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, 2004

                                       OR

|_|   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.)

  15165 Ventura Boulevard, Suite 330, Sherman Oaks, CA       91403
  (Address of principal executive offices)                   (Zip Code)

      Registrant's telephone number, including area code (818) 907-6580 Indicate
by check mark whether the Registrant: (l) has filed all reports required to be
filed by Section l3 or l5(d) of the Securities Exchange Act of l934 during the
preceding 12 months and (2) has been subject to such filing requirements for the
past 90 days. Yes |X| No |_|

      Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X|

      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 6, 2004, the
Registrant had the following number of shares of common stock, $0.01 par value
per share, outstanding: 3,692,419.
<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                    JB OXFORD HOLDINGS, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                                         Sep. 30, 2004      December 31,
                                                                          (Unaudited)           2003
                                                                          ------------      ------------
<S>                                                                       <C>               <C>
ASSETS:

  Cash and cash equivalents                                               $  1,818,699      $  6,897,970

  Cash and cash equivalents segregated under federal and other
   regulations                                                                      --       130,748,572

  Receivable from broker-dealers and clearing organizations                         --        29,337,358

  Receivable from customers (net of allowance for doubtful
    accounts of $0 and $2,781,305)                                                  --        78,372,056

  Other receivables                                                            272,311         2,139,865

  Marketable securities owned - at market value                                     --           432,060

  Notes receivable from shareholder                                          2,500,000         2,500,000

  Assets held for sale                                                     188,763,433                --

  Furniture, equipment, and leasehold improvements (at cost -
   net of accumulated depreciation and amortization of $2,958,602
   and $6,352,333)                                                             132,223         2,195,783

  Clearing deposits                                                                 --         6,542,595

  Intangible assets (net of accumulated amortization
   of $0 and $3,558,678)                                                            --         2,957,837

  Other assets                                                                 112,463           780,771
                                                                          ------------      ------------
  TOTAL ASSETS                                                            $193,599,129      $262,904,867
                                                                          ============      ============
</TABLE>

See accompanying notes.


                                       2
<PAGE>

                    JB OXFORD HOLDINGS, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                                                Sept 30, 2004      December 31,
                                                                                 (Unaudited)           2003
                                                                                -------------     -------------
<S>                                                                             <C>               <C>

LIABILITIES AND SHAREHOLDERS' EQUITY:

   LIABILITIES:

     Payable to broker-dealers and clearing organizations                       $          --     $  40,331,755

     Payable to customers                                                                  --       195,340,295

     Securities sold, not yet purchased - at market value                                  --         1,957,909

     Liabilities associated with assets held for sale                             174,258,841                --

     Accounts payable and accrued liabilities                                       6,593,222         5,436,675

     Loans from shareholders                                                               --         5,418,696

     Notes payable                                                                  3,333,819         3,458,819
                                                                                -------------     -------------
   TOTAL LIABILITIES                                                            $ 184,185,882     $ 251,944,149
                                                                                -------------     -------------

   COMMITMENTS AND CONTINGENCIES

   SHAREHOLDERS' EQUITY:

     Common stock  ($.01 par value, 100,000,000 shares authorized;
      3,739,413 and 1,756,499 shares issued)                                           37,394            17,565

     Additional paid-in capital                                                    23,282,397        18,039,086

     Retained deficit                                                             (12,993,343)       (5,425,090)

     Treasury stock at cost, 46,994 and 83,244 shares                                (913,201)       (1,670,843)
                                                                                -------------     -------------
   TOTAL SHAREHOLDERS' EQUITY                                                       9,413,247        10,960,718
                                                                                -------------     -------------
   TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                   $ 193,599,129     $ 262,904,867
                                                                                =============     =============
</TABLE>

See accompanying notes.


                                       3
<PAGE>

                    JB OXFORD HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                           For The Nine Months Ended       For The Three Months Ended
                                                September 30,                    September 30,
                                              2004            2003            2004            2003
                                          -----------     -----------     -----------     -----------
<S>                                       <C>             <C>             <C>             <C>
REVENUES:
   Interest                               $   173,673     $   174,913     $    57,887     $    58,158
   Brokerage                                  288,113              --         195,916              --
   Other                                      100,000          10,111         100,000              --
                                          -----------     -----------     -----------     -----------
   Total revenues                             561,786         185,024         353,803          58,158
                                          -----------     -----------     -----------     -----------

EXPENSES:
   General and administrative               1,531,248         993,730         537,077         168,228
   Interest                                   482,667         483,372         160,889         161,124
   Depreciation and amortization              116,354         149,330          36,840          44,371
                                          -----------     -----------     -----------     -----------
   Total expenses                           2,130,269       1,626,432         734,806         373,723
                                          -----------     -----------     -----------     -----------

   Loss from continuing operations
    before income taxes                    (1,568,483)     (1,441,408)       (381,003)       (315,565)

     Income tax expense (benefit)               6,100        (581,228)             --         (31,017)
                                          -----------     -----------     -----------     -----------

   Net loss from continuing operations     (1,574,583)       (860,180)       (381,003)       (284,548)

   Loss from discontinued operations       (5,351,543)     (2,746,959)     (2,590,364)       (854,843)
                                          -----------     -----------     -----------     -----------

   Net loss                               $(6,926,126)    $(3,607,139)    $(2,971,367)    $(1,139,391)
                                          ===========     ===========     ===========     ===========

Basic net loss per share:
   From continuing operations             $     (0.81)    $     (0.57)    $     (0.17)    $     (0.18)
   From discontinued operations                 (2.74)          (1.80)          (1.17)          (0.55)
   Basic net loss per share
                                                (3.55)          (2.37)          (1.34)          (0.73)
Diluted net loss per share:
   From continuing operations             $     (0.81)    $     (0.57)    $     (0.17)    $     (0.18)
   From discontinued operations                 (2.74)          (1.80)          (1.17)          (0.55)
   Diluted net loss per share
                                                (3.55)          (2.37)          (1.34)          (0.73)
  Weighted average number of shares
      Basic                                 1,949,404       1,523,665       2,216,761       1,557,565
      Diluted                               1,949,404       1,523,665       2,216,761       1,557,565
</TABLE>

See accompanying notes.


                                       4
<PAGE>

                    JB OXFORD HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                For The Nine Months Ended
                                                                                      September 30,
                                                                             -----------------------------
                                                                                 2004             2003
                                                                             ------------     ------------
<S>                                                                          <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                   $ (6,926,126)    $ (3,607,139)
  Adjustments to reconcile net loss to cash used in operating activities:
     Depreciation and amortization                                              1,111,672        2,066,476
     Provision for bad debts                                                       51,340           55,285
     Deferred income taxes, net                                                        --          880,000
   Changes in assets and liabilities:
     Cash segregated under federal and other regulations                       27,581,674        3,892,369
     Receivable from broker-dealers and clearing organizations                 18,434,836      (12,471,683)
     Receivable from customers                                                 14,697,423       12,731,314
     Other receivables                                                          1,557,422          393,547
     Securities owned                                                            (489,590)         596,400
     Clearing deposits                                                          1,703,957       (5,245,728)
     Other assets                                                                (199,183)         (66,063)
     Payable to broker-dealers and clearing organizations                     (29,739,160)     (10,245,587)
     Payable to customers                                                     (31,675,092)       5,578,508
     Securities sold, not yet purchased                                        (1,956,866)       2,525,619
     Accounts payable and accrued liabilities                                   1,116,506         (410,284)
     Income taxes receivable                                                           --        1,992,066
                                                                             ------------     ------------
Net cash used in operating activities                                          (4,731,187)      (1,334,897)
                                                                             ------------     ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                                           (223,084)        (170,351)
                                                                             ------------     ------------
Net cash used in investing activities                                            (223,084)        (170,351)
                                                                             ------------     ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Repayments of notes payable                                                     (125,000)              --
                                                                             ------------     ------------
Net cash used in financing activities                                            (125,000)              --
                                                                             ------------     ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS                                      (5,079,271)      (1,505,248)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD                            6,897,970        5,579,755
                                                                             ------------     ------------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD                               $  1,818,699     $  4,074,507
                                                                             ============     ============
</TABLE>

See accompanying notes.


                                       5
<PAGE>

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  consolidated
financial  statements  contain all  adjustments  necessary to present fairly the
consolidated  financial statements of JB Oxford Holdings,  Inc. and subsidiaries
(the  "Company")  for the periods  presented.  The results of operations for the
interim periods  presented are not  necessarily  indicative of the results to be
expected for the full year. The accompanying  consolidated financial information
should  be  read in  conjunction  with  the  Company's  2003  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 accompanying consolidated financial statements have been prepared on a
going  concern  basis,   which  reflects  the  realization  of  assets  and  the
satisfaction  of liabilities  in the normal course of business.  The Company has
incurred  recurring  operating  losses,  has  limited  access to capital and has
significant pending litigation.  Further, there is significant  uncertainty with
respect to the outcome of a pending  SEC  investigation  into the  alleged  late
trading of mutual funds  conducted by the Company.  The report of the  Company's
independent  accountants  for the year ended  December  31,  2003,  included  an
explanatory  paragraph expressing  substantial doubt about the Company's ability
to continue as a going concern.

      The  accompanying  consolidated  financial  statements  do not include any
adjustments  relating to the possible future effects on the  recoverability  and
classification  of assets or the amounts and  classification of liabilities that
might be necessary should the Company file for protection under Chapter 11 or be
unable to continue as a going concern.

      On June 4, 2004,  the  Company  signed an asset  purchase  agreement  with
Ameritrade,  Inc., a subsidiary of Ameritrade Holding  Corporation,  to sell the
online  retail  accounts of JB Oxford & Company  ("JBOC"),  a  subsidiary  of JB
Oxford  Holdings,  Inc.  for up to $26  million  in  cash,  subject  to  certain
adjustments and an escrow.  That transaction closed on October 8, 2004, with the
final purchase price fixed at $25,870,000.00. On August 20, 2004, the Registrant
entered into an agreement with North American Clearing,  Inc. to sell all of its
clearing rights for the  correspondent  accounts of its wholly-owned  subsidiary
National  Clearing  Corp.  ("NCC").  Under  the  terms  of  the  agreement,  the
Registrant received an initial payment of $100,000,  and will receive 50% of the
revenue  related to the  transferred  correspondent  accounts over the next five
years,  up to a  maximum  total  payment  of $2.5  million.  Please  see  Note 4
"Discontinued Operations" for more information.


                                       6
<PAGE>

NOTE 2. EARNINGS PER SHARE

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

<TABLE>
<CAPTION>
                                                   For The Nine Months Ended     For The Three Months Ended
                                                        September 30,                    September 30,
                                                     2004            2003            2004            2003
                                                 -----------     -----------     -----------     -----------
<S>                                              <C>             <C>             <C>             <C>
BASIC EARNINGS PER SHARE:
   Net loss                                      $(6,926,126)    $(3,607,139)    $(2,971,367)    $(1,139,391)
                                                 -----------     -----------     -----------     -----------
   Loss available to common stockholders         $(6,926,126)    $(3,607,139)    $(2,971,367)    $(1,139,391)
     (numerator)
                                                 ===========     ===========     ===========     ===========
   Weighted average common shares outstanding      1,949,404       1,523,665       2,216,761       1,557,565
     (denominator)
                                                 ===========     ===========     ===========     ===========
   Basic earnings per share                      $     (3.55)    $     (2.37)    $     (1.34)    $     (0.73)
                                                 ===========     ===========     ===========     ===========

DILUTED EARNINGS PER SHARE:
   Net Loss                                      $(6,926,126)    $(3,607,139)    $(2,971,367)    $(1,139,391)
                                                 -----------     -----------     -----------     -----------
   Loss available to common stockholders plus
     assumed conversions (numerator)             $(6,926,126)    $(3,607,139)    $(2,971,367)    $(1,139,391)
                                                 ===========     ===========     ===========     ===========
   Weighted average common shares outstanding      1,949,404       1,523,665       2,216,761       1,557,565
                                                 -----------     -----------     -----------     -----------
   Weighted average common shares and assumed      1,949,404       1,523,665       2,216,761       1,557,565
     conversions outstanding (denominator)
                                                 ===========     ===========     ===========     ===========
   Diluted earnings per share                    $     (3.55)    $     (2.37)    $     (1.34)    $     (0.73)
                                                 ===========     ===========     ===========     ===========
</TABLE>

      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  were used, the fully diluted shares
outstanding  for the nine  months  ended  September  30,  2004 and 2003 would be
3,694,935 and 3,855,609, respectively.

      The excluded options carry exercise prices ranging from $2.20 to $91.25 at
September 30, 2004 and 2003.  Options to purchase 151,250 shares of common stock
at September 30, 2004 expire at various dates through October 4, 2012.

NOTE 3. EQUITY TRANSACTIONS AND STOCK OPTIONS

      During the first quarter of 2004,  the Company  issued  132,244  shares of
common stock related to the  acquisition  of intangible  assets in the amount of
$466,667 in  connection  with the Mr.  Stock  transaction.  The average  closing
market price for the ten days prior to issuance was used to determine the number
of shares  issued.  These shares and 46,560  shares that were issued in December
2003 in the amount of $155,556  have been  returned to the Company and cancelled
as of September 30, 2004, in settlement of a dispute  regarding the registration
requirements  of the Mr.  Stock  shares.  See  "Litigation  Related  to  Account
Acquisitions" included at Note 6 for additional information.  Earnings per share
for the periods ended  September 30, 2004 have been  calculated as if the shares
were cancelled on September 30, 2004.


                                       7
<PAGE>

      On January 2, 2004,  the  Company  provided a treasury  stock bonus to all
employees  who had been with Company for six months or more.  All  employees who
were employed by the Company for one year or longer  received 500 shares,  while
those who were with the Company for less than one year received 250 shares.  The
Company required employees to hold the shares for one year prior to selling. The
cost of the treasury  stock was $757,642 and the market value at the time of the
bonus was $115,514,  the difference of $642,128 was charged to retained earnings
in 2004.

      On September 13, 2004 the secured convertible debentures were converted to
common  stock  in  accordance  with  the  terms  of the  notes.  The  debentures
representing  notes  payable in the amount of  $5,418,696  were  converted  into
2,029,474  shares of the Company's  common stock at the rate of $2.67 per share.
This conversion was a requirement of the asset purchase agreement in the sale of
online retail accounts to Ameritrade.

      SFAS  No.123,  "Accounting  for  Stock-Based  Compensation,"  requires the
Company to provide pro forma  information  regarding net income and earnings per
share in accordance with the  compensation-based  method  prescribed in SFAS No.
123. SFAS No. 148,  "Accounting  for  Stock-Based  Compensation - Transition and
Disclosure," requires the Company to provide information required by SFAS 123 on
a quarterly basis. No options were issued during the nine months ended September
30, 2004 and 2003; and there is no pro forma  attribution  expense on previously
issued options for those respective periods.

      A summary of the status of the Company's stock options as of September 30,
2004 and 2003, and changes during the periods ending on those dates is presented
below:

<TABLE>
<CAPTION>
                                           September 30, 2004              September 30, 2003
                                                        Weighted                       Weighted
                                          Shares         average         Shares        average
                                        ---------       ---------      ---------       ---------
<S>                                       <C>           <C>              <C>           <C>
            Outstanding at                256,825       $   15.66        257,200       $   15.72
              be-ginning of period
            Forfeited                    (105,575)          14.63           (375)          32.37
                                        ---------                      ---------
            Outstanding at end of
              period                      151,250           16.34        256,825           15.66
                                        =========                      =========
            Options exercisable           151,250           16.34        255,725           15.88
              at quarter-end
            Weighted-average fair
              value of options
              granted during the
              period                    $      --                      $      --
</TABLE>

NOTE 4. ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

On June 4, 2004, the Company signed an asset purchase agreement with Ameritrade,
Inc., a subsidiary of Ameritrade Holding Corporation,  to sell the online retail
accounts of JB Oxford & Company  ("JBOC"),  a subsidiary of JB Oxford  Holdings,
Inc.  for up to $26  million  in cash,  subject to  certain  adjustments  and an
escrow.  That  transaction  closed on October 8, 2004,  with the final  purchase
price fixed at  $25,870,000.00.  On August 20, 2004, the Registrant entered into
an  agreement  with North  American  Clearing,  Inc. to sell all of its clearing
rights for the correspondent  accounts of its wholly-owned  subsidiary  National
Clearing  Corp.  ("NCC").  Under  the  terms of the  agreement,  the  Registrant
received an initial payment of $100,000 in October 2004, and will receive 50% of
the revenue related to the transferred correspondent accounts over the next five
years, up to a maximum total payment of $2.5 million. These asset groups are the
brokerage  operations  (both  clearing  and retail  brokerage  segments)  of the
Company and provide  substantially  all of its operating  revenues.  These asset
groups  have  met  the  criteria  defined  by SFAS  No.  144 to be  reported  as
discontinued operations as of June 30, 2004.


                                       8
<PAGE>

      The brokerage assets and related  liabilities  have been  reclassified and
reported as assets and  liabilities  held for sale.  No  impairment of value has
been recognized,  as management  currently  believes the carrying value of these
assets will be fully  recoverable  from the proceeds of the sale, less any costs
to sell.  Additionally,  the  Company has no plan of  liquidation  nor is it the
current intention of management to liquidate the Company.  The Company will have
cash to address its various  legal  matters  following the sale and may identify
potential new  operations.  The following  table  represents  the  components of
assets and associated liabilities held for sale at September 30, 2004.

<TABLE>
<S>                                                                                       <C>
            Cash and cash equivalents segregated under federal and other regulations      $103,166,898
            Receivable from broker-dealer and clearing organizations                        10,902,522
            Receivable from customers (net of allowance for doubtful accounts of
               $2,832,645)                                                                  63,623,293
             Other receivable                                                                  310,132
             Marketable securities owned at market value                                       921,650
             Furniture, equipment, and leasehold improvements (at cost net of
               accumulated depreciation and amortization of $4,050,817)                      1,629,558
             Clearing deposits                                                               4,838,638
             Intangible assets (net of accumulated amortization of $4,031,264)               2,503,251
             Other assets                                                                      867,491
                                                                                          ------------
               Total assets held for sale                                                 $188,763,433
                                                                                          ============

             Payable to broker-dealer and clearing organizations                            10,592,595
             Payable to customers                                                          163,665,203
             Securities sold, not yet purchased at market value                                  1,043
                                                                                          ------------
               Total liabilities associated with assets held for sale                     $174,258,841
                                                                                          ============
</TABLE>

      The following table reflects detailed amounts of revenue, expense and loss
reported in discontinued  operations for the respective  periods ended September
30, 2004 and 2003.  Operations previously reported have been restated to reflect
the  change  in status to  discontinued  operations.  Revenue  of  $100,000  was
received in September 2004 on the sale of the correspondent  clearing  operation
and is included in other revenue on a continuing  operations  basis.  No gain on
sale is included as of September 30, 2004 on the Ameritrade  transaction because
the sale did not close until October 2004.


                                       9
<PAGE>

<TABLE>
<CAPTION>
                                            For The Nine Months Ended              For The Three Months Ended
                                                   September 30,                          September 30,
                                              2004               2003               2004               2003
                                          ------------       ------------       ------------       ------------
<S>                                       <C>                <C>                   <C>             <C>
REVENUES:
   Commissions                            $  5,149,891       $  6,325,195          1,197,131       $  2,193,145
   Interest                                  3,780,347          4,063,845          1,147,900          1,251,411
   Trading profits                             296,320          1,002,314             93,511           (265,874)
   Clearing and execution                    1,710,736          2,153,758            523,973            716,849
   Other                                        91,515            274,957             27,504             15,893
                                          ------------       ------------       ------------       ------------
      Total revenues                        11,028,809         13,820,069          2,990,019          3,911,424
                                          ------------       ------------       ------------       ------------

EXPENSES:
   Employee compensation                     3,863,159          5,002,361            985,727          1,540,767
   Clearing and floor brokerage                741,119            495,463            264,789            249,333
   Communications                            1,390,512          1,540,609            319,783            484,135
   Occupancy and equipment                   2,472,886          2,962,874            798,303            904,122
   Interest                                    281,585            418,783             83,489             89,439
   Data processing charges                   2,534,293          1,718,807          1,367,509            614,275
   Professional services                     2,499,879          1,327,395            644,942            416,801
   Promotional                                 163,632            165,970             25,299             46,997
   Bad debts                                    51,340             55,285             12,605             20,208
   Amortization of intangible assets           454,586          1,101,968                 --            360,727
   Other operating expenses                  1,921,161          2,611,007          1,077,937            583,435
                                          ------------       ------------       ------------       ------------
      Total Expenses                        16,374,152         17,400,522          5,580,383          5,310,239
                                          ------------       ------------       ------------       ------------
   Loss before income taxes                 (5,345,343)        (3,850,453)        (2,590,364)        (1,398,815)
   Income tax expense (benefit)                  6,200         (1,103,494)                --           (543,972)
                                          ------------       ------------       ------------       ------------

   Loss from discontinued operations      $ (5,351,543)      $ (2,746,959)      $ (2,590,364)      $   (854,843)
                                          ============       ============       ============       ============
</TABLE>

NOTE 5. REGULATORY REQUIREMENTS

      National  Clearing  Corp ("NCC") and JBOC are subject to the SEC's Uniform
Net Capital Rule ("the Rule"),  which  requires the  maintenance  of minimum net
capital.  NCC and JBOC have elected to use the alternative  method  permitted by
the Rule, which requires them 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 5% of aggregate debits.


                                       10
<PAGE>

      At  September  30,  2004,  NCC had net  capital of  $6,507,975,  which was
$5,172,622 in excess of the minimum amount  required.  At December 31, 2003, NCC
had net capital of  $9,554,544,  which was  $7,873,465  in excess of the minimum
amount required.

      At September 30, 2004, JBOC had net capital of $310,303, which was $60,303
in excess of the minimum  amount  required.  At December 31, 2003,  JBOC had net
capital  of  $420,575,  which  was  $414,478  in excess  of the  minimum  amount
required.

NOTE 6. CONTINGENT LIABILITIES

      The Company and its  subsidiaries are a party to a number of pending legal
or administrative  proceedings  incidental to the Company's business,  including
customer  brokerage  transactions  claims  as well  as  matters  related  to the
Company's  clearing services.  All of the legal,  arbitration and administrative
proceedings have arisen in the ordinary conduct of its business.  Those that may
have a significant impact on the Company have been reported in previous filings.
There has been no significant change in the legal and administrative proceedings
reported in the  Company's  Form 10-K and Form  10-K/A at December  31, 2003 and
Form 10-Q at June 30, 2004, except as disclosed below.

SEC MUTUAL FUND INVESTIGATION

On or about  August 24,  2004,  the SEC's Los Angeles  Office  commenced a civil
lawsuit  against  the  Company,  NCC,  and  three  of its  former  officers  and
employees,  alleging  violations of Section 17(a) of the Securities Act of 1933,
Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 thereunder, and Section
22(c) of the Investment Company Act of 1940 and Rule 22c-1 thereunder.  The suit
seeks  unspecified  monetary  damages and  penalties,  as well as other remedies
against the individual defendants. The suit contends that the Company wrongfully
allowed customers to place mutual fund trades after 4:00p.m. EST, and wrongfully
assisted clients in "market timing" of mutual funds. While the Company admits no
wrongdoing and intends to vigorously defend itself, no assurance can be given as
to the outcome of this matter.  Although the likelihood of loss is probable, the
Company has not accrued any  specific  amounts  related to this  matter,  as the
amount of loss is not estimable at this time. The Company maintains a litigation
reserve,  which it believes is  adequate  to cover the minimum  estimated  loss.
However, substantial penalties in excess of the litigation reserve from fines or
settlements  resulting from an adverse  outcome or judgment in this matter could
have a  material  adverse  effect  on the  financial  position  and  results  of
operations of the Company.

LITIGATION RELATED TO CORRESPONDENT CLEARING

On August 20, 2004,  NCC settled two pending  arbitrations  involving  claims of
approximately 60 former customers of correspondent firms that previously cleared
through NCC. The  settlement  called for a lump sum payment by the Registrant of
$1.25 million on or before October 18, 2004,  which payment was timely made. The
Company evaluated the adequacy of its litigation reserve at the end of the third
quarter.  As a result  of this  settlement,  the  Company  recorded  a charge of
$750,000.


                                       11
<PAGE>

LITIGATION RELATED TO ACCOUNT ACQUISITIONS

In October 2002,  Share King LLC, as successor to Mr. Stock,  Inc.  commenced an
arbitration  proceeding  related to the acquisition by us of the accounts of Mr.
Stock.  We counter-sued  for violations of the purchase  agreement by Mr. Stock.
That  litigation  was settled in August 2003, on terms more favorable to us than
we  originally  accrued  for,  and the  cost of the Mr.  Stock  acquisition  was
adjusted down $356,174 in 2003, as a result of settlement of the arbitration. As
a part of the  settlement,  we are required to distribute  cash and/or stock, at
our  election  to Share King LLC. In early 2004,  a further  dispute  arose with
Share King LLC regarding the registration  requirements  related to the stock to
be issued. In October 2004, we settled the dispute with Share King LLC by making
a one-time  payment of $1.4 million.  As a part of that  settlement,  all shares
issued to Share King LLC were returned to the Company to be cancelled.

NOTE 7. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

                                                         For The Nine Months
                                                           Ended Sept 30,
                                                       ----------------------
                                                         2004          2003
                                                       --------      --------
Supplemental Disclosures of Cash Flow Information
    Cash paid for:
        Interest                                       $647,347      $784,545
        Income taxes                                     12,300        71,977

Supplemental disclosure of non-cash investing and financing activities:

      Treasury  stock bonus  issued to  employees  in the amount of $115,514 and
$142,695 for 2004 and 2003, respectively.

      Cancellation  of common stock issued to acquire  intangible  assets in the
amount of $155,556 for 2004 (See Note 3 Equity Transactions and Stock Options).

      Conversion of  convertible  debentures  representing  notes payable in the
amount of  $5,418,696  were  converted  into  2,029,474  shares of the Company's
common stock for 2004.

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 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-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.


                                       12
<PAGE>

Business Overview

Through  our  wholly-owned  subsidiaries,  we  were  previously  engaged  in the
business  of  providing  brokerage  and  related  financial  services  to retail
customers and broker-dealers nationwide. With the completion of the transactions
with Ameritrade,  Inc. and North American Clearing, we now provide market making
and  institutional  trading  services only. See Note 4, Assets Held for Sale and
Discontinued   Operations.   Our  business  is  headquartered  in  Los  Angeles,
California.

Recent Developments

On June 7, 2004, we announced that Ameritrade,  Inc., a subsidiary of Ameritrade
Holding  Corporation,  had signed a definitive  agreement to purchase the online
retail  accounts  of JB Oxford & Company  ("JBOC").  The  purchase  price of $26
million was  subject to  adjustment  based upon the number of accounts  actually
transferred at the closing.  The transaction closed on October 8, 2004, with the
final  purchase  price  being  set at $25.87  million.  As a  condition  to that
transaction closing,  Third Capital Partners,  LLC converted its holdings of our
convertible  notes with an  aggregate  principal  amount of  approximately  $5.4
million into  approximately  2 million shares of our common stock,  representing
approximately 52% of our total outstanding shares, on a fully-diluted basis.

On August 20, 2004, the Registrant entered into an agreement with North American
Clearing, Inc. to sell all of its clearing rights for the correspondent accounts
of its wholly-owned  subsidiary National Clearing Corp. ("NCC"). Under the terms
of the agreement,  the Registrant  received an initial payment of $100,000,  and
will  receive  50% of the  revenue  related  to  the  transferred  correspondent
accounts  over the next  five  years,  up to a  maximum  total  payment  of $2.5
million.

On or about  August 24,  2004,  the SEC's Los Angeles  Office  commenced a civil
lawsuit  against  the  Company,  NCC,  and  three  of its  former  officers  and
employees,  alleging  violations of Section 17(a) of the Securities Act of 1933,
Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 thereunder, and Section
22(c) of the Investment Company Act of 1940 and Rule 22c-1 thereunder.  The suit
seeks  unspecified  monetary  damages and  penalties,  as well as other remedies
against the individual defendants. The suit contends that the Company wrongfully
allowed customers to place mutual fund trades after 4:00p.m. EST, and wrongfully
assisted clients in "market timing" of mutual funds. While the Company admits no
wrongdoing and intends to vigorously defend itself, no assurance can be given as
to the outcome of this matter.  Although the likelihood of loss is probable, the
Company has not accrued any  specific  amounts  related to this  matter,  as the
amount of loss is not estimable at this time. The Company maintains a litigation
reserve,  which it believes is  adequate  to cover the minimum  estimated  loss.
However, substantial penalties in excess of the litigation reserve from fines or
settlements  resulting from an adverse  outcome or judgment in this matter could
have a  material  adverse  effect  on the  financial  position  and  results  of
operations of the Company.


                                       13
<PAGE>

Market Making Activities

In order to  facilitate  the  execution  of  security  transactions  for our own
customers,  NCC acts as a market maker for approximately 10 public  corporations
whose stocks are traded on the NASDAQ National Market System,  or other national
exchanges.  The  number  of  companies  in  which  NCC  acts as a  market  maker
fluctuates  depending  upon various  factors,  including  trading volume and the
number  of  employees  in a  trading  capacity.  Our  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.

Results of Operations

Nine Months Ended  September 30, 2004 Compared with Nine Months Ended  September
30, 2003

Continuing Operations

Revenues from ongoing institutional sales and trading services provided $213,580
in commission  revenue and $74,533 in trading  profits for the nine months ended
September 30, 2004. The Company did not provide such services in 2003.  Interest
earned for the nine months ended  September 30, 2004 amounted to $173,673.  This
compares to $174,913  of interest  earned in the first nine months of 2003.  The
Company also  generated  $100,000  from the sale of its  correspondent  clearing
operation during the nine months ended September 30, 2004.

Our  general  and  administrative  expense  increased  by  $537,518  or  54%  to
$1,531,248  in the first  nine  months of 2004 from  $993,730  in the first nine
months of 2003. This increase  resulted  primarily from  professional  fees that
increased $461,310 to $882,163 in the first nine months of 2004 from $420,853 in
the first nine months of 2003.  These fees were incurred  largely due to the SEC
mutual fund investigation and the lawsuit against the Parent Company. See Note 6
above.  General and  administrative  expenses included employee  compensation of
$336,328 and $265,585  for the nine months  ended  September  30, 2004 and 2003,
respectively.

Discontinued Operations

Loss from  discontinued  operations  amounted  to  $5,351,543  in the first nine
months of 2004 compared to $2,746,959 in the first nine months of 2003.  This is
a change of $1,604,584 or 58% increase in the loss.

Revenues from Discontinued Operations

Our total  discontinued  brokerage  revenues were  $11,028,809 in the first nine
months of 2004, a decrease of 20% from  $13,820,069  in the first nine months of
2003. The primary reason for the decrease in brokerage  revenue was a decline in
Commission  revenues of $1,175,304 or 19% to $5,149,891 in the first nine months
of 2004 from $6,325,195 in the first nine months of 2003. Additionally,  trading
profits  decreased 70% to $296,320 in the current period from  $1,002,314 in the
first nine months of 2003.  Clearing and  execution  revenues  decreased  21% to
$1,710,736  in the first nine months of 2004 from  $2,153,758  in the first nine
months of 2003.  Interest  revenue  decreased 7% to $3,780,347 in the first nine
months of 2004 from $4,063,845 in the first nine months of 2003.


                                       14
<PAGE>

Discontinued  retail  commission  revenue  decreased   $1,175,304,   or  19%  to
$5,149,891  in the first nine months of 2004 compared to $6,325,195 in the first
nine months of 2003. The decrease in commission  revenue, is the result of fewer
trade  transactions  and also  reflects  JBOC's  adoption  during 2003 of a more
competitive pricing schedule.

Interest  revenues  from  brokerage  operations  decreased  $283,498  or  7%  to
$3,780,347  in the first nine months of 2004 compared to $4,063,845 in the first
nine months of 2003.  Net interest  income  decreased 4% from  $3,645,062 in the
first nine months of 2003 to  $3,498,762  in the first nine months of 2004.  The
changes in interest  revenues  reflect  decreased  yields on bank deposits and a
decline  in  segregated  cash  balances,  offset by  increased  customer  margin
balances over the same period.

Trading profits  decreased 70% to $296,320 in the first nine months of 2004 from
$1,002,314  in the first nine months of 2003.  The  decrease in trading  profits
resulted  primarily from a 70% decrease in volumes in firm  proprietary  trading
accounts, augmented by a loss of approximately $150,000 in one security position
in the first quarter of 2004.

Clearing and execution  revenues  decreased $443,022 or 21% to $1,710,736 in the
first nine  months of 2004  compared to  $2,153,758  in the first nine months of
2003. The largest  factor in the decrease was a $232,416  decrease in inactivity
fee  revenues  from the first  nine  months of 2003  compared  to the first nine
months of 2004.  The decrease  results from  inactive  accounts  being closed or
moved to other broker-dealers.

Expenses from Discontinued Operations

Expenses from  discontinued  brokerage  activities  totaled  $15,374,152 for the
first nine months of 2004, a decrease of 13% from  $17,670,522 in the first nine
months of 2003.  Included in the expense of 2003 is a $1,500,000 accrual for the
abandonment of leased property in Oakland, California related to the acquisition
of the Mr. Stock  accounts.  Excluding  this one-time item,  expenses  decreased
$796,370 or 5% during the first nine  months of 2004  compared to the first nine
months of 2003.  The  largest  increase  was  attributable  to the  increase  of
$1,172,484 in  professional  services  incurred in the first nine months of 2004
when compared with the first nine months of 2003.  Decreases in certain  expense
items reflect the impact of cost containment measures taken by management during
the past  several  years.  Many of our  expenses,  including  clearing  expense,
interest  expense,   and  data  processing  charges  were  directly  related  to
commission  revenues,  interest revenues and trading  revenues.  Assets that are
classified as held for sale cease to be deprecated and amortized. There was also
a decrease of $568,232 in  amortization  expense that would have  otherwise been
expensed, because customer intangible assets were held for sale.

Employee compensation from discontinued brokerage operations decreased by 23% in
the first nine months of 2004 to  $3,863,159  from  $5,002,361 in the first nine
months of 2003,  as the  Company  continued  to reduce its  workforce.  Interest
expense decreased 33% to $281,585 in the first nine months of 2004 from $418,783
in the first nine  months of 2003.  This  decrease  was in line with the revenue
decreases discussed above.


                                       15
<PAGE>

Professional services increased by $1,172,484 or 88% in the first nine months of
2004 to $2,499,879 from $1,327,395 in the first nine months of 2003.  Legal fees
included in professional  services increased $1,190,271 primarily as a result of
the SEC mutual fund investigation involving NCC.

Occupancy and equipment  expenses decreased $489,988 or 17% to $2,472,886 in the
first nine months of 2004 from  $2,962,874  in the first nine months of 2003, as
property and equipment  lease  commitments  have ended.  Included in 2004 is the
accrual of $315,000  that was paid in November  2004 to  terminate  the lease in
Beverly  Hills.  The  termination  of  these  lease  eliminated  a  total  lease
commitment of $7,068,602 from November 2004 through  December 2010.  Included in
data  processing  expense for the nine months  ended  September  30, 2004 is the
accrual of  $1,000,000  relating  to the buy out of a data  processing  provider
service  agreement.  This contract,  prior to the buy out,  required payments of
approximately  $2,200,000 over the next four years. Payment of the $1,000,000 is
required prior to the end of 2004. Additionally,  amortization expense decreased
$647,382  during the first nine months of 2004 compared to the first nine months
of 2003, of which $568,232 was because the intangible  assets were classified as
held for sale in 2004.

Other  expense  decreased  by  $689,846  during  the first  nine  months of 2004
compared to the first nine months of 2003. The most  significant  reason for the
change is a one-time  charge in the first nine months of 2003 of $1,500,000  for
the  abandonment  of leased  property  in  Oakland,  California  related  to the
acquisition  of the Mr.  Stock  accounts.  This charge was offset in part by the
accrual of $750,000 in the third  quarter  2004 related to the  settlement  of a
correspondent clearing case (see Note 6 Contingent Liabilities).

Quarter Ended September 30, 2004 Compared with Quarter Ended September 30, 2003

Continuing Operations

Revenues from ongoing institutional sales and trading services provided $130,360
in  commission  revenue  and $65,556 in trading  profits  for the quarter  ended
September 30, 2004. The Company did not provided such services in 2003. Interest
earned for the  quarter  ended  September  30, 2004  amounted  to $57,887.  This
compares to $58,158 of interest earned in the third quarter of 2003. The Company
also generated  $100,000 from the sale of its correspondent  clearing  operation
during the quarter ended September 30, 2004.

Our general and administrative expense increased by $368,228 or 219% to $537,077
in the third quarter of 2004 from  $168,228 in the third  quarter of 2003.  This
increase resulted from professional fees that increased  $240,076 to $260,128 in
the third quarter of 2004 from $20,052 in the third quarter of 2003.  These fees
were  incurred  due to the SEC  mutual  fund  investigation  and the  litigation
related to the Oeri notes. See Note 6 to the accompanying  financial statements.
General and administrative  expenses included employee  compensation of $142,658
and  $52,546  for  the  three  months  ended   September   30,  2004  and  2003,
respectively.  The increase in 2004 relates to  commissions  paid on commissions
generated on institutional sales and trading services.

Discontinued Operations

We  recorded  a net loss from  discontinued  operations  of  $2,590,364  for the
quarter ended  September 30, 2004. This compares with a net loss of $854,843 for
the quarter ended September 30, 2003.


                                       16
<PAGE>

Total  discontinued  brokerage  revenues  for the  third  quarter  of 2004  were
$2,990,019,  a decrease of $921,405 or 24% from the comparable  quarter of 2003.
Lower trading volumes during the third quarter of 2004 caused commission revenue
to decrease  $996,014 or 45% in the same period  compared with the third quarter
of 2003, and $552,311 or 32% when compared with the second quarter of 2004.

Clearing  revenue  decreased  $192,876  or 27% during the third  quarter of 2004
compared with the third quarter of 2003, and decreased  $103,446 or 16% compared
with the second quarter of 2004,  primarily due to the sale of the correspondent
clearing operation that occurred during the first week of September 2004.

Interest  revenue  from  brokerage   operations  decreased  $103,511  or  8%  to
$1,147,900 from $1,251,411 for the third quarter of 2004 compared with the third
quarter of 2003.  Interest  revenue  decreased as a result of  declining  margin
balances,  which was partially offset by increases in margin interest rates. Net
interest  income  decreased  $97,561 or 8% to $1,064,411 in the third quarter of
2004 from $1,161,972 in the third quarter of 2003.

Total  discontinued  brokerage  expenses  for the  third  quarter  of 2004  were
$4,580,383,  a decrease of $729,859 or 14% from the comparable  quarter of 2003.
Interest  expense  decreased  $5,950 or 7%  during  the  third  quarter  of 2004
compared with the third quarter of 2003 on lower  customer  credit  balances and
interest rates.

Employee compensation from discontinued  brokerage operations decreased $555,040
or 36% to $985,727 in the third quarter of 2004 from $1,540,767 during the third
quarter of 2003, due to workforce  reductions.  Professional  services  expenses
increased  $228,414  or 55% in the third  quarter of 2004 when  compared  to the
third quarter of 2003, due to increased legal fees as a result of the SEC mutual
fund investigation involving NCC.

Occupancy and equipment  expenses decreased $105,819 or 12% in the third quarter
of 2004  when  compared  with  the  third  quarter  of  2003.  Included  in data
processing  expense for the quarter  ended  September 30, 2004 is the accrual of
$1,000,000  relating  to  the  buy  out of a data  processing  provider  service
agreement,  as explained above.  Amortization  expense decreased $360,727 during
the third quarter of 2004 compared to the third quarter of 2003, no amortization
was  provided  for in the third  quarter  2004  because  intangible  assets were
classified as held for sale. Data processing  charges decreased  $246,766 or 40%
on lower  trading  volumes in the third  quarter of 2004 when  compared with the
third quarter of 2003.

Other expenses  increased  $494,502 or 85% in the third quarter of 2004 compared
with the third  quarter  of 2003.  This  increase  results  from the  accrual of
$750,000 in the third quarter 2004 related to the settlement of a  correspondent
clearing case (see Note 6 Contingent Liabilities).

Management continues to examine ways to cut costs and improve efficiencies,  but
there can be no assurance that we will be able to do so.


                                       17
<PAGE>

Liquidity and Capital Resources

We finance our operations  through the use of funds  generated from the business
of our subsidiaries, NCC and JBOC. The majority of our corporate assets are held
by NCC, and consist of cash or assets readily convertible to cash. Our 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 stock
loan  transactions  where the  contracts  are adjusted to market  values  daily.
Additionally,  NCC 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 4, "Regulatory  Requirements," to the financial statements
for regulatory requirements of the Company.

During the most recent  seven  fiscal  quarters,  NCC's net capital has declined
from  $9,452,719  at December 31, 2002 to  $6,507,975  at September 30, 2004. We
have suffered  recurring  operating  losses,  have limited access to capital and
have significant pending litigation.  Further, there is significant  uncertainty
with respect to the outcome of the SEC  investigation  into alleged late trading
conducted by NCC. The report of our  independent  accountants for the year ended
December 31, 2003,  included an  explanatory  paragraph  expressing  substantial
doubt about our ability to continue as a going concern.

As a result of these and other considerations,  our Board of Directors concluded
that it was in the best  interest  of our  shareholders  to effect a sale of the
online retail brokerage  business  conducted by JBOC. On June 4, 2004, we signed
an asset purchase  agreement with  Ameritrade,  Inc., a subsidiary of Ameritrade
Holding  Corporation,  to sell the online retail  accounts of JBOC. The purchase
price was $25.87  million.  The  transaction  closed on October 8, 2004 and JBOC
received the initial required payment of $14.0 million.  Third Capital Partners,
LLC has  converted  its  holdings  of our  convertible  notes with an  aggregate
principal  amount of  approximately  $5.4 million into  approximately  2 million
shares  of our  common  stock,  representing  approximately  52%  of  the  total
outstanding  shares,  on a fully-diluted  basis.  In addition,  we have sold our
correspondent  clearing operation to North American Clearing,  Inc. for $100,000
and 50% of the revenue over the next five years for the transferred accounts, up
to a maximum total payment of $2.5 million. The net proceeds will be utilized to
address pending legal matters and for other general expenses.

Liquidity at September 30, 2004

Our cash position  decreased  during the first nine months of 2004 by $5,079,271
to $1,818,699. This compares with a net decrease in cash and cash equivalents of
$1,505,248  in the  first  nine  months  of 2003.  The  fluctuation  in our cash
position is impacted by the  settlement  cycles of the  business,  which  relate
directly to the cash provided from or used in operations.

We do not anticipate  making any principal  payments on loans from  shareholders
due December  31, 2004,  in the amount of  $5,418,696.  Instead,  the holder has
converted  these notes into  approximately  2 million shares of our common stock
(See  Other  Events in Part II,  below).  We also do not  anticipate  making any
payments on notes payable in the principal amount of $2,889,375 (See "Litigation
Related to Oeri Notes" in Legal Proceedings in Part II, below).


                                       18
<PAGE>

Cash Flows From Operating Activities

Net  cash  used  in  operating  activities  (including   discontinued  operating
activities)  was $4,731,187 for the first nine months of 2004,  compared to cash
of $1,334,897  used in operations  during the first nine months of 2003. Our net
cash  provided by or used in operating  activities is impacted by changes in the
brokerage-related assets and liabilities of NCC.

During the first nine months of 2004,  the most  significant  source of cash was
the  decrease  in  cash  segregated  under  federal  and  other  regulations  of
$27,581,674.   Additionally,   receivables  from   broker-dealer   and  clearing
organizations decreased to provide cash of $18,434,836, and customer receivables
decreased to provide cash of  $14,697,423.  These sources of cash were offset by
the  decreases  in payables to  broker-dealers  and  clearing  organizations  of
$29,739,160 and payables to customers of $31,675,092  that are uses of cash. The
net loss of $5,926,126 also used cash in operations.

Cash Flows Used In Investing Activities

The net cash used in investing  activities  during the first nine months of 2004
was $223,084 compared with $170,351 during the first nine months of 2003. All of
the cash used for investing activities in the respective periods was for capital
expenditures.  We  presently  have no plans to open  additional  offices  and no
significant commitments for capital expenditures. Therefore, our requirement for
capital resources is not material to the business as a whole.

Cash Flows From Financing Activities

The net cash used in financing  activities  during the first nine months of 2004
was $125,000  compared  with no cash used in financing  activities  in the first
nine  months  of 2003.  The cash  used in 2004  was for the  repayment  of notes
payable.

RISK FACTORS

      You should  carefully  consider the risks described below before making an
investment  decision in our securities.  The risks and  uncertainties  described
below are not the only ones we face, and there may be additional  risks of which
we do not  presently  know or that we currently  deem to be  immaterial.  All of
these risks may impair our business operations.  The forward-looking  statements
in this report  involve risks and  uncertainties  and actual  results may differ
materially from the results we discuss in the forward-looking statements. If any
of the following  risks actually  occur,  our business,  financial  condition or
results of operations could be materially adversely affected.  In that case, the
trading price of our stock could  decline,  and you may lose all or part of your
investment.

WE COULD BE HARMED BY A CURRENT SEC, NYAG AND USAO MUTUAL FUND INVESTIGATION.

      We are  currently  under  investigation  by the SEC,  the New  York  State
Attorney General ("NYAG") and the US Attorney's  Office for the Central District
of California  ("USAO")  related to  allegations  that we  improperly  processed
mutual fund trade orders which, among other  allegations,  enabled certain hedge
fund and  mutual  fund  customers  to  engage  in "late  trading."  The  alleged
transactions  took  place  between  May  2002  and  September  2003  and we have
terminated our  arrangements  with the subject  customers.  Since August 2003 we
have  been  providing  the SEC and the NYAG  with  documents  and  testimony  in
response to  subpoenas  and we believe  that we have been  cooperating  fully in
these investigations.


                                       19
<PAGE>

      On November 6, 2003, our NCC subsidiary  received a "Wells Notice" as part
of the SEC's  investigation  informing  us that the  staff of the SEC's  Pacific
Regional   office   intended  to   recommend   that  the  SEC  bring  civil  and
administrative  enforcement  actions  against us based on alleged  violations of
federal  securities  laws related to the alleged late trading  transactions.  On
April 12,  2004,  we received a  subsequent  "Wells  Notice" on the same subject
matter  directed to the  Company.  We have  responded  to the Wells  Notices and
believe we are cooperating in connection with the notices.  To that end, we have
had several meetings with the SEC with the goal of settling this matter.

      On or about  August 24,  2004,  the SEC's Los Angeles  Office  commenced a
civil  lawsuit  against the Company,  NCC, and three of its former  officers and
employees,  alleging  violations of Section 17(a) of the Securities Act of 1933,
Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 thereunder, and Section
22(c) of the Investment Company Act of 1940 and Rule 22c-1 thereunder.  The suit
seeks  unspecified  monetary  damages and  penalties,  as well as other remedies
against the individual defendants. The suit contends that the Company wrongfully
allowed customers to place mutual fund trades after 4:00p.m. EST, and wrongfully
assisted clients in "market timing" of mutual funds. While the Company admits no
wrongdoing and intends to vigorously defend itself, no assurance can be given as
to the outcome of this matter.  Although the likelihood of loss is probable, the
Company has not accrued any  specific  amounts  related to this  matter,  as the
amount of loss is not estimable at this time. The Company maintains a litigation
reserve,  which it believes is  adequate  to cover the minimum  estimated  loss.
However, substantial penalties in excess of the litigation reserve from fines or
settlements  resulting from an adverse  outcome or judgment in this matter could
have a  material  adverse  effect  on the  financial  position  and  results  of
operations of the Company.

THIRD  CAPITAL HAS CONVERTED ITS NOTES INTO SHARES OF COMMON STOCK AND OUR STOCK
PRICE COULD MATERIALLY DECLINE IF THIRD CAPITAL SELLS IT SHARES.

      As of August 6, 2004, we had  approximately  1.85 million shares of common
stock  outstanding.  The  convertible  notes  currently  held by  Third  Capital
Partners were converted into  approximately  2 million shares of common stock on
September 8, 2004.  As a result,  the ownership  percentage of our  shareholders
other than Third Capital Partners has been significantly  diluted. Third Capital
Partners now owns approximately 52% of our common stock.

      If Third Capital  Partners sells  substantial  amounts of our common stock
into the public  market,  it could  cause a  significant  decrease  in our stock
price. Furthermore, the awareness that a large number of shares is available for
sale could cause the price of our stock to fall or could  prevent the price from
rising.

      In  addition  to the  adverse  effect a price  decline  would  have on our
shareholders, if the price decline is significant enough, it could result in our
common stock being delisted from the NASDAQ SmallCap  Market. A delisting of our
shares  could  further harm our stock price and make it more  difficult  for our
shareholders to sell their shares.


                                       20
<PAGE>

WE HAVE  INCURRED  OPERATING  LOSSES IN THE PAST AND MAY INCUR FUTURE  OPERATING
LOSSES.

      We incurred net operating  losses of approximately $5 million for the year
ended December 31, 2003,  approximately  $11 million for the year ended December
31,  2002,  and  approximately  $9 million in 2001.  As a result of the sales to
Ameritrade and North American Clearing, the Company is reviewing its options for
ongoing  business and  investment of the proceeds from the sales.  However,  any
such new  business  venture  may  require  additional  capital.  There can be no
assurance  that such capital will be available to us, or if available,  on terms
that are not substantially dilutive to existing shareholders.  Additionally,  we
could lose our  uncommitted  lines of credit,  which would greatly  restrict our
ability to finance our operations and we may never generate  sufficient revenues
to achieve or sustain profitability or generate positive cash flow.

OUR  BUSINESS IS SUBJECT TO  EXTENSIVE  REGULATION  UNDER BOTH FEDERAL AND STATE
LAWS.

      The   securities   industry  is  subject  to  extensive   regulation   and
broker-dealers are subject to regulations covering all aspects of the securities
business.  The SEC, NASD, and other self-regulatory  organizations and state and
foreign regulators can, among other things, fine, issue cease-and-desist  orders
to, suspend or expel a broker-dealer or any of its officers or employees.

      Our ability to comply with applicable laws and rules is largely  dependent
on our internal system to ensure  compliance,  as well as our ability to attract
and retain qualified compliance  personnel.  We could be subject to disciplinary
or other actions in the future due to claimed noncompliance,  which could have a
material adverse effect on our operations and profitability.

WE COULD SUFFER  SUBSTANTIAL  LOSSES AND CUSTOMER  LITIGATION IF OUR  ELECTRONIC
SYSTEMS WHICH SUPPORT  ONLINE  TRADING FAIL, OR IF OUR  TRANSACTIONS  PROCESS IS
SLOW.

      We receive and process trade orders through  internal trading software and
the Internet. Thus, we depend heavily on the integrity of the electronic systems
supporting this type of trading.  Heavy stress placed on our systems during peak
trading times or  interference  from third parties over the Internet could cause
our  systems  to  operate  too  slowly or to fail.  If our  systems or any other
systems in the trading process slow down  significantly or fail even for a short
time,  our  customers  would  suffer  delays  in  trading,  potentially  causing
substantial  losses and possibly  subjecting  us to claims for such losses or to
litigation  claiming  fraud or negligence.  In addition,  a hardware or software
failure,  power or telecommunications  interruption,  natural disaster or act of
terrorism could cause a systems failure. Any systems failure that interrupts our
operations  could  have a material  adverse  effect on our  business,  financial
condition and operating results.

OUR BUSINESS COULD SUFFER IF WE CANNOT PROTECT THE  CONFIDENTIALITY  OF CUSTOMER
INFORMATION.

      An  important  element of our  operations  is the secure  transmission  of
confidential  information  over  public  networks.  We  rely on  encryption  and
authentication   technology  to  provide  secure  transmission  of  confidential
information. While we have not experienced problems in the past, there can be no
assurance that hackers, computer viruses and other problems will not result in a
breach of security. If a compromise of our security were to occur, it could have
a material  adverse  effect on our business,  financial  condition and operating
results.


                                       21
<PAGE>

THE TRADING PRICE OF OUR COMMON STOCK HAS BEEN AND MAY CONTINUE TO BE SUBJECT TO
WIDE FLUCTUATIONS.

      During the past twelve months, our common stock traded as low as $1.90 and
as high as $6.25.  Our stock  price may  fluctuate  in  response  to a number of
events  and  factors,   such  as  quarterly  variations  in  operating  results,
announcements of technological innovations or new products by our company or our
competitors,  changes in financial  estimates and  recommendations by securities
analysts,  the operating and stock price  performance  of other  companies  that
investors may consider  comparable,  and news reports  relating to trends in our
markets.  In addition,  the stock market in general,  and the market  prices for
Internet related companies in particular,  have experienced  extreme  volatility
that has often been unrelated to operating  performance.  These broad market and
industry  fluctuations  may  adversely  affect  the price of our  common  stock,
regardless of our operating performance.

YOUR INTERESTS AS A STOCKHOLDER MAY CONFLICT WITH OUR CONTROLLING  SHAREHOLDERS,
OUR CHIEF EXECUTIVE OFFICER AND OUR PRESIDENT.

      Our executive officers,  directors and principal shareholders beneficially
own approximately 56% of our outstanding common stock, including shares issuable
upon conversion of certain debt. As a result, our controlling  shareholders have
the power to control or direct our business affairs  including matters requiring
stockholder  approval.  This concentration of ownership could effectively delay,
defer or prevent a change in control or other significant corporate transactions
that  might  give  you the  opportunity  to  realize  a  premium  over  our then
prevailing stock price. In addition,  various conflicts of interest may arise in
the future as a result of our  relationship  with Third  Capital  Partners,  LLC
("Third Capital Partners"),  a company controlled by our Chief Executive Officer
who also serves on our Board of Directors. Serving us as an officer and director
as well as Third Capital  Partners could result in our Chief  Executive  Officer
being  placed in a conflict of interest  should he have to make  decisions  that
have materially different implications for us and for Third Capital Partners. An
affiliate of Third  Capital  Partners  receives  management  fees from us, which
could influence decisions.

THE LOSS OF CERTAIN KEY EXECUTIVE OFFICERS COULD HARM OUR BUSINESS.

      Our success is  substantially  dependent upon the  continuing  services of
certain key  executive  officers,  especially  our Chief  Executive  Officer and
President.  We do not have written employment  agreements with our key executive
officers and do not maintain "key person" life insurance on any of our executive
officers.  There can be no assurance  that any of our  executive  officers  will
continue to work for us nor can there be any assurance that upon ceasing to work
for us they will not compete against us. The loss of our Chief Executive Officer
and President  could have a material  adverse effect on our business,  financial
condition and results of operations.

THE  ABILITY OF OUR BOARD OF  DIRECTORS  TO ISSUE  PREFERRED  STOCK  COULD DETER
TAKEOVER BIDS, EVEN IF THOSE BIDS ARE IN THE SHAREHOLDERS' BEST INTERESTS.

      We  have  10,000,000  shares  of  authorized  preferred  stock,  of  which
9,800,000 remain available for issuance to third parties selected by management.
The ability of our Board of Directors to establish  the terms and  provisions of
different series of preferred stock could discourage  unsolicited  takeover bids
from third parties even if those bids are in the shareholders' best interests.


                                       22
<PAGE>

OUR FAILURE TO MAINTAIN THE NET CAPITAL  LEVELS  REQUIRED BY VARIOUS  REGULATORS
COULD ADVERSELY AFFECT OUR BUSINESS.

      The SEC, the NASD and various other  regulatory  agencies  have  stringent
rules with  respect to the  maintenance  of  specific  levels of net  capital by
securities  broker-dealers.  Net  capital is the net worth of a broker or dealer
(assets minus  liabilities),  less deductions for certain types of assets.  If a
firm fails to maintain the required net capital it may be subject to  suspension
or  revocation  of  registration  by the SEC and  suspension or expulsion by the
NASD, and could ultimately lead to the firm's  liquidation.  If such net capital
rules are changed or expanded,  or if there is an unusually large charge against
net capital,  operations  that  require the  intensive  use of capital  would be
limited.  Such  operations may include  trading  activities and the financing of
customer account balances.  A large operating loss or charge against net capital
could adversely affect our ability to expand or even maintain our present levels
of  business,  which  could  have a  material  adverse  effect on our  business,
financial condition and operating results. Also, our ability to withdraw capital
from brokerage  subsidiaries could be restricted,  which in turn could limit our
ability  to pay  dividends,  repay  debt and  redeem or  purchase  shares of our
outstanding  stock.  Our net capital has declined over the past three years.  At
September 30, 2004, our NCC subsidiary had net capital of $7,507,975,  which was
$6,172,622 in excess of the minimum  amount  required.  At December 31, 2003 NCC
had net capital of  $9,554,544,  as compared to $9,452,719  and  $18,975,361  at
December 31, 2002 and 2001, respectively.

SECURITIES LITIGATION COULD ADVERSELY AFFECT OUR BUSINESS.

      The securities  brokerage business involves substantial risks of liability
and  corresponding  litigation  including  class  action  and other  suits  that
generally  seek  substantial  damages  including  punitive  damages.  Like other
securities  brokerage  firms,  from time to time we are named as a defendant  in
civil lawsuits and arbitrations.  Any significant  monetary judgments against us
in the  course  of  litigation  could  have a  material  adverse  effect  on our
business, financial condition and operating results.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk Disclosures

The   following   discussion   about  our  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.

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 term certificates
of deposit and savings accounts. The certificates of deposit have original terms
ranging  from one to twelve  months.  Certificates  of deposit with terms longer
than one month  comprise less than 10% of total cash,  and  consequently  do not
present a material interest rate risk.


                                       23
<PAGE>

Equity Price Risk

NCC acts as a market maker for approximately 10 public corporations whose stocks
are traded on the NASDAQ National Market System 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
correspondent's  clients.  Market  making  may  result  in  a  concentration  of
securities that may expose the Company to additional risk; however,  the Company
does not maintain a significant inventory of equity securities.

ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

As of September 30, 2004, we carried out an evaluation (the "Evaluation"), under
the supervision and with the  participation of our President and Chief Executive
Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the
design and  operation  of our  disclosure  controls and  procedures  pursuant to
Exchange Act Rule 13a-15 ("Disclosure Controls"). Based upon the Evaluation, our
CEO  and CFO  concluded  that,  subject  to the  limitations  noted  below,  our
Disclosure   Controls  were  effective  in  timely  alerting  them  to  material
information required to be included in our periodic SEC reports.

CHANGES IN INTERNAL CONTROLS

We have also evaluated our internal controls for financing reporting,  and there
have been no  significant  changes in our internal  controls  during the quarter
ended September 30, 2004, that have materially affected or are reasonably likely
to materially affect the Company's internal controls over financial reporting.

LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS

Our  management,  including our CEO and CFO, does not expect that our Disclosure
Controls and internal  controls will prevent all error and all fraud.  A control
system, no matter how well conceived and operated,  can provide only reasonable,
not  absolute,  assurance  that the  objectives  of the control  system are met.
Further,  the design of a control  system  must  reflect the fact that there are
resource  constraints,  and the benefits of controls must be considered relative
to their costs.  Because of the inherent  limitations in all control systems, no
evaluation of controls can provide  absolute  assurance  that all control issues
and instances of fraud,  if any,  within the company have been  detected.  These
inherent limitations include the realities that judgments in decision-making can
be faulty,  and that  breakdowns  can occur  because of simple error or mistake.
Additionally,  controls  can be  circumvented  by the  individual  acts  of some
persons,  by collusion of two or more people, or by management or board override
of the control.

The  design  of any  system  of  controls  also is  based in part  upon  certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving  its stated goals under all  potential
future  conditions;  over time, control may become inadequate because of changed
conditions,  or the degree of  compliance  with the policies or  procedures  may
deteriorate.  Because of the inherent  limitations in a  cost-effective  control
system, misstatements due to error or fraud may occur and not be detected.


                                       24
<PAGE>

CEO AND CFO CERTIFICATIONS

Appearing  immediately  following  the  Signatures  section  of this  report are
Certifications  of the CEO and the  CFO.  The  Certifications  are  required  in
accordance with Section 302 of the  Sarbanes-Oxley Act of 2002 ("the Section 302
Certifications").  This Item of this report provides information  concerning the
Evaluation referred to in the Section 302  Certifications,  and this information
should be read in  conjunction  with the Section 302  Certifications  for a more
complete understanding of the topics presented.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In addition to those matters  described  below, we are from time to time subject
to legal  arbitration  or  administrative  proceedings  arising in the  ordinary
course of our  business,  including  claims by  customers  relating to brokerage
services  as well as  matters  related  to our  clearing  services.  We are also
subject to periodic regulatory audits and inspections by the SEC and NASD, which
could give rise to claims  against us. While we make a provision for a liability
when it is probable  that a liability  has been  incurred  and the amount of the
loss can be reasonably estimated, legal matters are inherently unpredictable and
expensive to defend. If there are adverse outcomes in our legal proceedings,  it
could have a material  adverse  effect on our business and financial  condition.
Those  proceedings  that management  believes may have a significant  impact are
described below.

SEC MUTUAL FUND INVESTIGATION

We are currently  under  investigation  by the SEC, the New York State  Attorney
General  ("NYAG")  and the US  Attorney's  Office for the  Central  District  of
California  ("USAO") related to allegations that we improperly  processed mutual
fund trade orders which, among other allegations, enabled certain hedge fund and
mutual fund customers to engage in "late trading." The alleged transactions took
place  between  May  2002  and  September  2003  and  we  have   terminated  our
arrangements  with  the  subject  customers.  Since  August  2003 we  have  been
providing  the SEC and the NYAG with  documents  and  testimony  in  response to
subpoenas and we believe that we have been cooperating in these investigations.

On November 6, 2003, our NCC subsidiary received a "Wells Notice" as part of the
SEC's  investigation  informing us that the staff of the SEC's Pacific  Regional
Office  intended  to  recommend  that the SEC  bring  civil  and  administrative
enforcement actions against us based on alleged violations of federal securities
laws related to the alleged mutual fund trading transactions.  On April 12, 2004
we received a subsequent  "Wells Notice" on the some subject matter  directed to
the  Company.  We  have  responded  to the  Wells  Notices  and  believe  we are
cooperating  in  connection  with the notices.  To that end, we have had several
meetings with the SEC with the goal of settling this matter.


                                       25
<PAGE>

      On or about  August 24,  2004,  the SEC's Los Angeles  Office  commenced a
civil  lawsuit  against the Company,  NCC, and three of its former  officers and
employees,  alleging  violations of Section 17(a) of the Securities Act of 1933,
Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 thereunder, and Section
22(c) of the Investment Company Act of 1940 and Rule 22c-1 thereunder.  The suit
seeks  unspecified  monetary  damages and  penalties,  as well as other remedies
against the individual defendants. The suit contends that the Company wrongfully
allowed customers to place mutual fund trades after 4:00p.m. EST, and wrongfully
assisted clients in "market timing" of mutual funds. While the Company admits no
wrongdoing and intends to vigorously defend itself, no assurance can be given as
to the outcome of this matter.  Although the likelihood of loss is probable, the
Company has not accrued any  specific  amounts  related to this  matter,  as the
amount of loss is not estimable at this time. The Company maintains a litigation
reserve,  which it believes is  adequate  to cover the minimum  estimated  loss.
However, substantial penalties in excess of the litigation reserve from fines or
settlements  resulting from an adverse  outcome or judgment in this matter could
have a  material  adverse  effect  on the  financial  position  and  results  of
operations of the Company.

OTHER REGULATORY MATTERS

In April 2003 we were notified by the SEC in the course of a routine examination
that we had a deficiency  since  September 2002 in our required  reserve account
deposits in violation of SEC rules. This deficiency identified by the SEC, which
ranged between $120 million and $145 million,  was caused  primarily as a result
of our deposit of customer funds into  certificates  of deposit and money market
accounts at a financial  institution in excess of the amount of funds  permitted
to be maintained at any one financial institution.  Our inadvertent inclusion of
accounts  maintained by certain of our  executive  officers and directors in our
reserve account  calculations also contributed to the deficiency since under the
SEC rules we are not permitted to include such accounts in our calculations.  We
subsequently  brought our required reserve  accounts into compliance  within the
two weeks requested by the SEC.  Although the deficiency was in violation of the
SEC  rules,  at no time  were  any  customer  funds  at risk of  loss.  The NASD
subsequently  required us to pay a $15,000 fine and the matter was  concluded in
early 2004.

LITIGATION RELATED TO OERI NOTES

The Company is a party to a lawsuit  entitled  EBC Trust v. JB Oxford  Holdings,
Inc.,  et al.,  pending in the Federal  District  Court in Los Angeles.  In this
suit, EBC Trust,  as the assignee of certain notes described below issued by the
Company is seeking payment of the $2.9 million of such notes. The Company issued
$2,867,500 in demand notes to former  shareholders  during 1997.  The notes bore
interest at 8 1/4%, payable quarterly.  In 1998, $250,000 was paid on the demand
notes. In 1999,  $728,125 of the debt was forgiven by Oeri  Financial,  Inc. and
Felix A. Oeri (collectively "Oeri"), leaving a balance due of $1,889,375,  which
was   reclassified  to  notes  payable  in  1999.  In  addition,   a  $1,000,000
subordinated loan agreement, payable to Oeri Finance, Inc., matured by its terms
on March 31,  1999.  The balance due was  reclassified  to note  payable at that
time.

Since in or about March 1999,  the Company has refused to make payment under the
notes payable totaling  approximately $2.9 million,  plus accrued interest,  and
has asserted defenses and counterclaims against the alleged holders of the notes
related  to: i) an award  entered  jointly  against  the Company and the holders
related to alleged  wrongful conduct by the Company in clearing certain customer
accounts  during the time that the holders of the notes payable ran the Company;
and, ii) the Company has acquired a Judgment  against Oeri Finance,  Inc., which
it intends to use as a set-off  against claims on the notes payable.  The amount
of the Judgment  acquired is substantially in excess of the total claimed due on
the notes payable.


                                       26
<PAGE>

In July 2002, the court magistrate granted a pre-judgment attachment against the
assets of the Company in favor of EBC Trust. In January 2003, the Court reversed
the magistrate's order and dissolved the attachment.  In January 2003, EBC Trust
amended  its claim to assert  additional  claims  against the Company and to add
claims  against the officers and  directors of the Company,  as well as to add a
claim against NCC under the $1,000,000  Oeri  subordinated  note. By Order dated
October  14,  2003,  in  response  to motions  filed by the  Company,  the Court
dismissed  several  claims,  struck  portions  of  the  Amended  Complaint,  and
compelled EBC Trust to arbitrate all claims against NCC.

As to the remaining claims, the Company has asserted a number of defenses to EBC
Trust's claims,  including fraud, and contribution related to a judgment entered
against EBC Trust's  predecessor-in-interest  under the notes payable and NCC in
an NASD  arbitration  commenced by Stanly J. Cohen,  Receiver for Secured Equity
Title and  Appraisal  Agency Corp.  NCC settled all of the claims  against it in
that matter in 2002, and as a part of that  settlement,  obtained the assignment
from Secured Equity of a Judgment against Oeri Finance,  Inc.  Accordingly,  the
Company has  asserted a claim of offset for the Judgment  against Oeri  Finance,
Inc.

In December  2003, EBC Trust  commenced an arbitration  action with the National
Association of Securities  Dealers,  Inc., against JBOC, seeking recovery on the
$1,000,000  subordinated  note  originally  issued  to RMS  Network,  Inc.,  and
subsequently  assigned  with  approval  from  the  Company  and the NASD to Oeri
Finance,  Inc. The Company intends to vigorously  defend the action and believes
that it has meritorious defenses including,  without limitation:  i) the suit is
brought against the wrong party;  ii) no valid assignment has ever been approved
by the  Company or the NASD to EBC Trust,  as required by the terms of the note;
and iii) the Company  will assert an offset for the  Judgment  obtained  against
Oeri Finance,  Inc.,  described above.  The Company has recorded  liabilities of
approximately $2.9 million on its balance sheet in notes payable,  additionally,
the Company has $816,429 of accrued  interest related to these notes included in
accounts payable and accrued expenses.

On June 29, 2004, EBC Trust filed a summons and complaint with the United States
District Court for the Central  District of California.  The action requests the
imposition of a constructive trust on the proceeds of the Ameritrade Acquisition
sufficient  to satisfy the disputed  obligations  discussed  above.  The Company
plans to raise the same defenses as discussed above in defense of this claim.

LITIGATION RELATED TO ACCOUNT ACQUISITIONS

In October 2002,  Share King LLC, as successor to Mr. Stock,  Inc.  commenced an
arbitration  proceeding  related to the acquisition by us of the accounts of Mr.
Stock.  We counter-sued  for violations of the purchase  agreement by Mr. Stock.
That  litigation  was settled in August 2003, on terms more favorable to us than
we  originally  accrued  for,  and the  cost of the Mr.  Stock  acquisition  was
adjusted down $356,174 in 2003, as a result of settlement of the arbitration. As
a part of the  settlement,  we are required to distribute  cash and/or stock, at
our  election  to Share King LLC. In early 2004,  a further  dispute  arose with
Share King LLC regarding the registration  requirements  related to the stock to
be issued. In October 2004, we settled the dispute with Share King LLC by making
a one-time  payment of $1.4 million.  As a part of that  settlement,  all shares
issued to Share King LLC were returned to the Company to be cancelled.


                                       27
<PAGE>

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

            On September  13, 2004,  Third Capital  Partners,  LLC exercised its
conversion  rights  under  two 9%  Secured  Convertible  Notes in the  aggregate
principal sum of  $5,418,696.  Upon  conversion,  the Company  issued  2,029,474
shares of its common stock, par value $.01 per share, to Third Capital Partners.
The shares were issued at the conversion rate of $2.67 per share, as required by
the terms of the Secured Convertible Notes.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

            None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

            None.

ITEM 5. OTHER INFORMATION

            None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits

31.1  Certification of Christopher L. Jarratt, Chief Executive Officer, pursuant
      to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2  Certification of Michael J. Chiodo,  Chief Financial Officer,  pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.

32.1  Certification of Christopher L. Jarratt, Chief Executive Officer, pursuant
      to 18 U.S.C. ss. 1350.

32.2  Certification of Michael J. Chiodo,  Chief Financial Officer,  pursuant to
      18 U.S.C. ss. 1350.

(b)   Reports on Form 8-K.

      During the third quarter,  we filed a Report on Form 8-K, dated August 24,
2004,  reporting  that North  American  Clearing,  Inc., had signed a definitive
agreement to purchase the  correspondent  clearing accounts of National Clearing
Corp.  The filing  also  reported  the  settlement  of two  pending  arbitration
matters, and our financial results for the second quarter of 2004.


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<PAGE>

      Also, after the end of third quarter, but before the date hereof, we filed
a Report on Form 8-K,  dated October 12, 2004,  reporting  that the  transaction
with Ameritrade,  Inc., a subsidiary of Ameritrade  Holdings,  Corporation,  had
been consummated.

      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 22, 2004


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