x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
|
Delaware
|
11-2936371
|
|
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
(I.R.S.
Employer
Identification
No.)
|
600
California Street, 9th Floor
San
Francisco, CA
|
94108
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
Large
accelerated filer ¨
|
Accelerated
filer ¨
|
|
Non-accelerated
filer ¨
|
Smaller
reporting company x
|
Page No.
|
||
PART
I FINANCIAL INFORMATION
|
||
ITEM
1. Financial Statements (unaudited)
|
||
Consolidated
Statements of Operations For the Three Months and Six Months Ended June
30, 2009 and 2008
|
3
|
|
Consolidated
Statements of Financial Condition as of June 30, 2009 and December 31,
2008
|
4
|
|
Consolidated
Statements of Cash Flows For the Six Months Ended June 30, 2009 and
2008
|
5
|
|
Notes
to Consolidated Financial Statements
|
6
|
|
ITEM
2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
|
20
|
|
ITEM
3. Quantitative and Qualitative Disclosures About Market
Risk
|
32
|
|
ITEM
4. Controls and Procedures
|
33
|
|
PART
II OTHER INFORMATION
|
||
ITEM
1. Legal Proceedings
|
34
|
|
ITEM
1A. Risk Factors
|
39
|
|
ITEM
6. Exhibits
|
40
|
|
Signatures
|
41
|
|
Certifications
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
2009
|
June 30,
2008
|
June 30,
2009
|
June 30,
2008
|
|||||||||||||
Revenue:
|
|
|
|
|||||||||||||
Commissions
|
$ | 9,969,922 | $ | 7,892,372 | $ | 19,087,850 | $ | 16,361,082 | ||||||||
Principal
transactions
|
747,039 | 1,418,829 | (95,498 | ) | 103,753 | |||||||||||
Investment
banking
|
1,067,450 | 4,446,995 | 2,283,867 | 7,823,406 | ||||||||||||
Advisory
and other fees
|
647,867 | 543,134 | 1,206,680 | 239,600 | ||||||||||||
Total
revenue
|
12,432,278 | 14,301,330 | 22,482,899 | 24,527,841 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Compensation
and benefits
|
10,191,416 | 11,101,879 | 19,456,583 | 23,329,054 | ||||||||||||
Brokerage
and clearing fees
|
270,396 | 709,183 | 583,356 | 1,484,484 | ||||||||||||
Professional
services
|
919,795 | 2,552,010 | 2,032,544 | 3,361,951 | ||||||||||||
Occupancy
and equipment
|
486,491 | 607,587 | 1,062,881 | 1,061,000 | ||||||||||||
Communications
and technology
|
839,835 | 983,826 | 1,561,100 | 1,893,739 | ||||||||||||
Depreciation
and amortization
|
115,749 | 133,988 | 262,991 | 257,905 | ||||||||||||
Travel
and entertainment
|
374,609 | 971,393 | 609,733 | 1,893,394 | ||||||||||||
Other
|
568,964 | 1,224,706 | 1,265,587 | 2,001,697 | ||||||||||||
Total
operating expenses
|
13,767,255 | 18,284,572 | 26,834,775 | 35,283,224 | ||||||||||||
Operating
loss
|
(1,334,977 | ) | (3,983,242 | ) | (4,351,876 | ) | (10,755,383 | ) | ||||||||
Other
income
|
800,000 |
─
|
2,000,000 |
─
|
||||||||||||
Interest
income
|
2,679 | 34,016 | 9,166 | 130,420 | ||||||||||||
Interest
expense
|
(28,458 | ) | (15,615 | ) | (43,823 | ) | (33,383 | ) | ||||||||
Loss
before provision for income tax
|
(560,756 | ) | (3,964,841 | ) | (2,386,533 | ) | (10,658,346 | ) | ||||||||
(Provision
for) benefit from income tax
|
(1,984 | ) | 1,838,744 | (5,200 | ) | 1,838,744 | ||||||||||
Loss
from continued operations
|
(562,740 | ) | (2,126,097 | ) | (2,391,733 | ) | (8,819,602 | ) | ||||||||
Loss
from discontinued operations
|
─
|
(2,987,748 | ) | (94,894 | ) | (3,344,216 | ) | |||||||||
Net
loss
|
$ | (562,740 | ) | $ | (5,113,845 | ) | $ | (2,486,627 | ) | $ | (12,163,818 | ) | ||||
Basic
and diluted loss per share – continued operations
|
(0.04 | ) | (0.17 | ) | (0.19 | ) | (0.71 | ) | ||||||||
Basic
and diluted loss per share – discontinued operations
|
─
|
(0.24 | ) | (0.01 | ) | (0.27 | ) | |||||||||
Basic
and diluted net loss per share
|
$ | (0.04 | ) | $ | (0.41 | ) | $ | (0.20 | ) | $ | (0.98 | ) | ||||
Weighted
average common shares outstanding:
|
||||||||||||||||
Basic
and Diluted
|
12,510,805 | 12,562,120 | 12,549,477 | 12,425,851 |
June 30,
2009
|
December 31,
2008
|
|||||||
ASSETS
|
|
|
||||||
Cash
and cash equivalents
|
$ | 2,866,526 | $ | 6,358,128 | ||||
Securities
owned:
|
||||||||
Marketable,
at fair value
|
4,892,217 | 4,622,577 | ||||||
Not
readily marketable, at estimated fair value
|
274,953 | 366,061 | ||||||
Other
|
146,631 | 185,065 | ||||||
Restricted
cash
|
1,127,851 | 1,131,182 | ||||||
Due
from clearing broker
|
2,031,959 | 1,752,535 | ||||||
Accounts
receivable, net
|
1,092,068 | 612,234 | ||||||
Prepaid
expenses and other assets
|
452,084 | 619,759 | ||||||
Equipment
and fixtures, net
|
702,642 | 1,260,011 | ||||||
Assets
held for sale
|
–
|
1,958,038 | ||||||
Total
assets
|
$ | 13,586,931 | $ | 18,865,590 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Accounts
payable
|
$ | 49,989 | $ | 712,591 | ||||
Commissions
and bonus payable
|
3,182,874 | 3,182,941 | ||||||
Accrued
expenses
|
2,823,203 | 3,637,345 | ||||||
Due
to clearing and other brokers
|
7,890 | 28,022 | ||||||
Securities
sold, not yet purchased
|
3,829 | 903,217 | ||||||
Deferred
revenue
|
542,968 | 709,691 | ||||||
Notes
payable – short term
|
300,000 |
─
|
||||||
Capital
lease obligation
|
653,056 | 923,683 | ||||||
Convertible
notes payable, net
|
248,490 |
─
|
||||||
Liabilities
held for sale
|
–
|
1,052,899 | ||||||
Total
liabilities
|
7,812,299 | 11,150,389 | ||||||
Commitments
and contingencies
|
||||||||
Stockholders'
equity:
|
||||||||
Preferred
stock, Series A—$0.0001 par value; 2,000,000 shares authorized; 0 shares
issued and outstanding as of June 30, 2009 and December 31, 2008,
respectively; aggregate liquidation preference of $0
|
─
|
─
|
||||||
Preferred
stock, Series B—$0.0001 par value; 12,500,000 shares authorized; 1,250,000
shares issued and 0 shares outstanding as of June 30, 2009 and December
31, 2008; aggregate liquidation preference of $0
|
─
|
─
|
||||||
Preferred
stock, Series C—$0.0001 par value; 14,200,000 shares authorized; 1,685,714
shares issued and 0 shares outstanding as of June 30, 2009 and December
31, 2008; aggregate liquidation preference of $0
|
─
|
─
|
||||||
Common
stock, $0.0001 par value; 300,000,000 shares authorized; 12,756,656 and
12,756,656 shares issued and 12,554,779 and 12,730,218 shares outstanding
as of June 30, 2009 and December 31, 2008, respectively
|
1,278 | 1,278 | ||||||
Additional
paid-in capital
|
127,839,252 | 127,193,195 | ||||||
Treasury
stock
|
(225,613 | ) | (125,613 | ) | ||||
Accumulated
deficit
|
(121,840,285 | ) | (119,353,659 | ) | ||||
Total
stockholders' equity
|
5,774,632 | 7,715,201 | ||||||
Total
liabilities and stockholders' equity
|
$ | 13,586,931 | $ | 18,865,590 |
Six Months Ended
June 30,
|
||||||||
2009
|
2008
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
loss
|
$ | (2,486,627 | ) | $ | (12,163,818 | ) | ||
Adjustments
to reconcile net loss to cash used in operating
activities:
|
||||||||
Depreciation
and amortization
|
273,601 | 306,171 | ||||||
Amortization
of intangible assets
|
– | 233,070 | ||||||
Gain
on sale of ICD
|
(2,000,000 | ) | – | |||||
Stock-based
compensation
|
259,779 | 1,316,606 | ||||||
Amortization
of discounts on convertible notes payable
|
9,768 | 2,584 | ||||||
Impairment
of goodwill
|
– | 2,208,735 | ||||||
Impairment
of intangible assets
|
– | 392,781 | ||||||
Loss
on disposal of equipment and fixtures
|
294,379 | – | ||||||
Provision
for bad debt
|
155,473 | 280,543 | ||||||
Securities
received for services
|
(168,913 | ) | (1,545,788 | ) | ||||
Unrealized
loss on securities owned
|
693,648 | 381,431 | ||||||
Changes
in operating assets and liabilities:
|
||||||||
Securities
owned
|
(1,564,221 | ) | (2,057,190 | ) | ||||
Restricted
cash
|
3,331 | (441,406 | ) | |||||
Due
from clearing broker
|
(279,424 | ) | 17,023 | |||||
Accounts
receivable
|
(406,191 | ) | 546,762 | |||||
Prepaid
expenses and other assets
|
468,929 | (304,366 | ) | |||||
Accounts
payable
|
(804,959 | ) | 915,272 | |||||
Commissions
and bonus payable
|
(5,280 | ) | (10,870,120 | ) | ||||
Accrued
expenses
|
(1,383,720 | ) | (721,230 | ) | ||||
Due
to clearing and other brokers
|
(20,132 | ) | 8,866 | |||||
Net
cash used in operating activities
|
(6,960,559 | ) | (21,494,074 | ) | ||||
Cash
flows from investing activities:
|
||||||||
Purchase
of equipment and fixtures
|
– | (192,428 | ) | |||||
Proceeds
from sale of Panel
|
702,966 | – | ||||||
Proceeds
from sale of ICD
|
2,000,000 | – | ||||||
Net
cash provided by (used in) investing activities
|
2,702,966 | (192,428 | ) | |||||
Cash
flows from financing activities:
|
||||||||
Proceeds
from the exercise of stock options and warrants
|
– | 470,304 | ||||||
Debt
service principal payments
|
(381,901 | ) | (325,632 | ) | ||||
Proceeds
from the issuance of convertible notes payable
|
625,000 | – | ||||||
Proceeds
from the issuance of notes payable – short term
|
300,000 | – | ||||||
Net
cash provided by financing activities
|
543,099 | 144,672 | ||||||
Decrease
in cash and cash equivalents
|
(3,714,494 | ) | (21,541,830 | ) | ||||
Cash
and cash equivalents at beginning of period
|
6,358,128 | 31,962,201 | ||||||
Cash
and cash equivalents, assets held for sale
|
222,892 | – | ||||||
Cash
and cash equivalents at end of period
|
$ | 2,866,526 | $ | 10,420,371 | ||||
Supplementary
disclosure of cash flow information:
|
||||||||
Cash
paid during the period:
|
||||||||
Interest
|
$ | 34,055 | $ | 37,924 | ||||
Income
taxes
|
$ | 5,200 | $ | 566,858 | ||||
Supplementary
non-cash information:
|
||||||||
Stock
received as part of sale of Panel
|
100,000 | – | ||||||
Conversion
of note payable into common stock
|
$ | – | 200,000 | |||||
Property
acquired through capitalized leases
|
$ | – | 805,776 |
|
1.
|
Continue
to reduce operating costs
|
|
2.
|
Shed
non-essential operations
|
|
3.
|
Negotiate
a settlement of pending litigations
|
|
4.
|
Raise
additional capital
|
Assets at Fair Value at June 30, 2009
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets:
|
||||||||||||||||
Securities
owned:
|
||||||||||||||||
Corporate
equities
|
$
|
3,834,751
|
$
|
—
|
$
|
25,033
|
$
|
3,859,784
|
||||||||
Stock
warrants
|
—
|
—
|
1,306,930
|
1,306,930
|
||||||||||||
Preferred
stock
|
456
|
—
|
—
|
456
|
||||||||||||
Total
securities owned
|
$
|
3,835,207
|
$
|
—
|
$
|
1,331,963
|
$
|
5,167,170
|
||||||||
Liabilities:
|
||||||||||||||||
Securities
sold, not yet purchased
|
$
|
3,829
|
$
|
—
|
$
|
—
|
$
|
3,829
|
||||||||
Total
fair value liabilities
|
$
|
3,829
|
$
|
—
|
$
|
—
|
$
|
3,829
|
Assets at Fair Value at December 31, 2008
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Assets:
|
||||||||||||||||
Securities
owned:
|
||||||||||||||||
Corporate
equities
|
$
|
3,353,784
|
$
|
650
|
$
|
695
|
$
|
3,355,129
|
||||||||
Stock
warrants
|
—
|
—
|
1,605,451
|
1,605,451
|
||||||||||||
Underwriters’
purchase option
|
—
|
—
|
27,995
|
27,995
|
||||||||||||
Preferred
stock
|
63
|
—
|
—
|
63
|
||||||||||||
Total
securities owned
|
$
|
3,353,847
|
$
|
650
|
$
|
1,634,141
|
$
|
4,988,638
|
||||||||
Liabilities:
|
||||||||||||||||
Securities
sold, not yet purchased
|
$
|
903,217
|
$
|
—
|
$
|
—
|
$
|
903,217
|
||||||||
Total
fair value liabilities
|
$
|
903,217
|
$
|
—
|
$
|
—
|
$
|
903,217
|
Corporate
Equities
|
Stock
Warrants
|
Underwriters’
Purchase Option
|
Total
|
|||||||||||||
Assets:
|
||||||||||||||||
Balance
at December 31, 2008
|
$
|
695
|
$
|
1,605,451
|
$
|
27,995
|
$
|
1,634,141
|
||||||||
Purchases,
issuances and settlements
|
50,998
|
132,879
|
—
|
183,877
|
||||||||||||
Net
transfers in / (out)
|
(13,490
|
)
|
(108,900
|
)
|
—
|
(122,390
|
)
|
|||||||||
Gains
/ (losses)
|
||||||||||||||||
Realized
|
—
|
(79,093
|
(91,058
|
)
|
(170,151
|
)
|
||||||||||
Unrealized
|
(13,170
|
)
|
(243,407
|
)
|
63,063
|
(193,514
|
)
|
|||||||||
Balance
at June 30, 2009
|
$
|
25,033
|
$
|
1,306,930
|
$
|
—
|
$
|
1,331,963
|
Options
Outstanding
|
Weighted
Average
Exercise Price
|
|||||||
Balance
as of December 31, 2008
|
1,167,117 | $ | 5.85 | |||||
Granted
|
4,075,359 | 0.42 | ||||||
Exercised
|
- | - | ||||||
Canceled
|
(264,119 | ) | (2.46 | ) | ||||
Balance
as of June 30, 2009
|
4,978,357 | $ | 1.58 | |||||
Exercisable
as of June 30, 2009
|
778,204 | $ | 6.43 |
Options Outstanding
|
Vested Options
|
|||||||||||||||||||||||||||
Range of Exercise Price
|
Number
|
Weighted
Average
Remaining
Contractual
Life (Years)
|
Weighted
Average
Exercise
Price
|
Aggregate
Intrinsic
Value
|
Number
|
Weighted
Average
Exercise
Price
|
Aggregate
Intrinsic
Value
|
|||||||||||||||||||||
$
0.00 - $ 1.00
|
3,962,929 | 9.83 | $ | 0.42 | $ | 123,247 | 98,838 | $ | 0.43 | $ | 1,977 | |||||||||||||||||
$
1.01 - $ 3.50
|
297,527 | 4.11 | $ | 2.49 | – | 231,847 | 2.69 | – | ||||||||||||||||||||
$
3.51 - $ 7.00
|
437,670 | 6.75 | $ | 4.40 | – | 175,655 | 4.86 | – | ||||||||||||||||||||
$
7.01 - $14.00
|
254,083 | 2.10 | $ | 9.08 | – | 245,716 | 9.13 | – | ||||||||||||||||||||
$14.01
- $28.00
|
1,147 | 1.50 | $ | 15.34 | – | 1,147 | 15.34 | – | ||||||||||||||||||||
$28.01
- $49.00
|
25,001 | 0.66 | $ | 49.00 | – | 25,001 | 49.00 | – | ||||||||||||||||||||
4,978,357 | 8.78 | $ | 1.58 | $ | 123,247 | 778,204 | $ | 6.43 | $ | 1,977 |
Non-Vested
Stock
Outstanding
|
Weighted
Average
Grant Date
Fair Value
|
Intrinsic
Value at
June 30, 2009
|
||||||||||
Balance
as of December 31, 2008
|
48,779 | $ | 9.84 | |||||||||
Granted
|
– | – | ||||||||||
Vested
|
(5,546 | ) | (7.42 | ) | ||||||||
Canceled
|
– | – | ||||||||||
Balance
as of June 30, 2009
|
43,233 | $ | 10.15 | $ | 438,713 |
Six months Ended
June 30,
|
||||||||
2009
|
2008
|
|||||||
Expected
volatility
|
110.65 | % | 70.42 | % | ||||
Expected
life (years)
|
2.95 | 6.43 | ||||||
Risk-free
interest rate
|
1.35 | % | 3.11 | % | ||||
Expected
dividend yield
|
0 | % | 0 | % |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
2009
|
June 30,
2008
|
June 30,
2009
|
June 30,
2008
|
|||||||||||||
Revenue
|
$
|
–
|
$
|
1,498,144
|
$
|
217,141
|
$
|
3,039,938
|
||||||||
Operating
expenses:
|
||||||||||||||||
Compensation
and benefits
|
–
|
896,402
|
193,723
|
1,824,813
|
||||||||||||
Cost
of primary research services
|
–
|
609,129
|
64,179
|
1,194,293
|
||||||||||||
Professional
services
|
–
|
27,293
|
42,180
|
59,894
|
||||||||||||
Occupancy
and equipment
|
–
|
81,841
|
27,775
|
165,610
|
||||||||||||
Communications
and technology
|
–
|
27,043
|
1,179
|
57,107
|
||||||||||||
Depreciation
and amortization
|
–
|
145,495
|
10,610
|
281,336
|
||||||||||||
Travel
and entertainment
|
–
|
40,817
|
8,123
|
78,409
|
||||||||||||
Other
expenses
|
–
|
2,655,186
|
(36,436
|
)
|
2,717,067
|
|||||||||||
Total
operating expenses
|
–
|
4,483,206
|
311,333
|
6,378,529
|
||||||||||||
Operating
loss
|
–
|
(2,985,062
|
)
|
(94,192
|
)
|
(3,338,591
|
)
|
|||||||||
Interest
expense, net
|
–
|
(2,686
|
)
|
(702
|
)
|
(5,625
|
)
|
|||||||||
Net
loss
|
$
|
–
|
$
|
(2,987,748
|
)
|
$
|
(94,894
|
)
|
$
|
(3,344,216
|
)
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Net
loss available to stockholders – basic and diluted
|
$ | (562,740 | ) | $ | (5,113,845 | ) | $ | (2,486,627 | ) | $ | (12,163,818 | ) | ||||
Weighted-average
number of common shares – basic and diluted
|
12,510,805 | 12,562,120 | 12,549,477 | 12,425,851 | ||||||||||||
Basic
and diluted loss per common share:
|
||||||||||||||||
Loss
from continuing operations
|
$ | (0.04 | ) | $ | (0.17 | ) | $ | (0.19 | ) | $ | (0.71 | ) | ||||
Loss
from discontinued operations
|
$ | – | $ | (0.24 | ) | $ | (0.01 | ) | $ | (0.27 | ) | |||||
Net
loss
|
$ | (0.04 | ) | (0.41 | ) | $ | (0.20 | ) | (0.98 | ) |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Stock
options and warrants excluded due to the exercise price exceeding the
average fair value of the Company's common stock during the
period
|
4,177,082 | 4,198,770 | 2,803,375 | 2,226,464 | ||||||||||||
Weighted
average non-vested stock, stock options and stock warrants, calculated
using the treasury stock method, that were excluded due to the Company
reporting a net loss during the period
|
43,974 | 348,754 | 45,263 | 740,477 | ||||||||||||
Weighted
average shares issuable for the period prior to the conversion of the
convertible notes payable
|
0 | 45,526 | 0 | 94,192 | ||||||||||||
Total
common stock equivalents excluded from diluted net (loss) income per
share
|
4,221,056 | 4,593,050 | 2,848,638 | 3,061,133 |
|
1.
|
Continue
to reduce operating costs
|
|
2.
|
Shed
non-essential operations
|
|
3.
|
Negotiate
a settlement of pending litigations
|
|
4.
|
Raise
additional capital
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
2009
|
June 30,
2008
|
June 30,
2009
|
June 30,
2008
|
|||||||||||||
Revenue:
|
||||||||||||||||
Commissions
|
$ | 9,969,922 | $ | 7,892,372 | $ | 19,087,850 | $ | 16,361,082 | ||||||||
Principal
transactions
|
747,039 | 1,418,829 | (95,498 | ) | 103,753 | |||||||||||
Investment
banking
|
1,067,450 | 4,446,995 | 2,283,867 | 7,823,406 | ||||||||||||
Advisory
and other
|
647,867 | 543,134 | 1,206,680 | 120,256 | ||||||||||||
Total
revenue
|
12,432,278 | 14,301,330 | 22,482,899 | 24,408,497 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Compensation
and benefits
|
10,191,416 | 11,101,879 | 19,456,583 | 23,329,054 | ||||||||||||
Brokerage
and clearing fees
|
270,396 | 709,183 | 583,356 | 1,484,484 | ||||||||||||
Professional
services
|
919,795 | 2,552,010 | 2,032,544 | 3,242,607 | ||||||||||||
Occupancy
and equipment
|
486,491 | 607,587 | 1,062,881 | 1,061,000 | ||||||||||||
Communications
and technology
|
839,835 | 983,826 | 1,561,100 | 1,893,739 | ||||||||||||
Depreciation
and amortization
|
115,749 | 133,988 | 262,991 | 257,905 | ||||||||||||
Travel
and entertainment
|
374,609 | 971,393 | 609,733 | 1,893,394 | ||||||||||||
Other
|
568,964 | 1,224,706 | 1,265,587 | 2,001,697 | ||||||||||||
Total
operating expenses
|
13,767,255 | 18,284,572 | 26,834,775 | 35,163,880 | ||||||||||||
Operating
loss
|
(1,334,977 | ) | (3,983,242 | ) | (4,351,876 | ) | (10,755,383 | ) | ||||||||
Other
income
|
800,000 | — | 2,000,000 | — | ||||||||||||
Interest
income
|
2,679 | 34,016 | 9,166 | 130,420 | ||||||||||||
Interest
expense
|
(28,458 | ) | (15,615 | ) | (43,823 | ) | (33,383 | ) | ||||||||
Loss
before provision for income tax
|
(560,756 | ) | (3,964,841 | ) | (2,386,533 | ) | (10,658,346 | ) | ||||||||
(Provision
for) benefit from income tax
|
(1,984 | ) | 1,838,744 | (5,200 | ) | 1,838,744 | ||||||||||
Loss
from continued operations
|
(562,740 | ) | (2,126,097 | ) | (2,391,733 | ) | (8,819,602 | ) | ||||||||
Loss
from discontinued operations
|
─
|
(2,987,748 | ) | (94,894 | ) | (3,344,216 | ) | |||||||||
Net
loss
|
$ | (562,740 | ) | $ | (5,113,845 | ) | $ | (2,486,627 | ) | $ | (12,163,818 | ) |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
2009
|
June 30,
2008
|
June 30,
2009
|
June 30,
2008
|
|||||||||||||
Depreciation
and amortization
|
$ | 115,749 | 162,946 | $ | 273,601 | $ | 306,171 | |||||||||
Amortization
of intangible assets
|
— | 116,535 | — | 233,070 | ||||||||||||
Stock-based
compensation
|
170,163 | 653,281 | 259,779 | 1,316,606 | ||||||||||||
Amortization
of discounts on debt
|
9,768 | — | 9,768 | 2,584 | ||||||||||||
Impairment
of goodwill
|
— | 2,601,516 | — | 2,208,735 | ||||||||||||
Impairment
of intangible assets
|
— | — | — | 392,781 | ||||||||||||
Loss
on disposal of equipment and fixtures
|
— | — | 294,379 | — | ||||||||||||
Provision
for uncollectible accounts receivable
|
155,473 | 113,758 | 155,473 | 280,543 | ||||||||||||
Securities
received for services
|
— | — | (168,913 | ) | (1,545,788 | ) | ||||||||||
Unrealized
(gain) loss on securities owned
|
(318,129 | ) | — | 693,648 | 381,431 | |||||||||||
Total
|
$ | 133,024 | 3,648,036 | $ | 1,517,735 | $ | 3,576,133 |
|
·
|
Capital Raising -
Capital raising includes private placements of equity and debt instruments
and underwritten public offerings.
|
|
·
|
Financial Advisory -
Financial advisory includes advisory assignments with respect to mergers
and acquisitions, divestures, spin-offs and
restructurings.
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
2009
|
June 30,
2008
|
June 30,
2009
|
June 30,
2008
|
|||||||||||||
Revenue:
|
||||||||||||||||
Capital
raising
|
$ | 571,250 | $ | 4,252,495 | $ | 924,133 | $ | 7,482,685 | ||||||||
Financial
advisory and other
|
496,200 | 194,500 | 1,359,734 | 340,721 | ||||||||||||
Total
investment banking revenue
|
$ | 1,067,450 | $ | 4,446,995 | $ | 2,283,867 | $ | 7,823,406 | ||||||||
Transaction
Volumes:
|
||||||||||||||||
Public
offerings:
|
||||||||||||||||
Capital
underwritten participations
|
$ | 34,375,000 | $ | 182,780,000 | $ | 34,375,000 | $ | 182,780,000 | ||||||||
Number
of transactions
|
1 | 3 | 1 | 3 | ||||||||||||
Private
placements:
|
||||||||||||||||
Capital
raised
|
$ | 6,000,000 | $ | 74,700,000 | $ | 7,753,000 | $ | 238,900,000 | ||||||||
Number
of transactions
|
1 | 4 | 2 | 9 | ||||||||||||
Financial
advisory:
|
||||||||||||||||
Transaction
amounts
|
$ | 23,300,000 | $ | 45,000,000 | $ | 52,900,000 | $ | 87,300,000 | ||||||||
Number
of transactions
|
2 | 1 | 5 | 3 |
|
·
|
Commissions -
Commissions include revenue resulting from executing stock trades in
exchange-listed securities, over-the-counter securities and other
transactions as agent.
|
|
·
|
Principal Transactions
- Principal
transactions consist of a portion of dealer spreads attributed to our
securities trading activities as principal in NASDAQ-listed and other
securities, and include transactions derived from our activities as a
market-maker. Additionally, principal transactions include gains and
losses resulting from market price fluctuations that occur while holding
positions in our trading security
inventory.
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
2009
|
June 30,
2008
|
June 30,
2009
|
June 30,
2008
|
|||||||||||||
Revenue:
|
||||||||||||||||
Commissions
|
$ | 9,969,922 | $ | 7,892,372 | $ | 19,087,850 | $ | 16,361,082 | ||||||||
Principal
transactions:
|
||||||||||||||||
Customer
principal transactions, proprietary trading and market
making
|
$ | 700,618 | $ | 112,637 | $ | 327,822 | $ | (3,672,105 | ) | |||||||
Investment
portfolio
|
46,421 | 1,306,192 | (423,320 | ) | 3,775,858 | |||||||||||
Total
principal transactions revenue
|
$ | 747,039 | $ | 1,418,829 | $ | (95,498 | ) | $ | 103,753 | |||||||
Transaction
Volumes:
|
||||||||||||||||
Number
of shares traded
|
186,961,322 | 329,419,357 | 476,548,239 | 561,535,539 | ||||||||||||
Number
of active clients
|
186 | 343 | 239 | 444 |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
2009
|
June
30,
2008
|
June
30,
2009
|
June
30,
2008
|
|||||||||||||
Incentive
compensation and discretionary bonuses |