-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JJUIou0+TXJNHfZndyWOwUQ7K7lI98XR4kgs8FsjlqbHzb+pOtbphWZVfY8OAi3w vZ6iSz/Mcgi2ZpHM6+jXFQ== 0000855663-97-000004.txt : 19971117 0000855663-97-000004.hdr.sgml : 19971117 ACCESSION NUMBER: 0000855663-97-000004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: JORDAN AMERICAN HOLDINGS INC CENTRAL INDEX KEY: 0000855663 STANDARD INDUSTRIAL CLASSIFICATION: INVESTMENT ADVICE [6282] IRS NUMBER: 650142815 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-18974 FILM NUMBER: 97718279 BUSINESS ADDRESS: STREET 1: 1875 SKI TIME SQUARE DRIVE STREET 2: SUITE ONE CITY: STEAMBOAT SPRINGS STATE: CO ZIP: 80487-9015 BUSINESS PHONE: (970) 879-1189 MAIL ADDRESS: STREET 1: 1875 SKI TIME SQUARE STREET 2: SUITE ONE CITY: STEAMBOAT SPRINGS STATE: CO ZIP: 80487-9015 FORMER COMPANY: FORMER CONFORMED NAME: CHRISTIAN PURCHASING NETWORK INC DATE OF NAME CHANGE: 19920703 10QSB 1 JORDAN AMERICAN HOLDINGS, INC. 6/30/97 10-QSB 1 U. S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 1997 OR [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period From __________ to __________ Commission File Number 0-18974 Jordan American Holdings, Inc. (Exact name of registrant as specified in its charter) Florida 65-0142815 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification Number) 1875 Ski Time Square, Suite One, Steamboat Springs, CO 80487 (Address of principal executive offices) (800) 879-1189 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Title of Each Class Name of Each Exchange on Which Registered None None Securities Registered Pursuant to Section 12(g) of the Act: Common Stock, $.001 Par Value (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days. Yes X No As of September 30, 1997, 10,558,876 shares of the registrant's common stock were issued and outstanding. 2 JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES (NASDAQ: JAHI) Table Of Contents PART I
Page ITEM 1 Financial Information Consolidated Balance Sheets 3 Consolidated Statements of Operations 4 Consolidated Statements of Cash Flows 5 Notes to Consolidated Financial Statements 6 ITEM 2 Management's Discussion and Analysis Operational Notes 8 Risk Factors, Trends & Uncertainties 10 Results of Operations 12 Liquidity and Capital Resources 13
2 3 PART I. ITEM 1. FINANCIAL INFORMATION JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES Consolidated Balance Sheets
(unaudited) September 30, December 31, 1997 1996 ASSETS Cash and cash equivalents $592,769 $1,725,056 Marketable securities 588,794 495,625 Investment advisory fees receivable, net 189,663 92,796 Receivable from clearing broker 98,783 102,999 Deposit with clearing broker 25,000 25,000 Prepaid expenses and other current assets 93,146 42,954 Receivable from affiliates and officer 61,499 139,250 Notes receivable 938,000 946,175 Property and equipment, net 226,536 189,901 Total Assets $2,814,190 $3,759,756 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accrued expenses $206,096 $290,030 Deferred investment advisory fees 179,349 213,942 Preferred stock dividend payable 60,000 0 Total Liabilities $445,445 $503,972 Stockholders' equity: 8% cumulative, convertible, non-voting preferred stock, $0.01 par value; authorized 5,000,000 shares; 3,000,000 shares issued and outstanding 30,000 30,000 Common stock, $0.001 par value; authorized 20,000,000 shares; 10,558,876 shares issued and outstanding at September 30, 1997; 10,678,376 shares issued and outstanding at December 31, 1996 10,559 10,678 Additional paid-in capital 4,699,191 4,930,202 Treasury stock (95,331) 0 Accumulated deficit (2,275,674) (1,715,096) Total stockholders' equity $2,368,745 $3,255,784 Total liabilities and stockholders' equity $2,814,190 $3,759,756
See accompanying notes to consolidated financial statements. 3 4 JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited)
Three Months Nine Months Ended September 30, Ended September 30, 1997 1996 1997 1996 REVENUES Investment advisory fees $493,052 $195,917 $836,514 $1,430,497 Commission income 98,960 88,394 279,497 319,862 Total revenues $592,012 $284,311 $1,116,011 1,750,359 Selling, general and administrative expenses 634,237 353,932 1,550,165 1,557,934 Operating income (loss) ($42,225) ($69,621) ($434,154) 192,425 OTHER INCOME (EXPENSES) Interest and dividend income (expense) 27,685 38,731 105,341 110,522 Realized gain (loss) from investing and trading (318,901) 40,248 (299,293) (5,388) Unrealized gain (loss) from investing and trading 146,897 84,031 112,586 120,838 Loss on disposal of land and building -- (1,947) -- (10,288) Total other income (expense), net ($144,319) $161,063 ($81,366) 215,684 Net income (loss) ($186,544) $91,442 ($515,520) $408,109 Dividends on preferred stock 60,000 60,000 180,000 180,000 Net income (loss) attributable to common stock ($246,544) $31,442 ($695,520) $228,109 Net income (loss) per common share and share equivalent attributable to common stock ($0.02) $0.00 ($0.07) $0.02 Weighted average number of share and share equivalents outstanding 10,544,800 10,700,115 10,605,999 10,773,785
See accompanying notes to consolidated financial statements. 4 5 JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended September 30, 1997 1996 Cash flows--operating activities Net income (loss) from continuing operations ($515,520) $408,109 Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: Depreciation 17,884 17,758 Unrealized (gain) loss from investing and trading (112,586) 5,388 Realized (gain) loss from investing and trading 299,293 (120,838) Loss on disposal of land, building and equipment -- 10,288 Issuance of common stock as compensation 11,563 -- Changes in operating assets and liabilities: Investment advisory fees receivable (96,867) 257,933 Trading marketable securities (279,876) (343,675) Prepaid expenses and other current assets (50,192) (102,022) Accounts payable and accrued expenses (83,934) 107,592 Deferred investment advisory fees (34,593) (11,052) Notes receivable 8,175 -- Other receivables 81,967 -- Net cash provided by (used in) operating activities ($754,686) $229,481 Cash flows--investing activities Capital expenditures (54,519) (16,498) Net cash provided by (used in) investing activities ($54,519) ($16,498) Cash flows--financing activities Repurchase of common stock (203,082) (231,220) Net proceeds from issuance of common stock -- 12,300 Proceeds from sale of land and building -- 99,708 Repayment of note payable -- (373,121) Payment of preferred dividend (120,000) (120,000) Net cash provided by (used in) financing activities ($323,082) ($612,333) Net increase (decrease) in cash and cash equivilents ($1,132,287) ($399,350) Cash and cash equivalents, beginning of period 1,725,056 2,424,806 Cash and cash equivalents, end of period $592,769 $2,025,456 Supplemental disclosure: Interest paid $1,304 $182
See accompanying notes to consolidated financial statements. 5 6 Notes to Consolidated Financial Statements (Unaudited) In the opinion of management, the accompanying consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the balance sheets of Jordan American Holdings, Inc. (Company or JAHI) and its broker/dealer subsidiary, IMPACT Financial Network, Inc. (IMPACT), formerly known as Management Securities, Inc., as of September 30, 1997, and December 31, 1996, and the results of its operations for the three months and nine months ended September 30, 1997 and 1996, and the results of its cash flows for the nine months ended September 30, 1997 and 1996, in accordance with generally accepted accounting principles. The results for interim periods are not necessarily indicative of results for a full year. (Please see Management's Discussion and Analysis below.) Percentage of assets investment advisory fees, for which refunds may be due to clients, are billed in advance and are deferred and amortized into income over the period in which services are performed. Investment advisory fees based on a percentage of the annual increase (performance billings) in the market value of a client's portfolio, including interest and dividends, are fully recognized at the contract anniversary date after the period of management. During the third quarter of 1997, JAHI began serving as investment advisor to the IMPACT Management Growth Portfolio (Portfolio), an open-end investment company registered with the Securities and Exchange Commission. Fees for management of the Portfolio are accrued daily and paid to JAHI on a monthly basis. Management fee compensation which is due to sales representatives is accrued when such fees are billed and/or earned and is paid to sales representatives no later than quarterly. Asset management contracts are generally terminable upon written notice from the client(s) or the Company, and percentage of assets management fees billed in advance are refundable on a pro-rata basis. For additional information regarding the Company's business operations and policies, a copy of disclosure document Form ADV, Part II is available without charge upon written request to the Company. The Company develops prospective investment advisory clients and investors through seminars, money shows, television and radio appearances, direct contact, its web site (www.jahi.com), sales representatives, and referrals from clients, securities broker-dealers and other sources. Prospective clients receive Form ADV, Part II, as the Company's disclosure document and provide information about themselves, their investment experience, and their net worth through new account forms and other methods. Approximately 80% of JAHI's clients maintain their brokerage accounts with IMPACT, a member of the National Association of Securities Dealers, Inc. (NASD) and the Securities Investor Protection Corporation (SIPC). IMPACT is compensated for securities transactions on behalf of the Company's managed accounts by receipt of commissions. IMPACT does not hold funds or securities for clients and does not have custody of accounts for any clients of the Company. IMPACT currently executes orders through Pershing & Co., a division of Donaldson, Lufkin, & Jenrette, a securities corporation. Pershing, a member of the SIPC, acts as clearing house and custodian for the majority of the Company's managed accounts and processes all confirmations and monthly statements for JAHI clients who choose to maintain their accounts with IMPACT. 6 7 Commission income is recognized on a settlement date basis, which does not differ materially from the trade date basis of accounting. Marketable securities consist primarily of corporate stocks and other securities held in Company investment accounts. Realized and unrealized gains or losses result from the trading of securities and stock index futures contracts in Company investment accounts. Net income (loss) per share and share equivalent is based upon the weighted average number of share and share equivalents outstanding during the period. The calculations ignore common stock equivalent shares when their inclusion in such calculations would have been anti-dilutive. In February 1993, JAHI completed a $3 million private placement of 750,000 units. Each unit is comprised of four shares of 8% cumulative convertible non-voting preferred stock (Preferred Stock) and one share of Common Stock. The Preferred Stock is convertible at the rate of one share of Common stock for each $3.50 in face amount of Preferred Stock converted. The face amount equals the initial offering price of $1.00 per share. If at any time the closing bid price of JAHI Common Stock exceeds $5.25 per share for a period of thirty consecutive trading days, the Company may, upon thirty days, written notice, convert the Preferred Stock to Common Stock using the above conversion rate. If the conversion of Preferred Stock to Common Stock occurred, the Company would then be relieved of $240,000 in annual preferred dividend payments to the holders of the Preferred Stock. Preferred stock dividends are normally paid semi-annually as of June 30 and December 31 of each year. At the request of the holder of the preferred stock, the Company agreed to pay the first semi-annual dividend of $120,000 on July 31 of each year and the second semi-annual dividend of $120,000 on November 30. This arrangement was agreed to by both parties to assist the holder of the preferred stock in its cash flow needs related to its charitable giving as a private foundation. This arrangement has no material impact on the annual operations and/or earnings of the Company. The Company is not a party in any material litigation, and management has no knowledge of any threatened material litigation against the Company. The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123, Accounting for Stock Based Compensation (SFAS 123), which is effective for fiscal years beginning after December 15, 1995. SFAS recommends, but does not require, measuring compensation cost of stock options at the grant date and recognizing the expense over the service period. If the Company does not change its accounting method, SFAS 123 requires, at a minimum, disclosure of the pro forma impact on net income and net earnings per share. The Company has determined that it will not change from its current method of accounting, but will make the disclosures required by SFAS 123. 7 8 These interim period consolidated financial statements, including the notes thereto, are condensed and do not include all disclosures required by generally accepted accounting principles. Such interim period consolidated financial statements should be read in conjunction with the Company's consolidated financial statements which are included in the Company's 1996 Form 10-KSB which is contained in the Company's 1996 Annual Report to shareholders and is available without charge upon request to JAHI Investor Relations, 1875 Ski Time Square, Suite One, Steamboat Springs, Colorado, 80487, (800) 879-1189; Fax: (970) 879-1272.; E-mail: info@jahi.com PART I, ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES Information found in this report contains forward-looking implications which may differ materially from actual results due to the success, or lack thereof, of JAHI's management decisions, marketing and sales effectiveness, investment decisions, and the management of clients' stock portfolios and pooled investments as influenced by market conditions and other factors. There can be no guarantee that the forward-looking potentials discussed and/or referenced in this report will have any impact, positive or negative, upon the earnings and/or operations of the Company. Operational Notes During 1996, the Company formed a joint venture with IMPACT Financial Network, a financial services firm which markets the investment advisory services of the Company. During the third quarter of fiscal 1997, the Company acquired IMPACT Financial Network as well as its future revenues, which were formerly due to its founder, Mr. Ronald Stiller, in order to increase the potential benefit to the Company which a financial services and marketing firm may be able to achieve from its operations and revenues in are as such as insurance, estate planning, mortgage services and charitable gifting, as well as asset management. The Company hired Mr. Stiller, a current member of the Company's Board of Directors, to serve on a full-time basis as JAHI's National Director of Sales & Marketing. On July 1, 1997, the registration statement of the Portfolio became effective with the Securities and Exchange Commission (SEC). While there can be no guarantee that the Portfolio will be profitable, the Company believes that assets will be raised for the Portfolio over the next one to two years, which may increase the Company's revenues. Additionally, during the third quarter of 1997 the Company formed IMPACT Administrative Services, Inc. (IASI), which is expected to serve as administrator and transfer agent for the Portfolio, from which IASI will receive annual administrative revenues of $165.00 per account. There can be no guarantee, however, that the hiring of Mr. Stiller or the formation of IASI will necessarily result in improved revenues or improved net income to the Company. 8 9 The Company recently announced the appointment of Ms. Terri Williams Abady as a Director of the Board. Ms. Abady founded Digital Post & Graphics, Inc., which specializes in video graphics, editing, and special effects for advertising and corporate communications. She served as President of the graphic design/film production company from its formation in 1987 until its sale in April of 1997. Ms. Abady was actively involved in all aspects of commercial television sales and network and independent broadcasting management. From 1976 until founding her own company in 1987, she served in a series of television sales and management positions, culminating in Station Manager of KTZZ TV in Seattle, Washington. JAHI also recently announced the election of Mr. Charles R. Clark by the Board of Directors as the Company's new Chief Executive Officer, a position formerly held by Mr. Neal Jordan. Mr. Clark, formerly Chief Operating Officer of JAHI, will continue to serve as Senior Assistant Portfolio Manager in conjunction with Mr. Jordan, who the Board appointed as the Company's Chief Investment Officer. The Board believes this corporate management restructuring, which became effective October 1, 1997, will allow Mr. Jordan to focus his efforts primarily upon portfolio management for the Company's clients. Mr. Clark has been with JAHI since October of 1991. The Company was investigating the possible acquisition of Synergy, Inc. (Synergy), a small insurance firm based in the Pittsburgh, Pennsylvania area. Management of the Company no longer believes that the acquisition of Synergy would prove materially beneficial to JAHI operations and shareholders. The Company plans to continue expenditures for marketing and related sales and is pursuing business plans for asset gathering and creating exposure of the Company's common stock and warrants through seminars, national investment shows, advertising, marketing materials, joint ventures with other professionals, and other means. With the Company's current mix of management fee accounts (approximately 60% of accounts pay performance based fees; approximately 40% of accounts pay percentage of assets based fees), in a period of normal trading activity with assets under management of approximately $150 million, the Company may be able to cover the costs of its operations (not including selling expenses) solely from commission revenues and percentage of assets investment advisory fees, including fees received from the Portfolio. Additional assets under management or strong performance and billings in percentage of profits accounts or increased trading activity through the Company's broker/dealer subsidiary or successful investing of Company assets or revenues from the Jordan Index Fund, L.P. or other sources, may significantly improve the Company's net earnings, although there can be no guarantee that any of these potentials will necessarily occur. In the third quarter of 1994, Wallace Neal Jordan established Jordan Assets, Ltd. For providing administrative services, the Company receives 100% of the management fee revenue, if any, from Jordan Assets, Ltd., a privately held affiliate which manages the Jordan Index Fund, L.P., (Fund), a limited partnership with assets of approximately $10 million. The Fund invests in 9 10 stock index futures contracts and other securities and receives as its fee 20% of the Fund's trading profits. Fees for this Fund are accounted for as deferred revenue until the annual billing date of the Fund, which is July 31 of each year. Revenues to JAHI from the Fund were approximately $90,000 in 1995 as compared to no revenues from the Fund in 1996 and 1997. Additionally, potential investors in the Company's common stock or warrants should understand that there is no guarantee that the Fund will continue to exist as a potential revenue source for the Company. The Company is also currently involved with the formation of a new limited partnership in order to increase assets under management and thereby seek to improve corporate earnings. Currently, the Company has advanced approximately $43,000 in the formation of the partnership, which amount is anticipated to be repaid by the partnership upon commencement of operations. If the partnership does not gather enough assets to initiate management during the next two quarters of operations, the Company may have to recognize this $43,000 receivable as an expense. As of April 1997, the Company is no longer charging management fees on holdings of JAHI common stock and warrants. While this policy will eliminate management fee revenues from holdings in JAHI securities, management believes it is in the best interest of our clients and our shareholders to implement this policy. Risk Factors, Trends & Uncertainties Total assets under management and corporate earnings may substantially increase or decrease due to stock market conditions including the onset of a long-term declining, or bear market, performance returns as influenced by the Company's investment advisory decisions, legal and other professional fees, effectiveness of marketing and sales efforts, competition from other investment advisory companies and mutual funds, interest rate changes by the Federal Reserve Board, economic conditions such as high inflation and/or recession, and other factors discussed below. Management fees for the third quarter were relatively strong because of performance in clients' managed accounts. Nevertheless, unless account performance and/or asset gathering increases, or trading activity improves or increases, the current earnings trend may continue. Market conditions and other factors may materially impact this trend either positively or negatively. The Company will be subject, as are other companies in the securities industry, to general stock market conditions and fluctuations as influenced by Federal Reserve Board actions, both domestic and international economic and political conditions and events, and trends in business, finance, the economy and other factors. Long-term trends in retention of client assets since fiscal year-end 1995 show that for fiscal 1996, the company had a net loss in assets under management, i.e., more assets in client accounts have departed from the Company's management than were brought in as new managed assets. During the nine months ended September 30, 1997, the Company also experienced a net decrease in assets under management of approximately $3.15 million. 10 11 Exceptional performance in percentage of profit accounts may result in substantial revenues for the Company while poor performance in the same accounts may yield no revenues for the Company from approximately 60% of the Company's total assets under management. Additionally, because percentage of profit accounts are billed on an annual basis for each respective client, there may be a delay in billing revenue as long as eleven months from the time when actual account performance was achieved. Thus, exceptional performance in percentage of profit accounts may benefit the revenues of the Company for nearly one year after such performance was achieved as dependent on the billing cycle of respective clients and other investment results in respective accounts. The securities industry is subject to various risks and intense regulation from the SEC, the NASD, the National Futures Association, and the Commodity Futures Trading Commission. Investment advisors, broker-dealers, and commodity trading advisors are highly regulated by both federal and state authorities and by self-regulatory organizations. Such regulations may restrict both the types of investments and amount of investments that JAHI may employ. The NASD, for instance, has strict requirements for the maintenance of net capital requirements by broker-dealers such as IMPACT. There can be no assurance that any changes to existing laws, regulations or rulings promulgated by government entities having jurisdiction over the Company's investment advisory, broker-dealer, and commodity trading business will not have an adverse effect upon the business of the Company, or that the Company will remain in compliance with all applicable law and regulations. By law, investment advisors, broker-dealers, and investment companies are fiduciaries and are required to serve their clients' interests with undivided loyalty. The affiliation between the Company and IMPACT may continue to be scrutinized by the regulatory authorities because of the potential conflict of interest created by related-party transactions, and may be subject to various regulations which may affect the fees and charges of IMPACT. Because of this potential conflict of interest, these arrangements may be closely examined by the SEC, the NASD and other regulatory authorities to determine that such transactions are conducted within the rules and regulations promulgated by the SEC and others. Findings to the contrary may subject the Company to censures, fines and/or other liabilities, or cause the Company to change its method of doing business, and could therefore have a material adverse effect on the Company. The SEC requires that these arrangements be in the best interests of the clients and that such arrangements be disclosed to them. While the Company believes that its existing and proposed relationships are in compliance with applicable law and regulations, findings to the contrary may have a material adverse effect upon the Company. Many aspects of the financial services industry involve substantial liability risks, including exposure under federal and state securities laws in connection with the distribution of securities, brokerage transactions, suitability and investment advisor activities. Although the Company currently maintains errors and omission insurance and other insurance to protect against these types of liabilities, there can be no guarantee that this coverage will necessarily protect the Company and its shareholders from potential claimants. 11 12 The Company operates in a highly competitive industry with competition from other investment advisors, commodity trading advisors, broker-dealers, and mutual fund managers in addition to investment alternatives offered by insurance companies, banks, securities dealers and other financial institutions. Many of these institutions are able to engage in more extensive advertising and may offer accounts insured by federal corporations such as the Federal Deposit Insurance Corporation. JAHI believes its investment strategy, which centers around attempting to understand the general trend of the market as assisted by certain proprietary analysis, coupled with its long-term track record, make it an attractive alternative to the mutual fund industry and more traditional money managers, but there can be no guarantee that this is necessarily the case. Effective February 23, 1998, the Nasdaq Stock Market adopted new standards for continued listing of securities on the Nasdaq Small-Cap Market which may adversely effect the Company. There can be no guarantee that the Company will be able to meet or maintain these listing standards, which include but are not limited to a minimum share price of $1.00 for small- capitalization companies such as Jordan American Holdings, Inc. Should the Company not be able to meet or maintain the new listing standards, the Company may be de-listed from its current listing and be traded on the Electronic Bulletin Board. Such an event, if it occurs, may adversely effect the trading and liquidity of the Company's common stock and warrants. Additionally, if the Company's securities are de-listed, proposed re-entry standards may be much more difficult for the Company to achieve in order to gain re-listing in the Nasdaq Small-Cap Market. The Company is currently investigating various business options and seeking to avoid potential de-listing. Results of Operations The Company had a net loss for the three months ended September 30, 1997 of ($246,544) or ($0.02) per common share and share equivalent compared to a net gain of $31,442 or $0.00 per common share and share equivalent for the same period in 1996. This loss resulted from increased selling, general and administrative expenses related to the formation and marketing of the Portfolio and realized losses from investing and trading in the Company's investment accounts. Selling, general, and administrative ("SG&A") expenses of $634,237 were incurred during the three month period ended September 30, 1997, compared to SG&A expenses of $353,932 for the same period in 1996, an increase of approximately 79%. For the three months ended September 30, 1997, revenues from investment advisory fees totaled $493,052 compared to revenues from investment advisory fees of $195,917 for the same period in 1996, an increase of approximately 152% due primarily to stronger performance billings in managed accounts during the third quarter of fiscal 1997. Commission revenue increased for the three months ended September 30, 1997, to $98,960 as compared to $88,394 for the same period in 1996. This increase is due to stock transactions resulting from an increase in the amount of securities being purchased and sold in client accounts as determined by the management of the Company based on market conditions and other factors. Additionally, the Company has re-negotiated its clearing 12 13 arrangement with its current clearing house, Pershing. While there can be no guarantee this change will result in substantial benefits to the Company, improved clearing costs may improve profit margins in commission revenues received by the Company's broker/dealer subsidiary, IMPACT. Total other income (expense) was ($144,319) for the three months ended September 30, 1997, compared to $161,043 for the three months ended September 30, 1996. This increase in expense was primarily due to realized losses in Company investment accounts from trading stock index futures contracts. Liquidity and Capital Resources At September 30, 1997, the Company had cash and cash equivalents of $592,769 versus $1,725,056 at December 31, 1996. This decrease is primarily due to use of cash for marketing purposes and sales expenses related to the Portfolio, professional fees, and the repurchase of JAHI common stock by the Company since December 31, 1996. During the third quarter of 1997, the Company used $95,331 to repurchase 150,000 shares of JAHI common stock, which was retired on October 9, 1997. Accounts payable and accrued expenses were $206,096 at September 30, 1997, as compared to $290,030 at December 31, 1996, a decrease of approximately 29%. Accruals are based upon expenses as determined by management's estimate. During the third quarter of fiscal 1997, the Company elected to expense Receivable From Affiliates and Officer by approximately $98,000 as a signing bonus to Mr. Stiller in consideration for his employment and compensation package with the Company as National Director of Sales & Marketing. This amount previously was to have been reimbursed to the Company from revenues related to IMPACT Management Services, Inc., the administrator and transfer agent for the Portfolio. The Company's commitment to marketing and asset gathering will continue to result in an increased use of cash. Cash flows used in operating activities for the nine months ended September 30, 1997, were ($754,686) compared to net cash provided by operating activities of $229,481 for the same period in 1996. Cash flows used in financing activities were ($323,082) for the nine month period ended September 30, 1997, compared to ($612,333) for the same period in 1996, during which time cash was used to repurchase JAHI common stock and in conjunction with the payment of the debt of the Company's former corporate headquarters in Sarasota, Florida. Management of the Company believes current and long-term cash needs will be met despite increased marketing expenses and the ongoing repurchase of the Company's common stock. 13 14 SIGNATURES In accordance with 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 thereunto duly authorized. JORDAN AMERICAN HOLDINGS, INC. Dated: November 14, 1997 By: /s/ Charles R. Clark Charles R. Clark Chief Executive Officer Dated: November 14, 1997 By: /s/ Frederick A. Whittlesey Frederick A. Whittlesey Chief Financial Officer 14 EX-27 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the financial statements of Jordan American Holdings, Inc. for the period ending September 30, 1997, and is qualified in its entirety by reference to such financial statements. 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 592,769 588,794 202,663 13,000 0 1,588,155 323,537 97,001 2,814,190 445,445 0 0 30,000 10,559 2,328,186 2,814,190 0 1,116,011 0 0 0 0 0 (515,520) 0 (515,520) 0 0 0 (515,520) (0.07) (0.07)
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