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, 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: 5,035,335
<PAGE>
M. H. Meyerson & Co., Inc.
Index
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Statements of financial condition, July 31, 1997 and 1996. . . 1
Statements of operations, three and six months ended
July 31, 1997 and 1996. . . . . . . . . . . . . . . . . . 2
Statement of changes in stockholders' equity
six months ended July 31, 1997. . . . . . . . . . . . . . 3
Statement of cash flows, six months ended
July 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>
<S> <C> <C>
July 31, July 31,
1997 1996
CURRENT ASSETS
Due from clearing brokers -
available for immediate withdrawal $ 5,248,592 $ 13,535,074
Cash at banks and on hand 733,030 977,883
Securities - trading - long at market 11,660,471 10,382,231
Other current assets 1,192,815 282,780
18,834,908 25,177,968
Investments 810,253 524,855
Fixed assets net of accumulated depreciation 1,658,092 1,270,681
$ 21,303,253 $ 26,973,504
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Securities - trading - short at market $ 3,781,963 $ 5,551,899
Sales commission payable 2,964,764 4,948,291
Other liabilities and accrued items 1,808,504 2,440,593
8,555,231 12,940,783
STOCKHOLDERS' EQUITY
Common stock 50,353 49,933
Additional paid-in capital 7,795,377 7,753,797
Loans to officers for purchase of Company
Stock 0 (30,000)
Retained earnings 4,902,292 6,258,991
12,748,022 14,032,721
$ 21,303,253 $ 26,973,504
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
M. H. Meyerson & Co., Inc.
Condensed Statements of Operations
Three and Six Months Ended July 31,
(Unaudited)
<S> <C> <C> <C> <C>
Three months ended Six months ended
July 31, July 31,
1997 1996 1997 1996
REVENUE
Trading profit $4,977,444 $13,572,092 $8,292,020 $22,349,235
Commission 543,308 643,654 1,201,259 1,211,250
Underwriting 1,634,810 1,024,879 1,794,710 2,096,299
Interest and other 113,913 115,453 152,584 74,068
7,269,475 15,356,078 11,440,573 25,730,852
EXPENSES
Clearing charges 1,313,359 2,278,967 2,748,707 3,652,180
Salesmens' draw &
commissions 2,897,438 5,839,445 3,335,762 9,767,930
Other personnel costs 1,163,052 2,205,284 2,602,722 3,858,950
Rent and office 1,163,098 1,201,778 2,235,280 2,263,439
Legal and professional 243,993 330,951 439,505 552,044
Interest expense 0 0 0 0
Other expenses 1,043,448 1,263,984 2,044,135 2,312,474
7,824,388 13,120,409 13,406,111 22,407,017
Income(loss) before
income taxes (554,913) 2,235,669 (1,965,538) 3,323,835
Income taxes (190,754) 927,056 (728,959) 1,383,751
Net income(loss) $(364,159) $1,308,613 $(1,236,579) $1,940,084
Earnings(loss) per
common share $(0.07) $0.24 $(0.25) $0.36
Weighted average number
of shares 5,034,139 5,396,454 5,021,445 5,391,885
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
M. H. Meyerson & Co., Inc.
Statement of Changes in Shareholders' Equity
(Unaudited)
Six Months ended July 31, 1997
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 (1,236,579)
Exercise of employee stock option 420 41,580
Shareholders' Equity, July 31, 1997 $ 50,353 $ 7,795,377 $ 4,902,292
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
M. H. Meyerson & Co., Inc.
Statement of Cash Flows
(Unaudited)
Six Months ended July 31,
<S> <C> <C>
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net income(loss) $(1,236,579) $1,940,084
Adjustments to reconcile net income to net cash
provided by (used in) operating activities
Depreciation 180,334 302,017
Change in assets and liabilities
(Increase) decrease in:
Receivable from clearing brokers (2,228,645) (5,202,488)
Securities owned 1,875,573 (1,614,406)
Other current assets 309,521 (25,760)
Increase (decrease) in:
Securities sold but not
yet purchased 288,250 2,681,683
Sales commission payable (1,706,775) 1,381,938
Other liabilities and accrued 214,056 1,552,314
Net cash provided by (used in)
operating activities (2,304,265) 1,015,382
CASH FLOWS FROM INVESTING ACTIVITIES
Investments 888,832 (7,781)
Fixed assets (77,838) (885,815)
Net cash provided by (used in)
investing activities 810,994 (893,596)
CASH FLOWS FROM FINANCING ACTIVITIES
Exercise of Employee Stock Option 42,000 10,000
Repayments of loans to officers 0 27,500
Net cash provided by (used in)
financing activities 42,000 37,500
NET INCREASE (DECREASE) IN CASH (1,451,271) 159,286
CASH, BEGINNING OF PERIOD 2,184,301 818,597
CASH, END OF PERIOD $733,030 $977,883
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid $0 $677,300
Interest paid $0 $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 July 31, 1997 and 1996, the
statements of operations for the three months and six months ended July 31, 1997
and 1996, the statement of changes in stockholders' equity for the six month
period ended July 31, 1997, and the statement of cash flows for the six months
ended July 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 July 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 six months ended July 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 July 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
Six Months Ended July 31,
1997 1996
Net gain on securities transactions 72.5 86.9
Commissions 10.5 4.7
Underwriting 15.7 8.1
Interest and other 1.3 0.3
100.0 100.0
Clearing charges 24.0 14.2
Compensation and benefits 51.9 53.0
Rent and office 19.5 8.8
Professional fees 3.8 2.1
Interest and other operating expenses 18.0 9.0
Total expenses 117.2 87.1
Income(loss) before income taxes (17.2) 12.9
Provision for income taxes (6.4) 5.4
Net Income(loss) (10.8) 7.5
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 July 31, 1997 compared with Quarter Ended July 31, 1996
Total revenues for the quarter ended July 31, 1997 were $7,269,475, a 52.7%
decrease from the $15,356,078 reported for the quarter ended July 31, 1996. This
decrease is attributable mainly to decreased trading volume and profitability,
due to unstable and volatile markets. Retail services revenue was down,
decreasing 15.6% from $643,654 to $543,308.
<PAGE>
Clearing charges decreased from $2,278,967 to $1,313,359, a change of 42.4%
This is attributable to the decrease in the Company's trading volume.
Compensation and benefits decreased from $8,044,729 to $4,060,490,
representing a decrease of 49.5%. This was also the result of the decreased
trading volume during the second quarter of fiscal 1997, which decreases 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 83% and 92% of
total assets at July 31, 1997 and July 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>
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 a report on Form 8-K during the second quarter of
fiscal year 1998, announcing the resignation of Linda Antosiewicz from the
Company's Board of Directors.
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:
August 26, 1997 /s/ Michael Silvestri
Michael Silvestri
President and Chief Operating Officer
Date: By:
August 26, 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:
Six months ended July 31, 1996
Shares outstanding during the six months ended July 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 July 31, 1996 85 days 424,433,475
907,816,970
907,816,970 shares divided by 182 days = 4,988,005 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
60,000 options, exercise price $2.25 60,000 2.2500 135,000
50,000 options, exercise price $2.375 50,000 2.3750 118,750
Less shares assumed to be purchased: (379,120) (1,184,750)
403,880 0
Total weighted average outstanding shares: 5,391,885
Earnings, six months ended July 31, 1996: $1,940,084/5,391,885 = $0.36
Six months ended July 31, 1997
Shares outstanding during the six months ended July 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 July 31, 1997 70 days 352,473,450
181 days 908,881,635
908,881,635 shares divided by 181 days = 5,021,445 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> JUL-31-1997
<CASH> 733030
<RECEIVABLES> 5248592
<SECURITIES-RESALE> 0
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<INSTRUMENTS-OWNED> 11660471
<PP&E> 1658092
<TOTAL-ASSETS> 21303253
<SHORT-TERM> 0
<PAYABLES> 4773268
<REPOS-SOLD> 0
<SECURITIES-LOANED> 0
<INSTRUMENTS-SOLD> 3781963
<LONG-TERM> 0
0
0
<COMMON> 50353
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<TOTAL-LIABILITY-AND-EQUITY> 21303253
<TRADING-REVENUE> 4977444
<INTEREST-DIVIDENDS> 0
<COMMISSIONS> 543308
<INVESTMENT-BANKING-REVENUES> 1634810
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<NET-INCOME> (364159)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
