ITEM 1. FINANCIAL STATEMENTS
CASTLE HOLDING CORP. AND SUBSIDIARIES
|
(A Development Stage Entity)
|
Consolidated Statements of Financial Condition
|
(Unaudited and Unreviewed)
|
|
|
March 31,
2014
|
|
|
September 30,
2013
|
|
Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,616
|
|
|
$
|
993
|
|
Marketable securities, at market value
|
|
|
69
|
|
|
|
226
|
|
Restricted cash and securities, at market value (note 3)
|
|
|
363,604
|
|
|
|
380,938
|
|
Other assets
|
|
|
2
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
365,291
|
|
|
$
|
382,159
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
-
|
|
|
$
|
116
|
|
Loans payable to affiliates
|
|
|
3,081
|
|
|
|
500
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
3,081
|
|
|
|
616
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity (note 5):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $.01 par value; authorized
9,000,000 shares, none issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Class A Convertible Preferred stock, $.01 par value;
authorized 1,000,000 shares, issued and outstanding
699,250 and 699,250 shares, respectively; liquidation
preference of $699,250 and $699,250, respectively (note 5)
|
|
|
6,993
|
|
|
|
6,993
|
|
Common stock, $.0025 par value; authorized
100,000,000 shares, issued 37,629,510 and
37,629,510 shares, respectively (net of 261,000 shares
"stopped" and requested to be cancelled)
|
|
|
94,074
|
|
|
|
94,074
|
|
Common stock held in FBO Accounts as treasury stock -
560,700 and 551,000 shares, respectively - at cost (note 3)
|
|
|
(27,414
|
)
|
|
|
(24,809
|
)
|
Additional paid-in capital
|
|
|
1,516,142
|
|
|
|
1,516,142
|
|
Accumulated deficit
|
|
|
(1,227,585
|
)
|
|
|
(1,210,857
|
)
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity
|
|
|
362,210
|
|
|
|
381,543
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
365,291
|
|
|
$
|
382,159
|
|
See notes to consolidated financial statements.
CASTLE HOLDING CORP. AND SUBSIDIARIES
|
(A Development Stage Entity)
|
Consolidated Statements of Operations
|
(Unaudited and Unreviewed)
|
|
|
Three Months Ended March 31,
|
|
|
Six Months Ended March 31,
|
|
|
Period October1, 2005 (Inception of Development
Stage) to
March 31,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gain (loss) on marketable securities
|
|
$
|
(30,862
|
)
|
|
$
|
(30,703
|
)
|
|
$
|
(23,903
|
)
|
|
$
|
(91,356
|
)
|
|
$
|
(36,541
|
)
|
Interest and dividends
|
|
|
6,579
|
|
|
|
1,535
|
|
|
|
9,118
|
|
|
|
9,912
|
|
|
|
135,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
(24,283
|
)
|
|
|
(29,168
|
)
|
|
|
(14,785
|
)
|
|
|
(81,444
|
)
|
|
|
98,495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
1,909
|
|
|
|
8
|
|
|
|
1,943
|
|
|
|
1,449
|
|
|
|
13,441
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
1,909
|
|
|
|
8
|
|
|
|
1,943
|
|
|
|
1,449
|
|
|
|
13,441
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
(26,192
|
)
|
|
|
(29,176
|
)
|
|
|
(16,728
|
)
|
|
|
(82,893
|
)
|
|
|
84,054
|
|
Discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
103,789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(26,192
|
)
|
|
$
|
(29,176
|
)
|
|
$
|
(16,728
|
)
|
|
$
|
(82,893
|
)
|
|
$
|
188,843
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
Diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
37,070,910
|
|
|
|
37,561,710
|
|
|
|
37,073,660
|
|
|
|
37,566,810
|
|
|
|
|
|
Diluted
|
|
|
37,770,160
|
|
|
|
38,260,960
|
|
|
|
37,772,910
|
|
|
|
38,266,060
|
|
|
|
|
|
See notes to consolidated financial statements.
CASTLE HOLDING CORP. AND SUBSIDIARIES
|
(A Development Stage Entity)
|
Consolidated Statements of Changes in Stockholders' Equity
|
For the Period October 1, 2005 (Inception of Development Stage) to March 31, 2014
|
(Unaudited and Unreviewed)
|
|
|
Class A Convertible
Preferred Stock,
$.01 Par Value
|
|
|
Common Stock,
$.0025 Par Value
|
|
|
Treasury
Common Stock,
$.0025 Par Value
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
Total
Stock-
holders'
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, September 30, 2005
|
|
|
706,750
|
|
|
$
|
7,068
|
|
|
|
37,379,510
|
|
|
$
|
93,449
|
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
1,515,192
|
|
|
$
|
(1,416,428
|
)
|
|
$
|
199,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of common shares in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 2005
|
|
|
-
|
|
|
|
-
|
|
|
|
200,000
|
|
|
|
500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,500
|
|
|
|
-
|
|
|
|
2,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of preferred shares in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 2006
|
|
|
(2,500
|
)
|
|
|
(25
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(375
|
)
|
|
|
-
|
|
|
|
(400
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
107,392
|
|
|
|
107,392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, September 30, 2006
|
|
|
704,250
|
|
|
|
7,043
|
|
|
|
37,579,510
|
|
|
|
93,949
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,516,317
|
|
|
|
(1,309,036
|
)
|
|
|
308,273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of common shares in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 2007
|
|
|
-
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
425
|
|
|
|
-
|
|
|
|
550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of preferred shares in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 2006
|
|
|
(2,500
|
)
|
|
|
(25
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(375
|
)
|
|
|
-
|
|
|
|
(400
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
21,735
|
|
|
|
21,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, September 30, 2007
|
|
|
701,750
|
|
|
|
7,018
|
|
|
|
37,629,510
|
|
|
|
94,074
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,516,367
|
|
|
|
(1,287,301
|
)
|
|
|
330,158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
30,275
|
|
|
|
30,275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, September 30, 2008
|
|
|
701,750
|
|
|
|
7,018
|
|
|
|
37,629,510
|
|
|
|
94,074
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,516,367
|
|
|
|
(1,257,026
|
)
|
|
|
360,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of preferred shares in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 2009
|
|
|
(2,500
|
)
|
|
|
(25
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(225
|
)
|
|
|
-
|
|
|
|
(250
|
)
|
CASTLE HOLDING CORP. AND SUBSIDIARIES
(A Development Stage Entity)
Consolidated Statements of Changes in Stockholders' Equity
For the Period October 1, 2005 (Inception of Development Stage) to March 31, 2014
(Unaudited and Unreviewed)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
Deficit
|
|
|
|
|
|
|
Class A Convertible
Preferred Stock,
$.01 Par Value
|
|
|
Common Stock,
$.0025 Par Value
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
17,579
|
|
|
|
17,579
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, September 30, 2009
|
|
|
699,250
|
|
|
|
6,993
|
|
|
|
37,629,510
|
|
|
|
94,074
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,516,142
|
|
|
|
(1,239,447
|
)
|
|
|
377,762
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,630
|
|
|
|
3,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, September 30, 2010
|
|
|
699,250
|
|
|
|
6,993
|
|
|
|
37,629,510
|
|
|
|
94,074
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,516,142
|
|
|
|
(1,235,817
|
)
|
|
|
381,392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,555
|
|
|
|
6,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, September 30, 2011
|
|
|
699,250
|
|
|
|
6,993
|
|
|
|
37,629,510
|
|
|
|
94,074
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,516,142
|
|
|
|
(1,229,262
|
)
|
|
|
387,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of treasury stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
49,400
|
|
|
|
(2,509
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,509
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
80,453
|
|
|
|
80,453
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, September 30, 2012
|
|
|
699,250
|
|
|
|
6,993
|
|
|
|
37,629,510
|
|
|
|
94,074
|
|
|
|
49,400
|
|
|
|
(2,509
|
)
|
|
|
1,516,142
|
|
|
|
(1,148,809
|
)
|
|
|
465,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of treasury stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
501,600
|
|
|
|
(22,300
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(22,300
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(62,048
|
)
|
|
|
(62,048
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, September 30, 2013
|
|
|
699,250
|
|
|
|
6,993
|
|
|
|
37,629,510
|
|
|
|
94,074
|
|
|
|
551,000
|
|
|
|
(24,809
|
)
|
|
|
1,516,142
|
|
|
|
(1,210,857
|
)
|
|
|
381,543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of treasury stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,700
|
|
|
|
(2,605
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,605
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(16.728
|
)
|
|
|
(16,728
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, March 31, 2014
|
|
|
699,250
|
|
|
$
|
6,993
|
|
|
|
37,629,510
|
|
|
$
|
94,074
|
|
|
|
560,700
|
|
|
$
|
(27,414
|
)
|
|
$
|
1,516,142
|
|
|
$
|
(1,227,585
|
)
|
|
$
|
362,210
|
|
See notes to consolidated financial statements.
CASTLE HOLDING CORP. AND SUBSIDIARIES
|
(A Development Stage Entity)
|
Consolidated Statements of Cash Flows
|
(Unaudited and Unreviewed)
|
|
|
Six Months Ended March 31,
|
|
|
Period October 1, 2005 (Inception of Development Stage) to
March 31,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(16,728
|
)
|
|
$
|
(82,893
|
)
|
|
$
|
188,843
|
|
Adjustments to reconcile net income (loss) to net
|
|
|
|
|
|
|
|
|
|
|
|
|
cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
-
|
|
|
|
-
|
|
|
|
263
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable securities
|
|
|
157
|
|
|
|
(98
|
)
|
|
|
131
|
|
Restricted cash and securities
|
|
|
17,334
|
|
|
|
85,693
|
|
|
|
(65,659
|
)
|
Other assets
|
|
|
-
|
|
|
|
-
|
|
|
|
693
|
|
Accounts payable and accrued expenses
|
|
|
(116
|
)
|
|
|
(116
|
)
|
|
|
(74,674
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
647
|
|
|
|
2,586
|
|
|
|
49,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of treasury stock
|
|
|
(2,605
|
)
|
|
|
(2,151
|
)
|
|
|
(27,414
|
)
|
Proceeds from sale of common shares
|
|
|
-
|
|
|
|
-
|
|
|
|
2,550
|
|
Proceeds of loans from affiliates
|
|
|
2,581
|
|
|
|
-
|
|
|
|
3,081
|
|
Repayment of loans payable to related parties
|
|
|
-
|
|
|
|
-
|
|
|
|
(26,015
|
)
|
Repurchase of preferred shares
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,050
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(24
|
)
|
|
|
(2,151
|
)
|
|
|
(48,848
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
623
|
|
|
|
435
|
|
|
|
749
|
|
Cash and cash equivalents, beginning of year
|
|
|
993
|
|
|
|
1,093
|
|
|
|
867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
1,616
|
|
|
$
|
1,528
|
|
|
$
|
1,616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
Interest paid
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Income taxes paid
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
See notes to consolidated financial statements.
CASTLE HOLDING CORP. AND SUBSIDIARIES
(A Development Stage Entity)
Notes to Consolidated Financial Statements
Three and Six Months Ended March 31, 2014 and 2013 and Period October 1, 2005 (Inception of Development Stage) to March 31, 2014
(Unaudited and Unreviewed)
1.
ORGANIZATION
Castle Holding Corp. (“CHC”) is a holding company which was incorporated in Nevada on June 13, 1986. The subsidiaries of CHC are as follows:
|
1.
|
Beverage King, Ltd. (incorporated in Delaware January 2, 1990) - leased automobiles for Company employees; no operations since October 31, 2005.
|
|
2.
|
Church Street Securities Corp. (incorporated in New York April 11, 1991) – operated a securities broker-dealer from October 26, 1995 to January 6, 2005; decided to cease operations on January 6, 2005.
|
|
3.
|
Castle Advisors, Inc. (incorporated in New York December 23, 1993) - acts as a financial consultant; no revenues in years ended September 30, 2013 and 2012.
|
|
4.
|
Wall Street Indians, Ltd. (incorporated in New York May 27, 1994) - provided office services and supplies to the Company to October 31, 2005; no operations since October 31, 2005.
|
|
5.
|
The Unlisted Stock Market Corporation (incorporated in New York December 9, 1999) – no operations from inception.
|
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim financial statements – The accompanying unaudited interim financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all information and footnotes required by generally accepted accounting principles for annual audited financial statements. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments considered necessary for a fair presentation.
The results of operations for the three and six months ended March 31, 2014 are not necessarily indicative of the results to be expected for the year ending September 30, 2014. The accompanying unaudited interim financial statements should be read in conjunction with the Company’s financial statements and notes related thereto for the years ended September 30, 2013 and 2012 included in our Form 10-K filed with the SEC.
Principles of consolidation – The consolidated financial statements include the accounts of CHC and its subsidiaries (collectively, the “Company”). Castle Securities Corp., a former subsidiary that operated a securities broker-dealer from November 1, 1985 to October 31, 2003, dissolved in September 2009. All significant intercompany balances and transactions have been eliminated in consolidation.
Basis of Presentation – The accompanying consolidated financial statements are presented in accordance with the guidance provided by Accounting Standards Codification ("ASC") topic no. 915, "Development Stage Entities". We have used fiscal year ended September 30, 2006 as the inception of our development stage. Since cessation of the operations of Church Street Securities Corp. in January 2005, the Company has had no business operations or operating revenues.
CASTLE HOLDING CORP. AND SUBSIDIARIES
(A Development Stage Entity)
Notes to Consolidated Financial Statements
Three and Six Months Ended March 31, 2014 and 2013 and Period October 1, 2005 (Inception of Development Stage) to March 31, 2014
(Unaudited and Unreviewed)
Use of estimates – The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Cash and cash equivalents - The Company considers highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
Marketable securities and restricted cash and securities - Marketable securities and restricted cash and securities consist primarily of trading securities valued at market. All fair value measurements are based on Level 1 inputs (i.e., closing trading prices of respective marketable securities). Unrealized gains and losses are reflected in income ($(25,900) and $(103,844) for the six months ended March 31, 2014 and 2013, respectively).
Income taxes – Income taxes are accounted for under the assets and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.
Net income (loss) per common share – Basic net income (loss) per common share is calculated based upon the weighted average number of common shares outstanding. Diluted net income (loss) per common share is calculated based upon the weighted average number of common shares outstanding and dilutive convertible preferred shares outstanding.
3. RESTRICTED CASH AND SECURITIES, AT MARKET VALUE
At March 31, 2014 and September 30, 2013, restricted cash and securities consist of:
|
|
March 31,
2014
|
|
|
September 30,
2013
|
|
|
|
|
|
|
|
|
Uninvested cash
|
|
$
|
329
|
|
|
$
|
23,398
|
|
|
|
|
|
|
|
|
|
|
Marketable securities:
|
|
|
|
|
|
|
|
|
560,700 and 551,000 shares, respectively, Castle Holding Corp. (CHOD)
(reflected as treasury stock in the consolidated balance sheet)
|
|
|
162,603
|
|
|
|
275,500
|
|
0 and 60,000 shares, respectively, Liberty Pete Corp. (LBPE)
|
|
|
-
|
|
|
|
420
|
|
27,500 and 24,000 shares, respectively, Medallion Financial Group
(TAXI)
|
|
|
363,275
|
|
|
|
357,120
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
526,207
|
|
|
|
656,438
|
|
|
|
|
|
|
|
|
|
|
Less Castle Holding Corp. (CHOD) shares treated as treasury stock
|
|
|
(162,603
|
)
|
|
|
(275,500
|
)
|
|
|
|
|
|
|
|
|
|
Net
|
|
$
|
363,604
|
|
|
$
|
380,938
|
|
CASTLE HOLDING CORP. AND SUBSIDIARIES
(A Development Stage Entity)
Notes to Consolidated Financial Statements
Three and Six Months Ended March 31, 2014 and 2013 and Period October 1, 2005 (Inception of Development Stage) to March 31, 2014
(Unaudited and Unreviewed)
Except for 375,000 shares Castle Holding Corp. held in safekeeping at March 31, 2014, the restricted cash and securities are held at accounts with TD Ameritrade Inc. (the “First FBO Account”) and E Trade Securities LLC (the “Second FBO Account”). The First FBO Account was established in 2001 to secure payment of the investment in the Class A Convertible Preferred Shares in the event of liquidation of CHC (see Note 5).
In 2001, as a provision of the private offering (see Note 5), CHOD purchased a total of $380,000 face value of United States Treasury Strips (the “Strips”) maturing August 15, 2011 for a total of approximately $233,000. On August 15, 2011, the Strips matured and the First FBO Account was credited $380,000. Since August 15, 2011, the FBO Accounts have acquired and sold a variety of marketable equity securities.
On November 14, 2013, TD Ameritrade notified us to transfer the First FBO Account to another brokerage firm and restricted us to liquidating transactions only. On February 19, 2014, we opened an account at E Trade Securities and, except for 181,500 shares of Castle Holding Corp. common stock still held at TD Ameritrade, all assets held at TD Ameritrade were transferred to E Trade Securities.
Had CHC required conversion of the 699,250 shares of the Class A Convertible Preferred Shares into 699,250 shares of CHOD Common Stock and paid the Class A Convertible Preferred stockholders $0.50 per Preferred Share (or $349,625 total) at March 31, 2014 (see Note 5), the remaining restricted cash and securities available to CHC at March 31, 2014 would have been $13,979.
4. OTHER ASSETS
Other assets consist of:
|
|
March 31,
2014
|
|
|
September 30,
2013
|
|
9% equity ownership of Castle Trucking Corp.
|
|
$
|
1
|
|
|
$
|
1
|
|
9% equity ownership of U Trade Inc.
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2
|
|
|
$
|
2
|
|
5. STOCKHOLDERS’ EQUITY
Class A Convertible Preferred Stock
From March 2001 to September 2001, CHC sold 706,750 shares of Class A Convertible Preferred Stock for gross proceeds of $706,750.
Each share of Class A Convertible Preferred Stock is convertible at any time into one share of the Company’s Common Stock at the election of the Class A Convertible Preferred Stockholder. At any time, CHC may require conversion of the Class A Convertible Preferred Shares provided that CHC Common Stock closes at a price of $1.50 per share or higher for more than 20 consecutive business days. At any time after one year from the issue date of the Class A Convertible Preferred Shares, CHC may require conversion of the Class A Convertible Preferred Shares provided that CHC pay the Class A Convertible Preferred Stockholder $0.50 per Class A Convertible Preferred Share.
The Class A Convertible Preferred Shares are non-voting and will have a first priority, up to $1.00 per Class A Convertible Preferred Share, in the event of liquidation of CHC.
As a provision of the private offering, CHC used 33% of the gross proceeds of the offering to purchase $380,000 face value of U.S. Treasury Strips (the “Strips”) maturing August 15, 2011 (see Note 3).
The proceeds from the Strips are available to holders of the Class A Convertible Preferred Shares and are in addition to the other assets of CHC. The Strips, and upon maturity, subsequent investments purchased from such proceeds, are to be held by CHC to secure payment of the investment in the Class A Convertible Preferred Shares in the event of liquidation of CHC. The protection afforded by the Strips are to terminate upon the conversion of the Class A Convertible Preferred Shares and the Strips, or their proceeds, are to thereafter be available to CHC.
In the years ended September 30, 2006 and 2007, CHC repurchased a total of 5,000 shares of Class A Convertible Preferred Stock. In the year ended September 30, 2009, CHC repurchased 2,500 shares of Class A Convertible Preferred Stock. Accordingly, the proportionate share (approximately 1.06%) of the FBO Accounts (or approximately $3,854 market value at March 31, 2014) may be available to CHC.
CASTLE HOLDING CORP. AND SUBSIDIARIES
(A Development Stage Entity)
Notes to Consolidated Financial Statements
Three and Six Months Ended March 31, 2014 and 2013 and Period October 1, 2005 (Inception of Development Stage) to March 31, 2014
(Unaudited and Unreviewed)
Common Stock
In October 2005, CHC sold 200,000 shares of common stock to a CHC affiliate for $2,000 ($0.01 per share).
In January 2007, CHC sold 50,000 shares of common stock to a former employee for $550 ($0.011 per share).
6. INCOME TAXES
CHC files a consolidated income tax return with its subsidiaries for federal reporting purposes. CHC and its subsidiaries file separate income tax returns for state reporting purposes.
The provisions for (benefit from) income taxes consisted of:
|
|
Six Months Ended March 31,
|
|
|
|
2014
|
|
|
2013
|
|
Current:
|
|
|
|
|
|
|
Federal
|
|
$
|
-
|
|
|
$
|
-
|
|
State
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
Federal
|
|
|
(5,317
|
)
|
|
|
(26,352
|
)
|
State
|
|
|
(1,087
|
)
|
|
|
(5,388
|
)
|
Change in valuation allowance
|
|
|
6,404
|
|
|
|
31,740
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
The Company’s effective tax rate differed from the United States Federal income tax rate for the following reasons:
|
|
Six Months Ended March 31,
|
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
Computed Federal income tax at 34%
|
|
$
|
(5,688
|
)
|
|
$
|
(28,184
|
)
|
Computed state income tax, net of Federal tax effect
|
|
|
(716
|
)
|
|
|
(3,556
|
)
|
Change in valuation allowance
|
|
|
(6,404
|
)
|
|
|
31,740
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
Based on management's present assessment, the Company has not yet determined it to be more likely than not that a deferred tax asset of $412,500 as of March 31, 2014 attributable to the future utilization of $1,162,059 of prior year net operating loss carryforwards and $51,175 of capital loss carryforwards will be realized. Accordingly, the Company has maintained a 100% allowance against the deferred tax asset in the financial statements at March 31, 2014. The Company will continue to review this valuation allowance and make adjustments as appropriate. The net operating loss carryforwards expire as follows: $22,164 in year 2019, $185,653 in year 2021, $694,345 in year 2022, $135,943 in year 2023, $66,021 in year 2024, $39,208 in year 2025 and $18,725 in year 2034. The capital loss carryforward of $51,175 expires in year 2018.
Current United States income tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.
7.
COMMITMENTS AND CONTINGENCIES
Since December 2005, the Company has been using space provided by a public accounting firm owned by the Company’s treasurer at no cost to the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Castle Holding Corp. (“CHOD”) is a holding company which was incorporated in Nevada on June 13, 1986. On September 30, 1987, CHOD acquired Castle Securities Corp., a New York corporation which operated as a securities broker dealer from November 1, 1985 to October 31, 2003. On April 11, 1991, CHOD formed Church Street Securities Corp., a New York corporation which operated as a securities broker dealer from October 26, 1995 to January 6, 2005. Since January 2005, CHOD and its subsidiaries have had no business operations or operating revenues. Our current plan is to acquire an operating company in a reverse acquisition transaction involving the exchange of capital stock.
RESULTS OF OPERATIONS – Three Months ended March 31, 2014 compared to Three Months ended March 31, 2013.
For the three months ended March 31, 2014, we incurred a net loss from investment of marketable securities of $30,862 compared to a net loss of $30,703 for the three months ended March 31, 2013. Substantially all of the marketable securities are held in an account with E Trade Financial LLC (the “Second FBO Account”) which was established to secure payment of the Class A Convertible Preferred Shares in the event of liquidation of CHOD.
Interest and dividends revenues increased $5,044 from $1,535 in 2013 to $6,579 in 2014.
Expenses increased $1,901 from $8 in 2013 to $1,909 in 2014.
Net income (loss) decreased $2,984 from a net loss of $29,176 in 2013 to a net loss of $26,192 in 2014. The $2,984 decrease was due to the $5,044 increase in interest and dividends revenues, offset by the $159 increase in net loss on marketable securities and the $1,901 increase in expenses.
RESULTS OF OPERATIONS – Six Months ended March 31, 2014 compared to Six Months ended March 31, 2013:
For the six months ended March 31, 2014, we incurred a net loss from investment of marketable securities of $23,903 compared to a net loss of $91,356 for the six months ended March 31, 2013. Substantially all of the marketable securities are held in an account with E Trade Financial LLC (the “Second FBO Account”) which was established to secure payment of Class A Convertible Preferred Shares in the event of liquidation of CHOD.
Interest and dividends revenues decreased $794 from $9,912 in 2013 to $9,118 in 2014.
Expenses increased $494 from $1,449 in 2013 to $1,943 in 2014.
Net loss decreased $66,165 from a net loss of $82,893 in 2013 to a net loss of $14,785 in 2014. The $66,165 decrease was due to the $67,453 reduction in net loss on marketable securities, offset by the $794 decrease in interest and dividends revenues and the $494 increase in expenses.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2014, the Company had cash and cash equivalents of $1,616, total assets of $365,291, total liabilities of $3,081, and total stockholders’ equity of $362,210. Of the $365,291 total assets at March 31, 2014, $363,604 represents cash and marketable securities held in the Second FBO Account to secure payment of the Class A Convertible Preferred Shares in the event of liquidation of CHOD.
Cash and cash equivalents increased $623 from $993 at September 30, 2013 to $1,616 at March 31, 2014. The $623 increase was due to the $2,581 loan from an affiliate and the $647 provided by operating activities, offset by $2,605 used to acquire treasury stock.
The Company currently has no other agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.
We currently have no commitments with any person for any capital expenditures.
We have no off-balance sheet arrangements.
Changes in
and Disagreements with Accountants on Accounting and Financial Disclosure
Since year ended September 30, 2002, Castle Holding Corp. has had no principal accountant. Accordingly, there has been no disagreements with accountants on accounting and financial disclosure.