SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
May 3, 2000
Date of report (Date of earliest event reported)
Commission File Number: 0-18108
FINET.COM, INC.
Exact name of registrant as specified in its charter)
DELAWARE
(State or jurisdiction of
incorporation or organization)
2527 CAMINO RAMON, SUITE 200
SAN RAMON, CA 94583
(Address of principal executive office)
94-3115180
(IRS Employer Identification Number)
Telephone Number: (925) 242-6550
(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS
On May 2, 2000 FiNet.com, Inc. reported results for the quarter ended March 31,
2000. A copy of the press release is attached as Exhibit 99.1.
ITEM 7. EXHIBITS
EXHIBIT 99.1 Press Release dated May 2, 2000 in connection with the earnings
announcement.
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.
<TABLE>
<S> <C>
Date: May 3, 2000 /s/ GARY A. PALMER
------------------------------
GARY A. PALMER
(PRINCIPAL FINANCIAL OFFICER)
</TABLE>
FiNET.COM REPORTS RESULTS FOR THE QUARTER ENDED
MARCH 31, 2000
B2B Loan Originations increased to 84% of closed loans
SAN RAMON, CA, May 2, 2000 - FiNet.com Inc. (NASDAQ: FNCM) owner and operator of
www.FiNet.com, "America's Home Finance Network," today announced financial
results for the first quarter ended March 31, 2000. These results represent the
fourth consecutive increase in quarterly revenues for the company.
Revenue for the first quarter increased 3% to $2.9 million compared to $2.8
million for the quarter ended December 31, 1999, and increased 18% compared to
$2.4 million for the quarter ended March 31, 1999. $1.3 million of the current
quarter revenue resulted from the sale of marketable equity securities acquired
through a joint venture relationship. Net loss for the first quarter decreased
50% to $6.5 million compared to $13.0 million in the December quarter as a
result of reduced marketing, G&A, and loan loss expenses.
Net loss per share was $0.07 compared to a net loss of $0.14 per share in the
three months ended December 31, 1999, and $0.24 per share for the quarter ended
March 31, 1999, based on 93.8 million, 93.2 million, and 70.4 million weighted
average shares outstanding, respectively.
During the period, loan origination volume declined by 26% to $154.5 million
compared to $209.6 million for the same quarter of 1999, due to interest rate
increases, and declined by $95.8 million or 38% compared to the December quarter
primarily due to seasonality. The decline was greatest in the consumer direct
segment. As a result, business-to-business volumes increased to 84% of loan
origination volume from 60% in the first quarter of 1999 and 76% in the quarter
ended December 1999.
"We are very pleased with the progress made during the quarter," stated Rick
Cossano, President & CEO of FiNet.com. "We have cut our cash burn, aligned our
operating expense structure to improve productivity, hired 13 district managers
to enable mortgage brokers with state of the art technology, and introduced
several higher-margin mortgage products, which we believe will result in
increased revenues and improved operating profits during the fourth quarter of
this year."
The Company also announced the following accomplishments:
n FiNet.com's cash balance declined by only $923,000 during the quarter,
primarily as a result of increased inventory turnover, expense reductions,
and cash received from the sale of marketable equity securities. Our cash
position remains strong.
n Thirteen B2B district managers were added in April to provide a presence in
areas across the country with a high concentration of mortgage brokers.
These district managers bring deep mortgage broker relationships to
FiNet.com. Their stature in the local communities helps them influence
opinions and will strengthen FiNet.com's position as a technology
infrastructure provider;
n An agreement was reached with the leading provider of loan processing
software for mortgage brokers to provide direct links to FiNet.com and
seamless data transmission between their 20,000 mortgage broker licensees
and FiNet.com's loan processing system. This agreement further positions
FiNet.com as a technology infrastructure provider;
n The Monument.com website was improved significantly and now provides
additional functionality and efficiency to mortgage brokers in their
e-commerce with Monument Mortgage, FiNet.com's mortgage banking subsidiary;
and
n Following a review of loan acquisition costs, virtually all consumer
marketing arrangements were terminated. The Company is identifying and
pursuing profitable consumer marketing arrangements on smaller, more
focused scale.
Rick Cossano, President & CEO will host a conference call to discuss the results
and outline his strategy for FiNet.com at 5:00 PM Eastern Time. The conference
call can be accessed by calling 415-247-8535. The call will also be simulcast
over the Internet on the Vcall web site at http://www.vcall.com. Listeners
should go to the web site ten minutes before the call and download the necessary
audio software. A replay of the call will be available through May 9, 2000 by
calling 800-633-8284 from the continental U.S., and 858-812-6440
internationally. The reservation number for the replay is 14902532.
<PAGE>
About FiNet.com
FiNet.com, Inc., including its wholly owned subsidiaries (the "Company") is a
leading provider of traditional and e-commerce home financing services that
facilitate home ownership, including a variety of technology-based products and
automated services for consumers and mortgage broker businesses. The Company
offers online financing solutions directly to consumers through its
www.finet.com web site and to mortgage broker businesses through Monument
Mortgage and its web site www.monument.com.
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.
<PAGE>
FiNET.COM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS*
(Amounts in thousands
<TABLE>
<CAPTION>
December 31 March 31
1999 2000
---------- ----------
(Unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 18,626 $17,703
Restricted cash 10,403 400
Marketable equity securities 2,674 2,030
Accounts receivable 2,363 1,195
Mortgages held for sale 78,691 38,397
Furniture, fixtures & equipment 4,471 3,465
Goodwill 1,757 1,567
Other 823 1,308
---------- ----------
Total assets $119,808 $ 66,065
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Warehouse and other lines of credit $ 80,453 $ 36,158
Accounts payable 2,379 495
Notes payable and capitalized leases 141 110
Accrued expenses and other liabilities 6,462 5,027
---------- ----------
Total liabilities $ 89,435 $ 41,790
Stockholders' equity:
Common stock $ 934 $ 941
Paid-in capital 100,943 101,973
Accumulated deficit (73,208) (79,748)
Other comprehensive income 1,704 1,109
---------- ----------
Total stockholders' equity $ 30,373 $ 24,275
---------- ----------
Total liabilities and stockholders' equity $ 119,808 $ 66,065
========== ==========
<FN>
* Includes discontinued business units.
</FN>
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FiNET.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS*
(Dollars and amounts in thousands - except per share amounts)
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<CAPTION>
3 Months Ended
March 31 March 31
1999 2000
------- -------
<S> <C> <C>
(Unaudited)
Revenues $ 2,430 $ 2,871
Cost of Revenues 8,702 1,713
------- -------
Gross Profit (6,272) 1,158
Operating Expenses 10,402 7,698
------- -------
Loss from Operations (16,674) (6,540)
Other Expense/In-substance Pref. Dividend 312 -
------- -------
Net Loss $ (16,986) $ (6,540)
======= =======
Basic and diluted net loss
per common share $ (0.24) $ (0.07)
------- -------
Shares used in computing
basic and diluted share data 70,381 93,764
------- -------
<FN>
*Includes discontinued business units.
</FN>
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<PAGE>
Appendix R
Pro Forma Revenues
(Continuing Business Units Only)*
($000's)
<TABLE>
<CAPTION>
3 Months Ended
March 31 March 31
1999 2000
------- -------
Total FiNet.com Revenues
- ------------------------
<S> <C> <C>
Warehouse interest income $ 505 $ 1,078
Gain on sale of mortgage loans 409 163
Loan brokerage fees 789 127
Other 36 1,472
------- -------
Total Revenues 1,739 2,840
Cost of Revenues 1,294 1,504
------- -------
Gross Profit 445 1,336
Consumer Segment Revenues
-------------------------
Warehouse interest income - 73
Gain on sale of mortgage loans - 22
Loan brokerage fees 789 127
Other - 1,321
------- -------
Total Consumer Revenues 789 1,543
Cost of Revenues 244 318
------- -------
Gross Profit 545 1,225
Business-to-Business (B2B) Segment Revenues
-------------------------------------
Warehouse interest income 505 1,005
Gain on sale of mortgage loans 409 141
Other 36 151
----- ------
Total B2B Revenues 950 1,297
Cost of Revenues 1,050 1,186
------- -------
Gross Profit (100) 111
<FN>
*Excludes discontinued business units and corporate segment
</FN>
</TABLE>
<PAGE>
Appendix E
Pro Forma Corporate Expenses
(Continuing Business Units Only)*
($000's)
<TABLE>
<CAPTION>
3 Months Ended
March 31 March 31
1999 2000
------- -------
FiNet.com Expenses
- ------------------
<S> <C> <C>
General & Administrative $ 3,221 $ 4,690
Marketing & Advertising 702 864
Depreciation & Amortization 129 494
Other 662 1,283
------- -------
Total Operating Expenses $ 4,714 $ 7,331
Warehouse Interest Expense $ 767 $ 508
<FN>
*Excludes discontinued business units
</FN>
</TABLE>
<PAGE>
Appendix O
Other Data
(Continuing Business Units Only)
<TABLE>
<CAPTION>
Three Months Ended
March 31 March 31
1999 2000
-------- --------
Total FiNet.com*
- ---------------
<S> <C> <C>
Loans Closed 1,227 1,022
Revenues (per loan) $1,417 $2,719
Cost of Revenues (per loan) $1,054 $1,470
Marketing (per loan) $ 572 $ 845
Consumer Channel
----------------
Loans Brokered 377 113
Loans Funded 43 69
------- --------
Total Loans Closed 420 182
Revenues (per loan)** $1,878 $1,219
Cost of Revenues (per loan) $ 579 $1,747
Marketing (per loan) $ 73 $3,923
Business to Business Channel
---------------------------
Loans Closed 807 840
Revenues (per loan) $1,175 $1,545
Cost of Revenues (per loan) $1,301 $1,414
Marketing (per loan) $ 826 $ 179
<FN>
*Excludes discontinued business units and corporate segment
** Excludes Other Revenue
</FN>
</TABLE>
<PAGE>
Appendix V
Loan Volumes
(Continuing Business Units Only)*
<TABLE>
<CAPTION>
Three Months Ended
March 31 March 31
1999 2000
------- -------
Total FiNet.com
- ---------------
<S> <C> <C>
Number of unique visitors 69,200 511,608
Number of applications 1,999 2,268
Number of closed loans 1,227 1,022
Amount of closed loans ($000) 209,626 154,504
Refinance loans (% of # of loans) 76% 38%
California loans (% of # of loans) 90% 72%
Consumer Channel
----------------
Number of unique visitors** 69,200 511,608
Number of applications 700 679
Number of closed loans 420 182
Amount of closed loans ($000's) 83,040 24,370
Refinance loans (% of # of loans) 92% 43%
California loans (% of # of loans) 94% 18%
Business-to-Business Channel
----------------------------
Number of applications 1,299 1,589
Number of closed loans 807 840
Amount of closed loans ($000's) 126,586 130,134
Refinance loans (% of # of loans 64% 37%
California loans (% of # of loans) 88% 84%
<FN>
*Excludes discontinued business units
** Unique visitors are user sessions non-inclusive of pages viewed. One user
can tally upwards of 10 page views during one unique user session
</FN>
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