective for transactions entered into
by SelectTech beginning July 1, 1999. Adoption of these amendments did not have
a material impact on financial position, results of operations or cash flows.

Software license revenue is recognized upon meeting each of the following
criteria: execution of a written license agreement or contract; delivery and
implementation of software; the license fee is fixed and determinable;
collectibility of the proceeds is assessed as being probable; and vendor
specific objective evidence exists to allocate the total fee to elements of the
arrangement. Vendor-specific objective evidence is based on the price generally
charged when an element is sold separately, or if not yet sold separately, is
established by authorized management. All elements of each order are valued at
the time of revenue recognition.

The portion of revenues from new license agreements which relate to
SelectTech's obligations to provide customer support are deferred and recognized
ratably over the contract support period, which is generally one to four years.
Software maintenance contracts are renewable on an annual basis. Revenues from
maintenance contract renewals are deferred and recognized ratably over the terms
of the agreements.

Revenues from transactional services, consulting and other services are
recognized as the related services are provided or as the milestones are
completed.

CONCENTRATIONS OF CREDIT RISK--As of June 30, 1998, four insurance carriers
accounted for 16%, 15%, 13%, and 13%, respectively, of total commissions and
accounts receivable. As of June 30, 1999, three insurance carriers accounted for
28%, 13%, and 10%, respectively, of total commissions receivable. As of
December 31, 1999, four insurance carriers accounted for 21%, 20%, 11% and 11%,
respectively, of total commissions and accounts receivable.

Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of investments in fixed income
securities and commissions receivable. The Company sells its products and
services to companies in the insurance industry and generally does not require
its customers to provide collateral to support accounts receivable.

IMPAIRMENT OF LONG-LIVED ASSETS--The Company evaluates the recoverability of
its long-lived assets in accordance with SFAS No. 121, ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF.
SFAS No. 121 requires recognition of impairment losses related to long-lived
assets in the event the net carrying value of such assets exceeds the future
undiscounted cash flows attributable to such assets. The Company assesses the
impairment of its long-lived assets when events or changes in circumstances
indicate that the carrying value of an asset may not be recoverable.

ADVERTISING EXPENSES--Direct costs related to marketing and advertising the
Company's product are expensed in the periods incurred. Advertising expenses
were $5,672,556, $3,310,103 and $3,099,351 for 1997, 1998 and 1999,
respectively, and $1,793,424 and $1,849,214 for the six months ended
December 31, 1998 and 1999, respectively.

NET INCOME (LOSS) PER COMMON SHARE--Basic income (loss) per share excludes
dilution and is computed by dividing net income (loss) less preferred dividends
by the weighted-average number

F-9

ZEBU

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999
AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1999 (UNAUDITED)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
of common shares outstanding for the period. Diluted income (loss) per share
reflects the potential dilution that could occur if the outstanding stock
options, preferred stock and convertible debentures are converted into common
stock. Common share equivalents are excluded from the computation in loss
periods as their effect would be antidilutive.

PRO FORMA NET INCOME (LOSS) PER COMMON SHARE (UNAUDITED)--Unaudited pro
forma net loss per common share for the year ended June 30, 1999 and six months
ended December 31, 1999 included in the statement of operations is computed
using the weighted average number of common shares outstanding, adjusted to
include the pro forma effects of the SelectTech acquisition and the conversion
of Series A, B, C and D convertible preferred stock into common stock as if such
conversion had occurred on July 1, 1998 for the year ended June 30, 1999 and on
July 1, 1999 for the six months ended December 31, 1999, or at the date of
original issuance, if later.

PRO FORMA STOCKHOLDERS' EQUITY (UNAUDITED)--Effective upon the closing of
the Company's proposed initial public offering, subject to certain conditions as
described in Note 11, the outstanding shares of all series of convertible
preferred stock will automatically convert into 3,139,961 shares of common
stock. The unaudited pro forma amounts included on the balance sheet reflect
these conversions as if they had occurred on December 31, 1999.

STOCK-BASED COMPENSATION--The Company accounts for stock-based employee
compensation using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25 ("APB 25"), ACCOUNTING FOR STOCK ISSUED TO
EMPLOYEES. The Company reports non-employee stock-based compensation in
accordance with SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION.

COMPREHENSIVE INCOME--There are no differences between comprehensive income
and net income as reported in the Company's statements of operations.

FINANCIAL INSTRUMENTS--The fair value of financial instruments, principally
cash, receivables and accounts payable approximate their June 30, 1998 and 1999
carrying values because such items are primarily short-term in nature.

INCOME TAXES--The Company records income taxes using the asset and liability
method which requires the recognition of deferred tax assets and liabilities for
the expected future tax consequences of events that have been recognized in the
Company's financial statements or tax returns. In estimating future tax
consequences, generally all expected future events other than enactments or
changes in the tax law or rates are considered.

CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES--SelectTech operates in the
software industry, and accordingly, can be affected by a variety of factors. For
example, management of the Company believes that changes in any of the following
areas could have a significant negative effect on the Company's future financial
position, results of operations and cash flows: demand for performance
availability and management software solutions; new product introductions by
competitors; development of distribution channels; ability to implement and
expand operational customer support and financial control systems to manage
rapid growth, both domestically and internationally; the hiring, training and
retention of key employees; fundamental changes in technology underlying
software products; litigation or other claims against the Company.

F-10

ZEBU

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999
AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1999 (UNAUDITED)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual amounts could differ from those estimates.

SEGMENT INFORMATION--The Company has adopted the provisions of SFAS
No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION.
SFAS No. 131 establishes standards for the reporting by public business
enterprises of information about operating segments, products and services,
geographic areas, and major customers.

Prior to the merger the Company operated in a single industry segment, sales
of term life insurance policies. Subsequent to the merger, the Company may
operate in more than one segment. The operations, tangible assets and capital
expenditures of SelectTech are not significant from the date of acquisition to
December 31, 1999. All of the Company's revenues are received from customers
based primarily in the United States. See Note 15 for information on major
customers.

NEW ACCOUNTING PRONOUNCEMENT--SFAS No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES, establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts and for hedging activities. Under SFAS No. 133,
certain contracts that were not formerly considered derivatives may now meet the
definition of a derivative. This Statement, as amended, is effective for fiscal
years beginning after June 15, 2000. The Company has not yet evaluated the
impact of this Statement.

3. SELECTTECH ACQUISITION (UNAUDITED)

On December 23, 1999, SelectQuote acquired all of the outstanding shares and
options of SelectTech in exchange for 5,516,125 shares of the Company's common
stock. The acquisition has been accounted for under the purchase method of
accounting.

Acquisition costs and the preliminary determination of the unallocated
excess of acquisition costs over net assets acquired are set forth below:

Value of SelectTech stock acquired in the acquisition....... $50,000,000
Value of SelectTech options assumed......................... 5,744,000
Transaction costs........................................... 543,000
-----------
Purchase price.............................................. 56,287,000
Estimated fair value of net liabilities acquired............ 7,209,000
-----------
Purchase price including net liabilities acquired........... $63,496,000
===========

The fair value of SelectTech acquired in the transaction consists of
$7,209,000 in net liabilities assumed and $63,496,000 in intangible assets,
including purchased software of $6,170,000,

F-11

ZEBU

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999
AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1999 (UNAUDITED)

3. SELECTTECH ACQUISITION (UNAUDITED) (Continued)
assembled workforce of $864,000, customer list of $75,000, and goodwill of
$56,387,000. The acquired intangible assets are being amortized over their
estimated useful lives of two to three years.

The preliminary allocation of the purchase price is based on current
information and should not materially differ from the final determination.

The following pro forma results of operations reflect the combined results
of the Company and SelectTech for the year ended June 30, 1999 and for the six
months ended December 31, 1999 and have been prepared as though the entities had
been combined as of July 1, 1998. All intercompany accounts and balances have
been eliminated.

Six Months
Year Ended Ended
June 30, December 31,
1999 1999
------------ -------------
(unaudited)

Revenues........................................ $ 22,823,334 $ 11,307,134
Net loss........................................ $(21,827,422) $(14,032,294)
Net loss per share.............................. $ (2.10) $ (1.82)
Shares used in computing net loss per share..... 10,497,974 10,497,974

4. COMMISSIONS AND ACCOUNTS RECEIVABLE, NET

Commissions and accounts receivable, net, consists of the following:

June 30,
------------------------- December 31,
1998 1999 1999
----------- ----------- -------------

Commissions receivable................ $4,297,992 $5,503,267 $5,321,727
Production bonus commissions
receivable.......................... 415,414 365,000 690,000
Other accounts receivable............. -- -- 639,488
---------- ---------- ----------
Total............................. 4,713,406 5,868,267 6,651,215
Less allowance........................ (481,585) (542,412) (635,214)
---------- ---------- ----------
Commissions and accounts receivable,
net................................. $4,231,821 $5,325,855 $6,016,001
========== ========== ==========

The Company estimates an allowance for receivables that will not be
collected due to nonpayment of commissions and policy cancellations by the
policy holder and nonpayment of accounts by insurance carriers. Such allowance
is established based on management's evaluation of various factors, including
historical write-off experience and industry trends. While management uses the
information available to make evaluations, future adjustments to the allowances
may be

F-12

ZEBU

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999
AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1999 (UNAUDITED)

4. COMMISSIONS AND ACCOUNTS RECEIVABLE, NET (Continued)
necessary. Any such adjustments are reflected in current operations. Additions
to the allowance are charged against revenue. Commissions receivable are written
off against the allowance when commissions are deemed uncollectible. Changes in
the allowance were as follows:

Six Months Ended
Year Ended June 30, December 31,
--------------------------------- ---------------------
1997 1998 1999 1998 1999
--------- --------- --------- --------- ---------

Balance, beginning of
period............. $ 508,264 $ 521,234 $ 481,585 $ 481,585 $ 542,412
Additions............ 385,332 620,463 875,656 418,251 675,988
Write-offs........... (372,362) (660,112) (814,829) (386,130) (583,186)
--------- --------- --------- --------- ---------
Balance, end of
period............. $ 521,234 $ 481,585 $ 542,412 $ 513,706 $ 635,214
========= ========= ========= ========= =========

5. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

June 30,
------------------------- December 31,
1998 1999 1999
----------- ----------- -------------

Computers............................ $ 1,653,326 $ 1,782,276 $ 2,519,909
Equipment............................ 683,904 850,587 915,901
Furniture and fixtures............... 485,782 497,077 563,173
Leasehold improvements............... 416,467 419,654 459,162
Capitalized software................. -- -- 305,562
----------- ----------- -----------
Total............................ 3,239,479 3,549,594 4,763,707
Less accumulated depreciation........ (1,917,719) (2,420,722) (2,990,712)
----------- ----------- -----------
Property and equipment, net.......... $ 1,321,760 $ 1,128,872 $ 1,772,995
=========== =========== ===========

Included in property and equipment at June 30, 1998 and 1999 and
December 31, 1999 is equipment acquired under capital leases with a cost of
$471,479, $597,333 and $650,309 and accumulated depreciation of $240,648,
$358,904 and $476,321, respectively.

Depreciation expense was $501,535, $559,101 and $590,553 during the years
ended June 30, 1997, 1998 and 1999, respectively, and $292,602 and $308,410 for
the six months ended December 31, 1998 and 1999, respectively.

6. TRANSACTIONS WITH SELECTTECH AND OTHER RELATED PARTIES

Prior to the acquisition, certain shareholders of the Company were
shareholders of SelectTech, and two officers of the Company participated in the
management and direction of SelectTech, including serving on SelectTech's Board
of Directors. The Company provided SelectTech with certain operating support,
which included management and administrative services, telephone and office

F-13

ZEBU

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999
AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1999 (UNAUDITED)

6. TRANSACTIONS WITH SELECTTECH AND OTHER RELATED PARTIES (Continued)
facilities, and other miscellaneous items and charged SelectTech for these
benefits on a cost reimbursement basis. Receivables from SelectTech for such
services were $344,074 and $761,084 at June 30, 1998 and 1999, respectively.
Total fees for these services provided by the Company were approximately
$338,393, $527,009 and $708,132 in fiscal 1997, 1998 and 1999, respectively, and
$294,145 and $903,526 for the six months ended December 31, 1998 and 1999,
respectively. Included in the total fees was sublease rental income (see
Note 10).

In February 1997, the Company loaned SelectTech $200,000 at an interest rate
of 10% per annum due on July 31, 1998. However, payment on the note and related
interest were deferred due to SelectTech's refinancing discussed in the
following paragraph. Interest income recognized by the Company related to the
note was $6,100, $20,000 and $20,000 in fiscal 1997, 1998 and 1999,
respectively, and $10,000 and $10,000 for the six months ended December 31, 1998
and 1999, respectively. Receivables from SelectTech for accrued interest income
were $26,100 and $46,100 at June 30, 1998 and 1999, respectively.

On October 15, 1998, SelectTech entered into a Debenture Purchase Agreement
(the "Agreement") which required the Company to agree to subordination of both
the Company's $200,000 note receivable from SelectTech and $453,300 of the
outstanding receivable for operating services from SelectTech. As a condition of
the subordination, the note receivable from SelectTech was made convertible into
shares of SelectTech's common stock at $1.67 per share. The Agreement also
allowed SelectTech to repay the $453,300 other receivable balance in twelve
monthly installments of $37,800 commencing in October 1998 and that subsequent
charges for operating services be paid on a current basis. However, none of
these installment payments were made, although certain operating costs charged
by the Company to SelectTech were reimbursed subsequent to the Agreement date.
All amounts due at December 23, 1999 were canceled concurrent with the merger.

In June 1999, the Company loaned SelectTech an additional $250,000 in the
form of a promissory note bearing interest at 9% per annum and due on
December 31, 1999. The Company made two additional loans to SelectTech of
$250,000 each in October and November 1999 under similar terms. All of these
loans were canceled concurrent with the merger.

During 1997, 1998 and 1999, two members of the Company's Board of Directors
worked as consultants to the Company and provided software development, computer
system management, and marketing and advertising assistance. The fees included
in general and administrative expenses for these services were $179,850,
$181,013 and $181,013 in 1997, 1998, and 1999, respectively. For the six months
ended December 31, 1998 and 1999, such general and administrative expenses were
$90,506 in each period.

While working as a consultant for the Company, a current officer of the
Company had a compensation agreement with the Company whereby he deferred a
portion of his consulting fees until the Company reached and exceeded cash
break-even from operations for three consecutive months and more senior
obligations had been repaid. The balance was $82,195, $64,195 and $40,195 as of
June 30, 1998 and 1999 and December 31, 1999, respectively.

F-14

ZEBU

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999
AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1999 (UNAUDITED)

7. INCOME TAXES

Income tax expense (benefit) consists of the following components:

Six Months Ended
Years Ended June 30, December 31,
------------------------------------- ---------------------
1997 1998 1999 1998 1999
--------- ----------- ----------- --------- ---------

Current income taxes:
Federal............. $(501,837) $1,447,782 $1,035,246 $367,805 $ 318,327
State............... (123,730) 383,245 301,759 124,584 110,468
--------- ---------- ---------- -------- ---------
Total............. (625,567) 1,831,027 1,337,005 492,389 428,795
--------- ---------- ---------- -------- ---------

Deferred income taxes:
Federal............. 375,126 652 274,710 61,319 (611,694)
State............... 88,031 31,324 73,398 (1,431) (192,963)
--------- ---------- ---------- -------- ---------
Total............. 463,157 31,976 348,108 59,888 (804,657)
--------- ---------- ---------- -------- ---------
Income tax expense
(benefit)........... $(162,410) $1,863,003 $1,685,113 $552,277 $(375,862)
========= ========== ========== ======== =========

The difference between income tax expense (benefit) based on the federal tax
rate and amounts reported in the statements of operations is as follows:

Six Months
Ended
Years Ended June 30, December 31,
------------------------------------ ----------------------
1997 1998 1999 1998 1999
-------- -------- -------- -------- --------

Federal tax (benefit) at statutory
rate................................... (34)% 34% 34% 34% 34%
State taxes, net of federal benefit...... (6) 6 6 6 6
Other.................................... (2) -- -- 2 --
--- -- -- -- --
Income tax expense (benefit)............. (42)% 40% 40% 42% 40%
=== == == == ==

F-15

ZEBU

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999
AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1999 (UNAUDITED)

7. INCOME TAXES (Continued)
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities used for financial
reporting and the amounts used for income tax purposes. The items comprising the
Company's net deferred tax liability at June 30, 1998 and 1999 and December 31,
1999 are as follows:

June 30,
------------------------- December 31,
1998 1999 1999
----------- ----------- -------------

Deferred tax assets:
Revenue recognized for tax......... $ 294,947 $ 391,837 $ 431,672
Allowance for policy
cancellations..................... 247,462 214,122 237,062
Accrued liabilities................ 107,965 140,139 151,293
Deferred stock compensation........ -- -- 527,786
Goodwill and other intangibles..... -- -- 193,843
Other.............................. 163,584 142,347 81,125
----------- ----------- -----------
Total deferred tax assets........ 813,958 888,445 1,622,781

Deferred tax liability--commissions
receivable......................... (1,767,705) (2,190,249) (2,119,878)
----------- ----------- -----------
Net deferred tax liability........... $ (953,747) $(1,301,804) $ (497,097)
=========== =========== ===========

8. SENIOR SECURED CONVERTIBLE DEBENTURES

As a result of the acquisition of SelectTech, the Company assumed SelectTech
debentures issued under a Debenture Purchase Agreement with three insurance
carriers that provided $2,500,000 at 12% interest. The Company also assumed
$750,000 of short-term loans from the insurance carriers to SelectTech. On
December 27, 1999, the $750,000 of short-term loans was repaid to the carriers.
In addition, the Company repaid in full $600,000 to one debenture holder. The
terms of the remaining $1,900,000 in debentures were modified to transfer the
holders a security interest in the Company's assets and alter the prepayment
terms.

The principal amount of the debentures are convertible into common stock at
approximately $2.60 per share.

The Debenture Purchase Agreement requires quarterly interest-only payments
through September 30, 2000; thereafter, outstanding principal shall be repaid in
twelve equal quarterly installments, plus interest, from December 31, 2000
through September 30, 2003.

9. MANDATORILY REDEEMABLE CONVERTIBLE SERIES D PREFERRED STOCK (UNAUDITED)

On December 23, 1999, the Company issued 50,000 shares of Mandatorily
Redeemable Convertible Series D Preferred Stock for $5,000,000. Issuance costs
were $256,224.

Each share of the Mandatorily Redeemable Convertible Series D Preferred
Stock is convertible at the option of the holder at any time into 22.2222 shares
of common stock, subject to adjustment

F-16

ZEBU

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999
AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1999 (UNAUDITED)

9. MANDATORILY REDEEMABLE CONVERTIBLE SERIES D PREFERRED STOCK (UNAUDITED)
(Continued)
for certain anti-dilution provisions, and is automatically convertible into
common stock upon a public offering of the Company's shares at a per share price
which is at least $4.50 (as adjusted for any stock dividends, combinations,
splits, recapitalizations and the like with respect to such shares) and the
gross cash proceeds to the Company (before underwriting discounts, commissions
and fees) are at least $25,000,000 or upon the consent of the holders of a
majority of the shares outstanding. The Mandatorily Redeemable Convertible
Series D Preferred Stock has voting rights equivalent to the number of common
shares into which each share is convertible and has a liquidation preference of
the original purchase price plus interest at 25% per annum, compounded annually.
Additionally, on December 17, 2004 the Company must redeem all of the
outstanding Mandatorily Redeemable Convertible Series D Preferred Stock at the
greater of fair value (as defined) or the liquidation preference.

The Mandatorily Redeemable Convertible Series D Preferred Stock has a
beneficial conversion feature totaling $5,000,000, measured as the difference
between the conversion price of $4.50 per share and the fair value of the
underlying common stock at the time of issuance, limited to the amount of the
proceeds received, and was accounted for as a Preferred dividend which was a
reduction to income applicable to common shareholders at issuance.

10. COMMITMENTS AND CONTINGENCIES

LEASES--The Company leases various office and computer equipment under
capital leases that expire at various dates prior to June 2004. The leases also
include noncancelable maintenance agreements for the office equipment. The
Company also leases office facilities under operating leases that expire at
various dates through March 2005 with options to renew. As of December 31, 1999,
the minimum lease obligations are as follows:

Operating Capital
----------- ---------

Six months ending June 30:
2000.............................................. $ 990,137 $ 82,822

Year ending June 30:
2001.............................................. 1,938,593 81,718
2002.............................................. 1,997,917 33,104
2003.............................................. 1,568,845 29,052
2004.............................................. 1,359,602 16,947
2005.............................................. 1,033,058 --
---------- ---------
Total lease obligations............................. $8,888,152 243,643
==========
Less amount representing interest................... (27,512)
---------
Present value of minimum lease payments............. 216,131

Less current obligation under capital leases........ (125,542)
---------
Long-term obligation under capital leases........... $ 90,589
=========

F-17

ZEBU

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999
AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1999 (UNAUDITED)

10. COMMITMENTS AND CONTINGENCIES (Continued)
Up until the acquisition, the Company subleased a portion of its office
facilities to SelectTech. Monthly rental income varied based on usage and costs
per square foot over the term of the lease. Rental income was $24,214, $85,302
and $134,892 during the years ended June 30, 1997, 1998 and 1999, respectively,
and $50,563 and $171,348 for the six months ended December 31, 1998 and 1999,
respectively.

Rent expense was $433,545, $558,343 and $616,241 during the years ended
June 30, 1997, 1998 and 1999, respectively, and $292,232 and $594,663 for the
six months ended December 31, 1998 and 1999, respectively.

LITIGATION--From time to time, the Company is subject to legal proceedings
and claims in the ordinary course of business. The Company currently is not
aware of any legal proceedings or claims that it believes will have,
individually or in the aggregate, a material adverse effect on its business,
prospects, consolidated financial condition and operating results.

11. STOCKHOLDERS' EQUITY

Shares of common stock have been reserved for future issuance in connection
with the conversion or exercise of the following securities as of December 31,
1999:

Common Shares
Reserved
-------------

Senior secured convertible debentures....................... 731,420
Series A Preferred Stock.................................... 1,137,235
Series B Preferred Stock.................................... 821,690
Series C Preferred Stock.................................... 69,925
Series D Preferred Stock.................................... 1,111,111
Stock options granted under the 1999 Stock Option Plan...... 6,510,635
Stock options available for issuance under the 1999 Stock
Option Plan............................................... 3,489,365
1999 employee stock purchase plan........................... 1,000,000
----------
Total....................................................... 14,871,381
==========

CONVERTIBLE PREFERRED STOCK--In contemplation of the acquisition of
SelectTech, the Company restated its Articles of Incorporation in August 1999 to
increase the number of shares of preferred stock authorized from 5,000,000 to
10,000,000 and changed the par value from no par to $0.01 per share.

F-18

ZEBU

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999
AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1999 (UNAUDITED)

11. STOCKHOLDERS' EQUITY (Continued)
Preferred Stock Series A, B and C information as of December 31, 1999 is as
follows:

Liquidation Value
Authorized Shares ---------------------
Series Shares Outstanding Amount Per Share
- ------ ---------- ----------- --------- ---------

A............................... 2,500,000 1,137,235 $170,585 $0.15
B............................... 1,250,000 821,690 501,231 0.61
C............................... 750,000 69,925 85,309 1.22
--------- --------- --------
Total........................... 4,500,000 2,028,850 $757,125
========= ========= ========

CONVERSION--Each share of preferred stock may be converted into shares of
common stock on a one-for-one basis, subject to adjustments under specific
circumstances. Conversion is: (i) at the option of the preferred stockholder,
(ii) automatic upon the closing of an initial public offering of the Company's
common stock.

DIVIDENDS--The holders of the Series A, B and C preferred stock are entitled
to receive in any fiscal year noncumulative dividends of $0.00913 per share,
$0.0365 per share and $0.073 per share, respectively, when, and if, declared by
the Company's Board of Directors. Such dividends, whether undeclared or unpaid,
shall not bear or accrue interest. Preferred stock dividends declared and paid
were $199,805, $161,225 and $199,805 during the years ended June 30, 1997, 1998
and 1999, respectively, and $122,646 and $84,066 for the six months ended
December 31, 1998 and 1999, respectively.

LIQUIDATION--In the event of any liquidation, dissolution or winding up of
the Company either voluntary or involuntary, the assets of the Company available
for distribution shall be distributed: (i) $0.15 per outstanding share of
Series A, (ii) $0.61 per outstanding share of Series B and (iii) $1.22 per
outstanding share of Series C. If the assets of the Company available for
distribution are not sufficient to pay the full amount of this distribution,
plus any dividends thereon declared but unpaid, such assets will be distributed
ratably among the holders of the preferred stock based on the full preferential
amount per share of the preferred stock that each such holder is entitled to
receive.

REDEMPTION--The Company may at any time, at the option of the Board of
Directors, redeem all or part (selected pro rata among all of the preferred
shares) of the outstanding shares of Series A preferred stock at $0.15 per
share. Series B and C preferred stock is not redeemable.

VOTING RIGHTS--Each share of Series A, B and C preferred stock has voting
rights equal to the number of common stock shares into which shares of preferred
stock are convertible.

COMMON STOCK--In anticipation of the acquisition of SelectTech, the Company
changed the par value of common stock from no par to $0.01 per share.

Through August 17, 1999, the Company had a "phantom stock" employee
compensation plan where each unit of phantom stock entitled the record holder to
receive the same cash dividends per

F-19

ZEBU

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999
AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1999 (UNAUDITED)

11. STOCKHOLDERS' EQUITY (Continued)
unit as a share of the Company's common stock. Phantom stock units terminate
when the employee ceases to be an employee due to resignation, termination,
retirement, or death. Phantom stock units:

(a) have no voting rights

(b) are not transferable or saleable to other parties

(c) have no monetary value other than the right to receive payments equal to
dividends earned on an equivalent number of shares of the Company's
common stock as of the date of record of each dividend, provided that the
record holder is an employee as of that date

(d) are fully vested when granted.

Prior to fiscal 1997, 24,500 phantom stock units had been granted. In fiscal
1998 and 1999 an additional 53,500 units and 163,557 units, respectively, were
granted. No forfeitures of any units occurred. Compensation expense has been
recognized by the Company with respect to cash dividends paid under the phantom
stock plan.

On August 17, 1999, all phantom stock units were converted into the Company
stock option plan described in Note 13.

12. EMPLOYEE BENEFIT PLAN

The Company has a pretax savings plan covering nearly all its employees that
is intended to qualify under Section 401(k) of the Internal Revenue Code.
Eligible employees may contribute up to 15 percent of their pretax salary,
subject to certain limitations. The Company makes a discretionary profit sharing
contribution and matches each employee's contributions up to $300 per plan year.
The Company contributions were $21,450, $27,672 and $27,863 during the years
ended June 30, 1997, 1998 and 1999, respectively, and $22,092 and $28,906 for
the six months ended December 31, 1998 and 1999, respectively.

13. STOCK OPTION PLAN (UNAUDITED)

On August 17, 1999, the Company authorized the 1999 Stock Option Plan (the
"1999 Plan") under which the Board of Directors may grant options to purchase
shares of common stock to employees, non-employee directors, and consultants. A
total of 10,000,000 shares of common stock have been reserved for issuance under
the 1999 Plan. Options generally vest one-third at the end of the first year and
then monthly on a pro rata basis over the next two years. The options expire ten
years from the date of grant.

F-20

ZEBU

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999
AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1999 (UNAUDITED)

13. STOCK OPTION PLAN (UNAUDITED) (Continued)
In the period from August 17, 1999 through the date of acquisition of
SelectTech, the Company granted options which were converted at the time of the
merger based on a conversion formula. Options issued by SelectTech prior to the
acquisition were also converted to Company options. The following table
summarizes option activity using post-merger amounts.

Number Average
of Shares Exercise Price
--------- --------------

Balance at July 1, 1999............................ -- $ --

Grants:
SelectQuote plan................................. 3,121,813 4.350
SelectTech plan.................................. 3,388,822 3.521
--------- ------
Balance at December 31, 1999 (1,081,352 shares
vested at a weighted average exercise price
of $0.36)........................................ 6,510,635 $3.918
========= ======

Options outstanding and currently exercisable by exercise price at
December 31, 1999 are as follows:

Options Outstanding
- -------------------------------------------------
Weighted Options Currently
Average Exercisable --
Exercise Number Remaining Number
Price Outstanding Contractual Life (Years) Outstanding
- -------- ----------- ------------------------ -----------------

$0.0016 627,318 7.5 554,560
$ 0.26 513,278 8.2 325,339
$ 0.76 80,528 9.6 80,528
$ 1.98 175,847 9.6 120,925
$ 2.43 537,588 9.6 --
$ 2.60 60,952 9.2 --
$ 4.99 1,877,848 9.9 --
$ 5.00 797,703 9.6 --
$ 5.50 1,839,573 9.6 --
--------- --- ---------
6,510,635 9.3 1,081,352
========= === =========

The Company accounts for employee and board of director stock options in
accordance with APB 25. Under APB 25, compensation expense is recognized based
on the amount by which the fair value of the underlying common stock exceeds the
exercise price of the stock options at the measurement date, which in the case
of employee stock options is typically the date of grant. For financial
reporting purposes, the Company has determined that the fair market value on the
date of grant of certain employee stock options associated with the conversion
of the phantom stock compensation plan was in excess of the exercise price of
the options. Such excess is recorded as deferred stock compensation and
classified as a reduction of stockholders' equity, with a charge to

F-21

ZEBU

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999
AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1999 (UNAUDITED)

13. STOCK OPTION PLAN (UNAUDITED) (Continued)
operations over the vesting period of the applicable options. Consequently, the
Company recorded deferred stock compensation of $1,643,806 in the six-month
period ended December 31, 1999 and amortized $1,240,403 during the same period.

The fair value of stock options granted to consultants for future services
to be performed for the Company was $542,917 for the six months ended
December 31, 1999. This amount has been recorded as deferred stock compensation.
Of this amount, $84,548 was amortized during the six months ended December 31,
1999.

The weighted average fair value for options granted during the six months
ended December 31, 1999 was $1.75.

ADDITIONAL STOCK PLAN INFORMATION--SFAS No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION, requires the disclosure of pro-forma net loss and loss per share
had the Company adopted the fair value method since the Company's inception.
Under SFAS No. 123, the fair value of stock-based awards to employees is
calculated through the use of option pricing models, even though such models
were developed to estimate the fair value of freely tradable, fully transferable
options without vesting restrictions, which significantly differ from the
Company's stock option awards. These models also require subjective assumptions,
including expected time to exercise, which greatly affect the calculated values.

The weighted average fair value of the Company's stock-based awards to
employees was estimated using the minimum option pricing model with the
following assumptions:

Dividend yield--none
Risk free interest rate--6%
Expected term--3 years

If the computed minimum values of the Company's stock-based awards to
employees had been amortized to expense over the vesting period of the awards as
specified under SFAS No. 123, net loss and basic and diluted loss per common
share on a pro forma basis (as compared to such items as reported) would have
been as follows for the six months ended December 31, 1999:

Net loss:
As reported............................................... $(569,948)
Pro forma................................................. (896,285)
Basic and diluted net loss per common share:
As reported............................................... $ (1.08)
Pro forma (1.14)

F-22

ZEBU

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999
AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1999 (UNAUDITED)

14. NET INCOME (LOSS) PER COMMON SHARE

The following is a reconciliation of the numerators and denominators used in
computing basic and diluted net income (loss) per share:

Six Months Ended
Years Ended June 30, December 31,
------------------------------------- -----------------------
1997 1998 1999 1998 1999
--------- ----------- ----------- --------- -----------

Income (loss)
attributable to
common
stockholders:
Net income
(loss)............ $(229,368) $2,818,253 $2,528,252 $ 775,644 $ (569,948)
Preferred
dividends......... (199,805) (161,225) (199,805) (122,646) (84,066)
Value of preferred
stock beneficial
conversion........ -- -- -- -- (5,000,000)
--------- ---------- ---------- --------- -----------
Income (loss)
attributable to
common
stockholders...... $(429,173) $2,657,028 $2,328,447 $ 652,998 $(5,654,014)
========= ========== ========== ========= ===========
Shares:
Shares used in the
computation of
Basic EPS......... 4,981,849 4,981,849 4,981,849 4,981,849 5,221,681
Effect of
conversion of
preferred stock... -- 2,028,850 2,028,850 2,028,850 --
--------- ---------- ---------- --------- -----------
Shares used in the
computation of
Diluted EPS....... 4,981,849 7,010,699 7,010,699 7,010,699 5,221,681
========= ========== ========== ========= ===========

For fiscal 1997 and the six months ended December 31, 1999, the Company had
securities outstanding which could potentially dilute basic earnings per share
in the future, but were excluded in the computation of diluted net loss per
share in the periods presented, as their effect would have been antidilutive.
Such outstanding securities consist of the following:

Year Ended Six Months Ended
June 30, 1997 December 31, 1999
-------------- ------------------

Convertible debentures -- 731,420
Redeemable convertible preferred stock........ 2,028,850 3,139,961
Stock options................................. -- 447,352
--------- ---------
Total..................................... 2,028,850 4,318,733
========= =========

F-23

ZEBU

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999
AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1999 (UNAUDITED)

15. MAJOR CUSTOMERS

Revenue attributable to significant insurance carrier customers,
representing approximately 10% or more of total revenue for at least one of the
respective periods, is summarized as follows:

Six Months
Ended
Years Ended June 30, December 31,
------------------------------------ ----------------------
1997 1998 1999 1998 1999
-------- -------- -------- -------- --------

Carrier A................................ --% --% 10% --% 22%
Carrier B................................ 23 18 -- 13 --
Carrier C................................ 15 12 15 14 --
Carrier D................................ -- -- 12 -- 20
Carrier E................................ -- 17 13 16 10
Carrier F................................ 13 -- -- -- --
Carrier G................................ -- -- -- 13 15
Carrier H................................ -- -- -- 11 10

16. SUBSEQUENT EVENTS (UNAUDITED)

During February 2000, SelectQuote obtained a one-year line of credit from
LaSalle Bank. SelectQuote may borrow against that line, provided it meets
certain financial and other covenants and conditions. Any borrowings under the
line of credit will bear interest at a rate determined by reference to the prime
rate or to LIBOR. The line of credit is secured by a pledge of all of the assets
of SelectQuote, which is senior to the security interest of the holders of the
convertible debentures. It is also guaranteed by four of the Company's principal
stockholders, and that guaranty is secured by a pledge of their Company stock.

On February 29, 2000, the Company increased the authorized number of shares
of common stock to 100,000,000.

On February 29, 2000, the Company and investors entered into a binding
agreement for the purchase and sale of 2,041,845 shares of Mandatorily
Redeemable Convertible Series E Preferred Stock for $10,515,502. The terms of
this issuance are similar to the terms of the Series D issuance discussed in
Note 9.

F-24

INDEPENDENT AUDITORS' REPORT

To the Shareholders and Board of Directors
of SelectTech:

We have audited the accompanying balance sheets of SelectTech as of
June 30, 1998 and 1999, and the related statements of operations and
shareholders' equity (deficit) and cash flows for each of the three years in the
period ended June 30, 1999. These financial statements are the responsibility of
SelectTech's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, such financial statements present fairly, in all material
respects, the financial position of SelectTech as of June 30, 1998 and 1999, and
the results of its operations and its cash flows for each of the three years in
the period ended June 30, 1999 in conformity with generally accepted accounting
principles.

/s/ DELOITTE & TOUCHE LLP

San Francisco, California
February 29, 2000

F-25

SELECTTECH

BALANCE SHEETS

June 30,
------------------------- December 23,
1998 1999 1999
----------- ----------- -------------
(Unaudited)

ASSETS

CURRENT ASSETS:
Cash and cash equivalents................................. $ 105,823 $ 35,596 $ 56,266
Accounts receivable, net of allowance for doubtful
accounts of $0, $40,095 and $40,095, respectively........ 507,815 886,346 538,620
Other..................................................... 14,905 35,898 9,096
---------- ----------- -----------
Total current assets.................................... 628,543 957,840 603,982
PROPERTY AND EQUIPMENT, NET................................. 169,677 280,246 342,347
---------- ----------- -----------
TOTAL ASSETS................................................ $ 798,220 $ 1,238,086 $ 946,329
========== =========== ===========

LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE
PREFERRED STOCK, AND SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
Accounts payable and accrued expenses..................... $ 379,493 $ 467,898 $ 513,333
Payables to SelectQuote................................... 370,174 808,109 1,673,952
Payables to other related parties......................... 608,817 794,679 779,044
Deferred revenue.......................................... 56,096 231,131 327,295
Current portion of capital lease obligations.............. 17,370 5,146 5,409
Notes payable to SelectQuote.............................. 200,000 450,000 950,000
Promissory notes.......................................... 100,000 -- --
Senior secured convertible debentures..................... -- 1,769,398 2,576,860
---------- ----------- -----------
Total current liabilities............................... 1,731,950 4,526,361 6,825,893

DEFERRED REVENUE............................................ 468,279 979,356 1,015,185

LONG-TERM PORTION OF CAPITAL LEASE OBLIGATIONS.............. 8,873 3,727 955
---------- ----------- -----------
Total liabilities....................................... 2,209,102 5,509,444 7,842,033
---------- ----------- -----------

MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK, Series
A, $0.001 par value: 750,000 shares authorized; 600,000
shares issued and outstanding (aggregate liquidation
preference $1,000,000).................................... 1,000,000 1,000,000 1,000,000
---------- ----------- -----------

SHAREHOLDERS' EQUITY (DEFICIT):
Preferred stock, $0.001 par value: 750,000 shares
authorized; no shares issued and outstanding............. -- -- --
Common stock, $0.001 par value: 8,500,000 shares and
18,500,000 shares authorized, respectively; 6,500,000
shares issued and outstanding (June 30, 1998 and 1999)
and 7,250,000 (December 23, 1999, unaudited)............. -- 718,294 719,044
Accumulated deficit....................................... (2,410,882) (5,989,652) (8,614,748)
---------- ----------- -----------
Total shareholders' equity (deficit).................... (2,410,882) (5,271,358) (7,895,704)
---------- ----------- -----------

TOTAL LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE
PREFERRED STOCK, AND SHAREHOLDERS' EQUITY (DEFICIT)....... $ 798,220 $ 1,238,086 $ 946,329
========== =========== ===========

See notes to financial statements.

F-26

SELECTTECH

STATEMENTS OF OPERATIONS

For the
Period
Six Months July 1, 1999
For the Years Ended June 30, Ended Through
--------------------------------------- December 31, December 23,
1997 1998 1999 1998 1999
----------- ----------- ----------- ------------ -------------
(Unaudited)

REVENUES:
Consulting services............... $1,426,661 $1,361,412 $2,375,791 $1,207,539 $ 936,132
License and maintenance........... -- 15,625 299,183 27,337 142,247
Transactional services............ -- 55,211 296,893 68,651 365,610
---------- ---------- ---------- ---------- ----------
Total revenue................... 1,426,661 1,432,248 2,971,867 1,303,527 1,443,989
---------- ---------- ---------- ---------- ----------

OPERATING EXPENSES:
Software development and
consulting services.............. 1,350,236 2,343,512 4,759,127 2,163,884 3,076,293
Marketing and sales............... 138,136 222,764 496,257 250,232 239,809
General and administrative........ 508,619 850,337 1,035,524 464,772 491,770
---------- ---------- ---------- ---------- ----------
Total operating expenses........ 1,996,991 3,416,613 6,290,908 2,878,888 3,807,872
---------- ---------- ---------- ---------- ----------

LOSS FROM OPERATIONS................ 570,330 1,984,365 3,319,041 1,575,361 2,363,883

INTEREST EXPENSE, NET............... 9,126 20,213 258,929 71,286 261,213
---------- ---------- ---------- ---------- ----------

LOSS BEFORE INCOME TAXES............ 579,456 2,004,578 3,577,970 1,646,647 2,625,096

INCOME TAX EXPENSE.................. 3,100 800 800 800 --
---------- ---------- ---------- ---------- ----------

NET LOSS............................ $ 582,556 $2,005,378 $3,578,770 $1,647,447 $2,625,096
========== ========== ========== ========== ==========

See notes to financial statements.

F-27

SELECTTECH

STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

Retained
Common Stock Earnings Total
--------------------- (Accumulated Shareholders'
Shares Amount Deficit) Equity (Deficit)
--------- --------- ------------ ----------------

BALANCE, JULY 1, 1996...................... 6,500,000 $ -- $ 177,052 $ 177,052

NET LOSS................................... (582,556) (582,556)
--------- -------- ----------- -----------

BALANCE, JUNE 30, 1997..................... 6,500,000 -- (405,504) (405,504)

NET LOSS................................... (2,005,378) (2,005,378)
--------- -------- ----------- -----------

BALANCE, JUNE 30, 1998..................... 6,500,000 -- (2,410,882) (2,410,882)

WARRANTS ISSUED............................ 718,294 718,294

NET LOSS................................... (3,578,770) (3,578,770)
--------- -------- ----------- -----------

BALANCE, JUNE 30, 1999..................... 6,500,000 718,294 (5,989,652) (5,271,358)

OPTIONS EXERCISED (Unaudited).............. 750,000 750 750

NET LOSS (Unaudited)....................... (2,625,096) (2,625,096)
--------- -------- ----------- -----------

BALANCE, DECEMBER 23, 1999 (Unaudited)..... 7,250,000 $719,044 $(8,614,748) $(7,895,704)
========= ======== =========== ===========

See notes to financial statements.

F-28

SELECTTECH

STATEMENTS OF CASH FLOWS

Period
Six Months July 1, 1999
For the Years Ended June 30, Ended Through
------------------------------------- December 31, December 23,
1997 1998 1999 1998 1999
--------- ----------- ----------- -------------- --------------
(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss....................................... $(582,556) $(2,005,378) $(3,578,770) $(1,647,447) $(2,625,096)
Adjustments to reconcile net loss to net cash
used in operating activities:
Amortization of debt discount................ -- -- 82,253 24,192 57,462
Depreciation and amortization................ 26,386 62,600 122,954 54,022 84,591
Changes in assets and liabilities:
Accounts receivable........................ 69,270 (241,008) (378,531) (458,460) 347,726
Other...................................... (10,582) (436) (19,015) (4,717) 26,802
Accounts payable and accrued expenses...... 88,383 216,806 88,405 197,636 45,435
Payables to SelectQuote and other related
parties................................... 223,313 598,205 623,797 237,668 850,208
Deferred revenue........................... 50,000 474,375 686,112 590,201 131,993
--------- ----------- ----------- ----------- -----------
Net cash used in operating activities.... (135,786) (894,836) (2,372,795) (1,006,905) (1,080,879)
--------- ----------- ----------- ----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES -
Property and equipment purchased............... (108,850) (92,376) (235,501) (163,636) (146,692)
--------- ----------- ----------- ----------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of mandatorily
redeemable convertible Series A preferred
stock......................................... -- 1,000,000 -- -- --
Proceeds from promissory notes................. -- 100,000 325,000 -- --
Repayments of promissory notes................. -- -- (425,000) (100,000) --
Net proceeds from issuance of senior secured
convertible debentures and warrants to
purchase common stock (net of issuance
costs)........................................ -- -- 2,405,439 1,330,439 750,000
Capital lease obligations repaid............... (9,766) (14,177) (17,370) (10,240) (2,509)
Proceeds from exercise of options.............. -- -- -- -- 750
Proceeds from notes payable to related party... 200,000 -- 250,000 -- 500,000
--------- ----------- ----------- ----------- -----------
Net cash provided by financing
activities.............................. 190,234 1,085,823 2,538,069 1,220,199 1,248,241
--------- ----------- ----------- ----------- -----------

NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS.................................... (54,402) 98,611 (70,227) 49,658 20,670

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR..... 61,614 7,212 105,823 105,823 35,596
--------- ----------- ----------- ----------- -----------

CASH AND CASH EQUIVALENTS, END OF YEAR........... $ 7,212 $ 105,823 $ 35,596 $ 155,481 $ 56,266
========= =========== =========== =========== ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid for interest expense................. $ 2,315 $ 1,812 $ 164,948 $ 41,441 $ 186,050
Cash paid for income taxes..................... $ 2,300 $ 2,300 $ 1,600 $ 800 $ --

NONCASH INVESTING AND FINANCING ACTIVITIES:
Purchase of equipment under capital leases..... $ -- $ 14,984 $ -- $ -- $ --

See notes to financial statements.

F-29

SELECTTECH

NOTES TO FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 1997, 1998 AND 1999, SIX MONTHS ENDED
DECEMBER 31, 1998 (Unaudited) AND PERIOD FROM JULY 1, 1999
THROUGH DECEMBER 23, 1999 (Unaudited)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS--SelectTech ("SelectTech"), a Nevada Corporation,
was established to develop custom software and to provide computer consulting
services to the insurance industry. SelectTech derives its revenues from
software licenses, software maintenance, software usage fees, custom software
development and professional consulting services.

Effective April 30, 1997, SelectTech changed its tax status from a limited
liability company to a C corporation. Prior to the change in status, taxable
income and losses of SelectTech were generally reportable on the income tax
returns of the respective owners.

Prior to the change in status, SelectQuote Insurance Services
("SelectQuote") owned 50% of SelectTech. Subsequent to April 30, 1997,
SelectQuote distributed all of its shares to its shareholders.

In October 1998, SelectTech increased authorized common stock to 18,500,000
shares.

On December 23, 1999, SelectQuote acquired all the outstanding common and
preferred stock (other than preferred stock which was converted concurrent with
the transaction) of SelectTech. These financial statements reflect SelectTech's
financial position immediately prior to the acquisition.

CASH AND CASH EQUIVALENTS--SelectTech considers all highly liquid
instruments purchased with an original maturity of three months or less to be
cash equivalents.

PROPERTY AND EQUIPMENT are stated at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets, which
range from three years for computer equipment to five to ten years for other
assets.

SOFTWARE DEVELOPMENT COSTS--Costs for the development of new software
products and substantial enhancements to existing software products are expensed
as incurred until technological feasibility has been established, at which time
any additional costs would be capitalized in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 86, COMPUTER SOFTWARE TO BE SOLD,
LEASED OR OTHERWISE MARKETED. The costs to develop such software have not been
capitalized as SelectTech generally releases the software once technological
feasibility has been established, and subsequent improvement costs have not been
significant.

REVENUE RECOGNITION--Statement of Position 97-2, SOFTWARE REVENUE
RECOGNITION ("SOP 97-2"), was issued in October 1997 by the American Institute
of Certified Public Accountants ("AICPA") and was amended by Statement of
Position 98-4 ("SOP 98-4"). SelectTech adopted SOP 97-2 effective July 1, 1997
and SOP 98-4 effective March 31, 1998. SelectTech believes its current revenue
recognition policies and practices are consistent with SOP 97-2 and SOP 98-4.
Additionally, the AICPA issued SOP 98-9 in December 1998, which provides certain
amendments to SOP 97-2, and is effective for transactions entered into by
SelectTech beginning July 1, 1999. Adoption of these amendments did not have a
material impact on SelectTech's financial position, results of operations or
cash flows.

Software license revenue is recognized upon meeting each of the following
criteria: execution of a written license agreement or contract; delivery and
implementation of software; the license fee

F-30

SELECTTECH

NOTES TO FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999, SIX MONTHS ENDED
DECEMBER 31, 1998 (Unaudited) AND PERIOD FROM JULY 1, 1999
THROUGH DECEMBER 23, 1999 (Unaudited)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
is fixed and determinable; collectibility of the proceeds is assessed as being
probable; and vendor specific objective evidence exists to allocate the total
fee to elements of the arrangement. Vendor-specific objective evidence is based
on the price generally charged when an element is sold separately, or if not yet
sold separately, is established by authorized management. All elements of each
order are valued at the time of revenue recognition.

The portion of revenues from new license agreements which relate to
SelectTech's obligations to provide customer support is deferred and recognized
ratably over the contract support period, which is generally one to four years.
Software maintenance contracts are renewable on an annual basis. Revenues from
maintenance contract renewals are deferred and recognized ratably over the terms
of the agreements.

Revenues from transactional services, consulting and other services are
recognized as the related services are provided or as the milestones are
completed.

CONCENTRATION OF CREDIT RISK--Financial instruments which potentially
subject SelectTech to concentrations of credit risk consist principally of
accounts receivable. SelectTech sells its products and services to companies in
the insurance industry and generally does not require its customers to provide
collateral to support accounts receivable. SelectTech maintains allowances for
potential credit losses.

DEBT WITH STOCK PURCHASE WARRANTS--SelectTech accounts for stock purchase
warrants as a separate component of equity and as a discount on the associated
debt based on the relative fair value of the stock purchase warrants at the time
of issuance. The discount on debt is amortized, as interest expense, over the
period that the debt is outstanding.

ADVERTISING EXPENSES--Direct costs related to marketing and advertising
SelectTech's product are expensed in the periods incurred. Advertising expenses
were $6,490, $8,630 and $42,774 for fiscal 1997, 1998 and 1999, respectively,
$43,798 for the six months ended December 31, 1998, and $20,559 for the period
from July 1, 1999 through December 23, 1999.

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

FINANCIAL INSTRUMENTS--The fair value of financial instruments, principally
cash, accounts receivable, accounts payable, notes payable and debentures
approximate their June 30, 1998 and 1999 and December 23, 1999 carrying values
because such items are primarily short-term in nature.

F-31

SELECTTECH

NOTES TO FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999, SIX MONTHS ENDED
DECEMBER 31, 1998 (Unaudited) AND PERIOD FROM JULY 1, 1999
THROUGH DECEMBER 23, 1999 (Unaudited)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES--SelectTech operates in the
software industry, and accordingly, can be affected by a variety of factors. For
example, management of SelectTech believes that changes in any of the following
areas could have a significant negative effect on SelectTech's future financial
position, results of operations and cash flows: demand for performance
availability and management software solutions, including any adverse purchasing
patterns caused by Year 2000 related concerns; new product introductions by
competitors; development of distribution channels; ability to implement and
expand operational customer support and financial control systems to manage
rapid growth, both domestically and internationally; the hiring, training and
retention of key employees; fundamental changes in technology underlying
software products; litigation or other claims against SelectTech.

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

INCOME TAXES--SelectTech records income taxes using the asset and liability
method which requires the recognition of deferred tax assets and liabilities for
the expected future tax consequences of events that have been recognized in
SelectTech's financial statements or tax returns. In estimating future tax
consequences, generally all expected future events other than enactments or
changes in the tax law or rates are considered.

STOCK-BASED COMPENSATION--SelectTech accounts for stock-based compensation
using the intrinsic value method prescribed in Accounting Principles Board
Opinion No. 25 ("APB 25"), ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES.

COMPREHENSIVE INCOME--There are no differences between comprehensive income
and net income as reported in SelectTech's statements of operations.

SEGMENT INFORMATION--SelectTech has adopted the provisions of SFAS No. 131,
DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION. SFAS
No. 131 establishes standards for the reporting by public business enterprises
of information about operating segments, products and services, geographic
areas, and major customers.

SelectTech operates in a single industry segment encompassing application
system software and the accompanying integration and solution consulting
services applicable to the insurance industry. All of SelectTech's revenues are
received from customers based primarily in the United States. See Note 12 for
information on major customers.

F-32

SELECTTECH

NOTES TO FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999, SIX MONTHS ENDED
DECEMBER 31, 1998 (Unaudited) AND PERIOD FROM JULY 1, 1999
THROUGH DECEMBER 23, 1999 (Unaudited)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
definition of a derivative. As amended in June 1999 by SFAS No. 137, this
Statement is effective for all fiscal quarters of all fiscal years beginning
after June 15, 2000. SelectTech has not yet evaluated the impact of this
Statement.

2. ALLOWANCE FOR DOUBTFUL ACCOUNTS

Allowances for doubtful accounts are estimated and established based on
historical experience and specific circumstances of each customer. Additions to
the allowance are charged to general and administrative expenses. Accounts
receivable are written off against the allowance for doubtful accounts when an
account is deemed uncollectible. Recoveries on accounts receivable previously
charged off as uncollectible are credited to the allowance for doubtful
accounts. SelectTech provided $124,291 to the allowance for doubtful accounts
and wrote off accounts receivable of $84,196 during 1999.

3. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

June 30,
--------------------- December 23,
1998 1999 1999
--------- --------- ------------

Computer equipment....................... $238,170 $ 439,999 $ 532,746
Furniture and equipment.................. 14,984 45,465 83,927
Leasehold improvements................... 8,320 8,320 23,803
-------- --------- ---------
Total................................ 261,474 493,784 640,476

Less accumulated depreciation............ (91,797) (213,538) (298,129)
-------- --------- ---------

Property and equipment, net.............. $169,677 $ 280,246 $ 342,347
======== ========= =========

Included in property and equipment at June 30, 1998 and 1999 and
December 23, 1999 is equipment acquired under capital leases with a cost of
$52,976. Accumulated depreciation at June 30, 1998 and 1999 and December 23,
1999 was $29,102, $44,233 and $46,886, respectively, related to such equipment.

4. MANDATORILY REDEEMABLE CONVERTIBLE SERIES A PREFERRED STOCK

In August and November 1997, SelectTech issued a total of 450,000 shares of
Mandatorily Redeemable Convertible Series A Preferred Stock for $750,000 to
three insurance companies under a Stock Purchase Agreement. In addition in
April 1998 SelectTech issued 150,000 shares of Mandatorily Redeemable
Convertible Series A Preferred Stock to SelectQuote for $250,000 under

F-33

SELECTTECH

NOTES TO FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999, SIX MONTHS ENDED
DECEMBER 31, 1998 (Unaudited) AND PERIOD FROM JULY 1, 1999
THROUGH DECEMBER 23, 1999 (Unaudited)

4. MANDATORILY REDEEMABLE CONVERTIBLE SERIES A PREFERRED STOCK (Continued)
the same agreement. This agreement provides stock registration rights,
representation on SelectTech's steering committee to provide advice about
product development, and priority access to SelectTech's development resources.

Each share of the Mandatorily Redeemable Convertible Series A Preferred
Stock is convertible at any time into one share of common stock, subject to
adjustment for certain anti-dilution provisions, and is automatically
convertible into common stock upon a public offering of SelectTech's share at a
per share price which is at least $5.00 (as adjusted for any stock dividends,
combinations, splits, recapitalizations and the like with respect to such
shares) and the gross cash proceeds to SelectTech (before underwriting
discounts, commissions and fees) are at least $7,500,000 or upon the consent of
the holders of a majority of the shares outstanding. The Mandatorily Redeemable
Convertible Series A Preferred Stock has voting rights equivalent to the number
of common shares into which each share is convertible, has a liquidation
preference of the original purchase price plus any declared but unpaid
dividends, and has a noncumulative annual dividend preference of $0.10 per
share. Additionally, any time after August 2000 holders of at least 50% of the
then outstanding Mandatorily Redeemable Convertible Series A Preferred Stock
have the right to redeem all of the outstanding Mandatorily Redeemable
Convertible Series A Preferred Stock at the liquidation preference.

5. TRANSACTIONS WITH SELECTQUOTE AND OTHER RELATED PARTIES

Certain shareholders of SelectTech are shareholders of SelectQuote, and two
officers of SelectQuote participate in the management and direction of
SelectTech, including serving on SelectTech's Board of Directors. SelectQuote
provides SelectTech with certain operating support, which includes management
and administrative services, telephone and office facilities, and other
miscellaneous items and charges SelectTech for these benefits on a cost
reimbursement basis. Payables to SelectQuote for such services are $344,074 and
$761,084 at June 30, 1998 and 1999, respectively, and $1,599,270 at
December 23, 1999. Total fees for these services provided by SelectQuote were
approximately $338,393, $527,009 and $708,132 in fiscal 1997, 1998 and 1999,
respectively, $294,145 for the six months ended December 31, 1998, and $903,526
for the period from July 1, 1999 through December 23, 1999. Included in the
total fees was sublease rental expense of $24,214, $85,302 and $134,892 during
fiscal 1997, 1998 and 1999, respectively, $50,563 for the six months ended
December 31, 1998, and $171,348 for the period from July 1, 1999 through
December 23, 1999.

In February 1997, SelectQuote loaned SelectTech $200,000 at an interest rate
of 10% per annum due on July 31, 1998. However, payment on the note and related
interest were deferred due to SelectTech's refinancing discussed in the
following paragraph. The note is secured by consulting contracts, rights to any
software that has been developed, and a maintenance contract with one insurance
company. Interest expense recognized by SelectTech related to the note was
$6,100, $20,000 and $20,000 in fiscal 1997, 1998 and 1999, respectively, $10,000
for the six months ended

F-34

SELECTTECH

NOTES TO FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999, SIX MONTHS ENDED
DECEMBER 31, 1998 (Unaudited) AND PERIOD FROM JULY 1, 1999
THROUGH DECEMBER 23, 1999 (Unaudited)

5. TRANSACTIONS WITH SELECTQUOTE AND OTHER RELATED PARTIES (Continued)
December 31, 1998, and $10,000 for the period from July 1, 1999 through
December 23, 1999. Payables to SelectQuote for accrued interest expense are
$26,100 and $46,100 at June 30, 1998 and 1999, respectively, and $56,100 at
December 23, 1999.

On October 15, 1998, SelectTech entered into a Debenture Purchase Agreement
(the "Agreement") (see Note 7) which required SelectQuote to agree to
subordination of both its $200,000 note receivable from SelectTech and $453,300
of the outstanding receivable for operating services from SelectTech. As a
condition of the subordination, the note payable to SelectQuote was made
convertible into shares of SelectTech's common stock at $1.67 per share. The
Agreement also allows SelectTech to repay the $453,300 other payables balance in
twelve monthly installments of $37,800 commencing in October 1998 and that
subsequent charges for operating services be paid on a current basis. However,
none of these installment payments have been made, although certain operating
costs charged by SelectQuote to SelectTech have been reimbursed subsequent to
the Agreement date.

In June 1999, SelectTech borrowed from SelectQuote an additional $250,000 in
the form of a promissory note bearing interest at 9% per annum and due on
December 31, 1999. SelectQuote made two additional loans to SelectTech of
$250,000 each in October and November 1999 under similar terms.

SelectTech leased $38,000 of computer equipment from SelectQuote under a
36-month capital lease that expired in March 1999. The rate of interest on this
lease was 9.0%.

In April 1998, SelectQuote purchased 150,000 shares of Mandatorily
Redeemable Convertible Series A Preferred Stock for $250,000.

During fiscal 1997, 1998 and 1999, two members of SelectTech's Board of
Directors worked as officers and consultants for SelectTech. The consulting
expenses related to these directors totaled $176,440, $307,900 and $282,900 in
fiscal 1997, 1998 and 1999, respectively, and $137,700 for the six months ended
December 31, 1998, and $16,700 for the period from July 1, 1999 through
December 23, 1999. Total payable was $55,546 and $46,425 at June 30, 1998 and
1999, respectively, and $0 at December 23, 1999. Additionally, a corporation
owned by these individuals provided programming resources. Total programming
expense was $285,145, $544,700 and $1,010,269 in fiscal 1997, 1998 and 1999,
respectively, and $552,940 for the six months ended December 31, 1998 and
$367,052 for the period from July 1, 1999 through December 23, 1999. Total
payable was $553,271 and $748,254 at June 30, 1998 and 1999, respectively, and
$779,044 at December 23, 1999.

6. PROMISSORY NOTES

During fiscal 1998 and 1999, SelectTech entered into promissory notes
totaling $425,000 with four insurance companies. These promissory notes bore
interest at rates ranging from 10% to 15% with principal and interest due on
October 12, 1998. The notes were repaid with the proceeds from the sale of the
Senior Secured Convertible Debentures (see Note 7).

F-35

SELECTTECH

NOTES TO FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999, SIX MONTHS ENDED
DECEMBER 31, 1998 (Unaudited) AND PERIOD FROM JULY 1, 1999
THROUGH DECEMBER 23, 1999 (Unaudited)

7. SENIOR SECURED CONVERTIBLE DEBENTURES

In October 1998 SelectTech entered into a Debenture Purchase Agreement with
three insurance carriers that provides up to $2,500,000 at 12% interest. As of
June 30, 1999, $2,500,000 had been borrowed under this agreement.

Debentures are convertible to common stock at a rate of $1.67 per share. In
addition, debenture holders receive warrants to purchase common stock at $.01
per share for 5% of SelectTech's fully diluted capital exercisable at the
earlier of an initial public offering of common stock, sale, transfer, or
disposition of substantially all assets, or October 15, 2005. The proceeds from
the issuance of Senior Secured Convertible Debentures were allocated to the debt
and the warrants based on their relative fair value. The resulting debt discount
of $718,294 and financing costs of $94,561 are being recognized as interest
expense over the life of the debentures.

The Debenture Purchase Agreement requires eight quarterly interest-only
payments from December 31, 1998 through September 30, 2000; thereafter,
outstanding principal shall be repaid in twelve equal quarterly installments,
plus interest, from December 31, 2000 through September 30, 2003. The agreement
provides for stock registration rights, requires 20% representation by
purchasers on SelectTech's Board of Directors, requires subordination of the
Note Payable to SelectQuote and past-due payables to related parties, and grants
security interests in SelectTech's assets, including source code, to all
existing and future software while the debentures are outstanding.

From July 22, 1999 through August 13, 1999, SelectTech received additional
loans totalling $750,000 from the three insurance carriers. These loans were to
be repaid in full on December 15, 1999 at 12% per annum interest; however, the
insurance carriers extended the due date to the earlier of: (i) the date funds
are received from a $5,000,000 preferred stock investment in SelectQuote or
(ii) December 29, 1999.

8. INCOME TAXES

Income tax expense for the years ended June 30, 1997, 1998 and 1999 and for
the period July 1, 1999 through December 23, 1999 consisted solely of state
franchise taxes.

F-36

SELECTTECH

NOTES TO FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999, SIX MONTHS ENDED
DECEMBER 31, 1998 (Unaudited) AND PERIOD FROM JULY 1, 1999
THROUGH DECEMBER 23, 1999 (Unaudited)

8. INCOME TAXES (Continued)
Deferred income taxes reflect the tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax reporting purposes, as well as
operating losses and tax credit carryforwards. Significant components of
SelectTech's deferred tax assets for federal and state income taxes are as
follows:

June 30,
------------------------- December 23,
1998 1999 1999
----------- ----------- ------------

Deferred tax assets:
Net operating loss carryforwards... $ 753,531 $ 1,898,781 $ 2,486,752
Other--net......................... 261,720 547,876 1,018,733
----------- ----------- -----------
Total............................ 1,015,251 2,446,657 3,505,485

Valuation allowance.................. (1,015,251) (2,446,657) (3,505,485)
----------- ----------- -----------

Net deferred tax asset............... $ -- $ -- $ --
=========== =========== ===========

A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax asset will not be realized. SelectTech established a
100% valuation allowance at June 30, 1998 and 1999 and December 23, 1999 due to
the uncertainty of realizing future tax benefits from its net operating loss
carryforwards and other deferred tax assets. Federal and state net operating
losses for tax purposes of approximately $4,700,000 and $2,900,000,
respectively, begin to expire in the years 2012 and 2003 for federal and state
purposes, respectively.

Internal Revenue Code Section 382 places a limitation (the "Section 382
Limitation") on the amount of taxable income which can be offset by net
operating loss ("NOL") carryforwards after a change in control (generally
greater than 50% change in ownership) of a loss corporation. California has
similar rules. Generally, after a control change, a loss corporation cannot
deduct NOL carryforwards in excess of the Section 382 Limitation. Due to these
"change in ownership" provisions, utilization of the NOL and tax credit
carryforwards may be subject to an annual limitation regarding their utilization
against taxable income in future periods.

9. CAPITAL LEASES

SelectTech leased computer equipment from SelectQuote under a capital lease
agreement that expired March 1999 (see Note 5). In addition, during 1998
SelectTech entered into another capital lease which expires in March 2001.

F-37

SELECTTECH

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999
AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1999 (UNAUDITED)

9. CAPITAL LEASES (Continued)

Minimum lease payments under this lease for future years ending June 30 are
as follows:

2000........................................................ $ 5,802
2001........................................................ 3,868
-------
Total minimum lease payments............................ 9,670

Less amount representing interest........................... 797
-------

Present value of minimum lease payments..................... 8,873
Less current portion of obligation under capital lease...... (5,146)
-------
Long-term portion of obligation under capital lease......... $ 3,727
=======

10. STOCK OPTION PLAN

SelectTech's 1997 Stock Option Plan (the "Plan") allows the Board of
Directors to grant options to employees, directors and consultants of SelectTech
to purchase shares of common stock either as incentive stock options ("ISO") or
as nonqualified stock options ("NSO"). The Board of Directors has authorized
6,200,000 shares of common stock for the Plan, as amended in February 1998 and
August 1999. The term of each option may not exceed ten years and ten years and
one month for ISOs and NSOs, respectively. Options vest ratably over three years
from the date of grant.

Stock option activity was as follows:

Weighted
Number Average
of Shares Exercise Price
--------- --------------

Balance at July 1, 1996............................ -- $ --
Granted............................................ 1,727,744 0.001
--------- ------

Balance at June 30, 1997 (no shares vested)........ 1,727,744 0.001
Granted............................................ 900,000 0.170
--------- ------

Balance at June 30, 1998 (671,900 shares vested at
a weighted average exercise price of $0.001)..... 2,627,744 0.060
Granted............................................ 124,500 1.670
Canceled........................................... (2,500) 1.670
--------- ------

Balance at June 30, 1999........................... 2,749,744 0.130
Granted (unaudited)................................ 3,409,111 3.413
Exercised (unaudited).............................. (750,000) 0.001
Canceled (unaudited)............................... (117,000) 0.520
--------- ------

Balance at December 23, 1999 (unaudited)........... 5,291,855 $2.255
========= ======
Available for grant at December 23, 1999
(unaudited)...................................... 908,145
=========

F-38

SELECTTECH

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999
AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1999 (UNAUDITED)

10. STOCK OPTION PLAN (Continued)
The weighted average minimum value per option as of the date of grant for
options granted during 1997, 1998 and 1999 was $0.00, $0.04 and $0.41,
respectively. Total exercisable shares were 671,900 and 1,676,982 at June 30,
1998 and 1999, respectively, and 1,850,974 at December 23, 1999.

The following table summarizes information about outstanding and vested
stock options at December 23, 1999:

Options Outstanding
- ----------------------------------------------
Weighted Options
Outstanding Average Vested at
Exercise at December 23, Remaining December 23,
Price 1999 Contractual Life 1999
- -------- ---------------- ---------------- -------------

$0.001 977,744 7.47 864,344
0.170 800,000 8.16 507,078
1.670 105,000 9.20 28,116
3.210 1,243,309 9.65 164,640
3.530 2,165,802 9.65 286,796
--------- ---------
5,291,855 9.01 1,850,974
========= =========

ADDITIONAL STOCK PLAN INFORMATION--As discussed in Note 1, SelectTech
accounts for its stock-based awards to employees using the intrinsic value
method in accordance with APB No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES,
and its related interpretations.

SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, requires the
disclosure of pro-forma net loss and loss per share had SelectTech adopted the
fair value method since SelectTech's inception. Under SFAS No. 123, the fair
value of stock-based awards to employees is calculated through the use of option
pricing models, even though such models were developed to estimate the fair
value of freely tradable, fully transferable options without vesting
restrictions, which significantly differ from SelectTech's stock option awards.
These models also require subjective assumptions, including future stock price
volatility and expected time to exercise, which greatly affect the calculated
values.

The weighted average fair value of SelectTech's stock-based awards to
employees was estimated using the minimum option pricing model with the
following assumptions:

Years Ended June 30,
------------------------------
1997 1998 1999
-------- -------- --------

Dividend yield........................................ None None None
Risk free interest rate............................... 5.6% 5.6% 5.6%
Expected term, in years............................... 2 2 2

F-39

SELECTTECH

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

YEARS ENDED JUNE 30, 1997, 1998 AND 1999
AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1999 (UNAUDITED)

10. STOCK OPTION PLAN (Continued)
If the computed minimum values of SelectTech's stock-based awards to
employees had been amortized to expense over the vesting period of the awards as
specified under SFAS No. 123, net loss on a pro forma basis (as compared to such
items as reported) would have been:

Years Ended June 30,
-------------------------------------
1997 1998 1999
--------- ----------- -----------

Net loss:
As reported........................... $582,556 $2,005,378 $3,578,770
Pro forma............................. $582,563 $2,009,966 $3,595,629

11. EMPLOYEE BENEFIT PLAN

SelectTech has a pretax savings plan covering nearly all its employees that
is intended to qualify under Section 401(k) of the Internal Revenue Code.
Eligible employees may contribute up to 15 percent of their pretax salary,
subject to certain limitations. SelectTech makes a discretionary profit sharing
contribution and matches each employee's contributions up to $300 per plan year.
SelectTech's contributions were zero, $203 and $2,029 during the years ended
June 30, 1997, 1998 and 1999, respectively.

12. MAJOR CUSTOMERS

Revenue attributable to significant customers, representing approximately
10% or more of total revenue for at least one of the respective periods, is
summarized as follows:

Years Ended June 30,
------------------------------------
Sales 1997 1998 1999
- ----- -------- -------- --------

Company A.............................................. 59% 4% --%
Company B.............................................. 40 23 --
Company C.............................................. -- 19 24
Company D.............................................. -- 19 2
Company E.............................................. -- 27 6
Company F.............................................. -- -- 30

At June 30, 1998, Company B, C, E and F accounted for 17%, 33%, 24% and 14%,
respectively, of accounts receivable. At June 30, 1999, Company C and F
accounted for 27% and 22%, respectively, of accounts receivable.

F-40

You should rely only on the information contained in this Prospectus. We
have not authorized anyone to provide information different from that contained
in this Prospectus. We are offering to sell, and seeking offers to buy, shares
of common stock only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date of this
prospectus, regardless of the time of delivery of this prospectus or of any sale
of our common stock.

TABLE OF CONTENTS

Page
--------

Prospectus Summary.................... 3
Risk Factors.......................... 8
Special Note Re Forward-Looking
Statements and Industry Data........ 20
Use of Proceeds....................... 20
Dividend Policy....................... 20
Capitalization........................ 21
Dilution.............................. 22
Selected Financial and Operating
Data................................ 23
Pro Forma Condensed Combined and
Actual Data......................... 25
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 28
Business.............................. 41
Management............................ 59
Related Party Transactions............ 64
Principal Stockholders................ 66
Description of Capital Stock.......... 67
Shares Eligible for Future Sale....... 69
Underwriting.......................... 71
Legal Matters......................... 73
Experts............................... 73
Where You Can Find Additional
Information......................... 73
Index to Consolidated Financial
Statements.......................... F-1

Dealer Prospectus Delivery Obligation:

Until , 2000 (25 days after the date of this prospectus), all
dealers that buy, sell or trade in these shares of common stock, whether or not
participating in this offering, may be required to deliver a prospectus. Dealers
are also obligated to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.

[LOGO]
Shares
Common Stock
Deutsche Banc Alex. Brown
U.S. Bancorp Piper Jaffray
Cochran, Caronia & Co.
Prospectus
, 2000

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the expenses payable by the Company (the
"registrant") in connection with the offering of the securities being
registered, other than the underwriting discounts and commissions. All of the
amounts are estimates except for the SEC registration fee, the NASD filing fee
and the Nasdaq National Market filing fee.

SEC registration fee........................................ $17,152
NASD filing fee.............................................
Nasdaq National Market filing fee*..........................
Blue Sky fees and expenses.................................. 1,000
Printing and engraving expenses*............................
Legal fees and expenses*....................................
Accounting fees and expenses*...............................
Transfer agent and registrar fees and expenses*.............
Directors' and Officers' insurance premiums*................
Miscellaneous expenses*.....................................
-------
Total..................................................... $
=======

- ------------------------

* To be added by amendment

Item 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law (the DGCL) authorizes a
court to award, or a corporation's board of directors to grant, indemnity to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the "Securities Act").

As permitted by the DGCL, the registrant's bylaws provide that the
registrant shall indemnify its directors and officers, and may indemnify its
employees and other agents, to the fullest extent permitted by law. The bylaws
also permit the registrant to secure insurance on behalf of any officer,
director, employee or other agent for any liability arising out of his or her
actions in such capacity, regardless of whether the bylaws would permit
indemnification. The registrant intends to obtain officer and director liability
insurance with respect to liabilities arising out of certain matters, including
matters arising under the Securities Act.

The registrant also has entered into agreements with certain of its
directors and executive officers and intends to enter into agreements with its
remaining officers and directors that, among other things, indemnify them for
certain expenses (including attorneys' fees), judgments, fines and settlement
amounts incurred by them in any action or proceeding, including any action by or
in the right of the registrant, arising out of such person's services as a
director or officer of the registrant, any subsidiary of the registrant or any
other company or enterprise to which the person provides services at the request
of the registrant.

Reference is made to Section 8 of the Underwriting Agreement, a copy of
which is filed as Exhibit 1.1 hereto, which provides for indemnification by the
Underwriters of the directors and officers of the registrant who sign the
registration statement against certain liabilities, including those arising
under the Securities Act, in certain circumstances.

II-1

Item 15. RECENT SALES OF UNREGISTERED SECURITIES.

(1) In December 1999, the registrant acquired SelectQuote as its wholly owned
subsidiary in a merger transaction and simultaneously acquired SelectTech
which merged into SelectQuote pursuant to the terms of an amended and
restated agreement and plan of reorganization dated as of August 17, 1999.
In connection with these two merger transactions, the registrant appeared at
a fairness hearing conducted by the California Corporations Commissioner,
which issued a permit for the offer and sale of securities in the merger.
Pursuant to the permit the registrant issued the following securities to the
shareholders and other security holders of SelectQuote and SelectTech which
were exempt from registration under the Securities Act by reason of
Section 3(a)(10) thereof: 10,497,974 shares of common stock; 1,137,235
shares of Series A preferred stock; 821,690 shares of Series B preferred
stock; 69,925 shares of Series C preferred stock. In addition, the
registrant issued debentures in the principal amount of $1.9 million
convertible into 731,420 shares of common stock at $2.60 per share and
options for the purchase of 6,510,635 shares of common stock, which were
issued to the former holders of SelectQuote and SelectTech stock options. No
underwriters were engaged in connection with these issuances and sales.

(2) The registrant issued a total of 50,000 shares of Series D preferred stock
in a private placement on December 27, 1999 to an accredited investor. These
shares are convertible into 1,111,111 shares of Series D preferred stock.
The total consideration received was $5.0 million. The exemption from
registration relied upon for this transaction was Section 4(2). Cochran,
Caronia Securities LLC provided investment banking services to the
registrant in connection with this private placement.

(3) The registrant entered into a binding agreement for the sale of 2,041,845
shares of Series E preferred stock in a private placement on February 29,
2000 to a group of accredited investors. These shares are convertible into
2,041,845 shares of common stock. The sale of these securities will be
exempt from registration relied upon for this transaction was Section 4(2).
Cochran, Caronia Securities LLC provided investment banking services to the
registrant in connection with this private placement.

Item 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

Exhibit
Number Description of Document
- ------- -----------------------

II-2

Exhibit
Number Description of Document
- ------- -----------------------

10.3 SelectQuote, Inc. 1999 Employee Stock Purchase Plan
10.4 * Software License Agreement--Intellisys
10.5 Software Development Agreement with Innovative Information
Group, Inc.
10.6 Software Development Agreement between Software Technology,
Inc. and Innovative Information Group, Inc.
10.7 Software Development Agreement between Software Technology,
Inc. and Client Server Programs, Inc.
10.8 Lease Agreement for 657 Mission Street, San Francisco,
California
10.9 Lease Agreement for 595 Market Street, San Francisco,
California (6th and 7th Floors)
10.10 Lease Agreement for 595 Market Street, San Francisco,
California (7th, 9th and 10th Floors)
10.11 Form of Employment Agreement with executive officers
10.12 Form of Indemnity Agreement
10.13 Form of Affiliates Agreement
10.14 * Credit Agreement with LaSalle Bank National Association
21.1 * Subsidiaries of the Registrant
23.1 * Consent of McCutchen, Doyle, Brown & Enersen LLP (included
in Exhibit 5.1 hereto)
23.2 Consent of Deloitte & Touche LLP
23.3 * Consent of Chapin Fleming McNitt Shea & Carter
23.4 Consent of Randall J. Wolf
24.1 Power of Attorney (contained on the signature page to this
registration statement).
27.1 Financial Data Schedule

- ------------------------

* To be filed by amendment

Item 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For the purpose of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1)
or (4) or 297(h) under the Securities Act shall be deemed to be part of this
registration statement at the time it was declared effective.

II-3

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial BONA FIDE offering thereof.

The undersigned registrant hereby undertakes to provide to the Underwriters
at the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

[Remainder of page intentionally left blank.]

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment to the registration statement to be
signed on its behalf of the undersigned, thereunto duly authorized, in the city
of San Francisco, state of California on March 1, 2000.

ZEBU

By: /s/ CHARAN J. SINGH
-----------------------------------------
Charan J. Singh
CHIEF EXECUTIVE OFFICER

Power of Attorney

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Steven H. Gerber and David L. Paulsen, or
either one of them, his true and lawful attorney-in-fact and agent for him and
on his behalf and in his name, place and stead, and in any and all capacities,
to sign any and all amendments (including post-effective amendments) to this
registration statement and any registration statement for the same offering that
is to be effective upon filing pursuant to Rule 462(b) under the Securities Act
of 1933 (and any amendments thereto), and to file the same, with exhibits and
any and all other documents filed with respect thereto, with the Securities and
Exchange Commission (or any other governmental or regulatory authority),
granting unto said attorney full power and authority to do and to perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully to all intents and purposes as
he himself might or could do if personally present, hereby ratifying and
confirming all that said attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

Name Title Date
---- ----- ----

/s/ CHARAN J. SINGH Chairman of the Board of Directors and
--------------------------------- Chief Executive Officer (Principal March 1, 2000
Charan J. Singh Executive Officer)

/s/ STEVEN H. GERBER
--------------------------------- President and Director March 1, 2000
Steven H. Gerber

Chief Operating Officer, Insurance
/s/ DAVID L. PAULSEN Products and Services, Chief Financial
--------------------------------- Officer (Principal Financial Officer March 1, 2000
David L. Paulsen and Principal Accounting Officer), and
Director

/s/ MICHAEL L. FEROAH
--------------------------------- Director March 1, 2000
Michael L. Feroah

/s/ STEVEN J. TYNAN
--------------------------------- Director March 1, 2000
Steven J. Tynan

II-5

EXHIBIT INDEX

Exhibit
Number Description of Document
- ------- -----------------------

1.1 Form of Equity Underwriting Agreement.
2.1 Amended and Restated Agreement and Plan of Reorganization
2.1.1 Amendment to Amended and Restated Agreement and Plan of
Reorganization
2.2 Merger Agreement
3.1 Restated Certificate of Incorporation of the Registrant in
effect upon the date of this filing
3.2 Bylaws of the registrant in effect upon the date of this
filing
4.1 * Specimen Stock Certificate
4.2 Amended and Restated Registration Rights Agreement
4.3 Amended and Restated Debenture Purchase Agreement
5.1 * Opinion of McCutchen, Doyle, Brown & Enersen, LLP
5.2 * Opinion of Chapin McNitt Fleming Shea & Carter
10.1 SelectQuote, Inc. 1999 Stock Option Plan
10.2 Form of Option Agreement
10.3 SelectQuote, Inc. 1999 Employee Stock Purchase Plan
10.4 * Software License Agreement--Intellisys
10.5 Software Development Agreement with Innovative Information
Group, Inc.
10.6 Software Development Agreement between Software Technology,
Inc. and Innovative Information Group, Inc.
10.7 Software Development Agreement between Software Technology,
Inc. and Client Server Programs, Inc.
10.8 Lease Agreement for 657 Mission Street, San Francisco,
California
10.9 Lease Agreement for 595 Market Street, San Francisco,
California (6th and 7th Floors)
10.10 Lease Agreement for 595 Market Street, San Francisco,
California (7th, 9th and 10th Floors)
10.11 Form of Employment Agreement with executive officers
10.12 Form of Indemnity Agreement
10.13 Form of Affiliates Agreement
10.14 * Credit Agreement with LaSalle Bank National Association
21.1 * Subsidiaries of the Registrant
23.1 * Consent of McCutchen, Doyle, Brown & Enersen LLP (included
in Exhibit 5.1 hereto)
23.2 Consent of Deloitte & Touche LLP
23.3 * Consent of Chapin Fleming McNitt Shea & Carter
23.4 Consent of Randall J. Wolf
24.1 Power of Attorney (contained on the signature page to this
registration statement).
27.1 Financial Data Schedule

- ------------------------

* To be filed by amendment