-----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, D9pne/SQB99gmG050xAZq6Y+H8kNjE/HuHedKbNASwLqWA0cDqxdLbZhUFpQB+u6 YHWWtZo1S2cZQDyIjSanPA== 0000855663-98-000010.txt : 19981116 0000855663-98-000010.hdr.sgml : 19981116 ACCESSION NUMBER: 0000855663-98-000010 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981113 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: 98746943 BUSINESS ADDRESS: STREET 1: 1875 SKI TIME SQUARE DRIVE STREET 2: SUITE ONE CITY: STEAMBOAT SPRINGS STATE: CO ZIP: 80487-9015 BUSINESS PHONE: 9708791189 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 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, 1998 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) (970) 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, 1998, 10,410,676 shares of the registrant's common stock were issued and outstanding. 1 2 JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES Table Of Contents PART I 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 9 Risk Factors, Trends & Uncertainties 9 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, 1998 1997 ASSETS Cash and cash equivalents $488,727 $51,286 Marketable securities 234,894 783,500 Investment advisory fees receivable, net 41,225 99,178 Other receivables 125,831 112,080 Deposit with clearing broker 25,000 25,000 Prepaid expenses and other current assets 61,807 97,635 Limited partnership investments 50,000 0 Notes receivable 500,000 935,000 Property and equipment, net 81,149 220,575 ----------- ----------- Total Assets $1,608,633 $2,324,254 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accrued expenses $168,890 $179,360 Deferred investment advisory fees 59,736 153,472 Preferred stock dividend payable 60,000 0 ----------- ----------- Total Liabilities $288,626 $332,832 ----------- ----------- 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; 10,410,676 shares issued and outstanding at September 30, 1998, and December 31, 1997 10,411 10,409 Additional paid-in capital 4,442,853 4,622,853 Accumulated deficit (3,163,257) (2,671,840) ----------- ----------- Total Stockholders' Equity $1,320,007 $1,991,422 ----------- ----------- Total Liabilities and Stockholders' Equity $1,608,633 $2,324,254 =========== ===========
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, 1998 1997 1998 1997 REVENUES Investment advisory fees $106,798 $493,052 $492,073 $836,514 Commission income 51,940 98,960 289,496 279,497 ----------- ----------- ----------- ----------- Total Revenues $158,738 $592,012 $781,569 $1,116,011 ----------- ----------- ----------- ----------- Selling, general and administrative expenses 372,716 634,237 1,358,325 1,550,165 ----------- ----------- ----------- ----------- Operating Income (Loss) ($213,978) ($42,225) ($576,756) ($434,154) ----------- ----------- ----------- ----------- OTHER INCOME (LOSS) Interest and dividend income 29,204 27,685 90,056 105,341 Realized gain (loss) from investing and trading (38,199) (318,901) (104,599) (299,293) Unrealized gain (loss) from investing and trading (57,367) 146,897 44,629 112,586 Gain on disposal of building -- -- 55,256 -- ----------- ----------- ----------- ----------- Total Other Income (Loss), Net ($66,362) ($144,319) $85,342 ($81,366) ----------- ----------- ----------- ----------- Net Income (Loss) ($280,340) ($186,544) ($491,414) ($515,520) Dividends on preferred stock 60,000 60,000 180,000 180,000 ----------- ----------- ----------- ----------- Net Income (Loss) Attributable to Common Stock ($340,340) ($246,544) ($671,414) ($695,520) =========== =========== =========== =========== Basic earnings (loss) per common share ($0.03) ($0.02) ($0.06) ($0.07) =========== =========== =========== =========== Diluted earnings (loss) per common share ($0.03) ($0.02) ($0.06) ($0.07) =========== =========== =========== =========== Weighted-average number of common shares outstanding: Basic 10,409,013 10,600,903 10,408,922 10,637,105 =========== =========== =========== =========== Diluted 10,409,013 10,600,903 10,408,922 10,637,105 =========== =========== =========== ===========
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, 1998 1997 Cash flows--operating activities Net income (loss) ($491,414) ($515,520) Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: Depreciation and Amortization 18,788 17,884 Realized (gain) loss from investing and trading 104,599 299,293 Unrealized (gain) loss from investing and trading (44,629) (112,586) Gain on disposal of building (55,256) -- Issuance of common stock as compensation -- 11,563 Changes in operating assets and liabilities: Investment advisory fees receivable 57,953 (96,867) Trading marketable securities 488,636 (279,876) Prepaid expenses and other current assets 15,773 (50,192) Accounts payable and accrued expenses (10,470) (83,934) Deferred investment advisory fees (93,736) (34,593) Notes receivable -- 8,175 Other receivables 6,304 81,967 ----------- ------------ Net Cash Provided By (Used In) Operating Activities ($3,452) ($754,686) ----------- ------------ Cash flows--investing activities Investment in limited partnership (50,000) -- Principal received on notes receivable 435,000 -- Proceeds from sale of building 195,483 -- Capital expenditures (19,590) (54,519) ----------- ------------ Net Cash Provided By (Used In) Investing Activities $560,893 ($54,519) ----------- ------------ Cash flows--financing activities Payment of preferred dividend (120,000) (120,000) Repurchase of common stock -- (203,082) ----------- ------------ Net Cash Provided By (Used In) Financing Activities ($120,000) ($323,082) ----------- ------------ Net Increase (Decrease) in Cash and Cash Equivalents $437,441 ($1,132,287) Cash and cash equivalents, beginning of period 51,286 1,725,056 ----------- ------------ Cash and cash equivalents, end of period $488,727 $592,769 =========== ============ Supplemental disclosure: Interest paid $9,053 $1,304
See accompanying notes to consolidated financial statements. 5 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 subsidiaries as of September 30, 1998, and December 31, 1997, and the results of operations for the three months and nine months ended September 30, 1998, and 1997, and the results of cash flows for the nine months ended September 30, 1998, and 1997, 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, or incentive, fees) in the market value of a client's portfolio, including interest and dividends, are fully recognized when billed after the period of management, which is usually twelve months after account inception and annually thereafter. JAHI also serves 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 earned daily and paid to JAHI on a monthly basis. Fee compensation which is due to sales representatives is accrued monthly and is paid to sales representatives quarterly. Asset management contracts are generally terminable upon written notice from the client(s) or the Company, and the unearned percentage of assets management fees billed in advance are refundable on a pro-rata basis. For additional information regarding the Company's advisory 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, occasional television and radio appearances, direct contact, its web site (http://www.jahi.com or www.equityassets.com), sales representatives, referrals from clients, securities broker-dealers and other sources. Prospective advisory 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 various new account forms and other methods. Approximately 93% of JAHI's clients execute brokerage transactions through IMPACT Financial Network, Inc. ("IFNI"), a wholly-owned broker-dealer subsidiary of JAHI and a member of the National Association of Securities Dealers, Inc. ("NASD") and the Securities Investor Protection Corporation ("SIPC"). IFNI is compensated for securities transactions on behalf of the Company's managed accounts by receipt of commissions. IFNI does not hold funds or securities for clients and does not have custody of accounts for clients of the Company. IFNI currently executes securities transactions 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 accounts and processes all confirmations and monthly statements for JAHI advisory clients 6 7 who choose to maintain their accounts with IFNI. Commission income is recognized on a settlement date basis, which does not differ materially from the trade date basis of accounting. The Company's other wholly-owned subsidiary, IMPACT Administrative Services, Inc. ("IASI"), an investment company services entity, receives revenues of $165 per account from clients of the Portfolio and may provide similar services to other mutual funds in the future. 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 contracts in Company investment accounts. Basic and diluted earnings per share and share equivalent are based upon the weighted average number of share and/or 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 (the "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. 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 special arrangement has no material impact on the annual operations and/or earnings of the Company. On October 29, 1998, the Board of Directors of JAHI decided not to declare the current semi-annual preferred stock dividend, which totals $120,000 due to operational and cash flow needs of the Company. Because the preferred stock dividend is cumulative, all cumulative but unpaid preferred stock dividends must at some future date be declared and paid before JAHI's Board of Directors would be able to declare and pay a dividend to its common stock shareholders. JAHI has not declared or paid a common stock dividend and does not intend to do so in the foreseeable future. In the third quarter of 1994, Wallace Neal Jordan established Jordan Assets, Ltd. For providing administrative services, the Company receives 100% of the net income resulting from the collection of incentive and/or management fees, if any, collected by Jordan Assets, Ltd., a privately held affiliate which manages the Jordan Index Fund, L.P., (the "Index"), a limited partnership with 7 8 September 30, 1998, assets of approximately $4.3 million. The Index invests in stock index futures contracts and other securities and receives as its fee 20% of the Index's trading profits, if any. Fees for this Index are accounted for as deferred revenue until the annual billing date of the Index, which is July 31 of each year. Fees to JAHI from the Index were approximately $90,000 in 1995 as compared to no revenues from the Index in 1996, 1997 and 1998. There is no assurance that the Index will continue to exist as a potential revenue source for 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 continue to make the disclosures required by SFAS 123, which can most recently be found in the Company's 1997 10-KSB. 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 audited consolidated financial statements which are included in the Company's 1997 Form 10-KSB which is contained in the Company's 1997 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, (970) 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 Safe Harbor for Forward-Looking Statements - ------------------------------------------ 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, Federal Reserve Board policy, economic trends, political developments, domestic and international events and other factors. There can be no guarantee that any forward-looking implications discussed and/or referenced in this report will have any impact, positive or negative, upon the earnings, value and/or operations of the Company. 8 9 Operational Notes - ----------------- The Company plans to slow expenditures for marketing and related sales and is pursuing business plans for asset gathering and business development. Asset gathering is primarily being pursued through selling agreements with other broker-dealers, as well as seminars, national investment shows, advertising, marketing materials, joint ventures with other financial services professionals and other means. The Company managed approximately $50 million in individually held fee-paying equity portfolios at September 30, 1998. During the nine months ended September 30, 1998, the Company experienced a net loss in total equity portfolio assets (fee and non-fee) of approximately $10.4 million. During 1997 the Company began serving as investment advisor to the Impact Management Growth Portfolio ("Portfolio"), an open-end investment company formed under the Impact Management Investment Trust. At September 30, 1998, the Portfolio had assets of approximately $3.9 million from which JAHI and IFNI receives management fees and brokerage commissions, respectively. At September 30, 1998, the Company and a privately held affiliate were the advisor to approximately $58 million in fee-paying assets in individually managed equity portfolios, the Portfolio and the Index, mentioned above. Exceptional performance in percentage of profit (incentive) accounts may result in substantial revenues for the Company while poor performance in the same accounts may yield no fees for the Company from approximately 56% 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 the respective accounts. 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, operational expense and effectiveness of marketing efforts, competition from mutual funds, other investment advisory companies and insurance companies, interest rate changes and other actions taken by the Federal Reserve Board, domestic and international economic and political conditions, high inflation and/or recession, trends in business and finance, international events, acts of terrorism and other factors. The securities and commodities industries are 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, commodity pool operators, and commodity trading advisors are highly regulated by both federal and state authorities and by other self-regulatory organizations. Such regulations may restrict both the types of investments and amount of investments that JAHI may employ for its clients and itself. The NASD, for instance, has strict requirements for the maintenance of net capital 9 10 requirements by broker-dealers such as IFNI. 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, investment company-related and commodities trading business will not have an adverse effect upon the business of the Company, or that, despite its best efforts, the Company currently operates in full compliance with all applicable law and regulations or will be able to remain in compliance with all applicable law and regulations. If the Company fails to maintain compliance with all applicable regulations, JAHI and/or its subsidiaries may be subject to various and significant fines, censures and other considerations and penalties. 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 IFNI 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 IFNI. Additionally, as the brokerage industry continues to become more competitive, fees for such services may decline which result in a similar reduction in revenues from trading transactions. Findings contrary to industry regulations by one or more regulatory entities may subject the Company to censures, fines and/or other liabilities, or cause the Company to change its method of doing business. The SEC requires that business be conducted in the best interests of the clients and that such arrangements be disclosed to them. While the Company believes that its existing policies, procedures and proposed relationships are in compliance with applicable laws 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 but not limited to 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 claims. 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 analyses, coupled with its long-term track record, make it an attractive alternative to traditional mutual funds and other money managers. Management fees for the third quarter decreased from the same period in 1997 due to performance in clients' managed accounts and a reduction in total assets under management. The Company may continue to experience net losses on a 10 11 quarterly and annual basis. Market conditions and other factors mentioned above may materially impact this trend, either positively or negatively. Long-term trends in retention of client assets since fiscal year-end 1995 show that the Company has 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. This declining trend in total assets under management may continue to have a direct negative impact upon the Company's investment advisory revenues and related brokerage commissions. It is likely that future net income/loss of the Company will be substantially impacted by the amount of assets under management, investment management decisions and general stock market conditions, among other factors listed in this report. During 1997, the Nasdaq Stock Market formalized new standards for continued listing of securities on the Nasdaq Small Cap Market ("Nasdaq"). During the third quarter of 1998, JAHI common stock was delisted from Nasdaq. The Company's common stock is now traded on the OTC Bulletin Board, which may adversely affect the trading and liquidity of the Company's common stock. The SEC recently completed an examination of the Company. As a result of this examination, certain issues arose regarding possible violations of the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940 relating to the contingent "best efforts" private placement debenture offering for Boston Restaurants Associates, Inc. The SEC has initiated discussions with the Company's legal counsel with regard to these issues and may be considering formal action against the Company. Legal counsel to the Company filed a "Wells Submission" with the SEC on June 1, 1998, and the Company to date has not heard anything further from the SEC. Management and legal counsel to the Company cannot, at this time, predict with any certainty the outcome of the SEC's examination or whether the resolution will have a material effect on JAHI's operations or financial statements. Other than the foregoing, the Company is not a party in any material litigation, and management has no knowledge of any threatened material litigation against the Company. Effective September 14, 1998, the Company received notification from its independent auditors of their resignation. Further details regarding this resignation are available through the Company's most recent Form 8-K filing with the SEC. Effective September 30, 1998, Mr. Robert Flaherty, an outside Director of the Board of JAHI, resigned. Mr. Flaherty did not resign, however, due to a disagreement with the Company regarding its operations, policies or practices. Effective October 31, 1998, Mr. Frederick Whittlesey, Chief Financial Officer, Chief Compliance Officer, and Secretary & Treasurer of the Board of Directors, resigned from the above positions. Mr. Whittlesey will continue to function as a non-executive officer of the Company under the new title, Vice-President, Compliance & Corporate Reporting. 11 12 Effective January 1, 1999, Mr. Albert J. Elko, current sub-administrator to the Portfolio, will become Vice-President, Finance & Operations, of Jordan American Holdings, Inc. Effective January 1, 1999, Mr. Ron Stiller, National Sales & Marketing Director for JAHI, will no longer be a salaried employee of the Company. Mr. Stiller will, however, remain on the Company's Board of Directors. As of October 1998, the Company discontinued marketing and sales efforts related to the ancillary products such as insurance, estate planning, annuities, etc., mentioned in previous reports filed by the Company with the SEC to focus its efforts on asset gathering and portfolio management. Results of Operations - --------------------- The Company had a net loss for the three months ended September 30, 1998, of ($340,340) or ($0.03) per basic and diluted common share compared to a net loss of ($246,544) or ($0.02) per basic and diluted common share for the same period in 1997. This increased loss compared to the same period last year stems from lower revenues from performance fee based managed accounts, a general decrease in assets under management, and lower commission revenues. The Company also reported a net loss per basic and diluted common share for the nine months ended September 30, 1998, of ($671,414) or ($0.06) compared to ($695,520) or ($0.07) for the same period in 1997. For the three months ended September 30, 1998, revenues from investment advisory fees totaled $106,798 compared to revenues from investment advisory fees of $493,052 for the same period in 1997, a decrease of approximately 78% due primarily to significantly lower revenues from performance fee based managed accounts during the third quarter of fiscal 1998. Commission income decreased for the three months ended September 30, 1998, to $51,940 compared to $98,960 for the same period in 1997, a decrease of approximately 48% due to fewer securities transactions resulting from the amount of securities being purchased and sold in client accounts as incidental to management's investment advisory decisions based on technical and fundamental considerations of individual securities, market conditions and other factors. Total other income was ($66,362) for the three months ended September 30, 1998, compared to ($144,319) for the same period in 1997. This decrease was primarily due to fewer realized losses from investing and trading compared to the same period in 1997. Selling, general, and administrative ("SG&A") expenses of $372,716 were incurred during the three month period ended September 30, 1998, compared to similar SG&A expenses of $634,237 for the same period in 1997, a decrease of approximately 41% due primarily to lower selling and marketing expenses. 12 13 Liquidity and Capital Resources - ------------------------------- At September 30, 1998, the Company had cash and cash equivalents of $488,727 versus $51,286 at December 31, 1997. This increase is primarily due to the sale of certain marketable securities held at December 31, 1997, and the Company's collection of the balance of its note receivable of approximately $435,000 relating to the three year promissory note, originally due January 12, 1999, regarding its previous corporate headquarters located in Sarasota, Florida, as described in the Company's 1997 10-KSB and accompanying notes related to the Company's audit (p. F-10). Accounts payable and accrued expenses were $168,890 at September 30, 1998, compared to $179,360 at December 31, 1997. Accruals are based upon expenses as determined by management's estimate. Cash flows provided by (used in) operating activities for the nine months ended September 30, 1998, were ($3,452) compared to ($754,686) for the same period in 1997 due primarily to changes in operating assets related to the sale of marketable securities. Cash flows provided by (used in) investing activities for the nine months ended September 30, 1998, were $560,893 compared to ($54,519) for the same period in 1997 due primarily to the receipt of the principal balance on the note related to the Company's former corporate headquarters. Cash flows provided by (used in) financing activities were ($120,000) for the nine month period ended September 30, 1998, compared to ($323,082) for the same period in 1997 due primarily to the conclusion of the Company's repurchase of its common stock. Current cash needs may not continue to be met during the next six months to one year unless revenues from investment advisory fees and brokerage transactions or other sources increase, or unless the Company liquidates its marketable securities and/or other investments, or reduces SG&A significantly. 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 10, 1998 By: /s/ Charles R. Clark Charles R. Clark Chief Executive Officer 14 EX-27 2
5 0000855663 JORDAN AMERICAN HOLDINGS, INC. 9-MOS DEC-31-1998 JAN-01-1998 SEP-30-1998 488,727 234,894 54,185 12,960 0 977,484 202,899 121,750 1,608,633 288,626 0 0 30,000 10,411 1,279,596 1,608,633 0 492,073 0 0 0 0 9,053 (491,414) 0 (491,414) 0 0 0 (491,414) (0.06) (0.06)
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