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Significant Accounting Policies (Policies)

12 Months Ended

Sep. 30, 2020

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Consolidation, Policy [Policy Text Block]

Principals of Consolidation

The consolidated financial statements include the accounts of National and its wholly owned and majority owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation.

Consolidation, Subsidiaries or Other Investments, Consolidated Entities, Policy [Policy Text Block]

Non-controlling Interest

NAM has a majority voting interest in Innovation

Management, LLC (“Innovation

X”

), which together serve as the investment manager of an investment fund (see Variable Interest Entities below). Because NAM has the majority voting interest in Innovation

the results of operations of Innovation

are included in the Company's consolidated financial statements, and the amount attributable to the other investor is recorded as a non-controlling interest.

Consolidation, Variable Interest Entity, Policy [Policy Text Block]

Variable Interest Entities

The Company has entered into agreements to provide investment banking and advisory services to numerous investment funds (the “Funds”) that are considered variable interest entities (“VIEs”) under the accounting guidance. These Funds are established primarily to make and manage investments in equity or convertible debt securities of privately held companies that the Company, as investment advisory to the Funds, believes possess innovative or disruptive technologies and present opportunities for an initial public offering (“IPO”) or another similar liquidity event within approximately

one

five

years from the date of investment. The Funds intend to hold the investments until an IPO or another similar liquidity event and then to make distributions to its investors when contractually permitted, estimated approximately

six

months following such IPO or liquidity event.

The Company earns fees from the Funds in the form of placement agent fees and carried interest. For placement agent fees, the Company receives a cash fee of generally

10%

of the amount of raised capital for the Funds and the fee is recognized at the time the placement services occurred. The Company receives carried interest as a percentage allocation (

15%

) of the profits of the Funds as compensation for asset management services provided to the Funds and it is recognized at the time of distributions. Once fund investors have received distributions in an amount equal to

one hundred

percent (

100%

) of their total capital contributions, the Company as the manager of the Funds will be entitled to share in any profits of the Funds to the extent of the carried interest. As the fee arrangements under such agreements are arm's-length and contain customary terms and conditions and represent compensation that is considered fair value for the services provided, the fee arrangements are

not

considered variable interests and accordingly, the Company does

not

consolidate such VIEs.

Placement agent fees attributable to such arrangements were

$21,404,000

2020

and

$34,184,000

2019

, respectively, and included in investment banking in the consolidated statements of operations.

Carried interest is recognized and recorded at the time of distribution and all contingencies are resolved. For the year ended

September 30, 2020

carried interest has been recorded. For the year ended

September 30, 2019

$15,872,000

of carried interest has been recorded.

$5,403,000

of the carried interest is related to the back-end compensation of the placement agent fees and is included in investment banking in the consolidated statements of operations. The remaining

$10,469,000

is recorded as compensation for asset management services and is included in investment advisory in the consolidated statements of operations. For the year ended

September 30, 2019

, an unrealized loss of

$2,389,000

was recorded due to the change in fair value of the shares received for carried interest. The loss for the change in fair value is included in net dealer inventory (losses) gains in the consolidated statements of operations.

Unrecognized Carried Interest (Unaudited)

Based on the investment performance of the Funds as of

September 30, 2020

, unrecognized carried interest under a hypothetical distribution was

$8,086,000

and the related compensation expense associated was

$5,651,000.

Based on current market values, at

December 24, 2020,

unrecognized carried interest and related compensation expense under a hypothetical distribution would increase to

$49,776,000

and

$34,412,000,

respectively. Carried interest is dependent on the market and will fluctuate until a distribution event occurs.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of these financial statements in conformity with accounting principles generally accepted in the Unites States of America (“US GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could significantly differ from those estimates.

Revenue from Contract with Customer [Policy Text Block]

Revenue Recognition

Commission revenue represents commissions generated by the Company's registered representatives for their clients' purchases and sales of mutual funds, variable annuities, general securities and other financial products, most of which is paid to the registered representatives as commissions for initiating the transactions.

Commission revenue is generated from front-end sales commissions that occur at the point of sale, as well as trailing commissions. The Company recognizes front-end sales commission revenue and related clearing and other expenses on transactions introduced to its clearing brokers on a trade date basis. The Company also recognizes front-end sales commissions and related expenses on transactions initiated directly between the registered representatives and product sponsors upon receipt of notification from sponsors of the commission earned. Commission revenue also includes

12b

fees, and variable product trailing fees, collectively considered as trailing fees, which are recurring in nature. These trailing fees are earned by the Company based on a percentage of the current market value of clients' investment holdings in trail eligible assets. Because trail commission revenues are generally paid in arrears, management estimates commission revenues earned during each period. These estimates are based on a number of factors including investment holdings and the applicable commission rate and the amount of trail commission revenue received in prior periods. Estimates are subsequently adjusted to actual based on notification from the sponsors of trail commissions earned.

Net dealer inventory gains, which are recorded on a trade-date basis, include realized and unrealized net gains and losses resulting from the Company's principal trading activities including equity-linked warrants received from investment banking activities.

Investment banking revenues consist of underwriting revenues, advisory revenues and private placement fees. Underwriting revenues arise from securities offerings in which the Company acts as an underwriter and include management fees, selling concessions and underwriting fees. Management estimates the Company's share of the transaction-related expenses incurred by the syndicate. On final settlement, typically within

days from the trade date of the transaction, these amounts are adjusted to reflect the actual transaction-related expenses.

Investment advisory fees are derived from account management and investment advisory services. These fees are determined based on a percentage of the customers assets under management,

may

be billed monthly or quarterly and are recognized when earned. Also included in advisory fees is carried interest. Carried interest is recognized and recorded at the time of distribution and all contingencies are resolved.

Interest is recorded on an accrual basis and dividends are recorded on the ex-dividend date.

Transfer fees and fees for clearing services are recorded on a trade date basis.

Tax preparation and accounting fees are recognized upon completion of the services.

See Note

of the Company's consolidated financial statements for additional disclosures on revenue recognition from revenues from contracts.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company accounts for income taxes in accordance with US GAAP which requires the recognition of tax benefits or expenses based on the estimated future tax effects of temporary differences between the financial statement and tax basis of its assets and liabilities. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date. Valuation allowances are established to reduce deferred tax assets to an amount that is more likely than

not

to be realized.

FASB ASC

740

clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements, requiring us to determine whether a tax position is more likely than

not

to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. For tax positions meeting the more likely than

not

threshold, the tax amount recognized in the financial statements is reduced by the largest benefit that has a greater than

50%

likelihood of being realized upon ultimate settlement with the relevant taxing authority. The Company recognizes accrued interest and penalties related to income taxes as a component of income tax expense. As of

September 30, 2020

and

2019

, the Company had

unrecognized tax positions.

Marketable Securities, Policy [Policy Text Block]

Securities

Securities owned and securities sold, but

not

yet purchased, are recorded at fair value. See Note

for fair value measurements.

Property, Plant and Equipment, Policy [Policy Text Block]

Fixed Assets, net

Fixed assets are recorded at cost net of accumulated depreciation and amortization. Depreciation is calculated using the straight-line method based on the estimated useful lives of the related assets (See Note

). Leasehold improvements are amortized on a straight-line basis over the lease term, or their estimated useful lives, whichever is shorter.

Fixed assets are reviewed for impairment whenever indicators of impairment exist. In such circumstances, the Company will estimate the future cash flows expected to result from the use of the asset and its eventual disposition. Future cash flows are the future cash inflows expected to be generated by an asset less the future outflows expected to be necessary to obtain those inflows. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the asset, the Company will recognize an impairment loss to adjust to the fair value of the asset.

Earnings Per Share, Policy [Policy Text Block]

Net Income per Common Share

Basic net income per share is computed on the basis of the weighted average number of common shares outstanding. Diluted net income per share is computed on the basis of the weighted average number of common shares outstanding plus the dilutive effect of incremental shares of common stock potentially issuable under outstanding options, warrants and unvested restricted stock units utilizing the treasury stock method. A reconciliation of basic and diluted common shares used in the computation of per share data follows:

	Year Ended September 30,
	2020		2019
Basic weighted-average shares		13,414,009		12,821,581
Effect of dilutive securities:
Options		—		—
Unvested restricted stock units		—		—
Diluted weighted-average shares		13,414,009		12,821,581

September 30, 2020

and

2019

, options, warrants and unvested restricted stock units totaling

9,166,422

and

9,321,747

shares, respectively, were excluded from the computation of diluted net income (loss) per share as their effect would have been anti-dilutive.

Share-based Payment Arrangement [Policy Text Block]

Stock-based Compensation

The Company measures the cost of employee, officer and director services received in exchange for an award of equity instruments including stock options and restricted stock units, based on the grant-date fair value of the award and measures the cost of independent contractor awards based on the vesting date fair value of the award. The cost is recognized as compensation expense over the service period, which would normally be the vesting period of the award.

Deferred Clearing and Marketing Credit [Policy Text Block]

Deferred Clearing and Marketing Credits

The deferred clearing credit represents a clearing fee rebate from National Financial Services (“NFS”),

one

of the Company's clearing brokers, which is being recognized pro rata as a reduction of clearing charges over the term of the clearing agreement which expires in

2021.

The clearing rebate recognized in fiscal years

2020

and

2019

amounted to

$143,000

for each of the

two

years. At

September 30, 2020

and

2019

, the deferred credit amounted to

$107,000

and

$250,000

, respectively.

The deferred marketing credit represents a marketing rebate from NFS, which is being recognized pro rata as a reduction of marketing expenses over the term of the clearing agreement which expires in

2021.

The marketing rebate recognized in fiscal years

2020

and

2019

amounted to

$67,000

for each of the

two

years. At

September 30, 2020

and

2019

, the deferred credit amounted to

$50,000

and

$117,000

, respectively.

Reimbursement of Expenses [Policy Text Block]

Reimbursement of Expenses

The Company incurs certain costs on behalf of its registered representatives including those for insurance, professional registration, technology and information services and legal services, amongst others, which are charged back to the registered representatives. It is the Company's policy to record the reimbursement as a reduction of the respective operating expense. Total reimbursements in fiscal years

2020

and

2019

amounted to approximately

$7,889,000

and

$7,422,000,

respectively.

Intangible Assets, Finite-Lived, Policy [Policy Text Block]

Intangible Assets

Intangible assets with finite lives, which consist of customer relationships, are being amortized over their estimated useful lives on a straight-line basis. Such intangible assets are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount

may

not

be recoverable. The Company assesses the recoverability of its intangible assets by determining whether the unamortized balance can be recovered over the assets' remaining estimated useful life through undiscounted estimated future cash flows. If undiscounted estimated future cash flows indicate that the unamortized amounts will

not

be recovered, an adjustment will be made to reduce such amounts to fair value based on estimated future cash flows discounted at a rate commensurate with the risk associated with achieving such cash flows. Estimated future cash flows are based on trends of historical performance and the Company's estimate of future performance, giving consideration to existing and anticipated competitive and economic conditions.

Brand names are being amortized over their estimated useful lives on a straight-line basis and are tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset

may

be impaired. Brand names are tested for impairment by comparing their fair value to their carrying amount. If the carrying amount exceeds fair value, an impairment loss is recognized for the excess (see Note

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Goodwill

Goodwill is

not

subject to amortization and is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset

may

be impaired. Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets acquired. Goodwill is tested for impairment at the reporting unit level. Fair value of a reporting unit is typically based upon estimated future cash flows discounted at a rate commensurate with the risk involved or market-based comparables. If the carrying amount of the reporting unit's net assets exceeds its fair value, then an impairment will be recognized. An impairment loss will be recognized in an amount equal to the excess of the carrying amount over its fair value. After an impairment loss is recognized, the adjusted carrying amount of goodwill is its new accounting basis. Accounting guidance on the testing of goodwill for impairment allows entities testing goodwill for impairment, the option of performing a qualitative assessment to determine the likelihood of goodwill impairment and whether it is necessary to perform such impairment test. See Note

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Restricted Cash

The Company has defined cash as cash held at financial institutions and highly liquid investments with maturities of less than

three

months when acquired that are

not

held for sale in the ordinary course of business. Cash held at financial institutions, at times,

may

exceed the amount insured by the Federal Deposit Insurance Corporation.

Restricted cash consists of deposits collateralizing letters of credits in connections with property leases. Cash and restricted cash consist of the following:

	September 30,
	2020		2019
Cash		27,327,000		30,443,000
Restricted cash		962,000		960,000
		28,289,000		31,403,000

Receivable [Policy Text Block]

Receivables From Broker Dealers and Clearing organizations

Receivables from broker dealers and clearing organizations represent net amounts due for fees and commissions associated with the Company's retail brokerage business.

Financing Receivable [Policy Text Block]

Forgivable Loans

Forgivable Loans represent loans to primarily newly recruited independent financial advisors as an incentive for their affiliation. The notes receivable balance is comprised of unsecured non-interest-bearing and interest-bearing loans (interest ranging up to

). These forgivable loans are amortized over time, and the amortization is included in Commissions, compensation and fees within the Statement of Operations. The Company provides an allowance for doubtful accounts on the notes based on historical collection experience and continually evaluates the receivables for collectability and possible write-offs where a loss is deemed probable.

Reclassification, Comparability Adjustment [Policy Text Block]

Reclassifications

Certain items in the statement of operations for

2019

have been reclassified to conform to their presentation in

2020.

Such reclassifications did

not

have a material impact on the presentation of the overall financial statements.