Note 16 - Stockholders' Equity

12 Months Ended

Sep. 30, 2014

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

NOTE 16. STOCKHOLDERS’ EQUITY

Shares Authorized

The Company’s authorized number of shares of common stock is 150,000,000, and its authorized number of shares of preferred stock is 10,000,000 of which the Company has designated 50,000 shares of Series A Preferred Stock, 34,500 shares of Series C Preferred Stock, 100,000 shares of Series D Preferred Stock, and 200,000 shares of Series E Preferred Stock, none of which are outstanding at September 30, 2014 and 2013.

Issuance of shares of common stock pursuant to a private placement

In January 2013 the Company issued 29,451,596 shares of common stock for an aggregate purchase price of approximately $8,562,000, net of expenses. The Company used the proceeds from the sale of the shares to repay certain outstanding indebtedness and for general corporate, working capital and net capital purposes and associated and reasonable costs and fees relating to the transaction.

In August 2013 the Company issued 10,583,330 shares of common stock for an aggregate purchase price of approximately $3,016,000, net of expenses. The Company used the proceeds from the sale of the shares toward the purchase consideration in the merger with Gilman and for general corporate, working capital and net capital purposes and associated and reasonable costs and fees relating to the transaction.

Issuance of shares of common stock to satisfy certain liabilities

During fiscal 2013, the Company issued 1,000,000 shares of its common stock to satisfy certain liabilities amounting to $313,000 pertaining to customer settlements. The fair value of the shares was based on the Company’s quoted trading price at the date the agreement was executed.

Series C Convertible Preferred Stock

On July 12, 2010, the Company issued 34,169 shares of Series C Preferred Stock to certain investors in consideration of the conversion of $1.7 million in subordinated financing. The Series C shares issued pursuant to this transaction were converted into 3,416,691 shares of the Company’s common stock in January 2013.

Series D Convertible Preferred Stock

On September 29, 2010, the Company issued 60,000 shares of Series D Preferred Stock to certain investors in consideration of $3,000,000, of which $1,334,000 was a receivable. This amount was collected in October 2010. The Series D shares issued pursuant to this transaction were converted into 6,000,000 shares of the Company’s common stock in January 2013.

Series E Convertible Preferred Stock

In January 2013, the Company entered into a Conversion and Exchange Agreement with the holder (the "Series E Holder") of convertible notes in the aggregate initial principal amount of $5,000,000 (the "Notes") pursuant to which, among other things, (i) the Series E Holder converted all of the Notes (and all accrued and unpaid interest thereon) into shares of Series E Preferred Stock, par value $0.01 per share, in accordance with the terms and conditions of the Notes (the "Note Conversion"); and (ii) then the Series E Holder converted all of its Series E Preferred Stock into 10,000,000 shares of our common stock (the "Series E Conversion").

Grant of Restricted Stock Units

On September 19, 2013, the Company granted 1,865,450 restricted stock units (“RSU”) of which 1,157,750 RSU's were to employees and 707,700 RSU’s were to independent advisors, as per its 2013 Omnibus Incentive Plan. One RSU gives the right to one share of the Company’s common stock. The vesting rate is 1/3 upon grant date and 1/3 every year thereafter provided the grantee has been continuously employed by the Company.

During the year ended September 30, 2014 and 2013, the Company recorded stock based compensation expense of $253,000 and $240,000, respectively related to RSU’s.

A summary of the Company's non-vested restricted stock units for the year ended September 30, 2014 is as follows:

	Shares			Weighted Average Grant Due Fair Value *
Non-vested restricted stock units at October 1, 2013		1,243,633		$	472,000
Vested		(577,895	)		253,000
Forfeited		(87,843	)		39,000
Non-vested restricted stock units at September 30, 2014		577,895		$	253,000

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

At September 30, 2014, there was $253,000 of unrecognized compensation expense related to unvested RSU’s, which is expected to be recognized in 2015. 

Stock Options

The Company’s stock option plans provide for the granting of stock options to certain key employees, directors and investment executives. Generally, options outstanding under the Company’s stock option plan are granted at prices equal to or above the market value of the stock on the date of grant, vest either immediately or ratably over up to five years, and expire five years subsequent to award.

The following option activity occurred under our plan during 2014 and 2013:

	Options			Weighted Average Exercise Price Per Share		Weighted Average Grant-Date Fair Value Per Share		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at September 30, 2012		1,312,002		$	1.64				2.17	$	-
Granted		9,300,000			0.69	$	0.08
Forfeited or expired		(312,002	)		1.67
Outstanding at September 30, 2013		10,300,000			.66		0.08		6.50	$	-
Granted		1,880,000			0.53		0.22		8.56
Outstanding at September 30, 2014		12,180,000			0.64		0.10		4.69	$	104,000
Vested and exercisable at September 30, 2014		9,200,000		$	0.66	$	0.18		3.78	$	-

During 2014 and 2013 the Company recognized compensation expense of $871,000 and $139,000, respectively related to stock options. As of September 30, 2014, the Company had approximately $185,000 of unamortized compensation costs related to non-vested options, which will be recognized in 2015.

The grant date fair value of options granted during the years ended September 30, 2014 and 2013 was $414,000 and $838,000 respectively. The fair value of each option award was estimated on the date of grant using the Black-Scholes option pricing model using the following weighted-average assumptions:   

	2014			2013
Dividend yield		0.00	%		0.00	%
Expected volatility		75.00	%		75.00	%
Risk-free interest rate		1.16	%		0.58	%
Expected life (in years)		5.26			3.00

Warrants

The following tables summarize information about warrant activity during 2014 and 2013:

	Warrants			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term
Outstanding at September 30, 2012		14,719,941		$	0.56		2.84
Granted		-			-
Converted		(12,727,436	)		0.98
Exercised		-			-
Forfeited or expired		(1,095,750	)		2.22
Outstanding at September 30, 2013		896,755		$	0.50		1.73
Granted		-			-
Converted		-		$	-
Exercised		-			-
Forfeited or expired		-		$	-
Outstanding and exercisable at September 30, 2014		896,755		$	0.50		0.73

The 896,755 warrants outstanding at September 30, 2014, all of which were exercisable, have an exercise price of $0.50 of which 250,000 expire in June 2015 and 646,755 expire in July 2015.

As of September 30, 2014, the aggregate intrinsic value of the Company’s outstanding and exercisable warrants was $0.

Other

In 2003, prior to National's acquisition of vFinance, Inc. and its subsidiaries in 2008, vFinance, Inc. had deposited in escrow a stock certificate representing 4,500,000 shares of its common stock to secure an obligation to make payments aggregating $250,000 under a settlement agreement. The settlement obligation was paid in full in 2006 and vFinance was then entitled to the return of all of the shares. Such shares represented 630,000 post-acquisition shares of National's common stock but were not considered outstanding by National. However, the Company believes that the transfer agent escheated the shares to the State of Florida which it sold for proceeds of $128,000 and remitted the proceeds to the escrow agent. ln December 2014, National received such proceeds from the escrow agent.

The Company has recorded a receivable from the escrow agent of $128,000 at September 30, 2014 which is included in other assets in the consolidated statement of financial condition, with a corresponding credit to stockholders' equity. The Company has considered such shares outstanding for the entire fiscal year ended September 30, 2014 for purposes of computing earnings per share. Such shares, if considered outstanding for the entire year ended September 30, 2013, would not affect the Company's earnings per share as previously reported.