SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-KA
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) August 8, 1996
MARKET DATA CORP.
(Exact name of registrant as specified in its charter)
TEXAS 33-22264-FW 76-0252235
(State or jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
14505 TORREY CHASE BLVD. SUITE 410, HOUSTON, TX 77014
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 586-8686
Item 5. Other Items
The following items are pertinent to Renet Financial Corporation,
which was acquired as a subsidiary of registrant.
1. Financial Statements dated June 30, 1996, from Renet
Financial Corporation.
2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
The following discussion should be read in conjunction with the
attached unaudited subsidiary financial statements for the fourth
quarter, ending June 30, 1996, (see exhibit 99).
Financial Results of Operations
Total revenues for Renet Financial Corporation decreased to
$645,498 in the quarter ended June 30, 1996, from $1,231,926 in
the quarter ended June 30, 1995, a decrease of 48%. This was due
to the changing loan market away from the refinance market to a
weak real estate market in California. The change was brought
about with increases in interest rates and a weak California
economy. In addition, a major factor in reduction in revenues
was the loss of HUD approvals and the subsequent loss of the
warehouse lending line of credit. (See discussion below).
Operating expenses decreased to $738,962 for the quarter ending
June 30, 1996, compared to $969,925 for the quarter ending June
30, 1995, a decrease of 23.8%. The Company downsized during this
period by closing branch offices. Commissions paid decreased 42%
from $457,656 to $261,084. Salaries decreased 13.7% from
$211,984 to $182,902. The employee costs did not come down as
rapidly as other expenses, because of the cost of termination
including accrued vacation pay and other benefits.
A net loss resulted for the quarter of $(160,520) as compared to
a net profit of $75,826 for the prior year's quarter ending June
30, 1995. The loss was due to the drop in revenues and the cost
of office closings during the period.
Business Operations
During the quarter the company continued to experience losses.
On May 28, 1996, Renet received a Notice of Withdrawal of HUD
Title II lender approval for a period of three years. The main
reason for the withdrawal was the failure to pay and the late
payment of UFMIP funds. In addition, the letter stated that HUD
intends to assess $50,000 in civil penalties for these violations
of HUD regulations. The Company had 30 days in which to request
a hearing in regards to HUD's action, and did so. The hearing
date has not been set as yet.
Upon Renet's announcement of HUD's action, Renet's warehouse
lender, Imperial Credit Industries, canceled Renet's warehouse
line of credit and requested that all loans held for sale be
promptly sold off. In addition, Imperial Credit Industries
verbally notified Renet that it would not forward any proceeds of
the sales of its loans until all the loans were sold. To date
twenty loans have been sold, but seven loans remain. Because of
Imperial Credit Industries restricting the cash flow out of the
warehouse line, several small collection demands and suits have
been commenced against Renet for $3,000 to $20,000.
Management's action to counter these was to close all remaining
branch offices and reduce staffing and consolidate operations to
the main office in Orange, California. In addition, the funding
division was closed. The funding division required significant
working capital and recently generated operating losses. Renet
remains a broker of loans and is table funding some loans with
its lenders. These actions should move us toward operating
profits by the end of this quarter.
On July 26, 1996, the California Department of Real Estate
completed an audit (as a result of the HUD action) and made
specific findings which management believes may lead to a "Cease
and Desist" order based on unpaid MIP's. The audit found
$197,077.41 unpaid as of June 30, 1996, based on Renet's
accounting. On July 27, 1996, Management presented the auditors
with a letter of corrective actions. This included that some of
the amounts had already been subsequently paid and that all of
the remaining amounts will be paid by August 15, 1996, by
agreement with Homeside Lending and other lenders who will
advance the funds of Renet's behalf. Each of the lenders has
submitted demands to Renet for the repayment of the amounts
advanced as follows:
Countrywide Funding on July 26, 1996, sent a letter to Renet
demanding payment of $30,707 plus late fees of $1,381.85 for MIP
advances.
First Nationwide Mortgage has demanded $67,424 which is the
remaining balance on funds advanced for MIP's.
First Plus is advancing $17,000 on behalf of Renet and Renet will
sign a note for that amount. Homeside Mortgage is advancing the
balance plus late charges and fees ($140,000 estimated), and
should make its demand shortly.
First Nationwide, On July 19, 1996, demanded repurchase by Renet
of loans totaling $336,456. The reason is that these loans had
late payment of MIP's and FHA will not issue insurance unless the
borrower's payments are on time. If there is a late payment, FHA
requires a period of six months with no late payments to insure
the loan. Renet has asked First Nationwide for the payment
history and status of each loan to determine if and when they may
be insured to determine if they may be resold to another lender.
Such action would result in a market loss on the face amount of
the loans, the amount is yet undetermined. Renet may be subject
to other loan repurchase liabilities in the normal course of
business and in particularly on the FHA loans with late MIP
payments. HUD loans represented 15% of the loan volume of Renet
in the past year.
The loss of HUD approval does not directly affect Renet's
franchisees, because they were not allowed to do FHA loans by HUD
under a 1991 agreement with Renet. The Renet franchisees
continue to broker loans to their lender of choice as they have
in the past. Renet's efforts will be to concentrate on
supporting the franchisees and their marketing efforts. Renet
will also continue its wholesale and retail loan marketing in its
high loan to value market niche.
Capital
The Company is aggressively pursuing raising additional capital.
Currently, management is in negotiation with a Southern
California investment advisor for the purposes of obtaining a
bridge loan, leading to a private offering to raise capital for
the expansion of the marketing of franchises and the geographic
expansion of the wholesale operation. Management anticipates
that the capital raising should take place before the end of this
year. The funds from the offering will allow the Company to
expand its market share and, in turn, expand revenues. The
Company will also receive the necessary funds to settle the
payable as described above. Should the Company be unable to
raise additional capital, its ability to repay the above
obligations would be limited to earnings and the payment of
accounts receivable.
The Company is also in negotiation with a California CPA firm to
complete the current audit and to maintain the necessary SEC
filings in a timely manner. This should be finalized by August
9, 1996. Within the same period, the Company will be hiring a
new California based SEC attorney to assist in all filings.
Item 6. Resignations of Registrant's Directors
1. On June 11, 1996, David P. LaPuma resigned as a Director of
the Company and as an officer and director of Renet Financial
Corporation so that he could pursue other interests. He remains
available as a consultant to the Company as needed (see exhibit
17).
2. On August 7, 1996, Steven C. Naremore resigned as a Director
and as an officer of Market Data Corp. in a disagreement with the
board over the disclosure and consequences of the HUD approval
withdrawal within the Renet Financial Corporation (see exhibit
17).
3. On August 7, 1996, Janice S. Whalen resigned as a Director
and as an officer of Market Data Corp. in a disagreement with the
board over the disclosure and consequences of the HUD approval
withdrawal within the Renet Financial Corporation (see exhibit
17).
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 hereunto duly authorized.
Market Data Corp.
(Registrant)
8/9/96 Michael F. Pope
(Signature)
8/9/96 Philip C. LaPuma
(Signature)