UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE
SECURITIES EXCHANGE ACT OF 1934
For
the Quarter Ended December 31, 2007
|
Commission
File Number 001-12629
|
NATIONAL
HOLDINGS CORPORATION
(Exact
name of registrant as specified in its charter)
Delaware
|
|
36-4128138
|
(State
or other jurisdiction of
|
|
(I.R.S.
Employer
|
incorporation
or organization)
|
|
Identification
No.)
|
120
Broadway, 27th Floor, New York, NY 10271
(Address
including zip code of principal executive offices)
Registrant’s
telephone number, including area code: (212)
417-8000
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 x No o
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
definition of “accelerated filer”, “large accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act (check one).
Large
Accelerated Filer o
|
Accelerated
Filer o
|
|
|
Non-Accelerated
Filer o
|
Smaller
Reporting Company x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). YES o NO x
As
of
February 12, 2008 there were 8,602,628 shares of the registrant's common stock
outstanding.
NATIONAL
HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
|
|
December
31,
|
|
September
30,
|
|
|
|
2007
|
|
2007
|
|
|
|
(unaudited)
|
|
(see note below)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
|
|
$
|
1,485,000
|
|
$
|
4,957,000
|
|
DEPOSITS
WITH CLEARING ORGANIZATIONS
|
|
|
402,000
|
|
|
402,000
|
|
RECEIVABLES
FROM BROKER-DEALERS AND CLEARING ORGANIZATIONS
|
|
|
5,067,000
|
|
|
4,739,000
|
|
OTHER
RECEIVABLES, net of allowance for uncollectible accounts of $467,000
at
December 31, 2007 and September 30, 2007, respectively
|
|
|
733,000
|
|
|
784,000
|
|
ADVANCES
TO REGISTERED REPRESENTATIVES
|
|
|
3,915,000
|
|
|
4,010,000
|
|
SECURITIES
OWNED
|
|
|
|
|
|
|
|
Marketable,
at market value
|
|
|
1,100,000
|
|
|
1,191,000
|
|
FIXED
ASSETS, net
|
|
|
311,000
|
|
|
304,000
|
|
SECURED
DEMAND NOTE
|
|
|
500,000
|
|
|
500,000
|
|
OTHER
ASSETS
|
|
|
660,000
|
|
|
396,000
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
14,173,000
|
|
$
|
17,283,000
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PAYABLE
TO BROKER-DEALERS AND CLEARING ORGANIZATIONS
|
|
$
|
769,000
|
|
$
|
1,115,000
|
|
SECURITIES
SOLD, BUT NOT YET PURCHASED, at market
|
|
|
332,000
|
|
|
77,000
|
|
ACCOUNTS
PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES
|
|
|
5,928,000
|
|
|
7,907,000
|
|
NOTES
PAYABLE, net of debt discounts of $113,000 and $138,000 at December
31,
2007 and September 30, 2007, respectively
|
|
|
887,000
|
|
|
862,000
|
|
TOTAL
LIABILITIES
|
|
|
7,916,000
|
|
|
9,961,000
|
|
|
|
|
|
|
|
|
|
SUBORDINATED
BORROWINGS
|
|
|
500,000
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
COMMITMENTS
AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
Preferred
stock, $.01 par value, 200,000 shares authorized; 50,000 shares
designated
as Series A and 20,000 shares designated as Series B
|
|
|
|
|
|
|
|
Series
A 9% cumulative convertible preferred stock, $.01 par value, 50,000
shares
authorized; 37,550 shares issued and outstanding (liquidation preference:
$3,755,000) at December 31, 2007 and September 30, 2007
|
|
|
-
|
|
|
-
|
|
Series
B 9% cumulative convertible preferred stock, $.01 par value, 20,000
shares
authorized; 0 shares issued and outstanding (liquidation preference:
$0)
at December 31, 2007 and September 30, 2007
|
|
|
-
|
|
|
-
|
|
Common
stock, $.02 par value, 30,000,000 shares authorized; 8,602,628
shares
issued and outstanding, at December 31, 2007 and September 30,
2007,
respectively
|
|
|
172,000
|
|
|
172,000
|
|
Additional
paid-in capital
|
|
|
20,021,000
|
|
|
19,919,000
|
|
Accumulated
deficit
|
|
|
(14,436,000
|
)
|
|
(13,269,000
|
)
|
TOTAL
STOCKHOLDERS' EQUITY
|
|
|
5,757,000
|
|
|
6,822,000
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
14,173,000
|
|
$
|
17,283,000
|
|
Note:
The
balance sheet at September 30, 2007 has been derived from the audited
consolidated financial statements at that date.
See
notes
to condensed consolidated financial statements.
NATIONAL
HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
Three
Months Ended
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
2007
|
|
2006
|
|
REVENUES:
|
|
|
|
|
|
|
|
Commissions
|
|
$
|
13,292,000
|
|
$
|
8,422,000
|
|
Net
dealer inventory gains
|
|
|
4,194,000
|
|
|
3,298,000
|
|
Investment
banking
|
|
|
-
|
|
|
556,000
|
|
|
|
|
|
|
|
|
|
Total
commission and fee revenues
|
|
|
17,486,000
|
|
|
12,276,000
|
|
|
|
|
|
|
|
|
|
Interest
and dividends
|
|
|
930,000
|
|
|
566,000
|
|
Transfer
fees and clearing services
|
|
|
1,311,000
|
|
|
1,010,000
|
|
Other
|
|
|
638,000
|
|
|
434,000
|
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
|
|
20,365,000
|
|
|
14,286,000
|
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
|
Commissions
and fees
|
|
|
16,203,000
|
|
|
9,784,000
|
|
Employee
compensation and related expenses
|
|
|
2,240,000
|
|
|
1,514,000
|
|
Clearing
fees
|
|
|
613,000
|
|
|
375,000
|
|
Communications
|
|
|
356,000
|
|
|
402,000
|
|
Occupancy
and equipment costs
|
|
|
864,000
|
|
|
735,000
|
|
Professional
fees
|
|
|
588,000
|
|
|
958,000
|
|
Interest
|
|
|
73,000
|
|
|
104,000
|
|
Taxes,
licenses, registration
|
|
|
130,000
|
|
|
179,000
|
|
Other
administrative expenses
|
|
|
465,000
|
|
|
320,000
|
|
|
|
|
|
|
|
|
|
TOTAL
EXPENSES
|
|
|
21,532,000
|
|
|
14,371,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS
|
|
|
(1,167,000
|
)
|
|
(85,000
|
)
|
|
|
|
|
|
|
|
|
Preferred
stock dividends
|
|
|
(85,000
|
)
|
|
(105,000
|
)
|
|
|
|
|
|
|
|
|
Net
loss attributable to common stockholders
|
|
$
|
(1,252,000
|
)
|
$
|
(190,000
|
)
|
|
|
|
|
|
|
|
|
NET
LOSS PER COMMON SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
Net
loss attributable to common stockholders
|
|
$
|
(0.15
|
)
|
$
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
Net
loss attributable to common stockholders
|
|
$
|
(0.15
|
)
|
$
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
Weighted
average number of shares outstanding
|
|
|
|
|
|
|
|
Basic
|
|
|
8,602,628
|
|
|
5,251,915
|
|
Diluted
|
|
|
8,602,628
|
|
|
5,251,915
|
|
See
notes
to condensed consolidated financial statements.
NATIONAL
HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
Three
Months Ended
|
|
|
|
December 31, 2007
|
|
December 31, 2006
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(1,167,000
|
)
|
$
|
(85,000
|
)
|
Adjustments
to reconcile net loss to net cash provided by (used in) operating
activities
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
56,000
|
|
|
37,000
|
|
Amortization
of deferred financing costs
|
|
|
3,000
|
|
|
1,000
|
|
Amortization
of note discount
|
|
|
25,000
|
|
|
29,000
|
|
Compensatory
element of common stock options issuance
|
|
|
102,000
|
|
|
7,000
|
|
Changes
in assets and liabilities
|
|
|
|
|
|
|
|
Deposits
with clearing organizations
|
|
|
-
|
|
|
(1,000
|
)
|
Receivables
from broker-dealers, clearing organizations and others
|
|
|
(182,000
|
)
|
|
(2,220,000
|
)
|
Securities
owned: marketable, at market value
|
|
|
91,000
|
|
|
(1,462,000
|
)
|
Securities
owned: non-marketable, at fair value
|
|
|
-
|
|
|
370,000
|
|
Other
assets
|
|
|
(102,000
|
)
|
|
(138,000
|
)
|
Payables
|
|
|
(2,328,000
|
)
|
|
2,046,000
|
|
Securities
sold, but not yet purchased, at market
|
|
|
255,000
|
|
|
113,000
|
|
Net
cash used in operating activities
|
|
|
(3,247,000
|
)
|
|
(1,303,000
|
)
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
Purchase
of fixed assets
|
|
|
(63,000
|
)
|
|
(2,000
|
)
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
Dividends
paid
|
|
|
-
|
|
|
(25,000
|
)
|
Deferred
offering costs
|
|
|
(162,000
|
)
|
|
-
|
|
Exercise
of warrants
|
|
|
-
|
|
|
132,000
|
|
Net
cash (used in) provided by financing activities
|
|
|
(162,000
|
)
|
|
107,000
|
|
|
|
|
|
|
|
|
|
NET
DECREASE IN CASH
|
|
|
(3,472,000
|
)
|
|
(1,198,000
|
)
|
|
|
|
|
|
|
|
|
CASH
BALANCE
|
|
|
|
|
|
|
|
Beginning
of the period
|
|
|
4,957,000
|
|
|
1,441,000
|
|
|
|
|
|
|
|
|
|
End
of the period
|
|
$
|
1,485,000
|
|
$
|
243,000
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
Cash
paid during the period for:
|
|
|
|
|
|
|
|
Interest
|
|
$
|
45,000
|
|
$
|
74,000
|
|
Income
taxes
|
|
$
|
23,000
|
|
$
|
-
|
|
Series
B preferred stock dividends
|
|
$
|
-
|
|
$
|
25,000
|
|
NATIONAL
HOLDINGS CORPORATION AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2007
(UNAUDITED)
NOTE
1. BASIS OF PRESENTATION
The
accompanying condensed consolidated financial statements of National Holdings
Corporation (“National Holdings” or the “Company”) have been prepared in
accordance with generally accepted accounting principles for interim financial
statements and with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and disclosures
required for annual financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a
fair presentation have been included. The condensed consolidated financial
statements as of December 31, 2007 and for the periods ended December 31, 2007
and December 31, 2006 are unaudited. The results of operations for the interim
periods are not necessarily indicative of the results of operations for the
fiscal year. These condensed consolidated financial statements should be read
in
conjunction with the consolidated financial statements and related footnotes
included thereto in the Company’s Annual Report on Form 10-K for the fiscal year
ended September 30, 2007.
NOTE
2. CONSOLIDATION
The
condensed consolidated financial statements include the accounts of National
Holdings and its wholly owned subsidiaries. National Securities Corporation
(“National Securities”)
is a
Washington corporation organized in 1947.
National
Securities conducts a national securities brokerage business through its main
offices in Seattle, Washington and New York, New York. The
Company’s business includes securities brokerage for individual and
institutional clients, market-making trading activities, asset management and
corporate finance services. National Securities is an introducing broker and
clears all transactions through clearing organizations on a fully disclosed
basis. National Insurance Corporation (“National
Insurance”),
a
Washington corporation,
provides
fixed insurance products to its clients, including life insurance, disability
insurance, long term care insurance and fixed annuities. National Insurance
commenced business operations during the second quarter of fiscal year 2007
that
have been diminimus. National Securities Futures Corporation (“National
Futures”), National Holdings Mortgage Corporation (“National Mortgage”), and
National Group Benefits Corporation (“National Group Benefits”), each a
Washington corporation, have not commenced active business operations. All
significant inter-company accounts and transactions have been eliminated in
consolidation.
NOTE
3. RECENT ACCOUNTING PRONOUNCEMENTS
Effective
October 1, 2008, the Company adopted the provisions of FASB Interpretation
No.
48, "Accounting for Uncertainty in Income Taxes – an interpretation of FASB
Statement No. 109" ("FIN 48"). FIN 48 prescribes a recognition threshold and
a
measurement attribute for the financial statement recognition and measurement
of
tax positions taken or expected to be taken in a tax return. For those benefits
to be recognized, a tax position must be more-likely-than-not to be sustained
upon examination by taxing authorities. Differences between tax positions taken
or expected to be taken in a tax return and the benefit recognized and measured
pursuant to the interpretation are referred to as "unrecognized benefits".
A
liability is recognized (or amount of net operating loss carry forward or amount
of tax refundable is reduced) for an unrecognized tax benefit because it
represents an enterprise's potential future obligation to the taxing authority
for a tax position that was not recognized as a result of applying the
provisions of FIN 48.
In
accordance with FIN 48, interest costs related to unrecognized tax benefits
are
required to be calculated (if applicable) and would be classified as "Interest”
expense in the consolidated statements of operations. Penalties would be
recognized as a component of "Other administrative expenses".
In
many
cases the company's uncertain tax positions are related to tax years that remain
subject to examination by relevant tax authorities. The Company files income
tax
returns in the United States (federal) and in various state and local
jurisdictions. In most instances, the Company is no longer subject to federal,
state and local income tax examinations by tax authorities for years prior
to
the fiscal year ended September 30, 2004.
The
adoption of the provisions of FIN 48 did not have a material impact on the
Company's financial position and results of operations. As of December 31,
2007,
no liability for unrecognized tax benefits was required to be
recorded.
The
Company recognized a deferred tax asset of approximately $4.5 million as of
December 31, 2007, primarily relating to net operating loss carryovers of
approximately $10.5 million, available to offset future taxable income through
2025.
The
ultimate realization of deferred tax assets is dependent upon the generation
of
future taxable income during the periods in which those temporary differences
become deductible. The Company considers projected future taxable income and
tax
planning strategies in making this assessment. At present, the Company does
not
have a sufficient history of income to conclude that it is more likely than
not
that the Company will be able to realize all of its tax benefits in the near
future and therefore a valuation allowance was established in the full value
of
the deferred tax asset. A valuation allowance will be maintained until
sufficient positive evidence exists to support the reversal of any portion
or
all of the valuation allowance net of appropriate reserves.
In
December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
Combinations” (“SFAS 141(R)”). SFAS 141(R) replaces SFAS No. 141, “Business
Combinations”, and is effective for the Company for business combinations
for which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. SFAS 141(R)
requires the new acquiring entity to recognize all assets acquired and
liabilities assumed in the transactions; establishes an acquisition-date fair
value for acquired assets and liabilities; and fully discloses to investors
the
financial effect the acquisition will have. The Company is evaluating
the impact of this pronouncement on the Company’s condensed consolidated
financial position, results of operations and cash flows.
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements” (“SFAS 160”). SFAS 160 requires all entities
to report minority interests in subsidiaries as equity in the consolidated
financial statements, and requires that transactions between entities and
noncontrolling interests be treated as equity. SFAS 160 is effective
for fiscal years, and interim periods within those fiscal years, beginning
on or
after December 15, 2008, and earlier adoption is prohibited. The Company is
evaluating the impact of this pronouncement on the Company’s condensed
consolidated financial position, results of operations and cash
flows.
NOTE
4. STOCK
BASED COMPENSATION
Effective
October 1, 2005, the Company adopted FASB Statement of Financial Accounting
Standard (“SFAS”) No. 123R “Share Based Payment.” This statement is a
revision of SFAS Statement No. 123 and supersedes APB Opinion No. 25,
and its related implementation guidance. SFAS 123R addresses all forms of share
based payment (“SBP”) awards including shares issued under employee stock
purchase plans, stock options, restricted stock and stock appreciation rights.
Under SFAS 123R, SBP awards will result in a charge to operations that will
be
measured at fair value on the awards grant date, based on the estimated number
of awards expected to vest over the service period. During the three
months ended December 31, 2006, the Company granted 150,000 stock options
with a fair value of $96,400. No charge was recorded in the quarter ended
December 31, 2006 as the expense incurred during the period associated with
this
grant was nominal. During the three months ended December 31, 2007, the
Company did not grant any stock options. A charge of approximately $102,000
and
$7,000 was recorded in the three months ended December 31, 2007 and 2006,
respectively, relating to the amortization of the fair value associated with
stock option grants and restricted stock grants.
The
Black-Scholes option valuation model is used to estimate the fair value of
the
options granted. The model includes subjective input assumptions that can
materially affect the fair value estimates. The model was developed for use
in
estimating the fair value of traded options that have no vesting restrictions
and that are fully transferable. For example, the expected volatility is
estimated based on the most recent historical period of time equal to the
weighted average life of the options granted. Options issued under the Company's
option plans have characteristics that differ from traded options. In
management's opinion, this valuation model does not necessarily provide a
reliable single measure of the fair value of its employee stock options.
Principal assumptions used in applying the Black-Scholes model along with the
results from the model were as follows:
|
|
|
|
Assumptions:
|
|
|
|
|
Risk-free
interest rate
|
|
|
4.40
|
%
|
|
|
|
|
|
Expected
life, in years
|
|
|
3.0
|
|
|
|
|
|
|
Expected
volatility
|
|
|
122
|
%
|
A
summary
of the stock option activity as of December 31, 2007, and changes during the
three month period then ended is presented below:
|
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
|
|
Outstanding
at September 30, 2007
|
|
|
2,007,000
|
|
$
|
1.62
|
|
|
3.64
|
|
$
|
2,359,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expired
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at December 31, 2007
|
|
|
2,007,000
|
|
$
|
1.62
|
|
|
3.39
|
|
$
|
1,857,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exerciseable
at December 31, 2007
|
|
|
1,207,000
|
|
$
|
1.37
|
|
|
2.73
|
|
$
|
1,430,000
|
|
As
of
December 31, 2007, there was $958,000 of total unrecognized deferred
compensation costs related to share-based compensation arrangements. The Company
expects that future forfeitures will be diminimus.
A
summary
of the status of the Company’s nonvested shares as of December
31,
2007,
and changes during the three month period then ended is presented
below:
Nonvested
Shares
|
|
Shares
|
|
Weighted
Average
Grant
Date
Fair
Value
|
|
Nonvested
at September 30, 2007
|
|
|
900,000
|
|
$
|
0.95
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
(100,000
|
)
|
$
|
0.74
|
|
|
|
|
|
|
|
|
|
Expired
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonvested
at December 31, 2007
|
|
|
800,000
|
|
$
|
0.97
|
|
NOTE
5. SECURITIES OWNED AND SECURITIES SOLD, BUT NOT YET
PURCHASED
The
following table shows the quoted market values of securities owned by the
Company, and securities sold but not yet purchased by the Company, as of
December 31, 2007:
|
|
Securities
Owned
|
|
Securities sold, but
not yet purchased
|
|
Corporate
stocks
|
|
$
|
1,046,000
|
|
$
|
27,000
|
|
Corporate
bonds
|
|
|
19,000
|
|
|
-
|
|
Government
obligations
|
|
|
35,000
|
|
|
305,000
|
|
|
|
$
|
1,100,000
|
|
$
|
332,000
|
|
NOTE
6. CONTINGENCIES
In
September 2006, the
former
chairman and chief executive officer of the Company, Steven A. Rothstein,
commenced an arbitration against the current chairman and chief executive
officer of the Company, Mark Goldwasser, in the matter Rothstein
et al. vs. Goldwasser,
FINRA
No. 06-04000. Rothstein is alleging fraud and inequitable conduct relating
to his attempts to sell his investment in the Company in calendar year
2001, and is seeking approximately $5,750,000 in damages. The
Company is indemnifying Mr. Goldwasser in this action. The Company
and Mr. Goldwasser believe this action is without merit, and intend to
vigorously defend this action. As of December 31, 2007, the outcome of this
arbitration is not determinable and accordingly the Company has not established
a provision for this matter.
The
Company is a defendant in various other arbitrations and administrative
proceedings, lawsuits and claims seeking
in the aggregate damages of approximately $350,000. The Company
believes
such claims are substantially without merit, and estimates that its liability,
primarily for attorney representation, will be less than $100,000 (exclusive
of
unspecified punitive damages related to certain claims and inclusive of expected
insurance coverage). These matters arise in the normal course of business.
The
Company intends to vigorously defend itself in these actions, and believes
that
the eventual outcome of these matters will not have a material adverse effect
on
the Company. However,
the ultimate outcome of these matters cannot be determined at this time. The
amounts related to such matters that are reasonably estimable and which have
been accrued at December 31, 2007 and 2006, is $124,000 and $762,000 (primarily
legal fees), respectively, and
have
been included in “Accounts Payable, Accrued Expenses and Other Liabilities” in
the accompanying consolidated statements of financial condition.
Approximately $575,000 of the accrued legal fees at December 31, 2006 related
to
the settlement of certain arbitrations. The
Company has included in “Professional fees” litigation and FINRA related
expenses of $315,000 and $789,000 for the first quarter of fiscal year 2008
and
2007, respectively.
NOTE
7. DIVIDENDS ON CONVERTIBLE PREFERRED STOCK
The
holders of the Company’s Series A convertible preferred stock, that are
convertible into the Company’s common stock at $1.25 per share, are entitled to
receive dividends on a quarterly basis at a rate of 9% per annum, per share.
Such dividends are cumulative and accumulate whether or not declared by the
Company’s Board of Directors, but are payable only when and if declared by the
Company’s Board of Directors. In the quarter ended December 31, 2007, the
Company accumulated $85,000 of dividends on its Series A preferred stock, and
at
December 31, 2007, the total amount of accumulated dividends on the Company’s
37,550 issued and outstanding shares of Series A preferred stock was
approximately $255,000.
NOTE
8. LOSS PER COMMON SHARE
Basic
income (loss) per share is computed on the basis of the weighted average number
of common shares outstanding. Diluted income (loss) per share is computed on
the
basis of the weighted average number of common shares outstanding plus the
potential dilution that would occur if securities or other contracts to issue
common shares were exercised or converted.
For
the
three-month period ended December 31, 2007, 5,761,000 common share equivalents
were excluded from the calculation of diluted net loss per share because their
inclusion would have been anti-dilutive. For the three-month period ended
December 31, 2006, 7,829,644 common share equivalents were excluded from the
calculation of diluted net loss per share because their inclusion would have
been anti-dilutive.
The
following table sets forth the common share equivalents that were excluded
from
the calculation:
|
|
Three Months Ended
|
|
|
|
December 31, 2007
|
|
December 31, 2006
|
|
|
|
|
|
|
|
Stock
options
|
|
|
2,007,000
|
|
|
1,082,000
|
|
Warrants
|
|
|
750,000
|
|
|
1,589,031
|
|
Assumed
conversion of:
|
|
|
|
|
|
|
|
Series
A Preferred Stock
|
|
|
3,004,000
|
|
|
2,825,280
|
|
Series
B Preferred Stock
|
|
|
-
|
|
|
1,333,333
|
|
Notes
|
|
|
-
|
|
|
1,000,000
|
|
|
|
|
|
|
|
|
|
Dilutive
potential common shares
|
|
|
5,761,000
|
|
|
7,829,644
|
|
NOTE
9. ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER
LIABILITIES
Accounts
payable, accrued expenses and other liabilities as of December 31, 2007 and
September 30, 2007, respectively, consist of the following:
|
|
December 31,
2007
|
|
September 30,
2007
|
|
|
|
|
|
|
|
Commissions
payable
|
|
$
|
3,246,000
|
|
$
|
5,128,000
|
|
Deferred
clearing fee credits
|
|
|
773,000
|
|
|
828,000
|
|
Telecommunications
vendors payable
|
|
|
301,000
|
|
|
366,000
|
|
Legal
payable
|
|
|
153,000
|
|
|
84,000
|
|
Deferred
rent payable
|
|
|
271,000
|
|
|
133,000
|
|
Other
vendors
|
|
|
1,184,000
|
|
|
1,368,000
|
|
Total
|
|
$
|
5,928,000
|
|
$
|
7,907,000
|
|
NOTE
10. NET CAPITAL REQUIREMENTS
National
Securities, as a registered broker-dealer, is subject to the SEC’s Uniform Net
Capital Rule 15c3-1 that requires the maintenance of minimum net capital.
National Securities has elected to use the alternative standard method permitted
by the rule. This requires that National Securities maintain minimum net capital
equal to the greater of $250,000 or a specified amount per security based on
the
bid price of each security for which National Securities is a market maker.
At
December 31, 2007, National Securities’ net capital exceeded the requirement by
$1,183,000.
Advances,
dividend payments and other equity withdrawals from the Company’s subsidiary are
restricted by the regulations of the SEC and other regulatory agencies. These
regulatory restrictions may limit the amounts that a subsidiary may dividend
or
advance to the Company.
NOTE
11. LIQUIDITY
The
Company has historically satisfied its capital needs with cash generated from
operations or from financing activities. The Company believes that it will
have
sufficient funds to maintain its current level of business activities during
fiscal year 2008. If market conditions should weaken, the Company would need
to
consider curtailing certain of its business activities, reducing its fixed
overhead costs and/or seek additional sources of financing.
NOTE
12. MERGER AGREEMENT
In
November 2007, the Company entered into a definitive merger agreement with
vFinance, Inc.,
a
publicly traded company with two wholly owned subsidiaries which are also
registered broker-dealers with a similar business to National Securities.
The
merger agreement is subject to numerous conditions, including: execution of
definitive transaction documents, compliance with state and federal securities
laws and regulations, the completion of an equity financing with gross proceeds
of at least $3.0 million, and corporate, shareholder and regulatory approvals.
However, no
assurance can be given that the Company will consummate the merger with
vFinance,
Inc.
The
Company has capitalized approximately $162,000 of costs associated with this
merger that have been included in “Other Assets” in the condensed consolidated
statements of financial condition as of December 31, 2007. Upon the completion
of the merger these costs will be included as part of the purchase price, and
if
the merger is not consummated the Company will record a charge to operations.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The
Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. This Quarterly Report may contain certain statements
of a forward-looking nature relating to future events or future business
performance. Any such statements that refer to the Company’s estimated or
anticipated future results or other non-historical facts are forward-looking
and
reflect the Company’s current perspective of existing trends and information.
These statements involve risks and uncertainties that cannot be predicted or
quantified and, consequently, actual results may differ materially from those
expressed or implied by such forward-looking statements. Such risks and
uncertainties include, among others, risks and uncertainties detailed in the
Company’s Annual Report on Form 10-K, filed with the Securities and Exchange
Commission on December 10, 2007. Any forward-looking statements contained in
or
incorporated into this Quarterly Report speak only as of the date of this
Quarterly Report. The Company undertakes no obligation to update publicly any
forward-looking statement, whether as a result of new information, future events
or otherwise.
RESULTS
OF OPERATIONS
Three
Months Ended December 31, 2007 Compared to Three Months Ended December 31,
2006
The
Company’s first quarter of fiscal year 2008 resulted in an increase in revenues,
but a greater increase in expenses compared
to the same period last year. As
a
result, the Company reported a net loss of $1,144,000 compared with a net loss
of $85,000 for the first quarters of fiscal years 2008 and 2007, respectively.
|
|
Three Months Ended
December 31,
|
|
Increase (Decrease)
|
|
|
|
2007
|
|
2006
|
|
Amount
|
|
Percent
|
|
Commissions
|
|
$
|
13,292,000
|
|
$
|
8,422,000
|
|
$
|
4,870,000
|
|
|
58
|
%
|
Proprietary
trading
|
|
|
4,099,000
|
|
|
2,800,000
|
|
|
1,299,000
|
|
|
46
|
%
|
Market
making
|
|
|
92,000
|
|
|
447,000
|
|
|
(355,000
|
)
|
|
(79)
|
%
|
Mark-ups
and mark-downs
|
|
|
3,000
|
|
|
51,000
|
|
|
(48,000
|
)
|
|
(94
|
)%
|
Net
dealer inventory gains
|
|
|
4,194,000
|
|
|
3,298,000
|
|
|
896,000
|
|
|
27
|
%
|
Investment
banking
|
|
|
-
|
|
|
556,000
|
|
|
(556,000
|
)
|
|
(100)
|
%
|
Interest
and dividends
|
|
|
930,000
|
|
|
566,000
|
|
|
364,000
|
|
|
64
|
%
|
Transfer
fees and clearance services
|
|
|
1,311,000
|
|
|
1,010,000
|
|
|
301,000
|
|
|
30
|
%
|
Other
|
|
|
638,000
|
|
|
434,000
|
|
|
204,000
|
|
|
47
|
%
|
|
|
$
|
20,365,000
|
|
$
|
14,286,000
|
|
$
|
6,079,000
|
|
|
43
|
%
|
Total
revenues increased $6,079,000, or 43%, in the first quarter of fiscal year
2008
to $20,365,000 from $14,286,000 in the first quarter of fiscal year 2007. During
the first quarter of fiscal year 2008, total trading volume increased by
approximately 54%, compared to the first quarter of fiscal year 2007. The
increase in revenues and trading volume is due to an increase in the number
of
registered representatives associated with the Company, offset in part by a
decline in market making activities. Commission revenue increased $4,870,000,
or
58%, to $13,292,000 from $8,422,000 during the first quarter of fiscal year
2008
compared with the same period in fiscal year 2007, which is attributable to
the
greater number of registered representatives. Net dealer inventory gains, which
includes profits on proprietary trading, market making activities and customer
mark-ups and mark-downs, increased $896,000, or 27%, to $4,194,000 from
$3,298,000 during the first quarter of fiscal year 2008 compared with the same
period in fiscal year 2007. The increase is due to increased trading activity
in
foreign securities partially offset set by a decline in market making
activities. During the first quarter of fiscal year 2008, revenues from
proprietary trading increased $1,299,000, or 46%, to $4,099,000 from $2,800,000
in the first quarter of fiscal year 2007, revenues from market making activities
decreased $355,000, or 79%, to $92,000 from $447,000 in the first quarter of
fiscal year 2007, and revenues from customer mark-ups and mark-downs decreased
$48,000, or 94%, to $3,000 from $51,000 in the first quarter of fiscal year
2007.
The
Company did not complete any investment banking transactions in the first
quarter of fiscal year 2008, compared with $556,000 of investment banking
revenues in the first quarter of fiscal year 2007. Interest and dividend income
increased $364,000 or 64%, to $930,000 from $566,000
in the first quarter of fiscal year 2008 compared with the same period last
year. The increase in interest income is attributable to an adjustment of the
interest sharing agreement with one of the Company’s clearing firms. Transfer
fees increased $301,000, or 30%, to $1,311,000 in the first quarter of fiscal
year 2008 from
$1,010,000 in the first quarter of fiscal year 2007. The increase is due to
the
higher trading volume experienced during the current year’s
quarter.
Other
revenue, consisting of asset management fees, miscellaneous transaction fees
and
trading fees and other investment income, increased $204,000, or 47%, to
$638,000 from $434,000 during the first quarter of fiscal year 2008 compared
to
the first quarter of fiscal year 2007. The increase is due to an increase in
fee
based assets under management.
In
comparison with the 43% increase in total revenues, total expenses increased
50%
or $7,151,000 to $21,522,000 for the first quarter of fiscal year 2008 compared
to $14,371,000 in the first quarter of fiscal year 2007. The increase in total
expenses is a result of higher commissions and compensation expenses, partially
off set by legal fees and costs incurred to settle certain arbitrations in
the
first quarter of fiscal year 2007.
|
|
Three Months Ended
December 31,
|
|
Increase (Decrease)
|
|
|
|
2007
|
|
2006
|
|
Amount
|
|
Percent
|
|
Commission
expense related to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commission
revenue
|
|
$
|
12,760,000
|
|
$
|
7,333,000
|
|
$
|
5,427,000
|
|
|
74
|
%
|
Net
dealer inventory gains
|
|
|
3,443,000
|
|
|
2,441,000
|
|
|
1,002,000
|
|
|
41
|
%
|
Investment
banking
|
|
|
-
|
|
|
10,000
|
|
|
(10,000
|
)
|
|
(100
|
)%
|
Commissions
|
|
|
16,203,000
|
|
|
9,784,000
|
|
|
6,419,000
|
|
|
66
|
%
|
Employee
compensation
|
|
|
2,240,000
|
|
|
1,514,000
|
|
|
726,000
|
|
|
48
|
%
|
Clearing
fees
|
|
|
613,000
|
|
|
375,000
|
|
|
238,000
|
|
|
63
|
%
|
Communications
|
|
|
356,000
|
|
|
402,000
|
|
|
(46,000
|
)
|
|
(11
|
)%
|
Occupancy
and equipment costs
|
|
|
854,000
|
|
|
735,000
|
|
|
119,000
|
|
|
16
|
%
|
Professional
fees
|
|
|
588,000
|
|
|
958,000
|
|
|
(370,000
|
)
|
|
(39
|
)%
|
Interest
|
|
|
73,000
|
|
|
104,000
|
|
|
(31,000
|
)
|
|
(30
|
)%
|
Taxes,
licenses and registration
|
|
|
130,000
|
|
|
179,000
|
|
|
(49,000
|
)
|
|
(27
|
)%
|
Other
administrative expenses
|
|
|
465,000
|
|
|
320,000
|
|
|
145,000
|
|
|
45
|
%
|
|
|
$
|
21,522,000
|
|
$
|
14,371,000
|
|
$
|
7,151,000
|
|
|
50
|
%
|
Commission
expense, which includes expenses related to commission revenue, net dealer
inventory gains and investment banking, increased $6,419,000, or 66%, to
$16,203,000 in the first quarter of fiscal year 2008 from $9,784,000 in the
first quarter of fiscal year 2007. Commission expense related to commission
revenue increased $5,427,000, or 74%, to $12,760,000 in the first quarter of
fiscal year 2008 from $7,333,000 in the first quarter of fiscal year 2007;
and
commission expense related to net dealer inventory gains increased $1,002,000,
or 41%, to $3,443,000 in the first quarter of fiscal year 2008 from $2,441,000
in the first quarter of fiscal year 2007. Commission expense as a percentage
of
commission revenues increased to 96% in the first quarter of fiscal year 2008
from 87% in the first quarter of fiscal year 2007. This increase is attributable
to higher payouts for registered representatives recently affiliated with the
Company and an increase in the amortization of advances to registered
representatives. Commission expense as a percentage of net dealer inventory
gains increased to 82% in the first quarter of fiscal year 2008 from 74% in
the
first quarter of fiscal year 2007. This increase is attributable to changes
in
the securities traded, and their related commission payouts. Commission expense
includes the amortization of advances to registered representatives of $491,000
and $230,000 for the first quarter of fiscal years 2008 and 2007, respectively.
These amounts fluctuate based upon the amounts of advances outstanding and
the
time period for which the registered representatives have agreed to be
affiliated with National Securities.
Employee
compensation expense increased $726, 000, or 48%, to $2,240,000 in the first
quarter of fiscal year 2008 from $1,514,000 in the first quarter of fiscal
year
2007. The increase is attributable to new employees hired during fiscal year
2007 and the first quarter of fiscal year 2008, and salary increases for certain
employees. Overall, combined commission and employee compensation expense,
as a
percentage of revenue, increased to 91% from 79% in the first quarters of fiscal
year 2008 and 2007, respectively.
Clearing
fees increased $238,000, or 63%, to $613,000 in the first quarter of fiscal
year
2008 from $375,000 in the first quarter of fiscal year 2007. The increase in
clearing fees is attributable to the increase in commission revenue in the
first
quarter of fiscal year 2008 as compared to the first quarter of fiscal year
2007. The greater increase in clearing fees as compared to the increase in
commission
revenue is attributable to lower average commission revenue per ticket in the
first quarter of fiscal year 2008.
Communication
expenses decreased $46,000 or 11%, to $356,000 from $402,000 in the first
quarter of fiscal year 2008 compared to the first quarter of fiscal year 2007.
The decrease is due to the Company’s ability to acquire certain of these
services at a lower price. Occupancy costs increased $119,000, or 16%, to
$854,000 from $735,000 in the first quarter of fiscal year 2008 compared to
the
first quarter of fiscal year 2007. The increase in occupancy expense is
primarily due to annual rent increases contained in the Company’s office leases.
Professional fees decreased $370,000, or 39%, to $588,000 from $958,000 in
the
first quarter of fiscal year 2008 compared to the first quarter of fiscal year
2007. The decrease in professional fees is primarily a result of legal fees
and
costs incurred to settle certain arbitrations in the first quarter of fiscal
year 2007.
Interest
expense decreased $31,000, or 30%, to $73,000 from $104,000 in the first quarter
of fiscal year 2008 compared to the first quarter of fiscal year 2007. The
decrease is due to the retirement of certain debt in fiscal year 2007. Taxes,
licenses and registration decreased $49,000, or 27%, to $130,000 from $179,000
in the first quarter of fiscal year 2008 compared to the first quarter of fiscal
year 2007. The decrease in taxes, licenses and registration is due to lower
registration fees paid on behalf of brokers in the first quarter of fiscal
year
2008 compared to the first quarter of fiscal year 2007. Other administrative
expenses increased $145,000 or 45% to $465,000 from $320,000 in the first
quarter of fiscal year 2008 compared to the first quarter of fiscal year 2007.
The increase is primarily attributable due to an increase in marketing and
other
promotional expenses.
The
Company reported a net loss of $1,167,000 in the first quarter of fiscal year
2008 compared to a net loss of $85,000 in the first quarter of fiscal year
2007.
The net loss attributable to common stockholders in the first quarter of fiscal
year 2008 was $1,252,000, or $.15 per common share, as compared to a net loss
attributable to common stockholders in the first quarter of fiscal year 2007
of
$190,000, or $.04 per common share. The net loss attributable to common
stockholders for the first quarter of fiscal year 2008 and 2007 reflects $85,000
and $105,000, respectively, of cumulative preferred stock dividends on the
Company’s preferred stock.
Liquidity
and Capital Resources
National
Securities, as a registered broker-dealer, is subject to the SEC’s Uniform Net
Capital Rule 15c3-1 that requires the maintenance of minimum net capital.
National Securities has elected to use the alternative standard method permitted
by the rule. This requires that National Securities maintain minimum net
capital
equal to the greater of $250,000 or a specified amount per security based
on the
bid price of each security for which National Securities is a market maker.
At
December 31, 2007, National Securities’ net capital exceeded the requirement by
$1,183,000.
Advances,
dividend payments and other equity withdrawals from the Company’s subsidiary are
restricted by the regulations of the SEC and other regulatory agencies. These
regulatory restrictions may limit the amounts that a subsidiary may dividend
or
advance to the Company.
The
Company extends unsecured credit in the normal course of business to its
brokers. The determination of the appropriate amount of the reserve for
uncollectible accounts is based upon a review of the amount of credit extended,
the length of time each receivable has been outstanding, and the specific
individual brokers from whom the receivables are due.
The
objective of liquidity management is to ensure that the Company has ready access
to sufficient funds to meet commitments, fund deposit withdrawals and
efficiently provide for the credit needs of customers.
In
April
2005, National Securities entered into a clearing agreement with NFS that became
effective in June 2005. In the first quarter of fiscal year 2007, NFS paid
National Securities a $750,000 general business credit that is being amortized
over an eight year period ending November 2014, corresponding with the
expiration date of the clearing agreement. In the second quarter of fiscal
year
2007, NFS provided National Securities a $250,000 clearing fee waiver that
is
being amortized over a two year period ending December 2008, corresponding
with
the time period that certain performance standards were to be achieved. The
clearing agreement includes a termination fee if National Securities terminates
the agreement without cause. In June 2005, National Securities entered into
a
clearing agreement with Penson for the purpose of providing clearing services
that are not provided by NFS. Additionally, in June 2007, National Securities
entered into a clearing agreement with Legent for the purpose of providing
clearing services that are not provided by NFS and to maintain a pre-existing
clearing relationship for brokers newly associated with National Securities.
The
Company believes that the overall effect of its clearing relationships has
been
beneficial to the Company’s cost structure, liquidity and capital
resources.
The
Company has historically satisfied its capital needs with cash generated from
operations or from financing activities. The Company believes that it will
have
sufficient funds to maintain its current level of business activities during
fiscal year 2008. If market conditions should weaken, the Company would need
to
consider curtailing certain of its business activities, reducing its fixed
overhead costs and/or seek additional sources of financing.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
The
Company's primary market risk arises from the fact that it engages in
proprietary trading and historically made dealer markets in equity securities.
Accordingly, the Company may be required to maintain certain amounts of
inventories in order to facilitate customer order flow. The Company may incur
losses as a result of price movements in these inventories due to changes in
interest rates, foreign exchange rates, equity prices and other political
factors. The Company is not subject to direct market risk due to changes in
foreign exchange rates. However, the Company is subject to market risk as a
result of changes in interest rates and equity prices, which are affected by
global economic conditions. The Company manages its exposure to market risk
by
limiting its net long or short positions. Trading and inventory accounts are
monitored daily by management and the Company has instituted position limits.
Credit
risk represents the amount of accounting loss the Company could incur if
counterparties to its proprietary transactions fail to perform and the value
of
any collateral proves inadequate. Although credit risk relating to various
financing activities is reduced by the industry practice of obtaining and
maintaining collateral, the Company maintains more stringent requirements to
further reduce its exposure. The Company monitors its exposure to counterparty
risk on a daily basis by using credit exposure information and monitoring
collateral values. The Company maintains a credit committee, which reviews
margin requirements for large or concentrated accounts and sets higher
requirements or requires a reduction of either the level of margin debt or
investment in high-risk securities or, in some cases, requiring the transfer
of
the account to another broker-dealer.
The
Company monitors its market and credit risks daily through internal control
procedures designed to identify and evaluate the various risks to which the
Company is exposed. There can be no assurance, however, that the Company's
risk
management procedures and internal controls will prevent losses from occurring
as a result of such risks.
The
following table shows the quoted market values of marketable securities owned
("long") by the Company, securities sold but not yet purchased ("short") the
Company, and net positions as of December 31, 2007:
|
|
Long
|
|
Short
|
|
Net
|
|
Corporate
stocks
|
|
$
|
1,046,000
|
|
$
|
27,000
|
|
$
|
1,019,000
|
|
Corporate
bonds
|
|
|
19,000
|
|
|
-
|
|
|
19,000
|
|
Government
obligations
|
|
|
35,000
|
|
|
305,000
|
|
|
(270,000
|
)
|
|
|
$
|
1,100,000
|
|
$
|
332,000
|
|
$
|
768,000
|
|
ITEM
4. CONTROLS AND PROCEDURES
Evaluation
of disclosure controls and procedures.
Based on
the evaluation of the Company’s disclosure controls and procedures (as defined
in the Exchange Act Rules 13a-15(e) and 15d-15(e)) required by the Exchange
Act Rules 13a-15(b) or 15d-15(b), the Company’s Chief Executive Officer and
Chief Financial Officer have concluded that, as of the end of the period covered
by this report, the Company’s disclosure controls and procedures were adequate
and effective to ensure that material information relating to the Company and
its consolidated subsidiaries would be made known to them by others within
those
entities, particularly during the period in which this quarterly report on
Form
10-Q was being prepared.
Changes
in internal controls.
There
were no significant changes in the Company’s internal controls or in other
factors that could significantly affect those controls and procedures subsequent
to the date of our evaluation nor any significant deficiencies or material
weaknesses in such disclosure controls and procedures requiring corrective
actions.
PART
II – OTHER INFORMATION
ITEM
1. LEGAL PROCEEDINGS
During
the quarter ended December 31, 2007, there were no significant developments
in
the Company’s legal proceedings. For a detailed discussion of the Company’s
legal proceedings, please refer to Note 6 herein, and the Company’s Annual
Report on Form 10-K for the fiscal year ended September 30, 2007.
ITEM
1A. RISK FACTORS
There
are
no material changes from the risk factors previously disclosed in the Company’s
Form 10-K for the year ended September 30, 2007.
ITEM
2. UNREGISTERED
SALES OF EQUITY SECURITIES
AND USE OF PROCEEDS
None.
ITEM
3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM
5. OTHER INFORMATION
None.
ITEM
6. EXHIBITS
31.1
|
Chief
Executive Officer’s Certificate pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
31.2
|
Chief
Financial Officer’s Certificate pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
32.1
|
Chief
Executive Officer’s Certificate pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
32.2
|
Chief
Financial Officer’s Certificate pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
NATIONAL
HOLDINGS CORPORATION AND SUBSIDIARIES
|
By:
|
/s/
Mark Goldwasser
|
|
|
|
Mark
Goldwasser
|
|
|
|
President
and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
February
13, 2008
|
By:
|
/s/
Robert H. Daskal
|
|
|
|
Robert
H. Daskal
|
|
|
|
Chief
Financial Officer
|
|