SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended __ March 31,1997____________________
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ___________________
Commission File No. _0-24188__
JOTAN, INC.
(Exact name of small business issuer as specified in its charter)
______Florida_________________ ___________59-3181162_________
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
_____118 W. Adams Street, Suite 900, Jacksonville, Florida 32202__________
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code ___(904) 355-2592___
________________________________________________________________
Former name, former address and former fiscal year, if changed
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchanged act of 1934 during the
past 12 months (or for such shorter period that the issuer was required to
file such reports) and (2) has been subject to such filing requirements for
the past 90 days.
Yes______X______ No ____________
APPLICABLE ONLY TO CORPORATE ISSUERS: State the number of shares outstanding
of each of the issuer's classes of common equity, as of the latest practicable
date: 5,679,411 shares of common stock, $.01 par value, as of March 31, 1997.
<PAGE>
INDEX
Jotan, Inc.
Part I--Financial Information
Item I - Financial Statements (Unaudited)
Condensed Consolidated Statements of Operations
for the Three Months ended March 31, 1997 and 1996 2
Condensed Consolidated Balance Sheet at March 31, 1997 3 & 4
Condensed Consolidated Statements of Cash Flows for the
Three Months ended March 31, 1997 and 1996 5 & 6
Notes to Condensed Consolidated Financial Statements 7
Item II -- Management's Discussion and Analysis of
Financial Condition and Result of Operations 12
Part II -- Other Information
Item 6 - Exhibits and Reports on Form 8-K 16
Signatures 18
<PAGE>
Jotan, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31
_________________________________
1997 1996
_____________ _____________
<S> <C> <C>
Sales $ 6,789,207 $ 2,717,703
Cost of sales 4,748,143 2,086,152
_____________ _____________
Gross profit 2,041,064 631,551
_____________ _____________
Operating expenses 1,941,325 567,309
Amortization of goodwill and non-compete 272,508 -
_____________ _____________
Operating income (loss) ( 172,769) 64,242
Other income 9,910 17,102
Interest expense ( 320,598) ( 60,325)
_____________ _____________
Income (loss) before taxes ( 483,457) 21,019
Income tax expense - -
_____________ _____________
Net income (loss) ( 483,457) 21,019
Amounts attributable to
preferred stock 100,209 -
_____________ _____________
Net income (loss) attributable
to common shareholders $( 583,666) $ 21,019
============== =============
Net income (loss) per share $ (.10) $ .00
============== =============
Weighted average number
of common and common
equivalent shares outstanding 5,679,411 5,667,667
============== =============
</TABLE>
See notes to condensed consolidated financial statements.
-2-
<PAGE>
Jotan, Inc.
Condensed Consolidated Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
March 31
1997
_____________
<S> <C>
Assets
Current assets:
Cash and cash equivalents $ 3,018,575
Trade receivables (net) 7,342,019
Inventory 7,198,999
Other current assets 788,247
_____________
Total current assets 18,347,840
_____________
Property and equipment, net 4,882,390
Goodwill, net 25,185,671
Non-compete, net 6,490,500
Other assets 932,328
_____________
Total assets $ 55,838,729
=============
</TABLE>
See notes to condensed consolidated financial statements.
-3-
<PAGE>
Jotan, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
March 31
1997
_____________
<S> <C>
Liabilities and stockholders' equity
Current liabilities:
Trade payables $ 7,697,317
Accrued expenses 3,766,276
Notes payable (12%) 95,000
Current portion of long-term debt,
notes payable and capital leases 1,211,802
Other 898,454
_____________
Total current liabilities 13,668,849
_____________
Capitalized lease obligations 4,029,643
Deferred revenue 122,486
Long-term debt, less current maturities 26,483,077
Line of credit -
_____________
30,635,206
_____________
Redeemable preferred stock 9,340,000
Stockholders' equity
Preferred stock
Authorized shares - 10,000,000
Issued and outstanding shares - 1,265,823
in 1997 12,658
Voting common stock, $.01 par value:
Authorized shares - 40,000,000
Issued and outstanding shares - 5,679,411
in 1997 56,794
Additional paid-in capital 4,613,983
Retained earnings (deficit) ( 2,488,761)
_____________
Total stockholders' equity 2,194,674
_____________
Total liabilities and stockholders' equity $ 55,838,729
=============
</TABLE>
See notes to condensed consolidated financial statements.
-4-
<PAGE>
Jotan. Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31
_________________________________
1997 1996
_____________ _____________
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $( 483,457) $ 21,019
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization expense 329,213 38,409
Stock compensation expense 25,800 -
Changes in operating assets and liabilities:
Trade receivables 178,786 ( 215,148)
Inventory ( 227,476) 99,678
Other current assets 47,583 ( 83,482)
Trade payables 2,892,684 157,980
Accrued expenses 30,422 ( 21,014)
Deferred revenue and expenses ( 23,667) -
_____________ _____________
Net cash provided by (used in) operating activities 2,769,888 ( 2,558)
============= ==============
Cash flows from investing activities
Proceeds from sale of property and equipment 1,000,000 -
Decrease (increase) in other assets 495,192 ( 1,600)
Purchase of property and equipment ( 31,203) ( 17,264)
Purchase of business, net of cash acquired (37,482,786) -
_____________ _____________
Net cash flows from (used in) investing activities (36,018,797) ( 18,864)
============= =============
Cash flows from financing activities
Proceeds from (payments) on line of credit borrowings ( 1,594,076) 146,927
Repayments of amounts advanced from Total Supply
Systems, Inc. - ( 123,128)
Payments on long-term debt ( 1,195,038) ( 24,148)
Proceeds from senior revolver 2,830,884 -
Proceeds from senior term debt 16,122,500 -
Proceeds from senior subordinated debt 8,710,000 -
Proceeds from issuance of redeemable preferred stock,
net of issuance costs 9,340,000 -
Proceeds from issuance of warrants 650,000 -
_____________ _____________
Net cash provided by (used in) financing activities 34,864,270 ( 349)
============= =============
</TABLE>
-5-
<PAGE>
Jotan. Inc.
Condensed Consolidated Statements of Cash Flows (continued)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31
_________________________________
1997 1996
_____________ _____________
<S> <C> <C>
Net increase (decrease) in cash and cash equivalents 1,615,361 ( 21,771)
Cash and cash equivalents at beginning of period 1,403,214 21,771
_____________ _____________
Cash and cash equivalents at end of period $ 3,018,575 $ -
============= =============
Purchase of business, net of cash acquired
Trade receivables ($ 5,967,581) $ -
Inventory ( 5,789,881) -
Other current assets ( 517,889) -
Property and equipment ( 4,069,138) -
Other assets ( 820,802) -
Trade payables 3,278,692 -
Accrued expenses 3,488,497 -
Other current liabilities 922,121 -
Other liabilities 122,486 -
Non - Compete ( 6,600,000) -
Goodwill ( 25,262,114) -
Notes payable and capitalized leases 3,732,823 -
_____________ _____________
($37,482,786) $ -
============= =============
</TABLE>
See notes to condensed consolidated financial statements.
-6-
<PAGE>
Jotan Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. The Business and Basis of Presentation
Description of Business
Jotan, Inc. (the "Company") is a distributor of packaging and shipping
supplies with five distribution centers located in the Southern United States.
The Company sells primarily to manufacturers and provides Just On Time As
Needed delivery service for it's products. On March 4, 1997 the Company
completed the acquisition of 100% of the stock of Southland Holding Company
("Southland"). Southland is a distributor of packaging and shipping supplies
with eleven distribution centers throughout the United States. Southland sells
primarily to the moving and storage industry, but also sells packaging
products to the air freight and perishable food markets. Southland provides
services similar to those provided by the Company to these market segments.
Basis of Presentation
The accompanying financial statements are unaudited and, in the opinion of
management reflect all the adjustments that are necessary for a fair
presentation of the financial position and results of operations for the
periods presented. All of such adjustments are of a normal and recurring
nature.
The acquisition of Southland has been accounted for under the purchase method
of accounting. Cost in excess of the fair value of net assets acquired
(goodwill) will be amortized over 15 years. The results from operations
include amortization of goodwill and noncompete agreements based on
preliminary purchase price allocations. The purchase price allocation is
currently being evaluated by management and is subject to revision after more
detailed analysis and evaluations are completed.
The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the entire year. The financial
statements as of March 31, 1997 and March 31, 1996 reflect the consolidated
accounts of the Company and its subsidiaries. Certain information and footnote
disclosure normally included in the financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted.
-7-
<PAGE>
Jotan Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
cont.
2. Long Term Debt
Senior Secured Term Loan A $8,535,240
with interest at LIBOR plus 2.75%
payable quarterly, with principal payments
due quarterly beginning in June, 1997
and ending March, 2002.
Senior Secured Term Loan B 7,587,260
with interest at LIBOR plus 3,25%
payable quarterly, with principal payments
due quarterly beginning in June, 1997
and ending March 2004.
Senior Secured Revolving Line of 2,830,884
Credit with interest at LIBOR plus
2.75% payable quarterly, with principal
due March 2002.
Subordinated Debt with interest of 8,710,000
12.5% payable quarterly, with
principal due in equal
quarterly installments during
2002 and 2005.
Other 41,495
____________
27,704,879
Less Current Maturities 1,115,000
____________
Long Term Debt $26,589,879
============
The Senior Secured Term Loans and Senior Secured Revolving Line of Credit are
secured by all assets, including inventory, accounts receivable, real estate,
trademarks, and patents of the Company, as well as the common stock and other
equity interests of each subsidiary of the Company. The subordinated debt is
subordinated to all senior debt and is unsecured. All of the debt contains
-8-
<PAGE>
Jotan Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
cont.
restrictive covenants including limitations on the Company's amount of debt,
disposition of assets, incurrence of liens or encumbrances, payment of
dividends, investments, and executive compensation. In connection with the
subordinated debt, the Company issued warrants to purchase approximately 13.5%
of the Company's issued and outstanding Common Stock on a fully diluted basis.
The warrants are exercisable for ten years and were attributed a value of
$150,000.
Long term debt maturities by year are as follows:
1997 $ 825,000
1998 1,475,000
1999 1,787,500
2000 2,037,500
2001 2,662,500
Thereafter 18,917,379
______________
Total Long Term Debt $ 27,704,879
==============
3. Capitalized Leases
The Company leases certain land and buildings under long term leases which are
accounted for as capital leases. Included in property and equipment are the
following assets held under capital leases:
March 31, 1997
Land $ 701,597
Buildings 2,949,274
____________
3,650,871
Less accumulated amortization (1,112,514)
____________
$ 2,538,357
============
-9-
<PAGE>
Jotan Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
cont.
Future minimum lease payments for assets under capital leases at March 31,
1997 are as follows:
1998 $ 732,500
1999 732,500
2000 732,500
2001 732,500
2002 732,500
Thereafter 4,352,916
____________
Total minimum leases payments 8,015,416
Less amount representing interest (3,985,773)
____________
Present value of minimum
lease payments 4,029,643
Less current maturities (96,802)
____________
Long Term Obligation $ 3,932,841
============
4. Preferred Stock
Convertible Preferred Stock
On May 16, 1996, Jotan, Inc. (the Company) signed an agreement to sell up tp
$6,000,000 in Series A Convertible Preferred Stock to an affiliate of Fairview
Capital L.L.C., a Raleigh, N.C. based private investment company. The initial
funding closed May 16, 1996, and provided the Company $1,820,076, net of
expenses, through the sale of 1,265,823 shares of Series A Convertible
Preferred Stock to F-Jotan, L.L.C., the Fairview affiliate. Under the terms of
the Series A Convertible Preferred Stock Purchase Agreement, the Company may
sell an additional $4,000,000 of Series A Convertible Preferred Stock to the
investors subject to certain conditions set forth in the Series A Convertible
Preferred Stock Purchase Agreement. The Series A Convertible Preferred Stock
has voting rights equivalent to the common stock and carries an 8% annual
dividend, which is payable beginning January 1, 1997 in additional shares of
preferred stock.
-10-
<PAGE>
Jotan Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
cont.
Redeemable Preferred Stock
In Connection with the Southland acquisition, the Company issued Series B
Redeemable Preferred Stock of $9,340,000, net of fees and discount of
$600,000. The Series B Preferred Stock accrues dividends at a rate of 8.0% per
annum, payable quarterly, in kind by the issuance of additional shares of
Series B Preferred Stock. Series B Preferred Stock have a liquidation
preference over all other shares of Common Stock and preferred stock,
including the Series A Preferred Stock that is currently held by F-Jotan, an
affiliate of Fairview. The Series B Preferred Stock may be redeemed by the
Company at any time, but subject to premiums ranging from 12.5% during the
first year to 0% commencing in the sixth year. Redemption of the Series B
Redeemable Preferred Stock is mandatory on the eighth anniversary of closing.
Rice and the Southland Purchasers were paid pro rata portions of a fee at
closing of $250,000 for providing the Series B Redeemable Preferred Stock
financing. The Series B Redeemable Preferred Stock entitles the holders
thereof at all times that it is outstanding to elect the majority of the Board
of Directors.
Also, in connection with the Redeemable Preferred Stock, the Company issued
warrants to purchase approximately 50% of the Company's issued and outstanding
Common Stock on a fully diluted basis. The warrants are exercisable for ten
years and were attributed a value of $500,000.
-11-
<PAGE>
Jotan Inc.
Item II - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Net sales increased to $6,789,207 for the three months ended March 31, 1997
from $2,717,703 for the three months ended March 31, 1996 or an increase of
149.8%. The increase in revenue was primarily related to $3.800,000 of post
acquisition revenue generated by Southland. Revenues also increased as a
result of new business at the Company's four existing distribution centers,
and the opening of a new distribution center in Dallas, Texas, during the
first quarter. Revenues from Jotan's distribution network increased 9.8%, more
than offsetting the impact of declining corrugated prices that occurred
throughout 1996 and the first three months of 1997.
Cost of goods sold increased to $4,748,143 or 69.9% of sales for the three
months ended March 31, 1997 from $2,086,152 or 76.8% of sales for the three
months ended March 31, 1996. The improvement in profit margin reflects several
factors including the impact of the inclusion of Southland's historically
higher profit margin product lines, the Company's ability to purchase product
more efficiently as a result of its overall improved financial condition, and
the impact of declining corrugated prices.
Operating expenses increased to $1,941,325 for the first three months of 1997
compared to $567,309 for the same period in 1996, a 242.2% increase. Several
factors contributed to this increase including the inclusion of Southland's
operating expenses in the post acquisition period, one time management
incentive payments relating to the completion of the Southland transaction,
and expenses related to the integration of Southland's administrative
functions.
Expenses related to amortization were $272,508 for the first three months of
1997, compared to no amortization expense in the same period of 1996. This
increase relates to the amortization of goodwill and noncompete agreements
resulting from the Southland acquisition.
As a result the Company had an operating loss of $172,769 for the three months
ended March 31, 1997 compared to income from operations of $64,242 for the
three months ended March 31, 1996.
Other income declined to $9,910 for the three months ended March 31, 1997,
from $17,102 for the three months ended March 31, 1996. Interest expense
increased to $320,598 for the three months ended March 31, 1997 from $60,325
for the three months ended March 31, 1996. This increase reflected the impact
of increased borrowings relating to the Southland acquisition.
-12-
<PAGE>
Jotan Inc.
As a result of the foregoing factors the Company had a net loss of $483,457
for the three months ended March 31, 1997, compared to net income of $21,019
for the three months ended March 31, 1996.
Liquidity and Capital Resources
In order to obtain financing for the Southland transaction and fund future
expansion, the Company signed an agreement on February 28, 1997 with Rice
Partners II L.P. to purchase $9 million of senior subordinated debt and $10
million of senior redeemable preferred stock. F-Southland, L.L.C., a North
Carolina limited liability company, and FF-Southland Limited Partnership, a
North Carolina limited partnership (collectively, the "Southland Purchasers"),
entities affiliated with Franklin Street/Fairview Capital, L.L.C.
("Fairview"), purchased $2 million of such senior subordinated debt and
$2 million of such senior redeemable preferred stock in lieu of Rice. Rice
and the Southland Purchasers are using capital derived from partner or member
contributions as the source of the consideration paid by them for the senior
subordinated debt and redeemable preferred stock.
Subordinated Debt.- The Subordinated Debt bears interest at a rate of 12.5%
per annum, with a default rate of 15.5% per annum. Interest is payable
quarterly for eight years, with principal due in equal quarterly installments
during the seventh and eighth years. Prepayments of the Subordinated Debt are
allowed but are subject to premiums ranging from 12.5% during the first year
to 0% commencing in the sixth year. The Subordinated Debt is subordinated to
the Company's senior debt and is unsecured. Rice and the Southland Purchasers
were paid pro rata portions of a fee of $225,000 for providing the
Subordinated Debt financing. The documentation for the Subordinated Debt
includes customary restrictive covenants and agreements by the Company,
including financial covenants and limitations on the Company's debt,
disposition of assets, incurrence of liens and encumbrances, payment of
dividends, investments and executive compensation.
In addition to the Subordinated Debt, Rice and the Southland Purchasers
received pro rata portions of warrants to purchase 3,227,471 shares of Common
Stock, representing 13.5% of the outstanding Common Stock on a fully diluted
basis, which will be exercisable for a term of ten years (the "13.5%
Warrants"). The total exercise price of the 13.5% Warrants is a maximum of
$100. The Common Stock issuable upon exercise of the 13.5% Warrants is
subject to registration rights that will allow the holders to require the
registration of such shares on not more than two occasions, and to include
such shares in other registrations by the Company, subject to certain
restrictions.
-13-
<PAGE>
Jotan Inc.
The 13.5% Warrants include customary antidilution provisions and allow the
holder to sell ("put") the 13.5% Warrants to the Company at a price equal to
the greater of their book value or their fair market value (the "Put Price")
at any time after the earlier to occur of (i) the fifth anniversary of
closing, (ii) prepayment of the Subordinated Debt in full, (iii) a material
change in the ownership of the Company, (iv) a merger or sale of all or a
majority of the Company's assets, or (v) the Company's default in performing
certain covenants contained in the documents governing the Subordinated Debt.
The Company has the right to purchase ("call") the 13.5% Warrants at any time
after the sixth anniversary of closing for a price equal to the Put Price (the
value attributed to the warrants was $150,000). As long as the Subordinated
Debt is outstanding, Rice and Fairview will each have the right to attend and
observe all meetings of the Board of Directors.
Redeemable Preferred Stock.- The Series B Preferred Stock accrues dividends at
a rate of 8.0% per annum, payable quarterly, in kind by the issuance of
additional shares of Series B Preferred Stock. Series B Preferred Stock have
a liquidation preference over all other shares of Common Stock and preferred
stock, including the Series A Preferred Stock that is currently held by F-
Jotan, an affiliate of Fairview. The Series B Preferred Stock may be redeemed
by the Company at any time, but subject to premiums ranging from 12.5% during
the first year to 0% commencing in the sixth year. Redemption of the Series B
Redeemable Preferred Stock is mandatory on the eighth anniversary of closing.
Rice and the Southland Purchasers were paid pro rata portions of a fee at
closing of $250,000 for providing the Series B Redeemable Preferred Stock
financing. The Series B Redeemable Preferred Stock entitles the holders
thereof at all times that it is outstanding to elect the majority of the Board
of Directors.
In addition to the Series B Redeemable Preferred Stock, Rice and the Southland
Purchasers received pro rata portions of warrants to purchase 11,953,596
shares of Common Stock, representing approximately 50% of the issued and
outstanding Common Stock on a fully diluted basis, which are exercisable for a
term of ten years (the "50% Warrants"). The total exercise price of the 50%
Warrants is a maximum of $100. The portion of the 13.5% Warrants and the 50%
Warrants acquired by Rice, in the aggregate, will allow Rice to acquire upon
exercise approximately 50.5% of the outstanding Common Stock on a fully
diluted basis. Through conversion of the Series A Preferred Stock and
exercise of the portion of the 13.5% Warrants and the 50% Warrants acquired by
the Southland Purchasers, affiliates of Fairview will have the right to
acquire approximately 24.12% of the outstanding Common Stock, on a fully
diluted basis. The Common Stock issuable upon exercise of the 50% Warrants is
-14-
<PAGE>
Jotan Inc.
subject to registration rights that will allow the holders to require the
registration of such shares on not more than two occasions, and to include
such shares in other registrations by the Company, subject to certain
restrictions. The value attributed to the Warrants was $500,000. The put and
call rights associated with the 50% Warrants are identical to the similar
rights of the 13.5% Warrants described above.
The former holders of Common Stock collectively own approximately 25.38% of
the outstanding shares of Common Stock on a fully diluted basis. Rice is the
Company's largest holder, beneficially owning approximately 50.5% of the
outstanding shares of Common Stock on a fully diluted basis. In addition, the
Southland Purchasers will beneficially own approximately 13% of the
outstanding shares of Common Stock and F-Jotan will beneficially own
approximately 11.12% of the outstanding shares of Common Stock on a fully
diluted basis. The Rice and the Southland Purchasers are required to file with
the Securities and Exchange Commission (the "Commission") statements reporting
their respective beneficial ownership of Common Stock pursuant to Section
13(d) of the Exchange Act. For purposes of Section 13(d), each of the
Southland Purchasers and F-Jotan are deemed to beneficially own the full
24.12% of the outstanding Common Stock on a fully diluted basis as a result of
their affiliate status due to their common manager.
The Company executed an agreement with Banque Paribas on February 28, 1997 to
obtain up to $12 million in a senior revolving credit facility and $27 million
in senior term/acquisition credit facilities. As part of the Banque Paribas
financing agreement the Company terminated it's long term financing
arrangement with CIT and paid off other long term credit facilities totaling
$2.9 million. These facilities were terminated on February 28, 1997. As a
result of the foregoing transactions the Company believes it will have
adequate capital resources for the foreseeable future.
Some of the statements above contain forward-looking statements that involve a
number of risks and uncertainties. In addition to the factors discussed above,
among the other factors that could cause actual results to differ materially
are the following: the continued implementation of the Company's expansion
program, implementation of the Company's strict business disciplines and
service levels over a large distribution network, the economic conditions in
the new areas into which the Company expands, competitive pressures from other
distributors of packaging products, business conditions and growth in the
moving and storage industry, the industrial sector of the economy and the
economy in general, and other risk factors listed from time to time in the
Company's SEC reports.
-15-
<PAGE>
Jotan Inc.
Part II--Other Information
Item 6--Exhibits and Reports on Form 8-K
a) Form 8-K/A and it's attachments, as filed May 14, 1997, is
incorporated herein by reference.
b) Exhibit 11 Statement Re: Computation of Per Share Earnings
-16-
<PAGE>
Jotan Inc.
Exhibit 11 Statement Re: Computation of Per Share Earnings
Three months ended March 31
1997 1996
_____________ ____________
Primary:
Average shares outstanding 5,679,411 5,667,667
Net effect of stock options - based
on the treasury stock method using
average market price * -0-
_____________ _____________
Totals 5,679,411 5,667,667
============= =============
Net Income (loss) $(483,457) $21,019
Amount attributable
to preferred stock 100,209 -0-
_____________ ______________
Net income (loss)
attributable to common shareholders $(583,666) $21,019
============= ==============
Per Share Amount $(.10) $.00
============= ==============
Fully diluted:
Average shares outstanding 5,679,411 5,667,667
Net effect of stock options - based
on the treasury method using average
market price which is greater than
quarter-end market price * -0-
Assumed conversion of 8% preferred
convertible stock equivalent to 2,531,646
common shares. * -0-
_____________ ______________
Totals 5,679,411 5,667,667
============= ==============
Net Income (loss) $(483,457) $21,019
Amount attributable
to preferred stock 100,209 -0-
_____________ ______________
Net income (loss)
attributable to common shareholders $(583,666) $21,019
============= ==============
Per Share Amount $(.10) $.00
============= ==============
* The effect of the stock options and the preferred stock on weighted average
shares is not assumed in the computation because their effect is anti-
dilutive.
-17-
<PAGE>
Jotan Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Jotan, Inc.
By: ____________________________
Jerry Callahan, President
By: _____________________________
David Freedman, Vice President
and Chief Financial Officer
May 19, 1997
-18-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 3,018,575
<SECURITIES> 0
<RECEIVABLES> 7,342,019
<ALLOWANCES> 0
<INVENTORY> 7,198,999
<CURRENT-ASSETS> 18,347,840
<PP&E> 4,882,390
<DEPRECIATION> 0
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9,340,000
12,658
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<EPS-PRIMARY> (.10)
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</TABLE>
