Quarterly Report (10-q)
May 14 2014 - 3:30PM
Edgar (US Regulatory)
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
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For the quarterly period ended
March 31, 2014
Or
[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OF
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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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
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13-4196940
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(State or other jurisdiction
of
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(IRS Employer
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Incorporation of
organization)
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Identification
Number)
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401 Theodore Fremd Avenue, Rye, New York
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10580
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(Address of principal executive
offices)
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(Zip
Code)
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(914) 921-1877
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(Registrants telephone number,
including area code)
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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
[ ]
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Accelerated filer [
]
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Non-accelerated filer [ ] (Do
not check if a smaller reporting
company)
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Smaller reporting company
[X]
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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 issuers classes of common equity, as of the latest practical date.
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Class
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Outstanding at April 30, 2014
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Common Stock, $.01 par
value
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3,359,055
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MORGAN GROUP HOLDING CO.
TABLE OF
CONTENTS
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Page No.
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PART I FINANCIAL
INFORMATION
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Item 1.
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Financial
Statements.
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3-9
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Item 2.
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Managements Discussion
and Analysis of Financial Condition and Results of Operations.
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9
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Item 3.
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Quantitative and
Qualitative Disclosure About Market Risk.
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10
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Item 4.
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Controls and
Procedures.
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10
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PART II OTHER INFORMATION
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Item 6.
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Exhibits.
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10
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Signatures
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11
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2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Unaudited Financial Statements
Condensed
Balance Sheets as of
March 31, 2014, December 31, 2013 and March 31, 2013
Condensed
Statements of Operations for
the
Three
Months Ended March 31, 2014 and 2013
Condensed
Statements of Cash Flows for
the
Three
Months Ended March 31, 2014 and 2013
Condensed
Statement of Shareholders Equity for
the
Three
Months Ended March 31, 2014
Notes
to Condensed
Financial
Statements
as of March 31, 2014
3
Morgan Group Holding Co.
Condensed
Balance Sheets
(Unaudited)
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March 31,
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December 31,
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March 31,
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2014
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2013
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2013
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ASSETS
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Current assets:
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Cash and cash
equivalents
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$255,469
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$8,981
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$321,507
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Marketable
securities
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--
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275,857
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--
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Prepaid
expenses
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14,109
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9,081
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12,056
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Total
current assets
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269,578
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293,919
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333,563
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Equipment
net
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1,062
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1,226
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1,716
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Total
assets
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$270,640
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$295,145
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$335,279
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LIABILITIES
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Current liabilities:
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Accrued
liabilities
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$23,872
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$--
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$4,641
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Total
current liabilities
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23,872
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--
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4,641
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Total
liabilities
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23,872
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--
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4,641
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COMMITMENTS AND
CONTINGENCIES
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SHAREHOLDERS'
EQUITY
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Preferred stock, $0.01 par value, 1,000,000
shares
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authorized,
none outstanding
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--
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--
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--
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Common stock, $0.01 par
value, 10,000,000 shares
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authorized,
3,359,055 outstanding
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33,591
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33,591
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33,591
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Additional paid-in-capital
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5,772,368
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5,772,368
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5,772,368
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Accumulated
deficit
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(5,559,191
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)
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(5,510,814
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)
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(5,475,321
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)
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Total
shareholders' equity
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246,768
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295,145
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330,638
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Total
liabilities and shareholders' equity
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$270,640
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$295,145
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$335,279
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See accompanying notes to condensed
financial statements
4
Morgan Group Holding Co.
Condensed
Statements of Operations
(Unaudited)
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Three Months
Ended March 31
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2014
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2013
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Revenues
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$--
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$--
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Administrative
expenses
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(47,834
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)
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(26,327
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)
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Other income:
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Interest and
dividends
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--
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11
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Realized and
unrealized loss on
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marketable
securities
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(543
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)
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--
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Net
loss before income taxes
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(48,377
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)
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(26,316
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)
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Income taxes
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--
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--
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Net
loss
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($48,377
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)
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($26,316
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)
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Net loss per share, basic
and diluted
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($0.01
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)
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($0.01
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)
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Shares outstanding, basic
and diluted
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3,359,055
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3,359,055
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See accompanying notes to condensed
financial statements
5
Morgan Group Holding Co.
Condensed
Statements of Cash Flows
(Unaudited)
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Three Months Ended
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March 31,
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2014
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2013
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Cash Flows from Operating
Activities
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Interest
received
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$--
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$11
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Cash paid to
suppliers
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(28,826
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)
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(44,022
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)
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Net
cash used in operating activities
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(28,826
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)
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(44,011
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)
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Cash Flows from Investing
Activities
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Proceeds from
the sale of marketable securities
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275,314
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--
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Net
cash provided by investing activities
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275,314
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--
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Cash Flows from Financing
Activities
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Proceeds from
issuance of warrants
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--
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10,000
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Net
cash provided by financing activities
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--
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10,000
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Net increase (decrease) in cash and cash
equivalents
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246,488
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(34,011
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)
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Cash and cash
equivalents, beginning of the period
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8,981
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355,518
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Cash and cash
equivalents, end of the period
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$255,469
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$321,507
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Reconciliation of net loss to net cash used
in operating
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activities:
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Net
loss
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($48,377
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)
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($26,316
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)
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Depreciation
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163
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163
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Realized losses
from the sale of marketable securities
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4,781
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--
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Change in
unrealized gains from investment in
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marketable
securities
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(4,238
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)
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--
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Increase in
prepaid expenses
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(5,027
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)
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(6,125
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)
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Increase
(decrease) in accrued liabilities
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23,872
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(11,733
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)
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Net cash used in operating
activities
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($28,826
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)
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($44,011
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)
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Cash paid for interest
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$--
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$--
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Cash paid for income taxes
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$--
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$--
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See accompanying notes to condensed
financial statements
6
Morgan Group Holding Co.
Condensed
Statement of Shareholders Equity
Three Months Ended March 31, 2014
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Common Stock
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Additional
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Par
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Paid in
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Accumulated
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Shares
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Value
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Capital
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Deficit
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Total
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Shareholders
equity,
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December 31,
2013
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3,359,055
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$33,591
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$5,772,368
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($5,510,814
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)
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$295,145
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Net loss for three months
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ended March 31,
2014
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--
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--
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-
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(48,377
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)
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(48,377
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)
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Shareholders equity,
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March 31, 2014
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3,359,055
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$33,591
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$5,772,368
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($5,559,191
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)
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$246,768
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See accompanying notes to condensed
financial statements
7
Morgan Group Holding Co.
Notes to
Condensed Financial Statements
Note 1.
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Basis of Presentation
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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 LICTs 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.
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 months ended March 31, 2014 are not necessarily
indicative of the results that may be expected for the year ending
December 31, 2014. 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 differ from these estimates.
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Note
2.
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Significant Accounting
Policies
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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.
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At March 31, 2014, December 31, 2013
and March 31, 2013 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.
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Note
3.
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Income Taxes
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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 $177,420 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.
Pursuant to Sections 382 and 383 of
the Internal Revenue Code, annual use of any of the Companys net
operating loss carry forwards may be limited if cumulative changes in
ownership of more than 50% occur during any three year period.
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Note
4.
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Commitments and
Contingencies
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From time to time the Company may be
subject to certain asserted and unasserted claims. It is the Companys
belief that the resolution of these matters will not have a material
adverse effect on its financial position.
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8
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The Company has not guaranteed any
of the obligations of Morgan and believes it currently has no commitment
or obligation to fund any creditors.
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Note 5.
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Shareholders Equity and Stock
Options and Warrants
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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 Companys 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 March 31, 2014, 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
Companys 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 Companys
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 March 31, 2014, these are the only warrants
outstanding.
|
Item 2. Managements Discussion and
Analysis of Financial Condition and Results of Operations
Overview
The Company currently has no operating
businesses and is actively seeking acquisitions as part of its strategic
alternatives. 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.
Results of Operations
For the three months ended March 31, 2014,
the Company incurred $47,834 of administrative expenses an increase of $21,507
from the $26,327 of expenses in the three months ended March 31, 2013, due to
activity associated with a possible acquisition evaluation, specifically during
the first quarter of 2014, the Company incurred $22,500 related to a specific
acquisition that it did not proceed with.
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. During the three
months ended March 31, 2014, the Company recorded $543 of net realized and
unrealized losses from this activity, no realized or unrealized gains or losses
were recorded during 2013.
Interest income from the Companys
investments in a money market fund that invests in United States Treasury
securities was $11 during the three months ended March 31, 2013 as compared to
$0 during the three months ended March 31, 2014, as during most of the first
quarter of 2014, the Companys funds were invested in a marketable
security.
Liquidity and Capital Resources
As of March 31, 2014, the Companys
principal assets consisted of cash and cash equivalents of $255,469.
The Company has implemented a growth
strategy to acquire US-based businesses of an appropriate type and size. The
execution of such a strategy will require the Company to obtain significantly
more financial resources than it currently possesses. Those resources could take
the form of debt and equity offerings, or potentially a hybrid instrument. There
is no assurance that the Company can obtain such financial resources to
successfully implement this strategy
Off Balance Sheet
Arrangements
None.
9
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 Companys 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 Companys 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 but not limited to statements regarding
the prospective adequacy of the Companys 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
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|
Certificate of Incorporation of the
Company*
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Exhibit 3.2
|
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By-laws of the Company*
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Exhibit 31.1
|
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Chief Executive Officer Rule 15d-14(a)
Certification.
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Exhibit 31.2
|
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Principal Financial Officer Rule 15d-14(a)
Certification.
|
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Exhibit 32.1
|
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Chief Executive Officer Section 1350
Certification.
|
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Exhibit 32.2
|
|
Principal Financial Officer Section 1350
Certification.
|
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EX-101.INS
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XBRL INSTANCE DOCUMENT
|
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EX-101.SCH
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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
|
____________________
*
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|
Incorporated by
reference to the exhibits to the Companys Registration Statement on Form
S-1 (Registration No. 333-73996).
|
10
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
|
May 13, 2014
11
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