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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 21, 2000
REGISTRATION NO. 333-93809
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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FINET.COM, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 6162 94-3115180
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code No.) Identification No.)
organization)
2527 CAMINO RAMON, SUITE 200, SAN RAMON, CALIFORNIA 94583
TELEPHONE: (925) 242-6600
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
RICK COSSANO, PRESIDENT, CHIEF EXECUTIVE OFFICER
2527 CAMINO RAMON, SUITE 200, SAN RAMON, CALIFORNIA 94583
TELEPHONE: (925) 242-6600
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
------------------------------------
COPIES TO:
ROGER S. MERTZ STEPHEN C. FERRUOLO
ALLEN, MATKINS, LECK, GAMBLE & HELLER EHRMAN WHITE & MCAULIFFE LLP
MALLORY LLP 525 UNIVERSITY AVENUE
333 BUSH STREET, SEVENTEENTH FLOOR PALO ALTO, CALIFORNIA 94301
SAN FRANCISCO, CALIFORNIA 94104-2806 TELEPHONE: (650) 324-7000
TELEPHONE: (415) 837-1515 FACSIMILE: (650) 324-0638
FACSIMILE: (415) 837-1516
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF
THIS REGISTRATION STATEMENT.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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The information in this preliminary prospectus is not complete and may be
changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission becomes effective. This
preliminary prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
SUBJECT TO COMPLETION, DATED MARCH 21, 2000
PROSPECTUS
FiNET.COM, INC.
600,000 SHARES
COMMON STOCK
The selling stockholder identified in this prospectus is offering 600,000
shares of common stock. FiNet.com will not receive any of the proceeds from the
sale of shares by the selling stockholder.
FiNet.com's common stock is traded on the Nasdaq SmallCap Market under the
symbol "FNCM." On March 15, 2000, the last reported sale price for the
common stock on the Nasdaq SmallCap Market was $1.84 per share.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 3.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this Prospectus is ____________, 2000.
<PAGE>
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. The selling security holder is offering to sell,
and seeking offers to buy, shares of FiNet.com's common stock only in
jurisdictions where offers and sales are permitted. The information contained
in this prospectus is accurate only as of the date of this prospectus,
regardless of the time of delivery of this prospectus or of any sale of the
shares.
In this prospectus, the "company," the "Registrant," "FiNet.com," "we,"
"us," and "our" refer to FiNet.com, Inc.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to "incorporate" into this prospectus information we file
with the SEC in other documents. This means that we can disclose important
information to you by referring to other documents that contain that
information. The information may include documents filed after the date of this
prospectus which update and supersede the information you read in this
prospectus. We incorporate by reference the documents listed below, except to
the extent information in those documents is different from the information
contained in this prospectus, and all future documents filed with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until
we terminate the offering of these shares.
SEC Filing (File No. 0-18108) Period/Filing Date
----------------------------- -------------------
Annual Report on Form 10-K/A Year ended April 30, 1999
Quarterly Reports on Forms 10-Q Quarter ended July 31, 1999
Quarter ended October 31, 1999
Current Reports on Form 8-K May 28, 1999
June 24, 1999
June 28, 1999
August 20, 1999
November 9, 1999
December 15, 1999
January 12, 2000
March 21, 2000
You may request a copy of these documents, at no cost, upon oral request, or
by writing to:
FiNet.com, Inc.
2527 Camino Ramon, Suite 200
San Ramon, California 94583
Attention: Investor Relations
Telephone: (925) 242-6600
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2
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SUBSEQUENT EVENTS
In November 1999, Kevin Gillespie, our Executive Vice President - Sales
and Marketing, announced his resignation, effective December 20, 1999. In
November 1999, we announced that Kellie Johnson-Abreu had been hired to
replace Mr. Gillespie as Vice President--Marketing and Sales. In December
1999, Ms. Johnson-Abreu informed us that she was resigning, believing that
she had been constructively terminated. We are currently negotiating a
settlement with Ms. Johnson-Abreu.
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, resigned.
Effective April 1, 2000, we have appointed Michael Quinn, Senior Vice
President, Director of Capital Markets.
As of December 31, 1999, we are in default of certain financial
covenants contained in our warehouse lending agreement. We are working with
our lender to obtain a waiver of these defaults. While we believe we will
obtain a waiver, we cannot assure you that a waiver will be obtained.
RISK FACTORS
You should carefully consider the risks described below before making a
decision to buy our common stock. The risks described below are not the only
ones we face. Additional risks not presently known to us or that we currently
consider immaterial may also materially impair our business operations.
If any one or more of the risks described below actually occurs, the
price of our shares may decline and you may lose all or part of your
investment.
Many of 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.
3
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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 ON 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,
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 THE 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 effect on our business, results
of operations and financial condition.
Over the last seven years we have generally operated in an environment
of relatively low interest rates, relatively high demand for consumer credit
and increasing home sales and real estate values. However, the mortgage
market has contracted during 1999 and early 2000 with the increase in
interest rates, and this contraction may continue for some time. We cannot
be sure that we will be able to grow our business in an atmosphere of higher
interest rates, lower consumer credit demand and real estate value and fewer
home sales and mortgage refinances.
4
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IF WE ARE UNABLE TO DIFFERENTIATE OURSELVES FROM 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.
5
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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 45% of the
loans we originated and/or funded during the eight months ended December 31,
1999 were loans to refinance mortgage debt, compared to 73% during the eight
months ended 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 to replace
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. We are in default of
certain financial covenants as of December 31, 1999. We are working with
GMAC/RFC to obtain a waiver. We cannot assure you that we will be able to
obtain a waiver of this default from GMAC/RFC or of any future defaults, or
that financing will continue to be available on favorable terms or at all.
6
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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, results of
operations and financial condition could be materially adversely affected.
IF WE ARE UNABLE TO RETAIN AND 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 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 WILL BE MATERIALLY ADVERSELY AFFECTED.
Our success depends upon the acceptance of on-line mortgage financing by
consumers, mortgage brokers and other real estate service providers.
If 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.
7
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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, 87% were for properties located in
California. No other state represented more than 2% 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 OPERATING
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 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 loan foreclosures may rise.
Depending on the circumstances of the transaction, we may or may not be able
to sell the property for more than the outstanding loan balance. As of
December 31, 1999, we held approximately $220,000 aggregate principal amount
of loans in foreclosure.
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.
8
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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 BUSINESSES 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.
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.
9
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IF THERE ARE INTERRUPTIONS OR DELAYS 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.
IF WE FAIL TO COMPLY WITH EXTENSIVE FEDERAL AND STATE LAWS REGULATING OUR
INDUSTRY, WE COULD BE SUBJECT TO PENALTIES, DISQUALIFICATIONS, LAWSUITS OR
ENFORCEMENT ACTIONS THAT COULD HAVE A MATERIAL ADVERSE AFFECT OUR BUSINESS.
Our operations are subject to extensive regulation by federal and state
authorities. 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 21 of our Annual Report on
Form 10-K/A 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 infracture 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.
10
<PAGE>
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.
IF OUR SHARES ARE DELISTED, THE LIQUIDITY FOR OUR SHARES COULD BE IMPAIRED.
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.
WE DO NOT INTEND TO PAY DIVIDENDS.
We have not paid any dividends on our common stock since fiscal 1997 and we
do not anticipate paying dividends on our common stock in the foreseeable
future.
11
<PAGE>
FORWARD LOOKING STATEMENTS
We have made forward-looking statements in this prospectus that are subject
to risks and uncertainties. Forward-looking statements include information
concerning our possible or assumed future results of operations. Also, when we
use such words as "believe," "expect," "anticipate," "plan," "could," "intend"
or similar expressions, we are making forward-looking statements. You should
note that an investment in our securities involves certain risks and
uncertainties that could affect our future financial results. Our actual
results could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including those set forth in "Risk
Factors" and elsewhere in this prospectus.
We believe it is important to communicate our expectations to our
investors. However, there may be events in the future that we are not able to
predict accurately or over which we have no control. The risk factors listed
above, as well as any cautionary language in this prospectus, provide examples
of risks, uncertainties and events that may cause our actual results to differ
materially from the expectations we describe in our forward-looking statements.
Before you invest in our common stock, you should be aware that the occurrence
of the events described in these risk factors and elsewhere in this prospectus
could materially and adversely affect our business, results of operations and
financial condition.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares by the
selling stockholder.
12
<PAGE>
SELLING STOCKHOLDER
The following table sets forth the name of the selling stockholder, the
number of shares of common stock owned beneficially by the selling
stockholder as of March 15, 2000 and the number of shares that may be offered
pursuant to this prospectus. There are currently no agreements, arrangements
or understandings with respect to the sale of any of the shares. The shares
are being registered to permit public secondary trading of the shares, and
the selling stockholder may offer the shares for resale from time to time.
The selling stockholder acquired the shares from us in consideration for the
transfer of its interest, in October 1999, in an entity that we jointly
owned. At the time of that transaction, the selling stockholder had no
agreement or undertaking, directly or indirectly, with any person to
distribute the shares.
<TABLE>
<CAPTION>
COMMON STOCK COMMON STOCK
BENEFICIALLY OWNED BENEFICIALLY OWNED
PRIOR TO OFFERING(1) AFTER OFFERING (1)
--------------------- COMMON STOCK ------------------
HOLDER NUMBER PERCENT TO BE SOLD NUMBER PERCENT
------ ------- ------- ------------ ------ -------
<S> <C> <C> <C> <C> <C>
Homeseekers.com, Inc. 600,000 * 600,000 0 -
</TABLE>
- ------------------------
* Less than one percent.
(1) Applicable percentage of ownership is based on 93,937,495 shares of Common
Stock outstanding as of March 15, 2000.
PLAN OF DISTRIBUTION
The selling stockholder may offer its shares at various times in one or
more of the following transactions:
- on the Nasdaq SmallCap Market (or any other exchange on which the
shares may be listed);
- in the over-the-counter market;
- in negotiated transactions other than on such exchanges;
- by pledge to secure debts and other obligations;
- in connection with the writing of non-traded and exchange-traded
call options, in hedge transactions, in covering previously established
short positions and in settlement of other transactions in standardized or
over-the-counter options; or
- in a combination of any of the above transactions.
The selling stockholder may sell its shares at market prices prevailing
at the time of sale, at prices related to such prevailing market prices, at
negotiated prices or at fixed prices. The selling stockholder may use
broker-dealers to sell its shares. The broker-dealers will either receive
discounts or commissions from the selling stockholder, or they will receive
commissions from purchasers of shares.
Under certain circumstances the selling stockholder and any
broker-dealers that participate in the distribution may be deemed to be
"underwriters" within the meaning of the Securities Act. Any commissions
received by such broker-dealers and any profits realized on the resale of
shares by them may be considered underwriting discounts and commissions under
the Securities Act. The selling stockholder may agree to indemnify such
broker-dealers against certain liabilities, including liabilities under the
Securities Act.
Under the rules and regulations of the Exchange Act, any person engaged in
the distribution or the resale of shares may not simultaneously engage in market
making activities with respect to FiNet.com's common stock for a period of two
business days prior to the commencement of such distribution. The selling
stockholder will also be
13
<PAGE>
subject to applicable provisions of the Exchange Act and regulations under
the Exchange Act which may limit the timing of purchases and sales of shares
of FiNet.com's common stock by the selling stockholder.
The selling stockholder will pay all commissions, transfer taxes, and other
expenses associated with the sale of securities by them. The shares offered
hereby are being registered pursuant to contractual obligations of FiNet.com,
and FiNet.com has paid the expenses of the preparation of this prospectus. We
have not made any underwriting arrangements with respect to the sale of shares
offered hereby.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed on for us
by Heller Ehrman White & McAuliffe LLP, Palo Alto, California, counsel to the
company in connection with the offering.
EXPERTS
The consolidated financial statements of FiNet.com which appear in its
Annual Report (Form 10-K/A) for the fiscal year ended April 30, 1999 have
been audited by Ernst & Young LLP, independent auditors, as set forth in
their report therein and incorporated herein by reference. Such financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
FiNet.com's consolidated financial statements, except with respect to
Coastal Federal Mortgage, for the fiscal years ended April 30, 1998 and 1997
were audited by Reuben E. Price & Co., independent certified accountants, as set
forth in their report therein and incorporated herein by reference. Such
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
The financial statements of Coastal Federal Mortgage, for the fiscal years
ended April 30, 1998 and 1997, which are not presented separately herein, were
audited by Richard A. Eisner & Company, LLP, independent auditors, as set forth
in their report thereon and incorporated herein by reference. Such financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly, and current reports, proxy statements, and other
documents with the Securities and Exchange Commission. You may read and copy
any document we file at the SEC's public reference room at Judiciary Plaza
Building, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. You should
call 1-800-SEC-0330 for more information on the public reference room. The SEC
maintains an Internet site at http://www.sec.gov where certain information
regarding issuers (including FiNet.com) may be found.
This prospectus is part of a registration statement that we filed with the
SEC (Registration No. 333-93809). The registration statement contains more
information than this prospectus regarding FiNet.com and its common stock,
including certain exhibits and schedules. You can get a copy of the
registration statement from the SEC at the address listed above or from its
Internet site.
14
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the registrant in connection
with the sale of the common stock being registered. All amounts are estimated
except the SEC registration fee.
SEC Registration Fee . . . . . . . . $ 190
Accounting Fees and Expenses . . . . $ 35,000
Legal Fees and Expenses . . . . . . . $ 20,000
Printing and Engraving . . . . . . . $ 4,000
Miscellaneous . . . . . . . . . . . . $ 5,810
--------
Total . . . . . . . . . . . $ 65,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to the General Corporation Law of Delaware (the "DGCL"), the
registrant's Certificate of Incorporation excludes personal liability on the
part of its directors to the registrant for monetary damages based upon any
violation of their fiduciary duties as directors, except as to liability for any
breach of the duty of loyalty, acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, acts in violation
of Section 174 of the General Corporation Law of Delaware, or any transaction
from which a director receives an improper personal benefit. This exclusion of
liability does not limit any right which a director may have to be indemnified.
The registrant's Certificate of Incorporation and its Bylaws require
indemnification of directors and officers of the registrant to the fullest
extent permitted by the DGCL for claims against them in their official
capacities, including stockholders' derivative actions.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the SEC, such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.
ITEM 16. EXHIBITS.
Exhibit Description
- --------- -----------
*4.1 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
5.1 Opinion of Heller Ehrman White & McAuliffe
23.1 Consent of Ernst & Young LLP
23.2 Consent of Reuben E. Price & Co.
23.3 Consent of Richard A. Eisner & Company, LLP
II-1
<PAGE>
23.4 Consent of Heller Ehrman White & McAuliffe (included in Exhibit 5.1
hereto)
24.1 Power of Attorney (see page II-4)
* Previously filed.
ITEM 17. UNDERTAKINGS
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in
the volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of the Registration Fee"
table in the effective Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, as amended, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
B. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described in Item 14 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
C. The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.
II-2
<PAGE>
(2) For purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 to Registration Statement on Form S-3 to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of San Ramon,
California on March 21, 2000.
FiNET.COM, INC.
By: /s/ Gary A. Palmer
----------------------------------
Gary A. Palmer
Executive Vice President -
Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Stephen J. Sogin and Gary A. Palmer his true and lawful attorneys-in-fact and
agents, each acting alone, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective
amendments) to the Registration Statement, and to sign any registration
statement for the same offering covered by this Registration Statement that
is to be effective upon filing pursuant to Rule 462(b) under the Securities
Act of 1933, as amended, and all post-effective amendments thereto, and to
file the same, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do
or cause to be done by virture hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to Registration Statement on Form S-3 has been signed by the
following persons in the capacities and on the dates indicated.
Signature Office Date
--------- ------ ----
/s/ Rick Cassano
- ------------------------- Chief Executive March 21, 2000
Rick Cassano Officer and Director
(Principal Executive Officer)
*
- ------------------------- Vice Chairman March 21, 2000
L. Daniel Rawitch
/s/ Gary A. Palmer
- ------------------------- Executive Vice President - March 21, 2000
Gary A. Palmer Chief Financial Officer
(Principal Financial and
Accounting Officer)
*
- ------------------------- Director March 21, 2000
Antonio P. Falcao
*
- ------------------------- Director March 21, 2000
S. Lewis Meyer
*
- ------------------------- Director
Stephen J. Sogin, Ph.D.
*
- ------------------------- Director March 21, 2000
Richard E. Wilkes
By: /s/ Gary A. Palmer
----------------------
Gary A. Palmer
(Attorney-in-Fact)
II-4
<PAGE>
INDEX TO EXHIBITS
Exhibit Description
- ------- -----------
*4.1 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
5.1 Opinion of Heller Ehrman White & McAuliffe
23.1 Consent of Ernst & Young LLP
23.2 Consent of Reuben E. Price & Co.
23.3 Consent of Richard A. Eisner & Company, LLP
23.4 Consent of Heller Ehrman White & McAuliffe (included in Exhibit 5.1
hereto)
24.1 Power of Attorney (see page II-4)
* Previously filed.
II-5
<PAGE>
[LETTERHEAD OF HELLER EHRMAN]
March 20, 2000
25716-0001
FiNet.Com, Inc.
2527 Camino Ramon, Suite 200
San Ramon, CA 94583
REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have acted as counsel to FiNet.com, Inc., a Delaware corporation
(the "Company"), in connection with the Registration Statement on Form S-3 which
the Company filed with the Securities and Exchange Commission on December 29,
1999, as amended (Registration No. 333-93809) (the "Registration Statement"),
for the purpose of registering under the Securities Act of 1933, as amended,
600,000 shares of its Common Stock, par value $0.01 (the "Shares").
We have assumed the authenticity of all records, documents and
instruments submitted to us as originals, the genuineness of all signatures, the
legal capacity of natural persons and the conformity to the originals of all
records, documents and instruments submitted to us as copies.
In rendering our opinion, we have examined the following records,
documents and instruments:
(a) The Certificate of Incorporation of the Company, certified by the
Delaware Secretary of State as of June 1, 1999, and plain copies of the
Certificate of Incorporation dated as of March 8, 2000 and certified to
us by an officer of the Company as being complete and in full force as
of the date of this opinion;
(b) The Bylaws of the Company certified to us by an officer of the Company
as being complete and in full force and effect as of the date of this
opinion;
(c) A Certificate of an officer of the Company (i) attaching records
certified to us as constituting all records of proceedings and actions
of the Board of Directors, including
<PAGE>
HellerEhrman
Attorneys March 20, 2000
Page 2
any committee thereof, and stockholders of the Company relating to the
Shares, and the Registration Statement, and (ii) certifying as to
certain factual matters;
(d) The Registration Statement;
(e) A letter from Continental Stock Transfer & Trust Company, the Company's
transfer agent, dated March 14, 2000, as to the number of shares of the
Company's Common Stock that were outstanding on March 13, 2000.
This opinion is limited to the federal law of the United States of
America and the General Corporation Law of the State of Delaware, and we
disclaim any opinion as to the laws of any other jurisdiction. We further
disclaim any opinion as to any other statute, rule, regulation, ordinance, order
or other promulgation of any other jurisdiction or any regional or local
governmental body or as to any related judicial or administrative opinion.
Based upon the foregoing and our examination of such questions of law
as we have deemed necessary or appropriate for the purpose of this opinion, and
assuming that (i) the Registration Statement becomes and remains effective
during the period when the Shares are offered and sold, (ii) the full
consideration stated in the purchase agreement pursuant to which the Shares were
purchased was paid for each Share and that such consideration in respect of each
Share includes payment of cash or other lawful consideration at least equal to
the par value thereof, (iii) appropriate certificates evidencing the Shares were
executed and delivered by the Company, and (iv) all applicable securities laws
are complied with, it is our opinion that the Shares were legally issued, and
are fully paid and nonassessable.
This opinion is rendered to you in connection with the Registration
Statement and we disclaim any obligation to advise you of any change of law that
occurs, or any facts of which we may become aware, after the date of this
opinion.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the caption "Legal
Matters" in the Registration Statement.
Very truly yours,
/s/ Heller Ehrman White & McAuliffe LLP
<PAGE>
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to the Registration Statement (Form S-3 No. 33-93809) and
related Prospectus of FiNet.com, Inc. and subsidiaries for the registration
of 600,000 shares of its common stock and to the incorporation by reference
therein of our report dated June 11, 1999 (except Note 20, as to which the
date is June 28, 1999), with respect to the consolidated financial statements
of FiNet.com, Inc. and subsidiaries included in its Form 10-K/A for the year
ended April 30, 1999, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
San Francisco, California
March 20, 2000
<PAGE>
Exhibit 23.2
[LETTERHEAD]
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to the
Registration Statement of FiNet.com, Inc. on Form S-3 of our reports dated
August 12, 1998 appearing in the Annual Report on Form 10-K/A of FiNet.com,
Inc. for the year ended April 30, 1999 and to the reference to us under the
heading "Experts" in the Prospectus, which is part of this registration
Statement.
/s/Reuben E. Price & Co.
San Francisco, CA
March 20, 2000
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Amendment No. 1 to
Registration Statement on Form S-3, relating to the registration of 600,000
shares of common stock of FiNet.com, Inc., of our report dated July 9, 1998
(with respect to Note C July 31, 1998) with respect to our audit of the
financial statements (not included in the registration statement) of Coastal
Federal Mortgage Company, a wholly owned subsidiary of FiNET.Com, as of and
for each of the years in the two year period ended April 30, 1998.
/s/ Richard A. Eisner and Company, LLP
Florham Park, New Jersey
March 14, 2000
