Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Sep. 30, 2019 | Nov. 30, 2019 | Mar. 29, 2019 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | NATIONAL HOLDINGS CORP | ||
Entity Central Index Key | 0001023844 | ||
Current Fiscal Year End Date | --09-30 | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | false | ||
Document Type | 10-K | ||
Document Period End Date | Sep. 30, 2019 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 13,158,441 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Shell Company | false | ||
Entity Public Float | $ 10,678,236 |
Consolidated Statements of Fina
Consolidated Statements of Financial Condition - USD ($) $ in Thousands | Sep. 30, 2019 | Sep. 30, 2018 |
ASSETS | ||
Cash | $ 30,443 | $ 27,920 |
Restricted cash | 960 | 1,353 |
Cash deposits with clearing organizations | 436 | 336 |
Securities owned, at fair value | 12,481 | 7,786 |
Receivables from broker dealers and clearing organizations | 3,490 | 3,967 |
Forgivable loans receivable | 1,834 | 1,567 |
Other receivables, net | 5,672 | 4,265 |
Prepaid expenses | 3,639 | 4,065 |
Fixed assets, net | 5,067 | 2,671 |
Intangible assets, net | 5,441 | 4,730 |
Goodwill | 5,153 | 5,153 |
Deferred tax asset, net | 4,560 | 4,192 |
Other assets | 2,031 | 444 |
Total Assets | 81,207 | 68,449 |
Liabilities | ||
Accrued commissions and payroll payable | 18,590 | 12,862 |
Accounts payable and other accrued expenses | 10,263 | 8,019 |
Deferred clearing and marketing credits | 367 | 576 |
Other | 388 | 57 |
Total Liabilities | 29,608 | 21,514 |
Commitments and Contingencies (Note 13) | ||
Stockholders’ Equity | ||
Preferred stock, $0.01 par value, 10,000,000 shares authorized; none outstanding | 0 | 0 |
Common stock $0.02 par value, authorized 75,000,000 shares at September 30, 2019 and 2018; 13,158,441 shares issued and outstanding at September 30, 2019 and 12,541,890 shares issued and outstanding at September 30, 2018 | 263 | 250 |
Additional paid-in-capital | 90,354 | 86,510 |
Accumulated deficit | (40,779) | (39,825) |
Total National Holdings Corporation Stockholders’ Equity | 49,838 | 46,935 |
Non-controlling interest | 1,761 | 0 |
Total Stockholders’ Equity | 51,599 | 46,935 |
Total Liabilities and Stockholders’ Equity | $ 81,207 | $ 68,449 |
Consolidated Statements of Fi_2
Consolidated Statements of Financial Condition (Parenthetical) - $ / shares | Sep. 30, 2019 | Sep. 30, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.02 | $ 0.02 |
Common stock, shares authorized (in shares) | 75,000,000 | 75,000,000 |
Common stock, shares issued (in shares) | 13,158,441 | 12,541,890 |
Common stock, shares outstanding (in shares) | 13,158,441 | 12,541,890 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues | |||
Revenue from contracts with customers | $ 207,884,000 | ||
Net dealer inventory (losses) gains | (1,466,000) | $ 3,329,000 | $ 15,108,000 |
Interest and dividends | 5,822,000 | 3,233,000 | 2,764,000 |
Transfer fees and clearing services | 8,092,000 | 7,200,000 | 7,393,000 |
Tax preparation and accounting | 8,807,000 | 7,772,000 | 7,439,000 |
Other | 701,000 | 913,000 | 1,236,000 |
Total Revenues | 212,941,000 | 211,115,000 | 189,870,000 |
Operating Expenses | |||
Commissions, compensation and fees | 177,824,000 | 182,127,000 | 155,187,000 |
Clearing fees | 2,437,000 | 2,400,000 | 2,343,000 |
Communications | 2,816,000 | 3,260,000 | 2,767,000 |
Occupancy | 4,301,000 | 3,755,000 | 4,286,000 |
Licenses and registration | 2,960,000 | 2,735,000 | 1,726,000 |
Professional fees | 7,306,000 | 4,306,000 | 4,531,000 |
Interest | 32,000 | 97,000 | 14,000 |
Depreciation and amortization | 1,832,000 | 1,551,000 | 1,229,000 |
Other administrative expenses | 11,333,000 | 8,165,000 | 9,819,000 |
Total Operating Expenses | 210,841,000 | 208,396,000 | 181,902,000 |
Income before Other Income (Expense) and Income Taxes | 2,100,000 | 2,719,000 | 7,968,000 |
Other Income (Expense) | |||
Gain on disposal of Gilman branches | 0 | 57,000 | 137,000 |
Change in fair value of warrants | 0 | (11,194,000) | 8,458,000 |
Other income | 60,000 | 96,000 | 16,000 |
Total Other Income (Expense) | 60,000 | (11,041,000) | 8,611,000 |
Income (Loss) before Income Taxes | 2,160,000 | (8,322,000) | 16,579,000 |
Income tax expense | 319,000 | 3,188,000 | 4,051,000 |
Net Income (Loss) | 1,841,000 | (11,510,000) | 12,528,000 |
Net income attributable to non-controlling interest | (2,660,000) | 0 | 0 |
Net income (loss) attributable to National Holdings Corporation common shareholders | $ (819,000) | $ (11,510,000) | $ 12,528,000 |
Net income (loss) per share attributable to National Holdings Corporation common shareholders - Basic (in dollars per share) | $ (0.06) | $ (0.92) | $ 1.01 |
Net income (loss) per share attributable to National Holdings Corporation common shareholders - Diluted (in dollars per share) | $ (0.06) | $ (0.92) | $ 1 |
Weighted average number of shares outstanding - Basic (in shares) | 12,821,581 | 12,474,753 | 12,437,916 |
Weighted average number of shares outstanding - Diluted (in shares) | 12,821,581 | 12,474,753 | 12,472,541 |
Commissions | |||
Revenues | |||
Revenue from contracts with customers | $ 86,929,000 | $ 109,984,000 | $ 96,807,000 |
Investment Banking | |||
Revenues | |||
Revenue from contracts with customers | 69,656,000 | 57,201,000 | 44,385,000 |
Investment Advisory | |||
Revenues | |||
Revenue from contracts with customers | $ 34,400,000 | $ 21,483,000 | $ 14,738,000 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity - USD ($) | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Non- controlling Interest |
Beginning balance (in shares) at Sep. 30, 2016 | 12,437,916 | ||||
Beginning balance at Sep. 30, 2016 | $ 25,773,000 | $ 248,000 | $ 66,353,000 | $ (40,843,000) | $ 15,000 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock – based compensation for restricted stock units | 602,000 | 602,000 | |||
Warrant liability reclassification | 0 | ||||
Net income (loss) | 12,528,000 | 12,528,000 | |||
Ending balance (in shares) at Sep. 30, 2017 | 12,437,916 | ||||
Ending balance at Sep. 30, 2017 | 38,903,000 | $ 248,000 | 66,955,000 | (28,315,000) | 15,000 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock – based compensation for restricted stock units | 2,913,000 | 2,913,000 | |||
Issuance of shares of common stock for warrant exercises (in shares) | 1,489 | ||||
Stock – based compensation for restricted stock units | 5,000 | 5,000 | |||
Issuance of shares of common stock with respect to restricted stock units and awards, net of shares tendered for tax withholding (in shares) | 102,485 | ||||
Issuance of shares of common stock with respect to restricted stock units and awards, net of shares tendered for tax withholding | (152,000) | $ 2,000 | (154,000) | ||
Warrant liability reclassification | 16,791,000 | 16,791,000 | |||
Deconsolidation of subsidiary | (15,000) | (15,000) | |||
Net income (loss) | (11,510,000) | (11,510,000) | |||
Ending balance (in shares) at Sep. 30, 2018 | 12,541,890 | ||||
Ending balance at Sep. 30, 2018 | 46,935,000 | $ 250,000 | 86,510,000 | (39,825,000) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of shares of common stock for warrant exercises (in shares) | 38 | ||||
Stock – based compensation for restricted stock units | 4,282,000 | 4,282,000 | |||
Issuance of shares of common stock with respect to restricted stock units and awards, net of shares tendered for tax withholding (in shares) | 616,513 | ||||
Issuance of shares of common stock with respect to restricted stock units and awards, net of shares tendered for tax withholding | (425,000) | $ 13,000 | (438,000) | ||
Warrant liability reclassification | 0 | ||||
Distributions to non-controlling interest | (899,000) | (899,000) | |||
Net income (loss) | 1,841,000 | (819,000) | 2,660,000 | ||
Ending balance (in shares) at Sep. 30, 2019 | 13,158,441 | ||||
Ending balance at Sep. 30, 2019 | $ 51,599,000 | $ 263,000 | $ 90,354,000 | $ (40,779,000) | $ 1,761,000 |
Consolidated Statement of Cha_2
Consolidated Statement of Changes in Stockholders' Equity (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Statement of Stockholders' Equity [Abstract] | ||
Issuance of shares (in shares) | 144,269 | 48,140 |
Value of shares issued | $ 425 | $ 152 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income (loss) | $ 1,841,000 | $ (11,510,000) | $ 12,528,000 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities | |||
Change in fair value of warrant liability | 0 | 11,194,000 | (8,458,000) |
Depreciation and amortization | 1,832,000 | 1,551,000 | 1,229,000 |
Amortization of forgivable loans | 680,000 | 630,000 | 693,000 |
Stock-based compensation | 4,282,000 | 2,913,000 | 602,000 |
Provision (recovery) for doubtful accounts | (216,000) | (191,000) | |
Provision (recovery) for doubtful accounts | 5,000 | ||
Deferred tax (benefit) expense | (368,000) | 2,228,000 | 2,538,000 |
Amortization of deferred clearing and marketing credit | (209,000) | (210,000) | (209,000) |
Increase in fair value of contingent consideration | 65,000 | 24,000 | 28,000 |
Impairment of intangible assets | 0 | 0 | 50,000 |
Impairment of goodwill | 0 | 0 | 961,000 |
Gain on disposal of Gilman branches | 0 | (57,000) | (137,000) |
Gain on deconsolidation of subsidiary | 0 | (15,000) | 0 |
Changes in assets and liabilities | |||
Cash deposits with clearing organizations | (100,000) | 705,000 | (11,000) |
Receivables from broker dealers and clearing organizations | 477,000 | (1,117,000) | 507,000 |
Forgivable loans receivable | (1,052,000) | (581,000) | (597,000) |
Other receivables, net | (1,200,000) | 976,000 | 1,117,000 |
Securities owned, at fair value | (4,695,000) | (684,000) | (4,745,000) |
Prepaid expenses | 426,000 | (1,575,000) | (580,000) |
Other assets | (629,000) | (91,000) | (8,000) |
Accounts payable, accrued expenses and other liabilities | 6,542,000 | 1,025,000 | (882,000) |
Securities sold, but not yet purchased at fair value | 0 | (151,000) | (147,000) |
Net cash provided by operating activities | 7,676,000 | 5,260,000 | 4,288,000 |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Acquisition of businesses | (387,000) | (187,000) | (19,000) |
Acquisition of intangible asset | 0 | (45,000) | 0 |
Purchase of fixed assets | (2,744,000) | (419,000) | (1,432,000) |
Collection on notes receivable - disposal of National Tax branches | 114,000 | 93,000 | 46,000 |
Net cash used in investing activities | (3,017,000) | (558,000) | (1,405,000) |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Repurchase of common stock for tax withholding | (425,000) | (152,000) | 0 |
Principal payments under capital lease obligations | (223,000) | 0 | 0 |
Principal payments under Finance obligations | (365,000) | 0 | 0 |
Proceeds from warrant exercises | 0 | 5,000 | 0 |
Contingent consideration payments | (617,000) | (171,000) | (42,000) |
Distributions to non-controlling interest | (899,000) | 0 | 0 |
Net cash used in financing activities | (2,529,000) | (318,000) | (42,000) |
NET INCREASE IN CASH AND RESTRICTED CASH | 2,130,000 | 4,384,000 | 2,841,000 |
CASH AND RESTRICTED CASH BALANCE | |||
Beginning of the year | 29,273,000 | 24,889,000 | 22,048,000 |
End of the year | 31,403,000 | 29,273,000 | 24,889,000 |
Cash paid during the year for: | |||
Interest | 32,000 | 53,000 | 14,000 |
Income taxes, net of refunds | 118,000 | 2,349,000 | 2,399,000 |
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES | |||
Fixed assets (acquired but not paid including capital leases of $509,000 in 2018) | 380,000 | 519,000 | 240,000 |
Finance obligation (related asset included in other assets - see Note 11) | 958,000 | 0 | 0 |
Business acquired: | |||
Identifiable intangible asset acquired | 1,815,000 | 767,000 | 211,000 |
Contingent consideration payable | (1,428,000) | (580,000) | (192,000) |
Cash paid | 387,000 | 187,000 | 19,000 |
Sale of National Tax branches: | |||
Notes receivable (included in other receivables) | 0 | 159,000 | 722,000 |
Disposal of goodwill | 0 | (64,000) | (353,000) |
Disposal of intangible assets, net | 0 | (38,000) | (232,000) |
Gain on disposal of Gilman branches | 0 | (57,000) | (137,000) |
Reclassification of warrant liability from debt to equity | $ 0 | $ 16,791,000 | $ 0 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) $ in Thousands | Sep. 30, 2018USD ($) |
Statement of Cash Flows [Abstract] | |
Capital lease obligations | $ 509 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | ORGANIZATION AND DESCRIPTION OF BUSINESS National Holdings Corporation (“National” or the “Company”), a Delaware corporation organized in 1996, operates through its wholly-owned subsidiaries which principally provide financial services. Through its broker-dealer and investment advisory subsidiaries, the Company (1) offers full service retail brokerage and investment advisory services to individual, corporate and institutional clients, (2) provides investment banking, merger, acquisition and advisory services to high-growth micro-, small- and mid-cap companies and (3) trades securities, including making markets in micro- and small-cap stocks listed on the Nasdaq Capital Market (“Nasdaq”) and other exchanges. The Company's broker-dealer subsidiary is National Securities Corporation (“NSC”). NSC conducts a national securities brokerage business through its main offices in New York City, New York and Boca Raton, Florida. NSC is an introducing broker and clears all transactions through clearing organizations on a fully disclosed basis. NSC is registered with the Securities and Exchange Commission (“SEC”) and is a member of the Financial Industry Regulatory Authority (“FINRA”) and the Securities Investor Protection Corporation (the “SIPC”). Our wholly-owned subsidiary, National Asset Management, Inc., a Washington corporation (“NAM”), is a federally-registered investment adviser providing asset management advisory services to retail clients for a fee based upon a percentage of assets managed. Our wholly-owned subsidiaries, National Insurance Corporation., a Washington corporation (“National Insurance”) and Prime Financial Services, a Delaware corporation (“Prime Financial”), provide fixed insurance products to their clients, including life insurance, disability insurance, long-term care insurance and fixed annuities. Our wholly-owned subsidiary, National Tax and Financial Services, Inc. (“National Tax”) formerly Gilman Ciocia, Inc., provides tax preparation and accounting services to individuals and small to midsize companies. Our wholly-owned subsidiary, GC Capital Corporation (“GC”), provides licensed mortgage brokerage services in New York and Florida. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Principals of Consolidation The consolidated financial statements include the accounts of National and its wholly owned and majority owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. Non-controlling Interest NAM has a majority voting interest in Innovation X Management, LLC (“Innovation X”), which together serve as the investment manager of an investment fund (see Variable Interest Entities below). Because NAM has the majority voting interest in Innovation X, the results of operations of Innovation X are included in the Company's consolidated financial statements, and the amount attributable to the other investor is recorded as a non-controlling interest. During the year ended September 30, 2019, Innovation X recognized net carried interest of $6,650,000 , including an unrealized loss from securities received from the investment fund and held at September 30, 2019, of which $2,660,000 was attributable to the non-controlling interest. Variable Interest Entities The Company has entered into agreements to provide investment banking and advisory services to numerous investment funds (the “Funds”) that are considered variable interest entities (“VIEs”) under the accounting guidance. These Funds are established primarily to make and manage investments in equity or convertible debt securities of privately held companies that the Company, as investment advisory to the Funds, believes possess innovative or disruptive technologies and present opportunities for an initial public offering (“IPO”) or another similar liquidity event within approximately one to five years from the date of investment. The Funds intent to hold the investments until an IPO or another similar liquidity event and then to make distributions to its investors when contractually permitted, estimated approximately six months following such IPO or liquidity event. The Company earns fees from the Funds in the form of placement agent fees and carried interest. For placement agent fees, the Company receives a cash fee of generally 7% to 10% of the amount of raised capital for the Funds and the fee is recognized at the time the placement services occurred. The Company receives carried interest as a percentage allocation ( 8% to 15% ) of the profits of the Funds as compensation for asset management services provided to the Funds and it is recognized at the time of distributions. Once fund investors have received distributions in an amount equal to one hundred percent ( 100% ) of their total capital contributions, the Company as the manager of the Funds will be entitled to share in any profits of the Funds to the extent of the carried interest. As the fee arrangements under such agreements are arm's-length and contain customary terms and conditions and represent compensation that is considered fair value for the services provided, the fee arrangements are not considered variable interests and accordingly, the Company does not consolidate such VIEs. Placement agent fees attributable to such arrangements were $34,184,000 in 2019 , $24,789,000 in 2018 and $16,537,000 in 2017 , respectively, and included in investment banking in the consolidated statements of operations. Carried interest is recognized and recorded at the time of distribution and all contingencies are resolved. For the year ended September 30, 2019 , $15,872,000 of carried interest has been recorded. $5,403,000 of the carried interest is related to the back-end compensation of the placement agent fees and is included in investment banking in the consolidated statements of operations. The remaining $10,469,000 is recorded as compensation for asset management services and is included in investment advisory in the consolidated statements of operations. For the year ended September 30, 2019 , an unrealized loss of $2,389,000 has been recorded due to the change in fair value of the shares received for carried interest. The loss for the change in fair value is included in net dealer inventory (losses) gains in the consolidated statements of operations. Carried interest recorded in previous years was not material. Based on the investment performance of the Funds as of September 30, 2019 , unrecognized carried interest under a hypothetical distribution was $800,000 and the related compensation expense associated was $562,000 . Carried interest is dependent on the market and will fluctuate until a distribution event occurs. Use of Estimates The preparation of these financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could significantly differ from those estimates. Revenue Recognition Commission revenue represents commissions generated by the Company’s registered representatives for their clients’ purchases and sales of mutual funds, variable annuities, general securities and other financial products, most of which is paid to the registered representatives as commissions for initiating the transactions. Commission revenue is generated from front-end sales commissions that occur at the point of sale, as well as trailing commissions. The Company recognizes front-end sales commission revenue and related clearing and other expenses on transactions introduced to its clearing brokers on a trade date basis. The Company also recognizes front-end sales commissions and related expenses on transactions initiated directly between the registered representatives and product sponsors upon receipt of notification from sponsors of the commission earned. Commission revenue also includes 12b-1 fees, and variable product trailing fees, collectively considered as trailing fees, which are recurring in nature. These trailing fees are earned by the Company based on a percentage of the current market value of clients’ investment holdings in trail eligible assets. Because trail commission revenues are generally paid in arrears, management estimates commission revenues earned during each period. These estimates are based on a number of factors including investment holdings and the applicable commission rate and the amount of trail commission revenue received in prior periods. Estimates are subsequently adjusted to actual based on notification from the sponsors of trail commissions earned. Net dealer inventory gains, which are recorded on a trade-date basis, include realized and unrealized net gains and losses resulting from the Company’s principal trading activities including equity-linked warrants received from investment banking activities. Investment banking revenues consist of underwriting revenues, advisory revenues and private placement fees. Underwriting revenues arise from securities offerings in which the Company acts as an underwriter and include management fees, selling concessions and underwriting fees. Management estimates the Company’s share of the transaction-related expenses incurred by the syndicate. On final settlement, typically within 90 days from the trade date of the transaction, these amounts are adjusted to reflect the actual transaction-related expenses. Investment advisory fees are derived from account management and investment advisory services. These fees are determined based on a percentage of the customers assets under management, may be billed monthly or quarterly and are recognized when earned. Interest is recorded on an accrual basis and dividends are recorded on the ex-dividend date. Transfer fees and fees for clearing services are recorded on a trade date basis. Tax preparation and accounting fees are recognized upon completion of the services. See Note 21 of the Company's consolidated financial statements for additional disclosures on revenue recognition from revenues from contracts. Income Taxes The Company accounts for income taxes in accordance with US GAAP which requires the recognition of tax benefits or expenses based on the estimated future tax effects of temporary differences between the financial statement and tax basis of its assets and liabilities. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date. Valuation allowances are established to reduce deferred tax assets to an amount that is more likely than not to be realized. FASB ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements, requiring us to determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. For tax positions meeting the more likely than not threshold, the tax amount recognized in the financial statements is reduced by the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant taxing authority. The Company recognizes accrued interest and penalties related to its uncertain tax positions as a component of income tax expense. As of September 30, 2019 and 2018, the Company had no unrecognized tax positions. Securities Securities owned and securities sold, but not yet purchased, are recorded at fair value. See Note 9 for fair value measurements. Fixed Assets, net Fixed assets are recorded at cost net of accumulated depreciation and amortization. Depreciation is calculated using the straight-line method based on the estimated useful lives of the related assets (See Note 10). Leasehold improvements are amortized on a straight-line basis over the lease term, or their estimated useful lives, whichever is shorter. Fixed assets are reviewed for impairment whenever indicators of impairment exist. In such circumstances, the Company will estimate the future cash flows expected to result from the use of the asset and its eventual disposition. Future cash flows are the future cash inflows expected to be generated by an asset less the future outflows expected to be necessary to obtain those inflows. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the asset, the Company will recognize an impairment loss to adjust to the fair value of the asset. Net Income per Common Share Basic net income per share is computed on the basis of the weighted average number of common shares outstanding. Diluted net income per share is computed on the basis of the weighted average number of common shares outstanding plus the dilutive effect of incremental shares of common stock potentially issuable under outstanding options, warrants and unvested restricted stock units utilizing the treasury stock method. A reconciliation of basic and diluted common shares used in the computation of per share data follows: Year Ended September 30, 2019 2018 2017 Basic weighted-average shares 12,821,581 12,474,753 12,437,916 Effect of dilutive securities: Options — — 140 Unvested restricted stock units — — 34,485 Diluted weighted-average shares 12,821,581 12,474,753 12,472,541 The following potential common share equivalents are not included in the above diluted computation because to do so would be anti-dilutive as the instruments are out of the money: Year Ended September 30, 2019 2018 2017 Options 604,200 615,000 1,207,000 Warrants 5,398,907 12,437,172 9,344,973 (a) Restricted stock units 3,318,640 219,097 — 9,321,747 13,271,269 10,551,973 (a) As the warrants are out of the money, in the diluted computation, no adjustment is made to net income (loss) to eliminate the change in fair value of the warrants. Stock-based Compensation The Company measures the cost of employee, officer and director services received in exchange for an award of equity instruments including stock options and restricted stock units, based on the grant-date fair value of the award and measures the cost of independent contractor awards based on the vesting date fair value of the award. The cost is recognized as compensation expense over the service period, which would normally be the vesting period of the award. Deferred Clearing and Marketing Credits The deferred clearing credit represents a clearing fee rebate from National Financial Services (“NFS”), one of the Company’s clearing brokers, which is being recognized pro rata as a reduction of clearing charges over the term of the clearing agreement which expires in 2021. The clearing rebate recognized in fiscal years 2019 , 2018 and 2017 amounted to $143,000 for each of the three years. At September 30, 2019 and 2018 , the deferred credit amounted to $250,000 and $393,000 , respectively. The deferred marketing credit represents a marketing rebate from NFS, which is being recognized pro rata as a reduction of marketing expenses over the term of the clearing agreement which expires in 2021. The marketing rebate recognized in fiscal years 2019 , 2018 and 2017 amounted to $67,000 for each of the three years. At September 30, 2019 and 2018 , the deferred credit amounted to $117,000 and $183,000 , respectively. Reimbursement of Expenses The Company incurs certain costs on behalf of its registered representatives including those for insurance, professional registration, technology and information services and legal services, amongst others, which are charged back to the registered representatives. It is the Company’s policy to record the reimbursement as a reduction of the respective operating expense. Total reimbursements in fiscal years 2019 , 2018 and 2017 amounted to approximately $9,793,000 , $8,614,000 and $9,941,000 , respectively. Intangible Assets Intangible assets with finite lives, which consist of customer relationships, are being amortized over their estimated useful lives on a straight-line basis. Such intangible assets are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company assesses the recoverability of its intangible assets by determining whether the unamortized balance can be recovered over the assets’ remaining estimated useful life through undiscounted estimated future cash flows. If undiscounted estimated future cash flows indicate that the unamortized amounts will not be recovered, an adjustment will be made to reduce such amounts to fair value based on estimated future cash flows discounted at a rate commensurate with the risk associated with achieving such cash flows. Estimated future cash flows are based on trends of historical performance and the Company’s estimate of future performance, giving consideration to existing and anticipated competitive and economic conditions. Brand names are deemed to have an indefinite life, are not subject to amortization and are tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired. Brand names are tested for impairment by comparing their fair value to their carrying amount. If the carrying amount exceeds fair value, an impairment loss is recognized for the excess (see Note 6). Goodwill Goodwill is not subject to amortization and is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired. Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets acquired. Goodwill is tested for impairment at the reporting unit level. Fair value of a reporting unit is typically based upon estimated future cash flows discounted at a rate commensurate with the risk involved or market-based comparables. If the carrying amount of the reporting unit’s net assets exceeds its fair value, then an analysis will be performed to compare the implied fair value of goodwill with the carrying amount of goodwill. An impairment loss will be recognized in an amount equal to the excess of the carrying amount over its implied fair value. After an impairment loss is recognized, the adjusted carrying amount of goodwill is its new accounting basis. Accounting guidance on the testing of goodwill for impairment allows entities testing goodwill for impairment, the option of performing a qualitative assessment to determine the likelihood of goodwill impairment and whether it is necessary to perform such two-step impairment test. Under Accounting Standards Update (“ASU”) No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, step 2 of the goodwill impairment test has been eliminated. Step 2 of the goodwill impairment test required companies to determine the implied fair value of the reporting unit’s goodwill. Under the new standard, an entity recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The standard is effective for the Company beginning October 1, 2020 for both interim and annual periods. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company early adopted this standard for the annual test performed after January 1, 2017. See Note 5. Cash and Restricted Cash The Company has defined cash as cash held at financial institutions and highly liquid investments with original maturities of less than three months that are not held for sale in the ordinary course of business. Cash held at financial institutions, at times, may exceed the amount insured by the Federal Deposit Insurance Corporation. Restricted cash consists of deposits collateralizing letters of credits in connections with property leases. Cash and restricted cash consist of the following: September 30, 2019 2018 Cash 30,443,000 27,920,000 Restricted cash 960,000 1,353,000 31,403,000 29,273,000 Receivables From Broker Dealers and Clearing organizations Receivables from broker dealers and clearing organizations represent net amounts due for fees and commissions associated with the Company’s retail brokerage business. Forgivable Loans Forgivable Loans represent loans to primarily newly recruited independent financial advisors as an incentive for their affiliation. The notes receivable balance is comprised of unsecured non-interest-bearing and interest-bearing loans (interest ranging up to 9% ). These forgivable loans are amortized over time, and the amortization is included in Commissions, compensation and fees within the Statement of Operations. The Company provides an allowance for doubtful accounts on the notes based on historical collection experience and continually evaluates the receivables for collectability and possible write-offs where a loss is deemed probable. |
New Accounting Guidance
New Accounting Guidance | 12 Months Ended |
Sep. 30, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Guidance | NEW ACCOUNTING GUIDANCE In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU“) 2014-09, Revenue From Contracts With Customers (Topic 606) which creates a single, principle-based model for revenue recognition and expands and improves disclosures about revenue. The new guidance was effective for the Company beginning October 1, 2018, and was adopted using a modified retrospective approach. The Company adopted the new revenue standard on October 1, 2018 and recognized a decrease of $135,000 to retained earnings as the cumulative effect of adoption of this accounting change. The impact of adoption is primarily related to the Company’s investment banking advisory fees that were recognized as of September 30, 2018 under the previously existing accounting guidance, which would have been deferred in prior periods under the new revenue standard. Accordingly, the new revenue standard will be applied prospectively in the Company’s financial statements from October 1, 2018 forward and reported financial information for historical comparable periods will not be revised and will continue to be reported under the accounting standards in effect during those historical periods. Further, the adoption of ASU 2014-09 did not have a material impact on the Company’s revenue. The new revenue guidance does not apply to revenue associated with financial instruments, including the Company’s warrants and securities that are accounted for under other US GAAP, and as a result, did not have an impact on the elements of the statements of operations most closely associated with financial instruments. The new revenue standard primarily impacts the following of the Company’s revenue recognition and presentation accounting policies: • Investment Banking Revenues . Advisory fees from mergers and acquisitions engagements are recognized at the point in time when the related transaction is completed, as the performance obligation is to successfully broker a specific transaction. • Investment Banking Advisory Expenses . Historically, expenses associated with investment banking advisory assignments were deferred until reimbursed by the client, the related fee revenue is recognized or the engagement is otherwise concluded. Under the new revenue standard, expenses are deferred only to the extent they are explicitly reimbursable by the client and the related revenue is recognized when all performance obligations are met. All other investment banking advisory related expenses are expenses as incurred. • Investment Banking Underwriting and Advisory Expenses . Expenses have historically been recorded net of client reimbursements and/or netted against revenue. Under the new revenue standard, all investment banking expenses will be recognized within their respective expense category on the income statement and any expense reimbursements will be recognized as investment banking revenues (i.e., expenses are no longer recorded net of client reimbursements and are not netted against revenue). The new revenue standard requires enhanced disclosures, which are included in Note 21 to the Company's consolidated financial statements for the year ended September 30, 2019. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the existing guidance for lease accounting, Leases (Topic 840). ASU 2016-02 requires lessees to recognize leases on their balance sheets, and leaves lessor accounting largely unchanged. The recognition of these lease assets and lease liabilities represents a change from previous U.S. GAAP requirements, which did not require lease assets and lease liabilities to be recognized for most leases. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee, have not significantly changed from previous U.S. GAAP requirements. The amendments in this ASU are effective for the Company beginning October 1, 2019 and interim periods within those fiscal years. As of September 30, 2019, the Company has identified its arrangements that are within the scope of the new guidance and has evaluated its portfolio of leases, which is primarily comprised of operating real estate leases for its respective offices. The Company adopted the package of practical expedients and will recognize the right to use lease assets and related lease liabilities as of the adoption date using FASB's modified retrospective approach. Prior period information will not be restated. On adoption, the Company currently expects to recognize right-of-use assets and corresponding liabilities ranging from approximately $16,000,000 to $17,000,000 on the Company's consolidated statements of financial condition on its leases, with terms greater than twelve months. Adoption of the standard will not materially impact the Company's consolidated statements of operations or consolidated statements of cash flows. The company does not believe the new standard will have a material impact on its liquidity. This expectation may change as the Company's assessment is finalized. The Company is in the process of evaluating changes to its business processes, systems and controls needed to support recognition and disclosure under the new standard. Further, the Company is continuing to assess any incremental disclosures that will be required in the Company's consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments”. ASU 2016-15 reduces the diversity of how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. The standard was effective for the Company beginning October 1, 2018 for both interim and annual periods. The Company adopted ASU No. 2016-15 as of October 1, 2018. The adoption of this update did not impact the Company's consolidated financial statements and related disclosures. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230) - Restricted Cash”. ASU 2016-18 reduces the diversity in the presentation of restricted cash and restricted cash equivalents in the statement. The statement requires that restricted cash and restricted cash equivalents be included as components of total cash and cash equivalents as presented on the statement of cash flows. The standard was effective for the Company beginning October 1, 2018 for both interim and annual periods. The Company adopted ASU No. 2016-18 as of October 1, 2018. The adoption of this update did not materially impact the Company's consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business”. The amendments in this update is to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The standard was effective for the Company beginning October 1, 2018 for both interim and annual periods. The Company adopted ASU 2017-01 as of October 1, 2018. Upon adoption of ASU 2017-01, there was no significant impact to the Company's consolidated financial condition or results of operations. In May 2017, the FASB issued ASU 2017-09, “Scope of Modification Accounting”. This ASU clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The standard was effective for the Company beginning October 1, 2018 for both interim and annual periods. The Company adopted ASU No. 2017-09 as of October 1, 2018. The adoption of this update did not impact the Company's consolidated financial statements and related disclosures. In June 2018, the FASB issued ASU 2018-07, “Compensation - Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting”. This ASU simplifies the accounting for share-based payments granted to nonemployees by aligning the accounting with the requirements for employee share-based compensation. The standard is effective for the Company beginning October 1, 2019 for both interim and annual periods. Early adoption is permitted. The Company does not anticipate that the adoption of ASU 2018-07 will have a material impact on its financial statements. In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement - Disclosure Framework - Changes to the Disclosure Requirements for the Fair Value Measurement,” which removes or modifies certain current disclosures, and adds additional disclosures. The changes are meant to provide more relevant information regarding valuation techniques and inputs used to arrive at measures of fair value, uncertainty in the fair value measurements, and how changes in fair value measurements impact an entity's performance and cash flows. Certain disclosures in ASU 2018-13 will need to be applied on a retrospective basis and others on a prospective basis. The standard is effective for the Company beginning October 1, 2020 for both interim and annual periods. Early adoption is permitted. The company is currently assessing the impact that the adoption of ASU 2018-13 will have on its financial statements. In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract”. The guidance on the accounting for implementation, setup, and other upfront costs (collectively referred to as implementation costs) applies to entities that are a customer in a hosting arrangement that is a service contract. The amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the guidance in this ASU. The standard is effective for the Company beginning October 1, 2020, should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption, and early adoption is permitted. The company early adopted ASU 2018-15 in 2019. The adoption of this update did not materially impact the Company's consolidated financial condition or results of operations. |
Business Combination, Contingen
Business Combination, Contingent Consideration and Disposal of Branches | 12 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Business Combination, Contingent Consideration and Disposal of Branches | BUSINESS COMBINATION, CONTINGENT CONSIDERATION AND DISPOSAL OF BRANCHES Business Combinations In October 2016, National Tax acquired certain assets of a tax preparation and accounting business that was deemed to be a business acquisition. The consideration for the transaction consisted of a cash payment at closing of $19,000 and contingent consideration payable in cash having a fair value of $192,000 , for which a liability (included in accounts payable and accrued expenses) was recognized based on the estimated acquisition date fair value of the potential earn-out. The earn-out is based on revenue, as defined in the acquisition agreement, during the 36 -month period following the closing up to a maximum of $225,600 . The fair value of the acquired assets totaling $211,000 was allocated to customer relationships, which is being amortized over three years. In October, November 2017 and March 2018, National Tax acquired certain assets of five tax preparation and accounting businesses that were deemed to be business acquisitions. The consideration for the transactions consisted of cash payments at closing totaling $187,000 and contingent consideration payables in cash having a fair value of $580,000 , for which liabilities (included in accounts payable and accrued expenses) were recognized based on the estimated acquisition date fair value of the potential earn-out. The earn-outs are based on revenue, as defined in the acquisition agreements, during various period following the closings. The fair value of the acquired assets totaling $767,000 were allocated to customer relationships, which are being amortized over seven years . In January and February 2019, National Tax acquired certain assets of three tax preparation and accounting businesses that per accounting guidance were deemed to be a business combination. The consideration for the transactions consisted of cash payments at closing totaling $387,000 , and contingent consideration payable in cash having a fair value of $1,428,000 , for which liabilities (included in accounts payable and accrued expenses) were recognized based on the estimated acquisition date fair value of the potential earn-outs. The earn-outs are based on revenue, as defined in the acquisition agreements, during various periods following the closing. The fair values of the acquired assets totaling $1,815,000 were allocated to customer relationships, which are being amortized over seven years. The contingent consideration liabilities recognized in the above acquisitions were valued using an income-based approach using unobservable inputs (Level 3) and reflects the Company’s own assumptions. The liabilities will be revalued at each Balance Sheet date with changes therein recorded in earnings. Results of operations of the acquired businesses are included in the accompanying consolidated statements of operations from the dates of acquisition and were not material. In addition, based on materiality, pro forma results are not presented. Contingent Consideration Set below are changes in the carrying value of contingent consideration for the years ended September 30, 2019 , 2018 and 2017 related to the acquisitions: Fair value of contingent consideration at September 30, 2016 $ 424,000 Fair value of contingent consideration in connection with October 2017 acquisition 192,000 Payments (42,000 ) Change in fair value (263,000 ) Fair value of contingent consideration at September 30, 2017 311,000 Fair value of contingent consideration in connection with 2018 acquisitions 580,000 Payments (171,000 ) Change in fair value 24,000 Fair value of contingent consideration at September 30, 2018 744,000 Fair value of contingent consideration in connection with 2019 acquisitions 1,428,000 Payments (617,000 ) Change in fair value 65,000 Fair value of contingent consideration at September 30, 2019 $ 1,620,000 Disposal of National Tax Branches In 2018, the Company sold one of its National Tax branches for a note in the aggregate principal amounts of $159,000 which, after allocating a portion of goodwill and unamortized intangibles of $64,000 and $38,000 , respectively, resulted in a gain on disposal of $57,000 . Principal and interest on the note is payable monthly over 84 months with an interest rate of 4% per annum. In 2017, the Company sold three of its National Tax branches for notes in the aggregate principal amounts of $722,000 which, after allocating a portion of goodwill and unamortized intangibles of $353,000 and $232,000 , respectively, resulted in a gain on disposal of $137,000 . Principal and interest on the notes is payable monthly over 83 to 95 months with a weighted average interest rate of 3% per annum. Notes receivable outstanding at September 30, 2019 and 2018 amounts to $665,000 and $746,000 , respectively, which is included in other receivables in the statements of financial condition. |
Goodwill
Goodwill | 12 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | GOODWILL Changes to the carrying amount of goodwill during the years ended September 30, 2019 and 2018 are as follows: Brokerage and Tax and Accounting Services Total Balance as of September 30, 2017 $ 4,451,000 $ 766,000 $ 5,217,000 Reduction related to sale of National Tax branches — (64,000 ) (64,000 ) Impairment — — — Balance as of September 30, 2018 4,451,000 702,000 5,153,000 Impairment — — — Balance as of September 30, 2019 $ 4,451,000 $ 702,000 $ 5,153,000 The annual quantitative impairment tests performed on September 30, 2019 and 2018 indicated no impairment of goodwill. The fair value of the reporting unit was estimated using the guideline company method taking into consideration the market value of the Company’s common stock. |
Intangibles
Intangibles | 12 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangibles | INTANGIBLES Intangibles consisted of the following at September 30, 2019 and 2018 : September 30, 2019 Intangible asset Cost Accumulated Amortization Carrying Value Estimated Useful Life (years) Customer relationships $ 9,326,000 $ 4,614,000 $ 4,712,000 3-10 Brand name 710,000 — 710,000 Indefinite Software license $ 45,000 $ 26,000 $ 19,000 3 $ 10,081,000 $ 4,640,000 $ 5,441,000 September 30, 2018 Intangible asset Cost Accumulated Amortization Carrying Value Estimated Useful Life (years) Customer relationships $ 7,511,000 $ 3,525,000 $ 3,986,000 3-10 Brand name 710,000 — 710,000 Indefinite Software license 45,000 11,000 34,000 3 $ 8,266,000 $ 3,536,000 $ 4,730,000 Amortization expense for the years ended September 30, 2019 , 2018 and 2017 was $1,104,000 , $887,000 and $790,000 , respectively. The estimated future amortization expense of the finite lived intangible assets for the next five fiscal years and thereafter is as follows: Year ended September 30, 2020 $ 1,103,000 2021 1,092,000 2022 1,034,000 2023 781,000 2024 369,000 Thereafter 352,000 Total $ 4,731,000 |
Receivables From Broker Dealers
Receivables From Broker Dealers and Clearing Organizations and Other Receivables | 12 Months Ended |
Sep. 30, 2019 | |
Brokers and Dealers [Abstract] | |
Receivables From Broker Dealers and Clearing Organizations and Other Receivables | RECEIVABLES FROM BROKER DEALERS AND CLEARING ORGANIZATIONS AND OTHER RECEIVABLES At September 30, 2019 and 2018 , the receivables of $3,490,000 and $3,967,000 , respectively, from broker-dealers and clearing organizations represent net amounts due for commissions and fees associated with the Company’s retail brokerage business as well as asset based fee revenue associated with the Company’s asset management advisory business. Other receivables at September 30, 2019 and 2018 consist of the following: September 30, 2019 2018 Trailing fees 947,000 1,086,000 Accounts receivable for tax and accounting services 686,000 661,000 Allowance for doubtful accounts - tax and accounting services (282,000 ) (286,000 ) Advances to registered representatives 1,383,000 393,000 Investment banking receivable 411,000 357,000 Advisory fees 483,000 559,000 Notes receivable (Note 4) 665,000 746,000 Other 1,379,000 749,000 Total $ 5,672,000 $ 4,265,000 |
Forgivable Loans Receivable
Forgivable Loans Receivable | 12 Months Ended |
Sep. 30, 2019 | |
Investments in and Advances to Affiliates, Schedule of Investments [Abstract] | |
Forgivable Loans Receivable | FORGIVABLE LOANS RECEIVABLE From time to time, the Company’s operating subsidiaries may make loans, evidenced by promissory notes, primarily to newly recruited independent financial advisors as an incentive for their affiliation. The notes receivable balance is comprised of unsecured non-interest-bearing and interest-bearing loans (weighted average interest rate of 4% ). These notes have various schedules for repayment or forgiveness based on production or retention requirements being met and mature at various dates through 2026 . Amortization of forgivable loans amounted to $680,000 , $630,000 and $693,000 for the years ended September 30, 2019 , 2018 and 2017 respectively, and the related compensation was included in commissions, compensation and fees in the statement of operations. In the event the advisor’s affiliation with the subsidiary terminates, the advisor is required to repay the unamortized balance of the note. The Company provides an allowance for doubtful accounts on the notes based on historical collection experience and continually evaluates the receivables for collectability and possible write-offs where a loss is deemed probable. As of September 30, 2019 and 2018 , no allowance for doubtful accounts was required. Forgivable loan activity for the fiscal years ended September 30, 2019 , 2018 and 2017 is as follows: Balance, September 30, 2016 $ 1,712,000 Advances 694,000 Amortization (693,000 ) Repayments (97,000 ) Balance, September 30, 2017 1,616,000 Advances 581,000 Amortization (630,000 ) Balance, September 30, 2018 1,567,000 Advances 1,052,000 Amortization (680,000 ) Reclassification to other receivables (105,000 ) Balance, September 30, 2019 $ 1,834,000 |
Fair Value of Assets and Liabil
Fair Value of Assets and Liabilities | 12 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Assets and Liabilities | FAIR VALUE OF ASSETS AND LIABILITIES Authoritative accounting guidance defines fair value, establishes a framework for measuring fair value, and establishes a fair value hierarchy which prioritizes the inputs to valuation techniques. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. Valuation techniques that are consistent with the market or income approach are used to measure fair value. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories: Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs other than quoted market prices that are observable, either directly or indirectly, and reasonably available. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the Company. Level 3 - Unobservable inputs which reflect the assumptions that the Company develops based on available information about what market participants would use in valuing the asset or liability. The following tables present the carrying values and estimated fair values at September 30, 2019 and 2018 of financial assets and liabilities, excluding financial instruments that are carried at fair value on a recurring basis, and information is provided on their classification within the fair value hierarchy. Such instruments are carried at amounts that approximate fair value due to their short-term nature and generally negligible credit risk. September 30, 2019 Assets Carrying Value Level 1 Level 2 Total Estimated Fair Value Cash $ 30,443,000 $ 30,443,000 $ — $ 30,443,000 Cash deposits with clearing organizations 436,000 436,000 — 436,000 Receivables from broker-dealers and clearing organizations 3,490,000 — 3,490,000 3,490,000 Forgivable loans receivable 1,834,000 — 1,834,000 1,834,000 Other Receivables, Net 5,672,000 — 5,672,000 5,672,000 $ 41,875,000 $ 30,879,000 $ 10,996,000 $ 41,875,000 Liabilities Accrued commissions and payroll payable 18,590,000 — 18,590,000 18,590,000 Accounts payable and accrued expenses (1) 8,643,000 — 8,643,000 8,643,000 $ 27,233,000 $ — $ 27,233,000 $ 27,233,000 (1) Excludes contingent consideration liabilities of $1,620,000 . September 30, 2018 Assets Carrying Value Level 1 Level 2 Total Estimated Fair Value Cash $ 27,920,000 $ 27,920,000 $ — $ 27,920,000 Cash deposits with clearing organizations 336,000 336,000 — 336,000 Receivables from broker-dealers and clearing organizations 3,967,000 — 3,967,000 3,967,000 Forgivable loans receivable 1,567,000 — 1,567,000 1,567,000 Other Receivables, Net 4,265,000 — 4,265,000 4,265,000 $ 38,055,000 $ 28,256,000 $ 9,799,000 $ 38,055,000 Liabilities Accrued commissions and payroll payable 12,862,000 — 12,862,000 12,862,000 Accounts payable and accrued expenses (1) 7,275,000 — 7,275,000 7,275,000 $ 20,137,000 $ — $ 20,137,000 $ 20,137,000 (1) Excludes contingent consideration liabilities of $744,000 . The following tables present the financial assets and liabilities measured at fair value on a recurring basis at September 30, 2019 and 2018 . September 30, 2019 Assets Carrying Value Level 1 Level 2 Level 3 Total Estimated Fair Value Securities owned Corporate stocks $ 6,282,000 $ 6,282,000 $ — $ — $ 6,282,000 Municipal bonds 20,000 20,000 — — 20,000 Restricted stock 725,000 — 725,000 — 725,000 Warrants 5,454,000 — 1,529,000 3,925,000 5,454,000 $ 12,481,000 $ 6,302,000 $ 2,254,000 $ 3,925,000 $ 12,481,000 Liabilities Contingent consideration 1,620,000 — — 1,620,000 1,620,000 $ 1,620,000 $ — $ — $ 1,620,000 $ 1,620,000 September 30, 2018 Assets Carrying Value Level 1 Level 2 Level 3 Total Estimated Fair Value Securities owned Corporate stocks 1,084,000 1,084,000 — — 1,084,000 Restricted stock 670,000 670,000 670,000 Warrants 6,032,000 — 2,753,000 3,279,000 6,032,000 $ 7,786,000 $ 1,084,000 $ 3,423,000 $ 3,279,000 $ 7,786,000 Liabilities Contingent consideration 744,000 — — 744,000 744,000 $ 744,000 $ — $ — $ 744,000 $ 744,000 Changes in Level 3 assets measured at fair value on a recurring basis for the year ended September 30, 2019 : Beginning Balance as of September 30, 2018 Net Realized Gain or (losses) Net Change in Unrealized Appreciation (Depreciation) Purchases Sales Transfer into Level 3 (a) Transfer Out of Level 3 (b) Ending Balance as of September 30, 2019 Assets Warrants $ 3,279,000 $ — $ (73,000 ) $ — $ — $ 883,000 $ (164,000 ) $ 3,925,000 (a) The Company received warrants as part of investment banking transaction. (b) Transfer out consist of a transfer to Level 2 of a warrant as the underlying security became a publicly registered security and a warrant exercise. Changes in Level 3 assets measured at fair value on a recurring basis for the year ended September 30, 2018: Beginning Balance as of September 30, 2017 Net realized Gain or (losses) Net Change in Unrealized Appreciation (Depreciation) Purchases Sales Transfer into Level 3 (a) Transfer Out of Level 3 Ending Balance as of September 30, 2018 Assets Warrants $ — $ — $ 297,000 $ — $ — $ 2,982,000 $ — $ 3,279,000 (a) The Company received warrants as part of a transaction. See changes in Level 3 liabilities (contingent consideration) measured at fair value on a recurring basis for the year ended September 30, 2019 and 2018 in Note 4. The table below presents information on the valuation techniques, significant unobservable inputs and their ranges for our financial assets measured at fair value on a recurring basis with a significant Level 3 balance as of September 30, 2019. Financial Instruments Owned Fair Value Valuation Technique Significant Unobservable Input(s) Input/Range Warrants $3,925,000 Market Approach Discount for lack of marketability 21% - 44% Volatility 55% - 120% The table below presents information on the valuation techniques, significant unobservable inputs and their ranges for our financial assets measured at fair value on a recurring basis with a significant Level 3 balance as of September 30, 2018. Financial Instruments Owned Fair Value Valuation Technique Significant Unobservable Input(s) Input/Range Warrants $3,279,000 Market Approach Discount for lack of marketability 36% Volatility 55% - 116% Certain positions in common stock and warrants were received as compensation for investment banking services. Restricted common stock and warrants may be freely traded only upon the effectiveness of a registration statement covering them or upon the satisfaction of the requirements of Rule 144, including the requisite holding period. The unrealized (loss)/gain for the change in fair value of such positions for 2019, 2018 and 2017 amounted to approximately $(2,820,000) , $(2,865,000) and $5,612,000 , respectively, which is included in net dealer inventory gains. Warrants are carried at fair value as determined by using the Black-Scholes option pricing model. This model takes into account the underlying securities current market values, the underlying securities market volatility, the terms of the warrants, exercise prices, and risk-free return rate. The market value of the underlying securities’ market value is discounted based on the value of a protective put. Debt securities are valued based on recently executed transactions. |
Fixed Assets
Fixed Assets | 12 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Fixed Assets | FIXED ASSETS Fixed assets as of September 30, 2019 and 2018 , respectively, consist of the following: September 30, Estimated Useful 2019 2018 Lives (in years) Equipment $ 1,835,000 $ 2,299,000 3 - 5 years Furniture and fixtures 761,000 439,000 5 years Construction in Process — 271,000 N/A Leasehold improvements 3,662,000 1,453,000 Lesser of useful life or term of lease Capital leases (primarily composed of computer equipment) 907,000 739,000 3 - 7 years 7,165,000 5,201,000 Less accumulated depreciation and amortization (2,098,000 ) (2,530,000 ) Fixed assets - net $ 5,067,000 $ 2,671,000 Depreciation expense for the years ended September 30, 2019 , 2018 and 2017 was $728,000 , $664,000 and $439,000 respectively. |
Accounts Payable and Other Accr
Accounts Payable and Other Accrued Expenses | 12 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Other Accrued Expenses | ACCOUNTS PAYABLE AND OTHER ACCRUED EXPENSES Accounts payable and other accrued expenses as of September 30, 2019 and 2018 , respectively, consist of the following: September 30, 2019 2018 Legal $ 900,000 $ 448,000 Audit 239,000 411,000 Telecommunications 125,000 240,000 Data Services 296,000 370,000 Regulatory 292,000 335,000 Settlements 1,817,000 825,000 Deferred rent 772,000 670,000 Contingent consideration payable 1,620,000 744,000 Other 4,202,000 3,976,000 Total $ 10,263,000 $ 8,019,000 At September 30, 2019 , other primarily consists of $319,000 for investment banking deal expense accruals, $1,188,000 for soft dollar accruals, $119,000 for tax return preparation fees, $595,000 for finance obligation of the annual subscription fee and implementation costs of the new general ledger system, $380,000 for fixed assets acquired but not paid, $396,000 for rent and $228,000 for clearing fees. At September 30, 2018 , other primarily consists of $739,000 for restitution payment accrual related to 12b-1 trailing fees, $704,000 for soft dollar accruals, $187,000 for investment banking deal expense accruals and $189,000 for sales and use tax accrual. In December 2018, the Company entered into an agreement for 12 months to finance the annual subscription fee of the new general ledger system in the amount of $308,000 . The related asset is included in other assets in the consolidated statements of financial condition. In January 2019, the Company entered into an agreement for 36 months to finance the implementation costs of the new general ledger system in the amount of $650,000 . The related asset is included in other assets in the consolidated statements of financial condition. |
Income Taxes
Income Taxes | 12 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES The Company files a consolidated federal income tax return and certain combined state and local income tax returns with its subsidiaries. Income taxes consist of the following: 2019 Federal State Total Current income tax expense $ 424,000 $ 263,000 $ 687,000 Deferred income tax benefit (145,000 ) (223,000 ) (368,000 ) Total income tax expense $ 279,000 $ 40,000 $ 319,000 2018 Federal State Total Current income tax expense $ 589,000 $ 371,000 $ 960,000 Deferred income tax expense (benefit) $ 2,293,000 $ (65,000 ) $ 2,228,000 Total income tax expense $ 2,882,000 $ 306,000 $ 3,188,000 2017 Federal State Total Current income tax expense $ 1,074,000 $ 439,000 $ 1,513,000 Deferred income tax expense $ 2,126,000 $ 412,000 $ 2,538,000 Total income tax expense $ 3,200,000 $ 851,000 $ 4,051,000 The income tax provision related to pre-tax income (loss) vary from the federal statutory rate as follows: Years Ended 2019 2018 2017 Statutory federal rate (21.0 )% (24.3 )% 34.0 % State income taxes, net of federal income tax expense (benefit) 1.8 % 2.5 % 3.4 % Permanent differences for tax purposes 9.2 % 33.1 % (14.4 )% Change in rate 9.7 % 28.2 % — % Write-off of deferred tax asset attributable to change in ownership (see below) 67.7 % — % — % Other (3.6 )% (1.2 )% 1.4 % 63.8 % 38.3 % 24.4 % Significant components of the Company’s net deferred tax assets in the accompanying financial statements are as follows: September 30, 2019 2018 Deferred tax assets (liabilities): Net operating loss carryforwards $ 2,967,000 $ 3,673,000 Contingent consideration 441,000 203,000 Stock based compensation 1,481,000 938,000 Accrued expenses 1,499,000 1,031,000 Accounts receivable and other receivables 91,000 149,000 Federal AMT credit carryforward 260,000 260,000 Fixed assets (510,000 ) (186,000 ) Intangibles (448,000 ) (361,000 ) Securities (1,221,000 ) (1,515,000 ) Total deferred tax asset, net $ 4,560,000 $ 4,192,000 At September 30, 2019 , the Company had available federal net operating loss carryforwards of approximately $13.3 million , which includes approximately $4.6 million resulting from the National Tax acquisition, and state net operating loss carryforwards of approximately $8.7 million that may be applied against future taxable income and expire at various dates between 2020 and 2033. Due to the change in ownership discussed in Note 19, the Company’s deferred tax asset relating to the Company’s net operating loss carry forwards will be subject to an annual limitation under Section 382 of the Internal Revenue Code, thereby reducing the amount of net operating loss carry forwards available to the Company to offset future taxable income. Such reduction in 2019 resulted in a write-off of deferred income tax assets of $339,000 . During the year ended September 30, 2018, the Company estimated its annual effective rate to reflect a change in the federal statutory rate from 34% to 21% , resulting from legislation enacted on December 22, 2017. The rate change is administered effective at the beginning of the Company's fiscal year, using a blended rate for the annual period of 24.3% . Additionally, the Company recognized a tax expense of approximately $2,400,000 during the year ended September 30, 2018, to adjust the Company's net deferred tax balance to reflect the new corporate tax rate. The accounting for the effects of the rate change on deferred tax balances is complete and no provisional amounts were recorded for this item. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Leases The Company leases office space in various states expiring at various dates through August 2032, and as of September 30, 2019 , is committed under operating leases for future minimum lease payments as shown in the table below. In October 2018, the Company entered into an agreement to lease equipment under a capital lease for 24 months . The equipment under the lease is collateral for the lease obligation and is included within fixed assets in the consolidated statements of financial condition. The leased equipment is amortized on a straight line basis over 7 years . The interest rate related to the lease obligation is 5.6 percent and the maturity date is September 2020. The capital lease obligation is included within other liabilities in the consolidated statements of financial condition. Fiscal Year Ending September 30, Operating Leases Capital Lease 2020 $ 2,975,000 $ 297,000 2021 2,991,000 — 2022 2,459,000 — 2023 2,304,000 — 2024 2,109,000 — Thereafter 7,450,000 — Total minimum lease payments $ 20,288,000 $ 297,000 Less: Amounts representing interest not yet incurred 10,000 Present value of capital lease obligations $ 287,000 The total amount of rent payable under the leases is recognized on a straight line basis over the term of the leases. Rental expense under all operating leases for the years ended September 30, 2019 , 2018 and 2017 was $4,240,000 , $4,149,000 and $4,257,000 , respectively. Sublease income under all operating subleases for the years ended September 30, 2019 , 2018 and 2017 was approximately $51,000 , $558,000 and $167,000 , respectively. As of September 30, 2019 and 2018 , the Company and its subsidiaries had outstanding one and two , respectively, letters of credit, which have been issued in the maximum amount of $960,000 and $1,353,000 , respectively, as security for property leases, and are collateralized by the restricted cash as reflected in the statements of financial condition. Litigation and Regulatory Matters The Company and its subsidiaries are defendants or respondents in various pending and threatened arbitrations, administrative proceedings and lawsuits seeking compensatory damages. Several cases have no stated alleged damages. Claim amounts are infrequently indicative of the actual amounts the Company will be liable for, if any. Further, the Company has a history of collecting amounts awarded in these types of matters from its registered representatives that are still affiliated, as well as from those that are no longer affiliated. Many of these claimants also seek, in addition to compensatory damages, punitive or treble damages, and all seek interest, costs and fees. These matters arise in the normal course of business. The Company intends to vigorously defend itself in these actions, and the ultimate outcome of these matters cannot be determined at this time. On July 3, 2019, a lawsuit was filed against National Securities Corporation, National Asset Management, Inc., the Company, the Company’s current board members and certain former board members, certain officers of the Company, John Does 1–10, and the Company as a nominal defendant, in the United States District Court for the Southern District of New York, captioned Kay Johnson v. National Securities Corporation, et al., Case No. 1:19-cv-06197-LTS . The complaint presents three purported derivative causes of action on behalf of the Company, and five causes of action by the plaintiff directly. As part of the derivative claims, the complaint generally alleges that certain of the individual defendants failed to establish and maintain adequate internal controls to ensure that the Board acted in accordance with its fiduciary duties to prevent and uncover alleged legal and regulatory misconduct and wrongdoing on the part of a National officer. As part of its claims brought directly by the plaintiff, the complaint generally alleges that certain individual and corporate defendants wrongfully terminated the employment of the plaintiff in violation of the Dodd-Frank Act and applicable common law, or conspired to do so. The complaint further alleges that certain corporate defendants violated the Equal Pay Act with regards to the plaintiff’s compensation. The complaint seeks monetary damages in favor of the Company, an order directing the Company’s board members to take actions to enhance the Company’s governance, compensatory and punitive damages in favor of the plaintiff, and attorneys’ fees and costs. The Company has notified its insurer of the lawsuit and believes it has valid defenses to the asserted claims of the complaint. Liabilities for potential losses from complaints, legal actions, government investigations and proceedings are established where management believes that it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. In making these decisions, management bases its judgments on its knowledge of the situations, consultations with legal counsel and its historical experience in resolving similar matters. In many lawsuits, arbitrations and regulatory proceedings, it is not possible to determine whether a liability has been incurred or to estimate the amount of that liability until the matter is close to resolution. However, accruals are reviewed regularly and are adjusted to reflect management’s estimates of the impact of developments, rulings, advice of counsel and any other information pertinent to a particular matter. Because of the inherent difficulty in predicting the ultimate outcome of legal and regulatory actions, management cannot predict with certainty the eventual loss or range of loss related to such matters. As of September 30, 2019 and 2018 , the Company accrued approximately $1,817,000 and $825,000 respectively. These amounts are included in accounts payable and other accrued expenses in the statements of financial condition. Awards ultimately paid, if any, may be covered by the Company’s errors and omissions insurance policy. While the Company will vigorously defend itself in these matters, and will assert insurance coverage and indemnification to the maximum extent possible, there can be no assurance that such matters will not have a material adverse impact on the Company's financial position, results of operations or cash flows. Amounts charged to operations for settlements and potential losses in fiscal years 2019 , 2018 and 2017 were $3,008,000 , $1,737,000 and $3,414,000 respectively, which is included in other administrative expenses in the statement of operations. The Company has included in professional fees litigation and arbitration related expenses of $2,052,000 , $950,000 and $1,476,000 for fiscal years 2019 , 2018 and 2017 , respectively. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | STOCKHOLDERS’ EQUITY Share Repurchase In August 2015, the Company’s Board of Directors authorized the repurchase of up to $2 million of the Company’s common stock. Share repurchases, if any, will be made using a variety of methods, which may include open market purchases, privately negotiated transactions or block trades, or any combination of such methods, in accordance with applicable insider trading and other securities laws and regulations. The Company’s Board did not stipulate an expiration date for this repurchase and the purchase decisions are at the discretion of the Company’s management. During the years ended September 30, 2019 , 2018 and 2017, the Company did not repurchase any shares. Restricted Stock Units A summary of the Company’s non-vested restricted stock units for the years ended September 30, 2019 , 2018 and 2017 are as follows: Shares Weighted Average Grant Due Fair Value Non-vested restricted stock units at October 1, 2016 — $ — Granted 1,250,000 3,054,000 Non-vested restricted stock units at September 30, 2017 1,250,000 3,054,000 Granted 1,295,632 5,250,000 Vested (251,042 ) (697,000 ) Forfeited (87,348 ) (305,000 ) Non-Vested restricted stock units at September 30, 2018 2,207,242 7,302,000 Granted 1,810,017 5,400,000 Vested (563,711 ) (2,261,000 ) Forfeited (134,908 ) (435,000 ) Non-vested restricted stock units at September 30, 2019 3,318,640 $ 10,006,000 In 2017, the Company granted 1,250,000 restricted stock units (“RSU”) to certain of its officers and employees. RSU vest based on service and certain performance and market conditions. The fair value of the RSU awards issued in 2017 was $3,054,000 . In February 2018, the Company granted 363,558 RSUs to the board of directors of the Company and 52,966 RSUs to employees of the Company. The fair value of the RSUs awards issued in February 2018 of $1,966,000 was estimated on the grant date using the Company’s stock price as of the grant date. The RSUs awards vest upon the passage of time. In April 2018, the Company granted 847,858 RSUs to certain employees of the Company. RSU vest based on service and certain performance and market conditions. The fair value of the RSU awards issued in April 2018 was $3,184,000 . In July 2018, the Company granted 31,250 RSUs to an employee of the Company. The fair value of the RSU awards issued in July 2018 of $100,000 was estimated on the grant date using the Company’s stock price as of the grant date. The RSU awards vest upon the passage of time. In November 2018, the Company granted 1,447,292 RSUs to certain employees of the Company. RSUs vest based on service and certain performance and market conditions. The fair value of the RSUs awards issued in November 2018 was $4,289,000 . In February 2019, the Company granted 265,960 RSUs to certain directors and employees of the Company. RSUs vest based on service and certain performance and market conditions. The fair value of the RSUs awards issued in February 2019 was $843,000 . In April 2019, the Company granted 58,277 restricted stock awards (“RSAs”) to an employee of the Company. RSAs vest based on service condition. The fair value of the RSAs issued in April 2019 was $173,000 . In July 2019, the Company granted 17,925 RSAs to an employee of the Company. RSAs vest based on service condition. The fair value of the RSAs issued in July 2019 was $48,000 . In August 2019, the Company granted 20,563 RSAs to an employee of the Company. RSAs vest based on service condition. The fair value of the RSAs issued in August 2019 was $47,000 One RSU and RSA gives the right to one share of the Company’s common stock. RSU and RSAs that vest based on service and performance are measured based on the fair values of the underlying stock on the date of grant. The Company used a Lattice model to determine the fair value of the RSU with a market condition. Compensation with respect to RSU and RSA awards is expensed on a straight-line basis over the vesting period. For the years ended September 30, 2019 , 2018 and 2017 , the Company recognized compensation expense of $4,282,000 , $2,913,000 and $602,000 , respectively, related to RSUs and RSAs. At September 30, 2019 , unrecognized compensation with respect to RSUs and RSAs amounted to $5,167,000 . Stock Options The Company’s stock option plans provide for the granting of stock options to certain key employees, directors and investment executives. Generally, options outstanding under the Company’s stock option plan are granted at prices equal to or above the market value of the stock on the date of grant, vest either immediately or ratably over up to five years , and expire five years subsequent to award. The following option activity occurred under the Company’s plan during the years ended September 30, 2019 , 2018 and 2017 : Options Weighted Average Exercise Price Per Share Weighted Average Grant-Date Fair Value Per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at September 30, 2016 1,221,500 $ 6.51 $ 1.22 3.31 Forfeited or expired (15,500 ) 4.42 1.99 Outstanding at September 30, 2017 1,206,000 $ 6.54 $ 1.21 2.29 Forfeited or expired (594,000 ) 6.85 0.83 Outstanding at September 30, 2018 612,000 6.23 1.59 3.27 Forfeited or expired (7,800 ) 5.54 2.69 Outstanding at September 30, 2019 604,200 6.19 1.58 2.29 Vested and exercisable at September 30, 2019 604,200 $ 6.19 $ 1.58 2.29 $ — There was no recognized compensation expense in 2019, 2018 or 2017. Warrants The following tables summarize information about warrant activity during 2019 , 2018 and 2017 : Warrants Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term Outstanding at September 30, 2016 23,029 $ 5.00 0.75 Issued 12,437,916 3.25 4.30 Forfeited or expired (21,558 ) 5.00 Outstanding at September 30, 2017 12,439,387 3.25 4.30 Exercised (1,489 ) 3.25 Forfeited or expired (1,471 ) 5.00 Outstanding at September 30, 2018 12,436,427 3.25 3.30 Exercised (38 ) 3.25 Forfeited or expired (7,037,482 ) (a) 3.25 Outstanding and exercisable at September 30, 2019 5,398,907 $ 3.25 2.30 (a) 7,037,482 warrants held by FBIO Acquisition were forfeited due to the FBIO sale. See note 19. |
Net Capital Requirements of Bro
Net Capital Requirements of Broker Dealer Subsidiary | 12 Months Ended |
Sep. 30, 2019 | |
Brokers and Dealers [Abstract] | |
Net Capital Requirements of Broker Dealer Subsidiary | NET CAPITAL REQUIREMENTS OF BROKER DEALER SUBSIDIARY NSC is subject to the SEC’s Uniform Net Capital Rule (Rule 15c3-1), which, among other things, requires the maintenance of minimum net capital. At September 30, 2019 , NSC had net capital of $5,887,912 which was $4,887,912 in excess of its required minimum net capital of $1,000,000 . NSC is exempt from the provisions of Rule 15c3-3 since it is an introducing broker dealer that clears all transactions on a fully disclosed basis and promptly transmits all customer funds and securities to clearing brokers. Advances, dividend payments and other equity withdrawals from NSC 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. |
Off Balance Sheet Risk and Conc
Off Balance Sheet Risk and Concentrations of Credit Risk | 12 Months Ended |
Sep. 30, 2019 | |
Risks and Uncertainties [Abstract] | |
Off Balance Sheet Risk and Concentrations of Credit Risk | OFF BALANCE SHEET RISK AND CONCENTRATIONS OF CREDIT RISK The Company is engaged in trading and providing a broad range of securities brokerage and investment services to a diverse group of retail and institutional clientele, as well as corporate finance and investment banking services to corporations and businesses. Counterparties to the Company’s business activities include broker-dealers and clearing organizations, banks and other financial institutions. The Company uses clearing brokers to process transactions and maintain customer accounts for the Company on a fee basis. The Company permits the clearing firms to extend credit to its clientele secured by cash and securities in the client’s account. The Company’s exposure to credit risk associated with the non-performance by its customers and counterparties in fulfilling their contractual obligations can be directly impacted by volatile or illiquid trading markets, which may impair the ability of customers and counterparties to satisfy their obligations to the Company. The Company has agreed to indemnify the clearing brokers for losses they incur while extending credit to the Company’s clients. It is the Company’s policy to review, as necessary, the credit standing of its customers and counterparties. Amounts due from customers that are considered uncollectible by the clearing broker are charged back to the Company by the clearing broker when such amounts become determinable. Upon notification of a charge back, such amounts, in total or in part, are then either (i) collected from the customers, (ii) charged to the broker initiating the transaction and/or (iii) charged to operations, based on the particular facts and circumstances. The Company maintains cash in bank deposits, which, at times, may exceed federally insured limits. The Company has not experienced and does not expect to experience losses on such accounts. A short sale involves the sale of a security that is not owned in the expectation of purchasing the same security (or a security exchangeable) at a later date at a lower price. A short sale involves the risk of a theoretically unlimited increase in the market price of the security that would result in a theoretically unlimited loss. To the extent the Company invests in marketable securities, the Company is subject to various market risks related to the portfolio. |
Employee Benefits
Employee Benefits | 12 Months Ended |
Sep. 30, 2019 | |
Retirement Benefits [Abstract] | |
Employee Benefits | EMPLOYEE BENEFITS The Company sponsors a defined contribution 401(k) plan (the “Plan”). Under the Plan, employees can elect to defer up to 75% of eligible compensation, subject to certain limitations, by making voluntary contributions to the Plan. The Company’s contributions are made at the discretion of the Board of Directors. For the fiscal years ended September 30, 2019 and 2018 the company made a contribution of $146,000 and $71,000 , respectively, to the plan. For fiscal year ended September 30, 2017 , the Company made no contributions to the Plan. |
Segment Information
Segment Information | 12 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | SEGMENT INFORMATION The Company has two reportable segments. The brokerage and advisory services segment includes broker-dealer and investment advisory services, sale of insurance products and licensed mortgage brokerage services provided by NSC, NAM, National Insurance, Prime Financial, and GC. The tax and accounting services segment includes tax preparation and accounting services provided by National Tax. Corporate pre-tax income (loss) consists of certain expenses that have not been allocated to reportable segments. Segment information for the years ended September 30, 2019 , 2018 and 2017 is as follows: 2019 Brokerage and Advisory Services Tax and Accounting Services Corporate Total Revenues $ 204,134,000 $ 8,807,000 $ — $ 212,941,000 Pre-tax income (loss) 7,522,000 85,000 (5,447,000 ) (b) 2,160,000 Identifiable assets 61,880,000 4,313,000 15,014,000 (c) 81,207,000 Depreciation and amortization 841,000 490,000 501,000 1,832,000 Interest 32,000 32,000 Capital expenditures 776,000 75,000 2,273,000 3,124,000 2018 Brokerage and Advisory Services Tax and Accounting Services Corporate Total Revenues $ 203,343,000 $ 7,772,000 $ — $ 211,115,000 Pre-tax (loss) income 5,176,000 895,000 (14,393,000 ) (d) (8,322,000 ) Identifiable assets 51,946,000 4,407,000 12,096,000 (c) 68,449,000 Depreciation and amortization 749,000 263,000 539,000 1,551,000 Interest 97,000 97,000 Capital expenditures 564,000 43,000 331,000 938,000 2017 Brokerage and Advisory Services Tax and Accounting Services Corporate Total Revenues 182,431,000 7,439,000 — 189,870,000 Pre-tax (loss) income 11,516,000 649,000 4,414,000 (a) 16,579,000 Identifiable assets 47,213,000 2,984,000 14,201,000 (c) 64,398,000 Depreciation and amortization 694,000 181,000 354,000 1,229,000 Interest 14,000 14,000 Capital expenditures 140,000 73,000 1,459,000 1,672,000 (a) Consists of the gain on the change in fair value of warrant liability offset in part by executive salaries and other expenses not allocated to reportable segments by management. (b) Consists of board of director fees and other expenses not allocated to reportable segments by management. (c) Consists principally of deferred tax assets, cash, prepaid and fixed asset balances held at Corporate. (d) Consists of loss on the change in fair value of warrant liability, executive salaries and other expenses not allocated to reportable segments by management. |
Acquisition of Interests in the
Acquisition of Interests in the Company and Dividend Warrants | 12 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Acquisition of Interests in the Company and Dividend Warrants | ACQUISITION OF INTERESTS IN THE COMPANY AND DIVIDEND WARRANTS B. Riley Financial, Inc. On November 14, 2018, B. Riley Financial, Inc. (“B. Riley”) and FBIO Acquisition, Inc. (“FBIO Acquisition”), a subsidiary of Fortress Biotech, Inc. (“Fortress”), entered into a stock purchase agreement whereby FBIO Acquisition agreed to sell FBIO Acquisition’s majority stake in the Company to a wholly-owned subsidiary of B. Riley (the “FBIO Sale”). Under the terms of the agreement, B. Riley agreed to purchase 7,037,482 shares of the Company's common stock from FBIO Acquisition, representing approximately 56.1% of the Company's outstanding common stock and Fortress’s entire economic interest in the Company. An aggregate of 3,010,054 shares were purchased immediately at $3.25 per share. After approval from FINRA was received on February 4, 2019, B. Riley purchased an additional 3,149,496 shares of the Company's common stock on February 11, 2019 and assigned its right to purchase the remaining 877,932 shares to a third party. Further, in connection with the FBIO Sale, the Company entered into an agreement with B. Riley (the “B. Riley Agreement”), pursuant to which B. Riley agreed to certain customary standstill provisions, effective as of the date of the B. Riley Agreement through December 31, 2021 (the “Standstill Period”), prohibiting B. Riley and any of its affiliates or associates, directly or indirectly, from among other things: (i) acquiring, agreeing to acquire or otherwise seeking to acquire any beneficial interest in the Company’s share capital or any of its material assets other than (x) the FBIO Sale and (y) pursuant to B. Riley’s pro rata participation rights described in the B. Riley Agreement; (ii) making a take-over bid, tender offer or exchange offer for all or any part of the Company’s share capital; (iii) announcing, or taking any action which would require the announcement of, any proposals by B. Riley for any business combination or any other similar transaction involving the securities of the Company or its material assets or businesses; (iv) soliciting proxies with respect to any securities of the Company or otherwise influencing any shareholders of the Company for any action or transaction; (v) requesting that the Board expand or reduce the number of directors or the number of Board designees nominated by otherwise designated by B. Riley; (vi) take any other action that would constitute a “business combination” for purposes of Section 203 of the Delaware General Corporation Law (including any successor statute thereto) (“Section 203”) (other than any transactions covered by Section 203(c)(3)(v) of the Delaware General Corporation Law that are in the ordinary course of our business operations); (vii) make any public announcement with respect to any of the foregoing, except as, and solely to the extent, legally required or compelled (and provided that the reason for any such required announcement is not the result of any action taken by B. Riley) or (viii) contest the validity of the standstill terms of the B. Riley Agreement or initiate or participate in any judicial proceeding to amend, waive, terminate or seek a release of the restrictions of such standstill terms. Pursuant to the B. Riley Agreement, the Company granted to B. Riley the right to appoint B. Riley representatives to attend meetings of the Board and any committee thereof in a non-voting observer capacity. If B. Riley’s beneficial ownership of the Company’s common stock is reduced to below 24% , its rights to designate board observers will be reduced to one board observer, and if B. Riley’s beneficial ownership of the Company’s common stock is reduced to below 5% , its rights to designate board observers will cease. The B. Riley Agreement further permits B. Riley to participate pro rata in any bona fide common stock equity offering by the Company (including the offering of any securities convertible into common stock) if the offering price of the Company’s common stock in such offering is equal to or less than $3.25 per share, as adjusted for stock splits, stock dividends, stock combinations and similar events, subject to certain exceptions. This participation right will end upon the earlier of (x) the end of the Standstill Period and (y) a change in control of the Company, as defined in the B. Riley Agreement. The Agreement also contains non-solicitation terms that prohibit either the Company or B. Riley, or any of their respective affiliates, associates and related parties, from hiring any executive officer or member of senior management of the other party during the Standstill Period, subject to certain exceptions. In connection with the Agreement, the Board waived the applicability of Section 203 of the Delaware General Corporation Law to B. Riley in connection with the FBIO Sale. Upon final closing of the FBIO Sale, 7,037,482 warrants held by FBIO Acquisition ceased to be outstanding. Fortress Biotech, Inc. On September 12, 2016, FBIO Acquisition, Inc. (“FBIO Acquisition”), a wholly-owned subsidiary of Fortress Biotech, Inc. (“Fortress”), completed a tender offer (the “Offer”) for all outstanding shares of the Company at a price of $3.25 per share, net to the seller in cash (less any required withholding taxes and without interest) (the “Offer Price”), pursuant to the terms of an Agreement and Plan of Merger dated as of April 27, 2016 (as amended, the “Merger Agreement”) among the Company, Fortress and FBIO Acquisition. The Offer expired on September 9, 2016, and a total of 7,037,482 shares were validly tendered and not withdrawn (including shares delivered through notices of guaranteed delivery), representing approximately 56.6% of the Company’s issued and outstanding shares of common stock immediately following the completion of the Offer (in each case, without giving effect to the issuance or exercise of the Dividend Warrants). On September 12, 2016, FBIO Acquisition accepted for payment all shares that were validly tendered and not withdrawn prior to the expiration time of the Offer and delivered payment for such shares. Dividend Warrants In accordance with the Merger Agreement, since less than 80% of the Company’s issued and outstanding shares of common stock were tendered, the Company remained a publicly-traded company and stockholders post-tender offer received from the Company a five year warrant per held share to purchase an additional share of the Company’s common stock at $3.25 as a dividend to all holders of the Company’s common stock. As the Company did not have the ability to settle the warrants with unregistered shares and maintenance of an effective registration statement was considered outside of the Company’s control, net cash settlement of the warrants was assumed. Accordingly, the fair value of the 12,437,916 warrants issued was classified as a liability in the consolidated statement of financial condition. This liability was subject to re-measurement at each balance sheet date until the warrants were exercised or expired, and any change in fair value was recognized as change in fair value of warrants in the consolidated statements of operations. As the warrants were registered and trading and the Company maintained an effective registration statement, fair value of the warrants was based on the market price. Warrant Liability Reclassification On March 15, 2018, the Company and the Company's warrant agent, agreed to amend and restate the terms of the original warrant agreement dated December 13, 2016. The amended and restated warrant agreement explicitly provides that the Company shall not be required to pay cash if it cannot issue registered shares of common stock upon exercise of a warrant. The Company is required to reassess its classification of each contract as of each reporting date. Reclassification of a contract classified as an asset or a liability is required if the contract begins to meet all the criteria for equity classification. If reclassification is required, the Company reclassifies the instrument as of the date of the event or change in circumstance that caused the reclassification at its then-current fair value. If a contract is reclassified from an asset or a liability to equity, gains and losses during the period the contract was classified as an asset or a liability are not reversed, and the adjustment to the contract’s current fair value is recognized in earnings before reclassification. The (loss)/gain for the change in fair value of the warrants for the year ended September 30, 2018 and 2017 amounted to $(11,194,000) and $8,458,000 , respectively. The Original Agreement required the issuance of registered shares upon exercise and since it did not expressly preclude an implied right to cash settlement, the agreement was accounted for as a derivative liability and the Company classified the derivative warrant liability on the consolidated statement of financial conditions as a liability. Now that the amended agreement expressly precludes cash settlement, the warrants meet the criteria for equity classification. Accordingly, the Company recorded the change in fair value of the warrant in earnings through March 15, 2018 before reclassification from liability to equity. The reclassification resulted in a credit to additional paid-in-capital of $16,791,000 during the year ended September 30, 2018. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | RELATED PARTY TRANSACTIONS In fiscal year 2019, 2018 and 2017, investment banking revenues include approximately $0 , $4,931,000 and $14,414,000 , respectively, of fees related to placement of securities for Fortress and subsidiaries of Fortress. As of September 30, 2019 and 2018 , the value of warrants received from Fortress and subsidiaries of Fortress included in Securities Owned was $522,000 and $1,449,000 . |
Revenues from Contracts and Sig
Revenues from Contracts and Significant Customers | 12 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenues from Contracts and Significant Customers | REVENUES FROM CONTRACTS AND SIGNIFICANT CUSTOMERS On October 1, 2018, the Company adopted Topic 606 applying the modified retrospective method to all contracts that were not completed as of October 1, 2018. Results for reporting periods beginning after October 1, 2018 were presented under Topic 606, while prior periods amounts were not adjusted and reported under the accounting standards in effect for the prior periods. The adoption of Topic 606 did not have a material impact on the Company's consolidated results of operations and financial condition. Performance Obligations The Company recognizes revenue from contracts with customers when, or as, the Company satisfies its performance obligations by transferring the promised goods or services to the customers. A good or service is transferred to a customer when, or as, the customer obtains control of that good or service. A performance obligation may be satisfied over time or at a point in time. Revenue from a performance obligation satisfied over time is recognized by measuring progress in satisfying the performance obligation in a manner that depicts the transfer of the goods or services to the customer. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that the Company determines the customer obtains control over the promised good or service. Transaction Price and Variable Consideration The amount of revenue recognized reflects the consideration (“transaction price”) the Company expects to be entitled to in exchange for the transfer of the goods or services to the customer services. In determining the transaction price, the Company considers multiple factors, including the effects of variable consideration. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. In determining when to include variable consideration in the transaction price, the Company considers the range of possible outcomes, the predictive value of past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of influence, such as market volatility or the judgment and actions of third parties. Contract Assets Contract assets represent the Company’s right to consideration in exchange for goods or services that the Company has transferred to a customer, excluding unconditional rights to consideration that are presented as receivables. Contract Liabilities Contract liabilities represent the Company’s obligation to deliver products or provide data to customers in the future for which cash has already been received. The following provides detailed information on the recognition of the Company’s revenues from contracts with customers: Commissions and Transaction Fees and Clearing Services . The Company earns commission and transaction fee and clearing services revenue based on the execution of transactions for clients in stocks, mutual funds, variable annuities and other financial products and services as well as from trailing commissions. Trade execution and settlement, when provided together, represent a single performance obligation as the services are not separately identifiable in the context of the contract. Commission and transaction fee and clearing services revenues are recognized at a point in time on trade-date. Commission and transaction fee and clearing services revenues are generally paid on settlement date and the Company records a receivable between trade-date and payment on settlement date. For trailing commissions, the performance obligation is satisfied at the time of the execution of the transactions but the amount to be received for trailing commissions is uncertain, as it is dependent on the value of the investments at future points in time as well as the length of time the investor holds the investments, both of which are highly susceptible to variable factors outside the Company’s influence. The Company does not believe that it can overcome this constraint until the market value of the investment and the investor activities are known, which are usually monthly or quarterly. The Company’s consolidated statement of operations reflects trailing commissions for services performed and performance obligations satisfied in previous periods and are recognized in the period that the constraint is overcome. Investment Banking . The Company provides clients with a full range of investment banking services. Investment banking services include underwriting and placement agent services in both equity and debt, including private equity placements, initial public offerings, follow-on offerings and equity-linked convertible securities transactions and private debt. Underwriting and placement agent revenues are recognized at a point in time on trade-date, as the client obtains the control and benefit of the investment banking offering at that point. Costs associated with investment banking transactions are deferred until the related revenue is recognized or the engagement is otherwise concluded and are recorded on a gross basis as the Company is acting as a principal in the arrangement. Any expenses reimbursed by the Company’s clients are recognized as investment banking revenues. Where the Company is the lead underwriter, revenue and expenses will be first allocated to other members of a syndicate because the Company is acting as an agent for the syndicate. Accordingly, the Company records revenue on a net basis. When the Company is not the lead underwriter, the Company will recognize its share of revenue and expenses on a gross basis, because the Company is acting as the principal. Under accounting standards in effect for prior periods, the Company recognized all underwriting revenue on a net basis. The Company’s revenues from advisory services primarily consist of fees generated in connection with mergers and acquisition and advisory transactions. Advisory fees from mergers and acquisitions engagements are recognized at a point in time when the related transaction is completed, as the performance obligation is to successfully execute a specific transaction. Fees received prior to the completion of the transaction are deferred within other liabilities in the consolidated statements of financial condition. A significant portion of the fees the Company receives for advisory services are considered variable as they are contingent upon a future event and are excluded from the transaction price until the uncertainty associated with the variable consideration is subsequently resolved, which is expected to occur upon achievement of the specified milestone. Payment for advisory services is generally due promptly upon completion of a specified milestone or, for retainer fees, periodically over the course of the engagement. The Company recognizes a receivable between the date of completion of the milestone and payment by the customer. Expenses associated with investment banking advisory engagements are deferred only to the extent they are explicitly reimbursable by the client and the related revenue is recognized at a point in time. All other investment banking advisory related costs are expensed as incurred. All investment banking advisory expenses are recognized within their respective expense category on the consolidated statements of operations and any expenses reimbursed by the clients are recognized as investment banking revenues. The Company controls the service as it is transferred to the customer, and is therefore acting as a principal. Accordingly, the Company records revenues and out-of-pocket reimbursements on a gross basis. Under accounting standards in effect for prior periods, the Company recorded expenses net of client reimbursements and/or netted against revenues. Investment Advisory/Asset Management Fees . The Company receives management and performance fees in connection with investment advisory services provided to various funds and accounts, which are satisfied over time as the customer receives the benefits of the services evenly throughout the term of the contract. Management and performance fees are considered variable as they are subject to fluctuation (e.g., changes in assets under management, market performance) and/or are contingent on a future event during the measurement period (e.g., meeting a specified benchmark) and are recognized only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty is resolved. Management fees are generally based on month-end assets under management or an agreed upon notional amount and are included in the transaction price at the end of each month when the assets under management or notional amount is known. Performance fees are received when the return on assets under management for a specified performance period exceed certain benchmark returns, “high-water marks” or other performance targets. The performance period related to performance fees is annual, semiannual or at the recognition of a liquidation event. Accordingly, performance fee revenue will generally be recognized only at the end of the performance period to the extent that the benchmark return has been met. Tax Preparation and Accounting. The Company charges fees in connection with tax preparation and accounting services. Revenues are recorded upon completion of the services. Disaggregation of Revenue The following presents the Company’s revenues from contracts with customers disaggregated by major business activity and segment for the twelve months ended September 30, 2019 : For the Twelve Months Ended Brokerage and Advisory Services Tax and Accounting Services Corporate Total Revenues from customer contracts: Commissions and transfer fees and clearing services $ 95,021,000 $ — $ — $ 95,021,000 Investment banking 69,656,000 69,656,000 Investment advisory 34,400,000 — — 34,400,000 Tax preparation and accounting — 8,807,000 — 8,807,000 Sub-total revenue from contracts with customers 199,077,000 8,807,000 — 207,884,000 Other revenue 5,057,000 — — 5,057,000 Total revenue $ 204,134,000 $ 8,807,000 $ — $ 212,941,000 Information on Remaining Performance Obligations and Revenue Recognized from Past Performance The Company does not disclose information about remaining performance obligations pertaining to contracts that have an original expected duration of one year or less. The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was not material at September 30, 2019 . Investment banking advisory fees that are contingent upon completion of a specific milestone are also excluded as the fees are considered variable and not included in the transaction price at September 30, 2019 . Contract Balances The timing of the Company’s revenue recognition may differ from the timing of payment by customers. The Company records a receivable when revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied. Contract Costs Incremental contract costs are expensed when incurred when the amortization period of the asset that would have been recognized is one year or less. Otherwise, incremental contract costs are recognized as an asset and amortized over time as services are provided to a customer. Practical Expedients The Company has applied Topic 606’s practical expedient that permits for the non-disclosure of the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed. The Company also applied Topic 606’s practical expedient that allows incremental contract costs to be expensed when incurred when the amortization period of the asset that would have been recognized is one year or less. |
Quarterly Financial Data (Unaud
Quarterly Financial Data (Unaudited) | 12 Months Ended |
Sep. 30, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Data (Unaudited) | QUARTERLY FINANCIAL DATA (UNAUDITED) Quarters 1st 2nd 3rd 4th 2019: Revenues $ 58,107,000 $ 46,700,000 $ 50,775,000 $ 57,359,000 Operating expenses 56,790,000 50,599,000 49,561,000 53,891,000 Income (loss) before item shown below 1,317,000 (3,899,000 ) 1,214,000 3,468,000 Other income (expense) 6,000 6,000 6,000 42,000 Income (loss) before income taxes $ 1,323,000 $ (3,893,000 ) $ 1,220,000 $ 3,510,000 Net income (loss) attributable to National Holdings Corporation common shareholders $ 956,000 $ (2,785,000 ) $ 233,000 $ 777,000 Net income (loss) per share attributable to National Holdings Corporation common shareholders - Basic $ 0.08 $ (0.22 ) $ 0.02 $ 0.06 Net income (loss) per share attributable to National Holdings Corporation common shareholders - Diluted $ 0.08 $ (0.22 ) $ 0.02 $ 0.06 Weighted average number of shares outstanding - Basic 12,545,286 12,714,002 12,931,660 13,031,462 Weighted average number of shares outstanding - Diluted 12,716,195 12,714,002 13,251,379 13,198,324 Quarters 1st 2nd 3rd 4th 2018: Revenues $ 50,080,000 $ 60,346,000 $ 56,237,000 $ 44,452,000 Operating expenses 50,256,000 55,653,000 54,678,000 47,809,000 Income before item shown below (176,000 ) 4,693,000 1,559,000 (3,357,000 ) Other income (expense) (1) (5,591,000 ) (5,367,000 ) (146,000 ) 63,000 Income (loss) before income taxes $ (5,767,000 ) $ (674,000 ) $ 1,413,000 $ (3,294,000 ) Net income (loss) attributable to National Holdings Corporation common shareholders $ (8,040,000 ) $ (2,252,000 ) $ 812,000 $ (2,030,000 ) Net income (loss) per share attributable to National Holdings Corporation common shareholders - Basic $ (0.65 ) $ (0.18 ) $ 0.07 $ (0.16 ) Net income (loss) per share attributable to National Holdings Corporation common shareholders - Diluted $ (0.65 ) $ (0.18 ) $ 0.06 $ (0.16 ) Weighted average number of shares outstanding - Basic 12,437,916 12,457,043 12,490,539 12,513,364 Weighted average number of shares outstanding - Diluted 12,437,916 12,457,043 13,899,374 12,513,364 (1) Includes loss of $(5,597,000) due to changes in the fair value of warrant liability in both the first and second quarter. |
Subsequent Event
Subsequent Event | 12 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Event | SUBSEQUENT EVENT Winslow, Evans & Crocker, Inc. Acquisition On August 26, 2019, the Company entered into a stock purchase agreement (as amended, the “Winslow Agreement” and the transactions contemplated thereunder, the “Winslow Acquisition”) whereby the Company agreed to acquire all of the outstanding equity interests (the “Purchased Shares”) of Winslow Evans & Crocker, Inc. (“WEC”), Winslow, Evans & Crocker Insurance Agency, Inc. (“WIA”), and Winslow Financial, Inc. (“WF” and collectively with WEC and WIA, the “Winslow Targets”). The Company entered into an amendment to the Winslow Agreement on October 11, 2019, to reflect certain clarifications to the terms of the Winslow Agreement as agreed to by the parties. The Winslow Acquisition is expected to close in the first fiscal quarter of 2020, subject to customary conditions and regulatory approvals. Under the terms of the Winslow Agreement, at the closing of the Winslow Acquisition, the Company will acquire the Purchased Shares for an aggregate purchase price of approximately $3.2 million paid at closing in cash, subject to certain adjustments, plus additional consideration to be based on (i) the amount of net operating capital of WEC and WF as of the closing, payable in three annual installments and not to exceed $1.0 million in the aggregate, (ii) the aggregate pre-tax net income (loss) of the Winslow Targets through September 22, 2022, provided that such additional consideration shall not be less than $1.5 million and shall not exceed $3.0 million in the aggregate, and (iii) a portion of the synergies achieved through September 20, 2022. At the signing of the Winslow Agreement, the Company deposited $500,000 into escrow, which will be applied to the amount payable at closing or which would be forfeited if the Winslow Acquisition is approved by FINRA but are not consummated due to certain breaches of the Winslow Agreement by the Company. WEC is a Boston-based, full-service investment firm established in 1991. WEC is an SEC Registered Investment Advisor and a FINRA registered broker-dealer. More than 50 financial professionals including Certified Financial Planners, Investment Advisor Representatives, Financial Consultants, brokers and other specialists are part of the Winslow team with over $2.5 billion in assets under management. Located in the heart of the financial district in Boston, MA, the Company believes that WEC is a strategic location for the Company to build out its banking platform. The Company expects that the Winslow Acquisition will be accretive to gross margin and adjusted EBITDA margin. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). |
Principals of Consolidation | Principals of Consolidation The consolidated financial statements include the accounts of National and its wholly owned and majority owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. |
Variable Interest Entities | Variable Interest Entities The Company has entered into agreements to provide investment banking and advisory services to numerous investment funds (the “Funds”) that are considered variable interest entities (“VIEs”) under the accounting guidance. These Funds are established primarily to make and manage investments in equity or convertible debt securities of privately held companies that the Company, as investment advisory to the Funds, believes possess innovative or disruptive technologies and present opportunities for an initial public offering (“IPO”) or another similar liquidity event within approximately one to five years from the date of investment. The Funds intent to hold the investments until an IPO or another similar liquidity event and then to make distributions to its investors when contractually permitted, estimated approximately six months following such IPO or liquidity event. The Company earns fees from the Funds in the form of placement agent fees and carried interest. For placement agent fees, the Company receives a cash fee of generally 7% to 10% of the amount of raised capital for the Funds and the fee is recognized at the time the placement services occurred. The Company receives carried interest as a percentage allocation ( 8% to 15% ) of the profits of the Funds as compensation for asset management services provided to the Funds and it is recognized at the time of distributions. Once fund investors have received distributions in an amount equal to one hundred percent ( 100% ) of their total capital contributions, the Company as the manager of the Funds will be entitled to share in any profits of the Funds to the extent of the carried interest. As the fee arrangements under such agreements are arm's-length and contain customary terms and conditions and represent compensation that is considered fair value for the services provided, the fee arrangements are not considered variable interests and accordingly, the Company does not consolidate such VIEs. Placement agent fees attributable to such arrangements |
Use of Estimates | Use of Estimates The preparation of these financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could significantly differ from those estimates. |
Revenue Recognition | Revenue Recognition Commission revenue represents commissions generated by the Company’s registered representatives for their clients’ purchases and sales of mutual funds, variable annuities, general securities and other financial products, most of which is paid to the registered representatives as commissions for initiating the transactions. Commission revenue is generated from front-end sales commissions that occur at the point of sale, as well as trailing commissions. The Company recognizes front-end sales commission revenue and related clearing and other expenses on transactions introduced to its clearing brokers on a trade date basis. The Company also recognizes front-end sales commissions and related expenses on transactions initiated directly between the registered representatives and product sponsors upon receipt of notification from sponsors of the commission earned. Commission revenue also includes 12b-1 fees, and variable product trailing fees, collectively considered as trailing fees, which are recurring in nature. These trailing fees are earned by the Company based on a percentage of the current market value of clients’ investment holdings in trail eligible assets. Because trail commission revenues are generally paid in arrears, management estimates commission revenues earned during each period. These estimates are based on a number of factors including investment holdings and the applicable commission rate and the amount of trail commission revenue received in prior periods. Estimates are subsequently adjusted to actual based on notification from the sponsors of trail commissions earned. Net dealer inventory gains, which are recorded on a trade-date basis, include realized and unrealized net gains and losses resulting from the Company’s principal trading activities including equity-linked warrants received from investment banking activities. Investment banking revenues consist of underwriting revenues, advisory revenues and private placement fees. Underwriting revenues arise from securities offerings in which the Company acts as an underwriter and include management fees, selling concessions and underwriting fees. Management estimates the Company’s share of the transaction-related expenses incurred by the syndicate. On final settlement, typically within 90 days from the trade date of the transaction, these amounts are adjusted to reflect the actual transaction-related expenses. Investment advisory fees are derived from account management and investment advisory services. These fees are determined based on a percentage of the customers assets under management, may be billed monthly or quarterly and are recognized when earned. Interest is recorded on an accrual basis and dividends are recorded on the ex-dividend date. Transfer fees and fees for clearing services are recorded on a trade date basis. Tax preparation and accounting fees are recognized upon completion of the services. |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with US GAAP which requires the recognition of tax benefits or expenses based on the estimated future tax effects of temporary differences between the financial statement and tax basis of its assets and liabilities. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date. Valuation allowances are established to reduce deferred tax assets to an amount that is more likely than not to be realized. FASB ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements, requiring us to determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. For tax positions meeting the more likely than not threshold, the tax amount recognized in the financial statements is reduced by the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant taxing authority. The Company recognizes accrued interest and penalties related to its uncertain tax positions as a component of income tax expense. As of September 30, 2019 and 2018, the Company had no unrecognized tax positions. |
Securities | Securities Securities owned and securities sold, but not yet purchased, are recorded at fair value. See Note 9 for fair value measurements. |
Fixed Assets, net | Fixed Assets, net Fixed assets are recorded at cost net of accumulated depreciation and amortization. Depreciation is calculated using the straight-line method based on the estimated useful lives of the related assets (See Note 10). Leasehold improvements are amortized on a straight-line basis over the lease term, or their estimated useful lives, whichever is shorter. Fixed assets are reviewed for impairment whenever indicators of impairment exist. In such circumstances, the Company will estimate the future cash flows expected to result from the use of the asset and its eventual disposition. Future cash flows are the future cash inflows expected to be generated by an asset less the future outflows expected to be necessary to obtain those inflows. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the asset, the Company will recognize an impairment loss to adjust to the fair value of the asset. |
Net Income per Common Share | Net Income per Common Share Basic net income per share is computed on the basis of the weighted average number of common shares outstanding. Diluted net income per share is computed on the basis of the weighted average number of common shares outstanding plus the dilutive effect of incremental shares of common stock potentially issuable under outstanding options, warrants and unvested restricted stock units utilizing the treasury stock method. |
Stock-based Compensation | Stock-based Compensation The Company measures the cost of employee, officer and director services received in exchange for an award of equity instruments including stock options and restricted stock units, based on the grant-date fair value of the award and measures the cost of independent contractor awards based on the vesting date fair value of the award. The cost is recognized as compensation expense over the service period, which would normally be the vesting period of the award. |
Deferred Clearing and Marketing Credits | Deferred Clearing and Marketing Credits The deferred clearing credit represents a clearing fee rebate from National Financial Services (“NFS”), one of the Company’s clearing brokers, which is being recognized pro rata as a reduction of clearing charges over the term of the clearing agreement which expires in 2021. The deferred marketing credit represents a marketing rebate from NFS, which is being recognized pro rata as a reduction of marketing expenses over the term of the clearing agreement which expires in 2021. |
Reimbursement of Expenses | Reimbursement of Expenses The Company incurs certain costs on behalf of its registered representatives including those for insurance, professional registration, technology and information services and legal services, amongst others, which are charged back to the registered representatives. It is the Company’s policy to record the reimbursement as a reduction of the respective operating expense. |
Intangible Assets | Intangible Assets Intangible assets with finite lives, which consist of customer relationships, are being amortized over their estimated useful lives on a straight-line basis. Such intangible assets are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company assesses the recoverability of its intangible assets by determining whether the unamortized balance can be recovered over the assets’ remaining estimated useful life through undiscounted estimated future cash flows. If undiscounted estimated future cash flows indicate that the unamortized amounts will not be recovered, an adjustment will be made to reduce such amounts to fair value based on estimated future cash flows discounted at a rate commensurate with the risk associated with achieving such cash flows. Estimated future cash flows are based on trends of historical performance and the Company’s estimate of future performance, giving consideration to existing and anticipated competitive and economic conditions. Brand names are deemed to have an indefinite life, are not subject to amortization and are tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired. Brand names are tested for impairment by comparing their fair value to their carrying amount. If the carrying amount exceeds fair value, an impairment loss is recognized for the excess (see Note 6). |
Goodwill | Goodwill Goodwill is not subject to amortization and is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired. Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets acquired. Goodwill is tested for impairment at the reporting unit level. Fair value of a reporting unit is typically based upon estimated future cash flows discounted at a rate commensurate with the risk involved or market-based comparables. If the carrying amount of the reporting unit’s net assets exceeds its fair value, then an analysis will be performed to compare the implied fair value of goodwill with the carrying amount of goodwill. An impairment loss will be recognized in an amount equal to the excess of the carrying amount over its implied fair value. After an impairment loss is recognized, the adjusted carrying amount of goodwill is its new accounting basis. Accounting guidance on the testing of goodwill for impairment allows entities testing goodwill for impairment, the option of performing a qualitative assessment to determine the likelihood of goodwill impairment and whether it is necessary to perform such two-step impairment test. Under Accounting Standards Update (“ASU”) No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, step 2 of the goodwill impairment test has been eliminated. Step 2 of the goodwill impairment test required companies to determine the implied fair value of the reporting unit’s goodwill. Under the new standard, an entity recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The standard is effective for the Company beginning October 1, 2020 for both interim and annual periods. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company early adopted this standard for the annual test performed after January 1, 2017. |
Cash and Restricted Cash | Cash and Restricted Cash The Company has defined cash as cash held at financial institutions and highly liquid investments with original maturities of less than three months that are not held for sale in the ordinary course of business. Cash held at financial institutions, at times, may exceed the amount insured by the Federal Deposit Insurance Corporation. Restricted cash consists of deposits collateralizing letters of credits in connections with property leases. Cash and restricted cash consist of the following: September 30, 2019 2018 Cash 30,443,000 27,920,000 Restricted cash 960,000 1,353,000 31,403,000 29,273,000 |
Receivables From Broker Dealers and Clearing organizations | Receivables From Broker Dealers and Clearing organizations Receivables from broker dealers and clearing organizations represent net amounts due for fees and commissions associated with the Company’s retail brokerage business. |
Forgivable Loans | Forgivable Loans Forgivable Loans represent loans to primarily newly recruited independent financial advisors as an incentive for their affiliation. The notes receivable balance is comprised of unsecured non-interest-bearing and interest-bearing loans (interest ranging up to 9% ). These forgivable loans are amortized over time, and the amortization is included in Commissions, compensation and fees within the Statement of Operations. The Company provides an allowance for doubtful accounts on the notes based on historical collection experience and continually evaluates the receivables for collectability and possible write-offs where a loss is deemed probable. |
New Accounting Guidance | NEW ACCOUNTING GUIDANCE In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU“) 2014-09, Revenue From Contracts With Customers (Topic 606) which creates a single, principle-based model for revenue recognition and expands and improves disclosures about revenue. The new guidance was effective for the Company beginning October 1, 2018, and was adopted using a modified retrospective approach. The Company adopted the new revenue standard on October 1, 2018 and recognized a decrease of $135,000 to retained earnings as the cumulative effect of adoption of this accounting change. The impact of adoption is primarily related to the Company’s investment banking advisory fees that were recognized as of September 30, 2018 under the previously existing accounting guidance, which would have been deferred in prior periods under the new revenue standard. Accordingly, the new revenue standard will be applied prospectively in the Company’s financial statements from October 1, 2018 forward and reported financial information for historical comparable periods will not be revised and will continue to be reported under the accounting standards in effect during those historical periods. Further, the adoption of ASU 2014-09 did not have a material impact on the Company’s revenue. The new revenue guidance does not apply to revenue associated with financial instruments, including the Company’s warrants and securities that are accounted for under other US GAAP, and as a result, did not have an impact on the elements of the statements of operations most closely associated with financial instruments. The new revenue standard primarily impacts the following of the Company’s revenue recognition and presentation accounting policies: • Investment Banking Revenues . Advisory fees from mergers and acquisitions engagements are recognized at the point in time when the related transaction is completed, as the performance obligation is to successfully broker a specific transaction. • Investment Banking Advisory Expenses . Historically, expenses associated with investment banking advisory assignments were deferred until reimbursed by the client, the related fee revenue is recognized or the engagement is otherwise concluded. Under the new revenue standard, expenses are deferred only to the extent they are explicitly reimbursable by the client and the related revenue is recognized when all performance obligations are met. All other investment banking advisory related expenses are expenses as incurred. • Investment Banking Underwriting and Advisory Expenses . Expenses have historically been recorded net of client reimbursements and/or netted against revenue. Under the new revenue standard, all investment banking expenses will be recognized within their respective expense category on the income statement and any expense reimbursements will be recognized as investment banking revenues (i.e., expenses are no longer recorded net of client reimbursements and are not netted against revenue). The new revenue standard requires enhanced disclosures, which are included in Note 21 to the Company's consolidated financial statements for the year ended September 30, 2019. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the existing guidance for lease accounting, Leases (Topic 840). ASU 2016-02 requires lessees to recognize leases on their balance sheets, and leaves lessor accounting largely unchanged. The recognition of these lease assets and lease liabilities represents a change from previous U.S. GAAP requirements, which did not require lease assets and lease liabilities to be recognized for most leases. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee, have not significantly changed from previous U.S. GAAP requirements. The amendments in this ASU are effective for the Company beginning October 1, 2019 and interim periods within those fiscal years. As of September 30, 2019, the Company has identified its arrangements that are within the scope of the new guidance and has evaluated its portfolio of leases, which is primarily comprised of operating real estate leases for its respective offices. The Company adopted the package of practical expedients and will recognize the right to use lease assets and related lease liabilities as of the adoption date using FASB's modified retrospective approach. Prior period information will not be restated. On adoption, the Company currently expects to recognize right-of-use assets and corresponding liabilities ranging from approximately $16,000,000 to $17,000,000 on the Company's consolidated statements of financial condition on its leases, with terms greater than twelve months. Adoption of the standard will not materially impact the Company's consolidated statements of operations or consolidated statements of cash flows. The company does not believe the new standard will have a material impact on its liquidity. This expectation may change as the Company's assessment is finalized. The Company is in the process of evaluating changes to its business processes, systems and controls needed to support recognition and disclosure under the new standard. Further, the Company is continuing to assess any incremental disclosures that will be required in the Company's consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments”. ASU 2016-15 reduces the diversity of how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. The standard was effective for the Company beginning October 1, 2018 for both interim and annual periods. The Company adopted ASU No. 2016-15 as of October 1, 2018. The adoption of this update did not impact the Company's consolidated financial statements and related disclosures. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230) - Restricted Cash”. ASU 2016-18 reduces the diversity in the presentation of restricted cash and restricted cash equivalents in the statement. The statement requires that restricted cash and restricted cash equivalents be included as components of total cash and cash equivalents as presented on the statement of cash flows. The standard was effective for the Company beginning October 1, 2018 for both interim and annual periods. The Company adopted ASU No. 2016-18 as of October 1, 2018. The adoption of this update did not materially impact the Company's consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business”. The amendments in this update is to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The standard was effective for the Company beginning October 1, 2018 for both interim and annual periods. The Company adopted ASU 2017-01 as of October 1, 2018. Upon adoption of ASU 2017-01, there was no significant impact to the Company's consolidated financial condition or results of operations. In May 2017, the FASB issued ASU 2017-09, “Scope of Modification Accounting”. This ASU clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The standard was effective for the Company beginning October 1, 2018 for both interim and annual periods. The Company adopted ASU No. 2017-09 as of October 1, 2018. The adoption of this update did not impact the Company's consolidated financial statements and related disclosures. In June 2018, the FASB issued ASU 2018-07, “Compensation - Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting”. This ASU simplifies the accounting for share-based payments granted to nonemployees by aligning the accounting with the requirements for employee share-based compensation. The standard is effective for the Company beginning October 1, 2019 for both interim and annual periods. Early adoption is permitted. The Company does not anticipate that the adoption of ASU 2018-07 will have a material impact on its financial statements. In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement - Disclosure Framework - Changes to the Disclosure Requirements for the Fair Value Measurement,” which removes or modifies certain current disclosures, and adds additional disclosures. The changes are meant to provide more relevant information regarding valuation techniques and inputs used to arrive at measures of fair value, uncertainty in the fair value measurements, and how changes in fair value measurements impact an entity's performance and cash flows. Certain disclosures in ASU 2018-13 will need to be applied on a retrospective basis and others on a prospective basis. The standard is effective for the Company beginning October 1, 2020 for both interim and annual periods. Early adoption is permitted. The company is currently assessing the impact that the adoption of ASU 2018-13 will have on its financial statements. In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract”. The guidance on the accounting for implementation, setup, and other upfront costs (collectively referred to as implementation costs) applies to entities that are a customer in a hosting arrangement that is a service contract. The amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the guidance in this ASU. The standard is effective for the Company beginning October 1, 2020, should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption, and early adoption is permitted. The company early adopted ASU 2018-15 in 2019. The adoption of this update did not materially impact the Company's consolidated financial condition or results of operations. On October 1, 2018, the Company adopted Topic 606 applying the modified retrospective method to all contracts that were not completed as of October 1, 2018. Results for reporting periods beginning after October 1, 2018 were presented under Topic 606, while prior periods amounts were not adjusted and reported under the accounting standards in effect for the prior periods. The adoption of Topic 606 did not have a material impact on the Company's consolidated results of operations and financial condition. |
Revenue from Contract with Customer | Performance Obligations The Company recognizes revenue from contracts with customers when, or as, the Company satisfies its performance obligations by transferring the promised goods or services to the customers. A good or service is transferred to a customer when, or as, the customer obtains control of that good or service. A performance obligation may be satisfied over time or at a point in time. Revenue from a performance obligation satisfied over time is recognized by measuring progress in satisfying the performance obligation in a manner that depicts the transfer of the goods or services to the customer. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that the Company determines the customer obtains control over the promised good or service. Transaction Price and Variable Consideration The amount of revenue recognized reflects the consideration (“transaction price”) the Company expects to be entitled to in exchange for the transfer of the goods or services to the customer services. In determining the transaction price, the Company considers multiple factors, including the effects of variable consideration. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. In determining when to include variable consideration in the transaction price, the Company considers the range of possible outcomes, the predictive value of past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of influence, such as market volatility or the judgment and actions of third parties. Contract Assets Contract assets represent the Company’s right to consideration in exchange for goods or services that the Company has transferred to a customer, excluding unconditional rights to consideration that are presented as receivables. Contract Liabilities Contract liabilities represent the Company’s obligation to deliver products or provide data to customers in the future for which cash has already been received. The following provides detailed information on the recognition of the Company’s revenues from contracts with customers: Commissions and Transaction Fees and Clearing Services . The Company earns commission and transaction fee and clearing services revenue based on the execution of transactions for clients in stocks, mutual funds, variable annuities and other financial products and services as well as from trailing commissions. Trade execution and settlement, when provided together, represent a single performance obligation as the services are not separately identifiable in the context of the contract. Commission and transaction fee and clearing services revenues are recognized at a point in time on trade-date. Commission and transaction fee and clearing services revenues are generally paid on settlement date and the Company records a receivable between trade-date and payment on settlement date. For trailing commissions, the performance obligation is satisfied at the time of the execution of the transactions but the amount to be received for trailing commissions is uncertain, as it is dependent on the value of the investments at future points in time as well as the length of time the investor holds the investments, both of which are highly susceptible to variable factors outside the Company’s influence. The Company does not believe that it can overcome this constraint until the market value of the investment and the investor activities are known, which are usually monthly or quarterly. The Company’s consolidated statement of operations reflects trailing commissions for services performed and performance obligations satisfied in previous periods and are recognized in the period that the constraint is overcome. Investment Banking . The Company provides clients with a full range of investment banking services. Investment banking services include underwriting and placement agent services in both equity and debt, including private equity placements, initial public offerings, follow-on offerings and equity-linked convertible securities transactions and private debt. Underwriting and placement agent revenues are recognized at a point in time on trade-date, as the client obtains the control and benefit of the investment banking offering at that point. Costs associated with investment banking transactions are deferred until the related revenue is recognized or the engagement is otherwise concluded and are recorded on a gross basis as the Company is acting as a principal in the arrangement. Any expenses reimbursed by the Company’s clients are recognized as investment banking revenues. Where the Company is the lead underwriter, revenue and expenses will be first allocated to other members of a syndicate because the Company is acting as an agent for the syndicate. Accordingly, the Company records revenue on a net basis. When the Company is not the lead underwriter, the Company will recognize its share of revenue and expenses on a gross basis, because the Company is acting as the principal. Under accounting standards in effect for prior periods, the Company recognized all underwriting revenue on a net basis. The Company’s revenues from advisory services primarily consist of fees generated in connection with mergers and acquisition and advisory transactions. Advisory fees from mergers and acquisitions engagements are recognized at a point in time when the related transaction is completed, as the performance obligation is to successfully execute a specific transaction. Fees received prior to the completion of the transaction are deferred within other liabilities in the consolidated statements of financial condition. A significant portion of the fees the Company receives for advisory services are considered variable as they are contingent upon a future event and are excluded from the transaction price until the uncertainty associated with the variable consideration is subsequently resolved, which is expected to occur upon achievement of the specified milestone. Payment for advisory services is generally due promptly upon completion of a specified milestone or, for retainer fees, periodically over the course of the engagement. The Company recognizes a receivable between the date of completion of the milestone and payment by the customer. Expenses associated with investment banking advisory engagements are deferred only to the extent they are explicitly reimbursable by the client and the related revenue is recognized at a point in time. All other investment banking advisory related costs are expensed as incurred. All investment banking advisory expenses are recognized within their respective expense category on the consolidated statements of operations and any expenses reimbursed by the clients are recognized as investment banking revenues. The Company controls the service as it is transferred to the customer, and is therefore acting as a principal. Accordingly, the Company records revenues and out-of-pocket reimbursements on a gross basis. Under accounting standards in effect for prior periods, the Company recorded expenses net of client reimbursements and/or netted against revenues. Investment Advisory/Asset Management Fees . The Company receives management and performance fees in connection with investment advisory services provided to various funds and accounts, which are satisfied over time as the customer receives the benefits of the services evenly throughout the term of the contract. Management and performance fees are considered variable as they are subject to fluctuation (e.g., changes in assets under management, market performance) and/or are contingent on a future event during the measurement period (e.g., meeting a specified benchmark) and are recognized only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty is resolved. Management fees are generally based on month-end assets under management or an agreed upon notional amount and are included in the transaction price at the end of each month when the assets under management or notional amount is known. Performance fees are received when the return on assets under management for a specified performance period exceed certain benchmark returns, “high-water marks” or other performance targets. The performance period related to performance fees is annual, semiannual or at the recognition of a liquidation event. Accordingly, performance fee revenue will generally be recognized only at the end of the performance period to the extent that the benchmark return has been met. Tax Preparation and Accounting. The Company charges fees in connection with tax preparation and accounting services. Revenues are recorded upon completion of the services. Information on Remaining Performance Obligations and Revenue Recognized from Past Performance The Company does not disclose information about remaining performance obligations pertaining to contracts that have an original expected duration of one year or less. The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligations with an original expected duration exceeding one year was not material at September 30, 2019 . Investment banking advisory fees that are contingent upon completion of a specific milestone are also excluded as the fees are considered variable and not included in the transaction price at September 30, 2019 . Contract Balances The timing of the Company’s revenue recognition may differ from the timing of payment by customers. The Company records a receivable when revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied. Contract Costs Incremental contract costs are expensed when incurred when the amortization period of the asset that would have been recognized is one year or less. Otherwise, incremental contract costs are recognized as an asset and amortized over time as services are provided to a customer. Practical Expedients The Company has applied Topic 606’s practical expedient that permits for the non-disclosure of the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which it has the right to invoice for services performed. The Company also applied Topic 606’s practical expedient that allows incremental contract costs to be expensed when incurred when the amortization period of the asset that would have been recognized is one year or less. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Basic and Diluted Common Shares | A reconciliation of basic and diluted common shares used in the computation of per share data follows: Year Ended September 30, 2019 2018 2017 Basic weighted-average shares 12,821,581 12,474,753 12,437,916 Effect of dilutive securities: Options — — 140 Unvested restricted stock units — — 34,485 Diluted weighted-average shares 12,821,581 12,474,753 12,472,541 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following potential common share equivalents are not included in the above diluted computation because to do so would be anti-dilutive as the instruments are out of the money: Year Ended September 30, 2019 2018 2017 Options 604,200 615,000 1,207,000 Warrants 5,398,907 12,437,172 9,344,973 (a) Restricted stock units 3,318,640 219,097 — 9,321,747 13,271,269 10,551,973 (a) As the warrants are out of the money, in the diluted computation, no adjustment is made to net income (loss) to eliminate the change in fair value of the warrants. |
Business Combination, Conting_2
Business Combination, Contingent Consideration and Disposal of Branches (Tables) | 12 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions by Acquisition, Contingent Consideration | Set below are changes in the carrying value of contingent consideration for the years ended September 30, 2019 , 2018 and 2017 related to the acquisitions: Fair value of contingent consideration at September 30, 2016 $ 424,000 Fair value of contingent consideration in connection with October 2017 acquisition 192,000 Payments (42,000 ) Change in fair value (263,000 ) Fair value of contingent consideration at September 30, 2017 311,000 Fair value of contingent consideration in connection with 2018 acquisitions 580,000 Payments (171,000 ) Change in fair value 24,000 Fair value of contingent consideration at September 30, 2018 744,000 Fair value of contingent consideration in connection with 2019 acquisitions 1,428,000 Payments (617,000 ) Change in fair value 65,000 Fair value of contingent consideration at September 30, 2019 $ 1,620,000 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Changes to the carrying amount of goodwill during the years ended September 30, 2019 and 2018 are as follows: Brokerage and Tax and Accounting Services Total Balance as of September 30, 2017 $ 4,451,000 $ 766,000 $ 5,217,000 Reduction related to sale of National Tax branches — (64,000 ) (64,000 ) Impairment — — — Balance as of September 30, 2018 4,451,000 702,000 5,153,000 Impairment — — — Balance as of September 30, 2019 $ 4,451,000 $ 702,000 $ 5,153,000 |
Intangibles (Tables)
Intangibles (Tables) | 12 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | Intangibles consisted of the following at September 30, 2019 and 2018 : September 30, 2019 Intangible asset Cost Accumulated Amortization Carrying Value Estimated Useful Life (years) Customer relationships $ 9,326,000 $ 4,614,000 $ 4,712,000 3-10 Brand name 710,000 — 710,000 Indefinite Software license $ 45,000 $ 26,000 $ 19,000 3 $ 10,081,000 $ 4,640,000 $ 5,441,000 September 30, 2018 Intangible asset Cost Accumulated Amortization Carrying Value Estimated Useful Life (years) Customer relationships $ 7,511,000 $ 3,525,000 $ 3,986,000 3-10 Brand name 710,000 — 710,000 Indefinite Software license 45,000 11,000 34,000 3 $ 8,266,000 $ 3,536,000 $ 4,730,000 |
Schedule of Indefinite-Lived Intangible Assets | Intangibles consisted of the following at September 30, 2019 and 2018 : September 30, 2019 Intangible asset Cost Accumulated Amortization Carrying Value Estimated Useful Life (years) Customer relationships $ 9,326,000 $ 4,614,000 $ 4,712,000 3-10 Brand name 710,000 — 710,000 Indefinite Software license $ 45,000 $ 26,000 $ 19,000 3 $ 10,081,000 $ 4,640,000 $ 5,441,000 September 30, 2018 Intangible asset Cost Accumulated Amortization Carrying Value Estimated Useful Life (years) Customer relationships $ 7,511,000 $ 3,525,000 $ 3,986,000 3-10 Brand name 710,000 — 710,000 Indefinite Software license 45,000 11,000 34,000 3 $ 8,266,000 $ 3,536,000 $ 4,730,000 |
Schedule of Estimated Future Amortization Expense of the Finite Lived Intangible Assets | The estimated future amortization expense of the finite lived intangible assets for the next five fiscal years and thereafter is as follows: Year ended September 30, 2020 $ 1,103,000 2021 1,092,000 2022 1,034,000 2023 781,000 2024 369,000 Thereafter 352,000 Total $ 4,731,000 |
Receivables From Broker Deale_2
Receivables From Broker Dealers and Clearing Organizations and Other Receivables (Tables) | 12 Months Ended |
Sep. 30, 2019 | |
Brokers and Dealers [Abstract] | |
Loans, Notes, Trade and Other Receivables Disclosure | Other receivables at September 30, 2019 and 2018 consist of the following: September 30, 2019 2018 Trailing fees 947,000 1,086,000 Accounts receivable for tax and accounting services 686,000 661,000 Allowance for doubtful accounts - tax and accounting services (282,000 ) (286,000 ) Advances to registered representatives 1,383,000 393,000 Investment banking receivable 411,000 357,000 Advisory fees 483,000 559,000 Notes receivable (Note 4) 665,000 746,000 Other 1,379,000 749,000 Total $ 5,672,000 $ 4,265,000 |
Forgivable Loans Receivable (Ta
Forgivable Loans Receivable (Tables) | 12 Months Ended |
Sep. 30, 2019 | |
Investments in and Advances to Affiliates, Schedule of Investments [Abstract] | |
Schedule of Forgivable Loan Activity | Forgivable loan activity for the fiscal years ended September 30, 2019 , 2018 and 2017 is as follows: Balance, September 30, 2016 $ 1,712,000 Advances 694,000 Amortization (693,000 ) Repayments (97,000 ) Balance, September 30, 2017 1,616,000 Advances 581,000 Amortization (630,000 ) Balance, September 30, 2018 1,567,000 Advances 1,052,000 Amortization (680,000 ) Reclassification to other receivables (105,000 ) Balance, September 30, 2019 $ 1,834,000 |
Fair Value of Assets and Liab_2
Fair Value of Assets and Liabilities (Tables) | 12 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following tables present the carrying values and estimated fair values at September 30, 2019 and 2018 of financial assets and liabilities, excluding financial instruments that are carried at fair value on a recurring basis, and information is provided on their classification within the fair value hierarchy. Such instruments are carried at amounts that approximate fair value due to their short-term nature and generally negligible credit risk. September 30, 2019 Assets Carrying Value Level 1 Level 2 Total Estimated Fair Value Cash $ 30,443,000 $ 30,443,000 $ — $ 30,443,000 Cash deposits with clearing organizations 436,000 436,000 — 436,000 Receivables from broker-dealers and clearing organizations 3,490,000 — 3,490,000 3,490,000 Forgivable loans receivable 1,834,000 — 1,834,000 1,834,000 Other Receivables, Net 5,672,000 — 5,672,000 5,672,000 $ 41,875,000 $ 30,879,000 $ 10,996,000 $ 41,875,000 Liabilities Accrued commissions and payroll payable 18,590,000 — 18,590,000 18,590,000 Accounts payable and accrued expenses (1) 8,643,000 — 8,643,000 8,643,000 $ 27,233,000 $ — $ 27,233,000 $ 27,233,000 (1) Excludes contingent consideration liabilities of $1,620,000 . September 30, 2018 Assets Carrying Value Level 1 Level 2 Total Estimated Fair Value Cash $ 27,920,000 $ 27,920,000 $ — $ 27,920,000 Cash deposits with clearing organizations 336,000 336,000 — 336,000 Receivables from broker-dealers and clearing organizations 3,967,000 — 3,967,000 3,967,000 Forgivable loans receivable 1,567,000 — 1,567,000 1,567,000 Other Receivables, Net 4,265,000 — 4,265,000 4,265,000 $ 38,055,000 $ 28,256,000 $ 9,799,000 $ 38,055,000 Liabilities Accrued commissions and payroll payable 12,862,000 — 12,862,000 12,862,000 Accounts payable and accrued expenses (1) 7,275,000 — 7,275,000 7,275,000 $ 20,137,000 $ — $ 20,137,000 $ 20,137,000 (1) Excludes contingent consideration liabilities of $744,000 . The following tables present the financial assets and liabilities measured at fair value on a recurring basis at September 30, 2019 and 2018 . September 30, 2019 Assets Carrying Value Level 1 Level 2 Level 3 Total Estimated Fair Value Securities owned Corporate stocks $ 6,282,000 $ 6,282,000 $ — $ — $ 6,282,000 Municipal bonds 20,000 20,000 — — 20,000 Restricted stock 725,000 — 725,000 — 725,000 Warrants 5,454,000 — 1,529,000 3,925,000 5,454,000 $ 12,481,000 $ 6,302,000 $ 2,254,000 $ 3,925,000 $ 12,481,000 Liabilities Contingent consideration 1,620,000 — — 1,620,000 1,620,000 $ 1,620,000 $ — $ — $ 1,620,000 $ 1,620,000 September 30, 2018 Assets Carrying Value Level 1 Level 2 Level 3 Total Estimated Fair Value Securities owned Corporate stocks 1,084,000 1,084,000 — — 1,084,000 Restricted stock 670,000 670,000 670,000 Warrants 6,032,000 — 2,753,000 3,279,000 6,032,000 $ 7,786,000 $ 1,084,000 $ 3,423,000 $ 3,279,000 $ 7,786,000 Liabilities Contingent consideration 744,000 — — 744,000 744,000 $ 744,000 $ — $ — $ 744,000 $ 744,000 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | Changes in Level 3 assets measured at fair value on a recurring basis for the year ended September 30, 2019 : Beginning Balance as of September 30, 2018 Net Realized Gain or (losses) Net Change in Unrealized Appreciation (Depreciation) Purchases Sales Transfer into Level 3 (a) Transfer Out of Level 3 (b) Ending Balance as of September 30, 2019 Assets Warrants $ 3,279,000 $ — $ (73,000 ) $ — $ — $ 883,000 $ (164,000 ) $ 3,925,000 (a) The Company received warrants as part of investment banking transaction. |
Fair Value Measurement Inputs and Valuation Techniques | The table below presents information on the valuation techniques, significant unobservable inputs and their ranges for our financial assets measured at fair value on a recurring basis with a significant Level 3 balance as of September 30, 2019. Financial Instruments Owned Fair Value Valuation Technique Significant Unobservable Input(s) Input/Range Warrants $3,925,000 Market Approach Discount for lack of marketability 21% - 44% Volatility 55% - 120% |
Fixed Assets (Tables)
Fixed Assets (Tables) | 12 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Fixed Assets | Fixed assets as of September 30, 2019 and 2018 , respectively, consist of the following: September 30, Estimated Useful 2019 2018 Lives (in years) Equipment $ 1,835,000 $ 2,299,000 3 - 5 years Furniture and fixtures 761,000 439,000 5 years Construction in Process — 271,000 N/A Leasehold improvements 3,662,000 1,453,000 Lesser of useful life or term of lease Capital leases (primarily composed of computer equipment) 907,000 739,000 3 - 7 years 7,165,000 5,201,000 Less accumulated depreciation and amortization (2,098,000 ) (2,530,000 ) Fixed assets - net $ 5,067,000 $ 2,671,000 |
Accounts Payable and Other Ac_2
Accounts Payable and Other Accrued Expenses (Tables) | 12 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Other Accrued Expenses | Accounts payable and other accrued expenses as of September 30, 2019 and 2018 , respectively, consist of the following: September 30, 2019 2018 Legal $ 900,000 $ 448,000 Audit 239,000 411,000 Telecommunications 125,000 240,000 Data Services 296,000 370,000 Regulatory 292,000 335,000 Settlements 1,817,000 825,000 Deferred rent 772,000 670,000 Contingent consideration payable 1,620,000 744,000 Other 4,202,000 3,976,000 Total $ 10,263,000 $ 8,019,000 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Taxes | Income taxes consist of the following: 2019 Federal State Total Current income tax expense $ 424,000 $ 263,000 $ 687,000 Deferred income tax benefit (145,000 ) (223,000 ) (368,000 ) Total income tax expense $ 279,000 $ 40,000 $ 319,000 2018 Federal State Total Current income tax expense $ 589,000 $ 371,000 $ 960,000 Deferred income tax expense (benefit) $ 2,293,000 $ (65,000 ) $ 2,228,000 Total income tax expense $ 2,882,000 $ 306,000 $ 3,188,000 2017 Federal State Total Current income tax expense $ 1,074,000 $ 439,000 $ 1,513,000 Deferred income tax expense $ 2,126,000 $ 412,000 $ 2,538,000 Total income tax expense $ 3,200,000 $ 851,000 $ 4,051,000 |
Schedule of Effective Income Tax Rate Reconciliation | The income tax provision related to pre-tax income (loss) vary from the federal statutory rate as follows: Years Ended 2019 2018 2017 Statutory federal rate (21.0 )% (24.3 )% 34.0 % State income taxes, net of federal income tax expense (benefit) 1.8 % 2.5 % 3.4 % Permanent differences for tax purposes 9.2 % 33.1 % (14.4 )% Change in rate 9.7 % 28.2 % — % Write-off of deferred tax asset attributable to change in ownership (see below) 67.7 % — % — % Other (3.6 )% (1.2 )% 1.4 % 63.8 % 38.3 % 24.4 % |
Schedule of Components of Net Deferred Tax Assets | Significant components of the Company’s net deferred tax assets in the accompanying financial statements are as follows: September 30, 2019 2018 Deferred tax assets (liabilities): Net operating loss carryforwards $ 2,967,000 $ 3,673,000 Contingent consideration 441,000 203,000 Stock based compensation 1,481,000 938,000 Accrued expenses 1,499,000 1,031,000 Accounts receivable and other receivables 91,000 149,000 Federal AMT credit carryforward 260,000 260,000 Fixed assets (510,000 ) (186,000 ) Intangibles (448,000 ) (361,000 ) Securities (1,221,000 ) (1,515,000 ) Total deferred tax asset, net $ 4,560,000 $ 4,192,000 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Operating Lease Minimum Lease Payments | Fiscal Year Ending September 30, Operating Leases Capital Lease 2020 $ 2,975,000 $ 297,000 2021 2,991,000 — 2022 2,459,000 — 2023 2,304,000 — 2024 2,109,000 — Thereafter 7,450,000 — Total minimum lease payments $ 20,288,000 $ 297,000 Less: Amounts representing interest not yet incurred 10,000 Present value of capital lease obligations $ 287,000 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Schedule of Non-Vested Restricted Stock Units | A summary of the Company’s non-vested restricted stock units for the years ended September 30, 2019 , 2018 and 2017 are as follows: Shares Weighted Average Grant Due Fair Value Non-vested restricted stock units at October 1, 2016 — $ — Granted 1,250,000 3,054,000 Non-vested restricted stock units at September 30, 2017 1,250,000 3,054,000 Granted 1,295,632 5,250,000 Vested (251,042 ) (697,000 ) Forfeited (87,348 ) (305,000 ) Non-Vested restricted stock units at September 30, 2018 2,207,242 7,302,000 Granted 1,810,017 5,400,000 Vested (563,711 ) (2,261,000 ) Forfeited (134,908 ) (435,000 ) Non-vested restricted stock units at September 30, 2019 3,318,640 $ 10,006,000 |
Schedule of Stock Option Activity | The following option activity occurred under the Company’s plan during the years ended September 30, 2019 , 2018 and 2017 : Options Weighted Average Exercise Price Per Share Weighted Average Grant-Date Fair Value Per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at September 30, 2016 1,221,500 $ 6.51 $ 1.22 3.31 Forfeited or expired (15,500 ) 4.42 1.99 Outstanding at September 30, 2017 1,206,000 $ 6.54 $ 1.21 2.29 Forfeited or expired (594,000 ) 6.85 0.83 Outstanding at September 30, 2018 612,000 6.23 1.59 3.27 Forfeited or expired (7,800 ) 5.54 2.69 Outstanding at September 30, 2019 604,200 6.19 1.58 2.29 Vested and exercisable at September 30, 2019 604,200 $ 6.19 $ 1.58 2.29 $ — |
Schedule of Warrant Activity | The following tables summarize information about warrant activity during 2019 , 2018 and 2017 : Warrants Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term Outstanding at September 30, 2016 23,029 $ 5.00 0.75 Issued 12,437,916 3.25 4.30 Forfeited or expired (21,558 ) 5.00 Outstanding at September 30, 2017 12,439,387 3.25 4.30 Exercised (1,489 ) 3.25 Forfeited or expired (1,471 ) 5.00 Outstanding at September 30, 2018 12,436,427 3.25 3.30 Exercised (38 ) 3.25 Forfeited or expired (7,037,482 ) (a) 3.25 Outstanding and exercisable at September 30, 2019 5,398,907 $ 3.25 2.30 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information | Segment information for the years ended September 30, 2019 , 2018 and 2017 is as follows: 2019 Brokerage and Advisory Services Tax and Accounting Services Corporate Total Revenues $ 204,134,000 $ 8,807,000 $ — $ 212,941,000 Pre-tax income (loss) 7,522,000 85,000 (5,447,000 ) (b) 2,160,000 Identifiable assets 61,880,000 4,313,000 15,014,000 (c) 81,207,000 Depreciation and amortization 841,000 490,000 501,000 1,832,000 Interest 32,000 32,000 Capital expenditures 776,000 75,000 2,273,000 3,124,000 2018 Brokerage and Advisory Services Tax and Accounting Services Corporate Total Revenues $ 203,343,000 $ 7,772,000 $ — $ 211,115,000 Pre-tax (loss) income 5,176,000 895,000 (14,393,000 ) (d) (8,322,000 ) Identifiable assets 51,946,000 4,407,000 12,096,000 (c) 68,449,000 Depreciation and amortization 749,000 263,000 539,000 1,551,000 Interest 97,000 97,000 Capital expenditures 564,000 43,000 331,000 938,000 2017 Brokerage and Advisory Services Tax and Accounting Services Corporate Total Revenues 182,431,000 7,439,000 — 189,870,000 Pre-tax (loss) income 11,516,000 649,000 4,414,000 (a) 16,579,000 Identifiable assets 47,213,000 2,984,000 14,201,000 (c) 64,398,000 Depreciation and amortization 694,000 181,000 354,000 1,229,000 Interest 14,000 14,000 Capital expenditures 140,000 73,000 1,459,000 1,672,000 (a) Consists of the gain on the change in fair value of warrant liability offset in part by executive salaries and other expenses not allocated to reportable segments by management. (b) Consists of board of director fees and other expenses not allocated to reportable segments by management. (c) Consists principally of deferred tax assets, cash, prepaid and fixed asset balances held at Corporate. (d) Consists of loss on the change in fair value of warrant liability, executive salaries and other expenses not allocated to reportable segments by management. |
Revenues from Contracts and S_2
Revenues from Contracts and Significant Customers (Tables) | 12 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following presents the Company’s revenues from contracts with customers disaggregated by major business activity and segment for the twelve months ended September 30, 2019 : For the Twelve Months Ended Brokerage and Advisory Services Tax and Accounting Services Corporate Total Revenues from customer contracts: Commissions and transfer fees and clearing services $ 95,021,000 $ — $ — $ 95,021,000 Investment banking 69,656,000 69,656,000 Investment advisory 34,400,000 — — 34,400,000 Tax preparation and accounting — 8,807,000 — 8,807,000 Sub-total revenue from contracts with customers 199,077,000 8,807,000 — 207,884,000 Other revenue 5,057,000 — — 5,057,000 Total revenue $ 204,134,000 $ 8,807,000 $ — $ 212,941,000 |
Quarterly Financial Data (Una_2
Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Sep. 30, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Information | Quarters 1st 2nd 3rd 4th 2019: Revenues $ 58,107,000 $ 46,700,000 $ 50,775,000 $ 57,359,000 Operating expenses 56,790,000 50,599,000 49,561,000 53,891,000 Income (loss) before item shown below 1,317,000 (3,899,000 ) 1,214,000 3,468,000 Other income (expense) 6,000 6,000 6,000 42,000 Income (loss) before income taxes $ 1,323,000 $ (3,893,000 ) $ 1,220,000 $ 3,510,000 Net income (loss) attributable to National Holdings Corporation common shareholders $ 956,000 $ (2,785,000 ) $ 233,000 $ 777,000 Net income (loss) per share attributable to National Holdings Corporation common shareholders - Basic $ 0.08 $ (0.22 ) $ 0.02 $ 0.06 Net income (loss) per share attributable to National Holdings Corporation common shareholders - Diluted $ 0.08 $ (0.22 ) $ 0.02 $ 0.06 Weighted average number of shares outstanding - Basic 12,545,286 12,714,002 12,931,660 13,031,462 Weighted average number of shares outstanding - Diluted 12,716,195 12,714,002 13,251,379 13,198,324 Quarters 1st 2nd 3rd 4th 2018: Revenues $ 50,080,000 $ 60,346,000 $ 56,237,000 $ 44,452,000 Operating expenses 50,256,000 55,653,000 54,678,000 47,809,000 Income before item shown below (176,000 ) 4,693,000 1,559,000 (3,357,000 ) Other income (expense) (1) (5,591,000 ) (5,367,000 ) (146,000 ) 63,000 Income (loss) before income taxes $ (5,767,000 ) $ (674,000 ) $ 1,413,000 $ (3,294,000 ) Net income (loss) attributable to National Holdings Corporation common shareholders $ (8,040,000 ) $ (2,252,000 ) $ 812,000 $ (2,030,000 ) Net income (loss) per share attributable to National Holdings Corporation common shareholders - Basic $ (0.65 ) $ (0.18 ) $ 0.07 $ (0.16 ) Net income (loss) per share attributable to National Holdings Corporation common shareholders - Diluted $ (0.65 ) $ (0.18 ) $ 0.06 $ (0.16 ) Weighted average number of shares outstanding - Basic 12,437,916 12,457,043 12,490,539 12,513,364 Weighted average number of shares outstanding - Diluted 12,437,916 12,457,043 13,899,374 12,513,364 (1) Includes loss of $(5,597,000) due to changes in the fair value of warrant liability in both the first and second quarter. |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Class of Stock [Line Items] | |||
Distributed earnings | $ 6,650 | ||
Net income (loss) attributable to noncontrolling interest | 2,660 | $ 0 | $ 0 |
Investment banking fees | 34,184 | 24,789 | 16,537 |
Net loss due to carried interest | $ 2,820 | 2,865 | (5,612) |
Duration between trade date and final settlement | 90 days | ||
Deferred clearing rebates recognized | $ 143 | 143 | 143 |
Deferred clearing rebates | 250 | 393 | |
Deferred marketing rebates recognized | 67 | 67 | 67 |
Deferred marketing rebates | 117 | 183 | |
Reimbursement revenue | $ 9,793 | $ 8,614 | $ 9,941 |
Notes receivable, interest range (up to) (as a percent) | 4.00% | ||
Variable Interest Entity, Not Primary Beneficiary | |||
Class of Stock [Line Items] | |||
Distributed earnings | $ 15,872 | ||
Distribution threshold | 100.00% | ||
Net loss due to carried interest | $ 2,389 | ||
Unrecognized carried interest | 800 | ||
Compensation expense related to liquidation of investments | $ 562 | ||
Minimum | Variable Interest Entity, Not Primary Beneficiary | |||
Class of Stock [Line Items] | |||
Timing of liquidity event | 1 year | ||
Cash fee received | 7.00% | ||
Carried interest | 8.00% | ||
Maximum | |||
Class of Stock [Line Items] | |||
Notes receivable, interest range (up to) (as a percent) | 9.00% | ||
Maximum | Variable Interest Entity, Not Primary Beneficiary | |||
Class of Stock [Line Items] | |||
Timing of liquidity event | 5 years | ||
Cash fee received | 10.00% | ||
Carried interest | 15.00% | ||
Investment Banking | Variable Interest Entity, Not Primary Beneficiary | |||
Class of Stock [Line Items] | |||
Distributed earnings | $ 5,403 | ||
Investment Advisory | Variable Interest Entity, Not Primary Beneficiary | |||
Class of Stock [Line Items] | |||
Distributed earnings | $ 10,469 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Basic and Diluted Common Shares (Details) - shares | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||||||||
Basic weighted-average shares (in shares) | 12,821,581 | 12,474,753 | 12,437,916 | ||||||||
Effect of dilutive securities: | |||||||||||
Diluted weighted-average shares (in shares) | 13,198,324 | 13,251,379 | 12,714,002 | 12,716,195 | 12,513,364 | 13,899,374 | 12,457,043 | 12,437,916 | 12,821,581 | 12,474,753 | 12,472,541 |
Options | |||||||||||
Effect of dilutive securities: | |||||||||||
Effect of dilutive securities (in shares) | 0 | 0 | 140 | ||||||||
Unvested restricted stock units | |||||||||||
Effect of dilutive securities: | |||||||||||
Effect of dilutive securities (in shares) | 0 | 0 | 34,485 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Antidilutive Securities (Details) - shares | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive securities (in shares) | 9,321,747 | 13,271,269 | 10,551,973 |
Options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive securities (in shares) | 604,200 | 615,000 | 1,207,000 |
Warrants | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive securities (in shares) | 5,398,907 | 12,437,172 | 9,344,973 |
Restricted stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive securities (in shares) | 3,318,640 | 219,097 | 0 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Cash and Restricted Cash (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 |
Accounting Policies [Abstract] | ||||
Cash | $ 30,443 | $ 27,920 | ||
Restricted cash | 960 | 1,353 | ||
Cash and restricted cash | $ 31,403 | $ 29,273 | $ 24,889 | $ 22,048 |
New Accounting Guidance - Narra
New Accounting Guidance - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2019 | Oct. 01, 2018 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Cumulative effect of adoption on retained earnings | $ (135) | |
Accounting Standards Update 2014-09 | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Cumulative effect of adoption on retained earnings | $ (135) | |
Minimum | Accounting Standards Update 2016-02 | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Operating lease asset obtained in exchange for operating lease liability | $ 16,000 | |
Maximum | Accounting Standards Update 2016-02 | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Operating lease asset obtained in exchange for operating lease liability | $ 17,000 |
Business Combination, Conting_3
Business Combination, Contingent Consideration and Disposal of Branches - Narrative (Details) | Mar. 31, 2018USD ($)business | Oct. 31, 2016USD ($) | Sep. 30, 2019USD ($)business | Sep. 30, 2018USD ($)branch | Sep. 30, 2017USD ($)branch | Sep. 30, 2016USD ($) |
Business Acquisition [Line Items] | ||||||
Cash paid | $ 387,000 | $ 187,000 | $ 19,000 | |||
Contingent consideration payable | $ 1,620,000 | 744,000 | 311,000 | $ 424,000 | ||
Number of businesses acquired | business | 3 | |||||
Gain on disposal of Gilman branches | $ 0 | 57,000 | $ 137,000 | |||
Notes receivable | 665,000 | $ 746,000 | ||||
Certain Assets of a Tax Preparation and Accounting Business | ||||||
Business Acquisition [Line Items] | ||||||
Cash paid | $ 187,000 | $ 19,000 | 387,000 | |||
Contingent consideration payable | $ 580,000 | $ 192,000 | 1,428,000 | |||
Earn-out period for which the contingent liability is derived | 36 months | |||||
Earn-out period, maximum revenue | $ 225,600 | |||||
Finite-lived intangible assets acquired | $ 211,000 | |||||
Estimated useful life (years) | 3 years | |||||
Number of businesses acquired | business | 5 | |||||
Gilman Branches | ||||||
Business Acquisition [Line Items] | ||||||
Number of branches sold | branch | 1 | 3 | ||||
Consideration for divestiture | $ 159,000 | $ 722,000 | ||||
Disposal of goodwill | 64,000 | 353,000 | ||||
Disposal of intangibles | 38,000 | 232,000 | ||||
Gain on disposal of Gilman branches | $ 57,000 | $ 137,000 | ||||
Notes receivable term | 84 months | |||||
Notes receivable, weighted average interest rate | 4.00% | 3.00% | ||||
Minimum | Gilman Branches | ||||||
Business Acquisition [Line Items] | ||||||
Notes receivable term | 83 months | |||||
Maximum | Gilman Branches | ||||||
Business Acquisition [Line Items] | ||||||
Notes receivable term | 95 months | |||||
Discontinued Operations, Disposed of by Sale | Gilman Branches | ||||||
Business Acquisition [Line Items] | ||||||
Notes receivable | 665,000 | $ 746,000 | ||||
Customer relationships | Certain Assets of a Tax Preparation and Accounting Business | ||||||
Business Acquisition [Line Items] | ||||||
Finite-lived intangible assets acquired | $ 767,000 | $ 1,815,000 | ||||
Estimated useful life (years) | 7 years | 7 years | ||||
Customer relationships | Minimum | ||||||
Business Acquisition [Line Items] | ||||||
Estimated useful life (years) | 3 years | 3 years | ||||
Customer relationships | Maximum | ||||||
Business Acquisition [Line Items] | ||||||
Estimated useful life (years) | 10 years | 10 years |
Business Combination, Conting_4
Business Combination, Contingent Consideration and Disposal of Branches - Changes in Carrying Amount of Contingent Consideration (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Contingent Consideration [Roll Forward] | |||
Beginning balance | $ 744 | $ 311 | $ 424 |
Fair value of contingent consideration in connection with acquisitions | 1,428 | 580 | 192 |
Payments | (617) | (171) | (42) |
Change in fair value | 65 | 24 | (263) |
Ending balance | $ 1,620 | $ 744 | $ 311 |
Goodwill - Schedule of Goodwill
Goodwill - Schedule of Goodwill (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Goodwill [Roll Forward] | |||
Beginning balance | $ 5,153,000 | $ 5,217,000 | |
Reduction related to sale of National Tax branches | (64,000) | ||
Impairment | 0 | 0 | $ (961,000) |
Ending balance | 5,153,000 | 5,153,000 | 5,217,000 |
Brokerage and Advisory Services | |||
Goodwill [Roll Forward] | |||
Beginning balance | 4,451,000 | 4,451,000 | |
Reduction related to sale of National Tax branches | 0 | ||
Impairment | 0 | 0 | |
Ending balance | 4,451,000 | 4,451,000 | 4,451,000 |
Tax and Accounting Services | |||
Goodwill [Roll Forward] | |||
Beginning balance | 702,000 | 766,000 | |
Reduction related to sale of National Tax branches | (64,000) | ||
Impairment | 0 | 0 | |
Ending balance | $ 702,000 | $ 702,000 | $ 766,000 |
Goodwill - Narrative (Details)
Goodwill - Narrative (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Impairment of goodwill | $ 0 | $ 0 | $ 961,000 |
Intangibles - Schedule of Intan
Intangibles - Schedule of Intangibles (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Finite-Lived Intangible Assets [Line Items] | ||
Accumulated amortization | $ 4,640 | $ 3,536 |
Carrying value | 4,731 | |
Cost, total | 10,081 | 8,266 |
Carrying value, total | 5,441 | 4,730 |
Brand name | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 710 | 710 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 9,326 | 7,511 |
Accumulated amortization | 4,614 | 3,525 |
Carrying value | $ 4,712 | $ 3,986 |
Customer relationships | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life (years) | 3 years | 3 years |
Customer relationships | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated useful life (years) | 10 years | 10 years |
Software license | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 45 | $ 45 |
Accumulated amortization | 26 | 11 |
Carrying value | $ 19 | $ 34 |
Estimated useful life (years) | 3 years | 3 years |
Intangibles - Narrative (Detail
Intangibles - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization of intangible assets | $ 1,104 | $ 887 | $ 790 |
Intangibles - Estimated Future
Intangibles - Estimated Future Amortization Expense (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2020 | $ 1,103 |
2021 | 1,092 |
2022 | 1,034 |
2023 | 781 |
2024 | 369 |
Thereafter | 352 |
Carrying value | $ 4,731 |
Receivables From Broker Deale_3
Receivables From Broker Dealers and Clearing Organizations and Other Receivables - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Sep. 30, 2018 |
Brokers and Dealers [Abstract] | ||
Receivables from broker dealers and clearing organizations | $ 3,490 | $ 3,967 |
Receivables From Broker Deale_4
Receivables From Broker Dealers and Clearing Organizations and Other Receivables - Other Receivables (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Sep. 30, 2018 |
Brokers and Dealers [Abstract] | ||
Trailing fees | $ 947 | $ 1,086 |
Accounts receivable for tax and accounting services | 686 | 661 |
Allowance for doubtful accounts - tax and accounting services | (282) | (286) |
Advances to registered representatives | 1,383 | 393 |
Investment banking receivable | 411 | 357 |
Advisory fees | 483 | 559 |
Notes receivable | 665 | 746 |
Other | 1,379 | 749 |
Other receivables | $ 5,672 | $ 4,265 |
Forgivable Loans Receivable - N
Forgivable Loans Receivable - Narrative (Details) - USD ($) | 12 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Investments in and Advances to Affiliates [Line Items] | ||||
Notes receivable, interest range (up to) (as a percent) | 4.00% | |||
Forgiveness of loans | $ 680,000 | $ 630,000 | $ 693,000 | |
Forgivable loans receivable | 1,834,000 | 1,567,000 | $ 1,616,000 | $ 1,712,000 |
Loans Receivable | ||||
Investments in and Advances to Affiliates [Line Items] | ||||
Allowance for doubtful accounts, receivable | $ 0 | 0 | ||
Ended Affiliation | ||||
Investments in and Advances to Affiliates [Line Items] | ||||
Forgivable loans receivable | $ 0 |
Forgivable Loans Receivable - F
Forgivable Loans Receivable - Forgivable Loan Activity (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Loans and Leases Receivable, Related Parties [Roll Forward] | |||
Beginning balance | $ 1,567 | $ 1,616 | $ 1,712 |
Advances | 1,052 | 581 | 694 |
Amortization | (680) | (630) | (693) |
Repayments | (97) | ||
Reclassification to other receivables | (105) | ||
Ending balance | $ 1,834 | $ 1,567 | $ 1,616 |
Fair Value of Assets and Liab_3
Fair Value of Assets and Liabilities - Carrying Values and Estimated Fair Values of Financial Assets and Liabilities Measured on a Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 |
Liabilities | ||||
Contingent consideration liability | $ 1,620 | $ 744 | $ 311 | $ 424 |
Carrying Value | Fair Value, Measurements, Nonrecurring | ||||
Assets | ||||
Receivables from broker-dealers and clearing organizations | 3,490 | 3,967 | ||
Forgivable loans receivable | 1,834 | 1,567 | ||
Other receivables, net | 5,672 | 4,265 | ||
Total assets | 41,875 | 38,055 | ||
Liabilities | ||||
Accrued commissions and payroll payable | 18,590 | 12,862 | ||
Accounts payable and accrued expenses | 8,643 | 7,275 | ||
Total liabilities | 27,233 | 20,137 | ||
Total Estimated Fair Value | Fair Value, Measurements, Nonrecurring | ||||
Assets | ||||
Receivables from broker-dealers and clearing organizations | 3,490 | 3,967 | ||
Forgivable loans receivable | 1,834 | 1,567 | ||
Other receivables, net | 5,672 | 4,265 | ||
Total assets | 41,875 | 38,055 | ||
Liabilities | ||||
Accrued commissions and payroll payable | 18,590 | 12,862 | ||
Accounts payable and accrued expenses | 8,643 | 7,275 | ||
Total liabilities | 27,233 | 20,137 | ||
Total Estimated Fair Value | Fair Value, Measurements, Nonrecurring | Level 1 | ||||
Assets | ||||
Receivables from broker-dealers and clearing organizations | 0 | 0 | ||
Forgivable loans receivable | 0 | 0 | ||
Other receivables, net | 0 | 0 | ||
Total assets | 30,879 | 28,256 | ||
Liabilities | ||||
Accrued commissions and payroll payable | 0 | 0 | ||
Accounts payable and accrued expenses | 0 | 0 | ||
Total liabilities | 0 | 0 | ||
Total Estimated Fair Value | Fair Value, Measurements, Nonrecurring | Level 2 | ||||
Assets | ||||
Receivables from broker-dealers and clearing organizations | 3,490 | 3,967 | ||
Forgivable loans receivable | 1,834 | 1,567 | ||
Other receivables, net | 5,672 | 4,265 | ||
Total assets | 10,996 | 9,799 | ||
Liabilities | ||||
Accrued commissions and payroll payable | 18,590 | 12,862 | ||
Accounts payable and accrued expenses | 8,643 | 7,275 | ||
Total liabilities | 27,233 | 20,137 | ||
Cash | Carrying Value | Fair Value, Measurements, Nonrecurring | ||||
Assets | ||||
Cash and cash equivalents | 30,443 | 27,920 | ||
Cash | Total Estimated Fair Value | Fair Value, Measurements, Nonrecurring | ||||
Assets | ||||
Cash and cash equivalents | 30,443 | 27,920 | ||
Cash | Total Estimated Fair Value | Fair Value, Measurements, Nonrecurring | Level 1 | ||||
Assets | ||||
Cash and cash equivalents | 30,443 | 27,920 | ||
Cash | Total Estimated Fair Value | Fair Value, Measurements, Nonrecurring | Level 2 | ||||
Assets | ||||
Cash and cash equivalents | 0 | 0 | ||
Cash deposits with clearing organizations | Carrying Value | Fair Value, Measurements, Nonrecurring | ||||
Assets | ||||
Cash and cash equivalents | 436 | 336 | ||
Cash deposits with clearing organizations | Total Estimated Fair Value | Fair Value, Measurements, Nonrecurring | ||||
Assets | ||||
Cash and cash equivalents | 436 | 336 | ||
Cash deposits with clearing organizations | Total Estimated Fair Value | Fair Value, Measurements, Nonrecurring | Level 1 | ||||
Assets | ||||
Cash and cash equivalents | 436 | 336 | ||
Cash deposits with clearing organizations | Total Estimated Fair Value | Fair Value, Measurements, Nonrecurring | Level 2 | ||||
Assets | ||||
Cash and cash equivalents | $ 0 | $ 0 |
Fair Value of Assets and Liab_4
Fair Value of Assets and Liabilities - Fair Value Hierarchy of Financial Assets and Liabilities (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | Sep. 30, 2019 | Sep. 30, 2018 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | $ 6,302 | $ 1,084 |
Liabilities | 0 | 0 |
Level 1 | Contingent consideration | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 0 | 0 |
Level 1 | Corporate stocks | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 6,282 | 1,084 |
Level 1 | Municipal bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 20 | |
Level 1 | Restricted stock | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 0 | |
Level 1 | Warrants | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 2,254 | 3,423 |
Liabilities | 0 | 0 |
Level 2 | Contingent consideration | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 0 | 0 |
Level 2 | Corporate stocks | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 0 | 0 |
Level 2 | Municipal bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 0 | |
Level 2 | Restricted stock | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 725 | 670 |
Level 2 | Warrants | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 1,529 | 2,753 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 3,925 | 3,279 |
Liabilities | 1,620 | 744 |
Level 3 | Contingent consideration | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 1,620 | 744 |
Level 3 | Corporate stocks | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 0 | 0 |
Level 3 | Municipal bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 0 | |
Level 3 | Restricted stock | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 0 | |
Level 3 | Warrants | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 3,925 | 3,279 |
Carrying Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 12,481 | 7,786 |
Liabilities | 1,620 | 744 |
Carrying Value | Contingent consideration | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 1,620 | 744 |
Carrying Value | Corporate stocks | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 6,282 | 1,084 |
Carrying Value | Municipal bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 20 | |
Carrying Value | Restricted stock | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 725 | 670 |
Carrying Value | Warrants | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 5,454 | 6,032 |
Total Estimated Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 12,481 | 7,786 |
Liabilities | 1,620 | 744 |
Total Estimated Fair Value | Contingent consideration | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 1,620 | 744 |
Total Estimated Fair Value | Corporate stocks | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 6,282 | 1,084 |
Total Estimated Fair Value | Municipal bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 20 | |
Total Estimated Fair Value | Restricted stock | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 725 | 670 |
Total Estimated Fair Value | Warrants | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | $ 5,454 | $ 6,032 |
Fair Value of Assets and Liab_5
Fair Value of Assets and Liabilities - Schedule of Assets Measured on Recurring Basis, Unobservable Inputs (Details) - Warrants - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | $ 3,279 | $ 0 |
Net realized gain or (losses) | 0 | 0 |
Net change in unrealized appreciation (depreciation) | (73) | 297 |
Purchases | 0 | 0 |
Sales | 0 | 0 |
Transfer into Level 3 | 883 | 2,982 |
Transfer out of Level 3 | (164) | 0 |
Ending balance | $ 3,925 | $ 3,279 |
Fair Value of Assets and Liab_6
Fair Value of Assets and Liabilities - Schedule of Fair Value Inputs and Valuation Techniques (Details) $ in Thousands | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) |
Minimum | Market Approach | Discount for lack of marketability | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Measurement input of warrants | 0.21 | 0.36 | |
Minimum | Market Approach | Volatility | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Measurement input of warrants | 0.55 | 0.55 | |
Maximum | Market Approach | Discount for lack of marketability | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Measurement input of warrants | 0.44 | 0.36 | |
Maximum | Market Approach | Volatility | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Measurement input of warrants | 1.20 | 1.16 | |
Warrants | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Fair value of warrants | $ 3,925 | $ 3,279 | $ 0 |
Fair Value of Assets and Liab_7
Fair Value of Assets and Liabilities - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Unrealized (loss) gain | $ (2,820) | $ (2,865) | $ 5,612 |
Fixed Assets - Schedule of Fixe
Fixed Assets - Schedule of Fixed Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Property, Plant and Equipment [Line Items] | ||
Fixed assets - gross | $ 7,165 | $ 5,201 |
Less accumulated depreciation and amortization | (2,098) | (2,530) |
Fixed assets - net | 5,067 | 2,671 |
Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Fixed assets - gross | 1,835 | 2,299 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Fixed assets - gross | $ 761 | 439 |
Estimated useful lives (in years) | 5 years | |
Construction in Process | ||
Property, Plant and Equipment [Line Items] | ||
Fixed assets - gross | $ 0 | 271 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Fixed assets - gross | 3,662 | 1,453 |
Capital leases (primarily composed of computer equipment) | ||
Property, Plant and Equipment [Line Items] | ||
Fixed assets - gross | $ 907 | $ 739 |
Minimum | Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives (in years) | 3 years | |
Minimum | Capital leases (primarily composed of computer equipment) | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives (in years) | 3 years | |
Maximum | Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives (in years) | 5 years | |
Maximum | Capital leases (primarily composed of computer equipment) | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives (in years) | 7 years |
Fixed Assets - Narrative (Detai
Fixed Assets - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation and amortization | $ 728 | $ 664 | $ 439 |
Accounts Payable and Other Ac_3
Accounts Payable and Other Accrued Expenses - Schedule of Accounts Payable and Other Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 |
Payables and Accruals [Abstract] | ||||
Legal | $ 900 | $ 448 | ||
Audit | 239 | 411 | ||
Telecommunications | 125 | 240 | ||
Data Services | 296 | 370 | ||
Regulatory | 292 | 335 | ||
Settlements | 1,817 | 825 | ||
Deferred rent | 772 | 670 | ||
Contingent consideration payable | 1,620 | 744 | $ 311 | $ 424 |
Other | 4,202 | 3,976 | ||
Total | $ 10,263 | $ 8,019 |
Accounts Payable and Other Ac_4
Accounts Payable and Other Accrued Expenses - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | |||
Jan. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Short-term Debt [Line Items] | ||||
Restitution payment accrual related to trailing fees | $ 319 | $ 739 | ||
Soft dollar accruals | 1,188 | 704 | ||
Accrued professional fees | 119 | |||
Financial obligation | 595 | |||
Accrued fixed assets payable | 380 | |||
Accrued rent, other | 396 | |||
Clearing fees | 228 | |||
Recruiting fee payable | 187 | |||
Sales and use tax accrual | $ 189 | |||
Annual Subscription Fee | ||||
Short-term Debt [Line Items] | ||||
Financial obligation | 308 | |||
System Implementation | ||||
Short-term Debt [Line Items] | ||||
Financial obligation | $ 650 | |||
Product Financing Arrangement | Annual Subscription Fee | ||||
Short-term Debt [Line Items] | ||||
Debt instrument, term | 12 months | |||
Product Financing Arrangement | System Implementation | ||||
Short-term Debt [Line Items] | ||||
Debt instrument, term | 36 months |
Income Taxes - Income Tax Expen
Income Taxes - Income Tax Expense Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Federal | |||
Current income tax expense | $ 424 | $ 589 | $ 1,074 |
Deferred income tax benefit | (145) | 2,293 | 2,126 |
Total income tax expense | 279 | 2,882 | 3,200 |
State | |||
Current income tax expense | 263 | 371 | 439 |
Deferred income tax benefit | (223) | (65) | 412 |
Total income tax expense | 40 | 306 | 851 |
Total | |||
Current income tax expense | 687 | 960 | 1,513 |
Deferred income tax benefit | (368) | 2,228 | 2,538 |
Total income tax expense | $ 319 | $ 3,188 | $ 4,051 |
Income Taxes - Income Tax Provi
Income Taxes - Income Tax Provision (Benefit) (Details) | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |||
Statutory federal rate | (21.00%) | (24.30%) | (34.00%) |
State income taxes, net of federal income tax expense (benefit) | 1.80% | 2.50% | (3.40%) |
Permanent differences for tax purposes | 9.20% | 33.10% | 14.40% |
Change in rate | 9.70% | 28.20% | (0.00%) |
Write-off of deferred tax asset attributable to change in ownership | 67.70% | (0.00%) | (0.00%) |
Other | (3.60%) | (1.20%) | (1.40%) |
Effective income tax rate reconciliation | 63.80% | 38.30% | (24.40%) |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Sep. 30, 2018 |
Deferred tax assets (liabilities): | ||
Net operating loss carryforwards | $ 2,967 | $ 3,673 |
Contingent consideration | 441 | 203 |
Stock based compensation | 1,481 | 938 |
Accrued expenses | 1,499 | 1,031 |
Accounts receivable and other receivables | 91 | 149 |
Federal AMT credit carryforward | 260 | 260 |
Fixed assets | (510) | (186) |
Intangibles | (448) | (361) |
Securities | (1,221) | (1,515) |
Total deferred tax asset, net | $ 4,560 | $ 4,192 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Operating Loss Carryforwards [Line Items] | |||
Income tax expense | $ 319 | $ 3,188 | $ 4,051 |
Annualized blended rate | 21.00% | 24.30% | 34.00% |
Tax Cuts And Jobs Act Of 2017, tax expenses realized from adjustment of deferred taxes | $ 2,400 | ||
Gilman | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforwards | 4,600 | ||
FBIO Acquisitions Inc. | |||
Operating Loss Carryforwards [Line Items] | |||
Income tax expense | 339 | ||
Federal | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforwards | 13,300 | ||
State | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforwards | $ 8,700 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) | 1 Months Ended | 12 Months Ended | ||
Oct. 31, 2018 | Sep. 30, 2019USD ($)Letter_of_credit | Sep. 30, 2018USD ($)Letter_of_credit | Sep. 30, 2017USD ($) | |
Loss Contingencies [Line Items] | ||||
Lease term | 24 months | |||
Amortization period | 7 years | |||
Interest rate on lease obligation | 560.00% | |||
Rent expense under operating leases | $ 4,240,000 | $ 4,149,000 | $ 4,257,000 | |
Sublease income under operating subleases | $ 51,000 | $ 558,000 | 167,000 | |
Number of letters of credit | Letter_of_credit | 1 | 2 | ||
Litigation expense | $ 3,008,000 | $ 1,737,000 | 3,414,000 | |
Pending Litigation | Professional Fees | ||||
Loss Contingencies [Line Items] | ||||
Litigation and FINRA related expenses | 2,052,000 | 950,000 | $ 1,476,000 | |
Pending Litigation | Accounts Payable and Accrued Expenses | ||||
Loss Contingencies [Line Items] | ||||
Estimate of possible loss | 1,817,000 | 825,000 | ||
Letter of Credit | ||||
Loss Contingencies [Line Items] | ||||
Maximum borrowing capacity | $ 960,000 | $ 1,353,000 |
Commitments and Contingencies_2
Commitments and Contingencies - Future Minimum Lease Payments (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Operating Leases | |
2020 | $ 2,975 |
2021 | 2,991 |
2022 | 2,459 |
2023 | 2,304 |
2024 | 2,109 |
Thereafter | 7,450 |
Total minimum lease payments | 20,288 |
Capital Lease | |
2020 | 297 |
2021 | 0 |
2022 | 0 |
2023 | 0 |
2024 | 0 |
Thereafter | 0 |
Total minimum lease payments | 297 |
Less: Amounts representing interest not yet incurred | 10 |
Present value of capital lease obligations | $ 287 |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) | Nov. 14, 2018shares | Aug. 31, 2019USD ($)shares | Jul. 31, 2019USD ($)shares | Apr. 30, 2019USD ($)shares | Feb. 28, 2019USD ($)shares | Nov. 30, 2018USD ($)shares | Jul. 31, 2018USD ($)shares | Apr. 30, 2018USD ($)shares | Feb. 28, 2018USD ($)shares | Sep. 30, 2019USD ($)shares | Sep. 30, 2018USD ($)shares | Sep. 30, 2017USD ($)shares | Aug. 31, 2015USD ($) |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Stock repurchase program, authorized amount | $ 2,000,000 | ||||||||||||
Restricted Stock Units | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Granted (in shares) | shares | 1,810,017 | 1,295,632 | 1,250,000 | ||||||||||
Fair value | $ 1,966,000 | $ 2,261,000 | $ 697,000 | $ 3,054,000 | |||||||||
Award conversion rate | 1 | ||||||||||||
Stock based compensation expense | $ 4,282,000 | $ 2,913,000 | $ 602,000 | ||||||||||
Unrecognized share base-compensation expense | $ 5,167,000 | ||||||||||||
Options | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Award vesting period (up to) | 5 years | ||||||||||||
Award expiration period | 5 years | ||||||||||||
Director | Restricted Stock Units | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Granted (in shares) | shares | 363,558 | ||||||||||||
Employee(s) | Restricted Stock Units | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Granted (in shares) | shares | 265,960 | 1,447,292 | 31,250 | 847,858 | 52,966 | ||||||||
Fair value | $ 843,000 | $ 4,289,000 | $ 100,000 | $ 3,184,000 | |||||||||
Employee(s) | Restricted stock | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Granted (in shares) | shares | 20,563 | 17,925 | 58,277 | ||||||||||
Fair value | $ 47,000 | $ 48,000 | $ 173,000 | ||||||||||
B. Riley Financial, Inc. | Common Stock | FBIO Acquisitions Inc. | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Number of shares tendered for acquisition (in shares) | shares | 7,037,482 |
Stockholders' Equity - Nonveste
Stockholders' Equity - Nonvested Restricted Stock Unit Activity (Details) - Restricted Stock Units - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Feb. 28, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Shares | ||||
Beginning balance (in shares) | 2,207,242 | 1,250,000 | 0 | |
Granted (in shares) | 1,810,017 | 1,295,632 | 1,250,000 | |
Vested (in shares) | (563,711) | (251,042) | ||
Forfeited or expired (in shares) | (134,908) | (87,348) | ||
Ending balance (in shares) | 3,318,640 | 2,207,242 | 1,250,000 | |
Weighted Average Grant Due Fair Value | ||||
Beginning balance | $ 7,302 | $ 3,054 | $ 0 | |
Granted | 5,400 | 5,250 | 3,054 | |
Vested | $ (1,966) | (2,261) | (697) | (3,054) |
Forfeited | (435) | (305) | ||
Ending balance | $ 10,006 | $ 7,302 | $ 3,054 |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Options | ||||
Beginning balance (in shares) | 612,000 | 1,206,000 | 1,221,500 | |
Forfeited or expired (in shares) | (7,800) | (594,000) | (15,500) | |
Ending balance (in shares) | 604,200 | 612,000 | 1,206,000 | 1,221,500 |
Vested and exercisable balance (in shares) | 604,200 | |||
Weighted Average Exercise Price Per Share | ||||
Beginning balance (in dollars per share) | $ 6.23 | $ 6.54 | $ 6.51 | |
Forfeited or expired (in dollars per share) | 5.54 | 6.85 | 4.42 | |
Ending balance (in dollars per share) | 6.19 | 6.23 | 6.54 | $ 6.51 |
Vested and exercisable balance (in dollars per share) | 6.19 | |||
Weighted Average Grant-Date Fair Value Per Share | ||||
Beginning balance (in dollars per share) | 1.59 | 1.21 | 1.22 | |
Forfeited or expired (in dollars per share) | 2.69 | 0.83 | 1.99 | |
Ending balance (in dollars per share) | 1.58 | $ 1.59 | $ 1.21 | $ 1.22 |
Vested and exercisable balance (in dollars per share) | $ 1.58 | |||
Weighted Average Remaining Contractual Term | ||||
Balance | 2 years 3 months 13 days | 3 years 3 months 7 days | 2 years 3 months 15 days | 3 years 3 months 22 days |
Vested and exercisable balance | 2 years 3 months 13 days | |||
Aggregate Intrinsic Value | ||||
Aggregate Intrinsic Value | $ 0 |
Stockholders' Equity - Warrants
Stockholders' Equity - Warrants Outstanding (Details) - Warrants - $ / shares | 12 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2016 | |
Warrants | ||||
Beginning balance (in shares) | 12,436,427 | 12,439,387 | 23,029 | |
Issued (in shares) | 12,437,916 | |||
Forfeited or expired (in shares) | (7,037,482) | (1,471) | (21,558) | |
Exercised (in shares) | (38) | (1,489) | ||
Ending balance (in shares) | 5,398,907 | 12,436,427 | 12,439,387 | 23,029 |
Weighted Average Exercise Price Per Share | ||||
Beginning balance (in dollars per share) | $ 3.25 | $ 3.25 | $ 5 | |
Issued (in dollars per share) | 3.25 | |||
Forfeited or expired (in dollars per share) | 3.25 | 5 | 5 | |
Exercised (in dollars per share) | 3.25 | 3.25 | ||
Ending balance (in dollars per share) | $ 3.25 | $ 3.25 | $ 3.25 | $ 5 |
Weighted Average Remaining Contractual Term | ||||
Balance outstanding | 2 years 3 months 18 days | 3 years 3 months 18 days | 4 years 3 months 18 days | 9 months |
Issued | 4 years 3 months 18 days |
Net Capital Requirements of B_2
Net Capital Requirements of Broker Dealer Subsidiary (Details) - National Securities | Sep. 30, 2019USD ($) |
Net Capital Requirements [Line Items] | |
Net capital | $ 5,887,912 |
Excess net capital | 4,887,912 |
SEC Requirement | |
Net Capital Requirements [Line Items] | |
Minimum net capital required | $ 1,000,000 |
Employee Benefits (Details)
Employee Benefits (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Retirement Benefits [Abstract] | |||
Maximum annual contributions per employee, percent (up to) | 75.00% | ||
Employer discretionary contribution amount | $ 146,000 | $ 71,000 | $ 0 |
Segment Information - Narrative
Segment Information - Narrative (Details) | 12 Months Ended |
Sep. 30, 2019segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Segment Information - Table (De
Segment Information - Table (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Segment Reporting Information [Line Items] | |||||||||||
Revenues | $ 57,359 | $ 50,775 | $ 46,700 | $ 58,107 | $ 44,452 | $ 56,237 | $ 60,346 | $ 50,080 | $ 212,941 | $ 211,115 | $ 189,870 |
Pre-tax income (loss) | 3,510 | $ 1,220 | $ (3,893) | $ 1,323 | (3,294) | $ 1,413 | $ (674) | $ (5,767) | 2,160 | (8,322) | 16,579 |
Identifiable assets | 81,207 | 68,449 | 81,207 | 68,449 | 64,398 | ||||||
Depreciation and amortization | 1,832 | 1,551 | 1,229 | ||||||||
Interest | 32 | 97 | 14 | ||||||||
Capital expenditures | 3,124 | 938 | 1,672 | ||||||||
Corporate | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenues | 0 | 0 | 0 | ||||||||
Pre-tax income (loss) | (5,447) | (14,393) | 4,414 | ||||||||
Identifiable assets | 15,014 | 12,096 | 15,014 | 12,096 | 14,201 | ||||||
Depreciation and amortization | 501 | 539 | 354 | ||||||||
Capital expenditures | 2,273 | 331 | 1,459 | ||||||||
Brokerage and Advisory Services | Operating Segments | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenues | 204,134 | 203,343 | 182,431 | ||||||||
Pre-tax income (loss) | 7,522 | 5,176 | 11,516 | ||||||||
Identifiable assets | 61,880 | 51,946 | 61,880 | 51,946 | 47,213 | ||||||
Depreciation and amortization | 841 | 749 | 694 | ||||||||
Interest | 32 | 97 | 14 | ||||||||
Capital expenditures | 776 | 564 | 140 | ||||||||
Tax and Accounting Services | Operating Segments | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenues | 8,807 | 7,772 | 7,439 | ||||||||
Pre-tax income (loss) | 85 | 895 | 649 | ||||||||
Identifiable assets | $ 4,313 | $ 4,407 | 4,313 | 4,407 | 2,984 | ||||||
Depreciation and amortization | 490 | 263 | 181 | ||||||||
Capital expenditures | $ 75 | $ 43 | $ 73 |
Acquisition of Interests in t_2
Acquisition of Interests in the Company and Dividend Warrants - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Feb. 11, 2019 | Nov. 14, 2018 | Sep. 12, 2016 | Jan. 31, 2017 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 |
Business Acquisition [Line Items] | |||||||||
Change in fair value of warrants | $ 5,597 | $ 5,597 | $ 0 | $ (11,194) | $ 8,458 | ||||
Reclassification of warrant liability from debt to equity | $ 0 | $ 16,791 | $ 0 | ||||||
FBIO Acquisitions Inc. | Common Stock | |||||||||
Business Acquisition [Line Items] | |||||||||
Warranty contract term | 5 years | ||||||||
Warrant price (in dollars per share) | $ 3.25 | ||||||||
FBIO Acquisitions Inc. | National Holdings Corp | |||||||||
Business Acquisition [Line Items] | |||||||||
Stock ownership percentage required to become a privately held company, | 80.00% | ||||||||
FBIO Acquisitions Inc. | National Holdings Corp | Common Stock | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of shares tendered for acquisition (in shares) | 7,037,482 | ||||||||
Equity interest after business acquisition | 56.60% | ||||||||
Acquisition share price (in dollars per share) | $ 3.25 | ||||||||
B. Riley Financial, Inc. | FBIO Acquisitions Inc. | |||||||||
Business Acquisition [Line Items] | |||||||||
Acquisition share price (in dollars per share) | $ 3.25 | ||||||||
B. Riley Financial, Inc. | FBIO Acquisitions Inc. | Common Stock | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of shares tendered for acquisition (in shares) | 7,037,482 | ||||||||
Equity interest after business acquisition | 56.10% | ||||||||
Acquisition share price (in dollars per share) | $ 3.25 | ||||||||
Voting rights threshold for two board observers | 24.00% | ||||||||
Voting rights threshold for one board observer | 5.00% | ||||||||
Immediate Purchase | B. Riley Financial, Inc. | FBIO Acquisitions Inc. | Common Stock | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of shares tendered for acquisition (in shares) | 3,010,054 | ||||||||
Purchase After Period Of Time From FINRA Approval | B. Riley Financial, Inc. | FBIO Acquisitions Inc. | Common Stock | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of shares tendered for acquisition (in shares) | 3,149,496 | ||||||||
Purchase After Period Of Time From FINRA Approval | Third Parties | FBIO Acquisitions Inc. | Common Stock | |||||||||
Business Acquisition [Line Items] | |||||||||
Number of shares tendered for acquisition (in shares) | 877,932 | ||||||||
Warrants | FBIO Acquisitions Inc. | Common Stock | |||||||||
Business Acquisition [Line Items] | |||||||||
Warrants issued (in shares) | 12,437,916 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Related Party Transaction [Line Items] | |||
Investment banking revenue | $ 0 | $ 4,931 | $ 14,414 |
Warrants | Fortress | |||
Related Party Transaction [Line Items] | |||
Value of warrants received | $ 522 | $ 1,449 |
Revenues from Contracts and S_3
Revenues from Contracts and Significant Customers (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | $ 207,884 | ||||||||||
Other revenue | 5,057 | ||||||||||
Total Revenues | $ 57,359 | $ 50,775 | $ 46,700 | $ 58,107 | $ 44,452 | $ 56,237 | $ 60,346 | $ 50,080 | 212,941 | $ 211,115 | $ 189,870 |
Commissions, Transaction Fees, And Clearing Services | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 95,021 | ||||||||||
Investment Banking | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 69,656 | 57,201 | 44,385 | ||||||||
Investment Advisory | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 34,400 | 21,483 | 14,738 | ||||||||
Tax Preparation And Accounting | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 8,807 | ||||||||||
Corporate | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 0 | ||||||||||
Other revenue | 0 | ||||||||||
Total Revenues | 0 | 0 | 0 | ||||||||
Corporate | Commissions, Transaction Fees, And Clearing Services | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 0 | ||||||||||
Corporate | Investment Advisory | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 0 | ||||||||||
Corporate | Tax Preparation And Accounting | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 0 | ||||||||||
Brokerage and Advisory Services | Operating Segments | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 199,077 | ||||||||||
Other revenue | 5,057 | ||||||||||
Total Revenues | 204,134 | 203,343 | 182,431 | ||||||||
Brokerage and Advisory Services | Operating Segments | Commissions, Transaction Fees, And Clearing Services | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 95,021 | ||||||||||
Brokerage and Advisory Services | Operating Segments | Investment Banking | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 69,656 | ||||||||||
Brokerage and Advisory Services | Operating Segments | Investment Advisory | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 34,400 | ||||||||||
Brokerage and Advisory Services | Operating Segments | Tax Preparation And Accounting | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 0 | ||||||||||
Tax and Accounting Services | Operating Segments | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 8,807 | ||||||||||
Other revenue | 0 | ||||||||||
Total Revenues | 8,807 | $ 7,772 | $ 7,439 | ||||||||
Tax and Accounting Services | Operating Segments | Commissions, Transaction Fees, And Clearing Services | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 0 | ||||||||||
Tax and Accounting Services | Operating Segments | Investment Advisory | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | 0 | ||||||||||
Tax and Accounting Services | Operating Segments | Tax Preparation And Accounting | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Revenue from contracts with customers | $ 8,807 |
Quarterly Financial Data (Una_3
Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenues | $ 57,359 | $ 50,775 | $ 46,700 | $ 58,107 | $ 44,452 | $ 56,237 | $ 60,346 | $ 50,080 | $ 212,941 | $ 211,115 | $ 189,870 |
Operating expenses | 53,891 | 49,561 | 50,599 | 56,790 | 47,809 | 54,678 | 55,653 | 50,256 | 210,841 | 208,396 | 181,902 |
Income before Other Income (Expense) and Income Taxes | 3,468 | 1,214 | (3,899) | 1,317 | (3,357) | 1,559 | 4,693 | (176) | 2,100 | 2,719 | 7,968 |
Other income (expense) | 42 | 6 | 6 | 6 | 63 | (146) | (5,367) | (5,591) | 60 | (11,041) | 8,611 |
Income (Loss) before Income Taxes | 3,510 | 1,220 | (3,893) | 1,323 | (3,294) | 1,413 | (674) | (5,767) | 2,160 | (8,322) | 16,579 |
Net income (loss) attributable to National Holdings Corporation common shareholders | $ 777 | $ 233 | $ (2,785) | $ 956 | $ (2,030) | $ 812 | $ (2,252) | $ (8,040) | $ (819) | $ (11,510) | $ 12,528 |
Net income (loss) per share attributable to National Holdings Corporation common shareholders - Basic (in dollars per share) | $ 0.06 | $ 0.02 | $ (0.22) | $ 0.08 | $ (0.16) | $ 0.07 | $ (0.18) | $ (0.65) | $ (0.06) | $ (0.92) | $ 1.01 |
Net income (loss) per share attributable to National Holdings Corporation common shareholders - Diluted (in dollars per share) | $ 0.06 | $ 0.02 | $ (0.22) | $ 0.08 | $ (0.16) | $ 0.06 | $ (0.18) | $ (0.65) | $ (0.06) | $ (0.92) | $ 1 |
Weighted average number of shares outstanding - Basic (in shares) | 13,031,462 | 12,931,660 | 12,714,002 | 12,545,286 | 12,513,364 | 12,490,539 | 12,457,043 | 12,437,916 | 12,821,581 | 12,474,753 | 12,437,916 |
Weighted average number of shares outstanding - Diluted (in shares) | 13,198,324 | 13,251,379 | 12,714,002 | 12,716,195 | 12,513,364 | 13,899,374 | 12,457,043 | 12,437,916 | 12,821,581 | 12,474,753 | 12,472,541 |
Change in fair value of warrant liability | $ (5,597) | $ (5,597) | $ 0 | $ 11,194 | $ (8,458) |
Subsequent Event (Details)
Subsequent Event (Details) - Winslow Targets - Subsequent Event | Oct. 11, 2019USD ($)Installment |
Subsequent Event [Line Items] | |
Equity interest acquired from business acquisition | 100.00% |
Consideration transferred | $ 3,200,000 |
Annual installments | Installment | 3 |
Contingent consideration, maximum, net working capital | $ 1,000,000 |
Contingent consideration, minimum, pre-tax net income | 1,500,000 |
Contingent consideration, maximum, pre-tax net income | 3,000,000 |
Amount placed in escrow | 500,000 |
Assets acquired | $ 2,500,000,000 |
Uncategorized Items - nhld-2019
Label | Element | Value |
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | $ 46,800,000 |
Noncontrolling Interest [Member] | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | $ 0 |
Common Stock [Member] | ||
Shares, Issued | us-gaap_SharesIssued | 12,541,890 |
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | $ 250,000 |
Retained Earnings [Member] | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | (39,960,000) |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (135,000) |
Additional Paid-in Capital [Member] | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | $ 86,510,000 |