UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

         Annual Report Pursuant to Section 13 or 15(d) of the Securities
        Exchange Act of 1934 for the fiscal year ended December 31, 1999

                             THE MORGAN GROUP, INC.
                              2746 Old U.S. 20 West
                             Elkhart, Indiana 46514
                                 (219)295-2200
                         Commission File Number 1-13586

          Delaware                                    22-2902315
   (State of Incorporation)              (I.R.S. Employer Identification Number)

           Securities Registered Pursuant to Section 12(b) of the Act:

                             American Stock Exchange
                     Class A common stock, without par value

           Securities Registered Pursuant to Section 12(g) of the Act:

                                      None

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.

                                 YES  X        NO ______

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The aggregate market value of the issuer's voting stock held by  non-affiliates,
as of March 24, 2000 was  $6,397,000.  The number of shares of the  Registrant's
Class A common  stock $.015 par value and Class B common  stock $.015 par value,
outstanding as of March 24, 2000, was 1,248,157  shares,  and 1,200,000  shares,
respectively.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the 2000 Annual Meeting of Stockholders  are
incorporated into Part III of this report.


<PAGE>

Part I

Item 1.  BUSINESS

Overview

The Morgan Group, Inc. (the "Company" or "Registrant") , a Delaware corporation,
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.  ("Morgan"),  has been operating  since 1936. The Company is a
subsidiary of Lynch Interactive Corporation, which formed the Company in 1988 to
acquire Morgan and Interstate  Indemnity  Company  ("Interstate"),  an insurance
subsidiary. The Company offers financing to independent  owner-operators through
Morgan Finance,  Inc.  ("Finance").  The Company provides services to the Driver
Outsourcing industry through its subsidiary Transfer Drivers, Inc. ("TDI").

The Company primarily  provides  outsourcing  transportation  services through a
national  network  of  approximately   1,320  independent   owner-operators  and
approximately  1,470 other drivers.  The Company  dispatches its drivers from 98
locations in 32 states.  The Company's  largest  customers include Oakwood Homes
Corporation,  Fleetwood Enterprises, Inc., Champion Enterprises, Inc., Winnebago
Industries,  Inc.,  Cavalier  Homes,  Inc.,  Clayton Homes,  Inc.,  Four Seasons
Housing,  Inc., Thor Industries,  Inc.,  Fairmont Homes,  Inc. and Ryder System,
Inc.

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

As further described below, the Company'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 Company will look to
expand  insurance  product  offerings  to drivers  and  owner-operators  through
Interstate.

The  Company's  principal  office is located at 2746 Old U.S. 20 West,  Elkhart,
Indiana 46514-1168.




<PAGE>




Company Services

The Company 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 Company's
          operating  revenues is derived  from  transportation  of  manufactured
          housing,  primarily new manufactured homes,  modular homes, and office
          trailers. A manufactured home is an affordable housing alternative. In
          addition,  Manufactured Housing 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 ("MHI"), and the Company's knowledge of the industry and its
          principal  competitors,  the  Company is the  largest  transporter  of
          manufactured  homes in the United States.  Manufactured  Housing ships
          products through approximately 1,015 independent owner-operators, some
          of  whom  drive  specially  modified   semi-tractors  referred  to  as
          "toters," which are used to reduce combined vehicle length.  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 Company  positions its
          dispatch  offices  close to the  production  facilities it is serving.
          Approximately 35 of the Company's dispatch offices are located in such
          a manner  to serve  the  needs  of a  single  plant of a  manufactured
          housing producer.  Most manufactured  housing units, when transported,
          require a special permit  prescribing the time and manner of transport
          for  over-dimensional  loads. See  "Business-Regulation."  The Company
          obtains the permits required for each shipment from each state through
          which the shipment will pass.


          During 1999, 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 U.S. decreased by approximately 5% to 574,000 in 1999 from 602,000
          in 1998, after an 8% increase in 1998 according  to data from the MHI.
          However,  the Company  believes  that  manufactured  housing  industry
          production  over the long-term  should continue to grow along with the
          general  economy,  especially when employment  statistics and consumer
          confidence  remain  strong.  The Company  believes  that the principal
          economic  consideration of the typical  manufactured home buyer is the
          monthly  payment  required  to purchase a  manufactured  home and that
          purchasers  are generally  less affected by  incremental  increases in
          interest rates than those purchasers of site built homes.  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  1,470 drivers who
          are outsourced to customers to deliver the vehicles.  In 1999,  Driver
          outsourcing  delivered  approximately  49,900 units through the use of
          these drivers.

     o    Specialized  Outsourcing Services Segment. The Specialized Outsourcing
          Services  segment  consists  of large  trailer  ("Towaway")  delivery,
          travel and other small  trailer  ("Pick-up")  delivery  and  presently
          another specialized service called ("Decking").  The Towaway operation
          moved  approximately  14,600 trailers in 1999.  Towaway contracts with
          approximately 144 independent owner-operators who drive semi-tractors.
          The travel and other small  trailers are delivered by 161  independent
          owner-operators   utilizing  pickup  trucks.   The  Company  in  1997,
          initiated the decking transportation and delivery service.  Decking is
          the delivery of two to four over-the-road highway tractors by means of
          mounting one or more tractors on the rear of a preceding tractor.  The
          Company is currently  evaluating  the profit  potential of these niche
          businesses and their growth potential.

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

Selected Operating and Industry Participation Information

The following tables set forth operating information and industry  participation
with respect to the manufactured  housing,  driver outsourcing,  and specialized
outsourcing  services  segments  for each of the five years ended  December  31,
1999.
<TABLE>
<CAPTION>

                                                              Years Ended December 31,
Manufactured Housing
--------------------
  Operating Information:                1995           1996           1997           1998           1999
                                      ---------      ---------      ---------      ---------      ---------
<S>                                    <C>             <C>            <C>            <C>            <C>
New home shipments                     114,890         121,136        154,389        161,543        148,019
Other shipments                         20,860          23,465         24,144         17,330         11,871
                                     ---------       ---------      ---------      ---------      ---------
Total shipments                        135,750         144,601        178,533        178,873        159,890

Linehaul revenues (in thousands)(1)  $  63,353       $  72,616      $  93,092      $  94,158      $  88,396

Manufactured Housing
--------------------
  Industry Participation:

Industry production (2)                505,819         553,133        558,435        601,678        573,629
New home shipments                     114,890         121,136        154,389        161,543        148,019
Shares of units produced                  22.7%           21.9%          27.6%          26.8%          25.8%

Driver Outsourcing
------------------
  Operating Information:

Shipments                               49,885          58,368         45,447         44,177         49,892
Linehaul revenues (in thousands)     $  19,842       $  23,090      $  19,706      $  19,979      $  23,748

Specialized Outsourcing Services
--------------------------------
  Operating Information:

Shipments                               44,406          41,255         34,867         38,167         32,967
Linehaul revenues (in thousands)     $  29,494       $  26,169      $  19,630      $  23,015      $  21,115
</TABLE>





(1)  Linehaul revenue is derived by multiplying the miles of a given shipment by
     the stated mileage rate.

(2)  Based on reports of MHI.  To  calculate  shares of new homes  shipped,  the
     Company assumes two unit shipments for each multi-section home.

Additional  financial  information  about the  business  segments is included in
Management's  Discussion  and  Analysis of Financial  Conditions  and Results of
Operations and in Note 11 of the Notes to the Consolidated  Financial Statements
included in Item 8.

Growth Strategy

The  Company's  strategy  is to  focus  on the  profitable  core  transportation
services  of  Manufactured  Housing  and Driver  Outsourcing  so that  operating
revenues and profitability can grow in its area of dominant market position. The
Company will also look for opportunities to capitalize and/or grow its market in
Manufactured  Housing and Driver  Outsourcing  through  acquisitions if suitable
opportunities arise. To enhance its profitability, the Company is continuing the
process of reducing its overhead costs.

         o        Manufactured  Housing. The Company 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  service  it
                  offers  within its  specialized  business.  The  Company  will
                  continue to pursue  opportunities  to offer new services.  The
                  Company may also pursue the purchase of certain manufacturers'
                  private  transport  fleets.  In such a case, the Company would
                  typically purchase the customer's tractors, sell the equipment
                  to  interested  drivers,  and then  engage  these  drivers  as
                  independent  owner-operators.  The Company will also  consider
                  other acquisition opportunities.

         o        Driver Outsourcing.  The Company believes it can capitalize on
                  the growing trend in the  outsourcing of  specialized  vehicle
                  transportation and delivery by manufacturers.  It is estimated
                  that  approximately  750,000  vehicles are delivered each year
                  through  driveaway  services,  a delivery market  estimated at
                  $500 million or more.  The number of vehicles to be outsourced
                  is expected to increase  substantially as companies  calculate
                  the cost benefits of not  maintaining  their own driver corps,
                  paying salaries and benefits,  running  dispatch  points,  and
                  maintaining an equipment base.  Unlike  companies with drivers
                  on  their  payroll,   Morgan's  drivers  are  paid  only  when
                  deliveries  are made.  Morgan's  growth  strategy  within this
                  market  is to  expand  its  market  position  in  this  highly
                  fragmented delivery  transportation  market. The future growth
                  rate of the Company's  outsourcing  business is dependent upon
                  continuing  to add major  vehicle  customers and expanding the
                  Company's driver force.

         o        Acquisitions/Joint   Ventures.  The  Company  is  continuously
                  considering   acquisition   opportunities.   The  Company  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
                  Company 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  affected,  or,  if  affected,  can  be
                  successfully integrated with the Company's business.

Forward-Looking Discussion

In 2000, the Company could benefit from further  reduction of overhead costs and
an improvement of its safety records.  While the Company remains optimistic over
the long term,  near term results  could be effected by a number of internal and
external economic conditions.

This report  contains a number of  forward-looking  statements,  including those
contained in the  preceding  paragraph  and the  discussion  of growth  strategy
above.  From  time  to  time,  the  Company  may  make  other  oral  or  written
forward-looking  statements regarding its anticipated operating revenues, costs,
expenses,  earnings and matters  affecting its condition  and  operations.  Such
forward-looking  statements  are subject to a number of material  factors  which
could cause the  statements  or  projections  contained  herein or therein to be
materially inaccurate. Such factors include, without limitation, the following:

     o    Dependence on Manufactured Housing.  Shipments of manufactured housing
          have  historically   accounted  for  a  substantial  majority  of  the
          Company's operating revenues.  Therefore,  the Company'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 Company's operating revenues and profitability.
<PAGE>


     o    Costs of Accident Claims and Insurance. Traffic accidents occur in the
          ordinary  course of the Company's  business.  Claims arising from such
          accidents can be significant. Although the Company maintains liability
          and  cargo  insurance,  the  number  and  severity  of  the  accidents
          involving the Company's  independent  owner-operators  and drivers can
          have  significant  adverse effect on the  profitability of the Company
          through premium  increases and amounts of loss retained by the Company
          below deductible  limits or above its total coverage.  There can be no
          assurance  that the  Company  can  continue  to  maintain  its present
          insurance  coverage  on  acceptable  terms  nor  that the cost of such
          coverage will not increase significantly.

     o    Customer Contracts and Concentration.  Historically, a majority of the
          Company'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 Company's top ten customers have  historically
          accounted for a majority of the Company's operating revenues. The loss
          of one or more of these  significant  customers could adversely affect
          the Company's results of operations.

     o    Competition  for  Qualified  Drivers.  Recruitment  and  retention  of
          qualified   drivers   and   independent   owner-operators   is  highly
          competitive.  The Company's contracts with independent owner-operators
          are  terminable  by  either  party on ten  days'  notice.  There is no
          assurance  that the Company's  drivers will continue to maintain their
          contracts  in force  or that the  Company  will be able to  recruit  a
          sufficient  number of new drivers on terms similar to those  presently
          in force. The Company 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 the Company.

     o    Independent  Contractors,  Labor  Matters.  From  time  to  time,  tax
          authorities have sought to assert that independent  contractors in the
          transportation service industry are employees, rather than independent
          contractors.  Under existing  interpretations of federal and state tax
          laws, the Company  maintains that its independent  contractors are not
          employees.  There can be no assurance  that tax  authorities  will not
          challenge  this  position,  or that  such tax laws or  interpretations
          thereof  will  not  change.   If  the  independent   contractors  were
          determined  to  be  employees,  such  determination  could  materially
          increase the Company's tax and workers' compensation exposure.

     o    Risks of  Acquisitions.  The Company  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  its  existing  business  lines or which
          complement  its business.  There is no assurance that the Company will
          be able to identify favorable acquisition opportunities in the future.
          There is no assurance that the Company's future  acquisitions  will be
          successfully integrated into its operations or that they will prove to
          be  profitable  for the Company.  Such  changes  could have a material
          adverse effect on the Company.

     o    Seasonality and General Economic Conditions.  The Company'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 Company's  operating
          revenues  are  generated in the winter  months in areas where  weather
          conditions  limit  highway  use.  The  seasonality  of  the  Company's
          business may cause a significant  variation in its quarterly operating
          results.  Additionally,  the  Company's  operations  are  affected  by
          fluctuations  in  interest  rates  and the  availability  of credit to
          purchasers of  manufactured  homes and motor homes,  general  economic
          conditions, and the availability and price of motor fuels.

Customers and Marketing

The Company's customers  requiring delivery of manufactured homes,  recreational
vehicles,  commercial  trucks,  and specialized  vehicles are located in various
parts of the United States. The Company's largest manufactured housing customers
include  Oakwood  Homes  Corporation,   Fleetwood  Enterprises,  Inc.,  Champion

<PAGE>

Enterprises,  Inc.,  Cavalier  Homes,  Inc.,  Clayton Homes,  Inc., Four Seasons
Housing,  Inc.,  Palm Harbor,  and Skyline  Corporation.  The Company's  largest
Driver   Outsourcing   customers  include  Winnebago   Industries,   Inc.,  Thor
Industries,  Inc., Ryder System,  Inc. and Fairmont Homes. The Company's largest
Specialized Outsourcing Services customers include Fleetwood Enterprises,  Inc.,
North American Van Lines,  Inc., and Xtra Lease,  Inc. While most  manufacturers
rely solely on carriers such as the Company,  other manufacturers  operate their
own equipment and may employ outside carriers on a limited basis.

The Company'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  Company's  operating  revenues is
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 Company on the basis of a prescribed  rate  schedule,  subject to certain
adjustments  to  accommodate  increases in the Company's  transportation  costs.
Linehaul revenues generated under customer contracts in 1997, 1998 and 1999 were
60%, 64%, and 71% of total linehaul revenues, respectively.

The  Company's  ten  largest  customers  all have been served for at least three
years and accounted for approximately  66%, 69% and 68% of its linehaul revenues
in 1997,  1998 and 1999,  respectively.  Linehaul  revenues  under contract with
Fleetwood  Enterprises,  Inc.  ("Fleetwood"),  accounted for approximately $28.1
million,  $26.0 million and $23.9 million of linehaul revenues in 1997, 1998 and
1999, respectively. Linehaul revenues with Oakwood Homes Corporation ("Oakwood")
accounted for  approximately  $21.6 million,  $31.8 million and $28.8 million of
linehaul  revenues  in  1997,  1998  and  1999,   respectively.   The  Fleetwood
Manufactured  Housing  contract is continuous  unless  cancelled by either party
with a thirty (30) day written notice. The Oakwood manufactured housing contract
is renewed annually.  The Company has been servicing Fleetwood for over 25 years
and Oakwood  for over ten years.  Most  contracts  provide  for  scheduled  rate
increases  based upon the regional  fuel prices.  These  increases are generally
past on to the independent owner/operators who purchase fuel.

The Company  markets and sells its  services  through 98 locations in 32 states,
concentrated where manufactured housing and motor home production facilities are
located.  Marketing support personnel are located both at the Company's Elkhart,
Indiana headquarters and regionally. Dispatch offices are supervised by regional
offices.

The Company has 35 dispatch offices each devoted  primarily to a single customer
facility.  This allows the dispatching agent and local personnel to focus on the
needs of each  individual  customer while  remaining  supported by the Company'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
Company's  largest  customers.  Regional  and  terminal  personnel  also develop
relationships  with  manufactured  home park  owners,  retailers,  and others to
promote the Company's  shipments of used  manufactured  homes.  The Company 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  Manufactured  Housing and a portion of  Specialized
Outsourcing Services is 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 Company on a long-term
basis.  Independent  owner-operators  are not  generally  approved to  transport
commodities  on their own in  interstate or  intrastate  commerce.  The Company,
however,     possesses    such     approvals     and/or     authorities     (see
"Business-Regulation"),   and  provides  marketing,  insurance,   communication,
administrative, and other support required for such transportation.

The  Company   attracts   independent   owner-operators   mainly  through  field
recruiters,  trade magazines,  referrals,  and truck stop brochures. The Company
has in the past been able to attract new independent  owner-operators  primarily
because of its competitive  compensation structure, its ability to provide loads
and its  reputation  in the  industry.  Recruitment  and  retention of qualified
drivers is highly  competitive  and there can be no  assurance  that the Company
will  be  able  to  attract  a  sufficient  number  of  qualified,   independent
owner-operators in the future.


<PAGE>

The contract  between the Company and each owner  operator can be canceled  upon
ten day's notice by either party.  The weighted average length of service of the
Company's current independent owner-operators is approximately 3.5 years in 1999
and 3.0 years in 1998. At December 31, 1999, 1,320  independent  owner-operators
were under  contract to the  Company,  including  1,015  operating  toters,  144
operating semi-tractors, and 161 operating pick-up trucks.

In Manufactured Housing,  independent  owner-operators utilizing toter equipment
tend to exclusively  transport  manufactured  housing,  modular  structures,  or
office  trailers.  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  Company  an   advantage   in   retaining   toter   independent
owner-operators.  The average  tenure with the Company of its toter  independent
owner-operators is 3.9 years in 1999 compared to 3.3 years in 1998.

In Specialized Outsourcing Services,  Morgan is competing with national carriers
for  the  recruitment  and  retention  of  independent  owner-operators  who own
tractors.   The  average   length  of  service  of  the  Company's   independent
owner-operators is approximately 2.3 years, compared to 2.1 years in 1998.

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 Company provides required permits,  cargo and liability  insurance (coverage
while  transporting  goods  for the  Company),  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 Company.

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 Company. Under existing industry practice and
interpretations  of federal and state tax laws, as well as the Company's current
method of operation,  the Company 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
their  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  Company's  employment  tax and  workers'  compensation
exposure.

Driver Outsourcing

The  Company  utilizes  both  independent   contractors  and  employees  in  its
outsourcing  operations.  The  Company  outsources  its over 1,470  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 U.S.  Department  of  Transportation  and  standards  established  by the
Company.  Outsourcing drivers are utilized as needed, depending on the Company'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 Company provides licenses,  cargo
and liability insurance, communications, sales, and administrative services.

Agents and Employees

The Company  has  approximately  91 terminal  managers  and  assistant  terminal
managers who are involved directly with the management of equipment and drivers.
Of these 91 staff,  approximately  73 are full-time  employees and the remainder
are independent  contractors who earn  commissions.  The terminal  personnel are
responsible for the Company's  terminal  operations  including safety,  customer
relations,  equipment assignment,  and other matters. Because terminal personnel
develop close relationships with the Company's customers and drivers,  from time
to time the Company has suffered a terminal personnel defection, following which
the former staff has sought to exploit such  relationships  in competition  with

<PAGE>

the Company.  The Company does not expect that future defections,  if any, would
have a material affect on its operations. In addition to the terminal personnel,
the Company employs approximately 225 full-time employees.  The Company also has
11  full-time   employee  drivers  in  Manufactured  housing  and  11 in  Driver
Outsourcing.

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 Company's  operating
revenues, therefore, tend to be stronger in the second and third quarters.

Risk Management, Safety and Insurance

The risk of substantial losses arising from traffic accidents is inherent in any
transportation  business.  The Company  carries  insurance  with a deductible of
$250,000 per  occurrence  except for the period from April 1, 1998 through March
31, 1999 when the  deductible  was  $150,000  for  personal  injury and property
damage.  The Company has been  approved but has not  activated a  self-insurance
authority for personal  injury and property damage coverage of up to $1 million.
For the  period  April 1,  1997 to March  31,  1998 the  Company  carried  cargo
insurance with a $250,000 deductible. The deductible was $150,000 for the period
April 1, 1998 to March  31,  1999.  Effective  April 1,  1999,  the  Company  is
self-insured  for up to $1  million  of  cargo  coverage.  The  Company's  cargo
insurance  policy  for the year  ended  March  31,  1999  included  a  stop-loss
provision.  The frequency  and severity of claims under the Company's  liability
insurance  affects the cost and potentially the  availability of such insurance.
If the Company 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 Company  continues to
review  its  insurance  programs,   self-insurance   limits  and  excess  policy
provisions. The Company believes that its current insurance coverage is adequate
to cover its  liability  risks.  There can be no assurance  that the Company can
continue to maintain its present insurance coverage on acceptable terms.

The  following  table  sets forth  information  with  respect to bodily  injury,
property damage,  cargo claims, and automotive  physical damage reserves for the
years ended December 31, 1997, 1998, and 1999, respectively.

                             Claims Reserve History
                            Years Ended December 31,
                                 (in thousands)

                                  1997            1998            1999
                                 -------         -------         -------

Beginning Reserve Balance        $ 4,660         $ 5,323         $ 8,108
Provision for Claims               7,204           7,698           8,633
Payments, net                     (6,541)         (4,913)         (8,323)
                                 -------         -------         -------
Ending Reserve Balance           $ 5,323         $ 8,108         $ 8,418
                                 =======         =======         =======


The Company has driver  recognition  programs  emphasizing safety to enhance the
Company's  overall safety record.  In addition to periodic  recognition for safe
operations, the Company 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 Company utilizes a field safety  organization which
places a dedicated  safety officer at each regional  center.  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
Company has a Senior Vice  President of Safety,  a Director of Safety and D.O.T.
Compliance, seven (7) field safety managers, and a Director - Risk Management.

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

Competition

All of the Company's  activities are highly  competitive.  In addition to fleets
operated by  manufacturers,  the Company competes with large national  carriers,
many of whom have substantially  greater resources than the Company and numerous
small regional or local  carriers.  The Company's  principal  competitors in the
Manufactured  Housing and  Specialized  Outsourcing  Services  marketplaces  are
privately  owned.  No  assurance  can be given that the Company  will be able to
maintain its competitive position in the future.

Competition among carriers is based on the rate charged for services, quality of
service, financial strength, and insurance coverage. The availability of tractor
equipment and the possession of appropriate  registration  approvals  permitting
shipments between points required by the customer may also be influential.

Regulation

The  Company's  interstate  operations  (Morgan  and  TDI)  are now  subject  to
regulation by the Federal Highway Administration  ("FHWA") which is an agency of
the United States Department of Transportation ("D.O.T."). This jurisdiction was
transferred  to  the  D.O.T.  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 insure 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 D.O.T.  safety  regulations and actively enforce them in
conjunction with D.O.T. personnel.

Motor carriers  normally are required to obtain approval  and/or  authority from
the FHWA as well as various  state  agencies.  Morgan 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 Company 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 Company believes that it is in substantial  compliance
with all material regulations applicable to its operations.

The D.O.T. regulates safety matters with respect to the interstate operations of
the  Company.  Among  other  things,  the  D.O.T.  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 D.O.T.  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 Company
believes  that  it  is  in  substantial  compliance  with  all  material  D.O.T.
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 Company 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  Company
obtains these permits for its independent  contractor  owner-operators from each
state which allows the Company 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 Company  coordinates
compliance with these  requirements  by its drivers and  independent  contractor
owner-operators,  and  monitors  their  compliance  with all  applicable  safety
regulations.

Interstate,  the Company's insurance subsidiary,  is a captive 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  to be  audited  annually  and to have its loss
reserves certified by an approved actuary. The Company believes Interstate is in
substantial compliance with Vermont insurance regulations.

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


<PAGE>



Item 2.  PROPERTIES

The Company owns  approximately  24 acres of land with  improvements in Elkhart,
Indiana.  The improvements  include a 23,000 square foot office building housing
the Company's  principal  office and Manufactured  Housing;  a 7,000 square foot
building housing Specialized  Outsourcing Services; a 9,000 square foot building
used for the  Company's  safety  and  driver  service  departments.  The  driver
training and  licensing  operation  was  discontinued  during 1999.  Most of the
Company's 103 locations are situated on leased  property.  The Company also owns
and leases  property for parking and storage of  equipment at various  locations
throughout the United States,  usually in proximity to manufacturers of products
moved by the Company.  The property leases have term commitments of a minimum of
thirty days and a maximum of three years, at monthly rentals ranging from $25 to
$6,500. The following table summarizes the Company's owned real property.

 Property                          Property                      Approximate
 Location                         Description                      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               Region and storage                      1
Montevideo, Minnesota          Terminal and storage                    3

The following property is
owned and is being held for sale:

Fort Worth, Texas              Region and storage                      6

Item 3.    LEGAL PROCEEDINGS

The Company and its  subsidiaries are party to litigation in the ordinary course
of business,  generally  involving  liability  claims in connection with traffic
accidents  incidental to its transport  business.  From time to time the Company
may become party to litigation  arising outside the ordinary course of business.
The Company does not expect such pending suits to have a material adverse effect
on the Company or its results of operations.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.



<PAGE>


PART II

Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED  STOCKHOLDER MATTERS

The Company's  common stock is traded on the American  Stock  Exchange under the
symbol MG. As of March 24,  2000,  the  approximate  number of  shareholders  of
record of the  Company's  Class A common  stock was 126.  This  figure  does not
include shareholders with shares held under beneficial ownership in nominee name
or within  clearinghouse  position  of  brokerage  firms and banks.  The Class B
common  stock  is held of  record  by  Brighton  Communications  Corporation,  a
subsidiary of Lynch Interactive Corporation.

Market Price of Class A common stock:

                               1999                         1998
Quarter Ended           High          Low           High           Low
March 31             $   9.13      $   6.63      $   10.25      $   8.75
June 30                  8.75          6.75          11.63          9.50
September 30             9.88          7.00          10.19          6.50
December 31              7.88          5.44           7.75          6.88

Dividends Declared:
                            Class A                      Class B
                         Cash Dividends              Cash Dividends
Quarter Ended         1999          1998            1999         1998
March 31             $    .02      $    .02       $    .01     $    .01
June 30                   .02           .02            .01          .01
September 30              .02           .02            .01          .01
December 31               .02           .02            .01          .01



<PAGE>



Item 6.  SELECTED CONSOLIDATED FINANCIAL DATA

THE MORGAN GROUP, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>


(Dollars in thousands, except share amounts)         1999           1998           1997          1996           1995
--------------------------------------------------------------------------------------------------------------------
Operations
<S>                                              <C>            <C>            <C>           <C>            <C>
  Operating Revenues                             $145,629       $150,454       $146,154      $132,208       $122,303
  Operating Income (Loss) (1)                         550          2,007          1,015       (3,263)          3,371
  Pre-tax Income (Loss) (1)                           212          1,462            296       (3,615)          3,284
  Net Income (Loss) (1)                                19            903            196       (2,070)          2,269


Net Income (Loss) Per Share:
  Basic                                             $0.01          $0.35          $0.07       ($0.77)          $0.80
  Diluted                                            0.01           0.35           0.07        (0.77)           0.73
  Cash Dividends Declared:
      Class A                                         .08           0.08           0.08          0.08           0.08
      Class B                                         .04           0.04           0.04          0.04           0.04

Financial Position

  Total Assets                                    $32,264        $33,387        $33,135       $33,066        $30,795
  Working Capital                                   3,189          3,806          1,613         1,635          8,293
  Long-term Debt                                      965          1,480          2,513         4,206          3,275
  Shareholders' Equity                             12,092         13,221         12,724        13,104         15,578


Common Shares Outstanding at Year
   End                                          2,448,157      2,554,085      2,637,910     2,685,520      2,649,554
Basic Weighted Average Shares
   Outstanding                                  2,469,675      2,606,237      2,656,690     2,684,242      2,582,548
</TABLE>


(1)  Includes  pre-tax  special  charges of $624,000  ($412,000  after-tax)  and
     $3,500,000 ($2,100,000 after-tax) in 1997 and 1996, respectively.


<PAGE>



Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
              RESULTS OF OPERATIONS

Year 1999 Compared with 1998

Consolidated Results

During 1999,  the Company  experienced a decrease in the number of  Manufactured
Housing  shipments and a continued  increase in insurance and claims costs.  The
Company 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. Morgan was more severely  impacted as our largest customer  experienced an
approximate 21% decline in retail sales of new homes.  As a result,  the Company
sustained an 8% decrease in shipments of new homes in 1999. The Company believes
that  this  depressed  level of unit  shipments  in  Manufactured  Housing  will
continue  through the first half of 2000 and possibly  moderating  in the second
half of the year.  Consequently,  the Company may experience continued decreases
in profitability for the first quarter of 2000.

The Company in March 2000  instituted  staff  reduction  and other cost  savings
initiatives.   It  is  currently  estimated  that  the  cost  savings  of  these
initiatives  will  approximate  $2.4  million  annually.  The impact of the cost
savings for 2000 is expected  to  approximate  $1.8  million,  net of  severance
costs.

Total  operating  revenues in 1999 decreased $4.9 million to $145.6 million from
$150.5 million in 1998.  Operating income before interest,  taxes,  depreciation
and amortization (EBITDA) decreased from $3.2 million in 1998 to $1.8 million in
1999.

Because of the existence of significant non-cash expenses,  such as depreciation
of fixed assets and amortization of intangible assets, the Company believes that
EBITDA contributes to a better understanding of the Company's 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.

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

For information concerning the provision for income taxes as well as information
regarding  differences between effective tax rates and statutory rates, see Note
5 of the Notes to Consolidated Financial Statements.

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

Segment Results

The Company  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 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.


<PAGE>

Driver Outsourcing

Driver Outsourcing  provides  outsourcing  transportation  services primarily to
manufacturers of recreational vehicles,  commercial trucks and other specialized
vehicles.  This  segment  of the  business  demonstrated  good  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 continue
to depress the profitability of this segment.  Management is planning additional
programs to reduce  overhead costs and to focus their  marketing  efforts toward
higher  volume   customers.   Higher  volume  accounts  should  provide  further
opportunities to consolidate operations and increase productivity.

Specialized Outsourcing Services

Specialized  Outsourcing  Services consists of large trailers,  travel and other
small trailers and another specialized transport service ("Decking").  Operating
revenues  decreased 8% to $21.2 million in 1999. This decrease was primarily the
result of changes in the customer  base and a reduction  in  available  drivers.
Specialized  Outsourcing  Services EBITDA  decreased  $542,000  primarily on the
lower  volume  and  increased  overhead  costs  associated  with  large  trailer
delivery.

Insurance/Finance

The  Company's   Insurance/Finance  segment  provides  insurance  and  financing
services to the Company's drivers and independent owner-operators.  This segment
also acts as a cost center whereby all bodily injury,  property damage and cargo
loss costs are captured.

Insurance/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.

The Company in 1999 continued to be penalized by increasing claims costs.  Claim
costs in 1999, as a percent of operating  revenue increased to 5.9% from 5.1% in
1998.  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.  Accordingly,  the  Company is  essentially  self-insured  for cargo
losses. The Company continues to review its insurance  programs,  self-insurance
limits and excess  policy  provisions.  The  Company  believes  that its current
insurance coverage is adequate to cover its liability risks.

Year 1998 Compared with 1997

Consolidated Results

Net income for 1998 was $903,000  compared with  $196,000 for 1997.  The results
for 1997 included a special charge of $412,000 after-tax.

In 1998  total  operating  revenues  increased  to $150.5  million  from  $146.2
million.  1997 operating revenues included $3.3 million from a discontinued line
of  business.  Excluding  the  discontinued  line of business,  total  operating
revenues from continued operations increased 5% in 1998.

EBITDA  increased from $2.1 million in 1997 to $3.2 million in 1998.  EBITDA for
1997 is after special charges of $624,000.

Net interest  expense  decreased  from $719,000 in 1997 to $545,000 in 1998 as a
result of improved  cash flows that  allowed the Company to reduce the amount of
debt outstanding under its credit facilities.


<PAGE>

Segment Results

Manufactured Housing

Manufactured  housing operating revenue increased  $762,000 to $106.1 million in
1998.  This  increase was primarily  with contract and other large  manufactured
housing  customers that the Company services.  Partially  offsetting this growth
was the loss of accounts in the second half of the year  primarily in the South.
Manufactured  housing EBITDA increased $2.1 million,  or 24%, primarily due to a
reduction in overhead  costs  resulting  from force  reductions and field office
consolidations or eliminations.

Driver Outsourcing

Driver  Outsourcing  1998  EBITDA  improved  $162,000  on a modest  increase  in
operating revenues primarily due to improved operating costs.

Specialized Outsourcing Services

Specialized  outsourcing  services operating  revenues  increased  $3,352,000 to
$23.1 million in 1998. The large trailer  delivery  service  operating  revenues
grew 32% in 1998 to $20.8  million.  This growth was  primarily  due to improved
owner-operator  utilization  and an  approximate  50%  increase  in  independent
owner-operators.  Additionally,  Decking operating revenues grew to $2.3 million
in 1998.  Partially  offsetting this growth was a decrease in operating revenues
from the delivery of travel and other small  trailers.  Specialized  Outsourcing
Services  EBITDA  decreased  $281,000  primarily  due to  increased  recruiting,
dispatch, and other administrative costs.

Insurance/Finance

Claim costs in 1998, as a percent of operating  revenue,  increased to 5.1% from
4.9% in 1997.  This  negative  trend  offsets the  benefits  of lower  insurance
expense and the transfer of more losses to the insurers in 1998.

The increase in claims costs was primarily responsible for the increased loss of
the Insurance/Finance segment.

Liquidity and Capital Resources

Operating  activities  generated  $4.9 million of cash in 1999  compared to $5.5
million in 1998.  Net  income  plus  depreciation  and  amortization  along with
decreases in trade  accounts  receivable,  other  accounts  receivable,  prepaid
expenses, other current assets, and an increase in other accrued liabilities was
partially  offset by a decrease  in trade  accounts  payable  and  income  taxes
payable.  Trade accounts receivable  decreased $2.1 million primarily due to the
decline in operating revenue. Days sales outstanding ("DSO") remained at 28 days
at December  31, 1999 as compared to December  31,  1998.  The decrease in other
accounts  receivable  is  primarily  collection  of refund  amounts due from the
Company's primary insurance provider.

The investment in property and equipment increased in 1999 with expenditures for
an optical scanning system and other new information  systems.  The 2000 capital
expenditure  plan  approximates  $500,000  but is  dependent  upon  the  Company
achieving a higher operating revenue level.

Net cash used in financing  activities  decreased  to $1.7 million in 1999.  The
Company on March 19, 1999  concluded a tender offer whereby it acquired  102,528
shares at $9.00 a share of its Class A common stock at a total cost of $985,000.
The  Company,  given  its  businesses,   assets  and  prospects,  believes  that
purchasing its Class A stock is an attractive  investment  that will benefit the
Company and its  remaining  shareholders  and is  consistent  with its long-term
goals of maximizing the  shareholder  return and with its previous  purchases of
outstanding  shares.  Cash was also  used for  payments  on term and  promissory
notes, dividends and the purchase of company stock.

The Company  entered into a $20.0 million  revolving  credit  facility  ("Credit
Facility") on January 28, 1999 with the  Transportation  Division of BankBoston,
N.A. The term of the Credit Facility is for two years, subject to annual renewal
thereafter.  The Credit Facility also provides for excess short-term  borrowings

<PAGE>

of up to $5.0 million based on a leverage  test.  The Company had no outstanding
loans,  but had $8.1 million of letters of credit  outstanding  under its credit
facility at December 31, 1999.  The total amount  available for borrowing  under
the credit facility was $3.1 million at December 31, 1999.

The Credit Facility contains financial covenants,  the most restrictive of which
are a debt service to cash flow coverage ratio and an interest  expense coverage
ratio. The Company  projected it was probable that a violation of one or more of
the  financial  covenants  would occur at each of the  measurement  dates during
2000. The Company and the bank, on March 30, 2000, agreed to modify the affected
covenants.  This  amendment  will limit the  payment of  dividends  to  $120,000
annually ($142,000 was declared in 1999), prohibits the acquisition of Company's
common stock, and limits borrowings and letters of credit to the Borrowing Base.
This amendment provides for the payment of up front fees of $25,000, an increase
of  twenty-five  basis points on the interest rate and an increase of twelve and
one half basis points in the commitment fee.

The Company believes,  based on its current financial projections,  that it will
maintain  compliance with the amended covenants  throughout the fiscal year 2000
and that the Credit Facility should be adequate to meet the Company's short-term
liquidity needs.

The Company in 1999 paid annual Class A common stock dividends totaling $.08 per
share and Class B common stock dividends totaling $.04 per share. Payment of any
future  dividends will be dependent  upon,  among other things,  earnings,  debt
covenants, future growth plans, legal restrictions,  and the financial condition
of the Company.

The Company had minimal  exposure to interest  rates as of December 31, 1999, as
substantially  all of its  outstanding  long-term  debt bears fixed  rates.  The
Credit Facility  mentioned above bears variable interest rates based on either a
Federal Funds rate or the Eurodollar  rate.  Accordingly,  borrowings  under the
Credit Facility have exposure to changes in interest rates.

Under its current  policies,  the Company does not use interest rate  derivative
instruments  to manage  exposure to interest  rate changes.  Also,  the Company,
currently, is not using any fuel hedging instruments.

Impact of Year 2000

Some  of the  Company's  existing  computer  systems,  applications,  and  other
non-computer  control  devices were initially  designed to use two digits rather
than four digits to define the applicable  year. If not modified,  that software
or system was likely to interpret a date using "00" as the year 1900 rather than
the year 2000, which could have resulted in erroneous results or system failure.

Through March 30, 2000,  the Company has  experienced  no  significant  problems
resulting from the Year 2000 issue. The company believes that we have identified
and corrected substantially all of the major systems,  software applications and
related equipment used in connection with our internal  operations that required
modification  or upgrading in order to minimize  the  possibility  of a material
disruption to our business.  The Company expended  approximately $336,000 on the
project.

During 1999,  the Company  evaluated its customers and suppliers to determine if
they had taken  adequate  measures to ensure that necessary  modifications  were
made to the software and hardware prior to the year 2000. As of this date, there
has been no measurable  impact  resulting  from Year 2000 failures by any of the
Company's major  customers or vendors.  We have developed  contingency  plans to
address  Year  2000  issues  that may  arise  and pose  significant  risk to our
business.

Inflation

Most of the  Company's  expenses  are  affected by  inflation,  which  generally
results  in  increased  costs.  During  1999,  the  effect of  inflation  on the
Company's results of operation was minimal.

The transportation industry is dependent upon the availability and cost of fuel.
Although fuel costs are paid by the Company's owner-operators, increases in fuel
prices may have  significant  adverse  effects on the Company's  operations  for
various reasons. Since fuel costs vary between regions,  drivers may become more
selective as to which regions they will transport  goods resulting in diminished
driver  availability.  Also, the Company 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 the  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.


<PAGE>

Long-Lived Assets

The Company  periodically  assesses the net  realizable  value of its long-lived
assets and evaluates  such assets for impairment  whenever  events or changes in
circumstances  indicate the carrying  amount of an asset may not be recoverable.
The Company continues to assess the  recoverability  of the goodwill  associated
with two recent acquisitions. The total amount under review is $5.6 million. The
Company does not believe there is an impairment of long-lived assets,  including
goodwill.

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 Company's  operating
revenues, therefore, tend to be stronger in the second and third quarters.

Forward-Looking Information

Forward-looking  statements  in  this  report,  including,  without  limitation,
statements relating to future events or the future financial  performance of the
Company  appear  in  the  preceding  Management's  Discussion  and  Analysis  of
Financial  Condition  and Results of  Operations  and in other  written and oral
statements made by or on behalf of the Company,  including,  without limitation,
statements   relating  to  the  Company's   goals,   strategies,   expectations,
competitive  environment,   regulation  and  availability  of  resources.   Such
forward-looking  statements  are made pursuant to the safe harbor  provisions of
the Private  Securities  Litigation Reform Act of 1995.  Investors are cautioned
that such forward-looking  statements involve risks and uncertainties that could
cause actual events and results to be materially  different from those expressed
or implied herein,  including, but not limited to, the following: (1) dependence
on  the  Manufactured  Housing  industry;  (2)  costs  of  accident  claims  and
insurance;  (3) customer  contracts and  concentration;  (4) the competition for
qualified  drivers;  (5) independent  contractors,  labor matters;  (6) risks of
acquisitions; (7) seasonality and general economic conditions; (8) the Company's
ability to locate and correct  relevant  year 2000  compliance  problems and the
ability of the  Company's  customers  and  suppliers to address  their year 2000
compliance issues; and (9) other risks and uncertainties  indicated from time to
time in the Company's filings with the Securities and Exchange Commission.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

The  information  required  by Item 7A of Form  10-K  appears  in Item 7 of this
report under the heading  "Liquidity and Capital  Resources" and is incorporated
herein by this reference.


<PAGE>



Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                     The Morgan Group, Inc. and Subsidiaries
                           Consolidated Balance Sheets
                  (Dollars in thousands, except share amounts)
<TABLE>
<CAPTION>

                                                                            December 31
                                                                         1999          1998
                                                                       --------      --------
<S>                                                                    <C>           <C>
ASSETS
Current assets:
   Cash and cash equivalents                                           $  3,847      $  1,490
   Trade accounts receivable, less allowances
      of $313 in 1999 and $208 in 1998                                   10,130        12,188
   Accounts receivable, other                                               313         1,214
   Prepaid expenses and other current assets                              1,960         2,467
   Deferred income taxes                                                  1,475         1,230
                                                                       --------      --------
Total current assets                                                     17,725        18,589
                                                                       --------      --------

Property and equipment, net                                               4,309         4,117
Intangible assets, net                                                    7,361         8,030
Deferred income taxes                                                     2,172         1,997
Other assets                                                                697           654
                                                                       --------      --------
Total assets                                                           $ 32,264      $ 33,387
                                                                       ========      ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Trade accounts payable                                              $  3,907      $  4,304
   Accrued liabilities                                                    4,852         3,566
   Income taxes payable                                                     278           878
   Accrued claims payable                                                 3,071         3,553
   Refundable deposits                                                    1,752         1,830
   Current portion of long-term debt and capital lease obligations          676           652
                                                                       --------      --------
Total current liabilities                                                14,536        14,783
                                                                       --------      --------

Long-term debt and capital lease obligations, less current portion          289           828
Long-term accrued claims payable                                          5,347         4,555
Commitments and contingencies                                                --            --

Shareholders' equity:
   Common stock, $.015 par value
      Class A: Authorized shares - 7,500,000
      Issued shares - 1,607,303                                              23            23

      Class B: Authorized shares - 2,500,000
      Issued and outstanding shares - 1,200,000                              18            18
   Additional paid-in capital                                            12,459        12,459
   Retained earnings                                                      2,775         2,898
                                                                       --------      --------
Total capital and retained earnings                                      15,275        15,398

Less - treasury stock at cost (359,146 in 1999 and
  253,218 in 1998 Class A shares)                                        (3,183)       (2,177)
                                                                       --------      --------
Total shareholders' equity                                               12,092        13,221
                                                                       --------      --------
Total liabilities and shareholders' equity                             $ 32,264      $ 33,387
                                                                       ========      ========
</TABLE>

See accompanying notes.


<PAGE>

                     The Morgan Group, Inc. and Subsidiaries
                      Consolidated Statements of Operations
                  (Dollars in thousands, except share amounts)


<TABLE>
<CAPTION>
                                                  For the year ended December 31
                                                 1999           1998           1997
                                              ----------     ----------     ----------
<S>                                           <C>            <C>            <C>
Operating revenues                            $  145,629     $  150,454     $  146,154

Costs and expenses:
   Operating costs                               133,774        136,963        133,732
   Selling, general and administration            10,090         10,254          9,708
   Depreciation and amortization                   1,215          1,230          1,075
   Special charges                                    --             --            624
                                              ----------     ----------     ----------
                                                 145,079        148,447        145,139
                                              ----------     ----------     ----------

Operating income                                     550          2,007          1,015
Interest expense, net                                338            545            719
                                              ----------     ----------     ----------
Income before income taxes                           212          1,462            296

Income tax expense                                   193            559            100
                                              ----------     ----------     ----------
Net income                                    $       19     $      903     $      196
                                              ==========     ==========     ==========

Net income per basic and diluted share        $     0.01     $     0.35     $     0.07
                                              ==========     ==========     ==========

Basic weighted average shares outstanding      2,469,675      2,606,237      2,656,690
                                              ==========     ==========     ==========
</TABLE>


See accompanying notes.


<PAGE>


                     The Morgan Group, Inc. and Subsidiaries
           Consolidated Statements of Changes in Shareholders' Equity
                (Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>

                                           Class A     Class B    Additional
                                           Common       Common      Paid-in      Officer     Treasury    Retained
                                            Stock       Stock       Capital       Loan        Stock      Earnings       Total
                                            -----       -----       -------       ----        -----      --------       -----
<S>                                         <C>          <C>        <C>          <C>          <C>          <C>         <C>
Balance at December 31, 1996                $ 23         $ 18       $12,441      $(504)       $(1,000)     $2,126      $13,104
   Net income                                 --           --              --       --             --         196          196
   Purchase of treasury stock                 --           --              --       --           (426)         --         (426)
   Common stock dividends:
      Class A ($.08 per share)                --           --              --       --             --        (114)        (114)
      Class B ($.04 per share)                --           --              --       --             --         (48)         (48)

   Issuance of a director's stock options     --           --             12        --             --          --           12
                                           -------     -------     --------      -------     -------      -------     --------
Balance at December 31, 1997                  23          18         12,453       (504)        (1,426)      2,160       12,724
   Net income                                 --           --             --        --              --        903          903
   Purchase of treasury stock                 --           --             --       504           (813)         --         (309)
   Common stock dividends:
      Class A ($.08 per share)                --           --             --        --             --        (117)        (117)
      Class B ($.04 per share)                --           --             --        --             --         (48)         (48)
   Options exercised                          --           --              6        --             62          --           68
                                           -------     -------     --------      -------     --------     -------     --------
Balance at December 31, 1998                 $23          $18        $12,459     $  --        $(2,177)     $2,898      $13,221
   Net income                                 --           --             --        --             --          19           19
   Purchase of treasury stock                 --           --             --        --         (1,006)         --       (1,006)
   Common stock dividends:
      Class A ($.08 per share)                --           --             --        --             --         (94)         (94)
      Class B ($.04 per share)                --           --             --        --             --         (48)         (48)
                                           -------     -------     --------      -------     --------    -------      --------
Balance at December 31, 1999                 $23         $18        $12,459      $  --        $(3,183)     $2,775      $12,092
                                           ======       ======      =======      =======      =======     =======      =======
</TABLE>



See accompanying notes.


<PAGE>




                     The Morgan Group, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                             For the year ended December 31
                                                                             1999         1998         1997
                                                                            -------      -------      -------
Operating activities:
<S>                                                                         <C>          <C>          <C>
Net income                                                                  $    19      $   903      $   196
Adjustments to reconcile net income (loss) to net cash provided by
   (used in) operating activities:
        Depreciation and amortization                                         1,215        1,246        1,108
        Deferred income taxes                                                  (420)        (713)        (179)
        Special charges                                                          --           --          624
        Non-cash compensation expense for stock options                          --           --           12
        (Gain) loss on disposal of property and equipment                       101           20          (37)

Changes in operating assets and liabilities:

        Trade accounts receivable                                             2,058        1,174       (2,050)
        Other accounts receivable                                               901       (1,088)         148
        Refundable taxes                                                         --           --          321
        Prepaid expenses and other current assets                               507          139          795
        Other assets                                                            (43)         810       (1,053)
        Trade accounts payable                                                 (397)         207        1,770
        Accrued liabilities                                                   1,286         (612)      (2,486)
        Income taxes payable                                                   (600)         489           --
        Accrued claims payable                                                  310        2,785          663
        Refundable deposits                                                     (78)         164         (242)
                                                                            -------      -------      -------
        Net cash provided by (used in) operating activities                   4,859        5,524         (410)

Investing activities:
        Purchases of property and equipment                                    (811)        (585)        (825)
        Proceeds from sale of property and equipment                              7           88          159
        Proceeds from disposal of assets held                                    --           --        1,656
        Business acquisitions                                                   (35)        (228)        (227)
                                                                            -------      -------      -------
Net cash (used in) provided by investing activities                            (839)        (725)         763

Financing activities:
        Net (payment) proceeds from revolving credit agreement                   --       (2,250)       1,000
        Principle payments on long-term debt                                   (664)      (1,168)      (2,366)
        Proceeds from long-term debt                                            149          135          673
        Purchase of treasury stock, net of officer loan of $504 in 1998      (1,006)        (309)        (426)
        Proceeds from exercise of stock options                                  --           68           --
        Common stock dividends paid                                            (142)        (165)        (162)
                                                                            -------      -------      -------
        Net cash used in financing activities                                (1,663)      (3,689)      (1,281)
                                                                            -------      -------      -------

Net increase (decrease) in cash and cash equivalents                          2,357        1,110         (928)

Cash and cash equivalents at beginning of period                              1,490          380        1,308
                                                                            -------      -------      -------

Cash and cash equivalents at end of period                                  $ 3,847      $ 1,490      $   380
                                                                            =======      =======      =======
</TABLE>

See accompanying notes.


<PAGE>

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

The Morgan  Group,  Inc.  ("Company"),  through its wholly  owned  subsidiaries,
Morgan Drive Away, Inc.  ("Morgan") 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.  Lynch
Interactive  Corporation and its wholly owned subsidiaries ("Lynch Interactive")
owns all of the  1,200,000  shares  of the  Company's  Class B common  stock and
155,900  shares of the Company's  Class A common  stock,  which in the aggregate
represents  70% of the  combined  voting  power of the  combined  classes of the
Company's common stock.

The  Company'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 Consolidation

The consolidated  financial  statements  include the accounts of the Company and
its subsidiaries, Morgan, TDI, Interstate, and Finance. Significant intercompany
accounts and transactions have been eliminated in consolidation.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported  amounts of operating  revenues and expenses  during the  reporting
period. Actual results could materially differ from those estimates.

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 a maturity  of three  months or less when
purchased are considered to be cash equivalents.

Property and Equipment

Property and  equipment is stated at cost.  Depreciation  is computed  using the
straight-line  method  over  the  estimated  useful  lives of the  property  and
equipment.

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  $3,547,000  and  $2,843,000  at  December  31,  1999 and 1998,
respectively.  Intangible assets are being amortized by the straight-line method
over their estimated useful lives, which range from three to forty years.


<PAGE>



Impairment of Assets

The Company  periodically  assesses the net  realizable  value of its long-lived
assets 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

The Company  maintains  personal  injury and property  damage  insurance  with a
deductible of $250,000,  $150,000 and $250,000 for the policy periods of April 1
to March 31,  for the years of 1999,  1998,  1997 and prior,  respectively.  The
Company  maintains  cargo  damage  insurance  with a deductible  of  $1,000,000,
$150,000,  $250,000 for the policy periods of April 1 to March 31, for the years
of 1999, 1998, 1997 and prior, respectively. The insurance policy for the period
of April 1, 1998 to March 31, 1999 included a stop-loss  provision,  under which
the Company has  recorded a  receivable  of $30,900 at December  31,  1999.  The
Company  carries  statutory  insurance  limits on workers'  compensation  with a
deductible  of $50,000.  Claims and  insurance  accruals  reflect the  estimated
ultimate cost of claims for cargo loss and damage,  personal injury and property
damage not covered by insurance. The Company believes that its current insurance
coverage is  adequate  to cover its  liability  risks.  The Company  accrues its
self-insurance  liability using a case reserve method based upon claims incurred
and estimates of unasserted and unsettled  claims.  These  liabilities  have not
been discounted.

Stock-Based Compensation

The Company accounts for stock-based  compensation  under Accounting  Principles
Board  Opinion No. 25  "Accounting  for Stock Issued to  Employees"  ("APB 25").
Because the exercise  price of the Company's  employee  stock options equals the
market  price of the  underlying  stock on the date of  grant,  no  compensation
expense is recognized.

Net Income (Loss) Per Common Share

Net income  (loss) per common  share  ("EPS")  is  computed  using the  weighted
average number of common shares outstanding during the period.  Since each share
of Class B common stock is freely  convertible  into one share of Class A common
stock,  the total of the  weighted  average  number of  common  shares  for both
classes of common stock is considered in the  computation  of EPS. The effect of
dilutive  stock options is immaterial to the  calculation of diluted EPS for all
the years presented.

Fair Values of Financial Instruments

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

<PAGE>

in fair value must be  immediately  recognized in earnings.  The Company has not
yet  determined  what the effect of SFAS No. 133 will have on the  earnings  and
financial position of the Company.

2.  PROPERTY AND EQUIPMENT

The components of property and equipment and their estimated useful lives are as
follows (in thousands):

                                   Estimated             December 31
                                  Useful Life         1999            1998
                                  -----------         ----            ----
                                    (Years)

Land                                 --                $873            $873
Buildings                                 25          2,241           2,052
Transportation equipment              3 to 5            419             478
Office and service equipment          3 to 8          3,491           3,535
                                                      -----           -----
                                                      7,024           6,938
Less accumulated depreciation                         2,715           2,821
                                                      -----           -----

Property and equipment, net                          $4,309          $4,117
                                                     ======          ======

Depreciation  expense was  $511,000,  $581,000 and  $495,000 for 1999,  1998 and
1997, respectively.

3.  INDEBTEDNESS

The Company has $20,000,000  revolving credit facility ("Credit Facility") which
expires February 28, 2001, and is subject to renewal  annually,  thereafter.  If
not renewed,  the Credit  Facility shall convert to a three-year  term loan. The
interest  rate will be  calculated,  at the  Company's  option,  on  either  the
lender's base rate, or Eurodollar rate, all of which are adjusted on a quarterly
basis and include a margin based upon  performance  ratios.  A commitment fee of
 .375% is  required  on the unused  portion.  Total  borrowings  and  outstanding
letters of credit are limited to qualified trade accounts receivable,  qualified
owner-operator  loans, and cash investments (the "Borrowing  Base").  The Credit
facility  also  provides for excess  short-term  borrowings  of up to $5,000,000
based on a leverage test. This facility  provides  financing for working capital
and  general  corporate  needs.  At  December  31,  1999,  the  Company  had  no
outstanding  debt under its Credit  Facility.  The  Company  had  $8,100,000  of
letters  of credit  outstanding  on  December  31,  1999.  Letters of credit are
required for self-insurance retention reserves and other corporate needs.

The Credit Facility contains financial covenants,  the most restrictive of which
are a debt service to cash flow coverage ratio and an interest  expense coverage
ratio. The Company  projected it was probable that a violation of one or more of
the  financial  covenants  would occur at each of the  measurement  dates during
2000. The Company and the bank, on March 30, 2000, agreed to modify the affected
covenants.  The Company believes that compliance with the amended covenants will
be maintained throughout the year 2000. This amendment will limit the payment of
dividends to $120,000  annually  ($142,000 was declared in 1999),  prohibits the
acquisition  of Company's  common stock,  and limits  borrowings  and letters of
credit to the  Borrowing  Base.  This  amendment  provides for the payment of up
front fees of $25,000,  an increase of twenty-five  basis points in the interest
rate and an increase of twelve and one half basis points in the commitment fee.


<PAGE>



Long-term  debt and capital  lease  obligations  consisted of the  following (in
thousands):

<TABLE>
<CAPTION>


                                                                                              December 31
                                                                                        1999              1998
                                                                                        ----              ----
<S>                                                                                      <C>              <C>
Term  note  with  principal  and  interest  payable  monthly  at  8.25%  through
   February 29, 2000                                                                     $ 13             $123
Promissory  note  with  imputed  interest  at  7.81%,   principal  and  interest
   payments due annually through August 11, 2000                                          329              657
Promissory note with imputed interest at 10.0%,  principal and interest payments
   due monthly through September 6, 2000                                                   29               --
Capital lease  obligations  with imputed  interest from 10.29% to 11.04%,  lease
   payments due monthly                                                                   115               --
Promissory note with imputed interest at 7.0%,  principal and interest  payments
   due annually through October 31, 2001                                                  131              169
Promissory  note  with  imputed  interest  at  6.31%,   principal  and  interest
   payments due quarterly through December 31, 2001                                       259              411
Promissory note with imputed interest at 8.5%,  principal and interest  payments
   due quarterly through June 30, 2002                                                     89              120
                                                                                         ----           ------
                                                                                          965            1,480
Less current portion                                                                      676              652
                                                                                         -----          ------
Long-term debt and capital lease obligations, net                                        $289           $  828
                                                                                         ====           ======
</TABLE>


Maturities on long-term debt are $676,000 in 2000, $217,000 in 2001, and $72,000
in 2002.

Cash payments for interest were $406,000 in 1999, $566,000 in 1998, and $717,000
in 1997.

4.   LEASES

The Company leases certain service equipment under capital leases.  These assets
are included in property and equipment as follows (in thousands):

                                                December 31,
                                                   1999

         Service equipment                        $  90
         Less accumulated amortization               (4)
                                                 -------
                                                  $  86
                                                 =======

Future minimum annual lease payments as of December 31, 1999, are as follows (in
thousands):
<TABLE>
<CAPTION>

                                                             Capital    Operating
                                                               Lease      Leases       Total

<S>                                                          <C>        <C>          <C>
     2000                                                    $  78      $   889      $   967
     2001                                                       44          553          597
     2002                                                        4          186          190
                                                             -------    --------     --------
     Total minimum lease payments                              126      $ 1,628       $1,754
                                                                        =======      ========
     Less amount representing interest                          11
                                                             ------
     Present value of capitalized lease obligations          $ 115
                                                             ======
</TABLE>


Aggregate expense under operating leases  approximated  $2,115,000,  $2,578,000,
and $2,817,000 for 1999, 1998 and 1997, respectively.

5.   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 Year Ended December 31
                          1999         1998         1997
                        -------      -------      -------
Current:
   State                $    98      $   201      $    --
   Federal                  515        1,071          279
                        -------      -------      -------
                            613        1,272          279

Deferred:
   State                    (67)        (203)          45
   Federal                 (353)        (510)        (224)
                        -------      -------      -------
                           (420)        (713)        (179)
                        -------      -------      -------
                        $   193      $   559      $   100
                        =======      =======      =======


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

                                                December 31

                                              1999         1998
                                            -------      -------
Deferred tax assets:
   Accrued insurance claims                 $ 3,232      $ 3,029
   Special charges and accrued expenses         487          379
   Depreciation                                 163          146
   Other                                        125           62
                                            -------      -------
                                              4,007        3,616
Deferred tax liabilities:
   Prepaid expenses                            (360)        (389)
   Other                                         --           --
                                            -------      -------
                                               (360)        (389)
                                            -------      -------
                                            $ 3,647      $ 3,227
                                            =======      =======



<PAGE>




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

                                  For the Year Ended December 31
                                    1999      1998       1997
                                   -----     -----      -----
Income tax provision at
   federal statutory rate          $  72     $ 497      $ 101
State income tax, net of
   federal tax benefit                20        48          3
Reduction attributable to
   special election by captive        --        --       (155)
   insurance company
Changes in estimated state
   tax rates on beginning             --       (70)        --
   temporary differences
Permanent differences                101        84         94
Other                                 --        --         57
                                   -----     -----      -----
                                   $ 193     $ 559      $ 100
                                   =====     =====      =====

Net cash  payments  for income  taxes were  $1,205,000,  $810,000 and $54,000 in
1999, 1998 and 1997 respectively.

6.   SHAREHOLDERS' EQUITY

The Company 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.

The  Company'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, 1999, the Company  repurchased 2,900
shares totaling $22,000 under this plan. As of December 31, 1999, 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 July 1998, the Company 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.

In March 1999,  the  Company  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.

7.  STOCK OPTION PLAN

The Company has a 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 140,875 and
40,000 shares,  respectively,  of Class A common stock, net of cancellations and
shares exercised. There are 10,750 options reserved for future issuance.

A summary  of the  Company's  stock  option  activity  and  related  information
follows:
<TABLE>
<CAPTION>

                                                                         Year Ended December 31

                                                  1999                           1998                           1997
                                                  ----                           ----                           ----
                                                     Weighted                        Weighted                      Weighted
                                                     Average                         Average                       Average
                                        Options      Exercise          Options       Exercise         Options      Exercise
                                        (000)        Price             (000)         Price            (000)        Price
                                        -----        -----             -----         -----            -----        -----
<S>                                      <C>          <C>               <C>          <C>                <C>        <C>
Outstanding at beginning of year         170          $8.28             167          $8.32              176        $8.40
Granted                                   11           7.52              23           8.11               25         8.13
Exercised                                 --             --              (7)          8.25              (26)        8.73
Canceled                                  --             --             (13)          8.59               (8)        8.07
                                        ----         -------            ---                            ----



Outstanding at end of year              181          $8.23              170          $8.28             167         $8.32
                                        ===                             ===                            ===

Exercisable at end of year              149          $8.31              124          $8.42             109         $8.35
                                        ===                            ===                             ===
</TABLE>


Exercise  prices for options  outstanding  as of December 31, 1999,  ranged from
$6.20  to  $10.19.  The  weighted-average  remaining  contractual  life of those
options is 5.8 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 .316
in 1999 and .250 in 1998 and 1997, and a risk-free interest rate of 5.0% in 1999
and 6.0% in 1998 and 1997. 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):

                                         1999           1998         1997
                                         ----           ----         ----
Net income (loss):
   As reported                            $19           $903         $ 196
   Pro forma                             $(24)         $ 861         $ 174

Diluted earnings (loss) per share:

   As reported                          $0.01         $ 0.35        $ 0.07
   Pro forma                           $(0.01)        $ 0.33        $ 0.07

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.

The Company in January 2000 in connection with the employment arrangements for a
new President and Chief Executive Officer grantd such executive ten year options
to acquire 120,000 shares of Morgan's Class A Common stock, 40,000 of which have
an exercise price of $5.625 per share, 40,000 of which have an exercise price of
$7.625 per share, and 40,000 which have an exercise price of $9.625 per share.

8.  BENEFIT PLAN

The Company 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  1999,  1998  and 1997  were  $23,000,
$29,000 and $38,000, respectively.

9.  TRANSACTIONS WITH LYNCH

The Company has paid Lynch  Interactive  Corporation  ("Lynch  Interactive")  an
annual  service  fee  of  $100,000  for  executive,  financial  and  accounting,
planning,  budgeting,  tax, legal, and insurance services.  Additionally,  Lynch
Interactive  has charged  the  Company  $16,000  for  officers'  and  directors'
liability insurance for all years presented.

The  Company's  Class A and Class B common stock owned by Lynch  Interactive  is
pledged to secure a Lynch Interactive line of credit.

10.  SPECIAL CHARGES

The Company  recorded a pretax  special  charge for 1997 of  $624,000  ($412,000
after tax) which is comprised of gains in excess of the estimated net realizable
value  associated  with exiting the truckaway  operation of $361,000,  offset by
charges  related to driver pay. During 1997,  management  concluded that certain
components of driver pay were being accounted for on a cash basis.  Accordingly,
the Company recorded total charges of $1.2 million  ($985,000 in special charges
and  $215,000 as operating  costs) in the fourth  quarter of 1997 to account for
all  components  of  driver  pay  on an  accrual  basis.  It is the  opinion  of
management  that the effects of this change in accounting  are immaterial to the
results of operations of the previous years presented.

11.  SEGMENT REPORTING

The Company has adopted FASB Statement No. 131  "Disclosure  about Segments of a
Business Enterprise and Related Information".

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  thirty-one  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 nine  states.  The  specialized  outsourcing
services segment consists of a large trailer,  travel and small trailer delivery
and another  Specialized  Service  "Decking".  The third 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  Specialiized  Outsourcing  Services in the prior
year. All years shown below have been restated to show the corresponding segment
information for the earlier years.

Measurement of Segment (Loss) 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):
<TABLE>
<CAPTION>

                                                         1999           1998           1997
                                                      ---------      ---------      ---------
Operating revenues
<S>                                                   <C>            <C>            <C>
     Manufactured Housing                             $  99,491      $ 106,145      $ 105,383
     Driver Outsourcing                                  23,351         19,710         19,524
     Specialized Outsourcing Services                    21,172         23,064         19,712
     Insurance and Finance                                3,958          4,072          4,085
     All Other                                              148             48              9
                                                      ---------      ---------      ---------
                                                        148,120        153,039        148,713
Total intersegment insurance revenues                    (2,491)        (2,585)        (2,559)
                                                      ---------      ---------      ---------
Total operating revenues                              $ 145,629      $ 150,454      $ 146,154
                                                      =========      =========      =========

Segment profit (loss) - EBITDA
     Manufactured Housing                             $  10,265      $  10,836      $   8,715
     Driver Outsourcing                                     416            115            (47)
     Specialized Outsourcing Services                       469          1,011          1,292
     Insurance and Finance                               (9,058)        (8,358)        (7,825)
     All Other                                             (327)          (367)           (45)
                                                      ---------      ---------      ---------
                                                          1,765          3,237          2,090
Depreciation and amortization                            (1,215)        (1,230)        (1,075)
Interest expense                                           (338)          (545)          (719)
                                                      ---------      ---------      ---------
Income before taxes                                   $     212      $   1,462      $     296
                                                      =========      =========      =========

Identifiable assets

     Manufactured Housing                             $  16,956      $  18,764      $  17,741
     Driver Outsourcing                                   5,438          6,055          5,415
     Specialized Outsourcing Services                     2,724          3,015          2,240
     Insurance and Finance                                1,801          1,864          1,949
     All Other                                            5,345          3,689          5,790
                                                      ---------      ---------      ---------
     Total                                            $  32,264      $  33,387      $  33,135
                                                      =========      =========      =========

Special charges included in segment profit (loss)
     Manufactured Housing                             $      --      $      --      $     571
     Driver Outsourcing                                      --             --            180
     Specialized Outsourcing Services                        --             --           (127)
     Insurance and Finance                                   --             --             --
     All Other                                               --             --             --
                                                      ---------      ---------      ---------
     Total                                            $      --      $      --      $     624
                                                      =========      =========      =========
</TABLE>


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 $28.8 million,  $31.8 million and
$21.6 million of revenues in 1999,  1998 and 1997,  respectively.  The Company's

<PAGE>

gross accounts receivables from Oakwood were 16% and 20% of total receivables at
December 31, 1999 and 1998,  respectively.  In addition,  Fleetwood Enterprises,
Inc.,  accounted  for  approximately  $23.9  million,  $26.0  million  and $28.1
million, of revenues in 1999, 1998 and 1997,  respectively.  The Company's gross
accounts  receivables  from Fleetwood  were 17% and 15% of total  receivables at
December 31, 1999 and 1998, respectively.

12.  OPERATING COSTS AND EXPENSES (in thousands)

                                      1999         1998         1997
                                    --------     --------     --------
Purchased transportation costs      $101,046     $103,820     $100,453
Operating supplies and expenses       13,559       14,092       15,267
Claims                                 8,633        7,698        7,204
Insurance                              3,178        3,375        3,524
Operating taxes and licenses           7,358        7,978        7,284
                                    --------     --------     --------
                                    $133,774     $136,963     $133,732
                                    ========     ========     ========

13.  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 2003.  Several land and building leases contain monthly
renewal options

14.  QUARTERLY RESULTS OF OPERATIONS (Unaudited)

The following is a summary of unaudited  quarterly results of operations for the
years ended December 31, 1999 and 1998 (in thousands, except share data):
<TABLE>
<CAPTION>

                                                                 Three Months Ended

                                                  March 31       June 30     Sept. 30     Dec. 31
                                                  --------       -------     --------     -------

1999

<S>                                               <C>           <C>          <C>          <C>
Operating revenues                                $ 35,325      $ 40,270     $ 37,312     $ 32,722
Operating income (loss)                                325           436          208         (419)
Net income (loss)                                      118           169           34         (302)

Net income (loss) per basic and diluted share     $   0.05      $   0.07     $   0.01     $  (0.12)

1998

Operating revenues                                $ 33,971      $ 41,523     $ 39,135     $ 35,825
Operating income (loss)                               (347)        1,239          699          416
Net income (loss)                                     (231)          617          321          196
Net income (loss) per basic and diluted share     $  (0.09)     $   0.23     $   0.12     $   0.08
</TABLE>




<PAGE>



                         Report of Independent Auditors

The Board of Directors and Shareholders
The Morgan Group, Inc.

We have  audited  the  accompanying  consolidated  balance  sheets of The Morgan
Group,  Inc. and  subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of operations, changes in shareholders' equity, and cash
flows for each of the three years in the period ended  December  31,  1999.  Our
audits also included the financial  statement schedule of The Morgan Group, Inc.
and subsidiaries  listed in Item 14(a). These financial  statements and schedule
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion  on these  financial  statements  and  schedule  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 financial  statements  referred to above present fairly, in
all material respects,  the consolidated financial position of The Morgan Group,
Inc. and  subsidiaries  as of December 31, 1999 and 1998,  and the  consolidated
results of their  operations and their cash flows for each of the three years in
the period ended  December 31, 1999 in  conformity  with  accounting  principles
generally  accepted in the United  States.  Also, in our opinion,  the financial
statement  schedule,   when  considered  in  relation  to  the  basic  financial
statements  taken as a whole,  presents  fairly  in all  material  respects  the
information set forth therein.

                                          /s/ Ernst & Young LLP

Greensboro, North Carolina
February 11, 2000,
except for the second paragraph of Note 3, as to which the date is
March 30, 2000

Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

None.

PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The  information  required  by this item is  incorporated  by  reference  to the
section  entitled  "Proposal One - Election of Directors" of the Company's Proxy
Statement for its 2000 Annual Meeting of Stockholders  expected to be filed with
the Commission on or about April 28, 2000 (the "2000 Proxy Statement").

Item 11.  EXECUTIVE COMPENSATION

The information required by this item with respect to executive  compensation is
incorporated by reference to the section entitled  "Management  Remuneration" of
the 2000 Proxy Statement.

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
           MANAGEMENT

The  information  required  by this item is  incorporated  by  reference  to the
sections entitled "Voting Securities and Principal Holders Thereof" and entitled
"Proposal One - Election of Directors" of the 2000 Proxy Statement.

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The  information  required  by this item is  incorporated  by  reference  to the
section entitled  "Certain  Transactions with Related Persons" of the 2000 Proxy
Statement.


<PAGE>



PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1)   Financial Statements

                  The following  consolidated  financial statements are included
                  in Item 8:

                  Consolidated Balance Sheets

                  Consolidated Statements of Operations

                  Consolidated Statements of Changes in Shareholders' Equity

                  Consolidated Statements of Cash Flows

                  Notes to Consolidated Financial Statements

                  Report of Independent Auditors

(a)(2)  Financial  Statement  Schedules  Schedule II - Valuation and  Qualifying
        Accounts

                  All  other  schedules  for  which  provision  is  made  in the
                  applicable  accounting   regulations  of  the  Securities  and
                  Exchange Commission are not required under the instructions or
                  are inapplicable and, therefore, have been omitted.

(a)(3)  Exhibits Filed.

                  The  exhibits  filed  herewith or  incorporated  by  reference
                  herein are set forth on the Exhibit  Index.  Included in those
                  exhibits are management  contracts and compensatory  plans and
                  arrangements  which are  identified  as Exhibits  10.1 through
                  10.8.

(b)      Reports on Form 8-K

                  Registrant  filed no reports  on Form 8-K  during the  quarter
                  ending December 31, 1999.

(c)      The exhibits filed herewith or incorporated by reference herein are set
         forth on the Exhibit Index.




<PAGE>

                                   Schedule II

                     The Morgan Group Inc. and Subsidiaries

                        Valuation and Qualifying Accounts
<TABLE>
<CAPTION>


                                                             Allowance for Doubtful Accounts

                                                           Additions                Amounts
                                            Beginning   Charged to Costs           Written                Ending
             Description                     Balance     and Expenses            Net of Recoveries        Balance

<S>                                         <C>            <C>                        <C>                 <C>
Year ended December 31, 1999                $208,000       $415,000                   $310,000            $313,000

Year ended December 31, 1998                $183,000       $301,000                   $276,000            $208,000

Year ended December 31, 1997                $ 59,000       $336,000                   $212,000            $183,000



                                                                          Morgan Finance, Inc.
                                                                     Allowance for Loans Receivable

Year ended December 31, 1999                $  40,000               $  60,000                 $  50,000            $  50,000

Year ended December 31, 1998                $  80,000               $ 156,000                  $196,000            $  40,000

Year ended December 31, 1997                $  48,000               $  50,000                 $  18,000            $  80,000




                                                           Allowance for Receivable from Independent Contractors

Year ended December 31, 1999                $  82,000               $300,000                  $301,000             $  81,000

Year ended December 31, 1998                $  41,000               $341,000                  $300,000             $  82,000

Year ended December 31, 1997                $  62,000               $180,000                  $201,000             $  41,000
</TABLE>




<PAGE>




                                  EXHIBIT INDEX

Exhibit No.                       Description                              Page

3.1            Registrant's  Restated  Certificate  of  Incorporation,  as
               amended, is incorporated by reference to Exhibit 3.1 to the
               Registrant's  Registration  Statement on Form S-1, File No.
               33-641-22, effective July 22, 1993.

3.2            Registrant's Code of By-Laws,  as restated and amended,  is
               incorporated   by   reference   to   Exhibit   3.2  of  the
               Registrant's  Registration  Statement on Form S-1, File No.
               33-641-22, effective July 22, 1993.

4.1            Form of  Class  A  Stock  Certificate  is  incorporated  by
               reference to Exhibit 3.3 of the  Registrant's  Registration
               Statement on Form S-1, File No.  33-641-22,  effective July
               22, 1993.

4.2            Fourth  Article  -  "Common  Stock"  of  the   Registrant's
               Certificate of Incorporation,  is incorporated by reference
               to  the  Registrant's  Certificate  of  Incorporation,   as
               amended,   filed  as  Exhibit   3.1  to  the   Registrant's
               Registration  Statement  on Form S-1,  File No.  33-641-22,
               effective July 22, 1993.

4.3            Article  II  -  "Meeting  of  Stockholders,"  Article  VI -
               "Certificate   for  Shares"  and  Article  VII  -  "General
               Provisions"   of  the   Registrant's   Code   of   By-Laws,
               incorporated  by  reference  to the  Registrant's  Code  of
               By-Laws,   as   amended,   filed  as  Exhibit  3.2  to  the
               Registrant's  Registration  Statement on Form S-1, File No.
               33-641-22, effective July 22, 1993.

4.4            Loan  Agreements,  dated  September  13, 1994,  between the
               Registrant and  Subsidiaries and Society National Bank, are
               incorporated   by   reference   to   Exhibit   4.4  to  the
               Registrant's  Quarterly  Report on Form 10-Q for the period
               ended September 30, 1994, filed November 15, 1994.

4.5            Amended  and  Restated   Credit  and  Security   Agreement,
               effective  March 25,  1998,  among the  Registrant,  Morgan
               Drive Away, Inc., TDI, Inc.,  Interstate  Indemnity Company
               and  KeyBank   National   Association  is  incorporated  by
               reference to Exhibit 4.5 to the Registrant's  Annual Report
               on Form 10-K for the year ended  December 31,  1997,  filed
               March 31, 1998.

4.6            Revolving  Credit Facility  Agreement,  effective March 27,
               1997, among Morgan Drive Away, Inc., TDI, Inc.,  Interstate
               Indemnity  Company  and  KeyBank  National  Association  is
               incorporated   by  reference  to  Exhibit   4.5(a)  to  the
               Registrant's  Annual Report on Form 10-K for the year ended
               December 31, 1996, filed March 31, 1997.

4.7            Master  Revolving Note,  dated March 27, 1997, among Morgan
               Drive Away,  Inc.,  TDI,  Inc.,  and  Interstate  Indemnity
               Company to KeyBank National  Association is incorporated by
               reference  to  Exhibit  4.5(b) to the  Registrant's  Annual
               Report on Form 10-K for the year ended  December  31, 1996,
               filed March 31, 1997.





4.8            Amended and Restated Revolving Credit Note, dated March 31,
               1998, among Morgan Drive Away, Inc., TDI, Inc.,  Interstate
               Indemnity  Company  to  KeyBank  National   Association  is
               incorporated  by  reference to Exhibit A to the Amended and
               Restated Credit and Security Agreement, effective March 25,
               1998,  among the Registrant,  Morgan Drive Away, Inc., TDI,
               Inc.,  Interstate  Indemnity  Company and KeyBank  National
               Association, filed herewith as Exhibit 4.5.

4.9            Security Agreement, effective as of March 27, 1997, between
               Morgan Drive Away, Inc. and KeyBank National Association is
               incorporated   by  reference  to  Exhibit   4.5(c)  to  the
               Registrant's  Annual Report on Form 10-K for the year ended
               December 31, 1996, filed March 31, 1997.

4.10           Absolute,  Unconditional and Continuing Guaranty, effective
               as of  March  27,  1997,  by the  Registrant  to  Key  Bank
               National   Association  is  incorporated  by  reference  to
               Exhibit  4.5(d) to the  Registrant's  Annual Report on Form
               10-K for the year ended December 31, 1996,  filed March 31,
               1997.

4.11           Amended and Restated Continuing  Guaranty,  effective as of
               March 31,  1998,  by the  Registrant  to  KeyBank  National
               Association  is  incorporated  by reference to Exhibit D to
               the Amended and  Restated  Credit and  Security  Agreement,
               effective  March 25,  1998,  among the  Registrant,  Morgan
               Drive Away, Inc., TDI, Inc.,  Interstate  Indemnity Company
               and KeyBank National Association, filed herewith as Exhibit
               4.5.

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

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

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

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

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

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

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

10.3           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
               Registrant's  Registration  Statement on Form S-1, File No.
               33-641-22, effective July 22, 1993.

10.4           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
               Registrant's  Registration  Statement on Form S-1, File No.
               33-641-22, effective July 22, 1993.

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

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

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

10.8           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 Registrant's
               Annual Report on Form 10-K for the year ended  December 31,
               1995, filed on April 1, 1996.

10.9           Employment  Agreement,  dated  January  12,  2000  between
               Registrant and Anthony T. Castor, III

10.10          Non-Qualified  Stock  Option  Plan  and  Agreement,  dated
               January  11,  2000,  between  Registrant  and  Anthony  T.
               Castor, III

10.11          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 Registrant's Registration
               Statement on Form S-1, File No.  33-641-22,  effective July
               22, 1993.

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

10.13          Certain Services Agreement,  dated January 1, 1995, between
               Lynch  Corporation  and the Registrant is  incorporated  by
               reference  to  Exhibit  10.18  to the  Registrant's  Annual
               Report on Form 10-K for the year ended  December  31, 1994,
               filed on March 30, 1995.

21             Subsidiaries of the Registrant is incorporated by reference
               to  Exhibit  21 to the  Registrant  Form  10-K for the year
               ended December 31, 1998

23             Consent of Ernst & Young LLP

27             Financial Data Schedule (year ended December 31, 1999)
<PAGE>





                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended,  the Registrant has duly caused this report to
be signed on behalf of the undersigned, thereto duly authorized.

                                                          THE MORGAN GROUP, INC.

Date:   March 30, 2000                            By:     /s/ Charles C.  Baum
                                                          --------------------
                                                          Charles C. Baum
                                                          Chairman

           Pursuant to the requirements of the Securities  Exchange Act of 1934,
as amended, this report has been signed below by the following persons on behalf
of the  Registrant  and in the  capacities  indicated on this 30th day of March,
2000.

1)      Chairman:

        By:        /s/ Charles C.  Baum
                   -------------------------
                   Charles C.  Baum

2)      Director, President and Chief Executive Officer:

        By:        /s/ Anthony T. Castor, III
                   --------------------------
                      Anthony T. Castor, III

3)      Chief Financial Officer and
        Chief Accounting Officer

        By:        /s/ Dennis R.  Duerksen
                   --------------------------
                   Dennis R.  Duerksen

4)      A Majority of the Board of Directors:

                      /s/ Charles C.  Baum                          Director
                      --------------------
                      Charles C.  Baum

                      /s/ Bradley J.  Bell                          Director
                      --------------------
                      Bradley J.  Bell

                      /s/ Richard B. Black                          Director
                      --------------------
                      Richard B.  Black

                      /s/ Richard L. Haydon                         Director
                      ---------------------
                      Richard L. Haydon

                      /s/ Robert S.  Prather, Jr.                   Director
                      ---------------------------
                      Robert S.  Prather, Jr.