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Will this LION Ever Roar? by Soula Jones LION Inc. stock has started to rebound, after scraping bottom at 53 cents a share. Toward the end of January 2000, the company reported record 1999 revenue -- up 128% to $4.2 million. And, although it's not profitable, LION does seem to have a viable B2B business; it's a leading provider of online services to U.S. mortgage brokers. So why is LION stock (OTC: LINC) still a penny stock?       The major reason seems to be confusion. LION (Lender's Interactive Online Network) used to be a family-run business with a weird "shell" structure. And for so small a company, LION has an awful lot of shares -- about 40 million (if all warrants and options are exercised).       All this has put LION in a do-or-die situation. If its stock price doesn't rise, LION may not be able to raise enough money to expand -- it could be snuffed out by its own stock.       But, LION is raging against the coming of the night. In the fall of 1999, LION took two very major steps to boost its share price, and they seem to be working: Starting to Grrowl       (1) Cleaning house. Pending shareholder approval (probably in April 2000), LION Inc., which is just an empty shell, will merge into Lioninc.com, the provider of online services to mortgage brokers. The president of the "new" company will be Sam Ringer. The other two Ringers -- father Alan and brother Joe -- who've had their own ideas about how to develop the company -- are out of there.       (2) Getting Wall Street's attention. In November 1999, LION hired Seattle-based StreetConnect, which does financial PR for major local tech companies, including F5 Networks and WatchGuard.       The only reason LION stock doesn't trade on NASDAQ (where it would have a much wider following) is its low share price. And there's the rub. For the price to go up to $5 a share (the NASDAQ listing requirement), LION needs institutional investors. But the big guys typically scoff at penny stocks.       So StreetConnect is now trying to convince major investment bankers that LION deserves backing. (Jeff Howlett of StreetConnect says some heavy-hitters are currently taking a closer look, trying to figure out how to "unlock the value." One of the possibilities is that a major investor will buy LION and then do an IPO.) Will they? A Different Animal       Although the mortgage industry is now in a funk due to rising interest rates, LION's story certainly seems promising. Jennifer Jordan of Black & Co. is the only analyst who currently follows LION. If she had to place a market value on LION, she'd go with $200 million, or $7 a share. But that really depends on how well they execute, she says.       Jordan points out that LION is not nearly as vulnerable to rising rates as E-Loan, Mortgage.com and other Internet mortgage brokers, which make their money by issuing loans. And she points out that LION doesn't really have much head-on competition.       In fact, LION is benefiting from the current blood-feud between the E-Loans of the world, who will issue you a mortgage online -- no walking or talking necessary -- and the 35,000 regular mortgage brokers, most of whom still rely on phones and faxes to do most of their business.       There's A LOT of money at stake here: In 1998, U.S. mortgage brokers originated $1.2 trillion worth of mortgages (70% of the total).      The long-term bet is that the industry will consolidate: All mortgage brokers will eventually do business online, and E-Loan will probably open branch offices. Three-Pronged Attack       In the meantime, Lioninc.com is helping the regular mortgage brokers compete with the E-Loans of the world. Here's how:       (1) Selling access to Lioninc.com's proprietary database of loans, by far the largest in the industry. This is the LION's #1 asset. The database lists programs from 460 different wholesale lenders and is updated daily. By comparison, E-Loan has only 70 lenders in its database (and it's actually using some of LION's services). About 46% of LION's revenue now comes from subscriptions to Lioninc.com; 5,600 mortgage brokers currently subscribe, with 200 being added each month.       The goal is to make Lioninc.com indispensable to mortgage brokers and to sell them additional services, such as online Automated Underwriting (recently 16% of revenue), which LION has started to offer.       (2) Creating websites for mortgage brokers (#3 in this, with 580 customers), and for the major lenders (#1 here with 60 customers). Such services are bringing in about 35% of LION's revenue.       (3) Operating Mortgage101.com and AMO.com (American Mortgage Online), which provide mortgage-rate comparisons to more than 3,000 realtor sites, as well as to consumers. These two sites attract more than 600,000 different visitors each month. And Go2Net, the Seattle-based Internet portal, recently added Mortgage101.com to its real-estate listings. Soula Jones is content chief at Seattle24x7.

LION Inc. 2201 Lind Ave. Renton, WA 98055 Employees: 57 888-251-7616 www.lioncorp.net www.lioninc.com 1999 Revenue: $4.24 million 1999 Net Loss: $(1.1 million)* 1998 Revenue: $1.86 million 1998 Net Loss: $(1.2 million) Shares outstanding: 40 million (fully diluted) 52-week high/low: $1.50/$0.53 per share Total Liabilities: $1.1 million Shareholders Equity: (-$6.3 million) *For first nine months of 1999. Company has not yet reported loss for entire year. Source: Lion Inc. All in the Family Brothers Sam and Joe Ringer started what is now Lioninc.com back in 1991 as a dial-in bulletin board service for Seattle-area mortgage brokers. In 1995, they started to offer the service nationwide, thanks to the advent of the Internet.