independent brokerage and advisory services segment includes the broker-dealer and investment advisory services provided by Investacorp and, since its acquisition on August 13, 2008, Triad to their independent registered representatives.
Recent Developments
Difficult Market Conditions
The U.S. and global economies are in a recession, which could be long-term. We, like other companies in the financial services sector, are exposed to volatility and trends in the securities markets and the economy, generally. The market downturn and poor economic conditions have reduced overall investment banking and client activity levels. It is difficult to predict when conditions will change. Given difficult market and economic conditions, we have focused on reducing redundancies and unnecessary expense. At the same time, however, we continue to selectively upgrade our talent pool given the availability of experienced professionals.
Acquisition Strategy
We continue to explore opportunities to grow our businesses, including through potential acquisitions of other securities, investment banking and investment advisory firms, both domestically and internationally. These acquisitions may involve payments of material amounts of cash, the incurrence of a significant amount of debt or the issuance of significant amounts of our equity securities, which may be dilutive to our existing shareholders and/or may increase our leverage. We cannot assure you that we will be able to consummate any such potential acquisitions at all or on terms acceptable to us or, if we do, that any acquired business will be profitable. There is also a risk that we will not be able to successfully integrate acquired businesses into our existing business and operations.
Critical Accounting Policies
In addition to the critical accounting policies set forth in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of our annual report on Form 10-K for the year ended December 31, 2008, as amended, we have the following critical accounting policy:
Investment banking revenues include revenues Ladenburg earns from SPAC transactions. Ladenburg receives a significant portion (often approximately 50%) of the revenue when a SPAC completes its initial public offering ("initial fees") and receives the remaining portion of the revenue ("deferred fees") only if and when a SPAC completes a business combination transaction. We record the initial fees when the underwriting is completed. We record the remaining portion of the revenues, the deferred fees, only if and when the SPAC completes a business combination. Generally, these deferred fees may be received within 24 months from the respective date of the offering, or not received at all if no business combination transactions are completed during such time period. If and when deferred revenue is recognized upon a SPAC's successful completion of a business combination, we recognize related compensation expense and finder's fees, which are payable only if we record the deferred revenue. Results of Operations
The following discussion provides an assessment of our results of operations, capital resources and liquidity and should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this report. The unaudited condensed consolidated financial statements include our accounts and the accounts of Ladenburg, Investacorp, Triad (since August 13, 2008) and our other subsidiaries.

                                                   Three months ended June 30,                Six months ended June 30,
                                                   2009                   2008                  2009                2008
Total revenues                                $       34,326         $       25,232        $       67,615         $  54,023
Total expenses                                        39,166                 30,376                78,455            60,227
Pre-tax loss                                          (4,840 )               (5,144 )             (10,840 )          (6,204 )
Net loss                                              (5,158 )               (5,233 )             (11,399 )          (6,266 )

Reconciliation of EBITDA, as adjusted,
to net loss:
EBITDA, as adjusted                                   (1,212 )               (1,809 )              (3,267 )             419

Add:
Interest income                                           17                     68                    54               144
Less:
Interest expense                                      (1,048 )               (1,202 )              (2,172 )          (2,357 )
Income tax expense                                      (318 )                  (89 )                (559 )             (62 )
Depreciation and amortization                           (931 )                 (703 )              (1,870 )          (1,343 )
Non-cash compensation                                 (1,666 )               (1,498 )              (3,585 )          (3,067 )

Net loss                                      $       (5,158 )       $       (5,233 )      $      (11,399 )       $  (6,266 )

Earnings before interest, taxes, depreciation and amortization, or EBITDA, adjusted for gains or losses on sales of assets, non-cash compensation expense and loss on extinguishment of debt, is a key metric we use in evaluating our business. EBITDA is considered a non-GAAP financial measure as defined by Regulation G promulgated by the SEC under the Securities Act of 1933, as amended. We consider EBITDA, as adjusted, important in evaluating our business on a consistent basis across various periods. Due to the significance of non-recurring items, EBITDA, as adjusted, enables our board of directors and management to monitor and evaluate our business on a consistent basis. We use EBITDA, as adjusted, as a primary measure, among others, to analyze and evaluate financial and strategic planning decisions regarding future operating investments and potential acquisitions. We believe that EBITDA, as adjusted, eliminates items that are not part of our core operations, such as interest expense and debt extinguishment expense, or do not involve a cash outlay, such as stock-related compensation. EBITDA, as adjusted, should be considered in addition to, rather than as a substitute for, pre-tax income, net income and cash flows from operating activities.
Second quarter 2009 EBITDA, as adjusted, was ($1,212), an increase of $597 from second quarter 2008 EBITDA, as adjusted, of ($1,809) primarily because of increased revenues in the 2009 period arising from our acquisition of Triad, on August 13, 2008.
Segment Description
We have two operating segments:
• Ladenburg - includes the retail and institutional securities brokerage, investment banking services, asset management services and investment activities conducted by Ladenburg.

• Independent brokerage and advisory services - includes the broker-dealer and investment advisory services provided by Investacorp and Triad to their independent contractor registered representatives.

                                            Three months ended June 30,               Six months ended June 30,
                                               2009              2008                   2009             2008
Revenues:
Ladenburg                                 $        7,100    $        9,499         $       16,282    $      22,603
Independent brokerage and advisory
services                                          27,167            15,911                 51,261           31,370
Corporate                                             59              (178 )                   72               50

Total revenues                            $       34,326    $       25,232         $       67,615    $      54,023


Pre-tax (loss) income:
Ladenburg                                 $       (2,743 )  $       (2,196 )       $       (6,188 )  $      (1,512 )
Independent brokerage and advisory
services                                             522               149                    440              712
Corporate                                         (2,619 )          (3,097 )               (5,092 )         (5,404 )

Total pre-tax loss                        $       (4,840 )  $       (5,144 )       $      (10,840 )  $      (6,204 )

Three months ended June 30, 2009 versus three months ended June 30, 2008 Our net loss for the three months ended June 30, 2009 was $5,158 compared to a net loss of $5,233 for the three months ended June 30, 2008. The decrease in net loss of $75 is primarily attributed to the addition of Triad in 2009, which had net income of $104 in the 2009 period and which we acquired on August 13, 2008.
Total revenues for the three months ended June 30, 2009 increased $9,094 (36%) from the 2008 period, due to the inclusion of Triad revenues of $14,312, which were not included in the corresponding 2008 period. The addition of

Triad in the 2009 period resulted in a $13,270 increase in commissions and fees revenue, an $835 increase in other income and a $207 increase in interest and dividends. The increase in revenues from Triad was partially offset by decreased commissions and fees revenue of $4,646, decreased investment banking revenue of $127, decreased asset management fee revenue of $235, and a $382 decrease in interest and dividends due to lower interest rates and client assets.
Total expenses for the three months ended June 30, 2009 increased $8,790 (29%) from the 2008 period, primarily as a result of Triad operating expenses of $14,131 (primarily commissions and fees expense of $11,571), which were not included in 2008. This was partially offset by a $2,866 decrease in Investacorp's commissions and fees expense and decreases in Ladenburg's and Investacorp's compensation expense of $1,585, interest expense of $156 and professional services of $119. Although total expenses increased due to the Triad acquisition, Ladenburg has undertaken efforts to reduce operating expenses. Also, Investacorp and Triad have been seeking increased operating efficiencies, including benefits from common technology platforms.
The $8,624 (42%) increase in commissions and fees revenue in the second quarter of 2009 is primarily due to the acquisition of Triad, which had $13,270 in commissions and fees revenue. Unfavorable market conditions negatively impacted commissions and fees revenue in both of our segments, including a decrease in commissions and fees revenue generated by Investacorp and Ladenburg of $4,646 as compared to the 2008 period. Commissions and fees revenue consists of commissions earned as agent in transactions involving equity and fixed income securities, mutual funds, insurance and other products. We also earn commissions and fees revenue in the form of 12b-1 fees and investment advisory fees on assets under management.
The $127 (7%) decrease in investment banking revenue for the three months ended June 30, 2009 was primarily due to unfavorable market conditions and a decrease in advisory, merger and acquisition and valuation fees of $582, partially offset by an increase in public offering revenues of $455. There were no SPAC offerings or SPAC business combination transactions in the second quarter of 2008 or 2009.
The $235 (34%) decrease in asset management fees for the three months ended June 30, 2009 is due to decreased assets under management resulting from market declines.
The $175 (18%) decrease in interest and dividends revenue for the three months ended June 30, 2009 is primarily attributable lower interest rates in 2009 and decreased asset balances. We expect similar trends in the third quarter of 2009.
For the 2009 period, we did not record an amount for unrealized gain on the NYSE Euronext restricted common stock we held because these shares are no longer restricted. In the 2008 period, we recorded an unrealized loss of $217 for these shares. Unrealized gains and losses for these shares were recorded in principal transactions revenue. We sold our remaining NYSE Euronext shares in the second quarter of 2009.
Other income revenue for the three months ended June 30, 2009 increased $824 (75%) primarily due to the addition of Triad, which had $835 of other income in the second quarter of 2009.
The $8,705 (72%) increase in commissions and fees expense is due to the addition of $11,571of such expense from Triad in 2009, partially offset by a decrease of $2,866 at Investacorp of such expense. The decrease at Investacorp is directly correlated to the reduction in commissions and fees revenue at Investacorp. Commissions and fees expense are compensation payments earned by the registered representatives in our independent brokerage and advisory services segment. These payments to the independent contractor registered representatives are calculated based on a percentage of revenues and vary by product. Accordingly, when the independent contractor registered representatives increase their business, both our revenues and expenses increase since they earn additional compensation based on the revenue produced.
Compensation and benefits expense decreased $605 (6%) primarily due to a $1,353 reduction in Ladenburg's producers' compensation and benefits, which is directly correlated with revenue production by such persons and a $232 reduction in Investacorp's salaries and benefits, partially offset by the addition of Triad, which had $980 in compensation and benefits expense for the second quarter of 2009.
Non-cash compensation expense increased $168 (11%) primarily due to a reduction in the forfeiture rate for our stock options.

Brokerage, communication and clearance fees expense increased $563 (49%) due primarily to Triad expense of $590.
The $154 (13%) decrease in interest expense is attributable to an $815 reduction in average amounts outstanding under our loan obligations in the 2009 period.
The $228 (32%) increase in depreciation and amortization expense is primarily due to Triad expense of $306, of which $288 is attributable to the amortization of intangible assets related to the Triad acquisition.
The $76 (4%) decrease in other expense is primarily attributable to Triad expense of $503, offset by a decrease in general and administrative expenses of $579 at Ladenburg and Investacorp.
We had income tax expense of $318 for 2009 as compared to income tax expense of $89 for 2008. After consideration of all the evidence, both positive and negative, management determined that a valuation allowance at June 30, 2009 was necessary to fully offset the deferred tax assets based on the likelihood of future realization. Our current deferred income tax liabilities increased by approximately $181 for the three months ended June 30, 2009 as a result of goodwill amortization for tax purposes. The income tax rates for the 2009 and 2008 periods do not bear a customary relationship to effective tax rates primarily as a result of the increase in the valuation allowance for the 2009 and 2008 periods.
Six months ended June 30, 2009 versus six months ended June 30, 2008 Our net loss for the six months ended June 30, 2009 was $11,399 compared to net loss of $6,266 for the six months ended June 30, 2008. The increase in net loss of $5,133 is attributable to the decrease in investment banking transactions, primarily SPAC offerings, a decrease in Investacorp commissions and fees and a decrease in asset management fees partially offset by decreases in commissions and fees expense and compensation and benefits expense.
Our total revenues for the six months ended June 30, 2009 increased $13,592, or 25%, from the 2008 period, primarily due to Triad revenues of $26,619, which were not included in the corresponding 2008 period. The addition of Triad in the 2009 period resulted in a $24,435 increase in commissions and fees revenue, a $1,763 increase in other income and an increase in interest and dividends of $421 as compared to 2008, partially offset by a decrease in Investacorp commissions and fees revenue of $8,310, a decrease in investment banking revenue of $3,534, a decrease in asset management fee revenue of $576 and a decrease in interest and dividends of $586.
Total expenses for the six months ended June 30, 2009 increased $18,228 (30%) from the 2008 period, primarily as a result of Triad operating expenses of $26,469 (primarily commissions and fees expense of $21,254), which were not included in the comparable 2008 period, an increase in Ladenburg and Investacorp rent and occupancy expense of $899 and an increase in non-cash compensation expense of $518. This was partially offset by a $6,025 decrease in Investacorp's commissions and fees expense and decreases in Ladenburg's and Investacorp's compensation expense of $3,602. Although total expenses increased due to the Triad acquisition, Ladenburg has undertaken efforts to reduce operating expenses. Also, Investacorp and Triad have been seeking to achieve increased operating efficiencies, including benefits from common technology platforms.
The $16,125 (41%) increase in commissions and fees revenue in the 2009 period is due to the addition of Triad, which had $24,435 in commissions and fees revenue. Unfavorable market conditions negatively impacted commissions and fees revenue in both of our segments, including a decrease in commissions and fees revenue generated by Investacorp and Ladenburg of $8,310 as compared to the 2008 period.
The $3,534 (38%) decrease in investment banking revenue was primarily due to unfavorable market conditions and a decrease in the number of SPAC offerings Ladenburg led or co-managed from four offerings in the 2008 period to none in 2009. The decrease related to new SPAC offerings was $2,508 and the decrease in advisory, merger and acquisitions and valuation fees was $1,640, partially offset by an increase in deferred revenues realized from a successful SPAC business combination of $614.
The $165 (8%) decrease in interest and dividends revenue is due to lower interest rates and decreased asset balances which caused a decrease of $586 at Ladenburg and Investacorp, partially offset by Triad interest and dividends of $421.
The $1,726 (103%) increase in other income is due to the addition of Triad, which had $1,763 in other income.

The $15,229 (63%) increase in commissions and fees expense is due to the addition of $21,254 from Triad in 2009, partially offset by a decrease of $6,025 at Investacorp, which is directly correlated to the reduction in commissions and fees revenues at Investacorp.
The $1,586 (8%) decrease in compensation and benefits expense is primarily due to a $3,489 reduction in Ladenburg's producers' compensation and benefits, which is directly correlated to revenue production by such persons, partially offset by the addition of Triad, which had $2,016 in compensation and benefits expense.
The $518 (17%) increase in non-cash compensation expense is primarily due to a reduction in the forfeiture rate for our stock options.
The $1,171 (52%) increase in brokerage, communication and clearance fees expense is due primarily to Triad expense of $1,095.
The $1,059 (101%) increase in rent and occupancy, net of sublease revenue, expense is primarily attributable to a $562 one-time charge related to office space Ladenburg is no longer using and intends to sublet, $337 in increased costs for Ladenburg's new New York headquarters and $160 for Triad rent and occupancy expense.
The $830 (33%) increase in professional services expense for the 2009 period is primarily due to an increase in Ladenburg's legal fees of $814 and the addition of Triad expense of $336, partially offset by a decrease in audit and tax expenses of $231.
The $185 (8%) decrease in interest expense is primarily attributable to a $4,630 reduction in average amounts outstanding under our loan obligations in the 2009 period.
The $527 (39%) increase in depreciation and amortization expense is primarily due to Triad expense of $613, of which $575 is attributed to the amortization of intangible assets related to the acquisition.
We had income tax expense of $559 for 2009, as compared to income tax expense of $62 for 2008. After consideration of all the evidence, both positive and negative, management determined that a valuation allowance at June 30, 2009 was necessary to fully offset the deferred tax assets based on the likelihood of future realization. Our current deferred income tax liabilities increased by approximately $361 during the six months ended June 30, 2009 as a result of goodwill amortization for tax purposes. The income tax rates for the 2009 and 2008 periods do not bear a customary relationship to effective tax rates primarily as a result of the increase in the valuation allowance in the 2009 and 2008 periods.
Liquidity and Capital Resources
Approximately 22% and 26% of our total assets at June 30, 2009 and December 31, 2008, respectively, consisted of cash and cash equivalents, securities owned and receivables from clearing brokers and other broker-dealers, all of which fluctuate, depending upon the levels of customer business and trading and investment banking activity. As securities dealers, our broker-dealer subsidiaries may carry significant levels of securities inventories to meet customer needs. A relatively small percentage of our total assets are fixed. The total assets or the individual components of total assets may vary significantly from period to period because of changes relating to economic and market conditions, and proprietary trading strategies.
Each of Ladenburg, Investacorp and Triad is subject to the SEC's net capital rules. Ladenburg is also subject to the net capital rules of the CFTC. Therefore, Ladenburg, Investacorp and Triad are subject to certain restrictions on their use of capital and their related liquidity. At June 30, 2009, Ladenburg's regulatory net capital of $3,238 exceeded minimum capital requirements of $500 by $2,738. At June 30, 2009, Investacorp's regulatory net capital of $724 exceeded minimum capital requirements of $320 by $404. At June 30, 2009, Triad's regulatory net capital of $1,017 exceeded minimum capital requirements of $250 by $767. Failure to maintain the required net capital may subject Ladenburg, Investacorp and Triad to suspension or expulsion by FINRA, the SEC and other regulatory bodies, and ultimately may require their liquidation. The net capital rule also prohibits the payment of dividends, redemption of stock and prepayment or payment of principal of subordinated . . .