FINANCIAL INTRANET INC/NY, SB-2/A, 1999-08-09

FINANCIAL INTRANET INC/NY
SB-2/A, 1999-08-09
COMMUNICATIONS SERVICES, NEC

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<PAGE>

As filed with the Securities and Exchange Commission on August 9, 1999

Registration No. 333-72975

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

AMENDMENT NO. 4
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)

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>
<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 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

o 5,508,333 shares of common stock underlying the warrants owned by
the selling security holders,

o 6,675,000 shares of common stock underlying the convertible
promissory notes owned by the selling securityholders (including an
additional 2,525,000 shares of common stock being registered with
respect to anti-dilution provisions linked to market price
protection provisions in the promissory notes),

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

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

The alternate prospectus pages, which follow the primary prospectus, contain
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.

ii
<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 AUGUST 9, 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 $0.65 and $1.35 per share. 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 OTC Bulletin Board maintained by the NASD 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

Page

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

2
<PAGE>

PROSPECTUS SUMMARY

About Financial Intranet

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

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.

<TABLE>
<CAPTION>
The offering
<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 additional
shares to the selling securityholders 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.

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 proceeds from an offering of a minimum of $3,000,000 of gross
proceeds for the following categories:

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

Financial Intranet may not spend proceeds on all of these
categories if we receive gross proceeds of less than $3,000,000.
If we receive gross proceeds of $500,000, we will only spend the
proceeds on marketing and sales and repayment of past due accounts payable.

OTC Bulletin Board symbol: FNTN
</TABLE>

3
<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.

<TABLE>
<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>

4
<PAGE>

RISK FACTORS

Investors can have difficulty evaluating our prospects because we
commenced business in the fall of 1998 and have a limited operating history for
investors to analyze.

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
operations 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

5
<PAGE>

more of the following:

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.

Because success in offering our intranet and other communications services
depends on constantly changing technologies, our success in developing and using
the proprietary data mining software depends on our ability to protect our
proprietary technology from adverse claims.

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 would be expensive with no assurance of success. To our knowledge, we
do not infringe on any other proprietary technologies and we have received no
claims alleging infringement from others.

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 may 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 including 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 22.5% of the
outstanding shares of our common stock. They would own 36.5% 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
23.1% 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.

Because we only have a single location for our computer equipment and no
secondary systems, any disruption to our computer system could adversely affect
our business.

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

6
<PAGE>

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.

Our potential issuance of shares upon the exercise of 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 11,271,327 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. If
sales by the selling security holders cause the market price of our stock to
fall below our offering price, we may be unable to complete the offering of our
common stock which would reduce the proceeds to Financial Intranet.

The price of our stock may decrease as a result of sales of stock that are not
currently freely tradeable.

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 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.

7
<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 $ 1,800,000 30.9% 1,000,000 35.4% $ 250,000 78.1%

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 750,000 12.9% 350,000 12.4% 0 0.0%
switching and installation of
cabling to customers

Payment of past due accounts payable 220,000 3.7% 195,000 6.9% 70,000 21.9%

Research and development of 500,000 8.6% 250,000 8.9% 0 0.0%
additional 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 750,000 12.9% 400,000 14.2% 0 0.0%
& admin. expenses
------------- ------ ------------- ------ ------------- ------
Net proceeds, after deducting $ 5,820,000 100.0% $ 2,820,000 100.0% $ 320,000 100.0%
offering 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.

8
<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>

9
<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:

Public offering price per share $1.00

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

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

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

Dilution per share to purchasers in Financial Intranet's offering $ .72

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 under anti-dilution provisions and market price
protection provisions of convertible promissory notes issued to the selling
security holders.

10
<PAGE>

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:

Public offering price per share $1.00

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

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

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

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

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

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<PAGE>

<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 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:

Public offering price per share $1.00

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

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

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

Dilution per share to purchasers in Financial Intranet's offering $ .84

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

<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 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>

DIVIDEND POLICY

Financial Intranet has not paid and does not anticipate paying any dividends on
its common stock in the foreseeable

12
<PAGE>

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.

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<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 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.

Depreciation and amortization

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<PAGE>

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

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<PAGE>

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 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

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<PAGE>

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.

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 under 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.

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<PAGE>

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 under 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 and repayment of past due accounts payable. Financial Intranet 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. We no longer have 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 non- information
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

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<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 factors, including the risks
described above and factors described 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 and receive immmediate access to
information about mutual funds. Mutual funds and futures traders can use
our intranet to provide product information to broker/dealers using interactive
video teleconferencing, video-on-demand, digitally stored text and graphics.
Mutual funds and investment managers can use the private intranet to distribute
their documentation to broker/dealers and financial advisors. 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.

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

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

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<PAGE>

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. 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.

20
<PAGE>

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

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 agreement
with Frontier Corp. allows it to utilize Frontier's 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

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<PAGE>

individual.

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 free real-time 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

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<PAGE>

o a real time searchable news data base .

o links to EDGAR

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 consenting 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. Despite such disclaimer,
we may be subject to claims related to the content on our web site. Third
parties who desire to provide us with content must also agree to indemnify us
against claims related to such 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 a reseller agreement with Frontier
Corp. 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

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<PAGE>

telecommunications services on a local exchange, non-toll basis for which
separate applications and/or tariff filings are 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 digitally-stored
documents , including 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

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<PAGE>

o free real-time stock quotes,
o links to EDGAR

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

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<PAGE>

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 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 provides 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

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<PAGE>

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. 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 regulated 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 need not periodically renew our status. 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.

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<PAGE>

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.

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 supplier for the resale of communication services
is 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

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<PAGE>

telecommunications services from a reliable major company, 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.

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

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
shares of common stock that Stein agreed to purchase from plaintiff. According
to plaintiff, these shares 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:

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.

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

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

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<PAGE>

in the general field of automation. Mr. Engelberger serves on the Board of
directors of EDO Corporation (NYSE:EDO).

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).

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 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.

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 Financial Intranet. 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

31
<PAGE>

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. 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.

32
<PAGE>

<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
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>

33
<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 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-

34
<PAGE>

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 some discretionary authority to
determine the number of shares to be issued under incentive stock options and
nonstatutory stock options and the recipients, and when and at what exercise
price 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.

35
<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.

36
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth information regarding beneficial ownership of the
common stock as of August 1, 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....................................................... 5,967, 537 23.6% 4,467,537 12.8%

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.

37
<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 the
convertible promissory notes owned by the selling security holders
in the aggregate principal amount of $2,100,000,

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 could increase under market price protection provisions that
could lower the conversion prices of the convertible promissory notes. These
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 Offering 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).............................................. 5,967,537 23.6 4,147,402 12.8
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 0
Corporate Capital Management Corp.(8)......................... 50,000 0 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
$1,100,000.
o Assumes conversion prices of:
o $.50 for a promissory note in the principal amount of $200,000 and
o $.60 for three promissory notes in the aggregate principal amount
of $900,000.

38
<PAGE>

(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:

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

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

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

39
<PAGE>

MARKET PRICE OF COMMON STOCK

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.

<TABLE>
<CAPTION>
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 August 1, 1999, Financial Intranet had 48 record holders of its common stock
and an estimated 2,045 beneficial holders.

40
<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 the
convertible promissory notes and warrants issued to the selling security
holders, 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 common stock at an exercise price
per share of common stock of $0.60. The warrants may be exercised through

41
<PAGE>

December 31, 2003.

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.

$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

<PAGE>

* 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.

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.

$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 securities within the meaning of Rule 144
securities for at least one year, including the holding period of any
securities

43
<PAGE>

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 must satisfy 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.

LEGAL MATTERS

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.

44
<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.

45
<PAGE>

FINANCIAL INTRANET, INC.
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
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>

[BLANK PAGE]

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)

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-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)

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-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)

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-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 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:

<TABLE>
<CAPTION>
12/31/97 12/31/98 3/31/98 3/31/99
-------- -------- ------- -------
<S> <C> <C> <C> <C>
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
======== ========== ======== ==========
</TABLE>

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-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 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-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)

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 of
Monthly Common stock 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-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 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:

<TABLE>
<CAPTION>
Stock Option
Percentage Through
Executive Base Salary through December 31, 1998
- --------- ----------- -------------------------
<S> <C> <C>
Founder................................................................................. $150,000 25.0%
President and Chief Operating Officer................................................... $150,000 14.5%
Executive Vice-President ............................................................... $100,000 9.0%
</TABLE>

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-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 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-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)

$.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-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)

<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-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 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-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 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 9, 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-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)

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-25
<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.

The interest expense associated with this promissory note is approximately
$13,000. This amount is based on the anticipated conversion of the promissory
note on October 20, 1999. The interest expense related to this promissory note
will be amortized over the period of time the promissory note is outstanding,
which is expected to be from July 20, 1999 to October 20, 1999, and will be
included as a charge to operations for that period. The expenses to be recorded
in connection with the favorable warrants issued is not anticipated to be
material.

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-26

<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 .............................................................5
Use of Proceeds ..........................................................8
Capitalization............................................................9
Dilution.................................................................10
Dividend Policy .........................................................12
Management's Discussions and Analysis of
Financial Condition and Results of
Operations ..............................................................14
Business.................................................................19
Management ..............................................................30
Certain Transactions ....................................................36
Principal Stockholders ..................................................37
Selling Securityholders .................................................38
Description of Securities ...............................................41
Shares Eligible for Future Sale .........................................43
Plan of Distribution ....................................................44
Legal Matters............................................................44
Experts..................................................................44
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
---------------------

August 9, 1999

<PAGE>

[Alternate Cover Page--- The Offering]

SUBJECT TO COMPLETION, DATED AUGUST 9, 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 specified 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 August 9, 1999

A-1
<PAGE>

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.

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
- ----
Prospectus Summary .......................................................3
Risk Factors .............................................................5
Use of Proceeds ..........................................................8
Capitalization............................................................9
Dilution.................................................................10
Dividend Policy .........................................................12
Management's Discussions and Analysis of
Financial Condition and Results of
Operations ...........................................................14
Business.................................................................19
Management ..............................................................30
Certain Transactions ....................................................36
Principal Stockholders ..................................................37
Selling Securityholders .................................................38
Description of Securities ...............................................41
Shares Eligible for Future Sale .........................................43
Plan of Distribution ....................................................44
Legal Matters............................................................44
Experts..................................................................44
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.

11,271,327
of Common Stock

Financial Intranet, Inc.

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

August 9, 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 specified 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

II-1

<PAGE>

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.

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. The
issuances under 4(2) to officers, employees or legal counsel were to persons
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 J
G Capital in consideration for investment banking services of $10,000.

On May 9, 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 with a value of
$360,000.

On April 28, 1999, Financial Intranet issued 11,111 shares of common stock to
Steven Schuster, counsel to

II-2

<PAGE>

Financial Intranet, in consideration for advisory services valued at $10,000.

On March 10, 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 with a value of
$240,000.

On March 3, 1999, Financial Intranet issued 15,000 shares of common stock valued
at $9,750 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
valued at $1,046 to Ganesh Asset Management for exercise of warrants.

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
valued at $8,125 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 at
$.001 par value 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 at
$.001 par value 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. These shares were valued at $315,000.

On July 15, 1998, Financial Intranet issued 112,093 shares of common stock at
$.001 par value 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
$500,000 under Rule 504.

On June 11, 1998, Financial Intranet issued 28,794 and 9,599 shares at $.001
par value to Great North Capital and

II-3

<PAGE>

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 under 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 stock
at $.001 par value to Civilization Communication Corp. under anti-dilution
provisions of a 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 of common stock
at $.001 par value to Civilization Communication Corp. under anti-dilution
provisions of a consulting agreement.

On September 5, 1997, Financial Intranet issued 20,000 shares of common stock
valued at $5,400 to Ron Pauls, an employee, in consideration for employment
services rendered.

On September 5, 1997, Financial Intranet issued 20,000 shares of common stock
valued at $5,400 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 under Rule 504 of Regulation D.

On February 27, 1997, Financial Intranet issued 750,000 shares of common stock
at $.001 par value to Michael Sheppard as an incentive payment for execution of
employment contract under Section 701.

On February 27, 1997, Financial Intranet issued 500,000 shares of common stock
at $.001 par value to Maura Marx as an incentive payment for execution of
employment contract under Section 701.

On February 27, 1997, Financial Intranet issued 1,500,000 shares of common
stock at $.001 par value to Barry Stein as an incentive payment for execution
of employment contract under 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.

II-4

<PAGE>

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
at $.001 par value to Michael Daniels in consideration for services rendered in
connection with his sale of a controlling interest in Wee Wees, Inc.

OPTIONS, WARRANTS AND CONVERTIBLE PROMISSORY NOTES

On July 20, 1999 Financial Intranet issued 100,000 warrants to J G Capital in
consideration for investment banking services valued at $17,000. The warrants
have an exercise price of $.50 per share and expire on October 20, 2004.

On July 20, 1999, Financial Intranet issued to Garth LLC an 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 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. The aggregate consideration received by Financial Intranet for the
promissory note and the warrants was the $500,000 loaned under the promissory
note.

On February 28, 1999, Financial Intranet issued 20,000 warrants to each of
Scott Goldstein and Sheldon Goldstein in consideration for legal services
valued at a total of $19,600. The warrants have an exercise price of $.60 per
share and expire five years after issuance.

On February 8, 1999, Financial Intranet issued to Zubair Kazi a 7% convertible
promissory note in the principal amount of $600,000. Financial Intranet also
issued Mr. Kazi 1,500,000 warrants in February 1999 to purchase common stock at
an exercise price per share of $.40. The warrants may be exercised through
February 6, 2002. The aggregate consideration received by Financial Intranet
for the promissory note and the warrants was the $600,000 loaned under the
promissory note.

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 for investment banking services rendered in
connection with a private placement. The warrants expire five years after
issuance. These warrants have an exercise price of $.60 per share and had a
total value of $111,000.

On December 31, 1998, Financial Intranet issued Ahood Sharbatly 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
aggregate amount of consideration received by Financial Intranet for the
promissory note and warrants was the $500,000 loaned under the promissory note.

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 consideration for investment banking
services valued at $32,850 rendered for a private placement.

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

II-5

<PAGE>

package, vest over three years and expire on December 31, 2001.

On December 21, 1998, Financial Intranet agreed to issue 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 25, 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 and had a value of $15,750.

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 and had a value of $1,800.

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 and had a value of $3,250.

On July 15, 1998, Financial Intranet issued 166,667 warrants valued at $40,000
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. (1)

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. (1)

Under 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 and had a
value of $76,435.

Under 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 and had a value of
$45,719.

Under 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 and
had a value of $121,440.

On September 15, 1997, 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. (1)

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. (1)

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. (1)

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. (1)

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. (1)

II-6

<PAGE>

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. (1)

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. (1)

(1) At date of grant, the market price was lower than the exercise price.
Therefore, there was no value ascribed to the warrants.

CONVERTIBLE PROMISSORY NOTES

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
II-7

<PAGE>
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)
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.(4)

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

27 -- Financial Data Schedule.(4)

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.

(2) Included with Amendment No. 2.

(3) Included with Amendment No. 3.

(4) 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 under Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a
20 percent change

II-8

<PAGE>

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

(b) 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 under
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.

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
under 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-9

<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 August 6, 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.

Under 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.

<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
By: /s/ Michael Sheppard Director, President, Chief August 6, 1999
--------------------- Operating Officer
Michael Sheppard

By: * Director August 6, 1999
---------------------
Steven S. Weller

By: * Director August 6, 1999
---------------------
Joseph F. Engelberger

* Under Power-of-Attorney

/s/ MICHAEL SHEPPARD

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

</TABLE>

II-10

<PAGE>

EXHIBIT INDEX

EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- ----------- ------

23.1 -- Consent of Reminick Aaron & Company, LLC.

27 -- Financial Data Schedule.

<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. 4 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
August 9, 1999

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 228,032
<SECURITIES> 0
<RECEIVABLES> 22,676
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 300,522
<PP&E> 1,008,449
<DEPRECIATION> 149,904
<TOTAL-ASSETS> 1,464,070
<CURRENT-LIABILITIES> 580,656
<BONDS> 860,000
0
0
<COMMON> 22,713
<OTHER-SE> 701
<TOTAL-LIABILITY-AND-EQUITY> 1,464,070
<SALES> 6,741
<TOTAL-REVENUES> 6,741
<CGS> 23,341
<TOTAL-COSTS> 23,341
<OTHER-EXPENSES> 597,318
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,605
<INCOME-PRETAX> (626,523)
<INCOME-TAX> 0
<INCOME-CONTINUING> (626,523)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (626,523)
<EPS-BASIC> (.03)
<EPS-DILUTED> (.03)

</TABLE>