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

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Mar 30, 2011, 04:15 ET

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