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 March 31, 1998
[ ] 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 1,525,565 as of May 11,
1998.
Transitional small business disclosure format Yes [ ] No [X]
INDEX
Page No.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheet as of March 31, 1998 3
Condensed Consolidated Statements of Operations for the
Six Months ended March 31, 1998 and 1997 5
Condensed Consolidated Statements of Operations for the
Three Months ended March 31, 1998 and 1997 6
Condensed Consolidated Statements of Cash Flows for the
Six Months ended March 31, 1998 and 1997 7
Notes to Condensed Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis or Plan of Operation 12
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 19
2
INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
March 31, 1998
(Unaudited)
Assets
Cash $ 331,635
Cash deposits with clearing broker 1,182,320
Investments 1,308,267
Other receivables 98,234
Securities owned, at market value 3,566,651
Income taxes receivable 10,001
Deferred income tax benefit 69,070
Property and equipment, at cost:
Leasehold improvements 52,953
Furniture and equipment 888,269
----------------
941,222
Less accumulated depreciation and amortization (530,629)
----------------
Net property and equipment 410,593
Other assets, net of accumulated amortization of $105,502 133,595
================
Total assets $ 7,110,366
================
See accompanying notes to condensed consolidated financial statements.
3
INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
March 31, 1998
(Unaudited)
Liabilities and Stockholders' Equity
Liabilities:
Securities sold, but not yet purchased, at market value $ 398,127
Foreign currency sold, but not yet purchased, at market value 106,703
Payable to clearing broker 137,721
Accounts payable 55,957
Accrued employee compensation and benefits 318,212
Other accrued expenses 183,528
Income taxes payable 27,031
Deferred income taxes 15,414
Other 111,413
----------------
Total liabilities 1,354,106
----------------
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 1,544,901 15,449
Additional paid-in capital 3,661,748
Retained earnings 2,079,063
----------------
Total stockholders' equity 5,756,260
================
Total liabilities and stockholders' equity $ 7,110,366
================
See accompanying notes to condensed consolidated financial statements.
4
INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
For the Six Months Ended March 31, 1998 and 1997
(Unaudited)
1998 1997
Revenues:
Commissions $ 3,857,053 4,155,846
Net dealer inventory and investment gains 1,154,508 1,185,734
Other revenue 237,676 301,935
---------------- -----------------
Total revenues 5,249,237 5,643,515
---------------- -----------------
Expenses:
Commissions and clearing fees 2,279,131 2,381,012
Employee compensation and benefits 1,039,897 1,255,709
Communications and promotions 840,336 743,522
Other operating expenses 1,130,677 773,513
---------------- -----------------
Total expenses 5,290,041 5,153,756
---------------- -----------------
Income (loss) before income taxes (40,804) 489,759
Income tax expense (benefit) (280) 206,638
---------------- -----------------
Net income (loss) $ (40,524) 283,121
================ =================
Basic earnings (loss) per share $ (.026) .178
Diluted earnings (loss) per share $ (.026) .172
Weighted average number of common shares outstanding 1,548,015 1,590,830
Weighted average number of common shares and dilutive
potential common shares outstanding 1,548,015 1,647,402
See accompanying notes to condensed consolidated financial statements.
5
INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
For the Three Months Ended March 31, 1998 and 1997
(Unaudited)
1998 1997
Revenues:
Commissions $ 1,793,919 2,133,939
Net dealer inventory and investment gains 672,922 663,950
Other revenue 96,197 157,904
----------------- -----------------
Total revenues 2,563,038 2,955,793
----------------- -----------------
Expenses:
Commissions and clearing fees 1,092,664 1,254,449
Employee compensation and benefits 514,487 680,052
Communications and promotions 383,064 407,857
Other operating expenses 417,649 394,796
----------------- -----------------
Total expenses 2,407,864 2,737,154
----------------- -----------------
Income before income taxes 155,174 218,639
Income tax expense 60,996 93,069
----------------- -----------------
Net income $ 94,178 125,570
================= =================
Basic earnings per share $ .061 .079
Diluted earnings per share $ .058 .077
Weighted average number of common shares outstanding 1,547,045 1,588,637
Weighted average number of common shares and dilutive
potential common shares outstanding 1,633,013 1,630,989
See accompanying notes to condensed consolidated financial statements.
6
INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended March 31, 1998 and 1997
(Unaudited)
1998 1997
Cash flows from operating activities:
Net income (loss) $ (40,524) 283,121
Adjustments to reconcile net income (loss) to net cash
used for operating activities:
Net amortization and appreciation of investments (25,665) (42,666)
Depreciation and amortization 90,559 77,058
Deferred income taxes (24,864) (22,046)
Cash provided by (used for) changes in:
Receivable from clearing broker, net 405,050 237,136
Receivable from affiliated company - 26,542
Other receivables (45,978) (32,920)
Securities owned, at market value (1,038,391) (574,543)
Other assets 26,100 32,077
Securities sold, but not yet purchased, at market value (283,927) (564,664)
Payable to clearing broker, net 137,721 198,398
Accounts payable (60,110) 11,608
Accrued employee compensation and benefits (582,761) (325,729)
Other accrued expenses (84,786) 66,555
Income taxes payable 27,031 (121,318)
Other liabilities 2,052 76
----------------- -----------------
Net cash used for operating activities (1,498,493) (751,315)
----------------- -----------------
Cash flows from investing activities:
Disposal of investments 3,900,000 4,425,000
Acquisition of investments (3,882,218) (4,437,293)
Acquisition of property, equipment and other assets (44,274) (136,199)
----------------- -----------------
Net cash used for investing activities (26,492) (148,492)
----------------- -----------------
(continued)
See accompanying notes to condensed consolidated financial statements.
7
INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows, Continued
For the Six Months Ended March 31, 1998 and 1997
(Unaudited)
1998 1997
Cash flows from financing activities:
Acquisition of common shares related to repurchase program (30,610) (31,240)
Acquisition of common shares related to terminated
ESOP participants - (429)
----------------- -----------------
Net cash used for financing activities (30,610) (31,669)
----------------- -----------------
Net decrease in cash and cash equivalents (1,555,595) (931,476)
Cash and cash equivalents at beginning of period 2,962,847 2,829,483
----------------- -----------------
Cash and cash equivalents at end of period $ 1,407,252 1,898,007
================= =================
Supplemental disclosure of cash flow information:
Cash paid for interest $ 2,525 1,069
================= =================
Income taxes paid $ 3,899 360,700
================= =================
See accompanying notes to condensed consolidated financial statements.
8
INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 1998 and 1997
(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, 1997, 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 five
wholly owned subsidiaries; International Assets Advisory Corp. ("IAAC"), Global
Assets Advisors, Inc. ("GAA"), International Financial Products, Inc. ("IFP"),
GlobalNet Securities, Inc. ("GNSI") and International Asset Management Corp.
("IAMC"). All significant intercompany balances and transactions have been
eliminated in consolidation.
(2) Securities Owned and Securities Sold, But Not Yet Purchased
Securities owned and Securities sold, but not yet purchased at March 31, 1998,
consist of trading and investment securities at quoted market values as follows:
Sold, but not
Owned yet purchased
Obligations of U.S. Government $ 357,259 -
Common stock and American Depository Receipts 1,806,202 398,127
Proprietary unit investment trusts 995,403 -
Corporate and municipal bonds 349,044 -
Foreign government obligations 58,743 -
_________ _______
$ 3,566,651 398,127
_________ _______
9
INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, continued
(3) Stock Dividend
On November 14, 1997 the Company's Board of Directors declared a 10% stock
dividend for shareholders of record on December 26, 1997 and payable on January
20, 1998. The 10% stock dividend increased the Company's issued and outstanding
common shares by 140,648 shares.
(4) Basic and Diluted Earnings (Loss) Per Share
On October 1, 1997 the Company adopted the provisions of Statement of Financial
Accounting Standards (SFAS) No. 128, Earnings Per Share. Comparative earnings
per share data for the quarter ended March 31, 1997 has been restated to adhere
to the provisions of SFAS No. 128.
Basic earnings (loss) per share for the six months ended March 31, 1998 and
1997, have been computed by dividing net income (loss) by the weighted average
number of common shares outstanding. Diluted earnings per share for the six
months ended March 31, 1997 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 six months ended March 31, 1998 is
the same as basic loss per share because of the anti-dilutive impact of the
potential common shares, due to the loss for the period.
Basic earnings per share for the three months ended March 31, 1998 and 1997,
have been computed by dividing net income by the weighted average number of
common shares outstanding. Diluted earnings per share for the three months ended
March 31, 1998 and 1997, have been computed by dividing net income by the
weighted average number of common shares and dilutive potential common shares
outstanding.
Due to the issuance of the 10% stock dividend, the computations of basic and
diluted earnings (loss) per share have been adjusted retroactively for all
periods presented to reflect the additional number of shares issued.
(5) 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.
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 $123,738 and $154,593 for the six
months ended
10
INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, continued
March 31, 1998, and 1997, respectively. The minimum lease payments under
noncancelable operating leases as of March 31, 1998 are as follows:
Fiscal Year (12 month period) Ending September 30,
1998 282,800
1999 316,100
2000 326,900
2001 233,000
2002 17,500
_________
Total future minimum lease payments $1,176,300
(6) Stock Repurchase Program
On November 14, 1997 the Board of Directors authorized the Company to continue
its repurchase of up to $500,000 in shares of the Company's common stock in the
open market during the remainder of the fiscal year ended September 30, 1998.
The stock purchases will 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 35,630 shares (as adjusted for the 10% stock dividend) at a total cost
of $129,233.
(7) Commitments and Contingent Liabilities
The Company was involved in a National Association of Securities Dealers (NASD)
arbitration hearing that concluded on November 7, 1997. On January 16, 1998, the
Company received notification from the NASD arbitration panel that an award of
$99,845 plus $100,000 reimbursement for a portion of the claimant's legal fees
was awarded to the claimant. The cost of both the award and legal fee
reimbursement was accrued in other accrued expenses in the December 31, 1997
financial statements and was paid on January 22, 1998.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF OPERATION.
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 and changes in laws and regulations 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 assurance 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 decreased from $7,928,214 at September 30, 1997, to
$7,110,366 at March 31, 1998, or a decrease of $817,848. The Company's
liabilities decreased from $2,100,820 at September 30, 1997, to $1,354,106 at
March 31, 1998, or a decrease of $746,714. The decrease in the net assets
(assets less liabilities) of $71,134 relates to the $40,524 net loss incurred by
the Company for the six month fiscal period ended March 31, 1998, and the stock
repurchase costs from the stock repurchase program totaling $30,610 for the same
period.
The Company's condensed consolidated balance sheet at March 31, 1998, reflects a
payable to clearing broker, for trades which had not yet settled for cash, due
to the costs from the purchase of securities exceeding the proceeds of
securities sold.
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.
Six Months Ended March 31,1998,as Compared to
the Six Months Ended March 31,1997
The Company's revenues are derived primarily from commissions earned on the sale
of securities and trading income in securities purchased or sold for the
Company's account. Total revenues decreased by approximately $394,000, or 7% for
the six months ended March 31, 1998, as compared to the six months ended March
31, 1997. For the six months ended March 31, 1998, and 1997, approximately 73%
12
and 74%, respectively, of the Company's revenues were derived from commissions
earned on the sale of securities. For the six months ended March 31, 1998, and
1997, approximately 22% and 21%, respectively, of the Company's total revenues
were from net dealer inventory and investment gains (trading revenue).
Commission revenue decreased by approximately $299,000, or 7% for the six months
ended March 31, 1998, as compared to the six months ended March 31, 1997. During
the six months ended March 31, 1998, the overall volume of customer ticket
orders decreased by approximately 1% and the average dollar amount of retail
trades decreased by approximately 7%, as compared to the six months ended March
31, 1997. This approximate 1% decrease in ticket volume combined with the
approximate 7% decrease in the average dollar amount of retail trades is
directly related to the approximate 7% decrease in total commission revenue for
the six months ended March 31, 1998 over the same period in 1997. The overall
decrease in commission revenue was despite an increase in the average number of
account executives from 41 as of March 31, 1997, to 46 as of March 31, 1998.
Revenues from net dealer inventory and investment gains decreased by
approximately $31,000, or 3% for the six months ended March 31, 1998, as
compared to the six months ended March 31, 1997. The decrease in trading revenue
is primarily attributable to a decrease in the Company's retail trading income
due to the volatility of the Asian financial markets, especially during the
first fiscal quarter (October 1, 1997 through December 31, 1997). The Company's
retail trading department primarily concentrates on global securities that it
believes are likely to be traded by the Company's retail clients. By focusing on
these types of securities, retail trading revenue is more closely related to
commission revenue and order flow. The decrease in retail trading was partially
offset by increases in wholesale trading. The increase in wholesale trading is
attributable to the ongoing development of new wholesale trading relationships
as well as maintaining existing wholesale relationships.
Other revenue decreased by approximately $64,000 or 21% during the six months
ended March 31, 1998, as compared to the six months ended March 31, 1997. The
decrease in other revenue is primarily due to decreases in list rental income
and newsletter subscription fee income.
The major expenses incurred by the Company relate to direct costs of its
securities operations such as commissions and clearing fees, employee
compensation and benefits, communications and promotions expense and other
operating expenses. Total expenses increased by approximately $136,000, or 3%
for the six months ended March 31, 1998, as compared to the same period in 1997.
This increase in total expense is primarily attributable to increases in
communications and promotions and other operating expenses.
13
Commissions and clearing fees decreased by approximately $102,000, or 4% during
the six months ended March 31, 1998, as compared to the same period in 1997.
This decrease is primarily attributable to the corresponding approximate 7%
decrease in commission revenue for the six months ended March 31, 1998, as
compared to the same period in 1997. The decrease in commissions and clearing
fees is also related to decreases in clearing fees based on the 1% decrease in
retail ticket volume. The approximate 4% decrease in commissions and clearing
fees was partially offset by increases in commissions expense related to
increases in new broker expenses based on the increase in the average number of
account executives.
Employee compensation and benefits expense decreased by approximately $216,000,
or 17% during the six months ended March 31, 1998, as compared to the six months
ended March 31, 1997. The decrease in employee compensation and benefits is
primarily due to a decrease in performance based bonus accruals and a decrease
in retirement plan profit sharing accruals. The decrease in these employee
compensation and benefits accruals is based on the approximate $41,000 loss
before income taxes incurred for the six months ended March 31, 1998 compared to
the approximate $490,000 income before income taxes for the same period in 1997.
Communications and promotions expense increased by approximately $97,000, or 13%
during the six months ended March 31, 1998, as compared to the six months ended
March 31, 1997. This increase is primarily related to increases in expenditures
for promotional print media including postage, printing and design costs.
Other operating expenses increased by approximately $357,000, or 46% during the
six months ended March 31, 1998, as compared to the six months ended March 31,
1997. Approximately $142,000 of this increase is related to professional fees
incurred by the Company for the defense of an arbitration matter. In addition,
approximately $100,000 of the increase is for the arbitration award for a
portion of the claimant's claim and an additional $100,000 of the increase is
for partial reimbursement of the claimant's legal fees also awarded to the
claimant in the same matter.
As a result of the above, the Company is reporting a loss before income taxes of
approximately $41,000 for the six months ended March 31, 1998. This is compared
to income before income taxes of approximately $490,000 for the six months ended
March 31, 1997.
The Company's effective income tax benefit was approximately 1% for the six
months ended March 31, 1998. The reduction of income tax benefit for the six
months ended March 31, 1998 is due to the presence of permanent tax differences
nearly equal to the approximate $41,000 loss before income taxes for the period.
The Company's effective income tax rate was approximately 42% for the six months
ended March 31, 1997.
14
Three Months Ended March 31, 1998, as Compared to
the Three Months Ended March 31, 1997
Total revenues decreased by approximately $393,000, or 13% for the three months
ended March 31, 1998, as compared to the three months ended March 31, 1997. For
the three months ended March 31, 1998, and 1997, approximately 70% and 72%,
respectively, of the Company's revenues were derived from commissions earned on
the sale of securities. For the three months ended March 31, 1998, and 1997,
approximately 26% and 22%, respectively, of the Company's total revenues were
derived from net dealer inventory and investment gains (trading revenue).
Commission revenue decreased by approximately $340,000, or 16% for the three
months ended March 31, 1998, as compared to the three months ended March 31,
1997. The decrease in commission revenues is related to the 13% decrease in
ticket volume and the 4% decrease in the average dollar amount of trades during
the three months ended March 31, 1998, as compared to the three months ended
March 31, 1997.
Revenues from net dealer inventory and investment gains increased by
approximately $9,000, or 1% for the three months ended March 31, 1998, as
compared to the three months ended March 31, 1997. The net increase in trading
revenue is attributable to increases in the Company's wholesale trading activity
which offset decreases in retail and fixed income trading income. The decrease
in retail and fixed income trading income is related to the decrease in retail
order flow and the approximate 16% decrease in commission revenue for the three
months ended March 31, 1998, as compared to the three months ended March 31,
1997.
Other revenues decreased by approximately $62,000, or 39% during the three
months ended March 31, 1998, as compared to the three months ended March 31,
1997. This decrease is primarily attributable to decreases in money management
fees, account maintenance fees, list rental and newsletter subscription
revenues.
The major expenses incurred by the Company relate to the direct costs of
securities operations such as commissions and clearing fees, employee
compensation and benefits, and communications and promotions expense. Total
expenses decreased by approximately $329,000, or 12% for the three months ended
March 31, 1998, as compared to the same period in 1997. This decrease in
expenses is primarily attributable to decreases in commissions and clearing
fees, employee compensation and benefits and promotions expense.
Commissions and clearing fees decreased by approximately $162,000, or 13% during
the three months ended March 31, 1998, as compared to the same period in 1997.
This decrease in expense is directly related to the 16% decrease in commission
revenue for the same period.
15
Employee compensation and benefits expense decreased by approximately $166,000,
or 24% during the three months ended March 31, 1998, as compared to the three
months ended March 31, 1997. The decrease in employee compensation and benefits
is primarily due to a decrease in performance based bonus accruals and a
decrease in retirement plan profit sharing accruals based on the decrease in
income (loss) before income taxes by the Company during the three months ended
March 31, 1998, as compared to the same period in 1997.
Overall communication and promotions expense decreased by approximately $25,000,
or 6% primarily due to decreased promotional expense during the three months
ended March 31, 1998, as compared to the three months ended March 31, 1997.
Other operating expenses increased by approximately $23,000, or 6% during the
three months ended March 31, 1998, as compared to the three months ended March
31, 1997.
As a result of the above, income before income taxes decreased by approximately
$63,000, or 29% during the three months ended March 31, 1998, as compared to the
three months ended March 31, 1997. The Company's effective income tax rate was
approximately 39% and 43% for the three months ended March 31, 1998, and 1997,
respectively.
Liquidity and Capital Resources
Substantial portions of the Company's assets are liquid. At March 31, 1998,
approximately 88% 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 March 31, 1998, IAAC had net capital of approximately
$2,605,000, which was approximately $2,478,000 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 12 months in light of known and reasonably estimated trends. In addition,
management believes that the Company will be able to obtain additional short or
medium-term financing that may be desirable in the ordinary conduct of its
business. The Company has no plans for additional financing and there can be no
assurance such financing will be available.
16
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company was involved in a National Association of Securities Dealers (NASD)
arbitration hearing that concluded on November 7, 1997. On January 16, 1998, the
Company received notification from the NASD arbitration panel that an award of
$99,845 plus $100,000 reimbursement for a portion of the claimant's legal fees
was awarded to the claimant. The cost of both the award and legal fee
reimbursement was accrued in other accrued expenses in the December 31, 1997
financial statements and was paid on January 22, 1998.
The Company is party to certain additional arbitration and/or litigation matters
as of March 31, 1998 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.
17
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
The Company's annual meeting of stockholders was held on Thursday, February 12,
1998. The stockholders reelected the four members of the existing Board of
Directors that stood for reelection, Diego J. Veitia, Jerome F. Miceli, Stephen
A. Saker and Elmer L. Jacobs. The stockholders also elected Robert A. Miller to
the Board of Directors. The stockholders approved the action of the Board of
Directors in selecting KPMG Peat Marwick LLP to audit the financial statements
of the Company and its subsidiaries for the period commencing October 1, 1997,
and ending September 30, 1998.
Votes Votes
Matter For Withheld
Election of Diego J. Veitia as director 1,094,969 9,504
Election of Jerome F. Miceli as director 1,097,773 6,700
Election of Stephen A. Saker as director 1,096,969 7,504
Election of Elmer L. Jacobs as director 1,090,893 13,580
Election of Robert A. Miller as director 1,092,589 11,884
Votes Votes Votes
Matter For Against Abstain
Approval of the auditors 1,102,173 2,300 0
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a). Exhibits
(11) The Statements of Computation of Earnings Per Share are attached
hereto as Exhibit 11.
(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 six months ended
March 31, 1998.
18
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 05/11/98 /s/ Jerome F. Miceli
Jerome F. Miceli
President and Chief Operating Officer
Date 05/11/98 /s/ Jonathan C. Hinz
Jonathan C. Hinz
Chief Accounting Officer
19
EXHIBIT 11
INTERNATIONAL ASSETS HOLDING CORPORATION
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
For the Six Months Ended March 31, 1998 and 1997
1998 (1) 1997
Basic Earnings (Loss) Per Share
Net income (loss) $ (40,524) $ 283,121
Weighted average number of common shares outstanding 1,548,015 1,590,830
Basic earnings (loss) per share $ (0.026) $ 0.178
Diluted Earnings (Loss) Per Share
Net income (loss) $ (40,524) $ 283,121
Weighted average number of common shares outstanding 1,548,015 1,590,830
Weighted average number of net common shares that would
be issued upon exercise of dilutive options and warrants assuming
proceeds used to repurchase shares pursuant to the treasury
stock method (2) 56,572
Weighted average number of common shares and dilutive
potential common shares outstanding 1,548,015 1,647,402
Diluted earnings (loss) per share $ (0.026) $ 0.172
- --------------------------------------------------------------------------------
(1) Diluted earnings (loss) per share is the same as basic earnings (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 and warrants in computing diluted earnings per
share. It assumes exercise of options and warrants 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.
20
EXHIBIT 11
INTERNATIONAL ASSETS HOLDING CORPORATION
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
For the Three Months Ended March 31, 1998 and 1997
1998 1997
Basic Earnings Per Share
Net income $ 94,178 $ 125,570
Weighted average number of common shares outstanding 1,547,045 1,588,637
Basic earnings per share $ 0.061 $ 0.079
Diluted Earnings Per Share
Net income $ 94,178 $ 125,570
Weighted average number of common shares outstanding 1,547,045 1,588,637
Weighted average number of net common shares that would
be issued upon exercise of dilutive options and warrants assuming
proceeds used to repurchase shares pursuant to the treasury
stock method (1) 85,968 42,352
Weighted average number of common shares and dilutive
potential common shares outstanding 1,633,013 1,630,989
Diluted earnings per share $ 0.058 $ 0.077
- --------------------------------------------------------------------------------
(1) The treasury stock method recognizes the use of proceeds that could be
obtained upon exercise of options and warrants in computing diluted earnings per
share. It assumes exercise of options and warrants 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.
21
BD
1
6-MOS
SEP-30-1998
MAR-31-1998
1,407,252
108,235
0
0
4,874,918
410,593
7,110,366
0
722,449
0
0
398,127
0
0
0
15,449
5,740,811
7,110,366
1,154,508
137,719
3,857,053
0
93,654
2,525
2,650,901
(40,804)
(40,804)
0
0
(40,524)
(.026)
(.026)
