Paulson Capital Corp. is a full service brokerage firm engaged in the purchase and sale of securities from and to the public and for its own account and in investment banking activities. Paulson Capital Corp. has a market cap of $7.41 million; its shares were traded at around $1.2503 with and P/S ratio of 0.25.
Highlight of Business Operations:Because we operate in the financial services industry, our revenues and earnings are substantially affected by general conditions in financial markets. Further, past performance is not necessarily indicative of results to be expected in future periods. In our securities brokerage business, the amount of our revenues depends on levels of market activity requiring the services we provide. Our corporate finance activity, which consists of acting as the managing underwriter of initial and follow-on public offerings, private investments in public equity (PIPEs) and private placements for smaller companies, is similarly affected by the strength of the market for new equity offerings, which has historically experienced substantial cyclical fluctuation. The number of initial public offerings (IPOs) in the U.S. has declined as volatility in the U.S. economy continues. According to Renaissance Capital LLC, during the first six months of 2009, there were 14 U.S. IPOs with gross proceeds totaling $2.4 billion. During 2008, 43 companies completed IPOs in the U.S., with proceeds totaling $28 billion. This compares to 272 IPOs in 2007, with proceeds totaling $59.7 billion. With the VISA IPO excluded from the 2008 results, the IPOs in 2008 raised $10 billion. 2008 was the slowest year for U.S. IPOs since 1978. The low demand for IPOs in 2008 was also evidenced by the 101 companies that filed with the SEC to withdraw proposed offerings, almost double the 51 that did so in 2007. Although we attempt to match operating costs with activity levels, many of our expenses are either fixed or difficult to change on short notice. Accordingly, fluctuations in brokerage and corporate finance revenues tend to result in sharper fluctuations, on a percentage basis, in net income or loss.
Trading income increased $3.3 million and decreased $0.6 million, respectively, in the three and six-month periods ended June 30, 2009 compared to the same periods of 2008. In the three-month period ended June 30, 2009 and the six-month period ended June 30, 2008, trading income was positively affected by favorable results for certain securities that we were holding in our trading inventories. Our focus is on very small capitalization issues, especially those tied to our corporate finance clients. Trading income (loss) can be volatile from period to period because it is driven by the fair value of the securities in which we make a market.
Total expenses decreased $0.3 million and $2.2 million, respectively, in the three and six-month periods ended June 30, 2009 compared to the same periods of 2008, as described in more detail below.
Commissions and salaries increased $0.1 million and decreased $1.6 million, respectively, in the three and six-month periods ended June 30, 2009 compared to the same periods of 2008. The decrease in the six-month period was primarily due to
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