Document_And_Entity_Informatio
Document And Entity Information | 3 Months Ended | |
Mar. 31, 2014 | 15-May-14 | |
Document and Entity Information [Abstract] | ' | ' |
Entity Registrant Name | 'PAULSON CAPITAL (DELAWARE) CORP. | ' |
Document Type | '10-Q | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Common Stock, Shares Outstanding | ' | 7,793,258 |
Amendment Flag | 'false | ' |
Entity Central Index Key | '0000704159 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Voluntary Filers | 'No | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Well-known Seasoned Issuer | 'No | ' |
Document Period End Date | 31-Mar-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Consolidated_Balance_Sheets_Un
Consolidated Balance Sheets (Unaudited) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Assets | ' | ' |
Cash | $5,768,819 | $6,728,680 |
Receivable from clearing organization | 446,129 | 445,113 |
Notes and other receivables, net of allowances for doubtful accounts of $901,541 and $901,541 | 1,879,556 | 1,778,936 |
Trading and investment securities owned, at fair value | 4,799,574 | 4,908,753 |
Underwriter warrants, at fair value | 3,823,000 | 5,276,000 |
Prepaid and deferred expenses | 781,029 | 472,016 |
Other assets | 286,710 | 78,467 |
Furniture and equipment, at cost, net of accumulated depreciation and amortization of $75,383 and $66,041 | 107,355 | 111,180 |
Total Assets | 17,892,172 | 19,799,145 |
Liabilities and Shareholders' Equity | ' | ' |
Accounts payable and accrued liabilities | 590,964 | 540,771 |
Payable to clearing organization | 1,263 | ' |
Compensation, employee benefits and payroll taxes | 464,287 | 363,665 |
Underwriter warrants payable to employees, at fair value | 2,526,837 | 3,641,035 |
Notes payable | 716,781 | 700,000 |
Advances from related parties | 1,521,781 | 1,521,781 |
Total Liabilities | 5,821,913 | 6,767,252 |
Commitments and Contingencies | ' | ' |
Shareholders' Equity | ' | ' |
Preferred stock, $0.0001 par value; 30,000,000 shares authorized; none issued | ' | ' |
Common stock, $0.0001 par value; 90,000,000 shares authorized; shares issued and outstanding: 7,325,485 and 5,805,485 | 3,465,416 | 2,338,216 |
Retained earnings | 6,860,448 | 9,130,287 |
Total Shareholders' Equity | 10,325,864 | 11,468,503 |
Non-controlling interest in consolidated entities | 1,744,395 | 1,563,390 |
Total Equity | 12,070,259 | 13,031,893 |
Total Liabilities and Shareholders' Equity | $17,892,172 | $19,799,145 |
Consolidated_Balance_Sheets_Un1
Consolidated Balance Sheets (Unaudited) (Parentheticals) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Allowances for doubtful accounts (in Dollars) | $901,541 | $901,541 |
Accumulated depreciation and amortization (in Dollars) | $75,383 | $66,041 |
Preferred stock, par value (in Dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized | 30,000,000 | 30,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in Dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 90,000,000 | 90,000,000 |
Common stock, shares issued | 7,325,485 | 5,805,485 |
Common stock, shares outstanding | 7,325,485 | 5,805,485 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Revenues | ' | ' |
Commissions | $1,735,687 | $198,071 |
Corporate Finance | 308,465 | 88,191 |
Investment income | 14,664 | 724,346 |
Trading income (loss) | -1,551,526 | 188,742 |
Interest and dividends | 8,931 | 6,449 |
Other | ' | 44,881 |
516,221 | 1,250,680 | |
Expenses | ' | ' |
Commissions and salaries | 2,791,619 | 602,195 |
Underwriter warrant commissions | -1,114,198 | ' |
Underwriting expenses | 17,286 | 22,333 |
Clearing expenses | 24,335 | 18,954 |
Rent and utilities | 94,311 | 50,956 |
Communication and quotation services | 29,666 | 25,342 |
Professional fees | 389,570 | 335,079 |
Travel and entertainment | 33,506 | 13,088 |
Depreciation and amortization | 9,342 | 743 |
Licenses, taxes and insurance | 175,469 | 183,469 |
Interest | 17,618 | 15,616 |
Other | 128,031 | 223,296 |
2,596,555 | 1,491,071 | |
Loss before income taxes | -2,080,334 | -240,391 |
Income tax expense: | ' | ' |
Current | 8,500 | 0 |
Deferred | 0 | 0 |
8,500 | 0 | |
Net loss | -2,088,834 | -240,391 |
Income attributable to non-controlling interests | 181,004 | ' |
Net loss attributable to Paulson Capital (Delaware) Corp. common stockholders | ($2,269,838) | ($240,391) |
Basic and diluted net loss per share attributed to Legacy Shareholders (in Dollars per share) | ($0.56) | ($0.04) |
Basic net income per share attributed to Non-Legacy Shareholders (in Dollars per share) | $0.15 | ' |
Diluted net income per share attributed to Non-Legacy Shareholders (in Dollars per share) | $0.04 | ' |
Shares used in per share calculations: | ' | ' |
Basic and diluted net loss per share attributed to Legacy Shareholders (in Shares) | 5,805,485 | 5,766,985 |
Basic net income per share attributed to Non-Legacy Shareholders (in Shares) | 6,285,929 | ' |
Diluted net income per share attributed to Non-Legacy Shareholders (in Shares) | 21,845,449 | ' |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Cash flows from operating activities: | ' | ' |
Net loss | ($2,088,834) | ($240,391) |
Adjustments to reconcile net loss to net cash flows provided by operating activities: | ' | ' |
Underwriter warrants owed to employees | -1,114,198 | ' |
Unrealized (appreciation) depreciation/expiration of underwriter warrants | 1,453,000 | -601,000 |
Stock-based compensation | 877,200 | ' |
Depreciation and amortization | 9,342 | 743 |
Change in assets and liabilities: | ' | ' |
Receivables from/payable to clearing organization, net | 247 | -42,853 |
Notes and other receivables | -100,620 | -819,605 |
Income taxes receivable | ' | 7,000 |
Trading and investment securities owned | 109,179 | 74,000 |
Prepaid and deferred expenses | -309,013 | -19,034 |
Other assets | -208,243 | ' |
Deferred revenue | ' | -44,642 |
Accounts payable, accrued liabilities and compensation payables | 167,596 | 300,853 |
Trading securities sold, not yet purchased | ' | 47,295 |
Net cash used in operating activities | -1,204,344 | -1,337,634 |
Cash flows from investing activities: | ' | ' |
Additions to furniture and equipment | -5,517 | -12,845 |
Net cash used in investing activities | -5,517 | -12,845 |
Cash flows from financing activities: | ' | ' |
Proceeds from related party advance | ' | 1,500,000 |
Proceeds from issuance of common stock | 250,000 | ' |
Net cash provided by financing activities | 250,000 | 1,500,000 |
Increase (decrease) in cash | -959,861 | 149,521 |
Cash: | ' | ' |
Beginning of period | 6,728,680 | 337,136 |
End of period | 5,768,819 | 486,657 |
Supplemental cash flow information: | ' | ' |
Cash received (paid) during the period for income taxes, net | ($8,500) | $7,000 |
Note_1_Basis_of_Presentation
Note 1 - Basis of Presentation | 3 Months Ended |
Mar. 31, 2014 | |
Disclosure Text Block [Abstract] | ' |
Basis of Presentation and Significant Accounting Policies [Text Block] | ' |
Note 1. Basis of Presentation | |
The financial information for Paulson Capital (Delaware) Corp. and its majority-owned subsidiary, Paulson Investment Company, Inc., its wholly owned subsidiary, VBI Acquisition Corp., and its wholly owned subsidiary, Paulson Capital Properties, LLC, included herein as of March 31, 2014 and December 31, 2013 and for the three-month periods ended March 31, 2014 and 2013 is unaudited; however, such information reflects all adjustments, consisting only of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods. The financial information as of December 31, 2013 is derived from the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2013. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year. |
Note_2_Change_of_State_of_Inco
Note 2 - Change of State of Incorporation and Articles of Incorporation | 3 Months Ended |
Mar. 31, 2014 | |
Changeof Stateof Incorporationand Articlesof Incorporation [Abstract] | ' |
Changeof Stateof Incorporationand Articlesof Incorporation [Text Block] | ' |
Note 2. Change of State of Incorporation and Articles of Incorporation | |
Effective March 20, 2014 (the “Effective Date”), the Company changed its state of incorporation from the State of Oregon to the State of Delaware. The reincorporation was pursuant to an Agreement and Plan of Merger dated March 20, 2014 approved by shareholders at the 2013 Annual Meeting held on November 8, 2013. Under the Plan, each issued and outstanding share of common stock, no par value, of the predecessor entity, Paulson Capital Corp. (“Paulson Oregon”) was automatically converted into one share of Paulson Capital (Delaware) Corp. (“Paulson Delaware”), a Delaware Corporation’s common stock, $0.0001 par value. Each share of Paulson Oregon’s preferred stock, no par value, issued and outstanding was automatically converted into one share of Paulson Delaware’s preferred stock, $0.0001 par value. Any options, warrants, or other securities of Paulson Oregon shall be enforced against Paulson Delaware to the same extent as if such options, warrants or other securities had been issued by Paulson Delaware. As a result of the Reincorporation, the Company is now Paulson Delaware, its name is “Paulson Capital (Delaware) Corp.” and Paulson Oregon no longer exists. The directors and officers of Paulson Oregon continue to be the directors and officers of the Company, and the Company continues to operate the business of Paulson Oregon as it existed immediately prior to the Reincorporation. | |
Prior to the Effective Date, the rights of Paulson Oregon’s shareholders were governed by the Oregon Business Corporation Act (the “OBCA”), Paulson Oregon’s Articles of Incorporation and its Amended and Restated Bylaws. As a result of the Reincorporation, holders of Paulson Oregon’s common stock and preferred stock are now holders of the Common Stock and the Preferred Stock, respectively, and their rights as shareholders are now governed by the Delaware General Corporation Law and the following documents: (i) Paulson Delaware’s Certificate of Incorporation (the “Certificate of Incorporation”); (ii) Paulson Delaware’s Bylaws (the “Bylaws”); and (iii) Paulson Delaware’s Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock (the “Certificate of Designation”). | |
In accordance with Rule 12g-3 of the Securities and Exchange Act of 1934, the shares of Common Stock of Paulson Delaware were deemed to be registered under Section 12(b) of the Exchange Act as the successor to Paulson Oregon. The Common Stock continues to be listed on The NASDAQ Capital Market under the symbol “PLCC.” |
Note_3_Earnings_Per_Share
Note 3 - Earnings Per Share | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
Earnings Per Share [Abstract] | ' | ||||
Earnings Per Share [Text Block] | ' | ||||
Note 3. Earnings Per Share | |||||
The Company presents earnings per share for two classifications of Common Stock. The “Legacy Shareholder” classification includes shareholders of record on October 11, 2013 (the “Record Date”), and reflects the combined results for the year-to-date up to the Record Date, as well as the results after the Record Date of the Trust Assets (as described below in Note 9) in which the Legacy Shareholders have a beneficial interest. The “Non-Legacy Shareholder” classification includes those who were not shareholders on the Record Date, but purchased shares thereafter, and only reflects the operating results of the Company after the Record Date, excluding the results on the Trust Assets for which they do not have a beneficial interest. | |||||
We computed basic earnings per common share using net income (loss) available to common stockholders and the weighted average number of common shares outstanding during the period. We computed diluted earnings per common share using net income available to common stockholders and the weighted average number of common shares outstanding plus potentially dilutive common shares outstanding during the period. | |||||
Potentially dilutive common shares from other instruments are determined by applying the treasury stock method to the assumed exercise of outstanding stock options. Potentially dilutive common shares are determined by applying the if-converted method. | |||||
Net income (loss) used in earnings per share calculations for March 31, | 2014 | ||||
Net loss attributed to Legacy Shareholders | $ | (3,235,155 | ) | ||
Net income attributed to Non-Legacy Shareholders | 965,317 | ||||
Net loss | $ | (2,269,838 | ) | ||
Legacy Shareholder basic earnings per share is the same as diluted earnings per share for the periods ended March 31, 2014 and 2013 since we were in a loss position in both years. | |||||
Non-Legacy Shareholder earnings per share after the Record Date included 15,524,586 contingently issuable common shares in the calculation of diluted earnings per common share that were held in escrow pending the subsequent closing of a financing transaction. The contingently issuable common shares are described in Note 5. Following is a reconciliation of our shares used for our basic net income (loss) per share and our diluted net income per share: | |||||
Non-Legacy Shareholder earnings per share for March 31, | 2014 | ||||
Shares used for basic net income per share | 6,285,929 | ||||
Effect of dilutive stock options | 34,934 | ||||
Effect of contingently issuable common shares | 15,524,586 | ||||
Shares used for diluted net income per share | 21,845,449 | ||||
Stock options not included in diluted net income per share because their effect would have been antidilutive | 180,000 | ||||
Note_4_Fair_Value_Measurements
Note 4 - Fair Value Measurements | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||||||||
Fair Value Disclosures [Text Block] | ' | |||||||||||||||||||
Note 4. Fair Value Measurements | ||||||||||||||||||||
Various inputs are used in determining the fair value of our assets and liabilities carried at fair value and are summarized into three broad categories: | ||||||||||||||||||||
● | Level 1 – unadjusted quoted prices in active markets for identical securities; | |||||||||||||||||||
● | Level 2 – other significant observable inputs, including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.; and | |||||||||||||||||||
● | Level 3 – significant unobservable inputs, including our own assumptions in determining fair value. | |||||||||||||||||||
The inputs or methodology used for valuing securities is not necessarily an indication of the risk associated with investing in those securities. | ||||||||||||||||||||
Following are the disclosures related to our financial assets and liabilities (in thousands): | ||||||||||||||||||||
31-Mar-14 | 31-Dec-13 | |||||||||||||||||||
Fair Value | Input Level | Fair Value | Input Level | |||||||||||||||||
Trading and investment securities owned: | ||||||||||||||||||||
Corporate equities, marketable | $ | 4,044 | Level 1 | $ | 3,720 | Level 1 | ||||||||||||||
Corporate equities, not readily marketable | 717 | Level 3 | 1,122 | Level 3 | ||||||||||||||||
Corporate options/warrants, marketable | 39 | Level 1 | 67 | Level 1 | ||||||||||||||||
Underwriter warrants | 3,823 | Level 3 | 5,276 | Level 3 | ||||||||||||||||
Underwriter warrants payable to employees | (2,527 | ) | Level 3 | (3,641 | ) | Level 3 | ||||||||||||||
Following is a summary of activity related to our Level 3 financial assets and liabilities (in thousands): | ||||||||||||||||||||
Underwriter | Underwriter | Not Readily | ||||||||||||||||||
Warrants | Warrants | Marketable | ||||||||||||||||||
Payable to | Investment | |||||||||||||||||||
Employees | Securities | |||||||||||||||||||
Balance, December 31, 2013 | $ | 5,276 | $ | (3,641 | ) | $ | 1,122 | |||||||||||||
Sale of investment in privately held company | - | - | (205 | ) | ||||||||||||||||
Reclassification of investment from Level 3 to Level 1 * | - | - | (200 | ) | ||||||||||||||||
Net unrealized gain (loss), included as a component of investment income related to securities held at March 31, 2014 | (1,453 | ) | 1,114 | - | ||||||||||||||||
Balance, March 31, 2014 | $ | 3,823 | $ | (2,527 | ) | $ | 717 | |||||||||||||
* On February 7, 2014, one of our Level 3 investments consummated a merger where a quoted price became available on an active market, and we reclassified it to a Level 1 investment. | ||||||||||||||||||||
Underwriter | Underwriter | Not Readily | ||||||||||||||||||
Warrants | Warrants | Marketable | ||||||||||||||||||
Payable to | Investment | |||||||||||||||||||
Employees | Securities | |||||||||||||||||||
Balance, December 31, 2012 | $ | 1,548 | $ | - | $ | 4,878 | ||||||||||||||
Fair value of underwriter warrants received included as a component of corporate finance income | - | - | - | |||||||||||||||||
Investment in privately-held company | - | - | - | |||||||||||||||||
Net unrealized gain (loss), included as a component of investment loss related to securities held | 693 | - | (20 | ) | ||||||||||||||||
Underwriter warrants exercised or expired included as a component of investment income | (92 | ) | - | - | ||||||||||||||||
Balance, March 31, 2013 | $ | 2,149 | $ | - | $ | 4,858 | ||||||||||||||
Valuation of Marketable Trading and Investment Securities Owned | ||||||||||||||||||||
The fair value of our marketable trading and investment securities owned is determined based on quoted market prices. Securities traded on a national exchange are stated at the last reported sales price on the day of valuation; other securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are stated at the last quoted bid price. | ||||||||||||||||||||
Valuation of Not Readily Marketable Investment Securities | ||||||||||||||||||||
Securities not readily marketable include investment securities (a) for which there is no market on a securities exchange or no independent publicly quoted market, (b) that cannot be publicly offered or sold unless registration has been effected under the Securities Act of 1933, or (c) that cannot be offered or sold because of other arrangements, restrictions or conditions applicable to the securities or to us. The fair value of not readily marketable securities is estimated by management using available information including the following: quoted market prices of similar securities (i.e., unrestricted shares of the same company); price of recent known trades of the same or similar securities; the cost of the security, if recently purchased, adjusted for changes in the financial condition of the issuer; all other information available from review of available documents related to the issuer or discussions with management of the issuer. Significant unobservable inputs include the discount rate for lack of liquidity, and the volatility index of comparable companies. Changes to these unobservable inputs would cause the fair value to fluctuate substantially. | ||||||||||||||||||||
Valuation of Underwriter Warrants and Underwriter Warrants Payable to Employees | ||||||||||||||||||||
We estimate the fair value of underwriter warrants using the Black-Scholes Option Pricing Model. The warrants generally have a five-year expiration date and vest immediately. The warrants are generally subject to a restriction period of six months to one-year in which the warrants cannot be exercised. The Black-Scholes model requires us to use five inputs including: stock price, risk free rate, exercise price, time remaining on the warrant and price volatility. After stock price, the most influential factor in this model is price volatility, which we calculate for each company’s warrants based on each company’s own historical closing stock prices as well as an index of historical prices for comparable companies. When we initially receive a new underwriter warrant from an initial public offering, its calculated volatility factor is entirely based on the volatility of an index of comparable companies, since there is no price history for a new publicly traded company. For publicly traded companies, as each underwriter warrant approaches its expiration date, its volatility factor is derived primarily from the historical prices of its underlying common stock. Private company underwriter warrant valuations use the volatility index of comparable companies. There is no assurance that we will ultimately be able to exercise any of our warrants in a way that will realize the fair value that has been recorded in the financial statements based on this model. Underwriter warrants payable to employees represent warrants that are held by the Company, but are distributable to employees as compensation at periods ended March 31, 2014 and December 31, 2013. | ||||||||||||||||||||
There were no changes to our valuation methods or techniques during the first quarter of 2014 or 2013. | ||||||||||||||||||||
The following table is a quantitative disclosure about the significant unobservable inputs (Level 3) that were used in determining fair value at March 31, 2014: | ||||||||||||||||||||
Quantitative Information about Level 3 Fair Value Measurements | ||||||||||||||||||||
Fair Value at | Valuation | Unobservable | Range | Weighted | ||||||||||||||||
31-Mar-14 | Technique | Input | Average | |||||||||||||||||
Minimum | Maximum | |||||||||||||||||||
Investments in privately-held companies | $ | 717 | Market approach; Asset approach | Discount rate for lack of liquidity | 13 | % | 20 | % | 15.3 | % | ||||||||||
Underwriter warrants | 3,823 | |||||||||||||||||||
Underwriter warrants payable to employees* | (2,527 | ) | Black-Scholes Option Pricing Model | Volatility index of comparable companies | 61.2 | % | 92.6 | % | 78.4 | % | ||||||||||
$ | 2,013 | |||||||||||||||||||
* Negative number reflects a reduction in the fair value of warrants payable to employees for the quarter ended March 31, 2014 and is recorded as a contra entry to underwriter warrant commissions. |
Note_5_Stockholders_Equity
Note 5 - Stockholders' Equity | 3 Months Ended |
Mar. 31, 2014 | |
Stockholders' Equity Note [Abstract] | ' |
Stockholders' Equity Note Disclosure [Text Block] | ' |
Note 5. Stockholders' Equity | |
Comprehensive Income | |
The Company did not have any transactions that generated comprehensive income during the first quarter of fiscal 2014 or during the fiscal year ended December 31, 2013. | |
Private Placement of Common Stock | |
On January 29, 2014, the Company closed the private sale of 500,000 shares of its Common Stock (the “Shares”) to six accredited investors at a price of $0.50 per share for gross proceeds of $250,000. The shares were sold without registration in reliance upon the private transaction exemption set forth in Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and/or Rule 506 of Regulation D promulgated under the Securities Act. | |
Repurchase of Common Stock | |
There were no common shares repurchased during the quarter of 2014. | |
In September 2001, our Board of Directors approved a stock repurchase program pursuant to which we are authorized to repurchase up to 600,000 shares of our common stock. In addition, in June 2008, our Board of Directors approved the repurchase of up to a total of an additional 200,000 shares of our common stock. Through March 31, 2014, 731,989 shares had been repurchased and, as of March 31, 2014, 68,011 shares remained available for repurchase. These repurchase programs do not have an expiration date. | |
Common Shares in Escrow | |
As described in Note 9, the Company issued and placed 287,773 shares of common stock in escrow on July 25, 2013. These shares are not considered officially outstanding until they are released from the escrow. | |
2013 Equity Incentive Plan | |
Our 2013 Equity Incentive Plan (the “2013 Plan”) authorizes that 1.5 million shares common stock be reserved for issuance of equity and cash and equity-linked awards to certain management, consultants and others. On June 19, 2013, the Board of Directors granted 300,000 stock options to purchase shares of common stock at a purchase price equal to the closing price of stock on that date, pursuant to the adoption of the 2013 Plan by the Company’s shareholders. On March 19, 2014, the Board of Directors granted 1,020,000 common shares to officers and directors under the 2013 Plan, which was recorded as commissions and salaries expense based on the closing price of stock on that date. |
Note_6_New_Accounting_Guidance
Note 6 - New Accounting Guidance | 3 Months Ended |
Mar. 31, 2014 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | ' |
New Accounting Pronouncements and Changes in Accounting Principles [Text Block] | ' |
Note 6. New Accounting Guidance | |
Management has reviewed the new accounting guidance and determined that there is not a material impact on our financial statements. |
Note_7_Change_in_Preferred_Sto
Note 7 - Change in Preferred Stock Designation | 3 Months Ended |
Mar. 31, 2014 | |
Change In Preferred Stock Designation [Abstract] | ' |
Change In Preferred Stock Designation [Text Block] | ' |
Note 7. Change in Preferred Stock Designation | |
On June 19, 2013, the Company’s Board of Directors authorized the creation of Series A Preferred Stock. On July 18, 2013, the Company filed a Certificate of Designation of Preference, Rights and Limitations of Series A Convertible Preferred Stock with the Secretary of State of Oregon. Upon the reincorporation of the Company in Delaware from Oregon effective March 20, 2014, each share of Paulson Oregon’s preferred stock, no par value, issued and outstanding was automatically converted into one share of Paulson Delaware’s preferred stock, $0.0001 par value. |
Note_8_Restructure_of_Paulson_
Note 8 - Restructure of Paulson Investment Company, Inc. | 3 Months Ended |
Mar. 31, 2014 | |
Investments Schedule [Abstract] | ' |
Investment [Text Block] | ' |
Note 8. Restructure of Paulson Investment Company, Inc. | |
The Company is in the process of restructuring the business involving the broker-dealer license held by the Company’s subsidiary, Paulson Investment Company, Inc. (“PIC”). The restructuring, which is subject to approval by the Financial Industry Regulatory Authority (“FINRA”), is contemplated to result in PIC ultimately being owned by management of PIC and outside investors. | |
During the first quarter of fiscal 2013, PIC received a $1,500,000 loan from a related-party investor pursuant to a convertible promissory note bearing 5% simple interest which is due on January 13, 2016. The note holder agreed the note would stop accruing interest after April 30, 2013. The note was amended and restated in the second quarter of 2014. The amended and restated note is mandatorily convertible into equity of PIC on the date that is 10 business days after the expiration of the 30-day waiting period following submission by PIC to FINRA of the Form CMA seeking approval for the issuance of securities of PIC upon conversion of the amended and restated note, but in no event earlier than the closing date of the proposed merger between the Company and Variation Biotechnologies (US), Inc. ("VBI"). The amended and restated note contemplates that PIC will be converted into a limited liability company (the "Converted Entity") prior to conversion of the amended and restated note. Upon the creation of the Converted Entity, all of the outstanding principal and interest under the amended and restated note shall be converted into a 35% membership interest in the Converted Entity. | |
During the second quarter of fiscal 2013, PIC issued 215,438 shares of series B preferred stock for $1,500,000. The series B preferred stock is afforded no conversion or voting rights. Upon a liquidation event, the shareholder would be given a liquidation preference equal to 15.79%. During the second quarter of 2014, the holder of the series B preferred stock and PIC entered into a securities exchange agreement providing that, on the date that is 10 business days after the expiration of the 30-day waiting period following submission by PIC to FINRA of the Form CMA seeking approval for the issuance of membership interests in the Converted Entity, but in no event earlier than the closing date of the proposed merger between PLCC and VBI, all shares of series B preferred stock shall be exchanged for a 12.5% membership interest in the Converted Entity. | |
During the fourth quarter of fiscal 2013, PIC received a $700,000 loan from an outside investor pursuant to a convertible promissory note bearing 5% simple interest, with a maturity date of July 1, 2014. During the second quarter of 2014, the note was amended and restated to extend the maturity date to December 31, 2014 and increase the interest rate to 10% per annum from after July 2, 2014. The outstanding principal under the amended and restated note is mandatorily convertible into an 11.6% equity interest in PIC (or other entity, if PIC is not a corporation at the time of conversion) on the date that is 10 business days after the expiration of the 30-day waiting period following submission by PIC to FINRA of the Form CMA seeking approval for the issuance of securities of PIC upon conversion of the amended and restated note, but in no event earlier than the closing date of the proposed merger between PLCC and VBI. At the time of conversion, accrued interest will be payable either in cash or additional equity. |
Note_9_Corporate_Reorganizatio
Note 9 - Corporate Reorganization | 3 Months Ended |
Mar. 31, 2014 | |
Restructuring and Related Activities [Abstract] | ' |
Restructuring and Related Activities Disclosure [Text Block] | ' |
Note 9. Corporate Reorganization | |
The Board of Directors of the Company has determined that a change of direction is in the best interest of shareholders. Therefore, in 2013, the Company entered into a series of related transactions to execute a corporate reorganization. These transactions include the following: | |
a) PIPE Financings | |
On July 25, 2013, the Company entered into a series of agreements intended to secure investment in the Company of $5,250,000 (the “Investment Funds”) with DKR Ventures, LLC, a Delaware limited liability company, and Hudson Bay Master Fund Ltd., a Cayman Islands limited partnership (collectively, the “Investors”). The investment was made in a private placement transaction (the “2013 PIPE Financing”) intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), subject to satisfaction of certain conditions. | |
Under the agreements, the Company will complete the private placement of a Unit consisting of (i) 287,773 shares of Common Stock; (ii) 500,000 shares of Series A Preferred Stock; (iii) a Class A Warrant; and (iv) a Class B Warrant. Each share of Series A Preferred Stock has a stated value of $0.806974 and a conversion ratio of 2.305640603 per share of Common Stock, subject to adjustment. Each share of Series B Preferred Stock will be convertible into one share of Common Stock and have a stated value of $0.35 per share and a conversion ratio equal to one share of Common Stock for each share of Series B Preferred Stock outstanding, equal to a purchase price of $0.35 per share of Common Stock, subject to adjustment. The Class A Warrant is exercisable for up to 7,500,000 shares of Series B Preferred Stock at a per share exercise price of $0.80, subject to adjustment, beginning on the date that is six months following the date of issuance and ending on the date that is five years thereafter. The Class B Warrant is exercisable for up to 13,559,407 shares of Series B Preferred Stock. The purchase price of one share of Common Stock underlying the Class B Warrant is deemed to be $0.35, subject to adjustment, without any payment of consideration by the Holder upon exercise. The Class B Warrant is exercisable beginning on the date that is six months following the date of issuance and ending on the date that is two years thereafter. As of the date of this report, the 2013 PIPE Financing had not closed, and the Investment Funds remained in escrow. | |
On January 29, 2014, the Company closed the private sale of 500,000 shares of its Common Stock (the “2014 PIPE Financing”) to six accredited investors at a price of $0.50 per share for gross proceeds of $250,000. The shares were sold without registration in reliance upon the private transaction exemption set forth in Section 4(a)(2) of the Securities Act, and/or Rule 506 of Regulation D promulgated under the Securities Act. | |
b) Formation of Liquidating Trust | |
In connection with the 2013 PIPE Financing, the Board of Directors of the Company approved the formation of a trust (the "Trust") for the benefit of shareholders of the Company as of the record date of October 11, 2013 (the “Record Date”). The Trust, if and when formed, will hold certain non-operating assets of PIC (the “Trust Assets”). Common shareholders of record (the “Legacy Shareholders”) will be given non-transferable beneficial interests in the Trust in proportion to their pro rata ownership interest in our Common Stock as of the Record Date. It is expected the assets in the Trust will be liquidated and distributed to the Legacy Shareholders over time. | |
c) Changes to the Articles of Incorporation | |
At the 2013 Annual Meeting of Shareholders held on November 8, 2013 (the “2013 Shareholders Meeting”), the shareholders approved a proposal to change the Company’s state of incorporation to Delaware from Oregon (the “Reincorporation”). | |
At the 2013 Shareholders Meeting, shareholders also approved the amendment and restatement of the Company’s Articles of Incorporation to increase the authorized capital stock from 10,000,000 shares of Common Stock, no par value per share, and 500,000 shares of preferred stock, no par value, to 90,000,000 shares of Common Stock, par value $0.0001 per share, and 30,000,000 shares of “Blank Check” Preferred Stock, par value $0.0001 per share. | |
The Reincorporation and the amendment and restatement of the Company’s Articles of Incorporation were effective March 20, 2014. | |
d) Proposed Reverse Stock Split of Common Stock | |
At the 2013 Shareholders Meeting, shareholders approved the proposal to grant the Board of Directors the authority to effect a reverse stock split of its Common Stock. The proposal permits, but does not require, the Board of Directors to effect a reverse stock split of the issued and outstanding Common Stock at any time prior to 18 months from the date of approval by a ratio of not less than one - for - two and not more than one - for - ten, with the exact ratio to be set within this range at the sole discretion of the Board of Directors. The Board reserves the right to elect to abandon the Reverse Stock Split, including any or all proposed reverse stock split ratios, if it determines, in its sole discretion, that the Reverse Stock Split is no longer in the best interests of the Company and its shareholders. As of the date of this report, the Board of Directors had not acted to effect a reverse stock split of the Common Stock. |
Note_10_Subsequent_Events
Note 10 - Subsequent Events | 3 Months Ended | |||
Mar. 31, 2014 | ||||
Subsequent Events [Abstract] | ' | |||
Subsequent Events [Text Block] | ' | |||
Note 10. Subsequent Events | ||||
a) On April 4, 2014, the Company’s operating subsidiary, Paulson Investment Company, Inc. (“PIC”), completed the sale of a term life insurance policy on the life of its founder, Chester L.F. Paulson (the “Policy”), to Coventry First LLC (“Coventry”) for cash proceeds of $2,203,333, net of commissions and expenses. The Policy, with a face amount of $7,000,000, was sold to Coventry pursuant to a Life Settlement Contract between the parties. The Life Settlement Contract contains customary covenants, representations and warranties of PIC, and PIC agrees to indemnify Coventry against certain losses, including losses related to (i) PIC’s failure to perform any of its obligations under the Life Settlement Contract, (ii) any representation made, or information provided, by PIC to Coventry which Coventry has reason to believe was false or misleading at the time it was provided, and (iii) any claim by the insurer, John Hancock Life Insurance Company (U.S.A.), or any other party that the original owner or any beneficiary of the Policy lacked an insurable interest in the life of Mr. Paulson. | ||||
It is contemplated that the cash proceeds from the sale of the Policy will be contributed to a liquidating trust to be created for the benefit of the Company’s shareholders of record as of October 11, 2013. | ||||
b) On April 10, 2014, the Board of Directors granted 180,000 common shares to officers and directors under the 2013 Equity Incentive Plan. | ||||
c) On May 8, 2014, the Company, Variation Biotechnologies (US), Inc., a Delaware corporation (“VBI”), and VBI Acquisition Corp., a special purpose wholly owned subsidiary of the Company (the “Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which, subject to the satisfaction or waiver of certain conditions, the Merger Sub will merge with and into VBI, with VBI surviving as a wholly owned subsidiary of the Company (the “VBI Merger”). | ||||
At the effective time of the VBI Merger, each share of VBI common stock and Series A Preferred Stock will be converted into the right to receive 1.226 shares of the Company’s common stock, par value $0.0001 per share (the “Paulson Common Stock”) (as may be adjusted under the Merger Agreement, the “Exchange Ratio”). No fraction of a share of Paulson Common Stock will be issued, but instead each holder of shares of VBI common stock and Series A Preferred Stock who would otherwise be entitled to a fraction of a share of Paulson Common Stock will receive from the Company one full share of Paulson Common Stock (i.e., rounded up to the nearest whole share). The total number of shares of Paulson Common Stock to be issued to the former holders of VBI common stock and Series A Preferred Stock at the effective time of the VBI Merger would be 42,772,713. These newly issued shares, together with the options to purchase shares of VBI common stock that will be converted into options to purchase shares of Paulson Common Stock (and will be assumed by the Company at the effective time of the VBI Merger), would represent approximately 41.5% of the shares of Paulson Common Stock on a fully diluted basis after the effective time of the VBI Merger (not including shares of Paulson Common Stock issued to VBI stockholders in the $11 million private placement contemplated to be completed concurrently with the VBI Merger). | ||||
Subject to, and immediately prior to the effective time of, the VBI Merger, all outstanding convertible debt securities issued by VBI will be converted into capital stock of VBI, and at the effective time of the VBI Merger, VBI shall have no convertible notes or other indebtedness outstanding (other than the Venture Debt, as defined in the Merger Agreement). At the effective time of the VBI Merger, each outstanding option to purchase a share of VBI common stock, whether vested or unvested, and so long as such option has not, prior to the effective time of the VBI Merger, been exercised, cancelled, terminated or expired, will be deemed to constitute an option to purchase, on the same terms and conditions, a number of shares of Paulson Common Stock (rounded down to the nearest whole share) equal to the product of (i) the number of shares of VBI common stock subject to such option multiplied by (ii) the Exchange Ratio (defined above), at an exercise price per share of Paulson Common Stock equal to the quotient of (i) the exercise price per share of VBI common stock (rounded up to the nearest cent) subject to such option divided by (ii) the Exchange Ratio. | ||||
The Company and VBI each made customary representations, warranties and covenants in the Merger Agreement, including, among others, covenants by each of the Company and VBI to, subject to certain exceptions, conduct its business in the ordinary course during the interim period between the execution of the Merger Agreement and the consummation of the VBI Merger. | ||||
The obligation of the parties to consummate the VBI Merger is subject to a number of closing conditions, including, among other things: | ||||
• | the Company’s stockholders will have approved the VBI Merger proposal at a special meeting of its shareholders to be held at a time and place to be determined, and VBI stockholders will have approved the VBI Merger; | |||
• | the name of Paulson Capital (Delaware) Corp. must have been changed to “VBI Vaccines Inc.”; | |||
• | the Company must have delivered to an escrow agent instructions as to the reserve for issuance of the number of shares of Paulson Common Stock equal to $1,000,000 divided by the price per share used in the private placement (described in the Merger Agreement) and must have deposited or caused to be deposited $250,000 with the escrow agent, each allocated among the VBI stockholders as provided in the Merger Agreement; | |||
• | the Company must have furnished to VBI the Liquidating Trust Indemnification Agreement (as defined in the Merger Agreement), pursuant to which the Liquidating Trust agrees to stand behind the Company's indemnification obligations in the Merger Agreement; | |||
• | the Company’s Board must have, upon the effective time of the VBI Merger: (i) increased the Company’s Board to seven directors; (ii) elected to the Board (a) the following five VBI director designees: Jeff Baxter, Steven Gillis (Chairman), Michael Steinmetz, Michel De Wilde and Sam Chawla; and (b) Trent Davis and Alan Timmins, as the two designees of the Company; and (iii) appointed as the officers of the Company Jeff Baxter, President & CEO; David Anderson, Senior Vice President, Research; Egidio Nascimento, Chief Financial Officer; Marc Kirchmeier, Vice President, Formulations; and T. Adam Buckley, Vice President, Operations & Project Management; | |||
• | VBI and the Company must have in escrow for the benefit of the surviving company in the VBI Merger aggregate gross proceeds of at least $11,000,000 (rounded up to the nearest thousand) (or such lesser amount agreed to in writing by VBI in its sole discretion) received pursuant to a private placement of Paulson Common Stock solely to accredited investors in compliance with the exemption from registration provided by Section 4(a)(2) of the Securities Act or Rule 506 of Regulation D thereunder, on terms satisfactory to VBI and the Company; and the conditions to closing such private placement must have been satisfied and such amount of gross proceeds must be unencumbered cash available to the surviving company in the VBI Merger at the effective time of the VBI Merger; | |||
• | holders of no more than 5% of the outstanding shares of VBI common stock and Series A Preferred Stock will have exercised, or remained entitled to exercise, their appraisal rights under Section 262 of the Delaware General Corporation Law; | |||
• | the Company shall have entered into definitive documentation, reasonably acceptable to VBI, whereby the Company’s ownership in its operating subsidiary, Paulson Investment Company, Inc. (“PIC”) shall be reduced to 0.01%, by the issuance of equity securities to holders of convertible promissory notes of PIC and to members of PIC’s management team; | |||
• | NASDAQ must have approved an initial listing application of VBI on a post-merger basis for purposes of listing of Paulson Common Stock on NASDAQ following the VBI Merger; the Company must be in compliance with all of NASDAQ’s criteria for continued listing; and Paulson Common Stock shall continue to be listed on NASDAQ from the date of the Merger Agreement through the closing of the VBI Merger; | |||
• | the Company must have completed the actions voted upon at the Annual Meeting of Shareholders as described in the Company’s Definitive Proxy Statement on Schedule 14A filed by the Company with the SEC on October 18, 2013; | |||
• | the Company must have available not less than $5,250,000 in unencumbered cash invested by Hudson Bay Master Fund Ltd. and DKR Ventures, LLC (each a "July 2013 Investor") or their designees pursuant to the series of agreements described in the Current Report on Form 8-K/A filed with the SEC by the Company on August 30, 2013 (the “July 2013 Financing Documents”), all of the conditions to closing the transactions contemplated by the July 2013 Financing Documents must have been satisfied at or prior to the effective time of the VBI Merger and the $5,250,000 gross proceeds resulting from such closing must have been released from escrow to the Company at or prior to the effective time of the VBI Merger; | |||
• | the Company shall have no material indebtedness for money borrowed except as directly attributable to PIC as set forth in the Merger Agreement and presented in the Company's financial statements provided pursuant to the Merger Agreement solely for the purpose of complying with ASC 810 – Consolidation; notwithstanding, however, that contemporaneously with the closing of the VBI Merger, the Company may issue up to $6 million in principal amount of non-convertible venture debt instruments to venture debt investors approved by VBI, including, without limitation, Perceptive Advisors LLC or its affiliated investment vehicles; | |||
• | the Company’s Class A Warrants must have been exchanged for Paulson Common Stock; | |||
• | the Company’s Class B Warrants must have been converted into Paulson Common Stock (or modified or exchanged for a new class of preferred stock of the Company); | |||
• | all of the Company’s Series A Preferred Stock issued pursuant to the July 2013 Financing Documents must have been converted to Paulson Common Stock; | |||
• | the Interest Preservation Letter Agreement included in the July 2013 Financing Documents must have been terminated and must not be deemed a “Dilutive Acquisition” and must have no effect with respect to the VBI Merger or any issuances prior thereto; | |||
• | The July 2013 Investors must not have any continuing “most favored nation” rights, registration rights (provided the provisions of Rule 144 are then applicable), anti-dilution rights or any other special investor rights except as may be granted to all investors in the private placement; | |||
• | the Company must not have outstanding special investor rights (such as anti-dilution rights or registration rights) of holders of Paulson Common Stock and preferred stock other than registration rights of the July 2013 Investors if no Rule 144 resale exemption is available to them and other than as may be granted to all the investors in the private placement; | |||
• | prior to the effective time of the VBI Merger, PIC shall have (i) obtained all requisite consents or approvals of FINRA pursuant to FINRA Conduct Rule 1017 relating to the change in equity ownership of PIC that may be deemed to result as a consequence of (A) the merger and (B) the issuances of PIC (or its successor) equity interests upon conversion of notes of PIC, in exchange for PIC Series B Preferred Stock and to PIC's management; | |||
• | the Company must have filed an amendment to its Certificate of Incorporation setting forth a certificate of designation of a new class of preferred stock of the Company (as required by the terms of secured convertible promissory notes issued by VBI in March 2014) that will not have any economic or voting preferences over the common stock of the Company but will have limits on the amount of common stock that may be issued upon conversion of such preferred stock; | |||
• | the Company must have obtained stockholder approval of the reverse split proposal and effected a reverse split of the outstanding Paulson Common Stock if required for its market price on the NASDAQ Capital Market to be at least $4.00 per share at the closing of the VBI Merger or for such longer period as is required by the listing rules of the NASDAQ Capital Market; and | |||
• | the Company must have obtained the stockholder approval of the VBI Equity Plan proposal, to become effective upon the closing of the VBI Merger; | |||
The Merger Agreement contains certain other termination rights for each of the Company and VBI, including the right of each party to terminate the Merger Agreement if the VBI Merger has not been consummated by July 25, 2014. In addition, VBI has the right to terminate the Merger Agreement if the Company becomes the subject of any proceeding of NASDAQ to delist the Company. | ||||
Concurrently with the execution of the Merger Agreement, certain stockholders of VBI and a holder of approximately 40% of the Paulson Common Stock, respectively, have entered into Voting Agreements, referred to as the “voting agreements,” pursuant to which those VBI and Company stockholders have, among other matters, agreed to support the VBI Merger and the other transactions contemplated by the VBI Merger. Under the voting agreements, in addition to agreeing to vote in favor of approval of the VBI Merger and the Merger Agreement and the transactions contemplated thereby, each VBI stockholder and the Company stockholder party to a voting agreement have agreed to not transfer, sell, offer to sell, exchange, assign, pledge or otherwise dispose of or encumber any of the VBI stock or stock of the Company held by such stockholders prior to the VBI Merger becoming effective, the termination of the Merger Agreement, or the amendment of the voting agreement in a manner adverse to the stockholder, whichever occurs first. | ||||
The foregoing description of the VBI Merger does not purport to be complete, and is qualified in its entirety by reference to the Company’s Preliminary Proxy Statement on Schedule 14A filed with the SEC on May 9, 2014 and its Current Report on Form 8-K filed with the SEC on May 14, 2014. |
Note_3_Earnings_Per_Share_Tabl
Note 3 - Earnings Per Share (Tables) | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
Earnings Per Share [Abstract] | ' | ||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | ' | ||||
Net income (loss) used in earnings per share calculations for March 31, | 2014 | ||||
Net loss attributed to Legacy Shareholders | $ | (3,235,155 | ) | ||
Net income attributed to Non-Legacy Shareholders | 965,317 | ||||
Net loss | $ | (2,269,838 | ) | ||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] | ' | ||||
Non-Legacy Shareholder earnings per share for March 31, | 2014 | ||||
Shares used for basic net income per share | 6,285,929 | ||||
Effect of dilutive stock options | 34,934 | ||||
Effect of contingently issuable common shares | 15,524,586 | ||||
Shares used for diluted net income per share | 21,845,449 | ||||
Stock options not included in diluted net income per share because their effect would have been antidilutive | 180,000 |
Note_4_Fair_Value_Measurements1
Note 4 - Fair Value Measurements (Tables) | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||||||||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Table Text Block] | ' | |||||||||||||||||||
31-Mar-14 | 31-Dec-13 | |||||||||||||||||||
Fair Value | Input Level | Fair Value | Input Level | |||||||||||||||||
Trading and investment securities owned: | ||||||||||||||||||||
Corporate equities, marketable | $ | 4,044 | Level 1 | $ | 3,720 | Level 1 | ||||||||||||||
Corporate equities, not readily marketable | 717 | Level 3 | 1,122 | Level 3 | ||||||||||||||||
Corporate options/warrants, marketable | 39 | Level 1 | 67 | Level 1 | ||||||||||||||||
Underwriter warrants | 3,823 | Level 3 | 5,276 | Level 3 | ||||||||||||||||
Underwriter warrants payable to employees | (2,527 | ) | Level 3 | (3,641 | ) | Level 3 | ||||||||||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | ' | |||||||||||||||||||
Underwriter | Underwriter | Not Readily | ||||||||||||||||||
Warrants | Warrants | Marketable | ||||||||||||||||||
Payable to | Investment | |||||||||||||||||||
Employees | Securities | |||||||||||||||||||
Balance, December 31, 2013 | $ | 5,276 | $ | (3,641 | ) | $ | 1,122 | |||||||||||||
Sale of investment in privately held company | - | - | (205 | ) | ||||||||||||||||
Reclassification of investment from Level 3 to Level 1 * | - | - | (200 | ) | ||||||||||||||||
Net unrealized gain (loss), included as a component of investment income related to securities held at March 31, 2014 | (1,453 | ) | 1,114 | - | ||||||||||||||||
Balance, March 31, 2014 | $ | 3,823 | $ | (2,527 | ) | $ | 717 | |||||||||||||
Underwriter | Underwriter | Not Readily | ||||||||||||||||||
Warrants | Warrants | Marketable | ||||||||||||||||||
Payable to | Investment | |||||||||||||||||||
Employees | Securities | |||||||||||||||||||
Balance, December 31, 2012 | $ | 1,548 | $ | - | $ | 4,878 | ||||||||||||||
Fair value of underwriter warrants received included as a component of corporate finance income | - | - | - | |||||||||||||||||
Investment in privately-held company | - | - | - | |||||||||||||||||
Net unrealized gain (loss), included as a component of investment loss related to securities held | 693 | - | (20 | ) | ||||||||||||||||
Underwriter warrants exercised or expired included as a component of investment income | (92 | ) | - | - | ||||||||||||||||
Balance, March 31, 2013 | $ | 2,149 | $ | - | $ | 4,858 | ||||||||||||||
Fair Value Inputs, Assets, Quantitative Information [Table Text Block] | ' | |||||||||||||||||||
Quantitative Information about Level 3 Fair Value Measurements | ||||||||||||||||||||
Fair Value at | Valuation | Unobservable | Range | Weighted | ||||||||||||||||
31-Mar-14 | Technique | Input | Average | |||||||||||||||||
Minimum | Maximum | |||||||||||||||||||
Investments in privately-held companies | $ | 717 | Market approach; Asset approach | Discount rate for lack of liquidity | 13 | % | 20 | % | 15.3 | % | ||||||||||
Underwriter warrants | 3,823 | |||||||||||||||||||
Underwriter warrants payable to employees* | (2,527 | ) | Black-Scholes Option Pricing Model | Volatility index of comparable companies | 61.2 | % | 92.6 | % | 78.4 | % | ||||||||||
$ | 2,013 |
Note_2_Change_of_State_of_Inco1
Note 2 - Change of State of Incorporation and Articles of Incorporation (Details) (USD $) | Mar. 31, 2014 | Mar. 20, 2014 | Dec. 31, 2013 | Nov. 08, 2013 | Mar. 20, 2014 | Mar. 20, 2014 | Mar. 20, 2014 |
Common Stock [Member] | Preferred Stock [Member] | Paulson Capital Corp [Member] | |||||
Paulson Capital Corp [Member] | Paulson Capital Corp [Member] | ||||||
Note 2 - Change of State of Incorporation and Articles of Incorporation (Details) [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Common Stock, Par or Stated Value Per Share | $0.00 | $0.00 | $0.00 | $0.00 | ' | ' | $0 |
Conversion of Stock, Shares Converted Per Share Due to Reincorporation of Entity (in Shares) | ' | ' | ' | ' | 1 | 1 | ' |
Preferred Stock, Par or Stated Value Per Share | $0.00 | $0.00 | $0.00 | ' | ' | ' | $0 |
Note_3_Earnings_Per_Share_Deta
Note 3 - Earnings Per Share (Details) | 3 Months Ended |
Mar. 31, 2014 | |
Earnings Per Share [Abstract] | ' |
Incremental Common Shares Attributable to Dilutive Effect of Contingently Issuable Shares | 15,524,586 |
Note_3_Earnings_Per_Share_Deta1
Note 3 - Earnings Per Share (Details) - Net Income (Loss) Used in Earnings Per Share (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Note 3 - Earnings Per Share (Details) - Net Income (Loss) Used in Earnings Per Share [Line Items] | ' | ' |
Net income attributed to Shareholders | ($2,269,838) | ($240,391) |
Legacy Shareholders [Member] | ' | ' |
Note 3 - Earnings Per Share (Details) - Net Income (Loss) Used in Earnings Per Share [Line Items] | ' | ' |
Net income attributed to Shareholders | -3,235,155 | ' |
Non-Legacy Shareholders [Member] | ' | ' |
Note 3 - Earnings Per Share (Details) - Net Income (Loss) Used in Earnings Per Share [Line Items] | ' | ' |
Net income attributed to Shareholders | $965,317 | ' |
Note_3_Earnings_Per_Share_Deta2
Note 3 - Earnings Per Share (Details) - Antidilutive Shares | 3 Months Ended |
Mar. 31, 2014 | |
Antidilutive Shares [Abstract] | ' |
Shares used for basic net income per share | 6,285,929 |
Effect of dilutive stock options | 34,934 |
Effect of contingently issuable common shares | 15,524,586 |
Shares used for diluted net income per share | 21,845,449 |
Stock options not included in diluted net income per share because their effect would have been antidilutive | 180,000 |
Note_4_Fair_Value_Measurements2
Note 4 - Fair Value Measurements (Details) | 3 Months Ended |
Mar. 31, 2014 | |
Note 4 - Fair Value Measurements (Details) [Line Items] | ' |
Underwriter Warrants Expiration Term | '5 years |
Minimum [Member] | ' |
Note 4 - Fair Value Measurements (Details) [Line Items] | ' |
Warrant Exercise Restriction Period | '6 months |
Maximum [Member] | ' |
Note 4 - Fair Value Measurements (Details) [Line Items] | ' |
Warrant Exercise Restriction Period | '1 year |
Note_4_Fair_Value_Measurements3
Note 4 - Fair Value Measurements (Details) - Disclosures Related to Financial Assets and Liabilities (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Trading and investment securities owned: | ' | ' |
Underwriter warrants | $3,823,000 | $5,276,000 |
Underwriter warrants payable to employees | 2,526,837 | 3,641,035 |
Equity Securities [Member] | Fair Value, Inputs, Level 1 [Member] | ' | ' |
Trading and investment securities owned: | ' | ' |
Corporate securities, marketable | 4,044,000 | 3,720,000 |
Corporate Options Warrants [Member] | Fair Value, Inputs, Level 1 [Member] | ' | ' |
Trading and investment securities owned: | ' | ' |
Corporate securities, marketable | 39,000 | 67,000 |
Fair Value, Inputs, Level 3 [Member] | ' | ' |
Trading and investment securities owned: | ' | ' |
Corporate equities, not readily marketable | 717,000 | 1,122,000 |
Underwriter warrants | 3,823,000 | 5,276,000 |
Underwriter warrants payable to employees | ($2,527,000) | ($3,641,000) |
Note_4_Fair_Value_Measurements4
Note 4 - Fair Value Measurements (Details) - Summary of Activity Related to Level 3 Financial Assets and Liabilities (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2013 | |||
Underwriter Warrants [Member] | Underwriter Warrants [Member] | Underwriter Warrants Payable To Employees [Member] | Not Readily Marketable Investment Securities [Member] | Not Readily Marketable Investment Securities [Member] | ||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ' | ' | ' | ' | ' | ' | ' | |||
Investment in privately-held company | ' | ' | ' | ' | ' | ($205,000) | ' | |||
Reclassification of investment from Level 3 to Level 1 * | ' | ' | ' | [1] | ' | ' | [1] | -200,000 | [1] | ' |
Net unrealized gain (loss), included as a component of investment | ' | ' | -1,453,000 | 693,000 | 1,114,000 | ' | -20,000 | |||
Underwriter warrants exercised or expired included as a component of investment income | ' | ' | ' | -92,000 | ' | ' | ' | |||
Balance | 3,823,000 | 5,276,000 | 5,276,000 | 1,548,000 | -3,641,000 | 1,122,000 | 4,878,000 | |||
Balance | $3,823,000 | $5,276,000 | $3,823,000 | $2,149,000 | ($2,527,000) | $717,000 | $4,858,000 | |||
[1] | On February 7, 2014, one of our Level 3 investments consummated a merger where a quoted price became available on an active market, and we reclassified it to a Level 1 investment. |
Note_4_Fair_Value_Measurements5
Note 4 - Fair Value Measurements (Details) - Quantitative Information about Level 3 Fair Value Measurements (USD $) | 3 Months Ended | |
Mar. 31, 2014 | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ' | |
Fair Value (in Dollars) | $2,013 | |
Investments in Privately-Held Companies [Member] | ' | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ' | |
Fair Value (in Dollars) | 717 | |
Valuation Technique | 'Market approach; Asset approach | |
Unobservable Input | 'Discount rate for lack of liquidity | |
Weighted Average | 15.30% | |
Investments in Privately-Held Companies [Member] | Minimum [Member] | ' | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ' | |
Range | 13.00% | |
Investments in Privately-Held Companies [Member] | Maximum [Member] | ' | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ' | |
Range | 20.00% | |
Underwriter Warrants [Member] | ' | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ' | |
Fair Value (in Dollars) | 3,823 | |
Underwriter Warrants Payable To Employees [Member] | ' | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ' | |
Fair Value (in Dollars) | ($2,527) | [1] |
Valuation Technique | 'Black-Scholes Option Pricing Model | [1] |
Unobservable Input | 'Volatility index of comparable companies | [1] |
Weighted Average | 78.40% | [1] |
Underwriter Warrants Payable To Employees [Member] | Minimum [Member] | ' | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ' | |
Range | 61.20% | [1] |
Underwriter Warrants Payable To Employees [Member] | Maximum [Member] | ' | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ' | |
Range | 92.60% | [1] |
[1] | Negative number reflects a reduction in the fair value of warrants payable to employees for the quarter ended March 31, 2014 and is recorded as a contra entry to underwriter warrant commissions. |
Note_5_Stockholders_Equity_Det
Note 5 - Stockholders' Equity (Details) (USD $) | 1 Months Ended | 3 Months Ended | 150 Months Ended | 0 Months Ended | 1 Months Ended | ||||
Jun. 30, 2008 | Mar. 31, 2014 | Mar. 31, 2014 | Jul. 25, 2013 | Sep. 30, 2001 | Mar. 19, 2014 | Jan. 29, 2014 | Jun. 19, 2013 | Mar. 31, 2014 | |
Common Stock [Member] | Common Stock [Member] | 2013 Equity Incentive Plan [Member] | 2013 Equity Incentive Plan [Member] | ||||||
2013 Equity Incentive Plan [Member] | |||||||||
Note 5 - Stockholders' Equity (Details) [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock Issued During Period, Shares, New Issues | ' | ' | ' | ' | ' | ' | 500,000 | ' | ' |
Sale of Stock, Price Per Share (in Dollars per share) | ' | ' | ' | ' | ' | ' | $0.50 | ' | ' |
Proceeds from Issuance of Common Stock (in Dollars) | ' | $250,000 | ' | ' | ' | ' | $250,000 | ' | ' |
Stock Repurchased During Period, Shares | ' | 0 | 731,989 | ' | ' | ' | ' | ' | ' |
Stock Repurchase Program, Number of Shares Authorized to be Repurchased | ' | ' | ' | ' | 600,000 | ' | ' | ' | ' |
Stock Repurchase Program, Increase In Amount Of Shares Authorized To Be Repurchased | 200,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Stock Repurchase Program, Remaining Number of Shares Authorized to be Repurchased | ' | 68,011 | 68,011 | ' | ' | ' | ' | ' | ' |
Escrow Deposit, Shares (in Dollars) | ' | ' | ' | $287,773 | ' | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | ' | ' | ' | ' | ' | ' | ' | ' | 1,500,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | ' | ' | ' | ' | ' | ' | ' | 300,000 | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | ' | ' | ' | ' | ' | 1,020,000 | ' | ' | ' |
Note_7_Change_in_Preferred_Sto1
Note 7 - Change in Preferred Stock Designation (Details) (USD $) | Mar. 31, 2014 | Mar. 20, 2014 | Dec. 31, 2013 | Mar. 20, 2014 | Mar. 20, 2014 |
Preferred Stock [Member] | Paulson Capital Corp [Member] | ||||
Paulson Capital Corp [Member] | |||||
Note 7 - Change in Preferred Stock Designation (Details) [Line Items] | ' | ' | ' | ' | ' |
Preferred Stock, Par or Stated Value Per Share | $0.00 | $0.00 | $0.00 | ' | $0 |
Conversion of Stock, Shares Converted Per Share Due to Reincorporation of Entity (in Shares) | ' | ' | ' | 1 | ' |
Note_8_Restructure_of_Paulson_1
Note 8 - Restructure of Paulson Investment Company, Inc. (Details) (USD $) | 3 Months Ended | 3 Months Ended | ||||
Dec. 31, 2013 | Mar. 31, 2013 | Mar. 31, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Mar. 31, 2013 | |
Subsequent Event [Member] | Series B Preferred Stock [Member] | Investor [Member] | ||||
Note 8 - Restructure of Paulson Investment Company, Inc. (Details) [Line Items] | ' | ' | ' | ' | ' | ' |
Proceeds from (Repayments of) Related Party Debt (in Dollars) | ' | $1,500,000 | ' | ' | ' | $1,500,000 |
Debt Instrument, Interest Rate, Stated Percentage | 5.00% | ' | ' | 10.00% | ' | 5.00% |
Debt Instrument, Conversion Feature, Ownership Interest Percent | ' | ' | ' | ' | ' | 35.00% |
Stock Issued During Period, Shares, New Issues (in Shares) | ' | ' | ' | ' | 215,438 | ' |
Stock Issued During Period, Value, New Issues (in Dollars) | ' | ' | ' | ' | 1,500,000 | ' |
Guarantor Obligations, Liquidation Proceeds, Percentage | ' | ' | ' | ' | 15.79% | ' |
Membership Interest in Converted Entity Exchanged from All Shares of Series B Preferred Stock, Percent | ' | ' | ' | 12.50% | ' | ' |
Proceeds from Notes Payable (in Dollars) | $700,000 | ' | ' | ' | ' | ' |
Convertible Preferred Stock Percent | ' | ' | 11.60% | ' | ' | ' |
Note_9_Corporate_Reorganizatio1
Note 9 - Corporate Reorganization (Details) (USD $) | 1 Months Ended | 3 Months Ended | 0 Months Ended | 1 Months Ended | 3 Months Ended | 0 Months Ended | |||||||||||
Jul. 25, 2013 | Mar. 31, 2014 | Mar. 20, 2014 | Dec. 31, 2013 | Nov. 08, 2013 | Jul. 25, 2013 | Jul. 25, 2013 | Jan. 29, 2014 | Jul. 25, 2013 | Jul. 25, 2013 | Jul. 25, 2013 | Jun. 30, 2013 | Nov. 08, 2013 | Nov. 08, 2013 | Nov. 08, 2013 | Nov. 08, 2013 | Nov. 08, 2013 | |
Class A Warrant [Member] | Class B Warrant [Member] | Common Stock [Member] | Common Stock [Member] | Series A Preferred Stock [Member] | Series B Preferred Stock [Member] | Series B Preferred Stock [Member] | No Par Common Stock [Member] | No Par Preferred Stock [Member] | Blank Check Preferred Stock [Member] | Minimum [Member] | Maximum [Member] | ||||||
Series B Preferred Stock [Member] | Series B Preferred Stock [Member] | ||||||||||||||||
Note 9 - Corporate Reorganization (Details) [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Proceeds from Issuance of Private Placement (in Dollars) | $5,250,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | ' | ' | ' | ' | ' | ' | ' | ' | 287,773 | 500,000 | ' | ' | ' | ' | ' | ' | ' |
Preferred Stock Stated Value (in Dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.81 | $0.35 | ' | ' | ' | ' | ' | ' |
Conversion Ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.305640603 | ' | ' | ' | ' | ' | ' | ' |
Convertible Preferred Stock, Shares Issued upon Conversion | ' | ' | ' | ' | ' | 7,500,000 | 13,559,407 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Class of Warrant or Right, Exercise Price of Warrants or Rights (in Dollars per Item) | ' | ' | ' | ' | ' | 0.8 | 0.35 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock Issued During Period, Shares, New Issues | ' | ' | ' | ' | ' | ' | ' | 500,000 | ' | ' | ' | 215,438 | ' | ' | ' | ' | ' |
Sale of Stock, Price Per Share (in Dollars per share) | ' | ' | ' | ' | ' | ' | ' | $0.50 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Proceeds from Issuance of Common Stock (in Dollars) | ' | $250,000 | ' | ' | ' | ' | ' | $250,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common Stock, Shares Authorized | ' | 90,000,000 | ' | 90,000,000 | 90,000,000 | ' | ' | ' | ' | ' | ' | ' | 10,000,000 | ' | ' | ' | ' |
Preferred Stock, Shares Authorized | ' | 30,000,000 | ' | 30,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 500,000 | 30,000,000 | ' | ' |
Common Stock, Par or Stated Value Per Share (in Dollars per share) | ' | $0.00 | $0.00 | $0.00 | $0.00 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred Stock, Par or Stated Value Per Share (in Dollars per share) | ' | $0.00 | $0.00 | $0.00 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.00 | ' | ' |
Stockholders' Equity Note, Stock Split, Conversion Ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2 | 10 |
Note_10_Subsequent_Events_Deta
Note 10 - Subsequent Events (Details) (USD $) | 1 Months Ended | 0 Months Ended | 0 Months Ended | 0 Months Ended | ||||||||||
Jul. 25, 2013 | Mar. 31, 2014 | Mar. 20, 2014 | Dec. 31, 2013 | Nov. 08, 2013 | Apr. 10, 2014 | 8-May-14 | 8-May-14 | Apr. 04, 2014 | 8-May-14 | 8-May-14 | 8-May-14 | 8-May-14 | Mar. 19, 2014 | |
Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Common Stock [Member] | ||||||
Common Stock [Member] | Common Stock [Member] | Each Share of VBI Common and Series A Preferred Stock [Member] | Conventry First LLC [Member] | PIC [Member] | VBI [Member] | Minimum [Member] | 2013 Equity Incentive Plan [Member] | |||||||
2013 Equity Incentive Plan [Member] | ||||||||||||||
Note 10 - Subsequent Events (Details) [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Proceeds from Sale of Insurance Investments | ' | ' | ' | ' | ' | ' | ' | ' | $2,203,333 | ' | ' | ' | ' | ' |
Life Insurance, Corporate or Bank Owned, Amount | ' | ' | ' | ' | ' | ' | ' | ' | 7,000,000 | ' | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in Shares) | ' | ' | ' | ' | ' | 180,000 | ' | ' | ' | ' | ' | ' | ' | 1,020,000 |
Conversion of Stock, Shares Converted Per Share Due to Reincorporation of Entity (in Shares) | ' | ' | ' | ' | ' | ' | ' | 1.226 | ' | ' | ' | ' | ' | ' |
Common Stock, Par or Stated Value Per Share (in Dollars per share) | ' | $0.00 | $0.00 | $0.00 | $0.00 | ' | ' | ' | ' | ' | ' | $0.00 | ' | ' |
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in Shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 42,772,713 | ' | ' | ' |
Business Acquisition, Equity Interest Issued, Percent of Shares of Common Stock on Fully Diluted Basis | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 41.50% | ' | ' | ' |
Proceeds from Issuance of Private Placement | 5,250,000 | ' | ' | ' | ' | ' | 11,000,000 | ' | ' | ' | ' | ' | ' | ' |
Numerator in the Calculation of Reserve for Issuance of Common Stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,000,000 | ' | ' |
Minimum Cash to be Deposited with Escrow Agent | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 250,000 | ' | ' |
Number of Directors Required upon Effective Time of Merger | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7 | ' | ' |
Holders of Outstanding Shares of Acquiree's Common and Series A Preferred Stock to Exercise Their Appraisal Rights, Maximum Percent | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5.00% | ' | ' |
Noncontrolling Interest, Ownership Percentage by Parent | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.01% | ' | ' | ' | ' |
Minimum Amount of Unencumbered Cash from Investor | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,250,000 | ' | ' |
Maximum Principal Amount of Non-Convertible Venture Debt Instruments the Company may Issue | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $6,000,000 | ' | ' |
Share Price (in Dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $4 | ' |
Percent Ownership of Common Stock Represented by One Holder | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 40.00% | ' | ' |