Quarterly report pursuant to Section 13 or 15(d)

Notes Payable

Notes Payable

9 Months Ended

Sep. 30, 2014

Notes payable consisted of the following:



	September 30, 2014		December 31, 2013
Notes payable to clearing firm under forgivable loans (see Note 13)	$	14,285	$	14,285
Note payable to a subsidiary of Premier Trust’s former shareholder	264		450
Notes payable to finance Securities America acquisition, net of $951 and $1,618 of unamortized discount in 2014 and 2013, respectively	38,899		48,232
Note payable under term loan with bank	1,683		1,681
Notes payable to Highland's former shareholders	7,000		—
Total	$	62,131	$	64,648

The Company estimates that the fair value of notes payable was $66,223 at September 30, 2014 and $68,908 at December 31, 2013 based on then current interest rates at which similar amounts of debt could then be borrowed (Level 2 inputs). As of September 30, 2014, the Company was in compliance with all covenants in its debt agreements.

The lenders under the notes payable to finance the Securities America acquisition (the “November 2011 Loan”) included Frost Nevada Investments Trust (“Frost Nevada”), an affiliate of the Company's Chairman of the Board and principal shareholder, Vector Group, Ltd. (“Vector Group”), a principal shareholder of the Company, and the Company's President and Chief Executive Officer and a director. At September 30, 2014, outstanding principal amounts loaned by Frost Nevada, Vector Group and the Company's President and Chief Executive Officer were $33,477, $3,720 and $43, respectively.

The Company used the net proceeds from the sale of Series A Preferred Stock during the nine months ended September 30, 2014 (see Note 9) and working capital to prepay $10,000 principal amount of the remaining aggregate principal amount of the November 2011 Loan. In connection with the prepayment, the Company recorded a loss on extinguishment of debt for the nine months ended September 30, 2014 of $314, which included unamortized discounts and the write-off of debt issuance costs.

As of the date of the Highland acquisition, Highland had $21,834 payable under a credit agreement that was repaid by the Company. As of September 30, 2014, HCHC Acquisition, as successor in interest to HCHC, had outstanding $7,000 of its 10% promissory notes due February 26, 2019. Accrued interest on the promissory notes is payable quarterly on the 15th of October, January, April and July. The promissory notes may be prepaid, except that if the promissory notes are prepaid in full prior to August 26, 2016, the holders of the promissory notes are entitled to receive the total amount of interest that would otherwise have been payable through August 26, 2016, less any interest already paid.

At September 30, 2014, the Company had $40,000 available under its $40,000 revolving credit agreement with an affiliate of its principal shareholder.