Edgar Filing: MORGAN GROUP HOLDING CO

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, 2018

[ ]

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 October 23, 2018
Common Stock, $.01 par value		4,859,055

MORGAN GROUP HOLDING CO.
TABLE OF CONTENTS

		Page No.
PART I –FINANCIAL INFORMATION

Item 1.	Financial Statements.	3-9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	9-10

Item 3.	Quantitative and Qualitative Disclosure About Market Risk.	10

Item 4.	Controls and Procedures.	10

PART II – OTHER INFORMATION

Item 6.	Exhibits.	11

	Signatures	12

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Unaudited Financial Statements

Condensed Balance Sheets at September 30, 2018, December 31, 2017 and September 30, 2017

Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2018 and 2017

Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2018 and 2017

Condensed Statement of Shareholders’ Equity for the Nine Months Ended September 30, 2018

Notes to Condensed Financial Statements as of September 30, 2018

Morgan Group Holding Co.
Condensed Balance Sheets
(Unaudited)

	September 30,	December 31,	September 30,
	2018	2017	2017
ASSETS
Current assets:
Cash and cash equivalents	$133,152	$17,273	$21,490
Prepaid expenses	12,613	329	4,110
Total current assets	145,765	17,602	25,600
Total assets	$145,765	$17,602	$25,600

LIABILITIES
Current liabilities:
Accrued liabilities	$222	$4,995	$1,190
Total current liabilities	222	4,995	1,190
Total liabilities	222	4,995	1,190

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, 4,859,055 outstanding at September 30, 2018 and 3,359,055 outstanding at December 31, 2017 and September 30, 2017	48,591	33,591	33,591
Additional paid-in-capital	5,937,368	5,772,368	5,772,368
Accumulated deficit	(5,840,416)	(5,793,352)	(5,781,549)
Total shareholders' equity	145,543	12,607	24,410
Total liabilities and shareholders' equity	$145,765	$17,602	$25,600

See accompanying notes to condensed financial statements.

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

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2018	2017	2018	2017
Revenues	$--	$--	$--	$--

Administrative expenses	(9,616)	(9,716)	(48,381)	(43,263)
Other income:
Interest income	651	61	1,317	164
Net loss before income taxes	(8,965)	(9,655)	(47,064)	(43,099)
Income taxes	--	--	--	--
Net loss	($8,965)	($9,655)	($47,064)	($43,099)

Net loss per share, basic and diluted	($0.00)	($0.00)	($0.01)	($0.01)

Shares outstanding, basic and diluted	4,859,055	3,359,055	4,430,484	3,359,055

See accompanying notes to condensed financial statements.

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

	Nine Months Ended
	September 30,
	2018	2017
Cash Flows from Operating Activities
Interest income	$1,317	$164
Cash paid to suppliers	(65,438)	(43,135)
Net cash used in operating activities	(64,121)	(42,971)
Cash Flows from Investing Activities	--	--
Cash Flows from Financing Activities
Issuance of common stock	180,000	--
Net cash provided by financing activities	180,000	--
Net increase (decrease) in cash and cash equivalents	115,879	(42,971)
Cash and cash equivalents, beginning of the period	17,273	64,461
Cash and cash equivalents, end of the period	$133,152	$21,490

Reconciliation of net loss to net cash used in operating activities:
Net loss	($47,064)	($43,099)
Increase in prepaid expenses	(12,284)	(212)
(Decrease) increase in accrued liabilities	(4,773)	340
Net cash used in operating activities	($64,121)	($42,971)

Cash paid for interest	$--	$--

Cash paid for income taxes	$--	$--

See accompanying notes to condensed financial statements.

Morgan Group Holding Co.
Condensed Statement of Shareholders’ Equity
(Unaudited)

	Nine Months Ended September 30, 2018
	Common Stock		Additional
		Par	Paid in	Accumulated
	Shares	Value	Capital	Deficit	Total
Shareholders’ equity, December 31, 2017	3,359,055	$33,591	$5,772,368	($5,793,352)	$12,607
Issuance of common shares	1,500,000	15,000	165,000	--	180,000
Net loss for nine months ended September 30, 2018	--	--	--	(47,064)	(47,064)
Shareholders’ equity, September 30, 2018	4,859,055	$48,591	$5,937,368	($5,840,416)	$145,543

See accompanying notes to condensed financial statements.

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”) 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.

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, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. 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.

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 a cash equivalent approximates its fair value based on its nature.

At September 30, 2018, December 31, 2017, and September 30, 2017, 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.

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.

Recent Accounting Developments

In February 2016, the FASB issued ASU 2016-02, which amends the guidance in U.S. GAAP for the accounting for leases. ASU 2016-02 requires a lessee to recognize assets and liabilities arising from most operating leases in the condensed statement of financial position. It requires these operating leases to be recorded on the balance sheet as right of use assets and offsetting lease liability obligations. This new guidance will be effective for the Company’s first quarter of 2019. The Company is currently evaluating this guidance and the impact it will have on its financial statements and related disclosures, but does not expect it to have a material impact.

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 $197,200 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 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 March 19, 2018 the Company sold in a private placement to LICT, 1,500,000 of its shares common stock for $180,000, or $0.12 per share. These funds are intended to be used to pay administrative costs for the next three years, until an acquisition candidate can be found and appropriate financing obtained. The funds from the sale were received on April 3, 2018.

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 expired unexercised.

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

Overview

The Company currently has no operating businesses and is 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 company status and to find and evaluate potential acquisitions. These costs are estimated at $50,000 per year.

Results of Operations

Three Months Ended September 30, 2018 and 2017

For the three months ended September 30, 2018, the Company incurred $9,616 of administrative expenses, an decrease of $100 from the $9,716 of administrative expenses for the three months ended September 30, 2017. All categories of expenses in 2018 were in line with the previous year.

During the third quarter of 2018, the Company earned $651 from its investment in a United States Treasury money market fund as compared to $61 in the third quarter of 2017. The sale of shares for $180,000, for which the proceeds were received early in the second quarter of 2018, was the cause of the increase.

Nine Months Ended September 30, 2018 and 2017

For the nine months ended September 30, 2018, the Company incurred $43,381 of administrative expenses, an increase of $5,118 from the $43,263 of administrative expenses for the nine months ended September 30, 2017. The increase was primarily due to increased legal fees in 2018.

During the first three quarters of 2018, the Company earned $1,317 from its investment in a United States Treasury money market fund as compared to $164 in the first three quarters of 2017. The sale of shares for $180,000, for which the proceeds were received early in the second quarter of 2018, was the cause of the increase.

Liquidity and Capital Resources

On March 19, 2018 the Company sold in a private placement to LICT Corporation 1,500,000 shares of its common stock for $180,000, or $0.12 per share. These funds are intended to be used to pay administrative costs for the next three years, to allow the Company to search for an acquisition candidate and appropriate financing. The funds from this sale were received on April 3, 2018.

As of September 30, 2018, the Company’s principal assets consisted of cash and cash equivalents of $133,152.

The Company has adopted 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 a debt and/or equity offering, or potentially a hybrid instrument. There is no assurance that the Company can obtain such financial resources to successfully implement this strategy.

At the Company’s Annual Meeting of Stockholders on May 8, 2014, its stockholders voted to amend the Company’s Certificate of Incorporation (the “Charter Amendment”) to increase the number of authorized shares of common stock, par value $0.01 per share, from 10,000,000 to 100,000,000. This Charter Amendment gives the Company greater flexibility in considering and planning for future corporate needs, including, but not limited to, possible future capital raising activities, potential strategic transactions, including mergers, acquisitions, and business combinations, as well as other general corporate transactions. Such transactions may be undertaken with affiliates of the Company or unaffiliated third parties. The Board believes that additional authorized shares of common stock could enable the Company to take timely advantage of market conditions and favorable financing and acquisition opportunities that become available.

The Company has no current plan, commitment, arrangement, understanding or agreement regarding the issuance of the additional shares of common stock that could result from the Company’s adoption of this Charter Amendment.

The Company has not yet filed the Amended Certificate of Incorporation with its state of incorporation, Delaware.

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 Acting Chief Executive Officer/Chief Financial Officer has 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 Acting Chief Executive Officer/Chief Financial Officer has 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 has been 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 mate-rially 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 an on-going 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).

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

Acting Chief Executive Officer/Chief Financial Officer

October 26, 2018