-----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, RFruPGP//fVNn9FF3aPFnEQZcDoaKix6Di3UKg34ZR9+GyCiBSYSTZXEqIO91kpV Tx0uZso7PoTNWlxz2yxm4A== 0001012709-01-500593.txt : 20010815 0001012709-01-500593.hdr.sgml : 20010815 ACCESSION NUMBER: 0001012709-01-500593 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010814 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: 1934 Act SEC FILE NUMBER: 000-18974 FILM NUMBER: 1709524 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 x10q-801.txt JORDAN AMERICAN HOLDINGS U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM l0-QSB [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2001 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) 300 West Vine Street, Suite 206, Lexington, Kentucky 40507 ---------------------------------------------------------- (Address of principal executive offices) (859) 254-2240 -------------- (Registrant's telephone number) 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 the close of business on August 6, 2001, 14,217,266 shares of the registrant's common stock were issued and outstanding. JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES TABLE OF CONTENTS PART I ITEM 1 FINANCIAL INFORMATION PAGE 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 Results of Operations .......................................... 10 Liquidity and Capital Resources ................................ 12 Risk Factors, Trends & Uncertainties ........................... 12 PART 2 ITEM 1 Legal Proceedings............................................... 13 PART I ITEM 1 FINANCIAL INFORMATION JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31, A S S E T S 2001 2000 ------------ ------------ CURRENT ASSETS (Unaudited) (Audited) Cash & cash equivalents $ 210,216 $ 1,029,173 Marketable Securities at market value 257,525 328,609 Investment advisory fee - net 161,071 195,253 Deposit with clearing broker 25,000 25,000 Receivable from shareholders 45,592 61,697 Prepaid expenses 86,828 62,025 Other receivable 73,933 57,574 ------------ ------------ Total current assets 860,165 1,759,331 ------------ ------------ FIXED ASSETS Property & equipment - net of accumulated depreciation and amortization of $193,491 and $169,110, respectively 146,694 110,148 ------------ ------------ OTHER ASSETS Boston Restaurant Debentures 500,000 500,000 Senior Yellow Pages - net of allowance of $37,500 in 2001 112,500 150,000 Intangible Assets - Net of amortization of $4,429 and $939, respectively 90,187 83,564 ------------ ------------ Total Other Assets 702,687 733,564 ------------ ------------ TOTAL ASSETS $ 1,709,546 $ 2,603,043 ============ ============ LIABILITIES & STOCKHOLDERS EQUITY CURRENT LIABILITIES Accounts payable and accrued expenses $ 142,298 $ 166,162 Deferred revenue 18,709 27,025 Preferred dividends payable 52,500 -- Notes payable - officer -- 26,166 Software license payable 13,535 29,197 ------------ ------------ Total Current Liabilities 227,042 248,550 ------------ ------------ STOCKHOLDERS EQUITY Preferred stock, variable rate, cumulative, convertible, non-voting, $0.01 par value, $1.00 liquidation value, authorized 5,000,000 shares; issued and outstanding 3,500,000 shares 35,000 35,000 Common stock, $0.001 par value, authorized 20,000,000 shares; issued and outstanding 10,421,266 shares 10,421 10,421 Additional Paid in Capital 4,365,453 4,417,953 Accumulated Deficit (2,928,370) (2,108,881) ------------ ------------ Total Stockholders Equity 1,482,504 2,354,493 ------------ ------------ Total Liabilities & Stockholders Equity $ 1,709,546 $ 2,603,043 ============ ============
See accompanying notes to consolidated financial statements JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED JUNE 30, JUNE 30, 2001 2000 2001 2000 ------------ ------------ ------------ ------------ REVENUES Commission Income $ 25,707 $ 10,767 $ 44,301 $ 141,245 Investment Advisory Fees 36,721 500,966 161,842 1,629,095 Tax and business service income 21,651 -- 50,395 -- Realized equity gain from investments -- (5,322) -- (5,322) ------------ ------------ ------------ ------------ Total Revenue 84,079 506,411 256,538 1,765,018 Selling, General and Administrative Costs 534,261 424,755 1,013,208 1,080,519 ------------ ------------ ------------ ------------ Net Operating Income (Loss) (450,182) 81,656 (756,670) 684,499 ------------ ------------ ------------ ------------ Other Income & Expenses Dividend and interest Income 23,500 38,067 51,793 70,432 Other Income 4,990 4,404 5,972 8,998 Unrealized gain (loss) from investments 37,695 (476,292) (120,584) (251,102) ------------ ------------ ------------ ------------ Total Other Income (Loss) 66,185 (433,821) (62,819) (171,672) ------------ ------------ ------------ ------------ Net Income (Loss) before income taxes (383,997) (352,165) (819,489) 512,827 Income tax provision -- 13,968 -- 13,968 ------------ ------------ ------------ ------------ Net Income (Loss) $ (383,997) $ (366,133) $ (819,489) $ 498,859 ============ ============ ============ ============ Basic earnings attributable to Common Stock per Common Share $ (0.04) $ (0.04) $ (0.08) $ 0.04 ============ ============ ============ ============ Diluted earnings attributable to Common Stock per Common Share $ (0.04) $ (0.04) $ (0.08) $ 0.04 ============ ============ ============ ============ Weighted-average number of Common shares outstanding: Basic 10,421,266 10,421,266 10,421,266 10,421,266 ============ ============ ============ ============ Diluted 10,421,266 10,421,266 10,421,266 10,421,266 ============ ============ ============ ============
See accompanying notes to consolidated financial statements JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2001 2000 ------------ ------------ CASH FLOWS - OPERATING ACTIVITIES: Net Income (loss) $ (819,489) $ 498,859 Adjustments to reconcile net income to cash provided by (used in) operating activities: Depreciation and amortization 27,872 16,677 Valuation Adjustments 120,584 251,102 Realized loss from investments -- 5,322 Changes in operating assets and liabilities: Investment advisory fees receivable 34,182 574,973 Prepaid expenses (24,803) (4,315) Other receivable (16,359) 25,057 Notes receivable - shareholders 16,105 (31,872) Accounts payable and other accrued expenses (23,864) (129,911) Notes payable - Officer (26,166) -- Deferred revenues (8,316) 3,276 Software license payable (15,662) (14,469) ------------ ------------ Net Cash Provided By (Used In) Operating Activities (735,916) 1,194,699 ------------ ------------ CASH FLOWS - INVESTING ACTIVITIES: Trading marketable securities (12,000) (319,161) Investment - Senior Yellow Page -- (150,000) Intangible Assets (10,114) -- Capital expenditures (60,927) (1,325) ------------ ------------ Net Cash (Used In) Investing Activities (83,041) (470,486) ------------ ------------ Net Increase (Decrease) in Cash and Cash Equivalents (818,957) 724,213 Cash and cash equivalents, beginning of period 1,029,173 580,758 ------------ ------------ Cash and Cash Equivalents, end of period $ 210,216 $ 1,304,971 ============ ============ Supplemental disclosure of cash flow information: Interest paid $ 903 $ 2,097 ============ ============
See accompanying notes to consolidated financial statements JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ========================================== NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION Jordan American Holdings, Inc. and Subsidiaries ("JAHI"/the "Company") was incorporated in Florida in May 1989. JAHI historically conducted its investment advisory business under the name Equity Assets Management. In 2000, JAHI formed Equity Assets Management, Inc. ("EAM"), a wholly owned subsidiary, and moved its investment advisory business into that entity. EAM provides investment advisory and portfolio management services to individual investors, pooled accounts and its mutual fund with its customers located substantially in the United States. EAM is registered as an investment advisor under the Investment Advisers Act of 1940. The Company also owns 100% of the issued and outstanding common stock of IMPACT Financial Network, Inc. ("IFNI"), IMPACT Administrative Services, Inc. ("IASI") and IMPACT Tax and Business Services, Inc. ("ITABS"). IASI provides operational and administrative support to IMPACT Management Investment Trust ("IMIT"/the "Trust") (see Note 2). EAM's customer investment transactions are primarily brokered through IFNI, a registered broker-dealer in securities acting as a non-clearing introducing broker. IFNI also is the primary distributor for IMIT. ITABS, created in September 2000, provides tax preparation and tax planning services to individuals and small businesses (see Note 5). The accompanying consolidated financial statements include the accounts of JAHI and its subsidiaries; all significant intercompany transactions have been eliminated during consolidation. In the opinion of management, the interim financial statements contain all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial position of the Company at the date of the interim balance sheet and the results of operations for the interim periods covered. The results for interim periods are not necessarily indicative of results for a full year. The consolidated balance sheet as of December 31, 2000 has been derived from the audited consolidated balance sheet as of the that date. These consolidated financial statements should be read in conjunction with the Company's Annual Report on Form 10-KSB for the year ended December 31, 2000. NOTE 2 - IMPACT MANAGEMENT INVESTMENT TRUST The Company formed IMIT, which is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company (mutual fund). Impact Total Return Portfolio (the "Portfolio") is the initial Series of the Trust. EAM is the investment advisor of the Trust and IFNI is the primary distributor of the Trust. As investment advisor of the Portfolio, the Company receives an annual investment advisory fee equal to 1.25% of the Portfolio's average daily net assets. Of this amount, 60 basis points are paid to the sub advisor of the Portfolio. JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ========================================== (CONTINUED) NOTE 3 - NOTES RECEIVABLE The Company owns a $500,000 variable rate convertible subordinated debenture from Boston Restaurant Associates, Inc. ("BRAI"). The principal balance of the debenture is due and payable on December 31, 2011. The debenture has a conversion price of $1.25 per share and bears interest at a rate of 14%. In connection with the purchase of the debenture, the Company also acquired, at no cost, warrants to subscribe for the purchase from BRAI up to 500,000 fully paid and nonassessable shares of BRAI's common stock. The purchase rights represented by the warrants are exercisable by the Company, in whole or in part, at any time through December 31, 2006, at an exercise price of $3.00 per share. In March 2000, the Company made a loan of $150,000 represented by an unsecured Convertible Subordinated Bridge Note, to an unaffiliated entity. The note bears interest at 10% and matured on May 31, 2001. The Company is entitled to receive a 4% equity interest in this entity if and when it completes a public offering of its securities. The note is convertible into Series A Convertible Preferred Stock of the entity. The note was not paid at maturity and the Company's management has estimated the total value of this note to be $112,500 at June 30, 2001. The carrying value of the above notes receivable approximates the fair market value as estimated by management, after considering such factors as current interest rates, liquidity, conversion terms and the credit worthiness of the borrowers. The Company's management has estimated the value of the BRAI warrants to be $-0- at June 30, 2001 and December 31, 2000. This determination was made considering primarily the current value of the underlying common stock and the current illiquidity of the warrants. NOTE 4 - STOCKHOLDERS' EQUITY At June 30, 2001 and December 31, 2000, the Company has stock warrants outstanding entitling the warrant holder to acquire 1,113,000 shares of common stock at $.50 per share expiring June 5, 2010. The Company also has outstanding Underwriter Warrants related to the initial public offering entitling a former officer to purchase 44,545 units (five shares of common stock and five stock warrants; two warrants entitle the holder to purchase one share of common stock for $.60 per share) of the Company at a price of $2.58 per unit expiring through January 8, 2011. JAHI has authorized 5,000,000 shares of $0.01 par value preferred stock. The Board of Directors is authorized to issue preferred stock in one or more series, to determine the rights thereto, and to fix the number of shares on any series of preferred stock and the designation of any such series. The Company issued 3,000,000 shares of 8% cumulative, convertible, non-voting preferred stock to a customer of EAM in a private placement offering. In connection with this offering, 750,000 shares of common stock were given to the Company to distribute to the preferred shareholder by three officers of the Company for no additional consideration. JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ========================================== (CONTINUED) From February 1993 until June 30, 1998, the Company made semi-annual cash dividend payments on its cumulative convertible non-voting preferred stock at a rate of 8% per annum. The Company did not make any dividend payments on this stock in 1999 and 2000. On December 29, 2000, the Company entered into a preferred stock exchange agreement (the "Agreement") with its sole preferred shareholder (the "Shareholder"). The Shareholder was the owner of 3,000,000 shares of the Company's 8% Convertible Redeemable Cumulative Preferred Stock (the "Outstanding Preferred Stock"). The Company was in arrears with respect to the payment of dividends on the Outstanding Preferred Stock, which arrearages totaled $600,000 as of December 31, 2000 (the "Dividend Arrearages"). The Agreement provided that the Company declare and pay a cash dividend of $100,000 on the Outstanding Preferred Stock and exchange 3,500,000 shares of a new 2000 Convertible Preferred Stock (the "New Preferred Stock") for the 3,000,000 shares of the Outstanding Preferred Stock and cancellation of the $500,000 balance of the Dividend Arrearages. The New Preferred Stock is convertible to JAHI common stock at the rate of one share of common stock for each $3.50 of the face amount of the New Preferred Stock and will have a dividend rate of 3% for each of the calendar years 2001 through 2003, 4% for calendar year 2004, 5% for calendar year 2005, 6% for calendar year 2006, 7% for calendar year 2007, and 8% for calendar year 2008 and thereafter. In connection with the original preferred stock offering, the Company obtained "key man" life insurance on the Company's former president, in the amount of $3,750,000. The shareholder is the direct beneficiary and, upon the death of the Company's former president, would receive the insurance proceeds in redemption of the New Preferred Stock. In addition, the Company maintains life insurance on certain officers aggregating $1,000,000, with the Company as the primary beneficiary. NOTE 5 - RELATED PARTY TRANSACTIONS The Company has a loan to a former officer bearing interest at a rate of 10% per annum in the amount of $45,591 and $61,697 at June 30, 2001 and December 31, 2000, respectively. On November 30, 2000, the Company purchased certain assets of a tax preparation and tax planning services company from an officer and director of JAHI valued at $105,100 as determined by the Board of Directors of the Company. The purchase included a client database in the amount of $71,025 and goodwill of $13,478, which are included on the accompanying balance sheets as intangible assets. The Company issued 100,500 stock options exercisable at $0.20 per share through November 30, 2010 and valued at $20,100 as part of the purchase price. In 1994, a director and former officer of the Company established the Jordan Index Fund, L.P. (the "Fund"). The Fund engages in the speculative trading of stock index futures contracts, and may occasionally trade in equity securities and stock options. The Fund is administered by its general partner, Jordan Assets, Ltd. Jordan Assets, Ltd. is not a subsidiary of JAHI, although JAHI was registered as a principal of Jordan Assets, Ltd. with the Commodity Futures Trading Commission. All trading decisions for the Fund are made by Jordan Assets, Ltd. Certain administrative functions were provided to the Fund by JAHI in return for the fees earned by Jordan Assets, Ltd. No such fees were earned during 2001 and 2000. On July 15, 2001, JAHI resigned as a principal of Jordan Assets, Ltd. and no longer provides any services to the Fund. JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ========================================== (CONTINUED) NOTE 6 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONTINGENCIES In the normal course of business, the Company's client activities through its clearing broker involve the execution, settlement, and financing of various client securities transactions. These activities may expose the Company to off-balance sheet risk. In the event the client fails to satisfy its obligations, the Company may be required to purchase or sell financial instruments at prevailing market prices in order to fulfill the client's obligations. In the Company's investment activities, the Company purchases securities for its own account and may incur losses if the market value of the securities declines subsequent to June 30, 2001. The Company's revenues are primarily derived from a percentage of the assets under management and performance fees based on the appreciation of those assets. Assets under management are impacted by both the extent to which the Company attracts new or loses existing clients and the appreciation or depreciation of the U.S. and international equity and fixed income markets. A downturn in general economic conditions could cause investors to cease using the services of the Company. The Company's financial instruments, including cash and cash equivalents, receivables and other assets, are carried at amounts that approximate fair value. The Company's marketable securities are carried at the June 30, 2001 market value. Payables and other liabilities are carried at amounts that approximate fair value. The Company has a substantial portion of its assets on deposit with banks and brokers. Assets deposited with banks and brokers are subject to credit risk. In the event of a bank's or broker's insolvency, recovery of Company assets on deposit may be limited to account insurance or other protection afforded such deposits. The Securities and Exchange Commission ("SEC") has completed an inspection of the Company's investment advisory and broker-dealer operations. As a result of the inspection, certain issues arose regarding possible violations. Management of the Company does not expect the resolution of this matter to have a material adverse effect on the Company's operations. The former President of the Company and his son filed a complaint against the Company and two of its officers seeking an injunction against current management based upon violation of the federal securities laws and breaches of the common law fiduciary duty of directors of a Florida corporation. The management of the Company does not believe the claims to be meritorious and does not expect the resolution of this matter to have a material adverse effect on the Company's operations. JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ========================================== (CONTINUED) NOTE 7 - SUBSEQUENT EVENTS On August 6, 2001, the Company issued 3.1 million shares of common stock, par value $.001 per share in exchange for 1.5 million shares of preferred stock, par value $.01 per share. In addition, the Company modified the outstanding preferred stock to provide that the dividend rate for the remaining semi-annual payment for 2001 and for the two semi-annual payments for 2002 be set at 5.25%. PART 1, 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. Results of Operations JAHI's assets under management were $30.1 million as of June 30, 2001, compared to $31.0 million under management on March 31, 2001. The net $.9 million change in assets under management during the quarter resulted from investment losses of $.6 million and negative cash flow of $.3 million. IMIT's assets in the mutual funds were $3.9 million as of June 30, 2001, compared to $2.6 million under management on March 31, 2001. The net $1.3 million change in assets in the mutual funds during the quarter resulted from investment income and appreciation of $.2 million and positive cash flow of $1.1 million. THREE MONTHS ENDED JUNE 30, 2001 COMPARED TO THREE MONTHS ENDED JUNE 30, 2000 The Company had a net loss for the three months ended June 30, 2001 of ($383,997) or ($0.04) per common share compared to a net loss of ($366,133) or ($0.04) per common share for the same period in 2000. Basic and diluted earnings per common share for the three months ended June 30, 2001 and 2000 includes preferred stock dividends payable of $26,250 and dividends in arrears of $60,000, respectively for each period. The minimal increase in net loss for this period stems primarily from significantly lower revenue this period compared to the same period last year; the net loss for the previous year's period also included significant unrealized losses from investments. The Company had an operating loss of ($450,182) for the three months ended June 30, 2001 compared to operating income of $81,656 for the same period in 2000. This decrease is primarily due to total revenue being significantly lower during this period when compared to the same quarter last year. For the three months ended June 30, 2001, revenues totaled $84,079 compared to revenues of $506,411 for the same period in 2000, a decrease of approximately 83% due primarily to significantly decreased revenues from investment advisory fees. Advisory fee revenue decreased for the three months ended June 30, 2001, to $36,721 compared to $500,966 for the same period in 2000, a decrease of approximately 93% due primarily to decreased revenues from performance fee based managed accounts. This decrease in performance fee revenues resulted from investment losses during the last 12-month period in the performance fee accounts. Performance fees are only earned when the fair market value of accounts exceed their historical highs. Management does not anticipate any performance billings during the last six months of this year due to the depressed value of these accounts relative to their historical highs. Commission income increased for the three months ended June 30, 2001, to $25,707 compared to $10,767 for the same period in 2000, an increase of approximately 139% due primarily to more securities transactions resulting from the amount of securities being purchased and sold in client accounts. These securities transactions are incidental to management's investment advisory decisions based on technical and fundamental considerations of individual securities, market conditions and other factors. Selling, general, and administrative ("SG&A") expenses of $534,261 were incurred during the three month period ended June 30, 2001, compared to similar SG&A expenses of $424,755 for the same period in 2000. This increase of approximately 26% was due primarily to an increase in the salary of a former officer and the expenses of ITABS, created in September 2000. Total other income (expenses) was $66,185 for the three months ended June 30, 2001, compared to ($433,821) for the same period in 2000. This change was primarily due to unrealized equity gains in the second quarter of 2001 compared to losses in the same quarter last year. SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO SIX MONTHS ENDED JUNE 30, 2000 The Company had a net loss for the six months ended June 30, 2001 of ($819,489) or ($0.08) per common share compared to net income of $498,859 or $0.04 per common share for the same period in 2000. Basic and diluted earnings per common share for the six months ended June 30, 2001 and June 30, 2000 includes dividends payable of $52,500 and dividends in arrears of $120,000, respectively for each period. The net loss for this period compared to the net income for the same period last year stems primarily from substantially lower revenues from performance fee based managed accounts. The Company had an operating loss of ($756,670) for the six months ended June 30, 2001 compared to operating income of $684,499 for the same period in 2000. This decrease is primarily due to total revenue being significantly lower during this period when compared to the same period last year. For the six months ended June 30, 2001, revenues totaled $256,538 compared to revenues of $1,765,018 for the same period in 2000, a decrease of approximately 85%. The decrease in revenue can be primarily attributed to a decrease in advisory fees. Revenues from advisory fees for the six months ended June 30, 2001 totaled $161,842 compared to revenues from the same source of $1,629,095 for the same period in 2000, a decrease of approximately 90% due primarily to decreased revenues from performance fee based managed accounts. This decrease in performance fee revenues resulted from investment losses during the last 12-month period in the performance fee accounts. Performance fees are only earned when the fair market value of accounts exceed their historical highs. Management does not anticipate any performance billings during the last six months of this year due to the depressed value of these accounts relative to their historical highs. Revenues from commissions decreased approximately 69% for the six months ended June 30, 2001 compared to the same period in 2000 primarily due to less trading activity. SG&A expenses totaled $1,013,208 during the six months ended June 30, 2001 compared to $1,080,519 in selling, general and administrative expenses for the same period in 2000. The net $67,311 decrease in SG&A expenses resulted primarily from lower fees paid out to sales representatives during this period. Total other income (expenses) was ($62,819) for the six months ended June 30, 2001 compared to ($171,672) for the same period in 2000. This increase was primarily due to the lower unrealized equity losses in the first six months of 2001. Liquidity and Capital Resources At June 30, 2001, the Company had cash and cash equivalents of $210,216 versus $1,029,173 at December 31, 2000. This decrease was due primarily to the net loss for the six months ended June 30, 2001. Accounts payable and accrued expenses were $142,298 at June 30, 2001, compared to $166,162 at December 31, 2000. The decrease in accounts payable and accrued expenses is primarily due to lower accruals for actual expenses incurred on fees paid out to sales representatives, provisions for income tax and bonus accruals at June 30, 2001 compared to those fees accrued at December 31, 2000. Accruals are based upon expenses incurred and/or as determined by management's best estimate based upon the Company's annual budget. Cash flows provided by (used in) operating activities for the six months ended June 30, 2001, were ($735,916) compared to $1,194,699 for the same period in 2000 due primarily to changes in net income for the six months ended June 30, 2001 and the changes in the investment advisory fee receivable. Cash flows provided by (used in) investing activities for the six months ended June 30, 2001, were ($83,041) compared to ($470,486) for the same period in 2000 due primarily to the investments made in marketable securities and Senior Yellow Pages, Inc. during the first six months of 2000. Risk Factors, Trends & Uncertainties Total assets under management and corporate earnings may substantially increase or decrease due to (1) stock market conditions, including the onset of a long-term declining, or bear market; (2) performance returns as influenced by the Company's investment advisory decisions, operational expense and effectiveness of marketing efforts; (3) competition from mutual funds, other investment advisory companies and insurance companies; (4) interest rate changes and other actions taken by the Federal Reserve Board; (5) domestic and international economic and political conditions, high inflation and/or recession; (6) trends in business and finance; (7) international events; (8) acts of terrorism; and (9) other factors. The Company is registered with and subject to regulation by the SEC under the Investment Advisers Act of 1940 and, where applicable, under state advisory laws. The Company is also subject to regulation by the SEC under the Investment Company Act of 1940. The Company's affiliate broker-dealer is registered as a broker-dealer with the SEC under the Securities Exchange Act of 1934 (the "Exchange Act") and, where applicable, under state securities laws, and is regulated by the SEC, state securities administrators and the NASD. IASI is registered as a transfer agent under the Exchange Act and is regulated by the SEC. The privately held affiliate that manages the Fund is regulated by the Commodity Futures Trading Commission and the National Futures Association. By law, investment advisors and broker-dealers are fiduciaries and are required to serve their clients' interests with undivided loyalty. There is a potential conflict of interest because of the affiliation between EAM and IFNI. While the Company believes that its existing relationships are in compliance with applicable law and regulations, because of this potential conflict of interest, the SEC may closely examine these relationships. 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 and investment advisor activities. Although the Company currently maintains errors and omission insurance policies insuring against this risk, such insurance does not necessarily protect the Company against loss in all events. 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 and commodities trading business will not have an adverse effect upon the business of the Company. In connection with a late 1997 examination of the Company, the SEC raised certain issues regarding possible violations of the federal securities laws in connection with the private placement of debentures of Boston Restaurant Associates, Inc. The matter has not been resolved and to the Company's knowledge the investigation is ongoing. Management of the Company does not expect the resolution of this matter to have any material effect on the Company's financial condition, results of operations or business. Management of the Company believes short-term cash needs will continue to be met through management fees, brokerage revenues and/or the liquidation of marketable securities. At June 30, 2001, the Company had $628,812 in cash, accounts receivables and marketable securities. The Company may seek additional capital through the sale of equity although no assurances can be given that such financing will be available on satisfactory terms, if at all. Any additional capital raised would be used to fund growth and diversity of revenue sources. PART 2, ITEM 1 LEGAL PROCEEDINGS JORDAN AMERICAN HOLDINGS, INC. AND SUBSIDIARIES On June 27, 2001, a complaint was filed in the United States District Court in the Eastern District of Kentucky by W. Neal Jordan against the Company, Charles R. Clark, and A.J. Elko. Mr. Jordan is a director of the Company and, as of August 6, 2001, the beneficial owner of 37% of the Company's outstanding common stock. Mr. Jordan seeks injunctive relief based upon alleged violation of the federal securities laws and alleged breaches of the common law fiduciary duty of directors of a Florida corporation. The Company has filed a motion to dismiss the complaint. Mr. Jordan has sued the Company for injunctive relief based only upon the allegation that Mr. Clark and/or Mr. Elko solicited one proxy revocation from a shareholder in violation of the federal securities laws. Mr. Jordan seeks injunctive relief of either (1) the re-solicitation of proxies with a record date of April 2, 2001 and the rescheduling of a new annual meeting, or (2) prohibiting JAHI from issuing any further shares of common stock until such time as a shareholder meeting is held. Mr. Jordan also seeks injunctive relief against Mr. Clark and Mr. Elko for their alleged breach of fiduciary duty and dilution of Jordan's ownership interest based upon their alleged self interested efforts to thwart Jordan's bid for control of JAHI, to maintain their positions and gain control of JAHI by possibly issuing new shares to dilute Jordan's voting power and by improperly soliciting revocations and purposefully defeating a quorum for the annual meeting of shareholders that had been scheduled for May 22, 2001, all in an effort to personally injure and oust Jordan. Mr. Jordan requested that the court enjoin JAHI from issuing shares of common stock until a new shareholders' meeting is scheduled and held. At a hearing on July 23, 2001, on Mr. Jordan's motion for a preliminary injunction and other pending motions, the court took all pending motions under advisement and did not grant any of them. The management of the Company does not believe the claims to be meritorious and does not expect the resolution to have a material adverse affect on the Company's operations. 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: August 14, 2001 By: /s/ A.J. Elko ------------------- A.J. Elko Chief Executive Officer Dated: August 14, 2001 By: /s/ Emmett A. Pais ------------------- Emmett A. Pais, CPA Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----