-----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, BEqR7qt/HgY6KgdukoPSr2NuIvoV+RQYlUHk+7wiw5Cnxz6722D/x5j/c3G3KtGa IsuoMzcr7oHHF2d7IaGESA== 0000913760-97-000007.txt : 19970222 0000913760-97-000007.hdr.sgml : 19970222 ACCESSION NUMBER: 0000913760-97-000007 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970214 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL ASSETS HOLDING CORP CENTRAL INDEX KEY: 0000913760 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 592921318 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 033-70334-A FILM NUMBER: 97533065 BUSINESS ADDRESS: STREET 1: 250 PARK AVENUE SOUTH STREET 2: SUITE 200 CITY: WINTER PARK STATE: FL ZIP: 32789 BUSINESS PHONE: 4076291400 MAIL ADDRESS: STREET 1: 250 PARK AVENUE SOUTH STREET 2: SUITE 200 CITY: WINTER PARK STATE: FL ZIP: 32789 10QSB 1 QUARTERLY REPORT 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 December 31, 1996 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT Commission File Number 33-70334-A INTERNATIONAL ASSETS HOLDING CORPORATION (Exact name of small business issuer as specified in its charter) Delaware 59-2921318 - -------------------------------------------------------------------------------- (State or other jurisdiction of IRS Employer Identification No.) incorporation or organization) 250 Park Avenue South, Suite 200 Winter Park, FL 32789 (Address of principal executive offices) (407) 629-1400 (Issuer's telephone number) NA - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]. The number of shares outstanding of Common Stock was 1,444,769 as of January 29, 1997. Transitional small business disclosure format Yes [ ] No [X] 1 INDEX Page No. Part I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheet as of December 31, 1996 3 Condensed Consolidated Statements of Operations for the Three Months ended December 31, 1996, and 1995 ............. 5 Condensed Consolidated Statements of Cash Flows for the Three Months ended December 31, 1996, and 1995 ............. 6 Notes to Condensed Consolidated Financial Statements ....... 8 Item 2. Management's Discussion and Analysis or Plan of Operation .. 10 Part II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K ..............................14 Signatures ....................................................15 2 INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheet December 31, 1996 (Unaudited) Assets Cash ......................................... $ 541,139 Cash deposits with clearing broker ........... 1,364,447 Foreign currency deposits with clearing broker 520 Investments .................................. 1,364,442 Receivable from clearing broker .............. 240,235 Receivable from affiliated company ........... 2,422 Other receivables ............................ 119,090 Securities owned, at market value ............ 2,734,187 Deferred income tax benefit .................. 32,310 Property and equipment, at cost: Leasehold improvements .................. 41,805 Furniture and equipment ................. 707,997 ------- 749,802 Less accumulated depreciation and amortization 363,019 ------- Net property and equipment ...... 386,783 Other assets, net of accumulated amortization of $58,002 .................. 167,238 ========== $ 6,952,813 ========== See accompanying notes to condensed consolidated financial statements. 3 INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheet December 31, 1996 (Unaudited) Liabilities and Stockholders' Equity Liabilities: Securities sold, but not yet purchased, at market value $642,116 Accounts payable ...................................... 132,944 Accrued employee compensation and benefits ........... 472,306 Other accrued expenses ................................ 192,025 Income taxes payable .................................. 115,550 Deferred income taxes ................................. 12,199 Other ................................................. 7,601 -------- Total liabilities ........................ 1,574,741 -------- Stockholders' equity: Preferred stock, $.01 par value. Authorized 1,000,000 shares; issued and outstanding -0- shares ...... --- Common stock, $.01 par value. Authorized 3,000,000 shares; issued and outstanding 1,444,769 shares 14,448 Additional paid-in capital ....................... 3,204,086 Retained earnings ................................ 2,159,538 --------- Total stockholders' equity 5,378,072 ========= $ 6,952,813 ========= See accompanying notes to condensed consolidated financial statements. 4 INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Operations For the Three Months Ended December 31, 1996, and 1995 (Unaudited) 1996 1995 Revenues: Commissions ........................... $2,021,907 1,881,360 Net dealer inventory and investment gains 521,784 620,918 Other revenue ......................... 144,031 157,054 ---------- ---------- Total revenues ............. 2,687,722 2,659,332 ---------- ---------- Expenses: Commissions and clearing fees ......... 1,126,563 1,051,641 Employees compensation and benefits 575,657 548,304 Communications and promotions ......... 335,665 426,887 Other operating expenses .............. 378,717 310,110 --------- --------- Total expenses ............. 2,416,602 2,336,942 --------- --------- Income before income taxes .............. 271,120 322,390 Income tax expense ...................... 113,569 135,293 --------- --------- Net income .............................. $ 157,551 187,097 ======= ======= Earnings per common and dilutive common equivalent share: Primary: $ .088 .110 Fully diluted: $ .088 .110 Weighted average number of common and dilutive common equivalent shares outstanding: Primary: 2,225,414 2,005,231 Fully diluted: 2,225,414 2,005,231 See accompanying notes to condensed consolidated financial statements. 5 INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows For the Three Months Ended December 31, 1996, and 1995 (Unaudited)
1996 1995 Cash flows from operating activities: Net income $ 157,551 187,097 Adjustments to reconcile net income to net cash used for operating activities: Net amortization and appreciation of Investments (23,450) (21,355) Depreciation and amortization 37,572 23,781 Deferred income taxes (9,163) (195) Cash provided by (used for) changes in: Receivable from clearing broker (3,099) (9,880) Receivable from affiliated company 24,120 8,071 Other receivables (11,005) (20,972) Securities owned (263,592) (372,370) Other assets 21,213 (556) Securities sold, but not yet purchased (386,965) (22,733) Accounts payable 21,911 36,485 Accrued salaries, commissions and benefits (371,638) (203,860) Other accrued expenses 35,704 (30,892) Income taxes payable (5,768) (39,512) Other liabilities 38 45 ----------------- --------------- Net cash used for operating activities (776,571) (466,846) ----------------- --------------- Cash flows from investing activities: Disposal of Investments 2,250,000 2,737,000 Acquisition of Investments (2,271,996) (2,464,303) Acquisition of property, equipment & other assets (102,950) (8,417) ----------------- --------------- Net cash provided by (used for) investing activities (124,946) 264,280 ----------------- --------------- (continued)
See accompanying notes to condensed consolidated financial statements. 6 INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows, Continued
1996 1995 Cash flows from financing activities: Acquisition of common shares related to repurchase program (21,431) - Acquisition of common shares for treasury (429) - ----------------- --------------- Net cash used for financing activities (21,860) - ----------------- --------------- Net decrease in cash and cash equivalents (923,377) (202,566) Cash and cash equivalents at beginning of period 2,829,483 1,604,871 ----------------- --------------- Cash and cash equivalents at end of period $ 1,906,106 1,402,305 ================= =============== Supplemental disclosure of cash flow information: Cash paid for interest $ 876 2,527 ================= =============== Income taxes paid $ 128,500 175,000 ================= ===============
7 INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements December 31, 1996, and 1995 (1) Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions and requirements of Form 10-QSB and, therefore, do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. In the opinion of Management, such financial statements reflect all adjustments necessary for a fair statement of the results of operations, cash flows and financial position for the interim periods presented. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year. It is suggested that these condensed consolidated financial statements be read in conjunction with the Company's audited consolidated financial statements for the year ending September 30, 1996, filed on Form 10-KSB (SEC File Number 33-70334-A). As used in this Form 10-QSB, the term "Company" refers, unless the context requires otherwise, to International Assets Holding Corporation and its five wholly owned subsidiaries; International Assets Advisory Corp. ("IAAC"), Global Assets Advisors, Inc. ("GAA"), International Financial Products, Inc. ("IFP"), GlobalNet Securities, Inc. ("GNSI") and International Asset Management Corp. ("IAMC"). All significant intercompany balances and transactions have been eliminated in consolidation. (2) Securities Owned and Securities Sold, But Not Yet Purchased Securities owned and Securities sold, but not yet purchased at December 31, 1996, consist of trading and investment securities at quoted market values as follows:
Sold, but not Owned yet purchased Obligations of U.S. Government $ 1,057,730 - Common stock and American Depository Receipts 1,021,761 608,778 Proprietary unit investment trusts 515,650 - Corporate debt securities 131,614 - Foreign government obligations 7,432 33,338 --------- ------- $ 2,734,187 642,116
8 INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements, continued (3) Stock Options On December 11, 1996, the Company granted 30,000 qualified incentive stock options which are exercisable at 20% per year beginning three years from the date of grant. The options granted on December 11, 1996 have an exercise price of $3.3125 per share and expire on December 11, 2006. As of December 31, 1996, options to purchase 455,000 shares have been granted and are outstanding under the Company Stock Option Plan. (4) Earnings Per Common Share Primary and fully diluted earnings per common and dilutive common equivalent share for the three months ended December 31, 1996 and 1995, have been computed by dividing adjusted net income by the weighted average number of common and dilutive common equivalent shares outstanding. Common equivalent shares represent shares of common stock issuable upon the assumed exercise of stock options and warrants. (5) Leases The Company occupies leased office space of approximately 13,815 square feet at 250 Park Avenue South, Winter Park, Florida. In December 1996, the Company executed an amendment to enhance this leased office space and extend the lease expiration from November 1999 to May 2001. The Company is obligated under various noncancelable operating leases for the rental of its office facilities and certain office equipment. Rent expense associated with operating leases amounted to $76,948 and $71,421 for the three months ended December 31, 1996, and 1995, respectively. The minimum lease payments under noncancelable operating leases as of December 31, 1996, are as follows: Fiscal Year (12 month period) Ending September 30, 1997 $ 310,100 1998 302,000 1999 297,100 2000 299,900 2001 205,000 Thereafter - --------- Total future minimum lease payments $1,414,100 --------- 9 INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements, continued (6) Stock Repurchase Program On October 4, 1996, the Company announced that the Board of Directors has authorized the Company to continue its repurchase of common stock up to $500,000 in the open market during the remainder of the fiscal year which ends September 30, 1997. The Board of Directors originally authorized the Company to repurchase up to $500,000 in shares of common stock in the open market during the remainder of the fiscal year ended September 30, 1996 on March 13, 1996. The stock purchases will be made in the open market from time to time as market conditions permit. The Company is required to comply with Rule 10b-18 of the Securities and Exchange Commission which regulates the specific terms in which shares may be repurchased. As of January 29, 1997, the Company has repurchased a total of 16,000 shares under this repurchase program at a total cost of $62,899. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. The Company's assets decreased from $7,528,292 at September 30, 1996, to $6,952,813 at December 31, 1996, or a decrease of $575,479. The Company's liabilities decreased from $2,285,911 at September 30, 1996, to $1,574,741 at December 31, 1996, or a decrease of $711,170. The increase in the net assets (assets less liabilities) of $135,691 primarily relates to the net income earned for the three month fiscal period. The Company's condensed consolidated balance sheet at December 31, 1996, reflects a receivable from clearing broker, for trades which had not yet settled for cash, due to the proceeds from the sale of securities exceeding the cost of securities purchased. Results of Operations: The Company's principal activities, securities brokerage and the trading of and market-making in securities, are highly competitive and extremely volatile. The earnings of the Company are subject to wide fluctuations since many factors over which the Company has little or no control, particularly the overall volume of trading and the volatility and general level of market prices, may significantly affect its operations. 10 Three Months Ended December 31, 1996, as Compared to the Three Months Ended December 31, 1995 The Company's revenues are derived primarily from commissions earned on the sale of securities and trading income in securities purchased or sold for the Company's account. Total revenues increased by approximately 1% for the three months ended December 31, 1996, as compared to the three months ended December 31, 1995. For the three months ended December 31, 1996, and 1995, approximately 75% and 71%, respectively, of the Company's revenues were derived from commissions earned on the sale of securities. For the three months ended December 31, 1996, and 1995, approximately 19% and 23%, respectively, of the Company's total revenues were from net dealer inventory and investment gains (trading revenue). Commission revenue increased by approximately $141,000, or 7% for the three months ended December 31, 1996, as compared to the three months ended December 31, 1995. During the three months ended December 31, 1996, the overall volume of customer ticket orders increased by 14% and the average dollar amount of retail trades decreased 6% as compared to the three months ended December 31, 1995. This increase in commission revenue is despite a slight decrease in the average number of account executives from 42, as of December 31, 1995, to 41, as of December 31, 1996, or a decrease of approximately 2%. Revenues from net dealer inventory and investment gains decreased by approximately $99,000, or 16% for the three months ended December 31, 1996, as compared to the three months ended December 31, 1995. The decrease in trading revenue is primarily attributable to decreases in the Company's retail, fixed income and wholesale trading activities due to decreases in the volume of trading activity. The Company's trading department primarily concentrates on global securities which it believes are likely to be traded by the Company's clients. By focusing on these types of securities, trading revenue is more directly related to commission revenue and order flow. Other revenues decreased by approximately $13,000 or 8% during the three months ended December 31, 1996, as compared to the three months ended December 31, 1995. The decrease in other revenue is primarily due to decreases in list rental income and seminar fee income. The major expenses incurred by the Company relate to direct costs of securities operations such as commissions and clearing fees, employees' compensation and benefits and communications and promotions expense. 11 Total expenses increased by approximately $80,000, or 3% for the three months ended December 31, 1996, as compared to the same period in 1995. This increase is primarily attributable to increases in commissions and clearing fees, employee compensation and benefits and other operating expenses. Commissions and clearing expenses increased approximately $75,000, or 7% during the three months ended December 31, 1996, as compared to the same period in 1995. This increase is directly related to the 7% increase in commission revenue for the same period. Employee compensation and benefits expense rose approximately $27,000, or 5% during the three months ended December 31, 1996, as compared to the three months ended December 31, 1995. The increase in employee compensation and benefits is primarily due to additional employees hired by the Company and salary increases during the three months ended December 31, 1996, as compared to the three months ended December 31, 1995. Overall promotion and communication expenses decreased by approximately $91,000, or 21% during the three months ended December 31, 1996, as compared to the three months ended December 31, 1995. This decrease is primarily due to the elimination of funding from the Company to IFP for promotional activities. As of October 1996, Company funding for all IFP promotional activities was ceased due to the unsuccessful efforts of IFP in generating revenues. Other operating expenses increased approximately $69,000, or 22% during the three months ended December 31, 1996, as compared to the three months ended December 31, 1995. This increase is primarily attributable to increases in expenses incurred for rental of leased premises, insurance expense, professional fees and amortization and depreciation expense. As a result of the above, income before income taxes decreased by approximately $51,000, or 16% during the three months ended December 31, 1996, as compared to the three months ended December 31, 1995. The Company's effective income tax rate was approximately 42% for the three months ended December 31, 1996, and 1995. Liquidity and Capital Resources A substantial portion of the Company's assets are liquid. At December 31, 1996, approximately 85% of the Company's assets consisted of cash, cash equivalents, and marketable securities. All assets are financed by the Company's equity capital, short-term borrowings from securities lending transactions and other payables. 12 IAAC is subject to the requirements of the SEC and the NASD relating to liquidity and net capital levels. At December 31, 1996, IAAC had net capital of approximately $2,458,000, which was approximately $2,358,000 in excess of its minimum net capital requirement at that date. In the opinion of management, the Company's existing capital and cash flow from operations will be adequate to meet the Company's capital needs for at least the next 12 months in light of known and reasonably estimated trends. In addition, management believes that the Company will be able to obtain additional short or medium-term financing that may be desirable in the ordinary conduct of its business. The Company has no plans for additional financing and there can be no assurance such financing will be available. 13 PART II ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a). Exhibits (11) The Statement of Computation of Earnings Per Share is attached hereto as Exhibit 11. (27) Broker-Dealers and Broker Dealer Holding Companies Financial Data Schedule BD is attached hereto as Exhibit 27 b). Form 8-K No reports were filed on Form 8-K during the three months ended December 31, 1996. 14 Signatures In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. INTERNATIONAL ASSETS HOLDING CORPORATION Date 02/14/97 /s/ Jerome F. Miceli Jerome F. Miceli President and Chief Operating Officer Date 02/14/97 /s/ Jonathan C. Hinz Jonathan C. Hinz Chief Accounting Officer 15 Exhibit 11 INTERNATIONAL ASSETS HOLDING CORPORATION STATEMENT OF COMPUTATION OF EARNINGS PER SHARE For the Three Months Ended December 31, 1996, and 1995
1996 1995 Adjustment of shares outstanding: Weighted average number of actual common shares outstanding 1,448,138 1,460,887 Weighted average number of additional common shares outstanding assuming the exercise of common stock equivalents (1) 777,276 544,344 Weighted average number of common and dilutive ============== ============== common equivalent shares outstanding 2,225,414 2,005,231 ============== ============== Adjustment of net income: Actual net income $157,551 $187,097 Adjustment to net income assuming the investment of excess proceeds received from the assumed exercise of common stock equivalents, net of income taxes $37,899 $34,354 ============== ============== Adjusted net income $195,450 $221,451 ============== ============== Earnings per common and dilutive common equivalent share: Primary: $.088 $.110 Fully diluted (2): $.088 $.110
- -------------------------------------------------------------------------------- (1) This calculation assumes that of all the additional common shares outstanding, assuming the exercise of all common stock equivalents, 288,954 shares of common stock are re-acquired with the proceeds therefrom as of October 1, 1996 and 292,177 shares are re-acquired as of October 1, 1995. (2) In 1996 and 1995 there were no other potentially dilutive securities present other than the common stock equivalents (common stock warrants and common stock options), therefore, primary and fully diluted earnings per share amounts are the same. EX-27 2 FDS FOR 10QSB
BD 1
3-MOS SEP-30-1997 Dec-31-1996 1,906,106 361,747 0 0 4,098,629 386,783 6,952,813 0 720,800 0 0 642,116 0 0 0 14,448 5,363,624 6,952,813 521,784 72,928 2,021,907 0 41,702 876 1,425,107 271,120 271,120 0 0 157,551 .088 .088
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