The accompanying notes are an integral part
of these financial statements.
The accompanying notes are an integral part
of these financial statements.
The accompanying notes are an integral part
of these financial statements.
Note 1 – Basis of Presentation
The financial information
for MANASOTA GROUP, Inc. f/k/a HORIZON BANCORPORATION, Inc, Bradenton, Florida (the “Company”) as of September 30, 2015
and for the nine and three months ended September 30, 2015 and 2014 is unaudited but includes all adjustments, which, in the opinion
of management are necessary in order to make the financial statements not misleading at such dates and for those periods. These
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America
for interim financial information and ,therefore, do not include all information and notes required by accounting principles generally
accepted in the United States of America (“GAAP”) for complete financial statements. These financial statements should
be read in conjunction with the audited financial statements and related notes included in the Company’s Annual Report on
Form 10K for the year ended December 31, 2014. Operating results for the nine and three months ended September 30, 2015 are not
necessarily indicative of the results that may be expected for the entire year.
Note 2 - Organization and Summary of Significant
Accounting Policies
MANASOTA GROUP, Inc. f/k/a
HORIZON BANCORPORATION, Inc, Bradenton, Florida (the “Company” or “we”) was a one-bank holding company with
respect to Horizon Bank, Bradenton, Florida (the “Bank”). The Company commenced banking operations on October
25, 1999 when the Bank opened for business. On September 10, 2010, the Company ceased to be a bank holding company when
the Florida Office of Financial Regulation (the “OFR”) closed the Bank and the Federal Deposit Insurance Corporation
(the “FDIC”) was appointed as receiver. The FDIC sold the Bank to the Bank of the Ozarks. The Bank was primarily engaged
in the business of obtaining deposits and providing commercial, consumer, and real estate loans to the general public. Bank
deposits were each insured up to $250,000 by the FDIC subject to certain limitations. After September 10, 2010, the Company’s
business consisted of owning, maintaining and holding for lease its sole asset, an approximately 7,000 square foot office building
located at 900 53
rd
Ave E, Bradenton, FL (the “Building”). The Building was leased to Bank of the Ozarks
under a 3-year lease which expired on September 10, 2013. Subsequently the Building was leased to 1
st
Manatee Bank in
December of 2013 under a three year lease with an option to purchase. The Building was sold to 1
st
Manatee Bank during
the period covered by this Report.
The Company is authorized
to issue up to 25.0 million shares of its $.01 par value per share common stock. Each share is entitled to one vote
and shareholders have no preemptive or conversion rights. As of September 30, 2015 and December 31, 2014, there were
1,809,912 shares Company’s common stock issued outstanding, 39,773 shares of which were held as treasury stock. Additionally,
the Company is authorized to issue up to 1.0 million shares of its $.01 par value per share preferred stock, which may be designated
by the Company’s Board, without further action by the shareholders, for any proper corporate purpose with preferences, voting powers,
conversion rights, qualifications, special or relative rights and privileges which could adversely affect the voting power or other
rights of shareholders of common stock. As of September 30, 2015 and December 31, 2014, there was no designated preferred
stock and no shares issued or outstanding.
Use of Estimates.
The accounting
and reporting policies of the Company conform to U.S. generally accepted accounting principles. In preparing the financial statements,
management is required to make estimates and assumptions that affect the reported amounts 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 significantly from those estimates.
Concentration of Credit Risk.
Cash is
maintained at a major financial institution and, at times, balances may exceed federally insured limits. The Company has never
experienced any losses related to these balances. The Company has not experienced any losses in such accounts and believes that
it is not exposed to any significant credit risk on the accounts. As of September 30, 2015, all non-interest bearing checking accounts
were FDIC insured to a limit of $250,000. The Company did not have any interest-bearing accounts at September 30, 2015 or December
31, 2014, respectively.
Property
.
The Company’s
property consists of land, the Building and building improvements, and is stated at cost. The straight-line method is used in computing
depreciation over the estimated useful lives of the building and improvements of 10 to 40 years. Expenditures which significantly
increase values or extend useful lives are capitalized. Expenditures for maintenance and repairs are charged
to expense as incurred. Upon sale or retirement of property the cost and related accumulated depreciation are eliminated from
the respective accounts and the resulting gain or loss is included in the current earnings.
The Company follows the
provisions of FASB ASC Topic 360, Property, Plant and Equipment, which establishes accounting standards for the impairment of long-lived
assets such as property and equipment. The Company reviews long-lived assets to be held-and-used for impairment whenever events
or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. If the sum of the undiscounted
expected future cash flows over the remaining useful life of a long-lived asset group is less than its carrying amount, the asset
is considered to be impaired. An impairment loss is recognized when management’s estimate of fair value, through outside
consultation or internal assessment of value is less than its carrying amount. There were no impairment charges for the periods
ended September 30, 2015 and December 31, 2014 related to these long-lived assets.
Income Taxes.
Income taxes are accounted
for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected
future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. A valuation allowance is provided when it is more likely than not that some portion or the entire
deferred tax asset will not be realized. A tax position is recognized as a benefit only if it is “more likely than not”
that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized
is the largest amount of tax benefit that is greater than 50 percent of being realized on examination. For tax positions not meeting
the “more likely than not” test, no tax benefit is recorded. The Company is no longer subject to examination by U.S.
taxing authorities for years prior to 2010.
Sales Taxes.
Amounts collected on behalf
of governmental authorities for sales taxes and other similar taxes are reported on a net basis.
Revenue Recognition.
The Company recognizes
its rental revenues based on the terms on its signed lease with tenant on a straight-line basis.
Earnings Per Share.
Basic
earnings per share are determined by dividing net income by the weighted-average number of common shares outstanding. Diluted
income per share is determined by dividing net income by the weighted average number of common shares outstanding increased by
the number of common shares that would be issued assuming exercise of stock options. This also assumes that only options
with an exercise price below the existing market price will be exercised. In computing net income per share, the Company
uses the treasury stock method.
Reclassification
. Certain reclassifications
have been made to the prior period’s financial statements to conform to the current period’s presentation.
Subsequent Events
. Management has evaluated
subsequent events through October 7, 2016, the date the financial statements were issued.
Note 3 – Recently Issued Accounting
Pronouncements
The Company’s management
does not believe that any recent codified pronouncements by the Financial Accounting Standards Board (“FASB”) will
have a material impact on the Company’s financial statements.
Note 4 – Going Concern
The accompanying financial
statements and notes have been prepared assuming that the Company will continue as a going concern.
The Company sold its significant
operating asset and has had no operating activity subsequent to September 29, 2015. There are no assurances that the Company will
be able. in the next twelve months, to either (1) consummate a business combination transaction with a privately-owned business
seeking to become a public company and, if successful in such consummation, achieve a level of revenues adequate to generate sufficient
cash flow from operations; or (2) otherwise obtain additional financing through either private placements, public offerings and/or
bank financing necessary to support the Company’s current working capital requirements and to retire existing liabilities and obligations,
if any, on a timely basis. To the extent that funds generated from any private placements, public offerings and/or bank
financing are insufficient to support the Company, the Company will have to raise additional working capital. No assurance
can be given that additional financing will be available, or if available, will be on terms acceptable to the Company.
If, during the next twelve
months, a business combination is not consummated and no additional operating capital is received, the Company will be forced to
rely on existing cash on hand and upon additional funds loaned by management and/or significant stockholders to preserve the integrity
of the corporate entity. In the event, the Company is unable to acquire advances from management and/or significant
stockholders, who have no legal obligation to provide any further funding, the Company may not continue its operations.
Note 5 – Discontinued Operations and Gain on Sale of Property
On September 29, 2015,
the Company completed the sale of a building and land to the lessee for a total sale price of $2,100,000. The Company recognized
a gain on the sale of approximately $1.0 million. At the time of the sale, the Company paid off the principal balance of the mortgage
note secured by the property and accrued interest totaling approximately $1,432,000.
Discontinued operations - assets consisted of the following:
|
|
September 30, 2015
|
|
December 31, 2014
|
Land
|
|
$
|
0
|
|
|
$
|
395,035
|
|
Building & building improvements
|
|
|
0
|
|
|
|
1,104,951
|
|
Property, gross
|
|
|
0
|
|
|
|
1,499,986
|
|
Deduct:
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
0
|
|
|
|
(379,413
|
)
|
|
|
|
|
|
|
|
|
|
Property, net
|
|
$
|
0
|
|
|
$
|
1,120,573
|
|
The building served as collateral on the note
disclosed in note 4.
Depreciation expense for each of the years
ended December 31, 2015 and 2014 amounted to $20,917 and $27,889, respectively.
The pre-tax gain on sale of property was calculated
as follows:
Land
|
|
$
|
395,035
|
|
Building & building improvements
|
|
|
1,104,951
|
|
Property, gross
|
|
|
1,499,986
|
|
Deduct:
|
|
|
|
|
Accumulated depreciation at September 29, 2015
|
|
|
(400,330
|
)
|
Property, net
|
|
$
|
1,099,656
|
|
|
|
|
|
|
Proceeds from sale of land and building
|
|
$
|
2,100,000
|
|
Deduct Property, net
|
|
|
1,099,656
|
|
Gain on sale
|
|
$
|
1,000,344
|
|
Costs associated with the sale were approximately
$97,000.
The components of the income from discontinued operations consisted
of the following for the years ended December 31:
|
|
2015
|
|
2014
|
Rental income
|
|
$
|
115,059
|
|
|
$
|
111,664
|
|
Gain on sale of land and building
|
|
|
1,000,344
|
|
|
|
0
|
|
Depreciation
|
|
|
(20,917
|
)
|
|
|
(20,917
|
)
|
Net income from discontinued operations
|
|
$
|
1,094,486
|
|
|
$
|
90,747
|
|
Note 6 – Payoff of Note
On September 29, 2015,
the Company completed the sale of the Building and land to the lessee for a total sale price of $2,100,000. At the time of the
sale, the Company paid off the principal balance of the mortgage note secured by the property and accrued interest totaling approximately
$1,432,000.
Note 7 – Provision for Federal &
State Income Taxes
The sale of the land and
building business resulted in the recognition of a taxable gain of approximately $1.0 million. As of September 30,
2015, the Company the gain was offset by prior year NOL’s. The Company is currently unable to reasonably estimate the impact
of any additional losses that may occur during the remainder of its year ending June 30, 2015. As of September 30,
2015, the net federal and state tax impact of the gain (net of the losses incurred during the nine months ended September
30, 2015,and NOL carryovers from prior years) is approximately $62,000, which is related to the Alternative Minimum Tax (“AMT”)
incurred in the amount of $11,000 and current state tax expense of $51,000.
For the nine months
ended September 30, 2015 and 2014, the Company’s effective tax rate differed from the federal statutory rate of 35%,
primarily due to state taxes and AMT .
In assessing the realizability
of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets
will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable
income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal
of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As of
September 30, 2015, based upon the levels of historical taxable income and projections of future taxable income over which the
deferred tax assets are deductible, the Company believes that it is more likely than not that it will not be able to realize the
benefits of these deductible differences. Accordingly, a valuation allowance of approximately $4,145,000 has been provided
in the accompanying financial statements as of September 30, 2015.
Note 8 – Subsequent Events
In October 2015, the Board
of Directors declared a dividend of $0.27 per share totaling approximately $490,000. The dividend was paid in November 2015.
Effective March 21, 2016,
we issued 2,000,000 shares of the Company’s Common Stock, $.01 par value, to each of four existing shareholders for the purchase
price of $.01 per share. The total consideration received by the Company was $20,000 in cash.
This report contains
forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as “expects,”
“anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates”
and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive
means of identifying forward-looking statements in this report.
Although forward-looking
statements in this report reflect the good faith judgment of our management, such statements can only be based on facts and factors
currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results
and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements.
Except as required by federal securities laws, we undertake no obligation to revise or update any forward-looking statements in
order to reflect any event or circumstance that may arise after the date of this report.