##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2001

OR

o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from ______________ to _______________

Commission File Number 0-16240

JB Oxford Holdings, Inc.




(Exact name of registrant as specified in its charter)


|                                                          |  |                                     
|--------------------------------------------------------- |  | ------------------------------------
|UTAH                                                      |  | 95-4099866                          
|                                                         
|                                                         
|                                                         
|                                                         
|(State of incorporation or organization)                  |  | (I.R.S. Employer
Identification No.)
|                                                         
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|                                                         
|                                                         
|                                                         
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|                                                         
|                                                         
|                                                         
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|                                                         
|9665 Wilshire Blvd., Suite 300; Beverly Hills, California |  | 90212                               
|                                                         
|                                                         
|                                                         
|                                                         
|(Address of principal executive offices)                  |  | (Zip Code)                          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                         
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|                                                         
|Registrants telephone number, including area code        |  | (310) 777-8888                      

Indicate by check mark whether the Registrant: (l) 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 and (2) has been subject to such filing requirements for
the past 90 days.
Yes  x      No  o

Indicate the number of shares outstanding of each of the issuers classes of common stock,
as of the latest practicable date. As of November 9, 2001, the Registrant had the
following number of shares of common stock, $0.01 par value per share, outstanding:
13,888,286.





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TABLE OF CONTENTS



|                                                                                              |  |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION                                                               
|Notes To Consolidated Financial Statements                                                   
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|PART II  OTHER INFORMATION                                                                  
|Signature                                                                                    



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##### Table of Contents






PART I  FINANCIAL INFORMATION

Item 1. Financial Statements

JB Oxford Holdings, Inc. and Subsidiaries
Consolidated Statements of Financial Condition

|        |                                                                                                                                                                     |  |               |             |              |  |   |             | 
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ----------- | ------------ |  | - | ----------- | 
|        |                                                                                                                                                                     |  | September 30, |             | December 31,
|        |                                                                                                                                                                     |  | 2001          |             | 2000        
|        |                                                                                                                                                                     |  |               |             |             
|        |                                                                                                                                                                     |  | (Unaudited)   |             |              |  |  
|Assets: |                                                                                                                                                                     |  |               |             |              |  |   |            
|       
|       
|       
|       
|        | Cash and cash equivalents (including securities
purchased under agreements to resell of $1,618,338 and
$2,541,193)                                                  |  | $             | 15,071,532  |              |  | $ | 8,004,000   | 
|       
|       
|       
|       
|        | Cash and cash equivalents segregated under federal and
other regulations (including securities purchased under
agreements to resell of $33,046,055 and $33,274,048) |  |               | 64,278,651  |              |  |   | 37,544,690  | 
|       
|       
|       
|       
|        | Receivable from broker-dealers and clearing organizations                                                                                                           |  |               | 22,412,434  |              |  |   | 7,262,385   | 
|       
|       
|       
|       
|        | Receivable from customers (net of allowance for doubtful
accounts of $2,548,829 and $2,577,451)                                                                     |  |               | 115,687,343 |              |  |   | 278,511,536 | 
|       
|       
|       
|       
|        | Other receivables                                                                                                                                                   |  |               | 2,187,886   |              |  |   | 2,101,578   | 
|       
|       
|       
|       
|        | Securities owned  at market value                                                                                                                                  |  |               | 374,693     |              |  |   | 322,783     | 
|       
|       
|       
|       
|        | Notes receivable from shareholder                                                                                                                                   |  |               | 2,500,000   |              |  |   | 2,500,000   | 
|       
|       
|       
|       
|        | Furniture, equipment, and leasehold improvements (at
cost  net of accumulated depreciation and amortization
of $8,942,750 and $8,040,869)                          |  |               | 3,278,847   |              |  |   | 3,540,370   | 
|       
|       
|       
|       
|        | Income taxes receivable                                                                                                                                             |  |               | 3,875,611   |              |  |   | 989,308     | 
|       
|       
|       
|       
|        | Deferred income taxes                                                                                                                                               |  |               | 1,969,425   |              |  |   | 2,045,424   | 
|       
|       
|       
|       
|        | Clearing deposits                                                                                                                                                   |  |               | 6,037,461   |              |  |   | 7,871,717   | 
|       
|       
|       
|       
|        | Other assets                                                                                                                                                        |  |               | 3,904,752   |              |  |   | 1,560,258   | 
|        |                                                                                                                                                                     |  |               |             |              |  |   |            
|       
|       
|       
|       
|        | Total assets                                                                                                                                                        |  | $             | 241,578,635 |              |  | $ | 352,254,049 | 
|        |                                                                                                                                                                     |  |               |             |              |  |   |            

See accompanying notes to Consolidated Financial Statements.

2



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##### Table of Contents



JB Oxford Holdings, Inc. and Subsidiaries
Consolidated Statements of Financial Condition

|                                      |                                            |                                                                                        |   |               |             |              |   |             |             |  
|------------------------------------- | ------------------------------------------ | -------------------------------------------------------------------------------------- | - | ------------- | ----------- | ------------ | - | ----------- | ----------- | -
|                                      |                                            |                                                                                        |   | September 30, |             | December 31,
|                                      |                                            |                                                                                        |   | 2001          |             | 2000        
|                                      |                                            |                                                                                        |   |               |             |             
|                                      |                                            |                                                                                        |   | (Unaudited)   |             |              |   |            
|Liabilities and shareholders equity: |                                            |                                                                                        |   |               |             |              |   |            
|                                     
|                                     
|                                     
|                                     
|                                      | Liabilities:                               |                                                                                        |   |               |             |              |   |             |            
|                                     
|                                     
|                                     
|                                     
|                                      |                                            | Payable to broker-dealers and clearing organizations                                   |   | $             | 17,852,141  |              |   | $           | 110,840,077 |  
|                                     
|                                     
|                                     
|                                     
|                                      |                                            | Payable to customers                                                                   |   |               | 179,047,238 |              |   |             | 188,061,388 |  
|                                     
|                                     
|                                     
|                                     
|                                      |                                            | Securities sold, not yet purchased  at market value                                   |   |               | 214,149     |              |   |             | 106,720     |  
|                                     
|                                     
|                                     
|                                     
|                                      |                                            | Accounts payable and accrued liabilities                                               |   |               | 6,132,322   |              |   |             | 10,298,150  |  
|                                     
|                                     
|                                     
|                                     
|                                      |                                            | Loans payable to shareholder                                                           |   |               | 5,418,696   |              |   |             | 5,418,696   |  
|                                     
|                                     
|                                     
|                                     
|                                      |                                            | Notes payable                                                                          |   |               | 6,965,375   |              |   |             | 7,637,375   |  
|                                      |                                            |                                                                                        |   |               |             |              |   |            
|                                     
|                                     
|                                     
|                                     
|                                      | Total liabilities                          |                                                                                        |   | 215,629,921   |             |              |   | 322,362,406 |            
|                                      |                                            |                                                                                        |   |               |             |              |   |            
|                                      | Commitments and contingencies              |                                                                                        |   |               |             |              |   |             |            
|                                     
|                                     
|                                     
|                                     
|                                      | Shareholders equity:                      |                                                                                        |   |               |             |              |   |             |            
|                                     
|                                     
|                                     
|                                     
|                                      |                                            | Common stock ($.01 par value, 100,000,000 shares
authorized; 15,193,226 shares issued) |   |               | 151,932     |              |   |             | 151,932     |  
|                                     
|                                     
|                                     
|                                     
|                                      |                                            | Additional paid-in capital                                                             |   |               | 16,446,381  |              |   |             | 16,446,381  |  
|                                     
|                                     
|                                     
|                                     
|                                      |                                            | Retained earnings                                                                      |   |               | 11,969,629  |              |   |             | 15,745,478  |  
|                                     
|                                     
|                                     
|                                     
|                                      |                                            | Treasury stock (1,304,940 and 1,138,140 shares, at cost)                               |   |               | (2,619,228  | )            |   |             | (2,452,148  | )
|                                      |                                            |                                                                                        |   |               |             |              |   |            
|                                      | Total shareholders equity                 |                                                                                        |   | 25,948,714    |             |              |   | 29,891,643  |            
|                                      |                                            |                                                                                        |   |               |             |              |   |            
|                                     
|                                     
|                                     
|                                     
|                                      | Total liabilities and shareholders equity |                                                                                        | $ | 241,578,635   |             |              | $ | 352,254,049 |            
|                                      |                                            |                                                                                        |   |               |             |              |   |            

See accompanying notes to Consolidated Financial Statements.

3



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##### Table of Contents



JB Oxford Holdings, Inc. and Subsidiaries
Consolidated Statements Of Operations
(Unaudited)

|          |                                   |                                         |                                |            |            |                            |            |        |            |        |            | 
|--------- | --------------------------------- | --------------------------------------- | ------------------------------ | ---------- | ---------- | -------------------------- | ---------- | ------ | ---------- | ------ | ---------- | 
|          |                                   |                                         |                                |            |            | For The Three Months Ended
|          |                                   |                                         |                                |            |            | September 30,             
|          |                                   |                                         |                                |            |            |                           
|          |                                   |                                         |                                |            |            | 2001                       |            | 2000  
|          |                                   |                                         |                                |            |            |                            |            |       
|Revenues: |                                   |                                         |                                |            |            |                            |            |       
|         
|         
|         
|         
|          |                                   | Commissions                             |                                | $          | 2,192,224  |                            |            | $      | 7,107,120  |       
|         
|         
|         
|         
|          |                                   | Interest                                |                                |            | 3,311,968  |                            |            |        | 10,126,999 |       
|         
|         
|         
|         
|          |                                   | Trading profits                         |                                |            | 186,300    |                            |            |        | 2,526,506  |       
|         
|         
|         
|         
|          |                                   | Clearing and execution                  |                                |            | 768,945    |                            |            |        | 1,307,403  |       
|         
|         
|         
|         
|          |                                   | Other                                   |                                |            | 128,268    |                            |            |        | 73,054     |       
|          |                                   |                                         |                                |            |            |                            |            |       
|         
|         
|         
|         
|          |                                   | Total revenues                          |                                |            | 6,587,705  |                            |            |        | 21,141,082 |       
|          |                                   |                                         |                                |            |            |                            |            |       
|Expenses: |                                   |                                         |                                |            |            |                            |            |       
|         
|         
|         
|         
|          |                                   | Employee compensation                   |                                |            | 2,061,142  |                            |            |        | 3,575,044  |       
|         
|         
|         
|         
|          |                                   | Commission expense                      |                                |            | 453,297    |                            |            |        | 2,223,798  |       
|         
|         
|         
|         
|          |                                   | Clearing and floor brokerage            |                                |            | 417,851    |                            |            |        | 514,640    |       
|         
|         
|         
|         
|          |                                   | Communications                          |                                |            | 1,124,678  |                            |            |        | 1,643,564  |       
|         
|         
|         
|         
|          |                                   | Occupancy and equipment                 |                                |            | 1,352,494  |                            |            |        | 1,468,347  |       
|         
|         
|         
|         
|          |                                   | Interest                                |                                |            | 1,532,821  |                            |            |        | 5,979,251  |       
|         
|         
|         
|         
|          |                                   | Data processing charges                 |                                |            | 604,248    |                            |            |        | 1,962,946  |       
|         
|         
|         
|         
|          |                                   | Professional services                   |                                |            | 933,559    |                            |            |        | 965,215    |       
|         
|         
|         
|         
|          |                                   | Promotional                             |                                |            | 190,550    |                            |            |        | 1,930,880  |       
|         
|         
|         
|         
|          |                                   | Bad debts                               |                                |            | 167,689    |                            |            |        | 271,548    |       
|         
|         
|         
|         
|          |                                   | Other operating expenses                |                                |            | 805,133    |                            |            |        | 554,079    |       
|          |                                   |                                         |                                |            |            |                            |            |       
|         
|         
|         
|         
|          |                                   | Total expenses                          |                                |            | 9,643,462  |                            |            |        | 21,089,312 |       
|          |                                   |                                         |                                |            |            |                            |            |       
|          | Income (loss) before income taxes |                                         |                                | (3,055,757 | )          |                            |            | 51,770 |           
|         
|         
|         
|         
|          |                                   |                                         | Income tax provision (benefit) |            |            | (1,253,000                 | )          |        |            | 20,000 |           
|          |                                   |                                         |                                |            |            |                            |            |       
|          |                                   | Net income (loss)                       |                                | $          | (1,802,757 | )                          |            | $      | 31,770     |       
|          |                                   |                                         |                                |            |            |                            |            |       
|          |                                   | Basic net income (loss) per share       |                                | $          | (0.13      | )                          |            | $      | 0.00       |       
|         
|         
|         
|         
|          |                                   | Diluted net income (loss) per share     |                                | $          | (0.13      | )                          |            | $      | 0.00       |       
|         
|         
|         
|         
|          |                                   | Weighted average number of shares
Basic |                                |            | 14,046,021 |                            |            |        | 14,080,064 |       
|         
|         
|         
|         
|          |                                   |                                         |                                | Diluted    |            |                            | 14,046,021 |        |            |        | 23,273,086 | 

See accompanying notes to Consolidated Financial Statements.

4



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##### Table of Contents



JB Oxford Holdings, Inc. and Subsidiaries
Consolidated Statements Of Operations
(Unaudited)

|          |                                   |                                         |                                |            |            |                           |            |           |            |           |            | 
|--------- | --------------------------------- | --------------------------------------- | ------------------------------ | ---------- | ---------- | ------------------------- | ---------- | --------- | ---------- | --------- | ---------- | 
|          |                                   |                                         |                                |            |            | For The Nine Months Ended
|          |                                   |                                         |                                |            |            | September 30,            
|          |                                   |                                         |                                |            |            |                          
|          |                                   |                                         |                                |            |            | 2001                      |            | 2000     
|          |                                   |                                         |                                |            |            |                           |            |          
|Revenues: |                                   |                                         |                                |            |            |                           |            |          
|         
|         
|         
|         
|          |                                   | Commissions                             |                                | $          | 10,212,588 |                           |            | $         | 30,894,214 |          
|         
|         
|         
|         
|          |                                   | Interest                                |                                |            | 12,970,423 |                           |            |           | 30,953,479 |          
|         
|         
|         
|         
|          |                                   | Trading profits                         |                                |            | 2,404,686  |                           |            |           | 12,318,518 |          
|         
|         
|         
|         
|          |                                   | Clearing and execution                  |                                |            | 3,104,366  |                           |            |           | 6,217,380  |          
|         
|         
|         
|         
|          |                                   | Other                                   |                                |            | 584,325    |                           |            |           | 870,196    |          
|          |                                   |                                         |                                |            |            |                           |            |          
|          |                                   | Total revenues                          |                                |            | 29,276,388 |                           |            |           | 81,253,787 |          
|          |                                   |                                         |                                |            |            |                           |            |          
|Expenses: |                                   |                                         |                                |            |            |                           |            |          
|         
|         
|         
|         
|          |                                   | Employee compensation                   |                                |            | 7,039,892  |                           |            |           | 10,976,211 |          
|         
|         
|         
|         
|          |                                   | Commission expense                      |                                |            | 2,653,118  |                           |            |           | 11,890,520 |          
|         
|         
|         
|         
|          |                                   | Clearing and floor brokerage            |                                |            | 1,541,858  |                           |            |           | 2,197,484  |          
|         
|         
|         
|         
|          |                                   | Communications                          |                                |            | 3,642,121  |                           |            |           | 5,734,583  |          
|         
|         
|         
|         
|          |                                   | Occupancy and equipment                 |                                |            | 4,192,302  |                           |            |           | 4,509,319  |          
|         
|         
|         
|         
|          |                                   | Interest                                |                                |            | 6,888,794  |                           |            |           | 18,248,756 |          
|         
|         
|         
|         
|          |                                   | Data processing charges                 |                                |            | 2,680,964  |                           |            |           | 6,883,686  |          
|         
|         
|         
|         
|          |                                   | Professional services                   |                                |            | 3,309,500  |                           |            |           | 3,262,870  |          
|         
|         
|         
|         
|          |                                   | Promotional                             |                                |            | 1,076,954  |                           |            |           | 5,634,166  |          
|         
|         
|         
|         
|          |                                   | Bad debts                               |                                |            | 604,359    |                           |            |           | 1,187,662  |          
|         
|         
|         
|         
|          |                                   | Other operating expenses                |                                |            | 2,162,375  |                           |            |           | 1,779,858  |          
|          |                                   |                                         |                                |            |            |                           |            |          
|          |                                   | Total expenses                          |                                |            | 35,792,237 |                           |            |           | 72,305,115 |          
|          |                                   |                                         |                                |            |            |                           |            |          
|          | Income (loss) before income taxes |                                         |                                | (6,515,849 | )          |                           |            | 8,948,672 |           
|         
|         
|         
|         
|          |                                   |                                         | Income tax provision (benefit) |            |            | (2,740,000                | )          |           |            | 3,850,000 |           
|          |                                   |                                         |                                |            |            |                           |            |          
|          |                                   | Net income (loss)                       |                                | $          | (3,775,849 | )                         |            | $         | 5,098,672  |          
|          |                                   |                                         |                                |            |            |                           |            |          
|          |                                   | Basic net income (loss) per share       |                                | $          | (0.27      | )                         |            | $         | 0.36       |          
|         
|         
|         
|         
|          |                                   | Diluted net income (loss) per share     |                                | $          | (0.27      | )                         |            | $         | 0.23       |          
|         
|         
|         
|         
|          |                                   | Weighted average number of shares
Basic |                                |            | 14,052,031 |                           |            |           | 14,249,245 |          
|         
|         
|         
|         
|          |                                   |                                         |                                | Diluted    |            |                           | 14,052,031 |           |            |           | 23,526,500 | 

See accompanying notes to Consolidated Financial Statements.

5



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##### Table of Contents



JB Oxford Holdings, Inc. and Subsidiaries
Consolidated Statements Of Cash Flows
(Unaudited)

|                                                       |                                                                                  |                                    |                                                           |            |                           |             |             |            |   |             |  
|------------------------------------------------------ | -------------------------------------------------------------------------------- | ---------------------------------- | --------------------------------------------------------- | ---------- | ------------------------- | ----------- | ----------- | ---------- | - | ----------- | -
|                                                       |                                                                                  |                                    |                                                           |            | For The Nine Months Ended
|                                                       |                                                                                  |                                    |                                                           |            | September 30,            
|                                                       |                                                                                  |                                    |                                                           |            |                          
|                                                       |                                                                                  |                                    |                                                           |            | 2001                      |             | 2000       
|                                                       |                                                                                  |                                    |                                                           |            |                           |             |            
|Cash flows from operating activities:                  |                                                                                  |                                    |                                                           |            |                           |             |             |           
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Net income (loss)                                                                |                                    | $                                                         | (3,775,849 | )                         |             | $           | 5,098,672  |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Adjustments to reconcile net income (loss) to cash used in
operating activities: |                                    |                                                           |            |                           |             |             |            |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                  |                                    | Depreciation and amortization                             |            |                           | 1,174,566   |             |            |   | 1,307,250   |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                  |                                    | Amortization of intangible assets                         |            |                           | 150,000     |             |            |   |            |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                  |                                    | Deferred rent                                             |            |                           | (138,534    | )           |            |   | (120,386    | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                  |                                    | Provision for bad debts                                   |            |                           | 604,359     |             |            |   | 1,187,662   |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                  |                                    | Deferred income tax provision (benefit)                   |            |                           | 75,999      |             |            |   | (280,000    | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                  | Changes in assets and liabilities: |                                                           |            |                           |             |             |            |   |            
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                  |                                    | Cash segregated under federal and other regulations       |            |                           | (26,733,961 | )           |            |   | 21,187,763  |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                  |                                    | Receivable from broker-dealers and clearing organizations |            |                           | (15,150,049 | )           |            |   | (1,531,169  | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                  |                                    | Receivable from customers                                 |            |                           | 162,219,834 |             |            |   | (36,390,922 | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                  |                                    | Other receivables                                         |            |                           | (86,308     | )           |            |   | (100,054    | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                  |                                    | Securities owned                                          |            |                           | (51,910     | )           |            |   | (77,348     | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                  |                                    | Clearing deposits                                         |            |                           | 1,834,256   |             |            |   | 2,685,585   |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                  |                                    | Other assets                                              |            |                           | 15,506      |             |            |   | (144,045    | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                  |                                    | Payable to broker-dealers and clearing organizations      |            |                           | (92,987,936 | )           |            |   | 69,994,235  |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                  |                                    | Payable to customers                                      |            |                           | (9,014,150  | )           |            |   | (84,507,565 | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                  |                                    | Securities sold, not yet purchased                        |            |                           | 107,429     |             |            |   | (20,432     | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                  |                                    | Accounts payable and accrued liabilities                  |            |                           | (4,027,294  | )           |            |   | (2,620,474  | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                  |                                    | Income taxes receivable                                   |            |                           | (2,886,303  | )           |            |   | (60,427     | )
|                                                       |                                                                                  |                                    |                                                           |            |                           |             |             |           
|                                                      
|                                                      
|                                                      
|                                                      
|Net cash provided by (used in) in operating activities |                                                                                  |                                    | 11,329,655                                                |            |                           |             | (24,391,655 | )         
|                                                       |                                                                                  |                                    |                                                           |            |                           |             |             |           
|Cash flows from investing activities:                  |                                                                                  |                                    |                                                           |            |                           |             |             |           
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Capital expenditures                                                             |                                    |                                                           | (913,043   | )                         |             |             | (1,693,765 | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                  | Acquisitions of customer accounts  |                                                           |            | (2,510,000                | )           |             |            |  |            
|                                                       |                                                                                  |                                    |                                                           |            |                           |             |             |           
|Net cash used in investing activities                  |                                                                                  |                                    | (3,423,043                                                | )          |                           |             | (1,693,765  | )         
|                                                       |                                                                                  |                                    |                                                           |            |                           |             |             |           
|Cash flows from financing activities:                  |                                                                                  |                                    |                                                           |            |                           |             |             |           
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Repayments of notes payable                                                      |                                    |                                                           | (672,000   | )                         |             |             | (5,749     | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Advances on notes payable                                                        |                                    |                                                           |           |                           |             |             | 5,000,000  |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Advances on short term borrowing                                                 |                                    |                                                           |           |                           |             |             | 25,062,359 |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Issuance of common stock                                                         |                                    |                                                           |           |                           |             |             | 98,265     |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Purchase of treasury stock                                                       |                                    |                                                           | (167,080   | )                         |             |             | (1,506,150 | )
|                                                       |                                                                                  |                                    |                                                           |            |                           |             |             |           
|                                                      
|                                                      
|                                                      
|                                                      
|Net cash provided by (used in) financing activities    |                                                                                  |                                    | (839,080                                                  | )          |                           |             | 28,648,725  |           
|                                                       |                                                                                  |                                    |                                                           |            |                           |             |             |           
|Net increase in cash and cash equivalents              |                                                                                  |                                    | 7,067,532                                                 |            |                           |             | 2,563,305   |           
|                                                      
|                                                      
|                                                      
|                                                      
|Cash and cash equivalents at beginning of the period   |                                                                                  |                                    | 8,004,000                                                 |            |                           |             | 6,023,095   |           
|                                                       |                                                                                  |                                    |                                                           |            |                           |             |             |           
|                                                      
|                                                      
|                                                      
|                                                      
|Cash and cash equivalents at end of the period         |                                                                                  | $                                  | 15,071,532                                                |            |                           | $           | 8,586,400   |           
|                                                       |                                                                                  |                                    |                                                           |            |                           |             |             |           

See accompanying notes to Consolidated Financial Statements.

6



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##### Table of Contents



JB Oxford Holdings, Inc. and Subsidiaries
Notes To Consolidated Financial Statements
(Unaudited)




Note 1. Companys Quarterly Report Under Form 10-Q

In the opinion of Management, the accompanying unaudited financial
statements contain all adjustments (all of which are normal and recurring in
nature) necessary to present fairly the financial statements of JB Oxford
Holdings, Inc. and subsidiaries (the Company) for the periods presented. JB
Oxford & Company (JBOC), a registered securities broker-dealer, is the
Companys most significant operating subsidiary. The accompanying financial
information should be read in conjunction with the Companys 2000 Annual Report
on Securities and Exchange Commission (SEC) Form 10-K. Footnote disclosures
that substantially duplicate those in the Companys Annual Report on Form 10-K,
including significant accounting policies, have been omitted. The results of
operations for the three and nine months ended September 30, 2001 are not
necessarily indicative of the results of operations for the remainder of the
year.

Note 2. Earnings per Share

The following table reconciles the numerators and denominators of the
basic and diluted earnings per share computation:

|                            |                                                                                     |  |                           |            |                            |  |      |            |      |  |   |            |   |  |   |            |  
|--------------------------- | ----------------------------------------------------------------------------------- |  | ------------------------- | ---------- | -------------------------- |  | ---- | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                            |                                                                                     |  | For The Nine Months Ended |            | For The Three Months Ended
|                            |                                                                                     |  | September 30,             |            | September 30,             
|                            |                                                                                     |  |                           |            |                           
|                            |                                                                                     |  | 2001                      |            | 2000                       |  | 2001 |            | 2000
|                            |                                                                                     |  |                           |            |                            |  |      |            |     
|Basic earnings per share:   |                                                                                     |  |                           |            |                            |  |      |            |      |  |   |            |   |  |   |           
|                           
|                           
|                           
|                           
|                            | Net income (loss)                                                                   |  | $                         | (3,775,849 | )                          |  | $    | 5,098,672  |      |  | $ | (1,802,757 | ) |  | $ | 31,770     |  
|                            |                                                                                     |  |                           |            |                            |  |      |            |      |  |   |            |   |  |   |           
|                            | Income (loss) available to common
stockholders (numerator)                          |  | $                         | (3,775,849 | )                          |  | $    | 5,098,672  |      |  | $ | (1,802,757 | ) |  | $ | 31,770     |  
|                            |                                                                                     |  |                           |            |                            |  |      |            |      |  |   |            |   |  |   |           
|                            | Weighted average common shares
outstanding (denominator)                            |  |                           | 14,052,031 |                            |  |      | 14,249,245 |      |  |   | 14,046,021 |   |  |   | 14,080,064 |  
|                            |                                                                                     |  |                           |            |                            |  |      |            |      |  |   |            |   |  |   |           
|                            | Basic earnings per share                                                            |  | $                         | (0.27      | )                          |  | $    | 0.36       |      |  | $ | (0.13      | ) |  | $ | 0.00       |  
|                            |                                                                                     |  |                           |            |                            |  |      |            |      |  |   |            |   |  |   |           
|Diluted earnings per share: |                                                                                     |  |                           |            |                            |  |      |            |      |  |   |            |   |  |   |           
|                           
|                           
|                           
|                           
|                            | Net income (loss)                                                                   |  | $                         | (3,775,849 | )                          |  | $    | 5,098,672  |      |  | $ | (1,802,757 | ) |  | $ | 31,770     |  
|                           
|                           
|                           
|                           
|                            | Interest on convertible debentures,
net of income tax                               |  |                           |           |                            |  |      | 218,857    |      |  |   |           |   |  |   | 72,952     |  
|                            |                                                                                     |  |                           |            |                            |  |      |            |      |  |   |            |   |  |   |           
|                            | Income (loss) available to common
stockholders plus assumed
conversions (numerator) |  | $                         | (3,775,849 | )                          |  | $    | 5,317,529  |      |  | $ | (1,802,757 | ) |  | $ | 104,722    |  
|                            |                                                                                     |  |                           |            |                            |  |      |            |      |  |   |            |   |  |   |           
|                            | Weighted average common shares
outstanding                                          |  |                           | 14,052,031 |                            |  |      | 14,249,245 |      |  |   | 14,046,021 |   |  |   | 14,080,064 |  
|                           
|                           
|                           
|                           
|                            | Weighted average options outstanding                                                |  |                           |           |                            |  |      | 2,211,288  |      |  |   |           |   |  |   | 2,591,076  |  
|                           
|                           
|                           
|                           
|                            | Weighted average convertible
debentures                                             |  |                           |           |                            |  |      | 7,740,994  |      |  |   |           |   |  |   | 7,740,994  |  
|                           
|                           
|                           
|                           
|                            | Stock acquired with proceeds                                                        |  |                           |           |                            |  |      | (675,027   | )    |  |   |           |   |  |   | (1,139,048 | )
|                            |                                                                                     |  |                           |            |                            |  |      |            |      |  |   |            |   |  |   |           
|                            | Weighted average common shares and
assumed conversions outstanding
(denominator)    |  |                           | 14,052,031 |                            |  |      | 23,526,500 |      |  |   | 14,046,021 |   |  |   | 23,273,086 |  
|                            |                                                                                     |  |                           |            |                            |  |      |            |      |  |   |            |   |  |   |           
|                            | Diluted earnings per share                                                          |  | $                         | (0.27      | )                          |  | $    | 0.23       |      |  | $ | (0.13      | ) |  | $ | 0.00       |  
|                            |                                                                                     |  |                           |            |                            |  |      |            |      |  |   |            |   |  |   |           

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##### Table of Contents



The assumed conversions have been excluded in computing the diluted
earnings per share when there is a net loss for the period. They have been
excluded because their inclusion would reduce the loss per share or be
anti-dilutive. If the assumed conversions had been used, the fully diluted
shares outstanding for the nine months and quarter ended September 30, 2001
would have been 22,144,406 and 21,827,341, respectively.

Options to purchase 2,098,000 and 553,500 shares of common stock at
September 30, 2001 and 2000, respectively, were not included in the
computation of diluted earning per share because the options exercise prices
were greater than the average market price of the common stock during the
respective periods. As of September 30, 2001 and 2000 the options carry
exercise prices ranging from $0.63 to $9.00. The options outstanding at
September 30, 2001 expire at various dates through June 8, 2011.

Note 3. Regulatory Requirements

JBOC is subject to Rule 15c3-1 of the Securities Exchange Act of 1934, as
amended, which requires the maintenance of minimum net capital. JBOC has
elected to use the alternative method permitted by the rule, which requires it
to maintain minimum net capital, as defined, equal to the greater of $250,000
or two percent of aggregate debit balances arising from customer transactions,
as defined. The rule also provides, among other things, for a restriction on
the payment of cash dividends, payments on subordinated borrowings or the
repurchase of capital stock if the resulting excess net capital would fall
below five percent of aggregate debits.

At September 30, 2001, JBOC had net capital of $21,518,319, which was
18.7% of aggregate debit items and $19,220,258 in excess of the minimum amount
required. At December 31, 2000, JBOC had net capital of $28,860,901, which was
10.3% of aggregate debit items and $23,275,591 in excess of the minimum amount
required.

Cash is segregated in special reserve bank accounts for the exclusive
benefit of customers under Rule 15c3-3 of the Securities Exchange Act of 1934,
as amended. Included in the special reserve bank account are securities
purchased under agreements to resell on an overnight basis in the amount of
$33,046,055 and $33,274,048 at September 30, 2001 and December 31, 2000,
respectively. Securities purchased are U.S. Treasury instruments having a
market value of approximately 102% of cash tendered.

Note 4. Contingent Liabilities

The Company and its subsidiaries are a party to a number of pending legal,
arbitration or administrative proceedings incidental to its business, including
customer brokerage transactions claims as well as matters related to our
clearing services resulting from the failure of certain correspondents. All of
the legal, arbitration and administrative proceedings have arisen in the
ordinary conduct of its business. To date, these proceedings have not had a
material effect on the Companys financial condition or results of operations.
However, there can be no assurance that in future periods these proceedings
will not have a material adverse effect on our financial condition or results
of operations, the most significant of which follows:

On February 14, 2000, the Company reached a settlement with the Los
Angeles office of the United States Attorneys Office (the USAO) in
connection with the USAOs investigation of the Companys prior management.
While this settlement brings a resolution to the USAO investigation, the SEC
investigation into these matters remains ongoing. The Company continues to
cooperate with the SEC and is hopeful that the SEC investigation will be
settled, but can make no assurance as to if or when it might be resolved.

8



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##### Table of Contents



It is the Companys understanding that the USAO and SEC investigations
appear to focus primarily on two areas related to previous management. The
first is whether the Company, in its proxy filings with the SEC, properly and
accurately reported shareholder information regarding the Companys former
management and ownership. The second area of focus is trading activity dating
back to as early as 1993 by entities alleged to be associated with a former
consultant to the Company. The Company does not believe that current
management was the subject of the investigation and the USAO did not bring
charges against the Company or current management.

While the Company maintains its innocence, it agreed to pay a total of
$2.0 million over three years to settle the USAO matter and to reimburse the
USAO for the substantial expense associated with the two and a half-year
investigation. The agreement with the USAO provides that as long as the
Company complies with its terms, the USAO will not bring charges against it in
connection with the matters that are the subject of the investigation. The
settlement further requires JBOC to comply with all applicable federal and
state securities and other laws and regulations and to cooperate with the
ongoing investigation of others by the USAO and other governmental agencies,
including producing documents and other evidence, and providing technical
assistance and analysis. Pursuant to the settlement, JBOC retained an
independent expert that conducted a compliance review and audit. The expert
has submitted its report to the USAO and JBOC has already begun implementation
of the experts recommendations, none of which the Company deems to indicate a
material internal control weakness. The settlement contains other
miscellaneous requirements, with regard to which the Company believes it is in
full compliance. Furthermore, under the terms of the settlement, the Company
also agreed that it would be subject to monetary penalties and the USAO would
not be bound by its promise of non-prosecution if the Company materially failed
to abide by the terms of the settlement.

In addition, the USAO settlement states that if on or before February 14,
2001 the Company enters into a settlement with the SEC that involves a payment
of $1.0 million or more to the SEC, the Companys obligation to the USAO would
be reduced by $500,000. Discussions are ongoing with the USAO regarding
extending this agreement, based upon the proposed SEC settlement. On October
12, 2000, the Pacific Regional Office of the SEC advised the Company that it is
recommending that the SEC accept the $1.5 million offer to settle the SECs
investigation. If the proposed settlement is accepted, JBOC will also agree to
a censure, to refrain from any violations of securities laws, and to take
certain actions to ensure continued compliance with federal securities laws.
The Company paid $500,000 of the USAO settlement amount in the first quarter of
2000, $500,000 in the first quarter of 2001, and the remainder will be paid in
equal annual installments over two years. If the SEC accepts the regional
offices recommendation, payments to the USAO and SEC would total $3.0 million.
The full amount was expensed in prior years and the liability for the
remaining estimated payments is included in accounts payable and accrued
liabilities.

Note 5. Supplemental Disclosures of Cash Flow Information

|                                                                                   |              |  |                                     |           |             |  |   |            | 
|---------------------------------------------------------------------------------- | ------------ |  | ----------------------------------- | --------- | ----------- |  | - | ---------- | 
|                                                                                   |              |  | For the Nine Months Ended Sept. 30,
|                                                                                   |              |  |                                    
|                                                                                   |              |  | 2001                                |           | 2000       
|                                                                                   |              |  | (Unaudited)                         |           | (Unaudited)
|                                                                                   |              |  |                                     |           |            
|Supplemental Disclosures of Cash Flow Information
Cash paid during the period for: |              |  |                                     |           |             |  |   |           
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Interest     |  | $                                   | 6,703,443 |             |  | $ | 18,046,203 | 
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Income taxes |  |                                     | 70,000    |             |  |   | 4,129,428  | 

9



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##### Table of Contents



Note 6. Acquisition of Customer Accounts

During 2001, the Company entered into two purchase agreements to acquire
certain customer accounts of other broker dealers. The Company has invested
$2,510,000 as of September 30, 2001 to acquire approximately 11,000 active
customer accounts with nearly $275,000,000 in customer assets. The investment
will be recorded as an intangible asset and will be amortized, over an
estimated useful life of 4 years, in accordance with Statement of Financial
Accounting Standards (''SFAS) No. 142 ''Goodwill and Other Intangible
Assets

Note 7. New Accounting Pronouncements

In September of 2000, the Financial Accounting Standards Board (FASB)
issued SFAS No. 140 Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities  a replacement of FASB Statement No.
125. As of December 31, 2000, the Company has adopted accounting and
disclosure requirements of SFAS No. 140 as set forth in paragraphs 15 and 17 of
the Statement, respectively. All other provisions of the Statement were
adopted as of March 31, 2001. The adoption of SFAS No. 140 did not have an
impact on the financial condition or results of operations of the Company.

The FASB has finalized new accounting standards covering business
combinations, goodwill and intangible assets. These new rules, published in
July 2001, consist of SFAS No. 141 Business Combinations and SFAS No. 142
Goodwill and Other Intangible Assets. In conjunction with these new
accounting standards, the FASB has issued Transition Provisions for New
Business Combination Accounting Rules (Provisions) that require the Company
to cease amortization of goodwill and adopt the new impairment approach as of
January 1, 2002. Management does not expect SFAS No.s 141 and 142 to have a
material effect on the Companys financial position or results of operations.

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations. This statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The purpose of this statement
is to develop consistent accounting of asset retirement obligations and related
costs in the financial statements and provide more information about future
cash outflows, leverage and liquidity regarding retirement obligations and the
gross investment in long-lived assets. This statement is effective for
financial statements issued for fiscal years beginning after June 15, 2002. The
Company does not believe that the adoption of this statement will have a
significant impact on the Companys financial position or results of
operations.

In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, which supersedes SFAS No. 121.
SFAS No. 144, which governs accounting for the impairment of long-lived assets,
is effective for financial statements issued for fiscal years beginning after
December 15, 2002. The Company does not believe that the adoption of this
statement will have a significant impact on the Companys financial position or
results of operations.

10



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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations




Business Overview

JB Oxford Holdings, Inc. (together with its consolidated subsidiaries, the
Company), through its wholly-owned subsidiaries, is engaged in the business
of providing brokerage and related financial services to retail customers and
broker-dealers nationwide. The Companys primary subsidiary is JB Oxford &
Company (JBOC), a registered broker-dealer offering the following services:
(1) discount and electronic brokerage services to the investing public; (2)
clearing and execution services to correspondents on a fully-disclosed basis;
and (3) acting as a market maker in NASDAQ National Market System, New York
Stock Exchange (NYSE) and other national exchange listed securities.

Discount and Electronic Brokerage Services

JBOC provides a full line of brokerage services and products to customers,
including the ability to buy and sell securities, security options, mutual
funds, fixed income products, annuities and other investment securities. The
Company continues to upgrade and improve its brokerage technologies in order to
provide its customers with the resources necessary to conveniently and
economically execute securities transactions and access related financial
information. In the second quarter of 2001 the Company began offering online
bond trading, joining only a handful of discount brokerages that offer this
service to customers. In addition to its trading capabilities, the Companys
Internet site (www.jboxford.com) provides market quotes, charts, company
research, and customer account information such as cash balances, portfolio
balances and similar information.

During the last quarter of 2001, the Company will continue to provide high
quality, flexible, and customer responsive services. The Company continually
upgrades computer systems and services within each of its divisions to utilize
and take advantage of the most recent technological developments. During the
current down-trending market, the Company will continue its efforts to maintain
a lean infrastructure by carefully monitoring and minimizing costs.

Clearing and Execution Services

JBOC is self-clearing and provides clearing and execution services to
independent broker-dealers. The clearing business offers the opportunity for a
high return on capital but involves risks that exceed the simple risk of loss
of business. Management believes that by careful selection and monitoring of
the Companys correspondents, the risk of providing these services can be
minimized.

Market Making Activities

In order to facilitate the execution of security transactions for its own
customers and the customers of its correspondents, JBOC acts as a market maker
for approximately 600 public corporations whose stocks are traded on the NASDAQ
National Market System, NYSE or other national exchanges. The number of
companies in which JBOC acts as a market maker fluctuates depending upon
various factors, including trading volume and the number of employees acting in
a trading capacity. The Companys market making activities concentrate on the
execution of unsolicited transactions for customers and are required to be in
compliance with the rules of the National Association of Securities Dealers,
Inc. (NASD) regarding best execution.

11



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##### Table of Contents



Recent Developments

Due to the terrorist attacks against the United Sates that occurred on
September 11, 2001, the stock markets were closed for four (4) days which had a
negative impact on the Companys revenues. JBOCs New York City office is
located within blocks of where the World Trade Center was destroyed, and as a
result of the attacks, was closed for approximately three (3) weeks after the
markets re-opened, while structural integrity of the building was confirmed,
and the clean up process in lower Manhattan began. JBOC was able to re-route
its phone lines and trading orders through its Beverly Hills and Miami offices,
and JBOCs customers encountered no disruption of service upon the re-opening
of the markets. As of early October, the New York City office has reopened and
is in full operation. Further acts of terrorism, including the recent
proliferation of acts involving anthrax, which continue to impact the U.S.
financial markets could have a material adverse effect on our business,
financial condition and operating results.

Results of Operations

Nine Months Ended September 30, 2001 Compared with Nine Months Ended September
30, 2000

Revenues

The Companys total revenues were $29,276,388 in the first nine months of
2001, a decrease of 64% from $81,253,787 in the first nine months of 2000. The
primary reason for the decrease was a decline in commission revenue of 67% to
$10,212,588 in the current period from $30,894,214 in the first nine months of
2000. Additionally, interest revenue decreased 58% to $12,970,423 in the first
nine months of 2001 from $30,953,479 for the same period in 2000. Trading
profits decreased 80% to $2,404,686 in the first nine months of 2001 from
$12,318,518 in the first nine months of 2000.

Commission revenue decreased $20,681,626 or 67% to $10,212,588 in the
first nine months of 2001 compared with $30,894,214 in the first nine months of
2000. This decline is the direct result of the decline in trading volume,
which is down 60% in the first nine months of 2001 compared with the same
period of 2000, as the entire industry experienced decreased volume in the
current downtrending market. For the final quarter of 2001, the Company
anticipates commission revenue will track the overall trading volumes within
the industry. In the second quarter of 2001, the Company acquired
approximately 11,000 customer accounts from two other broker dealers. The
Company intends to continue to look for opportunities to grow its business
through acquisitions of accounts from compatible discount and on-line brokerage
operations of other firms. There can be no assurance that the Company will
complete any acquisitions in the future, or if completed, that they will be
successful.

Interest revenue decreased $17,983,056 or 58% to $12,970,423 in the first
nine months 2001 compared with $30,953,479 for the same period of 2000. Net
interest income decreased 52% to $6,081,629 in the first nine months 2001 from
$12,704,723 for the same period 2000. The changes in interest revenue are
consistent with the usual fluctuation of debit balances in brokerage margin
accounts as well as changes in broker-call rates on which the interest charged
to customers is calculated. The decline in margin balances has been the most
significant factor for the decrease.

The decrease in trading profits resulted from a decrease in trading volume
from the Companys discount and on-line brokerage operations. Trading profits
were also adversely affected by decimalization being fully implemented in April
2001. Decimalization has decreased the spreads from which trading profits are
realized, thereby reducing revenues generated from market making

12



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##### Table of Contents



activities. Management anticipates trading profits will continue to track
the volumes of the discount and on-line brokerage operation for the final
quarter of 2001; however, management is also exploring new sources of order
flow for the Company to utilize.

Clearing and execution revenue decreased $3,113,014 or 50% to $3,104,366
in the first nine months 2001 compared with $6,217,380 for the same period of
2000. The decrease reflects the decrease in correspondent trades cleared by
the Company, and the trend tracks the overall volume trend of the industry.

Commission, trading and clearing revenues were also negatively impacted by
the closing of the U.S. equity markets for four days due to the September 11,
2001 terrorist attacks.

Expenses

Expenses totaled $35,792,237 for the first nine months of 2001, a decrease
of 50% from $72,305,115 in the first nine months of 2000. The decrease in
expenses is primarily a result of the decline in trading volume in the
Companys discount and on-line brokerage divisions. The decrease also reflects
the impact of cost containment measures taken by management during the past
year. Many of the Companys expenses, including commission expense, interest
expense, clearing and floor brokerage, communications and data processing
charges are directly related to commission revenue, interest revenue and
trading revenue, which are all down from the first nine months of 2000. Data
processing expense decreased 61% to $2,680,964 in the first nine months of 2001
from $6,883,686 for the same period of 2000. This decrease is the result of a
decline in commission and trading volumes, in addition to the Company
renegotiating terms with its service provider.

Commission expense decreased by 78% in the first nine months of 2001 to
$2,653,118 from $11,890,520 for the same period of 2000. These decreases are
in line with the revenue decreases discussed above, where commission revenue
decreased 67% and trading profits decreased 80%. Interest expense decreased
62% to $6,888,794 in the first nine months of 2001 from $18,248,756 in the
first nine months of 2000. The changes in interest expense are consistent with
the fluctuation of customer credit balances in brokerage accounts as well as
changes in rates on which credit interest was paid to customers. The decline
in outside financing, including short term borrowings and stock loan, has also
been a significant factor for the decrease in interest expense.

Promotional expense decreased $4,557,212 or 81% to $1,076,954 in the first
nine months of 2001 from $5,634,166 for the same period of 2000. These costs
have decreased as management has decreased its television ads. Management
believes it is currently more efficient to generate new accounts through
acquisition rather than from advertising.

Management continues to examine ways to contain costs and improve
efficiencies. Through targeted workforce reduction and attrition, the Company
reduced its total workforce by 46% during the first nine months of 2001. The
Company will continue to seek ways to monitor and minimize costs during the
current market slowdown.

Quarter Ended September 30, 2001 Compared with Quarter Ended September 30, 2000

The Company recorded a net loss of $1,802,757 for the quarter ended
September 30, 2001. This compares with a net profit of $31,770 for the quarter
ended September 30, 2000.

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Total revenues for the third quarter of 2001 were $6,587,705, a decrease
of $14,553,377 or 69% from the comparable quarter of 2000, and a decrease of
$2,834,325 or 30% from the trailing second quarter of 2001. Commission revenue
decreased $4,914,898 or 69% during the third quarter of 2001 compared with the
third quarter of 2001 and $1,139,769 or 34% from the trailing second quarter of
2001. Customer trade volumes declined 65% in the third quarter 2001 compared
to the third quarter 2000 and 34% from the trailing second quarter of 2001.
This decline was typical for the industry during these periods. These
declining volumes also affected trading profits and clearing revenue for the
same periods. Trading profits were also adversely affected by decimalization
being fully implemented in April 2001. Decimalization has decreased the
spreads from which trading profits are realized, thereby reducing revenues
generated from market making activities.

Clearing revenue decreased $538,458 or 41% during the third quarter of
2001 compared with the third quarter of 2000, and $241,298 or 24% compared with
the second quarter of 2001. These decreases are related to the decline in
market volumes, discussed in the nine-month comparison above.

Commission, trading and clearing revenues were also negatively impacted by
the closing of the U.S. equity markets for four days due to the September 11,
2001 terrorist attacks.

Interest revenue decreased $6,815,031 or 67% to $3,311,968 from
$10,126,999 for the third quarter of 2001 compared with the third quarter of
2000. Additionally, interest revenue decreased $754,651 or 19% over the second
quarter of 2001. Net interest income decreased $2,368,601 or 57% to $1,779,147
in the third quarter of 2001 from $4,147,748 in the third quarter of 2000. Net
interest income declined $96,994 or 5% from the second quarter of 2001. These
decreases are the result of declining interest rates and trade volumes as
discussed in the nine-month comparison above.

Total expenses for the third quarter of 2001 were $9,643,462, a decrease
of $11,445,850 or 54% from the third quarter of 2000, and a decrease of
$1,825,536 or 16% from the second quarter of 2001. These decreases are due to
the decrease in variable costs associated with revenue and cost cutting
measures implemented by management. Interest expense decreased $4,446,430 or
74% during the third quarter of 2001 compared with the third quarter of 2000
and $657,657 or 30% compared with the second quarter of 2001. Interest costs
decreased due to declining customer credit balances and lower interest rates.

Employee compensation decreased $1,513,902 or 42% to $2,061,142 in the
third quarter of 2001 from $3,575,044 during the third quarter of 2000, and
$138,341 or 6% from the second quarter of 2001. Reductions in the companys
workforce resulted in the reduced salary costs. Promotional costs decreased
$1,740,330 or 90% in the third quarter of 2001 compared with the third quarter
of 2000, while these costs decreased $95,619 or 33% from the second quarter of
2001. These declines are discussed in more detail in the nine-month discussion
above.

Liquidity and Capital Resources

The Company finances its growth through the use of funds generated from
the business operations of its subsidiaries, mainly JBOC. Additionally, JBOC
has established omnibus/financing accounts and lines of revolving credit with
other broker-dealers and banking institutions. The Company has borrowing
availability approximating $55,000,000 with banking institutions and
uncommitted lines with broker dealers based upon loan collateral as of
September 30, 2001. Further, the Company has available stock loan financing
when necessary. Amounts borrowed bear interest at

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a fluctuating rate based on the broker call and prime rates. Certain of
these credit facilities are subject to financial covenants and restrictions,
which could limit the amount the Company could borrow at any given time in the
event of changes in financial ratios and continuing losses.

The majority of the Companys corporate assets at September 30, 2001, were
held by its subsidiary, JBOC, and consisted of cash or assets readily
convertible to cash. The Companys statement of financial condition reflects
this largely liquid financial position. Receivables with other brokers and
dealers primarily represent current open transactions that typically settle
within a few days, or stock borrow-and-loan transactions where the contracts
are adjusted to market values daily. Additionally, JBOC is subject to the
requirements of the NASD and the SEC relating to liquidity, net capital
standards and the use of customer cash and securities. See Note 3, Regulatory
Requirements, to the financial statements for regulatory requirements of the
Company.

The Company currently anticipates that its cash resources and available
credit facilities will be sufficient to fund its expected working capital and
capital expenditure requirements for the foreseeable future. However, in order
to more aggressively expand its business, respond to competitive pressures,
develop additional products and services, or take advantage of strategic
opportunities, or in the event losses continue or future positive cash flow is
not realized, the Company may need to raise additional funds. If funds are
raised through the issuance of equity securities, or securities which are
convertible into equity securities, the Companys existing shareholders may
experience additional dilution in ownership percentages or book value.
Additionally, such securities may have rights, preferences and privileges
senior to those of the holders of the Companys common stock. If such funds
are needed, there can be no assurance that additional financing will be
available or whether it will be available on terms satisfactory to the Company.

Liquidity at September 30, 2001

The Companys cash position increased during the first nine months of 2001
by $7,067,532 to $15,071,532. This compares with a net increase in cash and
cash equivalents of $2,563,305 in the first nine months of 2000. The
fluctuation in the Companys cash position is impacted by the settlement cycles
of the business.

Cash Flows From Operating Activities

Net cash provided by operating activities was $11,329,655 for the first
nine months of 2001, compared with cash of $24,391,655 used in operations
during the first nine months of 2000. The Companys net cash provided by or
used in operating activities is impacted by changes in the brokerage-related
assets and liabilities of JBOC.

During the first nine months of 2001, the most significant source of cash
was the decrease in receivables from customers of $162,084,444. This source of
cash was used in part by the decrease in stock loan and an increase in stock
borrowed. These uses are reflected in the decrease of payables from
broker-dealers and clearing organizations of $92,987,936 and the increase of
receivables from broker-dealers and clearing organizations of $15,150,049.
Additional cash was used through an increase in cash segregated under federal
and other regulations of $26,733,961 and the reduction of accounts payable and
accrued expenses of $4,027,294.

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Cash Flows Used In Investing Activities

The net cash used in investing activities during the first nine months of
2001 was $3,423,043 compared with $1,693,765 during the same period of 2000.
The Company has invested $2,510,000 in acquiring customer accounts from two
other broker dealers. The remaining $913,043 of cash uses are a direct result
of capital expenditures made by the Company during the first nine months of
2001 as compared with $1,693,765 for the first nine months of 2000. The Company
presently has no plans to open additional offices and no significant
commitments for capital expenditures. The Company continues to look for
opportunities to grow its business through acquisition and if acquisitions are
made, the Company may expend its resources on an investment in such an
acquisition.

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Cash Flows From Financing Activities

Financing activities used cash of $839,080 in the first nine months of
2001, compared with $28,648,725 cash provided by financing activities in the
first nine months of 2000. Cash used in 2001 was for the repayment of notes
payable of $672,000 compared with $5,749 for the first nine months of 2000.
Additionally, the Company used cash of $167,080 to acquire treasury stock
during the first nine months of 2001 compared to $1,506,150 cash used for the
same period in 2000. The primary source of cash provided in 2000 was the
proceeds from short-term loans in the amount $25,062,359, and the proceeds of
$5,000,000 from notes payable. These loans were used to finance the growth in
the receivables from customers and are secured by securities held in the
customer accounts.

Recent Accounting Pronouncements

In September of 2000, the Financial Accounting Standards Board (FASB)
issued SFAS No. 140 Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities  a replacement of FASB Statement No.
125. As of December 31, 2000, the Company has adopted accounting and
disclosure requirements of SFAS No. 140 as set forth in paragraphs 15 and 17 of
the Statement, respectively. All other provisions of the Statement were
adopted as of March 31, 2001. The adoption of SFAS No. 140 did not have an
impact on the financial condition or results of operations of the Company.

The FASB has finalized new accounting standards covering business
combinations, goodwill and intangible assets. These new rules, published in
July 2001, consist of SFAS No. 141 Business Combinations and SFAS No. 142
Goodwill and Other Intangible Assets. In conjunction with these new
accounting standards, the FASB has issued Transition Provisions for New
Business Combination Accounting Rules (Provisions) that require the Company
to cease amortization of goodwill and adopt the new impairment approach as of
January 1, 2002. Management does not expect SFAS No.s 141 and 142 to have a
material effect on the Companys financial position or results of operations.

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations. This statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The purpose of this statement
is to develop consistent accounting of asset retirement obligations and related
costs in the financial statements and provide more information about future
cash outflows, leverage and liquidity regarding retirement obligations and the
gross investment in long-lived assets. This statement is effective for
financial statements issued for fiscal years beginning after June 15, 2002. The
Company does not believe that the adoption of this statement will have a
significant impact on the Companys financial position or results of
operations.

In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, which supersedes SFAS No. 121.
SFAS No. 144, which governs accounting for the impairment of long-lived assets,
is effective for financial statements issued for fiscal years beginning after
December 15, 2002. The Company does not believe that the adoption of this
statement will have a significant impact on the Companys financial position or
results of operations.

Special Note Regarding Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q, particularly
under Items 2 and 3, as well as certain information provided periodically in
writing or orally by us, constitute forward-

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looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements involve known
and unknown risks, uncertainties, and other factors which may cause the actual
results, performance, or achievements of the Company to be materially different
from any future results, performance, or achievements, expressed or implied by
such forward-looking statements.

You should carefully consider the risks described below and all other
information contained in this report and in our other filings with the SEC,
including but not limited to information under the heading Business Overview 
Forward Looking Statements and Risk Factors in our Form 10-K for the year
ended December 31, 2000 and our Form S-4, filed in October 2001, before making
an investment decision in the Company. These risks include, among others, the
following:



| |  |  | inability to generate positive cash flows and continuance of, or increased, negative cash flows;                      
| | - |  | ----------------------------------------------------------------------------------------------------------------------
|
| |  |  | continued or worsening decline in market activity and trade volume;                                                   
|
| |  |  | continued or worsening poor general economic and market conditions;                                                   
|
| |  |  | the significant demands on our resources as a result of our rapidly evolving business;                                
|
| |  |  | rapid and significant fluctuation in both value and volume of the U.S. securities markets;                            
|
| |  |  | financial risks from our clearing operations that exceed the simple risk
of loss of business if a correspondent fails;
|
| |  |  | delays in the introduction of new services and products;                                                              
|
| |  |  | increased competition;                                                                                                
|
| |  |  | any adverse effect caused by or inability to comply with government and other regulation;                             
|
| |  |  | inability to meet net capital requirements;                                                                           
|
| |  |  | inability to successfully identify, fund or integrate future acquisitions;                                            
|
| |  |  | inability to successfully integrate recent acquisitions;                                                              
|
| |  |  | inability to maintain network security and customer privacy;                                                          
|
| |  |  | continued adverse effects associated with the events of September 11,
2001 and any subsequent acts of terrorism;      
|
| |  |  | credit risks associated with customer margin accounts;                                                                
|
| |  |  | any adverse effects resulting from recent downsizing;                                                                 
|
| |  |  | the adverse impact of decimalization;                                                                                 
|
| |  |  | significant loss of customers or inability to generate new customers;                                                 
|
| |  |  | systems failures;                                                                                                     
|
| |  |  | inability to obtain SEC approval of the USAO settlement;                                                              
|
| |  |  | any adverse effect resulting from pending or future legal, arbitration
or administrative proceedings;                 
|
| |  |  | stock price volatility; and                                                                                           
|
| |  |  | inability to maintain listing on Nasdaq SmallCap Market.                                                              

These risks and uncertainties are not the only ones facing the Company,
and there may be additional risks of which we do not presently know or that we
currently deem immaterial. If any of the risks actually occur, these risks
could have a materially adverse effect on our business, financial condition or
results of operations. In that case, the trading price of our stock could
decline, and you may lose all or part of your investment. We undertake no
obligation to update or revise the forward-looking statements or risks and
uncertainties to reflect events or circumstances occurring after the date of
this Form 10-Q or to reflect the occurrence of unanticipated events.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk




Market Risk Disclosures

The following discussion about the Companys market risk disclosures
involves forward-looking statements. Actual results could differ materially
from those projected in these forward-looking statements. See Item 2
Managements Discussion and Analysis of Financial Condition and Results of
Operations  Special Note Regarding Forward-Looking Statements above. The
Company is exposed to market risk related to changes in interest rates and
equity security price risk. The Company does not have derivative financial
instruments for speculative or trading purposes.

Retail broker-dealers with clearing operations, such as the Company, are
exposed to risks that exceed the simple risk of loss of business due to the
loss of retail customers and/or correspondents. Broker-dealers engaged in
clearing operations for other correspondent broker-dealers are exposed to
losses beyond the loss of business in the event that the correspondent fails.
These risks result where the total assets, securities held in inventory, and
cash of the failed correspondent are insufficient to cover the unpaid customer
debits, together with losses which may be generated in the correspondents
trading account. The Company has established procedures to review a
correspondents inventory and activities in an effort to prevent such losses in
the event of a correspondents failure.

Areas outside the control of the Company which affect the securities market,
such as severe downturns or declines in market activity, may cause substantial
financial exposure. This is particularly true with regard to the receivables
that are carried in customer margin accounts. A significant decline in market
value may decrease the value of securities pledged in the margin accounts to a
point that the margin loans would exceed such value. While the Company is
authorized to liquidate the securities and to utilize the customers account
balances to cover any shortfall, in a worst case scenario, such collateral may
not be sufficient to cover all losses.

Interest Rate Sensitivity and Financial Instruments

For its working capital and reserves that are required to be segregated
under federal or other regulations, the Company invests primarily in U.S.
Treasury securities under agreements to resell. These agreements have maturity
dates ranging from one to seven days and do not present a material interest
rate risk.

Equity Price Risk

JBOC acts as a market maker for approximately 600 public corporations
whose stocks are traded on the NASDAQ National Market System, NYSE or other
national exchanges. The Company selects companies in which it makes a market
based on a review of the current market activity, and also to facilitate
trading activity of its own and correspondents clients. Market making may
result in a concentration of securities which may expose the Company to
additional risk; however, the Company does not maintain a significant inventory
of equity securities.

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PART II  OTHER INFORMATION




Item 1. Legal Proceedings

The Company and its subsidiaries are a party to a number of pending legal,
arbitration or administrative proceedings incidental to its business, including
customer brokerage transactions claims as well as matters related to our
clearing services resulting from the failure of certain correspondents. All of
the legal, arbitration and administrative proceedings have arisen in the
ordinary conduct of its business. To date, these proceedings have not had a
material effect on the Companys financial condition or results of operations.
However, there can be no assurance that in future periods these proceedings
will not have a material adverse effect on our financial condition or results
of operations. Those proceedings that management believes may have a
significant impact on the Company have been previously disclosed in the
Companys most recent Form 10-K and Form S-4 and are described in Note 4 to the
financial statements of this Form 10-Q. There were no material developments in
the third quarter of 2001.

Item 2. Changes in Securities and Use of Proceeds

There has been no material modification of ownership rights of securities
holders. Certain subsidiary companies, as part of their normal broker-dealer
activities, have minimum capital requirements imposed by regulatory agencies.
See Note 3, Regulatory Requirements, to the financial statements. These
requirements may restrict the payment of dividends.

Item 4. Submission of Matters to Vote of Security Holders

During the third quarter of 2001, there were no matters submitted to a
vote of security holders.

Item 6. Exhibits and Reports on Form 8-K

(b)  During the third quarter of 2001, the Company did not file a Report on Form
8-K.

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Pursuant to the requirements of the Securities Exchange Act of 1934, JB
Oxford Holdings, Inc. has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

JB Oxford Holdings, Inc.

/s/ Michael J. Chiodo




Michael J. Chiodo
Chief Financial Officer


November 13, 2001

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