MCF Corporation Announces Earnings for the Fourth Quarter and Fiscal Year 2003
Thursday February 12, 4:05 pm ET
Compared to 2002, Revenue from Continuing Operations for 2003 Increased 183%
Company Reports Second Profitable Quarter in a Row and Completes Pivotal Restructuring Year

SAN FRANCISCO--(BUSINESS WIRE)--Feb. 12, 2004-- MCF Corporation (AMEX:MEM - News), the parent company of Merriman Curhan Ford & Co., a securities broker-dealer and investment bank, today reported revenue from continuing operations of $6,087,000 for the fourth quarter of 2003. This represents a 322% increase compared to the fourth quarter of 2002. Net income for the fourth quarter 2003 was $653,000, or $0.01 per diluted share, an improvement from a net loss of $860,000, or $0.04 per diluted share, for the similar period in 2002.
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"We are very pleased with the performance of the company in the fourth quarter and during 2003," stated Jon Merriman, chairman and chief executive officer of MCF Corporation. "The fact that we were able to reach profitability a quarter earlier than planned and continue that momentum through the end of the year is a clear demonstration that we have a cohesive team that is really starting to execute. We have attracted some very strong producers and continue our focus on building a great place for aggressive, motivated people to work."

"At the beginning of 2003, we had forty employees; today we have over eighty-five," continued Mr. Merriman. "It is important to note that we did not crank up this expansion for growth's sake alone. We are sticking to our plan of hiring cash flow positive, seasoned producers who can immediately add to the company's bottom line. In addition, we recently announced the launch of our asset management subsidiary which will complement the cash management services offered by our Institutional Cash Distributors division, and offer products that will leverage on our core competencies in emerging growth companies."

For fiscal year 2003, MCF Corporation reported revenue from continuing operations of $18,306,000, a 183% increase over the $6,469,000 recognized during 2002. Net income for 2003 was $2,971,000, or $0.06 per diluted share, compared to a net loss of $3,405,000, or $0.18 per share, for 2002. Cash and cash equivalents and marketable securities amounted to $6,752,000 as of December 31, 2003, an increase of $4,585,000 from December 31, 2002.

"In 2003, we completed the restructuring of our balance sheet," stated John Hiestand, chief financial officer of MCF Corporation. "We closed an oversubscribed $3.0 million private placement financing and exchanged existing debt with a face amount of $3.4 million for equity. Additionally, we retired a $5.9 million convertible note payable left over from our legacy business. These actions have significantly reduced our long-term debt, which will result in lower interest expense and have recapitalized the company for future growth."

"The markets improved in 2003 and our team worked hard to be in a position to benefit from that improvement. While it is impossible to predict the ongoing strength of the equity markets, I am confident that we have people in place across a variety of businesses that will enable us to grow rapidly and enhance shareholder value even in a tough environment," added Merriman.

Highlights for Merriman Curhan Ford & Co. and MCF Corporation during the fourth quarter 2003 include:

Increased the sales and trading business by 24% sequentially from the third quarter to fourth quarter, with growth occurring both in volume and pricing;
Increased the number of new account relationships by 30% compared to the third quarter;
Achieved a second consecutive profitable quarter while adding 17 people, primarily in capital markets; and
Hired Charlie White, formerly of Avatar Associates, as President of the firm's Asset Management subsidiary.
Highlights for the Full Year 2003 include:

Hired Brock Ganeles, formerly with Credit Suisse First Boston, to head the Equity Capital Markets Group and to serve on the firm's Management Committee;
Institutional Cash Distributors, a premier broker of money funds serving the short-term investing needs of corporate treasury departments at companies throughout the United States, was launched as a division of Merriman Curhan Ford & Co.;
Hired Wall Street veterans, Arnold "Arnie" Owen and Elise Stern, as Managing Directors in the Equity Capital Markets Group and MCF's Corporate and Venture Services Group, respectively;
Hired Robert Johnson ("RJ"), formerly of Wells Fargo Securities, as a Managing Director and Head of West Coast Sales;
Restructured our balance sheet, resulting in an increase in stockholders' equity of $10.8 million and a decline in long-term debt by $6.6 million;
Opened a New York office, spearheaded by Elise Stern, Herve Francois, formerly an Institutional Investor-ranked equity analyst at Credit Suisse First Boston who is now part of MCF's institutional equity sales team, and Brock Ganeles;
Ranked seventh in terms of the number of private investment in public equity ("PIPE") transactions completed with 11 transactions and ranked nineteenth among placement agents in terms of dollar amount. (Both statistics according to PlacementTracker, www.placementtracker.com);
Appointed Raymond J. Minehan, former chief financial officer of Hambrecht & Quist, and Dennis G. Schmal, a partner at Arthur Andersen & Co. from 1972 to 1999 focusing on investment banking clients, to its board of directors.
Conference Call for Fiscal Year and Fourth Quarter 2003 Results

In conjunction with this announcement, MCF Corporation will host a discussion of the Firm's fourth quarter and fiscal year 2003 results with investors and financial analysts on Thursday, February 12, 2004 at 1:30 PM (Pacific Standard Time). Interested listeners and participants may access the live conference call by dialing 800-915-4836 or may access the live Web broadcast at the Firm's Web site, www.merrimanco.com. An archived version of the discussion will be available on the firm's Web site following the conclusion of the live conference call.

About MCF Corporation

MCF Corporation (AMEX:MEM - News) is a financial services holding company that provides research, capital markets services, asset management, corporate and venture services, and investment banking through its operating subsidiaries, Merriman Curhan Ford & Co. and MCF Asset Management, LLC. Merriman Curhan Ford & Co. is a securities broker-dealer and investment bank focused on emerging growth companies and growth-oriented institutional investors. It provides investment research, brokerage and trading services primarily to institutions, as well as advisory and investment banking services to corporate clients. Its mission is to become a leader in the researching, advising, financing and trading of emerging growth equities. Merriman Curhan Ford & Co. is registered with the Securities and Exchange Commission as a broker-dealer and is a member of the National Association of Securities Dealers, Inc. and SIPC. MCF Asset Management, LLC engages in fixed income asset management for corporate clients and manages alternative investment vehicles through a fund of funds.

Note to Investors

This press release contains certain forward-looking statements based on our current expectations, forecasts and assumptions that involve risks and uncertainties. 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 Annual Report on Form 10-K filed on February 12, 2004. 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," "will," 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.

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MCF CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended
December 31,
-----------------------
2003 2002
----------- -----------
Revenue:
Commissions $3,787,748 $1,124,422
Principal transactions 358,231 263,621
Investment banking 1,913,904 51,718
Other 26,945 940
----------- -----------
Total revenue 6,086,828 1,440,701
Operating expenses:
Compensation and benefits 3,691,388 1,064,451
Brokerage and clearing fees 660,297 244,870
Professional services 169,197 149,725
Occupancy and equipment 122,891 65,653
Communications and technology 216,377 164,936
Depreciation and amortization 20,816 93,457
Other 361,916 251,865
----------- -----------
Total operating expenses 5,242,882 2,034,957
----------- -----------
Operating income (loss) 843,946 (594,256)
Interest income 20,449 8,065
Interest expense (136,783) (273,405)
----------- -----------
Income (loss) from continuing operations before
income taxes 727,612 (859,596)
Income tax expense (74,884) --
----------- -----------
Net income (loss) $652,728 $(859,596)
=========== ===========

Basic net income (loss) per share $0.01 $(0.04)
=========== ===========
Diluted net income (loss) per share $0.01 $(0.04)
=========== ===========
Weighted average number of common shares:
Basic 54,602,770 21,104,274
Diluted 72,893,039 21,104,274

MCF CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS

Year ended December 31,
--------------------------------------
2003 2002 2001
----------- ------------ -------------
Revenue:
Commissions $9,547,061 $5,658,187 $--
Principal transactions 1,350,886 467,573 --
Investment banking 7,378,808 313,967 --
Other 29,256 29,767 205,502
------------ ------------ -------------
Total revenue 18,306,011 6,469,494 205,502
Operating expenses:
Compensation and benefits 11,682,867 5,177,286 7,424,188
Brokerage and clearing fees 1,602,200 987,051 --
Professional services 686,190 565,240 2,334,237
Occupancy and equipment 383,457 238,876 4,629,417
Communications and
technology 828,512 367,357 301,981
Depreciation and
amortization 77,918 394,188 1,546,741
Write-down of software
assets -- -- 3,010,371
Settlement of lease
obligations -- -- 7,315,360
Other 1,571,532 561,737 2,928,156
------------ ------------ -------------
Total operating
expenses 16,832,676 8,291,735 29,490,451
------------ ------------ -------------
Operating income (loss) 1,473,335 (1,822,241) (29,284,949)
Gain on retirement of
convertible note payable 3,088,230 -- --
Interest income 39,483 45,345 324,677
Interest expense (1,554,901) (1,364,903) (339,213)
------------ ------------ -------------
Income (loss) from continuing
operations before income taxes 3,046,147 (3,141,799) (29,299,485)
Income tax expense (74,884) -- --
------------ ------------ -------------
Income (loss) from continuing
operations 2,971,263 (3,141,799) (29,299,485)
------------ ------------ -------------
Loss from discontinued
operations -- (262,843) (772,691)
------------ ------------ -------------
Net income (loss) $2,971,263 $(3,404,642) $(30,072,176)
============ ============ =============

Basic net income (loss) per
share:
Income (loss) from
continuing operations $0.07 $(0.17) $(1.62)
============ ============ =============
Loss from discontinued
operations $-- $(0.01) $(0.04)
============ ============ =============
Net income (loss) $0.07 $(0.18) $(1.66)
============ ============ =============
Diluted net income (loss) per
share:
Income (loss) from
continuing operations $0.06 $(0.17) $(1.62)
============ ============ =============
Loss from discontinued
operations $-- $(0.01) $(0.04)
============ ============ =============
Net income (loss) $0.06 $(0.18) $(1.66)
============ ============ =============
Weighted average number of
common shares:
Basic 32,501,831 20,303,927 18,223,546
Diluted 45,430,392 20,303,927 18,223,546

MCF CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

December 31,
--------------------------
2003 2002
------------ ------------
ASSETS

Cash and cash equivalents $6,142,958 $1,402,627
Securities owned:
Marketable, at fair value 608,665 764,421
Not readily marketable, at estimated
fair value 637,533 16,067
Restricted cash 500,000 610,240
Due from clearing broker 775,697 124,053
Accounts receivable, net 498,236 27,661
Equipment and fixtures, net 192,421 49,216
Debt issuance costs 23,340 612,673
Prepaid expenses and other assets 325,096 162,169
------------ ------------
Total assets $9,703,946 $3,769,127
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)

Accounts payable $179,620 $112,041
Commissions payable 1,006,192 325,351
Accrued liabilities 1,149,321 342,454
Due to clearing and other brokers 154,995 63,550
Securities sold, not yet purchased 225 --
Capital lease obligation 24,401 --
Convertible notes payable, net 520,612 8,455,085
Notes payable 1,407,370 --
------------ ------------
Total liabilities 4,442,736 9,298,481
------------ ------------
Commitments and contingencies

Stockholders' equity (deficit):
Preferred stock, Series A - $0.0001
par value; 2,000,000 shares
authorized; 657,201 and 499,999
shares issued and outstanding as of
December 31, 2003 and 2002,
respectively; aggregate liquidation
preference of $1,894,350 66 50
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, 2003 and 2002; aggregate
liquidation preference of $0 -- --
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, 2003 and 2002; aggregate
liquidation preference of $0 -- --
Common stock, $0.0001 par value;
300,000,000 shares authorized;
55,951,675 and 23,601,580 shares
issued and 55,871,675 and 23,521,580
shares outstanding as of December 31,
2003 and 2002, respectively 5,587 2,352
Treasury stock (363,653) (363,653)
Additional paid-in capital 95,870,008 86,156,666
Deferred compensation (1,244,490) --
Accumulated deficit (89,006,308) (91,324,769)
------------ ------------
Total stockholders' equity
(deficit) 5,261,210 (5,529,354)
------------ ------------
Total liabilities and
stockholders' equity
(deficit) $9,703,946 $3,769,127
============ ============

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Contact:
MCF Corporation
John Hiestand, 415-248-5640 (CFO)
jhiestand@merrimanco.com