<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended September 30, 2000
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ____________ to ______________
Commission File No: 0-29337
-------
SUMMIT BROKERAGE SERVICES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-3041826
------------------------------- ------------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
25 FIFTH AVENUE
INDIATLANTIC, FLORIDA 32903
(321) 724-2303
------------------------------------------------------------------------
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
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 such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AS OF NOVEMBER 10, 2000
----- -----------------------------------
Common Stock
Par value $.0001 per share 4,548,525
Transitional Small Business Disclosure Format [ ] Yes [X] No
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<PAGE> 2
SUMMIT BROKERAGE SERVICES, INC.
INDEX
PAGE
----
PART I - FINANCIAL INFORMATION:
Item 1. Financial Statements
Certified Public Accountant's Review Report 3
Consolidated Statements of Financial Condition 4
Consolidated Statements of Income (Loss) for the Nine Months
Ended and the Three Months Ended September 30, 2000 and 1999 5
Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 2000 and 1999 7
Notes to Financial Statements 9
Item 2. Management's Discussion and Analysis 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities and Use of Proceeds 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submissions of Matters to a Vote of Security Holders 13
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
FORWARD LOOKING STATEMENTS
This Report contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"). When used in this Report, the words "may," "will," "expect,"
"anticipate," "continue," "estimate," "project" or "intend" and similar
expressions identify forward-looking statements regarding events, conditions and
financial trends in connection with our future plan of operations, business
strategy, operating results and financial position. Discussions containing such
forward-looking statements may be found in "Management's Discussion and Analysis
of Financial Condition and Results of Operations under the captions "Comparison
of Nine Months Ended September 30, 2000 and September 30, 1999," and "Liquidity
and Capital Resources," below. Current shareholders and prospective investors
are cautioned that any forward-looking statements are not guarantees of future
performance. Such forward-looking statements by their nature involve substantial
risks and uncertainties, certain of which are beyond the Company's control, and
actual results for future periods could differ materially from those discussed
in this Report, depending on a variety of important factors, among which are the
success or failure of management's efforts to implement its business strategy;
the level of acquisition opportunities available to the Company and the
Company's ability to price and negotiate such transactions on a favorable basis,
the Company's ability to property manage growth and successfully integrate
acquired companies and operations, our ability to compete with major established
companies, our ability to attract and retain qualified personnel, and other
risks which may be described from time to time in future filings with the SEC.
2
<PAGE> 3
SUMMIT BROKERAGE SERVICES, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Board of Directors and Shareholders
Summit Brokerage Services, Inc. and Subsidiaries
Indialantic, Florida
We have reviewed the consolidated statements of financial condition of Summit
Brokerage Services, Inc. and Subsidiaries as of September 30, 2000 and the
related consolidated statements of income (loss) for the nine months and three
months ended September 30, 2000, and the consolidated statement of cash flows
for the nine months ended September 30, 2000. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the aforementioned financial statements for them to be in conformity
with generally accepted accounting principles.
/s/ Hoyman, Dobson & Company, P.A.
----------------------------------
Hoyman, Dobson & Company, P.A.
Melbourne, Florida
November 3, 2000
3
<PAGE> 4
SUMMIT BROKERAGE SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
September 30, 2000 December 31,
ASSETS (Reviewed) 1999
----------- -----------
<S> <C> <C>
Cash $ 57,562 $ 408,957
Cash with clearing broker 25,126 25,132
Investments 5,113 --
Commissions receivable 952,080 463,356
Prepaid expenses 48,049 27,132
Other receivables, net of $14,040 and $31,040
allowance for doubtful accounts at September 30, 2000
and December 31, 1999, respectively 17,000
Due from related party 121,565 102,704
Subscription receivable 317,500 48,000
Secured demand notes 40,000 --
Property and equipment at cost, less accumulated
depreciation of $94,645 and $70,970 at September 30, 2000
and December 31, 1999, respectively 140,021 79,267
Deferred tax asset, net of valuation allowance of $382,000
and $283,860 at September 30, 2000 and December 31, 1999,
respectively -- --
----------- -----------
TOTAL ASSETS $ 1,724,016 $ 1,154,548
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable $ 163,688 $ 63,896
Accrued commission expense 732,513 645,925
Due to related party 43,740 --
Deferred income 28,000 24,667
Capital lease payable 12,055 --
----------- -----------
Total liabilities 979,996 734,488
----------- -----------
LIABILITIES SUBORDINATED TO CLAIMS OF GENERAL CREDITORS 40,000 --
----------- -----------
STOCKHOLDERS' EQUITY
Common stock, par value $.0001 per share. Authorized 10,000,000 shares,
4,869,152 shares issued and 4,848,525 shares outstanding at September 30,
2000, 4,541,751 issued
and 4,538,132 outstanding at December 31, 1999 487 454
Additional paid-in capital 2,898,898 2,559,389
Unearned stock compensation (246,887) (517,223)
Treasury stock, at cost (76,689) (18,578)
Subscriptions receivable (27,750) (94,000)
Unrealized loss on securities available for sale (9,712) --
Accumulated deficit (1,834,327) (1,509,982)
----------- -----------
Total stockholders' equity 704,020 420,060
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,724,016 $ 1,154,548
=========== ===========
</TABLE>
See accompanying accountant's review report and
notes to financial statements.
4
<PAGE> 5
SUMMIT BROKERAGE SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Income (Loss)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
For the Nine Months Ended
-----------------------------------------
September 30, 2000 September 30, 1999
(Reviewed) (Unaudited)
------------------ ------------------
<S> <C> <C>
REVENUES
Commissions $ 5,845,759 $ 2,553,912
Interest and dividends 27,724 21,986
Other 62,274 10,711
----------- -----------
5,935,757 2,586,609
----------- -----------
EXPENSES
Commissions 4,688,274 1,758,077
Occupancy 86,814 87,814
Amortization of unearned stock compensation 309,874 132,908
Management fees -- 838,642
Other operating expenses 1,175,140 273,376
----------- -----------
6,260,102 3,090,817
----------- -----------
NET LOSS BEFORE INCOME TAXES (324,345) (504,208)
PROVISION FOR INCOME TAXES -- --
----------- -----------
NET LOSS $ (324,345) $ (504,208)
=========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 4,533,133 4,071,679
=========== ===========
WEIGHTED AVERAGE COMMON SHARES AND DILUTIVE
POTENTIAL COMMON SHARES OUTSTANDING 4,533,133 4,071,679
=========== ===========
BASIC EARNINGS PER SHARE $ (.0716) $ (0.1238)
=========== ===========
DILUTED EARNINGS PER SHARE $ (.0716) $ (0.1238)
=========== ===========
</TABLE>
See accompanying accountant's review report and
notes to financial statements.
5
<PAGE> 6
SUMMIT BROKERAGE SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Income (Loss)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
For the Three Months Ended
------------------------------------
September 30, September 30,
2000 1999
(Reviewed) (Unaudited)
------------- -------------
<S> <C> <C>
REVENUES
Commissions $ 1,475,039 $ 652,836
Interest and dividends 10,733 13,900
Other 48,553 2,112
----------- -----------
1,534,325 668,848
----------- -----------
EXPENSES
Commissions 1,288,049 403,184
Occupancy 27,452 28,938
Amortization of unearned stock compensation 103,878 47,948
Management fees -- 299,709
Other operating expenses 472,516 77,630
----------- -----------
1,891,895 857,409
----------- -----------
NET LOSS BEFORE INCOME TAXES (357,570) (188,561)
PROVISION FOR INCOME TAXES -- --
----------- -----------
NET LOSS $ (357,570) $ (188,561)
=========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 4,533,133 4,071,679
=========== ===========
WEIGHTED AVERAGE COMMON SHARES AND DILATIVE
POTENTIAL COMMON SHARES OUTSTANDING 4,533,133 4,071,679
=========== ===========
BASIC EARNINGS PER SHARE $ (.0789) $ (0.0463)
=========== ===========
DILUTED EARNINGS PER SHARE $ (.0789) $ (0.0463)
=========== ===========
</TABLE>
See accompanying accountant's review report and
notes to financial statements.
6
<PAGE> 7
SUMMIT BROKERAGE SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
For the Nine Months Ended
-----------------------------------------
September 30, 2000 September 30, 1999
(Reviewed) (Unaudited)
------------------ ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers $ 5,405,644 $ 2,327,463
Cash paid to suppliers and employees (5,787,490) (2,889,763)
Interest received 27,724 21,986
----------- -----------
Net cash used in operating activities (354,122) (540,314)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investments (14,825) --
Purchase of property and equipment (14,845) (10,762)
----------- -----------
Net cash used in investing activities (29,670) (10,762)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury stock (85,651) --
Issuance of treasury stock 27,540 --
Proceeds received from subscription receivable 96,750 --
Payments on capital lease obligation (6,248) --
Issuance of common stock -- 552,000
----------- -----------
Net cash provided by financing activities 32,391 552,000
----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (351,401) 924
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 434,089 132,181
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 82,688 $ 133,105
=========== ===========
</TABLE>
See accompanying accountant's review report and
notes to financial statements.
7
<PAGE> 8
SUMMIT BROKERAGE SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows - Continued
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
For the Nine Months Ended
-----------------------------------------
September 30, 2000 September 30, 1999
(Reviewed) (Unaudited)
------------------ ------------------
<S> <C> <C>
RECONCILIATION OF NET LOSS TO NET CASH
USED IN OPERATING ACTIVITIES
Net income (loss) $(324,345) $(504,208)
Adjustments to reconcile net loss to net cash used
in operating activities
Depreciation 23,677 23,225
Amortization of unearned stock
compensation/expense 309,874 132,908
Increase in commissions receivable (488,724) (215,970)
Decrease (increase) in prepaid expenses (20,917) 48,078
Increase in due from related party (70,140) (73,841)
Increase in other receivables (17,000) (21,190)
Decrease in other assets -- 9,537
Increase (decrease) in accounts payable 99,792 (13,024)
Increase in due to related party 43,740 --
Increase accrued commission expense 86,588 74,171
Increase in deferred income 3,333 --
--------- ---------
Net cash used in operating activities $(354,122) $(540,314)
========= =========
Cash and cash equivalents for the purpose of this statement consisted of the
following at September 30:
Cash $ 57,562 $ 107,701
Cash with clearing broker 25,126 25,404
--------- ---------
$ 82,688 $ 133,105
========= =========
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON CASH INVESTING AND
FINANCING ACTIVITIES:
In the fiscal quarter ended March 31, 2000, the Company issued a $40,000 secured
demand note for $40,000 of subordinated debt. In the fiscal quarter ended March
31, 2000, the Company issued 13,168 shares of common stock for $28,956 of
unearned compensation. In the fiscal quarter ended June 30, 2000, the Company
obtained $69,582 of equipment in exchange for a reduction in due from related
party of $51,279 and assumed a capital lease obligation of $18,303.
In the fiscal quarter ended September 30, 2000, the Company issued a $300,000
common stock for $300,000 of subscription receivable.
See accompanying accountant's review report and
notes to financial statements.
8
<PAGE> 9
SUMMIT BROKERAGE SERVICES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
NOTE 1 - GENERAL
The consolidated financial statements for the nine months and three months ended
September 30, 2000 reflect all adjustments (consisting only of normal recurring
adjustment) which are, in the opinion of management, necessary for a fair
presentation of the financial position and operating results for the interim
period. The consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto, together with
management's discussion and analysis of financial condition and results of
operations, contained in the Company's Annual Report on Form 10-SB for the
fiscal year ended December 31, 1999. The results of operations for the nine and
three months ended September 30, 2000 are not necessarily indicative of the
results for the entire fiscal year ending December 31, 2000.
NOTE 2 - LIABILITIES SUBORDINATED TO CLAIMS OF GENERAL CREDITORS
On March 31, 2000, the Company entered into a secured demand note collateral
agreement with a corporation 100% owned by Summit's majority shareholder. The
note is due on April 30, 2001 and accrues interest at 12.0% per annum. The
subordinated borrowing is available in computing net capital under the SEC's
uniform net capital rule. To the extent that such borrowings are required for
the Company's continued compliance with minimum net capital requirements, it may
not be repaid.
NOTE 3 - RELATED PARTY TRANSACTION
During the quarter ended June 30, 2000, the Company purchased fixed assets with
a net book value of $69,582 from a company owned by the majority stockholder of
the Company. Payment for these assets was made by reducing $51,279 of a
receivable due from the related party and assuming an $18,303 capital lease
obligation on the acquired assets.
NOTE 4 - STOCK OPTIONS
On May 16, 2000, the Company cancelled all previously issued outstanding options
to purchase the Company's common stock, none of which had been exercised. In
replacement thereof, the Company granted stock options to its officers,
directors and certain employees to purchase an aggregate of 1,037,878 of common
stock at an exercise price of $2.50 per share. The exercise price is not less
than 85% of the market price, therefore, under APB Number 25, the stock option
plan is not considered to be compensatory. Accordingly, no compensation expense
has been recognized in the financial statements.
9
<PAGE> 10
SUMMIT BROKERAGE SERVICES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
NOTE 5 - COMMITMENTS AND CONTINGENCY
On May 16, 2000, the two-year employment agreement with William R. Turner (the
"Turner Employment Agreement") was amended. Mr. Turner will, effective January
1, 2000 through the remaining term of the original agreement, forego his rights
to receive 15,000 shares of company stock per year and his rights to receive
100,000 options (50,000 options each year of the term). In lieu of these items,
the Company granted to Mr. Turner on May 16, 2000, 160,000 options of the
company's common stock exercisable at $2.50 per share. All other terms and
conditions of the agreement remain the same. Effective August 16, 2000, Mr.
Turner tendered his resignation to the Company for personal reasons and he will
retain 80,000 options of 160,000 options granted pursuant to his employment
agreement.
On May 16, 2000, the Company entered into employment agreements with Mr. Richard
Parker, (the "Parker Employment Agreement"); the Company's Chairman and CEO and
Mr. Mark F. Caulfield (the "Caulfield Employment Agreement"), the Company's
Chief Financial Officer. Both agreements commenced on January 1, 1998 and will
expire December 31, 2001. The Parker Agreement provides that in consideration
for Mr. Parker's services, he is to be paid a salary of $155,000 in year 2000
and his salary will be increased by $5,000 per year each year thereafter. Also
on May 16, 2000, Mr. Parker was granted 320,000 common stock options. Options
will be granted each year thereafter at a rate of 100,000 shares annually. The
Caulfield Employment Agreement provides that in consideration for Mr.
Caulfield's services, he is to be paid a salary of $60,000. This salary will be
increased $5,000 per year each year thereafter. Mr. Caulfield also was granted
on May 16, 2000 160,000 common stock options. Options will be granted each year
thereafter at a rate of 50,000 shares annually. The exercise price under both
employment agreements is $2.50 per share.
No compensation has been recorded under APB 25, for the shares received since
the exercise price is not less than 85% of the market price on the date granted.
These options have been included in Note 4.
NOTE 5 - CHANGE IN SECURITIES
On September 1, 2000 the Company amended the Articles of Incorporation of the
Company. The amendment created blank preferred stock, par value $.0001 per
share, and authorized 5,000,000 shares. There were no preferred stock shares
outstanding at September 30, 2000. This amendment also provided that no
shareholder of any capital stock of the Company shall have preemptive rights of
any nature.
NOTE 6 - RECLASSIFICATIONS
Certain amounts in the income statement for the three months and nine months
ended September 30, 1999 have been reclassified to conform to current year
classifications. Other revenue was decreased by $28,396 and other operating
expenses was increased by $28,396.
10
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SUMMIT BROKERAGE SERVICES, INC.
SEPTEMBER 30, 2000
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis of the Company's financial condition and
results of its operations for the three month periods ended September 30, 2000
and 1999, should be read in conjunction with the Company's financial statements
included elsewhere herein. When used in the following discussions, the words
"believes," "anticipates," "intends," "expects," and similar expressions are
intended to identify forward-looking statements. Such statements are subject to
certain risks and uncertainties, which could cause results to differ materially
from those projected.
RESULTS OF OPERATIONS
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999
Revenues. Revenues for the nine months ended September 30, 2000 rose to
$5,935,757, an increase of $3,349,148 or 130% over the nine months ended
September 30, 1999. This change was due to the increase in new branch offices
from 1999 to 2000, higher revenues from existing offices (those added prior to
2000), and the increase in new offices that employ higher producing registered
representatives.
Expenses. Expenses for the nine months ended September 30, 2000
increased by $3,169,285 or 103% to $6,260,102 from $3,090,817 for the nine
months ended September 30, 1999. The higher expenses were largely attributable
to the related direct costs of the increased revenues - commissions expense (the
payments to the registered representatives for their portion of the revenue).
Such commission expenses were $4,688,274 for the nine months ended September 30,
2000 compared with $1,758,077 for the comparable period in 1999. The Company
also incurred higher non-cash expenses for amortization of unearned stock
compensation in the amount of $309,874 for the nine months ended September 30,
2000, compared with $132,908 for the comparable period in 1999.
Management fees expense as a category was eliminated in the fiscal
quarter ended March 31, 2000 due to the termination of the agreement with the
former management company, Summit Group of Companies, Inc., effective January 1,
2000. The services were replaced internally by the Company, and the expenses are
now reflected in various general and administrative categories, such as salaries
and wages. In the nine months ended September 30, 1999, total management fees
expense was $838,642.
Net Income. Net income (loss) for the nine months ended September 30,
2000 was $(324,345), an increase of $179,863 or 36% from a loss of ($504,208)
during the nine months ended September 30, 1999. Net loss for the nine months
ended September 30, 2000 was (5.5%) of revenues compared to a net loss of
(19.5%) for the nine months ended September 30, 1999. The increase in income
from operations overall resulted primarily from increased revenues and gross
profits. The Company's basic earnings per share were $(0.0716) for the nine
months ended September 30, 2000 compared to a per share loss of ($0.1238) for
the nine months ended September 30,1999.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities totaled $354,122 during the nine
months ended September 30, 2000, compared to net cash used of $540,314 for the
comparable period in 1999. The decrease in cash used by operating activities is
due to the Company's overall increase in revenue from its operations.
Cash used in investing activities (capital expenditures) totaled
$29,670 and $10,762 during the nine months ended September 30, 2000 and 1999,
respectively. During 2000 and 1999, capital expenditures were primarily
comprised of the Company's investments in securities and replacement of office
computer equipment.
Net cash provided by financing activities totaled $552,000 during the
nine months ended September 30, 1999, from the issuance of common stock through
a limited private placement. No such issuance occurred during the nine months
ended September 30, 2000.
11
<PAGE> 12
On March 31, 2000, the Company entered into a secured demand note
collateral agreement with a corporation 100% owned by Summit's majority
shareholder. The note is due on July 30, 2001 and accrues interest at 12% per
annum. The subordinated borrowing is available in computing net capital under
the SEC's uniform net capital rule. To the extent that such borrowings are
required for the Company's continued compliance with minimum net capital
requirements, it may not be repaid.
The Company anticipates, based on its currently proposed plans and
assumptions relating to its operations, that the Company's existing working
capital and anticipated cash flows from the Company's operations will be
sufficient to satisfy the Company's cash requirements for at least twelve
months. As the Company continues to grow, additional equity and/or debt
offerings may be considered, in part or in combination, as the situation
warrants. In the normal course of business, the Company evaluates acquisitions
of businesses that compliment the Company's business. In connection with any
acquisitions, the Company may issue additional securities, which could result in
dilution for existing shareholders. In addition, in the event the Company's
plans change or its assumptions change or prove to be inaccurate, or if
projected cash flow otherwise proves insufficient to fund operations, the
Company might need to seek other sources of financing to conduct its operations.
There can be no assurance that any such other sources of financing would be
available when needed, on commercially reasonable terms, or at all.
Inflation. Inflation has not been a major factor in the Company's
business since inception. There can be no assurances that this will continue if
and when the Company completes an acquisition or merger.
12
<PAGE> 13
SUMMIT BROKERAGE SERVICES, INC.
SEPTEMBER 30, 2000
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not involved in any legal proceedings or litigation, and
the Company is not aware of any pending litigation.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) Not applicable.
(b) Not applicable.
(c) On September 29, 2000, the Company issued Richard Parker, its Chairman,
Chief Executive Officer and principal shareholder, 150,000 shares of
restricted common stock in exchange for a capital contribution of
$300,000, the then fair market value of such shares. This issuance was
made in reliance on Section 4(2) of the Securities Act. In relying upon
this exemption, the Company made certain inquiries and received certain
assurances to establish that the exemptions were available for the
issuance.
(d) Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) On August 12, 2000, at an Annual Meeting of Shareholders, the
following was approved:
(i) the election of directors; and
(ii) the Company's 2000 Incentive Compensation Plan.
The total number of shares entitled to vote at this meeting was
4,544,925, and the tabulation of proxies was as follows:
ELECTION OF DIRECTORS:
BROKER
NAME FOR AGAINST ABSTAIN NON-VOTES
---- --- ------- ------- ---------
Richard Parker 3,597,724 0 0 0
Brain R. Best 3,597,724 0 0 0
Harry S. Green 3,597,724 0 0 0
Jack B. Root 3,597,724 0 0 0
The elected directors constitute all of the directors of the Company.
2000 INCENTIVE BROKER
COMPENSATION PLAN: FOR AGAINST ABSTAIN NON-VOTES
--- ------- ------- ---------
3,597,724 0 0 0
13
<PAGE> 14
There was no other business was brought before the Annual Meeting.
(b) By written consent dated September 25, 2000, the majority
shareholder of the Company who held 3,813,035 shares of the Company's then
issued and outstanding common stock, representing 84% of the then issued and
outstanding shares, approved the following:
(i) Amended and Restated Articles of Incorporation of the
Company, previously adopted and approved by the Board of Directors on September
1, 2000, which (A) created blank check preferred stock, par value $0001 per
share, and authorized 5,000,000 shares thereof, and (B) provided that no
shareholder of any capital stock of the Company shall have preemptive rights of
any nature; and
(ii) Stock Option Agreements between the Company and each of
Richard Parker, William R. Turner and Mark F. Caulfield, dated May 16, 2000,
each of which had previously been approved by the Board of Directors on May 16,
2000.
ITEM 5. OTHER INFORMATION
During the fiscal quarter ended September 30, 2000, the Company's board
of directors approved Amended and Restated Bylaws for the Company pursuant to
such authority vested in the Board under the Company's Articles of Incorporation
and then existing Bylaws. The Amended and Restated Bylaws contain, among other
things, advance notice provisions in connection with shareholder proposals. A
copy of the Amended and Restated Bylaws is attached to this Report as Exhibit
3.2.
14
<PAGE> 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
<TABLE>
<CAPTION>
NUMBER NAME
------ --------------------------------------------------------------------------------------------
<S> <C>
3.1 Amended and Restated Articles of Incorporation (1)
3.2 Amended and Restated Bylaws (2)
10.1 2000 Incentive Compensation Plan (3)
10.2 Stock Option Agreement between the Company and Richard Parker (1)
10.3 Stock Option Agreement between the Company and William R. Turner (1)
10.4 Stock Option Agreement between the Company and Mark F. Caulfield (1)
10.7 Employment Agreement between the Company and Richard Parker (2)
10.8 Employment Agreement between the Company and Mark F. Caulfield (2)
10.9 Employment Agreement between William R. Turner, and Addendum thereto (2)
21.1 Subsidiaries of the Company (4)
22.1 Proxy Statement pursuant to Schedule 14A, filed with the SEC on July 31, 2000 (3)
22.2 Information Statement pursuant to Schedule 14C, filed with the SEC on September 26, 2000 (1)
27.1 Financial Data Schedule (submitted only in electronic format for SEC use only).*
</TABLE>
----------------
* Filed herewith
(1) Incorporated by reference to the Company's Information Statement on Schedule
14C, filed September 26, 2000, file no. 000-29337.
(2) Incorporated by reference to the Company's Quarterly Report for the fiscal
quarter ended June 30, 2000 on Form 10-QSB, filed August 14, 2000 and
amended August 15, 2000, file no. 000-29337
(3) Incorporated by reference to the Company's Proxy Statement on Schedule 14A,
filed July 31, 2000, file no. 000-29337.
(4) Incorporated by reference to the Company's Registration Statement on Form
10SB, filed February 4, 2000, file no. 000-29337.
(b) REPORTS ON FORM 8-K
There were no reports on Form 8-K filed by the Company during the
quarter ended September 30, 2000.
15
<PAGE> 16
SUMMIT BROKERAGE SERVICES, INC.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SUMMIT BROKERAGE SERVICES, INC.
Date: November 13, 2000 /s/ Richard Parker
-------------------------------------
Chairman and Chief Executive
Officer (Principal Executive Officer)
16
<PAGE> 17
EXHIBIT INDEX
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
<TABLE>
<CAPTION>
NUMBER NAME
------ --------------------------------------------------------------------------------------------
<S> <C>
3.1 Amended and Restated Articles of Incorporation (1)
3.2 Amended and Restated Bylaws (2)
10.1 2000 Incentive Compensation Plan (3)
10.2 Stock Option Agreement between the Company and Richard Parker (1)
10.3 Stock Option Agreement between the Company and William R. Turner (1)
10.4 Stock Option Agreement between the Company and Mark F. Caulfield (1)
10.7 Employment Agreement between the Company and Richard Parker (2)
10.8 Employment Agreement between the Company and Mark F. Caulfield (2)
10.9 Employment Agreement between William R. Turner, and Addendum thereto (2)
21.1 Subsidiaries of the Company (4)
22.1 Proxy Statement pursuant to Schedule 14A, filed with the SEC on July 31, 2000 (3)
22.2 Information Statement pursuant to Schedule 14C, filed with the SEC on September 26, 2000 (1)
27.1 Financial Data Schedule (submitted only in electronic format for SEC use only).*
</TABLE>
----------------
* Filed herewith
(1) Incorporated by reference to the Company's Information Statement on Schedule
14C, filed September 26, 2000, file no. 000-29337.
(2) Incorporated by reference to the Company's Quarterly Report for the fiscal
quarter ended June 30, 2000 on Form 10-QSB, filed August 14, 2000 and
amended August 15, 2000, file no. 000-29337
(3) Incorporated by reference to the Company's Proxy Statement on Schedule 14A,
filed July 31, 2000, file no. 000-29337.
(4) Incorporated by reference to the Company's Registration Statement on Form
10SB, filed February 4, 2000, file no. 000-29337.
17
