Another loss for Web broker

eChapman.com Inc. now `re-evaluating' its Internet strategy

April 05, 2001|By Bill Atkinson | Bill Atkinson,SUN STAFF

eChapman.com Inc., the Internet financial services company started by Baltimore broker Nathan A. Chapman Jr., reported yesterday that it lost $4.48 million last year and that its management team intends to "limit future investment" in its Web site and Internet business.

The comparable loss the previous year was $4.5 million.

"Our management team is currently re-evaluating our Internet strategy," the company said in a document, filed late yesterday with the Securities and Exchange Commission.

"While our management team reconsiders our Internet strategy, we intend to limit future investment in our Web site and Internet business, and focus our resources on our core businesses of investment management, investment banking and brokers," the company said.

The company also said it will seek to lower its operating expenses.

"If we are unsuccessful in lowering our operating expenses ... or if our efforts to lower expenses result in less revenue, our business, results of operations and financial condition may be materially and adversely affected," the company said.

The announcement came a day after eChapman.com told the SEC that its year 2000 annual report would be filed late because of "unexpected turnover in its accounting department."

Chapman, the company's president and chairman, could not be reached for comment last night.

eChapman.com, formed in May 1999, is a combination of three financial companies started by Chapman -- Chapman Holdings Inc., Chapman Capital Management Holdings Inc. and Chapman Insurance Holdings Inc.

The company's most recent results reflect the performance of the three individual companies as if they had been merged into eChapman.com on Jan. 1, 1999.

eChapman.com said in the report that its revenue fell to $9.7 million in 2000, down from $10.5 million in 1999.

The company also said it had a trading loss of $361,000 in the year.

Without the effects of the mergers, eChapman.com's revenue jumped 40 percent, to $9.3 million from $6.7 million, and it lost $3.5 million, compared with $1.9 million in 1999.

Chapman's goal has been to become a one-stop financial company, selling stocks, mutual funds, insurance and other products, while attracting large numbers of African-Americans to investing.

Wider audience wooed

The company also has tried to widen its audience by offering lifestyle, educational, sports and cultural content that appeals to African-Americans, Asian-Americans, Hispanic-Americans and women.

"Our management team has recognized the difficulties encountered in the past six months by minority-oriented Internet portal Web sites and other business-to-consumer Internet entities," the company said.

Shares of eChapman.com closed unchanged yesterday at $2.50.

As have the shares of many other Internet related companies, eChapman.com's stock has tumbled -- 81 percent since its initial public offering June 20, when shares were priced at $13. The company netted $12.3 million from the offering.

eChapman.com also disclosed in the filing that its brokerage subsidiary, Chapman Co., had "less than the minimum net capital required to meet the SEC net capital rule."

The deficiency was corrected as of March 8, which brought Chapman Co. into compliance again with the SEC rule, the filing said.

A day later, the Chapman Co. filed a "notice of noncompliance" with the SEC and National Association of Securities Dealers.

"The SEC and NASD have not indicated what, if any, action either may take as a result of the Chapman Co.'s net capital noncompliance," according to the filing.

As of Feb. 28, eChapman.com had 54 full-time employees, including 29 brokers.

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