SCHEDULE 14A
                                 (Rule 14a-101)
                     INFORMATION REQUIRED IN PROXY STATEMENT
                            SCHEDULE 14A INFORMATION

                Proxy Statement Pursuant to Section 14(a) of the
                         Securities Exchange Act of 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[X]      Preliminary Proxy Statement
[ ]      Definitive Proxy Statement
[ ]      Definitive Additional Materials
[ ]      Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ]      Confidential, for use of the Commission only as permitted by Rule 14a-6
         (e)(2)

                                DCAP GROUP, INC.
------------------------------------------------------------------------------
                (Name of Registrant as Specified in its Charter)

     (Name of Person(s) Filing Proxy Statement if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[ ]   No fee required.
[X]   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

     1)   Title of each class of securities to which transaction applies:

          not applicable

     2)   Aggregate number of securities to which transaction applies:

          not applicable

     3)   Per unit  price  or other  underlying  value of  transaction  computed
          pursuant to Exchange Act Rule 0-11: (Set forth the amount on which the
          filing fee is calculated and state how it was determined)

          not applicable

     4)   Proposed maximum aggregate value of transaction:

          $1,563,500

     5)   Total fee paid:

          $312.70

     [X]  Fee paid previously with preliminary materials:

[  ]      Check box if any part of the fee is offset as provided by Exchange Act
          Rule  0-11(a)(2)  and identify the filing for which the offsetting fee
          was paid  previously.  Identify  the previous  filing by  registration
          statement number, or the form or schedule and the date of its filing.

          1) Amount previously paid:

          2) Form, Schedule or Registration Statement no.:

          3) Filing Party:

          4) Date Filed:

                                DCAP GROUP, INC.
                                  1158 Broadway
                            Hewlett, New York 11557

                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                        TO BE HELD ON NOVEMBER 20, 2001

To the Stockholders of DCAP Group, Inc.:

     NOTICE IS HEREBY  GIVEN that the Annual  Meeting  of  Stockholders  of DCAP
Group,  Inc., a Delaware  corporation,  will be held on November 20, 2001 at The
Financial  Center at Mitchel Field, 90 Merrick Avenue,  9th Floor,  East Meadow,
New York 11554, at the hour of 10:00 a.m., for the following purposes:

     1. To elect four directors for the coming year.

     2. To approve and ratify the sale by us and our subsidiaries of assets that
may constitute, under Delaware law, substantially all of our assets.

     3. To approve an increase in the number of common  shares  authorized to be
issued pursuant to our 1998 Stock Option Plan from 2,000,000 to 3,000,000.

     4. To approve an amendment to our Certificate of  Incorporation to increase
the number of authorized common shares from 25,000,000 to 40,000,000.

     5. To approve an amendment to our Certificate of  Incorporation  to provide
for the authority to issue up to 1,000,000 preferred shares.

     6. To approve an amendment to our Certificate of  Incorporation  to broaden
the  corporate  purposes  to  include  any  lawful  act or  activity  for  which
corporations may be organized under Delaware law.

     7. To transact such other business as may properly come before the meeting.

     Only  stockholders  of record at the close of  business on October 15, 2001
are  entitled  to notice  of and to vote at the  meeting  or at any  adjournment
thereof.

                                                   Morton L. Certilman
                                                   Secretary

East Meadow, New York
October 18, 2001

================================================================================

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,  PLEASE  VOTE,  DATE AND SIGN THE
ENCLOSED PROXY,  WHICH IS SOLICITED BY OUR BOARD OF DIRECTORS,  AND RETURN IT IN
THE PRE-ADDRESSED ENVELOPE PROVIDED FOR THAT PURPOSE. ANY STOCKHOLDER MAY REVOKE
HIS PROXY AT ANY TIME BEFORE THE MEETING BY WRITTEN  NOTICE TO SUCH  EFFECT,  BY
SUBMITTING A SUBSEQUENTLY  DATED PROXY OR BY ATTENDING THE MEETING AND VOTING IN
PERSON.
================================================================================

                                TABLE OF CONTENTS

                                                                                                              Page

                                                                                                               
Explanatory Note.............................................................................................     1
Summary Term Sheet ..........................................................................................     1
Soliciting, Voting and Revocability of Proxy.................................................................     4
Forward-Looking Statements..................................................................................      6
Executive Compensation......................................................................................      6
Security Ownership of Certain Beneficial Owners and Management..............................................      8
Certain Relationships and Related Transactions...............................................................    10
Proposal 1:  Election of Directors...........................................................................    16
Proposal 2:  Sale of Assets..................................................................................    20
    Sales Transactions........................................................................................   20
    Background of and Reasons for the Sales Transactions.....................................................    22
    Valuation Analysis.......................................................................................    23
    Stockholder Approval.....................................................................................    25
    Regulatory Requirements..................................................................................    26
    Pro Forma Financial Statements...........................................................................    26
    Recommendation and Required Vote.........................................................................    34
Proposal 3: Amendment to 1998 Stock Option Plan to Increase Number
  of Authorized Shares........................................................................................   34
Proposal 4:  Amendment to Certificate of Incorporation to Increase Number
  of Authorized Common Shares.................................................................................   39
Proposal 5:  Amendment to Certificate of Incorporation to Provide for Authority
  to Issue Preferred Shares..................................................................................    40
Proposal 6:  Amendment to Certificate of Incorporation to Broaden Corporate Purposes.........................    41
Independent Public Accountants...............................................................................    41
Stockholders Proposals.......................................................................................    42
Other Business...............................................................................................    44
Incorporation of Certain Information by Reference............................................................    44
Appendix A - Authority of Board with respect to Preferred Shares Proposed
  to be Authorized
Appendix B - Proposed Revised Article THIRD of Certificate of Incorporation with
  respect to Corporate Purposes

                                DCAP GROUP, INC.
                                  1158 Broadway
                            Hewlett, New York 11557
                          ----------------------------

                                 PROXY STATEMENT
                          -----------------------------

                                EXPLANATORY NOTE

     Throughout this proxy  statement,  the words "DCAP Group," "we," "our," and
"us" refer to DCAP Group,  Inc.  and the  operations  of DCAP  Group,  Inc. as a
whole.  References to "DCAP  Insurance"  and the "DCAP  Companies" in this proxy
statement mean our wholly-owned  subsidiary,  DCAP Insurance Agencies, Inc., and
affiliated companies, and the operations of our insurance-related subsidiaries.

                               SUMMARY TERM SHEET

     The following is a brief summary of the material terms of the  transactions
pursuant to which we or our subsidiaries have sold or have agreed to sell assets
that may constitute,  under Delaware law,  substantially all of our assets.  The
summary,  which  also  discusses  the  effect  of  stockholder  approval  of the
proposal,  is not intended to be a complete  description of the transactions and
is subject to and  qualified in its  entirety by reference to the more  detailed
information  contained  later in this proxy statement under "Proposal 2: Sale of
Assets."

     Sales Transactions

     We or our subsidiaries  have entered into the following sales  transactions
since May 2000:

          In May 2000, we sold to Morton L. Certilman,  our then Chairman of the
          Board,  our 50%  interest  in four  DCAP  stores.  The  remaining  50%
          interest in each store was held by Mr. Certilman's daughter. The total
          purchase  price for our interest  was  approximately  $141,000,  after
          certain credits.  The nature of the credits and the other terms of the
          sale  are   described   in  this  proxy   statement   under   "Certain
          Relationships and Related Transactions - Sale of Interests in Stores."
          The  obligation to pay the purchase price of $141,000 for our interest
          was  cancelled in March 2001 based upon Mr.  Certilman's  agreement to
          terminate his employment  agreement with us and forgo the compensation
          otherwise  due him for the  balance  of the term  ($365,000).  This is
          described in "Certain  Relationships and Related  Transactions - March
          2001 Transactions."

          Between  September  2000 and February  2001,  we sold seven other DCAP
          stores to persons who are not affiliated  with us for a total purchase
          price of approximately

          $555,000 (exclusive of contingent amounts). The terms of the sales are
          described in "Proposal 2: Sale of Assets - Sales Transactions."

          In March  2001,  we and our  subsidiaries  agreed to sell eight  other
          stores to Kevin Lang (three),  Abraham Weinzimer (three) and an entity
          owned by Mr. Certilman  (two). At the time of the agreements,  Messrs.
          Lang and Weinzimer  were our President and Executive  Vice  President,
          respectively,  and Mr. Certilman was our Chairman of the Board.  Also,
          each was a director of DCAP Group (Mr. Certilman remains a director).
          The purchase prices for the sales are as follows:

                        Mr. Lang: $257,000;
                        Mr. Weinzimer: $285,000; and
                        Mr. Certilman: $225,000.

          The terms of the sales are  described  in this proxy  statement  under
          "Certain   Relationships   and  Related   Transactions  -  March  2001
          Transactions."

     Stockholder Approval

     We are submitting  the above May 2000 sale,  September 2000 - February 2001
sales,  and March 2001 agreements to sell to our stockholders for approval based
upon our belief that the assets sold and agreed to be sold may constitute, under
Delaware law,  substantially  all of our assets.  Stockholder  approval is being
sought for the transactions in their totality and not individually;  however, as
discussed  below,  the  obtaining  of, or the  failure  to  obtain,  stockholder
approval will affect the sale transactions in different ways.

     The sales to Messrs.  Lang,  Weinzimer and Certilman  pursuant to the March
2001  Agreements are not yet final and are subject to the receipt of approval by
our stockholders of the sales (either  individually,  as a group or as part of a
sale of our  assets  that  may  constitute  a sale of  substantially  all of our
assets).

     At the time of execution of the March 2001 agreements with Messrs. Lang and
Weinzimer, each of them paid to us the entire purchase price for his stores. Mr.
Certilman  paid  $197,000 of his purchase  price at the time of execution of his
agreement.  In the event  stockholder  approval is not  received by December 31,
2001, each of Messrs.  Lang,  Weinzimer and Certilman may demand a return of his
respective  payment.  As security  for the return of the amounts  paid to us, we
granted to each of Messrs.  Lang, Weinzimer and Certilman a security interest in
the assets  they agreed to  acquire.  In the event of a demand by Messrs.  Lang,
Weinzimer and/or Certilman,  we have the option to require that,  instead of our
having to repay the sums,  they foreclose upon their  respective  liens.  In the
event of foreclosure,  Messrs.  Lang, Weinzimer and Certilman will have obtained
their respective stores without stockholder approval of the transaction.

     In contrast with the March 2001  agreements,  the sales that were completed
between May 2000 and February  2001 are final and binding and are not subject to
stockholder  approval or

                                       2

ratification. No party to any of the sales agreementswas given any right to undo
any of the  transactions in the event  stockholder  approval or ratification was
not obtained.  Therefore,  in the event  stockholders do not approve Proposal 2,
there will be no effect upon the validity of these completed sales.  Stockholder
approval of Proposal 2 would,  however,  serve to signify that the  stockholders
have ratified these sales.

     Effect

     Following  the sale of the eight  stores to  Messrs.  Lang,  Weinzimer  and
Certilman,  or in the event they foreclose their respective liens and obtain the
stores,  the number of stores wholly or partially owned by us will be reduced to
three. Our business will consist primarily of our insurance franchise operations
and our  related  operations  in the areas of income  tax  preparation,  premium
financing  and  automobile  club  services.   We  currently  have  55  franchise
locations,  excluding the above eight stores that are to become DCAP  franchsies
in the event of sale or foreclosure.

                                       3

                  SOLICITING, VOTING AND REVOCABILITY OF PROXY

     This proxy  statement is being mailed to all  stockholders of record at the
close of business on October 15, 2001 in connection with the solicitation by the
Board of Directors of proxies to be voted at the Annual Meeting of  Stockholders
to be held on November 20, 2001 at 10:00 a.m.,  local time,  or any  adjournment
thereof.  The proxy and this proxy  statement were mailed to  stockholders on or
about October 18, 2001.

     All shares  represented by proxies duly executed and received will be voted
on the matters  presented  at the meeting in  accordance  with the  instructions
specified in such proxies.  Proxies so received without  specified  instructions
will be voted as follows:

     (1) FOR the nominees named in the proxy to our Board of Directors;

     (2) FOR the approval and ratification of the sale of assets;

     (3)  FOR the  approval  of an  increase  in the  number  of  common  shares
authorized to be issued pursuant to our 1998 Stock Option Plan from 2,000,000 to
3,000,000;

     (4) FOR the approval of an amendment to our Certificate of Incorporation to
increase the number of authorized common shares from 25,000,000 to 40,000,000;

     (5) FOR the approval of an amendment to our Certificate of Incorporation to
provide for the authority to issue up to 1,000,000 preferred shares; and

     (6) FOR the approval of an amendment to our Certificate of Incorporation to
broaden the  corporate  purposes to include any lawful act or activity for which
corporations may be organized under Delaware law.

     Our Board does not know of any other matters that may be brought before the
meeting nor does it foresee or have reason to believe  that proxy  holders  will
have to vote for  substitute  or alternate  nominees to the Board.  In the event
that any other  matter  should  come  before the  meeting or any  nominee is not
available  for  election,  the  persons  named in the  enclosed  proxy will have
discretionary  authority  to vote all  proxies not marked to the  contrary  with
respect to such matters in accordance with their best judgment.

     The total number of common  shares  outstanding  and entitled to vote as of
October 15,  2001 was  11,353,402.  The  common  shares  are the  only  class of
securities entitled to vote on matters presented to our stockholders, each share
being entitled to one vote.

    Our Certificate of Incorporation  provides for cumulative  voting of shares
for the election of directors. This means that each stockholder has the right to
cumulate his votes and give to one or more  nominees as many votes as equals the
number of directors to be elected  (four)  multiplied by the number of shares he
is entitled to vote. A stockholder  may therefore cast his votes for

                                       4

one nominee or distribute them among two or more of the nominees.  A majority of
the common  shares  outstanding  and entitled to vote as of October 15, 2001, or
5,676,702 common shares, must be present at the meeting in person or by proxy in
order to constitute a quorum for the transaction of business.  Only stockholders
of record as of the close of  business  on October  15, 2001 will be entitled to
vote.  With regard to the election of  directors,  votes may be cast in favor or
withheld.  The  directors  shall be elected by a plurality  of the votes cast in
favor.  Accordingly,  based upon  there  being four  nominees,  each  person who
receives  one or more votes will be elected as a  director.  Votes  withheld  in
connection  with the election of one or more of the  nominees for director  will
not be counted as votes cast for such individuals.

     Stockholders may expressly  abstain from voting on Proposals 2, 3, 4, 5 and
6 by so  indicating  on the  proxy.  Abstentions  and broker  non-votes  will be
counted for purposes of determining  the presence or absence of a quorum for the
transaction of business. Abstentions are counted as present in the tabulation of
votes on each of the proposals  presented to stockholders.  Broker non-votes are
not counted for the purpose of  determining  whether a  particular  proposal has
been approved.  Since Proposals 2, 4, 5 and 6 require the approval of a majority
of our outstanding common shares, abstentions and broker non-votes will have the
effect of a negative vote. Since Proposal 3 requires the affirmative approval of
a majority of the common shares present in person or represented by proxy at the
meeting  and  entitled to vote  (assuming  a quorum is present at the  meeting),
abstentions  will have a  negative  vote  while  broker  non-votes  will have no
effect.

     Any person giving a proxy in the form accompanying this proxy statement has
the power to revoke it at any time before its exercise. The proxy may be revoked
by filing with us written notice of revocation or a fully executed proxy bearing
a later date. The proxy may also be revoked by affirmatively electing to vote in
person while in attendance at the meeting.  However,  a stockholder  who attends
the  meeting  need  not  revoke a proxy  given  and vote in  person  unless  the
stockholder  wishes to do so. Written  revocations or amended  proxies should be
sent to us at 1158  Broadway,  Hewlett,  New York  11557,  Attention:  Corporate
Secretary.

     The proxy is being  solicited by our Board of  Directors.  We will bear the
cost of the  solicitation  of proxies,  including  the  charges and  expenses of
brokerage  firms and other  custodians,  nominees and fiduciaries for forwarding
proxy materials to beneficial owners of our shares.  Solicitations  will be made
primarily  by mail,  but certain of our  directors,  officers or  employees  may
solicit  proxies  in person or by  telephone,  telecopier  or  telegram  without
special compensation.

     A list of  stockholders  entitled to vote at the meeting  will be available
for  examination  by any  stockholder  for any purpose  germane to the  meeting,
during  ordinary  business  hours,  for ten days  prior to the  meeting,  at our
offices, 1158 Broadway,  Hewlett, New York 11557, and also during the whole time
of the meeting for inspection by any stockholder who is present.  To contact us,
stockholders should call (516) 374-7600, extension 3.

                                       5

     Stockholders  do not  have  any  appraisal  rights  under  Delaware  law in
connection  with the sale of  assets.  Therefore,  even if a  stockholder  votes
against the approval and  ratification  of the sale,  he will not be entitled to
seek payment from us for his common shares.

                           FORWARD-LOOKING STATEMENTS

     Certain  information  contained in this proxy statement and/or incorporated
by  reference  in this proxy  statement  includes  "forward-looking  statements"
within the meaning of the Private Securities  Litigation Reform Act of 1995, and
is  subject to the safe  harbor  created by that act.  We caution  readers  that
certain  important  factors  may affect our actual  results and could cause such
results to differ  materially from any  forward-looking  statements which may be
deemed to have been made in this proxy  statement or which are otherwise made by
or on behalf of us. For this purpose,  any statements  contained or incorporated
by reference in this proxy  statement that are not statements of historical fact
may be deemed to be forward-looking statements.  Without limiting the generality
of  the   foregoing,   words  such  as  "may,"  "will,"   "expect,"   "believe,"
"anticipate,"  "intend,"  "could,"  "estimate,"  or  "continue"  or the negative
variations   thereof  or  comparable   terminology   are  intended  to  identify
forward-looking  statements.  Factors which may affect our results include,  but
are not  limited to, the risks and  uncertainties  associated  with  undertaking
different  lines of business,  the lack of experience  in operating  certain new
business  lines,  the  decline in the  number of  insurance  companies  offering
insurance products in our markets,  the volatility of insurance premium pricing,
government  regulation,  competition  from  larger,  better  financed  and  more
established  companies,  the possibility of tort reform and a resultant decrease
in the demand for insurance,  the  uncertainty of litigation  with regard to our
hotel lease,  the  dependence  on our executive  management,  and our ability to
raise additional capital which may be required in the near term. Any one or more
of these  uncertainties,  risks and other influences could materially affect our
results  of  operations  and  whether  forward-looking  statements  made  by  us
ultimately   prove  to  be  accurate.   Our  actual  results,   performance  and
achievements  could differ  materially  from those expressed or implied in these
forward-looking  statements.  We undertake no obligation to publically update or
revise any  forward-looking  statements,  whether from new  information,  future
events or otherwise.

                             EXECUTIVE COMPENSATION

     Summary Compensation Table

     The  following  table  sets  forth  certain   information   concerning  the
compensation  for the fiscal years ended  December  31, 2000,  1999 and 1998 for
each of our  executive  officers as of December  31, 2000 who had a total salary
and bonus for that year in excess of $100,000:

                                       6

                                                                    Long-Term Compensation
                                                                  -------------------------
                                   Annual Compensation                    Awards                      All Other
Name and                           -------------------                   --------                     ---------
Principal Position               Year           Salary            Shares Underlying Options         Compensation
------------------               ----           ------            -------------------------         ------------

Morton L. Certilman             2000           $125,000                      -                          -0-*
Chairman of Board(1)            1999            129,167                   225,000                       -0-*
                                1998            150,000                      -                          -0-*

Kevin Lang                      2000           $250,000                      -                           -
 President(2)                   1999            208,000(3)                200,000                        -
                                1998               -                         -                           -

Abraham Weinzimer               2000           $250,000                      -                           -
 Executive Vice President(4)    1999            208,000(3)                200,000                        -
                                1998               -                         -                           -

*    Excludes fees payable during 1998,  1999 and 2000 by us to Certilman  Balin
     Adler & Hyman, LLP, a law firm of which Mr. Certilman is a member.

(1)  Effective  March 28,  2001,  Mr.  Certilman  resigned  his  position as our
     Chairman of the Board.

(2)  Effective  March 28, 2001,  Mr. Lang resigned his position as our President
     and a director,  and he became  President  of DCAP  Management  Corp.,  our
     wholly-owned subsidiary that operates our franchise business.

(3)  Represents  salary paid from February 25, 1999, the date of our acquisition
     of the DCAP  Companies.  Messrs.  Lang and Weinzimer were the principals of
     these companies.

(4)  Effective  March 28,  2001,  Mr.  Weinzimer  resigned  his  position as our
     Executive Vice President and a director.

     Options

     No grants of stock options were made to any of Messrs.  Certilman,  Lang or
Weinzimer during the fiscal year ended December 31, 2000.

                                     AGGREGATED OPTION EXERCISES IN FISCAL YEAR
                              ENDED DECEMBER 31, 2000 AND FISCAL YEAR-END OPTION VALUES
---------------------------- --------------- ----------- ------------------------------ ------------------------------

                                                               Number of Shares
                               Number of                    Underlying Unexercised          Value of Unexercised
                                 Shares                           Options at                In-the-Money Options
                                Acquired       Value           December 31, 2000            at December 31, 2000
Name                          on Exercise     Realized     Exercisable/Unexercisable      Exercisable/Unexercisable
---------------------------- --------------- ----------- ------------------------------ ------------------------------
---------------------------- --------------- ----------- ------------------------------ ------------------------------
                                                                                         
Morton L. Certilman                -            N/A             112,500/112,500                      0/0

Kevin Lang                         -            N/A             100,000/100,000                      0/0

Abraham Weinzimer                  -            N/A             100,000/100,000                      0/0
---------------------------- --------------- ----------- ------------------------------ ------------------------------

                                       7

    Long-Term Incentive Plan Awards

     No awards were made to any of Messrs.  Certilman,  Lang or Weinzimer during
the fiscal year ended December 31, 2000 under any long-term incentive plan.

     Compensation of Directors

     Our  directors  are not  entitled  to receive  any  compensation  for their
services as directors.

     Employment  Contracts,  Termination  of  Employment  and  Change-in-Control
Arrangements

     Effective March 28, 2001, our subsidiary,  DCAP Management,  entered into a
six month employment agreement with Mr. Lang pursuant to which he is employed as
its President.

     During the term of the employment agreement, Mr. Lang is required to expend
all of his  working  time for DCAP  Management,  except that he may expend up to
eight hours per week in  connection  with the operation of the three DCAP stores
he has agreed to purchase, as discussed under "Certain Relationships and Related
Transactions."

     Pursuant  to the  employment  agreement,  Mr. Lang is entitled to receive a
salary of $125,000 per annum.  In addition,  in connection  with each  franchise
agreement  approved by the DCAP  Management  Board of Directors and entered into
solely as a result of Mr. Lang's efforts, he is entitled to receive $2,000.

                    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                              OWNERS AND MANAGEMENT

     The following table sets forth certain information as of September 30, 2001
regarding the  beneficial  ownership of our common shares by (i) each person who
we believe to be the beneficial owner of more than 5% of our outstanding  common
shares,  (ii) each  present  director,  (iii) each person  listed in the Summary
Compensation  Table under "Executive  Compensation," and (iv) all of our present
executive officers and directors as a group.

 Name and Address                            Number of Shares                      Approximate
 of Beneficial Owner                         Beneficially Owned                 Percent of Class
 -------------------                         ------------------                 ----------------

Jay M. Haft                                 1,788,893(1) (2)                            15.5%
1001 Brickell Bay Drive
Miami, Florida

                                       8

Eagle Insurance Company                     1,486,893(3)                                13.1%
c/o The Robert Plan
  Corporation
999 Stewart Avenue
Bethpage, New York

Robert M. Wallach                           1,486,893(4)                                13.1%(4)
c/o The Robert Plan
  Corporation
999 Stewart Avenue
Bethpage, New York

Morton L. Certilman                         1,336,005(1)(5)                             11.5%
The Financial Center at
  Mitchel Field
90 Merrick Avenue
East Meadow, New York

Kevin Lang                                    851,460(1)(6)                              7.4%
3789 Merrick Road
Seaford, New York

Abraham Weinzimer                             783,924(1)                                 6.9%
418 South Broadway
Hicksville, New York

Barry Goldstein                                        0                                    -
2545 Hempstead Turnpike
East Meadow, New York

All executive officers
and directors as a group                     5,463,251(1)(2)(5)                         45.5%
(5 persons)                                           (6)(7)

(1)  Based upon Schedule 13D filed under the Securities Exchange Act of 1934.

(2)  Includes 225,000 shares issuable upon the exercise of currently exercisable
     options and 15,380 shares held in a retirement trust for the benefit of Mr.
     Haft.

(3)  Eagle is a wholly-owned subsidiary of The Robert Plan Corporation.

(4)  Represents  shares  owned  by  Eagle,  of  which  Mr.  Wallach,  one of our
     directors,  is a Vice President.  Eagle is a wholly-owned subsidiary of The
     Robert  Plan,  of which  Mr.  Wallach  is  President,  Chairman  and  Chief
     Executive  Officer.

                                       9

(5)  Includes 225,000 shares issuable upon the exercise of currently exercisable
     options and 902,452  shares held in a  retirement  trust for the benefit of
     Mr. Certilman.

(6)  Includes 200,000 shares issuable upon the exercise of currently exercisable
     options.

(7)  Includes  shares owned by Eagle,  of which Mr. Wallach is a Vice President.
     Mr. Wallach is also President,  Chairman and Chief Executive Officer of The
     Robert Plan, Eagle's parent.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     DCAP Agreement

     On February 25, 1999, pursuant to the terms of an Agreement dated as of May
8, 1998 between Messrs. Lang, Weinzimer,  Certilman and Haft and us, as amended,
we acquired DCAP Insurance. Prior to our acquisition of DCAP Insurance,  Messrs.
Lang and Weinzimer were its principals.  Messrs. Certilman and Haft were parties
to the  agreement  since  they  acquired  shares of DCAP Group  concurrently  as
described  below.  The  following  is a  summary  of the  material  terms of the
agreement:

     Acquisition of Common Shares

     Pursuant to the agreement,  we acquired DCAP  Insurance.  At the closing of
the acquisition, we issued the following common shares:

     o    3,300,000 shares to Messrs.  Lang and Weinzimer  (1,650,000  shares to
          each) in  consideration  for  their  transfer  of the  shares  of DCAP
          Insurance.

     o    950,000 shares to Messrs.  Lang and Weinzimer (475,000 shares to each)
          at a purchase price of $.25 per share (an aggregate of $237,500), paid
          as follows:

          o    an amount in cash  equal to the par value of the  950,000  shares
               (an aggregate of $9,500); and

          o    the balance by the delivery by each of Messrs. Lang and Weinzimer
               of a  promissory  note in the  principal  amount of $114,000  (an
               aggregate of $228,000).  These notes  provided  for,  among other
               things, the following:

               o    interest at the rate of 6% per annum; and

               o    payment  of  principal  and  interest  in six  equal  annual
                    installments   commencing  April  15,  2001  and  continuing
                    through  April 15,  2006,  subject  to  acceleration  to the
                    extent that Mr. Lang or Mr. Weinzimer  received any proceeds
                    from the sale or other disposition of any common shares; and

                                       10

     o    452,000  shares  to  Messrs.  Certilman  and Haft or  their  designees
          (208,500  shares  to  each  of  Messrs.  Certilman  and  Haft  or  his
          retirement  trust and an aggregate  of 35,000  shares to a designee of
          Mr.  Certilman) at a purchase price of $.25 per share (an aggregate of
          $113,000), paid in cash.

     At the closing of our acquisition of DCAP Insurance,  each of Messrs. Haft,
Lang and Weinzimer and Mr.  Certilman's  retirement trust also purchased 450,000
of our common shares (1,800,000 shares in the aggregate)  beneficially  owned by
Sterling  Foster  Holding  Corp.  and held by Mr.  Certilman  as voting  trustee
pursuant to a Voting Trust Agreement with Sterling  Foster,  at a purchase price
of $.25 per share.  Mr.  Certilman  did not receive any portion of such purchase
price. Upon such purchase, the Voting Trust Agreement was terminated.

     At the  closing of the  acquisition,  we also  loaned  $112,500  to each of
Messrs. Lang and Weinzimer (an aggregate of $225,000). The proceeds of the loans
were used by Messrs.  Lang and  Weinzimer  solely for the purpose of  purchasing
their  shares  from  Sterling  Foster.  Each of the  loans  was  evidenced  by a
promissory note that provided for, among other things, the following:

     o    interest at the rate of 6% per annum;

     o    payment of principal  and  interest in six equal  annual  installments
          commencing  April 15,  2001 and  continuing  through  April 15,  2006,
          subject to acceleration  to the extent that Mr. Lang or Mr.  Weinzimer
          received any proceeds from the sale or other disposition of any common
          shares;

     o    non-recourse  against Messrs.  Lang and Weinzimer,  i.e., Messrs. Lang
          and Weinzimer  would not be  personally  liable for the payment of the
          notes;  instead,  in the event of a default,  our sole remedy would be
          pursuant to a pledge by Messrs.  Lang and Weinzimer of their  Sterling
          Foster shares, as discussed below; and

     o    the right of each of Messrs. Lang and Weinzimer to satisfy the amounts
          due under his  respective  note by delivering our common shares valued
          at the greater of (i) $.25 per share or (ii) the average  market price
          of our common shares for the 20 trading days immediately preceding the
          date of delivery of the shares.

     The payment of all amounts  due under the  $114,000  notes was secured by a
pledge by each of Messrs. Lang and Weinzimer to us of 570,000 common shares. The
payment of all amounts due under the  $112,500  notes was secured by a pledge by
each of Messrs.  Lang and  Weinzimer  to us of the shares  acquired  by him from
Sterling Foster.

     The $.25 per share purchase price for the shares,  as described  above, was
based upon a share valuation performed by Margolin, Winer & Evans LLP, certified
public accountants.

                                       11

     See "March 2001  Transactions"  for a discussion of our  reacquisition of a
portion of the shares issued to Messrs.  Lang and Weinzimer and the cancellation
of the notes discussed above.

     Restrictive Covenant Agreements

     At the  closing of our  acquisition  of DCAP  Insurance,  Messrs.  Lang and
Weinzimer  executed  and  delivered  to  us a  restrictive  covenant  agreement.
Pursuant to this  agreement,  each agreed that for five years he will not engage
or participate in a business that is similar to or competitive with our business
anywhere  within five miles of the  location  of any of our  offices  (including
franchises).

     The restrictive  covenants contained in the restrictive  covenant agreement
are separate and  independent  from the restrictive  covenants  contained in the
employment and franchise agreements entered into with them.

     Sale of Company Shares

     Pursuant to an  employment  agreement  we entered into with Mr. Lang at the
time of our acquisition of the DCAP Companies, we have loaned him $36,000. While
such loan is outstanding, Mr. Lang will be obligated to sell, as soon as legally
permissible, the maximum number of our common shares that he is permitted by law
to sell,  and to use the  proceeds to satisfy his  obligations  under his notes.
Until  the  above  loan has been  satisfied  in full,  Mr.  Lang may not sell or
otherwise  dispose  of any of his  common  shares  for less  than $.25 per share
(subject to adjustment  for stock splits and the like) without our prior written
consent.

     Eagle

     Concurrently with our acquisition of the DCAP Companies, we issued and sold
to Eagle  1,486,893 of our common shares for an aggregate cash purchase price of
approximately $1,000,000, or $.67 per share.

     Eagle is a New Jersey  insurance  company  wholly-owned by The Robert Plan,
one of the  largest  insurers  of  assigned-risk  drivers in the United  States.
Pursuant  to  separate  agency  agreements  between  some of our DCAP stores and
certain insurance company  subsidiaries of The Robert Plan, the DCAP stores have
been appointed agents of the insurance  companies with regard to the offering of
automobile and other insurance products.

     Pursuant to our  agreement  with Eagle,  Robert M.  Wallach,  Eagle's  Vice
President and the President,  Chairman and Chief Executive Officer of The Robert
Plan,  was  appointed  as a member of our Board of  Directors.  We agreed  that,
during the five year period  following the closing,  provided that Eagle remains
the  beneficial  owner of at least  1,000,000 of our common  shares  (subject to
adjustment  for stock  splits and the like),  we shall  continue to nominate Mr.
Wallach as a director.

                                       12

     Sale of Interests in Stores

     Prior to May 31, 2000,  four of the DCAP stores were owned  one-half by the
daughter of Mr. Certilman and one-half by us. Effective May 31, 2000 we sold our
50% interest in each of the stores to Mr. Certilman upon the following  material
terms and conditions:

     o    The purchase  price for our  interest in the stores was  approximately
          $141,000,   after  certain  credits.   These  credits,  which  totaled
          $126,000,   represented  franchise  fees  received  by  us  for  three
          franchises  that were  granted  by us in  violation  of a  territorial
          exclusivity agreement with the four DCAP stores.

     o    The purchase price was payable as follows:

          o    $66,000 was payable at the rate of $6,000 per month,  starting on
               the first anniversary of the closing, and

          o    the balance of the  purchase  price was payable  over five years,
               together  with  6%  interest,   in  equal  monthly   installments
               commencing on the second anniversary of the closing.

     o    We agreed to waive all  indebtedness  owing by the stores to us. As of
          the  closing,  the  approximate  amount  of such  indebtedness,  which
          related to advances  made by us on behalf of the stores for  operating
          expenses, was $210,000.

     o    As part of the transaction,  the stores became conversion franchisees,
          and the first annual franchise charge of $18,000 per store was paid in
          full at the  closing  in  consideration  for a  waiver  of the  annual
          franchise charges during the second year.

     o    The  stores  entered  into  franchise  agreements  with us,  which are
          similar  in  most  respects  to  our  standard  conversion   franchise
          agreement (including standard territorial rights), except that

          o    the stores have a right of first refusal with regard to franchise
               locations to be offered in zip codes adjoining those in which the
               stores are located, and

          o    in the  event we sell  another  franchise  to be  located  in the
               territory  with  respect to which a store  currently  has certain
               rights (which is more expansive than the rights granted  pursuant
               to the franchise  agreements),  the annual  franchise fee for the
               particular store will be waived for six months.

          These rights were granted in  consideration  of the waiver of certain
          other geographic rights not granted to other franchisees.

                                       13

          o    Certain license fees totaling $40,000  previously  prepaid by Mr.
               Certilman will be retained by us, to be applied generally against
               franchise fees for any new franchises granted to Mr. Certilman or
               his designee.

     See "March 2001  Transactions"  for a discussion of the cancellation of the
above amount due by Mr.  Certilman as well as of  agreements to sell DCAP stores
to Messrs. Lang, Weinzimer and Certilman.

     March 2001 Transactions

     In March 2001, the following transactions occurred:

     o    We entered into agreements with Messrs.  Lang, Weinzimer and Certilman
          that  provide  for our  sale to them of a total  of  eight of our DCAP
          stores.  Pursuant to the  agreements,  Mr. Lang is to acquire three of
          the stores for a total purchase price of approximately  $257,000,  Mr.
          Weinzimer is to acquire three of the stores for a total purchase price
          of  $285,000  and an entity  owned by Mr.  Certilman  (we refer to the
          entity as "Mr. Certilman") is to acquire two of the stores for a total
          purchase price of approximately  $225,000. At the time of execution of
          the agreements with Messrs.  Lang and Weinzimer,  each of them paid to
          us the total amount of his respective  purchase  price. At the time of
          execution  of  the   agreement   with  Mr.   Certilman,   we  received
          approximately  $197,000 of the purchase price.  The balance of $28,000
          is payable at the closing of the acquisition through the assumption of
          our  obligation  to an  unaffiliated  third party in that amount.  The
          obligation was incurred in May 2000 in connection with our acquisition
          of the third party's  interest in one of the stores being  acquired by
          Mr.  Certilman.  The closing of the sales is subject to the receipt of
          approval by our stockholders of the sales (either  individually,  as a
          group or as part of a sale of our assets that may constitute a sale of
          substantially all of our assets). Pending the closing, each of Messrs.
          Lang,  Weinzimer and Certilman is managing his  respective  stores and
          will be entitled to receive a management  fee equal to the net profits
          of the stores.  Each of them will also be  responsible  for all losses
          incurred during this interim period.

     o    As security  for the return of the  amounts  paid to us at the time of
          execution of the agreements,  we granted to Messrs. Lang and Weinzimer
          a lien in the  outstanding  shares of the respective  stores they have
          agreed to  acquire  and to Mr.  Certilman  a lien in the assets of the
          stores he has agreed to acquire. In the event stockholder  approval is
          not received by December 31, 2001, each of Messrs. Lang, Weinzimer and
          Certilman may demand a return of his respective payments.  We have the
          option to require that,  instead of repaying the sums,  they foreclose
          upon their respective liens. The right to foreclose is not conditioned
          upon the receipt of stockholder  approval. In the event of foreclosure
          by Mr.  Certilman,  he would  have to  assume  the  $28,000  liability
          discussed above.

                                       14

     o    We agreed with Messrs.  Lang,  Weinzimer  and  Certilman  that, at the
          closing of the store sales or in the event of the foreclosure of their
          liens,  we would enter into  franchise  agreements  with them on terms
          similar  to  those  entered  into by Mr.  Certilman  in May  2000  (as
          described above under "Sale of Interests in Stores"),  except that, in
          general,  none of the  franchisees  will be allowed to terminate their
          respective franchise agreements prior to March 31, 2003. Messrs. Lang,
          Weinzimer and Certilman  have agreed that,  pending the closing,  they
          would be  responsible  for charges as if the franchise  agreements had
          been executed.

     o    We  reacquired a total of  3,714,616  of the shares  issued to Messrs.
          Lang and  Weinzimer  (see  "DCAP  Agreement  -  Acquisition  of Common
          Shares") in consideration of the cancellation of indebtedness  owed to
          us by them in the aggregate amount of $928,654.

     o    We agreed with Mr. Lang to terminate his employment agreement that was
          scheduled to expire in February 2004, and DCAP Management, our wholly-
          owned subsidiary that operates our franchise business,  entered into a
          new  employment  agreement  with  him as  discussed  under  "Executive
          Compensation  - Employment  Contracts;  Termination  of Employment and
          Change-in-Control  Arrangements."  Based upon Mr. Lang's  agreement to
          forgo the compensation otherwise payable to him for the balance of the
          original  employment term ($667,000,  net of the amount payable to him
          pursuant to his new  employment  agreement),  we granted to Mr. Lang a
          price  concession  of  approximately  $85,000 in  connection  with his
          purchase  of his three  stores.  This price  concession  resulted in a
          purchase price of $257,000 for Mr. Lang.

     o    We agreed with Mr.  Weinzimer to terminate  his  employment  agreement
          that  was  scheduled  to  expire  in  February  2004.  Based  upon Mr.
          Weinzimer's  agreement to forgo the compensation  otherwise payable to
          him for the balance of the employment term  ($729,000),  we granted to
          Mr.  Weinzimer  a  price   concession  of  approximately   $85,000  in
          connection  with  his  purchase  of  his  three  stores.   This  price
          concession resulted in a purchase price of $285,000 for Mr. Weinzimer.

     o    We agreed with Mr.  Certilman to terminate  his  employment  agreement
          that was  scheduled to expire in February  2004.  Concurrently,  based
          upon Mr.  Certilman's  agreement to forgo the  compensation  otherwise
          payable  to him for  the  balance  of the  employment  agreement  term
          ($365,000), we agreed to cancel indebtedness of approximately $141,000
          that Mr. Certilman owed to us pursuant to his purchase of our interest
          in four DCAP stores as  discussed  above under "Sale of  Interests  in
          Stores."

     o    We agreed with Mr. Haft to terminate his employment agreement that was
          scheduled to expire in February 2004.

     o    Each of Messrs.  Lang,  Weinzimer,  Certilman  and Haft resigned as an
          officer of DCAP Group.  Messrs.  Lang and  Weinzimer  also resigned as
          directors.

                                       15

     Relationship

     Certilman Balin Adler & Hyman,  LLP, a law firm of which Mr. Certilman is a
member,  serves as our counsel. It is presently  anticipated that such firm will
continue to  represent us and will receive fees for its services at rates and in
amounts not greater than would be paid to unrelated law firms performing similar
services.  Certilman  Balin has also served as counsel to DCAP Insurance and The
Robert  Plan with  respect  to  certain  matters;  however,  it did not serve as
counsel to DCAP Insurance or Messrs.  Lang and Weinzimer in connection  with our
acquisition of DCAP Insurance,  to Messrs.  Lang or Weinzimer in connection with
the transactions with them discussed under "March 2001 Transactions" or to Eagle
in connection with the issuance of shares to Eagle. In addition, Certilman Balin
did not serve as counsel to either us or Mr.  Certilman in  connection  with the
transactions  with him discussed  under "Sale of Interests in Stores" and "March
2001 Transactions" above.

                        PROPOSAL 1: ELECTION OF DIRECTORS

     Four  directors  are to be elected at the  meeting to serve  until the next
annual meeting of stockholders and until their respective  successors shall have
been elected and have qualified.

     Our Certificate of Incorporation  provides for cumulative  voting of shares
for the election of directors. This means that each stockholder has the right to
cumulate his votes and give to one or more  nominees as many votes as equals the
number of directors to be elected  (four)  multiplied by the number of shares he
is entitled to vote. A stockholder  may therefore cast his votes for one nominee
or distribute them among two or more of the nominees.

     Nominees for Directors

     All  four of the  nominees  are  currently  directors  of DCAP  Group.  The
following  table sets forth each  nominee's  age as of September  30, 2001,  the
positions  and offices  presently  held by him with us, and the year in which he
became a director.  The Board  recommends  a vote FOR all  nominees.  The person
named as proxy intends to vote  cumulatively  all shares  represented by proxies
equally among all nominees for election as directors,  unless proxies are marked
to the contrary.

                                                                                               Director
              Name                      Age          Positions and Offices Held                  Since
              ----                      ---          --------------------------                 --------

Barry Goldstein                         48        President, Chairman of the Board, Chief         2001
                                                  Executive Officer, Chief Financial
                                                  Officer, Treasurer and Director
Morton L. Certilman                     69        Secretary and Director                          1989
Jay M. Haft                             65        Director                                        1989
Robert M. Wallach                       48        Director                                        1999

                                       16

     Barry Goldstein

     Mr.  Goldstein was elected our Chief Executive  Officer and Chief Financial
Officer in  February  2001,  our  Chairman  of the Board and a director in March
2001,  and our  President  and  Treasurer in May 2001.  Since April 1997, he has
served as President of AIA Acquisition Corp., which operates insurance agencies.
Since 1982, he has served as President of Stone Equities, a consulting firm.

     Morton L. Certilman

     Mr.  Certilman  served as our  Chairman  of the Board  from  February  1999
(concurrently  with our  acquisition of DCAP  Insurance)  until March 2001. From
October 1989 to February 1999, he served as our President.  He has served as one
of our  directors  since 1989.  He was elected our  Secretary  in May 2001.  Mr.
Certilman  has been engaged in the practice of law since 1956 and is a member of
the law firm of Certilman Balin Adler & Hyman, LLP. Mr. Certilman is Chairman of
the  Long  Island   Regional   Planning   Board,   the  Nassau  County  Coliseum
Privatization  Commission,  and the Northrop/Grumman Master Planning Council. He
served as a director  of the Long  Island  Association  and the New Long  Island
Partnership for a period of ten years and currently  serves as a director of the
Long Island Sports Commission. Mr. Certilman has lectured extensively before bar
associations,  builders'  institutes,  title companies,  real estate institutes,
banking and law school seminars, The Practicing Law Institute,  The Institute of
Real Estate  Management and at annual  conventions of such  organizations as the
National Association of Home Builders,  the Community Associations Institute and
the National Association of Corporate Real Estate Executives. He was a member of
the faculty of the American Law Institute/American  Bar Association,  as well as
the Institute on Condominium and Cluster Developments of the University of Miami
Law Center. Mr. Certilman has written various articles in the condominium field,
is the author of the New York State Bar Association Condominium Cassette and the
Condominium portion of the State Bar Association book on "Real Property Titles."
Mr. Certilman received an LL.B. degree, cum laude, from Brooklyn Law School.

     Jay M. Haft

     Mr.  Haft  served as our Vice  Chairman  of the Board  from  February  1999
(concurrently  with our  acquisition of DCAP  Insurance)  until March 2001. From
October 1989 to February  1999,  he served as our Chairman of the Board.  He has
served as one of our  directors  since 1989.  Mr.  Haft has been  engaged in the
practice of law since 1959 and since 1994 has served as counsel to Parker Duryee
Rosoff & Haft.  From 1989 to 1994,  he was a senior  corporate  partner  of that
firm.  Mr.  Haft is a  strategic  and  financial  consultant  for  growth  stage
companies.  He is active in  international  corporate  finance  and  mergers and
acquisitions.  Mr.  Haft  also  represents  emerging  growth  companies.  He has
actively  participated in strategic planning and fund raising for many high-tech
companies,  leading edge medical  technology  companies and  technical  product,
service and marketing  companies.  Mr. Haft is a Managing General Partner of Gen
Am "1"  Venture  Fund,  an  international  venture  capital  fund.  He is also a
director of many  public and  private  corporations,  including  Robotic  Vision
Systems,   Inc.,   NCT   Group,   Inc.,   Encore   Medical

                                       17

Corporation,  DUSA  Pharmaceuticals,  Inc.,  Oryx Technology  Corp.,  and Thrift
Management,  Inc,  all of whose  securities  are traded in the  over-the-counter
market.  Mr.  Haft is a past  member of the Florida  Commission  for  Government
Accountability to the People,  and a national trustee and Treasurer of the Miami
Ballet. He is also a trustee of Florida  International  University and serves on
the advisory board of the Wolfsonian Museum in Miami, Florida. Mr. Haft received
B.A. and LL.B. degrees from Yale University.

     Robert M. Wallach

     Mr.  Wallach  has  served  since  1993 as  President,  Chairman  and  Chief
Executive Officer of The Robert Plan  Corporation,  an insurance company holding
company that provides services to insurance  companies.  He has served as one of
our directors since 1999.

     There are no family  relationships  among any of our executive officers and
directors.

     Each  director   will  hold  office  until  the  next  annual   meeting  of
stockholders  and until his  successor  is elected  and  qualified  or until his
earlier  resignation or removal.  Each executive  officer will hold office until
the initial meeting of the Board of Directors  following the next annual meeting
of  stockholders  and until his  successor is elected and qualified or until his
earlier resignation or removal.

     Committees

     The  Audit  Committee  of the Board of  Directors  is  responsible  for (i)
recommending  independent accountants to the Board, (ii) reviewing our financial
statements  with  management and the  independent  accountants,  (iii) making an
appraisal of our audit effort and the  effectiveness  of our financial  policies
and  practices  and  (iv)   consulting   with  management  and  our  independent
accountants  with regard to the adequacy of internal  accounting  controls.  The
members of the Audit  Committee  currently are Messrs.  Certilman and Haft.  The
directors who serve on the Audit Committee are not "independent" directors based
on the  definition  of  independence  in the listing  standards  of the National
Association  of  Securities  Dealers.  To date,  our Board of Directors  has not
adopted a written charter for the Audit Committee.

     The Finance  Committee  of the Board of Directors  is  responsible  for (i)
developing and analyzing plans for corporate expansion,  examining and adjusting
our capital structure and determining long-range financial requirements and (ii)
other  matters  relating to our  financial  affairs.  The members of the Finance
Committee currently are Messrs. Certilman and Haft.

     We do not have any standing  nominating or  compensation  committees of the
Board of Directors or committees  performing similar functions.  These functions
are currently performed by our Board as a whole.

     Report of the Audit Committee

     In overseeing the  preparation of DCAP's  financial  statements,  the Audit
Committee met with  management  to review and discuss all  financial  statements
prior to their issuance and to discuss significant accounting issues. Management
advised the Committee that all financial

                                       18

statements  were  prepared in  accordance  with  generally  accepted  accounting
principles,  and the Committee  discussed the statements  with  management.  The
Committee also discussed with Holtz Rubenstein LLP, DCAP's outside auditors, the
matters  required to be  discussed by  Statement  on Auditing  Standards  No. 61
(Communication with Audit Committees).

     The  Committee  received  the  written  disclosures  and letter  from Holtz
Rubenstein  LLP  required by the  Independence  Standards  Board  Standard No. 1
(Independence Discussions with Audit Committees) and the Committee discussed the
independence of Holtz Rubenstein LLP with that firm.

     On the basis of these reviews and discussions, the Committee recommended to
the Board of  Directors  that the audited  financial  statements  be included in
DCAP's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2000,
for filing with the Securities and Exchange Commission.

                         Members of the Audit Committee

                               Morton L. Certilman
                                   Jay M. Haft

     Meetings

     Our Board of  Directors  held five  meetings  during the fiscal  year ended
December 31, 2000. All of our then directors attended all such meetings with the
exception of Mr. Wallach, who attended three of the meetings.  Neither the Audit
Committee nor the Finance  Committee of the Board of Directors held any meetings
during the fiscal year ended December 31, 2000.

     Section 16(a) Beneficial Ownership Reporting Compliance

     Section  16 of  the  Exchange  Act  requires  that  reports  of  beneficial
ownership  of common  shares  and  changes in such  ownership  be filed with the
Securities and Exchange Commission by Section 16 "reporting  persons," including
directors,  certain officers, holders of more than 10% of the outstanding common
shares and  certain  trusts of which  reporting  persons  are  trustees.  We are
required to disclose in this proxy statement each reporting  person whom we know
to have failed to file any required  reports  under Section 16 on a timely basis
during the fiscal year ended December 31, 2000. To our  knowledge,  based solely
on a review of written representations that no reports were required, during the
fiscal  year  ended  December  31,  2000,   our  officers,   directors  and  10%
stockholders  complied with all Section 16(a) filing requirements  applicable to
them.

                                       19

                           PROPOSAL 2: SALE OF ASSETS

     At the  meeting,  the  stockholders  of DCAP will  consider and vote upon a
proposal  to approve  and ratify the sale by us and our  subsidiaries  of assets
that may  constitute,  under Delaware law,  substantially  all of our assets.  A
summary of the sales is included in this proxy statement  beginning on the cover
page hereof.

     Sales Transactions

     We or our subsidiaries  have entered into the following sales  transactions
since  May  2000.  The  terms  of the  sales  were as a result  of arm's  length
negotiations  between the parties based upon then current market conditions.  No
independent  appraisal or valuation was received in  connection  with any of the
sales transactions.

     o    In May 2000, we sold to Morton L. Certilman,  our then Chairman of the
          Board,  our 50%  interest  in four DCAP  stores  located in Queens and
          Nassau  Counties,  New York.  The remaining 50% interest in each store
          was held by Mr. Certilman's daughter. The total purchase price for our
          interest was approximately  $141,000,  net of certain credits applied,
          and was arrived at following arm's length  negotiations.  The purchase
          price (prior to the credits)  was equal to  approximately  one-half of
          the aggregate  commissions  for the stores for the year ended December
          31,  1999.  We believe  that a purchase  price for a 50% interest in a
          store equal to one-half of the store's annual commissions  represented
          fair  market  value  at that  time.  The  other  terms of the sale are
          described in this proxy  statement  under "Certain  Relationships  and
          Related Transactions - Sale of Interests in Stores." The obligation to
          pay the  purchase  price of $141,000  for our interest was canceled in
          March 2001 based  upon Mr.  Certilman's  agreement  to  terminate  his
          employment agreement with us and forgo the compensation  otherwise due
          him for the  balance  of the term  ($365,000).  This is  described  in
          "Certain   Relationships   and  Related   Transactions  -  March  2001
          Transactions."

     o    Between  September  2000 and February  2001,  we sold seven other DCAP
          stores to persons who are not affiliated  with us for a total purchase
          price of approximately $555,000 (exclusive of contingent amounts). The
          aggregate  purchase  price  for  the  stores,  which  was  arrived  at
          following  arm's length  negotiations,  was  approximately  55% of the
          aggregate  annualized  commissions  for the stores for the nine months
          ended  September 30, 2000.  We believe that a purchase  price equal to
          that  percentage  of a store's  annual  commissions  represented  fair
          market value at that time. A summary of the sales is set forth below:

                                                                                                                        Became a
                     Store                                                                                               DCAP
  Date             Location(s)       Purchaser            Purchase Price      Nature of Sale      Payment Terms        Franchise?
  ----             -----------       ---------            --------------      --------------      -------------        ----------
                                                                                                         
September 2000    Staten Island,    Hari Roth             $128,000 (net of     Sale of stock      Payable in full at        Yes
                  NY                2048 Victory Blvd.    $10,000 credit)                         or shortly
                                    Staten Island, NY                                             following closing

                                       20

September 2000    Brooklyn, NY      Rio Brokerage, Inc.   One times commissions  Sale of book         $15,000 at closing;     No
                                    4501 Fifth Avenue     received during 12     of business          balance monthly
                                    Brooklyn, NY          months following
                                                          closing from book of
                                                          business sold

October 2000      Manhattan, NY     CIS Brokerage, Inc.      $100,000            Sale of book         $80,000 at closing;    No
                   (2 stores)       790 11th Avenue                              of business          balance on
                                    New York, NY                                                      December  31, 2000

November 2000     Bronx, NY         Harvey Grossman          $115,000            Sale of stock        Payable in full at     Yes
                                    57 Eastview Drive                                                 or shortly
                                    Valhalla, NY                                                      following closing

December 2000     Yonkers, NY       Allan Bellinger          $112,500            Sale of stock        Payable in full at     Yes
                                    21 Hewitt Avenue                                                  or  shortly
                                    Bronxville, NY                                                    following closing

February 2001     Woodhaven, NY     Andrew Lerner            $100,000            Sale of stock        Payable in full at     Yes
                                    2194 Bellewood                                                    or shortly
                                    Drive Merrick, NY                                                 following closing

     o    In March  2001,  we and our  subsidiaries  agreed to sell eight  other
          stores to Kevin Lang (three),  Abraham Weinzimer (three) and an entity
          owned by Mr.  Certilman  (two).  The  locations  of the  stores are as
          follows:

                    o    Lang:                    Amityville, New York
                                                  Medford, New York
                                                  Seaford, New York

                    o    Weinzimer:               Hempstead, New York
                                                  Hicksville, New York
                                                  Jamaica, New York

                    o    Certilman:               East Meadow, New York
                                                  Flushing, New York

          At the time of the  agreements,  Messrs.  Lang and Weinzimer  were our
          President  and  Executive  Vice  President,   respectively,   and  Mr.
          Certilman was our Chairman of the Board.  Also, each was a director of
          DCAP Group (Mr.  Certilman  remains a director). The purchase  prices
          for the sales are as follows:

                    o    Lang: $257,000;
                    o    Weinzimer: $285,000; and
                    o    Certilman: $225,000.

          The terms of the sales are  described  in this proxy  statement  under
          "Certain   Relationships   and  Related   Transactions  -  March  2001
          Transactions." We did not

                                       21

          utilize a special  independent  committee of our Board of Directors to
          perform  an  analysis  of  the  fairness  of  the  transactions  or to
          negotiate the terms of the sales on our behalf.  We believe,  however,
          that the purchase  prices were fair based upon the valuation  analysis
          we performed as discussed  below under  "Valuation  Analysis"  and the
          concurrent  termination of employment  agreements with each of Messrs.
          Lang,   Weinzimer   and   Certilman   as  discussed   under   "Certain
          Relationships  and Related  Transactions"  and below under  "Valuation
          Analysis."

     Background of and Reasons for the Sales Transactions

     Prior to February 25,  1999,  our sole  business  was the  operation of the
International Airport Hotel in San Juan, Puerto Rico.

     On February  25,  1999,  we  acquired  DCAP  Insurance.  At the time of the
acquisition,  there  were  56  DCAP  stores.  Of  these,  one-half  were  either
wholly-owned  by DCAP  Insurance or were owned  partially by DCAP  Insurance and
partially  by  the  operator  of the  location,  and  the  other  one-half  were
franchises.  We provide the administrative  services and functions of a "central
office" to our  wholly-owned and  partially-owned  offices.  Franchises  operate
without the assistance of our "central office" functions.

     During the fiscal year ended  December 31, 1999,  our insurance  operations
generated a net loss of  $173,160.  During the six months  ended June 30,  2000,
these  operations  continued  to  generate a net loss.  The losses  were  caused
primarily by the substantial  administrative  expenses incurred in operating the
insurance brokerage business.

     As a result, in August 2000, our Board of Directors  determined to commence
selling our interest in our wholly-owned and partially-owned stores and focus on
our franchise operations. This determination was made with a view toward raising
needed cash and  eliminating  the  overhead  expenses  that are not  incurred in
connection with franchise operations.

     As a result of the store  sales  already  made (as  discussed  above  under
"Sales  Transactions") and in the event ownership of the eight stores subject to
the  sale  agreements  discussed  above is  transferred,  we  would  have  three
remaining wholly-owned or partially-owned stores. We intend to sell our interest
in those three stores.

     We currently have 55 franchise  locations.  There are also three  locations
subject  to  franchise  agreements  that have not yet opened  for  business.  In
addition,  the eight  stores  subject  to the  agreements  of sale are to become
franchisees  at the time  ownership  is  transferred  to the buyers.  Therefore,
inclusive of the three stores  wholly-owned or  partially-owned by us, there are
69 DCAP store locations.

     Following  the sale of the eight  stores to  Messrs.  Lang,  Weinzimer  and
Certilman,  our business  will  consist  primarily  of our  insurance  franchise
operations  and our related  operations in the areas of income tax  preparation,
premium  financing,  and  automobile  club  services.  We also still operate the
International  Airport  Hotel in San Juan,  Puerto Rico.  These  operations  are
discussed  in Item 1 of our Form 10-KSB for the year ended  December  31,  2000.
This proxy

                                       22

statement is  accompanied  by a copy of our 2000 Form 10-KSB.  The effect of the
sales of the stores on our operations is discussed in this proxy statement under
this Proposal 2 in "Pro Forma Financial Statements."

     Valuation Analysis

     In  connection  with the  contemplated  sale of the eight stores to Messrs.
Lang, Weinzimer and Certilman,  an analysis was prepared that compared the terms
of the sales to the terms of other recent sales of our stores to nonaffiliates.

     Terms of Comparable Sales

     We  reviewed  the terms of sale  with  respect  to five  stores we had sold
between September and November 2000 (Staten Island, Brooklyn,  Manhattan (2) and
Bronx,  New York). We also reviewed the terms of sale with respect to two of our
stores we contemplated selling at the time (Yonkers and Brentwood, New York - we
did in fact  sell our  Yonkers  store in  December  2000).  Based on each of the
store's historical level of commission  income,  there was derived a sales price
multiple of trailing twelve month commission  income for the twelve months ended
(i) December 31, 1999; (ii) September 30, 2000; and (iii) December 31, 2000. The
sales  price  multiple  was  determined  by  dividing  the  sales  price  by the
historical  commission  income for the  relevant  period.  We believe  that,  in
determining the sales price multiples for the various stores, we did not need to
consider the location of the particular  store since the fair market value of an
insurance brokerage is generally based upon the store's historical  commissions.
Fixed assets of a particular store are generally nominal.

     The mean  multiples  for the  closed  sales of our  five  stores,  the then
pending  sales of the two other  stores and the entire group of the seven stores
were  calculated  with respect to each of the time frames set forth in (i), (ii)
and (iii) above, and applied to the eight stores that are proposed to be sold to
Messrs.  Lang,  Weinzimer and Certilman.  This yielded  implied sales prices for
each of the eight stores in the proposed transactions, and in the aggregate.

     The mean sales price  multiple  for the closed sales of the five stores was
as follows:

     o    .63 for the twelve months ended December 31, 1999; and
     o    .73 for the twelve months ended September 30, 2000.

     The mean sales price  multiple for the then pending sales of the two stores
was as follows:

     o    .54 for the twelve months ended December 31, 1999;
     o    .55 for the twelve months ended September 30, 2000; and
     o    .57 for the twelve months ended December 31, 2000.

     The mean sales price  multiple for all of the  transactions  involving  the
sales of the seven stores in total was as follows:

                                       23

     o    .60 for the twelve months ended December 31, 1999;
     o    .67 for the twelve months ended September 30, 2000; and
     o    .57 for the twelve months ended December 31, 2000.

     Application of Multiples to Proposed Transactions

     We then applied the mean sales  multiples  for the five closed and two then
pending  store  sales  (seven in total) to the  contemplated  sales of the eight
stores and found the following:

     Lang Stores

Aggregate Historical Commission Income

                               Twelve Months Ended
--------------------------------------------------------------------------------
December 31, 1999          September 30, 2000               December 31, 2000
-----------------          ------------------               -----------------

   $555,625                    $560,974                         $537,621

Implied Aggregate Sale Price for the Stores Using Mean Multiple of Commission Income

                               Twelve Months Ended
-------------------------------------------------------------------------------------------------
     December 31, 1999                 September 30, 2000                  December 31, 2000
---------------------------       ----------------------------       ----------------------------
                                                                 
Closed      Pending     All       Closed     Pending     All        Closed   Pending    All
------      -------     ---       ------     -------     ---        ------   -------    ---
 .63x         .54x       .60x      .73x       .55x        .67x        n/a     .57x       .57x
----         ----       ----      ----       ----        ----        ---      ----      ----

$350,044   $300,038   $333,375    $409,511   $308,536   $375,853      -      $306,444  $306,444

                                   *** *** ***

     Weinzimer Stores

Aggregate Historical Commission Income

                              Twelve Months Ended
-------------------------------------------------------------------------------
December 31, 1999          September 30, 2000                December 31, 2000
-----------------          ------------------                -----------------

  $605,811                     $608,373                          $618,006

Implied Aggregate Sale Price for the Stores Using Mean Multiple of Commission Income

                               Twelve Months Ended
--------------------------------------------------------------------------------------------------------
      December 31, 1999                  September 30, 2000                       December 31, 2000
----------------------------        ----------------------------            ----------------------------
                                                                           
Closed      Pending     All         Closed     Pending       All             Closed    Pending     All
------      -------     ---         ------     -------       ---             ------    -------     ---
 .63x        .54x        .60x        .73x       .55x          .67x             n/a      .57x        .57x
----        ----        ----        ----       ----          ----             ---      ----        ----

$381,661    $327,138   $363,487     $444,112   $334,605      $407,610         -        $352,263    $352,263

                                   *** *** ***

                                       24

     Certilman Stores

Aggregate Historical Commission Income

                               Twelve Months Ended
--------------------------------------------------------------------------------
December 31, 1999          September 30, 2000                 December 31, 2000
-----------------          ------------------                 -----------------

   $381,681                    $390,629                            $379,303

Implied Aggregate Sale Price for the Stores Using Mean Multiple of Commission Income

                               Twelve Months Ended
----------------------------------------------------------------------------------------------------------
     December 31, 1999                     September 30, 2000                       December 31, 2000
---------------------------           ----------------------------            ----------------------------
                                                                              
Closed      Pending     All           Closed     Pending       All             Closed   Pending       All
------      -------     ---           ------     -------       ----            ------   -------       ---
 .63x        .54x        .60x           .73x       .55x         .67x             n/a     .57x          .57x
----        ----        ----           ----       ----         ----             ---     ----          ----

$240,459    $206,108    $229,009      $285,159    $214,846     $261,721         -       $216,203      $216,203

                                   *** *** ***

     It should be noted that,  as discussed  under  "Certain  Relationships  and
Related Transactions - March 2001 Transactions," concurrently with the execution
of the agreements to sell the stores to Messrs.  Lang,  Weinzimer and Certilman,
each of them agreed to the termination of his employment agreement with DCAP. In
connection  with  the  termination  of  Mr.  Certilman's  employment  agreement,
indebtedness  of  approximately  $141,000 owed by him to us was canceled.  Since
neither Mr. Lang nor Mr.  Weinzimer  received  any sums or debt  forgiveness  in
connection  with the  termination  of his  employment  agreement,  certain price
concessions  (approximately  $85,000  for  each)  were  given to each of them in
connection  with the sale of the stores.  As a result of the  termination of the
employment  agreements  with Messrs.  Lang,  Weinzimer  and  Certilman,  we were
relieved of an obligation  to pay minimum  aggregate  salaries of  approximately
$1,760,000  through February 2004  (approximately  $667,000 for Mr. Lang (net of
the $62,500  payable to him pursuant to his new  employment  agreement  with our
subsidiary,  DCAP Management);  $729,000 for Mr. Weinzimer; and $365,000 for Mr.
Certilman) in addition to other  amounts that may have been payable  pursuant to
the employment agreements.

     Stockholder Approval

     We  are  submitting   the   transactions   discussed   above  under  "Sales
Transactions"  (i.e.,  the May 2000 sale,  the  September  2000 - February  2001
sales,  and the March 2001 agreements to sell) to our  stockholders for approval
based upon our belief that the assets sold and agreed to be sold may constitute,
under Delaware law,  substantially  all of our assets.  Stockholder  approval is
being  sought  for the  transactions  in their  totality  and not  individually;
however,  as  discussed  below,  the  obtaining  of, or the  failure  to obtain,
stockholder  approval will affect the sales  transactions in different ways.

                                       25

     The assets sold by us during 2000 and 2001 constituted  approximately 9% of
our total  assets as of  December  31,  1999.  The DCAP  stores  subject  to the
completed sales generated approximately 28% and 24% of our total revenues during
the fiscal year ended  December  31, 1999 and the three  months  ended March 31,
2000, respectively.

     The  assets  agreed to be sold to Messrs.  Lang,  Weinzimer  and  Certilman
constituted  approximately  12% of our total assets as of December 31, 2000. The
stores subject to these sales generated  approximately 30% of our total revenues
for the year ended December 31, 2000.

     The sales to Messrs.  Lang,  Weinzimer and Certilman  pursuant to the March
2001  agreements are not yet final and are subject to the receipt of approval by
our stockholders of the sales (either  individually,  as a group or as part of a
sale of our  assets  that  may  constitute  a sale of  substantially  all of our
assets).

     At the time of execution of the March 2001 agreements with Messrs. Lang and
Weinzimer, each of them paid to us the entire purchase price for his stores. Mr.
Certilman  paid  $197,000 of his purchase  price at the time of execution of his
agreement.  In the event  stockholder  approval is not  received by December 31,
2001, each of Messrs.  Lang,  Weinzimer and Certilman may demand a return of his
respective  payment.  As security  for the return of the amounts  paid to us, we
granted to each of Messrs.  Lang, Weinzimer and Certilman a security interest in
the assets  they agreed to  acquire.  In the event of a demand by Messrs.  Lang,
Weinzimer and/or Certilman,  we have the option to require that,  instead of our
having to repay the sums,  they foreclose upon their  respective  liens.  In the
event of foreclosure,  Messrs.  Lang, Weinzimer and Certilman will have obtained
their respective stores without stockholder approval of the transaction.

     In contrast with the March 2001  agreements,  the sales that were completed
between May 2000 and February  2001 are final and binding and are not subject to
stockholder  approval or  ratification.  No party to any of the sales agreements
was  given any right to undo any of the  transactions  in the event  stockholder
approval or ratification was not obtained.  Therefore, in the event stockholders
do not approve  Proposal  2, there will be no effect upon the  validity of these
completed sales.  Stockholder  approval of Proposal 2 would,  however,  serve to
signify that the stockholders have ratified these sales.

     Regulatory Requirements

     No  federal  or state  regulatory  requirements  must be  complied  with or
approval must be obtained (other than  stockholder  approval) in connection with
the sales of the stores.

     Pro Forma Financial Statements

     The  following  unaudited  pro  forma  condensed   consolidated   financial
statements give effect to the sale of our interest in eleven DCAP stores in 2000
and 2001 and our  contemplated  sale of the eight DCAP  stores to Messrs.  Lang,
Weinzimer  and  Certilman,   as  described  below.  These  pro  forma  financial
statements  are presented for  illustrative  purposes only and therefore are not
necessarily  indicative of the  operating  results that might have been achieved
had the sales

                                       26

occurred as of an earlier date. They are also not necessarily  indicative of the
operating results which may occur in the future.

     A pro forma condensed consolidated balance sheet is provided as of June 30,
2001,  giving effect to the consummation of our contemplated  sales of the eight
DCAP stores to Messrs. Lang, Weinzimer and Certilman as though they had occurred
on that date. No pro forma  adjustment  is made for the  completed  sales of the
eleven  stores  since all were  consummated  prior to June 30,  2001.  Pro forma
condensed  consolidated  statements of operations are provided for the six month
period ended June 30, 2001 and the year ended  December 31, 2000,  giving effect
to the  consummation  of all of the  sales of the  stores  (both  completed  and
pending) as though they had occurred on January 1, 2000.

     The pro forma  financial  statements are based on preliminary  estimates of
values and transaction costs and preliminary appraisals. The actual recording of
the  transactions  will be based on final  appraisals,  values  and  transaction
costs. Accordingly,  the actual recording of the transactions can be expected to
differ from these pro forma financial statements.

     The pro  forma  financial  data  does not give  effect  to any of the other
transactions entered into concurrently with the agreements to sell the stores to
Messrs.  Lang,  Weinzimer and Certilman.  These other transactions are discussed
under "Certain Relationships and Related Transactions - March 2001 Transactions"
and include the  termination or amendment of employment  agreements with Messrs.
Lang,  Weinzimer  and  Certilman  pursuant  to  which  we  were  relieved  of an
obligation to pay minimum aggregate salaries of approximately $1,760,000 through
February 2004 in addition to other  amounts that may have been payable  pursuant
to the employment agreements.

     The historical  consolidated statement of operations presented for the year
ended  December 31, 2000 is derived from our  separate  historical  consolidated
financial  statements  and should be read in  conjunction  with these  financial
statements  which are  incorporated  by reference in this proxy  statement.  The
historical  condensed  consolidated  balance  sheet  as of  June  30,  2001  and
condensed consolidated statement of operations for the six months ended June 30,
2001 are derived from our historical interim  consolidated  financial statements
incorporated  by reference in this proxy  statement.  The  historical  six month
financial  statements have been prepared in accordance  with generally  accepted
accounting principles applicable to interim financial  information,  and, in the
opinion  of  our  management,  include  all  adjustments  necessary  for a  fair
presentation of the financial information for such interim period.

                                       27

                                DCAP GROUP, INC.

                 PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

                                  JUNE 30, 2001

                       ASSETS                                           Pro Forma Adjustments
                       ------                                           ---------------------
                                                   Historical      Lang          Weinzimer    Certilman     Pro Forma
                                                   ----------      ----          ---------    ---------     ---------
Current assets:
                                                                                            
   Cash and cash equivalents                   $    593,250     $         -    $       -     $      -    $   593,250
   Accounts receivable, net                         267,796               -            -            -        267,796
   Notes and other receivables                      131,997               -            -            -        131,997
   Prepaid expenses and other current assets         57,607               -            -            -         57,607
                                                  ----------        -------      -------      -------     ----------

    Total current assets                          1,050,650               -            -            -      1,050,650

PROPERTY AND EQUIPMENT, net                         783,212          (5,000)(2)  (23,000)(2)        -        755,212
GOODWILL                                            751,682        (256,667)(1) (285,000)(1)  (197,448)(1)    12,567
OTHER INTANGIBLES                                   268,036               -            -            -        268,036
OTHER                                                99,268               -            -            -         99,268
                                                 ----------       ----------    ---------     --------    -----------
                                                $ 2,952,848      $ (261,667)   $(308,000)    $(197,448)  $ 2,185,733
                                                 ==========       ==========    =========    =========   ===========

      Liabilities and Stockholders' Equity
      ------------------------------------

Current liabilities:
   Accounts payable and other accrued expenses  $ 1,543,206       $       -     $      -     $      -    $ 1,543,206
   Current portion of long-term debt                  5,420               -            -            -          5,420
   Current portion of capital lease obligations      96,474               -      (15,000)(2)        -         81,474
   Deferred revenue                                 188,523               -            -            -        188,523
   Deposits on sale of stores                       739,115        (256,667)(1) (285,000)(1)  (197,448)(1)       -
   Debentures payable                               154,200               -            -            -        154,200
                                                 ----------        ----------   ---------     ---------   ----------
    Total current liabilities                     2,726,938        (256,667)    (300,000)     (197,448)    1,972,823
                                                 ----------        ----------   ---------     ---------   ----------
LONG-TERM DEBT                                      193,790               -            -            -        193,790
CAPITAL LEASE OBLIGATIONS                           162,907               -      (15,000)(2)        -        147,907
DEFERRED REVENUE                                     40,000               -            -            -         40,000
MINORITY INTEREST                                    24,948               -            -            -         24,948

Stockholders' equity:
   Common stock, $.01 par value, authorized
    25,000,000, issued, 15,068,018 shares           150,680               -            -            -        150,680
   Capital in excess of par                       9,752,409               -            -            -      9,752,409
   Deficit                                       (9,170,170)         (5,000)(2)    7,000 (2)        -     (9,168,170)
                                                 -----------         -------(3) -------- (3)     -------  ----------
                                                    732,919          (5,000)       7,000            -        734,919
   Treasury stock                                  (928,654)             -            -             -       (928,654)
                                                   ---------         -------    --------      -------     ----------
                                                   (195,735)         (5,000)       7,000            -       (193,735)
                                                   ---------         -------    --------      -------     ----------

                                                $ 2,952,848      $ (261,667)   $(308,000)  $  (197,448) $  2,185,733
                                                ===========       ==========    ========    ==========   ===========

           See accompanying notes to pro forma condensed consolidated financial statements

                                       28

                        DCAP GROUP, INC. AND SUBSIDIARIES
                     NOTES TO UNAUDITED PRO FORMA CONDENSED
                           CONSOLIDATED BALANCE SHEET

                                  JUNE 30, 2001

1.   To record cash received and related goodwill written off in connection with
     the sale of eight DCAP stores.

2.   To write off fixed assets and related capital lease obligations transferred
     to buyers in connection with the sale of eight DCAP stores.

3.   The adjustment reflected herein is not included in the pro forma statements
     of operations because it will not have a continuing impact.

                                       29

                                DCAP GROUP, INC.
            PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                         SIX MONTHS ENDED JUNE 30, 2001

                              Sale of Stores
                              Not Subject to                               Sale of Stores
               Historical  Shareholder Approval   Subtotal    to K. Lang  to A. Weinzimer  to M. Certilman   Adjustments  Pro Forma
               ----------  --------------------   --------    ----------  ---------------  ---------------   -----------  ---------
REVENUES:
                                                                                                  
 Commissions
 and fees     $ 1,383,763    $   (22,572)(1)      $1,361,191  $(159,376)(1) $(187,175)(1)  $ (103,003)(1)    $    -       $ 911,637

 Rooms            498,608              -             498,608          -             -               -             -         498,608
 Other
 operating
 departments       17,497              -              17,497          -             -               -             -          17,497
              -----------      -----------        ----------  -----------  -----------     -----------       ---------    ---------

  Total
  revenues      1,899,868        (22,572)          1,877,296   (159,376)     (187,175)       (103,003)            -       1,427,742

OPERATING EXPENSES:

 General and
 administrative
 expenses       2,495,583         (6,447)(2)       2,489,136   (205,900)(2)  (217,649)(2)    (111,984)(2)         -       1,953,603
 Departmental     139,631              -             139,631          -             -               -             -         139,631
 Depreciation
 and
 amortization     171,906         (1,700)(3)         170,206     (3,500)(3)    (7,200)(3)      (1,900)(3)     (50,461)(3)   107,145
                ----------     ----------         ----------  ----------    ----------     -----------      ----------    ---------
   Total
 operating
 expenses       2,807,120         (8,147)          2,798,973   (209,400)     (224,849)       (113,884)        (50,461)    2,200,379

OPERATING
(LOSS)INCOME     (907,252)       (14,425)           (921,677)    50,024        37,674          10,881          50,461      (772,637)

OTHER(EXPENSE)
INCOME:

 Interest income    9,402              -               9,402          -             -               -               -         9,402
 Interest expense (30,642)             -             (30,642)         -         3,000(4)            -               -       (27,642)
 Gain on sale
 of DCAP stores    56,043        (56,043)(5)               -          -             -               -               -            -
                ----------     ----------          ----------  ----------     ---------     ----------      -----------    ---------
                   34,803        (56,043)            (21,240)         -         3,000               -               -      (18,240)

LOSS BEFORE
INCOME TAXES
AND MINORITY
INTEREST         (872,449)       (70,468)           (942,917)    50,024        40,674          10,881           50,461     (790,877)

INCOME TAXES       20,304              -              20,304          -             -               -               -        20,304
                 ---------     ----------           ---------  ---------     --------        --------        ---------    ---------
LOSS BEFORE
MINORITY
INTEREST         (892,753)       (70,468)           (963,221)    50,024        40,674          10,881           50,461     (811,181)

MINORITY
INTEREST            5,148              -               5,148          -             -               -               -         5,148
                 ---------     ----------           --------   ---------     --------        --------        ---------    ---------

NET LOSS        $(887,605)     $ (70,468)         $ (958,073)  $ 50,024      $ 40,674        $ 10,881        $  50,461   $ (806,033)
                ==========     ==========         ===========  ==========    ========        ========        =========    =========

NET LOSS PER
COMMON SHARE

 Basic          $   (0.06)                                                                                               $ (0.05)
                ==========                                                                                                =======

 Diluted        $   (0.06)                                                                                               $ (0.05)
                ==========                                                                                                =======

WEIGHTED AVERAGE
 NUMBER OF SHARES
 OUTSTANDING

 Basic         15,068,018                                                                                                15,068,018
               ==========                                                                                                ===========

 Diluted       15,068,018                                                                                                15,068,018
               ==========                                                                                                ===========

                                       30

                        DCAP GROUP, INC. AND SUBSIDIARIES

                     NOTES TO UNAUDITED PRO FORMA CONDENSED
                      CONSOLIDATED STATEMENT OF OPERATIONS

                         SIX MONTHS ENDED JUNE 30, 2001

1.   To eliminate  commissions and fees earned by wholly-owned offices that were
     sold and agreed to be sold.

2.   To eliminate the general and administrative costs generated by wholly-owned
     offices that were sold and agreed to be sold.

3.   To eliminate the  amortization of goodwill and depreciation on property and
     equipment related to the wholly-owned  offices that were sold and agreed to
     be sold.

4.   To  eliminate  the  interest  expense  on  capital  leases  assumed  by the
     purchasers of the wholly-owned offices.

5.   The gain on the sale of the DCAP  stores is not  included  in the pro forma
     statement of operations because it will not have a continuing impact.

                                       31

                                DCAP GROUP, INC.
            PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                          YEAR ENDED DECEMBER 31, 2000

                                    Sale of Stores
                                    Not Subject to
                                    Shareholder                  Sale of Stores  Sale of Stores   Sale of Stores  Adjust-    Pro
                      Historical      Approval        Subtotal    to K. Lang    to A. Weinzimer   to M.Certilman  ments     Forma
                     ----------    --------------     --------  -------------   ---------------   --------------  -------  -------
                                                                                                      
 REVENUES:
  Commissions
   and fees           $ 6,716,356   $ (1,124,802)(1)  $ 5,591,554   $(829,119)  $ (957,434)(1)   $(529,239)(1)  $    -   $ 3,275,762
  Rooms                   970,195              -          970,195          -               -           -             -       970,195
  Other operating
   departments            128,873              -          128,873          -               -           -             -       128,873
                       ----------     -----------       ---------    ---------    ----------       --------       -----    ---------
  Total revenues        7,815,424     (1,124,802)       6,690,622    (829,119)     (957,434)       (529,239)          -    4,374,830

 OPERATING EXPENSES:

  General and
   administrative
   expenses             7,858,726      (534,479)(2)     7,324,247   (661,570)(2)   (804,846)(2)  (413,499)(2)        -    5,444,332
   Impairment of
    intangible asets      201,000              -          201,000          -                -            -           -      201,000
   Impairment of notes
    receivabe              81,000              -           81,000          -                -            -           -       81,000
   Departmental           382,683              -          382,683          -                -            -           -      382,683
   Depreciation and
    amortization          788,259        (11,000)(4)      777,259    (14,000)(4)    (28,800)(4)    (7,600)(4) (343,285)(4)  383,574
                        ---------      ----------       ---------    --------      ---------      --------    --------     --------

    Total operating
     expenses           9,311,668       (545,479)       8,766,189   (675,570)      (833,646)     (421,099)    (343,285)   6,492,589

OPERATING LOSS         (1,496,244)      (579,323)      (2,075,567)  (153,549)      (123,788)     (108,140)     343,285   (2,117,759)

OTHER (EXPENSE) INCOME:

  Interest income          78,660              -           78,660          -           -           -                 -       78,660
  Interest expense       (144,173)             -         (144,173)         -           -           -            37,543(5)  (106,630)
  Loss on sale of DCAP
    stores             (2,136,681)             -       (2,136,681)         -  (6)      -  (6)      -   (6)   2,136,681(3)       -
                       -----------      -----------    -----------  ----------     ----------    ---------   ------------   -------

                       (2,202,194)             -       (2,202,194)         -           -           -         2,174,224      (27,970)

 LOSS BEFORE INCOME
  TAXES AND MINORITY
  INTEREST             (3,698,438)      (579,323)      (4,277,761)  (153,549)      (123,788)     (108,140)   2,517,509   (2,145,729)

 INCOME TAXES              25,000              -           25,000          -           -           -                 -       25,000
                       -----------      ----------     -----------  ---------      ---------      ---------  ----------   ----------

 LOSS BEFORE
  MINORITY INTEREST    (3,723,438)      (579,323)      (4,302,761)  (153,549)      (123,788)     (108,140)   2,517,509   (2,170,729)

 MINORITY INTEREST          5,141              -            5,141          -           -           -                 -        5,141
                      ------------      ----------     ----------   ---------     ----------    ----------   ----------  ----------
 NET LOSS            $ (3,718,297)    $ (579,323)    $ (4,297,620) $(153,549)    $ (123,788)   $ (108,140)  $2,517,509  ($2,165,588)
                      ============      ==========     ===========  =========     ==========    ==========   =========   ==========

 NET LOSS PER COMMON SHARE

      Basic          $      (0.25)                                                                                      $     (0.15)
                     ============                                                                                       ===========

      Diluted        $      (0.25)                                                                                      $     (0.15)
                     ============                                                                                       ===========

 WEIGHTED AVERAGE NUMBER OF
 SHARES OUTSTANDING

      Basic            14,751,832                                                                                         14,751,832
                       ==========                                                                                         ==========

      Diluted          14,751,832                                                                                         14,751,832
                       ==========                                                                                         ==========

                                       32

                        DCAP GROUP, INC. AND SUBSIDIARIES

                     NOTES TO UNAUDITED PRO FORMA CONDENSED
                      CONSOLIDATED STATEMENT OF OPERATIONS

                          YEAR ENDED DECEMBER 31, 2000

1.   To eliminate  commissions and fees earned by wholly-owned and joint venture
     offices that were sold and agreed to be sold.

2.   To eliminate the general and administrative costs generated by wholly-owned
     and joint venture offices that were sold and agreed to be sold.

3.   The loss on the sale of the DCAP  stores is not  included  in the pro forma
     statement of operations because it will not have a continuing impact.

4.   To eliminate the  amortization of goodwill and depreciation of property and
     equipment  related to the  wholly-owned and joint venture offices that were
     sold and agreed to be sold.

5.   To  eliminate  the  interest  expense  on  capital  leases  assumed  by the
     purchasers of the wholly-owned and joint venture offices.

6.   No  adjustment  has been made to reflect  the gain on the sale of the eight
     DCAP  stores as it will not have a  continuing  impact.  Such gain has been
     reflected in the pro forma  balance sheet at June 30, 2001 as an adjustment
     to retained earnings.

                                       33

     Recommendation and Required Vote

     The affirmative vote of the holders of a majority of our outstanding common
shares is  required  for  approval  of this  proposal.  Our  Board of  Directors
recommends a vote FOR approval of the sale of assets.

                 PROPOSAL 3: AMENDMENT TO 1998 STOCK OPTION PLAN
                     TO INCREASE NUMBER OF AUTHORIZED SHARES

     The Board of Directors recommends that stockholders approve an amendment to
our 1998 Stock Option Plan to increase the number of common shares authorized to
be issued from  2,000,000 to  3,000,000.  As of September  30, 2001,  there were
1,750,000 common shares issuable pursuant to the exercise of outstanding options
granted  under the plan.  The plan  plays an  important  role in our  efforts to
attract and retain  employees of outstanding  ability and to align the interests
of employees with those of the stockholders  through  increased stock ownership.
In order to continue to provide  appropriate  equity  incentives to employees in
the future,  the Board has approved an increase in the number of reserved shares
subject to stockholder  approval.  As discussed below, the plan is also designed
to provide incentives to non-employee directors of, and consultants and advisors
to, us and our subsidiaries.

     The following  statements  include  summaries of certain  provisions of the
plan.  The  statements  do not purport to be complete and are qualified in their
entirety  by  reference  to the  provisions  of the  plan,  a copy of  which  is
available at our offices.

     Purpose

     The  purpose of the plan is to advance  the  interests  of DCAP by inducing
persons or entities of  outstanding  ability  and  potential  to join and remain
with, or provide  consulting or advisory services to, us and our subsidiaries by
encouraging and enabling eligible employees, non-employee directors, consultants
and advisors to acquire proprietary interests,  and by providing such employees,
non-employee directors, consultants and advisors with an additional incentive to
promote success of DCAP.

     Administration

     The plan  provides  for its  administration  by the Board or by a committee
consisting  of at  least  one  person  chosen  by the  Board.  The  Board or the
committee has  authority  (subject to certain  restrictions)  to select from the
group of eligible employees,  non-employee  directors,  consultants and advisors
the  individuals  or entities to whom options will be granted,  and to determine
the times at which and the exercise price for which options will be granted. The
Board  or  the   committee  is   authorized   to  interpret  the  plan  and  the
interpretation  and  construction by the Board or the committee of any provision
of the plan or of any option granted  thereunder  shall be final and conclusive.
The receipt of options by  directors or any members of the  committee  shall not
preclude  their vote on any matters in  connection  with the  administration  or
interpretation of the plan.

                                       34

     Nature of Options

     The Board or committee  may grant options under the plan which are intended
to either qualify as "incentive stock options" within the meaning of Section 422
of the Internal Revenue Code (we refer to this as the "Code") or not so qualify.
We refer to options that do not so qualify as "nonstatutory  stock options." The
Federal income tax consequences  relating to the grant and exercise of incentive
stock options and nonstatutory  stock options are described below under "Federal
Income Tax Consequences."

     Eligibility

     Subject  to  certain  limitations  as set  forth in the  plan,  options  to
purchase  shares may be granted  thereunder  to persons or entities  who, in the
case of incentive  stock options,  are employees or, in the case of nonstatutory
stock  options,   are  employees  or  non-employee   directors  of,  or  certain
consultants  or advisors  to, us or our  subsidiaries.  At  September  30, 2001,
approximately  11 employees and three  non-employee  directors  were eligible to
receive options under the plan.

     Option Price

     The option price of the shares subject to an incentive stock option may not
be less than the fair market  value (as such term is defined in the plan) of the
common shares on the date upon which such option is granted. In addition, in the
case of a recipient of an incentive  stock option who, at the time the option is
granted, owns more than 10% of the total combined voting power of all classes of
our stock or of a parent or of any of our subsidiaries,  the option price of the
shares  subject to such option must be at least 110% of the fair market value of
the common shares on the date upon which such option is granted.

     The option price of shares subject to a  nonstatutory  stock option will be
determined  by the Board of Directors or the  committee at the time of grant and
need not be equal to or greater than the fair market value of our common shares.

     On  _____________,  2001, the closing bid price for our common  shares,  as
reported by the Bulletin Board, was $_______ per share.

     Exercise of Options

     An option  granted under the plan shall be exercised by the delivery by the
holder to our  Secretary  at our  principal  office  of a written  notice of the
number of shares with respect to which the option is being exercised. The notice
must be accompanied,  or followed within ten days, by payment of the full option
price of such shares which must be made by the holder's  delivery of (i) a check
in such amount or (ii) previously  acquired common shares, the fair market value
of which shall be determined as of the date of exercise, or a combination of (i)
and (ii).

                                       35

     Duration of Options

     No incentive stock option granted under the plan shall be exercisable after
the expiration of ten years from the date of its grant. However, if an incentive
stock  option  is  granted  to a  10%  stockholder,  the  option  shall  not  be
exercisable after the expiration of five years from the date of its grant.

     Nonstatutory  stock options  granted under the plan may be of such duration
as shall be determined by the Board or the committee.

     Non-Transferability

     Options granted under the plan are not transferable  otherwise than by will
or the laws of descent and distribution and such options are exercisable, during
a holder's lifetime, only by the optionee.

     Death, Disability or Termination of Employment

     Subject  to the  terms of the  stock  option  agreement  pursuant  to which
options are  granted,  if the  employment  of an  employee or the  services of a
non-employee  director,  consultant or advisor shall be terminated for cause, or
such employment or services shall be terminated voluntarily, any options held by
such  persons or  entities  shall  expire  immediately.  If such  employment  or
services  shall   terminate  other  than  by  reason  of  death  or  disability,
voluntarily by the employee, non-employee director, consultant or advisor or for
cause,  then,  subject to the terms of the stock  option  agreement  pursuant to
which options are granted, such option may be exercised at any time within three
months  after such  termination,  but in no event  after the  expiration  of the
option.  For  purposes  of the plan,  the  retirement  of an  individual  either
pursuant  to a  pension  or  retirement  plan  adopted  by us or at  the  normal
retirement  date  prescribed  from  time to time by us shall be  deemed  to be a
termination  of such  individual's  employment  other  than  voluntarily  by the
employee or for cause.

     Subject  to the  terms of the  stock  option  agreement  pursuant  to which
options are granted,  if an option holder under the plan (i) dies while employed
by us or any of our subsidiaries or while serving as a non-employee director of,
or consultant or advisor to, us or any of our subsidiaries,  or (ii) dies within
three months after the  termination  of his  employment  or services  other than
voluntarily or for cause, then such option may be exercised by the estate of the
employee,  non-employee  director,  consultant  or  advisor,  or by a person who
acquired such option by bequest or inheritance  from the deceased option holder,
at any time  within one year after his death.  Subject to the terms of the stock
option  agreement  pursuant to which  options are  granted,  if the holder of an
option under the plan ceases  employment  or services  because of permanent  and
total  disability  (within  the  meaning of Section  22(e)(3) of the Code) while
employed by, or while  serving as a  non-employee  director of, or consultant or
advisor to, us or any of our subsidiaries,  then such option may be exercised at
any time within one year after his  termination  of  employment,  termination of
directorship,  or termination of consulting or advisory arrangement or agreement
due to the disability.

                                       36

     Amendment and Termination

     The plan (but not options previously granted thereunder) shall terminate on
November  2,  2008,  ten years  from the date that it was  adopted by the Board.
Subject to certain limitations, the plan may be amended or modified from time to
time or terminated at an earlier date by the Board or by the stockholders.

     Plan Benefits

     To date, we have granted options under the plan as follows:

                                                                  Common Shares              Average Weighted
                                                                   Underlying                Exercise Price
          Name and Position                                      Options Granted                 Per Share
         -----------------                                       ---------------                 ---------
                                                                                           
Barry Goldstein, President, Chairman of the                       1,000,000                        $.25
Board, Chief Executive Officer, Chief Financial
Officer and Treasurer
Morton L. Certilman, formerly Chairman of the                       225,000                       $2.69
  Board; currently Secretary
Jay M. Haft, formerly Vice Chairman of the                          225,000                       $2.69
  Board
Kevin Lang, formerly President; currently                           200,000                       $2.69
  President of DCAP Management
Abraham Weinzimer, formerly Executive Vice                          200,000(1)                    $2.69
  President
Richard Maikis, Consultant                                          100,000(1)                    $1.00
All current executive officers as a group                         1,200,000                        $.66
(2 persons)
All current directors who are not executive                         450,000                       $2.69
officers as a group (3 persons)
All employees, including all current officers                             -                           -
who are not executive officers, as a group
---------------

(1)      Expired.

                                       37

     Federal Income Tax Consequences

     Nonstatutory Stock Options

     Under the Code and the  Treasury  Department  Regulations,  a  nonstatutory
stock  option  does not  ordinarily  have a "readily  ascertainable  fair market
value"  when it is  granted.  This rule will apply to our grant of  nonstatutory
stock  options.  Consequently,  the grant of a  nonstatutory  stock option to an
optionee  will result in neither  income to him nor a deduction to us.  Instead,
the optionee  will  recognize  compensation  income at the time he exercises the
nonstatutory  stock option in an amount equal to the excess, if any, of the then
fair  market  value of the  shares  transferred  to him over the  option  price.
Subject to the applicable  provisions of the Code and the Regulations  regarding
withholding  of tax, a deduction will be allowable to us in the year of exercise
in the same amount as is includable in the optionee's income.

     For  purposes of  determining  the  optionee's  gain or loss on the sale or
other  disposition  of  the  shares  transferred  to  him  upon  exercise  of  a
nonstatutory  stock option,  the optionee's basis in such shares will be the sum
of his option price plus the amount of compensation  income recognized by him on
exercise.  Such gain or loss will be capital gain or loss and will be long- term
or short-term  depending upon whether the optionee held the shares for more than
one year or one year or less.  No part of any such  gain will be an "item of tax
preference" for purposes of the "alternative minimum tax."

     Incentive Stock Options

     Options  granted  under the plan which  qualify as incentive  stock options
under Section 422 of the Code will be treated as follows:

     Except to the extent that the alternative  minimum tax rule described below
applies, no tax consequences will result to the optionee or us from the grant of
an incentive  stock option to, or the exercise of an incentive  stock option by,
the optionee. Instead, the optionee will recognize gain or loss when he sells or
disposes of the shares  transferred to him upon exercise of the incentive  stock
option.  For purposes of determining  such gain or loss, the optionee's basis in
such shares will be his option price. If the date of sale or disposition of such
shares is at least two years after the date of the grant of the incentive  stock
option,  and at least one year  after  the  transfer  of the  shares to him upon
exercise of the  incentive  stock option,  the optionee  will realize  long-term
capital gain treatment upon their sale or disposition.

     Generally,  we will not be allowed a deduction with respect to an incentive
stock option. However, if an optionee fails to meet the foregoing holding period
requirements (a so-called disqualifying disposition), any gain recognized by the
optionee  upon the sale or  disposition  of the shares  transferred  to him upon
exercise of an  incentive  stock option will be treated in the year of such sale
or  disposition as ordinary  income,  rather than capital gain, to the extent of
the  excess,  if any,  of the fair  market  value of the  shares  at the time of
exercise  (or,  if less,  in certain  cases the amount  realized on such sale or
disposition)  over  their  option  price,  and in that case we will be allowed a
corresponding deduction.

                                       38

     For purposes of the alternative  minimum tax, the amount,  if any, by which
the fair  market  value of the  shares  transferred  to the  optionee  upon such
exercise exceeds the option price will be included in determining the optionee's
alternative  minimum taxable income. In addition,  for purposes of such tax, the
basis of such shares will include such excess.

     To the extent that the aggregate fair market value  (determined at the time
the option is  granted)  of the stock  with  respect  to which  incentive  stock
options are  exercisable  for the first time by the optionee during any calendar
year exceeds $100,000, such options will not be incentive stock options. In this
regard, upon the exercise of an option which is deemed, under the rule described
in the preceding sentence, to be in part an incentive stock option and in part a
nonstatutory stock option,  under existing Internal Revenue Service  guidelines,
we may designate which shares issued upon exercise of such options are incentive
stock options and which shares are nonstatutory stock options. In the absence of
such  designation,  a pro rata  portion of each share issued is to be treated as
issued  pursuant to the exercise of an incentive stock option and the balance of
each share treated as issued  pursuant to the exercise of a  nonstatutory  stock
option.

     Recommendation and Required Vote

     The affirmative vote of the holders of a majority of our outstanding common
shares present at the meeting,  in person or by proxy,  is required for approval
of this  proposal.  Our Board of Directors  recommends a vote FOR this  proposed
amendment to the 1998 Stock Option Plan.

              PROPOSAL 4: AMENDMENT TO CERTIFICATE OF INCORPORATION
                 TO INCREASE NUMBER OF AUTHORIZED COMMON SHARES

     Our Board of Directors has adopted resolutions  approving and submitting to
a vote of the  stockholders an amendment to Article FOURTH of our Certificate of
Incorporation to increase the number of authorized common shares from 25,000,000
to 40,000,000.  Our Board believes that the increase in authorized  shares is in
our  best  interest  so  as to  make  additional  common  shares  available  for
acquisitions, financings, present and future employee benefit programs and other
corporate purposes.

     The additional common shares resulting from the stockholder approval of the
authorized  share  increase  may be  issued  from  time to time as our  Board of
Directors may determine without further action of our stockholders. Although our
Board  has  no  current  plans  to  utilize  such  shares  to  entrench  present
management,  it may, in the future,  be able to use the additional common shares
as a defensive tactic against hostile takeover  attempts.  The  authorization of
such  additional  common shares will have no current  anti-takeover  effect.  No
hostile  takeover  attempts  are,  to  our  management's  knowledge,   currently
threatened.  There are no  provisions in our  Certificate  of  Incorporation  or
By-Laws or other material  agreements to which we are a party that would, in our
management's judgment,  have an anti-takeover effect;  however,  pursuant to our
Certificate of Incorporation, if our stockholders wish to take action by written
consent  in lieu  of a  meeting,  then  the  unanimous  written  consent  of our
stockholders  is  required to take the action

                                       39

(rather  than a majority  as would  otherwise  be the case) if the action is not
supported by our Board of Directors.

     The  relative  rights and  limitations  of the common  shares  would remain
unchanged under the amendment.  Our stockholders do not currently  possess,  nor
upon the approval of the proposed  authorized  share increase will they acquire,
preemptive  rights,  that would entitle such persons,  as a matter of right,  to
subscribe for the purchase of any shares,  rights,  warrants or other securities
or obligations convertible into, or exchangeable for, our securities. Therefore,
the proposed  increase in authorized  shares could result in the dilution of the
ownership interest of existing stockholders.

     Recommendation and Required Vote

     The affirmative vote of the holders of a majority of our outstanding common
shares is  required  for  approval  of this  proposal.  The  Board of  Directors
recommends a vote FOR approval of the proposed  amendment to the  Certificate of
Incorporation.

              PROPOSAL 5: AMENDMENT TO CERTIFICATE OF INCORPORATION
               TO PROVIDE FOR AUTHORITY TO ISSUE PREFERRED SHARES

     Our Board of Directors has  recommended an amendment to our  Certificate of
Incorporation  to provide for the  authority to issue up to 1,000,000  preferred
shares,  $.01  par  value,  in one or more  classes  or  series,  and to fix the
relative rights and preferences of the shares, including voting powers, dividend
rights, liquidation preferences, redemption rights and conversion privileges.

     The preferred  shares,  if approved and  authorized,  would be utilized for
various corporate  purposes including as consideration in connection with future
corporate acquisitions and to raise additional capital. Our Board believes it is
desirable to have our authorized  capital  sufficiently  flexible so that future
business  needs and  corporate  opportunities  may be dealt with by our Board of
Directors   without   undue  delay  or  the   necessity  of  holding  a  special
stockholders' meeting.

     The additional  preferred shares resulting from the stockholder approval of
the  proposal  may be issued  from time to time as our  Board of  Directors  may
determine without further action of our stockholders.  Although our Board has no
current plans to utilize such shares to entrench present management,  it may, in
the future,  be able to use the shares as a  defensive  tactic  against  hostile
takeover  attempts.  The  authorization  of such  shares  will  have no  current
anti-takeover  effect.  No hostile  takeover  attempts are, to our  management's
knowledge,  currently threatened.  There are no provisions in our Certificate of
Incorporation  or By-Laws or other  material  agreements to which we are a party
that would, in our management's judgment, have an anti-takeover effect; however,
pursuant to our Certificate of  Incorporation,  if our stockholders wish to take
action by  written  consent  in lieu of a meeting,  then the  unanimous  written
consent  of our  stockholders  is  required  to take the action  (rather  than a
majority as would  otherwise be the case) if the action is not  supported by our
Board of Directors.

                                       40

     The proposed preferred shares could result in the dilution of the ownership
interest of existing stockholders.  In addition, because of its broad discretion
with  respect  to  the  creation  and  issuance  of  preferred   shares  without
stockholder  approval,  our Board of Directors could adversely affect the voting
power of the  holders of common  shares by  granting  supervoting  powers to the
holders of preferred  shares.  Also, our Board could issue preferred shares that
have a  preferential  right to the  holders  of common  shares  with  respect to
dividends  and upon  liquidation.  Further,  conversion  and  redemption  rights
granted to the holders of preferred shares could adversely affect the holders of
common shares.

     The  authority  to be  given  to our  Board of  Directors  pursuant  to the
proposed amendment is attached as Appendix A to this proxy statement.

     Recommendation and Required Vote

     The affirmative vote of the holders of a majority of our outstanding common
shares is required for approval of this  proposal.  The Board  recommends a vote
FOR adoption of this proposed amendment to the Certificate of Incorporation.

              PROPOSAL 6: AMENDMENT TO CERTIFICATE OF INCORPORATION
                          TO BROADEN CORPORATE PURPOSES

     Our Board of Directors has recommended an amendment to Article THIRD of our
Certificate of  Incorporation  to broaden the corporate  purposes to include any
lawful act or activity for which  corporations  may be organized  under Delaware
Law.

     The current purpose and powers clause of our Certificate of  Incorporation,
which has not been amended since the original  Certificate of Incorporation  was
filed in 1961, contains thirteen  subparagraphs.  Since 1961, custom,  usage and
the laws of the State of Delaware have changed. Under current Delaware law, this
specific  enumeration of business functions is no longer necessary,  and a brief
statement of business purposes suffices. The amendment would permit us to engage
in any kind of lawful corporate activity.

     Article  THIRD of our  Certificate  of  Incorporation,  as  proposed  to be
amended, is attached as Appendix B to this proxy statement.

     Recommendation and Required Vote

     The affirmative vote of the holders of a majority of our outstanding common
shares is required for approval of this  proposal.  The Board  recommends a vote
FOR adoption of this proposed amendment to the Certificate of Incorporation.

                         INDEPENDENT PUBLIC ACCOUNTANTS

     Holtz  Rubenstein & Co., LLP has served as our auditors  since 1990 and was
selected as our independent  public  accountants with respect to the fiscal year
ended December 31, 2000.

                                       41

     It is not expected that a  representative  of Holtz  Rubenstein will attend
the meeting.

     Audit Fees

     The aggregate  fees billed by Holtz  Rubenstein for  professional  services
rendered for the audit of our annual  financial  statements  for the 2000 fiscal
year and the review of the financial statements included in our Forms 10-QSB for
that fiscal year were approximately $71,000.

     Financial Information Systems Design and Implementation Fees

     During  fiscal  2000,  Holtz  Rubenstein  did not  render  to us any of the
professional  services with regard to financial  information  systems design and
implementation described in paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X.

     All Other Fees

     The aggregate  fees billed for services  rendered by Holtz  Rubenstein  for
fiscal 2000,  other than the services  described above under "Audit Fees",  were
approximately $2,000.

     The Audit  Committee  has  determined  that the  provision  of the services
covered in "All Other Fees" is compatible with  maintaining  Holtz  Rubenstein's
independence.

                              STOCKHOLDER PROPOSALS

     Stockholder  proposals  intended to be presented at our next annual meeting
of  stockholders  pursuant to the provisions of Rule 14a-8 of the Securities and
Exchange Commission, promulgated under the Exchange Act, must be received at our
offices in East Meadow,  New York by _________,  2002 for inclusion in our proxy
statement and form of proxy relating to such meeting.

     The  following  requirements  with  respect to  stockholder  proposals  and
stockholder nominees to our Board of Directors are included in our By-Laws.

     1. Stockholder Proposals.  In order for a stockholder to make a proposal at
an annual  meeting of  stockholders,  under our By-Laws,  timely  notice must be
received by us in advance of the meeting.  To be timely,  the  proposal  must be
received by our Secretary at our principal executive offices (as provided below)
on a date which is not less than 60 days nor more than 90 days prior to the date
which is one year from the date of the  mailing of the proxy  statement  for the
prior year's annual meeting of stockholders. If during the prior year we did not
hold an annual  meeting,  or if the date of the meeting for which a  stockholder
intends to submit a proposal  has changed more than 30 days from the date of the
meeting in the prior year,  then the notice must be received a  reasonable  time
before we mail the proxy statement for the current year. A stockholder's  notice
must set forth as to each matter the  stockholder  proposes to bring  before the
annual  meeting  certain  information  regarding  the  proposal,  including  the
following:

                                       42

     o    a brief  description of the business  desired to be brought before the
          meeting and the reasons for conducting such business at such meeting;

     o    the name and address of the stockholder proposing such business;

     o    the class and number of our shares of which are beneficially  owned by
          such stockholder; and

     o    any material interest of such stockholder in such business.

     2. Stockholder Nominees. In order for a stockholder to nominate a candidate
for  director,  under  our  By-Laws,  timely  notice of the  nomination  must be
received  by us in advance of the  meeting.  To be  timely,  the notice  must be
received at our principal executive offices (as provided below) not less than 60
days nor more than 90 days prior to the meeting;  however, if less than 70 days'
notice of the date of the meeting is given to stockholders and public disclosure
of the meeting date,  pursuant to a press release,  is either not made at all or
is made less than 70 days prior to the meeting date,  notice by a stockholder to
be timely  made must be so  received  no later than the close of business on the
tenth day following the earlier of the following:

     o    the day on which the notice of the date of the  meeting  was mailed to
          stockholders, or

     o    the day on which such public disclosure of the meeting date was made.

     The  stockholder  sending the notice of nomination  must  describe  various
matters, including such information as:

     o    the  name,  age,  business  and  residence  addresses,  occupation  or
          employment and shares held by the nominee;

     o    any  other  information  relating  to  such  nominee  required  to  be
          disclosed in a proxy statement; and

     o    the name, address and number of shares held by the stockholder.

     These  requirements are separate from and in addition to the requirements a
stockholder must meet to have a proposal included in our proxy statement.

     Any notice given pursuant to the foregoing requirements must be sent to our
Secretary at 2545 Hempstead Turnpike, East Meadow, New York 11554. The foregoing
is only a summary of the  provisions  of our By-Laws that relate to  stockholder
proposals and stockholder  nominations for director.  Any stockholder desiring a
copy of our  By-Laws  will be  furnished  one without  charge upon  receipt of a
written request therefor.

                                       43

                                 OTHER BUSINESS

     While the  accompanying  Notice of Annual Meeting of Stockholders  provides
for the  transaction  of such other  business  as may  properly  come before the
meeting,  we have no  knowledge  of any matters to be  presented  at the meeting
other than those  listed as  Proposals 1 through 6 in the notice.  However,  the
enclosed proxy gives discretionary authority in the event that any other matters
should be presented.

                INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

     This proxy  statement is  accompanied by a copy of our 2000 Form 10-KSB and
our Form 10-QSB for the period ended June 30, 2001.

     The following  information from our 2000 Form 10-KSB (File No. 0-1665),  as
filed  with the SEC  pursuant  to Section 13 or 15(d) of the  Exchange  Act,  is
hereby incorporated by reference into this proxy statement:

     o    "Description of Business," included in Item 1 thereof;

     o    "Description of Property," included in Item 2 thereof;

     o    "Legal Proceedings," included in Item 3 thereof;

     o    "Management's  Discussion and Analysis or Plan of Operation," included
          in Item 6 thereof;

     o    our consolidated  financial statements as of December 31, 2000 and for
          the  years  ended  December  31,  1999 and  2000,  included  in Item 7
          thereof; and

     o    "Changes in and Disagreements  with  Accountants,"  included in Item 8
          thereof.

     The  following  information  from our Form 10-QSB for the period ended June
30,  2001 (File No.  0-1665),  as filed with the SEC  pursuant  to Section 13 or
15(d) of the Exchange Act, is hereby  incorporated  by reference into this proxy
statement:

     o    Our consolidated  financial statements as of June 30, 2001 and for the
          six months  ended June 30,  2001 and 2000,  included in Part I, Item 1
          thereof; and

     o    "Management's  Discussion and Analysis or Plan of Operation," included
          in Part I, Item 2 thereof.

                                       44

     Any  statement  contained  in a document  incorporated  herein by reference
shall be  deemed  to be  modified  or  superseded  for  purposes  of this  proxy
statement to the extent that a statement contained herein modifies or supersedes
such  statement.  Any statement so modified or  superseded  shall not be deemed,
except  as so  modified  or  superseded,  to  constitute  a part of  this  proxy
statement.

                                                     Barry Goldstein
                                                     Chief Executive Officer

East Meadow, New York
October 18, 2001

                                       45

                                                                    Appendix A

     The Board of Directors  hereby is vested with the  authority to provide for
the issuance of the Preferred  Stock,  at any time and from time to time, in one
or more series,  each of such series to have such voting  powers,  designations,
preferences and relative participating,  optional,  conversion and other rights,
and such  qualifications,  limitations  or  restrictions  thereon  as  expressly
provided in the resolution or resolutions duly adopted by the Board of Directors
providing for the issuance of such shares or series thereof. The authority which
hereby is vested in the Board of Directors shall include, but not be limited to,
the  authority to provide for the following  matters  relating to each series of
the Preferred Stock:

          (i) The designation of any series.

          (ii) The number of shares initially constituting any such series.

          (iii)The  increase,  and the  decrease  to a number  not less than the
     number of the  outstanding  shares  of any such  series,  of the  number of
     shares constituting such series theretofore fixed.

          (iv) The rate or rates and the times at which  dividends on the shares
     of Preferred  Stock or any series thereof shall be paid, and whether or not
     such  dividends  shall  be  cumulative,  and,  if such  dividends  shall be
     cumulative, the date or dates from and after which they shall accumulate.

          (v)  Whether or not the shares of  Preferred  Stock or series  thereof
     shall be redeemable, and, if such shares shall be redeemable, the terms and
     conditions of such redemption,  including,  but not limited to, the date or
     dates upon or after which such shares  shall be  redeemable  and the amount
     per share which shall be payable  upon such  redemption,  which  amount may
     vary under different conditions and at different redemption dates.

          (vi) The amount  payable on the  shares of  Preferred  Stock or series
     thereof  in  the  event  of  the  voluntary  or  involuntary   liquidation,
     dissolution or winding up of the Corporation;  provided,  however, that the
     holders of shares  ranking  senior to other  shares shall be entitled to be
     paid, or to have set apart for payment, not less than the liquidation value
     of such  shares  before the  holders  of shares of the Common  Stock or the
     holders  of any other  series of  Preferred  Stock  ranking  junior to such
     shares.

          (vii) Whether or not the shares of Preferred  Stock or series  thereof
     shall have voting rights, in addition to the voting rights provided by law,
     and, if such shares shall have such voting rights, the terms and conditions
     thereof,  including  but not  limited  to the right of the  holders of such
     shares to vote as a  separate  class  either  alone or with the  holders of
     shares of one or more  other  class or series  of  Preferred  Stock and the
     right to have more than one vote per share.

          (viii)  Whether  or not a  sinking  fund  shall  be  provided  for the
     redemption of the shares of Preferred Stock or series thereof, and, if such
     a sinking fund shall be provided, the terms and conditions thereof.

          (ix)  Whether or not a purchase  fund shall be provided for the shares
     of Preferred Stock or series thereof, and, if such a purchase fund shall be
     provided, the terms and conditions thereof.

          (x)  Whether or not the shares of  Preferred  Stock or series  thereof
     shall have conversion privileges, and, if such shares shall have conversion
     privileges,  the terms and  conditions  of  conversion,  including  but not
     limited to any provision for the adjustment of the  conversion  rate or the
     conversion price.

          (xi)  Any  other   relative   rights,   preferences,   qualifications,
     limitations and restrictions.

                                                                  Appendix B

     "THIRD: The nature of the business of the Corporation,  and the objects and
purposes  proposed to be transacted,  promoted and carried on by it, shall be to
engage in any lawful act or activity  for which  corporations  may be  organized
under the General Corporation Law of Delaware."

                                DCAP GROUP, INC.

           This Proxy is Solicited on Behalf of the Board of Directors

     The undersigned hereby appoints Barry Goldstein as proxy, with the power to
appoint his  substitute,  and hereby  authorizes  him to represent  and vote, as
designated below, all the common shares of DCAP Group, Inc. (the "Company") held
of record by the undersigned at the close of business on October 15, 2001 at the
Annual  Meeting  of  Stockholders  to be  held  on  November  20,  2001  or  any
adjournment thereof.

1.   Election of Directors:

FOR all nominees listed below                   WITHHOLD AUTHORITY to vote
(except as marked to the contrary)              for all nominees listed below

(Instruction:  To withhold authority to vote for any individual nominee,  strike
such nominee's name from the list below.)

   Barry Goldstein    Morton L. Certilman    Jay M. Haft    Robert M. Wallach

2.   Proposal to approve and ratify the sale by the Company and its subsidiaries
     of assets that may constitute, under Delaware law, substantially all of its
     assets.

     FOR ____               AGAINST ____            ABSTAIN ____

3.   Proposal to approve an increase in the number of common  shares  authorized
     to be  issued  pursuant  to the  Company's  1998  Stock  Option  Plan  from
     2,000,000 to 3,000,000.

     FOR ____               AGAINST ____            ABSTAIN ____

4.   Proposal  to  approve  an  amendment  to  the  Company's   Certificate   of
     Incorporation  to  increase  the number of  authorized  common  shares from
     25,000,000 to 40,000,000.

     FOR ____               AGAINST ____            ABSTAIN ____

5.   Proposal  to  approve  an  amendment  to  the  Company's   Certificate   of
     Incorporation  to  provide  for the  authority  to  issue  up to  1,000,000
     preferred shares.

     FOR ____               AGAINST ____            ABSTAIN ____

6.   Proposal  to  approve  an  amendment  to  the  Company's   Certificate   of
     Incorporation  to broaden the corporate  purposes to include any lawful act
     or activity for which corporations may be organized under Delaware law.

     FOR ____               AGAINST ____            ABSTAIN ____

7.   In his discretion, the proxy is authorized to vote upon such other business
     as may properly come before the meeting.

     This proxy, when properly executed, will be voted in the manner directed by
the undersigned  stockholder.  If no direction is made, this proxy will be voted
FOR the election of the named  nominees as directors  and FOR Proposals 2, 3, 4,
5, and 6.

     PLEASE  MARK,  SIGN,  DATE AND  RETURN THE PROXY  CARD  PROMPTLY  USING THE
ENCLOSED ENVELOPE.

                                                     Please sign exactly as name
                                                     appears below. When shares
                                                     are held by joint tenants,
                                                     both should sign. When
                                                     signing as attorney,
                                                     executor, administrator,
                                                     trustee or guardian, please
                                                     give full title as such. If
                                                     a corporation, please sign
                                                     in full corporate name by
                                                     the President or other
                                                     authorized officer. If a
                                                     partnership, please sign in
                                                     partnership name by
                                                     authorized person.

                                                     Dated:_______________, 2001

                                                     Signature

                                                     Signature if held jointly