Merriman Curhan Ford Reports Fiscal Year 2009 and Fourth Quarter Results

News provided by

Merriman Curhan Ford Group, Inc.

Mar 18, 2010, 04:32 ET

SAN FRANCISCO, March 18 /PRNewswire-FirstCall/ -- Merriman Curhan Ford Group, Inc. (Nasdaq: MERR) today released results for 2009.

(Logo:  http://www.newscom.com/cgi-bin/prnh/20090911/MCFLOGO)

2009 Financial Highlights

  • Total 2009 revenue was $49.3 million, an increase of 35% over 2008, a result of the company's improved principal transactions and Institutional Cash Distributors ("ICD") division whose assets were sold in 2009.
  • Total 2009 revenue on a non-GAAP, pro-forma basis, which excludes ICD results, whose assets were sold in 2009 unrealized gains and losses was $22.8 million, a 35% decrease from 2008:
    • Investment banking revenue was $7.2 million, a 37% decrease from 2008;
    • Commission revenue on a pro-forma basis was $12.4 million, a 45% decrease from 2008; and
    • Principal transaction revenue on a pro-forma basis had a gain of $1.3 million, a 74% improvement over 2008, comprised primarily of realized gains in the firm's warrant positions and proprietary account.
  • Loss from continuing operations for the year was $5.4 million, or $0.42 per diluted share, compared to a loss from continuing operations of $24.5 million for 2008, or $1.95 per diluted share.
  • Net loss attributable to common shareholders was $0.84 for 2009, due primarily to the dividends to preferred shareholders.
  • Financial condition:
    • Total assets were $16.1 million at the end of 2009, compared with $18.9 million at December 31, 2008; and
    • Cash and marketable securities were $10.4 million at the end of 2009.

In 2009, Merriman Curhan Ford introduced non-GAAP pro-forma operating measures which exclude the effects of its former division, ICD, the unrealized gain or loss on its portfolio of securities, and the non-operating legal and settlement expenses.  Management uses these non-GAAP measures, in addition to GAAP results, to assess the performance of the company's core business. A reconciliation of these non-GAAP measures to GAAP is attached below.

"The team fought hard and survived in 2009, despite extraordinarily difficult circumstances," said Peter Coleman, chief executive officer of Merriman's broker/dealer. "Our $10.2 million strategic transaction that we closed in September, settlements with a selected group of litigants, and positive closure on the SEC matters, gave us an opportunity to reposition the firm by bringing in new financial industry veterans and investors to help us rebuild, while strictly managing our cost structure.  This past year we built a foundation for future rapid revenue growth and consistent profitability.  Today, we are beginning to see solid demand from our corporate clients and institutional investors as we focus on our core offerings of researching, trading, advising and financing undiscovered, fast-growing companies. Our investment banking pipeline remains strong, and we closed 27 corporate financing and strategic advisory transactions during the year, compared to 20 transactions in 2008."

Fourth Quarter 2009 Financial Highlights

  • Quarterly revenue was $13.5 million, representing a growth of 76% over the fourth quarter 2008.
  • Quarterly revenue on a non-GAAP, pro-forma basis (excluding ICD), was $6.6 million, a 26% increase from fourth quarter 2008:
    • Investment banking revenue was $1.8 million, a 9% decrease from fourth quarter 2008;
    • Commission revenue on a pro-forma basis was $3.6 million, a 31% decrease from fourth quarter 2008; and
    • Principal transaction revenue on a pro-forma basis had a gain of $925,000 comprised primarily of realized gains in the firm's warrant positions and proprietary account, compared to a loss of $2.1 million in the fourth quarter 2008.
  • Income from continuing operations for the quarter was $13.6 million, or $1.07 per diluted share, compared to a loss from continuing operations of $4.3 million for the fourth quarter 2008, or $0.34 per diluted share.  Income from continuing operations in the fourth quarter 2009 was a result of the change in warrant liabilities due to the amendment of the warrants issued in connection with the company's September 2009 strategic transaction.  Excluding the change in warrant liabilities resulting from the warrant amendment, operating loss from continuing operations was $2.9 million for the quarter, a 32% improvement over the same period 2008.

Jon Merriman, co-founder and chief executive officer of Merriman Curhan Ford Group, Inc., added: "By the fourth quarter, we saw early signs of recovery in our corporate clients' industry sectors. The financing environment for fast-growing companies remains challenging despite the impressive market rally from the 2008 lows.  I believe we won't see a full market recovery until small businesses, which are an important growth engine of the U.S. economy, come back and the commercial lending environment normalizes.  The universe of corporate clients that need our services has expanded dramatically over the past two difficult years.  We continue to work aggressively to help our corporate clients obtain the growth capital they need and we are excited to meet that demand during these uncertain times."

Conference Call for the 2009 Results

In conjunction with this announcement, Merriman Curhan Ford will host a discussion of the company's 2009 results with investors and financial analysts today, Thursday, March 18, 2010, at 2 PM (PT) / 5 PM (ET).  Interested listeners and participants may access the live conference call by dialing (800) 762-8779 or may access the live web broadcast at the company's website, www.mcfco.com. An archived version of the discussion will be available on the company's website following the conclusion of the live conference call.

About Merriman Curhan Ford

Merriman Curhan Ford (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, and specializes in five growth industry sectors: CleanTech, Consumer, Media & Internet, Health Care, Natural Resources and Technology.  For more information, please go to www.mcfco.com.

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 18, 2010. 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 18, 2010, together with this press release and the financial information contained herein, is available on our website, www.mcfco.com.  Please click on "Investor Relations."

MERRIMAN CURHAN FORD GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

2009

2008




Revenue:


Commissions

$  40,180,288

$  33,678,706

Principal transactions

(21,702)

(9,040,218)

Investment banking

7,236,059

11,432,454

Advisory and other

1,868,397

496,894




Total revenue

49,263,042

36,567,836




Operating expenses:


Compensation and benefits

41,733,106

36,670,457

Brokerage and clearing fees

994,312

3,042,133

Professional services

2,514,225

9,161,729

Occupancy and equipment

2,148,733

2,303,944

Communications and technology

3,364,171

3,762,954

Depreciation and amortization

477,729

705,883

Travel and entertainment

1,507,107

2,921,196

Legal services and litigation settlement expense

7,776,917

-

Other

2,326,095

4,411,128




Total operating expenses

62,842,395

62,979,424




Operating loss

(13,579,353)

(26,411,588)








Other income

2,000,000

-

Change in warrant liability

6,910,656

-

Interest income

15,658

375,949

Interest expense

(1,341,753)

(72,304)




Loss from continuing operations before income taxes

(5,994,792)

(26,107,943)




Income tax benefit

627,923

1,635,214




Loss from continuing operations

(5,366,869)

(24,472,729)




Loss from discontinued operations

(94,894)

(5,801,076)




Net loss

(5,461,763)

(30,273,805)

Preferred stock deemed dividend

$   (5,066,702)

$                   -

Preferred stock cash dividend

$      (192,100)

$                   -




Net loss attributable to common shareholders

$ (10,720,565)

$ (30,273,805)




Basic and diluted net loss per share:


Loss from continuing operations

$            (0.42)

$            (1.95)

Loss from discontinued operations

(0.01)

(0.46)




Net loss

$            (0.43)

$            (2.41)




Net loss attributable to common shareholders

$            (0.84)

$            (2.41)




Weighted average number of common shares:


Basic and diluted

12,693,648

12,550,872

MERRIMAN CURHAN FORD GROUP, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(unaudited)

ASSETS

2009

2008




Cash and cash equivalents

$       5,656,750

$       6,358,128

Securities owned:


Marketable, at fair value

4,728,940

4,622,577

Not readily marketable, at estimated fair value

272,463

366,061

Other

67,448

185,065

Restricted cash

1,072,086

1,131,182

Due from clearing broker

2,546,581

1,752,535

Accounts receivable, net

470,992

612,234

Prepaid expenses and other assets

801,946

619,759

Equipment and fixtures, net

506,535

1,260,011

Assets held for sale

-

1,958,038




Total assets

$     16,123,741

$     18,865,590




LIABILITIES AND STOCKHOLDERS’ EQUITY






Liabilities:


Accounts payable

$          346,220

$          712,591

Commissions and bonus payable

4,133,924

3,182,941

Accrued expenses

2,755,831

3,637,345

Due to clearing and other brokers

7,185

28,022

Securities sold, not yet purchased

161,461

903,217

Deferred revenue

304,334

709,691

Capital lease obligation

397,958

923,683

Liabilities held for sale

-

1,052,899




Total liabilities

8,106,913

11,150,389








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, 2009 and 2008; 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, 2009 and 2008; 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, 2009 and 2008; 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 23,720,916 shares


outstanding as of December 31, 2009; and 0 shares authorized, issued




and outstanding as of December 31, 2008; aggregate liquidation


preference of $10,199,994 prior to conversion, and pari passu with


common stock on conversion

2,372

-

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




12,988,073 and 12,756,656 shares issued and 12,786,496 and 


12,730,218 shares outstanding as of December 31, 2009 and




2008, respectively

                1,299


                1,278

Additional paid-in capital

     133,054,192


     127,193,195

Treasury stock

          (225,613)

          (125,613)

Accumulated deficit

   (124,815,422)

   (119,353,659)




Total stockholders’ equity

         8,016,828


         7,715,201





Total liabilities and stockholders’ equity

$     16,123,741


$     18,865,590

MERRIMAN CURHAN FORD GROUP, INC.

RECONCILIATION OF NON-GAAP TO GAAP MEASURES – THREE MONTHS

(unaudited)

Three Months Ended December 31,

2009

2008

As Reported

Less ICD

Less Other

Pro-Forma

As Reported

Less ICD

Less Other

Pro-Forma
















Revenue:














Commissions

$ 11,287,720


$ 7,714,682


$                 -


$   3,573,038


$  9,325,010


$ 4,132,373


$                 -


$   5,192,637

Principal transactions

        109,318


           (685)

      (815,183)

        925,186


   (3,759,668)

                  -


   (1,669,516)

   (2,090,152)

Investment banking

     1,824,596


                  -


                   -


     1,824,596


    2,008,788


                  -


                   -


     2,008,788

Advisory and other fees

        250,116


                  -


                   -


        250,116


         90,267


                  -


                   -


          90,267

















Total revenue

   13,471,750


   7,713,997


      (815,183)

     6,572,936


    7,664,397


   4,132,373


   (1,669,516)

     5,201,540

















Operating expenses:














Compensation and
















benefits

   12,045,620


   6,979,109


                   -


     5,066,511


    5,465,311


   2,535,574


                   -


     2,929,737

Brokerage and  














clearing fees

        202,905


        16,923


                   -


        185,982


       999,305


        39,355


                   -


        959,950

Professional services

        718,928


      210,286


                   -


        508,642


    1,980,129


        35,420


    1,172,607


        772,102

Occupancy and
















equipment

        531,386


        12,672


                   -


        518,714


       702,839


        21,702


                   -


        681,137

Communications
















and technology

        921,192


      195,869


                   -


        725,323


    1,206,302


      213,324


                   -


        992,978

Depreciation and
















amortization

        104,816


                  -


                   -


        104,816


       168,717


                  -


                   -


        168,717

Travel and
















entertainment

        448,267


      147,744


                   -


        300,523


       393,113


      174,152


                   -


        218,961

Legal and litigation
















settlement expense

     1,140,860


                  -


       717,089


        423,771


                   -


                  -


                   -


                    -

Other expenses

        694,661


      115,337


                   -


        579,324


    1,114,028


        29,706


                   -


     1,084,322

















Total operating
















expenses

   16,808,635


   7,677,940


       717,089


     8,413,606


  12,029,744


   3,049,233


    1,172,607


     7,807,904

















Operating income/(loss)

$ (3,336,885)

$      36,057


$ (1,532,272)

$ (1,840,670)

$ (4,365,347)

$ 1,083,140


$ (2,842,123)

$ (2,606,364)

Note – The column headed "Less Other" includes unrealized gains/losses in "Principal transactions" revenues, and litigation settlement and approximate legal expenses paid as related to the Del Biaggio/Cacchione matters.

MERRIMAN CURHAN FORD GROUP, INC.

RECONCILIATION OF NON-GAAP TO GAAP MEASURES – TWELVE MONTHS

(unaudited)

Year Ended December 31,

2009

2008

As Reported

Less ICD

Less Other

Pro-Forma

As Reported

Less ICD

Less Other

Pro-Forma
















Revenue:














Commissions

$  40,180,288


$ 27,789,003


$                 -


$ 12,391,285


$  33,678,706


$ 11,293,429


$                   -


$  22,385,277

Principal transactions

          (21,702)

          (2,973)

   (1,295,475)

     1,276,746


     (9,040,218)

                    -


     (9,774,573)

         734,355

Investment banking

      7,236,059


                    -


                   -


     7,236,059


    11,432,454


                    -


                     -


    11,432,454

Advisory and other  fees

      1,868,397


                    -


                   -


     1,868,397


         496,894


                    -


                     -


         496,894

















Total revenue

    49,263,042


   27,786,030


   (1,295,475)

   22,772,487


    36,567,836


   11,293,429


     (9,774,573)

    35,048,980

















Operating expenses:














Compensation and
















benefits

    41,733,106


   25,499,105


                   -


   16,234,001


    36,670,457


     7,489,738


                     -


    29,180,719

Brokerage and  














clearing fees

         994,312


          62,652


                   -


        931,660


      3,042,133


        101,898


                     -


      2,940,235

Professional services

      2,514,224


        307,283


                   -


     2,206,941


      9,161,729


        108,900


      4,191,590


      4,861,239

Occupancy and
















equipment

      2,148,733


          54,278


                   -


     2,094,455


      2,303,944


          28,742


                     -


      2,275,202

Communications
















and technology

      3,364,171


        573,709


                   -


     2,790,462


      3,762,954


        456,501


                     -


      3,306,453

Depreciation and
















amortization

         477,729


                    -


                   -


        477,729


         705,883


                    -


                     -


         705,883

Travel and
















entertainment

      1,507,107


        674,471


                   -


        832,636


      2,921,196


        620,016


                     -


      2,301,180

Legal and litigation
















settlement expense

      7,776,918


                    -


    7,707,548


          69,370


                     -


                    -


                     -


                     -

Other expenses

      2,326,095


        404,678


                   -


     1,921,417


      4,411,128


        147,583


                     -


      4,263,545

















Total operating
















expenses

    62,842,395


   27,576,176


    7,707,548


   27,558,671


    62,979,424


     8,953,378


      4,191,590


    49,834,456

















Operating income/(loss)

$ (13,579,353)

$      209,854


$ (9,003,023)

$ (4,786,184)

$ (26,411,588)

$   2,340,051


$ (13,966,163)

$ (14,785,476)

Note – The column headed "Less Other" includes unrealized gains/losses in "Principal transactions" revenues, and litigation settlement and approximate legal expenses paid as related to the Del Biaggio/Cacchione matters.

SOURCE Merriman Curhan Ford Group, Inc.

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