SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
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 No. 0-6729
FIRST MONTAUK FINANCIAL CORP
(Exact name of registrant as specified in its charter)
New Jersey 22-1737915
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Parkway 109 Office Center, 328 Newman Springs Rd., Red Bank, NJ 07701
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (732) 842-4700
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the Registrant (l) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
9,920,727 Common Shares, no par value were outstanding as of
August 12, 1999.
Page 1 of 11
<PAGE>
02
FIRST MONTAUK FINANCIAL CORP
FORM 10-Q
JUNE 30, 1999
INDEX
Page
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Statements of Financial Condition
as of June 30, 1999 and December 31, 1998 ....... 3
Consolidated Statements of Income (Loss) for the
Six Months ended June 30, 1999 and 1998
and Three months ended June 30, 1999 and 1998 ..... 4
Consolidated Statements of Cash Flows for the
Six Months ended June 30, 1999 and 1998 ... 5
Notes to Financial Statements ..................... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations .... 7-9
PART II. OTHER INFORMATION:
Item 5. Other Information........................... 10
Item 6. Exhibits and Reports on Form 8-K............ 10
Signatures .......................................... 11
<PAGE>
03
FIRST MONTAUK FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
ASSETS 1999 1998
Cash $ 861,976 $ 613,513
Due from clearing firm 1,424,447 2,876,202
Securities owned, at market 6,077,070 2,685,879
Securities owned, not readily marketable,
at estimated market value 40,317 47,381
Commissions receivable 64,291 250,803
Employee and broker receivables 444,974 598,212
Furniture, equipment and leasehold
improvements-net 2,117,133 2,074,470
Notes receivable 647,461 477,729
Due from officers 131,408 131,501
Other assets 1,069,385 1,087,289
Deferred tax asset-net 1,212,086 700,755
--------- -------
Total assets $ 14,090,548 $ 11,543,734
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Securities sold, but not yet
purchased, at market $ 394,402 $ 327,047
Notes payable-bank 196,881 244,844
Subordinated notes payable 150,000 200,000
Bonds payable 480,666 473,625
Capital lease payable 318,901 373,579
Commissions payable 1,815,893 1,531,644
Accounts payable 759,008 802,497
Income taxes payable 623,417 -
Accrued expenses 930,480 905,154
Other liabilities 662,613 461,717
------- -------
Total liabilities 6,332,261 5,320,107
--------- ---------
Common stock issued with guaranteed
selling price - no par value,
18,000 shares issued and outstanding 36,500 36,500
Commitments and contingencies (See Notes)
Stockholders' equity
Preferred Stock, 5,000,000 shares
authorized, $.10 par value, no shares
issued and outstanding - -
Common Stock, no par value, 30,000,000 shares
authorized, 9,850,727 and 9,629,044
shares issued and outstanding 5,067,323 4,980,977
Additional paid-in capital 2,991,179 2,979,831
Retained earnings (Accumulated deficit) 165,233 (1,192,471)
Less: Deferred compensation (501,948) (581,210)
-------- --------
Total stockholders' equity 7,721,787 6,187,127
--------- ---------
Total liabilities and stockholders'
equity $ 14,090,548 $ 11,543,734
============= =============
See notes to financial statements.
<PAGE>
04 FIRST MONTAUK FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
Six months ended June 30, Three months ended June 30,
1999 1998 1999 1998
Revenues:
Commissions $ 19,977,955 $15,441,811 $ 10,200,487 $ 7,814,041
Principal
transactions 6,540,243 4,402,917 4,274,159 2,059,474
Investment banking 182,161 601,252 105,137 335,048
Interest and other
income 889,356 793,809 488,632 415,272
------- ------- ------- -------
27,589,715 21,239,789 15,068,415 10,623,835
---------- ---------- ---------- ----------
Expenses:
Commissions, employee
compensation and
benefits 20,319,229 16,263,930 10,828,950 8,028,111
Clearing and floor
brokerage 2,265,776 1,742,243 1,156,841 895,760
Communications and
occupancy 1,290,767 1,180,905 649,732 583,914
Legal matters and related
costs 662,254 1,360,076 615,696 1,059,502
Writedown of
Note Receivable
-Global Financial Corp. - 875,000 - 875,000
Other operating expenses 1,496,559 1,553,901 955,714 982,587
Interest 82,794 66,053 40,067 37,483
---------- ---------- ---------- ----------
26,117,379 23,042,108 14,247,000 12,462,357
---------- ---------- ---------- ----------
Income (loss) before
income taxes 1,472,336 (1,802,319) 821,415 (1,838,522)
Income taxes 115,298 (595,578) 112,346 (611,603)
--------- ---------- ---------- -----------
Net income (loss) $ 1,357,038 $ (1,206,741) $ 709,069 $(1,226,919)
=========== ============ ============ ===========
Per share of Common Stock:
Basic $ 0.14 $ (0.13) $ 0.07 $ (0.13)
=========== ============ ============ ===========
Diluted $ 0.13 $ (0.13) $ 0.07 $ (0.13)
=========== ============ ============ ===========
Number of common shares
used in basic income
(loss) per share 9,866,057 9,643,166 9,895,643 9,664,113
Incremental shares from
assumed conversion of
options 739,754 - 802,290 -
----------- ---------- ----------- ---------
Number of common shares
used in diluted income
(loss) per share 10,605,811 9,643,166 10,697,933 9,664,113
=========== ========= ========== =========
See notes to financial statements.
<PAGE>
05
FIRST MONTAUK FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended June 30,
1999 1998
INCREASE (DECREASE) IN CASH
Cash flows from operating activities:
Net income (loss) $ 1,357,038 $ (1,206,741)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Tax benefit related to exercise of
stock options - 150,003
Depreciation and amortization 201,192 162,982
Amortization of deferred compensation 90,609 93,552
Loan reserves - 875,000
Amortization of bond discount 7,041 -
Other - 22,000
Increase (decrease) in cash attributable to
changes in assets and liabilities
Due from clearing firm 1,451,755 (521,265)
Securities owned - at market (3,391,191) 489,818
Securities owned-not readily marketable 7,064 439,303
Commissions receivable 186,512 188,949
Other assets 17,904 (502,441)
Deferred income taxes (511,331) (635,698)
Securities sold but not yet purchased 67,355 (680,308)
Commissions payable 284,249 (265,987)
Accounts payable (42,562) 426,350
Income taxes payable 623,417 -
Accrued expenses 25,066 522,648
Other liabilities 200,896 366,127
------- -------
Total adjustments (782,024) 1,131,033
-------- ---------
Net cash provided by (used in)
operating activities 575,014 (75,708)
-------- ---------
Cash flows from investing activities:
Due from officers 93 5,791
Employee and broker receivables 153,238 139,311
Issuance of notes receivable (243,616) (1,459,364)
Repayment of notes receivable 73,884 603,759
Capital expenditures (243,855) (665,983)
-------- ----------
Net cash used in investing activities (260,256) (1,376,486)
-------- ----------
Cash flows from financing activities:
Payment of notes payable-bank (47,963) (47,963)
Payment of subordinated notes payable (50,000) (50,000)
Payment of capital lease payable (54,678) -
Proceeds from rights offering - 1,382,751
Registration costs - (113,518)
Proceeds from exercise of
common stock options 86,346 319,310
--------- ---------
Net cash provided by (used in)
financing activities (66,295) 1,490,580
--------- -----------
Net increase in cash 248,463 38,386
Cash at beginning of year 613,513 789,883
--------- -----------
Cash at end of period $ 861,976 $ 828,269
========= ===========
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 82,794 $ 66,053
Income taxes $ 2,952 $ -
Transfer of temporary equity to
permanent capital $ - $ 140,000
See notes to financial statements.
<PAGE>
06
FIRST MONTAUK FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
NOTE 1 - MANAGEMENT REPRESENTATION
The accompanying financial statements are unaudited for the interim period,
but include all adjustments (consisting only of normal recurring accruals) which
management considers necessary for the fair presentation of results at June 30,
1999 and 1998. The preparation of financial statements in conformity with GAAP
requires the Company to make estimates and assumptions that affect the reported
amounts of revenues and expenses during the reporting period. Actual results
could vary from these estimates. These financial statements should be read in
conjunction with the Company's Annual Report at, and for the year ended December
31,1998, as filed with the Securities and Exchange Commission on Form 10-K.
The results reflected for the six-month and three-month periods ended June
30, 1999, are not necessarily indicative of the results for the entire fiscal
year to end on December 31, 1999.
NOTE 2 - EARNINGS PER SHARE
Basic EPS is computed by dividing net income by the weighted-average number
of common shares outstanding for the period. Diluted EPS reflects the potential
dilution from the exercise or conversion of other securities into common stock.
NOTE 3 - EXCHANGE OFFERING
In April 1999, the Company advised Global Financial Corp. ("Global") that
as of April 30, 1999 it would no longer provide financial assistance to Global.
In May 1999, the Company submitted a buy-out plan to leaseholders holding Global
leases on May 1, 1999. The plan has been structured as a private exchange
offering, whereby the Company will issue shares of a 6% Series A Convertible
Preferred Stock in exchange for an assignment of the Global leases. The Company
will exchange one share of Preferred Stock for every $5.00 of payments, as
adjusted, remaining on each lease interest. The preferred shares will be
convertible into two shares of the Company's common stock at the rate of $2.50
per share. Provided the Company has registered the underlying common shares and
the closing stock price of the Common Stock is at least $3.50 per share for
twenty consecutive trading days, conversion will automatically take place. The
Preferred Stock will pay a quarterly dividend of $.075 per share.
The Company has not yet determined the dollar value of the lease interests
exchanged, nor the number of preferred shares to be issued.
NOTE 4 - INCOME TAXES
Based on its review of current operating results and other factors,
management believes that it is more likely than not that the tax benefits from
net operating losses and other deferred tax assets will be realized.
Accordingly, as of June 30, 1999 the Company has recorded a net reversal of
$367,000 of federal tax valuation allowances and $119,000 of state tax valuation
allowances to offset tax provisions accrued on current taxable income.
<PAGE>
07
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
For the three months ended June 30, 1999, the Company achieved record
revenues of $15,068,000, an increase of 42% over the second quarter of 1998.
This was the second consecutive quarter of record revenues for the Company.
During the six month period ended June 30, 1999, total revenues were
$27,590,000, an increase of 30% over the 1998 comparable period. Continued
strength in the equity markets as reflected in transaction volume and stock
prices, as well as the addition of new affiliate brokers, helped contribute to
the record results.
Commission revenues from the sale of listed and over-the-counter
securities, mutual funds, fees from managed accounts and other agency
transactions increased to $19,978,000 (72% of total revenues) during the first
half of 1999, from $15,442,000 (73% of total revenues) during the comparable
1998 period. For the second quarter of 1999, commission revenues rose to
$10,200,000 (68% of total revenues) from $7,814,000 (74% of total revenues)
during the same period in 1998. Most of the increase was attributable to gains
in commissions from equity trades and mutual fund investments.
The largest percentage revenue increase was in the area of principal
transactions, which rose from $2,059,000 in the second quarter of 1998 to
$4,274,000 during the same period in 1999, an increase of over 100%. For the six
month period the increase was $2,137,000, or 48% over the comparable period in
1998. This was due to significant increases in market-making and proprietary
trading in over-the-counter equity and debt securities, as well as unrealized
gains on inventory positions. The value of securities held in inventory can and
do fluctuate significantly from period to period.
Compensation and benefits increased 25% over the comparable six month
period of the prior year. This category includes salaries, commission expense,
payroll taxes and fringe benefits for salaried employees. Commissions paid to
registered representatives for the first half of 1999 was $17,265,000 (63% of
total revenues) as compared to $13,572,000 (64% of total revenues) in the first
half of 1998. The increase is directly related to the higher level of agency
trades transacted by the Company's registered representatives. Commission
expense as a percentage of total revenues will fluctuate within a narrow range
depending upon the product mix of commission-based business and principal
transactions. This percentage will also fluctuate based upon the contribution to
revenues from the Company's in-house brokers and affiliated registered
representatives. In-house brokers usually receive a lower commission payout than
independent affiliates but are not generally required to pay their own overhead.
For the six months ended June 30, 1999, the Company paid salaries of
$2,391,000 for management, operations and trading and clerical personnel, as
compared to $2,074,000 in the first half of 1998. Salaries paid for the second
quarter of 1999 were $1,243,000, compared with $1,040,000 for the second quarter
of 1998. This increase reflects the overall growth of support staff required for
current operations. Salaries are projected to increase for the balance of the
year due to the hiring of a Chief Sales Officer and other sales and marketing
professionals in the third quarter of 1999.
Clearing costs increased for the first six months in 1999 to $2,266,000 (8%
of total revenues) from $1,742,000 (8% of total revenues) in 1998. The dollar
increase in clearing costs was attributable to higher transactions volume, but
was partially offset by clearing discounts and rebates. The percentage of
clearing costs to gross revenues remained constant, but can fluctuate depending
upon the product mix. Some transactions, such as options and bonds, have a
higher execution and clearing cost than others.
Both data communications and occupancy costs exceeded the prior year,
reflecting the Company's growth. The increase of $110,000, or 9%, to $1,291,000
over the comparable 1998 six month period, is primarily due to the increase in
rent expense for the Company's expanded headquarters. Higher communications and
market data service costs associated with the growth in business activity also
contributed to the increase.
The Company has experienced a major reduction in the category of legal fees
and settlements in 1999. Whereas the total expense for the 1998 six month period
was $1,360,000, or 6% of total revenues, the 1999 corresponding period declined
to $662,000, or 2% of total revenues. Through enhanced supervision and
compliance measures, the Company has made progress towards reducing its exposure
to customer claims arising out of securities activities. The Company is
currently a respondent in various customer claims arising in the normal course
of its securities business; however, none of these claims is expected to have a
material impact on its financial condition or operating results.
<PAGE>
08
In 1998 management began a full review of the collectibility of the
Company's loans to Global Financial Corp. ("Global"). Based on various events
and circumstances, including the default status of the loans, management
determined that the loans had been impaired and a reserve for uncollectibility
of $875,000 was required at June 30, 1998. The reserve was increased to
$1,775,000 in the fourth quarter of 1998. (See "Liquidity and Capital Resources"
for further discussion of Global matters.)
Other operating expenses decreased by $57,000 to $1,497,000 (5% of total
revenues) during the first six months of 1999 when compared to the same period
in 1998. Cost stability during this period was achieved by the reduction in
advertising costs. The advertising and marketing campaigns, which were completed
and expensed in 1998, are continuing to produce results in registered
representative recruitment and name recognition. However, the Company expects
the cost for advertising and recruitment to increase for the remainder of the
fiscal year, as it launches new advertising and business development campaigns
for its brokerage operations, particularly its discount brokerage division, and
incurs other costs associated with branding efforts.
The effective income tax rates for the six months and three months ended
June 30, 1999 were 7.8% and 13.7%, respectively, as compared to 33% in the
respective 1998 periods. Tax provisions accrued at regular statutory rates on
1999 income have been offset in part by the reversal of valuation allowances
established in fiscal 1998, because management currently believes that the tax
benefits provided by deferred tax assets will be realized. Management expects
that tax expense on additional 1999 income will be accrued at rates ranging from
35% to 40%.
For the six month period, the Company reported net income of $1,357,000, or
$.14 and $.13 per basic and diluted share, respectively, as compared to a loss
of ($1,207,000), or ($.13) per basic and diluted share for the 1998 comparable
period. Net income for the 1999 second quarter was $709,000, or $.07 per basic
and diluted share, as compared to a loss of ($1,227,000), or ($.13) per basic
and diluted share in the second quarter of 1998. Operating results will continue
to be dependent upon general economic and securities market conditions, and
management's ability to continue to recruit productive registered
representatives and to contain administrative and legal costs.
Liquidity and Capital Resources
The Company maintains a highly liquid balance sheet with 60% of the
Company's assets consisting of cash and cash equivalents, securities owned, and
receivables from the Company's clearing firm and other broker-dealers.
Market-making and other securities dealer activities require the Company to
carry significant levels of securities inventory in order to meet customer and
internal trading needs. The balances in the Company's cash, inventory and
clearing firm accounts can and do fluctuate significantly from day to day,
depending on market conditions, daily trading activity, and investment
opportunities. The Company monitors these accounts on a daily basis in order to
ensure compliance with regulatory capital requirements and to preserve
liquidity.
Net cash provided by operating activities for the six months was $575,000.
The primary source of this increase was net income for the six months of
$1,357,000, the reduction in the clearing firm receivable of $1,452,000, and an
increase in accrued liabilities of $1,091,000. The net increase in securities
inventories of $3,324,000 was an offsetting factor.
Investing and financing activities required cash of $327,000 over the last
six months. Additions to capital expenditures consumed $243,000, most of which
was for the renovation of the newly acquired space at the headquarters complex,
as well as the purchase of additional computer and technology equipment. The
Company projects additional expenditures for infrastructure and technology,
including the planned new corporate office in Richmond, Virginia, to be
approximately $450,000 for the remainder of fiscal 1999. Debt repayments used
cash of $153,000, while proceeds from the exercise of common stock options
provided cash of $86,000.
<PAGE>
09
In October 1998, the Company issued a series of Convertible Promissory
Notes aggregating $570,000 to a private investor in consideration of $300,000 in
cash and an income stream from equipment lease investments with a remaining
balance of approximately $270,000. The notes carry interest at the rate of 10%
per annum, payable semi-annually on April 1 and October 1 of each year, and are
convertible into a maximum of 380,000 shares of the Company's Common Stock at
the rate of $1.50 per share. The notes mature in five years; however, with
respect to one note in the principal amount of $300,000, the Company is required
to pay 20% of the original outstanding principal amount into a sinking fund on
or before each annual anniversary date of the Notes. Thus, the Company will be
required to deposit $60,000 by October 1, 1999 into the sinking fund for the
retirement of this note.
In April 1999, the Company advised Global that as of April 30, 1999 it
would no longer provide financial assistance to Global. In May 1999, the Company
submitted a buy-out plan to leaseholders holding Global leases on May 1, 1999.
The plan has been structured as a private exchange offering, whereby the Company
will issue 6% Series A Convertible Preferred Stock in exchange for an assignment
of the Global leases. The Company will exchange one share of Preferred Stock for
every $5.00 of payments, as adjusted, remaining on each lease interest. The
preferred shares will be convertible into two shares of the Company's common
stock at the rate of $2.50 per share. The preferred stock is automatically
converted into common stock if (1) the Company has registered the underlying
common shares for public distribution and (2) the closing price of the common
stock is at least $3.50 per share for twenty (20) consecutive trading days. The
Preferred Stock will pay a quarterly dividend of $.075 per share. The Company
has not yet determined the dollar value of the lease interests exchanged, or the
number of preferred shares to be issued.
Leaseholders who accept the exchange offering will assign all rights to
their leases, and will sign a general release and assignment of claims to the
Company. There is no assurance as to the dollar amount or collectibility of any
lease payments that may be acquired by the Company as a result of the exchange
offering.
Management believes that operating income will satisfy the Company's
liquidity needs, at least through the current fiscal year.
Year 2000 Issue
The onset of the year 2000 brings challenges to companies who use and rely
on computers and technology as a function of their businesses. Many existing
computer programs were designed and developed without considering the impact of
the upcoming change in the century. If not corrected, many computer systems
could malfunction and lead to significant business delays and disruptions in the
U.S. and internationally by or at the year 2000.
The Company has reviewed its compliance with what has come to be known as
the Year 2000 Issue ("Y2K"). The Company does not create or develop its own
proprietary computer programs. Rather, it is reliant on outside vendors or
providers for verification of the compliance of their applications, which are
utilized by the Company. The Company has currently identified 17 programs and
applications that were purchased/licensed by the Company for various departments
as mission critical systems requiring compliance with Y2K. We have requested
each vendor to supply verification that the program and/or application utilized
by the firm is, or will be, Y2K compliant before the Year 2000. To date, none of
these vendors have failed to provide a statement of compliance. The most
significant of these outside vendors is the Company's clearing firm, Schroder &
Co., Inc. Schroder & Co. has been mandated by the NYSE to participate in
industry testing of all computer interfaces relating to securities processing.
These tests have been ongoing since early Spring 1999. To date, the Company has
not been advised of any problems relating to the clearing firm's compliance with
Y2K readiness. The Company has participated with Schroder in point to point
testing of their interfaces and applications. These tests were successfully
completed in June 1999.
The Company has designated an individual within the organization to
coordinate the Y2K compliance issues and to communicate with each software and
service provider, to ensure Y2K compliance before the turn of the century. While
management has not finalized an estimate of the cost of internal system
modifications, it does not believe that these costs will have a material impact
on the Company's operations in fiscal 1999.
In addition, FMSC inventoried its computer and systems operations that
could be affected by Y2K issues, including steps to remediate systems requiring
such attention. This has included a review of our facilities, office equipment,
telecommunications systems, market data services and third-party products and
services used by our company, and retention of consultants, where necessary.
During February 1999, FMSC issued a letter to securities account clients
reporting on the progress of its Y2K readiness program. The Company is working
to take the necessary steps to ensure, as far as practicable, that the firm's
systems will function without interruption after the millennium change. FMSC
expects to continue its evaluation process relating to contingency planning.
<PAGE>
10
PART II
OTHER INFORMATION
Item 5. Other Information.
Leaseholder Private Offering
During the quarter the Company commenced a private offering for the
purposes of offering to buy-out the leaseholders holding Global leases on May 1,
1999. The Company has offered to purchase all Global leases in exchange for
shares of Series A Convertible Preferred Stock paying a cash dividend of 6% per
annum. The preferred stock is convertible into two shares of the Company's
common stock at the rate of $2.50 per share. The preferred stock is
automatically converted into common stock if (1) the Company has registered the
underlying common shares for public distribution and (2) the closing price of
the common stock is at least $3.50 per share for twenty (20) consecutive trading
days.
Leaseholders who accept the exchange offering will assign all rights to
their leases, and will sign a general release and assignment of claims to the
Company. There is no assurance as to the dollar amount or collectibility of any
lease payments that may be acquired by the Company as a result of the exchange
offering.
The Company has not yet determined the dollar value of the lease interests
exchanged nor the total number of preferred shares to be issued.
The securities offered in the exchange offering have not been registered
under the Securities Act and may not be offered or sold in the United States
absent registration or an applicable exemption from registration requirements.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
None.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed.
<PAGE>
11
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.
FIRST MONTAUK FINANCIAL CORP.
(Registrant)
Dated: August 12, 1999 /s/ William J. Kurinsky
----------------------------------
William J. Kurinsky
Secretary/Treasurer
Chief Financial Officer and
Principal Accounting Officer
/s/ Herbert Kurinsky
----------------------------------
Herbert Kurinsky
President
<PAGE>
12
EXHIBIT INDEX
-------------
Exhibit 27 - Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> BD
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000083125
<NAME> First Montauk Financial Corp.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Apr-1-1999
<PERIOD-END> Jun-30-1999
<CASH> 862
<RECEIVABLES> 1489
<SECURITIES-RESALE> 0
<SECURITIES-BORROWED> 0
<INSTRUMENTS-OWNED> 6077
<PP&E> 2117
<TOTAL-ASSETS> 14091
<SHORT-TERM> 0
<PAYABLES> 3198
<REPOS-SOLD> 0
<SECURITIES-LOANED> 0
<INSTRUMENTS-SOLD> 394
<LONG-TERM> 2740
0
0
<COMMON> 5067
<OTHER-SE> 2654
<TOTAL-LIABILITY-AND-EQUITY> 14091
<TRADING-REVENUE> 4274
<INTEREST-DIVIDENDS> 489
<COMMISSIONS> 10200
<INVESTMENT-BANKING-REVENUES> 105
<FEE-REVENUE> 0
<INTEREST-EXPENSE> 40
<COMPENSATION> 10829
<INCOME-PRETAX> 821
<INCOME-PRE-EXTRAORDINARY> 821
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 709
<EPS-BASIC> .07
<EPS-DILUTED> .07
</TABLE>
