As filed with the Securities and Exchange Commission on December 31, 2001January 16, 2002

Registration No. 333-73996
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

------------------------

AMENDMENT NO. 12
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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MORGAN GROUP HOLDING CO.
(Exact name of Registrant as specified in its charter)

Delaware 6719 13-4196940
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
organization)

401 Theodore Fremd Avenue
Rye, New York 10580
(914) 921-8821
(Address, including zip code, and telephone number, including area code,
of Registrant'sRegistrants principal executive offices)

John Fikre, Esq.
Lynch Interactive Corporation
401 Theodore Fremd Avenue
Rye, New York 10580
(914) 921-8821

(Name, address, including zip code, and telephone number,
including area code, of agent of service)

Copy to:

David J. Adler, Esq.
Olshan Grundman Frome Rosenzweig & Wolosky LLP
505 Park Avenue
New York, New York 10022
(212) 753-7200
-----------------------------

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. / /

If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act of 1933, please check
the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. / /

If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. / /

-----------------------------

The Registrant hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.

TABLE OF CONTENTS

Page

PROSPECTUS SUMMARY...........................................................2
RISK FACTORS.................................................................6
FORWARD-LOOKING STATEMENTS..................................................10
THE SPIN-OFF................................................................10
USE OF PROCEEDS.............................................................14
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS....................14
CAPITALIZATION..............................................................15
SELECTED FINANCIAL DATA.....................................................16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.................................................17
BUSINESS....................................................................25
LEGISLATION AND GOVERNMENT REGULATION.......................................33
MANAGEMENT..................................................................34
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..............................40
PRINCIPAL STOCKHOLDERS......................................................41
DESCRIPTION OF CAPITAL STOCK................................................44
EXPERTS.....................................................................48
LEGAL MATTERS...............................................................48
ADDITIONAL INFORMATION......................................................48
FINANCIAL STATEMENTS.......................................................F-1

iii

The information in this prospectusEXPLANATORY NOTE

This Amendment is not complete and may be
changed. We may not distribute these securities until the registration statementbeing filed with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and it is not soliciting an offer to
buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED DECEMBER 31, 2001

2,820,051 Shares
Common Stock

MORGAN GROUP HOLDING CO.

Lynch Interactive Corporation currently owns allcorrect exhibit 8.1 of our outstanding
common stock, which represents 100% of our equity securities. Lynch Interactive
Corporation intends to spin off 2,820,051 shares of our common stock through a
pro rata distribution to its stockholders.

As a result of the spin-off, each holder of Lynch Interactive
Corporation common stock will receive one share of our common stock for each
share of Lynch Interactive Corporation common stock held at the close of
business on December 18, 2001, the record date for the spin-off.

We are sending you this prospectus to describe the spin-off. We
expect the spin-off to occur on January __, 2002. No stockholder vote is
required for the spin-off to occur, and you do not need to take any action to
receive our common stock. This means that:

o you do not need to pay anything to Lynch Interactive
Corporation or to us; and

o you do not need to surrender any shares of Lynch
Interactive Corporation stock to receive your shares of
our common stock.

We do not expect our common stock to be listed on any national
securities exchange or quotation system.

As a result of the spin-off, Lynch Interactive Corporation may be
considered an underwriter and selling stockholder for purposes of liability
under Section 11 of the Securities Act of 1933, as amended.

The securities offered involve a high degree of risk.
See "Risk Factors" on pages 6 through 10 below.

--------------------------

We are not asking you for a proxy or for any consideration, and you
are requested not to send us a proxy or any consideration.

--------------------------

Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities, or
determined if this prospectus is truthful or complete. Any representationAmendment
No. 1 to the contrary is a criminal offense.

-------------------------

The date of this prospectus is [_____________], 2002.

PROSPECTUS SUMMARY

This summary highlights material information contained elsewhere in
this prospectus. You should read the entire prospectus carefully, paying
particular attention to the section entitled "Risk Factors" and to the financial
statements, including notes thereto.

The Company

We were incorporated in November 2001 to serve as a holding company
for Lynch Interactive Corporation's controlling interest in The Morgan Group,
Inc., a publicly traded Delaware corporation. Upon our formation as a wholly
owned subsidiary of Lynch Interactive Corporation, Lynch Interactive Corporation
transferred its entire ownership interest in The Morgan Group, Inc. to us. As a
result of this transfer, we now hold 161,100 shares of The Morgan Group, Inc.'s
outstanding Class A common stock, warrants to purchase an additional 161,100
shares of such Class A common stock at $9.00 per share, 2,200,000 shares of The
Morgan Group, Inc.'s Class B common stock and warrants to purchase an additional
2,200,000 shares of such Class B common stock at $9.00 per share, giving us
control of more than 80% of The Morgan Group, Inc.'s aggregate voting power. In
addition, Lynch Interactive Corporation made a capital contribution to us of
$500,000 and assigned to us a services agreement with The Morgan Group, Inc.,
pursuant to which The Morgan Group, Inc. has agreed to pay $100,000 per year for
certain management services. The Morgan Group, Inc. has not made any
payments under this agreement since the first quarter of 2001. We have no
additional significant assets and we have had no operations to date.

Ownership Structure

The following charts depict the beneficial ownership structure of us
and The Morgan Group, Inc., before and after giving effect to the spin-off.

[OMITTED DIAGRAM]

The omitted diagram is comprised of linked circles and boxes which
visually demonstrate in a descending pattern that prior to the spin-off, public
stockholders will own 100% of Lynch Interactive Corporation which in turn owns
100%Registration Statement of Morgan Group Holding Co., which in turn will own 68.5% of the
outstanding stock of The Morgan Group, Inc. with the rest of The Morgan Group,
Inc. stock being owned by the public stockholders.

The diagram also shows that following the spin-off the public
stockholders will separately own 100% of both Morgan Group Holding Co. and Lynch
Interactive Corporation, but Morgan Group Holding Co. will still own 68.5% of
the outstanding stock of The Morgan Group, Inc. with the rest of the Morgan
Group, Inc. stock being owned by the public stockholders.

-2-

The Morgan Group, Inc.

The Morgan Group, Inc. operates in four business segments:
Manufactured Housing, Driver Outsourcing, Specialized Outsourcing Services, and
Insurance and Finance.

o Manufactured Housing Segment. The largest portion of The Morgan
Group, Inc.'s operating revenues is derived from the
transportation of manufactured housing, primarily new
manufactured homes, modular homes and office trailers. The
Morgan Group, Inc. also transports used manufactured homes and
offices for individuals, businesses and the U.S. Government. The
Morgan Group, Inc. is the largest transporter of manufactured
homes in the United States.

o Specialized Outsourcing Services Segment. The specialized
outsourcing services segment delivers large trailers ("Towaway
Services") and travel and other small trailers.

o Insurance and Finance Segment. The insurance and finance segment
provides insurance and financing to The Morgan Group, Inc.'s
drivers and independent owner-operators. The insurance
subsidiary may accept a limited portion or all of the
underwriting risk, retaining the appropriate proportion of the
premiums. This segment administers The Morgan Group, Inc.'s
cargo, bodily injury and property damage insurance programs.

The Morgan Group, Inc. plans to grow its business through expansion
in these niche businesses, while pursuing appropriate acquisitions or joint
ventures in related industries. In addition, The Morgan Group, Inc. plans to
expand its insurance product offerings to its drivers and owner operators.

Ability to Continue as a Going Concern

The report of Ernst & Young LLP, with respect to the financial
statements of The Morgan Group, Inc. as of December 31, 2000 and 1999 and for
each of the three years in the period ended December 31, 2000, contains an
explanatory paragraph as to The Morgan Group, Inc.'s ability to continue as a
going concern. A going concern opinion indicates that The Morgan Group, Inc.'s
auditors believe that substantial doubt exists regarding The Morgan Group,
Inc.'s ability to remain in business. Because we are a holding company and our
sole asset consists of our controlling interest in The Morgan Group Inc., other
than $500,000 in cash and a contractual right to receive $100,000 per year for
management services, the report of Ernst & Young LLP, our independent
auditors, with respect to our financial statements as of December 31, 2000 and
1999 and for each of the three years in the period ended December 31, 2000,
also contains an explanatory paragraph which expresses substantial doubt as to
our ability to continue as a going concern.

Our address is 401 Theodore Fremd Avenue, Rye, New York. Our
telephone number is (914) 921-8821.

Information Concerning Lynch Interactive Corporation and the Spin-Off

Why is Lynch Interactive Corporation undertaking this spin-off?

Lynch Interactive Corporation is undertaking this spin-off to
separate us from its other businesses, which focus chiefly on the
telecommunications industry. Notwithstanding the fact that prior to the spin-off
The Morgan Group, Inc. has been both a public company and a separate operating
subsidiary of Lynch Interactive Corporation, Lynch Interactive Corporation has
advised us that its ownership interest in The Morgan Group, Inc. no longer fits
into its core business strategy. In addition, the inclusion of the Morgan Group,
Inc. with Lynch Interactive Corporation's other subsidiaries has reduced Lynch
Interactive Corporation's overall reported results. Also, The Morgan Group,
Inc.'s inconsistent pattern of earnings and its going concern opinion, impairs
Lynch Interactive Corporation's ability to carry out its strategic financing
plans. As a result of the spin-off, you will have a direct ownership interest in
us and an indirect interest in our chief asset, our controlling interest in The
Morgan Group, Inc.

-3-

Why is Lynch Interactive Corporation Not Spinning Off Shares of The Morgan
Group, Inc.?

Lynch Interactive Corporation has chosen to spin off our shares,
rather than shares of The Morgan Group, Inc., because it believes that continued
management insight and oversight by a board of directors and management team
initially, and for a transition period not to exceed three years, comprised of
Lynch Interactive Corporation's senior management team is in the best interest
of our stockholders.

What will I receive in the spin-off?

You will receive one share of our common stock for each share of
Lynch Interactive Corporation common stock held by you at the close of business
on December 18, 2001.

Will Lynch Interactive Corporation own any interest in us after the spin-off?

Immediately after the spin-off, Lynch Interactive Corporation will
retain 235,294 shares of our common stock, which it will hold as escrow agent.
Should Cascade Investment LLC, the holder of an outstanding convertible
promissory note, issued by Lynch Interactive Corporation, convert all or a
portion of the principal amount of that note into shares of Lynch Interactive
Corporation common stock prior to December 10, 2004, Lynch Interactive
Corporation will transfer to Cascade Investment LLC a pro rata portion of those
235,294 shares of our common stock, depending on how much of the principal
amount of such note is converted. Should Cascade Investment LLC fail to convert
any or all of the principal amount of such note into shares of Lynch Interactive
Corporation common stock prior to December 10, 2004, ownership of any shares of
our common stock then remaining in that escrow account will be sold by Lynch
Interactive Corporation within five years following the spin-off.

How will the spin-off effect relations among us, The Morgan Group, Inc. and
Lynch Interactive Corporation?

Following the spin-off, we will control approximately 81% of the
voting power of The Morgan Group, Inc.'s outstanding common stock, giving us the
ability to strongly influence its corporate policy and to dictate the members of
its board or directors. Following the spin-off, Lynch Interactive Corporation
will have no equity interest in The Morgan Group, Inc. and will hold only
235,294 shares of our common stock in an escrow account pursuant to the terms
described above. Lynch Interactive Corporation, however, may still exercise
influence over us, and therefore The Morgan Group, Inc., because for a
transitional period not to exceed three years from the date of the spin-off, all
of our officers and directors will also serve as officers and/or directors of
Lynch Interactive Corporation. This fact will effectively give Lynch Interactive
Corporation significant managerial influence over our operations and our
controlling interest in the Morgan Group, Inc.

What do I have to do in the spin-off?

You do not have to do anything or pay any consideration to receive
our shares of common stock in the spin-off.

When will the spin-off occur?

The spin-off will occur on or about January __, 2002.

When and how will I receive my shares of common stock?

As soon as practicable after the distribution date, Lynch
Interactive Corporation will deliver to our transfer agent certificates
representing shares of our common stock. The transfer agent will then mail those
certificates to stockholders.

-4-

Are there any transfer restrictions on the securities I will receive?

There are no federal or state securities law transfer restrictions
on the securities you will receive as long as you are not an affiliate of ours.

Will the common stock be listed on any national securities exchange or automated
quotation system?

We do not intend to list our common stock on any national securities
exchange or automated quotation system. Accordingly, we are unable to predict
whether a trading market will develop for our common stock, and the ability to
trade our common stock may accordingly be very limited.

Will this distribution of stock be taxable to me?

Lynch Interactive Corporation has received an opinion from Ernst
& Young LLP, its tax advisor, that the spin-off should qualify as a tax free
distribution to its stockholders under Sections 368(a)(1)(D) and 355 of the
Internal Revenue Code of 1986, as amended. No gain or loss should be recognized by
you upon the receipt of our common stock. Therefore, you should not incur any
federal income tax liability as a direct result of the spin-off. See "The
Spin-Off-Material Federal Income Tax Consequences."

Will any underwriters be involved in the spin-off?

No underwriters will be involved in the spin-off, but Lynch
Interactive Corporation may be considered an underwriter and selling stockholder
for purposes of liability under Section 11 of the Securities Act of 1933, as
amended.

Proceeds of the Spin Off

The spin off will not result in any net proceeds to us, Lynch
Interactive Corporation or The Morgan Group, Inc.

Summary Financial Data(1)

The following table sets forth our summary combined financial data.
This table gives effect to our controlling interest in The Morgan Group, Inc.
You should read this information together with the financial statements and the
notes to those financial statements appearing elsewhere in this prospectus and
the information under "Selected Financial Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

Nine Months Ended
September 30, Years Ended December 31,
------------------ ------------------------
2001 2000 2000 1999 1998
---- ---- ---- ---- ----
Operations

Operating Revenues $ 70,954 $ 87,447 $ 108,024 $ 145,629 $ 150,454

Operating Income (Loss) (247) (607) (2,038) 550 2,007

Pre-tax Income (Loss) (429) (817) (2,348) 212 1,475

Net Income (Loss) (143) (246) (2,492) (3) 420

Basic and diluted
earnings (loss) per share $ (0.05) $ (0.08) $ (0.82) $ (0.00) $ 0.14

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(1) We were incorporated in November 2001 to serve as a holding company
for Lynch Interactive Corporation's controlling interest in The
Morgan Group, Inc. The accompanying combined financial data
represents the combination, on a retroactive basis, of all of Lynch
Interactive Corporation's interest in The Morgan Group, Inc. and
the consolidated financial statements of The Morgan Group, Inc. as
if the transfer by Lynch Interactive Corporation to us occurred on
January 1, 1998.

-5-

RISK FACTORS

You should carefully consider the following risks with respect to
us, our common stock and The Morgan Group, Inc.

Risks Relating to our Common Stock

As we are a holding company with limited independent operations, we are
dependent on the payment of dividends by The Morgan Group, Inc., the sale of
assets, payments under our services contract or outside financing in order to
meet our operating expenses.

We are a holding company and have no significant operations or
assets other than our controlling interest in The Morgan Group, Inc., a cash
balance of $500,000 and the right to receive $100,000 per year from The Morgan
Group, Inc. under a services agreement assigned to us by Lynch Interactive
Corporation. Therefore, the only way we can generate income is through the
payment of dividends by The Morgan Group, Inc., selling assets, or receiving
payments under our services agreement. The Morgan Group, Inc., however, has not
made any payments under this assigned agreement since the first quarter of 2001,
nor has it declared any dividends since the third quarter of 2000. There can be
no assurance as to when, if ever, The Morgan Group, Inc. will resume declaring
dividends and making its contractual payments to us. See "Market For Common
Equity And Related Stockholder Matters-Dividend Policy." A continued failure to
make such payments or declare dividends will force us to either sell our
interests in The Morgan Group, Inc. or seek outside financing to meet our
operating needs. Disposing of the stock of The Morgan Group, Inc. to generate
revenue, however, would not be realistic in the near future, as our interest in
The Morgan Group, Inc. is so large that the trading market for its stock is
quite limited. Any disposal of its stock by us would therefore have to be made
in small quantities over a long period of time. In addition, given that we have
no significant operations or assets other than our controlling interest in The
Morgan Group, Inc. and the fact that we have received an opinion from our
independent auditors that expresses substantial doubt as to our ability to
continue as a going concern, there can be no assurance of our ability to secure
outside financing on reasonable terms or at all.

Our future performance is highly dependent upon the performance of The Morgan
Group, Inc., a public company that we do not operate.

We have had no meaningful operations to date and possess no
significant assets other than our interest in The Morgan Group, Inc., a cash
balance of $500,000 and the right to receive $100,000 per year from The Morgan
Group, Inc. under a services agreement assigned to us by Lynch Interactive
Corporation. As a result, our business is wholly dependent on the performance of
The Morgan Group, Inc. While we have a controlling interest in The Morgan Group,
Inc. that allows us to select a majority of its directors, we are not in control
of its day to day operations, leaving us vulnerable to poor management decisions
of The Morgan Group, Inc.

Our ownership and voting interest in The Morgan Group, Inc. could be diluted
should other stockholders exercise warrants at a time when we cannot afford to
exercise our warrants.

The Morgan Group, Inc. has recently distributed warrants to each of
its Class A and Class B common stockholders, granting each stockholder the right
to purchase up to as many shares of common stock as such stockholder owned on
the date of distribution, at the price of $9.00 per share. As a result of this
distribution, we were issued warrants to purchase up to 161,000 shares of The
Morgan Group, Inc.'s Class A common stock and 2,200,000 shares of its Class B
common stock. Should other stockholders of The Morgan Group, Inc. exercise these
warrants at a time when we cannot afford the exercise price of our own warrants,
our controlling interest in The Morgan Group, Inc. could be diluted, resulting
in a diminished influence over the operations of The Morgan Group, Inc.

There will be a very limited, or possibly no trading market for our common
stock, because we do not intend to list or register it on any national
securities exchange or automated quotation system.

There will be a very limited, or possibly no trading market for our
common stock. We do not intend to list or register it on any national securities
exchange or automated quotation system. Accordingly, we are unable to predict
whether a trading market will develop for our common stock.

-6-

Our common stock will be subject to "Penny Stock" regulations, which may make it
difficult to obtain timely and accurate quotes for the stock or execute trades
in it.

Our common stock will be considered a penny stock, which may make it
difficult to obtain timely and accurate quotes for the stock or execute trades
in it. See "The Spin-Off-Regulations Affecting the Price and Marketability of
our Common Stock."

It is possible that this spin-off could result in adverse tax
consequences to both you and Lynch Interactive Corporation.

Lynch Interactive Corporation has obtained an opinion from Ernst
& Young LLP, its tax advisor, to the effect that the spin-off should be tax
free to Lynch Interactive Corporation and its stockholders. This opinion is not
binding on the Internal Revenue Service or the courts, and we have not requested
a private letter ruling from the Internal Revenue Service relating to the tax
consequences of the spin-off. If it is determined that the spin-off is not a tax
free spin-off, then:

o Lynch Interactive Corporation would recognize a gain equal to
the excess of the fair market value of our common stock
distributed to its stockholders over Lynch Interactive
Corporation's basis in our common stock; and

o Each U.S. holder of Lynch Interactive Corporation common stock
would be generally treated as if such stockholder had received a
taxable dividend, to the extent of earnings and profits, in an
amount equal to the fair market value of our common stock
received.

The combined post-spin-off value of Lynch Interactive Corporation and our stock
may not equal or exceed the pre-spin-off value of Lynch Interactive
Corporation's common stock.

After the spin-off, we cannot assure you that the combined trading
prices of Lynch Interactive Corporation's common stock and our common stock will
be equal to or greater than the trading price of Lynch Interactive Corporation's
common stock prior to the spin-off. Until the market has fully evaluated the
business of Lynch Interactive Corporation without our business, the price of
Lynch Interactive Corporation's common stock may fluctuate significantly.
Similarly, until the market has fully evaluated our business on an independent
basis, the price at which our common stock trades, if at all, may fluctuate
significantly.

Creditors of Lynch Interactive Corporation may challenge the spin-off.

If a court in a lawsuit by a creditor or representative of creditors
of Lynch Interactive Corporation, such as a trustee in bankruptcy, were to find
that at the time of the spin-off, Lynch Interactive Corporation:

o was insolvent;

o was rendered insolvent by reason of the spin-off;

o was engaged in a business or transaction for which its remaining
assets constituted unreasonably small capital; or

o intended to incur, or believed it would incur, debts beyond its
ability to pay such debts as they matured,

the court may be asked to void the spin-off (in whole or in part) as a
fraudulent conveyance. The court could then require the stockholders of Lynch
Interactive Corporation to return some or all of our common stock, or require us
to fund certain liabilities of Lynch Interactive Corporation. The measure of
insolvency for purposes of the foregoing will vary depending upon the
jurisdiction whose law is being applied. Generally, however, Lynch Interactive
Corporation would be considered insolvent if the fair market value of its assets
were less than its liabilities or if it incurred debt beyond its ability to
repay it as it matures.

-7-

Our chairman and chief executive officer holds management positions with other
companies that could distract his attention from us.

Our chairman and chief executive officer, Mario J. Gabelli, is also
the chairman and chief executive officer of Lynch Interactive Corporation,
Gabelli Group Capital Partners, Inc., a private company that makes investments
for its own account, and Gabelli Asset Management Inc., a diversified asset
manager and financial services company. Mr. Gabelli also serves as director or
trustee and/or officer of registered investment companies managed by
subsidiaries of Gabelli Asset Management Inc. Given the time commitment
necessary for Mr. Gabelli to satisfy the requirements of his numerous managerial
positions, he will not able to devote his full business time and attention to
managing our affairs, which could have an adverse impact on our operations.

We may not be able to invest in certain companies in which the investment
companies managed by subsidiaries of Gabelli Asset Management Inc. have an
ownership interest.

Because of Mr. Gabelli's management position and stock ownership of
our company, Gabelli Asset Management Inc. may be deemed to be an affiliate of
ours for certain purposes. As a result of certain regulatory issues raised under
Section 17(d) of the Investment Company Act of 1940, as amended, we may be
precluded from investing in, or engaging in other types of transactions with,
certain companies in which the investment companies managed by subsidiaries of
Gabelli Asset Management Inc. have an ownership interest.

We are presently controlled by Lynch Interactive Corporation and following the
spin-off, our directors and officers will be comprised solely of directors and
officers of Lynch Interactive Corporation.

For a transitional period not to exceed three years from the date of
the spin off, all of our officers and directors will be officers and/or
directors of Lynch Interactive Corporation, giving Lynch Interactive Corporation
significant influence over our management decisions during this period. Lynch
Interactive Corporation can be expected to exercise this management influence of
us in its best interests, which may result in corporate actions, which, though
favored by Lynch Interactive Corporation, are not favored by the majority of our
stockholders. In addition, while it is not our intention, we may inadvertently
as a result of Lynch Interactive Corporation's management influence, enter into
transactions with Lynch Interactive Corporation in the future that are less
favorable to us than might be reflected in a comparable transaction between
independent parties dealing at arm's length.

Risks Related To The Morgan Group, Inc. and Its Industry

The Morgan Group, Inc.'s credit facilities may not be adequate to support its
current letter of credit and working capital requirements.

The Morgan Group, Inc. relies heavily on third party credit
facilities to fund its operations. The availability and sufficiency of such
credit facilities depends upon The Morgan Group, Inc.'s financial condition and
operating performance, as well as the willingness of lenders to provide credit
support in the transportation and manufactured housing sector. The inability to
secure such sufficient third party funding for any reason, including those
beyond the control of The Morgan Group, Inc., could threaten its ability to
continue as a going concern.

The Morgan Group, Inc. cannot assure us that it will pay dividends.

Payment of dividends is within the discretion of The Morgan Group,
Inc.'s Board of Directors and will depend, among other factors, upon its
earnings, financial condition, and capital requirements. The Morgan Group,
Inc.'s ability to pay dividends is also limited by covenants with its lenders.
The Morgan Group, Inc. cannot assure us that it will pay any dividends.

-8-

The costs of accident claims and insurance could reduce The Morgan Group, Inc.'s
profitability.

Motor vehicle accidents occur in the ordinary course of The Morgan
Group, Inc.'s business. Although The Morgan Group, Inc. maintains liability and
cargo insurance, the number and severity of the accidents involving its
independent owner-operators and drivers can have significant adverse effects on
the profitability of its business through premium increases and amounts of loss
retained by it below deductible limits or above total coverage.

The Morgan Group, Inc.'s results of operations would be adversely affected if it
lost any of its major customers.

The Morgan Group, Inc.'s top ten customers have historically
accounted for the majority of its operating revenues, and the loss of one or
more of them could adversely affect The Morgan Group, Inc.'s results of
operations. This risk is magnified by the fact that a number of The Morgan
Group, Inc.'s major customers are experiencing financial difficulty as a result
of the softness in the manufactured housing and recreational vehicle markets.

The competition for qualified drivers is intense and The Morgan Group, Inc. may
not be able to recruit enough drivers.

Recruitment and retention of qualified drivers and independent
owner-operators is highly competitive. There is no assurance that The Morgan
Group, Inc.'s drivers will continue to maintain their contracts with The Morgan
Group, Inc. or that The Morgan Group, Inc. will be able to recruit a sufficient
number of new drivers on terms similar to those presently in force.

If The Morgan Group, Inc.'s owner-operators were considered employees rather
than independent contractors, The Morgan Group, Inc.'s costs of operations would
increase dramatically.

From time to time, tax authorities have sought to assert that
independent contractors in the transportation service industry are employees,
rather than independent contractors. The Morgan Group, Inc. maintains that its
owner-operators are not employees. If its independent contractors were
determined to be employees, such determination could materially increase its tax
and workers' compensation exposure.

The Morgan Group, Inc.'s future acquisitions and expansions may not be
profitable.

As part of its long term growth strategy, The Morgan Group, Inc.
intends to pursue favorable acquisition opportunities. Its strategic plan may
also include the initiation of new services or products, either directly or
through acquisition, within existing or complimentary business lines. There is
no assurance that The Morgan Group, Inc. will be able to identify favorable
acquisition opportunities, that its acquisitions will be successfully integrated
into operations or that such endeavors will prove to be profitable.

The seasonality of The Morgan Group, Inc.'s business may cause significant
variation in quarterly results.

The Morgan Group, Inc.'s operations have historically been seasonal,
with higher operating revenues generated in the second and third quarters than
in the first and fourth quarters. The seasonality of its business may cause a
significant variation in its quarterly operating results.

Risks Related To Factors Outside of the Control of The Morgan Group, Inc.

Economic slowdowns or recessions, especially in the manufactured housing
industry, adversely affect the business of The Morgan Group, Inc.

Periods of economic slowdown or recession, whether general, regional
or industry-related, may have a great impact on the business of The Morgan
Group, Inc. The present downturn in manufactured housing sales and the financial
difficulty of its customers has had a significant adverse impact on the
profitability of The Morgan Group, Inc., as shipments of manufactured housing
have historically accounted for a majority of its operating revenues. The Morgan
Group, Inc. cannot assure us that it can achieve or sustain profitability under
these conditions. These conditions could result in such severe reductions in the
cash flows available to The Morgan Group, Inc. that its ability to meet all its
financial obligations and cash flow requirements could be impaired.
Additionally, there are no assurances that the manufactured housing industry
will rebound.

-9-

Changes in government regulation could increase the costs of The Morgan Group,
Inc.

Motor carriers are subject to regulation by various federal and
state governmental agencies, including the United States Department of
Transportation. These regulatory agencies have broad powers, and the motor
carrier industry is subject to regulatory and legislative changes that can
affect the economics of the industry by requiring changes in the operating
practices or influencing the demand for, and the costs of providing, services to
shippers. The Morgan Group, Inc. may not be able to pass such increased costs on
to its customers, which could impair its profitability.

Increases in interest rates and fuel prices may reduce profitability.

The operations of The Morgan Group, Inc. are affected by
fluctuations in interest rates. Demand for its services is affected by the
availability of credit to purchasers of manufactured homes and recreational
vehicles, which in turn is largely dependent on prevailing interest rates.
Additionally, the price of fuel is an expense over which The Morgan Group, Inc.
has little or no control. An increase in these costs could have an adverse
impact on profitability.

Current increases in the cost of insurance premiums may reduce profitability.

Increases in the cost of insurance premiums will increase the
expenses of The Morgan Group, Inc. and will have an adverse impact on its
profitability to the extent it is unable to pass such increases through to its
customers.

The Morgan Group, Inc. is in a competitive industry that could reduce the rates
it can charge.

The Morgan Group, Inc. is participating in a highly competitive
industry and rates offered by competitors affect the rates that it can charge
for its services. If competitors' rates are reduced, such reduction may have the
effect of reducing the rates The Morgan Group, Inc. can charge, thereby
impairing its profitability.

FORWARD-LOOKING STATEMENTS

Some of the statements contained in this prospectus are
forward-looking and may involve a number of risks and uncertainties. Those
statements are subject to known and unknown risks, uncertainties and other
factors that could cause actual results to differ materially from those
contemplated by the statements. We caution you that these forward-looking
statements are only predictions. We cannot assure you that the future results
predicted, whether expressed or implied, will be achieved. The forward-looking
statements are based on current expectations, and we are not obligated to update
this information.

THE SPIN-OFF

Reasons For The Spin-Off

Lynch Interactive Corporation is undertaking this spin-off to
separate us from its other businesses which focus chiefly on the
telecommunications industry. Notwithstanding the fact that prior to the spin-off
The Morgan Group, Inc. has been both a public company and a separate operating
subsidiary of Lynch Interactive Corporation, Lynch Interactive Corporation has
advised us that its ownership interest in The Morgan Group, Inc. no longer fits
into its core business strategy. In addition, the inclusion of the Morgan Group,
Inc. with Lynch Interactive Corporation's other subsidiaries has reduced Lynch
Interactive Corporation's overall reported results. Also, The Morgan Group,
Inc.'s inconsistent pattern of earnings and its going concern opinion, impairs
Lynch Interactive Corporation's ability to carry out its strategic financing
plans. Following the spin-off, these accounting and financial disclosure issues
will no longer affect Lynch Interactive Corporation and Lynch Interactive
Corporation has advised us that it expects important benefits, including the
following:

o Capital Financing Flexibility. After the spin-off, Lynch
Interactive Corporation should have greater capital planning
flexibility, as it will be better able to use its own stock to
fund acquisitions in the telecommunications industry.

o Business Focus. As a result of the spin-off, Lynch Interactive
Corporation will be better able to focus its attention and
financial resources on its telecommunications businesses and on
exploring and implementing the most appropriate strategic plans.

-10-

o Simplified Internal Structures. Management of Lynch Interactive
Corporation should be able to implement simplified
organizational and internal reporting structures.

o Employee Incentives. The spin-off will allow us to develop
incentive programs for management and other professionals that
are tailored to our own business and are tied to the market
performance of our own common stock.

Lynch Interactive Corporation has chosen to spin off our shares,
rather than shares of The Morgan Group, Inc., because it believes that continued
management insight and oversight by a board of directors and management team
initially, for a transition period not to exceed three years, comprised of Lynch
Interactive Corporation's senior management team is in the best interest of
Lynch Interactive Corporation's stockholders.

As a result of the spin-off, you will have a direct ownership
interest in us and an indirect interest in our chief asset, our controlling
interest in The Morgan Group, Inc.

Manner Of Effecting The Spin-Off

The spin-off will be effected by a stock dividend paid to each
holder of record of Lynch Interactive Corporation common stock. The spin-off
ratio will be one share of our common stock for each share of Lynch Interactive
Corporation common stock outstanding on the spin-off record date. Lynch
Interactive Corporation stockholders will not be required to pay for shares of
our common stock received in the spin-off. Additionally, Lynch Interactive
Corporation stockholders will not need to surrender or exchange Lynch
Interactive Corporation common stock in order to receive shares of our common
stock. All shares of our common stock received by Lynch Interactive Corporation
stockholders in connection with the spin-off will be fully paid and
non-assessable. Lynch Interactive Corporation stockholders do not have any
appraisal rights in connection with the spin-off.

On or about December 18, 2001 and continuing through
January __, 2002, Lynch Interactive Corporation common stock will trade on
the American Stock Exchange with due bills attached. The due bills will entitle
a purchaser of Lynch Interactive Corporation common stock during this period to
receive one share of our common stock for one share of Lynch Interactive
Corporation common stock purchased. Accordingly, a seller of Lynch Interactive
Corporation common stock during the due bill period will have to deliver the
certificate for our common stock to the buyer of Lynch Interactive Corporation
common stock once he or she receives our certificate. As the American Stock
Exchange is aware of the due bill period, no notification by a purchaser or
seller is necessary when trading Lynch Interactive Corporation common stock. If
the spin-off is not completed, all due bills attaching to Lynch Interactive
Corporation common stock will become null and void.

In order to be entitled to receive shares of our common stock in the
spin-off, Lynch Interactive Corporation stockholders must be holders of record
of Lynch Interactive Corporation common stock at 5:00 p.m. New York City time on
the spin-off effective date, which is expected to be January __, 2002.

The dividend agent is American Stock Transfer & Trust Company.
American Stock Transfer & Trust Company will commence mailing our common stock
certificates on the spin-off effective date.

Results Of The Spin-Off

Following the spin-off, we will be a separate, publicly-traded
company (See "Trading of Our Common Stock" below). Immediately after the
spin-off, based on the number of outstanding shares of Lynch Interactive
Corporation common stock and the number of record holders on December 18,
2001, we expect to have 3,055,345 shares of common stock outstanding, held by
approximately 867 record holders.

Lynch Interactive Corporation is retaining 235,294 shares of our
common stock, which it will hold as escrow agent. Should Cascade Investment LLC,
the holder of an outstanding convertible promissory note, issued by Lynch
Interactive Corporation, convert all or a portion of the principal amount of
that note into shares of Lynch Interactive Corporation common stock prior to
December 10, 2004, Lynch Interactive Corporation will transfer to Cascade
Investment LLC a pro rata portion of those 235,294 shares of common stock,
depending on how much of the principal amount of such note is converted, to
Cascade Investment LLC. Should Cascade Investment LLC fail to convert any or all
of the principal amount of such note into shares of Lynch Interactive
Corporation common stock prior to December 10, 2004, ownership of any shares of
our common stock then remaining in that escrow account will be retained by Lynch
Interactive Corporation. Lynch Interactive Corporation has advised us that it
will sell or dispose of any shares of our common stock retained by it prior to
the fifth anniversary of the spin-off.

-11-

Following the spin-off, Lynch Interactive Corporation will continue
to own and operate its other businesses. The spin-off will not affect the number
of outstanding shares of Lynch Interactive Corporation common stock or any
rights of Lynch Interactive Corporation stockholders.

Trading Of Our Common Stock

We do not expect any public trading market for our common stock to
exist before or after the spin-off, as we do not intend to list our common stock
on any national securities exchange or automated quotation system. The ability
to buy or sell shares of our common stock may accordingly be very limited.

Absent any state law restrictions, the shares of our common stock to
be issued to Lynch Interactive Corporation stockholders will be freely
transferable, except for shares received by persons who may be deemed to be our
"affiliates" under the Securities Act of 1933, as amended. Persons who may be
deemed to be our affiliates after the spin-off generally include individuals or
entities that control, are controlled by, or are under common control with us
and may include certain of our officers and directors. Persons who are our
affiliates will be permitted to sell their shares of our common stock only
pursuant to an effective registration statement under the Securities Act of
1933, as amended, or an exemption from the registration requirements of the
Securities Act of 1933, as amended, such as the exemptions afforded by Section 4
of the Securities Act of 1933, as amended, and Rule 144 under the Securities Act
of 1933, as amended (with the exemption under Rule 144 not available until 90
days after the effective date of this registration statement).

Lynch Interactive Corporation will account for the spin-off as a
dividend out of its retained earnings. If no retained earnings exist at the time
of distribution, it will be accounted for as a reduction in paid-in capital.

Expenses

It is expected that we will expend a total of approximately $150,000
for legal fees, printing, organization costs and other costs involved in the
distribution of our common stock.

Regulations Affecting the Price and Marketability of our Common Stock

Because of the anticipated low price of our common stock and the
fact that it is not listed on any national securities exchange or automated
quotation system, our common stock is likely to be subject to a number of
regulations that can affect its price and your ability to sell it. For example,
Rule 15g-9 under the Securities Exchange Act of 1934, as amended, would apply to
our common stock. This rule imposes sales practice requirements on
broker-dealers that sell low priced securities to persons other than established
customers and institutional accredited investors. For transactions covered by
this rule, a broker-dealer must make a special suitability determination for the
purchaser and have received the purchaser's written consent to the transaction.

In addition, because the penny stock rules are expected to apply to
our common stock, our stockholders may find it more difficult to sell their
securities. The rules of the Securities and Exchange Commission define a penny
stock to be any equity security that has a market price or exercise price of
less than $5.00 per share, subject to some exceptions. The penny stock rules
require broker-dealers to deliver a standardized risk disclosure document
prescribed by the Securities and Exchange Commission, to provide the customer
with additional information, including the current bid and offer quotations for
the penny stock, the compensation of the broker-dealer and its salesperson in
the transaction, monthly account statements showing the market value of each
penny stock held in the customer's account, and to make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. These
requirements may reduce the level of trading activity in any secondary market
for our common stock and may adversely affect the ability of broker-dealers to
sell our securities.

-12-

Agreements Between Us and Lynch Interactive Corporation and our Relationship
After the Spin-Off

After the spin-off, we and Lynch Interactive Corporation will
operate independently of each other as separate public companies.

We entered into an agreement with Lynch Interactive Corporation
providing for the transfer of Lynch Interactive Corporation's stock holdings in
The Morgan Group, Inc. prior to the spin-off and defining our responsibilities
regarding the following:

o Indemnification against certain liabilities, including
liabilities for taxes;

o Corporate transitional matters, including the transfer of assets
and liabilities under employee benefit plans;

o Provision of administrative services;

o Post spin-off cooperation;

o Competitive matters; and

o Assignment of The Morgan Group, Inc. services agreement.

These agreements were negotiated before the spin-off and thus were
negotiated between affiliated parties. We believe that the terms of these
agreements equitably reflect the benefits and costs of our ongoing relationship
with Lynch Interactive Corporation. However, we cannot assure you that any of
these agreements, or that any of the transactions provided for in these
agreements, were effected on terms at least as favorable to us or to Lynch
Interactive Corporation as could have been obtained from unaffiliated third
parties.

Material Federal Income Tax Consequences

Lynch Interactive Corporation received an opinion from Ernst &
Young LLP, its tax advisor, to the effect that, among other things, the spin-off
should qualify as a tax-free spin-off to Lynch Interactive Corporation and its
stockholders under Sections 368(a)(1)(D) and 355 of the Internal Revenue Code,
as amended. The following is a summary of the material federal income tax
consequences to Lynch Interactive Corporation and its stockholders which should
result from the spin-off.

o A Lynch Interactive Corporation stockholder will not recognize
any taxable gain or loss as a result of the spin-off.

o A Lynch Interactive Corporation stockholder will apportion the
tax basis for his or her Lynch Interactive Corporation stock on
which our common stock is distributed between the Lynch
Interactive Corporation stock and our common stock received in
the spin-off in proportion to the relative fair market values of
Lynch Interactive Corporation stock and our common stock on the
date of the spin-off.

o The holding period for our common stock received by a Lynch
Interactive Corporation stockholder in the spin-off will
include the period during which he or she held the Lynch
Interactive Corporation stock on which our common stock is
distributed, provided that the Lynch Interactive Corporation
stock is held as a capital asset by such holder on the date of
the spin-off.

o Lynch Interactive Corporation will not recognize any gain or
loss as a result of the spin-off.

Current United States Treasury regulations require each Lynch
Interactive Corporation stockholder who receives our common stock in the
spin-off to attach to his or her federal income tax return for the year in which
the spin-off occurs, a detailed statement setting forth such data as may be
appropriate in order to show the applicability of Section 355 of the Internal
Revenue Code of 1986, as amended, to the spin-off. Lynch Interactive Corporation
will provide the appropriate information to each stockholder of record as of the
spin-off record date.

-13-

The summary of federal income tax consequences set forth above is
for general information only and may not be applicable to stockholders who
receive their shares of our common stock through the exercise of employee stock
options or otherwise as compensation or who are otherwise subject to special
treatment under the Internal Revenue Code, as amended. All stockholders should
consult their own tax advisors as to the particular tax consequences to them,
including the applicability and effect of state, local and foreign tax laws.

Reasons For Furnishing This Prospectus

This prospectus is being furnished by us and Lynch Interactive
Corporation solely to provide information to Lynch Interactive Corporation
stockholders about the receipt of our common stock in the spin-off. It is not,
and is not to be construed as, an inducement or encouragement to buy or sell any
of our securities or those of Lynch Interactive Corporation.

USE OF PROCEEDS

Our common stock is being distributed in connection with our
spin-off from Lynch Interactive Corporation. None of Lynch Interactive
Corporation, The Morgan Group, Inc. or us will receive any proceeds from the
distribution of our stock.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Morgan Group Holding Co.

As set forth above, we are a wholly owned subsidiary of Lynch
Interactive Corporation. Our common stock is not publicly traded and following
the spin-off, we do not intend to list it on any national securities exchange or
automated quotation system. In addition, an exemption from the registration
requirements of state securities laws is not automatically available in all 50
states and we may not be able to qualify for such exemption in certain states.
The ability to buy or sell shares of our common stock may accordingly be very
limited.

Dividend Policy

We do not expect to pay cash dividends on our common stock in the
foreseeable future. To the extent we obtain financing in the future, such
funding sources may prohibit the payment of dividends. We currently intend to
retain any future earnings for use in our business.

The Morgan Group, Inc.

Shares of The Morgan Group, Inc.'s Class A common stock are quoted
on the American Stock Exchange under the symbol "MG." The following table sets
forth the high and low sales price per share of its Class A common stock for
each quarter in fiscal 2000 and 1999, and the first three quarters of fiscal
2001.

Years Ended December 31,
2001 2000 1999
----------------------- ------------------------------ ------------------------------
High Low High Low High Low
--------- --------- ----------- ------------- ------------ ------------

First Quarter $4.75 $3.80 $8.50 $5.38 $9.13 $6.63
Second Quarter 4.20 3.65 7.88 6.13 8.75 6.75
Third Quarter 3.85 3.45 7.25 5.25 9.88 7.00
Fourth Quarter N/A N/A 6.06 3.75 7.88 5.44

As of September 30, 2001, there were 150 holders of record of The
Morgan Group, Inc.'s Class A common stock and one holder of record of The Morgan
Group, Inc.'s Class B common stock, Lynch Interactive Corporation. The Morgan
Group, Inc. estimates that its Class A common stock is owned beneficially by
approximately 289 persons. There is no market for its Class B common stock, and
its management has no plans to list the Class B common stock on any exchange.

-14-

As of September 30, 2001, there were 1,248,157 shares of The Morgan
Group, Inc.'s Class A common stock outstanding and 2,200,000 shares of its Class
B common stock outstanding for an aggregate of 3,448,157 shares of its common
stock issued and outstanding.

Dividend Policy

In 1999, The Morgan Group, Inc. declared a dividend of $0.02 in each
quarter, and in 2000, it declared a dividend of $0.02 in the first and second
quarter. In the third quarter of 2000, The Morgan Group, Inc. reduced the
dividend rate to $0.01, and it did not declare a dividend in the fourth quarter
of 2000. The Morgan Group, Inc.'s charter provides that dividends on its Class A
common stock may be up to 100% greater than dividends on its Class B common
stock. Historically, dividends paid on the Class A common stock have been twice
the amount paid on the Class B common stock. The Morgan Group, Inc. expects this
will continue to be true of future dividends, if any. The payment of dividends
is within the discretion of its Board of Directors and will depend, among other
things, upon earnings, capital requirements and its financial condition. In
addition, The Morgan Group, Inc. cannot declare dividends greater than $200,000
in the aggregate for any fiscal year under one of its financing arrangements,
and no dividends can be declared if a default or an event of default has
occurred.

CAPITALIZATION

The following table sets forth our debt and capitalization as of
September 30, 2001. This table should be read in conjunction with our financial
statements and notes thereto included elsewhere in this prospectus.

At September 30, 2001
---------------------------
Liabilities: (In thousands)

Current Liabilities
Trade accounts payable $4,806
Note payable to bank 1,369
Accrued liabilities 4,489
Accrued claims payable 3,013
Refundable deposits 1,154
Current portion of long-term debt and capital lease obligations 147
-----------------
Total current liabilities 14,978
-----------------

Long-term debt and capital lease obligations, less current portion 16
Deferred income taxes 744
Long-term accrued claims payable 4,821
Minority interests 2,772

Equity, investments by and advances from Lynch Interactive Corporation 5,563

-----------------

Total $28,894
=================
-15-

SELECTED FINANCIAL DATA(1)

The following table sets forth certain selected financial
information reflecting our operations and financial condition for each year in
the five year period ended December 31, 2000 (and as of each year end) and the
nine month periods ended September 30, 2001 and 2000. This data should be read
in conjunction with our combined financial statements and related notes thereto
as well as Management's Discussion and Analysis of Financial Condition and
Results of Operations included herein.

Nine Months Ended
September 30, Years Ended December 31,
---------------------------- ----------------------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
------------- ------------- ----------------------------------------------------------------------
(Dollars in thousands, except share and per share amounts)
Operations

Operating Revenues $ 70,954 $ 87,447 $ 108,024 $ 145,629 $ 150,454 $ 146,154 $ 132,208

Operating Income (Loss) (247) (607) (2,038) 550 2,007 1,015 (3,263)

Pre-tax income (Loss) (429) (817) (2,348) 212 1,475 296 (3,541)

Net Income (Loss) (143) (246) (2,492) (3) 420 68 (935)

Basic and Diluted
earnings (loss) per share $ (0.05) $ (0.08) $ (0.82) $ (0.00) $ 0.14 $ 0.02 $ (0.31)

The Morgan Group, Inc.'s Cash
Dividends Declared per share
Class A $ 0.00 $ 0.05 $ 0.05 $ 0.08 $ 0.08 $ 0.08 $ 0.08
Class B $ 0.00 $ 0.025 $ 0.025 $ 0.04 $ 0.04 $ 0.04 $ 0.04

Financial Position

Total Assets $ 28,894 $ 29,965 $ 23,666 $ 32,653 $ 33,769 $ 33,521 $ 33,502

Working Capital 3,431 2,734 1,063 3,189 3,806 1,613 1,635

Long-term Debt 163 357 288 965 1,480 2,513 4,206

Equity, investments by and
advances from Lynch
Interactive Corporation 5,563 5,871 3,661 6,171 6,486 6,292 6,513

Basic and diluted
weighted average and end of
period common shares
outstanding 3,055,345 3,055,345 3,055,345 3,055,345 3,055,345 3,055,345 3,055,345

- ---------------

(1) We were incorporated in November 2001 to serve as a holding company
for Lynch Interactive Corporation's controlling interest in The
Morgan Group, Inc. The acompanying combined financial data
represents the combination, on a retroactive basis, of all of Lynch
Interactive Corporation's interest in Thge Morgan Grooup, Inc. and
the consolidated financial statements of The Morgan Group, Inc. as
if the transfer by Lynch Interactive Corporation to us occurred on
January 1, 1996.

-16-

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Morgan Group Holding Co.

We were incorporated in November 2001 to serve as a holding company
for Lynch Interactive Corporation's controlling interest in The Morgan Group,
Inc. We have no significant assets other than 161,100 shares of The Morgan
Group, Inc.'s outstanding Class A common stock, warrants to purchase an
additional such 161,100 shares at $9.00 per share, 2,200,000 shares of The
Morgan Group, Inc.'s Class B common stock and warrants to purchase an additional
2,200,000 such shares at $9.00 per share, giving us control of more than 80% of
The Morgan Group, Inc.'s aggregate voting power, a cash balance of $500,000, and
the right to receive $100,000 per year from The Morgan Group, Inc. under a
services agreement assigned to us by Lynch Interactive Corporation. The Morgan
Group has not made any payments under this agreement since the first quarter of
2001. Our ability to develop a successful business is therefore largely
dependent on the success or failure of The Morgan Group, Inc.

The accompanying combined financial statements represent the
combination of all of Lynch Interactive Corporation's interest in The Morgan
Group, Inc. and our consolidated financial statements as if the transfer by
Lynch Interactive Corporation to us occurred at the beginning of the respective
period.

The combined financial statements have been prepared using the
historical basis of assets and liabilities and historical results of Lynch
Interactive Corporation's interest in The Morgan Group, Inc. which will be
contributed to us. However, the historical financial information presented
herein reflects periods during which we did not operate as an independent public
company and accordingly, certain assumptions were made in preparing such
financial information. Such information, therefore, may not necessarily reflect
our results of operations, financial condition or cash flows in the future or
what they would have been had we been an independent public company during the
reporting periods.

The report of Ernst & Young LLP with respect to the financial
statements of The Morgan Group, Inc. as of December 31, 2000 and 1999 and for
each of the three years in the period ended December 31, 2000, contains an
explanatory paragraph as to The Morgan Group, Inc's ability to continue as a
going concern. A going concern opinion indicates that The Morgan Group, Inc.'s
auditors believe that substantial doubt exists regarding The Morgan Group,
Inc.'s ability to remain in business. Because we are a holding company and our
sole asset consists of our controlling interest in The Morgan Group Inc., other
than $500,000 in cash and a contractual right to receive $100,000 per year for
management services, the report of Ernst & Young LLP, our independent
auditors, with respect to our financial statements as of December 31, 2000 and
1999 and for each of the three years in the period ended December 31, 2000, also
contains an explanatory paragraph which expresses substantial doubt as to our
ability to continue as a going concern. Such an opinion may adversely affect our
ability to obtain new financing on reasonable terms or at all.

Results of Operations

Since our inception, we have had no operating history or revenues.
Following consummation of the spin-off, our sole source of revenue, absent
selling assets, shall be the payment of dividends by The Morgan Group, Inc. and
any management fees received by us from The Morgan Group, Inc. pursuant to that
certain services agreement assigned to us by Lynch Interactive Corporation. The
Morgan Group, Inc., however, has not made any payments under that agreement
since the first quarter of 2001, nor has it declared any dividends since the
third quarter of 2000. There can be no assurance as to when, if ever, The Morgan
Group will resume declaring dividends and making its contractual payments to us
under the services agreement.

Liquidity and Capital Resources

Other than $500,000 in cash and a contractual right to receive
$100,000 per year for management services, we have no assets other than our
controlling interest in The Morgan Group, Inc. However, as stated above, the
Morgan Group has neither made any payments for management services since the
first quarter of 2001 nor declared any dividends since the third quarter of
2000. Therefore, until such payments and dividend declarations resume, the only
way we can generate liquidity in the near future is through the sale of our
controlling interest in The Morgan Group, Inc. Presently, selling such shares
would not be realistic as our holdings are so large that the trading market for
The Morgan Group, Inc.'s stock is quite limited. Any disposal of its stock would
have to be made in small quantities over a long period of time. Even if we could
sell this interest, The Morgan Group, Inc.'s common stock is currently trading
near all time lows and the prospect of this stock appreciating in value is
highly uncertain as The Morgan Group, Inc. has not enjoyed a profitable quarter
since 1999.

-17-

Should we adopt a business plan to develop our own operations beyond
serving as a holding company, additional avenues for generating cash flow will
be required. There is no assurance that such financing can be obtained, or on
terms acceptable to us.

Quantitative And Qualitative Disclosures About Market Risk

The Morgan Group, Inc. had minimal exposure to interest rates as of
December 31, 2000, because its outstanding long-term debt was not significant.
The new credit facilities mentioned above bear interest at variable rates based
on either The Bank of New York Alternate Base Rate or the one month LIBOR, or,
in the case of the new mortgage facility, the prime rate. Accordingly,
borrowings under the credit facilities have exposure to changes in interest
rates. In addition, interest rate exposure on investments in U.S. Treasury
backed instruments was also minimal.

Additionally, we are indirectly exposed to fluctuating interest
rates and fuel prices. Lower interest rates often stimulate the construction of
new homes which in turn generates increased demand for The Morgan Group, Inc.'s
largest division, the delivery of manufactured homes. In addition, as fuel costs
decline, The Morgan Group, Inc.'s profit margins normally increase, as
transporting goods across the country becomes cheaper and drivers becomes easier
to recruit. Both of these factors, therefore, tend to impact on the value of our
stockholdings in The Morgan Group, Inc. and the likelihood that the Morgan
Group, Inc. will pay cash dividends and management service fees, are chief
sources of revenue.

The Morgan Group, Inc.

Results Of Operations For The Year 2000 Compared With 1999

Consolidated Results

The year 2000 was characterized by the continued downturn in
manufactured housing production, which began in 1999. Industrial production of
new manufactured homes decreased 26% in 2000. The Morgan Group, Inc. was also
affected by the decline in activity in other markets it serves, including
delivery of recreational vehicles and large trailers. As a result of these
declines, The Morgan Group, Inc.'s revenues decreased 26% from 1999 levels.

To combat this severe decline in revenues, in March 2000 The Morgan
Group, Inc. instituted significant cost reduction initiatives in all areas, with
the primary focus on staff reduction and facility consolidation. The effects of
these initiatives were savings of $1.8 million in 2000. The Morgan Group, Inc.
estimates that the effects of these initiatives will continue and will
approximate savings of $3.2 million in 2001. In spite of these significant
efforts, operating costs as a percentage of revenue were 102% for the year ended
December 31, 2000, compared to 99% in the prior year, resulting in a loss from
operations of $2.0 million.

Because of the existence of significant non-cash expenses, such as
depreciation of fixed assets and amortization of intangible assets, The Morgan
Group, Inc. believes that EBITDA contributes to a better understanding of its
ability to satisfy its obligations and to utilize cash for other purposes.
EBITDA should not be considered in isolation, from or as a substitute for,
operating income, cash flow from operating activities, and other consolidated
income or cash flow data prepared in accordance with generally accepted
accounting principles. The loss before interest, taxes, depreciation and
amortization (EBITDA loss) was $971,000 in 2000, as compared to positive EBITDA
of $1.8 million in 1999.

In the fourth quarter of 2000, The Morgan Group, Inc. recorded a
non-cash charge of $3.2 million relating to the valuation of deferred tax
assets. As The Morgan Group, Inc. has a cumulative loss in its three most recent
fiscal years and is in default on its credit facility (see "Liquidity and
Capital Resources" below), its management believes that it would be inconsistent
with the technical provisions of Statement of Financial Accounting Standard No.
109, to rely on future taxable income to support realization of the deferred tax
assets. The Morgan Group, Inc. therefore wrote off deferred tax assets that were
not currently realizable.

-18-

The Morgan Group, Inc. experienced net loss for 2000 of $4.8 million
compared to net income of $19,000 in 1999.

Segment Results

The Morgan Group, Inc. conducts its operations in four principal
segments as discussed below. The following discussion sets forth certain
information about the segment results.

Manufactured Housing

Manufactured housing operating revenues are generated from providing
transportation and logistical services to manufacturers of manufactured homes.
Manufactured housing operating revenues decreased 29% from 1999 to $70.6 million
in 2000.

The manufactured housing industry as a whole continued to decline in
2000, with industry shipments down by 26%. The decline is due in large part to
the combined impact of tightened consumer credit standards, increased industry
repossessions and excess inventory. The Morgan Group, Inc. is highly dependent
upon the manufactured housing industry generally and on certain major customers
within that industry. Some of The Morgan Group, Inc.'s customers are financially
stressed by continued weakness in the industry. Unit deliveries in the
manufactured housing segment declined by 31% in 2000, indicating a loss of
market share due primarily to competitive pricing pressures.

EBITDA decreased $4.5 million to $5.8 million due to the decrease in
business. The decrease in revenue of $6.9 million was partially offset by $2.2
million in reduced costs. The Morgan Group, Inc. closed some terminals due to
plant closures and consolidated terminals in other areas to serve the needs of
more than one customer from a single location.

The Morgan Group, Inc.'s focus on manufactured housing is on large
national contracts. During 2001, The Morgan Group, Inc. obtained significant
additional contracts with Fleetwood Enterprises, Inc. and Clayton Homes, Inc.
under which it will provide for each client a significantly higher percentage of
the shipments, for terms of one year and two years, respectively. The Morgan
Group, Inc. will continue to pursue these efforts.

Driver Outsourcing

The Morgan Group, Inc.'s driver outsourcing segment provides
outsourcing transportation services primarily to manufacturers of recreational
vehicles, commercial trucks and other specialized vehicles. Driver outsourcing
operating revenues decreased 10% in 2000 to $20.9 million. The decrease was
primarily the result of softness in the recreational vehicle market. However,
driver outsourcing EBITDA increased $900,000 to $1.3 million from improved
operating efficiencies, consolidations and other reductions in overhead costs.

Specialized Outsourcing Services

Specialized outsourcing services consists of delivering large
trailers, travel and other small trailers. The Morgan Group, Inc. discontinued a
specialized transport service, decking, in 2000. Operating revenues decreased
28% to $15.3 million in 2000. This decrease was primarily caused by a reduction
in available drivers and discontinuing the decking deliveries. Specialized
outsourcing services incurred an EBITDA loss of $140,000 in 2000 compared to an
EBITDA of $469,000 in 1999. This loss was caused primarily by the reduction in
the delivery of large trailers ($1.1 million) and decking ($360,000), partially
offset by improved operating efficiencies and overhead cost reductions,
representing an aggregate savings of $882,000.

-19-

Insurance and Finance

The Morgan Group, Inc.'s insurance and finance segment provides
insurance and financing services to its drivers and independent owner-operators.
This segment also acts as a cost center because it accounts for all bodily
injury, property damage and cargo loss costs.

Insurance and finance operating revenues decreased $1.0 million to
$2.9 million in 2000 reflecting a decrease in owner-operator insurance premiums
relating to the decline in the manufactured housing industry. However, insurance
and finance EBITDA loss decreased $2.2 million to $6.8 million due to improved
bodily injury, property damage and cargo loss claims experience. The deductible
for personal injury and property damage is $250,000 per occurrence. The cargo
deductible is $1,000,000. Accordingly, The Morgan Group, Inc. is essentially
self-insured for cargo losses.

As a part of continuing efforts to contain claims' expense, The
Morgan Group, Inc. is expanding its safety awareness as well as formal safety
training efforts among both owner-operators and terminal personnel. Cargo claims
as a percent of operating revenue decreased from 2.3% in 1999 to 1.9% in 2000.
Similarly, bodily injury and property damage claims decreased from 3.6% to 3.3%
of operating revenue. The Morgan Group, Inc. believes that its focus on driver
safety is having, and may continue to have, a favorable impact.

Year 1999 Compared with 1998

Consolidated Results

During 1999, The Morgan Group, Inc. experienced a decrease in the
number of manufactured housing shipments and a continued increase in insurance
and claims costs. The Morgan Group, Inc. also experienced a reduction in
operating revenues and profitability in the specialized outsourcing services
segment.

Industrial shipment of new manufactured homes decreased
approximately 4% in 1999. The Morgan Group, Inc. was more severely impacted as
its largest customer experienced an approximate 21% decline in retail sales of
new homes. As a result, The Morgan Group, Inc. sustained an 8% decrease in
shipments of new homes in 1999.

The Morgan Group, Inc.'s total operating revenues in 1999 decreased
$4.9 million to $145.6 million from $150.5 million in 1998. Its operating income
before interest, taxes, depreciation and amortization (EBITDA) decreased from
$3.2 million in 1998 to $1.8 million in 1999.

Net interest expense decreased from $545,000 in 1998 to $338,000 in
1999 as a result of improved cash management that reduced the amount of its
borrowings from its credit facility.

Accordingly, net income for 1999 was $19,000 compared to $903,000 in
1998.

Manufactured Housing

Manufactured housing operating revenues began decreasing in the
second quarter, and ended the year at $99.5 million, or a 6% reduction from
1998. In spite of this reduction, EBITDA for 1999 ended at $10.3 million
compared to $10.8 million for 1998 because of cost reduction measures instituted
by management that largely mitigated the revenue decline.

Driver Outsourcing

The Morgan Group, Inc.'s driver outsourcing business demonstrated
positive growth in 1999. Operating revenues increased 18% to $23.4 million in
1999 while EBITDA increased by $301,000. However, high driver recruiting and
other overhead costs continued to depress the profitability of this segment in
1999. Accrued expenses in this segment for 1999 were $1.0 million, representing
an increase of $200,000 from 1998, and overhead costs of $2.1 million,
representing an increase of $128,000 from 1998.

Specialized Outsourcing Services

Specialized outsourcing services operating revenues decreased 8% to
$21.2 million in 1999. The Morgan Group, Inc. received $1.0 million less revenue
from pick-up shipments by one customer and $673,000 less revenue from decking
operations as a result of a general market decline. Specialized outsourcing
services' EBITDA decreased $542,000 primarily on the lower volume and an
increase in overhead costs of $460,000 associated with large trailer delivery.

-20-

Insurance and Finance

Insurance and finance operating revenues decreased less than 3% in
1999, particularly in the latter months of the year, reflecting a decrease in
owner-operator insurance premiums relating to the slow-down in the manufactured
housing industry.

During 1999, The Morgan Group, Inc. continued to be affected by
increasing claims costs. Claim costs in 1999, as a percent of operating revenue
increased to 5.9% from 5.1% in 1998. As stated above, effective April 1, 1999,
the deductible for personal injury and property damage increased to $250,000 per
occurrence. Additionally, the cargo stop-loss insurance policy provision
terminated and the deductible was increased to $1,000,000.

Interim Results Of Operations For The Quarter Ended September 30, 2001

Consolidated Results

For third-quarter 2001, revenues were down 13 percent to $24.8
million versus the $28.6 million reported in the year-ago quarter. The Morgan
Group, Inc. reported revenue improvements of 51% in the towaway division and 26%
in the pickup division. These increases were offset by a 27% decline in revenue
from the manufactured housing division.

Revenues for September were negatively impacted for all four
divisions by the September 11 terrorist attacks. Shippers experienced work
slowdowns and demand fell as some customers cancelled orders. In addition,
continued weakness in the manufactured housing sector resulted in reduced
revenues in the manufactured housing division, although the industry continues
to make progress since hitting bottom in February 2001.

To offset the lower revenue, The Morgan Group, Inc. has implemented
cost-cutting programs designed to match company expenses with reduced revenue
levels. In The Morgan Group, Inc.'s business model, 86% of expenses are variable
on a load-by-load basis, 11% of expenses are variable within a 60-day period,
and only 3% are fixed in the long term. The Morgan Group, Inc. has continued to
eliminate or reduce costs to maximize operating profit on overall lower
revenues.

The Morgan Group, Inc. renewed its liability and workers
compensation insurance on July 1, 2001 resulting in increased expense. The
liability insurance market for trucking companies has been negatively impacted
by increased loss ratios, higher credit risk and a decrease in available
capacity in the excess reinsurance market. The Morgan Group, Inc. will attempt
to recover much of the increased insurance cost in the form of apportioned
insurance charges (AIC) to customers.

Operating costs were 91.3% of total revenues for the quarter
compared to 91.0% in prior year. Selling, general and administrative expenses
were 8.6% of revenue compared to 7.5% of revenue in the third quarter of 2000.

The reduced revenue and increased insurance expense resulted in an
operating loss of $169,000 in the third quarter compared to operating income of
$178,000 in 2000.

The Morgan Group, Inc. also reported that effective October 1, 2001,
it would no longer be the primary carrier for Oakwood Homes Corporation (NYSE:
OH). In past years, Oakwood Homes Corporation was its largest customer,
generating revenues in excess of $25 million for the manufactured housing
division. A weakened market for manufactured homes and reductions in capacity at
Oakwood Homes Corporation had reduced The Morgan Group, Inc.'s revenue stream
from Oakwood Homes Corporation to a $12 million annualized base. The Morgan
Group, Inc. will continue as the primary backup carrier for Oakwood Homes
Corporation.

The Morgan Group, Inc. is currently implementing marketing and sales
programs directed at successfully replacing the Oakwood revenue. The Morgan
Group, Inc. has obtained significant new contracts with New Flyer Industries,
Monaco Coach, Union Pacific, Wabash Trailers and others that in the aggregate
are expected to generate annual revenue offsetting the Oakwood decline.

-21-

Manufactured Housing

Revenues for the manufactured housing division decreased by $4.8
million or 26% in the third quarter compared to prior year.

The manufactured housing market continues to rebound slowly from a
severe two-year slump. Shipments of manufactured homes in July and August of
2001 were down 17% compared to the prior year. This compares to year-over-year
declines of 41% in the first quarter and 29% in the second quarter of 2001
compared to 2000.

Revenues for September manufactured housing were negatively impacted
by a loss of drivers that primarily hauled Oakwood Homes Corporation homes. The
Morgan Group, Inc. expects to replace many of the drivers and much of the
business lost as a result of the Oakwood Homes Corporation contract change.

In September The Morgan Group, Inc. filed a lawsuit alleging that
one of its former senior officers had conspired with a competitor to
misappropriate its drivers, employees, customers and trade secrets both during
that officer's employment with The Morgan Group, Inc. and after she left its
employment. The court issued a preliminary injunction in favor of The Morgan
Group, Inc. on September 28, 2001. In addition, The Morgan Group, Inc. is
seeking monetary damages as well as a permanent injunction against unfair
competition and unlawful interference with its contracts.

Driver Outsourcing

Operating revenues for the driver outsourcing division in the
quarter decreased by $620,000 million or 12% from prior year as a result of
reduced demand for recreational vehicles.

The driver outsourcing division has acquired several new contracts
that will increase revenue beginning in October 2001.

Specialized Outsourcing Services

Operating revenues for the specialized outsourcing division
increased by $1.7 million or 42% compared to prior year third quarter. Revenues
of the towaway division that leases independent contractors with Class 8
tractors grew by 51% compared to prior year. The towaway division has 113 owner
operators leased on and continues to grow its brokerage function which contracts
customer loads to other carriers. The pick-up division, which utilizes
independent contractors with dual-axle pick-up trucks to move travel trailers
and boats, reported 26% revenue growth compared to prior year despite the down
market in recreational vehicles.

Insurance and Finance

Insurance and Finance operating revenues decreased $97,000 or 13% in
the third quarter of 2001 as a result of decreases in the number of drivers and
independent owner-operators.

For the Nine Months Ended September 30, 2001

Consolidated Results

Revenues for the first nine months of 2001 decreased by $16.5
million or 19% compared to 2000. The decrease is primarily related to the
previously discussed weak market for shipments of new manufactured homes.

As a result of comprehensive cost reduction initiatives, The Morgan
Group, Inc. was able to reduce the operating loss to $247,000 from $607,000 in
the first nine months of 2000.

-22-

Manufactured Housing

Manufactured housing revenues declined by $17.5 million or 31% for
the nine months ended September 30, 2001 compared to 2000. According to the
Manufactured Housing Institute, shipments of new manufactured homes from January
through August of 2001 decreased by 33% compared to the same period in 2000.

Driver Outsourcing

Operating revenues for the first nine months of 2001 declined by 17%
or $2.8 million compared to 2000. This decline is primarily a result of weak
demand for recreational vehicles in 2001 compared to 2000. In addition, the
general demand for commercial trucks, buses, step-out vans, trams and other
specialized equipment declined in step with the slowdown in the national
economy.

Specialized Outsourcing Services

Operating revenues in specialized outsourcing services increased 36%
or $4.2 million during the first nine months of 2001 compared to 2000. The
towaway division has expanded revenues by 43% by adding to the number of owner
operators leased on to The Morgan Group, Inc. and by expanding its brokerage
operation. The pick up division has grown by 27% by recruiting new employees,
business and drivers throughout the year.

Liquidity and Capital Resources at December 31, 2000

Operating activities used $0.9 million of cash in 2000 compared to a
$4.9 million cash generation in 1999. The 2000 net loss and reductions in
working capital liabilities was partially offset by the deferred tax assets
valuation reserve and by reductions in trade accounts receivable and other
working capital assets. The Morgan Group, Inc. recorded an income tax receivable
of $499,000 as of December 31, 2000 as it intends to file for tax refunds based
on prior year payments. Trade accounts receivable decreased $2.4 million
primarily due to the decline in operating revenue. Day's sales outstanding
increased to 33 days at December 31, 2000 as compared to 28 days at December 31,
1999.

The Morgan Group, Inc.'s investment in property and equipment
decreased in 2000 to $106,000 with expenditures for an optical scanning system
and other new information systems. The Morgan Group, Inc.'s 2001 capital
expenditure plan approximates $150,000.

At December 31, 2000, The Morgan Group, Inc. had a $7.7 million
revolving credit facility, with a $6.7 million letter of credit sub-limit. At
December 31, 2000, The Morgan Group, Inc. had no outstanding debt under its
credit facility, and $6.6 million of letters of credit were outstanding under
the credit facility. Letters of credit are required for self-insurance retention
reserves and other corporate needs.

The Morgan Group, Inc.'s credit facility matured on January 28,
2001, at which time The Morgan Group, Inc. had no outstanding debt and $6.6
million outstanding letters of credit. As a result of the credit facility not
being renewed, The Morgan Group, Inc. had a payment default arising from the
lender's right to demand cash to meet outstanding obligations under the letters
of credit and the bank had discretion whether to make any loans to The Morgan
Group, Inc. or issue additional letters of credit for The Morgan Group, Inc. In
July 2001, The Morgan Group, Inc. established two credit facilities to replace
the matured credit facility. Please see "Liquidity and Capital Resources at
September 30, 2001" below.

During 2000, The Morgan Group, Inc. declared quarterly dividends on
its Class A common stock of $.05 per share and dividends of $.025 per share on
its Class B common stock through the first three quarters. No dividends were
declared in the fourth quarter. Payment of dividends is within the discretion of
the Board of Directors. Payment of future dividends will be dependent upon,
among other things, earnings, debt covenants, future growth plans, legal
restrictions, and The Morgan Group, Inc.'s financial condition.

-23-

Under current policies, The Morgan Group, Inc. does not use interest
rate derivative instruments to manage exposure to interest rate changes. Also,
The Morgan Group, Inc. currently is not using any fuel hedging instruments.

Liquidity and Capital Resources at September 30, 2001

On July 12, 2001, The Morgan Group, Inc. completed a previously
announced $2 million capital infusion from its majority stockholder Lynch
Interactive Corporation. The Morgan Group, Inc. issued one million new Class B
shares of common stock in exchange for a $2 million cash investment, thereby
increasing Lynch Interactive Corporation's ownership position from 55.6% to
68.5%. The proceeds from the transaction are invested in U.S. Treasury backed
instruments and are pledged as collateral for a credit facility.

On July 27, 2001, The Morgan Group, Inc. obtained a new three-year
$12.5 million credit facility. This credit facility replaces its previous credit
line that had expired on January 28, 2001 and was not renewed.

This credit facility will be used for working capital purposes and
to post letters of credit for insurance contracts. As of September 30, 2001, The
Morgan Group, Inc. had outstanding borrowings of $869,000 and $7.6 million
outstanding letters of credit. Borrowings will bear interest at a rate per annum
equal to either Bank of New York Alternate Base Rate ("ABR") plus one-half
percent or, at The Morgan Group, Inc.'s option, absent an event of default, the
one month London Interbank Offered Rate ("LIBOR") as published in The Wall
Street Journal, averaged monthly, plus three percent. Borrowings and posted
letters of credit on the credit facility are limited to a borrowing base
calculation that includes 85% of eligible receivables and 95% of eligible
investments, and are subject to certain financial covenants including minimum
tangible net worth, maximum funded debt, minimum fixed interest coverage and
maximum capital expenditures. The facility is secured by accounts receivable,
investments, inventory, equipment and general intangibles. The facility may be
prepaid anytime with prepayment being subject to a 3%, .75% and .25% prepayment
penalty during year 1, 2 and 3, respectively.

This prior credit facility matured on January 28, 2001, at which
time The Morgan Group, Inc. had no outstanding debt and $6.6 million outstanding
letters of credit. The Morgan Group, Inc. was in default of the financial
covenants. The bank decided not to renew the credit facility. As a result of the
prior credit facility not being renewed, The Morgan Group, Inc. had a payment
default.

On July 31, 2001, The Morgan Group, Inc. closed on a new real estate
mortgage for $500,000 that is secured by its land and buildings in Elkhart,
Indiana. The loan will be used for short-term working capital purposes. The
mortgage bears interest at prime rate plus 0.75%, and is for a six-month term
with outstanding principal due on February 1, 2002. The loan may be prepaid at
any time with no penalties, and is subject to the same covenants as the new
credit facility. The Morgan Group, Inc.'s application for additional capacity
under this facility is under consideration.

In addition, in August 2001 The Morgan Group, Inc. received an
income tax refund of $664,000 from filing a federal net operating loss
carry-back return for the 2000 tax year.

Effective July 1, 2001, The Morgan Group, Inc. renewed its primary
liability insurance, workers compensation, cargo, and property insurance.
Acquisition of liability insurance in the trucking industry has become
increasingly more difficult and expensive over the past year. As a result, The
Morgan Group, Inc.'s insurance premiums effective July 1, 2001 increased
significantly. The Morgan Group, Inc. will recover much of this increase from
customers in the form of apportioned insurance charges (AIC). The net impact on
its operating results for the next 12 months cannot be determined at this time.

The Morgan Group, Inc. has posted increased letters of credit to the
insurance carriers through the new credit facility as collateral for the payment
of claim reimbursements. The Morgan Group, Inc. believes the combination of the
above financial transactions will be adequate to allow it to post all required
letters of credit for insurance contracts.

The Morgan Group, Inc.'s financial statements were prepared on a
going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Morgan Group,
Inc.'s ability to continue as a going concern is dependent upon its ability to
successfully maintain its financing arrangements and to comply with the terms
thereof.

-24-

The Morgan Group, Inc. believes that internally generated funds
together with the recent equity infusion and resources available under the
replacement credit and mortgage facilities will be sufficient to provide for its
capital and liquidity requirements for the next 12 months.

Inflation

Most of The Morgan Group, Inc.'s expenses are affected by inflation,
which generally results in increased costs. During 2000, the effect of inflation
on its results of operation was minimal.

The transportation industry is dependent upon the availability and
cost of fuel. Although fuel costs are paid by The Morgan Group, Inc.'s
owner-operators, increases in fuel prices may have significant adverse effects
on its operations for various reasons. Since fuel costs vary between regions,
drivers may become more selective as to regions in which they will transport
goods resulting in diminished driver availability. Also, The Morgan Group, Inc.
would experience adverse effects during the time period from when fuel costs
begin to increase until the time when scheduled rate increases to customers are
enacted. Increases in fuel prices may also affect the sale of recreational
vehicles by making their purchase less attractive to consumers. A decrease in
the sale of recreational vehicles would be accompanied by a decrease in the
transportation of recreational vehicles and a decrease in the need for driver
outsourcing services.

Impact of Seasonality

Shipments of manufactured homes tend to decline in the winter months
in areas where poor weather conditions inhibit transport. This usually reduces
operating revenues in the first and fourth quarters of the year. The Morgan
Group, Inc.'s operating revenues, therefore, tend to be stronger in the second
and third quarters.

BUSINESS

Overview

We were incorporated in November 2001 to serve as a holding company
for Lynch Interactive Corporation's controlling interest in The Morgan Group,
Inc. Upon our formation as a wholly owned subsidiary of Lynch Interactive
Corporation, Lynch Interactive Corporation transferred to us 161,100 shares of
The Morgan Group, Inc.'s outstanding Class A common stock, warrants to purchase
an additional 161,100 such shares at $9.00 per share, 2,200,000 shares of The
Morgan Group, Inc.'s Class B common stock and warrants to purchase an additional
2,200,000 such shares at $9.00 per share, giving us control of more than 80% of
The Morgan Group, Inc.'s aggregate voting power. In addition, Lynch Interactive
Corporation made a capital contribution to us of $500,000 and assigned to us a
services agreement with The Morgan Group, Inc. pursuant to which The Morgan
Group, Inc. has agreed to pay $100,000 per year for certain management services.
The Morgan Group, Inc. has not made any payments under this agreement since the
first quarter of 2001. We have no additional significant assets and we have had
no operations to date.

The Morgan Group, Inc. is the nation's largest publicly owned
service company in managing the delivery of manufactured homes, commercial
vehicles and specialized equipment in the United States, and through its wholly
owned and principal subsidiary, Morgan Drive Away, Inc., has been operating
since 1936. The Morgan Group, Inc. primarily provides outsourcing transportation
services through a national network of approximately 775 independent
owner-operators and approximately 1,112 other drivers as of October 31, 2001.
The Morgan Group, Inc. dispatches its drivers from 56 locations in 27 states.
The Morgan Group, Inc.'s largest customers include Fleetwood Enterprises, Inc.,
Champion Enterprises, Inc., Winnebago Industries, Inc., Cavalier Homes, Inc.,
Clayton Homes, Inc., Four Seasons Housing, Inc., Thor Industries, Inc., Holiday
Rambler and Damon Corporation.

The Morgan Group, Inc. also provides certain insurance and financing
services to the independent owner-operators through its insurance and finance
subsidiaries, Interstate Indemnity Company and Morgan Finance, Inc.,
respectively.

-25-

As further described below, The Morgan Group, Inc.'s strategy is to
grow through expansion in the niche businesses already being serviced, along
with pursuing acquisitions or joint ventures in related industries. In addition,
The Morgan Group, Inc. will look to expand insurance product offerings to
drivers and owner-operators through its Interstate Indemnity Company.

Company Services

The Morgan Group, Inc. operates in these business segments:
Manufactured Housing, Driver Outsourcing, Specialized Outsourcing Services, and
Insurance and Finance.

o Manufactured Housing Segment. The largest portion of The Morgan
Group, Inc.'s operating revenues is derived from transportation
of manufactured housing, primarily new manufactured homes,
modular homes, and office trailers. This segment also transports
used manufactured homes and offices for individuals, businesses,
and the U.S. Government. Based on industry shipment data
available from the Manufactured Housing Institute, The Morgan
Group, Inc. is the largest transporter of manufactured homes in
the United States. As of October 31, 2001, the manufactured
housing segment ships products through approximately 426
independent owner-operators driving specially modified
semi-tractors referred to as "toters." The number of independent
owner-operators decreased approximately 47% from October 31,
2000 principally due to a decrease in shipments. Makers of
manufactured housing generally ship their products no more than
a few hundred miles from their production facilities. Therefore,
to serve the regional structure of this industry, The Morgan
Group, Inc. positions its dispatch offices close to the
production facilities of its customers in order to best service
them. The Morgan Group, Inc. reduced its number of manufacturing
housing dispatch offices in 2000 by 18 locations, primarily due
to plant closures and internal consolidation. Most manufactured
housing units, when transported, require a special permit
prescribing the time and manner of transport for
over-dimensional loads. The Morgan Group, Inc. obtains the
permits required for each shipment from each state through which
the shipment will pass.

In 2001, for the third consecutive year, the manufactured
housing industry experienced a decline in shipments and
production. Industry production by the manufactured housing
industry (considering double-wide homes as two shipments) in the
United States decreased by approximately 26% to 426,000 in 2000
from 574,000 in 1999, after a 5% decrease in 1999 according to
data from the Manufactured Housing Institute. The manufactured
housing industry continues to suffer from the combined impact of
tightened consumer credit standards, increased industry
repossessions and excess inventory. The Morgan Group, Inc.
believes that affordable manufactured housing over the long-term
should continue to grow along with the general economy, as long
as employment statistics and consumer confidence remain strong.
There is no assurance, however, that manufactured housing
production will increase.

o Driver Outsourcing Segment. The driver outsourcing segment
provides outsourcing transportation services primarily to
manufacturers of recreational vehicles, commercial trucks, and
other specialized vehicles through a network of service centers
in nine states. Driver outsourcing engages the services of
approximately 1,112 drivers who are outsourced to customers to
deliver the vehicles. In 2000, driver outsourcing delivered
approximately 36,900 units through the use of these drivers.
While the number of deliveries decreased, operating revenue per
unit delivered increased in 2000.

o Specialized Outsourcing Services Segment. The specialized
outsourcing services segment consists of large trailer, or
towaway, delivery, travel and other small trailer, or pick-up,
delivery. The towaway operation moved approximately 8,250 large
trailers in 2000 compared to 14,600 large trailers in 1999,
primarily the result of a shortage in independent owner-operator
availability. As of October 31, 2001, the towaway operation had
contracts with approximately 123 independent owner-operators who
drive semi-tractors compared to 89 independent owner-operators
at October 31, 2000. As of October 31, 2000, The Morgan Group,
Inc. delivered travel and other small trailers through 226
independent owner-operators utilizing pickup trucks compared to
161 independent owner-operators in 1999.

o Insurance and Finance Segment. The insurance and finance segment
provides insurance and financing to The Morgan Group, Inc.'s
drivers and independent owner-operators. Interstate Indemnity
Company, The Morgan Group, Inc.'s insurance subsidiary, may
accept a limited portion or all of the underwriting risk,
retaining the appropriate proportion of the premiums. This
segment administers cargo, bodily injury and property damage
insurance programs.

-26-

Growth Strategy

The Morgan Group, Inc.'s growth strategy is to focus on its core
transportation services, and to grow its market in manufactured housing and
driver outsourcing through acquisitions, if suitable opportunities arise. To
enhance its profitability, The Morgan Group, Inc. is continuing the process of
reducing its overhead costs.

o Manufactured Housing. The Morgan Group, Inc. believes it can
take better advantage of its position in the manufactured
housing industry and its relationship with manufacturers,
retailers, and independent owner-operators, by expanding the
services it offers within its specialized business. As the
nation's largest service company managing the delivery of
manufactured homes, The Morgan Group, Inc. will also pursue
other national contracts with manufacturers, and continue to
pursue opportunities to offer new services and consider
acquisition opportunities.

o Driver Outsourcing. The Morgan Group, Inc. has focused its
operations in two broad markets, recreational and commercial
vehicles. Given the softness in the recreational vehicle
industry, The Morgan Group, Inc. is looking to expand its growth
in the delivery of commercial vehicles, such as school buses,
ambulances, dump trucks and shuttle buses. In addition, The
Morgan Group, Inc. has strengthened its sales and marketing
staff. The Morgan Group, Inc.'s growth strategy within this
market includes expanding its market position in this highly
fragmented delivery transportation market. The future growth
rate of The Morgan Group, Inc.'s outsourcing business is
dependent upon continuing to add major vehicle customers and
expanding The Morgan Group, Inc.'s driver force.

o Specialized Outsourcing Services. The Morgan Group, Inc.
believes it can grow its towaway business by increasing the
number of available drivers and through the use of
transportation brokers. The Morgan Group, Inc. has not been able
to take full advantage of large trailer delivery opportunities
because it did not have a sufficient number of towaway drivers
or its drivers were not in the necessary locations.
Additionally, The Morgan Group, Inc. continues to develop other
market opportunities for the pick-up portion of this segment.

o Acquisitions/Joint Ventures. The Morgan Group, Inc. is
continuously considering acquisition opportunities. The Morgan
Group, Inc. may consider acquiring regional or national firms
that service the manufactured housing and/or the outsourcing
industry as well as logistics, transportation, or related
industries. The Morgan Group, Inc. is continually reviewing
potential acquisitions and joint venture opportunities and is
engaged in negotiations from time to time. There can be no
assurance that any future transactions will be effected.

Forward-Looking Discussion

During the remainder of 2001, The Morgan Group, Inc. could benefit
from further reduction of overhead costs and an improvement of its safety
record. While The Morgan Group, Inc. remains optimistic over the long term, near
term results could be affected by a number of internal and external economic
conditions.

o Dependence on Manufactured Housing. Shipments of manufactured
housing have historically accounted for a substantial majority
of The Morgan Group, Inc.'s operating revenues. Therefore, The
Morgan Group, Inc.'s prospects are substantially dependent upon
this industry, which is subject to broad production cycles.
Currently, manufactured housing is experiencing an industry-wide
decline in shipments, which is having an adverse impact on The
Morgan Group, Inc.'s operating revenues and profitability.

o Costs of Accident Claims and Insurance. Traffic accidents occur
in the ordinary course of The Morgan Group, Inc.'s business.
Claims arising from such accidents can be significant. Although
The Morgan Group, Inc. maintains liability and cargo insurance,
the number and severity of the accidents involving The Morgan
Group, Inc.'s independent owner-operators and drivers can have a
significant adverse effect on the profitability of The Morgan
Group, Inc. through premium increases and amounts of loss
retained by The Morgan Group, Inc. below deductible limits or
above its total coverage. There can be no assurance that The
Morgan Group, Inc. can continue to maintain its present
insurance coverage on acceptable terms or that the cost of such
coverage will not increase significantly.

-27-

o Customer Contracts and Concentration. Historically, a majority
of The Morgan Group, Inc.'s operating revenues have been derived
under contracts with customers. Such contracts generally have
one, two, or three year terms. There is no assurance that
customers will agree to renew their contracts on acceptable
terms or on terms as favorable as those currently in force. The
Morgan Group, Inc.'s top ten customers have historically
accounted for a majority of its operating revenues. The loss of
one or more of these significant customers could adversely
affect The Morgan Group, Inc.'s results of operations. A number
of The Morgan Group, Inc.'s major customers are experiencing
financial difficulty as a result of the softness in the
manufactured housing and recreational vehicle markets.

o Competition for Qualified Drivers. Recruitment and retention of
qualified drivers and independent owner-operators is highly
competitive. The Morgan Group, Inc.'s contracts with independent
owner-operators are terminable by either party on ten days'
notice. There is no assurance that The Morgan Group, Inc.'s
drivers will continue to maintain their contracts in force or
that The Morgan Group, Inc. will be able to recruit a sufficient
number of new drivers on terms similar to those presently in
force. The Morgan Group, Inc. may not be able to engage a
sufficient number of new drivers to meet customer shipment
demands from time to time, resulting in loss of operating
revenues that might otherwise be available to it.

o Risks of Acquisitions and Expansions. The Morgan Group, Inc. has
sought and will continue to seek favorable acquisition
opportunities. Its strategic plans may also include the
initiation of new services or products, either directly or
through acquisition, within existing and/or complimentary
business lines. There is no assurance that The Morgan Group,
Inc. will be able to identify favorable acquisition
opportunities, that its acquisitions will be successfully
integrated into its operations or that they will prove to be
profitable.

Seasonality and General Economic Conditions

The Morgan Group, Inc.'s operations have historically been seasonal,
with generally higher operating revenues generated in the second and third
quarters than in the first and fourth quarters. A smaller percentage of The
Morgan Group, Inc.'s operating revenues are generated in the winter months in
areas where weather conditions limit highway use. The seasonality of The Morgan
Group, Inc.'s business may cause a significant variation in its quarterly
operating results. Additionally, The Morgan Group, Inc.'s operations are
affected by fluctuations in interest rates and the availability of credit to
purchasers of manufactured homes and recreational vehicles, general economic
conditions, and the availability and price of motor fuels. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Reserves at December 31, 2000."

The Morgan Group, Inc. requires significant credit facilities from
independent financial institutions to support its working capital needs and to
provide letters of credit for its insurance arrangements. The availability and
sufficiency of such credit facilities depends on The Morgan Group, Inc.'s
financial condition and operating performance, which is affected by the other
factors described herein, as well as the willingness of lenders to provide
credit support in the transportation and manufacturing housing sector. Without
such credit facilities, The Morgan Group, Inc. might not be able to continue as
a going concern.

Customers and Marketing

The Morgan Group, Inc.'s customers requiring delivery of
manufactured homes, recreational vehicles, commercial trucks, and specialized
vehicles are located in various parts of the United States. The Morgan Group,
Inc.'s largest manufactured housing customers include Fleetwood Enterprises,
Inc., Champion Enterprises, Inc., Cavalier Homes, Inc., Clayton Homes, Inc.,
Four Seasons Housing, Inc., Scotsman, and Commodore Corporation. The Morgan
Group, Inc.'s largest driver outsourcing customers include Winnebago Industries,
Inc., Thor Industries, Inc. Damon Corporation and Utilimaster. The Morgan Group,
Inc.'s largest specialized outsourcing services customers include Fleetwood
Enterprises, Inc., Keystone RV and North American Van Lines, Inc. While most
manufacturers rely solely on carriers such as The Morgan Group, Inc., other
manufacturers operate their own equipment and may employ outside carriers on a
limited basis.

-28-

The Morgan Group, Inc.'s operating revenues are comprised primarily
of linehaul revenues derived by multiplying the miles of a given shipment by the
stated mileage rate. Operating revenues also include charges for permits,
insurance, escorts and other items. A substantial portion of The Morgan Group,
Inc.'s operating revenues are generated under one, two, or three-year contracts
with producers of manufactured homes, recreational vehicles, and the other
products. In these contracts, the manufacturers agree that a specific percentage
(up to 100%) of their transportation service requirements from a particular
location will be performed by The Morgan Group, Inc. on the basis of a
prescribed rate schedule, subject to certain adjustments to accommodate
increases in The Morgan Group, Inc.'s transportation costs. Linehaul revenues
generated under customer contracts in 2000, 1999 and 1998 were 69%, 71%, and 64%
of total linehaul revenues, respectively.

The Morgan Group, Inc.'s ten largest customers all have been served
for at least three years and accounted for approximately 67%, 68% and 69% of its
linehaul revenues in 2000, 1999 and 1998, respectively. Linehaul revenues under
contracts with Fleetwood Enterprises, Inc. and Oakwood Homes Corporation
accounted for over 15% and 20%, respectively, of linehaul revenues in 2000. The
Fleetwood Enterprises, Inc. manufactured housing contract is continuous except
that it may be terminated upon thirty (30) day written notice by either party if
the other party has repeatedly failed to perform, persistently disregarded
applicable laws or regulations, or otherwise committed a substantial violation
of the contract. The Morgan Group, Inc. has been servicing Fleetwood
Enterprises, Inc. for over 25 years. The Oakwood Homes Corporation manufactured
housing contract expired on October 31, 2001 and will not be renewed; however,
The Morgan Group, Inc. will continue to be the primary back-up carrier for
Oakwood Homes Corporation. Most contracts provide for scheduled rate increases
based upon regional fuel prices. These increases are generally passed on to the
independent owner-operators who purchase fuel.

The Morgan Group, Inc. markets and sells its services through 56
locations in 27 states at October 31, 2001, concentrated where manufactured
housing and recreational vehicle production facilities are located. Marketing
support personnel are located both at The Morgan Group, Inc.'s Elkhart, Indiana
headquarters and regionally. Dispatch offices are supervised by regional
offices.

The Morgan Group, Inc. has 37 dispatch offices, each devoted
primarily to a single customer facility. This setup allows the dispatching agent
and local personnel to focus on the needs of each individual customer while
remaining supported by The Morgan Group, Inc.'s nationwide operating structure.
Sales personnel at regional offices and at the corporate headquarters meet
periodically with manufacturers to review production schedules, requirements and
maintain contact with customers' shipping personnel. Senior management maintains
personal contact with corporate officers of The Morgan Group, Inc.'s largest
customers. Regional and terminal personnel also develop relationships with
manufactured home park owners, retailers, finance companies and others to
promote The Morgan Group, Inc.'s shipments of used manufactured homes. The
Morgan Group, Inc. also participates in industry trade shows throughout the
country and advertises in trade magazines, newspapers, and telephone
directories.

Independent Owner-Operators

The shipment of product by the manufactured housing and specialized
outsourcing services segments are conducted by contracting for the use of the
equipment of independent owner-operators.

Owner-operators are independent contractors who own toters, tractors
or pick-up trucks, which they contract to, and operate for, The Morgan Group,
Inc. on a long-term basis. Independent owner-operators are not generally
approved to transport commodities on their own in interstate or intrastate
commerce. The Morgan Group, Inc., however, possesses such approvals and/or
authorities, and provides marketing, insurance, communication, administrative,
and other support required for such transportation.

The Morgan Group, Inc. attracts independent owner-operators mainly
through field recruiters, trade magazines, referrals, and truck stop brochures.
Recruitment and retention of qualified drivers is highly competitive and there
can be no assurance that The Morgan Group, Inc. will be able to attract a
sufficient number of qualified, independent owner-operators in the future.

-29-

The contract between The Morgan Group, Inc. and each owner-operator
can be cancelled upon ten days' notice by either party. The weighted average
length of service of The Morgan Group, Inc.'s current independent
owner-operators is approximately 4.0 years in 2000 and 3.5 years in 1999. At
December 31, 2000, 1,023 independent owner-operators were under contract to The
Morgan Group, Inc., including 749 operating toters, 91 operating semi-tractors,
and 183 operating pick-up trucks.

In manufactured housing, independent owner-operators utilizing toter
equipment tend to exclusively transport manufactured homes. Once modified from a
semi-tractor, a toter has limited applications for hauling general freight.
Toter drivers are, therefore, unlikely to be engaged by transport firms that do
not specialize in manufactured housing. This gives The Morgan Group, Inc. an
advantage in retaining toter independent owner-operators. The average tenure
with The Morgan Group, Inc. of its toter independent owner-operators is 4.7
years in 2000 compared to 3.9 years in 1999.

In specialized outsourcing services, The Morgan Group, Inc. is
competing with national carriers for the recruitment and retention of
independent owner-operators who own semi-tractors. The average length of service
of The Morgan Group, Inc.'s independent owner-operators is approximately 2.1
years in 2000, compared to 2.3 years in 1999. During 2000, the number of
owner-operators providing services to the towaway segment declined, while the
number of owner-operators driving pick-ups increased.

Independent owner-operators are generally compensated for each trip
on a per mile basis. Independent owner-operators are responsible for operating
expenses, including fuel, maintenance, lodging, meals, and certain insurance
coverages. The Morgan Group, Inc. provides required permits, cargo and liability
insurance (coverage while transporting goods for The Morgan Group, Inc.), and
communications, sales and administrative services. Independent owner-operators,
except for owners of certain pick-up trucks, are required to possess a
commercial drivers license and to meet and maintain compliance with requirements
of the U.S. Department of Transportation and standards established by The Morgan
Group, Inc.

From time to time, tax authorities have sought to assert that
independent owner-operators in the trucking industry are employees, rather than
independent contractors. No such tax claims have been successfully made with
respect to independent owner-operators of The Morgan Group, Inc. Under existing
industry practice and interpretations of federal and state tax laws, as well as
The Morgan Group, Inc.'s current method of operation, The Morgan Group, Inc.
believes that its independent owner-operators are not employees. Whether an
owner-operator is an independent contractor or employee is, however, generally a
fact-sensitive determination and the laws and interpretations can vary from
state to state. There can be no assurance that tax authorities will not
successfully challenge this position, or that such tax laws or interpretations
thereof will not change. If the independent owner-operators were determined to
be employees, such determination could materially increase The Morgan Group,
Inc.'s employment tax and workers' compensation exposure.

Driver Outsourcing

The Morgan Group, Inc. utilizes both independent contractors and
employees in its outsourcing operations. The Morgan Group, Inc. outsources its
over 1,410 drivers on a trip-by-trip basis for delivery to retailers and rental
truck agencies, recreational and commercial vehicles, such as buses, tractors,
and commercial vans. These individuals are recruited through driver recruiters,
trade magazines, brochures, and referrals. Prospective drivers are required to
possess at least a chauffeur's license and are encouraged to obtain a commercial
driver's license. They must also meet and maintain compliance with requirements
of the United States Department of Transportation and standards established by
The Morgan Group, Inc. Outsourcing drivers are utilized as needed, depending on
The Morgan Group, Inc.'s transportation volume and driver availability.
Outsourcing drivers are paid on a per mile basis. The driver is responsible for
most operating expenses, including fuel, return travel, lodging, and meals. The
Morgan Group, Inc. provides licenses, cargo and liability insurance,
communications, sales, and administrative services.

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Agents and Employees

The Morgan Group, Inc. has approximately 83 terminal managers and
assistant terminal managers who are involved directly with the management of
equipment and drivers. Of these 83 managers, approximately 67 are full-time
employees and the remainder are independent contractors who earn commissions.
The terminal personnel are responsible for The Morgan Group, Inc.'s terminal
operations including safety, customer relations, equipment assignment, and other
matters. Because terminal personnel develop close relationships with The Morgan
Group, Inc.'s customers and drivers, from time to time The Morgan Group, Inc.
has suffered a terminal personnel defection, following which the former staff
has sought to exploit such relationships in competition with The Morgan Group,
Inc. See "Legal Proceedings" below. In addition to the terminal personnel, The
Morgan Group, Inc. employs approximately 190 full-time employees. The Morgan
Group, Inc. also has 5 full-time employee drivers in its manufactured housing
segment and 11 in its driver outsourcing division.

Risk Management, Safety and Insurance

The risk of losses arising from traffic accidents is inherent in any
transportation business. The Morgan Group, Inc. carries personal injury and
property damage insurance with a deductible of $250,000 per occurrence except
for the period from April 1, 1998 to March 31, 1999, which had a deductible of
$150,000. The Morgan Group, Inc. has obtained, but has not activated a
self-insurance authority for personal injury and property damage coverage of up
to $1,000,000. The Morgan Group, Inc. maintains cargo damage insurance with a
deductible of $1,000,000 from April 1, 1999 to July 1, 2001, and $150,000 from
April 1, 1998 to March 31, 1999, and $250,000 for prior periods. The insurance
policy for the period of April 1, 1998 to March 31, 1999 included a stop-loss
provision. The frequency and severity of claims under The Morgan Group, Inc.'s
liability insurance affects the cost and potentially the availability of such
insurance. If The Morgan Group, Inc. is required to pay substantially greater
insurance premiums, or incurs substantial losses above its insurance coverage or
below its deductibles, its results could be materially adversely affected. The
Morgan Group, Inc. continues to review its insurance programs, self-insurance
limits and excess policy provisions. The Morgan Group, Inc. believes that its
current insurance coverage is adequate to cover its liability risks. There can
be no assurance that The Morgan Group, Inc. can continue to maintain its present
insurance coverage on acceptable terms.

The Morgan Group, Inc. has driver recognition programs emphasizing
safety to enhance its overall safety record. In addition to periodic recognition
for safe operations, The Morgan Group, Inc. has implemented safe driving bonus
programs. These plans generally reward drivers on an escalating rate per mile
based upon the claim-free miles driven. The Morgan Group, Inc. utilizes a field
safety organization that places a dedicated safety officer at most regional
centers. These individuals work towards improving safety by analyzing claims,
identifying opportunities to reduce claims costs, implementing preventative
programs to reduce the number of incidents, and promoting the exchange of
information to educate others. The Morgan Group, Inc. has a Director of Safety
and D.O.T. Compliance and six (6) field safety managers.

Interstate Indemnity Company makes available physical damage
insurance coverage for The Morgan Group, Inc.'s independent owner-operators.
Interstate Indemnity Company also writes performance surety bonds for The Morgan
Group, Inc. The Morgan Group, Inc. may also utilize its wholly-owned insurance
subsidiary to secure business insurance for The Morgan Group, Inc. through
re-insurance contracts.

Competition

All of The Morgan Group, Inc.'s activities are highly competitive.
In addition to fleets operated by manufacturers, The Morgan Group, Inc. competes
with numerous small regional or local carriers and to a lesser extent with large
national carriers. The Morgan Group, Inc.'s principal competitors in the
manufactured housing and specialized outsourcing services marketplaces are
privately owned. No assurance can be given that The Morgan Group, Inc. will be
able to maintain its competitive position in the future.

Properties

We do not directly own any real property.

The Morgan Group, Inc. owns approximately 24 acres of land with
improvements in Elkhart, Indiana. The improvements include a 23,000 square foot
office building housing The Morgan Group, Inc.'s principal office and its
manufactured housing division; a 7,000 square foot building housing the
specialized outsourcing services division; a 9,000 square foot building used for
The Morgan Group, Inc.'s safety and driver service departments. Most of The
Morgan Group, Inc.'s 56 locations are situated on leased property. The Morgan
Group, Inc. also owns and leases property for storage at various locations
throughout the United States, usually in proximity to manufacturers of products
moved by The Morgan Group, Inc. The property leases have term commitments of a

-31-

minimum of thirty days and a maximum of three years, at monthly rentals ranging
from $10 to $6,500. The following table summarizes The Morgan Group, Inc.'s
owned real property.

Property Location Property Description Approximate Acreage
- ------------------ --------------------- -------------------
Elkhart, Indiana Corporate and Specialized Outsourcing Services 24
Wakarusa, Indiana Terminal and Storage 4
Middlebury, Indiana Terminal and storage 13
Mocksville, North Carolina Terminal and Storage 8
Edgerton, Ohio Terminal and Storage 2
Woodburn, Oregon Storage 4
Woodburn, Oregon Storage 1
Montevideo, Minnesota Storage 3

The following property is owned and is being held for sale:
Forth Worth, Texas Storage 6

Legal Proceedings

We are not a party to any legal proceedings.

On September 26, 2001, The Morgan Group, Inc. filed suit in federal
court in Georgia against one of its former senior officers, a competitor and
certain of the competitor's affiliates, alleging that the parties had secretly
conspired to misappropriate The Morgan Group, Inc.'s drivers, employees,
customers and trade secrets through unlawful means at a time when the senior
officer was still a senior officer of The Morgan Group, Inc. The lawsuit further
alleges that, while on The Morgan Group, Inc.'s payroll, the senior officer and
some of her subordinates worked with the competitor, using false information, to
convince drivers under contract with The Morgan Group, Inc. to leave and work
for the competitor instead. It is also alleged that the senior officer and
others working on behalf of the competitor sent more than 20 faxes (including
some from The Morgan Group, Inc.'s own facilities) encouraging retail dealers
under false pretenses to instruct manufacturers to have their homes shipped by
the competitor rather than The Morgan Group, Inc. in interference with those
manufacturers' written agreement with The Morgan Group, Inc. The lawsuit further
alleges that the senior officer and others acting for the competitor improperly
removed trade secret information and files from two of The Morgan Group, Inc.'s
offices, including confidential pricing data that the competitor allegedly is
using to unfairly compete with The Morgan Group, Inc.'s price structure.

At a hearing on September 28, 2001, the competitor and the senior
officer denied many of the allegations and any wrongdoing. The federal court
issued a preliminary injunction under which the court invalidated contracts
between the competitor and the drivers the competitor had recruited from The
Morgan Group, Inc. Those drivers were freed from their contracts with the
competitor and given 10 days to choose among The Morgan Group, Inc., its
competitor or another carrier based on full disclosure of information. The court
also invalidated the letters from retail dealers to manufacturers that the
competitor and the senior officer allegedly instigated, and confirmed that
retail dealers should not be improperly induced to use an alternate carrier. The
competitor and the senior officer also have been prohibited by the court from
keeping or using any confidential information and files allegedly taken from The
Morgan Group, Inc.

Since the issuance of the preliminary injunction, The Morgan Group,
Inc. has succeeded in its efforts to bring some of these employees, drivers and
customers back to the company. The alleged illegal actions described above
obviously negatively impacted the manufactured house business in the third
quarter.

In addition to the preliminary injunction issued by the court on
September 28, 2001, The Morgan Group, Inc. is also seeking monetary damages from
the competitor and the senior officer, as well as a permanent injunction against
unfair competition and unlawful interference with its contracts. Over the
competitor's objection, the court ruled on September 28 that the parties could
take immediate discovery in the case on these remaining issues.

-32-

On October 18, 2001, The Morgan Group, Inc.'s competitor filed
certain counterclaims against The Morgan Group, Inc., which The Morgan Group,
Inc. plans to defend vigorously.

LEGISLATION AND GOVERNMENT REGULATION

The Morgan Group, Inc.'s interstate operations are subject to
regulation by the Federal Motor Carrier Safety Administration which is an agency
of the United States Department of Transportation. This jurisdiction was
transferred to the United States Department of Transportation with the enactment
of the Interstate Commerce Commission Termination Act. Effective January 1,
1995, the economic regulation of certain intrastate operations by various state
agencies was preempted by federal law. The states continue to have jurisdiction
primarily to ensure that carriers providing intrastate transportation services
maintain required insurance coverage, comply with applicable safety regulations,
and conform to regulations governing size and weight of shipments on state
highways. Most states have adopted the Federal Motor Carrier Safety
Administration safety regulations and actively enforce them in conjunction with
United States Department of Transportation personnel.

Motor carriers normally are required to obtain approval and/or
authority from the Federal Motor Carrier Safety Administration as well as
various state agencies. The Morgan Group, Inc. is approved and/or holds
authority to provide interstate and intrastate transportation services from, to,
and between all points in the continental United States.

The Morgan Group, Inc. provides services to certain specific
customers under contract and non-contract services to the shipping public
pursuant to governing rates and charges maintained at its corporate and various
dispatching offices. Transportation services provided pursuant to a written
contract are designed to meet a customer's specific shipping needs.

Federal regulations govern not only operating authority and
registration, but also such matters as the content of agreements with
independent owner-operators, required procedures for processing of cargo loss
and damage claims, and financial reporting. The Morgan Group, Inc. believes that
it is in substantial compliance with all material regulations applicable to its
operations.

The United States Department of Transportation regulates safety
matters with respect to the interstate operations of The Morgan Group, Inc.
Among other things, the United States Department of Transportation regulates
commercial driver qualifications and licensing; sets minimum levels of financial
responsibility; requires carriers to enforce limitations on drivers' hours of
service; prescribes parts, accessories and maintenance procedures for safe
operation of commercial/motor vehicles; establishes health and safety standards
for commercial motor vehicle operators; and utilizes audits, roadside
inspections and other enforcement procedures to monitor compliance with all such
regulations. The United States Department of Transportation has established
regulations which mandate random, periodic, pre-employment, post-accident and
reasonable cause drug testing for commercial drivers and similar regulations for
alcohol testing. The Morgan Group, Inc. believes that it is in substantial
compliance with all material United States Department of Transportation
requirements applicable to its operations.

In Canada, provincial agencies grant both intraprovincial and
extraprovincial authority; the latter permits transborder operations to and from
the United States. The Morgan Group, Inc. has obtained from Canadian provincial
agencies all required extraprovincial authority to provide transborder
transportation of manufactured homes and motor homes throughout most of Canada.

Most manufactured homes, when being transported by a toter, exceed
the maximum dimensions allowed on state highways without a special permit. The
Morgan Group, Inc. obtains these permits for its independent contractor
owner-operators from each state that allows The Morgan Group, Inc. to transport
their manufactured homes on state highways. The states and Canadian provinces
have special requirements for over-dimensional loads detailing permitted routes,
timing required, signage, escorts, warning lights and similar matters.

Most states and provinces also require operators to pay fuel taxes,
comply with a variety of other state tax and/or registration requirements, and
keep evidence of such compliance in their vehicles while in transit. The Morgan
Group, Inc. coordinates compliance with these requirements by its drivers and
independent contractor owner-operators, and monitors their compliance with all
applicable safety regulations.

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Interstate Indemnity Company, The Morgan Group, Inc.'s insurance
subsidiary, is an insurance company incorporated under Vermont law. It is
required to report annually to the Vermont Department of Banking, Insurance,
Securities, & Health Care Administration, and must submit to an examination by
this department on a triennial basis. Vermont regulations require Interstate
Indemnity Company to be audited annually and to have its loss reserves certified
by an approved actuary. The Morgan Group, Inc. believes Interstate Indemnity
Company is in substantial compliance with Vermont insurance regulations.

Morgan Finance, Inc., The Morgan Group, Inc.'s finance subsidiary,
is incorporated under Indiana law. Morgan Finance, Inc. is subject to Indiana's
Equal Credit Opportunity Laws and other state and federal laws relating
generally to fair financing practices.

MANAGEMENT

Morgan Group Holding Co.

Executive Officers and Directors

The following table sets forth the name, present principal
occupation, employment history, positions, offices or employment for the past
five years and ages as of December 28, 2001 for our executive officers and
directors. Members of the Board are elected and serve for one year terms or
until their successors are elected and qualify.

Name Age Position
- ---- --- --------

Mario J. Gabelli 59 Chief Executive Officer and Director

Robert E. Dolan 50 Chief Financial Officer and Director

John Fikre 37 Vice President, Secretary and Director

Mario J. Gabelli. Mario J. Gabelli has served as Chairman, Chief
Executive Officer, Chief Investment Officer and a director of Gabelli Asset
Management Inc. and its predecessors since November 1976. In connection with
those responsibilities, he serves as director or trustee and/or an officer of
registered investment companies managed by subsidiaries of Gabelli Asset
Management. Mr. Gabelli serves as Chairman and Chief Executive Officer of Lynch
Interactive Corporation, a public company engaged in multimedia and other
services; and Vice Chairman of Lynch Corporation, a public company engaged in
manufacturing. In addition, Mr. Gabelli is the Chairman and Chief Executive
Officer of Gabelli Group Capital Partners, Inc., a private company which makes
investments for its own account. Mr. Gabelli also serves as a Governor of the
American Stock Exchange; Overseer of Columbia University Graduate School of
Business; Trustee of Fairfield University, Roger Williams University, Winston
Churchill Foundation and E.L. Wiegand Foundation; Director of the National
Italian American Foundation and the American-Italian Cancer Foundation; and
Chairman, Patron's Committee of Immaculate Conception School.

Robert E. Dolan. Mr. Dolan has served as Chief Financial Officer of
Lynch Interactive Corporation (September 1999 to present), Director of Sunshine
PCS Corporation (November 2000 to present), and Chief Financial Officer of Lynch
Corporation (1993 to January 2000).

John Fikre. Mr. Fikre has served as Vice President, Corporate
Development, Secretary and General Counsel of Lynch Interactive Corporation
since August 2001. Prior to joining Lynch Interactive Corporation, Mr. Fikre was
an associate at the law firm of Willkie Farr & Gallagher.

Compensation of Directors

We do not compensate our directors at the present time, although we
may do so in the future. We indemnify directors pursuant to Delaware law and may
reimburse them for certain out-of-pocket costs in connection with serving as
directors.

-34-

Employees and Compensation

We presently have no employees, although we may hire employees in
the future. We do not pay employment compensation to any person, including our
directors and executive officers.

Indemnification of Directors and Officers

Under Section 145 of the Delaware General Corporation Law, we have
broad powers to indemnify our directors and officers against liabilities they
may incur in such capacities. Our certificate of incorporation provides our
directors and officers shall be indemnified to the fullest extent permitted by
the Delaware law. Our certificate of incorporation also provides that we shall,
to the fullest extent permitted by Delaware law, as amended from time to time,
indemnify and advance expenses to each of our currently acting and former
directors, officers, employees and agents.

Delaware law provides that a corporation may limit the liability of
each director to the corporation or its stockholders for monetary damages except
for liability:

o for any breach of the director's duty of loyalty to the
corporation or its stockholders,
o for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law,
o in respect of certain unlawful dividend payments or stock
redemptions or repurchases and
o for any transaction which the director derives an improper
personal benefit.

Our certificate of incorporation provides for the elimination and
limitation of the personal liability of our directors for monetary damages to
the fullest extent permitted by Delaware law. In addition, our certificate of
incorporation provides that if Delaware law is amended to authorize the further
elimination or limitation of the liability of a director, then the liability of
our directors shall be eliminated or limited to the fullest extent permitted by
Delaware law, as amended. The effect of this provision is to eliminate our
rights and our stockholders' rights, through stockholders' derivative suits, to
recover monetary damages against a director for breach of the fiduciary duty of
care as a director, except in the situations described above. This provision
does not limit or eliminate our rights or our stockholders' rights to seek
non-monetary relief such as an injunction or rescission in the event of a breach
of a director's duty of care.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted for our directors,
officers, and controlling persons, pursuant to the foregoing provisions, or
otherwise, we have been advised that in the opinion of the Securities and
Exchange Commission that this sort of indemnification is against public policy
as expressed in the Securities Act of 1933, as amended, and is therefore
unenforceable.

At present, there is no pending litigation or proceeding involving
any of our directors, officers, employees or agents where indemnification will
be required or permitted.

The Morgan Group, Inc.

Executive Officers and Directors

The Morgan Group, Inc.'s executive officers are as follows

Name Age Position
- ---- --- --------
Charles C. Baum 59 Chairman of the Board
Anthony T. Castor, III 49 President, Chief Executive Officer and Director
Michael J. Archual 50 President of Morgan Drive Away, Inc.
Paul D. Borghesani 62 Vice President, Treasurer, Secretary and General Counsel
Gary J. Klusman 41 Executive Vice President Finance and Administration
Richard D. Black 67 Director
Richard L. Haydon 54 Director
Robert S. Prather, Jr. 56 Director

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Mr. Baum serves as Chairman of the Board of The Morgan Group, Inc.
From 1992 until January, 2000, Mr. Baum was The Morgan Group, Inc.'s Chief
Executive Officer. Mr. Baum has also been Chief Financial Officer, Treasurer and
Secretary of United Holdings Co., Inc. and its predecessors and affiliates since
1973. United Holdings Co., Inc. was involved in the metal business until 1990
when it shifted its focus to become a firm that invests in real estate and
securities. Mr. Baum is also a Director of United Holdings Co., Inc., Gabelli
Group Capital Partners, Inc. (a registered investment adviser under the
Investment Advisers Act of 1940, as amended), Shapiro Robinson & Associates (a
firm which represents professional athletes), and Municipal Mortgage and Equity
Co. (a company engaged in the business of mortgage financing).

Mr. Black joined The Morgan Group, Inc.'s Board of Directors in
1993. Mr. Black is a General Partner of OpNet Partners, L.P. Mr. Black is Vice
Chairman and has been a director of Oak Technology, Inc., a worldwide
semiconductor supplier for the personal computer and consumer electronics
industries, since 1988. He was President of Oak Technology, Inc. from January
1988 to March 1999. Mr. Black has been Chairman and a Director of ECRM,
Incorporated, a producer of electronic publishing equipment, since 1983. He is
also a Director of GSI Lumonics, Inc., a manufacturer of laser-based positioning
systems, testing equipment, and medical imaging systems, Gabelli Group Capital
Partners, Inc., Altigen Communications, Inc., a systems company, Photoniko,
Inc., an optical networking components company, TREX Enterprises, a laser and
microwave imaging and optical networking components company, and Servador, Inc.,
an e-commerce printing company.

Mr. Castor joined The Morgan Group, Inc. as President and Chief
Executive Officer in January, 2000. Prior to joining The Morgan Group, Inc., Mr.
Castor was the President and Chief Executive Officer of Precision Industrial
Corporation from 1997 to 1999 and of Hayward Industries, Inc. from 1993 to 1997.
Mr. Castor is a Director of Super Vision International, Inc.

Mr. Haydon became a Director of The Morgan Group, Inc. in 1999. He
is a Partner of Omega Advisors, Inc. and was the Managing Partner of Strategic
Restructuring Partnerships until 2000 where he had been a General Partner since
1990.

Mr. Prather has been a Director of The Morgan Group, Inc. since
1997. He has served as the President and Chief Executive Officer of Bull Run
Corporation, an investment holding company, since 1992 and as Executive Vice
President of Gray Communications Systems, Inc., a media and communications
company, since 1996. Mr. Prather is also a Director of Bull Run Corporation and
Gray Communications Systems, Inc.

Mr. Archual was named President of Morgan Drive Away, Inc., a wholly
owned subsidiary of The Morgan Group, Inc., in February, 2001. Prior to joining
Morgan Drive Away, Inc., Mr. Archual was Vice President, Marketing and Sales, of
TruckerB2B, Inc., a business-to-business service subsidiary of Celadon Group,
Inc. since 2000. Previously he had served as President-Servicios de
Transportacion Jaguar, another Celadon subsidiary, from 1998 to 2000 and as
Executive Vice President of Celadon Trucking Services from 1995 to 1998.

Mr. Borghesani has been Vice President and Corporate Counsel of
Morgan Drive Away Inc. since 1996 and Vice President, Treasurer, Secretary and
Corporate Counsel of The Morgan Group, Inc. since March, 2001. He served as Vice
President of The Morgan Group, Inc. and its predecessors from 1988 to 1996. Mr.
Borghesani has also been Counsel to Baker & Daniels, a private law firm, since
1996. From 1980 to 1983, Mr. Borghesani was in private practice as an attorney
specializing in transportation law and related matters. From 1968 to 1980, Mr.
Borghesani served in various management capacities for Morgan Drive Away, Inc.

Mr. Duerksen, age 60, served as Treasurer, Vice President and Chief
Financial Officer of The Morgan Group, Inc. and Treasurer, Senior Vice President
and Chief Financial Officer of Morgan Drive Away, Inc. from December, 1997 until
May, 2001. Prior to joining The Morgan Group, Inc., Mr. Duerksen was Manager -
Financial Systems and Reporting of CTS Corporation, a manufacturer of electronic
components, from February 1996 to October 1997. He served as Financial
Controller of CTS Corporation's subsidiary, CTS Singapore PTE, Ltd., from
August, 1994 to February, 1996.

Mr. Klusman was named Vice President Finance, Secretary and a
Director of Morgan Drive Away, Inc. in March, 2001 and Executive Vice President
Finance and Administration of The Morgan Group, Inc., effective May, 2001. Prior
to joining Morgan Drive Away, Inc., Mr. Klusman was Vice President-Operations of
DriverNet, Inc., a company specializing in technology solutions for the trucking
industry, from January 2000 to December 2000. He served as President and Chief
Executive Officer of OTR Express, Inc., a truckload carrier and logistics
company, from 1998 to 1999, after having previously served as Executive Vice
President from 1995 to 1998 and as Vice President and Chief Financial Officer
from 1991 to 1995.

-36-

Board of Directors and Committees of the Board

The Board of Directors of The Morgan Group, Inc. currently consists
of five directors. Each director holds office until that director's term expires
or until a successor is duly elected and qualified. All of the officers
identified above serve at the discretion of the Board of Directors.

Audit Committee. The audit committee of the Board of Directors
reviews, acts on and reports to the Board of Directors with respect to various
auditing and accounting matters, including the recommendation of auditors, the
scope of the annual audits, fees to be paid to the auditors, the performance of
the independent auditors and accounting practices. The members of the audit
committee are Richard B. Black, Richard L. Haydon and Robert S. Prather. Each
member is independent as independence is defined in Rule 4200(a)(15) of the
listing standards of the National Association of Securities Dealers.

Compensation Committee. The compensation committee of the Board of
Directors recommends, reviews and oversees the salaries, benefits and stock
option plans of The Morgan Group, Inc.'s employees, consultants, directors and
other individuals compensated by The Morgan Group, Inc. The compensation
committee also administers all compensation plans. The members of the
compensation committee are Richard L. Haydon, Richard B. Black and Robert S.
Prather.

Director Compensation

Directors receive $1,000 per year for serving on the Board of
Directors and $1,000 for each Board of Directors meeting attended. In addition,
the Chairman of each of the Compensation, Audit and Nominating Committees
receives $5,000 annually. Other committee members receive $500 for each
committee meeting attended. The Chairman of The Morgan Group, Inc., Mr. Baum,
does not receive any additional compensation for serving as a director.

Under The Morgan Group, Inc.'s Stock Option Plan, non-employee
directors first elected to the Board of Directors after the 1997 annual meeting
of stockholders may be granted non-qualified options to purchase up to 8,000
shares of Class A common stock at an exercise price of not less than 80% of the
fair market value of Class A common stock on the date of grant, if and to the
extent determined by the Board of Directors. All options presently granted have
terms of 10 years and one day and are exercisable 6 months after grant.

Executive Compensation

The following table sets forth all compensation received during
fiscal years 1998, 1999 and 2000 by The Morgan Group, Inc.'s chief executive
officer and its other three most highly compensated executive officers whose
salary and bonus exceeded $100,000 during the year ended December 31, 2001.

-37-

Summary Compensation Table

Long-Term Other
Annual Compensation Compensation Compensation
------------------- ------------ ------------

Other Annual Securities
Name and Salary Bonus Compensation Underlying Options
Principal Position Year ($) ($) ($)(1) (Shares)
------------------ ---- --- --- --- --------

Anthony T. Castor, III 2000 $233,654 $125,000 - 120,000 $27,644 (2)
President and Chief 1999 - - - - -
Executive Officer 1998 - - - - -

Charles C. Baum 2000 $68,875 - - - -
Chief Financial Officer 1999 $123,500 - - - -
1998 $118,308 - - - -

Dennis R. Duerksen, 2000 $122,020 - - - -
Former Treasurer, Vice 1999 $117,918 - $13,646(3) - -
President and Chief 1998 $109,083 - - - -
Financial Officer (4)

Paul D. Borghesani 2000 $108,400 - - - -
Vice President of Morgan 1999 $99,540 - $15,255(5) - -
Drive Away, Inc. 1998 $98,000 - - - -
- ---------------

(1) Pursuant to applicable regulations, the value of Other Annual
Compensation is not reflected unless the aggregate amount of such
compensation exceeds 10% of the annual salary and bonus paid to the
executive officer.

(2) Represents the full value of the premiums paid during the fiscal
year for split-dollar life insurance.

(3) Includes automobile allowance ($4,636) and payment of premiums for
health, life, disability and excess life insurance ($6,063).

(4) Mr. Duerksen resigned effective April 27, 2001.

(5) Includes health, life, disability and excess life insurance premiums
($11,843).

Option Grants in Fiscal Year 2000

The following table sets forth information related to options
granted to the named executives during the year ended December 31, 2000. These
grants are also reflected in the Summary Compensation Table above.

Percentage
Number of of Total
Securities Options Potential Realizable Value at
Underlying Granted to Exercise Assumed Annual Rates of
Stock Options Employees Price Per Expiration Stock Price Appreciation
Name Granted (#) in 2000 Share ($) Date for Stock Options(1)
---- ---------- ------- ----- --------- --------------------
5% ($) 10% ($)
-- ---

Anthony T. Castor, III 40,000 33.3% $5.625 01/11/10 $141,500 $358,200

Anthony T. Castor, III 40,000 33.3% $7.625 01/11/10 $51,500 $278,200

Anthony T. Castor, III 40,000 33.3% $9.625 01/11/10 -0- $198,200
- -------------

(1) Based on the fair market value on the date of grant of $5.625 per
share. These gains are based upon assumed rates of annual compound
stock appreciation of 5% and 10% from the date the options were
granted over the full option term. These amounts represent certain
assumed rates of appreciation only. Actual gains, if any, on option
exercises are dependent upon the future performance of the shares
and overall stock market conditions. There can be no assurance that
the amounts reflected in this table will be achieved.

-38-

Aggregated Option Exercises in Last Fiscal Period and Fiscal Year-End Option Values

The following table sets forth information with respect to the named
executive officers concerning option exercises during the year ended December
31, 2000, and the value of exercisable and unexercisable options held at
December 31, 2000.

Number of
Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
Fiscal-Year-End Fiscal Year-End(1)
Shares --------------- -----------------
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
---- -------- -------- ------------- -------------

Anthony T. Castor, III - $0 40,000/80,000 $0/$0(2)
Charles C. Baum - $0 25,000/0 $0/$0(2)
Dennis R. Duerksen - $0 3,750/1,250 $0/$0(2)
Paul D. Borghesani - $0 10,000/0 $0/$0(2)

(1) Based on market value of the Class A common stock of $4.25 per share
at December 31, 2000.

(2) Since the fair market value of the shares subject to the options was
below the exercise price of the options at fiscal year end, such
options were not "in-the-money."

Stock Option and Other Compensation Plans

401(k) Plan. All of The Morgan Group, Inc.'s employees and the
employees of its subsidiaries are eligible to participate in The Morgan Group,
Inc. Deferred Compensation 401(k) Plan after having satisfied eligibility
requirements including age, employment term, and hours of service, as specified
in The Morgan Group, Inc. Deferred Compensation 401(k) Plan.

The Morgan Group, Inc. Deferred Compensation 401(k) Plan permits
employees to make contributions by deferring a portion of their compensation.
Participating employees also share in contributions made by their respective
employers. The annual employer contribution to each participant's account is
equal to 25% of the first $800 of the participant's contribution, provided the
employer has net income or retained earnings. The Morgan Group, Inc. has
discretion to, and may consider, increasing the annual matching contribution in
the future. A participant's interest in both employee and employer matching
contributions and earnings thereon are fully vested at all times. The Morgan
Group, Inc. also has discretion to make profit-sharing contributions to The
Morgan Group, Inc. Deferred Compensation 401(k) Plan that would vest over six
years.

Employee and employer contributions may be invested in The Morgan
Group, Inc.'s Class A common stock or in one or more guaranteed income or equity
funds or insurance contracts offered under The Morgan Group, Inc. Deferred
Compensation 401(k) Plan from time to time. Except in certain cases of financial
hardship, a participant (or his or her beneficiary) receives distributions from
The Morgan Group, Inc. Deferred Compensation 401(k) Plan only at retirement,
termination of employment, total permanent disability, death, or termination of
Morgan Group, Inc. Deferred Compensation 401(k) Plan. At that time, the value of
the participant's interest in The Morgan Group, Inc. Deferred Compensation
401(k) Plan is distributed to the participant (or his or her beneficiary). The
Morgan Group, Inc. offers no other post-termination benefit plans.

Health, Life and Disability Insurance. The Morgan Group, Inc. pays
annual premiums for health, life and disability insurance for executive
officers.

-39-

Employment Agreements

Mr. Castor entered into a written employment agreement with The
Morgan Group, Inc. effective January, 2000 which was approved by its Board of
Directors. Pursuant to the agreement, Mr. Castor's annual base salary is
$250,000, subject to increases to reflect inflation and performance as
reasonably determined by the Board of Directors. In addition, Mr. Castor is
eligible to receive an annual bonus of 50% of his base salary if The Morgan
Group, Inc. meets the corporate goals and objectives jointly determined by Mr.
Castor and the Board of Directors. His minimum bonus for 2000 was guaranteed to
be at least $100,000. Mr. Castor is also entitled to split-dollar life insurance
and certain other perquisites. Mr. Castor's employment agreement contains a
covenant not to compete with The Morgan Group, Inc. upon his termination for a
period of 18 months.

Under his employment agreement, Mr. Castor is entitled to certain
severance payments. In the event that Mr. Castor is terminated without cause, he
is entitled to a payment of (a) one times his base salary plus bonus if
terminated in the first year, (b) one and a half times his base salary plus
bonus if terminated in the second year, or (c) two times his base salary and
bonus if terminated after two years. In addition, Mr. Castor may continue to
participate in medical and other insurance plans and the split-dollar life
insurance policy for a period of up to two years after termination. In the event
of termination due to a change of control, Mr. Castor will receive, instead of
the payments described above, a payment equal to the greater of two times his
base salary plus 50% of such base salary or his base salary plus bonus for the
prior calendar year.

Mr. Borghesani and Morgan Drive Away, Inc. entered into a consulting
agreement effective April 1, 1996. Under such agreement, Mr. Borghesani will
remain available to Morgan Drive Away, Inc. on a substantially continuous basis
(though less than full time) for base compensation of $100,000 per year, plus an
hourly rate of $100 per hour for hours in excess of his annual hourly
commitment. Mr. Borghesani's base salary under such agreement was increased to
$108,400 in 1999 for the year 2000. If his employment is terminated other than
for just cause (as defined in the employment agreement) he is entitled to a
three-month severance benefit of $8,333 per month. During such period, Mr.
Borghesani remains eligible to participate in benefit plans and programs
available to Morgan Drive Away, Inc.'s executive officers.

Limitation of Liability and Indemnification of Officers and Directors

Under provisions of The Morgan Group, Inc.'s charter, any person
made a party to any lawsuit by reason of being a director or officer of The
Morgan Group, Inc., or any parent or subsidiary thereof, may be indemnified to
the full extent authorized by the General Corporation Law of the State of
Delaware.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers or
persons controlling The Morgan Group, Inc. pursuant to the foregoing provisions,
The Morgan Group, Inc. has been informed that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933, as amended, and is therefore
unenforceable.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Morgan Group Holding Co.

Each of our directors and officers is also an officer of Lynch
Interactive Corporation.

On December __, 2001, Lynch Interactive Corporation made a capital
contribution to us of $500,000 and assigned to us a services agreement with The
Morgan Group, Inc. pursuant to which The Morgan Group, Inc. has agreed to pay
$100,000 per year for certain management services. The Morgan Group, Inc. has
not made any payments under this agreement since the first quarter of
2001.

-40-

Corporation will transfer to Cascade Investment LLC a pro rata portion of those
235,294 shares of common stock, depending on how much of the principal amount of
such note is converted, to Cascade Investment LLC. Should Cascade Investment LLC
fail to convert any or all of the principal amount of such note into shares of
Lynch Interactive Corporation common stock prior to December 10, 2004, ownership
of any shares of our common stock then remaining in that escrow account will be
retained by Lynch Interactive Corporation. Lynch Interactive Corporation has
advised us that it will sell or dispose of any shares of our common stock
retained by it prior to the fifth anniversary of the spin-off.

The Morgan Group, Inc.

The Morgan Group, Inc. was formed by Lynch Corporation in 1988 to
acquire the shares of Morgan Drive Away, Inc. On September 1, 1999, Lynch
Corporation transferred all of its shares of The Morgan Group, Inc. to Brighton
Communications Corporation, a wholly-owned subsidiary of Lynch Interactive
Corporation. Effective September 1, 1999, all of the stock of Lynch Interactive
Corporation was transferred to the stockholders of Lynch Corporation. Then in
2001, Lynch Interactive Corporation purchased an additional 1 million shares of
Class B common stock of The Morgan Group, Inc. at a purchase price of $2.00 per
share. As part of this transaction, The Morgan Group, Inc. agreed to grant the
holders of Class A common stock a warrant under which they would have the right
to purchase one share of Class A common stock for each share of Class A common
stock held for a price of $9.00 per share. Under the warrant, there will be a
one-time window period of at least 30 days during which the exercise price for
the holders of Class A common stock will be reduced by up to 1/3, the timing and
duration of such window and the amount of the reduction to be determined by the
Board of Directors. The Morgan Group, Inc. also agreed to grant the holders of
Class B common stock a warrant under which they would have the right to purchase
one share of Class B common stock for each share of Class B common stock held
for an exercise price of $9.00 per share. The warrants issued to the holders of
Class B common stock will not carry any right to a reduction in the exercise
price. The warrants to be issued to the holder of Class B common stock will be
subject to the same restrictions on transfer as the shares of Class B common
stock.

As a result of these transactions Lynch Interactive Corporation
currently owns all 2,200,000 shares of The Morgan Group, Inc.'s Class B common
stock and 161,100 shares of its Class A common stock. These shares represent
80.8% of aggregate voting control of The Morgan Group, Inc. By virtue of its
relationship with Lynch Interactive Corporation, The Morgan Group, Inc. has
received certain benefits and services from Lynch Interactive Corporation, such
as directors and officers insurance, placement, strategic consultation and
financial and accounting services from time to time. The Board of Directors of
The Morgan Group, Inc. has approved a services agreement providing for the
payment of reasonable compensation to Lynch Interactive Corporation for these
benefits and services. Such payments in 2000 were $118,000.

PRINCIPAL STOCKHOLDERS

Morgan Group Holding Co.

The following table sets forth certain information regarding
beneficial ownership of our common stock before and after the spin off by each
person who is known by us to own beneficially more than five percent of our
common stock, our directors, our executive officers, and all current executive
officers and directors as a group.

Beneficial Ownership Tables

A person is deemed to be the beneficial owner of voting securities
that can be acquired by such person within 60 days after the record date upon
the exercise of options, warrants or convertible securities. Each beneficial
owner's percentage of ownership is determined by assuming that options, warrants
or convertible securities that are held by such person (but not those held by
any other person) and that are currently exercisable (i.e., that are exercisable
within 60 days after the record date) have been exercised. Unless otherwise
noted, we believe that all persons named in the table have sole voting and
investment power with respect to all shares beneficially owned by them.

-41-

Before Spin-off After Spin-Off
---------------------------- --------------------------------
Beneficial Owner* Common Stock Beneficially Owned
Shares Percentage(1) Shares Percentage(1)
------ ---------- ------ ----------
Kinetics Asset Management, Inc. -- -- 152,015 5.0%

Dimension Fund Advisors Inc. -- -- 141,000(2) 4.6%

Mario J. Gabelli(3) 3,055,345(3) 100% 884,408(4)(5) 28.9%

Robert E. Dolan -- -- 470(6) **

John Fikre -- -- -- --

Lynch Interactive Corporation 3,055,345 100% 235,294(5) 7.7%

All directors and executive officers
as a group (3 in total) 3,055,345 100% 884,408(4)(5) 28.9%
- -------------------
* The address of each holder of more than 5% of our common stock is as follows:
Kinetics Asset management - 342 Madison Avenue, Suite 702, New York, NY 10173;
Dimensional Fund Advisors - 1299 Ocean Avenue, Santa Monica, CA; Mr. Gabelli -
555 Theodore Fremd Avenue, Corporate Center at Rye, Rye, New York 10580.

** Less than 1%

(1) All percentages in this column are based on a total of 2,820,051
shares.

(2) Because of its investment and/or voting power over shares of our
Common Stock held in the accounts of its investment advisory
clients, Dimensional Fund Advisors, Inc., an investment advisor
("Dimensional"), is deemed to be the beneficial owner of 141,100
shares. Dimensional disclaims beneficial ownership of all such
shares. Based solely upon information contained in the Schedule 13G
filed by Dimensional Fund Advisors Inc. on February 2, 2001.

(3) Represents shares owned by Lynch Interactive Corporation. Mario J.
Gabelli is a "control person" of Lynch Interactive Corporation and
therefore shares owned by Lynch Interactive Corporation are set
forth in the table as beneficially owned by Mr. Gabelli. Mr. Gabelli
disclaims beneficial ownership of the shares held by Lynch
Interactive Corporation.

(4) Represents 500,514 shares of Common Stock owned directly by Mr.
Gabelli, 8,600 shares owned by a charitable foundation of which Mr.
Gabelli is a trustee and 140,000 shares owned by a limited
partnership in which Mr. Gabelli is the general partner and has a 6%
interest. Mr. Gabelli disclaims beneficial ownership of the shares
owned by the foundation and by the partnership, except for his
approximate 6% interest therein.

(5) Represents 235,294 shares of common stock currently being held by
Lynch Interactive Corporation as escrow agent, that are to be
delivered to Cascade Investment LLC in the event of full conversion
of a convertible promissory note issued to Cascade Investment LLC by
Lynch Interactive Corporation. The actual number of shares that will
be delivered to Cascade Investment LLC is dependent upon much of the
principal amount of such note is converted by Cascade Investment LLC
into shares of Lynch Interactive Corporation.

(6) Includes 70 shares registered in the name of Mr. Dolan's children
with respect to which Mr. Dolan has voting and investment power.

-42-

The Morgan Group, Inc.

The following table sets forth certain information regarding the
beneficial ownership of The Morgan Group, Inc.'s Class A common stock and Class
B common stock as of May 1, 2001, by each person known to beneficially own 5% or
more of its Class A or Class B common stock. Unless otherwise indicated, the
named beneficial owner has sole voting and dispositive power with respect to the
shares reported.

Name and Address of Class A common stock Class B common stock
Beneficial Owner beneficially owned beneficially owned Total Beneficially Owned
- ---------------- ------------------ ------------------ ------------------------

Shares Percent(1) Shares Percent Shares Percent
------ ---------- ------ ------- ------ -------
Lynch Interactive Corporation
401 Theodore Fremd Avenue 161,100(2) 12.9% (2) 2,200,000(2) 100%(2) 2,361,000 68.5%
Rye, New York 10580

Charles C. Baum
2545 Wilkens Avenue 195,470(3) 15.4% - - 195,470 5.6%
Baltimore, Maryland 21223

Richard D. Black 8,000(4) * - - 8,000 *

Anthony T. Castor, III 100,000(5) 7.4% - - 100,000 2.8%

Richard L. Haydon 8,000(4) * - - 8,000 *

Robert S. Prather, Jr. 8,000(4) * - - 8,000 *

Michael J. Archual - - - - - -

Paul D. Borghesani 11,460(6) * - - 11,460 *

Dennis R. Duerksen 3(7) * - - 3 *

Gary J. Klusman - - - - - -

United Holdings Co., Inc. (8)
2545 Wilkens Avenue 118,518 9.5% - - 118,518 3.4%
Baltimore, Maryland 21223

John L. Keeley, Jr.
401 South LaSalle Street
Suite 1201 107,450(9) 8.6%(9) - - 107,450 3.1%
Chicago, Illinois 60605

All directors and executives as 330,933(10) 23.5% - - 330,933 9.2%
a group (9 persons)

* Less than 1%

(1) Based upon 1,248,157 shares of Class A common stock outstanding as
of May 1, 2001.

(2) Prior to the spin-off, Lynch Interactive Corporation, through us,
beneficially owns all 2,200,000 shares of Class B common stock and
161,100 shares of Class A common stock. Class B common stock is
automatically converted into Class A common stock upon transfer,
with certain limited exceptions, on a share-for-share basis. The
Class B common stock is convertible at all times, at the option of
the stockholder and without cost to the stockholder, into Class A
common stock on a share-for-share basis. Upon conversion, such
shares would represent 64% of the then outstanding shares of Class A
common stock. The outstanding Class A common stock and Class B
common stock held by Lynch Interactive Corporation through us
represents 80.8% of the aggregate voting power of both classes of
common stock. Mr. Mario J. Gabelli is the Chairman of the Board and
Chief Executive Officer of Lynch Interactive Corporation. Prior

-43-

to the spin-off, Mr. Gabelli may be deemed to be a beneficial owner
of the 161,100 shares of Class A common stock and all of the Class B
common stock owned by Lynch Interactive Corporation through us
(shown in the above table) by virtue of his and certain affiliated
parties' beneficial ownership of 23.0% of the shares of common stock
of Lynch Interactive Corporation. Mr. Gabelli, however, specifically
disclaims beneficial ownership of all shares of the Class A common
stock and Class B common stock held by Lynch Interactive Corporation
through us.

(3) Includes 154,647 shares held of record by Mr. Baum, 8,000 shares
held of record by Mr. Baum's children, 4,323 shares held in The
Morgan Group, Inc.'s 401(k) Plan, 3,500 shares held of record by the
Baum Foundation, and unexercised options to acquire 25,000 shares.
An additional 118,518 shares of Class A common stock (not included
in Mr. Baum's holdings) are held by United Holdings Co., Inc. of
which Mr. Baum is a director, executive officer and minority
stockholder.

(4) Includes currently exercisable options to acquire 8,000 shares.

(5) Includes currently exercisable options to acquire 100,000 shares

(6) Includes currently exercisable options to acquire 10,000 shares and
960 shares in 401(k) plan.

(7) Includes 3 shares in 401(k) plan.

(8) Mr. Baum is a director, executive officer and minority stockholder
of United Holdings Co., Inc.

(9) Includes (a) 21,550 shares beneficially owned by John L. Keeley,
Jr., individually, (b) 53,250 shares beneficially owned by Keeley
Asset Management Corp., (c) 9,500 shares beneficially owned by Kamco
Performance Limited Partnership, (d) 11,000 shares beneficially
owned by Kamco Limited Partnership No. 1, (e) 2,200 shares
beneficially owned by the John L. Keeley, Jr. Foundation, and (f)
9,950 shares beneficially owned by Keeley Investment Corp. This
information is as of the latest Schedule 13D filed by Mr. Keeley on
February 9, 2001.

(10) Includes currently exercisable options to acquire 159,000 shares.

DESCRIPTION OF CAPITAL STOCK

Morgan Group Holding Co.

Common Stock

We have authorized 10,000,000 shares of common stock, $0.001 par
value per share, of which 3,055,345 shares are issued and outstanding. The
holders of our common stock are entitled to one vote per share on all matters to
be voted upon by the stockholders. Subject to preferences that may be applicable
to any outstanding shares of preferred stock, holders of common stock are
allowed to receive dividends as may be declared by the board of directors out of
funds legally available in proportion to their stockholdings. If we liquidate,
dissolve or wind up, holders of common stock are allowed to share in proportion
to their stockholdings in all assets remaining after payment of liabilities and
the liquidation preferences of any outstanding shares of preferred stock.
Holders of common stock have no preemptive, conversion, or subscription rights.
There are no redemption or sinking fund provisions applicable to the common
stock. All outstanding shares of common stock are, and all shares of common
stock to be outstanding upon completion of this offering will be, fully paid and
nonassessable.

Preferred Stock

We have authorized 1,000,000 shares of preferred stock, none of
which is issued and outstanding. Under our certificate of incorporation, our
board has the authority, without further action by stockholders, to issue up to
1,000,000 shares of preferred stock in one or more series and to fix the rights,
preferences, privileges, qualifications and restrictions granted to or imposed
upon preferred stock, including dividend rights, conversion rights, voting
rights, rights and terms of redemption, liquidation preference and sinking fund
terms, any or all of which may be greater than the rights of the common stock.
The issuance of preferred stock could reduce the voting power of holders of
common stock and reduce the likelihood that the holders of common stock will
receive dividend payments and payments upon liquidation. This issuance could
have the effect of decreasing the market price of the common stock. The issuance
of preferred stock could also have the effect of delaying, deterring or
preventing a change in control from occurring. We have no present plans to issue
any shares of preferred stock.

-44-

Antitakeover Effects of Provisions of Delaware Law

We are subject to Section 203 of the General Corporate Law of the
State of Delaware, which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder for a period of three years following the date that such stockholder
became an interested stockholder, unless:

o prior to such date, the Board of Directors of the corporation
approved either the business combination or the transaction that
resulted in the stockholders becoming an interested stockholder;
or
o upon consummation of the transaction that resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced,
excluding for purposes of determining the numbers of shares
owned by persons who are directors and also officers and by
employee stock plans in which employee participants do not have
the right to determine confidentially whether shares held
subject to the plan will be tendered in a tender or exchange
offer; or
o on or subsequent to such date, the business combination is
approved by the Board of Directors and authorized at an annual
or special meeting of stockholders, and not by written consent,
by the affirmative vote of at least 66 2/3% of the outstanding
voting stock that is not owned by the interested stockholder.

Section 203 defines business combination to include:

o any merger or consolidation involving the corporation and the
interested stockholder;
o any sale, transfer, pledge or other disposition of 10% or more
of the assets of the corporation involving the interested
stockholder;
o subject to certain exceptions, any transaction that results in
the issuance or transfer by the corporation of any stock of the
corporation to the interested stockholder;
o any transaction involving the corporation that has the effect of
increasing the proportionate share of the stock of any class or
series of the corporation beneficially owned by the interested
stockholder; or
o the receipt by the interested stockholder of the benefit of any
loans, advances, guarantees, pledges or other financial benefits
provided by or through the corporation.

In general, Section 203 defines an interested stockholder as any
entity or person beneficially owning 15% or more of the outstanding voting stock
of the corporation and any entity or person affiliated with or controlling or
controlled by such entity or person.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is American
Stock Transfer & Trust Company.

The Morgan Group, Inc.

The Morgan Group, Inc.'s authorized capital stock consists of (a)
7,500,000 shares of Class A common stock, $.015 par value per share, (b)
4,400,000 shares of Class B common stock, $.015 par value per share, and (c)
2,100,000 shares of preferred stock, $.01 par value per share.

As of September 30, 2001, there are 1,248,157 shares of Class A
common stock outstanding held of record by 150 stockholders, while we now hold
all 2,200,000 shares of outstanding Class B common stock. No shares of preferred
stock have been designated and there are no outstanding shares of preferred
stock.

-45-

If all warrants are exercised, there would be 2,496,314 shares of
Class A common stock outstanding and 4,400,000 shares of Class B common stock
outstanding.

The relative rights, privileges and limitations of our capital stock
are summarized below.

Class A and Class B Common Stock

Class A Common Stock. The shares of Class A common stock are listed
on the American Stock Exchange. The shares of Class A common stock are entitled
to one vote per share on all matters presented to the stockholders, and the
holders of shares of Class A common stock are entitled, voting separately as a
class, to elect one member of the Board of Directors. The holders of the Class A
and Class B common stock vote together as a single class upon the election of
all remaining directors and on all other matters presented to stockholders,
except that the Class A and Class B common stock also each vote separately as a
class when required by the charter or by-laws, or the Delaware General
Corporation Law, as amended. See "Certain Statutory, Charter and By-Law
Provisions" below. The shares of Class A common stock are freely transferable by
the holder.

Class B Common Stock. The shares of Class B common stock are
entitled to two votes per share on all matters presented to the stockholders.
The holders of Class A and Class B common stock vote together as a single class
on all matters presented to the stockholders, except that the holders of Class A
common stock elect one director exclusively and except where voting by class is
required by the charter or bylaws, or the Delaware General Corporation Law. The
Class B common stock is not listed on any exchange or traded in any market. The
shares of Class B common stock automatically convert to shares of Class A common
stock upon any transfer, except for transfers to an "affiliate" of the
transferor. An "affiliate" is defined as a person that, directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is under
common control with, the transferring holder of such Class B common stock.
"Control" means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a person, whether through
the ownership of voting securities, by contract or otherwise, and specifically
includes direct or indirect ownership of at least 5% of the voting equity of
such person.

Common Stock Generally. Holders of both classes of common stock are
entitled to receive ratably such dividends, if any, as are declared by the Board
of Directors from legally available funds, subject to any preferential dividend
owing to outstanding preferred stock. See "Preferred Stock", below. No cash
dividend may be paid on either class of our common stock unless a cash dividend
is also paid on the other class; provided that any dividend paid on Class B
common stock may not be greater than 100%, nor less than 50%, of any dividend
paid on shares of Class A common stock. If holders of Class A common stock
receive shares of Class A common stock distributed in connection with stock
dividends or stock splits, holders of Class B common stock will receive shares
of Class B common stock in the same per-share proportion as holders of Class A
common stock receive shares of Class A common stock.

Pursuant to the charter of The Morgan Group, Inc., The Morgan Group,
Inc. may not issue any additional shares of Class B common stock without the
approval of a majority of the votes of the outstanding shares of Class A common
stock and Class B common stock, each voting separately as a class. The Morgan
Group, Inc. may, however, issue additional shares of Class B common stock in the
event of pro rata stock splits or stock dividends. Any shares of Class B common
stock received by The Morgan Group, Inc. upon conversion of the shares to Class
A common stock will be retired and not reissued.

Upon liquidation, dissolution or winding up, the holders of both
classes of common stock are entitled to receive ratably the net assets of The
Morgan Group, Inc. available after the payment of all debts and other
liabilities and subject to the prior rights of any outstanding preferred stock.
Holders of common stock have no preemptive, subscription or redemption rights.
All outstanding shares of common stock are fully paid and nonassessable. The
rights, preferences and privileges of holders of common stock are subject to,
and may be adversely affected by, the rights of the holders of any shares of
preferred stock that The Morgan Group, Inc. may designate and issue in the
future.

-46-

Preferred Stock

The Board of Directors of The Morgan Group, Inc. has the authority
to issue preferred stock and to determine its rights and preferences to
eliminate delays associated with a stockholder vote on specific issuances. There
are 2,100,000 authorized shares of preferred stock that may be designated and
issued pursuant to these provisions. The issuance of preferred stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire, or of discouraging a third party from acquiring, a
majority of The Morgan Group, Inc.'s outstanding voting stock. The Morgan Group,
Inc. has no present plans to designate or issue any classes or series of
preferred stock.

Certain Statutory, Charter and By-Law Provisions

The following discussion is a general summary of material provisions
of the charter and by-laws of The Morgan Group, Inc. and the Delaware General
Corporation Law.

The charter of The Morgan Group, Inc. contains certain provisions
permitted under the Delaware General Corporation Law relating to the liability
of its directors and officers. The provisions provide that it will indemnify its
directors and officers against all expense, liability and loss suffered by a
director or officer in connection with his or her service as a director or
officer to the fullest extent authorized by the Delaware General Corporation
Law, and includes the right of the director or officer to require The Morgan
Group, Inc. to pay the expenses incurred in defending any such proceeding in
advance of its final disposition. Therefore, the directors and officers are
protected from monetary damages for breach of fiduciary duty, except in certain
circumstances involving wrongful acts, such as the breach of a director's duty
of loyalty or acts or omissions which involve intentional misconduct or a
knowing violation of law.

The by-laws of The Morgan Group, Inc. provide that any action
required or permitted to be taken by its stockholders may be taken only at a
duly called annual or special meeting of stockholders, and special meetings may
be called only by the Chairman of the Board of Directors, a majority of the
members of the Board of Directors or the holders of a majority of the voting
power of the outstanding common stock of The Morgan Group, Inc. The by-laws also
impose certain notice and information requirements in connection with the
nomination by stockholders of candidates for election to the Board of Directors
or the proposal by stockholders of business to be acted upon at the annual
meeting of the stockholders of The Morgan Group, Inc. These provisions could
have the effect of delaying until the next annual stockholders' meeting
stockholder actions that are not favored by the holders of a majority of the
voting power of the outstanding common stock.

The Delaware General Corporation Law provides generally that the
affirmative vote of a majority of the shares entitled to vote on any matter, and
the affirmative vote of each class entitled to vote on any matter as a separate
class, is required to amend the charter of The Morgan Group, Inc. Each class of
common stock is entitled to vote on any amendment to the charter which would (a)
increase or decrease the aggregate number of authorized shares of such class,
(b) increase or decrease the par value of the shares of such class, or (c) alter
or change the powers, preferences, or special rights of the shares of such class
so as to affect them adversely. The charter and by-laws of The Morgan Group,
Inc. allow its stockholders and the Board of Directors the power to amend,
repeal and adopt its by-laws.

Under Delaware law, the vote of a simple majority of the outstanding
shares of the capital stock entitled to vote thereon is required to approve a
merger or consolidation, or the sale, lease, or exchange of substantially all of
the assets of a company. With respect to a merger, no vote of stockholders is
required if The Morgan Group, Inc. is the surviving corporation and (a) the
related agreement of merger does not amend its charter, (b) each share of its
stock outstanding immediately before the merger is an identical outstanding or
treasury share after the merger, and (c) the number of shares of common stock to
be issued in the merger (or to be issuable upon conversion of any convertible
instruments to be issued in the merger) does not exceed 20% of the shares of
common stock outstanding immediately before the merger.

Certain of the foregoing provisions of the charter and by-laws of
The Morgan Group, Inc. and the Delaware General Corporation Law could have the
effect of preventing or delaying a person from acquiring or seeking to acquire a
substantial equity interest in, or control of, The Morgan Group, Inc.'s equity
securities.

-47-

EXPERTS

The combinded financial statements of Morgan Group Holding Co. at
December 31, 2000 and 1999, and for each of the three years in the period ended
December 31, 2000, appearing in this prospectus and registration statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon (which contains an explanatory paragraph describing
conditions that raise substantial doubt about our ability to continue as a going
concern as described in Note 4 to the combined financial statements) appearing
elsewhere herein, and are included in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.

LEGAL MATTERS

The legality of the shares of our common stock distributed in the
spin off will be passed upon by the law firm of Olshan Grundman Frome Rosenzweig
& Wolosky LLP, New York, New York.

ADDITIONAL INFORMATION

We have filed with the Securities and Exchange Commission a
registration statement on Form S-1, together with all amendments and exhibits
thereto, under the Securities Act of 1933, as amended, covering the securities
described herein. This prospectus does not contain all of the information set
forth in the registration statement, certain parts of which are omitted in
accordance with the rules and regulations of the Securities and Exchange
Commission. For additional information, please see the registration statement
and its exhibits.

After the spin-off, we will file annual, quarterly and special
reports, proxy statements, and other information with the Securities and
Exchange Commission. We intend to furnish our stockholders with annual reports
containing consolidated financial statements, certified by an independent public
accounting firm. The registration statement is, and these future filings with
the Securities and Exchange Commission will be, available to the public at the
public reference facilities at the Securities and Exchange Commission's office
at 450 Fifth Street, N.W., Washington, D.C. 20549. Such material may also be
accessed electronically through the Securities and Exchange Commission's home
page on the Internet at http://www.sec.gov. Please call the Securities and
Exchange Commission at 1-800-SEC-0330 for more information.

Any person who has received a copy of this prospectus may receive a
complimentary copy of all the documents referred to above which have been
incorporated by reference (other than exhibits to such documents) by making a
written or oral request to us at either the address or telephone number listed
on page 1.

-48-

Morgan Group Holding Co.
Index to Combined
Financial Statements

Combined Financial Statements:

Report of Independent Auditors.........................................F-2

Combined Balance Sheets as of
December 31, 2000 and 1999.................................F-3

Combined Statements of Operations for the Years
ended December 31, 2000, 1999 and 1998.....................F-4

Combined Statements of Cash Flows for the Years
ended December 31, 2000, 1999 and 1998.....................F-5

Combined Statements of Changes in Equity, Investments by
and Advances from Lynch Interactive Corporation
for the years ended December 31, 2000, 1999 and 1998.......F-6

Notes to the Combined Financial Statements.............................F-7

F-1

Report of Independent Auditors

Board of Directors
Lynch Interactive Corporation

We have audited the accompanying combined balance sheets of the net assets and
operations contributed to Morgan Group Holding Co. (see Note 1) as of December
31, 2000 and 1999, and the related combined statements of operations, changes in
equity, investments by and advances from Lynch Interactive Corporation and cash
flows for each of the three years in the period ended December 31, 2000. These
financial statements are the responsibility of the management of Lynch
Interactive Corporation (the "Company"). Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of the net
assets and operations contributed to Morgan Group Holding Co. (See Note 1) at
December 31, 2000 and 1999, and the combined results of its operations and its
cash flows for each of the three years in the period ended December 31, 2000, in
conformity with accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As more fully described in Note 4, the
Company's only subsidiary, The Morgan Group, Inc., incurred operating losses
during the year ended December 31, 2000, and was not in compliance with its
credit facility, which expired on January 28, 2001. Under the terms of the
expired credit facility, the bank has the right to demand cash to meet
outstanding obligations of the letters of credits. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters, including raising additional
equity and replacing the expired credit facility, are more fully described in
Note 4. The financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or
the amounts and classification of liabilities that may result from the outcome
of this uncertainty.

/s/ Ernst & Young LLP
Stamford, Connecticut
March 30, 2001,
except for the first three
paragraphs of Note 1,
as to which the date is
December 18, 2001.

F-2

Morgan Group Holding Co.
Combined Balance Sheets
(Dollars in thousands)
December 31,
2000 1999
---- ----
ASSETS
Current assets:
Cash and cash equivalents $ 2,092 $ 3,847
Trade accounts receivable, less allowances
of $248 in 2000 and $313 in 1999 7,748 10,130
Accounts receivable, other 133 313
Refundable taxes 499 --
Prepaid expenses and other current assets 1,147 1,960
Deferred income taxes 319 1,475
------- -------
Total current assets 11,938 17,725
------- -------

Property and equipment, net 3,688 4,309
Intangible assets, net 7,124 7,750
Deferred income taxes 282 2,172
Other assets 634 697
------- -------
Total assets $23,666 $32,653
======= =======

LIABILITIES AND EQUITY
Current liabilities:
Trade accounts payable $ 2,373 $ 3,907
Accrued liabilities 3,704 4,852
Income taxes payable -- 278
Accrued claims payable 3,224 3,071
Refundable deposits 1,357 1,752
Current portion of long-term debt and capital lease obligations 217 676
------- -------
Total current liabilities 10,875 14,536
------- -------

Long-term debt and capital lease obligations, less current portion 71 289
Deferred Income taxes 744 918
Long-term accrued claims payable 5,122 5,347

Commitments and contingencies -- --
Minority interest 3,193 5,392

Equity, investments by and advances from Lynch Interactive Corporation 3,661 6,171
------- -------
Total liabilities and equity $23,666 $32,653
======= =======

See accompanying notes.

F-3

Morgan Group Holding Co.
Combined Statements of Operations
(Dollars in thousands, except share amounts)

For the Years ended December 31
2000 1999 1998
---- ---- ----

Operating revenues $ 108,024 $ 145,629 $ 150,454

Costs and expenses:
Operating costs 99,552 133,774 136,963
Selling, general and administration 9,443 10,090 10,254
Depreciation and amortization 1,067 1,215 1,230
----------- ----------- -----------
110,062 145,079 148,447
----------- ----------- -----------
Operating (loss) income (2,038) 550 2,007
Interest expense, net 310 338 545
Other -- -- 13
----------- ----------- -----------
(Loss) income before income taxes and minority interests (2,348) 212 1,475
Income tax expense (2,277) (187) (594)
Minority interests 2,133 (28) (461)
----------- ----------- -----------
Net (loss) income $ (2,492) $ (3) $ 420
=========== =========== ===========

Net (loss) income per basic and diluted share $ (0.82) $ 0.00 $ 0.14
=========== =========== ===========

Basic and diluted weighted average shares
outstanding 3,055,345 3,055,345 3,055,345
=========== =========== ===========

See accompanying notes.

F-4

Morgan Group Holding Co.
Combined Statements of Changes in Equity, Investments by and
Advances from Lynch Interactive Corporation
(Dollars in thousands)

Equity, Investments
by and advances from
Lynch Interactive
Corporation
---------------------

Balance at December 31, 1997 $6,291
Capital transactions of the Morgan Group ,Inc. (164)
Advances to Lynch Interactive Corporation (61)
Net income 420
------
Balance at December 31, 1998 6,486
Capital transactions of the Morgan Group, Inc. (252)
Advances to Lynch Interactive Corporation (60)
Net (loss) (3)
------
Balance at December 31, 1999 6,171
Advances to Lynch Interactive Corporation (18)
Net (loss) (2,492)
------
Balance at December 31, 2000 $3,661
======

See accompanying notes.

F-5

Morgan Group Holding Co.
Combined Statements of Cash Flows
(Dollars in thousands)
For the Years ended December 31,
2000 1999 1998
---- ---- ----
Operating activities:
Net (loss) income $(2,492) $ (3) $ 420
Adjustments to reconcile net (loss) income to net cash (used in)
provided by operating activities:
Depreciation and amortization 1,067 1,215 1,246
Deferred income taxes 2,872 (426) (678)
Loss on disposal of property and equipment 292 101 20
Minority interests (2,133) 28 461
Changes in operating assets and liabilities:
Trade accounts receivable 2,382 2,058 1,174
Other accounts receivable 180 901 (1,088)
Refundable taxes (499) -- --
Prepaid expenses and other current assets 813 507 139
Other assets 63 (43) 810
Trade accounts payable (1,534) (397) 207
Accrued liabilities (1,148) 1,286 (612)
Income taxes payable (278) (600) 489
Accrued claims payable (72) 310 2,785
Refundable deposits (395) (78) 164
Other -- -- (13)
------- ------- -------
Net cash (used in) provided by operating activities (882) 4,859 5,524
------- ------- -------

Investing activities:
Purchases of property and equipment (106) (811) (585)
Proceeds from sale of property and equipment 2 7 88
Business acquisitions -- (35) (228)
Other (20) -- --
------- ------- -------
Net cash used in investing activities (124) (839) (725)
------- ------- -------

Financing activities:
Principle payments on long-term debt (677) (664) (3,418)
Proceeds from long-term debt -- 149 135
Minority interests transactions (54) (1,088) (345)
Investments by and advances (to)
Lynch Interactive Corporation (18) (60) (61)
------- ------- -------
Net cash used in financing activities (749) (1,663) (3,689)
------- ------- -------

Net (decrease) increase in cash and cash equivalents (1,755) 2,357 1,110

Cash and cash equivalents at beginning of period 3,847 1,490 380
------- ------- -------

Cash and cash equivalents at end of period $ 2,092 $ 3,847 $ 1,490
======= ======= =======

Cash payments for interest were $379,000 in 2000, $406,000 in 1999 and $566,000
in 1998.

See accompanying notes.

F-6

MORGAN GROUP HOLDING CO.
NOTES TO THE COMBINED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Morgan Group Holding Co. ("Holding" or "Company") was incorporated in November
2001 to serve as a holding company for Lynch Interactive Corporation's
("Interactive") controlling interest in The Morgan Group, Inc. ("Morgan").
Interactive intends to spin-off 2,820,051 shares of our common stock through a
pro rata distribution ("Spin-Off") to its stockholders. Interactive intends to
retain 235,294 shares of our common stock to be distributed in connection with
potential conversion of a convertible note that has been issued by Interactive.

The accompanying combined financial statements represents the combination, on a
retroactive basis, of all of Interactive's interest in Morgan and the
consolidated financial statements of Morgan as if the transfer by Interactive to
Holding occurred on January 1, 1998.

The combined financial statements have been prepared using the historical basis
of assets and liabilities and historical results of Interactive's interest in
Morgan which were contributed to the Company on December 18, 2001. However, the
historical financial information presented herein reflects periods during which
the Company did not operate as an independent public company and accordingly,
certain assumptions were made in preparing such financial information. Such
information, therefore, may not necessarily reflect the results of operations,
financial condition or cash flows of the Company in the future or what they
would have been had the Company been an independent public company during the
reporting periods.

Description of Business

The Company's only significant asset is its controlling interest in Morgan,
which through its wholly owned subsidiaries, Morgan Drive Away, Inc. and TDI,
Inc. ("TDI"), provides outsourced transportation and logistical services to the
manufactured housing and recreational vehicle industries and is a leading
provider of delivery services to the commercial truck and trailer industries in
the United States. Holding owns all of the 2,200,000 shares of Morgan's Class B
common stock and 161,100 shares of the Company's Class A common stock, which in
the aggregate of approximately 81% of the combined voting power of the combined
classes of the Company's common stock.

Morgan's other significant wholly owned subsidiaries are Interstate Indemnity
Company ("Interstate") and Morgan Finance, Inc. ("Finance"), which provide
insurance and financial services to its owner-operators.

Principles of Combination

The combined financial statements include the accounts of Holding, Morgan and
its subsidiaries. Significant intercompany accounts and transactions have been
eliminated in the combination.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires Management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could materially differ from those estimates.

F-7

Operating Revenues and Expense Recognition

Operating revenues and related driver pay are recognized when movement of the
product is completed. Other operating expenses are recognized when incurred.

Cash Equivalents

All highly liquid investments with maturity of three months or less when
purchased are considered to be cash equivalents.

Credit Risk

Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of customer receivables. As discussed in Note
10, two customers represent 33% of total customer receivables. The remaining
credit risk is generally diversified due to the large number of entities
comprising Company's remaining customer base and their dispersion across many
different industries and geographic regions. As noted on the consolidated
balance sheets, the Company maintains an allowance for doubtful accounts to
cover estimated credit losses.

Property and Equipment

Property and equipment is stated at cost. Major additions and improvements are
capitalized, while maintenance and repairs that do not improve or extend the
lives of the respective assets are charged to expense as incurred. Depreciation
is computed using the straight-line method over the following estimated useful
lives:

Buildings 25 years
Transportation Equipment 3 to 5 years
Office and Service Equipment 3 to 8 years

Intangible Assets

Intangible assets are comprised primarily of goodwill, which is stated at the
excess of purchase price over net asset acquired, net of accumulated
amortization of $4,181,000 and $3,547,000 at December 31, 2000 and 1999,
respectively. Intangible assets are being amortized by the straight-line method
over their estimated useful lives, which range from three to forty years.

Impairment of Assets

The Company periodically assesses the net realizable value of its long-lived
assets, including intangibles, and evaluates such assets for impairment whenever
events or changes in circumstances indicate the carrying amount of an asset may
not be recoverable. For assets to be held and used, impairment is determined to
exist if estimated undiscounted future cash flows are less than the carrying
amount. For assets to be disposed of, impairment is determined to exist if the
estimated net realizable value is less than the carrying amount.

Insurance and Claim Reserves

Claims and insurance accruals reflect the estimated ultimate cost of claims,
including amounts for claims incurred but not reported, for cargo loss and
damage, bodily injury and property damage, workers' compensation, long-term
disability and group health not covered by insurance. These costs are charged to
operating costs.

F-8

Stock-Based Compensation

Stock based compensation expense for Morgan's employee stock option plan is
recognized under the provisions of Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees ("APB 25"), and related
interpretations. Consistent with APB 25, the exercise price of the Morgan's
employee stock options equals the market price of the underlying stock on the
date of grant; therefore, no compensation expense is recognized.

Equity, Investments By and Advances From Lynch Interactive Corporation

Equity represents the net investments in and advances to Holding by Interactive.
It includes common stock, additional paid-in capital, net earnings and net
intercompany balances with Interactive which will be contributed at the time of
the Spin-Off.

Net Income (Loss) Per Share

Net income (loss) per common share ("EPS") is computed using the number of
common shares to be issued in connection with the Spin-Off as if such shares had
been outstanding for all periods presented.

Fair Values of Financial Instruments

At December 31, 2000 and 1999, the carrying value of financial instruments such
as cash and cash equivalents, trade and other receivables, trade payables and
long-term debt approximate their fair values. Fair value is determined based on
expected future cash flows, discounted at market interest rates, and other
appropriate valuation methodologies.

Comprehensive Income

There were no items of comprehensive income for the years presented, as defined
under SFAS No. 130, "Reporting Comprehensive Income". Accordingly, comprehensive
income is equal to net income.

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which is required to be adopted in fiscal
years beginning after June 15, 2000. Under the statement, all derivatives will
be required to be recognized on the balance sheet at fair value. Derivatives
that are not hedges must be adjusted to fair value through income. If the
derivative is a hedge, depending on the nature of the hedge, changes in the fair
value of derivatives will either be offset against the change in fair value of
the hedged assets, liabilities, or firm commitments through earnings or
recognized in other comprehensive income until the hedged item is recognized in
earnings. Under the statement, any ineffective portion of a derivative's change
in fair value must be immediately recognized in earnings. The Company has
evaluated the effect of SFAS No. 133 and determined that the adoption of SFAS
No. 133 will have no effect on the earnings and financial position of the
Company.

F-9

2. PROPERTY AND EQUIPMENT

The components of property and equipment are as follows (in thousands):
December 31,
2000 1999
---- ----

Land $ 873 $ 873
Buildings 2,186 2,241
Transportation equipment 146 419
Office and service equipment 2,288 3,491
----- -----
5,493 7,024

Less accumulated depreciation 1,805 2,715
----- -----
Property and equipment, net $3,688 $4,309
====== ======

Depreciation expense was $433,000, $511,000 and $581,000 for 2000, 1999 and
1998, respectively.

3. GOODWILL AND OTHER INTANGIBLES, NET

The components of goodwill and other intangibles, net are as follows (in
thousands):

December 31, 2000

Useful life Cost Accumulated Amortization Net Book Value
----------- ---- ------------------------ --------------
Goodwill 40 year $1,660 $518 $1,142
Goodwill 20 year 7,131 1,567 5,564
Goodwill 3-5 year 335 273 62
Non-compete agreements 3-20 year 2,179 1,823 356
----- ----- ---
$11,305 $4,181 $7,124
======= ====== ======

December 31, 1999

Useful life Cost Accumulated Amortization Net Book Value
----------- ---- ------------------------ --------------
Goodwill 40 year $1,660 $477 $1,183
Goodwill 20 year 7,123 1,229 5,894
Goodwill 3-5 year 335 196 139
Non-compete agreements 3-20 year 2,179 1,645 534
----- ----- -----
$11,297 $3,547 $7,750
======= ====== ======

4. INDEBTEDNESS

At December 31, 2000, Morgan had a $7.7 million revolving credit facility
("Credit Facility"), with a $6.7 million letter of credit sub-limit. The Credit
Facility bears interest at Morgan's option, on either the applicable Eurodollar
Rate Margin or the applicable Base Rate Margin, all of which are adjusted over
the term of the Credit Facility. Total borrowings and outstanding letters of
credit are limited to qualified trade accounts receivable, qualified in-transit
amounts, contractor loans, and qualified investments. The Credit Facility
contains financial covenants, the most restrictive of which are a cash flow
coverage ratio, interest expense coverage ratio, and minimum net income. At
December 31, 2000, the Company had no outstanding debt under its Credit
Facility, and $6.6 million of letters of credit were outstanding under the
Credit Facility. Letters of credit are required for self-insurance retention
reserves and other corporate needs.

The Credit Facility matured on January 28, 2001, at which time Morgan had no
outstanding debt and $6.6 million outstanding letters of credit. Morgan was in
default of the financial covenants, resulting in the bank failing to renew the
Credit Facility. As a result of the Credit Facility not being renewed, Morgan
has a payment default and the financial institution has the right to demand cash
to meet outstanding obligations under the letters of credit. The bank has
discretion as to whether to make any loans or issue additional letters of credit
for Morgan.

F-10

Due to the matured credit facility of Morgan, the financial statements of
Holding have been prepared on a going concern basis, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business. Morgan is actively seeking alternative financial institutions to
replace the existing Credit Facility as well as seeking additional capital
resources. Currently, negotiations are being held with several financial
institutions regarding a replacement facility. In connection with these
potential replacement facilities, Morgan is anticipating raising equity capital
up to $3.0 million. Morgan has engaged in discussions with its principal
shareholder, Interactive, regarding these matters. Based on preliminary
discussions, Interactive has expressed interest in providing a portion of the
capital support Morgan will require, but no terms have been agreed upon. Morgan
expects to seek to raise the equity capital it will require from Interactive,
other stockholders, or, if necessary, privately from other sources. Morgan's
ability to continue as a going concern is dependent upon its ability to
successfully maintain its financing arrangements and to comply with the terms
thereof. However, although no assurances can be given, management remains
confident that Morgan will be able to continue operating as a going concern.

Long-term debt and capital lease obligations of Morgan consisted of the
following (in thousands):
December 31,
2000 1999
---- ----
Promissory notes with imputed interest rates from 6.31% to 10.0%, principal and
interest payments due from monthly to
annually, through June 30, 2002 $242 $837
Term note and capital leases with imputed interest rates of 8.25% to 11.04%
with principal and interest payments due monthly through April 26, 2002 46 128
----- ----
288 965

Less current portion 217 676
----- ----
Long-term debt and capital lease obligations, net $ 71 $289
==== ====

Maturities on long-term debt are $217,000 in 2001 and $71,000 in 2002.

5. LEASES
Future minimum annual operating lease payments as of December 31, 2000, are as
follows (in thousands):
Operating
Leases
------

2001 $ 641
2002 173
2003 60
2004 11
2005 1
------
Total minimum lease payments $ 886
======

Aggregate expense under operating leases approximated $1,672,000, $2,115,000,
and $2,578,000 for 2000, 1999 and 1998, respectively.

6. INCOME TAXES

Deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse.

The income tax (provisions) benefits are summarized as follows (in thousands):
For the Years Ended December 31,
2000 1999 1998
---- ---- ----
Current:
State $ -- $ (98) $ (201)
Federal 595 (515) (1,071)
------- ------- -------
595 (613) (1,272)
------- ------- -------
Deferred:
State (448) 68 195
Federal (2,424) 358 483
------- ------- -------

(2,872) 426 678
------- ------- -------
($2,277) $ (187) $ (594)
======= ======= =======

F-11

Deferred tax assets (liabilities) are comprised of the following (in thousands):

December 31,
2000 1999
---- ----
Deferred tax assets:
Accrued insurance claims $ 3,323 $ 3,232
Special charges and accrued expenses 367 487
Depreciation 199 163
Other 84 125
------- -------
3,973 4,007
Deferred tax liabilities:
Prepaid expenses (184) (360)
Basis difference in subsidiary stock (744) (918)
------- -------
(928) (1,278)
------- -------
3,045 2,729

Valuation allowance for deferred tax assets (3,188) --
------- -------

$ (143) $ 2,729
======= =======

A reconciliation of the income tax (provisions) benefits and the amounts
computed by applying the statutory federal income tax rate to income before
income taxes follows (in thousands):

For the Years Ended December 31,
2000 1999 1998
---- ---- ----
Income tax (provision) benefits at
federal statutory rate $ 772 $ (72) $ (502)
State income (tax) benefit, net of
federal tax benefit 44 (20) (48)
Changes in estimated state tax rates
on beginning temporary differences
-- -- 70
Change in Valuation Allowance (3,188) -- --
Other 174 6 (30)
Permanent differences (79) (101) (84)
------- ------- -------

$(2,277) $ (187) $ (594)
======= ======= =======

Net cash payments for income taxes were $181,000, $1,205,000 and $810,000 in
2000, 1999 and 1998, respectively.

In assessing the realization of deferred tax assets, Management considers where
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the period in
which the temporary differences become deductible. A valuation allowance of
$3,188,000 was recorded in 2000 to reduce the deferred tax asset as

F-12

Morgan has experienced cumulative losses for financial reporting for the last
three years. Management considered, in reaching the conclusion on the required
valuation allowance, that given the cumulative losses, combined with the current
default on its Credit Facility, that it would be inconsistent to rely on future
taxable income to support full realization of the deferred tax assets.
Accordingly, the remaining deferred tax assets of $601,000 relates to federal
income tax carry-backs available to Morgan.

7. MORGAN'S SHAREHOLDERS' EQUITY

Morgan has two classes of common stock outstanding, Class A and Class B. Under
the bylaws of the Company: (i) each share of Class A is entitled to one vote and
each share of Class B is entitled to two votes; (ii) Class A shareholders are
entitled to a dividend ranging from one to two times the dividend declared on
Class B stock; (iii) any stock distributions will maintain the same relative
percentages outstanding of Class A and Class B; (iv) any liquidation of the
Company will be ratably made to Class A and Class B shareholders after
satisfaction of the Company's other obligations; and (v) Class B stock is
convertible into Class A stock at the discretion of the holder; Class A stock is
not convertible into Class B stock.

Morgan's Board of Directors has approved the purchase of up to 250,000 shares of
Class A Common Stock for its Treasury at various dates and market prices. During
the year ended December 31, 2000, the Company did not repurchase any shares
under this plan. As of December 31, 2000, 186,618 shares had been repurchased at
prices between $6.875 and $11.375 per share for a total of $1,561,000 under this
plan.

In March 1999, Morgan repurchased 102,528 shares of Class A stock in a Dutch
Auction for $985,000, which includes $62,000 of fees and expenses associated
with the transaction.

In July 1998, Morgan purchased 70,000 shares of Class A stock from a former
officer for $637,000 under a special stock purchase approved by the Board of
Directors.

8. STOCK OPTION PLAN AND BENEFIT PLAN

Morgan has an incentive stock option plan which provides for the granting of
incentive or non-qualified stock options to purchase up to 200,000 shares of
Class A common stock to directors, officers, and other key employees. No options
may be granted under this plan for less than the fair market value of the common
stock at the date of the grant. Although the exercise period is determined when
options are actually granted, an option shall not be exercised later than ten
years and one day after it is granted. Stock options granted will terminate if
the grantee's employment terminates prior to exercise for reasons other than
retirement, death, or disability. Stock options vest over a four-year period
pursuant to the terms of the plan, except for stock options granted to a
non-employee director, which are immediately vested. Employees and non-employee
directors have been granted non-qualified stock options to purchase 96,375 and
32,000 shares, respectively, of Class A common stock, net of cancellations and
shares exercised. There are 63,250 options reserved for future issuance.

In January 2000, Morgan's President and Chief Executive Officer entered into a
special stock option plan and agreement with Morgan which provides for the
granting of options to purchase 120,000 shares of Class A Common Stock in three
separate installments. The first installment is for 40,000 shares at an exercise
price of $5.625, exercisable 6 months from the date of the agreement. The second
installment is for 40,000 shares at an exercise price of $7.625, exercisable 18
months after the date of the agreement. The third installment is for 40,000
shares at an exercise price of $9.625, exercisable 30 months after the date of
the agreement. The options granted under this stock option plan and agreement
are not granted pursuant to the Incentive Stock Option Plan described above; but
they are subject to the same general terms and conditions of the Incentive Stock
Option Plan.

F-13

A summary of the Company's stock option activity and related information
follows:

Years Ended December 31,

2000 1999 1998
---- ---- ----
Weighted Weighted Weighted
Average Average Average
Options Exercise Options Exercise Options Exercise
(000) Price (000) Price (000) Price
----- ----- ----- ----- ----- -----

Outstanding at beginning of year 181 $ 8.23 170 $ 8.28 167 $ 8.32
Granted 120 7.63 11 7.52 23 8.11
Exercised -- -- -- -- (7) 8.25
Canceled (53) 7.79 -- -- (13) 8.59
---- -------- ---- -------- ---- --------

Outstanding at end of year 128 $ 8.42 181 $ 8.23 170 $ 8.28
==== ======== ==== ======== ==== ========

Exercisable at end of year 124 $ 8.41 149 $ 8.31 124 $ 8.42
==== ======== ==== ======== ==== ========

Exercise prices for options outstanding as of December 31, 2000, ranged from
$6.80 to $10.19. The weighted-average remaining contractual life of those
options is 4.6 years. The weighted-average fair value of options granted during
each year was immaterial.

The following pro forma information regarding net income (loss) and net income
(loss) per share is required when APB 25 accounting is elected, and was
determined as if the Company had accounted for its employee stock options under
the fair value method of SFAS No. 123, "Accounting for Stock-Based
Compensation." The fair values for these options were estimated at the date of
grant using a Black-Scholes option pricing model with the following assumptions:
dividend yield of 0.1%; expected life of 10 years; expected volatility of .596
in 2000 and .316 in 1999 and .250 in 1998, and a risk-free interest rate of 6.5%
in 2000 and 5.0% in 1999 and 6.0% in 1998. For purposes of pro forma
disclosures, the estimated fair values of the options are amortized to expense
over the option's vesting periods (in thousands except for per share
information):
2000 1999 1998
---- ---- ----
Net income (loss):
As reported $(2,492) $ (3) $ 420
Pro forma $(2,617) (22) 402

Diluted earnings (loss) per share:
As reported $(0.82) $0.00 $0.14
Pro forma $(0.86) (0.01) 0.13

During the initial phase-in period, as required by SFAS No. 123, the pro forma
amounts were determined based on stock options granted after the 1995 fiscal
year only. Therefore, the pro forma amounts for compensation cost may not be
indicative of the effects on pro forma net income and pro forma net income per
share for future years.

Morgan has a 401(k) Savings Plan covering substantially all employees, which
matches 25% of the employee contributions up to a designated amount. The
Company's contributions to the Plan for 2000, 1999 and 1998 were $18,000,
$23,000 and $29,000, respectively.

9. TRANSACTIONS WITH LYNCH INTERACTIVE CORPORATION

Interactive allocated $100,000 of expenses for executive, financial and
accounting, planning, budgeting, tax, legal, and insurance services to the
Company. Additionally, Lynch Interactive charges the Company for officers' and
directors' liability insurance, which totaled $20,000 in 2000, and $16,000 in
1999 and 1998. It is anticipated that when the Company becomes an independent
public company, administrative expenses will increase by approximately $.1-.2
million (unaudited) per year as a result of additional financial reporting
requirements, stock transfer fees, directors' fees, insurance, compensation and
other costs.

F-14

10. SEGMENT REPORTING

Description of Services by Segment

The Company operates in four business segments: manufactured housing, driver
outsourcing, specialized outsourcing services, and insurance and finance. The
manufactured housing segment primarily provides specialized transportation to
companies which produce new manufactured homes and modular homes through a
network of terminals located in twenty-eight states. The driver outsourcing
segment provides outsourcing transportation primarily to manufacturers of
recreational vehicles, commercial trucks, and other specialized vehicles through
a network of service centers in six states. The specialized outsourcing services
segment consists of a large trailer, travel and small trailer delivery and
another Specialized Service "Decking" (discontinued in 2000). The last segment,
insurance and finance, provides insurance and financing to the Company's drivers
and independent owner-operators. This segment also acts as a cost center whereby
all property damage and bodily injury and cargo costs are captured. The
Company's segments are strategic business units that offer different services
and are managed separately based on the differences in these services.

The driver outsourcing segment and the specialized outsourcing services were
reported as one segment titled "SOS" in 1998. The year of 1998 has been restated
to show corresponding segment information.

Measurement of Segment (Loss) Profit and Segment Assets

The Company evaluates performance and allocates resources based on several
factors, of which the primary financial measure is business segment operating
income, defined as earnings before interest, taxes, depreciation and
amortization (EBITDA). The accounting policies of the segments are the same as
those described in the summary of significant accounting policies (See Note 1).
There are no significant intersegment revenues.

The following table presents the financial information for the Company's
reportable segments for the years ended December 31 (in thousands):
2000 1999 1998
---- ---- ----
Operating revenues
Manufactured Housing $ 70,631 $ 99,491 $ 106,145
Driver Outsourcing 20,939 23,351 19,710
Specialized Outsourcing Services 15,260 21,172 23,064
Insurance and Finance 2,933 3,958 4,072
All Other (3) 148 48
--------- --------- ---------
109,760 148,120 153,039
Total intersegment insurance revenues (1,736) (2,491) (2,585)
--------- --------- ---------
Total operating revenues $ 108,024 $ 145,629 $ 150,454
========= ========= =========

Segment (loss) profit - EBITDA
Manufactured Housing $ 5,784 $ 10,265 $ 10,836
Driver Outsourcing 1,324 416 115
Specialized Outsourcing Services (140) 469 1,011
Insurance and Finance (6,765) (9,058) (8,358)
All Other (1,174) (327) (367)
--------- --------- ---------
(971) 1,765 3,237
Depreciation and amortization (1,067) (1,215) (1,230)
Interest expense (310) (338) (545)
Other -- -- 13
--------- --------- ---------
(Loss) income before taxes and minority interests $ (2,348) $ 212 $ 1,475
========= ========= =========
Identifiable assets
Manufactured Housing $ 11,652 $ 17,345 $ 19,146
Driver Outsourcing 4,561 5,438 6,055
Specialized Outsourcing Services 2,078 2,724 3,015
Insurance and Finance 1,433 1,801 1,864
All Other 3,942 5,345 3,689
--------- --------- ---------
Total $ 23,666 $ 32,653 $ 33,769
========= ========= =========
F-15

A majority of the Company's accounts receivable are due from companies in the
manufactured housing, recreational vehicle, and commercial truck and trailer
industries located throughout the United States. Services provided to Oakwood
Homes Corporation accounted for approximately $22.5 million, $28.8 million and
$31.8 million of revenues in 2000, 1999 and 1998, respectively. The Company's
gross accounts receivables from Oakwood were 23% and 16% of total receivables at
December 31, 2000 and 1999, respectively. In addition, Fleetwood Enterprises,
Inc., accounted for approximately $16.9 million, $23.9 million and $26.0
million, of revenues in 2000, 1999 and 1998, respectively. The Company's gross
accounts receivables from Fleetwood were 10% and 17% of total receivables at
December 31, 2000 and 1999, respectively.

11. OPERATING COSTS AND EXPENSES (in thousands)
2000 1999 1998
---- ---- ----
Purchased transportation costs $ 75,411 $101,046 $103,820
Operating supplies and expenses 10,826 13,559 14,092
Claims 5,658 8,633 7,698
Insurance 2,733 3,178 3,375
Operating taxes and licenses 4,924 7,358 7,978
-------- -------- --------

$ 99,552 $133,774 $136,963
======== ======== ========

Significant Accruals

Material components (greater than 5% of total current liabilities) of accrued
liabilities are as follows:

12/31/99 % 12/31/00 %
-------- - -------- -
Government Fees $717 4.9 $759 7.0
Workers' Comp 638 4.4 839 7.7
Customer Incentives 1,104 7.6 588 5.4
Other 12,077 83.1 8,689 79.9
------------------------------------------------------
Total Current Liabilities $14,536 100.0% $10,875 100.0%

Accruals are reviewed and booked monthly. The corresponding expenses are
reflected in the Selling, general and administration and Operating costs
sections of the Consolidated Statements of Operations.

Government fees represent amounts due for fuel taxes, permits and use taxes
related to linehaul transportation costs.

F-16

Workers' compensation represents estimated amounts due claimants related to
unsettled claims related to injuries incurred by Company employee-drivers. These
claim amounts due are established by Morgan's insurance carrier, Liberty Mutual,
on a monthly basis.

Customer incentive liability represents volume discounts ranging from 1% to 7%
of revenue earned by certain customers. The customer incentives earned are
computed and booked monthly based upon linehaul revenue for that specific
customer. The incentives are paid quarterly and are recorded as a charge against
Operating revenues in the Consolidated Statements of Operations.

12. COMMITMENTS AND CONTINGENCIES

The Company is involved in various legal proceedings and claims that have arisen
in the normal course of business for which the Company maintains liability
insurance covering amounts in excess of its self-insured retention. Management
believes that adequate reserves have been established on its self-insured claims
and that their ultimate resolution will not have a material adverse effect on
the consolidated financial position, liquidity, or operating results of the
Company.

The Company leases certain land, buildings, computer equipment, computer
software, and motor equipment under non-cancelable operating leases that expire
in various years through 2005. Several land and building leases contain monthly
renewal options.

13. QUARTERLY RESULTS OF OPERATIONS (Unaudited)

The following is a summary of unaudited quarterly results of operations for the
years ended December 31, 2000 and 1999 (in thousands, except share data):

Three Months Ended
March 31 June 30 Sept. 30 Dec. 31
-------- ------- -------- -------

2000
- ----
Operating revenues $ 27,867 $ 29,961 $ 28,164 $ 22,032
Operating income (loss) (898) 113 178 (1,431)
Net income (loss) (292) 8 38 (2,246)
Net income (loss) per basic and diluted share $ (0.10) $ 0.00 $ 0.01 $ (0.74)

1999
- ----
Operating revenues $ 35,325 $ 40,270 $ 37,312 $ 32,722
Operating income (loss) 325 436 208 (419)
Net income (loss) 51 80 12 (146)
Net income (loss) per basic and diluted share $ 0.02 $ 0.03 $ 0.00 $ (0.05)

F-17

MORGAN GROUP HOLDING CO.
INDEX TO COMBINED INTERIM
FINANCIAL STATEMENTS (Unaudited)

Combined Interim Financial Statements (unaudited): Page

Combined Balance Sheets as of September 30, 2001 and
December 31, 2000...................................................F-19

Combined Statements of Operations for the Nine Months Ended
September 30, 2001 and 2000.........................................F-20

Combined Statements of Cash Flows for the Nine Months Ended
September 30, 2001 and 2000.........................................F-21

Notes to Combined Interim Financial Statements..............................F-22

F-18

Morgan Group Holding Co.
Combined Balance Sheets
(Dollars in thousand)

September 30, December 31,
2001 2000
---- ----
ASSETS (Unaudited) (Note 1)
Current assets:
Cash and cash equivalents $ 1,393 $ 2,092
Investments - restricted 2,623 --
Trade accounts receivable, less allowances
of $144 in 2001 and $254 in 2000 9,217 7,748
Accounts receivable, other 448 133
Refundable taxes 131 499
Prepaid insurance 2,896 97
Prepaid expenses and other current assets 1,382 1,050
Deferred income taxes 319 319
------- -------
Total current assets 18,409 11,938
------- -------

Property and equipment, net 3,477 3,688
Goodwill and other intangibles, net 6,556 7,124
Deferred income taxes 282 282
Other assets 170 634
------- -------
Total assets $28,894 $23,666
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 4,806 $ 2,373
Notes payable, banks 1,369 --
Accrued liabilities 4,489 3,704
Accrued claims payable 3,013 3,224
Refundable deposits 1,154 1,357
Current portion of long-term debt and capital lease obligations 147 217
------- -------
Total current liabilities 14,978 10,875
------- -------
Long-term debt and capital lease obligations, less current portion 16 71
Deferred income taxes 744 744
Long-term accrued claims payable 4,821 5,122
Minority interests 2,772 3,193
Equity, investments by and advances from Lynch Interactive
Corporation 5,563 3,661
------- -------
Total liabilities and shareholders' equity $28,894 $23,666
======= =======

See notes to interim combined financial statements

F-19

Morgan Group Holding Co.
Combined Statements of Operations
(in thousands)
(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
---- ---- ---- ----

Operating revenues $ 24,834 $ 28,629 $ 70,954 $ 87,447

Costs and expenses:
Operating costs 22,666 26,055 64,306 80,445
Selling, general and administration 2,127 2,160 6,207 6,792
Depreciation and amortization 210 236 688 817
-------- -------- -------- --------
25,003 28,451 71,201 88,054

Operating (loss) income (169) 178 (247) (607)
Interest expense, net 90 77 182 210
-------- -------- -------- --------
Income (loss) before income taxes and minority
interest (259) 101 (429) (817)

Income tax expense (benefit) -- (32) 255 335
Minority interests 69 (31) 31 236
-------- -------- -------- --------
Net income (loss) $ (190) $ 38 $ (143) $ (246)
======== ======== ======== ========
Net income (loss) per common share:
Basic and Diluted $ (0.06) $ 0.01 $ (0.05) $ (0.08)
======== ======== ======== ========

Weighted average shares outstanding (thousands)
Basic 3,055 3,055 3,055 3,055
======== ======== ======== ========
Diluted 3,055 3,055 3,055 3,055
======== ======== ======== ========

See notes to interim combined financial statements.

F-20

Morgan Group Holding Co.
Combined Statements of Cash Flows
(Dollars in thousands)
(Unaudited)

Nine Months Ended
September 30
2001 2000
---------- ----------
Operating activities:
Net loss $ (143) $ (246)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 688 817
Deferred income taxes -- (42)
Loss on disposal of property and equipment 12 60
Minority interests (31) (236)
Changes in operating assets and liabilities:
Trade accounts receivable (1,469) (652)
Other accounts receivable (315) (13)
Refundable taxes 368 --
Prepaid insurance (2,799) --
Prepaid expenses and other current assets (332) 429
Other assets 464 229
Trade accounts payable 2,433 (285)
Accrued liabilities 785 (481)
Income taxes payable -- (565)
Accrued claims payable (512) (213)
Refundable deposits (203) (195)
------- -------
Net cash used in operating activities (1,054) (1,393)
------- -------

Investing activities:
Purchase of restricted investments (2,623) --
Purchases of property and equipment (98) (118)
Other (133) 2
------- -------

Net cash used in investing activities (2,854) (116)
------- -------

Financing activities:
Net proceeds from note payable to bank 1,369 --
Principal payments on long-term debt (160) (608)
Minority interest transactions -- (54)
Investment by and advances (to) from Lynch 2,000 (38)
Interactive Corporation ------- -------
Net cash provided by (used in) financing activities 3,209 (700)
------- -------

Net decrease in cash and equivalents (699) (2,209)

Cash and cash equivalents at beginning of period 2,092 3,847
------- -------

Cash and cash equivalents at end of period $ 1,393 $ 1,638
======= =======

See notes to interim combined financial statements.

F-21

Morgan Group Holding Co.
Notes to Interim Combined Financial Statements
(Unaudited)

September 30, 2001

Note 1. Basis of Presentation
---------------------

Morgan Group Holding Co. was incorporated in November 2001 to serve
as a holding company for Lynch Interactive Corporation's
("Interactive") controlling interest in the Morgan Group, Inc.
("Morgan") Interactive intends to spin-off 2,810,035 shares of our
common stock through a pro rata distribution ("Spin-Off") to its
stockholders. Interactive intends to retain 235,294 shares of our
common stock to be distributed in connection with its conversion of
a convertible note that has been issued by Interactive.

The accompanying combined interim financial statements represents
the combination, on a retroactive basis, of all of Interactive's
interest in Morgan as if the transfer by Interactive to Holding
occurred at the beginning of the respective period. At the time of
the Spin-Off, Interactive will transfer to Holding $500,000 and the
right to receive $100,000 per year from Morgan under a services
agreement assigned to the Company by Interactive.

The accompanying combined interim financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and with instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, certain information
and footnote disclosures normally included for complete financial
statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to such rules and regulations.
The balance sheet at December 31, 2000 has been derived from the
audited financial statements at that date but does not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements. The
combined interim financial statements should be read in conjunction
with the financial statements, notes thereto and other information
included in Holding's combined financial statements for the year
ended December 31, 2000 included herein.

Net income (loss) per common share ("EPS") is computed using the
number of common shares to be issued in connection with the Spin-Off
as if such shares were outstanding for all periods presented.

The accompanying unaudited combined interim financial statements
reflect, in the opinion of management, all adjustments (consisting
of normal recurring items) necessary for a fair presentation, in all
material respects, of the financial position and results of
operations for the periods presented. The preparation of financial
statements in accordance with generally accepted accounting
principles requires management to make estimates and assumptions.
Such estimates and assumptions affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates. The results of operations for the
interim periods are not necessarily indicative of the results for
the entire year.

The combined financial statements include the accounts of Holding
and Morgan and its subsidiaries, Morgan Drive Away, Inc., TDI, Inc.,
Interstate Indemnity Company, and Morgan Finance, Inc., all of which
are wholly owned. Significant intercompany accounts and transactions
have been eliminated in consolidation.

Certain 2000 amounts have been reclassified to conform to the 2001
presentation.

F-22

Note 2. Impairment of Long-Lived Assets and Recent Accounting Pronouncements
--------------------------------------------------------------------

As disclosed in the accounting policy note in the audited annual
financial statements for the year ended December 31, 2000, periodic
assessment of the net realizable value of its long-lived assets,
including intangibles, and evaluation of such assets for impairment
are made whenever events or changes in circumstances indicate the
carrying amount of the assets may not be recoverable. Impairment is
determined to exist if estimated undiscounted future cash flows are
less than the carrying amount of the intangible asset.

Significant negative indicators currently exist for the Company,
including, but not limited to, significant revenue declines of 26%
in fiscal 2000 and 13% in year-to-date 2001, operating and cash flow
losses in those periods and the loss of a significant customer as of
October 1, 2001. As a result, management deemed it appropriate to
obtain an independent valuation of the Company's intangible assets
to determine if impairment existed as of September 30, 2001. This
valuation was done for the current accounting pronouncement relating
to goodwill as prescribed by Statements of Financial Accounting
Standards No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of (Statement 121)
under which the Company has adopted an accounting policy to utilize
an undiscounted cash flow approach to estimate any potential
impairment.

Additionally in July 2001, the Financial Accounting Standards Board
issued Statements of Financial Accounting Standards, No. 141,
Business Combination (Statement 141), and No. 142, Goodwill and
Other Intangible Assets (Statement 142). These Statements change the
accounting for business combinations, goodwill, and intangible
assets.

Under Statement 142, goodwill and indefinite lived intangible assets
are no longer amortized but are reviewed for impairment annually or
more frequently if impairment indicators arise. Separable intangible
assets that are deemed to have definite lives will continue to be
amortized over their useful lives. The amortization provisions of
Statement 142 apply to both goodwill and intangible assets acquired
after June 30, 2001. With respect to goodwill and intangible assets
acquired prior to July 1, 2001, companies are required to adopt
Statement 142 in their fiscal year beginning after December 15,
2000. Because of the different transition dates for goodwill and
intangible assets acquired on or before June 30, 2001 and those
acquired after that date, pre-existing goodwill and intangibles will
be amortized during this transition period until adoption. New
goodwill and indefinite lived intangible assets acquired after June
30, 2001 will be recorded in accordance with the Statement 142
requirements.

The Company is required to, and will, adopt Statements 141 and 142
in the third quarter of 2001 except with respect to the provisions
of Statement 142 relating to goodwill and intangibles acquired prior
to July 1, 2001. Statements 141 and 142 will be adopted in the first
quarter of 2002 for those assets.

Key assumptions utilized in the independent valuation are discussed
in the following paragraphs.

In accordance with the requirements of Statement 142, the Company
has identified two reporting units, manufactured housing and drive
away, that contain material intangible assets that are subject to
impairment analysis. The Company does not maintain or have access to
accurate, supportable and reliable financial data at lower operating
levels within these segments which management relies upon in making
its operating decisions. The forecasts, valuations and impairment
analyses for Statement 142 were made at these two reporting unit
levels.

Another key assumption is the time frame for which the Company has
estimated its cash flows for the projections. The valuation is based
on cash flow projected over a five-year period after which time cash
flow is normalized and projected to grow at a constant rate.
Management believes that five years is the appropriate period to
forecast prior to normalized cash flows based on the current
industry cycle in manufactured housing and the Company's long term
market strategy.

The Company is projecting, and the valuation analysis assumes, net
earnings in all periods from 2002 to 2006. For the valuation, we
projected average net earnings in the periods from 2002 to

F-23

2006 of $799,000 for the manufactured housing unit and $230,000 for
the drive away unit. Management believes the projected period and
earnings are appropriate for the valuation based on historical
operating results, the current state of the manufactured housing
industry, the Company's business model and long-term market
strategy.

The valuation uses a discount rate of 15.5% which is the estimated
rate of return expected by an investor considering the perceived
investment risk. The discount rate reflects a risk-free rate of
return and industry adjusted equity premium, a premium for small
size and the industry's level of leverage. The capitalization rate
of 8.4 was derived from the discount rate and the long-term growth
rate.

The projections also assumed future capital expenditures of
approximately $170,000 to $280,000 per year for each of the
forecasted years 2002 through 2006. Actual capital expenditures
incurred in the previous five years were significantly higher than
these projections. The Company's business model and strategy for the
future is not asset intensive and the Company has no plans to
acquire significant transportation equipment, real estate or other
business property. Capital expenditures for the first nine months of
2001 have been approximately $100,000. Management believes that
future capital expenditures used in the projections are appropriate
to carry out the Company's strategic plan.

The independent valuation based upon the Company's estimated future
cash flow concluded that currently there is no impairment of the
Company's intangible assets under Statement 121 as of September 30,
2001. However, there is a projected impairment under Statement 142
of approximately $300,000 to $500,000 for intangible assets in the
manufactured housing division and approximately $25,000 to $100,000
for intangible assets in the drive away division. These intangible
asset impairments will be required to be recorded on January 1,
2002, when Statement 142 is adopted for those assets.

The Company will be required to perform an updated analysis under
Statement 142 as of January 1, 2002. There can be no assurance at
this time that the projections or any of the key assumptions will
remain the same as business conditions may dictate significant
changes in either the estimated cash flows, or any of the other key
assumptions. The Company will update the analysis of intangible
asset impairment on at least an annual basis as required by
Statement 142 as long as material goodwill exists on the balance
sheet.

Note 3. Notes Payable, Banks
--------------------

Credit Facility
---------------

On July 27, 2001, Morgan obtained a new three-year $12.5 million
Credit Facility.

The Credit Facility will be used for working capital purposes and to
post letters of credit for insurance contracts. As of September 30,
2001, Morgan had outstanding borrowings of $.9 million and $7.6
million outstanding letters of credit. Borrowings bear interest at a
rate per annum equal to either Bank of New York Alternate Base Rate
("ABR") plus one-half percent or, at the option of Morgan, absent an
event of default, the one month London Interbank Offered Rate
("LIBOR") as published in The Wall Street Journal, averaged monthly,
plus three percent. Borrowings and posted letters of credit on the
Credit Facility are limited to a borrowing base calculation that
includes 85% of eligible receivables and 95% of eligible
investments, and are subject to certain financial covenants
including minimum tangible net worth, maximum funded debt, minimum
fixed interest coverage and maximum capital expenditures. The
facility is secured by accounts receivable, investments, inventory,
equipment and general intangibles. The facility may be prepaid
anytime with prepayment being subject to a 3%, .75% and .25%
prepayment penalty during year 1, 2 and 3, respectively.

The prior Credit Facility matured on January 28, 2001, at which time
Morgan had no outstanding

F-24

debt and $6.6 million outstanding letters of credit. Morgan was in
default of the financial covenants, resulting in the bank failing to
renew the prior Credit Facility and, as a result, Morgan had a
payment default.

Real Estate Loan
----------------

On July 31, 2001, Morgan closed on a new real estate mortgage for
$500,000 that is secured by Morgan's land and buildings in Elkhart,
Indiana. The loan will be used for short-term working capital
purposes. The mortgage bears interest at prime rate plus 0.75%, and
is for a six-month term with outstanding principal due on February
1, 2002. The loan may be prepaid at any time with no penalties, and
is subject to the same covenants as the Credit Facility. Morgan's
application for additional capacity under this facility is under
consideration.

Note 4. Credit Risk
-----------

With the downturn in the national economy, management is continually
reviewing credit worthiness of its customers and taking appropriate
steps to ensure the quality of the receivables. As of September 30,
2001, 35% of the open trade accounts receivable was with five
customers of which over 97% was within 60 days of invoice. In total,
96% of the open trade receivables are also within 60 days of
invoice.

Effective October 1, 2001, Morgan will no longer be the primary
carrier for its largest customer, Oakwood Homes Corporation. The
Company has reduced the Oakwood open accounts receivable from
$1,776,000 as of December 31, 2000, to $792,000 and $579,000 as of
September 30, 2001, and October 31, 2001, respectively. At this
time, Company management believes the receivable is fully
collectible.

Note 5. Stockholders' Equity
--------------------

Capital Infusion

On July 12, 2001, Holding received a $2 million capital infusion
from its majority stockholder Lynch Interactive Corporation, which
was invested in Morgan increasing Holding's ownership position in
the Company from 55.6% to 68.5%. Proceeds from the transaction are
invested in U.S. Treasury backed instruments and are pledged as
collateral for Morgan's Credit Facility.

Note 6. Income Taxes
------------

Holding does not file consolidated income tax returns with Morgan on
either a federal or state basis. In assessing the realization of
deferred tax assets, Management considers whether it is more likely
than not that some portion or all of the deferred tax assets will
not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the
period in which the temporary differences become deductible. A
valuation allowance of $3.2 million was recorded in 2000 to reduce
the deferred tax assets, as Morgan has experienced cumulative losses
for financial reporting for the last three years. Management
considered, in reaching the conclusion on the required valuation
allowance, given the cumulative losses, that it would be
inconsistent with applicable accounting rules to rely on future
taxable income to support full realization of the deferred tax
assets. Accordingly, the remaining deferred tax assets relate to
federal income tax carry backs available to Morgan.

Note 7. Segment Reporting
-----------------

Description of Services by Segment
----------------------------------

The Company operates in four business segments: Manufactured
Housing, Driver Outsourcing, Specialized Outsourcing Services, and
Insurance and Finance. The Manufactured Housing

segment primarily provides specialized transportation to companies,
which produce new manufactured homes and modular homes through a
network of terminals located in twenty-eight states. The Driver
Outsourcing segment provides outsourcing transportation primarily to
manufacturers of recreational vehicles, commercial trucks, and other
specialized vehicles through a network of service centers in six
states. The Specialized Outsourcing Services segment consists of
large trailer, travel and small trailer delivery. The last segment,
Insurance and Finance, provides insurance and financing to the
Company's drivers and independent owner-operators. This segment also
acts as a cost center whereby all property damage, bodily injury and
cargo costs are captured. The Company's segments are strategic
business units that offer different services and are managed
separately based on the differences in these services.

Measurement of Segment (Loss) Income
------------------------------------

The Company evaluates performance and allocates resources based on
several factors, of which the primary financial measure is business
segment operating income, defined as earnings before interest,
taxes, depreciation and amortization (EBITDA). The accounting
policies of the segments are the same as those described in the
Company's annual financial statements.

F-26

The following table presents the financial information for the
Company's reportable segments for the three and nine-month periods
ended September 30, (in thousands):

Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
-------------------- ---------------------
Operating revenues
Manufactured Housing $ 13,947 $ 18,730 $ 39,411 $ 56,931
Driver Outsourcing 4,532 5,152 13,759 16,584
Specialized Outsourcing Services 5,728 4,023 15,831 11,662
Insurance and Finance 627 724 1,953 2,273
All Other -- -- -- (3)
-------- -------- -------- --------
Total operating revenues $ 24,834 $ 28,629 $ 70,954 $ 87,447
======== ======== ======== ========

Segment profit - EBITDA
Manufactured Housing $ 1,146 $ 1,716 $ 3,266 $ 5,354
Driver Outsourcing 283 194 1,003 1,100
Specialized Outsourcing Services 400 82 747 (37)
Insurance and Finance (1,879) (1,471) (4,012) (5,435)
All Other 91 (107) (563) (772)
-------- -------- -------- --------
41 414 441 210
Depreciation and amortization (210) (236) (688) (817)
Interest expense (90) (77) (182) (210)
-------- -------- -------- --------
(Loss) income before taxes and minority
interests $ (259) $ 101 $ (429) $ (817)
======== ======== ======== ========

F-27

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13 Other Expenses of Issuance and Distribution.
- ------- -------------------------------------------

The following table sets forth the various expenses (other than
underwriting discounts and commissions) which we will pay in connection with the
issuance and distribution of the securities being registered. With the exception
of the Securities and Exchange Commission registration fee, all amounts shown
are estimates.

Securities and Exchange Commission Registration Fee $ 1,395.93
Blue Sky Fees and Expenses 5,000.00
Printing and Engraving 10,000.00
Accounting Fees and Expenses 20,000.00
Legal Fees and Expenses 100,000.00
Miscellaneous Expenses 15,000.00
----------------------------
Total $ 151,395.93

ITEM 14 Indemnification of Directors and Officers
- ------- -----------------------------------------

As permitted by the Delaware General Corporation Law, our
certificate of incorporation limits the personal liability of our directors and
officers for breaches of their fiduciary duties. Liability is not eliminated for

o any breach of the duty of loyalty to us or our stockholders,
o acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law,
o unlawful payment of dividends or stock purchases or redemptions
pursuant to Section 174 of the Delaware General Corporation
Law, or
o any transaction from which the director derived an improper
personal benefit.

Our by-laws provide that we shall indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding by reason of the fact that he is or was a
director, officer, employee or an agent of ours or is or was serving at our
request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against all expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with the defense or
settlement of such action, suit or proceeding, to the fullest extent and in the
manner set forth in and permitted by Delaware law, as from time to time in
effect, and any other applicable law, as from time to time in effect. Such right
of indemnification is not be deemed exclusive of any other rights to which such
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of each such person.

ITEM 15 Recent Sales of Unregistered Securities
- ------- ---------------------------------------

Not Applicable

ITEM 16 Exhibits and Financial Statement Schedules

- ------- ------------------------------------------1. Exhibits:

II-1

Exhibit Number Description
-------------- -----------

3.1** Certificate of Incorporation of the Company

3.2** By-laws of the Company

4.1 Revolving Credit and Term Loan Agreement, dated
January 28, 1999, among The Morgan Group, Inc. and
Subsidiaries and Bank Boston, N.A., is
incorporated by reference to Exhibit 4(1) to The
Morgan Group, Inc.'s Current Report on Form 8-K
filed February 12, 1999.

4.2 Guaranty, dated January 28, 1999, among The Morgan
Group, Inc. and Subsidiaries and BankBoston, N.A.
is incorporated by reference to Exhibit 4(2) to
The Morgan Group, Inc.'s Current Report on Form
8-K filed February 12, 1999.

4.3 Security Agreement, dated January 28, 1999, among
The Morgan Group, Inc. and Subsidiaries and
BankBoston, N.A. is incorporated by reference to
Exhibit 4(3) to The Morgan Group, Inc.'s Current
Report on Form 8-K filed February 12, 1999.

4.4 Stock Pledge Agreement, dated January 28, 1999,
among The Morgan Group, Inc. and Subsidiaries and
BankBoston, N.A. is incorporated by reference to
Exhibit 4(4) to The Morgan Group, Inc.'s Current
Report on Form 8-K filed February 12, 1999.

4.5 Revolving Credit Note, dated January 28, 1999,
among The Morgan Group, Inc. and Subsidiaries and
BankBoston, N.A. is incorporated by reference to
Exhibit 4(5) to The Morgan Group, Inc.'s Current
Report on Form 8-K filed February 12,1999.

4.6 Amendment Agreement No. 1 to that Certain
Revolving Credit Agreement and Term Loan Agreement
among The Morgan Group, Inc. and its Subsidiaries
and BankBoston dated as of March 31, 2000, is
incorporated by reference to Exhibit 4.9 to The
Morgan Group, Inc.'s Annual Report on Form 10-K
for the year ended December 31, 2000.

4.7 Amendment Agreement No. 2 to that Certain
Revolving Credit Agreement and Term Loan Agreement
among The Morgan Group, Inc. and its Subsidiaries
and BankBoston dated as of November 10, 2000, is
incorporated by reference to Exhibit 4.10 to The
Morgan Group, Inc.'s Annual Report on Form 10-K
for the year ended December 31, 2000.

4.8 Form of Class A Warrant Certificate is
incoporatedincorporated by reference to Exhibit 4.11 of
Amendment No. 1 to The Morgan Group, Inc.'s
Registration Statement on Form S-2, File No.
333-63188, filed August 15, 2001.

4.9 Form of Warrant Services Agreement between The
Morgan Group, Inc. and American Stock Transfer and
Trust Company is incorporated by reference to
Exhibit 4.12 of Amendment No. 1 to The Morgan
Group, Inc.'s Registration Statement on Form S-2,
File No. 333-63188, filed August 15, 2001.

4.10 Revolving Credit and Security Agreement, dated
July 27, 2001, among GMAC Commercial Credit LLC,
Morgan Drive Away, Inc. and TDI, Inc., is
incorporated by reference to Exhibit 4.1 to The
Morgan Group, Inc.'s Quarterly Report on Form 10-Q
for the period ended June 30, 2001, filed August
14, 2001.

II-2
4.11 Guaranty, dated July 27, 2001, between The Morgan
Group, Inc. and GMAC Commercial Credit LLC, is
incorporated by reference to Exhibit 4.2 to The
Morgan Group, Inc.'s Quarterly Report on Form 10-Q
for the period ended June 30, 2001, filed August
14, 2001.

4.12 Letter of Credit Financing Supplement to Revolving

II-2

Credit Agreement, dated July 27, 2001, among GMAC
Commercial Credit LLC, Morgan Drive Away, Inc.,
and TDI, Inc., is incorporated by reference to
Exhibit 4.2 to The Morgan Group, Inc.'s Quarterly
Report on Form 10-Q for the period ended September
30, 2001.

4.13 Amendment to that certain Revolving Credit and
Security Agreement among GMAC Commercial Credit,
LLC, Morgan Drive Away, Inc., and TDI, Inc., dated
as of November 8, 2001, is incorporated by
reference to Exhibit 4.1 to The Morgan Group,
Inc.'s Quarterly Report on Form 10-Q for the
period ended September 30, 2001.

4.14 Mortgage, dated July 31, 2001, between Morgan
Drive Away, Inc. and Old Kent Bank, is
incorporated by reference to Exhibit 4.3 to The
Morgan Group, Inc.'s Quarterly Report on Form 10-Q
for the period ended June 30, 2001, filed August
14, 2001.

4.15 Guaranty, dated July 31, 2001, between The Morgan
Group, Inc. and Old Kent Bank, is incorporated by
reference to Exhibit 4.4 to The Morgan Group,
Inc.'s Quarterly Report on Form 10-Q for the
period ended June 30, 2001, filed August 14, 2001.

5.1** Legality Opinion

8.1* Opinion of Ernst & Young LLP

10.1** Separation and Distribution Agreement, dated as of
December ___, 2001 by and among Lynch Interactive
Corporation, Morgan Group Holding Co. and The
Morgan Group, Inc.

10.2 The Morgan Group, Inc. Incentive Stock Plan is
incorporated by reference to Exhibit 10.1 to The
Morgan Group, Inc.'s Registration Statement on
Form S-1, File No. 33-641-22, effective July 22,
1993.

10.3 First Amendment to The Morgan Group, Inc.
Incentive Stock Plan is incorporated by reference
to Exhibit 10.1 to The Morgan Group, Inc.'s
Quarterly Report on Form 10-Q for the period ended
September 30, 1997, filed November 14, 1997.

10.4 Memorandum to Charles Baum and Philip Ringo from
Lynch Corporation, dated December 8, 1992,
respecting Bonus Pool, is incorporated by
reference to Exhibit 10.2 to The Morgan Group,
Inc.'s Registration Statement on Form S-1, File
No. 33-641-22, effective July 22, 1993.

10.5 Term Life Policy from Northwestern Mutual Life
Insurance Company insuring Paul D. Borghesani,
dated August 1, 1991, is incorporated by reference
to Exhibit 10.4 to The Morgan Group, Inc.'s
Registration Statement on Form S-1, File No.
33-641-22, effective July 22, 1993.

10.6 Long Term Disability Insurance Policy from
Northwestern Mutual Life Insurance Company, dated
March 1, 1990, is incorporated by reference to The
Morgan Group, Inc.'s Registration Statement on
Form S-1, File No. 33-641-22, effective July 22,
1993.

10.7 Long Term Disability Insurance Policy from CNA
Insurance Companies, effective January 1, 1998 is
incorporated by reference to Exhibit 10.6 to The
Morgan Group, Inc.'s Annual Report on Form 10-K
for the year ended December 31, 1997, filed March
31, 1998.

II-3
10.8 The Morgan Group, Inc. Employee Stock Purchase
Plan, as amended, is incorporated by reference to
Exhibit 10.16 to The Morgan Group, Inc.'s Annual
Report on Form 10-K for the year ended December
31, 1994, filed on March 30, 1995.

II-3

10.9 Consulting Agreement between Morgan Drive Away,
Inc. and Paul D. Borghesani, effective as of April
1, 1996, is incorporated by reference to Exhibit
10.19 The Morgan Group, Inc.'s Annual Report on
Form 10-K for the year ended December 31, 1995,
filed on April 1, 1996.

10.10 Employment Agreement, dated January 12, 2000
between The Morgan Group, Inc. and Anthony T.
Castor, III is incorporated by reference to
Exhibit 10.9 to The Morgan Group, Inc.'s Annual
Report on Form 10-K for the year ended December
31, 1999.

10.11 Non-Qualified Stock Option Plan and Agreement,
dated January 11, 2000, between The Morgan Group,
Inc. and Anthony T. Castor, III is incorporated by
reference to Exhibit 10.10 to The Morgan Group,
Inc.'s Annual Report on Form 10-K for the year
ended December 31, 1999.

10.12 Management Agreement between Skandia International
and Risk Management (Vermont), Inc. and Interstate
Indemnity Company, dated December 15, 1992, is
incorporated by reference to Exhibit 10.12 to The
Morgan Group, Inc.'s Registration Statement on
Form S-1, File No. 33-641-22, effective July 22,
1993.

10.13 Agreement for the Allocation of Income Tax
Liability between Lynch Corporation and its
Consolidated Subsidiaries, including The Morgan
Group (formerly Lynch Services Corporation), dated
December 13, 1988, as amended, is incorporated by
reference to Exhibit 10.13 The Morgan Group,
Inc.'s Registration Statement on Form S-1, File
No. 33-641-22, effective July 22, 1993.

10.14** Certain Services Agreement, dated January 1, 1995,
between Lynch Corporation and The Morgan Group,
Inc.

23.1** Consent of Ernst & Young LLP

23.2* Consent of Ernst & Young LLP with regards to
tax opinion (contained in exhibitExhibit 8.1)

23.3** Consent of Olshan Grundman Frome Rosenzweig &
Wolosky LLP (contained in exhibit 5.1)

24** Power of Attorney dated November 21, 2001
- --------------
* Filed herewith
**Previously Filed

ITEM 28 Undertakings.
- ------- ------------

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, we
certify that we have reasonable grounds to believe that this registration
statement meets all of the requirements for filing on Form S-1 and have duly
caused this Amendment No. 12 to this Registration Statement to be signed on our
behalf by the undersigned, thereunto duly authorized, in the City of Rye, State
of New York on the 31st16th day of December, 2001.January, 2002.

MORGAN GROUP HOLDING CO.

By: *
--------------------------------------------------
Mario J. Gabelli
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as
amended, this Amendment No. 1 to this Registration Statement has been signed by
the following persons in the capacities and on the dates indicated:

Signature Title Date
- --------- ----- ----

* - ---------------------
Mario J. Gabelli Chief Executive Offer and Director December 31, 2001January 16, 2002
- -----------------------
Mario J. Gabelli

*
- ---------------------
Robert E. Dolan Chief Financial Officer and Director December 31, 2001January 16, 2002
- -----------------------
Robert E. Dolan

/s/ John Fikre
- --------------------- John Fikre Vice President, Secretary and Director December 31, 2001January 16, 2002
- -----------------------
John Fikre

* By:By /s/ John Fikre
--------------------------------------
John Fikre
Attorney-in-fact

II-5