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FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2005 Commission file number 333-73996
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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MORGAN GROUP HOLDING CO.
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(Exact name of Registrant as specified in its charter)
Delaware 13-4196940
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State of other jurisdiction (I.R.S. Employer
incorporation or organization Identification No.)
401 Theodore Fremd Avenue, Rye, NY 10580
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (914) 921-1877
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Securities registered pursuant to Section 12(b) of the Act: None
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Securities registered pursuant to section 12(g) of the Act: None
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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 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 shell company (as defined in
Rule 12b-2 of the Exchange Act) Yes X No
--- ---
The issuer's revenues for the fiscal year ended December 31, 2005 was [$0].
As of March 20, 2006, the aggregate market value of the Registrant's voting and
nonvoting common equity held by non-affiliates of the Registrant was
approximately $255,000, 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 March 20, 2006.
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MORGAN GROUP HOLDING CO.
TABLE OF CONTENTS
Page No.
Item 1. Description of Business 3
Item 2. Description of Properties 4
Item 3. Legal Proceedings 4
Item 4. Submission of Matters To a Vote of Security Holders 4
Item 5. Market For Common Equity, Related Stockholder Matters
and Small Business Issuer Purchases of Equity Securities 4
Item 6. Management's Discussion and Analysis or Plan of Operation 5
Item 7. Financial Statements 6-13
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 13
Item 8A. Controls and Procedures 13
Item 8B. Other Information 13
Item 9. Directors and Executive Officers of the Registrant 14
Item 10. Executive Compensation 15
Item 11. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 15
Item 12. Certain Relationships and Related Transactions 16
Item 13. Exhibits 16
Item 14. Principal Accountant Fees and Services 16
PART I
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Item 1. Business.
Morgan Group Holding Co. (the "Company" or "MGHL") was incorporated in
November 2001 to serve, among other business purposes, as a holding company for
Lynch Interactive Corporation's ("Lynch Interactive") controlling interest in
The Morgan Group, Inc. ("Morgan"). Morgan managed the delivery of manufactured
homes, commercial vehicles and specialized equipment. Upon the Company's
formation as a wholly owned subsidiary of Lynch Interactive, Lynch Interactive
made a capital contribution to MGHL of $500,000. Lynch Interactive also
transferred to MGHL 161,100 shares of Morgan's Class A common stock, warrants to
purchase an additional 161,100 such shares at $9.00 per share, 2,200,000 shares
of Morgan's Class B common stock and warrants to purchase an additional
2,200,000 such shares at $9.00 per share, giving MGHL control of more than 80%
of Morgan's aggregate voting power. On January 24, 2002, Lynch Interactive spun
off all but 235,294 of its shares in MGHL to its stockholders.
Unfortunately, a combination of industry dynamics, poor management
decisions, and a surge in insurance costs crippled Morgan. On October 3, 2002
Morgan ceased 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. As of December 31, 2004, the debtors
of Morgan were continuing to conduct an orderly liquidation of their assets.
Effective October 15, 2002, the shares of Morgan's Class A Common Stock
were delisted from the American Stock Exchange. The stock exchange determined
that Morgan's Class A Common Stock no longer satisfied Sections 1002, 1003 and
1009 of the listing rules.
On November 12, 2002, Morgan filed a Certification and Notice of
Termination of Registration under Section 12(g) of the Securities Exchange Act
of 1934.
The Company expects that its ownership interest in Morgan will have no
residual value upon completion of the liquidation of the assets of The Morgan
Group Inc. The Company's strategy is to look for additional investment
opportunities. However the loss did yield a capital loss of about $4 million.
Risk Factors That May Affect Future Results
-------------------------------------------
The Company operates in a rapidly changing environment that involves a
number of risks, some of which are beyond the Company's control. The following
discussion highlights the most material of the risks.
We have no substantial assets for operations.
As of December 31, 2005, the Company's only assets consisted of
$408,000 in cash and an unrecognized asset relating to capital loss carry
forward of about $4 million. This amount is insufficient to maintain
commercially reasonable operations. In addition, the Company has no product to
sell and has no revenue.
We need additional financing.
The Company has very limited funds, and such funds may not be adequate
to take advantage of any available business opportunities. Even if the Company's
currently available funds prove to be sufficient until it is able to acquire an
interest in, or complete a transaction with, a business opportunity, such funds
will not be sufficient to enable it to exploit the opportunity. There is no
assurance that additional capital will be available from any source or, if
available, that it can be obtained on terms acceptable to the Company. If
additional funds are not available, the Company's operations will be limited to
those that can be financed with its modest capital.
3
There are conflicts of interest inherent in our existence as a company
and acquisition candidate.
Certain conflicts of interest exist between the Company and its
officers and directors. Such individuals have other business interests to which
they currently devote attention, and are expected to continue to do so.
Consequently, conflicts of interest may arise that can be resolved only through
their exercise of judgment in a manner which is consistent with their fiduciary
duties to the Company.
It is anticipated that the Company's principal stockholders may
actively negotiate or otherwise consent to the purchase of a portion of their
common stock as a condition to, or in connection with, a proposed merger or
acquisition transaction. In this process, the Company's principal stockholders
may consider their own personal pecuniary benefit rather than the best interest
of other Company stockholders. Depending upon the nature of a proposed
transaction, Company stockholders other than the principal stockholders may not
be afforded the opportunity to approve or consent to a particular transaction.
The potential business opportunity has not been identified and may be
highly risky.
The Company has not identified, nor has it initiated, any commitments
to enter into or acquire a specific business opportunity. As a result, it is
only able to make general disclosures concerning the risks and hazards of
acquiring a business opportunity, rather than providing disclosure with respect
to specific risks and hazards. As a general matter, prospective investors can
expect any potential business opportunity to be quite risky.
The type of business opportunity that may be acquired presents certain
risks.
The type of business to be acquired may be one that desires to avoid
effecting its own public offering and the accompanying expense, delays,
uncertainties, and onerous federal and state requirements. Because of the
Company's limited capital, it is more likely than not that any acquisition by
the Company will involve other parties whose primary interest is the acquisition
of control of a publicly traded company. Moreover, any business opportunity
acquired may be currently unprofitable or present other negative factors.
Item 2. Properties.
The Company owns no properties.
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
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Item 5. Market For The Registrant's Common Equity And Related Stockholder
Matters.
The shares of our common stock trades on 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.
High Low
2005 Fiscal Year
First Quarter $0.09 $0.08
Second Quarter $0.10 $0.08
Third Quarter $0.115 $0.09
Fourth Quarter $0.101 $0.09
4
2004 Fiscal Year
First Quarter $0.10 $0.10
Second Quarter $0.10 $0.06
Third Quarter $0.07 $0.06
Fourth Quarter $0.08 $0.07
As of March 20, 2006, 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.
The Company has never repurchased any of its equity securities and does
not anticipate that it will do so in the foreseeable future.
Item 6. Management's Discussion and Analysis or Plan of Operation.
Overview
The Company was incorporated in November 2001 as a wholly-owned
subsidiary of Lynch Interactive Corporation ("Interactive") to serve as an
acquisition vehicle. Initially, we received $500,000 cash and 68.5% of The
Morgan Group, Inc.'s ("Morgan") equity interest and 80.8% of Morgan's voting
interest. On January 24, 2002, Interactive spun off 2,820,051 shares of our
common stock through a pro rata distribution ("Spin-Off") to its stockholders.
Interactive retained 235,294 shares at the time of the spin-off.
A combination of industry dynamics, poor management decisions, and a
surge in insurance costs crippled Morgan. On October 3, 2002, Morgan ceased
operations when its liability insurance expired and it was unable to secure
replacement insurance. On October 18, 2002, Morgan and two of its operating
subsidiaries filed voluntary petitions under Chapter 11 of the United States
Bankruptcy Code in the United States Bankruptcy Court for the Northern District
of Indiana, South Bend Division for the purpose of conducting an orderly
liquidation of Morgan's assets.
As Morgan is in the process of liquidation, in the accompanying
financial statements the assets and liabilities and results of operations of
Morgan have been reflected as a discontinued operation. In addition, the
Company's management currently believes that it is very unlikely that the
Company will realize any value from its equity ownership in Morgan. Given the
fact that the Company has no obligation or intention to fund any of Morgan's
liabilities, management believes that the Company's investment in Morgan will
have no value after the liquidation. As the liquidation of Morgan is under the
control of the bankruptcy court, the Company believes it has relinquished
control of Morgan and accordingly has ceased consolidating the financial
statements of Morgan.
On October 18, 2002, Morgan adopted the liquidation basis of accounting
and accordingly, Morgan's assets and liabilities have been adjusted to 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.
As of December 31, 2005, the Company's only assets consisted of
$408,000 in cash and an unrecognized asset relating to capital loss carryforward
of about $4 million.
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.
5
Results of Operations
For the year ended December 31, 2005, the Company incurred
administrative expenses of $3,000 as compared to $2,000 in 2004. Administrative
expenses are lower than expected due to the Company's inability to retain an
independent auditor.
Investment income of $10,000 was recorded during the three years ended
December 31, 2005 as compared to $4,000 during 2004 respectively as a result of
the Company's investment in a United States Treasury money market fund. Higher
interest rates caused the increase in 2005.
Recently Issued Accounting Pronouncements
No need - only footnotes of financials.
Item 7. Financial Statements.
Financial Statements
Balance Sheets as of
December 31, 2005 and December 31, 2004
Statements of Operations for the
Two Years Ended December 31, 2005
Statements of Cash Flows for the
Two Years Ended December 31, 2005
Statements of Shareholders' Equity for the
Two Years Ended December 31, 2005
Notes to Financial
Statements as of December 31, 2005
6
Morgan Group Holding Co.
Balance Sheets
(Dollars in thousands, except per share amounts)
December 31,
------------------------
2005 2004
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ASSETS
Current assets:
Cash and cash equivalents $ 408 $ 401
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Total current assets 408 401
Net assets of The Morgan Group, Inc. - - --
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Total assets $ 408 $ 401
============ ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Current liabilities:
Accrued expenses $ -- $ --
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Total current liabilities -- --
SHAREHOLDERS' EQUITY
Preferred stock, $0.01 par value,
1,000,000 shares authorized,
none outstanding -- --
Common stock, $0.01 par value,
10,000,000 shares authorized,
3,055,345 outstanding 30 30
Additional paid-in-capital 5,612 5,612
Accumulated deficit (5,234) (5,241)
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Total shareholders' equity 408 401
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Total liabilities and shareholders' equity $ 408 $ 401
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See notes to financial statements
7
Morgan Group Holding Co.
Statements of Operations
(Dollars and shares in thousands, except per share amounts)
Year Ending December 31,
----------------------------------
2005 2004
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Administrative expenses $(3) $(2)
Investment income 10 4
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Net income $7 $ 2
================ =================
Basic and diluted loss per share:
Net income per common share $0.00 $0.00
Weighted average shares outstanding 3,055 3,055
See accompanying notes
8
Morgan Group Holding Co.
Statements of Cash Flows
(Dollars in thousands)
Year Ending December 31,
----------------------------
2005 2004
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Operating activities:
Net income $ 7 $ 2
Adjustments to reconcile net income to net
cash used in operating activities -- --
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Net cash provided by operating activities 7 2
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Net increase in cash and equivalents 7 2
Cash and cash equivalents at beginning of period 401 399
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Cash and cash equivalents at end of period $408 $ 401
============== ==============
See accompanying notes
9
Morgan Group Holding Co.
Statements of Shareholders' Equity
(Dollars in thousands)
Common Stock Additional
Outstanding Common Paid-in Accumulated
Stock Capital Deficit Total
-------------- ---------- ------------- --------------- ------------
January 1, 2004 3,055,345 $30 $5,612 $(5,243) $ 399
Net income for year ended December
31,2004 -- -- -- 2 --
-------------- ---------- ------------- --------------- ------------
December 31, 2004 3,055,045 30 5,612 (5,241) 401
Net income for year ended December
31,2005 -- -- -- 7 --
-------------- ---------- ------------- --------------- ------------
December 31, 2005 3,055,045 $30 $5,612 $ (5,234) $408
============== ========== ============= =============== ============
See accompanying notes.
10
Morgan Group Holding Co.
Notes to Financial Statements
Note 1. Basis of Presentation
Morgan Group Holding Co. ("Holding" or "the Company") was incorporated in
November 2001 as a wholly-owned subsidiary of Lynch Interactive Corporation
("Interactive") to serve, among other business purposes, as a holding company
for Interactive's controlling interest in The Morgan Group, Inc. ("Morgan"). On
December 18, 2001, Interactive's controlling interest in Morgan was transferred
to Holding. At the time, Holding owned 68.5% of Morgan's equity interest and
80.8% of Morgan's voting interest. On January 24, 2002, Interactive spun off
2,820,051 shares of our common stock through a pro rata distribution
("Spin-Off") to its stockholders. Interactive retained 235,294 shares of our
common stock to be distributed in connection with the potential conversion of a
convertible note that had been issued by Interactive. Such note was repurchased
by Interactive in 2002 and Interactive retains the shares.
On October 3, 2002, Morgan ceased its operations when its liability
insurance expired and it was unable to secure replacement insurance. On October
18, 2002, Morgan and two of its operating subsidiaries filed voluntary petitions
under Chapter 11 of the United States Bankruptcy Code in the United States
Bankruptcy Court for the Northern District of Indiana, South Bend Division for
the purpose of conducting an orderly liquidation of Morgan's assets.
As Morgan has ceased operations and is in the process liquidating itself,
in the accompanying financial statements, the assets and liabilities and results
of operations of Morgan have been reflected as a discontinued operation. In
addition, Holding's management currently believes, it is very unlikely that it
will realize any value from its equity ownership in Morgan, and given the fact
that Holding has no obligation or intention to fund any of Morgan's liabilities,
its investment in Morgan was believed to have no value after the liquidation. As
the liquidation of Morgan is under the control of the bankruptcy court, the
Company believes it has relinquished control of Morgan and accordingly, has
ceased consolidating the financial statements of Morgan. As Holding's investment
in Morgan was a negative $2,182,000, at the date of adoption of the plan of
liquidation, this resulted in a gain to Holding of that amount.
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.
Significant intercompany accounts and transactions have been eliminated in
combination/consolidation.
Net income per common share ("EPS") is computed using the number of common
shares issued in connection with the Spin-Off as if such shares had been
outstanding for all periods presented.
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, 2005 and 2004 all cash and cash equivalents were invested
in a United States Treasury money market fund, which an affiliate of the Company
serves as the investment manager.
At December 31, 2005 and 2004, the carrying value of financial instruments
such as cash and cash equivalents, accounts receivable, trade payables and
long-term debt approximates their fair values. Fair value is determined based on
expected future cash flows, discounted at market interest rates, and other
appropriate valuation methodologies.
The accompanying unaudited consolidated financial statements reflect, in
the opinion of management, all adjustments (consisting of normal recurring
items) necessary for a fair presentation, in all material respects, of the
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financial position and results of operations for the periods presented. The
preparation of financial statements in accordance with Generally Accepted
Accounting Principles requires management to make estimates and assumptions.
Such estimates and assumptions affect the reported amounts of assets and
liabilities, the 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.
The financial statements include the accounts of the Company and through
October, 18, 2002, its majority owned subsidiary, Morgan. Morgan has the
following subsidiaries: Morgan Drive Away, Inc., TDI, Inc., Interstate Indemnity
Company, and Morgan Finance, Inc., all of which are wholly owned. Morgan Drive
Away, Inc. has two subsidiaries, Transport Services Unlimited, Inc. and MDA
Corp. Significant intercompany accounts and transactions have been eliminated in
consolidation. During 2002, Morgan is treated as a discontinued operations and
previously issued financial statements have been restated to reflect that
presentation.
Recently Issued Accounting Pronouncements
In June 2004, the Emerging Issues Task Force ("EITF") issued EITF No.
03-01, "The Meaning of Other-Than-Temporary Impairment and its Application to
Certain Investments". EITF 03-01 includes new guidance for evaluating and
recording impairment losses on debt and equity investments, as well as new
disclosure requirements for investments that are deemed to be temporarily
impaired. The provisions of EITF 03-01 were initially effective for reporting
periods beginning after June 15, 2004, while the disclosure requirements for
debt and equity securities accounted for under SFAS 115, "Accounting for Certain
Investments in Debt and Equity Securities", are effective for annual periods
ending after December 15, 2003. In September 2004, the FASB delayed the
effective date for the measurement and recognition guidance of EITF 03-01. The
Company will evaluate the effect of adopting the recognition and measurement
guidance when the final consensus is reached.
In December 2004, the FASB issued SFAS No.153, "Exchanges of Non-monetary
Assets", which eliminates the exception for non-monetary exchanges of similar
productive assets and replaces it with a general exception for exchanges of
non-monetary assets that do not have commercial substance. SFAS No.153 will be
effective for non-monetary asset exchanges occurring in fiscal periods beginning
after June 15, 2005. The Company does not believe the adoption of SFAS No.153
will have a material impact on its financial statements.
In December 2004, the FASB issued SFAS No.123(R), "Share-Based Payment",
which establishes standards for transactions in which an entity exchanges its
equity instruments for goods or services. This standard requires a public entity
to measure the cost of employee services received in exchange for an award of
equity instruments based on the grant-date fair value of the award. This
eliminates the exception to account for such awards using the intrinsic method
previously allowable under APB Opinion No.25. SFAS No.123(R) will be effective
in the first quarter of 2006. The Company does not believe that the adoption of
SFAS No.123(R) will have a material impact on its consolidated financial
statements.
In March 2005, the FASB issued FASB Interpretation No. 47, "Accounting for
Conditional Asset Retirement Obligations" ("FIN 47"). FIN 47 clarifies that a
conditional asset retirement obligation, as used in FASB Statement 143,
"Accounting for Asset Retirement Obligations," refers to a legal obligation to
perform an asset retirement activity in which the timing and/or method of the
settlement are conditional on a future event that may or may not be within the
control of the entity. Accordingly, an entity is required to recognize a
liability for the fair value of a conditional asset retirement obligation if the
fair value can be reasonably estimated. FIN 47 was effective no later than
fiscal years ending after December 15, 2005. The adoption of FIN 47 did not have
an impact on the Company's financial statements.
In May 2005, the FASB issued SFAS 154, "Accounting Changes and Error
Corrections". SFAS 154 eliminates the requirement in APB Opinion No. 20,
"Accounting Changes", to include the cumulative effect of changes in accounting
principle in the income statement in the period of change. Instead, to enhance
12
the comparability of prior period financial statements, SFAS 154 requires that
changes in accounting principle be retrospectively applied. Under the
retrospective application, the new accounting principle is applied as of the
beginning of the first period presented as if that principle had always been
used. Adoption of SFAS 154 is required for accounting changes and corrections of
errors made in the fiscal year beginning after December 15, 2005. The Company
will adopt this new accounting standard on January 1, 2006.
Note 2. Net assets of Discontinued Operation
-------------------------------------
At December 31, 2005 and 2004, the estimated value of Morgan's
assets in liquidation were insufficient to satisfy its estimated
obligations.
Note 5. Income Taxes
------------
No income tax benefit has been recorded in the accompanying
financial statements as the realization of such losses, for income tax
purposes, is dependent upon the generation of future taxable income
during the period when such losses would be deductible. Therefore, the
recording of the deferred tax asset of $1.5 million would be
inconsistent with applicable accounting rules.
Note 6. Segment Reporting
------------------
As the results of operations of the Morgan Group are currently
being accounted for as discontinued operation and the Holding currently
have limited operations there is no Segment Reporting.
Note 7. Commitments and Contingencies
-----------------------------
Holding has not guaranteed any of the obligations of Morgan
and it has no further commitment or obligation to fund any creditors.
Item 8. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
Not Applicable.
Item 8A. Controls and Procedures.
(a) Information required by Item 307
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, the Company carried out an evaluation of the
effectiveness of the design and operation of our disclosure controls and
procedures. 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 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) Information required by Item 308(c)
None
13
Item 8B. Other Information.
None.
PART III
Item 9. Directors and Executive Officers of the Registrant.
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 March 25, 2006 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 63 Chief Executive Officer and Director
Robert E. Dolan 54 Chief Financial Officer and Director
----------------------
Mario J. Gabelli has served as Chairman and Chief Executive Officer of
the Company since November 2001. With regard to Lynch Interactive Corporation,
he has served as its Chairman since December 2004 (and also from September 1999
to December 2002) and as our Vice Chairman from December 2002 to December 2004
and as Chief Executive Officer from September 1999 to November 2005. Mr. Gabelli
has also served as the Chairman and Chief Executive Officer and a director of
Gabelli Asset Management Inc. and its predecessors since November 1976 (and in
connection with those responsibilities, he serves as director or trustee and/or
an officer of registered investment companies managed by subsidiaries of Gabelli
Asset Management). Mr. Gabelli also serves as Chairman and Chief Executive
Officer of GGCP, Inc., a private investment company. Mr. Gabelli serves on the
Board of Advisors of Healthpoint and Caymus Partners LLC. Mr. Gabelli (i) is a
former Governor of the AMEX; and (ii) serves as an Overseer of Columbia
University Graduate School of Business; Trustee of Fairfield University, Roger
Williams University, the Winston Churchill Foundation and the E.L. Wiegand
Foundation; as a Director of the National Italian American Foundation and the
American-Italian Cancer Foundation; and as the Chairman of the Patron's
Committee of Immaculate Conception School.
Robert E. Dolan has served as our Chief Financial Officer since
November 2001. With regard to Lynch Interactive Corporation, he has served as
Chief Financial Officer from September 1999 and Controller from September 1999
to January 2004. Mr. Dolan has also served Chief Financial Officer (1992-2000)
and Controller (1990-2000) of Lynch Corporation.
Compensation of Directors
The Company does not compensate its directors at the present time,
although it may do so in the future. The Company does, however, indemnify
directors pursuant to Delaware law and may reimburse them for certain
out-of-pocket costs in connection with serving as directors.
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 the Delaware law. The certificate of incorporation also
provides that the Company shall, to the fullest extent permitted by Delaware
14
law, as amended from time to time, indemnify and advance expenses to each of its
currently acting and former directors, officers, employees and agents.
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:
o for any breach of the director's duty of loyalty to the corporation or its
stockholders,
o for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law,
o in respect of certain unlawful dividend payments or stock redemptions
or repurchases and
o 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 Delaware law. In addition, the certificate of
incorporation provides that if Delaware 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
Delaware 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.
Item 10. Executive Compensation.
The Company has not paid any compensation to any person, including its
directors and executive officers, in excess of $100,000 since January 1, 2002.
Item 11. 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 March 25, 2006 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 Percent of
Beneficial Owner Beneficially Owned Ownership
Mario J. Gabelli 858,384(1) 28.1%
Robert E. Dolan 579(2) **
Lynch Interactive Corporation 235,294 9.7%
All directors and executive officers
as a group (2 in total) 858,963 28.1%
-------------------
15
** 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 .625% interest,
and 235,294 shares owned by Lynch Interactive Corporation (Mr. Gabelli
is a "control person" of Lynch Interactive Corporation and therefore
shares owned by Lynch Interactive 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 Lynch
Interactive Corporation, except for his interest therein.
(2) 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 Lynch Interactive Corporation
401(k) Savings Plan.
Item 12. Certain Relationships and Related Transactions.
None. [Only since January 1, 2004.]
Item 13. Exhibits.
Exhibit Number Description
3.1 Certificate of Incorporation of the Company*
3.2 By-laws of the Company*
---------------
* Incorporated by reference to the exhibits to the Company's Registration
Statement on Form S-1 (Registration No. 333-73996).
Item 14. Principal Accountant Fees and Services.
The Company did not engage an independent auditor to audit its
financial statements for the year ended December 31, 2005 or December 31, 2004
and did not incur any audit fees, audit-related fees, tax fees or other fees.
16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
MORGAN GROUP HOLDING CO.
By: /s/ Robert E. Dolan
-------------------
ROBERT E. DOLAN
Chief Financial Officer
(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 31, 2006
-------------------- (Principal Executive Officer)
MARIO J. GABELLI and Director
/s/ Robert E. Dolan Chief Financial Officer (Principal March 31, 2006
------------------- Financial and Accounting Officer)
ROBERT E. DOLAN and Director