UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the period ended June 30, 2000
THE MORGAN GROUP, INC.
2746 Old U. S. 20 West
Elkhart, Indiana 46515-1168
(219) 295-2200
Delaware 1-13586 22-2902315
(State of (Commission File Number) (IRS Employer
Incorporation Identification Number)
The Company (1) 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.
The number of shares outstanding of each of the Company's classes of common
stock at August 8, 2000 was:
Class A - 1,248,157 shares
Class B - 1,200,000 shares
<PAGE>
The Morgan Group, Inc.
INDEX
PAGE
NUMBER
PART I FINANCIAL INFORMATION
Item 1 Financial Statements (unaudited)
Consolidated Balance Sheets as of
June 30, 2000 and December 31, 1999 3
Consolidated Statements of
Operations for the Three and Six Month Periods
Ended June 30, 2000 and 1999 4
Consolidated Statements of
Cash Flows for the Three and Six Month Periods
Ended June 30, 2000 and 1999 5
Notes to Consolidated Interim Financial
Statements as of June 30, 2000 6 -8
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-12
Item 3 Quantitative and Qualitative Disclosures About Market Risk 13
PART II OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders 14
Item 5 Other Information 15-22
Item 6 Exhibits and Reports on Form 8-K 23
Signatures 23
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
The Morgan Group, Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share amounts)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
-------- --------
ASSETS (Unaudited) (Note 1)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 1,349 $ 3,847
Trade accounts receivable, less allowance for doubtful
accounts of $254 in 2000 and $313 in 1999 11,863 10,130
Accounts receivable, other 360 313
Refundable taxes 306 --
Prepaid expenses and other current assets 1,834 1,960
Deferred income taxes 1,474 1,475
-------- --------
Total current assets 17,186 17,725
-------- --------
Property and equipment, net 4,139 4,309
Intangible assets, net 7,011 7,361
Deferred income taxes 2,172 2,172
Other assets 631 697
-------- --------
Total assets $ 31,139 $ 32,264
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 3,941 $ 3,907
Accrued liabilities 4,945 4,852
Income taxes payable -- 278
Accrued claims payable 3,852 3,071
Refundable deposits 1,597 1,752
Current portion of long-term debt and capital lease obligations 610 676
-------- --------
Total current liabilities 14,945 14,536
-------- --------
Long-term debt and capital lease obligations, less current portion 152 289
Long-term accrued claims payable 4,623 5,347
Commitments and contingencies -- --
Shareholders' equity:
Common stock, $.015 par value
Class A: Authorized shares - 7,500,000
Issued shares - 1,607,303 23 23
Class B: Authorized shares - 2,500,000
Issued and outstanding shares - 1,200,000 18 18
Additional paid-in capital 12,459 12,459
Retained earnings 2,102 2,775
-------- --------
Total capital and retained earnings 14,602 15,275
Less - treasury stock at cost (359,146 Class A shares) (3,183) (3,183)
-------- --------
Total shareholders' equity 11,419 12,092
-------- --------
Total liabilities and shareholders' equity $ 31,139 $ 32,264
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
The Morgan Group, Inc. and Subsidiaries
Consolidated Statements of Operations
(Dollars in thousands, except share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operating revenues $ 29,961 $ 40,270 $ 57,828 $ 75,595
Costs and expenses:
Operating costs 27,287 36,876 53,400 68,879
Selling, general and administration 2,273 2,650 4,632 5,338
Depreciation and amortization 288 308 581 617
----------- ----------- ----------- -----------
29,848 39,834 58,613 74,834
Operating income (loss) 113 436 (785) 761
Interest expense, net 76 119 133 207
----------- ----------- ----------- -----------
Income (loss) before income taxes 37 317 (918) 554
Income tax expense (benefit) 20 148 (319) 267
----------- ----------- ----------- -----------
Net income (loss) $ 17 $ 169 $ (599) $ 287
=========== =========== =========== ===========
Net income (loss) per common share:
Basic $ 0.01 $ 0.07 ( $0.24) $ 0.12
=========== =========== =========== ===========
Diluted $ 0.01 $ 0.07 ( $0.24) $ 0.11
=========== =========== =========== ===========
Weighted average shares outstanding
Basic 2,448,157 2,447,532 2,448,157 2,492,820
=========== =========== =========== ===========
Diluted 2,452,731 2,449,287 2,452,905 2,495,326
=========== =========== =========== ===========
Cash dividends declared per common share
Class A: $ 0.02 $ 0.02 $ 0.04 $ 0.04
=========== =========== =========== ===========
Class B: $ 0.01 $ 0.01 $ 0.02 $ 0.02
=========== =========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
The Morgan Group, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30
2000 1999
------- -------
Operating activities:
<S> <C> <C>
Net (loss) income $ (599) $ 287
Adjustments to reconcile net (loss) income to net cash (used
in) provided by operating activities:
Depreciation and amortization 581 617
Other 41 28
Changes in operating assets and liabilities:
Trade accounts receivable (1,733) (1,375)
Other accounts receivable (47) 941
Prepaid expenses and other current assets 126 302
Other assets 66 (186)
Trade accounts payable 34 503
Accrued liabilities 93 1,257
Income taxes payable (584) (815)
Accrued claims payable 57 11
Refundable deposits (155) 88
------- -------
Net cash (used in) provided by operating activities (2,120) 1,658
Investing activities:
Purchases of property and equipment (103) (421)
Other investing activities 2 (30)
------- -------
Net cash used in investing activities (101) (451)
Financing activities:
Net proceeds from note payable to bank -- --
Principal payments on long-term debt (203) (195)
Treasury stock purchases -- (1,014)
Common stock dividends paid (74) (69)
------- -------
Net cash used in financing activities (277) (1,278)
------- -------
Net decrease in cash and equivalents (2,498) (71)
Cash and cash equivalents at beginning of period 3,847 1,490
------- -------
Cash and cash equivalents at end of period $ 1,349 $ 1,419
======= =======
</TABLE>
See Notes to Condensed Financial Statements
<PAGE>
The Morgan Group, Inc. and Subsidiaries
Notes to Consolidated Interim Financial Statements
(Unaudited)
June 30, 2000
Note 1.Basis of Presentation
The accompanying consolidated interim financial statements have been
prepared by The Morgan Group, Inc. and Subsidiaries (the "Company"), in
accordance with generally accepted accounting principles for interim
financial information and with instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, certain information and footnote
disclosures normally included for complete financial statements
prepared in accordance with generally accepted accounting principles
have been omitted pursuant to such rules and regulations. The balance
sheet at December 31, 1999 has been derived from the audited financial
statements at that date but does not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. The consolidated interim financial
statements should be read in conjunction with the financial statements,
notes thereto and other information included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1999.
Net income per common share ("EPS") is computed using the weighted
average number of common shares outstanding during the period. Since
each share of Class B common stock is freely convertible into one share
of Class A common stock, the total of the weighted average number of
shares for both classes of common stock is considered in the
computation of EPS.
The accompanying unaudited consolidated interim financial statements
reflect, in the opinion of management, all adjustments (consisting of
normal recurring items) necessary for a fair presentation, in all
material respects, of the financial position and results of operations
for the periods presented. The preparation of financial statements in
accordance with generally accepted accounting principles requires
management to make estimates and assumptions. Such estimates and
assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates. The results of operations for the interim periods are not
necessarily indicative of the results for the entire year.
The consolidated financial statements include the accounts of the
Company and its subsidiaries, Morgan Drive Away, Inc., TDI, Inc.,
Interstate Indemnity Company, and Morgan Finance, Inc., all of which
are wholly owned. Significant intercompany accounts and transactions
have been eliminated in consolidation.
Note 2. Indebtedness
The Company has a $20,000,000 revolving credit facility ("Credit
Facility") which expires February 28, 2001, and is subject to renewal
annually, thereafter. The Credit Facility was amended March 30, 2000 to
limit payment of dividends to $120,000 annually, to prohibit the
acquisition of the Company's common stock, and to limit borrowings and
letters of credit to the borrowing base.
<PAGE>
Note 3.Segment Reporting
Description of Services by Segment
The Company operates in four business segments: manufactured housing,
driver outsourcing, specialized outsourcing services, and insurance and
finance. The manufactured housing segment primarily provides
specialized transportation to companies which produce new manufactured
homes and modular homes through a network of terminals located in
thirty-one states. The driver outsourcing segment provides outsourcing
transportation primarily to manufacturers of recreational vehicles,
commercial trucks, and other specialized vehicles through a network of
service centers in seven states. The specialized outsourcing services
segment consists of large trailer, travel and small trailer delivery.
The fourth segment, insurance and finance, provides insurance and
financing to the Company's drivers and independent owner-operators.
This segment also acts as a cost center whereby all property damage and
bodily injury and cargo costs are captured. The Company's segments are
strategic business units that offer different services and are managed
separately based on the differences in these services.
The driver outsourcing segment and the specialized outsourcing services
were reported as one segment titled "Specialized Outsourcing Services"
in the prior year. The prior year periods have been restated.
Measurement of Segment (Loss)
The Company evaluates performance and allocates resources based on
several factors, of which the primary financial measure is business
segment operating income, defined as earnings before interest, taxes,
depreciation and amortization (EBITDA). The accounting policies of the
segments are the same as those described in the Company's Annual Report
on Form 10-K for the year ended December 31, 1999. Except for insurance
premiums, there are no significant intersegment revenues.
<PAGE>
The following table presents the financial information for the
Company's reportable segments for the three and six month periods ended
June 30, (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
-------- -------- -------- --------
Operating revenues
<S> <C> <C> <C> <C>
Manufactured Housing $ 19,995 $ 27,648 $ 38,201 $ 51,516
Driver Outsourcing 5,820 6,323 11,431 12,040
Specialized Outsourcing Services 3,883 5,891 7,640 11,206
Insurance and Finance 734 1,032 1,549 2,060
All Other -- 20 (3) 72
-------- -------- -------- --------
30,432 40,914 58,818 76,894
Total intersegment insurance revenues (471) (644) (990) (1,299)
-------- -------- -------- --------
Total operating revenues $ 29,961 $ 40,270 $ 57,828 $ 75,595
======== ======== ======== ========
Segment profit (loss) - EBITDA
Manufactured Housing $ 1,896 $ 3,108 $ 3,638 $ 5,757
Driver Outsourcing 436 20 906 109
Specialized Outsourcing Services 24 190 (119) 305
Insurance and Finance (1,703) (2,376) (3,964) (4,406)
All Other (252) (198) (665) (387)
-------- -------- -------- --------
401 744 (204) 1,378
Depreciation and amortization (288) (308) (581) (617)
Interest expense (76) (119) (133) (207)
-------- -------- -------- --------
Income (loss) before taxes $ 37 $ 317 $ (918) $ 554
======== ======== ======== ========
</TABLE>
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
For the Quarter Ended June 30, 2000
Consolidated Results
During the second quarter of 2000, the Company continued to experience shipment
and profit declines in its manufactured housing and specialized outsourcing
business segments while the segment profit/loss of driver outsourcing and
insurance and finance improved. In the second quarter, consolidated operating
revenues decreased 25.6 percent to $29,961,000 from 1999's second quarter of
$40,270,000. This decrease is primarily the result of a sharp industry-wide
decline in shipments of manufactured homes. Additionally, operating revenues
decreased significantly in the specialized outsourcing business segment.
Second quarter 2000 operating revenues increased from first quarter 2000 by 7.5
percent principally due to the seasonality of the businesses. However, this
volume increase was approximately half of the rate experienced in the prior
year.
The manufactured housing industry continues to be hampered by tighter credit
standards and rising interest rates at the retail level, and a resultant
excessive inventory of new and repossessed homes, which directly impacts
production and sales volume of the Company's customers. The largest portion of
the Company's operating revenues is derived from the transportation of
manufactured homes. The Company believes that the depressed level of shipments
in manufactured housing will continue through this year, possibly moderating the
following year.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") was a
profit of $401,000 for the quarter, compared with a profit of $744,000 for the
corresponding period last year.
Because of the existence of significant non-cash expenses, such as depreciation
of fixed assets and amortization of intangible assets, the Company believes that
EBITDA contributes to a better understanding of the Company's ability to satisfy
its obligations and to utilize cash for other purposes. EBITDA should not be
considered in isolation from or as a substitute for operating income, cash flow
from operating activities, and other consolidated income or cash flow data
prepared in accordance with generally accepted accounting principles.
Net interest expense decreased from $119,000 in the second quarter of 1999 to
$76,000 in 2000 as a result of continued improved cash management which reduced
the amount of borrowings from the credit facility.
Accordingly, net income for the second quarter of 2000 was $17,000 or $0.01 per
basic share, compared to net income of $169,000 or $0.07 per basic share, for
the same period of the prior year.
The Company continues to review incremental marketing initiatives, is
continuously reviewing staffing levels and expenditures to reduce its overhead
structure.
<PAGE>
Segment Results
The Company conducts its operations in four principal segments as discussed
below. The following discussion sets forth certain information about the segment
results.
Manufactured Housing
Manufactured Housing operating revenues are generated from providing
transportation and logistical services to manufacturers of manufactured homes.
Manufactured Housing operating revenues were $7,653,000 or 27.7 percent less in
the second quarter of 2000 compared to the second quarter of a year ago,
reflecting the continued softness in the manufactured housing industry.
Manufactured Housing EBITDA decreased primarily due to the lower
quarter-to-quarter shipment volume. EBITDA decreased $1,212,000 to $1,896,000.
Driver Outsourcing
Driver outsourcing provides outsourcing transportation services primarily to
manufacturers of recreational vehicles, commercial trucks and other specialized
vehicles. Operating revenues of $5,820,000 decreased $503,000 in the second
quarter of 2000 compared to the second quarter of 1999. However, EBITDA
increased to $436,000 in the second quarter of 2000 primarily due to the
elimination of low margin business and to reductions in transportation and
overhead costs.
Specialized Outsourcing Services
Specialized Outsourcing Services consists of delivering large trailers, travel
and other small trailers and another specialized transport service ("Decking").
Operating revenues decreased by $2,008,000 in the second quarter of 2000 to
$3,883,000. This decrease was primarily in the delivery of large trailers but
also from the Decking operations. The Company essentially ceased delivery of the
Decking units in the second quarter 2000. EBITDA decreased $166,000 compared to
the year ago quarter to $24,000 in the second quarter 2000. This decrease is
primarily due to the volume decreases.
Insurance/Finance
The Company's Insurance/Finance segment provides insurance and financing
services to the Company's drivers and independent owner-operators. This segment
also acts as a cost center whereby all bodily injury, property damage and cargo
loss costs are captured. Insurance/Finance operating revenues decreased $298,000
in the second quarter of 2000 to $734,000 primarily reflecting a decrease in
owner-operator insurance premiums caused by the slow-down in the manufactured
housing industry.
The loss at the EBITDA level in the second quarter of 2000 compared to the
second quarter of the prior year decreased by $673,000 to $1,703,000 primarily
due to decreases in cargo related claims but also lower bodily injury and
property damage losses.
RESULTS OF OPERATIONS
For the First Six Months Ended June 30, 2000
For the first six months of 2000, operating revenues decreased to $57,828,000
from $75,595,000 for the same period last year. The decrease in operating
revenues was primarily in Manufactured Housing but also decreased in the other
business segments.
<PAGE>
EBITDA decreased $1,582,000 to a loss of $204,000 for the six month period of
2000 compared to the year ago period. This decrease was caused by Manufactured
Housing and Specialized Outsourcing Services business segments partially offset
by improved performance in Driver Outsourcing and the Insurance and Finance
business segment.
Net interest expense decreased $74,000 compared to the year ago period for the
reasons previously noted.
Accordingly, the net loss for the six months ended June 30, 2000 was $599,000 or
$0.24 per diluted share, compared to net income of $287,000 or $0.11 per diluted
share, for the same period of the prior year.
The Company has instituted staff reduction and other cost savings initiatives.
It is currently estimated that the cost savings of these initiatives will
approximate $2,400,000 annually. The impact of the cost savings for 2000 is
expected to approximate $1,800,000, net of severance costs.
Segment Results
The following discussion sets forth certain information about the segment
results for the six months ended June 30, 2000 and 1999.
Manufactured Housing
Manufactured Housing operating revenues were $13,315,000 less in the first half
of 2000 compared to the prior year period. As previously discussed, the
decreases in operating revenues are primarily due to the continued softness in
the Manufactured Housing industry. Manufactured Housing EBITDA decreased
$2,119,000, primarily due to the reduction in volume partially offset by
decreased overhead costs.
Driver Outsourcing
Operating revenues decreased by $609,000 in the first six months of 2000
compared to the first six months of 1999. This decrease as previously discussed
occurred primarily in the second quarter. However, EBITDA increased from
$109,000 to $906,000 primarily due to improved pricing, and reductions in
transportation and overhead costs.
Specialized Outsourcing Services
Operating revenues decreased by $3,566,000 in the first six months of 2000
compared to the first six months of 1999. This decrease was primarily in the
delivery of large trailers but the delivery of decking units also decreased, as
described above. EBITDA decreased primarily because of the lower volume.
<PAGE>
Insurance/Finance
Insurance/Finance operating revenues decreased $511,000 in the first six months
of 2000 compared to the first six months of the prior year to $1,549,000
reflecting a decrease in owner-operator insurance premiums.
The Company also experienced decreases in bodily injury, property damage and
cargo related claims in the first six months of 2000. As a result of the above
factors the loss at the EBITDA level decreased in the first six months of 2000
compared to the prior year period by $442,000 to $3,964,000.
LIQUIDITY AND CAPITAL RESOURCES
Operating activities used $2,120,000 of cash in the first six months of 2000
primarily to fund the net loss, the seasonal increase in trade accounts
receivable and pay prior year federal and state tax liabilities.
Trade accounts receivable days sales outstanding (DSO) decreased from 28 days at
December 31, 1999 to 27 days at June 30, 2000.
The March 30, 2000 amendment to the Credit Facility limits payments of dividends
to $120,000 annually and limits borrowings and letters of credit to the
borrowing base. The borrowing base as of June 30, 2000 was $11,082,000 with
$8,775,000 letters of credit outstanding. The Company has no borrowings as of
June 30, 2000. The letters of credit are primarily required for self-insurance
retention reserves. The Company was in compliance with all covenants as of June
30, 2000.
The Company had minimal exposure to interest rates as of June 30, 2000, as
substantially all of its outstanding long-term debt bears fixed rates. The
Credit Facility mentioned above bears variable interest rates based on either a
Federal Funds rate or the Eurodollar rate. Accordingly, borrowings under the
Credit Facility have exposure to changes in interest rates. Under its current
policies, the Company does not use interest rate derivative instruments to
manage exposure to interest rate changes. Also, the Company currently, is not
using any fuel hedging instruments.
Inflation
Most of the Company's expenses are affected by inflation, which generally
results in increased costs. As of June 30, 2000 the effect of inflation on the
Company's results of operation was minimal.
The transportation industry is dependent upon the availability and cost of fuel.
Although fuel costs are paid by the Company's owner-operators, increases in fuel
prices may have significant adverse effects on the Company's operations for
various reasons. Since fuel costs vary between regions, drivers may become more
selective as to which regions they will transport goods resulting in diminished
driver availability. Also, the Company would experience adverse effects during
the time period from when fuel costs begin to increase until the time when
scheduled rate increases to customers are enacted. Increases in fuel prices may
also affect the sale of recreational vehicles by making the purchase less
attractive to consumers. A decrease in the sale of recreational vehicles would
be accompanied by a decrease in the transportation of recreational vehicles and
a decrease in the need for Driver Outsourcing services.
Impact of Seasonality
Shipments of manufactured homes tend to decline in the winter months in areas
where poor weather conditions inhibit transport. This usually reduces operating
revenues in the first and fourth quarters of the year. The Company's operating
revenues, therefore, tend to be stronger in the second and third quarters.
<PAGE>
FORWARD LOOKING DISCUSSION
This report contains a number of forward-looking statements. From time to time,
the Company may make other oral or written forward-looking statements regarding
its anticipated operating revenues, costs and expenses, earnings and other
matters affecting its operations and condition. Such forward-looking statements
are subject to a number of material factors which could cause the statements or
projections contained therein to be materially inaccurate. Such factors include,
without limitation, the risk of declining production in the manufactured housing
industry; the risk of losses or insurance premium increases from traffic
accidents; the risk of loss of major customers; risks of competition in the
recruitment and retention of qualified drivers in the transportation industry
generally; risks of acquisitions or expansion into new business lines that may
not be profitable; risks of changes in regulation and seasonality of the
Company's business. Such factors are discussed in greater detail in the
Company's Annual Report on Form 10-K for the year ended December 31, 1999.
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
The information called for by this item is provided under the caption "Liquidity
and Capital Resources" under Item 2- Management's Discussion and Analysis of
Financial Condition and Results of Operations.
<PAGE>
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
On June 14, 2000, the Company held its Annual Meeting of Stockholders,
the results of which follow:
Report of proxies received and shares voted June 14, 2000
Total Voted % of Total
----- ----- ----------
Number of shares of Class A 1,248,157 1,223,263 98%
common stock
Number of shares of Class B
common stock 1,200,000 1,200,000 100%
1. Election of directors elected by
all shareholders (1-year term), shares
of Class B common stock are entitled
to two votes
Against or
For Withheld Abstained Non-Votes
--- -------- --------- ---------
Charles C. Baum 3,621,733 1,530 - 0 - 24,894
Bradley J. Bell 3,621,733 1,530 - 0 - 24,894
Richard B. Black 3,621,733 1,530 - 0 - 24,894
Anthony T. Castor, III 3,621,733 1,530 - 0 - 24,894
Richard L. Haydon 3,621,733 1,530 - 0 - 24,894
2. Election of director by holders of
Class A common stock (1-year term)
Robert S. Prather, Jr. 1,221,733 1,530 - 0 - 24,894
<PAGE>
Item 6 Exhibits and Reports on Form 8-K
(a) The following exhibits are included herein:
Exhibit 10.1 - Amendment Agreement No. 1 to Revolving Credit
and Term Loan Agreement dated as of January 28, 1999
Exhibit 27.1 - Financial Data Schedule for Six Month Period
Ended June 30, 2000
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter for which
this report is filed.
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.
THE MORGAN GROUP, INC.
BY: /s/ Dennis R. Duerksen
-----------------------------
Dennis R. Duerksen
Chief Financial Officer
DATE: August 14, 2000
