"Funding for this expansion was raised through sale of investments, which generated other income in 1999 of $2.8 million."
Loraca International Reports 1999 Results; Company Executing Plan for New B2B E-Commerce Model for Financial Services
SEATTLE--(BUSINESS WIRE)--March 30, 2000--Loraca International, Inc. (OTCBB:LCAI), an emerging business-to-business e-finance services holding company, reported losses for 1999 as the company began implementing its strategic plan to provide wholesale services emphasizing internet automation and technology to third party mortgage originators.
During this transition year, revenues decreased 69% to $197,000 for the year ended December 31, 1999 as compared to $637,000 for the like period in 1998. The decrease resulted from the reduction in gain on sales of loans and interest income as mortgage loan origination volume declined due to the partial closure of the company's retail lending. Total operating expenses in 1999 increased to $3.9 million as compared to $1.8 million in 1998, as the company began building the infrastructure needed to support its expansion into business-to-business e-finance services. Funding for this expansion was raised through sale of investments, which generated other income in 1999 of $2.8 million. As a result LCAI reported a loss of $889,000 or $.13 per share with 7 million outstanding shares in 1999 compared to a loss of $1.1 million or $.19 per share with 6 million outstanding shares in 1998. Other comprehensive income, which is not included in operating results, generated market appreciation of $4.2 million during 1999.
"Our accomplishments in 1999 laid the groundwork for Loraca to bring a new paradigm for efficiency, convenience and value to the mortgage origination industry," stated Ron Baca, chairman and CEO. "This year we brought together the technology and lending expertise necessary to achieve our goals of revolutionizing the third-party mortgage origination business in the United States. This highly fragmented industry is very well suited to Internet technology for not only underwriting loans in all categories, but also delivering the many services necessary to efficiently close a mortgage today. We believe the benefits of this new approach to mortgage services will generate increased efficiencies for the third party mortgage origination firms (TPOs) and improved services and pricing for the consumer."
In the past fifteen months, the company made significant progress on implementing its plans for developing and delivering superior technology to TPOs. The highlights are as follows:
-- Engaged J.A. Young & Co. ("JA Young") of Bellevue to create a loan processing module to provide B2B services for TPO's and initiated beta testing of this software on live files at the end of the year.
-- Assembled a superior management team with extensive mortgage, technology and Internet experience.
-- Relocated geographically disperse team to new Seattle headquarters.
-- Filed Form 10 to become a fully reporting public company.
-- Initiated purchase of key components for delivering high quality service and exceptionally functional technology
- For technology, LCAI and JA Young initiated discussions to
merge.
- For mortgage fulfillment, LCAI and Calumet Securities agreed to
merge.
- For ancillary insurance and other services, initiated
discussions with private companies for strategic alliances.
-- Began design and construction of website and related technology to deliver services on-line.
-- Developed automated lending algorithms for credit review and approval of conforming and non-conforming loans, jumbo, government agency programs and other specialty lending products.
-- Signed first host broker to link LCAI's systems and products to over 400 mortgage brokerage firms throughout the southeast.
"The strong management team we've assembled coupled with our technology and expected acquisitions, provide us with a very strong platform for delivering a competitive advantage to third party mortgage lending firms," Baca explained. There are more than 36,000 independent mortgage brokers and over 7,600 community banks throughout the United States that can benefit from Loraca's web-enabled technology model, providing fast, efficient loan processing for brokers and helping them compete with larger rivals and emerging B2C Internet mortgage companies. "TPO's need a lifeline. They need someone focused on their needs that will provide technology in a useable format that trains them and leads them through the new loan programs and processes emerging in today's highly competitive marketplace. We believe our model will not only improve the processes, but has the potential to at least double the profitability of most small mortgage brokerages, because we can spread the cost of automation across a much wider base."
Loraca International, Inc. is an emerging business-to-business e-finance services holding company providing web-enabling technology to firms involved in the mortgage industry.
Financial Highlights
Balance Sheet
(unaudited)
($ in thousands except per share)
December 31,
1999 1998
Assets
Cash and cash equivalents $ 155,072 $ 35,895
Marketable securities 6,367,541 2,682,316
Loan receivables held for
sale, net 1,315,301 1,798,514
Prepaid expenses 58,785 24,932
Furniture, fixtures and
equipment, net 51,153 64,968
Capitalized leased assets, net 98,023 10,853
Receivables, other 26,782 49,673
Goodwill, net of amortization of
$56,324 (1999) and
$25,602 (1998) 404,512 435,234
Total assets $ 8,477,169 $ 5,102,385
Liabilities and Shareholders' Equity
Warehouse lines of credit $ 1,288,797 $ 1,790,960
Other borrowings 25,762 61,271
Accounts payable 397,150 152,569
Accrued liabilities 162,463 53,318
Escrow deposits 298 12,714
Capitalized lease liabilities 102,252 6,485
Note payable to stockholder 859,568 701,737
Total liabilities 2,836,290 2,779,054
Stockholders' Equity
Common stock: Par value $.001 per
share; 50,000,000 shares
authorized; 7,003,047 (1999) and
7,000,000 (1998) issued
and outstanding 7,003 7,000
Additional paid-in-capital 3,292,409 3,276,415
Other accumulated comprehensive
income 4,442,892 252,371
Accumulated deficit (2,101,425 ) (1,212,455 )
Total stockholders' equity 5,640,879 2,323,331
Total liabilities and
stockholders' equity $ 8,477,169 $ 5,102,385
Income Statement
1999 1998
Revenues
Gains on sales of loans $ 113,223 $ 285,843
Interest income 83,661 351,496
Total revenue 196,884 637,339
Expenses
Interest expense 78,786 452,513
Personnel and commission
expense 1,511,778 579,336
General, administrative and
development expense 2,282,899 782,534
Total expenses 3,873,463 1,814,383
Loss from operations (3,676,579 ) (1,177,044 )
Other income
Dividends 5,924 3,423
Gain on sale of investments 2,781,685 41,107
Total other income 2,787,609 44,530
Net loss (888,970 ) (1,132,514 )
Other comprehensive income
Unrealized holding gains
arising during year 4,190,521 317,841
Less reclassification
adjustment for losses
included in net loss -- (65,470 )
Other comprehensive income 4,190,521 252,371
Comprehensive income (loss) $ 3,301,551 $ (880,143 )
Basic and diluted net loss
per share $ (0.13 ) $ (0.19 )
Weighted average number of
shares outstanding 7,001,016 5,967,000
Statements made in this news release that are not historical facts are forward-looking information. Actual results may differ materially from those projected in any forward-looking information. Specifically, there are a number of important factors that could cause actual results to differ materially from those anticipated by any forward-looking information. Those factors include, but are not limited to, changes in technology and product acceptance, regulatory approval processes, ability of Loraca to successfully integrate the acquired businesses, and general economic conditions. Additional information on these and other factors which could affect the Company's financial results are included in its Securities and Exchange Commission filings.
CONTACT:
Loraca International Inc.
Bernard Guy, President, 206/332-0400
KEYWORD: WASHINGTON
BW1545 MAR 30,2000
11:57 PACIFIC
14:57 EASTERN |
