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 March 31, 2015

 
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

MORGAN GROUP HOLDING CO.
(Exact name of small business issuing as specified in its charter)

Delaware        13-4196940
(State or other jurisdiction of
Incorporation of organization)
  (IRS Employer
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 April 30, 2015
Common Stock, $.01 par value 3,359,055
 



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

2



PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Unaudited Financial Statements

Condensed Balance Sheets as of
March 31, 2015, December 31, 2014 and March 31, 2014

Condensed Statements of Operations for the
Three Months Ended March 31, 2015 and 2014

Condensed Statements of Cash Flows for the
Three Months Ended March 31, 2015 and 2014

Condensed Statement of Shareholders’ Equity for the
Three Months Ended March 31, 2015

Notes to Condensed Financial
Statements as of March 31, 2015

3



Morgan Group Holding Co.
Condensed Balance Sheets
(Unaudited)

      March 31,       December 31,       March 31,
2015 2014 2014
ASSETS
Current assets:
       Cash and cash equivalents $149,377 $187,429 $255,469
       Prepaid expenses 14,108 9,082 14,109
              Total current assets 163,485 196,511 269,578
Equipment – net 409 572 1,062
              Total assets $163,894 $197,083 $270,640
 
LIABILITIES
Current liabilities:
       Accrued liabilities $700 $8,257 $23,872
              Total current liabilities 700 8,257 23,872
              Total liabilities 700 8,257 23,872
 
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, 3,359,055 outstanding 33,591 33,591 33,591
Additional paid-in-capital 5,772,368 5,772,368 5,772,368
Accumulated deficit (5,642,765) (5,617,133) (5,559,191)
              Total shareholders' equity 163,194 188,826 246,768
              Total liabilities and shareholders' equity $163,894 $197,083 $270,640

See accompanying notes to condensed financial statements

4



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

Three Months Ended
March 31,
      2015       2014
Revenues $-- $--
 
Administrative expenses (25,632) (47,834)
Other income:
       Realized and unrealized loss on
              marketable securities -- (543)
              Net loss before income taxes (25,632) (48,377)
Income taxes -- --
       Net loss ($25,632) ($48,377)
 
Net loss per share, basic and diluted ($0.01) ($0.01)
 
Shares outstanding, basic and diluted 3,359,055 3,359,055

See accompanying notes to condensed financial statements

5



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

Three Months Ended
March 31,
      2015       2014
Cash Flows from Operating Activities  
       Cash paid to suppliers ($38,052) ($28,826)
              Net cash used in operating activities (38,052) (28,826)
 
Cash Flows from Investing Activities
       Proceeds from the sale of marketable securities -- 275,314
              Net cash provided by investing activities -- 275,314
                     Net (decrease) increase in cash and cash equivalents (38,052) 246,488
       Cash and cash equivalents, beginning of the period 187,429 8,981
                     Cash and cash equivalents, end of the period $149,377 $255,469
 
Reconciliation of net loss to net cash used in operating
activities:
              Net loss ($25,632) ($48,377)
              Depreciation 163 163
              Realized losses from the sale of marketable securities -- 4,781
              Change in unrealized gains from investment in
                     marketable securities -- (4,238)
              Increase in prepaid expenses (5,026) (5,027)
              (Decrease) increase in accrued liabilities (7,557) 23,872
Net cash used in operating activities ($38,052) ($28,826)
  
Cash paid for interest $-- $--
  
Cash paid for income taxes $-- $--

See accompanying notes to condensed financial statements

6



Morgan Group Holding Co.
Condensed Statement of Shareholders’ Equity
Three Months Ended March 31, 2015

Common Stock Additional
            Par       Paid in       Accumulated      
Shares Value Capital Deficit Total
Shareholders’ equity,
       December 31, 2014 3,359,055 $33,591 $5,772,368 ($5,617,133) $188,826
Net loss for three
       months ended March  
       31, 2015 -- -- -- (25,632) (25,632)
Shareholders’ equity,
       March 31, 2015 3,359,055 $33,591 $5,772,368 ($5,642,765) $163,194

See accompanying notes to condensed financial statements

7



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 months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. 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 March 31, 2015, December 31, 2014 and March 31, 2014 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.

 
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 $210,702 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.


8



The Company has not guaranteed any of the obligations of Morgan and believes it currently has no commitment or obligation to fund any creditors.

 
Note 5. Shareholders’ Equity and Stock Options and Warrants
 

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. In order to economize costs until necessary, the Company has not yet filed the Amended Certificate of Incorporation with its state of incorporation, Delaware, to effectuate the authorization.

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 Company’s Common Stock at an exercise price of $0.15 per share of Common Stock, which was 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, 2015 and December 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 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 are exercisable currently through December 21, 2017.


Item 2. Management’s 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 $50,000 to $100,000 per year.

Results of Operations

Three months Ended March 31, 2015 and 2014

For the three months ended March 31, 2015, the Company incurred $25,632 of administrative expenses, a decrease of $22,202 from the $47,834 of administrative expenses for the three months ended March 31, 2014. The decrease was essentially due to additional acquisition costs in 2014 related to a specific potential acquisition candidate that the Company did not ultimately acquire.

The Company may from time to time invest in marketable securities. 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 2015.

Liquidity and Capital Resources

As of March 31, 2015, the Company’s principal assets consisted of cash and cash equivalents of $149,377.

The Company has implemented a growth strategy to acquire US-based businesses of an appropriate type and size. The execution of such a strategy may 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.

9



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 will 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 will 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 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

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 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 going-forward basis.

10



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).

11



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 7, 2015

12