UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

               Special Financial Report Pursuant to Section 13 or
                  15(d) of the Securities Exchange Act of 1934
                   for the fiscal year ended December 31, 2001

The  Registrant's  Registration  Statement  on  Form  S-1  (Registration  Number
333-73996)  became effective on January 18, 2002, and did not contain  certified
financial   statements  for  the  fiscal  year  ended  December  31,  2001,  the
Registrant's  last full fiscal  year.  This  special  financial  report is filed
pursuant to Rule 15d-2 and contains  only  financial  statements  for the fiscal
year ended December 31, 2001.

                            MORGAN GROUP HOLDING CO.
                            -----------------------
                            401 Theodore Fremd Avenue
                               Rye, New York 10580
                                 (914) 921-7601
                        Commission File Number 333-73996

       Delaware                                      13-4196940
------------------------                         -----------------
(State of Incorporation)                         (I.R.S. Employer
                                                Identification Number)

           Securities Registered Pursuant to Section 12(b) of the Act:
                                      None

           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 NO X

(Registrant only became subject to Section 15(d) filing  requirements on January
18, 2002,  pursuant to the filing of a  Registration  Statement on Form S-1 that
was declared effective on such date (Registration Number 333-73996).)

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. [X]

The aggregate market value of the issuer's voting stock held by  non-affiliates,
as of April 5, 2002, was  $2,713,084.  The number of shares of the  Registrant's
Common Stock $.001 par value outstanding as of April 5, 2002, was 3,055,345.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None


<PAGE>





This annual report on Form 10-K for the fiscal year ended  December 31, 2001, is
being filed pursuant to Rule 15d-2 under the Securities Exchange Act of 1934, as
amended,  and contains only certified  financial  statements as required by Rule
15d-2. Rule 15d-2 provides  generally that, if a registrant files a registration
statement  under the Securities Act of 1933, as amended,  which does not contain
certified  financial  statements for the registrant's  last full fiscal year (or
the life of the registrant if less than a full fiscal year), then the registrant
shall, within 90 days of the effective date of the registration statement,  file
a special report furnishing  certified financial statements for such last fiscal
year or other period,  as the case may be, meeting the  requirements of the form
appropriate  for annual reports of the registrant.  Rule 15d-2 further  provides
that such  special  financial  report is to be filed  under  cover of the facing
sheet appropriate for the annual report of the registrant.  Morgan Group Holding
Co.'s  Registration  on Form S-1  referenced  above  did not  contain  certified
financial  statements  for the year ended December 31, 2001,  Registrant's  last
full fiscal  year.  Therefore,  as required by Rule 15d-2,  certified  financial
statements  for the year ended December 31, 2001, are filed herewith under cover
of the facing page of an Annual Report on Form 10-K.




<PAGE>






Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                         Report of Independent Auditors

The Board of Directors and Shareholders
Morgan Group Holding Co.

We have audited the accompanying balance sheets of the net assets and operations
contributed  to Morgan  Group  Holding  Co. (the  "Company")  (see Note 1) as of
December 31, 2001 and 2000, and the related  statements of  operations,  equity,
investments by and advances from Lynch  Interactive  Corporation  and cash flows
for each of the three years in the period ended  December  31, 2001.  Our audits
also included  Schedule  II-Valuation and Qualifying  Accounts  included in this
Annual  Report on Form 10-K.  These  financial  statements  and schedule are the
responsibility  of  the  management  of  Lynch  Interactive   Corporation.   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 financial position of the net assets and operations
contributed  to Morgan  Group  Holding Co. (See Note 1) at December 31, 2001 and
2000, and the results of its operations and its cash flows for each of the three
years in the period ended  December  31, 2001,  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.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern. As more fully described in Note 2, the
Company's only subsidiary, The Morgan Group, Inc. ("Morgan"), incurred operating
losses and  negative  operating  cash flows during the past two years and was in
payment default on its real estate  mortgage.  In addition,  Morgan's ability to
meet  its  quarterly  financial  covenant  requirements  contained  in its  debt
agreements in 2002 is uncertain.  These conditions raise substantial doubt about
the  Company's  ability to continue as a going  concern.  Management's  plans in
regard  to these  matters  are more  fully  described  in Note 2. The  financial
statements do not include any adjustments to reflect the possible future effects
on  the   recoverability  and  classification  of  assets  or  the  amounts  and
classification  of  liabilities  that  may  result  from  the  outcome  of  this
uncertainty.


                                                 /s/ Ernst & Young LLP
Stamford, Connecticut
February 22, 2002
except for Note 2,
as to which the date
is March 29, 2002



<PAGE>
<TABLE>

                            Morgan Group Holding Co.
                                 Balance Sheets
                            (Dollars in thousands)

<CAPTION>
                                                                         December 31,
                                                                       2001        2000
                                                                       ----        ----
ASSETS
Current assets:
<S>                                                                 <C>          <C>
   Cash and cash equivalents ....................................   $  1,517     $  2,092
   Investments - restricted .....................................      2,624         --
   Accounts receivable, less allowances
      of $439 in 2001 and $248 in 2000 ..........................      6,322        7,881
   Refundable taxes .............................................        591          499
   Prepaid insurance ............................................        890           96
   Other current assets .........................................      1,313        1,051
   Deferred income taxes ........................................       --            319
                                                                    --------     --------
Total current assets ............................................     13,257       11,938
                                                                    --------     --------

Property and equipment, net .....................................      3,339        3,688
Goodwill and other intangibles, net .............................      6,256        7,124
Deferred income taxes ...........................................       --            282
Other assets ....................................................        132          634
                                                                    --------     --------
Total assets ....................................................   $ 22,984     $ 23,666
                                                                    ========     ========

LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
   Notes payable, banks .........................................   $    580     $   --
   Trade accounts payable .......................................      4,505        2,373
   Accrued liabilities ..........................................      2,500        3,704
   Accrued claims payable .......................................      3,028        3,224
   Refundable deposits ..........................................        675        1,357
   Current portion of long-term debt ............................        169          217
                                                                    --------     --------
Total current liabilities .......................................     11,457       10,875

Long-term debt, less current portion ............................         13           71
Deferred income taxes ...........................................       --            744
Long-term accrued claims payable ................................      4,078        5,122

Commitments and contingencies (Note 14) .........................       --           --

Minority interest ...............................................      2,201        3,193
Shareholder's Equity
  Preferred stock, $0.01 value, 1,000,000
    shares authorized, none outstanding .........................       --           --
  Common stock, $0.01 par value, 10,000,000 shares
    authorized, 3,055,345 outstanding ...........................         30         --
  Additional paid-in capital ....................................      5,614         --
  Accumulated deficit ...........................................       (409)        --
  Equity, investments by and advances from
    Lynch Interactive Corporation ...............................       --          3,661
                                                                    --------     --------
Total ...........................................................      5,235        3,661
                                                                    --------     --------
Total liabilities and equity ....................................   $ 22,984     $ 23,666
                                                                    ========     ========
See accompanying notes.
</TABLE>


<PAGE>

<TABLE>





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

<CAPTION>

                                                                           For the years ended December 31,
                                                                          2001          2000           1999
                                                                          ----          ----           ----
<S>                                                                  <C>            <C>            <C>
Operating revenues ..............................................    $   101,168    $   128,367    $   172,491

Costs and expenses:
   Operating costs ..............................................         93,933        119,895        160,636
   Selling, general and administration ..........................          8,229          9,443         10,090
   Depreciation and amortization ................................          1,100          1,067          1,215
                                                                     -----------    -----------    -----------
                                                                         103,262        130,405        171,941
                                                                     -----------    -----------    -----------

Operating income (loss) .........................................         (2,094)        (2,038)           550
Interest expense ................................................            273            310            338
                                                                     -----------    -----------    -----------
Income (loss) before income taxes ...............................         (2,367)        (2,238)           212

Income tax (expense) benefit ....................................            910         (2,277)          (187)

Minority interest ...............................................            603          2,133            (28)
                                                                     -----------    -----------    -----------

Net loss ........................................................    $      (854)   $    (2,492)   $        (3)
                                                                     ===========    ===========    ===========

Net loss per share:
  Basic and diluted .............................................    $     (0.28)   $     (0.82)   $     (0.00)
                                                                     ===========    ===========    ===========

Weighted average shares outstanding .............................      3,055,345      3,055,345      3,055,345
                                                                     ===========    ===========    ===========

See accompanying notes.
</TABLE>


<PAGE>

<TABLE>





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

<CAPTION>
                                                                                                         Equity,
                                                                                                       Investments
                                                                                                          by and
                                                                                                         Advances
                                                             Common            Additional               from Lynch
                                                             Stock     Common    Paid-in   Accumulated  Interactive
                                                          Outstanding   Stock    Capital     Deficit    Corporation  Total

<S>                                                         <C>        <C>        <C>        <C>        <C>        <C>
Balance at January 1, 1999 ...........................      $   --     $   --     $  --      $  --      $ 6,486    $ 6,486
  Capital transactions of The Morgan
     Group, Inc. .....................................          --         --        --         --         (252)      (252)
  Advances to Lynch Interactive Corporation ..........          --         --        --         --          (60)       (60)
  Net loss ...........................................          --         --        --         --           (3)        (3)
                                                            -------    -------   -------     -------     -------     ------
Balance at December 31, 1999 .........................          --         --         --         --        6,171     6,171
  Advances to Lynch Interactive Corporation ..........          --         --         --         --          (18)      (18)
  Net loss ...........................................          --         --         --         --       (2,492)   (2,492)
                                                            -------    -------   -------     -------     --------   -------
Balance at December 31, 2000 .........................          --         --         --         --      $ 3,661    $ 3,661
  Capital transactions of The Morgan
    Group, Inc. ......................................          --         --         --         --          (72)       (72)
  Investment by Lynch Interactive Corporation ........          --         --         --         --        2,000      2,000
  Net loss through December 18, 2001 .................          --         --         --         --         (445)      (445)

  Issuance of shares to Lynch Interactive
    Corporation ......................................    3,055,345         30      5,614        --       (5,144)       500

  Net loss subsequent to December 18, 2001 ...........          --         --         --       (409)         --        (409)
                                                            -------    -------    -------    -------      -------    ------
 Balance at December 31, 2001 .........................   3,055,345    $    30    $ 5,614   $  (409)     $     0    $ 5,235
                                                           ========    =======    =======    =======      =======    ======



See accompanying notes.
</TABLE>


<PAGE>
<TABLE>


                            Morgan Group Holding Co.
                            Statements of Cash Flows
                             (Dollars in thousands)
<CAPTION>
                                                                                For the years ended December 31,
                                                                                  2001        2000       1999
                                                                                  ----        ----       ----
Operating activities:
<S>                                                                              <C>        <C>        <C>
        Net income (loss) ....................................................   $  (854)   $(2,492)   $    (3)
        Adjustments to reconcile net income (loss) to net cash
        provided by (used in) operating activities:
        Depreciation and amortization ........................................     1,100      1,067      1,215
        Deferred income taxes ................................................      (143)     2,872       (426)
        Minority interests ...................................................      (603)    (2,133)        28
        Loss on disposal of property and equipment ...........................        15        292        101
Changes in operating assets and liabilities:
        Accounts receivable ..................................................     1,559      2,562      2,959
        Refundable taxes .....................................................       (92)      (499)      --
        Prepaid insurance and other current assets ...........................    (1,056)       813        507
        Other assets .........................................................       502         63        (43)
        Trade accounts payable ...............................................     2,132     (1,534)      (397)
        Accrued liabilities ..................................................    (1,204)    (1,148)     1,286
        Income taxes payable .................................................      --         (278)      (600)
        Accrued claims payable ...............................................    (1,240)       (72)       310
        Refundable deposits ..................................................      (682)      (395)       (78)
                                                                                 -------    -------    -------
        Net cash provided by (used in) operating activities ..................      (566)      (882)     4,859
Investing activities:
        Purchases of restricted investments ..................................    (2,624)      --         --
        Purchases of property and equipment ..................................       (99)      (106)      (811)
        Proceeds from sale of property and equipment .........................        15          2          7
        Non-compete agreements ...............................................       (45)      --         --
        Other ................................................................      --          (20)       (35)
                                                                                 -------    -------    -------
        Net cash used in investing activities ................................    (2,753)      (124)      (839)
Financing activities:
        Principal payments on long-term debt .................................      (106)      (677)      (664)
        Net proceeds from credit facility ....................................        80       --          149
        Proceeds from mortgage note ..........................................       500       --         --
        Expenses incurred in connection with issuance
           of common stock of The Morgan Group, Inc. .........................      (230)      --         --
        Minority interest transactions .......................................      --          (54)    (1,088)
        Investment by and advances from (to) Lynch
          Interactive Corporation ............................................     2,500        (18)       (60)
                                                                                 -------    -------    -------
        Net cash provided by (used in) financing activities ..................     2,744       (749)    (1,663)
                                                                                 -------    -------    -------
Net increase (decrease) in cash and cash equivalents .........................      (575)    (1,755)     2,357

Cash and cash equivalents at beginning of year ...............................     2,092      3,847      1,490
                                                                                 -------    -------    -------
Cash and cash equivalents at end of year .....................................   $ 1,517    $ 2,092    $ 3,847
                                                                                 =======    =======    =======
Cash payments for interest ...................................................   $   434    $   379    $   406
                                                                                 =======    =======    =======

See accompanying notes.
</TABLE>


<PAGE>






NOTES TO THE FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Morgan Group  Holding Co.  ("Holding"  or "the  Company")  was  incorporated  in
November  2001 as a  wholly-owned  subsidiary of Lynch  Interactive  Corporation
("Interactive")  to serve as a holding  company  for  Interactive's  controlling
interest in The Morgan Group, Inc. ("Morgan").  On January 24, 2002, Interactive
spun off 2,820,051  shares of our common stock  through a pro rata  distribution
("Spin-Off") to its  stockholders.  Interactive  retained  235,294 shares of our
common stock to be  distributed  in connection  with  potential  conversion of a
convertible note that has been issued by Interactive.

The  accompanying   financial  statements  represents  the  combination  through
December 18, 2001, on a retroactive  basis, of all of Interactive's  interest in
Morgan and the consolidated financial statements of Morgan as if the transfer by
Interactive  to Holding  occurred  on January 1, 1999.  On  December  18,  2001,
Interactive's  controlling interest in Morgan was transferred to Holding and the
financials represent the consolidated results of Holding after that date.

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

Description of Business

The  Company's  only  significant  asset  (other than  $500,000 in cash and cash
equivalents)  is its  controlling  interest in Morgan,  which through its wholly
owned  subsidiaries,  Morgan Drive Away,  Inc.  ("MDA") and TDI,  Inc.  ("TDI"),
provides  specialized  transportation  services  to  the  manufactured  housing,
recreational  vehicle,  bus, van,  commercial truck and trailer  industries.  At
December 31, 2001, the Company owned all of the 2,200,000  outstanding shares of
Morgan's  Class B common  stock and 161,100  shares of  Morgan's  Class A common
stock, which in aggregate  represented 68.5% of the combined equity and 80.7% of
the combined voting power of the combined classes of Morgan's common stock.

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

Principles of Combination/Consolidation

The  financial   statements  represent  combined  financial  statements  through
December  18,  2001  and  include  the  accounts  of  Holding,  Morgan  and  its
subsidiaries.   Subsequent  to  December  31,  2001,  the  financial  statements
represent the consolidated results of those entities.  Significant  intercompany
accounts and transactions have been eliminated in combination/consolidation.
<PAGE>

Use of Estimates in the Preparation of Financial Statements

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

Operating Revenues and Expense Recognition

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

Reclassifications

Gross  operating  revenues and operating  expenses for 2000 and prior years were
reclassified  to conform to the current  year  presentation.  This  consisted of
reclassifying  escort and  insurance  billings to  operating  revenue  that were
previously  recorded  as offsets  against  escort and  insurance  expense in the
operating costs section. The  reclassification  increased operating revenues and
operating  expenses  proportionately.  There was no impact on operating  results
from this reclassification.

Certain   other   reclassifications   were  made  to  conform  to  current  year
presentation.

Cash Equivalents

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

Credit Risk

Financial  instruments that potentially subject the Company to concentrations of
credit risk consist principally of customer receivables. As discussed in Note 7,
two customers  represented  21% of total  customer  receivables  at December 31,
2001. The remaining credit risk is generally diversified due to the large number
of  entities   comprising  the  Company's  remaining  customer  base  and  their
dispersion across many different  industries and geographic regions. As noted in
the balance sheets,  the Company maintains an allowance for doubtful accounts to
cover estimated credit losses.

Property and Equipment

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

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



<PAGE>


Goodwill and Other Intangibles

Intangible  assets are comprised  primarily of goodwill,  which is stated at the
excess  of  purchase  price  over  net  asset   acquired,   net  of  accumulated
amortization  of  $4,863,000  and  $4,181,000  at  December  31,  2001 and 2000,
respectively.  Intangible assets are being amortized by the straight-line method
over their estimated useful lives, which range from three to forty years.

Impairment of Assets

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

Insurance and Claim Reserves

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

Stock-Based Compensation

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

Net Income (Loss) Per Common Share

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

Fair Values of Financial Instruments

At December 31, 2001 and 2000, the carrying value of financial  instruments such
as cash and cash equivalents,  accounts receivable, trade payables and long-term
debt approximates 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  Statements  of  Financial   Accounting   Standards  No.  130,  "Reporting
Comprehensive Income". Accordingly,  comprehensive income (loss) is equal to net
income (loss).

<PAGE>


Impairment of Goodwill and other Intangible Long-Lived Assets

In July 2001, the Financial  Accounting Standards Board (FASB) issued Statements
of Financial  Accounting  Standards,  No. 141, Business  Combinations  (SFAS No.
141), and No. 142,  Goodwill and Other  Intangible  Assets (SFAS No. 142). These
Statements  change the  accounting  for  business  combinations,  goodwill,  and
intangible  assets.  SFAS No. 142  requires a discounted  cash flow  approach to
estimate potential impairment of intangible assets.

Under SFAS No. 142,  goodwill  and  indefinite  lived  intangible  assets are no
longer amortized but are reviewed for impairment  annually or more frequently if
impairment indicators arise. Separable intangible assets that are deemed to have
definite  lives will  continue to be  amortized  over their  useful  lives.  The
amortization  provisions of SFAS No. 142 apply to both  goodwill and  intangible
assets acquired after June 30, 2001.

The  Company  adopted  SFAS No. 141 and 142 in the third  quarter of 2001 except
with  respect  to the  provisions  of SFAS No.  142  relating  to  goodwill  and
intangibles  acquired  prior to July 1, 2001.  Those  provisions of SFAS No. 142
will be adopted January 1, 2002.

In 2001, significant negative indicators existed for the Company, including, but
not limited to, significant  revenue declines as well as operating and cash flow
losses and the loss of a  significant  customer on October 1, 2001. As a result,
management  deemed it  appropriate  to obtain an  independent  valuation  of the
Company's  intangible  assets to determine if impairment  existed in 2001.  This
valuation  was  performed  under  the  current   accounting   pronouncement   on
impairment, SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived  Assets to be Disposed Of that utilizes an undiscounted cash flow
approach to estimate any potential impairment.

The independent  valuation based upon the Company's  estimated  future cash flow
concluded that there was no impairment of the Company's  intangible assets under
SFAS No. 121.  However,  there was a projected  impairment under SFAS No. 142 of
approximately $325,000 to $600,000,  which was disclosed, in the Company's third
quarter  Form 10-Q.  The Company is  currently  in the  process of updating  the
valuation  analysis under SFAS No. 142 in anticipation of adoption on January 1,
2002.  Any impairment  charge  resulted from this analysis will be recognized in
the first quarter of 2002.

Recent Accounting Pronouncements

On October 3, 2001, the FASB issued SFAS No. 144,  Accounting for the Impairment
or Disposal  of  Long-Lived  Assets.  This  statement  addresses  the  financial
accounting and reporting for the  impairment and disposal of long-lived  assets.
It supercedes and addresses significant issues relating to the implementation of
SFAS No.  121,  Accounting  for the  Impairment  of  Long-Lived  Assets  and for
Long-Lived  Assets  to be  Disposed  Of.  SFAS  No.  144  retains  many  of  the
fundamental  provisions  of SFAS No.  121 and  establishes  a single  accounting
model, based on the framework established in SFAS No. 121, for long-lived assets
to be disposed of by sale,  whether  previously held and used or newly acquired.
The  Company  will adopt  this  standard  on  January  1, 2002 and is  currently
evaluating the impact of SFAS No. 144 on the Company's results of operations and
financial position.

<PAGE>


2.  LIQUIDITY

The financial  statements  have been prepared on a going  concern  basis,  which
contemplates  the  realization of assets and the  satisfaction of liabilities in
the normal course of business.  Morgan  incurred  operating  losses and negative
operating  cash flows during the past two years,  and was in payment  default on
its real estate mortgage at February 1, 2002. Note: this facility was refinanced
on February 7, 2002. In addition,  Morgan's lender waived the financial covenant
defaults on the Credit  Facility  (see Note 5) for only the fiscal  period ended
December  31,  2001.  Without an  additional  waiver or  amendment to the Credit
Facility,  Morgan will likely be in default of its  financial  covenants for the
period ended March 31, 2002.  These  conditions  raise  substantial  doubt about
Morgan and, as its  ownership  of Morgan is  substantially  the  Company's  only
asset, the Company's ability to continue as a going concern.  Morgan is actively
seeking amendments to the existing Credit Facility as well as seeking additional
capital resources. Currently, negotiations are being held with several financial
institutions regarding a replacement mortgage.

The Company and  Morgan's  ability to continue as a going  concern is  dependent
upon Morgan's ability to successfully maintain its financing arrangements and to
comply with the terms  thereof.  However,  although no assurances  can be given,
management  of Morgan  remains  confident  that it will be able to continue as a
going concern.

3. PROPERTY AND EQUIPMENT

The components of property and equipment are as follows (in thousands):
<TABLE>
<CAPTION>

                                                        December 31,
                                                      2001      2000
                                                      ----      ----
<S>                                                 <C>        <C>
Land ............................................   $   873    $   873
Buildings .......................................     2,250      2,186
Transportation equipment ........................       124        146
Office and computer equipment ...................     2,221      2,288
                                                    -------    -------
                                                      5,468      5,493
Less accumulated depreciation ...................    (2,129)    (1,805)
                                                    -------    -------
Property and equipment, net .....................   $ 3,339    $ 3,688
                                                    =======    =======
</TABLE>


Depreciation  expense was  $373,000,  $433,000 and  $511,000 for 2001,  2000 and
1999, respectively.

4.  GOODWILL AND OTHER INTANGIBLES

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

December 31, 2001
                          Useful                 Accumulated    Net Book
                            Life        Cost     Amortization    Value
                         ---------   ---------   ------------   --------
<S>                      <C>          <C>          <C>          <C>
Goodwill .............   40 Years     $ 1,660      $  560       $1,100
Goodwill .............   20 Years       6,900       2,071        4,829
Goodwill .............   3-5 Years        345         318           27
Non-Compete agreements   3-20 Years     2,214       1,914          300
                                      -------      ------       ------
                                      $11,119      $4,863       $6,256
                                      =======      ======       ======
</TABLE>



<PAGE>

<TABLE>
<CAPTION>

December 31, 2000
                              Useful                  Accumulated   Net Book
                               Life          Cost     Amortization   Value
                             ---------    ---------    ---------    --------
<S>                           <C>          <C>          <C>         <C>
     Goodwill .............   40 Years     $ 1,660      $  518      $1,142
     Goodwill .............   20 Years       7,131       1,567       5,564
     Goodwill .............   3-5 Years        335         273          62
     Non-Compete agreements   3-20 Years     2,179       1,823         356
                                           -------      ------      ------
                                           $11,305      $4,181      $7,124
                                           =======      ======      ======
</TABLE>

5.  INDEBTEDNESS

  Credit Facility

On July 27, 2001,  Morgan  obtained a new $12.5  million  Credit  Facility.  The
Credit  Facility is used for working  capital  purposes  and to post  letters of
credit for insurance contracts.  As of December 31, 2001, Morgan had outstanding
borrowings of $80,000 for working capital purposes and $7.0 million  outstanding
letters of credit.  Borrowings bear interest at a rate per annum equal to either
the Bank of New York  Alternate  Base Rate ("ABR") plus one-half  percent or, at
the option of Morgan, absent an event of default, the one month London Interbank
Offered  Rate  ("LIBOR")  as  published  in The Wall  Street  Journal,  averaged
monthly,  plus three  percent.  Borrowings  and posted  letters of credit on the
Credit Facility are limited to a borrowing base calculation that includes 85% of
eligible  receivables  and 95% of eligible  investments.  The Credit Facility is
subject to certain  financial  covenants  including  minimum tangible net worth,
maximum  funded debt to EBITDA,  minimum  fixed  interest  coverage  and maximum
capital expenditures as well as restriction on the payment of dividends.  Morgan
was in violation of certain of these  covenants at December 31, 2001. See waiver
discussion  in  Note  2.  The  facility  is  secured  by  accounts   receivable,
investments,  inventory,  equipment and general intangibles. The facility may be
prepaid anytime with prepayment  being subject to a 3%, .75% and .25% prepayment
penalty during year 1, 2 and 3, respectively.

The prior credit facility  matured on January 28, 2001, at which time Morgan had
no outstanding debt and $6.6 million outstanding  letters of credit.  Morgan was
in default of its  financial  covenants  at maturity and the bank decided not to
renew the prior credit facility.

Real Estate Loan

On July 31, 2001,  Morgan closed on a real estate  mortgage for $500,000 that is
secured by Morgan's  land and buildings in Elkhart,  Indiana.  The loan proceeds
are invested in U.S.  Treasury backed  instruments and are pledged as collateral
for  $600,000  in  letters  of credit  issued by the Bank.  The  mortgage  bears
interest at prime rate plus 0.75%,  and is for a six-month term with outstanding
principal,  which matured on February 1, 2002.  Morgan has a payment  default on
this scheduled  principal payment and is currently seeking a replacement lender.
The loan is subject to the same covenants as the Credit Facility.

Long Term Debt

Long-term  debt,  all of which was issued by Morgan,  consisted of the following
(in thousands):


<PAGE>

<TABLE>
<CAPTION>
                                                                                    December 31,
                                                                                  2001       2000
                                                                                 ----       ----
<S>                                                                             <C>        <C>
Promissory notes with imputed  interest rates from 6.31% to 10.0%,
 principal and interest payments due from monthly to annually,
 through March 31, 2004 ......................................................   $178       $242

Term notes with  imputed  interest  rates of 8.25% to 11.04%
  with  principal  and interest payments due monthly through
  April 26, 2002 .............................................................      4         46
                                                                                 ----       ----
                                                                                  182        288
Less current portion .........................................................    169        217
                                                                                 ----       ----
Long-term debt, net of current portion .......................................   $ 13       $ 71
                                                                                 ====       ====
</TABLE>

Insurance Premium Financing

In 2001,  Morgan  utilized a third party to finance its insurance  premiums.  In
conjunction with this financing arrangement, the Company borrowed $2,210,000 and
prepaid  its annual  premiums  to its  insurance  underwriter.  The terms of the
financing allow for the financier to have a first security  interest in unearned
premiums. The financing was for a nine-month period at an interest rate of 5.84%
with the final  payment due on April 2, 2002.  At  December  31,  2001,  the net
transaction  is recorded as prepaid  insurance in the current  assets section of
the balance sheet as follows (in thousands):

       Unamortized prepaid premiums                  $1,784
       Amount due under financing arrangement          (894)
                                                   --------
        Net prepaid insurance                       $   890
                                                   ========

6.   LEASES

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

Future minimum annual  operating  lease payments as of December 31, 2001, are as
follows (in thousands):

                        2002   $228
                        2003    139
                        2004     11
                        2005      1
                               ----
Total minimum lease payments   $379
                               ====

Aggregate expense under operating leases approximated $888,000,  $1,672,000, and
$2,115,000 for 2001, 2000 and 1999.

7.  CREDIT RISK

A majority of the Company's  accounts  receivable  are due from companies in the
manufactured  housing,  recreational  vehicle, bus, van and commercial truck and
trailer industries located throughout the United States.  Fleetwood Enterprises,
Inc., accounted for approximately $10.9 million, $16.9 million and $23.9 million
of revenues in 2001, 2000 and 1999,  respectively.  The Company's gross accounts
receivables  from  Fleetwood  Enterprises,  Inc.  were  19%  and  10%  of  total
receivables at December 31, 2001 and 2000, respectively.
<PAGE>

Effective October 1, 2001, the Company was no longer the primary carrier for its
largest customer, Oakwood Homes Corporation.  Services provided to Oakwood Homes
Corporation  accounted for approximately $10.9 million,  $22.5 million and $28.8
million of revenues in 2001,  2000 and 1999,  respectively.  The Company's gross
accounts  receivables  from Oakwood Homes  Corporation  were 2% and 23% of total
receivables at December 31, 2001 and 2000, respectively.

As of December 31, 2001, 46% of the open trade accounts receivable was with five
customers of which over 91% was within 60 days of invoice.  In total, 91% of the
open trade receivables are also within 60 days of invoice.

8.   INCOME TAXES

Deferred tax assets and liabilities are determined based on differences  between
financial  reporting  and tax basis 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  (expense)  benefit  provisions  are  summarized  as follows  (in
thousands):
<TABLE>
<CAPTION>
                                          For the Year Ended December 31,
                                            2001       2000      1999
                                            ----       ----      ----
Current:
<S>                                        <C>        <C>        <C>
   State ...............................   $    95    $  --      $ (98)
   Federal .............................       672        595     (515)
                                           -------    -------   ------
                                               767        595     (613)
                                           -------    -------   -------
Deferred:
   State ...............................        72       (448)      68
   Federal .............................        71     (2,424)     358
                                           -------    -------   -------
                                               143     (2,872)     426
                                           -------    -------   -------
                                             $ 910    $(2,277)  $ (187)
                                           =======    =======   =======
</TABLE>
<TABLE>

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

                                                                        December 31,
                                                                      2001          2000
                                                                      ----          ----
Deferred tax assets:
<S>                                                                   <C>        <C>
   Accrued insurance claims .......................................   $ 2,510    $ 3,323
   Net operating losses ...........................................     1,596       --
   Accrued expenses ...............................................       148        367
   Depreciation ...................................................       285        199
   Other ..........................................................       342         84
                                                                      -------    -------
                                                                        4,881      3,973
Deferred tax liabilities:
   Prepaid expenses ...............................................      (886)      (184)
                                                                      -------    -------
Net deferred tax assets ...........................................     3,995      3,789
Valuation allowance for net deferred tax assets ...................    (3,995)    (3,188)
                                                                      -------    -------
Deferred tax assets of Morgan .....................................   $  --      $   601
                                                                      =======    =======
</TABLE>

In addition,  at December 31, 2000,  Holding had a basis difference in the stock
of Morgan which resulted in a deferred tax liability of $744,000. Such liability
was  reduced to zero  during  2001 as a result of the  recording  of  additional
losses of Morgan.
<PAGE>

A  reconciliation  of the income tax  provisions  and the  amounts  computed  by
applying the  statutory  federal  income tax rate to income (loss) before income
tax (expense) benefit follows (in thousands):
<TABLE>
<CAPTION>
                                                                For  the  Year   Ended
                                                                      December 31,
                                                               2001       2000     1999
                                                               ----       ----     ----
<S>                                                           <C>      <C>        <C>
Income tax (expense) benefit at
   federal statutory rate .................................   $ 805    $   772    $ (72)
State income tax benefit (expense), net of
   federal tax benefit ....................................      82         44      (20)
Change in valuation allowance .............................    (601)    (3,188)    --
Other .....................................................     744        174        6
Permanent differences .....................................    (120)       (79)    (101)
                                                              -----    -------    -----
Income tax (expense) benefit ..............................   $ 910    $(2,277)   $(187)
                                                              =====    =======    =====
</TABLE>

Net cash  payments  (refunds)  for income  taxes were  ($677,000),  $181,000 and
$1,205,000 in 2001, 2000 and 1999, respectively.

In  assessing  the  realization  of deferred  tax assets,  management  considers
whether it is more likely than not that some  portion or all of the deferred tax
assets will not be realized.  The ultimate realization of deferred tax assets is
dependent  upon the  generation  of future  taxable  income during the period in
which the temporary  differences  become  deductible.  A valuation  allowance of
$3,188,000  was  recorded in 2000 to reduce the deferred tax asset as Morgan had
experienced  a loss.  As  financial  results  have not  improved  in  2001,  the
valuation  allowance  was  increased to the full amount of Morgan's net deferred
tax  assets at  December  31,  2001.  Management  considered,  in  reaching  the
conclusion on the required valuation allowance, given the cumulative losses that
it would be  inconsistent  with  applicable  accounting  rules to rely on future
taxable income to support realization of any of the net deferred tax assets.

At December 31, 2001, Morgan had unused federal net operating loss carryforwards
of approximately $3,989,000 that expire in 2021.

9.   MORGAN SHAREHOLDERS' EQUITY

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

Morgan's Board of Directors has approved the purchase of up to 250,000 shares of
Class A Common Stock for its Treasury at various dates and market prices. During
the year ended  December 31, 2001,  Morgan did not  repurchase  any shares under
this plan.  As of December  31, 2001,  186,618  shares had been  repurchased  at
prices between $6.875 and $11.375 per share for a total of $1,561,000 under this
plan.

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

<PAGE>


Capital Infusions

On July 12, 2001, the Company  received a $2 million  capital  infusion from its
majority stockholder Lynch Interactive Corporation. The Company used the cash to
acquire  one  million  new  Class B shares of common  stock of  Morgan,  thereby
increasing  the  Company's  ownership  position  in Morgan  from 55.6% to 68.5%.
Proceeds from the  transaction  are invested by Morgan in U.S.  Treasury  backed
instruments  and are restricted as they are pledged as collateral for its Credit
Facility.

On December 20, 2001, the Company received $500,000 from  Interactive,  which is
expected to be used to cover the  operating  expenses of Holding for a period of
time.

Issuance of Non-transferable Warrants

On December 12, 2001, Morgan issued non-transferable warrants to purchase shares
of common  stock to the  holders of its Class A and Class B common  stock.  Each
warrant  entitles the holder to purchase one share of their same class of common
stock at an exercise  price of $9.00 per share  through the  expiration  date of
December 12, 2006. The Class A warrants  provide that the exercise price will be
reduced to $6.00 per share during a Reduction  Period of at least 30 days during
the five-year exercise period. See Note 16.

10.  STOCK OPTION PLAN AND BENEFIT PLAN

Morgan has an incentive  stock option plan,  which  provides for the granting of
incentive or  non-qualified  stock  options to purchase up to 200,000  shares 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. 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 76,375 and 24,000 shares,  respectively,
of Class A common stock, net of cancellations  and shares  exercised.  There are
91,250 options reserved for future issuance.

Morgan has entered into separate non-qualified stock option agreements with
certain members of its management. Options to purchase 220,000 shares of Class A
Common Stock have been authorized and granted under the agreements. These
options are not granted pursuant to the Incentive Stock Option Plan described
above, but they are subject to the same general terms and conditions of the
Incentive Stock Option Plan.

A summary of the Morgan's stock option activity and related information follows:
<TABLE>
<CAPTION>
                                                            2001                 2000                    1999
                                                            ----                 ----                    ----
                                                               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 ..................    248    $   8.04      181    $   8.23      170      $   8.28
Granted ...........................................    120        4.61      120        7.63       11          7.52
Canceled ..........................................    (49)       8.14      (53)       7.79       --            --
                                                      ----       -----     ----       -----     ----         -----
Outstanding at end of year ........................    319    $   4.40      248    $   8.04      181      $   8.23
                                                      ====       =====     ====       =====    =====           -
Exercisable at end of year ........................    280    $   5.98      164    $   7.73      149      $   8.31
                                                      ====       =====     ====       =====    ======        =====
</TABLE>
<PAGE>

Exercise  prices for options  outstanding  as of December 31, 2001,  ranged from
$3.20  to  $10.19.  The  weighted-average  remaining  contractual  life of those
options is 8.4 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 Morgan's  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  volatilities  of
0.338,  0.596,  and 0.316 in 2001, 2000, and 1999,  respectively,  and risk-free
interest rates of 6.0%,  6.5%, and 5.0% in 2001,  2000, and 1999,  respectively.
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):
<TABLE>
<CAPTION>
                                         2001          2000        1999
                                         ----          ----        ----
Net income (loss):
<S>                                  <C>          <C>          <C>
  As reported ....................   $    (854)    $  (2,492)   $     (3 )
  Pro forma ......................        (901)      (2,617)         (22)

Diluted earnings (loss) per share:
  As reported ....................   $   (0.28)   $   (0.82)   $   (0.00)
  Pro forma ......................       (0.29)       (0.86)       (0.01)
</TABLE>

The pro forma amounts for  compensation  cost above may not be indicative of the
effects on pro forma net income (loss) and pro forma net income (loss) per share
for future years.

Morgan has a 401(k) Savings Plan covering  substantially  all  employees,  which
matches 25% of the employee  contributions up to a designated  amount.  Morgan's
contributions  to the Plan for 2001,  2000 and 1999 were  $12,000,  $18,000  and
$23,000, respectively.

11.  TRANSACTIONS WITH LYNCH INTERACTIVE CORPORATION

For each of the three years in the period ended  December 31, 2001,  Interactive
allocated  $100,000  of  expenses  for  executive,   financial  and  accounting,
planning,  budgeting,  tax,  legal,  and  insurance  services  to  the  Company.
Additionally,  Interactive  charges  the Company for  officers'  and  directors'
liability insurance, which totaled $20,000 in 2001 and 2000 and $16,000 in 1999.
It is anticipated  that when the Company becomes an independent  public company,
which  occurred on January 24, 2002,  administrative  expenses  will increase by
approximately  $.1-.2  million  (unaudited)  per year as a result of  additional
financial  reporting   requirements,   stock  transfer  fees,  directors'  fees,
insurance, compensation and other costs.

12.  SEGMENT REPORTING

Description of Services by Segment

Morgan  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 23 states.  The  Driver  Outsourcing  segment
provides outsourcing  transportation  primarily to manufacturers of recreational
vehicles, buses, vans, commercial trucks, and other specialized vehicles through
a network of service centers in 5 states. The
<PAGE>

Specialized Outsourcing Services segment consists of a large trailer, travel and
small  trailer  delivery.  The last  segment,  Insurance  and Finance,  provides
insurance   and   financing   to   the   Company's   drivers   and   independent
owner-operators.  This segment  also acts as a cost center  whereby all property
damage, bodily injury, and cargo claims are captured. The Company's segments are
strategic   business  units  that  offer  different  services  and  are  managed
separately based on the differences in these services.

Measurement of Segment Profit and Segment Assets

The Company  evaluates  performance  and  allocates  resources  based on several
factors,  of which the primary  financial  measure is business segment operating
income,   defined  as  earnings  before   interest,   taxes,   depreciation  and
amortization  (EBITDA).  The accounting policies of the segments are the same as
those described in the summary of significant  accounting policies (See Note 1).
There are no significant  inter-segment  revenues.  The following table presents
the financial  information for the Company's  reportable  segments for the years
ended December 31, (in thousands):
<TABLE>
<CAPTION>

                                                           2001          2000          1999
                                                           ----          ----          ----
Operating revenues
<S>                                                      <C>          <C>          <C>
     Manufactured Housing ............................   $  60,169    $  89,238    $ 123,862
     Driver Outsourcing ..............................      17,581       20,939       23,351
     Specialized Outsourcing Services ................      20,999       15,260       21,172
     Insurance and Finance ...........................       2,419        2,933        3,958
     All Other .......................................        --             (3)         148
                                                         ---------    ---------    ---------
Total operating revenues .............................   $ 101,168    $ 128,367    $ 172,491
                                                         =========    =========    =========

Segment profit (loss) - EBITDA
     Manufactured Housing ............................   $   2,964    $   5,784    $  10,265
     Driver Outsourcing ..............................       1,316        1,324          416
     Specialized Outsourcing Services ................         925         (140)         469
     Insurance and Finance ...........................      (5,296)      (6,765)      (9,058)
     All Other (1) ...................................        (903)      (1,174)        (327)
                                                         ---------    ---------    ---------
                                                              (994)        (971)       1,765
Depreciation and amortization ........................      (1,100)      (1,067)      (1,215)
Interest expense .....................................        (273)        (310)        (338)
                                                         ---------    ---------    ---------
Income (loss) before income taxes ....................   $  (2,367)   $ ( 2,348)   $     212
                                                         =========    =========    =========
Identifiable assets
     Manufactured Housing ............................   $  10,643    $  11,652    $  17,345
     Driver Outsourcing ..............................       4,662        4,561        5,438
     Specialized Outsourcing Services ................       2,084        2,078        2,724
     Insurance and Finance ...........................         960        1,433        1,801
     All Other (1) ...................................       4,635        3,942        5,345
                                                         ---------    ---------    ---------
    Total ...........................................    $  22,984    $  23,666    $  32,653
                                                         =========    =========    =========
<FN>
(1)  All other  segment loss  primarily  represents  general and  administrative
     expenses not allocated to operating segments. All other identifiable assets
     primarily  include  corporate  assets  comprised of cash,  fixed assets and
     goodwill.
</FN>
</TABLE>



<PAGE>




13.      OPERATING COSTS AND ACCRUALS

Components of operating costs are as follows (in thousands):
<TABLE>
<CAPTION>
                                                                              2001       2000       1999
                                                                              ----       ----       ----
<S>                                                                         <C>        <C>        <C>
Purchased transportation costs ..........................................   $ 74,461   $ 95,754   $127,908
Operating supplies and expenses .........................................      8,862     10,826     13,559
Claims ..................................................................      2,496      5,658      8,633
Insurance ...............................................................      4,552      2,733      3,178
Operating taxes and licenses ............................................      3,562      4,924      7,358
                                                                            --------   --------   --------
                                                                            $ 93,933   $119,895   $160,636
                                                                            ========   ========   ========
</TABLE>

Significant Accruals
<TABLE>

Material components of accrued liabilities are as follows (in thousands):
<CAPTION>
                                                                              December 31
                                                                             2001     2000
                                                                             ----     ----
<S>                                                                         <C>      <C>
Government fees .........................................................   $  283   $  759
Workers' compensation ...................................................      405      839
Customer incentives .....................................................      150      588
Other accrued liabilities ...............................................    1,662    1,518
                                                                            ------   ------
                                                                            $2,500   $3,704
                                                                            ======   ======
</TABLE>

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

Workers'  compensation  represents  estimated  amounts due claimants  related to
unsettled claims for injuries incurred by Company employee-drivers.  These claim
amounts due are established by the Company's  insurance  carrier and reviewed by
management on a monthly basis.

Customer incentives represent volume discounts earned by certain customers.  The
customer incentives earned are computed and recorded monthly based upon linehaul
revenue  for  each  respective  customer.  The  incentives  are  generally  paid
quarterly  and are  recorded  as a  contra-revenue  account in the  Consolidated
Statements of Operations.

Other  accrued  liabilities   consists  of  various  accruals  for  professional
services,  group health insurance,  payroll and payroll taxes, real estate taxes
and  other  items,  which  individually  are  less  than  5%  of  total  current
liabilities.

14.  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.

<PAGE>

15.  QUARTERLY RESULTS OF OPERATIONS (Unaudited)

The following is a summary of unaudited  quarterly results of operations for the
years ended December 31, 2001 and 2000 (in thousands, except per share data):
<TABLE>
<CAPTION>

                                                           Three Months Ended
                                                 Mar 31     June 30     Sep 30      Dec 31
                                                 ------     -------     ------      ------
2001
<S>                                             <C>         <C>       <C>         <C>
Operating revenues ..........................   $ 23,701    $29,309   $ 28,701    $ 19,457
Operating income (loss) .....................       (475)       398       (169)     (1,848)
Net income (loss) ...........................       (301)       348       (190)       (711)
Net income (loss) per basic and diluted share   $  (0.10)   $  0.11   $  (0.06)   $  (0.23)

2000
Operating revenues ..........................   $ 32,831    $35,736   $ 33,590    $ 26,210
Operating income (loss) .....................       (898)       113        178      (1,431)
Net income (loss) ...........................       (292)         8         38      (2,246)
Net income (loss) per basic and diluted share   $  (0.10)   $  0.00   $   0.01    $  (0.74)
</TABLE>

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.

In the fourth quarter of 2000,  the Company  recorded  non-cash  charges of $3.2
million relatiing to the valuation of deferred tax assets.

16.  SUBSEQUENT EVENTS

Expansion of Credit Facility

On February 7, 2002,  Morgan obtained an increase in its availability  under the
Credit  Facility of $1,000,000.  Morgan provided the lender a second mortgage on
Morgan's  real  estate  in  Elkhart,   Indiana.   The  $1,000,000   increase  in
availability will be eliminated on May 31, 2002.

Reduction of Warrant Exercise Price

On February  19, 2002,  the Board of  Directors  of Morgan  agreed to reduce the
exercise price of its Class A warrants  outstanding to $2.25 per share, from the
stated $9.00 per share, during a specified period of time as permitted under the
warrant  certificates.  This period  began on February 26, 2002 and is to extend
for 63 days, expiring on April 30, 2002. All other terms regarding the warrants,
including the expiration date of the warrants, will remain the same.



<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.

                                              MORGAN GROUP HOLDING CO.

Date:    April 18, 2002                       By:  /s/ Robert E. Dolan
                                                       ----------------------
                                                       Robert E. Dolan
                                                       Chief Financial Officer
                                                       (Principal Financial and
                                                       Accounting Officer)

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 18th day of April, 2002.

SIGNATURE                             CAPACITY                       DATE
---------                             --------                       ----

/s/ Mario J. Gabelli         Chairman of the Board of            April 18, 2002
    --------------------     Directors and Chief Executive
    Mario J. Gabelli         Officer (Principal Executive
                             Officer)


/s/ Robert E. Dolan          Director                            April 18, 2002
    -------------------
    Robert E. Dolan

/s/ John Fikre               Director                            April 18, 2002
    ---------------
    John Fikre




<PAGE>





                                   SCHEDULE II


                            Morgan Group Holding Co.
                        Valuation and Qualifying Accounts
<TABLE>

                         Allowance for Doubtful Accounts

<CAPTION>
                                         Additions     Amounts
                                         Charged to  Written Off
                              Beginning   Costs and    Net of    Ending
    Description                Balance    Expenses   Recoveries  Balance
    ----------                ---------  ----------  ----------  -------

<S>                 <C> <C>    <C>        <C>        <C>        <C>
Year ended December 31, 2001   $248,000   $447,000   $256,000   $439,000
Year ended December 31, 2000   $313,000   $249,000   $314,000   $248,000
Year ended December 31, 1999   $208,000   $415,000   $310,000   $313,000


                              Morgan Finance, Inc.
                         Allowance for Loans Receivable

Year ended December 31, 2001   $165,000   $200,000   $271,000   $ 94,000
Year ended December 31, 2000   $ 50,000   $211,000   $ 96,000   $165,000
Year ended December 31, 1999   $ 40,000   $ 60,000   $ 50,000   $ 50,000


              Allowance for Receivable from Independent Contractors

Year ended December 31, 2001   $77,000   $139,000   $145,000   $71,000
Year ended December 31, 2000   $81,000   $246,000   $250,000   $77,000
Year ended December 31, 1999   $82,000   $300,000   $301,000   $81,000
</TABLE>