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Jesup & Lamont Inc Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 13, 2009 04:19PM
Jesup & Lamont Inc (JLI) filed Quarterly Report for the period ended 2009-09-30. JESUP & LAMONT, INC., through its wholly owned subsidiaries, Empire Financial Group, Inc. and Jesup & Lamont Securities Corporation, provides full-service retail brokerage services through its network of independently owned and operated and Company owned and operated offices. Through its market-making and trading division, the Company offers securities order execution services for unaffiliated broker dealers and makes markets in domestic and international securities. Jesup & Lamont, Inc. also provides Investment Banking services for clients as well as turn-key fee based investment advisory and registered advisor custodial services through its wholly owned sub Jesup & Lamont Inc has a market cap of $10.1 million; its shares were traded at around $0.449 with and P/S ratio of 0.3.
Highlight of Business Operations:
Additionally, of our $15.8 million in debt, $7.7 million is convertible and we expect that over time that debt will be converted into equity. We have also had preliminary discussions with other holders of debt ($2.1 million) about converting those amounts into equity as well. In addition, we have $1.863 million that is due to our clearing firm, Legent Clearing LLC, which is being paid down through higher ticket charges over the next ten years. As a result, we are confident that our operations will support future cash needs and that long-term debt obligations will be converted into equity.
Total revenue for the nine months ended September 30, 2009 were $26,559,259, a decrease of $4,707,543, or 15% from the same period in 2008. Commission and fee revenue for the nine months ended September 30, 2009 were $20,127,077, a decrease of $1,886,703 or approximately 9%, from our commission and fee revenue of $22,013,780 for the comparable period in 2008. The decrease was primarily due to a revenue reduction by our Independent Sales Group as shown above. Commissions and fees revenue accounted for approximately 76% and 70%, of our total revenue for the nine month periods ended September 30, 2009 and 2008, respectively. We analyze our commissions and fees excluding the Independent Sales Group, see above nine month table for this analysis.
In May 2008, we entered into settlement agreements with two former officers. The agreements included offsetting receivables owed to JLI totaling $675,297 against the note payable by JLI to the former officers totaling $861,105. As part of his settlement agreement one of the former officers also received the rights to certain investment banking engagements and transferred 524,118 shares of JLI's common stock to JLI. We recorded the stock received as $733,765 of treasury stock valued at the closing market price ($1.40 per share) on the date we entered into the settlement agreement. The gain recognized on these transactions totaled $806,744 after deduction of $112,829 of accelerated discount amortization related to the canceled notes payable. This gain is included in other income for 2008.
Stockholders' equity increased $971,752 to $7,785,357 at September 30, 2009, compared to $6,813,605 at December 31, 2008. This increase is attributable to additional stock subscriptions of $3,550,000, offset by net losses incurred for the period of $2,966,601. Supplemental information pertaining to our historical sources and uses of cash is presented below and should be read in conjunction with our Condensed Consolidated Statements of Cash Flows and notes thereto included elsewhere in this report.
Net cash used by operations for the nine months ended September 30, 2009 was $3,767,960 as opposed to net cash used by operations for the same period in 2008 of $7,950,201. The loss from operations accounted for most of the operating cash used. Other significant items include increases in clearing organization deposits of $2,344,000, and commission receivable of $658,000 which were offset in part by an increase in accounts payable, accrued expenses, and other liabilities of $2,017,000.
Cash provided from financing activities for the nine months ended September 30, 2009 was $7,583,008. We raised $3,550,000 and $4,600,000 from the sale of common stock subscriptions and new loans, respectively, and made payments of $641,992 against notes payable. An additional $75,000 was raised by an advance from one of our clearing firms.
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