ENERKON SOLAR INTERNATIONAL, INC. - FORM 10-Q

ENERKON SOLAR INTERNATIONAL, INC. - FORM 10-Q - May 14, 2014

Attached files

Attached files

ENERKON SOLAR INTERNATIONAL, INC. Reports

file	filename
EX-31.1 - CERTIFICATION - ENERKON SOLAR INTERNATIONAL, INC.	chod_ex311.htm
EX-32.2 - CERTIFICATION - ENERKON SOLAR INTERNATIONAL, INC.	chod_ex322.htm
EX-32.1 - CERTIFICATION - ENERKON SOLAR INTERNATIONAL, INC.	chod_ex321.htm
EX-31.2 - CERTIFICATION - ENERKON SOLAR INTERNATIONAL, INC.	chod_ex312.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014

Commission file number 33-37809-NY

CASTLE HOLDING CORP.

(Exact Name of Registrant as Specified in Its Charter)

Nevada		77-0121957
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

18 East Sunrise Highway, Suite 311

Freeport, NY 11520

(516)-378-1000

(Address of Principal Executive Offices, Zip Code & Telephone Number)

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to section 15(d) of the Act:

Common Stock, $0.0025 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o 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 x No o

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 o No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No x

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. (Check one):

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of May 2, 2014, the registrant had 37,629,510 shares of common stock issued and 37,068,010 shares of common stock outstanding, as well as 699,250 Class A Convertible preferred shares issued and outstanding.

Castle Holding Corp.

TABLE OF CONTENTS

Quarterly Period Ended March 31, 2014

		Page No.

PART I – Financial Information

Item 1.	Financial Statements		3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operaions		12

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	13

Item 4.	Controls and Procedures		13

PART II – Other Information

Item 1.	Legal Proceedings		14

Item 1A.	Risk Factors		14

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	14

Item 3.	Defaults Upon Senior Securities		14

Item 4.	Mine Safety Disclosures		14

Item 5.	Other Information		14

Item 6.	Exhibits		15

SIGNATURES			16

PART I

ITEM 1. FINANCIAL STATEMENTS

CASTLE HOLDING CORP. AND SUBSIDIARIES
(A Development Stage Entity)
Consolidated Statements of Financial Condition
(Unaudited and Unreviewed)

	March 31, 2014			September 30, 2013
Assets
Cash and cash equivalents	$	1,616		$	993
Marketable securities, at market value		69			226
Restricted cash and securities, at market value (note 3)		363,604			380,938
Other assets		2			2

Total assets	$	365,291		$	382,159

Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and accrued expenses	$	-		$	116
Loans payable to affiliates		3,081			500

Total liabilities		3,081			616

Stockholders' equity (note 5):

Preferred stock, $.01 par value; authorized 9,000,000 shares, none issued and outstanding		-			-
Class A Convertible Preferred stock, $.01 par value; authorized 1,000,000 shares, issued and outstanding 699,250 and 699,250 shares, respectively; liquidation preference of $699,250 and $699,250, respectively (note 5)		6,993			6,993
Common stock, $.0025 par value; authorized 100,000,000 shares, issued 37,629,510 and 37,629,510 shares, respectively (net of 261,000 shares "stopped" and requested to be cancelled)		94,074			94,074
Common stock held in FBO Accounts as treasury stock - 560,700 and 551,000 shares, respectively - at cost (note 3)		(27,414	)		(24,809	)
Additional paid-in capital		1,516,142			1,516,142
Accumulated deficit		(1,227,585	)		(1,210,857	)

Total stockholders' equity		362,210			381,543

Total liabilities and stockholders' equity	$	365,291		$	382,159

See notes to consolidated financial statements.

CASTLE HOLDING CORP. AND SUBSIDIARIES
(A Development Stage Entity)
Consolidated Statements of Operations
(Unaudited and Unreviewed)

	Three Months Ended March 31,						Six Months Ended March 31,						Period October1, 2005 (Inception of Development Stage) to March 31,
	2014			2013			2014			2013			2014
Revenues:
Net gain (loss) on marketable securities	$	(30,862	)	$	(30,703	)	$	(23,903	)	$	(91,356	)	$	(36,541	)
Interest and dividends		6,579			1,535			9,118			9,912			135,036

Total revenues		(24,283	)		(29,168	)		(14,785	)		(81,444	)		98,495

Expenses:
General and administrative		1,909			8			1,943			1,449			13,441

Total expenses		1,909			8			1,943			1,449			13,441

Income (loss) from continuing operations		(26,192	)		(29,176	)		(16,728	)		(82,893	)		84,054
Discontinued operations		-			-			-			-			103,789

Net income (loss)	$	(26,192	)	$	(29,176	)	$	(16,728	)	$	(82,893	)	$	188,843

Net income (loss) per common share:
Basic	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

Weighted average number of common shares outstanding:
Basic		37,070,910			37,561,710			37,073,660			37,566,810
Diluted		37,770,160			38,260,960			37,772,910			38,266,060

See notes to consolidated financial statements.

CASTLE HOLDING CORP. AND SUBSIDIARIES

(A Development Stage Entity)

Consolidated Statements of Changes in Stockholders' Equity

For the Period October 1, 2005 (Inception of Development Stage) to March 31, 2014

(Unaudited and Unreviewed)

	Class A Convertible Preferred Stock, $.01 Par Value						Common Stock, $.0025 Par Value				Treasury Common Stock, $.0025 Par Value				Additional Paid-in			Accumulated			Total Stock- holders'
	Shares			Amount			Shares		Amount		Shares		Amount		Capital			Deficit			Equity

Balances, September 30, 2005		706,750		$	7,068			37,379,510	$	93,449		-	$	-	$	1,515,192		$	(1,416,428	)	$	199,281

Sale of common shares in
October 2005		-			-			200,000		500		-		-		1,500			-			2,000

Purchase of preferred shares in
June 2006		(2,500	)		(25	)		-		-		-		-		(375	)		-			(400	)

Net income		-			-			-		-		-		-		-			107,392			107,392

Balances, September 30, 2006		704,250			7,043			37,579,510		93,949		-		-		1,516,317			(1,309,036	)		308,273

Sale of common shares in
January 2007		-			-			50,000		125		-		-		425			-			550

Purchase of preferred shares in
October 2006		(2,500	)		(25	)		-		-		-		-		(375	)		-			(400	)

Net income		-			-			-		-		-		-		-			21,735			21,735

Balances, September 30, 2007		701,750			7,018			37,629,510		94,074		-		-		1,516,367			(1,287,301	)		330,158

Net income		-			-			-		-		-		-		-			30,275			30,275

Balances, September 30, 2008		701,750			7,018			37,629,510		94,074		-		-		1,516,367			(1,257,026	)		360,433

Purchase of preferred shares in
September 2009		(2,500	)		(25	)		-		-		-		-		(225	)		-			(250	)

CASTLE HOLDING CORP. AND SUBSIDIARIES

(A Development Stage Entity)

Consolidated Statements of Changes in Stockholders' Equity

For the Period October 1, 2005 (Inception of Development Stage) to March 31, 2014

(Unaudited and Unreviewed)

																Accumulated Deficit
	Class A Convertible Preferred Stock, $.01 Par Value				Common Stock, $.0025 Par Value				Treasury Common Stock, $.0025 Par Value					Additional Paid-in					Total Stock- holders'
	Shares		Amount		Shares		Amount		Shares		Amount			Capital					Equity

Net income		-		-		-		-		-		-			-		17,579			17,579

Balances, September 30, 2009		699,250		6,993		37,629,510		94,074		-		-			1,516,142		(1,239,447	)		377,762

Net income		-		-		-		-		-		-			-		3,630			3,630

Balances, September 30, 2010		699,250		6,993		37,629,510		94,074		-		-			1,516,142		(1,235,817	)		381,392

Net income		-		-		-		-		-		-			-		6,555			6,555

Balances, September 30, 2011		699,250		6,993		37,629,510		94,074		-		-			1,516,142		(1,229,262	)		387,947

Purchase of treasury stock		-		-		-		-		49,400		(2,509	)		-		-			(2,509	)

Net income		-		-		-		-		-		-			-		80,453			80,453

Balances, September 30, 2012		699,250		6,993		37,629,510		94,074		49,400		(2,509	)		1,516,142		(1,148,809	)		465,891

Purchase of treasury stock		-		-		-		-		501,600		(22,300	)		-		-			(22,300	)

Net loss		-		-		-		-		-		-			-		(62,048	)		(62,048	)

Balances, September 30, 2013		699,250		6,993		37,629,510		94,074		551,000		(24,809	)		1,516,142		(1,210,857	)		381,543

Purchase of treasury stock		-		-		-		-		9,700		(2,605	)		-		-			(2,605	)

Net income		-		-		-		-		-		-			-		(16.728	)		(16,728	)

Balances, March 31, 2014		699,250	$	6,993		37,629,510	$	94,074		560,700	$	(27,414	)	$	1,516,142	$	(1,227,585	)	$	362,210

See notes to consolidated financial statements.

	Six Months Ended March 31,						Period October 1, 2005 (Inception of Development Stage) to March 31,
	2014			2013			2014
Cash flows from operating activities:
Net income (loss)	$	(16,728	)	$	(82,893	)	$	188,843
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation		-			-			263
Changes in operating assets and liabilities:
Marketable securities		157			(98	)		131
Restricted cash and securities		17,334			85,693			(65,659	)
Other assets		-			-			693
Accounts payable and accrued expenses		(116	)		(116	)		(74,674	)

Net cash provided by (used in) operating activities		647			2,586			49,597

Cash flows from investing activities		-			-			-

Cash flows from financing activities:
Acquisition of treasury stock		(2,605	)		(2,151	)		(27,414	)
Proceeds from sale of common shares		-			-			2,550
Proceeds of loans from affiliates		2,581			-			3,081
Repayment of loans payable to related parties		-			-			(26,015	)
Repurchase of preferred shares		-			-			(1,050	)

Net cash used in financing activities		(24	)		(2,151	)		(48,848	)

Net increase (decrease) in cash and cash equivalents		623			435			749
Cash and cash equivalents, beginning of year		993			1,093			867

Cash and cash equivalents, end of period	$	1,616		$	1,528		$	1,616

Supplemental disclosures of cash flow information:
Interest paid	$	-		$	-		$	-
Income taxes paid	$	-		$	-		$	-

See notes to consolidated financial statements.

CASTLE HOLDING CORP. AND SUBSIDIARIES

(A Development Stage Entity)

Notes to Consolidated Financial Statements

Three and Six Months Ended March 31, 2014 and 2013 and Period October 1, 2005 (Inception of Development Stage) to March 31, 2014

(Unaudited and Unreviewed)

1. ORGANIZATION

Castle Holding Corp. (“CHC”) is a holding company which was incorporated in Nevada on June 13, 1986. The subsidiaries of CHC are as follows:

Beverage King, Ltd. (incorporated in Delaware January 2, 1990) - leased automobiles for Company employees; no operations since October 31, 2005.

Church Street Securities Corp. (incorporated in New York April 11, 1991) – operated a securities broker-dealer from October 26, 1995 to January 6, 2005; decided to cease operations on January 6, 2005.

Castle Advisors, Inc. (incorporated in New York December 23, 1993) - acts as a financial consultant; no revenues in years ended September 30, 2013 and 2012.

Wall Street Indians, Ltd. (incorporated in New York May 27, 1994) - provided office services and supplies to the Company to October 31, 2005; no operations since October 31, 2005.

The Unlisted Stock Market Corporation (incorporated in New York December 9, 1999) – no operations from inception.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Interim financial statements – The accompanying unaudited interim financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all information and footnotes required by generally accepted accounting principles for annual audited financial statements. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments considered necessary for a fair presentation.

The results of operations for the three and six months ended March 31, 2014 are not necessarily indicative of the results to be expected for the year ending September 30, 2014. The accompanying unaudited interim financial statements should be read in conjunction with the Company’s financial statements and notes related thereto for the years ended September 30, 2013 and 2012 included in our Form 10-K filed with the SEC.

Principles of consolidation – The consolidated financial statements include the accounts of CHC and its subsidiaries (collectively, the “Company”). Castle Securities Corp., a former subsidiary that operated a securities broker-dealer from November 1, 1985 to October 31, 2003, dissolved in September 2009. All significant intercompany balances and transactions have been eliminated in consolidation.

Basis of Presentation – The accompanying consolidated financial statements are presented in accordance with the guidance provided by Accounting Standards Codification ("ASC") topic no. 915, "Development Stage Entities". We have used fiscal year ended September 30, 2006 as the inception of our development stage. Since cessation of the operations of Church Street Securities Corp. in January 2005, the Company has had no business operations or operating revenues.

CASTLE HOLDING CORP. AND SUBSIDIARIES

(A Development Stage Entity)

Notes to Consolidated Financial Statements

Three and Six Months Ended March 31, 2014 and 2013 and Period October 1, 2005 (Inception of Development Stage) to March 31, 2014

(Unaudited and Unreviewed)

Use of estimates – The preparation of the 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 those estimates.

Cash and cash equivalents - The Company considers highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.

Marketable securities and restricted cash and securities - Marketable securities and restricted cash and securities consist primarily of trading securities valued at market. All fair value measurements are based on Level 1 inputs (i.e., closing trading prices of respective marketable securities). Unrealized gains and losses are reflected in income ($(25,900) and $(103,844) for the six months ended March 31, 2014 and 2013, respectively).

Income taxes – Income taxes are accounted for under the assets and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.

Net income (loss) per common share – Basic net income (loss) per common share is calculated based upon the weighted average number of common shares outstanding. Diluted net income (loss) per common share is calculated based upon the weighted average number of common shares outstanding and dilutive convertible preferred shares outstanding.

3. RESTRICTED CASH AND SECURITIES, AT MARKET VALUE

At March 31, 2014 and September 30, 2013, restricted cash and securities consist of:

	March 31, 2014			September 30, 2013

Uninvested cash	$	329		$	23,398

Marketable securities:
560,700 and 551,000 shares, respectively, Castle Holding Corp. (CHOD) (reflected as treasury stock in the consolidated balance sheet)		162,603			275,500
0 and 60,000 shares, respectively, Liberty Pete Corp. (LBPE)		-			420
27,500 and 24,000 shares, respectively, Medallion Financial Group (TAXI)		363,275			357,120

Subtotal		526,207			656,438

Less Castle Holding Corp. (CHOD) shares treated as treasury stock		(162,603	)		(275,500	)

Net	$	363,604		$	380,938

CASTLE HOLDING CORP. AND SUBSIDIARIES

(A Development Stage Entity)

Notes to Consolidated Financial Statements

Three and Six Months Ended March 31, 2014 and 2013 and Period October 1, 2005 (Inception of Development Stage) to March 31, 2014

(Unaudited and Unreviewed)

Except for 375,000 shares Castle Holding Corp. held in safekeeping at March 31, 2014, the restricted cash and securities are held at accounts with TD Ameritrade Inc. (the “First FBO Account”) and E Trade Securities LLC (the “Second FBO Account”). The First FBO Account was established in 2001 to secure payment of the investment in the Class A Convertible Preferred Shares in the event of liquidation of CHC (see Note 5).

In 2001, as a provision of the private offering (see Note 5), CHOD purchased a total of $380,000 face value of United States Treasury Strips (the “Strips”) maturing August 15, 2011 for a total of approximately $233,000. On August 15, 2011, the Strips matured and the First FBO Account was credited $380,000. Since August 15, 2011, the FBO Accounts have acquired and sold a variety of marketable equity securities.

On November 14, 2013, TD Ameritrade notified us to transfer the First FBO Account to another brokerage firm and restricted us to liquidating transactions only. On February 19, 2014, we opened an account at E Trade Securities and, except for 181,500 shares of Castle Holding Corp. common stock still held at TD Ameritrade, all assets held at TD Ameritrade were transferred to E Trade Securities.

Had CHC required conversion of the 699,250 shares of the Class A Convertible Preferred Shares into 699,250 shares of CHOD Common Stock and paid the Class A Convertible Preferred stockholders $0.50 per Preferred Share (or $349,625 total) at March 31, 2014 (see Note 5), the remaining restricted cash and securities available to CHC at March 31, 2014 would have been $13,979.

4. OTHER ASSETS

Other assets consist of:

	March 31, 2014		September 30, 2013
9% equity ownership of Castle Trucking Corp.	$	1	$	1
9% equity ownership of U Trade Inc.		1		1

Total	$	2	$	2

5. STOCKHOLDERS’ EQUITY

Class A Convertible Preferred Stock

From March 2001 to September 2001, CHC sold 706,750 shares of Class A Convertible Preferred Stock for gross proceeds of $706,750.

Each share of Class A Convertible Preferred Stock is convertible at any time into one share of the Company’s Common Stock at the election of the Class A Convertible Preferred Stockholder. At any time, CHC may require conversion of the Class A Convertible Preferred Shares provided that CHC Common Stock closes at a price of $1.50 per share or higher for more than 20 consecutive business days. At any time after one year from the issue date of the Class A Convertible Preferred Shares, CHC may require conversion of the Class A Convertible Preferred Shares provided that CHC pay the Class A Convertible Preferred Stockholder $0.50 per Class A Convertible Preferred Share.

The Class A Convertible Preferred Shares are non-voting and will have a first priority, up to $1.00 per Class A Convertible Preferred Share, in the event of liquidation of CHC.

As a provision of the private offering, CHC used 33% of the gross proceeds of the offering to purchase $380,000 face value of U.S. Treasury Strips (the “Strips”) maturing August 15, 2011 (see Note 3).

The proceeds from the Strips are available to holders of the Class A Convertible Preferred Shares and are in addition to the other assets of CHC. The Strips, and upon maturity, subsequent investments purchased from such proceeds, are to be held by CHC to secure payment of the investment in the Class A Convertible Preferred Shares in the event of liquidation of CHC. The protection afforded by the Strips are to terminate upon the conversion of the Class A Convertible Preferred Shares and the Strips, or their proceeds, are to thereafter be available to CHC.

In the years ended September 30, 2006 and 2007, CHC repurchased a total of 5,000 shares of Class A Convertible Preferred Stock. In the year ended September 30, 2009, CHC repurchased 2,500 shares of Class A Convertible Preferred Stock. Accordingly, the proportionate share (approximately 1.06%) of the FBO Accounts (or approximately $3,854 market value at March 31, 2014) may be available to CHC.

CASTLE HOLDING CORP. AND SUBSIDIARIES

(A Development Stage Entity)

Notes to Consolidated Financial Statements

Three and Six Months Ended March 31, 2014 and 2013 and Period October 1, 2005 (Inception of Development Stage) to March 31, 2014

(Unaudited and Unreviewed)

Common Stock

In October 2005, CHC sold 200,000 shares of common stock to a CHC affiliate for $2,000 ($0.01 per share).

In January 2007, CHC sold 50,000 shares of common stock to a former employee for $550 ($0.011 per share).

6. INCOME TAXES

CHC files a consolidated income tax return with its subsidiaries for federal reporting purposes. CHC and its subsidiaries file separate income tax returns for state reporting purposes.

The provisions for (benefit from) income taxes consisted of:

	Six Months Ended March 31,
	2014			2013
Current:
Federal	$	-		$	-
State		-			-

Total		-			-

Deferred:
Federal		(5,317	)		(26,352	)
State		(1,087	)		(5,388	)
Change in valuation allowance		6,404			31,740

Total		-			-

Provision for income taxes	$	-		$	-

The Company’s effective tax rate differed from the United States Federal income tax rate for the following reasons:

	Six Months Ended March 31,
	2014			2013

Computed Federal income tax at 34%	$	(5,688	)	$	(28,184	)
Computed state income tax, net of Federal tax effect		(716	)		(3,556	)
Change in valuation allowance		(6,404	)		31,740

Provision for income taxes	$	-		$	-

Based on management's present assessment, the Company has not yet determined it to be more likely than not that a deferred tax asset of $412,500 as of March 31, 2014 attributable to the future utilization of $1,162,059 of prior year net operating loss carryforwards and $51,175 of capital loss carryforwards will be realized. Accordingly, the Company has maintained a 100% allowance against the deferred tax asset in the financial statements at March 31, 2014. The Company will continue to review this valuation allowance and make adjustments as appropriate. The net operating loss carryforwards expire as follows: $22,164 in year 2019, $185,653 in year 2021, $694,345 in year 2022, $135,943 in year 2023, $66,021 in year 2024, $39,208 in year 2025 and $18,725 in year 2034. The capital loss carryforward of $51,175 expires in year 2018.

Current United States income tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.

7. COMMITMENTS AND CONTINGENCIES

Since December 2005, the Company has been using space provided by a public accounting firm owned by the Company’s treasurer at no cost to the Company.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

Castle Holding Corp. (“CHOD”) is a holding company which was incorporated in Nevada on June 13, 1986. On September 30, 1987, CHOD acquired Castle Securities Corp., a New York corporation which operated as a securities broker dealer from November 1, 1985 to October 31, 2003. On April 11, 1991, CHOD formed Church Street Securities Corp., a New York corporation which operated as a securities broker dealer from October 26, 1995 to January 6, 2005. Since January 2005, CHOD and its subsidiaries have had no business operations or operating revenues. Our current plan is to acquire an operating company in a reverse acquisition transaction involving the exchange of capital stock.

RESULTS OF OPERATIONS – Three Months ended March 31, 2014 compared to Three Months ended March 31, 2013.

For the three months ended March 31, 2014, we incurred a net loss from investment of marketable securities of $30,862 compared to a net loss of $30,703 for the three months ended March 31, 2013. Substantially all of the marketable securities are held in an account with E Trade Financial LLC (the “Second FBO Account”) which was established to secure payment of the Class A Convertible Preferred Shares in the event of liquidation of CHOD.

Interest and dividends revenues increased $5,044 from $1,535 in 2013 to $6,579 in 2014.

Expenses increased $1,901 from $8 in 2013 to $1,909 in 2014.

Net income (loss) decreased $2,984 from a net loss of $29,176 in 2013 to a net loss of $26,192 in 2014. The $2,984 decrease was due to the $5,044 increase in interest and dividends revenues, offset by the $159 increase in net loss on marketable securities and the $1,901 increase in expenses.

RESULTS OF OPERATIONS – Six Months ended March 31, 2014 compared to Six Months ended March 31, 2013:

For the six months ended March 31, 2014, we incurred a net loss from investment of marketable securities of $23,903 compared to a net loss of $91,356 for the six months ended March 31, 2013. Substantially all of the marketable securities are held in an account with E Trade Financial LLC (the “Second FBO Account”) which was established to secure payment of Class A Convertible Preferred Shares in the event of liquidation of CHOD.

Interest and dividends revenues decreased $794 from $9,912 in 2013 to $9,118 in 2014.

Expenses increased $494 from $1,449 in 2013 to $1,943 in 2014.

Net loss decreased $66,165 from a net loss of $82,893 in 2013 to a net loss of $14,785 in 2014. The $66,165 decrease was due to the $67,453 reduction in net loss on marketable securities, offset by the $794 decrease in interest and dividends revenues and the $494 increase in expenses.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2014, the Company had cash and cash equivalents of $1,616, total assets of $365,291, total liabilities of $3,081, and total stockholders’ equity of $362,210. Of the $365,291 total assets at March 31, 2014, $363,604 represents cash and marketable securities held in the Second FBO Account to secure payment of the Class A Convertible Preferred Shares in the event of liquidation of CHOD.

Cash and cash equivalents increased $623 from $993 at September 30, 2013 to $1,616 at March 31, 2014. The $623 increase was due to the $2,581 loan from an affiliate and the $647 provided by operating activities, offset by $2,605 used to acquire treasury stock.

The Company currently has no other agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.

We currently have no commitments with any person for any capital expenditures.

We have no off-balance sheet arrangements.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Since year ended September 30, 2002, Castle Holding Corp. has had no principal accountant. Accordingly, there has been no disagreements with accountants on accounting and financial disclosure.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” as defined by Rule 229.10(f)(1), we are not required to provide the information required by this Item 3.

ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our principal executive officer and the principal financial officer, we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were effective such that the material information required to be included in our Securities and Exchange Commission reports is accumulated and communicated to our management, including our principal executive and financial officer, recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms relating to our company, particularly during the period when this report was being prepared.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in our internal control over financial reporting that occurred during the fiscal quarter ended March 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

ITEM 1A. RISK FACTORS

As a “smaller reporting company” as defined by Rule 229.10(f)(1), we are not required to provide the information required by this Item 1A.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) Recent Sales of Unregistered Securities – None.

(b) Issuer Purchases of Equity Securities:

For the three months ended March 31, 2014, we purchased our common stock as follows:

Period	(a) Total number of shares purchased		(b) Average price paid per share		(c) Total number of shares (purchased as part of publicly announced plans or programs)		(d) Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs
January 2014		0	$	-		0		0
February 2014		0	$	-		0		0
March 2014		4,200	$	0.23		0		0
Total		4,200	$	0.23		0		0

For the three months ended March 31, 2014, we did not purchase any of our Class A Convertible Preferred Stock.

We presently have no publicly announced repurchase plan or program to purchase our Common Stock or Series A Convertible Preferred Stock.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following exhibits are including with this filing:

3.1*		Articles of Incorporation (Form S-18 Registration No. 33-8395-LA, effective November 14, 1986)

3.2*		Amendment to Articles of Incorporation (Form S-18 Registration No. 33-37809-NY, effective February 11, 1991)

3.2*		Amendment to Articles of Incorporation filed August 15, 2001 (September 30, 2001 Form 10-K filed January 15, 2002)

3.3*		By-laws (Form S-18 Registration No. 33-8395-LA, effective November 14, 1986)

4.4*		Specimen Stock Certificate (Form S-18 Registration No. 33-37809-NY, effective February 11, 1991)

31.1		Sarbanes-Oxley Section 302 certification by George R. Hebert

31.2		Sarbanes-Oxley Section 302 certification by Michael T. Studer

32.1		Sarbanes-Oxley Section 906 certification by George R. Hebert

32.2		Sarbanes-Oxley Section 906 certification by Michael T. Studer

99.1*		Complaint for Injunctive and Other Relief (dated September 14, 1994) – Securities and Exchange Commission, Plaintiff (Form 8-K dated September 13, 1994)

____________

*	Previously filed and incorporated by reference.

SIGNATURES

Pursuant to the requirements of Section 13(a) or 15(d) of 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.

	Castle Holding Corp.

Date: May 14, 2014	By:	/s/ George R. Hebert
		George R. Hebert
		President, Chief Executive Officer

	Castle Holding Corp.

Date: May 14, 2014	By:	/s/ Michael T. Studer
		Michael T. Studer
		Secretary, Treasurer, Chief Financial Officer

CASTLE HOLDING CORP. AND SUBSIDIARIES

(A Development Stage Entity)

Consolidated Statements of Cash Flows

(Unaudited and Unreviewed)