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 June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______________ to _______________
Commission File Number 0-16240
JB Oxford Holdings, Inc.
(Exact name of registrant as specified in its charter)
UTAH 95-4099866
(State of incorporation or organization) (I.R.S. Employer
Id. No.)
9665 Wilshire Blvd., Suite 300; Beverly Hills, CA 90212
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area (310) 777-8888
code
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Name of each exchange
Title of each class on which registered
Common stock, 12,866,205 shares NASDAQ
$0.01 par value: outstanding at August 6, 1997
Indicate by check mark whether the Registrant (l) has filed
all reports required to be filed by Section l3 or l5(d) of the
Securities Exchange Act of l934 during the preceding 12 months
and (2) has been subject to such filing requirements for the
past 90 days. Yes X No ___
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
JB Oxford Holdings, Inc. and Subsidiaries
Consolidated Statements of Financial Condition
June 30, December 31,
1997 1996
(Unaudited)
Assets:
Cash and cash equivalents $ 2,911,488 $ 969,871
Cash segregated under federal & other
regulations 193,428,398 95,676,462
Receivable from broker/dealers and
clearing organizations (Net of
allowance for doubtful accounts of
$2,103,802 for both periods) 19,050,898 7,034,713
Receivable from customers (Net of
allowance for doubtful accounts of
$3,930,918 and $3,931,080) 298,008,965 209,727,063
Other receivables (Net of allowance for 2,576,135 1,403,588
doubtful accounts of $1,979,793 for
both periods)
Securities owned - at market value 4,301,008 5,080,146
Furniture, equipment and leasehold 3,284,978 2,987,209
improvements (At cost - less
accumulated depreciation and
amortization of $3,397,142 and
$2,792,595)
Income Tax Receivable 849,162 849,162
Deferred income taxes 689,795 689,795
Clearing Deposits 6,087,395 4,973,246
Other assets 1,379,785 944,866
Total Assets $532,568,007 $330,336,121
See accompanying notes to Consolidated Financial Statements.<PAGE>
JB Oxford Holdings, Inc. and Subsidiaries
Consolidated Statements of Financial Condition
June 30, December 31,
1997 1996
(Unaudited)
Liabilities and stockholders' equity:
Liabilities:
Payable to broker/dealers and
clearing organizations $ 91,855,071 35,566,706
Payable to customers 395,196,022 262,019,997
Securities sold not yet purchased - 997,938 243,864
at market value
Accounts payable and accrued 12,089,884 7,605,998
liabilities
Income taxes payable 256,972 --
Loans from stockholders 7,821,311 4,421,311
Notes payable 8,527,966 6,120,087
Loans subordinated to the claims of 2,000,000 2,000,000
general creditors
Total liabilities 518,745,164 317,977,963
Commitments and contingent liabilities
Stockholders' equity:
Convertible preferred stock ($10 par -- 2,000,000
value 200,000 shares authorized;
200,000 issued and outstanding for
12/96)
Common stock ($0.01 par value 128,662 87,602
100,000,000 shares authorized;
12,866,205 and 8,760,205 shares
issued and outstanding)
Additional paid-in capital 11,680,566 9,541,496
Retained Earnings 2,013,615 729,060
Total stockholders' equity 13,822,843 12,358,158
Total liabilities and stockholders' $532,568,007 $330,336,121
equity
See accompanying notes to Consolidated Financial Statements<PAGE>
JB Oxford Holdings, Inc. and Subsidiaries
Consolidated Statements Of Operations
(Unaudited)
For The Six Months Ended
June 30,
1997 1996
Revenues:
Clearing and execution $ 9,762,126 $10,323,751
Trading profits 2,342,365 764,496
Commissions 11,175,128 9,940,454
Interest 10,377,115 6,164,593
Other 176,563 1,892,981
Total Revenues 33,833,297 29,086,275
Expenses:
Employee compensation 4,781,081 4,270,320
Commission expense 4,641,703 4,411,278
Clearing and floor brokerage 1,398,253 1,029,990
Communications 2,817,650 2,786,639
Occupancy 1,893,947 1,236,111
Interest 6,149,219 3,514,443
Data processing charges 2,479,210 2,122,207
Professional services 1,970,524 2,111,413
Promotional 2,350,711 1,709,452
Bad debts 1,727,964 1,055,827
Other operating expenses 1,338,001 952,655
Total Expenses 31,548,263 25,200,335
Income Before Income Taxes 2,285,034 3,885,940
Income Tax Provision 915,000 1,555,000
Net Income $ 1,370,034 $ 2,330,940
Primary Net Income Per Share $0.11 $0.22
Fully Diluted Income Per Share $0.08 $0.13<PAGE>
Weighted average number of shares of
common stock & common stock
equivalents
Primary 11,313,396 9,920,422
Fully diluted 18,227,507 18,393,174
See accompanying notes to Consolidated Financial Statements.<PAGE>
JB Oxford Holdings, Inc. and Subsidiaries
Consolidated Statements Of Operations
(Unaudited)
For The Three Months Ended
June 30,
1997 1996
Revenues:
Clearing and execution $ 5,112,969 $ 5,273,999
Trading profits 978,080 483,727
Commissions 6,044,688 5,835,344
Interest 5,973,164 3,434,435
Other 106,758 1,154,156
Total Revenues 18,215,659 16,181,661
Expenses:
Employee compensation 2,425,102 2,474,506
Commission expense 2,510,894 2,564,103
Clearing and floor brokerage 806,592 501,085
Communications 1,691,152 1,557,306
Occupancy 1,047,048 654,991
Interest 3,433,180 1,936,402
Data processing charges 1,095,323 1,108,569
Professional services 940,741 1,062,845
Promotional 1,544,670 1,042,537
Bad debts 1,824,480 844,332
Other operating expenses 716,305 495,142
Total Expenses 18,035,487 14,241,818
Income Before Income Taxes 180,172 1,939,843
Income Tax Provision 75,000 787,000
Net Income $ 105,172 $ 1,152,843
Primary Net Income Per Share $0.01 $0.11
Fully Diluted Income Per Share $0.01 $0.07<PAGE>
Weighted average number of shares of
common stock & common stock
equivalents
Primary 13,153,671 9,909,981
Fully diluted 18,342,002 18,382,733
See accompanying notes to Consolidated Financial Statements.<PAGE>
JB Oxford Holdings, Inc. and Subsidiaries
Consolidated Statements Of Cash Flows
(Unaudited)
For The Six Months Ended
June 30,
1997 1996
Increase (decrease) in cash and cash
equivalents:
Cash flows from operating activities:
Net income $ 1,370,034 $ 2,330,940
Adjustments to reconcile net income to
cash used in operation:
Depreciation and amortization 604,616 392,130
Deferred rent (27,440) 45,560
Provision for bad debts 227,964 743,887
Changes in assets and liabilities:
Cash segregated under federal and other
regulations (97,751,936)(27,219,622)
Receivable from broker/dealers and
clearing organizations (12,016,185) 1,000,000
Receivable from customers (88,509,866)(75,977,860)
Other receivables (1,172,547) (1,037,159)
Securities owned 779,138 376,132
Clearing deposits (1,114,149) --
Other assets (434,919) (3,858,196)
Payable to broker/dealers and clearing
organizations 56,288,365 16,526,284
Payable to customers 133,176,025 79,450,199
Securities sold not yet purchased 754,074 261,080
Accounts payable and accrued
liabilities 4,511,326 (2,575,298)
Income taxes payable/receivable 256,972 (524,425)
Net cash used in operating activities (3,058,528)(10,065,378)
Cash flows from investing activities:
Capital expenditures (902,385) (1,083,926)
Net cash used in investing activities (902,385) (1,083,926)
Cash flows from financing activities:
Repayments of notes payable -- (69,461)
Short term borrowing 2,407,879 10,443
Loans from stockholders 3,400,000 --
Exercise of warrants -- 72,500
Repayments of loans from stockholders -- (149,791)
Issuance of common stock 180,130 --
Payment of cash dividends - preferred (85,479) (109,698)
stock
Net cash provided by/(used in) financing 5,902,530 (246,007)
activities
Net increase (decrease) in cash and cash
equivalents 1,941,617 (11,395,311)
Cash and cash equivalents at the
beginning of the period 969,871 15,949,577
Cash and cash equivalents at the end of
the period $ 2,911,488 4,554,266
See accompanying notes to Consolidated Financial Statements.<PAGE>
JB Oxford Holdings, Inc. and Subsidiaries
Notes To Consolidated Financial Statements
(Unaudited)
Note 1. Company's Quarterly Report Under Form 10-Q
In the opinion of Management, the accompanying unaudited
financial statements contain all adjustments (all of which are
normal and recurring in nature) necessary to present fairly the
financial statements of JB Oxford Holdings, Inc. and subsidiaries
(the Company) for the periods presented. The accompanying
financial information should be read in conjunction with the
Company's 1996 Annual Report on Form 10-K. Footnote disclosures
that substantially duplicate those in the Company's Annual
Audited Report on Form 10-K, including significant accounting
policies, have been omitted.
The Company formed two subsidiaries, S4L and JB Oxford
Insurance Services, Inc. (JBOI) during the current year. S4L
commenced business at the end of the second quarter, and JBOI has
not yet commenced operations.
The Company's broker/dealer subsidiaries, JB Oxford &
Company (JBOC) and Stocks4Less, Inc. (S4L), are consolidated
in the quarterly financial information as of June 27, 1997 and
June 28, 1996, because the last settlement Friday of each month
is consistently treated as month-end. Accordingly, this is
reflected in the consolidated financial statements of the
Company.
Note 2. Derivative Financial Instruments
As a part of its ongoing trading activities the Company may
hold derivative financial instruments for trading purposes.
These instruments consist of options and warrants and are not
used as hedge instruments to reduce financial market risks. The
Company does not trade futures, forward, swap or any other
derivative financial instruments except options and warrants.
Options and warrants are valued at quoted market value and
options and warrants not readily marketable are valued at fair
value as determined by management. Fluctuations in market value
(or fair value) are included in the consolidated statement of
operations.
Note 3. New Accounting Pronouncements
The Statement of Financial Accounting Standard Number 128
(SFAS No. 128), _Earnings Per Share_ (_EPS_), issued by the
Financial Accounting Standards Board is effective for financial
statements issued for the periods ending after December 15, 1997,
including interim periods. The SFAS No. 128 requires restatement
of all prior period EPS data presented. The new standard also
requires a reconciliation of the numerator and denominator of the
basic EPS computation to the numerator and denominator of the
diluted EPS computation. The Company does not expect that the
adoption will have a material effect on its EPS calculation.
Statements of Financial Accounting Standards No. 129,
_Disclosure of Information about Capital Structure_ (SFAS
No.129) issued by the FASB is effective for financial statements
ending after December 15, 1997. The new standard reinstates
various securities disclosure requirements previously in effect
under Accounting Principles Board Opinion No. 15, which has been
superseded by SFAS No. 128. The Company does not expect
adoption of SFAS N0. 129 to have a material effect, if any, on
its financial position or results of operations.
Statements of Financial Accounting Standards No. 130,
_Reporting Comprehensive Income_ (SFAS No. 130) issued by the
FASB is effective for financial statements with fiscal years
beginning after December 15, 1997. Earlier application is
permitted. SFAS No. 130 establishes standards for reporting and
display of comprehensive income and its components in a full set
of general-purpose financial statements. The company has not
determined the effect on its financial position or results of
operations, if any, from the adoption of this statement.
Statements of Financial Accounting Standards No. 131,
_Disclosure about Segments of an Enterprise and Related
Information_ (SFAS No. 131) issued by the FASB is effective for
financial statements beginning after December 15, 1997. The new
standard requires that public business enterprises report
certain information about operating segments in complete sets of
financial statements of the enterprise and in condensed
financial statements of interim periods issued to shareholders.
It also requires that public business enterprises report certain
information about their products and services, the geographic
areas in which they operate and their major customers. The
Company does not expect adoption of SFAS No. 131 to have a
material effect, if any, on its Results of Operations.
Note 4. Loans from Shareholders
The Company borrowed additional funds in the amount of
$3,400,000 from certain shareholders during the second quarter.
These loans are unsecured, due on demand, and bear interest at 8
1/4% per annum due quarterly.
Note 5. Convertible Preferred Stock
On April 12, 1997 the holder exercised the conversion
option. The preferred stock was converted to common stock at the
rate of $.50 per share of common stock based on the par value of
the preferred stock.
Note 6. Stockholders' Equity
On April 12, 1997 200,000 shares of preferred stock was
converted into 4,000,000 shares of $.01 par value common stock.
During the six months ending June 30, 1997, 41,000 shares of
common stock was issued upon the exercise of various stock
options. Additionally, 65,000 shares of common stock was issued
to a consultant for compensation.
Note 7. Regulatory Requirements
JBOC and S4L are subject to the Securities and Exchange
Commission's Uniform Net Capital Rule (Rule 15c3-1), which
requires the maintenance of minimum net capital.
At June 30, 1997, JBOC had net capital of $15,411,414 which
was 5.0% of aggregate debit balances and $9,266,478 in excess of
the minimum amount required. At December 31, 1996 JBOC had net
capital of $12,222,510, which was 5.8% of aggregate debit
balances and $7,986,964 in excess of the minimum amount required.
At June 30, 1997, S4L had net capital of $38,872 which was $26,615
in excess of the minimum amount required.
Cash is segregated in special reserve bank accounts for the
exclusive benefit of customers under Rule 15c3-3 of the
Securities and Exchange Act of 1934 as amended. Included in the
special reserve accounts are securities purchased under
agreements to resell on an overnight basis in the amount of
$193,428,398 as of June 30, 1997. Securities purchased are U.S.
Treasury instruments having a market value of 102% of cash
tendered. The Company liquidated $2,500,000 of these securities
on July 1, 1997 pursuant to these rules.
Note 8. Contingent Liabilities
In the ordinary conduct of business, the Company and/or its
subsidiaries have been named as Defendants in several lawsuits
and arbitration matters or have instituted legal proceedings as
Plaintiffs to recover moneys owing, the most significant of which
follow:
a) In an action commenced in March 1995, in the U.S.
District Court of New York, a claim was brought by former
counsel for the Company and alleges payment due for
professional services in the amount of $681,217. An answer
and counter claim by the Company was filed asserting among
other claims that the Company was overcharged for services.
The ultimate outcome and range of possible loss, if any, is
not determinable at this stage. Management intends to
vigorously contest this matter.
The ultimate outcome of the uncertainties discussed above is
unknown. Moreover, due to the nature of arbitration matters, it
is impossible to predict the ultimate outcome and/or range of
loss. Accordingly, no provision for any liability that might
result has been made in the accompanying financial statements.
Note 9. Supplemental Disclosures of Cash Flow Information
For the Six Months Ended
June 30,
1997 1996
(Unaudited)(Unaudited)
Supplemental Disclosures of Cash Flow
Information
Cash paid during the period for:
Interest $6,150,204 $3,446,385
Income taxes 658,028 2,579,425
Supplemental schedule of noncash investing and financing
activities:
In April 1997 200,000 shares of $10
par value non-voting convertible 2,000,000 --
preferred stock was exchanged for
4,000,000 shares of $0.01 par value
common stock.<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Special Note Regarding Forward Looking Statements
Certain statements constitute _forward-looking statements_
within the meaning of the Private Securities Litigation Reform
Act of 1995 (the _Reform Act_). Such forward-looking statements
involve known and unknown risks, uncertainties, and other factors
which may cause the actual results, performance or achievements
of the Company to be materially different from any future
results, performance or achievements, expressed or implied by
such forward-looking statements.
Changes in Financial Condition
The Company had significant growth in the second quarter of
1997. Total assets increased $158,909,964 or 43% from March
31,1997 and has increased $202,231,886 or 61% from the year end
balances. Net assets (assets less liabilities) of the Company
increased $1,464,685 to $13,822,843, or 12% from December 31,
1996
The most significant increase in assets was in cash
segregated under federal regulations which increased $97,751,936
or 102% to $193,428,398 at June 30, 1997. Receivables from
customers increased $88,281,902 or 42% to $298,008,965 during the
first six months of 1997. Receivables from customers represent
56% of the Company's total assets at June 30, 1997, down from 63%
at December 31, 1996. Receivables from broker/dealers and
clearing organizations increased $12,016,185 or 171% to
$19,050,898 during the six months ended June 30, 1997.
Total liabilities increased $200,767,201 or 63% to
$518,745,164. Payables to customers increased $133,176,025 or
51% to $395,196,022. Customer payables represent 76% of the
total liabilities of the Company. Payables to broker dealers
increased by $56,288,365 or 158% to $91,855,071 during the six
months ended June 30, 1997. Of this increase, $52,359,334 was
attributable to increases in securities loaned. Accounts payable
and accrued liabilities increased by $4,483,886 or 59% during the
six months ended June 30, 1997.
Comparison of Operations
The Company recorded net income of $1,370,034 for the six
months ended June 30, 1997 compared to $2,330,940 in 1996, and
net income of $105,172 for the quarter ended June 30, 1997
compared to $1,152,843 in 1996. This represents a decrease of
$960,906 and $1,047,671 in earnings compared to the same periods
in 1996.
Total revenue increased $4,747,022 or 16% to $33,833,297 for
the six months ended June 30, 1997 compared to the same six
months of 1996. Revenues for the quarter ended June 30, 1997
increased $2,033,998 or 13% compared to the quarter ended June
30, 1996, and $2,598,021 or 17% over the trailing first quarter
of 1997.
Clearing and execution revenue decreased by $561,625 or 5%
to $9,762,126 during the first six months of 1997 compared to the
same period of 1996. The decrease was due to a decrease in the
average price charged per transaction. Correspondent ticket
volume which generates clearing and execution revenue increased
by 35% in the first six months of 1997 over the same period in
1996.
Commission revenue increased by $1,234,674 or 12% during the
first six months of 1997 compared to the same period of 1996.
Net commissions (commission revenue less commission expense)
increased $1,004,249 during the same period. The increase in
commission is directly related to the increase in discount
transaction volume, which increased 48% over the same period for
the prior year. The Capital Markets Division of JBOC completed
an initial public offering transaction during the second quarter
of 1996. This contributed approximately $600,000 to commission
revenue during the period. The Company has discontinued this
division.
Interest revenue increased by $4,212,522 or 68% during the
first six months of 1997 compared to the first six months of
1996. This increase is the result of increased customer margin
balances. Net interest income increased $1,577,746 or 60% during
the first six months of 1997 over 1996.
Trading profits increased $1,577,869 or 206% during the
first six months of 1997 compared to the same period in 1997.
The Company's total expenses increased by $6,347,928 or 25%
during the first six months of 1997 compared to the same period
of 1996. Expenses for the quarter ended June 30, 1997 increased
$3,793,669 or 27% compared to the quarter ended June 30, 1996 and
$4,522,711 or 33% over the trailing first quarter of 1997.
Commission expense increased by $230,425 or 5% to $4,641,703
during the first six months of 1997 compared to the same period
of 1996. However, related commission revenue increased by 12%.
Interest expense increased by $2,634,776 or 75% during the
first six months of 1997 compared to the first six months of
1996. This increase is directly related to the increase in
interest revenue described above.
Salaries and other operational expenses have increased as a
result of the increase in transaction volume and related revenue.
This growth is primarily the result of management's efforts to
expand JBOC's discount division, fueled by increased promotional
expense of 38% over the first six months of the previous year.
During the second quarter the Company also began operations in a
new broker/dealer subsidiary, Stocks 4 Less, Inc. Much of this
promotional expense increase is related to the startup of this
new subsidiary. In a continuing effort to manage costs and
maximize returns on dollars spent, Management will monitor its
customer leads in relation to the advertising dollars being
spent.
Clearing expense increased $368,263 or 36% from the first
six months of 1997 compared to the first six months of 1996.
This increase relates directly to an increase in overall
transaction volume which is up 40% during the first six months of
1997 over 1996.
Bad debts expense increased by $672,137 or 38% to $1,727,964
during the first six months of 1997 compared to the same period
of 1996. The most significant item was a litigation matter that
was settled in the gross amount of $1,500,000.
Liquidity and Capital Resources
The Company's equity to total assets ratio decreased during
the quarter, from 3.7 % to 2.6%. The Company's liquidity and
financial condition remain sound at the end of the second quarter
of 1997.
The increase in cash of $1,941,617 resulted primarily from
cash provided by financing activities of $5,902,530. This cash
was obtained from loans from shareholders in the amount of
$3,400,000 and an increase in short term borrowings of
$2,407,879. Holders of 1,275,000 of the Company's options gave
notice, effective July 7, 1997, to exercise their options into
common stock, thereby increasing equity by approximately
$1,147,500, and reducing the loans from shareholders by the same
amount.
Cash of $3,058,528 was used in operating activities during
the first six months of 1997. The largest use of cash is the
cash and cash equivalents segregated under federal and other
regulations increase of $97,751,936. The cash position of the
company remains strong as the Company liquidated $2,500,000 of
this segregated cash on July 1, 1997.
The largest source of operating cash was provided from net
amounts due to/from customers of $44,666,159. The net amounts
due to/from brokers also contributed over 44 million to the
operating cash of the Company.
The Company used cash of $902,385 for investing activities
in the acquisition of property and equipment.
Recent Expansions and Developments
Trade volumes and revenues continued their significant
growth from the first quarter into the second of 1997. Revenues
for the second quarter of 1997 were $18.2 million, an increase
over the trailing first quarter of $2.6 million or 17%. Total
average daily trades cleared by JBOC increased in June 1997 over
March 1997 by 28%. Of this increase, 79% was due to
correspondent business.
The traditional retail discount business continues to expand
as does JBOC's electronic trading division, JB On-lineO. Sales
of mutual funds and fixed income products continue to grow at
record levels as the company continues to expand its product
base. A new insurance subsidiary was recently formed in
anticipation of offering annuity and other insurance related
products. The Company's branch office system has room for growth
and Management intends to concentrate on increasing the number of
sales professionals in all branch offices by at least 50% over
the next six months. In this way, the Company believes revenues
can be leveraged with minimal increase in operating expenses.
JBOC's on-line business continues to expand, and over 1,000
executions a day are currently being transacted. During the
second quarter of 1997, the Company funded and activated a new
subsidiary, Stocks4Less, Inc. (_S4L_). In order to capitalize on
emerging trends in the electronic brokerage industry, S4L was
established as a separate broker/dealer to provide deep, deep
discount electronic trading services to retail accounts for the
trading of equities and options. S4L offers services through
multiple access points including the Internet (at
http://www.stocks4less.com), direct modem access via a personal
computer, and touch-tone telephones.
The Company continues to build its management infrastructure
to manage its growth. Al Laubenstein, former Compliance Director
of JBOC, was promoted to Executive Vice President of
Administration and Ian Kott, former Director of Operations of
JBOC, was named Chief Operating Officer. Messrs. Laubenstein and
Kott will be involved in overseeing all aspects of day-to-day
operations of JBOC. Additionally, JBOC has added middle
management staff to more efficiently handle operations.
The Company believes that efficient communications and
modern technology are keys to sustaining the Company's growth.
It continues to invest in these areas. Management also believes
that expanding JBOC's trading/market making capabilities will
enable it to internalize more order flow as a consequence of its
increased business. This has become more of an issue for JBOC as
order flow rebates received from wholesalers of securities have
shrunk by significant percentages due to the effect of new
regulatory order handling rules. During 1997, in order to
finance its growth, the Company relied primarily on increased
retained earnings but Management of the Company is now
investigating alternative sources of equity and debt financing.
At a recent meeting of the Board of Directors of the
Company, held in July 1997, Stephen Rubenstein resigned his
position as Chairman of the Board of the Company; Mr. Rubenstein
retains his title as President and Chief Executive Officer,
having negotiated a new three year employment contract which will
take him through April of the year 2000. In his place, Felix
Oeri was named Chairman of the Board of Directors of the Company.
Mr. Oeri is the Chairman of Oeri Finance Inc., the Company's
largest shareholder, and heads the international brokerage
business of JBOC from its branch office in Basel, Switzerland.
Management believes that the Company and its shareholders will be
better served if Mr. Rubenstein is allowed to devote more time to
carrying out the business plan for growing the business.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In the ordinary conduct of business, the Company and/or its
subsidiaries have been named as Defendants in several lawsuits
and arbitration matters or have instituted legal proceedings as
plaintiffs to recover moneys owing. There have been no material
pending legal proceedings other than ordinary routine litigation
incidental to the business. Those which may have a significant
impact on the Company have been disclosed in previous filings.
Two matters previously addressed have been decided as follows:
Beachport Entertainment Corporation vs. JB Oxford & Company, et.
al. LA Superior Court Case No. BC 127 221
In a civil litigation matter filed in May 1995, Plaintiffs
alleged that JBOC had breached an investment banking agreement
entered into by JBOC and Beachport, JBOC had breached fiduciary
duties, and made affirmative misrepresentations to Beachport
concerning the agreement. A jury trial commenced during the
second quarter of 1997. The matter was settled by the parties
after conclusion of the jury trial, but prior to the reading of
any award. Payment of the settlement amount by the Company
resulted in an after tax non-recurring charge of $900,000. The
settlement terms also included the Company purchasing 486,486
shares of Beachport common stock for investment.
Robert F. Smith vs. Reynolds Kendrick Stratton, Inc., William
Stratton, Wm. Michael Reynolds, et. al. NASD Arbitration No. 94-
00519
In an arbitration matter filed in February 1994, the
claimant sought rescission of certain sales in his customer
account and damages of $750,000. This matter was settled by the
parties in July 1997; the settlement did not have a material
impact on the Company's earnings.
Item 2. Changes in Securities
There has been no material modification of ownership rights
of securities holders. The broker/dealer subsidiaries, as part
of their normal broker/dealer activity, have minimum capital
requirements as imposed by regulatory agencies. These
requirements may restrict the payment of dividends.
Item 3. Defaults Upon Senior Securities
There has been no default in payments of the Company.
Item 4. Submission of Matters to Vote of Security Holders
There have been no matters submitted to a vote of security
holders during this reporting period.
Item 5. Other Information
There have been no matters that require disclosure under
this item.
Item 6 Exhibits and Reports on Form 8-K
(a) The following exhibit is filed with this report as required
by Item 601 of Regulation S-K:<PAGE>
Exhibit Description Page
No.
11 Computation of Earnings Per Share 14-15
27 Financial Data Schedule 17
(b) During this quarter, there were no events as required to be
reported on Form 8-K.<PAGE>
Exhibit 11
JB Oxford Holdings, Inc. and Subsidiaries
Computation of Earnings Per Share
(Unaudited)
For The Six Months Ended
June 30,
1997 1996
Primary Earnings Per Share
Net income $1,370,034 $2,330,940
Preferred stock dividends (85,480) (109,698)
Net income for primary earnings $1,284,554 $2,221,242
Weighted average common shares outstanding 10,547,194 8,665,150
Weighted average options outstanding 1,687,935 1,978,753
Stock acquired with proceeds (921,733) (723,481)
Weighted average common shares and
equivalents outstanding 11,313,396 9,920,422
Primary Earnings Per Share $0.11 $0.22
Fully Diluted Earnings Per Share
Net income $1,370,034 $2,330,940
Interest on convertible debentures, net of
income tax 119,376 122,464
Net Income for fully diluted earnings $1,489,410 $2,453,404
Weighted average common shares outstanding 10,547,194 8,665,150
Weighted average options outstanding 1,687,935 1,978,753
Weighted average convertible debentures 4,659,967 4,472,752
Weighted average convertible preferred
stock 2,254,144 4,000,000
Stock acquired with proceeds (810,253) (723,481)
Weighted average shares common and 18,227,507 18,393,174
equivalents outstanding
Fully Diluted Earnings Per Share $0.08 $0.13
Exhibit 11
JB Oxford Holdings, Inc. and Subsidiaries
Computation of Earnings Per Share
(Unaudited)
For The Three Months Ended
June 30,
1997 1996
Primary Earnings Per Share
Net income $105,172 $1,152,843
Preferred stock dividends (21,370) (54,849)
Net income for primary earnings $ 83,802 $1,097,994
Weighted average common shares
outstanding 12,310,095 8,655,205
Weighted average options outstanding 1,699,549 1,986,802
Stock acquired with proceeds (855,973) (732,026)
Weighted avg. common shares and
equivalents outstanding 13,153,671 9,909,981
Primary Earnings Per Share $0.01 $0.11
Fully Diluted Earnings Per Share
Net income $105,172 $1,152,843
Interest on convertible debentures, net
of income tax 59,688 61,739
Net Income for fully diluted earnings $164,860 $1,214,582
Weighted average common shares
outstanding 12,310,095 8,655,205
Weighted average options outstanding 1,699,549 1,986,802
Weighted average convertible debentures 4,660,858 4,472,752
Weighted average convertible preferred
stock 527,473 4,000,000
Stock acquired with proceeds (743,602) (732,026)
Weighted average shares common &
equivalents outstanding 18,342,002 18,382,733
Fully Diluted Earnings Per Share $0.01 $0.07
Pursuant to the requirements of Section 13 of 15(d) of the
Securities Exchange Act of 1934, JB Oxford Holdings, Inc. has
duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JB Oxford Holdings, Inc.
Stephen M. Rubenstein Chief Executive Officer
Michael J. Chiodo Acting Chief Financial Officer
August 13, 1997
<TABLE> <S> <C>
<ARTICLE> BD
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-START> JAN-01-1997 JAN-01-1997
<PERIOD-END> JUN-30-1997 MAR-31-1997
<CASH> 196,339 88,060
<RECEIVABLES> 304,588 265,615
<SECURITIES-RESALE> 0 0
<SECURITIES-BORROWED> 15,048 6,321
<INSTRUMENTS-OWNED> 4,301 10,496
<PP&E> 3,285 3,166
<TOTAL-ASSETS> 523,561 373,658
<SHORT-TERM> 8,528 84
<PAYABLES> 417,185 341,066
<REPOS-SOLD> 0 0
<SECURITIES-LOANED> 81,956 12,437
<INSTRUMENTS-SOLD> 997 77
<LONG-TERM> 9,821 6,421
0 0
0 2000
<COMMON> 129 88
<OTHER-SE> 13,695 11,485
<TOTAL-LIABILITY-AND-EQUITY> 532,568 373,658
<TRADING-REVENUE> 2,342 1,364
<INTEREST-DIVIDENDS> 10,377 4,404
<COMMISSIONS> 11,175 5,130
<INVESTMENT-BANKING-REVENUES> 0 0
<FEE-REVENUE> 177 70
<INTEREST-EXPENSE> 6,149 2,716
<COMPENSATION> 9,423 4,487
<INCOME-PRETAX> 2,285 2,105
<INCOME-PRE-EXTRAORDINARY> 2,285 2,105
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,370 1,264
<EPS-PRIMARY> .11 .13
<EPS-DILUTED> .08 .07
</TABLE>
