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, 2015 | |
| 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 [ ]
The number of outstanding shares of the Registrant's Common Stock was 3,359,055 as of February 17, 2016
MORGAN GROUP HOLDING
CO.
TABLE OF CONTENTS
PART I
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.
Effective November 1, 2012, Jonathan P. Evans was appointed as the Company’s Chief Executive Officer, replacing Mario J. Gabelli, who remains Chairman of the Board of Directors.
We are continuing to evaluate all options available to the Company at this time. Under Mr. Evans, the Company is looking to implement a growth strategy by acquiring businesses based in the United States of an appropriate type and size. The execution of such a strategy will require the Company to obtain significantly more financial resources than it currently possesses. Those resources could take the form of a debt and/or equity offering, or potentially a hybrid instrument. There is no assurance that the Company can obtain adequate financial resources to successfully implement this strategy.
At present, we have one full time employee.
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
The Company does not own any property.
The Company is not a party to any legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
3
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 OTC Pink®, under the symbol: MGHL. 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.
| High | Low | |||
| 2015 Fiscal Year | ||||
| First Quarter | $0.55 | $0.35 | ||
| Second Quarter | $0.51 | $0.51 | ||
| Third Quarter | $0.45 | $0.40 | ||
| Fourth Quarter | $0.30 | $0.15 | ||
| 2014 Fiscal Year | ||||
| First Quarter | $0.45 | $0.20 | ||
| Second Quarter | $0.95 | $0.26 | ||
| Third Quarter | $0.40 | $0.21 | ||
| Fourth Quarter | $0.40 | $0.35 | ||
As of February 17, 2016 there were approximately 650 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 years ended December 31, 2015 and 2014, the Company 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 on 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, 2015, the Company’s only assets consisted of $117,492 in cash and cash equivalents, and net operating loss carry forwards of approximately $474,000 which are expected to expire from 2023 to 2035.
The Company currently has no operating businesses and will seek acquisitions as part of its strategic alternatives. Its only costs are the expenses required to make the regulatory filings needed to maintain its public status and to find and evaluate potential acquisitions. These costs are estimated at $50,000 to $100,000 per year.
We are evaluating all options available to the Company at this time.
4
Results of Operations
For the year ended December 31, 2015, the Company incurred administrative expenses of $64,614 versus $108,588 in 2014. Administrative expenses decreased in 2015 from 2014 predominantly due to decreased expenses associated with acquisition activity of $29,259, and annual meeting costs of $12,373 in 2014.
During 2010, the company began to invest from time to time in marketable securities that are subject to a publicly disclosed acquisition offer but are trading below the proposed acquisition price and selected mutual funds. During the year ended December 31, 2014 the Company recorded $2,267 of net realized and unrealized gains from this activity. No net realized gains or losses were recorded during the year ended December 31, 2015. The relative amount of gains, or losses, and distributions in any period is very dependent on the number and timing of the available transactions over that period. Interest income from the Company investment in a United States Treasury money market fund was $2 in both of the years ended December 31, 2015 and 2014.
Liquidity and Capital Resources
At December 31, 2015, we had $117,492 in cash and cash equivalents as compared to $187,429 in cash and cash equivalents at December 31, 2014.
The Company has implemented a growth strategy to acquire US-based businesses of an appropriate type and size. The execution of such a strategy will require the Company to obtain significantly more financial resources than it currently possesses. Those resources could take the form of a debt and/or equity offering, or potentially a hybrid instrument. There is no assurance that the Company can obtain such financial resources to successfully implement this strategy.
Item 7A. Quantitative 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, 2015 and 2014
Statements of Operations
for the
Years Ended December 31,
2015 and 2014
Statements of Cash Flows
for the
Years Ended December 31,
2015 and 2014
Statements of Shareholders’
Equity for the
Years Ended December 31, 2015 and 2014
Notes to Financial Statements
5
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
and Shareholders of
Morgan Group Holding Co.
Rye, New York
We have audited the accompanying balance sheets of Morgan Group Holding Co. (the “Company”) as of December 31, 2015 and 2014, and the related statements of operations, shareholders’ equity, and cash flows for each of the years then ended. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of 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 audit 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Morgan Group Holding Co. as of December 31, 2015 and 2014, 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
February 19, 2016
6
Morgan Group Holding
Co.
Balance Sheets
| December 31, | |||
| 2015 | 2014 | ||
| ASSETS | |||
| Current assets: | |||
| Cash and cash equivalents | $117,492 | $187,429 | |
| Prepaid expenses | 6,722 | 9,082 | |
| Total current assets | 124,214 | 196,511 | |
| Property and equipment, net | -- | 572 | |
| Total assets | $124,214 | $197,083 | |
| LIABILITIES | |||
| Current liabilities: | |||
| Accounts payable | $-- | $8,257 | |
| Total current liabilities | -- | 8,257 | |
| COMMITMENTS AND CONTINGENCIES | |||
| SHAREHOLDERS' EQUITY | |||
| Preferred Stock, $0.01 par value, 1,000,000 shares | |||
| authorized, none outstanding | -- | -- | |
| Common Stock, $0.01 par value, 10,000,000 shares | |||
| authorized, 3,359,055 outstanding at December 31, 2015 | |||
| and 2014 | 33,591 | 33,591 | |
| Additional paid-in-capital | 5,772,368 | 5,772,368 | |
| Accumulated deficit | (5,681,745) | (5,617,133) | |
| Total shareholders' equity | 124,214 | 188,826 | |
| Total liabilities and shareholders' equity | $124,214 | $197,083 | |
See accompanying notes to financial statements
7
Morgan Group Holding
Co.
Statements of
Operations
| Year Ended December 31, | |||
| 2015 | 2014 | ||
| Revenues | $-- | $-- | |
| Administrative expenses | (64,614) | (108,588) | |
| Other income | |||
| Interest income and dividends received from marketable securities | 2 | 2 | |
| Realized and unrealized gains on marketable securities | -- | 2,267 | |
| Net loss before income taxes | (64,612) | (106,319) | |
| Income taxes | -- | -- | |
| Net loss | ($64,612) | ($106,319) | |
| Loss per share, basic and diluted | ($0.02) | ($ 0.03) | |
| Average shares outstanding, basic and diluted | 3,359,055 | 3,359,055 | |
See accompanying notes to financial statements
8
Morgan Group Holding
Co.
Statements of Cash
Flows
| Year Ended December 31, | |||
| 2015 | 2014 | ||
| Cash Flows from Operating Activities | |||
| Interest received | $2 | $2 | |
| Cash paid to suppliers | (69,939) | (99,678) | |
| Net cash used in operating activities | (69,937) | (99,676) | |
| Cash Flows from Investing Activities | |||
| Purchases of marketable securities | -- | (65,676) | |
| Proceeds from the sale of marketable securities | -- | 343,800 | |
| Net cash used in investing activities | -- | (278,124) | |
| Net (decrease) increase in cash and cash equivalents | (69,937) | 178,448 | |
| Cash and cash equivalents, beginning of the year | 187,429 | 8,981 | |
| Cash and cash equivalents, end of the year | $117,492 | $187,429 | |
| Reconciliation of net loss to net cash used in operating | |||
| activities: | |||
| Net loss | ($64,612) | ($106,319) | |
| Depreciation | 572 | 654 | |
| Realized gains from the sale of marketable securities | -- | 1,971 | |
| Change in unrealized losses on marketable securities | -- | (4,238) | |
| (Decrease) increase in accounts payable | (8,257) | 8,257 | |
| Decrease (increase) in prepaid expenses | 2,360 | (1) | |
| Net cash used in operating activities | ($69,937) | ($99,676) | |
See accompanying notes to financial statements
9
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, 2013 | -- | $-- | 3,359,055 | $33,591 | $5,772,368 | ($5,510,814) | $295,145 | |||||||
| Net loss for year ended December 31, 2014 | -- | -- | -- | -- | -- | (106,319) | (106,319) | |||||||
| Balance, December 31, 2014 | -- | -- | 3,359,055 | 33,591 | 5,772,368 | (5,617,133) | 188,826 | |||||||
| Net loss for year ended December 31, 2015 | -- | -- | -- | -- | -- | (64,612) | (64,612) | |||||||
| Balance, December 31, 2015 | -- | $-- | 3,359,055 | $33,591 | $5,772,368 | ($5,681,745) | $124,214 | |||||||
See accompanying notes to financial statements
10
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”) to serve, among other business purposes, as a holding company for LICT’s controlling interest in The Morgan Group, Inc. (“Morgan”). On January 24, 2002, LICT spun off 2,820,051 shares of Holding common stock through a pro rata distribution (“Spin-Off”) to its stockholders and retained 235,294 shares. 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 March 31, 2008, and the bankruptcy court dismissed the proceeding and it was entirely concluded at that time. The Company 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 a cash equivalent approximates its fair value based on its nature. At December 31, 2015 and 2014 all cash and cash equivalents were invested in a United States Treasury money market fund, for which an affiliate of the Company serves as the investment manager. Stock Based Compensation During 2012, the Company issued stock options and warrants to two of the Company’s officers, see Note 5. The Company uses a fair value based method of accounting for stock-based compensation provided to our employees. The estimated fair value of option awards on the grant date is determined using the Black Scholes option-pricing model. This sophisticated model utilizes a number of assumptions in arriving at its results, including the estimated life of the option, the risk free interest rate at the date of grant and the volatility of the underlying common stock. There may be other factors which are not considered in the Black Scholes model but which may have an effect on the value of the options as well. The effects of changing any of the assumptions or factors employed by the Black Scholes model may result in a significantly different valuation for the options. No options or warrants were granted during the years ended December 31, 2015 and 2014. Earnings per share Basic earnings per share is based on the weighted-average number of common shares outstanding during each period. Diluted earnings per share is based on basic shares plus the incremental shares that would be issued upon the assumed exercise of in-the-money stock options and unvested restricted stock using the treasury stock method, if dilutive. 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. |
11
|
Note 2. |
Fair Value of Financial Instruments |
|
The Company measures fair value as the selling price that would be received for an asset, or paid to transfer a liability, in the principal market on the measurement date. The hierarchy established by the FASB prioritizes fair value measurements based on the types of inputs used in the valuation technique. The inputs are categorized into the following levels: Level 1 – Observable inputs such as quoted prices in active markets for identical assets or liabilities. Level 2 – Inputs other than quoted prices that are observable, either directly or indirectly, for identical or similar assets and liabilities in active or non-active markets; or model-derived valuations or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liability. Level 3 – Unobservable inputs not corroborated by market data, therefore requiring the entity to use the best available information, including management assumptions. At December 31, 2015 and 2014, the Company’s cash equivalents include money market securities. These securities are valued utilizing quoted market prices from identical instruments and are categorized in Level 1 of the fair value hierarchy. At December 31, 2015 and 2014, there were no gross unrealized gains or losses. | |
|
Note 3. |
Investment in Morgan Group, Inc. |
|
Upon Morgan’s bankruptcy filing, the Company deconsolidated its investment, as the Company believes it no longer had 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 5. Income Taxes Deferred income taxes are determined based upon differences between financial reporting and income tax bases of assets and liabilities and are measured using the enacted income tax rates and laws that will be in effect when the differences are expected to reverse. The Company recognizes any interest and penalties to unrecognized tax benefits as a component of income tax expense. No federal current or deferred income taxes were recorded for the years ended December 31, 2015 and 2014, as the Company's income tax benefits were fully offset by a corresponding increase to the valuation allowance against its net deferred income tax assets. The Tax Reform Act of 1986 limits the annual utilization of net operating loss and tax credit carry forwards, following an ownership change of the Company. Note that as a result of the Company's equity financings in recent years, the Company underwent changes in ownership for purposes of the Tax Reform Act. 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. |
12
|
At December 31, 2015 and 2014, the Company had federal and state net operating loss carry forwards of $474,000 and $410,000, respectively, available to offset future taxable income. These net operating loss carry forwards will expire in varying amounts beginning in 2023 through 2035. At December 31, 2015 and 2014, the Company had federal capital loss carry forwards of $2,000 available to offset future taxable gains. The components of income tax provision (benefit) are as follows: |
| December 31, | ||||
| 2015 | 2014 | |||
| Current income taxes: | ||||
| Federal | $-- | $-- | ||
| State | -- | -- | ||
| Total current income taxes | -- | -- | ||
| Deferred income taxes | 24,983 | 42,801 | ||
| Change in valuation allowance | (24,983) | (42,801) | ||
| Provision (benefit) for income taxes | $-- | $-- | ||
|
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's net deferred income taxes are as follows: |
| December 31, | ||||
| 2015 | 2014 | |||
| Current deferred income tax assets | $-- | $-- | ||
| Noncurrent deferred income tax assets: | ||||
| Net operating loss carryover difference | 183,431 | 158,448 | ||
| Stock option compensation | 42,338 | 42,338 | ||
| 225,769 | 200,786 | |||
| Valuation allowance | (225,769) | (200,786) | ||
| $-- | $-- | |||
|
Due to uncertainty surrounding realization of the deferred income tax assets in future periods, the Company has recorded a 100% valuation allowance against its net deferred tax assets. If it is determined in the future that it is more likely than not that the deferred income tax assets are realizable, the valuation allowance will be reduced. The reconciliation of the provision for income taxes for the years ended December 31, 2015 and 2014, and the amount computed by applying the U. S, Federal statutory income tax rate to net loss is as follows: |
| December 31, | ||||
| 2015 | 2014 | |||
| Tax provision (benefit) at statutory rate | ($21,967) | ($37,739) | ||
| State taxes, net of federal effect | (3,016) | (5,062) | ||
| Change of valuation allowance | 24,983 | 42,801 | ||
| Effective income provision (benefit) | $-- | $-- | ||
|
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 any such 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. |
13
|
Note 5. |
Shareholders Equity and Stock Options and Warrants |
|
At the Company’s Annual Meeting of Stockholders on May 8, 2014, its stockholders voted to amend the Company’s Certificate of Incorporation (the “Charter Amendment”) to increase the number of authorized shares of common stock, par value $0.01 per share, from 10,000,000 to 100,000,000. The Company has not yet filed the Amended Certificate of Incorporation with its state of incorporation, Delaware, to effectuate the authorization. On December 21, 2012, the Company and Jonathan P. Evans, currently Chief Executive Officer of the Company, entered into a Nonqualified Stock Option Agreement, whereby the Company granted to Mr. Evans an option (the “Option”) to purchase 800,000 shares of the Company’s Common Stock at an exercise price of $0.15 per share of Common Stock, which was the closing price of the Common Stock as quoted on the OTC Markets’ inter-dealer quotation service on December 20, 2012. These options expired unexercised on December 21, 2015 and were the no options outstanding at December 31, 2015. Also on December 21, 2012, the Company issued a warrant to purchase up to 1,000,000 shares of the Company’s Common Stock at $1.00 per share to Jonathan P. Evans in exchange for $10,000, which was received in 2013. In addition, on that date, the Company issued a warrant to purchase up to 200,000 shares of the Company’s Common Stock at $1.00 per share to Robert E. Dolan, Chief Financial Officer of the Company, in exchange for $2,000. Both warrants are exercisable currently through December 21, 2017. The fair values of options and warrants granted during the year ended December 31, 2012 were estimated on the date of the grant using the Black-Sholes option-pricing model with the following assumptions with regard to the option and warrants; respectively, risk-free rates of 0.38% and 0.74%; dividend yield of 0%; expected volatility of 85%; and estimated lives of 3 and 5 years. Expected volatility is based on historical volatility of the Company’s common stock. The expected term of the options and warrants represents the period of time that options and warrants granted are expected to be outstanding and is derived from their terms. |
14
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, 2015. 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.
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 is 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 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, 2015, 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 permit 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 year that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
None.
15
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The following information provides the name, business address, present principal occupation, employment history, positions, offices or employments for the past five years and ages as of February 13, 2016 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 |
| Jonathan P. Evans | 39 | Chief Executive Officer and Director |
| Robert E. Dolan | 64 | Chief Financial Officer and Director |
Jonathan P. Evans has served as our Chief Executive Officer since November 2012. From 2006 through November 2012, Mr. Evans held various positions with Crane Co.: Director – Strategic Initiatives from May 2012 to November 2012, Director – Marketing & Product Management (Chippenham, England) from May 2011 to May 2012, Director – Operations (Chippenham, England) from May 2010 to May 2011, Currenza Product Manager from September 2007 to May 2010, and Manager of Operational Excellence from July 2006 to September 2007.
Robert E. Dolan has served as our Chief Financial Officer since November 2001. Mr. Dolan has also served in the following capacities at LICT Corporation: Executive Vice President and Chief Financial Officer from December 6, 2010, Interim Chief Executive Officer and Chief Financial Officer from May 1, 2006 to December 6, 2010, Chief Financial Officer from January 2004 to May 1, 2006, Chief Financial Officer, Controller from September 1999 to January 2004 and Director from August 2013. In addition, Mr. Dolan was, until September 14, 2009, the Assistant Secretary and director of Sunshine PCS Corporation, a public holding company, and had served in these capacities since November 2000. Also, from November 17, 2007, Mr. Dolan has also been 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 directors 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 of any operations, it is necessary or appropriate to adopt a formal corporate code of ethics. If it is determined that such a code would be necessary or appropriate, the Board will then consider establishing, over the next year, a code of ethics.
Legal Proceedings
None of our directors and executive officers has been involved in legal proceedings that would be material to an evaluation of our management.
16
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 2015.
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 17, 2016 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.
| Number of Shares of | |||
| Common Stock | |||
| Name and Address* of Beneficial Owner | Beneficially Owned | Percent of Ownership | |
| Jonathan P. Evans | 1,000,000(1) | 22.9% | |
| 140 Greenwich Avenue | |||
| Greenwich, CT 06830 | |||
| Mario J. Gabelli | 885,844(2) | 26.4% | |
| T. Baulch | 335,868(3) | 10.0% | |
| 448 West 19th Street, #580 | |||
| Houston, TX 77008 | |||
| LICT Corporation | 235,294(1) | 7.0% | |
| Bernard Zimmerman & Company, Inc. | 216,100(4) | 6.4% | |
| 18 High Meadow Road | |||
| Weston, CT 06883 | |||
| Claudia Carucci and Uncle Mills | 196,899(4) | 5.9% | |
| Partners | |||
| 17 Eagle Island Place | |||
| Shelton, SC 29941-3017 | |||
| Robert E. Dolan | 200,509(5) | 5.6% | |
* Unless otherwise indicated, the address of each person listed above is 401 Theodore Fremd Avenue, Rye, New York 10580.
| (1) | Represents a Warrant owned by Mr. Evans, which is currently exercisable and is to purchase 1,000,000 shares at $1.00 per share until December 21, 2017. For purposes of computing the Percent of Ownership for Mr. Evans, the amount of shares represented by the Option and the Warrant have been added to the numerator and denominator of the computation. |
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| (2) | Represents 310,550 shares owned directly by Mr. Gabelli, 340,000 shares owned by a limited partnership for which Mr. Gabelli serves as a general partner (Mr. Gabelli has less than a 100% interest in the entity and disclaims beneficial ownership of the shares held by this entity which are in excess of his indirect pecuniary 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.) |
| (3) | Based solely on a Schedule 13G/A filed with the Securities and Exchange Commission by T. Baulch on February 17, 2015, identifying T. Baulch as the beneficial owner of 335,868 shares, having sole voting power and sole dispositive power with respect to 211,441 shares and having shared voting power and shared dispositive power with respect to 124,427 shares which are held of record by the wife of T. Baulch. |
| (4) | Based solely on a Schedule 13G filed with the Securities and Exchange Commission by Claudia Carucci, Uncle Mills Partners, and Bernard Zimmerman & Company, Inc. filed on February 11,2014, identifying (i) Claudia Carucci as the beneficial owner of 196,899 shares (which includes 177,999 shares owned individually and 18,900 shares owned by Uncle Mills Partners) and having sole voting power and sole dispositive power with respect to such shares, (ii) Uncle Mills Partners as the beneficial owner of 18,900 shares and having sole voting power and sole dispositive power with respect to such shares, and (iii) Bernard Zimmerman & Company, Inc. as the beneficial owner of 216,100 shares and having sole voting power and sole dispositive power with respect to such shares. |
| (5) | Represents 400 shares owned directly by Mr. Dolan, 109 shares owned by Mr. Dolan as part of the LICT Corporation 401(k) Plan and a Warrant owned by Mr. Dolan. The Warrant is currently exercisable and is to purchase 200,000 shares at $1.00 per share until December 21, 2017. For purposes of computing the Percent of Ownership for Mr. Dolan, the amount of shares represented by the Warrant have been added to the numerator and denominator of the computation. |
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 2015 and 2014 were $14,000 annually. For 2015 and 2014, Daszkal Bolton LLP billed the Company an aggregate of $3,000 per quarter for the reviews of the financial statements included in its quarterly Form 10-Q.
Audit-Related Fees
No audit-related fees were billed by Daszkal Bolton LLP for 2015 or 2014.
Tax Fees
No tax fees were billed by Daszkal Bolton LLP for 2015 or 2014.
All Other Fees
No other fees were billed by Daszkal Bolton LLP for 2015 or 2014 for services other than as set forth above.
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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 | ||
| EX-101.INS | XBRL Instance
Document | ||
| EX-101.SCH | XBRL Taxonomy
Extension Schema | ||
| EX-101.PRE | XBRL Taxonomy
Extension Presentation Linkbase | ||
| EX-101.LAB | XBRL Taxonomy
Extension Label Linkbase | ||
| EX-101.CAL | XBRL Taxonomy
Extension Calculation Linkbase | ||
| EX-101.DEF | XBRL Taxonomy
Extension Definition Linkbase | ||
| * | Incorporated by reference to the exhibits to the Company’s Registration Statement on Form S-1 (Registration No. 333-73996). |
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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: February 19, 2016 |
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/ Jonathan P. Evans | Chief Executive Officer | February 19, 2016 | |
| JONATHAN P. EVANS | (Principal Executive Officer) | ||
| and Director | |||
| /s/ Robert E. Dolan | Chief Financial Officer (Principal | February 19, 2016 | |
| ROBERT E. DOLAN | Financial and Accounting Officer) | ||
| and Director | |||
| /s/ Mario J. Gabelli | Director | February 19, 2016 | |
| MARIO J. GABELLI | |||
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