Rebounding from its low of .25 per share, to a close yesterday of 1 3/32, HomeSeekers is having a wild ride after its fiscal-year-end report was released on Monday in which the company's new auditors expressed growing concerns about the company's ability to be profitable.

It's an unforgiving business climate for dotcoms, but one troubled dotcom officer wants to remind people that any business has its ups and downs. And that a 10-year veteran, $50 million dollar company has a lot more assets up its sleeve than people may think.

"I'm not so worried about the future," says John Giaimo, president of HomeSeekers, currently riding out a tech-depressed stock market as well as the results of a new auditor's report. "I knew we were going to take some hits."

Explaining the company's disappointing SEC filing and fiscal year-end report, Giaimo says some accounting methods were changed which resulted in higher quarterly losses to report, but that the fundamentals of the company will get them through this rocky period.

"We are relatively debt-free, with no long term debt," says Giaimo. "This is not a situation that is severe."

It is severe in that the company's auditors have taken a position that HomeSeekers may not survive as a going concern without additional investment. The auditors' statement, attached to the company's fiscal 2000 earnings report, restated revenues and losses for the second and third quarters of the fiscal year. Revenues for the second quarter were cut to $2.6 million from $2.7 million and for the third quarter to $3.4 million from $4.3 million. Net loss in the second quarter was restated to $4.8 million from $5 million, but its third-quarter net loss was restated to $5.7 million from $5.1 million, according to the report. For its fourth quarter of fiscal 2000, ended June 30, the company reported cash used in operations of 27 cents a share vs. 19 cents a share in the same quarter a year ago.

"You can't deny what they are seeing, and there is a certain readjustment in the dotcom world about dotcoms in general and their viabilities," counters Giaimo. "We are a dotcom, and that was a benefit that has turned into a negative on Wall Street."

HomeSeekers provides Internet technology solutions and services to consumers and service providers of the real estate industry including brokers, agents, Multiple Listing Services (MLS), builders, consumers. The company opened its doors in 1989 and was the first real estate listings service to go public. The second was Homestore.

Giaimo says look at the sales that the company is generating. Despite significant competition from other entrants into the Web-site-for-agents category, as well as the shut-out from a couple of hundred key MLS organizations, due to their exclusive Gold Alliance contracts with Realtor.com, HomeSeekers' GenStar web sites are selling at a rate of 1000 per month. "We have a total of 26,000 customers," says Giaimo, "who are paying an average cost of $600 annually."

"You have the IRIS division, the desktop productivity software, the Lightning family of products and Formulator the forms division, HomeSeekers.com magazines, and the most recent Connect2Call Internet phone connectivity," says Giaimo. "We are starting to create revenues in world markets - Mexico and France."

HomeSeekers is also proud of its MLS services division, which stars XMLSweb, an Internet MLS information management technology developed with XML standards with universal language protocols.

"You look at our MLS division with $10 million plus in contracts," says Giaimo. Indeed, HomeSeekers has just announced a million dollar plus contract with one of the largest MLS organizations in the country. the Multiple Listing Service of Northern Illinois, (MLSNI.) MLSNI represents approximately 28,700 Realtors® serving the greater Chicago area. HomeSeekers.com will provide a parallel MLS system for Internet connectivity that is valued at over one million dollars in a two-year agreement.

That makes XMLSweb™ the MLS information management technology of choice for three of the five largest MLS organizations in the industry, including Southern California MLS. The company also announced an agreement yesterday with the Westchester, New York Multiple Listing Service (MLS), serving Westchester and Putnam counties and approximately 5,000 agents.

While providing fully functional desktop MLS products for agents, creating the infrastructure to support the new MLS services has hit HomeSeekers hard for its fiscal year-end, and Giaimo says the large expenditures are behind the company now.

"We have only started selling MLS divisions in the last nine months," explains Giaimo. "Where the cash strain occurs is the infrastructure, hiring developers to create and maintain the product, customer service personnel to provide support, engineering to manage the hardware and traffic. But you don't start collecting on the contracts until you deliver. We have had to go through the pain of development but we have done that now and it is behind us. Now, we will start collecting revenue on a monthly basis."

"The other area that was a cash strain was Reinnovators, our broker Web site and design services division," continues Giaimo. "The program conceptually was great and we just had some issues getting to all the brokers. We had put a lot of effort and staff and saw that it wasn't going to ramp up quickly enough. So these are the things that caused the drain."

"We have trimmed operations over the last two quarters, last quarter specifically so people aren't headed for the door," he says. "We did our cutbacks in June. Our current staffing is 336 and we are trimmed down to where we need to be."

Some staff HomeSeekers let go in July were due to a merger in which many personnel were redundant. "We brought IRIS in July, and we had redundancy with developers in our Minden, NV location." Minden manages Realty 2000 and now Realty 2000 has been brought over to IRIS. "We are making IRIS the desktop division." IRIS is housed in Anaheim Hills and has 50 employees.

"Where we are at, there is no panic," says Giaimo. "On the shareholder side, we are asking for some calm and we are telling them that we are in the trenches and working for our model. I'm very optimistic as to where we are today and where we are going. I would prefer to be in a better place, but we are managing."

The company has more battles ahead besides the upstream swim toward profitability. It still has litigation pending against Homes.com, whose salespeople were taped soliciting HomeSeekers customers by telling them that the company was going out of business in July. Giaimo refused comment on the topic.

The company, which also blames many of its high operating and competition costs on the Gold Alliance shut-out, is privately hoping that the Department of Justice will shortly intervene and stop Homestore from continuing its Gold Alliance agreements with MLSs and brokers which shut competitors out.

Again, Giaimo refused comment, but he did concede that listings are becoming slightly easier to get. HomeSeekers is about to announce that it has reached the one million listing mark. "The Gold Alliance has gotten weaker because of the recent news on the DOJ investigation of Homestore, but I would like to think that they (MLSs and brokers) have figured out that ours is a better product," laughs Giaimo.

"HomeSeekers has been in business since 1989 and there are ups and downs in any business at any given point. Our management team is very capable of managing the lows and we have proved our survivability. A bump in the road is not going to cause us to crash and burn."

"The level of service we give has not and will not diminish, and we are committed to providing a fully staffed customer service team and we are still committed to producing the best Web sites in the business. We are still innovating and building. You can't be reactionary to Wall Street. You can't just look at today," says Giaimo.

Published: October 12, 2000

Use of this article without permission is a violation of federal copyright laws.

Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. For more articles by Blanche, click here.