GSB Globalscape Inc

GlobalSCAPE, Inc. (NYSE Amex: GSB), a leading developer of secure information exchange solutions, today announced financial results for its fourth quarter and 2009 fiscal year end.

Revenue for fiscal 2009 was $16.5 million, an increase of four percent when compared with revenue of $15.8 million last year. Net income for fiscal 2009 was $1.4 million, or $0.08 per diluted share, compared with a net loss of ($7.7) million, or ($0.44) per diluted share in 2008. Cash and short term investments grew to $8.2 million, a 30 percent increase from 2008, even after the Company’s fourth quarter investment of $2.3 million in CoreTrace Corporation.

Revenue for the fourth quarter was $4.2 million, an increase of 10 percent compared to the fourth quarter of 2008. “We had a strong 2009, especially considering the economic conditions through the first half of the year,” said Jim Morris, GlobalSCAPE president and CEO. “Our cash and fourth quarter revenue growth demonstrate our continued and increasingly strong financial performance. We are looking forward to further market expansion and financial growth.”

The prior year net loss included a $9 million non-cash impairment of goodwill and intangible assets. Excluding this impairment from 2008 would have resulted in an Adjusted Net Income of $254,000. Adjusted Net Income is a non-GAAP measure. See the accompanying table for a reconciliation of net loss to Adjusted Net Income.

Adjusted EBITDA for the fourth quarter was $632,000, a 37 percent increase compared with the fourth quarter of 2008. For the full year, Adjusted EBITDA was $3.5 million, an increase of 26 percent relative to 2008. The Adjusted EBITDA margin for the fourth quarter was 15.2 percent, up from 12.2 percent in the fourth quarter of 2008. For the full year, the Adjusted EBITDA margin was 21.5 percent, up 370 basis points from 2008. Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures. See the accompanying table for a reconciliation of net income/loss to Adjusted EBITDA and Adjusted EBITDA margin.

Conference Call March 31, 2010 At 4:00 p.m. ET

GlobalSCAPE management will hold a conference call Wednesday, March 31 to discuss the fourth quarter and fiscal year 2009 financial results and other corporate matters at 4:00 p.m. Eastern Time/3:00 p.m. Central Time. Those wishing to join should dial 1-800-380-1061 and use Conference ID # 60432415. A live webcast of the conference call will also be available in the investor relations page of the company's website at www.globalscape.com. A webcast replay of the conference call will be available on the Company’s website through April 30, 2010.

About GlobalSCAPE

GlobalSCAPE, Inc. (NYSE Amex: GSB), headquartered in San Antonio, TX, is a global provider of managed file transfer (MFT) and wide area file services (WAFS) solutions for securely exchanging critical information over the Internet, within an enterprise, and with business partners. Since the release of Cute FTP in 1996, GlobalSCAPE's solutions have continued to evolve to meet the business and technology needs of an increasingly interconnected global marketplace. For more information about GlobalSCAPE's products, visit www.globalscape.com or the Company’s Secure Info Exchange blog.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words "would," "exceed," "should," "anticipates," believe," "possibly," "steady," "dramatic," and variations of such words and similar expressions identify forward-looking statements, but their absence does not mean that a statement is not a forward-looking statement. These forward-looking statements are based upon the Company's current expectations and are subject to a number of risks, uncertainties, and assumptions. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Among the important factors that could cause actual results to differ significantly from those expressed or implied by such forward-looking statements are risks that are detailed in the Company's Annual Report on Form 10-K for the 2008 calendar year, filed with the Securities and Exchange Commission on March 31, 2009.

Summary Financial Data

 

GlobalSCAPE, Inc.

Statements of Operations

      Year Ended  

December 31,

2009

(Unaudited)

 

December 31,

2008

  OPERATING REVENUE: Software product revenues $ 10,273,685 $ 10,901,887 Maintenance and support revenues   6,177,733     4,890,355    

Total revenue

 

16,451,418

   

15,792,242

    OPERATING EXPENSES: Cost of revenues 335,961 188,942 SG&A expenses 10,797,827 10,943,821 R&D expenses 2,804,857 2,819,791 Depreciation and amortization 724,485 957,036 Impairment of goodwill - 5,773,010 Impairment of long-lived assets   -     3,243,945   Total operating expenses 14,663,130 23,926,545   OPERATING INCOME (LOSS) 1,788,288 (8,134,303 )   Other income (expense)   (67,732 )   94,131    

INCOME (LOSS) BEFORE INCOME TAXES

1,720,556

(8,040,172

)

 

PROVISION (BENEFIT) FOR INCOME TAXES

 

320,619

   

(380,211

)

  NET INCOME (LOSS) $ 1,399,937   $ (7,659,961 )   Net income (loss) per common share - basic $ 0.08 $ (0.44 ) Net income (loss) per common share – diluted $ 0.08 $ (0.44 ) Weighted average shares outstanding: Basic 17,247,975 17,240,285 Diluted     17,690,948       17,240,285    

GlobalSCAPE, Inc.

Balance Sheets

     

December 31,

2009

(Unaudited)

 

December 31,

2008

Assets     Cash and cash equivalents $ 7,025,599 $ 6,318,604 Short term investments 1,205,000 - Accounts receivable (net of allowance for doubtful accounts of $217,286 and $330,916 on December 31, 2009 and December 31, 2008, respectively) 2,161,572 2,021,293 Federal income tax receivable 36,572 19,244 Current deferred tax asset 130,210 - Prepaid expenses   131,860     120,162   Total current assets 10,690,813 8,479,303   Fixed assets, net 1,653,369 1,642,776 Investment in CoreTrace 2,277,778 - Intangible assets, net 832,472 1,134,000 Goodwill 619,065 619,065 Deferred tax asset 574,124 297,183 Other assets   53,004     47,581     Total assets $ 16,700,625   $ 12,219,908     Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 315,584 $ 512,256 Accrued expenses 766,388 560,889 Deferred revenue 4,071,485 2,755,698 Deferred compensation   -     215,858   Total current liabilities 5,153,457 4,044,701   Deferred tax liability 527,893 545,169 Other long term liabilities 1,079,223 151,497 Commitments and contingencies - -   Stockholders’ equity: Preferred stock, par value $0.001 per share, 10,000,000 authorized, no shares issued or outstanding - -

Common stock, par value $0.001 per share, 40,000,000 authorized, 17,686,252 and 17,630,952 issued at December 31, 2009 and December 31, 2008, respectively

17,686

17,631

Additional paid-in capital 10,798,899 9,737,380 Treasury stock, 403,581 shares, at cost, at December 30, 2009 and December 31, 2008 (1,451,805 ) (1,451,805 ) Retained earnings (deficit)   575,272     (824,665 ) Total stockholders’ equity 9,940,052 7,478,541   Total liabilities and stockholders’ equity   $ 16,700,625     $ 12,219,908    

GlobalSCAPE, Inc.

Statements of Cash Flows

      Year Ended  

December 31,

2009

(Unaudited)

 

December 31,

2008

Operating Activities: Net income (loss) $ 1,399,937 $ (7,659,961 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Bad debt (recoveries) expense (60,276 ) 235,192 Depreciation and amortization 724,485 957,036 Loss on disposition of assets 85,292 9,284 Share-based compensation 1,021,389 974,334 Stock issued for goods - 300 Deferred taxes (426,969 ) (1,422,607 ) Impairment of goodwill - 5,773,010 Impairment of long-lived assets - 3,243,945 Changes in operating assets and liabilities: Accounts receivable (70,003 ) (23,558 ) Prepaid expenses (11,698 ) (32,508 ) Federal income tax receivable (17,328 ) 921,083 Other assets (5,423 ) 32,386 Accounts payable (196,672 ) 182,439 Accrued expenses 205,499 (182,057 ) Deferred revenues 2,224,466 565,381 Deferred compensation (215,858 ) 215,858 Other long-term liabilities   19,047     (107,014 ) Net cash provided by operating activities   4,675,888     3,682,543   Investing Activities: Proceeds from sale of property and equipment 1,244 4,876 Purchase of property and equipment (530,086 ) (1,617,332 ) Investment in CoreTrace (2,277,778 ) - Purchase of short-term investments (1,705,000 ) - Redemption of short-term investments   500,000     -   Net cash used in investing activities (4,011,620 ) (1,612,456 ) Financing Activities: Purchase of treasury stock - (978,382 ) Proceeds from exercise of stock options   42,727     12,420   Net cash provided by (used in) financing activities 42,727 (965,962 ) Net increase in cash 706,995 1,104,125 Cash at beginning of period   6,318,604     5,214,479   Cash at end of period   $ 7,025,599     $ 6,318,604    

Non-GAAP Financial Measures

Adjusted EBITDA

We define Adjusted EBITDA as Net Income, plus Income Taxes, Total Other Income (Expense), Depreciation and Amortization, and non-cash charges for share-based compensation and asset impairments.

Adjusted EBITDA is a metric that is used in our industry by the investment community for comparative and valuation purposes. We disclose this metric in order to support and facilitate the dialogue with research analysts and investors.

Note that Adjusted EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States (GAAP) and should not be considered a substitute for net income. Adjusted EBITDA has limitations as an analytical tool, and when assessing our operating performance, you should not consider Adjusted EBITDA in isolation, or as a substitute for net income or other income statement data prepared in accordance with GAAP. Other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. See our Adjusted EBITDA to net income reconciliations in the table below.

    Three Months Ended (Unaudited) December 31,   March 31,   June 30,   September 30,   December 31, 2008 2009 2009 2009 2009 Net Revenue $ 3,781,901 $ 3,240,394 $ 4,744,990 $ 4,296,360 $ 4,169,674   Income (loss) from operations $ (9,357,291 ) $ (241,888 ) $ 955,771 $ 882,100 $ 192,307   Net income (loss): $ (8,331,121 ) $ (244,442 ) $ 943,258 $ 575,867 $ 125,254 Plus: Income taxes (1,003,675 ) 12,973 (39,326 ) 309,485 37,488 Plus: Total other (income) expense (22,196 ) (10,419 ) 51,839 (3,252 ) 29,565 Plus: Depreciation and amortization 380,789 172,039 177,832 187,202 187,411 Plus: Share-based compensation expense 421,136 283,316 257,707 227,777 252,590 Plus: Impairment of goodwill 5,773,010 0 0 0 0 Plus: Impairment of long-lived assets   3,243,945     0     0     0     0   Adjusted EBITDA $ 461,888   $ 213,467   $ 1,391,310   $ 1,297,079   $ 632,308     Operating income margin -247.4 % -7.5 % 20.1 % 20.5 % 4.6 %   Adjusted EBITDA margin     12.2 %     6.6 %     29.3 %     30.2 %     15.2 %         Year Ended  

December 31,

2009

(Unaudited)

 

December 31,

2008

  Net Revenue $ 16,451,418 $ 15,792,242   Income (loss) from operations $ 1,788,288 $ (8,134,303 )   Net income (loss): $ 1,399,937 $ (7,659,961 ) Plus: Income taxes 320,619 (380,211 ) Plus: Total other (income) expense 67,732 (94,131 ) Plus: Depreciation and amortization 724,485 957,036 Plus: Share-based compensation expense 1,021,389 974,334 Plus: Impairment of goodwill - 5,773,010 Plus: Impairment of long-lived assets   -     3,243,945   Adjusted EBITDA $ 3,534,162 $ 2,814,022   Operating income margin 10.9 % -51.5 %   Adjusted EBITDA margin     21.5 %     17.8 %  

Reconciliation of Net Loss to Adjusted Net Income

       

December 31,

2008

  Net loss: $ (7,659,961 ) Impairment of goodwill 5,773,010 Impairment of long-lived assets 3,243,945 Effect of income taxes (1,102,839 ) Adjusted net income   $ 254,155    

The table above reconciles net loss to Adjusted Net Income. Adjusted Net Income is calculated by eliminating non-cash impairments and their related tax effects to arrive at Adjusted Net Income. The tax effects are determined by calculating the tax provision for GAAP net loss and comparing the results to the tax provision for Adjusted Net Income, which excludes the adjusting items. The difference in the tax provision calculations represents the effect of income taxes.