| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the quarterly period ended September 30, 2011 | ||
| 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 |
| 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) | |
| Large accelerated filer [ ] | Accelerated filer [ ] | |
| Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [X] |
| Class | Outstanding at October 24, 2011 | |
| Common Stock, $.01 par value | 3,055,345 |
| Page No. | ||||
| PART I –FINANCIAL INFORMATION | ||||
| Item 1. | Financial Statements. | 3-7 | ||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 8 | ||
| Item 3. | Quantitative and Qualitative Disclosure About Market Risk. | 9 | ||
| Item 4. | Controls and Procedures. | 9 | ||
| PART II – OTHER INFORMATION | ||||
| Item 6. | Exhibits. | 9 | ||
| Signatures | 10 | |||
| September 30, | December 31, | September 30, | |||||||
| 2011 | 2010 | 2010 | |||||||
| ASSETS | |||||||||
| Current assets: | |||||||||
| Cash | $264,355 | $192,033 | $307,413 | ||||||
| Investment in Marketable Securities | 120,680 | 203,540 | 97,840 | ||||||
| Total current assets | 385,035 | 395,573 | 405,253 | ||||||
| Total assets | $385,035 | $395,573 | $405,253 | ||||||
| LIABILITIES | |||||||||
| Current liabilities: | |||||||||
| Accrued liabilities | $22,798 | $-- | $-- | ||||||
| Total current liabilities | 22,798 | -- | -- | ||||||
| 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, 3,055,345 outstanding | 30,553 | 30,553 | 30,553 | ||||||
| Additional paid-in-capital | 5,611,447 | 5,611,447 | 5,611,447 | ||||||
| Accumulated deficit | (5,279,763 | ) | (5,246,427 | ) | (5,236,747 | ) | |||
| Total shareholders' equity | 362,237 | 395,573 | 405,253 | ||||||
| Total liabilities and shareholders' equity | $385,035 | $395,573 | $405,253 | ||||||
| Three Months Ended | Nine Months Ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||
| Revenues | $-- | $-- | $-- | $-- | ||||||||
| Administrative expenses | (22,813 | ) | (4,286 | ) | (42,292 | ) | (23,281 | ) | ||||
| Other income | ||||||||||||
| Interest and dividends | 324 | 36 | 924 | 134 | ||||||||
| Realized and unrealized gains on | ||||||||||||
| marketable securities | 2,094 | 43,526 | 8,032 | 44,716 | ||||||||
| Net (loss) income before income taxes | (20,395 | ) | 39,276 | (33,336 | ) | 21,569 | ||||||
| Income taxes | -- | -- | -- | -- | ||||||||
| Net (loss) income | ($20,395 | ) | $39,276 | ($33,336 | ) | $21,569 | ||||||
| (Loss) earnings per share, basic and | ||||||||||||
| diluted | ($0.01 | ) | $0.01 | ($0.01 | ) | $0.01 | ||||||
| Shares outstanding, basic and diluted | 3,055,345 | 3,055,345 | 3,055,345 | 3,055,345 | ||||||||
| Nine Months Ended September 30, | ||||||
| 2011 | 2010 | |||||
| Cash Flows from Operating Activities | ||||||
| Interest received | $48 | $134 | ||||
| Cash paid to suppliers | (19,494 | ) | (16,281 | ) | ||
| Net cash used in operating activities | (19,446 | ) | (16,147 | ) | ||
| Cash Flows from Investing Activities | ||||||
| Purchases of marketable securities | (989,240 | ) | (1,014,037 | ) | ||
| Proceeds from the sale of marketable | 1,080,132 | 960,913 | ||||
| Dividends received | 876 | -- | ||||
| Net cash received (used) in investing activities | 91,768 | (53,124 | ) | |||
| Cash Flows from Financing Activities | -- | -- | ||||
| Net increase (decrease) in Cash | 72,322 | (69,271 | ) | |||
| Cash, Beginning of the Period | 192,033 | 376,684 | ||||
| Cash, End of the Period | $264,355 | $307,413 | ||||
| Reconciliation of net (loss) income to net cash used in | ||||||
| operating activities: | ||||||
| Net (loss) income | ($33,336 | ) | 21,569 | |||
| Realized and unrealized gains on marketable securities | (8,032 | ) | (44,716 | ) | ||
| Dividends received | (876 | ) | -- | |||
| Decrease in prepaid expenses | -- | 7,000 | ||||
| Increase in accrued liabilities | 22,798 | -- | ||||
| Net cash used in operating activities | ($19,446 | ) | ($16,147 | ) | ||
| 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. Holding 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, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011. 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.
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| Note 2. |
Significant Accounting Policies
The Company invests 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.
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| 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 $1.7 million arising from its temporary basis differences and tax loss carry forward, 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.
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| 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.
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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| 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 EXTENSION LABEL LINKBASE | ||
| EX-101.CAL | XBRL TAXONOMY EXTENSION CALCULATION LINKBASE | ||
| 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).
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| By: | /s/ Robert E. Dolan |
| ROBERT E. DOLAN | |
| Chief Financial Officer |