ITEM 1.
DESCRIPTION OF BUSINESS
Special Cautionary Notice Regarding Forward-Looking Statements
Various matters discussed in this document and in documents incorporated by reference herein, including matters discussed under the caption “Management’s Discussion and Analysis or Plan of Operation,” may constitute forward-looking statements for purposes of the Securities Act and the Securities Exchange Act. These forward-looking statements may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Woodstock Holdings, Inc. (the “Company”) (formerly Woodstock Financial Group, Inc.) to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. The words “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” and similar expressions are intended to identify such forward-looking statements. The Company’s actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation:
·
The effects of future economic conditions;
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Governmental monetary and fiscal policies, as well as legislative and regulatory changes;
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The risks of changes in interest rates on the level and composition of deposits, loan demand, and the values of loan collateral, securities and interest rate protection agreements, as well as interest rate risks; and
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The effects of competition from other financial institutions and financial service providers operating in the Company’s market area and elsewhere, including institutions operating locally, regionally, nationally and internationally, together with such competitors offering products and services by mail, telephone, and computer and the Internet.
All written or oral forward-looking statements attributable to the Company are expressly qualified in their entirety by these cautionary statements.
Woodstock Holdings, Inc.
GENERAL
The Company is a holdings company, engaged through a subsidiary in full service securities brokerage and investment banking since 1995. Effective January 20, 2010, we reorganized into a holding company and changed our name, transferring the name Woodstock Financial Group, Inc. (“WFG”) to a newly established 100% owned broker dealer subsidiary.
The Company reports its financial position and results of operations for 2009 and earlier periods on a pre-reorganization basis. For reporting periods beginning February 2010, we will report our position and results of operations on a consolidated basis.
WFG is a full service securities brokerage firm, which was incorporated in January 2010. WFG is registered as a broker-dealer with the Financial Industry Regulatory Authority (“FINRA”) in 50 states, Puerto Rico, Washington D.C. and also as a municipal securities dealer with the Municipal Securities Regulation Board. WFG is also an SEC Registered Investment Advisor and maintains advisory accounts through Fidelity Registered Investment Advisor Group (“FRIAG”), an arm of Fidelity Investments and IMG (Investment Management Group, a division of Southwest Securities.) The WFG is subject to net capital and other regulations of the United States Securities and Exchange Commission (“SEC”). WFG offers full service commission and fee-based money management services to individual and institutional investors.
WFG maintains a custody-clearing relationship with Southwest Securities, Inc. (“Southwest”) and these accounts are introduced to Southwest on a fully disclosed basis.
In September 2010 WFG signed a revised clearing and custody agreement with Southwest whereby Southwest provided a $500,000 incentive payment as part of a six year agreement with WFG. Receipt of these funds was initially recorded as an increase to the Clearing Deposit account and Deferred Revenue. In December 2010 WFG signed an amendment to this agreement with Southwest whereby Southwest provided the $500,000 incentive payment with $125,000 being a one time non-contingent signing bonus in return for a six year agreement with WFG. The initial recording of the transaction was reversed and receipt of these funds was recorded as an increase of $125,000 to the Other Income account and $375,000 to Deferred Revenue account, of which beginning October 2011 a monthly deduction of $6,250 is allowed under the terms. We believe WFG will benefit economically as a result of the terms of the new clearing and custody agreement with Southwest.
Our Company headquarters is at 117 Towne Lake Parkway, Suite 200, Woodstock, Georgia 30188, and our telephone number is (770) 516-6996. We maintain branch and other offices in a number of other jurisdictions and a complement of approximately 104 independent retail brokers. Our net capital position as of December 31, 2010 and 2009, as calculated by Rule 15c3-1 of the SEC, was $761,433 and $781,846, respectively.
For the previous five years, our annual revenues are as follows:
Thus far, all expansion and growth has been funded by cash flows from operations and private sales of our securities. Our plans are to invest in advertising and recruiting efforts to continue our growth and profitability. We expand through recruiting additional registered representatives, establishing new branch offices, broadening our institutional services and creating new financial products and service offerings.
The Company’s website address is www.woodstockholdingsinc.com
BUSINESS
Our primary sources of revenue are derived from brokerage services and related financial activities.
HOLDING COMPANY REORGANIZATION
Effective January 20, 2010, we entered into a FINRA and SEC-approved reorganization in which we transferred our broker-dealer and insurance businesses, together with the name “Woodstock Financial Group, Inc.” to a newly-established wholly owned Georgia subsidiary. In turn, we changed our name to “Woodstock Holdings, Inc.” Our trading symbol remains WSFL.
Other than these changes in corporate form, there has been no change in the ownership or management of the Company or of these businesses. The purpose of the reorganization is to position our firm to take advantage of new opportunities to grow and diversify in a post-recession environment. In addition, the reorganization is expected to provide opportunities to improve the quality of management, internal controls and a reduction of operating costs by associating them more closely with the particular businesses being done. In this respect, the reorganization aligns our corporate structure more closely with that employed by other publicly traded firms in our business.
SECURITIES SALES SERVICES
WFG is a FINRA member broker-dealer providing securities sales services through a network of "independent contractor" registered representatives to several thousand retail clients. These representatives primarily retail stocks, mutual funds, variable annuities and variable life insurance products, managed account and other investment advisory and financial planning products and services. Commissions are charged on the sale of securities products, of which a percentage is shared with the representatives. Over 87% of our revenue during 2010 and 2009 has been derived from these securities sales services.
WFG’s independent contractors receive a commission payout of between 80% and 90%, on average.
INSURANCE PRODUCT SALES
Through several selling agreements with larger insurance companies, WFG offers a variety of insurance products, which are sold by our independent broker network. Variable annuity and variable life products from over 10 carriers are also offered, providing a large variety for consumers’ choice. While this business is not significant to date, in terms of dollar revenues, we regard it as an important part of the services provided.
ADVISORY AND PLANNING
WFG is also registered as an Investment Advisor with the SEC and provides investment supervisory services. Through WFG, our independent representatives are able to provide planning and consulting services in a variety of financial services areas such as financial planning, tax planning, benefits consulting, corporate 401(k)s and other types of financial structures. Fees are billed quarterly for these services and shared between WFG and the Investment Advisor Representatives on a fully disclosed basis. No significant amount of business has been derived from advisory and planning activities to date.
EXPANSION OF EXISTING BUSINESS
We believe that our business has been limited by our capital position and capital structure. With the reorganization and the ability to obtain increased capital, we will be able to expand our existing businesses as set forth below:
We intend to intensify our efforts to attract higher producing independent registered representatives by offering them a higher quality of service and a larger variety of financial products and service options to provide to their clients.
The expanded services include:
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Improved sales and business development education and support services
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Better continuing education programs
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Enhanced electronic order processing, communications and record keeping
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Improved compliance support and communications
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Increased capacity to provide investment advisory and insurance services
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Better contact with product and service suppliers
We also intend to expand our investment banking activities, hire additional brokers and market specialized products to retail and institutional clients.
CLEARING AGENT AND CUSTOMER CREDIT
WFG currently uses Southwest Securities, Inc. (“Southwest”) as its clearing agent on a fully disclosed basis. Southwest processes all securities transactions and maintains the accounts of customers. Customer accounts are protected through the Securities Investor Protection Corporation (“SIPC”) for up to $500,000, with coverage of cash balances limited to $250,000. Southwest has purchased from underwriting syndicates, syndicates at Lloyd’s of London with additional security protection to cover the net equity of customers’ accounts up to an aggregate of $100 million.
The services of Southwest include billing, credit control and receipt, and custody and delivery of securities. Southwest provides the operational support necessary to process, record and maintain securities transactions for our brokerage and distribution activities. The total cost of Southwest’s services is closely monitored to determine the feasibility of our providing these services ourselves.
Southwest lends funds to our customers through the use of margin credit. These loans are made to customers on a secured basis, with Southwest maintaining collateral in the form of saleable securities, cash or cash equivalents. Under the terms of our clearing agreement, we indemnify Southwest for any loss on these credit arrangements. We have implemented policies to avoid possible defaults on margin loans by the increased supervision of customers with margin loans. Margin interest for the years ending December 31, 2010 and 2009 was approximately 2.1% and 1.4%, respectively, of revenues.
In September 2010 WFG signed a revised clearing and custody agreement with Southwest whereby Southwest provided a $500,000 incentive payment as part of a six year agreement with WFG. Receipt of these funds was initially recorded as an increase to the Clearing Deposit account and Deferred Revenue. In December 2010 WFG signed an amendment to this agreement with Southwest whereby Southwest provided the $500,000 incentive payment with $125,000 being a one time non-contingent signing bonus in return for a six year agreement with WFG. Therefore, we recorded $125,000 to Other Income and adjusted Deferred Revenue to $375,000.
REGULATION
The securities business is subject to extensive and frequently changing federal and state laws and substantial regulation under such laws by the SEC and various state agencies and self-regulatory organizations, such as FINRA. Much of the regulation of broker-dealers has been delegated to self-regulatory organizations, principally FINRA, which has been designated by the SEC as WFG’s primary regulator. FINRA adopts rules (which are subject to approval by the SEC) that govern FINRA members and conducts periodic examinations of member firms' operations. We are also subject to regulation as a broker-dealer and investment advisor by state securities administrators in those states in which we conduct business.
In July, 2010 the U.S. Congress enacted and the President signed a comprehensive overhaul of the financial services industry (the “Dodd Frank Act”), among other things mandating the U.S. Securities and Exchange Commission to adopt a variety of new regulations governing the broker dealer and investment advisory business. Many of these new regulations, as proposed, will have far reaching effects on the Company’s business. The Company will be, as a result, subject to an increased level of regulation and reporting which will affect its efficiency and profitability for years to come.
Broker-dealers are already subject to regulations which cover all aspects of the securities business, including sales methods and supervision, trading practices, use and safekeeping of customers' funds and securities, capital structure of securities firms, record keeping and reporting, continuing education and the conduct of directors, officers and employees. Investment advisors are subject to SEC and state regulation governing licensing of investment advisor representatives, disclosure to and communication with customers, bonding and investment and other managers. Additional legislation, changes in rules promulgated by the SEC and self-regulatory organizations, or changes in the interpretation or enforcement of existing laws and rules, may directly affect the mode of operation and profitability of broker-dealers and investment advisors.
The SEC, self-regulatory organizations and state securities commissions may conduct administrative proceedings which can result in censure, fine, the issuance of cease-and-desist orders or the suspension or expulsion of a broker-dealer, its officers or employees. The principal purpose of regulation and discipline of broker-dealers is the protection of customers and the integrity of the securities markets.
Our mutual fund distribution business is subject to extensive regulation as to duties, affiliations, conduct and limitations on fees under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Investment Company Act of 1940, as amended (the "1940 Act"), and the regulations of FINRA. As discussed above, the Company is a FINRA member. FINRA has prescribed rules with respect to maximum commissions, charges and fees related to investment in any open-end investment company registered under the 1940 Act.
NET CAPITAL REQUIREMENTS
As a registered broker-dealer and a member firm of FINRA, WFG is subject to the SEC Uniform Net Capital Rule, Rule15c3-1, (the “Net Capital Rule”). The Net Capital Rule, which specifies minimum net capital requirements for registered brokers and dealers, is designed to measure the general financial integrity and liquidity of a broker-dealer and requires that at least a minimum part of its assets be kept in relatively liquid form. Net capital is essentially defined as net worth (assets minus liabilities), plus qualifying subordinated borrowings, less certain mandatory deductions that result from excluding assets not readily convertible into cash and from conservatively valuing certain other assets, such as a firm's positions in securities.
Among these deductions are adjustments in the market value of securities to reflect the possibility of a market decline prior to disposition. WFG has elected to compute its net capital under the standard aggregate indebtedness method permitted by the net capital rule, which requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed a 15-to-1 ratio. WFG’s required minimum net capital is $100,000. As of December 31, 2010, we had FINRA reported net capital of $761,433 and our ratio of aggregate indebtedness to net capital was 1.95 to 1.
Failure to maintain the required net capital may subject a firm to suspension or expulsion by FINRA, the SEC and other regulatory bodies and ultimately may require its liquidation. WFG has met or exceeded all net capital requirements since the Company’s inception. The net capital rule also prohibits payments of dividends, redemption of stock and the prepayment or payment in respect of principal of subordinated indebtedness, if net capital, after giving effect to the payment, redemption or repayment, would be less than a specified percentage of the minimum net capital requirement. Compliance with the net capital rule could limit those operations that require the intensive use of capital, such as underwriting and trading activities, and also could restrict our ability to withdraw capital, which in turn, could limit our ability to pay dividends, repay debt and redeem or purchase shares of our outstanding capital stock.
COMPETITION
We encounter intense competition in all aspects of our securities business and compete directly with other securities firms, a significant number of which have greater capital and other resources. In addition to competition from firms currently in the securities business, there has recently been increasing competition from other sources, such as commercial banks and insurance companies offering financial services, and from other investment alternatives. We believe that the principal factors affecting competition in the securities industry are the quality and abilities of professional personnel, including their ability to effectuate a firm's commitments, and the quality, range and relative prices of services and products offered.
Although we may expand the financial services we can render to our customers, we currently do not offer as broad a range of financial services as national stock exchange member firms, commercial banks, insurance companies and others.
PERSONNEL
At December 31, 2010, we had 14 full-time employees in addition to approximately 104 registered representatives. None of our personnel are covered by a collective bargaining agreement. We consider our relationships with our employees to be good.
ITEM 2.
ITEM 2.
DESCRIPTION OF PROPERTY
Our principal executive offices are located at 117 Towne Lake Parkway, Suite 200, Woodstock, Georgia 30188 where the Company purchased 7,200 square feet of office space for approximately $1.2 million.
ITEM 3.
ITEM 3.
LEGAL PROCEEDINGS
In the normal course of business, WFG, as a regulated broker-dealer, is subject to examinations, inquiries and requests from customers, the SEC, FINRA and state regulators. We are not aware of any matter at this time that would have a material impact on the Company’s financial position.
ITEM 4.
ITEM 4.
REMOVED AND RESERVED
PART II
ITEM 5.
ITEM 5.
MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a)
The Company’s Common Stock is traded on the NASDAQ OTC Bulletin Board under the symbol “WSFL.OB”. No equity securities of the Company were sold during the period.
(b)
Not applicable.
(c)
Not applicable.
ITEM 6.
ITEM 6.
SELECTED FINANCIAL DATA
Not applicable.
ITEM 7.
ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The following discussion should be read in conjunction with the financial statements of the Company and the notes thereto appearing elsewhere herein.
OVERVIEW AND GENERAL INDUSTRY CONDITIONS
Our primary sources of revenue are commissions earned from brokerage transaction and related financial services. To an immaterial degree to date, we derive revenues from investment advisory and insurance businesses. Our principal business activities are, by their nature, affected by many factors, including general economic and financial conditions, movement of interest rates, security valuations in the marketplace, regulatory changes, competitive conditions, transaction volume and market liquidity. Consequently, our revenues can be volatile. While we seek to maintain cost controls, a significant portion of our expenses is fixed and does not vary with market activity. As a result, substantial fluctuations can occur in our revenue and net income from period to period. Unless otherwise indicated, in this section, references to years are to fiscal years.
Our subsidiary, WFG, is a licensed insurance broker and receives insurance commission revenue as a result of insurance operations. Our subsidiary, WFG, is also a registered investment advisor and receives revenue from advisory fees. The Company does not regard insurance commissions and advisory fee revenue as significant at this time.
RESULTS OF OPERATIONS - YEARS ENDED DECEMBER 31, 2010 and 2009
Total revenue for the year ended December 31, 2010 increased by $3,773,802 or approximately 42%, to $12,706,967 from $8,933,165 for the comparable period in 2009.
Commission revenue for the year ended December 31, 2010 increased by $3,187,408, or approximately 40%, to $11,133,983 from $7,946,575 for the comparable period in 2009. The increase was due primarily to an addition of an OSJ branch office in the third quarter, along with an increase in transactional business for the first quarter and third quarter and fee based business in the second quarter.
Interest and dividend income for the year ended December 31, 2010 increased by $131,380, or approximately 88%, to $280,085 from $148,705 compared to the comparable period in 2009. This increase is due to the increase in interest charged on margin accounts and customer accounts held by Southwest.
Other fees, from clearing transactions charges and other income for the year ended December 31, 2010 increased by $455,014, or approximately 54%, to $1,292,899 from $837,885 for the comparable period in 2009. The primarily increase is due to the fact that in September, 2010 WFG executed an agreement with Southwest whereby Southwest provided a $500,000 incentive payment in return for a six year agreement with WFG. The agreement was further amended in December, 2010. Receipt of the funds was recorded as deferred revenue, of which $125,000 was recognized as income as of December 31, 2010. In addition, there are $67,429 in realized and $36,845 in unrealized trading profits included from the fourth quarter. Furthermore, there is additional income from a sub-tenant.
Total operating expenses for the year ended December 31, 2010 increased by $3,255,777, or approximately 35%, to $12,427,768 from $9,171,991 for the comparable period in 2009. The increased expense was due primarily to the increased commissions paid to brokers, which correlates with the increase commission revenue.
Commissions to brokers for the year ended December 31, 2010 increased by $2,924,472, or approximately 43%, to $9,717,860 from $6,793,388 for the comparable period in the prior year. This increase correlates with the increase in commission revenue during the year.
Clearing costs for the year ended December 31, 2010 decreased by $5,971, or approximately 4%, to $160,473 from $166,444 for the comparable period in 2009 as a result of a renegotiated clearing agreement. As a percentage of commission revenue, clearing costs were approximately 1.4% for the year ended December 31, 2010, compared to approximately 2.1% in 2009.
Selling, general and administrative expense for the year ended December 31, 2010 increased $319,969, or 15%, to $2,455,341 compared to $2,135,372 for the comparable period in 2009. This increase was largely due to the Company taking a write-off of $109,798 in the amount due from a broker’s account.
The Company recorded no income tax expense or benefit for the years ended December 31, 2010 and 2009. We have net operating loss carryforward as of December 31, 2010, the utilization of which is dependent upon future taxable income.
Net profit was $279,199 for the year ended December 31, 2010 compared to net loss of $238,826 for the comparable period in 2009. The increase in revenue was primarily related to an increase in brokers and their activity, while at the same time the Company was able to leverage on established policies and procedures to efficiently manage the increase in activity without incurring a proportionate increase to selling, general, and administrative expenses; thus, there was overall net income.
RELATED PARTIES
During the period ended December 31, 2010, a company owned by the Chief Executive Officer (“CEO”) received consulting fees from WFG in the amount of approximately $166,000. In addition, WFG pays an override equal to 2.5% of revenues to a company owned by the CEO. A company owned by the CEO’s spouse also receives consulting fees of $120,000 annually. During the period ended December 31, 2010, the CEO also earned an override bonus of approximately $314,000. Of the override bonus earned during the year ended December 31, 2010, approximately $307,000 was paid. Included in the paid override bonus is approximately $30,000 from payments that were earned in 2009. This liability was transferred to WFG during the reorganization and was paid during 2010. The unpaid 2010 override bonus of approximately $37,000 is included in accounts payable at December 31, 2010.
Registered representatives licensed with WFG sold interests in Raike Real Estate Income Fund (“RRIF”) and received approximately $32,000 in commissions during 2010. RRIF is managed by a company owned by the CEO of WHI.
Pursuant to Exchange Act Rules 17a-3(a) and (a)(2), WFG and WHI have an expense sharing agreement in place.
LIQUIDITY AND CAPITAL RESOURCES
Our assets are reasonably liquid with a substantial majority consisting of cash and cash equivalents and receivables from other broker-dealers and Southwest, all of which fluctuate depending upon the levels of customer business and trading activity. Receivables from broker-dealers and Southwest turn over rapidly. Both our total assets, as well as the individual components as a percentage of total assets, may vary significantly from period to period because of changes relating to customer demand, economic, market conditions and proprietary trading strategies. Our total net assets at December 31, 2010 were $1,236,215, of which $968,716 is cash and cash equivalents.
Historically, we have financed our operations through cash flow from operations and the private placement of equity securities. We have not employed any significant leverage or debt.
We believe that our capital structure is adequate for our current operations. We continually review our overall capital and funding needs to ensure that our capital base can support the estimated needs of the business. These reviews take into account business needs, as well as the Company's regulatory capital requirements. Based upon these reviews, to take advantage of strengthening market conditions and to implement our expansion as fully as possible, we will continue to pursue avenues to decrease costs and increase our capital position.
The Company's cash and cash equivalents increased by $335,042, to $968,716 as of December 31, 2010, from $633,674 as of December 31, 2009. This increase was due to net cash provided by operating activities of $576,041, cash used in investing activities of $9,962, and cash used in financing activities of $231,037. For more information on the cash flows of the Company, please see the statement of cash flows included in the Company’s financial statements appearing elsewhere herein.
SECURITIES INVENTORY AND LIABLILITY FOR SECURITIES INVENTORY
The Company maintains an investment grade municipal bond inventory account for the purpose of inter-dealer trading. This inventory account is monitored on a daily basis for credit risk, market risk and collateralization purposes. This inventory is held in a segregated margin account at Southwest, the Company’s clearing firm. This segregated margin account is collateralized by the Company’s clearing deposit account at Southwest. The current interest rate environment has produced a positive cost to carry on this trading account.
EFFECTS OF INFLATION AND OTHER ECONOMIC FACTORS
Market prices of securities are generally influenced by changes in rates of inflation, changes in interest rates and economic activity. Our revenues and net income are, in turn, principally affected by changes in market prices and levels of market activity. Moreover, the rate of inflation affects our expenses, such as employee compensation, occupancy expenses and communications costs, which may not be readily recoverable in the prices of services offered to our customers. To the extent inflation, interest rates or levels of economic activity adversely affect market prices of securities, our financial condition and results of operations will also be adversely affected.
ITEM 7A.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not invest or trade in market sensitive investments.
ITEM 8.
ITEM 8.
FINANCIAL STATEMENTS
The following financial statements are included herein:
Report of Independent Registered Public Accounting Firm
Balance Sheets as of December 31, 2010 and 2009
Statements of Operations for the years ended December 31, 2010 and 2009
Statements of Shareholders’ Equity for the years ended December 31, 2010 and 2009
Statements of Cash Flows for the years ended December 31, 2010 and 2009
Notes to Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders
We have audited the accompanying consolidated balance sheets of Woodstock Holdings, Inc. (formerly known as Woodstock Financial Group, Inc., the “Company”) as of December 31, 2010 and 2009, and the related consolidated statements of operations, shareholders’ equity and cash flows for the years ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Woodstock Holdings, Inc. as of December 31, 2010 and 2009, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Tampa, Florida
March 15, 2011
4868 West Gandy Boulevard i Tampa, Florida 33611 i 866.683.2727
WOODSTOCK HOLDINGS, INC.
Balance Sheets
As of December 31, 2010 and 2009
See accompanying notes to financial statements.
WOODSTOCK HOLDINGS, INC.
Statements of Operations
For the Years Ended December 31, 2010 and 2009
See accompanying notes to financial statements
.
WOODSTOCK HOLDINGS, INC.
Statements of Shareholders’ Equity
For the Years Ended December 31, 2010 and 2009
See accompanying notes to financial statements.
WOODSTOCK HOLDINGS, INC.
Statements of Cash Flows
For the Years Ended December 31, 2010 and 2009
See accompanying notes to financial statements.
WOODSTOCK HOLDINGS, INC.
Notes to the Financial Statements
(1)
Description of Business and Summary of Significant Accounting Policies
Business
The Company is a holdings company, engaged through a subsidiary in full service securities brokerage and investment banking since 1995. Effective January 20, 2010, we reorganized into a holding company and changed our name, transferring the name Woodstock Financial Group, Inc. (“WFG”) to a newly established 100% owned broker dealer subsidiary.
The Company reports its financial position and results of operations for 2009 and earlier periods on a pre-reorganization basis. For reporting periods beginning February 2010, we will report our position and results of operations on a consolidated basis.
WFG is a full service securities brokerage firm, which was incorporated in January 2010. WFG is registered as a broker-dealer with the Financial Industry Regulatory Authority (“FINRA”) in 50 states, Puerto Rico, Washington D.C. and also as a municipal securities dealer with the Municipal Securities Regulation Board. WFG is also an SEC Registered Investment Advisor and maintains advisory accounts through Fidelity Registered Investment Advisor Group (“FRIAG”), an arm of Fidelity Investments and IMG (Investment Management Group, a division of Southwest Securities.) The WFG is subject to net capital and other regulations of the United States Securities and Exchange Commission (“SEC”). WFG offers full service commission and fee-based money management services to individual and institutional investors.
WFG maintains a custody-clearing relationship with Southwest Securities, Inc. (“Southwest”) and these accounts are introduced to Southwest on a fully disclosed basis.
Basis of Presentation
The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”) and to general practices within the broker-dealer industry. The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from these estimates.
Concentrations of Credit Risk
Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of cash and cash equivalents, clearing deposit, securities inventory and commissions receivable.
Cash and cash equivalents and the clearing deposit are deposited in various financial institutions. At times, amounts on deposit may be in excess of the FDIC insurance limit. From December 31, 2010, to December 31, 2012, all noninterest-bearing transaction accounts are fully insured, regardless of the balance of the accounts, at all FDIC insured institutions. At December 31, 2010, all cash deposits were covered under the FDIC insurance limits.
At December 31, 2010, commissions receivable were approximately $1,247,000, and of that $1,234,000 were due from Southwest Securities, Inc.
Revenue Recognition and Commissions Receivable
WFG charges commissions and/or fees for customer transactions. These commissions and/or fees are charged within the guidelines of industry standards. Commissions are recorded on a settlement date basis, which does not differ materially from trade date basis.
Advertising
The Company recognizes advertising costs as incurred in selling, general and administrative expenses in the statement of operations. The amount of advertising expense recognized in 2010 and 2009 was approximately $4,000 and $18,000, respectively.
WOODSTOCK HOLDINGS, INC.
Notes to the Financial Statements
Cash and Cash Equivalents
Cash and cash equivalents include short-term deposits and highly liquid investments that have original maturities of three months or less when purchased and are stated at cost.
Building and Furniture, Fixtures and Equipment
Building and furniture, fixtures and equipment are reported at cost, less accumulated depreciation. Depreciation of furniture, fixtures and equipment is computed using the double declining balance method over the estimated useful life of five years. Depreciation of the building is computed using the straight-line method over the estimated useful life of 39 years. For assets that are purchased after January 1, 2011, the straight line will replace the current depreciation method.
The cost of maintenance and repairs, which do not improve or extend the useful life of the respective asset, is charged to earnings as incurred, whereas significant renewals and improvements are capitalized.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Additionally, the recognition of future tax benefits, such as net operating loss carryforwards, is required to the extent that realization of such benefits is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the assets and liabilities are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date.
In the event the future tax consequences of differences between the financial reporting bases and the tax bases of the Company’s assets and liabilities result in deferred tax assets, an evaluation of the probability of being able to realize the future benefits indicated by such asset is required. A valuation allowance is provided for the portion of the deferred tax asset when it is more likely than not that some or all of the deferred tax asset will not be realized. In assessing the realizability of the deferred tax assets, management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies.
The Company files income tax returns in the United States and Georgia, which are subject to examination by the tax authorities in these jurisdictions. Generally, the statute of limitations related to the Company’s federal and state income tax return is three years. The state impact of any federal changes for prior years remains subject to examination for a period up to five years after formal notification to the states.
Treasury Stock
Treasury stock is accounted for by the cost method. Subsequent reissuances are accounted for at average cost.
Net Earnings Per Share
During the years ended December 31, 2010 and 2009, the Company had potential common stock issuances outstanding totaling 86,500 shares related to preferred stock. The effect of the convertible preferred stock issuances would be antidilutive because the exercise price is more than the fair value of the stock. The effect of these potential common stock issuances has been excluded from the computation of net earnings per share for each year. Additionally, as of December 31, 2010, the Company had options outstanding. The effect of these options was also not considered due to their antidilutive effect.
WOODSTOCK HOLDINGS, INC.
Notes to the Financial Statements
Presented below is a summary of earnings (loss) per common share for the years ended December 31, 2010 and 2009:
Stock-Based Compensation
The Company sponsors a stock-based incentive compensation plan for the benefit of certain employees. The Company accounts for this plan under the recognition and measurement principles of the Financial Accounting Standards Board Accounting Standard Codification (“ASC”) No 718, Compensation-Stock Compensation.
Fair Value of Financial Instruments
ASC 820, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value. The framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described below.
Level 1
Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.
Level 2
Inputs to the valuation methodology including quoted prices for similar or identical assets or liabilities in active or inactive markets. Inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived from observable market data. If the asset or liability has a specified term, the Level 2 input must be observable for substantially the full term of the asset or liability.
Level 3
Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
Recent Accounting Pronouncements
In January 2010, the FASB issued ASU No. 2010-04, SEC Update - Accounting for Various Topics: Technical Corrections to SEC Paragraphs. This update ASU detailed amendments to various topics for technical corrections. The adoption of ASU 2010-04 did not have a material impact on the Company’s financial statements.
In January 2010, the FASB issued ASU No. 2010-06, Fair Value Measurements and Disclosures (Topic 820) - Improving Disclosures about Fair Value Measurements. The ASU amends Subtopic 820-10, Fair Value Measurements and Disclosures to provide guidance on the fair value measurement of liabilities. The adoption of ASU 2010-06 did not have a material impact on the Company’s financial statements.
In February 2010, the FASB issued ASU No. 2010-08, Technical Corrections to Various Topics. This ASU detailed amendments to various topics for technical corrections. The adoption of ASU 2010-08 did not have a material impact on the Company’s financial statements.
WOODSTOCK HOLDINGS, INC.
Notes to the Financial Statements
In February 2010, the FASB issued ASU No. 2010-09, Subsequent Events (Topic 855) - Amendments to Certain Recognition and Disclosure Requirements. This update provides amendments to Subtopic 855-10, Subsequent Events. The adoption of ASU 2010-09 did not have a material impact on the Company’s financial statements.
In August 2010, the FASB issued ASU No. 2010-21, Accounting for Technical Amendments to Various SEC Rules and Schedules. This Update amends various SEC paragraphs pursuant to the issuance of Release No. 33-9026: Technical Amendments to Rules, Forms, Schedules and Codification of Financial Reporting Policies. The adoption of ASU 2010-21 did not have a material impact on the Company’s financial statements.
In August 2010, the FASB issued ASU No. 2010-22, Accounting for Various Topics-Technical Corrections to SEC Paragraphs. This ASU details amendments to various topics for technical corrections. The adoption of ASU 2010-22 did not have a material impact on the Company’s financial statements.
(2)
Related Party Transactions
During the period ended December 31, 2010, a company owned by the Chief Executive Officer (“CEO”) received consulting fees from WFG in the amount of approximately $166,000. In addition, WFG pays an override equal to 2.5% of revenues to a company owned by the CEO. A company owned by the CEO’s spouse also receives consulting fees of $120,000 annually. During the period ended December 31, 2010, the CEO also earned an override bonus of approximately $314,000. Of the override bonus earned during the year ended December 31, 2010, approximately $307,000 was paid. Included in the paid override bonus is approximately $30,000 from payments that were earned in 2009. This liability was transferred to WFG during the reorganization and was paid during 2010. The unpaid 2010 override bonus of approximately $37,000 is included in accounts payable at December 31, 2010.
Registered representatives licensed with WFG sold interests in Raike Real Estate Income Fund (“RRIF”) and received approximately $32,000 in commissions during 2010. RRIF is managed by a company owned by the CEO of WHI.
Pursuant to Exchange Act Rules 17a-3(a) and (a)(2), WFG and WHI have an expense sharing agreement in place.
(3)
Net Capital Requirements
The Company is subject to the SEC Uniform Net Capital Rule (SEC Rule 15c3-1), which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1 (and the rule of the “applicable” exchange also provides that equity capital may not be withdrawn or cash dividends paid if the resulting net capital ratio would exceed 10 to 1). At December 31, 2010, the Company had net capital of $761,433, which was $661,433 in excess of its required net capital of $100,000. The Company’s net capital ratio was 1.95 to 1.
(4)
Off-Balance Sheet Risk
Customer transactions are introduced and cleared through the Company’s clearing agent on a fully disclosed basis. Under the terms of its clearing agreement, the Company is obligated to make sure that its customers pay for all transactions and meet all maintenance requirements, if applicable, in a timely manner under Regulation-T of the Federal Reserve Board.
The Company engages in inter-dealer activity with various broker-dealers and qualified institutional buyers. These transactions are affirmed/compared in a timely fashion to make sure all such counterparties fulfill their settlement obligations.
WOODSTOCK HOLDINGS, INC.
Notes to the Financial Statements
(5)
Income Taxes
The components of income tax expense for the years ended December 31, 2010 and 2009 are as follows:
The difference between income tax expense computed by applying the statutory federal income tax rate to earnings before taxes for the years ended December 31, 2010 and 2009 is as follows:
The components of deferred taxes at December 31, 2010 and 2009 are as follows:
During 2010 and 2009 a valuation allowance was established for the entire amount of the net deferred tax asset as the realization of the deferred tax asset is dependent on future taxable income.
At December 31, 2010, the Company had net operating loss carryforwards for tax purposes of approximately $1.2 million which will expire beginning in 2016, if not previously utilized.
WOODSTOCK HOLDINGS, INC.
Notes to the Financial Statements
(6)
Mortgage Note
In September 2009, the Company refinanced the mortgage note on the current office space in Woodstock, Georgia. The new note is a 5-year balloon maturing in September 2014, amortized on a 25-year basis at a fixed rate interest rate of 7.00%, and is collateralized by the building.
The Company paid a monthly condo association fee of approximately $56,000 and $53,000 for the years ended December 31, 2010 and 2009, respectively.
Scheduled principal payments due on the mortgage note as of December 31, 2010 are as follows:
(7)
Selling, General and Administrative Expenses
Components of selling, general and administrative expenses which are greater than 1% of total revenues for the years ended December 31, 2010 and 2009 are as follows:
(8)
Securities Inventory and Liability for Securities Inventory
The Company maintains an investment grade municipal bond inventory account for the purpose of inter-dealer trading. This inventory account is monitored on a daily basis for credit risk, market risk and collateralization purposes. This inventory is held in a segregated margin account at Southwest, the Company’s clearing firm. This segregated margin account is collateralized by the Company’s clearing deposit account at Southwest. The current interest rate environment has produced a positive cost to carry on this trading account.
(9)
Shareholders’ Equity
Stock Option Plan
The Company sponsors an incentive stock option plan for the benefit of certain employees. The Board of Directors approved a total of 7.6 million shares to be available for potential future option grants. There were a total of 125,000 stock options granted in 2010 and 500,000 stock options granted during 2009.
During October 2010, the Company granted a total of 125,000 options for a certain employee with a strike price of $.01 where the market value of the Company’s stock was $.05 per share at the time of grant. These options vested immediately, and the Company recognized $1,250 of expense related to these options. The fair value of these options, using the Black-Scholes pricing model was $.04 per share.
During October 2009, the Company granted a total of 500,000 options as part of an employment and compensation package with a strike price of $.01. The market value of the Company’s stock was $.015 per share at the time of grant. These options will vest in 100,000 increments over 5 years beginning in 2009. The fair value of these options, calculated using the Black-Scholes pricing model, was $.015 per share. The Company recognized expense related to these options of $7,500.
WOODSTOCK HOLDINGS, INC.
Notes to the Financial Statements
The Company used the following assumptions in estimating the fair value of the option awards:
A summary of activity in the stock option plan is presented below:
The total intrinsic value of options outstanding and exercisable as of December 31, 2010 and 2009 was $2,457 and $2,357, respectively.
If stock options are exercised in the future, management plans to issue additional shares of common stock to redeem the options.
Perpetual Preferred Stock
The Preferred Stock pays a cumulative annual dividend of $.70 per share. Each share of Preferred Stock is convertible into five shares of common stock at the option of the holder. Each share of Preferred Stock is mandatorily convertible into five shares of common stock upon the filing of a public offering registration statement or a change in control (as defined). The Company may redeem the Preferred Stock by giving 30-day’s notice to the preferred stockholders for a redemption price of $10.00 per share, plus unpaid dividends through the redemption date. Upon voluntary or involuntary dissolution of the Company, the preferred stockholders will receive $10.00 per share prior to the distribution of any amounts to common shareholders. The Preferred Stock has no voting rights. As of December 31, 2010 and 2009, there were no preferred dividends in arrears.
(10)
Employee Retirement Plan
The Company has established a Savings Incentive Match Plan for Employees of Small Employers (SIMPLE IRA). Employees who receive at least $5,000 of compensation for the calendar year are eligible to participate. The Company matches employee contributions dollar for dollar up to three percent of the employee’s compensation. Total contributions for any employee are limited by certain regulations. During 2010 and 2009, the Company contributed approximately $10,200 and $9,700, respectively, to the plan.
(11)
Fair Value
The following table presents the Company’s fair value hierarchy for those assets measured at fair value on a recurring basis as of December 31, 2010:
WOODSTOCK HOLDINGS, INC.
Notes to the Financial Statements
The method described on the previous page may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation method was appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
(12)
Subsequent Events
In accordance with applicable accounting standards, the Company evaluated subsequent events through the date of this audit report, the date the financial statements were available for issue.
Effective January 15, 2011 William Bertsche resigned voluntarily as a Director of the Company, stating that he has no disputes with the Company but that in view of his age he felt he was no longer willing to continue. The Board is currently searching for a successor.
ITEM 9.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A.
ITEM 9A.
CONTROLS AND PROCEDURES
As of the end of the period covered by this report, our management, including our Chief Executive Officer and Chief Financial Officer, reviewed and evaluated the effectiveness of the design and operation of our financial reporting controls and procedures pursuant to Exchange Act Rule 15d-15. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to the Company that is required to be included in our periodic filings with the SEC. There have been no significant changes in our internal controls or, to management’s knowledge, in other factors that could significantly affect those internal controls subsequent to the date we carried out our evaluation, and there has been no corrective actions with respect to significant deficiencies or material weaknesses.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-5(f) under the Exchange Act). Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2010. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Our management has concluded that, as of December 31, 2010, our internal control over financial reporting is effective based on these criteria. This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our internal control over financial reporting would prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. The Company’s internal control over financial reporting is designed to provide reasonable assurance that the objectives of internal control over financial reporting are met.
ITEM 9B.
ITEM 9B.
OTHER INFORMATION
None.
PART III
ITEM 10.
ITEM 10.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below is information regarding our directors and executive officers. We have no other management employees besides those described below, and there are currently no other persons under consideration to become directors or executive officers.
The Board of Directors has designated an Audit Committee of the Board of Directors, consisting of one member, that will review the scope of accounting audits, review with the independent auditors the corporate accounting practices and policies and recommend to whom reports should be submitted within the Company, review with the independent auditors their final report and the overall accounting and financial controls and be available to the independent auditors during the year for consultation purposes. The Board of Directors has also designated a Compensation Committee of the Board of Directors consisting of three Directors, which will review the performance of senior management, recommend appropriate compensation levels and approve the issuance of stock options pursuant to the Company's stock option plan. All Directors and officers of the Company serve until their successors are duly elected and qualify.
The Audit Committee consists of Morris Brunson.
The Compensation Committee consisted of Morris Brunson, William Raike and William Bertsche. Effective January 15, 2011 William Bertsche resigned voluntarily, stating that he has no disputes with the Company but that in view of his age he felt he was no longer willing to continue. The Committee is currently searching for a successor.
William J. Raike, III, Chairman, President and CEO
Mr. Raike has been licensed in the financial services industry for over 20 years. His brokerage career began as a financial representative in 1985, with an NASD member brokerage headquartered in Denver, Colorado. In 1988, Mr. Raike accepted a position as Vice President and Branch Manager of the Atlanta, Georgia regional office. Mr. Raike later joined Davenport & Company, a NYSE member firm headquartered in Richmond, Virginia and subsequently owned an independently operated branch office of an NASD member firm. Mr. Raike formed the Company, formerly known as Raike Financial Group, Inc., in March of 1995. Mr. Raike currently holds positions as Chairman of the Board, Chief Executive Officer and President and is licensed with the Series 4 (Registered Options Principal), 7 (General Securities Representative), 24 (General Securities Principal), 55 (Equity Trader), 63 (State Securities License).
Melissa L. Whitley, Treasurer, CFO and Director
Mrs. Whitley has been with the Company since its inception in March 1995. Prior to joining Raike Financial, she was the operations manager of an independently owned OSJ branch office. Mrs. Whitley has served in several capacities during her tenure at the Company including: trading operations, administrative operations, as well as accounting and payroll. Mrs. Whitley currently holds a Series 27 Financial Operations Principal License.
Morris L. Brunson, Director
Mr. Brunson graduated from Berry College in 1958 with a degree in Business Administration with a concentration in Accounting. His career has been spent in the accounting and financial areas primarily in the health care business. He was the Accounting Manager for Floyd Medical Center, a Cost Accountant for Ledbetter Construction Co. and has held several positions at the American Red Cross and the United Way. He retired in 1998 and currently resides in Georgia.
Geoffrey T. Chalmers, Director
Mr. Chalmers is a graduate of Harvard College and Columbia Law School. He has been a practicing attorney for over 35 years in corporate and securities law, having acted as general counsel to several public and private companies, including broker-dealers. He is engaged in private practice.
ITEM 11.
ITEM 11.
EXECUTIVE COMPENSATION
The following table sets forth the annual compensation of i) our highest-paid officer, and ii) the Company’s officers or directors as a group for the years ended December 31, 2010 and 2009:
The total override paid to Mr. Raike was $307,510 and $192,308 in 2010 and 2009, respectively.
ITEM 12.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the record ownership of our Common Stock as of December 31, 2010 as to (i) each person or entity who owns more than five percent (5%) of any class of our Securities (including those shares subject to outstanding options), (ii) each person named in the table appearing in “Executive Compensation”, and (iii) all officers and directors of the Company as a group.
To the best of our knowledge, the persons named in the table have sole voting and investment power with respect to all shares of common stock owned by them, subject to community property laws where applicable.
ITEM 13.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the period ended December 31, 2010, a company owned by the Chief Executive Officer (“CEO”) received consulting fees from WFG in the amount of approximately $166,000. In addition, WFG pays an override equal to 2.5% of revenues to a company owned by the CEO. A company owned by the CEO’s spouse also receives consulting fees of $120,000 annually. During the period ended December 31, 2010, the CEO also earned an override bonus of approximately $314,000. Of the override bonus earned during the year ended December 31, 2010, approximately $307,000, respectively, was paid. Included in the paid override bonus is approximately $30,000 from payments that were due in 2009 from WHI. This liability was transferred to WFG during the reorganization and was paid during 2010. The unpaid 2010 override bonus of approximately $37,000 is included in accounts payable at December 31, 2010.
Registered representatives licensed with WFG sold interests in Raike Real Estate Income Fund (“RRIF”) and received approximately $32,000 in commissions during 2010. RRIF is managed by a company owned by the CEO of WHI.
Pursuant to Exchange Act Rules 17a-3(a) and (a)(2), WFG and WHI have an expense sharing agreement in place.
ITEM 14.
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table shows the amounts paid by the Company to its independent auditors, Accell, P.A. whose name was changed in 2010 to Accell Audit and Compliance, P.A. (“Accell”) and Porter Keadle Moore, LLP (“PKM”), related to the 2010 and 2009 fiscal years.
The fees billed by Accell and PKM are pre-approved by the Audit Committee of the Company in accordance with the policies and procedures for the Audit Committee. The Audit Committee pre-approves all audit and non-audit services provided by the Company’s independent accountants and may not engage the independent accountants to perform any prohibited non-audit services. For 2010 and 2009, 100% of the fees incurred were pre-approved.
Audit Fees
The aggregate fees billed by Accell and PKM for professional services rendered in connection with the (i) audit of the Company’s annual financial statements for 2010 and 2009, and (ii) review of the financial statements included in the Company’s quarterly filings on Form 10-Q and 10-QSB and annual filings on Form 10-K and 10-KSB during those fiscal years.
Audit Related Fees
There were no audit-related fees, other than the audit fees, paid to Accell or PKM during 2010 or 2009.
Tax Fees
There were no tax fees paid to Accell or PKM during 2010 or 2009.
All Other Fees
There were no other fees paid to Accell or PKM during 2010 or 2009.
ITEM 15.
ITEM 15.
EXHIBITS
Exhibit
Number
Exhibit
14.1
Code of Ethics for Officers of Woodstock Financial Group, Inc. dated October 15, 2004.
31.1
Certification by Chief Executive Officer Pursuant to Rule 13a-14(a)/15(d)-14(a).
31.2
Certification by Chief Financial Officer Pursuant to Rule 13a-14(a)/15(d)-14(a).
32.1
Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized
WOODSTOCK HOLDINGS, INC.
By:
/s/ William J. Raike, III
William J. Raike, III
President and Chief
Executive Officer
By:
/s/ Melissa L. Whitley
Melissa L. Whitley
Chief Financial Officer
Date:
March 21, 2011
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.
/s/ William J. Raike, III
William J. Raike, III
President and Chief Executive Officer, Director
(Principal Executive Officer)
Date: March 21, 2011
/s/ Melissa L. Whitley
Melissa L. Whitley
Treasurer, Chief Financial Officer and Director
Date: March 21, 2011
/s/Morris L. Brunson
Morris L. Brunson
Director
Date: March 21, 2011
/s/ Geoffrey T. Chalmers
Geoffrey T. Chalmers
Director
Date: March 21, 2011