Manasota Group, Inc. - FORM 10-Q

Attached files

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EXCEL - IDEA: XBRL DOCUMENT - Manasota Group, Inc.	Financial_Report.xls
EX-32 - Manasota Group, Inc.	hznbex-32.1-20130702.htm
EX-31 - Manasota Group, Inc.	hznbex-31.1-20130702.htm
EX-31 - Manasota Group, Inc.	hznbex-31.2-20130702.htm
EX-32 - Manasota Group, Inc.	hznbex-32.2-20130702.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

Form 10-Q

x	Quarterly report under section 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2012

¨	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
	For the transition period from ______ to ______

Commission file number 333-71773

MANASOTA GROUP, INC
(Exact Name of Registrant as Specified in Its Charter)

Florida
(State or Other Jurisdiction of
Incorporation or Organization)

65-0840565
(IRS Employer
Identification No.)

P. O. Box 14302

Bradenton, Florida 34280
(Address of Principal Executive Offices)

941-776-8233
(Registrant's Telephone Number, Including Area Code)

N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 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. Yes ¨ No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporation 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).

Yes ¨ No x

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 definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act) (Check one):

Large Accelerated Filer ¨	Accelerated Filer ¨
Non-Accelerated Filer ¨	Smaller reporting company x
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:

Common Stock $0.01 Par Value as of May 13, 2013: Issued 1,809,912 Shares; Outstanding: 1,770,139 Shares

Index

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Balance Sheets as of September 30, 2012 (unaudited) and December 31, 2011(audited)	3

Statements of Income (Unaudited) for the Nine Months ended September 30 2012 and 2011 and Three Months Ended September 30, 2012 and 2011	4

Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2012 and 2011	5

Notes to Financial Statements (Unaudited)	6

Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations	10

Item 3. Quantitative and Qualitative Disclosures About Market Risk	12

Item 4. Controls and Procedures	12

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	14

Item 1A. Risk Factors	14

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	14

Item 3. Defaults Upon Senior Securities	14

Item 4. Mine Safety Disclosures	14

Item 5. Other Information	14

Item 6. Exhibits	14

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

MANASOTA GROUP, INC.

F/K/A HORIZONBANCORPORATION, INC.

Balance Sheets

	September 30, 2012 (Unaudited)		December 31, 2011 (Audited)
Cash	$	23,938	$	20,868
Property		1,183,323		1,204,239
Other assets		3,334		6,668
Total Assets	$	1,210,595	$	1,231,775
LIABILITIES & SHAREHOLDERS' (DEFICIT)
Liabilities:
Accrued expenses	$	923	$	923
Note payable		1,492,582		1,513,700
Advances from related parties		48,000		71,000
Total Liabilities		1,541,505		1,585,623
Shareholders' (Deficit):
Preferred stock, $.01 par value, 1,000,000 shares authorized; zero shares issued and outstanding		—		—
Common stock, $.01 par value, 25,000,000 shares authorized; 1,809,912 issued and 1,770,139 outstanding at September 30, 2012 and December 31, 2011.		18,099		18,099
Paid-in-capital		10,428,214		10,428,214
Accumulated deficit		(10,297,830)		(10,320,768)
		148,483		125,545
Less Treasury stock: 39,773 shares		(479,393)		(479,393)
Total Shareholders' (Deficit)		(330,910)		(353,848)
Total Liabilities and Shareholders' (Deficit)	$	1,210,595	$	1,231,775

The accompanying notes are an integral part of these financial statements

MANASOTA GROUP, INC.

F/K/A HORIZON BANCORPORATION, INC.

Statements of Income (Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
				(Restated)				(Restated)
Operating Income
Rental income	$	43,680	$	184,426	$	131,040	$	184,426
Gain on sale of property				44,948				44,948
Other miscellaneous income		71		77		213		142
Total operating income		43,751		229,451		131,253		229,516
Operating Expenses
Interest expense on note		21,044		15,910		63,204		40,306
General administrative expenses		14,324		14,638		45,111		92,759
Settlement expense		—0—		651,352		—0—		651,352
Total operating expenses		35,368		681,900		108,315		784,417
Income/(loss) before income taxes		8,383		(452,449)		22,938		(554,901)
Income tax provision/(benefit)		—0—		—0—		—0—		—0—

NET (LOSS)/INCOME	$	8,383	$	(452,449)	$	22,938	$	(554,901)
NET (LOSS)/INCOME PER BASIC AND DILUTED SHARE	$	0.01	$	(0.25)	$	0.01	$	(0.31)
Weighted average number of shares outstanding:
Basic and Diluted		1,779,139		1,779,139		1,779,139		1,779,139

The accompanying notes are an integral part of these financial statements

MANASOTA GROUP, INC.

F/K/A HORIZON BANCORPORATION, INC

Statements of Cash Flows (Unaudited)

	Nine Months ended September 30
	2012		2011
				(Restated)
Cash flow from operating activities:
Net cash provided/(used) by operating activities	$	47,188	$	(579,569)

Cash flow from investing activities:
Net cash provided by investing activities		—0—		60,000

Cash flow from financing activities:
Payment on note payable		(21,118)		(4,303)
Payment on related party advances		(23,000)
Borrowings on note payable		—0—		543,218
Net cash (used)/ provided by financing activities		(44,118)		538,915

Net change in cash		3,070		19,346
Cash beginning of period		20,868		13,440
Cash end of period	$	23,938	$	32,786

Supplemental disclosure of cash flow information:
Interest paid	$	63,204	$	15,910

The accompanying notes are an integral part of these financial statements

MANASOTA GROUP, INC.

F/K/A HORIZON BANCORPORATION, INC.

Note 1 – Basis of Presentation

The financial information for MANASOTA GROUP, Inc. f/k/a HORIZON BANCORPOTION, Inc, Bradenton, Florida (the "Company") as of September 30, 2012 and for the three and nine months ended September 30, 2012 and 2011 is unaudited but includes all adjustments, which, in the opinion of management are necessary in order to make the financial statements not misleading at such dates and for those periods. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and ,therefore, do not include all information and notes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. These financial statements should be read in conjunction with the audited financial statements and related notes included in the Company’s Annual Report on Form 10K for the year ended December 31, 2011. Operating results for the nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the entire year.

Note 2 - Organization and Summary of Significant Accounting Policies

MANASOTA GROUP, Inc. f/k/a HORIZON BANCORPOTION, Inc, Bradenton, Florida (the "Company") was a one-bank holding company with respect to Horizon Bank, Bradenton, Florida (the "Bank"). The Company commenced banking operations on October 25, 1999 when the Bank opened for business. On September 10, 2010, the Company ceased to be a bank holding company when the Florida Office of Financial Regulation (the “OFR”) closed the Bank and the Federal Deposit Insurance Corporation (the “FDIC”) was appointed as receiver. The FDIC sold the Bank to the Bank of the Ozarks. The Bank was primarily engaged in the business of obtaining deposits and providing commercial, consumer, and real estate loans to the general public. Bank deposits were each insured up to $250,000 by the FDIC subject to certain limitations. As of the date of this Report, the Company’s sole asset is the building located at 900 53^rd Ave E, Bradenton, FL. The building is being leased to Bank of the Ozarks under a 3-year lease expiring on September 10, 2013.

The Company is authorized to issue up to 25.0 million shares of its $.01 par value per share common stock. Each share is entitled to one vote and shareholders have no preemptive or conversion rights. As of September 30, 2012 and 2011 there were 1,809,912 shares issued and 1,770,139 shares of the Company's common stock outstanding. As of September 30, 2012 and 2011 the Company held 39,773 shares of treasury stock. Additionally, the Company is authorized to issue up to 1.0 million shares of its $.01 par value per share preferred stock, which may be designated by the Company's Board, without further action by the shareholders, for any proper corporate purpose with preferences, voting powers, conversion rights, qualifications, special or relative rights and privileges which could adversely affect the voting power or other rights of shareholders of common stock. Effective October 22, 2009, the Company’s Board did designate, by amending the Articles of Incorporation, the Series A Preferred Stock, consisting of 5,000 shares with a liquidation preference of $1,000 per share. On September 11, 2011, the Articles of Incorporation were further amended eliminating the Series A Preferred Stock. As of September 30, 2012 and 2011, there were no shares of the Company's preferred stock issued or outstanding.

Uses of Estimates. The accounting and reporting policies of the Company conform to U.S. generally accepted accounting principles. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates.

Concentration of Credit Risk. Cash is maintained at a major financial institution and, at times, balances may exceed federally insured limits. The Company has never experienced any losses related to these balances. All of the Company’s non-interest bearing cash balances were fully insured at September 30, 2012 and 2011 due to a temporary federal program in effect from December 31, 2010 through December 31, 2012. Under the program, there is no limit to the amount of insurance for eligible accounts. Beginning 2013, insurance coverage will revert to $250,000 per depositor at each financial institution, and the Company’s non-interest bearing cash balances may again exceed federally insured limits. The Company did not have any interest-bearing accounts at September 30, 2012 and 2011, respectively.

Property.The Company’s properties consist of a building and land and are stated at cost. Generally, the straight-line method is used in computing depreciation over the estimated useful lives of 10 to 40 years. Expenditures which significantly increase values or extend useful lives are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Upon sale or retirement of property the cost and related accumulated depreciation are eliminated from the respective accounts and the resulting gain or loss is included in the current earnings.

The Company follows the provisions of FASB ASC Topic 360, Property, Plant and Equipment, which establishes accounting standards for the impairment of long-lived assets such as property and equipment. The Company reviews long-lived assets to be held-and-used for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. If the sum of the undiscounted expected future cash flows over the remaining useful life of a long-lived asset group is less than its carrying amount, the asset is considered to be impaired. An impairment loss is recognized when management’s estimate of fair value, through outside consultation or internal assessment of value is less than its carrying amount. There was no impairment charges for the periods ended September 30, 2011 and 2010 related to these long-lived assets.

Income Taxes. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance is provided when it is more likely than not that some portion or the entire deferred tax asset will not be realized. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50 percent of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company is no longer subject to examination by U.S. taxing authorities for years prior to 2008. A valuation allowance is provided because it is more likely than not that the net operating loss will not be utilized.

Sales Taxes. Amounts collected on behalf of governmental authorities for sales taxes and other similar taxes are reported on a net basis.

Revenue Recognition. The Company recognizes its rental revenues based on the terms on its signed lease with tenant on a straight-line basis.

Earnings Per Share. Basic earnings per share are determined by dividing net income by the weighted-average number of common shares outstanding. Diluted income per share is determined by dividing net income by the weighted average number of common shares outstanding increased by the number of common shares that would be issued assuming exercise of stock options. This also assumes that only options with an exercise price below the existing market price will be exercised. In computing net income per share, the Company uses the treasury stock method. When a net loss occurs, potential common shares have an anti-dilutive effect on earnings per share and such shares are excluded from the diluted earnings per share calculation.

Note 3 – Restatement of Financial Statements

The financial statements as of and for the period ended September 30, 2011 have been restated to correct the accounting treatment previously accorded the following transactions.

The Company commenced banking operations on October 25, 1999 when Horizon Bank, Bradenton, Florida (the “Bank”) opened for business. On September 10, 2010, the Company ceased to be a bank holding company when the Florida Office of Financial Regulation (the “OFR”) closed the Bank and the Federal Deposit Insurance Corporation (the “FDIC”) was appointed as receiver. The FDIC sold the Bank to the Bank of the Ozarks. After that date, the Company’s sole asset is the building located at 900 53^rd Ave E, Bradenton, FL. The building is being leased to Bank of the Ozarks under a 3-year lease expiring on September 10, 2013. The FDIC asserted that, based upon the books and records of Horizon Bank maintained at that time, equitable title and beneficial ownership of the building and its property lawfully resided with Horizon Bank, and therefore, with the receiver. In order to retain possession of the building and its property, in July 2011, the Company entered into a settlement agreement with the FDIC for $1,800,000 which represented the fair value of the building at the time. This settlement amount was then offset against the mortgage the Company had for the building, back rent owed from the bank that is using the building, and income tax refunds. The Company should have recorded this amount as an expense rather than increasing the book value of the building, recorded the rent as income, and reduced other expense as a result of the tax refunds.

In 2010, the Company and Manatee County entered into an eminent domain proceeding. In 2011, the Company voluntarily relinquished part of its property to Manatee County. The proceeds were paid over the two year period and the Company recorded a portion of the gain on involuntary conversion in 2010. However, additional gain should have been recorded in September 2011 when the Company received the remaining proceeds.

The following schedule illustrates the effects on the account classifications resulting from the above restatements:

For the three months ended September 30, 2011:

Net income as previously reported	$	14,692
Adjustment to record FDIC settlement		(501,489)
Adjustment to gain on involuntary conversion		34,348
Net loss, as restated	$	(452,449)

Net income per basic and diluted share, as previously reported	$	0.01
Net loss per basic and diluted share, as restated	$	(0.25)

For the nine months ended September 30, 2011:

Net loss as previously reported	$	(87,761)
Adjustment to record FDIC settlement		(501,489)
Adjustment to gain on involuntary conversion		34,348
Net loss, as restated	$	(554,901)

Net loss per basic and diluted share, as previously reported	$	(0.05)
Net loss per basic and diluted share, as restated	$	(0.31)

For the nine months ended September 30, 2011:

Net cash from operating activities, as previously reported	$	(118,362)
Adjustment to record FDIC settlement		(461,207)
Adjustment to gain on involuntary conversion		—0—
Net cash from operating activities, as restated	$	(579,569)

Net cash from investing activities, as previously reported	$	(401,207)
Adjustment to record FDIC settlement		(461,207)
Adjustment to gain on involuntary conversion		—0—
Net cash from investing activities, as restated	$	60,000

Note 4– Recently Issued Accounting Pronouncements

The Company’s management does not believe that any recent accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”)(including its EITF), the AICPA or Securities and Exchange Commission has or will have a material impact on the Company’s present or future financial statements.

This report contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this report.

Although forward-looking statements in this report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Except as required by federal securities laws, we undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report.

Item 2: Management's Discussion and Analysis of Financial Condition and Operations.

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included in this report. This discussion includes forward-looking statements that involve risks and uncertainties. As a result of many factors, our actual results may differ materially from those anticipated in these forward-looking statements.

Overview.

Manasota Group, Inc., f/k/a Horizon Bancorporation, Inc. (hereinafter, the "Company," "we" or the "Registrant"), was incorporated in the State of Florida on May 27, 1998, for the purpose of becoming a bank holding company owning all of the outstanding capital stock of Horizon Bank, a commercial bank chartered under the laws of Florida and a member of the Federal Reserve System (the "Bank"). The Bank opened for business on October 25, 1999.

As previously reported, during October 25, 1999 through September 10, 2010, the Company acted as a one-bank holding company with respect to the Bank. On September 10, 2010, due to significant losses incurred by the Bank during 2008-2010, the Florida Office of Financial Regulation (the “OFR”) declared the Bank to be "imminently insolvent." The Bank was closed, with the Federal Deposit Insurance Corporation (the "FDIC") being appointed as receiver therefor, and sold to Bank of the Ozarks.

Pursuant to a settlement agreement with the FDIC and a lease (the "Building Lease"), both entered into July 11, 2011, but effective September 11, 2010 , during the first quarter of 2012, we have owned, maintained and held for rent the approximately 7,000 square foot building, previously occupied by the Bank and now leased to Bank of the Ozarks (the "Building"). As of September 31, 2012, the Building was subject to an approximately $1.5 million first lien mortgage in favor of 1st Manatee Bank (the "Building Note"), which matures on August 31, 2013. Accordingly, during the first quarter of 2012, our sole source of income consisted of rent under such lease and our net income consisted of an approximately $5,200 per month net margin between such revenue and the debt service with respect to the mortgage. As of September 30, 2012, we also owed $48,000 to certain current and former directors for unsecured, payable on demand, advances made by them to the Company in 2010 (the "Advances").

On April 26, 2013, we received a letter from the Office of Enforcement Liaison in the SEC's Division of Corporation Finance. The letter informed the Company that if we do not take the necessary steps to return the Company into compliance with its reporting requirements under the Exchange Act within the next fifteen days, the SEC may commence administrative proceedings to revoke our registration under the Exchange Act and impose a trading suspension with respect to the Common Stock. On May 6, 2013, we filed a letter with the SEC setting forth a plan for returning into such compliance by filing the Annual Report on Form 10-K for 2011 on or before May 31, 2013, and all other delinquent periodic reports on or before July 31, 2013, and requesting that no such administrative proceedings or trading suspension be commenced at this time. We filed our first delinquent report, the Annual Report on Form 10-K for the year ended December 31, 2011, on May 23, 2013.

As of the filing date of this Report, we continue to engage in active discussions with several potential purchasers of the Building, all of whom are financial institutions that would occupy the Building and use it as a branch. The

potential purchase price being discussed would exceed the outstanding principal balance with respect to the Building

Note. Were the Building sold to any of these potential purchasers, the net proceeds would be distributed to the shareholders as a dividend.

Disregarding the need to refinance the Building Note in August 2013, and as long as the repayment of all of the Advances are not being demanded at once by the obligees, we do currently have a positive spread of approximately $5,200 between the rental income from the Building Lease and the debt service under the Building Note. Unless we sell the Building at the expected net gain and pay off the Building Note, any increase in other operating expenses such that they exceed such spread would require that we obtain additional liquidity, which may not be available on terms acceptable to us. Whether we will be successful in refinancing the Building Note will depend on whether the Building is then leased, either to Bank of the Ozarks or another tenant. In the absence of a tenant, refinancing of the Building Note is not likely to be possible.

Management is also continuing to consider using the Company's potential status as a fully reporting public company to engage in a transaction in which a carefully selected privately held operating company would merge into the Company, i.e. a reverse merger. As a result of such a merger, whether or not the Building would in the meantime been sold, voting control of the Company would be held by the shareholders of the operating company. Subject to forbearance by the SEC, this Report and the filing by us of the other delinquent reports under the Exchange Act are designed to restore the Company's fully reporting status so that it can act as a viable merger candidate.

To be sure, there is no assurance that we will be able to sell the Building before the current maturity date of the Building Note or that the mortgagee would agree to extend such maturity date to give us additional time to sell the Building. There is also no assurance that we will be able to restore our status as a fully reporting public company and, even if we do, that we will be able to find the private operating company whose business has sufficient upside potential and where the terms and conditions of a merger with such company are in the best interests of our shareholders. In other words, there is no assurance that ultimately we will not lose our sole asset, the Building, in foreclosure and thus be forced to liquidate the Company without any liquidation proceeds available to the shareholders..

Results of Operations.

Overall Net Income.

The Company reported net income of $22,938 for the nine months ended September 30, 2012, compared to a net loss of $554,901 for the nine months ended September 30, 2011, which included a loss of $651,352 as a result of the settlement with the FDIC. During the third quarter of 2011, the Company realized rental income with respect to the Building, consisting of back rent for the period of September 11, 2010 through June 30, 2012, of $140,746,. Basic and diluted earnings per share were $0.01 for the nine months ended September 30, 2012. Basic and diluted losses per share for the nine months ended September 30, 2011 were $0.31.

The Company reported a net gain of $8,382 for the three months ended September 30, 2012, compared to a net loss of $452,449 for the three months ended September 30, 2011. , which included a loss of $651,352 as a result of the settlement with the FDIC. During the third quarter of 2011, the Company realized rental income with respect to the Building, consisting of back rent for the period of September 11, 2010 through June 30, 2012, of $140,746 Basic and diluted earnings per share was $0.01 for the three months ended September 30, 2012. Basic and diluted losses per share for the three months ended September 30, 2011 were $0.25.

Total Assets.

As of September 30, 2012, total assets of the Company were $1,210,595 compared to $1,231,775 at December 31, 2011, a decrease of $21,180. This decrease is primarily due to repayments on related party borrowings.

Liquidity & Capital Resources

As of September 30, 2012, we had a working capital deficiency (total current liabilities — which included $28,516 of the principal of the Building Note and $48,000 of related party advances — in excess of total current assets) of

$49,244 all of such deficit being attributable to the $48,000 owed at the end of the period to certain current and former directors for unsecured advances made by them to the Company in 2010 (the "Advances"). We realized net income of $22,938 for the nine months ended September 30, 2012, compared to a net loss of $554,901 for the nine months ended September 30, 2011.

Item 3. Quantitative and Qualitative Disclosure About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer (Principal Financial Officer) as appropriate, to allow timely decisions regarding required disclosure. Within the 90 days preceding the filing of this Report, we carried out an evaluation, under the supervision and with the participation of our management, including the Principal Executive Officer and the Acting Chief Financial Officer (Principal Financial Officer), of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13(a)-15(e) under the Exchange Act. Based on this evaluation, because of lack of segregation of duties attributable to limited resources and limited number of employees, management concluded that our disclosure controls and procedures were ineffective as of September 30, 2012.

Limitations on Effectiveness of Controls and Procedures.

Our management, including our Principal Executive Officer and Principal Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Controls.

There have been no changes in the Company’s internal control over financial reporting during the third quarter of 2012 that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings.

There have been no material changes to the pending legal proceedings to which the Company or the Bank is a party since the filing of the Registrant’s Form 10-K for the year ended December 31, 2011.

Item 1A. Risk Factors.

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosure.

Not Applicable

Item 5. Other Information.

None.

Item 6. Exhibits.

	31.1	Certification of Chief Executive Officer

	31.2	Certification of Acting Chief Financial Officer

	32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	/s/ Charles S. Conoley
	Charles S. Conoley
	President and Chief Executive Officer
	(Principal Executive Officer)

	/s/ Kathleen M. Jepson
	Kathleen M. Jepson
	Acting Chief Financial Officer
	(Principal Financial and Accounting Officer)

Date: July 3, 2013

Manasota Group, Inc. - FORM 10-Q - July 3, 2013

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Manasota Group, Inc. Reports