Attached files
================================================================================
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended: December 31, 2009
-----------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________to____________
Commission file number: 333-73996
---------
MORGAN GROUP HOLDING CO.
--------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 13-4196940
-------- ----------
State of other jurisdiction (I.R.S. Employer
incorporation or organization Identification No.)
401 Theodore Fremd Avenue, Rye, NY 10580
---------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (914) 921-1877
--------------
Securities registered pursuant to Section 12(b) of the Act: None
----
Securities registered pursuant to section 12(g) of the Act: None
----
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
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 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulations S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K, or any
amendment to this Form 10-KSB. [ ]
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]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) Yes [X] No [ ]
As of February 26, 2010, the aggregate market value of the Registrant's voting
and nonvoting common equity held by non-affiliates of the Registrant was
approximately $176,000, which value, solely for the purposes of this
calculation, excludes shares held by the Registrant's officers, directors, and
their affiliates. Such exclusion should not be deemed a determination or an
admission by the issuer that all such individuals are, in fact, affiliates of
the issuer.
The number of outstanding shares of the Registrant's Common Stock was 3,055,345
as of February 26, 2010.
--------------------------------------------------------------------------------
================================================================================
2
MORGAN GROUP HOLDING CO.
TABLE OF CONTENTS
Page No.
Item 1. Business. 4
Item 1A. Risk Factors. 4
Item 1B. Unresolved Staff Comments. 4
Item 2. Properties. 4
Item 3. Legal Proceedings. 4
Item 4. Submission of Matters to a Vote of Security Holders. 4
Item 5. Market For Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities 4-5
Item 6. Selected Financial Data. 5
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations. 5-6
Item 7A. Quantitative and Qualitative Disclosure About Market Risk. 6
Item 8. Financial Statements and Supplementary Data. 6-14
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure. 14
Item 9A. Controls and Procedures. 14-15
Item 9B. Other Information. 15
Item 10. Directors, Executive Officers and Corporate Governance. 15-17
Item 11. Executive Compensation. 17
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters. 17-18
Item 13. Certain Relationships and Related Transactions and Director
Independence. 18
Item 14. Principal Accounting Fees and Services. 18-19
Item 15. Exhibits, Financial Statement Schedules. 19
Signatures 20
3
PART I
------
Item 1. Business.
Morgan Group Holding Co. (the "Company" or "Holding") was incorporated
in November 2001 to serve, among other business purposes, as a holding company
for LICT Corporation's ("LICT") controlling interest in The Morgan Group, Inc.
("Morgan"). On January 24, 2002, LICT spun off all but 235,294 of its shares in
the Company to its stockholders.
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. On March 31, 2008, the bankruptcy proceeding was concluded and the
bankruptcy court dismissed the proceeding. There was no appeal from the
bankruptcy court's dismissal of the proceeding, and that proceeding is now
entirely ended. Morgan received no value for its equity ownership from the
bankruptcy proceeding.
We are continuing to evaluate all options available to the Company at
this time. One option is to make a further distribution of any remaining cash,
effectively liquidating the Company.
At present we have no full time employees.
Item 1A. Risk Factors
We are a smaller reporting company as defined in Item 10(f)(1) of
Regulation S-K and thus are not required to report the risk factors specified in
Item 503(c) of Regulation S-K.
Item 1B. Unresolved Staff Comments.
None
Item 2. Properties.
The Company does not own any property.
Item 3. Legal Proceedings.
The Company is not a party to any legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
-------
Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters,
and Issuer Purchases of Equity Securities.
The shares of our common stock trade on the over-the-counter market in
the Pink Sheets, under the symbol: MGHL.PK. The following table sets forth the
high and low market prices of the common stock for the periods indicated, as
reported by published sources. These prices represent inter-dealer quotations
without retail markup, markdown, or commission and may not necessarily represent
actual transactions.
4
High Low
---- ---
2009 Fiscal Year
----------------
First Quarter $0.13 $0.085
Second Quarter $0.14 $0.075
Third Quarter $0.14 $0.131
Fourth Quarter $0.131 $0.131
2008 Fiscal Year
----------------
First Quarter $0.17 $0.125
Second Quarter $0.165 $0.14
Third Quarter $0.151 $0.145
Fourth Quarter $0.151 $0.09
As of February 26, 2010, there were approximately 800 holders of record
of the Company's common stock.
The Company has never declared a cash dividend on its common stock and
its Board of Directors does not anticipate that it will pay cash dividends in
the foreseeable future.
During the fiscal year ended December 31, 2009, the Company did not
sell any unregistered securities, and did not repurchase any of its shares from
its shareholders.
Item 6. Selected Financial Data.
We are a smaller reporting company as defined in Item 10(f)(1) of
Regulation S-K and thus are not required to report the selected financial data
specified in Item 303 of Regulation S-K.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation.
Forward-Looking Statements and Uncertainty of Financial Projections
Forward-looking statements are not based on historical information but
relate to future operations, strategies, financial results or other
developments. Forward-looking statements are necessarily based upon estimates
and assumptions that are inherently subject to significant business, economic
and competitive uncertainties and contingencies, many of which are beyond our
control and many of which, with respect to future business decisions, are
subject to change. These uncertainties and contingencies can affect actual
results and could cause actual results to differ materially from those expressed
in any forward-looking statements made by, or on behalf of, us.
Overview
As of December 31, 2009, the Company's only assets consisted of
approximately $377,000 in cash and a capital loss carry forward of about $4
million which it expects will expire in 2013. The ability to utilize this loss
carry-forward is dependent on the Company's ability to generate a capital gain
prior to its expiration.
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 $25,000 to $50,000 per
year.
We are evaluating all options available to the Company at this time.
One option is to make a further distribution of any remaining cash effectively
liquidating the company.
Results of Operations
For the year ended December 31, 2009, the Company incurred
administrative expenses of $30,000 as compared to $37,000 in 2008, lower audit
fees was the primary cause of the variance.
5
Investment income was $900 during the year ended December 31, 2009 as
compared to $9,000 during 2008 respectively 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 decrease in 2009.
Liquidity and Capital Resources
At December 31, 2009, we had approximately $377,000 in cash as compared
to approximately $405,000 at December 31, 2008.
Recently Issued Accounting Pronouncements
In June 2009, the Financial Accounting Standards Board ("FASB")
designated the FASB Accounting Standards Codification (the "Codification") as
the source of authoritative accounting principles to be applied by
nongovernmental entities in the preparation of financial statements in
conformity with GAAP. Concurrent with this designation, the FASB also issued
guidance on the framework for selecting the accounting principles used in the
preparation of financial statements. The Codification is a structure which takes
accounting pronouncements and organizes them into approximately 90 accounting
topics. In addition to the Codification, the rules and interpretive releases of
the Securities and Exchange Commission ("SEC") under federal securities laws are
considered sources of authoritative GAAP for SEC registrants, as the
Codification does not replace or affect guidance issued by the SEC or its staff
for public entities in their filings with the SEC. Upon the adoption of the
Codification, all previously existing non-SEC accounting and reporting standards
are superseded, with the exception of certain pronouncements grandfathered by
the FASB. Going forward, the FASB will issue Accounting Standards Updates
("ASUs") in order to update the Codification, provide background information
about new guidance and describe the bases for conclusions on changes to the
Codification. The Codification and the guidance surrounding the framework for
selecting accounting principles is effective for financial statements issued for
interim and annual periods ending after September 15, 2009. The Company adopted
the Codification and associated guidance for the interim period ended September
30, 2009. As a result, previous references to former GAAP in the financial
statements have been eliminated (with the exception of certain grandfathered
pronouncements), and the financial statement disclosures starting with the
interim period ended September 30, 2009 explain the accounting concepts utilized
rather than specific GAAP references from the Codification. The adoption of the
Codification and associated guidance did not change the application of GAAP to
the Company's financial statements.
Item 7A. Quantitive and Qualitative Analysis of Market Risk
We are a smaller reporting company as defined in Item 10(f)(1) of
Regulation S-K and thus are not required to report the Quantitative and
Qualitative Analysis of Market Risk specified in Item 305 of Regulation S-K.
Item 8. Financial Statements and Supplementary Data.
Report of Independent Registered Public Accounting Firm
Balance Sheets as of
December 31, 2009 and 2008
Statements of Operations for the Years Ended
December 31, 2009 and 2008
Statements of Cash Flows for the Years Ended
December 31, 2009 and 2008
Statements of Shareholders' Equity for the Years Ended
December 31, 2009 and 2008
Notes to Financial Statements
6
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
To the Board of Directors and Stockholders of
Morgan Group Holding Company
Rye, New York
We have audited the accompanying balance sheets of Morgan Group Holding Company
(the "Company") as of December 31, 2009 and 2008 and the related statements of
operations, stockholders' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free to material misstatement. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting.
Our audits included consideration of internal control over financial reporting
as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements present fairly, in all material
respects, the financial position of Morgan Group Holding Company as of December
31, 2009 and 2008 and the results of its operations and its cash flows for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.
/s/ Daszkal Bolton LLP
Boca Raton, Florida
March 16, 2010
7
Morgan Group Holding Co.
Balance Sheets
December 31,
--------------------------------
2009 2008
-------------- --------------
ASSETS
Current assets:
Cash $ 376,684 $ 404,876
Prepaid expenses 7,000 7,500
-------------- --------------
Total current assets 383,684 412,376
Investment in Morgan Group, Inc. - -
-------------- --------------
Total assets $ 383,684 $ 412,376
============== ==============
LIABILITIES $ - $ -
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 30,553 30,553
authorized, 3,055,345 outstanding
Additional paid-in-capital 5,611,447 5,611,447
Accumulated deficit (5,258,316) (5,229,624)
-------------- --------------
Total shareholders' equity 383,684 412,376
-------------- --------------
Total liabilities and shareholders' equity $ 383,684 $ 412,376
============== ==============
See accompanying notes to financial statements
8
Morgan Group Holding Co.
Statements of Operations
Year Ended December 31,
--------------------------------
2009 2008
-------------- --------------
Revenues $ - $ -
Administrative expenses (29,556) (36,747)
Other income - interest 864 8,877
-------------- --------------
Net loss before income taxes (28,692) (27,870)
Income taxes - -
-------------- --------------
Net loss ($ 28,692) ($ 27,870)
============== ==============
Loss per share, basic and diluted ($ 0.01) ($ 0.01)
============== ==============
Shares outstanding, based and diluted 3,055,345 3,055,345
See accompanying notes to financial statements
9
Morgan Group Holding Co.
Statements of Cash Flows
Year Ended December 31,
--------------------------------
2009 2008
-------------- --------------
Cash Flows from Operating Activities
Interest received $ 864 $ 8,877
Cash paid to suppliers and employees (29,056) (44,247)
-------------- --------------
Net Cash Used In Operating Activities (28,192) (35,370)
-------------- --------------
Cash Flows from Investing Activities - -
-------------- --------------
Cash Flows from Financing Activities - -
-------------- --------------
Net Decrease in Cash (28,192) (35,370)
Cash, Beginning of the Year 404,876 440,246
-------------- --------------
Cash, End of the Year $ 376,684 $ 404,876
============== ==============
Reconciliation of net loss to net cash used in
operating activities:
Net loss ($ 28,692) ($ 27,870)
Change in assets:
Decrease (increase) in prepaid expenses 500 (7,500)
-------------- --------------
Net cash used in operating activities ($ 28,192) ($ 35,370)
============== ==============
See accompanying notes to financial statements
10
Morgan Group Holding Co.
Statements of Shareholders' Equity
---------------------------------------------------------------------------------------------------------------------------
Preferred Stock Common Stock
------------------------- ------------------------- Additional
Paid in Accumulated
Shares Par Value Shares Par Value Capital Deficit Total
----------- ----------- ----------- ----------- ------------ ------------ -----------
Balance, December 31,
2007 - $ - 3,055,345 $ 30,553 $ 5,611,447 ($ 5,201,754) $ 440,246
Net loss for year ended
December 31, 2008 - - - - - (27,870) (27,870)
----------- ----------- ----------- ----------- ------------ ------------ -----------
Balance, December 31,
2008 - - 3,055,345 30,553 5,611,447 (5,229,624) 412,376
Net loss for year ended
December 31, 2009 - - - - - (28,692) (28,692)
----------- ----------- ----------- ----------- ------------ ------------ -----------
Balance, December 31,
2009 - $ - 3,055,345 $ 30,553 $ 5,611,447 ($ 5,258,316) $ 383,684
=========== =========== =========== =========== ============ ============ ===========
See accompanying notes to financial statements
11
Morgan Group Holding Co.
Notes to Financial Statements
Note 1. Basis of Presentation and Significant Accounting Principles
-----------------------------------------------------------
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 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.
Significant Accounting Principles
---------------------------------
Cash and Cash Equivalents
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.
At December 31, 2009 and 2008 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.
Earnings per Share
Net (loss) income per common share ("EPS") is computed using the number
of common shares issued in connection with the Spin-Off.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
12
Subsequent Events
The Company evaluates events and transactions occurring subsequent to
the date of the financial statements for matters requiring recognition or
disclosure in the financial statements. The accompanying financial statements
consider events through March 16, 2010.
Recently Issued Accounting Pronouncements
In June 2009, the Financial Accounting Standards Board ("FASB")
designated the FASB Accounting Standards Codification (the "Codification") as
the source of authoritative accounting principles to be applied by
nongovernmental entities in the preparation of financial statements in
conformity with GAAP. Concurrent with this designation, the FASB also issued
guidance on the framework for selecting the accounting principles used in the
preparation of financial statements. The Codification is a structure which takes
accounting pronouncements and organizes them into approximately 90 accounting
topics. In addition to the Codification, the rules and interpretive releases of
the Securities and Exchange Commission ("SEC") under federal securities laws are
considered sources of authoritative GAAP for SEC registrants, as the
Codification does not replace or affect guidance issued by the SEC or its staff
for public entities in their filings with the SEC. Upon the adoption of the
Codification, all previously existing non-SEC accounting and reporting standards
are superseded, with the exception of certain pronouncements grandfathered by
the FASB. Going forward, the FASB will issue Accounting Standards Updates
("ASUs") in order to update the Codification, provide background information
about new guidance and describe the bases for conclusions on changes to the
Codification. The Codification and the guidance surrounding the framework for
selecting accounting principles is effective for financial statements issued for
interim and annual periods ending after September 15, 2009. The Company adopted
the Codification and associated guidance for the interim period ended September
30, 2009. As a result, previous references to former GAAP in the financial
statements have been eliminated (with the exception of certain grandfathered
pronouncements), and the financial statement disclosures starting with the
interim period ended September 30, 2009 explain the accounting concepts utilized
rather than specific GAAP references from the Codification. The adoption of the
Codification and associated guidance did not change the application of GAAP to
the Company's financial statements.
Note 2. Investment in Morgan Group, Inc.
-------------------------------
Upon Morgan's bankruptcy filing, the Company has deconsolidated its
investment, as the Company believes it no longer has controlling or significant
influence. At December 31, 2007, the estimated value of Morgan's assets in
liquidation was insufficient to satisfy its estimated obligations. On March 31,
2008, the bankruptcy proceeding was concluded and the bankruptcy court dismissed
the proceeding. The Company received no value for its equity ownership.
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. As of December
31, 2009 and 2008, the Company has an unused net operating loss carryforward of
$41,062 and $29,886 available for use on its future corporate income tax returns
which will expire during the years 2020 through 2029. 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.
13
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.
Cumulative temporary differences at December 31, 2009 and 2008 are as
follows:
December 31,
---------------------------
2009 2008
------------ ------------
Deferred tax assets:
Temporary basis difference $ 1,673,987 $ 1,673,987
Net operating losses 41,062 29,886
------------ ------------
1,715,049 1,703,873
Valuation allowance (1,715,049) (1,703,873)
------------ ------------
$ - $ -
============ ============
Income tax provision for the years ended December 31, 2009 and 2008 is comprised
of:
December 31,
---------------------------
2009 2008
------------ ------------
Current income tax benefit $ - $ -
Deferred income tax benefit (11,175) (10,855)
Change in valuation allowance 11,175 10,855
------------ ------------
Income tax benefit $ - $ -
============ ============
The reconciliation of the provision for income taxes for the years ended
December 31, 2009 and 2008, and the amount computed by applying the statutory
federal income tax rate to net loss is as follows:
December 31,
---------------------------
2009 2008
------------ ------------
Tax benefit at statutory rate $ 9,755 $ 9,476
State taxes, net of federal expense 1,420 1,379
Change of valuation allowance (11,175) (10,855)
------------ ------------
$ - $ -
============ ============
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.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not Applicable.
Item 9A. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures.
------------------------------------------------
As required by Rule 15d-15 under the Securities Exchange Act of 1934,
as of the end of the period covered by this report, Management carried out an
evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures as of December 31, 2009. This evaluation was carried out
under the supervision and with the participation of our principal executive
officer as well as our principal financial officer, who concluded that our
disclosure controls and procedures are effective.
14
Disclosure controls and procedures are controls and other procedures
that are designed to ensure that information required to be disclosed in our
reports filed or submitted under the Securities Exchange Act are recorded,
processed, summarized and reported, within the time periods specified in the
Securities and Exchange Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in our reports filed under the
Exchange Act are accumulated and communicated to management, including our
principal executive officer and our principal financial officer, as appropriate,
to allow timely decisions regarding required disclosure.
(b) Management's Annual Report on Internal Control of Financial
-----------------------------------------------------------
Reporting.
---------
The Company's management is responsible for establishing and
maintaining an adequate system of internal control over financial reporting, as
defined in the Rule 13a-15(f) of the Securities Exchange Act of 1934, as
amended. Management conducted an assessment of the Company's internal control
over financial reporting based on the framework established by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control-Integrated Framework. Based on the assessment, management concluded
that, as of December 31, 2009, the Company's internal control over financial
reporting is effective.
This annual report does not include an attestation report of a
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by a registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permits the Company to provide only management's report
in this annual report.
(c) Changes in Internal Control over Financial Reporting
----------------------------------------------------
There was no significant change in the Company's internal control over
financial reporting that occurred during the most recently completed fiscal
quarter that materially affected, or is reasonably likely to materially affect,
the Company's internal control over financial reporting.
Item 9B. Other Information.
None.
PART III
--------
Item 10. Directors, Executive Officers and Corporate Governance.
The following table sets forth the name, business address, present
principal occupation, employment history, positions, offices or employments for
the past five years and ages as of February 27, 2009 for our executive officers
and directors. Members of the board are elected and serve for one year terms or
until their successors are elected and qualify.
Name Age Position
---- --- --------
Mario J. Gabelli 67 Chief Executive Officer and Director
Robert E. Dolan 58 Chief Financial Officer and Director
______________________
15
Mario J. Gabelli has served as Chairman and Chief Executive Officer of
the Company since November 2001. Mr. Gabelli has also served as the Chairman,
Chief Executive Officer and Chief Investment Officer -Value Portfolios of GAMCO
Investors Inc. ("GAMCO"), a publicly traded company in the asset management
business, since November 1976. He serves as director or trustee of registered
investment companies managed by GAMCO and its affiliates ("Gabelli Funds"). Mr.
Gabelli also has been a portfolio manager of Teton Advisors, Inc., a publicly
traded company in the asset management business since 1993. Teton was spun-off
from GAMCO on March 2009. Mr. Gabelli has also served as Chairman of LICT
Corporation (formerly known as Lynch Interactive Corporation), a public company
engaged in multimedia and other services since December 2004 (and also from
September 1999 to December 2002), as Vice Chairman from December 2002 to
December 2004 and as Chief Executive Officer from September 1999 to November
2005. Mr. Gabelli has served as a director of CIBL, Inc. from November 2007, a
private company with operations in cable television, broadcasting, and wireless
communications. In addition, Mr. Gabelli is the Chief Executive Officer, a
director and the controlling shareholder of GGCP, Inc., a private company which
owns a majority of GAMCO's Class B Stock, and the Chairman of MJG Associates,
Inc., which acts as a investment manager of various investment funds and other
accounts. Mr. Gabelli is also the Chief Executive Officer of Greenwich PMV
Acquisition Corp., a blank check company formed for the purpose of acquiring one
or more operating businesses or assets for which GGCP, Inc. is the sponsor, and
the Chairman of the Gabelli Entertainment & Telecommunications Acquisition
Corp., a blank check company formed for the purpose of acquiring one or more
operating businesses or assets in the media, entertainment, telecommunications
or regulated utilities industries for which the Company is the sponsor. He also
serves as an Overseer of the Columbia University Graduate School of Business;
Trustee of Boston College, Roger Williams University and Winston Churchill
Foundation; Director of the National Italian American Foundation, The
American-Italian Cancer Foundation, The Foundation for Italian Art & Culture and
the Mentor/National Mentoring Partnership; and Chairman, Patron's Committee for
the Immaculate Conception School. He is also Chairman of the Gabelli Foundation,
Inc.
Robert E. Dolan has served as our Chief Financial Officer since
November 2001. Mr. Dolan is also the Interim Chief Executive Officer and Chief
Financial Officer of LICT Corporation, and has served as its Interim Chief
Executive Officer from May 1, 2006, Chief Financial Officer from September 1999
and Controller from September 1999 to January 2004. In addition, Mr. Dolan was,
until September 14, 2009 is the Assistant Secretary and director of Sunshine PCS
Corporation, a public holding company, and has served in these capacities since
November 2000. Also from November 17, 2007, Mr. Dolan is also the Interim Chief
Executive Officer and Chief Financial Officer of CIBL, Inc.
Committees of the Board of Directors
------------------------------------
We presently do not have an audit committee, compensation committee,
nominating committee, an executive committee of our board of directors, stock
plan committee or any other committees. Currently, our full board of serves as
the audit committee and approves, when applicable, the appointment of auditors
and the inclusion of financial statements in our periodic reports. Mr. Dolan is
deemed to be an "audit committee financial expert."
We have not made any changes to the process by which shareholders may
recommend nominees to the board of directors since our last annual report.
Code of Ethics
--------------
We have not yet adopted a corporate code of ethics. Our board of
directors is considering whether in light of the nature of our company and its
lack on any operations, it is necessary or appropriate to adopt a formal
corporate code of ethics. If it determined that such a code would be necessary
or appropriate, it will then consider establishing, over the next year, a code
of ethics to deter wrongdoing and promote honest and ethical conduct; provide
full, fair, accurate, timely and understandable disclosure in public reports;
comply with applicable laws; ensure prompt internal reporting of code
violations; and provide accountability for adherence to the code.
Legal Proceedings
-----------------
Neither of our directors and executive officers has been involved in
legal proceedings that would be material to an evaluation of our management.
Indemnification of Directors and Officers
-----------------------------------------
Under Section 145 of the Delaware General Corporation Law, the Company
has broad powers to indemnify its directors and officers against liabilities
they may incur in such capacities. The Company's certificate of incorporation
provides that its directors and officers shall be indemnified to the fullest
extent permitted by Delaware law. The certificate of incorporation also provides
that the Company shall, to the fullest extent permitted by PersonNameDelaware
law, as amended from time to time, indemnify and advance expenses to each of its
currently acting and former directors, officers, employees and agents.
16
Delaware law provides that a corporation may limit the liability of
each director to the corporation or its stockholders for monetary damages except
for liability:
- for any breach of the director's duty of loyalty to the corporation or
its stockholders,
- for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law,
- in respect of certain unlawful dividend payments or stock redemptions
or repurchases and
- for any transaction which the director derives an improper personal
benefit.
The Company's certificate of incorporation provides for the elimination
and limitation of the personal liability of its directors for monetary damages
to the fullest extent permitted by PersonNameDelaware law. In addition, the
certificate of incorporation provides that if PersonNameDelaware law is amended
to authorize the further elimination or limitation of the liability of a
director, then the liability of our directors shall be eliminated or limited to
the fullest extent permitted by PersonNameDelaware law, as amended. The effect
of this provision is to eliminate the Company's rights and its stockholders
rights, through stockholders' derivative suits, to recover monetary damages
against a director for breach of the fiduciary duty of care as a director,
except in the situations described above. This provision does not limit or
eliminate the Company's rights or its stockholders' rights to seek non-monetary
relief such as an injunction or rescission in the event of a breach of a
director's duty of care.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted for its directors, officers, and
controlling persons, pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission this sort of indemnification is against public policy as expressed in
the Securities Act of 1933, as amended, and is therefore unenforceable.
At present, there is no pending litigation or proceeding involving any
of our directors, officers, employees or agents where indemnification will be
required or permitted.
Section 16(a) Beneficial Ownership Reporting Compliance
-------------------------------------------------------
To our knowledge, based solely upon our review of copies of reports
received by us pursuant to Section 16(a) of the Securities Exchange Act of 1934,
we believe that all of our directors, officers and beneficial owners of more
than 10 percent of our common stock filed all such reports on a timely basis
during 2009.
Item 11. Executive Compensation.
The Company has not paid any compensation to any person, including its
directors and executive officers, since inception. The Company does not have any
employment contracts with either of its executive officers.
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.
The following table sets forth information concerning ownership of our
common stock as of February 26, 2010 by each person known by us to be the
beneficial owner of more than five percent of the common stock, each director,
each executive officer, and by all directors and executive officers as a group.
We believe that each stockholder has sole voting power and sole dispositive
power with respect to the shares beneficially owned by him. Unless otherwise
indicated, the address of each person listed below is 401 Theodore Fremd Avenue,
Rye, New York 10580.
17
Number of Shares
of Common Stock
Beneficial Owner Beneficially Owned Percent of Ownership
---------------- ------------------ --------------------
Mario J. Gabelli 858,384(1) 28.1%
LICT Corporation 235,294 7.7%
T. Baulch 300,000(2) 9.8%
Jay Gottlieb 252,360(3) 8.3%
Walter P. Carucci, Uncle
Mills Partners and
Bernard Zimmerman &
Company, Inc. 202,339(4) 6.6%
Robert E. Dolan 579(5) **
All directors and executive
officers as a group (2 in
total) 858,963 28.1%
___________________
** Less than 1%
(1) Represents 283,090 shares of common stock owned directly by Mr.
Gabelli, 340,000 shares owned by a limited partnership in which Mr.
Gabelli is the general partner and has approximately a .5% interest,
and 235,294 shares owned by LICT Corporation (Mr. Gabelli is a "control
person" of LICT Corporation and therefore shares owned by LICT
Corporation are set forth in the table as also beneficially owned by
Mr. Gabelli). Mr. Gabelli disclaims beneficial ownership of the shares
owned by the partnership and LICT Corporation, except for his interest
therein.
(2) Based solely on a Schedule 13G filed by T. Baulch Gottlieb filed as of
February 3, 2010, includes 106,427 held of record by the wife of T.
Baulch.
(3) Based solely on a Schedule 13G filed by Jay Gottlieb filed as of
February 11, 2010.
(4) Based solely on a combined Schedule 13G filed by Walter P. Carucci,
Uncle Mills Partners, Carr Securities Corporation, and Bernard
Zimmerman & Company, Inc. filed as of February 9, 2010 reflecting the
following share ownership: Walter P. Carucci - 87,739 shares (including
10,000 shares owned by Uncle Mills Partners and 6,526 owned by Carr
Securities Corporation); Uncle Mills Partners - 10,000; a Carr
Securities Corporation - 6,526; and Bernard Zimmerman & Company -
114,600 shares.
(5) Includes 70 shares registered in the name of Mr. Dolan's children with
respect to which Mr. Dolan has voting and investment power and 109
shares owned by Mr. Dolan through the LICT Corporation 401(k) Savings
Plan.
Item 13. Certain Relationships and Related Transactions.
None.
Item 14. Principal Accountant Fees and Services.
Audit Fees
The aggregate fees billed by Daszkal Bolton LLP for professional services
rendered for the audit of the Company's financial statements for 2009 and 2008
were $14,000 and $15,000, respectively. For 2009 and 2008, Daszkal Bolton LLP
billed the Company an aggregate of $10,500 and $12,000, respectively for reviews
of the financial statements included in its quarterly Form 10-Q.
18
Audit-Related Fees
No audit-related fees were billed by Daszkal Bolton LLP for 2009 or 2008.
Tax Fees
No tax fees were billed by Daszkal Bolton LLP for 2009 or 2008.
All Other Fees
No other fees were billed by Daszkal Bolton LLP for 2009 or 2008 for
services other than as set forth above.
PART IV
-------
Item 15. Exhibits, Financial Statement Schedules.
Exhibit Number Description
-------------- -----------
3.1 Certificate of Incorporation of the Company*
3.2 By-laws of the Company*
31.1 Rule 15d-14(a) Certification of the Chief Executive
Officer
31.2 Rule 15d-14(a) Certification of the Principal Accounting
Officer
32.1 Section 1350 Certification of the Chief Executive
Officer
32.2 Section 1350 Certification of the Principal Accounting
Officer
_______________
* Incorporated by reference to the exhibits to the Company's Registration
Statement on Form S-1 (Registration No. 333-73996).
19
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.
Dated: March 16, 2010 By: /s/ Robert E. Dolan
-------------------
ROBERT E. DOLAN
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Capacity Date
/s/ Mario J. Gabelli Chief Executive Officer March 16, 2010
-------------------- (Principal Executive Officer)
MARIO J. GABELLI and Director
/s/ Robert E. Dolan Chief Financial Officer March 16, 2010
------------------- (Principal Financial and
ROBERT E. DOLAN Accounting Officer) and
Director
2
