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 June 30, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
Commission File Number 33-70334-A
INTERNATIONAL ASSETS HOLDING CORPORATION
(Exact name of small business issuer as specified in its charter)
Delaware 59-2921318
- --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
250 Park Avenue South, Suite 200
Winter Park, FL 32789
(Address of principal executive offices)
(407) 629-1400
(Issuer's telephone number)
NA
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 [ ].
The number of shares outstanding of Common Stock was 1,718,828 as of August 5,
1999.
Transitional small business disclosure format Yes [ ] No [X]
1
<PAGE>
INDEX
Page No.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of
June 30, 1999 and September 30, 1998 3
Condensed Consolidated Statements of Operations
for the Nine Months ended June 30, 1999 and 1998 5
Condensed Consolidated Statements of Operations
for the Three Months ended June 30, 1999 and 1998 6
Condensed Consolidated Statements of Cash Flows
for the Nine Months ended June 30, 1999 and 1998 7
Notes to Condensed Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis or Plan of Operation 15
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 25
Item 6. Exhibits and Reports on Form 8-K 25
Signatures 26
2
<PAGE>
INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
(Unaudited)
June 30, September 30,
Assets 1999 1998
------ ---- ----
Cash $ 538,437 617,628
Cash deposits with clearing broker 3,945,869 2,424,486
Foreign currency 17,391 3,961
Receivable from clearing broker, net 0 791,753
Other receivables 53,990 63,523
Securities owned, at market value 3,175,504 2,014,734
Investment in Joint Venture 15,746 0
Income taxes receivable 55,874 67,398
Deferred income tax benefit 85,921 127,065
Property and equipment, at cost:
Leasehold improvements 52,953 52,953
Furniture and equipment 962,618 902,719
-------------------- --------------------
1,015,571 955,672
Less accumulated depreciation and amortization (696,946) (605,059)
-------------------- --------------------
Net property and equipment 318,625 350,613
Other assets, net of accumulated amortization of $138,007
in June 1999 and $118,504 in September 1998 108,847 98,920
==================== ====================
Total assets $ 8,316,204 6,560,081
==================== ====================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
(Unaudited)
June 30, September 30,
Liabilities and Stockholders' Equity 1999 1998
------------------------------------ ---- ----
Liabilities:
Foreign currency sold, but not yet purchased $ 32,487 7,206
Securities sold, but not yet purchased, at market value 1,089,262 290,403
Payable to clearing broker, net 47,196 0
Accounts payable 50,662 72,600
Accrued employee compensation and benefits 603,363 291,536
Accrued expenses 271,598 352,544
Payable to joint venture 13,333 0
Deferred income taxes 12,442 16,797
Other liabilities 119,000 117,845
-------------------- --------------------
Total liabilities 2,239,343 1,148,931
-------------------- --------------------
Stockholders' equity:
Preferred stock, $.01 par value. Authorized 1,000,000
shares; issued and outstanding -0- shares - -
Common stock, $.01 par value. Authorized 3,000,000
shares; issued and outstanding 1,718,828 shares in June 17,188 14,816
1999 and 1,481,574 shares in September 1998
Additional paid-in capital 4,598,496 3,564,648
Retained earnings 1,461,177 1,831,686
-------------------- --------------------
Total stockholders' equity 6,076,861 5,411,150
==================== ====================
Total liabilities and stockholders' equity $ 8,316,204 6,560,081
==================== ====================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
For the Nine Months Ended June 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
<S>
<C> <C>
1999 1998
---- ----
Revenues:
Commissions $4,700,005 5,484,305
Net dealer inventory and investment gains 2,437,717 1,549,350
Management and investment advisory fees 63,171 57,241
Account maintenance fees 108,314 132,366
Interest and dividends 184,466 206,666
Loss from joint venture (34,254) 0
Other 20,811 27,625
------------------ -----------------
Total revenues 7,480,230 7,457,553
------------------ -----------------
Expenses:
Commissions and clearing fees 3,017,469 3,324,935
Employees compensation and benefits 2,097,597 1,516,033
Communications 197,391 257,373
Promotion 534,522 921,984
Occupancy and equipment rental 332,062 263,435
Interest 2,345 3,015
Professional fees 198,809 334,671
Insurance 124,695 154,817
Depreciation and amortization 111,390 134,278
Other operating expenses 302,804 588,572
------------------ -----------------
Total expenses 6,919,084 7,499,113
------------------ -----------------
Income (loss) before income taxes 561,146 (41,560)
Income tax expense 235,613 7,032
------------------ -----------------
Net income (loss) $ 325,533 (48,592)
================== =================
Earnings (loss) per
share:
Basic $ 0.20 (.03)
Diluted $ 0.17 (.03)
Weighted average number of common shares outstanding:
Basic 1,650,938 1,695,505
Diluted 1,948,964 1,695,505
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
For the Three Months Ended June 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
<S>
<C> <C>
1999 1998
---- ----
Revenues:
Commissions $1,594,474 1,627,252
Net dealer inventory and investment gains 648,958 404,010
Management and investment advisory fees 18,775 30,510
Account maintenance fees 46,139 65,443
Interest and dividends 75,719 68,947
Loss from joint venture (16,711) 0
Other 5,916 12,154
------------------ ----------------
Total revenues 2,373,270 2,208,316
------------------ ----------------
Expenses:
Commissions and clearing fees 975,596 1,044,104
Employees compensation and benefits 710,619 477,836
Communications 66,521 83,123
Promotion 205,782 255,898
Occupancy and equipment rental 116,479 97,291
Interest 1,249 490
Professional fees 85,316 67,133
Insurance 35,547 45,095
Depreciation and amortization 32,999 43,719
Other operating expenses 125,246 94,383
------------------ ----------------
Total expenses 2,355,354 2,209,072
------------------ ----------------
Income (loss) before income taxes 17,916 (756)
Income tax expense 16,537 7,312
------------------ ----------------
Net income (loss) $ 1,379 (8,068)
================== ================
Earnings (loss) per share:
Basic $ 0.001 $ (0.005)
Diluted $ 0.001 $ (0.005)
Weighted average number of common shares outstanding:
Basic 1,700,980 1,681,002
Diluted 2,172,267 1,681,002
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended June 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
1999 1998
---- ----
Cash flows from operating activities:
Net income (loss) $ 325,533 (48,592)
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities:
Depreciation and amortization 111,390 134,278
Deferred income taxes 36,789 (36,405)
Non-cash compensation 93,601 0
Loss from joint venture 34,254 0
Cash provided by (used for) changes in:
Receivable from clearing broker, net 791,753 260,430
Other receivables 9,533 (42,960)
Securities owned, at market value (1,160,770) (76,324)
Income tax receivable 11,524 0
Other assets (29,430) 21,135
Securities sold, but not yet purchased, at market value 798,859 (292,517)
Payable to clearing broker, net 47,196 0
Accounts payable (21,938) (40,722)
Accrued employee compensation and benefits 311,827 (554,157)
Accrued expenses (80,946) (32,864)
Payable to joint venture 13,333 0
Other liabilities 1,155 9,579
------------------ -----------------
Net cash provided by (used for) operating activities 1,293,663 (699,119)
------------------ -----------------
Cash flows from investing activities:
Investment in joint venture (50,000) 0
Acquisition of property, equipment and other assets (59,899) (49,550)
------------------ -----------------
Net cash used for investing activities (109,899) (49,550)
------------------ -----------------
</TABLE>
(continued)
See accompanying notes to condensed consolidated financial statements.
7
<PAGE>
INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows, Continued
For the Nine Months Ended June 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
1999 1998
---- ----
Cash flows from financing activities:
Exercise of stock options 259,473 0
Acquisition of common shares related to repurchase program 0 (30,609)
Acquisition of common shares related to terminated
ESOP and RSP participants (12,896) (66,795)
------------------ -----------------
Net cash provided by (used for) financing activities 246,577 (97,404)
------------------ -----------------
Net increase (decrease) in cash and cash equivalents 1,430,341 (846,073)
Cash and cash equivalents at beginning of period 3,038,869 2,962,847
------------------ -----------------
Cash and cash equivalents at end of period $4,469,210 2,116,774
================== =================
Supplemental disclosure of cash flow information:
Cash paid for interest $ 2,345 3,015
================== =================
Income taxes paid $ 187,300 75,399
================== =================
</TABLE>
Supplemental disclosure of noncash financing activities:
On March 26,1999, the Company issued 148,199
shares of common stock in conjunction with a ten
percent stock dividend.
On January 20, 1998, the Company issued 140,648 shares of common stock in
conjunction with a ten percent stock dividend.
See accompanying notes to condensed consolidated financial statements.
8
<PAGE>
INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30, 1999 and 1998
(1) Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the instructions and requirements
of Form 10-QSB and, therefore, do not include all information and
footnotes necessary for a fair presentation of financial position,
results of operations, and cash flows in conformity with generally
accepted accounting principles. In the opinion of Management, such
financial statements reflect all adjustments (consisting of normal
recurring items) necessary for a fair statement of the results of
operations, cash flows and financial position for the interim periods
presented. Operating results for the interim periods are not necessarily
indicative of the results that may be expected for the full year. These
condensed consolidated financial statements should be read in conjunction
with the Company's audited consolidated financial statements for the year
ending September 30, 1998, filed on Form 10-KSB (SEC File Number
33-70334-A).
As used in this Form 10-QSB, the term "Company" refers, unless the
context requires otherwise, to International Assets Holding
Corporation and its six wholly owned subsidiaries; International Assets
Advisory Corp. ("IAAC"), Global Assets Advisors, Inc. ("GAA"),
International Financial Products, Inc. ("IFP"), International Trader
Association, Inc. now known as INTLTRADER.COM, INC.("ITCI")
(name change filed July 15, 1999), International Asset Management Corp.
("IAMC") and OffshoreTrader.com Ltd. ("OTCL"): and a 50%
interest in International Assets New York, LLC ("IANY") a joint
venture. All significant intercompany balances and transactions have
been eliminated in consolidation.
OTCL was incorporated on April 15, 1999 as a Bermuda exempted company and
is 100% owned by International Assets Holding Corporation. OTCL was
incorporated to explore global internet securities trading for non-U.S.
citizens. In June 1999 OTCL was funded with a $25,000 share capital
contribution from International Assets Holding Corporation. Exempted
Bermuda companies, although resident in Bermuda, may only carry on
business that is external to Bermuda. However, exempted Bermuda companies
may trade with other exempted companies which reside in Bermuda.
(2) Reclassifications
Certain prior year amounts have been reclassified to conform to fiscal
1999 presentation. These changes had no impact on previously reported
results of operations or stockholders' equity.
9
<PAGE>
INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, continued
(3) Stock Dividend
On February 12, 1999 the Company's Board of Directors declared a 10%
stock dividend for shareholders of record on March 5, 1999 and payable on
March 26, 1999. The 10% stock dividend increased the Company's issued and
outstanding common shares by 148,199 shares.
Earnings per common share, weighted average shares outstanding, and all
stock option activity have been restated to reflect the 10% stock
dividend
(4) Basic and Diluted Earnings (Loss) Per Share
Basic earnings (loss) per share for the nine months ended June 30, 1999
and 1998, have been computed by dividing net income (loss) by the
weighted average number of common shares outstanding. Diluted earnings
per share for the nine months ended June 30, 1999 has been computed by
dividing net income by the weighted average number of common shares and
dilutive potential common shares outstanding. Diluted loss per share for
the nine months ended June 30, 1998 is the same as basic loss per share
because of the anti-dilutive impact of the potential common shares, due
to the net loss for the period.
Options to purchase 29,800 shares of common stock were excluded from the
calculation of diluted earnings per share for the nine months ended June
30, 1999 because their exercise prices exceeded the average market price
of common shares for the period. All options were excluded from the
calculation of diluted loss per share for the nine months ended June 30,
1998, because their inclusion would have been antidilutive.
Basic earnings (loss) per share for the three months ended June 30, 1999
and 1998, have been computed by dividing net income (loss) by the
weighted average number of common shares outstanding. Diluted earnings
per share for the three months ended June 30, 1999 has been computed by
dividing net income by the weighted average number of common shares and
dilutive potential common shares outstanding. Diluted loss per share for
the three months ended June 30, 1998 is the same as basic loss per share
because of the anti-dilutive impact of the potential common shares, due
to the net loss for the period.
No options to purchase shares of common stock were excluded from the
calculation of diluted earnings per share for the three months ended June
30, 1999. All options were excluded from the calculation of diluted loss
per share for the three months ended June 30, 1998, because their
inclusion would have been antidilutive.
10
<PAGE>
INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, continued
(5) Securities Owned and Securities Sold, But Not Yet Purchased
Securities owned and Securities sold, but not yet purchased at
June 30, 1999 and September 30, 1998 consist of trading and
investment securities at quoted market values as follows:
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
Sold, but not
Owned yet purchased
June 30, 1999:
Obligations of U.S. Government $ 264,711 -
Common stock and American Depository Receipts 2,201,496 1,067,060
Corporate and municipal bonds 214,787 -
Foreign government obligations 257,639 -
Unit investment trusts, mutual funds and other
investments 236,871 22,202
----------- -----------
Total $ 3,175,504 1,089,262
=========== ===========
September 30, 1998:
Obligations of U.S. Government $ 373,841 -
Common stock and American Depository Receipts 836,057 290,403
Corporate and municipal bonds 341,066 -
Foreign government obligations 26,713 -
Unit investment trusts, mutual funds and other
investments 437,057 -
--------- ----------
Total $ 2,014,734 290,403
========== ==========
</TABLE>
(6) Investment in Joint Venture
In October 1998, the Company made an initial $20,000 capital contribution
to International Assets New York, LLC (IANY), a 50/50 joint venture with
Lakeside Investments, LLC, an unrelated party. In February 1999, the
Company made an additional $30,000 capital contribution to this joint
venture. The Company has recorded this investment under the equity method
of accounting. For the nine months and three months ended June 30, 1999
the Company has recorded a loss of $34,254 and $16,711, respectively, for
50% of the joint venture's loss for both periods. As of June 30, 1999 the
Company has a payable to the joint venture of $13,333 related to joint
venture cash outlays which were made on behalf of the Company.
(7) Leases
The Company occupies leased office space of approximately 13,815 square
feet at 250 Park Avenue South, Winter Park, Florida. The expiration date
of the office lease is May 31, 2001. The lease includes an option to
renew for an additional three years at a rental rate determined by the
landlord.
11
<PAGE>
INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, continued
The Company is obligated under various noncancelable operating leases for
the rental of its office facilities and certain office equipment. Rent
expense associated with operating leases amounted to $255,134 and
$204,925 for the nine months ended June 30, 1999, and 1998, respectively.
The future minimum lease payments under noncancelable operating leases as
of June 30, 1999 are as follows:
Fiscal Year (12 month period) Ending September 30,
---------------------------------------------------
1999 346,900
2000 383,600
2001 289,700
2002 81,700
2003 50,500
Thereafter 3,300
Total future minimum lease payments $1,155,700
==========
The Company and Lakeside Investments, LLC, each executed a 100% guaranty
for the joint venture office lease for IANY. Concurrently, the Company
and Lakeside Investments, LLC executed indemnification agreements
expressly agreeing to indemnify each other related to this lease
guarantee in accordance with each parties proportionate ownership
(50/50). This office lease is for a 38 month term from January 1, 1999
through February 28, 2002. The total rental commitment for IANY is
$100,944 (Fiscal year ending: September 30, 1999, $19,628; September 30,
2000, $33,648; September 30, 2001, $33,648 and September 30, 2002,
$14,020).
(8) Stock Repurchase Program
The Board of Directors has authorized the Company to continue its
repurchase of up to $500,000 in shares of the Company's common stock in
the open market through the year ended September 30, 1999. The stock
purchases may be made in the open market from time to time as market
conditions permit. The Company is required to comply with Rule 10b-18 and
Regulation M of the Securities and Exchange Commission which regulate the
specific terms in which shares may be repurchased. Since the inception of
the repurchase program on March 13, 1996 the Company has repurchased and
retired a total of 39,193 shares (as adjusted for the 10% stock
dividends) in the open market at a total cost of $129,233.
In addition to the Company's common stock repurchases in the open market,
the Company has repurchased and retired an additional 104,580 shares (as
adjusted for the 10% stock dividends) from terminated participants of the
Company's Employee Stock Ownership Plan and Retirement Savings Plan for a
total cost of $256,893.
In total the Company has repurchased 143,773 shares (as adjusted for
the 10% stock dividends) for a total cost of $386,126 since
March 13, 1996.
12
<PAGE>
INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, continued
(9) Commitments and Contingent Liabilities
The Company is party to certain litigation as of June 30, 1999 which
relates primarily to matters arising in the ordinary course of business.
Management of the Company anticipates that the final resolution of these
items will not have a material adverse effect on the Company's
consolidated financial statements.
(10) Stock Option Plan
According to the terms of the Company's stock option plan the 10% stock
dividend, declared by the Company's Board of Directors in March 1999,
resulted in a corresponding 10% adjustment for all stock options issued
prior to March 5, 1999. Previously issued option shares have been
proportionally increased by 10% and the corresponding option exercise
price has also been reduced by 10%. The total options authorized under
this plan is also proportionally increased from 700,000 options to
770,000 options as a result of this stock dividend.
On June 4, 1999 one non-qualified stock option for 10,000 shares, with an
exercise price of $7.25 per share was granted. The 10,000 share option
granted on June 4, 1999 has a 10 year term and vests at 20% per year
beginning one year from the date of grant.
Incentive Stock Options exercised during the quarter ended June 30, 1999:
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C>
Options Date Cash Exercise Original
Exercised Exercised Proceeds Price Grant Date
--------- --------- -------- ----- ----------
1,100 April 6, 1999 $ 2,726.90 $2.479 March 7, 1996
7,000 April 13, 1999 $ 29,505.00 $4.215 January 23, 1993
13,200 April 14, 1999 $ 59,994.00 $4.545 August 12, 1994
46,200 April 15, 1999 $ 95,449.20 $2.066 December 28, 1995
5,000 April 26, 1999 $ 10,330.00 $2.066 December 28, 1995
5,000 June 17, 1999 $ 10,330.00 $2.066 December 28, 1995
------ ------------
77,500 $208,335.10
======
Non-Qualified Options exercised during the quarter ended June 30, 1999:
Options Date Cash Exercise Original
Exercised Exercised Proceeds Price Grant Date
--------- --------- -------- ----- ----------
8,250 April 12, 1999 $ 38,354.25 $4.649 May 13, 1994
2,750 May 13, 1999 $ 12,784.75 $4.649 May 13, 1994
------ ------------
11,000 $ 51,139.00
======
</TABLE>
13
<PAGE>
INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, continued
During the quarter ended June 30, 1999 the Company recognized $63,330 in
non-cash compensation expense associated with the exercise of the 11,000
shares of non-qualified stock options.
(11) ITCI Stock Option and Plan
The Board of Directors of ITCI, a wholly owned subsidiary of the Company,
adopted a stock option plan ("ITCI Plan") retroactively as of December 1,
1998. The ITCI Plan is intended to constitute both an "incentive stock
option" and a "plan" within the meaning of and qualifying under Section
422 of the Internal Revenue Code of 1986, as amended, and the regulations
thereunder. The ITCI Plan permits the granting of 111 common shares
(approximately 10% of the total common shares) of ITCI to a sole
participant. The ITCI Plan expires on December 31, 2002. Retroactively,
as of December 1, 1998 this one incentive stock option was granted to a
sole participant. The purchase price of the 111 common shares is $98.95
per common share, being 100% of the fair market value per share of common
stock as of December 1, 1998.
The right to exercise the options granted and purchase the option shares
does not vest unless certain defined ITCI financial benchmarks are met.
If the first of these financial benchmarks is met 55 option shares vest
on September 30, 2000. If the second financial benchmark is met 56 option
shares vest on September 30, 2001. Some defined partial vesting is
allowed if the defined financial benchmarks are partially achieved.
(12) New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133). SFAS 133 establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, (collectively
referred to as derivatives) and for hedging activities. It requires that
an entity recognize all derivatives as either assets or liabilities in
the statement of financial position and measure those instruments at fair
value. SFAS 133, as amended, is effective for all fiscal quarters of
fiscal years beginning after June 15, 2000. The Company is currently
reviewing SFAS 133, as amended, to see what impact, if any, it will have
on the Company.
(13) Subsequent Events
On July 15, 1999 the Company's wholly owned subsidiary International
Trader Association, Inc. filed an amendment to its Articles of
Incorporation with the Florida Department of State which changed its
name to INTLTRADER.COM, INC. (ITCI).
14
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following discussion and analysis should be read in conjunction with the
financial statements and notes thereto appearing elsewhere in this report.
Certain statements in this discussion may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements involve known and unknown risks
including, but not limited to, changes in general economic and business
conditions, interest rate and securities market fluctuations, competition
from within and from outside the investment brokerage industry, new products
and services in the investment brokerage industry, changing trends in
customer profiles, Year 2000 issues and changes in laws and regulation
applicable to the Company. Although the Company believes that its
expectations with respect to the forward-looking statements are based upon
reasonable assumptions within the bounds of its knowledge of its business
and operations, there can be no assurances that the actual results,
performance or achievement of the Company will not differ materially from
any future results, performance or achievements expressed or implied by such
forward-looking statements.
The Company's assets increased from $6,560,081 at September 30, 1998, to
$8,316,204 at June 30, 1999, or an increase of $1,756,123. The Company's
liabilities increased from $1,148,931 at September 30, 1998, to $2,239,343
at June 30, 1999, or an increase of $1,090,412. The increase in the net
assets (assets less liabilities) of $665,711 resulted from net income of
$325,533, cash proceeds of $259,473 from the exercise of stock options and
the $93,601 non-cash expense related to the exercise of non-qualified stock
options, net of the $12,896 cost of repurchased stock for the nine month
period ended June 30, 1999.
The Company's condensed consolidated balance sheet at June 30, 1999,
reflects a net payable to clearing broker, for trades which had not yet
settled for cash, due to the costs of securities purchased exceeding the
proceeds from the sale of securities.
Results of Operations:
The Company's principal activities, securities brokerage and the trading of
and market-making in securities, are highly competitive and extremely
volatile. The earnings of the Company are subject to wide fluctuations since
many factors over which the Company has little or no control, particularly
the overall volume of trading and the volatility and general level of market
prices, may significantly affect its operations.
Nine Months Ended June 30, 1999, as Compared to
the Nine Months Ended June 30, 1998
15
<PAGE>
The Company's revenues are derived primarily from commissions earned on the
sale of securities and net dealer inventory and investment gains (trading
income) in securities purchased or sold for the Company's account. For the
nine months ended June 30, 1999 and 1998, 63% and 74%, respectively, of the
Company's revenues were derived from commissions earned on the sale of
securities, with 33% and 21%, respectively, of revenues coming from net
dealer inventory and investment gains. Total revenues increased by $22,677,
or .3% to $7,480,230 for the nine months ended June 30, 1999 from $7,457,553
for the same period in 1998. This increase was primarily attributable to a
$888,367 increase in net dealer inventory and investment gains which was
offset by a $784,300 decrease in commission revenues as well as net
decreases in other revenue sources totaling $81,390.
Commission revenue decreased by $784,300, or 14% to $4,700,005 for the nine
months ended June 30, 1999 from $5,484,305 for the same period in 1998.
Revenues from commissions are affected by both retail trading volume and the
dollar amount of retail trades. Based on the number of retail trades
processed, 1999 volume decreased by 17% from 1998 levels. Partially
offsetting this 17% decrease in volume is a 4% increase in the dollar
average of retail trades for 1999 as compared with 1998. The average number
of account executives decreased from an average of 43 for the nine months
ended June 30, 1998 to an average of 30 for the nine months ended June 30,
1999, or a decrease of 30%.
Net dealer inventory and investment gains increased by $888,367, or 57% to
$2,437,717 for the nine months ended June 30, 1999 as compared to $1,549,350
for the same period in 1998. The increase in net dealer inventory and
investment gains is primarily attributable to a $858,704 increase in
wholesale trading income and a $223,552 increase in income generated from
Company investment portfolio valuations in the nine months ended June 30,
1999 as compared to the same nine month period in 1998. The increase in
wholesale trading is attributable to the ongoing development of new
wholesale trading relationships by the Company as well as maintenance of
existing wholesale relationships. Partially offsetting the significant
increases in wholesale trading is a $209,082 decrease in retail equity
trading income for the nine months ended June 30, 1999 as compared to the
same period in 1998. The Company's retail trading department primarily
concentrates on global securities which it believes are likely to be traded
by the Company's retail clients. By focusing on these types of securities,
retail trading income is more directly related to commission income and
order flow.
Revenues from management and investment advisory fees increased by $5,930,
or 10% to $63,171 for the nine months ended June 30, 1999 from $57,241 for
the same period in 1998. The increase is primarily due to an increase in the
dollar amount of fixed fee money under management.
Interest and dividend revenue decreased by $22,200, or 11% to $184,466 for
the nine months ended June 30, 1999 from $206,666 in the same period in
1998. This
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decrease is primarily attributable to a lower average dollar amount of
interest bearing investments held by the Company for the nine
month period.
Loss from joint venture of $34,254 for the nine months ended June 30, 1999
represents the Company's 50% share of the operating loss from the activity
of International Assets New York, LLC, a 50/50 joint venture with Lakeside
Investments, LLC of New York which began its operations in December 1998.
The major expenses incurred by the Company relate to direct costs of its
securities operations such as commissions and clearing fees (which includes
commissions paid to account executives), employees compensation and
benefits, communications and promotion expense. Total expenses decreased by
$580,029, or 8% to $6,919,084 for the nine months ended June 30, 1999 from
$7,499,113 in the same period ended June 30, 1998. This decrease is
primarily attributable to decreases in commissions and clearing fees,
communications, promotions, professional fees and other operating expenses.
Commissions and clearing fees decreased by $307,466, or 9% to $3,017,469 for
the nine months ended June 30, 1999 from $3,324,935 in the same period in
1998. The decrease in commission expense is directly related to the 14%
decrease in commission revenue and the related 30% decrease in the average
number of account executives for the nine month period.
Employees compensation and benefits expense increased by $581,564, or 38% to
$2,097,597 for the nine months ended June 30, 1999 from $1,516,033 for the
same period in 1998. The increase in employees compensation and benefits
expense is due to the creation of additional staff positions related to
ITCI's start-up as well as IAAC's staffing needs, increases in performance
based bonus expense and an increase in the accrual for retirement plan
profit sharing expense. The increase in performance based bonus and
retirement plan profit sharing expense is primarily based on the $561,146
income before income taxes incurred for the nine month period ended June 30,
1999 as compared to the $41,560 loss before income taxes for the same nine
month period ended June 30, 1998. The increase in employees compensation and
benefits for the nine month period ended June 30, 1999 also includes $93,601
of non-cash compensation expense related to the exercise of two
non-qualified stock options. No non-cash compensation expense was reported
for the same period in 1998.
Communications expense decreased by $59,982, or 23% to $197,391 for the nine
months ended June 30, 1999 from $257,373 for the same period in 1998. This
decrease is due to lower telephone, printing and postage expense related to
the corresponding decrease in the average number of account executives from
43 for the nine months ended June 30, 1998 to 30 for the same period in
1999.
Promotion expense decreased by $387,462, or 42% to $534,522 for the nine
months ended June 30, 1999 from $921,984 for the same period in 1998. This
decrease is
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primarily due to the planned reduction of promotion expenditures for print
media, including newsletter publication, lead generation and the related
postage expense.
Occupancy and equipment rental expense increased by $68,627, or 26% to
$332,062 for the nine months ended June 30, 1999 from $263,435 in the same
period in 1998. This increase was primarily due to a negotiated, time
specific rent adjustment realized during the five months from September 1997
through January 1998.
Professional fees decreased by $135,862, or 41% to $198,809 for the nine
months ended June 30, 1999 from $334,671 in the same period in 1998. This
decrease is primarily due to significantly higher legal fees incurred during
the nine month period ended June 30, 1998 related to a closed 1998 NASD
arbitration matter.
Other operating expenses decreased by $285,768, or 49% to $302,804 for the
nine months ended June 30, 1999 from $588,572 in the same period in 1998.
Approximately $100,000 of the decrease in other operating expenses
represents the award in the closed arbitration matter which was incurred
during the nine month period ended June 30, 1998 and an additional $100,000
of the decrease represents the partial reimbursement of the claimant's legal
fees also awarded to the claimant in the same matter. Other operating
expenses also included various other expenses that decreased from 1998 to
1999.
As a result of the above, the Company is reporting net income of $325,533
for the nine months ended June 30, 1999. This is compared to a net loss of
$48,592 for the nine months ended June 30, 1998.
The Company's effective income tax rate was approximately 42% for the nine
months ended June 30, 1999. The presence of income tax expense for the nine
months ended June 30, 1998, given the loss before income taxes, is due to
the amount of permanent tax differences exceeding the $41,560 loss before
income taxes for the nine month period in 1998.
Three Months Ended June 30, 1999, as Compared to
the Three Months Ended June 30, 1998
For the three months ended June 30, 1999 and 1998, 67% and 74%,
respectively, of the Company's revenues were derived from commissions earned
on the sale of securities, with 27% and 18%, respectively, of revenues
coming from net dealer inventory and investment gains. Total revenues
increased by $164,954, or 7% to $2,373,270 for the three months ended June
30, 1999 from $2,208,316 for the same period in 1998. This increase was
primarily attributable to a $244,948 increase in net dealer inventory and
investment gains which was offset by a $32,778 decrease in commission
revenues.
Commission revenue decreased by $32,778, or 2% to $1,594,474 for the three
months ended June 30, 1999 from $1,627,252 for the same period in 1998. The
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decrease in commission revenue is related to the 9% decrease in ticket
volume and largely offset by an 8% increase in the average dollar amount of
trades during the three months ended June 30, 1999, as compared to the three
months ended June 30, 1998. The average number of account executives
decreased from an average of 38 for the three months ended June 30, 1998 to
an average of 28 for the three months ended June 30, 1999, or a decrease of
26%.
Net dealer inventory and investment gains increased by $244,948, or 61% to
$648,958 for the three months ended June 30, 1999 as compared to $404,010
for the same period in 1998. The increase in net dealer inventory and
investment gains is primarily attributable to a $88,916 increase in
wholesale trading income and a $109,365 increase in income generated from
Company investment portfolio valuations in the three months ended June 30,
1999 as compared to the same three month period in 1998.
Revenues from management and investment advisory fees decreased by $11,735,
or 38% to $18,775 for the three months ended June 30, 1999 from $30,510 for
the same period in 1998. The decrease is due to decreases in unit investment
trust supervisory fees as well as reduced client money management fees.
Interest and dividend revenue increased by $6,772, or 10% to $75,719 for
the three months ended June 30, 1999 from $68,947 in the same period in
1998.
Loss from joint venture of $16,711 for the three months ended June 30, 1999
represents the Company's 50% share of the operating loss from the activity
of International Assets New York, LLC, a 50/50 joint venture with Lakeside
Investments, LLC of New York which began its operations in December 1998.
Total expenses increased by $146,282, or 7% to $2,355,354 for the three
months ended June 30, 1999 from $2,209,072 in the same period ended June 30,
1998. This increase is primarily attributable to increases in employees
compensation and benefits, occupancy and equipment rental, professional fees
and other operating expenses. These expense increases were partially offset
by decreases in commissions and clearing fees, communications and
promotions.
Commissions and clearing fees decreased by $68,508, or 7% to $975,596 for
the three months ended June 30, 1999 from $1,044,104 in the same period in
1998. The decrease in commission expense is directly related to the 2%
decrease in commission revenue and the related 26% decrease in the average
number of account executives for the three month period.
Employees compensation and benefits expense increased by $232,783, or 49% to
$710,619 for the three months ended June 30, 1999 from $477,836 for the same
period in 1998. The increase in employees compensation and benefits expense
is due to the creation of additional staff positions related to ITCI's
start-up as well as IAAC's staffing needs and an increase in the accrual for
retirement plan profit
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sharing expense. The increase in employees compensation and benefits for
the three month period ended June 30, 1999 also includes $63,330 of
non-cash compensation expense related to the exercise of one non-qualified
stock option. No non-cash compensation expense was reported for the same
period in 1998.
Communications expense decreased by $16,602, or 20% to $66,521 for the three
months ended June 30, 1999 from $83,123 for the same period in 1998. This
decrease is due to lower telephone, printing and postage expense related to
the corresponding decrease in the average number of account executives from
38 for the three months ended June 30, 1998 to 28 for the same period in
1999.
Promotion expense decreased by $50,116, or 20% to $205,782 for the three
months ended June 30, 1999 from $255,898 for the same period in 1998. This
decrease is primarily due to the planned reduction of promotion expenditures
for print media, including newsletter publication, lead generation and the
related postage expense.
Occupancy and equipment rental expense increased by $19,188, or 20% to
$116,479 for the three months ended June 30, 1999 from $97,291 in the same
period in 1998.
Professional fees increased by $18,183, or 27% to $85,316 for the three
months ended June 30, 1999 from $67,133 in the same period in 1998.
Other operating expenses increased by $30,863, or 33% to $125,246 for the
three months ended June 30, 1999 from $94,383 in the same period in 1998.
As a result of the above, the Company is reporting net income of $1,379 for
the three months ended June 30, 1999 as compared to a net loss of $8,068 for
the three month period ended June 30, 1998.
Income tax expense increased by $9,225 to $16,537 for the three months ended
June 30, 1999 from $7,312 in the same period in 1998. The Company is
reporting book income tax expense in excess of the regular expected tax rate
due to the impact of permanent tax differences that occurs near breakeven
operating activity. In addition, the calculation of an effective tax rate
reports a meaningless percentage due to the effects of these permanent tax
differences.
Liquidity and Capital ResourcesSubstantial portions of the Company's assets
are liquid. At June 30, 1999, approximately 91% of the Company's assets
consisted of cash, cash equivalents and marketable securities. All assets
are financed by the Company's equity capital, short-term borrowings from
securities lending transactions and other payables.
The Company's wholly owned registered securities broker/dealer subsidiary
IAAC is subject to the requirements of the SEC and the NASD relating to
liquidity and net capital levels. At June 30, 1999, IAAC had net capital of
approximately
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$2,741,000, which was approximately $2,609,000 in excess of
its minimum net capital requirement at that date.
The Company's wholly owned registered securities broker subsidiary ITCI is
also subject to the requirements of the SEC and the NASD relating to
liquidity and net capital levels. ITCI has not yet commenced operations. The
net capital requirement for ITCI is based on ITCI's planned status as an
introducing securities broker. At June 30, 1999, ITCI had net capital of
approximately $173,000, which was approximately $123,000 in excess of its
minimum net capital requirement at that date.
In the opinion of management, the Company's existing capital and cash flow
from operations will be adequate to meet the Company's capital needs for at
least the next twelve months in light of known and reasonably estimated
trends. The Company believes that it has the internal financial resources to
implement the initial online trading of foreign and domestic securities
activities and operations of ITCI without additional outside capital.
However, at this time additional financing is being sought primarily for
desired marketing efforts intended to generate potential online client and
online securities transaction growth. Any additional financing will also
support the required technology and staffing enhancements that would be
required if the marketing efforts are successful in generating significant
growth for ITCI. In conjunction with the Company's plans for ITCI, the
Company has engaged PaineWebber as its exclusive financial advisor to
arrange and negotiate a private placement of securities issued by the
Company or to find a strategic partner. PaineWebber has been engaged to use
its best efforts in connection with a private placement and does not have
any obligation to purchase any securities issued by the Company or to
provide financing of any kind to the Company.
Year 2000 Compliance
The securities industry is, to a significant extent, technologically driven
and dependent. In addition to some internally utilized technological
applications, the Company's businesses are materially dependant upon the
performance of exchanges, market centers, counterparties, customers and
vendors (collectively "the Company's material third parties") who, in turn,
may be heavily reliant on technological applications. The securities
industry is interdependent with each other, strengthened or weakened by the
quality and performance of its attendant information and embedded
technology.
The Company is aware that the Year 2000 provides potential problems with the
programming code in existing computer systems. The Year 2000 problem is
extensive and complex as virtually every computer operation will be affected
to some degree by the change of the two digit year value to 00. The issue is
whether computer systems will properly recognize date-sensitive information
when the year changes to 2000. Systems that do not properly recognize such
information could generate erroneous data or fail.
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The failure or faulty performance of computer systems could potentially have
a far ranging impact on the Company's business such as a diminution in its
ability to (a) ascertain information vital to strategic decision making by
both the Company and its customers; (b) perform interest rate and pricing
calculations; (c) execute and settle proprietary and customer transactions;
(d) undertake regulatory surveillance and risk management; (e) maintain
accurate books and records and provide timely reports; (f) maintain
appropriate internal financial operations and accounting; and (g) access
credit facilities for both the Company and its customers.
Accordingly it is necessary for the Company, to the extent reasonably
practicable, to identify the internal computer systems and software which
are likely to have a critical impact on its operations, make an assessment
of its Year 2000 readiness and modify or replace information and embedded
technology as needed. Some of these critical internal data processing
systems include the Company's internal Novel network, sales contact
management software, general ledger accounting software, trading income
calculation software and retail commission tracking programs. Assessment of
these internal programs is primarily completed and final remediation is in
process and largely completed. In addition, the Company has primarily
completed a Year 2000 readiness assessment for the Company's material third
parties.
Because the Company utilizes the services of Wexford Clearing Services
Corporation ("Wexford") in its business, data processing system aspects of
the Year 2000 problem related to securities clearing, custody of client
securities, back office operations, cashiering and margin and credit will be
addressed by Wexford (a wholly owned guaranteed subsidiary of Prudential
Securities Incorporated "Prudential"). Although Wexford is the contracting
party for the provision of these critical services, Wexford in fact delivers
those services through the operations of Prudential, a leading registered
broker and dealer. Consequently, it is the readiness of Prudential that is
critical when assessing the Year 2000 compliance of the clearing and
operations capacity of the Company's active broker-dealer subsidiaries.
Prudential has been assessed, by internal industry standards established by
the Securities Industry Association, to be within the top tier of Year 2000
readiness. During industry-wide testing conducted by the Securities Industry
Association, in which Prudential took part, Prudential and other
participants were able to input transactions and send them to the
appropriate markets for execution, confirmation and clearance under
simulated Year 2000 conditions.
Additionally, the Company has assessed the state of readiness of almost all
known technologically oriented service vendors and believes, based on
letters of certification, that the vast majority of these vendors are Year
2000 compliant with the remainder expected to be compliant before the end of
August 1999. This determination does not mean that the vast majority of the
Company's material third parties pose no Year 2000 risk to the Company.
First, the Company is relying in large measure on these parties' assessments
of their readiness. Second, there are several vendors, which account for a
substantial portion of the Company's mission
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critical operations, which may be partially or largely, but not fully, Year
2000 compliant. Finally, certain critical third parties, such as
exchanges, clearing houses, depositaries and other service vendors have no
direct functional contact with the Company (as they operate directly with
Wexford) but may impact the Company's operations.
During fiscal year 1997 the Company began the strategic review process as it
relates to the Year 2000 process. The Board of Directors of the Company
approved the Company's Year 2000 plan at its meeting on July 17, 1998. This
plan includes all phases necessary and budgetary consideration for each
fiscal year through the Year 2000.
The Year 2000 remediation plan and process includes (1) identification,
modification and testing of non-compliant Year 2000 code; (2)
identification, inventory, assessment and, if necessary, modification of
internal ad hoc systems or applications that may be material to the
Company's operations; (3) with the exception of counterparties and
customers, documentation of the assessment of the readiness of the Company's
material third parties; and (4) a timetable for completion of all year 2000
plans implementation steps for amendment to the plan as required. During the
year ended September 30, 1998 the Company incurred approximately $76,000 of
costs related to the Year 2000 problem. During the nine months ended June
30, 1999 the Company incurred approximately $87,000 in costs related to the
Year 2000 problem. The Company has budgeted a total of $193,000 for Year
2000 related costs for the 20 month period from June 1998 through January
2000. These Year 2000 costs include both capital expenditures and period
expenses. This Year 2000 budget will be funded from the working capital of
the Company. Provided there is an absence of unanticipated critical events,
the Company does not expect Year 2000 costs to have a material effect on its
operating results, financial condition or cash flows.
As a contingency plan, the Company intends to have information systems
personnel on site or on stand-by availability, from December 31, 1999
through January 2, 2000, on a 24-hour basis, to insure that any Year 2000
problems which may arise will be addressed and corrected immediately. The
Company has been informed that Prudential intends to implement a similar
contingency plan. The Company believes these measures will be sufficient
because of the following reasons: (1) the Company has reviewed and modified,
to the extent it can ascertain the problem, mission critical code and
embedded technology (2) the Company has minimal internally generated systems
and (3) the Company's vendors have represented that they are either
currently Year 2000 compliant or will become so by the third quarter of
1999.
However, it is the Company's position there are no alternatives in the event
the exchanges or other market centers fail to perform. In such event, the
Company believes it is highly likely that the factors which may prevent a
particular clearing firm from performing would similarly affect all other
clearing firms, which would either preclude the availability of alternative
clearing service providers or
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overwhelm the resources of surviving alternative clearing services
providers. The Year 2000 presents a problem which is not likely to be
susceptible to remediation at a future date if it is not fixed in advance.
The Company is cautiously optimistic about its current state of readiness
and its ability to make any further necessary modifications to internal
systems in time for the Year 2000. The Company also believes that its major
third party service provider, Prudential/Wexford, has undertaken a
systematic approach to the Year 2000 problem and will complete its plan
which is designed to achieve a state of readiness. However, there are
factors outside the control of the Company which make certainty impossible
such as: (1) the inability to assess the readiness of market counterparties
and customers; (2) the inability to achieve assurance as to any material
third parties' representations of readiness; (3) the global exposure of
material third parties to Year 2000 problems outside the United States which
have a corresponding effect within the global securities markets and
operations; and (4) the limitations in anticipating all aspects of a problem
with which there is no prior historical experience. The presence of any or
all of these and other factors may well have a material adverse effect on
the Company's business, operating results, financial condition and cash
flows.
24
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is party to certain arbitration and/or litigation matters as of
June 30, 1999 which relate primarily to matters arising in the ordinary
course of business. Management of the Company anticipates that the final
resolution of these additional items will not have a material adverse effect
on the Company's consolidated financial statements.
The foregoing discussion contains certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements involve various risks and uncertainties with
respect to current legal proceedings. Although the Company believes that its
expectation with respect to the forward-looking statements is based upon
reasonable assumptions within the bounds of its knowledge of its business
and operations, there can be no assurances that the actual results,
performance or achievement of the Company will not differ materially from
any future results, performance or achievements expressed or implied by such
forward-looking statements.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a). Exhibits
(10.12) The Company's Employment Agreement, entered into as
March 24, 1999, between the Company and Diego J.
Veitia, is attached hereto as Exhibit 10.12.
(10.13) The Company's Employment Agreement, entered into as
March 24, 1999, between the Company and Jerome F.
Miceli, is attached hereto as Exhibit 10.13.
(11) The Statements of Computation of Earnings Per Share
are attached hereto as Exhibit 11.
(21) Subsidiaries of the Registrant is attached hereto as
Exhibit 21.
(27) Broker-Dealers and Broker Dealer Holding Companies
Financial Data Schedule BD is attached hereto as
Exhibit 27.
b). Form 8-K
No reports were filed on Form 8-K during the nine months
ended June 30, 1999.
25
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Signatures
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
INTERNATIONAL ASSETS HOLDING CORPORATION
Date 08/12/99 /s/ Diego J. Veitia
Diego J. Veitia
Chairman and Chief Executive Officer
Date 08/12/99 /s/ Jonathan C. Hinz
-------- --------------------
Jonathan C. Hinz
Vice President and Controller
(Person Performing Similar Functions
of Principal Financial Officer and
Principal Accounting Officer)
26
<PAGE>
Exhibit 10.12
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
the 24th day of March, 1999, by and between INTERNATIONAL ASSETS HOLDING
CORPORATION, a Delaware corporation (the "Company"), and Diego J. Veitia (the
"Executive"); this Agreement shall become effective as of March 24, 1999 (the
"Effective Date").
R E C I T A L S
A. The Company, directly or through its subsidiaries, operates a
financial services company, including a full-service securities brokerage firm
specializing in global investing, a registered investment advisor providing
clients with investment advisory services, and other securities businesses
servicing its clients.
B. The Executive is the Chairman of the Board and Chief Executive
Officer of the Company, and may hold such offices in its subsidiaries as may be
appropriate for the conduct of its business.
C. The Company is a publicly held entity, having previously offered
shares of the Company's common stock pursuant to a registration statement, and
continues to file reports as to the Companies business.
D. The Board of Directors of the Company (the "Board") considers it
essential to the best interests of the Company that the Executive remain with
the Company after the completion of the present term of his employment.
E. In order to induce the Executive to continue to be employed by the
Company, the Company desires to enter into this Agreement with the Executive.
F. The Executive desires to continue in the employ of the Company, and
agrees to continue his employment, and in furtherance thereof agrees to be bound
by the covenants herein.
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth hereinafter, the Company and the Executive agree as follows:
1. Recitals. All of the above recitals are true and correct.
2. Term. The term of this Agreement shall be for a period of two years
commencing on the Effective Date, subject, however, to prior termination as
herein provided. Thereafter, this Agreement may be extended by the mutual
written agreement of the Company and the Executive.
<PAGE>
3. Duties. During the period of employment (except as otherwise agreed
by the Executive), the Executive will be employed as the Chairman of the Board
and Chief Executive Officer of the Company and shall have powers and duties as
may from time to time be delegated to the Executive by the Board. The Executive
shall report to the Board of Directors. The Company acknowledges that Executive
is not required to devote his full-time business efforts to the conduct of the
duties specified in this Agreement. The Company acknowledges that the Executive
is involved in the conduct of other business entities, and may continue such
involvement during the term of this Agreement.
4. Indemnification. The Company agrees to defend, indemnify and hold
harmless the Executive ("Indemnified Party") for acts in his capacity as
Executive to the fullest extent permitted by Delaware corporate law at the
present time (or as such right of indemnity may be increased in the future). The
Company agrees to reimburse the Indemnified Party on a monthly basis for any
cost of defending any action or investigation (including reasonable attorneys'
fees and expenses) subject to an undertaking from the Indemnified Party to repay
the Company if the Indemnified Party is determined not to be entitled to such
indemnity by a court of competent jurisdiction.
5. Compensation and Related Matters.
(a) Basic Salary. As a compensation for the duties to be
performed by the Executive hereunder, the Company will pay the Executive a base
salary at a rate of $143,504 during the current year and shall thereafter
increase effective as of the first day of each suceeding fiscal year by the
greater of (i) the change in the consumer price index, or (ii) such other amount
as the Board in its discretion determines to be appropriate. The Executive's
base salary shall be payable in accordance with the customary payroll practices
of the company, during the period of employment.
(b) Bonus Plan. (i) In addition to the base salary, the
Executive shall be entitled to additional compensation in an amount equal to a
percentage of the adjusted consolidated pre-tax earnings of the Company
(including its subsidiaries) for each fiscal year which ends during the term
hereof.
(ii) For purposes of this Section 5(b), the "consolidated
pre-tax earnings of the Company" shall be determined by the independent public
accountants then regularly servicing the Company, in accordance with generally
accepted accounting principles, consistently applied, based on the audited
consolidated financial statements of the Company for such fiscal year, which
determination shall be binding on the parties hereto. In calculating the
amount of the consolidated pre-tax earnings of the Company certain financial
transactions (including start-up costs arising from the creation of the
Company's branch office in New York, New York) may be excluded if so directed
by a unanimous vote of all directors of the Company excluding the Executive.
(iii) The consolidated Return on Equity (ROE) percentage
shall be calculated by dividing the audited fiscal year end net income of the
Company by the Average Shareholders Equity. The Average Shareholders Equity
for each fiscal year shall be determined
<PAGE>
by averaging the shareholders' equity reported in the audited financial
statements of the Company as of the beginning and the end of that fiscal year.
(iv) The executive bonus percentage for a fiscal year shall be
calculated by applying the consolidated ROE percentage for that year to the
consolidated pre-tax earnings as adjusted before the deduction for officers
bonus expense and as adjusted for certain financial transactions pursuant to
Section 5(b)(ii). The executive bonus percentage shall be subject to a minimum
of 5% and a maximum of 15% of adjusted consolidated pre-tax earnings of the
Company.
(v) Such compensation shall be determined and paid within 60
days after delivery by the Company's independent accountants of the audited
consolidated financial statements of the Company for such fiscal year.
(c) Stock Options. The Executive shall be eligible to participate in
the Stock Option Plan (the "Plan") and shall be considered by the Company's
Board or the Compensation Committee to receive grants of options thereunder at
the same times as consideration shall be given by the Board or such committee
to the grants of stock options generally to senior executive officers of the
Company. If the Plan shall be terminated or if no options remain available for
grant thereunder, the Executive shall be entitled to participate in such other
incentive program as the Company may substitute for the Plan for its senior
executive officers. Any options which have not vested in the Executive, or
which have not been exercised by the Executive at the time of the termination
of the employment of the Executive shall be deemed cancelled, withdrawn, void,
or otherwise not operative.
(d) Additional Compensation. The Company may award additional bonuses
to the Executive from time to time in amounts as determined by the Board or a
committee of the Board.
(e) Reimbursement of Expenses. During the term of this Agreement, the
Company shall promptly pay or reimburse the Executive for all reasonable
business expenses actually incurred or paid by the Executive in the
performance of his services hereunder (including annual membership dues in
connection with the Executive's affiliations with any organizations or clubs)
in accordance with the policies and procedures of the Company for the
reimbursement of business expenses of its senior executive officers, provided
that the Executive properly accounts therefor in accordance with Company
policy.
(f) Benefits. The Company shall, at its sole cost and expense,
provide life insurance, medical insurance, disability insurance and other
benefits comparable to those provided by comparable companies to their senior
executive officers.
(g) Automobile. During the term of this Agreement, the Company shall
furnish the Executive, without cost to him, a Company-owned or leased
automobile, of year type, and model to be agreed upon between the Company and
the Executive, or provide Executive with a monthly car allowance in the amount
of $600.00.
6. Vacation, Days Off. The Executive may take a maximum of 4 weeks
vacation, at times to be determined in the manner most convenient for the
business of the Company. In
<PAGE>
addition, the Executive may take time off at such
times as may be determined by the Board to attend such meetings and postgraduate
courses as may comply with regulatory and licensing requirements of the
businesses conducted by the Company, or which otherwise directly advance the
interests of the Company. The Company may, in its discretion, reimburse the
Executive for some or all of the expenses incurred to register for or attend
such training courses.
7. Termination Provisions.
(a) Termination
(i) The Executive's employment hereunder shall
automatically terminate (A) upon the Executive's death or Disability (as
hereinafter defined); (B) upon written notice by the Company for "Cause" (as
hereinafter defined); or (C) upon 30 days written notice by either party.
(ii) For purposes of this Agreement, "Disability" shall
have the same meaning as that term has under a disability policy maintained for
the Executive by the Company. If no such policy exists, or if payment of
benefits under the policy is not conditioned on meeting such a definition, then
"Disability" shall mean that the Executive is unable to perform his duties
hereunder on a full-time basis for three consecutive months after reasonable
accommodation by the Company.
(iii) For purposes of this Agreement, the Company shall
have "Cause" to terminate the Executive's employment hereunder upon (A) the
willful failure by the Executive to substantially perform the Executive's
duties (other than any such failure resulting by the Executive's Disability)
and continuance of such failure for more than 30 days after the Company
notifies the Executive in writing of the Executive's failure to perform; (B)
the engaging by the Executive in willful misconduct which is injurious to the
Company; (C) the conviction of the Executive in a court of proper jurisdiction
of a crime which constitutes a felony in respect of the conduct of the
business of the Company;or (D) a finding by the National Association of
Securities Dealers, Inc. the "NASD"), another self-regulatory body of
competent jurisdiction (the "SRO"), or U.S. Securities and exchange Commission
(the "SEC") that the Executive personally violated its rules or regulations,
and such finding or penalty therefore restricts the Executive's ability to
perform his obligations under this Agreement. Notwithstanding the foregoing,
the Executive shall not be deemed to have personally violated rules or
regulations of the NASD, an SRO, or the SEC, if a finding or penalty imposed
is based upon a finding that the Executive did not adequately supervise such
employee, but was not otherwise a party to the acts constituting the
misconduct by such other person. Further, the Executive shall not be deemed to
have been terminated for Cause unless and until there has been delivered to
the Executive notice that a resolution has been duly adopted by the Board
which finds that the Company has "Cause" to terminate the Executive as
contemplated in this Section 7(a), provided, that the Executive is terminated
for Cause upon conviction of a felony as identified in clause (C) above, and
upon the revocation of any license required under applicable law for the
conduct of the business of the Company by the Executive.
(b) Compensation Upon Termination. If either (i) the Company
shall terminate the employment of the Executive for Cause pursuant to the
provisions of Section 7(a)
<PAGE>
hereof, or (ii) the Executive shall resign (other than as a result of the
violation of this Agreement by the Company), then the Company shall pay the
Executive 100% of the compensation set forth in Section 5 hereof for 30 days
following the date of termination of employment. If the Company shall
terminate the employment of the Executive without Cause or the Executive
resigns as a result of a breach by the Company of its obligations to the
Executive, whether set forth herein or otherwise, then the Company shall pay
the Executive 100% of the compensation set forth in Section 5 hereof for 24
months following the date of termination.
8. Nondisclosure and Noncompetition.
During the period of employment hereunder and for a period of
one year after termination of this Agreement (for whatever reason), the
Executive shall not, without the written consent of the Board or a person
authorized thereby, disclose to any person, information, knowledge or data which
is not theretofore publicly known and in the public domain, and obtained by the
Executive while in the employ of the Company (which for purposes of this Section
8 shall include the Company or any of its subsidiaries), respecting information
about the Company, or of any products, improvements, designs or styles,
customers, methods of distribution, sales, prices, profits, costs, contracts,
suppliers, business prospects, business methods, techniques, research, trade
secrets, or know-how of the Company, except as the Executive may, in good faith,
reasonably believe to be for the Company's benefit. Notwithstanding the
foregoing, for a period of one year following the termination of employment
hereunder, the Executive may disclose any information, knowledge or data of the
type described to the extent required by law in connection with any judicial or
administrative proceeding or inquiry.
In addition to the foregoing and in the interest of protecting
the Company's trade secrets, during the term of this Agreement and for a period
of one year after termination of this Agreement for any reason, the Executive
shall not, without the written consent of the Board or a person authorized
thereby, directly or indirectly, do any business with respect to, or solicit any
business similar to the business of the Company from, any of the Company's
customers, clients, or accounts without the consent of the Company. In addition,
Executive shall not directly, or through any company of which Executive is an
officer, employee, or more than 5% owner, hire any employee of the Company, or
attempt to solicit any employee of, or independent contractor used by, the
Company to leave the service of the Company.
Executive agrees that the restrictions of this Section 8 are
reasonable as to time, area, subject matter and otherwise due to the
confidential nature of the information and trade secrets of the Company, and the
unique role and substantial compensation of the Executive. The Executive
acknowledges that he entered into the covenants imposed by this Section 8 in
connection with a prior employment agreement, and that such restrictions are
continued without interruption under this Agreement. The covenants contained in
this Section 8 shall survive the termination of the Executive's employment
pursuant to this Agreement. The foregoing provisions of this Section 8 shall be
binding upon the Executive's heirs, successors and legal representatives.
9. Repurchase of Stock. It is agreed that within fifteen days following
the termination of this Agreement by virtue of the death or Disability of the
Executive; or by action
<PAGE>
of the Company other than for Cause; or at the time of the resignation of the
Executive as a result of a breach by the Company of its obligations under this
Agreement, then the Executive may give notice to the Company (a "Section 9
Notice") that the Company shall repurchase from the Executive a specified
number of shares of stock of the Company then owned by the Executive. For the
purpose of this determination, shares which are not vested in the Executive,
and shares which are the subject of options which have not been exercised by
the Executive, shall not be deemed to be shares "then owned by the Executive."
The giving of such notice shall constitute a revocable offer
of such shares to the Company. Upon the receipt of a Section 9 Notice, the
Company shall be obligated to purchase on or about the first business day of
each of the next twenty months thereafter, a number of shares equal to five
percent of the number of shares identified in the notice given hereunder, to the
extent such shares are tendered for delivery to the Company, and to the extent
that such purchase may be made under applicable law. If the Executive shall fail
to tender in any month the number of shares which the Company is obligated to
purchase during such month, then the offer to the Company of such number of
shares (but not other shares covered by the Section 9 Notice during future
months), shall be deemed to have been waived.
In the event that a change in control of the Company occurs,
or is proposed to occur, during the period the Company is obligated to purchase
shares pursuant to this Section 9, then the duty of the Company to acquire from
the Executive any shares covered in the Executive's Section 9 Notice is hereby
accelerated, and such purchase (including full payment for such shares) must be
completed on or before the date of a proposed change of control, or within
twenty days after a change of control which occurs other than with the
cooperation of the Company. If the Executive would be entitled to deliver a
Section 9 Notice to the Company in connection with events arising from a
proposed change of control event involving the Company, then such Section 9
Notice may provide for the offer and purchase of such shares concurrently with
the triggering change of control event.
Each purchase of shares under this Section 9 shall be made at
current market price per share of the stock in effect at the time such purchase
are made. The Company shall not be obligated to purchase any shares, and the
Executive is not empowered to offer his shares to the Company pursuant to this
provision upon the expiration of this Agreement by the passage of time.
10. Tax Returns. During the term of this Agreement, the Company shall
promptly pay or reimburse the Executive for all costs and expenses associated
with the preparation of the Executive's personal income tax returns. The
Executive represents and warrants that he will file all tax returns he is
required by law to file, as and when due on the original due date or a lawfully
extended filing date.
11. Other Directorships. The Company acknowledges and understands that
the Executive will sit on the Board of Directors of other public and private
companies not in competition with the Company and its affiliates. The Company
agrees that the Executive shall be entitled to any fees or salary received for
his participation on the Boards of Directors of such companies.
<PAGE>
12. Attorneys' Fees. In the event a proceeding is brought to enforce or
interpret any part of this Agreement or the rights or obligations or any party
to this Agreement, the prevailing party shall be entitled to recover as an
element of such party's costs of suit, through all appeals, and not as damages,
reasonable attorneys' fees and paralegals' fees to be fixed by the arbitrator(s)
or court. The prevailing party shall be the party who is entitled to recover his
costs of suit or proceeding whether or not the action proceeds to final
judgment. A party not entitled to recover his costs shall not recover attorneys'
fees.
13. Successors and Assigns. This Agreement and the benefits hereunder
are personal to the Company and are not assignable or transferable by the
Executive without the written consent of the Company. The services to be
performed by the Executive hereunder may not be assigned by the Company, without
the written consent of the Executive, to any person, firm, corporation or other
entity, with the exception of a parent or subsidiary of the Company. Subject to
the foregoing, this Agreement shall be binding upon and inure to the benefit of
the Company and the Executive and the Executive's heirs and legal
representatives, and the Company's successors and permitted assigns.
14. Governing Law. This Agreement shall be construed in accordance
with and governed by the law of the State of Delaware, without regard to the
application of principles of conflict of laws.
15. Notices. All notices and other communications required or permitted
to be given under this Agreement shall be in writing and shall be deemed to have
been given if delivered personally or sent by certified mail, return receipt
requested, postage prepaid, to the parties to this Agreement shall specify by
notice to the other:
If to the Company: International Assets Holding Corporation
Suite 200
250 Park Avenue South
Winter Park, Florida 32789
With a copy to: Steven M. Felsenstein, Esq.
Stradley, Ronon, Stevens & Young LLP
2600 Commerce Square
Philadelphia, Pennsylvania 19103
If to the Executive: Mr. Diego J. Veitia
Winter Park, FL 32789
All notices and communications shall be deemed to have been received on the date
of delivery or on the third business day after the mailing thereof.
16. Modification; Waiver. No provisions of this Agreement may be
modified, waived or discharged unless such modification, waiver or discharge is
approved by the Board or a person authorized thereby, and is agreed to in a
writing signed by the Executive and such officer as may
<PAGE>
be specifically designated by the Board. No waiver by either party hereto at
the time of any breach by the other party hereto of any condition or provision
of this Agreement, or compliance therewith, by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same time,
or at any prior or subsequent time.
17. Complete Understanding. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.
18. Headings. The headings in this Agreement are for convenience of
reference only and shall not control or affect the meaning or construction of
this Agreement.
19. Severability. The invalidity of any one or more of the words,
phrases, sentences, clauses or sections contained in this Agreement shall not
affect the enforceability of the remaining portions of this Agreement or any
part thereof, all of which are inserted conditionally on their being valid in
law, and if any one or more of the words, phrases, sentences, clauses or
sections contained in this Agreement shall be declared invalid, this Agreement
shall be construed as if such invalid word or words, phrase or phrases, sentence
or sentences, clause or clauses, or section or sections had not been inserted.
20. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
21. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Orlando, Florida, in accordance with the rules of the American Arbitration
Association then in effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
COMPANY:
INTERNATIONAL ASSETS HOLDING
CORPORATION, a Delaware corporation
By: Jerome F. Miceli
Name: Jerome F. Miceli
Title: President & COO
EXECUTIVE:
Diego J. Veitia
Diego J. Veitia
<PAGE>
Exhibit 10.13
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
the 24th day of March, 1999, by and between INTERNATIONAL ASSETS HOLDING
CORPORATION, a Delaware corporation (the "Company"), and Jerome F. Miceli (the
"Executive"); this Agreement shall become effective as of March 24, 1999 (the
"Effective Date").
R E C I T A L S
A. The Company, directly or through its subsidiaries, operates a
financial services company, including a full-service securities brokerage firm
specializing in global investing, a registered investment advisor providing
clients with investment advisory services, and other securities businesses
servicing its clients.
B. The Executive is the President, Chief Operating Officer and
Treasurer of the Company, and shall hold such offices of its subsidiaries as may
be appropriate for the conduct of its business.
C. The Company is a publicly held entity, having previously offered
shares of the Company's common stock pursuant to a registration statement, and
continues to file reports as to the Companies business.
D. The Board of Directors of the Company (the "Board") considers it
essential to the best interests of the Company that the Executive remain with
the Company after the completion of the present term of his employment.
E. In order to induce the Executive to continue to be employed by the
Company, the Company desires to enter into this Agreement with the Executive.
F. The Executive desires to continue in the employ of the Company, and
agrees to continue his employment, and in furtherance thereof agrees to be bound
by the covenants herein.
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth hereinafter, the Company and the Executive agree as follows:
1. Recitals. All of the above recitals are true and correct.
2. Term. The term of this Agreement shall be for a period of two years
commencing on the Effective Date, subject, however, to prior termination as
herein provided. Thereafter, this Agreement may be extended by the mutual
written agreement of the Company and the Executive.
<PAGE>
3. Duties. During the period of employment (except as otherwise agreed
by the Executive), the Executive will be employed as the President, Chief
Operating Officer and Treasurer of the company and shall have powers and duties
as may from time to time be delegated to the Executive by the Board. The
Executive shall report to the Chairman of the Board. The Executive shall devote
substantially all of the Executive's business time to the affairs of the
Company.
4. Indemnification. The Company agrees to defend, indemnify and hold
harmless the Executive ("Indemnified Party") for acts in his capacity as
Executive to the fullest extent permitted by Delaware corporate law at the
present time (or as such right of indemnity may be increased in the future). The
Company agrees to reimburse the Indemnified Party on a monthly basis for any
cost of defending any action or investigation (including reasonable attorneys'
fees and expenses) subject to an undertaking from the Indemnified Party to repay
the Company if the Indemnified Party is determined not to be entitled to such
indemnity by a court of competent jurisdiction.
5. Compensation and Related Matters.
(a) Basic Salary. As a compensation for the duties to be
performed by the Executive hereunder, the Company will pay the Executive a base
salary at a rate of $143,504 during the current year and such salary shall
thereafter increase effective as of the first day of each succeeding fiscal year
by the greater of (i) the change in the consumer price index, or (ii) such other
amount as the Board in its discretion determines to be appropriate. The
Executive's base salary shall be payable in accordance with the customary
payroll practices of the company, during the period of employment.
(b) Bonus Plan. (i) In addition to the base salary, the
Executive shall be entitled to additional compensation in an amount equal to a
percentage of the adjusted consolidated pre-tax earnings of the Company
(including its subsidiaries) for each fiscal year which ends during the term
hereof.
(ii) For purposes of this Section 5(b), the "consolidated
pre-tax earnings of the Company" shall be determined by the independent public
accountants then regularly servicing the Company, in accordance with generally
accepted accounting principles, consistently applied, based on the audited
consolidated financial statements of the Company for such fiscal year, which
determination shall be binding on the parties hereto. In calculating the
amount of the consolidated pre-tax earnings of the Company certain financial
transactions (including start-up costs arising from the creation of the
Company's branch office in New York, New York) may be excluded if so directed
by a unanimous vote of all directors of the Company excluding the Executive.
(iii) The consolidated Return on Equity (ROE) percentage
shall be calculated by dividing the audited fiscal year end net income of the
Company by the Average Shareholders Equity. The Average Shareholders Equity for
each fiscal year shall be determined by averaging the shareholders' equity
reported in the audited financial statements of the Company as of the beginning
and the end of that fiscal year.
<PAGE>
(iv) The executive bonus percentage for a fiscal year shall
be calculated by applying the consolidated ROE percentage for that year to the
consolidated pre-tax earnings as adjusted before the deduction for officers
bonus expense and as adjusted for certain financial transactions pursuant to
Section 5(b)(ii). The executive bonus percentage shall be subject to a minimum
of 5% and a maximum of 15% of adjusted consolidated pre-tax earnings of the
Company.
(v) Such compensation shall be determined and paid within
60 days after delivery by the Company's independent accountants of the audited
consolidated financial statements of the Company for such fiscal year.
(c) Stock Options. The Executive shall be eligible to
participate in the Stock Option Plan (the "Plan") and shall be considered by the
Company's Board or the Compensation Committee to receive grants of options
thereunder at the same times as consideration shall be given by the Board or
such committee to the grants of stock options generally to senior executive
officers of the Company. If the Plan shall be terminated or if no options remain
available for grant thereunder, the Executive shall be entitled to participate
in such other incentive program as the Company may substitute for the Plan for
its senior executive officers. Any options which have not vested in the
Executive, or which have not been exercised by the Executive at the time of the
termination of the employment of the Executive shall be deemed cancelled,
withdrawn, void, or otherwise not operative.
(d) Additional Compensation. The Company may award additional
bonuses to the Executive from time to time in amounts as determined by the Board
or a committee of the Board.
(e) Reimbursement of Expenses. During the term of this
Agreement, the Company shall promptly pay or reimburse the Executive for all
reasonable business expenses actually incurred or paid by the Executive in the
performance of his services hereunder (including annual membership dues in
connection with the Executive's affiliations with any organizations or clubs) in
accordance with the policies and procedures of the Company for the reimbursement
of business expenses of its senior executive officers, provided that the
Executive properly accounts therefor in accordance with Company policy.
(f) Benefits. The Company shall, at its sole cost and expense,
provide life insurance, medical insurance, disability insurance and other
benefits comparable to those provided by comparable companies to their senior
executive officers.
(g) Automobile. During the term of this Agreement, the Company
shall furnish the Executive, without cost to him, a Company-owned or leased
automobile, of year type, and model to be agreed upon between the Company and
the Executive, or provide Executive with a monthly car allowance in the amount
of $600.00.
6. Vacation, Days Off. The Executive may take a maximum of 4 weeks
vacation, at times to be determined in the manner most convenient for the
business of the Company. In addition, the Executive may take time off at such
times as may be determined by the Board to attend such meetings and postgraduate
courses as may comply with regulatory and licensing
<PAGE>
requirements of the businesses conducted by the Company, or which otherwise
directly advance the interests of the Company. The Company may, in its
discretion, reimburse the Executive for some or all of the expenses incurred to
register for or attend such training courses.
7. Termination Provisions.
(a) Termination
(iv) The Executive's employment hereunder shall
automatically terminate (A) upon the Executive's death or Disability (as
hereinafter defined); (B) upon written notice by the Company for "Cause"
(as hereinafter defined); or (C) upon 30 days written notice by either party.
(v) For purposes of this Agreement, "Disability" shall have
the same meaning as that term has under a disability policy maintained for the
Executive by the Company. If no such policy exists, or if payment of benefits
under the policy is not conditioned on meeting such a definition, then
"Disability" shall mean that the Executive is unable to perform his duties
hereunder on a full-time basis for three consecutive months after reasonable
accommodation by the Company.
(vi) For purposes of this Agreement, the Company shall have
"Cause" to terminate the Executive's employment hereunder upon (A) the willful
failure by the Executive to substantially perform the Executive's duties
(other than any such failure resulting by the Executive's Disability) and
continuance of such failure for more than 30 days after the Company notifies
the Executive in writing of the Executive's failure to perform; (B) the
engaging by the Executive in willful misconduct which is injurious to the
Company; (C) the conviction of the Executive in a court of proper jurisdiction
of a crime which constitutes a felony in respect of the conduct of the business
of the Company; or (D) a finding by the National Association of Securities
Dealers, Inc. (the "NASD"), another self-regulatory body of competent
jurisdiction (the "SRO"), or U.S. Securities and exchange Commission (the
"SEC") that the Executive personally violated its rules or regulations, and
such finding or penalty therefore restricts the Executive's ability to
perform his obligations under this Agreement. Notwithstanding the foregoing,
the Executive shall not be deemed to have personally violated rules or
regulations of the NASD, an SRO, or the SEC, if a finding or penalty imposed
is based upon a finding that the Executive did not adequately supervise such
employee, but was not otherwise a party to the acts constituting the misconduct
by such other person. Further, the Executive shall not be deemed to have been
terminated for Cause unless and until there has been delivered to the Executive
notice that a resolution has been duly adopted by the Board which finds that
the Company has "Cause" to terminate the Executive as contemplated in this
Section 7(a), provided, that the Executive is terminated for Cause upon
conviction of a felony as identified in clause (C) above, and upon the
revocation of any license required under applicable law for the conduct of the
business of the Company by the Executive.
(b) Compensation Upon Termination. If either (i) the Company
shall terminate the employment of the Executive for Cause pursuant to the
provisions of Section 7(a) hereof, or (ii) the Executive shall resign (other
than as a result of the violation of this Agreement by the Company), then the
Company shall pay the Executive 100% of the compensation set forth
<PAGE>
in Section 5 hereof for 30 days following the date of termination of
employment. If the Company shall terminate the employment of the Executive
without Cause or the Executive resigns as a result of a breach by the Company
of its obligations to the Executive, whether set forth herein or otherwise,
then the Company shall pay the Executive 100% of the compensation set forth
in Section 5 hereof for 24months following the date of termination.
8. Nondisclosure and Noncompetition.
During the period of employment hereunder and for a period of
one year after termination of this Agreement (for whatever reason), the
Executive shall not, without the written consent of the Board or a person
authorized thereby, disclose to any person, information, knowledge or data which
is not theretofore publicly known and in the public domain, and obtained by the
Executive while in the employ of the Company (which for purposes of this Section
8 shall include the Company or any of its subsidiaries), respecting information
about the Company, or of any products, improvements, designs or styles,
customers, methods of distribution, sales, prices, profits, costs, contracts,
suppliers, business prospects, business methods, techniques, research, trade
secrets, or know-how of the Company, except as the Executive may, in good faith,
reasonably believe to be for the Company's benefit. Notwithstanding the
foregoing, for a period of one year following the termination of employment
hereunder, the Executive may disclose any information, knowledge or data of the
type described to the extent required by law in connection with any judicial or
administrative proceeding or inquiry.
In addition to the foregoing and in the interest of protecting
the Company's trade secrets, during the term of this Agreement and for a period
of one year after termination of this Agreement for any reason, the Executive
shall not, without the written consent of the Board or a person authorized
thereby, directly or indirectly, do any business with respect to, or solicit any
business similar to the business of the Company from, any of the Company's
customers, clients, or accounts without the consent of the Company. In addition,
Executive shall not directly, or through any company of which Executive is an
officer, employee, or more than 5% owner, hire any employee of the Company, or
attempt to solicit any employee of, or independent contractor used by, the
Company to leave the service of the Company.
Executive agrees that the restrictions of this Section 8 are
reasonable as to time, area, subject matter and otherwise due to the
confidential nature of the information and trade secrets of the Company, and the
unique role and substantial compensation of the Executive. The Executive
acknowledges that he entered into the covenants imposed by this Section 8 in
connection with a prior employment agreement, and that such restrictions are
continued without interruption under this Agreement. The covenants contained in
this Section 8 shall survive the termination of the Executive's employment
pursuant to this Agreement. The foregoing provisions of this Section 8 shall be
binding upon the Executive's heirs, successors and legal representatives.
9. Repurchase of Stock. It is agreed that within fifteen days following
the termination of this Agreement by virtue of the death or Disability of the
Executive; or by action of the Company other than for Cause; or at the time of
the resignation of the Executive as a result of a breach by the Company of its
obligations under this Agreement, then the Executive may
<PAGE>
give notice to the Company (a "Section 9 Notice") that the Company shall
repurchase from the Executive a specified number of shares of stock of the
Company then owned by the Executive. For the purpose of this determination,
shares which are not vested in the Executive, and shares which are the subject
of options which have not been exercised by the Executive, shall not be deemed
to be shares "then owned by the Executive."
The giving of such notice shall constitute a revocable offer
of such shares to the Company. Upon the receipt of a Section 9 Notice, the
Company shall be obligated to purchase on or about the first business day of
each of the next twenty months thereafter, a number of shares equal to five
percent of the number of shares identified in the notice given hereunder, to the
extent such shares are tendered for delivery to the Company, and to the extent
that such purchase may be made under applicable law. If the Executive shall fail
to tender in any month the number of shares which the Company is obligated to
purchase during such month, then the offer to the Company of such number of
shares (but not other shares covered by the Section 9 Notice during future
months), shall be deemed to have been waived.
In the event that a change in control of the Company occurs,
or is proposed to occur, during the period the Company is obligated to purchase
shares pursuant to this Section 9, then the duty of the Company to acquire from
the Executive any shares covered in the Executive's Section 9 Notice is hereby
accelerated, and such purchase (including full payment for such shares) must be
completed on or before the date of a proposed change of control, or within
twenty days after a change of control which occurs other than with the
cooperation of the Company. If the Executive would be entitled to deliver a
Section 9 Notice to the Company in connection with events arising from a
proposed change of control event involving the Company, then such Section 9
Notice may provide for the offer and purchase of such shares concurrently with
the triggering change of control event.
Each purchase of shares under this Section 9 shall be made at
current market price per share of the stock in effect at the time such purchase
are made. The Company shall not be obligated to purchase any shares, and the
Executive is not empowered to offer his shares to the Company pursuant to this
provision upon the expiration of this Agreement by the passage of time.
10. Tax Returns. During the term of this Agreement, the Company shall
promptly pay or reimburse the Executive for all costs and expenses associated
with the preparation of the Executive's personal income tax returns. The
Executive represents and warrants that he will file all tax returns he is
required by law to file, as and when due on the original due date or a lawfully
extended filing date.
11. Other Directorships. The Company acknowledges and understands that
the Executive will sit on the Board of Directors of other public and private
companies not in competition with the Company and its affiliates. The Company
agrees that the Executive shall be entitled to any fees or salary received for
his participation on the Boards of Directors of such companies.
12. Attorneys' Fees. In the event a proceeding is brought to enforce or
interpret any part of this Agreement or the rights or obligations or any party
to this Agreement, the prevailing
<PAGE>
party shall be entitled to recover as an element of such party's costs of suit,
through all appeals, and not as damages, reasonable attorneys' fees and
paralegals' fees to be fixed by the arbitrator(s) or court. The prevailing
party shall be the party who is entitled to recover his costs of suit or
proceeding whether or not the action proceeds to final judgment. A party not
entitled to recover his costs shall not recover attorneys' fees.
13. Successors and Assigns. This Agreement and the benefits hereunder
are personal to the Company and are not assignable or transferable by the
Executive without the written consent of the Company. The services to be
performed by the Executive hereunder may not be assigned by the Company, without
the written consent of the Executive, to any person, firm, corporation or other
entity, with the exception of a parent or subsidiary of the Company. Subject to
the foregoing, this Agreement shall be binding upon and inure to the benefit of
the Company and the Executive and the Executive's heirs and legal
representatives, and the Company's successors and permitted assigns.
14. Governing Law. This Agreement shall be construed in accordance
with and governed by the law of the State of Delaware, without regard to the
application of principles of conflict of laws.
15. Notices. All notices and other communications required or permitted
to be given under this Agreement shall be in writing and shall be deemed to have
been given if delivered personally or sent by certified mail, return receipt
requested, postage prepaid, to the parties to this Agreement shall specify by
notice to the other:
If to the Company: International Assets Holding Corporation
Suite 200
250 Park Avenue South
Winter Park, Florida 32789
With a copy to: Steven M. Felsenstein, Esq.
Stradley, Ronon, Stevens & Young LLP
2600 Commerce Square
Philadelphia, Pennsylvania 19103
If to the Executive: Mr. Jerome F. Miceli
Heathrow, FL 33746
All notices and communications shall be deemed to have been received on the date
of delivery or on the third business day after the mailing thereof.
16. Modification; Waiver. No provisions of this Agreement may be
modified, waived or discharged unless such modification, waiver or discharge is
approved by the Board or a person authorized thereby, and is agreed to in a
writing signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at the time of any
breach by the other party hereto of any condition or provision of this
Agreement, or compliance
<PAGE>
therewith, by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same time, or at any prior or
subsequent time.
17. Complete Understanding. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.
18. Headings. The headings in this Agreement are for convenience
of reference only and shall not control or affect the meaning or construction
of this Agreement.
19. Severability. The invalidity of any one or more of the words,
phrases, sentences, clauses or sections contained in this Agreement shall not
affect the enforceability of the remaining portions of this Agreement or any
part thereof, all of which are inserted conditionally on their being valid in
law, and if any one or more of the words, phrases, sentences, clauses or
sections contained in this Agreement shall be declared invalid, this Agreement
shall be construed as if such invalid word or words, phrase or phrases, sentence
or sentences, clause or clauses, or section or sections had not been inserted.
20. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
21. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Orlando, Florida, in accordance with the rules of the American Arbitration
Association then in effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
COMPANY:
INTERNATIONAL ASSETS HOLDING
CORPORATION, a Delaware corporation
By: Diego J. Veitia
Name: Diego J. Veitia
Title: Chairman & CEO
EXECUTIVE:
Jerome F. Miceli
Jerome F. Miceli
<PAGE>
EXHIBIT 11
INTERNATIONAL ASSETS HOLDING CORPORATION
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
For the Nine Months Ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
1999 1998 (1)
---- --------
Basic Earnings (Loss) Per Share
Numerator:
Net income (loss) $ 325,533 $ (48,592)
Denominator:
Weighted average number of common shares outstanding 1,650,938 1,695,505
Basic earnings (loss) per share $ 0.20 $ (0.03)
Diluted Earnings (Loss) Per Share
Numerator:
Net income (loss) $ 325,533 $ (48,592)
Denominator:
Weighted average number of common shares outstanding 1,650,938 1,695,505
Weighted average number of net common shares that
would be issued upon exercise of dilutive options
assuming proceeds used to repurchase shares
pursuant to the treasury
stock method (2) 298,026
-
Weighted average number of common shares and dilutive
potential common shares outstanding 1,948,964 1,695,505
Diluted earnings (loss) per share $ 0.17 $ (0.03)
</TABLE>
- -------------------------------------------------------------------------------
(1) Diluted loss per share is the same as basic loss per share for 1998
because of the anti-dilutive impact of the dilutive potential common
shares due to the net loss for 1998.
(2) The treasury stock method recognizes the use of proceeds that could be
obtained upon exercise of options in computing diluted earnings per share.
It assumes exercise of options as of the beginning of the period or when
issued, if later, and that any proceeds would be used to purchase common
stock at the average market price during the period.
<PAGE>
EXHIBIT 11
INTERNATIONAL ASSETS HOLDING CORPORATION
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
For the Three Months Ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
<S>
<C>
1999 1998 (1)
---- --------
Basic Earnings (Loss) Per Share
Numerator:
Net income (loss) $ 1,379 $ (8,068)
Denominator:
Weighted average number of common shares outstanding 1,700,980 1,681,002
Basic earnings (loss) per share $ 0.001 $ (0.005)
Diluted Earnings (Loss) Per Share
Numerator:
Net income (loss) $ 1,379 $ (8,068)
Denominator:
Weighted average number of common shares outstanding 1,700,980 1,681,002
Weighted average number of net common shares that would
be issued upon exercise of dilutive options assuming proceeds
used to repurchase shares pursuant to the treasury
stock method (2) 471,287
-
Weighted average number of common shares and dilutive
potential common shares outstanding 2,172,267 1,681,002
Diluted earnings (loss) per share $ 0.001 $ (0.005)
</TABLE>
- -------------------------------------------------------------------------------
(1) Diluted loss per share is the same as basic loss per share for 1998
because of the anti-dilutive impact of the dilutive potential common
shares due to the net loss for 1998.
(2) The treasury stock method recognizes the use of proceeds that could be
obtained upon exercise of options in computing diluted earnings per share.
It assumes exercise of options as of the beginning of the period or when
issued, if later, and that any proceeds would be used to purchase common
stock at the average market price during the period.
<PAGE>
EXHIBIT 21
INTERNATIONAL ASSETS HOLDING CORPORATION
SUBSIDIARIES OF THE REGISTRANT
Name Place of Incorporation
International Assets Advisory Corp. Florida
International Asset Management Corp. Florida
Global Assets Advisors, Inc. Florida
International Financial Products, Inc. Florida
INTLTRADER.COM, INC. Florida
Offshoretrader.com Ltd. Bermuda
<TABLE> <S> <C>
<ARTICLE> BD
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> JUN-30-1999
<CASH> 4,469,210
<RECEIVABLES> 109,864
<SECURITIES-RESALE> 0
<SECURITIES-BORROWED> 0
<INSTRUMENTS-OWNED> 3,175,504
<PP&E> 318,625
<TOTAL-ASSETS> 8,316,204
<SHORT-TERM> 0
<PAYABLES> 986,152
<REPOS-SOLD> 0
<SECURITIES-LOANED> 0
<INSTRUMENTS-SOLD> 1,089,262
<LONG-TERM> 0
0
0
<COMMON> 17,188
<OTHER-SE> 6,059,673
<TOTAL-LIABILITY-AND-EQUITY> 8,316,204
<TRADING-REVENUE> 2,437,717
<INTEREST-DIVIDENDS> 184,466
<COMMISSIONS> 4,700,005
<INVESTMENT-BANKING-REVENUES> 0
<FEE-REVENUE> 171,485
<INTEREST-EXPENSE> 2,345
<COMPENSATION> 4,148,558
<INCOME-PRETAX> 561,146
<INCOME-PRE-EXTRAORDINARY> 561,146
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 325,533
<EPS-BASIC> 0.20
<EPS-DILUTED> 0.17
</TABLE>
