FINANCIAL INTRANET INC/NY, SB-2/A, 1999-07-28

FINANCIAL INTRANET INC/NY
SB-2/A, 1999-07-28
COMMUNICATIONS SERVICES, NEC

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<PAGE>

As filed with the Securities and Exchange Commission on July 28, 1999

Registration No. 333-72975

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

AMENDMENT NO. 3

FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FINANCIAL INTRANET, INC.
(Name of small business issuer in charter)

<TABLE>
<S> <C> <C>
Nevada 7375 88-0357272
(State or other jurisdiction of (Primary Standard Industrial (IRS Employer I.D. Number)
incorporation or organization) Classification Code Number)
</TABLE>

410 Saw Mill River Road
Ardsley NY 10502
(914) 693-5060
(Address and telephone number, of registrant's principal executive offices)

Michael Sheppard, President
c/o Financial Intranet, Inc.
410 Saw Mill River Road
Ardsley NY 10502
(914) 693-5060
(Address of principal place of business or intended principal place of business)
(Name, address and telephone number, of agent for service)

Please send a copy of all communications to:

Steven W. Schuster, Esq.
McLaughlin & Stern, LLP
260 Madison Avenue
New York, New York 10016
(212) 448-1100
Fax (212) 448-0066

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the registration statement becomes effective.

If this form is filed to register additional securities for an offering under
Rule 462(b) under the Securities Act of 1933, please check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /

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

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

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

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

<PAGE>

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Each Class of Security Amount Being Offering Price Per Aggregate Amount of
Being Registered Registered Unit/Share(1) Offering Price Registration Fee
<S> <C> <C> <C> <C>
Shares of common stock $.001 par value(2)............... 6,000,000 $1.00 $6,000,000 $1,668.00
Shares of common stock underlying warrants(3)(4)........ 5,508,333 $1.00 $5,508,333 $1,531.32
Shares of common stock(4)............................... 1,612,994 $1.00 $1,612,994 $ 448.41
Shares of common stock underlying convertible
promissory notes(3)(4).............................. 6,675,000 $1.00 $6,675,000 $1,855.65
Total registration fee. $5,503.38(5)
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee.
(2) Securities being registered for sale by Financial Intranet.

(3) Under Rule 416 there are also being registered such additional shares as may
be issued as a result of the anti-dilution provisions of the warrants and the
convertible promissory notes.

(4) Securities being registered for resale only.
(5) $8,521.43 previously paid as the registration fee.

The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall become effective on that date in accordance with Section 8(a) of the
Securities Act or until the registration statement shall become effective on
such date as the Commission, acting under said Section 8(a), may determine.

<PAGE>

EXPLANATORY NOTE

This registration statement covers the primary offering of common stock by
Financial Intranet, Inc. and the offering of common stock by certain selling
securityholders. Financial Intranet is registering under the primary prospectus
6,000,000 shares of common stock for sale. The selling securityholders are
registering, under an alternate prospectus

5,508,333 shares of common stock underlying certain warrants,

6,675,000 shares of common stock underlying certain convertible
promissory notes (including an additional 2,525,000 shares of common
stock being registered with respect to certain anti-dilution
provisions of such promissory notes),

1,575,000 shares of common stock previously issued and

37,994 shares of common stock which may be issued.

The alternate prospectus pages, which follow the primary prospectus, contain
certain sections which are to be combined with all of the sections contained in
the primary prospectus, with the exceptions of the front and back cover pages
and the section entitled "The Offering." Furthermore, all references contained
in the alternate prospectus to the "offering" shall refer to Financial
Intranet's offering under the primary prospectus.

<PAGE>

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT AN OFFER TO BUY THESE SECURITIES IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION DATED JULY 28, 1999

PROSPECTUS

6,000,000 SHARES OF COMMON STOCK

FINANCIAL INTRANET, INC.

$ PER SHARE

Financial Intranet, Inc. is directly offering 6,000,000 shares of
common stock. The public offering price of the common stock is anticipated to be
between $0.70 and $1.30 per share and will be equal to the average of the
closing bid and asked prices per share of common stock as quoted on the OTC
Bulletin Board on the day preceding the date of this prospectus. We are not
required to sell any specific number or amount of common stock. We will use our
best efforts to sell the common stock offered without discounts or selling
commissions. We will receive a maximum of $5,820,000 before expenses if we sell
all 6,000,000 shares. Our common stock is listed on the Nasdaq OTC Bulletin
Board under the symbol "FNTN."

THESE ARE SPECULATIVE SECURITIES AND THIS INVESTMENT INVOLVES A HIGH
DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 6.

We will offer the common stock for a maximum of 6 months from the date
of this prospectus. The funds will not be placed in an escrow account. We will
keep the proceeds as shares of common stock are purchased.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or passed upon the
adequacy of the prospectus. Any representation to the contrary is a criminal
offense.

Selling securityholders are offering under an alternate prospectus
9,658,333 shares of common stock underlying warrants and convertible promissory
notes, 1,575,000 shares of common stock previously issued and 37,994 shares of
common stock which may be issued.

THE DATE OF THIS PROSPECTUS IS , 1999

<PAGE>

TABLE OF CONTENTS

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<CAPTION>
Page
----
<S> <C>
Prospectus summary ........................................................ 3
Risk factors .............................................................. 6
Use of proceeds ........................................................... 10
Capitalization .......................................................... 11
Dilution .................................................................. 12
Dividend policy ........................................................... 15
Management's discussion and analysis of
financial condition and results of
operations ............................................................... 16
Business .................................................................. 21
Management ................................................................ 32
Certain transactions ...................................................... 38
Principal stockholders .................................................... 39
Selling securityholders ................................................... 40
Description of securities ................................................. 44
Shares eligible for future sale ........................................... 46
Plan of distribution ...................................................... 47
Legal matters ............................................................. 48
Experts ................................................................... 48
Available Information...................................................... 49
Financial statements ...................................................... F-1
</TABLE>

2
<PAGE>

PROSPECTUS SUMMARY

ABOUT OUR COMPANY

We are an emerging media and communications company providing
specialized services to the investment industry.

o We offer mutual funds and investment managers a private intranet
to distribute product information and training materials to
broker/dealers and financial advisors. The client can transmit
these materials through interactive video teleconferences and the
transmission of video-on-demand, text and digitally stored
documents.

o We provide broker/dealers and financial advisors with
communications services, including voice and data transmission.
We also provide value-added features, including:

o immediate access to information about mutual funds,
o video teleconferencing, and
o leads to potential customers who visit our web site.

o We maintain a web site at www.fntn.com for prospective investors.

We have a strategic relationship with Siemens Nixdorf
Informationssysteme Ges.m.b.H. Siemens has installed and manages our integrated
hardware and software system. We and Siemens have developed applications based
on Siemens' proprietary video-on-demand and data mining technology.

Under an alternate prospectus a number of shareholder are offering
slightly over 11,000,000 shares of common stock underlying warrants and
convertible promissory notes.

Our principal executive office is located at 410 Saw Mill River Road,
Suite 2040, Ardsley, New York 10502. Our telephone number is (914) 973-5060.

3
<PAGE>

THE OFFERING

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<S> <C>
Securities offered: 6,000,000 shares of common stock

Offering price: $1.00 per share of common stock. The price is estimated at $1.00
for purposes of this preliminary prospectus. The offering price
will equal the average of the closing bid and asked prices per
share of common stock as listed on the OTC Bulletin Board on the
trading date prior to the commencement of the offering under this
prospectus.

Securities outstanding prior to the
offering: 23,644,292 shares

Securities outstanding after
offering: 39,340,619 shares. The number assumes conversion of the selling
securityholders' convertible promissory notes and exercise of the
selling securityholders' warrants and the issuance of certain
additional shares but assumes no exercise of any other outstanding
options or warrants.

Risk factors: An investment in the common stock is highly speculative and involves
substantial risks including the risks of:

o limited operations
o projected losses
o limited number of products
o management's broad discretion in the application of proceeds
o the possible need for additional financing
o competition.

Use of proceeds: Financial Intranet will receive maximum net proceeds from its sale
of the common stock of approximately $5,820,000. We intend to use
the net proceeds approximately as follows:

o marketing and sales
o capital expenditures
o expansion of network architecture
o repayment of accounts payable
o research and development
o deposits with telecom carriers
o working capital.

OTC Bulletin Board symbol: FNTN
</TABLE>

4
<PAGE>

SELECTED FINANCIAL DATA

The selected financial data as of December 31, 1997 and 1998 and March 31, 1998
and 1999 and for the fiscal years ended December 31, 1997 and 1998 and quarter
ended March 31, 1998 and 1999 have been derived from our audited and unaudited
consolidated financial statements, including the related notes, included
elsewhere in this prospectus. This financial information should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated financial statements and notes
appearing elsewhere in this prospectus.

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<CAPTION>
YEAR ENDED DECEMBER 31 QUARTER ENDED MARCH 31

1997 1998 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:

Total revenue......................................... $0 $ 89,169 $ 35,931 $ 6,741
Cost of revenue....................................... 0 163,033 14,156 23,341
Operating expenses.................................... 817,280 2,065,976 265,731 597,318
Loss from operations.................................. (817,280) (2,139,840) (243,956) (613,918)
Other expense......................................... (150) (2,138) (723) (12,605)
Net loss.............................................. (817,430) (2,141,978) (244,679) (626,523)
Net loss per common share............................. (0.07) (0.12) (.02) (.03)
Weighted average shares outstanding................... 10,932,900 18,328,984 16,223,877 22,461,567
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1998 MARCH 31, 1999
----------------- --------------
<S> <C> <C>
BALANCE SHEET DATA:

Working capital (deficit)............................. $(667,438) $(280,134)
Total assets.......................................... 1,413,148 1,464,070
Total long-term debt.................................. 500,000 860,000
Total stockholders' equity............................ 42,963 23,414
</TABLE>

5
<PAGE>

RISK FACTORS

INVESTORS CAN HAVE DIFFICULTY EVALUATING OUR PROSPECTS BECAUSE WE RECENTLY
COMMENCED BUSINESS.

We began building our infrastructure and our research and development
for our intranet in February 1997 and offer a limited relevant operating
history. You should consider our prospects in light of the risks, expenses and
difficulties frequently encountered by new businesses in connection with the
marketing and sale of new products and services.

OUR PROJECTED LOSSES RAISE SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A
GOING CONCERN UNLESS WE OBTAIN FINANCING OR GENERATE ADEQUATE REVENUES.

Unless we generate sufficient revenues or obtain financing through this
offering or another means, our operations in the development stage raise
substantial doubt about our ability to continue as a going concern. We had net
losses of $817,430 for the year ended December 31, 1997 and $2,141,978 for the
year ended December 31, 1998. We have had limited revenues since inception. We
had no revenues from inception through December 31, 1997. We had revenues of
$89,169 in 1998. We expect to incur up-front operating costs to expand our
marketing efforts, which may result in further losses. We will not be profitable
until we establish a broader customer base for our services and derive
substantial revenues from our sale of communications and intranet services.

BECAUSE OUR BUSINESS DEPENDS ON A LIMITED NUMBER OF PRODUCTS, THE LACK OF
SUCCESS FOR ANY ONE OF THEM WOULD REDUCE THE VALUE OF OUR SECURITIES.

Our business may be adversely affected if we receive lower than
anticipated revenues from either of our two principal sources:

o communications services with value added features for
broker/dealers and financial advisors, and

o marketing services for mutual funds and other financial product
companies.

TELECOMMUNICATIONS COMPANIES AND OTHERS WITH GREATER RESOURCES AND NAME
RECOGNITION COULD MAKE IT VERY DIFFICULT TO COMPETE.

Telecommunications companies and other distributors of financial
information are our most significant competitors. Many competitors have greater
financial, technical, marketing, sales and customer support and other resources.
Many competitors have reputations for successfully developing, licensing and
selling their products and technologies. Competitors may be able to undertake
more extensive marketing campaigns and adopt more aggressive pricing policies
than we. They may be able to add value-added services, similar to ours. In that
case, we may face significant price competition and reduced profit margins. We
may not be able to compete successfully with larger companies.

TECHNOLOGICAL CHANGES HAVE LOWERED THE COST OF OPERATING IN OUR INDUSTRY, WHICH
HAS INCREASED COMPETITION AND COULD REDUCE ANTICIPATED PROFIT MARGINS.

Technological changes have lowered the cost of operating communications
and computer systems and purchasing software. These changes reduce our cost of
providing services but also facilitate increased competition by reducing
competitors' costs in providing similar services. Such competition could
increase price competition and reduce anticipated profit margins.

OUR LACK OF PATENT OR COPYRIGHT PROTECTION MAY INCREASE THE DIFFICULTY OF
PROTECTING OUR RIGHTS TO OUR TECHNOLOGY.

We regard the technology we use as proprietary, but have no existing or
pending patent or copyright protection. Our success depends in part on our
ability to protect our technology and other intellectual property by relying on
one or more of the following:

6
<PAGE>

o confidentiality agreements with employees and third parties
o license agreements with consultants, vendors and customers
o trade secret laws
o trademark laws
o common law copyright

We have signed agreements with third parties who have access to our technology.
Despite such protections, a third party could copy or otherwise obtain and use
our products or technology, or develop similar technology independently. We may
be forced to litigate to protect our interests. Litigation of this type is
frequently expensive. We may not have the financial resources to pursue such
litigation. We cannot be assured of success without patent and copyright
protection.

OTHERS MAY CLAIM THAT WE BREACHED THEIR PATENTS OR COPYRIGHTS AND PREVENT US
FROM USING OUR TECHNOLOGY.

While we consider our technology unique, others utilize similar
technologies. These companies may claim that we have breached their copyrights,
patents or proprietary rights. We may be forced to litigate these disputes. This
litigation, too, would be expensive with no assurance of success.

WE CURRENTLY HAVE LIMITED SOURCES FOR ADDITIONAL FINANCING, AND OUR SUCCESS MAY
DEPEND ON OUR ABILITY TO OBTAIN FURTHER FINANCING FOLLOWING THIS OFFERING.

We anticipate that the net proceeds from the sale of all of the shares
and income from operations will satisfy our financial requirements for at least
24 months following the date of this prospectus. We base this expectation on our
current operating plan. The plan is subject to change because of events within
and outside of our control. In the event of a change, we may require additional
financing sooner than anticipated. Opportunities such as an acquisition may
arise which may require additional financing. We may not be able to obtain
funding on a timely basis, on favorable terms, or at all. One selling
securityholder is obligated to purchase convertible promissory notes and
warrants for an additional $1,100,000 during the 10 months after the date of
this prospectus. Except for that selling securityholder, we do not have a
credit facility or any committed source of financing. Our business, financial
condition and results of operations will suffer if we are unable to obtain the
financing we need (including the financing from the selling securityholder) or
to generate sufficient funds from operations. Although we anticipate that we
will continue to offer our existing services to additional customers, we may
curtail our planned expansion and may be unable to fund ongoing operations.

THE ABILITY OF OUR OFFICERS AND PRINCIPAL SHAREHOLDERS TO CONTROL OUR BUSINESS
MAY LIMIT MINORITY SHAREHOLDERS' ABILITY TO INFLUENCE CORPORATE AFFAIRS.

As of July 23, 1999, Michael Sheppard, President, Maura Marx, Executive
Vice President and Ben B. Stein, a consultant, own approximately 21.1% of the
outstanding shares of our common stock. They would own 35.3% of the outstanding
shares of common stock if they exercised all their options with an exercise
price of $.19 per share prior to completion of this offering. They would own
22.4% of the outstanding shares of common stock if they exercised all their
options and we sold all 6,000,000 shares in this offering and the selling
securityholders exercised all their warrants and converted all their promissory
notes. The exercise of such options by Messrs. Sheppard and Stein and Ms. Marx
may enable them to elect our directors and determine our policies.

WE DEPEND UPON CERTAIN KEY EMPLOYEES TO DEVELOP AND MARKET OUR SERVICES.

Financial Intranet's success is highly dependent upon key members of
senior management who designed the services and are responsible for marketing
them. The efforts of Mr. Sheppard, our President, and Ms. Marx, our Executive
Vice President are particularly essential to our operations and growth.
Financial Intranet has employment agreements with Mr. Sheppard and Ms. Marx but
no key-man life insurance on any employees. Our future operations will also
depend in part upon our ability to retain current employees and to attract and
retain additional qualified personnel. We may not be able to attract and retain
such personnel or, if we are able to do so, on favorable terms.

BECAUSE OUR OPERATIONS ARE DEPENDENT ON THE CONTINUED OPERATION OF OUR COMPUTER
EQUIPMENT, ANY DISRUPTION TO

7
<PAGE>

OUR COMPUTER SYSTEM COULD ADVERSELY AFFECT OUR BUSINESS.

Substantially all of our communications hardware and certain of our
computer hardware operations are located at our offices in Ardsley, New York.
Our system is vulnerable to damage from:

o fire,
o flood,
o power loss,
o telecommunications failures, and
o break-ins and similar events.

We do not have any secondary systems, although we intend to establish
such a system with the proceeds of a maximum offering. We believe that a total
system failure would not result in interruption of our business for more than
two weeks. We have a disaster recovery plan and carry business interruption
insurance. However, any significant failure in our services could cause
significant harm to our customer relations.

WE MAY BE VULNERABLE TO ATTEMPTS BY UNAUTHORIZED COMPUTER USERS TO PENETRATE OUR
NETWORK SECURITY.

Someone may be able to misappropriate proprietary information or cause
interruptions in our services. We may need to expend significant capital and
resources to protect against the threat of such security breaches or to
alleviate problems caused by such breaches. In addition to security breaches,
inadvertent transmission of computer viruses could expose us to risk of loss or
litigation and possible liability.

OUR WEBSITE DISSEMINATES SUBSTANTIAL MATERIALS RECEIVED FROM OTHERS, AND WE MAY
BECOME LIABLE IF THIS MATERIAL VIOLATES ANY LAW OR THE RIGHTS OF A THIRD PARTY.

Content from our Web site is distributed to others. We may be subjected
to claims of negligence, copyright, patent or trademark infringement,
defamation, indecency and other claims. Such claims have been brought, sometimes
successfully, against Internet content distributors. Our disclaimers regarding
content provided by others and indemnification from content providers may prove
inadequate. In addition, we could be subjected to claims based upon the content
that is accessible from our Web site through links to other Web sites. We
maintain general liability insurance of $2,000,000 and are applying for errors
and omission insurance. Our insurance may not cover potential claims of this
type or may not be adequate to indemnify us for all liability that may be
imposed. Any liability not covered by insurance or in excess of insurance
coverage could adversely effect us.

OUR POTENTIAL ISSUANCE OF SHARES UPON THE EXERCISE OF CERTAIN OPTIONS OR
CONVERSION OF PROMISSORY NOTES AT PRICES BELOW THE OFFERING PRICE COULD REDUCE
THE MARKET PRICE OF OUR STOCK.

The purchase of our stock by these investors or their potential of
purchases at below market price may reduce the market price of our stock. We
have issued stock options, warrants and convertible notes to persons who
invested in us or provided goods, services or credit. These people have the
right to purchase up to 15,938,622 shares at various prices below that offered
in this prospectus.

THE SALE OF SHARES BY SELLING SECURITY HOLDERS AT THE SAME TIME THAT WE SELL
SHARES COULD REDUCE THE MARKET PRICE OF OUR STOCK.

This prospectus is part of a larger registration statement. The
registration statement contains a second prospectus which allows a number of
investors to sell up to 10,151,327 shares of stock. The selling security
holders' sale of their shares may reduce the market price of our stock. Some of
the shares can only be offered after the investors have exercised warrants, but
the exercise prices of the warrants are below the market price of our stock.

THE PRICE OF OUR STOCK MAY DECREASE AS A RESULT OF SALES OF STOCK THAT ARE NOT
CURRENTLY FREELY TRADEABLE.

8
<PAGE>

6,079,570 shares of common stock held by present shareholders have not
been registered under the Securities Act of 1933. The stock can be sold under
Rule 144. Sales of substantial amounts of stock under Rule 144 could adversely
affect the market price of the shares and make it more difficult for us to sell
our stock in the future.

THE FAILURE OF THIRD PARTY VENDORS TO BE YEAR 2000 COMPLIANT COULD ADVERSELY
AFFECT US.

We work with a number of sophisticated companies in the
telecommunications industry, including Siemens, MCI/Worldcom and Frontier, who
have certified that they are year 2000 compliant. However, entities with which
we transact business, including customers and vendors may suffer from the year
2000 problem. We cannot be certain their products or systems are year 2000
compliant. We cannot predict the effects of the year 2000 problem on such
entities or on the economy in general, or the resulting effects on us. We may
suffer interruptions or additional expense or lose revenue to the extent
customers or vendors are not compliant.

9
<PAGE>

USE OF PROCEEDS

The gross and net proceeds which we will receive from the sale of the common
stock cannot be fully determined. The following table shows the use of proceeds
in three different situations depending on the success of our offering. In each
case, we assume our offering expenses will be approximately $180,000.

<TABLE>
<CAPTION>
GROSS OFFERING: MAXIMUM MID-RANGE MINIMAL

$6,000,000 $3,000,000 $500,000
---------- ---------- --------

Approximate Approximate Approximate
Application of Proceeds dollar amount Percentage dollar amount Percentage dollar amount Percentage
- ----------------------- ------------- ---------- ------------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Marketing and sales $ 1,600,000 27.5% $ 900,000 31.9% $ 290,000 90.6%

Capital expenditures for equipment 900,000 15.5% 450,000 16.0% 0 0.0%

Disaster recovery programs and 750,000 12.9% 100,000 3.5% 0 0.0%
expansion into other geographical
markets

Expand network architecture for 700,000 12.0% 350,000 12.4% 0 0.0%
switching and installation of cabling
to customers

Payment of past due accounts payable 670,000 11.5% 395,000 14.0% 30,000 9.4%

Research and development of additional 500,000 8.6% 250,000 8.9% 0 0.0%
product and software development tools

Deposits with telcom carriers who 150,000 2.6% 75,000 2.7% 0 0.0%
provide communications services that
we resell

Working capital, primarily general & 550,000 9.5% 300,000 10.6% 0 0.0%
admin. expenses
- ----------------------------------------------------------------------------------------------------------------------------------
Net proceeds, after deducting offering $ 5,820,000 100.0% $ 2,820,000 100.0% $ 320,000 100.0%
expenses
</TABLE>

Our allocation of net proceeds represents our best estimate based upon
present plans. We may reallocate some of the proceeds if our plans change. We
have broad discretion as to the application of a significant portion of the net
proceeds without having to seek the approval of the investors in this offering.
Future events may cause us to reallocate our resources, including cash, for
uses not presently contemplated by us.

Selling commissions of up to $600,000 and non-accountable expense
allowances of up to $180,000 may be deducted from the proceeds and a
reallocation would occur if any broker/dealers participate in the offering.

We believe that the net proceeds from its offering and revenues
generated by planned operations will satisfy our working capital needs for the
next 24 months. However, Financial Intranet may require additional financing to
expand its business. We will require additional financing for any acquisitions
and do not know the means or terms of financing any acquisition or whether such
financing would be available on acceptable terms. We have no commitments or
understandings for any acquisitions.

Financial Intranet expects to receive $1,100,000 over the next 10
months as agreed upon by the purchaser of convertible promissory notes and
warrants in February 1999. If we receive minimal proceeds from this offering, we
anticipate using $300,000 of such investment for marketing and sales and the
balance for working capital. Financial Intranet can't predict the amount or
potential source of other funds and has no current other commitments to obtain
such funds. We can't be assured of obtaining additional financing on acceptable
terms when needed.

10
<PAGE>

CAPITALIZATION

The following table shows our capitalization as of March 31, 1999. The
information below should be read in conjunction with the other financial
information contained elsewhere in this prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1999
--------------
<S> <C>
Total short-term debt including current maturities of long-term debt....................... $ -0-
Total long-term debt, less current maturities.............................................. 860,000
Stockholders's equity:..................................................................... 23,414
--------
Common stock, $.001 par value; 50,000,000 shares authorized; 22,713,181 shares
outstanding.......................................................................... 22,713
---------
Paid in capital......................................................................... 4,221,454
Deferred compensation cost.............................................................. (600,323)
Accumulated deficit during the development stage........................................ (3,620,430)
----------

Total stockholder's equity................................................................. $23,414
=======
</TABLE>

11
<PAGE>

DILUTION

Purchasers of the shares of Financial Intranet will experience an immediate and
substantial dilution in the net tangible book value per share of their
investment. As of March 31, 1999, Financial Intranet had an aggregate of
22,713,181 shares of common stock outstanding and a net tangible book value of
$(281,589) or $(.01) per share of common stock. See the March 31, 1999
financial statements. "Net Tangible Book Value Per Share" represents the total
amount of Financial Intranet's tangible assets, less the total amount of its
liabilities, divided by the total number of shares of common stock outstanding.

MAXIMUM OFFERING

Our proforma net tangible book value would be $.19 per share after giving
effect to our sale of 6,000,000 shares at the offering price of $1.00 per share
of common stock. This amount represents an immediate dilution of approximately
$.81 per share of common stock to new investors. At the same time, it
represents an immediate increase of $.29 per share of common stock to
stockholders. Dilution is defined as the difference between the attributed
price per share of common stock to purchasers in Financial Intranet's offering
and the proforma net tangible book value per share of common stock as of March
31, 1999. The increase is defined as the difference between the proforma net
tangible book value per share of common stock as of March 31, 1999 and the
proforma net tangible book value per share of common stock as of March 31, 1999
after giving effect to the issuance of 11,271,327 shares of common stock. Such
increase to current stockholders is solely attributable to the cash price paid
by purchasers of the common stock offered for sale by Financial Intranet.

The following table illustrates the per share dilution as of March 31, 1999:

<TABLE>
<S> <C>
Public offering price per share $1.00

Net proforma tangible book value per share before giving effect to Financial Intranet's $(.01)
offering

Increase per share attributable to the net proceeds of the sale of 6,000,000 shares of $ .19
common stock offered by Financial Intranet

Proforma net tangible book value per share as of March 31, 1999 reflecting Financial $ .28
Intranet's offering

Dilution per share to purchasers in Financial Intranet's offering $ .72
</TABLE>

In order to make these calculations, we included the following:

o 5,508,333 shares of common stock issuable upon exercise of the
warrants issued to selling securityholders;

o 4,150,000 shares of common stock issuable upon conversion of the
selling securityholders' convertible promissory notes;

o 1,575,000 shares of common stock issued to the selling
securityholders; and

o 37,994 shares of common stock which may be issued to the selling
securityholders.

We excluded the following:

o 858,442 shares of common stock issuable upon exercise of outstanding
stock options and warrants at exercise prices from $.18 to $1.20 per
share;

o 5,202,162 shares of common stock issuable upon exercise of options at
an exercise price of $.19 per share; or

o shares that may be issuable pursuant to anti-dilution provisions and
market price protection provisions of certain

12
<PAGE>

securities.

The following table sets forth, as of March 31, 1999, a comparison of
the number of shares of common stock acquired by current stockholders, the total
consideration paid for such shares of common stock and the average price per
share paid by current stockholders of common stock and to be paid by the
prospective purchasers of the shares of common stock offered for sale by
Financial Intranet. The calculations are based upon the anticipated public
offering price of $1.00 per share of common stock, before deducting estimated
offering expenses.

<TABLE>
<CAPTION>
Common stock Acquired Total Consideration
--------------------- -------------------
Number Percent Amount Percent Average Price Per Share
------ ------- ------ ------- -----------------------
<S> <C> <C> <C> <C> <C>

Current Stockholders: 22,713,181 79.1% $4,244,167 41.4% $ .187

New Investors: 6,000,000 20.9% 6,000,000 58.6% 1.00
---------- ----- ----------- ----- ------

Total: 28,713,181 100% $10,244,167 100% $.357
</TABLE>

MID-RANGE OFFERING

Our proforma net tangible book value would be $.10 per share after giving
effect to our sale of 3,000,000 shares at the offering price of $1.00 per share
of common stock. This amount represents an immediate dilution of approximately
$.90 per share of common stock to new investors. At the same time, it
represents an immediate increase of $.23 per share of common stock to
stockholders. Dilution is defined as the difference between the attributed
price per share of common stock to purchasers in Financial Intranet's offering
and the proforma net tangible book value per share of common stock as of March
31, 1999. The increase is defined as the difference between the proforma net
tangible book value per share of common stock as of March 31, 1999 and the
proforma net tangible book value per share of common stock as of March 31, 1999
after giving effect to the issuance of 11,271,327 shares of common stock. Such
increase to current stockholders is solely attributable to the cash price paid
by purchasers of the common stock offered for sale by Financial Intranet.

The following table illustrates the per share dilution as of March 31, 1999:

<TABLE>
<S> <C>
Public offering price per share $1.00

Net proforma tangible book value per share before giving effect to Financial Intranet's $(.01)
offering

Increase per share attributable to the net proceeds of the sale of 3,000,000 shares of $.10
common stock offered by Financial Intranet

Proforma net tangible book value per share as of March 31, 1999 reflecting Financial $.22
Intranet's offering

Dilution per share to purchasers in Financial Intranet's offering $.78

</TABLE>
<TABLE>

In order to make these calculations, we included and excluded the same shares of
common stock as in the maximum offering.

13
<PAGE>

Common stock Acquired Total Consideration
--------------------- -------------------
Number Percent Amount Percent Average Price Per Share
------ ------- ------ ------- -----------------------
<S> <C> <C> <C> <C> <C>
Current Stockholders: 22,713,181 88.3% $4,244,167 58.6% $.187

New Investors: 3,000,000 11.7% 3,000,000 41.4% 1.00
---------- ----- ---------- ----- -----

Total: 25,713,181 100% $7,244,167 100% $.282
</TABLE>

MINIMAL OFFERING

Our proforma net tangible book value would be $.01 per share after giving
effect to our sale of 500,000 shares at the offering price of $1.00 per share
of common stock. This amount represents an immediate dilution of approximately
$.99 per share of common stock to new investors. At the same time, it
represents an immediate increase of $.17 per share of common stock to
stockholders. Dilution is defined as the difference between the attributed
price per share of common stock to purchasers in Financial Intranet's offering
and the proforma net tangible book value per share of common stock as of March
31, 1999. The increase is defined as the difference between the proforma net
tangible book value per share of common stock as of March 31, 1999 and the
proforma net tangible book value per share of common stock as of March 31, 1999
after giving effect to the issuance of 11,271,327 shares of common stock. Such
increase to current stockholders is solely attributable to the cash price paid
by purchasers of the common stock offered for sale by Financial Intranet.

The following table illustrates the per share dilution as of March 31, 1999:

<TABLE>
<S> <C>
Public offering price per share $1.00

Net proforma tangible book value per share before giving effect to Financial Intranet's $(.01)
offering

Increase per share attributable to the net proceeds of the sale of 500,000 shares of $.01
common stock offered by Financial Intranet

Proforma net tangible book value per share as of March 31, 1999 reflecting Financial $.16
Intranet's offering

Dilution per share to purchasers in Financial Intranet's offering $.84
</TABLE>

In order to make these calculations, we included and excluded the same shares of
common stock as the maximum offering.

Current Stockholders: 22,713,181 97.8% $4,244,167 89.5% $.187
New Investors: 500,000 2.2% 500,000 10.5% 1.00
---------- ----- ---------- ----- -----
Total: 23,213,181 100% $4,744,167 100% $.204
</TABLE>

14
<PAGE>

DIVIDEND POLICY

Financial Intranet has not paid and does not anticipate paying any dividends on
its common stock in the foreseeable future. Financial Intranet currently intends
to retain all working capital and earnings, if any, to finance its business
operations and expansion. The payment of any cash dividends will be at the
discretion of the board of directors and will be dependent upon Financial
Intranet's results of operations, financial condition, capital requirements,
contractual restrictions and other factors deemed relevant by the board of
directors.

15
<PAGE>

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

The following discussion should be read in conjunction with the financial
statements and notes included elsewhere in this prospectus.

RESULTS OF OPERATIONS:

YEAR ENDED DECEMBER 31, 1998 COMPARED WITH YEAR ENDED DECEMBER 31, 1997

REVENUE

Our principal source of revenue was income from the resale of telephone and data
communication. Revenue for the year ended December 31, 1998 were $89,169 as
compared with no revenue in the prior year. Financial Intranet is a development
stage company and in 1997 had not commenced operations. We expect to derive
growth in revenues primarily through increased volume of communications usage
sold.

COST OF REVENUE

Financial Intranet's cost of revenue consists primarily of telephone
communications lines and the internet access and hosting expenses required to
support and deliver Financial Intranet's communications services. Cost of
revenues for the year ended December 31, 1998 was $163,033 compared with no
costs in the prior year. We expect cost of revenues to increase in direct
relationship to the future revenues anticipated from increases in usage volume.

SALES AND MARKETING EXPENSES

Sales and marketing expenses consist primarily of commissions to our sales force
and promotional, advertising and public relations costs. Sales and marketing
expenses decreased 10% from $55,794 in 1997 to $50,246 in 1998. Lower
advertising and promotion costs were partially offset by commission expenses
paid to Financial Intranet's sales force, which did not exist in 1997. We expect
sales and marketing expenses to increase due to the growth of the sales force as
well as the increased advertising and promotional activities.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses consist primarily of

o employee compensation and related expenses (including payroll taxes and
benefits) for executive, administrative and operations personnel
o licensing, legal and other professional fees
o travel and entertainment
o facility and office-related costs such as rent insurance and telephone.

These costs increased 32% from $748,214 in 1997 to $988,509 in 1998 principally
due to increased payroll and office costs, as well as higher legal fees and a
$41,200 reserve for the potential uncollectibility of a long-term note
receivable. Included in these 1998 costs are $90,626 in non-cash issuance of
common stock to outside consultants in lieu of services performed. Management
expects general and administrative expenses to increase in future periods to
support the growth of the business.

OTHER FINANCING-RELATED EXPENSES

Other financing-related expenses charged to operations consist of certain
non-cash costs of the issuance of common stock, warrants and stock options.
These expenses increased from $13,272 in 1997 to $897,808 in 1998.

16
<PAGE>

DEPRECIATION AND AMORTIZATION

Depreciation and amortization consists primarily of depreciation of computer
equipment and amortization of software development costs. These activities were
effectively placed in service in 1998. No depreciation and amortization costs
existed in 1997. The 1998 expenses were $129,413, which represents a half-year
of depreciation and amortization.

OTHER INCOME AND EXPENSE

Other income consists principally of interest from loans, notes receivable and
short-term investments. Interest and other income increased 67% from $ 2,475 for
the year ended December 31, 1997 to $4,140 for the year ended December 31,1998.
Interest expense consists of interest accrued on loans and notes payable to
officers. Interest expense more than doubled from $2,675 for the year ended
December 31, 1997 to $6,278 for the year ended December 31, 1998.

INCOME TAXES

No provision for federal and state income taxes has been recorded as Financial
Intranet incurred net operating losses in both 1997 and 1998. Financial Intranet
had approximately $634,000 of net operating loss carryforward for federal
income tax purposes as of December 31, 1997. We have not determined the net
operating loss carryforward as of December 31, 1998 because we have not filed
our tax returns for such period. The net operating loss will be available to
offset future taxable income. Given Financial Intranet's limited operating
history, losses incurred to date and the difficulty in accurately forecasting
Financial Intranet's future results, management does not believe that the
realization of the potential future benefits of these carryforwards meets the
criteria for recognition of a deferred tax asset required by generally accepted
accounting principles and, accordingly, a full 100% valuation allowance has been
provided.

QUARTER ENDED MARCH 31, 1999 COMPARED WITH QUARTER ENDED MARCH 31, 1998
(UNAUDITED)

REVENUE

Our principal source of revenue was income from the resale of telephone and data
communication. Revenue for the quarter ended March 31, 1999 were $6,741 after a
deduction for credits of $3,200 issued to a customer, as compared with $35,931
in the prior year. The lower revenue is a timing difference attributable to
switching telecommunications carriers during the quarter ended March 31, 1999.
This revenue will be billed in the second quarter.

COST OF REVENUE

Financial Intranet's cost of revenue consists primarily of telephone
communications lines and internet access costs required to support and deliver
Financial Intranet's communications services. Cost of revenues for the quarter
ended March 31, 1999 was $23,341 compared with $14,156 in the prior year. We
expect cost of revenues to increase in direct relationship to the future
revenues anticipated from increases in usage volume.

SALES AND MARKETING EXPENSES

Sales and marketing expenses consist primarily of commissions to our sales force
and promotional, advertising and public relations costs. Sales and marketing
expenses increased 76% from $23,139 in 1998 to $40,745 in 1999. Web advertising
costs, partially offset by lower commissions paid to Financial Intranet's sales
force, primarily accounted for the increase. We expect sales and marketing
expenses to increase due to the growth of the sales force as well as the
increased advertising and promotional activities.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses consist primarily of

17
<PAGE>

o employee compensation and related expenses (including payroll taxes
and benefits) for executive, administrative and operations personnel
o licensing, legal and other professional fees
o travel and entertainment
o facility and office-related costs such as rent, insurance and telephone.

These costs increased 18% from $226,043 in 1998 to $265,668 in 1999 principally
due to increased legal and professional fees for the public offering
registration. Management expects general and administrative expenses to increase
in future periods to support the growth of the business.

OTHER FINANCING-RELATED EXPENSES

DEPRECIATION AND AMORTIZATION

Depreciation and amortization consists primarily of depreciation of computer
equipment and amortization of software development costs. Software development
costs of $2,845 were amortized in 1998. No depreciation was taken in the first
quarter of 1998 because the equipment had not yet been placed in service. The
1999 first quarter expenses were $66,469, which consisted of $42,259 in
depreciation and $24,210 in amortization.

OTHER INCOME AND EXPENSE

Other income consists principally of interest from loans, notes receivable and
short-term investments. Interest and other income increased from $ 390 for the
quarter ended March 31, 1998 to $1,633 for the quarter ended March 31,1999.
Interest expense consists of interest accrued on loans and convertible notes
payable. Interest expense increased from $1,113 for the quarter ended March 31,
1998 to $14,238 for the quarter ended March 31, 1999.

INCOME TAXES

No provision for federal and state income taxes has been recorded as Financial
Intranet incurred net operating losses in both the first quarters of 1998 and
1999. The net operating losses will be available to offset future taxable
income. Given Financial Intranet's limited operating history, losses incurred to
date and the difficulty in accurately forecasting Financial Intranet's future
results, management does not believe that the realization of the potential
future benefits of these carryforwards meets the criteria for recognition of a
deferred tax asset required by generally accepted accounting principles and,
accordingly, a full 100% valuation allowance has been provided.

LIQUIDITY AND CAPITAL RESOURCES

We had balances of $228,032 and $149,225 in cash and cash equivalents at March
31, 1999 and December 31, 1998, respectively.

Financial Intranet had negative working capital of $(667,438) at December 31,
1998. Net cash used in operating activities was $453,786 for the year ended
December 31, 1998. Cash used in operating activities was primarily attributable
to a net loss of $2,141,978 partially offset by non-cash items such as
depreciation and amortization of $129,413, stock compensation costs of $897,808,
as well as positive changes in working capital. Net cash used in operating
activities for the year ended December 31, 1997 was $533,042 which was
principally due to the net loss of $817,430, partially offset by $159,290 in
consulting services paid by issuance of common stock and positive changes in
working capital.

Financial Intranet had negative working capital of $(280,134) at March 31, 1999.
Net cash used in operating activities was $437,707 for the quarter ended March
31, 1999. Cash used in operating activities was primarily attributable to a net
loss of $626,523 and negative changes in working capital. This was partially
offset by non-cash items such as

18
<PAGE>

depreciation and amortization of $66,469 and stock compensation costs of
$224,436. Net cash provided by operating activities for the quarter ended March
31, 1998 was $379,651, which was principally due to the net loss of $244,679
being more than offset by positive changes in working capital.

Net cash used in investing activities of $859,343 for the year ended December
31, 1998 was primarily attributable to capital expenditures of $833,128 and
capitalized software development costs of $41,551, partially offset by a $15,336
loan repayment from an officer. Net cash used in investing activities of
$365,597 for the year ended December 31, 1997 was due to $235,712 in capital
equipment acquired, $68,275 in software development costs, $20,410 in loans
advanced to an officer and notes receivable advances of $41,200.

Net cash used in by investing activities of $15,618 for the quarter ended March
31, 1999 was primarily attributable to capital expenditures. Net cash used in
investing activities of $486,081 for the quarter ended March 31, 1998 was
entirely due to capital equipment acquired.

Net cash provided by financing activities for the year ended December 31, 1998
was $1,460,425 and consisted of proceeds from the issuance of common stock and
convertible promissory notes, less related financing costs and a $47,250
repayment of a vendor loan. Net cash provided by financing activities for the
year ended December 31, 1997 was $900,466, and consisted of proceeds from the
issuance of common stock, less related financing fees, and proceeds from a
vendor loan, which was repaid during 1998.

Net cash provided by financing activities for the quarter ended March 31, 1999
was $532,132 and consisted of proceeds from the issuance of convertible
promissory notes, less related financing costs and repayments to an officer. Net
cash provided by financing activities for the quarter ended March 31, 1998 was
$104,501, and consisted of proceeds from the issuance of common stock, less
related financing fees and repayments to an officer.

We believe that the cash proceeds from the offering, together with existing
private placement arrangements, will be sufficient to meet anticipated cash
requirements because Financial Intranet does not expect to generate positive
cash flow from operations until the second quarter of the year 2000. However,
unless Financial Intranet generates significant revenue or obtains financing
through this offering or another means in the near future, Financial Intranet's
operations in the development stage raise substantial doubt about its ability to
continue as a going concern. We have the right to demand payment of $1,100,000
from the investor in a private placement in four installments during the 10
months following the date this prospectus becomes effective. There can be no
assurance that additional capital beyond the amounts currently forecasted by
Financial Intranet will not be required, nor that any such required additional
capital will be available on reasonable terms, if at all, at such time as
required by Financial Intranet.

We anticipate that we can continue to provide the services that we currently
offer to more customers without any proceeds from this offering. We believe that
revenues from operations, and the $1,100,000, which the investor in a private
placement has agreed to provide us during the 10 months following the date of
this prospectus, will enable us to conduct our business. The proceeds of this
offering will enable us to accelerate our intended expansion, although there can
be no assurance. In addition, without all of the proceeds of this offering or
financing from another source, we will not implement the disaster recovery
program mentioned in our use of proceeds.

Financial Intranet has satisfied its cash requirements primarily through
revenue, private placements of common stock, warrants and debentures convertible
into shares of common stock, as well as the issuance of common stock in lieu of
payment for services. Also, officers have loaned Financial Intranet funds as
needed to provide working capital.

On May 20, 1998, Financial Intranet issued a 6% convertible debenture in the
principal amount of $500,000. The entire principal amount of the debenture and
all accrued interest was converted into an aggregate of 1,070,800 shares of
common stock.

On June 5, 1998, Financial Intranet issued a 12% convertible promissory note in
the principal amount of $500,000. The entire principal amount of this promissory
note and all accrued interest was converted into 1,237,666 shares of common
stock.

19
<PAGE>

On December 31, 1998, Financial Intranet issued a 7% convertible promissory
note in the principal amount of $500,000 with a maturity date of December 31,
2001. In conjunction with the issuance of the note, Financial Intranet issued
warrants to purchase 1,250,000 shares of common stock for $0.60 per share. The
shares issuable upon conversion of the promissory note and exercise of the
warrant are being registered pursuant the registration statement of which this
prospectus is a part. There can be no assurance that the warrants will be
exercised or the note converted.

On February 8, 1999, Financial Intranet issued a 7% convertible promissory note
in the principal amount of $600,000. The principal amount of $240,000 was
converted to common stock on March 10, 1999 and the balance of $360,000 was
converted to common stock on May 14, 1999. Financial Intranet also issued
warrants to purchase 1,500,000 shares of common stock for $0.40 per share. We
have the right to demand that the investor purchase, for $1,100,000, additional
convertible promissory notes and warrants to purchase 1,833,333 shares of Common
stock. We can demand this amount over 10 months from the date of this
prospectus. The promissory notes will bear interest at the rate of 7% a year.
Financial Intranet anticipates using the proceeds of the additional promissory
notes for working capital. The shares issuable upon conversion of the promissory
note and exercise of the warrant are being registered pursuant the registration
statement of which this prospectus is a part. There can be no assurance that the
warrants will be exercised or the note converted.

On July 20, 1999, we issued an 8% convertible promissory note in the principal
amount of $500,000 to one accredited investor with a maturity date of October
20, 1999. In conjunction with the issuance of the note, Financial Intranet
issued warrants to purchase 200,000 shares of common stock for $0.50 per share,
which warrants are exercisable only if we repay the note in cash. The shares
issuable upon conversion of the promissory note and exercise of the warrant are
being registered in the registration statement of which this prospectus is a
part. There can be no assurance that the warrants will be exercised or the note
converted. We are using the proceeds of the promissory note for general working
capital. The Company expects that its obligation under this convertible
promissory note will be satisfied by conversion into common stock.

From time to time, officers have loaned Financial Intranet funds as needed to
provide working capital. Financial Intranet issued three outstanding notes in
favor of Ben B. Stein, a shareholder, consultant and former officer and
director. The original principal amount of the notes was $60,889. Mr. Stein
agreed on March 3, 1999 to apply the outstanding principal amount of the notes
and all accrued interest to the exercise of options in lieu of a cash payment by
Financial Intranet. The Company no longer has any obligations to Ben B. Stein.
We have an outstanding note in favor of Michael Sheppard for $36,115 due on
demand. The promissory note bears interest at 8% a year.

YEAR 2000 COMPLIANCE

The year 2000 problem is the result of a widespread programming technique that
causes computer systems to identify a date based on the last two numbers of a
year, with the assumption that the first two numbers of the year are "19." As a
result, the year 2000 would be stored as "00," causing computers to incorrectly
interpret the year as 1900. Left uncorrected, the year 2000 problem may cause
information technology systems (e.g. computer databases) and noninformation
systems (e.g. elevators) to produce incorrect data or cease operating
completely.

We have received confirmation from Siemens, which installed and manages our
hardware and software systems, that they are year 2000 compliant. Financial
Intranet uses recent releases of software applications and operational programs
that are certified by the manufacturers to be year 2000 compliant. We have not
incurred material costs to become year 2000 compliant. Financial Intranet has
contingency plans to deal with unanticipated year 2000 problems including
backing up its data base and financial and accounting records.

Financial Intranet has been advised by its telecommunications providers and
providers of information services on its Website and other significant vendors
that they are year 2000 compliant and that they have contingency plans in place.

At this time, Financial Intranet fully expects to be year 2000 compliant and
believes that its providers and its significant vendors have taken, or are
taking, the steps necessary to be in compliance by the year 2000. We believe we
can quickly switch to other vendors from any who are not year 2000 compliant and
that we will not incur prolonged disruption to our business. We believe that we
could locate new vendors on the same terms as our current vendors if our current
vendors are not Year 2000 compliant. Nevertheless, uncertainties remain about
the affect on Financial Intranet of third parties

20
<PAGE>

who are not year 2000 compliant. The business of Financial Intranet could be
adversely affected should Financial Intranet or other entities with whom
Financial Intranet does business be unsuccessful in completing critical
modifications in a timely manner.

Forward-looking statements in this prospectus may prove to be materially
inaccurate. In addition to historical information, this prospectus contains
forward-looking information that involves risks and uncertainties. The words
"may", "will", "expect", "anticipate", "continue", "estimate", "project",
"intend" and similar expressions are intended to identify forward-looking
statements. Actual results may differ materially from those included within the
forward-looking statements as a result of certain factors, including the risks
described above and elsewhere in this prospectus.

BUSINESS

INTRODUCTION

Financial Intranet, Inc. is an emerging New York based media and communications
company which delivers services to the investment community. Financial
Intranet's initial objectives are to obtain a share of the telephony resale
market by offering value-added services to broker/dealers and financial advisors
and providing mutual funds and other investment managers with a cost-efficient
method for distributing information about their products.

To accomplish these goals, Financial Intranet and its technology partners have
developed a secure intranet capable of delivering high quality narrow-band
video-on-demand. We currently resell telecommunications services to
broker/dealers. Broker/dealers and financial advisors who are subscribers of
Financial Intranet can now use the same communications lines for the
transmission of voice, video and text data. Mutual funds and futures traders
have begun using our intranet to provide product information to broker/dealers
using video, text and graphics and to distribute their documentation. We believe
that the mutual funds and futures dealers can distribute their documentation via
our intranet at lower cost than printing and physically distributing the same
materials. Financial Intranet intends to offer its network to deliver continuing
education courses on series and ethics material to broker/dealers on an ongoing
basis.

Our web site also offers financial information to individuals .These individuals
provide historical information about their investment practices which we collect
and analyze. If the individuals consent, we provide this information to
broker/dealers who specialize in the sectors in which the individual expressed
an interest. These broker/dealers are subscribers to our communications
services. We will use the generation of leads as a marketing tool to sell
communication services to broker/dealers. Revenues will be generated both by the
resale of telecommunications services bundled with value-added services to
subscribing broker/dealers and from fees from mutual funds for the use of
Financial Intranet's network and access to its subscribers.

The technology underlying Financial Intranet's high-speed intranet,
video-on-demand service and data mining capability was developed by Financial
Intranet in association with Siemens. Financial Intranet has signed agreements
creating a strategic alliance with a number of Siemens companies.

History of Financial Intranet

Financial Intranet was incorporated in 1993 as Alexis and Co. in the State of
Nevada. We changed our name to Wee Wees Inc. and subsequently, on December 17,
1996 to Financial Intranet, Inc. after the purchase of a controlling interest
by Barry Stein. Prior to that date, Financial Intranet had not conducted any
business.

We received our reseller certificate from the Federal Communication Commission
in 1997 to provide international telecommunications services originating in the
United States. Upon the effective date of a tariff in 1997, Financial Intranet
also became authorized to provide domestic interstate telecommunications
services in accordance with its tariffs. Financial Intranet is also authorized
to offer intrastate telephone services in New York, Texas, California, Florida,
New Jersey, Connecticut and Colorado. We offer interstate and intrastate long
distance service at this time. In June 1997, Financial Intranet entered into an
agreement with MCI/WorldCom to resell communications services to end users.

21
<PAGE>

Financial Intranet entered into our first contracts with Siemens in July 1997
to provide hardware and assist in developing technology for its intranet. In
October 1997, Financial Intranet began providing communications services to
broker/dealers. In April 1999, we signed an agreement with Frontier
Communications to resell communication services to end users. Financial
Intranet derived its 1998 revenues from the resale of communications services
to approximately 20 broker/dealers.

We launched our web site in July 1998. Financial Intranet began delivering
video-on-demand on our web site in 1998. We began using data mining software to
take the information gathered on the website and generate live customer leads
for broker/dealers in 1998. We added chat rooms and message boards in January
1999.

An investor has agreed to invest $1,100,000 over the next 10 months under the
terms of a private placement in February 1999. We will use the proceeds from
such investor to expand our operations . The proceeds of this offering will be
used to accelerate the expansion of services that we currently offer.

MARKETS

Financial Intranet targets three groups in the investment industry:

Mutual funds and other providers of investment products

Mutual funds need to deliver product information and increase their exposure to
potential investors. Approximately 7,000 mutual funds were being offered to
investors according to a Reuters article entitled "More Mutual Funds Turning to
Outside Management" dated April 23, 1999. If a broker/dealer is to market a
fund's products, that fund must provide it with sales information, including a
current prospectus. The broker/dealer and its registered representatives must
review the prospectus and the fund's rate of return history and sign a selling
agreement with the fund before they can solicit or offer the product to the
public. Moreover, funds may desire to provide this information in a compelling
manner to attract the interest of broker/dealers and their registered
representatives and distinguish the fund from its competitors.

Historically, mutual funds provide information to broker/dealers and their
registered representatives by mass mailings of printed material, such as
prospectuses, sales aids and charts. Funds also utilize wholesalers to introduce
the mutual funds to broker/dealers. According to the July 1996 issue of Research
Magazine Online, approximately 5,000 wholesalers sold mutual funds in 1996. Fund
managers have advised us in interviews that reaching a large group of
broker/dealers and their registered representatives and distributing
documentation is expensive and can be a particular burden for smaller funds
without large marketing budgets. Fund managers said they needed a more effective
and economic way to inform a wider range of broker/dealers to increase the
percentage of closed sales to prospective investors.

We offer an alternative to using mailings and wholesalers. Using our high speed
secure intranet, a fund can distribute to our subscribers

o plain text,
o graphics,
o digitally stored documents such as prospectuses, and
o video content.

Financial Intranet believes this method of distribution will appeal to
broker/dealers and their registered representatives who will have immediate
access to fund information without having to leave their trading screen. A
broker can listen to audio or view a video or digitally stored document in a
window while still following real-time trading information. The advantage to the
broker is more information available at his convenience in his office and more
product to sell in a user- friendly format.

We target various providers of investment products. Financial Intranet offers
services to

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o mutual funds,
o insurance companies,
o commodity trading advisors,
o commodity pool operators,
o banks, and
o other investment product creators.

Mutual funds can use a variety of our services.

The network allows mutual funds to

o deliver pre-recorded information on their products and
educational video content. We deliver the service using our point
to point video-on-demand capability. We are producing content.
Funds from this offering will enable us to broaden this service by
allowing us to develop more content.

o deliver interactive training and support. We deliver the service
through point to multi-point live video teleconferencing. Mutual
funds can answer questions about the features of their products. We
offer this feature on a trial basis. The rate at which we increase
its availability depends on the availability of funds.

o distribute sales material. Simple text, graphics or digitally
stored documents can be viewed on screen or printed by the
recipient. Financial Intranet is currently digitalizing documents,
provided by our customers for transmission over the network. The
proceeds of this offering will enable us to more rapidly expand our
ability to digitalize documents for distribution.

Three mutual funds use our network to advertise their products.
Financial Intranet is working with these funds to develop the materials which
can be disseminated. Financial Intranet expects that as more broker/dealers
purchase its communication services and participate on its intranet, mutual
funds and other investment managers will pay Financial Intranet to distribute
information about their products.

Broker/dealers and financial advisors

Selling communications services to broker/dealers will be a significant portion
of our business. Telecommunications represent one of the largest recurring
expenses to broker/dealers and financial advisors. There were 5,553 NASD member
firms and 309 New York Stock Exchange member firms doing a public business in
1996 according to the Nasdaq stock market company directory, 1997 edition. The
NYSE member firms spent approximately $3,100,000,000 on communications in 1996,
a 50% increase from 1985.

Financial Intranet provides discount, long-distance telephony to
subscribers. We plan to enter the local resale market. Financial Intranet's
reseller agreements with MCI WorldCom Inc. and Frontier Corp. allow it to
utilize those companies' communication infrastructures while incurring little
up-front installation and maintenance costs. We believe that one appeal of our
service is its ability to utilize any channel in our network for the
transmission of voice, video, text and digitally stored documents as and when
needed.

Value-added services at no additional cost are intended to make our
communications services more attractive. Financial Intranet provides
broker/dealers and financial advisors value-added services in addition to the
technical enhancements to basic communication services. We generate live
consumer leads. Financial Intranet developed a web site accessible to
individuals. Individuals may "register" by completing a questionnaire and
consenting to specified limited use of the information. In exchange for
registration, the individual may receive a reward and access to the other
features on our web site. We currently provide a 20 minute pre-paid phone card
as a reward. Financial Intranet keeps track of the products in which each
visitor to its web site shows an interest. The information gathered from each
investor is analyzed using our data mining technology, and the name and profile
of a consenting individual is given to one broker/dealer or financial advisor
operating in that person's geographical area or area of interest. The
broker/dealer or financial advisor benefits from the possible sale of products
and the opportunity to develop a relationship with the individual.

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We reviewed the first 500 questionnaires completed at our web site. Of
the individuals responding:

o 95% claim to do a substantial amount of research regarding investment
opportunities;

o 92% have a brokerage account;

o approximately half execute trades through their broker;

o 87% trade at least once a month, the majority trading either weekly
or monthly;

o 67% earn over $50,000 per year; 20% earn over $100,000 per year;

o 90% reside in the United States; 8% reside in Europe; 2% reside
elsewhere.

Financial Intranet believes that many of these individuals are potential
customers for our subscribing broker/dealers and financial advisors based on the
response to the questionnaires. Financial Intranet can also assist
broker/dealers by using the network to provide the various sales application
forms on-line to the registered representatives.

Broker/dealers and financial advisors are currently offered two levels of
access, informational access and interactive access. Interactive access allows
broker/dealers and financial advisors to schedule video conferences. Information
access provides video-on-demand and news. Delayed quotes on securities prices
are available for no additional charge on our web site. We recognize that
broker\dealers require real time quotes. Real time quotes and financial data are
available through Financial Intranet's co-marketing agreement with S&P Comstock
for an additional charge. We could provide real time quotes directly if we
construct a second data center with the proceeds of a maximum offering. The
second data center will afford us sufficient redundancy in our hardware to
improve our reliability if our primary data center sustains a disruption.
Financial Intranet also offers links to broker/dealer web sites.

We have begun to offer broker/dealers and financial advisors training on mutual
funds and other investment products using video-on-demand, plain text and
digitally-stored documents which can be viewed or read at the recipient's
location. The information can be updated as needed by the provider of the
product. Financial Intranet's network now has the capability to offer
video-on-demand but its growth is limited by a lack of content. We are
developing content for the video on demand. The development of content can be
accelerated with the receipt of additional funding from this offering. Training
will also be available through point to multi-point (e.g. mutual fund to
broker/dealers) through live interactive video teleconferencing. This live
interchange allows broker/dealers to ask questions about the fund or other
product.

Financial Intranet expects that brokerage firms will utilize its network to help
them fulfill their continuing education requirement for the NASD. Financial
Intranet intends to offer broker/dealers the ability to obtain education and
training materials for examinations administered by the NASD through the
presentation of courses via video-on-demand at the broker/dealer's trading
terminal or personal computer. We do not expect to offer this service unless we
complete the maximum offering or obtain financing from another source.

Individual investors

Individual investors have access to Financial Intranet's web site. The web site
offers

o delayed quotes on securities prices,
o advanced, customizable charting,
o portfolio management,
o video-on-demand library,
o a searchable mutual fund database,
o "chat rooms,"
o message boards, and
o a real time searchable news data base.

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The number of "hits" per day on Financial Intranet's web site increased from
approximately 13,000 to 85,000 since we began the chat rooms in January 1999.

We make the names of certain registrants available to broker/dealers. During
registration, we ask each individual for permission to forward his/her name to a
broker/dealer or financial advisor. The registrant is also asked to acknowledge
that the material presented at the web site is derived from outside sources and
Financial Intranet is not responsible for its content.

We do not expect the web site to be a direct source of substantial income.
Individual investors do not pay to access or register at Financial Intranet's
web site. Financial Intranet is offering some fee based services and products
such as books and investment newsletters on stocks and investors and mutual
funds which may become an ancillary source of revenue.

MARKETING AND SALES

We believe that increasing our marketing will best facilitate our growth because
we currently offer most of the services described in this prospectus. We employ
2 full time salespeople and 2 consultants to assist our President and Executive
Vice President in marketing our products. We also advertise our products and
services on the internet and attend trade shows. If we receive no proceeds from
this offering, we will add salespeople and expand our advertising. We will use
90% of the proceeds of this offering for marketing if gross proceeds from this
offering are $1,000,000 or less. We will spend approximately $1,600,000 from the
proceeds of a maximum offering on marketing and sales. If we raise only minimal
proceeds from this offering, we will use approximately $300,000 from the
$1,100,000 which an investor is obligated to provide us over the next 10 months.

PRODUCTS AND SERVICES

Resale of long distance and local communication services

Resellers are among the fastest growing segment of the telecommunications
industry. Resellers grew at an annual rate of 16% between 1994 and 1996 while
the total long distance market is growing at approximately 6% per year according
to the Telecommunications Resellers Association, a trade association. Resellers
represented approximately 19% (or $13,000,000,000) of the $68,000,000,000 total
retail long distance market in 1996. The trade association stated on its web
site in January 1999 that 800 telecommunications resellers operate in the United
States. The trade association reported that while resellers have historically
engaged only in the resale of long distance communications, they are now adding
other services such as local resale, pagers, travel cards and PCS
phones/cellular phones. Financial Intranet believes that its value-added
services provide an advantage over other resellers.

A key element of Financial Intranet's services to the investment community is
the resale of discount, long distance telephony and other communication services
to broker/dealers and financial advisors. Voice, video-on-demand services, text,
and digitally-stored documents share the same network connection to each
customer's office. Financial Intranet has reseller agreements with MCI WorldCom
Inc. and Frontier Corp. The agreement with MCI/WorldCom expires in March 2001
and may be extended on a month-to-month basis after that. Our agreement with
Frontier expires in April 2001. Financial Intranet can also enter into such
agreements with other carriers who may be more competitive in specific
geographical areas or with respect to specific services. Resale of communication
services has been the principal source of revenue to date and is expected to be
one of our major revenue producing products during the initial years of
operation.

Financial Intranet is permitted to provide interstate and international long
distance service. Financial Intranet tariffed in New York, Florida, Connecticut,
Texas and California to provide intrastate toll telecommunications services and
in anticipation of entering the local resale business. We are registered in New
Jersey and Colorado where no tariffs are required. We have tariffs pending in
Georgia, Illinois, Massachusetts, Pennsylvania and Maryland. We are permitted to
offer intrastate toll telecommunications services in four other states without
filing a tariff by either filing a registration or commencing operations. None
of these authorizations include the authority to provide Financial Intranet's
telecommunications services on a local exchange, non-toll basis for which
separate applications and/or tariff filings are

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required.

We intend to engage in development of a voice-over internet protocol. This
feature will enable us to facilitate the transmission of voice and other
communications over the Internet. We do not anticipate devoting significant
proceeds from this offering to development as this technology is available
through Siemens.

Video-on-demand training and marketing

Financial Intranet now offers video conferencing and video-on-demand services to
provide flexible distance learning opportunities. These services permit
customers to conduct live training or informational sessions via
teleconferencing and to access pre-recorded materials through video-on-demand.

We can provide video-on-demand training and marketing applications. These
applications use stored video content, and are available on demand to Financial
Intranet's customers via its private intranet and to individual investors at its
web site. For broker/dealers, this content will include materials regarding
various investment products. Financial Intranet and mutual funds are jointly
developing materials related to their products. We are also developing our own
content. The content can range from videotapes of teleconferencing sessions to
customized materials with data, video and text.

Content is delivered at different speeds depending on its destination.
Broker/dealers receive video and detailed sales fulfillment material at high
speed and have direct contact with mutual funds. Financial Intranet's video
image occupies one quarter of the screen of the desktop computer and does not
interfere with access to real time financial data. Individuals have access to
more general information and can access stored video and certain
digitally-stored documents such as prospectuses. The digitally-stored documents
are delivered at the transmission speed available to them.

Video conferencing

Financial Intranet has begun testing point to point and point to multi-point
video conferencing to facilitate both marketing and training. A client, such as
a mutual fund, can now schedule a point to multi-point live video conference.
Scheduling information is accessible to the client on Financial Intranet's
private intranet. Financial Intranet's intranet can transmit full screen
downstream video (originator to viewer) at 30 frames per second. The upstream
video (viewers to originator) is delivered at 5 frames per second, a sufficient
quality for the originator to be able to identify who is asking a question.

We provide video conferencing hardware to clients. We currently lease or
purchase the required equipment. Our ability to expand this service is
constrained by our lack of equipment. We lease or purchase additional equipment
on an as needed basis as we secure additional demand for our service. We believe
that purchasing equipment with the proceeds of this offering will enable us to
have an inventory of equipment and obtain equipment on better terms than
continuing to purchase equipment on an as needed basis. We intend to use a
portion of the proceeds of this offering to purchase additional equipment, if we
receive proceeds of $1,000,000 or more.

Financial Intranet intends to use a portion of the proceeds of this offering to
develop a system for delivering continuing education training to broker/dealers
to meet NASD requirements. This system will track the progress of a
broker/dealer's registered representatives and provide courses appropriate to
their requirements and skill levels. We do not anticipate developing this
system unless we complete a maximum offering or obtain financing from another
source.

Individual investor web site

Financial Intranet recruits prospective investors as leads for the
broker/dealers, financial advisors and mutual funds, who subscribe to our
communications services. The web site is a mechanism to deliver multimedia
information and education to individual investors while capturing information
about those investors. A continuous background feature is the provision of

o 20 minute-delayed stock quotes,

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o exchange information,
o newsletters,
o chat rooms,
o market news,
o information about mutual funds and other markets, and
o message boards.

Data mining technology

We track the activities of our broker/dealer subscribers and the visitors to our
web site. We obtain information provided by investors who register. We maintain
information about specific materials downloaded by broker/dealers and registered
investors and subsequent actions relating to the information received.

Financial Intranet uses this data to provide customer leads, surveys and reports
based on criteria provided by its broker/dealer and financial advisor customers
through the use of its proprietary data mining system. Financial Intranet
believes its ability to convert the data it gathers into practical knowledge
gives Financial Intranet an advantage over its competitors in the communication
service resale industry. Financial Intranet does not, however, attempt to
determine the suitability of investors for particular investments.. That
qualification remains the responsibility of the broker/dealer.

EXPANSION

We have concentrated on the investment industry. Financial Intranet believes
this industry will benefit most from our information and communications services
and that the investment industry presents the most immediate opportunity for
revenue. Financial Intranet hopes that as it becomes established as a provider
of financial services information, we will capture a larger portion of the long
distance resale business.

We plan to expand our intranet services to other industries and associations. We
are examining expansion into pharmaceutical and health products, real estate,
insurance and entertainment industries. We believe these industries can benefit
from our telecommunications products and from participating in an
industry-centered intranet. We intend to focus on industries which rely on
distributors of their products and services or need to train geographically
dispersed sales people.

Financial Intranet intends to expand from the eastern United States throughout
the United States and possibly Europe and the Pacific Rim. Overseas expansion
may entail adding data centers or implement collocation agreements to service
those markets and provide Financial Intranet with a redundant data source. We
will not be able to add additional data centers unless we complete a maximum
offering or obtain financing from another source. We are unlikely to attempt to
expand to reach customers based overseas within the next 12 months unless we
complete a maximum offering.

We may also expand through the acquisition of companies that provide
complementary services. We are considering an acquisition of a company that
sells communications services. Discussions regarding the potential acquisition
are in the preliminary stage and no terms have been agreed upon. The
contemplated acquisition is not probable at this time. Any acquisition that
requires payment of a cash purchase price will likely require financing in
addition to the proceeds of this offering. Other issues to be resolved in an
acquisition include the assimilation of the operations, management and products
of the acquired companies. We can't be sure that we will complete any
acquisitions.

TECHNOLOGY AND BUSINESS PARTNERS

Financial Intranet's overall delivery system has three parts:

o The data center in Ardsley, NY, houses Financial Intranet's
video library and video processing software and its data warehouse
and data mining capability.

o The link between Financial Intranet and its customers. This
includes private lines from UUNet, an MCI

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WorldCom company, and the "last miles" on either end connecting
the leased lines to Financial Intranet and each of its customers.
This link creates a virtual private network.

o The services gateway which resides at each customer's office.

We have a strategic alliance with Siemens Nixdorf Informationssysteme Ges.m.b.H.
and several of its subsidiaries, most significantly Siemens Information and
Communication Products LLC and Siemens Telecom Network. Steven Weller, a member
of the Board of directors of Financial Intranet, is the Vice President of Sales
for the Computer Systems division of Siemens Information and Communication
Products LLC.

The Siemens companies installed a fully integrated system including hardware and
software in Financial Intranet's data center. They provided full documentation
and trained our internal technical team. Siemens will provide full time remote
management of Financial Intranet's system for a twelve month period beginning
February 1, 1999 under a management agreement. Out cost is $105,000 for the
year. Financial Intranet anticipates renewing the management agreement after one
year. Financial Intranet believes at least three full-time employees would be
required to perform these services in-house without the management agreement.

Siemens also licensed its proprietary data mining technology to Financial
Intranet for a one-time single site fee.

COMPETITION

Financial Intranet does not believe any other company offers the same array of
services as us although a number of companies compete with Financial Intranet in
specific areas.

Telecommunications carriers and resellers

Financial Intranet's communications resale services compete with:

o other resellers,
o local exchange carriers,
o local phone carriers,
o regional Bell operating companies, and
o long distance carriers.

Some competitors offer a wider range of communications services than Financial
Intranet. Some have significantly greater assets. Financial Intranet believes it
has an advantage over other resellers because of our value-added-services.

Mutual fund information services for financial sales professionals

Financial Intranet believes it has no direct competition providing mutual fund
information to financial services professionals such as broker/dealers and
financial planners. The large brokerage houses have long had internal systems
for the redistribution of mutual fund data to their employees. These systems use
data replication to replace paper distribution of mutual fund sales and
marketing materials to in-house brokers.

Financial Intranet's most direct competitor as an outside electronic
redistributor of fund sales and marketing materials is First Data Investor
Services Group, developer of BROKERCONNECT. Financial Intranet believes it has a
significant advantage over BROKERCONNECT. We deliver the same electronic text
redistribution services but add video-on- demand content provided by the fund
and as interactive video training and the prospect of receiving customer leads.

Real time data redistribution

Brokerage firms purchase trading desks equipped with terminals and real-time
data feeds for their registered representatives. Many companies provide
real-time data feeds, including PC Quote, Quotron and S&P Comstock.

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Through our co-marketing agreement with S&P Comstock, Financial Intranet
believes it can deliver S&P terminals and data feeds to broker/dealers at a
competitive price. Financial Intranet does not see data feeds as a significant
independent revenue source. Data feeds primarily provide value enhancement to
attract brokers to purchase Financial Intranet's communication services.

GOVERNMENT REGULATION

Communications regulation

Financial Intranet and its underlying carriers who provide the network
facilities and services we resell are subject to certain regulation at the
federal level by the FCC and, with limited exceptions, at the state level by
public service, public utility or state corporation commissions.

Financial Intranet and all other "non-dominant" carriers (telecommunications
service providers) are authorized to provide interstate telecommunication
services under a general policy decision adopted by the FCC as opposed to any
company specific authorization. We are not subject to periodic renewal
requirements. In mid-1997, Financial Intranet was granted its certificate of
public convenience and necessity under Section 214 of the Communications Act of
1934. This certificate authorizes us to provide international services, that is,
communications originated by customers in the United States and its possessions
and terminating in foreign countries. Financial Intranet's certificate has no
expiration date and is not subject to periodic renewal requirements.

Financial Intranet filed tariffs with the FCC after obtaining certificates under
Section 214. FCC regulations require that Financial Intranet, like all carriers,
file and maintain separate tariffs for its interstate and international service
offerings. Tariffs contain the terms, conditions and rate for each
telecommunications service offered or provided by Financial Intranet. Tariffs
are not approved by the FCC, but may be reviewed by the FCC on its own motion or
as a result of a complaint by a customer, a non-customer member of the public or
a competing communications company. Tariffs are strictly construed and any
ambiguity in the tariff is construed in favor of the public (customer) and
against the carrier. Financial Intranet has the right to file revisions to its
tariff and change any rate, term or condition at any time, except that any term,
condition or rate once filed must remain, by FCC rule, effective for a minimum
of 30 days. The FCC may not interfere with or reject any filed tariff rate, term
or condition without specific findings that such rate, term or condition is
unjust, unreasonable or unduly discriminatory.

The FCC assumes that all non-dominant carriers' rates are reasonable and
non-discriminatory. Any new or revised rate may be filed on only one day's prior
notice. The FCC does not review specific tariff filings unless someone protests
or it learns of some issue of lawfulness. Should issues be raised against any
tariff filing, the FCC must find that the tariff or tariff provision is
"patently unlawful," that is, contrary on its face to some law, rule,
regulation, policy or pre-existing decision of the courts or FCC. Where patent
unlawfulness is not shown, the FCC may suspend a tariff filing's effectiveness
for no more than 120 days, request that a carrier voluntarily "defer" the
effective date or investigate the tariff after the suspension is over.

Financial Intranet is also tariffed in New York, California, Florida,
Connecticut and Texas which allows it to provide intrastate toll communications
services. It is registered in New Jersey and Colorado (no tariffs being
required) and has tariffs pending in Georgia, Illinois, Massachusetts,
Pennsylvania and Maryland, and is legally permitted to offer intrastate toll
telecommunications services in four other states without filing a tariff by
either filing a registration or commencing operations. None of these
authorizations include the authority to provide Financial Intranet's
telecommunications services on a local exchange, non-toll basis for which
separate applications and/or tariff filings are required.

Should operations be expanded to countries other than the United States,
Financial Intranet will be required to comply with the laws and regulations
applicable to that country's telecommunications industry. In Western Europe, the
telecommunications industry is also subject to the actions, policies and
regulations of the European Commission. Beginning January 1, 1998, regulation of
telecommunications in Western Europe was formally liberalized to increase
competition in telecommunications. The timing and degree of liberalization
however varies, sometimes widely, country by country, and some countries like
Portugal and Greece have delayed implementation of new regulations.

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Since few laws or regulations are directly applicable to access or commerce on
the internet, our internet and intranet is not subject to direct government
regulation, other than regulations applicable to businesses generally. However,
a number of legislative and regulatory proposals are under consideration by
federal, state, local and foreign governmental organizations and, as a result,
a number of laws or regulations may be adopted with respect to internet user
privacy, taxation, infringement, pricing, quality of products and services and
intellectual property ownership.

Securities regulation

Financial Intranet's customers are subject to various federal and state laws and
regulations of self-regulatory agencies such as the NASD, regarding the sale of
securities and continuing education. Changes in these laws and regulations may
affect Financial Intranet's business. While Financial Intranet's web site states
that Financial Intranet is not responsible for the information presented,
Financial Intranet will make reasonable efforts to assure that its services are
not misused.

We do not intend to engage in activities which would require registration as a
broker\dealer. The leads are provided to our subscribers without charge, as a
value added service for their purchase of communications services. The
subscriber has the responsibility to approve the lead as a client, have the
client complete any new account forms or other documents regarding an investment
and determine the suitability of any investments for the client. We do not
receive commissions from any business that may be generated by the new client.

INTELLECTUAL PROPERTY

We regard the technology we use as proprietary, but have no existing or pending
patent or copyright protection. We rely on the following to protect our
software and other propriety technology:

o confidentiality and license agreements with third parties,
o trade secret and trademark laws, and
o common law copyright.

SUPPLIERS

Financial Intranet's principal suppliers for the resale of communication
services are MCI WorldCom Inc. and Frontier Corp. We use third party production
companies to produce video on terms negotiated with respect to each project.
Financial Intranet uses computer hardware and software and related services
provided by Siemens Nixdorf Informationssysteme Ges.m.b.H. and several of its
subsidiaries. Although we believe our supplier relationships are good, we
believe that alternate suppliers of telephony, computer hardware, software and
servicing are available at competitive prices. Regulatory and other changes in
the industry have lowered network costs. We believe we will obtain agreements
from suppliers of communications services which will permit the contained resale
of services at acceptable margins. Financial Intranet could experience a
disruption in its business if it needed to replace the Siemens companies without
sufficient notice.

DISASTER RECOVERY SYSTEM

Implementation of a second data center from the proceeds of a maximum offering
will facilitate both expansion overseas and implementation of a more thorough
disaster recovery program. Our current data center already provides some
redundancy and protection against a disruption in our computer systems. We
believe that all but the most severe problems can be corrected quickly and
without much disruption to our business. Our data center has four clustered
servers. Video transmissions can be transferred to another server within hours
if an existing server malfunctions. A defective motherboard can be replaced in
one or two days. Our software is backed up each day. We also purchase
telecommunications services from reliable major companies, WorldCom and
Frontier. A second data center would eliminate the delay that could result from
a total system failure. We anticipate that the second data center would be
implemented by leasing space and equipment at an existing Siemens data center.
Currently, a total system failure could disrupt operations for up to two weeks
until we secured connections to the Siemens data center in Toronto. We also
carry business disruption insurance.

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FACILITIES

Financial Intranet's principal offices are located at 410 Saw Mill River Road,
Ardsley, New York. Such offices are located on two floors leased by Financial
Intranet under two leases. A lease for 909 square feet at an annual rent of
$18,675 terminates on December 31, 2000. A lease for 700 square feet for annual
rent of $15,575 terminates on December 31, 2000. Financial Intranet believes
that the offices are sufficient for its current operations and proposed
operations through the term of the lease.

EMPLOYEES

Financial Intranet has five full-time employees and one part-time employee. Four
full-time employees are officers. We have five part-time outside consultants.
None of the employees are represented by a collective bargaining agreement and
management believes it has good relations with its employees.

LEGAL PROCEEDINGS

Legal Proceedings

On or about July 23, 1998, H & H Acquisition Corporation, individually and
purportedly on behalf of Financial Intranet, commenced an action in United
States District Court, Southern District of New York entitled H & H Acquisition
Corp., individually and on behalf of Financial Intranet, Inc. v. Financial
Intranet Holdings, Financial Intranet, Inc., Ben Stein, Interwest Transfer Co.,
Steven A. Sanders, Michael Sheppard, Maura Marx, Henry A. Schwartz, Leonard
Gotshalk, Gotshalk Enterprises, Law Office of Steven A. Sanders, P.C. and
Beckman, Millman & Sanders, LLP, 98 Civ. 5269. The action's principal basis
appears to be plaintiff's claim that Ben Stein wrongfully claims ownership of
certain shares of common stock of Financial Intranet which, according to
plaintiff, belong to plaintiff. The plaintiff asserts sixteen causes of action.
Only some make allegations against Financial Intranet, Michael Sheppard and
Maura Marx. The plaintiff alleges, inter alia:

o Mr. Sheppard and Ms. Marx assisted defendants Stein and
Financial Internet Holdings (a company owned by Stein) in
converting stock which plaintiff allegedly owns. Plaintiff
seeks damages allegedly sustained because of the alleged
conversion.

o Mr. Sheppard and Ms. Marx assisted in defrauding plaintiff
with respect to the stock plaintiff claims. Plaintiff seeks
damages allegedly sustained because of the alleged fraud.

o Plaintiff alleges in a derivative claim, purportedly on behalf
of Financial Intranet: that Mr. Sheppard and Ms. Marx
permitted issuance of shares to defendant Gotshalk without
proper consideration and at a price lower than that offered to
a company introduced by Plaintiff; that they refused to allow
plaintiff to purchase additional shares; that Mr. Sheppard and
Ms. Marx permitted Financial Intranet to pay defendant
Schwartz monies which should not have been paid, and
authorized issuance of stock to Schwartz without proper
authority; and that Mr. Sheppard and Ms. Marx caused the
issuance of stock to themselves without proper authority.
Plaintiff seeks damages allegedly sustained for these alleged
wrongful acts.

o a derivative claim purportedly on behalf of Financial Intranet
seeking an order directing the holding of a shareholders
meeting and rescission of actions determined to be improper by
the Court or its designee. A shareholders meeting was held in
December 1998.

o Financial Intranet and its former transfer agent wrongfully
transferred shares belonging to plaintiff to a third party.
The transfer agent has asserted a claim against us seeking
indemnification for any liabilities incurred by the transfer
agent in this action.

o Plaintiff is entitled to $2500.00, plus interest, from us for
alleged breach of contract. Financial Intranet settled this
cause of action.

<PAGE>

Plaintiff also seeks an accounting from Mr. Sheppard and Ms. Marx, among other
defendants, for damages Financial Intranet allegedly suffered.

Financial Intranet, Mr. Sheppard and Ms. Marx believe that the claims against
it, Mr. Sheppard and Ms. Marx are without merit and are vigorously defending the
action. Financial Intranet, Mr. Sheppard and Ms. Marx have filed responses to
the claims against them. The responses deny all material allegations of the
complaint and the claim asserted by the transfer agent, and assert a variety of
defenses. Discovery is in its early stages. We cannot make any assurances about
the litigation=s outcome. If the plaintiff prevails against us, we could be
adversely affected.

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Michael Sheppard................. 49 Director, President, Chief Operating Officer
Joseph F. Engelberger............ 74 Director
Steven S. Weller................. 44 Director
Maura Marx....................... 36 Executive Vice President, Secretary
Alan Spar........................ 26 Chief Technical Officer/Vice President,
Technology
Alan M. Ross..................... 55 Vice President, Finance and Administration
</TABLE>

All directors serve one year terms or until the next annual meeting of the
shareholders.

Michael Sheppard--President, Chief Operating Officer and Director

Mr. Sheppard joined Financial Intranet as a consultant in February 1997 and
became President, Chief Operating Officer and Director in April 1997. Mr.
Sheppard has been involved in setting up the corporate infrastructure of several
early stage development companies and undertaking their day-to-day operations as
chief executive and chief operating officer. From January 1996 through January
1997, Mr. Sheppard was Chief Operating Officer of Freelinq Communications,
formerly Televideo Corporation, based in New York City. Freelinq offers real
time video-on-demand via ATM/XDSL technology with high-speed internet
transmission and advertiser supported free theatrical films delivered through
twisted pair telephone lines. From 1995 to 1996 he was chief operating officer
for Lee Communications Ltd., which is a laser development and transmission
company. From 1993 to 1995, he was Chief Executive Officer for MLS Lighting Ltd.
In 1980 he founded Belden Communications and served as its President and Chief
Executive Officer until it was acquired in 1985. It was engaged in the sale and
distribution of proprietary products used in the motion picture and television
markets, and was merged in 1985 into Lee America Ltd., which was bought by Lee
Lighting Ltd., a United Kingdom company, in 1986.

Joseph F. Engelberger

Mr. Engelberger became a Director of Financial Intranet in August 1998. Joseph
Engelberger founded Helpmate Robotics, Inc. Since 1984, he has been Chairman
and Chief Executive Officer of Helpmate Robotics, Inc. He received B.S. and
M.S. degrees from Columbia University in 1946 and 1949, respectively, and he
has authored numerous articles in the instrumentation and robotics fields.

His honors include the Progress Award of the Society of Manufacturing
Engineers, the Leonardo da Vinci Award of the American Society of Mechanical
Engineers and the 1982 American Machinist Award. The University of Liverpool
bestowed the first McKechnie Award on him in 1983. In 1984, he was elected to
the National Academy of Engineering. He was the recipient of the Egleston Medal
for distinguished engineering achievement from Columbia University. The
University of Bridgeport, Spring Garden College, Briarwood College, Trinity
College and Carnegie-Mellon University granted him honorary doctorates. In
January 1997, he received the Beckman Award for pioneering and original
research in the general field of automation. Mr. Engelberger serves on the
Board of directors of EDO Corporation (NYSE:EDO).

32
<PAGE>

Steven Weller

Mr. Weller became a director of Financial Intranet in November 1998. Since
1989, Mr. Weller has been the Vice President of Siemens Information and
Communication Products LLC. He is the Vice President of Sales for the Computer
Systems division. He is responsible for all sales and technical support
personnel. He was previously the Vice President of Sales for the North American
Key Accounts.

Maura Marx--Executive Vice President, Secretary

Ms. Marx became Secretary in December 1998 and became Executive Vice President
in February 1999. She had been the Senior Vice President and Assistant Secretary
since September 1997. From 1994 until 1996, she was employed as a salesperson in
the Sales and Leasing Department of the Friedman Realty Group, a major New York
commercial real estate firm. Her responsibilities centered on selling, servicing
and expanding the firm's client base of foreign banking institutions. Ms. Marx
was head of the Sales & Marketing Department for Warner Bros. Film Gesmbh based
in Vienna Austria from 1992 until 1994. She was responsible for tactical and
budget planning, and for distribution and promotion of Warner films and Warner
retail goods throughout Austria. From 1990 until 1992, she served as Assistant
Director of European Development for the Guggenheim Museum Salzburg Advisory
Board (GMSAB).

CONSULTANTS

Ben B. Stein--Director of Brokerage Sales

Mr. Stein founded Financial Intranet in December 1996. Since November 1998, he
has been a consultant to Financial Intranet as Director of Brokerage Sales. He
is responsible for selling our products and services to the brokerage community.
From December 1996 through November 1998, he was a member of the board of
directors and Secretary of the Company. Mr. Stein has over 25 years experience
in the securities industry during which time he has held Series 3, Series 4,
Series 7, Series 8, Series 24, Series 27 and Series 63 Licenses issued by the
NASD. From July 1998 through October 1998, he was a registered representative
with the Empire Financial Group. From 1993 to 1996, Mr. Stein was Chief
Executive Officer of Stein Shore Securities, Inc., a full-service broker/dealer
with three branch offices. From 1991 through 1993, Mr. Stein operated as Senior
Vice President of Marsh Block & Company, a securities firm specializing in
investment banking. Mr. Stein received a Bachelor of Science degree in Business
Administration from Roosevelt University in Chicago, Illinois in 1961. He became
a Certified Public Accountant in 1968.

Kevin M. Haggerty--Consultant for Mutual Fund & Brokerage Industries

Mr. Haggerty became a consultant in October 1997. He provides consulting
services on marketing and sales of our products, training programs ans services
to customers. From 1990 to April 1997, Mr. Haggerty was the Senior Vice
President--Manager for equity trading at Fidelity Capital Markets in Boston, a
division of Fidelity Investments, the mutual fund complex. He was in charge of
all U.S. Institutional and broker/dealer equity trading. He was also responsible
for option, agency over-the-counter training, and all of the exchanges, floor
operations and execution, including the Chicago Board Options Exchange, New York
Stock Exchange, American Stock Exchange, the Pacific Stock Exchange and the
Boston Stock Exchange.

EXECUTIVE COMPENSATION

Employees

Michael Sheppard receives a salary of $150,000 per year under his employment
agreement dated September 12, 1997. The employment agreement expires on December
31, 2002. Mr. Sheppard received an incentive bonus of 750,000 shares of common
stock upon execution of a consulting agreement on February 27, 1997. Mr.
Sheppard received an option under the employment agreement to purchase 2,231,352
shares of common stock at a price of $0.19 per share. The option expires upon
the earlier to occur of December 31, 2002 or 90 days after the termination of
Mr. Sheppard's employment without cause or immediately after termination with
cause. The option is personal to Mr. Sheppard and is not assignable.

33
<PAGE>

Mr. Sheppard has not purchased any shares of common stock under his option.

Ms. Marx receives a salary of $100,000 per year under her employment agreement
dated September 12, 1997. The employment agreement expires on December 31, 2002.
Ms. Marx received an incentive bonus of 500,000 shares of common stock upon
execution of the employment agreement. She received an option under her
employment agreement to purchase 1,279,379 shares of common stock at a price of
$0.19 per share. The option expires upon the earlier to occur of December 31,
2002 or 90 days after the termination of Ms. Marx's employment without cause or
immediately after termination with cause. The option is personal to Ms. Marx and
is not assignable. Ms. Marx has not purchased any shares of common stock under
her option.

Mr. Ross receives a salary of $80,000 per year and has an unvested option to
purchase 250,000 shares of common stock at an exercise price of $0.62 1/2 per
share. One third of Mr. Ross's options vest on December 7 of each year
commencing in December 1999.

Mr. Spar receives a salary of $100,000 per year and has an unvested option to
purchase 250,000 shares of common stock at an exercise price of $0.62 1/2 per
share. One third of Mr. Spar's options vest on December 9 of each year
commencing in December 1999.

CONSULTANTS

Mr. Stein received compensation of $150,000 per year and 1,500,000 shares of
common stock as a signing bonus and 1,500,000 shares of common stock in lieu of
his compensation for 1997 under his consulting agreement dated February 27,
1997. He signed an employment agreement for the same annual compensation on
September 12, 1997. Mr. Stein ceased his employment and became a consultant in
November 1998. Mr. Stein's consulting fee is based solely on commissions earned
from telecommunications services sold to clients he introduces to us. The
consulting agreement expires on December 31, 2002. Financial Intranet accrued
Mr. Stein's consulting fee for 1998 in the aggregate amount of $150,000 but paid
$40,500 of such accrued amount in 1999.

The employment and consulting agreements provided Mr. Stein with options to
purchase shares of common stock at a price of $.19 per share. Under his
consulting agreement dated March 3, 1999, Mr. Stein agreed to reduce his options
from 3,640,262 to 2,500,000 and agreed to apply the $109,500 balance of his
accrued salary and the principal of $56,889 owed under two promissory notes to
purchase 879,685 shares of common stock. He now owns options to purchase
1,620,315 shares. The options expire upon the earlier to occur of December 31,
2002 or immediately if Mr. Stein's consulting agreement is terminated with
cause. The options are personal to Mr. Stein and are not assignable.

Mr. Haggerty became a consultant commencing October 6, 1997. He received a
warrant to purchase 1,000,000 shares of common stock at a price of $0.01 per
share. The warrant became exercisable one year after grant. He exercised this
warrant on October 9, 1998. The consulting agreement expires October 20, 1999.
The agreement can be terminated on 30 days notice by either Mr. Haggerty or
Financial Intranet. We will pay him $10,000 per month commencing November 1999
if we decide to extend the term to October 20, 2000.

TOTAL COMPENSATION

The following table shows the total compensation paid for services in all
capacities during the years ended December 31, 1998, 1997 and 1996 to officers
who received compensation in excess of $100,000 per year.

<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation ----------------------
------------------- Restricted
Name and Principal Position Year Salary Bonus Other Stock Awards Stock Options
- --------------------------- ---- ------ ----- ----- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Ben B. Stein(1)...................................... 1998 $150,000 $0 $0 $0 1,242,955
1997 150,000 0 10,500 54,000 2,397,307
</TABLE>

34
<PAGE>

<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1996 0 0 0 0 0

Michael Sheppard..................................... 1998 150,000 0 0 0 720,914
1997 116,352 0 0 27,000 1,510,438
1996 0 0 0 0 0

Maura Marx........................................... 1998 100,000 0 0 0 447,464
1997 48,750 0 0 18,000 903,031
1996 0 0 0 0 0
</TABLE>

(1) On February 27, 1997, Mr. Stein received 1,500,000 shares of common
stock in lieu of cash compensation for 1997 and an additional 1,500,000
shares of common stock as an inducement to execution of the consulting
agreement.

OPTION GRANTS IN LAST FISCAL YEAR--INDIVIDUAL GRANTS

<TABLE>
<CAPTION>
Percent of Total
Number of Options Granted
Securities to Employees In
Underlying Fiscal Year Ended Exercise or Base
Name Options Granted December 31, 1998 Price Per ($/Share) Expiration Date
- ---- --------------- ----------------- ------------------- ---------------
<S> <C> <C> <C> <C>
Ben B. Stein.............................. 1,242,955 51.5% $.19 12-31-2002
Michael Sheppard.......................... 720,914 29.9% $.19 12-31-2002
Maura Marx................................ 447,464 18.6% $.19 12-31-2002
</TABLE>

35
<PAGE>

FISCAL YEAR END OPTION VALUES

The following table shows the value of unexercised in-the-money options held by
the executive officers and consultant as of December 31, 1998.

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Fiscal Year End Options at Fiscal Year End
-------------------------- --------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Ben B. Stein.................. 3,640,262 0 $1,674,521 0
Michael Sheppard.............. 2,231,352 0 1,026,422 0
Maura Marx.................... 1,350,495 0 621,228 0
</TABLE>

DIRECTOR'S COMPENSATION

Financial Intranet's directors who are not full-time employees of Financial
Intranet receive compensation of $350 and reimbursement of expenses for
attendance at each meeting of the board of directors. Mr. Weller has received
options to purchase 10,000 shares of common stock at an exercise price of $.60
per share, which options are exercisable through November 12, 2001. Mr.
Engelberger has received options to purchase 10,000 shares of common stock at an
exercise price of $.725 per share, which options are exercisable through August
31, 2001.

COMMITTEES OF THE BOARD

The board of directors has one committee, the stock option committee. The stock
option committee administers the stock option plan and authorizes the award of
stock options by Financial Intranet. Messrs. Sheppard, Weller and Engleberger
are the members of the stock option committee.

INDEMNIFICATION OF DIRECTORS AND OFFICERS AND RELATED MATTERS

The by-laws of Financial Intranet provide that, to the fullest extent permitted
by applicable law, as amended from time to time, Financial Intranet will
indemnify any person who was or is a party or is threatened to be made a party
to an action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was director,
officer, employee or agent of Financial Intranet or serves or served any other
enterprise at the request of Financial Intranet.

Financial Intranet maintains directors' and officers' insurance insuring the
directors against any liability arising out of the director's status as a
director of Financial Intranet regardless of whether Financial Intranet has the
power to indemnify the director against such liability under applicable law.

Financial Intranet has been advised that it is the position of the SEC that
insofar as the foregoing provisions may be invoked to disclaim liability for
damages arising under the Securities Act, such provisions are against public
policy as expressed in the Securities Act and are unenforceable.

STOCK OPTION PLANS

Financial Intranet has established the 1998 Stock Option Plan which provides for
the granting of options which are intended to qualify either as incentive stock
options within the meaning of Section 422 of the Internal Revenue Code or as
options which are not intended to meet the requirements of such section. The
total number of shares of Common stock

36
<PAGE>

reserved for issuance under the plan is 1,500,000. Options to purchase shares
may be granted under the plan to persons who, in the case of incentive stock
options, are key employees (including officers) or, in the case of
non-statutory stock options, are key employees (including officers) or
non-employee directors or non-employee consultants.

The plan will be administered by the board of directors or a committee chosen by
the board of directors, which will have discretionary authority, subject to
certain restrictions to determine the number of shares issued under incentive
stock options and nonstatutory stock options and the individuals to whom, the
times at which and the exercise price for which the options will be granted. On
November 13, 1998, Financial Intranet appointed Steven S. Weller, Michael
Sheppard and Joseph F. Engelberger to constitute the stock option committee to
administer the plan.

The exercise price of all incentive stock options granted under the plan must be
at least equal to the fair market value of such shares on the date of the grant
or, in the case of incentive stock options granted to the holder of more than
10% of Financial Intranet's common stock, at least 110% of the fair market value
of such shares on the date of the grant. The maximum exercise period for which
incentive stock options may be granted is ten years from the date of grant (five
years in the case of an individual owning more than 10% of Financial Intranet's
common stock). The aggregate fair market value (determined at the date of the
option grant) of shares with respect to which incentive stock options are
exercisable for the first time by the holder of the option during any calendar
year shall not exceed $100,000.

The exercise price of all non-statutory stock options granted under the plan
must be at least equal to the 85% of the fair market value of such shares on the
date of the grant

As of today, no options have been granted under the plan.

<PAGE>

CERTAIN TRANSACTIONS

On February 7, 1997, Financial Intranet issued Ben Stein, the principal
shareholder of Financial Intranet, 1,500,000 shares of common stock in lieu of
salary due for 1997 in the amount of $150,000.

On February 8, 1999, Financial Intranet issued a 7% convertible promissory note
in the principal amount of $600,000. The principal amount of $240,000 was
payable on demand on March 10, 1999 and the principal amount of $360,000 is
payable on demand on May 9, 1999. The promissory note is convertible into
common stock at a conversion price equal to the lesser of:

o 75% of the average of the five lowest closing bid prices of common
stock during the 30 trading days ending on the trading day
immediately preceding the conversion date, or

o $.40 per share.

Mr. Ben Stein personally guaranteed Financial Intranet's obligations under the
convertible promissory note in the principal amount of $600,000 issued in
February 1999 and pledged 1,500,000 restricted shares of common stock as
collateral security for such obligations. The lender received 600,000 of the
pledged shares in March 1999 in satisfaction of payment of the principal amount
of $240,000 and 900,000 of the pledged shares in May 1999 in satisfaction of
payment of the principal amount of $360,000 based on a conversion price of $.40
per share. Financial Intranet issued 1,500,000 shares of common stock to Mr.
Stein in May 1999 to replace the pledged shares.

On March 3, 1999, Mr. Stein applied $167,140 owed to him by Financial Intranet
in lieu of cash payment to purchase 879,685 shares of common stock under
options with an exercise price of $.19 per share. The $167,140 owed to Mr.
Stein consisted of $109,500 in accrued compensation from 1998 and two
promissory notes in the principal amount of $56,889 and all accrued interest.

Messrs. Ben Stein and Michael Sheppard and Ms. Maura Marx personally guaranteed
Financial Intranet's obligations under the convertible promissory note in the
principal amount of $500,000 issued in July 1999. Mr. Stein pledged 924,517
restricted shares of common stock, Mr. Sheppard pledged 96,151 restricted
shares of common stock and Ms. Marx pledged 101,844 restricted shares of common
stock as collateral security for such obligations.

38
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the common stock as of July 15, 1999 by:

o each stockholder known by Financial Intranet to be the beneficial
owner of more than 5% of the outstanding common stock;

o each director and executive officer; and

o all directors and executive officers as a group.

Except as otherwise indicated, Financial Intranet believes that the
beneficial owners of the common stock listed below have sole investment and
voting power with respect to such shares. The following table:

o Assumes the exercise of all stock options held by the shareholder.

o Includes 1,000,000 shares owned by Financial Intranet Holdings, Inc.,
a company wholly-owned by Mr. Stein. Mr. Stein disclaims ownership of
183,000 shares owned by his children, 80,000 shares owned by his wife
and 30,000 shares owned by his mother and sister.

o Includes options exercisable at a price of $.19 per share for

o 1,620,315 shares issuable to Mr. Stein.

o 2,231,352 shares issuable to Mr. Sheppard and

o 1,350,491 shares issuable to Ms. Marx

o Includes 10,000 shares of common stock issuable at an exercise price
of $.725 per share for Mr. Engelberger's options and $.60 per share
for Mr. Weller's options.

<TABLE>
<CAPTION>
Number of Percentage Number of Percentage
Shares of Shares Shares of Shares
Prior to Prior to After After
Shareholder Offering Offering Offering Offering
- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Ben B. Stein.................................. 5,647,402 22.4% 4,147,402 11.9%

Michael Sheppard.............................. 2,732,177 10.6 2,732,177 7.7

Maura Marx.................................... 1,817,346 7.3 1,817,346 5.2

Joseph Engelberger............................ 10,000 -- 10,000 --

Steven Weller................................. 10,000 -- 10,000 --

All shareholding officers and
directors as a group (4 Persons)........... 4,569,523 16.8 4,569,523 12.4
</TABLE>

The address of each principal shareholder is c/o Financial Intranet, Inc., 410
Saw Mill River Road, Ardsley, New York 10502.

39
<PAGE>

SELLING SECURITYHOLDERS

In addition to the 6,000,000 shares being offered by Financial Intranet, the
registration statement, of which this prospectus forms a part, also covers the
registration on behalf of the selling securityholders of an aggregate of:

o 5,508,333 shares of common stock issuable upon the exercise of
warrants,

o 4,150,000 shares of common stock issuable upon conversion of certain
convertible promissory notes,

o 1,575,000 shares of common stock previously issued and

o 37,994 shares otherwise issuable to the selling securityholders.

The number of shares of common stock which may be issued to the selling
securityholders are subject to certain market price protection provisions and
additional shares of common stock may be sold by the selling securityholders
under the alternative prospectus. Financial Intranet may receive proceeds if
the warrants are subsequently exercised, as to which there can be no assurance.
The costs of qualifying these shares of common stock under federal and state
securities laws, together with legal and accounting fees, printing and other
costs in connection with this offering, will be paid by Financial Intranet.

The following list identifies the selling securityholders and the number of
shares of common stock owned by such selling securityholder along with shares
available upon the exercise of the respective options, warrants, or conversion
rights which are being registered under the registration statement, of which
this prospectus forms a part.

The list assumes exercise of warrants and conversion of all promissory notes
issued to each of the selling securityholders. The convertible promissory notes
and warrants prohibit Messrs. Sharbatly and Kazi and their affiliates from
beneficially owning more than 4.99% of the and outstanding common stock at any
time. They cannot convert the promissory notes or exercise the warrants to the
extent that such conversion or exercise will result in the selling
securityholder exceeding such limitation.

<TABLE>
<CAPTION>
Number of Percentage Percentage
Shares of Shares Number of of Shares
Owned Owned Shares Owned
Before Before Owned After After
Shareholder Offering Offering Offer Offering
- ----------- -------- -------- ----- --------
<S> <C> <C> <C> <C>
Ahood Sharbatly(1)................................. 1,179,850 4.99 0 0
Zubair Kazi(2)..................................... 1,179,850 4.99 0 0
Ben B. Stein (3)................................... 5,647,402 22.4 4,147,402 11.9
Garth LLC (4)...................................... 1,000,000 4.2 0 0
Cardinal Capital Management Inc.(5)................ 376,497 1.6 0 0
J.G. Capital, Inc. (6)............................ 461,497 2.0 0 0
Joseph Theismann(7)................................ 150,000 -- 0 0
Corporate Capital Management Corp.(8).............. 50,000 -- 0 0
</TABLE>

(1) Mr. Sharbatly may receive an aggregate of up to 2,500,000 shares
of Common stock upon exercise of all warrants and conversion of his
promissory note in the principal amount of $500,000. The number of shares
assumes a conversion price of $.40 per share for the convertible
promissory note.

(2) Mr. Kazi may receive 6,133,333 shares of common stock upon
exercise of all warrants and conversion of promissory notes in the
aggregate principal amount of $1,460,000.

o Assumes conversion prices of:

o $.50 for a promissory note in the principal amount of
$200,000 and

40
<PAGE>

o $.60 for three promissory notes in the aggregate principal
amount of $900,000.

(3) Mr. Stein is the founder of Financial Intranet, the largest
shareholder and serves as a consultant.

(4) Garth LLC may receive 1,000,000 shares of common stock upon
conversion of a promissory note in the principal amount of $500,000, which
note is not convertible until October 20, 1999. In the event that
Financial Intranet repays the note in cash, a warrant issued to Garth LLC
to purchase 200,000 shares of common stock at an exercise price of $.50
per share will become exercisable.

(5) Includes three warrants to purchase:

o 160,000 shares at an exercise price of $.64 per share
o 75,000 shares at an exercise price of $.40 per share, and
o 95,000 shares at an exercise price of $.60 per share.

(6) Includes four warrants to purchase:

o 125,000 shares at an exercise price of $.40 per share
o 75,000 shares at an exercise price of $.40 per share, and
o 95,000 shares at an exercise price of $.60 per share.
o 100,000 shares at an exercise price of $.50 per share

(7) Includes warrants to purchase 150,000 shares of common stock at
an exercise price of $.75 per share. Mr. Theismann is a spokesperson for
Financial Intranet.

(8) Includes warrants to purchase 50,000 shares of common stock at an
exercise price of $.64.

PLAN OF DISTRIBUTION

The shares offered by the selling securityholders may be sold from time to time
directly by the selling securityholders. Alternatively, the selling
securityholders may, from time to time, offer such securities through
underwriters, dealers and/or agents. The distribution of securities by the
selling securityholders may be effected in one or more transactions. Some or all
of these transactions may be privately-negotiated transactions . Others may be
through sales to one or more broker/dealers who would resell the securities as
principals, at market prices prevailing at the time of sale or at prices
related to such prevailing market prices or at negotiated prices. The selling
securityholders may pay brokerage, possibly usual and customary or possibly
specifically negotiated , fees or commissions in connection with such sales.
The selling securityholders, and intermediaries through whom such securities
are sold, may be deemed "underwriters" within the meaning of the Securities Act
with respect to the securities offered. Any profits they realize or commission
they receive may be deemed underwriting compensation.

At the time a particular offer of securities is made by or on behalf of the
selling securityholders, a prospectus will be distributed if it is required.
This prospectus will set forth:

the number of securities being offered and the terms of the offering,
including the name or names of any underwriter, dealer or agent,

the purchase price paid by the underwriter for securities purchased
from the selling securityholders and

any discounts, commissions or concessions allowed or reallowed or
paid to dealers and the proposed selling price to the public.

Sales of securities by the selling securityholders or even the potential of
such sales would likely have an adverse effect on the market prices of the
securities being offered. Following the closing of this offering (which assumes
the exercise of all

41
<PAGE>

warrants and conversion of all promissory notes held by the selling
securityholders), 34,072,790 shares of common stock will be freely tradable.

42
<PAGE>

MARKET PRICE OF COMMON STOCK

MARKET INFORMATION

The following table sets forth the high and low prices for the periods indicated
as reported by the National Daily Quotation Service, Inc. between dealers and do
not include retail mark-ups, mark-downs, or commissions and do not necessarily
represent actual transactions, as reported by the NASD Composite Feed or other
qualified inter-dealer quotation medium. During the first two quarters of the
fiscal year ending December 31, 1997, no established public trading market
existed for the common stock . The market prices included for these two quarters
were based on very limited transactions and sporadic price quotations that did
not reflect the true market value of the stock.

The prices listed for these periods reflect limited or sporadic quotations. As
of July 19, 1999, the closing bid price was $.73 per share.

Low High
---- ------
<S> <C> <C>
1997 Fiscal Year:
First Quarter....................................... 3.75 6.375
Second Quarter...................................... .38 4.625
Third Quarter....................................... .156 .484
Fourth Quarter...................................... .125 .594

1998 Fiscal Year:
First Quarter....................................... .219 .547
Second Quarter...................................... .22 .95
Third Quarter....................................... .58 1.99
Fourth Quarter...................................... 41 1.00

1999 Fiscal Year
First Quarter..................................... .56 1.58
Second Quarter.................................... .75 1.3125
</TABLE>

The common stock is recorded on the OTC Bulletin Board with the symbol FNTN. As
of July 15, 1999, Financial Intranet had 48 record holders of its common stock
and an estimated 2,045 beneficial holders.

43
<PAGE>

DESCRIPTION OF SECURITIES

The following descriptions of securities are qualified in all respects by
reference to the certificate of incorporation and by-laws and the terms of
certain convertible promissory notes and warrants, copies of which are filed as
exhibits to the registration statement of which this prospectus is a part. The
certificate of incorporation authorizes Financial Intranet to issue up to
50,000,000 shares of common stock, par value $.001 per share, and no preferred
stock. Neither the certificate of incorporation nor the by-laws contain any
provision that would delay, defer or prevent a change in control.

COMMON STOCK

23,624,292 shares of common stock are issued and outstanding. Each share of
common stock entitles the holder to one vote on each matter submitted to the
stockholders. The holders of common stock:

o have equal ratable rights to dividends from funds legally available for
payment of dividends when, as and if declared by the board of directors;

o are entitled to share ratably in all of the assets available for
distribution to holders of common stock upon liquidation, dissolution or
winding up of the affairs of Financial Intranet;

o do not have preemptive, subscription or conversion rights, or redemption
or access to any sinking fund ; and

o are entitled to one non-cumulative vote per share on all matters submitted
to stockholders for a vote at any meeting of stockholders. Financial
Intranet has not paid any dividends on its common stock to date. Financial
Intranet anticipates that, for the foreseeable future, it will retain
earnings, if any, to finance the continuing operations of its business.
The payment of dividends will depend upon, among other things, capital
requirements and the operating and financial conditions of Financial
Intranet.

Shareholders do not have any pre-emptive rights to subscribe for or purchase any
stock, warrants or other securities of Financial Intranet. The common stock is
not convertible or redeemable. Neither the certificate of incorporation nor its
by-laws provide for pre-emptive rights.

OPTIONS

Financial Intranet has issued options to three affiliates (including two
executive officers) to purchase 5,202,162 shares of common stock at an exercise
price of $.19 per share, which options are exercisable through December 31,
2001. Financial Intranet has issued options to two other employees to purchase
500,000 shares of common stock at an exercise price of $.625 per share,
one-third of which vests each year commencing December 7, 1999 and are
exercisable for two years after vesting. Financial Intranet has issued options
to persons not affiliated with Financial Intranet to purchase an aggregate of
592,630 shares of common stock at exercise prices ranging from $.18 to $7.50.

CONVERTIBLE NOTES AND WARRANTS

$500,000 7% convertible promissory note and warrants

On December 31, 1998, Financial Intranet issued a 7% convertible promissory note
in the principal amount of $500,000 with a maturity date of December 31, 2001
and warrants to purchase 1,250,000 shares of common stock at an exercise price
of $.60 per share through December 31, 2003. The promissory note is convertible
into common stock at any time by the lender. On the maturity date, Financial
Intranet is required to automatically convert the remaining outstanding
principal amount and accrued interest of the promissory note at the conversion
price into common stock.

Each of the 1,250,000 warrants issued in conjunction with the promissory note
entitle the holder to purchase one share of

44
<PAGE>

common stock at an exercise price per share of common stock of $0.60. The
warrants may be exercised through December 31, 2003.

$1,700,000 7% convertible promissory notes and warrants

Initial Note and Warrants

In February 1999, Financial Intranet issued a 7% convertible promissory note in
the principal amount of $600,000, with $240,000 principal amount, and all
accrued interest , payable on demand commencing March 10, 1999, and $360,000
principal amount, and all accrued interest , payable on demand commencing May 9,
1999. The holder converted the $240,000 portion of the note into common stock in
March 1999 and the $360,000 balance into common stock in May 1999. Financial
Intranet issued 1,500,000 warrants in February 1999 to purchase common stock at
an exercise price per share of $.60. The warrants may be exercised through
February 6, 2002. The investor also agreed to lend Financial Intranet an
additional $1,100,000 in four subsequent tranches. Financial Intranet's
obligations under the promissory note for $600,000 are subject to a guarantee by
Ben B. Stein and secured by a pledge of 1,500,000 shares of common stock. Mr.
Stein pledged 600,000 shares of common stock as collateral for Financial
Intranet's obligation payable March 10, 1999, and 900,000 shares as collateral
for Financial Intranet's obligation payable May 9, 1999.

On February 6, 2002, Financial Intranet is required to automatically convert any
and all remaining outstanding principal amount and accrued interest of the
promissory note at the conversion price into common stock.

Installment Convertible Promissory Notes and Warrants

Commencing on the date of this prospectus and terminating 30 days later,
Financial Intranet may require the investor or the investor may demand to
purchase for $200,000 a promissory note in the principal amount of $200,000 and
a warrant for the purchase of 333,333 shares of common stock at an exercise
price of $.60 per share. During the 90 day period after the closing of the
installment for a promissory note in the principal amount of $200,000, Financial
Intranet may require the investor or the investor may demand to purchase for
$300,000 a promissory note in the principal amount of $300,000 and a warrant for
the purchase of 500,000 shares of common stock. During the 90 day period after
the issuance of the first $300,000 note, Financial Intranet may require the
investor or the investor may demand to purchase for $300,000 a promissory note
in the principal amount of $300,000 and a warrant for the purchase of 500,000
shares of common stock. During the 90 day period after the issuance of the
second $300,000 note, we may require the investor or the investor may demand to
purchase for $300,000 a promissory note in the principal amount of $300,000 and
a warrant for the purchase of 500,000 shares of common stock. The warrants are
exercisable for a period of five years after issuance at an exercise price of
$.60 per share.

The conversion prices for the convertible promissory notes are the lesser of :

o 75% of the average of the five lowest closing bid prices of the
common stock during the 30 trading days ending on the trading day
immediately preceding the conversion date, or

o either:
$.40 per share for the promissory note for $500,000 issued in
December 1998 and the promissory note in the principal amount of
$600,000 issued in February 1999;

$.50 per share for the promissory note in the principal amount
of $200,000, and

$.60 per share for the three promissory notes in the aggregate
principal amount of $900,000.

The convertible promissory notes are convertible and the warrants are
exercisable, in whole or in part, at any time. However, the promissory note may
not be converted nor the warrants exercised to the extent that after such
conversion, the sum of

45
<PAGE>

o the number of shares of common stock beneficially owned by the
holder and its affiliates (other than shares of common stock
which may be deemed beneficially owned through the ownership of
the unconverted portion of the promissory note) and

o the aggregate number of shares of common stock issuable upon the
proposed conversion of the promissory note and the warrants
would result in beneficial ownership by the holder and its
affiliates of 4.99% or more of Financial Intranet's issued and
outstanding shares of common stock following such exercise or
conversion.

The 4.99% limitations in the promissory note and warrants do not apply to
any automatic conversion by Financial Intranet. The 4.99% limitations apply to
any transferee of the promissory note from the purchaser of such shares from
Financial Intranet.

$500,000 8% convertible promissory note and warrants

On July 20, 1999, Financial Intranet issued a 8% convertible promissory note
in the principal amount of $500,000 with a maturity date of October 20, 1999 and
warrants to purchase 200,000 shares of common stock at an exercise price of $.50
per share through October 20, 2004. The promissory note is convertible into
common stock at any time after the maturity date at the conversion price. The
conversion price is equal to the lesser of

* $.50 per share, or

* 75% of the average closing bid price per share for the five
trading days immediately prior to the conversion date.

Financial Intranet's obligations under the promissory note are subject to a
guarantee by Ben B. Stein, Michael Sheppard and Maura Marx and secured by a
pledge of 924,517 shares of common stock by Mr. Stein, 96,151 shares by Mr.
Sheppard and 101,844 shares by Ms. Marx.

Each of the 200,000 warrants issued in conjunction with the promissory note
entitle the holder to purchase one share of common stock at an exercise price
per share of common stock of $0.50 provided, however, that the warrants are
exercisable only if Financial Intranet repays its obligations under the
promissory note in cash on or prior to the maturity date. The warrants may be
exercised through October 20, 2004.

The shares of common stock issuable upon conversion of the promissory
notes and warrants issued in conjunction with the notes are being registered in
the alternate prospectus.

TRANSFER AGENT

The transfer agent for the common stock is Liberty Transfer Co., 191 New York
Avenue, Huntington, New York 11743.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, Financial Intranet will have outstanding an
aggregate of 39,340,619 shares of common stock, assuming exercise of the
warrants and conversion of the promissory notes issued to the selling
securityholders. 34,072,790 shares of common stock will be freely tradable
without restriction or further registration under the Securities Act. Of the
remaining shares of common stock outstanding, 5,168,459 shares will be
"restricted" shares that are owned by "affiliates" of Financial Intranet as
such terms are defined under the Securities Act and 93,370 shares are
"restricted" shares that are owned by nonaffiliates of Financial Intranet.

In general, under Rule 144, a person (or persons whose shares are aggregated)
who has beneficially owned restricted

46
<PAGE>

securities within the meaning of Rule 144 securities for at least one year,
including the holding period of any securities which are converted into the
restricted shares and including the holding period of any prior owner, except
an affiliate of Financial Intranet, would be entitled to sell within any
three-month period, only that a number of shares that do not exceed the greater
of 1% of the then outstanding shares of common stock or the average weekly
trading volume of the common stock reported during the four calendar weeks
preceding such sale. Sales under Rule 144 are also subject to certain manner of
sale provisions, notice requirements and the availability of current public
information about Financial Intranet. Any person (or persons whose shares are
aggregated with such person) who is not deemed to have been an affiliate of
Financial Intranet at any time during the 90 days preceding a sale, and who has
beneficially owned shares for at least three years (including any period of
ownership of preceding non-affiliated holders), would be entitled to sell
shares under Rule 144(k) without regard to the volume limitations, manner of
sale provisions, public information requirements or notice requirements.

The registration statement of which this prospectus is a part also registers
1,575,000 shares of common stock previously issued to selling securityholders,
9,658,333 shares of common stock to be issued upon exercise of warrants and
convertible promissory notes and 37,994 shares which may otherwise be issued to
the selling securityholders, thus permitting the resale of such shares by
non-affiliates in the public market without restriction under the Securities
Act.

PLAN OF DISTRIBUTION

Through our officers and directors, we are offering the shares of common stock
for sale on a "best efforts" basis. The shares will be offered by Michael
Sheppard, our President, and Maura Marx, our Executive Vice President. No
officer or director will receive any compensation for sales of shares of common
stock in this offering.

Licensed broker/dealers may also participate in the offering. We will pay a
commission of 10% and a non-accountable expense allowance of 3% to NASD
registered broker/dealers for sales of shares effected by NASD members. The
names of the NASD member broker/dealers that may participate in this offering,
if any, are identified on the annexed broker/dealer list. This list will be
updated by post-effective amendment to the extent that additional
broker/dealers, if any, agree to participate in this offering after the date of
this prospectus.

The offering shall commence on the date of this prospectus and terminate 180
days later, unless extended by us for up to an additional 90 days. All
subscription proceeds will be deposited no later than noon of the next business
day after receipt into our bank account. No escrow account will be established.
Subscriptions will be accepted as they are received.

The selling securityholders may sell their shares of common stock from time to
time in transactions, which may include block transactions by or for the account
of the selling securityholders, in the over-the-counter market or in negotiated
transactions, or through the writing of options on their shares, through a
combination of such methods of sale, or otherwise. Sales may be made at fixed
prices which may be changed, at market prices prevailing at the time of sale, or
at negotiated prices. A post-effective amendment to the registration statement
of which this prospectus is a part, would need to be filed and declared
effective by the SEC before:

* any selling securityholder sells shares of common stock, or
stock options, under this prospectus at a fixed price or at a negotiated price
which is other than the prevailing market price or in a block transaction to a
purchaser who resells,

* any selling securityholder pays compensation to a
broker/dealer that is other than the usual and customary discounts, concessions
or commissions, or

* if there are any arrangements either individually or in the
aggregate that would constitute a distribution of such shares.

Financial Intranet is under no obligation to file a post-effective
amendment to the registration statement of which this prospectus is a part
under such circumstances.

47
<PAGE>

LEGAL MATTERS

Certain legal matters in connection with the issuance of the securities being
offered by Financial Intranet will be passed upon for Financial Intranet by
McLaughlin & Stern, LLP, New York, New York. McLaughlin & Stern, LLP owns
options to purchase 75,000 shares of common stock at an exercise price of $.60
per share and 75,000 shares of common stock at an exercise price of $1.20 per
share. Mr. Schuster owns 11,111 shares of common stock.

EXPERTS

The financial statements as of December 31, 1998 and December 31, 1997 and for
the years ended December 31, 1998 and December 31, 1997 included in this
prospectus have been included in reliance on the report of Reminick, Aarons &
Company, LLP, independent accountants, given on their authority as experts in
auditing and accounting.

48
<PAGE>

AVAILABLE INFORMATION

We will begin to file various documents that are required by the SEC following
this offering. These include annual reports, quarterly reports, special reports
and proxy statements. Financial Intranet plans to give its stockholders annual
reports containing audited financial statements, all other reports which
Financial Intranet is required to provide and any other documents which
Financial Intranet believes its shareholders should have.

This prospectus is part of a registration statement filed with the SEC. It does
not contain all of the information in the registration statement, nor the
exhibits or the schedules which were included with the registration statement.
The registration statement, and the exhibits and schedules , may be inspected
and copied at the principal office of the SEC, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the SEC at Seven World
Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of all or any
part it may be obtained at prescribed rates from the SEC's Public Reference
Section at 450 Fifth Street, N.W., Washington, D.C. 20549 or by calling the SEC
at 1-800 SEC-0330. The SEC also maintains a World Wide Web site on the Internet
at http://www.sec.gov that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the
SEC.

When we qualify statements in this prospectus with the word "believe," unless
otherwise indicated, we are basing our belief on the knowledge and experience
of our personnel and advisors. Statistical information included in this
prospectus has been obtained by us from publications we deem reliable and with
which we have no relationship.

49
<PAGE>

FINANCIAL INTRANET, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
Page
----
<S> <C>
Financial Statements
Report of Independent Public Accountants........................................................... F-2
Balance Sheets as of December 31, 1997 and 1998 ................................................... F-3
Statements of Operations for the years ended December 31, 1997 and December 31, 1998 .............. F-4
Statements of Changes in Stockholders' Equity for the years ended December 31, 1997 and 1998....... F-5
Statements of Cash Flows for the years ended December 31, 1997 and December 31, 1998 .............. F-8
Notes to Financial Statements ..................................................................... F-11
</TABLE>

F-1

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
Financial Intranet, Inc.
(A Development Stage Company)

We have audited the accompanying balance sheets of Financial Intranet, Inc. (a
Development Stage Company) as of December 31, 1998 and 1997, and the related
statements of operations, changes in stockholders' equity, and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Financial Intranet, Inc. (a
Development Stage Company) as of December 31, 1998 and 1997, and the results of
its operations, and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company is in the development stage and has
experienced significant losses since its inception. In addition, the Company has
a negative working capital at December 31, 1998 and 1997 and the continuation of
the business is also dependent upon the Company's private placement and public
offering being successful. These matters raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans with regard
to these matters are also further described in Note 1. The accompanying
financial statements do not include any adjustments that may result should the
Company be unable to continue as a going concern.

REMINICK, AARONS & COMPANY, LLP

New York, New York
March 5, 1999, except for Note 6,
as to which the date is March 15, 1999

and Note 12, as to which the date is
July 20, 1999

F-2
<PAGE>

FINANCIAL INTRANET, INC.
(a Development Stage Company)

BALANCE SHEETS
<TABLE>
<CAPTION>
December 31 March 31
ASSETS
1997 1998 1998 1999
----------- ----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 1,929 $ 149,225 $ 0 $ 228,032
Accounts receivable 0 44,070 24,847 22,676
Due from officers 20,410 5,074 20,410 0
Prepaid expenses 4,693 4,378 0 49,814
----------- ----------- ----------- -----------
Total current assets 27,032 202,747 45,257 300,522

Property and equipment, net 235,712 961,195 721,793 858,545
Deferred offering costs 0 79,991 0 118,010
Deferred debt issuance costs 0 55,000 0 89,608
Notes receivable 41,200 0 41,200 0
Capitalized software development costs, net 68,275 88,058 65,430 68,640
Other assets 23,773 26,157 18,773 28,745
----------- ----------- ----------- -----------

Total assets $ 395,992 $ 1,413,148 $ 892,453 $ 1,464,070
=========== =========== =========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued liabilities $ 140,292 $ 771,567 $ 763,227 $ 543,546
Due to officers 43,489 98,618 42,989 37,110
Loan payable 47,250 0 47,250 0
----------- ----------- ----------- -----------
Total current liabilities 231,031 870,185 853,466 580,656
----------- ----------- ----------- -----------

Note payable 0 500,000 0 860,000
----------- ----------- ----------- -----------

Total liabilities 231,031 1,370,185 853,466 1,440,656
----------- ----------- ----------- -----------

Commitments and contingencies
Stockholders' Equity:
Common stock, $.001 par value; 25,000,000 shares auth.,
15,589,228 and 16,223,877 shares issued and
outstanding December 31, 1997 and March 31, 1998,
respectively; 50,000,000 shares auth., 20,561,048
and 22,713,181 shares issued and outstanding
December 31, 1998 and March 31, 1999, respectively 15,589 20,561 16,224 22,713
Additional paid-in capital 1,306,622 4,079,186 1,335,987 4,221,454
Accumulated deficit during the development stage (851,928) (2,993,906) (1,096,606) (3,620,430)
Less: Stock subscriptions receivable (75,000) 0 0 0
Deferred compensation cost (230,322) (1,062,878) (216,618) (600,323)
----------- ----------- ----------- -----------

Total stockholders' equity 164,961 42,963 38,987 23,414
----------- ----------- ----------- -----------

Total liabilities and stockholders' equity $ 395,992 $ 1,413,148 $ 892,453 $ 1,464,070
=========== =========== =========== ===========

</TABLE>

The accompanying notes are an integral part
of these financial statements.

F-3
<PAGE>

FINANCIAL INTRANET, INC.
(a Development Stage Company)

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
Year Ended December 31, Quarter Ended March 31,

1997 1998 1998 1999
------------ ------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C> <C>
Revenue $ 0 $ 89,169 $ 35,931 $ 6,741
------------ ------------ ------------ ------------

Operating costs and expenses:
Cost of revenue 0 163,033 14,156 23,341
Sales and marketing expenses 55,794 50,246 23,139 40,745
General and administrative expenses 748,214 988,509 226,043 265,668
Depreciation and amortization 0 129,413 2,845 66,469
Stock compensation expense 13,272 897,808 13,704 224,436
------------ ------------ ------------ ------------

Total operating costs and expenses 817,280 2,229,009 279,887 620,659
------------ ------------ ------------ ------------

Loss from operations $ (817,280) $ (2,139,840) $ (243,956) $ (613,918)

Other income (expense):
Interest income $ 2,475 $ 4,140 $ 390 $ 1,633
Interest expense (2,625) (6,278) (1,113) (14,238)
------------ ------------ ------------ ------------

Total other (expense) (150) (2,138) (723) (12,605)
------------ ------------ ------------ ------------

Net loss $ (817,430) $ (2,141,978) $ (244,679) $ (626,523)
============ ============ ============ ============

Basic and diluted net loss per share $ (0.07) $ (0.12) $ (0.02) $ (0.03)
============ ============ ============ ============

Number of shares used in calculating basic
and diluted net loss per share 10,932,900 18,328,984 16,223,877 22,461,567
============ ============ ============ ============

</TABLE>

The accompanying notes are an integral part
of these financial statements.

F-4
<PAGE>

FINANCIAL INTRANET, INC.
(a Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

For The Years Ended December 31, 1997 And
1998 And (Unaudited) Quarter Ended March 31, 1999

Additional
Paid-in
Description Shares Amount Capital
------ ------ -------

<S> <C> <C> <C>
Balance--January 1, 1997 3,980,000 $3,980 $ 30,620
February 29, 1997--issuance of stock in lieu of compensation
to key executives 4,250,000 4,250 148,500
May 1997 through December 31, 1997--Private Placement 6,904,228 6,904 877,823
August 4, 1997--issuance of stock in lieu of $6,500 in
promotional fees 100,000 100 6,400
September, 1997--issuance of stock to employees and increase in
additional paid-in capital resulting from stock options granted. 40,000 40 243,594
November 15, 1997--issuance of stock per non-dilution provisions
of consulting agreement 315,000 315 (315)
Net loss -- -- --
---------- ------- ----------

Balance--December 31, 1997 15,589,228 15,589 1,306,622
January, 1998--issuance of stock subscribed in 1997 400,000 400 29,600
Jan.-July 1998--issuance of stock per non-dilution provisions of
consulting agreement 346,742 347 (347)
May-Dec., 1998--issuance of stock in lieu of services 309,249 309 96,317
June and July, 1998--Promissory notes converted 1,070,800 1,071 463,930
June and October, 1998--Private placement 1,237,666 1,238 443,262
June 11, 1998--issuance of stock in lieu of fees on June, 1998
private placement 38,393 38 (38)
July 17, 1998--issuance of stock to release security interest in
certain equipment 500,000 500 314,500
October 15, 1998--issuance of stock in lieu of fees on 1997
private placement 68,970 69 (69)
October 15, 1998--issuance of stock resulting from exercise of
warrants 1,000,000 1,000 159,000
Increase in additional paid-in capital resulting from stock
options and warrants granted -- -- 1,266,409
Net loss -- -- --
---------- ------- ----------

Balance--December 31, 1998 20,561,048 20,561 4,079,186
January 7, 1999--issuance of stock in lieu of fees on December,
1998 private placement 25,000 25 (25)
January 21, 1999--Issuance of stock to three principals in
consideration for employment services 611,636 611 155,190
January 25, 1999--issuance of stock resulting from exercise of
warrants 5,812 6 (6)
March 3, 1999--issuance of stock to Founder for exercise of
options 879,685 880 166,260
March 3, 1999--issuance of stock in lieu of fees on February,
1999 private placement 30,000 30 (30)
March 10, 1999--issuance of stock as result of debt conversion 600,000 600 214,800
Increase in additional paid-in capital resulting from stock
options and warrants granted -- -- 130,600
Decrease in additional paid-in capital resulting from cancelled
stock options -- -- (524,521)
Net loss -- --
---------- ------- ----------
Balance--March 31, 1999 22,713,181 $22,713 $4,221,454
========== ======= ==========
</TABLE>

F-5
<PAGE>

FINANCIAL INTRANET, INC.
(a Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY--(Continued)

For The Years Ended December 31, 1997 And 1998
And (Unaudited) Quarter Ended March 31, 1999

<TABLE>
<CAPTION>
Accumulated
Deficit
Subscriptions Deferred Stock During the
Description Receivable Compensation Development Stage
---------- ------------ -----------------
<S> <C> <C> <C>
Balance--January 1, 1997 $ -- $ -- ($34,498)
February 29, 1997--issuance of stock in lieu of compensation to
key executives -- -- --
May 1997 through December 31, 1997--Private Placement (75,000) -- --
August 4, 1997--issuance of stock in lieu of $6,500 in
promotional fees -- -- --
September, 1997--issuance of stock to employees and increase in
additional paid-in capital resulting from stock options granted -- (230,322) --
November 15, 1997--issuance of stock per non-dilution provisions
of consulting agreement -- -- --
Net loss -- -- (817,430)
---------- --------- -----------

Balance--December 31, 1997 (75,000) (230,322) (851,928)
January, 1998--issuance of stock subscribed in 1997 75,000 -- --
Jan.-July 1998--issuance of stock per non-dilution provisions of
consulting agreement -- -- --
May-Dec., 1998--issuance of stock in lieu of services -- -- --
June and July, 1998--Promissory notes converted -- -- --
June and October, 1998--Private placement -- -- --
June 11, 1998--issuance of stock in lieu of fees on June, 1998
private placement -- -- --
July 17, 1998--issuance of stock to release security interest in
certain equipment -- -- --
October 15, 1998--issuance of stock in lieu of fees on 1997
private placement -- -- --
October 15, 1998--issuance of stock resulting from exercise of
warrants -- -- --
Increase in additional paid-in capital resulting from stock
options and warrants granted -- (832,556) --
Net loss -- -- (2,141,978)
---------- --------- -----------

Balance--December 31, 1998 -- (1,062,878) (2,993,906)
January 7, 1999--issuance of stock in lieu of fees on December,
1998 private placement -- -- --
January 21, 1999--Issuance of stock to three principals in
consideration for employment services -- -- --
January 25, 1999--issuance of stock resulting from exercise of
warrants -- -- --
March 3, 1999--issuance of stock to Founder for exercise of
options -- -- --
March 3, 1999--issuance of stock in lieu of fees on February,
1999 private placement. -- -- --
March 10, 1999--issuance of stock as result of debt conversion -- -- --
Increase in additional paid-in capital resulting from stock
options and warrants granted -- 42,939 --
Decrease in additional paid-in capital resulting from cancelled
stock options -- 419,616 --
Net loss -- (626,524)
---------- --------- -----------

Balance--March 31, 1999 $ 0 ($600,323) ($3,620,430)
========== ========= ===========
</TABLE>

F-6
<PAGE>

FINANCIAL INTRANET, INC.
(a Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY--(Continued)

For The Years Ended December 31, 1997 And 1998
And (Unaudited) Quarter Ended March 31, 1999

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

<S> <C>
Balance--January 1, 1997 $102
February 29, 1997--issuance of stock in lieu of compensation to key
executives 152,750
May 1997 through December 31, 1997--Private Placement 809,727
August 4, 1997--issuance of stock in lieu of $6,500 in promotional
fees 6,500
September, 1997--issuance of stock to employees and increase in
additional paid-in capital resulting from stock options granted 13,312
November 15, 1997--issuance of stock per non-dilution provisions of
consulting agreement --
Net loss (817,430)
-----------

Balance--December 31, 1997 164,961
January, 1998--issuance of stock subscribed in 1997 105,000
Jan.-July 1998--issuance of stock per non-dilution provisions of
consulting agreement --
May-Dec., 1998--issuance of stock in lieu of services 96,626
June and July, 1998--Promissory notes converted 465,001
June and October, 1998--Private placement 444,500
June 11, 1998--issuance of stock in lieu of fees on June, 1998
private placement --
July 17, 1998--issuance of stock to release security interest in
certain equipment 315,000
October 15, 1998--issuance of stock in lieu of fees on 1997 private
placement --
October 15, 1998--issuance of stock resulting from exercise of
warrants 160,000
Increase in additional paid-in capital resulting from stock options
and warrants granted 433,853
Net loss (2,141,978)
-----------

Balance--December 31, 1998 42,963
January 7, 1999--issuance of stock in lieu of fees on December, 1998
private placement --
January 21, 1999--Issuance of stock to three principals in 155,801
consideration for employment services
January 25, 1999--issuance of stock resulting from exercise of warrants --
March 3, 1999--issuance of stock to Founder for exercise of options 167,140
March 3, 1999--issuance of stock in lieu of fees on February, 1999
private placement --
March 10, 1999--issuance of stock as result of debt conversion 215,400
Increase in additional paid-in capital resulting from stock options and
warrants granted 173,539
Decrease in additional paid-in capital resulting from cancelled stock
options (104,905)
Net loss (626,524)
-----------

Balance--March 31, 1999 $23,414
===========

</TABLE>

* See Statement of Cash Flows - (Noncash Investing and Financing Activities)
for related disclosure regarding issuance of common stock for noncash
consideration.

The accompanying notes are an integral part of these financial statements.

F-7
<PAGE>

FINANCIAL INTRANET, INC.
(a Development Stage Company)
STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Year Ended December 31, Quarter Ended March 31,
------------------------ ----------------------

1997 1998 1998 1999
---------- ----------- ---------- ---------
(Unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $(817,430) $(2,141,978) $(244,679) $(626,523)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 0 129,413 2,845 66,469
Reserve for bad debts 0 41,200 0 0
Consulting services paid by issuance of
common stock 159,290 90,626 0 0
Compensation expense resulting from stock
options granted 13,272 897,808 13,704 224,436

Changes in operating assets and liabilities:
Accounts receivable 0 (44,070) (24,847) 21,394
Prepaid expenses (4,693) 315 4,693 (45,436)
Deferred offering costs 0 (55,991) 0 (38,019)
Other assets (23,773) (2,384) 5,000 (2,588)
Accounts payable and accrued expenses 140,292 631,275 622,935 (37,440)
--------- ----------- --------- ---------

Net cash provided by (used in) operating activities (533,042) (453,786) 379,651 (437,707)
--------- ----------- --------- ---------

Cash flows from investing activities:
Notes receivable advances (41,200) 0 0 0
Loans advanced from (to) officer (20,410) 15,336 0 5,074
Purchase of property and equipment (235,712) (833,128) (486,081) (20,692)
Capitalized software development costs (68,275) (41,551) 0 0
--------- ----------- --------- ---------

Net cash used in investing activities (365,597) (859,343) (486,081) (15,618)
--------- ----------- --------- ---------

Cash flows from financing activities:
(Repayments of) proceeds from loan payable 47,250 (47,250) 0 0
Proceeds from issuance of promissory notes 0 1,500,000 0 600,000
Payment of financing fees (70,523) (156,000) (2,499) (64,000)
Proceeds from issuance of common stock 880,250 37,500 37,500 0
Collection of stock subscriptions receivable 0 70,000 70,000 0
Proceeds from issuance of warrants 0 1,046 0 0
Advances from (payment to) officers 43,489 55,129 (500) (3,868)
--------- ----------- --------- ---------

Net cash provided by financing activities 900,466 1,460,425 104,501 532,132
--------- ----------- --------- ---------

Net increase in cash and cash equivalents 1,827 147,296 (1,929) 78,807
Cash and cash equivalents--beginning 102 1,929 1,929 149,225
--------- ----------- --------- ---------

Cash and cash equivalents--ending $ 1,929 $ 149,225 $ 0 $ 228,032
========= =========== ========= =========

Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 2,625 $ 4,167 $ 0 $ 739
========= =========== ========= =========
</TABLE>

F-8
<PAGE>

FINANCIAL INTRANET, INC.
(a Development Stage Company)
STATEMENTS OF CASH FLOWS --(Continued)

Noncash investing and financing activities:

The following noncash transactions occurred during the year ended
December 31, 1997:

-- 4,250,000 shares of the Company's common stock were issued to
three (3) key executives in lieu of $152,750 for executive
compensation and consulting fees.

-- 100,000 shares of the Company's common stock were issued to
outside consultants in lieu of $6,500 in promotional fees.

-- 315,000 shares of the Company's common stock valued at $315 were
issued at par value to outside consultants in accordance with the
anti- dilution provisions of the consulting agreement entered into
by the Company in December 1996.

-- Additional paid-in capital was increased by $243,594 and deferred
compensation of $230,322 was recorded resulting from stock options
granted.

The following noncash transactions occurred during the year ended
December 31, 1998:

-- 309,249 shares of the Company's common stock were issued to
outside consultants in lieu of 90,626 in services and $16,000 in
deferred offering costs, which represented the fair market value
of services rendered.

-- 1,000,000 shares of the Company's common stock in exchange for
$10,000 were issued to an independent consultant (as discussed in
Note 6) for providing various marketing, sales, general, and
public relations consulting services over a 24-month period. This
amount represented the excess of the market price of the Company's
common stock at date of grant over the exercise price.

-- 346,742 shares of the Company's common stock at par value were
issued to outside consultants in accordance with the anti-dilution
provisions of the consulting agreement entered into by the Company
which terminated in July 1998.

-- 500,000 shares valued at $315,000 were issued to an outside
facilitator as a settlement to release its security interest in
certain of the Company's equipment. This amount represented the
fair market value of the common stock issued at the date of
settlement.

F-9
<PAGE>

The following noncash transactions occurred during the quarter
ended March 31, 1999:

-- 12,500 shares of the Company's common stock were issued at par
value each to two financial advisors as part of their fees for
structuring a December, 1998 private placement.

-- 611,636 shares of the Company's common stock were issued to three
principals of the Company in consideration for employment services
valued at $155,801.

-- 5,812 shares of the Company's common stock were issued at par value
to Ganesh Asset Management for exercise of warrants.

-- 15,000 shares of the Company's common stock were issued at par
value each to two financial advisors as part of their fees for
structuring a February, 1999 private placement.

-- 879,685 shares of the Company's common stock were issued to Barry
Stein for aggregate consideration of $167,140 in payroll and
officers loans owed by the Company, upon exercise of options.

-- 600,000 shares of the Company's common stock were issued to an
investor as a result of a debt conversion.

-- Additional paid-in capital was decreased by $524,521 and stock
compensation costs were credited for $104,904 as a result of an
amended contract for Barry Stein wherein the Company cancelled
stock options to purchase 1,140,262 shares of commmon stock
previously granted in 1998 at an exercise price of $.19 per
share.

-- A credit in the amount of $81,081 was received from a vendor as an
adjustment to the purchase price of certain equipment and the
balance due to the vendor.

The accompanying notes are an integral part of these financial statements.

F-10
<PAGE>

FINANCIAL INTRANET, INC.
(a Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

Years ended December 31, 1997 and 1998 (Unaudited with
respect to data as of March 31, 1998 and 1999
and for the three months ended March 31, 1998 and 1999)

Note 1--Summary of Significant Accounting Policies

Description of Business

Financial Intranet, Inc. (the "Company"), formerly Wee Wees, Inc. (which was
formerly Alexis & Co.) is a Nevada corporation incorporated on December 16,
1993. The founder of the Company acquired all of the outstanding shares of Wee
Wees, Inc. to obtain the benefits of a corporate entity for the business. The
Company provides a secure on-demand proprietary network (intranet) for
broker-dealers and their registered representatives. The network is designed to
provide updated training and data information concerning, among other things,
those mutual funds planning to participate in the Company's network. In
addition, the Company has developed an Internet presence accessible to the
general public, which will highlight the Company's clients. It is the Company's
plan to connect over 500 U.S. broker-dealer locations and subsequently provide
local access ports in various cities around the world. The Company has not yet
generated significant revenue from its operations and is therefore considered to
be a development stage company in accordance with Statement of Financial
Accounting Standards No. 7.

Going Concern Uncertainty

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. At December 31, 1997, the Company had a
negative working capital of $203,999 and a stockholders' equity of $164,961. At
December 31, 1998, the Company has a negative working capital of $667,438 and a
stockholders' equity of $42,963. As the Company is still in the development
stage and has experienced significant losses since its inception, there is
substantial doubt that it will be able to continue as a going concern without
the additional funding as contemplated by the Company's private placement and
public offering (see Note 12). If the public offering is not effected and
successful, management plans to seek alternate funding from an affiliated third
party, which will enable the Company to grow beyond the development stage. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.

Accounts Receivable

Accounts receivable are principally from users of the Company's communications
network. Accounts receivable at December 31, 1998 and March 31, 1999 were
$44,070 and $22,676, respectively. There were no accounts receivable at December
31, 1997 as no revenues were generated during 1997. Accounts receivable at March
31, 1998 was $24,847. Management believes that all accounts receivable are fully
collectible; accordingly, no allowance for uncollectible accounts has been
provided.

F-11

<PAGE>

FINANCIAL INTRANET, INC.
(a Development Stage Company)

NOTES TO FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 1997 and 1998
(Unaudited with respect to data as of March 31, 1998 and 1999
and for the three months ended March 31, 1998 and 1999)

Note 1--Summary of Significant Accounting Policies--(Continued)

Property and Equipment

Property and equipment are stated at cost. Depreciation is calculated on the
straight line basis over the estimated lives of the assets which range from
three to five years. At December 31, 1997, the computer hardware and software
acquired to implement the Company's intranet and internet systems were not fully
operational. As such, no depreciation or amortization had been calculated for
these assets for 1997 or at March 31, 1998.

Deferred offering and debt issuance costs

Costs incurred in connection with the proposed offering of securities (see Note
12) and with the issuance of the December 31, 1998 convertible promissory note
have been deferred and will be offset against the proceeds of the offering and
conversion of debt. If the offering is not effected, these costs will be
expensed. The debt issuance costs will be amortized over the life of the debt,
if not converted. Amortization of debt issuance costs for the quarter ended
March 31, 1999 was $4,792.

Capitalized software development costs

Capitalized software development costs represent the costs of developing and
updating an Internet presence at the Company's web site. These costs are being
amortized on a straight-line basis over its estimated life of two years in
accordance with Statement of Position 98-1, "Accounting for the Cost of Computer
Software Developed or Obtained for Internal Use." There was no amortization in
1997 because the web site was not placed in service until 1998. Amortization of
capitalized software development costs was $21,768 for the year ended December
31, 1998. There was no amortization in 1997 because the web site was not placed
in service until 1998.

Basis for assigning amounts to equity securities issued for other than cash

Shares of common stock issued for other than cash have been assigned amounts
equivalent to the fair market value of the service or assets received in
exchange.

Revenue recognition

Revenue is recognized at the time telephone communications usage is incurred.

Advertising

Advertising and marketing costs are expensed as incurred.

Income taxes

F-12
<PAGE>

FINANCIAL INTRANET, INC.
(a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 1997 and 1998
(Unaudited with respect to data as of March 31, 1998 and 1999
and for the three months ended March 31, 1998 and 1999)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

The Company accounts for income taxes in accordance with the asset and liability
method of accounting for income taxes proscribed by Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". Under the asset and
liability method of Statement 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to the taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.

Earnings per share

During the year ended December 31, 1997, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128"). SFAS 128 requires the presentation of basic and diluted earnings per
share ("EPS"). Basic EPS is computed by dividing net loss available to common
stockholders by the weighted-average number of common shares outstanding during
the period. Diluted EPS is computed by dividing that net loss by the
weighted-average number of common shares and common stock equivalents
outstanding during the period. Common stock equivalents have been excluded from
the weighted-average shares for 1997 and 1998, because their inclusion is
anti-dilutive. All prior period EPS information has been computed in accordance
with the new pronouncement.

Stock-based compensation

In October 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"). SFAS 123 is effective for fiscal years beginning
after December 31, 1995 and prescribes accounting and reporting standards for
all stock-based compensation plans, including employee stock options, restricted
stock, employee stock purchase plans and stock appreciation rights. SFAS 123
requires compensation expense to be recorded (i) using the new fair value method
or (ii) using existing accounting rules prescribed by Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and
related interpretations with pro forma disclosure of what net income and
earnings per share would have been had the Company adopted the new fair value
method. The Company accounts for its stock-based compensation in accordance with
the provisions of APB 25.

Effect of recently issued accounting standards

In June 1997, the Financial Accounting Standards Board issued two new disclosure
standards.

Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS 130") establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, SFAS
130 requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. The Company's net loss is the only item of comprehensive
income through December 31, 1997 and December 31, 1998.

F-13
<PAGE>

FINANCIAL INTRANET, INC.
(a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 1997 and 1998
(Unaudited with respect to data as of March 31, 1998 and 1999
and for the three months ended March 31, 1998 and 1999)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

Statement of Financial Accounting Standards No. 131, "Disclosures about Segments
of an Enterprise and related Information" ("SFAS 131"), which supersedes
Statement of Financial Accounting Standards No. 14, "Financial Reporting for
Segments of a Business Enterprise", establishes standards for the way that
public enterprises report information about operating segments in annual
financial statements and requires reporting of selected information about
operating segments in interim financial statements regarding products and
services, geographic areas and major customers. SFAS 131 defines operating
segments as components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance. The Company has only one operating segment.

SFAS 130 and 131 are effective for financial statements for periods beginning
after December 15, 1997 and require that comparative information for earlier
years be restated.

In February 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 132, "Employers' Disclosures About Pensions
and Other Postretirement Benefits" ("SFAS 132"), which standardizes the
disclosure requirements for pensions and other postretirement benefits. SFAS 132
is applicable for fiscal years beginning after December 15, 1997. The Company
does not expect adoption of SFAS 132 to have a material effect, if any, on the
financial statements and results of operations.

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 "Accounting for Derivative Instruments
and Hedging Activities" (SFAS 133), which establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, collectively referred to as derivatives and hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial condition and measure those
instruments at fair value. SFAS 133 is effective for fiscal years beginning
after June 15, 1999. The Company has not determined the effect on its financial
statements or results of operations, if any, from the adoption of this
statement.

In October 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 134, "Accounting for Mortgage-backed
Securities Retained after the Securitization of Mortgage Loans Held for Sale by
a Mortgage Banking Enterprise" (SFAS 134). This is an amendment to Statement of
Financial Accounting Standards No. 65, "Accounting for Certain Mortgage Banking
Activities", which establishes standards requiring that, after a securitization
of a mortgage loan is held for sale, an entity engaged in mortgage banking
activities classify the resulting mortgage-backed security as a trading
security. SFAS 134 is effective for fiscal years beginning after December 15,
1998. The Company's financial statements and results of operations are
unaffected by SFAS 134.

In March 1998, the AICPA issued Statement of Position 98-1, "Accounting for the
Cost of Computer Software Developed or Obtained for Internal Use" (SOP 98-1),
which provides guidance on accounting for the cost of computer software
developed or obtained for internal use regarding either the capitalization or
expensing of software costs that meet certain specified criteria. SOP 98-1 is
effective for fiscal years beginning after December 15, 1998 with earlier
application encouraged. SOP 98-1 has been adopted by the Company for the year
ended December 31, 1998.

In April 1998, the AICPA issued Statement of Accounting Position, 98-5
"Reporting on the costs of Start up Activities" (SOP 98-5), which provides
guidance on defining start up activities and requires that entities expense
start-up costs and organizational costs as they are incurred. SOP 98-5 is
effective for fiscal years beginning after December 15, 1998 with earlier
application encouraged, and was adopted by the Company in 1997.

F-14
<PAGE>

FINANCIAL INTRANET, INC.
(a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 1997 and 1998
(Unaudited with respect to data as of March 31, 1998 and 1999
and for the three months ended March 31, 1998 and 1999)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

Reclassifications

Certain accounts from the 1997 financial statements have been reclassified in
order to conform with the 1998 financial statement presentation. These
reclassifications have no effect on the previously reported net loss.

Unaudited Interim Financial Statements

The accompanying balance sheet as of March 31, 1998 and 1999 and the
accompanying statements of operations, stockholders' equity and cash flows for
the three months ended March 31, 1998 and 1999 included herein have been
prepared by the Company and are unaudited. The information furnished in the
unaudited financial statements referred to above includes all adjustments that
are, in the opinion of management, necessary for a fair presentation of such
financial statements. The results of operations for the three months ended March
31, 1998 and 1999 are not necessarily indicative of the results to be expected
for the entire fiscal year.

Use of estimates

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

NOTE 2--NOTES RECEIVABLE

** 13 In connection with entering into a Letter of Intent to acquire 80% of the
equity of Micro-Intelligent Systems, Inc. (MIS), a private corporation that
manufactures a portable electronic document device, the Company provided loans
to MIS. On February 25, 1997, in conjunction with the signing of the Letter of
Intent, the Company provided a loan of $20,000, due on demand on or after
February 25, 2007, together with interest at the rate of 4% a year. On March 21,
1997, the Company issued an additional loan of $20,000, due on demand on or
after March 21, 2007, together with interest at the rate of 4% a year.
Subsequently, management has rescinded plans for the acquisition. Accrued
interest of $1,200 was due on these notes receivable at December 31, 1998 . As
of December 31, 1998, the Company has fully reserved the balance of $41,200 for
the potential uncollectibility of this note and related accrued interest.

NOTE 3--PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31, 1997 and 1998:

12/31/97 12/31/98 3/31/98 3/31/99
-------- ---------- -------- ----------

Computer equipment........... $235,712 $1,068,840 $721,793 $1,008,449
Accumulated depreciation..... -- (107,645) -- (149,904)
-------- ---------- -------- ----------

$235,712 $ 961,195 $721,793 $ 858,545
======== ========== ======== ==========

Depreciation for the year ended December 31, 1998 was $107,645 as the equipment
and related software were not placed in service until 1998. Depreciation for
the quarter ended March 31, 1999 was $42,259.

F-15
<PAGE>

FINANCIAL INTRANET, INC.
(a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 1997 and 1998
(Unaudited with respect to data as of March 31, 1998 and 1999
and for the three months ended March 31, 1998 and 1999)

NOTE 4--LOAN PAYABLE

In September 1997, Civilization Communications Inc. (CivCom), a consultant, (see
Note 6) advanced funds to various vendors on behalf of the Company. These
payments were documented in a promissory note dated January 2, 1998 in the
principal amount of $47,250, bearing interest at the prime rate and due on June
30, 1998. On August 28, 1998 the balance, including principal and interest, was
fully repaid.

NOTE 5--NOTE PAYABLE

On December 31, 1998, the Company entered into a subscription agreement for a
private placement of $500,000 consisting of a 7% convertible promissory note in
the principal amount of $500,000, and warrants to purchase 1,250,000 shares of
the Company's common stock, at an exercise price of $.60 per share as defined in
the agreement.

The Company paid, on the closing date, fees of $55,000 as a reduction of the
proceeds. In addition, the two placement agents, as part of their fees, received
25,000 shares of common stock and warrants to purchase 160,000 shares of common
stock at an exercise price of $.64 per share and 125,000 shares of common stock
at an exercise price of $.40 per share, respectively, of common stock. The
25,000 shares were issued in January 1999.

On February 8, 1999 the Company issued $600,000 in 7% convertible promissory
notes, of which $240,000 were converted to 600,000 shares of common stock on
March 10, 1999 and $360,000 were converted to 900,000 shares of common stock on
May 14, 1999. (See Note 12).

NOTE 6--COMMITMENTS

Operating leases

The Company subleased its office space in New York City until April 1998. Rent
expense under this lease charged to operations was $22,431 and $16,299 for the
years ended December 31, 1997 and 1998, respectively and $17,691 and $7,695 for
the quarters ended March 31, 1998 and 1999, respectively.

In October 1997, the Company entered into a lease agreement for office space in
Ardsley, New York for a term of three (3) years commencing on January 1, 1998.
The lease agreement provides for a fixed annual base rent of $15,575 payable in
equal monthly installments plus a proportionate share of certain incremental
building operating expenses as defined in the lease agreement.

In June 1998, the Company entered into another lease agreement for additional
office space in Ardsley, New York for a term commencing on July 15, 1998 and
expiring on December 31, 2000. This lease provides for an annual base rent of
$8,303 payable in equal monthly installments, plus a proportionate share of
certain incremental building operating expenses as defined in the lease
agreement. Rent expense under these leases charged to operations was $0 and
$22,062 for the years ended December 31, 1997 and 1998, respectively. Minimum
required future rental payments under these operating leases at December 31,
1998 are as follows:

1999..................................... $23,878
2000..................................... 23,878
-------
$47,756
=======

F-16
<PAGE>

FINANCIAL INTRANET, INC.
(a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 1997 and 1998
(Unaudited with respect to data as of March 31, 1998 and 1999
and for the three months ended March 31, 1998 and 1999)

NOTE 6--COMMITMENTS--(CONTINUED)

Consulting agreement--Civilization Communications Inc.

In October 1996, the Company entered into an agreement executed by its founder
(amended December 20, 1996), with Civilization Communications Inc. (CivCom), to
provide various consulting services. Specifically, CivCom assisted in the
preparation of the Company's Business Plan and the preparation of the initial
Private Placement Memorandum (PPM) as well as associated and relevant documents.
In addition, the agreement provides for CivCom, at the Company's request, to
assist in the preparation of all filings and to prepare the documentation
required to be filed with various state and federal agencies concerning the
raising of the funds encompassed by the PPM. In consideration of the services
provided, the agreement provides for $25,000 in compensation, payable as
follows: a $15,000 cash payment from the funds acquired through the placement of
any of the Company's securities and 200,000 shares (subsequently adjusted to
240,000 shares) of common stock (in lieu of $10,000).

In accordance with the non-dilutive provisions of the agreement, CivCom was
entitled to maintain a 6.1% share of the total outstanding shares of the
Company's common stock through July 7, 1998. As such, CivCom was issued 315,000
shares during 1997 and 346,742 shares during 1998 at which time the agreement
was cancelled by the Company. Subsequent to July 1998, CivCom continued to
consult the Company on a fixed price per hour basis.

Consulting agreements--key executives

In February 1997, the Company entered into consulting agreements with three key
executives to whom the Company intended to eventually offer long-term employment
agreements (see below). The consulting agreements provide for monthly stipends
from the date of signing to the date the Company and the executives enter into
the employment agreements. The consulting agreements also provide for the
issuance of the Company's common stock at par value since at the time there was
no determined market value for the shares issued as the Company was recently
formed and had no operations at this time. In addition, in February 1997, in
lieu of $150,000 in compensation for consulting services through December 31,
1997, the founder was issued an additional 1,500,000 shares of the Company's
common stock. The key executives and the related provisions within their
respective agreements are as follows:

<TABLE>
<CAPTION>
Par Value
Monthly Common stock of Stock
Executive Stipend Issued Issued
- --------- ------- ---------------- ------
<S> <C> <C> <C>
Founder............................................. $ 0 1,500,000 shares $1,500
Founder............................................. $12,500 1,500,000 shares 1,500
President and Chief Operating Officer............... $12,500 750,000 shares 750
Executive Vice-President ........................... $ 5,417 500,000 shares 500
--------- ------
4,250,000 $4,250
</TABLE>

Employment agreements

On September 12, 1997, the Company entered into employment agreements with
three key executives which were later amended on March 15, 1999. The agreements
are for a five-year period commencing on September 12, 1997 and may be extended
by the Company for an additional three-year period upon written notice six
months prior to the third anniversary of the original term. The agreements
stipulate the duties, compensation and benefits, indemnification, termination
and various other terms of employment. Included in compensation for all three
executives is an option to purchase, at any time while the executive is
employed by the Company, additional shares (in addition

F-17
<PAGE>

FINANCIAL INTRANET, INC.
(a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 1997 and 1998
(Unaudited with respect to data as of March 31, 1998 and 1999
and for the three months ended March 31, 1998 and 1999)

NOTE 6--COMMITMENTS--(CONTINUED)

to any shares previously issued) of the Company's common stock through December
31, 1998. The purchase price for such shares is at a price per share equal to
eighty percent of the per share bid price averaged over five working days prior
to the date of the signed employment agreement. The options shall permit each
executive to purchase up to a certain percentage (see below) of the Company's
issued and outstanding shares of common stock less; i) shares previously issued
according to the consulting agreement; ii) less any shares previously issued as
a result of the exercise of this option and (iii) less any shares issued in lieu
of cash expenses advanced by the executive or accepted as previously earned
consulting fees paid to the executive in lieu of cash. All options granted under
the employment agreements expire on December 31, 2002, except for earlier dates
relative to termination.

The number of the Company's issued and outstanding common stock for the purpose
of calculating the total number of shares which may be purchased by the
executive in exercising the option shall be: i) the number of shares issued on
the later of the exercise date or any date prior to December 31, 1998, providing
that ii) the total number of shares issued as utilized in the calculation of the
shares available for purchase under the option shall not exceed the number of
shares issued and outstanding at December 31, 1998 as recorded on the Company's
stock ledger and as reported by the Company's transfer agent. These options are
non-transferable and expire on the last date of the original employment term or
any extension of the term (See note 8). The executives and the related
provisions of their employment agreement are detailed below:

STOCK OPTION
PERCENTAGE THROUGH
EXECUTIVE BASE SALARY DECEMBER 31, 1998
- --------- ----------- -----------------

Founder................................... $150,000 25.0%
President and Chief Operating Officer..... $150,000 14.5%
Executive Vice-President ................. $100,000 9.0%

Consulting agreement--independent consultant

On October 6, 1997, the Company entered into a consulting agreement with an
individual to provide various marketing, sales, general and public relations
consulting in connection with undertaking the promotion of the Company's
products, training programs and services to broker/dealers, underwriters and
administrators of mutual funds. In consideration for services provided, the
agreement granted the consultant a warrant to purchase up to one million
(1,000,000) shares of the common stock of the Company at $.01 per share. In
addition, all travel, mailing, entertainment, printing, postage and all other
expenses directly related to services will be reimbursed by the Company. The
warrant was exercised on October 9, 1998 for 1,000,000 shares.

The terms of the agreement are for a 24-month period commencing with the date of
the signing of the agreement and shall terminate on October 20, 1999, with an
extension convertible to October 20, 2000, unless sooner by death of the
consultant or a 30-day notice of termination by either party. Stock compensation
costs charged to operations for warrants issued was $150,000 for the year ended
December 31, 1998.

Major customers

A substantial portion of the Company's revenue is derived from three major
customers which, individually, constitute approximately 38.3%, 22.0% and 15.6%
of total revenue for the year ended December 31, 1998.

F-18
<PAGE>

FINANCIAL INTRANET, INC.
(a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 1997 and 1998
(Unaudited with respect to data as of March 31, 1998 and 1999
and for the three months ended March 31, 1998 and 1999)

NOTE 7--PRIVATE PLACEMENTS

The Company had a private placement offering in June 1997, whereby 6,904,228
shares of common stock were issued. The Company had two outstanding subscription
agreements from investors totaling $75,000 at December 31, 1997.

The Company subsequently issued 400,000 shares of common stock in January 1998.

On May 20, 1998, the Company entered into subscription agreements to issue a
total of $500,000 in convertible debentures, due November 20, 1998. The
debentures pay 6% cumulative interest annually, payable in cash or in freely
trading common stock of the Company, at the Company's option at the time of each
conversion until the principal amount is paid in full or has been converted. The
debentures are subject to automatic conversion at the end of six months from the
date of issuance based on a formula as defined under the agreements. The holder
of the debenture has the right, at their option, to convert it into shares of
the Company's common stock at any time before the close of business on the
maturity date. The debentures were converted into 1,070,800 shares in June and
July 1998.

On June 4, 1998, the Company entered into a Placement Agent Agreement with
Corporate Capital Management LLC (CCM). The agreement appointed CCM exclusive
placement agent of the Company during the offering period as defined in the
agreement for the purpose of assisting the Company in the sale of $500,000 (the
Funds) in principal amount of its convertible 12% promissory note due December
1, 1998 (the Note). The agreement provides for a cash fee in an amount equal to
10% of the gross proceeds from the sale of the Note plus warrants to purchase
50,000 shares of the Company's common stock. The warrants shall be exercisable
at a price equal to 110% of the bid price for the common stock on the date of
closing of the sale of the Note. In conjunction with the agreement to retain CCM
as placement agent, on June 4, 1998, the Company entered into a subscription
agreement for the Note. The Note is convertible, at the holder's option, at any
time, into shares of common stock of the Company. The number of shares of common
stock into which the Note may be converted shall be determined at the lesser of
(i) 72.5% of the lowest closing bid price quoted on the over-the-counter
Bulletin Board market of the common stock for the five-day trading period ending
on the day prior to the conversion date or (ii) the lowest closing bid price
quoted on the Bulletin Board of the common stock for the five-day trading period
ending on the day prior to the closing of the sale of the Note. The note was
converted to 1,352,718 shares of the Company's common stock in June 1998 and
115,052 shares were subsequently cancelled in October 1998.

NOTE 8--STOCK OPTIONS AND WARRANTS

The following stock options and warrants were granted during 1997 and 1998:

Warrants to purchase 1,000,000 shares of common stock exercisable at $.01 per
share under a consulting agreement (See note 6).

Warrants to purchase 166,667 shares of common stock to a consultant on July 15,
1998 which expire June 22, 2003, at an exercise price of $.40 per share.

Stock options to purchase 250,000 shares of common stock to each of two
employees at an exercise price of $.625 per share, which vest one-third each
year over the next three years beginning in December 1999.

Warrants to purchase 150,000 shares of common stock for legal services: 75,000
shares on July 10, 1998 which expire July 10, 2003, at an exercise price of
$1.20 per share; and 75,000 shares on November 25, 1998 which expire November
24, 2003, at an exercise price of $.60 per share.

Stock options to purchase 4,810,776 and 2,411,333 shares of common stock during
1997 and 1998, respectively, exercisable at

F-19
<PAGE>

FINANCIAL INTRANET, INC.
(a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 1997 and 1998
(Unaudited with respect to data as of March 31, 1998 and 1999
and for the three months ended March 31, 1998 and 1999)

NOTE 8--STOCK OPTIONS AND WARRANTS--(CONTINUED)

$.19 per share pursuant to employment agreements with three key executives (See
note 6).

Warrants to purchase 10,000 shares of common stock to each of two directors, one
issued on September 1, 1998 which expires August 31, 2001, exercisable at a
price of $.725 per share; and the other issued on November 13, 1998 which
expires November 13, 2001, exercisable at a price of $.60 per share.

Warrants to purchase 285,000 shares of common stock to two investment bankers as
commissions for a December 31, 1998 private placement of convertible promissory
notes, one of which is for 125,000 shares of common stock exercisable at a price
of $.40 per share, and the other which is for 160,000 shares of common stock
exercisable at a price of $.64 per share.

Warrants to purchase 200,000 shares of the Company's common stock were issued to
a consultant on April 1, 1997 at an exercise price of $7.25. These warrants
expire on March 31, 2002.

Warrants to purchase 50,000 shares of the Company's common stock were issued to
the placement agent for a June, 1998 private placement. The warrants are
exercisable at $.64 per share.

The charge to operations for the above grants of options and warrants for the
year ended December 31, 1998 was $156,150.

The following warrants were granted during the quarter ended March 31, 1999:

Warrants to purchase 75,000 shares of common stock were issued to each of two
placement agents for a February 1999 private placement, exercisable at a price
of $.60 per share.

The charge to operations for the above grants for the quarter ended March 31,
1999 was $130,600.

Summary information with respect to stock options granted is as follows:

F-20
<PAGE>

FINANCIAL INTRANET, INC.
(a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 1997 and 1998
(Unaudited with respect to data as of March 31, 1998 and 1999
and for the three months ended March 31, 1998 and 1999)

NOTE 8--STOCK OPTIONS AND WARRANTS--(CONTINUED)

<TABLE>
<CAPTION>
OUTSTANDING OUTSTANDING
EXERCISE OPTIONS OPTIONS
PRICE GRANTED EXERCISABLE
-------- ---------- -----------
<S> <C> <C> <C>
Balance, January 1, 1997.................. -- --
Activity:
Options granted........................ $.19 4,810,776 4,810,776
Options exercised...................... -- --
Options cancelled...................... -- --
---------- -----------

Balance, December 31, 1997................ $.19 4,810,776 4,810,776
Activity:
Options granted........................ $.19 2,411,333 2,411,333
Options exercised...................... -- --
Options cancelled...................... -- --
---------- -----------

Balance, December 31, 1998................ $.19 7,222,109 7,222,109

Activity:
Options granted........................ $.19 -- --
Options exercised...................... (879,685) (879,685)
Options cancelled...................... (1,140,262) (1,140,262)
---------- -----------

Balance................................... 5,202,162 5,202,162
========== ==========

</TABLE>

Compensation cost charged to operations for stock options granted was $13,272
and $276,658 for the years ended December 31, 1997 and 1998, respectively and
$13,704 and $42,939 for the quarters ended March 31, 1998 and 1999,
respectively, and a $104,904 for options cancelled was credited during the
quarter ended March 31, 1999.

1998 Stock Option Plan

In December, 1998, the Company established the 1998 Stock Option Plan ("1998
Plan") which provides for the granting of options which are intended to qualify
either as incentive stock options ("Incentive Stock Options") within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended, or as options
which are not intended to meet the requirements of such section ("Non- statutory
Stock Options"). The total number of shares of Common stock reserved for
issuance under the 1998 Plan is 1,500,000. Options to purchase shares may be
granted under the 1998 Plan to persons who, in the case of Incentive Stock
Options, are key employees (including officers) of the Company or, in the case
of Non-statutory Stock Options, are key employees (including officers) or
non-employee directors of, or non-employee consultants to, the Company.

The exercise price of all Incentive Stock Options granted under the 1998 Plan
must be at least equal to the fair market value of such shares on the date of
the grant or, in the case of Incentive Stock Options granted to the holder of
more than 10% of the Company's Common stock, at least 110% of the fair market
value of such shares on the date of the grant. The maximum exercise period for
which Incentive Stock Options may be granted is ten years from the date of grant
(five years in the case of an individual owning more than 10% of the Company's

F-21
<PAGE>

FINANCIAL INTRANET, INC.
(a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 1997 and 1998
(Unaudited with respect to data as of March 31, 1998 and 1999
and for the three months ended March 31, 1998 and 1999)

NOTE 8--STOCK OPTIONS AND WARRANTS--(CONTINUED)

Common stock). The aggregate fair market value (determined at the date of the
option grant) of shares with respect to which Incentive Stock Options are
exercisable for the first time by the holder of the option during any calendar
year shall not exceed $100,000.

The exercise price of all Non-statutory Stock Options granted under the 1998
Plan must be at least equal to 85% of the fair market value of such shares on
the date of the grant.

No options have been granted during 1998 pursuant to the 1998 Plan.

NOTE 9--INCOME TAXES

The Company has net operating loss carryforwards available for income tax
reporting purposes of approximately $3,000,000, in the aggregate, expiring in
2011 to 2013 which, upon recognition, gives rise to a deferred income tax asset
of approximately $340,000 and $1,200,000 at December 31, 1997 and 1998,
respectively.

The Company has recorded a 100% valuation allowance on the net deferred tax
asset since management cannot determine if it is more likely than not that the
deferred tax asset will be utilized.

NOTE 10--RELATED PARTY TRANSACTIONS

Due from officers

At December 31, 1997, the Company had a $19,500 note receivable from an
officer/stockholder of the Company. The note receivable, which is due on demand,
bears interest at 8% a year. At December 31, 1997, there was $910 of accrued
interest on the note receivable. The balance of this note receivable was fully
repaid on November 19, 1998. At December 31, 1998 and March 31, 1999, there was
$5,074 and zero, respectively, in accounts receivable due from officers.

Due to officers

At December 31, 1997, the Company had an unsecured note payable in the amount of
$43,489 to an officer/stockholder. The borrowings, advanced to meet current
operating obligations, were due on demand and are non-interest bearing. The
remaining balance at December 31, 1998 was $5,889 and zero at March 31, 1999.

On August 27, 1998 and December 16, 1998, the Company borrowed an additional
$50,000 and $5,000, respectively from the same officer. The promissory notes,
with an interest rate of 8% a year, are due in 180 days. At December 31, 1998,
interest of $1,350 was accrued on this note. This amount was repaid on March 3,
1999 as part of an agreement with the Founder (see Note 12).

At December 31, 1998, the Company had an unsecured note payable in the amount of
$36,115 to another officer/stockholder, due on demand. The promissory note bears
an interest rate of 8% a year. At December 31, 1998, interest of $264 was
accrued on this note. At March 31, 1999, interest of $995 was accrued on this
note.

F-22
<PAGE>

FINANCIAL INTRANET, INC.
(a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 1997 and 1998
(Unaudited with respect to data as of March 31, 1998 and 1999
and for the three months ended March 31, 1998 and 1999)

NOTE 11--CONTINGENCY

Litigation

On July 23, 1998, H & H Acquisition Corp., individually and on behalf of the
Company, commenced an action in federal court in the Southern District of New
York against the Company, the founder and certain officers, among others. The
complaint is an action to recover shares of common stock of the Company
previously sold to an officer/stockholder and unspecified damages. Management
believes that the claims against the Company and certain officers are without
merit and is vigorously defending the action. In addition, management believes
that the plaintiffs' principal causes of action relate to the founder, who has
filed a motion to dismiss the complaint on the grounds, in part, that a mutual
release previously executed with the plaintiff covers the alleged action. No
provision has been made in these financial statements for any possible losses
arising from this litigation.

Settlement agreement

In February 1998, a collateral pledge agreement was executed between the Company
and two outside parties to arrange for the Company to receive $350,000 to
purchase certain network computer and telecommunications equipment. Pursuant to
that collateral pledge agreement, the Company granted a first priority security
interest to one of the parties (the "facilitator") in order to secure the
obligations of the other party ("the borrower") under said agreement. The
Company did not receive the contemplated funds and had to make other
arrangements to fund its purchase of the equipment.

In July 1998, in order to obtain a release of the security interest in the
equipment, the Company issued 500,000 shares of its common stock to the
facilitator. If the facilitator desires to sell the shares, the Company has a
right of first refusal to purchase those shares. In the event there is a sale of
the total shares, the facilitator receives the first $175,000 of the net
proceeds, and the balance shall be divided equally between the facilitator and
the Company. If the sale of shares has not taken place by July 31, 1999, this
agreement shall terminate and the facilitator shall retain ownership of the
shares. The Company has charged $315,000 to operations for the year ended
December 31, 1998 to reflect the issuance of the 500,000 shares of common stock.

NOTE 12--SUBSEQUENT EVENTS

Private placement

On February 8, 1999, the Company entered into a subscription agreement for a
private placement of up to $1,700,000 principal amount of 7% convertible
promissory notes and warrants to purchase up to 3,333,333 shares of common stock
in up to five separate installments at an exercise price of $.40 per share for
the initial warrants and $.60 per share for the installments. The agreements
consist of an initial purchase of a Promissory Note in the principal amount of
$600,000 (the "Initial Note") and Initial Warrants to purchase 1,500,000 shares
of Common stock for a purchase price of $600,000.

At the Initial Closing, the Company issued an Initial Note which may later be
convertible into common stock of the Company in the principal amount of
$600,000, with $240,000 of the principal amount, and all accrued interest
thereon, payable upon conversion by the holder commencing March 10, 1999, and
$360,000 of the principal amount, and all accrued interest thereon, payable upon
conversion by the holder commencing 90 days after the Initial Closing Date. The
Initial Note with respect to the $240,000 principal amount was converted on
March 10, 1999 into 600,000 shares of common stock and the balance of the
$360,000 principal amount was converted on May 14, 1999 into 900,000 shares of
common stock. The Installment Notes in the aggregate principal amount of
$1,100,000 may be converted, in whole or in part, at any time after issuance at
the option of the holder.

F-23
<PAGE>

FINANCIAL INTRANET, INC.
(a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 1997 and 1998
(Unaudited with respect to data as of March 31, 1998 and 1999
and for the three months ended March 31, 1998 and 1999)

NOTE 12--SUBSEQUENT EVENTS--(CONTINUED)

Commencing on the date the offering becomes effective, and terminating 30 days
later, the Company may serve a demand notice or the investor may serve a
purchase notice, with respect to the purchase for $200,000 of a promissory note
in the principal amount of $200,000 and a warrant for the purchase of 333,333
shares of Common Stock at an exercise price of $.60 per share.

The "Conversion price" shall be the lesser of: (i) 75% of the average of the
five lowest closing bid prices of the Common stock during the 30 trading days
ending on the trading day immediately preceding the Conversion date, or (ii)
$.40, $.50 and $.60 per share with respect to the promissory note for the
$200,000 promissory note and two promissory notes in the principal amount of
$300,000, respectively.

During the 90 day period after the closing of the installment for a promissory
note in the principal amount of $200,000, the Company may serve a demand notice
or the investor may serve a purchase notice, with respect to the purchase for
$300,000 of a promissory note in the principal amount of $300,000 and a warrant
for the purchase of 500,000 shares of Common stock (the "Third Installment").
During the 90 day period after the Third Installment, the Company may serve a
demand notice or the investor may serve a purchase notice, with respect to the
purchase for $300,000 of a promissory note in the principal amount of $300,000
and a warrant for the purchase of 500,000 shares of Common stock (the "Fourth
Installment"). During the 90 day period after the Fourth Installment, the
Company may serve a demand notice or the investor may serve a purchase notice,
with respect to the purchase for $300,000 of a Promissory Note in the principal
amount of $300,000 and a warrant for the purchase of 500,000 shares of Common
stock The warrants are exercisable for a period of five years after issuance at
an exercise price of $.60 per share.

The two agents for this placement, as part of their fee, each received 15,000
shares of Common stock and Initial Warrants to purchase 75,000 shares of Common
stock at an exercise price equal to $0.40 per share of Common stock (and
otherwise on terms set forth in the Common stock Purchase Warrant) on the
Initial Closing Date.

On each Closing Date for an installment: (i) the two Placement Agents, as part
of their fee, shall also each receive 1,727 shares of Common stock for each
$100,000 funded to the Company by the Investor, Installment Warrants to purchase
10,000 shares of Common stock on the Closing Date for each $100,000 funded on
the second installment, and Installment Warrants to purchase 8,333 shares of
Common stock on each Closing Date for each $100,000 funded on the third, fourth
and fifth installments. The Installment Warrants will have an exercise price of
$0.60 per share.

Public offering

In February 1999, the Company filed a Registration Statement (Form SB-2)
covering the primary offering of Common stock by the Company and the offering of
common stock by certain selling securityholders. Under the primary prospectus,
the Company is registering 6,000,000 Shares of common stock, par value $.001 per
share, to be held for sale. Under an alternate prospectus, the selling
securityholders are registering 5,508,333 shares of common stock underlying the
warrants, 6,075,000 shares of common stock underlying the convertible promissory
notes (including an additional 2,025,000 shares of common stock being registered
with respect to certain anti-dilution provisions of such promissory notes),
655,000 shares of common stock previously issued and 37,994 shares of common
stock which will be issued upon conversion of certain promissory notes. These
shares will be offered to the public at an offering price of $1.00 per share.

F-24
<PAGE>

FINANCIAL INTRANET, INC.
(a Development Stage Company)
NOTES TO FINANCIAL STATEMENTS--(Continued)

Years ended December 31, 1997 and 1998
(Unaudited with respect to data as of March 31, 1998 and 1999
and for the three months ended March 31, 1998 and 1999)

NOTE 12--SUBSEQUENT EVENTS--(CONTINUED)

Founder consulting agreement

On March 3, 1999 the Company entered into a consulting agreement with the
Company's Founder (the "Founder") whereby the Founder will be retained as a
consultant to act as Director of Brokerage Sales on a commission only basis
through December 31, 2002. The terms of compensation include commissions paid
as a percentage of sales and reimbursement of certain expenses as defined in
the agreement. In addition, under the terms of this agreement, the Founder
acknowledges that he agrees to reduce the number of unexercised options held by
him to purchase shares of the Company common stock from 3,640,262 to 2,500,000
shares at an exercise price of $.19 per share. The Founder has also agreed to
exercise these options with respect to 879,685 shares as of March 3, 1999 in
exchange for settlement of $167,140 in accrued salary and loans owed by the
Company to the Founder.

Convertible Promissory Note

On July 20, 1999, the Company issued an 8% convertible promissory note in the
principal amount of $500,000 with a maturity date of October 20, 1999, and
warrants, exercisable under certain conditions, to purchase up to 200,000 shares
of common stock at an exercise price of $.50 per share through October 20, 2004.

The "conversion price" shall be the lesser of: (i) 75% of the average of the
five lowest closing bid prices of the common stock during the five trading days
immediately preceding the conversion date, or (ii) $.50 per share. The
promissory note is convertible into common stock at any time after the maturity
date at the conversion price.

Financial Intranet's obligations under the promissory note are subject to a
guarantee by Ben B. Stein, Michael Sheppard and Maura Marx, and secured by a
pledge of 924,517 shares of common stock by Mr. Stein, 96,151 shares by Mr.
Sheppard, and 101,844 shares by Ms. Marx.

The Company expects that its obligations under this convertible promissory note
will be satisfied by conversion into common stock. Each of the 200,000
warrants issued in conjunction with the promissory note entitles the
holder to purchase one share of common stock at an exercise price of
$.50 per share. However, the warrants are exercisable only if the
Company repays its obligations under the promissory note in cash on or
prior to the maturity date.

The agent for this transaction, as part of its fee, received 20,000 shares of
common stock and warrants to purchase 100,000 shares of common stock at an
exercise price of $0.50 per share of common stock.

The shares of common stock issuable upon conversion of the promissory note and
warrants issued in conjunction with the note are being registered in the
alternate prospectus.

F-25
<PAGE>

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

We have not authorized anyone to give any information
different from that contained in this prospectus. You must
not rely on any unauthorized information. We are offering to
sell, and seeking offers to buy, shares of common stock only
in states where offers and sales are permitted. The
information in this prospectus is accurate only as of the
date of this prospectus.

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

TABLE OF CONTENTS

Page
----
Prospectus Summary .......................................................... 3
Risk Factors .................................................................6
Use of Proceeds .............................................................10
Capitalization...............................................................11
Dilution.....................................................................12
Dividend Policy ............................................................ 15
Management's Discussions and Analysis of
Financial Condition and Results of
Operations ................................................................. 16
Business.................................................................... 21
Management ................................................................. 32
Certain Transactions ....................................................... 38
Principal Stockholders ..................................................... 39
Selling Securityholders .................................................... 40
Description of Securities .................................................. 44
Shares Eligible for Future Sale ............................................ 46
Plan of Distribution ....................................................... 47
Legal Matters............................................................... 48
Experts..................................................................... 48
Financial Statements .......................................................F-1

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

Until __________, 1999 (25 days after the date of this prospectus), all
dealers effecting transactions in the securities offered hereby, whether or not
participating in the distribution, may be required to deliver a prospectus.
This is in addition to the obligation of dealers to deliver a prospectus when
acting as underwriters and with regard to their unsold allotments or
subscription.

6,000,000 SHARES
OF COMMON STOCK

FINANCIAL INTRANET, INC.

---------------------
PROSPECTUS
---------------------

July 28, 1999

- -------------------------------------------------------------------------------
<PAGE>

[Alternate Cover Page--- The Offering]
SUBJECT TO COMPLETION, DATED JULY 28, 1999

PROSPECTUS

11,271,327 Shares of Common stock

Financial Intranet Inc.

Selling securityholders are offering 11,271,327 shares of common stock of
Financial Intranet, Inc.

The selling securityholders may sell the shares of common stock from time to
time. They have no underwriting arrangements. The selling securityholders and
intermediaries through whom such securities may be sold may be "underwriters"
under the Securities Act, and any profits or commissions may be underwriting
compensation. Financial Intranet agreed to indemnify the selling securityholders
against certain liabilities, including liabilities under the Securities Act.

On the date of this prospectus, Financial Intranet commenced a public offering
of 6,000,000 shares of common stock through a registration statement of which
this prospectus is a part.

THESE ARE SPECULATIVE SECURITIES AND THIS INVESTMENT INVOLVES A HIGH DEGREE OF
RISK. SEE "RISK FACTORS" ON PAGE 6.

The date of this Prospectus July 28, 1999

A-1

<PAGE>

<TABLE>
<CAPTION>
THE OFFERING

<S> <C>
Securities offered by selling securityholders:............................ 11,271,371 shares

Securities outstanding prior to Financial Intranet's offering:............ 23,644,292 shares

Securities outstanding after offering:.................................... 39,340,619 shares which include:

o 5,508,333 shares of common stock issuable upon
exercise of the warrants,
o 4,150,000 shares of common stock issuable upon
conversion of the promissory notes issued to the
selling securityholders,
o 1,575,000 shares of common stock previously
issued to the selling securityholders,
o 37,994 shares otherwise issuable to the selling
securityholders, and
o 6,000,000 shares of common stock being offered by
Financial Intranet.

Risk Factors.............................................................. An investment in any of the securities being offered
hereby is highly speculative and involves
substantial
risks including the risks of:

o limited operations
o projected losses
o limited number of products
o management's broad discretion in the application
of proceeds
o the possible need for additional financing
o competition

Investors should carefully consider the matters set
forth under the caption "Risk Factors."

OTC Bulletin Board Symbol:................................................ FNTN
</TABLE>

A-2

<PAGE>

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

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

TABLE OF CONTENTS
Page
----
<S> <C>
Prospectus Summary .......................................................... 3
Risk Factors .................................................................6
Use of Proceeds .............................................................10
Capitalization...............................................................11
Dilution.....................................................................12
Dividend Policy ............................................................ 15
Management's Discussions and Analysis of
Financial Condition and Results of
Operations .............................................................. 16
Business.................................................................... 21
Management ................................................................. 32
Certain Transactions ....................................................... 38
Principal Stockholders ..................................................... 39
Selling Securityholders .................................................... 40
Description of Securities .................................................. 44
Shares Eligible for Future Sale ............................................ 46
Plan of Distribution ....................................................... 47
Legal Matters............................................................... 48
Experts..................................................................... 48
Financial Statements .......................................................F-1
</TABLE>

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

Until _________, 1999 (25 days after the date of this prospectus), all
dealers effecting transactions in the securities offered hereby, whether or not
participating in the distribution, may be required to deliver a prospectus.
This is in addition to the obligation of dealers to deliver a prospectus when
acting as underwriters and with regard to their unsold allotments or
subscription.

11,271,327 SHARES
OF COMMON STOCK

FINANCIAL INTRANET, INC.

---------------------
PROSPECTUS
---------------------

July 28, 1999

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

<PAGE>

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS

Subsection 1 of Section 78.7302 of Chapter 78 of the Nevada General
Corporation Law ("NGCL") empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (except in
an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation or enterprise, against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or
proceeding, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or
proceedings, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the
best interests of the corporation, and that, with respect to any
criminal action or proceeding, he had reasonable cause to believe
his action was unlawful.

Subsection 2 of Section 78.7502 of the NGCL empowers a corporation
to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he acted in any of the
capacities set forth above, against expenses, including amounts
paid in settlement and attorneys' fees, actually and reasonably
incurred by him in connection with the defense or settlement of
such action or suit if he acted in accordance with the standard set
forth above, except that no indemnification may be made in respect
of any claim, issue or matter as to which such person shall have
been adjudged by a court of competent jurisdiction after exhaustion
of all appeals therefrom to be liable to the corporation or for
amounts paid in settlement to the corporation unless and only to
the extent that the court in which such action or suit was brought
or other court of competent jurisdiction determines that, in view
of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses as the court
deems proper.

Section 78.751 of the NGCL provides that unless indemnification is
ordered by a court, the determination to provide indemnification
must be made by the stockholders, by a majority vote of a quorum of
the board of directors who were not parties to the action, suit or
proceeding, or in certain circumstances by independent legal
counsel in a written opinion. In addition, the articles of
incorporation, bylaws or an agreement made by the corporation may
provide for the payment of the expenses of a director or officer of
the expenses of defending an action as incurred upon receipt of an
undertaking to repay the amount if it is ultimately determined by a
court of competent jurisdiction that the person is not entitled to
indemnification. Section 78.751 of the NGCL further provides that,
to the extent a director or officer of a corporation has been
successful on the merits or otherwise in the defense of any action,
suit or proceeding referred to in subsection (1) and (2) , or in
the defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 78.751 of the NGCL shall
not be deemed exclusive of any other rights to which the
indemnified party may be entitled and that the scope of
indemnification shall continue as to directors, officers, employees
or agents who have ceased to hold such positions, and to their
heirs, executors and administrators.

Finally, Section 78.752 of the NGCL empowers the corporation to
purchase and maintain insurance on behalf of a director, officer,
employee or agent of the corporation against any liability asserted
against him or incurred by him in any such capacity or arising out
of his status as such whether or not the corporation would have the
authority to indemnify him against such liabilities and expenses.

The Registrant's bylaws provide for indemnification of officer,
directors and others to the fullest extent permitted by the laws of
the State of Nevada.

II-1
<PAGE>

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The expenses payable by registrant in connection with the issuance
and distribution of the securities being registered are estimated
as follows:

Securities and Exchange Commission Fees..................... $8,521.43
Accounting Fees and Expenses................................ $30,000.00
Blue Sky Fees and Expenses.................................. $25,000.00
Printing Expenses (including Securities).................... $30,000.00
Legal Fees.................................................. $70,000.00
Miscellaneous............................................... $16,478.57
----------

Total.................................................... $180,000.00
===========

The selling securityholders will not assume any of the expenses of their
offering except to the extent that they engage their own legal counsel.
The estimate of expenses includes expenses in connection with the issuance
and distribution of shares by the selling security holders.

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

All issuances were under Section 4(2) unless otherwise indicated.
Certain issuances under 4(2) were to officers, employees or legal
counsel who are familiar with the operations of the registrant. Other
issuances under Section 4(2) were to advisors, including Civilization
Communication Inc., Kevin Haggerty, Great North Capital Corp., Cardinal
Capital Management, Inc., Josephberg Grosz & Co., JG Capital Inc.,
Ganesh Asset Management Ltd. and Chez Inc. Financial Intranet believed
that these advisors were sufficiently sophisticated to qualify for the
exemption because they are in the business of advising corporations on
marketing, finance or public relations, as the case may be, and are
familiar with the business of the registrant.

COMMON STOCK

On July 20, 1999, Financial Intranet issued 20,000 shares of common stock to
JG Capital in consideration for investment banking services.

On May 26, 1999, Financial Intranet issued 900,000 shares of common stock to
Barry Stein to replace shares that Mr. Stein had pledged to secure Financial
Intranet's obligations under a convertible promissory note.

On April 28, 1999, Financial Intranet issued 600,000 shares of common stock to
Barry Stein to replace shares that Mr. Stein had pledged to secure Financial
Intranet's obligations under a convertible promissory note.

On April 28, 1999, Financial Intranet issued 11,111 shares of common stock to
Steven Schuster, counsel to Financial Intranet, in consideration for advisory
services valued at $10,000.

On March 3, 1999, Financial Intranet issued 15,000 shares of common stock each
to Cardinal Capital Management Inc. and JG Capital, Inc. as part of their fees
as advisors for structuring a February 8, 1999 private placement.

On March 3, 1999, Financial Intranet issued 879,685 shares of common stock to
Barry Stein for aggregate consideration of $167,140 upon exercise of options.

On January 25, 1999, Financial Intranet issued 5,812 shares of common stock to
Ganesh Asset Management for exercise of warrants.

II-2
<PAGE>

On January 21, 1999, Financial Intranet issued 197,402 shares of common stock
to Barry Stein in consideration for employment services valued at $43,837.55.

On January 21, 1999, Financial Intranet issued 205,825 shares of common stock
to Michael Sheppard in consideration for employment services valued at
$55,854.14.

On January 21, 1999, Financial Intranet issued 208,409 shares of common stock
to Maura Marx in consideration for employment services valued at $56,109.39.

On January 7, 1999, Financial Intranet issued 12,500 shares of common stock
each to Cardinal Capital Management Inc. and Josephberg Grosz & Co. as part of
their fees as advisors for structuring a December 1998 private placement.

On December 17, 1998, Financial Intranet issued 26,667 shares of common stock
to Civilization Communication, Inc. in consideration for advisory services
valued at $16,000 in connection with preparation of a Form 10.

On October 9, 1998, Financial Intranet issued 1,000,000 shares of common stock
to Kevin Haggerty in consideration for marketing consulting services valued at
$10,000.

On October 15, 1998, Financial Intranet issued 60,637 shares of common stock to
Great North Capital Corp. in consideration for advisory fees for structuring a
1997 private placement.

On October 15, 1998, Financial Intranet issued 8,333 shares of common stock to
Ganesh Asset Management, Ltd. in consideration for advisory fees for
structuring a 1997 private placement.

On July 17, 1998, Financial Intranet issued 500,000 shares of common stock to
Internet Credit Corp. in consideration for release of security interest in
equipment.

On July 15, 1998, Financial Intranet issued 112,093 shares of common stock to
Civilization Communication, Inc. pursuant to anti-dilution provisions of a
consulting agreement dated December 1996.

On June 12, 1998, Financial Intranet issued 60,000 shares of common stock to JG
Partners, LP in consideration for investment banking services valued at
$25,000.

On June 11, July 11, and July 23, Financial Intranet issued a total of
1,070,800 shares of common stock to Thomas Kernaghan & Co. in consideration for
investment banking $500,000 pursuant to Rule 504.

On June 11, 1998, Financial Intranet issued 28,794 and 9,599 shares to Great
North Capital and Corporate Capital Management, respectively, in consideration
for advisory services regarding the funding by Cadence Capital Corporation.

On June 5, 1998, Financial Intranet issued 1,352,718 shares of common stock to
Cadence Capital Corporation in consideration for $500,000 pursuant to Rule 504
of Regulation D. 115,052 shares of common stock were subsequently cancelled by
the Company in October, 1998.

On May 19, 1998, Financial Intranet issued 38,066 shares of common stock to
Steven Sanders in consideration for legal services valued at $9,453.50.

On May 19, 1998, Financial Intranet issued 9,516 shares of common stock to
Debra Millman in consideration for legal services valued at $2,422.

On May 19, 1998, Financial Intranet issued 175,000 shares of common stock to
Civilization Communication, Inc. in consideration for advisory services valued
at $43,750 in connection with preparation of a Form 10.

On February 9, 1998, Financial Intranet issued 234,649 shares of common to
Civilization Communication Corp.

II-3
<PAGE>

pursuant to anti-dilution provisions consulting agreement dated December 1996.

On January 14, 1998, Financial Intranet issued 400,000 shares of common stock
to Landmark Capital in consideration for $107,500.

On November 15, 1997, Financial Intranet issued 315,000 shares to Civilization
Communication Corp. pursuant to anti- dilution provisions of a consulting
agreement.

On September 5, 1997, Financial Intranet issued 20,000 shares of common stock
to Ron Pauls, an employee, in consideration for employment services rendered.

On September 5, 1997, Financial Intranet issued 20,000 shares of common stock
to James Reiff, an employee, in consideration for employment services rendered.

On August 4, 1997, Financial Intranet issued 100,000 shares of common stock to
CHEZ, INC. in consideration for $6,500 in public relations.

In June 1997, Financial Intranet issued 6,904,228 shares of common stock to
investors of which 4,304,228 were purchased by non-U.S. residents overseas for
an aggregate consideration of $955,250 pursuant to Rule 504 of Regulation D.

On February 27, 1997, Financial Intranet issued 750,000 shares of common stock
to Michael Sheppard as an incentive payment for execution of employment
contract pursuant to Section 701.

On February 27, 1997, Financial Intranet issued 500,000 shares of common stock
to Maura Marx as an incentive payment for execution of employment contract
pursuant to Section 701.

On February 27, 1997, Financial Intranet issued 1,500,000 shares of common
stock to Barry Stein as an incentive payment for execution of employment
contract pursuant to Section 701.

On February 7, 1997, Financial Intranet issued 1,500,000 shares of common stock
to Barry Stein in lieu of $150,000 in compensation for consulting services
through December 31, 1997.

On December 20, 1996, Financial Intranet issued 240,000 shares of common stock
to Civilization Communication Corp. in consideration for services related to
preparation of the business plans valued at $10,000.

On December 17, 1996, Financial Intranet issued 40,000 shares of common stock
to Michael Daniels in consideration for services rendered in connection with
his sale of a controlling interest in Wee Wees, Inc.

OPTIONS AND WARRANTS

On July 20, 1999 Financial Intranet issued 100,000 warrants to J G Capital in
consideration for investment banking services. The warrants have an exercise
price of $.50 per share and expire on October 20, 2004.

On February 28, 1999, Financial Intranet issued 20,000 warrants to each of
Scott Goldstein and Sheldon Goldstein in consideration for legal services. The
warrants have an exercise price of $.60 per share and expire five years after
issuance.

On February 8, 1999, Financial Intranet issued warrants to purchase 75,000
shares of common stock to each of Cardinal Capital Management Inc. and J.G.
Capital Inc. in consideration f or investment banking services rendered in
connection with a private placement. The warrants expire five years after
issuance.

On December 31, 1998, Financial Intranet issued warrants to purchase 160,000
shares of common stock to Cardinal Capital Management Inc. with an exercise
price of $.64 per share and 125,000 shares of common stock to J.G. Capital
Inc. with an exercise price of $.40 per share. The warrants expire five years
after issuance. The warrants were issued in

II-4
<PAGE>

consideration for investment banking services rendered for a private placement.

On December 21, 1998, Financial Intranet issued 75,000 warrants to purchase
common stock to McLaughlin & Stern, LLP with an exercise price of $.60 per
share in consideration of legal services rendered and disbursements incurred.
The warrants expire on November 24, 2003.

On December 21, 1998, Financial Intranet agreed to issue options to purchase
250,000 shares of common stock to Alan Spar at a price of $.625 per share. The
options were issued as part of an employment compensation package, vest over
three years and expire on December 31, 2001.

On December 21, 1998, Financial Intranet issued 250,000 options to purchase
common stock to Alan Ross at a price equal to $.625 per share. The options were
issued as part of an employment compensation package, vest over three years and
expire on December 31, 2001.

On November 13, 1998, Financial Intranet issued 10,000 warrants to purchase
common stock at $.60 per share to Steven Weller. The warrants were issued in
consideration for Mr. Weller's agreement to serve as a Director and expire on
November 12, 2001.

On September 1, 1998, Financial Intranet issued 10,000 warrants to purchase
common stock at $.725 per share to Joseph F. Engelberger. The warrants were
issued in consideration for Mr. Engelberger's agreement to serve as a Director
and expire on August 31, 2001.

On July 15, 1998, Financial Intranet issued 166,667 warrants to McCap, Inc. for
public relations services at an exercise price of $.40 per share expiring June
22, 2003.

On July 11, 1998, Financial Intranet issued 75,000 warrants to purchase common
stock for $1.20 per share to McLaughlin & Stern, LLP in consideration of legal
services rendered and disbursements incurred. The warrants expire on July 10,
2003.

On July 1, 1998, Financial Intranet issued 980 warrants to purchase common
stock for $.32 per share to Corporate Capital Management for advisory services.
The warrants expire on September 15, 2000.

On June 5, 1998, the Company issued warrants to purchase 50,000 shares of
common stock to Corporate Capital Management with an exercise price of $.64 per
share for advisory services.

Pursuant to his employment agreement dated September 12, 1997, Michael Sheppard
received options to purchase 2,231,352 shares of common stock at an exercise
price of $.19 per share. The warrants expire on December 31, 2002.

Pursuant to her employment agreement dated September 12, 1997, Ms. Marx
received options to purchase 1,350,495 shares of common stock at an exercise
price of $.19 per share. The warrants expire on December 31, 2002.

Pursuant to Mr. Stein's employment agreement, dated September 12, 1997, he
received options to purchase 3,640,262 shares of common stock as of common
stock at an exercise price of $.19 per share. The warrants expire on December
31, 2002.

On September 15, 1997, Financial Intranet issued 2,422 warrants to purchase
common stock for $.18 per share to Corporate Capital Management for advisory
services. The warrants expire on September 15, 2000.

On September 15, 1997, Financial Intranet issued 5,812 warrants to purchase
common stock for $.18 per share to Ganesh Asset Management for advisory
services. The warrants expire on September 15, 2000.

On September 15, 1997, Financial Intranet issued 2,353 warrants to purchase
common stock for $.32 per share to Ganesh Asset Management for advisory
services. The warrants expire on September 15, 2000.

II-5
<PAGE>

On September 15, 1997, Financial Intranet issued 7,266 warrants to purchase
common stock for $.18 per share to Great North Capital for advisory services.
The warrants expire on September 15, 2000.

On September 15, 1997, Financial Intranet issued 2,942 warrants to purchase
common stock for $.32 per share to Great North Capital for advisory services.
The warrants expire on September 15, 2000.

On April 1, 1997, Financial Intranet issued warrants to purchase 200,000 shares
of common stock with an exercise price of $7.25 per share to H&H Acquisitions
Inc. in connection with the acquisition of Wee Wees Inc. These warrants expire
on March 3, 2002.

ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

Exhibit
Number Description
- ----- -----------

3.1 -- Registrant's Restated Articles of Incorporation dated December
22, 1998
3.2 -- Registrant's By-laws
4.1 -- Form of Common Stock Certificate
4.2 -- 1998 Stock Option Plan

5.1 -- Opinion of McLaughlin & Stern, LLP 10.1 -- Letter regarding
purchase of Wee Wees, Inc. dated October 9, 1996.

10.2 -- Employment Agreement dated as of September 12, 1997 between
Registrant and Michael Sheppard.
10.3 -- Employment Agreement dated as of September 12, 1997 between
Registrant and Ben B. Stein.
10.4 -- Employment Agreement dated as of September 12, 1997 between
Registrant and Maura Marx.
10.5 -- Amendment to Employment Agreement dated as of December 15, 1998
between Registrant and Michael Sheppard.
10.6 -- Amendment to Employment Agreement dated as of December 15, 1998
between Registrant and Maura Marx.
10.7 -- Consulting Agreement dated as of February 27, 1997 between
Registrant and Michael Sheppard.
10.8 -- Promissory Note issued by Registrant to investor on December 31,
1998 in connection with private placement.
10.9 -- Warrant issued by Registrant to investor on December 31, 1998 in
connection with private placement.
10.10 -- Subscription agreement between Registrant and investor in private
placement on December 31, 1998.
10.11 -- Subscription agreement between Registrant and investor in private
placement on February 8, 1999.
10.12 -- Warrant issued by Registrant to investor on February 8, 1999 in
connection with private placement.
10.13 -- Form of Warrant certificate issuable by Registrant to investor
upon subsequent installments due under private placement.
10.14 -- Guaranty executed by Ben B. Stein on February 8, 1999 in
connection with private placement.
10.15 -- Stock Pledge Agreement executed by Ben B. Stein on February 8,
1999 in connection with private placement.
10.16 -- Service Agreement between the Registrant and Siemens dated
December 30, 1998.(1)
10.17 -- Warrant issued by Registrant to Cardinal Capital Management on
December 31, 1998 in connection with private placement.
10.18 -- Warrant issued by Registrant to Josephberg Grosz & Co. on
December 31, 1998 in connection with private placement.
10.19 -- Warrant issued by Registrant to Josephberg Grosz & Co. on
February 8, 1999 in connection with private placement.
10.20 -- Warrant issued by Registrant to Cardinal Capital Management on
February 8, 1999 in connection with private placement.
10.21 -- Convertible Promissory Note issued by Registrant to investor on
February 8, 1999.
10.22 -- Registration Rights Agreement executed by Registrant on February
8, 1999.
10.23 -- Consulting Agreement with Barry Stein dated February 27, 1997.
10.24 -- Registration Rights Agreement executed by Registrant on December
31, 1998.
10.25 -- Consulting agreement with Kevin Haggerty dated October 6, 1997.
(1)
10.26 -- Consulting agreement with Maura Marx dated February 27, 1997.(1)
10.27 -- Rebiller Service Agreement with WorldCom Inc. dated June 30,
1997.(1)

II-6
<PAGE>

10.28 -- Consulting Agreement with Barry Stein dated as of March 3, 1999.
(1)
10.29 -- Agreement with Frontier Corp. dated April 1999.(1)
10.30 -- Consulting Agreement with Joseph Theismann dated April 30, 1999.
(1)

10.31 -- Convertible Promissory Note dated July 20, 1999 in favor of Garth
LLC (3

10.32 -- Pledge and Security Agreement dated July 20, 1999 executed by
Messrs. Sheppard and Stein and Ms. Marx (3)

10.33 -- Letter Agreement between H&H Acquisition Corporation and Barry
Stein dated March 7, 1997.(3)

10.34 -- Warrant dated February 20, 1999 issued to Garth LLC (3)

10.35 -- Bridge Loan Financing Agreement dated as of July 20, 1999 between
the Registrant and Garth LLC (3)

23.1 -- Consent of Reminick Aaron & Company, LLC.(3)

23.2 -- Consent of McLaughlin & Stern, LLP (included in Exhibit 5.1).
24 -- Power of Attorney (contained on signature page).
27 -- Financial Data Schedule.(3)

Schedules other than those listed above have been omitted since they are either
not required, are not applicable or the required information is shown in the
financial statements or related notes.

(1) Included with Amendment No. 1. Other exhibits were previously filed.

(2) Included with Amendment No. 2.

(3) Included with this Amendment.

Exhibits with no footnote were included in the initial filing of the
Registration Statement.

ITEM 28. UNDERTAKING

The undersigned Registrant hereby undertakes to:

(a) (1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:

(i) Include any prospectus required by section 10(a) (3) of the
Securities Act;

(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the
low or high end of the estimated maximum offering range may be
reflected in the form of a prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in
the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;

(iii) Include any additional or changed material information on the
plan of distribution;

(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement for the
securities offered, and the offering of the securities at that time
to be the initial bona fide offering;

(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering; and

Provide to the underwriter at the closing specified in the underwriting
agreement certificates in such denominations and registered in such names
as required by the Underwriter to permit prompt delivery to each
purchaser.

` Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable.

II-7
<PAGE>

In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred
or paid by a director, officer or controlling person of the small business
issuer in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection
with the securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final adjudication of
such issue.

The undersigned Registrant hereby undertakes that:

(1) For the purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule
430A and contained in a form of prospectus filed by the Registrant
pursuant to Rule 424(b) (1) or (4) or 497 (h) under the Securities
Act shall be deemed to be part of this registration as of the time it
was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering .

II-8
<PAGE>

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements of filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned, in
the Town of Ardsley, State of New York, on July 26, 1999.

FINANCIAL INTRANET INC.

By: /s/ Michael Sheppard
--------------------
Michael Sheppard
President

By: /s/ Alan Ross
--------------------
Alan M. Ross
Vice President -- Finance

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears below
constitutes and appoints Michael Sheppard and Maura Marx and each of them his
true and lawful attorney-in-fact and agent with power of substitution and
resubstitution, for him or her, and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post effective
amendments) to this Registration Statement on Form SB-2, and to file the same,
with all exhibits , and all documents in connection therewith, with the
Commission, granting unto said attorneys-in-fact and agents and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done to comply with the provisions of the
Securities Act and all requirements of the Commission, hereby ratifying and
confirming all that said attorneys-in-fact or either of them, or their
substitutes, may lawfully do or cause to be done by virtue of this appointment.

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.

Name Title Date

By: /s/ Michael Sheppard Director, President, Chief July 26, 1999
--------------------- Operating Officer
Michael Sheppard

By: * Director July 26, 1999
---------------------
Steven S. Weller

By: * Director July 26, 1999
---------------------
Joseph F. Engelberger

*Pursuant to Power-of-Attorney

/s/ MICHAEL SHEPPARD
---------------------

*
---------------------
Michael Sheppard

II-9

<PAGE>

As filed with the Securities and Exchange Commission on July 28, 1999
Registration No. 333-72975

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

EXHIBIT
TO
AMENDMENT NO. 2
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

FINANCIAL INTRANET, INC.
(Name of small business issuer in charter)

II-10

<PAGE>

EXHIBIT 5.1

MCLAUGHLIN & STERN, LLP

STEVEN W. SCHUSTER, PARTNER
Direct Fax: (212) 448-6260
E-Mail: [email protected]

260 MADISON AVENUE
NEW YORK, NEW YORK 10016
(212) 448-1100
FAX (212) 448-0066

MILLBROOK OFFICE
Franklin Avenue
P.O. Box 1369
Millbrook, New York 12545
(914) 677-5700
Fax (914) 677-0097

July 26, 1999

Financial Intranet, Inc.
410 Saw Mill River Road
Ardsley, New York 10502

Dear Sirs:

We refer to the Registration Statement on Form SB-2 (the "Registration
Statement") initially filed by Financial Intranet, Inc. (the "Company"), a
Nevada corporation, with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, on February 25, 1999 and subsequently
amended, relating to the offer by the Company of 6,000,000 shares of the
Company's Common Stock, $.001 par value (the "Common Stock").

As counsel to the Company, we have examined such corporate records,
documents and such questions of law as we have deemed necessary or appropriate
for the purposes of this opinion. In such examinations, we have assumed the
genuineness of signatures and the conformity to original documents of the

<PAGE>

documents supplied to us as copies. As to the various questions of fact material
to such opinion, we have relied upon statements and certificates of officers and
representatives of the Company. Upon the basis of such examination, we advise
you that in our opinion the shares of Common Stock to be offered by the Company
have been duly and validly authorized and, when sold in accordance with the
terms agreed upon in the underwriting agreement, will be legally issued, fully
paid and nonassessable.

We consent to the filing of this opinion as exhibit 5 to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the Prospectus contained therein. This consent is not to be
construed as an admission that we are person whose consent is required to be
filed with the Registration Statement under the provisions of the Securities Act
of 1933, as amended.

Very truly yours,

/s/ McLaughlin & Stern, LLP
---------------------------
MCLAUGHLIN & STERN, LLP

<PAGE>

EXHIBIT 10.31

NOTE

NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION
HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES ARE RESTRICTED
AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS
PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION OR EXEMPTION OR SAFE
HARBOR THEREFROM.

No. US $ 500,000
--------------

FINANCIAL INTRANET, INC.

8% NOTE DUE OCTOBER 20, 1999

THIS Note is one of a duly authorized issue of up to $500,000 of
FINANCIAL INTRANET, INC., a corporation organized and existing under the laws of
the State of Nevada (the "Company") designated as its 8% Convertible Notes.

FOR VALUE RECEIVED, the Company promises to pay to GARTH LLC, the
registered holder hereof (the "Holder"), the principal sum of Five Hundred
Thousand and 00/100 Dollars (US $500,000) on October 20, 1999 and to pay
interest on the principal sum outstanding from time to time in arrears on
October 20, 1999 (the "Maturity Date"), at the rate of 8% per annum accruing
from the date of initial issuance of this Note (the "Issue Date"). Accrual of
interest shall commence on the first such business day to occur after the date
hereof and shall continue until payment in full of the principal sum has been
made or duly provided for. In the event of a default hereunder, the principal
of, and interest on, this Note are payable at the option of the Holder, in
Common Shares of the Company, $.001 par value per share ("Common Stock") as set
forth below, or in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts, at
the address last appearing on the Note Register of the Company as designated in
writing by the Holder from time to time. The Company will pay the principal of
and interest upon this Note on the Maturity Date, less any amounts required by
law to be deducted, to the registered holder of this Note as of the tenth day
prior to the Maturity Date and addressed to such holder at the last address
appearing on the Note Register. The forwarding of such check shall constitute a
payment of principal and interest hereunder and shall satisfy and discharge the
liability for principal and interest on this Note to the extent of the sum
represented by such check plus any amounts so deducted.

<PAGE>

This Note is subject to the following additional provisions:

1. The Notes are issuable in denominations of Ten Thousand Dollars
(US$10,000) and integral multiples thereof, provided that the number of shares
to be issued upon conversion is a minimum of 30,000 (unless if at the time of
election to convert the number of shares of Common Stock issuable upon
conversion is less than 30,000). The Notes are exchangeable for an equal
aggregate principal amount of Notes of different authorized denominations, as
requested by the Holder surrendering the same. No service charge will be made
for such registration or transfer or exchange.

2. The Company shall be entitled to withhold from all payments of
principal of, and interest on, this Note any amounts required to be withheld
under the applicable provisions of the United States income tax laws or other
applicable laws at the time of such payments, and Holder shall execute and
deliver all required documentation in connection therewith.

3. This Note has been issued subject to investment representations of
the original purchaser hereof and may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended (the "Act"), and other
applicable state and foreign securities laws. In the event of any proposed
transfer of this Note, the Company may require, prior to issuance of a new Note
in the name of such other person, that it receive reasonable transfer
documentation including legal opinions that the issuance of the Note in such
other name does not and will not cause a violation of the Act or any applicable
state or foreign securities laws. Prior to due presentment for transfer of this
Note, the Company and any agent of the Company may treat the person in whose
name this Note is duly registered on the Company's Note Register as the owner
hereof for the purpose of receiving payment as herein provided and for all other
purposes, whether or not this Note be overdue, and neither the Company nor any
such agent shall be affected by notice to the contrary.

4. A. Upon the occurrence of an Event of Default, the Holder of this
Note is entitled, (i) first, against the collateral which shall be valued at
Conversion Rate, and then (ii) Company issues additional shares of stock with
registration rights at conversion, to convert the principal amount of this Note
and accrued interest, provided that the number of shares to be issued upon
conversion is a minimum of 30,000 (unless if at the time of election to convert
the number of shares of Common Stock issuable upon conversion is less than
30,000), then the whole amount thereof) into shares of Common Stock of the
Company at a conversion price for each share of Common Stock ("Conversion Rate")
equal to the lower of (i) seventy-five percent (75%) of the average Market Price
(as defined below) for the five (5) trading days immediately preceding the
Conversion Date (as defined below) or (ii) $.50. Notwithstanding anything to the
contrary contained herein, upon the occurrence of an Event of Default, the
Company is entitled to satisfy its obligations with respect to the principal
amount of the Note, and all accrued interest thereon, demanded to be paid by the
Holder through the issuance to the Holder of shares of its Common Stock at the
Conversion Rate, provided such shares of Common Stock have been registered under
the Securities Act of 1933 in accordance with the terms if the Registration
Rights Agreement between the Holder

<PAGE>

and the Company dated as of the date thereof and such Registration Statement is
in full force and effect.

B. Conversion shall be effectuated by surrendering the Notes
to be converted to the Company, with the form of conversion notice and Notice of
Default attached hereto as Exhibit A, executed by the Holder of the Note
evidencing such Holder's intention to convert this Note or a specified portion
(as above provided) hereof, and accompanied, if required by the Company, by
proper assignment hereof in blank. Interest accrued or accruing from the Issue
Date to the date of conversion shall, at the option of the Company, be paid in
cash or Common Stock upon conversion at the Conversion Rate. No fractional
shares of Common Stock or scrip representing fractions of shares will be issued
on conversion, but the number of shares issuable shall be rounded to the nearest
whole share. The date on which notice of conversion is given (the "Conversion
Date") shall be deemed to be the date on which the Holder faxes the conversion
notice ("Notice of Conversion"), substantially in the form annexed hereto as
Exhibit A, duly executed, to the Company, provided that the Holder shall deliver
to the Company the original of such Notice of Conversion and the original Notes
being converted within five (5) business days thereafter (and if not so
delivered with such time, the Conversion Date shall be the date on which the
Notice of Conversion and the original Notes being converted are received by the
Company). Facsimile delivery of the Notice of Conversion shall be accepted by
the Company at facsimile number 914-643-5059; ATTN: Mr. Michael Sheppard.
Certificates representing Common Stock upon conversion will be delivered within
five (5) business days from the date the Notice of Default with the original
Note is delivered to the Company's transfer agent or the Company.

C. For purposes of this Agreement, the "Market Price" shall be
the average closing bid price of the Common Stock as reported, at the option of
the Holder, by Bloomberg, LP or by the National Association of Securities
Dealers or the closing bid price on the over-the-counter market for the date or
period indicated or, if no such period of time is indicated, for the five (5)
trading days immediately preceding the relevant Conversion Date.

5. Subject to the terms of the Bridge Loan Financing Agreement dated
July , 1999 (the "Agreement"), between the Company and the Holder (or the
Holder's predecessor in interest), no provision of this Note shall alter or
impair the obligation of the Company, which is absolute and unconditional, to
pay the principal of, and interest on, this Note at the time, place, and rate,
and in the coin or currency, herein prescribed. This Note is a direct
obligation of the Company.

6. No recourse shall be had for the payment of the principal of, or the
interest on, this Note, or for any claim based hereon, or otherwise in respect
hereof, against any incorporator, shareholder, officer or director, as such,
past, present or future, of the Company or any successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.

<PAGE>

7. The Holder of the Note, by acceptance hereof, agrees that this Note
is being acquired for investment and that such Holder will not offer, sell or
otherwise dispose of this Note or the shares of Common Stock issuable upon
conversion thereof except under circumstances which will not result in a
violation of the Act or any applicable state Blue Sky or foreign laws or similar
laws relating to the sale of securities.

8. This Note shall be governed by and construed in accordance with the
laws of the State of New York. Each of the parties consents to the jurisdiction
of the federal courts whose districts encompass any part of the City of New York
or the state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Agreement and hereby waives, to
the maximum extent permitted by law, any objection, including any objection
based on forum non coveniens, to the bringing of any such proceeding in such
jurisdictions.

11. The following shall constitute an "Event of Default":

a. The Company shall default in the payment of principal or
interest on this Note and same shall continue for a period
of five (5) days; or

b. Any of the representations or warranties made by the Company
herein, in the Agreement, the Registration Rights Agreement
or in any certificate or financial or other written
statements heretofore or hereafter furnished by the Company
in connection with the execution and delivery of this Note
or the Agreement shall be false or misleading in any
material respect at the time made; or

c. The Company fails to issue shares of Common Stock to the
Holder or to cause its Transfer Agent to issue shares of
Common Stock upon exercise by the Holder of the conversion
rights of the Holder in accordance with the terms of this
Note, fails to transfer or to cause its Transfer Agent to
transfer any certificate for shares of Common Stock issued
to the Holder upon conversion of this Note and when required
by this Note or the Registration Rights Agreement, and such
transfer is otherwise lawful, or fails to remove any
restrictive legend or to cause its Transfer Agent to
transfer on any certificate or any shares of Common Stock
issued to the Holder upon conversion of this Note as and
when required by this Note, the Agreement or the
Registration Rights Agreement and such legend removal is
otherwise lawful, and any such failure shall continue
uncured for five (5) business days.

d. The Company shall fail to perform or observe, in any
material respect, any other covenant, term, provision,
condition, agreement or obligation of any Note (as defined
in the Agreement, which term includes this Note) and such

<PAGE>

failure shall continue uncured for a period of thirty (30)
days after written notice from the Holder of such failure;
or

e. The Company shall fail to perform or observe, in any
material respect, any covenant, term, provision, condition,
agreement or obligation of the Company under the Agreement
or the Registration Rights Agreement and such failure shall
continue uncured for a period of thirty (30) days after
written notice from the Holder of such failure; or

f. The Company shall (1) admit in writing its inability to pay
its debts generally as they mature; (2) make an assignment
for the benefit of creditors or commence proceedings for its
dissolution; or (3) apply for or consent to the appointment
of a trustee, liquidator or receiver for its or for a
substantial part of its property or business; or

g. A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or
business without its consent and shall not be discharged
within ninety (90) days after such appointment; or

h. Any governmental agency or any court of competent
jurisdiction at the instance of any governmental agency
shall assume custody or control of the whole or any
substantial portion of the properties or assets of the
Company and shall not be dismissed within ninety (90) days
thereafter; or

i. Any money judgment, writ or warrant of attachment, or
similar process in excess of Two Hundred Thousand ($200,000)
Dollars in the aggregate shall be entered or filed against
the Company or any of its properties or other assets and
shall remain unpaid, unvacated, unbonded or unstayed for a
period of ninety (90) days or in any event later than five
(5) days prior to the date of any proposed sale thereunder;
or

j. Bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors shall be
instituted by or against the Company and, if instituted
against the Company, shall not be dismissed within ninety
(90) days after such institution or the Company shall by any
action or answer approve of, consent to, or acquiesce in any
such proceedings or admit the material allegations of, or
default in answering a petition filed in any such
proceeding; or

k. The Company shall have its Common Stock suspended or
delisted from an exchange or over-the-counter market from
trading for in excess of two trading days.

<PAGE>

Then, or at any time thereafter, and in each and every such case, unless such
Event of Default shall have been waived in writing by the Holder (which waiver
shall not be deemed to be a waiver of any subsequent default) at the option of
the Holder and in the Holder's sole discretion, the Holder may consider the
Redemption Amount of this Note immediately due and payable within five (5) days
of notice, without presentment, demand, protest or notice of any kinds, all of
which are hereby expressly waived, anything herein or in any note or other
instruments contained to the contrary notwithstanding, and the Holder may
immediately enforce any and all of the Holder's rights and remedies provided
herein or any other rights or remedies afforded by law.

12. Nothing contained in this Note shall be construed as conferring
upon the Holder the right to vote or to receive dividends or to consent or
receive notice as a shareholder in respect of any meeting of shareholders or any
rights whatsoever as a shareholder of the Company, unless and to the extent
converted in accordance with the terms hereof.

13. The obligation of the Company for payment of principal, interest
and all other sums hereunder, in the event of a default and failure of the
Company to perform hereunder, is guaranteed by Michael Sheppard, Barry Stein and
Maura Marx (each a "Guarantor"). The obligations of Guarantors hereunder is
joint and several and are secured by the pledge of certain shares of the
Company's Common Stock owned beneficially by such Guarantors (the "Collateral
Shares") under the terms and conditions of a Stock Pledge Agreement, by
reference made a part of the terms of this Debenture. The security interest of
the Holder as to the Collateral Shares is perfected by a delivery of such shares
to Holder or an escrow agent, as mutually agreed by the Company and Holder
pursuant to the terms of the Pledge Agreement.

<PAGE>

IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.

Dated: July 20, 1999

FINANCIAL INTRANET, INC.

By: /s/Michael Sheppard
-----------------------
Michael Sheppard
(Print Name)
President
(Title)

GUARANTORS

/s/Michael Sheppard
- -------------------
MICHAEL SHEPPARD

/s/Barry Stein
- -------------------
BARRY STEIN

/s/Maura Marx
- -------------------
MAURA MARX

<PAGE>

PLEDGE AND SECURITY AGREEMENT

THIS PLEDGE AND SECURITY AGREEMENT (this "Agreement"), dated as of this
___ day of July, 1999, is made by MICHAEL SHEPPARD, residing at
________________________________, BARRY STEIN, residing at
______________________________________, and MAURA MARX, residing at
________________________________,(the "Pledgors") in favor of GARTH LLC, a
corporation organized and existing under the laws of Cayman Islands (the
"Secured Party"), having an address at ____________________________________
______________________________________________________________________________.

1. Pledge. In order to induce the Secured Party to extend the
Obligations (as defined below), each Pledgor hereby grants a security interest
in and absolutely and presently pledges to the Secured Party all of the
Pledgor's right, title and interest in and to the collateral described in
Exhibit A attached hereto and made a part hereof, whether now owned or hereafter
acquired, together with all additions, substitutions, replacements and proceeds
and all income interest, dividends and other distributions thereon (the
"Collateral"). If the Collateral includes certificated securities, documents or
instruments, such certificates are herewith delivered to the Secured Party
accompanied by duly executed blank stock or bond powers or assignments, as
applicable. Each Pledgor hereby authorizes the transfer of possession of all
certificates, instruments, documents and other evidence of the Collateral to the
Secured Party. Notwithstanding anything to the contrary contained herein, this
Agreement evidences a present and absolute pledge of the Collateral to the
Secured Party, which shall be effective upon the execution of this Agreement.

2. Obligations Secured. The Collateral secures payment to the Secured
Party of all loans, advances, debts, liabilities, obligations, covenants and
duties owing to the Secured Party from FINANCIAL INTERNET, INC. (the
"Borrower"), of any kind or nature, present or future, under that certain
Debenture of even date herewith payable to Secured Party in the original
principal amount of $500,000 (the "Note"), the payment of which has been
personally guaranteed by the Pledgors, and the obligations of Borrower to
Secured Party under that certain Bridge Loan Financing Agreement of even date
herewith (the "Loan Agreement"), all of the foregoing whether arising under any
agreement, instrument or document, whether or not for the payment of money,
whether arising by reason of an extension of credit, opening a letter of credit,
loan or guarantee or in any other manner, whether direct or indirect (including
those acquired by assignment or participation), absolute or contingent, joint or
severally, due or to become due, now existing or hereafter arising, and any
amendments, extensions, renewals or increases, and all costs and expenses of the
Secured Party incurred in the documentation, negotiation, modification,
enforcement, collection or otherwise in connection with any of the foregoing,
including reasonable attorneys fees and expenses (collectively, the
"Obligations"). All capitalized terms not otherwise defined herein shall have
the meanings given to such terms in the Loan Agreement.

3. Representations and Warranties. Each Pledgor severally represents
and warrants to the Secured Party as follows:

(a) There arc no restrictions on the pledge or transfer of any
of the Collateral, other than restrictions referenced on the face of any
certificates evidencing the Collateral.

(b) The Pledgor is the legal owner of the Collateral, which is
registered in the name of the Pledgor as of the date hereof

<PAGE>

(c) Except as otherwise provided in the Loan Agreement or as
approved in advance by Secured Party, the Collateral is free and clear of any
security interests, pledges, liens, encumbrances charges, agreements, claims or
other arrangements or restrictions of any kind, [except as otherwise referenced
in Section 3.1 above]; and the Pledgor will not incur, create, assume or permit
to exist and pledge, security interest, lien, charge or other encumbrance of any
nature whatsoever on any of the Collateral or assign, pledge or otherwise
encumber any right to receive income from the Collateral.

(d) The Pledgor has the right to transfer the Collateral free
of any encumbrances and the Pledgor will defend the Pledgors title to the
Collateral against the claims of all persons, and any registration with, or
consent or approval to or action by, any federal, state or other governmental
authority or regulatory body which was or is necessary for the validity of the
pledge and grant of the security interest in the Collateral has been obtained

(e) The pledge of and grant of the security interest in the
Collateral is effective to vest in the Secured Party a valid and perfected first
priority security interest, superior to the rights of any other person, in and
to the Collateral as set forth herein

(f) Upon the occurrence of an Event of Default, no third party
has any rights to receive notice of such default or the sale of the Collateral
or any portion thereof, and no third party has rights to purchase all or any
portion of the Collateral.

4. Governmental Approvals. The Secured Party hereby acknowledges that
any transfer of the Collateral shall be subject to the approval of any
governmental authorities to the extent required by applicable law.

5. Default.

(a) If any of the following shall occur (each an "Event of
Default"): (i) any Event of Default under the Note or the Loan Agreement; (ii)
demand by the Secured Party under any of the Obligations that have such a demand
feature; or (iii) the failure by a Pledgor to perform any of its obligations
hereunder after written notice from the Secured Party and a reasonable
opportunity to cure, which cure period shall in no event be less than ten (10)
days, then the Secured Party is authorized in its discretion to declare any or
all of the Obligations to be immediately due and payable without further demand
or notice of any kind whatsoever which are expressly waived, and may exercise
any one or more of the rights and remedies granted pursuant to this Agreement or
given to a secured party under the Uniform Commercial Code of New Jersey, as it
may be amended from time to time, or otherwise at law or in equity, including
the right to sell or otherwise dispose of the Collateral. The parties
acknowledge that in the event that the Secured Party demands the release of less
than all of the Collateral, the first Collateral to be released shall be the
Collateral owned by Barry Stein, the next Collateral to be released shall be the
Collateral owned by Michael Sheppard and the last Collateral to be released
shall be the Collateral owned by Maura Marx.

(b) (i) At any bona fide public sale the Secured Party shall
be free to purchase all or any part of the Collateral. Any such sale may be on
cash or credit. The Secured Party shall be authorized at any such sale (if deems
it advisable to do so) to restrict the prospective bidders or purchasers to
persons who will represent and agree that they are purchasing the Collateral for
their own account in compliance with Regulation D of the Securities Act of 1933
or any other applicable exemption available under such Act. The Secured Party
will not be obligated to make any sale and sell at

<PAGE>

the time and place to which the sale is adjourned. If the Collateral is
customarily sold on a recognized market or threatens to decline speedily in
value, the Secured Party may sell such Collateral at any time without giving
prior notice to the Pledgor. Whenever notice is otherwise required by law to be
sent by the Secured Party to the Pledgor of any sale or other disposition of the
Collateral, five (5) days written notice sent to the Pledgor at the notice
address specified below will be reasonable.

(ii) The Pledgor recognizes that the Secured Party
may be unable to effect or cause to be effected a public sale of the Collateral
by reason of certain prohibitions contained in the Securities Act of 1933, as
amended (the "Act"), so that the Secured Party may be compelled to resort to one
or more private sales to a restricted group of purchasers who will be obligated
to agree, among other things, to acquire the Collateral for resale thereof. The
Pledgor understands that private sales so made may be at prices and on other
terms less favorable to the seller than if the Collateral were sold at public
sales, and agrees that the Secured Party has no obligation to delay or agree to
delay the sale of any of the Collateral from the period of time necessary to
permit the issuer of the securities which are part of the Collateral (even if
the issuer would agree), to register suet securities for sale under the Act. The
Pledgor agrees that private sales made under the foregoing circumstances shall
be deemed to have been made in a commercially reasonable manner.

(c) The net proceeds arising from the disposition of the
Collateral, if any, after deducting expenses incurred by the Secured Party, will
be applied to the Obligations in the order determined by the Secured Party in
its sole discretion. If any excess remains after the discharge of all of the
Obligations the same will be paid to the Pledgor.

(d) If any demand is made at any time upon the Secured Party
for the repayment or recovery of any amount received by it in payment or on
account of any of the Obligations from the disposition of the Collateral and if
the Secured Party repays all or any party of such amount the Pledgor, will be
and remain liable for the amounts so repaid or recovered to the same extends as
if never originally received by the Secured Party.

6. Voting Rights and Transfer. At any time after the occurrence of an
Event of Default, the Secured Party may transfer any or all of the Collateral
into its name or that of its nominee and may exercise all voting rights with
respect to the Collateral, but no such transfer shall constitute a taking of
such Collateral in satisfaction of any or all of the Obligations unless the
Secured Party expressly so indicates by written notice to the Pledgor.

7. Dividends, Interest and Premiums. The Pledgor will have the right to
receive all cash dividends, interest and premiums declared and paid on the
Collateral prior to the occurrence of any Event of Default. In the event any
additional shares are issued to the Pledgor as a stock dividend or in lieu of
interest on any of the Collateral, as a result of any split of any of the
Collateral by reclassification or otherwise, any certificates evidencing any
such additional shares will be immediately delivered to the Secured Party and
such shares will be subject to this Agreement and a part of the Collateral to
the same extent as the original Collateral. At any time after the occurrence of
an Event of Default, the Secured Party shall be entitled to receive all cash or
stock dividends, interest and premiums declared or paid on the Collateral, all
of which shall be subject to the Secured Party's rights under Section 5 above.

<PAGE>

8. Further Assurances. At any time and from time to time, upon demand
of the Secured Party, the Pledgor will give, execute, file and record any
notice, financing statement, continuation statement, instrument, document or
agreement that the Secured Party may consider necessary or desirable to create,
preserve, continue, perfect or validate any security interest granted hereunder
or to enable the Secured Party to inform its rights hereunder with respect to
such security interest. Without limiting the generality of the foregoing, the
Pledgor hereby irrevocably appoints the Secured Party as the Pledgor s
attorney-in-fact to do all acts and things in the Pledgor's name that the
Secured Party may deem necessary or desirable, which appointment is deemed to be
coupled with an interest. The Secured Party is authorized to file financing
statements, continuation statements and other documents under the Uniform
Commercial Code relating to the Collateral without the Pledgor's signature,
naming the Pledgor as debtor and the Secured Party as secured party.

9. Notices. All notices, demands, requests, consents, approval and
other communications required or permitted hereunder shall be sent and delivered
in accordance with Section 7.07 of the Loan Agreement.

10. Preservation of Rights. No delay or omission on the Secured Parties
part to exercise any right or power arising hereunder, including without
limitation, the failure of the Secured Party to exercise its rights against the
Collateral after the Holding Period, will impair any such right or power or be
considered a waiver of any such right or power, nor will the Secured Party's
action or inaction impair any such right or power. The Secured Party's rights
and remedies hereunder are cumulative and not exclusive of an other rights or
remedies which the Secured Party may have under other agreements, at law or in
equity.

11. Illegality. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.

12. Changes in Writing. No modification, amendment or waiver of any
provision of this Agreement nor consent to any departure by the Pledgor
therefrom will be effective unless made in a writing signed by the Secured
Party, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on the
Pledgor in any case will entitle the Pledgor to any other or further notice or
demand in the same, similar or other circumstance.

13. Entire Agreement. This Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement and supersedes
all other prior agreements and understandings, both written and oral, between
the Pledgor and the Secured Party with respect to the subject matter hereof.

14. Successors and Assigns. This Agreement will be binding upon and
inure to the benefit of the Pledgor and the Secured Party and their respective
heirs, executors, administrators, successors and assigns; provided, however,
that the Secured Party may not assign this Agreement in whole or in part without
the Pledgor's prior written consent.

15. Interpretation. In this Agreement, unless the Secured Party and the
Pledgor otherwise agree in writing, the singular includes the plural and the
plural the singular; references to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute

<PAGE>

referred to; the word or shall be deemed to include and/or, the works
"including", "includes and including shall be deemed to be followed by the words
"without limitation." Section headings in this Agreement are included for the
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose. If this Agreement is executed by more titan one party as
Pledgor, the obligations of such persons or entities will be joint and several.

16. Indemnity. Each Pledgor severally agrees to indemnify each of the
Secured Party, its directors, officers and employees and each legal entity, if
any, who controls the Secured Party (the "Indemnified Parties") and to hold each
Indemnified Party harmless from and against any and all claims, damages, losses,
liabilities and expenses (including all fees of counsel with whom any
indemnified Party may consult and all expenses of litigation or preparation
therefor) which any Indemnified Party may incur or which may be asserted against
any Indemnified Party as a result of the execution of or performance under this
Agreement; provided, however, that the foregoing indemnity agreement shall not
apply to claims, damages, losses, liabilities and expenses solely attributable
to an Indemnified Parties negligence or willful misconduct.

17. Governing Law and Jurisdiction. This Pledge Agreement has been
delivered to and accepted by the Secured Party and will be deemed to be made in
the State of New York. THIS PLEDGE AGREEMENT WILL BE INTERPRETED AND THE RIGHTS
AND LIABILITIES OF THE PLEDGOR AND SECURED PARTY DETERMINED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, EXCLUDING ITS CONFLICT OF LAWS RULES. The
Pledgor hereby irrevocably consents to the exclusive jurisdiction of any state
or federal court for New York County and consents that all service of process be
sent by nationally recognized overnight courier service directed to the Pledgor
at the Pledgor's address set forth herein and service so made will be deemed to
be completed on the business day after deposit with such courier; provided that
nothing contained in this Agreement will prevent the Secured Party from bringing
any action, enforcing any award or judgment or exercising any rights against the
Pledgor individually, against any security or against any property of the
Pledgor within any other county state or other foreign or domestic jurisdiction.
The Pledgor acknowledges and agrees that the venue provided above is the most
convenient forum for both the Secured Party and the Pledgor. The Pledgor waives
any objection to venue and any objection based on a more convenient forum in any
action instituted under this Agreement.

18. WAIVER OF JURY TRIAL. THE PLEDGOR IRREVOCABLY WAIVES ANY AND ALL
RIGHTS THE PLEDGOR MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
CLAIM OF ANY INURE RELATING TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN
ANY OF THE LOAN DOCUMENTS. THE PLEDGOR ACKNOWLEDGES THAT THE FOREGOING WAIVER IS
MADE KNOWINGLY AND VOLUNTARILY.

The Pledgor acknowledges that it has read and understood all
of the provisions of this Agreement including the waiver of a jury
trial and has been advised by counsel as necessary or appropriate.

[SIGNATURES ON NEXT PAGE]

<PAGE>

IN WITNESS WHEREOF, intending to be legally bound, Pledgor has heretofore
executed this Agreement as of the date and year first above written.

WITNESS:

By: /s/Michael Sheppard
------------------------------------ ------------------------------------
Print Name: MICHAEL SHEPPARD
----------------------------

/s/Barry Stein
------------------------------------
BARRY STEIN

/s/Maura Marx
------------------------------------
MAURA MARX

<PAGE>

EXHIBIT A TO PLEDGE AGREEMENT
(CERTIFIED SECURITIES)

The specific assets are listed below are pledged as collateral and are
restricted from trading and withdrawals. The Secured Party's written approval is
required prior to any trading or withdrawals of such assets.

<TABLE>
<CAPTION>
Pledgor Quantity Description of Securities Certificate Number(s)
- ------- -------- ------------------------- ---------------------

<S> <C> <C> <C>
Maura Marx 26,884 Common Stock of
Financial Intranet, Inc. 2530

Maura Marx 75,000 Common Stock of
Financial Intranet, Inc. 2527

Michael Sheppard 51,884 Common Stock of
Financial Intranet, Inc. 2522

Michael Sheppard 44,267 Common Stock of
Financial Intranet, Inc. 2716

Maura Marx 26,884 Common Stock of
Financial Intranet, Inc. 2530

Ben Stein 400,000 Common Stock of
Financial Intranet, Inc. 3010

Ben Stein 350,000 Common Stock of 2722
Financial Intranet, Inc.

Ben Stein 174,517 Common Stock of 2717
Financial Intranet, Inc.
</TABLE>

A-7

<PAGE>

STOCK POWER

FOR VALUE RECEIVED, the undersigned does hereby sell, assign and
transfer to _________________________________________________________________,

having an address at ________________________________________________, Tax I.D.
No. _________, __________ shares of the capital stock (the "Stock") of FINANCIAL
INTRANET, INC., a ___________ corporation, represented by Certificate Number
______________, standing in the name of the undersigned on the books of said
Company; and do hereby irrevocably constitute __________________________________
Attorney to transfer the said Shares on the books of the within named
Corporation with full power of substitution in the premises.

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

WITNESS/ATTEST:

By:
----------------------------------------
Print Name:

DATED:
-------------------------------------

A-8

<PAGE>

EXHIBIT 10.33

LETTER OF AGREEMENT

Meldon S. Hollis, Jr.
H&H Acquisition Corporation
c/a Hollis & Associates, P.A.
9300-B Liberty Road
Randallstown, MD 21133

March 7, 1997

Background:

Reference is made to the written offer of October 9, 1997, regarding Barry Stein
(a.k.a. Ben B. Stein or Stein) and associates purchasing all except two hundred
thousand (200,000) shares of the issued and outstanding shares of Wee Wees, Inc.
The agreement provided for two hundred thousand (200,000) shares being retained
by H&H Acquisition Corporation ("H&H"). On December 17, 1996, Wee Wees, Inc.
changed its name to Financial Intranet, Inc. ("FNTN"). That written offer is
attached hereto and incorporated by reference. Stein subsequently accepted that
offer, subject to the modifications set forth below.

(a) Subsequent to the offer of October 9, 1996, Stein and H&H agreed
that H&H would retain an additional two hundred thousand (200,000)
shares of FNTN's Common Stock, leaving a total of four hundred
thousand (400,000) shares of Financial Intranet, Inc. (formerly Wee
Wees, Inc.) Common Stock to be retained by H&H.

(b) It is agreed that of the four hundred thousand (400,000) shares
retained by H&H two hundred thousand (200,000) shares of FNTN Common
Stock shall be restricted for sale for a period of nine (9) months
from the date of this Agreement.

(c) Based upon a subsequent verbal agreement, FNTN issued and
delivered to H&H two hundred thousand (200,000) warrants in the
aggregate to purchase two hundred thousand (200,000) share in
aggregate of FNTN's Common Stock exercisable at Seven Dollars and
Twenty-Five Cents ($7.25) per share. A copy of a sample warrant is
attached hereto for reference purposes.

Commitment to Purchase by Stein

By his signature hereunder, Stein has agreed to purchase or arrange the purchase
by others one hundred forty-two thousand five hundred (142,500) shares, or such
lesser number of shares that may be delivered by H&H to Stein or to any broker
dealer handling the sale of FNTN Common Stock currently beneficially owned by
H&H or its shareholders, on the following terms:

<PAGE>

1. H&H shall deposit, or arrange to have one hundred twenty-three thousand, five
hundred (123,500) shares of FNTN Common Stock into its account at Marsh Block,
50 Broad Street, New York, NY, Attention Kenneth Marsh.

2. Stein shall purchase or arrange to have purchased by others an initial block
of twenty-two thousand (22,000) shares FNTN Common Stock through a private or
public transaction at a price for the block of Eighty-eight Thousand Dollars
($88,000.00). This sale will be aggregated with a prior sale of two thousand
shares made fix H&H account amounting to Twelve Thousand Dollars ($12,000.00)
which when added to the new block sold results in One Hundred Thousand Dollars
($100,000.00) in the aggregate being paid by Stein for both blocks sold or to be
sold in accordance with the terms of this Agreement.

3. Concurrent with the payment of the One Hundred Thousand Dollars ($100,000.00)
to H&H in good cleared funds, the balance of a total of two million, five
hundred forty-three thousand (2,543,000) shares of FNTN Common Stock, of which
two million, two hundred fifty-seven thousand, one hundred (2,257,100) shares
are assigned to Ben B. Stein and two hundred eighty-five thousand, nine hundred
(285,900) shares are owned by others (itemized on the schedule of certificates
attached hereto and made a part hereof), and which certificates are in the
current possession of H&H shall be delivered to Interwest Transfer Company with
the following instructions:

(a) "transfer fifty thousand (50,000) shares of enclosed shares
represented by the enclosed Certificates endorsed in blank to "Martin
B. Janus" and issue a new Certificate in the name of Martin E. Janus.
When issued in the name of Marvin Janus, representing shares of Common
Stock of FNTN, the Certificates shall be delivered by overnight US
Mail to Martin E. Janus at 919 N. Michigan Avenue 35th floor, Chicago,
IL 60611."

(b) "Release and deliver to the shareholders of record two hundred
eighty-five thousand, nine hundred (285,900) Certificates presently in
the possession of Interwest Transfer Company and previously issued to
shareholders of record, as set forth on the list of shareholders FNTN
shares of Common Stock attached hereto and made a part hereof."

(c) "Transfer the two million, two hundred seven thousand one hundred
(2,207,100) shares represented by the enclosed Certificates and
endorsed in blank by the current shareholders of record to Ben B.
Stein and issue new Certificates in the same denominations, in the
name of Ben B. Stein. When issued in the name of Ben B. Stein,
representing shares of Common Stock of FNTN owned by Ben B. Stein, the
Certificates shall be delivered by overnight US Mail to Steven Sanders
& Associates, 120 Broadway, Suite 3660, New York; NY 10271 ("Escrow
Agent") to be held under the terms of an escrow agreement entered into
between the Escrow Agent, H&H and Ben B. Stein."

4. Stein herewith agrees to purchase, or arrange the purchase of the balance of
one hundred twenty thousand, five hundred (120,500) shares of Common Stock owned
by H&H at a price of Five Dollars (5.00) per share in accordance with the
following purchase schedule:

<PAGE>

(a) 45,000 shares of FNTN Common Stock within forty-five (45) days of
the date of this Agreement.

(b) 35,000 shares of FNTN Common Stock within ninety (90) days of the
date of this Agreement.

5. Stein shall notify H&H in writing by first class mail and by telecopier
within forty-eight (48) hours of the confirmation of any sale of FNTN shares of
Common Stock owned by H&H the number of shares of FNTN Common Stock purchased by
Stein, or for which Stein arranged the purchase by third parties through a
private transaction and/or public sale and remit or arrange to remit finds to
H&H resulting from the purchase/sale of the shares on or before the settlement
date which is industry-standard for securities transactions.

6. In the event the certificates representing the shares of FNTN Common Stock
offered for sale by H&H hereinabove is not delivered to Stein or to the broker
dealer handling the transaction, within three (3) days of the date of a
confirmed offer to purchase by Stein or purchased by third parties which sale
was arranged by Stein, then in that event the shares committed to be purchased
by Stein in accordance with the terms of this Agreement shall be reduced from
the total number of shares whose certificates were not delivered on a timely
basis to Stein or to the broker dealer handling the purchase transaction, as the
case may be.

7. Concurrent with instructions provided to Interwest and counter-signed by
Stein as Secretary of FNTN to issue the shares of Common Stock of FNTN to Stein
in accordance with the terms of this Agreement, and concurrent with the delivery
of One Hundred Thousand Dollars ($100,000.00) by Stein to H&H in accordance,
with paragraph 3 above, Stein and H&H shall execute a Loan Agreement and Stein
shall execute a Promissory Note and Collateral Pledge Agreement in form and
substance as the draft documents attached hereto and made a part hereof.

(a) A Promissory Note ("the Note") shall mature one hundred twenty
(120) days from the date of this Agreement, whose principal is payable
in part or in whole in the amount of Five Hundred Seventy-Two
Thousand. One Hundred Dollars ($572,100.00) plus interest at the rate
of ten patent (10%) per annum calculated on a daily basis on the
outstanding principal.

(b) This Note shall be issued to secure the payment for those shares
committed to be purchased by Stein or others under the terms of this
Letter of Agreement.

8. Stein and H&H have selected Steven Sanders to act as Escrow Agent who accepts
to act upon the following instructions:

<PAGE>

(a) The two million, two hundred seven thousand, one hundred
(2,207,100) shares of Common Stock of Financial Intranet, Inc.
("FNTN") deposited with Steven Sanders acting as an Escrow Agent for
H&H and Ben B. Stein ("Stein") shall hold the property of Stein in a
secured location. The shares shall be delivered to Ben B. Stein, 1219
Tall Pine Drive, Apopka, Florida 32712 or to H&H c/o Meldon Hollis, at
9300-B Liberty Road, Randallstown MD, as the may be, upon the
following events:

(b) The Escrow agent shall deliver to Stein, the Certificates
representing five hundred fifty thousand seven hundred seventy-five
(551,775) shares of Common Stock of FNTN being held by the Escrow
Agent as the property of Ben B. Stein upon receipt of true copies of
transfer sheets from Interwest Transfer Company or such t transfer
agent selected to act as the transfer agent for FNTN shares indicating
that twenty-six thousand, eight hundred (26,800) shares FNTN's Common
Stock in the aggregate was transferred from the accounts of any or all
of H&H (or their designated shareholders).

(c) Upon the certification by Ben B. Stein stating that all one
hundred twenty thousand; five hundred (120,500) shares of FNTN Common
Stock committed to be purchased or sold by Stein for H&H or such
lesser number of shares of FNTN Common Stock committed to be purchased
or sold by Stein but not delivered by H&H for sale to or by Stein,
then in that event, the balance of any FNTN Common Stock, then held by
the Escrow Agent which is the property of Stein, shall be delivered to
Stein.

(d) Upon the certification of Meldon Hollis representing H&H that:

(i) the principal and accrued interest of the Note in the
amount of Five Hundred Eighty-four Thousand Five Hundred Sixty
Dollars ($584,560.00) had not been paid in full within 30 days
of the Note's maturity date and

(ii) all certificates representing one hundred twenty thousand,
five hundred (120,500) shares of FNTN's Common Stock owned by
H&H in had been delivered to the account of H&H at Marsh Block
and available for sale.

then in that event the balance of any FNTN Common Stock, then
held by the Escrow Agent which is the property of Stein, shall
be delivered and become the property of H&H as liquidated
damages and in lieu of, and in payment of, the balance of any
unpaid principal and accrued interest of the Note and all
shares offered and available for sale by H&H in accordance with
the terms of this Agreement shall be delivered forthwith to
Stein.

9. Beth Stein and H&H shall cooperate and do all other acts which may be
reasonably requested by the other party to implement the terms and conditions of
the transactions

<PAGE>

contemplated by this agreement.

10. Notices to H&H Acquisition are to be sent to:

H&H Acquisition Corporation
9300-B Liberty Road
Randallstown, MD 21133

or such other address as may be provided from time to time.

11. The terms of the Letter Agreement and attachments represents the total
agreement between the parties to this Agreement.

12. This Letter Agreement shall be governed and construed under the laws of the
State of Nevada and may not be modified except in writing signed by all parties
to this Agreement.

In Witness whereof the parties have affixed their signatures on the date listed
by this signature.

/s/Ben B. Stein (Date) 3-14-97
- ------------------------
Ben B. Stein

/s/Meldon S. Hollis, Jr. (Date) 3/12/97
- ------------------------
H&H Acquisition Corporation

<PAGE>

AMENDMENT TO LETTER AGREEMENT DATED MARCH 7, 1997

WHEREAS, on March 7, 1997, Ben S. Stein (a.k.a Barry B. Stein) and H&H
Acquisition Corporation ("H&H") entered into a Letter of Agreement (the
"Agreement"), for the purchase of certain shares by Ben B. Stein in Financial
Intranet, Inc. (formerly Wee Wees, Inc.).

WHEREAS, the undersigned parties wish to substitute Financial Intranet Holdings,
Inc. ("Holdings") for Ben B. Stein in the Agreement, and Holdings has agreed to
accept and assume, as purchaser, the obligations on the part of Ben B. Stein
under the Agreement, and Ben B. Stein has agreed to assign all of his interests
in and rights under the Agreement to Holdings.

WHEREAS, Stein has agreed to deliver to the Escrow Agent, executed irrevocable
stock powers, sufficient to cover two million, two hundred seven thousand, one
hundred (2,207,100) shares of Financial Intranet, Inc. ("FNTN"), endorsed in
blank, to the Escrow Agent, within five (5) business day of the delivery of such
shares to the Escrow Agent; and

WHEREAS, those stockpowers will be held by the Escrow Agent, and delivered,
along with the shares of FNTN, to Holdings or to H&H, as provided in the Escrow
Agreement;

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged,
Holdings hereby accepts and assumes the obligations on the part of Ben B. Stein,
as purchaser, under the Agreement and Ben B. Stein hereby assigns all of his
interests in and rights under the Agreement, and Holdings is hereby substituted
for Stein pursuant to the terms of the Agreement.

IN WITNESS WHEREOF, the parties have hereunto affixed their signatures on the
date listed by their signature.

/s/ Ben B. Stein Date: 4/3/97
- ---------------------------------
Ben B. Stein

Date:
- ---------------------------------
H&H Acquisition Corporation

AGREED AND ACCEPTED BY:

/s/ Ben B. Stein, President Date: 4/3/97
- ---------------------------------
Financial Intranet Holdings, Inc.

<PAGE>

EXHIBIT 10.34

WARRANT

THESE SECURITIES AND THE SECURITIES ISSUABLE UPON THEIR EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED UNLESS COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID
ACT, A "NO ACTION" LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION WITH
RESPECT TO SUCH TRANSFER, A TRANSFER MEETING THE REQUIREMENTS OF RULE 144 OF THE
SECURITIES AND EXCHANGE COMMISSION, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER TO THE EFFECT THAT ANY SUCH TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

FINANCIAL INTRANET, INC.

COMMON STOCK PURCHASE WARRANT

1. Issuance; Certain Definitions. In consideration of good and valuable
consideration, the receipt of which is hereby acknowledged by FINANCIAL
INTRANET, INC., a Nevada corporation (the "Company"), GARTH LLC or registered
assigns (the "Holder") is hereby granted the right to purchase at any time until
5:00 P.M., New York City time, five (5) years from Note Payoff Date (the
"Expiration Date"), Two Hundred Thousand (200,000) fully paid and nonassessable
shares of the Company's Common Stock, par value $.001 per share (the "Common
Stock") at an initial exercise price per share (the "Exercise Price") of $.50,
subject to further adjustment as set forth herein. This Warrant is being issued
pursuant to the terms of that certain Securities Purchase Agreement, dated as of
________________ (the "Securities Purchase Agreement"), to which the Company and
Holder (or Holder's predecessor in interest) are parties.

2. Exercise of Warrants. This Warrant is exercisable in whole or in
part at any time and from time to time commencing upon the payment by the
Company in cash of all amounts due under the Note on or before the maturity date
of the Note. This Warrant shall be exercisable at the Exercise Price per share
of Common Stock payable hereunder, payable in cash or by certified or official
bank check. Upon surrender of this Warrant Certificate with the annexed Notice
of Exercise Form duly executed (which Notice of Exercise Form may be submitted
either by delivery to the Company or by facsimile transmission as provided in
Section 8 hereof), together with payment of the Exercise Price for the shares of
Common Stock purchased, the Holder shall be entitled to receive a certificate or
certificates for the shares of Common Stock so purchased.

<PAGE>

3. Reservation of Shares. The Company hereby agrees that at all times
during the term of this Warrant there shall be reserved for issuance upon
exercise of this Warrant such number of shares of its Common Stock as shall be
required for issuance upon exercise of this Warrant (the "Warrant Shares").

4. Mutilation or Loss of Warrant. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.

5. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant and
are not enforceable against the Company except to the extent set forth herein.

6. Protection Against Dilution.

6.1 Adjustment Mechanism. If an adjustment of the Exercise Price is
required pursuant to this Section 6, the Holder shall be entitled to purchase
such number of shares of Common Stock as will cause (i) the total number of
shares of Common Stock Holder is entitled to purchase pursuant to this Warrant
after such adjustment, multiplied by (ii) the adjusted Exercise Price per share,
to equal (iii) the dollar amount of the total number of shares of Common Stock
Holder is entitled to purchase before adjustment multiplied by the total
Exercise Price before adjustment.

6.2 Capital Adjustments. In case of any stock split or reverse stock split,
stock dividend, reclassification of the Common Stock, recapitalization, merger
or consolidation, or like capital adjustment affecting the Common Stock of the
Company (each, an "Adjustment"), the Exercise Price in effect at the time of the
effective date for such Adjustment shall be proportionally adjusted so that the
Holder of this Warrant exercised after such date shall be entitled to receive
the aggregate number and kind of shares which, if this Warrant had been
exercised by such Holder immediately prior to such date, the Holder would have
owned upon such exercise and been entitled to received upon such Adjustment (and
for such purposes the Holder shall, to the extent relevant, be deemed to have
exercised this Warrant immediately prior to the record date or the effective
date, as the case may, for the Adjustment). For example, if the Company declares
a 2:1 stock dividend or stock split and the Exercise Price immediately prior to
the record date for such Adjustment was $5.00 per share, the adjusted Exercise
Price immediately after the Adjustment would be $2.50 per share. Such adjustment
may be made successively if there is more than one Adjustment. In all other
respects the provisions of this Section shall be applied in a fair, equitable
and reasonable manner so as to give

<PAGE>

effect, as nearly as may be, to the purposes hereof. A rights offering to
stockholders shall be deemed a stock dividend to the extent of the bargain
purchase element of the rights.

6.3 Adjustment for Spin Off. If, for any reason, prior to the exercise of
this Warrant in full, the Company spins off or otherwise divests itself of a
part of its business or operations or disposes all or of a part of its assets in
a transaction (the "Spin Off") in which the Company does not receive
compensation for such business, operations or assets, but causes securities of
another entity (the "Spin Off Securities") to be issued to security holders of
the Company, then the Company shall cause (i) to be reserved Spin Off Securities
equal to the number thereof which would have been issued to the Holder had all
of the Holder's unexercised Warrants outstanding on the record date (the "Record
Date") for determining the amount and number of Spin Off Securities to be issued
to security holders of the Company (the "Outstanding Warrants") been exercised
as of the close of business on the trading day immediately before the Record
Date (the "Reserved Spin Off Shares"), and (ii) to be issued to the Holder on
the exercise of all or any of the Outstanding Warrants, such amount of the
Reserved Spin Off Shares equal to (x) the Reserved Spin Off Shares multiplied by
(y) a fraction, of which (I) the numerator is the amount of the Outstanding
Warrants then being exercised, and (II) the denominator is the amount of the
Outstanding Warrants.

7. Transfer to Comply with the Securities Act; Registration Rights.

7.1 Transfer. This Warrant has not been registered under the Securities Act
of 1933, as amended, (the "Act") and has been issued to the Holder for
investment and not with a view to the distribution of either the Warrant or the
Warrant Shares. Neither this Warrant nor any of the Warrant Shares or any other
security issued or issuable upon exercise of this Warrant may be sold,
transferred, pledged or hypothecated in the absence of an effective registration
statement under the Act relating to such security or an opinion of counsel
satisfactory to the Company that registration is not required under the Act.
Each certificate for the Warrant, the Warrant Shares and any other security
issued or issuable upon exercise of this Warrant shall contain a legend on the
face thereof, in form and substance satisfactory to counsel for the Company,
setting forth the restrictions on transfer contained in this Section.

7.2 Registration Rights. (a) Reference is made to the Registration Rights
Agreement (as that term is defined in the Securities Purchase Agreement). The
Company's obligations under the Registration Rights Agreement and the other
terms and conditions thereof with respect to the Warrant Shares, including, but
not necessarily limited to, the Company's commitment to file a registration
statement including the Warrant Shares, to have the registration of the Warrant
Shares completed and effective, and to maintain such registration, are
incorporated herein by reference.

(b) In addition to the registration rights referred to in the preceding
provisions of Section 7.2(a), effective after the expiration of the
effectiveness of the Registration Statement as contemplated by the Registration
Rights Agreement, the Holder shall have demand piggy-back

<PAGE>

registration rights with respect to the Warrant Shares then held by the Holder
or then subject to issuance upon exercise of this Warrant (collectively, the
"Remaining Warrant Shares"), subject to the conditions set forth below. If, at
any time after the Registration Statement has ceased to be effective, the
Company participates (whether voluntarily or by reason of an obligation to a
third party) in the registration of any shares of the Company's stock, the
Company shall give written notice thereof to the Holder and the Holder shall
have the right, exercisable within ten (10) business days after receipt of such
notice, to demand inclusion of all or a portion of the Holder's Remaining
Warrant Shares in such registration statement. If the Holder exercises such
election, the Remaining Warrant Shares so designated shall be included in the
registration statement at no cost or expense to the Holder (other than any costs
or commissions which would be borne by the Holder under the terms of the
Registration Rights Agreement). The Holder's rights under this Section 7.2 are
subject to the following conditions: if there is a managing underwriter of the
offering of shares referred to in the registration statement and such managing
underwriter advises the Company in writing that the number of shares proposed to
be included in the offering will have an adverse effect on its ability to
successfully conclude the offering and, as a result, the number of shares to be
included in the offering is to be reduced, the number of Remaining Warrant
Shares of the Holder which were to be included in the registration (before such
reduction) will be reduced pro rata with the number of shares included for all
other parties whose shares are being registered.

8. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage pre-paid. Any such notice shall be deemed given when so
delivered personally, telegraphed, telexed or sent by facsimile transmission,
or, if mailed, two days after the date of deposit in the United States mails, as
follows:

(i) if to the Company, to:

FINANCIAL INTRANET, INC.
410 Saw Mill River Road
Suite B220
Ardsley, New York 10502
Telephone No.:
Telecopier No.:

with a copy to:

Steven W. Schuster, Esq.
McLaughlin & Stern, LLP
260 Madison Avenue
New York, New York 10016
Fax No. (212) 448-0066

<PAGE>

Attn:
Telephone No.:
Telecopier No.:

(ii) if to the Holder, to:

with a copy to:

Krieger & Prager, Esqs.
319 Fifth Avenue
New York, New York 10016
Telephone No.: (212) 689-3322
Telecopier No. (212) 213-2077

Any party may, by notice given in accordance with this Section to the other
parties, designate another address or person for receipt of notices hereunder.

9. Supplements and Amendments; Whole Agreement. This Warrant may be
amended or supplemented only by an instrument in writing signed by the parties
hereto. This Warrant contains the full understanding of the parties hereto with
respect to the subject matter hereof and thereof and there are no
representations, warranties, agreements or understandings other than expressly
contained herein and therein.

10. Governing Law. This Warrant shall be deemed to be a contract made
under the laws of the State of New York and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts to be made and performed entirely within such State. Each of the
parties consents to the jurisdiction of the federal courts whose districts
encompass any part of the City of New York or the state courts of the State of
New York sitting in the City of New York in connection with any dispute arising
under this Warrant and hereby waives, to the maximum extent permitted by law,
any objection, including any objection based on forum non conveniens, to the
bringing of any such proceeding in such jurisdictions. To the extent determined
by such court, the Company shall reimburse the Holder for any reasonable legal
fees and

<PAGE>

disbursements incurred by the Buyer in enforcement of or protection of any of
its rights under this Warrant.

11. Counterparts. This Warrant may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.

12. Descriptive Headings. Descriptive headings of the several Sections
of this Warrant are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.

IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
the 20 th day of July 1999.

FINANCIAL INTRANET, INC.

By: /s/Michael Sheppard
----------------------
Name: Michael Sheppard
Its: President

Attest:

/s/ Maura Marx
- ---------------------
Name: Maura Marx
Title: Vice President

<PAGE>

NOTICE OF EXERCISE OF WARRANT

The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of , 1999, to purchase shares of
the Common Stock, par value $0.01 per share, of FINANCIAL INTRANET, INC., and
tenders herewith payment in accordance with Section 1 of said Common Stock
Purchase Warrant.

Please deliver the stock certificate to:

Dated:

By:
------------------

|_| CASH: $

<PAGE>

EXHIBIT 10.35

BRIDGE LOAN FINANCING AGREEMENT

THIS BRIDGE LOAN FINANCING AGREEMENT ("Financing Agreement") is dated
as of July 20, 1999, by and between FINANCIAL INTRANET, INC., a Nevada
corporation, with headquarters located at 410 Saw Mill River Road, Suite B220,
Ardsley, New York 10502 (the "Company"), and GARTH LLC, having an office at
______________________________________ (the "Investor").

W I T N E S S E T H

WHEREAS, the Company wishes to induce the Investor to loan to the
Company, and the Investor is willing to loan to the Company, subject to the
terms and conditions set forth herein, Five Hundred Thousand ($500,000) Dollars.

NOW, THEREFORE, for and in consideration of the premises and the mutual
agreement contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

1. Loan. Subject to the terms and conditions set forth herein, the
Investor shall on or before ___________, 1999 loan to the Company Five Hundred
Thousand ($500,000) Dollars (the "Loan") with a Maturity Date of October ____,
1999 by delivery of such amount to the Company or as directed by the Company on
such date in same day U.S. funds by wire transfer to an account designated by
the Company.

2. Note. The terms of the Loan shall be set forth in and evidenced by a
Promissory

<PAGE>

Note in substantially the form attached hereto as Exhibit A in the principal
amount of Five Hundred Thousand ($500,000) Dollars, payable to the order of the
Investor (the "Note").

3. Mutual Deliveries.

(a) Upon the delivery by the Investor of the loan proceeds as
provided in Section 1 above, the Company shall deliver to the Investor the Note.

(b) The Company shall also deliver, or cause to be delivered,
the original or execution copies of the following instruments and agreements
duly executed by all parties thereto other than the Investor (together with the
Note - the "Related Agreements"):

(i) the Financial IntraNet Common Stock Purchase Warrants for 200,000
shares in the form attached hereto as Exhibit B (the "Warrants"); and

(ii) the Registration Rights Agreement in the form annexed hereto as
Exhibit C (the "Registration Rights Agreement"); and

(iii) the Pledge and Security Agreement of Barry Stein, Michael Sheppard
and Maura Marx in the form annexed hereto as Exhibit D (the "Pledge and Security
Agreement"); (iv) The opinion of McLaughlin & Stein in the form annexed hereto
as

Exhibit E.

4. Representations and Warranties of the Company. The Company
represents and warrants to the Investor that:

(a) The Company has the corporate power and authority to enter
into this Financing Agreement and the Related Agreements and to perform its
obligations hereunder and thereunder. The execution and delivery by the Company
of this Financing Agreement and the

<PAGE>

Related Agreements and the consummation by the Company of the transactions
contemplated

<PAGE>

hereby and thereby have been duly authorized by all necessary corporate action
on the part of the Company. This Financing Agreement and the Related Agreements
have been duly executed and delivered by the Company and constitute valid and
binding obligations of the Company enforceable against it in accordance with
their respective terms, subject to the effects of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and to the application of equitable principles in any
proceeding (legal or equitable).

(b) The execution, delivery and performance by the Company of
this Financing Agreement and the Related Agreements and the consummation of the
transactions contemplated hereby and thereby do not and will not breach or
constitute a default under any applicable law or regulation or of any agreement,
judgment, order, decree or other instrument binding on the Company which breach
or default could reasonably by expected to have a material adverse effect on the
Company taken as a whole.

(c) The Company is in material compliance with all applicable
laws, regulations, judgments, decrees and orders material to the conduct of its
business.

(d) Except as set forth in Form SB-2 filed on February 25,
1999, there is no pending, or to the knowledge of the Company, threatened,
judicial, administrative or arbitral action, claim, suit, proceeding or
investigation which might affect the validity or enforceability of this
Financing Agreement or the Related Agreements or which involves the Company and
which if adversely determined, could reasonably be expected to have a material
adverse effect on the Company.

<PAGE>

(e) No consent or approval of, or exemption by, or filing
with, any party or governmental or public body or authority is required in
connection with the execution, delivery and performance under this Financing
Agreement or the Related Agreements or the taking of any action contemplated
hereunder or thereunder.

(f) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation. The Company is duly qualified and licensed and in good
standing as a foreign corporation in each jurisdiction in which its current
ownership or leasing of any properties or its ownership or leasing of any
properties or the character of its operations as currently conducted requires
such qualification or licensing, except where the failure to be so qualified
would not have a material adverse effect on the Company. The Company has all
corporate power and authority, and has obtained all necessary authorizations,
approvals, orders, licenses, certificates, franchises and permits of and from
all governmental or regulatory officials and bodies necessary to own or lease
its properties and conduct its business other than those authorizations,
approvals and such other documents the lack of which could not reasonably be
expected to have a material adverse effect on the Company.

(g) The execution, delivery and performance of this Agreement
by the Company and the Related Agreements to be delivered hereunder and the
consummation of the transactions contemplated hereby and thereby will not: (i)
violate any provision of the Company's articles of incorporation or bylaws, (ii)
violate, conflict with or result in the breach of any of the terms of, result in
a material modification of the effect of, otherwise, give any other contracting
party the right to terminate, or constitute (or with notice or lapse of time or
both constitute) a default under,

<PAGE>

any contract or other agreement to which the Company is a party or by or to
which the Company or any of the Company's assets or properties may be bound or
subject, (iii) violate any order, judgment, injunction, award or decree of any
court, arbitrator or governmental or regulatory body by which the Company, or
the assets or properties of the Company are bound, (iv) to the Company's
knowledge, violate any statute, law or regulation.

(h) There has been no material change in the capitalization,
assets, or liabilities of the Company since the issuance of the financial
statements delivered to Investor. The Investor acknowledges that the Company has
incurred losses from operations since the date as of which such financial
statements speak.

5. Representations and Warranties of the Investor. The Investor hereby
represents and warrants to the Company that:

(a) The Investor has the corporate power and authority to
enter into this Financing Agreement and the Related Agreements and to perform
its obligations hereunder and thereunder. The execution and delivery by the
Investor of this Financial Agreement and the Related Agreements and the
consummation by the Investor of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the part of the
Investor. This Financing Agreement and the Related Agreements have been duly
executed and delivered by the Investor and constitute valid and binding
obligations of the Investor, enforceable against it in accordance with their
respective terms, subject to the effects of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and to the application of equitable principles in any
proceeding (legal or equitable).

<PAGE>

(b) The execution, delivery and performance by the Investor of
this Financing Agreement and the Related Agreements and the consummation of the
transactions contemplated hereby and thereby do not and will not breach or
constitute a default under any applicable law or regulation or of any agreement,
judgment, order, decree or other instrument binding on the Investor.

(c) There is no pending, or to the knowledge of the Investor,
threatened, judicial, administrative or arbitral action, claim, suit, proceeding
or investigation which might affect the validity or enforceability of this
Financing Agreement or the Related Agreements.

(d) No consent or approval of, or exemption by, or filing
with, any party of governmental or public body or authority is required in
connection with the execution, delivery and performance under this Financing
Agreement or the Related Agreements or the taking of any action contemplated
hereunder or thereunder.

(e) The Investor has prior substantial investment experience,
including investment in non-listed and non-registered securities and has had the
opportunity to engage the services of an investment advisor, attorney or
accountant to read all of the documents furnished or made available by the
Company to the Investor in connection with this investment and to evaluate the
merits and risks of this investment.

(f) The Investor and its affiliates shall not engage in short
sales of the Company's Common Stock; provided, however, that the Investor or its
affiliates may enter into any short sale of other hedging or similar arrangement
it deems appropriate with respect to the Converted Shares after the pledge
shares are released from escrow commencing on the day the

<PAGE>

Investor delivers a Notice of Conversion (as contemplated by Section ___ hereof)
with respect to such Converted Shares, so long as such arrangements do not
involve more than the number of such Converted Shares (determined as of the date
of such Conversion Notice).

6. Covenants of the Company. The Company covenants and agrees that, so
long as the Note shall be outstanding, except as otherwise required under the
Related Agreements, the Company shall:

(a) Promptly pay and discharge all lawful taxes, assessments
and governmental charges or levies imposed upon it or upon its income and
profits, or upon any of its property, before the same shall become in default as
well as all lawful material claims for labor, materials and supplies which, if
unpaid, might become a lien or charge upon such properties or any part thereof;
provided, however, that it shall not be required to pay and discharge any such
tax, assessment, charge, levy or claim so long as the validity thereof shall be
contested in good faith by appropriate proceedings, and the Company shall set
aside on its books adequate reserves with respect to any such tax, assessment,
charge, levy or claim so contested.

(b) Pay, or cause to be paid, all material debts and perform,
or cause to be performed, all material obligations promptly and in accordance
with the respective terms thereof.

(c) Implement and maintain a standard system of accounting in
accordance with generally accepted accounting principles ("GAAP").

(d) Provide to the Investor the following:
(i) as soon as available after the end of each fiscal year of the Company,
a consolidated balance sheet of the Company as at the end of that fiscal year
and the related

<PAGE>

statement of earnings, stockholders' equity and changes in financial position of
the Company for such fiscal year, in accordance with GAAP and audited by
independent certified public accountants of recognized standing; and

(ii) as soon as available, an unaudited consolidated balance sheet of the
Company as of the end of that quarter, and the related unaudited statement of
earnings of the Company for the period from the beginning of that fiscal year to
the end of that quarter, certified by the principal financial officer of the
Company as having been prepared in accordance with GAAP, subject to normal
year-end adjustments.

(e) Do, or cause to be done, all things that may be necessary
to (i) maintain its due organization, valid existence and good standing under
the laws of its state of incorporation; (ii) preserve and keep in full force and
effect all qualifications, registrations and licenses in those jurisdictions in
which the failure to do so could or would have a material adverse effect; (iii)
maintain its power or authority to carry on its business as now conducted; and
(iv) use its best efforts to keep available the services of its key present
employees and agents and maintain its current relations with suppliers,
customers, distributors and joint venture partners (subject to the business
judgment of executive management).

(f) At all times maintain, preserve, protect and keep material
property used and useful in the conduct of its business in good repair, working
order and condition (subject to normal wear and tear), and from time to time
make all needful and proper repairs, renewals, replacements, betterment and
improvements thereto, so that the business carried on in connection therewith
may be properly conducted at all times.

<PAGE>

(g) Keep adequately insured all property of a character
usually insured by similar corporations and carry such other insurance as is
usually carried by similar corporations.

(h) At all reasonable times upon the Investor's request and
upon advance notice to the Company and for good reason, permit representatives
designated by the Investor to have access to the books and records relating to
the operations and procedures of the Company (subject to execution of
confidentiality undertakings).

(i) Not assume, guaranty or otherwise, directly or indirectly,
become liable or responsible for the obligations of any other person or entity
for the purpose of paying or discharging t he obligations of such person or
entity unless such guarantees relate to the business of the Company, are
incurred in the ordinary course of its business and do not exceed in the
aggregate $100,000.

(j) Not declare or pay any cash dividends or authorize or make
any other distribution on any class of equity securities of the Company.

7. Assignment. This Financing Agreement and the Related Agreements may
be assigned by the Investor to transferees or assignees of the Note provided the
Company is, prior to or simultaneously with such transfer, furnished with
written notice of the name and address of such transferee or assignee, and such
assignee agrees in writing to be bound by the terms hereof and provided further
that, if the Note is only assigned or transferred in part, then such assignment
shall only be made in part on an appropriate proportionate basis. If there is a
conflict between this provision and any provision of the Related Agreements,
this provision shall govern.

As a condition to any such assignment, the assignee shall warrant,
represent and

<PAGE>

acknowledge to the Company and to the Investor that: (i) such assignee has
adequate means of providing for its current needs and possible contingencies,
and anticipates no need now or in the foreseeable future to sell its shares of
Common Stock, (ii) such assignee has had an opportunity to ask questions of and
receive answers from the Company concerning its investment as evidenced by the
loan and Warrant (hereinafter referred to as the "Investment") in the Company,
and all such questions have been answered to its full satisfaction, (iii) such
assignee intends to hold the Warrant, and any shares of the Common Stock issued
upon the exercise of the Warrant, of the Company for its own account for
investment, and not with a view toward any resale or other distribution of such
Common Stock, (iv) the Investment in the Company involves a high degree of risk,
no tax advantages will result from the Investment in the Company, and such
assignee must be able to bear the economic risk of complete loss of the
Investment in the Company, (v) such assignee has received no representations and
warranties from Company other than those otherwise set forth herein, and (vi)
such assignee has the knowledge and experience in financial and business matters
and is capable of evaluating the merits and risks of the Investment, provided,
however, if such assignee does not have such knowledge and experience, such
assignee has consulted with an attorney, accountant or other financial
consultant or advisor, as its Purchaser Representative, and such person is
capable of evaluating the risk of the Investment and of so advising such
assignee thereof.

8. Notices. Any notice required or permitted hereunder shall be given
in writing (unless otherwise specified herein) and shall be deemed effectively
given upon personal delivery or seven business days after deposit in the United
States Postal Service, by (a) advance copy by

<PAGE>

fax, and (b) mailing by express courier or registered or certified mail with
postage and fees prepaid, addressed to each of the other parties thereunto
entitled at the following addresses, or at such other addresses as a party may
designate by ten days advance written notice to each of the other parties
hereto.

COMPANY: FINANCIAL INTRANET
410 Saw Mill River Road
Suite B220
Ardsley, New York 10502
ATTN: Secretary
Fax No. (914) 693-5359

with a copy to:

Steven W. Schuster, Esq.
McLaughlin & Stern, LLP
260 Madison Avenue
New York, New York 10016
Fax No. (212) 448-0066

PURCHASER: At the address set forth on the signature page of this Agreement.

ESCROW AGENT: Krieger & Prager, Esqs.
319 Fifth Avenue
New York, New York 10016
Fax No. (212) 213-2077

9. Warrants. The Warrants shall be for a term of five (5) years with an
exercise price of $0.50 per share with cashless exercise and piggyback
registration rights. The parties agree that the Warrants and all rights
thereunder shall be exercisable only in the event the Note is paid in full in
cash on or prior to the Maturity Date.

10. Severability. If a court of competent jurisdiction determines that
any provision of

<PAGE>

this Financing Agreement is invalid, unenforceable or illegal for any reason,
such determination shall not affect or impair the validity, legality and
enforceability of the other provisions of this Financing Agreement. If any such
invalidity, unenforceability or illegality of a provision of this Financing
Agreement becomes known or apparent to any of the parties hereto, the parties
shall negotiate promptly and in good faith in an attempt to make appropriate
changes and adjustments to such provision specifically and this Financing
Agreement generally to achieve as closely as possible, consistent with
applicable law, the intent and spirit of such provision specifically and this
Financing Agreement generally.

11. Execution in Counterparts. This Financing Agreement may be executed
in counterparts, each of which shall be deemed an original, but all of which
together shall constitute the same Financing Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

IN WITNESS WHEREOF, the parties have executed this Bridge Loan
Financing Agreement as of the date first written above.

FINANCIAL INTRANET, INC.

By: /s/ Michael Sheppard
----------------------
Name: Michael Sheppard
Title: President

GARTH LLC

By: /s/ Sabrina Hew
----------------------
Name: Sabrina Hew
Title:

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
Financial Intranet, Inc.

We consent to the reference to our firm under the caption "Experts" in the
Amendment No. 3 to the Registration Statement (Form SB-2), and related
prospectus of Financial Intranet, Inc. and to the incorporation by reference
therein of our report dated March 5, 1999, except for Note 6, as to which the
date is March 15, 1999 and Note 12, as to which the date is July 20, 1999 with
respect to the financial statements as of December 31, 1998 and 1997 and for the
years then ended.

/s/ REMINICK, AARONS & COMPANY, LLP
-----------------------------------
REMINICK, AARONS & COMPANY, LLP

New York, New York
July 28, 1999

<PAGE>

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<PAGE>

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