U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1998
[ ] 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: 5,055,335 at May 20, 1998.
<PAGE>
M. H. Meyerson & Co., Inc.
Index
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Statements of financial condition, April 30, 1998 and
January 31, 1998 . . . . . . . . . . . . . . . . . . . . . . .1
Statements of operations, three months ended
April 30, 1998 and 1997 . . . . . . . . . . . . . . . . . . . 2
Statement of changes in stockholders' equity
three months ended April 30, 1998 . . . . . . . . . . . . . . 3
Statement of cash flows, three months ended
April 30, 1998 and 1997 . . . . . . . . . . . . . . . . . . . 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>
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements
M. H. Meyerson & Co., Inc.
Statement of Financial Condition
(Unaudited)
<TABLE>
<CAPTION>
April 30, January 31,
1998 1998
<S> <C> <C>
CURRENT ASSETS
Due from clearing brokers -
available for immediate
withdrawal $ 5,321,959 $ 4,106,384
Cash and cash equivalents 769,106 1,433,126
Securities - trading - long at
market 13,602,819 13,539,455
Other current assets 1,218,208 1,463,921
20,912,092 20,542,886
Investments 1,425,951 2,348,421
Fixed assets net of accumulated
depreciation 1,568,587 1,635,600
$ 23,906,630 $ 24,526,907
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Securities - trading - short at
market $ 5,963,402 $ 3,474,601
Payable to clearing brokers 0 2,868,462
Sales commission payable 2,887,760 2,756,111
Other liabilities and accrued
items 504,306 1,150,097
9,355,468 10,249,271
SUBORDINATED LOAN 2,000,000 2,000,000
STOCKHOLDERS' EQUITY
Common stock 50,553 50,478
Additional paid-in capital 7,815,177 7,807,752
Retained earnings 4,685,432 4,419,406
12,551,162 12,277,636
$ 23,906,630 $ 24,526,907
</TABLE>
See notes to financial statements
<PAGE>
M. H. Meyerson & Co., Inc.
Condensed Statements of Operations
Three Months Ended April 30,
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
REVENUE
Trading profit $ 7,535,659 $ 3,314,576
Commission 322,629 657,951
Underwriting 350,388 159,900
Interest & Other 53,739 38,671
8,262,415 4,171,098
EXPENSES
Clearing charges 1,724,721 1,435,348
Salesmen's draw & commissions 2,024,947 438,324
Other personnel costs 1,627,517 1,441,669
Rent and office expenses 1,189,687 1,072,182
Legal and professional fees 182,073 195,513
Interest expense 40,000 0
Other expenses 1,046,117 998,686
7,835,062 5,581,722
Income(loss) before income taxes 427,353 (1,410,624)
Income tax expense(benefit) 161,328 (538,205)
Net income(loss) $ 266,025 $ (872,419)
Basic Earnings(loss) per common share $ 0.05 $ (0.17)
Diluted Earnings(loss) per common share $ 0.05 $ (0.17)
Weighted average number of shares 5,055,335 5,008,324
Diluted weighted average number of shares 5,250,978 5,008,324
</TABLE>
See notes to financial statements
<PAGE>
M. H. Meyerson & Co., Inc.
Statement of Changes in Shareholders' Equity
(Unaudited)
Three Months ended April 30, 1998
<TABLE>
<CAPTION>
COMMON ADDITIONAL
STOCK PAID-IN RETAINED
$.01 PAR CAPITAL EARNINGS
VALUE
<S> <C> <C> <C>
SHAREHOLDERS' EQUITY
FEBRUARY 1, 1998 $ 50,478 $ 7,807,752 $ 4,419,406
Net income for quarterly
period 266,025
Options exercised 75 7,425
SHAREHOLDERS' EQUITY
APRIL 30, 1998 $ 50,553 $ 7,815,177 $ 4,685,431
</TABLE>
See notes to financial statements
<PAGE>
M. H. Meyerson & Co., Inc.
Statement of Cash Flows
(Unaudited)
Three Months ended April 30,
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income(loss) $ 266,025 $ (872,419)
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation 87,957 90,998
Change in assets and liabilities
(Increase) decrease in:
Receivable from clearing brokers (1,215,575) 302,218
Securities owned (63,364) 281,831
Other current assets 245,713 (957,510)
Increase (decrease) in:
Securities sold, but not yet purchased 2,488,802 47,150
Payable to clearing brokers (2,868,462) 387,500
Sales commission payable 131,649 (1,447,897)
Other liabilities and accrued items (645,791) 200,154
Net cash provided by (used in)
operating activities (1,573,046) (1,967,975)
CASH FLOWS FROM INVESTING ACTIVITIES
Investments 922,470 1,023,470
Fixed assets (20,944) (161,712)
Net cash provided by (used in)
investing activities 901,526 861,758
CASH FLOWS FROM FINANCING ACTIVITIES
Options exercised 7,500 37,000
Net cash provided by financing activities 7,500 37,000
NET INCREASE (DECREASE) IN CASH (664,020) (1,069,217)
CASH, BEGINNING OF PERIOD 1,433,126 2,184,301
CASH, END OF PERIOD $769,106 $1,115,084
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid $ 0 $ 0
Interest paid $ 40,000 $ 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 statement of financial condition as of April 30, 1998, the
statements of operations for the three months ended April 30, 1998
and 1997, the statement of changes in stockholders' equity for the
quarterly period ended April 30, 1998, and the statement of cash
flows for the three months ended April 30, 1998 and April 30, 1997
have been prepared by the Company without audit. The statement of
financial condition as of January 31, 1998 has been audited. 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 April
30, 1998 and April 30, 1997 have been made.
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, 1998 Annual Report to
Shareholders. The results of the periods ended April 30, 1998 and
1997 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.
Note 3. Net Capital Requirements
As a registered broker-dealer, the Company is subject to the
requirements of Rule 15c3-1 (the net capital rule) under the
Securities Act of 1934. The object of the rule is to require the
broker-dealer to have at all times sufficient liquid assets to cover
its current indebtedness. Specifically, the rule prohibits a broker-
dealer from permitting its "aggregate indebtedness" from exceeding
fifteen times its net capital as those terms are defined.
On April 30, 1998, the Company's aggregate indebtedness and net
capital were $3,392,066 and $8,324,603 respectively, a ratio of 0.41
to 1.00.
<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.
Certain statements set forth in the Company's Quarterly Report on Form 10-Q
for the quarter ended April 30, 1998 constitute forward looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
are subject to the safe harbor created by such section. Certain factors that
could cause results to differ materially from those described in the forward
looking statements are described in Item 2 - Management's Discussion and
Analysis of Results of Operations and elsewhere as appropriate. This Quarterly
Report on Form 10-Q, including the Statements of Financial Condition and the
notes thereto, should be read in its entirety for a complete understanding.
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
Quarter Ended April 30,
1998 1997
Net gain on securities transactions. . . . . . . 91.2 79.5
Commissions. . . . . . . . . . . . . . . . . . . 3.9 15.8
Underwriting . . . . . . . . . . . . . . . . . . 4.2 3.8
Interest and other . . . . . . . . . . . . . . . 0.7 0.9
100.0 100.0
Clearing charges . . . . . . . . . . . . . . . . 20.9 34.4
Compensation and benefits. . . . . . . . . . . . 44.2 45.1
Rent and office. . . . . . . . . . . . . . . . . 14.4 25.7
Professional fees. . . . . . . . . . . . . . . . 2.2 4.7
Interest and other operating expenses. . . . . . 13.1 23.9
Total expenses . . . . . . . . . . . . . . . . . 94.8 133.8
Income(loss) before income taxes . . . . . . . . 5.2 (33.8)
Provision for income tax expense(benefit) . . . 2.0 (12.9)
Net income(loss) . . . . . . . . . . . . . . . . .3.2 (20.9)
<PAGE>
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 April 30, 1998 compared with Quarter Ended April 30, 1997
Total revenues for the quarter ended April 30, 1997 were $8,262,415, a 98%
increase from the $4,171,098 reported for the quarter ended April 30, 1997.
This decrease is attributable mainly to an increase in trading volume, mainly
due to volatile markets, and a small increase in underwriting activity. Retail
services revenue was down, decreasing 51% from $657,951 to $322,629.
Clearing charges increased from $1,435,348 to $1,724,721, a change of 20%,
due to the increased trading volume during the quarter.
Compensation and benefits increased from $1,879,993 to $3,652,464,
representing an increase of 94%. This corresponds to the increase in revenue,
as a large portion of compensation expense is tied to percentages of profits in
trading accounts.
Interest expense is due to a subordinated loan, which was effective on
August 1, 1997.
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-
commission 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 87% and 84%
of total assets at April 30, 1998 and April 30, 1997 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.
Year 2000
The Company's internal accounting systems and the computers that run these
systems have been audited and it has been confirmed that we do not expect them
to be affected by the year 2000 bug'. The Company's trading and customer
transaction systems are supplied and managed by our clearing brokers and outside
independent vendors. The Company is in the process of assessing what steps it
must take to avoid being indirectly affected by potential year 2000 problems
occurring in the systems of clearing brokers and other outside vendors. The
Company does not expect to incur any significant expenditures related to year
2000 problems with its primary information systems. However, any failure by the
Company's clearing organization or other outside vendors to adequately address
the date change could have material adverse effect on the Company's financial
condition and operations.
<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
27 Financial Data Schedule (1)
(1) Filed with EDGAR filing of this report on Form 10-Q.
(b) Reports on Form 8-K:
The Company did not file any reports on Form 8-K during the first
quarter of fiscal year 1999.
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: 5/29/98 By: /s/ Michael Silvestri
Michael Silvestri
President and Chief Operating Officer
Date: 5/29/98 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:
Three months ended April 30, 1998
Shares outstanding during the three months ended April 30, 1998:
5,047,835 shares from 2/1/98 to 2/25/98 25 days 126,195,875
5,055,335 shares from 2/26/98 to 4/30/98 64 days 323,541,440
89 days 449,737,315
449,737,315 / 89 days = 5,053,228 weighted average shares outstanding.
Equivalent shares using the modified treasury stock method
Shares assumed sold: 211,000 $1.00 $211,000
205,000 $1.10 225,500
Shares assumed purchased: (218,250) $2.00 (436,500)
Total: 197,750 0
Total weighted average outstanding shares: 5,250,978
Net income - three months ended April 30, 1998 = $266,025.10
$266,025.10 / 5,250,978 = $0.05 earnings per diluted share.
Three months ended April 30, 1997
Shares outstanding during the three months ended April 30, 1997:
4,993,335 shares from 2/1/97 to 2/12/97 12 days 59,920,020
4,995,335 shares from 2/13/97 to 2/27/97 15 days 74,930,025
5,000,335 shares from 2/28/97 to 4/1/97 33 days 165,011,055
5,030,335 shares from 4/2/97 to 4/30/97 29 days 145,879,715
89 days 445,740,815
445,740,815 / 89 days = 5,008,324 weigted 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-Q and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-END> APR-30-1998
<CASH> 769106
<RECEIVABLES> 5321959
<SECURITIES-RESALE> 0
<SECURITIES-BORROWED> 0
<INSTRUMENTS-OWNED> 13602819
<PP&E> 1568587
<TOTAL-ASSETS> 23906630
<SHORT-TERM> 0
<PAYABLES> 2887760
<REPOS-SOLD> 0
<SECURITIES-LOANED> 0
<INSTRUMENTS-SOLD> 5963402
<LONG-TERM> 2000000
0
0
<COMMON> 50553
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 23906630
<TRADING-REVENUE> 7535659
<INTEREST-DIVIDENDS> 53739
<COMMISSIONS> 322629
<INVESTMENT-BANKING-REVENUES> 350388
<FEE-REVENUE> 0
<INTEREST-EXPENSE> 40000
<COMPENSATION> 3652464
<INCOME-PRETAX> 427353
<INCOME-PRE-EXTRAORDINARY> 427353
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 266025
<EPS-PRIMARY> 0.05
<EPS-DILUTED> 0.05
</TABLE>
