Form SC 13D NATIONAL HOLDINGS CORP Filed by: B. Riley Financial, Inc.

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

______________

 

SCHEDULE 13D

(Rule 13d-101)

 

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT

TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO

RULE 13d-2(a)

 

(Amendment No. )

 

National Holdings Corporation

(Name of Issuer)

 

Common Stock, $0.02 par value

(Title of Class of Securities)

 

636375206

(CUSIP Number)

 

BRYANT R. RILEY

B. RILEY & CO., LLC

11100 Santa Monica Blvd., Suite 800

Los Angeles, CA 90025

(310) 966-1444

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

 

November 30, 2015

(Date of Event Which Requires Filing of This Statement)

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [_].

 

Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

 

 

 

CUSIP No. 636375206

13D

Page 2 of 16 Pages

 

1	NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)   BRC Partners Opportunity Fund, LP
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_]
3	SEC USE ONLY
4	SOURCE OF FUNDS* WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [_]
6	CITIZENSHIP OR PLACE OF ORGANIZATION   Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER   - 0 -
	8	SHARED VOTING POWER   4,080
	9	SOLE DISPOSITIVE POWER   - 0 -
	10	SHARED DISPOSITIVE POWER   4,080
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON   4,080
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_]
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)   Less than 1%
14	TYPE OF REPORTING PERSON*   PN

 

 

CUSIP No. 636375206

13D

Page 3 of 16 Pages

 

1	NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)   B. Riley Capital Management, LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_]
3	SEC USE ONLY
4	SOURCE OF FUNDS* AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [_]
6	CITIZENSHIP OR PLACE OF ORGANIZATION   New York
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER   - 0 -
	8	SHARED VOTING POWER   4,080
	9	SOLE DISPOSITIVE POWER   - 0 -
	10	SHARED DISPOSITIVE POWER   4,080
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON   4,080
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_]
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)   Less than 1%
14	TYPE OF REPORTING PERSON*   IA

 

 

CUSIP No. 636375206

13D

Page 4 of 16 Pages

 

1	NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)   B. Riley & Co., LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_]
3	SEC USE ONLY
4	SOURCE OF FUNDS* WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [_]
6	CITIZENSHIP OR PLACE OF ORGANIZATION   Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER   - 0 -
	8	SHARED VOTING POWER   513,950
	9	SOLE DISPOSITIVE POWER   - 0 -
	10	SHARED DISPOSITIVE POWER   513,950
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON   513,950
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_]
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)   4.1%
14	TYPE OF REPORTING PERSON*   BD

 

 

CUSIP No. 636375206

13D

Page 5 of 16 Pages

 

1	NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)   B. Riley & Co., LLC 401(K) Profit Sharing Plan
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_]
3	SEC USE ONLY
4	SOURCE OF FUNDS* WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [_]
6	CITIZENSHIP OR PLACE OF ORGANIZATION   Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER   - 0 -
	8	SHARED VOTING POWER   38,788
	9	SOLE DISPOSITIVE POWER   - 0 -
	10	SHARED DISPOSITIVE POWER   38,788
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON   38,788
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_]
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)   Less than 1%
14	TYPE OF REPORTING PERSON*   EP

 

 

CUSIP No. 636375206

13D

Page 6 of 16 Pages

 

1	NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)   Robert Antin Children Irrevocable Trust dtd 1/1/01
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_]
3	SEC USE ONLY
4	SOURCE OF FUNDS* WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [_]
6	CITIZENSHIP OR PLACE OF ORGANIZATION   Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER   - 0 -
	8	SHARED VOTING POWER   47,296
	9	SOLE DISPOSITIVE POWER   - 0 -
	10	SHARED DISPOSITIVE POWER   47,296
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON   47,296
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_]
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)   Less than 1%
14	TYPE OF REPORTING PERSON*   OO

 

 

CUSIP No. 636375206

13D

Page 7 of 16 Pages

  

1	NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)   B. Riley Financial, Inc.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_]
3	SEC USE ONLY
4	SOURCE OF FUNDS*
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [_]
6	CITIZENSHIP OR PLACE OF ORGANIZATION   Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER   - 0 -
	8	SHARED VOTING POWER   - 0 -
	9	SOLE DISPOSITIVE POWER   - 0 -
	10	SHARED DISPOSITIVE POWER   - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON   - 0 -
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_]
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)   0%
14	TYPE OF REPORTING PERSON*   CO

 

 

 

CUSIP No. 636375206

13D

Page 8 of 16 Pages

 

1	NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)   Bryant R. Riley
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_]
3	SEC USE ONLY
4	SOURCE OF FUNDS* AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [_]
6	CITIZENSHIP OR PLACE OF ORGANIZATION   United States of America
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER   - 0 -
	8	SHARED VOTING POWER   604,114
	9	SOLE DISPOSITIVE POWER   - 0 -
	10	SHARED DISPOSITIVE POWER   604,114
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON   604,114
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_]
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)   4.9%
14	TYPE OF REPORTING PERSON*   IN

 

 

CUSIP No. 636375206

13D

Page 9 of 16 Pages

 

1	NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)   Mark D. Klein
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_]
3	SEC USE ONLY
4	SOURCE OF FUNDS* PF, OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [_]
6	CITIZENSHIP OR PLACE OF ORGANIZATION   United States of America
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER   1,083,503
	8	SHARED VOTING POWER   - 0 -
	9	SOLE DISPOSITIVE POWER   1,083,503
	10	SHARED DISPOSITIVE POWER   - 0 -
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON   1,083,503
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_]
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)   8.3%
14	TYPE OF REPORTING PERSON*   IN

 

 

 

CUSIP No. 636375206

13D

Page 10 of 16 Pages

 

The following constitutes the Schedule 13D filed by the undersigned (the “Schedule 13D”).

 

Item 1.

Security and Issuer.

 

This statement relates to the common stock, par value $0.02 per share (the “Shares”), of National Holdings Corporation, a Delaware corporation (the “Issuer”). The address of the principal executive offices of the Issuer is 410 Park Avenue, 14^th Floor, New York, NY 10022.

 

Item 2.

Identity and Background.

 

(a) This statement is filed by BRC Partners Opportunity Fund, LP, a Delaware limited partnership (“BPOF”), B. Riley Capital Management, LLC, a New York limited liability company (“BRCM”), B. Riley & Co., LLC 401(K) Profit Sharing Plan, a Delaware Trust (“Retirement Trust”), Robert Antin Children Irrevocable Trust, a Delaware Trust (“Antin Trust”), B. Riley & Co., LLC, a Delaware limited liability company (“BRC”), B. Riley Financial, Inc., a Delaware corporation (“BRF”), Bryant R. Riley (“Mr. Riley”) and Mark D. Klein (“Mr. Klein”). Each of the foregoing is referred to as a “Reporting Person” and collectively as the “Reporting Persons.” Each of the Reporting Persons is party to that certain Joint Filing Agreement as further described in Item 6. Accordingly, the Reporting Persons are hereby filing a joint Schedule 13D.

 

BRCM serves as the investment manager and general partner of BPOF. Mr. Riley serves as the Portfolio Manager of BPOF, the Chief Executive Officer of BRCM, the Trustee of the Retirement Trust and the Antin Trust and the Chairman of BRC. By virtue of these relationships, each of BRCM and Mr. Riley may be deemed to beneficially own the Shares owned directly by BPOF and Mr. Riley may also be deemed to beneficially own the Shares owned directly by BRC, the Retirement Trust and the Antin Trust.

 

Set forth on Schedule A annexed hereto (“Schedule A”) is the name and present principal business, occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted of the executive officers and directors of BRF. To the best of the Reporting Persons’ knowledge, except as otherwise set forth herein, none of the persons listed on Schedule A beneficially owns any securities of the Issuer or is a party to any contract, agreement or understanding required to be disclosed herein.

 

(b) The address of the principal office of each of BPOF, BRCM, BRC, the Retirement Trust, the Antin Trust, and Mr. Riley is 11100 Santa Monica Blvd., Suite 800, Los Angeles, CA 90025. The address of the principal office of BRF is 21860 Burbank Blvd., Suite 300 South, Woodland Hills, CA 91367. The address of the principal office of Mr. Klein is 590 Madison Avenue, 29^th Floor, New York, NY 10022.

 

(c) The principal business of BPOF is investing in securities. The principal business of BRCM is acting as a registered investment advisor and serving as the investment manager and general partner of BPOF. The principal business of BRC is acting as a brokerage firm. The principal business of the Retirement Trust is investing in securities. The principal business of the Antin Trust is investing in securities. The principal business of BRF is providing collaborative financial services and solutions. The principal occupation of Mr. Riley is serving as the Portfolio Manager of BPOF, the Chief Executive Officer of BRCM, the Chairman of BRC and the Chief Executive Officer of BRF, the parent company of BRCM and BRC. The principal occupation of Mr. Klein is serving as an employee and Member of the Board of Managers of BRCM and an employee of BRC.

 

 

CUSIP No. 636375206

13D

Page 11 of 16 Pages

 

(d) No Reporting Person nor any person listed on Schedule A has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

 

(e) No Reporting Person nor any person listed on Schedule A has, during the last five years, been party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

 

(f) BPOF, BRC, the Retirement Trust, the Antin Trust and BRF are organized under the laws of the State of Delaware. BRCM is organized under the laws of the State of New York. Each of Mr. Riley and Mr. Klein is a citizen of the United States of America.

 

Item 3.

Source and Amount of Funds or Other Consideration.

 

The aggregate purchase price of the 4,080 Shares owned directly by BPOF is approximately $15,098, excluding brokerage commissions. Such Shares were acquired with the working capital of BPOF.

 

The aggregate purchase price of the 513,950 Shares owned directly by BRC is approximately $2,475,303, excluding brokerage commissions. Such Shares were acquired with the working capital of BRC.

 

The aggregate purchase price of the 38,788 Shares owned directly by the Retirement Trust is approximately $160,261, excluding brokerage commissions. Such Shares were acquired with the working capital of the Retirement Trust.

 

The aggregate purchase price of the 47,296 Shares owned directly by the Antin Trust is approximately $246,691, excluding brokerage commissions. Such Shares were acquired with the working capital of the Antin Trust.

 

The aggregate purchase price of 513,503 Shares owned by Mr. Klein is approximately $1,587,400, excluding brokerage commissions. Such Shares were acquired with the personal funds of Mr. Klein. The remaining 570,000 Shares beneficially owned by Mr. Klein are issuable upon the exercise of stock options owned directly by Mr. Klein.

 

From time to time, BPOF, BRCM, BRC, the Antin Trust, Mr. Riley and Mr. Klein may effect purchases of securities through margin accounts, and may be extended margin credit as and when required to open or carry positions in the margin accounts, subject to applicable federal margin regulations and stock exchange rules. In such instances, the positions held in the margin accounts are pledged as collateral security for the repayment of debit balances in the accounts.

 

Item 4.

Purpose of Transaction.

 

The Reporting Persons purchased the Shares based on the Reporting Persons’ belief that the Shares, when purchased, were undervalued and represented an attractive investment opportunity. Depending upon overall market conditions, other investment opportunities available to the Reporting Persons, and the availability of securities of the Issuer at prices that would make the purchase or sale of such securities desirable, the Reporting Persons may endeavor to increase or decrease their respective positions in the Issuer through, among other things, the purchase or sale of securities of the Issuer on the open market or in private transactions or otherwise, on such terms and at such times as the Reporting Persons may deem advisable.

 

 

CUSIP No. 636375206

13D

Page 12 of 16 Pages

 

No Reporting Person has any present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a) - (j) of Item 4 of Schedule 13D except as set forth herein or such as would occur upon completion of any of the actions discussed herein. Effective November 30, 2015, BRF entered into a Letter of Intent with the Issuer with respect to a potential acquisition of the Issuer (the “LOI”). The Reporting Persons intend to continue to explore a potential acquisition of the Issuer in accordance with the LOI and to have discussions with management and the Board of Directors of the Issuer regarding such transaction. BRF and the Issuer have entered into a customary nondisclosure agreement. The Reporting Persons also intend to review their respective investments in the Issuer on a periodic basis and may from time to time engage in discussions with management and the Board of the Issuer, stockholders of the Issuer and others concerning, among other things, the business, operations and future plans of the Issuer and the Reporting Persons’ investment in the Issuer. Depending on various factors including, without limitation, the Issuer’s financial position and investment strategy, the price levels of the securities of the Issuer, conditions in the securities markets and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their respective investments in the Issuer as they deem appropriate including, without limitation, purchasing additional securities of the Issuer, selling some or all of their securities of the Issuer, engaging in short selling of or any hedging or similar transaction with respect to the securities of the Issuer, or changing their intention with respect to any and all matters referred to in this Item 4. The LOI is filed as Exhibit 99.1 hereto and is incorporated herein by reference.

 

Item 5.

Interest in Securities of the Issuer.

 

(a) The aggregate percentage of Shares reported owned by each person named herein is based upon 12,446,365 Shares outstanding as of August 13, 2015, which is the total number of Shares outstanding as reported in the Issuer’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2015.

 

As of the close of business on the date hereof, BPOF owned directly 4,080 Shares, BRC owned directly 513,950 Shares, the Retirement Trust owned directly 38,788 Shares, the Antin Trust owned directly 47,296 Shares and Mr. Klein beneficially owned 1,083,503 Shares (consisting of (i) 31,226 Shares held directly by him, (ii) 570,000 Shares issuable upon exercise of vested options held directly by him, and (iii) 482,277 Shares held by a company controlled by him), constituting approximately less than 1%, 4.1%, less than 1%, less than 1% and 8.3%, respectively, of the Shares outstanding.

 

BRCM, as the investment manager and general partner of BPOF, may be deemed to beneficially own the 4,080 Shares directly owned by BPOF, constituting less than 1% of the Shares outstanding.

 

Mr. Riley, as the Portfolio Manager of BPOF, the Chief Executive Officer of BRCM, the Chairman of BRC and the Trustee of the Retirement Trust and the Antin Trust, may be deemed to beneficially own the 604,114 Shares beneficially owned in the aggregate by BPOF, BRCM, BRC, the Retirement Trust and the Antin Trust, constituting approximately 4.9% of the Shares outstanding.

 

BRF does not directly own any securities of the Issuer.

 

As a result of the LOI, each of the Reporting Persons, as a member of a “group” with the other Reporting Persons for purposes of Rule 13d-5(b)(1) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), may be deemed to beneficially own the securities of the Issuer owned by the other Reporting Persons. The filing of this Schedule 13D shall not be deemed an admission that the Reporting Persons are, for purposes of Section 13(d) of the Exchange Act, the beneficial owners of any securities of the Issuer he or it does not directly own. Each of the Reporting Persons specifically disclaims beneficial ownership of the securities reported herein that he or it does not directly own.

 

 

CUSIP No. 636375206

13D

Page 13 of 16 Pages

 

(b) Each of BPOF, BRCM and Mr. Riley may be deemed to have shared power to vote or direct the vote of, and to dispose or direct the disposition of, the Shares owned directly by BPOF.

 

Each of BRC and Mr. Riley may be deemed to have shared power to vote or direct the vote of, and to dispose or direct the disposition of, the Shares owned directly by BRC.

 

Each of the Retirement Trust and Mr. Riley may be deemed to have shared power to vote or direct the vote of, and to dispose or direct the disposition of, the Shares owned directly by the Retirement Trust.

 

Each of the Antin Trust and Mr. Riley may be deemed to have shared power to vote or direct the vote of, and to dispose or direct the disposition of, the Shares owned directly by the Antin Trust.

 

Mr. Klein has the sole power to vote or direct the vote of, and to dispose or direct the disposition of, the Shares owned by him.

 

(c) There have been no transactions in the Shares by the Reporting Persons during the past 60 days.

 

(d) No person other than the Reporting Persons is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, the Shares.

 

(e) Not applicable.

 

Item 6.

Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

 

On December 10, 2015, each of the Reporting Persons entered into a Joint Filing Agreement (the “Joint Filing Agreement”) in which the parties agreed to the joint filing on behalf of each of them of statements on Schedule 13D with respect to the securities of the Issuer to the extent required by applicable law. The Joint Filing Agreement is filed as Exhibit 99.2 hereto and is incorporated herein by reference.

 

Other than as described herein, there are no contracts, arrangements, understandings or relationships among the Reporting Persons, or between the Reporting Persons and any other person, with respect to the securities of the Issuer.

 

Item 7.

Material to be Filed as Exhibits.

 

	Exhibit No.	Description
	99.1	Letter of Intent by and between B. Riley Financial, Inc. and National Holdings Corporation, effective as of November 30, 2015.

 

99.2

Joint Filing Agreement by and among BRC Partners Opportunity Fund, LP, B. Riley Capital Management, LLC, B. Riley & Co., LLC, the B. Riley & Co., LLC 401(K) Profit Sharing Plan, the Robert Antin Children Irrevocable Trust, B. Riley Financial, Inc., Bryant R. Riley and Mark D. Klein, dated December 10, 2015.

 

 

 

CUSIP No. 636375206

13D

Page 14 of 16 Pages

 

SIGNATURES

 

After reasonable inquiry and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.

 

Dated: December 10, 2015

 

	BRC PARTNERS OPPORTUNITY FUND, LP
	By:	B. Riley Capital Management, LLC, its General Partner
	By:	/s/ Bryant R. Riley
	Name:	Bryant R. Riley
	Title:	Chief Executive Officer

 

 

	B. RILEY CAPITAL MANAGEMENT, LLC
	By:	/s/ Bryant R. Riley
	Name:	Bryant R. Riley
	Title:	Chief Executive Officer

 

 

	B. RILEY & CO., LLC
	By:	/s/ Bryant R. Riley
	Name:	Bryant R. Riley
	Title:	Chairman

 

 

	B. RILEY & CO., LLC 401(K) PROFIT SHARING PLAN
	By:	/s/ Bryant R. Riley
	Name:	Bryant R. Riley
	Title:	Trustee

 

 

	ROBERT ANTIN CHILDREN IRREVOCABLE TRUST
	By:	/s/ Bryant R. Riley
	Name:	Bryant R. Riley
	Title:	Trustee

 

 

 

CUSIP No. 636375206

13D

Page 15 of 16 Pages

 

	B. RILEY FINANCIAL, INC.
	By:	/s/ Bryant R. Riley
	Name:	Bryant R. Riley
	Title:	Chief Executive Officer

 

 

	By:	/s/ Bryant R. Riley
	Name:	Bryant R. Riley

 

 

	By:	/s/ Mark D. Klein
	Name:	Mark D. Klein

 

 

CUSIP No. 636375206

13D

Page 16 of 16 Pages

 

SCHEDULE A

 

Executive Officers and Directors of B. Riley Financial, Inc.

 

Name and Position	Present Principal Occupation	Business Address
Bryant R. Riley, Chairman and Chief Executive Officer	Portfolio Manager of BRC Partners Opportunity Fund, LP, Chief Executive Officer of B. Riley Capital Management, LLC, Chairman of B. Riley & Co., LLC and Chief Executive Officer of B. Riley Financial, Inc.	11100 Santa Monica Blvd. Suite 800 Los Angeles, CA 90025
Andrew Gumaer, Chief Executive Officer of Great American Group, LLC and Director	Chief Executive Officer of Great American Group, LLC, a subsidiary of B. Riley Financial, Inc.	21860 Burbank Blvd., Suite 300 South  Woodland Hills, CA 91367
Thomas J. Kelleher, President and Director	President of B. Riley Financial, Inc. and Chief Executive Officer of B. Riley & Co., LLC	11100 Santa Monica Blvd. Suite 800 Los Angeles, CA 90025
Robert D’Agostino, Director	President of Q-mation, Inc., a supplier of software solutions	21860 Burbank Blvd., Suite 300 South  Woodland Hills, CA 91367
Mikel Williams, Director	Director of B. Riley Financial, Inc.	21860 Burbank Blvd., Suite 300 South  Woodland Hills, CA 91367
Richard L. Todaro, Director	President of Todaro Capital, an investment management company	21860 Burbank Blvd., Suite 300 South  Woodland Hills, CA 91367
Kenneth M. Young, Director	President and Chief Executive Officer of Lightbridge Communications Corporation, a telecom services company	21860 Burbank Blvd., Suite 300 South  Woodland Hills, CA 91367
Phillip J. Ahn, Chief Financial Officer and Chief Operating Officer	Chief Financial Officer and Chief Operating Officer of B. Riley Financial, Inc.	21860 Burbank Blvd., Suite 300 South  Woodland Hills, CA 91367
Alan N. Forman, Executive Vice President, General Counsel and Secretary	Executive Vice President, General Counsel and Secretary of B. Riley Financial, Inc.	590 Madison Avenue, 29th Floor New York, NY 10022

 

 

Exhibit 99.1

 

11100 Santa Monica Blvd., Ste. 800 Los Angeles, CA 90025 Tel: (310) 966-1444 | Fax: (310) 966-1448 www.brileyco.com

 

 

CONFIDENTIAL

 

VIA EMAIL

 

November 27, 2015

 

The Board of Directors

National Holdings Corporation

410 Park Avenue, 14^th Floor

New York, NY 10022

Attention:	Robert Fagenson
	Executive Chairman

 

Dear Mr. Fagenson:

 

B. Riley Financial, Inc. (“B. Riley” or “we”) is pleased to submit this revised letter of intent (“LOI”) explaining the terms under which we are prepared to move forward to execute certain transactions between B. Riley and National. As previously indicated, we see significant strategic and financial value in bringing the two companies together and are prepared to move expeditiously to consummate a transaction on terms attractive to the stockholders of both National and B. Riley.

 

Having concluded most of our diligence review, we are prepared to provide you with our final and best offer, as follows:

 

1.

Structure - Two Transactions

 

Following the signing of this LOI, we intend to execute a simple subscription agreement with National, pursuant to which B. Riley or one of its affiliates will purchase 1,538,462 newly issued shares of National capital stock at $3.25 per share, or an aggregate purchase price of $5 million (the “Subscription Transaction”). We anticipate that the parties will sign and close the Subscription Transaction within the next 30 days (the “Subscription Closing Date”). On the Subscription Closing Date, two nominees of B. Riley will be appointed to the National board of directors (the “Board”), one of whom will also be appointed as a member of the Executive Committee of the Board.

 

In addition, concurrent with the closing of the Subscription Transaction, we anticipate entering into a definitive agreement with National, pursuant to which B. Riley will acquire all of National’s outstanding shares of common stock (other than the shares already owned by B. Riley and its affiliates), with the exact structure of the acquisition to be determined (the “Definitive Transaction”). The purchase price will be $3.25 per share all of which will be paid in shares of B. Riley common stock. This represents more than a 10% premium to today’s closing price of $2.94 per share.

 

2.

Financing

 

We intend to finance the Subscription Transaction using our cash on hand.

 

3.

Timing and Certainty of Close

 

We recognize that speed and certainty of closing are important to both National and B. Riley. We are prepared to devote significant time and resources to closing the Subscription Transaction and the Definitive Transaction with National. Upon the signing of this LOI, we are ready to immediately finalize our diligence initiatives as well as the drafting of the definitive agreements. We anticipate conducting a limited confirmatory investigation given our prior exposure to National and intend to focus our efforts on updating our review of legal and regulatory issues and assessing National’s current financial condition.

 

B. Riley will engage as soon as practicable with the Financial Industry Regulatory Authority (FINRA) in order to set the stage for FINRA’s approval of the transaction.

 

 

 

4.

Conditions to Closing

 

The terms contained in this LOI are based upon the financial and business information currently known to B. Riley. Completion of the Subscription Transaction and the Definitive Transaction are subject to the following conditions:

 

a)

Completion of customary financial, legal and business due diligence;

b)

Execution of definitive agreements;

c)

Obtaining the necessary approvals from the board of directors and, as to the Definitive Transaction, stockholders of National; and

d)

As to the Definitive Transaction, such representations, warranties, conditions, covenants, indemnities and other terms that are customary for transactions of this kind.

 

5.

Go Shop

 

The definitive agreement for the Definitive Transaction will contain a 30-day go shop.

 

6.

Exclusivity

 

The exclusivity period shall be for the period from the date hereof until the earlier of (i) 30 days following the date hereof or (ii) the Subscription Closing Date (the “Exclusivity Period”). During the Exclusivity Period, National will not, and will cause its directors, officers, employees, agents, advisors and other representatives not to, directly or indirectly, initiate, solicit, encourage, seek, support or facilitate any inquiries or the making of any proposal or offer by any person with respect to, engage in any negotiations with any person concerning, or provide any information or data to, or otherwise encourage or facilitate any effort or attempt to make or implement, (i) any merger, reorganization, share exchange, consolidation or similar transaction involving National, including any acquisition of or investment in National or any of its subsidiaries, or any acquisition of any capital stock or assets of National or any of its subsidiaries, (ii) any financing or recapitalization involving National or any of its subsidiaries, or (iii) any other transaction that could affect the ability of National to consummate the transactions contemplated hereby (any such transaction described in this paragraph being hereafter referred to as an “Alternative Proposal”).

 

National agrees to, and to cause its directors, officer, employees, agents, advisors and other representatives to, (i) immediately cease and cause to be terminated any existing activities, discussions, or negotiations with any persons in progress as of the date of this letter with respect to any Alternative Proposal, and (ii) not accept or enter into any agreement, discussions or negotiations concerning any Alternative Proposal during the Exclusivity Period. National will notify B. Riley in writing promptly, and in any event within 24 hours, if any such discussions or negotiations are sought to be initiated with, or if any information is requested from, National.

 

7.

Fees and Expenses

 

Each party will be responsible for their respective expenses related to the transaction.

 

8.

Confidentiality and No Announcement

 

This LOI is presented to National on a confidential basis and on the understanding that neither National nor any of its subsidiaries, directors, officers, employees, agents, advisors or other representatives shall make any public announcement (or otherwise disclose any information (except to National’s legal and financial advisors)) relating to this LOI, our discussions or any other information relating hereto or thereto.

 

9.

Binding and Non-Binding Obligations

 

This LOI does not create legally binding obligations on the part of National or B. Riley, except for Section 6 (Exclusivity), Section 7 (Fees and Expenses), Section 8 (Confidentiality and No Announcement), Section 10 (Governing Law) and this Section 9, each of which shall be binding on the part of National.

 

 

 

10.

Governing Law

 

This LOI and any disputes arising hereunder or related hereto will be governed by and construed in accordance with the law of the State of Delaware. The parties agree to submit to the exclusive jurisdiction of the state and federal courts located within the State of Delaware and agree to waive, to the fullest extent permissible by law, any objection to the laying of venue of any suit, action or proceeding arising out of this LOI in any such court.

 

As we have noted, we are prepared to move very quickly to execute and consummate a transaction with National. To that end, our offer in this LOI expires on 5:00 p.m. Eastern Time on November 30, 2015 and we would appreciate hearing from you by or before that time. We are excited by the possibilities presented by the combination of B. Riley and National. We hope our enthusiasm and seriousness for the transaction are evident in our interactions to date as well as in this LOI.

 

If the foregoing is acceptable to you, please sign and return a copy of this letter.

 

 

Very truly yours,

 

B. Riley Financial, Inc.

 

By:	/s/ Bryant R. Riley
	Bryant R. Riley
	Chief Executive Officer

 

Agreed and accepted:

 

National Holdings Corporation

 

By:	/s/ RB Fagenson
	Name: RB Fagenson
	Title: CEO

 

 

 

 

Exhibit 99.2

 

JOINT FILING AGREEMENT

 

In accordance with Rule 13d-1(k)(1)(iii) under the Securities Exchange Act of 1934, as amended, the persons named below agree to the joint filing on behalf of each of them of a Statement on Schedule 13D (including additional amendments thereto) with respect to the common stock, $0.02 par value per share, of National Holdings Corporation, a Delaware corporation. This Joint Filing Agreement shall be filed as an Exhibit to such Statement.

 

Dated: December 10, 2015

 

	BRC PARTNERS OPPORTUNITY FUND, LP
	By:	B. Riley Capital Management, LLC, its General Partner
	By:	/s/ Bryant R. Riley
	Name:	Bryant R. Riley
	Title:	Chief Executive Officer
	B. RILEY CAPITAL MANAGEMENT, LLC
	By:	/s/ Bryant R. Riley
	Name:	Bryant R. Riley
	Title:	Chief Executive Officer

 

	B. RILEY & CO., LLC
	By:	/s/ Bryant R. Riley
	Name:	Bryant R. Riley
	Title:	Chairman

 

	B. RILEY & CO., LLC 401(K) PROFIT SHARING PLAN
	By:	/s/ Bryant R. Riley
	Name:	Bryant R. Riley
	Title:	Trustee

 

	ROBERT ANTIN CHILDREN IRREVOCABLE TRUST
	By:	/s/ Bryant R. Riley
	Name:	Bryant R. Riley
	Title:	Trustee

 

	B. RILEY FINANCIAL, INC.
	By:	/s/ Bryant R. Riley
	Name:	Bryant R. Riley
	Title:	Chief Executive Officer
	By:	/s/ Bryant R. Riley
	Name:	Bryant R. Riley
	By:	/s/ Mark D. Klein
	Name:	Mark D. Klein

 

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