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EX-31.2 - PRINCIPAL FINANCIAL OFFICER RULE 15D-14(A) CERTIFICATION - MORGAN GROUP HOLDING COexhibit31-2.htm
EX-31.1 - CHIEF EXECUTIVE OFFICER RULE 15D-14(A) CERTIFICATION - MORGAN GROUP HOLDING COexhibit31-1.htm
EX-32.1 - CHIEF EXECUTIVE OFFICER SECTION 1350 CERTIFICATION - MORGAN GROUP HOLDING COexhibit32-1.htm
EXCEL - IDEA: XBRL DOCUMENT - MORGAN GROUP HOLDING COFinancial_Report.xls
EX-32.2 - PRINCIPAL FINANCIAL OFFICER SECTION 1350 CERTIFICATION - MORGAN GROUP HOLDING COexhibit32-2.htm



UNITED STATES
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, 2013

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)

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 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 November 8, 2013
Common Stock, $.01 par value 3,359,055





MORGAN GROUP HOLDING CO.
TABLE OF CONTENTS

      Page No.
PART I –FINANCIAL INFORMATION
 
Item 1.       Condensed Financial Statements. 3-9
 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 9
   
Item 3. Quantitative and Qualitative Disclosure About Market Risk.   10
   
Item 4. Controls and Procedures. 10-11
 
PART II – OTHER INFORMATION
  
Item 6. Exhibits. 11
 
Signatures 12

2



PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Unaudited Financial Statements

              Condensed Balance Sheets as of 
             
September 30, 2013, December 31, 2012 and September 30, 2012

              Condensed Statements of Operations for the
              Three and Nine Months Ended September 30, 2013 and 2012

              Condensed Statements of Cash Flows for the 
              Nine Months Ended September 30, 2013 and 2012

              Condensed Statement of Shareholders’ Equity for the 
              Nine Months Ended September 30, 2013

              Notes to Condensed Financial 
              Statements as of September 30, 2013

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Morgan Group Holding Co.
Condensed Balance Sheets
(Unaudited)

September 30, December 31, September 30,
      2013       2012       2012
ASSETS
Current assets:
       Cash and cash equivalents          $294,786          $355,518          $369,267
       Prepaid expenses 11,470 5,931 7,908
              Total current assets 306,256 361,449 377,175
Equipment – Net 1,389 1,879 --
              Total assets $307,645 $363,328 $377,175
  
LIABILITIES
Current liabilities:
       Accrued liabilities $1,388 $16,374 $12,885
              Total current liabilities 1,388 16,374 12,885
              Total liabilities 1,388 16,374 12,885
 
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, 3,359,055 outstanding 33,591 33,591 33,591
Additional paid-in-capital 5,772,368 5,762,368 5,650,928
Accumulated deficit (5,499,702 ) (5,449,005 ) (5,320,229 )
              Total shareholders' equity 306,257 346,954 364,290
              Total liabilities and shareholders' equity $307,645 $363,328 $377,175

See accompanying notes to condensed financial statements

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Morgan Group Holding Co.
Condensed Statements of Operations
(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
      2013       2012       2013       2012
Revenues $-- $-- $- $-
 
Administrative expenses – net (12,343 ) 10,195 (50,720 ) (17,208 )
Other income:
       Interest and dividends 3 417 23 715
       Realized and unrealized gains on
              marketable securities -- 500 -- 2,288
              Net (loss)profit before income taxes (12,340 ) 11,112 (50,697 ) (14,205 )
Income taxes -- -- -- --
       Net (loss)profit ($12,340 ) $11,112 ($50,697 ) ($14,205 )
 
Net (loss) profit per share, basic and
diluted ($0.00 ) $0.00 ($0.02 ) ($0.00 )
 
Shares outstanding, basic and diluted 3,359,055 3,283,128 3,359,055 3,146,458

See accompanying notes to condensed financial statements

5



Morgan Group Holding Co.
Condensed Statements of Cash Flows
(Unaudited)

Nine Months Ended
September 30,
      2013       2012
Cash Flows used in Operating Activities
       Interest received $23 $25
       Cash paid to suppliers (70,755 ) (16,340 )
              Net cash used in operating activities (70,732 ) (16,315 )
 
Cash Flows from Investing Activities  
       Purchase of marketable securities -- (309,639 )
       Proceeds from the sale of marketable securities -- 435,628
       Dividends received -- 690
              Net cash provided by investing activities -- 126,679
 
Cash Flows from Financing Activities
       Proceeds from issuance of warrants 10,000   --
       Issuance of replacement shares 42,519
              Net cash provided by financing activities 10,000 42,519
Net (decrease) increase in cash and cash equivalents (60,732 ) 152,883
       Cash and cash equivalents, beginning of the period 355,518 216,384
       Cash and cash equivalents, end of the period $294,786 $369,267
 
Reconciliation of net loss to net cash used in operating
activities:
              Net loss ($50,697 ) ($14,205 )
              Depreciation 490 --
              Realized gains from the sale of marketable securities -- (4,376 )
              Change in unrealized gains from investment in    
              marketable securities --   2,087
              Dividends received -- (690 )
              Increase in prepaid expenses (5,539 ) (7,908 )
              (Decrease) increase in accrued liabilities (14,986 ) 8,777
Net cash used in operating activities ($70,732 ) ($16,315 )
 
Cash paid for interest $-- $--
 
Cash paid for income taxes $-- $--

See accompanying notes to condensed financial statements

6



Morgan Group Holding Co.
Condensed Statement of Shareholders’ Equity
Nine Months Ended September 30, 2013

Common Stock Additional
Par Paid in Accumulated
      Shares       Value       Capital       Deficit       Total
Shareholders’ equity,
       December 31, 2012 3,359,055 $33,591 $5,762,368     ($5,449,005 ) $346,954
Issuance of warrants -- -- 10,000 -- 10,000
Net loss for nine months -  
       ended September 30, 2013 - -- - (50,697 ) (50,697 )
Shareholders’ equity,  
       September 30, 2013 3,359,055 $33,591 $5,772,368 ($5,499,702 ) $306,257

See accompanying notes to condensed financial statements

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Morgan Group Holding Co.
Notes to Condensed 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. The Company received no value for its equity ownership from the bankruptcy proceeding.

 

The accompanying unaudited condensed 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, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. 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
 

All highly liquid investments with maturity of three months or less when purchased are considered to be cash equivalents. The carrying value of cash equivalents approximates its fair value based on its nature.

 

At September 30, 2013, December 31, 2012 and September 30, 2012 all cash and cash equivalents were invested in a United States Treasury money market fund, of which an affiliate of the Company serves as the investment manager of the money market fund.

 

The Company may from time to time invest 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.

 

Basic earnings per share is based on the weighted-average number of common shares outstanding during each period. Diluted earnings per share is based on basic shares plus the incremental shares that would be issued upon the assumed exercise of in-the-money stock options and unvested restricted stock using the treasury stock method and, if dilutive.

 

Certain line items in the previously reported financial statements have been reclassified to conform to the current presentation.

 
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 $1.6 million arising from its temporary basis differences and tax loss carryforward, as its realization is dependent upon the generation of future taxable income during the period when such losses would be deductible.


8



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.

 
Note 5. Shareholders’ Equity and Stock Options and Warrants
 
 

On December 21, 2012, the Company and Jonathan P. Evans, currently Chief Executive Officer of the Company, entered into a Nonqualified Stock Option Agreement, whereby the Company granted to Mr. Evans an option (the “Option”) to purchase 800,000 shares of the Company’s Common Stock at an exercise price of $0.15 per share of Common Stock, which is the closing price of the Common Stock as quoted on the OTC Markets’ inter-dealer quotation service on December 20, 2012. The Options are exercisable at any time and the exercise period expires December 21, 2015. As of September 30, 2013, these are the only options outstanding.

 

Also on December 21, 2012, the Company issued a warrant to purchase up to 1,000,000 shares of the Company’s Common Stock at $1.00 per share to Jonathan P. Evans in exchange for $10,000, which was received in 2013. In addition on that date, the Company issued a warrant to purchase up to 200,000 shares of the Company’s Common Stock to Robert E. Dolan, Chief Financial Officer of the Company, in exchange for $2,000. Both warrants are exercisable currently through December 21, 2017. As of September 30, 2013, these are the only warrants outstanding.

 
In August 2010, the Company’s stock transfer agent mistakenly escheated to the State of Connecticut the 276,250 shares of the Company’s stock owned by Mario J. Gabelli, the Company’s Chairman of the Board and then Chief Executive Officer. Those shares represented 9.0415% of the Company’s stock then outstanding. All of those shares were subsequently sold by the State of Connecticut to a third party and the State and Mr. Gabelli were unable to recover them. On August 6, 2012, Mr. Gabelli reached a settlement agreement with the transfer agent under which the transfer agent made a payment to the Company of $57,705, the amount required to pay the price of $0.19 per share for 303,710 shares of its stock. That is the number of shares required to return Mr. Gabelli to his previous ownership position of 9.0415% of the Company’s outstanding stock. The Company subsequently issued 303,710 shares of its stock to Mr. Gabelli. With the issuance of such shares, there are 3,359,055 shares of the Company’s stock outstanding. For accounting purposes, the Company recorded the issuance of shares at $0.14 per share, $42,519. The remaining amount of $15,186 was treated as a reimbursement of previously incurred legal expenses relating to the settlement of the erroneous escheatment and has been recognized as Other Income in the enclosed Condensed Statement of Operations.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The Company currently has no operating businesses and actively seeking acquisitions as part of its strategic alternatives. The primary, but not exclusive, focus of this search is on US based manufacturing businesses with EBITDA between $5-$20 million. Its only costs are the expenses required to make the regulatory filings needed to maintain its public status and to find and evaluate potential acquisitions. These costs are estimated at $25,000 to $75,000 per year.

9



Results of Operations

For the three months ended September 30, 2013, the Company incurred $12,343 of administrative expenses as compared to $10,195 of reimbursements in excess of administrative expenses in the three months ended September 30, 2012. During the three months ended September 30, 2012, the Company received reimbursement from its transfer agent, American Stock Transfer & Trust Company, LLC, of $15,186 for previously incurred legal fees (see Note 5 above). The amount exceeded the actual expenses recorded during the three months ended September 30, 2012 of $4,991. 2013 expenses were greater than this amount due primarily to the costs of Directors and Officers Insurance and additional professional fees. For the nine months ended September 30, 2013, the Company incurred $50,720 of administrative expenses an increase of $33,512 from the $17,208 of expenses in the nine months ended September 30, 2012. Aside from the previously noted reimbursement of administrative expenses increase due to activity associated with acquisition evaluation, the cost of Directors and Officers Insurance and other administrative costs of maintaining its public status.

The company may from time to time invest in marketable securities that are subject to a publicly disclosed acquisition offer but are trading below the proposed acquisition price. No investments have been made during 2013. During the three and nine months ended September 30, 2012, the company recorded $500 and $2,288, respectively, of net realized and unrealized gains from this activity, no realized or unrealized gains or losses were recorded during 2013. Also during the three and nine months ended September 30, 2012, received $400 and $690, respectively, in dividend income for the three and nine months ended September 30, 2012 as compared to $0 for the three and nine months ended September 30, 2013, also as a result of this marketable security program.

Interest income from the Company investments in a money market fund that invests in United States Treasury securities and in United States Treasury securities was $3 and $23, respectively, during the three and nine months ended September 30, 2013 as compared to $17 and $25, respectively, during the three and nine months ended September 30, 2012.

Liquidity and Capital Resources

As of September 30, 2013, the Company’s principal assets consisted of cash and cash equivalents of $294,786 and a capital loss carry forward of about $4.4 million which it expects will substantially expire at the end of this year. The ability to utilize this carry forward is dependent on the Company’s ability to generate a capital gain prior to its expiration, which is unlikely at this time.

Off Balance Sheet Arrangements

None.

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 is 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.

10



(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 but not limited to 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 going-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 LABEL LINKBASE
 
EX-101-CAL XBRL TAXONOMY EXTENSION CALCULATION
 
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).

11



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 11, 2013

12