vFinance, Inc. Reports Results for First Quarter Ended March 31, 2008

Business Wire, May 16, 2008

Company Continues to Maintain a Strong Balance Sheet and Diversified Income Stream Despite Unfavorable Market Conditions

BOCA RATON, Fla. -- vFinance, Inc. (OTCBB: VFIN) ("vFinance"), a financial services company specializing in growth opportunities, reported its earnings for the quarter ended March 31, 2008, after the close of business yesterday.

Revenues for the quarter ended March 31, 2008 were $11,568,300, compared to $12,040,200 for the same period in 2007, a decrease of $471,900, or 4%. The decrease was primarily a result of unfavorable market conditions, which caused a decrease of 16% in trading revenues compared to the same period in 2007. Additionally, investment banking revenues were off 36% due to a substantial transaction occurring in the first quarter of 2007 and the recognition of unrealized losses on securities received as compensation for investment banking services totaling approximately $358,900 during the first quarter of 2008. Due to the addition of new brokers, this decline in revenue was offset by retail commissions and other brokerage related income which combined reflects an increase of 5% over the first quarter of 2007. Moreover, consulting fees and income generated by other investment banking advisory projects and activities increased as compared to the three months ended March 31, 2007, which had minimal activity.

vFinance's liquid assets totaling $5,181,400 as of March 31, 2008, comprised of cash and cash equivalents of $4,686,700 and marketable securities of $494,700, is approximately $1,541,600 lower than its liquid assets as of December 31, 2007. vFinance's cash used by operating activities totaled $711,300 in the first quarter of 2008 as compared to cash provided by operating activities of $1,128,900 in the same quarter in 2007. This cash use was comprised primarily of an increase in net operating loss in the first quarter of 2008 and combined with a decrease in accrued liabilities of $1,498,000, which consisted of commissions, compensation, and payments of $475,000 in settlements accrued as of December 31, 2007. Continuing to build out the company's infrastructure for further growth and invest in long term opportunities, in the quarter ended March 31, 2008, vFinance purchased $53,000 in property and equipment. vFinance has no long term debt other than its capital lease obligations.

vFinance reported a net loss of ($620,300) for the quarter ended March 31, 2008, or ($0.01) per share, compared to a profit of $58,800, in the same quarter last year. The loss was primarily due to non-cash expenses totaling $445,200 representing depreciation expense of $118,000, amortization of intangibles of $207,000 and non-cash stock compensation of $120,200 from expensing stock options under SFAS No. 123R. This net loss also included non-cash unrealized losses of $358,900 on positions received as compensation for investment banking transactions and costs deemed non-recurring in nature of $319,500 for arbitrations and settlements and associated legal expenses, as well as legal expenses related to the previously announced merger of vFinance with National Holdings Corporation (OTCBB: NHLD) ("National"). Due to the mix of business having a generally higher payout percentage, vFinance incurred increased commissions. As a result of a subtenant default in one of vFinance's leased offices, occupancy and equipment costs increased.

"This quarter reflects how we were able to manage our results in an unfavorable market environment, resolve and pay for outstanding arbitrations and settlements and continue to benefit from the managed expansion arising from our business development and recruiting efforts," noted Leonard Sokolow, Chairman and CEO, vFinance, Inc. "Overall, we are pleased with our operating results taking into account our adjusted EBITDA loss of $173,202 for this quarter, which includes non-cash unrealized losses of $358,900 and non-recurring costs of $319,500. We are looking forward to improved market conditions and to the completion of our previously announced merger with National Holdings Corporation."

Alan Levin, CFO, vFinance, Inc., stated, "The first quarter of this year showed that because of our diverse revenue base we can continue to support our business despite market uncertainties. Cost controls and a strong balance sheet enabled us to manage our operations notwithstanding the business volatility exhibited in this quarter."

Earnings before interest, taxes, depreciation and amortization, or EBITDA, adjusted for non-cash compensation expense is a key metric vFinance uses in evaluating its financial performance. EBITDA is considered a non-GAAP financial measure as defined by Regulation G promulgated by the Securities and Exchange Commission ("SEC") pursuant to the Securities Act of 1933, as amended. vFinance considers EBITDA, as adjusted, an important measure of its ability to generate cash flows to fund capital expenditures, repurchase shares, fund other corporate investing and financing activities, and to service debt when it exists. EBITDA, as adjusted, eliminates the non-cash effect of depreciation and amortization of intangible assets and stock-based compensation. EBITDA should be considered in addition to, rather than as a substitute for, pre-tax income, net income and cash flows from operating activities.