Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the quarterly period ended September 30, 2011 | ||
| Or | ||
| [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the transition period from ________ to ________ |
| Commission File No. 333-73996 |
MORGAN GROUP HOLDING CO.
(Exact name of small business issuing as specified in its charter)
(Exact name of small business issuing as specified in its charter)
| Delaware | 13-4196940 |
| (State or other jurisdiction of | (IRS Employer |
| Incorporation of organization) | Identification Number) |
| 401 Theodore Fremd Avenue, Rye, New York | 10580 |
| (Address of principal executive offices) | (Zip Code) |
| (914) 921-1877 | |
| (Registrant’s telephone number, including area code) | |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [X] Yes [ ] No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer [ ] | Accelerated filer [ ] | |
| Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [X] Yes [ ] No
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practical date.
| Class | Outstanding at October 24, 2011 | |
| Common Stock, $.01 par value | 3,055,345 |
MORGAN GROUP HOLDING CO.
TABLE OF CONTENTS
TABLE OF CONTENTS
| Page No. | ||||
| PART I –FINANCIAL INFORMATION | ||||
| Item 1. | Financial Statements. | 3-7 | ||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 8 | ||
| Item 3. | Quantitative and Qualitative Disclosure About Market Risk. | 9 | ||
| Item 4. | Controls and Procedures. | 9 | ||
| PART II – OTHER INFORMATION | ||||
| Item 6. | Exhibits. | 9 | ||
| Signatures | 10 | |||
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Unaudited Financial Statements
Condensed Balance Sheets as of September 30, 2011, December 31, 2010 and September 30, 2010
Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2011 and 2010
Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2011 and 2010
Notes to Condensed Financial Statements as of September 30, 2011
3
Morgan Group Holding Co.
Condensed Balance Sheets
(Unaudited)
Condensed Balance Sheets
(Unaudited)
| September 30, | December 31, | September 30, | |||||||
| 2011 | 2010 | 2010 | |||||||
| ASSETS | |||||||||
| Current assets: | |||||||||
| Cash | $264,355 | $192,033 | $307,413 | ||||||
| Investment in Marketable Securities | 120,680 | 203,540 | 97,840 | ||||||
| Total current assets | 385,035 | 395,573 | 405,253 | ||||||
| Total assets | $385,035 | $395,573 | $405,253 | ||||||
| LIABILITIES | |||||||||
| Current liabilities: | |||||||||
| Accrued liabilities | $22,798 | $-- | $-- | ||||||
| Total current liabilities | 22,798 | -- | -- | ||||||
| COMMITMENTS AND CONTINGENCIES | |||||||||
| SHAREHOLDERS' EQUITY | |||||||||
| Preferred Stock, $0.01 par value, 1,000,000 shares | |||||||||
| authorized, none outstanding | -- | -- | -- | ||||||
| Common Stock, $0.01 par value, 10,000,000 shares | |||||||||
| authorized, 3,055,345 outstanding | 30,553 | 30,553 | 30,553 | ||||||
| Additional paid-in-capital | 5,611,447 | 5,611,447 | 5,611,447 | ||||||
| Accumulated deficit | (5,279,763 | ) | (5,246,427 | ) | (5,236,747 | ) | |||
| Total shareholders' equity | 362,237 | 395,573 | 405,253 | ||||||
| Total liabilities and shareholders' equity | $385,035 | $395,573 | $405,253 | ||||||
See accompanying notes to condensed financial statements
4
Morgan Group Holding Co.
Condensed Statements of Operations
(Unaudited)
Condensed Statements of Operations
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||
| Revenues | $-- | $-- | $-- | $-- | ||||||||
| Administrative expenses | (22,813 | ) | (4,286 | ) | (42,292 | ) | (23,281 | ) | ||||
| Other income | ||||||||||||
| Interest and dividends | 324 | 36 | 924 | 134 | ||||||||
| Realized and unrealized gains on | ||||||||||||
| marketable securities | 2,094 | 43,526 | 8,032 | 44,716 | ||||||||
| Net (loss) income before income taxes | (20,395 | ) | 39,276 | (33,336 | ) | 21,569 | ||||||
| Income taxes | -- | -- | -- | -- | ||||||||
| Net (loss) income | ($20,395 | ) | $39,276 | ($33,336 | ) | $21,569 | ||||||
| (Loss) earnings per share, basic and | ||||||||||||
| diluted | ($0.01 | ) | $0.01 | ($0.01 | ) | $0.01 | ||||||
| Shares outstanding, basic and diluted | 3,055,345 | 3,055,345 | 3,055,345 | 3,055,345 | ||||||||
See accompanying notes to condensed financial statements
5
Morgan Group Holding Co.
Condensed Statements of Cash Flows
(Unaudited)
Condensed Statements of Cash Flows
(Unaudited)
| Nine Months Ended September 30, | ||||||
| 2011 | 2010 | |||||
| Cash Flows from Operating Activities | ||||||
| Interest received | $48 | $134 | ||||
| Cash paid to suppliers | (19,494 | ) | (16,281 | ) | ||
| Net cash used in operating activities | (19,446 | ) | (16,147 | ) | ||
| Cash Flows from Investing Activities | ||||||
| Purchases of marketable securities | (989,240 | ) | (1,014,037 | ) | ||
| Proceeds from the sale of marketable | 1,080,132 | 960,913 | ||||
| Dividends received | 876 | -- | ||||
| Net cash received (used) in investing activities | 91,768 | (53,124 | ) | |||
| Cash Flows from Financing Activities | -- | -- | ||||
| Net increase (decrease) in Cash | 72,322 | (69,271 | ) | |||
| Cash, Beginning of the Period | 192,033 | 376,684 | ||||
| Cash, End of the Period | $264,355 | $307,413 | ||||
| Reconciliation of net (loss) income to net cash used in | ||||||
| operating activities: | ||||||
| Net (loss) income | ($33,336 | ) | 21,569 | |||
| Realized and unrealized gains on marketable securities | (8,032 | ) | (44,716 | ) | ||
| Dividends received | (876 | ) | -- | |||
| Decrease in prepaid expenses | -- | 7,000 | ||||
| Increase in accrued liabilities | 22,798 | -- | ||||
| Net cash used in operating activities | ($19,446 | ) | ($16,147 | ) | ||
See accompanying notes to condensed financial statements
6
Morgan Group Holding Co.
Notes to Financial Statements
Notes to Financial Statements
| Note 1. |
Basis of Presentation
Morgan Group Holding Co. (“Holding” or “the Company”) was incorporated in November 2001 as a wholly-owned subsidiary of LICT Corporation (“LICT, formerly Lynch Interactive Corporation”) to serve, among other business purposes, as a holding company for LICT’s controlling interest in The Morgan Group, Inc. (“Morgan”). On January 24, 2002, LICT spun off 2,820,051 shares of Holding common stock through a pro rata distribution (“Spin-Off”) to its stockholders and retained 235,294 shares.
On October 3, 2002, Morgan ceased its operations when its liability insurance expired and it was unable to secure replacement insurance. On October 18, 2002, Morgan and two of its operating subsidiaries filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Indiana, South Bend Division for the purpose of conducting an orderly liquidation of Morgan’s assets. On March 31, 2008, the bankruptcy proceeding was concluded and the bankruptcy court dismissed the proceeding. Holding received no value for its equity ownership from the bankruptcy proceeding.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011. The preparation of consolidated 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 differ from these estimates.
|
|
| Note 2. |
Significant Accounting Policies
The Company invests in marketable securities that are bought and held principally for the purpose of selling them in the near term and are classified as trading securities. Trading securities are recorded at fair value on the balance sheet in current assets, with the change in fair value during the period included in earnings.
|
|
| Note 3. |
Income Taxes
The Company is a “C” corporation for Federal tax purposes, and has provided for deferred income taxes for temporary differences between the financial statement and tax bases of its assets and liabilities. The Company has recorded a full valuation allowance against its deferred tax asset of approximately $1.7 million arising from its temporary basis differences and tax loss carry forward, as its realization is dependent upon the generation of future taxable income during the period when such losses would be deductible.
Pursuant to Sections 382 and 383 of the Internal Revenue Code, annual use of any of the Company’s net operating loss carry forwards may be limited if cumulative changes in ownership of more than 50% occur during any three year period.
|
|
| Note 4. |
Commitments and Contingencies
From time to time the Company may be subject to certain asserted and unasserted claims. It is the Company’s belief that the resolution of these matters will not have a material adverse effect on its financial position.
The Company has not guaranteed any of the obligations of Morgan and believes it currently has no commitment or obligation to fund any creditors.
|
7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
On October 18, 2002, Morgan adopted the liquidation basis of accounting and accordingly, Morgan’s assets and liabilities have been adjusted to estimate net realizable value. As the carrying value of Morgan’s liabilities exceeded the fair value of its assets, the liabilities were reduced to equal the estimated net realizable value of the assets.
The Company currently has no operating businesses and will seek acquisitions as part of its strategic alternatives. Its only costs are the administrative expenses required to make the regulatory filings needed to maintain its public status. These costs are estimated at $25,000 to $50,000 per year.
Results of Operations
For the three months ended September 30, 2011, the Company incurred $22,813 of administrative expenses which was $18,527 higher than the $4,286 of such expenses in the three months ended September 30, 2010. Increased legal fees caused the variance. For the nine months ended September 30, 2011, the Company incurred $42,292 of administrative expenses up $19,011 from $23,281 of such expenses in the nine months ended September 30, 2010. Increased legal fees were again the cause of the variance.
In the second quarter of 2010, the company began to invest in marketable securities that are subject to a publicly disclosed acquisition offer but are trading below the proposed acquisition price. During the three months ended September 30, 2011, the Company recorded $2,094 of net realized and unrealized gains from this activity as compared to $43,526 in the comparable prior year period. During the nine months ended September 30, 2011, the Company recorded $8,032 of net realized and unrealized gains from this activity as compared to $44,716 in the comparable prior year period. As noted, there was no activity in marketable securities in the three months ended March 31, 2010. The availability of such transactions, their timing, and overall movements in the securities markets caused the remaining variances.
As a result of this marketable security program, the Company also received dividend income of $324 and $876, respectively, for the three and nine month periods ended September 30, 2011.
Interest income from the Company investment in a United States Treasury money market fund was $0 during the three months ended September 30, 2011 as compared to $36 during 2010 period, and $48 during the nine months ended September 30, 2011 as compared to $134 during the comparable 2010 period. The variances resulted from lower investment balances in the Company’s balances in this investment in 2011.
Liquidity and Capital Resources
As of September 30, 2011, the Company’s only assets consisted of $385,035 in cash and marketable securities and had a capital loss carry forward of approximately $4.5 million which it expects will substantially expire in 2013. The ability to utilize this carry forward is dependent on the Company’s ability to generate a capital gain prior to its expiration.
Off Balance Sheet Arrangements
None.
8
Item 3. Quantitative and Qualitative Analysis of Market Risk
The Company is a smaller reporting company as defined in Item 10(f)(1) of Regulation S-K and thus are not required to report the Quantitative and Qualitative Analysis of Market Risk specified in Item 305 of Regulation S-K.
Item 4. Controls and Procedures
a) Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Act”)) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures as of the end of the period covered by this report were designed and were functioning effectively to provide reasonable assurance that the information required to be disclosed by the Company in reports filed under the Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. The Company believes that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
(b) Changes in Internal Controls
During the period covered by this report, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our financial statements.
Forward Looking Discussion
This report contains a number of forward-looking statements, including statements regarding the prospective adequacy of the Company’s liquidity and capital resources in the near term. From time to time, the Company may make other oral or written forward-looking statements regarding its anticipated operating revenues, costs and expenses, earnings and other matters affecting its operations and condition. Such forward-looking statements are subject to a number of material factors, which could cause the statements or projections contained therein, to be materially inaccurate. Such factors include the estimated administrative expenses of the Company on a go forward basis.
PART II - OTHER INFORMATION
| Item 6. Exhibits. | |||
| Exhibit 3.1 | Certificate of Incorporation of the Company* | ||
| Exhibit 3.2 | By-laws of the Company* | ||
| Exhibit 31.1 | Chief Executive Officer Rule 15d-14(a) Certification. | ||
| Exhibit 31.2 | Principal Financial Officer Rule 15d-14(a) Certification. | ||
| Exhibit 32.1 | Chief Executive Officer Section 1350 Certification. | ||
| Exhibit 32.2 | Principal Financial Officer Section 1350 Certification. | ||
| EX-101.INS | XBRL INSTANCE DOCUMENT | ||
| EX-101.SCH | XBRL TAXONOMY EXTENSION SCHEMA | ||
| EX-101.PRE | XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE | ||
| EX-101.LAB | XBRL TAXONOMY EXTENSION LABEL LINKBASE | ||
| EX-101.CAL | XBRL TAXONOMY EXTENSION CALCULATION LINKBASE | ||
| EX-101.DEF | XBRL TAXONOMY EXTENSION DEFINITION LINKBASE | ||
| * |
Incorporated by reference to the exhibits to the Company’s Registration Statement on Form S-1 (Registration No. 333-73996).
|
9
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MORGAN GROUP HOLDING CO.
| By: | /s/ Robert E. Dolan |
| ROBERT E. DOLAN | |
| Chief Financial Officer |
November 7, 2011
10