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 October 31, 1997
[ ] 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.)
Newport Tower, 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)
Not Applicable
(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: 5,042,835
<PAGE>
M. H. Meyerson & Co., Inc.
Index
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Statements of financial condition, October 31, 1997 and 1996 . 1
Statements of operations, three and nine months ended
October 31, 1997 and 1996 . . . . . . . . . . . . . . . . 2
Statement of changes in stockholders' equity
nine months ended October 31, 1997. . . . . . . . . . . . 3
Statement of cash flows, nine months ended
October 31, 1997 and 1996 . . . . . . . . . . . . . . . . 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
<PAGE>
M. H. Meyerson & Co., Inc.
Statement of Financial Condition
(Unaudited)
<TABLE>
<CAPTION>
October 31, October 31,
1997 1996
<S> <C> <C>
CURRENT ASSETS
Due from clearing brokers -
available for immediate withdrawal $ 7,394,028 $ 9,482,864
Cash at banks and on hand 1,484,846 2,320,763
Securities - trading - long at market 14,571,843 10,458,248
Other current assets 1,058,412 1,575,936
24,509,129 23,837,811
Investments 1,090,421 804,804
Fixed assets net of accumulated depreciation 1,727,071 1,786,450
$ 27,326,621 $ 26,429,065
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Securities - trading - short at market $ 4,797,808 $ 5,747,266
Sales commission payable 5,090,358 4,320,829
Other liabilities and accrued items 2,287,184 1,791,121
12,175,350 11,859,216
SUBORDINATED LIABILITY 2,000,000 0
STOCKHOLDERS' EQUITY
Common stock 50,428 49,933
Additional paid-in capital 7,802,802 7,753,797
Retained earnings 5,298,041 6,766,119
13,151,271 14,569,849
$ 27,326,621 $ 26,429,065
</TABLE>
See notes to financial statements
<PAGE>
M. H. Meyerson & Co., Inc.
Condensed Statements of Operations
Three and Nine Months Ended October 31,
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
October 31, October 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
REVENUE
Trading profit $9,241,365 $ 5,676,574 $17,533,385 $28,025,809
Commission 442,692 490,487 1,643,952 1,701,738
Underwriting 723,975 2,323,056 2,518,685 4,419,355
Interest and other 548,868 292,520 701,451 366,587
10,956,900 8,782,637 22,397,473 34,513,489
EXPENSES
Clearing charges 1,913,505 1,182,951 4,662,212 4,835,131
Salesmens' draw &
commissions 4,254,299 2,057,001 7,590,061 11,824,931
Other personnel costs 1,479,641 1,798,792 4,084,362 5,657,741
Rent and office 1,363,973 1,356,297 3,599,253 3,619,736
Legal and professional 227,222 538,231 666,727 1,090,275
Interest expense 40,000 0 40,000 0
Other expenses 986,632 953,923 3,028,767 3,266,399
10,265,272 7,887,195 23,671,382 30,294,213
Income(loss) before
income taxes 691,628 895,442 (1,273,909) 4,219,276
Income taxes 295,880 388,313 (433,079) 1,772,064
Net income(loss) $ 395,748 $ 507,129 $ (840,830) $2,447,212
Earnings(loss) per
common share $ 0.07 $0.09 $(0.17) $0.45
Weighted average number
of shares* 6,718,008 5,407,566 5,028,297 5,404,026
</TABLE>
*Fully diluted average shares is computed giving effect to the potential
exercise of the Company's exercisable outstanding options and warrants, using
the modified treasury stock method, except where such calculation would be anti-
dilutive.
See notes to financial statements
<PAGE>
M. H. Meyerson & Co., Inc.
Statement of Changes in Shareholders' Equity
(Unaudited)
Nine Months ended October 31, 1997
<TABLE>
<CAPTION>
Common Stock
Stock $0.01 Additional Retained
Par Value Paid-in-capital Earnings
<S> <C> <C> <C>
Shareholders' Equity, February 1, 1997 $ 49,933 $ 7,753,797 $ 6,138,871
Net income(loss) for period (840,830)
Exercise of employee stock option 495 49,005
Shareholders' Equity, October 31, 1997 $ 50,428 $ 7,802,802 $5,298,041
</TABLE>
See notes to financial statements
<PAGE>
M. H. Meyerson & Co., Inc.
Statement of Cash Flows
(Unaudited)
Nine Months ended October 31,
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income(loss) $( 840,830) $2,447,212
Adjustments to reconcile net income to net cash
provided by (used in) operating activities
Depreciation 273,138 398,470
Change in assets and liabilities
(Increase) decrease in:
Receivable from clearing brokers (4,374,081) (1,150,278)
Securities owned (1,035,799) (1,690,423)
Other current assets 443,924 (1,132,063)
Increase (decrease) in:
Securities sold but not
yet purchased 1,304,095 2,877,049
Sales commission payable 418,819 754,476
Other liabilities and accrued 692,737 902,843
Net cash provided by (used in)
operating activities (3,117,997) 3,407,286
CASH FLOWS FROM INVESTING ACTIVITIES
Investments 608,663 (474,583)
Fixed assets (239,621) (1,498,037)
Net cash provided by (used in)
investing activities 369,042 (1,972,620)
CASH FLOWS FROM FINANCING ACTIVITIES
Exercise of Employee Stock Option 49,500 10,000
Repayments of loans to officers 0 57,500
Subordinated Loan 2,000,000 0
Net cash provided by (used in)
financing activities 2,049,500 67,500
NET INCREASE (DECREASE) IN CASH ( 699,455) 1,502,166
CASH, BEGINNING OF PERIOD 2,184,301 818,597
CASH, END OF PERIOD $1,484,846 $2,320,763
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid $0 $910,000
Interest paid $13,333 $0
</TABLE>
See notes to financial statements
<PAGE>
M. H. Meyerson & Co., Inc.
Notes to Financial Statements
(Unaudited)
Note 1. Presentation of Financial Statements
The statements of financial condition as of October 31, 1997 and 1996,
the statements of operations for the three months and nine months ended October
31, 1997 and 1996, the statement of changes in stockholders' equity for the nine
month period ended October 31, 1997, and the statement of cash flows for the
nine months ended October 31, 1997 and 1996 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, 1997 and 1996
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, 1997
and 1996 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, 1997 Annual Report to
Shareholders. The results of the periods ended October 31, 1997 and 1996 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.
<PAGE>
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,
1997 1996
Net gain on securities transactions 78.3 81.2
Commissions 7.3 4.9
Underwriting 11.3 12.8
Interest and other 3.1 1.1
100.0 100.0
Clearing charges 20.8 14.0
Compensation and benefits 52.1 50.7
Rent and office 16.1 10.5
Professional fees 3.0 3.1
Interest and other operating expenses 13.7 9.5
Total expenses 105.7 87.8
Income(loss) before income taxes (5.7) 12.2
Provision for income taxes (1.9) 5.1
Net Income(loss) (3.8) 7.1
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, 1997 compared with Quarter Ended October 31, 1996
Total revenues for the quarter ended October 31, 1997 were $10,956,900, a
24.8% increase from the $8,782,637 reported for the quarter ended October 31,
1996. This increase is attributable mainly to an increase in trading volume,
partially offset by a decrease of 68.8%, or $1,599,091 in underwriting revenue.
Retail services revenue was down, decreasing 9.7% from $490,487 to $442,692.
<PAGE>
Clearing charges increased from $1,182,951 to $1,913,505, a change of
61.8%. This is attributable to the increase in the Company's trading volume.
Compensation and benefits increased from $3,855,793 to $5,733,940,
representing an increase of 48.7%. This was also the result of the increased
trading volume during the third quarter of fiscal 1998, which increases those
costs based on percentages of profits in trading accounts.
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 86% and 84% of
total assets at October 31, 1997 and October 31, 1996 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.
<PAGE>
<PAGE>
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:
The Company filed no reports on Form 8-K during the third quarter of
fiscal year 1998.
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: By:
December 8, 1997 /s/ Michael Silvestri
Michael Silvestri
President and Chief Operating Officer
Date: By:
December 8, 1997 /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:
Shares
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 total shares divided by 274 total days = 4,989,795 average shares
outstanding.
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)
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
<PAGE>
<PAGE>
Nine months ended October 31, 1997
Shares outstanding during the nine months ended October 31, 1997:
4,993,335 shares from February 1 to February 12, 1997 12 days 59,920,020
4,995,335 shares from February 13 to February 27, 1997 15 days 74,930,025
5,000,335 shares from February 28 to April 1, 1997 33 days 165,011,055
5,030,335 shares from April 2 to May 22, 1997 51 days 256,547,085
5,035,335 shares from May 23 to August 13, 1997 83 days 417,932,805
5,042,835 shares from August 14 to October 31, 1997 79 days 398,383,965
273 days 1,372,724,955
1,372,724,955 total shares divided by 273 total days = 5,028,297 average shares
outstanding.
Calculation of equivalent shares would be anti-dilutive.
<TABLE> <S> <C>
<ARTICLE> BD
<LEGEND>
This schedule contains summary financial information extracted from SEC
Form 10-QSB and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> OCT-31-1997
<CASH> 1484846
<RECEIVABLES> 7394028
<SECURITIES-RESALE> 0
<SECURITIES-BORROWED> 0
<INSTRUMENTS-OWNED> 14571843
<PP&E> 1727071
<TOTAL-ASSETS> 27326621
<SHORT-TERM> 0
<PAYABLES> 5090358
<REPOS-SOLD> 0
<SECURITIES-LOANED> 0
<INSTRUMENTS-SOLD> 4797808
<LONG-TERM> 2000000
0
0
<COMMON> 50428
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 27326621
<TRADING-REVENUE> 9241365
<INTEREST-DIVIDENDS> 548868
<COMMISSIONS> 442692
<INVESTMENT-BANKING-REVENUES> 723975
<FEE-REVENUE> 0
<INTEREST-EXPENSE> 40000
<COMPENSATION> 5733940
<INCOME-PRETAX> 691628
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 395748
<EPS-PRIMARY> .08
<EPS-DILUTED> .07
</TABLE>
