Paulson Capital Corp. Reports 2006 Third Quarter ResultsConference Call Scheduled for Today at 4:15 PM ET
PORTLAND, OR -- 11/20/2006 -- Paulson Capital Corp. (NASDAQ: PLCC), parent company to Paulson Investment Company, Inc., today announced its third quarter results for the three and nine months ended September 30, 2006.
Financial highlights for the three months ended September 30, 2006 compared to the three months ended September 30, 2005:
- -- Sales commissions from the Company’s retail stock brokerage business
declined 27% to $3.2 million from $4.3 million.
- -- Corporate finance revenues decreased 35% to $1.4 million from $2.2
million.
- -- Driven by a decline in market value or fair value of the securities
and underwriter warrants held in the Company’s proprietary investment
accounts, investment losses were $3.2 million, down from investment income
of $820,000.
- -- As a result of weaker performance in those securities that Paulson
makes a market, trading loss totaled $1.6 million, a decline from trading
income of $755,000.
- -- Total revenues were ($181,000), compared to $8.1 million.
- -- Expenses dropped 33% to $4.6 million from $6.9 million.
- -- Net loss was $3.2 million, or $0.52 loss per share, compared to net
income of $738,000, or $0.12 earnings per share.
Financial highlights for the nine months ended September 30, 2006 compared to the nine months ended September 30, 2006:
- -- Sales commissions declined 7% to $11.3 million from $12.2 million.
- -- Corporate finance revenues increased 68% to $4.7 million from $2.8
million.
- -- Investment loss from the Company’s proprietary investment accounts
totaled $8.3 million, down from investment income of $18.3 million.
- -- Trading loss was $1.8 million, a decrease from trading income of $2.9
million.
- -- Total revenues decreased to $6.0 million from $36.2 million.
- -- Expenses fell 25% to $15.4 million from $20.6 million.
- -- Net loss equaled $6.0 million, or $0.97 loss per share, down from net
income of $9.4 million, or $1.49 earnings per share.
As of September 30, 2006, the Company had $6.9 million in cash and receivables and $33.5 million in total shareholders’ equity. Net cash provided by the Company’s operating activities in the first nine months of 2006 totaled approximately $301,000. At the end of September 2006, the value of the Company’s trading securities, investment securities and underwriter warrants was $28.4 million. For the first nine months of this year, the Company repurchased a total of 34,316 shares of its common stock for a weighted average price of $6.45 per share, under its stock repurchase program.
Chester L.F. Paulson, founder and Chairman of Paulson, stated, “Despite challenging market dynamics that have plagued meaningful growth in the small and micro cap sectors over the past several quarters, we are pleased to see conditions strengthening in the current fourth quarter. Moreover, we are very enthused by the increase in quality investment banking projects being presented to us -- particularly those that contemplate registered offerings, an area of focused concentration for our corporate finance team.”
Continuing, Paulson added, “Although it has been evident that public companies have relied heavily on financing their growth through PIPE and private placement transactions in 2006, we believe that the environment for registered public offerings is once again gaining momentum and attracting sizable dollars from the investment community. Consequently, in the coming months it is our intent to launch a very proactive public relations and marketing campaign to help perpetuate this momentum, while leveraging our expertise and ongoing success to manage a much greater number of registered offerings for compelling, high growth companies.”
Paulson will host a teleconference this afternoon, beginning at 4:15 PM 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 1-800-218-0713. For those unable to participate at that time, a replay of the teleconference can be accessed domestically by dialing 1-800-405-2236 and entering the passcode 11074057#. 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
September 30, December 31,
2006 2005
-------------- ------------
Assets (Unaudited)
Cash and cash equivalents $ 119,041 $ 129,549
Receivable from clearing organization 4,777,941 12,608,491
Notes and other receivables 1,958,396 1,081,528
Income taxes receivable 143,197 -
Trading securities, at market value 2,455,157 1,558,564
Investment securities, at market value 21,328,018 32,401,808
Underwriter warrants, at estimated fair value 4,545,000 6,275,000
Prepaid and deferred expenses 493,115 674,328
Furniture and equipment, net 295,792 265,791
-------------- ------------
Total Assets $ 36,115,657 $ 54,995,059
============== ============
Liabilities and Shareholders' Equity
Accounts payable and accrued liabilities $ 756,490 $ 1,243,866
Payable to clearing organization 166,775 3,182,347
Compensation, employee benefits and payroll
taxes 679,705 2,105,259
Securities sold, not yet purchased, at market
value 2,955 23,033
Dividends payable - 929,317
Income taxes payable - 2,338,218
Deferred revenue 500,000 -
Deferred income taxes 466,542 5,408,000
-------------- ------------
Total Liabilities 2,572,467 15,230,040
Commitments and Contingencies - -
Shareholders' Equity
Preferred stock, no par value; 500,000
shares authorized; none issued - -
Common stock, no par value; 20,000,000
shares authorized; shares issued and
outstanding: 6,167,132 and 6,195,448 1,831,266 1,817,100
Retained earnings 31,711,924 37,947,919
-------------- ------------
Total Shareholders' Equity 33,543,190 39,765,019
-------------- ------------
Total Liabilities and Shareholders' Equity $ 36,115,657 $ 54,995,059
============== ============
For the Three Months For the Nine Months
Ended Sept. 30, Ended Sept. 30,
----------- ----------- ----------- -----------
2006 2005 2006 2005
----------- ----------- ----------- -----------
Revenues
Commissions $ 3,156,476 $ 4,335,517 $11,335,870 $12,219,843
Corporate finance 1,414,620 2,176,018 4,646,808 2,761,973
Investment income
(loss) (3,170,780) 820,278 (8,259,811) 18,334,207
Trading income
(loss) (1,595,605) 755,231 (1,814,315) 2,868,057
Interest and
dividends 15,203 8,661 41,367 30,806
Other (680) 9,544 934 20,878
----------- ----------- ----------- -----------
(180,766) 8,105,249 5,950,853 36,235,764
Expenses
Commissions and
salaries 3,314,795 5,461,956 11,759,338 15,868,145
Underwriting
expenses 188,579 76,078 356,025 210,250
Rent, telephone and
quotation services 307,326 291,249 893,592 883,348
Professional fees 155,774 425,406 606,151 1,214,522
Travel and
entertainment 45,722 14,161 299,061 175,230
Advertising and
promotion 47,542 75,938 133,245 221,248
Settlement expense 185,461 (175,000) 190,211 343,543
Depreciation and
amortization 29,032 22,559 73,509 68,319
Other 367,655 709,491 1,068,688 1,646,493
----------- ----------- ----------- -----------
4,641,886 6,901,838 15,379,820 20,631,098
----------- ----------- ----------- -----------
Income (loss) before
income taxes (4,822,652) 1,203,411 (9,428,967) 15,604,666
Income tax expense
(benefit):
Current (580,503) 1,956,954 1,534,136 1,956,954
Deferred (1,025,833) (1,491,288) (4,941,458) 4,269,214
----------- ----------- ----------- -----------
(1,606,336) 465,666 (3,407,322) 6,226,168
----------- ----------- ----------- -----------
Net income (loss) $(3,216,316) $ 737,745 $(6,021,645) $ 9,378,498
=========== =========== =========== ===========
Basic net income (loss)
per share $ (0.52) $ 0.12 $ (0.97) $ 1.49
=========== =========== =========== ===========
Diluted net income
(loss) per share $ (0.52) $ 0.12 $ (0.97) $ 1.49
=========== =========== =========== ===========
Shares used in per share
calculations:
Basic 6,167,621 6,226,442 6,180,099 6,282,470
=========== =========== =========== ===========
Diluted 6,167,621 6,259,444 6,180,099 6,315,350
=========== =========== =========== ===========
This 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
or via email at plcc@efcg.net
