SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 0-6729
FIRST MONTAUK FINANCIAL CORP.
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(Exact name of registrant as specified in its charter)
New Jersey 22-1737915
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Parkway 109 Office Center, 328 Newman Springs Rd., Red Bank, NJ 07701
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (732) 842-4700
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Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the Registrant (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.
Yes X No
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8,525,284 Common Shares, no par value, were outstanding as of August 14,
2002.
Page 1 of 13
FIRST MONTAUK FINANCIAL CORP.
FORM 10-Q
JUNE 30, 2002
INDEX
Page
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Statements of Financial Condition
as of June 30, 2002 and December 31, 2001.................. 3
Consolidated Statements of Loss for the Three months and
Six Months Ended June 30, 2002 and 2001.................... 4
Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 2002 and 2001 ................... 5
Notes to Financial Statements ............................. 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ................. 8-10
Item 3. Market Risk ...........................................11
PART II. OTHER INFORMATION:
Item 4. Submission of Matters to a Vote of Security-Holders ...12
Item 5. Other Information..................................... 12
Item 6. Exhibits and Reports on Form 8-K...................... 12
Signatures .................................................... 13
FIRST MONTAUK FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, December 31,
2002 2001
ASSETS
Cash and cash equivalents $ 940,714 $ 1,779,554
Due from clearing firm 5,051,896 4,146,410
Trading and investment account securities 977,346 1,199,102
Employee and broker receivables 1,680,978 2,105,620
Due from officers 233,031 202,964
Property and equipment - net 1,497,237 1,631,801
Income tax refund receivable 72,761 1,069,442
Deferred income taxes - net 930,000 930,000
Other assets 1,018,663 1,162,669
------------------------ ------------------------
Total assets $ 12,402,626 $ 14,227,562
======================== ========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deferred income $ 4,501,558 $ 4,783,333
Securities sold, but not yet purchased, at market 82,172 245,078
Notes payable 132,481 277,376
Commissions payable 3,810,174 3,647,170
Accounts payable 729,473 490,842
Accrued expenses 1,507,370 1,434,885
Capital leases payable 445,594 542,210
Other liabilities 236,883 513,987
------------------------ ------------------------
Total liabilities 11,445,705 11,934,881
------------------------ ------------------------
Temporary equity - stock subject to redemption 6,500 6,500
Commitments and contingencies (See Notes)
Stockholders' equity
Preferred Stock, 4,375,000 shares authorized, $.10 par
value, no shares issued and outstanding
respectively; stated at liquidation value - -
Series A Convertible Preferred Stock, 625,000 shares authorized,
$.10 par value, 331,190 and 331,190 shares issued and outstanding,
respectively; liquidation preference: $1,655,590 33,119 33,119
Common Stock, no par value, 30,000,000 shares
authorized, 8,522,284 shares issued and outstanding, 3,434,642 3,434,642
Additional paid-in capital 3,950,544 3,950,542
Accumulated deficit (6,394,529) (5,076,055)
Less: Deferred compensation (48,339) (56,067)
Less: Treasury stock, at cost (100,000 and -0-
shares, respectively) (25,016) -
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Total stockholders' equity 950,421 2,286,181
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Total liabilities and stockholders' equity $ 12,402,626 $ 14,227,562
========================= ========================
See notes to financial statements.
FIRST MONTAUK FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF LOSS
Six months ended June 30, Three months ended June 30,
2002 2001 2002 2001
Revenues:
Commissions $ 20,114,309 $ 19,883,033 $ 10,430,603 $ 11,113,406
Principal transactions 3,630,583 4,002,077 1,510,044 2,200,622
Investment banking 103,020 357,509 39,985 322,262
Interest and other income 1,777,285 2,078,465 896,097 972,247
-------------- ------------- ------------- --------------
25,625,197 26,321,084 12,876,729 14,608,537
-------------- ------------- ------------- --------------
Expenses:
Commissions, employee compensation and benefits 21,309,105 21,532,140 10,831,326 12,012,905
Clearing and floor brokerage 1,367,085 1,704,312 686,171 846,481
Communications and occupancy 1,554,198 1,456,014 877,913 778,114
Legal matters and related costs 639,941 776,943 372,785 428,318
Other operating expenses 1,969,017 2,887,129 1,059,927 1,662,845
Interest 54,645 74,909 21,739 33,169
-------------- ------------- ------------- --------------
26,893,991 28,431,447 13,849,861 15,761,832
-------------- ------------- ------------- --------------
Loss before income tax benefit (1,268,794) (2,110,363) (973,132) (1,153,295)
Income tax benefit - (707,790) - (370,174)
-------------- ------------- ------------- --------------
Net loss $ (1,268,794) $ (1,402,573) $ (973,132) $ (783,121)
============== ============= ============= ==============
Net loss applicable to common stockholders $ (1,318,473) $ (1,450,878) $ (997,971) $ (807,961)
============== ============= ============= ==============
Per share of Common Stock:
Basic and diluted $ (0.15) $ (0.17) $ (0.12) $ (0.09)
============== ============= ============= ==============
Number of common shares used in
basic and diluted loss per share 8,579,173 8,775,042 8,534,075 8,770,064
============== ============= ============= ==============
See notes to financial statements.
FIRST MONTAUK FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended June 30,
2002 2001
NCREASE (DECREASE) IN CASH
Cash flows from operating activities:
Net loss $ (1,268,794) $ (1,402,573)
------------- --------------
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 259,290 313,727
Amortization 11,254 122,334
Reserves and allowances - 200,000
Increase (decrease) in cash attributable to
changes in assets and liabilities
Due from clearing firm (905,486) (871,053)
Trading and investment account securities 221,756 437,531
Due from officers (30,067) (30,817)
Employee and broker receivables 424,642 (358,192)
Deferred income taxes - (718,996)
Other assets 144,006 (135,525)
Income tax refund receivable 996,681 -
Deferred income (281,775) (200,000)
Securities sold but not yet purchased (162,906) 546,456
Commissions payable 163,004 1,108,450
Accounts payable 238,632 (37,614)
Accrued expenses 72,485 801
Income taxes payable - (868,675)
Other liabilities (277,104) (214,871)
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Total adjustments 874,412 (706,444)
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Net cash used in operating activities (394,382) (2,109,017)
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Cash flows from investing activities:
Collection of notes receivable - 18,000
Additions to property and equipment (124,726) (179,347)
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Net cash used in investing activities (124,726) (161,347)
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Cash flows from financing activities:
Payment of notes payable (148,421) (181,415)
Payments of capital lease (96,616) (94,176)
Proceeds from capital lease financing - 606,195
Payment toward purchase of treasury stock (25,016) (88,584)
Payments of preferred stock dividends (49,679) (48,305)
-------------- --------------
Net cash provided by (used in) financing activities (319,732) 193,715
-------------- --------------
Net decrease in cash and cash equivalents (838,840) (2,076,649)
Cash and cash equivalents at beginning of period 1,779,554 3,701,010
-------------- --------------
Cash and cash equivalents at end of period 940,714 1,624,361
============== ==============
Supplemental disclosures of cash flow
information: Cash paid (received) during the period for:
Interest $ 54,645 $ 74,909
============== ==============
Income taxes $ (1,047,257) $ 894,331
============== ==============
Noncash financing activity:
Property and equipment financed under capital leases $ - $ 662,290
============== ==============
See notes to financial statements.
FIRST MONTAUK FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2002
NOTE 1 - MANAGEMENT REPRESENTATION
The accompanying financial statements are unaudited for the interim period,
but include all adjustments (consisting only of normal recurring accruals) which
management considers necessary for the fair presentation of results at June 30,
2002 and 2001. The preparation of financial statements in conformity with GAAP
requires the Company to make estimates and assumptions that affect the reported
amounts of revenues and expenses during the reporting periods. Actual results
could vary from these estimates. These financial statements should be read in
conjunction with the Company's Annual Report at, and for the year ended December
31, 2001, as filed with the Securities and Exchange Commission on Form 10-K.
The results reflected for the six-month and three-month periods ended June
30, 2002, are not necessarily indicative of the results for the entire fiscal
year to end on December 31, 2002.
NOTE 2 - EARNINGS PER SHARE
Basic and diluted EPS are computed by dividing net loss applicable to
common stockholders by the weighted-average number of common shares outstanding
for the period.
NOTE 3 - LEASE
In January 2002, the Company's broker-dealer subsidiary, First Montauk
Securities Corp. ("FMSC"), entered into a sublease for a new branch office in
New York City. Base rent is $17,700 per month through January 2004, increasing
to $18,800 through September 2006. FMSC will also be responsible for certain
operating expense and real estate tax escalations.
NOTE 4 - LEGAL MATTERS
FMSC is a respondent in two NASD arbitrations seeking rescissionary damages
of approximately $9.5 million in one case, and unspecified damages in another.
Both claims also seek statutory interest and punitive damages. Claimants in
these cases have asserted substantially similar claims relating to alleged
violations of various provisions of federal and state securities laws. FMSC
believes that there are meritorious defenses in each case, and that actual
damages, if any, will be substantially below the alleged amounts.
FMSC is also a respondent in several arbitration claims arising from
customer purchases of certain high yield corporate bonds which declined in
market value and subsequently defaulted. The claims allege, among other charges,
unsuitable recommendations and/or improper use of margin. Aggregate damages
sought is in excess of $13,000,000. FMSC believes that there are meritorious
defenses in each case, and that actual damages, if any, will be substantially
below the alleged amounts.
FMSC is also a respondent or co-respondent in various other legal
proceedings which are incidental to its securities business. FMSC is contesting
these claims and believes that there are meritorious defenses in each case.
After considering all relevant facts, management believes that significant
adverse judgments against FMSC from pending arbitration claims could have a
material impact on the Company's financial condition, results of operations, and
cash flows in any particular quarterly or annual period, or in the aggregate. As
of June 30, 2002, the Company has established a $1,224,000 reserve for
litigation costs that are probable and can be reasonably estimated. The reserve
is included in accrued expenses. Management cannot give assurance that this
reserve will be adequate to absorb actual costs that are subsequently incurred.
In July 2002, the Company received $230,000 from the settlement of
litigation with a former software vendor. The settlement will be recorded in the
third quarter.
NOTE 5 - INCOME TAXES
For the six-month and three-month periods ended June 30, 2002, the Company
increased its tax valuation allowance to offset the deferred tax benefits of net
operating losses and other temporary differences because management is uncertain
as to their ultimate realization. For the six-month and three-month periods
ended June 30, 2001, the income tax benefit of 33.5% and 32% of pre-tax losses,
respectively, included a tax valuation allowance against deferred tax benefits
relating to each period's option compensation charges. The tax benefits of net
operating losses generated in 2001 were subsequently utilized to offset taxable
income from the receipt of a $1.25 million installment under the Company's
financing agreement with its clearing firm in November 2001, and to obtain
refunds of prior years' federal taxes.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The results of operations for the six months and three months ended June
30, 2002 (the "2002 period" and the "2002 quarter," respectively) showed a
decrease in revenues over the same periods in the prior year (the "2001 period"
and the "2001 quarter," respectively). The continued lack of investor confidence
in the U.S. equity markets and the gloomy economic data have continued to
negatively impact revenues, thus reducing the net cash available to cover fixed
costs and overhead. However, the net loss in the 2002 period was less than the
net loss in the comparable 2001 period.
For the six month period ended June 30, 2002, the Company reported a net
loss available to common stockholders of $1,318,000 or $.15 per basic and
diluted share, as compared to the net loss available to common stockholders
reported in the same period of 2001 of $1,451,000 or $.17 per basic and diluted
share. For the three months ended June 30, 2002, the Company reported a net loss
applicable to common stockholders of $998,000, or $.12 per basic and diluted
share, as compared to a net loss applicable to common stockholders of $808,000,
or $.09 per basic and diluted share for the second quarter of 2001.
The Company's primary source of revenue is derived from commissions
generated on agency transactions, including the sales of listed and
over-the-counter securities, mutual funds and variable insurance. Overall
revenues from commissions increased 1% from the 2001 period to the 2002 period.
The business mix, however, was substantially different between the two periods
with increases in agency and mutual fund commissions, offsetting a decrease in
the insurance business, as detailed below.
Revenues from agency transactions increased $2,118,000, or 20%, from
$10,795,000 in the 2001 period, to $12,912,000 in the 2002 period. As a percent
of total revenues, agency revenues increased from 41% in the 2001 period, to 50%
in the 2002 period. Comparing the 2002 quarter to the 2001 quarter, agency
commissions increased $1,279,000, from $5,443,000 to $6,722,000.
Revenues from mutual fund commissions also posted significant increases
over 2001. Mutual fund revenues increased $918,000, from $2,357,000 in the 2001
period to $3,275,000, in the 2002 period, an increase of 39%, and $209,000 from
$1,602,000 to $1,811,000 in the 2001 and 2002 quarters, respectively, an
increase of 13%. The increase in mutual fund commissions is primarily related to
an increase in sales of three products, the 529 College Savings Plan created
through new legislation in October 1999, the principal protection plans, which
guarantee a return of principal if invested for five years, and bond funds which
have seen large increases due to the tenuous state of the equity markets.
Revenues from insurance commissions decreased $3,052,000 from $5,461,000 in
the 2001 period, to $2,409,000 in the 2002 period. The 2001 period included
commissions from the sale of certain variable annuities by one of the Company's
brokers. The large commissions generated from the sale of these annuities were a
one-time occurrence and did not occur again in the 2002 period. Insurance sales
subsequently returned to historic levels.
Revenues from principal transactions decreased $371,000, from $4,002,000 in
the 2001 period, to $3,631,000 in the 2002 period. Principal transaction revenue
includes gains or losses from proprietary trading riskless principal commissions
and unrealized gains or losses on inventory held in the firm's proprietary
accounts. Trading in firm's proprietary accounts improved by approximately
$700,000 in the 2002 period when compared with the 2002 period as the Company
eliminated much of its market-making and trading activities in order to help
reduce the related market/exposure and risk inherent in such types of
activities.
Revenues from principal transactions in the fixed income sector were down
from 2001 levels by approximately $243,000. Revenues from corporate bonds and
unit investment trusts ("UITs") were down due to the reduced confidence in the
corporate and equity sector. On the other hand, revenues from municipal and
government agency bonds increased as investors are seeking more stable
investments.
Interest income decreased $301,000, from $2,078,000 in the 2001 period to
$1,777,000 in the 2002 period, and $76,000 from $972,000 in the 2001 quarter, to
$896,000 in the 2002 quarter. The decline in market value in many of the
margined security positions held in customer accounts, combined with the
substantial transfer of funds out of the equity markets and into safer
instruments, impacted the amount of margin loan balances customers could carry.
The reduction in margin debit balances adversely affected the amount of interest
sharing the Company received from the clearing firm.
Compensation expense decreased $223,000, or 1%, to $21,309,000 in the 2002
period, from $21,532,000 in the 2001 period. Salaries and benefits expense
decreased $770,000, or 17%, from $4,456,000 in the 2001 period, to $3,686,000 in
the 2002 period, due to staff and salary reductions implemented during the
second half of 2001, and to the 2002 reversal of the 401(k) company matching
accrual made in 2001. Commission expense increased 3%, or $547,000, from
$17,076,000 in the 2001 period to $17,623,000 in the 2002 period.
Compensation expense decreased $1,182,000, or 10%, to $10,831,000 in the
2002 quarter, from $12,013,000 in the 2001 quarter. Salaries and benefits
expense decreased $388,000, or 17%, from $2,263,000 in the 2001 quarter, to
$1,875,000 in the 2002 quarter. Commission expense decreased 8%, or $794,000,
from $9,750,000 in the 2001 quarter, to $8,956,000 in the 2002 quarter. The same
factors affecting the compensation costs for the 2002 period impacted the 2002
quarter.
Communication and occupancy expenses increased $98,000, to $1,554,000 in
the 2002 period, from $1,456,000 in the 2001 period. The increase is primarily
attributable to the Company entering into two new sub-lease agreements for
corporate branch offices located in New York City. Postage expense also
increased for both the 2002 period and 2002 quarter due to costs related to
processing of client year end statements.
Legal matters and related costs decreased $137,000, from $777,000 in the
2001 period, to $640,000 in the 2002 period, an 18% decrease. The 2002 expense
includes approximately $262,500 of reserves for legal settlements, with the
balance related to the cost of counsel fees and other defense costs.
FMSC is a respondent in two NASD arbitrations seeking rescissionary damages
of approximately $9.5 million in one case, and unspecified damages in the other.
Both claims also seek statutory interest and punitive damages. Claimants in
these cases have asserted substantially similar claims relating to alleged
violations of various provisions of federal and state securities laws. FMSC
believes that there are meritorious defenses in each case, and that actual
damages, if any, will be substantially below the alleged amounts.
FMSC is also a respondent in several arbitration claims arising from
customer purchases of certain high yield corporate bonds which declined in
market value and subsequently defaulted. The claims allege, among other charges,
unsuitable recommendations and/or improper use of margin. Aggregate damages
sought is in excess of $13 million. FMSC believes that there are meritorious
defenses in each case, and that actual damages, if any, will be substantially
below the alleged amounts.
After considering all relevant facts, management believes that significant
adverse judgments against FMSC from pending arbitration claims could have a
material impact on the Company's financial condition, results of operations, and
cash flows in any particular quarterly or annual period, or in the aggregate. As
of June 30, 2002, the Company has established a $1,224,000 reserve for
litigation costs that are probable and can be reasonably estimated. The reserve
is included in accrued expenses. Management cannot give assurance that this
reserve will be adequate to absorb actual costs that are subsequently incurred.
Other operating expenses decreased $918,000, from $2,887,000 in the 2001
period, to $1,969,000 in the 2002 period and $603,000 from $1,663,000 in the
2001 quarter to $1,060,000 in the 2002 quarter. Bad debt expense decreased 62%,
or $587,000, from $948,000 in the 2001 period to $361,000 in the 2002 period and
for the quarter, bad debt expense decreased 69%, or $484,000, from $703,000 in
the 2001 quarter to $219,000 in the 2002 quarter. The 2001 bad debt expense
included a write-off of $200,000 related to payments previously made to a vendor
for the development of applications software. In July 2002, the Company settled
its lawsuit against the vendor by agreeing to accept $230,000, which was
received in July 2002 and will be recorded in the third quarter. Costs related
to the conversion to Fiserv as the Company's clearing agent decreased $168,000
due to the completion of the conversion in 2001.
For the 2002 period, the effective tax rate of 0% was lower than the
expected tax rate of approximately 37% due to an increase in the tax valuation
allowance to offset the benefits of the current period's operating losses and
other temporary differences because management is uncertain as to their ultimate
realization. For the 2001 period, the income tax benefit of 34% included a tax
valuation allowance against deferred tax benefits relating to that period's
option compensation charges.
Liquidity and Capital Resources
As with most financial firms, the Company maintains a highly liquid balance
sheet with 56% of the Company's assets consisting of cash, securities owned, and
receivables from the Company's clearing firm and other broker-dealers.
Market-making and other securities dealer activities require the Company to
carry significant levels of securities inventory in order to meet customer and
internal trading needs. The balances in the Company's cash, inventory and
clearing firm accounts can and do fluctuate significantly from day to day,
depending on market conditions, daily trading activity, and investment
opportunities. The Company monitors these accounts on a daily basis in order to
ensure compliance with regulatory capital requirements and to preserve
liquidity.
Cash and cash equivalents decreased during the first six months of 2002 by
$839,000, to $941,000. Net cash used by operating activities was $394,000 for
the 2002 period. The primary components of the decrease are the loss of
$1,269,000 offset by an income tax refund of $997,000. This refund is a one-time
source of cash. An increase in operating payables of $474,000 was also a source
of cash. Payables increased due to an increase in legal settlem*ent accrual and
due to timing of payables.
During the first quarter of 2002, the Company filed claims for federal
income tax refunds of approximately $1,000,000. These refunds were received in
April 2002.
Under a financial agreement with its clearing firm, the Company expects to
receive a cash advance of $1,250,000 in November 2002, provided it is in
compliance with the terms of the financial agreement, as defined. For financial
reporting purposes, such advance will be deferred and amortized on a
straight-line basis over the remaining term of the clearing agreement; however,
the advance will be subject to federal and state income taxes in 2002. The
Company received advances totaling $5,250,000 in 2000 and 2001 under the
financing agreement
Additions to capital expenditures accounted for the entire use of cash for
investing activities of $125,000 during the first quarter of 2002. The Company
projects $400,000 in capital expenditures over the next twelve months.
Financing activities used cash of $320,000 in fiscal 2002. Payments of
notes payable, capital leases and preferred stock dividends used $148,000,
$97,000 and $50,000, respectively. A treasury stock repurchase also used
$25,000. During fiscal 2001, the Company entered into two capital leases under a
sale/leaseback financing with a leasing company. The sale of the fixed assets
resulted in a gain of approximately $45,000, which has been deferred and will be
amortized over the related lease terms. The leases, totaling $662,000, are
together payable in 36 monthly installments of $21,000 and an additional 12
installments of $3,900.
Item 3. Market Risk.
Certain of the Company's business activities expose it to market risk. This
market risk represents the potential for loss that may result from a change in
value of a financial instrument as a result of fluctuations in interest rates,
equity prices or changes in credit rating of issuers of debt securities. This
risk relates to financial instruments held by the company as investment and for
trading.
The Company's securities inventories are exposed to risk of loss in the
event of unfavorable price movements. The Company's securities inventories are
marked to market on a daily basis. The Company's market-making activities are
client-driven, with the objective of meeting clients' needs while earning a
positive spread. At June 30, 2002 and December 31, 2001, the balances of the
Company's equity securities positions owned and sold but not yet purchased were
approximately $977,000 and $82,000 and $1,199,000 and $245,000, respectively. In
the opinion of management, the potential exposure to market risk, trading
volatility and the liquidity of securities held in the firm's inventory
accounts, could potentially have a material effect on the Company's financial
position.
The Company's activities involve the execution, settlement, and financial
of various transactions on behalf of its clients. Client activities are
transacted on either a cash or margin basis. The Company's client activities may
expose it to off-balance sheet credit risk. The Company may have to purchase or
sell financial instruments at the prevailing market price in the event of the
failure of a client to settle a trade on its original terms, or in the event
that cash and securities in the client margin accounts are not sufficient to
fully cover the client losses. The Company seeks to control the risks associated
with client activities by requiring clients to maintain collateral in compliance
with various regulations and Company policies.
PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders.
At the Company's Annual Meeting of Shareholders on June 21, 2002,
shareholders holding a majority of the voting shares approved the following:
1) A majority of votes entitled to vote elected the following Class I
Directors to serve for a term of 3 years to the Board of Directors:
Class II Votes Cast For Withhold Authority to Vote
-------- -------------- --------------------------
Herbert Kurinsky 6,596,998 1,100
William Kurinsky 6,597,298 1,100
2) A majority of votes entitled to vote adopted the 2002 Incentive Stock
Option Plan:
Votes Cast for Votes Cast Against
-------------- ------------------
1,511,911 577,007
3) A majority of votes entitled to vote adopted the 2002 Non-Executive
Director Stock Option Plan:
Votes Cast for Votes Cast Against
-------------- ------------------
1,545,412 543,836
Item 5. Other Information.
During the quarter ended June 30, 2002, the Company repurchased 100,000
shares of its common stock for $25,000 under a share repurchase program
authorized in 1999.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit 99.1 - Certification of Herbert Kurinsky
Exhibit 99.2 - Certification of William J. Kurinsky
(b) Reports on Form 8-K
There were no reports on Form 8-K 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.
FIRST MONTAUK FINANCIAL CORP.
(Registrant)
Dated: August 14, 2002 /s/ William J. Kurinsky
-------------------------------
William J. Kurinsky
Secretary/Treasurer
Chief Financial Officer and
Principal Accounting Officer
/s/ Herbert Kurinsky
-------------------------------
Herbert Kurinsky
President
Exhibit 99.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of FIRST MONTAUK FINANCIAL CORP.
(the "Company") on Form 10-Q for the period ending June 30, 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Herbert Kurinsky, Chief Executive Officer of the Company, certify, pursuant to
18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
/s/ Herbert Kurinsky
- -----------------------------------
Herbert Kurinsky
Chief Executive Officer
August 14, 2002
Exhibit 99.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of FIRST MONTAUK FINANCIAL CORP.
(the "Company") on Form 10-Q for the period ending June 30, 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
William J. Kurinsky, Chief Financial Officer of the Company, certify, pursuant
to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
/s/ William J. Kurinsky
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William J. Kurinsky
Chief Financial Officer
August 14, 2002