FINET COM INC, S-1, 1999-07-02

FINET COM INC
S-1, 1999-07-02
MORTGAGE BANKERS & LOAN CORRESPONDENTS

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 2, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

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

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

FINET.COM, INC.
(Exact Name of Registrant as Specified in Its Charter)

<TABLE>
<S> <C> <C>
DELAWARE 6162 94-3115180
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code No.) Identification No.)
</TABLE>

3021 CITRUS CIRCLE, SUITE 150, WALNUT CREEK, CALIFORNIA 94598
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

MARK L. KORELL, CHIEF EXECUTIVE OFFICER
3021 CITRUS CIRCLE, SUITE 150, WALNUT CREEK, CALIFORNIA 94598
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
--------------------------

COPIES TO:

ROGER S. MERTZ STEPHEN C. FERRUOLO
SEVERSON & WERSON HELLER EHRMAN WHITE & MCAULIFFE
ONE EMBARCADERO CENTER 525 UNIVERSITY AVENUE
SAN FRANCISCO, CALIFORNIA 94111 PALO ALTO, CALIFORNIA 94301
TELEPHONE: (415) 398-3344 TELEPHONE: (650) 324-7000
FACSIMILE: (415) 956-0439 FACSIMILE: (650) 324-0638

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
--------------------------

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

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

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /

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

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value............... 78,106,774 $4.219 $329,531,087 $91,611
</TABLE>

(1) Estimated solely for the purpose of computing the amount of registration fee
pursuant to Rule 457(c) under the Securities Act of 1933 based on the
average high and low sale prices of the registrant's common stock on the
Nasdaq SmallCap Market on June 28, 1999.
--------------------------

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

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- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 2, 1999
THE INFORMATION IN THIS PRELIMINARY 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 BECOMES EFFECTIVE. THIS PRELIMINARY
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
<PAGE>
PROSPECTUS

FINET.COM, INC.

78,106,774 SHARES

COMMON STOCK

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

The selling stockholders identified in this prospectus are offering
78,106,774 shares of common stock. FiNet.com will not receive any of the
proceeds from the sale of shares by the selling stockholders.

FiNet.com's common stock is traded on the Nasdaq SmallCap Market under the
symbol "FNCM." On June 30, 1999, the last reported sale price for the common
stock on the Nasdaq SmallCap Market was $5.63 per share.

INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 4.

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

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

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

THE DATE OF THIS PROSPECTUS IS , 1999
<PAGE>
SUMMARY

YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED
INFORMATION REGARDING FINET.COM AND THE CONSOLIDATED FINANCIAL STATEMENTS
APPEARING ELSEWHERE IN THIS PROSPECTUS. THIS PROSPECTUS CONTAINS FORWARD-LOOKING
STATEMENTS. THE OUTCOME OF THE EVENTS DESCRIBED IN THESE FORWARD-LOOKING
STATEMENTS IS SUBJECT TO RISKS AND ACTUAL RESULTS COULD DIFFER MATERIALLY. THE
SECTIONS ENTITLED "RISK FACTORS," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND "BUSINESS," AS WELL AS OTHER
SECTIONS IN THIS PROSPECTUS, CONTAIN A DISCUSSION OF SOME OF THE FACTORS THAT
COULD CONTRIBUTE TO THOSE DIFFERENCES.

WE REPORT OUR FINANCIAL RESULTS ON A FISCAL YEAR BASIS WHICH DOES NOT
CORRESPOND TO THE CALENDAR YEAR. WHEN WE REFER TO A PARTICULAR FISCAL YEAR IN
THIS PROSPECTUS, WE MEAN THE TWELVE MONTHS ENDED ON APRIL 30 OF THAT YEAR. FOR
EXAMPLE, "FISCAL 1999" REFERS TO THE TWELVE MONTHS ENDED APRIL 30, 1999.

THE COMPANY

FiNet.com is a full service, on-line mortgage banker that offers an
easy-to-use, one-stop mortgage source for consumers and mortgage brokers. We
operate one of the first sites on the Internet that enables the consumer to
apply for and receive credit approval on-line, and to electronically search,
analyze and select from a wide variety of mortgage loan products and rates
offered by us and other lenders. We make the mortgage process easier and more
understandable, while maintaining quality service by controlling the consumer's
entire mortgage lending experience. We also provide on-line and e-commerce
technologies and loan process management tools to mortgage broker businesses to
enable them to compete more effectively with on-line and other national lenders
and brokers and help their customers make better informed borrowing decisions.

We generate revenues by providing services to two primary customer groups:
consumers and mortgage broker businesses. We market or intend to market our
mortgage services to consumers primarily through:

- branded arrangements, where our services are offered through rapidly
growing websites such as XOOM.com and Ask.com, using our Interloan.com
brand;

- co-branded arrangements, where our services are offered through specialty
real estate websites such as Homeseekers.com and Homehunter.com, using
both our brand and our partner's brand; and

- private label arrangements, where we plan to design and operate electronic
mortgage centers for third party websites using our partner's brand.

We provide our consumers with a fast and easy to use on-line method to get
their loans approved through our award-winning iQualify.com technology.
Consumers can then use our Interloan.com website technology to search, analyze
and select from a wide variety of mortgage loan products and rates offered by
leading lenders, including our Monument Mortgage subsidiary. We allow each
consumer to choose between automated service and personalized assistance at any
time in the loan process. Consumers are assisted by our mortgage professionals
throughout the loan application process. We recently began offering our
consumers additional choice by allowing them to submit their processed mortgage
loan applications for auction to interested lenders. We refer to these services
to consumers as our business-to-consumer channel.

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design private label websites for mortgage broker businesses that will emphasize
user-friendly access to on-line, automated underwriting systems and other
e-commerce services. We refer to these services to mortgage brokers as our
business-to-business channel.

We were incorporated under the laws of the State of Delaware in 1989. Our
principal executive offices are located at 3021 Citrus Circle, Walnut Creek,
California 94598, and our telephone number is (925) 988-6550.

FiNet.com, iQualify.com and Interloan.com are trademarks of FiNet.com. All
other brand names or trademarks appearing in this prospectus are the property of
their respective holders.

SELECTED CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
-----------------------------------------------------
1999 1998 1997 1996(2) 1995(2)
--------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues...................................... $ 22,413 $ 15,160 $ 12,344 $ 6,375 $ 5,237
Cost of revenues.............................. 35,064 14,718 9,316 4,591 3,068
--------- --------- --------- --------- ---------
Gross profit.................................. (12,651) 442 3,028 1,784 2,169
Operating expenses............................ 20,906 9,175 5,775 1,444 1,923
--------- --------- --------- --------- ---------
Income (loss) from operations................. (33,557) (8,733) (2,747) 340 246
--------- --------- --------- --------- ---------
Net income (loss)............................. (36,538) (9,379) (2,778) 326 237
In-substance preferred stock dividend......... 705 -- -- -- --
--------- --------- --------- --------- ---------
Net income (loss) for common stockholders..... $ (37,243) $ (9,379) $ (2,778) $ 326 $ 237
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------

PER SHARE DATA:
Basic and diluted net loss per common share... $ (.79) $ (0.31) $ (0.19) $ .04 $ 2.37
Weighted average number of basic shares
outstanding(1).............................. 46,867 30,433 14,313 8,400 100
Cash dividends per common share............... $ -- $ -- $ -- $ 4.45 $ 2.10

BALANCE SHEET DATA:
Cash and cash equivalents..................... $ 4,202 $ 1,993 $ 1,147 $ 672 $ 392
Mortgage loans held for sale.................. 33,438 63,034 24,244 10,675 3,196
Total assets.................................. 45,255 101,468 33,070 25,215 15,091
Warehouse and other lines of credit........... 33,038 86,659 26,902 19,732 11,109
Total liabilities............................. 38,567 98,109 30,596 22,629 12,184
Stockholders' equity.......................... $ 6,688 $ 3,359 $ 2,474 $ 2,587 $ 2,908
</TABLE>

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(1) See Note 2 to the consolidated financial statements for an explanation of
the determination of the number of shares used in computing per share data.

(2) Selected financial data for the fiscal years ended April 30, 1996 and 1995
do not include data for our Coastal subsidiary which was acquired in a
pooling transaction on April 30, 1998, because its inclusion is not
meaningful in assessing trends of FiNet.com and its business was
discontinued in fiscal 1999.

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<PAGE>
RISK FACTORS

YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE MAKING A
DECISION TO BUY OUR COMMON STOCK. THE RISKS DESCRIBED BELOW ARE NOT THE ONLY
ONES WE FACE. ADDITIONAL RISKS NOT PRESENTLY KNOWN TO US OR THAT WE CURRENTLY
CONSIDER IMMATERIAL MAY ALSO MATERIALLY IMPAIR OUR BUSINESS OPERATIONS. IF ANY
OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL CONDITION OR
RESULTS OF OPERATIONS COULD BE MATERIALLY ADVERSELY AFFECTED. IN SUCH CASE, THE
TRADING PRICE OF OUR COMMON STOCK COULD DECLINE, AND YOU MAY LOSE ALL OR PART OF
YOUR INVESTMENT. YOU SHOULD ALSO REFER TO THE OTHER INFORMATION SET FORTH IN
THIS PROSPECTUS, INCLUDING OUR CONSOLIDATED FINANCIAL STATEMENTS.

IF WE CONTINUE TO EXPERIENCE LOSSES IN THE FUTURE, OUR BUSINESS, FINANCIAL
CONDITION AND GROWTH PROSPECTS COULD BE MATERIALLY ADVERSELY AFFECTED.

We have had net losses in each fiscal year since fiscal 1997, and we expect
that we will continue to incur losses for the foreseeable future on both an
annual and quarterly basis. We expect to continue to incur losses because of our
plans to invest over the near term in information systems, sales and marketing,
recruiting and training, customer support and administrative infrastructure.
Because of these expected losses, we may not be able to implement our business
plans, and our business, results of operations, financial condition and growth
prospects could be materially adversely affected.

As of April 30, 1999, we had an accumulated deficit of approximately $47.9
million. Prior to December 31, 1995, our year-end financial statements contained
a qualification from our independent accountants regarding the uncertainty of
our ability to continue as a going concern. We believe that it is likely that we
will experience losses and accumulate deficits for the foreseeable future.

WE MAY INCUR ADDITIONAL LOSSES FROM THE DISCONTINUED BUSINESSES OF COASTAL
FEDERAL MORTGAGE AND MICAL MORTGAGE.

In April 1998, we acquired Coastal Federal Mortgage Company, and in May
1998, we acquired Mical Mortgage Inc., both of which have incurred losses since
we acquired them. In April 1999, we discontinued our Coastal and Mical business
units, and we substantially liquidated their assets. We recorded a special
charge to operations of approximately $4.2 million associated with these
discontinued units. We reported a net loss associated with their acquisition and
operation of $16.9 million in fiscal 1999. We may incur additional unanticipated
losses in connection with these discontinued business units.

IF OUR NEW MANAGEMENT IS NOT ABLE TO IMPROVE AND EXPAND OUR OPERATIONS, OUR
BUSINESS COULD SUFFER.

We recently replaced most of our management team by hiring, among others,
Mark Korell, our President and Chief Executive Officer, Gary Palmer, our
Executive Vice President--Chief Financial Officer, Michael Conway, our Executive
Vice President--Capital Markets, Thomas Porter, our Executive Vice
President--Administration, Kevin Gillespie, our Executive Vice President--Sales
and Marketing, and Chris Skeadas, our Executive Vice President--Chief Technology
Officer. These employees have not previously worked together, and we cannot be
sure that they will be able to work together effectively to improve and expand
our operations. If these employees are not able to improve and expand our
operations, our financial condition, profitability and growth prospects could be
materially adversely affected.

THE LOSS OF ANY OF OUR EXECUTIVE OFFICERS OR KEY PERSONNEL WOULD LIKELY HAVE AN
ADVERSE EFFECT ON OUR BUSINESS.

We believe that our future success will depend to a significant extent on
the continued services of our senior management and other key personnel,
including, among others: Mark Korell, Gary Palmer, Michael Conway, Thomas
Porter, Kevin Gillespie and Chris Skeadas. We do not maintain "key person"

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life insurance for any of our personnel. The loss of the services of any of
these employees, or other key employees, could have a material adverse effect on
our business, results of operations and financial condition.

IF WE ARE UNABLE TO RETAIN AND ATTRACT QUALIFIED PERSONNEL, OUR BUSINESS COULD
SUFFER.

Our ability to grow and our future success depend on our ability to
identify, attract, hire, train, retain and motivate other highly skilled
technical, managerial, sales and marketing, customer service and professional
personnel. Competition for such employees is intense, especially in the
e-commerce sector, and there is a risk that we will not be able to successfully
attract, assimilate or retain sufficiently qualified personnel. If we fail to
retain and attract the necessary technical, managerial, sales and marketing,
customer service personnel and experienced professionals, our business, results
of operations and financial condition could be materially adversely effected.

IF CONSUMERS AND MORTGAGE BROKER BUSINESSES DO NOT EMBRACE ON-LINE MORTGAGE
FINANCING AND SALES, OUR BUSINESS WILL BE MATERIALLY ADVERSELY AFFECTED.

Our success depends upon the acceptance of on-line mortgage financing by
consumers, mortgage brokers and other real estate service providers. If these
groups do not embrace our model for mortgage finance, our business, results of
operations and financial condition will be materially adversely affected. The
market for electronic mortgage financing, particularly over the Internet, is at
an early stage of development and is evolving rapidly. Rapid growth in the use
of and interest in the Internet is a recent development and we cannot be sure
Internet usage will continue to grow or that a sufficiently broad base of
consumers and businesses will adopt, and continue to use, the Internet as a
medium by which to communicate and obtain services traditionally provided in
person-to-person and paper transactions. Our business prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered by companies in the new and rapidly evolving market for Internet
products and services.

We believe that acceptance of our products and services will depend on the
following factors, among others:

- the growth of the Internet as a medium for commerce generally, and as a
market for financial products and services in particular;

- development of the necessary Internet network infrastructure to support
new technologies and handle the demands placed upon the Internet;

- government regulation of the Internet;

- our ability to successfully and efficiently develop on-line products and
services that are attractive to a sufficiently large number of consumers
and mortgage brokers; and

- a change in the perception among many consumers and real estate service
providers that obtaining a mortgage on-line is less dependable than
obtaining a mortgage through a more traditional method.

There is a risk that on-line mortgage financing will not gain market
acceptance and that consumers will not significantly increase their use of the
Internet for obtaining loans. If the market for on-line mortgage financing fails
to develop, or develops more slowly than expected, our business, results of
operations and financial condition would be materially adversely affected. In
addition, if there are insufficient communications services to support the
Internet, it could result in slower response times which would adversely affect
usage of the Internet. Even if the Internet gains acceptance, we may be unable,
for technical or other reasons, to develop and introduce new products and
services or enhancements of existing products and services in a timely manner,
and such products and services and

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enhancements may not gain widespread market acceptance. Any of these factors
could have a material adverse effect on our business, results of operations and
financial condition.

In addition, because the market for on-line mortgage lending is at an early
stage of development, the volume of loans that we originate or sell in any given
period is difficult to predict. If the volume of loans that we originate or sell
falls below our expectations or the expectations of financial analysts, our
business, results of operation and financial condition could be materially
adversely affected.

IF THERE IS A RECESSION, NATURAL DISASTER OR OTHER DISRUPTION IN THE CALIFORNIA
ECONOMY, OUR BUSINESS COULD BE MATERIALLY ADVERSELY AFFECTED.

Approximately 87% of the loans we originated and/or funded in fiscal 1999
were for properties located in California. No other state represented more than
6% of our loan volume during such period. Because a high concentration of our
business is in California, we are particularly vulnerable to recessions and
conditions affecting the economy of California. Although we seek to originate
more loans in other states, we are likely to continue to be dependent on
originating loans for properties located in California for the foreseeable
future. There have been times in the past, most recently in 1991 and 1992, when
the California economy suffered a recession more severe than the rest of the
country. If such a recession were to occur again, our business, results of
operations and financial condition would be materially adversely affected.

In addition, California historically has been vulnerable to natural
disasters, such as earthquakes and mudslides, which are not typically covered by
standard hazard insurance policies that homeowners typically maintain. Uninsured
disasters may reduce a borrower's ability to repay the mortgage loans we close
and sell. A sustained period of increased delinquencies or defaults resulting
from natural disasters could adversely affect the pricing of our future loan
sales and our overall ability to sell loans. The occurrence of any such natural
disasters in California could have a material adverse effect on our business,
results of operations and financial condition.

IF THERE IS A DECREASE IN THE DEMAND FOR MORTGAGES, OUR BUSINESS COULD SUFFER.

Demand for mortgages is typically adversely affected by periods of economic
slowdown or recession, which can be accompanied by rising interest rates and
declining demand for consumer credit, home sales, real estate values and ability
of borrowers to make loan payments. These factors tend to decrease demand for
mortgage loans of the types we originate and could increase the rates of
delinquencies and foreclosures on loans we hold. These changes would likely have
a material adverse effect on our business, results of operations and financial
condition.

Over the last several years we have operated in an environment of relatively
low interest rates, relatively high demand for consumer credit and increasing
home sales and real estate values. We cannot be sure that we will be able to
grow our business in an atmosphere of higher interest rates, lower consumer
credit demand and real estate value and fewer home sales.

IF INTEREST RATES RISE, OUR RESULTS OF OPERATIONS COULD BE MATERIALLY ADVERSELY
AFFECTED.

Our residential mortgage business depends upon overall levels of sale and
refinancing of residential real estate as well as on mortgage loan interest
rates. Any fluctuation in interest rates or an adverse change in residential
real estate or general economic conditions, both of which are outside our
control, could have a material adverse effect on our business, results of
operations and financial condition. The residential real estate industry is
highly cyclical. Shifts in the economy and residential real estate values
generally affect the number of home sales and new housing starts. The demand for
mortgage loan financing increases as the number of home sales increases.
Declining interest rates generally increase mortgage loan financing activity
because homeowners refinance existing mortgage

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loans to obtain more favorable interest rates. Rising interest rates, in
contrast, discourage refinancing activities and generally reduce the number of
home sales that occur.

Approximately 70% of the loans we originated and/or funded in fiscal 1999
were loans to refinance mortgage debt. The effect of interest rate changes tends
to be greater on the market for refinancing loans than it is on the market for
purchase loans, since refinancing a mortgage loan is voluntary and motivated
primarily by a homeowner's desire to lower financing costs, whereas new home
purchasers are motivated by a need or desire for a new home. Accordingly, the
annual volume of new mortgage refinance loans is quite volatile. We cannot
predict future interest rate trends, their impact on our business, or our
ability to manage this business mix.

The value of the loans we make is based, in part, on market interest rates,
and our business, results of operations and financial condition may be
materially adversely affected if interest rates change rapidly or unexpectedly.
If interest rates rise after we fix a price for a loan but before we sell the
loan into the secondary market, the value of that loan will decrease. If we
delay in selling our loans into the secondary market, our interest rate exposure
increases and we could incur a loss on the sale. While we use various hedging
strategies to provide some protection against interest rate risks, no hedging
strategy can protect us completely. The nature and timing of hedging
transactions influences the effectiveness of hedging strategies and poorly
designed strategies or improperly executed transactions may increase rather than
decrease risk. In addition, hedging strategies involve transaction and other
costs. There is a risk that our hedging strategy and the hedges that we make
will not adequately offset the risks of interest rate volatility and that our
hedges will result in losses.

IF WE ARE UNABLE TO DIFFERENTIATE OURSELVES FROM COMPETITION IN OUR INDUSTRY,
OUR BUSINESS PROSPECTS COULD BE HARMED.

The e-commerce market is new, rapidly evolving and intensely competitive. We
expect competition to intensify in the future. Barriers to entry are minimal, so
our competitors can launch new Internet sites at relatively low cost. In
addition, the residential mortgage loan business is highly competitive. We
currently compete with a variety of other companies offering mortgage services,
including:

- various on-line mortgage brokers, including E-LOAN Inc., iOwn.com,
Mortgage.com, Quicken Mortgage.com and Keystroke Financial;

- mortgage companies that offer products through on-line search engines,
such as Yahoo! and Microsoft Corporation's Home Advisor website;

- mortgage banking companies, commercial banks, savings associations, credit
unions and other financial institutions which still originate the vast
majority of mortgage loans; and

- mortgage brokers.

Many of our mortgage banking and mortgage brokerage competitors have longer
operating histories or significantly greater financial, technical, marketing and
other resources than we do. Some of our on-line competitors are spending
substantial funds on mass marketing and branding their mortgage services. In
addition, some of our competitors offer a wider range of services and financial
products to customers and have the ability to respond more quickly to new or
changing opportunities. As a result, many have greater name recognition and more
extensive customer bases and can offer more attractive terms to customers and
adopt more aggressive loan pricing policies. We cannot be sure that we will be
able to compete successfully against current and future competitors. If we are
unable to do so it will have a material adverse effect on our business, results
of operations and financial condition.

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IF OUR QUARTERLY REVENUES AND OPERATING RESULTS FLUCTUATE SIGNIFICANTLY, THE
PRICE OF OUR COMMON STOCK IS LIKELY TO BE VOLATILE.

Our quarterly revenues and operating results are likely to continue to vary
substantially from quarter to quarter. Fluctuation in our quarterly results may
cause the price of our common stock to be volatile. We believe that the
following factors, among others, could affect our quarterly results:

- fluctuations in mortgage loan interest rates;

- seasonal or other economic factors affecting demand for mortgage credit;

- the volume of our mortgage loan originations;

- the size and timing of our loan sales;

- our ability to offer competitive mortgage rates;

- changes in our pricing policies or our competitors' pricing policies for
mortgage origination and processing fees;

- the proportion of our mortgage originations which are used to purchase
homes or refinance existing debt;

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

- the level of consumer interest and confidence in the Internet as a means
of accessing financial products and services;

- the timing of releases of enhancements to our products and services;

- our ability to upgrade and develop our information systems and operational
infrastructure to accommodate growth;

- the timing and rate at which we increase our expenses to support projected
growth;

- the cost of compliance with federal and state government laws and
regulations, including any changes in our historic business practices that
could result from legal interpretations;

- any termination or restructuring of any strategic alliances or agreements
with key service providers, such as the Federal National Mortgage
Association, commonly known as Fannie Mae, or the Federal Home Loan
Mortgage Corporation, commonly known as Freddie Mac;

- our announcement of new marketing initiatives or strategic alliances with
other Internet-based companies, or termination of any such initiative or
alliance;

- the volume of business resulting from collaborative marketing efforts with
our strategic partners;

- technical difficulties or service interruptions affecting our Internet
websites or operational data processing systems;

- changes in our operating expenses and investment in our infrastructure;

- general economic conditions in the United States and economic conditions
which particularly affect e-commerce industries; and

- additions or departures of key executives and operating personnel.

These factors make a substantial decline in our stock price possible at any
time. For example, our common stock traded between $0.41 and $18.25 per share
between May 1, 1998 and June 30, 1999.

In addition, the trading prices of Internet and e-commerce stocks have
recently experienced extreme price and volume fluctuations. These fluctuations
often appear to be unrelated or disproportionate to the operating performance of
Internet and e-commerce companies. The valuations

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of many Internet and e-commerce stocks are extraordinarily high based on
conventional valuation standards such as price-to-earnings and price-to-sales
ratios. These trading prices and valuations may not be sustained. Any negative
change in the public's perception of the prospects of Internet or e-commerce
companies could depress our stock price regardless of our results. In the past,
securities class action litigation often has been brought against companies
following declines in the market price of their securities. If litigation of
this type were brought against us, it could be very costly and could divert
management's attention and resources from our business plan.

We anticipate that as the on-line mortgage origination industry matures, our
business will also be increasingly susceptible to the same seasonal and cyclical
factors that affect the mortgage industry as a whole. Accordingly, we believe
period-to-period comparisons of our operating results are not meaningful and our
results for any period should not be relied upon as an indication of future
performance. Our operating results may fail to meet our expectations or those of
analysts who follow us. Any such failure could cause our stock price to decline
substantially.

We are aware that from time to time chat groups may develop on the Internet
and that participants in those groups may post statements about us. These
statements may influence the market price of our common stock. We do not monitor
statements about us that appear on the Internet, except for authorized
statements made by us. We undertake no obligation of any kind whatsoever to
monitor, correct, comment on or respond to statements on the Internet or
elsewhere by others, and it is our policy not to monitor, correct, comment on or
respond to such statements.

IF WE ARE UNABLE TO MANAGE GROWTH IN OUR BUSINESS, OUR RESULTS OF OPERATIONS MAY
NOT IMPROVE.

We anticipate that we will need to rapidly expand our employee base,
facilities and infrastructure in order to be able to compete successfully and
take advantage of market opportunities. We expect this expansion to place
significant strain on our management, operational and financial resources. Our
current personnel, systems, procedures and controls are not adequate to support
anticipated growth of our operations. To manage this expected growth, we will
need to improve our mortgage processing, operational and financial systems,
information processing capacity, procedures and controls. We may be unable to
hire, train, retain or manage necessary personnel, or to identify and take
advantage of existing and potential strategic relationships and market
opportunities. If we are unable to manage expansion of our business effectively,
our business, results of operations and financial condition may not improve and
could deteriorate.

PROBLEMS AND RISKS RELATED TO POTENTIAL ACQUISITIONS AND ALLIANCES MAY HARM OUR
BUSINESS.

Our growth strategy includes acquisitions of or alliances with companies
with complementary services, technologies and businesses. In connection with any
such acquisition, we may fail to successfully integrate the operations of the
acquired company. For example, as described more completely above under "We may
incur additional losses from the discontinued businesses of Coastal Federal
Mortgage and Mical Mortgage," we incurred significant losses following our
acquisitions of Mical and Coastal, and have discontinued their operations. Any
future acquisitions or alliances we pursue may not be completed or successful.
Also, acquisitions or alliances could divert our management's attention from
other business matters, or we could lose key employees of acquired companies or
alliance businesses.

IF WE LOSE KEY MORTGAGE LENDER RELATIONSHIPS, OUR BUSINESS COULD BE MATERIALLY
ADVERSELY AFFECTED.

We rely on lenders to make loans in cases where we act as a broker. These
lenders are under no obligation to continue their relationships with us or to
make a loan to any potential borrower we present to them. Approximately 65% of
the loans we originated in fiscal 1999 were closed by five lenders. Our reliance
on a small group of lenders makes our origination volume more susceptible to
changes in the rates, services and products such lenders offer. The loss of our
relationship with any of

9
<PAGE>
these lenders, or the failure of these lenders to offer competitive terms, could
have a material adverse effect on our business, results of operations and
financial condition.

THE DISCONTINUATION OF FEDERAL PROGRAMS THAT PURCHASE LOANS OR ANY CHANGE IN OUR
ELIGIBILITY TO PARTICIPATE SUCH PROGRAMS WOULD HAVE A MATERIAL ADVERSE EFFECT ON
OUR BUSINESS.

We fund our mortgage loan operations in part by selling the mortgage loans
that we fund to entities such as Fannie Mae, Freddie Mac and the Government
National Mortgage Association, commonly known as Ginnie Mae, which pool those
mortgage loans into mortgage-backed securities. Our ability to sell mortgage
loans depends upon the continuation of programs administered by these entities,
as well as our continued eligibility to participate in these programs. If these
programs, or our eligibility to participate in them, were terminated or
significantly curtailed, our business, results of operations and financial
condition would be materially adversely affected. In addition, the mortgage
products offered under these federal programs may change from time to time. The
profitability of specific mortgage products may vary depending on a number of
factors, including our administrative costs of originating these products.

We also depend upon private mortgage investors, such as GMAC/RFC, GE Capital
Mortgage and IndyMac, to purchase mortgage loans that we originate which do not
qualify for inclusion in the federal programs described above. If private
investors reduce their purchases of these mortgage loans, the market and price
for such mortgage loans will be adversely affected, which would have a material
adverse effect on our business, results of operations and financial condition.

We depend on automated underwriting and other services offered by government
sponsored and other mortgage investors, including Fannie Mae's Desktop
Underwriter, or DU, Freddie Mac's Loan Prospector, GMAC/RFC's AssetWise and GE
Capital Mortgage's Good Decisions. These services help ensure that our mortgage
services can be offered efficiently and timely. We currently have an agreement
with Fannie Mae that allows us to use their automated underwriting services and
enables us to sell qualified first mortgages to Fannie Mae. During fiscal 1999,
approximately 68% of our loans were sold to Fannie Mae. We expect to continue to
process a significant portion of our conforming loans using the Fannie Mae
system. However, our agreements with Fannie Mae and other mortgage investors can
be terminated by either party immediately upon the delivery of a written
termination notice. There is a risk that we will not remain in good standing
with Fannie Mae and other mortgage investors or that Fannie Mae and other
mortgage investors will terminate our relationship. The termination of our
agreement with Fannie Mae would materially adversely impact our ability to
originate loans.

IF OUR NEW MARKETING RELATIONSHIPS ARE UNSUCCESSFUL, OUR LOAN ORIGINATIONS COULD
SUFFER.

We have entered into a majority of our marketing relationships within the
past four months. We expect our new marketing relationships to direct a
significant number of prospective customers to our websites. Our agreements with
marketing partners are typically short term, lasting as little as 90 days, and,
in some cases, can be unilaterally terminated by either party. If any of these
agreements were terminated or lapsed without extension, we could lose an
important new source of loan applications.

Among our new marketing relationships are those with Ask.com,
CoxInteractive, GetSmart.com, Homehunter, Homeseekers and XOOM.com. If our
relationship with these marketing partners or future marketing partners are not
successful, or if they are successful but are discontinued for any reason, we
could experience a material reduction in the number of loans we are able to
originate. We cannot predict whether any or all of these agreements will be
terminated or will be renewed or extended past their current expiration dates.
In addition, if we fail to establish relationships with future website operators
or to anticipate and make adjustments in our marketing strategy to access other
potential customers, our business, results of operations and financial condition
could be materially adversely affected.

10
<PAGE>
IF WE HAVE TO REPURCHASE LOANS ORIGINATED FOR OR SOLD TO LENDERS, OUR OPERATING
RESULTS COULD BE MATERIALLY ADVERSELY AFFECTED.

Under agreements with some of our lenders, they may require us to repurchase
loans that we originate for them, or they purchase from us, in the event of
material misrepresentations by us or inaccuracies in the borrowers' loan
documents. In fiscal 1999, we were required to repurchase approximately $0, $9.9
million and $124,000 principal amount of loans sold by Coastal, Mical and
Monument Mortgage, respectively. It is possible that future demands will be made
to repurchase loans sold by these subsidiaries. There is a risk that we will not
have sufficient funds to repurchase loans upon demand or that such repurchases
will have a material adverse effect on our business, results of operations and
financial condition.

As a result of repurchases, we occasionally are required to hold foreclosed
residential real estate in inventory until it can be resold. If interest rates
rise and the economy declines, the rate of mortgage loan foreclosures may rise.
Depending on the circumstances of the transaction, we may or may not be able to
sell the property for more than the outstanding loan balance. As of April 30,
1999, our Mical Mortgage subsidiary held approximately $1 million aggregate
principal amount of loans in foreclosure. Future foreclosures could have a
material adverse effect on our business, results of operations and financial
condition.

IF WE LOSE ACCESS TO CREDIT FACILITIES TO FINANCE OUR MORTGAGE LENDING
ACTIVITIES, OUR GROWTH PROSPECTS COULD BE SEVERELY LIMITED.

We act as a lender for many of the loans we originate. Because we are not a
bank, we are dependent upon specialized mortgage credit facilities from other
lenders to finance our mortgage lending activities. We previously maintained
warehouse credit facilities with Residential Funding Corporation, and at times,
we have defaulted under such lines of credit. These warehouse lines have
expired; however, we were granted monthly extensions on one of these lines. The
current monthly extension under this line ends on July 9, 1999.

We cannot assure you that financing will continue to be available on
favorable terms or at all. To the extent that we are unable to access adequate
capital to fund loans, we may have to curtail or cease our loan funding
activities entirely. This would have a material adverse effect on our ability to
execute our growth and operating strategies as well as on our business, results
of operations and financial condition.

IF THERE ARE INTERRUPTIONS OR DELAYS IN OBTAINING APPRAISAL, CREDIT REPORTING,
TITLE SEARCHING AND OTHER UNDERWRITING SERVICES FROM THIRD PARTIES, WE MAY
EXPERIENCE CUSTOMER DISSATISFACTION AND DIFFICULTIES CLOSING LOANS.

We rely on other companies to perform certain aspects of the loan
underwriting process, including appraisals, credit reporting and title searches.
If the provision of these ancillary services were interrupted or delayed, it
could cause delays in the processing and closing of loans for our customers. The
value of the service we offer and the ultimate success of our business are
dependent on our ability to secure the timely provision of these ancillary
services by the third parties with whom we have business relationships. If we
are unsuccessful in securing the timely delivery of these ancillary services we
will likely experience increased customer dissatisfaction and our business,
results of operations and financial condition could be materially adversely
affected.

11
<PAGE>
IF WE FAIL TO COMPLY WITH EXTENSIVE FEDERAL AND STATE LAWS REGULATING OUR
INDUSTRY, WE COULD BE SUBJECT TO PENALTIES, DISQUALIFICATIONS, LAWSUITS OR
ENFORCEMENT ACTIONS THAT COULD HAVE A MATERIAL ADVERSE AFFECT OUR BUSINESS.

Our operations are subject to extensive regulation by federal and state
authorities. For example, the United States Department of Housing and Urban
Development, or HUD, regulates certain aspects of the mortgage lending business,
as do the Federal Reserve Board and the Federal Trade Commission. The Real
Estate Settlement Procedures Act of 1974, or RESPA, the Truth in Lending Act and
federal statutes require that certain disclosures, such as good faith estimates
of settlement charges, a Truth-in-Lending Statement and a HUD-1 settlement
statement be provided to borrowers and that certain information, such as the HUD
Settlement Costs booklet, also be provided to borrowers. The Federal Fair
Housing Act and the Equal Credit Opportunity Act prohibit discrimination and
various state statutes prohibit unfair and deceptive trade practices, and impose
disclosure and other requirements in connection with the mortgage loan
origination process. If we fail to comply with such regulations, possible
consequences could include loss of approved status, demands for indemnification,
class action lawsuits, and administrative enforcement actions.

In addition, RESPA contains certain prohibitions regarding the giving or
taking of a fee, kickback, or anything of value for the referral of business to
any specific person or organization. However, the payment of reasonable
compensation for the provision of goods, services and facilities is generally
not prohibited.

In September 1998, HUD cited Mical for various alleged violations of HUD/FHA
regulations. Thereafter, HUD withdrew Mical's HUD/FHA Title I & II approvals and
imposed a civil penalty against Mical in the amount of $500,000.

In California, regulation and licensing of mortgage brokers and lenders
falls under the California Department of Real Estate or the California
Department of Corporations. Other than banking industry employees and other
persons who are exempt from California Department of Real Estate and California
Department of Corporations licensing requirements, individuals engaged directly
in the origination of loans or the dissemination of certain information are
required to be licensed by the California Department of Real Estate or the
California Department of Corporations. We and some of our subsidiaries are also
required to be licensed in other states in which we have offices or operate.
Although we have the licenses required in California and several other states
and believe that we will be able to obtain licenses required in other states
from time to time, we cannot be sure that we will successfully comply with the
many government regulations and licensing requirements to which we are subject.
If we fail to comply adequately, it could have a material adverse effect on our
business, results of operations and financial condition.

IF LEGISLATION OR REGULATION SURROUNDING THE USE OF THE INTERNET RESTRICTS OUR
ABILITY TO ORIGINATE MORTGAGES OVER THE INTERNET, OUR BUSINESS WOULD BE
MATERIALLY ADVERSELY AFFECTED.

Laws and regulations directly applicable to the Internet and e-commerce may
become more prevalent in the future. In the event the Federal Trade Commission
or other governmental authorities adopt or modify laws or regulations relating
to the Internet, our business, results of operations and financial condition
could be materially adversely affected. Such legislation and regulation could
dampen the growth in Internet usage generally and decrease the acceptance of the
Internet as a commercial medium. The laws and regulations governing the Internet
remain largely unsettled, even in areas where there has been some legislative or
regulatory action. It may take years to determine whether and how existing laws
and regulations such as those governing intellectual property, privacy and
taxation apply to the Internet. In addition, the growth and development of the
market for e-commerce may prompt calls for more stringent consumer protection
laws and regulations, both in the United States and abroad, that may impose
additional burdens on companies conducting business over the Internet.

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<PAGE>
IF WE ARE UNABLE TO RESPOND TO RAPID TECHNOLOGICAL CHANGE IN E-COMMERCE AND
IMPROVE OUR PRODUCTS AND SERVICES, OUR BUSINESS COULD BE MATERIALLY ADVERSELY
AFFECTED.

The Internet and e-commerce are characterized by rapid technological change,
changes in user and customer requirements and preferences, frequent new product
and service introductions embodying new technologies and the emergence of new
industry standards and practices that could render existing technology and
systems obsolete. To remain competitive, we must continue to enhance and improve
the responsiveness, functionality and features of our on-line services. We have
little proprietary computer software, information databases or applications. We
cannot be sure that others will not develop and offer superior products and
services, or, if so offered, that they will not gain a greater acceptance among
potential customers. Our success will depend, in part, on our ability to both
license and internally develop leading technologies useful in our business,
enhance our existing services, develop new services and technology that address
the increasingly sophisticated and varied needs of our customers, and respond to
technological advances and emerging industry standards and practices on a
cost-effective and timely basis.

The development of websites and other proprietary technology entails
significant technical and business risks. There can be no assurance that we will
successfully use new technologies effectively or adapt our websites, technology
and transaction-processing systems to customer requirements or emerging industry
standards. If we are unable, for technical, legal, financial or other reasons,
to adapt in a timely manner to changing market conditions, customer requirements
or emerging industry standards, our business, results of operations and
financial condition could be materially adversely affected.

IF OUR COMPUTER SYSTEMS FAIL, OUR BUSINESS WOULD BE MATERIALLY ADVERSELY
AFFECTED.

A key element of our strategy is to generate a high volume of traffic on,
and use of, our websites. Accordingly, the satisfactory performance, reliability
and availability of our websites, transaction-processing systems and network
infrastructure are critical to our reputation and ability to attract and retain
customers and maintain adequate customer service levels. Our revenues depend in
part on the number of potential customers who visit our websites. Any system
interruption that results in the unavailability of our websites would reduce the
volume and attractiveness of our product and service offerings. Our
communications hardware and some of our other computer hardware operations are
located at our facilities in Walnut Creek, California. The hardware for our
internal loan and product database, as well as our loan processing operations,
is also maintained in our Walnut Creek facility. Fires, floods, earthquakes,
power losses, telecommunications failures, breaches and similar events could
damage these systems. Computer viruses, electronic breaches or other similar
disruptive problems could also adversely affect our websites. Our business,
results of operations and financial condition could be adversely affected if our
systems were affected by any of these occurrences. Our insurance policies may
not adequately compensate us for losses that may occur in the event of a failure
of our computer systems or other interruptions in our business.

Our websites must accommodate a high volume of traffic and deliver
frequently updated information, the accuracy and timeliness of which is critical
to our business. In the past, we have experienced periodic system interruptions,
which we believe will continue to occur from time to time. Any substantial
increase in the volume of traffic on our websites will require us to expand and
upgrade further our technology, transaction-processing systems and network
infrastructure. We cannot be sure that we will be able to accurately project the
rate or timing of increases, if any, in the use of our websites or expand and
upgrade our systems and infrastructure to accommodate such increases in a timely
manner. In addition, our users depend on Internet service providers, on-line
service providers and other website operators for access to our websites. Many
of them have experienced significant outages in the past, and could experience
outage delays and other difficulties due to system failures unrelated to our
systems. Moreover, the Internet infrastructure may not be able to support
continued

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<PAGE>
growth in its use. Any of these problems would materially adversely affect our
business, results of operations and financial condition.

IF OUR ELECTRONIC SECURITY DEVICES ARE BREACHED, OUR BUSINESS WOULD BE
MATERIALLY ADVERSELY AFFECTED.

The secure transmission of confidential information through e-commerce is
critical to our underwriting process. We rely on certain encryption and
authentication technology licensed from third parties to provide secure
transmission of confidential information, such as consumers' financial
statements. There can be no assurance that advances in computer capabilities,
new discoveries in the field of cryptography, or other events or developments
will not result in a compromise or breach of the algorithms we use to protect
customer transaction data. If any such compromise were to occur, it could have a
material adverse effect on our business, results of operations and financial
condition.

We may be required to spend significant capital and other resources to
protect against such security breaches or to alleviate problems caused by such
breaches. Concerns over the security of transactions conducted on the Internet
and the privacy of users may also inhibit the growth of the Internet generally,
and e-commerce in particular. To the extent that our activities involve the
storage and transmission of proprietary information, such as consumers'
financial statements and profile information, security breaches could damage our
reputation and expose us to a risk of loss or litigation and possible liability.
There can be no assurance that our security measures will prevent security
breaches or that a failure to prevent such security breaches will not have a
material adverse effect on our business, financial condition and results of
operations.

IF WE ARE UNABLE TO SUCCESSFULLY ADDRESS YEAR 2000 ISSUES, OUR BUSINESS COULD BE
MATERIALLY ADVERSELY AFFECTED.

Many currently installed computer systems and software programs only accept
two digits to identify the year in any date. Any system or program which cannot
accept four digits to identify the year in any date may not distinguish dates
falling on or after January 1, 2000 from dates falling before January 1, 2000.
As a result, many computer systems and software programs may need to upgraded or
replaced to ensure they comply with Year 2000 requirements.

The actual cost we incur to become Year 2000 compliant is subject to certain
risks and uncertainties including, among others, our ability to timely identify
all affected business-critical systems, and the readiness of service providers,
vendors and suppliers, and our financial institutions and significant customers.
If we are unsuccessful in correcting our business-critical systems and processes
affected by the Year 2000 issue, our, business, results of operations and
financial condition could be materially affected. In addition, if our service
providers, vendors and suppliers or our financial institutions and significant
customers are adversely affected by the Year 2000 issue, our operations could
face substantial interruptions and our business, results of operations and
financial condition could be materially and adversely affected. These third
party risks include possible interruptions in our ability to fund loans
utilizing our warehouse facilities, our ability to sell loans to Fannie Mae and
other investors, originate mortgages over the Internet and our hedging systems'
ability to link to financial data.

For additional information regarding Year 2000 issues, see "Management's
Discussion and Analysis of Financial Conditions and Results of Operations."

IF PREVIOUSLY UNREGISTERED SHARES OF OUR COMMON STOCK ARE SOLD INTO THE MARKET,
IT COULD CAUSE THE MARKET PRICE OF OUR COMMON STOCK TO DROP.

As of June 30, 1999, we had approximately 90.3 million shares of common
stock, and warrants to purchase approximately 16.6 million shares of common
stock, issued and outstanding. Prior to this offering, we had approximately 27.4
million shares of freely tradable stock outstanding. This prospectus

14
<PAGE>
covers substantially all of the shares of our common stock subject to
registration rights which could not otherwise currently be sold pursuant to Rule
144 of the Securities Act. Accordingly, the number of shares freely tradable in
the open market following the effective date of this prospectus will increase
significantly. If the holders of these shares sell large numbers of the shares
in the open market, the market price of our common stock could fall sharply. In
addition, the perception that such sales could occur may cause the market price
of our common stock to remain relatively low indefinitely. These factors could
also make it more difficult for us to raise funds through future offerings of
common stock.

FUTURE ISSUANCES OF ADDITIONAL SECURITIES WILL BE DILUTIVE TO EXISTING
STOCKHOLDERS.

Pursuant to contractual obligations to file a registration statement with
the SEC covering shares of common stock held by some of our existing
stockholders, we may be obligated to issue additional shares to such
stockholders for failing to file the registration statement within the time
specified in the agreements under which the shares were purchased. If we are
required to issue such additional shares, it will result in dilution to the
interests of our other stockholders.

In addition, Mr. Korell's employment agreement has an anti-dilution
provision pursuant to which he has the right to maintain a four percent equity
position in FiNet.com. The issuance of options to Mr. Korell pursuant to this
provision will result in dilution to the interests of our other stockholders.

WE DO NOT INTEND TO PAY DIVIDENDS.

We have not paid any dividends on our common stock since fiscal 1997 and we
do not anticipate paying dividends on our common stock in the foreseeable
future. You should take this into account when deciding whether to buy our
stock.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

We have made forward-looking statements in this prospectus that are subject
to risks and uncertainties. Forward-looking statements include information
concerning our possible or assumed future results of operations. Also, when we
use such words as "believe," "expect," "anticipate," "plan," "could," "intend"
or similar expressions, we are making forward-looking statements. You should
note that an investment in our securities involves certain risks and
uncertainties that could affect our future financial results. Our actual results
could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including those set forth in "Risk
Factors" and elsewhere in this prospectus.

We believe it is important to communicate our expectations to our investors.
However, there may be events in the future that we are not able to predict
accurately or over which we have no control. The risk factors listed above, as
well as any cautionary language in this prospectus, provide examples of risks,
uncertainties and events that may cause our actual results to differ materially
from the expectations we describe in our forward-looking statements. Before you
invest in our common stock, you should be aware that the occurrence of the
events described in these risk factors and elsewhere in this prospectus could
materially and adversely affect our business, results of operations and
financial condition.

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USE OF PROCEEDS

We will not receive any proceeds from the sale of common stock by the
selling stockholders except for the exercise price of the warrants underlying
certain of the shares offered under this prospectus. If the warrants are
exercised in full, we will receive approximately $21,375,000. We intend to use
any proceeds from the exercise of the warrants for general corporate purposes.

DIVIDEND POLICY

We have not declared or paid any cash dividend on our common stock since
fiscal 1997 and do not expect to do so in the foreseeable future. We anticipate
that all future earnings, if any, generated from operations will be retained to
develop and expand our business.

PRICE RANGE OF COMMON STOCK

Our common stock has traded on the Nasdaq SmallCap Market since June 1, 1999
under the symbol "FNCM." Prior to that, our common stock traded on the Nasdaq
SmallCap Market under the symbol "FNHC." The following table sets forth the high
and low sale prices of our common stock on Nasdaq for the periods indicated.

<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
FISCAL 1998
Fourth quarter.............................................................. $ 4.25 $ 2.88
Third quarter............................................................... 7.63 3.50
Second quarter.............................................................. 8.00 2.57
First quarter............................................................... 6.38 2.19

FISCAL 1999
Fourth quarter.............................................................. 18.25 0.81
Third quarter............................................................... 1.75 0.63
Second quarter.............................................................. 3.03 0.41
First quarter............................................................... 4.19 2.13

FISCAL 2000
First quarter (through June 30, 1999)....................................... 9.13 4.13
</TABLE>

As of June 30, 1999, there were approximately 477 holders of record of our
common stock. On June 30, 1999, the last reported sale price of our common stock
on the Nasdaq SmallCap Market was $5.63.

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<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data should be read in
conjunction with our consolidated financial statements and notes to our
consolidated financial statements and with "Management's Discussion and Analysis
of Financial Condition and Results of Operations," which appear elsewhere in
this prospectus. The following table provides selected historical consolidated
financial information of FiNet.com. We prepared this information using the
consolidated financial statements of FiNet.com as of the dates indicated and for
each of the fiscal years in the five year period ended April 30, 1999. We
derived the consolidated statement of operations and balance sheet data as of
and for each of the fiscal years in the five year period ended April 30, 1999
from FiNet.com's financial statements audited by Ernst & Young, LLP (1999),
Reuben E. Price (1998, 1997), Deloitte & Touche (1996, 1995), independent public
accountants for FiNet.com.

REVENUES........................................ $ 22,413 $ 15,160 $ 12,344 $ 6,375 $ 5,237
Cost of revenues................................ 35,064 14,718 9,316 4,591 3,068
--------- --------- --------- --------- ---------
Gross profit.................................... (12,651) 442 3,028 1,784 2,169
Operating expenses.............................. 20,906 9,175 5,775 1,444 1,923
--------- --------- --------- --------- ---------
Income (loss) from operations................... (33,557) (8,733) (2,747) 340 246
--------- --------- --------- --------- ---------
Net income (loss)............................... (36,538) (9,379) (2,778) 326 237
In-substance preferred stock dividend........... 705 -- -- -- --
Net income (loss) for common stockholders....... $ (37,243) $ (9,379) $ (2,778) $ 326 $ 237

PER SHARE DATA:
Basic and diluted net loss per common share..... $ (.79) $ (0.31) $ (0.19) $ .04 $ 2.37
Weighted average number of basic shares
outstanding(1)................................ 46,867 30,433 14,313 8,400 100
Cash dividends per common share................. $ -- $ -- $ -- $ 4.45 $ 2.10

BALANCE SHEET DATA:
Cash and cash equivalents....................... $ 4,202 $ 1,993 $ 1,147 $ 672 $ 392
Mortgage loans held for sale.................... 33,438 63,034 24,244 10,675 3,196
Total assets.................................... 45,255 101,468 33,070 25,215 15,091
Warehouse and other lines of credit............. 33,038 86,659 26,902 19,732 11,109
Total liabilities............................... 38,567 98,109 30,596 22,629 12,184
Stockholders' equity............................ $ 6,688 $ 3,359 $ 2,474 $ 2,587 $ 2,908
</TABLE>

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

(1) See Note 2 to the consolidated financial statements for an explanation of
the determination of the number of shares used in computing per share data.

17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION AND ANALYSIS OF OUR FINANCIAL CONDITION AND RESULTS
OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH OUR CONSOLIDATED FINANCIAL
STATEMENTS.

OVERVIEW

FiNet.com is a full service, on-line mortgage banker that offers an
easy-to-use, one stop mortgage source for consumers and mortgage brokers. We
operate one of the first sites on the Internet that enables the consumer to
apply for and receive credit approval on-line, and to electronically search,
analyze and select from a wide variety of mortgage loan products and rates
offered by us and other lenders. We make the mortgage process easier and more
understandable, while maintaining quality service by controlling the consumer's
entire mortgage lending experience. We also provide on-line and e-commerce
technologies and loan process management tools to mortgage broker businesses to
enable them to compete more effectively with on-line and other national lenders
and brokers, and help their customers make better informed borrowing decisions.

We earn revenues through both the origination and sale of mortgage loans. As
a retail originator of loans, we generate loan origination income and
loan-related fees through loans funded and brokered by us. Our loan origination
income consists of origination points paid to us by borrowers or discount points
paid to us by wholesale lenders. Our loan-related fees consist of application,
documentation and processing fees paid by borrowers.

On the loans that we sell, we generate revenues from net premium income and
interest income. Net premium income consists of the net gain on the sale of
mortgage loans and mortgage servicing rights. This net gain is recognized based
upon the difference between the combined selling price of the loans and their
related servicing rights, on the one hand, and the carrying value of the
mortgage loans and servicing rights sold, on the other. Interest income consists
of the interest we receive on our mortgage loans held for sale.

Our costs and expenses consist largely of:

- interest paid under our warehouse credit facilities;

- loan-related expenses, consisting of fees paid to third parties for
appraisal and credit report services and reserves for potential loan
repurchase and premium recapture obligations;

- salaries, commissions and benefits paid to employees;

- general and administrative expenses such as occupancy costs, office
expenses and professional services; and

- depreciation and amortization expense related principally to our
facilities, computers and goodwill associated with our acquisitions.

Seasonality affects the mortgage industry because loan originations are
typically at their lowest levels during the first and fourth calendar quarters
due to a reduced level of home buying activity during the winter months. Loan
originations generally increase during the warmer months beginning in March and
continuing through October. As a result, we may report earnings in our fiscal
third and fourth quarters that are generally lower than that of the first and
second quarters. However, due to significant refinance activity during 1997 and
1998, which was generally affected more by changes in interest rates than by
seasons, the expected seasonal patterns are not evident in our historical
financial statements. In the future, our expenses are also likely to vary
quarter-to-quarter based upon fluctuations in the volume of loans we originate
due to seasonality and other factors.

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<PAGE>
Economic and interest rate cycles also affect the mortgage industry, as loan
originations typically fall in rising interest rate environments. During such
periods, refinancing originations decrease as higher interest rates provide
reduced economic incentives for borrowers to refinance their existing mortgages.
Due to stable and decreasing interest rate environments over recent years, our
historical performance may not be indicative of results in rising interest rate
environments. In addition, our recent and rapid growth may distort some of our
ratios and financial statistics and may make period-to-period comparisons
difficult. In light of this growth, our historical earnings performance may be
of little relevance in predicting future performance. Furthermore, our financial
statistics may not be indicative of our results in future periods.

On April 30, 1998, we acquired Coastal Federal Mortgage in a transaction
accounted for as a pooling of interests. Our results of operations and financial
position for the fiscal years ended April 30, 1998 and 1997 have been restated
to include Coastal's results. Coastal's results for years prior to fiscal 1997
have not been included in our consolidated results, as they are not meaningful
in assessing our historical trends. On May 19, 1998, we acquired Mical in a
transaction accounted for as a purchase. Mical's results of operations are
included in our financial statements since the date of acquisition. Due to
significant operating problems and losses at Coastal and Mical, our new
management elected to close both units during fiscal 1999.

IMPACT OF OUR DISCONTINUED UNITS--MICAL, COASTAL AND OUR SERVICING BUSINESS

We incurred significant losses at both our Mical and Coastal subsidiaries
during fiscal 1999. New management elected to discontinue the businesses of both
of these subsidiaries in the last half of fiscal 1999. In addition, management
determined that servicing loans would not be a part of on-going operations and
began preparing our servicing portfolios for sale. The following table
summarizes the impact these discontinued business units had on our consolidated
operating results for the last three fiscal years:

<TABLE>
<CAPTION>
FISCAL YEAR
--------------------------------
1999 1998 1997
---------- --------- ---------
<S> <C> <C> <C>
Revenues................................................................. $ 12,559 $ 9,344 $ 7,623
Cost of revenues......................................................... 21,932 2,200 1,124
---------- --------- ---------
Gross profit............................................................. (9,373) 7,144 6,499
Other expenses
General and administrative............................................. 2,945 5,011 3,519
Marketing and advertising.............................................. 434 288 307
Special charges........................................................ 4,236 -- --
Depreciation and amortization.......................................... 180 139 106
Other.................................................................. 434 926 853
---------- --------- ---------
Total expenses........................................................... 8,229 6,364 4,785
---------- --------- ---------
Income (loss) from operations............................................ (17,602) 780 1,714
Other interest expense................................................... 208 6 9
---------- --------- ---------
Income (loss) before income taxes.................................... (17,810) 774 1,705
Income tax expense....................................................... 1 226 225
---------- --------- ---------
Net income (loss).................................................... $ (17,811) $ 548 $ 1,480
---------- --------- ---------
---------- --------- ---------
</TABLE>

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<PAGE>
RESULTS OF OPERATIONS

FISCAL 1999 COMPARED TO FISCAL 1998

REVENUES

Loan volume increased by $698 million, or 116%, to 1.3 billion in fiscal
1999 from $602 million in fiscal 1998 as a result of a significant increase in
the number of loans funded through our mortgage banking subsidiaries, volume
attributable to acquired operations, and significant refinancing activity
stimulated by relatively low interest rates. Refinancings accounted for 70% of
our loan volume in fiscal 1999, compared to 69% in fiscal 1998.

Revenues for fiscal 1999 increased by $7.2 million, or 47%, to $22.4 million
from $15.2 million in fiscal 1998. This increase resulted primarily from the
incremental volume of funded loans from Mical and increased volumes of
originated loans generated by our Interloan.com website, both of which were
purchased in the first quarter of fiscal 1999. Loans originated by mortgage
brokers and funded by us accounted for $4.4 million in additional revenues, or
61% of the increase for the year. Loans we originated, most of which were funded
by other lenders, accounted for $2.5 million in additional revenues, or 34% of
the increase for the year.

COST OF REVENUES

Cost of revenues for fiscal 1999 increased by $20.4 million, or 139%, to
$35.1 million from $14.7 million in fiscal 1998. This increase resulted
primarily from an increase in direct costs associated with increased volumes of
funded loans from the purchase of Mical, increased indirect production expenses
from the purchases of the Interloan.com website and Mical, and provisions for
losses on mortgages held for sale and receivables. Increased volumes of funded
loans accounted for $7.7 million in additional costs, or 38% of the increase for
the year. Indirect production expenses accounted for $5.9 million in additional
costs, or 29% of the increase for the year. Provision for losses increased by
$5.8 million to $6.5 million in fiscal 1999 from $718,000 in fiscal 1998 in
connection with loans held for sale and anticipated repurchases of loans
previously sold.

GROSS PROFIT/LOSS

Gross profit for fiscal 1999 decreased by $13.1 million to a loss of $12.7
million from a profit of $442,000 in fiscal 1998 as a result of the increase in
our cost of revenues.

OPERATING EXPENSES

GENERAL AND ADMINISTRATIVE. General and administrative expenses for fiscal
1999 increased by $5.8 million, or 98%, to $11.7 million from $5.9 million in
fiscal 1998. This increase resulted primarily from the acquisition of Mical and
increased expenses.

MARKETING AND ADVERTISING. Marketing and advertising expenses for fiscal
1999 increased by $1.3 million, or 141%, to $2.2 million from $921,000 in fiscal
1998. This increase resulted primarily from Internet advertising expenses.

SPECIAL CHARGES. Special charges of $4.9 million were established in fiscal
1999 and include $3.8 million of goodwill writeoff and restructuring charges
associated with the discontinuance of the business of Mical, a $690,000
writedown of purchased software and $405,000 to liquidate certain assets and
liabilities in connection with the discontinuance of the business of Coastal.

20
<PAGE>
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses for
fiscal 1999 increased by $164,000, or 34%, to $646,000 from $482,000 in fiscal
1998. The increase was due primarily to the increase in assets acquired with the
purchase of Mical.

OTHER. Other operating expense for fiscal 1999 increased by $625,000, or
71%, to $1.5 million from $875,000 in fiscal 1998. This increase resulted
primarily from charges recorded to value warrants issued when our 3% Convertible
Debentures were converted to common stock.

OTHER INTEREST EXPENSE

Other interest expense for fiscal 1999 increased by $2.6 million, or 619%,
to $3.0 million from $420,000 for fiscal 1998. The increase was primarily the
result of amortization of the imputed interest and debt issuance costs on our 3%
Convertible Subordinated Debentures, which were issued in March and May 1998.
The debt was redeemed in January 1999 and the discount has been fully amortized.

INCOME TAXES

As of April 30, 1999, we had approximately $49 million of federal and state
net operating loss carryforwards for tax reporting purposes available to offset
future taxable income. Our federal net operating loss carryforwards begin to
expire in 2004. A valuation allowance has been recorded for the entire deferred
tax asset at April 30, 1999 as a result of uncertainties regarding the
realization of the asset due to the lack of our earnings history.

NET LOSS

Net loss for fiscal 1999 increased by $27.1 million, or 288%, to $36.5
million from $9.4 million for fiscal 1998, primarily due to the purchases of
Mical and Coastal, increased marketing expenses associated with the purchase of
Interloan.com, and expenses associated with financing transactions.

FISCAL 1998 COMPARED TO FISCAL 1997

REVENUES

Loan volume increased by $209 million, or 53%, to $602 million in fiscal
1998 from $393 million in fiscal 1997 as a result of a significant increase in
the number of loans funded through our mortgage banking subsidiaries and
significant refinancing activity stimulated by relatively low interest rates.
Refinancings accounted for 69% of our origination volume in fiscal 1998 compared
to 52% in fiscal 1997.

Revenues for fiscal 1998 increased by $2.9 million, or 24%, to $15.2 million
from $12.3 million in fiscal 1997. This increase resulted primarily from
increased volumes of funded loans. Loans originated by mortgage brokers and
funded by us accounted for $2.0 million in additional revenues, or 69% of the
increase for the year. The volume of loans we originated and funded accounted
for $200,000 in additional revenues, or 7% of the increase for the year.

COST OF REVENUES

Cost of revenues for fiscal 1998 increased by $5.4 million, or 58%, to $14.7
million from $9.3 million in fiscal 1997. This increase resulted primarily from
an increase in direct and indirect costs due to increased volumes of funded
loans. Funded loans accounted for $1.3 million in additional costs, or 24% of
the increase for the year. Indirect production expenses accounted for $3.6
million in additional costs, or 67% of the increase for the year.

21
<PAGE>
GROSS PROFIT

Gross profit for fiscal 1998 decreased by $2.6 million to $442,000 from $3.0
million in fiscal 1997 as a result of an increase in our cost of revenues.

OPERATING EXPENSES

GENERAL AND ADMINISTRATIVE. General and administrative expenses for fiscal
1998 increased by $1.4 million, or 31%, to $5.9 million from $4.5 million in
fiscal 1997. This increase resulted primarily from the addition of new employees
in our technology and customer service departments.

MARKETING AND ADVERTISING. Marketing and advertising expenses for fiscal
1998 increased by $254,000, or 38%, to $921,000 from $667,000 in fiscal 1997.
This increase resulted primarily from increased advertising expenses associated
with the increased level of loan fundings and the introduction of new products.

SPECIAL CHARGES. In fiscal 1998, we recorded special charges of $1.0
million to writeoff intangible assets that we determined would no longer be
employed in future operations.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses for
fiscal 1998 increased by $377,000 to $482,000 from $105,000, in fiscal 1997. The
increase was primarily due to depreciation of fixed assets acquired to support
increased business activity and staff expansion.

OTHER. Other operating expense for fiscal 1998 increased by $323,000, or
59%, to $875,000 from $552,000 in fiscal 1997. This increase resulted primarily
from expenses related to the acquisition of Mical and Coastal.

OTHER INTEREST EXPENSE

Other interest expense for fiscal 1998 increased by $302,000, or 256%, to
$420,000 from $118,000 in fiscal 1997. This increase was the result of
amortization of the imputed interest and debt issuance costs on our 3%
Convertible Subordinated Debentures, which were issued in March 1998.

INCOME TAXES

As of April 30, 1998, we had approximately $31 million of federal and state
net operating loss carryforwards for tax reporting purposes available to offset
future taxable income. Our federal net operating loss carryforwards begin to
expire in 2004. A valuation allowance has been recorded for the entire deferred
tax asset at April 30, 1998 as a result of uncertainties regarding the
realization of the asset due to the lack of our earnings history.

NET LOSS

Net loss for fiscal 1998 increased by $6.6 million, or 236%, to $9.4 million
from $2.8 million for fiscal 1997, primarily due to an increase in the number of
employees and office space in anticipation of growing the business, consulting
expenses related to the acquisition of Monument in the prior fiscal year,
expenses in anticipation of the Mical and Coastal acquisitions, and intangible
asset write downs.

FINANCIAL CONDITION

During our recent operating history we have experienced operating losses and
have relied on external sources of debt and equity financing to fund operations,
to service debt and to complete acquisitions and capital investments. Capital
increases, primarily from private placements of common

22
<PAGE>
stock, conversion of debt to equity, and warrant exercises, partially offset by
operating losses have increased stockholders' equity to $6.7 million at April
30, 1999 from $3.4 million at April 30, 1998.

In response to our negative operating trends, we have hired new management,
including a new chairman and chief executive officer. The management team's
charter is to improve operations and to take full advantage of our technology
capabilities, ultimately improving our results from operations and our financial
position. Improvement in our financial condition is dependent on our ability to
grow our loan origination volumes, to achieve highly efficient operating
processes and procedures, and to manage interest expense. As of March 1, 1999,
we returned to more favorable borrowing terms as our primary warehouse lender
removed the incremental default interest rates. Our financial condition is
further dependent on economic conditions such as the general health of the
economy and demand for mortgage loans.

Total assets decreased by $56.2 million, or 55%, to $45.3 million at April
30, 1999 from $101.5 million at April 30, 1998. This decrease was due primarily
to discontinuing our Mical and Coastal units and liquidating the mortgages held
for sale at both units. Mical was acquired in a purchase transaction in fiscal
1999, and therefore Mical's balance sheet was not included in our consolidated
balance sheet in fiscal 1998. However certain transactions were entered into in
anticipation of the acquisition which increased our mortgages held for sale and
warehouse borrowing liabilities at April 30, 1998. Therefore, year over year
changes are affected by fluctuations in mortgages held for sale balances at
Mical. The decrease in assets is also due to improved turnover of mortgages held
for sale.

Warehouse borrowings decreased by $53.7 million to $33.0 million at April
30, 1999 from $86.7 million at April 30, 1998 as proceeds from loan sales were
used to reduce the warehouse lines of credit. $5.5 million of our 3% Convertible
Subordinated Debentures were converted to common stock in fiscal 1999. As a
result, liabilities decreased by $59.5 million to $38.6 million at April 30,
1999 from $98.1 million at April 30, 1998.

LIQUIDITY AND CAPITAL RESOURCES

The nature of the mortgage lending business requires us to advance cash on a
daily basis to fund newly originated loans to our customers. The majority of
these funds are provided through conventional mortgage warehouse lines of credit
and repurchase agreements. We use cash from our operating activities to invest
in mortgages held for sale, to fund ongoing expenses such as administration and
marketing, to invest in product development and geographic expansion, and to
satisfy debt and other obligations as they come due.

Although new operating revenue sources were developed during fiscal 1997,
1998 and 1999, cash generated by operations has been insufficient to meet our
on-going requirements. Therefore, we have employed servicing-secured credit
facilities and private placements of debentures, common stock and preferred
stock as additional resources to meet our operating and investing cash needs.

In fiscal 1999, operating activities used $25.2 million in cash compared to
cash used by operations of $4.3 million during fiscal 1998.

During the fourth quarter of fiscal 1999, Mical ceased originating loans.
Coastal ceased originating loans in the first quarter of fiscal 2000. We expect
that the remaining loans held for sale at Mical and Coastal will be sold in the
first quarter of fiscal 2000.

We expect that cash flow from the sale of mortgage loans to increase as we
intend to increase both fundings and sales through additional marketing and
sales efforts in both our business-to-consumer and business-to-business
segments.

Adequate credit facilities and other sources of funding, which permit us to
fund mortgage loans, are essential to our ability to close loans through our
mortgage banking subsidiaries. We borrow money

23
<PAGE>
to fund our loan closings and repay these borrowings as the loans and the
accompanying servicing rights are sold. Upon the sale of loans and servicing
rights and the subsequent repayment of the borrowings, our credit facilities
become available to fund additional loan closings. During the third and fourth
quarters of fiscal 1999, loan funding was curtailed to reduce the balance of
loans held for sale and reduce warehouse line borrowings in response to a
default on our warehouse facilities with GMAC/RFC. In the fourth quarter of
fiscal 1999, sales of loans were accelerated and the warehouse defaults were
cured. Warehouse borrowings were reduced to below the committed amounts in
accordance with the terms of the warehouse lending extension agreement.

On April 30, 1999, we had two revolving warehouse facilities which were used
to finance loans providing us with up to $45 million of demand loans secured by
loans held for sale. Loans under the warehouse facilities bear interest at rates
that vary from LIBOR plus 2.25% to LIBOR plus 2.75% depending on the type of
underlying loan, and the loans are subject to sublimits, advance rates and terms
that vary depending on the type of underlying loan. These warehouse facilities
require us to comply with various operating and financial covenants. As of April
30, 1999, our borrowings under our warehouse facilities decreased to $33.0
million from $86.7 million as of April 30, 1998. At April 30, 1999, our loans
held for sale were $33.4 million compared to $63.0 million at April 30, 1998.

We have also maintained uncommitted purchase and sale agreements, such as
repurchase agreements to fund our mortgages held for sale. These facilities
permit us to diversify our borrowing resources and permit greater origination
volumes. These agreements are not committed facilities and may be terminated at
the discretion of the repurchase investor. Under the terms of these agreements,
we pledged mortgage loans to obtain additional liquidity pending their sale.
Amounts outstanding under these agreements at April 30, 1999 and April 30, 1998
were $1.1 million and zero, respectively.

Our available credit lines also include Fannie Mae's "As Soon as
Pooled/Early Purchase Option" (the "ASAP Plus" program). Under the ASAP Plus
program, Fannie Mae funds us on the loans we deliver to them upon receipt of
appropriate mortgage collateral. Fannie Mae subsequently purchases the mortgage
loans for cash upon receipt of complete and accurate mortgage pool and other
documentation. While approximately 68% of loans funded by Monument Mortgage in
fiscal 1999 were sold to Fannie Mae, we have not used the ASAP Plus program
since Fannie Mae reinstituted our eligibility on February 1, 1999 after a period
of ineligibility due to our financial condition and management structure.

On June 3, 1999, we signed a letter of intent with GMAC/RFC for a $75
million committed revolving warehouse facility. Our new facility will replace
our existing $35 million extended facility with GMAC/RFC, which we will continue
to use until the new facility is available; we received an extension of our
current facility which expires on July 9, 1999. The new facility may be used for
the origination or acquisition of residential mortgage loans and expires 364
days from closing. The facility is secured by mortgage loans, which it funds.
Funds borrowed under the facility bear interest at LIBOR plus 1.75%. Our
facility agreement contains a number of covenants that, among other things,
require us to maintain a minimum current ratio, a minimum ratio of total
liabilities to tangible net worth and maintain a minimum level of tangible net
worth. The letter of intent agreement also contains covenants that limit our
ability to:

- change executive management;

- transfer or sell assets;

- rapidly grow liabilities;

- pay dividends;

- enter into transactions with our affiliates; or

- enter into a merger, consolidate or sell of substantially all of our
assets.

24
<PAGE>
Our revolving warehouse facility provides for events of default typical of
facilities of its type.

Cash used in financing activities was $26.6 million for fiscal 1999.
Increased net repayments of warehouse borrowings, repayments of other debt, the
partial redemption of our convertible subordinated debentures and the redemption
of our preferred stock were offset by the issuance of convertible debt and the
issuance of common stock through private placements and through warrant
exercises.

In May 1998, we received $1.4 million, net of expenses, from the issuance of
the final tranche of our 3% Convertible Subordinated Debenture private
placement. In September 1998, we issued 250 shares of our Series A Preferred
Stock in a private placement generating $2.3 million of proceeds, net of
expenses.

During fiscal 1999, we received $27.8 million from the issuance of common
stock in private placements. The proceeds were used to repay debt and other
obligations, to redeem $1.5 million of our 3% Subordinated Convertible
Debentures, to redeem $2.5 million of our Series A Preferred Stock and to fund
operations.

The net proceeds of private placements of common stock completed in the
first quarter of fiscal 2000, approximately $43.0 million, together with cash
flows from operations, our existing cash balances and funds available under our
revolving warehouse facilities and Fannie Mae ASAP Program, are expected to be
sufficient to meet our liquidity requirements for the next 12 months. We do,
however, expect to continue our expansion and expect that eventually we will
need to arrange for additional sources of capital through the issuance of debt
or equity or additional warehouse facilities. We have no commitments for any
additional financings, and we cannot be sure that we will be able to obtain any
such additional financing at the times required and on terms and conditions
acceptable to us. In such event, our growth could slow and operations could be
adversely affected.

See also Note 6 to the consolidated financial statements.

Investing activities provided cash of $875,000, consisting primarily of a
reduction in the balance of mortgage servicing rights through sales of $1.5
million in fiscal 1999. We do not intend to purchase additional mortgage
servicing rights and have entered into agreements to sell our remaining
servicing rights portfolios. These sales will generate cash for general
operating purposes.

Our capital expenditures totaled $819,000 for fiscal 1999. We expect our
level of capital spending for fiscal 2000 to increase significantly as we
improve our information systems investments to support our infrastructure and
ensure we are Year 2000 compliant.

POTENTIAL FOR NASDAQ DELISTING

There are several requirements for continued listing on the Nasdaq SmallCap
Market ("Nasdaq"), including a minimum stock price of $1.00 per share. If our
common share price closes below $1.00 per share for 30 consecutive days, we may
receive notification from Nasdaq that our common stock will be delisted from the
Nasdaq unless the stock closes at or above $1.00 per share for at least 10
consecutive days during the 90 day period following such notification.

Delisting from the Nasdaq and inclusion of our common stock on the OTC
Bulletin Board or similar quotation system could adversely affect the liquidity
and price of our common stock and make it more difficult for investors to obtain
quotations or trade this stock.

In December 1998, we received notice from Nasdaq that we had not met
required financial ratio criteria for continued listing on the Nasdaq. Nasdaq
requested that we maintain a minimum net worth of $2 million and complete and
submit for its review certain periodic financial reporting until July 1999.
Nasdaq could initiate delisting procedures if we fail to comply. We have
subsequently complied and intend to comply with all special financial reporting
requests and ratio criteria required by Nasdaq.

25
<PAGE>
YEAR 2000 COMPLIANCE

The Year 2000 issue concerns the ability of automated applications to
process date-dependent processes, calculations and information by properly
interpreting the year. The year 2000 issue could potentially impact our
business-critical computerized applications relating to, among others, loan
origination, servicing, pipeline management, hedging, payroll, financing and
financial accounting and reporting. In addition, other non business-critical
systems and services may also be affected. We have assembled a project team
composed of consultants, executive personnel and personnel from the information
systems, operations and finance departments to:

- assess the readiness of our systems, and the systems of our vendors and
suppliers, third-party service providers, customers and financial
institutions;

- replace or correct through program changes all our non-compliant
applications; and

- develop contingency plans in the event that systems and services are not
compliant.

The readiness assessment phase of the project is complete and consisted of a
detailed assessment and testing of substantially all internal computer systems.
In addition, we have received, or are seeking, documentation from many external
parties indicating their year 2000 readiness. Because our loan processing and
accounting software are more than two years old and have not been certified as
year 2000 compliant, we expect to spend up to $1.6 million on new software,
consultants and staff to replace these key systems. In addition, we expect to
spend up to $560,000 on testing and remedying our desktop computers and network.
We do not expect any additional costs of making our computer systems year 2000
compliant.

The actual cost to become year 2000 compliant is subject to certain risks
and uncertainties including, among others, our ability to timely identify all
affected business-critical systems, and the readiness of service providers,
vendors and suppliers, financial institutions and significant customers. We have
not been required to defer any information technology projects due to the year
2000 issue. If we are unsuccessful in correcting our business-critical systems
and processes affected by the year 2000 issue, our results of operations or
financial condition could be materially affected. If our service providers,
vendors and suppliers or our financial institutions and significant customers
are adversely affected by the year 2000 issue, our operations could face
substantial interruptions and our business and financial condition could be
materially and adversely affected. These third party risks include possible
interruptions in our ability to fund loans utilizing our warehouse facilities,
our ability to sell loans to Fannie Mae and other investors, our ability to
originate mortgages over the Internet and our hedging systems' ability to link
to financial data. We have contacted each of these parties and are seeking
assurance from them that their systems are year 2000 compliant.

Although we are in the process of developing contingency plans, in the event
our key service providers, vendors or suppliers experience year 2000 issues,
such contingency plans may not be effective. We do not expect the cost of
developing such plans to exceed $100,000, although no assurance to that effect
can be given.

MATERIAL SUBSEQUENT EVENTS

Subsequent to April 30, 1999, we received approximately $43.0 million from
the issuance of approximately 11.0 million shares of our common stock in private
placements.

We received an extension of our lending agreement from our primary warehouse
lender, GMAC/ RFC. The extension expires on July 9, 1999.

26
<PAGE>
BUSINESS

FINET.COM

- branded arrangements, where our services are offered through rapidly
growing websites such as XOOM.com and Ask.com, using our Interloan.com
brand;

- co-branded arrangements, where our services are offered through specialty
real estate websites such as Homeseekers.com and Homehunter.com, using
both our brand and our partner's brand; and

- private label arrangements, where we plan to design and operate electronic
mortgage centers for third party websites using our partner's brand.

We offer mortgage broker businesses the opportunity to use the on-line
technology and automated underwriting systems of our full service mortgage
banking operation to expand and improve service to their local customers and
compete with on-line mortgage originators, while maintaining the flexibility to
control their own businesses. As a full service mortgage banker, we fund loans
originated by mortgage brokers, which we then sell to institutional investors in
the secondary mortgage market. We also plan to design private label websites for
mortgage broker businesses that will emphasize user-friendly access to on-line,
automated underwriting systems and other e-commerce services. We refer to these
services to mortgage brokers as our business-to-business channel.

During fiscal 1999, we originated and/or funded over $1.3 billion in
mortgage loans directly or through our mortgage broker customers, including
approximately $500 million which we originated using on-line technology as part
of the loan process. During our most recent fiscal quarter ended April 30, 1999,
on-line loan technology was used in 52% of our business-to-consumer loan
originations and 57% of our business-to-business loan originations. In our
business-to-consumer channel, we earn our revenues from origination points and
fees charged to consumers. In our business-to-business channel, we primarily
earn revenues from the sale of loans and related servicing rights in the
secondary mortgage market.

27
<PAGE>
We offer a full range of loan products, including fixed and adjustable rate
first mortgage loans with a variety of maturities, conforming loans--which are
loans that meet the purchase standards Fannie Mae or Freddie Mac, jumbo
loans--which are loans that meet those standards except they exceed the maximum
loan amount, and loans to borrowers who do not meet one or more of the other
credit or documentation standards of the government-sponsored mortgage programs.

Since October 1998, we have reshaped our management by hiring a new
president and chief executive officer, Mark Korell, formerly the chief executive
officer for Norwest Mortgage, Inc., and a new executive team. Our new executive
team includes individuals with experience in mortgage banking, Internet
technology, financial management, sales and marketing and secondary mortgage
market transactions. Under our new management, we have discontinued the
operations of several unprofitable acquisitions made by prior management and
have focused on expanding our on-line mortgage origination business.

THE UNITED STATES MORTGAGE MARKET

The United States residential mortgage market is a substantial and growing
part of the U.S. economy. According to the Mortgage Bankers Association,
outstanding consumer mortgage debt exceeded $4.3 trillion at the end of 1998.
Loan origination volume in the U.S. reached a record high of $1.5 trillion in
1998, compared to $834 billion in 1997. The residential mortgage market is
fragmented, with the largest mortgage lender, Norwest Mortgage, accounting for
only 7.7% of funded loans in 1998.

Consumers generally seek mortgage loans to finance a home purchase or to
refinance existing mortgage debt. In some cases, a borrower may refinance for
more than the existing mortgage amount and use the cash generated for other
purposes. Mortgage loans are originated through two primary lending channels,
frequently referred to as retail and wholesale. These terms correspond to our
business-to-consumer and business-to-business channels. Traditional retail
originators generate loans through direct contact with the consumer. Retail
originators work through local branch offices or telemarketing centers.
Wholesale originators pay loan origination fees to mortgage brokers or purchase
closed loans from other lenders, who, in either case, work directly with
consumers from local offices.

Typically, the traditional mortgage loan process involves the following
steps:

- meeting with lender or broker to complete the lengthy paper application;

- gathering extensive supporting documentation for the application;

- entering the application information/data into the broker's or lender's
processing system;

- ordering appraisals, title and credit reports and verifying deposit and
other factual matters;

- submitting the paper loan file to an underwriter to determine loan
eligibility;

- receiving conditions to approval of loan by the underwriter;

- collecting additional information and complying with the conditions;

- resubmitting the revised paper file for approval;

- preparing loan documents and closing instructions;

- reviewing and approving the loan for funding; and

- closing of the transaction.

This paper intensive process generally takes at least three weeks to
complete.

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<PAGE>
CONSUMERS

The traditional mortgage loan application and closing process described
above is complex, time-consuming, paper-intensive and costly. We believe that
this process causes many consumers to feel:

- uncertain that lenders and brokers are providing unbiased advice and
recommending the most suitable mortgage products;

- skeptical that rates initially quoted will ultimately be available;

- intimidated by the number and variety of mortgage products available;

- pressured to commit to a particular mortgage product before they have
researched and compared alternative products to their satisfaction;

- aggravated by the amount and types of loan fees they are required to pay;
and

- frustrated by the substantial time and effort that it takes to complete a
mortgage loan.

MORTGAGE BROKER BUSINESSES

In 1998, approximately 70% of all mortgages in the United States were
originated through mortgage brokers. The mortgage broker industry is highly
fragmented with approximately 36,000 mortgage broker businesses operating in the
United States according to Wholesale Access. Mortgage broker businesses are
typically small, local enterprises that increasingly lack the financial
resources and technological capability to compete with financially stronger and
better-organized mortgage lenders, including on-line mortgage originators. In
particular, they generally lack access to the technology necessary to determine
borrower eligibility quickly and to search and analyze available mortgage
products to find the best match for their customers. Because local practices and
customs in the mortgage industry vary significantly from jurisdiction to
jurisdiction, and many consumers will continue to prefer face-to-face local
contact, we believe that nationwide lenders will not be able to meet the needs
of local mortgage consumers. Mortgage brokers will thus continue to be an
integral and important part of the mortgage lending process for the foreseeable
future. However, as technological advances make it easier for consumers to deal
directly with lenders, we believe that mortgage brokers will need to find new
ways to compete more effectively for the consumers' business.

ON-LINE MORTGAGE ORIGINATION

With the advent of on-line and e-commerce technologies, loan originations
can be made electronically, resulting in cost and time savings to consumers and
the mortgage brokers who assist those consumers. Although the on-line mortgage
industry is still relatively new, it is expected to grow rapidly. According to
Forrester Research, the market for on-line mortgage originations is expected to
grow from an estimated $18.7 billion in 1999 to over $91.2 billion in 2003,
representing an increase in on-line mortgage originations from 1.5% of the
existing market in 1999 to 9.6% of the projected market in 2003.

THE FINET.COM SOLUTION

We are a pioneer in offering on-line mortgage services to consumers and
mortgage broker businesses. The FiNet.com solution focuses on both consumers and
the mortgage brokers who assist many consumers in the mortgage loan process. We
believe that by using on-line and e-commerce technologies to streamline and
automate the process of making residential mortgage loans, we can help consumers
and mortgage broker businesses save time and money, and improve access to
mortgage credit. We also believe that we can help mortgage brokers expand their
business and withstand the competitive threat posed by on-line lenders.

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The FiNet.com solution provides the following key advantages in our
business-to-consumer channel:

- CONVENIENCE AND SERVICE. We provide our consumers with a fast and
easy-to-use on-line method to get a mortgage loan approved using our
award-winning iQualify.com technology. By clicking on our Interloan.com
website, consumers can easily and efficiently search, analyze and compare
mortgage products and rates, and make loan decisions based on their
personal financial situation and needs. In addition, our customers are
able to choose either an automated process to complete their mortgage
transaction or, at any point, choose to receive the personalized
assistance of a mortgage professional. We aim to make our fees and costs
competitive with other on-line mortgage originators, who typically charge
.625% for conforming loan products.

- UNBIASED ADVICE WITH NO SALES PRESSURE. Because our mortgage lending
process is automated, the consumer will not feel pressured to commit to
any particular mortgage product or lender. In addition, by having the
ability to search, compare and analyze different mortgage products and
rates without having to consult with a mortgage broker or lender, the
consumer will not be susceptible to receiving biased advice from the
mortgage broker or lender. We also give the consumer the ability to lock
in an interest rate when the application is approved, assuring the
consumer that the rate initially quoted will be available at closing.

- WIDE CHOICE OF MORTGAGE LENDERS AND MORTGAGE LOANS. Through Interloan.com
we provide consumers with a wide choice of mortgage products and rates
offered by Monument Mortgage and by more than 50 additional lenders
nationwide. In addition, we offer the consumer the ability to submit their
processed mortgage applications for bid by lenders in the auction process.
We continuously review the mortgage products and rates offered by other
lenders in order to select new mortgage products to provide our on-line
consumers.

The FiNet.com solution provides the following key advantages in our
business-to-business channel:

- EMPOWERING BROKERS WITH TECHNOLOGY. We help mortgage brokers reduce the
cost of their mortgage originations by supplying them with on-line and
e-commerce technologies and loan processing management tools. We believe
that on-line and e-commerce technologies can enable traditional mortgage
brokers to compete more effectively in their local markets with new
on-line mortgage originators and large retail loan originators. We enable
our business-to-business channel customers to provide the benefits of
automated, on-line mortgage services to their local customers while
maintaining personal contact with and controlling the customer
relationship. We are also developing private label websites for our
business-to-business customers. Our private label website services will
enable mortgage broker businesses to send their customers to a FiNet.com
website displaying that broker's name. The website will offer a full range
of mortgage products provided by our Monument Mortgage subsidiary and
other lenders. By using their own name and mortgage professionals through
this private label service, mortgage broker businesses will be able to
match the product offerings of on-line loan mortgage originators.

- OFFERING BROKERS CHOICE AND ASSISTANCE. As a full service mortgage banker,
we provide our business-to-business channel customers the ability to place
a loan with us either electronically or in the traditional paper format.
We believe that our on-line underwriting services provide exceptional
value to our business-to-business channel customers by greatly reducing
the time it takes to determine customer loan eligibility. Our
business-to-business channel customers have access to a range of on-line
underwriting software, including Fannie Mae's Desktop Underwriter and
Freddie Mac's Loan Prospector for loans that conform to the guidelines of
these agencies, as well as to GMAC/RFC's AssetWise and GE Capital
Mortgage's Good Decisions for loans that do not conform to agency
guidelines.

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BUSINESS STRATEGY

We intend to become a leading provider of on-line mortgage origination
services to consumers and mortgage broker businesses by:

CONTINUING OUR TECHNOLOGY LEADERSHIP

We have become a technology leader in the on-line mortgage origination
industry by bridging the gap between consumer and lender. The companies that
purchase mortgage loans from lenders in the secondary mortgage market have
created software which currently allows lenders to automate much of the loan
underwriting and sales process. We have used our in-house technical expertise
and our experience as a residential mortgage lender to bring the benefits of
this technology to consumers in an easy-to-use format. In 1998, in conjunction
with Fannie Mae, we were awarded a Smithsonian Award in the Personal Finance
Category for our iQualify.com technology, a user-friendly interface to the loan
purchasers' automated underwriting systems.

We plan to continue to invest in and enhance our technology to streamline
and automate the mortgage lending process. Our goal is to have our websites
serve as electronic transaction centers for consumers and mortgage broker
businesses, where they can receive information about mortgage products, compare
and analyze these products, apply for mortgage loans, complete the approval
process and select a lender. We also intend to automate the so-called "back-end"
of the mortgage lending process, including the operations relating to funding,
closing and sale of loans. We believe that this multifaceted approach to
automation of the mortgage lending process will provide significant cost savings
for us and improve our competitive position.

PURSUING BRANDED, CO-BRANDED AND PRIVATE LABEL STRATEGIES

We will selectively pursue strategic alliances and business partnerships in
order to improve our current market position, increase our on-line visibility
and accelerate distribution of our services. In our business-to-consumer
channel, we intend to market our services through:

- branded arrangements with high traffic general interest websites;

- co-branded arrangements with specialty real estate and financial websites;
and

- private label arrangements.

Because we believe that the mortgage lending business does not typically
generate repeat transactions and consumer loyalty, we do not anticipate making
large general advertising expenditures to promote our brand name. Instead we
intend to seek affiliations with general interest websites where we will be the
preferred mortgage provider for their repeat customer base. We will also enter
into co-branded and private label arrangements where we believe it will help us
increase our loan volume.

EXPANDING THE GEOGRAPHIC REACH OF OUR BUSINESSES

The on-line nature of our business enables us to offer our services
nationwide and does not require us to establish a physical presence in new
markets. However, we must be licensed in any state where we make loans. While we
currently make loans primarily in California, we are licensed to originate
mortgage loans in 29 other states and the District of Columbia. We have entered
into a partnering arrangement with a nationwide mortgage lender to provide for
mortgage lending services in the states where we are not currently licensed.
Through this arrangement we are currently able to provide mortgage services in
all 50 states. We intend to become licensed in all states where we are not
currently licensed and expect that the proportion of loans we make outside of
California will increase. In June 1999, we signed a letter of intent to acquire
an East-Coast based mortgage company. If this

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transaction is completed, we expect that it will significantly expand the
geographic scope of our e-commerce lending capabilities.

BECOMING A LOW-COST PROVIDER OF MORTGAGE LENDING SERVICES

Based upon our historical experience in the mortgage industry, we believe we
will need to be a low cost provider of mortgage lending services in order to be
profitable. We believe that the operational efficiencies that we expect to
realize from our continuing effort to streamline and automate the mortgage
process will help reduce our costs for handling, processing and closing mortgage
loans.

PRODUCTS AND SERVICES

We intend to implement our business strategy by offering fully-automated
on-line mortgage services to consumers through Interloan.com and to mortgage
broker businesses through Monument Mortgage. We believe that our on-line
mortgage services offer distinct advantages over the traditional loan process
which is paper intensive, slow and cumbersome.

INTERLOAN.COM

Through our Interloan.com website, consumers can fill out an on-line loan
application and request an automated underwriting analysis of their application.
The Interloan.com process requires the borrower to complete an application which
consists of only 32 fields, in contrast to the extensive, multi-page traditional
paper mortgage application. Our iQualify.com technology electronically obtains a
credit report on the borrower, combines and reformats the credit and application
information and submits the information through Monument Mortgage to an
automated underwriting system for a comprehensive credit analysis. If the system
returns an "approved" status, the consumer can be confident that a lender will
make the consumer a mortgage loan on the terms submitted, subject to
verification of the information provided by the customer. We have utilized
Fannie Mae's Desktop Underwriter system extensively in our mortgage lending
activities.

We are developing interfaces from Interloan.com to other automated
underwriting systems from Freddie Mac (Loan Prospector), GMAC/RFC (AssetWise)
and GE Capital Mortgage (Good Decisions) to increase the number and type of
loans processed by us that receive an automated approval, including jumbo loans
which have loan amounts greater than the $240,000 Fannie Mae/Freddie Mac limit,
and so-called Alternative A mortgage loans and sub-prime loans, which are loans
to borrowers with credit histories unacceptable for one or more reasons to
Fannie Mae and Freddie Mac. We believe that approximately 80% of consumers
seeking loans are eligible to get their applications approved in our fully
automated process. Approximately 57% of our closed loans during fiscal 1999 were
approved on-line.

After receiving automated underwriting approval, the consumer will be able
to select from and compare multiple loan options offered by Interloan.com.
Consumers will be able to choose from loan products offered by more than 50
lenders nationwide and many comparable products offered through Monument
Mortgage, or they will be able to submit their loans for auction to interested
lenders.

Interloan.com also offers consumers the option to exit the fully automated
process and continue to complete the loan process with the personal assistance
of mortgage professionals. In many cases, the mortgage professionals use our
on-line tools to assist those consumers whose applications fall outside the
parameters of the fully-automated process. These consumers include borrowers who
are self-employed or have credit problems, or who are purchasing investment
property. In addition, if the automated underwriting system is unable to approve
an application, the consumer is provided with a detailed and understandable list
of the reasons why the mortgage application was not approved, which is intended
to facilitate re-application.

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<PAGE>
MONUMENT MORTGAGE

Although a mortgage broker is generally more familiar with the mortgage
lending process, the broker must still contend with many time consuming and
paper-intensive tasks involved in the mortgage lending process. To assist the
mortgage broker, we provide the mortgage broker with access to our automated,
on-line mortgage approval process. A mortgage broker can access our services
either through the submission of traditional paper files to our loan processors
or electronically through automated underwriting software. In either case, we
use our automated technology to process the mortgage broker's loan application
quickly and efficiently. We are developing an on-line monitoring system that
will enable the mortgage broker to monitor in real time the status of loans
submitted to us.

We are also currently developing private label websites incorporating our
iQualify.com technology that will provide mortgage broker businesses with the
benefits of the latest e-commerce technologies based on the specific needs of
the mortgage broker. We believe that this will enable mortgage broker businesses
to offer competitive on-line mortgage origination services to their local
customers. By providing these on-line services to mortgage broker businesses, we
believe that we will be able to increase the number of loans that these mortgage
broker businesses place with us through Monument Mortgage.

NEW MANAGEMENT AND CORPORATE HISTORY

NEW MANAGEMENT

We believe that a strong, talented and experienced management team is
critical to our success. Accordingly, since October 1998, we have reshaped our
management by hiring a new president and chief executive officer, Mark Korell,
and a new executive team. Our new executive team includes individuals with
experience in mortgage banking, Internet technology, financial management, sales
and marketing and secondary mortgage market transactions. In addition to Mark
Korell, our executive management team now includes: Michael Conway as our
Executive Vice President--Capital Markets, Gary Palmer as our Executive Vice
President--Chief Financial Officer, Kevin Gillespie as our Executive Vice
President--Sales and Marketing, Thomas Porter as our Executive Vice President--
Administration, and Chris Skeadas as our Executive Vice President--Chief
Technology Officer. Our new management has discontinued the operations of
several unprofitable acquisitions made by prior management and has focused on
expanding the on-line mortgage origination business.

CORPORATE HISTORY

We were incorporated in 1989 to pursue a line of business unrelated to our
current business. We acquired Finex Corporation, a private technology-oriented
mortgage broker and discontinued our unrelated lines of business in 1990. In
December 1996, we acquired Monument Mortgage, a technology-oriented private
mortgage banking company, and since then, have made several additional
acquisitions to expand our technology and broaden our services. In April 1998,
we acquired Coastal Company, a sub-prime mortgage banker with lending offices in
New Jersey, Pennsylvania and Florida, and, in May 1998, we acquired Mical, a
mortgage banker with offices in San Diego and Las Vegas that specialized in the
origination of FHA and VA loans. As a result of operational and loan
underwriting problems discovered after these acquisitions, we discontinued our
Coastal and Mical business units in April 1999. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Risk Factors--We
may incur additional losses from the discontinued businesses of Coastal Federal
Mortgage and Mical Mortgage."

We currently operate our mortgage businesses through our wholly-owned
subsidiary, Monument Mortgage.

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<PAGE>
TECHNOLOGY

We are building our technology systems by combining our own proprietary
technologies with the commercially licensed Internet technologies such as:

- GHR Systems' PremierWare software components for pricing, product searches
and analysis;

- Tuttle & Co.'s LockPoint Xtra for interest rate risk management; and

- GMAC/RFC's RFConnects for warehouse line management.

SOFTWARE AND SYSTEMS

Through our proprietary iQualify.com we are directly linked to the
underwriting systems of the investors who will eventually purchase the closed
loans from us. Therefore, any loan which is approved through iQualify.com is
also approved by the investor who will ultimately purchase it from us.
iQualify.com also tracks mortgage rates and e-mails consumers when their target
rate has been reached.

We are configuring our commercially licensed software to:

- search qualifying product information from more than 50 lenders following
approval;

- provide the correct pricing for the combination of mortgage features
selected;

- perform a variety of mortgage-related computations, such as maximum
affordable sale price, minimum required cash, specified cash investment
and specified monthly payment computations;

- complete a "checklist document" based on the requirements of specific
transactions;

- access an independently maintained, comprehensive closing cost database of
fees for all 50 states on a county-by-county basis; and

- provide automated tracking status of a loan, or loans in the case of our
mortgage broker business customers, through the lending process.

PRIVATE LABEL TEMPLATES

We are currently developing a template system that will allow us to the
develop and deploy a customized private-label website quickly and easily. These
websites can have all the functionality of our Interloan.com website, with a
unique brand and appearance for each private-label partner.

NEW IMPLEMENTATION OF LOAN PROSPECTOR

We are one of the lenders selected by Freddie Mac to pilot a new version of
its Loan Prospector automated underwriting system with mortgage broker
businesses. We intend to be a significant "sponsoring lender" in the use of the
new Internet-based Loan Prospector technology by mortgage broker businesses.

SERVER HOSTING AND BACK-UP

Our websites hardware systems are housed at our facilities in Walnut Creek
California, where we have redundant power back-up and redundant communications
lines. Our routers are configured for load balancing and fault tolerance. We
have a strict maintenance schedule for our hardware and are not required to take
our website off-line to perform scheduled maintenance.

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<PAGE>
SECURITY

Through a Linux firewall we are able to maintain the integrity of our system
by blocking unauthorized traffic. The firewall is accessible only via the
console which is housed in a secure cage at our facility. In addition, all
sensitive transmissions between the client and server are encrypted.

MARKETING

We intend to selectively pursue strategic alliances and business
partnerships in order to leverage our current market position, increase our
on-line visibility and accelerate distribution of our services. In addition to
the marketing strategies described below, we anticipate making large general
advertising expenditures to promote our brand name.

BUSINESS-TO-CONSUMER CHANNEL

In our business-to-consumer channel, we intend to market our services
through branding arrangements with high-traffic general interest websites,
co-branding arrangements with specialty real estate and financial websites, and
private label arrangements.

Our primary marketing strategy is to become affiliated with general interest
websites where we will be the preferred mortgage provider for their repeat
customer base. We have entered into marketing arrangements with the following
websites:

- XOOM.COM. We entered into a strategic marketing alliance agreement with
XOOM.com in April 1999. Under the XOOM.com agreement, we have a fixed
button on XOOM.com's homepage and we have a premier position within the
real-estate/mortgages section of XOOM.com's Shopping Guide area.

- ASKJEEVES. AskJeeves is a leading provider of questions and answer based
searches for Internet products and services. We entered into a marketing
agreement with Ask.com in April 1999. Under the terms of the agreement, we
own certain words and when they are used in a question by a user, an
Interloan.com banner will appear along with a hyperlink to our website.
For these keyword searches, we have the exclusive rights to the "Shop"
button.

We also target websites catering to homebuyers and real estate agents. We
have entered into partnering agreements, which include operating a mortgage or
finance centers, with the following real estate related websites:

- HOMESEEKERS.COM. We entered into a marketing agreement with Homeseekers in
April 1999. Under our agreement with Homeseekers, we are the exclusive
operator of the Homeseekers Finance Center.

- HOMEHUNTER.COM. Homehunter.com is the official real estate website for
Classified Ventures, a consortium of newspaper publishers. We entered into
an exclusive marketing agreement with Homehunter.com in February 1999 to
create and operate an electronic finance center, which can be accessed
through Homeseekers.com public site, Homeseekers.com/citynet private
realtor site and Realty 2000 real estate agent productivity software.

- COXINTERACTIVE MEDIA. CoxInteractive Media is the Internet division of Cox
Communications and is comprised of local portals in 15 cities in the
United States. In May 1999, we entered into an agreement with
CoxInteractive Media that gives us the exclusive sponsorship of a mortgage
center, exclusive rights to certain mortgage related key word search
terms, and a fixed position on several real estate related web pages.

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In private label arrangements, we will create websites to prominently
display our partner's name and logo with a unique appearance and operate the
websites.

BUSINESS-TO-BUSINESS CHANNEL

We intend to increase our brand awareness with mortgage broker businesses
by:

- building a strong in-house sales force to market our services by personal
contact and to assist mortgage brokers in adopting on-line technologies;

- traditional marketing strategies, including participation in trade shows
and conferences, advertising in industry publications, flyers and broker
loyalty programs; and

- introducing new Internet-oriented services.

Key elements of our business-to-business channel marketing strategy will be
to offer co-branded or private-label sites operated by mortgage broker
businesses and to build a strong in-house sales force.

MORTGAGE OPERATIONS

While we currently make loans primarily in California, we are licensed to
originate mortgage loans in 29 other states and the District of Columbia. We
have entered into a partnering arrangement with a nationwide mortgage lender to
provide for mortgage lending services in the states which we are not currently
licensed. Through this arrangement we are currently able to provide mortgage
services in all 50 states. We intend to become licensed in all states where we
are not currently licensed and expect that the proportion of loans we make
outside of California will increase.

LOAN PRODUCT TYPES

Interloan.com offers consumers a variety of new and traditional mortgage
products through its nationwide network of lenders, which includes our Monument
Mortgage subsidiary. Monument Mortgage offers consumers and mortgage broker
businesses a wide array of first mortgage products, including 15 and 30-year
fixed rate loans, balloon loans and adjustable rate loans. Monument Mortgage
also offers second mortgages and home equity lines of credit. The following is a
description of the types of mortgage loans currently offered by Monument
Mortgage.

CONFORMING MORTGAGE LOANS

Conforming mortgage loans are mortgage loans that conform to the
underwriting standards established by one of the government-sponsored mortgage
entities, Fannie Mae or Freddie Mac, and are originated and generally sold by us
directly to Fannie Mae or Freddie Mac.

JUMBO MORTGAGE LOANS

Jumbo mortgage loans do not satisfy the criteria to be conforming loans
solely because they exceed the maximum loan size, currently $240,000 for
single-family homes. We sell all the jumbo mortgage loans we originate to
institutional investors or privately sponsored mortgage conduits such as GE
Capital Mortgage and GMAC/RFC, among others.

ALTERNATIVE A MORTGAGE LOANS

Alternative A mortgage loans fail to satisfy one or more elements of the
jumbo or Fannie Mae/ Freddie Mac loan underwriting criteria, such as those
relating to documentation, employment history, income verification,
loan-to-value ratios, credit history, qualifying ratios or borrower net worth.
We originate mortgage loans that do not satisfy one or more of the underwriting
criteria but which, in our estimation, based primarily on the borrower's credit
score and loan-to-value ratios for the property,

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<PAGE>
present a risk profile comparable to conforming loans. We generally sell these
loans to GMAC/RFC and IndyMac.

HOME EQUITY AND SECOND MORTGAGE LOANS

Home equity and second mortgage loans are secured by second liens on the
related property. Home equity mortgage loans take the form of a line of credit
while second mortgage loans are "closed-end" loans. Both types of loans are
designed primarily for high credit quality borrowers and are underwritten
according to the standards of the investor to which the loans will be sold. Home
equity lines generally provide for either a 5-year or 15-year draw period,
during which the borrower may make cash withdrawals, and a 10-year repayment
period during which the amount outstanding at the end of the draw period is
amortized. Only interest payments are made during the draw period. Second
mortgage loans are "closed-end," that is they are fixed in amount at the time of
origination and typically amortize over the term of the loan or have a balloon
payment feature. Home equity lines generally bear adjustable interest rates
while second mortgage loans typically bear fixed interest rates. Both types of
loans are frequently originated in conjunction with our origination of a
first-lien mortgage loan on the related property. We generally sell these loans
to Homecomings, a GMAC/RFC subsidiary.

NON-PRIME MORTGAGE LOANS

This category consists of mortgage loans for borrowers who have impaired or
limited credit profiles or higher debt-to-income ratios than would be acceptable
for sale of such loans to one of the agencies or private-sponsored mortgage
conduits. Such mortgage loans may also fail to satisfy the underwriting criteria
of the government-sponsored entities in other ways. We categorize these mortgage
loans based on the borrower's credit profile as "A-" or "B" or loans which are
generally considered "non-prime" mortgage loans in the secondary mortgage
market. We do not originate mortgage loans that our automated underwriting
system would categorize as "C" or "D" loans. We currently sell the "A-" or "B"
loans we originate to investors such as GMAC/RFC.

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<PAGE>
LOAN ORIGINATION

The following table summarizes our originations for the categories of
mortgage loans by type in the periods indicated for our ongoing businesses.

<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
CONFORMING MORTGAGE LOANS
Number of loans...................................................................... 1,924 2,534 4,644
Volume (in millions of dollars)...................................................... $ 254.7 $ 361.0 $ 703.5
% of category volume we funded....................................................... 100% 100% 84%
% of total loan volume............................................................... 72% 70% 75%

JUMBO MORTGAGE LOANS
Number of loans...................................................................... 161 160 468
Volume (in millions of dollars)...................................................... $ 49.0 $ 51.3 $ 152.3
% of category volume we funded....................................................... 100% 100% 49%
% of total loan volume............................................................... 14% 10% 16%

ALTERNATIVE A MORTGAGE LOANS
Number of loans...................................................................... 203 340 279
Volume (in millions of dollars)...................................................... $ 33.2 $ 69.2 $ 55.1
% of category volume we funded....................................................... 100% 100% 100%
% of total loan volume............................................................... 10% 13% 6%

HOME EQUITY MORTGAGE LOANS
Number of loans...................................................................... 297 412 310
Volume (in millions of dollars)...................................................... $ 10.5 $ 15.3 $ 11.8
% of category volume we funded....................................................... 100% 100% 100%
% of total loan volume............................................................... 3% 3% 1%

SUB-PRIME MORTGAGE LOANS
Number of loans...................................................................... 33 128 104
Volume (in millions of dollars)...................................................... $ 4.2 $ 19.3 $ 17.2
% of category volume we funded....................................................... 100 100 100
% of total loan volume............................................................... 1% 4% 2%

FHA/VA
Number of loans...................................................................... 6 2 4
Volume (in millions of dollars)...................................................... $ 0.6 $ 0.3 $ 0.5
% of category volume we funded....................................................... 100 100 100
% of total loan volume............................................................... * * *
</TABLE>

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

* Less than one percent

38
<PAGE>
The following table summarizes originations for the categories of mortgage
loans by type in the periods indicated for our discontinued businesses.

<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
CONFORMING MORTGAGE LOANS
Number of loans....................................................................... -- -- 551
Volume (in millions of dollars)....................................................... -- -- $ 63.5
% of category volume we funded........................................................ -- -- 100%
% of total loan volume................................................................ -- -- 17%

SUB-PRIME MORTGAGE LOANS
Number of loans....................................................................... 583 1,209 585
% of category volume we funded........................................................ $ 40.8 $ 85.9 $ 45.6
Volume (in millions of dollars)....................................................... 100% 100% 100%
% of total loan volume................................................................ 100% 100% 12%

FHA/VA
Number of loans....................................................................... -- -- 2,702
% of category volume we funded........................................................ -- -- $ 260.1
Volume (in millions of dollars)....................................................... -- -- 100%
% of total loan volume................................................................ -- -- 71%
</TABLE>

The following table summarizes our originations of mortgage loans by purpose
in the periods indicated for our ongoing businesses.

<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
PURCHASE
Number of Loans...................................................................... 1,171 1,080 1,416
Volume (in millions of dollars)...................................................... $ 180.4 $ 167.7 $ 235.1
% of category volume we funded....................................................... 100% 100% 89%
% of total loan volume............................................................... 51% 32% 25%

REFINANCING
Number of Loans...................................................................... 1,126 2,010 4,014
Volume (in millions of dollars)...................................................... $ 160.6 $ 330.4 $ 691.3
% of category volume we funded....................................................... 100% 100% 76%
% of total loan volume............................................................... 46% 64% 74%

HOME EQUITY MORTGAGE LOANS
Number of Loans...................................................................... 327 486 379
Volume (in millions of dollars)...................................................... $ 11.2 $ 18.3 $ 14.0
% of category volume we funded....................................................... 100% 100% 98%
% of total loan volume............................................................... 3% 4% 1%
</TABLE>

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<PAGE>
The following table summarizes our originations of mortgage loans by purpose
in the periods indicated for our discontinued businesses.

<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
PURCHASE
Number of Loans........................................................................ 119 243 1,573
Volume (in millions of dollars)........................................................ $ 9.9 $ 20.3 $ 157.7
% of category volume we funded......................................................... 100% 100% 100%
% of total loan volume................................................................. 24% 24% 43%

REFINANCING
Number of Loans........................................................................ 377 775 2,188
Volume (in millions of dollars)........................................................ $ 29.1 $ 60.9 $ 209.7
% of category volume we funded......................................................... 100% 100% 100%
% of total loan volume................................................................. 71% 71% 57%

OTHER
Number of Loans........................................................................ 87 191 77
Volume (in millions of dollars)........................................................ $ 1.8 $ 4.7 $ 1.8
% of category volume we funded......................................................... 100% 100% 100%
% of total loan volume................................................................. 5% 5% *
</TABLE>

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

* Less than one percent

The following table summarizes our originations of mortgage loans by channel
in the periods indicated for our ongoing businesses.

<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
CONSUMER CHANNEL
ON-LINE
Volume (in millions of dollars)...................................................... -- -- $ 106.8
% of total loan volume............................................................... -- -- 11%

TRADITIONAL
Volume (in millions of dollars)...................................................... $ 13.5 $ 38.1 $ 108.9
% of total loan volume............................................................... 4% 7% 12%

BUSINESS CHANNEL
ON-LINE
Volume (in millions of dollars)...................................................... $ 1.3 $ 139.4 $ 368.8
% of total loan volume............................................................... * 27% 39%

TRADITIONAL
Volume (in millions of dollars)...................................................... $ 337.4 $ 321.1 $ 355.9
% of total loan volume............................................................... 96% 66% 38%
</TABLE>

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

* Less than one percent

40
<PAGE>
The following table summarizes our originations of mortgage loans by channel
in the periods indicated for our discontinued businesses. Our discontinued
businesses made no on-line originations in the periods indicated.

<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
CONSUMER CHANNEL
TRADITIONAL
Volume (in millions of dollars)........................................................ -- $ 10.5 $ 47.9
% of total loan volume................................................................. -- 12% 13%

BUSINESS CHANNEL
TRADITIONAL
Volume (in millions of dollars)........................................................ $ 40.8 $ 75.4 $ 321.3
% of total loan volume................................................................. 100% 88% 87%
</TABLE>

GEOGRAPHIC CONCENTRATION

The following table summarizes our loan originations by state in the periods
indicated for our
ongoing businesses.

<TABLE>
<CAPTION>
FISCAL YEAR
---------------------------------
1997 1998 1999
--------- ----------- ---------
<S> <C> <C> <C>
CALIFORNIA
Number of loans................................................................... 1,846 2,826 4,862
Volume (in millions of dollars)................................................... $ 264.2 $ 428.1 $ 822.2
% of total loan volume............................................................ 75% 83% 87%

WASHINGTON
Number of loans................................................................... 147 45 211
Volume (in millions of dollars)................................................... $ 18.3 $ 5.9 $ 26.1
% of total loan volume............................................................ 5% 1% 3%

COLORADO
Number of loans................................................................... 136 231 319
Volume (in millions of dollars)................................................... $ 17.5 $ 28.0 $ 42.5
% of total loan volume............................................................ 5% 5% 5%

OREGON
Number of loans................................................................... 146 213 139
Volume (in millions of dollars)................................................... $ 14.2 $ 23.3 $ 18.1
% of total loan volume............................................................ 4% 5% 2%

NEVADA
Number of loans................................................................... 119 83 22
Volume (in millions of dollars)................................................... $ 14.0 $ 10.1 $ 4.1
% of total loan volume............................................................ 4% 2% *

ALL OTHER STATES
Number of loans................................................................... 230 178 256
Volume (in millions of dollars)................................................... $ 24.0 $ 21.0 $ 27.4
% of total loan volume............................................................ 7% 4% 3%
</TABLE>

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

* Less than one percent

41
<PAGE>
The following table summarizes our originations of mortgage loans by state
in the periods indicated for our discontinued businesses.

<TABLE>
<CAPTION>
FISCAL YEAR
-----------------------------------
1997 1998 1999
--------- ------------- ---------
<S> <C> <C> <C>
CALIFORNIA
Number of loans.................................................................... -- -- 1,253
Volume (in millions of dollars).................................................... -- -- $ 140.7
% of total loan volume............................................................. -- -- 38%

GEORGIA
Number of loans.................................................................... -- -- 471
Volume (in millions of dollars).................................................... -- -- $ 45.1
% of total loan volume............................................................. -- -- 12%

FLORIDA
Number of loans.................................................................... 91 186 357
Volume (in millions of dollars).................................................... $ 5.5 $ 13.2 $ 30.8
% of total loan volume............................................................. 14% 15% 8%

NEVADA
Number of loans.................................................................... -- -- 298
Volume (in millions of dollars).................................................... -- -- $ 38.7
% of total loan volume............................................................. -- -- 11%

PENNSYLVANIA
Number of loans.................................................................... 134 326 176
Volume (in millions of dollars).................................................... $ 7.8 $ 18.8 $ 10.9
% of total loan volume............................................................. 19% 22% 3%

NEW JERSEY
Number of loans.................................................................... 142 274 115
Volume (in millions of dollars).................................................... $ 12.3 $ 22.9 $ 10.4
% of total loan volume............................................................. 30% 27% 3%

ALL OTHER STATES
Number of loans.................................................................... 216 423 1,168
Volume (in millions of dollars).................................................... $ 15.2 $ 31.0 $ 92.6
% of total loan volume............................................................. 37% 36% 25%
</TABLE>

UNDERWRITING

If a consumer using Interloan.com chooses to have a loan funded and closed
by a lender other than Monument Mortgage, that lender is responsible for
underwriting the loan and may choose to re-underwrite the loan. If a consumer
chooses to have a loan funded and closed by Monument Mortgage, we continue using
the streamlined underwriting process by accepting the consumer's automated
underwriting results. Because we do not hold mortgage loans for investment, we
underwrite each mortgage loan to criteria provided by the investor we expect to
purchase the loan. By using automated underwriting systems accepted by our
investors, we reduce the risk of an investor rejecting the loan for underwriting
reasons.

Mortgage investors' underwriting criteria generally include such items as
the borrower's mortgage, installment loan payments and credit history,
employment history, capacity to pay, outstanding judgments, charge-offs and
repossessions involving the borrower, and involvement in bankruptcies by the
borrower and foreclosures. Since loans are secured by a mortgage lien, an
appraisal of the property securing the loan is also required.

42
<PAGE>
To maintain the integrity of the underwriting process, we do not permit our
loan production personnel, including loan originators and Internet service
representatives, to underwrite the mortgage loans which they originate. All
underwriting reviews and decisions for loans underwritten by us are conducted by
separate underwriters who have no other involvement with the loans.

COMPLIANCE/QUALITY CONTROL

COMPLIANCE

Our legal/compliance team is responsible for compliance and licensing. This
centralized compliance function allows us to control and supervise regulatory
compliance and offer consistency to our customers. Additionally, the compliance
group develops loan documents for new products and maintains lending and broker
licenses.

QUALITY ASSURANCE

Prior to funding a loan, we perform a pre-closing audit to ensure the loan
meets investor requirements. The pre-closing audit includes the following items:

- a new credit report is obtained;

- a cross reference check is performed to determine if the borrower or
property has been previously submitted for a loan;

- a verbal verification of current employment is completed; and

- for most self-employed borrowers, the IRS is contacted to confirm annual
income.

QUALITY CONTROL

Our quality control personnel continuously sample closed loans to verify
their compliance with legal documentation requirements and for accuracy and
potential fraud. These quality control reviews enable us to monitor, evaluate
and improve the overall quality of loan production and to identify and
communicate to the legal/compliance team and management existing and potential
underwriting problems.

We currently utilize the services of an independent quality control
provider. Each month our quality control provider reviews a random 10% sample of
loans funded by us. The review includes:

- a credit underwriting review;

- a complete loan package re-verification;

- a loan program compliance review; and

- a federal regulatory compliance review.

Every loan selected for review undergoes a complete re-verification of
employment, deposit, mortgage and rental history. A new residential mortgage
credit report is ordered on 10% of the selected loans, while a new review
appraisal is ordered on another 10% of the selected loans. This review also
includes procedures intended to detect evidence of fraudulent documentation
and/or imprudent activity during the processing, funding, servicing or selling
of the mortgage loan. Verification of occupancy and applicable information is
made by regular mail. Over each 12-month period, our quality control provider is
required to include loans of all product types, all states of operation and all
loans with high-risk characteristics. Its quality control reports include
individual loan overviews, loan group overviews and key trends or patterns
summarized on a monthly and year-to-date basis. We evaluate our provider's
quality control reports on a regular basis and address any deficiencies
specified in the reports. To date, these quality control reviews have not
uncovered any material deficiencies.

43
<PAGE>
REPURCHASES

Our agreements to sell loans to institutional lenders generally require us
to repurchase any loan if the representations made in the agreement are
materially inaccurate. Such representations are customary in sales agreements
and generally relate to the qualification of the borrower. See "Risk Factors--If
we have to repurchase loans originated for or sold to lenders, our operating
results could be materially adversely affected."

FINANCING AND SALE OF LOANS AND SERVICING RIGHTS

WAREHOUSE FINANCING

We use our secured revolving credit facility to fund loan originations and
finance originated loans until they are sold. In February 1999, Fannie Mae
reinstated our ability to use their ASAP Plus repurchase program for funding
loans held for sale. In fiscal 1999, 68% of our funded loans were sold to Fannie
Mae. In June 1999, we received a commitment for a new facility from Residential
Funding Corporation, which we expect to close in July 1999. Under the proposed
terms of this facility, we will have available a $75 million revolving line of
credit secured by the mortgage loans we close. We will be required to comply
with various operating and financial covenants including covenants relating to:

- net worth;

- maximum debt limits;

- debt to equity ratio;

- restrictions on changes in our executive management; and

- continued quotation on Nasdaq.

In accordance with industry practice, this facility will be renewable by the
lender annually. At April 30, 1999, the outstanding balance under our facilities
was $33 million.

INTEREST RATE RISK MANAGEMENT

Prior to the sale of originated mortgage loans, we bear the market risk on
the value of the loans. If market interest rates rise between the time we commit
to originate a loan at a specific rate and the time such loans are priced for
sale, the market price of the loan declines, resulting in a loss on the sale of
the loan. To protect against such losses, we attempt to manage our interest rate
risk exposure through hedging transactions using a combination of forward sales
of mortgage-backed securities and forward whole-loan sales to fix the sales
price of loans we expect to close. Forward sales means sales of loans with
settlement dates more than five days in the future. Before entering into forward
sales, forward commitments or hedging, we perform an analysis of our loans with
committed interest rates, taking into account such factors as the estimated
portion of such loans that will ultimately be funded, note rate, interest rates,
inventories of loans and applications and other factors to determine the type
and amount of forward commitment and hedging transactions. We attempt to make
forward commitments for or hedge substantially all of our estimated interest
rate risk on our loans. We do not believe that hedging our interest rate risk
with respect to our non-prime loans is cost effective because these loans
generally have higher interest spreads and generally lack sensitivity to
interest rate changes due to their credit characteristics and the short period
of time we hold them. We believe that we have implemented a cost-effective
hedging program to provide a level of protection against changes in the market
value of our fixed-rate mortgage loans held for sale. We utilize the services of
a nationally known risk management consultant, Tuttle & Co., to assist us. An
effective hedging strategy is complex, and no hedging strategy can completely
insulate us against interest rate changes.

44
<PAGE>
LOAN SALES

We customarily sell all loans we fund to one of the government-sponsored
mortgage entities, to an institutional investor, or to one of the national
privately sponsored mortgage conduits. A primary component of our business
strategy is to seek the most efficient method of selling our mortgage loans. We
evaluate the sale of each mortgage loan type and compare prices available for
each alternative method of sale, given current market conditions at the time and
the risk characteristics of the mortgage loan type to determine which method of
sale to utilize.

We currently sell our conforming loans through concurrent transactions or
assignments of trade or whole-loan sales. Concurrent transactions involve a sale
of the underlying mortgage loan directly to Fannie Mae or Freddie Mac with a
concurrent sale of the servicing rights to an independent servicer. Assignment
of trade sales are sales of conforming loans to a third party along with an
assignment of the associated mortgage backed security commitment/trade. The
third party then exchanges the loans with Fannie Mae or Freddie Mac for mortgage
backed securities issued by them which are then delivered against the assigned
trade. In a whole-loan sale, individual loans are underwritten to the standards
of and sold to a specific buyer on a forward commitment or over-the-counter
basis. Jumbo and Alternative A mortgage loans are currently sold in whole-loan
sales on a forward commitment basis. We sell our non-prime loans and home equity
lines and closed-end second mortgage loans through whole-loan sales.

The sale of mortgage loans may generate a cash and accounting gain or loss.
Gains or losses result primarily from two factors. First, we may originate a
loan at a price that may be higher or lower than we would receive if we
immediately sold the loan in the secondary market. These pricing differences
occur principally as a result of competitive pricing conditions in the primary
loan origination market. Second, gains or losses may result from changes in
interest rates that cause changes in the market value of the loans from the time
the price commitment is given to the customer until the time that the loan is
sold to the investor. We apply interest rate risk management techniques to
reduce the net effect of interest rate changes on the gain or loss on loan
sales.

We sell some of our loans on a forward commitment or other deferred delivery
and payment basis and have credit risk exposure to the extent purchasers are
unable to meet the terms of their forward purchase contracts. As is customary in
the marketplace, none of the forward payment obligations of any of our
counterparties is currently secured or subject to margin requirements, although
we attempt to limit our credit exposure on forward sales arrangements by
entering into forward sales contracts exclusively with institutions that we
believe are sound credit risks, and by limiting our exposure to any single
counterparty.

SALES OF SERVICING RIGHTS

When a loan is originated, a corresponding right to service the loan is
created. Although we currently have a small loan servicing portfolio, our
current strategy is to realize the value of this right by selling our loans
without retaining the right to service the loan or by selling the servicing
rights separately from the loan. As a result, we minimize risk associated with
defaults and early prepayments of those loans. However, we service the loans we
close between the date of funding the loan and the date we sell the loan and the
related servicing in the secondary market. We have no plans for retaining
servicing rights on loans we underwrite, fund and close.

RECOURSE

By selling all the loans we close, we reduce our exposure to default risk
(other than first-payment defaults by customers) and most of the prepayment risk
normally inherent in the mortgage lending business. However, in connection with
whole-loan sales and exchanges, we make representations and warranties to the
buyers of the loans relating to, among other things, compliance with laws,
regulations

45
<PAGE>
and program standards and accuracy of information. In the event of a breach of
these representations and warranties, we may be required to repurchase these
mortgage loans and indemnify the investors for damages caused by the breach. If
a repurchase request is made, we would either attempt to remedy the deficiency
and have the investors rescind the rejection of the mortgage loan or refinance
or sell the mortgage loan, sometimes at a loss. In addition, in connection with
some non-prime loan sales, we may be required to return a portion of the premium
received upon the sale of the loan if the loan is prepaid by the borrower within
the first year after sale. We have been able to minimize the risks of loan
rejection and repurchase of loans made by Monument Mortgage by using automated
underwriting systems and by implementing a stringent quality assurance program
that monitors the most important stages of the mortgage loan closing process. We
may be obligated, however, to repurchase loans made by some of the companies we
acquired. See "Risk Factors--If we have to repurchase loans originated for or
sold to lenders, our operating results could be materially adversely affected."

SERVICING

We currently hold the rights to process the monthly payments on certain
mortgage loans and we collect a servicing fee from the monthly mortgage payments
for doing this work. We plan to discontinue this line of business by the third
quarter of fiscal 2000. As of April 30, 1999, the total principal amount of
loans serviced by us was approximately $390 million.

MORTGAGE BANKING REGULATION

Our operations are subject to extensive regulation by federal and state
authorities. For example, the United States Department of Housing and Urban
Development, or HUD, regulates certain aspects of the mortgage lending business,
as do the Federal Reserve Board and the Federal Trade Commission. The Real
Estate Settlement Procedures Act of 1974, or RESPA, and the Truth in Lending
Act, Federal statutes, require that certain disclosures, such as good faith
estimates of settlement charges, a Truth-in-Lending Statement and a HUD-1
settlement statement be provided to borrowers and that certain information, such
as the HUD Settlement Costs booklet, also be provided to borrowers. The Federal
Fair Housing Act and the Equal Credit Opportunity Act prohibit discrimination
and various state statutes prohibit unfair and deceptive trade practices, and
impose disclosure and other requirements in connection with the mortgage loan
origination process. If we fail to comply with such regulations, possible
consequences could include loss of approved status, demands for indemnification,
class action lawsuits and administrative enforcement actions.

Additionally, RESPA contains certain prohibitions regarding the giving or
taking of a fee, kickback, or anything of value for the referral of business to
any specific person or organization. However, the payment of reasonable
compensation for the provision of goods, services and facilities is generally
not prohibited.

In California, regulation and licensing of mortgage brokers and lenders
falls under the California Department of Real Estate or the California
Department of Corporations. Other than banking industry employees and other
persons who are exempt from the licensing requirements of the California
Department of Real Estate and California Department of Corporations, individuals
engaged directly in the origination of loans or the dissemination of certain
information are required to be licensed by the California Department of Real
Estate or the California Department of Corporations. We and some of our
subsidiaries are also required to be licensed in other states in which we have
offices or operate. Although we have the licenses required in California and
several other states and believe that we will be able to obtain licenses
required in other states from time to time, we cannot be sure that we will
successfully comply with the many government regulations and licensing
requirements to which we are subject. If we fail to comply with these legal
requirements, it could have a material adverse effect on our business, financial
condition and results of operations.

46
<PAGE>
COMPETITION

The e-commerce market is new, rapidly evolving and intensely competitive,
and we expect competition to intensify in the future. Barriers to entry are
minimal, and current and new competitors can launch new sites on the Internet at
relatively low cost. In addition, the residential mortgage loan business is
intensely competitive. We currently compete with a variety of other companies
offering mortgage services including:

- various on-line mortgage brokers, including E-LOAN, Inc., iOwn.com,
Mortgage.com, QuickenMortgage.com, Lendingtree and Keystroke Financial;

- a number of indirect competitors that derive a substantial portion of
their revenues from on-line commerce, including Yahoo! and Microsoft
Corporation, through which other on-line mortgage companies may offer
products;

- mortgage banking companies, commercial banks, savings associations, credit
unions and other financial institutions which originate mortgage loans;
and

- mortgage brokers.

Many of our mortgage banking and mortgage brokerage competitors have
significant competitive advantages including the following:

- longer operating histories;

- greater name recognition and more extensive customer bases; and

- substantially greater financial, marketing, technical and other resources.

LEGAL PROCEEDINGS

On January 14, 1998, prior to our acquisition of Mical, a lawsuit was filed
against Mical in the United States District Court for the Middle District of
Georgia. The complaint alleges, among other things, that in connection with
residential mortgage loan closings, Mical made certain payments to mortgage
brokers in violation of the RESPA and induced mortgage brokers to breach their
alleged fiduciary duties to their customers. The plaintiffs seek unspecified
compensatory and punitive damages as to certain claims.

We believe that our compensation programs for mortgage brokers comply with
applicable laws and with long standing industry practices. We intend to defend
vigorously against this action and believe that the ultimate resolution will not
have a material adverse effect on our business, results of operations and
financial condition.

On April 16, 1999, a lawsuit was filed in the Superior Court of the State of
California, County of San Francisco by a former director and officer of
FiNet.com against FiNet.com and one of its current directors. The complaint
alleges, among other things, that the plaintiff and our current director entered
into an oral contract, wherein they agreed to share all profits from bonus
shares that were issued to either party under certain specific circumstances. It
is further alleged that we issued to our current director 1,800,000 shares of
stock and that our current director failed to provide the plaintiff one-half of
the stock, or 900,000 shares. The plaintiff seeks to recover 900,000 shares of
our common stock and punitive damages as to certain of the claims. We have filed
in the Superior Court a general denial of all claims and a motion to strike
portions of the plaintiff's complaint.

FiNet.com and certain subsidiaries are defendants in various legal
proceedings involving matters generally incidental to their business. We do not
expect that the aggregate liability or loss, if any, resulting therefrom or from
the matters described above will have a material adverse effect on our business
results of operations or financial condition.

47
<PAGE>
INTELLECTUAL PROPERTY

Trademarks and other proprietary rights are important to our success and our
competitive position. We currently hold a number of trademarks, service marks,
patents and copyrights. Although we seek to protect our trademarks and other
proprietary rights through a variety of means, we may not have taken adequate
steps to protect these rights. We will continue to license content from third
parties in the future and it is possible that we could be subjected to
infringement actions based upon the content licensed from these third parties.
Any claims brought against us, regardless of their merit, could result in costly
litigation and the diversion of its financial resources and technical and
management personnel. Further, if such claims are proved valid, through
litigation or otherwise, we may be required to change our trademarks or other
proprietary marks and pay financial damages, which could adversely affect our
business.

We currently enter into confidentiality or license agreements with our new
employees, consultants and corporate partners to control access to and
distribution of our technologies, documentation and other proprietary
information. Despite our efforts to protect our proprietary rights from
unauthorized use or disclosure, parties may attempt to disclose, obtain or use
our proprietary rights. The steps we have taken may not prevent misappropriation
of our proprietary rights, particularly in foreign countries where laws or law
enforcement practices may not protect our proprietary rights as fully as in the
United States.

EMPLOYEES

As of June 30, 1999, we had 144 full-time and 12 part-time employees.
Thirty-seven employees comprise the business-to-consumer division and 63
employees comprise the business-to-business division. Four employees comprise
the marketing department, and 52 employees comprise technology, administration
and support areas. None of our employees is represented by a union. Management
believe that its relations with employees are good.

FACILITIES

We are headquartered in Walnut Creek, California, where our current facility
occupies approximately 17,042 square feet of space. In addition to housing the
administrative offices, this facility also houses the operations of the
business-to-business segment. The lease for this facility expires in February
2001. We also lease 9,719 square feet of space in San Ramon, California, where
the business-to-consumer segment is operated. In June 1999, we leased an
additional facility, also located in San Ramon, California. We plan to
consolidate our Northern California facilities into the new facility.

During fiscal 1999, Coastal leased facilities in Manalapan, New Jersey and
Mical leased facilities in San Diego, California. Our Coastal and Mical business
units have been closed, and we expect to sublease any excess facilities created
by these closures.

We believe that our facilities are adequate to support anticipated
operations.

48
<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information regarding FiNet.com's
executive officers and directors as of May 31, 1999.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- ----------------------------------------------------
<S> <C> <C>
Mark L. Korell....................................... 51 Chairman of the Board, President and Chief Executive
Officer
L. Daniel Rawitch.................................... 40 Vice Chairman of the Board
Thomas L. Porter..................................... 52 Executive Vice President--Administration
Michael G. Conway.................................... 50 Executive Vice President--Capital Markets
Gary A. Palmer....................................... 45 Executive Vice President--Chief Financial Officer
Kevin Gillespie...................................... 41 Executive Vice President--Sales and Marketing
Christos Skeadas..................................... 52 Executive Vice President--Chief Technology Officer
Jan C. Hoeffel....................................... 62 Director
S. Lewis Meyer(1)(2)................................. 54 Director
Stephen J. Sogin, Ph.D.(2)........................... 57 Director
Richard E. Wilkes(1)(2).............................. 53 Director
Antonio P. Falcao(1)................................. 27 Director
</TABLE>

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

(1) Member of the Audit Committee

(2) Member of the Compensation Committee

MARK KORELL has served as Chairman of the Board and Chief Executive Officer
of FiNet.com since October 1998, and as President since May 1999. Prior to
joining FiNet.com, Mr. Korell served as the Chief Executive Officer of IMX
Mortgage Exchange, an e-commerce software firm, from 1997 to 1998; the Chief
Executive Officer of Norwest Mortgage, Inc., the nation's largest mortgage
lender and loan servicer, from 1995 to 1997; and the Chief Executive Officer of
GMAC Mortgage Group and its Residential Funding Corp. subsidiary, from 1986 to
1995. He also served as assistant to the Chairman of the Federal Home Loan Bank
Board and Deputy Director of the Minnesota Housing Finance Agency. Mr. Korell
received a B.S. degree in engineering from the University of Wisconsin and an
M.B.A. degree from Stanford University.

DANIEL RAWITCH has served as Vice Chairman of the Board since May 1999. He
also served us in various other positions, including as President of FiNet.com
from October 1998 to May 1999 and as its Chief Executive Officer from May 1995
to October 1998. Prior to joining FiNet.com, he served as Chief Executive
Officer of Residential Pacific Mortgage, Inc., from 1989 until it was acquired
by FiNet.com in August 1994.

THOMAS PORTER has served as FiNet.com's Executive Vice
President--Administration since August 1998. Prior to joining FiNet.com, he was
Vice President--Financial Planning and Analysis with Medaphis Corporation, a
health services provider, from December 1996 to August 1998. From June 1994 to
June 1996, Mr. Porter served as Senior Vice President--Finance for McKesson's
Drug Company.

MICHAEL CONWAY has served as FiNet.com's Executive Vice President--Capital
Markets since October 1998. Prior to joining FiNet.com, Mr. Conway was Executive
Vice President--Marketing for North American Mortgage Company (formerly IMCO
Realty Services, Inc. and Wells Fargo Mortgage) from August 1985 to October 1997
where he was responsible for product development and pricing, hedging,

49
<PAGE>
and selling residential loan production. Mr. Conway received his M.B.A. degree
from the University of California, Los Angeles.

GARY PALMER has served as FiNet.com's Executive Vice President--Chief
Financial Officer since December 1998. Prior to joining FiNet.com, he was an
independent financial consultant from January 1997 to December 1998. From
October 1995 to December 1997, he served as Executive Vice President, Chief
Financial Officer and Secretary of Southern Pacific Funding Corporation. Prior
to that, Mr. Palmer served as Senior Vice President and Treasurer of Gentra
Capital Corporation. Mr. Palmer received his B.S. degree in Business
Administration from the University of Vermont and his M.B.A. degree from the
University of North Carolina at Chapel Hill.

KEVIN GILLESPIE has served as FiNet.com's Executive Vice President--Sales
and Marketing since March 1999. From April 1998 until joining FiNet.com, he
served as Executive Vice President of Standard Financial Corporation, a
California subprime mortgage lender. He was an Executive Vice President at
Weyerhaeuser Mortgage Corporation from 1996 to 1997. Mr. Gillespie received his
A.A. degree from Owens College.

CHRIS SKEADAS has served as FiNet.com's Executive Vice President--Chief
Technology Officer since April 1999. Prior to joining FiNet.com, he was Chief
Information Officer for GMAC Mortgage Corporation from 1996 to 1999. From 1993
to 1995, he served as Senior Vice President--Technical Services at Galileo
International Partnership. Mr. Skeadas received his B.A. degree in Mathematics
from Columbia University and his M.S. degree in Mathematics from Renssealaer
Polytechnic Institute.

JAN C. HOEFFEL has served as a director since November 1995. Mr. Hoeffel was
the founder and president of Finex Corporation, a technology-oriented mortgage
broker which was acquired by FiNet.com in December 1991. After the acquisition,
Mr. Hoeffel served as FiNet.com's Executive Vice President until mid-1992. He
rejoined FiNet.com in mid-1995 and became President and a director in November
1995; Mr. Hoeffel served as President until October 1998.

LEWIS MEYER has served as a director since January 1997. Since June 1993,
Dr. Meyer has served as President and Chief Executive Officer of Imatron Inc., a
company engaged in designing, manufacturing and marketing a high performance
tomography scanner. From April 1991 until joining Imatron, Dr. Meyer was Vice
President, Operations of Otsuka Electronics (U.S.A.), Inc. From August 1990 to
April 1991, he was a founding partner of Medical Capital Management, a company
engaged in providing consulting services to medical equipment manufacturers,
imaging services providers and related medical professionals. Before that, he
was Founder, President and Chief Executive Officer of American Health Services
Corp. (now Insight Health Services), a developer and operator of diagnostic
imaging and treatment centers. Dr. Meyer is also a director of BSD Medical
Corporation. Dr. Meyer received his B.S. degree in Physics from the University
of Pacific and his M.S. and Ph.D. degrees in Physics from Purdue University.

STEPHEN SOGIN has served as a director since March 1990. Dr. Sogin is a
venture capitalist. From December 1984 until January 1995, he was a general
partner of Montgomery Medical Ventures. In July 1997, Dr. Sogin consented to a
cease and desist order issued by the SEC involving his late filing of Forms 3, 4
and 5 which he was required to file in his capacity as a general partner of
Montgomery Medical Ventures II. None of the SEC's findings involve charges that
Dr. Sogin received improper gains or personal benefits as a result of these
violations. Dr. Sogin has advised FiNet.com that the trades in question were
conducted by the partnership (Montgomery Medical Ventures II) and none of these
trades were executed by him personally. Dr. Sogin is also a director of
Osteotech, Inc. Dr. Sogin received his B.S., M.S. and Ph.D. degrees in
microbiology from the University of Illinois.

RICHARD WILKES has served as a director since November 1998. Since April
1999 he has been President and Chief Executive Officer of IMX, Inc., a company
engaged in the business of electronic trading of mortgages. Prior to that he was
a principal in Mortgage Outsource Services, a provider of

50
<PAGE>
pre- and post-closing services to the residential mortgage industry. In October
1995, Mr. Wilkes founded Group Millennium, a consulting company specializing in
mergers and acquisitions and strategic planning for the mortgage banking
industry. From 1989 to 1995, Mr. Wilkes was employed by MacAndrews and Forbes
Holdings, Inc.

ANTONIO FALCAO has served as a director since February 1999. Since 1994, Mr.
Falcao has been the Chief Financial Officer for several companies of the A.
Amorim Group, a business group based in Portugal that owns Banco Nacional de
Credito Imobiliario, a Portuguese real estate bank. The A. Amorim Group, which
is affiliated with Americo Ferreira Amorim, one of our largest stockholders,
also has interests in the cork, textile, hotel, oil, finance and
telecommunications industries. Mr. Falcao received his degree in Finance and
Economics from the University of Oporto.

BOARD COMPOSITION

The Board is currently composed of seven directors. Each director is elected
for a period of one year at the annual meeting of stockholders and serves until
the next annual meeting or until his successor is elected and qualified.

BOARD COMPENSATION

Directors who are full-time employees of FiNet.com are not separately
compensated for their service on the Board. Non-employee directors receive
$15,000 annually for their services and attendance at regular Board meetings,
and $1,000 for each additional Board or committee meeting attended. Non-employee
directors are also reimbursed for expenses related to their attendance at
meetings.

Upon being appointed the Board, each non-employee director receives a fully
vested option to purchase 40,000 shares of common stock under our 1998
Non-employee Directors' Stock Option Plan. Shares of common stock acquired upon
exercise of such options are subject to a right of repurchase in favor of
FiNet.com, which lapses in four equal annual installments, beginning on the
first anniversary of the date of grant. In addition, each non-employee director
receives an automatic option grant to purchase 40,000 shares of common stock on
January 1 of each year, which vests in four equal annual installments,
commencing on the first anniversary of the date of grant. The exercise price of
options granted under the Directors Plan is 85% of the fair market value of the
common stock on the date of grant.

BOARD COMMITTEES

FiNet.com has an Audit Committee and a Compensation Committee. The Audit
Committee reviews FiNet.com's annual audit and meets with FiNet.com's
independent auditors to review FiNet.com's internal controls and financial
management practices. The Audit Committee currently consists of Dr. Meyer and
Messrs. Falcao and Wilkes. The Compensation Committee makes recommendations to
the full Board related to compensation for our executives, including the Chief
Executive Officer. The Compensation Committee currently consists of Drs. Meyer
and Sogin and Mr. Wilkes.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

No member of the Compensation Committee has at any time been an officer or
employee of FiNet.com or any subsidiary of FiNet.com.

51
<PAGE>
EXECUTIVE COMPENSATION

The following table provides certain summary information concerning the
compensation received for services rendered to FiNet.com during fiscal 1999,
1998 and 1997 by our Chief Executive Officer and all other executive officers
whose aggregate compensation for fiscal 1999 exceeded $100,000. These people are
referred to as the "Named Executive Officers."

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION SECURITIES
FISCAL --------------------- UNDERLYING ALL OTHER
NAME AND POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
- ---------------------------------------------------- ----------- ---------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Mark L. Korell...................................... 1999 $ 183,563 $ -- 3,676,291 $ 55,785(2)
Chairman of the Board, President and
Chief Executive Officer(1)

L. Daniel Rawitch................................... 1999 154,500 -- -- 55,785(4)
Vice Chairman(3) 1998 150,000 -- -- --
1997 150,000 58,341 -- 35,000(5)
</TABLE>

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

(1) Mr. Korell became our Chief Executive Officer in October 1998. Compensation
is for partial year.

(2) Includes a car allowance of $2,250 and the fair market value (on the date of
issue) of shares of common stock issued to Mr. Korell pursuant to his
employment agreement with FiNet.com.

(3) Mr. Rawitch served as Chief Executive Officer of FiNet.com from May 1995
until October 1998 and as President of FiNet.com from October 1998 to May
1999.

(4) Represents deferred compensation.

(5) During fiscal 1997, prior to the acquisition of Monument Mortgage by
FiNet.com, Mr. Rawitch was employed by an affiliate of Monument Mortgage on
a part-time basis, for which Mr. Rawitch received compensation of $35,000.

The following table provides certain summary information regarding stock
options granted to the Named Executive Officers during fiscal 1999.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
---------------------------------------------------------- AT ASSUMED ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK PRICE APPRECIATION
SECURITIES TOTAL OPTIONS FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS EMPLOYEES PRICE EXPIRATION --------------------------
NAME GRANTED(#) IN FISCAL YEAR(1) ($/SHARE) DATE 5% 10%
- -------------------------------------- ----------- ------------------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Mark L. Korell........................ 1,300,000 17.1% $ 0.563 10/13/08 $ 433,285 $ 832,902
2,001,291 26.3 1.031 02/03/09 1,221,492 2,348,071
375,000 4.9 1.031 02/03/09 228,882 439,979

L. Daniel Rawitch..................... -- -- -- -- -- --
</TABLE>

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

(1) Based on 7,620,520 options issued to employees in fiscal 1999.

52
<PAGE>
The following table provides certain summary information concerning the
value of unexercised options held by each of the Named Executive Officers as of
April 30, 1999 and the value realized on exercise of options in fiscal 1999.

OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED APRIL 30, 1999 APRIL 30, 1999
ON VALUE -------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------- --------- --------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Mark L. Korell.......................... -- -- 725,258 2,951,033 $ 5,772,850 $ 23,326,806
L. Daniel Rawitch....................... 148,000 $ 88,208 -- -- -- --
</TABLE>

COMPENSATION ARRANGEMENTS

We entered into a four-year employment agreement with Mr. Korell in October
1998, which was amended in February 1999. The agreement, as amended, provides
for (i) an annual salary of $350,000 in the first year with annual $25,000
increases in subsequent years and (ii) an annual bonus equal to 2% of our
pre-tax profits. In addition, Mr. Korell received (i) 125,000 shares of common
stock, (ii) a stock option to purchase 1,300,000 shares of common stock at an
exercise price of $0.56 per share, and (iii) a stock option to purchase 375,000
shares of common stock at an exercise price of $1.03 per share. The agreement
also has an anti-dilution provision pursuant to which Mr. Korell has the right
to maintain a four percent equity position in FiNet.com. In connection with the
anti-dilution provision of the agreement, Mr. Korell was granted an option to
purchase 2,001,291 shares of common stock at an exercise price of $1.03 per
share in February 1999, an option to purchase 247,723 shares of common stock at
an exercise price of $9.125 per share in May 1999, an option to purchase 39,602
shares of common stock at an exercise price of $7.625 per share in May 1999 and
an option to purchase 345,921 shares of common stock at $4.25 per share in June
1999. All of the options become exercisable in five equal annual installments
commencing on the date of grant. Pursuant to Mr. Korell's employment agreement,
his options are subject to accelerated vesting under certain circumstances,
including a change in control of FiNet.com.

We entered into an 18-month employment agreement with Mr. Rawitch in October
1998, which was amended in February 1999. The agreement, as amended, provides
for an annual base salary of $150,000 and an annual bonus equal to 2% of our
pre-tax profits. Pursuant to the agreement, Mr. Rawitch received a warrant to
purchase 600,000 shares of common stock at an exercise price of $1.03 per share.
The shares are subject to a right of repurchase in favor of FiNet.com in the
event that Mr. Rawitch's employment is terminated for cause. If Mr. Rawitch's
employment is terminated for other than cause, we are required to pay his
compensation under the agreement until the later of the termination date of the
agreement or 12 months after his termination.

We entered into a four-year employment agreement with Mr. Conway in October
1998, which was amended in February 1999. The agreement, as amended, provides
for an annual salary of $187,500 and an annual bonus equal to 1% of our pre-tax
profits. Pursuant to the agreement, Mr. Conway received (i) 15,000 shares of
common stock, (ii) an option to purchase 300,000 shares of common stock at an
exercise price of $0.66 per share, 75,000 of which vested on the date of grant
and the remainder of which vests in four equal annual installments commencing on
the first anniversary of the date of grant and (iii) an option to purchase
67,500 shares of common stock at an exercise price of $1.03 per share, which
vests in four equal annual installments commencing on the first anniversary of
the date of grant.

We entered into a two-year employment agreement with Mr. Palmer in February
1999. The agreement provides for an annual salary of $187,000. In December 1998,
in connection with consulting

53
<PAGE>
services provided to us prior to, and contingent upon, becoming an employee, Mr.
Palmer received an option to purchase 350,000 shares of common stock at an
exercise price of $0.75 per share, 70,000 of which vested on the date of grant
and the remainder of which vests in four equal annual installments commencing on
the first anniversary of the date of grant.

We entered into a one-year employment agreement with Mr. Porter in August
1998, which was amended in September 1998. The agreement, as amended, provides
for an annual base salary of $150,000. Pursuant to the agreement, Mr. Porter
received 40,000 shares of common stock and an option to purchase 200,000 shares
of common stock at an exercise price of $0.75 per share, 50,000 of which vested
on the date of grant and the remainder of which vests in six equal installments
commencing on the first anniversary of the date of grant. In October 1998, Mr.
Porter received an option to purchase 100,000 shares of common stock at an
exercise price of $0.66 per share, 25,000 of which vested immediately and the
remainder of which vests in four equal annual installments commencing on the
first anniversary of the date of grant.

We entered into a 21-month employment agreement with Mr. Gillespie in March
1999. The agreement provides for an annual salary of $150,000 and a quarterly
bonus equal to .0005% of our monthly loan closings over $80 million. Pursuant to
the agreement, Mr. Gillespie also received an option to purchase 350,000 shares
of common stock at an exercise price of $1.97 per share, 70,000 of which vested
on the date of grant, and the remainder of which vests in four equal annual
installments commencing on the first anniversary of the date of grant.

We entered into a 21-month employment agreement with Mr. Skeadas in April
1999. The agreement provides for an annual salary of $185,000. In March 1999,
while employed as a technical advisor, Mr. Skeadas received an option to
purchase 350,000 shares of common stock at an exercise price of $2.25 per share,
100,000 of which vested on May 2, 1999, 100,000 shares of which vest on March 2,
2000 and 50,000 shares of which vest on each of March 2, 2002, 2003 and 2004.

COMPENSATION PLANS

EMPLOYEE STOCK OPTION PLAN

Our 1998 Stock Option Plan provides for the grant of options to our
officers, directors, key employees and consultants. The 1998 Plan is
administered by the Board. The administrator is authorized to determine the
terms of each option granted under the 1998 Plan, including the number of
shares, exercise price, term and exercisability. Options granted under the 1998
Plan may be incentive stock options or nonqualified stock options. Upon
termination of employment for any reason other than death or disability, each
option may be exercised for a period of 90 days, to the extent it is exercisable
on the date of termination. In the case of a termination due to death or
disability, an option will remain exercisable for a period of one year, to the
extent it is exercisable on the date of termination. As of June 30, 1999, there
were 18,226 shares available for grant under the 1998 Plan. In May 1999, subject
to stockholder approval, the Board amended the 1998 Plan to increase the number
of shares authorized for issuance pursuant to options granted under the 1998
Plan to 10,000,000 from 4,000,000.

NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

Our 1998 Non-employee Directors' Stock Option Plan provides for the
automatic grant of a fully vested option to purchase 40,000 shares of common
stock to non-employee directors upon their election or appointment to the Board
which is subject to a right of repurchase described above under "Director
Compensation." The Directors' Plan also provides for subsequent annual grants of
options to purchase 40,000 shares of common stock which vest in four equal
annual installments. The exercise price of the options is 85% of the fair market
value of the common stock on the date of grant. The Directors' Plan is
administered by the Board. To the extent that an option is not exercisable on
the

54
<PAGE>
date that a director ceases to be a director, the unvested portion terminates.
As of June 30, 1999, there were 300,000 shares available for grant under the
Directors' Plan. In May 1999, subject to stockholder approval, the Board amended
the Directors' Plan to increase the number of shares available for grant under
the Directors' Plan to 1,000,000 from 500,000 and to increase the automatic
annual grant to an option to purchase 60,000 shares of common stock.

STOCK BONUS INCENTIVE PLAN

Our Stock Bonus Incentive Plan provides for the discretionary grant of bonus
shares to our employees, directors, officers, consultants and advisors. The
Board has authorized up to an aggregate of 875,000 shares of common stock for
issuance as bonus awards under the Stock Bonus Plan, all of which were available
for grant as of June 30, 1999. The Stock Bonus Plan is currently administered by
the Board. Each grant of bonus shares becomes exercisable according to a
schedule to be established by the Board at the time of grant.

EMPLOYEE STOCK PURCHASE PLAN

In May 1999, the Board adopted, subject to stockholder approval, our 1999
Employee Stock Purchase Plan. A total of 500,000 shares of common stock has been
reserved for issuance under the Purchase Plan, none of which has as yet been
issued. The Purchase Plan permits eligible employees to purchase common stock at
a discount through payroll deductions during offering periods of up to 36
months. A new offering period will begin every three months. The price at which
stock is purchased under the Purchase Plan will be equal to 85% of the fair
market value of the common stock on the first or last day of the offering
period, whichever is lower.

DIRECTOR AND OFFICER INDEMNIFICATION

Pursuant to the Delaware General Corporation Law, our Certificate of
Incorporation includes a provision to eliminate the personal liability of our
directors for monetary damages based upon any violation of their fiduciary
duties as directors, except as to liability for any breach of the duty of
loyalty, acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, acts in violation of Section 174 of
the Delaware General Corporation Law, or any transaction from which a director
receives an improper personal benefit. This provision does not limit any right
which a director may have to be indemnified.

Our Certificate of Incorporation and Bylaws also require indemnification of
our directors and officers to the fullest extent permitted by Delaware law for
claims against them in their official capacities, including stockholders'
derivative actions.

TRANSACTIONS WITH AFFILIATES

In June 1998, we entered into a consulting agreement with Dr. Meyer, one of
our directors. Pursuant to the agreement, Dr. Meyer received $25,000 in 1998. In
addition, Dr. Meyer paid us $10,000 for warrants to purchase 1,000,000 shares of
common stock at an exercise price of $1.25 per share. 200,000 of the shares
became exercisable on the date of grant, and the remaining shares become
exercisable in quarterly installments over four years, so long as Dr. Meyer's
service with us continues.

In January 1999, FiNet.com loaned Mr. Rawitch, our Vice Chairman, $95,000;
the loan accrued interest at an annual rate of seven percent. In April 1999, Mr.
Rawitch repaid the loan in full, including all accrued interest.

In February 1999, we entered into a letter agreement with Mr. Hoeffel, one
of our directors and our former President, concerning the termination of his
employment as a corporate officer. Pursuant to the agreement, (i) Mr. Hoeffel's
employment terminated as of February 28, 1999, (ii) Mr. Hoeffel

55
<PAGE>
received 300,000 restricted shares of common stock, and (iii) Mr. Hoeffel
forfeited all anti-dilution rights previously granted him, and surrendered to us
a warrant to purchase 300,000 shares of common stock. We have also agreed to
continue to make car lease payments on an automobile provided to Mr. Hoeffel for
as long as he serves as a director.

In April 1999, we entered into a Lender Subscriber Agreement with IMX, Inc.,
of which Richard Wilkes, one of our directors, is President and Chief Executive
Officer and of which Mark Korell, our President and Chief Executive Officer, is
a minority shareholder. Pursuant to the agreement, IMX will provide us with
software and brokerage services.

56
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth information regarding the beneficial
ownership of our common stock as of June 30, 1999 by (i) each person we know to
own beneficially more than 5% of our common stock, (ii) each director of
FiNet.com, (iii) each of the Named Executive Officers, and (iv) all of our
directors and executive officers as a group. Beneficial ownership is determined
in accordance with the rules of the Securities and Exchange Commission. In
computing the number of shares beneficially owned by a person and the percentage
of ownership of that person, shares subject to options or warrants held by that
person that are currently exercisable or exercisable within 60 days of June 30,
1999 are deemed outstanding. Such shares, however, are not deemed outstanding
for the purpose of computing the percentage ownership of each other person.
Applicable percentage of ownership for each stock holder is based on 90,312,005
shares of common stock outstanding as of June 30, 1999.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
------------------------------------------
NUMBER ISSUABLE
WITHIN
TOTAL 60 DAYS OF JUNE
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER 30, 1999 PERCENT
- ----------------------------------------------------- --------- ------------------ -----------
<S> <C> <C> <C>
Banco Espirito Santo de Investimento
Rua Tierro Galvan
Torre 3, 14th Floor
1099-028 Lisbon
Portugal............................................. 10,117,653(1) 1,949,867 11.0%

Jose Maria Salema Garcao
Quinta Da Marinha, Lote
CT-14, 2750 Cascais
Portugal............................................. 9,330,000 6,190,000 9.7

Americo Ferreira Amorim
Edificio Amorim II
Meladas--Apartado 47
4536 Mozzelos VFR
Portugal............................................. 8,000,000(2) 1,000,000 8.8

Cumberland Associates
1114 Avenue of Americas
New York, NY 10036................................... 6,174,626(3) -- 6.8

Codsall, Ltd.
15 Avenue Montchoisi
Ch-1006 Lausanne
Switzerland.......................................... 5,904,027(4) -- 6.5

Jan C. Hoeffel....................................... 1,564,075(5) -- 1.7
L. Daniel Rawitch.................................... 1,358,206 733,333 1.5
S. Lewis Meyer....................................... 1,165,000 1,165,000 1.3
Mark L. Korell....................................... 976,909 851,909 1.1
Stephen J. Sogin..................................... 130,555 130,555 *
Richard Wilkes....................................... 40,000 *
Antonio Falcao....................................... 40,000 40,000 *
All directors and executive officers as a group (12
persons)............................................. 5,744,745 3,335,797 6.1%
</TABLE>

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

* Less than one percent of the outstanding shares of common stock.

57
<PAGE>
(1) Includes the security holdings of the entities listed below, all of which
are affiliated with Banco Espirito Santo de Investimento:

<TABLE>
<CAPTION>
NUMBER OF
OUTSTANDING
ENTITY SHARES
- -------------------------------------------------------------------------- ------------------
<S> <C>
Espirito Santo Dealer..................................................... 871,893
Espirito Santo Financial Holding.......................................... 514,139
Fundo de Pensoes Banco Espirito Santo..................................... 1,666,666
Compagnie Financiere Espirito Santo....................................... 12,853
</TABLE>

(2) Includes 5,000,000 shares held by Fondation Pamalu, a foundation of which
Mr. Amorim is the beneficiary, and 1,000,000 shares subject to currently
exercisable warrants held by Foundation Pamalu.

(3) Includes shares held by the individuals and entities listed below, each of
which is affiliated with Cumberland Associates:

<TABLE>
<CAPTION>
NUMBER OF
OUTSTANDING
ENTITY OR INDIVIDUAL SHARES
- -------------------------------------------------------------------------- ------------------
<S> <C>
Cumber International...................................................... 185,000
Cumberland Partners....................................................... 4,419,380
C-Valor LTD............................................................... 175,000
Cox, Edwin L.............................................................. 70,000
Delta Associates, LP...................................................... 85,000
Long View Partners........................................................ 578,469
Long View Partners B, LP.................................................. 423,517
Long View Partners C, LP.................................................. 148,260
Schaefer, Charles V....................................................... 90,000
</TABLE>

(4) Includes 3,333,333 shares held by Codsall Corporation Gestar, SA.

(5) Includes 917 shares held by Mr. Hoeffel's spouse.

58
<PAGE>
SELLING STOCKHOLDERS

The following table sets forth (i) the number of outstanding shares,
including shares issuable within 60 days of June 30, 1999 pursuant to options or
warrants, beneficially owned and the percentage ownership of the selling
stockholders prior to the offering, (ii) the aggregate number of shares offered
by each such stockholder pursuant to this prospectus and (iii) the number of
shares beneficially owned by each selling stockholder and the percentage
ownership assuming the sale of all of the shares offered by each such
stockholder pursuant to this prospectus.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING
------------------------------------------ SHARES BENEFICIALLY
NUMBER OF
NUMBER SHARES ISSUABLE OWNED AFTER OFFERING
OF WITHIN 60 DAYS SHARES
OUTSTANDING OF OFFERED ----------------------
NAME SHARES JUNE 30, 1999 PERCENT IN OFFERING NUMBER PERCENT
- ----------------------------------------------- ----------- ---------------- ----------- ----------- --------- -----------
% %
<S> <C> <C> <C> <C> <C> <C>
878 Corp....................................... 317,500 15,875 * 333,375 -- *
Albuquerque D'Orey, Monica..................... 500,000 -- * 500,000 -- *
Amorim, Americo................................ 7,000,000 1,000,000 8.8 8,000,000(1) -- *
Anasazi Partners............................... 50,000 30,000 * 80,000(2) -- *
Andrasko, Gary................................. 50,000 2,500 * 52,500 -- *
Archery Capital................................ 225,000 -- * 225,000 -- *
Ascuitto, Basil................................ -- 15,802 * 15,802 -- *
Baker, Christopher P........................... 30,000 -- * 30,000 -- *
Banco del Gottardo............................. 500,000 -- * 500,000 -- *
Banco Espirito Santo de Investimento........... 8,167,786 1,949,867 11.0 10,117,653(3) -- *
Banco Provado Portuges......................... 3,333,334 -- 3.7 3,333,334 -- *
Bank Morgan Stanley AG......................... 619,398 -- * 619,398 -- *
Becker, John P................................. 25,000 -- * 25,000 -- *
Beglin, Francis................................ 70,000 3,500 * 73,500 -- *
Bing, Arthur G.H. M.D., IRA Rollover........... -- 500 * 500 -- *
Bing, Arthur Ray............................... 10,000 -- * 10,000 -- *
Bloch, Raymond................................. 25,000 1,250 * 26,250 -- *
Block, Alan E.................................. 1,250 -- * 1,250 -- *
Blume, Shirley................................. 2,000 100 * 2,100 -- *
Brockton Corporation........................... 520,000 -- * 520,000 -- *
Borror, Douglas................................ 80,000 4,000 * 84,000 -- *
Bressler, Harry................................ 2,500 -- * 2,500 -- *
Bridlespur Partners L.P........................ 75,000 3,750 * 78,750 -- *
BRM IND. Inc. Employee Profit Plan............. -- 2,500 * 2,500 -- *
Brown, Ralph L. Jr. and Louise E.L............. 25,000 17,500 * 42,500 -- *
Brunton, Colin................................. 2,000 -- * 2,000 -- *
Brunton, Craig................................. 12,000 600 * 12,600 -- *
Brunton, Craig C/F Colin Andrew................ -- 100 * 100 -- *
Brunton, Craig C/F Eric Maxwell................ -- 100 * 100 -- *
Brunton, Craig C/F Laura Lee Brunton........... -- 100 * 100 -- *
Brunton, Eric.................................. 2,000 -- * 2,000 -- *
Brunton, Howard................................ 10,000 500 * 10,500 -- *
Brunton, Laura................................. 2,000 -- * 2,000 -- *
Brunton, Patricia.............................. 5,000 250 * 5,250 -- *
Brunton, Ronald................................ 10,000 500 * 10,500 -- *
Bull, Belinda Breese........................... -- 5,000 * 5,000 -- *
Caires, Claudia................................ 6,000 -- * 6,000 -- *
Chapekis, Anthony.............................. 20,000 1,000 * 21,000 -- *
Clemens, John Barry............................ 80,000 -- * 80,000 -- *
Codsall, Ltd................................... 5,904,027 -- 6.5 5,904,027(4) -- *
Cohen, Gerald M................................ 525,000 -- * 525,000 -- *
Cohen, Stephen R............................... 537,500 -- * 537,500 -- *
Commonwealth Associates........................ -- 502,381 * 502,381 -- *
Conners, James................................. 15,000 750 * 15,750 -- *
</TABLE>

59
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING
------------------------------------------ SHARES BENEFICIALLY
NUMBER OF
NUMBER SHARES ISSUABLE OWNED AFTER OFFERING
OF WITHIN 60 DAYS SHARES
OUTSTANDING OF OFFERED ----------------------
NAME SHARES JUNE 30, 1999 PERCENT IN OFFERING NUMBER PERCENT
- ----------------------------------------------- ----------- ---------------- ----------- ----------- --------- -----------
% %
<S> <C> <C> <C> <C> <C> <C>
Conway, Lori................................... 5,000 250 * 5,250 -- *
Costine Management Co./401K Profit Sharing
F/B/O David C. Costine....................... 2,500 -- * 2,500 -- *
Costine Management Co./401K Profit F/B/O
Stephen Puricelli............................ 1,250 -- * 1,250 -- *
Crandall, James P.............................. 25,000 -- * 25,000 -- *
Cumberland Associates LLC...................... 6,174,626 -- 6.8 5,008,761(5) 1,165,865 1.3
D'Orey Capucho, Manuel......................... 100,000 -- * 100,000 -- *
da Silva Violante, Manuel Luis................. 416,666 -- * 416,666 -- *
Dahlen, Richard G.............................. 50,000 -- * 50,000 -- *
Danielli, Mark................................. -- 1,975 * 1,975 -- *
Davis, Timothy................................. -- 14,999 * 14,999 -- *
Day, Donald.................................... 1,000 -- * 1,000 -- *
de Almeida, Miguel Ferreirra................... 432,000 -- * 432,000 -- *
de Muralt, Andre............................... 25,000 -- * 25,000 -- *
Dell, Samuel M. & Geraline M................... 2,500 -- * 2,500 -- *
DeLoach, Lisa.................................. -- 5,889 * 5,889 -- *
Dickett, Peter................................. 10,000 500 * 10,500 -- *
Eckersley, Jay................................. 15,000 750 * 15,750 -- *
Ecklin, Loretta................................ 10,000 -- * 10,000 -- *
Ecklin, Robert L............................... 2,500 -- * 2,500 -- *
Eldridge, Cornelia F........................... 37,500 677,827 * 715,327(6) -- *
Falk, Michael S................................ -- 74,252 * 74,252 -- *
Farida, Jalal.................................. 10,000 -- * 10,000 -- *
Ferreira Martins, Filipa....................... 800,000 -- * 800,000 -- *
Ferriera Martins, Jose Diogo................... 670,000 -- * 670,000 -- *
Filderman, Robert.............................. -- 2,500 * 2,500 -- *
Fisher, David.................................. 5,000 250 * 5,250 -- *
Frank Elliott M.D.............................. -- 5,000 * 5,000 -- *
Frank Elliott M.D. Trustee..................... -- 5,000 * 5,000 -- *
Frishwasser, Daniel............................ 35,000 -- * 35,000 -- *
Fulton, Peter.................................. -- 1,001 * 1,001 -- *
Fundo Pensoes Banco Pinto & Sotto Mayor........ 1,000,000 -- 1.1 1,000,000 -- *
Fundo Pensoes Banco Totta & Acores............. 333,333 -- * 333,333 -- *
Fundo Pensoes Credito Predial Portugues........ 283,333 -- * 283,333 -- *
Fundoacao Luso American para o
Desenvolvimento.............................. 1,000,000 -- 1.1 1,000,000 -- *
Garcao, Jose Maria Salema...................... 3,140,000 6,190,000 9.7 9,290,000 40,000 *
Gasaway, James................................. 25,000 1,250 * 26,250 -- *
Gharib, Mary................................... 5,000 -- * 5,000 -- *
Giardina, Anthony.............................. -- 5,925 * 5,925 -- *
Gistaro, Joseph E., TTEE....................... 138,106 -- * 138,106 -- *
Gomes, Jose Osvaldo............................ 1,060,000 -- 1.2 1,060,000 -- *
Gordon, Bruce.................................. 5,000 -- * 5,000 -- *
Gotschall, Troy A.............................. 8,333 8,333 * 16,666 -- *
Grady, Patrick................................. 2,000 100 * 2,100 *
Greenwich Fine Arts............................ 5,000 -- * 5,000 -- *
Griffin, Greg.................................. 5,000 5,000 * 10,000 -- *
H.P. Griffo Inc. Retirement Trust.............. 2,500 -- * 2,500 -- *
Guedes Q. de Mendia, Eduardo................... 250,000 -- * 250,000 -- *
Guedes, Jose Philipe........................... 320,000 200,000 * 520,000 -- *
Guilani, S.M. Izadi............................ 5,000 -- * 5,000 -- *
Haag, Bernadette--IRA.......................... 5,000 -- * 5,000 -- *
Haag, Andrew................................... -- 26,500 * 26,500 -- *
Haag, Robert................................... -- 26,500 * 26,500 -- *
</TABLE>

60
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING
------------------------------------------ SHARES BENEFICIALLY
NUMBER OF
NUMBER SHARES ISSUABLE OWNED AFTER OFFERING
OF WITHIN 60 DAYS SHARES
OUTSTANDING OF OFFERED ----------------------
NAME SHARES JUNE 30, 1999 PERCENT IN OFFERING NUMBER PERCENT
- ----------------------------------------------- ----------- ---------------- ----------- ----------- --------- -----------
% %
<S> <C> <C> <C> <C> <C> <C>
Handy, Jane Meredith........................... -- 1,250 * 1,250 -- *
Hedrington Investments SA...................... 1,666,667 -- 1.9 1,666,667 -- *
Henney, Regina Tee............................. 20,000 1,000 * 21,000 -- *
Herr, Jeffrey D................................ 8,333 8,333 * 16,666 -- *
Herring, Jack.................................. 50,000 2,500 * 52,500 -- *
Hoffman, Cheryl................................ 5,000 -- * 5,000 -- *
Hoffman, Susan................................. -- 1,000 * 1,000 -- *
Horowitz, Carol................................ 1,001 -- * 1,001 -- *
House, Jeff.................................... 5,000 250 * 5,250 -- *
Hubbard, Richard--IRA.......................... 12,500 21,250 * 33,750 -- *
Hughes, R. Gerald.............................. -- 5,000 * 5,000 -- *
Ickert, Heinz.................................. 5,000 250 * 5,250 -- *
Izadi, Mohammed A.--IRA........................ 10,000 -- * 10,000 -- *
J.F. Shea Co., Inc. as Nominee 1997-24......... 1,000,000 250,000 1.4 1,250,000 -- *
J.P. Carey Securities, Inc..................... -- 30,000 * 30,000 -- *
Jacoby, Richard A.............................. 25,000 -- * 25,000 -- *
Johnson, Thomas B.............................. 80,000 4,000 * 84,000 -- *
Jumaluddin Family Trust........................ -- 5,000 * 5,000 -- *
Juventus Investments S.A....................... -- 20,000 * 20,000 -- *
Kafai, Bijan................................... -- 5,000 * 5,000 -- *
Kahla, Pierre.................................. 400,000 -- * 400,000 -- *
Kamm, Robert M................................. 16,667 16,667 * 33,334 -- *
Karl, George................................... 50,000 2,500 * 52,500 -- *
Timothy M. Kelley, Trustee U/A/D 12/23/86...... 17,500 875 * 18,375 -- *
Kemp, Kenneth.................................. 20,000 1,000 * 21,000 -- *
Kemp, Kevin.................................... 80,000 4,000 * 84,000 -- *
Kiehl, Sam..................................... 500,000 25,000 * 525,000 -- *
Kozersky, David................................ 20,000 1,000 * 21,000 -- *
Kuschewski, Gustav............................. 2,500 -- * 2,500 -- *
Labarbara, Stephen............................. -- 1,975 * 1,975 -- *
Lauresen, Niels................................ 20,000 -- * 20,000 -- *
Leitman, Jerry D............................... 5,000 -- * 5,000 -- *
Leppla, Craig.................................. -- 1,975 * 1,975 -- *
Letticri, Lisa................................. -- 3,095 * 3,095 -- *
Levesque, Carla S.............................. 19,375 -- * 19,375 -- *
Lewis, Ellwood................................. 25,000 1,250 * 26,250 -- *
Lighthouse Investment Fund, L.P................ 611,814 -- * 611,814(7) -- *
Linn, John..................................... 15,000 750 * 15,750 -- *
Lipman, Beth................................... -- 500 * 500 -- *
Liput, Andrew L................................ 25,000 -- * 25,000 -- *
Lopera, Juan................................... -- 2,002 * 2,002 -- *
Lotterman, Thomas H............................ -- 1,250 * 1,250 -- *
Lubbers, Kristine.............................. 15,000 750 * 15,750 -- *
Lubbers, Lawrence & Pamela..................... 25,000 1,250 * 26,250 -- *
Lubbers, Melissa............................... 15,000 750 * 15,750 -- *
Lubbers, Thomas Barton......................... 15,000 750 * 15,750 -- *
Lubin TTEE, Harve L............................ 207,162 -- * 207,162 -- *
Luntz, John.................................... 5,000 250 * 5,250 -- *
Lyall, Michael R............................... -- 16,802 * 16,802 -- *
M. Fund Dollar Growth.......................... -- 35,000 * 35,000 -- *
Mague, SGPA, S.A............................... 1,666,667 -- 1.9 1,666,667 -- *
Marandi, Mohammad.............................. 5,000 250 * 5,250 -- *
Mayer, Charles D............................... 5,000 -- * 5,000 -- *
Mayer, Frank................................... 5,000 -- * 5,000 -- *
</TABLE>

61
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING
------------------------------------------ SHARES BENEFICIALLY
NUMBER OF
NUMBER SHARES ISSUABLE OWNED AFTER OFFERING
OF WITHIN 60 DAYS SHARES
OUTSTANDING OF OFFERED ----------------------
NAME SHARES JUNE 30, 1999 PERCENT IN OFFERING NUMBER PERCENT
- ----------------------------------------------- ----------- ---------------- ----------- ----------- --------- -----------
% %
<S> <C> <C> <C> <C> <C> <C>
MC Geste--Sociedade Gestora de Patrimonios SA.. 50,000 -- * 50,000 -- *
McAdams, Kenneth............................... -- 2,500 * 2,500 -- *
Meyer, S. Lewis................................ -- 1,165,000 1.3 1,700,000 65,000
MicroSearch Investments, LLC................... -- 125,000 * 125,000 -- *
Miller, Luke................................... 5,000 -- * 5,000 -- *
Molnar, Anthony................................ 20,000 1,000 * 21,000 -- *
Moschetta, Ronald.............................. -- 3,950 * 3,950 -- *
Mulkey, David A................................ 50,000 -- * 50,000 -- *
Munsell, James................................. -- 5,000 * 5,000 -- *
Muzea, George.................................. 40,000 -- * 40,000 -- *
Nano-Cap Hyper Growth Partnership.............. 25,000 -- * 25,000 -- *
Nass, Robert................................... -- 1,975 * 1,975 -- *
Nathan, Milton................................. 30,000 1,500 * 31,500 -- *
Niedfelt, Jerome............................... 10,000 -- * 10,000 -- *
Noack, James W................................. 35,343 75,001 * 110,344 -- *
O'Sullivan, Robert............................. -- 8,950 * 8,950 -- *
Osborne, Ron and Barbara....................... -- 5,000 * 5,000 -- *
Ozada, Enrich R. (IRA)......................... 51,413 -- * 51,413 -- *
Panosian, Manuel............................... -- 5,000 * 5,000 -- *
Penniston, Eric W. Jr.......................... 50,000 35,000 * 85,000(8) -- *
Perreira, Richard.............................. -- 500 * 500 -- *
Perrini, John.................................. 10,000 500 * 10,500 -- *
Perrini, Michael............................... 33,500 1,675 * 35,175(9) -- *
Pharos Fund Limited............................ 1,259,787 -- 1.4 1,259,787 -- *
Pimentel, Mary................................. 8,333 8,333 * 16,666 -- *
Pinkert, Philip................................ -- 19,939 * 19,939 -- *
Piper Jaffray.................................. -- 491,143 * 491,143 -- *
Purvis, David.................................. 47,500 -- * 47,500 -- *
Railey, John E., TTEE.......................... 207,162 -- * 207,162 -- *
Rand, Eric..................................... -- 3,950 * 3,950 -- *
Redman, Ken.................................... 5,000 250 * 5,250 -- *
Real Estate Office Software.................... 200,000 -- * 200,000 -- *
Reese, Olivia Tam.............................. 21,474 -- * 21,474 -- *
Rinaldi Balbi, Armando Jose.................... 560,000 -- * 560,000 -- *
Robertson, T. Calloway......................... 3,000 150 * 3,150 -- *
Rockman, Robert................................ -- 2,500 * 2,500 -- *
Rose, Wilbur R................................. 15,000 750 * 15,750 -- *
Rosenbloom, Keith.............................. -- 9,400 * 9,400 -- *
Rostad, Steve.................................. 50,000 -- * 50,000 -- *
Rubenstein, Eric............................... -- 3,950 * 3,950 -- *
SAC Corporation................................ 3,000,000 -- 3.3 3,000,000 -- *
Satelitte...................................... 666,667 -- * 666,667 -- *
Savage, Elizabeth.............................. -- 1,250 * 1,250 -- *
Schechter, David............................... 600,000 175,000 * 775,000 -- *
Scheidker, Audrey.............................. 1,250 -- * 1,250 -- *
Schlonsky, Gertrude............................ 20,000 1,000 * 21,000 -- *
Schlonsky, Joe................................. 50,000 2,500 * 52,500 -- *
Schueller, Gerald.............................. 5,000 250 * 5,250 -- *
Scritchfield, George........................... -- 100,000 * 100,000 -- *
Sekreta, Gregory E............................. 15,000 750 * 15,750 -- *
Serras, Luis Jorge............................. 700,000 -- * 700,000 -- *
Seton Services, Inc............................ -- 25,000 * 25,000 -- *
Siemer, Barb................................... 100,000 5,000 * 105,000 -- *
Sigla Corporation.............................. 200,000 -- * 200,000 -- *
</TABLE>

62
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING
------------------------------------------ SHARES BENEFICIALLY
NUMBER OF
NUMBER SHARES ISSUABLE OWNED AFTER OFFERING
OF WITHIN 60 DAYS SHARES
OUTSTANDING OF OFFERED ----------------------
NAME SHARES JUNE 30, 1999 PERCENT IN OFFERING NUMBER PERCENT
- ----------------------------------------------- ----------- ---------------- ----------- ----------- --------- -----------
% %
<S> <C> <C> <C> <C> <C> <C>
Skilondz, Theodore & Jan....................... 5,000 250 * 5,250 -- *
Sleeper, Mitchell J............................ 62,500 35,000 * 97,500 -- *
Snearey, Thomas................................ 5,000 250 * 5,250 -- *
Soares Franco, Filipe.......................... 180,000 -- * 180,000 -- *
Societe Bancaire de Paris SA................... 416,667 17,875 * 434,542 -- *
Sogema, SGPS, S.A.............................. 897,600 -- * 897,600 -- *
Spence, Lee H.................................. -- 5,000 * 5,000 -- *
Springer, M. H................................. -- 54,733 * 54,733 -- *
Spynola Teixeira, Carlos....................... 260,000 -- * 260,000 -- *
Stein, David................................... -- 1,001 * 1,001 -- *
Stein, Stephan................................. -- 2,500 * 2,500 -- *
Steitz, Timothy................................ 250,000 12,500 * 262,500 -- *
Sterios, Paul.................................. 25,000 1,001 * 26,001 -- *
Staid, James J................................. 12,500 11,250 * 23,750 -- *
Straughen, William J........................... 35,000 1,750 * 36,750 -- *
Tallur, Inder.................................. -- 5,500 * 5,500 -- *
Teneff, Hobart................................. 10,000 -- * 10,000 -- *
Thomson & Kernaghan & Co., Ltd................. 1,270,000 1,127,500 2.7 2,397,500 -- *
Thorsen, Marianne.............................. -- 7,500 * 7,500 -- *
Tobin, Raymond G. and Rose..................... -- 5,000 * 5,000 -- *
Toombs, Walter F............................... 50,000 -- * 50,000 -- *
Tracewell, Andrew C............................ 5,000 250 * 5,250 -- *
Tracewell, Larry............................... 35,000 1,750 * 36,750 -- *
Tracewell, Matthew S........................... 5,000 250 * 5,250 -- *
United Financial, Inc.......................... 33,146 -- * 33,146 -- *
Van Siclen, Bradford........................... -- 10,500 * 10,500 -- *
Volpe, Michael................................. -- 1,975 * 1,975 -- *
Wallace, David & Katy.......................... 10,000 10,000 * 20,000 -- *
Weiler, Steve.................................. 50,000 2,500 * 52,500 -- *
Weisbrod, Jay A................................ 8,333 8,333 * 16,666 -- *
Weyl, Steve.................................... 20,000 1,000 * 21,000 -- *
Winjum, Scott.................................. 2,500 -- * 2,500 -- *
Winkel, George................................. 25,000 -- * 25,000 -- *
Winston, Lawrence J.--IRA...................... 5,000 -- * 5,000 -- *
Woodworth, George H. Jr. and Margaret O........ -- 150,000 * 150,000 -- *
Wynne, Joseph P................................ -- 15,802 * 15,802 -- *
Zihnali, Balkir................................ 25,000 -- * 25,000 -- *

TOTAL.......................................... 63,711,303 15,066,336 74.7% 78,106,774 1,270,865 1.3%
</TABLE>

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

* Less than 1%

(1) Includes 5,000,000 held by Fondation Pamalu, a foundation of which Mr.
Amorim is the beneficiary, and 1,000,000 shares subject to currently
exercisable warrants held by Fondation Pamalu.

(2) Includes 30,000 shares subject to warrants held by Anasazi Marketing Group.

63
<PAGE>
(3) Includes the security holdings of the entities listed below, all of which
are affiliated with Banco Espirito Santo de Investimento:

<TABLE>
<CAPTION>
NUMBER OF
OUTSTANDING
ENTITY SHARES
- ------------------------------------------------------------------------------------- -----------
<S> <C>
Espirito Santo Dealer................................................................ 871,893
Espirito Santo Financial Holding..................................................... 514,139
Fundo de Pensoes Banco Espirito Santo................................................ 1,666,666
Compagnie Financiere Espirito Santo.................................................. 12,853
</TABLE>

(4) Includes 3,333,333 shares held by Codsall Corporation Gestar, SA.

(5) Includes shares held by the individuals and entitities listed below, each of
which is affiliated with Cumberland Associates:

<TABLE>
<CAPTION>
NUMBER
OF OUTSTANDING
ENTITY OR INDIVIDUAL SHARES
- ------------------------------------------------------------------------------ ------------------
<S> <C>
Cumber International.......................................................... 185,000
Cumberland Partners........................................................... 4,419,380
C-Valor LTD................................................................... 175,000
Cox, Edwin L.................................................................. 70,000
Delta Associates, LP.......................................................... 85,000
Long View Partners............................................................ 578,469
Long View Partners B, LP...................................................... 423,517
Long View Partners C, LP...................................................... 148,260
Schaefer, Charles V........................................................... 90,000
----------
----------
</TABLE>

(6) Includes 21,183 shares subject to currently exercisable warrants held by the
Eldridge Family Partnership, Ltd., 37,500 shares held by the Cornelia F.
Eldridge IRA and 7,500 shares subject to currently exercisable warrants held
by the Cornelia F. Eldridge IRA.

(7) Includes 367,859 shares held by Lighthouse Partners USA, L.P.

(8) Includes 50,000 shares jointly held by Deborah Penniston and Eric W.
Penniston, Jr. and 25,000 shares subject to currently exercisable warrants
jointly held by Deborah Penniston and Eric W. Penniston, Jr.

64
<PAGE>
PLAN OF DISTRIBUTION

The selling stockholders may offer their shares at various times in one or
more of the following transactions:

- on the Nasdaq SmallCap Market (or any other exchange on which the shares
may be listed);

- in the over-the-counter market;

- in negotiated transactions other than on such exchanges;

- by pledge to secure debts and other obligations;

- in connection with the writing of non-traded and exchange-traded call
options, in hedge transactions, in covering previously established short
positions and in settlement of other transactions in standardized or
over-the-counter options; or

- in a combination of any of the above transactions.

The selling stockholders may sell their shares at market prices prevailing
at the time of sale, at prices related to such prevailing market prices, at
negotiated prices or at fixed prices. The selling stockholders may use
broker-dealers to sell their shares. The broker-dealers will either receive
discounts or commissions from the selling stockholders, or they will receive
commissions from purchasers of shares.

Under certain circumstances the selling stockholders and any broker-dealers
that participate in the distribution may be deemed to be "underwriters" within
the meaning of the Securities Act. Any commissions received by such
broker-dealers and any profits realized on the resale of shares by them may be
considered underwriting discounts and commissions under the Securities Act. The
selling stockholders may agree to indemnify such broker-dealers against certain
liabilities, including liabilities under the Securities Act. In addition,
FiNet.com has agreed to indemnify the selling stockholders with respect to the
shares offered hereby against certain liabilities, including certain liabilities
under the Securities Act.

Under the rules and regulations of the Exchange Act, any person engaged in
the distribution or the resale of shares may not simultaneously engage in market
making activities with respect to the FiNet.com's common stock for a period of
two business days prior to the commencement of such distribution. The selling
stockholders will also be subject to applicable provisions of the Exchange Act
and regulations under the Exchange Act which may limit the timing of purchases
and sales of shares of FiNet.com's common stock by the selling stockholders.

The selling stockholders will pay all commissions, transfer taxes, and other
expenses associated with the sale of securities by them. The shares offered
hereby are being registered pursuant to contractual obligations of FiNet.com,
and FiNet.com has paid the expenses of the preparation of this prospectus. We
have not made any underwriting arrangements with respect to the sale of shares
offered hereby.

65
<PAGE>
DESCRIPTION OF CAPITAL STOCK

Our authorized capital stock consists of 150,000,000 shares of common stock,
$0.01 par value per share, and 100,000 shares of Preferred Stock, par value
$0.01 per share. As of June 30, 1999, 90,312,005 shares of common stock, and no
shares of preferred stock, were issued and outstanding.

COMMON STOCK

Subject to preferences that may apply to shares of preferred stock
outstanding at the time, the holders of outstanding shares of common stock are
entitled to receive dividends out of funds legally available therefor at such
times and in such amounts as the Board may from time to time determine. Each
stockholder is entitled to one vote for each share of common stock held on all
matters submitted to a vote of stockholders. Cumulative voting for the election
of directors is not provided for in FiNet.com's Certificate of Incorporation,
which means that the holders of a majority of the shares present at a meeting at
which a quorum is present voted can elect all of the directors then standing for
election. The common stock is not entitled to preemptive rights and is not
subject to conversion or redemption. Upon a liquidation, dissolution or
winding-up of FiNet.com, the assets legally available for distribution to
stockholders are distributable ratably among the holders of the common stock and
any participating preferred stock outstanding at that time after payment of
liquidation preferences, if any, on any outstanding preferred stock and payment
of other claims of creditors.

PREFERRED STOCK

We are authorized, subject to limitations prescribed by Delaware law, to
provide for the issuance of preferred stock in one or more series, to establish
from time to time the number of shares to be included in each such series, to
fix the rights, preferences and privileges of the shares of each wholly unissued
series and any qualifications, limitations or restrictions thereon, and to
increase or decrease the number of shares of any such series (but not below the
number of shares of such series then outstanding) without any further vote or
action by the stockholders. The Board may authorize the issuance of preferred
stock with voting or conversion rights that could adversely affect the voting
power or other rights of the holders of the common stock. The issuance of
preferred stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could, among other things, have the
effect of delaying, deferring or preventing a change in control of FiNet.com and
may adversely affect the market price of the common stock and the voting and
other rights of the holders of common stock.

REGISTRATION RIGHTS

We are registering the shares being sold by the selling stockholders
pursuant to contractual obligations to the selling stockholders. Other than the
shares being offered hereby, we are under no obligation to register any of our
shares.

WARRANTS

As of June 30, 1999, we had outstanding warrants to purchase 16,590,961
shares of common stock at exercise prices ranging from $0.50 to $5.00 and
expiring between April 2000 and June 2008.

ANTI-TAKEOVER PROVISIONS

DELAWARE LAW

We have not "opted out" of the provisions of Section 203 of the Delaware
General Corporation Law. In general, Section 203 restricts a corporation from
entering into certain business combinations with an interested stockholder
(defined as any person or entity that is the beneficial owner of at least

66
<PAGE>
15% of a corporation's voting stock) or its affiliates for a period of three
years after the date of the transaction in which the person became an interested
stockholder unless (i) the transaction is approved by the board of directors of
the corporation prior to such business combination, (ii) the interested
stockholder acquires 85% of the corporation's voting stock in the same
transaction in which it exceeds 15%, or (iii) the business combination is
approved by the board of directors and by a vote of two-thirds of the
outstanding voting stock not owned by the interested stockholder. "Business
combinations" include mergers, asset sales and other transactions resulting in a
financial benefit to the interested stockholder. A Delaware corporation may "opt
out" of Section 203 with an express provision in its original certificate of
incorporation or an express provision in its certificate or incorporation or
bylaws resulting from a stockholders' amendment approved by at least a majority
of the outstanding voting shares. The statute could prohibit or delay mergers or
other takeover or change-in-control attempts with respect to FiNet.com and,
accordingly, may discourage attempts to acquire us.

LEGAL MATTERS

The validity of the common stock offered hereby will be passed on for us by
Severson & Werson, San Francisco, California.

EXPERTS

The consolidated financial statements of FiNet.com at April 30, 1999 and for
the year in the period ended April 30, 1999, appearing in this prospectus and
registration statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report appearing elsewhere herein, and are
included in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.

FiNet.com's consolidated financial statements, except with respect to
Coastal Federal Mortgage, for the fiscal years ended April 30, 1998 and 1997
were audited by Reuben E. Price & Co., independent certified accountants, as set
forth in their report appearing elsewhere herein, and are included in reliance
upon such report given upon the authority of said firm as experts in accounting
and auditing.

ADDITIONAL INFORMATION

In February 1999, FiNet.com's Board of Directors decided to retain Ernst &
Young LLP as its independent accountants and dismissed Reuben E. Price & Co.
from that position. The reports of Reuben E. Price on FiNet.com's financial
statements for fiscal 1998 and 1997 contained no adverse opinion or disclaimer,
or were qualified as to uncertainty, audit scope, or accounting principles. The
decision to change independent accountants was recommended by management and was
approved by Finet.com's audit committee. During fiscal 1998 and 1997, there were
no disagreements with Reuben E. Price on any matter of accounting principles or
practices, finacial statement disclosure, or auditing scope or procedure.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly, and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any reports, statements or other information on file at the Commission's public
reference room in Washington, D.C. You can request copies of those documents,
upon payment of a duplicating fee, by writing to the Commission.

We have filed a registration statement on Form S-1 with the Commission. This
prospectus, which forms a part of that registration statement, does not contain
all the information set forth in the registration statement. Certain information
is omitted and you should refer to the registration statement and its exhibits.
Statements contained in this prospectus as to the contents of any contract,
agreement or other document referred to are not necessarily complete and you
should refer in each

67
<PAGE>
instance to the copy of such contract, agreement or other document filed as an
exhibit to the registration Statement, each statement being qualified in all
respects by such reference. You may read and copy all or any portion of the
registration statement or any reports, statements or other information we file
with the Commission at the Commission's public reference room at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's following regional
offices: Northeast Regional Office, 7 World Trade Center, Suite 1300, New York,
New York 10048; and Midwest Regional Office, Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661.

Our SEC filings and the registration statement can also be reviewed by
accessing the Commission's Internet site at http://www.sec.gov.

We will provide without charge to each person to whom a prospectus is
delivered upon written or oral request of such person, a copy of any document
incorporated herein by reference (not including exhibits to the document that
have been incorporated by reference unless such exhibits are specifically
incorporated by reference in the document which this prospectus incorporates).
Requests should be directed to: Chief Financial Officer, FiNet.com, Inc., 3021
Citrus Circle, Suite 150, Walnut Creek, California 94598, telephone (925)
988-6550.

68
<PAGE>
APPENDIX

Report of Ernst & Young LLP, Independent Auditors

The Board of Directors and Stockholders
FiNet.com, Inc.

We have audited the accompanying consolidated balance sheet of FiNet.com,
Inc., and subsidiaries as of April 30, 1999, and the related consolidated
statements of operations, changes in stockholders' equity, and cash flows for
the fiscal year ended April 30, 1999. These financial statements are the
responsibility of FiNet.com, Inc.'s management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides 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 FiNet.com, Inc. at April 30,
1999 and the consolidated results of their operations and their cash flows for
the fiscal year ended April 30, 1999, in conformity with generally accepted
accounting principles.

/s/ Ernst & Young LLP

June 11, 1999, except for Note 19, as to
which the date is June 28, 1999

F-1
<PAGE>
REUBEN E. PRICE & CO.
PUBLIC ACCOUNTANCY CORPORATION
703 MARKET STREET
SAN FRANCISCO, CA 94103

INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
FiNet.com, Inc.
Walnut Creek, CA

We have audited the accompanying consolidated balance sheet of FiNet.com,
Inc. (formerly Finet Holdings Corporation) and subsidiaries as of April 30,
1998, and the related consolidated statements of operations, stockholders'
equity and cash flows for the fiscal years ended April 30, 1998 and 1997. The
consolidated financial statements give retroactive effect to the merger of
FiNet.com, Inc. and Coastal Federal Mortgage Company on April 30, 1998, which
has been accounted for using the pooling of interests method as described in the
notes to the consolidated financial statements. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the 1998 and 1997 financial statements of Coastal
Federal Mortgage Company, which statements reflect total assets and revenues of
approximately 10 percent and 53 percent, respectively, of the related
consolidated totals as of April 30, 1998. Those statements were audited by other
auditors whose report has been furnished to us, and our opinion, insofar as it
relates to data included for Coastal Federal Mortgage Company, is based solely
on the report of the other auditors.

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, based on our audits and the report of other auditors, the
consolidated statements referred to above present fairly, in all material
respects, the financial position of FiNet.com, Inc. and subsidiaries as of April
30, 1998, the consolidated results of their operations and their cash flows for
the fiscal years ended April 30, 1998 and 1997 in conformity with generally
accepted accounting principles.

/s/ REUBEN E. PRICE & CO.
San Francisco, CA
August 12, 1998

F-2
<PAGE>
Richard A. Eisner & Company, LLP
Accountants and Consultants
100 Campus Drive
Florham Park, New Jersey 07932
973-593-7000

INDEPENDENT AUDITORS REPORT

To the Board of Directors
Coastal Federal Mortgage Company

We have audited the balance sheet of Coastal Federal Mortgage Company as of
April 30, 1998, and the related statements of income, stockholders' equity and
cash flows for each of the years in the two year period then ended (not
presented separately herein). 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 audit.

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

In our opinion, the financial statements enumerated above present fairly, in
all material respects, the financial position of Coastal Federal Mortgage
Company as of April 30, 1998, and the results of its operations and its cash
flows for each of the years in the two year period then ended, in conformity
with generally accepted accounting principles.

/s/ Richard A. Eisner & Company, LLP
Florham Park, New Jersey
July 9, 1998
With respect to Note C
July 31, 1998

F-3
<PAGE>
REPORT OF MANAGEMENT

To Our Stockholders:

Management of the Company is responsible for the preparation, integrity and
objectivity of the consolidated financial statements, and the other financial
information presented in the annual report. To meet these responsibilities we
maintain a system of internal control that is designed to provide reasonable
assurance as to the integrity and reliability of the financial statements, the
protection of Company and customer assets from unauthorized use, and the
execution and recording of transactions in accordance with management's
authorization. The system is augmented by careful selection of our managers, by
organizational arrangements that provide an appropriate division of
responsibility and by communications programs aimed at assuming that employees
adhere to the highest standards of personal and professional integrity. Although
no cost-effective internal control system will preclude all errors and
irregularities, we believe the Company's system of internal control is adequate
to accomplish the objectives set forth above.

The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles and necessarily include some amounts
that are based on estimates and our best judgments. The financial statements
have been audited by the independent accounting firm of Ernst & Young, LLP, who
were given unrestricted access to all the Company's financial records and
related data. We believe that all representations made to Ernst & Young LLP
during their audit were valid and appropriate.

The Board of Directors through its Audit Committee, which is comprised
entirely of nonmanagement directors, has an oversight role in the area of
financial reporting and internal control. The Audit Committee periodically meets
with Ernst & Young, LLP, our internal auditors and Company management to discuss
accounting, auditing, internal controls over financial reporting and other
matters.

F-4
<PAGE>
FINET.COM, INC.

CONSOLIDATED BALANCE SHEETS

APRIL 30

(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
ASSETS

Cash and cash equivalents................................................................. $ 4,202 $ 1,993
Accounts receivable, net of allowances of $2,150 and $36.................................. 2,245 26,186
Mortgages held for sale, net.............................................................. 33,438 63,034
Mortgage servicing rights................................................................. 2,693 5,478
Furniture, fixtures & equipment, net...................................................... 1,575 1,441
Other assets.............................................................................. 1,102 3,336
---------- ----------
Total assets............................................................................ $ 45,255 $ 101,468
---------- ----------
---------- ----------

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
Warehouse and other lines of credit....................................................... $ 33,038 $ 86,659
Accounts payable.......................................................................... 517 2,951
Notes payable and capitalized leases...................................................... 481 860
Accrued expenses and other liabilities.................................................... 4,531 2,139
Convertible subordinated debentures....................................................... -- 5,500
---------- ----------
Total liabilities......................................................................... 38,567 98,109

Commitments and contingencies............................................................. -- --

Stockholders' equity:
Common stock, par value $.01 per share (150,000 shares authorized, 78,638 and 32,052
shares issued and outstanding at April 30, 1999 and 1998, respectively)................. 786 321
Additional paid-in capital................................................................ 53,782 13,675
Accumulated deficit....................................................................... (47,880) (10,637)
---------- ----------
Total stockholders' equity.............................................................. 6,688 3,359
---------- ----------
Total liabilities and stockholders' equity................................................ $ 45,255 $ 101,468
---------- ----------
---------- ----------
</TABLE>

See accompanying notes to the consolidated financial statements.

F-5
<PAGE>
FINET.COM, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED APRIL 30

(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
1999 1998 1997
---------- --------- ---------
<S> <C> <C> <C>
Revenues........................................................................ $ 22,413 $ 15,160 $ 12,344
Cost of revenues................................................................ 35,064 14,718 9,316
---------- --------- ---------
Gross profit.................................................................... (12,651) 442 3,028
Operating expenses
General and administrative.................................................... 11,661 5,887 4,451
Marketing and advertising..................................................... 2,205 921 667
Special charges (Note 13)..................................................... 4,926 1,010 --
Depreciation and amortization................................................. 646 482 105
Other......................................................................... 1,468 875 552
---------- --------- ---------
Total expenses.............................................................. 20,906 9,175 5,775
---------- --------- ---------
Loss from operations............................................................ (33,557) (8,733) (2,747)
Other interest expense.......................................................... 2,976 420 118
---------- --------- ---------
Loss before income taxes and extraordinary gain................................. (36,533) (9,153) (2,865)
Income tax expense.............................................................. 5 226 225
---------- --------- ---------
Loss before extraordinary gain.................................................. (36,538) (9,379) (3,090)
Extraordinary gain on liabilities subject to compromise......................... -- -- 312
---------- --------- ---------
Net loss........................................................................ (36,538) (9,379) (2,778)
In-substance preferred dividend................................................. 705 -- --
---------- --------- ---------
Net loss available to common stockholders....................................... $ (37,243) $ (9,379) $ (2,778)
---------- --------- ---------
---------- --------- ---------
Loss per share available to common stockholders:
Basic and diluted net loss per share before extraordinary item................ $ (0.79) $ (0.31) $ (0.21)
Extraordinary gain on liabilities subject to compromise....................... -- -- .02
---------- --------- ---------
Basic and diluted net loss per common share................................... $ (0.79) $ (0.31) $ (0.19)
---------- --------- ---------
---------- --------- ---------
Weighted average common shares used in computing basic and diluted net loss per
common share.................................................................. 46,867 30,433 14,313
---------- --------- ---------
---------- --------- ---------
</TABLE>

See accompanying notes to the consolidated financial statements.

F-6
<PAGE>
FINET.COM, INC.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED APRIL 30
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss....................................................................... $ (36,538) $ (9,379) $ (2,778)
Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:
Depreciation and amortization................................................ 2,476 1,549 543
Imputed interest from convertible debentures................................. 2,502 287 --
Write down of goodwill and other asset valuation adjustments................. 4,958 1,728 164
Gain on sale of mortgage servicing rights.................................... (420) -- --
Expenses paid by issuance of common stock or warrants........................ 1,804 392 52
Expense from warrants issued upon conversion of debentures................... 739 -- --
Extraordinary gain on liabilities subject to compromise...................... -- -- (312)
Changes in operating assets and liabilities:
(Increase) decrease in mortgage loans held for sale.......................... 71,596 (38,562) (6,130)
(Increase) decrease in receivables from sales of mortgage loans, servicing
rights and other receivables............................................... 23,911 (20,496) 8,412
(Increase) decrease in originated mortgage servicing rights,................. 382 (1,248) (876)
(Increase) decrease in other assets.......................................... 724 317 (498)
Net increase (decrease) in warehouse borrowings.............................. (91,494) 58,357 (345)
Increase (decrease) in accounts payable and accrued expenses................. (6,175) 3,006 106
Other operating.............................................................. 309 (229) --
--------- --------- ---------
Net cash used in operating activities...................................... (25,226) (4,278) (1,662)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of mortgage servicing rights.......................................... -- (4,515) (287)
Proceeds from sale of mortgage servicing rights................................ 1,509 497 --
Acquisition of mortgage loans held for investment.............................. -- -- (87)
Purchase of furniture, fixtures and equipment.................................. (338) (647) (265)
Acquisition of purchased technology and intangibles............................ (481) (1,007) (67)
Cash acquired in acquisition................................................... 185 --
Pre-acquisition advances to affiliates, net of payments........................ -- (1,930) (717)
Other.......................................................................... -- 110 234
--------- --------- ---------
Net cash provided by (used in) investing activities........................ 875 (7,492) (1,189)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock......................................... 27,775 6,582 4,438
Proceeds from issuance of convertible preferred stock.......................... 2,286 -- --
Proceeds from issuance of convertible debt..................................... 1,384 5,058 --
Repurchase of common stock..................................................... -- -- (180)
Proceeds from advances on note payable and line of credit...................... 1,400 2,550 1,950
Proceeds from the exercise of common stock warrants and options................ 1,447 219 --
Redemption of convertible debt................................................. (1,500) -- --
Redemption of convertible preferred stock...................................... (2,500) -- --
Repayment of note payable, capitalized leases and line of credit............... (3,732) (1,665) (2,305)
Repayments of loans and distributions to former stockholders................... -- (129) (1,707)
Proceeds from notes payable to officers........................................ -- -- 625
--------- --------- ---------
Net cash provided by (used in) financing activities........................ 26,560 12,615 2,821
--------- --------- ---------
Net increase in cash............................................................. 2,209 845 (30)
Cash at beginning of period...................................................... 1,993 1,148 1,178
--------- --------- ---------
Cash at end of period............................................................ $ 4,202 $ 1,993 $ 1,148
--------- --------- ---------
--------- --------- ---------
Supplemental disclosures:
Interest paid.................................................................. $ 6,812 $ 1,877 $ 1,966
Taxes paid..................................................................... $ 2 $ 57 $ 351
</TABLE>

See accompanying notes to the consolidated financial statements.

F-7
<PAGE>
FINET.COM, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED APRIL 30, 1999, 1998 AND 1997

<TABLE>
<CAPTION>
COMMON STOCK PAID COMMON RETAINED
--------------------------- IN STOCK EARNINGS TOTAL
SHARES AMOUNT SUBSCRIBED CAPITAL SUBSCRIPTION (DEFICIT) CAPITAL
------ ------ ---------- ------- ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance April 30, 1996............................ 9,650 $ 97 $ -- $ 1,478 $ -- $ 2,261 $ 3,836
Issue of common shares:
Common stock offerings.......................... 11,992 80 40 7,233 (2,693) 4,660
Reverse acquisition............................. 6,412 64 (3,455) (3,391)
Debt & note payable conversion.................. 2,314 23 1,136 1,159
Liabilities subject to compromise settlements... 230 2 113 115
Common stock rights............................. 2,403 24 (24) --
Stock option exercise........................... 3
Repurchase of common shares....................... (3,000) (30) (150) (180)
Distributions to stockholders..................... (741) (741)
Net loss.......................................... (2,778) (2,778)
------ ------ --- ------- ------------ --------- --------
Balance April 30, 1997............................ 30,004 260 40 6,331 (2,693) (1,258) 2,680
Proceeds of subscription receivable............... 40 (40) 2,693 2,693
Issue of common shares:
In connection with acquisitions:
Real Estate Office Software................... 150 2 373 375
iQualify, Inc................................. 50 1 180 181
NDS........................................... 202 2 806 808
Private placement............................... 1,300 13 3,887 3,900
Settlement of liabilities....................... 232 2 355 357
Employee bonuses................................ 9 35 35
Warrants exercised................................ 105 1 157 158
Paid in capital related to imputed interest on
issue of convertible debt....................... 1,551 1,551
Net loss.......................................... (9,379) (9,379)
------ ------ --- ------- ------------ --------- --------
Balance April 30, 1998............................ 32,052 321 13,675 (10,637) 3,359
Issue of common shares:
Private placements of common shares............. 34,138 341 28,196 28,537
Costs of equity offerings....................... (762) (762)
In connection with acquisitions:
Mical Mortgage, Inc........................... 465 5 1,798 1,803
Interloan.com................................. 100 1 74 75
Real Estate Office Software................... 50 -- 246 246
Conversion of convertible subordinated
debentures.................................... 9,533 95 5,405 5,500
Warrants exercised.............................. 1,122 11 1,410 1,421
Stock options exercised......................... 378 4 22 26
Employee/other compensation..................... 800 8 1,120 1,128
Paid in capital related to imputed interest on
issue of convertible debentures................. 423 423
Paid in capital and in-substance dividend on
preferred stock................................. 705 (705) --
Warrants issued with subordinated convertible
debentures...................................... 269 269
Warrants issued upon conversion of debentures..... 739 739
Issue of preferred stock.......................... 2,500 2,500
Costs of preferred stock issue.................... (214) (214)
Redemption of preferred stock..................... (2,500) (2,500)
Warrants issued for services...................... 676 676
Net loss.......................................... (36,538) (36,538)
------ ------ --- ------- ------------ --------- --------
Balance April 30, 1999............................ 78,638 $786 -$- $53,782 $ $ (47,880) $ 6,688
------ ------ --- ------- ------------ --------- --------
------ ------ --- ------- ------------ --------- --------
</TABLE>

See accompanying notes to the consolidated financial statements

F-8
<PAGE>
FINET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. THE COMPANY

ORGANIZATION

FiNet.com ("FiNet" or "the Company") is a provider of mortgage services to
consumers and mortgage broker businesses, including online mortgage services.
The Company primarily markets its consumer mortgage services through marketing
agreements with general interest websites and co-branding arrangements with
financial services websites. FiNet operates its business-to-consumer and
business-to-business segments through Monument Mortgage, Inc. ("Monument"),
which is licensed to originate loans in 30 states and the District of Columbia,
and is licensed to fund and close mortgage loans in 32 states and the District
of Columbia. The majority of Monument's business activity is carried out in
California.

Effective June 1, 1999, the Company changed its name from Finet Holdings
Corporation to FiNet.com, Inc.

RISKS AND UNCERTAINTIES

The Company has a limited operating history under its current business
model, and its prospects are subject to the risks, expenses and uncertainties
frequently encountered by companies in the new and rapidly evolving markets for
Internet products and services. These risks include the failure to develop and
extend the Company's online service brands, the rejection of the Company's
services by consumers, vendors and/or advertisers, the inability of the Company
to maintain and increase the levels of traffic on its online services, as well
as other risks and uncertainties.

FiNet is substantially dependent on its mortgage finance partners, and the
termination of one or more of these relationships would adversely affect FiNet's
business. Through Monument Mortgage, the Company funds and closes mortgage
loans. As a non-depository mortgage banker, Monument Mortgage is dependent on
specialized mortgage credit facilities to finance its mortgage lending
activities. The Company defaulted on both its warehouse credit lines with
Residential Funding Corporation ("RFC") during fiscal 1999, and both warehouse
lines have expired. However, RFC continues to provide warehouse credit
facilities through a month-to-month extension of credit as a new agreement is
being negotiated and potential additional warehouse financing resources are
sought. Management expects that RFC will continue to extend the facility monthly
until the agreement is finalized; however, there can be no assurance that such
extensions will be granted.

The Company experienced losses for fiscal 1999, 1998, and 1997 and had an
accumulated deficit at April 30, 1999. Net losses are expected for the
foreseeable future. Equity capital has been raised in fiscal 1999, 1998 and
1997, and $43,020,000 was raised subsequent to fiscal 1999. In addition, the
Company's cash on hand at April 30, 1999 was $4,202,000. Future capital
requirements depend on many factors including the Company's ability to execute
its business plan. The Company may need to raise additional capital through the
issuance of debt or equity to execute its business plan. There can be no
assurance that the Company will be able to raise additional capital, or that
such capital will be available at all on satisfactory terms. Failure to raise
additional capital when needed could have a material adverse effect on the
Company's business, results of operations and financial condition.

F-9
<PAGE>
FINET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION

The consolidated financial statements include the accounts of FiNet and its
wholly owned subsidiaries. All significant intercompany transactions have been
eliminated. Certain reclassifications have been made to prior year financial
statements to conform to the fiscal 1999 presentation.

USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS

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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash balances and instruments with
maturities of three months or less at the time of purchase.

MORTGAGE LOANS HELD FOR SALE

Mortgage loans held for sale, net of related discounts and premiums, are
carried at the lower of aggregate cost or market value. Market valuation
adjustments of $3,851,000 and $396,000 at April 30, 1999 and 1998, respectively,
were required and recorded in a valuation allowance by charges to revenues.
Pursuant to the mortgage terms for the loans, the borrowers have pledged the
underlying real estate as collateral for the loans.

MORTGAGE SERVICING RIGHTS

Originated loan servicing is recorded based on its relative fair value when
separated from the underlying loan and retained by the Company. Purchased loan
servicing is recorded at cost, which is not in excess of the future net cash
flows related to the servicing profile. Impairment of mortgage servicing rights
is determined using the estimated fair value of the servicing rights based on
third party appraisals or written bids. The appraisals use a discounted cash
flow analysis on a disaggregated portfolio basis stratified by loan type,
investor type, and interest rate to determine fair value. Any indicated
impairment is recorded using a valuation allowance.

FURNITURE, FIXTURES AND EQUIPMENT

Furniture, fixtures and equipment, including furniture and equipment under
capital leases, are stated at cost. Depreciation and amortization, which
includes the amortization of assets recorded under capital leases, is computed
straight-line over their estimated useful lives of three to seven years. The
cost of repairs and maintenance of furniture, fixtures and equipment is charged
to operating expense.

REVENUE RECOGNITION

Lending transaction fees are deferred until the related loan is sold. Upon
sale of the loan, deferred transaction fee income is recognized and included in
gain on sale of mortgage loans.

F-10
<PAGE>
FINET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Discounts and premiums from the origination of mortgage loans held for sale are
deferred and recognized as adjustments to gain or loss upon sale.

Loan servicing fees represent fees earned for servicing loans for various
investors. The fees are either based on a contractual percentage of the
outstanding principal balance or a fixed dollar amount per loan. Fees are
credited to income when the related payments are received.

Loan brokerage fees represent fees earned by the Company's
business-to-consumer segment for processing of mortgage loan applications for
third party lenders. The fees for providing these services are recognized at
such time as the loans are funded by the lender.

Direct loan origination costs and other production costs attributable to
inventory as well as other costs associated with revenues earned during the
period are included in "Cost of revenues" in the Company's Consolidated
Statement of Operations.

The Company's revenue components are:

<TABLE>
<CAPTION>
CURRENT PRESENTATION
-------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Revenues:
Warehouse interest income...................... $ 6,009 $ 3,247 $ 2,433
Gain on sale of servicing rights and mortgage
loans........................................ 11,847 10,187 9,022
Loan servicing fees............................ 1,319 823 589
Loan brokerage fees............................ 2,895 418 94
Marketing services............................. 106 367 60
Other.......................................... 237 118 146
--------- --------- ---------
Total revenues............................... $ 22,413 $ 15,160 $ 12,344
--------- --------- ---------
--------- --------- ---------
</TABLE>

In fiscal 1998 and fiscal 1997, direct loan origination costs were included
in the computation of the gain or loss on sale of the related loans. The
components of fiscal 1998 and fiscal 1997 statements of operations have been
reclassified and condensed in the fiscal 1999 statement of operations to conform
to the fiscal 1999 presentation. Following are the Company's revenues consistent
with the fiscal 1998 and fiscal 1997 classifications:

<TABLE>
<CAPTION>
PRIOR PRESENTATION
-------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Revenues:
Warehouse interest income...................... $ 6,009 $ 3,247 $ 2,433
Gain on sale of servicing rights and mortgage
loans........................................ 8,591 7,543 6,827
Loan servicing fees............................ 1,319 868 589
Loan brokerage fees............................ 2,895 418 94
Marketing services............................. 106 367 60
Other.......................................... 237 118 146
--------- --------- ---------
Total revenues............................... $ 19,157 $ 12,561 $ 10,149
--------- --------- ---------
--------- --------- ---------
</TABLE>

F-11
<PAGE>
FINET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
MARKETING AND ADVERTISING COSTS

All marketing and advertising costs are charged to operating expenses as
incurred.

INCOME TAXES

The Company and its subsidiaries file consolidated federal and separate or
combined tax returns for certain states. State and local income taxes are filed
according to the taxable activities of the Company.

In accordance with the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 109, Accounting for Income Taxes, the Company uses the
liability method of accounting for income taxes. Under the liability method,
deferred tax assets and liabilities are recognized for the expected future tax
consequences of existing differences between financial reporting and tax
reporting bases of assets and liabilities, as well as for operating losses and
tax credit carry-forwards, using enacted tax laws and rates. Deferred tax assets
are recognized to the extent that management believes, based on available
evidence, that it is more likely than not that they will be realized. Deferred
tax expense represents the net change in the deferred tax asset or liability
balance during the year. This amount, together with income taxes currently
payable or refundable for the current year, represents the total income tax
expense for the year.

LOSS PER SHARE

The Company computes basic net loss and diluted net loss per share in
accordance with SFAS No. 128, Earnings per Share. Under the provisions of SFAS
No. 128 basic net loss per share is computed by dividing the net loss available
to common stockholders for the period by the weighted average number of common
shares outstanding during the period. Diluted net loss per share is computed by
dividing the net loss available to common stockholders for the period by the
weighted average number of common and common equivalent shares outstanding
during the period, to the extent such common equivalent shares are dilutive.
Since the common equivalent shares for all years were antidilutive (i.e. reduce
net loss per share), basic and diluted loss per share are the same.

The Company has excluded all outstanding warrants and options to purchase
common stock and shares potentially issuable upon conversion of convertible
subordinated debentures existing at April 30, 1998 from the calculation of loss
per share, because their inclusion would be antidilutive (i.e. reduce the net
loss per share) for all periods presented. The number of options to purchase
common stock that were excluded are 7,512,494, 737,875, and 558,875 for 1999,
1998 and 1997, respectively. Warrants to purchase common stock of 16,421,000,
10,596,000 and 6,907,000 for 1999, 1998 and 1997, respectively, and 2,659,000
shares potentially issuable upon conversion of subordinated debentures at April
30, 1998 were also excluded.

COMPREHENSIVE INCOME (LOSS)

The Company adopted SFAS No. 130, "Reporting Comprehensive Income" at April
30, 1999. The Company is required to display comprehensive income (loss) and its
components as part of the financial statements. Other comprehensive income
(loss) includes certain changes in equity that are excluded from net income
(loss). The Company has no material components of other comprehensive loss, and,
accordingly, the comprehensive loss is the same as the net loss for all periods
presented.

F-12
<PAGE>
FINET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
STOCK-BASED COMPENSATION

The Company accounts for stock-based employee compensation arrangements in
accordance with the provisions of Accounting Principals Board ("APB") Opinion
No. 25, Accounting for Stock Issued to Employees, and complies with the
disclosure provision of SFAS No. 123, Accounting for Stock-Based Compensation.
Under APB No. 25, compensation expense is based on the excess of the estimated
fair value of the Company's stock over the exercise price, if any, on the grant
date.

NEW ACCOUNTING STANDARDS

In June 1998 the FASB issued Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No.
133"). However, the effective date for this pronouncement was delayed for one
year from the original required date of fiscal years beginning after June 15,
1999. SFAS No. 133 will require the Company to record all derivatives on the
balance sheet at fair value. Changes in derivative fair values will either be
recognized in earnings as offsets to the changes in fair value of related hedged
assets, liabilities and firm commitments or, for forecasted transactions,
deferred and recorded as a component of comprehensive income in stockholders'
equity until the hedged transactions occur and are recognized in earnings. The
ineffective portion of a hedging derivative's change in fair value will be
immediately recognized in earnings. The Company anticipates engaging in hedging
activity in the future, and therefore expects to be impacted by the
pronouncement. The impact of FAS No. 133 on the Company's consolidated financial
statements, however, will depend on a variety of factors, including the level of
future hedging activity, the types of hedging instruments used and the
effectiveness of such instruments.

NOTE 3. ACQUISITIONS AND DISPOSITIONS

On May 19, 1998 the Company acquired all of the issued and outstanding
shares of Mical Mortgage, Inc. ("Mical"), a non-public mortgage banker with
offices in San Diego, California and Las Vegas, Nevada, in exchange for 552,000
shares of FiNet's common stock. At the purchase date, 431,930 of these shares
were issued and were valued at $1,674,000. The remaining shares are issuable
upon the resolution of specified contingencies related to the acquisition and
will be recognized as additional purchase price if and when the contingencies
are resolved. The acquisition was accounted for as a purchase. Accordingly, the
results of Mical's operations have been included in the Company's consolidated
financial statements subsequent to the acquisition date. The $3,332,000 excess
of the purchase price over the fair value of the acquired net assets, net of
purchase accounting adjustments, was recorded as goodwill. The Company
discontinued the operations of Mical during fiscal 1999. (See Note 13.)

On April 30, 1998 FiNet acquired all the issued and outstanding common
shares of Coastal Federal Mortgage Company ("Coastal"), a non-public, sub prime
mortgage banker with offices in New Jersey, Pennsylvania and Florida, in
exchange for 1,250,000 shares of our common stock. This transaction was
accounted for as a pooling of interests and, consequently, the consolidated
financial statements of FiNet have been restated to include the balance sheet
and statements of operations of Coastal for all periods reported. The Company
discontinued the operations of Coastal during fiscal 1999 and recorded $405,000
in "Special charges" in the Consolidated Statement of Operations related to
liquidating the assets and satisfying the liabilities of Coastal.

F-13
<PAGE>
FINET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. ACQUISITIONS AND DISPOSITIONS (CONTINUED)
On February 9, 1998 the Company acquired all of the issued and outstanding
stock of iQualify, Inc., a software developer whose principal asset is the
iQualify software currently used by FiNet, for a consideration of 50,000 shares
of FiNet common stock valued at $180,000, plus certain future usage-based
payments. The acquisition was accounted for as a purchase.

In December 1997, the Company completed the purchase of substantially all of
the assets of Real Estate Office Software, Inc. ("REOS"), a Nevada corporation.
REOS is a software development and marketing company whose primary product is a
proprietary realtor productivity tool called the Real Estate Office. The total
price paid was $1,261,000. Cash of $641,000 was paid and the remaining $620,000
was settled with 200,000 shares of FiNet's common stock. The acquisition cost
was recorded as purchased technology. In fiscal 1999, management determined that
REOS no longer fit the strategic direction of the Company and that the purchased
technology was permanently impaired based on projected future cash flows.
Accordingly, the Company expensed the remaining recorded value of REOS of
$690,000 in "Special charges" in the Company's Consolidated Statement of
Operations.

On December 31, 1996, FiNet acquired all of the outstanding common stock of
Monument Mortgage, Inc. ("Monument") in exchange for 8.4 million common shares
of the Company and a cash payment of $1,000,000. For accounting purposes, the
cash payment was deemed a dividend payment to Monument stockholders and the
common shares issued in the acquisition have been treated as a recapitalization
of Monument, with Monument as the reverse acquisition acquirer. The historical
financial statements prior to December 31, 1996 are those of Monument and are
deemed to be those of the reporting entity. Since the Company's operations were
minimal or dormant during the year ended December 31, 1996, the reverse
acquisition was considered a capital transaction rather than a business
combination. Following the reverse acquisition, the Company changed its fiscal
year end from December 31 to April 30 to conform to the fiscal year end of
Monument.

NOTE 4. MORTGAGE SERVICING RIGHTS

Mortgage servicing rights and the related valuation allowance activity for
fiscal 1999, 1998, and 1997 were as follows:

<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of year......................... $ 5,478 $ 579 $ 156
Additions............................................ 1,192 5,763 463
Sales................................................ (1,825) (268) --
Scheduled amortization............................... (1,199) (596) (40)
Impairment additions charged to operations........... (1,703) -- --
Impairment reductions credited to operations......... 750 -- --
--------- --------- ---------
Ending balance....................................... $ 2,693 $ 5,478 $ 579
--------- --------- ---------
--------- --------- ---------
</TABLE>

In connection with mortgage servicing activities, the Company segregates
escrow and custodial funds in a separate trust account and excludes this balance
of $3.7 million and $16.0 million at April 30, 1999 and 1998, respectively, from
its balance sheet.

F-14
<PAGE>
FINET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5. FURNITURE, FIXTURES AND EQUIPMENT

Furniture, fixtures and equipment consists of the following:

<TABLE>
<CAPTION>
APRIL 30
--------------------
1999 1998
--------- ---------
<S> <C> <C>
(IN THOUSANDS)
Furniture and fixtures..................................... $ 315 $ 1,010
Computer equipment......................................... 2,650 1,855
Office equipment........................................... 1,622 225
Leasehold improvements..................................... 243 205
--------- ---------
Total cost................................................. 4,830 3,295
Less: accumulated depreciation............................. (3,255) (1,854)
--------- ---------
Net furniture, fixtures and equipment...................... $ 1,575 $ 1,441
--------- ---------
--------- ---------
</TABLE>

NOTE 6. BORROWING ARRANGEMENTS

Borrowing arrangements consist of the following:

<TABLE>
<CAPTION>
APRIL 30
--------------------
1999 1998
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
WAREHOUSE AND OTHER LINES OF CREDIT
Warehouse lines of credit:
$35 and $55 million committed at April 30, 1999 and 1998,
respectively, bearing interest at LIBOR + variable spread, expired
December 31, 1998 with monthly extensions........................... $ 30,906 $ 55,000
$25 million uncommitted gestation, bearing interest at LIBOR + 2.5%,
expired December 31, 1998........................................... -- 22,552
$10 and $24 million committed at April 30, 1999 and 1998,
respectively, bearing interest at LIBOR + 2.5%, expired December 31,
1998................................................................ 1,001 7,707
Purchase/Repurchase agreements:
$10 million, bearing interest at prime................................ 138 --
$10 million, bearing interest at prime................................ 993 --
--------- ---------
33,038 85,259
Servicing acquisition financing........................................... -- 400
Revolving line of credit.................................................. -- 1,000
--------- ---------
$ 33,038 $ 86,659
--------- ---------
--------- ---------
NOTES AND CAPITAL LEASES:
$1.0 million original note.............................................. $ -- $ 500
Notes and capital leases (various rates)................................ 481 360
--------- ---------
TOTAL DEBT................................................................ $ 481 $ 860
--------- ---------
--------- ---------
3% CONVERTIBLE SUBORDINATED DEBENTURES.................................... $ -- $ 5,500
--------- ---------
--------- ---------
</TABLE>

F-15
<PAGE>
FINET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6. BORROWING ARRANGEMENTS (CONTINUED)

WAREHOUSE LINES OF CREDIT

The Company's continuing operations employ an uncommitted $35 million
revolving warehouse facility. The remaining facilities were used by the
Company's discontinued operations, and, after the balances are liquidated, will
not be renegotiated. The $35 million warehouse facility has expired. However,
the warehouse lender has provided month-to- month extensions as a new agreement
is being negotiated and potential additional warehouse financing resources are
sought. Management expects that the lender will continue to extend the facility
monthly until the agreement is finalized; however, there can be no assurance
that such extensions will be granted. At April 30, 1999, and 1998, LIBOR was
4.90%, and 5.69%, respectively, and the prime rate was 7.75% and 8.5%,
respectively. For fiscal 1999, 1998 and 1997, the Company recorded warehouse
interest expense of $6,587,000, $2,710,000, and $1,874,000, respectively.

WAREHOUSE FACILITY COVENANTS

The agreement for the warehouse line of credit (the "Agreement") contains
various financial covenants including minimum net worth, current ratio, tangible
net worth, and leverage ratio requirements. Should an event of default occur, as
defined in the Agreement, outstanding principal and interest are due on demand.

At April 30, 1998, the Company was in violation of a tangible net worth debt
covenant for which the lender subsequently issued a formal waiver letter.

In the second quarter of fiscal 1999, the Company's primary warehouse
lender, General Motors Acceptance Corporation/Residential Funding Corporation
("GMAC/RFC" or "RFC"), notified the Company that it was in default of its
lending agreements, as the required interest and debt service obligations were
not met as they became due. The Company was also in violation of certain
financial covenants. As of April 30, 1999, the Company had cured all defaults
with RFC and was current on the required interest and debt service payments. The
warehouse lines of credit with RFC expired on December 31, 1998. RFC and the
Company have executed monthly extension agreements to these warehouse lines,
with the most recent extension expiring on June 30, 1999.

At April 30, 1999, the Company was in violation of various financial
covenants related to its non-primary warehouse lenders. The Company is
negotiating the closure of these warehouse lines.

NOTES AND CAPITAL LEASES

At April 30, 1999 and 1998, the Company had notes payable of $300,000 and
$500,000, respectively. The note representing the fiscal 1998 balance had an
interest rate of prime + .625%. The note representing the fiscal 1998 balance
has been paid. In fiscal 1999 the notes bore interest rates of 10% and 15%. The
Company incurred interest expense relating to these notes of $147,000, $82,000
and $121,000 for 1999, 1998, and 1997, respectively.

At April 30, 1999 and 1998, the Company had capitalized lease obligations of
$181,000 and $360,000, respectively. These lease obligations are payable in
monthly installments through 2002. The Company incurred interest expense of
$19,000, $36,000 and $26,000 for fiscal 1999, 1998 and 1997, respectively, on
these lease obligations. The equipment financed serves as collateral for the
capitalized leases.

F-16
<PAGE>
FINET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6. BORROWING ARRANGEMENTS (CONTINUED)
3% SUBORDINATED CONVERTIBLE DEBENTURES

The Company issued $7,000,000 3% Subordinated Convertible Debentures in a
private placement with interest payable in common stock of FiNet when converted,
or in cash at maturity, redemption or retirement. The Company also issued
175,000 detachable warrants for purchase of the Company's common stock in
connection with debenture issuance. These debentures were issued in three
separate tranches with the first two tranches issued in fiscal 1998 totaling
$5,500,000 and the third tranch issued in fiscal 1999 totaling $1,500,000. The
debentures were convertible into the Company's common stock at the lesser of
$5.00 per common share or 78% of the determined market price prior to
conversion.

The Company recorded $1,974,000 as additional paid in capital for the
discount deemed related to imputed interest for the preferential conversion
feature on the debentures. This discount was amortized to interest expense over
the period from the date of issue to the date debentures first became
convertible. Interest expense of $1,687,000 and $287,000 in fiscal 1999 and
1998, respectively, was recognized in connection with the discount amortization
and is included in other interest expense. Additionally, the Company recorded
$269,000 in fiscal 1999 as a discount and additional paid in capital for the
deemed fair value of 175,000 detachable warrants. This discount was fully
amortized to interest expense during fiscal 1999.

In January 1999, $1,100,000 of the total $7,000,000 debentures were
converted into 2,200,000 common shares at a conversion price of fifty cents per
share, and an additional $4,400,000 of debentures were converted into 7,333,333
common shares at a conversion price of sixty cents per share. The remaining
$1,500,000 of debentures were redeemed for cash at 100 percent of face value. In
connection with the redemption, the Company also issued 840,000 5-year warrants
exercisable at $1.50 per share, to the debenture holders. Expense of $739,000
was recorded for the deemed fair value of these warrants and is included in
"Other expense" in the Company's Consolidated Statement of Operations.
Additionally, capitalized debt issuance costs of $546,000 were expensed in
fiscal 1999 and are included in "Other interest expense" on the Company's
Consolidated Statement of Operations.

NOTE 7. LIABILITIES SUBJECT TO COMPROMISE

Prior to the December 31, 1996 reverse acquisition, FiNet had incurred
$969,000 of unsecured trade creditor accounts payable. The Company had settled a
majority of these claims by April 30, 1997. The creditors agreed to accept, on
average, 33.8% of what they were owed. The payments were made in the form of
cash and shares of the Company's common stock. The reduction of this liability
gave rise to extraordinary gain of $312,000 for the year ended April 30, 1997.
The balance of liabilities subject to compromise was $438,000 at April 30, 1999
and April 30, 1998.

F-17
<PAGE>
FINET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8. COMMITMENTS AND CONTINGENCIES

Leases

The Company leases its facilities and certain equipment under non-cancelable
operating and capital leases. Future minimum payments consist of the following
at April 30, 1999.

<TABLE>
<CAPTION>
FISCAL YEAR OPERATING CAPITAL
- -------------------------------------------------------------------- ------------- -----------
<S> <C> <C>
2000................................................................ $ 600 $ 138
2001................................................................ 494 54
2002................................................................ 152 8
2003................................................................ 92 --
2004................................................................ 3 --
------ -----
Total minimum lease payments........................................ $ 1,341 200
------
------
Less amount representing interest................................... (19)
-----
Present value of minimum lease payments............................. $ 181
-----
-----
</TABLE>

Rental expense for fiscal 1999, 1998, and 1997, was $867,000, $601,000 and
$514,000, respectively.

LITIGATION

Prior to the Mical acquisition a lawsuit was filed which alleges, among
other things, that Mical made certain payments in violation of the Real Estate
Settlement Procedures Act and induced mortgage brokers to breach their alleged
fiduciary duties. The plaintiffs seek unspecified compensatory and punitive
damages. Management believes that its compensation programs comply with
applicable laws and with long standing industry practices and that it has
meritorious defenses to the action. The Company intends to defend vigorously
against the action and believes that the ultimate resolution will not have a
material adverse effect on the Company's results of operations or consolidated
financial position.

The Company and certain subsidiaries are defendants in various legal
proceedings. Although it is difficult to predict the outcome of such cases,
after reviewing with counsel all such proceedings, management does not expect
the aggregate liability, if any, resulting therefrom, will have a material
adverse effect on the consolidated financial position or results of operations
of the Company and its subsidiaries.

NOTE 9. MORTGAGE BANKING ACTIVITIES AND RELATED RISKS

In the normal course of business, companies in the mortgage banking industry
encounter certain economic and regulatory risks including: interest rate risk,
market risk, credit risk and repurchase risk.

The Company's commitments to extend credit (pipeline loans) for which
interest rates were committed to borrowers, subject to loan approval, totaled
approximately $25,604,000 and $87,300,000 as of April 30, 1999 and 1998,
respectively. Until a rate commitment is extended by the Company to a borrower,
there is no market risk to the Company. If market interest rates rise between
the time the Company commits to originate a loan at a specific rate and the time
such loans are priced for sale, the market price of the loan declines, resulting
in a loss on the sale of the loan.

F-18
<PAGE>
FINET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9. MORTGAGE BANKING ACTIVITIES AND RELATED RISKS (CONTINUED)
To protect against such losses, the Company attempts to manage its interest
rate risk exposure through hedging transactions using a combination of forward
sales of mortgage-backed securities and forward whole-loan sales to fix the
sales price of loans the Company expects to fund. Forward sales are sales of
loans with settlement dates more than five days in the future. Before entering
into hedging transactions, the Company performs an analysis of the loans with
committed interest rates. This analysis includes taking into account such
factors as the estimated portion of such loans that will ultimately be funded,
note rate, interest rates, inventory of loans and applications and other factors
to determine the type and amount of forward commitment and hedging transactions.
The Company attempts to make forward commitments for, or hedge substantially,
all of its estimated interest rate risk on the loans. The Company does not
believe that hedging its interest rate risk with respect to the non-prime loans
is cost effective because these loans generally have higher interest rate
spreads and generally lack sensitivity to interest rate changes due to their
credit characteristics and the short period of time held by the Company. The
Company had mandatory and optional forward commitments April 30, 1999 and 1998
aggregating $43,829,000 and $46,400,000, respectively. These commitments covered
the market risk associated with the mortgage loans held for sale to investors of
$33,438,000 and $63,034,000 respectively, and the pipeline loans for which
interest rates were committed of $25,604,000 and $87,300,000, respectively.

As is customary in the marketplace, none of the forward payment obligations
of any of the Company's counterparties are currently secured or subject to
margin requirements. The Company attempts to limit its credit exposure on
forward sales arrangements by entering into forward sales contracts exclusively
with institutions that the Company believes are sound credit risks, and by
limiting its exposure to any single counterparty.

Fees paid to investors are deferred and subsequently expensed as the loans
are delivered to the investor in proportion to the percentage relationship of
loans delivered to the total commitment amount. Any remaining fee is recognized
as a period expense at the expiration of its commitment period or earlier if
exercise of the commitment is deemed remote.

The Company reduces its exposure to default risk (other than first-payment
defaults by customers) and most of the prepayment risk normally inherent in the
mortgage lending business by selling all funded loans. However, in connection
with loan sales and bulk servicing sales, the Company makes representations and
warranties relating to credit information, loan documentation and collateral. To
the extent that the Company does not comply with such representations and
warranties, or there are early payment defaults, the Company may be required to
repurchase the loans or indemnify the purchasers for any losses. For fiscal
1999, 1998, and 1997, the Company repurchased loans totaling $10,034,000,
$347,000, and $0, respectively, which resulted in losses of $759,000, $347,000
and zero, respectively.

NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following disclosures of the estimated fair values of financial
instruments are made in accordance with the requirements of SFAS No. 107,
Disclosures about Fair Value of Financial Instruments. The estimated fair value
amounts have been determined by using available market information and
appropriate methodologies. However, considerable judgment is necessarily
required to interpret market data to develop the estimates of fair value.
Accordingly, the estimates presented herein may not be indicative of the amounts
that could be realized in a current market exchange. The

F-19
<PAGE>
FINET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
use of different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts disclosed in the following
paragraph.

The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
such value:

- Cash, accounts receivable, and warehouse and other lines of credit. The
carrying amounts of these assets and liabilities approximate fair value
because of the short maturity of those instruments.

- Mortgages held for sale. Fair values for mortgages held for sale are based
on management's estimate of the ultimate realizable value.

- Mortgage servicing rights. Fair values for mortgage servicing rights are
based on third party appraisals and written bids to purchase the servicing
portfolios.

- Notes payable. The carrying value is considered to be a reasonable
estimate of fair value based on interest rates of similar financial
instruments in the marketplace.

- Loan commitments to fund (locked pipeline) and loan commitments to sell.
The fair value for the locked pipeline, allowing for estimated fallout
based on historical experience, and loan commitments to sell, are based on
quoted market prices.

The carrying values and the estimated fair values of our financial
instruments at April 30, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
1999 1998
---------------------- ----------------------
CARRYING ESTIMATED CARRYING ESTIMATED
VALUE FAIR VALUE VALUE FAIR VALUE
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
Assets:
Mortgages held for sale....................... $ 33,438 $ 33,438 $ 63,034 $ 63,363
Mortgage servicing rights..................... 2,693 2,693 5,478 5,478
Liabilities:
Notes payable................................. 300 300 860 860
Off Balance Sheet:
Loan commitments to fund...................... -- 395 -- (34)
Loan commitments to sell...................... -- 98 -- 43
</TABLE>

NOTE 11. STOCKHOLDERS' EQUITY

In September 1998, the Company issued 250 shares of its $2,500,000 Series A
Convertible Preferred Stock ("Preferred") in a private placement generating
$2,286,250 of proceeds, net of expenses. In addition, the Company issued
Warrants to the Preferred investors to purchase 250,000 shares of the Company's
common stock at $1.00 per share. The Company recorded a preferred stock discount
of $705,000 upon issuance of the preferred stock. This discount was amortized to
the date the preferred stock first became convertible. The entire discount has
been amortized and is reported as "In-substance preferred dividend" on the
Company's 1999 Consolidated Statement of Operations. In the third and fourth
quarters of fiscal 1999, the $2,500,000 Series A Convertible Preferred stock was
redeemed at face value.

F-20
<PAGE>
FINET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11. STOCKHOLDERS' EQUITY (CONTINUED)
In November 1998, the Company issued 2,500,000 shares of common stock at
eighty cents per share, for proceeds of $2,000,000 in a private placement. Per
the agreement, an additional 1,000,000 shares were issued, bringing the total
issuance to 3,500,000 shares and the price per share to fifty-seven cents per
share, as adjusted. In connection with the issuance, the Company agreed to
reduce the exercise price of 1,000,000 common stock purchase warrants owned by
the investor from $5.00 to the then fair market value of $1.00 per share.

WARRANTS

As of April 30, 1999, the Company had outstanding warrants as follows:

<TABLE>
<CAPTION>
EXERCISE
NUMBER OF PRICE YEAR OF
WARRANTS ISSUED PER SHARE EXPIRATION
- --------------- ---------- ----------
(THOUSANDS)
<S> <C> <C>
13,293 $0.50--1.50 2001--2008
2,747 1.50--3.00 2000--2004
25 3.00--4.50 2003
356 4.50--5.00 2001--2003
------
16,421
------
------
</TABLE>

NOTE 12. STOCK OPTIONS

1989 STOCK OPTION PLAN

The Company's 1989 Stock Option Plan (the "1989 Plan") provides for the
grant of options to officers, directors, other key employees and consultants of
the Company to purchase up to an aggregate of 1,750,000 shares of common stock.
The 1989 Plan is administered by the Board of Directors. The Board of Directors
is authorized to determine the terms of options granted under the 1989 Plan,
including the number of shares subject to the option, exercise price, term and
exercisability. Options granted under the 1989 Plan may be incentive stock
options or nonqualified stock options.

The exercise price of incentive stock options may not be less than 100% of
the fair market value of the common stock as of the date of grant (110% of the
fair market value in the case of an optionee that owns more than 10% of the
total combined voting power of all classes of the Company's capital stock).
Options may not be exercised more than ten years after the date of grant (five
years in the case of 10% stockholders).

Upon termination of employment, the optionee generally has the right to
exercise, for 90 days following the termination date, any outstanding option to
the extent it is exercisable on the date of termination, after which all
unexercised options lapse. In the event of an optionee's death or disability,
the optionee may exercise any outstanding options, to the extent it is
exercisable, for one year following the termination date.

As of April 30, 1999 and 1998, there were 8,051 and 999,958 shares,
respectively, available for grant under the 1989 Plan. The 1989 Plan expires in
June of 1999.

F-21
<PAGE>
FINET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 12. STOCK OPTIONS (CONTINUED)
1998 STOCK OPTION PLAN

The Company's 1998 Stock Option Plan (the "1998 Plan") provides for the
grant of options to officers, directors, other employees and consultants of
FiNet.com to purchase up to an aggregate of 4,000,000 shares of common stock.
The 1998 Plan is administered by the Board of Directors. The Board of Directors
determines the terms of options granted under the 1998 Plan, including the
number of shares subject to the option, exercise price, term and exercisability.
Options granted under the 1998 Plan may be incentive stock options or
nonqualified options. In general, the 1998 Plan has the same terms and
conditions as the 1989 Plan. As of April 30, 1999 and 1998, 419,544 and
4,000,000 options, were available for grant under the 1998 plan, respectively.

NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

The Company's 1998 Non-employee Directors' Stock Option Plan (the
"Directors' Plan") provides for an automatic grant of an option to purchase
40,000 shares of common stock to non-employee directors upon their election or
appointment to the Board of Directors and for subsequent annual grants. The
aggregate number of shares that can be purchased under this plan is 500,000. The
exercise price of the options is 85% of the fair market value of the common
stock on the date of grant. The Directors' Plan is administered by the Board of
Directors. Options granted under the Directors' Plan become exercisable in four
equal annual installments, commencing on the first anniversary of the date of
grant. To the extent that an option is not exercisable on the date that a
director ceases to be a director of the company, the unexercisable portion
lapses. As of April 30, 1999 and 1998, 300,000 and 500,000 options,
respectively, were available for grant under this plan.

STOCK BONUS INCENTIVE PLAN

The Company's Stock Bonus Incentive Plan (the "Stock Bonus Plan") provides
for the grant of bonus shares to any of the Company's employees, directors,
officers and to consultants or advisers to the Company. The Board of Directors
has authorized up to an aggregate of 875,000 shares of common stock for issuance
as bonus awards under the Stock Bonus Plan. The Stock Bonus Plan is currently
administered by the Board of Directors. Each grant of bonus shares becomes
exercisable according to a schedule to be established by the Board of Directors
at the time of grant.

OTHER AGREEMENT

The Company has an employment agreement with an executive officer which
provides a 4% anti-dilution provision through the term of his employment
contract (October 2002). This Agreement provides that upon the issuance of new
shares of FiNet common stock, options are granted to the executive officer with
an exercise price equal to the fair market value at the date of the grant.
During fiscal 1999, the Company granted an option to purchase 2,376,291 shares
of common stock at $1.03 per share pursuant to this Agreement.

OTHER

The Company applies Accounting Principles Board Opinion No. 25 and related
interpretations in accounting for its stock options. Accordingly, compensation
expense is only recognized if the option price is below the fair market value at
the date of grant. Had compensation expense been determined for stock options
granted in fiscal 1999, 1998 and 1997 based on the fair value at grant dates
consistent

F-22
<PAGE>
FINET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 12. STOCK OPTIONS (CONTINUED)
with SFAS No. 123, the Company's condensed Pro Forma Statement of Operations for
fiscal 1999, 1998 and 1997 would have been as follows:

<TABLE>
<CAPTION>
PRO FORMA STATEMENT OF OPERATIONS FISCAL 1999 FISCAL 1998 FISCAL 1997
- -------------------------------------------------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT FOR PER SHARE
DATA)
<S> <C> <C> <C>
Estimated stock-based compensation................ $ 1,715 $ 200 $ 125
Net loss as reported.............................. (36,538) (9,379) (2,778)
Pro forma net (loss).............................. (38,253) (9,579) (2,903)
(Loss) per share as reported...................... (0.79) (0.31) (0.19)
Pro forma (loss) per share........................ (0.83) (0.32) (0.20)
</TABLE>

The pro forma amounts were estimated using the Black-Scholes option pricing
model with the following assumptions for fiscal 1999, 1998 and 1997,
respectively: risk-free interest rates of 4.78% to 5.53%; 5.5%; and 6.6% to
6.7%; volatility factor of the expected market price of FiNet's common stock of
141%, 50% and 50%; no dividend growth rate since FiNet does not intend to pay
dividends on its common stock; and expected lives equal to one year over the
vesting period for fiscal 1999, and equal to the remaining option terms for
fiscal 1998 and 1997.

The weighted-average grant-date fair value and exercise price of options
granted during fiscal 1999, 1998 and 1997 are summarized below:

<TABLE>
<CAPTION>
WEIGHTED- WEIGHTED-
AVERAGE AVERAGE
FISCAL YEAR FAIR VALUE EXERCISE PRICE
- ------------------------------------------------------------------- ----------- ---------------
<S> <C> <C>
1999

Stock Price = Exercise Price....................................... $ .86 $ .99
Stock Price > Exercise Price....................................... 1.08 1.35
Stock Price < Exercise Price....................................... .33 1.25

1998

Stock Price = Exercise Price....................................... 2.85 4.44
Stock Price > Exercise Price....................................... 2.83 .50

1997

Stock Price > Exercise Price....................................... .80 .50
</TABLE>

F-23
<PAGE>
FINET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 12. STOCK OPTIONS (CONTINUED)
The following table summarizes stock option plan activity for fiscal 1999,
1998 and 1997:

<TABLE>
<CAPTION>
WEIGHTED
EXERCISE AVERAGE
EMPLOYEE STOCK OPTION SUMMARY OPTIONS PRICE EXERCISE PRICE
- --------------------------------------------------- ---------- ------------- ---------------
<S> <C> <C> <C>
Outstanding at May 1, 1996 (Plan inception)........ 468,042 $ 0.06--0.50 $ 0.06
Granted............................................ 120,000 0.50--0.50 0.50
Exercised.......................................... (3,167) 0.06--0.06 0.06
Expired / Canceled................................. (26,000) 0.06--0.06 0.06
---------- ------------- -----
Outstanding at May 1, 1997......................... 558,875 0.06--0.50 0.15
Granted............................................ 188,000 0.50--5.50 4.18
Exercised.......................................... -- -- --
Expired / Canceled................................. (9,000) 3.00 2.81
---------- ------------- -----
Outstanding at May 1, 1998......................... 737,875 0.06--5.50 1.15
Granted............................................ 7,620,520 0.50--3.25 .99
Exercised.......................................... (383,035) 0.06--0.75 .07
Expired / Canceled................................. (462,866) 0.50--3.25 1.19
---------- ------------- -----
Outstanding at April 30, 1999...................... 7,512,494 $ 0.06--5.50 $ 1.03
---------- ------------- -----
---------- ------------- -----
</TABLE>

F-24
<PAGE>
FINET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 12. STOCK OPTIONS (CONTINUED)
Exercise prices for stock options outstanding as of April 30, 1999, 1998,
and 1997, the number of options exercisable, and the weighted average remaining
contractual lives are as follows:

<TABLE>
<CAPTION>
WEIGHTED
SHARES NUMBER AVERAGE REMAINING
EXERCISE PRICES OUTSTANDING EXERCISABLE CONTRACTUAL LIFE
- ------------------------------------------------------ ----------- --------- -----------------
(YEARS)
<S> <C> <C> <C>
April 30, 1997
$0.06............................................... 438,875 438,480 8.39
0.50............................................... 120,000 120,000 5.75
----------- ---------
558,875 558,480
----------- ---------
----------- ---------
April 30, 1998
$ .06............................................... 438,875 438,638 7.50
.50............................................... 120,000 120,000 3.50
3.00............................................... 24,000 16,000 4.33
3.25............................................... 40,000 40,000 4.20
4.50............................................... 75,000 18,750 4.75
5.50............................................... 40,000 40,000 4.47
----------- ---------
737,875 673,388
----------- ---------
----------- ---------
April 30, 1999
$ .06............................................... 65,634 65,555 6.50
.50............................................... 160,000 160,000 2.84
.56............................................... 1,300,000 325,000 9.45
.64............................................... 40,000 40,000 9.57
.66............................................... 475,000 109,375 9.46
.72............................................... 80,000 5,000 9.53
.75............................................... 1,389,488 303,949 9.46
.88............................................... 25,000 8,334 9.51
.94............................................... 10,812 4,000 9.75
1.00............................................... 2,813 351 9.50
1.03............................................... 2,781,247 400,258 9.76
1.06............................................... 120,000 -- 9.67
1.06............................................... 50,000 12,500 9.71
1.13............................................... 7,500 -- 9.61
1.97............................................... 500,000 100,000 9.86
2.07............................................... 40,000 40,000 9.80
2.25............................................... 350,000 -- 9.84
4.50............................................... 75,000 75,000 3.75
5.50............................................... 40,000 40,000 3.47
----------- ---------
7,512,494 1,689,322
----------- ---------
----------- ---------
</TABLE>

F-25
<PAGE>
FINET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 12. STOCK OPTIONS (CONTINUED)

FiNet has elected to follow APB Opinion No. 25 and related interpretations
in accounting for its employee and director stock-based awards. Under APB
Opinion No. 25, the Company does not recognize compensation expense with respect
to such awards if the exercise price equals or exceeds the fair value of the
underlying security on the date of grant and other terms are fixed.

NOTE 13. SPECIAL CHARGES

The Company recorded nonrecurring charges associated with discontinued
business units during fiscal 1999. During the third quarter of fiscal 1999, the
Company's Board of Directors approved a plan to cease Mical's operations and
close its facilities. The Company assessed the remaining goodwill balance and
determined that the amount had no future economic value. Goodwill of $3,189,000,
net of purchase accounting adjustments and recorded amortization, was expensed
as part of these special charges. Approximately 130 employees were terminated
during fiscal 1999 as a result of the Mical closure. The Company also recorded a
special charge expense of $642,000 during the third quarter to recognize exit
costs primarily for severance and occupancy lease costs net of recovery from
subleases.

Except for the items detailed above totaling $642,000, all other financial
statement effects of winding down Mical are included in results from operations
as incurred. At April 30, 1999, the balance of the special charge accrual was
$202,000, which represents lease costs of vacated space that the Company expects
to incur subsequent to April 30, 1999.

The Company also recorded nonrecurring expenses of $405,000 to liquidate
certain assets and settle certain liabilities in connection with closing its
Coastal Federal Mortgage subsidiary, and $690,000 to expense the unamortized
balance of its Real Estate Office Software (REOS) technology. Management closed
Coastal Federal Mortgage and expensed the remaining balance of REOS upon
determining that the Company would no longer employ these assets in its future
strategic direction.

In fiscal 1998, the Company wrote off $1,010,000 of intangible assets.
Management determined that these assets were permanently impaired, as they did
not fit the Company's strategic plans and would no longer be employed in future
operations.

NOTE 14. INCOME TAXES

The provisions for income taxes for fiscal 1999, 1998 and 1997, consist of
the following:

<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Current Federal...................................................... $ -- $ 236 $ 219
Current State........................................................ 5 80 71
--------- --------- ---------
5 316 290
Deferred Federal..................................................... -- (70) (50)
Deferred State....................................................... -- (20) (15)
--------- --------- ---------
-- (90) (65)
--------- --------- ---------
Total................................................................ $ 5 $ 226 $ 225
--------- --------- ---------
--------- --------- ---------
</TABLE>

The Company's effective tax rate differs from the statutory federal rate for
fiscal 1999, 1998 and 1997 primarily due to increases in the valuation allowance
and non-deductible goodwill.

F-26
<PAGE>
FINET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 14. INCOME TAXES (CONTINUED)
The significant components of the Company's deferred tax liabilities and
assets as of April 30, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
1999 1998
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax liabilities
Originated mortgage servicing rights................................... $ 47 $ 460
Depreciation........................................................... 126 113
--------- ---------
Total deferred tax liabilities......................................... 173 573
--------- ---------
Deferred tax assets:
Net operating loss carryforwards....................................... 18,736 12,366
Loan loss and other reserves........................................... 2,597 --
Goodwill and other intangibles......................................... 310 1,116
Deferred revenue....................................................... 202 --
Other.................................................................. 90 432
--------- ---------
Total deferred tax assets................................................ 21,935 13,914
Valuation allowance...................................................... (21,762) (13,341)
Net deferred tax asset................................................... 173 573
--------- ---------
Total net deferred tax liabilities and assets............................ $ -- $ --
--------- ---------
--------- ---------
</TABLE>

Deferred tax assets are recognized to the extent that management believes,
based on available evidence, that it is more likely than not that they will be
realized. Due to the uncertainty surrounding the Company's ability to realize
the benefits associated with its net operating losses, a valuation allowance was
established against its net deferred tax asset. During fiscal 1999, the
valuation allowance was increased by $8,421,000. A portion of the valuation
allowance relates to deductions from the exercise of stock options. If realized,
the benefit from the reduction of that portion of the valuation allowance will
be credited to equity.

At April 30, 1999, the Company has federal net operating loss carryforwards
(NOLS) of approximately $49 million. The NOLs expire in the years 2004 through
2018. The Company has smaller state carryforwards. Due to ownership changes,
these carryforwards are subject to substantial annual limitations as provided by
the Internal Revenue Code of 1986, as amended, and similar state provisions. The
annual limitation could result in the expiration of a significant portion of the
NOLS before full utilization.

F-27
<PAGE>
FINET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 15. NON-CASH INVESTING AND FINANCING ACTIVITIES

The following table presents non-cash investing and financing information
for fiscal 1999 and 1998:

<TABLE>
<CAPTION>
1999 1998
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Common stock and warrants issued for expenses............................ $ 1,804 $ 392
Common stock issued for purchased
technology and intangibles............................................... 320 1,364
Warrants issued upon conversion of convertible debt...................... 739 --
Common stock issued upon debenture conversion............................ 5,500 --
In-substance dividend on preferred stock discount........................ 705 --
3% convertible debenture discount........................................ 423 --
Acquired in acquisition:
Furniture, fixtures & equipment.......................................... 505 --
Mortgages held for sale.................................................. 84,598
Other assets............................................................. 3,995 --
Accounts payable and other accrued expenses.............................. 9,829 --
Debt..................................................................... $ 82,634 $ --
</TABLE>

NOTE 16. SEGMENT DATA

The Company has adopted SFAS No. 131 "Disclosures about Segments of an
Enterprise and Related Information" which requires certain disclosures about
operating segments in a manner that is consistent with how management evaluates
the performance of the segment. The Company has

F-28
<PAGE>
FINET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 16. SEGMENT DATA (CONTINUED)
identified two reportable business segments: business-to-business and
business-to-consumer. Information related to the Company's reportable operating
segments is shown below:

<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ---------
<S> <C> <C> <C>
Revenue
Business-to-business......................................................... $ 19,411 $ 14,394 $ 12,189
Business-to-consumer......................................................... 3,002 766 155
---------- ---------- ---------
Segment Revenue................................................................ $ 22,413 $ 15,160 $ 12,344
---------- ---------- ---------
---------- ---------- ---------
Operating income
Business-to-business......................................................... $ (17,455) $ (508) $ (1,061)
Business-to-consumer......................................................... (4,642) (4,485) (683)
---------- ---------- ---------
Segment operating income....................................................... (22,097) (4,993) (1,744)
Corporate.................................................................... (11,460) (3,740) (1,003)
---------- ---------- ---------
$ (33,557) $ (8,733) $ (2,747)
---------- ---------- ---------
---------- ---------- ---------
Capital expenditures
Business-to-business......................................................... $ 116 $ 1,486 $ 128
Business-to-consumer......................................................... 75 55 83
---------- ---------- ---------
Segment Capital expenditures................................................... 191 1,541 211
Corporate.................................................................... 703 113 121
---------- ---------- ---------
$ 894 $ 1,654 $ 332
---------- ---------- ---------
---------- ---------- ---------
Identifiable assets
Business-to-business......................................................... $ 22,147 $ 91,174 $ 5,505
Business-to-consumer......................................................... (3,782) 3,362 3,544
---------- ---------- ---------
Segment Identifiable assets.................................................... 18,365 94,536 9,049
Corporate.................................................................... 26,890 6,932 5,201
---------- ---------- ---------
$ 45,255 $ 101,468 $ 14,250
---------- ---------- ---------
---------- ---------- ---------
Long-lived assets
Business-to-business......................................................... $ 624 $ 783 $ 424
Business-to-consumer......................................................... 311 452 273
---------- ---------- ---------
Segment long-lived assets...................................................... 935 1,235 697
Corporate.................................................................... 640 206 400
---------- ---------- ---------
$ 1,575 $ 1,441 $ 1,097
---------- ---------- ---------
---------- ---------- ---------
</TABLE>

The remaining differences from the segment amounts to the consolidated
amounts relate principally to the corporate functions including administrative
costs, corporate cash and related interest income.

F-29
<PAGE>
FINET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 17. RELATED PARTY TRANSACTIONS

MICAL MORTGAGE, INC.

During fiscal 1998 and in anticipation of the May 19, 1998 acquisition of
Mical, FiNet advanced $1.9 million to Mical and utilized the Company's available
warehouse lines of credit to fund $42.8 million of loans originated by Mical.
Subsequently, these loans were sold and the proceeds used to repay the
associated warehouse debt.

IQUALIFY

On February 9, 1998, the Company purchased the outstanding common stock of
iQualify, Inc., a software developer, from T. Lee Decker and James Noack, former
employees and officers of FiNet, for a consideration of 50,000 shares of the
Company's common stock.

CONSULTING AGREEMENTS

The Company entered into a consulting agreement with James Umphryes, a
former Monument Mortgage stockholder. The contract term is 3 years beginning
January 1, 1997 at a monthly fee of $15,000 for a total contract cost of
$540,000. For fiscal 1999, 1998, and 1997, the Company incurred consulting fee
expense relating to this agreement of $180,000, $180,000 and $60,000,
respectively.

The Company and Dr. Lewis Meyer, a director of the Company, entered into a
consulting agreement in June 1998. Pursuant to the agreement, Dr. Meyer received
$25,000. In addition, Dr. Meyer paid FiNet $10,000 for warrants to purchase
1,000,000 shares of common stock at an exercise price of $1.25 per share. Twenty
percent of the shares became exercisable on the date of grant, and the remaining
shares become exercisable in quarterly installments over four years, so long as
Dr. Meyer's service with FiNet continues.

FACILITY LEASE

The Company leases a 3,500 square foot storage facility from James Noack,
former President of Monument Mortgage. The facility is utilized by the Company
to store excess office furniture. The monthly lease payment is $600 and the term
of the lease is on a month-to-month basis. For fiscal 1999, 1998 and 1997, rent
expense related to lease was $7,200 per year.

OTHER

During fiscal 1999, warrants to purchase 1,700,000 common shares at $1.25
per share were purchased by three officers for cash consideration of $17,000.

In April 1999, the Company entered into a Lender Subscriber Agreement with
IMX, Inc. of which Richard Wilkes, a director of the Company, is president and
chief executive officer and of which FiNet's chief executive officer, Mark
Korell, is a minority shareholder. Pursuant to the agreement, IMX will provide
to the Company certain software and brokerage services.

On February 3, 1999, the Company and Jan C. Hoeffel, a current director and
the Company's former president, entered into a letter agreement concerning the
termination of his employment as a corporate officer. Pursuant to the agreement,
Mr. Hoeffel's employment terminated as of February 28, 1999. In consideration
for the issuance to him of 300,000 restricted shares of common stock, Mr.
Hoeffel agreed to forfeit any and all anti-dilution rights previously granted
him by the Company,

F-30
<PAGE>
FINET.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 17. RELATED PARTY TRANSACTIONS (CONTINUED)
and to surrender to the Company a warrant entitling him to purchase 300,000
shares of common stock. The Company will continue to make car lease payments on
an automobile provided to Mr. Hoeffel for as long as he serves as a director.

NOTE 18. EMPLOYEE BENEFIT PLAN

The Company has a salary reduction 401(k) retirement savings plan (the
"Plan") covering all employees meeting certain eligibility requirements.
Employees may contribute up to 15% of their eligible compensation, subject to an
annual limit. The Plan provides that, at the Company's discretion, the Company
may make employer contributions. There were no employer contributions for fiscal
1999, 1998 or 1997.

NOTE 19. SUBSEQUENT EVENTS

Subsequent to April 30, 1999, the Company received approximately $43.0
million from the issuance of approximately 11.0 million shares of the Company's
stock in private placements.

The Company received an extension of its lending agreement from its primary
warehouse lender, RFC. The extension expires on July 9, 1999.

F-31
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

YOU MAY RELY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS
PROSPECTUS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR SALE OF COMMON STOCK
MEANS THAT INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AFTER THE DATE OF
THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR SOLICITATION OF AN
OFFER TO BUY THESE SHARES OF COMMON STOCK IN ANY CIRCUMSTANCES UNDER WHICH THE
SOLICITATION IS UNLAWFUL.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 2

Risk Factors.............................................................. 4

Special Note Regarding Forward-Looking Statements......................... 15

Use of Proceeds........................................................... 16

Dividend Policy........................................................... 16

Price Range of Common Stock............................................... 16

Selected Consolidated Financial Data...................................... 17

Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 18

Business.................................................................. 27

Management................................................................ 49

Principal Stockholders.................................................... 57

Selling Stockholders...................................................... 59

Plan of Distribution...................................................... 65

Description of Capital Stock.............................................. 66

Legal Matters............................................................. 67

Experts................................................................... 67

Additional Information.................................................... 67

Where You Can Find More Information....................................... 68

Consolidated Financial Statements......................................... F-1
</TABLE>

78,106,774 SHARES

COMMON STOCK

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

PROSPECTUS

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

, 1999

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the registrant in connection
with the sale of the common stock being registered. All amounts are estimated
except the SEC registration fee.

<TABLE>
<S> <C>
SEC Registration Fee.............................................. $ 91,610
Accounting Fees and Expenses...................................... 150,000
Legal Fees and Expenses........................................... 300,000
Printing and Engraving............................................ 20,000
Miscellaneous..................................................... 3,390
---------
Total......................................................... $ 565,000
---------
---------
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Pursuant to the General Corporation Law of Delaware (the "DGCL"), the
registrant's Certificate of Incorporation excludes personal liability on the
part of its directors to the registrant for monetary damages based upon any
violation of their fiduciary duties as directors, except as to liability for any
breach of the duty of loyalty, acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, acts in violation
of Section 174 of the General Corporation Law of Delaware, or any transaction
from which a director receives an improper personal benefit. This exclusion of
liability does not limit any right which a director may have to be indemnified.

The registrant's Certificate of Incorporation and its Bylaws require
indemnification of directors and officers of the registrant to the fullest
extent permitted by the DGCL for claims against them in their official
capacities, including stockholders' derivative actions.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the SEC, such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

During the past three years, the registrant has issued the securities set
forth below which were not registered under the Securities Act of 1933.

Except for sales pursuant to Regulation S, which were made in compliance
with Regulation S, the sales of the following securities were made in reliance
upon the exemption from the registration provisions of the Securities Act under
Section 4(2) thereof or Regulation D promulgated thereunder, as transactions by
an issuer not involving a public offering. The purchasers of the securities
described below acquired them for their own account and not with a view toward
distribution thereof to the public. The certificates evidencing the securities
bear legends stating that the shares may not be offered, sold or otherwise
transferred other than pursuant to an effective registration statement under the
Securities Act, or an exemption from such registration requirements.

In December 1996, the registrant issued 1,000,000 shares of common stock and
a warrant to purchase 1,000,000 shares of common stock in a private placement to
an accredited investor for an aggregate purchase price of $500,000.

II-1
<PAGE>
In December 1996, the registrant issued 6,000,000 shares of common stock to
non-U.S. investors in a private placement for an aggregate purchase price of
$3,000,000. The offering was effected pursuant to the registration exemption
provided by Regulation S under the Securities Act. In addition, the registrant
issued a warrant to purchase 600,000 shares of common stock to the placement
agent for the transaction and a warrant to purchase 2,500,000 shares of common
stock to a financial advisor.

In March 1997, the registrant issued 1,000,000 shares of common stock and a
warrant to purchase 600,000 shares of common stock to an accredited investor in
a private placement for an aggregate purchase price of $600,000. In addition,
the registrant issued a warrant to purchase 50,000 shares of common stock to the
placement agent for the transaction.

In April 1997, the registrant issued 3,991,250 shares of common stock and
warrants to purchase 743,125 shares of common stock in a private placement to
accredited investors for an aggregate purchase price of $3,991,250. In addition,
the registrant issued a warrant to purchase 399,125 shares of common stock to
the placement agent for the transaction.

In October 1997, the registrant issued 1,300,000 shares of common stock and
warrants to purchase 1,300,000 shares of common stock for an aggregate purchase
price of $3,500,000 in a private placement.

In March and May of 1998, the registrant issued $7,000,000 principal amount
of the registrant's 3% Subordinated Convertible Debentures and warrants to
purchase 175,000 shares of common stock to accredited investors in a private
placement. In a restructuring of this transaction in January 1999, the
debentures were converted into 9,533,333 shares of common stock and warrants to
purchase 840,000 shares of common stock.

In September 1998, the registrant issued 250 shares of its Series A
Convertible Preferred Stock and warrants to purchase 250,000 shares of common
stock at an exercise price of $1.00 per share to accredited investors in a
private placement for an aggregate purchase price of $2,500,000. The Series A
Convertible Preferred Stock was redeemed in January 1999 and February 1999.

In October 1998, the registrant issued 2,500,000 shares of common stock in a
private placement to an accredited investor for an aggregate purchase price of
$2,000,000.

In January 1999, the registrant issued 1,000,000 shares of common stock to
an existing stockholder pursuant to an indemnity agreement.

During the third quarter of its 1999 fiscal year, the registrant issued
22,740,000 shares of common stock and warrants to purchase 122,675 shares of
common stock to accredited investors in a series of private placements for an
aggregate purchase price of $12,431,000. In addition, the registrant issued
warrants to purchase 2,449,867 shares of common stock to the placement agents
for such transactions. One such placement agent received placement agent fees of
$812,358 in connection with the transactions.

In May and June 1999, the registrant issued 3,347,039 shares of common stock
in a private placement to accredited investors for an aggregate purchase price
of $13,020,000.

In June 1999, the registrant issued 7,712,081 shares of common stock in a
private placement to accredited investors for an aggregate purchase price of
$30,000,000.

II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
EXHIBIT
- ----------
<S> <C>
3.1(1) Certificate of Amendment to the registrant's Restated Certificate of Incorporation, dated as of
October 29, 1997

3.2(2) Certificate of Amendment to the registrant's Restated Certificate of Incorporation, dated as of May
28, 1999

3.3(3) Bylaws, as amended to date

4.1(4) Form of Common Stock Purchase Agreement between the registrant and Jose Maria Salema Garcao, dated
December 16, 1996

4.2(4) Form of Warrant Purchase Agreement between the registrant and Jose Maria Salema Garcao dated December
16, 1996

4.3(4) Form of Warrant issued to Jose Maria Salema Garcao dated December 16, 1996

4.4(4) Common Stock Purchase Agreement between the registrant and investors in the private placement
concluded December 31, 1996

4.5(4) Form of Warrant Purchase Agreement between the registrant and Jose Maria Salema Garcao dated December
30, 1996

4.6(4) Form of Warrant issued to Jose Maria Salema Garcao dated December 30, 1996

4.7(4) Form of Common Stock Purchase Agreement between the registrant and Jose Maria Salema Garcao dated
March 21, 1997

4.8(4) Form of Warrant Purchase Agreement between the registrant and Jose Maria Salema Garcao dated March 21,
1997

4.9(4) Form of Warrant issued to Jose Maria Salema Garcao dated March 21, 1997

4.10(4) Form of Stock Purchase Agreement between the registrant and investors in the private placement
concluded April 30, 1997

4.11(4) Form of Warrant Purchase Agreement between the registrant and Jose Maria Salema Garcao dated April 30,
1997

4.12(4) Form of Warrant Issued to investors in the private placement concluded April 30, 1997

4.13(4) Form of Common Stock Purchase Agreement between the registrant and investors in the private placement
concluded October 31, 1997

4.14(4) Form of Common Stock Purchase Warrant issued to investors in the private placement concluded October
31, 1997

4.15 Form of Common Stock Purchase Agreement between the registrant and investors in the private placement
concluded December 23, 1998

4.16 Form of Common Stock Purchase Warrant issued to investors in the private placement concluded December
23, 1998

4.17(5) Restructuring Agreement and Amendment, dated January 15, 1999, among the registrant and the investors
in the debenture offering concluded May 26, 1998

4.18(6) Form of Registration Rights Agreement between the registrant and investors in the debenture offering
concluded May 26, 1998

4.19(7) Form of Warrant issued to the investors in the debenture offering concluded May 26, 1998

4.20 Form of Stock Purchase Agreement among the registrant and the investors in the private placement
concluded on May 10, 1999 and May 20, 1999
</TABLE>

II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
- ----------
<S> <C>
4.21 Form of Stock Purchase Agreement among the registrant and the investors in the private placement
concluded on June 28, 1999

5.1* Opinion of Severson & Werson

10.1(4) Merger Agreement and Plan of Reorganization between the registrant and Monument Mortgage, Inc., dated
December 20, 1996

10.2(4) Consulting Agreement between the registrant and James Umphryes, dated January 1, 1997

10.3 1989 Stock Option Plan

10.4(4) Asset Purchase Agreement between the registrant and Real Estate Office Software, Inc., dated August
30, 1997

10.5(4) Stock Purchase Agreement between the registrant and Coastal Federal Mortgage Company, dated April 30,
1998

10.6(4) Stock Purchase Agreement between the registrant and MICAL Mortgage, Inc., dated May 19, 1998

10.7 1998 Stock Option Plan

10.8 1998 Stock Bonus Incentive Plan

10.9 1998 Non-Employee Directors' Stock Option Plan

10.10 1999 Employee Stock Purchase Plan

10.11* Employment Agreement between the registrant and L. Daniel Rawitch, as amended to date

10.12* Employment Agreement between the registrant and Michael G. Conway, as amended to date

10.13* Employment Agreement between the registrant and Gary A. Palmer, dated February 25, 1999

10.14* Employment Agreement between the registrant and Christos Skeadas, dated April 19, 1999

10.15* Employment Agreement between the registrant and Kevin Gillespie, dated March 5, 1999

10.16* Employment Agreement between the registrant and Thomas L. Porter, as amended to date

10.17* Employment Termination Agreement between the registrant and Jan C. Hoeffel, dated February 3, 1999

10.18* Employment Agreement between the registrant and Mark L. Korell, as amended to date

16.1(8) Letter from Former Certifying Accountant

21.1 List of Subsidiaries

23.1 Consent of Ernst & Young LLP

23.2 Consent of Reuben E. Price & Co.

23.3 Consent of Richard A. Eisner & Company, LLP

23.4 Consent of Severson & Werson (included as Exhibit 5.1 hereto)

24.1 Power of Attorney (see page II-7)

27.1 Financial Data Schedule
</TABLE>

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

* To be filed by amendment

(1) Incorporated by reference to Exhibit 3.2 of the registrant's Annual Report
on Form 10-KSB for the fiscal year ended April 30, 1998, filed on August 13,
1998.

II-4
<PAGE>
(2) Incorporated by reference to Exhibit 3 of the registrant's Current Report on
Form 8-K filed on June 2, 1999.

(3) Incorporated by reference to Exhibit 3.2 of the registrant's Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1993.

(4) Incorporated by reference to the Exhibit of the same number filed with the
registrant's Annual Report on Form 10-KSB for the fiscal year ended April
30, 1998, filed on August 13, 1998.

(5) Incorporated by reference to Exhibit 7.1 of the registrant's Current Report
on Form 8-K filed on January 19, 1999.

(6) Incorporated by reference to Exhibit 4.2 of the registrant's Current Report
on Form 8-K filed with the SEC on April 6, 1998.

(7) Incorporated by reference to Exhibit 7.2 of the registrant's Current Report
on Form 8-K filed on January 19, 1999.

(8) Incorporated by reference to Exhibit 16 of the registrant's Current Report
on Form 8-K filed on February 19, 1999.

ITEM 17. UNDERTAKINGS

A. The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth 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 prospectus filed with the SEC
pursuant to Rule 424(b) if, in the aggregate, the changes in the volume
and price represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of the Registration Fee"
table in the effective Registration Statement; and

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.

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

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

B. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described in Item 14 above, 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

II-5
<PAGE>
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

C. The undersigned registrant hereby undertakes that:

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

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

II-6
<PAGE>
SIGNATURE

Pursuant to 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 for filing on Form S-1 and has duly caused this Registration
Statement on Form S-1 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Walnut Creek, California on July 2, 1999.

<TABLE>
<S> <C> <C>
FiNET.COM, INC.

By: /s/ MARK L. KORELL
-----------------------------------------
Mark L. Korell
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
</TABLE>

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Mark L.
Korell and Gary A. Palmer his true and lawful attorneys-in-fact and agents, each
acting alone, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to the Registration Statement,
and to sign any registration statement for the same offering covered by this
Registration Statement that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended, and all post-effective
amendments thereto, and to file the same, with all exhibits thereto, and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-1 has been signed by the following persons in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE OFFICE DATE
- ------------------------------ -------------------------- -------------------

<C> <S> <C>
Chairman of the Board,
/s/ MARK L. KORELL President and Chief
- ------------------------------ Executive Officer July 2, 1999
Mark L. Korell (Principal Executive
Officer)

/s/ L. DANIEL RAWITCH
- ------------------------------ Vice Chairman July 2, 1999
L. Daniel Rawitch

Executive Vice President--
/s/ GARY A. PALMER Chief Financial Officer
- ------------------------------ (Principal Financial and July 2, 1999
Gary A. Palmer Accounting Officer)
</TABLE>

II-7
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE OFFICE DATE
- ------------------------------ -------------------------- -------------------

<C> <S> <C>
/s/ JAN C. HOEFFEL
- ------------------------------ Director July 2, 1999
Jan C. Hoeffel

/s/ ANTONIO P. FALCAO
- ------------------------------ Director July 2, 1999
Antonio P. Falcao

/s/ RICHARD E. WILKES
- ------------------------------ Director July 2, 1999
Richard E. Wilkes

- ------------------------------ Director July , 1999
Stephen J. Sogin

/s/ S. LEWIS MEYER
- ------------------------------ Director July 2, 1999
S. Lewis Meyer
</TABLE>

II-8
<PAGE>
INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
- ---------
<C> <S> <C>
3.1(1) Certificate of Amendment to the registrant's Restated Certificate of Incorporation, dated
as of October 29, 1997

3.2(2) Certificate of Amendment to the registrant's Restated Certificate of Incorporation, dated
as of May 28, 1999

3.3(3) Bylaws, as amended to date

4.1(4) Form of Common Stock Purchase Agreement between the registrant and Jose Maria Salema
Garcao, dated December 16, 1996

4.2(4) Form of Warrant Purchase Agreement between the registrant and Jose Maria Salema Garcao
dated December 16, 1996

4.3(4) Form of Warrant issued to Jose Maria Salema Garcao dated December 16, 1996

4.4(4) Common Stock Purchase Agreement between the registrant and investors in the private
placement concluded December 31, 1996

4.5(4) Form of Warrant Purchase Agreement between the registrant and Jose Maria Salema Garcao
dated December 30, 1996

4.6(4) Form of Warrant issued to Jose Maria Salema Garcao dated December 30, 1996

4.7(4) Form of Common Stock Purchase Agreement between the registrant and Jose Maria Salema Garcao
dated March 21, 1997

4.8(4) Form of Warrant Purchase Agreement between the registrant and Jose Maria Salema Garcao
dated March 21, 1997

4.9(4) Form of Warrant issued to Jose Maria Salema Garcao dated March 21, 1997

4.10(4) Form of Stock Purchase Agreement between the registrant and investors in the private
placement concluded April 30, 1997

4.11(4) Form of Warrant Purchase Agreement between the registrant and Jose Maria Salema Garcao
dated April 30, 1997

4.12(4) Form of Warrant Issued to investors in the private placement concluded April 30, 1997

4.13(4) Form of Common Stock Purchase Agreement between the registrant and investors in the private
placement concluded October 31, 1997

4.14(4) Form of Common Stock Purchase Warrant issued to investors in the private placement
concluded October 31, 1997

4.15 Form of Common Stock Purchase Agreement between the registrant and investors in the private
placement concluded December 23, 1998

4.16 Form of Common Stock Purchase Warrant issued to investors in the private placement
concluded December 23, 1998

4.17(5) Restructuring Agreement and Amendment, dated January 15, 1999, among the registrant and the
investors in the debenture offering concluded May 26, 1998

4.18(6) Form of Registration Rights Agreement between the registrant and investors in the debenture
offering concluded May 26, 1998

4.19(7) Form of Warrant issued to the investors in the debenture offering concluded May 26, 1998

4.20 Form of Stock Purchase Agreement among the registrant and the investors in the private
placement concluded on May 10, 1999 and May 20, 1999
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
- ---------
<C> <S> <C>
4.21 Form of Stock Purchase Agreement among the registrant and the investors in the private
placement concluded on June 28, 1999

5.1* Opinion of Severson & Werson

10.1(4) Merger Agreement and Plan of Reorganization between the registrant and Monument Mortgage,
Inc., dated December 20, 1996

10.2(4) Consulting Agreement between the registrant and James Umphryes, dated January 1, 1997

10.3 1989 Stock Option Plan

10.4(4) Asset Purchase Agreement between the registrant and Real Estate Office Software, Inc.,
dated August 30, 1997

10.5(4) Stock Purchase Agreement between the registrant and Coastal Federal Mortgage Company, dated
April 30, 1998

10.6(4) Stock Purchase Agreement between the registrant and MICAL Mortgage, Inc., dated May 19,
1998

10.7 1998 Stock Option Plan

10.8 1998 Stock Bonus Incentive Plan

10.9 1998 Non-Employee Directors' Stock Option Plan

10.10 1999 Employee Stock Purchase Plan

10.11* Employment Agreement between the registrant and L. Daniel Rawitch, as amended to date

10.12* Employment Agreement between the registrant and Michael G. Conway, as amended to date

10.13* Employment Agreement between the registrant and Gary A. Palmer, dated February 25, 1999

10.14* Employment Agreement between the registrant and Christos Skeadas, dated April 19, 1999

10.15* Employment Agreement between the registrant and Kevin Gillespie, dated March 5, 1999

10.16* Employment Agreement between the registrant and Thomas L. Porter, as amended to date

10.17* Employment Termination Agreement between the registrant and Jan C. Hoeffel, dated February
3, 1999

10.18* Employment Agreement between the registrant and Mark L. Korell, as amended to date

16.1(8) Letter from Former Certifying Accountant

21.1 List of Subsidiaries

23.1 Consent of Ernst & Young LLP

23.2 Consent of Reuben E. Price & Co.

23.3 Consent of Richard A. Eisner & Company, LLP

23.4 Consent of Severson & Werson (included as Exhibit 5.1 hereto)

24.1 Power of Attorney (see page II-7)

27.1 Financial Data Schedule
</TABLE>

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

* To be filed by amendment
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
- ---------
<C> <S> <C>
</TABLE>

(1) Incorporated by reference to Exhibit 3.2 of the registrant's Annual Report
on Form 10-KSB for the fiscal year ended April 30, 1998, filed on August 13,
1998.

(2) Incorporated by reference to Exhibit 3 of the registrant's Current Report on
Form 8-K filed on June 2, 1999.

(3) Incorporated by reference to Exhibit 3.2 of the registrant's Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1993.

(4) Incorporated by reference to the Exhibit of the same number filed with the
registrant's Annual Report on Form 10-KSB for the fiscal year ended April
30, 1998, filed on August 13, 1998.

(5) Incorporated by reference to Exhibit 7.1 of the registrant's Current Report
on Form 8-K filed on January 19, 1999.

(6) Incorporated by reference to Exhibit 4.2 of the registrant's Current Report
on Form 8-K filed with the SEC on April 6, 1998.

(7) Incorporated by reference to Exhibit 7.2 of the registrant's Current Report
on Form 8-K filed on January 19, 1999.

(8) Incorporated by reference to Exhibit 16 of the registrant's Current Report
on Form 8-K filed on February 19, 1999.

<PAGE>

EXHIBIT 4.15

COMMON STOCK PURCHASE AGREEMENT

THIS COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is made as
of December 21, 1998, between FINET HOLDINGS CORPORATION, a Delaware
corporation (the "Company"), and the person executing this Agreement on the
Signature page hereof (the "Signature Page") as Purchaser (the "Purchaser"):

RECITALS:

WHEREAS, the Company has authorized the issuance and sale pursuant
to the terms and conditions hereof of 25,000,000 shares (the "Shares") of its
Common Stock, par value $.01 per share (the "Common Stock"); and

WHEREAS, the Purchaser desires to purchase and the Company desires
to sell the Shares on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of these premises and the mutual
covenants and agreements herein contained and other valuable consideration,
the receipt and adequacy of which the parties hereto acknowledge, the parties
agree as follows:

2. CLOSING DATE; DELIVERY. The closing of the purchase and sale of
the Purchase Shares shall be held at the offices of the Company, 505 Sansome
Street, #1402, San Francisco, California 94111 on December 23, 1998 or at
such other time and place as the parties may agree upon (the "Closing"). At
the Closing, subject to the terms of this Agreement, the Purchaser shall
deliver the Purchase Price via wire transfer of immediately available funds
to the account of the Company's Placement Agent, BES Investmento, S.A., Chase
Manhattan Bank (CHASUSA 33), Account No. 400-920875, Swift Code ESSIPTPL. The
Placement Agent shall immediately deliver the net amount of the offering to
the Company. At the Closing, the Company will deliver to the Purchaser
certificates representing the Purchase Shares to be purchased by the
Purchaser from the Company.

3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the Purchaser that:

(a) ORGANIZATION AND STANDING, ARTICLES AND BYLAWS. The Company
is a corporation duly organized and validly existing under, and by virtue of
the laws of, the

<PAGE>

State of Delaware and is in good standing under such laws. The Company has
the requisite corporate power to own and operate its properties and assets,
and to carry on its business as presently conducted and as proposed to be
conducted. The Company is qualified, licensed or domesticated as a foreign
corporation in all jurisdictions where the nature of its activities or of its
properties owned or leased makes such qualification, licensing or
domestication necessary at this time.

(b) CORPORATE POWER. The Company has now, or will have at the
Closing Date, all requisite legal and corporate power to enter into this
Agreement, to sell the Purchase Shares hereunder, and to carry out and
perform its obligations under the terms of this Agreement.

(i) All corporate action on the part of the Company, its
officers, directors, and stockholders necessary for the sale and issuance of
the Purchase Shares pursuant hereto and the performance of the Company's
obligations hereunder has been taken or will be taken prior to the Closing.
This Agreement is a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
of general application affecting enforcement of creditors' rights, and except
as limited by application of legal principles affecting the availability of
equitable remedies.

(ii) The Purchase Shares, when issued in compliance with the
provisions of this Agreement, will be validly issued, fully paid and
nonassessable and will be free of any liens or encumbrances; provided,
however, that such shares may be subject to restrictions on transfer under
state and/or federal securities laws as set forth herein and as may be
required by future changes in such laws.

(iii) No shareholder of the Company has any right of first
refusal or any preemptive rights in connection with the issuance of the
Shares of Common Stock (including the Shares) by the Company.

(d) FINANCIAL STATEMENTS. The Company's audited balance sheet as
of April 30, 1998, audited statement of income and expenses for the fiscal
year ended April 30, 1998, unaudited balance sheet and statement of income
and expenses for the three months ended July 31, 1998 (hereinafter
collectively referred to as the "Financial Statements") have been supplied by
the Company to the Purchaser and such Financial Statements are true and
correct, have been prepared in accordance with generally accepted accounting
principles consistently applied (except as disclosed therein and except that
the unaudited Financial Statements do not contain the footnotes required by
generally accepted accounting principles), and fairly present the financial
condition of the Company as of the date indicated and the results of the
operations of the Company for the period ended, as indicated. Subsequent to
July 31, 1998, the Company has determined to reevaluate its investment in
Mical Mortgage, Inc. In connection therewith, the Company

-2-

<PAGE>

anticipates writing off approximately $4.6 million of goodwill which was
incurred in connection with the acquisition of the business and an additional
$2.9 million in additional charges. Such write-offs may be retroactively
taken in prior periods.

(e) The Company is subject to the reporting requirements of
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the "1934
Act"); the Company's (a) Annual Report on Form 10-KSB for the fiscal year
ended April 30, 1998, (b) Annual Proxy Statement of Form 14A for the fiscal
year ended April 30, 1998 and the Consent Statement, dated December ___,
1998, (c) Current Reports on Form 8-K dated May 15, 1998, May 19, 1998, May
27, 1998, September 30, 1998, October 13, 1998 and December 7, 1998 and (d)
Quarterly Report on Form 10-QSB for the three months ended July 31, 1998
(collectively, the "Public Disclosure") filed by the Company with the U.S.
Securities and Exchange Commission (the "SEC") have been so filed in a timely
fashion (except for the amendment to the Form 8-K dated May 15, 1998) and
include all reports and other information required to be filed or furnished
by the Company under the 1934 Act and the Company has provided copies of all
such Public Disclosure to the Purchaser.

(f) VALIDITY OF MATERIAL CONTRACTS AND COMMITMENTS. All the
material contracts, mortgages, indentures, commitments, agreements, and
instruments to which the Company is a party (collectively, the "Company
Agreements") are (i) described in or included as exhibits to the Public
Disclosure and (ii) are legal, valid, binding, and in full force and effect
and are enforceable by the Company in accordance with their terms except as
limited by bankruptcy, insolvency, reorganization, moratorium, or similar
laws of general application affecting enforcement of creditors' rights, and
except as limited by application of legal principles affecting the
availability of equitable remedies.

(g) NONE BURDENSOME, ETC. Neither the Company nor any subsidiary
is in violation of any term of its respective Articles of Incorporation or
Bylaws, or, except as disclosed to Purchaser, any Company Agreement,
judgment, decree, order, statute, rule, or regulation applicable to it which,
either singly or in the aggregate, might result in any adverse change in the
business, prospects, conditions, affairs, or operations of the Company, or in
any of its properties or assets, or in any impairement of the right or
ability of the Company to carry on its business as proposed to be conducted,
or in any material liability on the part of the Company, or which question
the validity of this Agreement or any action taken or to be taken in
connection herewith (each, a "Material Adverse Effect"). The execution,
delivery, and performance by the Company of this Agreement, and the issuance
and sale of the Shares pursuant hereto, will not result in any such violation
or be in conflict with or constitute a default under any such Company
Agreement, or cause the acceleration of maturity of any loan or material
obligation to which the Company or the subsidiaries are a party or by which
any of them are bound or with respect to which any of them is an obligor or
guarantor, or result in the creation or imposition of any material lien,
claim, charge, restriction, equity or encumbrance of any kind whatsoever
upon, or, to the best knowledge of the Company after due inquiry, give to any
other person any interest or right (including any right of termination or
cancellation) in or with respect to any of the material properties, assets,
business or

-3-

<PAGE>

agreements of the Company or the subsidiaries. To the best knowledge of the
Company after due inquiry, no such Company Agreement materially adversely
affects or in the future (so far as can reasonably be foreseen by the Company
at the date of this Agreement) may materially adversely affect the business,
property, prospects, condition, affairs, or operations of the Company and the
subsidiary.

(h) LITIGATION, ETC. Other than as described in the Financial
Statements and ongoing regulatory proceedings relating to Mical Mortgage,
Inc. or the Public Disclosure, there are no actions, proceedings or
investigations pending (or to the best of the Company's knowledge, any basis
therefor or threat thereof), which might either singly or in the aggregate,
have a Material Adverse Effect.

(i) GOVERNMENTAL CONSENT ETC. No consent, approval, or
authorization of, or designation, declaration, or filing with, any
governmental unit is required on the part of the Company in connection with
the valid execution and delivery of this Agreement, or the offer, sale or
issuance of the Purchase Shares, or the consummation of any other transaction
contemplated hereby (except qualification or exemption under the California
Corporate Securities Law, which exemption or qualification will be available
or obtained and will be effective at the time of Closing).

(j) OFFERING. The offer, sale and issuance of the Shares in
conformity with the terms of this Agreement (the "Offering") will not violate
the Securities Act of 1933, as amended ("Securities Act").

(k) INTEGRATION. The Company has not, directly or indirectly,
during the six month period prior to the Closing solicited any offer to buy
or offered to sell, and will not, directly or indirectly, during the six
month period subsequent to the Closing, solicit any offer to buy or offer to
sell, in the United States or to any United States person (as that term is
defined in Regulation S under the Securities Act), any security which is or
would be integrated with the sale of the Shares in a manner that would
require the Shares to be registered under the Securities Act.

(l) NO GENERAL SOLICITATION OR DIRECTED SELLING EFFORTS. (A)
Neither the Company, nor any of its affiliates, nor any person acting on its
or their behalf has, within the preceding six months, offered or sold to any
person in the United States any shares of Common Stock, any depositary shares
representing Common Stock or any securities of the same or a similar class
as, or convertible into, such securities, and neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf has offered or
sold, or will offer for sale for a six month period following Closing, or
sell any Common Stock, by means of any general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act, and
(b) neither the Company, nor any of its affiliates, nor any person acting on
its or their behalf has engaged or will engage in any directed selling
efforts (as that term is defined in Regulation S under the Securities Act)
with respect to the Purchase Shares, and the Company, its affiliates and any
person acting on its or their behalf have complied and will comply with the
offering restrictions

-4-

<PAGE>

requirements or Regulation S in connection with the offering of the Purchase
Shares outside the United States.

(m) TITLE TO AND CONDITION OF PROPERTIES. The Company and its
subsidiaries have good and marketable title to all their respective tangible
and intangible property and assets, including those reflected in the Public
Disclosure and the Financial Statements Such property and assets are subject
to no mortgage or security interests, conditional sales contract, charge,
lien or encumbrance (except for the lien of current taxes not yet due and
payable and such imperfections of title, easements and encumbrances, if any,
as are not substantial in character, amount or extent and do not materially
detract from the value of, or interfere with the present use of the
properties subject thereto or affected thereby, or otherwise materially
impair the business operations of the Company and any subsidiary). Subsequent
to July 31, 1998, neither the Company nor any subsidiary has sold or disposed
of any of its property and assets or obligated itself to do so except in the
ordinary course of business. All material real and personal property leases
to which the Company or the subsidiaries are a party are in good standing,
valid and effective, and there is not under any such lease any default or
event which with notice or lapse of time or both would constitute a default
and in respect of which the Company or the subsidiaries have not taken
reasonable steps to prevent such a default from occurring other than such
defaults which would not have, either singly or in the aggregate, a Material
Adverse Effect.

(n) DISCLOSURE. This Agreement, the Public Disclosure, the
Financial Statements, and all certificates delivered to Purchaser pursuant to
this Agreement, when read together, do not contain any untrue statement of a
material fact and do not omit to state a material fact necessary in order to
make the statements contained therein or herein not misleading, it being
understood that the information provided to the Purchaser regarding the
Company contains estimates and projections which constitute forward looking
statements and which have been made in good faith by the Company and no
warranty of such projections is expressed or implied hereby. There is, to the
best of the Company's knowledge, no fact which might have a Material Adverse
Effect which has not been set forth in this Agreement, the Public Disclosure,
the Financial Statements or the other information provided to Purchaser.

(o) THE PURCHASE SHARES:

(i) are free and clear of any security interests, liens,
claims, or other encumbrances;

(ii) have been duly and validly authorized and issued and
are, and at Closing will be, fully paid and non-assessable;

(iii) will not have been, individually and collectively,
issued or sold in violation of any pre-emptive or other similar rights of the
holders of any securities of the Company; and

-5-
<PAGE>

(iv) will not subject the holders thereof to personal
liability by reason of being such holders.

(p) FURNISHING OF FINANCIAL STATEMENTS AND INFORMATION. The
Company will deliver to the Purchaser:

(i) as soon as practicable, but in any event within 90 days
after the end of each fiscal year, a consolidated balance sheet of the
Company and its subsidiaries, as of the end of such fiscal year, together
with the related consolidated statements of operations, shareholders' equity
and cash flow for such fiscal year, setting forth in comparative form figures
for the previous fiscal year, all in reasonable detail and duly certified by
the Company's independent public accountants, which accountants shall have
given the Company an opinion, unqualified as to the scope of the audit,
regarding such statements.

(ii) with reasonable promptness, such other financial data
relating to the business, affairs, results of operations and financial
condition of the Company and any subsidiaries as is available to the Company
and as from time to time the Purchasers may reasonably request.

(q) INSPECTION. The Company will permit each Purchaser and any of
its partners, officers or employees, or any outside representatives
designated by such Purchaser, to visit and inspect at such Purchaser's
expense any of the properties of the Company or its subsidiaries, including
their books and records (and to make photocopies thereof or make extracts
therefrom), and to discuss their affairs, finances, and accounts with their
officers, lawyers and accountants, except with respect to trade secrets and
similar confidential information, all to such reasonable extent and at such
reasonable times and intervals as such Purchaser may reasonably request.
Except as otherwise required by laws or regulations applicable to a
Purchaser, the Purchasers shall maintain, and shall require their
representatives to maintain, all information obtained pursuant to this
section on a confidential basis.

4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants to, and agrees with, the Company:

(a) No consent, approval, authorization, or order of any court,
governmental agency or body, or arbitrator having jurisdiction over the
Purchaser is required for execution of this Agreement, including, without
limitation, the purchase of the Purchase Shares or the performance of the
Purchaser's obligations hereunder.

(b) The Purchaser understands that no federal or state agency has
passed on or made any recommendation or endorsement of the Purchase Shares.

-6-

<PAGE>

(d) The Purchaser understands that the Purchase Shares are being
offered and sold to it in reliance on specific exemptions or non-application
from the registration requirements of United States federal and state
securities laws and that the Company is relying upon the truth and accuracy
of the representations, warranties, agreements, acknowledgments, and
understandings of the Purchaser set forth herein in order to determine the
applicability of such exemptions or non-applications and the suitability of
the Purchaser to acquire the Shares.

(e) The Purchaser is aware that the Purchase Shares have not been
registered under the Securities Act by reason of their issuance in a
transaction exempt from the registration and prospectus delivery requirements
of the Securities Act pursuant to Section 4(2) and Regulation D thereof and
that the Purchase Shares must be held by the Purchaser indefinitely, and the
Purchaser must therefore bear the economic risk of such investment
indefinitely unless a subsequent disposition thereof is registered under the
Securities Act or is exempt from registration. The Purchaser is aware of the
provisions of Rule 144 promulgated under the Securities Act which permits
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including among other things the
existence of a public market for the Shares, the availability of certain
current public information about the Company, the resale occurring not less
than one year after a party has purchased and paid for the security to be
sold, the sale being through a "broker's transaction" or in transactions
directly with a "market maker" (as provided by Rule 144(f)), and the number
of shares being sold during any three-month period not exceeding specified
limitations. The Purchaser is also aware that while many of the restrictions
of Rule 144 do not apply to the resale of shares by a person who owned those
shares for at least two years prior to their resale and who is not an
"affiliate" (within the meaning of Rule 144(a)) of the issuer and has not
been an affiliate of the issuer for at least three months prior to the date
of resale of the restricted securities, the Company does not warrant or
represent that the Purchaser is not an affiliate as of the date of this
Agreement or that the Purchaser will not be an affiliate at any relevant
times in the future.

(f) Each instrument representing the Shares is to be endorsed
with the following legends:

(i) THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS
MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY
TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION
IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH
ACT.

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<PAGE>

(ii) Any other legend required by California or other state
securities laws.

(g) The Company need not register a transfer of legended Shares
and may instruct its transfer agent not to register the transfer of the
Shares unless one of the conditions specified in the legends as set forth in
section 4(f) hereof is satisfied.

(h) Any legend endorsed on an instrument pursuant to Section 4(f)
hereof and the stop transfer instructions with respect to such Shares shall
be removed, and the Company shall issue an instrument without such legend to
the holder of such Shares if such Shares are registered under the Securities
Act and a prospectus meeting the requirements of Section 10 of the Securities
Act is available or if such holder provides the Company with an opinion of
counsel for such holder of the Shares, reasonably satisfactory to the
Company, to the effect that a public sale, transfer or assignment of such
Shares may be made without registration.

(i) The Purchaser is either (i) acquiring the Purchase Shares for
the Purchaser's own account; or (ii) for the account of another for which the
Purchaser acts as a fiduciary, in which case the Purchaser will so advise the
Company. If acting as a fiduciary, the Purchaser makes the representations,
warranties, and covenants as set forth herein on its own behalf and as agent
for and on behalf of such other party. The Purchaser is acquiring the
Purchase Shares for investment and without any present intention to engage in
a distribution thereof.

(j) The Purchaser has the knowledge and experience in financial
and business matters to evaluate the merits and risks of the proposed
investment.

(k) The Purchaser is an "Accredited Investor" as that term is
defined under Rule 501 adopted pursuant to the Securities Act.

5. NEGATIVE COVENANTS OF THE COMPANY. The Company further covenants
and agrees that without the prior written approval of a majority in interest
of the Purchasers, it will not:

(a) Engage in any business other than the business engaged in or
proposed to be engaged in by the Company or any subsidiary on the date
hereof, in each case as set forth in the Public Disclosure, and any
businesses or activities substantially similar or related thereto;

(b) Invest, directly or indirectly, in any business or
enterprise, other than in connection with the operation of its business;
provided, however, pending the use of the net proceeds from the sale of the
Shares in its businesses, the Company may invest such net proceeds in short
term interest bearing deposits and securities;

(c) By amendment of its articles of incorporation through
voluntary reorganization or recapitalization, or through any transfer of its
assets, consolidation,

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<PAGE>

merger, dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the
terms to be observed or performed hereunder by the Company; or

(d) Effect any private or public offering of the Company's Common
Stock or other securities convertible into or exchangeable for Common Stock,
during the period commencing on the date of the Closing and ending six months
thereafter.

6. CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATIONS. The
obligations of the Purchaser hereunder are subject to the performance by the
Company of its obligations hereunder and to the satisfaction of the following
conditions precedent on or before the Closing:

(a) The representations and warranties made by the Company in
this Agreement shall, unless waived by the Purchaser, be true and correct as
of the date hereof and at the Closing, with the same force and effect as if
they had been made on and as of the date of the Closing.

(b) After the date hereof until the Closing, there shall not have
occurred:

(i) any change, or any development involving a prospective
change, in either (A) the condition, financial or otherwise, or in the
earnings, business or operations, or in or affecting the properties of the
Company, or (B) the financial or market conditions or circumstances in the
United States, in either case which, in the Purchaser's sole judgment, is
material and adverse and makes it impractical or inadvisable to proceed with
the offering, sale, or delivery of the Shares;

(ii) an imposition of a new legal or regulatory restriction
not in effect on the date hereof, or any change in the interpretation of
existing legal or regulatory restrictions, that materially and adversely
affects the offering, sale, or delivery of the Shares; or

(iii) a suspension or material limitation of trading (A)
generally on or by the New York Stock Exchange or NASDAQ or (B) of any
securities of the Company on any exchange or in any over-the-counter market.

(c) At the Closing the Purchasers shall have received the
favorable opinion, dated the Closing, of Severson & Werson, U.S. counsel to
the Company, in form and substance satisfactory to the Purchasers to the
effect set forth below:

(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the Sate of
Delaware;

(ii) The Shares have been duly authorized for issuance and
sale to the Purchaser pursuant to this Agreement and, when issued and
delivered by the

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<PAGE>

Company pursuant to this Agreement against payment of the consideration set
forth herein, will be validly issued and fully paid and non-assessable and no
holder of the Shares is or will be subject to personal liability by reason of
being such a holder;

(iii) The Company has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in
the Public Disclosure and to enter into and perform its obligations under
this Agreement;

(iv) This Agreement has been duly authorized, executed and
delivered by the Company;

(v) Neither the Company nor any subsidiary is in violation of
its charter or by-laws and no default by the Company or any subsidiary exists
in the due performance or observance of any Company Agreement, other that
such defaults that would not, either singly or in the aggregate, have a
Material Adverse Effect;

(vi) The authorized, issued and outstanding capital stock of
the Company is as set forth in Item 5 of the company's Annual Report on Form
10-KSB for the year ended April 30, 1998 (except for subsequent issuances, if
any, pursuant to this Agreement or pursuant to reservations, agreements or
employee benefit plans referred to in the Public Disclosure or pursuant to
the exercise of convertible securities or options referred to in the Public
Disclosure); the shares of issued and outstanding capital stock of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable;

(vii) The Shares have been duly authorized for issuance and
sale to the Purchasers pursuant to this Agreement and, when issued and
delivered by the Company pursuant to this Agreement against payment of the
consideration set forth herein, will be validly issued and fully paid and
non-assessable and no holder of the Shares is or will be subject to personal
liability by reason of being such a holder; and

(viii) The issuance of the Shares is not subject to
preemptive or other similar rights of any security holder of the Company.

7. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS. The
obligations of the Company hereunder are subject to the performance by the
Purchaser of its obligations hereunder and to the satisfaction of the
condition that the representations and warranties made by the Purchaser in
this Agreement shall, unless waived by the Company, be true and correct at
the Closing Date, with the same force and effect as if they had been made on
and as of, the date of the Closing.

8. REGISTRATION RIGHTS.

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<PAGE>

"shelf" registration statement on the appropriate form under the Securities
Act providing for the registration of, and the sale on a continuous or
delayed basis by the holders of, all of the Shares, pursuant to Rule 415 or
any similar rule that may be adopted by the SEC (the "Shelf Registration
Statement").

The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the
prospectus forming part thereof to be usable by Purchasers for a period
ending on the earlier of (i) (x) the second anniversary of the Closing, (y)
the expiration of the period following the Closing after which Rule 144(k)
under the Securities Act generally becomes available to non-affiliates of an
issuer or (z) in the event the Company has at any time suspended the use of
the prospectus contained in the Shelf Registration Statement pursuant to this
paragraph, the date beyond the earlier of the periods referred to in clauses
(x) and (y) that reflects an additional period of days equal to the number of
days during all of the periods from and including the dates the Company gives
notice of such suspension pursuant to this paragraph to and including the
date when holders of Shares receive an amended or supplemented prospectus
necessary to permit resales of Shares under the Shelf Registration Statement
or to and including the date on which the Company gives a Resumption Notice
of (ii) such time as all of the Shares covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement or
pursuant to Rule 144 (in any such case, such period being called the "Shelf
Registration Period"). The Company shall be deemed not to have used its best
efforts to keep the Shelf Registration Statement effective during the
requisite period if it voluntarily takes any action that would result in
holders of Shares covered thereby not being able to offer and sell Shares
during that period, unless such action, in the opinion of the Company after
consulting with legal counsel, is required by applicable law.

Notwithstanding any other provisions hereof, the Company
will ensure that (i) any Shelf Registration Statement and any amendment
thereto and any prospectus forming part thereof and any supplement thereto
complies in all material respects with the Securities Act and the rules and
regulations thereunder, (ii) any Shelf Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated herein or necessary to make the statements therein not misleading and
(iii) any prospectus forming part of any Shelf Registration Statement, and
any supplement to such prospectus does not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

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<PAGE>

Purchaser of its intention to file such SB-1 Registration Statement and (ii)
at the Company's expense (which shall include, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and independent accountants for the Company, and fees and expenses
incident to compliance with state securities law, but shall not include fees
and disbursements of counsel for Purchaser) include among the securities
covered by the SB-1 Registration Statement such portions of the Shares then
held by Purchaser as shall be specified in a written request to the Company
within thirty (30) days after the date on which the Company gave the notice
described in (i) above. Upon receipt of such written request and of the
Shares specified in the request (any shareholder requesting registration
being individually called a "Selling Shareholder"), the Company shall (i) use
its reasonable best efforts to effect the registration, qualification or
compliance of the Shares under the Securities Act and under any other
applicable federal law and any applicable securities or blue sky laws of
jurisdictions within the United States; (ii) furnish each Selling Shareholder
such number of copies of the prospectus contained in the SB-1 Registration
Statement filed under the Securities Act (including preliminary prospectus)
in conformity with the requirements of the Securities Act, and such other
documents as the Selling Shareholder may reasonably request in order to
facilitate the disposition of the Shares covered by the SB-1 Registration
Statement; (iii) notify each Selling Shareholder, at any time when a
prospectus relating to the Shares covered by such SB-1 Registration Statement
is required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus forming a part of such SB-1
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; and (iv)
at the request of the Selling Shareholder, prepare and furnish to the Selling
Shareholder any reasonable number of copies of any supplement to or amendment
of such prospectus as may be necessary so that, as thereafter delivered to
purchasers of the Shares, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.

(b) REGISTRATION OF UNDERWRITTEN OFFERING. If the offering of
Common Stock to be registered by the Company pursuant to either of the
Registration Statements is underwritten, each Selling Shareholder shall sell
the Shares to or through the underwriter(s) of the Common Stock being
registered for the account of the Company or others upon the same terms
applicable to the Company or others. If the managing underwriter(s)
reasonably determine that all or any portion of the Shares held by the
Selling Shareholder should not be included in either of the Registration
Statements, then notwithstanding anything to the contrary in this Section,
the determination of such underwriter(s) shall be conclusive; provided,
however, that if such underwriter(s) determine that some but not all of the
Shares of the Selling Shareholder shall be included in the Registration
Statement, the number of Shares owned by each Selling Shareholder to be
included in the Registration Statement will be proportionately reduced in
accordance with the respective written requests given as provided above.

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<PAGE>

(c) INDEMNIFICATION. In the event that Purchase Shares purchased
pursuant to this Agreement are included in a Registration Statement under
this Section 8, the Company will indemnify and hold harmless each Selling
Shareholder and each other person, if any, who controls such Selling
Shareholder within the meaning of Section 15 of the Securities Act, against
any losses, claims, damages or liabilities, joint or several, to which such
Selling Shareholder or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of are based upon any
untrue statement or alleged untrue statement of any material fact contained,
in either of the Registration Statements pursuant to which the Shares were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or arise out of or are based upon the
failure by the Company to file any amendment or supplement thereto that was
required to be filed under the Securities Act, and will reimburse such
Selling Shareholder and each such controlling person for any legal or any
other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action.
Notwithstanding the foregoing, the Company will not be liable in any such
case to a Selling Shareholder to the extent that any such loss, claim,
damage, or liability arises out of or is based upon an untrue statement or
omission made in such Registration Statement, preliminary prospectus, final
prospectus or amendment or supplement in reliance upon and in conformity with
written information furnished to the Company through an instrument duly
executed by or on behalf of that Selling Shareholder specifically for use in
the preparation of such Registration Statement, preliminary prospectus, final
prospectus, or amendment or supplement. It shall be a condition precedent to
the obligation of the Company to take any action pursuant to this Section
that the Company shall have received an undertaking satisfactory to it from
each Selling Shareholder to indemnify and hold harmless the Company (in the
same manner and to the same extent as set forth in this Section), each
director of the Company, each officer who shall sign such registration
statement, and any persons who control the Company within the meaning of the
Securities Act, with respect to any statement or omission from such
registration statement, preliminary prospectus, or any final prospectus
contained therein, or any amendment or supplement thereto, if such statement
or omission was made in reliance upon and in conformity with written
information furnished to the Company through an instrument duly executed by
the indemnifying party specifically for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, or
amendment or supplement. Promptly following receipt by an indemnified party
of notice of the commencement of any action involving a claim referred to
above in this Section 8(c), such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written
notice to the latter of the commencement of such action, provided, however,
that any failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve
it from any liability which it may have otherwise than on account of this
indemnity agreement. An indemnifying

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<PAGE>

party may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not (except
with the consent of the indemnified party) also be counsel to the indemnified
party. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to any local counsel) separate
from their own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances. No indemnifying
party shall, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect to
any litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 8 or
Section 9 hereof (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim
and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.

(d) BINDING PROVISIONS. The provisions of this Section 8 shall be
binding on the successors of the Company. No Shareholder may assign the
provisions of this Section 8 or all or any part of its or their rights or
obligations hereunder, except that in the event of a merger or consolidation
in which the Company or the Purchaser is not the survivor, the Company or the
Purchaser, as the case may be, shall assign and transfer, and successor shall
assume, the provisions of this Section 8.

(e) CONFLICTS. To the extent that the Company's compliance with
the obligations set forth in Sections 8(a) through 8(d) above would conflict
with or otherwise cause a breach of or default under any of its existing
obligations pursuant to any agreements to which it currently is a party, the
Company's failure to comply with those obligations shall not be deemed a
breach of this Agreement.

(f) TRANSFER OF REGISTRATION RIGHTS. The rights to cause the
Company to register the Purchase Shares granted to the Purchaser by the
Company under Section 8 may be assigned by the Purchaser to a transferee or
assignee of any of the Purchaser's Shares, provided that the Company is given
written notice by the Purchaser at the time of or within a reasonable time
after said transfer, stating the name and address of said transferee or
assignee and indemnifying the Purchase Shares with respect to which such
registration rights are being assigned.

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<PAGE>

Agreement, or (ii) the value of the Purchase Shares measured by the average
closing bid price of a share of the Company's Common Stock on the five
trading days immediately preceding the date that is ninety (90) days
following the date of the Closing. Such payments shall be paid by the
delivery to the Purchaser of shares of Common Stock valued in the same manner
as in (ii) above. Provided that the Company shall continue to use its
reasonable best efforts to cause such Shelf Registration Statement to become
effective as promptly as practicable, the delivery of such Common Stock shall
be in full satisfaction of any liability on the part of the Company for
failing to register the Shares as provided herein; provided further however,
that such delivery shall not excuse the Company from the obligation to
register all of such Shares which obligation shall continue. Any shares of
Common Stock issued pursuant to this Section 8(g) shall be subject to the
same registration rights provided in this Section 8.

9. CONTRIBUTION

(a) If the indemnification provided for in Section 8 hereof is
for any reason unavailable to or insufficient to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Selling
Shareholder on the one hand and the Company on the other hand from the offer
and sale of the Purchase Shares pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Selling
Shareholder on the one hand and of the Company on the other hand in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.

(b) The relative fault of the Company on the one hand and the
Selling shareholder on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Selling Shareholder
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.

(c) The Company and the Selling Shareholder agree that it would
not be just and equitable if a contribution pursuant to this Section 9 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above. The
aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 9
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or

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<PAGE>

threatened, or any claim whatsoever based upon any such untrue or alleged
untrue statement or omission or alleged omission.

(d) No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.

(e) For purposes of this Section 9, each person, if any, who
controls the Selling Shareholder within the meaning of Section 15 of the
Securities Act or Section 20 of the 1934 Act shall have the same rights to
contribution as such Selling Shareholder, and each director of the Company,
each officer of the Company, and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20
of the 1934 Act shall have the same rights to contribution as the Company.

10. FEES AND EXPENSES. Each of the Purchaser and the Company each
agrees to pay its own expenses incident to the performance of its obligations
hereunder, except that the Company agrees to pay the fees, expenses and
disbursements of the Purchaser's counsel.

11. SURVIVAL OF THE REPRESENTATIONS, WARRANTIES, ETC. The
respective agreements, representations, warranties, indemnities, and other
statements made by or on behalf of the Company and Purchaser pursuant to this
Agreement shall remain in full force and effect, regardless of any
investigation made by or on behalf of the other party to this Agreement or
any officer, director, or employee, or person controlling or under common
control with, such party, and will survive delivery of any payment of the
Shares.

12. NOTICES. All communications hereunder shall be in writing and,
if sent to the Purchasers, shall be sufficient in all respects if delivered,
sent by registered mail, or by telecopy and confirmed to the Purchasers at
the address set forth on the Signature Page or, if sent to the Company, shall
be delivered, sent by registered mail, or by telecopy and confirmed to the
Company at:

Finet Holdings Corporation
505 Sansome Street, #1420
San Francisco, California 94111

Tel: (415) 263-5400
Fax: (415) 263-5440

13. MISCELLANEOUS.

(a) This Agreement may be executed in one or more counterparts
and it is not necessary that signatures of all parties appear on the same
counterpart, but such counterparts together shall constitute but one and the
same agreement.

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<PAGE>

(b) This Agreement shall inure to the benefit of and be binding
upon the parties hereto, their respective successors and, with respect to
Sections 8 and 9 hereof, the officers, directors, and controlling persons
thereof and each person under common control therewith, and no other person
shall have any right or obligation hereunder.

(d) The headings of the sections of this document have been
inserted for convenience of reference only and shall not be deemed to be a
part of this Agreement.

IN WITNESS HEREOF, the parties hereto have duly executed and
delivered this Agreement, all as of the day and year first above written.

COMPANY:

FINET HOLDINGS CORPORATION

By
----------------------------
President

PURCHASER:
Purchase Shares: ___________
-------------------------------
Total Purchase Price:___________ Print Name

-------------------------------
Authorized Signature

-------------------------------
Address

-------------------------------
Telephone Number

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<PAGE>

EXHIBIT 4.16

THIS WARRANT AND THE SHARES OF STOCK OF FINET HOLDINGS CORPORATION TO BE ISSUED
UPON ANY EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
ANY STATE SECURITIES LAWS AND ANY SALE, TRANSFER, PLEDGE OR OTHER DISPOSITION
THEREOF MAY BE MADE ONLY (i) IN A REGISTRATION UNDER SAID ACT OR (ii) IF AN
EXEMPTION FROM REGISTRATION UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS
IS AVAILABLE AND THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL TO THAT EFFECT
REASONABLY SATISFACTORY TO IT.

FINET HOLDINGS CORPORATION

COMMON STOCK PURCHASE WARRANT
TO PURCHASE 1,949,867 SHARES OF THE COMMON STOCK
OF FINET HOLDINGS CORPORATION

This Warrant Expires December 23, 2003

Warrant No. 98-13

THIS CERTIFIES that, subject to the terms and conditions set forth in
this Warrant, BES INVESTIMENTO, S.A. (the "Holder") is entitled to purchase from
Finet Holdings Corporation, a Delaware corporation (the "Company"), at any time
or from time to time during the Exercise Period (as defined in Section 15 below)
the number of fully paid and non-assessable shares of common stock, par value
$.01 per share, of the Company (the "Shares") as provided herein upon surrender
of this Warrant at the principal office of the Company, and, at the election of
the Holder, upon payment of the purchase price at said office in cash or by
cashier's check or by the wire transfer of funds in a dollar amount equal to the
purchase price of the Shares for which the consideration is being given.

This Warrant shall be exercisable for that number of Shares as set
forth above.

1. PURCHASE PRICE. The purchase price of one share of Common Stock
(or such securities as may be substituted for one share of Common Stock
pursuant to the provisions set forth below) (the "Warrant Price") shall be
One Dollar and Twenty-Five Cents ($1.25).

2. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number
and kind of securities issuable upon the exercise of this Warrant shall be
subject to adjustment from time to time upon the happening of certain events
as follows:

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<PAGE>

(a) ADJUSTMENT FOR DIVIDENDS IN STOCK. If, at any time on or
after the date hereof, the holders of the Common Stock of the Company (or any
shares of stock or other securities at the time receivable upon the exercise
of this Warrant) shall have received, or, on or after the record date fixed
for the determination of eligible stockholders, shall have become entitled to
receive, without payment therefor, other or additional stock of the Company
by way of dividend (other than as provided for in Section 2(b) below), then
and in each such case, upon the exercise of this Warrant, the Holder shall be
entitled to receive, in addition to the number of shares of Common Stock
receivable and without payment of any additional consideration, the amount of
such other or additional stock of the Company which the Holder would receive
on the date of such exercise had it been the holder of record of such Common
Stock on the date hereof and had thereafter, during the period from the date
hereof to and including the date of such exercise, retained such shares
and/or all other additional stock receivable by it during such period and
given effect to all adjustments called for during such period by this Section 2.

(b) ADJUSTMENT FOR CHANGES IN COMMON STOCK. In the event of
changes in the outstanding Common Stock of the Company by reason of
split-ups, recapitalizations, reclassifications, mergers, consolidations,
combinations or exchanges of shares, separations, reorganizations,
liquidations, or the like, the number and class of shares available under the
Warrant in the aggregate and the Warrant Price shall be correspondingly
adjusted by the Board of Directors of the Company. The adjustment shall be
such as will give the Holder, upon exercise for the same aggregate Warrant
Price, the total number, class, and kind of shares as the Holder would have
owned had the Warrant been exercised prior to the event and had the Holder
continued to hold such shares until after the event requiring adjustment.

3. NO FRACTIONAL SHARES. No fractional shares of Common Stock will
be issued in connection with any subscription under this Warrant. In lieu of
any fractional shares which would otherwise be issuable, the Company shall
pay cash equal to the product of such fraction multiplied by the fair market
value of one share of Common Stock on the date of exercise as determined in
good faith by the Company's Board of Directors.

4. NO STOCKHOLDER RIGHTS. This Warrant shall not entitle its
holder to any of the rights of a stockholder of the Company prior to its
exercise.

5. RESERVATION OF STOCK. The Company covenants that during the
period this Warrant is exercisable, the Company will reserve from its
authorized and unissued Common Stock a sufficient number of shares to provide
for the issuance of Common Stock upon the exercise of this Warrant. The
Company agrees that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of
Common Stock upon the exercise of this Warrant.

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<PAGE>

6. EXERCISE OF WARRANT. This Warrant may be exercised by the
Holder or its registered assigns, in whole or in part, by the surrender of
this Warrant at the principal office of the Company, together with the
attached form of subscription, duly executed, and accompanied by payment in
full of the amount of the Warrant Price in the form described in this
Warrant. Upon partial exercise of this Warrant, a new warrant or warrants
containing the same date and provisions as this Warrant shall be issued by
the Company to the Holder for the number of shares of Common Stock with
respect to which this Warrant shall not have been exercised. A Warrant shall
be deemed to have been exercised immediately prior to the close of business
on the date of its surrender for exercise as provided above, and the person
entitled to receive the shares of Common Stock issuable upon such exercise
shall be treated for all purposes as the holder of such shares of record as
of the close of business on such date. As promptly as practicable on or after
such date, the Company shall issue and deliver to the person or persons
entitled to receive the shares, a certificate or certificates for the number
of full shares of Common Stock issuable upon such exercise, together with
cash in lieu of any fraction of a share as provided above.

7. CERTIFICATE OF ADJUSTMENT. Whenever the Warrant Price is
adjusted as provided in Section 2, the Company shall promptly deliver to the
record holder of this Warrant a certificate of an officer of the Company
setting forth the relevant Warrant Price or number of shares after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.

8. COMPLIANCE WITH SECURITIES ACT. The Holder, by acceptance of this
Warrant, agrees that this Warrant and the shares of Common Stock to be issued
upon its exercise (or shares of any security into which such Common Stock may
be converted) (the "Shares") are being acquired for investment and that the
Holder will not offer, sell, or otherwise dispose of this Warrant and any
shares of Common Stock to be issued upon its exercise (or shares of any
security into which such Common Stock may be converted) except under
circumstances which will not result in a violation of the Securities Act of
1933, as amended (the "Securities Act"). Upon exercise of this Warrant, the
Holder shall, if requested by the Company, confirm in writing its investment
purpose and acceptance of the restrictions on transfer of the Shares.

9. REGISTRATION RIGHTS.

(a) RIGHTS TO REGISTRATION. The Company shall use its best
efforts to file with the SEC as promptly as practicable and thereafter shall
use its best efforts to cause to be declared effective within ninety (90)
days from December 23, 1998 (the "Issuance Date") a "shelf" registration
statement on the appropriate form under the Securities Act providing for the
registration of, and the sale on a continuous or delayed basis by the holders
of, all of the Shares, pursuant to Rule 415 or any similar rule that may be
adopted by the SEC (the "Shelf Registration Statement"). The Company shall
use its best efforts to keep the Shelf Registration Statement continuously
effective in order to permit the prospectus forming part thereof to be usable
by Holders for a period

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<PAGE>

ending on the earlier of (i) (x) the second anniversary of the Issuance Date,
(y) the expiration of the period following the Issuance Date after which Rule
144(k) under the Securities Act generally becomes available to non-affiliates
of an issuer, or (z) in the event the Company has at any time suspended the
use of the prospectus contained in the Shelf Registration Statement pursuant
to this section, the date beyond the earlier of the periods referred to in
clauses (x) and (y) that reflects an additional period of days equal to the
number of days during all of the periods from and including the dates the
Company gives notice of such suspension pursuant to this section to and
including the date when holders of Shares receive an amended or supplemented
prospectus necessary to permit resales of Shares under the Shelf Registration
Statement or to and including the date on which the Company gives a
resumption notice; or (ii) such time as all of the Shares covered by the
Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement or pursuant to Rule 144 (in any such case, such period
being called the "Shelf Registration Period"). The Company shall be deemed
not to have used its best efforts to keep the Shelf Registration Statement
effective during the requisite period if it voluntarily takes any action that
would result in holders of Shares covered thereby not being able to offer and
sell Shares during that period, unless such action, in the opinion of the
Company after consulting with legal counsel, is required by applicable law.

Notwithstanding any other provisions of this Warrant, the
Company will ensure that (i) any Shelf Registration Statement including any
amendment and any prospectus including any supplement forming part thereof
complies in all material respects with the Securities Act and the rules and
regulations thereunder; (ii) any Shelf Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated herein or
necessary to make the statements therein not misleading; and (iii) any
prospectus forming part of any Shelf Registration Statement, and any supplement
to such prospectus does not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading.

In addition, if, at any time during the period after the
Issuance Date and ending ten (10) years thereafter, the Company shall determine
to register under the Securities Act any shares of Common Stock to be offered
for cash by it or others, pursuant to a registration statement on Form SB-1 or
its equivalent (the "SB-1 Registration Statement" and, together with the Shelf
Registration Statement, the "Registration Statements"), the Company will (i)
promptly give written notice to Holder of its intention to file such SB-1
Registration Statement and (ii) at the Company's expense (which shall include,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel and independent accountants for the Company, and
fees and expenses incident to compliance with state securities law, but shall
not include fees and disbursements of counsel for Holder) include among the
securities covered by the SB-1 Registration Statement such portions of the
Shares then

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<PAGE>

held by Holder as shall be specified in a written request to the
Company within thirty (30) days after the date on which the Company gave the
notice described in (i) above.

Upon receipt of such written request and of the Shares
specified in the request (any shareholder requesting registration being
individually called a "Selling Shareholder"), the Company shall (i) use its
reasonable best efforts to effect the registration, qualification or compliance
of the Shares under the Securities Act and under any other applicable federal
law and any applicable securities or blue sky laws of jurisdictions within the
United States; (ii) furnish each Selling Shareholder such number of copies of
the prospectus contained in the SB-1 Registration Statement filed under the
Securities Act (including preliminary prospectus) in conformity with the
requirements of the Securities Act, and such other documents as the Selling
Shareholder may reasonably request in order to facilitate the disposition of the
Shares covered by the SB-1 Registration Statement; (iii) notify each Selling
Shareholder, at any time when a prospectus relating to the Shares covered by
such SB-1 Registration Statement is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus forming a part of such SB-1 Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading; and (iv) at the request of the Selling Shareholder,
prepare and furnish to the Selling Shareholder any reasonable number of copies
of any supplement to or amendment of such prospectus as may be necessary so
that, as thereafter delivered to purchasers of the Shares, such prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading.

(c) INDEMNIFICATION. In the event that the Shares are included
in a Registration Statement under this Section 9, the Company will indemnify
and hold harmless each Selling Shareholder and each other person, if any, who
controls such Selling Shareholder within the meaning of Section 15 of the
Securities Act against any losses, claims, damages or liabilities, joint or
several, to which such Selling Shareholder

-5-
<PAGE>

or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of are based upon any untrue statement or
alleged untrue statement of any material fact contained in either of the
Registration Statements pursuant to which the Shares were registered, any
preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements not misleading, or arise out of
or are based upon the failure by the Company to file any amendment or
supplement to the Registration Statements that was required to be filed under
the Securities Act, and will reimburse such Selling Shareholder and each such
controlling person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
damage, liability or action.

Notwithstanding the foregoing, the Company will not be liable
in any such case to a Selling Shareholder to the extent that any such loss,
claim, damage, or liability arises out of or is based upon an untrue statement
or omission made in such Registration Statement, preliminary prospectus, final
prospectus or amendment or supplement in reliance upon and in conformity with
written information furnished to the Company through an instrument duly executed
by or on behalf of that Selling Shareholder specifically for use in the
preparation of such Registration Statement, preliminary prospectus, final
prospectus, or amendment or supplement. It shall be a condition precedent to the
obligation of the Company to take any action pursuant to this Section that the
Company shall have received an undertaking satisfactory to it from each Selling
Shareholder to indemnify and hold harmless the Company (in the same manner and
to the same extent as set forth in this Section), each director of the Company,
each officer who shall sign such registration statement, and any persons who
control the Company within the meaning of the Securities Act, with respect to
any statement or omission from such registration statement, preliminary
prospectus, or any final prospectus contained therein, or any amendment or
supplement thereto, if such statement or omission was made in reliance upon and
in conformity with written information furnished to the Company through an
instrument duly executed by the indemnifying party specifically for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, or amendment or supplement.

Promptly following receipt by an indemnified party of notice
of the commencement of any action involving a claim referred to above in this
Section 9(c), such indemnified party will, if a claim in respect thereof is to
be made against an indemnifying party, give written notice to the latter of the
commencement of such action; provided, however, that any failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result and in any
event shall not relieve it from any liability which it may have otherwise on
account of this indemnity agreement. An indemnifying party may participate at
its own expense in the defense of any such action; provided, however, that
counsel to the indemnifying party shall not (except with the consent of the
indemnified

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<PAGE>

party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent
to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 9 or Section 10 below
(whether or not the indemnified parties are actual or potential parties),
unless such settlement, compromise or consent (i) includes an unconditional
release of each indemnified party from all liability arising out of such
litigation, investigation, proceeding or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.

(d) BINDING PROVISIONS. The provisions of this Section 9
shall be binding on the successors of the Company.

(e) CONFLICTS. To the extent that the Company's compliance
with the obligations set forth in Sections 9(a) through 9(d) above would
conflict with or otherwise cause a breach of or default under any of its
existing obligations pursuant to any agreements to which it currently is a
party, the Company's failure to comply with those obligations shall not be
deemed a breach of this agreement.

(f) TRANSFER OF REGISTRATION RIGHTS. The rights to cause the
Company to register the Shares granted to the Holder by the Company under
this Section 9 may be assigned by the Holder to a transferee or assignee of
this Warrant or any of the Shares, provided that the Company is given written
notice by the Holder at the time of or within a reasonable time after said
transfer, stating the name and address of the transferee or assignee and
identifying the Shares with respect to which the registration rights are
being assigned.

10. CONTRIBUTION.

(a) If the indemnification provided for in Section 9 above is
for any reason unavailable or insufficient to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to in Section 9, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and
expenses incurred by such indemnified party (i) in such proportion as is
appropriate to reflect the relative benefits received by the Selling
Shareholder on the one hand and the Company on the other hand from the offer
and sale of the Purchase Shares pursuant to this Agreement, or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Selling

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<PAGE>

Shareholder on the one hand and of the Company on the other hand in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.

(b) The relative fault of the Company on the one hand and the
Selling Shareholder on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Selling Shareholder
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.

(c) The Company and the Selling Shareholder agree that it
would not be just and equitable if a contribution pursuant to this Section 10
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to
above. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this
Section 10 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission.

(d) No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.

(e) For purposes of this Section 10, each person, if any, who
controls the Selling Shareholder within the meaning of Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act of 1934 ("1934
Act") shall have the same rights to contribution as such Selling Shareholder,
and each director of the Company, each officer of the Company, and each
person, if any, who controls the Company within the meaning of Section 15 of
the Securities Act or Section 20 of the 1934 Act shall have the same rights
to contribution as the Company.

11. SUBDIVISION OF WARRANT. At the request of the holder of this
Warrant in connection with a transfer or exercise of a portion of the Warrant
and upon surrender of this Warrant for such purpose to the Company, the
Company at its expense (except for any transfer tax payable) will issue in
exchange warrants of like tenor and date representing in the aggregate the
right to purchase such number of shares of Common Stock as shall be
designated by such holder at the time of such surrender; provided, however,
that the Company's obligations to subdivide securities under this Section
shall be subject to and conditioned upon the compliance of any such
subdivision with applicable state securities laws and with the Securities Act.

12. NOTICES OF RECORD DATE. In case:

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<PAGE>

(a) the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time receivable upon the
exercise of the Warrant) for the purpose of entitling them to receive any
dividend or other distribution, or any rights to subscribe for or purchase
any shares of stock of any class or any other securities, or to receive any
other right, or

(b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, or any conveyance of
all or substantially all of the assets of the Company to another corporation,
or

then, and in each such case, the Company will mail or cause to
be mailed to each holder of a Warrant at the time outstanding a
notice specifying, as the case may be, (i) the date on which a
record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of
such dividend, distribution or right, or (ii) the date on which
such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding-up is to take
place, and the time, if any is to be fixed, as of which the
holders of record of Common Stock or such other stock or
securities at the time receivable upon the exercise of the
Warrant shall be entitled to exchange their shares of Common
Stock (or such other stock or securities) for securities or
other property deliverable upon such reorganization,
reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be
mailed at least 30 days prior to the date therein specified.

13. LOSS, THEFT, DESTRUCTION, OR MUTILATION OF WARRANT. Upon receipt
by the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction, or mutilation of this Warrant, and in the case of loss, theft,
or destruction, receipt of indemnity or security reasonably satisfactory to
it and reimbursement to the Company of all reasonable expenses incidental
thereto, and in the case of mutilation, upon surrender and cancellation of
this Warrant, the Company will make and deliver a new Warrant of like tenor
and dates as of such cancellation, in lieu of this Warrant.

14. MISCELLANEOUS. This Warrant shall be governed by the laws of the
State of California. The headings in this Warrant are for purposes of
convenience and reference only and shall not be deemed to constitute a part
of this Warrant. Neither this Warrant nor any term included may be changed,
waived, discharged, or terminated orally but only by an instrument in writing
signed by the Company and the registered holder. All notices and other
communications from the Company to the Holder shall be by telecopy or

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<PAGE>

expedited courier service to the address furnished to the Company in writing
by the last holder of this Warrant who shall have furnished an address to the
Company in writing.

15. EXERCISE PERIOD. The Exercise Period shall mean the period
commencing on December 23, 1998 and ending on December 23, 2003.

ISSUED this 23rd day of December, 1998.

FINET HOLDINGS CORPORATION

By:___________________________________

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<PAGE>

FORM OF ASSIGNMENT
FINET HOLDINGS CORPORATION

FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns, and transfers unto the Assignee named below all of the
rights of the undersigned under the within Warrant, with respect to the number
of shares of Common Stock set forth below:

Name of Assignee Address Number of Shares
- ---------------- ------- ----------------
<S> <C> <C>

</TABLE>

The undersigned does hereby irrevocably constitute and appoint _______________
_______________________ Attorney to make such transfer on the books of FINET
HOLDINGS CORPORATION maintained for the purpose, with full power of substitution
in the premises.

Dated:______________________

-----------------------------------
Name of Warrant Holder

Signature: _______________________

Witness: ________________________

<PAGE>

SUBSCRIPTION FORM
FINET HOLDINGS CORPORATION

(To be executed only upon exercise of Warrant)

The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for and purchases ________________ of the number of shares of
Common Stock of FINET HOLDINGS CORPORATION purchasable with this Warrant, and
herewith makes payment therefor, all at the price and on the terms and
conditions specified in this Warrant.

Dated: _____________________

---------------------------------
(Signature of Registered Owner)

---------------------------------
(Street Address)

---------------------------------
(City) (State) (Zip Code)

<PAGE>

EXHIBIT 4.20

COMMON STOCK PURCHASE AGREEMENT

THIS COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is made as
of May 10, 1999, between FINET HOLDINGS CORPORATION, a Delaware corporation
(the "Company"), and the person executing this Agreement on the signature
page hereof (the "Signature Page") as Purchaser (the "Purchaser"):

RECITALS:

WHEREAS, the Company has authorized the issuance and sale pursuant
to the terms and conditions hereof of 1,000,000 shares of its Common Stock
(the "Common Stock"); and

WHEREAS, the Purchaser desires to purchase and the Company desires
to sell the Common Stock on the terms and conditions set forth herein.

1. PURCHASE AND SALE OF THE SHARES. The Company agrees to sell to
the Purchaser, and upon the basis of the representations and warranties, and
subject to the terms and conditions, set forth in this Agreement, the
Purchaser agrees to purchase from the Company __________ shares of Common
Stock (the "Shares") in consideration for a purchase price (the "Purchase
Price") of US$6.00 per share, subject to adjustment as follows: The Company
has reached an agreement in principle with Banco Espirito Santo de
Investimento S.A. ("BES") for the placement of up to an additional $10
million of the Company's common stock at a price to be based on a discount
from the market price of the Company's common stock at the time of closing
which placement is anticipated to close during June, 1999. In the event the
BES placement closes on or before June 15, 1999, and the cash purchase price
per share (before placement agent commissions, fees and expenses) of the
shares to be sold through BES is less than $6.00 per share, the Company will
issue to Purchaser such number of additional shares, if any, as will make the
Purchase Price equal to the purchase price per share paid by the BES
investors. In the event the BES placement does not close by June 15, 1999,
the Company will issue to Purchaser such number of additional shares, if any,
as will make the Purchase Price equal to the average closing price of the
Company's common stock during the ten trading day period ending June 10,
1999, but not less than $4.00 nor greater than $6.00.

<PAGE>

the purchase price in immediately available funds by transfer to the account
of the Company. Within ten (10) days following closing the Company will
deliver to Purchaser against certificates representing the Shares to be
purchased by the Purchaser from the Company.

3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the Purchaser that:

(a) ORGANIZATION AND STANDING, ARTICLES AND BYLAWS. The Company
is a corporation duly organized and validly existing under, and by virtue of,
the laws of the State of Delaware and is in good standing under such laws.
The Company's principal operating subsidiary, Monument Mortgage, Inc.
("Monument"), is a corporation duly organized and validly existing under, and
by virtue of, the laws of the State of California. Each of the Company and
Monument has the requisite corporate power to own and operate its properties
and assets, and to carry on its business as presently conducted and as
proposed to be conducted. Each of the Company and Monument is qualified,
licensed or domesticated as a foreign corporation in all jurisdictions where
the nature of its activities or of its properties owned or leased makes such
qualification, licensing or domestication necessary at this time.

(b) CORPORATE POWER. The Company has now, or will have at the
Closing Date, all requisite legal and corporate power to enter into this
Agreement, to sell the Shares hereunder, and to carry out and perform its
obligations under the terms of this Agreement. All references to this
Agreement and the Shares to be issued hereunder shall for all purposes of the
Agreement, unless the context clearly requires otherwise, be deemed to
include the warrants that may be issued pursuant to Section 7(g) hereof and
the shares of Common Stock issuable upon exercise thereof, respectively.

(i) All corporate action on the part of the Company, its
officers, directors, and stockholders necessary for the sale and issuance of
the Shares pursuant hereto and the performance of the Company's obligations
hereunder has been taken or will be taken prior to the Closing. This
Agreement is a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
of general application affecting enforcement of creditors' rights, and except
as limited by application of legal principles affecting the availability of
equitable remedies.

(ii) The Shares, when issued in compliance with the
provisions of this Agreement, will be validly issued, fully paid and
nonassessable and will be free of any liens or encumbrances; provided,
however, that such shares may be subject to restrictions on transfer under
state and/or federal securities laws as set forth herein and as may be
required by future changes in such laws.

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<PAGE>

(iii) No shareholder of the Company has any right of first
refusal or any preemptive rights in connection with the issuance of the
Shares or of Common Stock by the Company.

(d) FINANCIAL STATEMENTS. The Company's audited consolidated
balance sheet as of April 30, 1998, audited consolidated statement of
operations, stockholders' equity and cash flows for the fiscal year ended
April 30, 1998, unaudited consolidated balance sheet and statements of
operations, stockholders' equity and cash flows for the nine months ended
January 31, 1999 (hereinafter collectively referred to as the "Financial
Statements") have been supplied by the Company to the Purchaser and such
Financial Statements are true and correct, have been prepared in accordance
with generally accepted accounting principles consistently applied (except as
disclosed therein and except that the unaudited Financial Statements do not
contain the footnotes required by generally accepted accounting principles),
and fairly present the financial condition of the Company as of the date
indicated and the results of the operations of the Company for the period
ended, as indicated.

(e) PUBLIC REPORTING. The Company is subject to the reporting
requirements of Section 13 or Section 15(d) of the Securities Exchange Act of
1934 (the "1934 Act"); the Company's (a) Annual Report on Form 10-KSB for the
fiscal year ended April 30, 1998, (b) Annual Proxy Statement on Form 14A for
the fiscal year ended April 30, 1998, (c) Consent Statements dated December
18, 1998 and April 26, 1999, (d) Current Reports on Form 8-K dated May 15,
1998, May 19, 1998, May 27, 1998, September 30, 1998, October 13, 1998,
November 30, 1998, December 7, 1998, January 5, 1999, January 19, 1999,
February 11, 1999 and February 19, 1999, (e) Quarterly Reports on Forms
10-QSB and 10-QSB/A for the three months ended July 31, 1998, the six months
ended October 31, 1998, and the nine months ended January 31, 1999
(collectively, the "Public Disclosure") filed by the Company with the U.S.
Securities and Exchange Commission (the "SEC") have been so filed in a timely
fashion (except for the amendment to the Form 8-K dated May 15, 1998 and the
Quarterly Reports on form 10-QSB) and include all reports and other
information required to be filed or furnished by the Company under the 1934
Act and the Company has provided copies of all such Public Disclosure to the
Purchaser

(f) VALIDITY OF MATERIAL CONTRACTS AND COMMITMENTS. All the
material contracts, commitments, agreements, and instruments to which the
Company or Monument is a party are legal, valid, binding, and in full force
and effect in all material respects and enforceable by the Company or
Monument, as the case may be, in accordance with their terms except as
limited by bankruptcy, insolvency, reorganization, moratorium, or similar
laws of general application affecting enforcement of creditors' rights, and
except as limited by application of legal principles affecting the
availability of equitable remedies. Except as disclosed to Purchaser, neither
the Company nor Monument is in material default under any of such contracts.

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<PAGE>

(g) COMPLIANCE WITH OTHER INSTRUMENTS, NONE BURDENSOME, ETC.
Neither the Company nor any subsidiary is in violation of any term of its
respective Articles of Incorporation or Bylaws, or, except as disclosed to
Purchaser, in any material respect of any mortgage, indenture, contract,
agreement, instrument, or, to the best knowledge of the Company, any
judgment, decree, order, statute, rule, or regulation applicable to it. The
execution, delivery, and performance by the Company of this Agreement, and
the issuance and sale of the Shares pursuant hereto, will not result in any
such violation or be in conflict with or constitute a default under any such
term, or cause the acceleration of maturity of any loan or material
obligation to which the Company or the subsidiaries are a party or by which
any of them are bound or with respect to which any of them is an obligor or
guarantor, or result in the creation or imposition of any material lien,
claim, charge, restriction, equity or encumbrance of any kind whatsoever
upon, or, to the best knowledge of the Company after due inquiry, give to any
other person any interest or right (including any right of termination or
cancellation) in or with respect to any of the material properties, assets,
business or agreements of the Company or the subsidiaries. To the best
knowledge of the Company after due inquiry, no such term or condition
materially adversely affects or in the future (so far as can reasonably be
foreseen by the Company at the date of this Agreement) may materially
adversely affect the business, property, prospects, condition, affairs, or
operations of the Company and the subsidiary.

(h) LITIGATION, ETC. Other than as described in the Financial
Statements or the Public Disclosure and ongoing regulatory proceedings
relating to Mical Mortgage, Inc., there are no actions, proceedings or
investigations pending (or to the best of the Company's knowledge, any basis
therefor or threat thereof), which, either in any case or in the aggregate,
might result in any adverse change in the business, prospects, conditions,
affairs, or operations of the Company, or in any of its properties or assets,
or in any impairment of the right or ability of the Company to carry on its
business as proposed to be conducted, or in any material liability on the
part of the Company, or which question the validity of this Agreement or any
action taken or to be taken in connection herewith.

(i) GOVERNMENTAL CONSENT ETC. No consent, approval, or
authorization of, or designation, declaration, or filing with, any
governmental unit is required on the part of the Company in connection with
the valid execution and delivery of this Agreement, or the offer, sale or
issuance of the Shares, or the consummation of any other transaction
contemplated hereby (except qualification or exemption under the California
Corporate Securities Law, which exemption or qualification will be available
or obtained and will be effective on the Closing Date).

(j) OFFERING. The offer, sale and issuance of the Shares in
conformity with the terms of this Agreement (the "Offering") will not violate
the Securities Act of 1933, as amended ("Securities Act").

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(k) TITLE TO AND CONDITION OF PROPERTIES. The Company and its
subsidiaries have good and marketable title to all their respective tangible
and intangible property and assets, including those reflected in the Public
Disclosure and the Financial Statements (except such property or assets as
have since January 31, 1999, been sold or otherwise disposed of in the
ordinary course of business). Such property and assets are subject to no
mortgage or security interests, conditional sales contract, charge, lien or
encumbrance (except for the lien of current taxes not yet due and payable and
such imperfections of title, easements and encumbrances, if any, as are not
substantial in character, amount or extent and do not materially detract from
the value of, or interfere with the present use of the properties subject
thereto or affected thereby, or otherwise materially impair the business
operations of the Company and any subsidiary). Subsequent to January 31,
1999, neither the Company nor any subsidiary has sold or disposed of any of
its property and assets or obligated itself to do so except in the ordinary
course of business. Except for such minor defects as are not substantial in
character and which do not have a materially adverse effect upon the validity
thereof, all material real and personal property leases to which the Company
or the subsidiaries are a party are in good standing, valid and effective,
and there is not under any such lease any existing material default or event
which with notice or lapse of time or both would constitute a material
default and in respect of which the Company or the subsidiaries have not
taken reasonable steps to prevent such a default from occurring.

(l) DISCLOSURE. This Agreement, the Public Disclosure, the
Financial Statements, and all certificates delivered to Purchaser pursuant to
this Agreement, when read together, do not contain any untrue statement of a
material fact and do not omit to state a material fact necessary in order to
make the statements contained therein or herein not misleading, it being
understood that the information provided to the Purchaser regarding the
Company contains estimates and projections which constitute forward looking
statements and which have been made in good faith by the Company and no
warranty of such projections is expressed or implied hereby. There is, to the
best of the Company's knowledge, no fact which materially adversely affects
the business, prospects, condition, affairs or operations of the Company or
any of its properties or assets which has not been set forth in this
Agreement, the Public Disclosure, the Financial Statements or the other
information provided to Purchaser.

(m) THE SHARES:

(i) are free and clear of any security interests, liens,
claims, or other encumbrances;

(ii) have been duly and validly authorized and issued and
are, and on the Closing Date will be, fully paid and non-assessable;

(iii) will not have been, individually and collectively,
issued or sold in violation of any pre-emptive or other similar rights of the
holders of any securities of the Company; and

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<PAGE>

(iv) will not subject the holders thereof to personal
liability by reason of being such holders.

(n) FURNISHING OF FINANCIAL STATEMENTS AND INFORMATION. The
Company will deliver to the Purchaser :

(i) as soon as practicable, but in any event within 90 days
after the end of each fiscal year, a consolidated balance sheet of the
Company and its Subsidiaries, as of the end of such fiscal year, together
with the related consolidated statements of operations, shareholders' equity
and cash flow for such fiscal year, setting forth in comparative form figures
for the previous fiscal year, all in reasonable detail and duly certified by
the Company's independent public accountants, which accountants shall have
given the Company an opinion, unqualified as to the scope of the audit,
regarding such statements.

(ii) with reasonable promptness, such other financial data
relating to the business, affairs and financial condition of the Company and
any Subsidiaries as is available to the Company and as from time to time the
Purchasers may reasonably request.

(o) INSPECTION. The Company will permit each Purchaser and any of
its partners, officers or employees, or any outside representatives
designated by such Purchaser, to visit and inspect at such Purchaser's
expense any of the properties of the Company or its Subsidiaries, including
their books and records (and to make photocopies thereof or make extracts
therefrom), and to discuss their affairs, finances, and accounts with their
officers, lawyers and accountants, except with respect to trade secrets and
similar confidential information, all to such reasonable extent and at such
reasonable times and intervals as such Purchaser may reasonably request.
Except as otherwise required by laws or regulations applicable to a
Purchaser, the Purchasers shall maintain, and shall require their
representatives to maintain, all information obtained pursuant to Sections
3(m) and 3(n) hereof on a confidential basis.

4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants to, and agrees with, the Company:

(a) No consent, approval, authorization, or order of any court,
governmental agency or body, or arbitrator having jurisdiction over the
Purchaser is required for execution of this Agreement, including, without
limitation, the purchase of the Shares or the performance of the Purchaser's
obligations hereunder.

(b) The Purchaser understands that no federal or state agency has
passed on or made any recommendation or endorsement of the Shares.

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<PAGE>

reasonably necessary to verify the accuracy of other information furnished by
the Company. The Purchaser has received and evaluated all information about
the Company and its business which the Purchaser deems necessary to formulate
an investment decision and does not desire any further information.

(d) The Purchaser understands that the Shares are being offered
and sold to it in reliance on specific exemptions or non-application from the
registration requirements of federal and state securities laws and that the
Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments, and understandings of the Purchaser
set forth herein in order to determine the applicability of such exemptions
or non-applications and the suitability of the Purchaser to acquire the
Shares.

(e) The Purchaser is aware that the Shares have not been
registered under the Securities Act of 1933 by reason of their issuance in a
transaction exempt from the registration and prospectus delivery requirements
of the Securities Act pursuant to Section 4(2) and Regulation D thereof and
that they must be held by the Purchaser indefinitely, and the Purchaser must
therefore bear the economic risk of such investment indefinitely unless a
subsequent disposition thereof is registered under the Securities Act or is
exempt from registration. The Purchaser is aware of the provisions of Rule
144 promulgated under the Securities Act which permits limited resale of
shares purchased in a private placement subject to the satisfaction of
certain conditions, including among other things the existence of a public
market for the Shares, the availability of certain current public information
about the Company, the resale occurring not less than one year after a party
has purchased and paid for the security to be sold, the sale being through a
"broker's transaction" or in transactions directly with a "market maker" (as
provided by Rule 144(f)), and the number of shares being sold during any
three-month period not exceeding specified limitations. The Purchaser is also
aware that while many of the restrictions of Rule 144 do not apply to the
resale of shares by a person who owned those shares for at least two years
prior to their resale and who is not an "affiliate" (within the meaning of
Rule 144(a)) of the issuer and has not been an affiliate of the issuer for at
least three months prior to the date of resale of the restricted securities.
Based on Purchaser's representation that after giving effect to the
transactions contemplated by this Agreement, Purchaser, together with its
affiliates, will own less than 10% of the Company's outstanding Common Stock,
the Company acknowledges that the Purchaser is not an affiliate as of the
date of this Agreement and that the Purchaser will not be an affiliate after
giving effect to the transactions contemplated by this Agreement.

(f) Each instrument representing the Shares is to be endorsed
with the following legends:

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<PAGE>

STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF
COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE
COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.

(ii) Any other legend required by California or other state
securities laws.

The Company need not register a transfer of legended Shares and may
instruct its transfer agent not to register the transfer of the Shares unless
one of the conditions specified in the foregoing legends is satisfied.

(g) Any legend endorsed on an instrument pursuant to Section 4(f)
hereof and the stop transfer instructions with respect to such Shares shall
be removed, and the Company shall issue an instrument without such legend to
the holder of such Shares if such Shares are registered under the Securities
Act and a prospectus meeting the requirements of Section 10 of the Securities
Act is available or if such holder provides the Company with an opinion of
counsel for such holder of the Shares, reasonably satisfactory to the
Company, to the effect that a public sale, transfer or assignment of such
Shares may be made without registration.

(h) The Purchaser is either (i) acquiring the Shares for the
Purchaser's own account; or (ii) for the account of another for which the
Purchaser acts as a fiduciary, in which case the Purchaser will so advise the
Company. If acting as a fiduciary, the Purchaser makes the representations,
warranties, and covenants as set forth herein on its own behalf and as agent
for and on behalf of such other party. The Purchaser is acquiring the Shares
for investment and without any present intention to engage in a distribution
thereof.

(i) The Purchaser has the knowledge and experience in financial
and business matters to evaluate the merits and risks of the proposed
investment.

(j) The Purchaser is an "Accredited Investor" as that term is
defined under Rule 501 adopted pursuant to the Securities Act.

5. CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATIONS. The
obligations of the Purchaser hereunder are subject to the performance by the
Company of its obligations hereunder and to the satisfaction of the following
conditions precedent on or before the Closing Date:

(a) The representations and warranties made by the Company in
this Agreement shall, unless waived by the Purchaser, be true and correct as
of the date hereof

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<PAGE>

and at the Closing Date, with the same force and effect as if they had been
made on and as of the Closing Date; and

(b) After the date hereof until the Closing Date, there shall not
have occurred:

(i) any change, or any development involving a prospective
change, in either (A) the condition, financial or otherwise, or in the
earnings, business or operations, or in or affecting the properties of the
Company, or (B) the financial or market conditions or circumstances in the
United States, in either case which, in the Purchaser's judgment, is material
and adverse and makes it impractical or inadvisable to proceed with the
offering, sale, or delivery of the Shares;

(c) The Company shall have delivered to Purchaser an officer's
certificate attesting to the satisfaction as of the Closing of each of the
conditions precedent set forth in this Section 5.

6. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS. The
obligations of the Company hereunder are subject to the performance by the
Purchaser of its obligations hereunder, and the satisfaction of the condition
that the representations and warranties made by the Purchaser in this
Agreement shall, unless waived by the Company, be true and correct at the
Closing Date, with the same force and effect as if they had been made on and
as of, the Closing Date.

7. REGISTRATION RIGHTS.

(a) RIGHTS TO REGISTRATION. The Company shall use its best
efforts to file with the SEC as promptly as practicable and thereafter shall
use its best efforts to cause to be declared effective within ninety (90)
days from the date of the Closing a "shelf" registration statement on the
appropriate form under the Securities Act providing for the registration of,
and the sale on a continuous or delayed basis by the holders of, all of the
Shares, pursuant to Rule 415 or any similar rule that may be adopted by the
SEC (the "Shelf Registration Statement").

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<PAGE>

second anniversary of the Closing, (y) the expiration of the period following
the Closing after which Rule 144(k) under the Securities Act becomes
available to the Purchasers or (z) in the event the Company has at any time
suspended the use of the prospectus contained in the Shelf Registration
Statement pursuant to this paragraph, the date beyond the earlier of the
periods referred to in clauses (x) and (y) that reflects an additional period
of days equal to the number of days during all of the periods from and
including the dates the Company gives notice of such suspension pursuant to
this paragraph to and including the date when holders of Shares receive an
amended or supplemented prospectus necessary to permit resales of Shares
under the Shelf Registration Statement or to and including the date on which
the Company gives a resumption notice or (ii) such time as all of the Shares
covered by the Shelf Registration Statement have been sold pursuant to the
Shelf Registration Statement or pursuant to Rule 144 (in any such case, such
period being called the "Shelf Registration Period"). The Company shall be
deemed not to have used its best efforts to keep the Shelf Registration
Statement effective during the requisite period if it voluntarily takes any
action that would result in holders of Shares covered thereby not being able
to offer and sell Shares during that period, unless such action, in the
opinion of the Company after consulting with legal counsel, is required by
applicable law.

Notwithstanding any other provisions hereof, the Company will ensure
that (i) any Shelf Registration Statement and any amendment thereto and any
prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Shelf Registration Statement and any amendment thereto
does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated herein
or necessary to make the statements therein not misleading and (iii) any
prospectus forming part of any Shelf Registration Statement, and any
supplement to such prospectus does not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

In addition, if, at any time during the period after the Closing and
ending ten (10) years thereafter, the Company shall determine to register
under the Securities Act any shares of Common Stock to be offered for cash by
it or others, pursuant to a registration statement on Form S-1 (or its
equivalent) or any other form permitting such registration (the "S-1
Registration Statement" and, together with the Shelf Registration Statement,
the "Registration Statements"), the Company will (i) promptly give written
notice to Purchaser of its intention to file such S-1 Registration Statement
and (ii) at the Company's expense (which shall include, without limitation,
all registration and filing fees, printing expenses, fees and disbursements
of counsel and independent accountants for the Company, and fees and expenses
incident to compliance with state securities law, but shall not include fees
and disbursements of counsel for Purchaser) include among the securities
covered by the S-1 Registration Statement such portions of the Shares then
held by Purchaser as shall be specified in a written request to the Company
within thirty (30) days after the date on which the Company gave the notice

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<PAGE>

described in (i) above. Upon receipt of such written request and of the
Shares specified in the request (any shareholder requesting registration
being individually called a "Selling Shareholder"), the Company shall (i) use
its reasonable best efforts to effect the registration, qualification or
compliance of the Shares under the Securities Act and under any other
applicable federal law and any applicable securities or blue sky laws of
jurisdictions within the United States; (ii) furnish each Selling Shareholder
such number of copies of the prospectus contained in the S-1 Registration
Statement filed under the Securities Act (including preliminary prospectus)
in conformity with the requirements of the Securities Act, and such other
documents as the Selling Shareholder may reasonably request in order to
facilitate the disposition of the Shares covered by the S-1 Registration
Statement; (iii) notify each Selling Shareholder, at any time when a
prospectus relating to the Shares covered by such S-1 Registration Statement
is required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus forming a part of such S-1
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; and (iv)
at the request of the Selling Shareholder, prepare and furnish to the Selling
Shareholder any reasonable number of copies of any supplement to or amendment
of such prospectus as may be necessary so that, as thereafter delivered to
purchasers of the Shares, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.

(b) REGISTRATION OF UNDERWRITTEN OFFERING. If the offering of
Common Stock to be registered by the Company pursuant to the S-1 Registration
Statement is underwritten, each Selling Shareholder shall sell the Shares to
or through the underwriter(s) of the Common Stock being registered for the
account of the Company or others upon the same terms applicable to the
Company or others. If the managing underwriter(s) reasonably determine that
all or any portion of the Shares held by the Selling Shareholder should not
be included in either of the Registration Statements, then notwithstanding
anything to the contrary in this Section, the determination of such
underwriter(s) shall be conclusive; provided, however, that if such
underwriter(s) determine that some but not all of the Shares of the Selling
Shareholder shall be included in the Registration Statement, the number of
Shares owned by each Selling Shareholder to be included in the Registration
Statement will be proportionately reduced in accordance with the respective
written requests given as provided above.

(c) INDEMNIFICATION. In the event that Shares are included in a
Registration Statement under this Section 7, the Company will indemnify and
hold harmless each Selling Shareholder and each other person, if any, who
controls such Selling Shareholder within the meaning of Section 15 of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which such Selling Shareholder or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained, in either of the Registration Statements pursuant to
which the Shares were

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<PAGE>

registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or arise out of or are based upon the
failure by the Company to file any amendment or supplement thereto that was
required to be filed under the Securities Act, and will reimburse such
Selling Shareholder and each such controlling person for any legal or any
other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action.
Notwithstanding the foregoing, the Company will not be liable in any such
case to a Selling Shareholder to the extent that any such loss, claim,
damage, or liability arises out of or is based upon an untrue statement or
omission made in such Registration Statement, preliminary prospectus, final
prospectus or amendment or supplement in reliance upon and in conformity with
written information furnished to the Company through an instrument duly
executed by or on behalf of that Selling Shareholder specifically for use in
the preparation of such Registration Statement, preliminary prospectus, final
prospectus, or amendment or supplement. It shall be a condition precedent to
the obligation of the Company to take any action pursuant to this Section
that the Company shall have received an undertaking satisfactory to it from
each Selling Shareholder to indemnify and hold harmless the Company (in the
same manner and to the same extent as set forth in this Section), each
director of the Company, each officer who shall sign such registration
statement, and any persons who control the Company within the meaning of the
Securities Act, with respect to any statement or omission from such
registration statement, preliminary prospectus, or any final prospectus
contained therein, or any amendment or supplement thereto, if such statement
or omission was made in reliance upon and in conformity with written
information furnished to the Company through an instrument duly executed by
the indemnifying party specifically for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, or
amendment or supplement. Promptly following receipt by an indemnified party
of notice of the commencement of any action involving a claim referred to
above in this Section 7(c), such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written
notice to the latter of the commencement of such action, provided, however,
that any failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve
it from any liability which it may have otherwise than on account of this
indemnity agreement. An indemnifying party may participate at its own expense
in the defense of any such action; provided, however, that counsel to the
indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent
to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any

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<PAGE>

governmental agency or body, commenced or threatened, or any claim whatsoever
in respect of which indemnification or contribution could be sought under
this Section 7 or Section 8 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise
or consent (i) includes an unconditional release of each indemnified party
from all liability arising out of such litigation, investigation, proceeding
or claim and (ii) does not include a statement as to or an admission of
fault, culpability or a failure to act by or on behalf of any indemnified
party.

(d) BINDING PROVISIONS. The provisions of this Section 7 shall be
binding on the successors of the Company. In the event of a merger or
consolidation in which the Company or the Purchaser is not the survivor, the
Company or the Purchaser, as the case may be, shall assign and transfer, and
successor shall assume, the provisions of this Section 7.

(e) CONFLICTS. To the extent that the Company's compliance with
the obligations set forth in Sections 8(a) through 8(d) above would conflict
with or otherwise cause a breach of or default under any of its existing
obligations pursuant to any other agreements to which it currently is a
party, the Company's failure to comply with those obligations under such
other agreements shall not be deemed a breach of this Agreement.

(f) TRANSFER OF REGISTRATION RIGHTS. The rights and obligations
granted to the Purchaser by the Company under Section 7 may be assigned by
the Purchaser to a transferee or assignee of any of the Purchaser's Shares,
provided that the Company is given written notice by the Purchaser at the
time of or within a reasonable time after said transfer, stating the name and
address of said transferee or assignee and identifying the Shares with
respect to which such registration rights are being assigned.

(g) ISSUANCE OF WARRANTS. In the event that the Company shall
fail to cause the Shelf Registration Statement with respect to the Shares to
be declared effective by the SEC within ninety (90) days from the date of the
Closing as provided in Section 7(a), the Company shall issue to the Purchaser
five year warrants in form and substance reasonably satisfactory to the
Purchaser to purchase 117,000 of the Company's common stock at $6.00 per
share, subject to customary anti-dilution adjustments. Provided that the
Company shall continue to use its reasonable best efforts to cause such Shelf
Registration Statement to become effective as promptly as practicable, the
delivery of such warrants shall be in full satisfaction of any liability on
the part of the Company for failing to register the Shares as provided
herein; provided further however, that such delivery shall not excuse the
Company from the obligation to register all of such Shares which obligation
shall continue. Any shares of Common Stock issuable upon exercise of the
warrants issued pursuant to this Section 7(g) shall be subject to the same
registration rights provided in this Section 7.

8. CONTRIBUTION

(a) If the indemnification provided for in Section 7 hereof is
for any reason unavailable to or insufficient to hold harmless an indemnified
party in respect of

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<PAGE>

any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate amount of such
losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Selling Shareholder on the one
hand and the Company on the other hand from the offer and sale of the
Purchase Shares pursuant to this Agreement or (ii) if the allocation provided
by clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Selling Shareholder on the one
hand and of the Company on the other hand in connection with the statements
or omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.

(c) The Company and the Selling Shareholder agree that it would
not be just and equitable if a contribution pursuant to this Section 8 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above. The
aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 8
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.

(e) For purposes of this Section 8, each person, if any, who
controls the Selling Shareholder within the meaning of Section 15 of the
Securities Act or Section 20 of the 1934 Act shall have the same rights to
contribution as such Selling Shareholder, and each director of the Company,
each officer of the Company, and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20
of the 1934 Act shall have the same rights to contribution as the Company.

9. FEES AND EXPENSES. The Purchaser and the Company each agrees to
pay its own expenses incident to the performance of its obligations hereunder.

10. SURVIVAL OF THE REPRESENTATIONS, WARRANTIES, ETC. The respective
agreements, representations, warranties, indemnities, and other statements
made by or on

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<PAGE>

behalf of the Company and Purchaser pursuant to this Agreement shall remain
in full force and effect, regardless of any investigation made by or on
behalf of the other party to this Agreement or any officer, director, or
employee, or person controlling or under common control with, such party, and
will survive delivery of any payment of the Shares.

11. NOTICES. All communications hereunder shall be in writing and,
if sent to the Purchasers, shall be sufficient in all respects if delivered,
sent by registered mail, or by telecopy and confirmed to the Purchasers at
the address set forth on the Signature Page or, if sent to the Company, shall
be delivered, sent by registered mail, or by telecopy and confirmed to the
Company at:

Finet Holdings Corporation
3021 Citrus Circle, Suite 150
Walnut Creek, California 94598

Tel: (925) 988-6550
Fax: (925) 934-1296

12. MISCELLANEOUS.

(a) The Company agrees to make a public announcement of the
purchase of the Shares hereunder not later than ten days following the
Closing Date by means of a press release in a form reasonably acceptable to
the Purchaser.

(b) This Agreement may be executed in one or more counterparts
and it is not necessary that signatures of all parties appear on the same
counterpart, but such counterparts together shall constitute but one and the
same agreement.

(c) This Agreement shall inure to the benefit of and be binding
upon the parties hereto, their respective successors and, with respect to
Section 8 hereof, the officers, directors, and controlling persons thereof
and each person under common control therewith, and no other person shall
have any right or obligation hereunder.

(d) This Agreement shall be construed in accordance with and
governed by the laws of the State of New York applicable to agreements made
and to be performed wholly, within such jurisdiction. Each of the parties
hereto irrevocably and unconditionally consents to submit to the jurisdiction
of the courts of the State of New York and of the United States of America
located in the Southern District of New York for any actions, suits or
proceedings arising out of or relating to this Agreement and the transactions
contemplated hereby (and agrees not to commence any action, suit or
proceeding relating thereto except in such courts), and further agrees that
service of any process, summons, notice or document by registered mail to its
respective address set forth in Section 11 shall be effective service of
process for any action, suit or proceeding brought against it in any such
court. Each of the parties hereto hereby irrevocably and unconditionally
waives any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or the transactions contemplated hereby, in the

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<PAGE>

courts of the State of New York or the United States of America located in
the Southern District of New York, and hereby further irrevocably and
unconditionally waives and agrees not to co-plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum.

(e) The headings of the sections of this document have been
inserted for convenience of reference only and shall not be deemed to be a
part of this Agreement.

IN WITNESS HEREOF, the parties hereto have duly executed and
delivered this Agreement, all as of the day and year first above written.

COMPANY:

FINET HOLDINGS CORPORATION

By____________________________

Its_______________

By____________________________
Its Chief Financial Officer

PURCHASER:

By____________________________

Its_______________

By____________________________

Its_______________

________________________
Address

________________________
Telephone Number

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<PAGE>

EXHIBIT 4.21

COMMON STOCK PURCHASE AGREEMENT

THIS COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is made as of
June 28, 1999, between FiNet.com, Inc., a Delaware corporation (the "Company"),
and the person executing this Agreement on the signature page hereof (the
"Signature Page") as Purchaser (the "Purchaser"):

RECITALS:

WHEREAS, the Company has authorized the issuance and sale pursuant to
the terms and conditions hereof of shares of its Common Stock (the "Common
Stock"); and

WHEREAS, the Purchaser desires to purchase and the Company desires to
sell the Common Stock on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of these premises and the mutual
covenants and agreements herein contained and other valuable consideration, the
receipt and adequacy of which the parties hereto acknowledge, the parties agree
as follows:

1. PURCHASE AND SALE OF THE SHARES. The Company agrees to sell to
the Purchaser, and upon the basis of the representations and warranties, and
subject to the terms and conditions, set forth in this Agreement, the
Purchaser agrees to purchase from the Company shares of Common Stock (the
"Shares") in consideration for an aggregate purchase price (the "Purchase
Price") of US$_____________ . The purchase price per share (the "Purchase
Price Per Share") and the number of shares shall be determined as follows: A
benchmark price (the "Benchmark Price") shall be established which shall be
the average of: (i) the closing price of FiNet common stock on the date
following the date on which FiNet publicly announces its earnings for the
fiscal year ended April 30, 1999 (the "Date Following Announcement"); and
(ii) the simple average of closing prices of FiNet common stock on the five
(5) trading days immediately preceding and including the Date Following
Announcement. The purchase price per share shall equal 80% of the Benchmark
Price, but shall be not less than US$3.00 nor more than $5.00. The number of
shares of common stock purchased shall be the Purchase Price divided by the
Purchase Price Per Share, rounded to the nearest whole dollar.

2. CLOSING DATE; DELIVERY. The closing of the purchase and sale of
the Shares shall be held at the offices of the Company, 3021 Citrus Circle,
Suite 150, Walnut Creek, California on June 28, 1999, or at such other time
and place as the parties may agree upon (the "Closing"). At the Closing,
subject to the terms of this Agreement, the Purchaser shall deliver the
Purchase Price via wire transfer of immediately available funds to the
account of the Company's Placement Agent, BES Investmento, S.A., Chase
Manhattan Bank (CHASUSA 33), Account No. 400-920875, Swift Code ESSIPTPL. The
Placement Agent shall immediately deliver the net amount of the offering to
the

<PAGE>

Company. At the Closing, the Company will deliver to the Purchaser
certificates (which may be temporary certificates) representing the Shares to
be purchased by the Purchaser from the Company. Within ten (10) days
following the Closing, the Company will deliver to the Purchaser permanent
certificates in exchange for any temporary certificates.

3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the Purchaser that:

(a) ORGANIZATION AND STANDING, ARTICLES AND BYLAWS. The Company
is a corporation duly organized and validly existing under, and by virtue of,
the laws of the State of Delaware and is in good standing under such laws.
The Company is qualified, licensed or domesticated as a foreign corporation
in all jurisdictions where the nature of its activities or of its properties
owned or leased makes such qualification, licensing or domestication
necessary at this time.

(b) CORPORATE POWER. The Company has now, or will have at the
Closing, all requisite legal and corporate power to enter into this
Agreement, to sell the Shares hereunder, and to carry out and perform its
obligations under the terms of this Agreement. All references to this
Agreement and the Shares to be issued hereunder shall for all purposes of the
Agreement, unless the context clearly requires otherwise, be deemed to
include the shares that may be issued pursuant to Section 8(g) hereof.

(i) All corporate action on the part of the Company,
its officers, directors, and stockholders necessary for the sale and issuance
of the Shares pursuant hereto and the performance of the Company's
obligations hereunder has been taken or will be taken prior to the Closing.
This Agreement is a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
of general application affecting enforcement of creditors' rights, and except
as limited by application of legal principles affecting the availability of
equitable remedies.

(ii) The Shares, when issued in compliance with the
provisions of this Agreement, will be validly issued, fully paid and
nonassessable and will be free of any liens or encumbrances; provided,
however, that such Shares may be subject to restrictions on transfer under
state and/or federal securities laws as set forth herein and as may be
required by future changes in such laws.

(iii) No shareholder of the Company has any right of
first refusal or any preemptive rights in connection with the issuance of the
Shares or of Common Stock by the Company.

(d) FINANCIAL STATEMENTS. The Company's audited consolidated
balance sheet as of April 30, 1999, audited consolidated statement of
operations, stockholders' equity and cash flows for the fiscal year ended
April 30, 1999, unaudited

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<PAGE>

consolidated balance sheet and statements of operations, stockholders' equity
and cash flows for the nine months ended January 31, 1999 (hereinafter
collectively referred to as the "Financial Statements") have been supplied by
the Company to the Purchaser and such Financial Statements are true and
correct, have been prepared in accordance with generally accepted accounting
principles consistently applied (except as disclosed therein and except that
the unaudited Financial Statements do not contain the footnotes required by
generally accepted accounting principles), and fairly present the financial
condition of the Company as of the date indicated and the results of the
operations of the Company for the period ended, as indicated.

(e) PUBLIC REPORTING. The Company is subject to the reporting
requirements of Section 13 or Section 15(d) of the Securities Exchange Act of
1934 (the "1934 Act"); the Company's (a) Annual Report on Form 10-KSB for the
fiscal year ended April 30, 1998, (b) Annual Proxy Statement on Form 14A for
the fiscal year ended April 30, 1998, (c) Consent Statements dated December
18, 1998 (filed December 21, 1999) and April 23, 1999 (filed April 26, 1999),
(d) Current Reports on Forms 8-K and 8-K/A dated May 15, 1998 (filed May 18,
1998), May 27, 1998 (filed May 28, 1998), October 8, 1998 (filed October 13,
1998), December 7, 1998 (filed December 7, 1998), December 22, 1998 (filed
January 5, 1999), January 19, 1999 (filed January 19, 1999), February 11,
1999 (filed February 11, 1999), February 19, 1999 (filed February 19, 1999),
June 1, 1999 (filed June 2, 1999), and June 24, 1999 (filed June 24, 1999),
and (e) Quarterly Reports on Forms 10-QSB and 10-QSB/A for the three months
ended July 31, 1998, the six months ended October 31, 1998, and the nine
months ended January 31, 1999 (collectively, the "Public Disclosure") filed
by the Company with the U.S. Securities and Exchange Commission (the "SEC")
have been so filed in a timely fashion (except for the amendment to the Form
8-K dated May 15, 1998 and the Quarterly Reports on form 10-QSB for the for
the periods ending July 31, 1998 and October 31, 1998) and include all
reports and other information required to be filed or furnished by the
Company under the 1934 Act and the Company has provided copies of all such
Public Disclosure to the Purchaser.

(f) VALIDITY OF MATERIAL CONTRACTS AND COMMITMENTS. All the
material contracts, mortgages, indentures, commitments, agreements, and
instruments to which the Company or any material subsidiary ("Material
Subsidiary") is a party (collectively, the "Company Agreements') are legal,
valid, binding, and in full force and effect and enforceable by the Company
or each Material Subsidiary, as the case may be, in accordance with their
terms except as limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws of general application affecting enforcement of
creditors' rights, and except as limited by application of legal principles
affecting the availability of equitable remedies. Neither the Company nor any
Material Subsidiary is in material default under any of such contracts which
would have, either singly or in the aggregate, a Material Adverse Effect
("Material Adverse Effect").

(g) COMPLIANCE WITH OTHER INSTRUMENTS, NONE BURDENSOME, ETC.
Neither the Company nor any Material Subsidiary is in violation of any term
of their

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<PAGE>

respective Articles of Incorporation or Bylaws, or, except as disclosed to
Purchaser, any Company Agreement in any material respect of any mortgage,
indenture, contract, agreement, instrument, or, to the best knowledge of the
Company, any judgment, decree, order, statute, rule, or regulation applicable
to it which, either singly or in the aggregate, might result in any adverse
change in the business, prospects, conditions, affairs, or operations of the
Company, or in any of its properties or assets, or in any impairment of the
right or ability of the Company to carry on its business as proposed to be
conducted, or in any material liability on the part of the Company, or which
question the validity of this Agreement or any action taken or to be taken in
connection herewith (each, a Material Adverse Effect) The execution,
delivery, and performance by the Company of this Agreement, and the issuance
and sale of the Shares pursuant hereto, will not result in any such violation
or be in conflict with or constitute a default under any such Company
Agreement or cause the acceleration of maturity of any loan or material
obligation to which the Company or any Material Subsidiary is a party or by
which either of them are bound or with respect to which either of them is an
obligor or guarantor, or result in the creation or imposition of any material
lien, claim, charge, restriction, equity or encumbrance of any kind
whatsoever upon, or, to the best knowledge of the Company after due inquiry,
give to any other person any interest or right (including any right of
termination or cancellation) in or with respect to any of the material
properties, assets, business or agreements of the Company or any Material
Subsidiary. To the best knowledge of the Company after due inquiry, no such
Company Agreement materially adversely affects or in the future (so far as
can reasonably be foreseen by the Company at the date of this Agreement) may
materially adversely affect the business, property, prospects, condition,
affairs, or operations of the Company or any Material Subsidiary.

(i) GOVERNMENTAL CONSENT ETC. No consent, approval, or
authorization of, or designation, declaration, or filing with, any
governmental unit is required on the part of the Company in connection with
the valid execution and delivery of this Agreement, or the offer, sale or
issuance of the Shares, or the consummation of any other transaction
contemplated hereby (except qualification or exemption under the California
Corporate Securities Law, which exemption or qualification will be available
or obtained and will be effective at the Closing).

(j) OFFERING. The offer, sale and issuance of the Shares in
conformity with the terms of this Agreement (the "Offering") will not violate
the Securities Act of 1933, as amended ("Securities Act").

(k) INTEGRATION. The Company has not, directly or indirectly,
during the six month period prior to the Closing solicited any offer to buy
or offered to sell, and

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<PAGE>

will not, directly or indirectly, during the six month period subsequent to
the Closing, solicit any offer to buy or offer to sell, in the United States
or to any United States person (as that term is defined in Regulation S under
the Securities Act), any security which is or would be integrated with the
sale of the Shares in a manner that would require the Shares to be registered
under the Securities Act.

(l) TITLE TO AND CONDITION OF PROPERTIES. The Company and each
Material Subsidiary has good and marketable title to all its respective
tangible and intangible property and assets, including those reflected in the
Public Disclosure and the Financial Statements (except such property or
assets as have since January 31, 1999, been sold or otherwise disposed of in
the ordinary course of business). Such property and assets are subject to no
mortgage or security interests, conditional sales contract, charge, lien or
encumbrance (except for the lien of current taxes not yet due and payable and
such imperfections of title, easements and encumbrances, if any, as are not
substantial in character, amount or extent and do not materially detract from
the value of, or interfere with the present use of the properties subject
thereto or affected thereby, or otherwise materially impair the business
operations of the Company and any Material Subsidiary). Subsequent to January
31, 1999, neither the Company nor any Material Subsidiary has sold or
disposed of any of its property and assets or obligated itself to do so
except in the ordinary course of business. Except for such minor defects as
are not substantial in character and which do not have a materially adverse
effect upon the validity thereof, all material real and personal property
leases to which the Company or the subsidiaries are a party are in good
standing, valid and effective, and there is not under any such lease any
existing material default or event which with notice or lapse of time or both
would constitute a material default and in respect of which the Company or
any Material Subsidiary has taken reasonable steps to prevent such a default
from occurring other than such defaults which would not have, either singly
or in the aggregate, a Material Adverse Effect.

(m) DISCLOSURE. This Agreement, the Confidential Term Sheet
related thereto, the Public Disclosure, the Financial Statements, and all
certificates delivered to Purchaser pursuant to this Agreement, when read
together, do not contain any untrue statement of a material fact and do not
omit to state a material fact necessary in order to make the statements
contained therein or herein not misleading, it being understood that the
information provided to the Purchaser regarding the Company contains
estimates and projections which constitute forward looking statements and
which have been made in good faith by the Company and no warranty of such
projections is expressed or implied hereby. There is, to the best of the
Company's knowledge, no fact which might have a Material Adverse Effect which
has not been set forth in this Agreement, the Confidential Term Sheet related
thereto, the Public Disclosure, the Financial Statements or the other
information provided to Purchaser.

(n) THE SHARES:

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<PAGE>

(i) are free and clear of any security interests,
liens, claims, or other encumbrances;

(ii) have been duly and validly authorized and issued
and are, and at the Closing will be, fully paid and non-assessable;

(iii) will not have been, individually and collectively,
issued or sold in violation of any pre-emptive or other similar rights of the
holders of any securities of the Company; and

(iv) will not subject the holders thereof to personal
liability by reason of being such holders.

(o) FURNISHING OF FINANCIAL STATEMENTS AND INFORMATION. The
Company will deliver to the Purchaser:

(i) as soon as practicable, but in any event within 90
days after the end of each fiscal year, a consolidated balance sheet of the
Company and its subsidiaries, as of the end of such fiscal year, together
with the related consolidated statements of operations, shareholders' equity
and cash flow for such fiscal year, setting forth in comparative form figures
for the previous fiscal year, all in reasonable detail and duly certified by
the Company's independent public accountants, which accountants shall have
given the Company an opinion, unqualified as to the scope of the audit,
regarding such statements.

(ii) with reasonable promptness, such other financial
data relating to the business, affairs, results of operations and financial
condition of the Company and any subsidiaries as is available to the Company
and as from time to time the Purchasers may reasonably request.

(p) INSPECTION. The Company will permit each Purchaser and any
of its partners, officers or employees, or any outside representatives
designated by such Purchaser, to visit and inspect at such Purchaser's
expense any of the properties of the Company or the subsidiaries, including
their books and records (and to make photocopies thereof or make extracts
therefrom), and to discuss their affairs, finances, and accounts with their
officers, lawyers and accountants, except with respect to trade secrets and
similar confidential information, all to such reasonable extent and at such
reasonable times and intervals as such Purchaser may reasonably request.
Except as otherwise required by laws or regulations applicable to a
Purchaser, the Purchasers shall maintain, and shall require their
representatives to maintain, all information obtained pursuant to Sections
3(p) and 3(q) hereof on a confidential basis.

4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants to, and agrees with, the Company:

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<PAGE>

(a) No consent, approval, authorization, or order of any
court, governmental agency or body, or arbitrator having jurisdiction over
the Purchaser is required for execution of this Agreement, including, without
limitation, the purchase of the Shares or the performance of the Purchaser's
obligations hereunder.

(b) The Purchaser understands that no federal or state agency
has passed on or made any recommendation or endorsement of the Shares.

(c) The Company has given the Purchaser the opportunity to
have answered all of the Purchaser's questions concerning the Company and its
business and has made available to the Purchaser all information requested by
the Purchaser which is reasonably necessary to verify the accuracy of other
information furnished by the Company. The Purchaser has received and
evaluated all information about the Company and its business which the
Purchaser deems necessary to formulate an investment decision and does not
desire any further information.

(d) The Purchaser understands that the Shares are being
offered and sold to it in reliance on specific exemptions or non-application
from the registration requirements of federal and state securities laws and
that the Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments, and understandings of the Purchaser
set forth herein in order to determine the applicability of such exemptions
or non-applications and the suitability of the Purchaser to acquire the Shares.

(e) The Purchaser is aware that the Shares have not been
registered under the Securities Act of 1933 ("Securities Act") by reason of
their issuance in a transaction exempt from the registration and prospectus
delivery requirements of the Securities Act pursuant to Section 4(2) and
Regulation D thereof and that the Shares must be held by the Purchaser
indefinitely, and the Purchaser must therefore bear the economic risk of such
investment indefinitely unless a subsequent disposition thereof is registered
under the Securities Act or is exempt from registration.

(f) Each instrument representing the Shares is to be endorsed
with the following legends:

(i) THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS
MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY
TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION
IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH
ACT.

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<PAGE>

(ii) Any other legend required by California or other
state securities laws.

(g) Any legend endorsed on an instrument pursuant to Section
4(f) hereof and the stop transfer instructions with respect to such Shares
shall be removed, and the Company shall issue an instrument without such
legend to the holder of such Shares if such Shares are registered under the
Securities Act and a prospectus meeting the requirements of Section 10 of the
Securities Act is available or if such holder provides the Company with an
opinion of counsel for such holder of the Shares, reasonably satisfactory to
the Company, to the effect that a public sale, transfer or assignment of such
Shares may be made without registration.

(i) The Purchaser has the knowledge and experience in financial
and business matters to evaluate the merits and risks of the proposed
investment.

(j) The Purchaser is an "Accredited Investor" as that term is
defined under Rule 501 adopted pursuant to the Securities Act.

5. NEGATIVE COVENANTS OF THE COMPANY. The Company further
covenants and agrees that without the prior written approval of a majority in
interest of the Purchasers, it will not:

(a) Engage in any business other than the business engaged in
or proposed to be engaged in by the Company or any Material Subsidiary on the
date hereof, in each case as set forth in the Public Disclosure, and any
businesses or activities substantially similar or related thereto or to the
financial services business;

(c) By amendment of its articles of incorporation through
voluntary reorganization or recapitalization, or through any transfer of its
assets, consolidation,

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<PAGE>

(b) After the date hereof until the Closing, there shall not
have occurred:

(i) any change, or any development involving a
prospective change, in either (A) the condition, financial or otherwise, or
in the earnings, business or operations, or in or affecting the properties of
the Company, or (B) the financial or market conditions or circumstances in
the United States, in either case which, in the Purchaser's judgment, is
material and adverse and makes it impractical or inadvisable to proceed with
the offering, sale, or delivery of the Shares;

(ii) an imposition of a new legal or regulatory
restriction not in effect on the date hereof, or any change in the
interpretation of existing legal or regulatory restrictions, that materially
and adversely affects the offering, sale, or delivery of the Shares; or

(c) The Company shall have delivered to Purchaser an officer's
certificate attesting to the satisfaction as of the Closing of each of the
conditions precedent set forth in this Section 6.

(d) At the Closing the Purchasers shall have received the
favorable opinion, dated the Closing, of Severson & Werson, A Professional
Corporation, counsel to the Company, in form and substance satisfactory to
the Purchasers to the effect set forth below:

(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the Sate
of Delaware;

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<PAGE>

(ii) The Shares have been duly authorized for issuance
and sale to the Purchaser pursuant to this Agreement and, when issued and
delivered by the Company pursuant to this Agreement against payment of the
consideration set forth herein, will be validly issued and fully paid and
non-assessable and no holder of the Shares is or will be subject to personal
liability by reason of being such a holder;

(iii) The Company has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Public Disclosure and to enter into and perform its
obligations under this Agreement;

(iv) This Agreement has been duly authorized, executed
and delivered by the Company;

(v) Neither the Company nor any subsidiary is in
violation of its charter or by-laws and, to the knowledge of such counsel, no
default by the Company or any subsidiary, other than Mical Mortgage and
Coastal Mortgage, exists in the due performance or observance of any Company
Agreement, other than such defaults that would not, either singly or in the
aggregate, have a Material Adverse Effect;

(vi) The Shares have been duly authorized for issuance
and sale to the Purchasers pursuant to this Agreement and, when issued and
delivered by the Company pursuant to this Agreement against payment of the
consideration set forth herein, will be validly issued and fully paid and
non-assessable and no holder of the Shares is or will be subject to personal
liability by reason of being such a holder;

(vii) The authorized, issued and outstanding capital
stock of the Company is as set forth in the opinion and that the shares of
issued and outstanding capital stock of the Company have been duly authorized
and validly issued and are fully paid and non-assessable; and

(viii) The issuance of the Shares is not subject to
preemptive or other similar rights of any security holder of the Company.

7. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS. The
obligations of the Company hereunder are subject to the performance by the
Purchaser of its obligations hereunder, and the satisfaction of the condition
that the representations and warranties made by the Purchaser in this
Agreement shall, unless waived by the Company, be true and correct at the
Closing, with the same force and effect as if they had been made on and as
of, the Closing.

8. REGISTRATION RIGHTS.

(a) RIGHTS TO REGISTRATION. The Company shall file with the SEC
as promptly as practicable, but not later than July 2, 1999, and thereafter
shall use its best efforts to cause to be declared effective within ninety
(90) days from the date of the Closing a "shelf" registration statement on
the appropriate form under the Securities Act

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<PAGE>

providing for the registration of, and the sale on a continuous or delayed
basis by the holders of, all of the Shares, pursuant to Rule 415 or any
similar rule that may be adopted by the SEC (the "Shelf Registration
Statement").

The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the
prospectus forming part thereof to be usable by Purchasers for a period
ending on the earlier of (i) (x) the second anniversary of the Closing, (y)
the expiration of the period following the Closing after which Rule 144(k)
under the Securities Act becomes available to the Purchasers or (z) in the
event the Company has at any time suspended the use of the prospectus
contained in the Shelf Registration Statement pursuant to this paragraph, the
date beyond the earlier of the periods referred to in clauses (x) and (y)
that reflects an additional period of days equal to the number of days during
all of the periods from and including the dates the Company gives notice of
such suspension pursuant to this paragraph to and including the date when
holders of Shares receive an amended or supplemented prospectus necessary to
permit resales of Shares under the Shelf Registration Statement or to and
including the date on which the Company gives a resumption notice or (ii)
such time as all of the Shares covered by the Shelf Registration Statement
have been sold pursuant to the Shelf Registration Statement or pursuant a
transaction exempt from registration (in any such case, such period being
called the "Shelf Registration Period"). The Company shall be deemed not to
have used its best efforts to keep the Shelf Registration Statement effective
during the requisite period if it voluntarily takes any action that would
result in holders of Shares covered thereby not being able to offer and sell
Shares during that period, unless such action, in the opinion of the Company
after consulting with legal counsel, is required by applicable law.

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<PAGE>

Statement and (ii) at the Company's expense (which shall include, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel and independent accountants for the Company, and
fees and expenses incident to compliance with state securities law, but shall
not include fees and disbursements of counsel for Purchaser) include among
the securities covered by the S-1 Registration Statement such portions of the
Shares then held by Purchaser as shall be specified in a written request to
the Company within ten (10) days after the date on which the Company gave the
notice described in (i) above. Upon receipt of such written request and of
the Shares specified in the request (any shareholder requesting registration
being individually called a "Selling Shareholder"), the Company shall (i) use
its reasonable best efforts to effect the registration, qualification or
compliance of the Shares under the Securities Act and under any other
applicable federal law and any applicable securities or blue sky laws of
jurisdictions within the United States; (ii) furnish each Selling Shareholder
such number of copies of the prospectus contained in the S-1 Registration
Statement filed under the Securities Act (including preliminary prospectus)
in conformity with the requirements of the Securities Act, and such other
documents as the Selling Shareholder may reasonably request in order to
facilitate the disposition of the Shares covered by the S-1 Registration
Statement; (iii) notify each Selling Shareholder, at any time when a
prospectus relating to the Shares covered by such S-1 Registration Statement
is required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus forming a part of such S-1
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; and (iv)
at the request of the Selling Shareholder, prepare and furnish to the Selling
Shareholder any reasonable number of copies of any supplement to or amendment
of such prospectus as may be necessary so that, as thereafter delivered to
purchasers of the Shares, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.

(b) REGISTRATION OF UNDERWRITTEN OFFERING. If the offering of
Common Stock to be registered by the Company pursuant to either of the S-1
Registration Statements is underwritten, each Selling Shareholder shall sell
the Shares to or through the underwriter(s) of the Common Stock being
registered for the account of the Company or others upon the same terms
applicable to the Company or others. If the managing underwriter(s)
reasonably determine that all or any portion of the Shares held by the
Selling Shareholder should not be included in either of the Registration
Statements, then notwithstanding anything to the contrary in this Section,
the determination of such underwriter(s) shall be conclusive; provided,
however, that if such underwriter(s) determine that some but not all of the
Shares of the Selling Shareholder shall be included in the Registration
Statement, the number of Shares owned by each Selling Shareholder to be
included in the Registration Statement will be proportionately reduced in
accordance with the respective written requests given as provided above.

(c) INDEMNIFICATION. In the event that the Shares are included
in a Registration Statement under this Section 8, the Company will indemnify
and hold

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<PAGE>

harmless each Selling Shareholder and each other person, if any, who controls
such Selling Shareholder within the meaning of Section 15 of the Securities
Act, against any losses, claims, damages or liabilities, joint or several, to
which such Selling Shareholder or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained, in either of the Registration Statements pursuant to which the
Shares were registered under the Securities Act, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, or arise out of or are based
upon the failure by the Company to file any amendment or supplement thereto
that was required to be filed under the Securities Act, and will reimburse
such Selling Shareholder and each such controlling person for any legal or
any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action.
Notwithstanding the foregoing, the Company will not be liable in any such
case to a Selling Shareholder to the extent that any such loss, claim,
damage, or liability arises out of or is based upon an untrue statement or
omission made in such Registration Statement, preliminary prospectus, final
prospectus or amendment or supplement in reliance upon and in conformity with
written information furnished to the Company through an instrument duly
executed by or on behalf of that Selling Shareholder specifically for use in
the preparation of such Registration Statement, preliminary prospectus, final
prospectus, or amendment or supplement. It shall be a condition precedent to
the obligation of the Company to take any action pursuant to this Section
that the Company shall have received an undertaking satisfactory to it from
each Selling Shareholder to indemnify and hold harmless the Company (in the
same manner and to the same extent as set forth in this Section), each
director of the Company, each officer who shall sign such registration
statement, and any persons who control the Company within the meaning of the
Securities Act, with respect to any statement or omission from such
registration statement, preliminary prospectus, or any final prospectus
contained therein, or any amendment or supplement thereto, if such statement
or omission was made in reliance upon and in conformity with written
information furnished to the Company through an instrument duly executed by
the indemnifying party specifically for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, or
amendment or supplement. Promptly following receipt by an indemnified party
of notice of the commencement of any action involving a claim referred to
above in this Section 8(c), such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written
notice to the latter of the commencement of such action, provided, however,
that any failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve
it from any liability which it may have otherwise than on account of this
indemnity agreement. An indemnifying party may participate at its own expense
in the defense of any such action; provided, however, that counsel to the
indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the

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<PAGE>

indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection
with any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be
sought under this Section 8 or Section 9 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as
to or an admission of fault, culpability or a failure to act by or on behalf
of any indemnified party.

(d) BINDING PROVISIONS. The provisions of this Section 8 shall
be binding on the successors of the Company. In the event of a merger or
consolidation in which the Company or the Purchaser is not the survivor, the
Company or the Purchaser, as the case may be, shall assign and transfer, and
successor shall assume, the provisions of this Section 8.

(e) CONFLICTS. To the extent that the Company's compliance
with the obligations set forth in Sections 8(a) through 8(d) above would
conflict with or otherwise cause a breach of or default under any of its
existing obligations pursuant to any other agreements to which it currently
is a party, the Company's failure to comply with those obligations under such
other agreements shall not be deemed a breach of this Agreement.

(f) TRANSFER OF REGISTRATION RIGHTS. The rights granted to the
Purchaser by the Company under Section 8 may be assigned by the Purchaser to
a transferee or assignee of any of the Purchaser's Shares, provided that the
Company is given written notice by the Purchaser at the time of or within a
reasonable time after said transfer, stating the name and address of said
transferee or assignee and identifying the Shares with respect to which such
registration rights are being assigned.

(g) ADDITIONAL SHARES. In the event that the Company shall
fail to cause the Shelf Registration Statement with respect to the Shares to
be declared effective by the SEC within ninety (90) days from the date of the
Closing as provided in Section 8(a), the Company shall pay to the Purchaser
for each month or portion thereafter until such Shelf Registration Statement
becomes effective an amount equal to one percent (1%) of the greater of (i)
the purchase price paid for the Purchase Shares pursuant to this Agreement,
or (ii) the value of the Purchase Shares measured by the average closing bid
price of a share of the Company's Common Stock on the five trading days
immediately preceding the date that is ninety (90) days following the date of
the Closing. Such payments shall be paid by the delivery to the Purchaser of
shares of Common Stock valued in the same manner as in (ii) above. Provided
that the Company shall continue to

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<PAGE>

use its reasonable best efforts to cause such Shelf Registration Statement to
become effective as promptly as practicable, the delivery of such Common
Stock shall be in full satisfaction of any liability on the part of the
Company for failing to register the Shares as provided herein; provided
further however, that such delivery shall not excuse the Company from the
obligation to register all of such Shares which obligation shall continue.
Any shares of Common Stock issued pursuant to this Section 8(g) shall be
subject to the same registration rights provided in this Section 8.

9. CONTRIBUTION

(c) The Company and the Selling Shareholder agree that it
would not be just and equitable if a contribution pursuant to this Section 9
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to
above. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this
Section 9 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission.

(d) No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.

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<PAGE>

10. FEES AND EXPENSES. The Purchaser and the Company each agrees to
pay its own expenses incident to the performance of its obligations hereunder.

FiNet.com, Inc.
3021 Citrus Circle, Suite 150
Walnut Creek, California 94598
Attn: Chief Financial Officer

Tel: (925) 988-6550
Fax: (925) 934-1296

13. MISCELLANEOUS.

(b) This Agreement shall inure to the benefit of and be
binding upon the parties hereto, their respective successors and, with
respect to Section 8 hereof, the officers, directors, and controlling persons
thereof and each person under common control therewith, and no other person
shall have any right or obligation hereunder.

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<PAGE>

(d) The headings of the sections of this document have been
inserted for convenience of reference only and shall not be deemed to be a
part of this Agreement.

IN WITNESS HEREOF, the parties hereto have duly executed and delivered
this Agreement, all as of the day and year first above written.

COMPANY:

FiNET.COM, INC.

By
----------------------------
Its
-----------------

By
----------------------------
Its Chief Financial Officer

PURCHASER:

--------------------------------
By:
----------------------------
Shares: Its
------------ --------------
Total Purchase Price: By:
------------ ----------------------------
Its
--------------

--------------------------
Address

--------------------------
Telephone Number

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<PAGE>

EXHIBIT 10.3

FINET HOLDINGS CORPORATION
1989 STOCK OPTION PLAN
(as amended)

1. PURPOSE AND SCOPE. The purposes of the Finet Holdings Corporation Stock
Option Plan is to enable the Company to grant to key employees and directors
an opportunity to acquire Stock, thereby providing them with an inducement to
remain in the service of the Company and contribute to its success, and to
aid in attracting other capable personnel. SOME OR ALL OF THE OPTIONS GRANTED
TO EMPLOYEES UNDER THE PLAN MAY BE INTENDED TO QUALIFY AS "INCENTIVE STOCK
OPTIONS" UNDER SECTION 422A OF THE INTERNAL REVENUE CODE.

2. DEFINITIONS. As used in this Plan:

(a) "Board" means the Board of Directors of the Company.

(b) "Committee" means the Stock Option Committee, if any appointed by
the Board from among its members. If no committee has been appointed,
"Committee" shall refer to the Board, unless the context indicates otherwise.

(c) "Company" means Finet Holdings Corporation, a Delaware corporation
and any parent or majority-owned subsidiary corporation.

(d) "Plan" means the Finet Holdings Corporation 1989 Stock Option Plan,
as amended from time to time.

(e) "Stock" means the common stock of the Company.

3. ADMINISTRATION.

(a) AUTHORITY OF THE COMMITTEE. The Plan shall be administered by the
Committee. Subject to the provisions of the Plan, the Committee shall have
the sole authority to determine:

(i) the persons to whom options to purchase shares of Stock shall be
granted;

(ii) the number of shares to be optioned to each optionee;

(iii) the price to be paid for the shares upon the exercise of each
option;

(iv) the period within which each option may be exercised,
including any vesting requirements; and,

1
<PAGE>

(v) the terms and conditions of each stock option agreement to be
entered into between Company and the optionee.

(b) GRANTS TO BOARD OR COMMITTEE MEMBERS; FORMULA OPTIONS FOR OUTSIDE
DIRECTORS. The Committee may not grant an option to any member of the Board
or the Committee. An option may be granted to a director or a member of the
Committee only by action of the Board, with a majority of the Board and a
majority of the directors acting in the matter being disinterested persons
within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934.

Directors who are not full-time employees of the Company will, in
addition to any other compensation payable (including other stock options
which may be granted) to directors for their services, automatically and
without action by the Board or Committee, be granted under the Plan: (a) an
immediately exercisable five year option to purchase 40,000 shares of Stock
upon initial appointment or election as a director; and (b) commencing on the
first anniversary date of becoming a director and for each of the next three
years of service as a director, a five year option to purchase 25,000 shares
of Stock. Each such 25,000 share option shall become exercisable during the
year immediately following grant at a rate of 6,250 shares per quarter,
subject to continuing service as a director. Options granted pursuant to this
paragraph shall be exercisable only during the time the optionee remains a
director or within one year thereafter (but only to the extent vested on the
date of termination of service as a director and not beyond expiration of the
five year option term). The exercise price of each of the above grants shall
be the fair market value of the Company's common stock at the time of each
grant.

(c) Rules and Regulations. The Committee shall have full and complete
authority to promulgate such rules and regulations as it deems necessary or
desirable for administering and interpreting the Plan. Any determination,
decision, computation, or interpretation of the Plan by the Committee shall be
conclusive as to any interested person.

(d) Incentive Stock Option Status. The determination of whether options
granted to employees under the Plan are intended to qualify as incentive stock
options shall be made by the Committee at the time the option is granted. If an
option is intended to so qualify, that fact shall be indicated in the stock
option agreement for that option.

4. ELIGIBILITY. The class of person of the Company eligible to be granted
option to purchase Stock hereunder shall be key employees and directors of the
Company so designated by the Committee.

5. STOCK SUBJECT TO THE PLAN. There shall be a total of 1,750,000 shares of
Stock subject to purchase upon the exercise of options granted under the Plan,
as adjusted in accordance with Section 8. For options outstanding under the
Plan, shares of Stock will be reserved for issuance from the Company's
authorized but unissued Stock. If any option granted under the Plan shall expire
or terminate for any reason without having been exercised in full, the
unpurchased shares shall again be available for the purposes of the Plan;
provided, however, that no options will be granted under the Plan if, including
the shares which are the subject of a proposed option, the total number of
shares called for by all outstanding options under this Plan would cause the
limit set

2
<PAGE>

forth in Rule 260.140.45 of the California Commissioner of Corporations, as
in effect on November 14, 1989, to be exceeded.

6. TERMS AND CONDITIONS OF OPTIONS. Each option granted under the Plan
shall be evidenced by a stock option agreement between the optionee and the
Company and shall be subjected to the following terms and conditions and to such
other terms and conditions not inconsistent therewith as the Committee may deem
appropriate in each case:

(a) OPTION PRICE. The price to be paid for shares of Stock upon the
exercise of an option shall be determined by the Committee at the time the
option is granted, but shall in no event be less than one hundred percent (100%)
of the fair market value of the shares of Stock on the date the option is
granted (110% of the fair market value if the optionee is an employee who owns
Stock possessing more than ten percent of the total combined voting power or
value of all classes of stock of the Company), as determined by the Committee
or, if a trading market exists for the Stock, the fair market value of the
shares of Stock shall not be less than the closing price for the Stock as
reported by the principal trading market for the Stock on the date the option is
granted (or if there was no trade on such date, then the closing price on the
most recent date on which trading in the Stock occurred).

(b) PERIOD OF OPTION. The period or periods within which an option may be
exercised shall be determined by the Committee at the time the option is granted
but shall in no event exceed ten years from the date the option is granted (five
years if the optionee is an employee who owns Stock possessing more than ten
percent of the total combined voting power or value of all classes of stock of
the Company).

(c) PAYMENT FOR STOCK. Payment for each share of Stock purchased under
an option shall be made at the time of purchase: (i) in cash, (ii) in shares
ofStock, in good form for transfer, owned by the optionee, (iii) by a
combination of such Stock and cash; unless the Committee in its sole
discretion requires that payment be made in cash, or (iv) by dividing the net
gain per share (the positive difference in value, if any, between the
exercise price per share and the fair market value upon exercise ) by the
fair market value upon exercise, with the quotient issued in shares of Stock.
No share of Stock shall be issued until full payment therefor has been made.
No Stock acquired within six months preceding the payment date pursuant to
any Company stock option, stock purchase or other stock incentive plan shall
be used in payment hereunder. An optionee's payment of income tax withholding
upon exercise of an option, if required, may be made as set forth in (I),
(ii), or (iii) above.

(d) Stock Appreciation Rights. The Committee, in its discretion, may
provide that any option by its terms may permit the participant, upon exercise
of an option, to elect, in lieu of payment for Stock, to receive payment from
the Company of any of the following:

(i) cash equal to the excess of the value of one share over the option
price times the number of shares as to which the option is exercised;

(ii) the number of full shares having an aggregate value equal to the cash
amount calculated under alternative (i); or

3
<PAGE>

(iii) any combination of cash and Stock having an aggregate value equal to
the cash amount calculated under alternative (i).

(e) NONTRANSFERABILITY. An option shall be nontransferable, except by
will or the laws of descent and distribution, and shall be exercisable during
the optionee's lifetime only by the optionee.

(f) NOT AN EMPLOYMENT AGREEMENT. Nothing in this Plan or in any option
granted hereunder shall affect the right of the Company to terminate at any time
and for any reason the employment of any employee to whom an option has been
granted hereunder.

(g) VALUE LIMITATION. The aggregate fair market value (determined as of the
time the option is granted) of all shares of Stock subjected to incentive stock
options granted to any employee under this Plan and any other option plan of the
Company in any calendar year shall not exceed the limits set forth in the
Internal Revenue Code, as such may be amended from time to time.

(h) EFFECTIVE DATE OF GRANT. The date of grant of options hereunder shall
be deemed to be the date of the action by the Committee, notwithstanding that,
the issuance of the option may be conditioned on the execution of a stock option
agreement.

7. STOCK ISSUANCE AND RIGHTS AS SHAREHOLDER. Notwithstanding any other
provision of the Plan, no optionee shall have any right as a shareholder of the
Company until the date he is issued a stock certificate.

8. ADJUSTMENT OF SHARES.

(a) STOCK DIVIDENDS, ETC. In the event of changes in the outstanding
Stock of the company by reason of stock dividends, split-ups, consolidations,
recapitalizations, reorganizations, spin-offs or like events (as determined
by the Committee), an appropriate adjustment shall be made by the Committee
in the number of shares of Stock reserved under the Plan and in the number of
shares of Stock and the option price per share specified in any stock option
agreement with respect to any unpurchased shares. The determination of the
Committee as to what adjustments shall be made shall be conclusive.

(b) MERGERS, ETC. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, the option granted hereunder shall be
assumed or an equivalent option shall be substituted by such successor
corporation or a parent or subsidiary of such successor corporation. In the
event that such successor corporation refuses to assume the option granted
hereunder or to substitute an equivalent option, the Board shall, in lieu of
such assumption or substitution, provide for the optionee to have the right
to exercise the option granted hereunder as to all of the optioned Stock,
including shares of Stock as to which the option granted hereunder would not
otherwise be exercisable. If the Board makes an option fully exercisable in
lieu of assumption or substitution in the event of a merger or sale of
assets, the Board shall notify the optionee that the option shall be fully
exerciseable for a period of

4
<PAGE>

thirty (30) days from the date of such notice, and the option will terminate
upon the expiration of such period.

9. SECURITIES LAW REQUIREMENTS.

(a) INVESTMENT REPRESENTATION. The Committee may require any person, as
a condition of either grant or the exercise of an option pursuant to this
Plan, to represent and establish to the satisfaction of the Committee that
all shares of Stock acquired upon the exercise of such option will be
acquired for investment and not for distribution.

(b) REGISTRATION REQUIREMENTS. No shares of Stock shall be issued
upon the exercise of any option if counsel for the company determines that there
has not been met any applicable registration requirements under the Securities
Act of 1933 or the Securities Exchange Act of 1934, any applicable listing
requirement of any stock exchange on which the Stock is listed, any state
securities law or any other applicable provision of state or federal law.

(c) INFORMATION TO OPTIONEE. The Company shall provide to each
optionee, during the period for which he has one or more options outstanding,
copies of all annual reports and other information which are provided to all
shareholders of the Company. The Company shall not be required to provide
such information if the issuance of options under the Plan is limited to key
employees whose duties in connection with the Company assure their access to
equivalent information.

10. AMENDMENT. The Board may amend the Plan at any time, except that
without the approval by vote or written consent of the holders of a majority
of the Company's issued and outstanding shares:

(a) The number of shares of Stock that may be made available under the
Plan shall not be increased.

(b) The class of persons eligible to be granted options hereunder
shall not be changed.

This Section 10 may not be amended so as to defeat its purpose.

11. SHAREHOLDER APPROVAL. This Plan is subject to the approval of the
shareholders of the Company on or before June 5, 1990, and any stock option
agreement entered into under this Plan before that approval shall contain a
provision to the effect that the exercise of that option is subject to
shareholder approval.

12. TERMINATION. This Plan shall expire on June 5, 1999 and no options
shall be granted hereunder after that date. The Board may terminate this Plan
at any time, and no option hereunder shall be granted thereafter. Expiration
or termination of the plan shall not affect the validity of any option then
outstanding.

5
<PAGE>

13. EFFECTIVE DATE. Options may be granted hereunder beginning
immediately, subject to Section 11.

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

<PAGE>

EXHIBIT 10.7

FINET HOLDINGS CORPORATION
1998 STOCK OPTION PLAN

1. PURPOSE AND SCOPE. The purposes of this Plan are to induce
persons of outstanding ability and potential to join and remain with Finet
Holdings Corporation (the "Company"), to provide an incentive for such
employees as well as for non-employee consultants to expand and improve the
profits and prosperity of the Company by enabling such persons to acquire
proprietary interests in the Company, and to attract and retain key personnel
through the grant of Options to purchase shares of the Company's common
stock. As used herein, the term "Option" includes both Incentive Stock
Options and Non-Qualified Stock Options.

2. DEFINITIONS. Each term set forth in this Section 2 shall have
the meaning set forth opposite such term for purposes of this Plan unless the
context otherwise requires, and for the purposes of such definitions, the
singular shall include the plural and the plural shall include the singular:

(a) "Affiliate" shall mean any parent corporation or subsidiary
corporation of the Company as those terms are defined in Sections 424(e) and
(f) respectively of the Internal Revenue Code of 1986, as amended.

(b) "Board" shall mean the Board of Directors of the Company.

(d) "Company" shall mean Finet Holdings Corporation, a Delaware
corporation.

(e) "Code" shall mean the Internal Revenue Code of 1986, as
amended.

(f) "Fair Market Value" for a share of Stock means the price
that the Board or the Committee acting in good faith determines, through any
reasonable valuation method (including but not limited to reference to prices
existing in any established market in which the Stock is traded), to be the
price at which a share of Stock might change hands between a willing buyer
and a willing seller, neither being under any compulsion to buy or to sell
and both having reasonable knowledge of the relevant facts.

(g) "Option" shall mean a right to purchase Stock granted
pursuant to the Plan.

(h) "Exercise Price" shall mean the purchase price for Stock
under an Option, as determined in Sections 7 -"Incentive Stock Options" -
and 8 - "Non-Incentive Stock Options" -

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<PAGE>

below.

(i) "Participant" shall mean an employee or non-employee
consultant to the Company to whom an Option is granted under the Plan.

(j) "Plan" shall mean this Finet Holdings Corporation 1998 Stock
Option Plan.

(k) "Stock" shall mean the $0.01 par value common stock of the
Company.

(l) "1934 Act" means the Securities Exchange Act of 1934, as
amended.

3. ADMINISTRATION.

The Plan shall be administered (i) with respect to individuals
who receive options under the Plan and who are or become subject to the
reporting requirements and short-swing liability provisions of Section 16 of
the Securities Exchange Act of 1934, as amended (the "1934 Act") ("Reporting
Persons") by a committee consisting of at least two members of the Board of
Directors of the Company (the "Board"), each of whom is a non-employee
director (as such term is defined under Rule 16b-3 of the 1934 Act) (the
"Reporting Persons Committee") and (ii) with respect to all individuals who
receive Options under the Plan and are who are not Reporting Persons, by a
committee which consists of at least two members of the Board (the "Stock
Option Committee"). For purposes of this Plan, references to the "Committee"
shall mean the Reporting Persons Committee, the Stock Option Committee, or
both, as the context may require.

The Committee shall have full authority in its discretion,
subject to and not inconsistent with the express provisions of the Plan, to
grant Options, to determine the Exercise Price and term of each Option, the
persons to whom, and the time or times at which, Options shall be granted and
the number of shares of Stock to be covered by each Option; to interpret the
Plan; to prescribe, amend, and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of the option agreements (which
need not be identical) entered into in connection with the grant of Options
under the Plan; and to make all other determinations deemed necessary or
advisable for the administration of the Plan. The Board may delegate to one
or more of their members, or to one or more agents, such administrative
duties as it may deem advisable, and the Board or any person to whom it has
delegated duties as aforesaid may employ one or more persons to render advice
with respect to any responsibility the Board or such person may have under
the Plan. The Board may employ attorneys, consultants, accountants, or other
persons, and the Board shall be entitled to rely upon the advice, opinions,
or valuations of such persons. All actions taken and all interpretations and
determinations made by the Board in good faith shall be final and binding
upon all Participants, the Company, and all other interested persons. No
member of the Board shall be personally liable for any action, determination,
or interpretation made in good faith with respect to the Plan; and all
members of the Board shall be fully protected by the Company in

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<PAGE>

respect of any such action, determination, or interpretation.

4. SHARES SUBJECT TO THE PLAN. Subject to adjustment under the
provisions of Section 14 - "Effect of Change in Stock Subject to Plan" - of
the Plan, the maximum number of shares of Stock that may be optioned or sold
under the Plan is Four Million (4,000,000). Such shares may be authorized but
unissued shares of Stock of the Company, or issued shares of Stock reacquired
by the Company, or shares purchased in the open market expressly for use
under the Plan. If for any reason any shares of Stock as to which an Option
has been granted cease to be subject to purchase thereunder, then (unless the
Plan shall have been terminated) such shares shall become available for
subsequent awards under this Plan in the discretion of the Board. The Company
shall, at all times while the Plan is in force, reserve such number of common
shares as will be sufficient to satisfy the requirements of all outstanding
Options granted under the Plan.

5. ELIGIBILITY; FACTORS TO BE CONSIDERED IN GRANTING OPTIONS.

(a) Options may be granted to: (i) any regular full-time
employee (including officers and directors) of either the Company or any
affiliate of the Company; and (ii) any non-employee consultant of the Company.

(b) In determining to whom options shall be granted and the
number of shares of Stock to be covered by each Option, the Board shall take
into account the nature the participants' duties, their present and potential
contributions to the success of the Company, and such other factors as it
shall deem relevant in connection with accomplishing the purposes of the
Plan. The Board shall also determine the time(s) of grant, the type and term
of Option granted, and the time(s) of exercise, in whole or part. A
Participant who has been granted an Option under the Plan may be granted new
Options, which may be in addition to prior Options granted under the Plan or
may be in exchange for the surrender and cancellation of prior Options having
a higher or lower Exercise Price and containing such other terms as the Board
may deem appropriate.

6. TERMS AND CONDITIONS OF OPTIONS.

(a) GENERAL. Options granted pursuant to the Plan shall be
authorized by the Board and shall be evidenced by agreements ("Option
Agreements") in such form as the Board from time to time shall approve. Such
Option Agreements shall comply with and be subject to the following general
terms and conditions, and shall also comply with and be subject to the
provisions of Section 7 relating to Incentive Stock Options or Section 8
relating to Non-Qualified Stock Options, as applicable, as well as such other
terms and conditions as set forth in this Plan and as the Board may deem
desirable, not inconsistent with the Plan.

(b) EMPLOYMENT AGREEMENT. The Committee may, in its discretion,
include in any Option granted under the Plan a condition that the Participant
shall agree to remain in the

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<PAGE>

employ of, and/or to render services to, the Company for a period of time
(specified in the Option Agreement) following the date the Option is granted.
No such Option Agreement shall impose upon the Company any obligation to
employ and/or retain the Participant for any period of time.

(c) MANNER OF EXERCISE. A Participant may exercise an Option by
giving written notice of such exercise to the Company at its principal
office, attention to the Secretary, and paying the Exercise Price either (i)
in cash in full at the time of exercise, or (ii) in the discretion of the
Board:

(i) by delivery of other previously outstanding common stock
of the Company,

(ii) by an approved deferred payment schedule or other
arrangement, which arrangement shall be contained in writing in the Option
Agreement, in which event an interest rate will be stated which is not less
than the rate then specified which will prevent any imputation of higher
interest under Section 483 of the Code,

(iii) by retention by the Company of some of the Stock as to
which the Option is then being exercised, in which case the Optionee's notice
of exercise shall include a statement (1) directing the Company to retain so
many shares that would otherwise have been delivered by the Company upon
exercise of this Option as equals the number of shares that would have been
surrendered to the Company if the purchase price had been paid with
previously outstanding stock of the Company, and (2) confirming the aggregate
number of shares as to which this Option is being thus exercised and
therefore surrendered, or

(iv) in any other form of legal consideration acceptable to
the Committee at the time of grant or exercise.

(d) TIME OF EXERCISE. Promptly after the exercise of an Option
and the payment of the Exercise Price, either in full or pursuant to the
approved payment schedule, the Participant shall be entitled to the issuance
of a stock certificate evidencing ownership of the appropriate number of
shares of Stock. A Participant shall have none of the rights of a shareholder
until shares are issued to him/her, and no adjustment will be made for
dividends or other rights for which the record date has occurred prior to the
date such stock certificate is issued.

(e) NUMBER OF SHARES. Each Option shall state the total number
of shares of Stock to which it pertains.

(f) OPTION PERIOD AND LIMITATIONS ON EXERCISE. The Board may, in
its discretion, provide that an Option may not be exercised in whole or part
for any period(s) of time specified in the Option Agreement, except that the
right to exercise must be at the rate of at least

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<PAGE>

20% per year over five years from the date the Option is granted, subject to
the further conditions of the Plan and the Option Agreement such as continued
employment. However, in the case of an Option granted to officers, directors,
or non-employee consultants of the Company or any of its affiliates, the
Option may become fully exercisable, subject to the further conditions of the
Plan and the Option Agreement, at any time or during any period established
by the Company or its affiliates. The exercise period shall be stated in the
Option Agreement. No Option may be exercised after the expiration of ten
years from the Grant Date. No Option may be exercised as to less than one
hundred (100) shares at any one time, or the remaining shares covered by the
Option if less than one hundred (100).

7. INCENTIVE STOCK OPTIONS. The Board may grant Incentive Stock
Options ("ISOs") which meet the requirements of Section 422 of the Code, as
amended from time to time.

(a) ISOs may be granted only to employees of the Company or its
affiliates.

(b) Each ISO granted under the Plan must be granted within 10
years from the date the Plan is adopted or is approved by the shareholders of
the Company, whichever is earlier.

(c) The purchase price shall not be less than the Fair Market
Value of the common shares at the time of grant, except that the purchase
price shall be 110% of the Fair Market Value in the case of any person who
owns stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or its affiliates at the time of grant.

(d) No ISO granted under the Plan shall be exercisable more than
10 years from the date of grant, except that in the case of any person who
owns stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or its affiliates at the time of grant, no
ISO shall be exercisable more than five years from the date of grant.

(e) To the extent that the aggregate Fair Market Value of stock
(determined at the time of grant) with respect to which ISOs are exercisable
for the first time by any individual during any calendar year under all plans
of the Company and its subsidiaries exceeds $100,000, such options shall be
treated as Non-Qualified stock options, but only to the extent of such
excess. Should it be determined that an entire option or any portion thereof
does not qualify for treatment as an ISO by reason of exceeding such maximum,
or for any other reason, such option or portion shall be considered a
Non-Qualified stock option.

8. NON-QUALIFIED STOCK OPTIONS. The Board may grant Non-Qualified
Stock Options ("NSOs") under the Plan in addition to or in lieu of Incentive
Stock Options. NSOs are not intended to meet the requirements of Section 422
of the Code, and shall be subject to the following terms and conditions:

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<PAGE>

(a) NSOs may be granted to any eligible Participant.

(b) The purchase price of the shares shall be determined by the
Board in its absolute discretion, but in no event shall such purchase price
be less than 85% of the Fair Market Value of the shares at the time of grant.
In the case of any person who owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or its
affiliates at the time of grant, the price shall be 110% of the Fair Market
Value.

9. TRANSFERABILITY. Options granted under this Plan shall not be
transferable other than by will or by the laws of descent and distribution,
and during a Participant's life shall be exercisable only by such
Participant. Options granted under this Plan shall not be subject to
execution, attachment or other process.

10. TERMINATION OF EMPLOYMENT. Options held by employees, including
directors, shall terminate three months after termination of employment with
the Company or affiliate, unless:

(a) If employment is terminated for cause, as such term is
defined by California law, the employer's contract of employment or the
Option Agreement, the Option shall immediately terminate.

(b) If termination is due to the employee's permanent and total
disability within the meaning of Section 22(e)(3) of the Code, the Option may
be exercised at any time within one year following termination.

(c) The Option Agreement by its terms specifies whether it
shall terminate later than three (3) months after termination of employment.
If the Option may be exercised later than three months following termination,
any portion exercised beyond three months shall be a non-qualified stock
option. This paragraph shall not be construed to extend the term of any
Option nor to permit anyone to exercise the Option after expiration of its
term.

(d) Options granted under this Plan shall not be affected by
any change of duties or position of the Participant so long as Participant
continues to be a regular, full-time employee of the Company. Any Option, or
any rules and regulations relating to the Plan, may contain such provisions
as the Board shall approve with reference to the determination of the date
employment terminates. Nothing in the Plan or in any Option granted pursuant
to the Plan shall confer upon any Participant any right to continue in the
employ of the Company or shall interfere in any way with the right of the
Company to terminate such employment at its will at any time.

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<PAGE>

11. RIGHTS IN THE EVENT OF DEATH. If an employee dies during the
term of this Option, his/her legal representative or representatives, or the
person or persons entitled to do so under the employee's last will and
testament or under applicable intestate laws, shall have the right to
exercise this Option, but only for the number of shares as to which the
employee was entitled to exercise this Option on the date of his death, and
such right shall expire and this Option shall terminate six (6) months after
the date of Grantee's death or on the expiration date of this Option,
whichever date is sooner. In all other respects, this option shall terminate
upon such death.

12. LEAVES OF ABSENCE. For purposes of the Plan, an employee on
approved leave of absence from the Company shall be considered as currently
employed for 90 days following beginning the leave or for so long as his/her
right to reemployment is guaranteed by statute or contract, whichever is
longer.

13. EFFECT OF CHANGE IN STOCK SUBJECT TO PLAN.

(a) In the event that outstanding common shares are hereafter
changed by reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split, combination of shares, stock dividends and the
like, the Board shall make adjustments as it deems appropriate in the
aggregate number of shares advisable under the Plan and the number and price
subject to outstanding option. Any adjustment shall apply proportionately and
only to the unexercised portion of options granted.

(b) In the event the Company dissolves or liquidates or another
entity succeeds to its assets, or in the event of a merger or consolidation
in which the Company is not the surviving entity, or in the event of a
reverse merger in which the Company survives but its common stock immediately
preceding the merger is converted into other property by virtue of the
merger, then the surviving entity shall assume the outstanding Options or
substitute similar Options for those outstanding.

14. AGREEMENT AND REPRESENTATION OF EMPLOYEES.

(a) ACQUIRING STOCK FOR INVESTMENT PURPOSES. As a condition to
the exercise of any Option, the Company may require the person exercising
such Option to represent and warrant at the time of such exercise that any
shares of Stock acquired at exercise are being acquired only for investment
and without any present intention to sell or distribute such shares if, in
the opinion of Company's counsel, such representation is required or
desirable under the Securities Act of 1933 or any other applicable law,
regulation, or rule of any governmental agency.

(b) WITHHOLDING. With respect to the exercise of any Option
granted under this Plan, each Participant shall fully and completely consent
to whatever the Board directs to satisfy the federal and state tax
withholding requirements, if any, which the Board in its discretion deems

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<PAGE>

applicable to such exercise.

(c) DELIVERY. The Company is not obligated to deliver any
common shares until there has been qualification under or compliance with all
state or federal laws, rules and regulations deemed appropriate by the
Company. The Company will use all reasonable efforts to obtain such
qualification and compliance.

15. AMENDMENT AND TERMINATION OF PLAN. The Board, by resolution,
may terminate, amend, or revise the Plan with respect to any shares as to
which Options have not been granted; provided however, that any amendment
that would: (a) increase the aggregate number of shares of common stock that
may be issued under the Plan, (b) materially increase the benefits accruing
to Participants, or (c) materially modify the requirements as to eligibility
for participation in the Plan, shall be subject to shareholder approval
within 12 months before or after adoption. It is expressly contemplated that
the Board may amend the Plan in any respect necessary to provide employees
with the maximum benefits available under and/or to satisfy the requirements
of or amendments to Section 422 of the Code.

No termination, modification or amendment of the Plan may
however, alter or impair the rights conferred by an Option previously granted
without the consent of the individual to whom the Option was previously
granted.

Unless sooner terminated, the Plan shall remain in effect for a
period of ten years from the date of the Plan's adoption by the Board.
Termination of the Plan shall not affect any Option previously granted.

16. USE OF PROCEEDS. The proceeds from the sale of shares pursuant
to Options granted under the Plan shall constitute general funds of the
Company.

17. EFFECTIVE DATE OF PLAN. The Effective Date of this Plan is
February 18, 1998, the date it was adopted by the Board, provided the
shareholders of the Company approve this Plan within twelve (12) months after
such effective date. Any Options granted under this Plan prior to the date of
shareholder approval shall be deemed to be granted subject to such approval.
Should shareholder approval not be obtained within twelve (12) months, any
Options granted pursuant to the Plan shall be null and void.

18. INDEMNIFICATION OF COMMITTEE. In addition to such other rights
of indemnification as they may have and subject to limitations of applicable
law, the members of the Committee shall be indemnified by the Company against
all costs and expenses reasonably incurred by them in connection with any
action, suit or proceeding to which they or any of them may be a party by
reason of any action taken or failure to act under or in connection with the
Plan or any rights

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<PAGE>

granted thereunder and against all amounts paid by them in settlement thereof
or paid by them in satisfaction of a judgment of any such action, suit or
proceeding, the Board or Committee member or members shall notify the Company
in writing, giving the Company an opportunity at its own cost to defend the
same before such Committee member or members undertake to defend the same on
their own behalf.

19. INFORMATION REQUIREMENTS. The Company shall provide each
participant with annual financial statements.

20. GOVERNING LAW. The Plan shall be governed by, and all questions
arising hereunder, shall be determined in accordance with the laws of State
of California as such laws are applied to agreements between California
residents entered into and to be performed entirely within California.

Date of Board Adoption: Date of Shareholder Approval:
February 18, 1998 November 24, 1998

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<PAGE>

EXHIBIT 10.8

FINET HOLDINGS CORPORATION

1998 STOCK BONUS INCENTIVE PLAN

1. PURPOSE AND SCOPE. The purpose of this Plan is to advance the
interests of Finet Holdings Corporation (the "Company") and its shareholders,
by encouraging and enabling selected officers, directors, consultants and key
employees upon whose judgment, initiative and effort the Company is largely
dependent for the successful conduct of its business, to acquire and maintain
a proprietary interest in the Company by ownership of its stock, to keep
personnel of experience and ability in the employ of the Company and to
compensate them for their contributions to the growth and profits of the
Company and thereby induce them to continue to make such contributions in the
future.

2. DEFINITIONS. Each term set forth in this Section 2 shall have the
meaning set forth opposite such term for purposes of this Plan unless the
context otherwise requires, and for the purposes of such definitions, the
singular shall include the plural and the plural shall include the singular:

(a) "Board" shall mean the Board of Directors of the Company.

(b) "Committee" means the Directors duly appointed to administer
the Plan.

(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.

(e) "Plan" shall mean the Finet Holdings Corporation 1998 Stock
Bonus Incentive Plan.

(f) "Bonus Share" shall mean the shares of Common Stock of the
Company reserved pursuant to Section 4 hereof and any such shares issued to a
Recipient pursuant to this Plan.

(g) "Recipient" shall mean any individual rendering services for
the Company to whom shares are granted pursuant to this Plan.

3. ADMINISTRATION. The Plan shall be administered (i) with respect to
individuals who receive bonuses under the Plan and who are or become subject to
the reporting requirements and short-swing liability provisions of Section 16 of
the Securities Exchange Act of 1934, as amended (the "1934 Act") ("Reporting
Persons") by a Committee consisting of at least two members of the Board, each
of whom is a non-employee director (as such term is defined under Rule 16b-3 of
the 1934 Act) (the "Reporting Persons Committee") and (ii) with respect to all
individuals who receive bonuses under the Plan and who are not Reporting
Persons, by a Committee which consists of at least two members of the Board (the
"Compensation Committee"). For

<PAGE>

purposes of this Plan, references to the "Committee" shall mean the Reporting
Persons Committee, the Compensation Committee, or both, as the context may
require.

The Committee shall have full authority in its discretion, subject
to and not inconsistent with the express provisions of the Plan, to grant
bonuses; to determine individuals to whom and the time or times at which
Bonus Shares shall be granted; and the number of Bonus Shares; to construe
and interpret the Plan; and to make all other determinations and take all
other actions deemed necessary or advisable for the proper administration of
the Plan. All such actions and determinations shall be conclusively binding
for all purposes and upon all persons. No member of the Board shall be
personally liable for any action, determination, or interpretation made in
good faith with respect to the Plan; and all members of the Board shall be
fully protected by the Company in respect of any such action, determination,
or interpretation.

4. BONUS SHARES SUBJECT TO THE PLAN.

(a) BONUS SHARES RESERVED. The total number of shares of the
Company's Common Stock which may be issued under the Plan shall not exceed
875,000 shares.

(b) ADJUSTMENTS TO BONUS SHARE RESERVE. In the event the
outstanding shares of the Company's Common Stock are increased or decreased
as a result of any stock split, stock dividend, recapitalization or other
similar change in corporate structure, effected without the receipt of
consideration, or if the Common Stock is converted into other shares or
securities of the Company or any other corporation as a result of a merger,
reorganization, or other similar transaction, an appropriate adjustment shall
be made by the Committee to the class and/or number of shares which are
available for issuance under the Plan in order that there shall be no
dilution or enlargement of benefits hereunder.

5. ELIGIBILITY. Bonus Shares may be granted under the Plan to the
Company's employees, directors, officers, and to consultants or advisors to
the Company, provided however that bona fide services shall be rendered by
such consultants or advisors and such services shall not be in connection
with the offer and sale of securities in a capital-raising transaction.
Participation may be based on the recommendations of the Company's officers,
subject to the Committee's approval. Participation shall be determined
annually and semi-annually for new employees for each calendar year, without
regard to whether the employee was a participant for any prior calendar year.

6. GRANTING AND VESTING OF BONUS SHARES. The Committee, in its sole
discretion, is empowered to grant to an eligible Recipient a number of Bonus
Shares as it shall determine from time to time. Each grant of these Bonus
Shares shall become vested according to a schedule to be established by the
Committee at the time of the grant. For purposes of this Plan, vesting shall
mean the period during which the Recipient must remain an employee or provide
services for the Company. At such time as the employment of the Recipient
ceases, any shares not fully vested shall be forfeited by the Recipient and
shall be returned to the Bonus Share Reserve. The Committee, in its sole
discretion, may also impose restrictions on the future transferability of the
Bonus Shares, which restrictions shall be set forth on a Notice of Stock
Bonus Grant.

<PAGE>

7. DETERMINATION OF EMPLOYMENT.

(a) No Recipient shall be eligible to receive a bonus award
unless such Recipient is either employed by the Company or providing
consulting services to the Company on the date of grant.

(b) In the event that a Recipient ceases to be an employee or
service provider by reason of death, disability or retirement or for any
other reason, the Committee, in its sole discretion, may award a partial
bonus to the Recipient (or, in the event of the Recipient's death, to his or
her beneficiary). Payment shall be made to the Recipient (or his or her
beneficiary as the case may be according to Section 10.

8. WITHHOLDING TAXES. A Recipient shall be obligated to satisfy all
federal and state tax withholding obligations arising from the award of Bonus
Shares.

9. TRANSFERABILITY. Any right to a stock bonus payment under the Plan
shall be nontransferable, except that such right may be transferred to a
beneficiary upon a participant's death, as provided in Section 10. Any
attempted alienation, assignment, pledge, hypothecation, attachment,
execution or similar process, whether voluntary or involuntary with respect
to any such right shall be void and, at the Committee's option, shall cause
such right to be forfeited.

10. BENEFICIARY DESIGNATIONS. Upon commencement of participation, each
Recipient who is an employee of the Company shall by virtue of his or her
employment with the Company have named beneficiaries for life insurance
purposes under the Finet Insurance Plan that will be used for the same
purpose under this Plan. Any Recipient, including consultants, may designate
a new beneficiary by filing the prescribed form with the Committee. If the
participant has not named a beneficiary, or if none of the named
beneficiaries is living when any payment is to be made, then (a) the spouse
of the deceased Recipient shall be the beneficiary, or (b) if the Recipient
has no spouse living at the time of such payment, the then living children of
the deceased Recipient shall be the beneficiaries in equal shares, or (c) if
the Recipient has neither spouse nor children living at the time of such
payment, the estate of the Recipient shall be the beneficiary. The Recipient
may change the designation of the beneficiary from time to time in accordance
with procedures established by the Committee. Any designation of a
beneficiary (or an amendment or revocation thereof) shall be effective only
if it is made in writing on the prescribed form and is received by the
Company or the Committee prior to the Recipient's death.

11. SHAREHOLDER RIGHTS. No Recipient shall have any rights as a
shareholder until such time as any Bonus Shares are actually issued to such
Recipient.

12. NO EMPLOYMENT RIGHTS. No provision of the Plan, nor any bonus
opportunity established under the Plan, shall be construed to give any person
any right to remain in the Company's service. The Company reserves the right
to terminate any person's service at any time, with or without cause.

<PAGE>

13. RESTRICTIONS UPON ISSUANCE. Unless the Bonus Shares covered by the
Plan have been registered with the Securities and Exchange Commission, each
Recipient shall, by accepting a Bonus Share, represent and agree, for himself
and his transferees by will or the laws descent and distribution, that all
Bonus Shares were acquired for investment and not for resale or distribution.
On such exercise of any portion of a Bonus Share, the person entitled to
exercise shall, upon request of the Committee, furnish evidence satisfactory
to the Committee (including a written and signed representation) to the
effect that the shares of stock are being acquired in good faith for
investment and not for resale or distribution. Furthermore, the Committee
may, if it deems appropriate, affix a legend to certificates representing
Bonus Shares indicating that such Bonus Shares have not been registered with
the Securities and Exchange Commission and may so notify the Company's
transfer agent. Such shares may be disposed of by a Recipient in the
following manner only: (1) pursuant to an effective registration statement
covering such resale or reoffer, (2) pursuant to an applicable exemption from
registration as indicated in a written opinion of counsel reasonably
acceptable to the Company, or (3) any transaction that meets all of the
requirements of Rule 144 of the Securities and Exchange Commission. If Bonus
Shares covered by the Plan have been registered with the Securities and
Exchange Commission, no such restrictions on resale shall apply, except in
the case of Recipients who are directors, officers, or principal shareholders
of the Company.

14. AMENDMENTS OR TERMINATION. The Company may amend, suspend or
terminate the Plan at any time and for any reason. Neither an amendment of
the Plan nor the termination thereof shall affect any Bonus Shares previously
issued.

15. GOVERNING LAW. The Plan shall be governed by the laws of the State
of California.

Date of Board Adoption: February 18, 1998

Date of Shareholder Approval: November 24, 1998

<PAGE>

EXHIBIT 10.9

FINET HOLDINGS CORPORATION
1998 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

1. PURPOSE OF THE PLAN. This Finet Holdings Corporation 1998
Non-Employee Directors' Stock Option Plan (the "Plan") is adopted for the
benefit of the directors of Finet Holdings Corporation, a Delaware
corporation (the "Company") who, at the time of their service, are not
employees of the Company or any of its subsidiaries (the "Non-Employee
Directors"). The purposes of the Plan are to advance the interests of the
Company by providing the Non-Employee Directors with additional incentive to
serve the Company by increasing their proprietary interest in the success of
the Company.

2. ADMINISTRATION OF THE PLAN. (a) The Plan shall be administered
by the Board of Directors of the Company (the "Board"). The Board may
delegate administration of the Plan to a committee ("Committee") comprised of
not less than two (2) members of the Board. If administration is delegated to
a Committee, the Committee shall have, in connection with the administration
of the Plan, the powers possessed by the Board, subject to such resolutions,
not inconsistent with the provisions of the Plan, as may be adopted from time
to time by the Board. The Board may abolish the committee at any time and
revest in the Board the administration of the Plan. (b) The Board shall have
the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall, from time to time,
deem advisable; to interpret the terms and provisions of the Plan and any
Option granted under the Plan (and any agreements relating thereto); and to
otherwise supervise the administration of the plan, and to exercise such
powers and perform such acts as the Board deems necessary or expedient to
promote the bests interests of the Company. The Board may correct any defect,
supply any omission or reconcile any inconsistency in the Plan or in any
Option in the manner and to the extent it shall deem necessary to carry the
Plan into effect. (c) All actions taken and all interpretations and
determinations made by the Board in good faith shall be final and binding
upon all Non-Employee Directors, the Company, and all other interested
persons. (d) No member of the Board shall be personally liable for any
action, determination, or interpretation made in good faith with respect to
the Plan; and all members of the Board shall be fully protected by the
Company in respect of any such action, determination, or interpretation.

3. STOCK SUBJECT TO AND RESERVED FOR THE PLAN. (a) The total number
of shares of the Company's Common Stock, $0.01 par value (the "Common
Stock"), with respect to which Options may be granted under the Plan, shall
not exceed the aggregate of 500,000 shares; provided, however, that the class
and aggregate number of shares which may be subject to the Options granted
hereunder shall be subject to adjustment in accordance with the provisions of
Section 14 of this Plan. Such shares may be treasury shares, reacquired
shares or authorized but unissued shares. (b) The Company shall reserve for
issuance pursuant to this Plan such number of shares of Common Stock as may
from time to time be subject to Options granted hereunder. If any

<PAGE>

Option expires or is canceled prior to its exercise in full, the shares
theretofore subject to such Option may again be made subject to an Option
under the Plan. (c) All Options granted under the Plan will constitute
nonstatutory stock options (i.e., stock options which do not qualify under
Sections 422 or 423 of the Internal Revenue Code of 1986 (the "Code")) (the
"Option").

4. ELIGIBILITY. Options shall be granted only to Non-Employee
Directors of the Company.

5. NON-DISCRETIONARY GRANT OF OPTIONS.

(a) NON-EMPLOYEE DIRECTORS ELECTED AFTER THE EFFECTIVE DATE OF
THE PLAN: INITIAL GRANT. For so long as this Plan is in effect and shares are
available for the grant of Options hereunder, each person who is elected as a
Non-Employee Director of the Company for the first time after the effective
date of the Plan, and who is not and has not been an employee of the Company
or any of the Company's Subsidiaries ( as defined in Section 424(f) of the
Code (a "New Director") shall be granted a one-time Option ("Initial Option")
to purchase 40,000 shares of Common Stock at a per share exercise price equal
to 85% of the Fair Market Value (defined below) of a share of Common Stock on
such date (subject to the adjustments provided in Section 14 hereof), except
that the price shall be 110% of the Fair Market Value in the case of any
person who owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Corporation or its subsidiaries. This
Section 5(a) shall only apply to a New Director the first time he or she is
elected a director of the Company after the effective date of this Plan.

(b) ANNUAL OPTION GRANT TO NON-EMPLOYEE DIRECTORS ("ANNUAL
OPTION"). In addition, for so long as (i) this Plan is in effect, and (ii)
there are shares available for the grant of Options hereunder, each person
serving as an elected Non-Employee Director as of the effective date of this
Plan and each New Director (together "Eligible Director") shall be granted
automatically, on January 1st of each year (or the next day on which the
Company's Common Stock is traded should the Company's Common Stock not trade
on such date, commencing as of January 1, 1998 and subject to the adjustments
provided in Section 14 hereof), an Option to purchase 25,000 shares of Common
Stock at a per share exercise price equal to 85% of the Fair Market Value
(defined below) of a share of Common Stock), except that the price shall be
110% of the Fair Market Value in the case of any person who owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Corporation or its subsidiaries. The foregoing notwithstanding,
such Eligible Director must have served as a Non-Employee Director
continuously for at least thirty (30) days immediately preceding the first
day of January of any given year, in order to be eligible for grant of an
Annual Option as of January 1st of that year.

(c) OPTION PRICE. For the purposes of this Section 5, the "Fair
Market Value" as of any particular date shall mean (i) the closing sales
price on the immediately

<PAGE>

preceding business day of a share of Common Stock as reported on the
principal securities exchange on which shares of Common Stock are then listed
or admitted to trading or (ii) if not so reported, the average of the closing
bid and asked prices for a share of Common Stock on the immediately preceding
business day as quoted on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") or (iii) if not quoted on NASDAQ, the
average of the closing bid and asked prices for a share of Common Stock as
quoted by the National Quotation Bureau's "Pink Sheets" or the National
Association of Securities Dealers' OTC Bulletin Board System. If the price of
a share of Common Stock shall not be so reported, the Fair Market Value of a
share of Common Stock shall be determined by the Board in its absolute
discretion.

6. OPTION AGREEMENT. Each Option granted under the Plan shall be
evidenced by an agreement, in a form approved by the Board, which shall be
subject to the terms and conditions of the Plan. Any agreement may contain
such other terms, provisions and conditions as may be determined by the Board
and that are not inconsistent with the Plan.

7. VESTING AND TERM OF OPTIONS. (a ) Each Option granted under this
Plan shall be subject to vesting pursuant to one of two schedules: ( i)
vesting in full on the date of grant; or (ii) vesting in four (4) equal
installments commencing on the first anniversary of the date of grant;
provided, however, that each such Option, regardless of the manner of
vesting, shall be subject to termination as provided in Section 9 hereof. The
schedule of vesting, whether vesting in full or in installments, shall be
determined by the Board as part of and at the time of the grant; provided
however, that any Option granted under this Plan which vests in full on the
date of grant as set forth in subsection (i) above, shall be subject, as a
condition of such Option grant, to the Company's right to repurchase as
provided in Section 16 hereof. (b) Each Option agreement shall also provide
that the Option shall expire ten years from the date of grant, unless sooner
terminated pursuant to Section 9 hereof.

8. EXERCISE OF OPTIONS. Options shall be exercisable at any time
after their appropriate vesting date, subject to termination as provided in
Section 9 hereof and to the Company's right to repurchase as provided in
Section 16 hereof. Options shall be exercised by written notice to the Company
setting forth the number of shares with respect to which the Option is being
exercised and specifying the address to which the certificates representing
such shares are to be mailed. Such notice shall be accompanied by cash or
certified check, bank draft, or postal or express money order payable to the
order of the Company, for an amount equal to the product obtained by
multiplying the exercise price of the Option by the number of shares of Common
Stock with respect to which the Option is then being exercised. As promptly as
practicable after receipt of such written notification and payment, the Company
shall deliver to the Eligible Director a certificate or certificates
representing the number of shares of Common Stock with respect to which such
Option has been so exercised, issued in the Eligible Director's name, provided,
however, that such delivery shall be deemed effected for all purposes when the
Company's transfer agent shall have deposited such certificates in the United

<PAGE>

States mail, addressed to the Eligible Director, at the address specified
pursuant to this Section 8.

9. TERMINATION OF OPTIONS. Except as may be otherwise expressly
provided in this Plan or otherwise determined by the Board, each Option, to
the extent it shall not have been exercised previously, shall terminate on
the earliest of the following: (i) on the last day of the three-month period
commencing on the date on which the Eligible Director ceases to be a member
of the Board for any reason other than the death or total disability (within
the meaning of Section 22(e)(3) of the Internal Revenue Code) of the Eligible
Director, in which case the option may be exercised at any time within
eighteen (18) months following termination of such directorship or service,
during which period the Eligible Director shall be entitled to exercise all
Options held by the Eligible Director on the date on which the Eligible
Director ceased to be a member of the Board that could have been exercised on
such date; or (ii) ten years after the date of grant of such Option.

10. TRANSFERABILITY OF OPTIONS. During the term of an Option, the
Option shall not be assignable or otherwise transferable except by will or by
the laws of descent and distribution. Each Option shall be exercised during
the Eligible Director's lifetime only by the Eligible Director.

11. NO RIGHTS AS STOCKHOLDER. No Eligible Director shall have any
rights as a stockholder with respect to shares covered by an Option until the
date of issuance of a stock certificate or certificates representing such
shares. Except as provided in Section 14 hereof, no adjustment for dividends
or otherwise shall be made if the record date therefor is prior to the date
of issuance of certificates representing shares of Common Stock purchased
pursuant to exercise of this Option.

12. INVESTMENT REPRESENTATIONS. Whether or not the Options and
shares covered by the Plan have been registered under the Securities Act of
1933, as amended, each person exercising an option under the Plan may be
required by the Company to give a representation in writing that such person
is acquiring such shares for investment and not with a view to, or for sale
in connection with, the distribution of any part thereof. The Company will
endorse any necessary legend referring to the foregoing restriction upon the
certificate or certificates representing any shares issued or transferred to
the Eligible Director upon the exercise of any Option granted under the Plan.

13. AMENDMENT OR TERMINATION. The Board may amend, modify, revise
or terminate this Plan at any time and from time to time. All Options granted
under this Plan shall be subject to the terms and provisions of this Plan and
any amendment, modification or revision of this Plan shall be deemed to
amend, modify or revise all Options outstanding under this Plan at the time
of such amendment, modification or revision. If this Plan is terminated by
action of the Board, all outstanding Options may be terminated.

<PAGE>

14. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. The existence of
outstanding Options shall not affect in any way the right or power of the
Company or its stockholders to make or authorize the dissolution or
liquidation of the Company, any sale or transfer of all or any part of the
Company's assets or business, any reorganization or other corporate act or
proceeding, whether of a similar character or otherwise, any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, any merger or consolidation of
the Company, or any issuance of bonds, debentures, preferred or prior
preference stock senior to or affecting the Common Stock or the rights
thereof; provided, however, that if (i) the outstanding shares of Common
Stock of the Company shall be subdivided into a greater number of shares or
(ii) the outstanding shares of Common Stock shall be combined into a smaller
number of shares thereof, then (a) the number of shares of Common Stock
available for the grant of Options under the Plan shall be proportionally
adjusted to equal the product obtained by multiplying such number of
available shares remaining by a fraction, the numerator of which is the
number of outstanding shares of Common Stock after giving effect to such
combination or subdivision and the denominator of which is that number of
outstanding shares of Common Stock prior to such combination or subdivision,
(b) the exercise price of any Option then outstanding under the Plan shall be
proportionately adjusted to equal the product obtained by multiplying such
exercise price by a fraction, the numerator of which is the number of
outstanding shares of Common Stock prior to such combination or subdivision
and the denominator of which is that number of outstanding shares of Common
Stock after giving effect to such combination or subdivision, and (c) the
number of shares of Common Stock issuable on the exercise of any Option then
outstanding under the Plan or thereafter granted under the Plan shall be
proportionately adjusted to equal the product obtained by multiplying such
number of shares of Common Stock by a fraction, the numerator of which is the
number of outstanding shares of Common Stock after giving effect to such
combination or subdivision and the denominator of which is that number of
outstanding shares of Common Stock prior to such combination or subdivision.

15. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. (a) The Plan, the
grant and exercise of Options thereunder, and the obligation of the Company
to sell and deliver shares acquirable on exercise of such Options, shall be
subject to all applicable federal and state laws, rules and regulations and
to such approvals by any governmental or regulatory agency or national
securities exchange as may be required. The Company shall not be required to
sell or issue any shares on exercise of any Option if the issuance of such
shares shall constitute a violation by the Non-Employee Director or the
Company of any provisions of any law or regulation of any governmental
authority. (b) Each Option granted under this Plan shall be subject to the
requirement that, if at any time the Board shall determine that (i) the
listing, registration or qualification of the shares subject thereto on any
securities exchange or under any state or federal law of the United States or
of any other country or governmental subdivision thereof, (ii) the consent or
approval of any governmental regulatory body, or (iii) the making of
investment or other representations, are necessary or desirable in connection
with the issue or purchase of shares subject thereto, no such

<PAGE>

Option may be exercised in whole or in part unless such listing,
registration, qualification, consent, approval or representation shall have
been effected or obtained, free of any conditions not acceptable to the
Board. (c) These provisions do not obligate the Company to register either
the Plan, any option granted under the Plan, or any stock issued or issuable
pursuant to any such Option, under any state or federal law of the United
States or of any other country or governmental subdivision thereof. (d) Any
determination by the Board in connection with any of the above determinations
shall be final, binding and conclusive.

16. REPURCHASE RIGHT OF THE COMPANY.

(a) GENERAL. Shares of stock issued or issuable upon exercise of an
option grant with immediate vesting, as set forth in Section 7(a)(i), are
subject to a right of repurchase by the Company. If the service of a
Non-Employee Director to the Company or a subsidiary of the Company is
terminated for any reason other than by death or total disability, except as
otherwise described in Section 16(d), the Company (or any subsidiary
designated by it) shall have the option for 90 days after the termination of
service by the Non-Employee Director to repurchase all or any part of his
stock issued or issuable upon exercise of the option, as provided in this
Section 16.

(b) NOTICE. Within 30 days of receiving notice from a Non-Employee
Director or his representative of the termination of the director's service
to the Company or a subsidiary of the Company, the Company must give notice
to the director of the Company's decision whether or not to exercise its
repurchase right.

(c) REPURCHASE PRICE. The repurchase price per share repurchased in
accordance with this Section 16 shall be the original per share purchase
price set forth in the accompanying Notice of Stock Option Grant. The
Company's repurchase right at this price lapses at the rate of 25% per year,
starting with the first anniversary of the Option Grant, and continues over 4
years, without reference to the date the Option was exercised or became
exercisable.

(d) SHARES ACQUIRED THROUGH EXERCISE OF OPTION AFTER TERMINATION OF
SERVICES. If the Non-Employee Director exercises in whole or in part his
option after termination of his services to the Company for any reason other
than death or total disability, the Company shall have, for 90 days after the
exercise, the right to repurchase the shares so acquired upon written notice
to the Non-Employee Director. The purchase price and terms of payment will be
governed by Sections 16(c) and (e) of this Plan.

(e) PAYMENT OF THE PURCHASE PRICE. The Company's right to repurchase
must be exercised for cash or cancellation of purchase money indebtedness for
the shares within 90 days of termination of service by the Non-Employee
Director (or in the case of securities issued upon exercise of Options after
the date of termination, within 90 days after the date of exercise).

<PAGE>

(f) DEATH OR TOTAL DISABILITY. There shall be no right of repurchase
by the Company upon the Non-Employee Directors' death or total disability.
The foregoing notwithstanding, the provisions of this Section 16(g) do not
extend or otherwise affect the termination of any Option which shall not have
been exercised, as otherwise set forth in Section 9 herein.

(g) REPURCHASE RIGHT AS TO OTHER SHARES. The repurchase right of the
Company shall apply as well to all shares or other securities issued in
respect to any Option due to any stock split, reverse stock split, stock
dividend, recapitalization, reclassification, spin-off, split-off, merger,
consolidation or reorganization ("Other Shares") but such right shall expire
on the occurrence of any event or transaction upon which the Option
terminates.

17. INDEMNIFICATION OF BOARD OF DIRECTORS. The Company shall, to
the fullest extent permitted by law, indemnify, defend and hold harmless any
person who at any time 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) in any way relating to or arising
out of this Plan or any Options granted hereunder by reason of the fact that
such person is or was at any time a director of the Company against
judgments, fines, penalties, settlements and reasonable expenses (including
attorneys' fees) actually incurred by such person in connection with such
action, suit or proceeding. This right of indemnification shall inure to the
benefit of the heirs, executors and administrators of each such person and is
in addition to all other rights to which such person may be entitled by
virtue of the bylaws of the Company or as a matter of law, contract or
otherwise.

18. ADDITIONAL PROVISIONS. (a) Nothing in the Plan, or in any
instrument executed pursuant thereto, shall confer upon any Non-Employee
Director either the right or the obligation to continue acting as a director
of (or to employment by) the Company, nor shall any Plan provision or
instrument executed pursuant thereto affect any right of the Company, its
Board and/or its shareholders to terminate the directorship (or employment)
of any Non-Employee Director with or without cause. (b) In connection with
each option granted pursuant to the Plan, each Non-Employee Director shall
make arrangements satisfactory to the Company to insure that the amount of
any federal or other withholding tax required to be withheld with respect to
such sale or transfer is made available to the Company for timely payment of
such tax.

19. EFFECTIVE DATE OF THE PLAN. This Plan shall become effective,
subject to stockholder approval, on February 18, 1998. No Option shall be
granted pursuant to this Plan on or after February 18, 2008.

20. GOVERNING LAW. The Plan shall be governed by, and all questions
arising hereunder, shall be determined in accordance with the laws of the
State of California as such laws are applied to agreements between California
residents entered into and to be performed entirely within California.

<PAGE>

DATE OF BOARD ADOPTION: February 18, 1998

DATE OF SHAREHOLDER APPROVAL: November 24, 1998

<PAGE>

EXHIBIT 10.10

FINET HOLDINGS CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN

1. ESTABLISHMENT OF THE PLAN; PURPOSE

This Employee Stock Purchase Plan (the "Plan") was established to
provide Eligible Employees with an opportunity through regular payroll
deductions to purchase Common Stock of Finet Holdings Corporation (the
"Company") so that they may increase their proprietary interest in the
Company. The Plan is intended to qualify as an "employee stock purchase plan"
under Section 423 of the Internal Revenue Code.

2. DEFINITIONS

As used herein, the following definitions shall apply:

(a) "Board of Directors" means the Committee if one has been appointed,
or the Board of Directors of the Company if no Committee has been appointed.

(b) "Code" means the Internal Revenue Code of 1986.

(c) "Committee" means the committee appointed by the Board of Directors
to administer the Plan in accordance with Section 3 below
- -"Administration"-if one is appointed.

(d) "Company" means Finet Holdings Corporation and such present or
future Subsidiaries, as defined in Section 425 of the Code, of the Company as
the Board of Directors shall from time to time designate.

(e) "Compensation" means the annual base rate of pay of a Participant
as of the first day of an Offering Period, determined in accordance with
nondiscriminatory rules adopted by the Board of Directors, including
commissions, but excluding income with respect to stock options or other
stock purchases or moving expense reimbursements.

(f) "Eligible Employee" means any regular employee of the Company whose
date of hire was at least six months prior to the commencement of an Offering
Period or an Interim Offering Period and who is customarily employed for at
least twenty (20) hours per week and more than five (5) months in any
calendar year.

(g) "Exchange Act" means the Securities and Exchange Act of 1934.

(h) "Fair Market Value" of a share of Stock means the NASDAQ closing
price on the applicable date. In the event the Stock is not traded on the
date as of which

<PAGE>

the Fair Market Value is to be determined, Fair Market Value shall be
determined as of the next preceding date on which the Stock is traded.

(i) "Interim Offering Period" means each three-month period during and
within an Offering Period.

(j) "Option" means the right of a Participant to purchase Stock during
the applicable Offering Period.

(k) "Offering Date" means the first day of each Offering Period.

(l) "Offering Period" means, in the absence of a specific determination
to the contrary by the Board of Directors or the Committee, a 36-month period
during which contributions may be made toward the purchase of Stock under the
Plan. The Board of Directors or the Committee may establish from time to time
Option Periods which may be up to thirty-six (36) months.

(m) "Participant" means an Eligible Employee who elects to participate
in the Plan.

(n) "Plan Account" means the account established for each Participant
pursuant to the Plan.

(o) "Purchase Price" means the price at which Participants may purchase
Stock as determined pursuant to the Plan.

(p) "Stock" means the Common Stock of the Company.

(q) "Subsidiary" means a corporation a majority of whose voting shares
are owned by the Company.

3. ADMINISTRATION

The Plan shall be administered by the Board of Directors and/or by a
duly appointed Committee. Whether or not the Board has delegated
administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of
the Plan. The Board of Directors may from time to time remove members from,
or add members to, the Committee. Vacancies on the Committee, howsoever
caused, shall be filled by the Board of Directors. The Committee shall select
one of its members as Chairman, and shall hold meetings at such times and
places as it may determine. The interpretation and construction by the Board
of Directors or the Committee of any provision of the Plan or of any right to
purchase Stock shall be conclusive and binding on all persons.

(a) DELEGATION TO COMMITTEE. The Board may delegate administration of
the Plan to the Committee composed of not fewer than two (2) members of the
Board. All of the members of such Committee shall be disinterested persons as
defined by the

<PAGE>

provisions of subparagraph 3(b) --"Disinterested Person." If administration is
delegated to the Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
subject, however, to such resolutions, not inconsistent with the provisions
of the Plan, as may be adopted from time to time by the Board. The Board
shall otherwise comply with the requirements of Rule 16b-3 promulgated under
the Exchange Act, as from time to time in effect. The Board may abolish the
Committee at any time and revest in the Board the administration of the Plan.
Two members of the Committee shall constitute a quorum for the transaction of
business.

(b) DISINTERESTED PERSON. The term "Disinterested Person," as used in
this Plan, shall mean an administrator of the Plan, whether a member of the
Board or of any Committee to which responsibility for administration of the
Plan has been delegated pursuant to subparagraph 3(a), --"Delegation to
Committee" - who is not during the one year prior to service as an
administrator of the plan, or during such service, granted or awarded equity
securities pursuant to the plan or any other plan of the Company or any of
its affiliates, except that: (A) participation in a formula plan meeting the
conditions of Rule 16b-3(c)(2)(ii) pursuant to the Securities Exchange Act
shall not disqualify a director from being a disinterested person; (B)
participation in an ongoing securities acquisition plan meeting the
conditions in Rule 16b-3(d)(2(i) shall not disqualify a director from being a
disinterested person; (C) an election to receive an annual retainer fee in
either cash or an equivalent amount of securities, or partly in cash and
partly in securities, shall not disqualify a director from being a
disinterested person; and (D) participation in a plan shall not disqualify a
director from being a disinterested person for the purpose of administering
another plan that does not permit participation by directors. Any such person
shall otherwise comply with the requirements of Rule 16b-3 promulgated under
the Exchange Act, as from time to time in effect.

(c) NUMBER OF SHARES TO BE OFFERED. The maximum aggregate number of
shares which shall be offered under the Plan shall be Five Hundred Thousand
(500,000) shares of Stock, subject to adjustment as provided in Section 8 -
Recapitalization, Etc." - hereof. In the event that any Option granted under
the Plan expires or is terminated for any reason, such shares allocable to
the unexercised portion of such Option shall again be subject to an Option
under the Plan. The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.

4. ELIGIBILITY AND PARTICIPATION

(a) INITIAL PARTICIPATION. An Eligible Employee shall become a
Participant on the Offering Date after satisfying the eligibility
requirements by delivering to the Company's payroll office an enrollment form
authorizing payroll deductions not less than ten (10) business days prior to
such Offering Date. An Eligible Employee who did not enroll in the Plan prior
to the Offering Date, or a person who becomes an Eligible Employee after an
Offering Date, may enroll in the Plan for the remainder of the Offering

<PAGE>

Period as of the beginning of the next Interim Offering Period by completing
and filing an enrollment form prior to the commencement date of such Interim
Offering Period.

(b) CONTINUED PARTICIPATION. A Participant shall automatically
participate in each successive Offering Period (including Interim Offering
Periods) until such time as such Participant withdraws from the Plan as set
forth below. A Participant is not required to file any additional enrollment
forms for subsequent Offering Periods in order to continue participation in
the Plan.

(c) PAYROLL DEDUCTION RATE. The Participant shall designate on the
enrollment form the percentage of Compensation which he or she elects to have
withheld for the purchase of Stock, which may be 2%, 4%, 6%, 8% or 10% of the
Participant's Compensation. A Participant may reduce (but not increase) the
rate of payroll withholding during an Offering Period by filing an amended
enrollment form with the Committee at any time prior to the last day of any
Interim Offering Period (for which such change is to be effective), but not
more than three (3) changes may be made in any Offering Period (or such other
number of changes as may be approved by the Board or the Committee). A
Participant may increase or decrease the rate of payroll deduction for any
subsequent Offering Period by filing with the Company a new enrollment form
for payroll deductions not less than ten (10) days prior to the Offering Date
for such subsequent Offering Period.

By enrolling in the Plan, a Participant shall be deemed to have elected
to purchase the maximum number of whole shares of Stock which can be
purchased with the amount of the Participant's Compensation which is withheld
during the Offering Period; provided, however, that no Participant may
purchase shares of Stock in excess of the amount permitted under Section 9 -
"Limitation on Stock Ownership."

(d) OFFERING PERIOD. Any Options granted pursuant to the Plan shall be
subject to the Company obtaining all necessary governmental approvals and/or
qualifications of the sale and/or issuance of Options and/or Stock.

(e) PURCHASE PRICE. The Purchase Price for each share of Stock to be
purchased under the Plan shall be eighty-five percent (85%) of the Fair
Market Value of such share on either (i) the Offering Date (or the date of
entry for new re-enrolling employees) or (ii) the last day of each Interim
Offering Period, whichever is less.

(f) CONTRIBUTIONS. The Purchase Price of the Stock shall be accumulated
by payroll deductions throughout the Offering Period, which shall be applied
automatically to purchase Stock at the end of each Interim Offering Period.
In the absence of a contrary determination prior to the commencement of an
Offering Period, each Interim Offering Period shall have a three-month
duration. At the end of each Interim Offering Period, accrued payroll
deductions will be automatically applied to the purchase of Stock at the
Purchase Price. Payroll deductions shall commence on the first payday
following the Offering Date (or, in the case of a new or re-enrolling
employee, on the first payday

<PAGE>

following the commencement of the applicable Interim Offering Period) and
shall continue unless altered or terminated as provided in the Plan.

(g) EFFECT OF LEAVE OF ABSENCE. During a leave of absence approved by
the Company, a Participant may, for such period as the Committee shall deem
reasonable, continue contributions to the Plan by making cash payments to the
Company on his normal paydays in an amount equal to the difference between
the amount of his regular payroll deductions taken while such employee was
participating under the Plan and the amount of his payroll deductions taken
while on such leave of absence. Failure to pay any installment within ten
(10) days after the payday on which it is due shall be treated as a
withdrawal from the Plan.

(h) PURCHASE OF STOCK. The Company will maintain a Plan Account on its
books in the name of each Participant. On each payday the amount deducted
from the Participant's Compensation will be credited to the Participant's
Plan Account. No interest shall accrue on any such payroll deductions. As of
the last day of each Interim Offering Period the amount then in the
Participant's Plan Account will be divided by the Purchase Price and the
amount in the Participant's Plan Account shall be used to purchase the number
of whole shares of Stock which result. Share certificates representing the
number of shares of Stock so purchased shall be issued and delivered to the
participant as soon as reasonably practicable after the close of each Interim
Offering Period. Any amount remaining in a Participant's Plan Account at the
end of an Interim Offering Period after deducting the amount of the Purchase
Price for the number of whole shares issued to the Participant shall become
the beginning balance in the Participant's Plan Account for the next
following Interim Offering Period. Any balance remaining in the Participant's
Plan Account at the end of an Offering Period after deducting the amount of
the Purchase Price for the number of whole shares issued to the Participant
shall become the beginning balance in the Participant's Plan account for the
next following Offering Period unless the Participant elects to withdraw from
participation. If the Participant withdraws from participation, the balance
in the Participant's Plan Account will be refunded to the Participant,
without interest.

(i) WITHDRAWAL. A Participant may elect to withdraw from participation
in the Plan at any time up to the last day of an Interim Offering Period by
filing the prescribed form with the payroll office. At the time of withdrawal
the amount credited to the Participant's Plan Account will be refunded in
cash, without interest. Upon withdrawal from the Plan accumulated payroll
deductions, if any, shall be returned to the withdrawn Participant and the
withdrawn Participant's interest in the Plan shall terminate. In the event a
Participant voluntarily elects to withdraw from the Plan, such participant
may not resume participation in the Plan until after the expiration of one
complete Interim Offering Period; re-enrollment shall be made in the same
manner as set forth above for initial participation in the Plan.

<PAGE>

5. PRO RATA ALLOCATION

In the event that the aggregate number of shares which all Participants
elect to purchase during an Interim Offering Period shall exceed the number
of shares remaining available for issuance under the Plan, the number of
shares to which each Participant shall become entitled shall be determined by
multiplying the number of shares available for issuance by a fraction, the
numerator of which is the sum of the number of shares the Participant has
elected to purchase and the denominator of which is the sum of the number of
shares which all Participants have elected to purchase.

6. EFFECT OF TERMINATION OF EMPLOYMENT

Termination of a Participant's employment for any reason, including
retirement or death, or the failure of a Participant to remain an Eligible
Employee shall be treated as a withdrawal under the Plan. In the event of the
Participant's death, the refund of the Participant's Plan Account shall be
paid, without interest, to the representative of the Participant's estate. A
transfer by a Participant from the Company to a Subsidiary, from one
Subsidiary to another, or from a Subsidiary to the Company shall not be
treated as a termination of employment.

7. RIGHTS NOT TRANSFERABLE

The rights or interests of any Participant in the Plan, in any Option
granted under the Plan, or in any Stock or moneys to which he or she may be
entitled under the Plan, shall not be transferable by voluntary or
involuntary assignment or by operation of law, or by any other manner
otherwise than by will or the applicable laws of descent and distribution. If
the Participant shall in any manner attempt to transfer, assign or otherwise
encumber his or her rights or interests under the Plan, other than by will,
such act shall be treated as a withdrawal from the Plan.

8. RECAPITALIZATION, ETC.

Subject to any required action by the shareholders of the Company, the
number of shares of Stock covered by each Option under the Plan which has not
yet been exercised and the number of shares of Stock which have been
authorized for issuance under the Plan but have not yet been placed under an
Option (collectively the "Reserves"), as well as the price per share of Stock
covered by each Option under the Plan which has not yet been exercised, shall
be proportionately adjusted for any increase or decrease in the number of
issued shares of Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of Stock, or any other
increase or decrease in the number of shares of Stock effected without
receipt of consideration by the Company; provided, however, that conversion
of any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made by
the Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issue by the Company of
the

<PAGE>

shares of Stock of any class shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Stock
subject to an Option.

In the event of the proposed dissolution or liquidation of the Company,
the Offering Period will terminate immediately prior to the consummation of
such proposed action, unless otherwise provided by the Board. In the event of
a proposed sale of all or substantially all of the assets of the Company, or
the merger of the Company with or into another corporation, each Option under
the Plan shall be assumed or an equivalent option shall be substituted by
such successor corporation, unless the Board determines, in the exercise of
its sole discretion and in lieu of such assumption or substitution, that the
Participant shall have the right to exercise the Option as to all of the
opined Stock, including shares as to which the Option would not otherwise be
exercisable. If the Board makes an Option fully exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Board shall notify the Participant that the Option shall be fully exercisable
for a period of thirty (30) days from the date of such notice, and the Option
will terminate upon the expiration of such period.

The Board may also, if it so determines in the exercise of its sole
discretion, make provision for adjusting the Reserves, as well as the price
per share of Stock covered by each outstanding Option, in the event that the
Company effects one or more reorganizations, recapitalizations, rights
offerings or other increases or reductions of shares of its outstanding
Stock, and in the event of the Company being consolidated with or merged into
any other corporation.

9. LIMITATION ON STOCK OWNERSHIP

Notwithstanding any provision herein to the contrary, no Participant
shall be granted a right to purchase Stock pursuant to Section 4 -
"Eligibility and Participation" - if: (i) such Participant, immediately after
electing to purchase such Stock, would own Stock possessing five percent (5%)
or more of the total combined voting power or value of all classes of stock
of the Company or any parent or Subsidiary of the Company, or (ii) if under
the terms of the Plan the rights of the employee to purchase Stock under this
and all other qualified employee stock purchase plans of the Company or its
Subsidiaries would accrue at a rate that exceeds $20,000 of fair market value
of such Stock (determined on the Offering Date) for each calendar year for
which such right is outstanding at any time. For purposes of this Section 9,
ownership of Stock shall be determined by the attribution rules of Section
425(d) of the Code and Participants shall be considered to own any Stock
which they have a right or option to purchase under this or any other stock
purchase plan.

10. LIMITATIONS ON OFFICERS AND DIRECTORS

Participants subject to the provisions of Section 16 of the Exchange
Act (Company officers and directors) must comply with the following
requirements:

<PAGE>

(a) Shares of Stock purchased pursuant to the Plan must be held and
may not be transferred for a period of six (6) months from the date of
purchase; provided, however, that distributions in connection with death,
retirement, disability, termination of employment, or a qualified domestic
relations order as defined by the Code, or the rules thereunder, are not
subject to the requirement set forth in this subparagraph 10(a).

(b) Officer and director Participants who cease participation in the
Plan may not participate again for a period of at least six (6) months.

(c) Shares of Stock purchased pursuant to the Plan must be held for
at least six (6) months from the date the Purchase Price is fixed.

11. RIGHTS AS AN EMPLOYEE

Nothing in the Plan shall be construed to give any Participant the
right to remain in the employ of the Company or a Subsidiary or to affect the
right of the Company and its Subsidiaries or the Participant to terminate
such employment at any time with or without cause.

12. RIGHTS AS A SHAREHOLDER

A Participant shall have no rights as a shareholder with respect to
any. shares of Stock he or she may have a right to purchase under the Plan
until the date of issuance of a stock certificate to such participant for
shares issued pursuant to the Plan.

13. COVENANTS OF THE COMPANY

(a) During the terms of the rights granted under the Plan, the
Company shall keep available at all times the number of shares of stock
required to satisfy such rights.

(b) The Company shall seek to obtain from each regulatory commission
or agency having jurisdiction over the Plan such authority as maybe required
to issue and sell shares of Stock upon exercise of the rights granted under
the Plan. If the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems
necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell
stock upon exercise of such rights unless and until such authority is
obtained.

14. USE OF PROCEEDS FROM STOCK

Proceeds from the sale of stock pursuant to rights granted under the
Plan shall constitute general funds of the Company.

15. AMENDMENT OR TERMINATION OF THE PLAN

The Board of Directors shall have the right to amend, modify or
terminate the Plan at any time without notice, provided that no Participant's
existing rights are

<PAGE>

adversely affected thereby, and provided further that no amendment of the
Plan shall be effective until such amendment is approved by a vote of the
holders of at least a majority of the outstanding shares of Common Stock of
the Company within twelve months before or after the date upon which such
action is taken by the Board of Directors, if such amendment would:

(a) Increase the aggregate number of shares of Stock to be issued
under the Plan (except as provided in Section 8 "Recapitalization, Etc."-
hereof);

(b) Materially modify the requirements for eligibility to
participate in the Plan;

(d) Extend the term of the Plan;

(e) Alter the Purchase Price formula so as to reduce the price for
shares of Stock to be purchased under the Plan;

(f) Otherwise materially increase the benefits accruing to
Participants under the Plan; or

(g) Cause the Plan to fail to meet the requirements of an "employee
stock purchase plan" under Section 423 of the Code.

16. TERMINATION OR SUSPENSION OF THE PLAN

(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate ten (10) years from the date the
Plan is adopted by the Board or approved by the stockholders of the Company,
whichever is earlier. No rights may be granted under the Plan while the Plan
is suspended or after it is terminated.

(b) Rights and obligations under any rights granted while the Plan
is in effect shall not be altered or impaired by suspension or termination of
the Plan, except with the consent of the person to whom such rights were
granted.

17. EFFECTIVE DATE OF PLAN

The Plan shall become effective upon adoption by the Board or the
shareholders, whichever is earlier. Rights granted under the Plan shall be
subject to revocation unless and until the Plan has been approved by the
shareholders of the Company.

<PAGE>

EX-21.1
Subsidiaries of the registrant
<TABLE>
<CAPTION>
ENTITY LEGAL STATUS STATUS
- ---------------------------------- ---------------------------------------- -------
<S> <C> <C>
Coastal Federal Mortgage Company(1)a New Jersey corporation active
iQualify a California corporation active
Mical Mortgage, Inc. a California corporation active
Monument Mortgage, Inc.(2) a California corporation active
Property Transaction Network a California corporation active
</TABLE>

(1) Also did business as CFM Mortgage Company and Freeway Funding.

(2) Also does business as Finet Direct, Finet Mortgage, Interloan and Monument
Acceptance Corporation.

<PAGE>
EXHIBIT 23.1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference of our firm under the caption "Experts" and to
the use of our report dated June 11, 1999 (except Note 19, as to which the date
is June 28, 1999), in the Registration Statement Form S-1 dated July 2, 1999 and
the related prospectus of FiNet.com, Inc. for the registration of 78,106,774
shares of its common stock.

/S/ Ernst & Young LLP

San Francisco, California
June 30, 1999

<PAGE>
EXHIBIT 23.2

CONSENT OF REUBEN E. PRICE & CO., INDEPENDENT AUDITORS

We hereby consent to the use in this Registration Statement on Form S-1 of
our report dated August 12, 1998 relating to the consolidated financials
statements of FiNet.com, Inc. and subsidiaries, and to the reference to our Firm
under the "Experts" caption in the Prospectus.

/s/ RUEBEN E. PRICE & CO.

San Francisco, California
July 1, 1999

<PAGE>
EXHIBIT 23.3

CONSENT OF RICHARD A. EISNER & COMPANY, LLP INDEPENDENT AUDITORS

We consent to the incorporation in the Form S-1 Registration Statement,
relating to the registration of FiNet.com's previously issued shares of common
stock, of our report dated July 9, 1998 (July 31, 1998 with respect to Note C)
with respect to our audit of the financial statements (not included in the
registration statement) of Coastal Federal Mortgage Company, a wholly owned
subsidiary of FiNet.com, Inc., as of and for each of the years in the two year
period ended April 30, 1998.

/s/ RICHARD A. EISNER & COMPANY LLP

Florham Park, New Jersey
July 2, 1999

<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Registrant's audited financial reports and is qualified in its entirety
by reference to such financial statements.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-END> APR-30-1999
<CASH> 4,402,000
<SECURITIES> 0
<RECEIVABLES> 2,245,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 42,578,000
<PP&E> 4,830,000
<DEPRECIATION> 3,255,000
<TOTAL-ASSETS> 45,255,000
<CURRENT-LIABILITIES> 38,567,000
<BONDS> 0
0
0
<COMMON> 786,000
<OTHER-SE> 5,902,000
<TOTAL-LIABILITY-AND-EQUITY> 45,255,000
<SALES> 0
<TOTAL-REVENUES> 22,413,000
<CGS> 35,064,000
<TOTAL-COSTS> 20,906,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,563,000
<INCOME-PRETAX> (36,563,000)
<INCOME-TAX> 5,000
<INCOME-CONTINUING> (36,538,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (36,538,000)
<EPS-BASIC> (.79)
<EPS-DILUTED> (.79)

</TABLE>