Pink OTC Markets Reports Results for the Three and Six Months Ended June 30, 2010

NEW YORK, Aug. 16 /PRNewswire-FirstCall/ -- Pink OTC Markets Inc. (OTCQX: PINK) announced strong revenues and net income for the three and six months ended June 30, 2010.

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For the three months ended June 30, 2010, revenues totaled $6.9 million, an increase of $1.3 million, or 24%, compared to the second quarter 2009 results of $5.6 million.  Net Income for the second quarter of 2010 rose approximately 3% to $686 thousand from $667 thousand in the second quarter of 2009.  Net Income per weighted average fully diluted shares outstanding remained flat at $.065 per share for both the three months ended June 30, 2010 and 2009.

"Our increased revenues and net income in the second quarter are primarily due to continued revenue growth in our Issuer Services and Market Data Licensing business lines," stated R. Cromwell Coulson, President and Chief Executive Officer.  "In particular, our highest market tier is rapidly expanding, with the number of OTCQX traded securities nearly doubling over the past twelve months."

Second Quarter Results

Net revenues, after redistribution fees and rebates, for the second quarter of 2010 increased approximately 22% to $6.2 million compared to $5.1 million for the second quarter of 2009.  The $1.1 million increase in net revenues was primarily the result of a $0.7 million increase in our Market Data Licensing and $0.4 million increase in our Issuer Services business lines as compared to the second quarter of 2009.  Market Data Licensing revenue growth was attributable to growth in users and increased sales of enterprise and subscriber licenses, as well as the remaining effects of an end-of-day licensing change that was phased in during 2009.  The growth in Issuer Services revenues was attributable to the significant addition of new OTCQX® companies as well as new and greater renewal subscription fees associated with the OTC Disclosure and News Service.

Operating expenses increased approximately 29% during the second quarter of 2010 to $5.1 million from $4.0 million in the second quarter of 2009, primarily as a result of increased compensation and professional services.  "We remain cautious regarding the FINRA QCF rule proposal, which, if enacted would be detrimental to OTC market participants and to investors," continued Coulson.  "If adopted, the QCF will have a negative impact on Pink OTC's market data revenues – as such, we have and will continue to devote the necessary legal resources to best protect our intellectual property rights."

Six Month Results

Revenues for the six months ended June 30, 2010 totaled $13.5 million, an increase of $2.5 million, or 23%, compared to $11.0 million in the first six months of 2009.  Net revenues, after redistribution fees and rebates, increased 22% from $10.1 million for the six months ended June 30, 2009 to $12.4 million for the six months ended 2010.  In keeping with the second quarter results, Market Data Licensing posted year-over-year revenue growth of $1.4 million in the first half of 2010 as compared to the first half of 2009, due to increased sales of subscriber licenses and the residual effect of price increases on certain products implemented in 2009.  Similarly, Issuer Services posted year-over-year revenue growth of $0.8 million due to increases in OTCQX participation and OTC Disclosure and News Service Subscriptions.

Operating expenses for the first half of 2010 totaled $9.6 million, representing an increase of $1.6 million, or approximately 21%, from $8.0 million for the comparable period in 2009.   This increase was primarily due to increased compensation costs incurred during the first six months of 2010, as well as an increase in legal fees.

Net Income for the first six months of 2010 totaled $1.6 million, an increase of $0.3 million, or 31%, compared to the Net Income results of $1.3 million for the first six months of 2009.  Net Income per weighted average fully diluted share for the first six months of 2010 increased 26% to $0.16 compared to $0.12 for first six months of 2009.

Restatement of Prior Financial Statements

As previously announced on August 6, 2010, Pink OTC Markets will restate its previous issued financial statements for the years ended December 31, 2006 and 2007 for Pink Sheets LLC, and 2009 for Pink OTC Markets Inc., the balance sheet for the year ended December 31, 2008, the statements of income, changes in shareholders' equity, and cash flows for the nine months ended December 31, 2008 as to Pink OTC Markets Inc. and the three months ended March 31, 2008 as to Pink Sheets LLC, and the interim financial statements for the quarters ended March 31, 2008, March 31, 2009, June 30, 2009, September 30, 2009 and March 31, 2010.

As described within the August 6th press release, the Company, based on our best estimate, believes that approximately $1.3 million of receivables from the years 2003 through 2008 are uncollectable and has adjusted the Accounts Receivable, Prepaid expenses and other current assets, and Retained Earnings balances on the attached December 31, 2009 Balance Sheet.  This estimate may be reduced by ongoing collection efforts, which may result in a restatement, possibly including the financial statements presented in this press release, which will be less than originally estimated.

Pink OTC Markets' Quarterly Report for the period ended June 30, 2010 and the August 6, 2010 press release relating to the restatement are available publicly at: www.otcqx.com and www.otcmarkets.com.

Dividend Declaration – Quarterly Cash Dividend

Contemporaneous with the announcement of earnings for the quarter ended June 30, 2010, Pink OTC Markets announced today that its Board of Directors authorized a quarterly cash dividend on its Class A common stock of $0.04 per share.  The dividend is payable on October 7, 2010 to stockholders of record on September 21, 2010.  The ex-dividend date is September 17, 2010.  This dividend payment is unchanged from the Company's three previous quarterly cash dividends.

R. Cromwell Coulson, President and Chief Executive Officer stated, "The Board and I believe that it is in the best interest of our shareholders to pay an attractive dividend.  In recognition of the strong cash flow produced by our operations, we are pleased to share these results with our stockholders by continuing our quarterly dividend at $0.04 per share."

Stock Buyback Program

On August 10, 2010, the Board of Directors authorized a stock repurchase of up to 250,000 shares of the Company's Class A Common Stock during the remainder of 2010.  The Company is authorized to purchase shares from time to time through block trades, in compliance with applicable law.  The number of shares ultimately repurchased, and the timing of the purchases, will depend upon market conditions, share price and other factors.  As of July 31, 2010, the Company had 10,368,729 shares outstanding.  

"The stock repurchase authorization demonstrated the confidence of our Board and our management in the growth of our company.  Our cash position has increased from $2.5 million to $6 million over the past year, while steadily paying down bank debt and issuing dividends to our shareholders.  Given our strong balance sheet and cash flow, the repurchase should not affect our ability to continue to invest in all aspects of our business," said R. Cromwell Coulson, President and Chief Executive Officer.

About Pink OTC Markets Inc.

Pink OTC Markets Inc. (OTCQX: PINK) operates the largest electronic interdealer quotation system for the trading of OTC equity securities.  We organize the U.S. OTC equity markets into three tiers based on the quality of information that companies choose to provide for investors.  Our top tier is OTCQX®, the quality-controlled marketplace for investor friendly companies that can meet our highest financial standards.  The next tier is OTCQB™, which is designed for smaller companies that are current in their reporting obligations to the SEC or a U.S. banking regulator, but have not qualified for OTCQX.  The final tier is the Pink Sheets® speculative trading marketplace that enables broker-dealers to provide high-quality execution services to their clients in any OTC traded equity securities.  

To learn more about how Pink OTC Markets' products and services make OTC markets open, transparent and connected, please visit our websites at www.otcmarkets.com, www.pinkotc.com and www.otcqx.com or contact us at [email protected].

About OTCQX

The OTCQX marketplace is the premier tier of the U.S. OTC securities market.  Investor-focused companies use the quality-controlled OTCQX platform to offer investors transparent trading, superior information, and easy access through their regulated U.S. broker-dealers.  The innovative OTCQX platform offers companies and their shareholders a level of marketplace services formerly available only on a U.S. exchange.  For more information and to view a full list of OTCQX companies, visit www.otcqx.com.

Forward-Looking Statements

Information set forth in this news release contains forward-looking statements, which involve a number of risks and uncertainties that could cause our actual results to differ materially from those reflected in the forward-looking statements.  Forward-looking statements can be identified by use of the words "expect," "project," "may," "might," potential," and similar terms.  Pink OTC Markets Inc. ("Pink OTC", "we" or the "Company") cautions readers that any forward-looking information is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking information.  Forward-looking statements involve a number of risks, uncertainties or other factors beyond Pink OTC's control.  These factors include, but are not limited to, our ability to implement our strategic initiatives, economic, political and market conditions and price fluctuations, government and industry regulation, U.S. and global competition and other factors.  We undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.  Factors that could cause or contribute to such differences include, but are not limited to, those discussed under the heading "Risk Factors" in Item VIII of our Initial Company Information and Disclosure Statement for the year ended December 31, 2009.  We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements.  Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

SOURCE Pink OTC Markets Inc.