SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, DC 20549

                                 FORM 10-QSB

                                 (MARK ONE)

[X]   QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
      SECURITIES EXCHANGE ACT OF 1934

      For the quarterly period ended September 30,1997

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

      For the transition period from _____________ to ___________________

                          Commission File No. 0-24188

                                  JOTAN, INC.
       (Exact name of small business issuer as specified in its charter)
              Florida                                59-3181162         
       (State or other jurisdiction of    (IRS Employer Identification No.)
        incorporation or organization)

      118 W. Adams Street, Suite 900, Jacksonville, Florida 32202          
   (Address of principal executive offices)                (Zip Code)

   Issuer's telephone number, including area code      (904) 355-2592   
       ________________________________________________________________
        Former name, former address and former fiscal year, if changed

Check whether the issuer  (1) filed all reports required to be filed by 
Section 13 or 15 (d) of the Securities Exchanged act of 1934 during  the
past 12 months (or for such shorter period that the issuer was required to 
file such reports) and (2) has been subject to such filing requirements for 
the past 90 days.

                      Yes  [ X ]    No [   ]   

APPLICABLE ONLY TO CORPORATE ISSUERS: State the number of shares outstanding 
of each of the issuer's classes of common equity, as of the latest practicable 
date: 5,696,611 shares of common stock, $.01 par value, as of November 11, 1997.




<PAGE



                                 INDEX

                               Jotan, Inc.


Part I--Financial Information

   Item I - Financial Statements (Unaudited)
            Condensed Consolidated Statements of Operations for the
            Three Months and Nine Months ended September 30, 1997 and 1996   2

            Condensed Consolidated Balance Sheet at September 30, 1997
            and September 30, 1996                                         3 & 4

            Condensed Consolidated Statements of Cash Flows for the 
            Nine Months ended September 30, 1997 and 1996                  5 & 6

            Notes to Condensed Consolidated Financial Statements             7

   Item II -- Management's Discussion and Analysis of 
              Financial Condition and Result of Operations                  12
		
		

Part II -- Other Information

   Item 6 - Exhibit 11 - Computation of Per Share Earnings                  17
		
   Signatures                                                               20


<PAGE

                                   Jotan, Inc.

                     Condensed Consolidated Statements of Operations
                                   (Unaudited)
<TABLE>
<CAPTION>

                         Three months ended September 30   Nine months ended September 30
                          _____________________________    _____________________________
                              1997             1996            1997             1996
                          _____________   _____________    _____________   _____________

<S>                                                        <C>             <C>
Sales                     $ 20,195,006    $  2,865,067     $ 45,958,193    $  8,349,138
Cost of sales               14,452,681       2,078,858       32,821,835       6,237,573
                          _____________   _____________    _____________   _____________
Gross profit                 5,742,325         786,209       13,136,358       2,111,565
                          _____________   _____________    _____________   _____________

Operating expenses           5,417,881         648,861       11,949,745       1,825,896
Amortization of goodwill    
and non-compete                833,160            -           1,899,158            -
                          _____________   _____________    _____________   _____________
Operating income (loss)     (  508,716)        137,348      (   712,545)        285,669

Other income                     4,000          12,274           14,125          51,766
Interest expense            (1,010,483)    (    59,740)     ( 2,311,950)   (    201,475)
                          _____________   _____________    _____________   _____________
  
Income (loss) before taxes  (1,515,199)         89,882      ( 3,010,370)        135,960
Income tax expense                -               -                -               -
                          _____________   _____________    _____________   _____________
Net income (loss)           (1,515,199)         89,882      ( 3,010,370)        135,960

Amounts attributable to
   preferred stock             231,556            -             552,390            -
                          _____________   _____________    _____________   _____________
Net income (loss) 
   attributable to 
   common shareholders     $(1,746,755)   $     89,882     $( 3,562,760)   $    135,960
                          =============   =============    ==============  =============

Net income (loss) per share  $  (.31)       $    .01         $   (.63)       $    .02
                          =============   =============    ==============  =============
Weighted average number
   of common and common
   equivalent shares 
   outstanding               5,696,611       8,211,057         5,690,857       6,520,905
                          =============   =============    ==============   =============

</TABLE>




See notes to condensed consolidated financial statements.

                                  -2-
<PAGE

                                Jotan, Inc.

                   Condensed Consolidated Balance Sheet
                               (Unaudited)

<TABLE>
<CAPTION>
                                                               September 30
                                                          1997             1996
                                                      _____________    _____________
<S>                                                   <C>              <C>
Assets
Current assets:
   Cash and cash equivalents                          $  1,727,814      $ 1,379,254  
   Trade receivables, net                               10,554,716        1,242,764
   Inventory                                             9,130,996        1,123,161
   Other current assets                                    940,027          291,964
                                                      _____________    _____________
Total current assets                                    22,353,553        4,037,143
                                                      _____________    _____________


Property and equipment, net                              5,059,152          860,864


Goodwill, net Southland                                 24,743,715             -
Goodwill, net Cove                                       1,986,140             -
Non-compete, net                                         5,833,500             -
Other assets                                               593,817          396,215
                                                      _____________    _____________

Total assets                                          $ 60,569,877      $ 5,294,222 
                                                      =============    =============

</TABLE>




See notes to condensed consolidated financial statements.

                                  -3-
<PAGE>

                                Jotan, Inc.

                    Condensed Consolidated Balance Sheets
                                (Unaudited)

<TABLE>
<CAPTION>
                                                               September 30
                                                          1997             1996
                                                      _____________     ____________
<S>                                                   <C>               <C>
Liabilities and stockholders' equity
Current liabilities:
   Trade payables                                     $  6,945,837      $ 1,321,941
   Accrued expenses                                      5,012,660           46,849
   Notes payable (12%)                                      95,000           95,000
   Current portion of long-term debt,
      and capital leases                                23,811,784           24,748
   Other                                                   270,281             -
                                                      _____________     ____________
Total current liabilities                               36,135,562        1,488,538
                                                      _____________     ____________

Capitalized lease obligations                            3,864,501             -
Deferred revenue                                           120,637             -
Long-term debt, less current maturities                  8,790,616          519,291
Line of credit                                                -           1,295,960
                                                      _____________     ____________
                                                        12,775,754        1,815,251
                                                      _____________     ____________

Redeemable preferred stock                              11,965,000             -

Stockholders' equity (deficit)
   Preferred stock
     Authorized shares - 10,000,000
     Issued and outstanding shares - 1,265,823
       in 1997 and 1996                                     12,658           12,658
   Voting common stock, $.01 par value:
     Authorized shares - 40,000,000
     Issued and outstanding shares - 5,696,611
       in 1997 and 5,679,411 in 1996                        56,966           56,794
   Additional paid-in capital                            4,639,611        3,963,983
   Retained earnings (deficit)                         ( 5,015,674)      (2,043,002)
                                                      _____________     ____________
Total stockholders' equity (deficit)                   (   306,439)       1,990,433
                                                      _____________     ____________

Total liabilities and stockholders' equity            $ 60,569,877      $ 5,294,222
                                                      =============     ============
</TABLE>




See notes to condensed consolidated financial statements.

                                  -4-
<PAGE>

                                 Jotan. Inc.

                Condensed Consolidated Statements of Cash Flows
                                 (Unaudited)

<TABLE>
<CAPTION>

                                                       Nine months ended September 30
                                                      _________________________________
                                                          1997                1996
                                                      _____________       _____________
<S>                                                   <C>                 <C>
Cash flows from operating activities
Net income (loss)                                     $( 3,010,370)       $    135,960
Adjustments to reconcile net income (loss) to net cash
  provided by (used in) operating activities:
     Depreciation and amortization expense               2,242,631             117,624
     Stock compensation expense                             25,800               7,550
     Changes in operating assets and liabilities:
       Trade receivables                               ( 3,033,911)        (   286,338)
       Inventory                                       ( 1,679,473)        (   138,776)
       Other current assets                            (   104,198)        (    81,674)
       Trade payables                                    2,141,204             112,921
       Accrued expenses                                  1,300,757         (    12,013)
       Other current liabilities                       (   651,840)               -
                                                      _____________       _____________
Net cash (used in) provided by operating activities    ( 2,769,400)            132,806  
                                                      =============       ==============

Cash flows from investing activities
Proceeds from sale of property and equipment             1,000,000                -
Decrease (increase) in other assets                        706,261         (   350,961)
Purchase of property and equipment                     (   266,875)        (    31,559)
Purchase of business Cove, net of cash acquired        ( 2,625,000)               -
Purchase of business Southland, net of cash acquired   (37,842,535)               -
                                                      _____________       _____________
Net cash used in investing activities                  (39,028,149)        (   382,520) 
                                                      =============       =============

Cash flows from financing activities
Proceeds from (payments) on line of credit borrowings  ( 1,594,076)            188,582
Repayments of amounts advanced from Total Supply
     Systems, Inc.                                            -            (   353,749)
Payments on long-term debt                             ( 4,437,159)        (    55,262)
Proceeds from senior revolver                            8,080,884                -
Proceeds from acquisition revolver                       2,625,000                -
Proceeds from senior term debt                          16,122,500                -
Proceeds from senior subordinated debt                   8,710,000                -
Proceeds from issuance of redeemable preferred stock,
     net of issuance costs                              11,965,000           1,827,626 
Proceeds from issuance of warrants                         650,000                -
                                                      _____________       _____________
Net cash provided by financing activities               42,122,149           1,607,197  
                                                      =============       =============

</TABLE>
                                  -5-
<PAGE>

                                Jotan. Inc.

          Condensed Consolidated Statements of Cash Flows (continued)
                                 (Unaudited)

<TABLE>
<CAPTION>

                                                       Nine months ended September 30
                                                      _________________________________
                                                          1997                1996
                                                      _____________       _____________
<S>                                                   <C>                 <C>
Net increase in cash and cash equivalents                  324,600           1,357,483
Cash and cash equivalents at beginning of period         1,403,214              21,771
                                                      _____________       _____________
Cash and cash equivalents at end of period            $  1,727,814        $  1,379,254
                                                      =============       =============


Purchase of business, Cove net of cash acquired
  Inventory                                           $(   480,000)       $       -
  Property and equipment                               (   221,850)               -
  Other assets                                         (     2,850)               -
  Goodwill                                             ( 2,019,800)               -
  Notes payable and capitalized leases                      99,500                -
                                                      _____________       _____________
                                                      $( 2,625,000)       $       - 

Purchase of business, Southland net of cash acquired
  Trade receivables                                   $( 5,967,581)       $       -
  Inventory                                            ( 5,789,881)               -
  Other current assets                                 (   517,889)               -
  Property and equipment                               ( 4,069,138)               -
  Other assets                                         (   820,802)               -
  Trade payables                                         3,278,692                -
  Accrued expenses                                       3,488,497                -
  Other current liabilities                                922,121                -
  Other liabilities                                        122,486                -
  Non - Compete                                        ( 6,600,000)               -
  Goodwill                                             (25,621,863)               -
  Notes payable and capitalized leases                   3,732,823                -
                                                      _____________       _____________

                                                      $(37,842,535)       $       -
                                                      =============       =============

</TABLE>



 See notes to condensed consolidated financial statements.

                                  -6-
<PAGE>

                                Jotan Inc.
             Notes to Condensed Consolidated Financial Statements
                               (Unaudited)

1. The Business and Basis of Presentation

Description of Business

Jotan, Inc. (the "Company") is a distributor of packaging and shipping 
supplies with twenty distribution centers located throughout the United 
States. The Company sells to a broad customer base including manufacturers, 
moving and storage, air freight, and perishable food markets. Prior to March 
1997, Jotan, Inc. was a regional distributor of packaging materials providing 
Just On Time As Needed delivery service for its industrial customers. On March 
4, 1997 the Company completed the acquisition of 100% of the stock of 
Southland Holding Company ("Southland"). Southland is a distributor of 
packaging and shipping supplies with eleven distribution centers throughout 
the United States. Southland sells primarily to the moving and storage 
industry, but also sells packaging products to the air freight and perishable 
food markets. Southland provides services similar to those provided by the 
Company to these markets. On June 20, 1997 the Company completed the 
acquisition of the assets of Cove Container Corporation ("Cove"). Cove is a 
distributor of packaging and shipping supplies with a distribution center 
located in Pontiac, Michigan. Cove sells both to manufacturers and to the 
moving and storage industry and provides services similar to those provided by 
the Company.         

Basis of Presentation
The accompanying financial statements are unaudited and, in the opinion of 
management reflect all the adjustments that are necessary for a fair 
presentation of the financial position and results of operations for the 
periods presented. All of such adjustments are of a normal and recurring 
nature. 

The acquisitions of Southland and Cove have been accounted for under the 
purchase method of accounting. The cost in excess of net assets acquired is 
currently being evaluated by management to allocate its various components. 
The majority of the cost will be allocated to goodwill, which will be 
amortized over 15 years. The results from operations include amortization of 
goodwill and non-compete agreements based on preliminary purchase price 
allocations.  The purchase price allocations are currently being evaluated by 
management and are subject to revision after more detailed analysis and 
evaluations are completed.

The results of operations for the periods presented are not necessarily 
indicative of the results to be expected for the entire year. The financial 
statements at September 30, 1997 and September 30, 1996 reflect the combined 
accounts of the Company and its subsidiaries. Certain information and footnote 
disclosure normally included in the financial statements prepared in 
accordance with generally accepted accounting principles have been condensed 
or omitted.

                                    -7-
<PAGE>

                                Jotan Inc.
             Notes to Condensed Consolidated Financial Statements
                               (Unaudited)
                                  cont.

2.    Long Term Debt

      Senior Secured Term Loan A with interest                 $8,035,240
      at LIBOR plus 2.75% payable quarterly
      ( 8.47 % at September 30, 1997), with principal 
      payments due quarterly beginning in June, 
      1997 and ending March, 2002.

      Senior Secured Term Loan B with interest	                7,537,260
      at LIBOR plus 3.25% payable quarterly
      ( 8.97 % at September 30, 1997), with principal 
      payments due quarterly beginning in June, 
      1997 and ending March 2004.

      Senior Secured Revolving Line of Credit with	          8,080,884
      interest at LIBOR plus 2.75% payable quarterly
      ( 9.43 % at September 30, 1997), with principal
      due March 2002.

      Subordinated Debt with interest of 12.5%	                8,710,000
      payable quarterly commencing May 30, 1998, 
      with principal due in equal quarterly installments 
      during 2002 and 2005.
	

      Other                                                       120,616
                                                              ------------
                                                               32,484,000

      Less Current Maturities                                  23,693,384
                                                              ------------
      Long Term Debt                                          $ 8,790,616
                                                              ============

The Senior Secured Term Loans and Senior Secured Revolving Line of Credit are 
secured by all assets, including inventory, accounts receivable, real estate, 
trademarks, and patents of the Company, as well as the common stock and other 
equity interests of each subsidiary of the Company.  The subordinated debt is 
subordinated to all senior debt and is unsecured.  All of the debt contains 
restrictive covenants including limitations on the Company's amount of debt, 
disposition of assets, incurrence of liens or encumbrances, payment of 
dividends, investments, and executive compensation.  


                                   -8-
<PAGE>

                               Jotan Inc.
              Notes to Condensed Consolidated Financial Statements
                              (Unaudited)
                                  cont.

2.    Long Term Debt (continued)

In addition, certain covenants exist with senior lenders stipulating minimum 
interest coverage, fixed charge coverage, and EBITDA.  As of August 31, 1997, 
the company failed to meet minimum EBITDA requirements.  As of September 30, 
1997, the company failed to meet the required interest coverage, fixed charge 
coverage, and EBITDA requirements.  Waivers have been obtained from senior 
lenders for defaults occurring during August and September and financial 
covenants have been waived for October and November.  The Company expects that 
the financial covenants will be amended in December, and the Company will be in 
compliance with these amended covenants in the future.  As a result, the senior 
secured term loans have been reclassified as current liabilities at September 
30, 1997 with the expectation they will be reclassified to long term at December
31, 1997.

In connection with the subordinated debt, the Company issued warrants to 
purchase approximately 13.5% of the Company's issued and outstanding Common 
Stock on a fully diluted basis.  The warrants are exercisable for ten years and 
were attributed a value of $150,000.

      Long term debt maturities by year are as follows:

      1997                                               $         9,960
      1998                                                        20,000
      1999	                                                      20,000
      2000	                                                      20,000
      2001                                                        10,656
      Thereafter                                               8,710,000
                                                          ---------------
      Total Long Term Debt                                     8,790,616


3.    Capitalized Leases

The Company leases certain land and buildings under long term leases which are 
accounted for as capital leases.  Included in property and equipment are the 
following assets held under capital leases:

                                                    September 30, 1997

      Land                                             $   701,597
      Buildings                                          3,949,274
                                                       ------------
                                                         4,650,871
      Less accumulated amortization                     (1,244,514)
                                                       ------------
                                                        $3,406,357
                                                       ============


                                   -9-
<PAGE>

                               Jotan Inc.
              Notes to Condensed Consolidated Financial Statements
                              (Unaudited)
                                 cont.

3.    Capitalized Leases (continued)


Future minimum lease payments for assets under capital leases at September 30,
1997 are as follows:
				
            1997                                        $  181,250	
            1998                                           732,500
            1999                                           732,500
            2000                                           732,500
            2001                                           732,500
            2002                                           732,500
            Thereafter                                   3,803,540
                                                       ------------
        Total minimum lease payments                     7,647,290
        Less amount representing interest               (3,664,489)
                                                       ------------
        Present value of minimum lease payments          3,982,801
        Less current maturities                           (118,400)
                                                       ------------
        Long Term Obligations                          $ 3,864,501
                                                       ============ 

4.	Preferred Stock

Redeemable Preferred Stock 

In Connection with the Southland acquisition, the Company issued Series B 
Redeemable Preferred Stock of $9,340,000, net of fees and discount of 
$600,000.  The Series B Preferred Stock accrues dividends at a rate of 8.0% 
per annum, payable quarterly, in kind by the issuance of additional shares of 
Series B Preferred Stock.  Series B Preferred Stock has liquidation preference 
over all other shares of Common Stock and preferred stock, including the 
Series A Preferred Stock that is currently held by F-Jotan, an affiliate of 
Fairview.  The Series B Preferred Stock may be redeemed by the Company at any 
time, but subject to premiums ranging from 12.5% during the first year to 0% 
commencing in the sixth year.  Redemption of the Series B Redeemable Preferred 
Stock is mandatory on the eighth anniversary of closing.  Rice Partners II 
L.P. ("Rice") and the Southland Purchasers were paid pro rata portions of a 
fee at closing of $250,000 for providing the Series B Redeemable Preferred 
Stock financing.  The Series B Redeemable Preferred Stock entitles the holders 
thereof at all times that it is outstanding to elect the majority of the Board 
of Directors.

                                   -10-
<PAGE>

                               Jotan Inc.
              Notes to Condensed Consolidated Financial Statements
                              (Unaudited)
                                 cont.

4.Preferred Stock (continued)

Also, in connection with the Redeemable Preferred Stock, the Company issued 
warrants to purchase approximately 50% of the Company's issued and outstanding 
Common Stock on a fully diluted basis.  The warrants are exercisable for ten 
years and were attributed a value of $500,000.

On June 23, 1997 the Company entered into a commitment agreement with Rice and 
Fairview which resulted in their purchasing an additional $2,625,000 of Series 
B Preferred Stock on September 11, 1997. These additional funds were used to 
provide the long term financing of the Cove acquisition, retiring the 
acquisition credit facility of $2,625,000.  As a result of this commitment 
agreement, the lenders waived the Company's compliance with certain sections of 
the Credit Agreement related to the Cove acquisition.


II Management's Discussion and Analysis of Financial Condition and Results of 
Operations

On March 4, 1997, the Company completed the acquisition of 100% of the stock 
of Southland Holding Company. On June 20, 1997, the Company completed the 
acquisition of the assets of Cove Container Corporation.  As a result of these 
acquisitions, the Company's financial statements after March 4, 1997 are not 
comparable to financial statements prior to that date.  

To facilitate a meaningful comparison of the Company's operating performance, 
the following discussion and analysis is presented on a traditional basis.  
Included in the following discussion are comparisons of EBITDA (earnings 
before interest, taxes, depreciation, and amortization).  The Company believes 
EBITDA is helpful in understanding cash flow generated from operations that is 
available for taxes, debt service and capital expenditures.  In addition, 
EBITDA facilitates the monitoring of covenants related to certain long-term 
debt.  EBITDA should not be considered by investors as an alternative to net 
earnings as an indicator of the Company's operating performance or to cash 
flows as a measure of its overall liquidity.

Jotan, Inc. and its consolidated subsidiaries reported a net loss of $3.0 
million for the nine months ended September 30, 1997 compared to net income of 
$.1 million for the same period in 1996.  For the quarter ended September 30, 
1997, the Company reported a net loss of $1.5 million compared to net income 
of $.1 million for the equivalent period of 1996.  

EBITDA for the nine months ended September 30, 1997 was $1.5 million compared 
to $.4 million for the same period in 1996. For the quarter ended September 
30, 1997, the company achieved EBITDA of $.5 million compared to $.2 million for
the equivalent period of 1996.

                                   -11-
<PAGE>

                                 Jotan, Inc.

II Management's Discussion and Analysis (continued)

Net sales increased to $46.0 million for the nine months ended September 30, 
1997 from $8.3 million for the nine months ended September 30, 1996.  Net 
sales for the third quarter of 1997 increased to $20.2 million from $2.9 
million for the quarter ended September 30, 1996. The increase in net sales 
for the nine months and three months ended September 30, 1997 was primarily 
related to $35.1 million and $15.9 million, respectively of post acquisition 
revenue generated by Southland and Cove.  Net sales also increased from new 
business at the Company's four existing distribution centers, and the opening 
of three new distribution centers, during the first six months of 1997, in 
Dallas, Texas; Findlay, Ohio; and Chicago, Illinois. 

Gross profit increased to $13.1 million for the nine months ended September 
30, 1997 from $2.1 million for the nine months ended September 30, 1996.  For 
the third quarter of 1997, gross profit increased to $5.7 million from $.8 
million for the quarter ended September 30, 1996.  Gross profit margins were 
improved as a result of product mix changes associated with the Southland and 
Cove acquisitions. 

Operating expenses increased to $11.9 million for the first nine months of 
1997 from $1.8 million for the same period in 1996. Operating expenses for the 
three months ended September 30, 1997 increased to $5.4 million from $.6 
million for the three months ended September 30, 1996. The major factor 
contributing to these increases was the inclusion of Southland operating 
expenses in the post acquisition period. Other contributing factors included 
expenses related to integration of Southland's administrative functions, and 
professional fees relating to staffing and regulatory filings. 

Expenses related to amortization of goodwill and non-compete agreements were 
$1.9 million and $.8 million for the nine months and three months ended 
September 30, 1997, respectively.  There was no amortization expense in the 
same period of 1996. This increase relates to the amortization of goodwill and 
non-compete agreements resulting from the Southland and Cove acquisitions. 

Interest expense for the three months ended September 30, 1997 increased to 
$1.0 million from $59 thousand for the equivalent period 1996. For the nine 
month period ended September 30, 1997 interest expense totaled $2.3 million 
versus $.2 million in 1996. This increase reflected the impact of increased 
borrowings related to the Southland acquisition.



                                   -12-
<PAGE>

                               Jotan, Inc.

III Liquidity and Capital Resources

In order to obtain financing for the Southland transaction and fund future 
expansion, the Company signed an agreement on February 28, 1997 with Rice to 
purchase $9 million of senior subordinated debt and $10 million of senior 
redeemable preferred stock.  F-Southland, L.L.C., a North Carolina limited 
liability company, and FF-Southland Limited Partnership, a North Carolina 
limited partnership (collectively, the "Southland Purchasers"), entities 
affiliated with Franklin Street/Fairview Capital, L.L.C. ("Fairview"), 
purchased an aggregate amount of $2 million of such senior subordinated debt 
and $2 million of such senior redeemable preferred stock in lieu of Rice.  
Rice and the Southland Purchasers used working capital derived from partner or 
member contributions as the source of the consideration to be paid by them for 
the senior subordinated debt and senior redeemable preferred stock.

Subordinated Debt.- The Subordinated Debt bears interest at a rate of 12.5% 
per annum, with a default rate of 15.5% per annum. Interest is payable 
quarterly for eight years, with principal due in equal quarterly installments 
during the seventh and eighth years.  Prepayments of the Subordinated Debt are 
allowed but are subject to premiums ranging from 12.5% during the first year 
to 0% commencing in the sixth year.  The Subordinated Debt is subordinated to 
the Company's senior debt and is unsecured.  Rice and the Southland Purchasers 
were paid pro rata portions of a fee of $225,000 for providing the Subordinated 
Debt financing.  The documentation for the Subordinated Debt includes customary 
restrictive covenants and agreements by the Company, including financial 
covenants and limitations on the Company's debt, disposition of assets, 
incurrence of liens and encumbrances, payment of dividends, investments and 
executive compensation.

In addition to the Subordinated Debt, Rice and the Southland Purchasers also 
received pro rata portions of warrants to purchase 3,227,471 shares of Common 
Stock, representing 13.5% of the outstanding Common Stock on a fully diluted 
basis, which will be exercisable for a term of ten years (the "13.5% 
Warrants").  The total exercise price of the 13.5% Warrants is a maximum of 
$100.  The Common Stock issuable upon exercise of the 13.5% Warrants is 
subject to registration rights that will allow the holders to require the 
registration of such shares on not more than two occasions, and to include 
such shares in other registrations by the Company, subject to certain 
restrictions.

The 13.5% Warrants include customary antidilution provisions and allow the 
holder to sell ("put") the 13.5% Warrants to the Company at a price equal to 
the greater of their book value or their fair market value (the "Put Price") 
at any time after the earlier to occur of (i) the fifth anniversary of 
closing, (ii) prepayment of the Subordinated Debt in full, (iii) a material 
change in the ownership of the Company, (iv) a merger or sale of all or a 
majority of the Company's assets, or (v) the Company's default in performing 
certain covenants contained in the documents governing the Subordinated Debt.  
The Company will have the right to purchase ("call") the 13.5% Warrants at any 
time after the sixth anniversary of closing for a price equal to the Put 
Price.  As long as the Subordinated 

                                   -13-
<PAGE>

                                 Jotan, Inc.

III Liquidity and Capital Resources (continued)

Debt is outstanding, Rice and Fairview will each have the right to attend and 
observe all meetings of the Board of Directors.

Preferred Stock.- The Series B Preferred Stock accrues dividends at a rate of 
8.0% per annum, payable quarterly in cash or, at the Company's option, in kind 
by the issuance of additional shares of Series B Preferred Stock.  Series B 
Preferred Stock will have a liquidation preference over all other shares of 
Common Stock and preferred stock, including the Series A Preferred Stock that 
is currently held by F-Jotan, an affiliate of Fairview.  The Series B 
Preferred Stock may be redeemed by the Company at any time, but subject to 
premiums ranging from 12.5% during the first year to 0% commencing in 
the sixth year.  Redemption of the Series B Preferred Stock is mandatory on 
the eighth anniversary of closing.  Rice and the Southland Purchasers were 
paid pro rata portions of a fee at closing of $250,000 for providing the 
Series B Preferred Stock financing.  The Series B Preferred Stock will 
entitle the holders thereof at all times that it is outstanding to elect the 
majority of the Board of Directors.
		
In addition to the Series B Preferred Stock, Rice and the Southland Purchasers 
also received pro rata portions of warrants to purchase 11,953,596 shares of
Common Stock, representing approximately 50% of the issued and outstanding 
Common Stock on a fully diluted basis, which will be exercisable for a term of 
ten years (the "50% Warrants").  The total exercise price of the 50% Warrants 
is a maximum of $100.  The portion of the 13.5% Warrants and the 50% Warrants 
being acquired by Rice, in the aggregate, will allow Rice to acquire upon 
exercise approximately 50.5% of the outstanding Common Stock on a fully 
diluted basis.  Through conversion of the Series A Preferred Stock and 
exercise of the portion of the 13.5% Warrants and the 50% Warrants being 
acquired by the Southland Purchasers, affiliates of Fairview will after the 
closing of the Proposed Transactions have the right to acquire approximately 
24.12% of the outstanding Common Stock, on a fully diluted basis.  The Common 
Stock issuable upon exercise of the 50% Warrants is subject to registration 
rights that will allow the holders to require the registration of such shares 
on not more than two occasions, and to include such shares in other 
registrations by the Company, subject to certain restrictions.  The put and 
call rights associated with the 50% Warrants are identical to the similar 
rights of the 13.5% Warrants described above.

The former holders of Common Stock collectively own approximately 25.38% of 
the outstanding shares of Common Stock on a fully diluted basis after giving 
effect to the Transactions discussed above.  Rice is the Company's largest 
holder, beneficially owning approximately 50.5% of the outstanding shares of 
Common Stock on a fully diluted basis after giving effect to the Transactions.  
In addition, the Southland Purchasers beneficially own approximately 13% of 
the outstanding shares of Common Stock and F-Jotan will beneficially own 
approximately 11.12% of the outstanding shares of Common Stock on a fully 
diluted basis after giving effect to the Transactions.  Each of Rice and the 

                                   -14-
<PAGE>

                                 Jotan, Inc.

III Liquidity and Capital Resources (continued)

Southland Purchasers filed with the Securities and Exchange Commission (the 
"Commission") statements reporting their respective beneficial ownership of 
Common Stock pursuant to Section 13(d) of the Exchange Act.  For purposes of 
Section 13(d), each of the Southland Purchasers and F-Jotan were deemed to 
beneficially own the full 24.12% of the outstanding Common Stock on a fully 
diluted basis as a result of their affiliate status due to their common 
manager.

The Company has also signed an agreement ("the Credit Agreement") with Banque 
Paribas on February 28, 1997 to obtain up to $12 million in a senior revolving 
credit facility and $27 million in senior term/acquisition credit facilities. 
As part of the Banque Paribas financing agreement the Company has terminated 
its long term financing arrangement with CIT and paid off other long term credit
facilities resulting in $2,098,184 being reclassified to short term debt as of 
December 31, 1996. These facilities were terminated on February 28, 1997. On 
April 18, 1997 Banque Paribas assigned certain of its rights and interest under 
the Credit Agreement to other Banks ("the Lenders").
			
On June 23, 1997 the Company entered into a commitment agreement with Rice and 
Fairview which  resulted in their purchasing an additional $2,625,000 of 
Series B Preferred Stock on  September 11, 1997. These additional funds were 
used to provide the long term financing of the Cove acquisition. As a result 
of this commitment agreement,  the Lenders amended the Credit Agreement 
waiving the Company's compliance with certain sections of the  Agreement, thus 
allowing the Company to temporarily borrow $2,625,000 under the acquisition 
credit facility. The funds temporarily borrowed under the acquisition facility 
were repaid to the lenders upon the purchase of the additional Series B 
Preferred Stock by Rice and Fairview.

On November 14, 1997 the Company amended the Credit Agreement with Banque 
Paribas, reducing the senior revolving credit facility from $9 million to $8 
million, until April 1, 1998 when the revolving credit facility increases to 
$12 million.

On August 19, 1997 the Company also amended the Subordinated Debt Agreement to 
change interest payable, under the Subordinated Debt Agreement, on the last 
business day of August 1997, November 1997 and February 1998 to an obligation 
to issue one or more Senior Subordinated Notes for the same amount of interest 
payable on the respective dates, under the same conditions as the original 
Subordinated Debt Agreement.  These notes will be issued on or before May 30, 
1998 and will  be subject to the same repayment conditions as the original 
Subordinated Debt Agreement.

Certain covenants exist with senior lenders stipulating minimum interest 
coverage, fixed charge coverage, and EBITDA.  As of August 31, 1997, the company
failed to meet minimum EBITDA requirements.  As of September 30, 1997, the 
company failed to meet the required interest coverage, fixed charge coverage,

                                   -15-
<PAGE>

                                 Jotan, Inc.

III Liquidity and Capital Resources (continued)

and EBITDA requirements. Waivers have been obtained from senior lenders for 
defaults occurring during August and September and financial covenants have been
waived for October and November.  The Company expects that the financial 
covenants will be amended in December, and the Company will be in compliance 
with these amended covenants in the future.  As a result, the senior secured 
term loans have been reclassified as current liabilities at September 30, 1997 
with the expectation they will be reclassified to long term at December 31, 
1997.

The Company believes it has adequate capital resources for the foreseeable 
future.

Financial Accounting Standards Board Statement No. 128

In February 1997, the Financial Accounting Standards Board issued Statement 
No. 128, Earnings per Share, which is required to be adopted on December 31, 
1997.  At that time, the Company will be required to change the method 
currently used to compute earnings per share and to restate all prior periods.  
Under the new requirements for calculating primary earnings per share, the 
dilutive effect of common stock equivalents will be excluded.  There is no 
expected impact on primary earnings per share for the quarters ended and the 
nine months ended September 30, 1997 and 1996.  The Company has not yet 
determined what the impact of Statement 128 will be on the calculation of 
fully diluted earnings per share.

                                   -16-
<PAGE>

                               Jotan Inc.

Part II--Other Information

   Item 6--Exhibits 

     a)   Exhibit 11 - Computation of Per Share Earnings











                                        -17-
<PAGE>

                                 Jotan Inc.
Exhibit 11 Statement Re:  Computation of Per Share Earnings

                          Three months ended Sept 30   Nine months ended Sept 30
                               1997         1996             1997        1996  
                             ----------  ----------       ----------  ----------
Primary:
Average shares 
outstanding                   5,696,611   5,679,411       5,690,857   5,675,829

Net effect of stock 
options-based on the 
treasury stock method 
using average market price       *           -0-              *          -0-
                           ------------ -----------      ----------- -----------
Totals                       5,696,611   5,679,411        5,690,857   5,675,829
                           ============ ===========      =========== ===========

Net Income (loss)          $(1,515,199) $   89,882      $(3,010,370) $  135,960
Amount attributable
to preferred stock             231,556       -0-            552,390        -0-
                           ------------ -----------      ----------- -----------

Net income (loss)
attributable to common
shareholders               $(1,746,755) $   89,882      $(3,562,760) $  135,960
                           ============ ===========      =========== ===========

Per Share Amount            $     (.31)  $     .01       $     (.63)  $     .02
                           ============ ===========      =========== ===========


Fully diluted:
Average shares 
outstanding                  5,696,611   5,679,411        5,690,857   5,675,829

Net effect of stock options-
based on the treasury method
using average market price which
is greater than quarter-end
market price                     *           -0-              *          -0-

Assumed conversion of 8 %
preferred convertable stock
equivalent to 2,531,646
common shares.	               *       2,531,646	        *         845,076
                           ------------ -----------      ----------- -----------

Totals                       5,696,611   8,211,057        5,690,857   6,520,905
                           ============ ===========      =========== ===========


                                      -18-
<PAGE>

                                Jotan Inc.
          Exhibit 11 Statement Re:  Computation of Per Share Earnings
                                 (cont.)


                           Three months ended Sept 30  Nine months ended Sept 30
                               1997         1996             1997        1996  
                             ----------  ----------       ----------  ----------

Totals from previous page    5,696,611   8,211,057        5,690,857   6,520,905
                           ============ ===========      =========== ===========

Net Income (loss)          $(1,515,199) $   89,882      $(3,010,370) $  135,960
Amount attributable to 
preferred stock                231,556       -0-            552,390       -0-
                           ------------ -----------      ----------- -----------

Net Income (loss) 
attributable to common
shareholders               $(1,746,755) $   89,882      $(3,562,760) $  135,960
                           ============ ===========      =========== ===========

Per Share Amount            $    (.31)   $    .00        $    (.63)   $    .01
                           ============ ===========      =========== ===========

*The effect of the stock options and the preferred stock on weighted average 
shares is not assumed in the computation because their effect is anti-
dilutive.























                                     -19-
<PAGE>

                                JOTAN, INC.

SIGNATURES

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


                                      Jotan, Inc. 



                                      By: ____________________________ 
                                          William Ames, President






                                      By: ____________________________
                                          Edward Lipscomb, Vice President
                                          and Chief Financial Officer





November 14, 1997
                                     -20-
<PAGE>