Pink OTC Markets Reports Strong Results for the Three and Nine Months Ended September 30, 2010

NEW YORK, Nov. 15, 2010 /PRNewswire-FirstCall/ -- Pink OTC Markets Inc. (OTCQX: PINK) announced strong revenues and net income for the three and nine months ended September 30, 2010.

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For the three months ended September 30, 2010, revenues totaled $7.1 million, an increase of $0.9 million, or 14%, compared to the third quarter 2009 results of $6.2 million.  Net Income for the third quarter of 2010 increased approximately 13% to $1.1 million from $1.0 million in the third quarter of 2009.  Net Income per weighted average fully diluted shares outstanding increased by $0.01 from $0.09 for the third quarter of 2009 to $0.10 for the third quarter of 2010.

"Our increased revenues in the third quarter are primarily due to the continued strong growth of our Issuer Services and Market Data Licensing business lines," stated R. Cromwell Coulson, President and Chief Executive Officer.  "In particular, the rapid expansion of our OTCQX® market tier, along with substantial growth in OTC Disclosure and News Service subscribers, drove our positive revenue growth."

"By becoming the first interdealer quotation system registered with the SEC as an ATS, we will be recognized as the leading platform for broker-dealers to display quotes and negotiate trades in OTC equity securities.  We look forward to the positive effects of improvements to our infrastructure that will result from our compliance with Regulation ATS.  We continue to work diligently with our legal and regulatory advisors to complete the registration process with the SEC and the membership process with FINRA in a timely manner so we can commence operations of our ATS subsidiary in the first quarter of 2011."

"We also 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."

Third Quarter Results

Net revenues, after redistribution fees and rebates, for the third quarter of 2010 increased approximately 14% to $6.5 million compared to $5.7 million for the third quarter of 2009.  The $0.8 million increase in net revenues was primarily the result of a $0.5 million increase in our Issuer Services and a $0.4 million increase in our Market Data Licensing business lines as compared to the third quarter of 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™.  Market Data Licensing revenue growth was attributable to an influx 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.  

Operating expenses increased approximately 21% during the third quarter of 2010 to $4.9 million from $4.1 million in the third quarter of 2009, primarily as a result of increased compensation costs, professional services fees and technology and data communication expenses.  Included in the third quarter provision for income taxes was a $0.2 million reduction related to a discrete income tax benefit realized related to a research and development tax credit.

Nine Month Results

Revenues for the nine months ended September 30, 2010 totaled $20.6 million, an increase of $3.4 million, or 20%, compared to $17.2 million for the first nine months of 2009.  Net revenues, after redistribution fees and rebates, increased 19% from $15.8 million for the nine months ended September 30, 2009 to $18.9 million for the nine months ended September 30, 2010.  In keeping with the third quarter results, Market Data Licensing posted year-over-year revenue growth of $1.8 million in the first nine months of 2010 as compared to the same period in 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 $1.3 million due to increases in OTCQX participation and OTC Disclosure and News Service subscriptions.

Operating expenses for the first nine months of 2010 totaled $14.5 million, representing an increase of $2.5 million, or approximately 21%, from $12.0 million for the comparable period in 2009.  This increase was primarily due to increased compensation costs, professional fees and technology and data communications expenses incurred during the first nine months of 2010.

Net Income for the first nine months of 2010 totaled $2.7 million, an increase of $0.5 million, or 23%, compared to the Net Income results of $2.2 million for the first nine months of 2009.  Net Income per weighted average fully diluted share for the first nine months of 2010 increased to $0.26 as compared to $0.22 for first nine months of 2009.

Review of Prior Financial Statements

As previously announced, Pink OTC Markets is currently reviewing, and may restate, its previously 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 our August 6th press release, the Company, based on the best available information, 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 our December 31, 2009 Balance Sheet.  Our internal financial review may result in a restatement of certain previously issued financial statements, possibly including the financial statements presented in this press release.

Pink OTC Markets' Quarterly Report for the period ended September 30, 2010 is available publicly at http://www.otcmarkets.com/stock/PINK/financials.

Dividend Declaration – Quarterly Cash Dividend

Contemporaneous with the announcement of earnings for the quarter ended September 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 January 6, 2011 to stockholders of record on December 21, 2010.  The ex-dividend date is December 17, 2010.  This dividend payment is unchanged from the Company's four 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 our strong cash position, we are pleased to continue our quarterly dividend at $0.04 per share."

Appointment of General Counsel Daniel Zinn  

Pink OTC Markets is pleased to announce the appointment of Daniel Zinn to serve as the Company's General Counsel effective November 8, 2010.  In his new role, Dan will be a dedicated legal resource for the Company.

"Hiring a General Counsel is an important step in continuing to grow our infrastructure and evolve into a more mature corporation," said President and CEO R. Cromwell Coulson.  "Dan's years of experience advising the Company as our outside counsel provide him the institutional knowledge to add immediate value to our organization.  We are excited to have Dan as a member of our team."

About Pink OTC Markets Inc.

Pink OTC Markets Inc. (OTCQX: PINK) operates the largest electronic interdealer quotation and trading system for over 9,000 securities not listed on a U.S. stock exchange.  Pink OTC Markets segments these securities into three tiers: the quality-controlled OTCQX marketplace, the U.S. registered and reporting OTCQB marketplace, and the speculative trading Pink Sheets marketplace.  These three tiers constitute the third largest U.S. liquidity pool for trading public company shares, after The NASDAQ Stock Market, Inc. and The New York Stock Exchange.  Our products and services promote market transparency, improve price discovery, facilitate regulatory compliance, and increase the quality of issuer disclosure, to the benefit of all OTC market participants.

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.