Public Teleconference Scheduled for Wednesday, May 17 at 10:15 AM Eastern
PORTLAND, OR -- 05/15/2006 -- Paulson Capital Corp. (NASDAQ: PLCC), parent company to Paulson Investment Company, Inc., today announced its first quarter results for the three months ended March 31, 2006.
Financial Highlights for the Three-Month Period Ended March 31, 2006 Compared to Same Three Month Period Ended March 31, 2005:
- -- Sales commissions generated from the Company's retail stock brokerage business remained relatively flat at $4.10 million compared to $4.14 million. - -- Corporate finance revenues decreased by 55.6% to approximately $53,000 from $120,000. No IPOs and fewer PIPES and other offerings were completed in the first quarter of 2006, compared to the same quarter in the prior year. - -- Investment losses from the Company's proprietary investment accounts, primarily in a couple large positions, were approximately $5.2 million, a decrease from investment income of $5.2 million. The decrease was driven by a decline in market value or fair value of the securities and underwriter warrants held by the Company during the first quarter period. - -- Trading income also decreased as a result of weaker performance in some of the securities that the Company makes a market. The Company reported trading income of $36,000, a decrease from $702,000. - -- Total revenues declined approximately 110% to ($958,000) from $10.1 million. - -- Expenses dropped 20% to $4.7 million from $5.9 million. - -- Net losses totaled $3.5 million, or $.57 basic and diluted loss per share, compared to net income of $2.6 million, or $.40 basic and diluted earnings per share. - -- As of March 31, 2006, the Company had $9.82 in cash and receivables and $36.2 million in total shareholders' equity. - -- Net cash provided by the Company's operating activities in the first quarter of 2006 totaled approximately $167,000. - -- At the end of March 2006, the value of the Company's trading and investment securities was $25.7 million. - -- Under the stock repurchase plan, the Company acquired 7,508 shares of its Common Stock in the open market during the first quarter of 2006. From the commencement of share repurchases in September 2001, through March 31, 2006, the Company had acquired a total of 254,334 sharesChester L.F. Paulson, founder and Chairman of Paulson, stated, "There is no question that prevailing market volatility affected Paulson in the first quarter. We are currently working on a number of investment banking transactions and remain cautiously optimistic about the balance of the year."
Paulson will also host a teleconference on Wednesday, May 17, 2006 beginning at 10:15 AM Eastern, and invites all interested parties to join management in a discussion regarding the Company's financials, corporate progression and other meaningful developments. The conference call can be accessed by dialing toll-free 1-866-249-6463. For those unable to participate at that time, a replay of the teleconference can be accessed domestically by dialing 1-800-405-2236 and enter the pass-code 11060659#. The replay will be available for 30 days.
About Paulson Capital Corporation
Paulson Capital Corporation is the parent company to Paulson Investment Company, Inc. Located in Portland, Oregon, Paulson Investment Company is the Northwest's largest independent brokerage firm and a national leader in public offerings of small and emerging growth companies with capital needs of $5 million to $45 million. Founded by Chet Paulson in 1970, it has managed or underwritten more than 150 public offerings and has generated more than $1 billion for client companies.
Paulson Capital Corp. and Subsidiary CONSOLIDATED BALANCE SHEETS 03/31/06 12/31/05 ------------ ------------ (unaudited) ASSETS Cash and cash equivalents $ 244,381 $ 129,549 Receivable from clearing organization 8,727,502 12,608,491 Notes and other receivables 845,087 1,081,528 Trading securities, at market value 2,150,867 1,558,564 Investment securities, at market value 23,618,202 32,401,808 Underwriter warrants, at estimated fair value 4,650,000 6,275,000 Prepaid and deferred expenses 577,147 674,328 Furniture and equipment, net 251,134 265,791 ------------ ------------ Total assets $ 41,064,320 $ 54,995,059 ============ ============ LIABILITIES AND SHAREHOLDERS’ EQUITY LIABILITIES Accounts payable and accrued liabilities $ 392,481 $ 1,243,866 Payable to clearing organization 262,686 3,182,347 Compensation, employee benefits and payroll taxes 988,185 2,105,259 Securities sold, not yet purchased, at market value 84,580 23,033 Dividends payable 345 929,317 Income taxes payable 1,976,707 2,338,218 Deferred income taxes 1,164,851 5,408,000 ------------ ------------ Total liabilities 4,869,835 15,230,040 COMMITMENTS AND CONTINGENCIES — — SHAREHOLDERS’ EQUITY Preferred stock, no par value; authorized, 500,000 shares; issued and outstanding, no shares — — Common stock, no par value; authorized, 10,000,000 shares; issued and outstanding, 6,187,940 at 03/31/06 and 6,195,448 at 12/31/05 1,815,598 1,817,100 Retained earnings 34,378,887 37,947,919 ------------ ------------ Total shareholders’ equity 36,194,485 39,765,019 ------------ ------------ Total liabilities and shareholders’ equity $ 41,064,320 $ 54,995,059 ============ ============ Paulson Capital Corp. and Subsidiary CONSOLIDATED STATEMENT OF OPERATIONS (unaudited) Three months ended -------------------------- 03/31/06 03/31/05 ------------ ------------ Revenues Commissions $ 4,103,034 $ 4,141,057 Corporate finance 53,268 119,985 Investment income (loss) (5,164,766) 5,152,499 Trading income 35,837 702,004 Interest and dividends 13,168 7,691 Other 1,173 11,169 ------------ ------------ (958,286) 10,134,405 ------------ ------------ Expenses Commissions and salaries 3,717,009 4,254,004 Underwriting expenses 35,000 — Rent, telephone and quotation services 296,508 306,498 Professional fees 224,287 442,766 Travel and entertainment 42,032 60,146 Advertising and promotion expense 36,034 55,695 Settlement expense — 262,168 Depreciation and amortization 21,873 23,057 Other 338,969 450,282 ------------ ------------ 4,711,712 5,854,616 ------------ ------------ Income before income taxes (5,669,998) 4,279,789 Income tax expense (benefit) Current 2,099,889 — Deferred (4,243,148) 1,711,930 ------------ ------------ (2,143,259) 1,711,930 Net Income (Loss) $ (3,526,739) $ 2,567,859 ============ ============ Basic and diluted earnings per share $ (0.57) $ 0.40 ============ ============ Weighted average number of shares outstanding: Basic 6,189,194 6,357,694 Diluted 6,189,194 6,365,906This release may contain "forward-looking statements" based on current expectations but involving known and unknown risks and uncertainties. Actual results of achievements may be materially different from those expressed or implied. The Company's plan and objectives are based on judgments with respect to future conditions in the securities markets as well as general assumptions regarding the economy and competitive environment in the securities industry, which can be volatile and out of our control. In particular, we make assumptions about our ability to complete corporate finance transactions and increase the volume and size of our securities trading operations, which are difficult or impossible to predict accurately and often beyond the control of the Company. Therefore, there can be no assurance that any forward-looking statement will prove to be accurate.
FOR MORE INFORMATION, PLEASE CONTACT: Dodi Handy President and CEO Elite Financial Communications Group 407-585-1080 plcc@efcg.net