Merriman Holdings, Inc. Doubles Revenues First Half 2014 Over 2013

GlobeNewswire

Merriman_Square-01

SAN FRANCISCO - August 14, 2014 - Merriman Holdings, Inc. (MERR), the parent company of Merriman Capital, Inc., today released earnings for the second quarter ended June 30, 2014.

Second Quarter 2014 Financial Highlights:

  • Second quarter total revenue was $4.6 million, up $2.3 million or 98% when compared to $2.3 million in Q-2 2013 and flat with Q-1 2014:
    • Investment banking and DCN revenue was $2.3 million, a $1.5 million or a 187% increase when compared to $0.8 million in Q-2 2013;
    • Corporate services commissions and advisory revenue was $4.4 for first half 2014, versus $3.4 for 2013, roughly 30% increase;
    • Cash compensation (excluding the Financial Entrepreneur Platform) as a percentage of core business revenue was 48% for the first half of 2014, versus 72% for the first half of 2013;
    • The Digital Capital Network ("DCN") listed over $200 million of equity private placements at the end of the quarter, and facilitated roughly $23 million of transactions over the course of 1Q and 2Q.
  • Adjusted EBITDA was $210,000 in Q-2 2014, versus a loss of ($763,000) in Q-2 2013, and $1,155,000 in Q1 2014;
  • GAAP net loss attributable to common shareholders was $221,000 in Q-2 2014, as compared to GAAP net income of $653,000 in Q-1 2014 and a GAAP net loss of $1,309,000 in Q-2 2013.

"Our brokerage commissions business stabilized last year and is now also showing strong growth, up roughly 31% over the first half of last year. We doubled overall revenues while lowering expenses sharply, as we continue to focus on hiring senior executives with strong industry experience who are compensated solely on production. We have opened 120 new corporate services accounts this year as firms continue to exit the equities business, and we believe those new accounts will help accelerate our commissions business in the back half," said Jon Merriman, Chief Executive Officer. "Importantly, we believe that our DCN platform has considerable potential value, given its rapid growth since February to over $200 million in listings and $23 million of transactions facilitated by the platform. Now that we are well past the development stage for the DCN we are squarely focused on monetization and profitability of the platform. We will dedicate the balance of the year to unlocking that value for our shareholders."

"The capital formation business is moving into the digital age and with DCN we are at the forefront of that transition," added William J. Febbo, Chief Executive Officer of DCN. "While there has been a significant investment in crowdfunding for small private companies, the institutionally focused firms have stayed with traditional services and processes when it comes to capital markets. We are excited to see the number of issuers, funds and alternative investment products turning to DCN for distribution, and we are focused on making the experience for the investor simple, transparent and compliant. Technology finally is augmenting the effectiveness of the traditional bank capital raising process for our clients."
Bob Ward, former COO for the SunGard Transaction Network, now known as the SunGard Global Network and Merriman board member, commented, "I`ve had the opportunity to work with quite a few platform companies in the US, Europe and Asia over the last decade, and as a very active technology user I see DCN offering the cleanest, most robust platform solution in the marketplace today. DCN represents a paradigm shift in offering secure and compliant "crowdfunding for institutions," which I believe has the potential to become the Amazon of capital markets. The combination of Merriman`s regulatory infrastructure and Financial Entrepreneur Platform, coupled with constantly evolving technology, is creating a dynamic, powerful network effect."
Use of Non-GAAP Measures

Merriman Holdings, Inc. (the "Company") prepares its consolidated financial statements in accordance with the United States generally accepted accounting principles ("GAAP"). In addition to disclosing financial results prepared in accordance with GAAP, the Company discloses information regarding adjusted EBITDA, which differs from the term EBITDA as it is commonly used. In addition to adjusting net income/(loss) to exclude interest, depreciation and amortization, adjusted EBITDA also excludes stock-based compensation, bad debt, loss on restructuring and early extinguishment of debt. Adjusted EBITDA is not a measure of performance defined in accordance with GAAP. However, adjusted EBITDA is used internally in planning and evaluating the Company`s operating performance. Accordingly, management believes that disclosure of this metric offers investors, bankers and other shareholders an additional view of the Company`s operations that, when coupled with the GAAP results, provides a more complete understanding of the Company`s financial results.

Adjusted EBITDA should not be considered as an alternative to net income (loss) or to net cash used in operating activities as a measure of operating results or of liquidity. It may not be comparable to similarly titled measures used by other companies, and it excludes financial information that some may consider important in evaluating the Company`s performance. A reconciliation of GAAP net income (loss) to adjusted EBITDA is included in the accompanying financial schedules.

About Merriman Capital, Inc.

Merriman Capital, Inc. is a full service investment bank and Broker-Dealer that facilitates efficient capital formation through a proprietary digital network, and offers Capital Markets Advisory and comprehensive Corporate Brokerage services for public and private companies. The firm also provides equity and options execution services for sophisticated investors and differentiated research for high growth companies. Merriman Capital, Inc. is a wholly owned brokerage subsidiary of Merriman Holdings, Inc. (MERR) and is a leading advisory firm for publicly traded, high-growth companies.

Digital Capital Network, powered by Merriman Capital, is a capital marketplace that enables highly targeted and more efficient execution of transactions. Please visit our website for more information on how you can be a part of our Digital Capital Network: http://www.digitalcapitalnetwork.com.  Digital Capital Network, Inc. is a wholly owned subsidiary of Merriman Holdings, Inc.  All operations on the Digital Capital Network are currently being executed by Merriman Capital, Inc.

Merriman Capital, Inc. is a registered broker-dealer and member of The Financial Industry Regulatory Authority (FINRA) http://www.finra.org/ and the Securities Investor Protection Corporation (SIPC) http://www.sipc.org/.

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 any entity. 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 31, 2014. 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 31, 2014, together with this press release and the financial information contained herein, are available on our website, www.merrimanco.com. Please click on "Investor Relations."
At the Company:

Michael Doran
General Counsel
(415) 568-3905

William Febbo
Chief Operating Officer
(415) 248-5603

MERRIMAN HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) 

   Three Months Ended June 30,    Six Months Ended June 30,
  2014   2013   2014   2013
        
Revenues        
Commissions  $  1,216,656    $  1,200,179    $  2,598,473    $  2,218,360
Principal transactions 517,943    (232,384)   766,555   35,378
Investment banking 2,346,749   816,660   4,765,981   1,061,695
Advisory and other 535,240   541,279   1,050,059   1,146,518
        
Total revenues  $  4,616,588    $  2,325,734    $  9,181,068    $  4,461,951
        
Operating expenses        
Compensation and benefits  $  3,434,812    $  2,402,768    $  5,943,563    $  3,999,430
Brokerage and clearing fees 138,722   116,429   263,431   202,777
Professional services 148,567   74,225   261,672   147,255
Occupancy and equipment 293,161   356,263   594,420   693,296
Communications and technology 199,082   224,054   385,920   343,275
Depreciation and amortization 43,247   2,743   82,659   7,000
Travel and entertainment 93,077   45,459   135,528   105,636
Legal services  (12,265)   49,275   27,926   66,044
Cost of underwriting capital -   3,200   -   49,600
Other 404,301   251,822   584,804   576,764
        
Total operating expenses 4,742,704   3,526,238   8,279,923   6,191,077
        
Operating income/(loss)  (126,116)    (1,200,504)   901,145    (1,729,126)
        
Interest expense  (86,923)    (74,197)    (180,671)    (165,479)
Amortization of debt discount  (7,616)    (34,518)    (26,292)    (74,192)
Loss on modification and        
      early extinguishment of debt -   -    (262,299)    (293,347)
        
Net income/(loss) attributable to common shareholders  $  (220,655)    $  (1,309,219)    $  431,883    $  (2,262,144)
        
        
Basic net income/(loss) per share  $  (0,05)    $   (0,35)    $  0,10    $  (1,12)
        
        
Diluted net income/(loss) per share  $  (0,05)    $  (0,35)    $  0,08    $  (1,12)
        
        
 Weighted average common shares outstanding:        
      Basic 4,498,798   3,720,141   4,323,855   2,017,820
      Diluted 4,498,798   3,720,141   5,251,220   2,017,820

MERRIMAN HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)

   June 30,    December 31,
  2014   2013
ASSETS    
    
Cash and cash equivalents  $   959,633    $  1,044,110
Securities owned    
Marketable, at fair value 1,141,442   1,176,347
Not readily marketable, at estimated fair value 1,978,505   671,801
Restricted cash 725,799   891,828
Due from clearing broker 57,367   97,811
Accounts receivable, net 486,536   532,431
Prepaid expenses and other assets 1,334,581   674,915
Equipment and fixtures, net 360,456   341,258
   
Total assets  $  7,044,319    $  5,430,501
    
LIABILITIES AND SHAREHOLDERS` EQUITY (DEFICIT)    
Liabilities    
Accounts payable  $   260,925    $  317,272
Commissions payable 445,474   418,075
Accrued expenses and other 853,339   814,946
Deferred rent 555,907   428,540
Deferred revenue 78,587   70,378
Capital lease obligations 319,793   360,795
Notes payable, net of debt discount 820,000   1,226,521
Notes payable to related parties, net of debt discount 2,286,386   1,940,601
   
Total liabilities 5,620,411   5,577,128
    
Shareholders` equity (deficit)    
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    
June 30, 2014 and December 31, 2013; 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    
June 30, 2014 and December 31, 2013; 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    
June 30, 2014 and December 31, 2013; aggregate liquidation    
preference of $0 -   -
Convertible preferred stock, Series D-$0.0001 par value; 24,000,000    
shares authorized, 23,720,916 shares issued and    
0 shares outstanding as of June 30, 2014 and December 31, 2013;    
aggregate liquidation preference of $0 prior to conversion,    
and pari passu with common stock on conversion -   -
Convertible Preferred stock, Series E-$0.0001 par value; 7,300,000    
shares authorized, 6,825,433 shares issued and    
0 shares outstanding as of June 30, 2014 and December 31, 2013;    
aggregate liquidation preference of $0 prior to conversion,    
and pari passu with common stock on conversion    
Common stock, $0.0001 par value; 300,000,000 shares authorized;    
4,516,838 and 4,141,838 shares issued and 4,515,857 and     
4,140,857 shares outstanding as of June 30, 2014 and    
December 31, 2013, respectively 452   414
Additional paid-in capital 150,126,038   148,987,424
Treasury stock  (225,613)    (225,613)
Accumulated deficit  (148,476,969)    (148,908,852)
    
Total shareholders` equity (deficit) 1,423,908    (146,627)
    
Total liabilities and shareholders` equity (deficit)  $   7,044,319    $   5,430,501

RECONCILIATION OF ADJUSTED EBITDA TO GAAP MEASURES

   (Unaudited)    (Unaudited)
 Three Months Ended June 30,    Six Months Ended June 30,
  2014   2013   2014   2013
        
Adjusted EBITDA  $  210,487    $  (763,298)    $  1,365,702    $  (1,030,212)
        
Interest and non-cash items        
Interest expense, net  (86,923)    (74,196)    (180,671)    (165,479)
Bad debt expense  (179,750)   -    (179,750)    (122,033)
   Loss on modification and        
      early extinguishment of debt -     -    (262,299)    (293,347)
Amortization of debt discount  (7,616)    (34,518)    (26,292)    (74,192)
Depreciation and amortization  (43,247)    (2,743)    (82,659)    (7,000)
Non-cash stock-based compensation  (113,606)    (434,464)    (202,148)    (569,881)
        
GAAP net income (loss)  $  (220,655)    $  (1,309,219)    $  431,883    $  (2,262,144)



This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.

The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Merriman Holdings Inc. via GlobeNewswire

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