-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MK196DF9WegaI0QM2PavJVSzsYRMDOj5ZGzXf6xzkRaIu4hUG9VGcrHYKoD3SQgg nwOMw1TgzRipTEb8fKihSg== 0000922423-04-001330.txt : 20040816 0000922423-04-001330.hdr.sgml : 20040816 20040816171514 ACCESSION NUMBER: 0000922423-04-001330 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MM COMPANIES INC CENTRAL INDEX KEY: 0001079786 STANDARD INDUSTRIAL CLASSIFICATION: PHONOGRAPH RECORDS & PRERECORDED AUDIO TAPES & DISKS [3652] IRS NUMBER: 541811721 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-26585 FILM NUMBER: 04979823 BUSINESS ADDRESS: STREET 1: 1740 BROADWAY STREET 2: 23RD FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: (212) 265- MAIL ADDRESS: STREET 1: 1831 WIEHLE AVENUE STREET 2: SUITE 128 CITY: RESTON STATE: VA ZIP: 20190 FORMER COMPANY: FORMER CONFORMED NAME: MUSICMAKER COM INC DATE OF NAME CHANGE: 19990216 10-Q 1 kl08053_10q.txt FORM 10-Q QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2004, or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from ___________ to _______________. COMMISSION FILE NUMBER: 000-26585 MM COMPANIES, INC. (Exact Name of Registrant as Specified in Its Charter) DELAWARE 54-1811721 (State or Other Jurisdiction (I.R.S. Employer of Incorporation) Identification No.) 100 N. WILKES -BARRE BLVD, 4TH FLOOR, WILKES-BARRE, PA 18702 (Address of Principal Executive Office) (Zip Code) Registrant's telephone number, including area code (570) 822-6277 Indicate by check |X| 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 the filing requirements for the past 90 days. Yes [|X|] No [ ] Indicate by check |X| whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [|X|] As of August 16, 2004, 3,289,006 shares of the issuer's common stock, par value $0.01 per share, were outstanding. Index ----- Page ---- PART I-- FINANCIAL INFORMATION Item 1 Financial Statements Balance Sheets as of June 30, 2004 (unaudited) and December 31, 2003..............3 Statements of Operations (unaudited) for the three and six months ended June 30, 2004 and June 30, 2003....................................4 Statements of Cash Flows (unaudited) for the six months ended June 30, 2004 and June 30, 2003....................................5 Notes to Financial Statements......................................6 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations......................9 Item 3 Quantitative and Qualitative Disclosures About Market Risk.................................................11 Item 4 Controls and Procedures...........................................11 PART II-- OTHER INFORMATION Item 1 Legal Proceedings.................................................12 Item 2 Changes in Securities and Use of Proceeds.........................12 Item 3 Defaults upon Senior Securities...................................12 Item 4 Submission of Matters to a Vote of Securities Holders.............12 Item 5 Other Information.................................................12 Item 6 Exhibits and Reports on Form 8-K..................................12 Signatures........................................................13 PART I -- FINANCIAL INFORMATION Item 1. Financial Statements MM COMPANIES, INC. BALANCE SHEETS
June 30, December 31, 2004 2003 (unaudited) --------------- --------------- ASSETS Current assets: Cash and cash equivalents $3,717,637 $3,811,826 Precious metals 687,170 687,170 Notes receivable, current portion 78,261 95,652 Prepaid expenses and other current assets 264,050 162,273 --------------- --------------- Total current assets 4,747,118 4,756,921 Notes receivable, less current portion 115,218 154,348 Investment in available-for-sale securities - 397,125 --------------- --------------- Total assets $4,862,336 $5,308,394 =============== =============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $121,672 $74,966 --------------- --------------- Total current liabilities 121,672 74,966 --------------- --------------- Commitments and contingencies Stockholders' equity: Common stock, $0.01 par value, 25,000,000 shares authorized; 3,358,444 shares issued at June 30, 2004 and December 31, 2003 and 3,289,006 shares outstanding at June 30, 2004 and December 31, 2003 33,585 33,585 Additional paid-in capital 185,457,862 185,457,862 Accumulated other comprehensive income - 189,516 Accumulated deficit (180,659,250) (180,356,002) Treasury stock, 69,438 shares at cost (91,533) (91,533) --------------- --------------- Total stockholders' equity 4,740,664 5,233,428 --------------- --------------- Total liabilities and stockholders' equity $4,862,336 $5,308,394 =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS. 3 MM COMPANIES, INC. STATEMENTS OF OPERATIONS (UNAUDITED)
Three months ended Six months ended June 30, June 30, -------------------------------------- --------------------------------- 2004 2003 2004 2003 ----------------- ----------------- --------------- --------------- Revenues $13,723 $8,765 $28,587 $ 16,146 Interest and divided income Dividend income from cash 190,318 distribution Gain on sale of precious metals - 15,075 - 325,095 Gain on sale of available-for- sale securities 300,468 - 300,468 - ----------------- ----------------- --------------- --------------- 314,191 23,840 329,055 531,559 Total revenues General and administrative expenses 454,466 322,165 632,303 580,912 ----------------- ----------------- --------------- --------------- Net loss available to common stockholders $(140,275) $(298,325) $(303,248) $(49,353) Basic and diluted net loss per common share $ (0.04) $ (0.09) $ (0.09) $ (0.02) ================= ================= =============== =============== Weighted average shares outstanding 3,289,006 3,288,176 3,289,006 3,284,217 ================= ================= =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS. 4 MM COMPANIES INC. STATEMENTS OF CASH FLOWS (UNAUDITED)
Six months ended June 30, ---------------------------------- 2004 2003 ----------------- ---------------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (303,248) $ (49,353) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Gain on sale of available-for-sale securities (300,468) - Services received in exchange for stock - 12,000 Changes in operating assets and liabilities: Precious metals - 2,653,775 Prepaid expenses and other current assets (101,777) 913,763 Accounts payable and accrued expenses 46,706 (859,807) Other current liabilities - (1,911,135) ----------- ----------- Net cash provided by (used in) operating activities (658,787) 759,243 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from return of investment - 1,446,932 Collection on notes receivable 56,521 - Proceeds from sale of available-for-sale securities 508,077 - ----------- ----------- Net cash provided by investing activities 564,598 1,446,932 ----------- ----------- Net increase (decrease) in cash and cash equivalents (94,189) 2,206,175 Cash and cash equivalents at beginning of period 3,811,826 575,454 ----------- ----------- Cash and cash equivalents at end of period $ 3,717,637 $ 2,781,629 =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS. 5 MM COMPANIES, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. ORGANIZATION AND GOING CONCERN CONSIDERATION On January 3, 2001, the Board of Directors of MM Companies, Inc. (the "Company"), as then constituted, voted unanimously to cease the operations of its Internet-based custom CD-marketing business as the Board concluded that this business no longer represented a viable alternative to provide maximum value to the Company's stockholders. The accompanying financial statements as of June 30, 2004 and for the three and six month periods then ended have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. At June 30, 2004, the Company had $3,717,637 in cash and cash equivalents and $687,170 in precious metals (see Note 3) compared to $3,811,826 and $687,170, respectively, at December 31, 2003. The Company expects to experience negative cash flows for the foreseeable future and has not generated any operating revenue in the last two years. Additionally, the Company has not yet settled on an operating plan, and can give no assurance that the Company's cash and cash equivalents are sufficient to fund the Company's current operations and satisfy its obligations over the longer term. The Company believes these obligations will primarily relate to costs associated with the operation as a public company (legal, accounting, consulting, insurance, etc.), as well as the expenses associated with any new business activities. These factors, among others, indicate that the Company may be unable to continue operations as a going concern. No adjustment has been made in the accompanying financial statements to the amounts and classifications of assets and liabilities which could result should the Company be unable to continue as a going concern. The Company continues to consider future alternatives, including the possible acquisition of other businesses or adopting a possible plan of liquidation. However, the Company has not consummated any significant transactions to date and the Company's business prospects remain uncertain. To the extent that management of the Company moves forward on any alternative strategy, such strategy may have an impact on the Company's liquidity. The Investment Company Act of 1940 provides a set of regulations for companies that are or that hold themselves out as being engaged primarily in the business of investing, reinvesting, owning, holding or trading in securities. As a result of the Company's lack of an operating business, the significant cash balance as a percentage of the Company's total assets and its recent trading activities, the Company may have inadvertently become, or may become in the future if it fails to obtain an operating business, an investment company under the Investment Company Act. Notwithstanding the foregoing, the Company believes that at all relevant times prior to the date of filing this Quarterly Report on Form 10-Q, the Company has not been subject to regulation as an investment company under the Investment Company Act. 2. Summary of Significant Accounting Policies Basis of Presentation The financial statements as of June 30, 2004 and for the three and six months ended June 30, 2004 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). These financial statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary to present fairly the results for the periods presented. The balance sheet at December 31, 2003 has been derived from the audited financial statements at that date. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to applicable SEC rules and regulations. Operating results for the three and six months ended June 30, 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004. The financial statements included herein should be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2003. Certain prior period balances have been reclassified to conform to the current period presentation. 6 Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Stock-Based Compensation In December 2002, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 148 "Accounting for Stock-Based Compensation, Transition and Disclosure." SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. SFAS No. 148 also requires that disclosures of the pro forma effect of using the fair value method accounting for stock-based employee compensation be displayed more prominently and in a tabular format. Additionally, SFAS No. 148 requires disclosure of the pro forma effect on interim financial statements. The transition and annual disclosure requirements of SFAS No. 148 are effective for fiscal years ended after December 15, 2002. The interim disclosure requirements are effective for interim periods ending after December 15, 2002. The pro forma effect of using the fair value method accounting for stock-based employee compensation was not material for the three and six month periods ended June 30, 2004 and 2003. Other Comprehensive Income (Loss) The Company separately reports net income (loss) and comprehensive income (loss) pursuant to SFAS No. 130, "Reporting Comprehensive Income." Comprehensive income (loss) includes net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) includes accumulated unrealized gain (loss) on investment in available-for-sale securities. The components of comprehensive income (loss) are as follows:
Three months ended Six months ended June 30, June 30, ----------------------------- -------------------------------- 2004 2003 2004 2003 ------------- ------------- -------------- -------------- Comprehensive income (loss): Net income (loss)...................... $(140,275) $(298,325) $(303,248) $(49,353) Reversal of previously recorded unrealized gain on investment in available-for-sale securities (306,047) (189,516) Unrealized gain on investment in available-for-sale securities.......... - 22,962 - 68,388 --------- --------- --------- -------- $(446,322) $(275,363) $(492,764) $ 19,035 ========== ========== ========== =========
Net Income (Loss) Per Share The Company complies with SFAS No. 128, "Earnings Per Share." SFAS No. 128 requires dual presentation of basic and diluted income (loss) per share for all periods presented. Basic income (loss) per share excludes dilution and is computed by dividing income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shares in the income of the Company. Diluted net loss per share excludes common equivalent shares, unexercised stock options and warrants, as the computation would be anti-dilutive. Unexercised stock options to purchase shares of the Company's common stock as of June 30, 2004 were excluded in the computation of diluted earnings per share for the three and six months ended June 30, 2004 because the options' exercise price was greater than the average market price of the Company's common stock. 7 Since the effects of the outstanding options and warrants are anti-dilutive in the respective periods, they have been excluded from the computation of net loss per common share. 3. PRECIOUS METAL As of June 30, 2004 and December 31, 2003, the Company owned 2,200 ounces of gold bullion. 4. NOTES RECEIVABLE In connection with a royalty agreement signed on October 11, 1999, the Company advanced $500,000 to an independent record label, in return for which the Company received a note receivable that was due on April 11, 2000. In 2000, the Company established a reserve for the entire receivable and pursued legal action to collect the note. In January 2004 the parties agreed to a settlement agreement whereby the Company would receive an aggregate of $250,000. The note is payable in installments of $50,000 on each of May 1, 2004 and May 1, 2006 and $6,522 per month, for twenty-three months, commencing June 1, 2004 and continuing through May 1, 2006, less collection fees. The scheduled payments have been received to date. 5. RELATED PARTY TRANSACTIONS Under the terms of a Stock Purchase Agreement dated as of May 13, 2004 (the "Stock Purchase Agreement"), to which the Company was not a party, Jewelcor Management, Inc. ("JMI" and, together with Seymour Holtzman and affiliates, the "JMI Group") purchased 151,668 shares of the Company's common stock from Barington Capital Group, L.P. ("Barington"), James Mitarotonda and affiliates (together, the "Barington Group") and Ramius Securities, LLC ("Ramius") and affiliates (together, the "Ramius Group"). In addition, the JMI Group acquired 1,209,866 shares of the Company's common stock from BCG Strategic Investors, LLC ("BCG"), a limited liability company partially owned by the JMI Group, in part through redemption and subsequent transfer by BCG of the JMI Group's membership interest in BCG and in part by purchase, and Mr. Mitarotonda transferred to Mr. Holtzman certain stock appreciation rights with respect to shares of the Company originally granted on or about December 31, 2002. Pursuant to the Stock Purchase Agreement, the JMI Group also sold to the Barington Group and the Ramius Group all of the JMI Group's common stock of three other companies in which the JMI Group, the Barington Group and the Ramius Group had all had investments -- LQ Corporation, Inc. ("LQ"), Dynabazaar, Inc. ("Dynabazaar") and Register.com -- and Mr. Holtzman transferred to Mr. Mitarotonda certain options to acquire common stock of LQ originally granted on or about March 18 and April 15, 2003. A copy of the Stock Purchase Agreement was attached as Exhibit 99.1 to a Schedule 13D/A filed with the SEC on May 25, 2004, on behalf of certain members of the JMI Group, the Barington Group and the Ramius Group. One of the conditions to the closing of the transactions contemplated by the Stock Purchase Agreement was that Barington and Ramius (or their respective designees) be able to purchase from the Company, for the market price of such stock at the time the transactions were being negotiated, all of the 654,900 shares of common stock of LQ and the 627,890 shares of common stock of Dynabazaar held by the Company. Following approval of such sales by the disinterested directors of the Company, the Company agreed to the sale of such shares for a purchase price of $281,607, or $0.43 per share, in the case of LQ, and $226,040, or $0.36 per share, in the case of Dynabazaar. Effective as of the closing of these transactions, Messrs. Mitarotonda, William Fox, Joseph Wright and Melvyn Brunt resigned from any positions they held as directors, officers or employees of the Company. However the Barington Group agreed that it would make Mr. Brunt available to JMI for a reasonable period of time for up to 90 days after the closing of these transactions to assist JMI by performing the same services that he had rendered to the Company through the Company's consulting agreement with Barington, which terminated upon closing. JMI agreed to pay the Barington Group for such services at the rate of $10,000 per month and to reimburse the Barington Group for its actual out-of-pocket costs incurred in providing these services. Since these services were provided to the Company, the Company reimbursed JMI for the initial payment of $10,000 that was paid by JMI at closing. The Company has paid the two subsequent $10,000 payments directly to the Barington Group. Mr. Brunt will be providing services to the Company until August 16, 2004. The Company has arranged with JMI (now the beneficial owner of approximately 43% of the Company's common stock) for JMI to provide the Company, beginning May 19, 2004, with certain legal, accounting, consulting, management and other services similar to those which had been provided by Barington prior to May 19. JMI receives a fee of $21,500 per month for such services. A definitive consulting agreement with respect to such services is being finalized. The Company's principal executive offices are in a space leased by JMI from Mr. Holtzman and his wife, and made available to the Company (without separate charge) through the Company's consulting arrangement with JMI. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Note Regarding Forward Looking Information The statements contained in this quarterly report that are not historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the expectations, beliefs, intentions or strategies regarding the future. Without limiting the foregoing, the words "anticipates," "believes," "expects," "intends," "may" and "plans" and similar expressions are intended to identify forward-looking statements. The Company intends that all forward-looking statements be subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company's views as of the date they are made with respect to future events, but are subject to many risks and uncertainties, which could cause the actual results of the Company to differ materially from any future results expressed or implied by such forward-looking statements. These statements speak only as of the date hereof. We are under no duty to update, and do not undertake to update, any of the forward-looking statements contained in this quarterly report to conform them to actual results or to changes in our expectations. The following discussion should be read in conjunction with the financial statements contained in Item 1 of Part I of this Form 10-Q. Overview The Company was incorporated on April 23, 1996. On January 3, 2001, the Board of Directors of the Company as then constituted voted unanimously to cease its operations as a provider of customized music CD compilations and music digital downloads. The Company had sold its products primarily over the Internet through its website and through marketing partners, strategic alliances and direct mail order promotions. The then-Board concluded at that time that this business no longer represented a viable alternative to provide maximum value to the Company's stockholders. In connection with the Company's cessation of its Internet-based custom CD-marketing business, the Company sold all of the Company's remaining furniture and equipment. The Board then determined to review alternatives for the Company going forward, which included, among other things, potential dispositions of assets, the possibility of one or more cash distributions to stockholders, and the potential continued operation of the Company as a public company which might pursue other business opportunities as they arise, as well as other possible steps intended to provide stockholder value, all subject to the ongoing review and consideration of the Board, some of which would require stockholder approval. On February 15, 2001, the Company announced that the Board of Directors had approved a cash distribution in the amount of $3.00 per share to the holders of record of Common Stock as of March 1, 2001, the record date, pursuant to which the Company distributed $9,941,998 to its stockholders. Thereafter, the Board determined to seek to pursue one or more potential acquisitions of other publicly traded or privately held companies or significant interests in such companies, with a view to refocusing the Company's strategic direction. While the Company continues to actively examine certain potential acquisition transactions and believes that attractive opportunities exist, there can be no assurance whether, when, or on what terms the Company will complete any such acquisition. The Company's principal executive offices are in a space leased by JMI from Seymour Holtzman and his wife and made available to the Company (without separate charge) through the Company's consulting arrangement with JMI, a Company controlled by Mr. Holtzman. JMI is now the beneficial owner of approximately 43% of the Company's common stock, and Mr. Holtzman is the Chief Executive Officer of the Company. JMI has also made available to the Company the services of JMI employees to serve as the Chief Financial Officer and the Secretary of the Company, as well as General Counsel, and provides the Company with certain legal, accounting, consulting, management and other services. A definitive consulting agreement with respect to such services is being finalized. On August 9, 2002, in connection with the review of the Company's contested solicitation of proxies for the annual shareholders meeting of another public company, the Company received a letter from the SEC's Division of Investment Management inquiring as to the possible status of the Company as an unregistered "investment company" within the meaning of the Investment Company Act of 1940. The Company believes that, consistent with the discussion of Investment Company Act matters in its Annual Reports on Form 10-K for the year ended December 31, 2003, and prior years, the Company may have become an inadvertent investment company during 9 2001. The Company has relied on the "transient investment company" exemption from the applicable provisions of the Investment Company Act contained in Rule 3a-2 thereunder, which provides for a one-year "safe harbor." Accordingly, prior to the expiration of such one-year safe harbor period, on August 29, 2002, the Company acquired ownership of gold bullion with a purchase price of $4,028,115. The Company borrowed approximately $1.9 million secured by that gold bullion, which has since been repaid from the proceeds of the sale of some of the gold bullion. As a result, "investment securities" held by the Company no longer exceed 40% of its total assets (excluding cash and government securities), and the Company believes that it is no longer within the relevant definition of "investment company" for purposes of the Investment Company Act. Notwithstanding the fact that the Company has purchased gold bullion, and "investment securities" held by the Company no longer exceed 40% of its total assets (excluding cash and government securities), the Company could be deemed to be an investment company under Section 3(a)(1)(A) of the Investment Company Act, which covers companies that are engaged primarily in the business of investing, reinvesting or trading in securities. The Company believes that, at all relevant times prior to the date of filing this Quarterly Report, it has either not been an investment company as defined in the Investment Company Act, or it has been a "transient investment company" exempt from the Investment Company Act. The Company believes that because of the character of its assets it does not currently fall within the definition of an investment company. The Company intends to seek to acquire one or more operating businesses in the near term, which the Company believes would, among other things, eliminate any concern that it may be deemed to be primarily engaged in the business of investing, reinvesting or trading in securities. A determination by the SEC that the Company is in fact an unregistered investment company could have a material adverse effect on the Company's business. An unregistered investment company can be prohibited from, among other things, engaging in interstate commerce. The Company's financial statements as of June 30, 2004 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As of June 30, 2004, the Company had $3,717,637 in cash and cash equivalents and $687,170 in precious metals. Substantially all of the Company's remaining cash was provided by our initial public offering of common stock. The Company expects to experience negative cash flows for the foreseeable future. The Company has not generated any operating revenue for the last two years. The Company has not yet settled on an operating plan, and can give no assurance that the Company's cash and cash equivalents are sufficient to fund the Company's current operations and satisfy its obligations over the longer term. The Company believes these obligations will primarily relate to costs associated with the operation as a public company (legal, accounting, consulting, insurance, etc.), as well as the expenses associated with any new business activities. These factors, among others, indicate that the Company may be unable to continue operations as a going concern. No adjustment has been made in the accompanying financial statements to the amounts and classifications of assets and liabilities which could result should the Company be unable to continue as a going concern. The Company continues to consider future alternatives, including the possible acquisition of other businesses or adopting a possible plan of liquidation. However, the Company has not consummated any significant transactions to date and the Company's business prospects remain uncertain. To the extent that management of the Company moves forward on any alternative strategy, such strategy may have an impact on the Company's liquidity. Results of Operations --------------------- REVENUE Revenue principally consisted of gains on the sale of available-for-sale securities as well as interest and dividend income. In May 2004, in connection with the Securities Purchase Agreement (see Related Party Transactions - Note 5) the Company sold its available-for-sale securities resulting in a gain of $300,468. Interest income was $13,723 and $28,587, for the three and six months ended June 30, 2004, respectively, compared to $8,765 and $16,146, for the three and six months ended June 30, 2003, respectively. Revenue for the three and six months ended June 30, 2004, respectively, was $314,191 and $329,055, compared to $23,840 and $531,559, for the three and six months ended June 30, 2003, respectively. Revenue in the three and six month periods ended June 30, 2003 included $190,318 related to the cash distribution from the Company's investment in LQ Corporation, Inc. and a gain on sale of precious metals of $325,095. 10 GENERAL AND ADMINISTRATIVE EXPENSES During the three and six months ended June 30, 2004, general and administrative expenses primarily consisted of professional and consulting fees, the payment of insurance premiums for the Directors and Officers liability policy, and other general corporate expenses. General and administrative expenses were $454,466 and $632,303 for the three and six months ended June 30, 2004, respectively, compared to $322,165 and $580,912, for the three and six months ended June 30, 2003, respectively. Liquidity and Capital Resources ------------------------------- Net cash (used in) provided by operating activities was ($658,787) for the six months ended June 30, 2004, compared to net cash provided of $759,243 for the six months ended June 30, 2003. Net cash used for the six months ended June 30, 2004, primarily reflects the Company's net loss for the period of ($303,248) and the gain on the sale of available-for-sale securities of $300,468. During the six months ended June 30, 2003, cash provided of $2,653,775 was from the Company's sale of 10,700 ounces of gold bullion and the receipt of $929,000 for reimbursed legal expenses in the settlement of a stockholder derivative action. During the six months ended June 30, 2003, the Company repaid an outstanding liability of $1.9 million, which was secured by the gold bullion. In addition, payment of $190,000 was made in settlement of the Koch Entertainment lawsuit. Cash provided by investing activities was $564,598 for the six months ended June 30, 2004, as compared to cash provided of $1,446,932 for the six months ended June 30, 2003. Cash provided during the six months ended June 30, 2004, was primarily from the sale of stock in connection with Securities Purchase Agreement (see Related Party Transactions - Note 5). Cash provided during the six months ended June 30, 2003, was from the January 29, 2003 distribution by LQ Corporation, Inc. of $2.50 per share, of which $1,446,932 represented a return of capital. At June 30, 2004, the Company had $3,717,637 in cash and cash equivalents compared to $3,811,826 at December 31, 2003. Substantially all of the Company's remaining cash was provided by our initial public offering of Common Stock in 1999. The Company expects to experience negative cash flows for the foreseeable future. The Company believes these obligations will primarily relate to costs associated with the operation as a public company (legal, accounting, consulting, insurance, etc.), as well as the expenses associated with any new business activities. Item 3. Quantitative and Qualitative Disclosures about Market Risk Foreign Currency Risk. Currently substantially all of the Company's transactions are denominated in U.S. dollars and as a result, foreign exchange gains and losses to date have been insignificant. While the Company may effect some transactions in foreign currencies during 2004, it does not expect that any related gains or losses will be significant. The Company has not engaged in foreign currency transactions or foreign currency hedging to date. Item 4. Controls and Procedures The Company maintains a system of controls and procedures designed to provide reasonable assurance as to the reliability of the financial statements and other disclosures included in this report, as well as to safeguard assets from unauthorized use or disposition. The Company's management, including the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures as of June 30, 2004, pursuant to Exchange Act Rule 13a-15(e) and 15d-15(e). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective in ensuring that all material information required to be filed in this quarterly report has been made known to them in a timely fashion. There have been no changes in internal controls that materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting, subsequent to the date the Chief Executive Officer and Chief Financial Officer completed their evaluation. 11 PART II -- OTHER INFORMATION Item 1. Legal Proceedings None. Item 2. Changes in Securities and Use of Proceeds None. Item 3. Defaults upon Senior Securities None. Item 4. Submission of Matters to a Vote of Securities Holders None. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K A. Exhibits required by Item 601 of Regulation S-K: ------------------------------------------------ 31.1 Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2 Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 B. Reports on Form 8-K: -------------------- None. 12 SIGNATURES ---------- Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MM COMPANIES, INC. By: /s/ Seymour Holtzman ------------------------- Seymour Holtzman Chief Executive Officer By: /s/ Jeremy Anderson ------------------------- Jeremy Anderson Chief Financial Officer Date: August 16, 2004 13 EX-31 2 kl08053_ex31-1.txt EXHIBIT 31.1 CERTIFICATE Exhibit 31.1 Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, Seymour Holtzman, certify that: 1. I have reviewed this quarterly report on Form 10-Q of MM Companies, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) for the registrant and we have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and c) disclosed in this quarterly report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ Seymour Holtzman ------------------------ Seymour Holtzman Chief Executive Officer August 16, 2004 EX-31 3 kl08053_ex31-2.txt EXHIBIT 31.2 CERTIFICATE Exhibit 31.2 Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, Jeremy Anderson, certify that: 1. I have reviewed this quarterly report on Form 10-Q of MM Companies, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) for the registrant and we have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and c) disclosed in this quarterly report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ Jeremy Anderson ------------------------- Jeremy Anderson Chief Financial Officer August 16, 2004 EX-32 4 kl08053_ex32-1.txt EXHIBIT 32.1 CERTIFICATE Exhibit 32.1 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER OF MM COMPANIES, INC. Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Quarterly Report of MM Companies, Inc. (the "Company") on Form 10-Q for the quarter ending June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Seymour Holtzman, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 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 and Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Seymour Holtzman -------------------------- Seymour Holtzman Chief Executive Officer August 16, 2004 EX-32 5 kl08053_ex32-2.txt EXHIBIT 32.2 CERTIFICATE Exhibit 32.2 CERTIFICATION OF THE CHIEF FINANCIAL OFFICER OF MM COMPANIES, INC. Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Quarterly Report of MM Companies, Inc. (the "Company") on Form 10-Q for the quarter ending June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jeremy Anderson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 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 and Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Jeremy Anderson ------------------------ Jeremy Anderson Chief Financial Officer August 16, 2004 -----END PRIVACY-ENHANCED MESSAGE-----