UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 14, 2018
NATIONAL HOLDINGS CORPORATION
(Exact Name of Registrant as Specified in Charter)
|
Delaware
|
|
001-12629
|
|
36-4128138
|
200 Vesey Street, 25th Floor, New York, NY 10281
(Address of Principal Executive Offices)
(212) 417-8000
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act.
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act.
☐ Pre-commencement communications pursuant to Rule 14d-2b under the Exchange Act.
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act.
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Item 2.02. Results of Operations and Financial Condition.
On February 14, 2018, National Holdings Corporation issued a press release to provide a corporate update and to announce its financial results for the first quarter ended December 31, 2017. A copy of such press release is being furnished as Exhibit 99.1 to this report.
On May 15, 2018, National Holdings Corporation issued a press release to provide a corporate update and to announce its financial results for the second quarter ended March 31, 2018. A copy of such press release is being furnished as Exhibit 99.2 to this report.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are furnished herewith:
|
Exhibit
|
|
Description
|
|
|
||
|
99.1 |
|
Press release issued by National Holdings Corporation, dated February 14, 2018. |
|
99.2 |
Press release issued by National Holdings Corporation, dated May 15, 2018. |
SIGNATURE
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 hereunto duly authorized.
| Date: May 15, 2018 | NATIONAL HOLDINGS CORPORATION |
| (Registrant) | |
|
By: /s/ Michael Mullen Name: Michael Mullen |
|
| Title: Chief Executive Officer |
Exhibit 99.1
National Holdings Corporation Reports Financial Results for the Fiscal 2018 First Quarter
NEW YORK, NY, February 14, 2018 – National Holdings Corporation (NASDAQ: NHLD) (“National” or the “Company”), a leading full service independent brokerage, investment banking, trading and asset management firm providing diverse services including tax preparation, today announced its financial results for the fiscal 2018 first quarter.
Fiscal 2018 First Quarter Financial Highlights:
|
■ |
Revenue of $50.1 million, versus $44.6 million for the fiscal first quarter 2017. |
|
■ |
Investment banking continued to produce excellent results, generating $14.6 million of revenue, versus $9.7 million in the prior year quarter. |
|
■ |
Investment advisory and commissions revenues improved by $1.9 and $1.1 million respectively. |
|
■ |
Adjusted EBITDA declined to $.6 million from a strong $2.1 million in the prior year quarter, on significant infrastructure investment. |
|
■ |
A loss before other expense and income taxes of $.2 million versus comparative profit of $1.6 million in the prior year quarter, again due to infrastructure spending. |
|
o |
Pre-tax loss of $5.8 million includes a non-operating, non-taxable loss of $5.6 million due to a change in the fair value of the firm’s warrant liability. The warrants were issued in early 2017, as part of the previously announced tender offer closing. |
|
o |
The current quarter net loss of $8.0 million includes the non-operating, non-taxable $5.6 million loss from the fair value warrant liability change mentioned above, along with a $2.2 million write-off of deferred tax assets due to the reduction in the U.S. Federal Corporate income tax rate to 21%, effective in 2018. |
|
■ |
Cash and cash equivalents of $31.2 million and no debt as of December 31, 2017 versus $27.9 million as of September 30, 2017. |
|
■ |
Equity of $31.1 million as of December 31, 2017 was impacted by the change in the fair value of warrants outstanding and the write-off of the deferred tax assets noted above. |
Management Commentary
Michael Mullen, Chief Executive Officer of National Holdings Corporation stated, “As we continue to advance our company and strive towards a more streamlined business model, it is fantastic to see continued revenue growth quarter over quarter. The team’s hard work is truly paying off as we have seen positive growth in many of our businesses, especially increased revenue in our investment banking and investment advisory divisions.” Mr. Mullen continued, “Most recently we announced the successful completion of a $75,000,000 private placement and debt refinancing for Marrone Bio Innovations. This deal marks a major step forward for our Agribusiness and expands our institutional investor reach in the agriculture market. We are working towards additional value creation in each sector of our business and are extremely pleased with the progress seen thus far.”
Fiscal 2018 First Quarter Financial Results
National reported first quarter 2018 revenue of $50.1 million, up $5.5 million or 12% over the first quarter of fiscal 2017. Total expenses increased $7.3 million or 17% to $50.3 million in the quarter.
Revenue
Our major revenue categories produced very strong results in the current quarter. The majority of the revenue increase in Q1 2018 was recorded in investment banking, which increased to $14.6 million in the quarter, up $4.9 million, or 50%, on an increasingly diverse mix of business.
Commissions and related revenue increased 3% to $27.9 million. Continuing favorable equity markets and increasing interest in fixed income opportunities drove revenue higher in the quarter.
Investment advisory revenue increased $1.9 million, to $5.3 million, up 58% in the current quarter. Increased focus on this segment of our business combined with high asset values produced a very significant current quarter. Our assets under management continue to grow, adding to our percentage of recurring revenue.
Net dealer inventory gains declined to $.9 million in the current quarter from $2.5 million in the prior year. The uncertainty in fixed income markets due to the new tax reform laws weighed on trading opportunities during the quarter. In addition, a $1.1 million mark down of the firm’s warrant portfolio was recorded during the current quarter.
Tax preparation and accounting revenue declined to $.5 million in the first quarter of 2018, versus $.9 million during the same period in the prior year.
Expenses
Total expenses increased to $50.3 million in the current fiscal quarter, up $7.3 million (17%) over the comparative quarter in fiscal 2017. Variable compensation expenses directly associated with overall revenue generation, and technology and enterprise risk management spending contributed to the majority of the increase.
|
■ |
Commissions, compensation and fees increased $6.3 million to $43.6 million in the current quarter. The increase in investment banking, commissions, and investment advisory revenue, and therefore compensation expense, contributed to the majority of the increase. As we have previously noted, planned infrastructure spending in technology development and enterprise risk management professionals and the related Incremental employee benefits contributed to the increase. |
|
■ |
Other administrative expenses increased $.6 million, due to higher provisions for potential arbitration settlements and insurance costs. |
|
■ |
Licensing and registration increased $.2 million, and professional fees increased $.1 million, mainly due to software licensing and technology consultants in the current quarter. |
Earnings
The loss before other expense and income taxes totaled $.2 million versus income of $1.6 million in the prior year quarter. The loss before income taxes, which includes the change in the fair value of the firm’s warrant liability, totaled $5.8 million, versus income of $5.7 million in the prior year quarter. The change in the fair value of the firm’s warrant liability is a market based adjustment that negatively impacted earnings in the current quarter as noted, however positively impacted earnings in the prior year quarter by $4.1 million.
The impact of the re-valuation of the firm’s warrant liability is a non-operating, non-taxable earnings adjustment and should be viewed as such.
The net loss for the current quarter totaled $8.0 million, versus income of $5.1 million in the prior year quarter. In addition to the warrant liability adjustment noted above, a write-off of $2.2 million of the firm’s deferred tax asset was recorded due to the change in the U.S. Federal Corporate Income Tax rate to 21%.
The net loss per share, both basic and fully diluted, was $.65 in the first fiscal quarter of 2018, versus net income per share of $.41 in the comparable 2017 quarter.
Adjusted EBITDA decreased to $.6 million in the current quarter, from $2.1 million in prior year quarter.
Balance Sheet
As of December 31, 2017, National had $31.2 million of cash and cash equivalents, versus $27.9 million as of September 30, 2017. The Company's balance sheet remains debt free.
About National Holdings Corporation
National Holdings Corporation (NASDAQ: NHLD) is a full-service investment banking and asset management firm that, through its affiliates, provides a range of services, including independent retail brokerage and advisory services, investment banking, institutional sales and trading, equity research, financial planning, market making, tax preparation and insurance, to corporations, institutions, high net-worth and retail investors. With over 900 advisors, registered reps, traders, sales associates and corporate staff, National Holdings operates through various subsidiaries including National Securities Corporation, National Asset Management, Inc., National Insurance Corporation, vFinance Investments, Inc., Gilman Ciocia, Inc. and GC Capital Corporation. Formed as a holding company in 1999, National Holdings’ largest subsidiary National Securities Corporation has been in business since 1947. National Holdings is headquartered in New York and Florida. For more information, visit www.nhldcorp.com. Fortress Biotech, Inc. (NASDAQ: FBIO) through its affiliate FBIO Acquisition, Inc., is a majority shareholder of NHLD.
FORWARD-LOOKING STATEMENTS
This press release may contain certain forward-looking statements. Any such statements, other than statements of historical fact, are based on management’s current expectations, estimates, projections, beliefs and assumptions about National Holdings, Inc., its current and prospective portfolio investments, and its industry. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond National Holdings, Inc.’s control, difficult to predict and could cause actual results to differ materially from those expected or forecasted in such forward-looking statements. Actual developments and results are likely to vary materially from these estimates and projections as a result of a number of factors, including those described from time to time in National Holdings, Inc.’s filings with the Securities and Exchange Commission. Such statements speak only as of the time when made, and National undertakes no obligation to update any such forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
CONTACTS:
National Holdings Corporation:
Michael Mullen, Chief Executive Officer
Email: mm@nhldcorp.com
Telephone: +1 212-417-8055
Investor Relations:
Email: ir@nhldcorp.com
Telephone: +1 212 554 4351
NATIONAL HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
|
December 31, |
September 30, |
|||||||
|
ASSETS |
||||||||
|
Cash |
$ | 24,318,000 | $ | 23,508,000 | ||||
|
Restricted cash |
1,382,000 | 1,381,000 | ||||||
|
Cash deposits with clearing organizations |
1,041,000 | 1,041,000 | ||||||
|
Securities owned, at fair value |
8,110,000 | 7,102,000 | ||||||
|
Receivables from broker-dealers and clearing organizations |
3,243,000 | 2,850,000 | ||||||
|
Forgivable loans receivable |
1,534,000 | 1,616,000 | ||||||
|
Other receivables, net |
4,859,000 | 5,180,000 | ||||||
|
Prepaid expenses |
2,913,000 | 2,490,000 | ||||||
|
Fixed assets, net |
2,273,000 | 2,397,000 | ||||||
|
Intangible assets, net |
5,162,000 | 4,843,000 | ||||||
|
Goodwill |
5,217,000 | 5,217,000 | ||||||
|
Deferred tax asset, net |
4,102,000 | 6,420,000 | ||||||
|
Other assets, principally refundable deposits |
335,000 | 353,000 | ||||||
|
Total Assets |
$ | 64,489,000 | $ | 64,398,000 | ||||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
|
Liabilities |
||||||||
|
Securities sold, but not yet purchased, at fair value |
$ | — | $ | 151,000 | ||||
|
Accrued commissions and payroll payable |
10,713,000 | 10,065,000 | ||||||
|
Accounts payable and accrued expenses |
8,776,000 | 8,715,000 | ||||||
|
Deferred clearing and marketing credits |
733,000 | 786,000 | ||||||
|
Warrants issued |
11,194,000 | 5,597,000 | ||||||
|
Other |
1,952,000 | 181,000 | ||||||
|
Total Liabilities |
33,368,000 | 25,495,000 | ||||||
|
Stockholders’ Equity |
||||||||
|
Preferred stock, $0.01 par value, 10,000,000 shares authorized; none outstanding |
— | — | ||||||
|
Common stock $0.02 par value, authorized 75,000,000 shares at December 31, 2017 and September 30, 2017; 12,437,916 shares issued and outstanding at December 31, 2017 and September 30, 2017 |
248,000 | 248,000 | ||||||
|
Additional paid-in-capital |
67,213,000 | 66,955,000 | ||||||
|
Accumulated deficit |
(36,355,000 |
) |
(28,315,000 |
) |
||||
|
Total National Holdings Corporation Stockholders’ Equity |
31,106,000 | 38,888,000 | ||||||
|
Non-Controlling interest |
15,000 | 15,000 | ||||||
|
Total Stockholders’ Equity |
31,121,000 | 38,903,000 | ||||||
|
Total Liabilities and Stockholders’ Equity |
$ | 64,489,000 | $ | 64,398,000 | ||||
NATIONAL HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
Three Month Period Ended |
||||||||
|
2017 |
2016 |
|||||||
|
Revenues |
||||||||
|
Commissions |
$ | 25,618,000 | $ | 24,506,000 | ||||
|
Net dealer inventory gains |
905,000 | 2,545,000 | ||||||
|
Investment banking |
14,547,000 | 9,692,000 | ||||||
|
Investment advisory |
5,333,000 | 3,385,000 | ||||||
|
Interest and dividends |
631,000 | 716,000 | ||||||
|
Transaction fees and clearing services |
2,297,000 | 2,498,000 | ||||||
|
Tax preparation and accounting |
523,000 | 856,000 | ||||||
|
Other |
226,000 | 371,000 | ||||||
|
Total Revenues |
50,080,000 | 44,569,000 | ||||||
|
Operating Expenses |
||||||||
|
Commissions, compensation and fees |
43,561,000 | 37,258,000 | ||||||
|
Clearing fees |
743,000 | 738,000 | ||||||
|
Communications |
760,000 | 722,000 | ||||||
|
Occupancy |
955,000 | 1,008,000 | ||||||
|
License and registration |
637,000 | 405,000 | ||||||
|
Professional fees |
1,393,000 | 1,263,000 | ||||||
|
Interest |
2,000 | 4,000 | ||||||
|
Depreciation and amortization |
379,000 | 295,000 | ||||||
|
Other administrative expenses |
1,826,000 | 1,230,000 | ||||||
|
Total Operating Expenses |
50,256,000 | 42,923,000 | ||||||
|
(Loss) Income before Other Income (Expense) and Income Taxes |
(176,000 |
) |
1,646,000 | |||||
|
Other (Expense) Income |
||||||||
|
Change in fair value of warrant liability |
(5,597,000 |
) |
4,092,000 | |||||
|
Other income |
6,000 | — | ||||||
|
Total Other (Expense) Income |
(5,591,000 |
) |
4,092,000 | |||||
|
(Loss) Income before Income Taxes |
(5,767,000 |
) |
5,738,000 | |||||
|
Income tax expense |
2,273,000 | 679,000 | ||||||
|
Net (Loss) Income |
$ | (8,040,000 |
) |
$ | 5,059,000 | |||
|
Net (loss) income per share - Basic |
$ | (0.65 |
) |
$ | 0.41 | |||
|
Net (loss) income per share - Diluted |
$ | (0.65 |
) |
$ | 0.41 | |||
|
Weighted average number of shares outstanding - Basic |
12,437,916 | 12,437,916 | ||||||
|
Weighted average number of shares outstanding - Diluted |
12,437,916 | 12,438,474 | ||||||
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 December 31, |
||||||||
|
2017 |
2016 |
|||||||
|
Net (loss) income, as reported |
$ | (8,040,000 |
) |
$ | 5,059,000 | |||
|
Interest expense |
2,000 | 4,000 | ||||||
|
Income taxes |
2,273,000 | 679,000 | ||||||
|
Depreciation |
169,000 | 98,000 | ||||||
|
Amortization |
210,000 | 197,000 | ||||||
|
EBITDA |
(5,386,000 |
) |
6,037,000 | |||||
|
Non-cash compensation expense |
258,000 | — | ||||||
|
Change in fair value of warrant liability |
5,597,000 | (4,092,000 |
) |
|||||
|
Forgivable loan amortization |
160,000 | 201,000 | ||||||
|
EBITDA, as adjusted |
$ | 629,000 | $ | 2,146,000 | ||||
EBITDA, adjusted for forgivable loan amortization, non-cash compensation expense and other non-recurring items, 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.
Exhibit 99.2
National Holdings Corporation Reports Financial Results for the Fiscal Second Quarter 2018
NEW YORK, NY, May 15, 2018 – National Holdings Corporation (NASDAQ: NHLD) (“National” or the “Company”), a leading full service independent brokerage, investment banking, trading and asset management firm providing diverse services including tax preparation, today announced its financial results for the fiscal second quarter 2018.
Fiscal 2018 Second Quarter Financial Highlights:
|
▪ |
Record quarterly revenue of $60.3 million, versus $51.9 million for the fiscal second quarter 2017. Strategic hires, emphasis on diversified product offerings, and strong equity market activity contributed to this quarter’s performance. |
|
|
▪ |
Investment banking continued to produce excellent results, generating $14.5 million of revenue, in line with the fiscal first quarter of 2018. Year to date Investment banking results are up 18% compared to the prior year to date. |
|
|
▪ |
Adjusted EBITDA increased to $5.9 million, a record quarter, from a strong $4.3 million in the prior year quarter. Strategic investments in technology and enterprise risk management continue to impact profitability as we improve the company’s operating platform. |
|
| ▪ | Income before other expense and income taxes was $4.7 million, up 27% compared to profit of $3.7 million in the prior year quarter. |
|
o |
Pre-tax loss of $.7 million includes a non-operating, non-taxable loss of $5.6 million due to a change in the fair value of the firm’s warrant liability. The warrants were issued in early 2017, as part of the previously announced tender offer closing. The warrant agreement was amended on March 15th, 2018, and accordingly this is the last quarterly period a gain or loss will be recorded. |
|
| o | The current quarter net loss of $2.3 million includes the non-operating, non-taxable $5.6 million loss in the current quarter from the fair value warrant liability change mentioned above. |
|
▪ |
Cash and cash equivalents of $32.2 million and no debt as of March 31, 2018 versus $27.9 million as of September 30, 2017. |
|
|
▪ |
Equity of $46.0 million as of March 31, 2018 versus $38.9 million as of September 30, 2017. The significant increase in equity period to period is due to the reclassification of the warrant liability to equity, the result of the change to the warrant agreement described above. |
Management Commentary
Michael Mullen, Chief Executive Officer of National Holdings Corporation stated, “It has been just over 18 months since our reorganization and refocus initiated with the successful closing of the Fortress Biotech tender for our company. It began with an almost complete remaking of the Board of Directors of our holding company and continued with substantive changes in the management team of our operating companies. I am proud to say the transformation has been powerful and this shines through not only in the outperformance we have seen quarter over quarter, but also the high-end talent that continues to join our thriving organization. We have optimized our team by increasing senior management positions across key risk management departments, while simultaneously exiting more than 200 and adding over 100 new brokers, to ensure all of our personnel share in the vision, focus and success of National. The cultural shift has permeated from the top down and we are extremely proud of the progress and success we have achieved in such a short period of time.”
Mr. Mullen continued, “While implementing these changes required a substantial investment, we know that we are building an extremely solid foundation which will aid in the continued success and growth of our business. Despite all of the changes, our assets under management have never been higher, and we have driven record revenues and earnings to date. Of particular success has been our proprietary banking results. Since the tender, we have closed 91 banking transactions with an aggregate deal value of $2.8 billion dollars, while generating record banking revenues of $59 million.”
Fiscal 2018 Second Quarter Financial Results
National reported second quarter 2018 revenue of $60.3 million, up $8.4 million or 16% over the second quarter of fiscal 2017. Total expenses increased $7.5 million or 16% to $55.7 million in the quarter.
Revenue
Our major revenue categories produced very strong results in the current quarter. The majority of the revenue increase in Q2 2018 was recorded in commissions and related fees, which increased to $33.2 million in the quarter, up $7.5 million, or 29%, due to significant hires and strong equity markets. Investment banking, investment management, and tax preparation and accounting all contributed strong revenue generation during the quarter.
Investment banking revenue of $14.5 million declined slightly from the $14.9 million recorded in the prior year quarter. Although results declined slightly, the number and diversification of deals conducted in the current quarter improved versus the comparative quarter. Through the first six months of fiscal 2018, investment banking revenue generated has increased 18%, compared to the same period in the prior year.
Investment advisory revenue increased $1.5 million, to $5.2 million, up 40% in the current quarter. Increased focus on this segment of our business combined with high asset values produced a very significant current quarter. Our assets under management continue to grow, adding to our percentage of recurring revenue.
Net dealer inventory gains declined to $2.8 million in the current quarter from $3.4 million in the prior year. We have concluded our analysis of this portion of our business and have eliminated certain trading silos. As a result, we expect our operating margins to improve as we focus our trading efforts on those specifically tailored to service our retail and institutional clients.
Tax preparation and accounting revenue improved to $3.9 million in the second quarter of 2018, traditionally our busiest quarter, versus the $3.1 million during the same period in the prior year, up 23%. This is a net increase as we have eliminated underperforming offices, while adding resources to other, stronger offices.
Expenses
Total expenses increased to $55.7 million in the current fiscal quarter, up $7.5 million, 16%, over the comparative quarter in fiscal 2017. Variable compensation expenses directly associated with overall revenue generation, and technology and enterprise risk management spending contributed to the majority of the increase.
|
▪ |
Commissions, compensation and fees increased $7.6 million to $49.3 million in the current quarter. The increase in investment banking, commissions, and investment advisory revenue, and therefore compensation expense, contributed to the majority of the increase. As we have previously noted, planned infrastructure spending in technology development and enterprise risk management professionals and the related incremental employee benefits contributed to the increase. |
|
| ▪ | All other operating expense categories declined $.1 million in total. Increases in technology spending across several categories were offset by slightly lower clearing, professional fee, and other administrative expense spending. |
Earnings
Income before other expense and income taxes totaled $4.7 million, up 27%, versus income of $3.7 million in the prior year quarter. The loss before income taxes, which includes the change in the fair value of the firm’s warrant liability, totaled $.7 million, versus income of $5.6 million in the prior year quarter. The change in the fair value of the firm’s warrant liability is a market based adjustment that negatively impacted earnings in the current quarter by $5.6 million as noted, however positively impacted earnings in the prior year quarter by $1.8 million.
The impact of the re-valuation of the firm’s warrant liability is a non-operating, non-taxable earnings adjustment and should be viewed as such. Also, as noted above, due to an amendment to the 2016 warrant agreement, this is the last quarter that will be positively or negatively impacted by a warrant re-valuation.
The net loss for the current quarter totaled $2.3 million, versus income of $3.9 million in the prior year quarter. The variance is due entirely to the warrant valuation noted above.
The net loss per share, both basic and fully diluted, was $.18 in the second fiscal quarter of 2018, versus net income per share of $.31 in the comparable 2017 quarter.
Adjusted EBITDA increased to $5.9 million in the current quarter, from $4.3 million in prior year quarter.
Balance Sheet
As of March 31, 2018, National had $32.2 million of cash and cash equivalents, versus $27.9 million as of September 30, 2017. The Company's balance sheet remains debt free.
About National Holdings Corporation
National Holdings Corporation (NASDAQ: NHLD) is a full-service investment banking and asset management firm that, through its affiliates, provides a range of services, including independent retail brokerage and advisory services, investment banking, institutional sales and trading, equity research, financial planning, market making, tax preparation and insurance, to corporations, institutions, high net-worth and retail investors. With over 1,000 advisors, registered reps, traders, sales associates and corporate staff, National Holdings operates through various subsidiaries including National Securities Corporation, National Asset Management, Inc., National Insurance Corporation, vFinance Investments, Inc., Gilman Ciocia, Inc. and GC Capital Corporation. Formed as a holding company in 1999, National Holdings’ largest subsidiary National Securities Corporation has been in business since 1947. National Holdings is headquartered in New York and Florida. For more information, visit www.nhldcorp.com. Fortress Biotech, Inc. (NASDAQ: FBIO) through its affiliate FBIO Acquisition, Inc., is a majority shareholder of NHLD.
FORWARD-LOOKING STATEMENTS
This press release may contain certain forward-looking statements. Any such statements, other than statements of historical fact, are based on management’s current expectations, estimates, projections, beliefs and assumptions about National Holdings, Inc., its current and prospective portfolio investments, and its industry. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond National Holdings, Inc.’s control, difficult to predict and could cause actual results to differ materially from those expected or forecasted in such forward-looking statements. Actual developments and results are likely to vary materially from these estimates and projections as a result of a number of factors, including those described from time to time in National Holdings, Inc.’s filings with the Securities and Exchange Commission. Such statements speak only as of the time when made, and National undertakes no obligation to update any such forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
CONTACTS:
Investor Relations:
Email: ir@nhldcorp.com
Telephone: +1 212 554 4351
NATIONAL HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
|
March 31, |
September 30, |
|||||||
|
ASSETS |
||||||||
|
Cash |
$ | 27,211,000 | $ | 23,508,000 | ||||
|
Restricted cash |
1,383,000 | 1,381,000 | ||||||
|
Cash deposits with clearing organizations |
836,000 | 1,041,000 | ||||||
|
Securities owned, at fair value |
7,476,000 | 7,102,000 | ||||||
|
Receivables from broker-dealers and clearing organizations |
2,709,000 | 2,850,000 | ||||||
|
Forgivable loans receivable |
1,598,000 | 1,616,000 | ||||||
|
Other receivables, net |
6,033,000 | 5,180,000 | ||||||
|
Prepaid expenses |
1,681,000 | 2,490,000 | ||||||
|
Fixed assets, net |
2,119,000 | 2,397,000 | ||||||
|
Intangible assets, net |
5,225,000 | 4,843,000 | ||||||
|
Goodwill |
5,217,000 | 5,217,000 | ||||||
|
Deferred tax asset, net |
4,007,000 | 6,420,000 | ||||||
|
Other assets, principally refundable deposits |
438,000 | 353,000 | ||||||
|
Total Assets |
$ | 65,933,000 | $ | 64,398,000 | ||||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
|
Liabilities |
||||||||
|
Securities sold, but not yet purchased, at fair value |
$ | 8,000 | $ | 151,000 | ||||
|
Accrued commissions and payroll payable |
10,652,000 | 10,065,000 | ||||||
|
Accounts payable and accrued expenses |
8,453,000 | 8,715,000 | ||||||
|
Deferred clearing and marketing credits |
681,000 | 786,000 | ||||||
|
Warrants issued |
— | 5,597,000 | ||||||
|
Other |
158,000 | 181,000 | ||||||
|
Total Liabilities |
19,952,000 | 25,495,000 | ||||||
|
Stockholders’ Equity |
||||||||
|
Preferred stock, $0.01 par value, 10,000,000 shares authorized; none outstanding |
— | — | ||||||
|
Common stock $0.02 par value, authorized 75,000,000 shares at March 31, 2018 and September 30, 2017; 12,489,501 and 12,437,916 shares issued and outstanding at March 31, 2018 and September 30, 2017, respectively |
249,000 | 248,000 | ||||||
|
Additional paid-in-capital |
84,339,000 | 66,955,000 | ||||||
|
Accumulated deficit |
(38,607,000 |
) |
(28,315,000 |
) |
||||
|
Total National Holdings Corporation Stockholders’ Equity |
45,981,000 | 38,888,000 | ||||||
|
Non-Controlling interest |
— | 15,000 | ||||||
|
Total Stockholders’ Equity |
45,981,000 | 38,903,000 | ||||||
|
Total Liabilities and Stockholders’ Equity |
$ | 65,933,000 | $ | 64,398,000 | ||||
NATIONAL HOLDINGS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
Three Month Period Ended |
Six Month Period Ended |
|||||||||||||||
|
2018 |
2017 |
2018 |
2017 |
|||||||||||||
|
Revenues |
||||||||||||||||
|
Commissions |
$ | 31,407,000 | $ | 23,993,000 | $ | 57,025,000 | $ | 48,499,000 | ||||||||
|
Net dealer inventory gains |
2,761,000 | 3,423,000 | 3,666,000 | 5,967,000 | ||||||||||||
|
Investment banking |
14,532,000 | 14,916,000 | 29,079,000 | 24,608,000 | ||||||||||||
|
Investment advisory |
5,197,000 | 3,700,000 | 10,529,000 | 7,086,000 | ||||||||||||
|
Interest and dividends |
601,000 | 675,000 | 1,232,000 | 1,391,000 | ||||||||||||
|
Transaction fees and clearing services |
1,777,000 | 1,687,000 | 4,074,000 | 4,185,000 | ||||||||||||
|
Tax preparation and accounting |
3,868,000 | 3,144,000 | 4,391,000 | 4,000,000 | ||||||||||||
|
Other |
203,000 | 346,000 | 429,000 | 717,000 | ||||||||||||
|
Total Revenues |
60,346,000 | 51,884,000 | 110,425,000 | 96,453,000 | ||||||||||||
|
Operating Expenses |
||||||||||||||||
|
Commissions, compensation and fees |
49,345,000 | 41,761,000 | 92,906,000 | 79,020,000 | ||||||||||||
|
Clearing fees |
578,000 | 618,000 | 1,321,000 | 1,356,000 | ||||||||||||
|
Communications |
813,000 | 682,000 | 1,572,000 | 1,404,000 | ||||||||||||
|
Occupancy |
1,141,000 | 937,000 | 2,096,000 | 1,944,000 | ||||||||||||
|
License and registration |
530,000 | 428,000 | 1,167,000 | 832,000 | ||||||||||||
|
Professional fees |
578,000 | 991,000 | 1,970,000 | 2,254,000 | ||||||||||||
|
Interest |
2,000 | 4,000 | 5,000 | 8,000 | ||||||||||||
|
Depreciation and amortization |
379,000 | 286,000 | 758,000 | 582,000 | ||||||||||||
|
Other administrative expenses |
2,287,000 | 2,475,000 | 4,113,000 | 3,705,000 | ||||||||||||
|
Total Operating Expenses |
55,653,000 | 48,182,000 | 105,908,000 | 91,105,000 | ||||||||||||
|
Income before Other (Expense) Income and Income Taxes |
4,693,000 | 3,702,000 | 4,517,000 | 5,348,000 | ||||||||||||
|
Other (Expense) Income |
||||||||||||||||
|
Gain on disposal of Gilman branches |
— | 130,000 | — | 130,000 | ||||||||||||
|
Change in fair value of warrant liability |
(5,597,000 |
) |
1,773,000 | (11,194,000 |
) |
5,865,000 | ||||||||||
|
Other income |
230,000 | 5,000 | 236,000 | 5,000 | ||||||||||||
|
Total Other (Expense) Income |
(5,367,000 |
) |
1,908,000 | (10,958,000 |
) |
6,000,000 | ||||||||||
|
(Loss) Income before Income Taxes |
(674,000 |
) |
5,610,000 | (6,441,000 |
) |
11,348,000 | ||||||||||
|
Income tax expense |
1,578,000 | 1,736,000 | 3,851,000 | 2,414,000 | ||||||||||||
|
Net (Loss) Income |
$ | (2,252,000 |
) |
$ | 3,874,000 | $ | (10,292,000 |
) |
$ | 8,934,000 | ||||||
|
Net (loss) income per share - Basic |
$ | (0.18 |
) |
$ | 0.31 | $ | (0.83 |
) |
$ | 0.72 | ||||||
|
Net (loss) income per share - Diluted |
$ | (0.18 |
) |
$ | 0.31 | $ | (0.83 |
) |
$ | 0.72 | ||||||
|
Weighted average number of shares outstanding - Basic |
12,457,043 | 12,437,916 | 12,447,321 | 12,437,916 | ||||||||||||
|
Weighted average number of shares outstanding - Diluted |
12,457,043 | 12,461,882 | 12,447,321 | 12,450,178 | ||||||||||||
The following table presents a reconciliation of EBITDA, as adjusted, to net income (loss) as reported in accordance with generally accepted accounting principles, or GAAP:
|
Three Months Ended March 31, |
Six Months Ended March 31, |
|||||||||||||||
|
2018 |
2017 |
2018 |
2017 |
|||||||||||||
|
Net (loss) income, as reported |
$ | (2,252,000 |
) |
$ | 3,874,000 | $ | (10,292,000 |
) |
$ | 8,934,000 | ||||||
|
Interest expense |
2,000 | 4,000 | 5,000 | 8,000 | ||||||||||||
|
Income taxes |
1,578,000 | 1,736,000 | 3,851,000 | 2,414,000 | ||||||||||||
|
Depreciation |
159,000 | 89,000 | 328,000 | 187,000 | ||||||||||||
|
Amortization |
220,000 | 197,000 | 430,000 | 395,000 | ||||||||||||
|
EBITDA |
(293,000 |
) |
5,900,000 | (5,678,000 |
) |
11,938,000 | ||||||||||
|
Non-cash compensation expense |
418,000 | 183,000 | 676,000 | 183,000 | ||||||||||||
|
Change in fair value of warrant liability |
5,597,000 | (1,773,000 |
) |
11,194,000 | (5,865,000 |
) |
||||||||||
|
Forgivable loan amortization |
150,000 | 161,000 | 310,000 | 362,000 | ||||||||||||
|
Gain on disposal of Gilman branches |
$ | — | $ | (130,000 |
) |
$ | — | $ | (130,000 |
) |
||||||
|
EBITDA, as adjusted |
$ | 5,872,000 | $ | 4,341,000 | $ | 6,502,000 | $ | 6,488,000 | ||||||||
EBITDA, adjusted for forgivable loan amortization, non-cash compensation expense and other non-recurring items, 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.