______________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
_______________________
For the Quarterly Period ended Commission File Number
June 30, 1999 0-12926
_______________________
JMC GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-2627415
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9710 Scranton Road, Suite 100, San Diego, California 92121
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 619-450-0055
_______________________
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
------- -------
As of June 30, 1999, the registrant had 6,166,451 shares of its common
stock, $.01 par value, issued and outstanding.
______________________________________________________________________________
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JMC GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
June 30, December 31,
1999 1998
----------- ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 4,855,913 $ 4,895,190
Receivables from insurance companies 86,268 94,274
Income tax receivable 165,869 68,851
Deferred tax asset 140,744 63,884
Other assets 134,210 122,267
----------- ------------
TOTAL CURRENT ASSETS 5,383,004 5,244,466
Investment in OptiMark Technologies, Inc. 1,000,000 1,000,000
Furniture, equipment and leasehold improvements-
net of accumulated depreciation and
amortization of $528,785 in 1999 and
$520,840 in 1998 17,345 20,290
Asset-based fees purchased - net of accumulated
amortization of $1,114,668 in 1999 and
$1,073,386 in 1998 282,461 323,743
----------- ------------
TOTAL ASSETS $ 6,682,810 $ 6,588,499
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued fees to financial institutions $ 54,189 $ 48,966
Accrued expenses and other liabilities 402,872 72,614
Allowance for contract cancellations - 5,858
Accrued payroll and related expenses 37,942 34,481
----------- ------------
TOTAL CURRENT LIABILITIES 495,003 161,919
STOCKHOLDERS' EQUITY
Preferred stock, no par value; authorized
5,000,000 shares - -
Common stock, $.01 par value; authorized
20,000,000 shares; issued and outstanding
6,166,451 shares in 1999 and 6,166,451
shares in 1998 61,664 61,664
Additional paid-in-capital 583,276 583,276
Retained earnings 5,542,867 5,781,640
----------- ------------
TOTAL STOCKHOLDERS' EQUITY 6,187,807 6,426,580
----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,682,810 $ 6,588,499
=========== ============
The accompanying notes are an integral part of these financial statements.
2
JMC GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended June 30,
1999 1998
------------ ------------
REVENUES
Commissions $ 271,004 $ 343,501
Interest 58,183 81,097
Other 2,286 80,587
------------ ------------
TOTAL REVENUES 331,473 505,185
------------ ------------
EXPENSES
Employee compensation and benefits 131,432 132,144
Fees to financial institutions 84,379 105,112
Professional fees 41,670 40,930
Rent 13,996 21,890
Telephone 7,165 9,035
Depreciation and amortization 3,966 7,866
Merger related expenses 363,678 -
Other general and administrative expenses 42,638 83,724
------------ ------------
TOTAL EXPENSES 688,924 400,701
------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES (357,451) 104,484
INCOME TAX PROVISION (BENEFIT) (149,026) 40,790
------------ ------------
NET INCOME (LOSS) $ (208,425) $ 63,694
============ ============
EARNINGS (LOSS) PER SHARE:
BASIC $ (0.03) $ 0.01
============ ============
DILUTED $ (0.03) $ 0.01
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES
BASIC 6,166,451 6,156,044
DILUTED 6,166,451 6,170,084
The accompanying notes are an integral part of these financial statements.
3
JMC GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Six Months Ended June 30,
1999 1998
------------ ------------
REVENUES
Commissions $ 534,678 $ 712,246
Gain on sale of certain asset-based fee
revenue - 330,000
Interest 115,226 156,332
Other 3,006 86,782
------------ ------------
TOTAL REVENUES 652,910 1,285,360
------------ ------------
EXPENSES
Employee compensation and benefits 271,655 435,380
Fees to financial institutions 167,432 241,237
Professional fees 97,787 89,997
Rent 29,066 42,309
Telephone 14,863 20,624
Depreciation and amortization 7,945 16,906
Merger related expenses 363,678 -
Other general and administrative expenses 107,799 181,113
------------ ------------
TOTAL EXPENSES 1,060,225 1,027,566
------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES (407,315) 257,794
INCOME TAX PROVISION (BENEFIT) (168,542) 101,177
------------ ------------
NET INCOME (LOSS) $ (238,773) $ 156,617
============ ============
EARNINGS (LOSS) PER SHARE:
BASIC $ (0.04) $ 0.03
============ ============
DILUTED $ (0.04) $ 0.03
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES 6,166,451 6,102,051
WEIGHTED AVERAGE DILUTIVE COMMON SHARES 6,166,451 6,111,772
The accompanying notes are an integral part of these financial statements.
4
JMC GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended June 30,
1999 1998
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (238,773) $ 156,617
Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities:
Gain on sale of furniture and equipment - (21,951)
Depreciation and amortization 7,945 16,906
Amortization of asset-based fees 41,282 50,168
Deferred tax provision (76,860) 79,970
Changes in assets and liabilities:
Cash segregated under securities regulations - 921,213
Receivables from insurance companies 8,006 199,550
Receivable from financial institution - 1,462,861
Income taxes receivable (97,018) (14,464)
Other assets (11,943) 33,134
Accrued fees to financial institutions 5,223 (53,482)
Customer funds segregated under securities
regulations - (921,213)
Accrued restructuring - (271,282)
Accrued expenses and other liabilities 330,258 (124,335)
Allowance for contract cancellations (5,858) (23,477)
Income tax payable - (11,659)
Accrued payroll and related expenses 3,461 (48,342)
----------- -----------
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES (34,277) 1,430,214
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture, equipment and leasehold
improvements (5,000) (1,351)
Proceeds from sale of furniture and equipment - 21,951
----------- -----------
NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES (5,000) 20,600
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock options exercised - 117,648
----------- -----------
NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES - 117,648
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (39,277) 1,568,462
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 4,895,190 4,261,531
----------- -----------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $4,855,913 $5,829,993
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for:
Income taxes $ 5,466 $ 51,835
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING
ACTIVITIES
Depreciation charged against accrued
restructuring expenses $ - $ 16,905
The accompanying notes are an integral part of these financial statements.
5
NOTE 1. BASIS OF PRESENTATION
The accompanying financial statements have been prepared in
accordance with the instructions to Form 10-Q and, therefore, do
not include all information and footnote disclosures that are
otherwise required by Regulation S-X and that will normally be
made in the Company's Annual Report on Form 10-K. The financial
statements do, however, reflect all adjustments which are, in the
opinion of management, necessary for a fair statement of the
results of the interim period presented.
The balance sheet at December 31, 1998 has been derived from
the audited financial statements at that date. It is recommended
that these financial statements be read in conjunction with the
Company's financial statements and notes thereto included in the
Company's Form 10-K for the year ended December 31, 1998.
NOTE 2. PROPOSED MERGER
On June 10, 1999, upon completion of due diligence and the
receipt of a fairness opinion from J.C. Bradford & Co., the
Company signed an Agreement and Plan of Merger with privately
held Fechtor, Detwiler & Co., Inc., a registered broker-dealer,
headquartered in Boston, Massachusetts. Pursuant to the terms of
the merger agreement, Fechtor, Detwiler is expected to be the
accounting acquirer. Accordingly, merger related expenses
incurred by the Company during the quarter ended June 30, 1999
have been reflected as expenses in the accompanying Statement of
Operations. The merger is subject to stockholder approval.
At the time of the merger, the Company will issue 6,600,000
shares of the Company's common stock to the owners of Fechtor,
Detwiler, which will thereafter become a wholly owned subsidiary
of our company.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The discussion of the Company's business contained in this Form 10-Q
includes certain forward-looking statements. For a discussion of factors
which may affect the outcome projected in such statements, see "Material
Customers," "Competition," "Registration and Licensing," "Regulation,"
"Legal Proceedings," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the Company's Annual Report on Form
10-K dated March 29, 1999.
RESULTS OF OPERATIONS
- ---------------------
SECOND QUARTER 1999 COMPARED TO SECOND QUARTER 1998
The Company realized a net loss of $208,000 (or $0.03 per share after
estimated tax benefit) in the second quarter of 1999 compared to a net
income of $64,000 (or $0.01 per share after estimated tax provision) in the
second quarter of last year. For the six months ended June 30, 1999, the
Company had a net loss of $239,000 (or $0.04 per share after estimated tax
benefit) compared to a net income of $157,000 (or $0.03 per share after
estimated tax provision) during the first six months of 1998. The second
quarter of 1999 results included a loss of $364,000 (or $0.04 per share
after tax benefit) attributed to merger related expenses in connection with
the Company's proposed merger with a private broker-dealer. Without these
expenses, the Company would have realized net income of $4,000 for the
second quarter of 1999. The second quarter of 1998 results included a gain
of $45,000 ($27,000 after estimated tax provision) on the sale of the
rights to certain asset-based fee revenues to a former client financial
institution. Excluding this gain, the Company would have reported a net
income of $35,000 for the second quarter of 1998.
Total revenues for the quarter ended June 30, 1999 were $331,000, a
decrease of $174,000 or 34% from $505,000 in the second quarter of 1998.
The 1998 results included a second quarter gain of $45,000 on the sale of
the rights to certain asset-based fee revenues to a former client financial
institution. Without this gain, the decrease would have been $129,000 or
25%. This reduction in revenues is primarily a result of decreased
commissions due to the normal attrition associated with deaths and
conversions of previously sold annuities and a decrease in interest earned
due to decreased money market fund balances.
Total revenues for the first six months of 1999 were $653,000 versus
$1,285,000 for the first six months of 1998 (or $955,000 without the gain
on sale of asset fees). Excluding the aforementioned gain, total revenues
would have decreased by $302,000 or 32% from $955,000 for the first six
months of 1999 as compared to 1998. This decrease in revenues is a result
of a decrease in sales related commissions of $177,000 or 25% due to the
normal attrition associated with deaths and conversions of previously sold
annuities and a decrease in interest earned due to decreased money market
fund balances.
Total expenses for the quarters ended June 30, 1999 and 1998 were
$689,000 and $401,000, respectively. This $288,000 or 72% increase is
allocated as follows:
. A $364,000 increase attributable to expenses in connection with the
proposed merger with Fechtor, Detwiler;
. A $21,000 decrease in fees paid to financial institutions; and
. A $55,000 decrease in general operating expenses.
7
Because of merger related expenses, offset by decreased fees paid to
financial institutions and decreased general operating expenses, total
expenses for the six months ended June 30, 1999 increased $33,000 or 3%
overall to $1,061,000 from $1,028,000 in the first half of 1998.
SECOND QUARTER 1999 COMPARED TO FIRST QUARTER 1999
The Company realized a net loss of $208,000 in the second quarter of
1999 compared to a net loss of $30,000 for the first quarter. The second
quarter 1999 results include a loss of $364,000 (or $0.04 per share after
estimated tax benefit) due to merger related expenses in connection with
the Company's proposed merger with Fechtor, Detwiler. Excluding these
expenses, the Company would have reported a net income of $4,000 for the
second quarter of 1999.
Total revenues for the quarter ended June 30, 1999 were $331,000
compared to $321,000 in the first quarter of 1999, an increase of $10,000
or 3%.
Total expenses for the quarters ended June 30, 1999 and March 31, 1999
were $689,000 and $371,000, respectively. This $318,000 or 86% overall
increase is allocated as follows:
. A $364,000 increase attributable to expenses in connection with the
proposed merger with Fechtor, Detwiler; and
. A $46,000 decrease in general operating expenses.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
As of June 30, 1999, the Company had cash and cash equivalents of
approximately $4,856,000, unchanged from cash and cash equivalents at
March 31, 1999. No significant uses of cash or cash equivalents occurred
in the second quarter of 1999.
Future fees, both those due from provider companies and those due to
financial institution clients, are not reflected as an asset or a liability
in the Consolidated Balance Sheets. However, management does believe a
value exists related to the present value of the projected future net asset
fees to be retained by the Company. Such projected future net asset fees
are a function of the projected accumulated value of assets in-force
multiplied by the net asset fee rate (gross asset fee rate less amount
committed to the financial institution). The current value to the Company
is the discounted present value of such projected future asset fees less
the present value of an estimated cost to service the customers making up
such in-force assets. Management's belief that a present value for such
future asset-based fees exists and the estimates used to calculate the
range of such values have been supported by the sale of the rights to
certain future fees in the first quarter of 1998 and prior years. The
projected value of the future asset-based fees on the remaining block of
business at June 30, 1998 is based on assumptions as to growth, persistency
and risk adjusted discount rates. The assumptions as to persistency and
growth of the business are based on historical data maintained by the
Company since its inception. The discount rate used of between 8% and 10%
is based on a risk-free rate of return plus a nominal additional factor for
risk (taking into account that risk factors are substantially covered by
the estimated persistency and growth rates). Management believes the value
of these net future revenues is appropriately estimated at $3 million to $4
million, pre-tax, based on the Company's valuation calculations. Such
value is based on the estimates of the variables used in the calculation
(which are
8
consistent with estimates used in prior sales of future rights)
and the actual realization, if any, could be higher or lower than this
range.
Management believes the Company's cash and cash equivalents as of June
30, 1999 will meet its operating and capital expenditure needs for the
remainder of its current fiscal year.
OPTIMARK INVESTMENT
The Company in September 1998 utilized $1,000,000 of its cash to
purchase 100,000 shares of the common stock of OptiMark Technologies, Inc.
(OptiMark), a private, development-stage company based in Durango,
Colorado. OptiMark owns all rights to the advanced trading technology of
the OptiMark System, an electronic equity trading process, which offers
investors the ability to match buying and selling orders in multiple ranges
and sizes. The system utilizes advanced computers and patented algorithms
in order to match the buyers and sellers within seconds and with anonymity.
OptiMark currently has agreements with the Nasdaq National Market System
and the Pacific Exchange. OptiMark also announced in September 1998 that
it had entered into a joint venture agreement in Japan with Nihon Keizai
Shumbun, Inc. (Nikkei), QUICK Corporation and the Osaka Securities
Exchange, to adapt the OptiMark System for trading in Japanese listed
securities. The OptiMark system began online trading through the Pacific
Exchange at the end of January 1999 and is expected to begin Nasdaq trading
in late 1999.
BUSINESS DEVELOPMENT COMPANY RISK FACTORS
The Company has elected to be regulated as a Business Development
Company ("BDC") under the Investment Company Act of 1940. The Act provides
protection for investors but imposes restrictions on the Company's freedom
of action. Risk factors that investors should consider are:
1. Speculative Nature of Investments. Investments by a BDC are confined
---------------------------------
to stocks of companies that do not have an established "track record" of
earnings, dividends or market value and frequently have no earnings at
all.
2. Limited Liquidity of Assets. Investments by a BDC are in securities
---------------------------
of development-stage companies, for which there is usually no ready
market.
3. Lack of Control of Portfolio Companies. Most investments by a BDC are
--------------------------------------
confined to enterprises to which the BDC offers to provide significant
managerial assistance. However, such assistance does not constitute
control and a portfolio company may pursue policies or strategies which
are opposed to the advice of the BDC.
4. Conflicts of Interests. The other owners, the management or the
----------------------
creditors of a portfolio company may have interests or objectives
different from those of the BDC, creating the possibility of conflicts
which may be detrimental to the interest of the BDC as investor.
5. Restriction on Business Opportunities. Unless its BDC status is
-------------------------------------
terminated by vote of its stockholders, a BDC may not change its business
or engage in new business activities. Consequently, the directors and
management of a BDC do not have freedom to take advantage of business
opportunities that may become available.
9
TRENDS AND UNCERTAINTIES
- ------------------------
TERMINATION OF HISTORICAL BUSINESS LINES
The Company announced at the end of 1997 that it would be terminating
its retail sales bank programs. Accordingly, the Company has substantially
exited from its traditional lines of business. The Company continues to
service and maintain all annuity contracts and mutual fund accounts in
place at the end of the first quarter of 1999 in order to maximize the
return on those assets.
BUSINESS OPPORTUNITIES
On March 25, 1999, the Company announced a proposed merger with
privately held Fechtor, Detwiler & Co., Inc. ("FEDE"), a registered broker-
dealer, headquartered in Boston, Massachusetts. Upon completion of due
diligence and the receipt of a fairness opinion from J.C. Bradford & Co.,
the Company signed an Agreement and Plan of Merger with Fechtor, Detwiler
on June 10, 1999. The merger is subject to stockholder approval.
The merger is intended to create an entity that will combine the
financial services, including financial management, institutional and
retail brokerage, trading, investment banking, computer/information systems
of FEDE with the additional customer base, investment products and
marketing management skills of JMCG.
Under the terms of the proposed merger, FEDE stockholders will receive
6,600,000 newly issued shares of JMCG. Following the transaction, it is
anticipated that current JMCG stockholders will own approximately 48% of
the newly merged company. The proposal is expected to be voted on by
stockholders of JMCG at the Annual Meeting of Stockholders to be held on
August 30, 1999.
The merged company will be headquartered in Boston with operations in
San Diego being expanded to better serve California and the West Coast
markets. James Mitchell & Co., the operating subsidiary of JMCG, will be a
wholly owned subsidiary of the combined company and will continue to be
based in San Diego. The executives of both JMCG and FEDE will continue to
be actively involved in the operations of the merged company.
In addition, management and the Board continue to explore strategic
alternatives for enhanced utilization of its remaining liquid assets. In
the interim, the Company's cash assets are invested in government
securities, money market funds, cash equivalents and in stock of OptiMark
Technologies, Inc. as described above.
NASDAQ COMPLIANCE
On March 16, 1999, the Company was informed by The Nasdaq Stock Market
that the Company's Common Stock would be listed on the Nasdaq SmallCap
Market via an exception from the minimum bid price requirements effective
March 18, 1999 at the opening of the market. For the duration of the
exception, the Company's Nasdaq symbol was JMCGC.
On June 17, 1999, the Company was informed by Nasdaq that it had
complied with the listing qualifications exception. Accordingly, effective
Friday, June 18, 1999, the Company's symbol was changed from JMCGC back to
JMCG.
10
On July 14, 1999, the Company was informed by Nasdaq that its
application to transfer to the SmallCap Market was approved and it would
remain listed on the SmallCap on a continued listing basis.
YEAR 2000
The Company is aware of the issues associated with the programming
code in existing computer systems as the year 2000 approaches. The issue
is whether computer systems will properly recognize date-sensitive
information when the year changes to 2000. Management has identified its
non-compliant systems and has spent 95% of the amount it has budgeted to
bring the Company into year 2000 compliance. The Company will continue to
expend necessary resources to assure that its computer systems are
reprogrammed in time to deal effectively with transactions in the year 2000
and beyond, however, the Company does not expect to expend any more
resources than it has currently budgeted for and is in its final testing
stages of new software which was required in order to update existing
systems. The Company presently believes that the Year 2000 issue will not
pose significant operational problems for the Company's computer systems as
so modified, converted or replaced. The Company also believes that any
additional costs of conversion, modification or replacement will not have a
material adverse effect on the Company's financial condition or results of
operations. However, if such modifications and conversions are not completed
in a timely manner, the Year 2000 issue may have a material impact on the
operations of the Company.
The Company is also currently determining the extent to which third
parties on which the Company relies are able to address this issue in a
timely manner. For example, problems created by a lack of compliance by
third party service providers may inhibit the Company from adequately
servicing its current customer base thus causing a temporary impact on the
Company's operations. The Company has taken steps to prepare itself in the
event any third party service provider is unable to provide any or all
services which it has been contracted to provide. Should services from
third parties discontinue, whether due to non-compliance with Year 2000
issues or from any natural disaster, the Company plans to continue
providing assistance to its customers.
Another possible problem would be if the insurance provider companies
and mutual fund companies which pay regular fees and commissions to the
Company, were unable to pay these amounts due to their lack of compliance,
computer system problems or a loss of customer account information. If the
ongoing fee revenue stream were interrupted, this would create a material
impact on the Company's financial condition. The Company has taken
measures to provide that customer account information is duplicated in both
electronic and physical formats to protect against any uncertainties in
account values, fee valuations or other loss of information.
With the Company's current operating expenses, the current cash and
cash equivalent position should adequately supply the Company with
sufficient capital to continue its operations for extended periods should
any temporary interruption in revenue occur.
11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As previously reported, during March 1993 the Florida
Department of Insurance (the "Department") commenced an
administrative proceeding against the Company's wholly owned
subsidiary, James Mitchell & Co. ("JMC"). A Final Order was
issued in July 1995, however, the enforcement of the majority of
the Final Order was stayed pending the outcome of JMC's appeal.
The District Court of Appeal, for all material matters, affirmed
the Final Order in August 1996, and in October 1996, the District
Court of Appeal denied JMC's Motion for Rehearing. In March
1997, the Florida Supreme Court denied JMC's petition for review.
Although an agreement was reached with the Florida Department of
Insurance that the Final Order would be in effect for a period of
two years beginning October 1996, no administrative action was
taken against JMC Insurance Services Corporation or James
Mitchell's personal insurance license and he has been continually
licensed in the State of Florida as a non-resident life insurance
agent since 1991. Effective October 1998, all issues with the
Florida Department of Insurance were closed.
On March 27, 1998, the California Department of Insurance
("DOI") initiated proceedings in regards to the California
insurance licenses of James K. Mitchell and JMC Insurance
Services Corporation in order to review the allegations made by
the Florida Department of Insurance in a Final Order and to see
whether any actions should be taken by the California DOI. The
Company exercised its right to request a hearing concerning this
matter in April 1998. To date, management has not received a
response to its request for a hearing and does not believe that
any possible proceedings regarding this matter will have a
material adverse effect on the Company's business, financial
condition or results of operations.
OTHER PROCEEDINGS
The Company's broker-dealer subsidiary, JMC Investment
Services, Inc. ("JMCI"), has been named as a defendant in a NASD
arbitration regarding the sales of real estate limited
partnerships by Spear Rees & Co. (the predecessor to JMCI)
between 1990 and 1993. Management does not believe that such
proceeding will have a material adverse effect on the Company's
financial condition or results of operations.
12
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a.) Exhibits.
The following exhibit is filed herewith:
27 Financial Data Schedule
b.) Reports on Form 8-K.
None.
13
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.
Date: August 13, 1999 /s/ James K. Mitchell
--------------------------------
James K. Mitchell, Chairman,
President and Chief Executive Officer
Date: August 13, 1999 /s/ Lee M. Forrester, CPA
--------------------------------
Lee M. Forrester, Controller and
Principal Accounting Officer
14