Paulson Capital Corp. has a market cap of $9 million; its shares were traded at around $1.53 with and P/S ratio of 0.5.
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. Global IPO volume has increased significantly with China and the U.S. being the most active markets. During the first quarter of 2010, there were 27 IPOs in the U.S., with proceeds totaling $4.1 billion and the outlook is strong. However, U.S. IPO investors are demanding lower valuations. This compares to 1 IPO in the U.S. during the first quarter of 2009 with proceeds totaling $0.7 billion. During 2009, there were 62 U.S. IPOs with gross proceeds totaling $22.8 billion. 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 decreased $0.4 million to $11,000 in the first quarter of 2010 compared to $0.4 million in the first quarter of 2009. In the first quarter of 2010, trading income was negatively affected by the market value of certain securities in which we make a market. Our focus is on very small capitalization issues, especially those tied to our corporate finance clients.
Cash provided by operating activities totaled $11,000 in the first quarter of 2010, primarily due to our net loss of $240,000, net non-cash expense items of $125,000 and changes in our operating assets and liabilities as discussed in more detail below.
Our net receivable from our clearing organization decreased $0.5 million to $7.7 million at March 31, 2010 from $8.2 million at December 31, 2009, primarily due to the results of the activity in our trading and investment accounts, as well as the timing of general corporate expenditures and cash flow requirements.
Notes and other receivables increased $0.3 million to $0.8 million at March 31, 2010 from $0.5 million at December 31, 2009, primarily due to loans to our registered representatives.
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