U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________to __________
Commission File Number 0-23410
M. H. MEYERSON & CO., INC.
(Name of Small Business Issuer in its charter)
NEW JERSEY 13-1924455
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
525 Washington Blvd., Jersey City, New Jersey 07310
(Address of principal executive offices) (Zip Code)
(201) 459-9500
(Issuer's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 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 .
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
4,993,335
M. H. Meyerson & Co., Inc.
Index
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Balance sheets, October 31, 1996 and 1995 . . . . . . .1
Statements of operations, three and nine
months ended October 31, 1996 and 1995 . . . . . .2
Statement of changes in stockholders' equity
nine months ended October 31, 1996 . . . . . . . .3
Statement of cash flows, nine months ended
October 31, 1996 and 1995 . . . . . . . . . . . .4
Notes to financial statements . . . . . . . . . . . . .5
Item 2. Management's Discussion and Analysis . . . .6
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . .8
M. H. Meyerson & Co., Inc.
Balance Sheets
(Unaudited)
October 31, October 31,
1996 1995
CURRENT ASSETS
Due from clearing brokers - available
for immediate withdrawal $ 9,482,864 $ 7,947,857
Cash at banks and on hand 2,320,763 457,472
Securities-trading-long at market 10,458,248 8,535,494
Other current assets 1,575,936 515,774
TOTAL CURRENT ASSETS 23,837,811 17,456,597
Investments 804,804 585,722
Fixed Assets net of accumulated
depreciation 1,786,450 701,499
TOTAL ASSETS $ 26,429,065 $ 18,743,818
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Securities-trading-short at market $ 5,747,266 $ 3,287,950
Sales commission payable 4,320,829 3,239,001
Other liabilities and accrued items 1,791,121 397,091
TOTAL CURRENT LIABILITIES 11,859,216 6,924,042
STOCKHOLDERS' EQUITY
Common stock 49,933 50,083
Additional paid-in-capital 7,753,797 7,781,147
Loans to officers for purchase of
Company Stock 0 (57,500)
Treasury Stock 0 0
Retained earnings 6,766,119 4,046,046
TOTAL STOCKHOLDERS' EQUITY 14,569,849 11,819,776
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 26,429,065 $ 18,743,818
See notes to financial statements
M. H. Meyerson & Co., Inc.
Condensed Statements of Operations
Three and Nine Months Ended October 31,
(Unaudited)
Three months ended Nine months ended
October 31, October 31,
1996 1995 1996 1995
REVENUE
Trading profit $ 5,676,574 $ 6,159,818 $ 28,025,809 $ 14,880,271
Commission 490,487 681,311 1,701,738 1,735,653
Underwriting 2,323,056 174,988 4,419,355 1,143,686
Interest and other 292,520 66,723 366,587 207,621
TOTAL REVENUE 8,782,637 7,082,840 34,513,489 17,967,231
EXPENSES
Clearing charges 1,182,951 1,191,066 4,835,131 3,300,663
Salesmens' draw &
commissions 2,057,001 2,411,520 11,824,931 6,209,782
Other personnel costs 1,798,792 1,250,062 5,657,741 3,125,580
Rent and office 1,356,297 818,121 3,619,736 2,233,923
Legal & Professional 538,231 125,528 1,090,275 377,742
Interest Expense 0 0 0 0
Other Expenses 953,923 686,299 3,266,399 1,957,360
TOTAL EXPENSES 7,887,195 6,482,596 30,294,213 17,205,050
Income before taxes 895,442 600,244 4,219,276 762,181
Income taxes 388,313 262,261 1,772,064 360,255
Net income $ 507,129 $ 337,983 $ 2,447,212 $ 401,926
Earnings/common share $ 0.090 $ 0.065 $ 0.450 $ 0.075
Weighted average number
of shares 5,407,566 5,194,750 5,404,026 5,320,937
See notes to financial statements
M. H. Meyerson & Co., Inc.
Statement of Changes in Shareholders' Equity
(Unaudited)
Nine Months ended October 31, 1996
LOANS TO
OFFICERS
COMMON FOR
STOCK ADDITIONAL PURCHASE OF
$0.01 PAR PAID-IN RETAINED TREASURY COMPANY
VALUE CAPITAL EARNINGS STOCK STOCK
SHAREHOLDERS' EQUITY
FEBRUARY 1, 1996 $49,833 $7,743,897 $4,318,907 $ 0 $(57,500)
Net income for period 2,447,212
ESOP exercise 100 9,900
Loan to officers
repayment 57,500
SHAREHOLDERS' EQUITY
OCTOBER 31, 1996 $49,933 $7,753,797 $6,766,119 $ 0 $ 0
See notes to financial statements
M. H. Meyerson & Co., Inc.
Statement of Cash Flows
(Unaudited)
Nine Months ended October 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,447,212 $ 401,926
Adjustments to reconcile net income to net
cash provided by(used in) operating activites
Depreciation 398,470 142,360
Changes in assets and liabilities
(Increase)decrease in:
Receivable from clearing brokers (1,150,278) (1,709,058)
Securities owned (1,690,423) 22,621
Other current assets (1,132,063) 432,710
Increase(decrease) in:
Securities sold, but not yet purchased 2,877,049 (710,152)
Sales commission payable 754,476 46,250
Other liabilities and accrued items 902,843 113,799
Net cash provided by (used in)
operating activities 3,407,286 (1,259,544)
CASH FLOWS FROM INVESTING ACTIVITIES
Investments (474,583) 18,869
Fixed assets (1,498,037) (385,118)
Net cash provided by (used in)
investing activities (1,972,620) (366,249)
CASH FLOWS FROM FINANCING ACTIVITIES
Exercise of Employee Stock Option 10,000 0
Repayments of loans to officers 57,500 110,000
Treasury stock purchased 0 (371,232)
Net cash provided by (used in)
financing activities 67,500 (261,232)
NET INCREASE(DECREASE) IN CASH 1,502,166 (1,887,025)
Cash, beginning of period 818,597 2,344,497
Cash, end of period $2,320,763 $ 457,472
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid $ 910,000 $ 0
Interest paid $ 0 $ 0
See notes to financial statements
M. H. Meyerson & Co., Inc.
Notes to Financial Statements
(Unaudited)
Note 1. Presentation of Financial Statements
The balance sheet as of October 31, 1996 and 1995, the statements of operations
for the three months and nine months ended October 31, 1996 and 1995, the
statement of changes in stockholders' equity for the nine month period ended
October 31, 1996, and the statement of cash flows for the nine months ended
October 31, 1996 and 1995 have been prepared by the Company without audit.
In the opinion of management, all adjustments and accruals (which include only
normal recurring items) necessary to present fairly the financial positions,
results of operations, and cash flows at October 31, 1996 and 1995 have been
made.
The difference between the effective tax rate shown on the Condensed Statements
of Operations for the quarter and nine months ended October 31, 1996 and 1995
and nominal rates is due mainly to the partial non-deductibility of
entertainment related expenses.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these financial statements
be read in conjunction with the financial statements and notes to financial
statements included in the Company's January 31, 1996 Annual Report to
Shareholders. The results of the periods ended October 31, 1996 and 1995 are
not necessarily indicative of the operating results for the full year.
Note 2. Earnings Per Common Share
Earnings per common share is calculated using the weighted average number of
common shares outstanding during the period. Shares issuable upon the exercise
of stock options and warrants, that are dilutive, have been included in the
computation of earnings per share based on the modified treasury stock method.
M. H. Meyerson & Co., Inc.
Item 2. Management's Discussion and Analysis
General
The following discussion of the Company's financial condition
and results of operations should be read in conjunction with the Financial
Statements and Notes thereto appearing elsewhere in this Quarterly Report on
Form 10-QSB.
Results of Operations
The following table sets forth for the periods indicated the
percentage of total revenue represented by certain line items in the Company's
Statement of Operations:
PERCENT OF TOTAL REVENUES
Nine Months Ended October 31,
1996 1995
Net gain on securities transactions . . . . 81.2 82.8
Commissions . . . . . . . . . . . . . . . . 4.9 9.7
Underwriting. . . . . . . . . . . . . . . . 12.8 6.4
Interest and other. . . . . . . . . . . . . 1.1 1.1
TOTAL . . . . . . . . . . . . . . . . 100.0 100.0
Clearing charges. . . . . . . . . . . . . . 14.0 18.4
Compensation and benefits . . . . . . . . . 50.7 52.0
Rent and office . . . . . . . . . . . . . . 10.5 12.4
Professional fees . . . . . . . . . . . . . 3.1 2.1
Interest and other operating expenses . . . 9.5 10.9
TOTAL EXPENSES . . . . . . . . . . . . 87.8 95.8
INCOME(LOSS) BEFORE INCOME TAXES . . . 12.2 4.2
PROVISION FOR TAX EXPENSE(BENEFIT) . . 5.1 2.0
NET INCOME(LOSS) . . . . . . . . . . . 7.1 2.2
Calculation of Earnings Per Share
The calculation of earnings per share on the financial statements included
in this report are based on the weighted average number of shares outstanding,
as calculated.
Quarter Ended October 31, 1996 compared with Quarter Ended October 31, 1995
Total revenues for the quarter ended October 31, 1996 were $8,782,637, a
24.0% increase from the $7,082,840 reported for the quarter ended October 31,
1995. This increase is attributable mainly to an increase in underwriting
activity. Trading revenue was down $483,244 (7.8%) from the third quarter last
year. Retail services revenue was down, decreasing 28.0% from $681,311 to
$490,487. There was an increase of $2,148,068 (1,227.6%) in underwriting
revenue, due to increased activity, and an increase of $225,797 (338.4%) in
interest and other revenue.
Clearing charges decreased from $1,191,066 to $1,182,951, a change of
96.3%.
Compensation and benefits increased from $3,661,582 to $3,855,793,
representing an increase of 5.3%.
Legal and professional fees decreased from $125,528 to $538,231, a change
of 328.8%, due mainly to the increase in underwriting activity.
Rent and office expense increased from $818,121 to $1,356,297 an increase
of 65.8%, due to the Company's recent move and expansion into new offices.
Other expenses increased from $686,299 to $953,923, an increase of
39.0%, due mainly to increases in depreciation expense, also due to the
Company's recent move and expansion.
Viability of Operating Results
The Company, like other securities firms, is directly affected
by general economic conditions and market conditions, including fluctuations
in volume and price levels of securities, changes in levels of interest rates
and demand for the Company's investment banking services. All of these factors
have an impact on the Company's net gain from securities transactions,
underwriting, and commission revenues. In periods of reduced market activity,
profitability is adversely affected because certain expenses, consisting
primarily of non-officer compensation and benefits, communications and
occupancy and equipment remain relatively fixed.
Liquidity and Capital Resources
The Company's statements of financial position reflect a liquid financial
position as cash and assets readily convertible to cash represent 84% and 90% of
total assets at October 31, 1996 and October 31, 1995 respectively.
The Company finances its operations primarily with existing capital, and
funds generated from operations. The Company believes that existing capital and
cash flow from operations will be sufficient to meet its cash requirements.
M. H. Meyerson & Co., Inc.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Index of Exhibits as required by Item 601 of Regulation S-B.
Exhibit Number Description of Exhibit
11 Calculation of Earnings per
Share of the Company pg. 9
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Company during the quarter
ended October 31, 1996.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
M. H. MEYERSON & CO., INC.
(registrant)
Date: Dec. 5, 1996 By: /s/ Michael Silvestri
Michael Silvestri
President and Chief Operating Officer
Date: Dec. 5, 1996 By: /s/ Eugene M. Whitehouse
Eugene M. Whitehouse
Vice President and Controller
M. H. Meyerson & Co., Inc.
Exhibit 11
Statement of Earnings Per Share
The earnings per share during the periods presented were calculated as follows:
Nine months ended October 31, 1996
Shares outstanding during the nine months ended October 31, 1996
4,983,335 shares from February 1 to May 7, 1996 97 days 483,383,495
4,993,335 shares from May 8 to October 31, 1996 177 days 883,820,295
1,367,203,790
1,367,203,790 shares divided by 274 days = 4,989,795 average shares
Equivalent shares using the modified treasury stock method:
268,000 options, exercise price $1.00 268,000 1.0000 268,000
205,000 options, exercise price $1.10 205,000 1.1000 225,500
200,000 options, exercise price $2.1875 200,000 2.1875 437,500
90,000 options, exercise price $2.25 90,000 2.2500 202,500
Less shares assumed to be purchased (348,769) (1,133,500)
Total 414,231 0
Total weighted average outstanding shares: 5,404,026
Earnings, nine months ended October 31, 1996: $2,447,212/5,404,026 = $0.45
Nine months ended October 31, 1995
Shares outstanding during the nine months ended October 31, 1995:
5,256,135 shares from February 1 to April 24, 1995 83 days 436,259,205
5,221,135 shares from April 25 to May 9, 1995 15 days 78,317,025
5,215,135 shares from May 10 to May 11, 1995 2 days 10,430,270
5,145,135 shares from May 12 to July 24, 1995 74 days 380,739,990
5,128,935 shares from July 25 to July 25, 1995 1 day 5,128,935
5,023,935 shares from July 26 to August 2, 1995 8 days 40,191,480
5,008,335 shares from August 3 to October 31, 1995 90 days 450,750,150
1,401,817,055
1,401,817,055 shares divided by 273 days = 5,134,861 average shares outstanding
Equivalent shares using the modified treasury stock method:
175,500 options, exercise price $1.00 175,500 1.0000 175,500
205,000 options, exercise price $1.10 205,000 1.1000 225,500
Less shares assumed to be purchased (194,424) (401,000)
Total 186,096 0
Total weighted average outstanding shares: 5,320,937
Earnings, nine months ended October 31, 1995: $401,926/5,320,937 = $0.075
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