UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Amendment No. 1)
(Mark One)
? | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended December 31, 2011
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: 001-14753
NETWORK 1 FINANCIAL GROUP, INC.
(Exact Name of Registrant as specified in its charter)
Delaware | | 11-3423157 |
(State or other jurisdiction of | | (I.R.S. Employer |
incorporation or organization) | | Identification No.) |
2 Bridge Avenue, 4thFloor
Red Bank, NJ 07701
(Address of principal executive offices)
(732) 758-9001
(Registrant’s telephone number)
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES ? NO ?
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES ? NO ?
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 ? |
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ? NO ?
As of November 10, 2011, the Registrant had 48,635,057 shares of its Common Stock, $.001 par value, outstanding.
Explanatory Note
The purpose of this Amendment No. 1 to Network 1 Financial Group, Inc’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2011, filed with the Securities and Exchange Commission on February 21, 2012 (the “Form 10-Q”), is to include the XBRL report.
NETWORK 1 FINANCIAL GROUP, INC.
FORM 10-Q
DECEMBER 31, 2011
TABLE OF CONTENTS
| | Page |
PART I – FINANCIAL INFORMATION | 1 |
ITEM 1. | CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) | 1 |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 2 |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 5 |
ITEM 4T. | CONTROLS AND PROCEDURES | 5 |
| | |
PART II – OTHER INFORMATION | 6 |
ITEM 1. | LEGAL PROCEEDINGS | 6 |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 6 |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | 6 |
ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS | 6 |
ITEM 5. | OTHER INFORMATION | 6 |
ITEM 6. | EXHIBITS | 6 |
| | |
SIGNATURES | 7 |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Index to Consolidated Financial Statements
Condensed Consolidated Statement of Financial Condition | F–1 |
| |
Condensed Consolidated Statements of Operations | F–2 |
| |
Condensed Consolidated Statement of Equity | F–3 |
| |
Condensed Consolidated Statement of Cash Flows | F–4 |
| |
Notes to Condensed Consolidated Financial Statements | F–5 |
NETWORK 1 FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
December 31, 2011 (unaudited) and June 30, 2011
| | DECEMBER | | | JUNE | |
| | 2011 | | | 2011 | |
| | (unaudited) | | | | |
ASSETS | | | | | | | | |
Cash | | $ | 7,759 | | | $ | 58,856 | |
Commission Receivable from Clearing Firm | | | 63,036 | | | | 78,021 | |
Note Receivable Network 1 Financial Advisors Inc. | | | 44,600 | | | | 59,002 | |
Deposit with clearing organization | | | 325,382 | | | | 345,137 | |
Due from Affiliates | | | 12,183 | | | | 45,482 | |
Advances to Registered Representatives: net of reserve | | | | | | | | |
for uncollectible accounts of $90,000. | | | 79,982 | | | | 70,231 | |
Securities held for resale, at market | | | 83,574 | | | | 83,415 | |
Property and Equipment, net. | | | 26,532 | | | | 17,935 | |
Other Assets | | | 27,000 | | | | 27,000 | |
| | | | | | | | |
TOTAL ASSETS: | | $ | 670,048 | | | $ | 785,079 | |
| | | | | | | | |
LIABILITIES AND EQUITY | | | | | | | | |
LIABILITIES | | | | | | | | |
Line of Credit | | $ | 30,000 | | | $ | 30,000 | |
Notes Payable | | | 9,245 | | | | 4,088 | |
Commissions Payable | | | 95,395 | | | | 78,943 | |
Capital Leases payable | | | 14,048 | | | | 18,588 | |
Accounts Payable, accrued expenses and other liabilities | | | 166,315 | | | | 173,923 | |
| | | - | | | | | |
| | | | | | | | |
TOTAL LIABILITIES | | | 315,003 | | | | 305,542 | |
| | | | | | | | |
Commitments and Contingencies | | | | | | | | |
| | | | | | | | |
EQUITY | | | | | | | | |
Common Stock, $.001 par value; | | | | | | | - | |
100,000,000 shares authorized; 56,560,057 and | | | | | | | | |
55,560,057 issued and 48,635,054 and 47,635,057 outstanding, respectively. | | | 56,560 | | | | 55,560 | |
Additional Paid In Capital | | | 2,055,538 | | | | 2,022,888 | |
Treasury Stock at cost; 7,925,000 shares | | | (5,129 | ) | | | (5,129 | ) |
Accumulated deficit | | | (2,058,274 | ) | | | (1,808,782 | ) |
Common stock subscribed | | | 87,000 | | | | - | |
Total stockholders equity | | | 140,045 | | | | 264,537 | |
Non-controlling interest | | | 215,000 | | | | 215,000 | |
TOTAL EQUITY | | | 355,045 | | | | 479,537 | |
| | | | | | | | |
TOTAL LIABILITIES AND EQUITY | | $ | 670,048 | | | $ | 785,079 | |
(the accompanying notes are an integral part of these unaudited condensed consolidated financial statements)
NETWORK 1 FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED DECEMBER 31, 2011 and 2010
(unaudited)
| | For The Three Months Ended | | | For The Six Months Ended | |
| | December 31, | | | December 31, | |
| | 2011 | | | 2010 | | | 2011 | | | 2010 | |
Revenues: | | | | | | | | | | | | | | | | |
Commissions | | $ | 388,023 | | | $ | 226,950 | | | $ | 737,190 | | | $ | 396,738 | |
Net dealer inventory gains | | | 162,550 | | | | 178,412 | | | | 171,672 | | | | 324,700 | |
Investment banking | | | 101,600 | | | | 29,100 | | | | 104,600 | | | | 128,163 | |
Interest and Dividends | | | 1,769 | | | | 6,208 | | | | 7,914 | | | | 13,098 | |
Transfer fees and clearing services | | | - | | | | - | | | | - | | | | 6,633 | |
Investment advisory | | | 66,629 | | | | 277,341 | | | | 141,578 | | | | 385,116 | |
Other | | | - | | | | 25,500 | | | | 335 | | | | 36,500 | |
Total Revenue | | | 720,571 | | | | 743,511 | | | | 1,163,289 | | | | 1,290,948 | |
| | | | | | | | | | | | | | | | |
Operating Expenses: | | | | | | | | | | | | | | | | |
Commissions | | | 351,103 | | | | 78,084 | | | | 520,148 | | | | 165,470 | |
Compensation and Related Expenses | | | 206,693 | | | | 283,975 | | | | 383,016 | | | | 537,461 | |
Clearing Fees | | | 39,682 | | | | 52,919 | | | | 88,013 | | | | 100,148 | |
Communications and data processing | | | 26,493 | | | | 39,868 | | | | 55,209 | | | | 73,153 | |
Interest | | | 578 | | | | 676 | | | | 1,165 | | | | 4,074 | |
Occupancy and related expenses | | | 46,928 | | | | 54,315 | | | | 68,972 | | | | 96,068 | |
Office Expenses | | | 77,264 | | | | 59,608 | | | | 114,957 | | | | 108,630 | |
Professional Fees | | | 80,954 | | | | 82,215 | | | | 176,297 | | | | 197,596 | |
Depreciation | | | 2,446 | | | | 1,719 | | | | 5,004 | | | | 3,879 | |
Total Operating Expenses | | | 832,141 | | | | 653,379 | | | | 1,412,781 | | | | 1,286,479 | |
| | | | | | | | | | | | | | | | |
(Loss) Income from Operations | | | (111,570 | ) | | | 90,132 | | | | (249,492 | ) | | | 4,469 | |
| | | | | | | | | | | | | | | | |
Other Income | | | | | | | | | | | | | | | | |
Gain on change in derivative liability | | | - | | | | 3,098 | | | | - | | | | 13,182 | |
Total Other Income | | | - | | | | 3,098 | | | | - | | | | 13,182 | |
| | | | | | | | | | | | | | | | |
Net (loss) Income | | | (111,570 | ) | | | 93,230 | | | | (249,492 | ) | | | 17,651 | |
| | | | | | | | | | | | | | | | |
Loss/Income attributable to non-controlling interest | | | - | | | | - | | | | | | | | - | |
| | | | | | | | | | | | | | | | |
Net (loss) Income attributable to common shareholders | | $ | (111,570 | ) | | $ | 93,230 | | | $ | (249,492 | ) | | $ | 17,651 | |
| | | | | | | | | | | | | | | | |
(Loss) Income per common share (basic and diluted) | | $ | (0.002 | ) | | $ | 0.002 | | | $ | (0.005 | ) | | $ | 0.002 | |
| | | | | | | | | | | | | | | | |
Weighted average common shares outstanding | | | 56,058,427 | | | | 40,360,057 | | | | 50,144,568 | | | | 40,360,057 | |
(the accompanying notes are an integral part of these unaudited condensed consolidated financial statements)
NETWORK 1 FINANCIAL GROUP, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EQUITY
For the six months ended December 31, 2011
(Unaudited)
| | Common Stock | | | Additional
paid-in-capital | | | Treasury
Stock | | | Accumulated
Deficit | | | Common Stock
Subscribed | | Non-Controlling
interest | | | Total | |
| | Shares | | | Amount | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Balance - June 30, 2011 | | | 55,560,057 | | | $ | 55,560 | | | $ | 2,022,888 | | | $ | (5,129 | ) | | $ | (1,808,782 | ) | | $ | - | | $ | 215,000 | | | $ | 479,537 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |