Quarterly report pursuant to Section 13 or 15(d)

National Holdings Corporation

v3.5.0.2
National Holdings Corporation
 9 Months Ended
Sep. 30, 2016
Business Combinations [Abstract]  
National Holdings Corporation
3. National Holdings Corporation
 
On April 27, 2016, the Company entered into an Agreement and Plan of Merger with National and a wholly owned subsidiary of the Company, providing for the acquisition of National (the “Merger Agreement”). Pursuant to the Merger Agreement, and upon the terms and subject to the conditions described therein, the Company agreed to cause its wholly owned subsidiary to commence a tender offer for all the issued and outstanding shares of National’s common stock, par value $0.02 per share, at a purchase price of $3.25 per share (the “Offer”). Upon expiration of the Offer on September 9, 2016 (and the subsequent settlement period), a total of approximately 7 million shares were validly tendered, representing approximately 56% of the outstanding shares of National on a fully-diluted basis. The aggregate consideration paid by Fortress in the Offer was approximately $22.9 million, without giving effect to related transaction fees and expenses. Fortress funded the payment with cash on hand.
 
The following table summarizes the preliminary fair value of assets acquired and liabilities assumed at the date of the acquisition:
 
($ in thousands)
 
 
 
 
Assets
 
 
 
 
Cash and cash equivalents
 
$
27,498
 
Accounts receivable
 
 
4,889
 
Cash deposits with clearing organizations
 
 
1,030
 
Receivable from brokers, dealers and clearing agencies
 
 
1,607
 
Securities owned, at fair value
 
 
2,178
 
Prepaid expenses and other current assets
 
 
1,985
 
Property and equipment
 
 
1,132
 
Restricted cash
 
 
353
 
Goodwill
 
 
21,739
 
Total assets
 
 
62,411
 
 
 
 
 
 
Liabilities
 
 
 
 
Accrued compensation payable
 
$
14,029
 
Accounts payable and accrued expenses
 
 
6,079
 
Deferred clearing and marketing credits
 
 
1,007
 
Other current liabilities
 
 
707
 
Total liabilities assumed
 
 
21,822
 
Non-controlling interests
 
 
17,717
 
Net assets acquired
 
$
22,872
 
 
 
 
 
 
Cash and cash equivalents from National
 
$
27,498
 
Cash to NHLD Shareholders (Tender Offer)
 
 
22,872
 
Net cash acquired in acquisition of National
 
$
4,626
 
 
The estimated fair values of the assets acquired and liabilities assumed will be finalized as further information is received regarding these items and analysis of this information is completed. The Company preliminarily recognized $21.7 million of goodwill and does not expect goodwill be deductible for tax purposes.
 
National's results of operations have not been included in the consolidated financial statements prospectively from the date of acquisition, because we have elected to record National’s financial results in operations under a three month lag. The following unaudited pro forma financial data assumes the acquisition had occurred at the beginning of January 1, 2015. Pro forma results have been prepared by adjusting its historical results to include National's results of operations. The unaudited pro forma results presented do not necessarily reflect the results of operations that would have resulted had the acquisition been completed at the beginning of January 1, 2015, nor does it indicate the results of operations in future periods. Additionally, the unaudited pro forma results do not include the impact of possible business model changes, nor do they consider any potential impacts of current market conditions or revenues, reduction of expenses, asset dispositions, or other factors. The impact of these items could alter the following pro forma results:
 
 
 
Three Months Ended September 30,
 
($ in thousands)
 
2016
 
2015
 
Total revenues
 
$
47,317
 
$
42,360
 
Net loss attributable to common stockholders
 
 
(12,962)
 
 
(17,797)
 
Loss per share:
 
 
 
 
 
 
 
Basic
 
$
(0.32)
 
$
(0.45)
 
Diluted
 
$
(0.32)
 
$
(0.45)
 
 
 
 
Nine Months Ended September 30,
 
($ in thousands)
 
2016
 
2015
 
Total revenues
 
$
131,862
 
$
126,976
 
Net loss attributable to common stockholders
 
 
(37,355)
 
 
(34,985)
 
Loss per share:
 
 
 
 
 
 
 
Basic
 
$
(0.94)
 
$
(0.90)
 
Diluted
 
$
(0.94)
 
$
(0.90)