18
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______________ TO ____________________
INSTITUTIONAL EQUITY HOLDINGS, INC.
(FORMERLY EUROMED, INC.)
(Exact name of registrant as specified in its charter)
COMMISSION FILE NUMBER 0-27720
<TABLE>
<S> <C> <C>
NEVADA 88-0317700
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5910 North Central Expressway, Suite 1480
DALLAS, TX 75206
(Address of principal executive offices) (Zip Code)
</TABLE>
(214) 237-3223
(Registrant's telephone number, including area code)
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 past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -------------
3,900,245 shares of Common Stock, par value $.01 per share, were
outstanding at October 27, 2000
<PAGE>
FORM 10-QSB
<TABLE>
<CAPTION>
INDEX
PAGE NO.
<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED):
Consolidated Balance Sheets -
September 30, 2000 (unaudited) and December 31, 1999 3
Consolidated Statements of Operations -
Three months and nine months ended September 30, 2000 and
1999(unaudited) 4
Consolidated Statements of Cash Flows -
Nine months ended September 30, 2000 and 1999(unaudited) 6
Notes to Financial Statements 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 11
PART II. OTHER INFORMATION
ITEM 3. CHANGES IN SECURITIES AND USE OF PROCEEDS 14
ITEM 4. OTHER INFORMATION 14
ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K 14
SIGNATURES
</TABLE>
<PAGE>
PART 1 - FINANCIAL INFORMATION
INSTITUTIONAL EQUITY HOLDINGS, INC.
(FORMERLY EUROMED, INC.)
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, December 31,
2000 1999
--------------- ------------
(Unaudited)
<S> <C> <C>
Current Assets
Cash $ 72,445 $ 315,904
Trading Securities, at market 1,833,022 548,736
Receivables
Commissions 68,173 516,762
Good Faith Deposits 423,379 150,000
Other, net of allowance for doubtful accounts of
$225,000 and $25,000 in 2000 and 1999, respectively 251,831 56,623
Prepaid Expenses 21,273 301,413
------------ ------------
Total Current Assets 2,670,123 1,889,438
Furniture and Equipment, net of accumulated depreciation
of $382,606 and $333,543, respectively 377,339 382,409
Restricted Investment, at market - 1,304,043
Goodwill, net of accumulated amortization of $4,834 in 2000 1,155,501 -
Other Assets 109,380 259,185
------------ ------------
Total Assets $ 4,312,343 $3,835,075
============ ============
</TABLE>
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(FORMERLY EUROMED, INC.)
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
--------------- -------------
(Unaudited)
<S> <C> <C>
Current Liabilities
Cash Overdraft $ - $ 31,649
10% Convertible Debenture 650,000 -
Loans Payable 200,000 527,170
Liability for Borrowed Stock 1,081,850 -
Due to Broker 95,282 96,594
Securities Sold, not yet purchased - 25,034
Accounts Payable and Accrued Liabilities 1,652,574 1,106,333
------------ ------------
Total Current Liabilities 3,679,706 1,786,780
Loan Subordinated to Claims of General Creditors - 150,000
Restricted Investment Loan 1,668,063 1,304,043
Due to Related Parties 370,000 245,000
------------ ------------
Total Liabilities 5,717,769 3,485,823
------------ ------------
Stockholders' Equity (Deficit)
Undesignated Preferred Stock, par value $.01 per share;
3,190,000 shares authorized, none outstanding - -
10% Designated Series A Preferred Stock, par value $.01 per
share; 1,060,000 shares authorized, issued and outstanding 10,600 10,600
10% Designated Series B Preferred Stock, par value $.01 per
share; 750,000 shares authorized; 75,000 and 37,500 shares
issued and outstanding in 2000 and 1999, respectively 750 375
Common Stock, par value $.01 per share; 20,000,000 shares
authorized; 3,923,245 and 2,312,000 issued and
outstanding, respectively 39,232 23,120
Additional paid-in capital 5,312,313 3,778,234
Retained (deficit) (6,636,071) (3,330,827)
------------ ----------
(1,273,176) 481,502
Less Treasury Shares, at cost (132,250) (132,250)
------------ ------------
Total Shareholders' Equity (Deficit) (1,405,426) 349,252
------------ ------------
Total Liabilities and Shareholders' Equity (Deficit) $ 4,312,343 $3,835,075
============ ============
</TABLE>
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(FORMERLY EUROMED, INC.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2000 1999 2000 1999
----------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues
Commissions $ 124,661 $ 1,202,633 $3,303,949 $ 4,819,302
Gain (loss) on firm securities
accounts 499,236 (151,949) (36,215) 504,023
Underwriting and syndicate income 469,662 577,666 1,451,378 777,676
Other income 11,249 - 63,041 -
Interest income 5,205 2,078 51,096 2,492
------------ ------------- ------------- -------------
Total Revenue 1,110,013 1,630,428 4,833,249 6,103,493
Costs and Expenses
Commissions paid to other broker-
dealers 35,226 1,121,953 418,879 2,568,857
Employee compensation 439,321 175,486 4,452,501 2,217,230
General and administrative expenses 1,027,661 1,460,876 2,922,205 2,740,912
Interest expense 54,934 56,845 174,588 689,743
------------ ------------- ------------- -------------
(Loss) From Continuing
Operations Before Preferred
Stock Dividend (447,129) (1,184,732) (3,134,924) (2,113,249)
Preferred stock dividend (56,750) (5,229) (170,320) (5,229)
Federal income tax expense - - - -
------------ ------------- ------------- -------------
Net (Loss) From Continuing
Operations (503,879) (1,189,961) (3,305,244) (2,118,478)
Discontinued operations
Operating (loss) - - - -
Minority interest in operating
(loss) of subsidiary - - - (16,510)
Gain on sale of discontinued
operations - - - 15,047
------------ ------------- ------------- -------------
Net (Loss) $ (503,879) $(1,189,961) $ (3,305,244) $(2,119,941)
============ =========== ============= ===========-
Net (Loss) per share
Continuing operations $ (.16) $ (.47) $ (1.24) $ (.83)
Discontinued operations - - - -
Gain on sale of discontinued
operations - - - -
------------ ------------- ------------- -------------
$ (.16) $ (.47) $ (1.24) $ (.83)
============ ============= ============ =============
Pro forma weighted average number
of shares of common stock
outstanding 3,199,220 2,542,000 2,674,088 2,542,000
============ ============= ============= =============
</TABLE>
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(FORMERLY EUROMED, INC.)
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
--------------------------------------
2000 1999
--------------- --------------
<S> <C> <C>
Cash Flow from Operating Activities $ (3,305,244) $ (2,119,941)
Net (loss)
Adjustment to reconcile net (loss) to net cash flow
from operating activities
Depreciation and amortization 72,206 30,300
Minority interest in income of subsidiary - 16,511
Change in restricted investment loan 364,020 -
Loss on sale of assets 25,601 -
Capital contributed by officer 74,250 -
Issuance of stock warrants - 575,547
Changes in assets and liabilities
Trading Securities 1,401,607 (921,422)
Receivables (19,998) (436,011)
Prepaid expenses 295,766 (424,257)
Other assets 149,804 (34,570)
Cash overdraft (31,649) -
Due to brokers (1,312) (86,586)
Securities sold, not yet purchased (25,034) 894,944
Accounts payable and accrued liabilities 401,596 265,169
------------- --------------
Net Cash Flow (Used) By Operating Activities (598,387) (2,240,316)
------------- ---------------
Cash Flow From Investing Activities
Equipment purchases (161,002) (145,161)
Proceeds from sale of assets 73,100 -
------------- --------------
Net Cash Flow (Used) By Investing Activities (87,902) (145,161)
------------- --------------
Cash Flow From Financing Activities
Acquisition of restricted investment - (1,423,978)
Payment of loan (527,170) 358,683
Proceeds from loans 200,000
Debenture Borrowing 650,000 -
Advances from related parties 125,000 -
Increase in loans subordinated to claims of creditors - 1,523,978
Repayment of subordinated loans (150,000) -
Sale of common stock 70,000 -
Sale of preferred stock 75,000 1,849,897
------------- --------------
Net Cash Flow Provided By Investing Activities 442,830 2,308,580
------------- --------------
(Continued)
</TABLE>
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(FORMERLY EUROMED, INC.)
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
--------------------------------------
2000 1999
--------------- -------------
<S> <C> <C>
Net (Decrease) In Cash $ (243,459) $ (76,897)
Cash at the Beginning of the Period 315,904 118,130
------------- --------------
Cash at the End of the Period $ 72,445 $ 41,233
============= ==============
Cash Paid During the Year:
Interest $ 124,672 $ 118,337
============= ==============
Income Taxes $ - $ -
============= ==============
Supplemental Schedule of Non-Cash
Investing and Financing Activities
Liability for Borrowed Stock $ 1,081,850 $ -
Trading Securities (1,081,850) -
Goodwill (1,160,335) -
Prepaid Expenses (15,626) -
Assumed Liabilities 144,645
Common Stock 13,200 -
Paid-In Capital 1,018,116
-------------
$ - $ -
============= ==============
</TABLE>
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(FORMERLY EUROMED, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 2000
NOTE 1: BUSINESS
Swiss Nassau Corporation was incorporated on May 17, 1994 in the state of
Nevada, United States of America, with authorized and issued share capital of
1,000 shares of common stock with no par value (the "common stock") and on June
15, 1994, all authorized shares of Swiss Nassau Corporation were issued. On
October 20, 1995, Swiss Nassau Corporation changed its name into EuroMed, Inc.
and increased its authorized shares to 20,000,000 shares of Common Stock with a
new par value of $0.01 per share and 5,000,000 preferred shares with a par value
of $0.01 per share. On October 20, 1995, EuroMed, Inc. effected a 150 for 1
stock split of its Common Stock. On April 23, 1999, EuroMed, Inc. changed its
name to Institutional Equity Holdings, Inc. (the "Company" or "IEH").
In November 1995, the Company began acquiring pharmaceutical companies operating
exclusively in Europe. The Company completed the acquisitions using the net
proceeds from the sale of 1,150,000 shares of its common stock (issue price was
$6.50 per share) in March 1996, and the issuance of 2,700,000 shares of its
common stock. Subsequent to the acquisitions, laws relating to the pricing of
pharmaceuticals in Europe were changed and as a result the operations of the
pharmaceutical companies owned by the Company were severely impacted, resulting
in significant operating losses. The Company realized approximately $1,146,000
in cash and cancelled 2,700,000 shares of its common stock upon sale of its
European subsidiaries in 1997.
The Company had no business activities in the calendar year of 1998, except that
on November 6, 1998, the Company's Board of Directors approved and executed the
"Agreement and Plan of Reorganization" by and among the Company, Institutional
Equity Corporation ("IEC", a wholly owned subsidiary of the Company and formerly
known as Redstone Acquisition Corp.) and Redstone Securities, Inc. ("Redstone"),
a licensed broker and dealer of securities.
Effective February 16, 1999, Redstone was merged into the newly organized
subsidiary IEC. The Company issued 600,000 shares of its Common Stock to the
three principals of Redstone, Thomas Laundrie, Gary Prucell, and Richard Belz
(collectively referred to as the "Redstone Shareholders") and was obligated to
issue an additional 500,000 shares (the "Restricted Shares") upon the market
price of the Company's Common Stock reaching certain price levels or IEC
reporting certain levels of net income. Notwithstanding the price levels of the
Common Stock or net income performance levels, the Restricted Shares fully vest
on February 16, 2002. Redstone has been a registered broker dealer since 1988.
The Redstone Shareholders agreed to terminate their relationship with the
Company in February 2000 subject to certain compensation payments, to forego the
collections of the Company's subordinated notes due the Redstone Shareholders,
to assume an investment in a certain security at its book value and to modify
the number of shares of the Company's common stock from 1,100,000 to 500,000
shares of fully vested common stock. The Company has a right to repurchase these
shares of its common stock at a price of $2.00 per share as follows:
<TABLE>
<S> <C> <C>
Number of Redemption
Shares Period
100,000 Calendar year 2000
100,000 Calendar year 2001
300,000 On or before February 16, 2002
</TABLE>
(Continued)
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(FORMERLY EUROMED, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 2000
NOTE 1: BUSINESS (CONTINUED)
The termination of the relationship with the Redstone Shareholders is reflected
in the consolidated financial statements for the year ended December 31, 1999.
On August 18, 2000, IEH acquired all of the members' ownership interests in
First Atlanta Securities, L.L.C.("FAS"), a Georgia limited liability company, in
exchange for 1,300,000 shares of IEH's $.01 par value, common stock. FAS is a
full service brokerage firm, located in Atlanta, Georgia. The acquisition of FAS
by IEH will be accounted for as a purchase, and the purchase transaction is set
forth below:
<TABLE>
<S> <C> <C>
First Atlanta -
Liabilities Assumed $ 284,807
Assets Purchased (175,449)
-------------
Net Liabilities Assumed 109,358
IEH's Acquisition Costs 35,287
1,300,000 Shares of IEH's $.01 Par Value
Common Stock at $.7813 Per Share 1,015,690
-------------
Goodwill Recognized $ 1,160,335
=============
</TABLE>
The goodwill will be amortized over a twenty (20) year period.
IEH is a holding company whose operating subsidiaries are IEC and FAS, who are
full service brokerage firms engaged in the purchase and sale of securities from
and to the public and for its own account and investment banking activities. The
Company operates in one industry segment, the financial services industry.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 regulations S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation of the results of
operations for the periods presented have been included.
The financial data at December 31, 1999 is derived from audited financial
statements, which are included in the Company's Form 10-KSB and should be read
in conjunction with the unaudited financial statements and notes thereto.
Interim results are not necessarily indicative of results for the full year.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
<PAGE>
INSTITUTIONAL EQUITY HOLDINGS, INC.
(FORMERLY EUROMED, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 2000
NOTE 3: NET LOSS PER COMMON SHARE
Basic (loss) per common share has been calculated using the weighted average
number of shares of common stock outstanding during the periods. Diluted (loss)
per common share is not disclosed because the effect of the exercise of the
common stock warrants and options would be anti-dilutive.
NOTE 4: NET CAPITAL REQUIREMENTS
The NASD's net capital rule requires that broker/dealers maintain a designated
minimum level of financial capital. The net capital rule places limits on
certain of the Company's operations such as underwriting activities,
market-making and other principal trading activities. If the Company falls below
the minimum net capital required, the Company could be forced to suspend
activities until additional capital is obtained. On June 26, 2000, the Company
notified the NASD of its violation of the net capital requirements. The stated
basis for this action was the failure by the Company to comply with certain NASD
rules regarding the net capital requirements of a $100,000 for a broker dealer.
In response, the Company re-capitalized its position, and the Company notified
the NASD that it was in compliance with the NASD net capital requirements as of
August 11, 2000.
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO
THREE MONTHS ENDED SEPTEMBER 30, 1999
Revenues for the three months ended September 30, 2000, declined 32% to
$1,110,013 compared to $1,630,428 for the three months ended September 30, 1999.
On Monday June 26, 2000, the Company notified the NASD that it did not meet the
minimum net capital requirement of a broker dealer. At that date the Company
voluntarily ceased its brokerage operations, except for executing sale orders
for its customers. The severe reduction in brokerage commissions (89% in the
three month period ended September 30, 2000, as compared to the same three month
period in 1999) was attributable to the volatility of the stock market, the
closing of three offices in the three month period ended September 30, 2000 and
the temporary ceasing of brokerage operations on June 26, 2000. The Company
realized a $499,236 gain on security trading in the three months ended September
30, 2000 compared to a $151,949 loss in the three months ended September 30,
1999, primarily due to the decline of approximately $10 per share on 53,662
shares of borrowed stock.
Expenses for the three months ended September 30, 2000, declined 45% to
$1,557,142 compared to $2,815,160 for the three months ended September 30, 1999.
The following summarizes the changes in expenses:
<TABLE>
<CAPTION>
2000 Percentage
Percentage of Total Expenses Increase (Decrease)
Three Months Ended September 30, In Expenses
2000 1999
<S> <C> <C> <C>
------------- ---------
Employee Compensation 28% 7% 150%
Commissions Paid to Other Broker-Dealers 3 40 (97)%
----- -----
Total Compensation Expense 31 47 (63)%
General and Administrative Expenses 65 51 (30)%
Interest Expense 4 2 (3)%
----- -----
Total Expenses 100% 100% (45)%
=== =====
</TABLE>
Overall expenses decreased 45% in 2000, as compared to 1999. The most
significant decrease in expenses were the 63% decrease in compensation expense
for the three months ended September 30, 2000, compared to the three months
ended September 30, 1999. These expenses are directly related to commission
revenue and underwriting and syndicate income, which reflected a 67% decline for
the three months ended September 30, 2000. General and administrative expenses
decreased due to a reduction in the number of active offices and the firm was
unable to trade securities from June 26, 2000, to August 11, 2000. For the three
months ended September 30, 2000, the Company reported a net loss of $503,879
compared to a loss of $1,189,961 for the three months ended September 30, 1999.
The decrease in the loss was the result of the reduction in revenues by 32%
offset by a 45% decline in expenses for the three months ended September 30,
2000 as compared to the three months ended September 30, 1999.
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1999
Revenues for the nine months ended September 30, 2000, decreased 21% to
$4,833,249 compared to $6,103,493 for the nine months ended September 30, 1999.
On June 26, 2000, the Company notified the NASD that it did not meet the minimum
net capital requirement of a broker dealer. At that date the Company voluntarily
ceased its brokerage operations, except for executing sale orders for its
customers. The reduction in brokerage commissions was attributable to the
closing of three offices in the period ended September 30, 2000, and the
temporary ceasing of brokerage operations from June 26, 2000, until August 11,
2000. The Company realized a $36,215 loss on security trading in the nine months
ended September 30, 2000 compared to a $504,023 gain in the nine months ended
September 30, 1999, primarily due to losses on stocks initially taken public by
the Company and which were being held in its investment portfolio.
Expenses for the nine months ended September 30, 2000, decreased 3% to
$7,968,173 compared to $8,216,742 for the nine months ended September 30, 1999.
The following summarizes the changes in expenses:
<TABLE>
<CAPTION>
2000 Percentage
Percentage of Total Expenses Increase (Decrease)
Nine Months Ended September 30, In Expenses
2000 1999
------------- ---------
<S> <C> <C> <C>
Employee Compensation 56% 27% 101%
Commissions Paid to Other Broker-Dealers 5 31 (84)%
----- -----
Total Compensation Expense 61 58 2%
General and Administrative Expenses 37 33 6%
Interest Expense 2 9 (74)%
----- -----
Total Expenses 100% 100% (3)%
===== =====
Total Expenses as a Percentage of
Revenues 164% 135%
====== ======
</TABLE>
Overall expenses decreased 3% in 2000, as compared to 1999. General and
administrative expenses increased 6% due to increased office rent on newly
leased office space and an increase in the number of offices as compared to 1999
and an increase in professional fees.
In March 1999, the Company entered into an agreement with an individual for
delivery to the Company of a stock certificate representing 66,250 shares of
common stock of Westower Corporation (which has subsequently converted into
119,912 shares of Spectrasite Holdings, Inc.). The agreement included a
provision that the individual was to receive compensation equal to five percent
(5%) of the average daily closing sales price of the common stock and warrants
to purchase 414,062 shares of the Company's common stock at an exercise price of
$2.00 per share (estimated fair value of the warrants at date of issue was
($571,406). The $571,406 of compensation to the individual was included in
interest expense for the nine months ended September 30, 1999.
For the nine months ended September 30, 2000, the Company reported a net loss of
$3,305,244 compared to a loss of $2,119,941 for the nine months ended September
30, 1999. The increase in the loss is attributable to the 21% decline in
revenues in 2000 and, only a the 3% decrease in operating expenses in 2000.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash used in operations was $598,387 for the nine months ended September 30,
2000, compared with cash used in operations of $2,240,316 for the nine months
ended September 30, 1999.
To finance the operating losses, the Company sold 53,000 shares of Spectrasite
Holdings, Inc.'s common stock for an aggregate value of approximately
$1,092,000. The proceeds from the sale of these shares were used to repay a
$407,170 loan from a brokerage firm and to finance current operations. The
shares of Spectrasite Holdings, Inc. are owned by an individual and were loaned
to the Company. The Company must return these shares to the individual;
therefore, the Company will be required to purchase 53,000 shares of Spectrasite
Holdings, Inc. in the public market. The trading price of these shares has
ranged from a high of $28.75 (June 30, 2000) to a low of $11.06 (January 3,
2000) with a trading price of $18.56 on September 30, 2000. The Company also
sold 70,000 shares of its common stock for $1.00 per share and 37,500 shares of
its Series B Preferred Stock for $2.00 per share.
On June 26,2000, the Company voluntarily notified NASD that it did not meet the
minimum net capital requirements of a broker dealer. At that time the Company
ceased its brokerage operations, except for executing sale orders for its
customers. The management of the Company immediately began to develop and
implement a plan to raise sufficient capital to allow the Company to resume its
normal business activities and to be in compliance with the NASD net capital
requirements. Subsequent to June 26, 2000, the Company exchanged 221,245 shares
of its common stock for 332,708 shares of common stock in publicly traded
companies with a fair value of approximate $300,000. Subsequent to obtaining the
$300,000 in publicly traded common stocks the Company notified the NASD that it
was in compliance with the NASD net capital requirements as of August 11, 2000.
The Company's management is currently attempting to extend this exchange program
to other publicly traded companies to raise additional capital.
In September 2000, the Company authorized the sale of up to $1,250,000 of 10%
convertible debentures and the issuance of 1,250,000 common stock purchase
warrants, with an exercise price of $1.00 per share. As of September 30, 2000,
the Company had received $650,000 of proceeds from the sale of the debentures.
The debentures are due 180 days after issuance.
For the nine months ended September 30, 2000, the Company expended $161,002 for
the purchase of furniture and equipment.
The Company requires additional capital to continue its business operations.
There is no guarantee that the Company will be successful in obtaining
sufficient capital to continue operations.
SAFE HARBOR STATEMENT
Certain statements in this Form 10-QSB, including information set forth under
Item 2 Management's Discussion
and Analysis of Financial Condition and Results of Operations constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1955 (the Act). The Company desires to avail itself of
certain "safe harbor" provisions of the Act and is therefore including this
special note to enable the Company to do so. Forward-looking statements in this
Form 10-QSB or hereafter included in other publicly available statements issued
or released by the Company involve known and unknown risks, uncertainties and
other factors which could cause the Company's actual results, performance
(financial or operating) or achievements to differ from the future results,
performance (financial or operating) or achievements expressed or implied by
such forward-looking statements. Such future results are based upon management's
best estimates based upon current conditions and the most recent results of
operations.
<PAGE>
PART II - OTHER INFORMATION
ITEM 3: CHANGES IN SECURITIES AND USE OF PROCEEDS
In March 2000, the Company sold 70,000 shares of its common stock to an
individual for $1.00 per share. In April 2000, the Company sold 37,500 shares of
its Series B Preferred Stock for $2.00 per share. The proceeds have been used to
fund operations of the Company.
In the three month period ended September 30, 2000, the Company issued common
stock as follows:
<TABLE>
<CAPTION>
Number of
Transaction Description Common Shares Value
<S> <C> <C> <C>
Stock Swaps 221,245 $ 300,000
Acquisition of First Atlanta Securities, L.L.C. 1,300,000 1,160,335
Consulting Services 20,000 15,626
------------ ------------
1,541,245 $ 1,475,961
============ ============
</TABLE>
ITEM 4: OTHER INFORMATION
None
ITEM 5: EXHIBITS AND REPORTS ON FORM 8-K
(a) Number Exhibit Description
27.1 Financial Data Schedule.(*)
* Filed herewith.
(b) Reports of Form 8-K:
Form 8-K filed on September 15, 2000, in connection with
First Atlanta Securities, L.L.C.acquisition.
<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.
Institutional Equity Holdings, Inc.
Dated:
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<S> <C> <C>
Signature Title
/s/: Robert A. Shuey, III President and
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Robert A. Shuey, III Chief Executive Officer
/s/: Michael E. Vinez
--------------------------------------------------- Chief Financial Officer
Michael E. Vinez
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Exhibit Index
Exhibit No. Description
27.1 Financial Data Schedule.(*)
(*) Filed herewith
