UNITED STATES

SECURITIES AND EXCHANGE

COMMISSION

 

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): August 14, 2014.

 

MERRIMAN HOLDINGS, INC.

(Exact Name of Registrant as Specified in Charter)

 

Delaware 001-15831 11-2936371
(State or Other Jurisdiction  (Commission File Number) (IRS Employer
of Incorporation)   Identification No.)

 

250 Montgomery St., 16th Floor
San Francisco, CA 94104

 

 (Address of Principal Executive Offices)  (Zip Code)

 

Registrant's telephone number, including area code (415) 248-5600

 

(Former Name or Former Address, if Changed Since Last Report)

250 Montgomery Street, 16th Floor,

San Francisco, California  94104

 

 
 

 

Item 2.02 Results of Operations and Financial Condition

 

On August 14, 2014, Merriman Holdings, Inc. announced earnings for the second quarter of 2014.

 

Item 9.01(c) Exhibits

 

99.1 Press Release announcing Merriman Holdings, Inc.’s earnings for the second quarter of 2014.

 

 
 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  Merriman Holdings, Inc.
       
Date:  August 14, 2014 By: /s/ D. JONATHAN MERRIMAN  
    D. Jonathan Merriman  
    Chief Executive Officer  

 

 

 

 

Merriman_Square-01

 

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

 

SAN FRANCISCO – August 14, 2014 – Merriman Holdings, Inc. (OTCQX: 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. (OTCQX: 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."

 

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At the Company:

 

Michael Doran

General Counsel

(415) 568-3905

 

William Febbo

Chief Operating Officer

(415) 248-5603

 

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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 

 

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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 

 

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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)

 

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