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 March 31, 2003, 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.)
888 SEVENTH AVENUE, 17TH FLOOR,
NEW YORK, NY 10019
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code (212) 974-5730
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 the filing
requirements for the past 90 days. Yes [X] No [ ]
As of May 12, 2003, 3,280,614 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 March 31, 2003 (unaudited) and December 31, 2002...........3
Statements of Operations (unaudited)
for the three month periods ended
March 31, 2003 and March 31, 2002................................4
Statements of Cash Flows (unaudited)
for the three month periods ended
March 31, 2003 and March 31, 2002...............................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
Certifications..................................................14
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PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
MM COMPANIES, INC.
BALANCE SHEETS
March 31, December 31,
2003 2002
(unaudited)
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 3,234,806 $ 575,454
Precious metals 1,655,455 4,028,115
Prepaid expenses and other current assets 225,376 1,220,756
------------- -------------
Total current assets 5,115,637 5,824,325
Investment in partnership 596,021 596,021
Investment in available-for-sale securities 210,368 1,611,874
------------- -------------
Total assets $ 5,922,026 $ 8,032,220
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 696,219 $ 1,185,272
Other current liabilities -- 1,915,535
------------- -------------
Total current liabilities 696,219 3,100,807
------------- -------------
Commitments and contingencies
Stockholders' equity:
Common stock, $0.01 par value 25,000,000 shares authorized;
3,350,052 shares issued at March 31, 2003 and December 31, 2002
and 3,280,614 shares outstanding at March 31, 2003 and
December 31, 2002 33,501 33,501
Additional paid-in capital 185,445,946 185,445,946
Accumulated other comprehensive income 209,798 164,372
Accumulated deficit (180,371,905) (180,620,873)
Treasury stock, 69,438 shares at cost (91,533) (91,533)
------------- -------------
Total stockholders' equity 5,225,807 4,931,413
------------- -------------
Total liabilities and stockholders' equity $ 5,922,026 $ 8,032,220
============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
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MM COMPANIES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended
March 31,
----------------------------
2003 2002
------------ -----------
Revenues
Interest and divided income $ 7,381 $ 37,137
Dividend income from cash distribution 190,318 --
Gain on sale of precious metals 310,020 --
Gain on sale of available-for-sale
securities -- 17,940
----------- -----------
Total revenues 507,719 55,077
Operating expenses, general and
administrative 258,749 256,668
----------- -----------
Net income (loss)
available to common stockholders $ 248,970 $ (201,591)
=========== ===========
Basic and diluted net
income (loss) per common share $ .08 $ (0.06)
=========== ===========
Weighted average shares outstanding 3,280,614 3,313,996
=========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
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MM COMPANIES INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three months ended
March 31,
-------------------------------
2003 2002
----------- -----------
OPERATING ACTIVITIES
Net income (loss) $ 248,970 ($ 201,591)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Gain on sale of available-for-sale securities -- (17,940)
Changes in operating assets and liabilities:
Precious metals 2,372,660 --
Prepaid expenses and other current assets 995,378 93,287
Other assets -- (310,000)
Accounts payable and accrued expenses (489,053) (12,966)
Other current liabilities (1,915,535) 35,000
----------- -----------
Net cash provided by (used in) operating
activities 1,212,420 (414,210)
----------- -----------
INVESTING ACTIVITIES
Proceeds from return of investment 1,446,932 --
Proceeds from sale of available-for-sale securities -- 38,475
Purchase of available-for-sale securities -- (303,578)
----------- -----------
Net cash provided by (used in)
investing activities 1,446,932 (265,103)
----------- -----------
Net increase (decrease) in cash and cash equivalents 2,659,352 (679,313)
Cash and cash equivalents at beginning of period 575,454 7,596,588
----------- -----------
Cash and cash equivalents at end of period $ 3,234,806 $ 6,917,275
=========== ===========
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. (formerly
musicmaker.com, Inc.) (the "Company"), as then constituted, voted unanimously to
cease the operations of its Internet-based custom CD-marketing business. The
then-Board concluded at that time that business no longer represented a viable
alternative to provide maximum value to the Company's 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 accompanying financial statements as of March 31, 2003 and for the three
months 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 March 31,
2003, the Company had $3,234,806 in cash and cash equivalents and $1,655,455 in
precious metals (see note 3) compared to $575,454 and $4,028,115,
respectively, at December 31, 2002. The Company expects to experience negative
cash flows for the foreseeable future. Based on our current level of operations,
the Company believes that it has sufficient cash and cash equivalents to satisfy
its obligations, although it can give no assurance in that regard. The Company
believes these obligations will primarily relate to costs associated with the
operation as a public company (legal, accounting, insurance, etc.), as well as
the satisfaction of any potential legal judgments or settlements as well as the
expenses associated with any new business activities which may be undertaken by
the Company. 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. 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.
2. Summary of Significant Accounting Policies
Basis of Presentation
The financial statements as of March 31, 2003 and for the three months
ended March 31, 2003 and the year ended December 31, 2002 have been prepared by
the Company pursuant to the rules and regulations of the Securities and Exchange
Commission (the "SEC"). These 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, 2002 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 months
ended March 31, 2003 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2003. 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, 2002. Certain prior period balances have been
reclassified to conform to the current period presentation.
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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.
Investments
Securities classified for accounting purposes as "available-for-sale"
securities consist of marketable equity securities not classified as either
held-to-maturity or trading securities. Available-for-sale securities are stated
at fair value with unrealized gains and losses reported as a separate component
of stockholders' equity as other comprehensive income. Dividends on marketable
equity securities are recognized as income when declared. Realized gains and
losses and declines in value deemed to be other-than-temporary are included in
revenues. The cost basis for realized gains and losses is determined on the
basis of the actual cost of the securities sold.
As of March 31, 2003 and December 31, 2002, the Company had
available-for-sale securities with a fair market value of $210,368 and
$1,611,874, respectively, and a cost basis of approximately $570 and $1,447,502,
respectively. The gross unrealized gains as of March 31, 2003 and December 31,
2002 of $45,426 and $50,283 have been recorded as a separate component of
stockholder's equity as accumulated other comprehensive income.
As of March 31, 2003 and December 31, 2002, the Company held the following
equity positions:
Fairmarket Inc. (NASDAQ: FAIM) 500 shares
Liquid Audio, Inc. (NASDAQ: LQID) 654,900 shares
On January 29, 2003, Liquid Audio, Inc. distributed $2.50 per share in
cash to all of its shareholders, of which $1,446,932 represented a return of
investment and $190,318 was recorded as dividend income from cash distribution.
Stock-Based Compensation
In December 2002, the FASB issued Statement of Financial Accounting
Standards No. 148 "Accounting for Stock-Based Compensation, Transition and
Disclosure" ("SFAS 148"). SFAS 148 provides alternative methods of transition
for a voluntary change to the fair value based method of accounting for stock
based-based employee compensation. SFAS 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 148 requires disclosure of the pro forma effect interim
financial statements. The transition and annual disclosure requirements of SFAS
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 adoption of SFAS 148 did not have a material impact on its
financial condition or results of operations.
Other Comprehensive Income
The Company separately reports net income (loss) and comprehensive income
(loss) pursuant to SFAS No. 130, "Reporting Comprehensive Income." Other
comprehensive income includes revenues, expenses, gains and losses that under
generally accepted accounting principles are recorded as an element of
stockholders' equity and are excluded from net income (loss). The Company's
comprehensive gain (loss) for the three months ended March 31, 2003 and 2002
totaled $294,396 and ($205,814), respectively, and is comprised of the Company's
net income (loss) of $248,970 and ($201,591), respectively, increased in 2003 by
unrealized gains related to available-for-sale securities of $45,426 and
partially offset in 2002 by unrealized losses related to available-for-sale
securities of $4,223.
3. PRECIOUS METAL
In February and March 2003, the Company sold an aggregate of 7,600 ounces
of its gold bullion for approximately $2,683,000, of which approximately $1.9
million was used to pay off an outstanding liability which
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were secured by the gold bullion as of December 31, 2002. As of March 31, 2003,
the Company still holds 5,300 ounces of gold bullion with a cost basis of
$1,655,455.
4. PREPAID EXPENSES AND OTHER CURRENT ASSETS
Included in prepaid expenses and other current assets at March 31, 2003
and December 31, 2002 is approximately $123,000 and $1,024,000, respectively, of
costs associated with various previously contested proxy solicitations related
to the Company's investment in Liquid Audio, Inc.
5. INVESTMENT IN PARTNERSHIP
On February 27, 2002, the Company along with certain other entities
(together with the Company, the "Reporting Entities"), was party to a joint
filing on Schedule 13D reporting the purchase of 3,485,500 shares of common
stock of Fairmarket Inc. ("Fairmarket") (NASDAQ: FAIM) (such amount representing
approximately 12.0% of Fairmarket's outstanding common stock). Of the total
amount of outstanding common stock reported as beneficially owned by the
Reporting Entities, the Company may be deemed to account for 627,390 shares of
such common stock (such amount representing approximately 3.0% of Fairmarket's
outstanding common stock). This represents the Company's investment of $596,021
in JHC Investment Partners, LLC. JHC Investment Partners, LLC is an entity
created to purchase 3,485,500 shares of Fairmarket common stock. The Company has
accounted for this investment at cost. The Reporting Entities include, in
addition to the Company, Barington Companies Equity Partners, L.P., an affiliate
of Barington Capital Group, L.P. ("Barington") and a major shareholder of the
Company, and Jewelcor Management, Inc., an entity whose Chairman and Chief
Executive Officer is Seymour Holtzman, the Chairman of the Company's Board of
Directors.
On May 8, 2002, Fairmarket appointed Joseph Wright, Jr., to Fairmarket's
Board of Directors. Mr. Wright is also a director of MM Companies, Inc. Mr.
Wright was appointed to the Board of Fairmarket pursuant to an agreement that
Fairmarket entered into with the Reporting Entities. The agreement provides that
the Reporting Entities will not proceed with a previously contested proxy
solicitation initiated by the Reporting Entities and limit actions that the
group may take with respect to their ownership of Fairmarket common stock prior
to January 22, 2005. In addition, James Mitarotonda, President and Chief
Executive Officer of the Company, was granted observer status to meetings of
Fairmarket's Board of Directors.
6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses as of March 31, 2003 and December
31, 2002 are comprised of the following:
March 31, December 31,
2003 2002
------------ -----------
Accounts payable $ 278,229 $ 534,605
Professional fees 25,080 50,543
License and royalty fees 330,000 520,000
Other 62,910 80,124
---------- ----------
$ 696,219 $1,185,272
========== ==========
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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.
The present Board determined to review alternatives for the Company going
forward, which included, among other things, potential dispositions of assets,
the possibility of one or more additional 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.
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.
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 office is in a space maintained by
Barington, a limited partnership whose general partner is a corporation of which
James Mitarotonda is Chairman, President and Chief Executive Officer. Barington
and an affiliate are members, and Mr. Mitarotonda is one of the managing
members, of BCG Strategic Investors LLC, which, together with certain
affiliates, beneficially owns approximately 38% of the Company's Common Stock.
Mr. Mitarotonda is also the President and Chief Executive Officer of the
Company. Barington has also made available to the Company the services of a
Barington employee to serve as the Chief Financial Officer and Secretary of the
Company, and began providing the Company with the assistance of certain other
Barington employees, and administrative services provided by Barington for which
the Company paid Barington a monthly fee of $23,500.
-9-
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 Report on Form 10-K for the year
ended December 31, 2002, the Company may have become an inadvertent investment
company during 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 of March 31, 2003, have been prepared
on a going concern basis, which contemplates the realization of assets and the
settlement of liabilities and commitments in the normal cost of business. As of
March 31, 2003, the Company had $3,234,806 in cash and cash equivalents and
$1,655,455 in precious metals (see below). 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.
Based on our current level of operations, the Company believes that it has
sufficient cash and cash equivalents to satisfy its obligations, although it can
give no assurance in that regard. The Company believes these obligations will
primarily relate to costs associated with our operation as a public company, the
satisfaction of any legal judgments or settlements, and expenses related to any
new business activities which may be undertaken. As noted above, the Company
continues to pursue the potential acquisition of other businesses. 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 interest and dividend income, a
gain from the cash distribution made by Liquid Audio, Inc. and the gain on the
sale of some of the Company's gold bullion. Interest and dividend income was
$7,381 for the three months ended March 31, 2003, compared to $37,137 for the
three months ended March 31, 2002. The decrease in interest income reflects the
decline in cash balances available for investments. The decline in cash balances
is partially attributable to the Company's purchase of gold bullion. Revenue for
the three month period ended March 31, 2003, was $507,719 compared with $55,077
for the three month period ended March 31, 2002.
GENERAL AND ADMINISTRATIVE EXPENSES. During the three month period ended
March 31, 2003, general and administrative expenses primarily consist of legal
and professional fees and related expenses for
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accounting and administrative personnel, as well as other general corporate
expenses. General and administrative expenses were $258,749, for the three month
period ended March 31, 2003 compared with $256,668 for the three month period
ended March 31, 2002.
Liquidity and Capital Resources
Net cash provided in operating activities was $1,212,420 for the three
months ended March 31, 2003 compared to net cash used of $414,210 for the three
months ended March 31, 2002. During the three months ended March 31, 2003, cash
provided of $2,372,660 was attributable to the Company's sale of 7,600 ounces of
gold bullion and the receipt of $929,000 for reimbursed legal expenses in the
settlement of certain litigation. During the three months ended March 31, 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 in investing activities was $1,446,932 for the three months
ended March 31, 2003, as compared to cash used of $265,103 for three months
ended March 31, 2002. During the three months ended March 31, 2003, cash
provided in investing activities was attributable to the January 29, 2003
distribution by Liquid Audio, Inc. of $2.50 per share, of which $1,446,932
represented a return of capital.
At March 31, 2003, the Company had $3,234,806 in cash and cash equivalents
compared to $575,454 at December 31, 2002. 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. Based on our current level of operations, we believe that we have
sufficient cash and cash equivalents to satisfy our obligations in 2003,
although we can give no assurances in that regard. The Company believes these
obligations will primarily relate to costs associated with the operation as a
public company (legal, accounting, insurance, etc.), as well as the satisfaction
of any potential legal judgments or settlements and the expenses associated with
any new business activities which may be undertaken by the Company.
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 2003, 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
Within 90 days prior to the filing date of this Quarterly Report on Form
10-Q, the Company's management, including the Chief Executive Officer and Chief
Financial Officer, carried out an evaluation of the effectiveness of the
Company's disclosure controls and procedures as defined in Exchange Act Rule
13a-14. Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer have concluded that the Company's current disclosure controls
and procedures are effective. There have been no significant changes in the
Company's internal controls or in other factors that could significantly affect
internal controls subsequent to the date of the evaluation by the Chief
Executive Officer and Chief Financial Officer.
The design of any system of controls and procedures is based in part upon
certain assumptions about the likelihood of future events. There can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions, regardless of how remote.
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PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
The Company has been named as a defendant in a lawsuit arising out of a
licensing agreement it had entered into with Profile Publishing and Management
Corporation ApS. The Court granted the plaintiffs' motion for summary judgment
and denied the Company's cross motion to amend its pleadings. The Company and
its attorneys were both sanctioned by the Court. On April 1, 2003, a civil
judgment was entered into the District Court of New York awarding plaintiffs
$326,838. An amount of $330,000 had been previously accrued for in accounts
payable and accrued expenses at December 31, 2002 in connection with such
dispute.
The Company has also been named as a defendant in a lawsuit arising out of
a licensing agreement with Koch Entertainment LLC. In this lawsuit, the
plaintiff has agreed to discontinue this action in exchange for the Company's
payment of $190,000 to plaintiff which has been previously accrued for in
accounts payable and accrued expenses at December 31, 2002 and was paid on
February 18, 2003.
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. Exhibit and Reports on Form 8-K
A. Exhibits required by Item 601 of Regulation S-K:
-----------------------------------------------
99.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. ss.
1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act.
99.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C. ss.
1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act.
B. Reports on Form 8-K:
-------------------
None.
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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/ James A. Mitarotonda
----------------------------------
James A. Mitarotonda
President and Chief Executive Officer
By: /s/ Mel Brunt
--------------------------
Mel Brunt
Chief Financial Officer
Date: May 15, 2003
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CERTIFICATIONS
--------------
I, James A. Mitarotonda, 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-14 and 15d-14) for the registrant
and we have:
a) designed such disclosure controls and procedures 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 as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, 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 in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in
this quarterly report whether or not there were significant changes
in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
/s/ James A. Mitarotonda
------------------------------------
James A. Mitarotonda
President and Chief Executive
Officer
May 15, 2003
-14-
I, Mel Brunt, 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-14 and 15d-14) for the registrant
and we have:
a) designed such disclosure controls and procedures 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 as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, 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 in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
/s/ Mel Brunt
--------------------------
Mel Brunt
Chief Financial Officer
May 15, 2003
-15-