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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                   FORM 10-K

                 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 OF
                    THE SECURITIES AND EXCHANGE ACT OF 1934

                  FOR THE EIGHT MONTHS ENDED DECEMBER 31, 1999
                        COMMISSION FILE NUMBER: 0-18108

                                FINET.COM, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                            <C>
                   DELAWARE                                      94-3115180
       (State or other jurisdiction of                         (IRS Employer
        incorporation or organization)                      Identification No.)
</TABLE>

                     2527 CAMINO RAMON, SAN RAMON, CA 94583
                    (Address of principal executive offices)

                                 (925) 242 6500
                        (Registrant's telephone number)

      Securities registered under Section 12(b) of the Exchange Act: NONE

         Securities registered under Section 12(g) of the Exchange Act:

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<CAPTION>
             TITLE OF EACH CLASS                 NAME OF EACH EXCHANGE ON WHICH REGISTERED
             -------------------                 -----------------------------------------
<S>                                            <C>
         $.01 PAR VALUE COMMON STOCK                               Nasdaq
</TABLE>

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

    Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-K is not contained herein, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /X/

    The number of shares outstanding of the issuer's common stock, as of
March 15, 2000 was 93,937,495.

    At that date, the aggregate market value of voting common stock held by
non-affiliates of the registrant based on the closing price for the common stock
on Nasdaq was approximately $173,201,953.

    Documents incorporated by reference: Items 10 (as to directors), 11, 12, and
13 of Part III incorporate by reference information from the registrant's proxy
statement to be filed with the Securities and Exchange Commission in connection
with the solicitation of proxies for the registrant's 2000 annual meeting of
stockholders, which is expected to be held on May 24, 2000.

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                               TABLE OF CONTENTS

<TABLE>
<S>                     <C>                                                           <C>
                                            PART I

Item 1                  Description of Business.....................................         3

Item 2                  Description of Property.....................................        22

Item 3                  Legal Proceedings...........................................        23

Item 4                  Submission of Matters to a Vote of Security Holders.........        23

                                           PART II

Item 5                  Market for Registrant's Common Equity and Related
                          Stockholder Matters.......................................        24

Item 6                  Selected Financial Data.....................................        25

Item 7                  Management's Discussion and Analysis of Financial Condition
                          and Results of Operations.................................        26

Item 7A                 Quantitative and Qualitative Disclosure about Market Risk...        45

Item 8                  Financial Statements and Supplementary Data.................        45

Item 9                  Changes in or Disagreements with Accountants on Accounting
                          and Financial Disclosure..................................        79

                                           PART III

Item 10                 Directors and Executive Officers of the Registrant..........        80

Item 11                 Executive Compensation......................................        80

Item 12                 Security Ownership of Certain Beneficial Owners and
                          Management................................................        80

Item 13                 Certain Relationships and Related Transactions..............        80

Item 14                 Exhibits, Financial Statement Schedules and Reports on Form
                          8-K.......................................................        81
</TABLE>

                                       2
<PAGE>
                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

FINET.COM, INC.

    This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Readers are cautioned that actual results could differ
materially from those indicated in such statements as a result of certain
factors, including those set forth under "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Factors That May Affect Future
Results" and elsewhere in, or incorporated by reference into, this report.

CORPORATE HISTORY AND NEW MANAGEMENT

    CORPORATE HISTORY

    We were incorporated in 1989 to pursue a line of business unrelated to our
current business. We acquired Finet 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 Federal Mortgage Company, a sub-prime mortgage banker with
lending offices in New Jersey, Pennsylvania and Florida, and, in May 1998, we
acquired Mical Mortgage, 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. We may incur
additional losses from the discontinued businesses of Coastal Federal Mortgage
and Mical Mortgage. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Factors That May Affect Future
Performance".

    We currently operate our mortgage businesses through our wholly-owned
subsidiary, Monument Mortgage. On August 20, 1999, FiNet acquired certain
operations and assets of Lowestrate.com, Inc. ("Lowestrate"). The assets
included the trademark "Lowestrate.com" and the related website and certain
equipment and software. The acquired assets and operations will be used in our
consumer-direct segment.

NEW MANAGEMENT

    Since December 1999, we have significantly reshaped our management team. On
February 1, 2000, we appointed Rick Cossano as our President and Chief Executive
Officer. In addition, other executive and management positions have been
replaced with people experienced in business-to-business mortgage sales and
secondary marketing. Our new management team is focused on improving profits by
significantly growing revenues and streamlining costs. We intend to grow
revenues by expanding our sales force nationwide and by offering products with
higher margins than our current products.

BUSINESS

FINET.COM

    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
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 to brokers, to help their customers make
better informed borrowing decisions. We also 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

                                       3
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and more understandable, while maintaining quality service by controlling the
consumer's entire mortgage lending experience.

    We generate revenues by providing services to two primary customer groups:
mortgage broker businesses and consumers.

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

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

    - introducing new Internet-oriented services, and

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

    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 refer to these services to mortgage brokers as
our business-to-business channel.

    We provide our customers with a fast and easy to use on-line method to get
their loans approved through our award-winning iQualify technology. Mortgage
brokers and consumers can use our FiNet.com website to search, analyze and
select from a wide variety of mortgage loan products and rates offered by 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 refer to these services to consumers as our consumer direct channel.

    During the eight months ended December 31, 1999, we originated and/or funded
$519.0 million in mortgage loans directly or through our mortgage broker
customers. We primarily earn revenues from the sale of loans and related
servicing rights in the secondary mortgage market and from interest on mortgage
loans held pending sale.

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

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, loan
origination volume in the U.S. reached $1.3 trillion in 1999, slightly down from
$1.5 trillion in 1998. The residential mortgage market is fragmented, with the
largest mortgage lender, Norwest, accounting for only 7.7% of funded loans in
1999.

    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
consumer-direct 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

                                       4
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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.

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

                                       5
<PAGE>
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.

    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.

    - 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 numerous leading
      on-line underwriting software solutions.

    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 technology. By clicking on our FiNet.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. 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

                                       6
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      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 LOANS. Through FiNet.com we provide consumers with
      a wide choice of mortgage products and rates offered by Monument Mortgage.
      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.

PRODUCTS AND SERVICES

    We intend to implement our business strategy by offering fully-automated
on-line mortgage services to consumers through FiNet.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.

FINET.COM

    Through our FiNet.com website, consumers can fill out an on-line loan
application and request an automated underwriting analysis of their application.
The FiNet.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 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 have developed interfaces from FiNet.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 $252,700 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.

    After receiving automated underwriting approval, the consumer will be able
to select from and compare multiple loan options offered by Monument Mortgage.

    FiNet.com also offers consumers the option to exit the fully automated
process and continue to complete the loan process with the personal assistance
of our 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.

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

                                       7
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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.

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 technology, 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 is also
approved by the investor who will ultimately purchase it from us. iQualify 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;

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

    - allow a mortgage broker or consumer to directly "lock-in" a rate and
      points on loans in process.

SERVER HOSTING AND BACK-UP

    Our website's hardware systems are housed at our facilities in San Ramon,
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.

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.

                                       8
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MARKETING

    We intend to selectively pursue business partnerships in order to leverage
our current market position, increase our on-line visibility, and accelerate
distribution of our services. We intend to operate primarily in the
business-to-business channel by providing increased services to mortgage broker
businesses. We incurred large general advertising expenditures to promote our
brand name during the eight months ended December 31, 1999. Due to our shift in
focus to the business-to-business channel, we expect to significantly decrease
advertising costs for brand name promotion, which are associated with the
consumer direct channel. However, we may incur additional other costs of
expanding our sales force consistent with supporting a business-to-business
infrastructure.

BUSINESS-TO-BUSINESS CHANNEL

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

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

    - introducing new Internet-oriented services; and

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

    We believe that rapid expansion of our national sales force and the
resulting increase in revenues attributed them is critical to our success.

CONSUMER DIRECT CHANNEL

    We recently changed our consumer direct channel strategy by significantly
narrowing our target group of consumers. During the eight months ended
December 31, 1999, our primary marketing strategy included affiliations and
business alliances with general interest websites as well as websites catering
to homebuyers and real estate agents. We entered into a number of marketing
arrangements with websites such as XOOM, AskJeeeves, Homeseekers.com,
CoxInteractive Media and others. We incurred $6.2 million of marketing expense
in pursuit of this strategy. However, these marketing programs did not result in
the volume increases we expected and the resulting customer acquisition costs
per loan were prohibitive. Therefore, we discontinued the majority of these
programs and affiliations late in the period ended December 31, 1999, and will
be winding them down in the first quarter of calendar 2000.

    Our new strategy includes selectively marketing our services through
affinity arrangements and private label arrangements that target specific
consumer groups. In private label arrangements, we will create websites to
prominently display our partners' names and logos with a unique appearance and
operate the websites.

MORTGAGE OPERATIONS

    While we currently make loans primarily in California, we are licensed to
originate and fund mortgages in 49 states and the District of Columbia. We
expect that the proportion of loans we make outside of California will increase
as a result of the expansion of our nationwide sales force.

LOAN PRODUCT TYPES

    FiNet.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

                                       9
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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 $252,700 for
single-family homes. We sell all the jumbo mortgage loans we originate to
institutional investors such as Bank of America 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, 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.

SUB-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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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>
                                                      EIGHT MONTHS
                                                         ENDED
                                                      DECEMBER 31                 FISCAL YEAR ENDED APRIL 30
                                                 ----------------------      ------------------------------------
                                                   1999          1998          1999          1998          1997
                                                 --------      --------      --------      --------      --------
<S>                                              <C>           <C>           <C>           <C>           <C>
CONFORMING MORTGAGE LOANS
Number of loans................................    2,546         3,437         4,660         2,530         1,903
Volume (in millions of dollars)................   $371.9        $514.3        $705.6        $359.6        $247.8
% of category volume we funded.................       85%           85%           84%          100%          100%
% of total loan volume.........................       79%           81%           75%           70%           72%
JUMBO MORTGAGE LOANS
Number of loans................................      358           318           415           164           183
Volume (in millions of dollars)................   $112.3        $101.5        $148.7        $ 52.7        $ 55.9
% of category volume we funded.................       81%           54%           51%          100%          100%
% of total loan volume.........................       11%            8%           16%           10%           16%
ALTERNATIVE A MORTGAGE LOANS
Number of loans................................      128           247           279           340           203
Volume (in millions of dollars)................   $ 26.4        $ 49.7        $ 55.0        $ 69.2        $ 33.2
% of category volume we funded.................      100%          100%          100%          100%          100%
% of total loan volume.........................        4%            6%            6%           13%           10%
HOME EQUITY MORTGAGE LOANS
Number of loans................................      186           230           311           412           297
Volume (in millions of dollars)................   $  8.2        $  8.3        $ 11.8        $ 15.3        $ 10.5
% of category volume we funded.................      100%           97%          100%          100%          100%
% of total loan volume.........................        6%            5%            1%            3%            3%
SUB-PRIME MORTGAGE LOANS
Number of loans................................       --            --           104           128            32
Volume (in millions of dollars)................       --            --        $ 17.2        $ 19.3        $  4.2
% of category volume we funded.................       --            --           100%          100%          100%
% of total loan volume.........................       --            --             2%            4%            1%
FHA/VA
Number of loans................................        2            --             4             2             6
Volume (in millions of dollars)................   $  0.2            --        $  0.5        $  0.3        $  0.6
% of category volume we funded.................      100%           --           100%          100%          100%
% of total loan volume.........................        *            --             *             *             *
</TABLE>

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

*   Less than one percent

                                       11
<PAGE>
    The following table summarizes originations for the categories of mortgage
loans by type in the periods indicated for our discontinued businesses.

<TABLE>
<CAPTION>
                                                          EIGHT MONTHS
                                                              ENDED
                                                           DECEMBER 31                 FISCAL YEAR ENDED APRIL 30
                                                     -----------------------      ------------------------------------
                                                       1999           1998          1999          1998          1997
                                                     ---------      --------      --------      --------      --------
<S>                                                  <C>            <C>           <C>           <C>           <C>
CONFORMING MORTGAGE LOANS
Number of loans....................................        --           560           551            --           --
Volume (in millions of dollars)....................        --        $ 64.6        $ 63.5            --           --
100% funded through mortgage bank..................        --           100%          100%           --           --
% of total loan volume.............................        --            15%         16.0%           --           --
SUB-PRIME MORTGAGE LOANS
Number of loans....................................        --           542           801         1,335          500
Volume (in millions of dollars)....................        --        $ 41.1        $ 64.7        $ 93.4        $35.4
100% funded through mortgage bank..................        --           100%          100%          100%         100%
% of total loan volume.............................        --            14%           17%          100%         100%
FHA/VA
Number of loans....................................        --         2,702         2,702            --           --
Volume (in millions of dollars)....................        --        $260.1        $260.1            --           --
100% funded through mortgage bank..................        --           100%          100%           --           --
% of total loan volume.............................        --            71%           67%           --           --
</TABLE>

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

<TABLE>
<CAPTION>
                                                      EIGHT MONTHS
                                                         ENDED
                                                      DECEMBER 31                 FISCAL YEAR ENDED APRIL 30
                                                 ----------------------      ------------------------------------
                                                   1999          1998          1999          1998          1997
                                                 --------      --------      --------      --------      --------
<S>                                              <C>           <C>           <C>           <C>           <C>
PURCHASE
Number of loans................................    1,617         1,036         1,405         1,080         1,171
Volume (in millions of dollars)................   $275.2        $171.4        $233.2        $167.7        $180.4
% of category volume we funded.................       89%           88%           90%          100%          100%
% of total loan volume.........................       50%           24%           25%           32%           51%
REFINANCING
Number of loans................................    1,401         2,917         4,018         2,010         1,126
Volume (in millions of dollars)................   $234.9        $492.6        $691.6        $330.4        $160.6
% of category volume we funded.................       80%           79%           76%          100%          100%
% of total loan volume.........................       44%           69%           74%           64%           46%
HOME EQUITY MORTGAGE LOANS
Number of loans................................      202           279           380           486           327
Volume (in millions of dollars)................   $  8.9        $  9.8        $ 14.0        $ 18.3        $ 11.2
% of category volume we funded.................       98%           98%           99%          100%          100%
% of total loan volume.........................        6%            7%            1%            4%            3%
</TABLE>

                                       12
<PAGE>
    The following table summarizes our originations of mortgage loans by purpose
in the periods indicated for our discontinued businesses.

<TABLE>
<CAPTION>
                                                     EIGHT MONTHS ENDED
                                                        DECEMBER 31                 FISCAL YEAR ENDED APRIL 30
                                                   ----------------------      ------------------------------------
                                                     1999          1998          1999          1998          1997
                                                   --------      --------      --------      --------      --------
<S>                                                <C>           <C>           <C>           <C>           <C>
PURCHASE
Number of loans..................................       --         1,564         1,725          463           182
Volume (in millions of dollars)..................       --        $156.7        $165.0        $27.1         $10.1
100% funded through mortgage bank................                    100%          100%         100%          100%
% of total loan volume...........................       --            88%           42%          29%           29%
REFINANCING
Number of Loans..................................       --         2,177         2,329          872           318
100% funded through mortgage bank................                    100%          100%         100%          100%
Volume (in millions of dollars)..................       --        $207.4        $223.3        $66.3         $25.3
% of total loan volume...........................       --            12%           58%          71%           71%
OTHER
Number of Loans..................................                     63            --           --            --
Volume (in millions of dollars)..................                 $  1.7            --           --            --
100% funded through mortgage bank................                    100%           --           --            --
% of total loan volume...........................                      2%           --           --            --
</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>
                                                   EIGHT MONTHS ENDED
                                                      DECEMBER 31                 FISCAL YEAR ENDED APRIL 30
                                                 ----------------------      ------------------------------------
                                                   1999          1998          1999          1998          1997
                                                 --------      --------      --------      --------      --------
<S>                                              <C>           <C>           <C>           <C>           <C>
CONSUMER CHANNEL
Volume (in millions of dollars)................   $102.3        $144.1        $265.3        $ 24.7        $ 13.5
% of total loan volume.........................       20%           21%           28%            5%            4%
BUSINESS CHANNEL
Volume (in millions of dollars)................   $416.7        $529.7        $673.5        $491.7        $338.7
% of total loan volume.........................       80%           79%           72%           95%           96%
</TABLE>

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

<TABLE>
<CAPTION>
                                                     EIGHT MONTHS ENDED
                                                        DECEMBER 31                 FISCAL YEAR ENDED APRIL 30
                                                   ----------------------      ------------------------------------
                                                     1999          1998          1999          1998          1997
                                                   --------      --------      --------      --------      --------
<S>                                                <C>           <C>           <C>           <C>           <C>
CONSUMER CHANNEL
Volume (in millions of dollars)..................       --        $ 47.9        $ 49.8        $ 9.1            --
% of total loan volume...........................       --            13%           13%          10%           --

BUSINESS CHANNEL
Volume (in millions of dollars)..................       --        $317.9        $338.5        $84.3         $35.4
% of total loan volume...........................       --            87%           87%          90%          100%
</TABLE>

                                       13
<PAGE>
GEOGRAPHIC CONCENTRATION

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

<TABLE>
<CAPTION>
                                                   EIGHT MONTHS ENDED
                                                      DECEMBER 31                 FISCAL YEAR ENDED APRIL 30
                                                 ----------------------      ------------------------------------
                                                   1999          1998          1999          1998          1997
                                                 --------      --------      --------      --------      --------
<S>                                              <C>           <C>           <C>           <C>           <C>
CALIFORNIA
Number of loans................................    2,681         3,476         4,856         2,826         1,846
Volume (in millions of dollars)................   $448.8        $578.8        $820.7        $428.1        $264.2
% of total loan volume.........................       83%           86%           87%           83%           75%
WASHINGTON
Number of loans................................       75           191           211            46           147
Volume (in millions of dollars)................   $ 10.9        $ 23.5        $ 26.1        $  5.9        $ 18.3
% of total loan volume.........................        2%            3%            3%            1%            5%
COLORADO
Number of loans................................       85           259           319           231           136
Volume (in millions of dollars)................   $ 10.6        $ 34.6        $ 42.5        $ 28.0        $ 17.5
% of total loan volume.........................        3%            5%            5%            5%            5%
OREGON
Number of loans................................       82           112           139           213           146
Volume (in millions of dollars)................   $ 10.9        $ 14.8        $ 18.1        $ 23.3        $ 14.2
% of total loan volume.........................        3%            2%            2%            5%            4%
NEVADA
Number of loans................................       15             9            22            83           119
Volume (in millions of dollars)................   $  2.3        $  2.3        $  4.1        $ 10.1        $ 14.0
% of total loan volume.........................        *%            *%            *%            2%            4%
ALL OTHER STATES
Number of loans................................      282           185           256           177           230
Volume (in millions of dollars)................   $ 35.5        $ 19.8        $ 27.3        $ 21.0        $ 24.0
% of total loan volume.........................        9%            4%            3%            4%            7%
</TABLE>

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

*   Less than one percent

                                       14
<PAGE>
    The following table summarizes our originations of mortgage loans by state
in the periods indicated for our discontinued businesses.

<TABLE>
<CAPTION>
                                                     EIGHT MONTHS ENDED
                                                        DECEMBER 31                 FISCAL YEAR ENDED APRIL 30
                                                   ----------------------      ------------------------------------
                                                     1999          1998          1999          1998          1997
                                                   --------      --------      --------      --------      --------
<S>                                                <C>           <C>           <C>           <C>           <C>
CALIFORNIA
Number of loans..................................       --         1,253          1261           --            --
Volume (in millions of dollars)..................       --        $140.7        $142.2           --            --
% of total loan volume...........................       --            33%           36%          --            --
GEORGIA
Number of loans..................................       --           471           474           --            --
Volume (in millions of dollars)..................       --        $ 45.1        $ 45.6           --            --
% of total loan volume...........................       --            12%           12%          --            --
FLORIDA
Number of loans..................................       --           351           388          210            80
Volume (in millions of dollars)..................       --        $ 30.2        $ 33.8        $14.5         $ 4.7
% of total loan volume...........................       --             9%            9%          16%           13%
NEVADA
Number of loans..................................       --           298           299           --            --
Volume (in millions of dollars)..................       --        $ 38.7        $ 39.0           --            --
% of total loan volume...........................       --             8%           10%          --            --
PENNSYLVANIA
Number of loans..................................       --           175           228          360           114
Volume (in millions of dollars)..................       --        $ 10.8        $ 14.5        $20.5         $ 6.3
% of total loan volume...........................       --             5%          4.0%        22.0%         18.0%
NEW JERSEY
Number of loans..................................       --           113           145          275           123
Volume (in millions of dollars)..................       --        $ 10.2        $ 13.0        $23.3         $10.0
% of total loan volume...........................       --             3%            3%          25%           28%
ALL OTHER STATES
Number of loans..................................       --         1,143         1,259          490           183
Volume (in millions of dollars)..................       --        $ 90.1        $100.2        $35.1         $14.4
% of total loan volume...........................       --            30%           26%          37%           41%
</TABLE>

UNDERWRITING

    If Monument Mortgage chooses to have a loan funded and closed by another
lender, that lender is responsible for underwriting the loan and may choose to
re-underwrite the loan. If Monument Mortgage funds a loan direclty, we use 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.

    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

                                       15
<PAGE>
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.

                                       16
<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 $75 million revolving credit facility as well as a
$15 million purchase repurchase credit facility to fund loan originations and
finance originated loans until they are sold. During the eight month period
ending December 31, 1999, 42% of our loans funded by Monument Mortgage were sold
to Fannie Mae. We are required to comply with various operating and financial
covenants including covenants relating to:

    - net worth;

    - maximum debt limits;

    - debt to equity ratio;

    - rate of liability growth

    - changes in our executive management; and

    - continued quotation on Nasdaq.

    At December 31, 1999, our liability growth rate exceeded the permitted
amount in our primary warehouse lending agreement. Subsequent to December 31,
1999, the lender waived the default. This facility expires on May 31, 2000. At
December 31, 1999, the outstanding balance under our facilities was
$80.5 million. We are in the process of obtaining additional funding facilities.

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.

                                       17
<PAGE>
LOAN SALES

    We customarily sell all loans we fund to a number of investors, including:
the government-sponsored mortgage entities, institutional investors, and
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 Mortgage loans are currently sold in whole-loan
sales on a forward commitment basis. We sell our non-prime loans, home equity
lines and closed-end second mortgage loans through whole-loan sales.

    The sale of mortgage loans may generate a cash and an 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 in fiscal 1999 and 1998 we had 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 sold our
loan servicing portfolio in August 1999, and 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 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

                                       18
<PAGE>
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."

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 48
other states and believe that we will be able to obtain licenses required in the
remaining state, 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.

COMPETITION

    The e-mortgage market is new, rapidly evolving and intensely competitive.
Because the barriers to entry are minimal, we expect competition to intensify in
the future. We believe we compete based on service and price.

    In addition, the residential mortgage loans 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 and Keystroke Financial;

                                       19
<PAGE>
    - 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,
including more aggressive loan pricing policies.

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 our 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 February 29, 2000, we had 126 full-time and 7 part-time employees. 28
employees comprise the consumer direct division and 53 employees comprise the
business-to-business division. Fify-two employees comprise marketing,
technology, administration and support areas. None of our employees is
represented by a union. Management believes that its relations with employees
are good.

                                       20
<PAGE>
EXECUTIVE OFFICERS AND DIRECTORS

    The following table sets forth certain information regarding FiNet.com's
executive officers and directors as of March 1, 2000.

<TABLE>
<CAPTION>
NAME                                             AGE                          POSITION
----                                           --------   ------------------------------------------------
<S>                                            <C>        <C>
Rick Cossano.................................     43      President, Chief Executive Officer, Member of
                                                          the Board of Directors
L. Daniel Rawitch............................     41      Vice Chairman of the Board
W. Robert Snow...............................     41      Executive Vice President--Business to Business
Gary A. Palmer...............................     46      Executive Vice President--Chief Financial
                                                          Officer
S. Lewis Meyer(1)(2).........................     54      Director
Stephen J. Sogin, Ph.D.(2)...................     55      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

    RICK COSSANO has served as President, Chief Executive Officer and a member
of the Board of Directors since February 2000. Prior to joining FiNet.com,
Mr. Cossano was the President and Chief Operating Officer of LandSafe
Title, Inc. from 1996 to 2000 and the Executive Vice President of the Wholesale
Lending Division and Consumer Markets Division for Countrywide Home Loans from
1993 to 1996.

    L. 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.

    W. ROBERT SNOW has served as FiNet.com's Executive Vice
President-Business-to-Business since February 2000. Prior to joining FiNet.com,
he was Regional Vice President for Countrywide Home Loans from March 1996 to
December 1999. From 1992 to 1996, Mr. Snow served as Wholesale Operations
Manager for First Franklin Financial Corporation.

    GARY A. 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.

    S. 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

                                       21
<PAGE>
Physics from the University of the Pacific and his M.S. and Ph.D. degrees in
Physics from Purdue University.

    STEPHEN J. 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 E. 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 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 P. 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.

FINANCIAL INFORMATION ABOUT BUSINESS SEGMENTS

    See the Notes to our Consolidated Financial Statements for financial
information of the two business segments or channels we operate in: the
business-to-business channel and the consumer direct channel.

BUSINESS RISKS

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

ITEM 2.  DESCRIPTION OF PROPERTY

    We relocated our headquarters and operations to in San Ramon, California,
from Walnut Creek, California, where our current facility occupies approximately
39,335 square feet of space. In addition to housing the administrative offices,
this facility houses operations of both our business-to-business and our
consumer-direct segments. The lease for this facility expires in April 2004.

    We have an east coast facility located in East Norriton, Pennsylvania which
occupies approximately 3,705 square feet of space. This facility houses
operations for the consumer-direct segment. The leases for this facility expire
in November 2000 and June 2002.

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

ITEM 3.  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

                                       22
<PAGE>
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 then current and now former
directors. The complaint alleges, among other things, that the plaintiff and our
then 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 then 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. FiNet.com and our then current director
have each filed a general denial of all claims. We intend to defend vigorously
against the action and believe that the ultimate resolution will not have a
material adverse effect on our business, results of operations or financial
condition.

    On December 16, 1999, a lawsuit was filed in the Judicial District Court of
Dallas County, Texas, by FC Capital Corp. d/b/a FirstCity Capital Corporation.
The complaint alleges breach of contract by Coastal for failure to repurchase
loans in accordance with the terms and condition of a Purchase Agreement entered
into by First City and Coastal in March 1998. The plaintiff has named Finet as a
defendant alleging that Finet assumed all of Coastal's debts and obligations
when Finet acquired Coastal in April 1998. The plaintiff seeks to recover actual
damages in the amount of $1.7 million and premium rebates in the approximate
amount of $26,000. The action was removed to the United State District Court,
Northern District of Texas, Dallas Division on January 18, 2000, and we have
since filed procedural motions. We intend to defend vigorously against the
action and believe that the ultimate resolution will not have a material adverse
effect on our business, results of operations or financial condition.

    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.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    None.

                                       23
<PAGE>
                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

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 YEAR ENDED APRIL 30, 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 YEAR ENDED APRIL 30, 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

EIGHT MONTHS ENDED DECEMBER 31, 1999
Quarter ended July 31, 1999.................................    9.50       2.78
Quarter ended October 31, 1999..............................    4.13       1.97
Two Months ended December 31, 1999..........................    3.22       1.03
</TABLE>

    As of March 15, 2000, there were approximately 492 holders of record of our
common stock. On March 15, 2000, the last reported sale price of our common
stock on the Nasdaq Market was $1.84.

DIVIDENDS

    We have not paid, and we do not currently intend to pay, cash dividends on
our common stock. The current policy of our Board of Directors is to retain
earnings, if any, to provide funds for operation and expansion of our business.
The payment of cash dividends in the future will be at the discretion of the
Board of Directors and will depend upon, among other things, our earnings,
capital requirements and financial position. In addition, our ability to pay
dividends may be limited under future loan agreements which restrict or prohibit
the payment of dividends.

RECENT SALES OF UNREGISTERED SECURITIES

    During the past three years, we have 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 made representations that they acquired the securities 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.

                                       24
<PAGE>
    In March 1997, we 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, we issued a
warrant to purchase 50,000 shares of common stock to the placement agent for the
transaction.

    In April 1997, we 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, we issued
a warrant to purchase 399,125 shares of common stock to the placement agent for
the transaction.

    In October 1997, we 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, we 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, we issued 250 shares of our 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 November 1998, we 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, we issued 1,000,000 shares of common stock to an existing
stockholder pursuant to an indemnity agreement.

    During the third quarter of our 1999 fiscal year, we 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, we 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, we 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, we issued 7,712,081 shares of common stock in a private
placement to accredited investors for an aggregate purchase price of
$30,000,000.

    In August 1999, we purchased certain assets and operations of
Lowestrate.com, for a total purchase price of 1,400,000 shares of FiNet.com
common shares. 560,000 of these shares were issued to the seller at the closing.
The remaining 840,000 shares were placed in escrow subject to release to
Lowestrate if the contingencies are resolved.

    In October 1999, we issued 600,000 shares of FiNet common stock in
connection with our purchase of the remaining 50% interest of a limited
liability corporation.

ITEM 6.  SELECTED 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 Annual Report on Form 10-K. The following table provides selected
historical consolidated financial information of FiNet.com. We prepared this
information using the consolidated financial statements of

                                       25
<PAGE>
FiNet.com as of the dates indicated and for the eight months ended December 31,
1999, and 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
the eight months ended December 31, 1999, 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.

<TABLE>
<CAPTION>
                                           EIGHT MONTHS
                                              ENDED                    FISCAL YEAR ENDED APRIL 30
                                           DECEMBER 31    ----------------------------------------------------
                                               1999         1999       1998       1997     1996(2)    1995(2)
                                           ------------   --------   --------   --------   --------   --------
                                                          (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                        <C>            <C>        <C>        <C>        <C>        <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................    $  6,070     $ 22,413   $ 15,160   $12,344    $ 6,375    $ 5,237
Cost of revenues.........................       8,423       35,064     14,718     9,316      4,591      3,068
                                             --------     --------   --------   -------    -------    -------
Gross profit.............................      (2,353)     (12,651)       442     3,028      1,784      2,169
Operating expenses.......................      22,975       20,906      9,175     5,775      1,444      1,923
                                             --------     --------   --------   -------    -------    -------
Income (loss) from operations............     (25,328)     (33,557)    (8,733)   (2,747)       340        246
                                             --------     --------   --------   -------    -------    -------
Net income (loss)........................     (25,328)     (36,538)    (9,379)   (2,778)       326        237
In-substance preferred stock dividend....          --          705         --        --         --         --
                                             --------     --------   --------   -------    -------    -------
Net income (loss) for common
  stockholders...........................    $(25,328)    $(37,243)  $ (9,379)  $(2,778)   $   326    $   237

PER SHARE DATA:
Basic and diluted earnings (loss) per
  common share...........................    $  (0.28)    $  (0.79)  $  (0.31)  $ (0.19)   $  0.04    $  2.37
Weighted average number of basic shares
  outstanding(1).........................      89,517       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................    $ 18,626     $  4,202   $  1,993   $ 1,147    $   672    $   392
Mortgage loans held for sale, net........      78,691       33,438     63,034    24,244     10,675      3,196
Total assets.............................     119,808       45,255    101,468    33,070     25,215     15,091
Warehouse and other lines of credit......      80,453       33,038     86,659    26,902     19,732     11,109
Total liabilities........................      89,435       38,567     98,109    30,596     22,629     12,184
</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.

(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.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

    WE HAVE MADE FORWARD-LOOKING STATEMENTS IN THIS ANNUAL REPORT ON FORM 10-K
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

                                       26
<PAGE>
FACTORS, INCLUDING THOSE SET FORTH IN "FACTORS THAT MAY AFFECT FUTURE
PERFORMANCE" AND ELSEWHERE IN THIS ANNUAL REPORT ON FORM 10-K.

    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 these
calendar quarters that are generally lower than that of the second and third
calendar 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.

    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

                                       27
<PAGE>
interest rates provide reduced economic incentives for borrowers to refinance
their existing mortgages. Due to stable and decreasing interest rate
environments in prior years, our historical performance during those periods may
not be indicative of results in rising interest rate environments such as 1999.
In addition, our recent 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 ended April 30, and for the
eight months ended December 31, 1999:

<TABLE>
<CAPTION>
                                                       EIGHT MONTHS       FISCAL YEARS ENDED APRIL 30
                                                           ENDED         ------------------------------
                                                     DECEMBER 31, 1999     1999       1998       1997
                                                     -----------------   --------   --------   --------
                                                                       (IN THOUSANDS)
<S>                                                  <C>                 <C>        <C>        <C>
Revenues:..........................................       $   122        $ 10,865    $9,344     $7,623
Cost of revenues...................................         1,814          21,165     2,200      1,124
                                                          -------        --------    ------     ------
Gross (loss) profit................................        (1,692)        (10,300)    7,144      6,499
Other expenses:
  General and administrative.......................         1,211           2,945     5,011      3,519
  Marketing and advertising........................             6             434       288        307
  Special charges..................................           352           4,236        --         --
  Depreciation and amortization....................            --             180       139        106
  Other............................................            76             434       926        853
                                                          -------        --------    ------     ------
Total expenses.....................................         1,645           8,229     6,364      4,785
                                                          -------        --------    ------     ------
Income (loss) from operations......................        (3,337)        (18,529)      780      1,714
Other interest expense.............................            --             207         6          9
                                                          -------        --------    ------     ------
    Income (loss) before income taxes..............        (3,337)        (18,736)      774      1,705
Income tax expense.................................            --               1       226        225
                                                          -------        --------    ------     ------
    Net (loss) income..............................       $(3,337)       $(18,737)   $  548     $1,480
                                                          =======        ========    ======     ======
</TABLE>

                                       28
<PAGE>
RESULTS OF OPERATIONS

EIGHT MONTHS ENDED DECEMBER 31, 1999 COMPARED TO EIGHT MONTHS ENDED DECEMBER 31,
  1998

REVENUES AND VOLUMES

    Total loan volume for FiNet's production units is summarized below.

<TABLE>
<CAPTION>
                                                             FOR THE EIGHT
                                                             MONTHS ENDED
                                                              DECEMBER 31
                                                       -------------------------
                                                         1999            1998
                                                       ---------       ---------
                                                       (IN THOUSANDS)(UNAUDITED)
<S>                                                    <C>             <C>
Business-to-Business.................................  $428,400        $144,100
Consumer-direct......................................    90,600         529,700
                                                       --------        --------
    Total Loan Volume................................  $519,000        $673,800
                                                       ========        ========
</TABLE>

    Loan volume decreased $154.8 million, or 23%, to $519.0 million for the
eight months ended December 31, 1999 from $673.8 million for the eight months
ended December 31, 1998. Revenues decreased $10.8 million, or 64%, to
$6.1 million for the eight months ended December 31, 1999 from $16.9 million for
the eight months ended December 31, 1998. The volume decrease was attributable
primarily to the volume of the discontinued business units that were no longer
operating in the eight months ended December 31, 1999. Additionally,
business-to-business segment volumes decreased in our continuing units. Mortgage
lending rates have increased in the current fiscal year relative to the prior
fiscal year, slowing mortgage industry originations. In addition, price
decreases negatively impacted revenues since they were not offset by volume
increases. We expect to increase revenues through the planned expansion of our
sales force and increased emphasis on the business-to-business segment. However,
there can be no assurance that increased revenues will be achieved.

COST OF REVENUES AND GROSS PROFIT

    Cost of revenues decreased $6.3 million, or 43%, to $8.4 million for the
eight months ended December 31, 1999 from $14.7 million for the eight months
ended December 31, 1998. However, as a percentage of revenues, cost of revenues
increased, decreasing our gross profit to (39)% of revenues. Production
personnel costs, the primary component of cost of revenues in our continuing
businesses, were not decreased proportionately with volume decreases resulting
in a negative impact on margins.

    Gross profit was also negatively affected by an increase in loan loss
provisions of $807,000 to $1.5 million from $693,000 for the for the eight
months ended December 31, 1998. The increase is due to additional reserves
provided at both our discontinued subsidiaries and our on-going businesses. Our
discontinued subsidiaries continue to incur losses related to loans previously
sold (off-balance sheet risk). Our on-going business required increased reserves
due to increased volumes and slower sales of mortgages originated. We also
recorded $433,000 of expense related to the sale of our servicing portfolio
which was completed during the eight months ended December 31, 1999.

    The Company records provisions for losses to reflect market valuation
allowances on mortgages held for sale and mortgage loans previously sold
(off-balance sheet risk) and provisions for doubtful accounts receivable. The
Company evaluates the collectibility of its accounts receivable primarily on a
receivable by receivable basis, as accounts receivable is composed of amounts
that do not necessarily carry similar risk characteristics, such as amounts
heldback by purchasers on sales of mortgage loans and amounts heldback on sales
of servicing rights. Additionally, the Company maintains communications with
such purchasers and others from whom receivables are due and in certain
circumstances, determines the allowance necessary based on agreed upon amounts.

                                       29
<PAGE>
    The Company determines its market valuation allowance relating to mortgages
held for sale and mortgages that have been sold primarily on a loan by loan
basis. The allowance is based on factors such as market values, bids received,
industry loss experience and the Company's prior loss experience, if any, as
well as risk characteristics of the loan portfolio.

    Warehouse interest expense decreased $4.3 million or 81% to $1.0 million for
the eight months ended December 31, 1999 from $5.3 million for the eight months
ended December 31, 1998 primarily due to the volume decrease. In addition, we
employed our excess cash to fund our mortgage inventory during a portion of the
eight month period, whereas for the period ended December 31, 1998, we financed
over 95% of our mortgage inventory. Also, in fiscal 1999, our primary warehouse
lender allowed certain excess cash balance accounts to be offset against amounts
due on warehouse borrowings, thereby further reducing our warehouse interest
expense for the current fiscal period compared to the comparable period of the
prior year. The decrease in inventory financing in the period ended
December 1999 compared to the 1998 period resulted in lower warehouse facility
borrowings, contributing to the decrease in interest expense.

OPERATING EXPENSES

    GENERAL AND ADMINISTRATIVE

    Personnel costs and other general and administrative costs of our continuing
businesses increased $3.8 million, or 37%, to $14.0 million in the eight months
ended December 31, 1999 from $10.2 million in the eight months ended
December 31, 1998. Decreases attributable to the discontinued units were offset
by significant increases in personnel costs as well as professional fees at the
continuing units. Personnel costs have increased as FiNet increased its
management team and hired additional sales and production employees in
anticipation of increased volumes. In addition, general and administrative
expenses have increased significantly as the result of our spending associated
with becoming Year 2000 compliant.

    MARKETING AND ADVERTISING

    We initiated a number of marketing relationships in the eight months ended
December 31, 1999 designed to attract prospective customers to our website. As a
result, marketing and advertising increased $5.4 million to $6.2 million for the
eight months ended December 31, 1999 from $755,000 in the eight months ended
December 31, 1998. FiNet intends to significantly decrease its spending on
branding over the subsequent twelve months relative to spending incurred in the
current eight month period.

    SPECIAL CHARGES.

    Special charges of $1.4 million and $4.9 million were established in the
eight month period ended December 31, 1999 and fiscal 1999. The special charges
include $3.8 million of goodwill write off and restructuring charges associated
with the discontinuance of the business of Mical for fiscal 1999, $690,000
writedown of purchased software for fiscal 1999 and $405,000 to liquidate
certain assets and liabilities in connection with the discontinuance of the
business of Coastal for fiscal 1999. During the eight months ended December 31,
1999, the Company expensed $1.4 million net book value of fixed assets as a
result of a relocation of the corporate headquarters and primary operations.

    DEPRECIATION AND AMORTIZATION.

    Depreciation and amortization expenses for the eight months ended
December 31, 1999 increased by $180,000 or 30%, to $777,000 from $597,000 is
fiscal 1999. The increase was due primarily to the amortization of the goodwill
associated with the purchase of certain assets and operations of Lowestrate, and
increased depreciation associated with our purchases of property, plant and
equipment.

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<PAGE>
OTHER INTEREST EXPENSE

    Other interest expense decreased $2.7 million to zero for the eight months
ended December 31, 1999 from $2.7 million for the eight months ended
December 31, 1998. During the eight months ended December 31, 1998, we incurred
other interest expense as we amortized our 3% subordinated convertible debt
discount. We also incurred interest expense related to certain notes payable, a
working capital line of credit, and borrowings for the previous purchase of
servicing assets. These obligations were reduced to zero during the eight months
ended December 31, 1999; therefore, we did not incur material interest expense
other than warehouse interest expense during the eight months ended
December 31, 1999.

INCOME TAXES

    As of December 31, 1999, we had approximately $75 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 December 31, 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 the eight months ended December 31, 1999 increased by
$12.8 million, or 102%, to $25.3 million from $12.5 million for the eight months
ended December 31, 1998, due to investments in technology, marketing and
expenses associated with the relocation of our corporate headquarters.

FISCAL 1999 COMPARED TO FISCAL 1998

REVENUES AND VOLUMES

    Loan volume increased by $718 million, or 118%, to $1,328 million in fiscal
1999 from $610 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 69% of
our loan volume in fiscal 1999, compared to 65% 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 AND GROSS PROFIT

    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.

    Provisions for losses increased by $5.8 million to $6.5 million in fiscal
1999 from $718,000 in fiscal 1998. We record provisions for losses to reflect
market valuation allowances on mortgages held for sale and mortgage loans
previously sold (off-balance sheet risk) and provisions for doubtful accounts
receivable. We

                                       31
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evaluate the collectibility of its accounts receivable primarily on a receivable
by receivable basis, as accounts receivable is composed of amounts that do not
necessarily carry similar risk characteristics, such as amounts heldback by
purchasers on sales of mortgage loans and amounts heldback on sales of servicing
rights. Additionally, we maintain communications with such purchasers and others
from whom receivables are due and in certain circumstances, determines the
allowance necessary based on agreed upon amounts.

    We determine our market valuation allowance relating to mortgages held for
sale and mortgages that have been sold primarily on a loan by loan basis. The
allowance is based on factors such as market values, bids received, industry
loss experience and our prior loss experience, if any, as well as risk
characteristics of the loan portfolio.

    The increase in provision for losses of $2.2 million, or 38%, was
attributable to the provision for doubtful accounts recorded at our Mical
Mortgage subsidiary. We acquired Mical in a business combination accounted for
as a purchase in May 1998. Accordingly, the provision for doubtful accounts of
Mical is included in our results of operations only subsequent to the
acquisition date--only for fiscal 1999, and accounts for the entire increase.
The remaining increase in the provision for losses relates to increased
provisions for losses on mortgages held for sale and mortgages previously sold
(off-balance sheet risk). This increase was attributable primarily to our Mical
Mortgage subsidiary but additionally to provisions for loan losses recorded by
our Coastal Federal Mortgage subsidiary. Loans originated at Mical and at
Coastal, acquired in May and April 1998, had risk characteristics and loss
recourse provisions that were dissimilar from our risk characteristics and sale
recourse provisions prior to these acquisitions.

    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.

    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.

                                       32
<PAGE>
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 AND VOLUMES

    Loan volume increased by $222 million, or 53%, to $610 million in fiscal
1998 from $388 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 65% of our origination volume in fiscal 1998 compared
to 48% 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 AND GROSS PROFIT

    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.

    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.

                                       33
<PAGE>
    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

DECEMBER 31, 1999 COMPARED TO APRIL 30, 1999

    Historically 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 to make capital investments. Equity
increases, primarily from private placements of common stock and warrant
exercises, partially offset by operating losses have increased stockholders'
equity to $30.4 million at December 31, 1999 from $6.7 million at April 30,
1999.

    Our cash increased by $14.4 million to $18.6 million at December 31, 1999
from $4.2 million at April 30, 1999, primarily as the result of cash received
from private placements, partially offset by our use of cash to fund some of our
mortgage origination activities and to make capital investments. In addition, we
recorded $10.4 million of restricted cash, relating primarily to receipts from
sales of mortgage loans, which could only be used to reduce warehouse
borrowings.

    Mortgages held for sale increased by $45.3 million, or 136%, to
$78.7 million at December 31, 1999 from $33.4 million at April 30, 1999. This
increase was due to an increase in the volume of originations late in the period
and slower than expected settlements.

    Mortgage servicing rights decreased from $2.7 million at April 30, 1999 to
zero at December 31, 1999. The servicing portfolio was sold during in the eight
months ended December 31, 1999. We received cash of $2.0 million; we recorded
$433,000 of additional expense in "Cost of Revenues", and the balance due is
recorded in "Accounts receivable" on our Consolidated Balance Sheet at
December 31, 1999. We expect to collect substantially all of the balance due on
this sale during the six months ended June 30, 2000.

                                       34
<PAGE>
    Warehouse borrowings increased $47.5 million, or 144%, from $33.0 million at
April 30, 1999 to $80.5 million at December 31, 1999 as our loan originations
increased late in the period ended December 31, 1999.

    Accrued expenses increased as we increased our spending on professional
services relating to the implementation of computer systems and related
infrastructure.

    Improvement in our financial condition is dependent on our ability to
significantly grow our loan origination volumes, to achieve highly efficient
operating processes and procedures, and to manage warehouse interest expense and
operating expenses given the level of volumes. Our financial condition is
further dependent on economic conditions such as the general health of the
economy and demand for mortgage loans. There can be no assurance that we will be
able to improve our financial condition through profitable operations.

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 borrowers. The majority of
these funds are provided through conventional mortgage warehouse lines of
credit, "purchase-repurchase" agreements, and our cash balances. Additional cash
resources, obtained primarily through private placements of our common stock and
other debt and equity offerings are used 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.
Currently, cash generated by operations is not sufficient to meet our operating
requirements.

    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 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.

    On August 9, 1999 we entered into a new, $75 million committed warehouse
borrowing agreement with GMAC/RFC which expires on May 31, 2000. The new
agreement replaced the existing $35 million extended agreement. The new facility
may be used for the origination or the acquisition of mortgage loans and is
secured by mortgages loans that have been funded using the facility. Borrowings
under this agreement bear interest at LIBOR plus 1.75%. As of December 31, 1999,
$73.2 million was outstanding on this facility. The agreement contains a number
of operating and financial 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
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 substantially all of our assets.

    The events of default contained in our revolving warehouse facility are
typical of facilities of its type. At December 31, 1999, we were in default of
our primary warehouse lending agreement, as were in violation of the liability
growth covenant. Subsequent to December 31, 1999, the lender waived the default.

                                       35
<PAGE>
    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. At December 31, 1999, $7.3 million was outstanding on this
facility.

    During the eight months ended December 31, 1999, operating activities,
including daily operating expenditures, repayment of warehouse borrowings and
funding new originations, used $27.9 million in cash compared to cash used by
operations of $12.9 million during the same period of the prior year.

    Investing activities used cash of $1.5 million during the eight months ended
December 31, 1999, consisting primarily of investments in property, plant and
equipment partially offset by proceeds from the sale of our servicing portfolio
and proceeds from the sale of marketable equity securities. We do not intend to
purchase additional mortgage servicing rights. We expect our level of capital
spending for calendar 2000 to decrease somewhat as we will not incur
infrastructure upgrades required for Year 2000 compliance.

    Cash provided by financing activities was $43.8 million for the eight months
ended December 31, 1999, attributable mainly to private placements of our common
stock.

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

    If we continue to maintain at least our current level of working capital
borrowing resources, we believe that our existing cash balances and funds
available under our revolving warehouse facilities and Fannie Mae ASAP Program
will be sufficient to meet our liquidity requirements for the next 12 months. We
do, however, expect that in the future 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.

                                       36
<PAGE>
                   FACTORS THAT MAY AFFECT FUTURE PERFORMANCE

    The risks described below could materially adversely affect our business,
results of operations and financial condition, which, in turn, could cause the
price of our shares to decline, resulting in a loss of all or part of your
investment. We cannot predict which, if any, of these risks may actually occur,
or the extent to which any occurrence, circumstance or event will actually
affect our business, results of operations or financial condition, and the
trading price of our shares.

BECAUSE WE EXPECT CONTINUED LOSSES IN THE FUTURE, OUR BUSINESS, FINANCIAL
CONDITION AND GROWTH PROSPECTS COULD BE MATERIALLY ADVERSELY AFFECTED.

    We have incurred net losses of $9.4 million, $36.5 million and
$25.3 million for fiscal 1998 and 1999 and the eight months ended December 31,
1999, respectively, and, at December 31, 1999, we had an accumulated deficit of
approximately $73.2 million. Although we cannot predict future results of
operations with any degree of certainty, we expect to continue to incur losses
because of the current state of the mortgage market and our plans to continue to
invest in information technology, marketing and geographic expansion of our
business. While we do not believe these losses will exhaust our credit lines or
available capital resources in the year ending December 31, 2000, 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.

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

    Since December 1999, we have replaced most of our management team. Our new
officers have not previously worked together, and we cannot be sure that they
will be able to work together to improve and expand our operations. On
February 1, 2000, Rick Cossano became our President and Chief Executive Officer
replacing Mark Korell, who retired effective January 15, 2000. Robert Snow,
became our Executive Vice President, Business to Business, on January 31, 2000,
replacing Kevin Gillespie, Executive Vice President, Sales and Marketing, who
resigned effective December 20, 1999. Michael Quinn will become our Senior Vice
President, Director of Capital Markets on April 1, 2000, replacing Michael
Conway, who was terminated as Executive Vice President, Capital Markets,
effective January 31, 2000. In addition, Christos Skeadas, Executive Vice
President--Chief Technology Officer, and Thomas Porter, Executive Vice
President--Administration have recently resigned. If the new management team is
not able to work together and improve and expand our operations, our financial
condition, profitability and growth prospects would be materially adversely
affected.

THE LOSS OF ANY OF OUR KEY PERSONNEL WOULD LIKELY HAVE AN ADVERSE EFFECT OUR
BUSINESS.

    We believe that our future success will depend to a significant extent on
the continued services of our new senior management and other key personnel. The
loss of the services of key employees or delay in recruiting candidates to fill
our currently vacant management positions or any other key position which may
become vacant could have a material adverse effect on our business, results of
operations and financial condition.

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

    We anticipate that we will need to expand our employee base, facilities and
infrastructure in order to be able to compete successfully and take advantage of
market opportunities. If we are unable to manage the expansion of our business
effectively, our business, results of operations and financial condition may not
improve and could deteriorate. 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,

                                       37
<PAGE>
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 THERE IS A FURTHER DECREASE IN DEMAND FOR MORTGAGES, OUR BUSINESS COULD
SUFFER.

    Demand for mortgages is typically adversely affected by periods of economic
slowdown or recession, rising interest rates, declining demand for consumer
credit, declining home sales, declining real estate values and decreased 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 affect on our business, results of operations and financial
condition.

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

    The e-mortgage market is new, rapidly evolving and intensely competitive.
Because the barriers to entry are minimal, we expect competition to intensify in
the future. 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 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,
including 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.

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

    Rising interest rates generally discourage refinancing of residential
mortgages and reduce the number of new home sales. Any further increase in
interest rates or an adverse change in the residential real estate market 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 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. Approximately 44% of the loans we originated and/or
funded during the eight months ended December 31, 1999 were loans to refinance
mortgage debt, compared to 69% during the eight months ended

                                       38
<PAGE>
December 31, 1998. 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 FAIL TO MAINTAIN CREDIT FACILITIES TO FINANCE OUR MORTGAGE LENDING
ACTIVITIES, OUR GROWTH PROSPECTS COULD BE SEVERELY LIMITED.

    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 business, results of operations and
financial condition. Because we are not a bank, we are dependent upon
specialized mortgage credit facilities from other lenders to finance our
mortgage lending activities. In August 1999, we entered into a $75 million
committed warehouse borrowing agreement with GMAC/RFC which replaced an existing
$35 million agreement with GMAC/RFC. In the agreement, which expires on May 31,
2000, we make numerous representations, warranties and operating and financial
covenants. A material breach by FiNet.com of any of these representations,
warranties or covenants could result in the termination of the agreement and an
obligation to repay the entire amount outstanding under the agreement. In the
past, we have had to obtain waivers from GMAC/RFC's for defaults under the
agreement. At December 31, 1999, we were in default of our primarily warehouse
lending agreement, as we were in violation of certain financial and other
covenants. Subsequent to December 31, 1999, the lender waived the defaults.
During January 2000, the defaults were cured. However, we cannot assure you that
we will be able obtain a waiver of from GMAC/RFC of any future defaults, should
they occur, or that financing will continue to be available on favorable terms
or at all.

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. 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 to 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, we will
not remain competitive and our business, our results of operations and financial
condition could be materially adversely affected.

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

    Our ability to grow and our future success depends on our ability to
identify, attract, hire, train, retain and motivate other highly skilled
technical, managerial, sales and marketing, customer service and

                                       39
<PAGE>
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 affected.

IF CONSUMERS AND MORTGAGE BROKER BUSINESSES DO NOT EMBRACE ON-LINE MORTGAGE
FINANCING AND SALES, OUR BUSINESS WOULD 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 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 use
of the Internet for on-line financing gains acceptance, we may be unable, for
technical or other reasons, to develop and introduce new products and services
or enhancements in a timely manner, and such products and services and
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.

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

    We are particularly vulnerable to recessions and conditions affecting the
California economy. Of the loans we originated and/or funded in the eight months
ended December 31, 1999, 83% were for properties located in California. No other
state represented more than 3% of our closed loans during such period. While we
expect to expand our business in other states, a concentration of loans in
California is likely to continue 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. These natural disasters often result in increased loan
delinquencies or defaults which could adversely effect on our business, results
of operations and financial condition.

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

    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. 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 the eight months
ended December 31, 1999, our Coastal Federal Mortgage, Mical Mortgage and
Monument Mortgage subsidiaries were required to repurchase approximately $0,
$6.5 million and $465,000 principal amount of loans, respectively. It is
possible that future demands will be made to purchase loans originated and sold
by these subsidiaries. As of December 31, 1999, we held approximately $220,000
aggregate principal amount of loan in foreclosure. As a result of repurchases,
we occasionally are required to hold foreclosed residential real estate in
inventory until it can be resold. Future foreclosures could have a material
adverse effect on our business, results of operations and financial condition.
If interest rates rise and the economy declines, the rate of mortgage

                                       40
<PAGE>
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.

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

    To implement our growth strategy we may acquire or enter into 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
below under "We may incur additional losses from the discontinued operations of
Coastal Federal Mortgage and Mical Mortgage," we incurred significant losses
following our acquisitions of Mical Mortgage and Coastal Federal Mortgage, and
they have discontinued their operations. Any future alliances we pursue may not
be 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.

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

    If the mortgage programs administered by Fannie Mae, Freddie Mac and Ginnie
Mae 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. We fund our mortgage loan operations in part by
selling the mortgage loans that we fund to these mortgage programs which pool
the 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.

    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, 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 them qualified first mortgages. 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 at any time. 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.

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

    In April 1998, we acquired Coastal Federal Mortgage, and in May 1998, we
acquired Mical Mortgage Inc. Our results of operations include net losses from
the acquisitions of both of these units and from their operating activities.
Although these business units were discontinued in April 1999, they may incur
additional losses, which would be included in our consolidated results. We
reported net losses associated with Coastal and Mical during fiscal 1999 and for
the eight months ended December 31, 1999 of $16.9 million and $2.9 million,
respectively.

                                       41
<PAGE>
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 due to a number of factors, including the
following:

    - fluctuations in interest rates;

    - seasonal or other economic factors affecting demand for mortgages;

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

    - 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;

    - any termination or restructuring of agreements with key service providers;
      and

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

    Fluctuation in our quarterly results may cause the price of our common stock
to be volatile.

    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.

OUR STOCK PRICE COULD BE HIGHLY VOLATILE.

    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 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 further
depress our stock price regardless of our future 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.

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

    If we are unsuccessful in securing the timely delivery of ancillary services
such as appraisals, credit reporting and title searches, we will likely
experience increased customer dissatisfaction, and our business, results of
operations and financial condition could be materially adversely affected. 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.

                                       42
<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 EFFECT ON OUR BUSINESS.

    Our operations are subject to extensive regulation by federal and state
authorities. If we fail to comply with such regulations, possible consequences
could include loss of approved status, demands for indemnification, class action
lawsuits, administrative enforcement actions and other civil and criminal
sanctions, and could have a material adverse effect on our business, results of
operations and financial condition. See "Business--Mortgage Banking Regulation,"
at page 19 of our Annual Report on Form 10-K for the year ended April 30, 1999.

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

    Any interruption in the availability of our websites, transaction-processing
systems or network infrastructure could materially adversely affect our
business, results of operations and financial condition. Such interruptions
could result from events such as fires, floods, earthquakes, power losses,
telecommunications failures, computer viruses and electronic breaches. 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 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.

    If any compromise in our security devices were to occur, it could have a
material adverse effect on our business, results of operations and financial
condition. 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
transaction data. 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.

                                       43
<PAGE>
IF OUR SHARES OUR DELISTED, THE LIQUIDITY FOR OUR SHARES COULD BE IMPAIRED.

    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 submit to
Nasdaq certain periodic financial reporting until July 1999. We have complied
with Nasdaq's special reporting request and required ratio criteria.

    If we fail to meet the NASD's continued listing requirements, including,
among others, net tangible assets or market capitalization, minimum bid price
and various corporate governance requirements, our shares could be delisted from
the Nasdaq SmallCap Market. In such event, trading, if any, in our common stock
would thereafter be conducted in the over-the-counter markets in the so-called
"pink sheets" or the NASD's "Electronic Bulletin Board." Consequently, the
liquidity of our shares could be impaired, not only in the number of shares
which could be bought and sold, but also through delays in the timing of the
transactions, reductions in the number and quality of security analysts' and the
news media's coverage of the company, and lower prices for our shares than might
otherwise be attained.

IF OUR SHARES ARE DELISTED, OUR SHARES COULD BECOME SUBJECT TO THE SEC'S "PENNY
STOCK RULE".

    If our shares were delisted from Nasdaq, they could become subject to
Rule 15g-9 under the Securities Exchange Act of 1934, which imposes additional
sales practice requirements on broker-dealers which sell such securities to
persons other than established customers and "accredited investors" (generally,
individuals with net worth in excess of $1,000,000 or annual incomes exceeding
$200,000 or $300,000 together with their spouses). For transactions covered by
this rule, a broker-dealer must make a special suitability determination for the
purchase and have received the purchaser's written consent to the transaction
prior to sale. Consequently, the rule may adversely affect the ability of
broker-dealers to sell our shares and may adversely affect the ability of
purchasers in this offering to sell any of the securities acquired in the
secondary market. If our shares become subject to this rule, market liquidity
for our shares could be severely adversely affected.

YEAR 2000 COMPLIANCE

    In prior years, the Company discussed the nature and progress of its plans
to become Year 2000 ready. In late 1999, the Company completed its remediation
and testing of systems. As as result of those planning and implementation
efforts, the Company experienced no significant disruptions in mission critical
information and technology and non-information technology systems and believes
those systems successfully responded to the Year 2000 date change. The Company
expensed approximately $597,000 during the eight months ended December 31, 1999
in connection with remediating its systems. The Company is not aware of any
material problems resulting from Year 2000 issues, either with its products, its
internal systems, or the products and services of third parties. The Company
will continue to monitor its mission critical computer applications and those of
its suppliers and vendors throughout the year 2000 to ensure that any latent
Year 2000 matters that may arise are addressed promptly.

MATERIAL SUBSEQUENT EVENTS

    Effective January 31, 2000, we appointed Robert Snow, Executive Vice
President--Business to Business.

    Effective January 31, 2000, Michael Conway, our Executive Vice
President--Capital Markets, was terminated by the Company. Subsequent to his
termination, Mr. Conway initiated arbitration proceedings in which it is alleged
that he was wrongfully terminated. A mediation is scheduled to resolve the
matter.

    Effective February 29, 2000, Thomas Porter, our Executive Vice
President--Administration, resigned. Effective March 3, 2000, Christos Skeadas,
our Executive Vice President--Chief Technology Officer,

                                       44
<PAGE>
resigned. Effective April 1, 2000, we have appointed Michael Quinn, Senior Vice
President, Director of Capital Markets.

    As of December 31, 1999, our growth and change in Chief Executive Officers
violated certain covenants in our primary warehouse lending agreement.
Subsequent to December 31, 1999, the lender waived the defaults.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

    FiNet's primary exposure to market risk is interest rate risk. From the time
we extend an interest rate commitment to the borrower until the loan is priced
for sale to an investor, we are subject interest rate risk. If interest rates
rise during that period, the price at which the loan can be sold to an investor
declines, resulting in a lower sales price for the loan. We attempt to mitigate
such reductions and 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 fund.
Before entering into hedging transactions, we analyze our loans with committed
interest rates (pipeline loans). We consider factors such as the estimated
portion of loans that will ultimately be funded, note rates, interest rates,
inventory of loans and applications and other factors to determine the type and
amount of forward commitment and hedging transactions.

    FiNet attempts to make forward commitments for, or hedge substantially, all
of its estimated interest rate risk on the loans. We have mandatory and optional
forward commitments at December 31, 1999 and April 30, 1999 and 1998 aggregating
$110.2 million, $43.8 million and $46.4 million, respectively. These commitments
covered the market risk associated with mortgage loans held for sale to
investors of $78.7 million, $33.4 million and $63.0 million, respectively, and
our pipeline loans for which interest rates were committed at December 31, 1999
and April 30, 1999 and 1998 of $36.5 million, $25.6 million and $87.3 million,
respectively. 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 exposure to
any single institution.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>
<S>                                                           <C>
Index to Consolidated Financial Statements..................     45
Independent Auditors' Reports...............................     46
Report of Management........................................     49
Consolidated Balance Sheets at December 31, 1999 and April
  30, 1999 and 1998.........................................     50
Consolidated Statements of Operations for the eight months
  ended December 31, 1999 and 1998 and for the years ended
  April 30, 1999, 1998 and 1997.............................     51
Consolidated Statements of Changes in Stockholders' Equity
  for the eight months ended December 31, 1999 and the years
  ended April 30, 1999, 1998 and 1997.......................     52
Consolidated Statements of Cash Flows for the eight months
  ended December 31, 1999 and 1998 and the years ended
  April 30, 1999, 1998, and 1997............................     53
Notes to Consolidated Financial Statements..................     54
</TABLE>

                                       45
<PAGE>
               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

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

    We have audited the accompanying consolidated balance sheets of
FiNet.com, Inc., and subsidiaries as of December 31, 1999 and April 30, 1999,
and the related consolidated statements of operations, changes in stockholders'
equity, and cash flows for the eight months ended December 31, 1999 and for the
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 audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
FiNet.com, Inc. as of December 31, 1999 and April 30, 1999 and the consolidated
results of their operations and their cash flows for the eight months ended
December 31, 1999 and the year ended April 30, 1999, in conformity with
accounting principles generally accepted in the United States.

                                          /s/ Ernst & Young LLP

San Francisco, California
February 22, 2000, except for
Note 6 as to which the date is
March 30, 2000

                                       46
<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

                                       47
<PAGE>
                          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

                                       48
<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.

                                       49
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                 APRIL 30
                                                              DECEMBER 31   -------------------
                                                                 1999         1999       1998
                                                              -----------   --------   --------
<S>                                                           <C>           <C>        <C>
                           ASSETS

Cash and cash equivalents...................................   $ 18,626     $ 4,202    $  1,993
Restricted cash.............................................     10,403          --          --
Marketable securities.......................................      2,674          --          --
Accounts receivable, net of allowances of $1,793, $2,150,
  and $36...................................................      1,863       2,245      26,186
Notes receivable............................................        500          --          --
Mortgages held for sale, net................................     78,691      33,438      63,034
Mortgage servicing rights...................................         --       2,693       5,478
Furniture, fixtures and equipment, net......................      4,471       1,575       1,441
Other assets................................................      2,580       1,102       3,336
                                                               --------     -------    --------
  Total assets..............................................   $119,808     $45,255    $101,468
                                                               ========     =======    ========

            LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
Warehouse and other lines of credit.........................   $ 80,453     $33,038    $ 86,659
Accounts payable............................................      2,379         517       2,951
Notes payable and capitalized leases........................        141         481         860
Accrued expenses and other liabilities......................      6,462       4,531       2,139
Convertible subordinated debentures.........................         --          --       5,500
                                                               --------     -------    --------
  Total liabilities.........................................     89,435      38,567      98,109

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

Stockholders' equity:
Common stock, par value $.01 per share (150,000 shares
  authorized, 93,441, 78,638 and 32,052 shares issued and
  outstanding at December 31, 1999 and April 30, 1999 and
  1998, respectively).......................................        934         786         321
Additional paid-in capital..................................    100,943      53,782      13,675
Accumulated deficit.........................................    (73,208)    (47,880)    (10,637)
Accumulated comprehensive income............................      1,704          --          --
                                                               --------     -------    --------
  Total stockholders' equity................................     30,373       6,688       3,359
                                                               --------     -------    --------
Total liabilities and stockholders' equity..................   $119,808     $45,255    $101,468
                                                               ========     =======    ========
</TABLE>

        See accompanying notes to the consolidated financial statements.

                                       50
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                EIGHT MONTHS ENDED
                                                   DECEMBER 31              YEARS ENDED APRIL 30
                                              ----------------------   ------------------------------
                                                1999        1998         1999       1998       1997
                                              --------   -----------     ----     --------   --------
                                                         (UNAUDITED)
<S>                                           <C>        <C>           <C>        <C>        <C>
Revenues....................................  $  6,070     $ 16,859    $ 22,413   $15,160    $12,344
Cost of revenues............................     8,423       14,735      35,064    14,718      9,316
                                              --------     --------    --------   -------    -------
Gross (loss) profit.........................    (2,353)       2,124     (12,651)      442      3,028
Operating expenses
  General and administrative................    13,973       10,150      11,661     5,887      4,451
  Marketing and advertising.................     6,200          755       2,205       921        667
  Special charges...........................     1,385           --       4,926     1,010         --
  Depreciation and amortization.............       777          597         646       482        105
  Other.....................................       575          347       1,468       875        552
                                              --------     --------    --------   -------    -------
    Total expenses..........................    22,910       11,849      20,906     9,175      5,775
                                              --------     --------    --------   -------    -------
Loss from operations........................   (25,263)      (9,725)    (33,557)   (8,733)    (2,747)
Other interest expense......................        --        2,749       2,976       420        118
                                              --------     --------    --------   -------    -------
Loss before income taxes and extraordinary
  gain......................................   (25,263)     (12,474)    (36,533)   (9,153)    (2,865)
Income tax expense..........................        65           --           5       226        225
                                              --------     --------    --------   -------    -------
Loss before extraordinary gain..............   (25,328)     (12,474)    (36,538)   (9,379)    (3,090)
Extraordinary gain on liabilities subject to
  compromise................................        --           --          --        --        312
                                              --------     --------    --------   -------    -------
Net loss....................................   (25,328)     (12,474)    (36,538)   (9,379)    (2,778)
In-substance preferred dividend.............        --          353         705        --         --
                                              --------     --------    --------   -------    -------
Net loss attributable to common
  stockholders..............................  $(25,328)    $(12,827)   $(37,243)  $(9,379)   $(2,778)
                                              ========     ========    ========   =======    =======
Loss per share attributable to common
  stockholders:
  Basic and diluted net loss per share
    before extraordinary item...............  $  (0.28)    $  (0.37)   $  (0.79)  $ (0.31)   $ (0.21)
  Extraordinary gain on liabilities subject
    to compromise...........................        --           --          --        --       0.02
                                              --------     --------    --------   -------    -------
  Basic and diluted net loss per common
    share...................................  $  (0.28)    $  (0.37)   $  (0.79)  $ (0.31)   $ (0.19)
                                              ========     ========    ========   =======    =======
Weighted average common shares used in
  computing basic and diluted net loss per
  common share..............................    89,517       34,316      46,867    30,433     14,313
                                              ========     ========    ========   =======    =======
</TABLE>

        See accompanying notes to the consolidated financial statements.

                                       51
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                             ADDITIONAL
                                                    COMMON STOCK                PAID         COMMON       ACCUMULATED
                                          --------------------------------       IN          STOCK       COMPREHENSIVE
                                           SHARES     AMOUNT    SUBSCRIBED    CAPITAL     SUBSCRIPTION       INCOME
                                          --------   --------   ----------   ----------   ------------   --------------
<S>                                       <C>        <C>        <C>          <C>          <C>            <C>
Balance April 30, 1996..................    9,650      $ 97        $ --       $  1,478      $    --          $   --
Issue of common shares:
  Common stock offerings................   11,992        80          40          7,233       (2,693)             --
  Reverse acquisition...................    6,412        64          --         (3,455)          --              --
  Debt & note payable conversion........    2,314        23          --          1,136           --              --
  Liabilities subject to compromise
    settlements.........................      230         2          --            113           --              --
  Common stock rights...................    2,403        24          --            (24)          --              --
  Warrants/stock options exercised......        3        --          --             --           --              --
Repurchase of common shares.............   (3,000)      (30)         --           (150)          --              --
Distributions to stockholders...........       --        --          --             --           --              --
Net loss................................       --        --          --             --           --              --
                                           ------      ----        ----       --------      -------          ------
Balance, April 30, 1997.................   30,004       260          40          6,331       (2,693)             --
Proceeds of subscription receivable.....       --        40         (40)            --        2,693              --
Issue of common shares:
  In connection with acquisitions:
    Real Estate Office Software.........      150         2          --            373           --              --
    iQualify, Inc.......................       50         1          --            180           --              --
    NDS.................................      202         2          --            806           --              --
  Private placement.....................    1,300        13          --          3,887           --              --
  Settlement of liabilities.............      232         2          --            355           --              --
  Employee bonuses......................        9        --          --             35           --              --
Warrants/stock options exercised........      105         1          --            157           --              --
Paid in capital related to imputed
  interest on issue of convertible
  debt..................................       --        --          --          1,551           --              --
Net loss................................       --        --          --             --           --              --
                                           ------      ----        ----       --------      -------          ------
Balance, April 30, 1998.................   32,052       321          --         13,675           --              --
Issue of common shares:
  Private placements of common shares...   34,138       341          --         28,196           --              --
  Costs of equity offerings.............       --        --          --           (762)          --              --
  In connection with acquisitions:
    Mical Mortgage, Inc.................      465         5          --          1,798           --              --
    Interloan.com.......................      100         1          --             74           --              --
    Real Estate Office Software.........       50        --          --            246           --              --
  Conversion of convertible subordinated
    debentures..........................    9,533        95          --          5,405           --              --
  Warrants/stock options exercised......    1,500        15          --          1,432           --              --
  Employee/other compensation...........      800         8          --          1,120           --              --
Paid in capital related to imputed
  interest on issue of convertible
  debentures............................       --        --          --            423           --              --
Paid in capital and in-substance
  dividend on preferred stock...........       --        --          --            705           --              --
Warrants issued with subordinated
  convertible debentures................       --        --          --            269           --              --
Warrants issued upon conversion of
  debentures............................       --        --          --            739           --              --
Issue of preferred stock................       --        --          --          2,500           --              --
Costs of preferred stock issue..........       --        --          --           (214)          --              --
Redemption of preferred stock...........       --        --          --         (2,500)          --              --
Warrants issued for services............       --        --          --            676           --              --
Net loss................................       --        --          --             --           --              --
                                           ------      ----        ----       --------      -------          ------
Balance, April 30, 1999.................   78,638       786          --         53,782           --              --
Issue of common shares:
  Private placements of common shares...   11,058       111          --         41,890           --              --
  Costs of equity offerings.............       --        --          --           (729)          --              --
  In connection with acquisitions:
    Homeseekers.........................      600         6          --          1,457           --              --
    Lowestrate..........................      560         6          --          1,815           --              --
  Warrants/stock options exercised......    2,126        21          --          2,152           --              --
  Employee/other compensation...........      459         4          --            576           --              --
Other comprehensive income..............       --        --          --             --           --           1,704
Net loss................................
                                           ------      ----        ----       --------      -------          ------
Balance, December 31, 1999..............   93,441      $934        $ --       $100,943      $    --          $1,704
                                           ======      ====        ====       ========      =======          ======

<CAPTION>

                                          ACCUMULATED
                                           (DEFICIT)      TOTAL
                                          ------------   --------
<S>                                       <C>            <C>
Balance April 30, 1996..................    $  2,261     $  3,836
Issue of common shares:
  Common stock offerings................          --        4,660
  Reverse acquisition...................          --       (3,391)
  Debt & note payable conversion........          --        1,159
  Liabilities subject to compromise
    settlements.........................          --          115
  Common stock rights...................          --           --
  Warrants/stock options exercised......          --           --
Repurchase of common shares.............          --         (180)
Distributions to stockholders...........        (741)        (741)
Net loss................................      (2,778)      (2,778)
                                            --------     --------
Balance, April 30, 1997.................      (1,258)       2,680
Proceeds of subscription receivable.....          --        2,693
Issue of common shares:
  In connection with acquisitions:
    Real Estate Office Software.........          --          375
    iQualify, Inc.......................          --          181
    NDS.................................          --          808
  Private placement.....................          --        3,900
  Settlement of liabilities.............          --          357
  Employee bonuses......................          --           35
Warrants/stock options exercised........          --          158
Paid in capital related to imputed
  interest on issue of convertible
  debt..................................          --        1,551
Net loss................................      (9,379)      (9,379)
                                            --------     --------
Balance, April 30, 1998.................     (10,637)       3,359
Issue of common shares:
  Private placements of common shares...          --       28,537
  Costs of equity offerings.............          --         (762)
  In connection with acquisitions:
    Mical Mortgage, Inc.................          --        1,803
    Interloan.com.......................          --           75
    Real Estate Office Software.........          --          246
  Conversion of convertible subordinated
    debentures..........................          --        5,500
  Warrants/stock options exercised......          --        1,447
  Employee/other compensation...........          --        1,128
Paid in capital related to imputed
  interest on issue of convertible
  debentures............................          --          423
Paid in capital and in-substance
  dividend on preferred stock...........        (705)          --
Warrants issued with subordinated
  convertible debentures................          --          269
Warrants issued upon conversion of
  debentures............................          --          739
Issue of preferred stock................          --        2,500
Costs of preferred stock issue..........          --         (214)
Redemption of preferred stock...........          --       (2,500)
Warrants issued for services............          --          676
Net loss................................     (36,538)     (36,538)
                                            --------     --------
Balance, April 30, 1999.................     (47,880)       6,688
Issue of common shares:
  Private placements of common shares...          --       42,001
  Costs of equity offerings.............          --         (729)
  In connection with acquisitions:
    Homeseekers.........................          --        1,463
    Lowestrate..........................          --        1,821
  Warrants/stock options exercised......          --        2,173
  Employee/other compensation...........          --          580
Other comprehensive income..............          --        1,704
Net loss................................     (25,328)     (25,328)
                                            --------     --------
Balance, December 31, 1999..............    $(73,208)    $ 30,373
                                            ========     ========
</TABLE>

        See accompanying notes to the consolidated financial statements.

                                       52
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                   EIGHT MONTHS
                                                                      ENDED
                                                                   DECEMBER 31              YEARS ENDED APRIL 30
                                                              ----------------------   ------------------------------
                                                                1999        1998         1999       1998       1997
                                                              --------      ----       --------   --------   --------
                                                                         (UNAUDITED)
<S>                                                           <C>        <C>           <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss..................................................  ($25,328)   ($12,827)    ($36,538)  ($9,379)   ($2,778)
  Adjustments to reconcile net loss to net cash used in
    operating activities:
    Depreciation and amortization...........................       826       2,322        2,476     1,549        543
    Imputed interest from convertible debentures............        --       2,156        2,502       287         --
    Write down of goodwill and other asset valuation
      adjustments...........................................       989          --        4,958     1,728        164
    Gain on sale of mortgage servicing rights...............        --        (420)        (420)       --         --
    Gain on sale of marketable securities...................      (366)         --           --        --         --
    Expenses paid for 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 restricted cash..................   (10,003)         --           --        --         --
    (Increase) decrease in mortgage loans held for sale.....   (45,253)     55,395       71,596   (38,562)    (6,130)
    (Increase) decrease in receivables from sales of
      mortgage loans, servicing rights and other
      receivables...........................................       591      (1,561)      23,911   (20,496)     8,412
    (Increase) decrease in originated mortgage servicing
      rights................................................        --          --          382    (1,248)      (876)
    (Increase) decrease in other assets.....................      (121)      1,242          724       317       (498)
    Net increase (decrease) in warehouse borrowings.........    47,415     (54,747)     (91,494)   58,357       (345)
    Increase (decrease) in accounts payable and accrued
      expenses..............................................     3,703      (4,465)      (6,175)    3,006        106
    Other operating.........................................      (322)          6          309      (229)        --
                                                              --------    --------     --------   -------    -------
      Net cash used in operating activities.................   (27,869)    (12,899)     (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...........     1,984       1,509        1,509       497         --
  Proceeds on sale of marketable securities.................       872
  Acquisition of mortgage loans held for investment.........        --          --           --        --        (87)
  Purchase of furniture, fixtures and equipment.............    (4,338)       (793)        (338)     (647)      (265)
  Acquisition of purchased technology and intangibles.......        --                     (481)   (1,007)       (67)
  Cash acquired in acquisition..............................        --         185          185        --         --
  Pre-acquisition advances to affiliates, net of payments...        --          --           --    (1,930)      (717)
  Other.....................................................        --          --           --       110        234
                                                              --------    --------     --------   -------    -------
      Net cash provided by (used in) investing activities...    (1,482)        901          875    (7,492)    (1,189)
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of common stock....................    41,852      14,273       27,775     6,582      4,438
  Proceeds from issuance of convertible preferred stock.....        --       2,286        2,286        --         --
  Proceeds from issuance of convertible debt................        --       1,384        1,384     5,058         --
  Repurchase of common stock................................        --                       --        --       (180)
  Proceeds from advances on note payable and line of
    credit..................................................        --       1,400        1,400     2,550      1,950
  Proceeds from the exercise of common stock warrants and
    options.................................................     2,173         197        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..................................................      (250)     (2,572)      (3,732)   (1,665)    (2,305)
  Repayments of loans and distributions to former
    stockholders............................................        --          --           --      (129)    (1,707)
  Proceeds from notes payable to officers...................        --          --           --        --        625
  Other financing...........................................        --         455           --        --         --
                                                              --------    --------     --------   -------    -------
      Net cash provided by financing activities.............    43,775      17,423       26,560    12,615      2,821
                                                              --------    --------     --------   -------    -------
Net increase (decrease) in cash.............................    14,424       5,425        2,209       845        (30)
Cash and cash equivalents at beginning of period............     4,202       1,993        1,993     1,148      1,178
                                                              --------    --------     --------   -------    -------
Cash and cash equivalents at end of period..................  $ 18,626    $  7,418     $  4,202   $ 1,993    $ 1,148
                                                              ========    ========     ========   =======    =======
Supplemental disclosures:
  Interest paid.............................................  $    625    $  5,168     $  6,812   $ 1,877    $ 1,966
  Taxes paid................................................  $     65    $     --     $      2   $    57    $   351
</TABLE>

        See accompanying notes to the consolidated financial statements.

                                       53
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               DECEMBER 31, 1999

NOTE 1.  THE COMPANY

ORGANIZATION

    FiNet.com ("FiNet" or "the Company") is a provider of mortgage services to
mortgage broker businesses and consumers, including online mortgage services.
The Company primarily markets its business to business services through mortgage
brokers, and to consumers through marketing agreements with general interest
websites and co-branding arrangements with financial services websites. FiNet
operates its consumer-direct and business-to-business segments through Monument
Mortgage, Inc. ("Monument"), which is licensed to originate and fund mortgage
loans in 49 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, and 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, Inc., 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. At December 31, 1999, the Company's rapid growth in liabilities
violated a covenant with our primary warehouse lender. The lender subsequently
waived the default. This facility expires on May 31, 2000. The Company expects
to continue its lending relationship with its primary warehouse lender; however,
no assurances can be made that this relationship will continue. The inability to
obtain warehouse lending would cause a material adverse affect on the Company's
results of operations and financial position.

    The Company experienced net losses for the eight months ended December 31,
1999 and the years ended April 30, 1999, 1998, and 1997 and had an accumulated
deficit at December 31, 1999 of $73,208,000. Net losses are expected for the
foreseeable future. Equity capital has been raised to finance operations. The
Company's cash on hand at December 31, 1999 was $18,626,000. 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.

                                       54
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

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 presentation for the eight months ended
December 31, 1999 .

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. At December 31, 1999
the Company had restricted cash of $10,403,000 relating to amounts received for
settlements on sales of mortgage loans that had not yet been applied to reduce
the warehouse line of credit. This amount may only be used to pay down the
warehouse line and is therefore restricted as to use.

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 $2,937,000, $3,851,000 and $396,000 at December 31, 1999, April
30, 1999 and 1998, respectively, were required and recorded in a valuation
allowance by charges to "Cost of Revenue". 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.

                                       55
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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. 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 consumer-direct
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 (in thousands):

<TABLE>
<CAPTION>
                                                     EIGHT MONTHS
                                                        ENDED
                                                   DECEMBER 31 1999           YEARS ENDED APRIL 30
                                                ----------------------   ------------------------------
                                                  1999        1998         1999       1998       1997
                                                --------   -----------   --------   --------   --------
                                                           (UNAUDITED)
<S>                                             <C>        <C>           <C>        <C>        <C>
Revenues:
  Warehouse interest income...................   $2,016      $ 5,050     $ 6,009    $ 3,247    $ 2,433
  Gain on sale of servicing rights and
    mortgage loans............................    1,969        8,922      11,847     10,187      9,022
  Loan servicing fees.........................      305          924       1,319        823        589
  Loan brokerage fees.........................      797        1,702       2,895        418         94
  Other.......................................      983          261         343        485        206
                                                 ------      -------     -------    -------    -------
    Total revenues............................   $6,070      $16,859     $22,413    $15,160    $12,344
                                                 ======      =======     =======    =======    =======
</TABLE>

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

                                       56
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 December 31, 1999 and April 30, 1999 and
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
11,874,828; 7,512,000; 737,875 and 558,875 for the eight months ended
December 31, 1999 and for the fiscal years ended April 30, 1999, 1998 and 1997,
respectively. Warrants to purchase common stock of 14,801,000, 16,421,000;
10,596,000 and 6,907,000 for the eight months ended December 31, 1999 and for
the fiscal years ended April 30, 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 recorded other comprehensive income related to
unrealized gains on the appreciation of Marketable Equity Securities.

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.

                                       57
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
NEW ACCOUNTING STANDARDS

    In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". 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. In June 1999, the FASB issued SFAS 137, "Accounting for Derivative
Instruments and Hedging Activities--Deferral of the Effective Date of FASB
Statement No. 133," to defer the effective date of SFAS 133 until fiscal years
beginning after June 15, 2000. 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 August 20, 1999, FiNet acquired certain operations and assets of
Lowestrate.com, Inc. ("Lowestrate"). The assets included the trademark
"Lowestrate.com" and the related website and certain equipment and software. The
acquired assets and operations will be used in the Company's consumer-direct
segment. As consideration for the purchase, the Company issued 1,400,000 shares
of its common stock. Of these shares, 560,000 were issued to the seller at the
closing and were valued at approximately $1,820,000. The purchase price of these
assets and operations, including expenses was $1,997,000. The entire purchase
price was allocated to goodwill and is being amortized over 36 months.
Amortization expense recorded for the eight months ended December 31, 1999 was
$240,000. The remaining 840,000 shares were placed in escrow subject to release
to Lowestrate if the contingencies are resolved. The acquisition was accounted
for as a purchase. Certain ancillary agreements were entered into in connection
with the acquisition, including a $500,000 non interest-bearing loan due in one
year to the seller of Lowestrate, secured by 200,000 of the escrowed shares. The
$500,000 note is included in the Company's "Accounts Receivable" on its
Consolidated Balance Sheet at December 31, 1999.

    Subsequent to the asset and operations purchase date and until appropriate
licensing requirements were completed, Monument performed certain processing and
marketing services for Lowestrate and recorded fees and expenses related to
these services. As licenses were obtained in each state, lending activities in
that state were transferred to Monument and FiNet's results of operations
include those activities.

    On October 28, 1999, the Company acquired its partners' 50% interest in a
joint venture. As consideration for the purchase, the Company issued 600,000
shares of its common stock valued at $1,462,000. The only asset of the joint
venture was 300,000 common shares of HouseSeekers.com equity securities which
became marketable during 1999. The joint venture had no operating activities.

                                       58
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 3.  ACQUISITIONS AND DISPOSITIONS (CONTINUED)
    The securities are classified as "available for sale" and are valued at
market. Of the original 300,000 shares, the Company sold 96,000 shares a in 1999
and recognized a realized gain on the sale of $366,000 which is included in
"Revenue" in the Statement of Operations. As of December 31, 1999, the Company
held 204,000 shares valued at $2,674,000, which represents the closing bid price
of the stock as of December 31, 1999. The Company recognized $1,704,000 of
unrealized gains on the marketable equity securities for the eight month period
ended December 31, 1999 and this amount has been included in Other Comprehensive
Income in the Statement of Changes in Stockholders' Equity.

    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 by
FiNet 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 excess of the purchase price over the fair value of the net assets acquired
of $3,332,000, net of purchase accounting adjustments, was recorded as goodwill.
The Company discontinued the operations of Mical during fiscal 1999 and expensed
the remaining unamortized goodwill relating to this acquisition. (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 its 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.

    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
purchase price was $1,261,000, consisting of cash of $641,000 and 200,000 shares
of FiNet's common stock valued at $620,000. In January 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 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

                                       59
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 3.  ACQUISITIONS AND DISPOSITIONS (CONTINUED)
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 was
as follows:

<TABLE>
<CAPTION>
                                               EIGHT
                                              MONTHS            FISCAL YEARS ENDED
                                               ENDED                 APRIL 30
                                            DECEMBER 31   ------------------------------
                                               1999         1999       1998       1997
                                            -----------   --------   --------   --------
                                                                  (IN THOUSANDS)
<S>                                         <C>           <C>        <C>        <C>
Balance at beginning of period............    $2,693       $5,478     $  579      $156
Additions.................................        --        1,192      5,763       463
Sales.....................................    (2,539)      (1,825)      (268)       --
Scheduled amortization....................        --       (1,199)      (596)      (40)
Impairment additions charged to
  operations..............................      (154)      (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 $571,000, $3.7 million and $16.0 million at December 31, 1999 and April 30,
1999 and 1998, respectively, from its balance sheet.

NOTE 5.  FURNITURE, FIXTURES AND EQUIPMENT

    Furniture, fixtures and equipment consists of the following:

<TABLE>
<CAPTION>
                                                                     APRIL 30
                                                  DECEMBER 31   -------------------
                                                     1999         1999       1998
                                                  -----------   --------   --------
                                                           (IN THOUSANDS)
<S>                                               <C>           <C>        <C>
Furniture and fixtures..........................    $1,110       $  315    $ 1,010
Computer equipment..............................     3,313        2,650      1,855
Office equipment................................       194        1,622        225
Leasehold improvements..........................       260          243        205
                                                    ------       ------    -------
Total cost......................................     4,877        4,830      3,295
Less accumulated depreciation and
  amortization..................................      (406)      (3,255)    (1,854)
                                                    ------       ------    -------
Net furniture, fixtures and equipment...........    $4,471       $1,575    $ 1,441
                                                    ======       ======    =======
</TABLE>

                                       60
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 5.  FURNITURE, FIXTURES AND EQUIPMENT (CONTINUED)
    During the eight months ended December 31, 1999, the Company recorded
$1,385,000 of expense relating to the retirement of fixed assets in connection
with a relocation of its corporate headquarters and primary operations. See
Note 13, "Special Charges". These assets were used in the business-to-business
and consumer-direct segments and for the corporate group.

NOTE 6.  BORROWING ARRANGEMENTS

    Borrowing arrangements consist of the following:

<TABLE>
<CAPTION>
                                                                                 APRIL 30
                                                              DECEMBER 31   -------------------
                                                                 1999         1999       1998
                                                              -----------   --------   --------
                                                                       (IN THOUSANDS)
<S>                                                           <C>           <C>        <C>
WAREHOUSE AND OTHER LINES OF CREDIT
Warehouse lines of credit:
  $75 million committed, $35 million uncommitted, and $55
    million committed, respectively, bearing interest at
    LIBOR + variable spread, expires May 31, 2000...........    $73,125     $30,906    $55,000
  $25 million uncommitted gestation, bearing interest at
    LIBOR + 2.5%, expired December 31, 1998.................         --          --    $22,552
  $10 million 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:
  $15 million, bearing interest at Fed Funds + 0.70%, no
    expiration date.........................................      7,316          --         --
  $10 million, bearing interest at prime....................         --         138         --
  $10 million, bearing interest at prime....................         12         993         --
                                                                -------     -------    -------
                                                                 80,453      33,038     85,259
Servicing acquisition financing.............................         --          --        400
Revolving line of credit....................................         --          --      1,000
                                                                -------     -------    -------
                                                                $80,453     $33,038    $86,659
                                                                =======     =======    =======
NOTES PAYABLE AND CAPITALIZED LEASES:
  $1.0 million original note................................    $    --     $    --    $   500
  Notes and capital leases (various rates)..................        141         481        360
                                                                -------     -------    -------
                                                                    141         481        860
                                                                =======     =======    =======
3% CONVERTIBLE SUBORDINATED DEBENTURES......................    $    --     $    --    $ 5,500
                                                                =======     =======    =======
</TABLE>

WAREHOUSE LINES OF CREDIT

    In August, 1999, the Company entered into a new lending agreement with its
primary warehouse lender, GMAC/RFC. The new agreement provides the Company with
a committed $75 million warehouse borrowing facility that carries an interest
rate of LIBOR plus 1.75%. The agreement expires on May 31, 2000. For the eight
month period ended December 31, 1999, the Company recorded warehouse interest

                                       61
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 6.  BORROWING ARRANGEMENTS (CONTINUED)
expense of $1,002,000. For the years ended April 30, 1999, 1998 and 1997, the
Company recorded interest expense of $6,587,000, $2,710,000 and $1,874,000,
respectively. Borrowings under this warehouse facility are secured by the
mortgages held for sale thereby financed. At December 31, 1999, and April 30,
1999 and 1998, LIBOR was 6.49%, 4.90%, and 5.69%, respectively, and the prime
rate was 8.5%, 7.75%, and 8.5%, respectively.

    The Company's available credit lines also include a $15 million
purchase/repurchase agreement with Fannie Mae's "As Soon as Pooled/Early
Purchase Option" (the "ASAP Plus" program). Under the ASAP Plus program, Fannie
Mae funds the Company on the loans delivered to them upon receipt of appropriate
mortgage collateral. Fannie Mae subsequently purchases the mortagage loans for
cash upon receipt of complete and accurate mortgage pool and other
documentation. At December 31, 1999, the Company had $7.3 million of borrowings
outstanding on the ASAP Program.

WAREHOUSE FACILITY COVENANTS

    The agreement for the warehouse line of credit 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,
1999, the Company was in default under various financial covenants related to
its non-primary warehouse lenders. The Company is negotiating the closure of
these warehouse lines. At December 31, 1999, the Company was in default of its
primary warehouse lending agreement, as a liability growth rate covenant was
violated. Subsequent to December 31, 1999, the lender waived the default. This
facility expires on May 31, 2000.

3% SUBORDINATED CONVERTIBLE DEBENTURES

    The Company issued $7,000,000 of 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 the 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 years 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 the 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

                                       62
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 6.  BORROWING ARRANGEMENTS (CONTINUED)
$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 Statements 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 Statements 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 $239,000 at December 31,
1999, and $438,000 at April 30, 1999 and April 30, 1998, respectively.

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 December 31, 1999:

<TABLE>
<CAPTION>
FISCAL YEAR                                                 OPERATING   CAPITAL
-----------                                                 ---------   --------
                                                               (IN THOUSANDS)
<S>                                                         <C>         <C>
2000......................................................   $2,091      $   71
2001......................................................    1,711          --
2002......................................................    1,574          --
2003......................................................    1,498          --
2004......................................................      502          --
                                                             ------      ------
Total minimum lease payments..............................   $7,376      $   71
                                                             ======      ------
Less amount representing interest.........................                  (--)
                                                                         ------
Present value of minimum lease payments...................               $   71
                                                                         ======
</TABLE>

    Rent expense for the eight months ended December 31, 1999 and for fiscal
years 1999, 1998, and 1997, was $1,012,000, $867,000, $601,000 and $514,000,
respectively.

LITIGATION

    On January 14, 1998, prior to the Company's 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 Real Estate Settlement Procedures Act
and induced mortgage brokers

                                       63
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 8.  COMMITMENTS AND CONTINGENCIES (CONTINUED)
to breach their alleged fiduciary duties to their customers. The plaintiffs seek
unspecified compensatory and punitive damages as to certain claims. Management
believes that its compensation programs for mortgage brokers comply with
applicable laws and with long standing industry practices. The Company intends
to defend vigorously against this action and believes that the ultimate
resolution will not have a material adverse effect on its 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 then current and now former
directors. The complaint alleges, among other things, that the plaintiff and the
Company's then 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 the Company
issued to the current director 1,800,000 shares of stock and that the Company's
then 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 the Company's
common stock and punitive damages as to certain of the claims. FiNet.com and the
Company's then current director have each filed a general denial of all claims.
The Company intends to defend vigorously against the action and believes that
the ultimate resolution will not have a material adverse effect on its business,
results of operations or financial condition.

    On December 16, 1999, a lawsuit was filed in the Judicial District Court of
Dallas County, Texas, by FC Capital Corp. d/b/a FirstCity Capital Corporation.
The complaint alleges breach of contract by Coastal for failure to repurchase
loans in accordance with the terms and condition of a Purchase Agreement entered
into by the parties in March 1998. The plaintiff has named Finet as a defendant
alleging that Finet assumed all of Coastal's debts and obligations when Finet
acquired Coastal in April 1998. The plaintiff seeks to recover actual damages in
the amount of $1.7 million and premium rebates in the approximate amount of
$26,000. The action was removed to the United State District Court, Northern
District of Texas, Dallas Division on January 18, 2000 and the Company has since
filed procedural motions. Management intends to defend vigorously against the
action and believe that the ultimate resolution will not have a material adverse
effect on the Company's business, results of operations or financial condition.

    The Company and certain subsidiaries are defendants in various other 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 $36,458,000, $25,604,000 and $87,300,000 as of December 31, 1999
and 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.

                                       64
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

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 at
December 31 and at April 30, 1999 and 1998 aggregating $110,233,000, $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 $78,691,000,
$33,438,000 and $63,034,000, respectively, and the pipeline loans for which
interest rates were committed of $36,458,000, $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 the eight
months ended December 31, 1999, and the years ended April 30, 1999, 1998, and
1997, the Company repurchased loans totaling $6,982,820, $10,034,000, $347,000,
and zero, respectively, which resulted in losses of $1,572,000, $759,000,
$347,000, and zero, respectively.

                                       65
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

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 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 (i.e. pipeline loans) and loan commitments to
      sell. The fair value for the pipeline loans, 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 December 31, 1999 and April 30, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                                        DECEMBER 31, 1999        APRIL 30, 1999          APRIL 30, 1998
                                      ---------------------   ---------------------   ---------------------
                                      CARRYING   ESTIMATED    CARRYING   ESTIMATED    CARRYING   ESTIMATED
                                       VALUE     FAIR VALUE    VALUE     FAIR VALUE    VALUE     FAIR VALUE
                                      --------   ----------   --------   ----------   --------   ----------
                                                                 (IN THOUSANDS)
<S>                                   <C>        <C>          <C>        <C>          <C>        <C>
Assets:
  Mortgages held for sale...........  $78,691     $78,691     $33,438     $33,438     $63,034     $63,363
  Mortgage servicing rights.........       --          --       2,693       2,693       5,478       5,478
Liabilities:
  Notes payable.....................       70          70         300         300         860         860
Off Balance Sheet:
  Loan commitments to fund..........       --         881          --         395          --         (34)
  Loan commitments to sell..........       --         243          --          98          --          43
</TABLE>

NOTE 11.  STOCKHOLDERS' EQUITY

    The Company recorded $1,704,000 of "Other comprehensive income" relating to
unrealized gains on marketable equity securities held as available for sale at
December 31, 1999. (See Note 3)

                                       66
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 11.  STOCKHOLDERS' EQUITY (CONTINUED)
    As of December 31, 1999, the Company had outstanding warrants as follows:

<TABLE>
<CAPTION>
      NUMBER OF         EXERCISE PRICE    YEAR OF
   WARRANTS ISSUED        PER SHARE      EXPIRATION
---------------------   --------------   ----------
   (IN THOUSANDS)
<S>                     <C>              <C>
       12,889             $0.50-1.50     2001-2008
          100              1.51-3.00          2003
          754              3.01-4.50     2000-2007
        1,058              4.51-5.00     2001-2002
       ------
       14,801
       ======
</TABLE>

    In September 1998, the Company issued 250 shares of its $2,500 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 perferred 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 was
amortized in fiscal 1999 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.

NOTE 12.  STOCK OPTIONS

1989 STOCK OPTION PLAN (EXPIRED)

    The Company's 1989 Stock Option Plan (the "1989 Plan") provided 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 was administered by the Company's Board of Directors. The Board of
Directors were 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 could be incentive
stock options or nonqualified stock options.

    The exercise price of incentive stock options could 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 who owns more than 10% of the total
combined voting power of all classes of the Company's capital stock). Options
could 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 was exercisable on the date of termination, after which all
unexercised options lapse. In the event of an optionee's death or disability,
the optionee could exercise any outstanding option, to the extent it is
exercisable, for one year following the termination date.

                                       67
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

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, employee directors, other employees and
consultants of FiNet.com to purchase up to an aggregate of 10,000,000 shares of
common stock. The 1998 Plan is administered by the Company's Board of Directors.
The Company's 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 December 31, 1999,
4,601,572 options, were available for grant under the 1998 plan.

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 Company's Board of Directors and 60,000 shares for subsequent
annual grants. The aggregate number of shares that can be purchased under the
Directors' Plan is 1,000,000. 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 Company's Board of Directors. The initial option grant
vests 100% on grant. Subsequent annual grants 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 December 31, 1999, 760,000 options 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 Company's 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 Company's Board of Directors. Each grant of bonus
shares becomes exercisable according to a schedule to be established by the
Company's Board of Directors at the time of grant.

OTHER AGREEMENTS

    Pursuant to an employment agreement with a former executive officer, the
Company granted options to the executive officer to purchase 720,236 shares of
common stock at with prices ranging from $3.313 to $9.1250 which will expire in
2000.

    In December 1999, the Company entered into an employment agreement with a
new executive officer. Pursuant to the agreement, the Company granted the
executive officer 2,250,000 options in addition to 750,000 options granted to
him under the 1998 Stock Option Plan. The options are exercisable at $1.03 and
will expire in 2009.

                                       68
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 12.  STOCK OPTIONS (CONTINUED)
1999 EMPLOYEE STOCK PURCHASE PLAN

    The Company has an Employee Stock Purchase Plan under which 500,000 shares
of common stock have been reserved for issuance. Under this plan, FiNet's
employees, subject to certain restrictions, may purchase shares of common stock
at 85% of the fair market value at either the date of enrollment or the date of
purchase, whichever is less. The Company implemented this plan in the first
quarter of 2000.

    The Company has elected to follow Accounting Principles Board (APB) Opinion
No. 25, "Accounting for Stock Issued to Employees," and related interpretations,
which require compensation expense for options to be recognized when the market
price of the underlying stock exceeds the exercise price on the date of grant.
compensation expense recognized in income under APB 25 for the eight months
ended December 31, 1999 was $184,000. There was no such expense recognized for
the fiscal years ended April 30, 1999, 1998 and 1997.

    Statement of Financial Account Standards No. 123 (SFAS 123), "Accounting for
Stock Based Compensation," permits companies to recognize as expense over the
vesting period the fair value of all stock-based awards on the date of grant. In
management's opinion, the existing stock option valuation models do not
necessarily provide a reliable single measure of the fair value of stock-based
awards. Therefore, as permitted, the Company will continue to apply the existing
account rules under APB No. 25 and provide pro forma net income and pro forma
earnings per share (EPS) disclosures for stock-based awards made during the
eight months ended December 31, 1999 and fiscal years ended April 30, 1999, 1998
and 1997 as if the fair-value-based method defined in SFAS NO.123 had been
applied.

<TABLE>
<CAPTION>
                                                     EIGHT MONTHS       FISCAL YEARS ENDED APRIL 30
                                                         ENDED         ------------------------------
PRO FORMA STATEMENT OF OPERATIONS                  DECEMBER 31, 1999     1999       1998       1997
---------------------------------                  -----------------   --------   --------   --------
                                                       (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S>                                                <C>                 <C>        <C>        <C>
Estimated stock-based compensation...............      $  2,310        $  1,715   $   200    $   125
Net (loss) as reported...........................       (25,328)        (36,538)   (9,379)    (2,778)
                                                       --------        --------   -------    -------
Pro forma net (loss).............................      $(27,638)       $(38,253)  $(9,579)   $(2,903)
                                                       ========        ========   =======    =======
(Loss) per share as reported.....................          (.28)          (0.79)    (0.31)     (0.19)
Pro forma (loss) per share.......................          (.31)          (0.83)    (0.32)     (0.20)
</TABLE>

    The fair value of options at the date of grant was estimated using the
Black-Scholes model with the following assumptions for the eight months ended
December 31, 1999 and fiscal years 1999, 1998 and 1997, respectively: risk-free
interest rates of 5.38% to 6.52%; 4.78% to 5.53%; 5.5%; and 6.6% to 6.7%
volatility of 132.86%; 141%; 50% and 50%; a dividend growth rate of zero was
used since the Company does not intend to pay dividends on its common stock; and
the expected lives equal to .53 years over the vesting period for the eight
months ended December 31, 1999, one year over the vesting period for fiscal
1999, and the remaining option terms for fiscal years 1998 and 1997.

                                       69
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 12.  STOCK OPTIONS (CONTINUED)
    The weighted-average grant-date fair value and exercise price of options
granted during the eight months ended December 31, 1999 and fiscal years 1999,
1998 and 1997 are summarized below:

<TABLE>
<CAPTION>
                                                         WEIGHTED-      WEIGHTED-
                                                          AVERAGE        AVERAGE
                                              SHARES     FAIR VALUE   EXERCISE PRICE
                                             ---------   ----------   --------------
<S>                                          <C>         <C>          <C>
EIGHT MONTHS ENDED DECEMBER 31, 1999
  Granted
    Price = Market Value...................  5,253,236     $2.04           $2.37
    Price > Market Value...................         --        --              --
    Price < Market Value...................    205,000     $2.94           $2.43
FISCAL 1999
  Granted
    Price = Market Value...................  7,533,020     $0.88           $0.99
    Price > Market Value...................      7,500     $0.85           $1.13
    Price < Market Value...................     80,000     $1.08           $1.35
FISCAL 1998
  Granted
    Price = Market Value...................    148,000     $2.85           $4.44
    Price > Market Value...................         --        --              --
    Price < Market Value...................     40,000     $2.83           $0.50
FISCAL 1997
  Granted
    Price = Market Value...................         --        --              --
    Price > Market Value...................         --        --              --
    Price < Market Value...................    120,000     $0.80           $0.50
</TABLE>

                                       70
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 12.  STOCK OPTIONS (CONTINUED)
    The following table summarizes stock option plan activity for the eight
months ending December 31, 1999, fiscal years 1999, 1998 and 1997:

<TABLE>
<CAPTION>
                                                                                           WEIGHTED
                                                                                           AVERAGE
EMPLOYEE STOCK OPTION SUMMARY                              OPTIONS     EXERCISE PRICE   EXERCISE PRICE
-----------------------------                             ----------   --------------   --------------
<S>                                                       <C>          <C>              <C>
Outstanding at May 1, 1996..............................     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           0.99
Exercised...............................................    (383,035)     0.06-0.75           0.07
Expired / Canceled......................................    (462,866)     0.50-3.25           1.19
                                                          ----------
Outstanding at April 30, 1999...........................   7,512,494      0.06-5.50           1.03
Granted.................................................   5,458,236      1.03-9.13           2.38
Exercised...............................................    (237,914)     0.50-1.13           0.71
Expired / Canceled......................................    (857,988)     0.75-6.69           2.56
                                                          ----------
Outstanding at December 31, 1999........................  11,874,828     $0.06-9.13          $1.55
                                                          ==========
</TABLE>

                                       71
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 12.  STOCK OPTIONS (CONTINUED)
    The following table summarizes significant ranges of outstanding and
exercisable options at December 31, 1999:

<TABLE>
<CAPTION>
                                           OPTIONS OUTSTANDING
                           ---------------------------------------------------          OPTIONS EXERCISABLE
                                           WEIGHTED-AVERAGE                      ---------------------------------
                                              REMAINING                              NUMBER
                              SHARES       CONTRACTUAL LIFE   WEIGHTED-AVERAGE   EXERCISABLE AS   WEIGHTED-AVERAGE
RANGE OF EXERCISE PRICES    OUTSTANDING        (YEARS)         EXERCISE PRICE    OF 12/31/1999     EXERCISE PRICE
------------------------   -------------   ----------------   ----------------   --------------   ----------------
<S>                        <C>             <C>                <C>                <C>              <C>
0.06$00-$0.5000.....           185,634           3.40             $0.3444             185,555         $0.3446
0.5630.............          1,290,000           8.78              0.5630             558,750          0.5630
0.750.6560-$00.............   1,685,055          8.80              0.7222             543,000          0.7154
1.000.8750-$00.............      22,292          8.87              0.8987              17,720          0.8812
1.0310.............          5,707,986           9.57              1.0310           1,441,046          1.0310
2.461.0625-$90.............   1,282,250          9.43              1.9647             278,125          2.0311
4.502.5630-$00.............   1,211,161          9.23              3.5708             276,769          3.6854
6.684.6250-$80.............     203,125          9.42              5.1646              82,183          4.8053
7.627.6250-$50.............      39,602          9.38              7.6250               7,921          7.6250
9.1250.............            247,723           9.36              9.1250              49,545          9.1250
                            ----------                                              ---------

0.06$00-$9.1250.....        11,874,828           9.22             $1.5468           3,440,614         $1.3836
                            ==========                                              =========
</TABLE>

                                       72
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 13.  SPECIAL CHARGES

    In connection with the Company's relocation of its headquarters and
operating facilities from Walnut Creek, California to San Ramon, California,
$1,385,000 of expense was recorded to write-off fixed furniture fixtures and
equipment that would no longer be employed in the new location.

    In addition, the Company recorded nonrecurring charges associated with
discontinued business units during the eight months ended December 31, 1999 and
during fiscal year 1999. During the third quarter of fiscal year 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 was not recoverable from future cash flow. Goodwill
of $3,189,000, net of purchase accounting adjustments and recorded amortization,
was expensed as part of these special charges in fiscal year 1999. Approximately
130 employees were terminated during fiscal year 1999 as a result of the Mical
closure. The Company also recorded a special charge expense of $642,000 during
the third quarter of fiscal year 1999 to recognize exit costs primarily for
severance and occupancy lease costs net of recovery from subleases. During the
eight months ended December 31, 1999, $352,000 was recorded as expense
associated with the write off of the remaining furniture fixtures and equipment
of Mical.

    Except for the items detailed above totaling $352,000 for the eight months
ended December 31, 1999 and $642,000 for the fiscal year ended April 30, 1999,
all other financial statement effects of winding down Mical are included in
results from operations as incurred. At December 31, 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 December 31, 1999.

    During the year ended April 30, 1999, the Company also recorded nonrecurring
expenses of $405,000 to liquidate certain assets and settle certain liabilities
in connection with closing Coastal and $690,000 to expense the unamortized
balance of its Real Estate Office Software (REOS) technology. Management closed
Coastal 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 year 1998, the Company wrote off $1,010,000 relating to software
services and loan leads. 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.

                                       72
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 14.  INCOME TAXES

    The provisions for income taxes consist of the following:

<TABLE>
<CAPTION>
                                                                      FISCAL YEARS ENDED
                                                                           APRIL 30
                                              EIGHT MONTHS      ------------------------------
                                                  ENDED
                                            DECEMBER 31, 1999     1999       1998       1997
                                            -----------------   --------   --------   --------
                                                                        (IN THOUSANDS)
<S>                                         <C>                 <C>        <C>        <C>
Current Federal...........................         $--            $--        $236       $219
Current State.............................          65              5          80         71
                                                   ---            ---        ----       ----
                                                    65              5         316        290

Deferred Federal..........................          --             --         (70)       (50)
Deferred State............................          --             --         (20)       (15)
                                                   ---            ---        ----       ----
                                                    --             --         (90)       (65)
                                                   ---            ---        ----       ----
Total.....................................         $65            $ 5        $226       $225
                                                   ===            ===        ====       ====
</TABLE>

The reconciliation of the provision for income taxes computed at U.S. statutory
income tax rates to pretax income is as follows:

<TABLE>
<CAPTION>
                                                            EIGHT
                                                           MONTHS
                                                            ENDED           FISCAL YEARS ENDED APRIL 30
                                                         DECEMBER 31   --------------------------------------
                                                            1999         1999           1998           1997
                                                         -----------   --------       --------       --------
                                                                                   (IN THOUSANDS)
<S>                                                      <C>           <C>            <C>            <C>
Federal statutory income tax rate......................     (34.0)%     (34.0)%        (34.0)%        (34.0)%
State and local imcome taxes, net of federal tax
  effect...............................................       0.2          --             .4
Non-deductible goodwill................................        --         4.0             --            1.3
Valuation allowance....................................      33.5        20.8           36.5           40.5
Prior period adjustment................................        --         5.0             --             --
Other, net.............................................       0.6         4.2           (1.7)            --
                                                            -----       -----          -----          -----
  Effective Tax Rate...................................       0.3%        0.0%           2.3%           7.8%
                                                            =====       =====          =====          =====
</TABLE>

                                       73
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 14.  INCOME TAXES (CONTINUED)
The significant components of the Company's deferred tax liabilities and assets
as of December 31, 1999, April 30, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                                                                                 APRIL 30
                                                              DECEMBER 31   -------------------
                                                                 1999         1999       1998
                                                              -----------   --------   --------
                                                                              (IN THOUSANDS)
<S>                                                           <C>           <C>        <C>
DEFERRED TAX LIABILITIES:
  Originated mortgage servicing rights......................   $     --     $     47   $    460
  Marketable Securities.....................................        764           --         --
  Depreciation..............................................         41          126       (113)
                                                               --------     --------   --------
  Total deferred tax liabilities............................        805          173        573
                                                               --------     --------   --------
DEFERRED TAX ASSETS:
  Net operating loss carryforwards..........................     28,848       18,736     12,366
  Loan loss and other reserves..............................      2,138        2,597         --
  Goodwill and other intangibles............................        396          310      1,116
  Deferred revenue..........................................        175          202         --
  Other.....................................................        852           90        432
                                                               --------     --------   --------
Total deferred tax assets...................................     32,409       21,935     13,914
                                                               --------     --------   --------
Valuation allowance.........................................    (31,604)     (21,762)   (13,341)
Net deferred tax asset......................................        805          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 the eight months ended
December 31, 1999 and during fiscal year 1999, the valuation allowance was
increased by $9,842,000 and $8,421,000, respectively. 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 December 31, 1999, the Company has federal net operating loss
carryforwards (NOLs) of approximately $75 million. The NOLs expire in the years
2004 through 2019. The Company has smaller state tax loss 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.

                                       74
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 15.  NON-CASH INVESTING AND FINANCING ACTIVITIES

    The following table presents non-cash investing and financing information
for the eight months ended December 31, 1999 and for fiscal 1999 and 1998:

<TABLE>
<CAPTION>
                                                              EIGHT MONTHS    FISCAL YEAR ENDED
                                                                 ENDED            APRIL 30
                                                              DECEMBER 31    -------------------
                                                                  1999         1999       1998
                                                              ------------   --------   --------
                                                                               (IN THOUSANDS)
<S>                                                           <C>            <C>        <C>
Common stock and warrants issued for expenses...............     $  580      $ 1,804     $  392
Common stock issued to purchase certain assets and
  operations of Lowestrate.com..............................      1,821           --         --
Common stock issued to purchase the remaining 50% interest
  of a joint venture not already owned......................      1,463           --         --
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 identified two

                                       75
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

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

<TABLE>
<CAPTION>
                                                 EIGHT MONTHS
                                                    ENDED
                                                 DECEMBER 31          FISCAL YEARS ENDED APRIL 30
                                            ----------------------   ------------------------------
                                              1999        1998         1999       1998       1997
                                            --------   -----------   --------   --------   --------
                                                       (UNAUDITED)
<S>                                         <C>        <C>           <C>        <C>        <C>
Revenue
  Business-to-business....................  $  4,408     $ 13,717    $ 19,411   $ 14,394   $12,189
  Business-to-consumer....................     1,054        3,142       3,002        766       155
                                            --------     --------    --------   --------   -------
Segment Revenue...........................     5,462       16,859    $ 22,413   $ 15,160   $12,344
  Corporate...............................       608           --          --         --        --
                                            --------     --------    --------   --------   -------
  Segment revenue.........................  $  6,070     $ 16,859    $ 22,413   $ 15,160   $12,344
                                            ========     ========    ========   ========   =======
Operating income (loss)
  Business-to-business....................  $(14,716)    $   (475)   $(17,455)  $   (508)  $(1,061)
  Business-to-consumer....................    (4,769)      (2,642)     (4,642)    (4,485)     (683)
                                            --------     --------    --------   --------   -------
Segment operating income..................   (19,485)      (3,117)    (22,097)    (4,993)   (1,744)
  Corporate...............................    (5,843)      (6,608)    (11,460)    (3,740)   (1,003)
                                            --------     --------    --------   --------   -------
Loss from operations                        $(25,328)    $ (9,725)   $(33,557)  $ (8,733)  $(2,747)
                                            ========     ========    ========   ========   =======
Capital expenditures
  Business-to-business....................  $  3,687     $    167    $    116   $  1,486   $   128
  Business-to-consumer....................       217           87          75         55        83
                                            --------     --------    --------   --------   -------
Segment Capital expenditures..............     3,904          254         191      1,541       211
  Corporate...............................       434          539         703        113       121
                                            --------     --------    --------   --------   -------
                                            $  4,338     $    793    $    894   $  1,654   $   332
                                            ========     ========    ========   ========   =======
Identifiable assets
  Business-to-business....................  $101,837                 $ 14,583   $ 91,174   $ 5,505
  Business-to-consumer....................     5,990                    3,782      3,362     3,544
                                            --------                 --------   --------   -------
Segment Identifiable assets...............   107,827                   18,365     94,536     9,049
  Corporate...............................    11,981                   26,890      6,932     5,201
                                            --------                 --------   --------   -------
                                            $119,808                 $ 45,255   $101,468   $14,250
                                            ========                 ========   ========   =======
Long-lived assets
  Business-to-business....................     3,800                 $    624   $    783   $   424
  Business-to-consumer....................       223                      311        452       273
                                            --------                 --------   --------   -------
Segment long-lived assets.................     4,023                      935      1,235       697
  Corporate...............................       448                      640        206       400
                                            --------                 --------   --------   -------
                                            $  4,471                 $  1,575   $  1,441   $ 1,097
                                            ========                 ========   ========   =======
</TABLE>

                                       76
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 17.  RELATED PARTY TRANSACTIONS

MICAL MORTGAGE, INC.

    During fiscal year 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 stockholder. The contract term is three years beginning
January 1, 1997 at a monthly fee of $15,000 for a total contract cost of
$540,000. For the eight months ended December 31, 1999 and for fiscal year 1999,
1998, and 1997, the Company incurred consulting fee expense relating to this
agreement of $120,000, $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, as long as
Dr. Meyer's service with FiNet continues.

LOANS TO OFFICERS

    An adjustable rate, second mortgage loan in the amount of $356,000 was made
to Michael Conway, a former executive officer of FiNet. The loan carries an
initial interest rate of 7.25% and is secured by a second residence. The loan
was sold in the secondary market.

    A fixed rate, fifteen year second mortgage loan in the amount of $223,000
was made to Christos Skeadas, a former executive of FiNet. The loan carries an
interest rate of 10.5% and matures on November 14, 2014.

    A fixed rate, third mortgage loan in the amount of $20,000 was made to
Christos Skeadas, a former executive of FiNet. The loan carries an interest rate
of 7%. The principal amount and all accrued interest are due in a single payment
on November 12, 2000.

OTHER

    During fiscal year 1999, warrants to purchase 700,000 common shares at $1.25
per share were purchased by two officers for cash consideration of $7,000.

    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

                                       77
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 17.  RELATED PARTY TRANSACTIONS (CONTINUED)
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 unregistered shares of common stock,
Mr. Hoeffel agreed to forfeit any and all anti-dilution rights previously
granted him by the Company, and to surrender to the Company a warrant entitling
him to purchase 300,000 shares of common stock.

NOTE 18.  VALUATION ALLOWANCES

    Valuation allowances consist of the following:

<TABLE>
<CAPTION>
                                              BALANCE
                                                AT       CHARGED TO                           BALANCE AT
                                             BEGINNING   COSTS AND    ACQUIRED                  END OF
DESCRIPTION                                  OF PERIOD    EXPENSES    BUSINESS   DEDUCTIONS     PERIOD
-----------                                  ---------   ----------   --------   ----------   ----------
                                                                   (IN THOUSANDS)
<S>                                          <C>         <C>          <C>        <C>          <C>
MARKET VALUATION ALLOWANCE:
  Eight months ended December 31, 1999.....   $3,851       $1,518       $ --       $(2,432)     $2,937
  Year ended April 30, 1999................      396        4,344        542        (1,431)      3,851
  Year ended April 30, 1998................      311          718         --          (633)        396
  Year ended April 30, 1997................      135          226         --           (50)        311
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
  Eight months ended December 31, 1999.....   $2,150       $   30       $ --       $  (387)     $1,793
  Year ended April 30, 1999................       36        2,150         --           (36)      2,150
  Year ended April 30, 1998................       56           --         --           (20)         36
  Year ended April 30, 1997................       20           36         --            --          56
</TABLE>

NOTE 19.  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 the
eight months ended December 31, 1999 or during fiscal years 1999, 1998 or 1997.

NOTE 20.  YEAR 2000

    In prior years, the Company discussed the nature and progress of its plans
to become Year 2000 ready. In late 1999, the Company completed its remediation
and testing of systems. As a result of those planning and implementation
efforts, the Company experienced no significant disruptions in mission critical
information technology and non-information technology systems and believes those
systems successfully responded to the Year 2000 date change. The Company
expensed approximately $597,000 during the eight months ended December 31, 1999
in connection with remediating its systems. The Company is not aware

                                       78
<PAGE>
                        FINET.COM, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                               DECEMBER 31, 1999

NOTE 20.  YEAR 2000 (CONTINUED)
of any material problems resulting from Year 2000 issues, either with its
products, its internal systems, or the products and services of third parties.
The Company will continue to monitor its mission critical computer applications
and those of its suppliers and vendors throughout the year 2000 to ensure that
any latent Year 2000 matters that may arise are addressed promptly.

                                       79
<PAGE>
ITEM 9.  CHANGES IN OR DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

    On February 12, 1999, FiNet dismissed Reuben E. Price & Co. as its
independent accountant and, on February 12, 1999, appointed Ernst & Young LLP to
that position.

    The reports of Reuben E. Price on FiNet's financial statements for the past
two fiscal years contained no adverse opinion or disclaimer, or were qualified
as to uncertainty, audit scope, or accounting principles.

    The change in accountants was made in light of the recently expanded scope
of our operations and the attendant requirement for the accounting services of a
larger firm of national scope and stature. The decision to change independent
accountants was recommended by management and was approved by FiNet's Audit
Committee and Board of Directors.

    During the Company's fiscal years ended April 30 1998 and 1997 and the
subsequent interim period prior to the change in accountants, there were no
disagreements with Reuben E. Price on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure.

                                       80
<PAGE>
                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    The information required by this Item 10 is hereby incorporated by reference
from our definitive proxy statement, to be filed pursuant to Regulation 14A
within 120 days after the end of the fiscal year.

ITEM 11.  EXECUTIVE COMPENSATION

    The information required by this Item 11 is hereby incorporated by reference
from our definitive proxy statement, to be filed pursuant to Regulation 14A
within 120 days after the end of the fiscal year.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The information required by this Item 12 is hereby incorporated by reference
to our definitive proxy statement, to be filed pursuant to Regulation 14A within
120 days after the end of the fiscal year.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    The information required by this Item 13 is hereby incorporated by reference
to our definitive proxy statement, to be filed pursuant to Regulation 14A within
120 days after the end of the fiscal year.

                                       80
<PAGE>
                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(A)1 FINANCIAL STATEMENTS

    The information required by this Item appears in Item 8 of this Annual
Report on Form 10-K.

(A)2 FINANCIAL STATEMENT SCHEDULES

    See the Note 18 to the Company's Consolidated Financial Statements for the
required information about Valuation and Qualifying Accounts. All other
schedules are omitted because they are not applicable.

(A)3 EXHIBITS

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                                   DESCRIPTION
---------------------                           -----------
<C>                     <S>
      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(5)           Form of Common Stock Purchase Agreement between the
                        registrant and investors in the private placement concluded
                        December 23, 1998
      4.16(5)           Form of Common Stock Purchase Warrant issued to investors in
                        the private placement concluded December 23, 1998
      4.17(6)           Restructuring Agreement and Amendment, dated January 15,
                        1999, among the registrant and the investors in the
                        debenture offering concluded May 26, 1998
</TABLE>

                                       81
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                                   DESCRIPTION
---------------------                           -----------
<C>                     <S>
      4.18(7)           Form of Registration Rights Agreement between the registrant
                        and investors in the debenture offering concluded May 26,
                        1998
      4.19(8)           Form of Warrant issued to the investors in the debenture
                        offering concluded May 26, 1998
      4.20(5)           Form of Stock Purchase Agreement among the registrant and
                        the investors in the private placement concluded on May 10,
                        1999 and May 20, 1999
      4.21(5)           Form of Stock Purchase Agreement among the registrant and
                        the investors in the private placement concluded on June 28,
                        1999
      4.22(10)          Registration Rights Agreement, dated August 20, 1999 between
                        the registrants and Lowestrate.com, Inc.
      4.23(11)          Agreement for the Withdrawal of a Member and Amending the
                        Operating Agreement among the registrant, the selling
                        stockholder and Monument Mortgage, Inc. dated October 28,
                        1999.
     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(5)            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(5)            1998 Stock Option Plan
     10.8(5)            1998 Stock Bonus Incentive Plan
     10.9(5)            1998 Non-Employee Directors' Stock Option Plan
     10.10(5)           1999 Employee Stock Purchase Plan
     10.11(5)           Employment Agreement between the registrant and L. Daniel
                        Rawitch, as amended to date
     10.12(5)           Employment Agreement between the registrant and Michael G.
                        Conway, as amended to date
     10.13(5)           Employment Agreement between the registrant and Gary A.
                        Palmer, dated February 25, 1999
     10.14(5)           Employment Agreement between the registrant and Christos
                        Skeadas, dated April 19, 1999
     10.15(5)           Employment Agreement between the registrant and Kevin
                        Gillespie, dated March 5, 1999
     10.16(5)           Employment Agreement between the registrant and Thomas L.
                        Porter, as amended to date
     10.17(5)           Employment Termination Agreement between the registrant and
                        Jan C. Hoeffel, dated February 3, 1999
     10.18(5)           Employment Agreement between the registrant and Mark L.
                        Korell, as amended to date
     10.19(10)          Asset Purchase Agreement dated August 20, 1999 between the
                        registrant, Lowestrate.com, Inc. and Robert J. Ross.(10)
     10.20(10)          Loan and Security Agreement, dated August 20, 1999 between
                        registrant and Lowestrate.com, Inc.(10)
     10.21(10)          Employment Agreement dated August 20, 1999 between
                        registrant and Robert J. Ross(10)
</TABLE>

                                       82
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                                   DESCRIPTION
---------------------                           -----------
<C>                     <S>
     10.22              First Amended and Restated Warehousing Credit and Security
                        Agreement, dated August 9, 1999 between Monument Mortgage,
                        Inc., subsidiary of the registrant and Residential Funding
                        Corporation.
     10.23              First Amendment to First Amended and Restated Warehousing
                        Credit and Security Agreement, dated December 31, 1999
                        between Monument Mortgage, Inc., subsidiary of the
                        registrant and Residential Funding Corporation.
     10.24              Employment Agreement between the registrant and Rick
                        Cossano, dated December 28, 1999.
     16.1(9)            Letter from Former Certifying Accountant
     21.1(5)            List of Subsidiaries
     23.1               Consent of Ernst & Young LLP
     23.2               Consent of Reuben E. Price & Co.
     24.1               Power of Attorney (see page 89)
     27.1               Financial Data Schedule
</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 of the registrant's Current Report on
    Form 8-K filed on November 24, 1999.

(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) Filed with the registrant's Registration Statement on Form S-1 filed on
    July 2, 1999.

(6) Incorporated by reference to Exhibit 7.1 of the registrant's Current Report
    on Form 8-K filed on February 11, 1999.

(7) 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.

(8) Incorporated by reference to Exhibit 7.2 of the registrant's Current Report
    on Form 8-K filed on February 11, 1999.

(9) Incorporated by reference to Exhibit 16 of the registrant's Current Report
    on Form 8-K filed on February 19, 1999.

(10) Incorporated by reference from the registrant's Current Report on Form 8-K
    filed on August 27, 1999.

(11) Incorporated by reference on Exhibit 4.1 of the registrant's Registration
    on Form S-3 filed on December 30, 1999.

                                       83
<PAGE>
(B) REPORTS ON FORM 8-K

    During the two months ended December 31, 1999, we filed two Current Reports
on Form 8-K:

<TABLE>
<CAPTION>
DATE                               ITEM                             DESCRIPTION
----                             --------                           -----------
<S>                              <C>        <C>
November 9, 1999...............     5       Company headquarters relocation
                                    8       Change in year end
December 15, 1999..............     5       Retirement of Mark Korrell, Chairman, Chief Executive
                                            Officer and Director
</TABLE>

                                       84
<PAGE>
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant, FiNet.com, Inc., a corporation organized
and existing under the laws of the State of Delaware, has duly caused this
report to be signed on its behalf by the undersigned thereunto duly authorized,
in the City of San Ramon, State of California, on the 30th day of March 2000.

                                FINET.COM, INC.

                                By:               /s/ RICK COSSANO
                                     -----------------------------------------
                                                    Rick Cossano
                                        PRESIDENT, CHIEF EXECUTIVE OFFICER,
                                        AND MEMBER OF THE BOARD OF DIRECTORS

                               POWER OF ATTORNEY

    KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Rick Cossano and Gary A. Palmer, jointly and
severally, his attorney-in-fact, each with the power of substitution, for him in
any and all capacities, to sign any amendments to this Annual Report on
Form 10-K and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virture hereof.

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
Annual Report on Form 10-K has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
          SIGNATURE                       OFFICE                   DATE
          ---------                       ------                   ----
<C>                             <S>                         <C>
                                Chairman of the Board,
       /s/ RICK COSSANO           President and Chief
------------------------------    Executive Officer           March 30, 2000
         Rick Cossano             (Principal Executive
                                  Officer)

    /s/ L. DANIEL RAWITCH
------------------------------  Vice Chairman                 March 30, 2000
      L. Daniel Rawitch

                                Executive Vice
      /s/ GARY A. PALMER          President--Chief
------------------------------    Financial Officer           March 30, 2000
        Gary A. Palmer            (Principal Financial and
                                  Accounting Officer)

    /s/ ANTONIO P. FALCAO
------------------------------  Director                      March 30, 2000
      Antonio P. Falcao
</TABLE>

                                       84
<PAGE>

<TABLE>
<CAPTION>
          SIGNATURE                       OFFICE                   DATE
          ---------                       ------                   ----
<C>                             <S>                         <C>
    /s/ RICHARD E. WILKES
------------------------------  Director                      March 30, 2000
      Richard E. Wilkes

     /s/ STEPHEN J. SOGIN
------------------------------  Director                      March 30, 2000
       Stephen J. Sogin

      /s/ S. LEWIS MEYER
------------------------------  Director                      March 30, 2000
        S. Lewis Meyer
</TABLE>

                                       85
<PAGE>
                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                                   DESCRIPTION
---------------------                           -----------
<C>                     <S>
       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(5)          Form of Common Stock Purchase Agreement between the
                        registrant and investors in the private placement concluded
                        December 23, 1998
       4.16(5)          Form of Common Stock Purchase Warrant issued to investors in
                        the private placement concluded December 23, 1998
       4.17(6)          Restructuring Agreement and Amendment, dated January 15,
                        1999, among the registrant and the investors in the
                        debenture offering concluded May 26, 1998
       4.18(7)          Form of Registration Rights Agreement between the registrant
                        and investors in the debenture offering concluded May 26,
                        1998
       4.19(8)          Form of Warrant issued to the investors in the debenture
                        offering concluded May 26, 1998
       4.20(5)          Form of Stock Purchase Agreement among the registrant and
                        the investors in the private placement concluded on May 10,
                        1999 and May 20, 1999
       4.21(5)          Form of Stock Purchase Agreement among the registrant and
                        the investors in the private placement concluded on June 28,
                        1999
      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(5)           1989 Stock Option Plan
</TABLE>

                                       86
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                                   DESCRIPTION
---------------------                           -----------
<C>                     <S>
      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(5)           1998 Stock Option Plan
      10.8(5)           1998 Stock Bonus Incentive Plan
      10.9(5)           1998 Non-Employee Directors' Stock Option Plan
      10.10(5)          1999 Employee Stock Purchase Plan
      10.11(5)          Employment Agreement between the registrant and L. Daniel
                        Rawitch, as amended to date
      10.12(5)          Employment Agreement between the registrant and Michael G.
                        Conway, as amended to date
      10.13(5)          Employment Agreement between the registrant and Gary A.
                        Palmer, dated February 25, 1999
      10.14(5)          Employment Agreement between the registrant and Christos
                        Skeadas, dated April 19, 1999
      10.15(5)          Employment Agreement between the registrant and Kevin
                        Gillespie, dated March 5, 1999
      10.16(5)          Employment Agreement between the registrant and Thomas L.
                        Porter, as amended to date
      10.17(5)          Employment Termination Agreement between the registrant and
                        Jan C. Hoeffel, dated February 3, 1999
      10.18(5)          Employment Agreement between the registrant and Mark L.
                        Korell, as amended to date
      16.1(9)           Letter from Former Certifying Accountant
      21.1(5)           List of Subsidiaries
      23.1              Consent of Ernst & Young LLP
      23.2              Consent of Reuben E. Price & Co.
      24.1              Power of Attorney (see page 89)
      27.1              Financial Data Schedule
</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) Filed with the registrant's Registration Statement on Form S-1 filed on
    July 2, 1999.

(6) Incorporated by reference to Exhibit 7.1 of the registrant's Current Report
    on Form 8-K filed on January 19, 1999.

(7) 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.

(8) Incorporated by reference to Exhibit 7.2 of the registrant's Current Report
    on Form 8-K filed on January 19, 1999.

(9) Incorporated by reference to Exhibit 16 of the registrant's Current Report
    on Form 8-K filed on February 19, 1999.

                                       87