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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
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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, 2009
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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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(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 [ ] 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).
[X] Yes [ ] No
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date.
Class Outstanding at October 30, 2009
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Common Stock, $.01 par value 3,055,345
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Unaudited Financial Statements
Condensed Balance Sheets as of
September 30, 2009, December 31, 2008 and September 30, 2008
Condensed Statements of Operations for the
Three and Nine Months Ended September 30, 2009 and 2008
Condensed Statements of Cash Flows for the
Nine Months Ended September 30, 2009 and 2008
Notes to Condensed Financial
Statements as of September 30, 2009
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Morgan Group Holding Co.
Condensed Balance Sheets
(Unaudited)
September 30, December 31, September 30,
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2009 2008 2008
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ASSETS
Current assets:
Cash and cash equivalents $ 387,572 $ 404,876 $ 415,360
Prepaid expenses -- 7,500 --
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Total curent assets 387,572 412,376 415,360
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Total assets $ 387,572 $ 412,376 $ 415,360
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LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued Liabilities $ -- $ -- $ --
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Total current liabilities -- -- --
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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 30,553 30,553 30,553
Additional paid-in-capital 5,611,447 5,611,447 5,611,447
Accumulated deficit (5,254,428) (5,229,624) (5,226,640)
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Shareholders' equity 387,572 412,376 415,360
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Total liabilities and shareholders'
equity $ 387,572 $ 412,376 $ 415,360
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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
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2009 2008 2009 2008
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Revenues $ -- $ -- $ -- $ --
Administrative expenses (5,228) (4,578) (25,570) (32,367)
Other income - interest 148 1,946 766 7,481
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Net loss $ (5,080) $ (2,632) $ (24,804) $ (24,886)
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Basic and diluted net loss per share $ (0.00) $ (0.00) $ (0.01) $ (0.01)
Weighted average shares outstanding 3,055,345 3,055,345 3,055,345 3,055,345
See accompanying notes to condensed financial statements
4
Morgan Group Holding Co.
Condensed Statements of Cash Flows
(Unaudited)
Nine Months Ended
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September 30,
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2009 2008
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Cash Flows from Operating activities:
Interest received $ 766 $ 7,481
Cash paid to suppliers (18,070) (32,367)
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Net cash used in operating activities (17,304) (24,886)
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Cash Flow from Investing Activities -- --
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Cash Flow from Financing Activities -- --
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Net decrease in cash (17,304) (24,886)
Cash, Beginning of Period 404,876 440,246
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Cash, End of Period $ 387,572 $ 415,360
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Reconciliation of net loss to net cash used in
operating activities:
Net loss $ (24,804) $ (24,886)
Decrease in prepaid expenses 7,500 --
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Net cash used in operating activities $ (17,304) $ (24,886)
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See accompanying notes to condensed 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 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 December 18, 2001,
LICT'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, LICT spun off 2,820,051
shares of Holding common stock through a pro rata distribution
("Spin-Off") to its stockholders. LICT retained 235,294 shares of
Holding common stock to be distributed in connection with the
potential conversion of a convertible note that had been issued by
LICT. Such note was repurchased by LICT in 2002 and LICT 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.
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.
Management believed that it was unlikely that the Company would
realize any value from its equity ownership in Morgan and, given the
fact that the Company had no obligation or intention to fund any of
Morgan's liabilities, its investment in Morgan was believed to have no
value after its liquidation. Because the liquidation of Morgan was
under the control of the bankruptcy court, the Company believed it had
relinquished control of Morgan and, accordingly, deconsolidated its
ownership interest Morgan in its financial statements during 2002. On
March 31, 2008, the bankruptcy proceeding was concluded and the
bankruptcy court dismissed the proceeding. Morgan received no value
for its equity ownership from the bankruptcy proceeding.
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with accounting principles generally
accepted in the United States for interim financial information and
with the instructions to Form 10-Q and Article 8 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by accounting principles generally accepted in the United
States for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the three and nine months ended September 30,
2009 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2009. 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 2009, the Financial Accounting Standards Board, or FASB,
issued Statement of Financial Accounting Standard, or SFAS, No. 168,
The FASB Accounting Standards Codification and the Hierarchy of
Generally Accepted Accounting Principles, a replacement of FASB
Statement No. 162. This statement modifies the GAAP hierarchy by
establishing only two levels of GAAP, authoritative and
nonauthoritative accounting literature. Effective July 2009, the FASB
Accounting Standards Codification, or ASC, also known collectively as
the "Codification," is considered the single source of authoritative
U.S. accounting and reporting standards, except for additional
authoritative rules and interpretive releases issued by the SEC.
Nonauthoritative guidance and literature would include, among other
things, FASB Concepts Statements, American Institute of Certified
Public Accountants Issue Papers and Technical Practice Aids and
accounting textbooks. The Codification was developed to organize GAAP
pronouncements by topic, subtopic, section, and paragraph, each of
which is identified by a numerical designation, so that users can more
easily access authoritative accounting guidance. The Codification is
effective for financial statements issued for reporting periods that
end after September 15, 2009. Updates to the ASC are issued as
Accounting Standards Updates, or ASU. Because the Codification did not
change GAAP, the Codification had no impact on our financial
statements and footnotes, other than the replacement of
pre-codification references with ASC or ASU references herein."
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Note 2. 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 $1.7 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.
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 3. Commitments and Contingencies
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On March 31, 2008, the bankruptcy court dismissed Morgan's bankruptcy
proceeding. Holding had not guaranteed any of the obligations of
Morgan. Management believes that the Company has no commitment or
obligation to fund any creditors of Morgan.
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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 and will seek acquisitions as
part of its strategic alternatives. Its only costs are the administrative
expenses required to make the regulatory filings needed to maintain its public
status. These costs are estimated at $30,000 to $40,000 per year.
Results of Operations
For the three months ended September 30, 2009, the Company incurred $5,228 of
expenses as compared to $4,578 of expenses in the three months ended September
30, 2008. Higher professional fees in 2009 caused the increase in this quarter.
For the nine months ended September 30, 2009, the Company incurred $25,570 of
expenses as compared to $32,367 of expenses in the nine months ended September
30, 2008. Lower professional fees caused the reduction. During the nine months
ended September 30, 2008, the Company incurred an additional audit fee of $3,000
for the audit of its 2006 financial statements. Also, during 2008 approximately
$3,000 of legal expenses were incurred.
Investment income was $148 in the three months ended September 30, 2009 as
compared to $1,946 in the three months ended September 30, 2008, and $766 in the
nine months ended September 30, 2009 as compared to $7,481 in the nine months
ended September 30, 2008, as a result of the Company's investment in a United
States Treasury money market fund. Lower interest rates were the primary cause
of the decreases in 2009.
Liquidity and Capital Resources
As of September 30, 2009, the Company's only assets consisted of approximately
$387,572 in cash and a capital loss carry forward of about $4.5 million which it
expects will substantially expire in 2013. The ability to utilize this carry
forward is dependent on the Company's ability to generate a capital gain prior
to its expiration.
Off Balance Sheet Arrangements
None.
Item 3. Quantitative and Qualitative Analysis of Market Risk
As of September 30, 2009, the Company had no market sensitive assets or
liabilities, and, as a result, management believes that the Company is minimally
exposed to changes in market risk.
Recently Issued Accounting Pronouncements
In June 2009, the Financial Accounting Standards Board, or FASB, issued
Statement of Financial Accounting Standard, or SFAS, No. 168, The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles, a replacement of FASB Statement No. 162. This statement
modifies the GAAP hierarchy by establishing only two levels of GAAP,
authoritative and nonauthoritative accounting literature. Effective July 2009,
the FASB Accounting Standards Codification, or ASC, also known collectively as
the "Codification," is considered the single source of authoritative U.S.
accounting and reporting standards, except for additional authoritative rules
and interpretive releases issued by the SEC. Nonauthoritative guidance and
literature would include, among other things, FASB Concepts Statements, American
Institute of Certified Public Accountants Issue Papers and Technical Practice
Aids and accounting textbooks. The Codification was developed to organize GAAP
pronouncements by topic, subtopic, section, and paragraph, each of which is
identified by a numerical designation, so that users can more easily access
authoritative accounting guidance. The Codification is effective for financial
statements issued for reporting periods that end after September 15, 2009.
Updates to the ASC are issued as Accounting Standards Updates, or ASU. Because
the Codification did not change GAAP, the Codification had no impact on our
financial statements and footnotes, other than the replacement of
pre-codification references with ASC or ASU references herein."
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Item 4T. Controls and Procedures
a) Evaluation of Disclosure Controls and Procedures
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Our Chief Executive Officer and Chief Financial Officer have evaluated the
effectiveness of the Company's disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the
"Act")) as of the end of the period covered by this report. Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer have
concluded that the Company's disclosure controls and procedures as of the end of
the period covered by this report were designed and were functioning effectively
to provide reasonable assurance that the information required to be disclosed by
the Company in reports filed under the Act is recorded, processed, summarized
and reported within the time periods specified in the rules and forms of the
Securities and Exchange Commission. The Company believes that a controls system,
no matter how well designed and operated, cannot provide absolute assurance that
the objectives of the controls system are met, and no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within a company have been detected.
(b) Changes in Internal Controls
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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
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This report contains a number of forward-looking statements, including
statements regarding the prospective adequacy of the Company's liquidity and
capital resources in the near term. From time to time, the Company may make
other oral or written forward-looking statements regarding its anticipated
operating revenues, costs and expenses, earnings and other matters affecting its
operations and condition. Such forward-looking statements are subject to a
number of material factors, which could cause the statements or projections
contained therein, to be materially inaccurate. Such factors include the
estimated administrative expenses of the Company on a go forward basis.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
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.
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* Incorporated by reference to the exhibits to the Company's Registration
Statement on Form S-1 (Registration No. 333-73996).
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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 9, 2009
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