Paulson Capital Corp. Reports Third Quarter 2007 ResultsAchieves 297% Revenue Growth and Posts EPS of $0.73 for Nine Month Reporting Period
PORTLAND, OR -- 11/09/2007 -- Paulson Capital Corp. (NASDAQ: PLCC), parent company to Paulson Investment Company, Inc., today announced its third quarter financial results for the three and nine months ended September 30, 2007.
Financial Highlights for Three Months Ended September 30, 2007 Compared to Three Months Ended September 30, 2006:
- -- Total revenues increased to $5.95 million from negative total revenues
of $181,000.
- -- Commissions from securities brokerage activities totaled $4.09
million, a 30% increase over $3.16 million.
- -- Corporate finance revenues declined to $21,000 from $1.41 million.
- -- Investment income was $1.67 million compared to investment losses of
$3.17 million.
- -- Trading income increased to $58,000 from trading losses of $1.60
million.
- -- Income before taxes climbed to $1.01 million from losses before taxes
of $4.82 million.
- -- Net income totaled $670,000, or $0.11 earnings per basic and diluted
share, compared to net losses of $3.22 million, or $0.52 loss per basic and
diluted share.
Financial Highlights for Nine Months Ended September 30, 2007 Compared to Nine Months Ended September 30, 2006:
- -- Total revenues rose to $23.63 million, representing a 297% increase
over $5.95 million.
- -- Commissions earned from securities brokerage activities improved 13%
to $12.81 million from $11.34 million.
- -- Corporate finance revenues modestly declined to $4.47 million from
$4.65 million.
- -- Investment income increased to $4.23 million from investment losses of
$8.26 million.
- -- Trading income climbed to $1.77 million from trading losses of $1.81
million.
- -- Income before taxes was $7.17 million compared to a loss before taxes
of $9.43 million.
- -- Net income totaled $4.45 million, or $0.73 earnings per basic share
and $0.72 earnings per diluted share, compared to a net loss of $6.02
million, or $0.97 loss per basic and diluted share.
As of September 30, 2007, the Company had $10.2 million in cash and receivables and approximately $38.5 million in total shareholders' equity. The value of the Company's trading securities, investment securities and underwriter warrants was $32.8 million. During the first nine months of 2007, the Company repurchased a total of 123,861 shares of its common stock under the stock repurchase program approved by the Board in September 2001.
"We are very pleased with our strong financial performance, particularly in light of challenging market conditions that otherwise adversely affected the overall small cap market during the third quarter," stated Chester L.F. Paulson, founder, Chairman and CEO of Paulson Capital Corp. "Despite not completing any corporate finance transactions in the three month reporting period, our retail brokerage and trading activities, coupled with the solid management of our proprietary investment accounts, all made positive contributions to our results. Looking ahead to year-end, we look forward to concluding 2007 on relatively sound terms."
Due to travel and schedule conflicts associated with senior management's involvement with Paulson Investment's 30th Annual Westergaard Conference held next week in New York City, there will be no investor conference call to discuss the 2007 third quarter results. Management will resume hosting quarterly conference calls following the next scheduled financial reporting period.
Paulson Capital Corp. and Subsidiary Consolidated Balance Sheets
September 30, December 31,
2007 2006
-------------- --------------
(Unaudited)
Assets
Cash and cash equivalents $ 12,959 $ 219,341
Receivable from clearing organization 10,229,352 7,748,968
Notes and other receivables 1,546,724 1,651,002
Income taxes receivable - 304,695
Trading securities, at market value 4,756,474 2,363,824
Investment securities, at market or
estimated fair value 14,385,274 19,542,643
Underwriter warrants, at estimated fair
value 13,682,000 5,650,000
Prepaid and deferred expenses 743,812 711,827
Furniture and equipment, at cost, net of
accumulated depreciation and
amortization of $833,353 and $747,759 219,901 271,766
-------------- --------------
Total Assets $ 45,576,496 $ 38,464,066
============== ==============
Liabilities and Shareholders' Equity
Accounts payable and accrued liabilities $ 911,136 $ 570,823
Payable to clearing organization 326,611 -
Compensation, employee benefits and
payroll taxes 886,358 954,981
Securities sold, not yet purchased, at
market value 250,148 17,244
Income taxes payable - current 1,107,299 -
Income taxes payable - long-term 218,000 -
Deferred revenue 400,000 475,000
Deferred income taxes 2,929,950 1,670,000
-------------- --------------
Total Liabilities 7,029,502 3,688,048
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: 6,077,150 and 6,179,011 1,969,919 1,920,293
Retained earnings 36,577,075 32,855,725
-------------- --------------
Total Shareholders' Equity 38,546,994 34,776,018
-------------- --------------
Total Liabilities and Shareholders'
Equity $ 45,576,496 $ 38,464,066
============== ==============
Paulson Capital Corp. and Subsidiary
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------- ------------
Revenues
Commissions $ 4,090,223 $ 3,156,476 $ 12,810,762 $ 11,335,870
Corporate
finance 21,230 1,414,620 4,467,037 4,646,808
Investment
income (loss) 1,672,110 (3,170,780) 4,227,946 (8,259,811)
Trading income
(loss) 58,344 (1,595,605) 1,769,107 (1,814,315)
Interest and
dividends 48,988 15,203 119,987 41,367
Other 60,121 (680) 232,196 934
------------ ------------ ------------- ------------
5,951,016 (180,766) 23,627,035 5,950,853
Expenses
Commissions and
salaries 3,669,120 3,314,795 12,452,211 11,759,338
Underwriting
expenses 14,529 188,579 323,993 356,025
Rent, telephone
and quotation
services 313,066 307,326 930,246 893,592
Professional
fees 151,828 155,774 497,001 606,151
Bad debt
expense 27,192 2,643 182,041 4,261
Travel and
entertainment 107,505 45,722 184,689 299,061
Advertising and
promotion 92,820 47,542 177,546 133,245
Settlement
expense 190,000 185,461 499,717 190,211
Depreciation
and
amortization 29,267 29,032 85,594 73,509
Other 349,184 365,012 1,125,043 1,064,427
------------ ------------ ------------- ------------
4,944,511 4,641,886 16,458,081 15,379,820
------------ ------------ ------------- ------------
Income (loss)
before income
taxes 1,006,505 (4,822,652) 7,168,954 (9,428,967)
Income tax expense
(benefit):
Current 714,423 (580,503) 1,461,025 1,534,136
Deferred (377,823) (1,025,833) 1,259,950 (4,941,458)
------------ ------------ ------------- ------------
336,600 (1,606,336) 2,720,975 (3,407,322)
------------ ------------ ------------- ------------
Net income (loss) $ 669,905 $ (3,216,316) $ 4,447,979 $ (6,021,645)
============ ============ ============= ============
Basic net income
(loss) per share $ 0.11 $ (0.52) $ 0.73 $ (0.97)
============ ============ ============= ============
Diluted net income
(loss) per share $ 0.11 $ (0.52) $ 0.72 $ (0.97)
============ ============ ============= ============
Shares used in per
share
calculations:
Basic 6,087,341 6,167,621 6,129,613 6,180,099
============ ============ ============= ============
Diluted 6,097,321 6,167,621 6,139,665 6,180,099
============ ============ ============= ============
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.
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
Daniel Conway
Chief Strategist
Elite Financial Communications Group
407-585-1080
email: plcc@efcg.net
