<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 December 31, 1995
[ ] 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 33,624,531 shares of
common stock, $.004 par value per share.
This is page 1 of 31 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 December 31, 1995 and June 30, 1995. 3
Consolidated statements of operations for the
three months and six months ended December 31,
1995 and 1994. 4-5
Consolidated statement of changes in stockholders'
equity for the six months ended December 31,
1995. 6
Consolidated statements of changes in liabilities
subordinated to claims of general creditors for
the six months ended December 31, 1995 and 1994. 7
Consolidated statements of cash flows for the
six months ended December 31, 1995 and 1994. 8-9
Notes to consolidated financial statements. 10
-2-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1995 AND JUNE 30, 1995
ASSETS
<TABLE>
<CAPTION>
December 31, June 30,
1995 1995
------------ ------------
(Unaudited) (Audited)
<S> <C> <C>
Cash $ 3,888,700 $ 1,034,900
Cash segregated or secured under Commodity Exchange Act 4,968,500 1,181,700
U.S. Government obligations 112,491,400 82,885,600
Other short term investments 1,517,500 -
Deposits with clearing organizations 61,612,100 78,030,700
Warehouse receipts 930,300 1,537,200
Receivables:
Brokers and dealers 5,264,700 9,253,400
Clearing organizations 17,690,500 12,627,900
December 31, June 30,
1995 1995
------------ ----------
Customers $891,900 $1,152,200
Affiliates - 7,300
Other 283,400 379,100
Less - Allowance for doubtful accounts (191,900) (191,900) 983,400 1,346,700
------- -------
Investments in and advances to affiliated partnerships 46,600 39,100
Notes receivable 631,300 633,700
Exchange memberships, at cost (market value of $912,600
and $1,228,100 at December 31, 1995 and June 30, 1995,
respectively) 781,300 781,300
Furniture, equipment, and leasehold improvements, net of
accumulated depreciation and amortization of $1,755,500
and $1,602,800 at December 31, 1995 and June 30, 1995,
respectively 756,100 682,900
Goodwill, net of accumulated amortization of $4,081,300
and $4,054,500 at December 31, 1995 and June 30, 1995,
respectively 515,200 541,900
Other assets 370,200 355,400
------------ ------------
Total $212,447,800 $190,932,400
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Payables:
Brokers and dealers $ 4,176,300 $ -
Clearing organizations 10,700 185,900
Customers 186,678,100 168,500,000
Officers and employees 1,951,300 2,221,500
Affiliates 20,600 -
Accounts payable and accrued expenses 2,793,500 4,580,900
Notes payable 6,390,000 6,390,000
------------ ------------
Total 202,020,500 181,878,300
------------ ------------
Liabilities subordinated to claims of general creditors 3,440,000 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,
33,624,531 and 33,624,532 shares issued and outstanding
at December 31, 1995 and June 30, 1995, respectively 134,500 134,500
Paid-in capital 8,395,300 8,395,300
Retained deficit (1,928,000) (1,565,700)
Cumulative translation adjustment (14,500) -
------------ ------------
Total stockholders' equity 6,987,300 7,364,100
------------ ------------
Total $212,447,800 $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 DECEMBER 31, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
-------------------------
1995 1994
----------- -----------
<S> <C> <C>
Revenues:
Commissions $ 7,149,600 $ 7,886,500
Interest 1,859,300 1,153,500
Trading gains (losses), net 269,500 (35,000)
Other 42,900 180,800
----------- -----------
Total revenues 9,321,300 9,185,800
----------- -----------
Expenses:
Commission, floor brokerage and clearing costs 3,849,300 4,166,300
Compensation and related benefits 2,532,000 2,143,300
Communications 478,300 347,300
Interest 984,800 669,800
Rent and other occupancy costs 407,400 360,100
Business promotion 505,100 356,200
Professional and consulting fees 130,500 86,100
Depreciation 83,700 60,500
Amortization of goodwill 13,400 13,400
Other 572,600 504,800
----------- -----------
Total expenses 9,557,100 8,707,800
----------- -----------
Income (loss) before income taxes (235,800) 478,000
Income tax expense 71,800 167,700
----------- -----------
Net income (loss) (307,600) 310,300
Assumed cumulative dividend on Class A preferred stock (10,000) (10,000)
----------- -----------
Net income (loss) applicable to common stock $ (317,600) $ 300,300
=========== ===========
Primary earnings (loss) per common share,
restated for reverse split:
Net income (loss) $(.01) $.01
=========== ===========
Weighted average number of common shares outstanding 33,728,188 33,625,557
=========== ===========
Fully diluted earnings (loss) per common share,
restated for reverse split:
Net income (loss) $(.01) $.01
=========== ===========
Weighted average number of common shares outstanding 33,728,188 33,625,557
=========== ===========
</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 SIX MONTHS ENDED DECEMBER 31, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
---------------------------
1995 1994
----------- -----------
<S> <C> <C>
Revenues:
Commissions $14,952,800 $15,800,400
Interest 3,678,200 2,580,700
Trading gains, net 324,600 38,700
Other 84,100 316,000
----------- -----------
Total revenues 19,039,700 18,735,800
----------- -----------
Expenses:
Commission, floor brokerage and clearing costs 8,103,700 8,682,600
Compensation and related benefits 5,057,400 4,222,800
Communications 906,900 784,000
Interest 1,896,600 1,406,600
Rent and other occupancy costs 787,900 653,300
Business promotion 983,500 740,300
Professional and consulting fees 329,000 221,800
Depreciation 153,500 125,700
Amortization of goodwill 26,800 26,800
Other 1,040,500 967,100
----------- -----------
Total expenses 19,285,800 17,831,000
----------- -----------
Income (loss) before income taxes (246,100) 904,800
Income tax expense 116,200 329,700
----------- -----------
Net income (loss) (362,300) 575,100
Assumed cumulative dividend on Class A preferred stock (20,000) (20,000)
----------- -----------
Net income (loss) applicable to common stock $ (382,300) $ 555,100
=========== ===========
Primary earnings (loss) per common share,
restated for reverse split:
Net income (loss) $(.01) $.02
=========== ===========
Weighted average number of common shares outstanding 33,734,183 27,704,273
=========== ===========
Fully diluted earnings (loss) per common share,
restated for reverse split:
Net income (loss) $(.01) $.02
=========== ===========
Weighted average number of common shares outstanding 33,734,183 27,704,273
=========== ===========
</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 SIX MONTHS ENDED DECEMBER 31, 1995
(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 - (1) - - - - -
Net loss - - - - (362,300) - (362,300)
Foreign currency
translation - - - - - (14,500) (14,500)
-------- ---------- -------- ---------- ----------- -------- ----------
Balance,
December 31, 1995 $400,000 33,624,531 $134,500 $8,395,300 $(1,928,000) $(14,500) $6,987,300
======== ========== ======== ========== =========== ======== ==========
</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 SIX MONTHS ENDED DECEMBER 31, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
----------------------
1995 1994
---------- ----------
<S> <C> <C>
Liabilities subordinated to claims of
general creditors, at beginning of
period $1,690,000 $2,000,000
New borrowings 1,750,000 -
---------- ----------
Liabilities subordinated to claims of
general creditors, at end of period $3,440,000 $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 SIX MONTHS ENDED DECEMBER 31, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
--------------------------
1995 1994
------------ -----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income (loss) $ (362,300) $ 575,100
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 180,300 152,500
Deferred taxes (120,900) 207,600
Doubtful accounts expense (benefit) (69,000) 22,400
Equity in net (gain) loss of affiliated partnerships (8,900) 3,900
Changes in:
Cash segregated or secured under
Commodity Exchange Act, net (3,786,800) 121,400
U.S. Government obligations (29,605,800) 4,724,800
Other short term investments (1,517,500) -
Deposits with clearing organizations 16,418,600 (2,457,400)
Warehouse receipts 606,900 90,800
Receivables (641,600) (697,600)
Other assets 106,100 (304,500)
Payables 21,929,600 (2,226,100)
Accounts payable and accrued expenses (1,787,400) (1,218,700)
------------ -----------
Cash provided by (used in) operating activities 1,341,300 (1,005,800)
------------ -----------
Cash Flows From Investing Activities:
Investments in and advances to affiliated partnerships, net 1,400 (62,500)
Decrease in notes receivable 2,400 300
Purchase of exchange membership - (130,000)
Purchase of furniture, equipment and leasehold
improvements (226,800) (184,500)
Rebate from purchase of equipment - 50,000
Rebate from exchange memberships - 102,900
------------ -----------
Cash used in investing activities (223,000) (223,800)
------------ -----------
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 - (100,000)
Increase in liabilities subordinated to claims
of general creditors 1,750,000 -
Issuance of common stock pursuant to
rights offering - 1,076,000
------------ -----------
Cash provided by financing activities 1,750,000 976,000
------------ -----------
Effect of exchange rate changes on cash (14,500) -
------------ -----------
Increase (Decrease) in cash 2,853,800 (253,600)
Cash, beginning of period 1,034,900 1,862,300
------------ -----------
Cash, end of period $ 3,888,700 $ 1,608,700
============ ===========
</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 SIX MONTHS ENDED DECEMBER 31, 1995 AND 1994
(UNAUDITED)
(CONTINUED FROM PAGE 8)
Supplemental Schedule of Non-Cash Investing
and Financing Activities
Six Months Ended December 31, 1995
- ----------------------------------
(None)
Six Months Ended December 31, 1994
- ----------------------------------
(None)
-9-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(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
DECEMBER 31, 1995
(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>
December 31, June 30,
1995 1995
------------ ------------
<S> <C> <C>
Cash $ 4,968,500 $ 1,181,700
U.S. Government obligations 111,817,200 81,482,000
Deposits with clearing
organizations 54,431,700 69,531,900
Receivables from clearing
organizations, net 17,362,400 12,043,300
Receivables from brokers and dealers 4,978,500 8,436,200
Warehouse receipts 930,300 1,537,200
------------ ------------
Total segregated and
secured assets $194,488,600 $174,212,300
============ ============
Amount required to be
segregated and secured $186,075,400 $167,730,300
============ ============
</TABLE>
NOTE 3 - OTHER SHORT TERM INVESTMENTS
Other short term investments consist of $1,517,500 of time deposits due
January 2, 1996.
-11-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(UNAUDITED)
NOTE 4 - DEPOSITS WITH CLEARING ORGANIZATIONS
Deposits with clearing organizations are as follows:
<TABLE>
<CAPTION>
December 31, June 30,
1995 1995
------------ -----------
<S> <C> <C>
U.S. Government obligations $59,720,000 $75,964,600
Guarantee deposits 1,056,600 1,163,700
Stock in exchange clearing
organization at cost (market
value of $992,000 and $960,000 at
December 31, 1995 and June 30,
1995, respectively) 360,000 360,000
Cash margins 475,500 542,400
----------- -----------
Total $61,612,100 $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. IMSI is also the sponsor of an
exempted Cayman Islands limited liability company which is in the process of
liquidation. The investments in and advances to such entities consist of the
following:
<TABLE>
<CAPTION>
December 31, June 30,
1995 1995
------------ --------
<S> <C> <C>
Investments $36,900 $28,000
Advances 9,700 11,100
------- -------
Total $46,600 $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
December 31, 1995, IMSI is in compliance with those requirements. Index provides
commodity brokerage services to the active pool at agreed upon rates and IMSI
receives administrative fees from that pool.
-12-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(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 December 31, 1995 and June 30, 1995 is $48,847,000 and
$45,768,800, respectively.
NOTE 7 - NOTES PAYABLE
Notes payable consist of the following:
<TABLE>
<CAPTION>
December 31, June 30,
1995 1995
------------ ----------
<S> <C> <C>
Principal stockholder,
interest at prime plus 4%, due:
January 31, 1996 $ 540,000 $ 540,000
January 31, 1996 400,000 400,000
Affiliates and other related parties,
interest at prime plus 4%, due:
January 31, 1996 150,000 150,000
January 31, 1996 2,000,000 2,000,000
January 31, 1996 1,800,000 1,800,000
January 31, 1996 750,000 750,000
January 31, 1996 750,000 750,000
---------- ----------
Total $6,390,000 $6,390,000
========== ==========
</TABLE>
Interest expense on notes payable, all of which was earned by related
parties, is as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Three months ended December 31, $204,800 $232,100
Six months ended December 31, $410,400 $454,600
</TABLE>
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.
Subsequent to December 31, 1995 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
DECEMBER 31, 1995
(UNAUDITED)
NOTE 8 - LIABILITIES SUBORDINATED TO CLAIMS OF GENERAL CREDITORS
Liabilities subordinated to claims of general creditors consist of the
following:
<TABLE>
<CAPTION>
December 31, June 30,
1995 1995
------------ ----------
<S> <C> <C>
Bank, interest at prime plus 3%, due:
February 28, 1996 $1,690,000 $1,690,000
December 31, 1996 1,750,000 -
---------- ----------
Total $3,440,000 $1,690,000
========== ==========
</TABLE>
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.
Interest expense on liabilities subordinated to claims of general creditors
is as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Three months ended December 31, $101,900 $51,100
Six months ended December 31, $155,200 $99,000
</TABLE>
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.
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 December 31, 1995,
cumulative dividends in arrears amounted to $393,300 or $.98 per share. No
liability for these dividends has been recorded as dividends are not payable
until declared.
-14-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(UNAUDITED)
NOTE 9 - STOCKHOLDERS' EQUITY (CONTINUED)
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 December 31, 1995, 33,624,531 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 December, 1990, the Company,
pursuant to the incentive stock option plan, granted options for 410,000 shares
at the then market price exercisable through December, 2000. The Company also
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
DECEMBER 31, 1995
(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 December 31,
1995.
<TABLE>
<CAPTION>
Shares Shares Shares Shares Shares
Granted Price Exercisable Forfeited Cancelled Remaining
------- ----- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
========= ========= ====== ====== =========
</TABLE>
NOTE 10 - RELATED PARTY TRANSACTIONS
A note receivable in the amount of $631,300 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 December 31, 1995. The Company earned interest income on this
note in the amounts of $13,800 and $12,900 during the three months ended
December 31, 1995 and 1994, respectively, and $27,600 and $24,700 during the
six months ended December 31, 1995 and 1994, respectively.
The Company rents from an officer and a director an exchange membership
having a market value at December 31, 1995 of approximately $535,000. Rent
expense for the three months ended December 31, 1995 and 1994 was $16,500 and
$14,000, respectively, and for the six months ended December 31, 1995 and 1994,
rent expense was $34,500 and $26,000, respectively.
-16-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(UNAUDITED)
NOTE 10 - RELATED PARTY TRANSACTIONS (CONTINUED)
Certain exchange memberships owned by officers and others, having an
aggregate market value of $4,476,000, 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 December 31, 1995 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 six months ended
December 31, 1994, the Company earned $207,500 and $406,600, 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 $ 90,300
1997 155,700
1998 102,500
1999 102,500
2000 and thereafter 119,600
--------
Total $570,600
========
-17-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(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 $414,100 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 a demand for 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
DECEMBER 31, 1995
(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 intends to defend this action vigorously.
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
DECEMBER 31, 1995
(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>
December 31, June 30,
1995 1995
------------- ----------
<S> <C> <C>
Deferred income tax assets:
Bad debt reserve $ 65,200 $ 66,100
Book and tax depreciation
difference 70,900 67,500
Insurance reserve 20,900 -
Prepaid rent 5,100 -
Bonus accrual - 65,400
Accrued legal expense 25,600 40,800
Other 500 -
-------- ---------
Total deferred tax assets $188,200 $ 239,800
-------- ---------
Deferred income tax liabilities:
Unrealized gain on U.S.
Government obligations $(44,300) $(135,900)
Partnership income (26,100) (26,200)
Prepaid and deferred rent, net - (18,100)
1987-1989 audit adjustment - (61,300)
Other - (1,400)
-------- ---------
Total deferred tax liabilities $(70,400) $(242,900)
-------- ---------
Net deferred tax assets
(liabilities) $117,800 $ (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
DECEMBER 31, 1995
(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 December 31,
1995, were adequate to minimize the risk of material loss which could be created
by the positions held at that time. At December 31, 1995, Index held long
proprietary financial futures positions and customer foreign currency forward
contracts with an aggregate notional value of $230,156,200 and short proprietary
financial futures positions and customer foreign currency forward contracts with
an aggregate notional value of $230,161,200. At December 31, 1994, Index held
long proprietary financial futures positions and customer foreign currency
forward contracts with an aggregate notional value of $132,740,600 and
proprietary short financial futures positions and customer foreign currency
forward contracts with an aggregate notional value of $132,740,600.
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 December 31, 1995 and 1994, Index's open financial contracts
were transacted at the Chicago Mercantile Exchange, Chicago Board of Trade,
Commodity Exchange, Inc. and MidAmerican Commodity Exchange. At December 31,
1995, foreign currency forward contracts were transacted at First National Bank
of Chicago, Daiwa Securities America, Inc. and Refco, Inc.. At December 31, 1994
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
covers its customer positions to manage its currency risk. Management believes
that with the trades settling the next business day, its credit risk is
negligible. At December 31, 1995 Index FX held long foreign
-21-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(UNAUDITED)
NOTE 14 - FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK AND
CONCENTRATION OF CREDIT RISK (CONTINUED)
currency positions with an aggregate notional value of $210,041,500 and short
foreign currency positions with an aggregate notional value of $208,973,500.
At December 31, 1995 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. As of December 31, 1995, adjusted net
capital, as defined, of $13,240,000 is $6,702,400 in excess of the minimum
required under the regulations of the CFTC and exchanges. The net capital
requirements may effectively restrict the payment of cash dividends and the
repayment of subordinated borrowings.
A subsidiary of JC/312 is subject to the Uniform Net Capital Rule adopted
and administered by the Securities and Exchange Commission. At December 31,
1995, the subsidiary is 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 December 7, 1994, the Company's common stock resumed trading on the
NASDAQ SmallCap Market.
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 six months ended December 31, 1995 and 1994 amounted to $1,778,200 and
$1,341,200, respectively. The Company made income tax payments in the amount of
$1,100,000 and $439,700 during the six months ended December 31, 1995, and 1994,
respectively.
-22-
<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 December 31, 1995.
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, Commodity
Exchange, Inc., New York Mercantile Exchange, New York Futures Exchange and New
York Cotton Exchange, and effective January 1, 1995, the Coffee, Sugar & Cocoa
Exchange. Index also acts as a registered commodity pool operator through one of
its subsidiaries. The Company has 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 six months
ended December 31, 1995, Index's segregated asset requirement increased by
approximately $21,609,300, which increased Index's net capital requirements. As
of December 31, 1995, Index's segregated funds exceeded the requirement by
$7,569,800. Index is also required to secure all balances due to U.S. based
customers for activities in foreign futures and options. At December 31, 1995,
funds secured in separate accounts exceeded secured requirements by $843,400.
Throughout the six months, Index exceeded the net capital requirements of the
CFTC and the various exchanges of which it is a member. As of December 31, 1995,
Index's regulatory capital exceeded the minimum net capital requirements of the
CFTC by $6,702,400.
The Company, at December 31, 1995, had $6,390,000 in notes payable to
related parties maturing January 31, 1996 and $3,440,000 of subordinated debt of
which $1,690,000 matures February 28, 1996 and $1,750,000 matures December 31,
1996. Subsequent to December 31, 1996, all notes payable maturing January 31,
1996 were extended to January 31, 1997. 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
-23-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
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. 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 $1,750,000 since June 30, 1995, notes payable and
proceeds from the issuance of stock. The Company, since inception through
December 31, 1995, 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 six months ended December 31, 1995 generated
approximately $1,341,000 cash from operating activities and $1,750,000 from a
subordinated loan. Cash was used for start up costs, including purchases of
furniture and equipment, incurred on the Company's London subsidiary, which
began trading operations in October, 1995.
Total stockholders' equity decreased $376,800 to $6,987,300 at December 31,
1995, 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.
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 $207,500 and $406,600 during the quarter and six months ended
December 31, 1994, respectively, from the sale of BRC's introducing broker
business. This revenue stream ended effective January 15, 1995.
The Company, during the period ended December 31, 1995, 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 six months ended December 31, 1995. Due to international tax
laws,
-24-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
the income tax benefit resulting from the loss generated by Index FX during the
six months ended December 31, 1995 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 December 31, 1995 increased $135,500
to $9,321,300 compared to $9,185,800 for the quarter ended December 31, 1994.
Total revenues for the six months ended December 31, 1995 increased $303,900
compared to the same period a year ago.
Commission revenue, which generally is related to trading volume, decreased
$736,900 or 9% during the quarter ended December 31, 1995 compared to the same
period a year ago. Included in commission revenue for 1994 is $207,500 from the
sale of BRC's introducing broker business. Excluding the effect of the BRC
revenue, the Company's commission revenue decreased 7% in 1995 on a 13% increase
in trading volume. Commission revenue decreased $847,600 during the six months
ended December 31, 1995 compared to the same period a year ago. Included in
commission revenue for the six months ended December 31, 1994 is $406,600 from
the sale of BRC's introducing broker business. Commission revenue, excluding the
effect of the BRC revenue, decreased 3% on a 15% 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.
Interest income increased $705,800 and $1,097,500 during the quarter and
six months ended December 31, 1995, respectively, compared to the same periods a
year ago. The increases 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 an increase in interest income of
approximately $440,000 and $446,100 during the quarter and six months ended
December 31, 1995, respectively, compared to the same periods a year ago.
Second, the Company, by increasing its customer base, has additional funds
available to invest. Third, interest rates, until recently, have continued their
upward trend in fiscal 1996.
Total expenses increased $849,300 or 10% and $1,454,800 or 8% during the
quarter and six months ended December 31, 1995, respectively, compared to the
same periods a year ago.
-25-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
Commissions, floor brokerage and clearing costs which are related to
trading volume, decreased $317,000 or 8% and $578,900 or 7% during the quarter
and six months ended December 31, 1995, respectively, compared to the same
periods a year ago. The decreases in expense 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 $388,700 or 18% and $834,600 or
20% during the quarter and six months ended December 31, 1995, respectively,
compared to the same periods a year ago. The increases are the result of an
increase in the number of employees and salary 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 $315,000 and $490,000 during the quarter and six
months ended December 31, 1995, respectively, compared to the same periods a
year ago. Included in interest expense during the quarter ended December 31,
1995 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 $148,900 and $243,200 during the
quarter and six months ended December 31, 1995, respectively, compared to the
same periods a year ago. The increases are the result of increased television
advertising during fiscal 1996.
As a result of the aforementioned revenues and expenses, net loss for the
quarter ended December 31, 1995 is $307,600 or $.01 per share compared to net
income of $310,300 or $.01 per share for the same period a year ago. Net loss
for the six months ended December 31, 1995 is $362,300 or $.01 per share
compared to net income of $575,100 or $.02 per share for the same period a year
ago.
-26-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
DECEMBER 31, 1995
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 December 31, 1995.
-29-
<PAGE>
JACK CARL/312-FUTURES, INC. AND SUBSIDIARIES
EXHIBIT INDEX
Page
----
(11) Statement re: Computation of per share earnings 27-28
-30-
<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: February 12, 1996 By: /S/ ALLYSON LAACKMAN
-----------------------
Allyson Laackman
Chief Financial Officer
-31-
<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 Six Months Ended
December 31, December 31,
------------------------ ------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
PRIMARY
- -------
EARNINGS (LOSS)
Net income (loss) $(307,600) $310,300 $(362,300) $575,100
Deduct assumed
dividends on Class A
preferred stock (10,000) (10,000) (20,000) (20,000)
--------- -------- --------- --------
Net income (loss)
applicable to
common stock $(317,200) $300,300 $(382,300) $555,100
========= ======== ========= ========
SHARES
Weighted average
number of common
shares outstanding 33,728,188 33,625,557 33,734,183 27,704,273
========== ========== ========== ==========
Primary earnings (loss)
per common share:
Net income (loss) $ (.01) $ .01 $ (.01) $ .02
======= ======= ======= ======
</TABLE>
-27-
<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 Six Months Ended
December 31, December 31,
-------------------- -----------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
ASSUMING FULL DILUTION
- ----------------------
EARNINGS (LOSS)
Net income (loss) $(307,600) $310,300 $(362,300) $575,100
========= ======== ========= ========
SHARES
Weighted average
number of common
shares outstanding 33,728,188 33,625,557 33,734,183 27,704,273
========== ========== ========== ==========
Earnings (loss) per
common share
assuming full
dilution:
Net income (loss) $ (.01) $ .01 $ (.01) $ .02
======= ====== ======= =======
</TABLE>
-28-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 3,888,700
<SECURITIES> 112,491,400
<RECEIVABLES> 24,130,500
<ALLOWANCES> (191,900)
<INVENTORY> 0
<CURRENT-ASSETS> 209,347,100
<PP&E> 2,511,600
<DEPRECIATION> (1,755,500)
<TOTAL-ASSETS> 212,447,800
<CURRENT-LIABILITIES> 205,460,500
<BONDS> 0
<COMMON> 134,500
0
400,000
<OTHER-SE> 6,452,800
<TOTAL-LIABILITY-AND-EQUITY> 212,447,800
<SALES> 14,952,800
<TOTAL-REVENUES> 19,039,700
<CGS> 0
<TOTAL-COSTS> 8,103,700
<OTHER-EXPENSES> 9,354,500
<LOSS-PROVISION> (69,000)
<INTEREST-EXPENSE> 1,896,600
<INCOME-PRETAX> (246,100)
<INCOME-TAX> 116,200
<INCOME-CONTINUING> (362,300)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (362,300)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
