Note 16 - Net Capital Requirements

3 Months Ended

Dec. 31, 2011

Note 16 - Net Capital Requirements Disclosure

Note 16 - Net Capital Requirements

NOTE 16. NET CAPITAL REQUIREMENTS

National Securities, as a registered broker-dealer, is subject to the SEC’s Uniform Net Capital Rule 15c3-1 that requires the maintenance of minimum net capital.  National Securities has elected to use the alternative standard method permitted by the rule.  This requires that National Securities maintain minimum net capital equal to the greater of $250,000 or a specified amount per security based on the bid price of each security for which National Securities is a market maker.  At December 31, 2011, National Securities had net capital of approximately $708,000 which exceeded its requirement by approximately $458,000.

In addition to the net capital requirements, each of vFinance Investments and EquityStation is required to maintain a ratio of aggregate indebtedness to net capital, as defined, of not more than 15 to 1 (and the rule of the “applicable” exchange also provides that equity capital may not be withdrawn or cash dividends paid if the resulting net capital ratio would exceed 10 to 1).  At December 31, 2011, vFinance Investments had net capital of approximately $1,270,000, which was approximately $270,000 in excess of its required net capital of $1,000,000, and its percentage of aggregate indebtedness to net capital was 245%.  At December 31, 2011, EquityStation had net capital of approximately $137,000 which was approximately $37,000 in excess of its required net capital of $100,000, and its percentage of aggregate indebtedness to net capital was 91.9%. In February, at the request of EquityStation, FINRA approved a reduction in the minimum net capital EquityStation is required to maintain to $50,000. This change is effective February 2, 2012. Each of the Broker Dealer Subsidiaries qualifies under the exemptive provisions of Rule 15c3-3 under Section (k)(2)(ii) of the Rule, as none of them carry the accounts of their customers on their books nor perform custodial functions related to customer securities.

Advances, dividend payments and other equity withdrawals from the Company’s 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.