Merriman Holdings, Inc. Announces Financial Results for the Fourth Quarter Ended December 31, 2011 and Fiscal Year 2011

News provided by

Merriman Holdings, Inc.

Mar 29, 2012, 04:15 ET

SAN FRANCISCO, March 29, 2012 /PRNewswire/ -- Merriman Holdings, Inc. (OTCQX: MERR), the parent company of Merriman Capital, Inc., today released earnings for 2011.

(Logo:  http://photos.prnewswire.com/prnh/20100914/SF64919LOGO)

2011 Financial Highlights:

  • Revenue was $21.9 million.
    • Commission revenue was $13.4 million for 2011, a 10% decrease over 2010;
    • Investment banking revenue was $8.4 million, a 37% decrease over 2010;
    • Other revenue was $876,000, primarily derived from the firm's OTCQX advisory activity; and
    • Principal transactions were a loss of $777,000 for the year, due to the unrealized losses in the firm's warrant portfolio.
  • The net loss attributable to common shareholders for the year ended December 31, 2011 was $8.4 million, or $2.87 per share.

"In the fourth quarter we made the critical decision to exit the traditional research business and focus on addressing the market opportunity in the vastly underserved universe of small-cap companies," said Jon Merriman, Co-Chairman and CEO of Merriman Holdings, Inc. "Today, our team is focused on Capital Markets Advisory, Investment Banking Services, Equity and Options Trading Execution and our Financial Entrepreneur Platform. We completed the transition in November and reduced our fixed costs significantly, as well as increasing our financial and operating leverage, return on investment, and revenue per employee. We began to see the positive financial impact of the transition in the first quarter of 2012."

Fourth Quarter 2011 Financial Highlights:

  • Fourth quarter revenue was $2.9 million.
    • Commissions revenue was $2.6 million, a 27% decrease from fourth quarter 2010;
    • Investment banking revenue was $388,000, a 93% decrease from fourth quarter 2010;
    • Other revenue was $318,000, primarily derived from the firm's OTCQX advisory activity; and
    • Principal transaction income resulted in a loss of $360,000 comprised primarily of unrealized losses in the firm's warrant portfolio.
  • Net loss attributable to common shareholders was $3.6 million, or $0.81 per share during the fourth quarter 2011.  

"We believe the market has been looking for a major shift in how boutique and middle-market investment banks service their clients, both corporate and institutional," said Will Febbo, Chief Operating Officer of Merriman Holdings, Inc. "The firm took early steps among its peers in exiting low return businesses and building recurring revenues, as well as developing a platform for financial entrepreneurs. These two segments of our business are leading the way in shifting from a transaction-only model to longer term, value-added service relationships with our clients on their path toward market awareness and trading liquidity. When you couple this with a lower fixed overhead, a more focused effort on competitive compensation and emphasis on high productivity per employee, we see a very attractive investment for shareholders, employees and clients. On a macro basis, we are also seeing encouraging signs from Washington with the initiation of the JOBS Act, which we believe will create a more favorable regulatory and financing environment for small-cap companies trying to grow."

Merriman continued: "We are especially encouraged by the rapid growth of our OTCQX and Capital Markets Advisory business which addresses thousands of small, publicly traded companies as potential clients. This business also has a significant recurring revenue component which makes it very attractive in an uncertain economic environment. The growth in advisory services accelerated in Q1 and the pipeline of prospects is significant. Finally, I am very pleased with the strength of our finance and operations team, newly headed up by Will Febbo, which is allowing our client facing producers, including myself, to aggressively pursue the substantial opportunity in front of us. We are now making steady progress ahead of plan."

Conference Call for the 2011 Results

Following this announcement, Merriman's management will host a teleconference call beginning at 1:30 PM (PT) / 4:30 PM (ET) today, Thursday, March 29, 2012, to discuss the results and related matters.  Interested listeners and participants may access the live teleconference call by dialing (877) 941-0843 or may access the live webcast at www.merrimanco.com.

About Merriman Capital, Inc.

Merriman Capital, Inc. is an investment banking firm providing equity and options execution services, market making, and differentiated research for high growth companies. The firm also provides capital raising, advisory, and M&A services. Merriman Capital, Inc. is a wholly owned subsidiary of Merriman Holdings, Inc. (OTCQX: MERR) and is the leading investment banking firm for OTCQX companies. For more information, please go to http://www.merrimanco.com/.

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 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/A filed on April 28, 2011 and our Form 10-Q filed on November 14, 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 29, 2012, 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,

2011

2010




Revenues:


Commissions

$   13,411,312

$   14,937,938

Principal transactions

(777,495)

1,784,868

Investment banking

8,439,569

13,412,832

Other

875,894

530,673




Total revenues

21,949,280

30,666,311




Operating expenses:


Compensation and benefits

17,164,221

19,078,084

Stock-based compensation

725,179

1,636,100

Brokerage and clearing fees

1,395,820

1,483,436

Professional services

1,359,004

1,404,195

Occupancy and equipment

1,912,617

1,910,553

Communication and technology

1,954,384

2,006,615

Depreciation and amortization

125,726

401,346

Travel and entertainment

894,959

1,226,378

Legal services and litigation settlement expense

710,841

3,410,914

Cost of underwriting capital

97,625

1,068,520

Other

1,898,884

2,351,864




Total operating expenses

28,239,260

35,978,005




Operating loss

(6,289,980)

(5,311,694)




Other income

51,601

25,418

Interest income

6,249

13,576

Interest expense

(378,239)

(84,793)

Amortization of debt discount

(93,269)

(81,035)

Loss on early extinguishment of debt

(1,183,917)

-




Loss from continuing operations before income taxes

(7,887,555)

(5,438,528)




Income tax (expense) benefit

(6,107)

5,005




Loss from continuing operations

(7,893,662)

(5,433,523)




Income from discontinued operations

-

95,104




Net loss

(7,893,662)

(5,338,419)

Preferred stock cash dividend

(491,334)

(591,125)




Net loss attributable to common shareholders

$    (8,384,996)

$    (5,929,544)




Basic and diluted net loss per share:


Loss from continuing operations

$             (2.70)

$             (2.71)

Income from discontinued operations

-

0.05




Net loss

$             (2.70)

$             (2.66)




Net loss attributable to common shareholders

$             (2.87)

$             (2.96)




Weighted average number of common shares:


Basic and diluted

2,919,316

2,002,305

MERRIMAN HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(unaudited)

As of December 31,

ASSETS

2011

2010




Cash and cash equivalents

$       4,003,512

$       4,898,093

Securities owned:


  Marketable, at fair value

2,136,352

2,401,722

  Non-marketable, at estimated fair value

347,218

2,741,452

Restricted cash

680,028

965,000

Due from clearing broker

124,805

34,072

Accounts receivable, net

359,900

1,574,644

Prepaid expenses and other assets

506,708

313,537

Equipment and fixtures, net

30,537

136,706




           Total assets

$       8,189,060

$     13,065,226




LIABILITIES AND SHAREHOLDERS’ EQUITY






Liabilities:


  Accounts payable

$          246,040

$          361,237

  Commissions and bonus payable

986,722

3,240,021

  Accrued expenses and other

1,757,342

2,514,020

  Deferred rent

236,996

319,274

  Deferred revenue

688,074

175,712

  Capital lease obligation

-

120,453

  Notes payable

679,454

299,997

  Notes payable to related parties

1,006,765

1,098,840




          Total liabilities

5,601,393

8,129,554








Shareholders’ 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, 2011 and 2010; 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, 2011 and 2010; 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, 2011 and 2010; 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


   19,563,206 and 22,058,128 shares outstanding as of December 31,




   2011 and December 31, 2010, respectively; aggregate


   liquidation preference of $8,454,239 prior to conversion, and pari


   passu with common stock on conversion

1,957

2,206

 Convertible Preferred stock, Series E–$0.0001 par value; 5,000,000


   shares authorized, 2,531,744 and 0 shares issued and


   2,531,744 and 0 shares outstanding as of December 31,




   2011 and December 31, 2010, respectively; aggregate


   liquidation preference of $1,594,999 prior to conversion, and pari


   passu with common stock on conversion

253

-

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




   6,183,815 and 2,384,499 shares issued and 6,154,379 and 


   2,355,063 shares outstanding as of December 31, 2011 and




   2010, respectively

619

239

Common stock payable

-

461,675

Additional paid-in capital

140,857,954

134,851,006

Treasury stock

(225,613)

(225,613)

Accumulated deficit

(138,047,503)

(130,153,841)




Total shareholders’ equity

2,587,667

4,935,672




Total liabilities and shareholders’ equity

$       8,189,060

$     13,065,226




SOURCE Merriman Holdings, Inc.

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