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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, 2004
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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
MORGAN GROUP HOLDING CO.
(Exact name of Registrant as specified in its charter)
Delaware 13-4196940
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(State of jurisdiction of (IRS Employer
Incorporation) 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. Yes X No
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Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2of the Act).Yes No X
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Indicate the number of shares outstanding of each of the Registrant's classes of
Common Stock, as of the latest practical date.
Class Outstanding at November 1, 2004
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Common Stock, $.01 par value 3,055,345
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INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements and Supplementary Data.
Financial Statements Unaudited
Balance Sheets as of
September 30, 2004, December 31, 2003 and September 30, 2003
Statements of Operations for the
Three and Nine Months Ended September 30, 2004 and 2003
Statements of Cash Flows for the
Nine Months Ended September 30, 2004 and 2003
Notes to Financial
Statements as of September 30, 2004
PART II. OTHER INFORMATION
Item 2. Exhibits and Reports of Form 8-K
SIGNATURE
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Morgan Group Holding Co.
Balance Sheets
(Unaudited)
(Dollars in thousands)
September 30, December 31, September 30,
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2004 2003 2003
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ASSETS
Current assets:
Cash and cash equivalents ..................... $ 401 $ 399 $ 405
------- ------- -------
Total curent assets ........................ 401 399 405
Net assets of The Morgan Group, Inc. .......... -- -- --
------- ------- -------
Total assets ............................... $ 401 $ 399 $ 405
======= ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Current liabilities:
Accrued expenses .............................. $ 3 $ -- $ 6
------- ------- -------
Total current liabilities .................. 3 -- 6
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 ........................... (5,244) (5,243) (5,243)
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Total shareholders' equity ................. 398 399 399
------- ------- -------
Total liabilities and shareholders' equity . $ 401 $ 399 $ 405
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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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2004 2003 2004 2003
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Administrative expenses ...................... $ (2) $ 1 $ (3) $ (35)
Investment income ............................ -- 1 2 3
------- ------- ------- -------
Net income (loss) .......................... $ (2) $ 2 $ (1) $ (32)
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Basic and diluted net loss per share ......... $ 0.00 $ 0.00 $ 0.00 $ (0.01)
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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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2004 2003
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Operating activities:
x Net income (loss) ................................... $ (1) $ (32)
Adjustments to reconcile net loss to net
cash used in operating activities:
Increase in accrued expenses .................. 3 4
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Net cash provided by (used in) operating activities 2 (28)
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Net increase (decrease) in cash and equivalents ... 2 (28)
Cash and cash equivalents at beginning of period ....... 399 433
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Cash and cash equivalents at end of period ......... $ 401 $ 405
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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
Morgan Group Holding Co. ("Holding" or "the Company") was incorporated in
November 2001 as a wholly-owned subsidiary of Lynch Interactive Corporation
("Interactive") 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 the estimated value of Morgan's assets in liquidation are insufficient
to satisfy its estimated obligation, and therefore, 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
estimated 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. Accordingly, at
September 30, 2004, December 31, 2003 and September 30, 2003, in the
accompanying balance sheet, the Net Assets of The Morgan Group, Inc. were
recorded at $0.
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-Q 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 three
and nine months ended September 30, 2004 are not necessarily indicative of
the results that may be expected for the year ending December 31, 2004. 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 effect the amounts
reported in the financial statements and accompanying notes. Actual results
could differ from these estimates.
Note 2. Income Taxes
No income tax benefit has been recorded in the accompanying financial
statements, as the realization of losses, for income tax purposes, is
dependent upon the generation of future taxable income during the period
when such losses would be deductible. As of September 30, 2004, the Company
has a tax loss carryforward, primarily a capital loss carryforward, of
approximately $4.0 million. The recording of the deferred tax asset of $1.5
million associated with this loss has been fully reserved.
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Note 3. Commitments and Contingencies
Holding has not guaranteed any of the obligations of Morgan and it has no
further commitment or obligation to fund any creditors.
Note 4. Financial Statements not reviewed by Independent Public Accountants
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
Management's Discussion and Analysis of Financial Condition and Plan of
Operation.
Overview
On October 18, 2002, Morgan adopted the liquidation basis of accounting and
accordingly, Morgan's assets and liabilities have been adjusted to estimated 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 about $50,000 per year.
Results of Operations
For the nine months ended September 30, 2004, the Company incurred $3,000 of
expenses as compared to $35,000 of expenses in the first nine months of 2003,
which included certain one-time professional fees.
For the three months ended September 30, 2004, the Company incurred $2,000 in
operating expenses.
Investment income is earned on the cash balance in a money market fund.
Liquidity and Capital Resources
As of September 30, 2004, the Company's only assets consisted of $401,000 in
cash and an unrecognized asset relating to a tax loss carryforward, primarily
capital, of about $4 million.
Item 4. Controls and Procedures
Quantitative and Quantitative Analysis of Market Risk
The Company is minimally exposed to changes in market risk because as of
September 30, 2004, the Company has no market sensitive assets or liability.
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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.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) None.
(b) Current Report on Form 8-K filed on August 17, 2004, explaining reason for
not providing Rule 15d-14 and Section 906 certifications with Quarterly
Report on Form 10-Q for the period ending June 30, 2004.
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SIGNATURES
Pursuant to the requirements the Securities 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
Duly Authorized Officer
November 15, 2004
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