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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
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JUNE 24, 1999
Date of report (Date of earliest event reported)
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Commission File Number: 0-18108
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FINET.COM, INC
(Exact name of registrant as specified in its charter)
DELAWARE
(State or jurisdiction of
incorporation or organization)
3021 CITRUS CIRCLE, SUITE 150
WALNUT CREEK, CA 94598
(Address of principal executive office)
94-3115180
(IRS Employer Identification Number)
Telephone Number: (925) 988-6550
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On June 24, 1999 FiNet.com, Inc. announced earnings for the fiscal year ended
April 30, 1999.
ITEM 7. EXHIBITS
7.1 Press release issued June 24, 1999 in connection with the
earnings announcement.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
FINET.COM, INC.
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Date: June 24, 1999 /S/ MARK L. KORELL
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MARK L. KORELL
(CEO AND PRINCIPAL EXECUTIVE OFFICER)
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News from Finet.com
Dan Rawitch Kevin Theiss Brian Bailey
Finet Holdings Rubenstein Investor Rubenstein &
Corporation Relations Assoc., Inc.
925-906-5874 212-843-8096 212-843-9258
[email protected] [email protected] bbailey@rubenstei
n.com
For Immediate Release
FiNet.com Announces Fiscal 1999 Year End Results, $20 Million in New Capital
Commitment, and Letter of Intent for Strategic Acquisition
WALNUT CREEK, CA, June 24, 1999 - FiNet.com Inc. (NASDAQ: FNCM) owner and
operator of www.FiNet.com, "America's Home Finance Network," today announced
results of operations for its 1999 fiscal year which ended April 30, 1999.
Revenues, including those from discontinued business lines were $22.4 million,
an increase of 48% over fiscal 1998. FiNet.com's new management has completed
its review and evaluation of the company's operations, and has initiated
important actions to position the company to aggressively deliver on-line
mortgage origination and funding services across the United States through its
consumer direct channel and its business to business channel. The company
announced that it has significantly strengthened its financial position by
obtaining a firm commitment for the private placement of a minimum of $20
million of common stock in Europe. In addition, the company has signed a
letter of intent to acquire a privately-held Internet mortgage company. This
rapidly growing on-line business would double FiNet.com's consumer channel
revenues and create full nationwide scope for our e-commerce lending
capabilities.
Management initiatives have been focussed on three primary areas; financial
strength, revenue growth, and corporate reorganization. Highlights of
accomplishments are:
1.) Financial Strength
We have obtained $33 million in new capital commitments since the end of
the fourth fiscal quarter. These private placements of common stock include
investors from both the United States and Europe. $13 million has been funded
and $20 million in a firm commitment is expected to fund shortly. These
securities will not be, nor have been, registered under the Securities Act of
1933, and may not be offered or sold in the United States absent registration
or an applicable exemption from registration requirements.
We have entered agreements to sell for $2.7 million in cash the remainder
of our mortgage servicing portfolio asset of approximately $375 million.
FY99 financial results were a loss of $37.2 million, compared to a loss
of $9.4 million in FY98. Of the FY99 loss, $17.8 million was associated with
discontinued subsidiaries and business lines. Current cash burn rate is
($1.7) million per month, and should improve as revenues increase.
We have significantly strengthened our access to short-term financing
lines in order to implement our business plan and support our planned growth.
We have entered into a Letter of Intent with GMAC/RFC for a $75 million
committed revolving warehouse credit facility and we have an uncommitted
repurchase facility available from Fannie Mae (in FY1999, 68% of our loans
were sold to Fannie Mae).
Revenues for the year were negatively impacted due to corporate
repositioning and recruiting new management, as well as new staff in both the
consumer direct and business to business channels. Moreover, FiNet.com was
not insulated from recent increases in interest rates and related declines in
refinance volume.
- Overall revenues for FY99 were $22.4 million and total loan volume was
$1.3 billion, compared to FY98 revenues of $15.2 million and total loan
volume of $572 million respectively.
- Consumer channel revenues for FY99 were $3.0 million, compared to $0.8
million in FY98. Loan volume was $264 million in FY99 compared to $46 million
in FY98.
- Business to business channel revenues for FY99 were $19.4 million,
compared to $14.4 million in FY98. Loan volume was $1.0 billion in FY99,
compared to $526 million in FY98.
2.) Revenue Enhancement
We have signed a Letter of Intent to acquire an east coast based on-line
mortgage financing firm. We are currently conducting due diligence and expect
to conclude a definitive agreement in July. Subject to completing regulatory
approvals and due diligence, this stock-for-stock acquisition will more than
double FiNet.com's consumer channel revenues and will create full nationwide
scope for our e-commerce lending capabilities. FiNet.com believes that this
strategic acquisition would reduce the company's reliance on refinances
because of the target company's historic strength in originating loans for
home purchases.
Unique visitors to our consumer web sites increased to 166,000, or 159%
over the previous quarter, and unique visitors and loan applications have
continued to increase in recent weeks. We have entered into new strategic
marketing agreements with web portals such as GetSmart, Xoom.com, Ask.com,
Homeseekers.com, Cox Interactive Media; and expect these and additional new
alliances to be very beneficial. Since approximately 75% of our originations
are for refinancings, we have been focussed on developing co-branded and
private label marketing relationships oriented to the home purchase market.
A new mortgage auction process has been implemented, where our
Interloan.com mortgage professionals electronically submit on-line consumer
loan applications to a nationwide auction for bids from approximately 18
lenders.
Recent estimates state that there are 36,000 mortgage broker businesses
who originated 70% of the $1.7 trillion in mortgage loans in 1998. Our
business-to-business approach targets this portion of the mortgage market. We
have been serving mortgage brokers through our Monument Mortgage channel for
years by providing on-line technologies for loan processing, underwriting and
closings. We have taken steps to aggressively expand this business by
creating new customer service teams, adding sales staff, and expanding state
licenses to 30+ states in order to expand our reach outside our base states in
the western United States.
3.) Corporate Reorganization
We have closed and consolidated the operations of MICAL Mortgage and
Coastal Federal Mortgage, incurring substantial charges while creating future
savings of approximately $10 million in annual operating expenses. Our goal
is to be a low- cost provider of on-line mortgage services nationwide.
The executive management team was rounded out with the additions of Kevin
Gillespie, Executive Vice President - Sales & Marketing, and Chris Skeadas,
Executive Vice President - Chief Technology Officer. Both have considerable
experience and success in building and managing nationwide organizations.
We officially changed our name from Finet Holdings Corporation
(Nasdaq:FNHC) to FiNet.com, Inc. (Nasdaq:FNCM).
Dan Rawitch has been appointed Vice Chairman and will continue to focus
on strategic partnerships, investor relations, and marketing alliances. His
former title of President has been assumed by Mark L. Korell, Chairman and
CEO.
FiNet.com has also strengthened its middle management team, and is geared
to be a national leader in both on-line mortgage originations to consumers
through our Interloan.com channel featuring more than 50 lenders; and with
mortgage broker businesses, through our Monument Mortgage channel. We are
developing enhanced web sites and operations by incorporating the latest
software components from leading vendors with our Smithsonian award-winning
iQualify technology.
A telephone conference call hosted by CEO Mark Korell to review the company's
outlook, positioning and results will be held Thursday, June 24, 1999 at 4:30
p.m. (Eastern Time): Call-In Number: (800) 633 - 8549. The conference call
will also be simulcast over the Internet through the vcall web site at http:
//www.vcall.com. Listeners should go to the web site before the call and
download necessary audio software.
About FiNet.com
FiNet.com, Inc., "America's Home Finance Network" including its wholly
owned subsidiaries (the "Company"), is a leading provider of e-commerce home
financing services that facilitates home ownership through a variety of
technology-based products and automated services for consumers and mortgage
broker businesses. The Company offers automated financing solutions directly
to consumers through its www.interloan.com on-line home financing web site and
to mortgage broker businesses through Monument Mortgage.
Safe Harbor
Certain statements in this press release, including statements regarding the
anticipated development and expansion of the Company's business, and the
intent, belief or current expectations of the Company, its directors or its
officers, are "forward-looking" statements (as such term is defined in the
Private Securities Litigation Reform Act of 1995). Because such statements are
subject to risks and uncertainties, actual results may differ materially from
those expressed or implied by such forward-looking statements.
FiNET.COM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
April 30
(Dollars in thousands, except shares and per share amounts)
1999 1998
ASSETS
Cash and cash equivalents $ 4,202 $ 1,993
Accounts receivable 2,245 26,186
Mortgages held for sale 33,438 63,034
Mortgage servicing rights 2,693 5,478
Furniture, fixtures & equipment 1,575 1,441
Other 1,102 3,336
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Total assets $ 45,255 $101,468
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Warehouse and other lines of credit $ 33,038 $ 86,659
Accounts payable 517 2,951
Notes payable and capitalized leases 481 860
Accrued expenses and other liabilities 4,531 2,139
Convertible subordinated debentures -- 5,500
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Total liabilities $ 38,567 $ 98,109
Stockholders' equity:
Common stock $ 786 $ 321
Paid-in capital 53,782 13,675
Accumulated deficit (47,880) (10,637)
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Total stockholders' equity $ 6,688 $ 3,359
Total liabilities and stockholder's equity $ 45,255 $101,468
FiNET.COM, INC. SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars and amounts in thousands - except per share amounts)
Fiscal Year Ended
April 30
1999 1998
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Revenues $ 22,413 $ 15,160
Cost of Revenues 35,064 14,718
Gross Profit (12,651) 442
Operating Expenses 20,906 9,175
Loss from Operations (33,557) (8,733)
Other Expenses:
Other interest expense 2,976 420
Loss Before Income
Taxes (36,533) (9,153)
Income tax expense 5 226
Net Loss (36,538) (9,379)
In-substance
preferred dividend 705 --
Net Loss for
Common Shareholders $(37,243) $(9,379)
Basic and diluted
net loss per
common share $(0.79) $(.31)
Shares used in computing
basic and diluted
share data 46,867 30,433
FiNet.com Quarterly E-Commerce Activity
Fiscal Year 1999
Interloan.com:
3rd Qtr. 4th Qtr.
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Number of unique visitors 38,914 94,254
Number of applications N/A 437
Number of closed loans 210 202
Percentage of closed loans 0.54% 0.21%
Note: unique visitors are user sessions non-inclusive of pages viewed
(i.e. hits)
Example: one user can tally upwards of 10 hits during one unique user
session.
iQualify.com:
3rd Qtr. 4th Qtr.
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Number of unique visitors 25,466 72,204
Number of paid underwriting decisions 328 743
Number that proceeded to select a lender 148 350
Percentage of paid underwriting decisions 0.58% 0.48%
Note: unique visitors are user sessions non-inclusive of pages viewed
(i.e. hits)
Example: one user can tally upwards of 10 hits during one unique user
session.
Business to consumer:
3rd Qtr. 4th Qtr.
Number submissions 1,647 1,349
Number of loans closed 1,217 916
Number of online loans closed 625 536
Percentage of online loans closed 51% 59%
SOURCE: FiNet.com
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