8-K 1 form8k030607.txt CURRENT REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 March 6, 2007 (Date of earliest event reported) vFINANCE, INC. (Exact Name of Registrant as Specified in Charter) Delaware 1-11454-03 58-1974423 (State or Other Jurisdiction of (Commission File No.) (IRS Employer Incorporation) Identification No.) 3010 North Military Trail, Suite 300 Boca Raton, Florida 33431 (Address of Principal Executive Offices) (561) 981-1000 (Registrant's telephone number, including area code) Not Applicable (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review. In connection with comments received from the staff of the Securities and Exchange Commission ("SEC") and upon a review and assessment by our Chief Executive Officer and Chief Financial Officer, on February 28, 2007, our Chief Executive Officer and Chief Financial Officer concluded that certain of our previously issued financial statements should no longer be relied upon because of certain errors in our financial statements. As a result of this determination we intend to restate our consolidated financial statements for the years ended December 31, 2005, 2004, 2003 and 2002 and for the quarters ended September 30, 2006, June 30, 2006 and March 31, 2006. All adjustments are non-cash in nature and primarily relate to the timing and method used to record certain amounts in our financial statements. The errors in the financial statements and periods affected include: o A reclassification of marketable securities received as compensation for investment banking services from "trading" to "available-for-sale", effective January 1, 2002, resulting in the reclassification of unrealized gains and losses from the determination of net income to other comprehensive income, a component of stockholders' equity; o Recording amortization expense associated with certain acquired customer relationships during the year ended December 31, 2005 and the two months ended December 31, 2004 and an adjustment to the amortization recorded in each quarter during the year ended December 31, 2006, resulting from corrections in the period in which amortization commenced and in the useful life assigned to the acquired customer relationships; o A change in the timing of beneficial conversion feature expense recognition between 2001 and 2004, related to a financing transaction completed in 2001. o The deferral of $200,000 received in connection with a new clearing agreement in 2004, when it was recognized as a reduction in clearing and transaction costs, and the recording of the amortization of this $200,000 as a reduction in clearing and transaction costs over a five-year period commencing in 2004. As a result of the foregoing, we intend to file our December 31, 2006 Annual Report on Form 10-K with restated financial statements and revised disclosures for the fiscal periods covered by that report. Our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2007, June 30, 2007 and September 30, 2007 will include restated financial statements and revised disclosures for each corresponding period in 2006. The specific effect of these restatements on our consolidated financial statements for the periods indicated will be as follows for the years ended December 31, 2005, 2004, 2003 and 2002:

~~UNITED~~Net ~~STATES~~Effect of Restatements on Statements of Operations (In thousands, except per share amounts) 2005 2004 2003 2002 ---------------- ---------------- --------------- ----------------- Net income (loss), as reported $(1,137.4) $2,774.4 $ 311.4 $(2,235.3) Net effect of adjustments 137.9 (364.0) 27.7 (390.0) ---------------- ---------------- --------------- ----------------- Net income (loss), as restated $ (999.5) $2,410.4 $ 339.1 $(2,625.3) ================ ================ =============== ================= Net income (loss) per share - basic, as reported $ (0.03) $ 0.08 $ 0.01 $ (0.08) Net effect of adjustments $ 0.01 $ (0.01) $ - $ (0.02) ---------------- ---------------- --------------- ----------------- Net income (loss) per share - basic, as restated $ (0.02) $ 0.07 $ 0.01 $ (0.10) ================ ================ =============== ================= Wt. avg. shares outstanding - basic 40,049.7 33,773.3 26,609.1 26,716.4 ================ ================ =============== ================= Net income (loss) per share - diluted, as reported $ (0.03) $ 0.08 $ 0.01 $ (0.08) Net effect of adjustments $ 0.01 $ (0.01) $ - $ (0.02) ---------------- ---------------- --------------- ----------------- Net income (loss) per share - diluted, as restated $ (0.02) $ 0.07 $ 0.01 $ (0.10) ================ ================ =============== ================= Wt. avg. shares outstanding - diluted 40,049.7 35,840.2 29,963.4 26,716.4 ================ ================ =============== ================= Net Effect of Restatements on Stockholders' Equity (In thousands) 2005 2004 2003 2002 ---------------- ---------------- --------------- ----------------- Stockholders' equity, as reported $ 5,269.6 $6,274.1 $1,060.4 $ 521.2 Net effect of adjustments (648.4) (541.8) (12.4) 101.7 ---------------- ---------------- --------------- ----------------- Stockholders' equity, as restated $ 4,621.2 $5,732.3 $1,048.0 $ 622.9 ================ ================ =============== =================

These adjustments will not affect the amounts of net cash provided by (used in) operating, investing or financing activities in the consolidated statements of cash flows in any of the periods indicated. The specific effect of these restatements on our unaudited consolidated financial statements for the quarterly periods ended March 31, 2006, June 30, 2006 and September 30, 2006 will be as follows: Net Effect of Restatements on Statements of Operations (In thousands, except per share amounts)

~~SECURITIES~~3 ~~AND~~mos. ~~EXCHANGE~~ended ~~COMMISSION~~3 mos. ended 6 mos. ended 3 mos. ended 9 mos. ended March 31, 2006 June 30, 2006 June 30, 2006 September 30, September 30, (Unaudited) (Unaudited) (Unaudited) 2006 (Unaudited) 2006 (Unaudited) --------------- ------------- --------------- ---------------- ----------------- Net income (loss), as reported $ 253.2 $ (425.1) $ (177.4) $ (478.6) $ (656.0) Net effect of adjustments 164.7 82.3 247.0 92.0 339.0 --------------- ------------- --------------- ---------------- ----------------- Net income (loss), as restated $ 417.9 $ (342.8) $ 69.6 $ (386.6) $ (317.0) =============== ============= =============== ================ ================= Net income (loss) per share - basic, as reported $ 0.01 $ (0.01) $ - $ (0.01) $ (0.01) Net effect of adjustments $ - $ - $ - $ - $ - --------------- ------------- --------------- ---------------- ----------------- Net income (loss) per share - basic, as restated $ 0.01 $ (0.01) $ - $ (0.01) $ (0.01) =============== ============= =============== ================ ================= Wt. avg. shares outstanding - basic 40,126.1 47,269.0 43,717.3 53,126.1 46,912.9 =============== ============= =============== ================ ================= Net income (loss) per share - diluted, as reported $ 0.01 $ (0.01) $ - $ (0.01) $ (0.01) Net effect of adjustments $ - $ - $ - $ - $ - --------------- ------------- --------------- ---------------- ----------------- Net income (loss) per share - diluted, as restated $ 0.01 $ (0.01) $ - $ (0.01) $ (0.01) =============== ============= =============== ================ ================= Wt. avg. shares outstanding - diluted, as reported 42,231.2 47,269.0 43,717.3 53,126.1 46,912.9 =============== ============= =============== ================ ================= Wt. avg. shares outstanding - diluted, as restated* 46,984.4 ===============

* As a result of the adjustments, the net loss reported for the six months ended June 30, 2006 will be restated to net income and our Wt. avg. shares outstanding for the six months ended June 30, 2006 will be restated to include the potentially dilutive effects of stock options and warrants.

~~Washington~~Net Effect of Restatements on Stockholders' Equity (In thousands) March 31, D2006 June 30,2006 September 30, 2006 (Unaudited) (Unaudited) (Unaudited) --------------- ------------- --------------- Stockholders' equity, as reported 5,635.C9 8,734.2 ~~20549~~8,372.9 Net effect of adjustments (601.8) (555.1) (508.4) --------------- ------------- --------------- Stockholders' equity, as restated $ 5,034.1 $ 8,179.1 $ 7,864.5 =============== ============= ===============

These adjustments will not affect the amounts of net cash provided by (used in) operating, investing or financing activities in the consolidated statements of cash flows in any of the quarterly periods indicated. Our Chief Executive Officer has discussed the foregoing with Sherb & Co., LLP, our independent auditors. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. vFINANCE, INC. By: /s/ Leonard J. Sokolow ---------------------------- Name: Leonard J. Sokolow Title: Chief Executive Officer Date: March 6, 2007

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

January 10, 2006

(Date of earliest event reported)

vFINANCE, INC.

(Exact Name of Registrant as Specified in Charter)

	Delaware	1-11454-03	58-1974423
	(State or Other Jurisdiction of Incorporation)	(Commission File No.)	(IRS Employer Identification No.)

3010 North Military Trail

Suite 300

Boca Raton, Florida 33431

(Address of Principal Executive Offices)

(561) 981-1000

(Registrant’s telephone number, including area code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

On January 10, 2006, vFinance, Inc.’s (the "Company") wholly-owned subsidiary, vFinance Investments, Inc. ("vFinance Investments"), entered into an agreement to acquire certain assets of Sterling Financial Investment Group, Inc. (“SFIG”) and Sterling Financial Group of Companies, Inc. (“SFGC” and together with SFIG, “Sterling Financial”). These transactions are subject to the approval of the National Association of Securities Dealers, Inc.

The assets to be acquired from Sterling Financial include Sterling Financial’s businesses as a going concern, certain intellectual property, client accounts and revenues, computer equipment, and a certain real property lease. On the closing date, vFinance Investments will not assume any liabilities of Sterling Financial except an office lease and select office services contracts directly relating to the operation of the business that arise and are to be paid, performed or discharged from and after the closing date. One of the principals of Sterling Financial will enter into an employment agreement with vFinance Investments that provides for an annual base salary of $262,000 and certain performance bonuses and options to be granted in the sole discretion of vFinance Investments.

In accordance with the terms of the asset purchase agreement, vFinance Investments will deliver to SFGC 17,500,000 shares of the Company’s common stock and approximately $26,800, for certain prepaid expenses. Subject to the financial performance of the business of Sterling Financial acquired by vFinance Investments over the period specified in the asset purchase agreement, up to 4,500,000 of such shares may be cancelled. The Company has granted SFGC certain registration rights with respect to the shares. The Company and vFinance Investments will enter into a standstill agreement with each of SFGC, SFIG, Charles Garcia and Alexis Korybut to provide restrictions on certain actions for a defined time period. The Company and vFinance Investments also will enter into a voting and lockup agreement with each of SFIG, SFGC, Charles Garcia, Leonard Sokolow and Timothy Mahoney to provide certain rights and obligations with respect to the Company’s common stock.

vFinance Investments and Sterling Financial also entered into a management agreement, pursuant to which certain designated principals of vFinance Investments will provide risk management of, and operational and back office support for, the branch offices of SFIG from January 10, 2005 until the closing of the acquisition transactions. In addition, such principals will assist SFIG with the supervision of SFIG’s registered representatives in accordance with applicable rules and regulations.

The preceding summary of the agreements relating to the transaction is qualified in its entirety by reference to each of the agreements attached hereto as Exhibits 2.1, 4.1, 10.1, 10.2, 10.3 and 99.1, which are incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(a) Financial statements of businesses acquired.

None.

(b) Pro forma financial information.

None.

2.1* Asset Purchase Agreement, dated January 10, 2006, by and between vFinance, Inc., vFinance Investments, Inc., Sterling Financial Investment Group, Inc., and Sterling Financial Group of Companies, Inc.

4.1 Registration Rights Agreement, dated January 10, 2006, by and among vFinance, Inc., and Sterling Financial Group of Companies, Inc.

10.1 Standstill Agreement, dated January 10, 2006, by and among vFinance, Inc. and each of Sterling Financial Investment Group, Inc., Sterling Financial Group of Companies, Inc., Charles Garcia and Alexis Korybut.

10.2 Voting and Lockup Agreement, dated January 10, 2006, by and among vFinance, Inc., vFinance Investments, Inc., Sterling Financial Investment Group, Inc., Sterling Financial Group of Companies, Inc., Charles Garcia Leonard Sokolow and Timothy Mahoney.

10.3 Management Agreement, dated January 10, 2006, by and among vFinance Investments, Inc., Sterling Financial Investment Group, Inc. and Sterling Financial Group of Companies, Inc.

99.1 Press release issued by vFinance, Inc. on January 11, 2006.

*Pursuant to Item 601(b)(2) of Regulation S-B, the exhibits and schedules have been omitted and will be provided to the Commission upon request.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

vFINANCE, INC. By: /s/ Leonard J. Sokolow Name: Leonard J. Sokolow Title: Chief Executive Officer

Date: January 17, 2006

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EXHIBIT INDEX

Exhibit	Description
2.1*	Asset Purchase Agreement, dated January 10, 2006, by and between vFinance, Inc., vFinance Investments, Inc., Sterling Financial Investment Group, Inc., and Sterling Financial Group of Companies, Inc.
4.1	Registration Rights Agreement, dated January 10, 2006, by and among vFinance, Inc., and Sterling Financial Group of Companies, Inc.
10.1	Standstill Agreement, dated January 10, 2006, by and among vFinance, Inc. and each of Sterling Financial Investment Group, Inc., Sterling Financial Group of Companies, Inc., Charles Garcia and Alexis Korybut.
10.2	Voting and Lockup Agreement, dated January 10, 2006, by and among vFinance, Inc., vFinance Investments, Inc., Sterling Financial Investment Group, Inc., Sterling Financial Group of Companies, Inc., Charles Garcia Leonard Sokolow and Timothy Mahoney.
10.3	Management Agreement, dated January 10, 2006, by and among vFinance Investments, Inc., Sterling Financial Investment Group, Inc. and Sterling Financial Group of Companies, Inc.
99.1	Press release issued by vFinance, Inc. on January 11, 2006.

*Pursuant to Item 601(b)(2) of Regulation S-B, the exhibits and schedules have been omitted and will be provided to the Commission upon request.

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