Merriman Holdings, Inc. Announces Financial Results for the Fourth Quarter Ended December 31, 2010 and Fiscal Year 2010

Fourth Quarter Revenues Increased by 89% Year Over Year

Mar 30, 2011, 16:15 ET from Merriman Holdings, Inc.

SAN FRANCISCO, March 30, 2011 /PRNewswire/ -- Merriman Holdings, Inc. (Nasdaq: MERR) today released earnings for 2010.

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Fourth Quarter 2010 Financial Highlights(1)

  • Fourth quarter revenue was $10.9 million, representing a growth of 89% over the fourth quarter 2009.
    • Investment banking revenue was $5.3 million, a 191% increase from fourth quarter 2009;
    • Commissions revenue was $3.5 million, a 1% decrease from fourth quarter 2009; and
    • Principal transaction income resulted in a profit of $1.9 million comprised primarily of unrealized gains in the firm's warrant portfolio, compared to a gain of $110,000 in the fourth quarter 2009.
  • Net income was $1.3 million, or $0.57 per share, for the fourth quarter 2010 compared to net income of $13.4 million, or $7.49 per share, for the fourth quarter 2009.  However, 2009 net income was significantly higher due to the recognition of a $16.5 million non-cash gain associated with a change in the previously recorded warrant liability.  
  • The net income of $0.57 per share for the fourth quarter of 2010 was significantly higher than the net loss of $2.22 per share reported in the third quarter of 2010, primarily due to the closing of several investment banking transactions and increased principal transaction income during the fourth quarter.
  • The fourth quarter results included costs associated with the pending final settlement of the Cacchione/Del Biaggio legal matters.

"In 2010 we saw sharp improvement in our institutional brokerage and investment banking operations as a result of aggressively managing our core business of researching, trading, advising and financing fast-growing companies," said Alex Seiler, chief executive officer of Merriman Holding's broker/dealer, Merriman Capital, Inc. "Our positive momentum wouldn't have been possible without our dedicated team and selective, key hires we made over the past year in equity research, sales & trading, capital markets and investment banking. We continue to vigorously manage our cost structure with a focus on rationalizing variable expenses and maintaining very lean fixed costs."

2010 Financial Highlights(1)

  • Revenue was $30.7 million, representing a 43% increase over 2009.
    • Investment banking revenue was $13.4 million, an 85% increase over 2009, as a result of closing 28 transactions during 2010;
    • Commission revenue was $14.9 million for 2010, a 21% increase over 2009; and
    • Principal transactions provided a gain of $1.8 million for the year due to the realized and unrealized gains from the firm's trading activities, as well as the firm's warrant portfolio.
  • The net loss attributable to common shareholders for the year ended December 31, 2010 was $5.9 million, or $2.96 per share, compared to $10.7 million or $5.91 per share for 2009.
  • The company's cash loss from operations in 2010 was $1.5 million compared to $12.6 million in 2009.  The improvement is primarily a result of the final resolution of several legal matters.

Jon Merriman commented: "With the improvement in equity indices, institutional investors have participated more aggressively in transactions in our focus areas of Technology and Consumer, Media & Internet. This uptick in the markets boosted our investment banking revenue by nearly 200 percent in the fourth quarter from the same period in 2009.  We believe the markets have continued upside in 2011 despite a climate of high geopolitical volatility, and we are seeing a sharp increase in smaller cap M&A activity as larger companies buy growth.  I am also pleased with a very strong start to our Riverbank Partners division, which supports independent investment bankers by leveraging our existing institutional platform.  Although at an early stage, Riverbank is exceeding our expectations."

(1) Revenues and net income/loss related to Institutional Cash Distributors (ICD) have been reclassified as discontinued operations for the three and twelve months ended December 31, 2010 and December 31, 2009. As of December 31, 2010 and December 31, 2009, there were no assets or liabilities held for sale by the company that related to ICD that were included in the Company's consolidated statements of financial condition. 

Conference Call for the 2010 Results

Following this announcement, Merriman's management will host a teleconference call beginning at 2 PM (PT) / 5 PM (ET) today, Wednesday, March 30, 2011, to discuss the results and related matters.  Interested listeners and participants may access the live teleconference call by dialing (877) 941-8632 or may access the live Web broadcast at www.merrimanco.com.

About Merriman Holdings, Inc.

Merriman Holdings, Inc. (NASDAQ: MERR) is a financial services firm focused on fast-growing companies and the institutions that invest in them. The company offers high-quality investment banking, equity research, institutional services and corporate & venture services.  Merriman specializes in four industry growth sectors: Technology, Telecom, Consumer, Media & Internet and CleanTech Infrastructure. For more information, please go to http://www.merrimanco.com/.  Merriman Capital, Inc. is a member of FINRA and SIPC.

Note to Investors

This press release contains certain forward-looking statements based on our current expectations, forecasts and assumptions that involve risks and uncertainties. This release does not constitute an offer to sell or a solicitation of offers to buy any securities of the Company. Forward-looking statements in this release are based on information available to us as of the date hereof. Our actual results may differ materially from those stated or implied in such forward-looking statements, due to risks and uncertainties associated with our business, which include the risk factors disclosed in our Form 10-K  filed on March, 30, 2011. Forward-looking statements include statements regarding our expectations, beliefs, intentions or strategies regarding the future and can be identified by forward-looking words such as "anticipate," believe," "could," "estimate," "expect," "intend," "may," "should," and "would" or similar words. We assume no obligation to update the information included in this press release, whether as a result of new information, future events or otherwise. The Form 10-K  filed on March  30, 2011 and the Form 10-Q filed on November 15, 2010, together with this press release and the financial information contained herein, are available on our website, www.merrimanco.com. Please click on "Investor Relations."

MERRIMAN HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited) 

Year Ended December 31,

2010

2009

Revenues:

Commissions

$ 14,937,938

$  12,391,284

Principal transactions

1,784,868

(18,729)

Investment banking

13,412,832

7,236,059

Other

530,673

1,868,398

Total revenues

30,666,311

21,477,012

Operating expenses:

Compensation and benefits

20,714,184

16,234,001

Brokerage and clearing fees

1,483,436

931,660

Professional services

1,669,937

2,245,304

Occupancy and equipment

1,910,553

2,094,455

Communications and technology

2,006,615

2,790,462

Depreciation and amortization

401,346

477,729

Travel and entertainment

1,226,378

832,636

Legal services and litigation settlement expense

3,410,914

7,738,555

Cost of underwriting capital

1,068,520

-

Other

2,086,122

1,921,417

Total operating expenses

35,978,005

35,266,219

Operating loss

(5,311,694)

(13,789,207)

Other income

25,418

2,000,000

Change in warrant liability

-

6,910,656

Interest income

13,576

15,658

Interest expense

(165,828)

(1,341,753)

Loss from continuing operations before income taxes

(5,438,528)

(6,204,646)

Income tax benefit

5,005

627,923

Loss from continuing operations

(5,433,523)

(5,576,723)

Income from discontinued operations

95,104

114,960

Net loss

(5,338,419)

(5,461,763)

Preferred stock deemed dividend

-

(5,066,702)

Preferred stock cash dividend

(591,125)

(192,100)

Net loss attributable to common shareholders

$ (5,929,544)

$ (10,720,565)

Basic and diluted net loss per share:

Loss from continuing operations

$          (2.71)

$            (3.08)

Income from discontinued operations

0.04

0.06

Net loss

$          (2.67)

$            (3.02)

Net loss attributable to common shareholders

$          (2.96)

$            (5.91)

Weighted average number of common shares:

Basic and diluted

2,002,305

1,813,378

MERRIMAN HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(unaudited)

As of December 31,

ASSETS

2010

2009

Cash and cash equivalents

$    4,898,093

$    5,656,750

Securities owned:

Marketable, at fair value

2,401,722

4,728,940

Non-marketable, at estimated fair value

2,741,452

272,463

Other

-

67,448

Restricted cash

965,000

1,072,086

Due from clearing broker

34,072

2,546,581

Accounts receivable, net

1,574,644

470,992

Prepaid expenses and other assets

313,537

801,946

Equipment and fixtures, net

136,706

506,535

Total assets

$  13,065,226

$  16,123,741

LIABILITIES AND STOCKHOLDERS’ EQUITY

Liabilities:

Accounts payable

$       361,237

$       346,220

Commissions and bonus payable

3,240,021

4,133,924

Accrued expenses and other

2,833,294

2,763,016

Securities sold, not yet purchased

-

161,461

Deferred revenue

175,712

304,334

Notes payable - short term, net

259,532

-

Notes payable to related parties - short term

330,000

-

Capital lease obligation

120,453

397,958

Subordinated notes payable to related parties - long term, net

809,305

-

Total liabilities

8,129,554

8,106,913

Stockholders’ equity:

Convertible Preferred stock, Series A–$0.0001 par value; 2,000,000 shares

authorized; 2,000,000 shares issued and 0 shares outstanding as of

December 31, 2010 and 2009; aggregate liquidation

preference of $0

-

-

Convertible Preferred stock, Series B–$0.0001 par value; 12,500,000 shares

authorized; 8,750,000 shares issued and 0 shares outstanding as of

December 31, 2010 and 2009; aggregate liquidation preference of $0

-

-

Convertible Preferred stock, Series C–$0.0001 par value; 14,200,000 shares

authorized; 11,800,000 shares issued and 0 shares outstanding as of

December 31, 2010 and 2009; aggregate liquidation preference of $0

-

-

Convertible Preferred stock, Series D–$0.0001 par value; 24,000,000

shares authorized, 23,720,916 and 23,720,916 shares issued and

22,058,128 and 23,720,916 shares outstanding as of December 31,

2010 and December 31, 2009, respectively; aggregate

liquidation preference of $9,484,995 prior to conversion, and pari

passu with common stock on conversion

2,206

2,372

Common stock, $0.0001 par value; 300,000,000 shares authorized;

2,384,499 and 1,855,444 shares issued and 2,355,063 and 

1,826,008 shares outstanding as of December 31, 2010 and

2009, respectively

239

183

Common stock payable

461,675

-

Additional paid-in capital

134,851,006

133,055,308

Treasury stock

(225,613)

(225,613)

Accumulated deficit

(130,153,841)

(124,815,422)

Total stockholders’ equity

4,935,672

8,016,828

Total liabilities and stockholders’ equity

$  13,065,226

$  16,123,741

SOURCE Merriman Holdings, Inc.



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