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 March 31, 2004

                                       OR

[ ]         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934

        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.)

9665 Wilshire Blvd., Suite 300;  Beverly Hills, California   90212
(Address of principal executive offices)                     (Zip Code)

Registrant's telephone number, including area code           (310) 777-8888

      Indicate by check mark whether the  Registrant:  (l) has filed all reports
required to be filed by Section 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 the number of shares  outstanding of each of the issuer's classes
of common  stock,  as of the latest  practicable  date.  As of May 8, 2004,  the
Registrant had the following  number of shares of common stock,  $0.01 par value
per share, outstanding: 1,888,743.



<PAGE>

                         PART I - FINANCIAL INFORMATION


Item 1.           Financial Statements

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


<TABLE>
<CAPTION>
                                                                            March 31, 2004       December 31, 2003
                                                                              (Unaudited)
                                                                          --------------------  --------------------
<S>                                                                            <C>                   <C>
Assets:

  Cash and cash equivalents                                                    $ 5,831,319           $ 6,897,970

  Cash and cash equivalents segregated under federal and other
   regulations                                                                 110,847,999           130,748,572

  Receivable from broker-dealers and clearing organizations                     15,774,536            29,337,358

  Receivable from customers (net of allowance for doubtful accounts of
   $2,803,913 and $2,781,305)                                                  102,808,913            78,372,056

  Other receivables                                                                816,100             2,139,865

  Marketable securities owned - at market value                                    838,828               432,060

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

  Furniture, equipment, and leasehold improvements (at cost - net of
   accumulated depreciation and amortization of $6,769,222 and
   $6,352,333)                                                                   1,906,688             2,195,783

  Clearing deposits                                                              5,396,834             6,542,595

  Intangible assets (net of accumulated amortization of $3,899,618 and
   $3,558,678)                                                                   2,616,897             2,957,837

  Other assets                                                                   1,151,566               780,771
                                                                          --------------------  --------------------

  Total assets                                                                $250,489,680          $262,904,867
                                                                          ====================  ====================
</TABLE>

See accompanying notes.

                                       2
<PAGE>

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

<TABLE>
<CAPTION>
                                                                               March 31, 2004     December 31, 2003
                                                                                 (Unaudited)
                                                                              ------------------  ------------------
<S>                                                                             <C>                 <C>
Liabilities and shareholders' equity:

   Liabilities:

     Payable to broker-dealers and clearing organizations                       $ 37,326,238        $ 40,331,755

     Payable to customers                                                        189,682,266         195,340,295

     Securities sold, not yet purchased - at market value                             71,128           1,957,909

     Accounts payable and accrued liabilities                                      5,222,732           5,436,675

     Loans from shareholders                                                       5,418,696           5,418,696

     Notes payable                                                                 3,417,153           3,458,819
                                                                              ------------------  ------------------

   Total liabilities                                                             241,138,213         251,944,149
                                                                              ------------------  ------------------

   Commitments and contingencies

   Shareholders' equity:

     Common stock  ($.01 par value, 100,000,000 shares authorized, 1,888,743
      and 1,756,499 shares issued)                                                    18,887              17,565

     Additional paid-in capital                                                   18,504,431          18,039,086

     Retained deficit                                                             (8,258,650)         (5,425,090)

     Treasury stock at cost, 46,994 and 83,244 shares                               (913,201)         (1,670,843)
                                                                              ------------------  ------------------

   Total shareholders' equity                                                      9,351,467          10,960,718
                                                                              ------------------  ------------------

   Total liabilities and shareholders' equity                                   $250,489,680        $262,904,867
                                                                              ==================  ==================
</TABLE>

See accompanying notes.

                                       3
<PAGE>

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

<TABLE>
<CAPTION>
                                                                               For The Three Months Ended
                                                                                       March 31,
                                                                     ------------------------------------------------
                                                                              2004                     2003
                                                                     ----------------------  ------------------------
<S>                                                                       <C>                       <C>
Revenues:
   Clearing and execution                                                 $   559,344               $   789,383
   Trading profits                                                             30,575                   560,992
   Commissions                                                              2,286,537                 2,012,616
   Interest                                                                 1,333,717                 1,522,312
   Other                                                                       18,408                   104,022
                                                                     ----------------------  ------------------------
     Total Revenues                                                         4,228,581                 4,989,325
                                                                     ----------------------  ------------------------
Expenses:
   Employee compensation                                                    1,489,828                 1,934,739
   Clearing and floor brokerage                                               266,676                   258,550
   Communications                                                             555,033                   543,256
   Occupancy and equipment                                                    970,806                 1,143,311
   Interest                                                                   257,120                   333,495
   Data processing charges                                                    670,002                   532,399
   Professional services                                                    1,253,899                   591,067
   Promotional                                                                132,932                    66,064
   Bad debts                                                                   22,038                    15,578
   Amortization of intangible assets                                          340,939                   370,621
   Other operating expenses                                                   458,540                   201,905
                                                                     ----------------------  ------------------------
     Total Expenses                                                         6,417,813                 5,990,985
                                                                     ----------------------  ------------------------
   Loss before income taxes                                                (2,189,232)               (1,001,660)
     Income tax provision (benefit)                                             2,200                  (320,389)
                                                                     ----------------------  ------------------------
   Net Loss                                                               $(2,191,432)              $  (681,271)
                                                                     ======================  ========================

   Basic Net Loss Per Share                                                    $(1.23)                   $(0.45)
   Diluted Net Loss Per Share                                                  $(1.23)                   $(0.45)

   Weighted average number of shares
         Basic                                                              1,786,764                 1,506,170
         Diluted                                                            1,786,764                 1,506,170
</TABLE>

See accompanying notes.

                                       4
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                 For The Three Months Ended
                                                                                          March 31,
                                                                          ------------------------------------------
                                                                                  2004                 2003
                                                                          ------------------------------------------
<S>                                                                              <C>                <C>
 Increase (decrease) in cash and cash equivalents:
 Cash flows from operating activities:
   Net loss                                                                      $(2,191,432)       $   (681,271)
   Adjustments to reconcile net loss to net cash provided by
    (used in) operating activities:
      Depreciation and amortization                                                  727,828             709,741
      Provision for bad debts                                                         22,038              15,578
      Changes in assets and liabilities:
        Cash segregated under federal and other regulations                       19,900,573         (10,704,853)
        Receivable from broker-dealers and clearing organizations                 13,562,822         (19,591,540)
        Receivable from customers                                                (24,458,895)         12,961,941
        Other receivables                                                          1,323,765             (83,833)
        Securities owned                                                            (406,768)         (1,851,004)
        Clearing deposits                                                          1,145,761             (48,408)
        Other assets                                                                (370,795)           (222,403)
        Payable to broker-dealers and clearing organizations                      (3,005,517)          9,302,537
        Payable to customers                                                      (5,658,029)          3,198,208
        Securities sold not yet purchased                                         (1,886,781)             55,316
        Accounts payable and accrued liabilities                                     368,239           2,753,084
        Income taxes payable/receivable                                                   --            (335,000)
                                                                          ------------------------------------------
 Net cash used in operating activities                                              (927,191)         (4,521,907)
                                                                          ------------------------------------------
 Cash flows from investing activities:
   Capital expenditures                                                              (97,794)            (74,667)
                                                                          ------------------------------------------
 Net cash used in investing activities                                               (97,794)            (74,667)
                                                                          ------------------------------------------
 Cash flows from financing activities:
   Repayments of notes payable                                                       (41,666)                 --
                                                                          ------------------------------------------
 Net cash used in financing activities                                               (41,666)                 --
                                                                          ------------------------------------------
 Net (decrease) in cash and cash equivalents                                      (1,066,651)         (4,596,574)
 Cash and cash equivalents at beginning of the quarter                             6,897,970           5,579,755
                                                                          ------------------------------------------
 Cash and cash equivalents at end of the quarter                                 $ 5,831,319        $    983,181
                                                                          ==========================================
</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  financial
statements  contain all  adjustments  (all of which are normal and  recurring in
nature)  necessary  to present  fairly  the  financial  statements  of JB Oxford
Holdings,  Inc. and subsidiaries (the "Company") for the periods presented.  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
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 late trading  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.

Note 2.    Shareholders' Equity and Earnings Per Share

      Effective  January 1, 2004,  the Company  paid a bonus to employees in the
form of 36,250  shares of treasury  stock.  The market  value at the time of the
grant was $115,514 and the original cost was $757,642. Additionally, the Company
issued  132,244  shares of its previously  authorized  unissued  common stock in
connection  with an  acquisition  of intangible  assets.  The total value of the
stock in the amount of $466,667  was  determined  based on the  average  closing
price for the ten business days prior to issuance.

                                       6
<PAGE>

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

<TABLE>
<CAPTION>
                                                                              For The Three Months Ended March 31,
                                                                                    2004                2003
                                                                            --------------------- ------------------
<S>                                                                               <C>                  <C>
Basic Earnings Per Share
   Net loss                                                                       $(2,191,432)         $(681,271)
                                                                            --------------------- ------------------
   Income available to common stockholders (numerator)                             (2,191,432)          (681,271)
                                                                            ===================== ==================
   Weighted average common shares outstanding (denominator)                         1,786,764          1,506,170
                                                                            ===================== ==================
   Basic Earnings Per Share                                                            $(1.23)            $(0.45)
                                                                            ===================== ==================

Diluted Earnings Per Share
   Net loss                                                                       $(2,191,432)         $(681,271)
   Interest on convertible debentures, net of income tax                                   --                 --
                                                                            --------------------- ------------------
   Income available to common stockholders plus assumed conversions
     (numerator)                                                                  $(2,191,432)         $(681,271)
                                                                            ===================== ==================
   Weighted average common shares outstanding                                       1,786,794          1,506,170
   Weighted average options outstanding                                                    --                 --
   Weighted average convertible debentures                                                 --                 --
   Stock acquired with option proceeds                                                     --                 --
                                                                            --------------------- ------------------
   Weighted average common shares and assumed conversions outstanding               1,786,794          1,506,170
     (denominator)
                                                                            ===================== ==================
   Diluted Earnings Per Share                                                          $(1.23)            $(0.45)
                                                                            ===================== ==================
</TABLE>

      The assumed conversions of options and convertible debt have been excluded
in  computing  the diluted  earnings  per share when there is a net loss for the
period.  They have been excluded  because their  inclusion would reduce the loss
per share or be  anti-dilutive.  If the assumed  conversions  had been used, the
fully diluted shares  outstanding for the quarters ended March 31, 2004 and 2003
would be 3,816,474 and 3,535,926, respectively.

      The options carry  exercise  prices  ranging from $2.20 to $91.25 at March
31, 2003 and 2002.  Options to purchase  256,825 shares of common stock at March
31, 2004 expire at various dates through October 4, 2012.

Note 3.    Stock Options

      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 quarters  ended March 31,
2004 and 2003.  There is no pro forma net income or earnings per share to report
for those respective periods.

                                       7
<PAGE>

A summary of the status of the Company's  stock options as of March 31 2004, and
2003, and changes during the periods ending on those dates is presented below:

                               March 31, 2004           March 31, 2003
                                        Weighted                   Weighted
                             Shares      average      Shares        average
                             -------    --------      -------      --------
Outstanding at               256,825     $15.66       256,200       $26.88
  be-ginning of period
Granted                           --                       --           --
Exercised                         --                       --           --
Forfeited                       (200)     35.94        (1,475)       11.06
                             -------                  -------
Outstanding at end of
  period                     256,625      15.64       254,725        15.75
                             =======                  =======
Options exercisable          256,625      15.64       253,225        15.88
  at quarter-end
Weighted-average fair
  value of options
  granted during the
  period                         $--                      $--

Note 4.    Regulatory Requirements

      National  Clearing  Corp  ("NCC")  and JB  Oxford & Company  ("JBOC")  are
subject to the  Securities  and Exchange  Commission's  Uniform Net Capital Rule
(the Rule),  which  requires the  maintenance  of minimum net  capital.  NCC has
elected to use the alternative  method  permitted by the Rule, which requires it
to maintain minimum net capital, as defined, equal to the greater of $250,000 or
two percent of aggregate debit balances arising from customer  transactions,  as
defined.  The Rule also provides,  among other things,  for a restriction on the
payment of cash dividends, payments on subordinated borrowings or the repurchase
of capital  stock if the  resulting  excess net  capital  would fall below 5% of
aggregate debits.

      At March 31, 2004, NCC had net capital of $9,164,823, which was $7,040,287
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.

      JBOC computes its net capital requirement in accordance with the aggregate
indebtedness  standard. The Rule requires the maintenance of minimum net capital
and  requires  the  ratio of  aggregate  indebtedness  to net  capital,  both as
defined,  not to exceed  15 to 1. At March 31,  2004,  JBOC had net  capital  of
$480,037,  which was  $473,955  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.  JBOC's net capital ratio was less than 1
to 1 for both periods.

Note 5.    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

                                       8
<PAGE>

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.

SEC Mutual Fund Investigation

In the course of the ongoing  mutual  fund  investigations,  the NCC  received a
"Wells  Notice"  from the staff of the SEC's Los  Angeles  office on November 6,
2003,  stating  it  intention  to  recommend  that the SEC  institute  civil and
administrative proceedings against NCC seeking injunctive relief,  disgorgement,
prejudgment  interest and civil penalties for alleged  violations of Sections 8A
and 17(a) of the Securities Exchange Act of 1933, Sections 10)(b), 15(b) and 21C
of the  Securities  Exchange Act of 1934 and Rule 10b-5  thereunder and Sections
9(b) and 9(f) of the Investment  Company Act of 1940 and Rule 22c-1  thereunder.
The Company believes it has complied with all requests of documents and provided
testimonies in response to subpoenas from the New York Attorney General, the SEC
and the NASD  regarding the  allegations of NCC's  violation in forward  pricing
principles.  While NCC 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 general litigation  accrual,  which it believes are adequate
to cover the minimum estimated loss. However,  substantial  penalties 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 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 is seeking  payment of the $2.9 million in notes payable from a
former  shareholder.  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. As stated in Note 13, 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.

                                       9
<PAGE>

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.

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. A decision is pending on that matter by the arbitration  panel. If we
receive  an  adverse  ruling  from  the  panel,  we could  be  required  to make
subsequent  payments to Share King LLC in cash, instead of in our choice of cash
and/or stock.

USAO Settlement Agreement Related to Prior Management

      In April 2004,  the Los  Angeles  Office of the United  States  Attorney's
Office  (the  "USAO")  agreed to accept a lump sum  payment of  $500,000 in full
settlement  of  all  amounts  remaining  due  under  the  Settlement  Agreement,
previously reported in the 2003 Form 10-K and prior filings.  This settlement is
expected to be finalized in the second quarter of 2004.

Note 6.    Supplemental Disclosures of Cash Flow Information

<TABLE>
<CAPTION>
                                                                         For The Three Months Ended March 31,
                                                                    ------------------------------------------------
                                                                            2004                      2003
                                                                    ----------------------    ----------------------
<S>                                                                        <C>                       <C>
Supplemental Disclosures of Cash Flow Information
   Cash paid during the quarter for:
           Interest                                                        $218,152                  $281,102
           Income taxes                                                       2,200                     9,233
</TABLE>

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.

      Common stock issued to acquire intangible assets in the amount of $466,667
for 2004.

                                       10
<PAGE>

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.

Business Overview

Through  our  wholly-owned  subsidiaries,  we are  engaged  in the  business  of
providing  brokerage  and related  financial  services to retail  customers  and
broker-dealers  nationwide.  We are a fully integrated brokerage firm, providing
retail brokerage  services,  clearing services and market making services to our
customers.  Our business is  headquartered in Los Angeles and we have additional
branches in New York and Minneapolis.

Our retail  subsidiary  is JB Oxford & Company  ("JBOC").  JBOC is a  registered
broker-dealer  offering  discount  and  electronic  brokerage  services  to  the
investing public. JBOC's website is www.jboxford.com,  which allows customers to
review account  information,  conduct market research,  place trades, and manage
their accounts  online.  JBOC has retail offices in Beverly Hills,  New York and
Minneapolis.

Our  clearing  subsidiary  is  National  Clearing  Corp  ("NCC").  NCC is also a
registered   broker-dealer,    offering   clearing   services   to   independent
broker-dealers  ("correspondents").  NCC's  largest  correspondent  is JBOC.  In
addition,  NCC acts as a market  maker in stocks  traded on the NASDAQ  National
Market System and other national exchanges.

Recent Developments

In April 2004,  the Los Angeles  Office of the United States  Attorney's  Office
(the "USAO") agreed to accept a lump sum payment of $500,000 in full  settlement
of all amounts remaining due under the Settlement Agreement, previously reported
in the 2003 Form 10-K and prior  filings.  This  settlement  is  expected  to be
finalized in the second quarter of 2004.

On April 12, 2004,  the Company  received a "Wells Notice" from the staff of the
SEC's Pacific Regional  office,  stating its intention to recommend that the SEC
institute civil and  administrative  proceedings  against the Company related to
the SEC investigation of mutual fund trading practices by its NCC subsidiary. As
previously reported,  the Company's  subsidiary,  NCC, received a similar notice
from the SEC in November 2003.  The Company has responded to the notice,  and is
attempting to seek a prompt  resolution of these  matters,  although there is no
assurance that such resolution can be reached or that the ultimate impact on the
Company will not be material.

                                       11
<PAGE>

On April 15,  2004,  James G. Lewis  resigned as President  and Chief  Operating
Officer, and as a director,  of JB Oxford Holdings,  Inc. The Board of Directors
elected  Christopher  Jarratt to serve as President  until the next  election of
officers of the Company. Mr. Lewis continues to assist the Company through his
affiliation with Third Capital, LLC.

On April 30, 2004, we introduced our new customer website  developed  internally
using technology  obtained in a prior acquisition.  In addition to providing our
customers with a  state-of-the-art  trading  platform  offering  expanded market
information and research  tools,  the upgrade allows us full control over future
development  of the  website,  while  allowing  us to operate  the  website at a
significant cost savings over our previous outsourced website.

Discount Brokerage Services

JBOC  provides a full line of  brokerage  services  and  products to  customers,
including  the  ability to buy and sell  securities,  security  options,  mutual
funds,  fixed income  products,  annuities and other investment  securities.  We
continue to upgrade and improve our brokerage  technologies  in order to provide
our customers  with the resources  necessary to  conveniently  and  economically
execute  securities  transactions and access related financial  information.  In
addition to our trading  capabilities,  JBOC's Internet sites  (www.jboxford.com
and  www.mrstock.com)  provide  market quotes,  charts,  company  research,  and
customer  account  information,  such as cash balances,  portfolio  balances and
similar information.

The discount brokerage division has suffered  substantially with the downturn in
the  brokerage  industry  over the past three  years.  We believe  that JBOC can
recover from the volume  declines in this business line,  through our ability to
provide high quality,  flexible, and customer-sensitive  responses and services.
We  continually  upgrade our computer  systems and  services  within each of our
divisions to utilize and take advantage of technological developments.

Clearing and Execution Services

NCC is self-clearing  and provides  clearing and execution  services to JBOC and
other  broker-dealers  that are  independent  from  the  Company.  The  clearing
business  offers a high  return  on  capital,  and we  believe  that by  careful
selection and monitoring of NCC's  correspondents,  this business  division will
make a positive contribution to our overall brokerage operations.

Market Making Activities

In order to  facilitate  the  execution  of  security  transactions  for our own
customers  and the customers of our  correspondents,  NCC acts as a market maker
for approximately 200 public  corporations whose stocks are traded on the NASDAQ
National  Market  System,  NYSE 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.

                                       12
<PAGE>

Results of Operations

Revenues

Our total revenues were  $4,228,581 in the first quarter 2004, a decrease of 15%
from  $4,989,325  in the first  quarter  of 2003.  The  primary  reason  for the
decrease  was a decline  in trading  profits  of 95% to  $30,575 in the  current
quarter from $560,992 in the first quarter of 2003.  Additionally,  clearing and
execution  revenues  decreased 29% to $559,344 in the first quarter of 2004 from
$789,383 in the first quarter of 2003.  Interest  revenue also  decreased 12% to
$1,333,717 in the first quarter of 2004 from  $1,522,312 in the first quarter of
2003.

Commission  revenue increased $273,921 or 14% to $2,286,537 in the first quarter
2004 compared to $2,012,616  in the first quarter of 2003.  Trading  volumes and
commission revenue have shown slight growth out over the past year. For 2004, we
anticipate commission revenue will continue to track the overall trading volumes
within the industry.  We are  continuing to look for  opportunities  to grow our
business through  acquisitions of accounts from compatible  discount and on-line
brokerage operations of other firms. Although we have completed  acquisitions in
the past year,  there can be no assurance  that we will complete any  additional
acquisitions, or if completed, that they will be successful.

Interest revenues  decreased  $188,595 or 12% to $1,333,717 in the first quarter
2004 compared to $1,522,312  in the first quarter of 2003.  Net interest  income
decreased 9% from  $1,188,817  in the first  quarter 2003 to  $1,076,597  in the
first quarter 2004. The changes in interest  revenues are consistent  with usual
fluctuation of debit balances in brokerage margin accounts as well as changes in
broker-call  rates on which the interest  charged to  customers  is  calculated.
Rates  have not  changed  significantly  over the past year.  Rather,  declining
margin balances has been the most significant factor for the decrease.  Balances
have increased, however at the end of the quarter ended March 31, 2004.

Trading  profits  decreased  95% to  $30,575  in the first  quarter of 2004 from
$560,992 in the first quarter of 2003. The decrease in trading profits  resulted
from a realized  loss of  approximately  $150,000 in one  security  position the
Company  incurred  in the first  quarter of 2004.  Volumes  in firm  proprietary
trading  accounts  have  decreased by 67% from the first  quarter of 2003 to the
first  quarter of 2004.  Management  has  scaled  back its  trading  room due to
declining  volumes  of the  securities  in which  the  Company  makes a  market;
however, management is continuing to explore new sources of order flow.

Clearing and  execution  revenues  decreased  $230,039 or 29% to $559,344 in the
first  quarter  2004  compared  to $789,383  in the first  quarter of 2003.  The
decrease represents a reduction of $274,305 of revenue generated from inactivity
fees from the first quarter of 2003  compared to the first quarter of 2004.  The
decrease  results  from  inactive  accounts  being  closed  or  moved  to  other
broker-dealers.  We will  continue  to search for  opportunities  to attract new
correspondent broker business.

Expenses

Expenses  totaled  $6,417,813  for the first  quarter of 2004, an increase of 7%
from  $5,990,985 in the first quarter of 2003. The increase is  attributable  to
the increase of $662,832 in professional  services incurred in the first quarter

                                       13
<PAGE>

of  2004.  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,  are directly  related to commission  revenues,  interest  revenues and
trading revenues.

Employee  compensation  decreased  by  23% in  the  first  quarter  of  2004  to
$1,489,828  from  $1,934,739  in the first  quarter  of 2003.  Interest  expense
decreased  23% to  $257,120  in the first  quarter of 2004 from  $333,495 in the
first quarter of 2003.  These  decreases are in line with the revenue  decreases
discussed above.

Professional services increased by $662,832 or 112% in the first quarter of 2004
to $1,253,899  from $591,067 in the first quarter of 2003.  Legal fees increased
$665,878 as a result of the SEC mutual fund investigation  involving the Company
and NCC.

Occupancy and equipment  expenses have decreased  $172,505 or 15% to $970,806 in
the first quarter of 2004 from  $1,143,311  in the first quarter of 2003.  These
costs have  decreased as property and equipment  lease  commitments  have ended.
Data processing  expense  increased by $137,603 during the first quarter of 2004
compared to the first  quarter of 2003.  Charges  from our back  office  service
provider   increased   $51,788,   mostly  from  the  slight  increase  in  trade
transactions  we have  processed.  The  remainder  of the  increase  is from the
addition of certain market data services and web site content.

Other expense increased by $256,635 during the first quarter of 2004 compared to
the first  quarter of 2003.  The most  significant  reason for the increase is a
credit  item in the  first  quarter  of 2003 in the  amount of  $253,183,  which
reduced other expenses for that period.

Management continues to examine ways to contain costs and improve  efficiencies.
We will continue to seek ways to cut costs and add revenues.

Liquidity and Capital Resources

We finance our operations  through the use of funds  generated from the business
of our  subsidiaries,  mainly  NCC and  JBOC.  NCC  holds  the  majority  of our
corporate  assets  consisted 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-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  five  fiscal  quarters,  NCC's  excess net  capital has
declined  from  $7,656,245  at December  31, 2002 to  $7,040,287.  If this trend
continues,  our  liquidity  could  further  decrease  and we will  need to raise
additional  capital.  If  additional  capital is raised  through the issuance of
equity  securities,  or securities which are convertible into equity securities,
our existing  shareholders may experience  dilution in ownership  percentages or
book value.  Additionally,  such  securities  may have rights,  preferences  and
privileges senior to those of the holders of our common stock. If such funds are

                                       14
<PAGE>

needed, there can be no assurance that additional financing will be available or
whether it will be available on terms satisfactory to us.

Notwithstanding this trend, we currently expect our cash resources and available
credit and stock loan facilities will be sufficient to fund our expected working
capital  and  capital  expenditure  requirements  for  the  foreseeable  future.
However, if future positive cash flow is not realized,  or expenses increase due
to  adverse   results  in  legal  or   arbitration   proceedings  or  for  other
unanticipated  reasons,  we will  need to  raise  additional  funds  in order to
continue in  business,  respond to  competitive  pressures,  develop  additional
products and services, or take advantage of strategic opportunities.

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 the late  trading
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.

Liquidity at March 31, 2003

Our cash  position  decreased  during the first quarter of 2004 by $1,066,651 to
$5,831,319.  This compares with a net decrease in cash and cash  equivalents  of
$4,596,574 in the first quarter 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.   These  notes  have
historically  been  extended  each year.  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 above).

Cash Flows From Operating Activities

Net cash used in operating  activities  was  $927,191  for the first  quarter of
2004, compared to cash of $4,521,907 used in operations during the first quarter
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 quarter of 2003,  the most  significant  source of cash was the
decrease in cash segregated under federal and other  regulations of $19,900,573.
Additionally,   receivables  from   broker-dealer  and  clearing   organizations
decreased to provide cash of  $13,562,822.  These sources of cash were offset by
the increase in receivables  from customers which used cash of $24,458,895 and a
decrease in payables to customers of $5,658,029.

Cash Flows Used In Investing Activities

The net cash used in investing  activities  during the first quarter of 2004 was
$97,794  compared with $74,667  during the same quarter 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


<PAGE>

capital  resources is not  material to the  business as a whole.  We continue to
look for  opportunities to grow our business through the acquisition of customer
accounts,  and, if such  acquisitions  are made,  we may expend our resources on
such acquisitions.

Cash Flows From Financing Activities

The net cash used in financing  activities  during the first quarter of 2004 was
$41,666 compared with no cash used by financing  activities in the first quarter
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 that we do
not presently know of or that we currently deem  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.

      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.

      In the event  charges are filed against us related to the SEC, NYAG and/or
USAO investigations, we could be subject to significant sanctions and penalties,
including  but not limited to  suspension  or  revocation  of our  licensing and
registration as a broker-dealer, and substantial monetary fines which could have
a material adverse effect on our business and financial condition.  Furthermore,
our reputation  could suffer and any damage to our reputation  could cause us to
lose existing  customers  and fail to attract new  customers  which would have a
material  adverse  effect on our business  and  financial  condition.  While NCC

                                       16
<PAGE>

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 amounts related to this matter, as the
amount of loss is not  estimable at this time.  However,  substantial  penalties
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.

OUR CURRENT SHAREHOLDERS WILL BE SIGNIFICANTLY DILUTED IF THIRD CAPITAL CONVERTS
THE NOTES  INTO  SHARES OF COMMON  STOCK AND OUR STOCK  PRICE  COULD  MATERIALLY
DECLINE IF THIRD CAPITAL SELLS IT SHARES.

      As of April 10, 2004, we had  approximately  1.8 million  shares of common
stock  outstanding.  The  convertible  notes  currently  held by  Third  Capital
Partners are convertible into approximately 2 million shares of common stock. If
Third  Capital  Partners  elects to convert  the  convertible  notes in full the
ownership percentage of our current  shareholders will be significantly  diluted
and Third Capital Partners will own approximately 53% 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 under this  registration  statement  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,  it could impede our ability to raise capital through the issuance
of securities or utilize our common stock for acquisitions.  Furthermore, 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.

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
March 31, 2004,  our NCC  subsidiary  had net capital of  $9,164,823,  which was
$7,040,287 in excess of the minimum  amount  required.  At December 31, 2003 NCC

                                       17
<PAGE>

had net capital of  $9,554,544,  as compared to $9,452,719  and  $18,975,361  at
December 31, 2002 and 2001, respectively.

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 direct result of the downturn
in the U.S.  securities  markets that began in early 2000, and continued through
the first six  months of 2003,  we have  suffered  a  significant  reduction  in
transaction volume, and consequently  revenues.  While volumes stabilized in the
last 6 months of 2003,  and we continue to implement cost  containment  measures
that have reduced our expenses, we cannot assure you that our negative cash flow
and net losses from operations will not continue or increase for the foreseeable
future.  If we  continue to incur  losses and  negative  cash flow,  we may need
additional capital to fund working capital and cash flow deficits.  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.  Although we were profitable in
2000,  we  may  never  generate   sufficient  revenues  to  achieve  or  sustain
profitability or generate positive cash flow.

OUR BUSINESS IS ADVERSELY AFFECTED BY DOWNTURNS IN THE U.S. SECURITIES MARKETS.

      We, like other  securities  firms,  are directly  affected by economic and
political conditions, broad trends in business and finance and changes in volume
and  price  levels  of  securities  transactions.  In  recent  years,  the  U.S.
securities markets have fluctuated  considerably and a downturn in these markets
has adversely  affected our operating  results.  In March 2000, the stock market
entered into a protracted  down-trend,  resulting in reduced transaction volume,
and consequently, revenues. In 2001, the stock markets were closed for four days
as a result of the events of September  11,  which had a negative  impact on our
revenues.  In 2002,  low trading  volume and  financial  losses  continued.  The
invasion  of Iraq in 2003  resulted in further  reduced  trading  volumes  which
contributed  to our operating  losses in 2003.  When trading  volume is low, our
profitability  is likely to be adversely  affected  because our overhead remains
relatively fixed. Severe market fluctuations in the future could have a material
adverse effect on our business,  financial condition and operating results. Some
of our  competitors  with more  diverse  product  and  service  offerings  might
withstand such a downturn in the securities industry better than we would.

WE ARE EXPOSED TO CERTAIN CREDIT RISKS WITH OUR CUSTOMERS.

      We allow  customers to purchase  securities on margin.  Therefore,  we are
subject to risks  inherent in extending  credit.  All  borrowing by customers is
secured by  security  positions  in their  accounts.  Furthermore,  the  amounts
customers  can borrow is  limited by  regulatory  agencies  such as the  Federal
Reserve Bank and the NASD.  When the market is rapidly  declining,  the value of
the  collateral  we hold can fall below the amount of a customer's  indebtedness
which  increases  the risk that the customer will not be able to repay us. Under
specific regulatory guidelines,  any time we borrow or lend securities,  we must
correspondingly  disburse  or  receive  cash  deposits.  If we fail to  maintain
adequate cash deposit levels at all times,  we run the risk of loss if there are
sharp changes in market values of many  securities  and parties to the borrowing
and lending  transactions  fail to honor their  commitments.  If such losses are

                                       18
<PAGE>

significant, it could have a material adverse effect on our business,  financial
condition and operating results.

OUR CLEARING OPERATIONS EXPOSE US TO LOSSES BEYOND THE LOSS OF BUSINESS.

      Our clearing  operations expose us to risks that exceed the simple risk of
loss of  business  due to loss of retail  customers  or  correspondents.  If the
correspondent  fails,  possible  losses include its obligations to customers and
other third parties, and any losses in the correspondent's own trading accounts.
We have established procedures to review a correspondent's own customer and firm
accounts and  activities in an effort to prevent such losses if a  correspondent
fails but there can be no assurance  that such  procedures  will be effective in
every  case.  Any such  losses  could  have a  material  adverse  effect  on our
business, financial condition and operating results.

OUR  SUCCESS IS  DEPENDENT UPON THE  DEVELOPMENT AND ENHANCEMENT OF OUR SERVICES
AND PRODUCTS.

      Our future  success  depends in part on our ability to develop and enhance
our services and products. There are significant risks in the development of new
services and products or enhanced  versions of existing  services and  products,
particularly  in our  electronic  brokerage  business.  We may  also  experience
difficulties  that  could  delay or prevent  the  development,  introduction  or
marketing of these services and products.  Additionally,  these new services and
products may not adequately meet the  requirements of the marketplace or achieve
market  acceptance.  If we are unable to develop and  introduce  enhanced or new
services  and  products   quickly  enough  to  respond  to  market  or  customer
requirements,  or if  they  do not  achieve  market  acceptance,  our  business,
financial condition and operating results will be materially adversely affected.

THE DISCOUNT AND ELECTRONIC BROKERAGE SERVICES MARKET IS HIGHLY COMPETITIVE.

      The market for  discount  and  electronic  brokerage  services  is rapidly
evolving  and  intensely  competitive.  We face  direct  competition  from firms
offering  discount and  electronic  brokerage  services such as Charles Schwab &
Co., Inc., Fidelity Brokerage Services, Inc., TD Waterhouse Investment Services,
Inc. (a subsidiary of the Toronto-Dominion Bank), Ameritrade, Inc. (a subsidiary
of Ameritrade  Holding  Corporation),  and E*TRADE Group, Inc. We also encounter
competition  from  established  full  commission  brokerage  firms  such  as UBS
Financial Services, Inc. (a subsidiary of UBS AG), Merrill Lynch, Pierce, Fenner
& Smith Incorporated and Smith Barney,  Inc. (a subsidiary of Citigroup,  Inc.),
among other traditional firms which typically also offer their customers on-line
services.  In addition,  we compete  with  financial  institutions,  mutual fund
sponsors and other organizations.  Further, the industry is currently undergoing
consolidation,  which may strengthen our competitors, and this trend is expected
to  continue.  Many of our  competitors  have  longer  operating  histories  and
significantly greater financial,  technical,  marketing and other resources than
we do. In addition,  many of our competitors  have greater name  recognition and
larger customer bases that could be leveraged, thereby gaining market share from
us. Our competitors may conduct more extensive promotional  activities and offer
better terms and lower prices to customers than we do. There can be no assurance
that we will be able to compete  effectively with current or future  competitors
or that  such  competition  will  not  have a  material  adverse  effect  on our
business, financial condition and operating results.

                                      19
<PAGE>

THE LOSS OF SIGNIFICANT CUSTOMERS COULD ADVERSELY AFFECT OUR BUSINESS.

      While no single  correspondent  broker-dealer or customer  represents more
than 10% of our revenues,  we have several significant  customers whose loss, in
the aggregate,  could have a material adverse effect on our financial  condition
and  operating  results.  While we  believe  that  the  likelihood  of  losing a
substantial  number of such customers is remote,  there can be no assurance that
such event will not occur.

OUR PLANS TO EXPAND THROUGH  ACQUISITIONS OF OTHER COMPANIES MAY HAVE A MATERIAL
ADVERSE EFFECT ON OUR BUSINESS.

      During 2001 and 2002, we acquired  approximately  35,800 customer accounts
from six  other  broker-dealers  at a total  cost of  $6,872,689  and we plan to
continue to expand our business through strategic acquisitions.  Our industry is
currently  undergoing  consolidation  and  there is  intensive  competition  for
acquisitions,  which may make acquisitions  increasingly expensive.  Any lack of
capital for  additional  acquisitions  may limit our ability to grow. We will be
competing  for  acquisition   opportunities  with  entities  that  have  greater
resources  than we do and we plan on using our previously  authorized,  unissued
common stock as consideration,  which may limit our opportunities.  Any issuance
of our equity  securities  in  acquisitions  will have a dilutive  effect on our
current shareholders.  We cannot assure you that we will be able to successfully
identify, negotiate and consummate suitable acquisitions. In addition, there can
be no assurance that any such acquisitions  will generate profits.  Furthermore,
completed  acquisitions  entail  numerous risks,  including  difficulties in the
assimilation  of acquired  operations  and products,  diversion of  management's
attention  from  other  business   concerns,   assumption  of  unknown  material
liabilities,  amortization of acquired  intangible  assets and potential loss of
key employees and customers of acquired companies. We have limited experience in
assimilating  acquired  organizations into our operations.  We cannot assure you
that  we  will be able to  integrate  successfully  any  operations,  personnel,
services  or  products  that might be  acquired  in the  future.  Our failure to
successfully complete and assimilate  acquisitions could have a material adverse
effect on our business, financial condition and operating results.

OUR  BUSINESS IS  DEPENDENT ON  RELATIONSHIPS  WITH ONLINE AND INTERNET  SERVICE
PROVIDERS AND SOFTWARE AND INFORMATION SERVICES PROVIDERS.

      We have  established  a number of  relationships  with online and Internet
service  providers  and  software  and  information  service  providers.   These
relationships allow us to provide:

      o    Financial  information to our customers,  including quote,  chart and
           records services;

      o    Access to our website for trading;

      o    Routing of orders for execution; and

      o    Clearance of trades with contra-parties.

      These services are typically offered by a variety of competing vendors. We
attempt to enter  into  relationships  with the  vendors  that we  believe  will
provide our customers with quality services,  comparable or superior to those of

                                       20
<PAGE>

our competitors and at costs acceptable to us. These relationships are generally
subject  to  long-term  agreements.  There  can be no  assurance  that  any such
relationships will be maintained,  or that if they are maintained,  they will be
successful  or  profitable.  Additionally,  we may  not  develop  any  new  such
relationships in the future.

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.  While
we neither actively  solicit new foreign  accounts nor have established  offices
outside of the United  States,  our websites are  accessible  worldwide over the
Internet  and we  currently  have  account  holders  located  outside the United
States.  These  accounts  make up less than 5% of our  accounts  and are  spread
across many jurisdictions. Any adverse action by foreign regulators with respect
to regulatory  compliance in foreign  jurisdictions  could adversely  effect our
revenues from clients in such country or region.

      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 SYSTEMS FAIL OR OUR TRANSACTIONS PROCESS IS
SLOW.

      We receive and process trade orders through internal trading software, the
Internet, and touch-tone telephone.  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.  During a systems
failure,  we may be able to take orders by telephone.  However,  only associates
with securities  broker's licenses can accept telephone orders,  and an adequate
number of associates may not be available to take customer calls in the event of
a systems  failure.  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

                                       21
<PAGE>

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.

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 $2.13 and
as high as $6.25 (all  prices  have been  adjusted  to  reflect  the one for ten
reverse  stock split which was  effective  October 15, 2002) 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  which
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. In addition, Third Capital Partners is the beneficial
owner of the aggregate principal sum of $5,418,696 of our 9% Secured Convertible
Notes (the  "Notes").  Third  Capital  Partners has extended the due date of the
Notes from time to time most recently  through  December 31, 2004, but there can
be no assurance that they will continue to do so in the future. Our inability to
repay the Notes or otherwise  obtain an extension  from Third  Capital  Partners
could have a material adverse effect on our financial condition.

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

                                       22
<PAGE>

and President  could have a material  adverse effect on our business,  financial
condition and results of operations.

OUR  SHAREHOLDER  RIGHTS PLAN AND 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 adopted a shareholder rights plan designed to encourage parties seeking
to acquire us to negotiate with and seek the approval of our Board of Directors.
In addition,  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.
Our  shareholder  rights  plan and 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.

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.

WE MAY BE UNABLE TO HIRE AND RETAIN SKILLED PERSONNEL.

      The success of our business is dependent  upon having  adequate  levels of
personnel  with  experience  in the computer and  brokerage  business as well as
persons with the necessary  broker-dealer licenses. As a result of the prolonged
market  downturn,  we have  reduced our  personnel  by  approximately  62% since
January 2001 and in the event that there is a significant increase in demand for
our products and  services in the future we may not have  adequate  personnel to
handle the demand which could have a material  adverse  effect on our  business,
financial  condition and operating results.  Further,  there can be no assurance
that we can retain our existing  personnel  especially those whose stock options
are largely  underwater and might have little  long-term  incentive to stay with
us. We expect competition for qualified  personnel to be intense in the event of
a sustained  upswing in the stock markets and there can be no assurance  that we
will be able  to hire or  retain  skilled  or  licensed  personnel  to meet  any
increased demand.

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.  We are exposed to
market risk related to changes in interest rates and equity security price risk.
The Company does not have  derivative  financial  instruments for speculative or
trading purposes.

                                       23
<PAGE>

Retail broker-dealers with clearing operations,  such as ourselves,  are exposed
to risks  that  exceed the simple  risk of loss of  business  due to the loss of
retail  customers  and/or  correspondents.  Broker-dealers  engaged in  clearing
operations for other  correspondent  broker-dealers are exposed to losses beyond
the loss of  business  in the event that the  correspondent  fails.  These risks
result where the total assets,  securities  held in  inventory,  and cash of the
failed  correspondent  are  insufficient  to cover the unpaid  customer  debits,
together  with losses,  which may be generated  in the  correspondent's  trading
account.  We have established  procedures to review a correspondent's  inventory
and  activities  in  an  effort  to  prevent  such  losses  in  the  event  of a
correspondent's failure.  However, there can be no assurance that our procedures
will be effective in avoiding losses.

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

Interest Rate Sensitivity and Financial Instruments

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

Equity Price Risk

NCC acts as a market  maker for  approximately  200  public  corporations  whose
stocks are traded on the NASDAQ National  Market System,  NYSE or other national
exchanges.  The Company selects  companies in which it makes a market based on a
review of the current market activity,  and also to facilitate  trading activity
of  its  own  and  correspondent's  clients.  Market  making  may  result  in  a
concentration  of securities  which may expose the Company to  additional  risk;
however,  the  Company  does not  maintain  a  significant  inventory  of equity
securities.

Item 4.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of March 31,2004, 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  are  effective  in  timely   alerting  them  to  material
information required to be included in our periodic SEC reports.

                                       24
<PAGE>

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 March 31, 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.

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

                                       25
<PAGE>

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.

In the event  charges are filed  against us related to the SEC, NYAG and/or USAO
investigations,  we could be subject to  significant  sanctions  and  penalties,
including  but not limited to  suspension  or  revocation  of our  licensing and
registration as a broker-dealer, and substantial monetary fines which could have
a material adverse effect on our business and financial condition.  Furthermore,
our reputation  could suffer and any damage to our reputation  could cause us to
lose existing  customers  and fail to attract new  customers  which would have a
material  adverse  effect on our business  and  financial  condition.  While NCC
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  amount  related to this
matter,  as the  amount of loss is not  estimable  at this time.  We  maintain a
general  litigation  accrual  which we believe is  adequate to cover the minimum
estimated  loss.  However,  substantial  penalties  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

                                       26
<PAGE>

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.

USAO Settlement Agreement Related to Prior Management

      In April 2004,  the Los  Angeles  Office of the United  States  Attorney's
Office  (the  "USAO")  agreed to accept a lump sum  payment of  $500,000 in full
settlement  of  all  amounts  remaining  due  under  the  Settlement  Agreement,
previously reported in the 2003 Form 10-K and prior filings.  This settlement is
expected to be finalized in the second quarter of 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.

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

                                       27
<PAGE>


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.

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 countersued  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. A decision is pending on that matter by the arbitration  panel. If we
receive  an  adverse  ruling  from  the  panel,  we could  be  required  to make
subsequent  payments to Share King LLC in cash, instead of in our choice of cash
and/or stock.

Item 2.    Changes  in Securities, Use of Proceeds  and  Issuer  Repurchases  of
           Equity Securities

           None.

Item 3.    Defaults upon Senior Securities.

           None.

Item 4.    Submission of Matters to a Vote of Security Holders.

           None.

Item 5.    Other Events

      During March 2004, the Company  solicited  proposals from potential  audit
firms for  preparation of the 2004 financial  statements for the Company and its
subsidiaries.  The decision to seek a new audit firm was based,  in part, on the

                                       28
<PAGE>

fact that the current audit staff is required to transition  off the audit under
the provisions of The  Sarbanes-Oxley Act of 2002. On April 12, 2004 the Company
and its subsidiaries  received notification from Ernst & Young LLP that it would
not stand for  re-election  for the audit of the  December  31,  2004  financial
statements.  On April 16, 2004,  the Company's  Audit  Committee of the Board of
Directors selected BDO Seidman, LLP as its new independent  accountant,  subject
to execution of a mutually agreeable  engagement letter. The Company executed an
engagement  letter with BDO Seidman,  LLP on May 10,  2004.  The Company has not
consulted the newly engaged  accountants during the two most recent fiscal years
or the interim period between December 31, 2003, and May 10, 2004, regarding the
application  of accounting  principles to a specified  transaction or any matter
that was subject to any disagreement or reportable event.


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 first  quarter,  we filed a Report on Form 8-K, dated April 19,
2004,  reporting  the  resignation  of  Ernst  &  Young  LLC as our  independent
accountants.  The report  also  provided  disclosure  of the receipt of a "Wells
Notice" on April 12, 2004 and the  resignation of James G. Lewis,  its President
and Chief Operating Officer on April 15,2004.

      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


May 13, 2002


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