U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM l0-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2000
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)
2155 Resort Drive, Suite 108, Steamboat Springs, CO 80487
---------------------------------------------------------
(Address of principal executive offices)
(970) 879-1189
(Registrant's telephone number)
1875 Ski Time Square, Suite One, Steamboat Springs, CO 80487
------------------------------------------------------------
(Former address)
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, 2000, 10,421,266 shares of the registrant's common stock
were issued and outstanding.
<PAGE>
JORDAN AMERICAN HOLDINGS, INC.
AND SUBSIDIARIES
TABLE OF CONTENTS
PART I
ITEM 1 FINANCIAL INFORMATION PAGE
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
Results of Operations........................................... 10
Liquidity and Capital Resources................................. 12
Risk Factors, Trends & Uncertainties............................ 12
2
<PAGE>
JORDAN AMERICAN HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
SEPTEMBER 30, DECEMBER 31,
A S S E T S 2000 1999
----------- -----------
CURRENT ASSETS
Cash & cash equivalents $ 870,655 $ 580,758
Marketable securities 1,216,268 607,882
Investment advisory fee receivable - net 563,010 846,907
Deposit with clearing broker 25,000 25,000
Notes receivable - officer 56,044 26,556
Prepaid expenses 92,176 50,678
Other receivable 51,642 108,625
----------- -----------
Total current assets 2,874,795 2,246,406
----------- -----------
FIXED ASSETS
Property and equipment, at cost, net of
accumulated depreciation and amortization
of $158,811 and $133,005 respectively 82,497 88,228
----------- -----------
OTHER ASSETS
Notes receivable 650,000 500,000
Strategic Options Limited Partnership -- 27,058
----------- -----------
Total other assets 650,000 527,058
----------- -----------
TOTAL ASSETS $ 3,607,292 $ 2,861,692
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 385,273 $ 329,265
Deferred revenue 48,079 35,300
Software license payable 36,799 58,721
----------- -----------
Total current liabilities 470,151 423,286
----------- -----------
STOCKHOLDERS' EQUITY
8% cumulative, convertible, non-voting preferred
stock $0.01 par value, $1.00 liquidation
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; 10,421,266 shares issued
and outstanding at September 30, 2000 and
December 31, 1999 10,421 10,421
Additional paid in capital 4,502,853 4,502,853
Deficit (1,406,133) (2,104,868)
----------- -----------
Total stockholders' equity 3,137,141 2,438,406
----------- -----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 3,607,292 $ 2,861,692
=========== ===========
See accompanying notes to consolidated financial statements
3
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JORDAN AMERICAN HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE FOR THE
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- -----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
REVENUES
<S> <C> <C> <C> <C>
Commission income $ 38,637 $ 42,072 $ 179,882 $ 218,563
Investment advisory fees 896,117 400,702 2,525,212 904,077
Realized (loss) from trading -- (3,215) (5,322) (883)
------------ ------------ ------------ ------------
Total Revenues 934,754 439,559 2,699,772 1,121,757
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 697,081 353,783 1,777,608 1,049,603
------------ ------------ ------------ ------------
Operating income 237,673 85,776 922,164 72,154
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSES):
Interest and dividend income 40,739 21,252 111,171 72,119
Other income 3,928 11,233 12,926 46,048
Unrealized gain (loss) from trading (57,274) 31,238 (308,376) 65,993
------------ ------------ ------------ ------------
Total Other Income (Expense), net (12,607) 63,723 (184,279) 184,160
------------ ------------ ------------ ------------
NET INCOME BEFORE INCOME TAXES 225,066 149,499 737,885 256,314
Provision for income taxes 25,185 -- 39,153
------------ ------------ ------------ ------------
NET INCOME 199,881 149,499 698,732 256,314
============ ============ ============ ============
Basic earnings attributable to common stock
per common share $ 0.01 $ 0.01 $ 0.05 $ 0.01
============ ============ ============ ============
Diluted earnings attributable to common stock
per common share $ 0.01 $ 0.01 $ 0.05 $ 0.01
============ ============ ============ ============
Weighted-average number of common shares
outstanding:
Basic 10,421,266 10,421,266 10,421,266 10,421,266
============ ============ ============ ============
Diluted 10,421,266 10,421,266 10,421,266 10,421,266
============ ============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE>
JORDAN AMERICAN HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
2000 1999
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 698,732 $ 256,314
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 25,806 17,598
Unrealized (gain) loss from trading 308,376 (65,993)
Realized (gain) loss from trading 5,322 883
Changes in operating assets and liabilities:
Trading marketable securities (895,026) 106,898
Investment advisory fee receivable - net 283,897 (151,237)
Prepaid expenses (41,497) (27,921)
Other receivable 56,985 58,203
Notes receivable - officers (29,488) (11,049)
Accounts payable and accrued expenses 56,008 (10,083)
Deferred revenue 12,779 7,019
Software license payable (21,922) 49,803
------------ ------------
Net cash provided by operating activities 459,972 230,435
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in corporate stock - restricted -- (56,250)
Investment in Senior Yellow Pages, Inc. (150,000) --
Sale of IMPACT Management Growth Portfolio -- 57,092
Capital expenditures (20,075) (70,218)
------------ ------------
Net cash used in investing activities (170,075) (69,376)
Net increase in cash and cash equivalents 289,897 161,059
Cash and cash equivalents, beginning of period 580,758 495,622
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 870,655 $ 656,681
============ ============
Supplemental disclosure of cash flow information:
Interest paid $ 2,927 $ 4,597
============ ============
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE>
JORDAN AMERICAN HOLDINGS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION
Organization
------------
Jordan American Holdings, Inc. (JAHI/the Company) was incorporated in Florida in
May 1989. The Company also does business under the name of Equity Assets
Management (EAM). The Company provides investment advisory and portfolio
management services to individual investors, pooled accounts and its mutual fund
with its customers located substantially in the United States. JAHI is
registered as an investment advisor under the Investment Advisor Act of 1940.
The Company owns 100% of the issued and outstanding common stock of IMPACT
Financial Network, Inc. (IFNI) and IMPACT Administrative Services, Inc. (IASI).
IASI provides operational and administrative support to Impact Management
Investment Trust (see Note 2). JAHI's customer investment transactions are
primarily brokered through IFNI, a registered broker-dealer in securities acting
as a non-clearing introducing broker.
The accompanying consolidated financial statements include the accounts of JAHI
and its subsidiaries; all significant intercompany transactions have been
eliminated during consolidation. In the opinion of management, the interim
financial statements contain all adjustments necessary to present fairly the
financial position of the Company.
NOTE 2 - IMPACT MANAGEMENT INVESTMENT TRUST
The Company formed Impact Management Investment Trust (the Trust), which is
registered under the Investment Company Act of 1940 as a diversified, open-end
management investment company (mutual fund). Impact Total Return Portfolio
(Portfolio) is the initial Series of the Trust. JAHI is the investment advisor
of the Trust and IFNI is the Portfolio primary distributor of the Trust.
As investment advisor of the Portfolio, the Company receives an annual
investment advisory fee equal to 1.25% of the Portfolio's average daily net
assets. Of this amount, 60 basis points is paid to the sub advisor of the
Portfolio.
NOTE 3 - NOTES RECEIVABLE
The Company owns a $500,000 variable rate convertible subordinated debenture
from Boston Restaurant Associates, Inc. (BRAI). The principal balance of the
debenture is due and payable on December 31, 2011. The debenture has a
conversion price of $1.25 per share and bears interest at a rate of 14% for 2000
and thereafter.
In connection with the purchase of the debenture, the Company also acquired, at
no cost, warrants to subscribe for the purchase from BRAI up to 500,000 fully
paid and nonassessable shares of BRAI's common stock. The purchase rights
represented by the warrants are exercisable by the
6
<PAGE>
JORDAN AMERICAN HOLDINGS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 3 - NOTES RECEIVABLE (CONTINUED)
Company, in whole or in part, at any time through December 31, 2006, at an
exercise price of $3.00 per share.
The Company provided "angel" financing through a convertible subordinated bridge
note to Senior Yellow Pages, Inc. and its affiliates (SYP), an internet based
eldercare infomediary. The principal balance of the note is due and payable upon
the earlier of (1) the receipt by SYP or any affiliate of aggregate gross
proceeds of at least $1,000,000 raised in an offering (the "First Round
Financing") of SYP's Series A Convertible Preferred Stock or (2) redemption in
cash on or prior to January 30, 2001.
As an inducement to the Company providing bridge financing to SYP, SYP agreed to
issue to the Company a 4% equity interest in SYP, on a fully diluted basis
through future rounds of private financing.
The note bears interest at a rate of 10% per annum.
The carrying value of the above notes receivable approximates the fair market
value as estimated by management, after considering such factors as current
interest rates, liquidity, conversion terms and the credit worthiness of the
borrowers. The Company's management has estimated the value of the BRAI warrants
to be $-0- at September 30, 2000 and 1999. This determination was made
considering primarily the current value of the underlying common stock and the
current illiquidity of the warrants.
NOTE 4 - STOCKHOLDERS' EQUITY
At September 30, 2000 and December 31, 1999, the Company had stock warrants
outstanding entitling the warrant holder to acquire 1,113,000 shares of common
stock with a current exercise price of $0.50 per share and a current expiration
date of June 5, 2010. The Company also has outstanding Underwriter Warrants
related to the initial public offering entitling the holder to purchase 44,545
units (five shares of common stock and five stock warrants; two warrants entitle
the holder to purchase one share of common stock for $0.60 per share) of the
Company at a price of $2.58 per unit expiring at dates ranging from September
27, 2010 to January 8, 2011.
JAHI has authorized 5,000,000 shares of $0.01 par value preferred stock. The
Board of Directors is authorized to issue preferred stock in one or more series,
to determine the rights thereto, and to fix the number of shares on any series
of preferred stock and the designation of any such series.
The Company issued 3,000,000 shares of 8% cumulative, convertible, non-voting
preferred stock to a customer of EAM in a private placement offering. In
connection with this offering, 750,000
7
<PAGE>
JORDAN AMERICAN HOLDINGS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 4 - STOCKHOLDERS' EQUITY (CONTINUED)
Shares of common stock were given to the Company to distribute to the preferred
shareholder by three officers of the Company for no additional consideration.
The preferred stock is convertible at the rate of one share of common stock for
each $3.50 in face amount of the preferred stock converted. If at any time the
closing bid price of the common stock for the period of thirty consecutive
trading days exceeds $5.25 per share, then, in such event, the Company may, upon
30 days written notice, automatically convert the preferred stock to common
stock at the rate of $3.50 in face amount of the shares converted. The preferred
stock has a liquidation preference of $1.00 per share plus accrued and unpaid
dividends. Semi-annual dividends in arrears on preferred stock at September 30,
2000 amounted to $540,000.
In connection with the preferred stock offering, the Company obtained "key man"
life insurance on the Company's president, in the amount of $3,750,000. The
holder of the preferred stock is the direct beneficiary and would be redeemed at
the rate of $1.25 per share, in exchange for such shares.
NOTE 5 - RELATED PARTY TRANSACTIONS
The Company has a loan to an officer bearing interest at a rate of 10% per annum
in the amount of $56,044 and $26,556 at September 30, 2000 and December 31,
1999, respectively.
In 1994, the Company's president established the Jordan Index Fund, L.P. (the
"Fund"). The Fund engages in the speculative trading of stock index futures
contracts, and may trade in equity securities and stock options. The Fund is
administered by its general partner, Jordan Assets, Ltd. Jordan Assets, Ltd. is
not a subsidiary of JAHI, although JAHI is registered as a principal of Jordan
Assets, Ltd. with the Commodity Futures Trading Commission. All trading
decisions for the Fund are made by Jordan Assets, Ltd. Certain administrative
functions are provided to the Fund by JAHI in return for the fees earned by
Jordan Assets, Ltd. No such fees were earned during the first three quarters of
2000 and 1999.
NOTE 6 - FINANCIAL INSTRUMENTS, OFF-BALANCE SHEET RISK,
UNCERTAINTIES AND CONTINGENCIES
In the normal course of business, the Company's client activities through its
clearing broker involve the execution, settlement, and financing of various
client securities transactions. These activities may expose the Company to
off-balance sheet risk. In the event the client fails to satisfy its
obligations, the Company may be required to purchase or sell financial
instruments at prevailing market prices in order to fulfill the client's
obligations.
8
<PAGE>
JORDAN AMERICAN HOLDINGS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 6 - FINANCIAL INSTRUMENTS, OFF-BALANCE SHEET RISK,
UNCERTAINTIES AND CONTINGENCIES (CONTINUED)
In the Company's investment activities, the Company purchases securities for its
own account and may incur losses if the market value of the securities decline
subsequent to September 30, 2000.
The Company's revenues are primarily derived from a percentage of the assets
under management and performance fees based on the appreciation of those assets.
Assets under management are impacted by both the extent to which the Company
attracts new, or loses existing, clients and the appreciation or depreciation of
the U.S. and international equity and fixed income markets. A downturn in
general economic condition could cause investors to cease using the services of
the Company.
The Company's financial instruments, including cash, receivables and deposits,
are carried at amounts which approximate fair value. The Company's marketable
securities are carried at the September 30, 2000 market value. Payables and
other liabilities are carried at amounts which approximate fair value.
The Company has a substantial portion of its assets on deposit with banks and
brokers. Assets deposited with banks and brokers are subject to credit risk. In
the event of bank's or broker's insolvency, recovery of Company assets on
deposit may be limited to account insurance or other protection afforded such
deposits.
In connection with a late 1997 examination of the Company, the SEC raised
certain issues regarding possible violations of the federal securities laws in
connection with the private placement of debentures of Boston Restaurant
Associates, Inc. The matter has not been resolved and to the Company's knowledge
the investigation is ongoing. Management of the Company does not expect
resolution of this matter to have any material effect on the Company's financial
condition, results of operations or business.
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 audited consolidated
financial statements that are included in the Company's 1999 Form 10-KSB, which
is contained in the Company's 1999 Annual Report to shareholders and is
available without charge upon request to JAHI Investor Relations, 2155 Resort
Drive, Suite 108, Steamboat Springs, Colorado, 80487, (970) 879-1189; Fax: (970)
879-1272; E-mail: [email protected]
9
<PAGE>
PART 1, ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
JORDAN AMERICAN HOLDINGS, INC.
AND SUBSIDIARIES
Safe Harbor for Forward-Looking Statements
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, Federal Reserve Board policy,
economic trends, political developments, domestic and international events and
other factors. There can be no guarantee that any forward-looking implications
discussed and/or referenced in this report will have any impact, positive or
negative, upon the earnings, value and/or operations of the Company.
Results of Operations
JAHI's assets under management were $58.0 million as of September 30, 2000,
compared to $53.0 million under management on June 30, 2000. The net $5.0
million change in assets under management during the quarter resulted from
investment gains of $2.7 million and positive net client cash inflow of $2.3
million.
THREE MONTHS ENDED SEPTEMBER 30, 2000
COMPARED TO
THREE MONTHS ENDED SEPTEMBER 30, 1999
The Company had a net income for the three months ended September 30, 2000, of
$199,881 or $0.01 per common share compared to a net income of $149,499 or $0.01
per common share for the same period in 1999. Basic and diluted earnings per
common share for the three months ended September 30, 2000 and 1999 includes
dividends in arrears on the Company's outstanding preferred stock of $60,000 for
each period.
The increase in net income for this period compared to the same period last year
stems primarily from higher revenues from performance fee based managed accounts
during this period.
The Company had operating income of $237,673 for the three months ended
September 30, 2000 compared to an operating income of $85,776 for the same
period in 1999. This increase is primarily due to total revenue being
significantly higher during this period when compared to the same quarter last
year.
10
<PAGE>
For the three months ended September 30, 2000, revenues totaled $934,754
compared to revenues of $439,559 for the same period in 1999, an increase of
approximately 113% due primarily to significantly increased revenues from
investment advisory fees.
Advisory fee revenue increased for the three months ended September 30, 2000, to
$896,117 compared to $400,702 for the same period in 1999, an increase of
approximately 123% due primarily to increased revenues from performance fee
based managed accounts.
Commission income decreased for the three months ended September 30, 2000, to
$38,637 compared to $42,072 for the same period in 1999, a decrease of
approximately 8% due primarily to fewer securities transactions resulting from
the amount of securities being purchased and sold in client accounts. These
securities transactions are incidental to management's investment advisory
decisions based on technical and fundamental considerations of individual
securities, market conditions and other factors.
Selling, general, and administrative ("SG&A") expenses of $697,081 were incurred
during the three month period ended September 30, 2000, compared to similar SG&A
expenses of $353,783 for the same period in 1999. This increase of approximately
97% was due primarily to higher selling expenses during this period resulting
from higher fees paid out to sales representatives.
Total other income (expenses) was ($12,607) for the three months ended September
30, 2000, compared to $63,723 for the same period in 1999. This change was
primarily due to unrealized equity losses in the third quarter of 2000.
NINE MONTHS ENDED SEPTEMBER 30, 2000
COMPARED TO
NINE MONTHS ENDED SEPTEMBER 30, 1999
The Company had net income for the nine months ended September 30, 2000, of
$698,732 or $0.05 per common share compared to net income of $256,314 or $0.01
per common share for the same period in 1999. Basic and diluted earnings per
common share for the nine months ended September 30, 2000 and September 30, 1999
includes dividends in arrears of $180,000 for each period. Total dividends in
arrears on the Company's outstanding preferred stock as of September 30, 2000
were $540,000 including dividends in arrears of $360,000 as of December 31,
1999. There are currently no projected dividend payments for 2000.
The net income for this period compared to the net income for the same period
last year stems primarily from substantially higher revenues from performance
fee based managed accounts.
The Company had operating income of $922,164 for the nine months ended September
30, 2000 compared to an operating income of $72,154 for the same period in 1999.
This increase is primarily due to total revenue being significantly higher
during this period when compared to the same period last year.
For the nine months ended September 30, 2000, revenues totaled $2,699,772
compared to revenues of $1,121,757 for the same period in 1999, an increase of
approximately 140%. The increase in revenue can be primarily attributed to an
increase in advisory fees.
11
<PAGE>
Revenues from advisory fees for the nine months ended September 30, 2000 totaled
$2,525,212 compared to revenues from the same source of $904,077 for the same
period in 1999, an increase of approximately 179% due primarily to increased
revenues from performance fee based managed accounts.
Revenues from commissions decreased approximately 17% for the nine months ended
September 30, 2000 compared to the same period in 1999 primarily due to less
trading activity.
SG&A expenses totaled $1,777,608 during the nine months ended September 30, 2000
compared to $1,049,603 in selling, general and administrative expenses for the
same period in 1999. The net $728,005 increase in SG&A expenses resulted
primarily from higher fees paid out to sales representatives during this period
and bonus accruals tied to investment advisory fee revenue.
Total other income (expenses) was ($184,279) for the nine months ended September
30, 2000 compared to $184,160 for the same period in 1999. This decrease was
primarily due to unrealized equity losses of ($308,376) for the nine months
ended September 30, 2000 compared to unrealized equity gains of $65,993 for the
same period last year.
Liquidity and Capital Resources
At September 30, 2000, the Company had cash and cash equivalents of $870,655
versus $580,758 at December 31, 1999. This increase was due primarily to the net
income for the nine months ended September 30, 2000.
Accounts payable and accrued expenses were $385,273 at September 30, 2000,
compared to $329,265 at December 31, 1999. The increase in accounts payable and
accrued expenses is primarily due to higher accruals for actual expenses
incurred on fees paid out to sales representatives, provisions for income tax
and bonus accruals for the nine months ended September 30, 2000 compared to
those fees accrued for the year ended December 31, 1999. Accruals are based upon
expenses incurred and/or as determined by management's best estimate based upon
the Company's annual budget.
Cash flows provided by operating activities for the nine months ended September
30, 2000, were $459,972 compared to $230,435 for the same period in 1999 due
primarily to changes in net income for the nine months ended September 30, 2000.
Cash flows provided by (used in) investing activities for the nine months ended
September 30, 2000, were ($170,075) compared to ($69,376) for the same period in
1999 due primarily to the investment made in Senior Yellow Pages, Inc. in the
first quarter of 2000.
Risk Factors, Trends & Uncertainties
Total assets under management and corporate earnings may substantially increase
or decrease due to (1) stock market conditions, including the onset of a
long-term declining, or bear market; (2) performance returns as influenced by
the Company's investment advisory decisions, operational expense and
effectiveness of marketing efforts; (3) competition from mutual funds, other
investment
12
<PAGE>
advisory companies and insurance companies; (4) interest rate changes and other
actions taken by the Federal Reserve Board; (5) domestic and international
economic and political conditions, high inflation and/or recession; (6) trends
in business and finance; (7) international events; (8) acts of terrorism; and
(9) other factors.
The Company is registered with and subject to regulation by the SEC under the
Investment Advisers Act of 1940 and, where applicable, under state advisory
laws. The Company is also subject to regulation by the SEC under the Investment
Company Act of 1940. The Company's affiliate broker-dealer is registered as a
broker-dealer with the SEC under the Securities Exchange Act of 1934 (the
"Exchange Act") and, where applicable, under state securities laws, and is
regulated by the SEC, state securities administrators and the NASD. IASI is
registered as a transfer agent under the Exchange Act and is regulated by the
SEC. The privately held affiliate that manages the Fund is regulated by the
Commodity Futures Trading Commission and the National Futures Association.
By law, investment advisors and broker-dealers are fiduciaries and are required
to serve their clients' interests with undivided loyalty. There is a potential
conflict of interest because of the affiliation between the Company and IFNI.
While the Company believes that its existing relationships are in compliance
with applicable law and regulations, because of this potential conflict of
interest, the SEC may closely examine these relationships.
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 and investment advisor activities. Although
the Company currently maintains errors and omission insurance policies insuring
against this risk, such insurance does not necessarily protect the Company
against loss in all events.
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, investment company and commodities
trading business will not have an adverse effect upon the business of the
Company.
In connection with a late 1997 examination of the Company, the SEC raised
certain issues regarding possible violations of the federal securities laws in
connection with the private placement of debentures of Boston Restaurant
Associates, Inc. The matter has not been resolved and to the Company's knowledge
the investigation is ongoing. Management of the Company does not expect the
resolution of this matter to have any material effect on the Company's financial
condition, results of operations or business.
13
<PAGE>
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, 2000 By: /s/ Wallace Neal Jordan
-------------------------
Wallace Neal Jordan
Chief Executive Officer
Dated: November 14, 2000 By: /s/ A.J. Elko
-------------
A.J. Elko
Chief Financial Officer
