Dutton Associates Announces Investment Opinion: Paulson Capital Strong Buy Rating Maintained in Updated Coverage by Dutton Associates

Dutton Associates updates its coverage of Paulson Capital Corporation (Nasdaq: PLCC), maintaining a Strong Buy Rating and a price target of $10. The 12-page report by Dutton senior analyst Richard W. West, CFA is available at www.jmdutton.com as well as from First Call, Bloomberg, Zacks, Reuters, Knobias, and other leading financial portals.

Paulson Capital Corp. completed two corporate finance deals since our last Update Research Report of April 13, 2006. We had already increased our rating to Strong Buy and increased our twelve-month price target to $10.00 per share in our April 5th Research Note due to the efforts by management to create investor awareness in Paulson Capital and that the Company's stock is selling at a discount to peer brokers. As we pointed out in our Initial Research Report, "...investors must be willing to accept the market risk that ties Paulson Capital's results to the stock market and corporate finance climate." Management's decision to maintain and sometimes increase positions in underwritten companies works out to be a two-edged sword. This strategy has served Paulson well in attracting companies for their corporate finance business and in times of strong markets it has added to Paulson's operating results with higher investment income. However, Paulson's operating results for the three and six months ended June 30, 2006, graphically illustrate how a lethargic and weak stock market can negatively affect the operating results. However, we believe that Paulson's present value more than discounts these short-term results and we expect that with any market rally in the coming months, Paulson's inherent leverage will result in above average gains from the current depressed level.

About Dutton Associates

Dutton Associates is one of the largest independent investment research firms in the U.S. Its 31 senior analysts are primarily CFAs and have expertise in many industries. Dutton Associates provides continuing analyst coverage of over 140 enrolled companies, and its research, estimates, and ratings are carried in all the major databases serving institutions and online investors.

The cost of enrollment in our one-year continuing research program is US $35,000 prepaid for 4 Research Reports, typically published quarterly, and requisite Research Notes. We received $27,000 from the Company for 4 Research Reports with coverage commencing on 10/21/2005. We do not accept payment of our fees in company stock. Our principals and analysts are prohibited from owning or trading in securities of covered companies. The views expressed in this research report accurately reflect the analyst's personal views about the subject securities or issuer. Neither the analyst's compensation nor the compensation received by us is in any way related to the specific ratings or views contained in this research report or note. Please read full disclosures and analyst background at www.jmdutton.com before investing.

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