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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2007
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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
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MORGAN GROUP HOLDING CO.
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(Exact name of small business issuing as specified in its charter)
Delaware 13-4196940
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(State or other jurisdiction of (IRS Employer
Incorporation of organization) Identification Number)
401 Theodore Fremd Avenue, Rye, New York 10580
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(Address of principal executive offices) (Zip Code)
(914) 921-1877
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Insurer's telephone number, including area code
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the 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 ( X ) No ( )
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes ( X ) 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 6, 2007
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Common Stock, $.01 par value 3,055,345
Transitional Small Business Disclosure Format (Check One): Yes ( ) No ( X )
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements and Supplementary Data.
Financial Statements Unaudited
Balance Sheets as of
September 30, 2007, December 31, 2006 and September 30, 2006
Statements of Operations for the
Three and Nine Months Ended September 30, 2007 and 2006
Statements of Cash Flows for the
Nine Months Ended September 30, 2007 and 2006
Notes to Financial
Statements as of September 30, 2007
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Morgan Group Holding Co.
Balance Sheets
(Unaudited)
(Dollars in thousands)
September 30, December 31, September 30,
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2007 2006 2006
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ASSETS
Current assets:
Cash and cash equivalents $436 $423 $420
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Total curent assets 436 423 420
Net assets of The Morgan Group, Inc. -- - - --
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Total assets $436 $423 $420
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LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued Liabilities $ -- $-- $1
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Total current liabilities -- -- 1
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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 30 30
Additional paid-in-capital 5,612 5,612 5,612
Accumulated deficit (5,206) (5,219) (5,223)
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Shareholders equity 436 423 419
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Total liabilities and shareholders' equity $436 $423 $420
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See accompanying notes to financial statements
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Morgan Group Holding Co.
Statements of Operations
(Unaudited)
(Dollars and shares in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
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2007 2006 2007 2006
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Administrative expenses $(--) $(2) $(2) $(3)
Investment income 5 6 15 14
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Net profit $5 $4 $13 $11
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Basic and diluted net loss per share $0.00 $0.00 $0.00 $0.00
Weighted average shares outstanding 3,055 3,055 3,055 3,055
See accompanying notes to financial statements
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Morgan Group Holding Co.
Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
Nine Months Ended
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September 30,
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2007 2006
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Operating activities:
Net profit $13 $11
Adjustments to reconcile net profit to cash provided by
operating activities:
Increase in accrued liabilities -- 1
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Net cash provided by operating activities 13 12
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Net change in cash and equivalents 13 12
Cash and cash equivalents at beginning of period 423 408
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Cash and cash equivalents at end of period $ 436 $420
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See accompanying notes to financial statements
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Morgan Group Holding Co.
Notes to Financial Statements
Note 1. 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 Lynch Interactive
Corporation ("Interactive"), now known as LICT Corporation, to serve,
among other business purposes, as a holding company for Interactive's
controlling interest in The Morgan Group, Inc. ("Morgan"). On December
18, 2001, Interactive's controlling interest in Morgan was transferred
to Holding. At the time, Holding owned 68.5% of Morgan's equity
interest and 80.8% of Morgan's voting interest. On January 24, 2002,
Interactive spun off 2,820,051 shares of the Company's common stock
through a pro rata distribution ("Spin-Off") to its stockholders.
Interactive retained 235,294 shares of the Company's common stock to be
distributed in connection with the potential conversion of a
convertible note that had been issued by Interactive. Such note was
repurchased by Interactive in 2002 and Interactive retains the 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.
As Morgan has ceased operations and is in the process liquidating
itself, in the accompanying balance sheet, the assets and liabilities
of Morgan have been reflected as one line. Holding's management
currently believes that it is very unlikely that Holding will realize
any value from its equity ownership in Morgan. Furthermore, Holding has
no obligation or intention to fund any of Morgan's liabilities;
therefore, Holding's investment in Morgan was believed to have no value
after the liquidation. As the liquidation of Morgan is under the
control of the bankruptcy court, Holding believes it has relinquished
control of Morgan and accordingly, has ceased consolidating the
financial statements of Morgan.
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 carry 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.
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.
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-QSB and Articles 10 and 11 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 six months ended September 30, 2007 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 2007 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.
Recently Issued Accounting Pronouncements
In June 2006, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income
Taxes, which supplements Statement of Financial Accounting Standard No.
109, Accounting for Income Taxes, by defining the confidence level that
a tax position must meet in order to be recognized in the financial
statements. FIN 48 requires the tax effect of a position to be
recognized only if it is "more-likely-than-not" to be sustained based
solely on its technical merits as of the reporting date. If a tax
position is not considered more-likely-than-not to be sustained based
solely on its technical merits, no benefits of the position are
recognized. This is a different standard for recognition than was
previously required. The more-likely-than-not threshold must continue
to be met in each reporting period to support continued recognition of
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a benefit. At adoption, companies must adjust their financial
statements to reflect only those tax positions that are
more-likely-than-not to be sustained as of the adoption date. Any
necessary adjustment is recorded directly to opening retained earnings
in the period of adoption and reported as a change in accounting
principle. The adoption of the provisions of FIN 48 did not have a
material effect on the Company's financial statements.
Note 2. Net assets of Morgan Group
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At September 30, 2007, December 31, 2006, and September 30, 2006, the
estimated value of Morgan's assets in liquidation was insufficient to
satisfy its estimated obligations.
Note 3. Income Taxes
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No income tax benefit has been recorded in the accompanying financial
statements, as the realization of such losses, for income tax purposes,
is dependent upon the generation of future taxable income during the
period when such losses would be deductible. Therefore, the recording
of the deferred tax asset of $1.5 million would be inconsistent with
applicable accounting rules.
Note 4. Commitments and Contingencies
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Holding has not guaranteed any of the obligations of Morgan and it has
no further commitment or obligation to fund any creditors.
Note 5. Financial Statements not reviewed by Independent Public Accountants
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On May 2, 2003, the client-auditor relationship between Holding and
Ernst & Young LLP ceased. As a result, these interim financial
statements have not been reviewed by independent public accountants.
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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. Its only costs are the
administrative expenses required to make the regulatory filings needed to
maintain its public status. These costs are estimated at $10,000 to $20,000 per
year. Currently, the Company has not retained an independent auditor or incurred
other accounting and administrative fees, and therefore its expenses in 2007 and
2006 are well below this estimate.
Results of Operations
For the Three Months ended September 30, 2007 and 2006, the Company incurred
administration expenses of under $500 and about $2,000, respectively.
Administrative expenses are lower than expected due to the Company's inability
to retain an independent auditor. For the Nine Months ended September 30, 2007,
the Company incurred about $3,000 of expenses. For the Nine Months ended
September 30, 2006, the Company incurred about $2,000 in expense.
Investment income was about $5,000 in the Three Months ended September 30, 2007,
compared to $6,000 in the Three Months ended June 30, 2006. Investment income
was about $15,000 in the Nine Months ended September 30, 2007, compared to
$14,000 in the Nine Months ended September 30, 2006. The changes in interest
rates on the Company's investments in a United States Treasury money market fund
caused variance.
Liquidity and Capital Resources
As of September 30, 2007, the Company's only assets consisted of $436,000 in
cash and a capital loss carry forward of about $4 million which it expects will
expire in 2012. 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.
Quantitative and Qualitative Analysis of Market Risk
The Company is minimally exposed to changes in market risk because as of
September 30, 2007 the Company has no market sensitive assets or liabilities.
Recently Issued Accounting Pronouncements
In June 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes, which
supplements Statement of Financial Accounting Standard No. 109, Accounting for
Income Taxes, by defining the confidence level that a tax position must meet in
order to be recognized in the financial statements. FIN 48 requires the tax
effect of a position to be recognized only if it is "more-likely-than-not" to be
sustained based solely on its technical merits as of the reporting date. If a
tax position is not considered more-likely-than-not to be sustained based solely
on its technical merits, no benefits of the position are recognized. This is a
different standard for recognition than was previously required. The
more-likely-than-not threshold must continue to be met in each reporting period
to support continued recognition of a benefit. At adoption, companies must
adjust their financial statements to reflect only those tax positions that are
more-likely-than-not to be sustained as of the adoption date. Any necessary
adjustment is recorded directly to opening retained earnings in the period of
adoption and reported as a change in accounting principle. The adoption of the
provisions of FIN 48 did not have a material effect on the Company's financial
statements.
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Item 4. Controls and Procedures
As a result of the Bankruptcy, Morgan's corporate, financial and accounting
staff has been substantially reduced, thereby impairing the ability of Morgan to
maintain internal controls and adequate disclosure controls and procedures. On
November 12, 2002, Morgan filed a Form 15 with the Securities and Exchange
Commission to terminate its registration under Section 12(g) of the Exchange
Act. Given the current status of Morgan, neither the chief executive officer nor
the chief financial officer of Holding has been able to evaluate the
effectiveness of the disclosure controls and procedures of Morgan.
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Forward Looking Discussion
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This report contains several forward-looking statements 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.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) None.
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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
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ROBERT E. DOLAN
Chief Financial Officer
November 8, 2007
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