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U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended September 30, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Transition Period From __________ to __________
Commission File Number 0-18974
Jordan American Holdings, Inc.
(Exact name of registrant as specified in its charter)
Florida 65-0142815
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
1875 Ski Time Square, Suite One, Steamboat Springs, CO 80487
(Address of principal executive offices)
(800) 879-1189
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of Each Class Name of Each Exchange on Which Registered
None None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, $.001 Par Value
(Title of Class)
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 filing requirements
for the past 90 days. Yes X No
As of September 30, 1997, 10,558,876 shares of the registrant's common stock
were issued and outstanding.
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JORDAN AMERICAN HOLDINGS, INC.
AND SUBSIDIARIES
(NASDAQ: JAHI)
Table Of Contents
PART I
<TABLE>
<CAPTION>
Page
<S> <C>
ITEM 1 Financial Information
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
ITEM 2 Management's Discussion and Analysis
Operational Notes 8
Risk Factors, Trends & Uncertainties 10
Results of Operations 12
Liquidity and Capital Resources 13
</TABLE>
2
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PART I.
ITEM 1.
FINANCIAL INFORMATION
JORDAN AMERICAN HOLDINGS, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(unaudited)
September 30, December 31,
1997 1996
ASSETS
<S> <C> <C>
Cash and cash equivalents $592,769 $1,725,056
Marketable securities 588,794 495,625
Investment advisory fees receivable, net 189,663 92,796
Receivable from clearing broker 98,783 102,999
Deposit with clearing broker 25,000 25,000
Prepaid expenses and other current assets 93,146 42,954
Receivable from affiliates and officer 61,499 139,250
Notes receivable 938,000 946,175
Property and equipment, net 226,536 189,901
Total Assets $2,814,190 $3,759,756
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $206,096 $290,030
Deferred investment advisory fees 179,349 213,942
Preferred stock dividend payable 60,000 0
Total Liabilities $445,445 $503,972
Stockholders' equity:
8% cumulative, convertible, non-voting
preferred stock, $0.01 par value;
authorized 5,000,000 shares; 3,000,000
shares issued and outstanding 30,000 30,000
Common stock, $0.001 par value; authorized
20,000,000 shares; 10,558,876 shares
issued and outstanding at September 30,
1997; 10,678,376 shares issued and
outstanding at December 31, 1996 10,559 10,678
Additional paid-in capital 4,699,191 4,930,202
Treasury stock (95,331) 0
Accumulated deficit (2,275,674) (1,715,096)
Total stockholders' equity $2,368,745 $3,255,784
Total liabilities and
stockholders' equity $2,814,190 $3,759,756
</TABLE>
See accompanying notes to consolidated financial statements.
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JORDAN AMERICAN HOLDINGS, INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
REVENUES
Investment advisory fees $493,052 $195,917 $836,514 $1,430,497
Commission income 98,960 88,394 279,497 319,862
Total revenues $592,012 $284,311 $1,116,011 1,750,359
Selling, general and
administrative expenses 634,237 353,932 1,550,165 1,557,934
Operating income (loss) ($42,225) ($69,621) ($434,154) 192,425
OTHER INCOME (EXPENSES)
Interest and dividend income (expense) 27,685 38,731 105,341 110,522
Realized gain (loss) from
investing and trading (318,901) 40,248 (299,293) (5,388)
Unrealized gain (loss) from
investing and trading 146,897 84,031 112,586 120,838
Loss on disposal of land and building -- (1,947) -- (10,288)
Total other income (expense), net ($144,319) $161,063 ($81,366) 215,684
Net income (loss) ($186,544) $91,442 ($515,520) $408,109
Dividends on preferred stock 60,000 60,000 180,000 180,000
Net income (loss) attributable to
common stock ($246,544) $31,442 ($695,520) $228,109
Net income (loss) per common share
and share equivalent attributable
to common stock ($0.02) $0.00 ($0.07) $0.02
Weighted average number of share and
share equivalents outstanding 10,544,800 10,700,115 10,605,999 10,773,785
</TABLE>
See accompanying notes to consolidated financial statements.
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JORDAN AMERICAN HOLDINGS, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1997 1996
<S> <C> <C>
Cash flows--operating activities
Net income (loss) from continuing operations ($515,520) $408,109
Adjustments to reconcile net income (loss) to
cash provided by (used in) operating activities:
Depreciation 17,884 17,758
Unrealized (gain) loss from investing and trading (112,586) 5,388
Realized (gain) loss from investing and trading 299,293 (120,838)
Loss on disposal of land, building and equipment -- 10,288
Issuance of common stock as compensation 11,563 --
Changes in operating assets and liabilities:
Investment advisory fees receivable (96,867) 257,933
Trading marketable securities (279,876) (343,675)
Prepaid expenses and other current assets (50,192) (102,022)
Accounts payable and accrued expenses (83,934) 107,592
Deferred investment advisory fees (34,593) (11,052)
Notes receivable 8,175 --
Other receivables 81,967 --
Net cash provided by (used in)
operating activities ($754,686) $229,481
Cash flows--investing activities
Capital expenditures (54,519) (16,498)
Net cash provided by (used in)
investing activities ($54,519) ($16,498)
Cash flows--financing activities
Repurchase of common stock (203,082) (231,220)
Net proceeds from issuance of common stock -- 12,300
Proceeds from sale of land and building -- 99,708
Repayment of note payable -- (373,121)
Payment of preferred dividend (120,000) (120,000)
Net cash provided by (used in)
financing activities ($323,082) ($612,333)
Net increase (decrease) in cash
and cash equivilents ($1,132,287) ($399,350)
Cash and cash equivalents, beginning of period 1,725,056 2,424,806
Cash and cash equivalents, end of period $592,769 $2,025,456
Supplemental disclosure:
Interest paid $1,304 $182
</TABLE>
See accompanying notes to consolidated financial statements.
5
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Notes to Consolidated Financial Statements (Unaudited)
In the opinion of management, the accompanying consolidated financial
statements contain all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the balance sheets of Jordan
American Holdings, Inc. (Company or JAHI) and its broker/dealer subsidiary,
IMPACT Financial Network, Inc. (IMPACT), formerly known as Management
Securities, Inc., as of September 30, 1997, and December 31, 1996, and the
results of its operations for the three months and nine months ended
September 30, 1997 and 1996, and the results of its cash flows for the nine
months ended September 30, 1997 and 1996, in accordance with generally
accepted accounting principles. The results for interim periods are not
necessarily indicative of results for a full year. (Please see Management's
Discussion and Analysis below.)
Percentage of assets investment advisory fees, for which refunds may
be due to clients, are billed in advance and are deferred and amortized into
income over the period in which services are performed. Investment advisory
fees based on a percentage of the annual increase (performance billings) in
the market value of a client's portfolio, including interest and dividends,
are fully recognized at the contract anniversary date after the period of
management. During the third quarter of 1997, JAHI began serving as
investment advisor to the IMPACT Management Growth Portfolio (Portfolio), an
open-end investment company registered with the Securities and Exchange
Commission. Fees for management of the Portfolio are accrued daily and paid
to JAHI on a monthly basis. Management fee compensation which is due to sales
representatives is accrued when such fees are billed and/or earned and is
paid to sales representatives no later than quarterly.
Asset management contracts are generally terminable upon written
notice from the client(s) or the Company, and percentage of assets management
fees billed in advance are refundable on a pro-rata basis. For additional
information regarding the Company's business operations and policies, a copy
of disclosure document Form ADV, Part II is available without charge upon
written request to the Company.
The Company develops prospective investment advisory clients and
investors through seminars, money shows, television and radio appearances,
direct contact, its web site (www.jahi.com), sales representatives, and
referrals from clients, securities broker-dealers and other sources.
Prospective clients receive Form ADV, Part II, as the Company's disclosure
document and provide information about themselves, their investment
experience, and their net worth through new account forms and other methods.
Approximately 80% of JAHI's clients maintain their brokerage accounts
with IMPACT, a member of the National Association of Securities Dealers, Inc.
(NASD) and the Securities Investor Protection Corporation (SIPC). IMPACT is
compensated for securities transactions on behalf of the Company's managed
accounts by receipt of commissions. IMPACT does not hold funds or securities
for clients and does not have custody of accounts for any clients of the
Company. IMPACT currently executes orders through Pershing & Co., a division
of Donaldson, Lufkin, & Jenrette, a securities corporation. Pershing, a
member of the SIPC, acts as clearing house and custodian for the majority of
the Company's managed accounts and processes all confirmations and monthly
statements for JAHI clients who choose to maintain their accounts with
IMPACT.
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Commission income is recognized on a settlement date basis, which
does not differ materially from the trade date basis of accounting.
Marketable securities consist primarily of corporate stocks and other
securities held in Company investment accounts. Realized and unrealized
gains or losses result from the trading of securities and stock index futures
contracts in Company investment accounts.
Net income (loss) per share and share equivalent is based upon the
weighted average number of share and share equivalents outstanding during the
period. The calculations ignore common stock equivalent shares when their
inclusion in such calculations would have been anti-dilutive.
In February 1993, JAHI completed a $3 million private placement of
750,000 units. Each unit is comprised of four shares of 8% cumulative
convertible non-voting preferred stock (Preferred Stock) and one share of
Common Stock. The Preferred Stock is convertible at the rate of one share of
Common stock for each $3.50 in face amount of Preferred Stock converted. The
face amount equals the initial offering price of $1.00 per share. If at any
time the closing bid price of JAHI Common Stock exceeds $5.25 per share for
a period of thirty consecutive trading days, the Company may, upon thirty
days, written notice, convert the Preferred Stock to Common Stock using the
above conversion rate. If the conversion of Preferred Stock to Common Stock
occurred, the Company would then be relieved of $240,000 in annual preferred
dividend payments to the holders of the Preferred Stock.
Preferred stock dividends are normally paid semi-annually as of
June 30 and December 31 of each year. At the request of the holder of the
preferred stock, the Company agreed to pay the first semi-annual dividend of
$120,000 on July 31 of each year and the second semi-annual dividend of
$120,000 on November 30. This arrangement was agreed to by both parties to
assist the holder of the preferred stock in its cash flow needs related to
its charitable giving as a private foundation. This arrangement has no
material impact on the annual operations and/or earnings of the Company.
The Company is not a party in any material litigation, and management
has no knowledge of any threatened material litigation against the Company.
The Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, Accounting for Stock Based
Compensation (SFAS 123), which is effective for fiscal years beginning after
December 15, 1995. SFAS recommends, but does not require, measuring
compensation cost of stock options at the grant date and recognizing the
expense over the service period. If the Company does not change its
accounting method, SFAS 123 requires, at a minimum, disclosure of the pro
forma impact on net income and net earnings per share. The Company has
determined that it will not change from its current method of accounting, but
will make the disclosures required by SFAS 123.
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These interim period consolidated financial statements, including the
notes thereto, are condensed and do not include all disclosures required by
generally accepted accounting principles. Such interim period consolidated
financial statements should be read in conjunction with the Company's
consolidated financial statements which are included in the Company's 1996
Form 10-KSB which is contained in the Company's 1996 Annual Report to
shareholders and is available without charge upon request to JAHI Investor
Relations, 1875 Ski Time Square, Suite One, Steamboat Springs, Colorado,
80487, (800) 879-1189; Fax: (970) 879-1272.; E-mail: [email protected]
PART I, ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
JORDAN AMERICAN HOLDINGS, INC.
AND SUBSIDIARIES
Information found in this report contains forward-looking
implications which may differ materially from actual results due to the
success, or lack thereof, of JAHI's management decisions, marketing and sales
effectiveness, investment decisions, and the management of clients' stock
portfolios and pooled investments as influenced by market conditions and
other factors. There can be no guarantee that the forward-looking potentials
discussed and/or referenced in this report will have any impact, positive or
negative, upon the earnings and/or operations of the Company.
Operational Notes
During 1996, the Company formed a joint venture with IMPACT Financial
Network, a financial services firm which markets the investment advisory
services of the Company. During the third quarter of fiscal 1997, the
Company acquired IMPACT Financial Network as well as its future revenues,
which were formerly due to its founder, Mr. Ronald Stiller, in order to
increase the potential benefit to the Company which a financial services and
marketing firm may be able to achieve from its operations and revenues in are
as such as insurance, estate planning, mortgage services and charitable
gifting, as well as asset management. The Company hired Mr. Stiller, a
current member of the Company's Board of Directors, to serve on a full-time
basis as JAHI's National Director of Sales & Marketing.
On July 1, 1997, the registration statement of the Portfolio became
effective with the Securities and Exchange Commission (SEC). While there can
be no guarantee that the Portfolio will be profitable, the Company believes
that assets will be raised for the Portfolio over the next one to two years,
which may increase the Company's revenues. Additionally, during the third
quarter of 1997 the Company formed IMPACT Administrative Services, Inc.
(IASI), which is expected to serve as administrator and transfer agent for
the Portfolio, from which IASI will receive annual administrative revenues of
$165.00 per account. There can be no guarantee, however, that the hiring of
Mr. Stiller or the formation of IASI will necessarily result in improved
revenues or improved net income to the Company.
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The Company recently announced the appointment of Ms. Terri Williams
Abady as a Director of the Board. Ms. Abady founded Digital Post & Graphics,
Inc., which specializes in video graphics, editing, and special effects for
advertising and corporate communications. She served as President of the
graphic design/film production company from its formation in 1987 until its
sale in April of 1997. Ms. Abady was actively involved in all aspects of
commercial television sales and network and independent broadcasting
management. From 1976 until founding her own company in 1987, she served in
a series of television sales and management positions, culminating in Station
Manager of KTZZ TV in Seattle, Washington.
JAHI also recently announced the election of Mr. Charles R. Clark by
the Board of Directors as the Company's new Chief Executive Officer, a
position formerly held by Mr. Neal Jordan. Mr. Clark, formerly Chief
Operating Officer of JAHI, will continue to serve as Senior Assistant
Portfolio Manager in conjunction with Mr. Jordan, who the Board appointed as
the Company's Chief Investment Officer. The Board believes this corporate
management restructuring, which became effective October 1, 1997, will allow
Mr. Jordan to focus his efforts primarily upon portfolio management for the
Company's clients. Mr. Clark has been with JAHI since October of 1991.
The Company was investigating the possible acquisition of Synergy,
Inc. (Synergy), a small insurance firm based in the Pittsburgh, Pennsylvania
area. Management of the Company no longer believes that the acquisition of
Synergy would prove materially beneficial to JAHI operations and
shareholders.
The Company plans to continue expenditures for marketing and related
sales and is pursuing business plans for asset gathering and creating
exposure of the Company's common stock and warrants through seminars,
national investment shows, advertising, marketing materials, joint ventures
with other professionals, and other means.
With the Company's current mix of management fee accounts
(approximately 60% of accounts pay performance based fees; approximately 40%
of accounts pay percentage of assets based fees), in a period of normal
trading activity with assets under management of approximately $150 million,
the Company may be able to cover the costs of its operations (not including
selling expenses) solely from commission revenues and percentage of assets
investment advisory fees, including fees received from the Portfolio.
Additional assets under management or strong performance and billings in
percentage of profits accounts or increased trading activity through the
Company's broker/dealer subsidiary or successful investing of Company assets
or revenues from the Jordan Index Fund, L.P. or other sources, may
significantly improve the Company's net earnings, although there can be no
guarantee that any of these potentials will necessarily occur.
In the third quarter of 1994, Wallace Neal Jordan established Jordan
Assets, Ltd. For providing administrative services, the Company receives 100%
of the management fee revenue, if any, from Jordan Assets, Ltd., a privately
held affiliate which manages the Jordan Index Fund, L.P., (Fund), a limited
partnership with assets of approximately $10 million. The Fund invests in
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stock index futures contracts and other securities and receives as its fee
20% of the Fund's trading profits. Fees for this Fund are accounted for as
deferred revenue until the annual billing date of the Fund, which is July 31
of each year. Revenues to JAHI from the Fund were approximately $90,000 in
1995 as compared to no revenues from the Fund in 1996 and 1997.
Additionally, potential investors in the Company's common stock or warrants
should understand that there is no guarantee that the Fund will continue to
exist as a potential revenue source for the Company.
The Company is also currently involved with the formation of a new
limited partnership in order to increase assets under management and thereby
seek to improve corporate earnings. Currently, the Company has advanced
approximately $43,000 in the formation of the partnership, which amount is
anticipated to be repaid by the partnership upon commencement of operations.
If the partnership does not gather enough assets to initiate management
during the next two quarters of operations, the Company may have to recognize
this $43,000 receivable as an expense.
As of April 1997, the Company is no longer charging management fees
on holdings of JAHI common stock and warrants. While this policy will
eliminate management fee revenues from holdings in JAHI securities,
management believes it is in the best interest of our clients and our
shareholders to implement this policy.
Risk Factors, Trends & Uncertainties
Total assets under management and corporate earnings may
substantially increase or decrease due to stock market conditions including
the onset of a long-term declining, or bear market, performance returns as
influenced by the Company's investment advisory decisions, legal and other
professional fees, effectiveness of marketing and sales efforts, competition
from other investment advisory companies and mutual funds, interest rate
changes by the Federal Reserve Board, economic conditions such as high
inflation and/or recession, and other factors discussed below.
Management fees for the third quarter were relatively strong because
of performance in clients' managed accounts. Nevertheless, unless account
performance and/or asset gathering increases, or trading activity improves or
increases, the current earnings trend may continue. Market conditions and
other factors may materially impact this trend either positively or
negatively. The Company will be subject, as are other companies in the
securities industry, to general stock market conditions and fluctuations as
influenced by Federal Reserve Board actions, both domestic and international
economic and political conditions and events, and trends in business,
finance, the economy and other factors.
Long-term trends in retention of client assets since fiscal year-end
1995 show that for fiscal 1996, the company had a net loss in assets under
management, i.e., more assets in client accounts have departed from the
Company's management than were brought in as new managed assets. During the
nine months ended September 30, 1997, the Company also experienced a net
decrease in assets under management of approximately $3.15 million.
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Exceptional performance in percentage of profit accounts may result
in substantial revenues for the Company while poor performance in the same
accounts may yield no revenues for the Company from approximately 60% of the
Company's total assets under management. Additionally, because percentage of
profit accounts are billed on an annual basis for each respective client,
there may be a delay in billing revenue as long as eleven months from the
time when actual account performance was achieved. Thus, exceptional
performance in percentage of profit accounts may benefit the revenues of the
Company for nearly one year after such performance was achieved as dependent
on the billing cycle of respective clients and other investment results in
respective accounts.
The securities industry is subject to various risks and intense
regulation from the SEC, the NASD, the National Futures Association, and the
Commodity Futures Trading Commission. Investment advisors, broker-dealers,
and commodity trading advisors are highly regulated by both federal and state
authorities and by self-regulatory organizations. Such regulations may
restrict both the types of investments and amount of investments that JAHI
may employ. The NASD, for instance, has strict requirements for the
maintenance of net capital requirements by broker-dealers such as IMPACT.
There can be no assurance that any changes to existing laws, regulations or
rulings promulgated by government entities having jurisdiction over the
Company's investment advisory, broker-dealer, and commodity trading business
will not have an adverse effect upon the business of the Company, or that the
Company will remain in compliance with all applicable law and regulations.
By law, investment advisors, broker-dealers, and investment companies
are fiduciaries and are required to serve their clients' interests with
undivided loyalty. The affiliation between the Company and IMPACT may
continue to be scrutinized by the regulatory authorities because of the
potential conflict of interest created by related-party transactions, and may
be subject to various regulations which may affect the fees and charges of
IMPACT.
Because of this potential conflict of interest, these arrangements
may be closely examined by the SEC, the NASD and other regulatory authorities
to determine that such transactions are conducted within the rules and
regulations promulgated by the SEC and others. Findings to the contrary may
subject the Company to censures, fines and/or other liabilities, or cause the
Company to change its method of doing business, and could therefore have a
material adverse effect on the Company. The SEC requires that these
arrangements be in the best interests of the clients and that such
arrangements be disclosed to them. While the Company believes that its
existing and proposed relationships are in compliance with applicable law and
regulations, findings to the contrary may have a material adverse effect upon
the Company.
Many aspects of the financial services industry involve substantial
liability risks, including exposure under federal and state securities laws
in connection with the distribution of securities, brokerage transactions,
suitability and investment advisor activities. Although the Company
currently maintains errors and omission insurance and other insurance to
protect against these types of liabilities, there can be no guarantee that
this coverage will necessarily protect the Company and its shareholders from
potential claimants.
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The Company operates in a highly competitive industry with
competition from other investment advisors, commodity trading advisors,
broker-dealers, and mutual fund managers in addition to investment
alternatives offered by insurance companies, banks, securities dealers and
other financial institutions. Many of these institutions are able to engage
in more extensive advertising and may offer accounts insured by federal
corporations such as the Federal Deposit Insurance Corporation. JAHI
believes its investment strategy, which centers around attempting to
understand the general trend of the market as assisted by certain proprietary
analysis, coupled with its long-term track record, make it an attractive
alternative to the mutual fund industry and more traditional money managers,
but there can be no guarantee that this is necessarily the case.
Effective February 23, 1998, the Nasdaq Stock Market adopted new
standards for continued listing of securities on the Nasdaq Small-Cap Market
which may adversely effect the Company. There can be no guarantee that the
Company will be able to meet or maintain these listing standards, which
include but are not limited to a minimum share price of $1.00 for small-
capitalization companies such as Jordan American Holdings, Inc. Should the
Company not be able to meet or maintain the new listing standards, the
Company may be de-listed from its current listing and be traded on the
Electronic Bulletin Board. Such an event, if it occurs, may adversely effect
the trading and liquidity of the Company's common stock and warrants.
Additionally, if the Company's securities are de-listed, proposed re-entry
standards may be much more difficult for the Company to achieve in order to
gain re-listing in the Nasdaq Small-Cap Market. The Company is currently
investigating various business options and seeking to avoid potential
de-listing.
Results of Operations
The Company had a net loss for the three months ended September 30,
1997 of ($246,544) or ($0.02) per common share and share equivalent compared
to a net gain of $31,442 or $0.00 per common share and share equivalent for
the same period in 1996. This loss resulted from increased selling, general
and administrative expenses related to the formation and marketing of the
Portfolio and realized losses from investing and trading in the Company's
investment accounts. Selling, general, and administrative ("SG&A") expenses
of $634,237 were incurred during the three month period ended September 30,
1997, compared to SG&A expenses of $353,932 for the same period in 1996, an
increase of approximately 79%.
For the three months ended September 30, 1997, revenues from
investment advisory fees totaled $493,052 compared to revenues from
investment advisory fees of $195,917 for the same period in 1996, an increase
of approximately 152% due primarily to stronger performance billings in
managed accounts during the third quarter of fiscal 1997.
Commission revenue increased for the three months ended September 30,
1997, to $98,960 as compared to $88,394 for the same period in 1996. This
increase is due to stock transactions resulting from an increase in the
amount of securities being purchased and sold in client accounts as
determined by the management of the Company based on market conditions and
other factors. Additionally, the Company has re-negotiated its clearing
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arrangement with its current clearing house, Pershing. While there can be no
guarantee this change will result in substantial benefits to the Company,
improved clearing costs may improve profit margins in commission revenues
received by the Company's broker/dealer subsidiary, IMPACT.
Total other income (expense) was ($144,319) for the three months
ended September 30, 1997, compared to $161,043 for the three months ended
September 30, 1996. This increase in expense was primarily due to realized
losses in Company investment accounts from trading stock index futures
contracts.
Liquidity and Capital Resources
At September 30, 1997, the Company had cash and cash equivalents of
$592,769 versus $1,725,056 at December 31, 1996. This decrease is primarily
due to use of cash for marketing purposes and sales expenses related to the
Portfolio, professional fees, and the repurchase of JAHI common stock by the
Company since December 31, 1996. During the third quarter of 1997, the
Company used $95,331 to repurchase 150,000 shares of JAHI common stock, which
was retired on October 9, 1997.
Accounts payable and accrued expenses were $206,096 at September 30,
1997, as compared to $290,030 at December 31, 1996, a decrease of
approximately 29%. Accruals are based upon expenses as determined by
management's estimate.
During the third quarter of fiscal 1997, the Company elected to
expense Receivable From Affiliates and Officer by approximately $98,000 as a
signing bonus to Mr. Stiller in consideration for his employment and
compensation package with the Company as National Director of Sales &
Marketing. This amount previously was to have been reimbursed to the Company
from revenues related to IMPACT Management Services, Inc., the administrator
and transfer agent for the Portfolio. The Company's commitment to marketing
and asset gathering will continue to result in an increased use of cash.
Cash flows used in operating activities for the nine months ended
September 30, 1997, were ($754,686) compared to net cash provided by
operating activities of $229,481 for the same period in 1996. Cash flows
used in financing activities were ($323,082) for the nine month period ended
September 30, 1997, compared to ($612,333) for the same period in 1996,
during which time cash was used to repurchase JAHI common stock and in
conjunction with the payment of the debt of the Company's former corporate
headquarters in Sarasota, Florida. Management of the Company believes
current and long-term cash needs will be met despite increased marketing
expenses and the ongoing repurchase of the Company's common stock.
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SIGNATURES
In accordance with 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.
JORDAN AMERICAN HOLDINGS, INC.
Dated: November 14, 1997 By: /s/ Charles R. Clark
Charles R. Clark
Chief Executive Officer
Dated: November 14, 1997 By: /s/ Frederick A. Whittlesey
Frederick A. Whittlesey
Chief Financial Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Jordan American Holdings, Inc. for the period ending
September 30, 1997, and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 592,769
<SECURITIES> 588,794
<RECEIVABLES> 202,663
<ALLOWANCES> 13,000
<INVENTORY> 0
<CURRENT-ASSETS> 1,588,155
<PP&E> 323,537
<DEPRECIATION> 97,001
<TOTAL-ASSETS> 2,814,190
<CURRENT-LIABILITIES> 445,445
<BONDS> 0
0
30,000
<COMMON> 10,559
<OTHER-SE> 2,328,186
<TOTAL-LIABILITY-AND-EQUITY> 2,814,190
<SALES> 0
<TOTAL-REVENUES> 1,116,011
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (515,520)
<INCOME-TAX> 0
<INCOME-CONTINUING> (515,520)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (515,520)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
