10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended March 31, 2015 Commission File Number 001-12629

NATIONAL HOLDINGS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	36-4128138
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

410 Park Ave, 14th Floor, New York, NY 10022

(Address including zip code of principal executive offices)

Registrant’s telephone number, including area code: (212) 417-8000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☒ No☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one).

Large Accelerated Filer ☐	Accelerated Filer ☐
Non-Accelerated Filer ☐	Smaller Reporting Company ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES  ☐NO ☒

As of May 12, 2015 there were 12,446,365 shares of the registrant's common stock outstanding.

 NATIONAL HOLDINGS CORPORATION

FORM 10-Q

QUARTERLY PERIOD ENDED MARCH 31, 2015

INDEX

PART I – FINANCIAL INFORMATION
	Item 1 – Unaudited Condensed Financial Statements
		Condensed Consolidated Statements of Financial Condition as of March 31, 2015 and September 30, 2014	4
		Condensed Consolidated Statements of Operations for the Three and Six months ended March 31, 2015 and 2014	5
		Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six months ended March 31, 2015	6
		Condensed Consolidated Statements of Cash Flows for the Six months ended March 31, 2015 and 2014	7
		Condensed Notes to Consolidated Financial Statements	8
	Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations		18
	Item 3 – Quantitative and Qualitative Disclosures About Market Risk		26
	Item 4 – Controls and Procedures		27
PART II – OTHER INFORMATION
	Item 1 – Legal Proceedings		28
	Item 1A – Risk Factors		28
	Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds		28
	Item 3 - Defaults Upon Senior Securities		28
	Item 4 - Mine Safety Disclosures		28
	Item 5 - Other Information		28
	Item 6 – Exhibits		28
	Signatures		29

2

FORWARD-LOOKING STATEMENTS

The following information provides cautionary statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. We identify important factors that could cause our actual results to differ materially from those projected in forward-looking statements we make in this report or in other documents that reference this report. All statements that express or involve discussions as to: expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, identified through the use of words or phrases such as we or our management believes, expects, anticipates or hopes and words or phrases such as will result, are expected to, will continue, is anticipated, estimated, projection and outlook, and words of similar import) are not statements of historical facts and may be forward-looking. These forward-looking statements are based largely on our expectations and are subject to a number of risks and uncertainties including, but not limited to, economic, competitive, regulatory, growth strategies, available financing and other factors discussed elsewhere in this report and in the documents filed by us with the Securities and Exchange Commission ("SEC"). Many of these factors are beyond our control. Actual results could differ materially from the forward-looking statements we make in this report or in other documents that reference this report. In light of these risks and uncertainties, there can be no assurance that the results anticipated in the forward-looking information contained in this report or other documents that reference this report will, in fact, occur.

These forward-looking statements involve estimates, assumptions and uncertainties, and, accordingly, actual results could differ materially from those expressed in the forward-looking statements. These uncertainties include, among others, the following: (i) the inability of our broker-dealer operations to operate profitably in the face of intense competition from larger full service and discount brokers; (ii) a general decrease in merger and acquisition activities and our potential inability to receive success fees as a result of transactions not being completed; (iii) increased competition from business development portals; (iv) technological changes; (v) our potential inability to implement our growth strategy through acquisitions or joint ventures; and (vi) our potential inability to secure additional debt or equity financing.

Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events, except as required by law. New factors emerge from time to time and it is not possible for our management to predict all of such factors, nor can our management assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.

3

PART I.        FINANCIAL INFORMATION

ITEM I.         FINANCIAL STATEMENTS

NATIONAL HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

	March 31,			September 30,
	2015			2014
	(Unaudited)
ASSETS
Cash	$	23,924,000		$	24,465,000
Restricted cash		217,000			92,000
Cash deposits with clearing organizations		1,005,000			1,005,000
Securities owned, at fair value		914,000			1,061,000
Receivables from broker-dealers and clearing organizations		3,632,000			4,985,000
Forgivable loans receivable		936,000			662,000
Other receivables, net		4,277,000			3,998,000
Prepaid expenses		1,913,000			932,000
Fixed assets, net		804,000			752,000
Intangible assets, net		7,755,000			7,595,000
Goodwill		6,531,000			6,531,000
Deferred tax asset, net		11,551,000			11,925,000
Other assets, principally refundable deposits		532,000			790,000
Total Assets	$	63,991,000		$	64,793,000
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Securities sold, but not yet purchased, at fair value	$	34,000		$	55,000
Accrued commissions and payroll payable		12,530,000			13,520,000
Accounts payable and other liabilities		5,118,000			5,715,000
Deferred clearing credit		893,000			971,000
Total Liabilities		18,575,000			20,261,000
Stockholders’ Equity
Preferred stock, $0.01 par value, 10,000,000 shares authorized; none outstanding
Common stock $0.02 par value, 150,000,000 shares authorized; 12,446,365 issued and outstanding at March 31, 2015 and at September 30, 2014		249,000			249,000
Additional paid-in-capital		80,090,000			79,837,000
Accumulated deficit		(34,938,000	)		(35,569,000	)
Total National Holdings Corporation Stockholders’ Equity		45,401,000			44,517,000
Non-Controlling interest		15,000			15,000
Total Stockholders’ Equity		45,416,000			44,532,000
Total Liabilities and Stockholders’ Equity	$	63,991,000		$	64,793,000

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

NATIONAL HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Month Period Ended March 31,				Six Month Period Ended  March 31,
	2015		2014		2015		2014
Revenues
Commissions	$	25,746,000	$	30,306,000	$	50,162,000	$	57,913,000
Principal transactions		2,705,000		5,983,000		6,143,000		9,142,000
Investment banking		4,391,000		5,619,000		9,513,000		8,952,000
Investment advisory		3,527,000		3,696,000		7,352,000		6,936,000
Interest and dividends		847,000		885,000		1,678,000		1,817,000
Transfer fees and clearing services		1,853,000		2,452,000		4,567,000		4,767,000
Tax preparation and accounting		3,748,000		3,737,000		4,507,000		4,275,000
Other		100,000		55,000		193,000		112,000
Total Revenues		42,917,000		52,733,000		84,115,000		93,914,000
Operating Expenses
Commissions, compensation and fees		36,099,000		41,929,000		71,387,000		76,528,000
Clearing fees		886,000		1,103,000		1,528,000		2,140,000
Communications		1,194,000		1,191,000		2,442,000		2,331,000
Occupancy		1,004,000		1,073,000		2,025,000		2,027,000
License and registration		467,000		307,000		867,000		753,000
Professional fees		1,095,000		1,228,000		1,820,000		2,098,000
Interest		2,000		8,000		6,000		24,000
Depreciation and amortization		294,000		298,000		568,000		562,000
Other administrative expenses		1,343,000		1,902,000		2,424,000		2,691,000
Total Operating Expenses		42,384,000		49,039,000		83,067,000		89,154,000
Income before Income Tax Expense		533,000		3,694,000		1,048,000		4,760,000
Income tax expense		196,000		134,000		417,000		241,000
Net Income	$	337,000	$	3,560,000	$	631,000	$	4,519,000
Net income per share of common stock - Basic	$	0.03	$	0.29	$	0.05	$	0.37
Net income per share of common stock - Diluted	$	0.03	$	0.28	$	0.05	$	0.37
Weighted number of shares outstanding - Basic		12,446,365		12,324,689		12,446,365		12,150,330
Weighted number of shares outstanding - Diluted		12,502,758		12,502,307		12,497,628		12,301,330

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

 NATIONAL HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY 

(Unaudited)

FOR THE SIX MONTHS ENDED MARCH 31, 2015

	Common Stock				Additional Paid-in-		Accumulated			Non-Controlling		Total Stockholders
	Shares			$	Capital		Deficit			Interest		Equity
Balance, September 30, 2014*		12,446,365	$	249,000	$	79,837,000	$	(35,569,000	)	$	15,000	$	44,532,000
Stock-based compensation – stock options						144,000							144,000
Stock- based compensation for restricted stock units						109,000							109,000
Net income								631,000					631,000
Balance, March 31, 2015		12,446,365	$	249,000	$	80,090,000	$	(34,938,000	)	$	15,000	$	45,416,000

*Reflects split adjusted shares and amounts for par value of common stock and additional paid in capital including the issuance of 887 shares for roundup of fractional shares.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

 NATIONAL HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)   

	Six Month Period Ended March 31,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	631,000		$	4,519,000
Adjustments to reconcile net income to net cash (used in) provided by operating activities
Depreciation and amortization		568,000			563,000
Amortization of forgivable loans to registered representatives		149,000			105,000
Stock-based compensation		253,000			425,000
Provision for doubtful accounts		173,000			197,000
Amortization of deferred clearing credit		(78,000	)		(50,000	)
Deferred tax expense		374,000			-
Changes in assets and liabilities, net of effects of acquisition
Cash deposits with clearing organizations		-			242,000
Receivables from broker-dealers and clearing organizations		1,353,000			1,786,000
Other receivables, net		(452,000	)		(1,497,000	)
Restricted cash		(125,000	)		-
Forgivable loans receivable		(423,000	)		63,000
Securities owned, at fair value		147,000			(223,000	)
Other assets, principally refundable deposits		258,000			(175,000	)
Prepaid expenses		(981,000	)		(324,000	)
Accounts payable, accrued expenses and other liabilities		(2,156,000	)		(461,000	)
Securities sold, but not yet purchased, at fair value		(21,000	)		67,000
Net cash (used in) provided by operating activities		(330,000	)		5,237,000
CASH FLOWS FROM INVESTING ACTIVITIES
Cash acquired in acquisition		-			1,654,000
Purchase of fixed assets		(211,000	)		(72,000	)
Net cash (used in) provided by investing activities		(211,000	)		1,582,000
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of certain liabilities of acquired entity		-			(5,400,000	)
Net cash used in financing activities		-			(5,400,000	)
NET (DECREASE) INCREASE IN CASH		(541,000	)		1,419,000
CASH BALANCE
Beginning of the period		24,465,000			19,985,000
End of the period	$	23,924,000		$	21,404,000
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	2,000		$	24,000
Income taxes	$	1,123,000		$	33,000
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES
Acquisitions:
Tangible assets acquired, excluding cash	$	-		$	3,933,000
Identifiable intangible assets acquired	$	569,000		$	8,350,000
Goodwill	$	-		$	6,531,000
Liabilities assumed	$	-		$	11,628,000
Common stock issued				$	8,840,000
Contingent consideration payable	$	569,000		$	-

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7

 NATIONAL HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015

(UNAUDITED)

NOTE 1. BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements of National Holdings Corporation, a Delaware corporation (“National” or the “Company”), have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required for annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The condensed consolidated financial statements as of March 31, 2015 and for the three and six months ended March 31, 2015 and 2014 are unaudited. The results of operations for the interim periods are not necessarily indicative of the results of operations for the respective fiscal years. The consolidated statement of financial condition at September 30, 2014 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by GAAP for complete financial statement presentation. The accompanying consolidated financial information should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2014 for additional disclosures and accounting policies.

In February 2015, the board of directors declared a 1 for 10 reverse stock split of the Company’s common stock. All share and per share information has been restated for all prior periods presented giving retroactive effect to the reverse stock split.

Certain items in the consolidated statement of operations for the fiscal 2014 periods have been reclassified to conform to the presentation in the fiscal 2015 periods. In addition, the condensed consolidated statements of operations and cash flows for the three and six months ended March 31, 2014 have been retrospectively adjusted to reflect measurement period adjustments of preliminary allocations of the purchase price related to the Gilman Ciocia, Inc. (“Gilman”) acquisition (see Note 7) which was finalized in the fourth quarter of fiscal year 2014. The effect of the measurement period adjustments was to reduce identifiable assets acquired by approximately $2,066,000 with a corresponding increase in goodwill, which resulted in a reduction of amortization of intangibles of $324,000 and $593,000 for the three and six month ended March 31, 2014, respectively. The reclassifications and adjustments for the three and six months ended March 2014 are as follows:

	For the Three Months Ended				For the Six Months Ended
	March 31, 2014				March 31, 2014
	As previously				As previously
	Reported		As Revised		Reported		As Revised
Total revenues	$	52,684,000	$	52,733,000	$	94,478,000	$	93,914,000
Total operating expenses		49,314,000		49,039,000		90,311,000		89,154,000
Income before income taxes		3,370,000		3,694,000		4,167,000		4,760,000
Income taxes		134,000		134,000		241,000		241,000
Net income	$	3,236,000	$	3,560,000	$	3,926,000	$	4,519,000
Net income per share attributable to common stockholders
Basic	$	0.26	$	0.29	$	0.32	$	0.37
Diluted	$	0.26	$	0.28	$	0.32	$	0.37

8

NOTE 2. ORGANIZATION AND DESCRIPTION OF BUSINESS

National was organized in 1996 and operates through its wholly owned subsidiaries which principally provide diverse financial services. Through its broker-dealer and investment advisory subsidiaries, the Company (1) offers full service retail brokerage to high net worth individual and institutional clients, (2) provides investment banking, merger, acquisition and advisory services to micro, small and mid-cap high growth companies, (3) engages in trading securities, including making markets in micro and small-cap, NASDAQ and other exchange listed stocks and (4) provides liquidity in the United States Treasury marketplace. Broker-dealer subsidiaries consist of National Securities Corporation (“National Securities” or “NSC”) and vFinance Investments, Inc. (“vFinance Investments”) (collectively, the “Broker-Dealer Subsidiaries”). As a result of the merger with Gilman in October 2013 (See Note 7), the Company added Prime Capital Services, Inc. (“Prime”) to its portfolio of Broker Dealer Subsidiaries, however, in November 2013, National Securities and Prime received approval from the Financial Industry Regulatory Authority (“FINRA”) allowing for a mass transfer of Prime’s brokers and customer accounts to National Securities. This transfer which was completed on November 22, 2013, was done to reduce overhead and consolidate the administrative and regulatory structures of the two entities. The Company filed a Broker Dealer withdrawal for Prime in January 2014, which was subsequently approved in March 2014 by the FINRA and the SEC. The Broker-Dealer Subsidiaries conduct a national securities brokerage business through their main offices in New York City, Boca Raton, Florida, and Seattle, Washington. The Broker-Dealer subsidiaries are introducing brokers and clear all transactions through clearing organizations, on a fully disclosed basis. The Broker-Dealer Subsidiaries are registered with the Securities and Exchange Commission ("SEC") and the Commodities and Futures Trading Commission (“CFTC”), and are members of FINRA, Securities Investor Protection Corporation and the National Futures Association.

The Company’s wholly-owned subsidiaries, National Asset Management, Inc., a Washington corporation ("NAM"), and Asset and Financial Planning LTD, a New York corporation ("AFP"), which was acquired in the Gilman merger, are federally-registered investment advisers providing asset management advisory services to high net worth clients for a fee based upon a percentage of assets managed. All registered investment advisors and customer accounts of AFP were moved into NAM in May 2014 and AFP has ceased all operations.

The Company’s wholly-owned subsidiaries, National Insurance Corporation, a Washington corporation ("National Insurance"), and Prime Financial Services (“Prime Financial”), a Delaware corporation, which was acquired in the Gilman merger, provide fixed insurance products to their clients, including life insurance, disability insurance, long term care insurance and fixed annuities.

The Company’s wholly-owned subsidiary Gilman, a Delaware corporation which was acquired in October 2013, provides tax preparation services to individuals and accounting services to small and midsize companies.

The Company’s wholly-owned subsidiary, GC Capital Corporation, a Washington corporation, ("GC"), which was acquired in the Gilman merger, provides licensed mortgage brokerage services in the State of Florida.

NOTE 3. RECEIVABLES FROM BROKER-DEALERS AND CLEARING ORGANIZATIONS AND OTHER RECEIVABLES

At March 31, 2015 and September 30, 2014, the receivables of $3,632,000 and $4,985,000, respectively, from broker-dealers and clearing organizations represent net amounts due for fees and commissions associated with the Company’s retail brokerage business as well as asset based fees revenues associated with the Company’s asset management advisory business.

Other receivables, net, at March 31, 2015 and September 30, 2014 of $4,277,000 and $3,998,000, respectively, principally represent trailing fees and fees for tax and accounting services and are net of allowance for doubtful accounts of $509,000 and $336,000, respectively.

NOTE 4. 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 (interest ranging up to 9%). These notes have various schedules for repayment or forgiveness based on production or retention requirements being met and mature at various dates through 2020. Forgiveness of loans amounted to $149,000 and $105,000 for six months ended March 31, 2015 and 2014, respectively, and the related compensation was included in commissions, compensation and fees in the condensed consolidated statements of operations. In the event the advisor’s affiliation with the subsidiary terminates, the advisor is required to repay the unamortized balance of any notes payable. 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 March 31, 2015, and September 30, 2014, no allowance for doubtful accounts was required.

9

Forgivable loan activity for the six months ended March 31, 2015 is as follows:

Balance, October 1, 2014	$	662,000
Additions		483,000
Amortization		(149,000	)
Repayments		(60,000	)
Balance, March 31, 2015	$	936,000

There were no unamortized loans outstanding attributable to registered representatives who ended their affiliation with the Broker-Dealer Subsidiaries prior to the fulfillment of their obligation.

NOTE 5. SECURITIES OWNED AND SECURITIES SOLD, BUT NOT YET PURCHASED AT FAIR VALUE

Accounting guidance defines fair value as 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. Additionally, it requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

Level 1:	Observable inputs such as quoted market prices in active markets for identical assets or liabilities
Level 2:	Observable market-based inputs or unobservable inputs that are corroborated by market data
Level 3:	Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions

The following tables show the fair values of securities owned by the Broker-Dealer Subsidiaries, and securities sold, not yet purchased by such entities, as of March 31, 2015 and September 30, 2014:

Fair Value Measurements

As of March 31, 2015
Securities owned at fair value	Level 1		Level 2		Level 3		Total
Corporate stocks	$	237,000		-		-	$	237,000
Municipal bonds		503,000		-		-		503,000
Restricted stock and warrants		-		174,000		-		174,000
	$	740,000	$	174,000	$	-	$	914,000

Securities sold, not yet purchased at fair value	Level 1		Level 2		Level 3		Total
Municipal bonds	$	34,000	$	-	$	-	$	34,000

As of September 30, 2014
Securities owned at fair value	Level 1		Level 2		Level 3		Total
Corporate stocks	$	256,000		-		-	$	256,000
Municipal bonds		696,000		-		-		696,000
Restricted stock and warrants		-		109,000		-		109,000
	$	952,000	$	109,000	$	-	$	1,061,000

Securities sold, but not yet purchased at fair value	Level 1		Level 2		Level 3		Total
Corporate stocks	$	55,000		-		-	$	55,000

10

NOTE 6. FIXED ASSETS

Fixed assets as of March 31, 2015 and September 30, 2014 consist of the following: 

	March 31,			September 30,			Estimated Useful
	2015			2014			Lives
Equipment	$	526,000		$	339,000			5
Furniture and fixtures		151,000			139,000			5
Leasehold improvements		578,000			566,000		Lesser of useful life or term of lease
Capital leases (primarily composed of computer equipment)		453,000			453,000			5
		1,708,000			1,497,000
Less accumulated depreciation and amortization		(904,000	)		(745,000	)
Fixed assets – net	$	804,000		$	752,000

Depreciation and amortization expense associated with fixed assets for the six months ended March 31, 2015 and 2014 was $159,000 and $100,000, respectively.

NOTE 7 - BUSINESS COMBINATIONS

In February 2015, Gilman 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 contingent consideration payable in cash having a fair value of $569,000, for which a liability (included in Accounts payable and other liabilities) 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 agreement, during the 48-month period following the closing up to a maximum of $640,000. The liability was valued using an income-based approach using unobservable inputs (Level 3) and reflects the Company’s own assumptions. The liability will be revalued at each Balance Sheet date with changes therein recorded in earnings. There was no change in the estimated fair value of the liability at March 31, 2015. The fair value of the acquired assets was allocated to customer relationships, which will be amortized over seven years. Results of operations of the acquired business are included in the accompanying consolidated statements of operations from the date of acquisition and were not material. In addition, based on materiality, pro forma results are not presented.

On October 15, 2013, the Company completed a merger with Gilman pursuant to the terms and conditions of the Agreement and Plan of Merger (the “Merger Agreement”), dated as of June 20, 2013, by and among the Company, National Acquisition Corp., a Delaware corporation and the Company’s wholly-owned subsidiary (“Merger Sub”), and Gilman. Pursuant to the Merger Agreement, Merger Sub was merged with and into Gilman, with Gilman surviving the merger and becoming a wholly-owned subsidiary of the Company. Gilman provides federal, state and local tax preparation services to individuals predominantly in upper and middle income tax brackets and accounting services to small and middle size companies. In addition, through wholly owned subsidiaries, Gilman is engaged in broker-dealer, investment advisory, insurance product sales and mortgage brokerage activities.

Pursuant to the Merger Agreement, the Company issued to Gilman’s stockholders 2,266,669 shares of its common stock valued at $8,840,000 determined based on the closing market price of the Company’s common stock on the acquisition date, and became the owner of 100% of the outstanding shares of Gilman’s common stock. Additionally, the Company financed repayment of $5,400,000 of Gilman’s liabilities through a capital contribution to Gilman. In August 2013, the Company issued 1,058,333 shares of its common stock pursuant to a private placement which generated net proceeds of $3,016,000 to partially finance the cash consideration of $5,400,000.

The purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values as follows:

Assets
Current assets	$	4,833,000
Fixed assets		482,000
Other assets		272,000
Intangible assets		8,350,000
Goodwill		6,531,000
Total Assets		20,468,000
Liabilities
Current liabilities		6,000,000
Long-term liabilities		5,628,000
Total Liabilities		11,628,000
Purchase Price	$	8,840,000

The goodwill recognized, none of which is deductible for income tax purposes, is attributable to the assembled workforce of Gilman and to expected synergies and other benefits that the Company believes will result from combining its operations with Gilman’s. The intangible assets recognized are primarily attributable to expected increased margins that the Company believes will result from Gilman’s existing customer relationships and increased margins from financial planning and tax preparation services that the Company will offer to its existing clients.

11

The following table presents intangible assets acquired, including $569,000 attributable to the February 2015 Gilman aquisition, their carrying amount as of March 31, 2015 and their estimated useful lives: 

Intangible asset	Fair Value		Accumulated Amortization		Carrying Value		Estimated Useful Life (years)
Customer relationships	$	6,969,000	$	948,000	$	6,021,000		7&10
Non-compete		296,000		216,000		80,000		2
Brands		1,654,000		-		1,654,000	Indefinite
	$	8,919,000	$	1,164,000	$	7,755,000

Amortization expense associated with intangible assets, for the six months ended March 31, 2015 and 2014 was $409,000 and $463,000, respectively.

The estimated future amortization expense of the above intangible assets for the next five fiscal years and thereafter is as follows:

Year ending
September 30,
2015	$	426,000
2016		733,000
2017		719,000
2018		719,000
2019		719,000
Thereafter		2,785,000
Total	$	6,101,000

Gilman’s results of operations are included in the accompanying consolidated financial statements from October 15, 2013, the date of acquisition. The following pro forma consolidated results of operations have been prepared as if the acquisition occurred at October 1, 2013:  

	(Unaudited) Six Month Period Ended March 31, 2014
Revenues	$	95,518,000
Net income attributable to common stockholders	$	3,881,000
Basic earnings per share	$	0.31
Diluted earnings per share	$	0.31
Weighted number of shares outstanding – basic		12,339,219
Weighted number of shares outstanding – Diluted		12,490,219

These pro forma amounts have been calculated after applying the Company’s accounting policies and adjusting the results to reflect, among other things, 1) additional amortization that would have been charged assuming the fair value adjustments to amortizable intangible assets after giving effect to measurement period adjustments (see Note 1), had been applied, 2) the shares issued by the Company to acquire Gilman, and 3) the decrease in interest expense related to Gilman’s liabilities paid by the Company. These pro forma results of operations have been prepared for comparative purposes only, and they do not purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred on the date indicated or that may result in the future.

NOTE 8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses as of March 31, 2015 and September 30, 2014 consist of the following:

	March 31,		September 30,
	2015		2014
Federal and state income tax	$	-	$	732,000
Legal		606,000		911,000
Audit		274,000		294,000
Telecommunications		246,000		240,000
Data services		364,000		387,000
Regulatory		624,000		838,000
Settlements		349,000		440,000
Deferred rent		91,000		160,000
Contingent consideration payable		569,000		-
Other		1,995,000		1,713,000
Total	$	5,118,000	$	5,715,000

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NOTE 9. PER SHARE DATA

Net Income per Common Share

Basic net income per share of common stock attributable to the Company is computed on the basis of the weighted average number of shares of common stock outstanding after giving effect to the 1 for 10 reverse stock split. Diluted net income per share is computed on the basis of such weighted average number of shares of common stock 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.

	Three Month Period Ended				Six Month Period Ended
	March 31,				March 31,
	2015		2014		2015		2014
Numerator:
Net income	$	337,000	$	3,560,000	$	631,000	$	4,519,000
Denominator:
Denominator for basic earnings per share-weighted average shares		12,446,365		12,324,689		12,446,365		12,150,330
Effect of dilutive securities:
Options		22,826		49,808		24,226		26,639
Warrants		-		3,449		-		-
Unvested restricted stock units		33,567		124,361		27,037		124,361
Denominator for diluted earnings per share-adjusted weighted-average shares		12,502,758		12,502,307		12,497,628		12,301,330
Income per share:
Net income available to common stockholders
Basic	$	0.03	$	0.29	$	0.05	$	0.37
Diluted	$	0.03	$	0.28	$	0.05	$	0.37

The following potential common share equivalents are not included in the above diluted computation because to do so would be anti-dilutive: 

	Three and Six Month Period Ended March 31,
	2015		2014
Options		1,128,000		1,203,361
Warrants		89,676		89,676
		1,217,676		1,293,037

NOTE 10. OFF BALANCE SHEET RISK AND CONCENTRATION 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 on a fee basis for the Company. 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, periodically and 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.

13

The Company maintains cash in bank deposits, which, at times, may exceed federally insured limits. In the event of a financial institution’s insolvency, the recovery of cash may be limited. 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 into the same security) 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.

NOTE 11. NEW ACCOUNTING GUIDANCE

In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The update requires the netting of unrecognized tax benefits against a deferred tax asset for the loss or other carryforward that would apply in settlement of the uncertain tax positions. The new guidance was effective for the Company beginning October 1, 2014. The adoption did not have any impact on the Company’s financial statements.

In May 2014, the FASB issued an accounting standard update on revenue recognition. The new guidance creates a single, principle-based model for revenue recognition and expands and improves disclosures about revenue. The new guidance is effective for the Company beginning October 1, 2017, and must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. The Company is currently evaluating the potential impact of this standard on its financial position and results of operations.

NOTE 12. COMMITMENTS AND CONTINGENCIES

Leases

As of March 31, 2015, the Company leases office space in various states expiring at various dates through August 2021, and is committed under operating leases for future minimum lease payments as follows:

Fiscal Year Ending	Rental Expense		Less, Sublease Income		Net
2015	$	1,681,000	$	68,000	$	1,613,000
2016		2,807,000		136,000		2,671,000
2017		2,108,000		80,000		2,028,000
2018		1,461,000		-		1,461,000
2019		770,000		-		770,000
Thereafter		1,360,000		-		1,360,000
	$	10,187,000	$	284,000	$	9,903,000

The total amount of rent payable under the leases is recognized on a straight line basis over the term of the leases. As of March 31, 2015 and September 30, 2014, the Company has recognized deferred rent payable of $91,000 and $160,000, respectively, which is included in “Accounts payable and other liabilities” on the condensed consolidated statement of financial condition. Rental expense under all operating leases for the six months ended March 31, 2015 and March 31, 2014 was $1,973,000 and $1,926,000 respectively. Sublease income under all operating subleases for the six months ended March 31, 2015 and 2014 was approximately $70,000 and $28,000 respectively.

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 of approximately $29,400,000. 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 and its subsidiaries believe these actions are without merit and intend to vigorously defend themselves in these actions. The ultimate outcome of these matters cannot be determined at this time.

14

The Company establishes liabilities for potential losses from complaints, legal actions, government investigations and proceedings where the Company believes that it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. In making these decisions, the Company 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 the Company’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, the Company cannot predict with certainty the eventual loss or range of loss related to such matters. These claims may be covered by our 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 these lawsuits and arbitrations will not have a material adverse impact on the Company's financial position. At March 31, 2015 and September 30, 2014, the Company accrued approximately $542,000 and $440,000, respectively, for legal fees and potential settlements for these matters, which are included in "Accounts payable and other liabilities" in the accompanying condensed consolidated statements of financial condition. The Company has included in "Professional fees" litigation and FINRA related expenses of $411,000 and $318,000 for the six months ended March 31, 2015 and 2014, respectively.

NOTE 13. RELATED PARTY TRANSACTIONS

Robert B. Fagenson, the Company’s Chief Executive Officer and Executive Chairman of the Board of Directors, is a party to an Independent Contractor Agreement, dated February 27, 2012, with NSC, whereby in exchange for establishing and maintaining a branch office of NSC in New York City, (the “Branch”), Mr. Fagenson receives compensation equivalent to 50% of any net income earned at the Branch, which for the six months ended March 31, 2015 and 2014 amounted to compensation of $36,000 and $48,000 respectively. Additionally, Mr. Fagenson’s daughter, Stephanie Fagenson, is employed by NSC as Director of Corporate Access and receives an annual salary of $90,000 in fiscal 2015 and received an annual salary of $72,000 in fiscal 2014.

NOTE 14. NET CAPITAL REQUIREMENTS

National Securities is subject to the Securities and Exchange Commission Uniform Net Capital Rule (Rule 15c3-1) (the Rule), which, among other things, requires the maintenance of minimum net capital. In February 2015, pursuant to a directive form FINRA, National Securities reverted back to using the alternative method of computing net capital from the aggregate indebtedness method. At March 31, 2015, National Securities had net capital of $7,165,930 which was $6,915,930 in excess of its required net capital of $250,000. National Securities claims exemption from the provisions of the SEC's Rule 15c3-3 pursuant to paragraph (k) (2) (ii) as it clears its customer transactions through its correspondent brokers on a fully disclosed basis.

vFinance Investments is subject to the Rule, which, among other things, requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. At March 31, 2015, vFinance Investments had net capital of $3,003,962 which was $2,003,962 in excess of its required net capital of $1,000,000. vFinance Investments percentage of aggregate indebtedness to net capital was 153.8%. vFinance Investments claims exemption from the provisions of the SEC's Rule 15c3-3 pursuant to paragraph (k) (2) (ii) as it clears its customer transactions through its correspondent brokers on a fully disclosed basis.

Advances, dividend payments and other equity withdrawals from its Broker-Dealer Subsidiaries are restricted by the regulations of the SEC, and other regulatory agencies. These regulatory restrictions may limit the amounts that a subsidiary may dividend or advance to the Company. 

NOTE 15. STOCK BASED COMPENSATION

Restricted Stock Units

During the six months ended March 31, 2015 and 2014, the Company recorded stock based compensation expense of $109,000 and $119,000, respectively, related to restricted stock units.

15

A summary of the Company's non-vested restricted stock units for the six months ended March 31, 2015 is as follows: 

	Shares			Weighted Average Grant Date Fair Value per share *
Non-vested restricted stock units at October 1, 2014		57,790		$	4.38
Forfeited		(1,292	)	$	5.72
Non-vested restricted stock units at March 31, 2015		56,498		$	3.87

*For independent advisors, the weighted average grant date fair value per share is calculated as the weighted average vesting date fair value, or if not vested, the value at the balance sheet date.

At March 31, 2015, there was $109,000 of unrecognized compensation expense related to unvested RSUs, which is expected to be recognized in 2015. 

Stock Options

There was no stock option activity during the six months ended March 31, 2015. Information with respect to outstanding stock options at March 31, 2015 follows:

Outstanding Options		Weighted Average Exercise Price Per Share		Weighted Average Grant-Date Fair Value Per Share		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
	1,218,000	$	6.40		1.00		4.20	$	45,000

During the six months ended March 31, 2015 and 2014 the Company recognized compensation expense of $144,000 and $427,000, respectively related to stock options. As of March 31, 2015, the Company had approximately $41,000 of unamortized compensation costs related to non-vested options, which will be recognized in 2015.

Warrants

There were 89,676 warrants outstanding at March 31, 2015, all of which were exercisable, have an exercise price of $5.00 of which 25,000 expire in June 2015 and 64,676 expire in July 2015.

NOTE 16. INCOME TAXES

The Company files a consolidated federal income tax return and certain combined state and local income tax returns with its subsidiaries. Income tax expense amounted to $196,000 ($6,000 of current benefit and $202,000 of deferred expense) and $417,000 ($43,000 current expense and $374,000 deferred expense) for the three-month and six-month periods ended March 31, 2015, respectively and $134,000 and $241,000 for the three-month and six-month periods ended March 31, 2014, respectively. The tax expense for the three-month and six-month periods ended March 31, 2015 represents the estimated annual effective tax rate. The effective tax rate for the three-month and six-month periods ended March 31, 2014 differs from the statutory income tax rate, primarily due to utilization of net operating loss carryforwards for which valuation allowances had previously been provided.

At March 31, 2015, the Company had a net deferred tax asset of $11,551,000, principally comprised of net operating loss carryforwards. Management believes that is more likely than not that its deferred tax assets will be realized and, accordingly, has not provided a valuation allowance against such amount.

16

NOTE 17. 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 the Broker-Dealer Subsidiaries, NAM, National Insurance, Prime Financial and GC. The tax and accounting services segment includes tax preparation and accounting services provided by Gilman.

Corporate pre-tax loss consists of certain expenses that have not been allocated to reportable segments. 

Segment information for the three months ended March 31, 2015 and 2014 is as follows:

	Brokerage and Advisory Services		Tax and Accounting Services			Corporate				Total
Three Months Ended March 31,
2015
Revenues	$	39,163,000	$	3,754,000		$	-			$	42,917,000
Pre-tax income (loss)		269,000		1,184,000			(920,000	)	(a)		533,000
Identifiable assets		42,302,000		3,996,000			17,693,000		(b)		63,991,000
Depreciation and amortization		203,000		19,000			72,000				294,000
Interest		2,000		-			-				2,000
Capital expenditures		7,000		-			-				7,000
2014
Revenues	$	48,801,000	$	3,932,000		$	-			$	52,733,000
Pre-tax (loss) income		3,542,000		1,427,000			(1,275,000	)	(a)		3,694,000
Identifiable assets		28,951,000		18,700,000			1,433,000		(c)		49,084,000
Depreciation and amortization		110,000		(42,000	)		230,000				298,000
Interest		7,000		1,000			-				8,000
Capital expenditures		48,000		-			-				48,000

	Brokerage and Advisory Services		Tax and Accounting Services			Corporate				Total
Six Months Ended March 31,
2015
Revenues	$	79,603,000	$	4,512,000		$	-			$	84,115,000
Pre-tax income (loss)		2,251,000		555,000			(1,758,000	)	(a)		1,048,000
Identifiable assets		42,302,000		3,996,000			17,693,000		(b)		63,991,000
Depreciation and amortization		320,000		26,000			222,000				568,000
Interest		5,000		1,000			-				6,000
Capital expenditures		194,000		11,000			6,000				211,000
2014
Revenues	$	89,444,000	$	4,470,000		$	-			$	93,914,000
Pre-tax (loss) income		6,465,000		521,000			(2,226,000	)	(a)		4,760,000
Identifiable assets		28,951,000		18,700,000			1,433,000		(c)		49,084,000
Depreciation and amortization		216,000		(82,000	)		429,000				563,000
Interest		14,000		4,000			6,000				24,000
Capital expenditures		72,000		-			-				72,000

(a)	Consists of executive salaries and other expenses not allocated to reportable segments by management.
(b)	Consists principally of deferred tax asset.
(c)	Consists of cash, intangibles and goodwill.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. This Report may contain certain statements of a forward-looking nature relating to future events or future business performance. Any such statements that refer to the Company’s estimated or anticipated future results or other non-historical facts are forward-looking and reflect the Company’s current perspective of existing trends and information. These statements involve risks and uncertainties that cannot be predicted or quantified and, consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, among others, risks and uncertainties detailed in Item 1 above. Any forward-looking statements contained in or incorporated into this Quarterly Report on Form 10-Q speak only as of the date of this Report. The Company undertakes no obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

OVERVIEW

We are engaged in independent brokerage and advisory services and asset management services, investment banking, equity research and institutional sales and trading, through the Company’s principal subsidiaries, National Securities Corporation (“National Securities or “NSC”) and vFinance Investments, Inc. (“vFinance Investments”) (collectively “Broker-Dealer Subsidiaries”). We are committed to establishing a significant presence in the financial services industry by meeting the varying investment needs of the Company retail, corporate and institutional clients. Following the Company's merger with Gilman Ciocia, Inc., a Delaware corporation ("Gilman"), in October 2013, we also provide tax preparation services through Gilman, which is now a wholly-owned subsidiary. In November 2013, following approval from the Financial Industry Regulatory Authority ("FINRA"), National Securities received a transfer of Gilman's Prime Capital Services retail brokers and customer accounts.

Each of the Broker-Dealer Subsidiaries is subject to regulation by, among others, the Securities and Exchange Commission (“SEC”), FINRA, the Municipal Securities Rulemaking Board (“MSRB”) and are members of the Securities Investor Protection Corporation (“SIPC”) and the National Futures Association (“NFA”). In addition, each of the Broker-Dealer Subsidiaries is licensed to conduct its brokerage activities in all 50 states, plus the District of Columbia and Puerto Rico and the U.S. Virgin Islands. Gilman is also subject to regulation by, among others, the Internal Revenue Service.

The Company’s wholly-owned subsidiary, National Asset Management, Inc., a Washington corporation ("NAM"), is a federally-registered investment adviser providing asset management advisory services to high net worth clients for a fee based upon a percentage of assets managed. In May 2014, the Company completed a transfer to NAM of all the investment advisors and customer assets of Asset & Financial Planning, the registered investment advisor acquired in the Gilman merger.

Gilman provides federal, state and local tax preparation services to individuals, predominantly in the middle and upper income tax brackets and accounting services to small and midsize companies.

As of March 31, 2015, the Company had approximately 1,230 associated personnel serving retail and institutional customers, trading and investment banking clients. In addition to our 32 Company offices located in New York, New Jersey, Florida, Texas, Washington and Illinois branches, the Company has approximately 108 other registered offices, owned and operated by independent owners who maintain all appropriate licenses and are responsible for all office overhead and expenses.

Our registered representatives offer a broad range of investment products and services. These products and services allow us to generate both commissions (from transactions in securities and other investment products) and fee income (for providing investment advisory services, namely managing clients’ accounts). The investment products and services offered include but are not limited to stocks, bonds, mutual funds, annuities, insurance, and managed money accounts.

18

 RESULTS OF OPERATIONS

Three Months Ended March 31, 2015 Compared to Three Months Ended March 31, 2014

Summary

The Company’s second quarter of fiscal year 2015 resulted in a decrease in revenues and operating expenses of 19% and 14%, respectively, resulting in a decrease in margin of approximately 5%. Most business divisions saw a decrease in revenue during the quarter as compared to the same quarter last year.

Our retail commissions decreased in part due to the previously disclosed suspension of the sales of alternative investment products in November 2014. Although many of these products have since been reinstated to the Company’s list of approved alternative investment products, sales are improving but have not yet rebounded to the levels achieved in fiscal 2014. Lower transaction volumes and the corresponding reduction in trade execution also contributed to the reduction in retail commissions in the quarter.

Principal transactions, consisting primarily of our trading activities in equities, municipal and corporate debt and treasury bonds saw a decline of 55%. This decline is primarily due to the extraordinary volumes seen in the second quarter of fiscal year 2014, specifically, the equity sectors and the resurgence in municipal volumes and spreads in 2014 returned to more normalized levels in 2015. The treasury division continued to feel pressure due to federal regulations, yield pressure and large counterparty business shifts.

Investment banking saw a decline of 22% over the same quarter last year. As a result of these primary factors, the Company reported after tax net income of $337,000 and $3,560,000 for the quarters ended March 31, 2015 and 2014, respectively.

Revenues 

	Three Months Ended March 31,				Increase ( Decrease)
	2015		2014		Amount			Percent
Commissions	$	25,746,000	$	30,306,000	$	(4,560,000	)		-15	%
Principal transactions		2,705,000		5,983,000		(3,278,000	)		-55	%
Investment banking		4,391,000		5,619,000		(1,228,000	)		-22	%
Investment advisory		3,527,000		3,696,000		(169,000	)		-5	%
Interest and dividends		847,000		885,000		(38,000	)		-4	%
Transfer fees and clearing services		1,853,000		2,452,000		(599,000	)		-24	%
Tax preparation and accounting		3,748,000		3,737,000		11,000			0	%
Other		100,000		55,000		45,000			82	%
Total Revenues	$	42,917,000	$	52,733,000	$	(9,816,000	)		-19	%

Total revenues decreased $9,816,000, or 19%, in the second quarter of fiscal year 2015 to $42,917,000 from $52,733,000 in the second quarter of fiscal year 2014. Our retail commissions decreased in part due to the previously disclosed suspension of the sales of alternative investment products in November 2014. Although many of these products have since been reinstated to the Company’s list of approved alternative investment products, sales are improving but have not yet rebounded to the levels achieved in fiscal 2014. Principal transactions, consisting primarily of our trading activities in equities, municipal and corporate debt and treasury bonds saw a decline of 55%. This decline is primarily due to the extraordinary volumes seen in the second quarter of fiscal year 2014, specifically, the equity sectors and the resurgence in municipal volumes and spreads in 2014 returned to more normalized levels. The treasury division continued to feel pressure due to federal regulations, yield pressure and large counterparty business shifts. Investment banking also saw a decline of 22% over the same period last year.  

Commission revenue decreased $4,560,000, or 15%, to $25,746,000 from $30,306,000 during the second quarter of fiscal year 2015 compared with the same period in fiscal year 2014, which is the result of lower transaction volumes and lower sales of alternative investment products as a result of the news and suspension of sales in November 2014.

Principal transactions, which includes profits on proprietary trading, market making activities and customer mark-ups and mark-downs, decreased $3,278,000, or 55%, to $2,705,000 from $5,983,000 during the second quarter of fiscal year 2015 compared with the same period in fiscal year 2014. As mentioned above trading activities in equities, municipal and corporate debt and treasury bonds saw a decline from the extraordinary volumes seen in the second quarter of fiscal year 2014, specifically, the equity sectors and the resurgence in municipal volumes and spreads in 2014 returned to more normalized levels in 2015. The treasury division continued to feel pressure due to federal regulations, yield pressure and large counterparty business shifts.

Investment banking fees decreased $1,228,000, or 22%, to $4,391,000 from $5,619,000 during the second quarter of fiscal year 2015 compared to the same period in fiscal year 2014. This decrease is attributable to a lower number of capital raising events for clients during the quarter.

19 

Investment advisory fees, decreased $169,000, or 5%, to $3,527,000 from $3,696,000 in the second quarter of fiscal year 2015 compared to the same period in fiscal year 2014. The decrease is primarily due to a decrease in assets under management.

Interest and dividend income decreased by $38,000, or 4%, to $847,000 from $885,000 in the second quarter of fiscal year 2015 compared with the same period in fiscal year 2014. This decrease is primarily attributable to slightly lower customer margin and free cash balances in place during the quarter.

Transfer fees and clearing services decreased $599,000, or 24%, to $1,853,000 from $2,452,000 in the second quarter of fiscal year 2015 compared with the same period in fiscal year 2014. This decrease is primarily due to fewer retail transactions processed during the period.

Tax preparation and accounting fees increased $11,000, to $3,748,000 from $3,737,000 in the second quarter of fiscal year 2015 compared with the same period in fiscal year 2014.

Other revenue increased $45,000, or 82%, to $100,000 from $55,000 during the second quarter of fiscal year 2015 compared to the same period in fiscal year 2014.

Operating Expenses

In comparison with the 19% decrease in total revenues, total expenses decreased by 14%, or $6,655,000, to $42,384,000 for the second quarter of fiscal year 2015 compared to $49,039,000 in the same quarter of fiscal year 2014. The decrease in total expenses is primarily as a result of the decrease in commissions, compensation and fees. The decrease in variable cost was commensurate with the decline in commissionable revenue.

	Three Months Ended March 31,				Increase ( Decrease)
	2015		2014		Amount			Percent
Commissions, compensation and fees	$	36,099,000	$	41,929,000	$	(5,830,000	)		-14	%
Clearing fees		886,000		1,103,000		(217,000	)		-20	%
Communications		1,194,000		1,191,000		3,000			0	%
Occupancy		1,004,000		1,073,000		(69,000	)		-6	%
License and registration		467,000		307,000		160,000			52	%
Professional fees		1,095,000		1,228,000		(133,000	)		-11	%
Interest		2,000		8,000		(6,000	)		-75	%
Depreciation and amortization		294,000		298,000		(4,000	)		-1	%
Other administrative expenses		1,343,000		1,902,000		(559,000	)		-29	%
Total Operating Expenses	$	42,384,000	$	49,039,000	$	(6,655,000	)		-14	%

Commission, compensation, and fees, which includes expenses based on commission revenue, net dealer inventory gains and investment banking, as well as compensation to our employees, brokers, and support staff, decreased by $5,830,000, or 14%, to $36,099,000 from $41,929,000 for the second quarter of fiscal year 2015 compared to the same quarter of fiscal year 2014. The decrease is directly attributable to the decrease of revenues. Commission expense also includes the amortization of forgivable loans to registered representatives aggregating $83,000 and $54,000 for the second quarter of fiscal year 2015 and 2014, respectively. These amounts fluctuate based upon the amounts of forgivable loans outstanding and the time period for which the registered representatives have agreed to be affiliated with National Securities. Employee compensation includes the amortization of the fair value associated with stock based compensation of $85,000 and $217,000 for the three months ended March 31, 2015 and 2014, respectively.

Clearing fees decreased $217,000, or 20%, to $886,000 from $1,103,000 in the second quarter of fiscal year 2015 compared to the same quarter of fiscal year 2014. The decrease is partly a result of the decline in total transactions executed during the second quarter of fiscal 2015 as compared to the same quarter in fiscal year 2014, combined with negotiated reductions in certain clearing costs and amortization of deferred clearing credits, when the Company signed coterminous amendments to its clearing agreements with National Financial Services, its primary clearing firm for the Broker Dealer Subsidiaries.

Communications expenses increased by $3,000, to $1,194,000 from $1,191,000 in the second quarter of fiscal year 2015 compared with the same quarter of fiscal year 2014.

Occupancy expenses decreased $69,000, or 6%, to $1,004,000 from $1,073,000 in the second quarter of fiscal year 2015 compared with the same quarter of fiscal year 2014. This decrease is primarily due to the consolidation of two Gilman offices into one and reduction of the total square footage of office space rented.

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License and registration fees increased $160,000, or 52%, to $467,000 from $307,000 in the second quarter of fiscal year 2015 compared with the same quarter of fiscal year 2014. This increase is primarily due to the Company paying $45,000 for its new NASDAQ listing in March 2015 and higher fees paid for newly registered associates and branches in the second quarter of 2015 as compared to the same period in 2014.

Professional fees decreased $133,000, or 11% to $1,095,000 from $1,228,000 in the second quarter of fiscal year 2015 compared with the same quarter of fiscal year 2014. This decrease is attributed to the Company having collected more of its defense costs associated with various arbitrations from its registered representatives.

Interest expense decreased by $6,000, or 75%, to $2,000 from $8,000 in the second quarter of fiscal year 2015 compared with the same quarter of fiscal year 2014.

Depreciation and amortization expenses decreased $4,000, or 1%, to $294,000 from $298,000 in the second quarter of fiscal year 2015 compared with the same quarter of fiscal year 2014.

Other administrative expenses decreased $559,000, or 29%, to $1,343,000 from $1,902,000 in the second quarter of fiscal year 2015 compared with the same quarter of fiscal year 2014. This decrease is primarily attributable to cost cutting of insurance and office supplies.

Six Months Ended March 31, 2015 Compared to Six Months Ended March 31, 2014

Summary

The Company’s first six months of fiscal year 2015 resulted in a decrease in revenues and operating expenses of 10% and 7% respectively, resulting in a decrease in margin of approximately 3%. Commissions and principal transaction revenues declined while investment banking saw an increase.

Our retail commissions decreased primarily due to lower transaction volumes, and the previously disclosed suspension of the sale of certain alternative investment products in November 2014, as previously discussed. Although many of these products have since been reinstated to the Company’s list of approved alternative investment products and sales are improving, they have not rebounded to the levels achieved in fiscal 2014.

Principal transactions, consisting primarily of our trading activities in equities, municipal and corporate debt and treasury bonds, saw a decline of 33%, due to light trading volumes in the market. This decline is primarily due to the extraordinary volumes seen in Q2 2014, specifically, the equity sectors and the resurgence in municipal volumes and spreads in 2014 returned to more normalized levels in 2015. The treasury division continued to feel pressure due to federal regulations, yield pressure and large counterparty business shifts.

Investment banking improved with an increase of 6% over the same period last year.

As a result, the Company reported after tax net income of $631,000 and $4,519,000 for the six months ended March 31, 2015 and 2014, respectively.

Revenues

	Six Months Ended March 31,				Increase ( Decrease)
	2015		2014		Amount			Percent
Commissions	$	50,162,000	$	57,913,000	$	(7,751,000	)		-13	%
Principal transactions		6,143,000		9,142,000		(2,999,000	)		-33	%
Investment banking		9,513,000		8,952,000		561,000			6	%
Investment advisory		7,352,000		6,936,000		416,000			6	%
Interest and dividends		1,678,000		1,817,000		(139,000	)		-8	%
Transfer fees and clearing services		4,567,000		4,767,000		(200,000	)		-4	%
Tax preparation and accounting		4,507,000		4,275,000		232,000			5	%
Other		193,000		112,000		81,000			72	%
Total Revenues	$	84,115,000	$	93,914,000	$	(9,799,000	)		-10	%

Total revenues decreased $9,799,000, or 10%, in the first six month of fiscal year 2015 to $84,115,000 from $93,914,000 in the same period of fiscal year 2014.

As previously discussed, our retail commissions decreased primarily due to the lower market volumes experienced in the first half of the year, and the previously disclosed suspension of the sale of certain alternative investment products in November 2014. Although many of these products have since been reinstated to the Company’s list of approved alternative investment products, and sales are improving, they have not rebounded to the levels achieved in fiscal 2014.

Principal transactions, consisting primarily of our trading activities in equities, municipal and corporate debt and treasury bonds saw a decline of 33%. As mentioned earlier, this decline is primarily due to the extraordinary volumes seen in Q2 2014, specifically, the equity sectors and the resurgence in municipal volumes and spreads in 2014 returned to more normalized levels in 2015. The treasury division continued to feel pressure due to federal regulations, yield pressure and large counterparty business shifts.

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Good execution in Investment banking produced an increase of 6% over the same period last year.

Commission revenue decreased $7,751,000, or 13%, to $50,162,000 from $57,913,000 during the first six months of fiscal year 2015 compared with the same period in fiscal year 2014, again the a result of the adverse market conditions and the impact of the temporary suspension of the sale of certain alternative investment products in November 2014.

Principal transactions, which includes profits on proprietary trading, market making activities and customer mark-ups and mark-downs, decreased $2,999,000, or 33%, to $6,143,000 from $9,142,000 during the first six months of fiscal year 2015 compared with the same period in fiscal year 2014. The decrease, as previously discussed is primarily due to the extraordinary volumes seen in Q2 2014. The equity sectors and the resurgence in municipal volumes and spreads in 2014 returned to more normalized levels in 2015. The treasury division continued to feel pressure due to federal regulations, yield pressure and large counterparty business shifts.

Investment banking fees increased $561,000, or 6%, to $9,513,000 from $8,952,000 during the first six months of fiscal year 2015 compared to the same period in fiscal year 2014. This increase is attributable to a higher number of successful capital raising events for clients during the first six months.

Investment advisory fees, increased $416,000, or 6%, to $7,352,000 from $6,936,000 in the first six months of fiscal year 2015 compared to the same period in fiscal year 2014. The increase is primarily due to a small increase in total average assets under management during the period.

Interest and dividend income decreased by $139,000, or 8%, to $1,678,000 from $1,817,000 in the first six months of fiscal year 2015 compared with the same period in fiscal year 2014. This decrease is primarily attributable to slightly lower customer margin and free cash balances in place during the first six months, the result of overall lower market activity.

Transfer fees and clearing services decreased $200,000, or 4%, to $4,567,000 from $4,767,000 in the first six months of fiscal year 2015 compared with the same period in fiscal year 2014. This decrease is consistent with the lower retail commissions earned during the period.

Tax preparation and accounting fees increased $232,000, or 5%, to $4,507,000 from $4,275,000 in the first six months of fiscal year 2015 compared with the same period in fiscal year 2014.

Other revenue increased $81,000, or 72%, to $193,000 from $112,000 during the first six months of fiscal year 2015 compared to the same period in fiscal year 2014.

Operating Expenses

In comparison with the 10% decrease in total revenues, total expenses decreased by 7%, or $6,087,000, to $83,067,000 for the first six months of fiscal year 2015 compared to $89,154,000 in the same period of fiscal year 2014. The decrease in total expenses is primarily as a result of the decrease in commissions, compensation and fees and clearing costs. These decreases were commensurate with the decline in commissionable revenue.

	Six Months Ended March 31,				Increase ( Decrease)
	2015		2014		Amount			Percent
Commissions, compensation and fees	$	71,387,000	$	76,528,000	$	(5,141,000	)		-7	%
Clearing fees		1,528,000		2,140,000		(612,000	)		-29	%
Communications		2,442,000		2,331,000		111,000			5	%
Occupancy		2,025,000		2,027,000		(2,000	)		0	%
License and registration		867,000		753,000		114,000			15	%
Professional fees		1,820,000		2,098,000		(278,000	)		-13	%
Interest		6,000		24,000		(18,000	)		-75	%
Depreciation and amortization		568,000		562,000		6,000			1	%
Other administrative expenses		2,424,000		2,691,000		(267,000	)		-10	%
Total Operating Expenses	$	83,067,000	$	89,154,000	$	(6,087,000	)		-7	%

Commissions, compensation, and fees, which includes expenses based on commission revenue, net dealer inventory gains and investment banking, as well as compensation to our employees, brokers, and support staff, decreased by $5,141,000, or 7%, to $71,387,000 from $76,528,000 for the first six months of fiscal year 2015 compared to the first six months of fiscal year 2014. The decrease is directly attributable to the decrease in revenues. Commission expense also includes the amortization of forgivable loans to registered representatives aggregating $149,000 and $105,000 for the first six months of fiscal year 2015 and 2014, respectively. These amounts fluctuate based upon the amounts of forgivable loans outstanding and the time period for which the registered representatives have agreed to be affiliated with National Securities. Employee compensation includes the amortization of the fair value associated with stock based compensation of $253,000 and $427,000 for the first six months ended March 31, 2015 and 2014, respectively.

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Clearing fees decreased $612,000, or 29%, to 1,528,000 from $2,140,000 in the first six months of fiscal year 2015 compared to the first six months of fiscal year 2014. The decrease is partly a result of the decline in total transactions executed during the first six months of fiscal 2015 as compared to the same quarter in fiscal year 2014, combined with negotiated reductions in certain clearing costs and amortization of deferred clearing credits, when the Company signed coterminous amendments to its clearing agreements with National Financial Services, its primary clearing firm for the Broker Dealer Subsidiaries.

Communications expenses increased by $111,000, or 5%, to $2,442,000 from $2,331,000 in the first six months of fiscal year 2015 compared with the same period in fiscal year 2014. This increase is primarily due to the updating of services within the Gilman branches.

Occupancy expenses decreased $2,000 to $2,025,000 from $2,027,000 in the first six months of fiscal year 2015 compared with the same period in fiscal year 2014. Savings from the consolidation of two Gilman offices into one began to take effect in the second quarter of 2015.

License and registration fees increased $114,000, or 15%, to $867,000 from $753,000 in the first six months of fiscal year 2015 compared with the same period of fiscal year 2014. This increase is primarily due to the Company paying $45,000 for its new NASDAQ listing in March 2015 and higher fees for newly registered associates and branches in the first six months of 2015 as compared to the same period in 2014.

Professional fees decreased $278,000, or 13%, to $1,820,000 from $2,098,000 in the first six months of fiscal year 2015 compared with the first six months of fiscal year 2014. This decrease is attributed to the Company having collected more of its defense costs associated with various arbitrations from its registered representatives.

Interest expense decreased by $18,000, or 75%, to $6,000 from $24,000 in the first six months of fiscal year 2015 compared with the first six months of fiscal year 2014.

Depreciation and amortization expenses increased $6,000, or 1%, to $568,000 from $562,000 in the first six months of fiscal year 2015 compared with the first six months of fiscal year 2014.

Other administrative expenses decreased $267,000, or 10%, to $2,424,000 from $2,691,000 in the first six months of fiscal year 2015 compared with the first six months of fiscal year 2014. This decrease is primarily attributable to cost cutting of insurance and office supplies.

NON-G.A.A.P. INFORMATION

Management considers earnings before interest, taxes, depreciation and amortization, or EBITDA, as adjusted, an important indicator in evaluating our business on a consistent basis across various periods. Due to the significance of non-recurring items, EBITDA, as adjusted, enables our Board of Directors and management to monitor and evaluate our business on a consistent basis. We use EBITDA, as adjusted, as a primary measure, among others, to analyze and evaluate financial and strategic planning decisions regarding future operating investments and potential acquisitions. We believe that EBITDA, as adjusted, eliminates items that are not part of our core operations, such as interest expense and amortization expense associated with intangible assets, or items that do not involve a cash outlay, such as stock-related compensation. EBITDA, as adjusted should be considered in addition to, rather than as a substitute for, pre-tax income, net income and cash flows from operating activities.

For the three months ended March 31, 2015 and 2014, EBITDA, as adjusted, was $997,000 and $4,271,000, respectively. This decrease of $3,274,000 or 77%, in the three months ended March 31, 2015 over the same period in 2014 resulted from a decrease in revenues and the resulting lower operating income in the current period.

For the six months ended March 31, 2015 and 2014, EBITDA, as adjusted, was $2,024,000 and $5,876,000, respectively. This decrease of $3,852,000 or 66%, in the six months ended March 31, 2015 over the same period in 2014 resulted from a decrease in revenues and the resulting lower operating income in the first half of 2015.

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The following table presents a reconciliation of EBITDA, as adjusted, to net income as reported in accordance with generally accepted accounting principles, or GAAP:

	Three Months Ended				Six Months Ended
	March 31,				March 31,
	2015		2014		2015		2014
Net income, as reported	$	337,000	$	3,560,000	$	631,000	$	4,519,000
Interest expense		2,000		8,000		6,000		24,000
Income taxes		196,000		134,000		417,000		241,000
Depreciation		82,000		101,000		159,000		201,000
Amortization		212,000		197,000		409,000		361,000
EBITDA		829,000		4,000,000		1,622,000		5,346,000
Non-cash compensation expense		85,000		217,000		253,000		425,000
Forgivable loan amortization		83,000		54,000		149,000		105,000
EBITDA, as adjusted	$	997,000	$	4,271,000	$	2,024,000	$	5,876,000

EBITDA, adjusted for forgivable loan amortization and non-cash compensation expense, is a key metric we use in evaluating our business. EBITDA is considered a non-GAAP financial measure as defined by Regulation G, promulgated by the SEC.

Liquidity and Capital Resources 

	Ending Balance at March 31,				Average Balance during first six months of
	2015		2014		2015		2014
Cash	$	23,924,000	$	21,404,000	$	24,195,000	$	20,695,000
Receivables from broker-dealers and clearing organizations		3,632,000		4,332,000		4,309,000		4,314,000
Securities owned		914,000		691,000		988,000		533,000
Accounts payable, accrued expenses and other liabilities		17,648,000		19,536,000		18,442,000		17,111,000

We maintain a reasonably high level of liquidity on our balance sheet. At March 31, 2015 and 2014, respectively, 44% and 54%, of our total assets consisted of cash, securities owned and receivables from clearing brokers and other broker-dealers and others. The level of cash used in each asset class is subject to fluctuation based on market volatility, revenue production and trading activity in the marketplace.

National Securities is subject to the Securities and Exchange Commission Uniform Net Capital Rule (Rule 15c3-1) (the “Rule”), which, among other things, requires the maintenance of minimum net capital. In February 2015, pursuant to a directive form FINRA, National Securities reverted back to using the alternative method of computing net capital from the aggregate indebtedness method. At March 31, 2015, National Securities had net capital of $7,165,930 which was $6,915,930 in excess of its required net capital of $250,000. National Securities claims exemption from the provisions of the SEC’s Rule 15c3-3 pursuant to paragraph (k) (2) (ii) as it clears its customer transactions through its correspondent brokers on a fully disclosed basis.

vFinance Investments is subject to the Rule, which, among other things, requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. At March 31, 2015, vFinance Investments had net capital of $3,003,962 which was $2,003,962 in excess of its required net capital of $1,000,000. vFinance Investments percentage of aggregate indebtedness to net capital was 153.8%. vFinance Investments claims exemption from the provisions of the SEC’s Rule 15c3-3 pursuant to paragraph (k) (2) (ii) as it clears its customer transactions through its correspondent brokers on a fully disclosed basis.

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Advances, dividend payments and other equity withdrawals from its Broker-Dealer Subsidiaries 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. 

During the first six months of fiscal 2015 and 2014, the Broker-Dealer Subsidiaries were in compliance with the rules governing dividend payments and other equity withdrawals.

The Company extends unsecured credit in the normal course of business to its brokers. The determination of the appropriate amount of the reserve for uncollectible accounts is based upon a review of the amount of credit extended, the length of time each receivable has been outstanding, and the specific individual brokers from whom the receivables are due.

We do not have any material commitments for capital expenditures. We routinely purchase computer equipment and technology to maintain or enhance the productivity of our employees and such capital expenditures amounted to $211,000 and $72,000 during the first six months of fiscal 2015 and 2014, respectively.

	Six months ended
	March 31,
	2015			2014
Cash flows from operating activities
Net income	$	631,000		$	4,519,000
Non-cash adjustments
Depreciation and amortization		568,000			563,000
Stock based compensation		253,000			425,000
Deferred tax expense		374,000			-
Other		244,000			252,000
Changes in assets and liabilities
Receivables from clearing organizations, broker-dealers and others		901,000			289,000
Accounts payable and accrued expenses and other liabilities		(2,156,000	)		(461,000	)
Prepaid expenses		(981,000	)		(324,000	)
Other		(164,000	)		(26,000	)
Net cash used in operating activities		(330,000	)		5,237,000
Cash flows from investing and financing activities
Acquisition-related cash acquired		-			1,654,000
Payment of certain liabilities of acquired entity		-			(5,400,000	)
Purchase of fixed assets		(211,000	)		(72,000	)
Net cash used in investing activities		(211,000	)		(3,818,000	)
Net (decrease) increase in cash	$	(541,000	)	$	1,419,000

Six months ended March 31, 2015

The decrease in receivables from clearing organizations, broker-dealers and others during the first six months of fiscal 2015 is primarily due to the lower revenue performance in the commissions earned during the last month of a given quarter as compared to the same month of the previous year. These receivables are typically received within 10 days of the close of the month.

The decrease in accounts payable, accrued expenses and other liabilities is primarily due to timing differences in payments of commissions and other payables which may vary depending when they are earned during the respective quarters. Additionally, we paid approximately $1,123,000 in income taxes during the six months ended March 31, 2015 which were included in accounts payable and accrued expenses and other liabilities.

Six months ended March 31, 2014

The decrease in receivables from clearing organizations, broker-dealers and others during the first half of fiscal 2014 is primarily due to the lower revenue in the first six months of 2014. Receivables are typically received within 10 days of the close of the month.

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The decrease in accounts payable, accrued expenses and other liabilities is primarily due to timing differences in payments of commissions and other payable which may vary depending when they are earned during the respective quarters.

Cash provided by investing activities during the first half of 2014 amounted to $1,582,000 and is primarily attributable to cash acquired of $1,654,000 resulting from the Gilman merger. Cash used in financing activities of $5,400,000 was for the payment of certain liabilities of Gilman at the date of closing of the merger.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

The Company's primary market risk arises from the fact that it engages in proprietary trading and makes markets in equity securities. Accordingly, the Company may be required to maintain certain amounts of inventories in order to facilitate customer order flow. The Company may incur losses as a result of price movements in these inventories due to changes in interest rates, foreign exchange rates, equity prices and other political factors. The Company is not subject to direct market risk due to changes in foreign exchange rates. However, the Company is subject to market risk as a result of changes in interest rates and equity prices, which are affected by global economic conditions. The Company manages its exposure to market risk by limiting its net long or short positions. Trading and inventory accounts are monitored daily by management and the Company has instituted position limits.

Credit risk represents the amount of accounting loss the Company could incur if counterparties to its proprietary transactions fail to perform and the value of any collateral proves inadequate. Although credit risk relating to various financing activities is reduced by the industry practice of obtaining and maintaining collateral, the Company maintains more stringent requirements to further reduce its exposure. The Company monitors its exposure to counterparty risk on a daily basis by using credit exposure information and monitoring collateral values. The Company maintains a credit committee, which reviews margin requirements for large or concentrated accounts and sets higher requirements or requires a reduction of either the level of margin debt or investment in high-risk securities or, in some cases, requiring the transfer of the account to another broker-dealer.

The Company monitors its market and credit risks daily through internal control procedures designed to identify and evaluate the various risks to which the Company is exposed. There can be no assurance, however, that the Company's risk management procedures and internal controls will prevent losses from occurring as a result of such risks.

The following table shows the quoted market values of marketable securities we owned ("long") and securities we sold but have not yet purchased ("short"), as of March 31, 2015:  

	Securities owned		Securities sold, but not yet purchased
Corporate stocks	$	237,000	$	-
Municipal bonds		503,000		34,000
Restricted stock and warrants		174,000		-
Total	$	914,000	$	34,000

Operational Risk

Operational risk generally refers to the risk of loss resulting from our operations, including, but not limited to, improper or unauthorized execution and processing of transactions, deficiencies in our technology or financial operating systems and inadequacies or breaches in our control processes. We operate in a dynamic market and are reliant on the ability of our employees and systems to process a large number of transactions. These risks are less direct and quantifiable than credit and market risk, but managing them is critical, particularly in a rapidly changing environment with increasing transaction volumes. In the event of a breakdown or improper operation of systems or improper action by employees, we could suffer financial loss, regulatory sanctions and damage to our reputation. Business continuity plans exist for critical systems, and redundancies are built into the systems as deemed appropriate. In order to mitigate and control operational risk, we have developed and continue to enhance specific policies and procedures that are designed to identify and manage operational risk at appropriate levels throughout our organization and within various departments. These control mechanisms attempt to ensure that operational policies and procedures are being followed and that our employees operate within established corporate policies and limits.

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Risk Management

We have established various committees of the Board of Directors to manage the risks associated with our business. Our Audit Committee was established for the primary purpose of overseeing (i) the integrity of our unaudited and audited condensed consolidated financial statements, (ii) our compliance with legal and regulatory requirements that may impact our unaudited condensed consolidated financial statements or financial operations, (iii) the independent auditor’s qualifications and independence and (iv) the performance of our independent auditor and internal audit function.

In addition, we have written policies and procedures that govern the conduct of business by our employees and our relationship with our clients. Our client policies address the extension of credit for client accounts, data and physical security, compliance with industry regulation and codes of ethics to govern employee conduct among other matters.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures.

Disclosure controls and procedures are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosure.

Based on our evaluation of disclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) required by the Exchange Act Rules 13a-15(b) or 15d-15(b), our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were adequate and effective to ensure that material information relating to us and our consolidated subsidiaries would be made known to them by others within those entities, particularly during the period in which this Quarterly Report on Form 10-Q was being prepared.

Changes in internal controls.

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2015, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company establishes liabilities for potential losses from complaints, legal actions, government investigations and proceedings where the Company believes that it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. In making these decisions, the Company 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 the Company’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, the Company cannot predict with certainty the eventual loss or range of loss related to such matters. These claims may be covered by our errors and omissions insurance policy. While the Company believes these claims are without merit, and 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 these lawsuits and arbitrations will not have a material adverse impact on the Company's financial position. At March 31, 2015 and September 30, 2014, the Company accrued approximately $542,000 and $440,000, respectively, for these matters, and are included in "Accounts Payable and other Accrued Expenses" in the accompanying consolidated statements of financial condition. The Company has included in "Professional fees" litigation and FINRA related expenses of $411,000 and $318,000 for the three months ended March 31, 2015 and 2014, respectively.

SUBSEQUENT EVENTS – New Hire Glenn Worman

ITEM 1A. RISK FACTORS

There are no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2014.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY

Not applicable

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

31.1	Chief Executive Officer’s Certificate pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Principal Financial Officer’s Certificate pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Chief Executive Officer’s Certificate pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Principal Financial Officer’s Certificate pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance
101.SCH**	XBRL Taxonomy Extension Schema
101.CAL**	XBRL Taxonomy Extension Calculation
101.DEF**	XBRL Taxonomy Extension Definition
101.LAB**	XBRL Taxonomy Extension Labels
101.PRE**	XBRL Taxonomy Extension Presentation
** XBRL	information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

NATIONAL HOLDINGS CORPORATION AND SUBSIDIARIES

May 15, 2015	By:	/s/ Robert Fagenson
		Robert Fagenson
		Chairman of the Board and Chief Executive Officer

May 15, 2015	By:	/s/ Alan B. Levin
		Alan B. Levin
		Chief Financial Officer

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EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert B. Fagenson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of National Holdings Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Robert B. Fagenson

Robert B. Fagenson, Chief Executive Officer

May 15, 2015

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Glenn C. Worman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of National Holdings Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Glenn C Worman

Glenn C. Worman

Executive Vice President - Finance

(Principal Financial Officer)

May 15, 2015

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of National Holdings Corporation (the “Company”) on Form 10-Q for the fiscal quarter ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert B. Fagenson, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Robert B. Fagenson

Robert B. Fagenson

Chief Executive Officer

May 15, 2015

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of National Holdings Corporation (the “Company”) on Form 10-Q for the fiscal quarter ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Glen C. Worman, Executive Vice President - Finance of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Glenn C. Worman

Glenn C. Worman

Executive Vice President - Finance

(Principal Financial Officer)

May 15, 2015

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Note 4 - Forgivable Loans Receivable (Details) (USD $)	6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Sep. 30, 2014
Note 4 - Forgivable Loans Receivable (Details) [Line Items]
Forgiveness of Loans	$ 149,000	$ 105,000
Loans Receivable [Member]
Note 4 - Forgivable Loans Receivable (Details) [Line Items]
Allowance for Doubtful Accounts Receivable	$ 0		$ 0
Maximum [Member]
Note 4 - Forgivable Loans Receivable (Details) [Line Items]
Notes Receivable,Interest Range	9.00%

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Note 12 - Commitments and Contingencies (Details) - Future Minimum Lease Payments (USD $)	Mar. 31, 2015
Note 12 - Commitments and Contingencies (Details) - Future Minimum Lease Payments [Line Items]
2015	$ 68,000
2016	136,000
2017	80,000
	284,000
Gross Payments [Member]
Note 12 - Commitments and Contingencies (Details) - Future Minimum Lease Payments [Line Items]
2015	1,681,000
2016	2,807,000
2017	2,108,000
2018	1,461,000
2019	770,000
Thereafter	1,360,000
	10,187,000
Net of Sublease Income [Member]
Note 12 - Commitments and Contingencies (Details) - Future Minimum Lease Payments [Line Items]
2015	1,613,000
2016	2,671,000
2017	2,028,000
2018	1,461,000
2019	770,000
Thereafter	1,360,000
	$ 9,903,000

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Note 7 - Business Combination (Details) - Pro Forma Consolidated Results of Operations (Gilman Ciocia Inc [Member], USD $)	6 Months Ended
	Mar. 31, 2014
Gilman Ciocia Inc [Member]
Note 7 - Business Combination (Details) - Pro Forma Consolidated Results of Operations [Line Items]
Revenues	$ 95,518,000
Net income attributable to common stockholders	$ 3,881,000
Basic earnings per share	$ 0.31
Diluted earnings per share	$ 0.31
Weighted number of shares outstanding – basic	12,339,219
Weighted number of shares outstanding – Diluted	12,490,219

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Note 13 - Related Party Transactions (Details) (USD $)	6 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Sep. 30, 2014
Chief Executive Officer [Member] | Contractor Agreement [Member]
Note 13 - Related Party Transactions (Details) [Line Items]
Related Party Transaction, Rate	50.00%
Related Party Transaction, Amounts of Transaction	$ 36,000	$ 48,000
Immediate Family Member of Management or Principal Owner [Member] | Salary [Member]
Note 13 - Related Party Transactions (Details) [Line Items]
Related Party Transaction, Amounts of Transaction	$ 90,000		$ 72,000

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Note 7 - Business Combination (Details) - Intangible Assets Subject to Amortization (USD $)	6 Months Ended
	Mar. 31, 2015
Acquired Finite-Lived Intangible Assets [Line Items]
Fair Value	8,919,000
Accumulated Amortization	1,164,000
Carrying Value	7,755,000
Customer Relationships [Member] | Minimum [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Estimated Useful Life (years)	7 years
Customer Relationships [Member] | Maximum [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Estimated Useful Life (years)	10 years
Customer Relationships [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Fair Value	6,969,000
Accumulated Amortization	948,000
Carrying Value	6,021,000
Noncompete Agreements [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Fair Value	296,000
Accumulated Amortization	216,000
Carrying Value	80,000
Estimated Useful Life (years)	2 years
Trademarks and Trade Names [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Fair Value	1,654,000
Carrying Value	1,654,000
Estimated Useful Life (years)

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Note 12 - Commitments and Contingencies (Tables)

6 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

Fiscal Year Ending	Rental Expense		Less, Sublease Income		Net
2015	$	1,681,000	$	68,000	$	1,613,000
2016		2,807,000		136,000		2,671,000
2017		2,108,000		80,000		2,028,000
2018		1,461,000		-		1,461,000
2019		770,000		-		770,000
Thereafter		1,360,000		-		1,360,000
	$	10,187,000	$	284,000	$	9,903,000

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Note 15 - Stock Based Compensation (Details) (USD $)	6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Note 15 - Stock Based Compensation (Details) [Line Items]
Class of Warrant or Right, Outstanding (in Shares)	89,676
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per share)	$ 5.00
Expires June 2015 [Member]
Note 15 - Stock Based Compensation (Details) [Line Items]
Class of Warrant or Right, Outstanding (in Shares)	25,000
Expires July 2015 [Member]
Note 15 - Stock Based Compensation (Details) [Line Items]
Class of Warrant or Right, Outstanding (in Shares)	64,676
Restricted Stock Units (RSUs) [Member]
Note 15 - Stock Based Compensation (Details) [Line Items]
Allocated Share-based Compensation Expense	$ 109,000	$ 119,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in Shares)	109,000
Employee Stock Option [Member]
Note 15 - Stock Based Compensation (Details) [Line Items]
Allocated Share-based Compensation Expense	144,000	427,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	$ 41,000

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Accounting Policies, by Policy (Policies)

6 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

New Accounting Pronouncements, Policy [Policy Text Block]

In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The update requires the netting of unrecognized tax benefits against a deferred tax asset for the loss or other carryforward that would apply in settlement of the uncertain tax positions. The new guidance was effective for the Company beginning October 1, 2014. The adoption did not have any impact on the Company’s financial statements.

In May 2014, the FASB issued an accounting standard update on revenue recognition. The new guidance creates a single, principle-based model for revenue recognition and expands and improves disclosures about revenue. The new guidance is effective for the Company beginning October 1, 2017, and must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. The Company is currently evaluating the potential impact of this standard on its financial position and results of operations.

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Note 9 - Per Share Data (Details) (Reverse Stock Split [Member])	1 Months Ended	3 Months Ended
	Feb. 28, 2015	Mar. 31, 2015
Reverse Stock Split [Member]
Note 9 - Per Share Data (Details) [Line Items]
Stockholders' Equity Note, Stock Split, Conversion Ratio	10	10

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Note 6 - Fixed Assets (Details) (USD $)	6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Property, Plant and Equipment [Abstract]
Depreciation	$ 159,000	$ 100,000

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Note 1 - Basis of Presentation (Details) - Prior Period Adjustments (USD $)	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Total revenues	$ 42,917,000	$ 52,733,000	$ 84,115,000	$ 93,914,000
Total operating expenses	42,384,000	49,039,000	83,067,000	89,154,000
Income before income taxes	533,000	3,694,000	1,048,000	4,760,000
Income taxes	196,000	134,000	417,000	241,000
Net income	337,000	3,560,000	631,000	4,519,000
Basic (in Dollars per share)	$ 0.03	$ 0.29	$ 0.05	$ 0.37
Diluted (in Dollars per share)	$ 0.03	$ 0.28	$ 0.05	$ 0.37
Scenario, Previously Reported [Member]
Total revenues		52,684,000		94,478,000
Total operating expenses		49,314,000		90,311,000
Income before income taxes		3,370,000		4,167,000
Income taxes		134,000		241,000
Net income		$ 3,236,000		$ 3,926,000
Basic (in Dollars per share)		$ 0.26		$ 0.32
Diluted (in Dollars per share)		$ 0.26		$ 0.32

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Note 9 - Per Share Data (Details) - Anti-Dilutive Common Shares (Weighted Average [Member])	6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	1,217,676	1,293,037
Equity Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	1,128,000	1,203,361
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	89,676	89,676

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Note 17 - Segment Information (Details)	6 Months Ended
	Mar. 31, 2015
Segment Reporting [Abstract]
Number of Reportable Segments	2

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Note 7 - Business Combination (Details) - Intangible Assets Estimated Future Amortization Expense (USD $)	Mar. 31, 2015
Note 7 - Business Combination (Details) - Intangible Assets Estimated Future Amortization Expense [Line Items]
Total	$ 7,755,000
Gilman Ciocia Inc [Member]
Note 7 - Business Combination (Details) - Intangible Assets Estimated Future Amortization Expense [Line Items]
2015	426,000
2016	733,000
2017	719,000
2018	719,000
2019	719,000
Thereafter	2,785,000
Total	$ 6,101,000

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Note 2 - Organization and Description of Business

6 Months Ended

Mar. 31, 2015

Disclosure Text Block [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

NOTE 2. ORGANIZATION AND DESCRIPTION OF BUSINESS

National was organized in 1996 and operates through its wholly owned subsidiaries which principally provide diverse financial services. Through its broker-dealer and investment advisory subsidiaries, the Company (1) offers full service retail brokerage to high net worth individual and institutional clients, (2) provides investment banking, merger, acquisition and advisory services to micro, small and mid-cap high growth companies, (3) engages in trading securities, including making markets in micro and small-cap, NASDAQ and other exchange listed stocks and (4) provides liquidity in the United States Treasury marketplace. Broker-dealer subsidiaries consist of National Securities Corporation (“National Securities” or “NSC”) and vFinance Investments, Inc. (“vFinance Investments”) (collectively, the “Broker-Dealer Subsidiaries”). As a result of the merger with Gilman in October 2013 (See Note 7), the Company added Prime Capital Services, Inc. (“Prime”) to its portfolio of Broker Dealer Subsidiaries, however, in November 2013, National Securities and Prime received approval from the Financial Industry Regulatory Authority (“FINRA”) allowing for a mass transfer of Prime’s brokers and customer accounts to National Securities. This transfer which was completed on November 22, 2013, was done to reduce overhead and consolidate the administrative and regulatory structures of the two entities. The Company filed a Broker Dealer withdrawal for Prime in January 2014, which was subsequently approved in March 2014 by the FINRA and the SEC. The Broker-Dealer Subsidiaries conduct a national securities brokerage business through their main offices in New York City, Boca Raton, Florida, and Seattle, Washington. The Broker-Dealer subsidiaries are introducing brokers and clear all transactions through clearing organizations, on a fully disclosed basis. The Broker-Dealer Subsidiaries are registered with the Securities and Exchange Commission ("SEC") and the Commodities and Futures Trading Commission (“CFTC”), and are members of FINRA, Securities Investor Protection Corporation and the National Futures Association.

The Company’s wholly-owned subsidiaries, National Asset Management, Inc., a Washington corporation ("NAM"), and Asset and Financial Planning LTD, a New York corporation ("AFP"), which was acquired in the Gilman merger, are federally-registered investment advisers providing asset management advisory services to high net worth clients for a fee based upon a percentage of assets managed. All registered investment advisors and customer accounts of AFP were moved into NAM in May 2014 and AFP has ceased all operations.

The Company’s wholly-owned subsidiaries, National Insurance Corporation, a Washington corporation ("National Insurance"), and Prime Financial Services (“Prime Financial”), a Delaware corporation, which was acquired in the Gilman merger, provide fixed insurance products to their clients, including life insurance, disability insurance, long term care insurance and fixed annuities.

The Company’s wholly-owned subsidiary Gilman, a Delaware corporation which was acquired in October 2013, provides tax preparation services to individuals and accounting services to small and midsize companies.

The Company’s wholly-owned subsidiary, GC Capital Corporation, a Washington corporation, ("GC"), which was acquired in the Gilman merger, provides licensed mortgage brokerage services in the State of Florida.

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Note 17 - Segment Information (Details) - Segment Information (USD $)	3 Months Ended				6 Months Ended
	Mar. 31, 2015		Mar. 31, 2014		Mar. 31, 2015		Mar. 31, 2014		Sep. 30, 2014
2015
Revenues	$ 42,917,000		$ 52,733,000		$ 84,115,000		$ 93,914,000
Pre-tax income (loss)	533,000		3,694,000		1,048,000		4,760,000
Identifiable assets	63,991,000		49,084,000		63,991,000		49,084,000		64,793,000
Depreciation and amortization	294,000		298,000		568,000		563,000
Interest	2,000		8,000		6,000		24,000
Capital expenditures	7,000		48,000		211,000		72,000
Brokerage and Advisory Service [Member] | Operating Segments [Member]
2015
Revenues	39,163,000		48,801,000		79,603,000		89,444,000
Pre-tax income (loss)	269,000		3,542,000		2,251,000		6,465,000
Identifiable assets	42,302,000		28,951,000		42,302,000		28,951,000
Depreciation and amortization	203,000		110,000		320,000		216,000
Interest	2,000		7,000		5,000		14,000
Capital expenditures	7,000		48,000		194,000		72,000
Tax and Accounting Services [Member] | Operating Segments [Member]
2015
Revenues	3,754,000		3,932,000		4,512,000		4,470,000
Pre-tax income (loss)	1,184,000		1,427,000		555,000		521,000
Identifiable assets	3,996,000		18,700,000		3,996,000		18,700,000
Depreciation and amortization	19,000		(42,000)		26,000		(82,000)
Interest			1,000		1,000		4,000
Capital expenditures					11,000
Corporate, Non-Segment [Member]
2015
Pre-tax income (loss)	(920,000)	[1]	(1,275,000)	[1]	(1,758,000)	[1]	(2,226,000)	[1]
Identifiable assets	17,693,000	[2]	1,433,000	[3]	17,693,000	[2]	1,433,000	[3]
Depreciation and amortization	72,000		230,000		222,000		429,000
Interest							6,000
Capital expenditures					$ 6,000

[1] Consists of executive salaries and other expenses not allocated to reportable segments by management.

[2] Consists principally of deferred tax asset.

[3] Consists of cash, intangibles and goodwill.

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Note 6 - Fixed Assets (Details) - Fixed Assets (USD $)	6 Months Ended
	Mar. 31, 2015	Sep. 30, 2014
Property, Plant and Equipment [Line Items]
Property plant and equipment	$ 1,708,000	$ 1,497,000
Less accumulated depreciation and amortization	(904,000)	(745,000)
Fixed assets – net	804,000	752,000
Equipment [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment	526,000	339,000
Estimated useful lives	5 years
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment	151,000	139,000
Estimated useful lives	5 years
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment	578,000	566,000
Estimated useful lives
Assets Held under Capital Leases [Member]
Property, Plant and Equipment [Line Items]
Property plant and equipment	$ 453,000	$ 453,000
Estimated useful lives	5 years

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Note 6 - Fixed Assets (Tables)

6 Months Ended

Mar. 31, 2015

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

	March 31,			September 30,			Estimated Useful
	2015			2014			Lives
Equipment	$	526,000		$	339,000			5
Furniture and fixtures		151,000			139,000			5
Leasehold improvements		578,000			566,000		Lesser of useful life or term of lease
Capital leases (primarily composed of computer equipment)		453,000			453,000			5
		1,708,000			1,497,000
Less accumulated depreciation and amortization		(904,000	)		(745,000	)
Fixed assets – net	$	804,000		$	752,000

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Note 5 - Securities Owned and Securities Sold, But Not Yet Purchased at Fair Value (Tables)

6 Months Ended

Mar. 31, 2015

Investment Holdings [Abstract]

Schedule of Securities Owned and Sold, Not yet Purchased, at Fair Value [Table Text Block]

As of March 31, 2015
Securities owned at fair value	Level 1		Level 2		Level 3		Total
Corporate stocks	$	237,000		-		-	$	237,000
Municipal bonds		503,000		-		-		503,000
Restricted stock and warrants		-		174,000		-		174,000
	$	740,000	$	174,000	$	-	$	914,000

Securities sold, not yet purchased at fair value	Level 1		Level 2		Level 3		Total
Municipal bonds	$	34,000	$	-	$	-	$	34,000

As of September 30, 2014
Securities owned at fair value	Level 1		Level 2		Level 3		Total
Corporate stocks	$	256,000		-		-	$	256,000
Municipal bonds		696,000		-		-		696,000
Restricted stock and warrants		-		109,000		-		109,000
	$	952,000	$	109,000	$	-	$	1,061,000

Securities sold, but not yet purchased at fair value	Level 1		Level 2		Level 3		Total
Corporate stocks	$	55,000		-		-	$	55,000

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Note 14 - Net Capital Requirements (Details) (USD $)	Mar. 31, 2015
National Securities [Member] | SEC Requirement [Member]
Note 14 - Net Capital Requirements (Details) [Line Items]
Minimum Net Capital Required	$ 250,000
National Securities [Member]
Note 14 - Net Capital Requirements (Details) [Line Items]
Net Capital	7,165,930
Alternative Excess Net Capital	6,915,930
vFinance Investments [Member] | Maximum [Member]
Note 14 - Net Capital Requirements (Details) [Line Items]
Ratio of Indebtedness to Net Capital	15
vFinance Investments [Member] | SEC Requirement [Member]
Note 14 - Net Capital Requirements (Details) [Line Items]
Minimum Net Capital Required	1,000,000
vFinance Investments [Member]
Note 14 - Net Capital Requirements (Details) [Line Items]
Net Capital	3,003,962
Alternative Excess Net Capital	$ 2,003,962
Capital Required to be Well Capitalized to Risk Weighted Assets	153.80%

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Note 7 - Business Combination (Details) (USD $)	0 Months Ended	6 Months Ended		1 Months Ended
	Oct. 15, 2013	Mar. 31, 2015	Mar. 31, 2014	Feb. 28, 2015
Note 7 - Business Combination (Details) [Line Items]
Business Combination, Contingent Consideration, Liability		$ 569,000
Proceeds from Issuance of Private Placement	3,016,000
Amortization of Intangible Assets		409,000	463,000
Private Placement [Member]
Note 7 - Business Combination (Details) [Line Items]
Sale of Stock, Number of Shares Issued in Transaction (in Shares)	1,058,333
Customer Relationships [Member] | Certain Assets of a Tax Preparation and Accounting Business [Member]
Note 7 - Business Combination (Details) [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life				7 years
Certain Assets of a Tax Preparation and Accounting Business [Member]
Note 7 - Business Combination (Details) [Line Items]
Business Combination, Contingent Consideration, Liability				569,000
Business Combination, Earn-out Period				48 months
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High				640,000
Gilman Ciocia Inc [Member]
Note 7 - Business Combination (Details) [Line Items]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in Shares)	2,266,669
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable	8,840,000
Business Acquisition, Percentage of Voting Interests Acquired	100.00%
Payments to Acquire Businesses, Gross	$ 5,400,000

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Note 7 - Business Combination (Tables)

6 Months Ended

Mar. 31, 2015

Business Combinations [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

Assets
Current assets	$	4,833,000
Fixed assets		482,000
Other assets		272,000
Intangible assets		8,350,000
Goodwill		6,531,000
Total Assets		20,468,000
Liabilities
Current liabilities		6,000,000
Long-term liabilities		5,628,000
Total Liabilities		11,628,000
Purchase Price	$	8,840,000

Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block]

Intangible asset	Fair Value		Accumulated Amortization		Carrying Value		Estimated Useful Life (years)
Customer relationships	$	6,969,000	$	948,000	$	6,021,000		7&10
Non-compete		296,000		216,000		80,000		2
Brands		1,654,000		-		1,654,000	Indefinite
	$	8,919,000	$	1,164,000	$	7,755,000

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

Year ending
September 30,
2015	$	426,000
2016		733,000
2017		719,000
2018		719,000
2019		719,000
Thereafter		2,785,000
Total	$	6,101,000

Business Acquisition, Pro Forma Information [Table Text Block]

	(Unaudited) Six Month Period Ended March 31, 2014
Revenues	$	95,518,000
Net income attributable to common stockholders	$	3,881,000
Basic earnings per share	$	0.31
Diluted earnings per share	$	0.31
Weighted number of shares outstanding – basic		12,339,219
Weighted number of shares outstanding – Diluted		12,490,219

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Note 8 - Accounts Payable and Accrued Expenses (Tables)

6 Months Ended

Mar. 31, 2015

Payables and Accruals [Abstract]

Schedule of Accounts Payable and Accrued Liabilities [Table Text Block]

	March 31,		September 30,
	2015		2014
Federal and state income tax	$	-	$	732,000
Legal		606,000		911,000
Audit		274,000		294,000
Telecommunications		246,000		240,000
Data services		364,000		387,000
Regulatory		624,000		838,000
Settlements		349,000		440,000
Deferred rent		91,000		160,000
Contingent consideration payable		569,000		-
Other		1,995,000		1,713,000
Total	$	5,118,000	$	5,715,000

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Note 1 - Basis of Presentation

6 Months Ended

Mar. 31, 2015

Disclosure Text Block [Abstract]

Business Description and Basis of Presentation [Text Block]

NOTE 1. BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements of National Holdings Corporation, a Delaware corporation (“National” or the “Company”), have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required for annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The condensed consolidated financial statements as of March 31, 2015 and for the three and six months ended March 31, 2015 and 2014 are unaudited. The results of operations for the interim periods are not necessarily indicative of the results of operations for the respective fiscal years. The consolidated statement of financial condition at September 30, 2014 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by GAAP for complete financial statement presentation. The accompanying consolidated financial information should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2014 for additional disclosures and accounting policies.

In February 2015, the board of directors declared a 1 for 10 reverse stock split of the Company’s common stock. All share and per share information has been restated for all prior periods presented giving retroactive effect to the reverse stock split.

Certain items in the consolidated statement of operations for the fiscal 2014 periods have been reclassified to conform to the presentation in the fiscal 2015 periods. In addition, the condensed consolidated statements of operations and cash flows for the three and six months ended March 31, 2014 have been retrospectively adjusted to reflect measurement period adjustments of preliminary allocations of the purchase price related to the Gilman Ciocia, Inc. (“Gilman”) acquisition (see Note 7) which was finalized in the fourth quarter of fiscal year 2014. The effect of the measurement period adjustments was to reduce identifiable assets acquired by approximately $2,066,000 with a corresponding increase in goodwill, which resulted in a reduction of amortization of intangibles of $324,000 and $593,000 for the three and six month ended March 31, 2014, respectively. The reclassifications and adjustments for the three and six months ended March 2014 are as follows:

	For the Three Months Ended				For the Six Months Ended
	March 31, 2014				March 31, 2014
	As previously				As previously
	Reported		As Revised		Reported		As Revised
Total revenues	$	52,684,000	$	52,733,000	$	94,478,000	$	93,914,000
Total operating expenses		49,314,000		49,039,000		90,311,000		89,154,000
Income before income taxes		3,370,000		3,694,000		4,167,000		4,760,000
Income taxes		134,000		134,000		241,000		241,000
Net income	$	3,236,000	$	3,560,000	$	3,926,000	$	4,519,000
Net income per share attributable to common stockholders
Basic	$	0.26	$	0.29	$	0.32	$	0.37
Diluted	$	0.26	$	0.28	$	0.32	$	0.37

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Note 9 - Per Share Data (Tables)

6 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Month Period Ended				Six Month Period Ended
	March 31,				March 31,
	2015		2014		2015		2014
Numerator:
Net income	$	337,000	$	3,560,000	$	631,000	$	4,519,000
Denominator:
Denominator for basic earnings per share-weighted average shares		12,446,365		12,324,689		12,446,365		12,150,330
Effect of dilutive securities:
Options		22,826		49,808		24,226		26,639
Warrants		-		3,449		-		-
Unvested restricted stock units		33,567		124,361		27,037		124,361
Denominator for diluted earnings per share-adjusted weighted-average shares		12,502,758		12,502,307		12,497,628		12,301,330
Income per share:
Net income available to common stockholders
Basic	$	0.03	$	0.29	$	0.05	$	0.37
Diluted	$	0.03	$	0.28	$	0.05	$	0.37

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

	Three and Six Month Period Ended March 31,
	2015		2014
Options		1,128,000		1,203,361
Warrants		89,676		89,676
		1,217,676		1,293,037

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Note 4 - Forgivable Loans Receivable (Details) - Forgivable Loan Activity (USD $)	6 Months Ended
	Mar. 31, 2015	Sep. 30, 2014
Investments in and Advances to Affiliates [Line Items]
Balance		$ 3,998,000
Balance	4,277,000	3,998,000
Advances to Registered Representatives [Member]
Investments in and Advances to Affiliates [Line Items]
Balance	662,000
Additions	483,000
Amortization	(149,000)
Repayments	(60,000)
Balance	$ 936,000

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Note 12 - Commitments and Contingencies (Details) (USD $)	6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Sep. 30, 2014
Note 12 - Commitments and Contingencies (Details) [Line Items]
Deferred Rent Credit	$ 91,000		$ 160,000
Operating Leases, Rent Expense	1,973,000	1,926,000
Operating Leases, Income Statement, Sublease Revenue	70,000	28,000
Professional Fees1 [Member] | Pending and Threatend Litigation [Member]
Note 12 - Commitments and Contingencies (Details) [Line Items]
Legal Fees	411,000	318,000
Pending and Threatend Litigation [Member] | Accounts Payable and Accrued Liabilities [Member]
Note 12 - Commitments and Contingencies (Details) [Line Items]
Loss Contingency, Estimate of Possible Loss	542,000		440,000
Pending and Threatend Litigation [Member]
Note 12 - Commitments and Contingencies (Details) [Line Items]
Loss Contingency, Damages Sought, Value	29,400,000
Accounts Payable and Accrued Liabilities [Member]
Note 12 - Commitments and Contingencies (Details) [Line Items]
Deferred Rent Credit	$ 91,000		$ 160,000

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Condensed Consolidated Statements of Financial Condition (Current Period Unaudited) (USD $)	Mar. 31, 2015	Sep. 30, 2014
ASSETS
Cash	$ 23,924,000	$ 24,465,000
Restricted cash	217,000	92,000
Cash deposits with clearing organizations	1,005,000	1,005,000
Securities owned, at fair value	914,000	1,061,000
Receivables from broker-dealers and clearing organizations	3,632,000	4,985,000
Forgivable loans receivable	936,000	662,000
Other receivables, net	4,277,000	3,998,000
Prepaid expenses	1,913,000	932,000
Fixed assets, net	804,000	752,000
Intangible assets, net	7,755,000	7,595,000
Goodwill	6,531,000	6,531,000
Deferred tax asset, net	11,551,000	11,925,000
Other assets, principally refundable deposits	532,000	790,000
Total Assets	63,991,000	64,793,000
Liabilities
Securities sold, but not yet purchased, at fair value	34,000	55,000
Accrued commissions and payroll payable	12,530,000	13,520,000
Accounts payable and other liabilities	5,118,000	5,715,000
Deferred clearing credit	893,000	971,000
Total Liabilities	18,575,000	20,261,000
Stockholders’ Equity
Preferred stock, $0.01 par value, 10,000,000 shares authorized; none outstanding	0	0
Common stock $0.02 par value, 150,000,000 shares authorized; 12,446,365 issued and outstanding at March 31, 2015 and at September 30, 2014	249,000	249,000
Additional paid-in-capital	80,090,000	79,837,000
Accumulated deficit	(34,938,000)	(35,569,000)
Total National Holdings Corporation Stockholders’ Equity	45,401,000	44,517,000
Non-Controlling interest	15,000	15,000
Total Stockholders’ Equity	45,416,000	44,532,000	[1]
Total Liabilities and Stockholders’ Equity	$ 63,991,000	$ 64,793,000

[1] Reflects split adjusted shares and amounts for par value of common stock and additional paid in capital including the issuance of 887 shares for roundupof fractional shares.

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Note 7 - Business Combination (Details) - Assets Acquired and Liabilities Assumed (USD $)	Mar. 31, 2015	Sep. 30, 2014	Oct. 15, 2013
Note 7 - Business Combination (Details) - Assets Acquired and Liabilities Assumed [Line Items]
Goodwill	$ 6,531,000	$ 6,531,000
Gilman Ciocia Inc [Member]
Note 7 - Business Combination (Details) - Assets Acquired and Liabilities Assumed [Line Items]
Current assets			4,833,000
Fixed assets			482,000
Other assets			272,000
Intangible assets			8,350,000
Goodwill			6,531,000
Total Assets			20,468,000
Current liabilities			6,000,000
Long-term liabilities			5,628,000
Total Liabilities			11,628,000
Purchase Price			$ 8,840,000

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Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) (Parentheticals) (Common Stock [Member])	6 Months Ended
	Mar. 31, 2015
Common Stock [Member]
Shares issued for roundup of fractional shares	877

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Note 15 - Stock Based Compensation (Details) - Stock Option Activity (USD $)	6 Months Ended
	Mar. 31, 2015
Stock Option Activity [Abstract]
(in Shares)	1,218,000
	$ 6.40
	$ 1.00
	4 years 73 days
(in Dollars)	$ 45,000

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Note 17 - Segment Information (Tables)

6 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Brokerage and Advisory Services		Tax and Accounting Services			Corporate				Total
Three Months Ended March 31,
2015
Revenues	$	39,163,000	$	3,754,000		$	-			$	42,917,000
Pre-tax income (loss)		269,000		1,184,000			(920,000	)	(a)		533,000
Identifiable assets		42,302,000		3,996,000			17,693,000		(b)		63,991,000
Depreciation and amortization		203,000		19,000			72,000				294,000
Interest		2,000		-			-				2,000
Capital expenditures		7,000		-			-				7,000
2014
Revenues	$	48,801,000	$	3,932,000		$	-			$	52,733,000
Pre-tax (loss) income		3,542,000		1,427,000			(1,275,000	)	(a)		3,694,000
Identifiable assets		28,951,000		18,700,000			1,433,000		(c)		49,084,000
Depreciation and amortization		110,000		(42,000	)		230,000				298,000
Interest		7,000		1,000			-				8,000
Capital expenditures		48,000		-			-				48,000

	Brokerage and Advisory Services		Tax and Accounting Services			Corporate				Total
Six Months Ended March 31,
2015
Revenues	$	79,603,000	$	4,512,000		$	-			$	84,115,000
Pre-tax income (loss)		2,251,000		555,000			(1,758,000	)	(a)		1,048,000
Identifiable assets		42,302,000		3,996,000			17,693,000		(b)		63,991,000
Depreciation and amortization		320,000		26,000			222,000				568,000
Interest		5,000		1,000			-				6,000
Capital expenditures		194,000		11,000			6,000				211,000
2014
Revenues	$	89,444,000	$	4,470,000		$	-			$	93,914,000
Pre-tax (loss) income		6,465,000		521,000			(2,226,000	)	(a)		4,760,000
Identifiable assets		28,951,000		18,700,000			1,433,000		(c)		49,084,000
Depreciation and amortization		216,000		(82,000	)		429,000				563,000
Interest		14,000		4,000			6,000				24,000
Capital expenditures		72,000		-			-				72,000

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Note 15 - Stock Based Compensation

6 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE 15. STOCK BASED COMPENSATION

Restricted Stock Units

During the six months ended March 31, 2015 and 2014, the Company recorded stock based compensation expense of $109,000 and $119,000, respectively, related to restricted stock units.

A summary of the Company's non-vested restricted stock units for the six months ended March 31, 2015 is as follows: 

	Shares			Weighted Average Grant Date Fair Value per share *
Non-vested restricted stock units at October 1, 2014		57,790		$	4.38
Forfeited		(1,292	)	$	5.72
Non-vested restricted stock units at March 31, 2015		56,498		$	3.87

*For independent advisors, the weighted average grant date fair value per share is calculated as the weighted average vesting date fair value, or if not vested, the value at the balance sheet date.

At March 31, 2015, there was $109,000 of unrecognized compensation expense related to unvested RSUs, which is expected to be recognized in 2015. 

Stock Options

There was no stock option activity during the six months ended March 31, 2015. Information with respect to outstanding stock options at March 31, 2015 follows:

Outstanding Options		Weighted Average Exercise Price Per Share		Weighted Average Grant-Date Fair Value Per Share		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
	1,218,000	$	6.40		1.00		4.20	$	45,000

During the six months ended March 31, 2015 and 2014 the Company recognized compensation expense of $144,000 and $427,000, respectively related to stock options. As of March 31, 2015, the Company had approximately $41,000 of unamortized compensation costs related to non-vested options, which will be recognized in 2015.

Warrants

There were 89,676 warrants outstanding at March 31, 2015, all of which were exercisable, have an exercise price of $5.00 of which 25,000 expire in June 2015 and 64,676 expire in July 2015.

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Note 1 - Basis of Presentation (Details) (USD $)	1 Months Ended	3 Months Ended			6 Months Ended
	Feb. 28, 2015	Mar. 31, 2015	Sep. 30, 2014	Mar. 31, 2014	Mar. 31, 2014
Reverse Stock Split [Member]
Note 1 - Basis of Presentation (Details) [Line Items]
Stockholders' Equity Note, Stock Split, Conversion Ratio	10	10
Gilman [Member]
Note 1 - Basis of Presentation (Details) [Line Items]
Goodwill, Purchase Accounting Adjustments			$ 2,066,000
Increase (Decrease) in Intangible Assets, Current				$ 324,000	$ 593,000

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Note 17 - Segment Information

6 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

NOTE 17. 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 the Broker-Dealer Subsidiaries, NAM, National Insurance, Prime Financial and GC. The tax and accounting services segment includes tax preparation and accounting services provided by Gilman.

Corporate pre-tax loss consists of certain expenses that have not been allocated to reportable segments. 

Segment information for the three months ended March 31, 2015 and 2014 is as follows:

	Brokerage and Advisory Services		Tax and Accounting Services			Corporate				Total
Three Months Ended March 31,
2015
Revenues	$	39,163,000	$	3,754,000		$	-			$	42,917,000
Pre-tax income (loss)		269,000		1,184,000			(920,000	)	(a)		533,000
Identifiable assets		42,302,000		3,996,000			17,693,000		(b)		63,991,000
Depreciation and amortization		203,000		19,000			72,000				294,000
Interest		2,000		-			-				2,000
Capital expenditures		7,000		-			-				7,000
2014
Revenues	$	48,801,000	$	3,932,000		$	-			$	52,733,000
Pre-tax (loss) income		3,542,000		1,427,000			(1,275,000	)	(a)		3,694,000
Identifiable assets		28,951,000		18,700,000			1,433,000		(c)		49,084,000
Depreciation and amortization		110,000		(42,000	)		230,000				298,000
Interest		7,000		1,000			-				8,000
Capital expenditures		48,000		-			-				48,000

	Brokerage and Advisory Services		Tax and Accounting Services			Corporate				Total
Six Months Ended March 31,
2015
Revenues	$	79,603,000	$	4,512,000		$	-			$	84,115,000
Pre-tax income (loss)		2,251,000		555,000			(1,758,000	)	(a)		1,048,000
Identifiable assets		42,302,000		3,996,000			17,693,000		(b)		63,991,000
Depreciation and amortization		320,000		26,000			222,000				568,000
Interest		5,000		1,000			-				6,000
Capital expenditures		194,000		11,000			6,000				211,000
2014
Revenues	$	89,444,000	$	4,470,000		$	-			$	93,914,000
Pre-tax (loss) income		6,465,000		521,000			(2,226,000	)	(a)		4,760,000
Identifiable assets		28,951,000		18,700,000			1,433,000		(c)		49,084,000
Depreciation and amortization		216,000		(82,000	)		429,000				563,000
Interest		14,000		4,000			6,000				24,000
Capital expenditures		72,000		-			-				72,000

(a)	Consists of executive salaries and other expenses not allocated to reportable segments by management.
(b)	Consists principally of deferred tax asset.
(c)	Consists of cash, intangibles and goodwill.

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)	6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 631,000	$ 4,519,000
Adjustments to reconcile net income to net cash (used in) provided by operating activities
Depreciation and amortization	568,000	563,000
Amortization of forgivable loans to registered representatives	149,000	105,000
Stock-based compensation	253,000	425,000
Provision for doubtful accounts	173,000	197,000
Amortization of deferred clearing credit	(78,000)	(50,000)
Deferred tax expense	374,000
Changes in assets and liabilities, net of effects of acquisition
Cash deposits with clearing organizations		242,000
Receivables from broker-dealers and clearing organizations	1,353,000	1,786,000
Other receivables, net	(452,000)	(1,497,000)
Restricted cash	(125,000)
Forgivable loans receivable	(423,000)	63,000
Securities owned, at fair value	147,000	(223,000)
Other assets, principally refundable deposits	258,000	(175,000)
Prepaid expenses	(981,000)	(324,000)
Accounts payable, accrued expenses and other liabilities	(2,156,000)	(461,000)
Securities sold, but not yet purchased, at fair value	(21,000)	67,000
Net cash (used in) provided by operating activities	(330,000)	5,237,000
CASH FLOWS FROM INVESTING ACTIVITIES
Cash acquired in acquisition		1,654,000
Purchase of fixed assets	(211,000)	(72,000)
Net cash (used in) provided by investing activities	(211,000)	1,582,000
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of certain liabilities of acquired entity		(5,400,000)
Net cash used in financing activities		(5,400,000)
NET (DECREASE) INCREASE IN CASH	(541,000)	1,419,000
CASH BALANCE
Beginning of the period	24,465,000	19,985,000
End of the period	23,924,000	21,404,000
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest	2,000	24,000
Income taxes	1,123,000	33,000
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES
Tangible assets acquired, excluding cash		3,933,000
Identifiable intangible assets acquired	569,000	8,350,000
Goodwill		6,531,000
Liabilities assumed		11,628,000
Common stock issued		8,840,000
Contingent consideration payable	$ 569,000

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Condensed Consolidated Statements of Financial Condition (Current Period Unaudited) (Parentheticals) (USD $)	Mar. 31, 2015	Sep. 30, 2014
Preferred stock, par value (in Dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, outstanding	0	0
Common stock, par value (in Dollars per share)	$ 0.02	$ 0.02
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	12,446,365	12,446,365
Common stock, shares outstanding	12,446,365	12,446,365

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Note 10 - Off Balance Sheet Risk and Concentration of Credit Risk

6 Months Ended

Mar. 31, 2015

Risks and Uncertainties [Abstract]

Concentration Risk Disclosure [Text Block]

NOTE 10. OFF BALANCE SHEET RISK AND CONCENTRATION 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 on a fee basis for the Company. 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, periodically and 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. In the event of a financial institution’s insolvency, the recovery of cash may be limited. 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 into the same security) 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.

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Document And Entity Information	6 Months Ended
	Mar. 31, 2015	May 12, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	NATIONAL HOLDINGS CORP
Document Type	10-Q
Current Fiscal Year End Date	--09-30
Entity Common Stock, Shares Outstanding		12,446,365
Amendment Flag	false
Entity Central Index Key	0001023844
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Mar. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2

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Note 11 - New Accounting Guidance

6 Months Ended

Mar. 31, 2015

Disclosure Text Block [Abstract]

Description of New Accounting Pronouncements Not yet Adopted [Text Block]

NOTE 11. NEW ACCOUNTING GUIDANCE

In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The update requires the netting of unrecognized tax benefits against a deferred tax asset for the loss or other carryforward that would apply in settlement of the uncertain tax positions. The new guidance was effective for the Company beginning October 1, 2014. The adoption did not have any impact on the Company’s financial statements.

In May 2014, the FASB issued an accounting standard update on revenue recognition. The new guidance creates a single, principle-based model for revenue recognition and expands and improves disclosures about revenue. The new guidance is effective for the Company beginning October 1, 2017, and must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. The Company is currently evaluating the potential impact of this standard on its financial position and results of operations.

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Condensed Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Revenues
Commissions	$ 25,746,000	$ 30,306,000	$ 50,162,000	$ 57,913,000
Principal transactions	2,705,000	5,983,000	6,143,000	9,142,000
Investment banking	4,391,000	5,619,000	9,513,000	8,952,000
Investment advisory	3,527,000	3,696,000	7,352,000	6,936,000
Interest and dividends	847,000	885,000	1,678,000	1,817,000
Transfer fees and clearing services	1,853,000	2,452,000	4,567,000	4,767,000
Tax preparation and accounting	3,748,000	3,737,000	4,507,000	4,275,000
Other	100,000	55,000	193,000	112,000
Total Revenues	42,917,000	52,733,000	84,115,000	93,914,000
Operating Expenses
Commissions, compensation and fees	36,099,000	41,929,000	71,387,000	76,528,000
Clearing fees	886,000	1,103,000	1,528,000	2,140,000
Communications	1,194,000	1,191,000	2,442,000	2,331,000
Occupancy	1,004,000	1,073,000	2,025,000	2,027,000
License and registration	467,000	307,000	867,000	753,000
Professional fees	1,095,000	1,228,000	1,820,000	2,098,000
Interest	2,000	8,000	6,000	24,000
Depreciation and amortization	294,000	298,000	568,000	562,000
Other administrative expenses	1,343,000	1,902,000	2,424,000	2,691,000
Total Operating Expenses	42,384,000	49,039,000	83,067,000	89,154,000
Income before Income Tax Expense	533,000	3,694,000	1,048,000	4,760,000
Income tax expense	196,000	134,000	417,000	241,000
Net Income	$ 337,000	$ 3,560,000	$ 631,000	$ 4,519,000
Net income per share of common stock - Basic (in Dollars per share)	$ 0.03	$ 0.29	$ 0.05	$ 0.37
Net income per share of common stock - Diluted (in Dollars per share)	$ 0.03	$ 0.28	$ 0.05	$ 0.37
Weighted number of shares outstanding - Basic (in Shares)	12,446,365	12,324,689	12,446,365	12,150,330
Weighted number of shares outstanding - Diluted (in Shares)	12,502,758	12,502,307	12,497,628	12,301,330

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Note 5 - Securities Owned and Securities Sold, But Not Yet Purchased at Fair Value

6 Months Ended

Mar. 31, 2015

Investment Holdings [Abstract]

Investment Holdings [Text Block]

NOTE 5. SECURITIES OWNED AND SECURITIES SOLD, BUT NOT YET PURCHASED AT FAIR VALUE

Accounting guidance defines fair value as 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. Additionally, it requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

Level 1:	Observable inputs such as quoted market prices in active markets for identical assets or liabilities
Level 2:	Observable market-based inputs or unobservable inputs that are corroborated by market data
Level 3:	Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions

The following tables show the fair values of securities owned by the Broker-Dealer Subsidiaries, and securities sold, not yet purchased by such entities, as of March 31, 2015 and September 30, 2014:

Fair Value Measurements

As of March 31, 2015
Securities owned at fair value	Level 1		Level 2		Level 3		Total
Corporate stocks	$	237,000		-		-	$	237,000
Municipal bonds		503,000		-		-		503,000
Restricted stock and warrants		-		174,000		-		174,000
	$	740,000	$	174,000	$	-	$	914,000

Securities sold, not yet purchased at fair value	Level 1		Level 2		Level 3		Total
Municipal bonds	$	34,000	$	-	$	-	$	34,000

As of September 30, 2014
Securities owned at fair value	Level 1		Level 2		Level 3		Total
Corporate stocks	$	256,000		-		-	$	256,000
Municipal bonds		696,000		-		-		696,000
Restricted stock and warrants		-		109,000		-		109,000
	$	952,000	$	109,000	$	-	$	1,061,000

Securities sold, but not yet purchased at fair value	Level 1		Level 2		Level 3		Total
Corporate stocks	$	55,000		-		-	$	55,000

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Note 4 - Forgivable Loans Receivable

6 Months Ended

Mar. 31, 2015

Investments in and Advances to Affiliates, Schedule of Investments [Abstract]

Investments in and Advances to Affiliates, Schedule of Investments [Text Block]

NOTE 4. 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 (interest ranging up to 9%). These notes have various schedules for repayment or forgiveness based on production or retention requirements being met and mature at various dates through 2020. Forgiveness of loans amounted to $149,000 and $105,000 for six months ended March 31, 2015 and 2014, respectively, and the related compensation was included in commissions, compensation and fees in the condensed consolidated statements of operations. In the event the advisor’s affiliation with the subsidiary terminates, the advisor is required to repay the unamortized balance of any notes payable. 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 March 31, 2015, and September 30, 2014, no allowance for doubtful accounts was required.

Forgivable loan activity for the six months ended March 31, 2015 is as follows:

Balance, October 1, 2014	$	662,000
Additions		483,000
Amortization		(149,000	)
Repayments		(60,000	)
Balance, March 31, 2015	$	936,000

There were no unamortized loans outstanding attributable to registered representatives who ended their affiliation with the Broker-Dealer Subsidiaries prior to the fulfillment of their obligation.

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Note 16 - Income Taxes

6 Months Ended

Mar. 31, 2015

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

NOTE 16. INCOME TAXES

The Company files a consolidated federal income tax return and certain combined state and local income tax returns with its subsidiaries. Income tax expense amounted to $196,000 ($6,000 of current benefit and $202,000 of deferred expense) and $417,000 ($43,000 current expense and $374,000 deferred expense) for the three-month and six-month periods ended March 31, 2015, respectively and $134,000 and $241,000 for the three-month and six-month periods ended March 31, 2014, respectively. The tax expense for the three-month and six-month periods ended March 31, 2015 represents the estimated annual effective tax rate. The effective tax rate for the three-month and six-month periods ended March 31, 2014 differs from the statutory income tax rate, primarily due to utilization of net operating loss carryforwards for which valuation allowances had previously been provided.

At March 31, 2015, the Company had a net deferred tax asset of $11,551,000, principally comprised of net operating loss carryforwards. Management believes that is more likely than not that its deferred tax assets will be realized and, accordingly, has not provided a valuation allowance against such amount.

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Note 12 - Commitments and Contingencies

6 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

NOTE 12. COMMITMENTS AND CONTINGENCIES

Leases

As of March 31, 2015, the Company leases office space in various states expiring at various dates through August 2021, and is committed under operating leases for future minimum lease payments as follows:

Fiscal Year Ending	Rental Expense		Less, Sublease Income		Net
2015	$	1,681,000	$	68,000	$	1,613,000
2016		2,807,000		136,000		2,671,000
2017		2,108,000		80,000		2,028,000
2018		1,461,000		-		1,461,000
2019		770,000		-		770,000
Thereafter		1,360,000		-		1,360,000
	$	10,187,000	$	284,000	$	9,903,000

The total amount of rent payable under the leases is recognized on a straight line basis over the term of the leases. As of March 31, 2015 and September 30, 2014, the Company has recognized deferred rent payable of $91,000 and $160,000, respectively, which is included in “Accounts payable and other liabilities” on the condensed consolidated statement of financial condition. Rental expense under all operating leases for the six months ended March 31, 2015 and March 31, 2014 was $1,973,000 and $1,926,000 respectively. Sublease income under all operating subleases for the six months ended March 31, 2015 and 2014 was approximately $70,000 and $28,000 respectively.

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 of approximately $29,400,000. 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 and its subsidiaries believe these actions are without merit and intend to vigorously defend themselves in these actions. The ultimate outcome of these matters cannot be determined at this time.

The Company establishes liabilities for potential losses from complaints, legal actions, government investigations and proceedings where the Company believes that it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. In making these decisions, the Company 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 the Company’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, the Company cannot predict with certainty the eventual loss or range of loss related to such matters. These claims may be covered by our 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 these lawsuits and arbitrations will not have a material adverse impact on the Company's financial position. At March 31, 2015 and September 30, 2014, the Company accrued approximately $542,000 and $440,000, respectively, for legal fees and potential settlements for these matters, which are included in "Accounts payable and other liabilities" in the accompanying condensed consolidated statements of financial condition. The Company has included in "Professional fees" litigation and FINRA related expenses of $411,000 and $318,000 for the six months ended March 31, 2015 and 2014, respectively.

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Note 8 - Accounts Payable and Accrued Expenses

6 Months Ended

Mar. 31, 2015

Payables and Accruals [Abstract]

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

NOTE 8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses as of March 31, 2015 and September 30, 2014 consist of the following:

	March 31,		September 30,
	2015		2014
Federal and state income tax	$	-	$	732,000
Legal		606,000		911,000
Audit		274,000		294,000
Telecommunications		246,000		240,000
Data services		364,000		387,000
Regulatory		624,000		838,000
Settlements		349,000		440,000
Deferred rent		91,000		160,000
Contingent consideration payable		569,000		-
Other		1,995,000		1,713,000
Total	$	5,118,000	$	5,715,000

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Note 16 - Income Taxes (Details) (USD $)	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Income Tax Disclosure [Abstract]
Income Tax Expense (Benefit)	$ 196,000	$ 134,000	$ 417,000	$ 241,000
Current Income Tax Expense (Benefit)	6,000		43,000
Deferred Income Tax Expense (Benefit)	202,000		374,000
Deferred Tax Assets, Net of Valuation Allowance	$ 11,551,000		$ 11,551,000

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Note 6 - Fixed Assets

6 Months Ended

Mar. 31, 2015

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

NOTE 6. FIXED ASSETS

Fixed assets as of March 31, 2015 and September 30, 2014 consist of the following: 

	March 31,			September 30,			Estimated Useful
	2015			2014			Lives
Equipment	$	526,000		$	339,000			5
Furniture and fixtures		151,000			139,000			5
Leasehold improvements		578,000			566,000		Lesser of useful life or term of lease
Capital leases (primarily composed of computer equipment)		453,000			453,000			5
		1,708,000			1,497,000
Less accumulated depreciation and amortization		(904,000	)		(745,000	)
Fixed assets – net	$	804,000		$	752,000

Depreciation and amortization expense associated with fixed assets for the six months ended March 31, 2015 and 2014 was $159,000 and $100,000, respectively.

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Note 7 - Business Combination

6 Months Ended

Mar. 31, 2015

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

NOTE 7 - BUSINESS COMBINATIONS

In February 2015, Gilman 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 contingent consideration payable in cash having a fair value of $569,000, for which a liability (included in Accounts payable and other liabilities) 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 agreement, during the 48-month period following the closing up to a maximum of $640,000. The liability was valued using an income-based approach using unobservable inputs (Level 3) and reflects the Company’s own assumptions. The liability will be revalued at each Balance Sheet date with changes therein recorded in earnings. There was no change in the estimated fair value of the liability at March 31, 2015. The fair value of the acquired assets was allocated to customer relationships, which will be amortized over seven years. Results of operations of the acquired business are included in the accompanying consolidated statements of operations from the date of acquisition and were not material. In addition, based on materiality, pro forma results are not presented.

On October 15, 2013, the Company completed a merger with Gilman pursuant to the terms and conditions of the Agreement and Plan of Merger (the “Merger Agreement”), dated as of June 20, 2013, by and among the Company, National Acquisition Corp., a Delaware corporation and the Company’s wholly-owned subsidiary (“Merger Sub”), and Gilman. Pursuant to the Merger Agreement, Merger Sub was merged with and into Gilman, with Gilman surviving the merger and becoming a wholly-owned subsidiary of the Company. Gilman provides federal, state and local tax preparation services to individuals predominantly in upper and middle income tax brackets and accounting services to small and middle size companies. In addition, through wholly owned subsidiaries, Gilman is engaged in broker-dealer, investment advisory, insurance product sales and mortgage brokerage activities.

Pursuant to the Merger Agreement, the Company issued to Gilman’s stockholders 2,266,669 shares of its common stock valued at $8,840,000 determined based on the closing market price of the Company’s common stock on the acquisition date, and became the owner of 100% of the outstanding shares of Gilman’s common stock. Additionally, the Company financed repayment of $5,400,000 of Gilman’s liabilities through a capital contribution to Gilman. In August 2013, the Company issued 1,058,333 shares of its common stock pursuant to a private placement which generated net proceeds of $3,016,000 to partially finance the cash consideration of $5,400,000.

The purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values as follows:

Assets
Current assets	$	4,833,000
Fixed assets		482,000
Other assets		272,000
Intangible assets		8,350,000
Goodwill		6,531,000
Total Assets		20,468,000
Liabilities
Current liabilities		6,000,000
Long-term liabilities		5,628,000
Total Liabilities		11,628,000
Purchase Price	$	8,840,000

The goodwill recognized, none of which is deductible for income tax purposes, is attributable to the assembled workforce of Gilman and to expected synergies and other benefits that the Company believes will result from combining its operations with Gilman’s. The intangible assets recognized are primarily attributable to expected increased margins that the Company believes will result from Gilman’s existing customer relationships and increased margins from financial planning and tax preparation services that the Company will offer to its existing clients.

The following table presents intangible assets acquired, including $569,000 attributable to the February 2015 Gilman aquisition, their carrying amount as of March 31, 2015 and their estimated useful lives: 

Intangible asset	Fair Value		Accumulated Amortization		Carrying Value		Estimated Useful Life (years)
Customer relationships	$	6,969,000	$	948,000	$	6,021,000		7&10
Non-compete		296,000		216,000		80,000		2
Brands		1,654,000		-		1,654,000	Indefinite
	$	8,919,000	$	1,164,000	$	7,755,000

Amortization expense associated with intangible assets, for the six months ended March 31, 2015 and 2014 was $409,000 and $463,000, respectively.

The estimated future amortization expense of the above intangible assets for the next five fiscal years and thereafter is as follows:

Year ending
September 30,
2015	$	426,000
2016		733,000
2017		719,000
2018		719,000
2019		719,000
Thereafter		2,785,000
Total	$	6,101,000

Gilman’s results of operations are included in the accompanying consolidated financial statements from October 15, 2013, the date of acquisition. The following pro forma consolidated results of operations have been prepared as if the acquisition occurred at October 1, 2013:  

	(Unaudited) Six Month Period Ended March 31, 2014
Revenues	$	95,518,000
Net income attributable to common stockholders	$	3,881,000
Basic earnings per share	$	0.31
Diluted earnings per share	$	0.31
Weighted number of shares outstanding – basic		12,339,219
Weighted number of shares outstanding – Diluted		12,490,219

These pro forma amounts have been calculated after applying the Company’s accounting policies and adjusting the results to reflect, among other things, 1) additional amortization that would have been charged assuming the fair value adjustments to amortizable intangible assets after giving effect to measurement period adjustments (see Note 1), had been applied, 2) the shares issued by the Company to acquire Gilman, and 3) the decrease in interest expense related to Gilman’s liabilities paid by the Company. These pro forma results of operations have been prepared for comparative purposes only, and they do not purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred on the date indicated or that may result in the future.

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Note 9 - Per Share Data

6 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

NOTE 9. PER SHARE DATA

Net Income per Common Share

Basic net income per share of common stock attributable to the Company is computed on the basis of the weighted average number of shares of common stock outstanding after giving effect to the 1 for 10 reverse stock split. Diluted net income per share is computed on the basis of such weighted average number of shares of common stock 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.

	Three Month Period Ended				Six Month Period Ended
	March 31,				March 31,
	2015		2014		2015		2014
Numerator:
Net income	$	337,000	$	3,560,000	$	631,000	$	4,519,000
Denominator:
Denominator for basic earnings per share-weighted average shares		12,446,365		12,324,689		12,446,365		12,150,330
Effect of dilutive securities:
Options		22,826		49,808		24,226		26,639
Warrants		-		3,449		-		-
Unvested restricted stock units		33,567		124,361		27,037		124,361
Denominator for diluted earnings per share-adjusted weighted-average shares		12,502,758		12,502,307		12,497,628		12,301,330
Income per share:
Net income available to common stockholders
Basic	$	0.03	$	0.29	$	0.05	$	0.37
Diluted	$	0.03	$	0.28	$	0.05	$	0.37

The following potential common share equivalents are not included in the above diluted computation because to do so would be anti-dilutive: 

	Three and Six Month Period Ended March 31,
	2015		2014
Options		1,128,000		1,203,361
Warrants		89,676		89,676
		1,217,676		1,293,037

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Note 15 - Stock Based Compensation (Tables)

6 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block]

	Shares			Weighted Average Grant Date Fair Value per share *
Non-vested restricted stock units at October 1, 2014		57,790		$	4.38
Forfeited		(1,292	)	$	5.72
Non-vested restricted stock units at March 31, 2015		56,498		$	3.87

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

Outstanding Options		Weighted Average Exercise Price Per Share		Weighted Average Grant-Date Fair Value Per Share		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
	1,218,000	$	6.40		1.00		4.20	$	45,000

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Note 9 - Per Share Data (Details) - Basic Net Loss Per Share (USD $)	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Numerator:
Net income (in Dollars)	$ 337,000	$ 3,560,000	$ 631,000	$ 4,519,000
Denominator:
Denominator for basic earnings per share-weighted average shares	12,446,365	12,324,689	12,446,365	12,150,330
Denominator for diluted earnings per share-adjusted weighted-average shares	12,502,758	12,502,307	12,497,628	12,301,330
Net income available to common stockholders
Basic (in Dollars per share)	$ 0.03	$ 0.29	$ 0.05	$ 0.37
Diluted (in Dollars per share)	$ 0.03	$ 0.28	$ 0.05	$ 0.37
Dilutive Options [Member]
Denominator:
Dilutive securities	22,826	49,808	24,226	26,639
Warrant [Member]
Denominator:
Warrants		3,449
Restricted Stock Units (RSUs) [Member]
Denominator:
Dilutive securities	33,567	124,361	27,037	124,361

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Note 14 - Net Capital Requirements

6 Months Ended

Mar. 31, 2015

Disclosure Text Block [Abstract]

Regulatory Capital Requirements under Banking Regulations [Text Block]

NOTE 14. NET CAPITAL REQUIREMENTS

National Securities is subject to the Securities and Exchange Commission Uniform Net Capital Rule (Rule 15c3-1) (the Rule), which, among other things, requires the maintenance of minimum net capital. In February 2015, pursuant to a directive form FINRA, National Securities reverted back to using the alternative method of computing net capital from the aggregate indebtedness method. At March 31, 2015, National Securities had net capital of $7,165,930 which was $6,915,930 in excess of its required net capital of $250,000. National Securities claims exemption from the provisions of the SEC's Rule 15c3-3 pursuant to paragraph (k) (2) (ii) as it clears its customer transactions through its correspondent brokers on a fully disclosed basis.

vFinance Investments is subject to the Rule, which, among other things, requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. At March 31, 2015, vFinance Investments had net capital of $3,003,962 which was $2,003,962 in excess of its required net capital of $1,000,000. vFinance Investments percentage of aggregate indebtedness to net capital was 153.8%. vFinance Investments claims exemption from the provisions of the SEC's Rule 15c3-3 pursuant to paragraph (k) (2) (ii) as it clears its customer transactions through its correspondent brokers on a fully disclosed basis.

Advances, dividend payments and other equity withdrawals from its Broker-Dealer Subsidiaries 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. 

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Note 1 - Basis of Presentation (Tables)

6 Months Ended

Mar. 31, 2015

Disclosure Text Block [Abstract]

Schedule of Error Corrections and Prior Period Adjustments [Table Text Block]

	For the Three Months Ended				For the Six Months Ended
	March 31, 2014				March 31, 2014
	As previously				As previously
	Reported		As Revised		Reported		As Revised
Total revenues	$	52,684,000	$	52,733,000	$	94,478,000	$	93,914,000
Total operating expenses		49,314,000		49,039,000		90,311,000		89,154,000
Income before income taxes		3,370,000		3,694,000		4,167,000		4,760,000
Income taxes		134,000		134,000		241,000		241,000
Net income	$	3,236,000	$	3,560,000	$	3,926,000	$	4,519,000
Net income per share attributable to common stockholders
Basic	$	0.26	$	0.29	$	0.32	$	0.37
Diluted	$	0.26	$	0.28	$	0.32	$	0.37

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Note 8 - Accounts Payable and Accrued Expenses (Details) - Accounts Payable and Accrued Expenses (USD $)	Mar. 31, 2015	Sep. 30, 2014
Note 8 - Accounts Payable and Accrued Expenses (Details) - Accounts Payable and Accrued Expenses [Line Items]
Federal and state income tax		$ 732,000
Telecommunications	246,000	240,000
Data services	364,000	387,000
Regulatory	624,000	838,000
Settlements	349,000	440,000
Deferred rent	91,000	160,000
Contingent consideration payable	569,000
Other	1,995,000	1,713,000
Total	5,118,000	5,715,000
Legal Fees [Member]
Note 8 - Accounts Payable and Accrued Expenses (Details) - Accounts Payable and Accrued Expenses [Line Items]
Professional Fees	606,000	911,000
Audit Fees [Member]
Note 8 - Accounts Payable and Accrued Expenses (Details) - Accounts Payable and Accrued Expenses [Line Items]
Professional Fees	$ 274,000	$ 294,000

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Note 5 - Securities Owned and Securities Sold, But Not Yet Purchased at Fair Value (Details) - Fair Value Measurements (USD $)	Mar. 31, 2015	Sep. 30, 2014
Security Owned and Sold, Not yet Purchased, at Fair Value [Line Items]
Securities owned at fair value	$ 914,000	$ 1,061,000
Corporate Stocks [Member] | Fair Value, Inputs, Level 1 [Member]
Security Owned and Sold, Not yet Purchased, at Fair Value [Line Items]
Securities owned at fair value	237,000	256,000
Corporate Stocks [Member]
Security Owned and Sold, Not yet Purchased, at Fair Value [Line Items]
Securities owned at fair value	237,000	256,000
Municipal Bonds [Member] | Fair Value, Inputs, Level 1 [Member]
Security Owned and Sold, Not yet Purchased, at Fair Value [Line Items]
Securities owned at fair value	503,000	696,000
Municipal Bonds [Member]
Security Owned and Sold, Not yet Purchased, at Fair Value [Line Items]
Securities owned at fair value	503,000	696,000
Restricted Stock [Member] | Fair Value, Inputs, Level 2 [Member]
Security Owned and Sold, Not yet Purchased, at Fair Value [Line Items]
Securities owned at fair value	174,000	109,000
Restricted Stock [Member]
Security Owned and Sold, Not yet Purchased, at Fair Value [Line Items]
Securities owned at fair value	174,000	109,000
Fair Value, Inputs, Level 1 [Member] | Municipal Bonds [Member]
Security Owned and Sold, Not yet Purchased, at Fair Value [Line Items]
Securities sold, but not yet purchased at fair value	34,000
Fair Value, Inputs, Level 1 [Member] | Corporate Stocks [Member]
Security Owned and Sold, Not yet Purchased, at Fair Value [Line Items]
Securities sold, but not yet purchased at fair value		55,000
Fair Value, Inputs, Level 1 [Member]
Security Owned and Sold, Not yet Purchased, at Fair Value [Line Items]
Securities owned at fair value	740,000	952,000
Fair Value, Inputs, Level 2 [Member]
Security Owned and Sold, Not yet Purchased, at Fair Value [Line Items]
Securities owned at fair value	174,000	109,000
Municipal Bonds [Member]
Security Owned and Sold, Not yet Purchased, at Fair Value [Line Items]
Securities sold, but not yet purchased at fair value	34,000
Corporate Stocks [Member]
Security Owned and Sold, Not yet Purchased, at Fair Value [Line Items]
Securities sold, but not yet purchased at fair value		$ 55,000

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Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) (USD $)		Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Noncontrolling Interest [Member]	Total
Balance at Sep. 30, 2014	[1]	$ 249,000	$ 79,837,000	$ (35,569,000)	$ 15,000	$ 44,532,000
Balance (in Shares) at Sep. 30, 2014	[1]	12,446,365
Stock-based compensation – stock options			144,000			144,000
Stock- based compensation for restricted stock units			109,000			109,000
Net income				631,000		631,000
Balance at Mar. 31, 2015		$ 249,000	$ 80,090,000	$ (34,938,000)	$ 15,000	$ 45,416,000
Balance (in Shares) at Mar. 31, 2015		12,446,365

[1] Reflects split adjusted shares and amounts for par value of common stock and additional paid in capital including the issuance of 887 shares for roundupof fractional shares.

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Note 3 - Receivables from Broker-Dealers and Clearing Organizations and Other Receivables

6 Months Ended

Mar. 31, 2015

Due to and from Broker-Dealers and Clearing Organizations [Abstract]

Due to and from Broker-Dealers and Clearing Organizations Disclosure [Text Block]

NOTE 3. RECEIVABLES FROM BROKER-DEALERS AND CLEARING ORGANIZATIONS AND OTHER RECEIVABLES

At March 31, 2015 and September 30, 2014, the receivables of $3,632,000 and $4,985,000, respectively, from broker-dealers and clearing organizations represent net amounts due for fees and commissions associated with the Company’s retail brokerage business as well as asset based fees revenues associated with the Company’s asset management advisory business.

Other receivables, net, at March 31, 2015 and September 30, 2014 of $4,277,000 and $3,998,000, respectively, principally represent trailing fees and fees for tax and accounting services and are net of allowance for doubtful accounts of $509,000 and $336,000, respectively.

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Note 15 - Stock Based Compensation (Details) - Nonvested Restricted Stock Unit Activity (USD $)	6 Months Ended
	Mar. 31, 2015
Nonvested Restricted Stock Unit Activity [Abstract]
Non-vested restricted stock units, shares	57,790
Non-vested restricted stock units, weighted average grant due fair value	$ 4.38	[1]
Forfeited	(1,292)
Forfeited	$ 5.72	[1]
Non-vested restricted stock units, shares	56,498
Non-vested restricted stock units, weighted average grant due fair value	$ 3.87	[1]

[1] For independent advisors, the weighted average grant date fair value per share is calculated as the weighted average vesting date fair value, or if not vested, the value at the balance sheet date.

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Note 4 - Forgivable Loans Receivable (Tables)

6 Months Ended

Mar. 31, 2015

Investments in and Advances to Affiliates, Schedule of Investments [Abstract]

Investments in and Advances to Affiliates [Table Text Block]

Balance, October 1, 2014	$	662,000
Additions		483,000
Amortization		(149,000	)
Repayments		(60,000	)
Balance, March 31, 2015	$	936,000

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Note 3 - Receivables from Broker-Dealers and Clearing Organizations and Other Receivables (Details) (USD $)	Mar. 31, 2015	Sep. 30, 2014
Due to and from Broker-Dealers and Clearing Organizations [Abstract]
Receivables from Brokers-Dealers and Clearing Organizations	$ 3,632,000	$ 4,985,000
Premiums and Other Receivables, Net	4,277,000	3,998,000
Allowance for Doubtful Accounts Receivable, Current	$ 509,000	$ 336,000

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Note 13 - Related Party Transactions

6 Months Ended

Mar. 31, 2015

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

NOTE 13. RELATED PARTY TRANSACTIONS

Robert B. Fagenson, the Company’s Chief Executive Officer and Executive Chairman of the Board of Directors, is a party to an Independent Contractor Agreement, dated February 27, 2012, with NSC, whereby in exchange for establishing and maintaining a branch office of NSC in New York City, (the “Branch”), Mr. Fagenson receives compensation equivalent to 50% of any net income earned at the Branch, which for the six months ended March 31, 2015 and 2014 amounted to compensation of $36,000 and $48,000 respectively. Additionally, Mr. Fagenson’s daughter, Stephanie Fagenson, is employed by NSC as Director of Corporate Access and receives an annual salary of $90,000 in fiscal 2015 and received an annual salary of $72,000 in fiscal 2014.