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Riverside Group Inc/FL · 10-K · For 12/31/01

Filed On 4/1/02 · SEC File 0-09209 · Accession Number 277356-2-11

  As Of               Filer                 Filing     As/For/On Docs:Pgs

 4/01/02  Riverside Group Inc/FL            10-K       12/31/01    1:69

Annual Report · Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Form 10k 2001                                         69    342K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (RTF, XML, et al.) (b) Reports on Form 8-K Buildscape Business Certain Relationships and Related Transactions Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Cybermax Directors and Executive Officers of the Registrant Earnings Per Share Esop Executive Compensation Exhibits Exhibits, Financial Statement Schedules and Reports on Form 8-K Financial Statements and Supplementary Data Investment in Buildscape Investment in Wickes Legal Proceedings Management's Discussion and Analysis of Financial Condition and Results of Operations Market for Registrant's Common Equity and Related Stockholder Matters Properties Security Ownership of Certain Beneficial Owners and Management Selected Financial Data Signatures Submission of Matters to a Vote of Security Holders Wickes
1	1st Page
3	Item 1. Business
6	Buildscape
7	Cybermax
8	Investment in Wickes
10	Item 2. Properties
"	Item 3. Legal Proceedings
"	Item 4. Submission of Matters to a Vote of Security Holders
"	Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
11	Item 6. Selected Financial Data
13	Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
18	Wickes
24	Item 8. Financial Statements and Supplementary Data
"	Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
25	Item 10. Directors and Executive Officers of the Registrant
"	Item 11. Executive Compensation
"	Item 12. Security Ownership of Certain Beneficial Owners and Management
"	Item 13. Certain Relationships and Related Transactions
26	Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
27	(b) Reports on Form 8-K
28	Exhibits
31	Signatures
39	Investment in Buildscape
40	Earnings Per Share
51	Esop

10-K 1st Page of 69 TOC Top Previous Next Bottom Just 1st
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 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D. C. 20549

 FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
 SECURITIES EXCHANGE ACT OF 1934

 For the Fiscal Year Ended
 December 31, 2001

OR

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

Commission File No. 0-9209

 RIVERSIDE GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)

Florida 59-1144172
(State of Incorporation) (IRS Employer Identification No.)

 7800 Belfort Parkway, Jacksonville, Florida 32256
(Address of Principal Executive Offices)

(904) 281-2200
 (Registrant's Telephone Number)

 Securities Registered Pursuant to Section 12(g) of the Act:

 Common Stock, par value of $.10 per share

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant  was required to file such  reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No                              

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

     As of March 16, 2002, the Registrant had 4,767,123  shares of common stock,
par  value  $.10  per  share,  outstanding  and the  aggregate  market  value of
outstanding  voting  stock  (based  on the last sale  price on the OTC  Bulletin
Board) held by nonaffiliates  parties was approximately  $281,000  (includes the
market value of all such stock other than shares  beneficially owned by officers
and directors and the Registrant's Employee Stock Ownership Plan and Trust).    

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                                                        [Enlarge/Download Table]

                                                                                                            

                               TABLE OF CONTENTS                                                            

                                   Page No.                                                                 
                                    PART I                                                                  

Item 1. Business...........................................................................................1
Item 2. Properties.........................................................................................8
Item 3. Legal Proceedings..................................................................................8
Item 4. Submission of Matters to a Vote of Security Holders................................................8

                                    PART II                                                                 

Item 5. Market for Registrant's Common Equity                                                               
          and Related Stockholder Matters..................................................................8
Item 6. Selected Financial Data............................................................................9
Item 7. Management's Discussion and Analysis of Financial                                                   
          Condition and Results of Operations.............................................................11
Item 7A.Quantitative and Qualitative Disclosure About Market Risk.........................................22
Item 8. Financial Statements and Supplementary Data.......................................................22
Item 9. Changes in and Disagreements with Accountants                                                       
        on Accounting and Financial Disclosure............................................................22

                                   PART III                                                                 

Item 10. Directors and Executive Officers of the Registrant...............................................24
Item 11. Executive Compensation...........................................................................24
Item 12. Security Ownership of Certain Beneficial Owners and Management...................................24
Item 13. Certain Relationships and Related Transactions...................................................24

                                    PART IV                                                                 

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K..................................25
         (a) List of Financial Statements and Schedules Filed as a Part of this Report....................25
         (b) Reports on Form 8-K ... .....................................................................26
         Exhibits.........................................................................................27

SIGNATURES................................................................................................31

FINANCIAL STATEMENTS.....................................................................................F-1

FINANCIAL STATEMENT SCHEDULES............................................................................S-1


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PART I

Item 1. Business.                                                             

     Riverside Group,  Inc., a Florida  corporation formed in 1965 ("Riverside",
also "Parent  Company"),  is a holding company focused through its  wholly-owned
subsidiary,   Cybermax,  Inc.  ("Cybermax")  and  other  equity  investments  in
e-Commerce, e-Learning and Interactive Media solutions.                         

     The Company is engaged in the supply and distribution of building materials
through its 35% equity  investment in Wickes Inc.  ("Wickes") and its 40% equity
investment in Buildscape, Inc. ("Buildscape").  Wickes is a leading supplier and
manufacturer  of  building  materials  in the United  States,  with 98 sales and
distribution facilities and 26 manufacturing facilities located in states in the
midwest,  northeast  and south.  Buildscape  provides  e-Commerce  services  and
building-related content to the home building profession.                       

     Unless the  context  indicates  otherwise,  the term "the  Company" as used
herein refers to Riverside and its wholly-owned subsidiaries.                   

Historical Development

     From 1986  through  the first half of 1996,  Riverside  conducted  life and
property and casualty insurance operations.  The property and casualty insurance
operations were discontinued in 1993 and sold in September 1995. Riverside began
disposing of its life insurance operations at the end of 1994 and, in June 1996,
completed a merger of its remaining life insurance operations with a third party
that resulted in the ownership by Riverside of a non-controlling interest in the
third party. Riverside disposed of this interest on December 31, 1997.          

     Riverside  obtained  its initial  investment  in Wickes in 1990 through the
acquisition of American Founders Life Insurance Company, which at the time owned
approximately  10% of  Wickes'  common  stock.  In  1993,  as part  of a  Wickes
recapitalization  plan,  including  an initial  public  common  stock  offering,
Riverside  increased  its  beneficial  ownership  of  Wickes'  common  stock  to
approximately 36%. On June 20, 1996,  Riverside  purchased from Wickes 2,000,000
newly issued shares of Wickes' common stock for $10,000,000 in cash. In 1998 and
early 1999,  Riverside sold 1,151,900  shares of its Wickes' common stock. As of
March 15, 2002, Riverside  beneficially owned 2,860,213 shares of Wickes' common
stock, which constitutes 35% of Wickes' outstanding voting and non-voting common
stock. See "Investment in Wickes."                                              

     In January 1998,  Riverside formed various  operating  subsidiaries,  which
acquired  certain  e-Commerce  and  advertising  operations  from Wickes.  These
subsidiaries  included  Cybermax and  Buildscape.  In October 1999,  the Company
decreased its ownership in Buildscape to 47%. In May 2000, the Company decreased
its ownership in Buildscape to 40%. See "Buildscape."                           

     In February  1998,  Riverside  acquired the assets of Cybermax from a third
party. See "Cybermax."                                                          

1 

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 Lines of Business

     The following  table sets forth certain  financial  data for the past three
years for the following segments:  Buildscape,  Cybermax,  Wickes and the Parent
Group.  The  "Parent  Group"  includes  real  estate,  parent  company  and  all
eliminating  entries for inter-company  transactions.  The Company accounted for
its  investment  in Wickes  under the  equity  method  for 1999,  2000 and 2001.
Buildscape's  operations  are  consolidated  with those of the  Company  and its
subsidiaries  through October 21, 1999. The Company accounted for its investment
in Buildscape  under the equity method for the remainder of 1999,and all of 2000
and 2001.                                                                       

                                                        [Enlarge/Download Table]

                                                                                              
                                                  Years Ended December 31,                    
                                                  ------------------------                    
                                         2001                2000                   1999      
                                         ----                ----                   ----      
                                                        (in thousands)                        
                                                        --------------                        
Sales:                                                                                        
  Buildscape(1)                 $               --    $                --   $             415 
  Cybermax                                   1,215                  1,774               1,171 
  Parent Group                                  --                     --                  34 
                                   ----------------      -----------------     ---------------
                        Total   $            1,215    $             1,774   $           1,620 
                                   ================      =================     ===============

Direct costs:                                                                                 
  Buildscape(1)                 $               --    $                --   $             342 
  Cybermax                                     591                    945                 213 
  Parent Group                                  --                     --                   4 
                                   ----------------      -----------------     ---------------
                        Total   $              591    $               945   $             559 
                                   ================      =================     ===============

Other operating income:                                                                       
  Cybermax                      $               93    $                52   $              15 
  Parent Group                                 270                    136                  80 
                                   ----------------      -----------------     ---------------
                        Total   $              363    $               188   $              95 
                                   ================      =================     ===============

Investment income and realized                                                                
Gains/(losses):                                                                               
  Buildscape(1)                 $               --    $                --   $               3 
  Cybermax                                      --                     --               3,994 
  Wickes (2)                                   (72)                    28                  -- 
  Parent Group                               6,610                  1,899                (321)
                                   ----------------      -----------------     ---------------
                        Total   $            6,538    $             1,927   $           3,676 
                                   ================      =================     ===============

Expenses:                                                                                     
  Buildscape(1)                 $               --    $                --   $           4,485 
  Cybermax                                   1,067                  1,554               2,209 
  Parent Group                                 727                    823                 421 
                                   ----------------      -----------------     ---------------
                        Total   $            1,794    $             2,377   $           7,115 
                                   ================      =================     ===============


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                                                        [Enlarge/Download Table]

                                                                                                                   

                                                                         Years Ended December 31,                  
                                                                         ------------------------                  
                                                             2001                  2000                  1999      
                                                             ----                  ----                  ----      
                                                                              (in thousands)                       
                                                                              --------------                       

Interest expense:                                                                                                  
  Buildscape(1)                                     $               --    $                --    $             174 
  Cybermax                                                          --                     --                    3 
  Wickes (2)(3)                                                  1,615                  1,466                1,407 
  Parent Group                                                     738                  1,400                1,058 
                                                       ----------------      -----------------      ---------------
                        Total                       $            2,353    $             2,866    $           2,642 
                                                       ================      =================      ===============

Earnings (losses) before income taxes                                                                              
and equity in earnings(losses) of related parties:                                                                 
  Buildscape(1)                                     $               --    $                --    $          (4,583)
  Cybermax                                                        (350)                  (673)               2,755 
  Wickes (2)(3)                                                 (1,687)                (1,438)              (1,407)
  Parent Group                                                   5,415                   (188)              (1,690)
                                                       ----------------      -----------------      ---------------
                        Total                       $            3,378    $            (2,299)    $         (4,925)
                                                       ================      =================      ===============

Identifiable assets:                                                                                               
  Buildscape(1)                                     $             (947)    $             (947)    $           (947)
  Cybermax                                                         295                    505                  556 
  Wickes (2)                                                    12,506                 15,779               15,799 
  Parent Group                                                   3,418                  9,764               10,775 
                                                       ----------------      -----------------      ---------------
                        Total                       $           15,272    $            25,101    $          26,183 
                                                       ================      =================      ===============

(1)     After October 21, 1999,  the Company's  balance sheet and statements of 
operations  reflect the  Company's  investment  in  Buildscape  under the equity
method. See Note 4 to the Company's  Consolidated  Financial Statements included
elsewhere herein.                                                               

(2)     The Company's  balance sheet and  statements of operations  reflect the 
Company's  investment in Wickes under the equity method for 2001, 2000 and 1999,
respectively.  See  Note 2 to the  Consolidated  Financial  Statements  included
elsewhere herein.                                                               

(3)     Includes $1,615,000,  $1,466,000 and $1,407,000 for an interest expense 
allocation  from  Riverside  on its 11% Secured  Notes for 2001,  2000 and 1999,
respectively.                                                                   

Internet and E-Commerce Operations                                            

     Effective January 15, 1998, Riverside acquired certain operations of Wickes
that Wickes had  determined to discontinue as a result of its plan to streamline
operations and focus primarily on its core professional  builder  business.  The
operations  transferred included e-Commerce and advertising on the Internet. The
consideration  given or to be given by  Riverside  to Wickes in the  transaction
consists of Riverside's three-year $871,844 unsecured promissory note and future
payments of ten percent of the transferred  operations' net income (subject to a
maximum of $430,000). The Company has not made any payments under this agreement
since these operations have only incurred losses.                               

     In  connection  with  this  acquisition,   Riverside   established  various
operating  subsidiaries to conduct the businesses  acquired from Wickes, as well
as related  operations.  Buildscape was  established  to provide  e-Commerce and
advertising  services  for the  building  materials  industry  on the  Internet.
Cybermax  was  established  to  provide  e-Commerce  solutions  to the  building
industry, as well as software application development and hosting services.     

3 

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Buildscape                                                    

     The Company  provides  services to the  e-Commerce  market  through its 40%
equity investment in Buildscape.  Buildscape provides  home-building  materials,
service and commerce  online to  professionals  in the  home-building  industry.
Buildscape is considered to be a development stage company.                     

     On October 21,  1999,  Imagine  Investments,  Inc.  ("Imagine")  made a $10
million  investment  in  Buildscape by converting $3 million of debt into common
stock,  exchanging 520,000 shares of Riverside stock for Buildscape common stock
and investing $5 million in Buildscape for preferred shares.                    

     In  this  transaction,   Imagine  acquired  from  Riverside   1,880,933  of
Buildscape's then 5,000,000  outstanding  shares of common stock in exchange for
(i) the  cancellation of $3 million of  indebtedness  and (ii) 520,000 shares of
Riverside's  common stock held by Imagine.  In connection with the  transaction,
because Imagine was granted the right to vote the Company's common shares on all
matters with the exception of change in control,  the Company  began  accounting
for its investment in Buildscape  under the equity method.  The Company retained
the remaining  3,119,067  outstanding  shares of  Buildscape's  common stock. In
addition,  Buildscape issued to Imagine 1,666,667 shares of Buildscape's  voting
Series A Cumulative  Convertible  Preferred  Stock ("Series A Shares") with a $5
million aggregate liquidation preference in exchange for $5 million. As a result
of this  transaction,  the  Company  owned  (before  Buildscape  employee  stock
options) 47% of Buildscape on a fully converted basis.  Imagine owned 38% of the
common and 100% of the preferred shares of Buildscape, or 53% on the same basis.
The Company recorded a gain of $4.0 million on the transaction.                 

     In May 2000, Buildscape and The Dow Chemical Company ("Dow") entered into a
strategic  partnership  in order to pursue  the  companies  shared  vision for a
supply chain solution for the construction industry.                            

     On May 19, 2000,  Dow made an  investment of  approximately  $10 million in
Buildscape,  pursuant  to a stock  purchase  agreement,  whereby  Dow  purchased
1,109,782 newly issued shares of Series B Cumulative  Preferred Stock, "Series B
Shares,"  par  value  $0.01  per  share  of  Buildscape.  Additionally,  (i) Dow
purchased  1,666,667  shares of Series A Shares,  par value $0.01 per share,  of
Buildscape  from  Imagine;  and (ii) Dow acquired an option to purchase  547,998
shares of common stock of Buildscape  from Imagine.  Upon the investment by Dow,
the  Company's  voting  rights in  Buildscape  reverted back from Imagine to the
Company.                                                                        

     On November 20, 2000, Dow agreed to invest up to $10 million in Buildscape,
LLC for a 12.5% membership interest in Buildscape,  LLC, which at the time was a
wholly-owned subsidiary of Buildscape. As of December 31, 2000, Dow had invested
$5 million and held a 6.25%  membership  interest and, as of March 31, 2001, Dow
had  invested  the full $10  million  and  acquired  the full  12.5%  membership
interest in Buildscape, LLC.                                                    

     In April 2001,  Buildscape LLC entered into a loan agreement for $5 million
with Dow and the Company executed a guaranty for 35.1% of the note. On September
12,  2001,  Buildscape,  LLC  executed  a Second  Amendment  and  Restated  Note
("Amended  Note") under which Dow may make advances in the  aggregate  principal
amount of $13,000,000 to Buildscape, LLC. Pursuant to the Company's guaranty, if
principal  and interest  under the Amended  Note are not paid,  Dow may call the
guaranty  and the  Company may satisfy its  obligation  by  transferring  to Dow
shares of its Buildscape  common stock up to 1,014,000  shares.  Subsequently in
November 2001, Dow entered into a new loan agreement with Buildscape, LLC for up
to $10  million.  The  Company has not  guaranteed  this note.  Concurrent  with
executing this note, Dow was granted an additional 12.5% interest in Buildscape,
LLC.                                                                            

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     As a result of these  transactions,  as of December 31,  2001,  the Company
owned  (before  Buildscape's  employee  stock  options)   approximately  40%  of
Buildscape on a fully converted basis.  Imagine owned 24% on a fully converted  
basis and Dow owned 100% of the preferred  shares,  and  approximately  36% on a
fully  converted  basis. As of December 31, 2001,  Buildscape  owned 75% and Dow
owned 25% membership interest in Buildscape, LLC.                               

Cybermax                                                      

     In February  1998,  Riverside  acquired the assets of Cybermax from a third
party.  Cybermax is a professional  services company specializing in e-Commerce,
e-Learning and Interactive  Media  solutions.  Cybermax has built numerous "high
profile" e-Commerce  solutions for the building industry.  To date, Cybermax has
developed over 220 websites that are commerce enabled.                          

     Cybermax  generated  sales  of  approximately  $1,215,000,  $1,774,000  and
$1,171,000 in 2001, 2000 and 1999, respectively.  E-Commerce solutions accounted
for  approximately   59%,  76%  and  50%  of  sales  in  2001,  2000  and  1999,
respectively.                                                                   

Customers                                                                     

     In 2001, three customers,  Orgill, Inc. ("Orgill"),  Homeside Lending, Inc.
and Buildscape  accounted for approximately  57% of sales. One customer,  Orgill
accounted for  approximately  17%, 27% and 53% of sales in 2001,  2000 and 1999,
respectively.  Cybermax has enjoyed a close business  relationship  with Orgill.
Orgill, located in Memphis,  Tennessee, is the largest privately owned wholesale
hardware  distributor  in the United  States.  Cybermax  is the lead  e-Business
solutions  developer  for  Orgill,  having  designed,  developed  and  supported
www.Orgill.com since 1998.  Orgill.com is a dealer Extranet (B-to-B),  featuring
Orgill's   product   inventory   of  over   64,000   items   online   for  their
dealers/retailers  to view and order  inventory.  Cybermax has built five Orgill
e-Business  systems to date. In addition to Orgill.com,  Cybermax has also built
an online catalog for their dealers to link to their websites,  called QuikShip,
for B-to-C  transactions.  Another  QuikShip  system is "Special  Order Center,"
which houses  QuikShip in an in-store  kiosk.  HomeSource is another  innovative
product,  which resides on a kiosk within an attended Design Center for in-store
selection and order. The most recent development is "ProShip," which features an
enhanced  online  catalog for "Pro" sales.  Ancillary  to Orgill's  development,
Cybermax has created over 100 Orgill dealer websites on a custom-designed basis.

Products and Services                                                         

     As a provider of e-Learning,  Interactive  Media and  e-Business,  Cybermax
currently offers one product and several solutions and services.                

     Cybermax's  e-Learning  Solutions  division  has  developed  an  e-Learning
product  which  targets  mid  to  large-scale   corporations   and   educational
institutions.  In addition to this product, this division has the experience and
capability of producing custom web-based training for customers.                

     Cybermax's   Interactive  Media  Solutions   division   primarily  provides
graphical  support for  e-Learning  and  e-Business,  but also  develops  custom
multimedia programs  (interactive kiosks,  sales  presentations,  computer-based
training and 3D models/animations) for both commercial and government customers.

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     Cybermax  continues to seek out custom website  development,  incorporating
full-commerce   capabilities.    Custom-developed   sites   encompass   Internet
(customers), Intranet (employees) and Extranet (partners and suppliers) features
and functions, tied to comprehensive back office application modules.           

     Cybermax  has  specialized  in building  Extranets/e-Commerce  websites for
participants in the building  industry.  The Company believes that this provides
Cybermax with a significant competitive advantage.                              

     Cybermax has no material  patents,  trademarks,  licenses,  franchises,  or
concessions other than the name "Cybermax" and the trademark "Inspire."         

     The  operations  of  Cybermax  are not  affected by  seasonality.  However,
economic conditions do affect the operations of Cybermax. During the second half
of 2001, adverse economic  conditions resulted in the reduction of marketing and
advertising expenditures by companies in general. In addition,  during the third
quarter of 2001, the September 11, 2001 terrorist  attacks amplified the general
economic  weakness,  resulting  in further  reductions.  Moreover,  if  economic
conditions do improve,  there can be no assurance that marketing and advertising
expenditures will increase from its current level.                              

Other Operations                                                              

Investment in Wickes                                          

     At December 31, 2001, the Company  beneficially  owned 2,860,243  shares of
Wickes' common stock, which represents 35% of Wickes  outstanding  shares. For a
description  of the  reduction  by the Company of its  percentage  ownership  in
Wickes  during 1999,  2000 and 2001,  see Note 2 to the  Consolidated  Financial
Statements included elsewhere herein.                                           

     Wickes is a leading supplier and manufacturer of building  materials in the
United States.  Wickes sells its products and services  primarily to residential
and commercial building professionals, repair and remodeling ("R&R") contractors
and, to a lesser extent, project do-it-yourself  consumers ("DIY's") involved in
major home improvement  projects. At December 29, 2001, Wickes operated 98 sales
and distribution  facilities,  as well as 26 component manufacturing  facilities
that  produce  and  distribute  roof and floor  trusses,  framed wall panels and
pre-hung door units  principally in the midwest,  northeast and southern regions
of the United States.                                                           

Investment in Greenleaf                                       

     On September 30, 1998, the Company  entered into and completed an agreement
with Greenleaf Technologies Corporation  ("Greenleaf"),  based in Austin, Texas,
whereby the Company  acquired common shares of Greenleaf in exchange for 100% of
the common stock of a former wholly-owned  subsidiary of the Company. In January
2000,  the Company and  Greenleaf  settled a dispute  covering the terms of this
transaction.  Giving effect to the settlement,  the Company received  10,000,000
shares of Greenleaf common stock and a five-year option to acquire an additional
2,000,000  shares for an exercise price of $.25 per share. In addition,  another
3,000,000  shares  have  been  placed  in  escrow  to be used  to fund  mutually
acceptable  joint  ventures  related to  technology,  the  Internet  and related
products to be owned in equal amounts by Greenleaf  and the Company.  See Note 3
to the Consolidated Financial Statements included elsewhere herein.             

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     At December 31, 2001, the calculated  market value of the Company's  shares
(including  the shares held in escrow) in Greenleaf was  approximately  $89,000,
based on Greenleaf's stock price of $.009 per share on the Over-the-Counter Pink
Sheets.   However,   after  December  31,  2001,  Greenleaf  operations  ceased.
Accordingly,  the Greenleaf common stock is permanently  impaired.  As such, the
Company has written down the investment to $0 at December 31, 2001.             

Real Estate Operations                                        

     As of December 31,  2001,  Riverside's  real estate held for sale  includes
$2,874,000  of land  located  in  Georgia  and  $8,000 of land  located in other
states.                                                                         

Real Estate Held for Sale                                                     

     Included  in the  real  estate  held  for  sale  at  December  31,  2001 is
approximately 48 acres of land located within Highlands Park in Smyrna, Georgia.

     Highlands.  Highlands  originally  consisted of 1,000 acres and has been an
active  development since 1983 with  approximately 952 acres being sold over the
last 19 years.  Highlands is a planned  industrial  development  just outside of
Atlanta,  Georgia.  The land is  subdivided  into numerous  parcels  planned for
commercial,  office and light industrial use. In its current state, the property
has road  frontage  and  access to county  water,  sewer,  electricity,  gas and
telephone.  In addition,  many of the  properties  have been  graded.  Riverside
completed sales totaling 77.1 acres in 2001 for approximately  $10,368,000,  8.8
acres  in  2000  for   approximately   $861,000  and  .841  acres  in  1999  for
approximately $67,000.                                                          

     Belfort.  Belfort originally  consisted of approximately 28 acres of vacant
and unimproved  commercial land in  Jacksonville,  FL. In 2000, the Company sold
its remaining 6.83 acres for approximately $1,636,000.                          

Employees                                                             

     As of March 14,  2002,  Riverside  and its  wholly-owned  subsidiary  had 9
full-time  employees.  The Company  believes  that it has  maintained  favorable
relations with its employees. None of these employees are represented by a union
or covered by a collective bargaining agreement.                                

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Item 2. Properties.                                                             

          Riverside's   executive   offices  are  located  in  leased  space  in
Jacksonville, Florida.                                      

Item 3. Legal Proceedings.                                                    

      The Company is not aware of any legal proceedings that will have a
material adverse effect on the Company.                     

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

None.                                                           
 PART II

Item 5. Market For Registrant's Common Equity and Related Stockholder Matters.  

     The Company's Common Stock trades over-the-counter and is quoted on the OTC
Bulletin  Board under the trading  symbol  "RSGI."  Prior to July 28, 1997,  the
Company's Common Stock was traded on the NASDAQ National Stock Market. From that
date to July 8,  1999,  the  Company's  Common  Stock was  traded on the  NASDAQ
SmallCap  Stock  Market.  As of March 26,  2002,  there  were  4,767,123  shares
outstanding held by approximately 1,616 shareholders of record.                 

     The following table sets forth, for the periods indicated, the high and low
bid quotation for the Company's  Common Stock on the OTC Bulletin Board.  Prices
do not include retail markups, markdowns or commissions.                        

                                                                [Download Table]

                                                                           

                                                 High                  Low 
                                                 ----                  --- 

2000:                                                                      
First Quarter.........................     $      4.88           $      .88
Second Quarter.....................               5.63                 3.25
Third Quarter........................             4.13                 1.00
Fourth Quarter......................              2.75                  .56
2001:                                                                      
First Quarter.......................       $      1.25           $      .70
Second Quarter.....................                .65                  .51
Third Quarter.......................               .51                  .15
Fourth Quarter......................               .22                  .08

     The Company did not pay any cash  dividends  on its common stock during the
last two fiscal years and does not anticipate  payment of such dividends for the
foreseeable  future.  Payment  of  dividends  in the  future is  subject  to the
discretion  of the Board of Directors  of the Company and is dependent  upon the
Company's overall financial  condition,  capital  requirements,  compliance with
contractual requirements,  earnings and any other factors the Board of Directors
may deem relevant. In addition,  the terms of the Company's $2,022,000 loan from
Imagine  prohibit the payment of cash  dividends  without the prior  approval of
Imagine. See Note 7 to the Consolidated  Financial Statements included elsewhere
herein.                                                                         

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Item 6.     Selected Financial Data.                                            

The following summary of certain  consolidated  financial data of the company is
derived from the Company's  Consolidated Financial Statements included elsewhere
herein and should be read in conjunction  with these financial  statements,  and
notes thereto,  and "Item 7.  Management's  Discussion and Analysis of Financial
Condition and Results of Operations."                                           

                                                        [Enlarge/Download Table]

                                                                                                                      

                                                                    Years Ended December 31,                          
                                                                                                                      

                                                   2001          2000         1999(1)(5)       1998(5)         1997   
                                                   ----          ----         --------       --------        -------- 

Revenues:                                                                                                             
    Sales and service revenues               $       1,215  $      1,774  $       1,620   $    667,704   $    884,082 
    Other investment losses                            (37)          (77)           (61)           (32)           (31)
    Gains (losses) on real estate                    6,565           360           (257)         1,338            897 
    Gains on Greenleaf shares                           82         1,616             --             --             -- 
    Gains (losses) on Wickes shares                    (72)           28             --         (1,837)            -- 
    Gains on Buildscape shares (1)                      --            --          3,994             --             -- 
    Other operating income                             363           188             95          5,591         11,297 
                                                -----------    ----------    -----------     ----------     ----------
           Total revenue                             8,116         3,889          5,391        672,764        896,245 

Expenses:                                                                                                             
    Cost of sales                                      591           945            559        510,106        681,056 
    Provision for doubtful accounts                     25            97             91          1,904          2,148 
    Depreciation,and amortization                      109           250            375          4,426          5,613 
    Restructuring and unusual items (2)                 --            --             --          5,932           (559)
    Selling, general and administrative expenses     1,660         2,030          6,649        141,284        187,524 
    Interest expense                                 2,353         2,866          2,642         19,264         24,525 
                                                -----------    ----------    -----------     ----------     ----------
           Total expenses                            4,738         6,188         10,316        682,916        900,307 

Equity in earnings (losses) of Wickes (3)           (2,979)          455          2,247            208             -- 

Equity in earnings  (losses) of related parties         --            --             --             --         (1,516)

Minority interest net of income taxes (3)               --            --             --            778            703 

Income tax expense (4)                                  --            --             --         (3,398)          (946)
                                                -----------    ----------    -----------     ----------     ----------
Earnings (loss) from continuing operations             399        (1,844)        (2,678)       (12,564)        (5,821)

Loss from discontinued operations (5)                   --            --             --             --           (388)

                                                -----------    ----------    -----------     ----------     ----------
        Net income (loss)                    $         399  $     (1,844)  $     (2,678)   $   (12,564)   $    (6,209)
                                                -----------    ----------    -----------     ----------     ----------

(Loss) earnings per common share, after deducting                                                                     
preferred stock dividends and accretion:                                                                              

(Loss) earnings from continuing operations   $        0.08  $      (0.39)  $      (0.52)   $     (2.41)   $     (1.12)
Loss from discontinued operations                       --            --             --             --          (0.07)
                                                -----------    ----------    -----------     ----------     ----------
Basic and diluted earnings (loss) per share  $        0.08  $      (0.39)  $      (0.52)   $     (2.41)   $     (1.19)
                                                -----------    ----------    -----------     ----------     ----------

Balance Sheet data (at year end):                                                                                     
    Total investments (3)(6)                 $      14,460  $     23,897   $     25,101    $    24,662    $    14,329 
    Total assets (3)(6)                             15,272        25,101         26,183         26,402        313,905 
    Total debt                                      13,593        23,336         23,627         22,116        219,426 
    Total common stockholders'(deficit)equity       (2,427)         (484)           264          2,368         14,620 
    Common shares outstanding                    4,767,123     4,767,123      4,767,123      5,287,123      5,287,123 

Book value (deficit) per common share        $       (0.51)  $     (0.10)  $       0.06    $      0.45    $      2.77 
Cash dividend declared per common share                --            --             --             --             --  


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(1) In 1999,  the Company  recorded a $4.0  million  gain for the sale of 38% of
Buildscape's common shares.                                                     

(2) In 1998, the Company recorded charges of $5.9 million for  restructuring and
unusual items for Wickes.                                                       

(3)  Wickes'  operations  are  consolidated  with those of the  Company  and its
subsidiaries  through the third quarter of 1998.  The Company  accounted for its
investment in Wickes under the equity method for the fourth  quarter of 1998 and
all of 1999, 2000 and 2001, respectively.                                       

(4) In 1998, the Company  recorded $3.0 million in deferred  income tax expense.
This increased the valuation  allowance  against its deferred tax assets (net of
deferred tax liabilities) to 100%.                                              

(5) In December  1997,  the Company  completed the sale of its mortgage  lending
operations.   Losses  of  $388,000  are  included  on  the  Company's  financial
statements for 1997.                                                            

(6) Buildscape's  operations are consolidated  with those of the Company and its
subsidiaries  for 1998 and from January 1, 1999 to October 21, 1999. The Company
accounted  for its  investment  in  Buildscape  under the equity  method for the
remainder of 1999, 2000 and 2001.                                               

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

     The  following   discussion   should  be  read  in  conjunction   with  the
Consolidated  Financial  Statements and Notes contained elsewhere herein.  Since
the operations of Buildscape are consolidated  with those of the Company and its
subsidiaries  for all of  January  1,  1999 and  through  October  21,  1999 and
accounted for under the equity method for the remainder of 1999,  2000 and 2001,
respectively,  comparisons  between  periods  may not be  meaningful  in certain
respects.                                                                       

     FORWARD-LOOKING  INFORMATION CAUTIONARY STATEMENT. The following discussion
of the Company's future operations,  liquidity needs and sufficiency constitutes
Forward-Looking Information and is inherently subject to uncertainty as a result
of a number of risk factors  including,  among other  things:  (i) the Company's
ability  to  successfully  restructure  its 11%  Secured  Notes in a timely  and
reasonable  matter,  (ii) the  success  of and level of cash flow  generated  by
Cybermax,  (iii) the Company's ability to achieve the level of real estate sales
required to meet scheduled real estate debt principal and interest  payments and
to avoid the requirement that the Company provide additional collateral for this
debt, (iv) the Company's  ability to borrow,  which may depend upon, among other
things, the trading price of Wickes common stock, the value and liquidity of the
Company's Greenleaf  securities and the success of Cybermax and Buildscape,  (v)
the ability of the Company to raise funds  through  sales of Wickes common stock
and Greenleaf securities and (vi) uncertainty  concerning the possible existence
of indemnification claims resulting from the Company's discontinued  operations.
Future real estate  sales  depend upon a number of factors,  including  interest
rates,  general economic conditions and conditions in the commercial real estate
markets in Atlanta,  Georgia.  In addition to the factors  described  above, the
Company's  ability to sell Wickes  common  stock or Greenleaf  securities  would
depend upon, among other things, the trading prices for these securities and, in
light of the relatively low trading volume for these  securities,  the Company's
ability to find a buyer or buyers for these securities in a private  transaction
or otherwise.                                                                   

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 The Company's
 Results of Operations

         The Company reported results of operations for the years ended December
31, 2001, 2000 and 1999 as follows (in thousands):                              

                                                        [Enlarge/Download Table]

                                                                                           

                                                  2001             2000            1999    
                                             --------------    ------------    ------------

Revenues:                                                                                  
  Sales and other income                   $         1,541   $       1,885   $       1,654 
  Gains (losses) on real estate                      6,565             360           (257) 
  Gains on Greenleaf shares                             82           1,616              -- 
  Gains (losses) on Wickes shares                      (72)             28              -- 
  Gains on Buildscape shares (1)                        --              --           3,994 
                                             --------------    ------------    ------------
                                                     8,116           3,889           5,391 
Cost and expenses:                                                                         
  Direct costs                                         591             945             559 
  SG&A and other expenses                            1,794           2,377           7,115 
  Interest expense                                   2,353           2,866           2,642 
                                             --------------    ------------    ------------
                                                     4,738           6,188          10,316 

                                             --------------    ------------    ------------
Earnings (losses) from operations (2)                3,378          (2,299)         (4,925)

Equity in earnings (losses) of Wickes (3)           (2,979)            455           2,247 

                                             --------------    ------------    ------------
Earnings (losses) before income taxes                  399          (1,844)         (2,678)

Income tax expense(benefit)                             --             --              --  

                                             --------------    ------------    ------------
Net earnings (losses)                      $           399   $      (1,844)   $     (2,678)
                                             ==============    ============    ============


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(1)       In 1999, the Company  recorded a $4.0 million gain for the sale of 38%
of Buildscape's common shares.                              

(2)       Buildscape's operations are consolidated with those of the Company and
          its subsidiaries from January 1, 1999 to October 21, 1999. The Company
          accounted for its investment in Buildscape under the equity method for
the remainder of 1999,  2000 and 2001,  respectively.       

(3)       The Company  acccounted  for its investment in Wickes under the equity
method for 1999, 2000 and 2001, respectively.               

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Buildscape                                                                    

     From  January 1, 1999 to  October  21,  1999,  the  consolidated  financial
statements of the Company  included  Buildscape.  The following table sets forth
information  concerning  the results of operations for Buildscape for January 1,
1999 to October 21, 1999 (in thousands):                                        

                                                          1999
                                                     -----------

Sales                                                   $         415       
Cost of sales                                                     342       
                                                     -----------
Net profit                                                       73     

Selling, general and administrative expense                     4,343       
Depreciation and amortization                                     139       
Interest expense                                                  174       
                                                     -----------
Total expenses                                                4,656     

                                                     -----------
Net loss                                                $      (4,583)      
                                                     ===========

     Buildscape had advertising  revenue of $159,000 in 1999.  Revenue generated
from Buildscape's auctions and superstores was $256,000 in 1999.                

     The Company's  investment in Buildscape at December 31, 2001 and 2000 was a
deficit of  $947,000.  Accordingly,  the Company has not  recorded its equity in
Buildscape's losses since October 21, 1999. In addition, the Company recorded no
gains  during 2001 and 2000  relating to  Buildscape's  sale of unissued  common
stock and membership interest in Buildscape LLC.                                

     See Note 4 to the Consolidated  Financial  Statements for summary financial
information for Buildscape for the years ended December 31, 2001, 2000 and 1999,
respectively.                                                                   

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Cybermax                                                                      

     The  following  table  sets forth  information  concerning  the  results of
Cybermax  (excluding  its  ownership  of  Buildscape)  for 2001,  2000 and 1999,
respectively (in thousands):                                                    

                                                        [Enlarge/Download Table]

                                                                                                  
                                                    2001              2000              1999      
                                                -------------     -------------     --------------

Sales                                        $         1,215   $         1,774   $          1,171 
Direct costs                                             591               945                213 
                                                -------------     -------------     --------------
  Net profit                                             624               829                958 

Selling, general and administrative expense              991             1,363              2,053 
Depreciation and amortization                             76               191                156 
Interest expense                                          --                --                  3 
                                                -------------     -------------     --------------
  Total expenses                                       1,067             1,554              2,212 

Other income                                              93                52                 15 

                                                -------------     -------------     --------------
  Net loss                                   $          (350)  $          (673)   $        (1,239)
                                                =============     =============     ==============

     Cybermax's  revenues  for 2001  decreased  32% to  $1,215,000,  compared to
$1,774,000 in 2000.  Revenues for 2001 include  $723,000 of e-Commerce  solution
sales,  $305,000 of e-Learning sales,  $72,000 of multi-media solution sales and
$115,000 of network services. Revenues for 2000 include $1,343,000 of e-Commerce
solution sales,  $104,000 of multi-media solution sales, $96,000 of software and
equipment  sales,  $110,000  of network  services  and  $121,000  from  Internet
services.  During the first half of 2001,  Cybermax's  revenues  were  $813,000,
compared to $748,000  during the same period in 2000.  During the second half of
2001, Cybermax's revenues were $402,000,  compared to $1,026,000 during the same
period in 2000. As a result of economic conditions,  including the September 11,
2001  terrorist  attacks,  Cybermax  saw a general  decline in other  companies'
general  expenditures  for  software,   marketing  and  advertising,   including
marketing on the Internet.                                                      

     An additional factor contributing to the decline in Cybermax revenues was a
transition in the  management of operations.  In June 2001, the Company  entered
into an agreement with Ennovative Commerce Solutions, Inc. ("Ennovative"), based
in  California,  whereby,  effective July 1, 2001,  Ennovative  would manage and
operate the business of Cybermax. Ennovative receives a management fee of 60% of
the profits and is  responsible  for funding 60% of the losses as defined by the
agreement.  During 2001, Cybermax recorded  miscellaneous  income of $92,400 for
Ennovative's share of Cybermax losses.                                          

Cybermax's direct costs for 2001 decreased to $591,000,  compared to $945,000 in
2000.  Direct  costs for 2001 include  $340,000 of  e-Commerce  solution  sales,
$142,000 of e-Learning sales,  $15,000 of multi-media solution sales and $94,000
of network  services.  Direct  costs for 2000  include  $607,000  of  e-Commerce
solution sales,  $70,000 of software and equipment sales, $78,000 of multi-media
solution  sales and $190,000 of Internet  services.  The primary  reason for the
decrease in direct costs is due to lower sales during the second half of 2001.  

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     Cybermax's  revenues  for 2000  increased  51% to  $1,774,000,  compared to
$1,171,000 in 1999.  Revenues for 2000 include $1,343,000 of e-Commerce solution
sales, $96,000 of software and equipment sales, $104,000 of multi-media solution
sales,  $110,000  of network  services  and  $121,000  from  Internet  services.
Revenues for 1999 include  $886,000 of  e-Commerce  solution  sales,  $73,000 of
software and  equipment  sales,  $42,000 of network  services and $170,000  from
Internet services.  The increase in revenues is due primarily to the increase in
sales and marketing efforts in 2000.                                            

     Cybermax's  direct  costs  for 2000  increased  to  $945,000,  compared  to
$213,000 in 1999. Direct costs for 2000 include $607,000 of e-Commerce  solution
sales,  $70,000 of software and equipment sales, $78,000 of multi-media solution
sales and $190,000 of Internet  services.  Direct costs for 1999 include $10,000
of  e-Commerce  solution  sales,  $58,000 of software  and  equipment  sales and
$145,000 of Internet  services.  The primary  reason for the  increase in direct
costs is due to a change in cost  structure.  During  1999,  the direct costs of
sales were primarily attributable to employee's salaries, which were included in
the Selling, General and Administrative ("SG&A") line item. In 2000, these costs
were provided by an outside  consulting  firm and were included as a direct cost
of sales.  In  addition,  after  September  2000,  the actual  billable  time of
employees salaries and benefits were included as a direct cost of sales.        

     SG&A  expenses for 2001  decreased to $991,000,  compared to  $1,363,000 in
2000.  The primary  reason for this  decrease was the  reduction  of  personnel,
travel  related  expenses,  software  expense and  reserves  for bad debt.  This
decrease  was  slightly  offset by  increases  in  advertising  expense  and the
management fee from Ennovative.                                                 

     SG&A expense for 2000  decreased to  $1,363,000,  compared to $2,053,000 in
1999.  The primary  reason for this  decrease was the reduction of personnel and
travel expense in 2000 and, as discussed  above,  after September 2000,  certain
employee  salaries and benefits were  included as a direct cost of sales.  These
reductions were offset slightly by increases in contractual  services,  software
and advertising expense.                                                        

Wickes                                                                        

     Losses attributable to Wickes for 2001 were approximately  $4,594,000 after
inter-company  eliminations,  net  of  goodwill  amortization  of  approximately
$521,000 and net of interest  expense of $1,615,000  allocated from Riverside on
its 11% Secured Notes.                                                          

     Losses attributable to Wickes for 2000 were approximately  $1,011,000 after
inter-company  eliminations,  net  of  goodwill  amortization  of  approximately
$521,000 and net of interest  expense of $1,466,000  allocated from Riverside on
its 11% Secured Notes.                                                          

     Wickes  contributed  earnings  of  $840,000  to the  Company's  results  of
operations   in  1999  after   inter-company   eliminations,   net  of  goodwill
amortization of approximately $521,000 and net of interest expense of $1,407,000
allocated from Riverside on its 13% and 11% Secured Notes.                      

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Parent Company and Other Subsidiaries                                         

     The  following  discussion  relates to the  operations of Riverside and its
subsidiaries, other than Buildscape, Cybermax and Wickes (the "Parent Group").  

     The Parent  Group's  non-interest  expenses for 2001 decreased to $727,000,
compared to $823,000 in 2000.  For certain  costs,  including  human  resources,
senior management and accounting and office-related expenses, the Parent Company
charges its  subsidiaries  and affiliates  for its share of the costs,  based on
actual usage during a period. As a result, comparison between periods may not be
meaningful.  These reductions were offset slightly by approximately $135,000 due
to a  payable  recorded  in the  fourth  quarter  of 2001  that  relates  to the
Company's  former  mortgage  lending  operations.   For  additional  information
regarding  this  liability,  see  Note  8 of  Notes  to  Consolidated  Financial
Statements  included  elsewhere  herein.  The Company's  audit and legal expense
decreased  by  approximately  $140,000 in 2001,  compared  to 2000.  Included in
non-interest expenses for 2000 was a non-recurring compensation expense relative
to the transfer of certain  options to acquire common stock of Greenleaf held by
the Company to certain Company  employees.  In 2000, the Company recorded income
of approximately  $116,000,  included in net realized  investment  gains,  which
represented  the value of the options  transferred  and recognized  compensation
expense of approximately $116,000.                                              

     The Parent Group's  non-interest  operating expenses for 2000 increased 95%
to  $823,000,  compared  to  $421,000  in 1999.  The 2000  expenses  include the
compensation  expense relative to options and Greenleaf common stock transfer to
certain  employees as  explained  above.  The 1999  expenses  include  income of
approximately $100,000, which resulted from the release of a reserve established
in prior years in connection with the sale of the Company's  former property and
casualty  operations.  In  addition,  the 1999  expenses  include  approximately
$104,000  of  expenses  incurred  in  connection  with  the  replacement  of the
Company's 13% Notes that matured in 1999. The primary reason for the increase in
2000 is that in 1999 all  expenses  relating to any of the  Company's  operating
subsidiaries were paid directly by the subsidiaries eliminating allocations.  As
a result, comparison between periods may not be meaningful.                     

     Interest expense  (excluding the 13% and 11% Secured Notes interest expense
allocated  to  the  Wickes  line  of  business  of  $1,615,000,  $1,466,000  and
$1,407,000 in 2001,  2000 and 1999,  respectively)  for 2001,  2000 and 1999 was
$738,000,  $1,400,000 and $1,058,000,  respectively.  In 2001,  interest expense
consisted of $301,000 on the Company's other loans and $437,000 on the Company's
real estate mortgage debt. In 2000,  interest  expense  consisted of $294,000 on
the Company's  other loans and $1,106,000 on the Company's real estate  mortgage
debt. In 1999,  interest  expense  consisted of $90,000 on the  Company's  other
loans and  $968,000 on the Company's  real estate  mortgage  debt. The primary  
reason for the  decrease  in interest  expense is due to the real estate  sales.
Proceeds  from the real  estate  sales are  primarily  used to cover real estate
expenses and to reduce the mortgage debt.                                       

     Revenues of the Parent Group  (excluding  sales and investment  income) for
2001,  2000  and  1999  were  approximately  $270,000,   $136,000  and  $80,000,
respectively.  The Parent Group's  income  primarily  consists of  non-recurring
items,  such  as  settlement   proceeds  from  legal   proceedings.   Therefore,
comparisons between periods are not meaningful.                                 

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Real Estate Held For Sale                                                   

     The  Company's  real estate held for sale at December 31, 2001  consists of
$2,874,000 in Georgia properties and $8,000 in other states. Investments in real
estate  held for sale  are  carried  at the  lower of cost or fair  value.  As a
result, the Company's  investment in real estate is carried at cost. Included in
the real estate held for sale are  approximately 48 acres of land located within
Highlands Park in Smyrna,  Georgia.  During 2000, the Company sold its remaining
acres located within Belfort Park in Jacksonville, Florida.                     

     During 2001, the sales proceeds were used to pay property  taxes,  interest
and principal on the Company's  mortgage debt. At December 31, 2001, the Company
has a prepayment of interest of approximately $36,000.                          

     During 2000, the Company sold the remaining lot of its Florida property for
$309,000,  which generated gains of $210,000,  compared to 1999 when the Company
sold a lot in Florida for $283,000 which generated gains of $1,000.             

     In 2001,  the Company made payments on its mortgage  debt of  approximately
$10,118,000,  which was applied to  principal,  interest  expense  and  property
taxes, including a prepayment of interest of approximately $36,000. In 2000, the
Company made payments on its mortgage debt of  approximately  $2,300,000,  which
was applied to interest  expense and property  taxes,  including a prepayment of
interest of approximately $400,000.                                             

     Gains (losses) on real estate  investments  were  $6,565,000,  $360,000 and
$(257,000) in 2001, 2000 and 1999, respectively.                                

     Highlands.  Highlands  originally  consisted of 1,000 acres and has been an
active  development since 1983 with  approximately 952 acres being sold over the
last 19 years.  Highlands is a planned  industrial  development  just outside of
Atlanta,  Georgia.  The land is  subdivided  into numerous  parcels  planned for
commercial,  office and light industrial use. In its current state, the property
has road  frontage  and  access to county  water,  sewer,  electricity,  gas and
telephone.   During  2001,  the  Company  sold  77.1  acres  for   approximately
$10,368,000,  which generated  gains of  approximately  $6,565,000,  compared to
2000,  when the Company sold 8.8 acres for $861,000,  which  generated  gains of
$153,000.  In 1999,  the Company  sold .841 acres for $67,000,  which  generated
gains of $20,000.                                                               

     Belfort.  Belfort originally  consisted of approximately 28 acres of vacant
and unimproved commercial land. During 2000, the Company sold its remaining 6.83
acres for  $1,636,000  and  recorded  a loss of $3,400 on the sale.  During  the
fourth  quarter of 1999,  the Company had  established a reserve for $278,000 on
this property.                                                                  

Investment in Greenleaf                                                         

     At December 31, 2001,  the Company's  investment in Greenleaf  consisted of
8,460,000  common  shares,  1,390,000  escrow  shares and a five-year  option to
acquire 2,000,000  additional newly issued shares of Greenleaf's common stock at
an exercise  price of $.25 per share.  As of December 31, 2001,  the Company has
transferred 84,151 of these options to employees.                               

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     In accordance  with Statement of Financial  Accounting  Standards  ("SFAS")
No.115,  "Accounting  for Certain  Investments  in Debt and Equity  Securities,"
9,850,000  and 5,665,508  shares of the Company's  common stock in Greenleaf are
classified as available for sale at December 31, 2001 and 2000, respectively. At
December 31, 2000, the cost basis was $0 and the estimated fair market value was
$2,323,000,  resulting in gross  unrealized  gains of $2,323,000.  No taxes have
been provided, as the Company has available net operating loss carryforwards and
strategies,  which would result in no tax  liability  upon the unlikely  sale of
these  securities.  At  December  31,  2000,  sales  of  Greenleaf  shares  were
restricted  under the provisions of Securities and Exchange  Commission  ("SEC")
Rule 144. Accordingly,  the 4,834,492 Greenleaf shares at December 31, 2000 were
not considered to be marketable equity securities subject to valuation under the
provisions of SFAS 115 and were not reported at fair value at December 31, 2000,
but rather  were  recorded  at their cost basis of zero.  In 2001,  the  Company
received a legal opinion that the shares of Greenleaf may be sold under SEC Rule
144(k). Accordingly, during 2001, the Greenleaf shares owned by the Company were
classified as available for sale. However,  after December 31, 2001, Greenleaf's
operations  ceased.  Accordingly,  the  Greenleaf  common  stock is  permanently
impaired. As such, the Company has written down the investment to $0.           

     During 2001, the Company sold 650,000 shares of its Greenleaf  common stock
for  approximately  $82,000,  resulting in gains of approximately  $82,000.  The
Company had no sales of its Greenleaf escrow shares in 2001.                    

     During 2000, the Company sold 890,000 shares of its Greenleaf  common stock
for approximately  $1,410,000,  resulting in gains of approximately  $1,402,000.
The Company had sales of 110,000  shares of its Greenleaf  escrow shares in 2000
for approximately $98,000, resulting in gains of approximately $98,000.         

Income Taxes

     The  Company  had $0 tax  expense  in 2001,  2000  and  1999.  A  valuation
allowance has been maintained to reduce deferred tax assets (net of deferred tax
liabilities) to zero. See Note 10 of Notes to Consolidated  Financial Statements
included elsewhere herein.                                                      
 LIQUIDITY AND CAPITAL RESOURCES

The Parent Group                                                              

     Riverside's general liquidity  requirements  consist primarily of funds for
payment of debt and related interest and for operating expenses and overhead.   

     The  Company's  operations  consist  primarily of asset sales (real estate,
Greenleaf  shares and Wickes  shares) and Cybermax's  operations.  Proceeds from
real estate sales are required to be applied to real estate debt  reduction  and
are not available to Riverside for other purposes.                              

     Riverside's  cash on hand will not be sufficient to support its  operations
and  overhead  through  2002.  Therefore,   the  Company  will  need  to  obtain
significant  additional  funds through  asset sales or additional  borrowings or
other  financing  for such  purposes  and may need to  reduce  the  level of its
operations.   As  described  in  Note  7  of  Notes  to  Consolidated  Financial
Statements,  the  Company is in default  with  respect  to the  majority  of its
outstanding  long-term debt. The Company's immediate plans are to reorganize its
debts that are  currently  due and evaluate  options on  liquidating  assets and
investments  to meet the debt  requirements.  There can be no assurance that the
Company will be able to successfully  negotiate a restructuring  of its debt and
the  failure  to do so would  have a material  adverse  effect on the  Company's
financial  position.  In  addition,  if a successful  restructuring  of its debt
obligations  does not occur, the Company may need to seek  reorganization  under
applicable federal bankruptcy laws.                                             

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     For  a  detailed  discussion  of  Riverside's  liquidity,   debt  repayment
obligations  and  management's  plans  related  thereto,  see Note 8 of Notes to
Consolidated Financial Statements included elsewhere herein.                    

Cash Used in Operations                                       

     During  2001,  the  Company  used  approximately  $892,000  of cash for its
operations,  including  $140,000 and $752,000 of cash used for the operations of
Cybermax and the Parent Company, respectively.                                  

Cash Provided by Investing Activities                         

     The Company's  investments generated  approximately  $10,649,000 of cash in
2001.  Sales of the Company's real estate  investments  generated  approximately
$10,368,000  of cash.  The real  estate  proceeds  were  used to make  principal
payments of  approximately  $9,704,000  and  interest  expense and  property tax
payments  of  approximately  $414,000,  including  a  prepayment  of interest of
approximately  $36,000. In addition, the lender of the real estate mortgage debt
released  $225,000  to the  Company  that was used to cover  the  operations  of
Cybermax and  Riverside.  The lender charged a fee of $25,000 for the release of
funds to the Company.  During 2001, the Company sold 50,800 shares of its Wickes
stock for  approximately  $222,000.  The proceeds  from these sales were used to
cover the operations of Cybermax and the Parent  Company.  The Company also sold
650,000 shares of its Greenleaf stock for approximately $82,000 during 2001. The
agent for the 11%  Noteholders  allowed the  proceeds of the sales in 2001 to be
released to the Company to cover operating  costs. The proceeds from these sales
were used to cover the  operations  of Cybermax and the Parent  Company.  During
2001,  the Company  purchased  approximately  $14,000 of  equipment  and made an
improvement on its existing Highlands real estate for approximately $9,000.     

Cash Used in Financing Activities                             

     The Company used  approximately  $9,793,000 in its financing  activities in
2001. As a result of the Company's  real estate sales,  the Company  reduced its
mortgage debt by approximately  $9,704,000. In addition, the Company reduced its
other debt by  approximately  $98,000 in 2001.  These  payments  were  offset by
approximately $9,000 which the Company received on its ESOP notes and stock.    

Other Transactions                                            

     In addition, the following transactions relating to liquidity took place in
2000 and 2001:                                                                  

     In August 2000, the Company and Imagine extended the principal and interest
payments that were due under the Company's loan agreement with Imagine on August
31, 2000 until December 15, 2000. The $1.8 million loan balance was increased by
$222,000 for unpaid  interest and  refinancing  costs with this  extension.  The
Company did not make any payment of principal  and interest on December 15, 2000
and the loan is currently in default. The Company and Imagine are in discussions
regarding the extension of the principal and interest  payments that were due on
December 15, 2000. For further information  regarding the Imagine loan, see Note
7 to the Consolidated Financial Statements included elsewhere herein.           

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     The Company  failed to make the required  payment on its 11% Secured  Notes
which was due December 31, 2000. The Company  received notice from the agent for
the Noteholders  declaring all amounts  outstanding  under the notes immediately
due and payable.  The Company was also advised that the agent would  immediately
commence  foreclosure  proceedings  on the  collateral  securing the notes.  The
collateral includes certain real estate assets of Riverside and shares of Wickes
and Greenleaf.                                                                  

     In March 2001,  Imagine  purchased a majority of the  Company's 11% Secured
Notes from the Noteholders of the 11% Secured Notes. As a result of this action,
the agent for the Noteholders  cancelled the foreclosure  sales mentioned above.
In August 2001,  Imagine acquired the remaining 25% of the 11% Secured Notes and
now  owns  100%  of the  Notes.  Imagine  and the  Company  are  negotiating  to
restructure the debt. There can be no assurance that the Company will be able to
successfully  negotiate  a  restructuring  of its debt and the  failure to do so
would have a material  adverse effect on the Company's  financial  position.  In
addition, if a successful  restructuring of its debt obligations does not occur,
the Company may need to seek reorganization  under applicable federal bankruptcy
laws. For further  information  regarding the Company's 11% Secured  Notes,  see
Note 7 to the Consolidated Financial Statements included elsewhere herein.      

Recent Development                                                              

     On January 14, 2002, the Company received a letter,  dated January 9, 2002,
from the staff(the "Staff") of the Securities and Exchange Commission("SEC"). In
the  letter  the  Staff  requested  that the  Company  explain  why it is not an
investment  company as defined in Section  3(a)(1)(C) of the Investment  Company
Act of 1940(the "Investment Company Act"). By letter dated January 28, 2002, the
Company   responded  to  the  Staff's  comments  and  explained  the  basis  for
managment's  conclusion that the Company is not an investment company and is not
subject to the reporting requirements of the Investment Company Act.            

     On March 4, 2002, the Company received a second letter,  dated February 28,
2002,  from the Staff in which the  Staff  continued  to  question  whether  the
Company  qualifies for an exemption  from the  definition of investment  company
under the  Investment  Company  Act.  The Company is  reviewing  this issue with
counsel and preparing a response to the Staff's letter.                         

CRITICAL ACCOUNTING POLICIES

     The preparation of the consolidated  financial statements,  upon which this
Management's  Discussion  and  Analysis is based,  requires  Management  to make
estimates,  which  impact  these  consolidated  financial  statements.  The most
critical of these  estimates and accounting  policies relate to the valuation of
real estate held for sale and the  valuation  of  goodwill  associated  with the
investment  in  Wickes.  For a more  complete  discussion  of  these  and  other
accounting  policies,  see  Note  1  to  the  Company's  consolidated  financial
statements included in Item 8.                                                  

     Real  Estate Held for Sale -  Investments  in real estate held for sale are
carried at the lower of cost or fair value.  The Company is liquidating its real
estate  portfolio and is exposed to adverse  changes in the real estate  market.
Based  upon  recent  sales  transactions,  the  fair  value  of real  estate  is
substantially  higher than cost.  However,  deterioration in economic conditions
and/or a decline in the values of real estate could have a significant  negative
impact.                                                                         

     Investment in Wickes - The Company's 35%  investment in Wickes is accounted
for under the equity method of accounting.  Goodwill of $3.6 million at December
31, 2001 is included in the value of the  investment in Wickes.  Management  has
reviewed its investment in Wickes for impairment due to Wickes'  reported losses
from  operations  for the years ended  December  31,  2001 and 2000.  Based upon
estimates  of Wickes'  expected  future  cash flows  (undiscounted  and  without
interest  charges),  no impairment  allowance was required at December 31, 2001.
The carrying value of the Company's  2,860,243  shares of Wickes common stock at
December 31, 2001 of $12,506,000 is greater than the fair value of $8,724,000 as
determined by the quoted market price. This unrealized  depreciation in value is
considered by management to be temporary.  However,  the Company may be required
to sell its Wickes shares to generate resources to pay principal and interest on
debt.  Continued losses in Wickes'  operations and/or  deterioration in economic
conditions  would result in realized losses from the sale of Wickes common stock
and a possible  impairment in the value of the  Company's  investment in Wickes,
both of which could have a significant negative impact.                         

Recently Issued Accounting Pronouncements                                     

See Note 1 to the Consolidated Financial Statements included elsewhere herein.  

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

     The following  discussion  about the Company's  risk-management  activities
includes  "forward-looking"  statements  that  involve  risk and  uncertainties.
Actual   results   could  differ   materially   from  those   projected  in  the
forward-looking  statements.  The Company is subject to market risk from changes
in market price of equities and real estate.                                    

     The  Company is  currently  liquidating  its real estate  portfolio  and is
exposed to any adverse changes in the real estate market.  The Company  believes
that based on current economic  conditions and the  management's  expectation of
real estate  values,  proceeds from the sale of its real estate will allow it to
pay off its  mortgage  debt  and  pay  down  its  11%  Secured  Notes.  However,
deterioration  in  economic  conditions  and/or a  decline  in the value of real
estate could have a significant  negative  impact.  The table below reflects the
impact that a decrease of 10% and 25% in market prices may have on the Company's
realized  gains on real estate sales and the cash  available to pay down the 11%
Secured Notes.                                                                  

                                                                [Download Table]

                                                                  

                                     Current     @90%       @75%  
             (in thousands)           Value      Value      Value 
             -------------           -------     -----      ----- 
Market price less sales expenses  $    6,459  $   5,813  $   4,844
Realized gains                    $    3,655  $   3,009  $   2,040
Cash flow net of mortgage debt    $    4,367  $   3,766  $   2,865

     The  Company  believes  that  its  interest  rate  risk  is  minimal  as  a
hypothetical ten percent increase or decrease in interest rates is immaterial to
the  Company's  cash flow and  earnings.  The  Company  has  mortgage  debt at a
floating  rate of  interest  calculated  as the London  InterBank  Offered  Rate
("LIBOR")  plus 300 basis  points  with a current  outstanding  balance  of $1.6
million.                                                                        

Item 8. Financial Statements and Supplementary Data.                          

     Financial statements of the Company are set forth herein, beginning on page
F-1.                                                                  

Item 9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and 
Financial Disclosure.                                                 
None                                                                  
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                              PART III

Item 10.      Directors and Executive Officers of the Registrant.             

     Information  required by this Item is incorporated herein by reference from
the Company's  definitive proxy statement or definitive statement to be filed in
connection with the election of directors.                                      

Item 11.      Executive Compensation.                                         

     Information  required by this Item is incorporated herein by reference from
the Company's  definitive proxy statement or definitive statement to be filed in
connection with the election of directors.                                      

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

     Information  required by this Item is incorporated herein by reference from
the Company's  definitive proxy statement or definitive statement to be filed in
connection with the election of directors.                                      

Item 13.      Certain Relationships and Related Transactions.                 

     Information  required by this Item is incorporated herein by reference from
the Company's  definitive proxy statement or definitive statement to be filed in
connection with the election of directors.                                      

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 PART IV

                                                        [Enlarge/Download Table]

                                                                                              

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

    (a)   List of Financial Statements and Schedules Filed as a Part of this Report:          

         (1)   Financial Statements:                                                          

                Riverside Group, Inc. and Subsidiaries:                               Page No.
                                                                                      --------

               Independent Auditors' Report - Deloitte & Touche LLP                     F-1   

               Independent Auditors' Report - PricewaterhouseCoopers LLP                F-2   

               Consolidated Balance Sheets - December 31, 2001 and 2000                 F-3   

               Consolidated Statements of Operations                                          
               for the Years Ended December 31, 2001,                                   F-4   
               2000 and 1999                                                                  

               Consolidated Statement of Stockholders'                                        
               Equity(Deficit)for the Years Ended December 31,                                
               2001, 2000 and 1999                                                      F-5   

               Consolidated Statements of Cash Flows for                                      
               the Years Ended December 31, 2001, 2000                                        
               and 1999                                                                 F-6   

               Notes to Consolidated Financial Statements                               F-7   

               Wickes Inc. and Subsidiaries:                                                  

               We hereby incorporate by reference the Financial Statements and                
               Notes to Financial Statements included in Wickes Inc. Form-10K                 
               for the Fiscal Year Ended December 29, 2001.                                   

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(2)      Financial Statement Schedules:                                                       

               Riverside Group, Inc. and Subsidiaries:                                        

               Independent Auditors' Report - Deloitte & Touche LLP                      S-1  

               Independent Auditors' Report - PricewaterhouseCoopers LLP                 S-2  

               Schedule I - Condensed Financial Information of Registrant                S-3  

               Schedule II - Valuation and Qualifying Account                            S-6  

               Wickes, Inc.and Subsidaries:                                                   

               We hereby  incorporate by reference the Financial  Schedules                   
               in Wickes,Inc. Form 10-K for the Fiscal Year Ended December 29,                
               2001                                                                           

(b) Reports on Form 8-K                                                                       

               None                                                                           


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Exhibits                                                                      

3.1*     Restated  Articles of  Incorporation,  as amended to date  (previously 
         filed as Exhibit 3.01 to the  Company's  Annual Report on Form 10-K for
the year ended December 31, 1994).                            

3.2*     Amended and Restated Bylaws,  as amended to date (previously  filed as 
       Exhibit 3.02 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1994).                                     

4.1 (a)* Credit Agreement  dated April 1, 1999 between the  registrant and      
         the signatories thereto (incorporated by reference to Exhibit 4.1(a) to
    theQuarterly Report Form 10-Q filed by the Company for the quarter
ending June 30, 1999).                                        

(b)*  Form  of  11%  Secured  Promissory  Note  dated  April  1,  1999  
          (incorporated  by reference to Exhibit 4.1(b) to the Quarterly  Report
          Form 10-Q filed by the Company for the quarter  ending June 30, 1999).

(c)*  Modification to Credit Agreement dated March 24, 2000 between the 
          registrant   and  Mitchell  W.  Legler,   as  agent  for  the  Holders
          (previously  filed as Exhibit 4.1(c) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1999).            

(d)*  Forbearance  Agreement dated May 8, 2000 among the registrant and 
          the Secured  Noteholders  (incorporated by reference to Exhibit 4.1(d)
          to the Quarterly Report Form 10-Q filed by the Company for the quarter
ending June 30, 2000).                                      

(e)*  Amendment to Forbearance  Agreement  dated August 14, 2000 among  
          the registrant and the Secured Noteholders  (incorporated by reference
          to  Exhibit  4.1(e) to the  Quarterly  Report  Form 10-Q  filed by the
Company for the quarter ending June 30, 2000).              

(f)*  First  Amendment to Loan  Agreement  and Stock Pledge  Agreements 
          dated  August 31, 2000 among the  registrant  and Imagine  Investments
          (incorporated  by reference to Exhibit 4.1(f) to the Quarterly  Report
         Form 10-Q filed by the Company for the quarter ending June 30, 2000).

(g)*  First  Amendment  and Restated  Promissory  Note dated August 31, 
          2000 among the registrant  and Imagine  Investments  (incorporated  by
          reference to Exhibit 4.1(g) to the Quarterly Report Form 10-Q filed by
the Company for the quarter ending June 30, 2000).          

(h)*  Stock Pledge Agreement dated August 31, 2000 among the registrant 
          and Imagine  Investments  (incorporated by reference to Exhibit 4.1(h)
          to the Quarterly Report Form 10-Q filed by the Company for the quarter
ending June 30, 2000).                                      

(i)*  Forbearance  Agreement dated March,  2001 between the registrant  
          and Imagine Investments, Inc. (previously filed as Exhibit 3.02 to the
          Company's  Annual Report on Form 10-K for the year ended  December 31,
2000).                                                      

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4.2 (a)*  Amendment  to Loan  Agreement  dated  May  20,  1999  among  the      
          registrant,  Cybermax,  Inc.,  Cybermax Tech,  Inc.,  Buildscape, Inc.
         and Imagine Investments,  Inc.  (incorporated by reference to Exhibit
          4.2(a) to the Quarterly  Report Form 10-Q filed by the Company for the
quarter ending June 30, 1999).                              

(b)*  Amended and  Restated  Term  Promissory  Note dated May 20, 1999  
          (incorporated  by reference to Exhibit 4.2(b) to the Quarterly  Report
         Form 10-Q filed by the Company for the quarter ending June 30, 1999).

(c)*  Amendment to Stock Option  Agreement  dated May 20, 1999 between  
         Cybermax  Tech,  Inc.  and  Imagine  Investments, Inc.  (incorporated
     by reference to Exhibit 4.2(c) to the Quarterly  Report Form 10-Q
filed by the Company for the quarter ending June 30, 1999). 

(d)*  Guaranty  Agreement  dated April 12, 2001 between the  registrant 
         and Dow Chemical  Company  (incorporated  by reference to Exhibit 4.2
      (d) tothe Quarterly  Report Form 10-Q filed by the Company for the
quarter ending March 31, 2001).                             

(e)*  Forbearance  Agreement dated April,  2001, between the registrant 
        and Imagine Investment,  Inc.  (incorporated by reference to Exhibit
         4.2(d) to the  Quarterly  Report  Form 10-Q filed by the  Company for
the quarter ending March 31, 2001).                         

(f)*  Forbearance Agreement dated May, 2001, between the registrant and 
         Imagine  Investment,  Inc.  (incorporated by reference to Exhibit 4.2
       (d) to the Quarterly  Report Form 10-Q filed by the Company for the
quarter ending March 31, 2001).                             

(g)*  Forbearance  Agreement dated June,  2001,  between the registrant 
        and Imagine Investment,  Inc.  (incorporated by reference to Exhibit
         4.2(d) to the  Quarterly  Report  Form 10-Q filed by the  Company for
the quarter ending June 30, 2001).                          

(h)*  Forbearance  Agreement dated July,  2001,  between the registrant 
        and Imagine Investment,  Inc.  (incorporated by reference to Exhibit
     4.2(d) to the  Quarterly  Report  Form 10-Q filed by the  Company
for the quarter ending June 30, 2001).                      

(i)*  Guaranty   Agreement  dated  September  12,  2001,  between  the  
       registrant and Dow Chemical  Company  (incorporated by reference to
     Exhibit 4.2(d) to the  Quarterly  Report  Form 10-Q  filed by the
Company  for the quarter ending September 30, 2001).        

4.3 (a)*  Loan  Agreement  dated  August  12,  1999  among  the  registrant,    
       Cybermax,  Inc., Cybermax Tech, Inc., Buildscape,  Inc. and Imagine
          Investments,Inc.  (incorporated  by reference to Exhibit 4.3(a) to the
         Quarterly Report Form 0-Q filed by the Company for the quarter ending
June 30, 1999).                                             

   (b)*  Promissory Note dated August 12, 1999  (incorporated  by reference to
          Exhibit 4.3(b) to the Quarterly  Report Form 10-Q filed by the Company
for the quarter ending June 30, 1999).                      

    (c)*  Stock Option Agreement  dated  August 12, 1999 between  Cybermax Tech,
        Inc. and Imagine  Investments,  Inc.  (incorporated  by reference to
    Exhibit  4.3(c) to the Quarterly  Report Form 10-Q filed  by the
Company for the quarter ending June 30, 1999).              

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4.4 (a)*  Loan  Agreement  dated August 27, 1999 between the  registrant and    
         Imagine Investments,  Inc.  (incorporated by reference to Exhibit 4.1
       (a) to the Quarterly  Report Form 10-Q filed by the Company for the
quarter ending September 30, 1999).                         

   (b)*  Demand  Promissory  Note  dated  August  27,  1999  (incorporated  by
       reference  to  Exhibit  4.1(b) to the  Quarterly  Report  Form 10-Q
    filed by the Company for the quarter ending September 30, 1999).

    (c)*  Stock Pledge  Agreement  dated August 27, 1999 between the  registrant
   and Imagine  Investments,  Inc.  (incorporated  by reference to
        Exhibit 4.1(c)to the Quarterly Report Form 10-Q filed by the Company
          for the quarter ending September 30,  1999).  10.1 (a)*  Non-Qualified
     Stock  Option Plan  (previously  filed as Exhibit  10.1(a) to the
         Company's  Annual Report as Form 10-K for the year ended December 31,
1997).                                                      

(b)*  Form of Non-Qualified Stock Option Agreement (previously filed as 
Exhibit 10.1(b) to the Company's Annual Report as Form 10-K 
for the year ended December 31, 1997).                      

10.2(a)*  Agreement dated November 4, 1997 between the Registrant and Wickes Inc
        (incorporated by reference to Exhibit 10.1 to the Form 10-Q filed by
Wickes for the September 1997 quarter).                     

    (b)*  Agreement  and Closing  Agreement  dated  November 4, 1997 between the
       Registrant  and Wickes Inc.  (incorporated  by reference to Exhibit
10.9(b) to the Wickes Inc. 1997 Form 10-K).                 

10.3*     Agreement dated September 30, 1998 between Cybermax Tech, Inc. and    
    Greenleaf Technologies Corporation (incorporated by reference to
         Exhibit 99.1 to the 8-K filed by the registrant on October 15, 1998).

10.4*     Stock Purchase Agreement dated October 5, 1998 between the registrant 
      and Imagine Investment, Inc. (incorporated by reference to Exhibit
 99.2 to the 8-K filed by the registrant on October 15, 1998).

10.5*     Agreement dated October 15, 1999 among the registrant, Imagine        
          Investments, Inc., Cybermax, Inc., Cybermax Tech, Inc. and Buildscape,
          Inc.(incorporated  by reference to Exhibit 2.1 to the 8-K filed by the
registrant  on October 15, 1998).                           

10.6*     Series A Cumulative  Convertible  Preferred  Stock Purchase  Agreement
       dated October 15, 1999 among the  registrant, Buildscape,  Inc. and
          Imagine Investments,  Inc.  (incorporated  by reference to Exhibit 2.2
to the 8-K filed by the registrant on October 15, 1998).    

10.7*     Agreement between Buildscape,  Inc. and Wickes, Inc. (previously filed
       as Exhibit 10.7 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1999).                              

10.8*     Settlement Agreement dated January 28, 2000 between the registrant,   
          Greenleaf Technologies Corporation,  Cybermax Tech, Inc. and Cybermax,
         Inc. (previously filed as Exhibit 10.8 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1999).         

21.01** Subsidiaries of the Company.                                            

23.01** Consent of Deloitte & Touche LLP.                                       
23.02** Consent of PricewaterhouseCoopers LLP.                                  

*Incorporated by reference.                                                   
**filed herewith                                                              

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SIGNATURES

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

                                                           RIVERSIDE GROUP, INC.

                                                            /s/ J. Steven Wilson
                                                       -------------------------
                                                                J. Steven Wilson
                                                          Chairman of the Board,
                                                                 President and
                                                         Chief Executive Officer

Dated:   April 1, 2002                                                        

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

/s/ J. Steven Wilson                                /s/Edward M. Carey        
 -------------------------------------          --------------------------------
J. Steven Wilson                                    Edward M. Carey           
Principal Executive Officer                         Director, April 1, 2002   
and Director, April 1, 2002                                                   

/s/ John E. Donnelly, Esquire                       /s/ Edward C. Carey       
 -------------------------------                   -----------------------------
John E. Donnelly, Esquire                           Edward C. Carey           
Director, April 1, 2002                             Director, April 1, 2002   

/s/ Catherine J. Gray                                                           
-------------------------------                                               
Catherine J. Gray                                                             
Senior Vice President, Chief                                                  
Finanical Officer, (Principal                                                 
Accounting and Finanical Officer)                                             
April 1, 2002                                                                 

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Independent Auditors' Report                                                    
To the Board of Directors and Stockholders of                                   
Riverside Group, Inc.                                                           

Jacksonville, Florida                                                           

We have audited the accompanying consolidated balance sheets of Riverside Group,
Inc. and  subsidiaries  (the "Company") as of December 31, 2001 and 2000 and the
related consolidated statements of operations, stockholders'equity (deficit) and
cash  flows  for the  years  then  ended.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on the financial statements based on our audit.                         

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits 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 consolidated  financial  statements present fairly, in all
material  respects,   the  financial  position  of  Riverside  Group,  Inc.  and
subsidiaries  at December 31, 2001 and 2000 and the results of their  operations
and their  cash flows for the years then  ended in  conformity  with  accounting
principles generally accepted in the United States of America.                  

The accompanying  financial  statements for the year ended December 31, 2001 and
2000 have been prepared  assuming that Riverside  Group,  Inc. and  subsidiaries
will  continue  as a going  concern.  As  discussed  in Note 8 to the  financial
statements,  the Company's  recurring losses from operations,  net stockholders'
capital  deficiency and callable  nature of the notes payable raise  substantial
doubt about the Company's  ability to continue as a going concern.  Management's
plans  concerning  these  matters are also  described  in Note 8. The  financial
statements do not include any adjustments that might result from the outcome of 
this uncertainty.                                                               

/s/DELOITTE & TOUCHE LLP                                                        

Certified Public Accountants                                                    
Jacksonville, Florida                                                           
March 27, 2002                                                                  

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Report of Independent Certified Public Accountants                              

The Board of Directors and Shareholders of                                      
Riverside Group, Inc.:                                                          

In our opinion,  the  accompanying  consolidated  statements of  operations  and
common  stockholders'  equity and cash flows  present  fairly,  in all  material
respects, the results of Riverside Group, Inc. and its subsidiaries consolidated
operations  and cash flows for the year ended  December  31, 1999 in  conformity
with  accounting  principles  generally  accepted  in the United  States.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management;  our  responsibility  is to express  an  opinion on these  financial
statements  based on our audit.  We conducted  our audit of these  statements in
accordance  with auditing  standards  generally  accepted in the United  States,
which 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,  assessing the  accounting  principles
used and  significant  estimates  made by management  and evaluating the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for the opinion expressed above.                               

The accompanying  consolidated  financial statements have been prepared assuming
that Riverside will continue as a going concern.  As discussed in Note 11 in the
1999  Form  10-K to the  consolidated  financial  statements,  the  Company  has
suffered  recurring losses from operations and has a net capital deficiency that
raise  substantial  doubt  about its  ability to  continue  as a going  concern.
Management plans in regard to these matters are also described in Note 11 in the
1999 Form  10-K.  The  consolidated  financial  statements  do not  include  any
adjustments that might result from the outcome of this uncertainty.             

PricewaterhouseCoopers, LLP                                                     

Jacksonville, Florida                                                           
April 14,2000                                                                   

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Riverside Group, Inc. and Subsidiaries
 Consolidated Balance Sheets
(in thousands)

                                                        [Enlarge/Download Table]


                                                                                                       

                                                                   December 31,          December 31,  
                                                                       2001                  2000      
                                                                   --------------     -----------------

                                 ASSETS                                                                
Current assets:                                                                                        
   Cash and cash equivalents                                    $            210    $           246    
   Accounts receivable, less allowance for doubtful accounts                                           
     of $18 at 2001 and $100 at 2000                                         357                234    
   Investment in Greenleaf                                                    --              2,323    
   Other investments                                                          19                 60    
   Notes receivable                                                           27                 16    
   Prepaid expenses                                                           58                438    
                                                                   --------------     --------------   
                  Total current assets                                       671              3,317    

Investment in Wickes                                                      12,506             15,779    
Investment in Buildscape                                                    (947)              (947)   
Real estate held for sale                                                  2,882              6,682    
Property and equipment, net                                                   98                185    
Other assets, net of accumulated amortization of $8                                                    
     at 2001 and $12 at 2000                                                  62                 85    
                                                                   --------------     --------------   
                  Total assets                                  $         15,272    $        25,101    
                                                                   ==============     ==============   

              LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)                                             

Current liabilities:                                                                                   
   Current portion of long-term debt (Note 7)                   $         13,593    $        23,068    
   Accounts payable                                                          587                470    
   Accrued liabilities                                                     3,442              1,684    
                                                                   --------------  -----------------   
                  Total current liabilities                               17,622             25,222    

Long-term debt                                                                --                268    
Other liabilities                                                             77                 95    
                                                                   --------------  -----------------   
                  Total liabilities                                       17,699             25,585    

Commitments and contingencies (Note 8)                                                                 

Stockholders' equity (deficit):                                                                        
   Common stock, $.10 par value; 20,000,000 shares authorized:                                         
      4,767,123 issued and outstanding in 2001 and 2000                      477                477    
   Additional paid-in capital                                              6,513             16,492    
   Accumulated other comprehensive income (loss)                             (38)             2,325    
   Retained earnings (deficit)                                           (19,379)           (19,778)   
                                                                   --------------  -----------------   
                  Total stockholders' equity (deficit)                    (2,427)              (484)   

                                                                   --------------  -----------------   
          Total liabilities and stockholders' equity (deficit)  $         15,272    $        25,101    
                                                                   ==============  =================   


                    See Accompanying Notes to Consolidated Financial Statements.

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Riverside Group, Inc. and Subsidiaries
 Consolidated Statements of Operations
 (in thousands except per share amounts)

                                                        [Enlarge/Download Table]

                                                                                                         

                                                                    Years Ended December 31,             
                                                        -------------------------------------------------
                                                              2001              2000              1999   
                                                        --------------   ---------------    -------------

Revenues:                                                                                                
   Sales and service revenues                        $          1,215    $        1,774  $         1,620 
   Other investment losses                                        (37)              (77)             (61)
   Gains (losses) on real estate                                6,565               360             (257)
   Gains on Greenleaf shares                                       82             1,616               -- 
   Gains (losses) on Wickes shares                                (72)               28               -- 
   Gains on Buildscape shares                                      --                --            3,994 
   Other operating income                                         363               188               95 
                                                        --------------   ---------------    -------------
                                                                8,116             3,889            5,391 
Costs and expenses:                                                                                      
   Direct costs                                                   591               945              559 
   Provision for doubtful accounts                                 25                97               91 
   Depreciation and goodwill amortization                         109               250              375 
   Selling, general and administrative expenses                 1,660             2,030            6,649 
   Interest expense                                             2,353             2,866            2,642 
                                                        --------------   ---------------    -------------
                                                                4,738             6,188           10,316 

                                                        --------------   ---------------    -------------
Earnings (losses) from operations                               3,378            (2,299)          (4,925)

   Equity in earnings (losses) of Wickes                       (2,979)              455            2,247 

                                                        --------------   ---------------    -------------
Earnings (losses) before income taxes                             399            (1,844)          (2,678)

   Income tax expense(benefit)                                     --                --               -- 
                                                        --------------   ---------------    -------------
       Net earnings (losses)                         $            399    $       (1,844)  $       (2,678)
                                                        ==============   ===============    =============

Basic and diluted earnings (losses) per                                                                  
  common share:                                                                                          
    Earnings (losses) per share                      $           0.08    $        (0.39)  $        (0.52)

   Weighted average number of common shares                                                              
     used in computing basic earnings per share             4,767,123         4,767,123        5,128,131 

    Weighted average number of common shares                                                             
       used in computing diluted earnings per share         4,767,123         4,767,123        5,128,131 


                    See Accompanying Notes to Consolidated Financial Statements.

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 Riverside Group, Inc.
          Consolidated Statements of Stockholder's Equity(Deficit)
(in thousands)

                                                        [Enlarge/Download Table]

                                                                                                                               

                                                                    Accumulated                                                
                                                                       Other                         Total                     
                                                   Additional      Comprehensive     Retained     Stockholder's       Total    
                                       Common       Paid-In           Income         Earnings        Equity       Comprehensive
                                        Stock       Capital           (Loss)         (Deficit)     (Deficit)      Income (Loss)
                                     ----------   -----------      ------------     ----------   -------------    -------------

Balance, December 31, 1998         $      529    $    16,838    $          --     $   (15,256)   $    2,111                    

Net loss                                                                               (2,678)       (2,678)    $       (2,678)

Increase in unrealized investment                                                                                              
gains, net of deferred taxes                                              1,253                       1,253              1,253 

                                                                                                                   ------------
Total comprehensive loss                                                                                        $       (1,425)
                                                                                                                   ============
Termination of ESOP Plan                                  41                                             41                    

Note receivable from stockholders                        (41)                                           (41)                   

Retirement of 520,000 shares of                                                                                                
common stock, at cost                     (52)          (370)                                          (422)                   
                                     ----------    -----------       ----------     -----------     -----------                
Balance, December 31, 1999                477         16,468              1,253        (17,934)         264                    

Net loss                                                                                (1,844)      (1,844)    $       (1,844)

Increase in unrealized investment                                                                                              
gains, net of deferred taxes                                              1,072                       1,072              1,072 

                                                                                                                   ------------
Total comprehensive loss                                                                                        $         (772)
                                                                                                                   ============

Note receivable from stockholders                         24                                             24                    

                                     ----------    -----------       ----------     -----------     -----------                
Balance, December 31, 2000                477         16,492              2,325        (19,778)        (484)                   

Net income                                                                                 399          399     $          399 

Decrease in unrealized investment                                                                                              
gains, net of deferred taxes                                             (2,363)                     (2,363)            (2,363)
                                                                                                                 --------------
Total comprehensive loss                                                                                        $       (1,964)
                                                                                                                 ==============

Note receivable from stockholders                         21                                             21                    

                                     ----------    -----------       ----------      ----------     -----------                
Balance, December 31, 2001         $      477    $    16,513    $           (38)  $    (19,379)  $   (2,427)                   
                                     ==========    ===========       ==========      ==========     ===========                


                   See Accompanying Notes to Consolidated Financial Statements

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Riverside Group, Inc. and Subsidiaries
 Consolidated Cash Flows
(in thousands)

                                                        [Enlarge/Download Table]

                                                                                                                            

                                                                                     Years Ended December 31,               
                                                                                     ------------------------               
                                                                               2001              2000             1999      
                                                                           -------------      ------------    --------------
Operating Activities                                                                                                        
  Net earnings (losses)                                                 $           399    $       (1,844)  $        (2,678)
  Adjustments to reconcile net earnings (losses) to net cash                                                                
     used in operating activities:                                                                                          
     Depreciation expense                                                           101               215               254 
     Amortization expense                                                             8                35               636 
     Amortization of bond discount                                                   --                --               173 
      Provision for doubtful accounts                                                25                97                91 
     (Gain) loss on sale of fixed assets                                             --                (3)                2 
     Gain on sale on Buildscape shares                                               --                --            (3,994)
     (Gains) losses on real estate                                               (6,565)             (360)              261 
     Gains of Greenleaf shares                                                      (82)           (1,500)               -- 
     Losses (gains) on Wickes shares                                                 72               (28)               -- 
     Equity in losses (earnings) of Wickes                                        2,979              (455)           (2,768)
     Change in other assets and liabilities:                                                                                
       Increase in accounts receivable                                             (148)              (72)             (104)
       Decrease in notes receivable                                                  --                14               157 
       Decrease (increase) in other assets                                          401              (382)               45 
       Increase in accounts payable and accrued liabilities                       1,935               188               588 
       Increase  (decrease) in other liabilities and current income taxes           (17)               (9)             (220)

                                                                           -------------      ------------    --------------
  Net Cash Used in Operating Activities                                            (892)           (4,104)           (7,557)
                                                                           -------------      ------------    --------------

Investing Activities                                                                                                        
     Purchase of property, plant and equipment                                      (14)              (50)             (338)
     Sale of property, plant and equipment                                           --                 4                 2 
     Purchase of investments:                                                                                               
       Investment real estate held for sale                                          (9)               --                (9)
       Investment common stock                                                       --               (66)               -- 
     Sale of investments:                                                                                                   
       Sale of real estate held for sale                                         10,368             2,663               405 
       Sale of Greenleaf shares                                                      82             1,508                -- 
       Sale of Wickes shares                                                        222               503             1,186 
       Sale of Buildscape shares                                                     --                --             4,391 
                                                                           -------------      ------------    --------------
 Net Cash Provided By Investing Activities                                       10,649             4,562             5,637 
                                                                           -------------      ------------    --------------

Financing Activities                                                                                                        
       Repayment of debt                                                         (9,802)             (513)           (3,494)
       Increase in borrowings                                                        --                --             5,182 
       Net proceeds ESOP Sales                                                        9                24                -- 
                                                                           -------------      ------------    --------------
   Net Cash (Used In) Provided By Financing Activities                           (9,793)             (489)            1,688 
                                                                           -------------      ------------    --------------

       Net Decrease in Cash and Cash Equivalents                                    (36)              (31)             (232)
       Cash and cash equivalents at beginning of year                               246               277               509 
                                                                           -------------      ------------    --------------
       Cash and cash equivalents at end of year                         $           210     $         246  $            277 
                                                                           =============      ============    ==============
      Supplemental schedule of cash flow information:                                                                       
          Non-cash compensation expense (Greenleaf options)             $            --     $         116  $             -- 
          Non-cash increase in borrowings (Imagine)                                  --               222                -- 
          Non-cash debt                                                              59                --                -- 

                    See Accompanying Notes to Consolidated Financial Statements.
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Riverside Group, Inc.                                                           
Notes to Consolidated Financial Statements                                      
Years ended December 31, 2001, 2000 and 1999                                    

1.       Organization and Significant Accounting Principles                     

Organization                                                                    

Riverside Group, Inc., a Florida  corporation formed in 1965 ("Riverside",  also
"Parent  Company")  is  a  holding  company  focused  through  its  wholly-owned
subsidiary,  Cybermax,  Inc.  ("Cybermax") and other  investments in e-Commerce,
e-Learning  and  Interactive  Media  solutions.  Unless  the  context  indicates
otherwise,  the term  "Company"  as used  herein  refers  to  Riverside  and its
wholly-owned subsidiaries.                                                      

The Company also invests in the supply and  distribution  of building  materials
through its 35%-equity  investment in Wickes Inc.  ("Wickes") and its 40%-equity
investment in Buildscape,  Inc.  ("Buildscape").  Buildscape provides e-Commerce
services and building-related content to the home building professional.        

The  consolidated  financial  statements  present  the  results  of  operations,
financial  position  and  cash  flows  of  Riverside,  of its  wholly-owned  and
majority-owned  subsidiaries.  The  Company's  wholly-owned  and  majority-owned
subsidiaries   include:   Cybermax  and  its   subsidiaries,   Buildcast,   Inc.
("Buildcast"),  Wixx Energy,  Inc.  ("Wixx"),  and the  parent's  two  principal
insurance  holding  company   subsidiaries,   American   Financial   Acquisition
Corporation  ("AFAC") and Dependable  Insurance Group,  Inc.  ("DIGI") and their
subsidiaries.  The  Company  dissolved  DIGI  and  AFAC  on  December  1,  2000.
Dissolution  of  these  subsidiaries  did  not  have a  material  impact  on the
Company's financial position, results of operation or cash flows.               

Basis of Financial Statement Presentation                                       

The  accompanying  consolidated  financial  statements  have  been  prepared  in
conformity with accounting principles generally accepted in the United States of
America ("GAAP").  All significant  intercompany  accounts and transactions have
been eliminated.                                                                

Buildscape's  operations  are  consolidated  with those of the  Company  and its
subsidiaries  from  January  1, 1999  through  October  21,  1999.  The  Company
accounted  for  its  investment  in  Buildscape  on the  equity  method  for the
remainder of 1999 and all of 2000 and 2001, respectively.                       

Cash and Cash Equivalents                                                       

The Company  considers  all highly  liquid  investments  with a maturity date of
three months or less at date of purchase to be cash equivalents. Included in the
December 31, 2001 cash balance is approximately $4,600 of restricted cash.      

Concentration of Credit Risk                                                    

The  Company's  accounts  receivable  subject  the  Company to credit  risk,  as
collateral is generally not required.  The Company's risk of loss is limited due
to advance billings to customers for services, the use of preapproved charges to
customer  credit  cards  and the  ability  to  terminate  access  on  delinquent
accounts. The carrying amount of the Company's accounts receivable  approximates
their net realizable value.                                                     
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Real Estate Held for Sale                                                       

Investments  in real estate held for sale are  reported at the lower of carrying
amount or fair value less costs to sell.  Certain of the  Company's  real estate
was acquired from affiliates and has been recorded at historical carryover cost.

Investment in Greenleaf                                                         

The Company accounts for its investment in Greenleaf  Techonologies  Corporation
("Greenleaf") common stock as available for sale.  At December 31, 2000,  these 
available for sale  securities  are reported at fair value,  with the unrealized
gains and losses  excluded  from  earnings,  but reported  within  stockholders'
equity in accumulated  other  comprehensive  income (net of the effect of income
taxes).  At the time of sale,  any gains or losses,  calculated  by the specific
identification  method,  are  recognized  as a component of  operating  results.
Subsequent to December 31, 2001, Greenleaf operations ceased.  Accordingly,  the
Greenleaf common stock is permanently impaired. As such, the Company has written
down the investment to $0 at December 31, 2001.                                 

Investment in Wickes                                                          

The  Company's  consolidated  balance  sheets  and  consolidated  statements  of
operations  and cash flows  reflect  Riverside's  investment in Wickes under the
equity  method as a result of sales of Wickes  common stock that  decreased  the
Company's ownership below 50%.                                                  

Investment in Buildscape                                                        

Buildscape's  operations  were  consolidated  with those of the  Company and its
subsidiaries  until October 21, 1999. On that date,  the Company sold  1,880,933
shares of Buildscape's  common stock and Buildscape  issued  1,667,667 shares of
its voting Series A Cumulative  Convertible  Preferred  Stock.  This reduced the
Company's ownership in Buildscape to 47% on a fully converted basis. As a result
of this  transaction,  the Company  accounted  for its  investment in Buildscape
under the equity method from October 21, 1999 through  December 31, 1999 and all
of 2000 and 2001, respectively.                                                 

Long-Lived Assets                                                               

Long-lived  assets  include  property and equipment  and goodwill.  Property and
equipment is stated at cost less accumulated depreciation.  Depreciation expense
is computed using the  straight-line  method over the estimated  useful lives of
the related  assets,  ranging  from 3 to 5 years.  Depreciation  expense for the
years  ended  December  31,  2001,  2000 and 1999  was  approximately  $102,000,
$204,000  and  $235,000,  respectively.  Goodwill  of $3.6 and $4.1  million  at
December  31,  2001 and 2000,  respectively,  was  included  in the value of the
investment  in Wickes.  Amortization  expense of goodwill  was  $521,000 for the
years ended December 31, 2001, 2000 and 1999,  respectively  and was included in
equity in earnings (loss) of Wickes. Periodically, management reviews long-lived
assets for impairment whenever events or changes in circumstances  indicate that
the carrying amount of an asset may not be  recoverable.  Impairment is measured
by comparing the carrying  amount of the asset to the sum of the expected future
cash flows (undiscounted and without interest charges) resulting from use of the
asset and its eventual disposition.                                             
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Other Assets                                                                    

Other assets consists primarily of deferred financing costs, which are amortized
over the expected terms of the related debt.                                    

Income Taxes                                                                    

The Company  records  income taxes in accordance  with the  liability  method of
accounting.  Deferred taxes are recognized  for the estimated  taxes  ultimately
payable or  recoverable  based on enacted tax law.  Changes in enacted tax rates
are  reflected  in the tax  provision  as they  occur.  Deferred  tax assets are
reduced by a valuation  allowance when the Company cannot make the determination
that it is more likely than not that some portion of the related tax asset will 
be realized.                                                                    

The Company will file a consolidated tax return for 2001, which will include all
its  subsidiaries.  Riverside's  equity  investment in Wickes and  Buildscape is
below the requirements  that allow  consolidation  for tax purposes.  Therefore,
separate returns will be filed for these companies.                             

Earnings Per Share                                                              

Basic and diluted  earnings per common share are  calculated in accordance  with
Statement of  Financial  Accounting  Standards  No. 128,  "Earnings  Per Share".
Earnings per share are based on the weighted  average number of shares of common
stock outstanding.  In periods where net losses were incurred,  diluted weighted
average common shares are not used in the  calculation  of diluted  earnings per
share,  as it would have an  anti-dilutive  effect on  earnings  per  share.  In
addition,  in 2001,  options to purchase 294,000 shares were not included in the
diluted earnings per share,  since the options'  exercise price was greater than
the average market price.                                                       

Stock-Based Compensation                                                        

The Company has elected to account for its  employee  stock  compensation  plans
under  the  intrinsic  value  based  method  with pro forma  disclosures  of net
earnings and earnings per share, as if the fair value based method of accounting
had been applied.  Under the intrinsic value based method,  compensation cost is
the excess, if any, of the quoted market price of the stock at the grant date or
other  measurement  date over the amount an  employee  must pay to  acquire  the
stock.  Under the fair value based method,  compensation cost is measured at the
grant date based on the value of the award and is  recognized  over the  service
period,  which  is  usually  the  vesting  period.  For  grants  of  options  to
non-employees,  the Company accounts for these  transactions  utilizing the fair
value based method of accounting incurring a charge for the value of the option,
as calculated by the  Black-Scholes  asset pricing model and  amortizing it over
the service period of the option.                                               
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Revenue Recognition                                                             

The  Company  recognizes  revenue  when  services  are  provided.  Services  are
generally billed one month in advance. Advance billings and collections relating
to future  access  services are recorded as deferred  revenue and  recognized as
revenue when earned.                                                            

Recently Issued Accounting Pronouncements                                       

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial  Accounting  Standards ("SFAS") No. 141,  "Business  Combinations",
SFAS No.  142,  "Goodwill  and  Other  Intangible  Assets,"  and  SFAS No.  143,
"Accounting For Asset Retirement Obligations." These Statements make significant
changes to the  accounting  for business  combinations,  goodwill and intangible
assets.  SFAS No. 141 eliminates the  pooling-of-interests  method of accounting
for business  combinations  with limited  exceptions for combinations  initiated
prior to July 1, 2001.  In  addition,  it further  clarifies  the  criteria  for
recognition of intangible  assets  separately  from goodwill.  This statement is
effective for business combinations completed after June 30, 2001.              

SFAS No. 142  discontinues  the practice of amortizing  goodwill and  indefinite
lived  intangible   assets  and  initiates  an  annual  review  for  impairment.
Impairment  would  be  examined  more  frequently  if  certain   indicators  are
encountered.  Intangible assets with a determinable useful life will continue to
be amortized over that period. The amortization provisions apply to goodwill and
intangible  assets  acquired after June 30, 2001.  SFAS No. 142 is effective for
fiscal years beginning after December 15, 2001.  Goodwill and intangible  assets
on the books at June 30,  2001,  will be affected  when the  Company  adopts the
Statement effective January 1, 2002.                                            

SFAS No. 143  requires  entities to record the fair value of a liability  for an
asset  retirement  obligation in the period in which it is incurred and requires
that the amount  recorded  as a  liability  be  capitalized  by  increasing  the
carrying  amount  of  the  related  long-lived  asset.   Subsequent  to  initial
measurement,  the liability is accreted to the ultimate amount anticipated to be
paid and is also  adjusted  for  revisions  to the timing or amount of estimated
cash flows.  The  capitalized  cost is  depreciated  over the useful life of the
related asset.  Upon  settlement of the liability,  an entity either settles the
obligation  for its  recorded  amount or incurs a gain or loss upon  settlement.
SFAS No. 143 is required to be adopted for fiscal years beginning after June 15,
2002, with earlier application encouraged.                                      

In August 2001, the FASB issued SFAS No. 144,  "Accounting for the Impairment or
Disposal  of  Long-Lived  Assets."  This  statement  supersedes  SFAS  No.  121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of". SFAS No. 144 retains the fundamental provisions of SFAS No. 121
for (a) recognition and measurement of the impairment of long-lived assets to be
held and used and (b)  measurement  of  long-lived  assets to be  disposed of by
sale.  SFAS No. 144 is effective for fiscal years  beginning  after December 15,
2001.                                                                           

The Company is evaluating the impact of the adoption of these  standards and has
not yet determined the effect of adoption on its financial  position and results
of operations.                                                                  

Uses of Estimates in the Preparation of Financial Statements                    

The  preparation  of  financial  statements  in  conformity  with GAAP  requires
management to make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the financial  statements  and the reported  amounts of revenues and
expenses  during each reporting  period.  Actual results could differ from those
estimates.                                                                      
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Statement of Cash Flows Supplementary Disclosure                                

The Company and its  subsidiaries,  exclusive of Wickes,  ("Parent  Group") paid
$751,000,  $2,894,000  and  $1,544,000,  of  interest  in 2001,  2000 and  1999,
respectively.                                                                   

The Parent Group made no income tax payments in 2001, 2000 and 1999.            

In April 2001, the Company executed a non-interest  bearing promissory note with
Holland & Knight LLP ("H&K"), the Company's former attorneys,  for approximately
$59,000.  The terms of the note call for monthly  principal  payments of $5,000,
commencing  May 1, 2001 and continuing on a monthly basis until the note is paid
in full.  This note was for  payment  of  previous  legal fees  incurred  by the
Company and owed to H&K.                                                        

The Company did not pay any dividends on its common stock during 2001, 2000 and 
1999.                                                                           

In October 1999, the Company sold 1,880,000 shares of Buildscape common stock in
exchange for (i) the cancellation of $3 million of indebtedness and (ii) 520,000
shares of Riverside's common stock held by Imagine Investments, Inc.("Imagine").
The calculated market value on Riverside's  stock was approximately  $422,500 on
the date of the sale.                                                           

2.       Investment in Wickes                                                   

Through a series of  transactions in 1993, in connection with Wickes' equity and
debt  recapitalization  plan (which included  Wickes' initial public offering of
common stock),  Riverside  acquired a net 1,842,774  additional shares of Wickes
common  stock and an option  for  374,516  shares of Wickes  common  stock.  The
aggregate purchase price for these shares and option was $5.9 million, including
a $1.1 million promissory note. In August 1995,  Riverside  exercised its option
for an  exercise  price of $2.3  million and paid its  promissory  note in full.
After these transactions, Riverside owned 2,217,290 shares, or approximately 36%
of Wickes'  outstanding  common  stock.  At December  31,  1995,  the  Company's
retained earnings included $4.0 million of Wickes' undistributed earnings.      

Riverside  acquired two million  newly-issued  shares of Wickes' common stock on
June 20,  1996 for $10.0  million in cash.  These  additional  shares  increased
Riverside's  ownership in Wickes from 36% to 52% of Wickes'  total common shares
and from 39% to 55% of Wickes' voting common shares.                            

The  Company  sold  50,800  and  89,470  shares  of  Wickes'  common  stock  for
approximately $222,000, and $503,000 in 2001 and 2000, respectively. The Company
incurred  (losses)  gains of $(72,000)  and  $28,000,  on the sale of its Wickes
common  stock in 2001 and 2000,  respectively.  There  were no sales of  Wickes'
common stock in 1999.                                                           

On December 31, 1999, 2000 and 2001,  Riverside  beneficially  owned  3,000,513,
2,911,043 and 2,860,243 shares of Wickes' common stock,  which  constituted 36%,
35%  and  35%  of  Wickes'  outstanding  voting  and  non-voting  common  stock,
respectively.                                                                   

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Summary audited financial information of Wickes for years 2001, 2000 and 1999   
follows (in thousands):                                                         

                                                        [Enlarge/Download Table]

                                                                                                              

                       Years Ended December 29, 2001, December 30, 2000 and December 25,1999                  

                                                               2001                    2000           1999    
                                                               ----                    ----           ----    

Operating Statement Data:                                                                                     
   Net sales                                           $       1,000,999        $      1,027,604  $  1,087,402
  Gross profit                                                   211,553                 223,092       224,604
   Net income (loss)                                   $         (7,074)        $          2,854  $      7,588
Balance Sheet Data:                                                                                           
   Current assets                                      $         194,983        $        205,110  $    241,835
   Total assets                                                  295,169                 300,936       334,636
   Current liabilities                                            71,773                  56,870        79,312
   Long-term debt                                                193,253                 206,742       220,742
   Other long-term liabilities                                     3,373                   3,428         3,763
   Common stockholders' equity                         $          26,770        $         33,896  $     30,819

3.       Investment in Greenleaf                                                

As of September 30, 1998, the Company  completed a transaction  with  Greenleaf,
whereby the Company  acquired common shares of Greenleaf in exchange for 100% of
the common stock of the Company's former wholly owned subsidiary, Gameverse Inc.
As a result of Greenleaf's  dissatisfaction with the transaction, on January 28,
2000, the Company and Greenleaf executed a Settlement  Agreement (the "Greenleaf
Settlement").  In the  Greenleaf  Settlement,  the Company  retained  10,000,000
shares of the  14,687,585  shares that it had originally  received.  The Company
also retained a five-year  option to acquire  2,000,000  additional newly issued
shares of Greenleaf's  common stock at an exercise  price of $.25 per share.  In
addition to the 10,000,000  retained  shares,  3,000,000 of the Greenleaf shares
are held in an escrow  account  (the  "Escrow  Shares"),  pursuant  to an Escrow
Agreement acceptable to Greenleaf and the Company. The proceeds from the sale of
the Escrow Shares are to be used to fund mutually  agreeable  joint ventures for
the marketing of technology and Internet-related  products, to be owned in equal
amounts  by  Greenleaf  and the  Company.  In  connection  with the  settlement,
Riverside  granted  Greenleaf  a stock  option to  purchase 5% of the issued and
outstanding  shares  of  Cybermax.  The  exercise  price is  $1,000,000  and the
expiration  date of the option is September 30, 2003.  In addition,  the Company
entered into an agreement  with a subsidiary  of Greenleaf,  Future Com.,  South
Florida,  Inc., for use of satellite airtime,  related technology,  hardware and
software, on an as-needed basis, at fair market value.                          

In accordance with Statement of Financial Accounting Standards ("SFAS") No. 115,
"Accounting for Certain  Investments in Debt and Equity  Securities,"  9,850,000
and 5,665,508  shares of the Company's  common stock in Greenleaf are classified
as available for sale at December 31, 2001 and 2000,  respectively.  At December
31,  2000,  the  cost  basis was $0 and  the  estimated  fair  market  value was
$2,323,000,  resulting in gross unrealized gains of $2,323,000.  At December 31,
2000,  sales of  Greenleaf  shares  were  restricted  under  the  provisions  of
Securities and Exchange Commission ("SEC") Rule 144.  Accordingly,  4,834,492 of
restricted  shares were not  reported at fair value at December  31,  2000,  but
rather  were  recorded  at  their  cost  basis  of  zero.  As a  result  of  the
non-monetary exchange of a wholly-owned subsidiary for the Greenleaf shares, the
Company had no basis in the restricted  shares.  In 2001, the Company received a
legal  opinion that the shares of  Greenleaf  may be sold under SEC Rule 144(k).
Accordingly,  during 2001,  the total  number of  Greenleaf  shares owned by the
Company were classified as available for sale. However, after December 31, 2001,
Greenleaf operations ceased. Accordingly,  Greenleaf common stock is permanently
impaired.  As such,  the Company wrote down the investment to $0 at December 31,
2001.  No taxes have been  provided as the Company has  available  net operating
loss  carryforwards and strategies,  which would result in no tax liability upon
the unlikely sale of these securities.                                          
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During 2001, the Company sold 650,000  shares of its Greenleaf  common stock for
approximately $82,000,  resulting in gains of approximately $82,000. The Company
had no sales of its Greenleaf escrow shares in 2001.                            

During 2000, the Company sold 890,000  shares of its Greenleaf  common stock for
approximately $1,410,000, resulting in gains of approximately $1,402,000. All of
the  proceeds  from these sales were used to pay  principal  and interest on the
Company's 11% Secured  Notes.  For further  information  see Note 7.  "Long-Term
Debt."  In  addition,  during  2000,  the  Company  sold  110,000  shares of its
Greenleaf  escrow  shares  for  approximately  $98,000,  resulting  in  gains of
approximately $98,000.                                                          

4.       Investment in Buildscape                                               

On October 21, 1999,  Imagine made a $10 million  investment  in  Buildscape  by
converting $3 million of debt into common stock,  exchanging  520,000  shares of
Riverside  stock  for  Buildscape  common  stock and  investing  $5  million  in
Buildscape for preferred shares.                                                

In this transaction,  Imagine acquired from Riverside  1,880,933 of Buildscape's
then  5,000,000  outstanding  shares of  common  stock in  exchange  for (i) the
cancellation  of  $3  million  of  indebtedness   and  (ii)  520,000  shares  of
Riverside's  common stock held by Imagine.  In connection with the  transaction,
because Imagine was granted the right to vote the Company's common shares on all
matters with the exception of change in control,  the Company  began  accounting
for its investment in Buildscape  under the equity method.  The Company retained
the remaining  3,119,067  outstanding  shares of  Buildscape's  common stock. In
addition,  Buildscape issued to Imagine 1,666,667 shares of Buildscape's  voting
Series A Cumulative  Convertible  Preferred  Stock ("Series A Shares") with a $5
million aggregate liquidation preference in exchange for $5 million. As a result
of this  transaction,  the  Company  owned  (before  Buildscape  employee  stock
options) 47% of Buildscape on a fully converted basis.  Imagine owned 38% of the
common and 100% of the preferred shares of Buildscape, or 53% on the same basis.
The Company recorded a gain of $4.0 million on the transaction.                 

In May 2000,  Buildscape  and The Dow Chemical  Company  ("Dow")  entered into a
strategic  partnership  in order to pursue  the  company's  shared  vision for a
supply chain solution for the construction industry.                            

On May 19,  2000,  Dow  made an  investment  of  approximately  $10  million  in
Buildscape,  pursuant  to a stock  purchase  agreement,  whereby  Dow  purchased
1,109,782  newly issued shares of Series B Cumulative  Preferred Stock "Series B
Shares",  par  value  $0.01  per  share  of  Buildscape.  Additionally,  (i) Dow
purchased  1,666,667  shares of Series A Shares,  par value $0.01 per share,  of
Buildscape from Imagine;  (ii) Dow acquired an option to purchase 547,998 shares
of common stock of  Buildscape  from  Imagine.  Upon the  investment by Dow, the
Company's voting rights in Buildscape reverted back from Imagine to the Company.

On November 20, 2000, Dow agreed to invest up to $10 million in Buildscape,  LLC
for a 12.5%  membership  interest in  Buildscape,  LLC,  which at the time was a
wholly-owned subsidiary of Buildscape. As of December 31, 2000, Dow had invested
$5 million and held a 6.25%  membership  interest and as of March 31, 2001,  Dow
had  invested  the full $10  million  and  acquired  the full  12.5%  membership
interest in Buildscape, LLC.                                                    
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In April 2001,  Buildscape LLC entered into a loan agreement for $5 million with
Dow and the Company  executed a guaranty for 35.1% of the note. On September 12,
2001,  Buildscape,  LLC executed a Second  Amendment and Restated Note ("Amended
Note") under which Dow may make  advances in the aggregate  principal  amount of
$13,000,000 to Buildscape, LLC. Pursuant to the Company's guaranty, if principal
and interest  under the Amended Note are not paid, Dow may call the guaranty and
the  Company may satisfy its  obligation  by  transferring  to Dow shares of its
Buildscape  common stock up to 1,014,000 shares.  Subsequently in November,  Dow
entered into a new loan  agreement with  Buildscape,LLC,  for up to $10 million.
The Company has not guaranteed  this note.  Concurrent with executing this note,
Dow was granted an additional 12.5% interest in Buildscape, LLC.                

As a result of these  transactions,  as of December 31, 2001,  the Company owned
(before Buildscape's employee stock options)  approximately 40% of Buildscape on
a fully converted basis.  Imagine owned 24.0% on a fully converted basis and Dow
owned 100% of the preferred  shares,  and approximately 36% on a fully converted
basis.  As of  December  31,  2001,  Buildscape  owned  75%  and Dow  owned  25%
membership interest in Buildscape, LLC.                                         

Summary  financial  information  for Buildscape  for years 2001,  2000 and 1999,
respectively, follows (in thousands):                                           

                                                        [Enlarge/Download Table]

                                                                                                  

                                      ------------------------------------------------------------
                                                             December 31,                         
                                      ----------------- --- ------------------ --- ---------------
                                            2001                  2000                  1999      
                                            ----                  ----                  ----      
                                        (unaudited)             (audited)              (audited)  
Operating Statement Data:                                                                         
   Net sales                       $           1,657     $              746     $             547 
   Gross profit                                  123                     73                    85 
   Net loss                        $         (16,915)    $          (12,286)    $          (5,935)
Balance Sheet Data:                                                                               
   Current assets                  $             754     $              818     $           2,677 
   Current liabilities                        21,459                  2,711                 1,592 
   Stockholder's equity (deficit)  $         (15,442)    $              577     $           1,995 

5.       Property and Equipment                                                 

Property and equipment consists of (in thousands):                              

                                                                [Download Table]

                                                                 

                                            December 31,         
                                    -----------------------------
                                        2001             2000    
                                        ----             ----    

Furniture and office equipment   $            97  $           91 
Computer equipment                           158             154 
Software                                     204             231 
                                    -------------     -----------
                                             459             476 

Less:  Accumulated depreciation              361             291 
                                    -------------     -----------
Property and equipment, net      $            98  $          185 
                                    =============     ===========

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6.       Accrued Liabilities                                                    

The following table summarizes the accrued liabilities (in thousands):          

                                                        [Enlarge/Download Table]

                                                                                                        

                                                                                December 31,            
                                                                           --------------------------   
                                                                              2001              2000    
                                                                              ----              ----    

             Accrued interest                                           $      2,860    $        1,258  
             Accrued payroll                                                     272               100  
             Other                                                               310               326  
                                                                           ----------        ---------- 
                          Total accrued liabilities                     $      3,442    $        1,684  
                                                                           ==========        ========== 

7.       Long-Term Debt                                                                                 

Long-term debt obligations are summarized as follows (in thousands):                                    

                                                                                   December 31,         
                                                                           -----------------------------
                                                                              2001             2000     
                                                                              ----             ----     

             Collateralized notes                                       $      9,500    $       9,500   

             Wickes promissory note                                              402              469   

             Imagine loan                                                      2,022            2,022   

             Mortgage debt                                                     1,640           11,345   

             Other                                                                29               --   
                                                                           ----------         --------- 
             Long-term debt                                                   13,593           23,336   

             Less current maturities                                         (13,593)         (23,068)  
                                                                           ----------        ---------- 
                          Total long-term debt less current maturities  $        --     $         268   
                                                                           ==========        ========== 

As of December  31, 2001,  Prime and London  InterBank  Offered  Rate  ("LIBOR")
three-month rates were 4.75% and 2.6%, respectively.                            

Collateralized Notes ("the 11% Secured Notes")                                  

The 11% Secured Notes are unsubordinated promissory notes due September 30, 2000
bearing 11% interest.  The 11% Secured Notes are secured by a junior lien on the
collateral securing the Company's real estate indebtedness and 10 million shares
of Greenleaf common stock.                                                      

On March 24, 2000, the Company and the 11%  Noteholders  executed a modification
to the 11% Agreement.  This modification  allowed the Company to use 100% of the
net sales proceeds from the sale of its Greenleaf  shares to be applied  against
the semi-annual  interest  payment due March 31, 2000 in lieu of payment against
the principal.  In addition, the Company agreed to make a principal reduction of
$550,000 on the 11% Secured  Notes on or before April 30, 2000.  The Company was
unable to sell a sufficient  amount of the Greenleaf shares to meet the April 30
deadline and received a notice of default from the Noteholders on May 8, 2000.  
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On May 8, 2000,  the  Company  and the 11%  Noteholders  executed a  Forbearance
Agreement  that  precluded  the  11%  Noteholders  from  taking  any  action  to
accelerate  the  payment  of the 11%  Secured  Notes,  as  long  as the  Company
performed pursuant to the terms of the agreement. The terms included funding the
balance  of the  $550,000  principal  payment  that  was  due  April  30,  2000,
increasing the interest rate to 17% and selling  additional  shares of Greenleaf
common stock in subsequent months with the entire proceeds applied to reduce the
outstanding  principal  on the  11%  Secured  Notes.  The  Company  reduced  the
principal balance of the notes by $500,000 through August 2000,  however,  these
payments fell below the requirements of the Forbearance Agreement.              

On August 14, 2000, the Company and the 11% Noteholders executed an Amendment to
the Forbearance  Agreement with the agent for the 11%  Noteholders  that allowed
the interest and principal due on September 30, 2000, to be paid on December 31,
2000. The terms of this agreement provided that (i) the Company continue to sell
the Greenleaf common stock in a reasonable manner,  (ii) the Company applied the
proceeds  from such sales first to the unpaid  interest and second to the unpaid
principal,  (iii) the  interest  rate  remains  at 17% and (iv) the  Noteholders
received a second  lien  behind  Imagine on the  Company's  3,119,067  shares of
Buildscape common stock.                                                        

The Company  failed to make the required  payment on its 11% Secured Notes which
was due December 31, 2000.  The Company  received  notice from the agent for the
Noteholders  declaring all amounts  outstanding  under the notes immediately due
and  payable.  The Company  was also  advised  that the agent would  immediately
commence  foreclosure  proceedings  on the  collateral  securing the notes.  The
collateral includes certain real estate assets of Riverside and shares of Wickes
and Greenleaf.                                                                  

In March 2001,  Imagine  purchased a majority of the Company's 11% Secured Notes
from the noteholders of these 11% Secured Notes. As a result of this action, the
agent for the Noteholders  cancelled the foreclosure  sales mentioned  above. In
August 2001, Imagine acquired the remaining 25% of the 11% Secured Notes and now
owns 100% of the Notes.  Imagine and the Company are  negotiating to restructure
the  debt.  There  can  be no  assurance  that  the  Company  will  be  able  to
successfully  negotiate  a  restructuring  of its debt and the  failure to do so
would have a material  adverse effect on the Company's  financial  position.  In
addition, if a successful  restructuring of its debt obligations does not occur,
the Company may need to seek reorganization  under applicable federal bankruptcy
laws.                                                                           

As of December 31, 2001, the Noteholders  have a first lien on 8,460,000  shares
of Greenleaf's  common stock and a second lien on 3,119,067 shares of Buildscape
common stock and the assets securing the mortgage debt.                         

Wickes Promissory Note                                                          

In February  1998,  Riverside  completed the  acquisition  of the e-Commerce and
advertising operations of Wickes by issuing an approximately $872,000 three-year
unsecured  promissory  note. The terms of the promissory  note include  interest
based on the Prime  lending  rate plus two  percentage  points due  monthly  and
principal due in thirteen equal quarterly  installments,  beginning May 15, 1998
and ending May 15,  2001.  In addition,  Riverside  agreed to pay ten percent of
future net income of these  operations,  subject to a maximum of  $429,249  plus
interest.                                                                       
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During  1998,  1999 and 2000,  the  Company  was  delinquent  on the  payment of
principal  and  interest  on this note.  In March  2000,  the Company and Wickes
renegotiated the terms of the note, deferring all principal payments due for one
year, including the delinquent principal payments for November 1999 and February
2000. The interest rate was increased to Prime lending rate plus four percentage
points.                                                                         

In December  2001,  the Company and Wickes  renegotiated  the terms of the Note,
including  extending  the maturity  date of the Note to December  31,  2002.  In
addition, the interest rate was increased to a rate of ten percent per annum.   

Imagine Loan                                                                    

On August 27,  1999,  the Company  entered  into a loan  agreement  with Imagine
pursuant to which the Company borrowed $711,055 in August 1999 and $1,088,945 in
September  1999. The loan had a maturity date of August 31, 2000. The loan bears
interest at an annual rate of 12.75% and was  originally  secured by a pledge of
921,845  shares of Wickes  common  stock and 100% of the  outstanding  shares of
Cybermax stock. A portion of the pledged Wickes stock, 163,690 shares, have been
released to the borrower to be sold in the open market.  The shares released are
required to be sold for the sole purpose of covering  interest  payments on this
debt,  interest on the 11% Secured  Notes and/or  principal  and interest on its
debt payments due to Wickes.  The Company is prohibited from the payment of cash
dividends without the prior approval of Imagine under this agreement.           

On August 31, 2000, the Company and Imagine  extended the principal and interest
payments  that were due on August 31, 2000 until  December  15,  2000.  The $1.8
million  loan  balance  was  increased  by  $222,000  for  unpaid  interest  and
refinancing costs with this extension.                                          

The Company did not make any payment of  principal  and interest on December 15,
2000 and the loan is  currently  in  default.  The  Company  and  Imagine are in
discussions  regarding the extension of the principal and interest payments that
were due under the Imagine loan agreement on December 15, 2000.                 

As of December  31,  2001,  there were 758,155  shares of Wickes  common  stock,
3,119,067 shares of Buildscape  common stock and 1,000 shares of Cybermax common
stock held as collateral on this debt.                                          

On April 27, 2001, Imagine authorized the execution of the Company's Guaranty of
a $5,000,000  note by Dow to  Buildscape  ("Dow Note").  The Company  executed a
Guaranty  Note  Agreement to guarantee up to 35.1% of the principal and interest
advanced  under  the Dow Note.  The  guarantee  is  supported  by the  Company's
3,119,067  shares of Buildscape  Common Stock.  If it becomes  necessary for the
Company to  transfer a portion of its  Buildscape  Shares to Dow to satisfy  its
Guaranty of the Dow Note,  Imagine will release its first lien on such number of
Buildscape  Shares as will satisfy the Company's  obligations  under its partial
Guaranty of the Dow Note.                                                       

On September 12, 2001, Buildscape,  LLC executed a Second Amendment and Restated
Note ("Dow  Amended  Note"),  under which Dow may make advances in the aggregate
principal  amount of  $13,000,000  To  Buildscape,  LLC. The Company  executed a
Guaranty  for 35.1% of this Dow  Amended  Note.  If payments  of  principal  and
interest  under the Dow Amended Note are not paid, Dow may call the Guaranty and
the  Company may satisfy its  obligation  by  transferring  to Dow shares of its
Buildscape common stock up to 1,014,000 shares.                                 

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Mortgage Debt                                                                   

Riverside  purchased  certain  real estate  owned by its former  life  insurance
company subsidiary. In connection therewith,  Riverside issued a series of seven
non-recourse  promissory notes (the "Notes") with an aggregate  principal amount
of $17,798,000  equal to 90% of the purchase  price of the real estate  parcels.
Principal and interest  payments are due in annual  installments,  commencing on
June 6, 1997.  Each annual  installment is calculated  based upon equal payments
amortized over a term of 20 years. A balloon payment of the remaining  principal
balance is due on the seventh  anniversary of the Notes. The Notes bear interest
at a rate adjusted  quarterly,  equal to LIBOR plus three percentage points. The
Notes are  collateralized by first priority  mortgages  covering all of the real
estate.  On each anniversary of the Notes,  Riverside is required to provide the
lender  with  an  independent  appraisal  of the  real  estate,  subject  to the
mortgages  ("Appraised Value"). If the outstanding principal amount of the Notes
exceeds  85% of the  Appraised  Value  on the  first  anniversary  or 80% of the
Appraised  Value with each  anniversary  thereafter,  Riverside  is  required by
December 31 of that year to make an additional principal payment on the Notes in
an amount equal to such  excess.  A parcel of real estate that is subject to the
mortgage may be sold by Riverside only in a cash  transaction  and only with the
prior  consent of the lender.  Subject to certain  exclusions,  the entire sales
proceeds are required to be paid to the lender to fund an escrow account for the
payment of property taxes and to pay accrued and unpaid interest and any        
remaining principal balance on the Notes.                                       

On December 31, 1999,  American  Founders Life Insurance Company agreed to amend
certain  terms  of its  mortgage  with  the  Company.  In  connection  with  the
amendment, (i) all interest due through December 31, 1999 was deferred until the
next land sale,  (ii)  additional  interest  would accrue on the interest due on
June 6, 1999 at a rate of LIBOR plus three percentage points and (iii) as future
sales occur,  all past due  interest and taxes would be paid first;  then future
interest through June 6th of each year would be paid; thereafter, proceeds would
be applied to principal.                                                        

In 2001,  the  Company  made  principal  payments of  approximately  $9,704,000,
interest  expense  and  property  taxes  payments  of  approximately   $812,000,
including a prepayment of interest of approximately $36,000.                    

In 2000, the Company had made payments of  approximately  $2,300,000 of interest
expense and property taxes,  including a prepayment of interest of approximately
$400,000.                                                                       

As of December 31, 2001,  in additon to the real  estate,  there were  2,016,168
shares of Wickes' common stock held as collateral on this mortgage debt.        

Other Debt                                                                      

On April 4, 2001, the Company  executed a non-interest  bearing  promissory note
with the Company's former attorneys, for approximately $59,000. The terms of the
note call for monthly principal  payments of $5,000,  commencing May 1, 2001 and
continuing on a monthly basis until the note is paid in full.  This note was for
payment of previous legal fees incurred by the Company.                         

8.       Commitments and Contingencies                                          

The  Company  is not aware of any legal  proceedings  that will have a  material
adverse effect on the Company.                                                  

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The  Company  and its  subsidiaries  have  various  operating  leases  for which
approximately  $85,000,  $249,000 and  $296,000  was expensed in 2001,  2000 and
1999,  respectively.  As of December 31, 2001, the Company and its  subsidiaries
lease its home office property for approximately  $145,000 per year. The Company
executed  the lease for its home  office in  September  2001 and it  expires  in
August 2004.                                                                    

The Company's  total future  minimum  commitments  for  noncancelable  operating
leases are as follows (in thousands):                                           

                          Year                          Amount
                          ----                          ------
                           2002                    $         153
                           2003                              151
                           2004                              102
                                                          --------
                          Total                    $         406
                                                          ========

In   connection   with  the  sale  of   Dependable   Insurance   Company,   Inc.
("Dependable"),  a former  property  and  casualty  company of the  Parent,  the
Company  agreed to  indemnify  the  purchaser  for  certain  losses  on  various
categories of liabilities. Terms of the indemnities provided by the Company vary
with regards to time limits and maximum amounts. In 1995, in connection with the
sale of  Dependable,  the Company  established a reserve for $300,000 for future
losses.  Since the  Company has not  experienced  losses on this  business,  the
Company  released  $75,000  and  $150,000  of the  reserve  in  1999  and  1998,
respectively.  The Company's reserve at December 31, 2001 is $75,000,  which the
Company  believes is  sufficient  for any future  losses.  Although  future loss
development may occur over a number of years, the Company believes, based on all
information presently available,  that indemnities for any losses that may occur
will not have a material adverse effect on the Company's  financial  position or
results of operations.                                                          

In  connection  with the sale of its mortgage  lending  operation  in 1997,  the
Company  agreed to indemnify the purchaser  against  losses on the  construction
loan portfolio that was transferred.  The Company currently has 62,500 shares of
its  Wickes'  common  stock  pledged  as  collateral  for  this  indemnification
obligation. In 2001, the Company was notified of a potential liability under its
indemnity and in January 2002,  the Company agreed to settle this liability with
the purchaser.  The Company's  Consolidated  Balance Sheet at December 31, 2001,
includes a payable for  approximately  $135,000 for this liability.  The Company
believes that these  indemnities  will not have a material adverse effect on the
Company's financial position or results of operation.                           

Parent Company Liquidity and Management's Plans                                 

The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of  liabilities  in the normal  course of  business.  As shown in the  financial
statements,  during the years  ended  December  31,  2000 and 1999,  the Company
incurred net losses of $1,844,000 and $2,678,000,  respectively and, as December
31,  2001 and 2000,  the  Company's  current  liabilities  exceeded  its current
assets.  In addition,  at December 31, 2001,  the  Company's  total  liabilities
exceeded its total assets by $2,427,000. These factors among others may indicate
that the Company may be unable to continue as a going  concern for a  sufficient
period of time to realize the value of its assets.                              

The consolidated financial statements do not include any adjustments relating to
the  recoverability  and classification of recorded asset amounts or the amounts
and  classification of liabilities that might be necessary should the Company be
unable to continue as a going concern. As described in Note 7, the Company is in
default  with  respect  to  the  majority  of  its  outstanding  long-term  debt
agreements  and the  balance has been  classified  as a current  liability.  The
Company's  continuation  as a going  concern is  dependent  upon its  ability to
generate  sufficient  cash flow to meet its  obligations  on a timely basis,  to
obtain additional  financing or refinancing as may be required and ultimately to
attain successful operations.                                                   

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The  Company  is  primarily  a holding  company,  which  derives  its  financial
resources  through asset sales.  At December 30, 2001, such assets consist of 48
acres of land located within  Smyrna,  Georgia,  and 2,860,243  shares of Wickes
common  stock,  all of which are pledged as  collateral  on the  Company's  debt
agreements.  The Company's debt agreements require the proceeds from the sale of
these  assets  to  be  used  to  pay  principal  and  interest  on  the  related
indebtedness. Accordingly, unless the Noteholders release these assets, the sale
of such  assets  will not  generate  resources  to be used to pay other  current
obligations or to pay operating expenses until the debt has been repaid in full.

The  Company is  vigorously  pursuing  the sale of its Georgia  property,  which
management believes may be sufficient to retire the mortgage debt and reduce the
balance of the  Secured  11% Notes.  The  Company is also  negotiating  with its
Noteholders to restructure the various debt agreements to establish satisfactory
repayment terms and to release a portion of assets held as collateral  under the
notes,  allowing sales proceeds to be used to pay operating  costs.  The Company
believes that  corporate  assets have adequate  value to cover  liabilities  and
management is evaluating  all options on liquidating  assets and  investments to
meet the debt requirements.  If the Company is unsuccessful in these efforts, it
may file a voluntary petition for reorganization  under Chapter 11 of the United
States Bankruptcy Code and operate its businesses as debtors in possession under
the supervision of the Bankruptcy Court.                                        

9. Employee Benefit Plans                                                     

ESOP                                                                            

The Company  terminated  its Employee Stock  Ownership Plan and Trust  ("ESOP"),
effective December 29, 1999 and directed the ESOP to sell unallocated shares and
apply the proceeds to the unpaid balance of the note payable to the Company. The
ESOP sold 50,000 of those  shares to officers of the Company and  Cybermax.  The
Company received  promissory notes in the amount of $40,626 for payment of these
shares.  All of the notes bear an interest rate of 8.50% and are  collateralized
by the shares sold to these officers. During 2001 and 2000, the Company received
approximately  $6,500 and $25,300 of principal and interest on these notes.  The
remaining  8,000  shares were being held  pending  the  outcome of the  Internal
Revenue  Service  review  of the  termination  of the plan and  were  sold  upon
completion of this process in 2001.  Amounts  outstanding under these promissory
notes are reflected as reductions to Additional-Paid-in-Capital on the Company's
Consolidated  Balance  Sheet.  All  58,000  shares  were  considered  issued and
outstanding at December 31, 2000.                                               

In 2001, the IRS issued a "Favorable  Determination Letter on the Dissolution of
the ESOP" which means that all distributions have been accepted as properly made
and the ESOP may sell the  remaining  shares  that it  holds,  distributing  the
proceeds from the sale to Riverside as final payment on the ESOP note payable to
Riverside.  As a result, the remaining shares were purchased at the market price
per share of $.63 by various officers of the Company.                           

Stock Option Plans                                                              

On May 24,  2001,  the  Company's  2001 Stock  Option  Plan was  approved by the
shareholders of the Company. On August 1, 2001, the Company's Board of Directors
approved  the  grant  of  options  to  certain   employees  and  board  members.
Compensation cost for stock options issued in 2001, determined based on the fair
value of the grant date consistent  with the method  prescribed by SFAS No. 123,
would not have a material  effect on net  income.  Additional  information  with
respect to stock options is as follows:                                         

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                                                        [Enlarge/Download Table]

                                                                                                                    
                                                             Number of Option Shares               Option Price     
                Non-Qualified                           Total                Exercisable             Per Share      

Outstanding at December 31, 1999                           50,000                      50,000                 $3.00 
   Granted                                                     --                          --                    -- 
   Vested                                                      --                          --                    -- 
   Exercised                                                   --                          --                    -- 
   Expired/Cancelled                                           --                          --                    -- 
                                                    --------------      ----------------------  --------------------
Outstanding at December 31, 2000                           50,000                      50,000                 $3.00 
   Granted                                                120,000                          --                  $.51 
   Vested                                                                                                           
   Exercised                                                                                                        
   Expired/Cancelled                                      (50,000)                    (50,000)                $3.00 
                                                    --------------      ----------------------  --------------------
Outstanding at December 31, 2001                          120,000                          --                  $.51 
                                                    ==============      ======================  ====================

Non-Qualified Options outstanding as of December 31, 2001 expire in August 2011.                                    

                                                             Number of Option Shares               Option Price     
                     ISO                                Total                Exercisable             Per Share      
                     ---                                -----                -----------             ---------      

Outstanding at December 31, 2000                               --                          --                    -- 
   Granted                                                174,000                          --           $.51 - $.56 
   Vested                                                                                                           
   Exercised                                                                                                        
   Expired/Cancelled                                                                                                
                                                    --------------      ----------------------  --------------------
Outstanding at December 31, 2001                          174,000                          --           $.51 - $.56 
                                                    ==============      ======================  ====================

Options outstanding as of December 31, 2001, include 100,000 options that expire
in August 2006 and 74,000 options that expire in August 2011.                   

401(k) Plan                                                                     

The Company has a Deferred  Compensation  Plan for all its  eligible  employees,
which allows participants to defer up to ten percent of their salary pursuant to
Section 401(k) of the Internal  Revenue Code. The Company matches  contributions
up to a maximum  of 3% of  compensation  for  employees  contributing  up to 6%.
Employees  are 100%  vested  in their  contributions  and vest in the  Company's
contribution  over a period  of seven  years.  The  Company's  contribution  was
$9,700, $15,600 and $11,000 during 2001, 2000 and 1999, respectively.           

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10.      Income Taxes                                                           

The  Company had $0 current and  deferred  income tax expense in 2001,  2000 and
1999.                                                                           

Actual income tax expense differs from expected tax expense computed by applying
the Federal corporate tax rates of 34% as follows (in thousands):               

                                                        [Enlarge/Download Table]

                                                                                                        

                                                      2001                2000               1999       
                                                      ----                ----               ----       

Tax benefit computed at statutory rate        $             126   $          (627)   $           (911)  
Effect of the difference in tax treatment of                                                            
  goodwill                                                   --                --                 193   
State and local income taxes                                 11               (55)                (80)  
Expiring (utilization) net operating losses                (592)            1,478                  --   
Other                                                        --              (127)                405   
Change in valuation allowance                               455              (669)                393   
                                                 ----------------     -------------     ----------------
Actual tax expense                            $              --    $           --   $              --   
                                                 ================     =============     ================


A valuation  allowance has been established to reduce deferred tax assets to the
amount which more likely than not will be realized in the future. The components
of the deferred tax assets and  liabilities at December 31, 2001 and 2000 are as
follows (in thousands):                                                         

                                                                [Download Table]

                                                                                   
                                                         2001             2000     
                                                         ----             ----     

Deferred tax assets:                                                               
Goodwill amortized                                $         225     $        245   
Trade accounts receivable                                   125              155   
Other accrued liabilities                                    95               40   
Difference in investment carrying values                  8,295            7,048   
Net operating loss and AMT credit carry forwards         17,019           18,443   
Different in asset bases                                     16               --   
                                                     -------------     ------------
     Total deferred tax assets                           25,775           25,931   
Valuation allowance for deferred tax assets             (25,323)         (24,867)  
                                                     -------------     ------------
          Net deferred tax assets                           452            1,064   
                                                     -------------     ------------

Deferred tax liabilities:                                                          

Difference in asset bases                         $          --     $        612   
Other accrued income items                                  452              452   
                                                     -------------     ------------
      Total deferred tax liabilities                        452            1,064   
                                                     -------------     ------------
Net deferred tax assets                                      --               --   
                                                     =============     ============

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At  December  31,  2001,  the  Company  has net  operating  loss carry  forwards
available to offset income of  approximately  $45 million expiring in years 2003
through 2020, as follows (in thousands):                                        

                                                                [Download Table]

                                
Expires                Loss     

 2003           $       5,003   
 2006                   3,342   
 2007                   3,538   
 2008                   3,505   
 2009                   7,992   
 2010                   6,875   
 2011                   3,496   
 2012                   2,444   
 2018                   2,811   
 2019                   3,355   
 2020                   3,119   
                    ------------
 Total         $       45,480   
                    ============


11.      Fair Value of Financial Instruments                                    

In  accordance  with  SFAS  107,  "Disclosure  about  Fair  Value  of  Financial
Instruments,"  information  has been  provided  about the fair  value of certain
financial  information.  The  following  methods  and  assumptions  were used to
estimate the fair value of each material class of financial  instruments covered
by the Statement for which it is practicable to estimate that value.            

Investment in Wickes - The fair  value of Wickes is  determined  by the  NASDAQ 
National Market System quoted market price.                                     

Other investments - This includes common stock; the market is determined by the 
Over-the-Counter Bulletin Board price.                                          

Long-term debt - The carrying amount is a reasonable  estimate of fair value, as
the stated rates of interest represent current market rates.                    

The market value of the  Company's  investment  in shares of  Buildscape  common
stock are not  reflected  herein as this  investment  is accounted for under the
equity method and there is no readily determined market value.                  

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The estimated fair value of the Company's financial  instruments at December 31,
2001 are summarized as follows (in thousands):                                  

                                                                [Download Table]

                                                                              

                                              December 31, 2001               
                                 ---------------------------------------------
                                       Carrying                Estimated      
                                        Amount                Fair Value      
                                 ---------------------    --------------------
 Financial assets:                                                            
   Cash and cash equivalents  $                  210  $                 210   
   Investment in Wickes                       12,506                  8,724   
   Other investments                              19                     19   

Financial liabilities:                                                        
   Long-term debt                             13,593                 13,593   

12.      Related Party Transactions                                             

The Company reimburses its share of actual costs incurred from the Company's use
of an airplane owned by an affiliate of Mr. Wilson.  Reimbursement expenses were
$17,000 in 2001,  $15,000 in 2000 and  $195,000  in 1999.  In 1997,  the Company
established  a reserve  for  approximately  $434,000  related  to  salaries  and
expenses  either incurred in 1997 or incurred in prior years and charged to this
affiliate and not previously  paid. In 1998,  the Company  (exclusive of Wickes)
incurred $104,000 of costs from the use of the airplane. This amount reduced the
reserve  recorded in 1997 to  $330,000.  In 1999,  the Parent  Company  incurred
(exclusive  of  Wickes)  $195,000  of costs from use of the  airplane,  of which
$11,000 reduced the reserve. This amount reduced the reserve to $319,000.       

Included  in  operations  for 2001,  2000 and 1999 is income  related  to office
expenses and tax services either paid to the Company (or charged) by the Company
to Wilson Financial of $30,000, $50,000 and $34,000,  respectively.  At December
31, 2001 and 2000, there was an intercompany  balance of  approximately  $13,000
and $33,000,  respectively,  owed by Wilson  Financial  to Riverside  related to
these net expenses.  This balance was  reclassified  from current  assets to non
current assets at December 31, 2001 and 2000, respectively.                     

Included in operations for 2001 and 1999 is income related to tax and accounting
services paid to the Company by a former  affiliate of the Company of $9,500 and
$65,000, respectively.                                                          

Included  in  operations  for 2001 and 2000 is income  related to  software  and
editorial  services  provided  by the  Company to  Buildscape  of  $344,000  and
$392,000,  respectively. For certain costs, including office space and overhead,
business  services,  human resources and accounting,  the Company and Buildscape
have entered into a shared services agreement. This agreement allocates expenses
to Buildscape  based on its proportioned  usage. The Company received  $441,000,
$723,000 and $314,000 for these services in 2001, 2000 and 1999, respectively.  

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In the  fourth  quarter of 1997,  J.  Steven  Wilson,  the  Company's  Chairman,
President and Chief  Executive  Officer  advanced  $160,000 to the Company.  The
Company repaid this in June 1998. In addition,  the Company  advanced Mr. Wilson
$150,000 in June 1998. Mr. Wilson repaid this in March of 1999.  During December
1999, three executive  officers of the Company and its  subsidiaries,  purchased
50,000 shares of the Company's  common stock in connection  with the termination
of the Company's  ESOP. The Company  received  promissory  notes for $40,626 for
payment of these shares. For further information regarding this transaction, see
Note 9. "Employee  Benefits  Plans".  During 2001 and 2000, the Company received
principal and interest  payments on the promissory  notes of $6,500 and $25,300,
respectively.                                                                   

During the fourth  quarter of 1998 and the first  quarter of 1999,  the  Company
sold a total of 1,082,000  shares of its Wickes'  common  stock to Imagine.  The
president  of  Imagine  is on the  Wickes'  Board of  Directors  and is a former
Director of the Company.  For further  information  see Note 2.  "Investment  in
Wickes".                                                                        

During 1999, the Company entered into a loan agreement with Imagine. The loan is
for  $1,800,000,  bears  interest at an annual rate of 12.75% and was due August
31, 2000. On August 31, 2000, the Company and Imagine extended the principal and
interest  payments that were due on August 31, 2000 until December 15, 2000. The
loan was  increased to  $2,022,000  for unpaid  interest and  refinancing  costs
related to this extension.  The Company and Imagine are in discussions regarding
the extension of the  principal and interest  payments that were due on December
15,  2000  for  one  year.  For  further  information  on this  short-term  loan
agreement, see Note 7. "Long-Term Debt".                                        

On October 21,  1999,  the Company  sold 38% of its  Buildscape  common stock to
Imagine for the  cancellation of $3.0 million of indebtedness and 520,000 shares
of its Riverside common stock. For further information on this transaction,  see
Note 7. "Investment in Buildscape".                                             

13.      Subsequent Events ("Unaudited")                                        

On January 14, 2002, the Company received a letter,  dated January 9, 2002, from
the staff(the  "Staff") of the  Securities and Exchange  Commission("SEC").  The
leter contained  certain comments of the Staff on the Company's filings with the
SEC. One of the comments was for the Company to explain to Staff why the Company
is not an investment  company as defined in Section 3(a)(1)(C) of the Investment
Company Act of 1940(the  "Investment  Company Act"). By letter dated January 28,
2002, the Company  responded to the Staff's comments and explained the basis for
managment's  conclusion that the Company is not an investment company and is not
subject to the reporting requirements of the Investment Company Act.            

On March 4, 2002, the Company received a second letter, dated February 28, 2002,
from the Staff in which the Staff  continued  to  question  whether  the Company
qualifies for an exemption from the  definition of investment  company under the
Investment  Company Act.  The Company is  reviewing  this issue with counsel and
preparing a response to the Staff's second letter.                              

14.      Industry Segment Information and Quarterly Results of Operations       

The following  table sets forth certain  financial data for the past three years
for the following segments:  Buildscape,  Cybermax, Wickes and the Parent Group.
The "Parent  Group"  includes real estate,  parent  company and all  eliminating
entries for intercompany transactions. The Company accounted for its investment 
in  Wickes'  under  the  equity  method  for 1999,  2000 and 2001.  Buildscape's
operations  are  consolidated  with those of the  Company  and its  subsidiaries
through October 21, 1999. The Company accounted for its investment in Buildscape
under the equity method for the remainder of 1999,and all of 2000 and 2001.     

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                                                        [Enlarge/Download Table]

                                                                                              

                                                  Years Ended December 31,                    
                                                  ------------------------                    
                                         2001                2000                   1999      
                                         ----                ----                   ----      
                                                        (in thousands)                        
                                                        --------------                        
Sales:                                                                                        
  Buildscape(1)                 $            --       $             --      $          415    
  Cybermax                                 1,215                  1,774              1,171    
  Parent Group                               --                     --                  34    
                                   ----------------      -----------------     -------------- 
                        Total   $          1,215      $           1,774     $        1,620    
                                   ================      =================     ============== 

Direct costs:                                                                                 
  Buildscape(1)                 $            --       $             --      $          342    
  Cybermax                                   591                    945                213    
  Parent Group                               --                     --                   4    
                                   ----------------      -----------------     -------------- 
                        Total   $            591      $             945     $          559    
                                   ================      =================     ============== 

Other operating income:                                                                       
  Cybermax                      $             93      $              52     $           15    
  Parent Group                               270                    136                 80    
                                   ----------------      -----------------     ---------------
                        Total   $            363      $             188     $           95    
                                   ================      =================     ===============

Investment income and realized                                                                
gains/(losses):                                                                               
  Buildscape(1)                 $            --       $             --      $            3    
  Cybermax                                   --                     --               3,994    
  Wickes (2)                                 (72)                    28                --     
  Parent Group                             6,610                  1,899               (321)   
                                   ----------------      -----------------     ---------------
                        Total   $          6,538      $           1,927     $        3,676    
                                   ================      =================     ===============

Expenses:                                                                                     
  Buildscape(1)                 $            --       $              --     $        4,485    
  Cybermax                                 1,067                  1,554              2,209    
  Parent Group                               727                    823                421    
                                   ----------------      -----------------     ---------------
                        Total   $          1,794      $           2,377     $        7,115    
                                   ================      =================     ===============
Interest expense:                                                                             
  Buildscape(1)                 $            --       $             --      $          174    
  Cybermax                                   --                     --                   3    
  Wickes (2)(3)                            1,615                  1,466              1,407    
  Parent Group                               738                  1,400              1,058    
                                   ----------------      -----------------     ---------------
                        Total   $          2,353      $           2,866     $        2,642    
                                   ================      =================     ===============


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                                                        [Enlarge/Download Table]

                                                                                                        

                                                                    Years Ended December 31,            
                                                                    ------------------------            
                                                           2001                 2000               1999 
                                                           ----                 ----               ---- 
                                                                           (in thousands)               
                                                                           --------------               

Earnings (losses) before income taxes and equity                                                        
in earnings(losses) of related parties                                                                  
  Buildscape(1)                                   $           --     $            --        $    (4,583)
  Cybermax                                                  (350)                (673)            2,755 
  Wickes (2)(3)                                           (1,687)              (1,438)           (1,407)
  Parent Group                                             5,415                 (188)           (1,690)
                                                     -------------       -------------         ---------
                        Total                     $        3,378     $         (2,299)      $    (4,925)
                                                     =============       =============         =========
Identifiable assets:                                                                                    
  Buildscape(1)                                   $         (947)    $           (947)      $      (947)
  Cybermax                                                   295                  505               556 
  Wickes (2)                                              12,506               15,779            15,799 
  Parent Group                                             3,418                9,764            10,775 
                                                     -------------       -------------         ---------
                        Total                     $       15,272     $         25,101       $    26,183 
                                                     =============       =============         =========

(1) After  October 21, 1999,  the  Company's  balance  sheet and  statements  of
operations  reflect the  Company's  investment  in  Buildscape  under the equity
method. For further information on Buildscape's  summary financial  information,
see Note 4. "Investment in Buildscape".                                         

(2) The  Company's  balance  sheet and  statements  of  operations  reflect  the
Company's  investment in Wickes under the equity method for 2001, 2000 and 1999,
respectively.                                                                   

(3) Includes  $1,615,000,  $1,466,000  and  $1,407,000  for an interest  expense
allocation  from  Riverside  on its 11% Secured  Notes for 2001,  2000 and 1999,
respectively.                                                                   
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Quarterly Results (unaudited)                                                   

                                                        [Enlarge/Download Table]

                                                                                                                              
                                                                                2001                                          
                                                              (in thousands, except per share amounts)                        

                                           First            Second            Third             Fourth                        
                                          Quarter          Quarter           Quarter           Quarter             Total      
                                          -------          -------           -------           -------             -----      

Revenues                            $        4,019    $          900    $         227     $        2,970    $        8,116    

Costs and expenses                           1,326             1,175              964              1,273             4,738    

                                       --------------   ---------------    -------------    ---------------    ---------------
Earnings (losses) from                                                                                                        
operations                                   2,693              (275)            (737)             1,697             3,378    

Equity in (earnings) losses of                                                                                                
Wickes, Inc.                                (2,290)              115              108               (912)           (2,979)   

                                       --------------   ---------------    -------------    ---------------    ---------------
Earnings (losses) before                                                                                                      
 income taxes                                  403              (160)            (629)               785               399    

Current income tax expense(benefit)             51                (4)             (14)               (33)              --     
                                       --------------   ---------------    -------------    ---------------    ---------------
 Net earnings(losses)               $          352    $         (156)   $        (615)    $          818    $          399    
                                       ==============   ===============    =============    ===============    ===============
Basic & diluted earnings                                                                                                      
(loss) per common share             $         0.07    $        (0.03)   $       (0.13)    $         0.17    $         0.08    
                                       ==============   ===============    =============    ===============    ===============

Weighted average                                                                                                              
number of common                                                                                                              
shares used in computing                                                                                                      
earnings (loss) per share                4,767,123         4,767,123        4,767,123          4,767,123         4,767,123    

Weighted average number of common                                                                                             
shares used in computing diluted                                                                                              
earnings (loss) per share                4,767,123         4,767,123        4,767,123          4,767,123         4,767,123    


F-28

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Quarterly Results (unaudited)                                                   

                                                        [Enlarge/Download Table]

                                                                                                                     
                                                                            2000                                     
                                                          (in thousands, except per share amounts)                   

                                        First           Second            Third             Fourth                   
                                       Quarter         Quarter           Quarter           Quarter            Total  
                                       -------         -------           -------           -------            -----  

Revenues                           $        965   $          966   $         998    $          960    $       3,889  

Costs and expenses                        1,279            1,624           1,514             1,771            6,188  

                                     -----------     -----------      ------------      ------------     ------------
Losses from operations                     (314)            (658)           (516)             (811)          (2,299) 

Equity in earnings (losses) of                                                                                       
Wickes Inc.                              (1,297)             417             629               706              455  
                                     -----------     -----------      ------------      ------------     ------------
Earnings (losses) before                                                                                             
income taxes                             (1,611)            (241)            113              (105)          (1,844) 

Current income tax expense                                                                                           
                                     -----------     -----------      ------------      ------------     ------------
     Net earnings (losses)         $     (1,611)  $         (241)  $         113    $         (105)   $      (1,844) 
                                     ===========     ===========      ============      ============     ============

Basic and diluted                                                                                                    
earnings (loss)                                                                                                      
 per common share                  $      (0.34)  $        (0.05)  $        0.02    $         (.02)   $       (0.39) 
                                     ===========     ============     ============      ============     ============

Weighted average number                                                                                              
of common shares                                                                                                     
used in computing basic                                                                                              
earnings (losses) per share           4,767,123        4,767,123       4,767,123         4,767,123        4,767,123  

Weighted average number of common                                                                                    
shares used in computing diluted                                                                                     
earnings(losses) per share            4,767,123        4,759,123       4,759,123         4,759,123        4,759,123  


F-29

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INDEPENDENT AUDITORS' REPORT                                                    

To the Board of Directors and Stockholders of                                   
Riverside Group, Inc.                                                           
Jacksonville, Florida                                                           

We have audited the consolidated  financial  statements of Riverside Group, Inc.
and  subsidiaries  as of December 31, 2001 and 2000 and for the years then ended
and have  issued  our  report  thereon  dated  March 27,  2002;  such  financial
statements  and report are included in your 2001 Annual  Report to  Stockholders
and are incorporated herein by reference.  Our audit also included the financial
statement schedules of Riverside Group, Inc., listed in Item 14. These financial
statement  schedules are the  responsibility  of the Company's  management.  Our
responsibility is to express an opinion based on our audit. In our opinion, such
financial  statement  schedules,  when  considered  in  relation  to  the  basic
consolidated  financial  statements  taken as a  whole,  present  fairly  in all
material respects the information set forth therein.                            

/s/DELOITTE & TOUCHE LLP                                                        

Certified Public Accountants                                                    
Jacksonville, Florida                                                           
March 27, 2002                                                                  
S-1 

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 Independent Certified Public Auditors' Report

The Board of Directors and Shareholders of                                      
Riverside Group, Inc.                                                           
Jacksonville, Florida                                                           

Our report on the consolidated financial statements of Riverside Group, Inc. and
subsidiaries  for the period ended  December 31, 1999 is included on page F-2 of
this Form 10-K. In connection with our audits of such financial  statements,  we
have also audited the related financial  statement schedules listed in the index
on page 24 of this Form 10-K.                                                   

In our  opinion,  the  financial  statement  schedules  referred to above,  when
considered in relation to the basic consolidated financial statements taken as a
whole, present fairly, in all material respects,  the information required to be
included therein.                                                               

PricewaterhouseCoopers, LLP                                                     

Jacksonville, Florida                                                           
April 14, 2000                                                                  
S-2 

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Schedule I
 Riverside Group, Inc. (Parent Only)
 Condensed Financial Information of Registrant
Balance Sheets
(in thousands)

                                                        [Enlarge/Download Table]

                                                                                            
                                                                   December 31,             
                                                       -------------------------------------
                                                             2001                    2000   
                                                       -------------            ------------
                             ASSETS                                                         

Cash and cash equivalents                               $       148         $          132  
Investment in real estate                                     2,882                  6,682  
Investment in Greenleaf                                          --                  2,323  
Investment in Wickes                                         12,506                 15,779  
Investment in Buildscape                                       (947)                  (947) 
Investment in subsidiaries                                      (49)                   203  
Other investments                                                19                     60  
Other assets                                                    369                    567  
                                                       -------------            ------------
          Total assets                                       14,928         $       24,799  
                                                       =============            ============
         LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)                                       

Accounts payable and accrued expenses and                                                   
  other liabilities                                     $     3,762         $        1,947  
Long-term debt                                               13,593                 23,336  
                                                       -------------            ------------
          Total liabilities                                  17,355                 25,283  

Common stockholders' equity (deficit):                                                      
Common stock, $.10 par value; 20,000,000                                                    
   shares authorized, 4,767,123 issued and                                                  
   outstanding in 2001 & 2000                                   477                    477  
Additional paid-in capital                                   16,513                 16,492  
Accumulated other comprehensive income (loss)                   (38)                 2,325  
Retained earnings (deficit)                                 (19,379)               (19,778) 
                                                       -------------            ------------
          Total stockholders' equity (deficit)               (2,427)                  (484) 

                                                       -------------            ------------
Total liabilities and stockholders' equity (deficit)    $    14,928         $       24,799  
                                                       =============            ============

S-3 

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Schedule I
 Riverside Group, Inc. (Parent Only)
 Condensed Financial Information of Registrant
Condensed Statements of Operations
(in thousands)

                                                        [Enlarge/Download Table]

                                                                                                            

                                                               Years Ended December 31,                     
                                                 -----------------------------------------------------------
                                                         2001                2000                1999       
                                                         ----                ----                ----       

Net investment income                            $       6,538      $        1,710       $        (375)     
Other income                                               215                  21                  41      
Equity in net losses of subsidiaries,                                                                       
   net of income taxes                                    (350)               (428)             (1,569)     
Equity in investment in Wickes                          (2,979)                455               2,095      
                                                     ---------           ---------           ---------      
          Total revenues                                 3,424               1,758                 192      

Other operating costs & expenses                           672                 736                 405      
Interest expense                                         2,353               2,866               2,465      
                                                     ---------           ---------           ---------      
          Total expenses                                 3,025               3,602               2,870      

                                                     ---------           ---------           ---------      
    Earnings (losses) before income tax expense            399              (1,844)             (2,678)     

Income tax expense (benefit)                               --                  --                  --       

                                                     ---------           ---------           ---------      
     Net earnings (losses)                       $         399      $       (1,844)      $      (2,678)     
                                                     =========           =========           =========      

Earnings (losses) per share of common stock      $         .08      $        (0.39)      $       (0.52)     
                                                     =========           =========           =========      

Weighted average number of common shares                                                                    
  used in computing earnings (losses) per share      4,767,123           4,767,123           5,128,131      
                                                     =========           =========           =========      

                                      S-4                                                                   

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Schedule I
 Riverside Group, Inc. (Parent Only)
 Condensed Financial Information of Registrant
Condensed Statements of Cash Flows
(in thousands)

                                                        [Enlarge/Download Table]

                                                                                                    

                                                                     Years Ended December 31,       
                                                              --------------------------------------
                                                                  2001         2000         1999    
                                                                  ----         ----         ----    
Operating Activities:                                                                               
   Net earnings (losses)                                   $         399   $    (1,844)   $  (2,678)
   Adjustments to reconcile net earnings (losses)                                                   
      to net cash used in operating activities:                                                     
       Net realized investment (gains) losses                     (6,575)       (1,678)         258 
       Change in other assets and liabilities                      2,057            35         (650)
        Equity in losses (earnings) of Wickes                      2,979          (455)      (2,095)
        Equity in loss of subsidiaries,                                                             
         Net of cash received                                        253           (57)       1,341 
        Amortization of bond discount                                 --             --         173 
        Depreciation and amortization                                 33            53           67 
                                                                 --------      ---------   ---------
     Net cash used in operating activities                          (854)       (3,946)      (3,584)

Investing Activities:                                                                               
   Purchase of investments:                                                                         
     Real estate investments                                          (9)           --           (9)
     Other investments                                                --           (66)          -- 
   Sale of investments:                                                                             
     Real estate investments                                      10,368         2,381           76 
     Securities of Greenleaf                                          82         1,508           -- 
     Securities of Wickes                                            222           503        1,186 
                                                                ---------      ---------    --------
       Net cash provided by investing activities                  10,663         4,326        1,253 

Financing Activities:                                                                               
   Repayment of debt                                              (9,802)         (500)        (445)
   Increase in borrowings                                            --            --         2,637 
   Net proceeds - ESOP Notes/Shares                                    9            24           -- 
                                                                ---------      ---------   ---------
      Net cash (used in) provided by financing activities         (9,793)         (476)       2,192 
                                                                ---------      ---------   ---------

     Net increase (decrease) in cash and cash equivalents             16           (96)        (139)

     Cash and cash equivalents at beginning of year                  132           228          367 

                                                                ---------      ---------    --------
     Cash and cash equivalents at end of year              $         148   $       132    $     228 
                                                                =========      =========    ========

S-5 

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 Schedule II - Valuation and Qualifying Accounts
Riverside Group, Inc. and Subsidiaries
For the years Ended December 31, 2001, 2000 and 1999
(in thousands)

                                                                [Download Table]

                                                                                   

                Col.A         Col.B           Col.C          Col.D         Col.E   

                                           Additions                               
                            Balance at    Charged to                     Balance at
                           Beginning of    Costs and      Deductions      End of   
                             Period        Expenses          (1)          Period   
                             ------       ----------      ----------     ----------
Allowance for doubtful                                                             
Accounts............... $             100   $      25  $          107  $         18

2000:                                                                              
Allowance for doubtful                                                             
Accounts............... $               3   $     109  $           12  $        100

1999:                                                                              
Allowance for doubtful                                                             
Accounts..............  $             337   $      23  $          357  $          3


(1)           Reserved accounts written off.                                    

S-6 

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                                                               Exhibit 21.01

List of Subsidiaries or Registrant

                                                            State of
          Name                                                   Incorporation
__________________________________                              ________________

Cybermax, Inc.                                                           Florida

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                                                                   Exhibit 23.01

INDEPENDENT AUDITORS' CONSENT                                                   

We consent to the  incorporation  by reference  in  Registration  Statement  No.
33-16244 of Riverside  Group,  Inc. and  subsidiaries  on Form S-8 of our report
dated March 27, 2002,  appearing in this Annual Report on Form 10-K of Riverside
Group,  Inc. for the years ended  December 31, 2001 and 2000. We also consent to
the  incorporation  by reference of our report dated March 27, 2002  relating to
the financial statement schedules, which appear in this Form 10-K.              

/s/DELOITTE & TOUCHE LLP                                                        

Certified Public Accountants                                                    
Jacksonville, Florida                                                           
April 1, 2002                                                                   

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                                                                   Exhibit 23.02

Consent of Independent Certified Public Accounts

The Board of Directors of                                                       
Riverside Group, Inc.                                                           

We  hereby  consent  to the  incorporation  by  reference  in  the  Registration
Statement  on Form S-8 (No.  33-16244) of  Riverside  Group,  Inc. of our report
dated  April 14, 2000  relating to the  consolidated  financial  statements  and
financial statement  schedules,  as of December 31, 1999 and for the year ended,
which appear in this Form 10-K.                                                 

PricewaterhouseCoopers, LLP                                                     

Jacksonville, Florida                                                           
April 1, 2002

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Dates Referenced Herein and Documents Incorporated By Reference

		Referenced-On Page
This 10-K Filing	Date	First	Last	Other Filings

	12/31/94	28
	12/31/95	42		10-K405
	6/20/96	3	42
	6/6/97	49
	7/28/97	10
	11/4/97	30
	12/31/97	3	30	10-K
	1/15/98	5
	5/15/98	47		10-Q
	9/30/98	8	43	10-Q, NT 10-Q
	10/5/98	30		8-K
	10/15/98	30		SC 13D/A
	12/31/98	36		NT 10-K, 10-K
	1/1/99	12	38
	4/1/99	28		NT 10-K
	5/20/99	29
	6/6/99	49
	6/30/99	28	29	10-Q
	7/8/99	10
	8/12/99	29
	8/27/99	30	48
	9/30/99	30		10-Q
	10/15/99	30
	10/21/99	4	58	8-K, 8-K/A
	12/29/99	51
	12/31/99	14	69	NT 10-K, DEFN14A, 10-K, DEF 14A
	1/28/00	30	43
	3/24/00	28	46
	3/31/00	46		NT 10-Q, 10-Q
	4/14/00	62	69	10-K
	4/30/00	46	47
	5/8/00	28	47
	5/19/00	6	44	10-Q
	6/30/00	28		NT 10-Q, 10-Q/A, 10-Q
	8/14/00	28	47
	8/31/00	22	56
	9/30/00	46	47	10-Q
	11/20/00	6	44
	12/1/00	38
	12/15/00	22	56
	12/30/00	43
	12/31/00	6	68	DEFN14A, DEF 14A, 10-K
	3/31/01	6	44	10-Q
	4/4/01	49
	4/12/01	29
	4/27/01	48		DEF 14A, DEFN14A
	5/1/01	42	49
	5/15/01	47		10-Q
	5/24/01	51
	6/30/01	29	41	10-Q
	7/1/01	17	41
	8/1/01	51
	9/11/01	8	17
	9/12/01	6	48
	9/30/01	29		10-Q
	12/15/01	41
	12/29/01	8	43
	12/30/01	51
For The Period Ended	12/31/01	1	68	DEF 14C
	1/1/02	41
	1/9/02	23	56
	1/14/02	23	56
	1/28/02	23	56
	2/28/02	23	56
	3/4/02	23	56
	3/14/02	9
	3/15/02	3
	3/16/02	1
	3/26/02	10
	3/27/02	32	68
Filed On / Filed As Of	4/1/02	31	69
	6/15/02	41
	12/31/02	48		NT 10-K
	9/30/03	43

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Riverside Group Inc/FL · 10-K · For 12/31/01

Filed On 4/1/02 · SEC File 0-09209 · Accession Number 277356-2-11

Annual Report · Form 10-KFiling Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated By Reference

Annual Report · Form 10-K
Filing Table of Contents