<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1996
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to ______________
Commission File # 0-15187
Jack Carl/312-Futures, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-3399452
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 West Adams Street, Suite 1500, Chicago, Illinois 60606
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(312) 407-5700
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
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.
[X] Yes No
----- -----
As of the date of this report, the issuer had outstanding 33,624,530 shares of
common stock, $.004 par value per share.
This is page 1 of 33 sequentially numbered pages.
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Immediately following this page, the following financial information of the
Registrant is filed as part of this Report.
Page
----
Consolidated statements of financial condition
as of March 31, 1996 and June 30, 1995. 3
Consolidated statements of operations for the
three months and nine months ended March 31,
1996 and 1995. 4-5
Consolidated statement of changes in stockholders'
equity for the nine months ended March 31,
1996. 6
Consolidated statements of changes in liabilities
subordinated to claims of general creditors for
the nine months ended March 31, 1996 and 1995. 7
Consolidated statements of cash flows for the
nine months ended March 31, 1996 and 1995. 8-9
Notes to consolidated financial statements. 10
-2-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
MARCH 31, 1996 AND JUNE 30, 1995
ASSETS
<TABLE>
<CAPTION>
March 31, June 30,
1996 1995
------------ ------------
(Unaudited) (Audited)
<S> <C> <C> <C> <C>
Cash $ 2,436,300 $ 1,034,900
Cash segregated or secured under Commodity Exchange Act 4,521,900 1,181,700
U.S. Government obligations 129,381,900 82,885,600
Other short term investments 28,646,700 -
Deposits with clearing organizations 55,133,700 78,030,700
Warehouse receipts 1,001,500 1,537,200
Receivables:
Brokers and dealers 2,344,300 9,253,400
Clearing organizations 15,992,800 12,627,900
March 31, June 30,
1996 1995
--------- ----------
Customers $ 851,800 $1,152,200
Affiliates - 7,300
Other 386,500 379,100
Less - Allowance for doubtful accounts (284,100) (191,900) 954,200 1,346,700
--------- ----------
Investments in and advances to affiliated partnerships 9,400 39,100
Notes receivable 629,300 633,700
Exchange memberships, at cost (market value of $995,600
and $1,228,100 at March 31, 1996 and June 30, 1995,
respectively) 781,300 781,300
Furniture, equipment, and leasehold improvements, net of
accumulated depreciation and amortization of $1,835,300
and $1,602,800 at March 31, 1996 and June 30, 1995,
respectively 703,800 682,900
Goodwill, net of accumulated amortization of $4,094,700
and $4,054,500 at March 31, 1996 and June 30, 1995,
respectively 501,700 541,900
Other assets 520,500 355,400
------------ ------------
Total $243,559,300 $190,932,400
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Payables:
Clearing organizations $ 144,100 $ 185,900
Customers 221,725,400 168,500,000
Officers and employees 1,867,300 2,221,500
Affiliates 18,300 -
Accounts payable and accrued expenses 3,404,100 4,580,900
Notes payable 6,390,000 6,390,000
------------ ------------
Total 233,549,200 181,878,300
------------ ------------
Liabilities subordinated to claims of general creditors 2,750,000 1,690,000
------------ ------------
Stockholders' equity:
Class A preferred stock, $1 par value; 10% cumulative,
redeemable, 400,000 shares authorized and outstanding 400,000 400,000
Common stock, $.004 par value; 150,000,000 shares authorized,
33,624,530 and 33,624,532 shares issued and outstanding
at March 31, 1996 and June 30, 1995, respectively 134,500 134,500
Paid-in capital 8,395,300 8,395,300
Retained deficit (1,655,200) (1,565,700)
Cumulative translation adjustment (14,500) -
------------ ------------
Total stockholders' equity 7,260,100 7,364,100
------------ ------------
Total $243,559,300 $190,932,400
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-3-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1996 1995
----------- -----------
<S> <C> <C>
Revenues:
Commissions $ 8,077,700 $ 8,778,700
Interest 1,970,400 2,400,000
Trading gains, net 871,600 58,200
Other 66,200 241,000
----------- -----------
Total revenues 10,985,900 11,477,900
----------- -----------
Expenses:
Commission, floor brokerage and clearing costs 4,358,600 5,061,600
Compensation and related benefits 2,718,100 2,426,800
Communications 547,200 430,500
Interest 1,084,700 928,600
Rent and other occupancy costs 375,700 367,400
Business promotion 567,700 457,100
Professional and consulting fees 197,500 177,400
Depreciation 82,000 43,900
Amortization of goodwill 13,400 13,400
Other 734,600 (66,100)
----------- -----------
Total expenses 10,679,500 9,840,600
----------- -----------
Income before income taxes 306,400 1,637,300
Income tax expense 33,600 590,000
----------- -----------
Net income 272,800 1,047,300
Assumed cumulative dividend on Class A preferred stock (10,000) (10,000)
----------- -----------
Net income applicable to common stock $ 262,800 $ 1,037,300
=========== ===========
Primary earnings per common share,
restated for reverse split:
Net income $ .01 $ .03
=========== ===========
Weighted average number of common shares outstanding 33,667,632 33,624,535
=========== ===========
Fully diluted earnings per common share,
restated for reverse split:
Net income $ .01 $ .03
=========== ===========
Weighted average number of common shares outstanding 33,667,632 33,624,535
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-4-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
-------------------------
1996 1995
----------- -----------
<S> <C> <C>
Revenues:
Commissions $23,030,500 $24,579,100
Interest 5,648,600 4,980,700
Trading gains, net 1,196,200 96,900
Other 150,300 557,000
----------- -----------
Total revenues 30,025,600 30,213,700
----------- -----------
Expenses:
Commission, floor brokerage and clearing costs 12,462,300 13,744,200
Compensation and related benefits 7,775,500 6,649,600
Communications 1,454,100 1,214,500
Interest 2,981,300 2,335,200
Rent and other occupancy costs 1,163,600 1,020,700
Business promotion 1,551,200 1,197,400
Professional and consulting fees 526,500 399,200
Depreciation 235,500 169,600
Amortization of goodwill 40,200 40,200
Other 1,775,100 901,000
----------- -----------
Total expenses 29,965,300 27,671,600
----------- -----------
Income before income taxes 60,300 2,542,100
Income tax expense 149,800 919,700
----------- -----------
Net income (loss) (89,500) 1,622,400
Assumed cumulative dividend on Class A preferred stock (30,000) (30,000)
----------- -----------
Net income (loss) applicable to common stock $ (119,500) $ 1,592,400
=========== ===========
Primary earnings (loss) per common share,
restated for reverse split:
Net income (loss) $ (.00) $ .05
=========== ===========
Weighted average number of common shares outstanding 33,717,323 29,648,509
=========== ===========
Fully diluted earnings (loss) per common share,
restated for reverse split:
Net income (loss) $ (.00) $ .05
=========== ===========
Weighted average number of common shares outstanding 33,717,323 29,648,509
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-5-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Class A Common Stock Cumulative
Preferred ------------------ Paid-In Retained Translation
Stock Shares Amount Capital Deficit Adjustment Total
--------- ------ ------ ------- -------- ----------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, July 1, 1995 $400,000 33,624,532 $134,500 $8,395,300 $(1,565,700) $ - $7,364,100
Repurchase of common
stock pursuant to
reverse split - (2) - - - - -
Net loss - - - - (89,500) - (89,500)
Foreign currency
translation - - - - - (14,500) (14,500)
------- ---------- -------- ---------- --------- --------- ----------
Balance,
March 31, 1996 $400,000 33,624,530 $134,500 $8,395,300 $(1,655,200) $(14,500) $7,260,100
======== ========== ======== ========== =========== ======== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-6-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN LIABILITIES
SUBORDINATED TO CLAIMS OF GENERAL CREDITORS
FOR THE NINE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
------------------------
1996 1995
------------ ----------
<S> <C> <C>
Liabilities subordinated to claims of
general creditors, at beginning of
period $ 1,690,000 $2,000,000
New borrowings 2,750,000 -
Maturities (1,690,000) -
----------- ----------
Liabilities subordinated to claims of
general creditors, at end of period $ 2,750,000 $2,000,000
=========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-7-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
----------------------------
1996 1995
------------- -------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income (loss) $ (89,500) $ 1,622,400
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 275,700 209,800
Deferred taxes (116,700) 9,300
Doubtful accounts expense (benefit) 25,100 (562,500)
Equity in net (gain) loss of affiliated partnerships (6,400) 5,200
Changes in:
Cash segregated or secured under
Commodity Exchange Act, net (3,340,200) 609,100
U.S. Government obligations (46,496,300) 10,311,900
Other short term investments (28,646,700) -
Deposits with clearing organizations 22,897,000 (10,692,700)
Warehouse receipts 535,700 68,800
Receivables 3,911,600 (4,329,300)
Other assets (48,400) (95,100)
Payables 52,847,700 1,412,800
Accounts payable and accrued expenses (1,176,800) 399,800
------------ ------------
Cash provided by (used in) operating activities 571,800 (1,030,500)
------------ ------------
Cash Flows From Investing Activities:
Investments in and advances to affiliated partnerships, net 36,100 (11,000)
Decrease in notes receivable 4,400 6,700
Purchase of exchange membership - (130,000)
Purchase of furniture, equipment and leasehold
improvements (256,400) (288,500)
Rebate from purchase of equipment - 50,000
Rebate from exchange memberships - 102,900
------------ ------------
Cash used in investing activities (215,900) (269,900)
------------ ------------
Cash Flows From Financing Activities:
Increase in short term advance 1,000,000 -
Repayment of short term advance (1,000,000) -
Repayment of notes payable - (1,300,000)
Increase in liabilities subordinated to
claims of general creditors 1,750,000 1,190,000
Repayment of liabilities subordinated to
claims of general creditors (690,000) -
Issuance of common stock pursuant to
rights offering - 1,076,000
------------ ------------
Cash provided by financing activities 1,060,000 966,000
------------ ------------
Effect of exchange rate changes on cash (14,500) -
------------ ------------
Increase (Decrease) in cash 1,401,400 (334,400)
Cash, beginning of period 1,034,900 1,862,300
------------ ------------
Cash, end of period $ 2,436,300 $ 1,527,900
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-8-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
(CONTINUED FROM PAGE 8)
Supplemental Schedule of Non-Cash Investing
and Financing Activities
Nine Months Ended March 31, 1996
- --------------------------------
In January, 1996, all notes payable aggregating $6,390,000 due January 31,
1996 were extended to January 31, 1997.
In February, 1996, $1,000,000 of a $1,690,000 subordinated loan was
extended to February 24, 1997. The remaining $690,000 was repaid.
Nine Months Ended March 31, 1995
- --------------------------------
In January, 1995, all notes payable aggregating $7,590,000 due January 31,
1995 were extended to January 31, 1996.
In March, 1995 a subordinated loan in the amount of $2,000,000 was extended
to February 28, 1996.
-9-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
NOTE 1 - ORGANIZATION OF JACK CARL/312-FUTURES, INC.
Jack Carl/312-Futures, Inc. ("JC/312") and Subsidiaries, (the "Company"),
engages principally in the business of effecting transactions in futures and
options on futures contracts for the accounts of customers and the operation of
commodity pools. Index Futures Group, Inc. ("Index"), the principal operating
subsidiary of JC/312, is a registered futures commission merchant with the
Commodity Futures Trading Commission ("CFTC"). Index FX, Ltd. ("Index FX"), a
British corporation and a subsidiary of JC/312, conducts foreign exchange
business. Another subsidiary of JC/312 is a registered broker-dealer.
The results of operations for interim periods are not necessarily
indicative of the results to be expected for the full year.
It is suggested that these financial statements be read in connection with
the consolidated financial statements and notes included in the Report on Form
10-K of the Company for the year ended June 30, 1995.
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries as well as those of its majority-owned
subsidiary. All material intercompany accounts and transactions are eliminated
in consolidation. In the opinion of management, all adjustments necessary for a
fair presentation of the interim financial statements have been reflected.
Certain amounts previously reported have been reclassified to conform to
the current method of presentation.
Assets and liabilities of non-U.S. operations are translated into U.S.
dollars at period-end exchange rates. Revenues and expenses are translated using
monthly average exchange rates. The resulting translation adjustment is reported
as a separate component of stockholders' equity. Gains and losses from non-U.S.
transactions are included in results of operations.
-10-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
NOTE 2 - ASSETS SEGREGATED AND SECURED UNDER COMMODITY EXCHANGE ACT
Under the Commodity Exchange Act, as amended, Index is required to
segregate all balances due to customers in connection with transactions in
regulated commodities. In addition, in accordance with CFTC Regulation 30.7,
Index is required to secure all balances due to U.S. customers for activities in
foreign futures or options. Segregated and secured assets included in the
consolidated statements of financial condition are as follows:
<TABLE>
<CAPTION>
March 31, June 30,
1996 1995
------------ ------------
<S> <C> <C>
Cash $ 4,521,900 $ 1,181,700
U.S. Government obligations 129,336,800 81,482,000
Deposits with clearing
organizations 49,081,500 69,531,900
Receivables from clearing
organizations, net 15,830,800 12,043,300
Receivables from brokers and dealers 2,048,900 8,436,200
Warehouse receipts 1,001,500 1,537,200
------------ ------------
Total segregated and
secured assets $201,821,400 $174,212,300
============ ============
Amount required to be
segregated and secured $194,199,300 $167,730,300
============ ============
</TABLE>
NOTE 3 - OTHER SHORT TERM INVESTMENTS
Other short term investments consist of $27,646,70 and $1,000,000 of time
deposits due April 1, and April 4, 1996, respectively.
-11-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
NOTE 4 - DEPOSITS WITH CLEARING ORGANIZATIONS
Deposits with clearing organizations are as follows:
<TABLE>
<CAPTION>
March 31, June 30,
1996 1995
----------- -----------
<S> <C> <C>
U.S. Government obligations $53,440,400 $75,964,600
Guarantee deposits 1,263,700 1,163,700
Stock in exchange clearing
organization at cost (market
value of $957,600 and $960,000 at
March 31, 1996 and June 30,
1995, respectively) 360,000 360,000
Cash margins 69,600 542,400
----------- -----------
Total $55,133,700 $78,030,700
=========== ===========
</TABLE>
NOTE 5 - INVESTMENTS IN AND ADVANCES TO AFFILIATED PARTNERSHIPS
Index Management Services, Inc. ("IMSI"), a subsidiary of Index, as a
general partner, has invested in commodity pools. At March 31, 1996, one
commodity pool is in the process of liquidation. The investments in and advances
to such entities consist of the following:
<TABLE>
<CAPTION>
March 31, June 30,
1996 1995
-------- --------
<S> <C> <C>
Investments $3,400 $28,000
Advances 6,000 11,100
------ -------
Total $9,400 $39,100
====== =======
</TABLE>
IMSI is required to maintain minimum net worth and investments in the
commodity pools as defined in the commodity pool partnership agreements. At
March 31, 1996, IMSI is in compliance with those requirements. Index will
provide commodity brokerage services to a new commodity pool, which has not yet
commenced trading operations, at agreed upon rates and IMSI will receive
administrative fees from that pool.
-12-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
NOTE 6 - CUSTOMER OWNED SECURITIES
Customer-owned securities are reflected at market value in the consolidated
statements of financial condition. This presentation has no effect on
stockholders' equity. The total market value of customer-owned securities
included in the consolidated statements of financial condition as both assets
and liabilities at March 31, 1996 and June 30, 1995 is $53,460,500 and
$45,768,800, respectively.
NOTE 7 - NOTES PAYABLE
Notes payable consist of the following:
March 31, June 30,
1996 1995
---------- ----------
Principal stockholder,
interest at prime plus 4%, due:
January 31, 1997 and 1996 $ 540,000 $ 540,000
January 31, 1997 and 1996 400,000 400,000
Affiliates and other related parties,
interest at prime plus 4%, due:
January 31, 1997 and 1996 150,000 150,000
January 31, 1997 and 1996 2,000,000 2,000,000
January 31, 1997 and 1996 1,800,000 1,800,000
January 31, 1997 and 1996 750,000 750,000
January 31, 1997 and 1996 750,000 750,000
---------- ----------
Total $6,390,000 $6,390,000
========== ==========
Interest expense on notes payable, all of which was earned by related
parties, is as follows:
1996 1995
---------- ----------
Three months ended March 31, $ 198,400 $ 232,400
Nine months ended March 31, $ 608,800 $ 687,000
In August, 1995, the principal stockholder made a $1,000,000 short term
advance to the Company. The Company repaid the advance in September, 1995.
In January, 1996 all notes payable, aggregating $6,390,000 due January 31,
1996, were extended to January 31, 1997.
In September, 1994 the Company repaid $100,000 of a $250,000 note payable
to its President and a Director.
-13-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
NOTE 8 - LIABILITIES SUBORDINATED TO CLAIMS OF GENERAL CREDITORS
Liabilities subordinated to claims of general creditors consist of the
following:
<TABLE>
<CAPTION>
March 31, June 30,
1996 1995
---------- ----------
<S> <C> <C>
Bank, interest at prime plus 3%, due:
February 28, 1996 $ - $1,690,000
September 30, 1996 1,750,000 -
February 24, 1997 1,000,000 -
---------- ----------
Total $2,750,000 $1,690,000
========== ==========
</TABLE>
In February, 1996, the Company extended the maturity date on $1,000,000 of
a $1,690,000 subordinated loan from February 28, 1996 to February 24, 1997. The
remaining $690,000 was repaid.
These liabilities are borrowed in accordance with the terms of a revolving
subordinated debt line totalling $4,000,000 which expires November 30, 1996. Had
any of the remaining funds been borrowed, Index's regulatory capital would have
increased on a dollar for dollar basis.
In April, 1996, the Company borrowed an additional $1,250,000 in accordance
with the terms of the revolving subordinated debt line.
Interest expense on liabilities subordinated to claims of general creditors
is as follows:
1996 1995
---- ----
Three months ended March 31, $ 94,000 $ 61,400
Nine months ended March 31, $249,200 $160,400
NOTE 9 - STOCKHOLDERS' EQUITY
RIGHTS OFFERING
In July, 1994, the Company offered to its common stockholders the non-
transferable right to purchase, at a subscription price of $.02 per share, two-
thirds of a share of common stock for each one share of common stock owned of
record on July 15, 1994. 53,799,304 shares of common stock were available and
purchased in the Rights Offering. The gross proceeds of the Rights Offering were
$1,076,000.
-14-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
NOTE 9 - STOCKHOLDERS' EQUITY (CONTINUED)
CLASS A PREFERRED STOCK
The Company has issued 400,000 shares of Class A preferred stock, 10%
cumulative, to its principal stockholder. The shares are redeemable at par, with
accumulated dividends, at the option of the Company. At March 31, 1996,
cumulative dividends in arrears amounted to $403,300 or $1.01 per share. No
liability for these dividends has been recorded as dividends are not payable
until declared.
COMMON STOCK
Effective at the close of business November 4, 1994, the Company effected a
one-for-four reverse split of its common stock, par value $.001. Each four
shares of such common stock were reclassified and changed into one share of
common stock having a par value of $.004. Pursuant to the reverse split, the
Company is obligated to pay any holder of fractional shares resulting from the
reverse split $.05 per share of common stock up to a maximum of $.15 for three
shares. At the close of business on November 4, 1994, the outstanding shares of
common stock were reduced to approximately 33,624,565 shares from 134,498,260
shares before the reverse split. As the result of the repurchase of fractional
shares, there are outstanding as of March 31, 1996, 33,624,530 shares of common
stock.
All outstanding share, earnings per share and weighted average information
has been restated to reflect the one-for-four reverse split of common stock.
STOCK OPTION PLAN
In March, 1986, the Company adopted an incentive stock option plan
reserving 500,000 shares of common stock. In March, 1990, the Company, pursuant
to the incentive stock option plan, granted options for 410,000 shares at the
then market price exercisable through March, 2000. The Company also has granted
options, other than in accordance with the March 1986 incentive stock option
plan.
-15-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
NOTE 9 - STOCKHOLDERS' EQUITY (CONTINUED)
The following summarizes, after restatement for the November 4, 1994 one-
for-four reverse stock split, all outstanding options at March 31, 1996.
Shares Shares Shares Shares Shares
Granted Price Exercisable Forfeited Cancelled Remaining
------- ----- ----------- --------- --------- ---------
Dec.
1990 410,000 $.60 317,500 72,969 19,531 317,500
Feb.
1992 125,000 $.25 125,000 - - 125,000
May
1992 75,000 $.60 50,000 25,000 - 50,000
Sep.
1992 125,000 $.375 125,000 - - 125,000
Feb.
1994 1,250,000 $.24 1,250,000 - - 1,250,000
Jan.
1995 250,000 $.125 250,000 - - 250,000
--------- --------- ------ ------ ---------
Total 2,235,000 2,117,500 97,969 19,531 2,117,500
========= ========= ====== ====== =========
NOTE 10 - RELATED PARTY TRANSACTIONS
A note receivable in the amount of $629,300 arose in connection with
advances made by the Company to an affiliated entity. This receivable was
converted into a note bearing interest at 8%, and was subsequently changed to
the prime rate of interest. This note is partially collateralized by deposits at
Index as of March 31, 1996. The Company earned interest income on this note in
the amounts of $13,000 and $13,600 during the three months ended March 31, 1996
and 1995, respectively, and $40,600 and $38,300 during the nine months ended
March 31, 1996 and 1995, respectively.
The Company rents from an officer and a director an exchange membership
having a market value at March 31, 1996 of approximately $480,000. Rent expense
for the three months ended March 31, 1996 and 1995 was $13,500 and $18,000,
respectively, and for the nine months ended March 31, 1996 and 1995, rent
expense was $48,000 and $44,000, respectively.
-16-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
NOTE 10 - RELATED PARTY TRANSACTIONS (CONTINUED)
Certain exchange memberships owned by officers and others, having an
aggregate market value of $4,904,000, have been pledged to various exchange
clearinghouses or corporations on behalf of the Company and may be used by them
under certain circumstances to fulfill the Company's obligations to those
clearinghouses or corporations. These exchange memberships are not included in
the Company's consolidated statements of financial condition. The Company, in
the ordinary course of business, guarantees certain loans which are secured by
exchange memberships owned by an individual who is an officer and director and
by the principal shareholder.
The Company receives funds, in the form of loans and advances, from its
principal shareholder, an affiliated company and an officer and a director of
the Company. See Note 7 for the terms and balances at March 31, 1996 and June
30, 1995.
NOTE 11 - SALE OF ASSETS
In January, 1993, Brokers Resource Corp., at the time a wholly-owned
subsidiary of Index and currently a wholly-owned subsidiary of the Company, sold
the majority of its guaranteed introducing broker business to an unrelated
entity in return for a portion of future earnings on such business through
January 15, 1995. No gain was recognized at the date of the sale due to the
uncertainty of future earnings. During the three months and nine months ended
March 31, 1995, the Company earned $75,300 and $481,900, respectively, from this
transaction, which is included in commission income. The revenue stream
generated from this transaction ended effective January 15, 1995.
NOTE 12 - COMMITMENTS AND CONTINGENCIES
The Company has noncancellable leases for office space which expire at
varying dates through the year 2000. Minimum annual rentals, excluding
escalations and increases in operating expenses and taxes, are as follows:
Year Ending June 30, Amount
-------------------- ----------
1996 $ 44,200
1997 439,600
1998 453,000
1999 464,800
2000 and thereafter 1,343,500
---------
Total $2,745,100
=========
-17-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
NOTE 12 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Company has entered into employment agreements which expire at varying
dates through fiscal 1997 with certain of its officers, providing for aggregate
minimum annual payments for the years ending June 30, 1996 and 1997 of
approximately $203,300 and $309,100, respectively. Additional compensation is
payable under certain circumstances as defined in the agreements.
The Company has guaranteed performance under the Commodity Exchange Act of
certain introducing brokers with respect to their customer accounts.
Index and BRC issued a limited indemnification agreement to the purchaser
of the BRC business (See Note 11). This agreement covers potential customer
claims arising from activity prior to the sale. No such claims are currently
outstanding.
The Company is a defendant in, and may be threatened with, various legal
proceedings arising from its regular business activities. Management, after
consultation with legal counsel, is of the opinion that the ultimate liability,
if any, resulting from any pending action or proceedings will not have a
material effect on the financial position or results of operations of the
Company.
The Company is currently defending against an arbitration filed by a former
client to recover damages of $1,000,000 for misrepresentation of risk and
unauthorized trading. The client's actual losses were approximately $850,000.
The Company believes the claims are without merit and plans to vigorously
contest the action. In management's opinion, the ultimate liability, if any,
will not materially affect the financial position or operations of the Company.
In November, 1995, the Company settled a complaint filed by former partners
of a general partnership which cleared its trades at the Company. The settlement
did not materially affect the financial position or results of operations of the
Company.
In April, 1994, Index, without admitting or denying the allegations, paid
$100,000 to the CFTC, settling an administrative action, filed on September 29,
1992. The equity receiver of an alleged commodity pool operator brought a
related
-18-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
NOTE 12 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
action which is still pending to recover losses of approximately $600,000,
alleging various theories such as constructive trust, negligence, breach of
fiduciary duty and conversion. The attorney for the receiver has amended the
complaint to add a number of individuals claiming to have invested money with
this alleged commodity pool operator. Index denies the allegations, believes
they are without merit, believes the additional claimants should be dismissed
and has defended this action vigorously. Although no final judgement has been
made, preliminary indications are that the case will be resolved substantially
in favor of Index.
NOTE 13 - INCOME TAXES
Effective July 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109 - Accounting for Income Taxes. Under this standard,
deferred tax is recognized using the liability method, whereby tax rates are
applied to cumulative temporary differences based on when and how they are
expected to
-19-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
NOTE 13 - INCOME TAXES (CONTINUED)
affect the tax return. Deferred tax assets and liabilities are adjusted for tax
rate changes. The primary components of the Company's deferred tax assets and
liabilities are as follows:
<TABLE>
<CAPTION>
March 31, June 30,
1996 1995
--------- ----------
<S> <C> <C>
Deferred income tax assets:
Bad debt reserve $ 12,000 $ 66,100
Book and tax depreciation
difference 56,400 67,500
Prepaid rent 11,200 -
Bonus accrual 37,600 65,400
Accrued legal expense 25,300 40,800
Other expense accruals 40,400 -
-------- ---------
Total deferred tax assets $182,900 $ 239,800
-------- ---------
Deferred income tax liabilities:
Unrealized gain on U.S.
Government obligations $(18,100) $(135,900)
Partnership income (34,900) (26,200)
Taxes (16,300) -
Prepaid and deferred rent, net - (18,100)
1987-1989 audit adjustment - (61,300)
Other - (1,400)
-------- ---------
Total deferred tax liabilities $(69,300) $(242,900)
-------- ---------
Net deferred tax assets
(liabilities) $113,600 $ (3,100)
======== =========
</TABLE>
No valuation allowance has been provided as management believes deferred
taxes are realizable.
NOTE 14 - FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK AND CONCENTRATION OF
CREDIT RISK
The Company, through Index, is in the business of clearing and executing
futures contracts and options on futures contracts for the accounts of its
customers. As such, Index guarantees to the respective clearinghouses its
customers' performance under
-20-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
NOTE 14 - FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK AND
CONCENTRATION OF CREDIT RISK (CONTINUED)
these contracts. To reduce its risk, Index requires its customers to meet, at a
minimum, the margin requirement established by each of the exchanges at which
the contract is traded. This margin is a good faith deposit from the customer
which reduces the risk to Index of failure on behalf of the customer to fulfill
any obligation under the contract. To minimize its exposure to risk of loss due
to market variation, Index adjusts these margin requirements, as needed, due to
daily fluctuations in the values of the underlying positions. If necessary,
certain positions may be liquidated to satisfy resulting changes in margin
requirements. Management believes that the margin deposits held at March 31,
1996, were adequate to minimize the risk of material loss which could be created
by the positions held at that time. At March 31, 1996, Index held long
proprietary financial futures positions and customer foreign currency forward
contracts with an aggregate notional value of $267,346,600 and short proprietary
financial futures positions and customer foreign currency forward contracts with
an aggregate notional value of $267,346,600. At March 31, 1995 Index held long
proprietary financial futures positions and customer foreign currency forward
contracts with an aggregate notional value of $529,127,400 and proprietary short
financial futures positions and customer foreign currency forward contracts with
an aggregate notional value of $429,127,400.
The exchange upon which financial futures and options on futures contracts
are traded acts as the counterparty and, accordingly, bears the risk of
performance. At March 31, 1996 and 1995, Index's open financial contracts were
transacted at the Chicago Mercantile Exchange, Chicago Board of Trade, Commodity
Exchange, Inc. and MidAmerican Commodity Exchange. At March 31, 1996, foreign
currency forward contracts were transacted at First National Bank of Chicago and
Refco, Inc.. At March 31, 1995, foreign currency forward contracts were
transacted at First National Bank of Chicago and DAIWA Securities America, Inc.
Index FX conducts business for its customers in foreign currencies on the
spot market in which trades generally settle on the next business day. Index FX
offsets its customer positions to manage its currency risk. Management believes
that with the trades settling the next business day, its credit risk is reduced
substantially. At March 31, 1996, Index FX held long foreign
-21-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
NOTE 14 - FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK AND CONCENTRATION OF
CREDIT RISK (CONTINUED)
currency positions with an aggregate notional value of $476,478,100 and short
foreign currency positions with an aggregate notional value of $368,207,500.
At March 31, 1996, the Index FX foreign currency business was transacted
with several international financial institutions.
NOTE 15 - CAPITAL REQUIREMENTS
Index is subject to the minimum capital requirements adopted and
administered by the Commodity Futures Trading Commission ("CFTC") and by certain
exchanges of which Index is a member. The net capital requirements may
effectively restrict the payment of cash dividends and the repayment of
subordinated borrowings.
At the request of certain of its non-regulated customers trading in the
cash markets, Index transferred funds to its affiliate Index FX. Upon
clarification of the net capital rules, it was determined that the receivable
from Index FX could not accurately be classified as a current asset. As a
result, Index was under early warning and minimum capital requirements and as of
March 31, 1996 it had an adjusted net capital deficit, as defined, of $4,406,800
which was $11,272,800 less than the minimum required under the regulations of
the CFTC and exchanges. Index informed the Chicago Mercantile Exchange and the
CFTC of the capital deficiency. Index took immediate action to correct the
deficiency and as of April 23, 1996, was fully in compliance with minimum
capital requirements.
A subsidiary of JC/312 is subject to the Uniform Net Capital Rule adopted
and administered by the Securities and Exchange Commission. At March 31, 1996,
the subsidiary was in compliance with those requirements.
NOTE 16 - NASDAQ LISTING
On August 17, 1994, the Company was advised by NASDAQ that the securities
of the Company were delisted from the NASDAQ SmallCap Market effective August
18, 1994. The Company appealed NASDAQ's decision and secured additional market
makers. On March 7, 1994, the Company's common stock resumed trading on the
NASDAQ SmallCap Market.
-22-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
NOTE 17 - CASH FLOWS
For purposes of reporting cash flows, cash does not include net segregated
or secured cash, as defined, in the Commodity Exchange Act. Interest paid during
the nine months ended March 31, 1996 and 1995 amounted to $2,789,100 and
$2,198,500, respectively. The Company made income tax payments in the amount of
$1,100,000 and $444,600 during the nine months ended March 31, 1996, and 1995,
respectively.
-23-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations for the Period Ended March 31, 1996.
Jack Carl/312-Futures, Inc. (the "Company") is a holding company and
operates its business through its subsidiaries. Index Futures Group, Inc.
("Index"), the Company's principal operating subsidiary, provides a full range
of futures brokerage, clearing and back office services for institutional and
public commodity traders. It is a clearing member of the Chicago Mercantile
Exchange, Chicago Board of Trade, Mid-America Commodity Exchange, Coffee, Sugar
& Cocoa Exchange, Commodity Exchange, Inc., New York Mercantile Exchange, New
York Futures Exchange and New York Cotton Exchange. Index also acts as a
registered commodity pool operator through one of its subsidiaries. The Company
organized Index FX, Ltd. ("Index FX"), a British corporation, to conduct foreign
exchange business. Index FX commenced trading operations in October 1995.
Another subsidiary of the Company is a registered securities broker-dealer.
Liquidity and Capital Resources
- -------------------------------
Index, the Company's primary operating subsidiary, is subject to the
minimum capital requirements adopted and administered by various exchanges and
regulatory bodies. Among these are requirements for registered futures
commission merchants to maintain minimum net capital based on a percentage of
the amount of customer funds required to be segregated. During the nine months
ended March 31, 1996, Index's segregated asset requirement increased by
approximately $32,544,000, which increased Index's net capital requirements. As
of March 31, 1996, Index's segregated funds exceeded the requirement by
$6,604,500. Index is also required to secure all balances due to U.S. based
customers for activities in foreign futures and options. At March 31, 1996,
funds secured in separate accounts exceeded secured requirements by $1,017,600.
Prior to March, 1996, Index exceeded the net capital requirements of the
CFTC and the various exchanges of which it is a member. In March, 1996, at the
request of its non-regulated customers trading in the cash markets, Index
transferred funds to Index FX. Upon clarification of the net capital rules, it
was determined that the receivable from Index FX could not accurately be
classified as a current asset. As a result, Index was under early warning and
minimum capital requirements and as of March 31, 1996, Index's regulatory
capital was $11,272,800 less than the minimum net capital requirements of the
CFTC. Index informed the Chicago Mercantile Exchange and the CFTC of the capital
-24-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
deficiency. Index took immediate action to correct the deficiency and as of
April 23, 1996, was fully in compliance with minimum net capital requirements.
The Company, at March 31, 1996, had $6,390,000 in notes payable to related
parties maturing January 31, 1997 and $2,750,000 of subordinated debt of which
$1,750,000 matures September 30, 1996 and $1,000,000 matures February 24, 1997.
The Company during the quarter extended the maturity date on $1,000,000 of a
$1,690,000 subordinated loan from February 28, 1996 to February 24, 1997. The
remaining $690,000 was repaid. The majority of the proceeds from the notes were
loaned to Index in the form of subordinated loans which are included in net
capital for regulatory purposes. The subordinated debt was borrowed by Index
under the terms of a $4,000,000 revolving subordinated debt line of credit. The
line of credit expires November 30, 1996. In April, 1996, the Company borrowed
an additional $1,250,000 in accordance with the terms of the revolving
subordinated debt line. The ability to refinance its debt depends on the
lenders' desire to continue such loans with the Company.
The Company has historically satisfied its capital needs from subordinated
loans, which have increased $1,060,000 since June 30, 1995, notes payable and
proceeds from the issuance of stock. The Company, since inception through March
31, 1996, has realized approximately $8,929,800 from the issuance of stock. It
is anticipated that the Company's short-term and long-term capital needs will be
primarily satisfied through loans and operations as well as from the proceeds of
the issuance of stock.
The Company, during the nine months ended March 31, 1996, generated
approximately $571,800 cash from operating activities and $1,750,000 from a
subordinated loan. Cash was primarily used for start up costs, including
purchases of furniture and equipment, incurred by the Company's London
subsidiary, which began trading operations in October, 1995, and for the
repayment of a subordinated loan.
Total stockholders' equity decreased $104,000 to $7,260,100 at March 31,
1996, from $7,364,100 at June 30, 1995. The decrease in stockholders' equity is
the result of the net loss and the foreign currency translation adjustment for
the period.
The majority of the Company's assets are liquid in nature and are not
significantly affected by inflation. However, the rate of inflation affects the
Company's expenses, such as employee compensation and other operating expenses.
-25-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
Results of Operations
- ---------------------
In January, 1993, Brokers Resource Corp. ("BRC"), at the time a wholly-
owned subsidiary of Index and currently a wholly-owned subsidiary of Jack
Carl/312-Futures, Inc., sold the majority of its guaranteed introducing broker
business to an unrelated entity in return for a portion of future earnings on
such business through January 15, 1995. The Company earned commission revenue in
the amounts of $75,300 and $481,900 during the quarter and nine months ended
March 31, 1995, respectively, from the sale of BRC's introducing broker
business. This revenue stream ended effective January 15, 1995.
The Company, during the period ended March 31, 1996, organized Index FX,
located in London, England to conduct foreign exchange business. Index FX
commenced trading operations in October, 1995; however, it incurred start up
costs during the nine months ended March 31, 1996. Due to international tax
laws, the income tax benefit resulting from the loss generated by Index FX
during the nine months ended March 31, 1996, cannot be consolidated to reduce
the Company's overall tax liability. The revenue generated by Index FX is
recorded as trading gains.
Total revenues for the quarter ended March 31, 1996 decreased $492,000 to
$10,985,900 compared to $11,477,900 for the quarter ended March 31, 1995. Total
revenues for the nine months ended March 31, 1996 decreased $188,100 compared to
the same period a year ago.
Commission revenue, which generally is related to trading volume, decreased
$701,000 or 8% during the quarter ended March 31, 1996 compared to the same
period a year ago. Included in commission revenue for 1995 is $75,300 from the
sale of BRC's introducing broker business. Excluding the effect of the BRC
revenue, the Company's commission revenue decreased 7% in 1996 on an 11%
increase in trading volume. Commission revenue decreased $1,548,600 during the
nine months ended March 31, 1996 compared to the same period a year ago.
Included in commission revenue for the nine months ended March 31, 1995 is
$481,900 from the sale of BRC's introducing broker business. Commission revenue,
excluding the effect of the BRC revenue, decreased 4% on a 14% increase in
trading volume. The decreases in commission revenue compared to the increases in
trading volume are primarily attributable to the Company's business mix which
has changed toward business that generates higher trading volume and lower
revenues and expenses per trade than other types of retail business. Included in
this type of business are accounts from non-clearing futures commission
merchants, other wholesale business and execution only business.
-26-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
Interest income decreased $429,600 during the quarter ended March 31, 1996,
compared to the same period a year ago. Interest income increased $667,900
during the nine months ended March 31, 1996 compared to the same period a year
ago. The changes in interest income in fiscal 1996 are primarily attributable to
the following factors. The Company has invested in longer term U.S. Government
obligations which increased the yield on its investments. Such investments are
interest rate sensitive which cause fluctuations in income as interest rates
vary. The change in appreciation of these investments due to such market value
fluctuations generated a decrease in interest income of approximately $470,600
and $24,600 during the quarter and nine months ended March 31, 1996,
respectively, compared to the same periods a year ago. Second, the Company, by
increasing its customer base, has additional funds available to invest in fiscal
1996. Third, interest rates, until recently, have continued their upward trend
in fiscal 1996.
Trading gains increased $813,400 and $1,099,300 during the quarter and nine
months ended March 31, 1996, respectively. Included in trading gains in fiscal
1996 is the revenue generated from Index FX which was $801,800 and $1,003,000
for the three months and nine months ended March 31, 1996, respectively.
Total expenses increased $838,900 or 9% and $2,293,700 or 8% during the
quarter and nine months ended March 31, 1996, respectively, compared to the same
periods a year ago.
Commissions, floor brokerage and clearing costs which are related to
trading volume, decreased $703,000 or 14% and $1,281,900 or 9% during the
quarter and nine months ended March 31, 1996, respectively, compared to the same
periods a year ago. The decreases in expenses are the result of the gradual
restructuring of sales agreements to include the absorption of certain
production related costs by certain sales people before commissions are earned.
Also, as part of the restructuring, certain sales people are being compensated
by salary in addition to commissions. Another reason for the decrease in
commissions, floor brokerage and clearing costs is the change in business mix
toward business which generates higher trading volume and lower commission
revenues and expenses per trade than other types of retail business. Included in
this type of business are accounts from non-clearing futures commission
merchants, other wholesale business and execution only business.
Compensation and related benefits increased $291,300 or 12% and $1,125,900
or 17% during the quarter and nine months ended March 31, 1996, respectively,
compared to the same periods a year ago. The increases are the result of an
increase in the number of employees, which includes employees at Index FX, and
salary
-27-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
increases. Also contributing to the increase is the restructuring of sales
agreements which provide for certain sales people to be compensated by salary in
addition to commissions.
Interest expense increased $156,100 and $646,100 during the quarter and
nine months ended March 31, 1996, respectively, compared to the same periods a
year ago. Included in interest expense during the nine months ended March 31,
1996 is a $100,000 interest accrual related to the settlement of prior revenue
agent reviews through 1992. The balance of the increases are the result of
higher interest rates on the Company's obligations during fiscal 1996 and
increased customer deposits on which the Company pays interest expense.
Business promotion expense increased $110,600 and $353,800 during the
quarter and nine months ended March 31, 1996, respectively, compared to the same
periods a year ago. The increases are primarily the result of a general increase
in print advertising, promotions and increased television advertising during
fiscal 1996.
Other expense increased $800,700 and $874,100 during the quarter and nine
months ended March 31, 1996, respectively. Other expense for the quarter and
nine months ended March 31, 1995, includes a $585,000 credit to bad debt
expense. This credit was primarily the result of the receipt of a bankruptcy
settlement for a bad debt which was previously written off, collection of
deficit accounts and a reduction in the Company's bad debt experience.
As a result of the aforementioned revenues and expenses, net income for the
quarter ended March 31, 1996 is $272,800 or $.01 per share compared to net
income of $1,047,300 or $.03 per share for the same period a year ago. Net loss
for the nine months ended March 31, 1996 is $89,500 or $.01 per share compared
to net income of $1,622,400 or $.05 per share for the same period a year ago.
-28-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
MARCH 31, 1996
Item 5. Other Information
From time to time, the Registrant or its principal subsidiary, Index Futures
Group, Inc., has engaged in discussions with third parties concerning possible
material business combinations, acquisitions and other relationships. Subsequent
to the end of the calendar quarter to which this Report relates, certain
representatives of the Company have commenced meaningful discussions with an
unaffiliated third party concerning a possible material substantial business
acquisition by such unaffiliated third party. There is no assurance that such
current discussions will result in a definitive agreement or, if reached, will
be successfully consummated.
Item 6. Exhibits and Reports on Form 8-K
(a) Immediately following this page is an Exhibit Index setting forth the
exhibits to this Quarterly Report on Form 10-Q and the page number in the
sequential numbering system where such exhibits can be found.
(b) Reports on Form 8-K - There were no reports filed on Form 8-K for the three
months ended March 31, 1996.
-31-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
EXHIBIT INDEX
Page
----
(11) Statement re: Computation of per share earnings 29-30
-32-
<PAGE>
SIGNATURES
Pursuant to 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.
Jack Carl/312-Futures, Inc.
---------------------------
(Registrant)
Dated: May 15, 1996 By: /S/ ALLYSON LAACKMAN
-------------------------------
Allyson Laackman
Chief Financial Officer
-33-
<PAGE>
Exhibit 11.1
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
AS RESTATED FOR THE ONE-FOR-FOUR REVERSE SPLIT OF COMMON STOCK
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
--------------------- ----------------------
1996 1995 1996 1995
-------- ---------- --------- ----------
<S> <C> <C> <C> <C>
PRIMARY
-------
EARNINGS (LOSS)
Net income (loss) $272,800 $1,047,300 $ (89,500) $1,622,400
Deduct assumed
dividends on Class A
preferred stock (10,000) (10,000) (30,000) (30,000)
-------- ---------- --------- ----------
Net income (loss)
applicable to
common stock $262,800 $1,037,300 $(119,500) $1,592,400
======== ========== ========= ==========
SHARES
Weighted average
number of common
shares outstanding 33,667,632 33,624,535 33,717,323 29,648,509
========== ========== ========== ==========
Primary earnings (loss)
per common share:
Net income (loss) $ .01 $ .03 $ (.00) $ .05
======== ========== ========= =========
</TABLE>
-29-
<PAGE>
Exhibit 11.1
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
AS RESTATED FOR THE ONE-FOR-FOUR REVERSE SPLIT OF COMMON STOCK
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
---------------------- ----------------------
1996 1995 1996 1995
-------- --------- -------- ----------
<S> <C> <C> <C> <C>
ASSUMING FULL DILUTION
- ----------------------
EARNINGS (LOSS)
Net income (loss) $272,800 $1,047,300 $(89,500) $1,622,400
======== ========== ======== ==========
SHARES
Weighted average
number of common
shares outstanding 33,667,632 33,624,535 33,717,323 29,648,509
========== ========== ========== ==========
Earnings (loss) per
common share
assuming full
dilution:
Net income (loss) $ .01 $ .03 $ (.00) $ .05
======== ========== ======== ==========
</TABLE>
-30-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 2,436,300
<SECURITIES> 129,381,900
<RECEIVABLES> 19,291,300
<ALLOWANCES> (284,100)
<INVENTORY> 0
<CURRENT-ASSETS> 240,413,300
<PP&E> 2,539,100
<DEPRECIATION> (1,835,300)
<TOTAL-ASSETS> 243,559,300
<CURRENT-LIABILITIES> 236,299,200
<BONDS> 0
<COMMON> 134,500
0
400,000
<OTHER-SE> 6,725,600
<TOTAL-LIABILITY-AND-EQUITY> 243,559,300
<SALES> 23,030,500
<TOTAL-REVENUES> 30,025,600
<CGS> 0
<TOTAL-COSTS> 12,462,300
<OTHER-EXPENSES> 14,496,600
<LOSS-PROVISION> 25,100
<INTEREST-EXPENSE> 2,981,300
<INCOME-PRETAX> 60,300
<INCOME-TAX> 149,800
<INCOME-CONTINUING> (89,500)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (89,500)
<EPS-PRIMARY> (.00)
<EPS-DILUTED> (.00)
</TABLE>
