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 2010 fiscal year end.

Revenue for fiscal 2010 was $18.6 million, an increase of 13 percent when compared with revenue of $16.5 million last year, and the highest revenue in the Company’s history. Net income for fiscal 2010 was approximately $0.9 million, or $0.05 per diluted share, compared with net income of $1.4 million, or $0.08 per diluted share in 2009. Cash and short term investments grew to $11.1 million, a 35 percent increase from 2009.

Revenue for the fourth quarter was $4.9 million, an increase of 18 percent compared to the fourth quarter of 2009. “Setting a new high water mark for revenue in 2010 is a significant milestone for GlobalSCAPE,” said Jim Morris, GlobalSCAPE president and CEO. “We grew revenue every quarter while achieving record revenue for the fiscal year. During 2011 we are continuing our transition toward generating additional recurring revenue in the form of subscription services like our Managed Information Xchange solution. This subscription revenue potentially provides us with a growing revenue stream visible into future periods, but will require a transition that I expect to run through the later part of 2011.”

Adjusted EBITDA for the fourth quarter was $723,000, a 15 percent increase compared with the fourth quarter of 2009. For the full year, Adjusted EBITDA was $3.1 million, a decrease of 11 percent relative to 2009. The Adjusted EBITDA margin for the fourth quarter was 14.7 percent, marginally down from 15.2 percent in the fourth quarter of 2009. For the full year, the Adjusted EBITDA margin was 16.9 percent, down from 21.5 percent in 2009. 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. “In 2010, cash balances grew and we remained profitable during a period when we continued to invest in our operations to further increase our top-line performance,” Morris continued. “With our new product launches and with increasing subscription revenue, we believe 2011, especially the second half of the year, can take us to new heights.”

Conference Call March 29, 2011 at 5:00 p.m. ET

GlobalSCAPE management will hold a conference call Tuesday, March 29 to discuss the fourth quarter and fiscal year 2010 financial results and other corporate matters at 5:00 p.m. Eastern Time/4:00 p.m. Central Time. Those wishing to join should dial 1-800-380-1061 and use Conference ID # 41318117. 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, 2011.

About GlobalSCAPE

GlobalSCAPE, Inc. (NYSE Amex: GSB), headquartered in San Antonio, Texas, 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," "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 2010 calendar year, filed with the Securities and Exchange Commission on March 29, 2011.

Summary Financial Data

GlobalSCAPE, Inc.

Statements of Operations

        (in thousands, except per share amounts)   Three months ended December 31, For the Year Ended December 31,   2010   2009     2010   2009     Operating Revenues: Software license $ 2,627 $ 2,476 $ 10,279 $ 10,274 Maintenance and support 2,146 1,670 7,788 6,026 Others   145   23     498   151   Total Revenues 4,918 4,169 18,565 16,451 Operating Expenses: Cost of revenues 212 106 601 336 Selling, general and administrative expenses 3,366 2,973 12,815 10,798 Research and development expenses 864 711 3,016 2,805 Depreciation and amortization   202   187     852   724   Total operating expenses   4,644   3,977     17,284   14,663   Income from operations 274 192 1,281 1,788 Other income (expense)   4   (29 )   10   (67 ) Income before income taxes 278 163 1,291 1,721 Provision for income taxes   128   38     410   321   Net Income $ 150 $ 125   $ 881 $ 1,400     Net income per common share - basic $ 0.01 $ 0.01 $ 0.05 $ 0.08 Net income per common share - diluted $ 0.01 $ 0.01 $ 0.05 $ 0.08 Average shares outstanding: Basic 17,863 17,277 17,540 17,248 Diluted 18,508 17,845 18,260 17,691    

GlobalSCAPE, Inc.

Balance Sheets

  (in thousands except share amounts)   December 31, December 31,   2010     2009     Assets Current assets: Cash and cash equivalents $ 11,087 $ 7,026 Short term investments - 1,205 Accounts receivable (net of allowance for doubtful accounts of $237 and $217 on December 31, 2010 and December 31, 2009, respectively) 3,124 2,162 CoreTrace receivable 298 - Federal income tax receivable 94 37 Current deferred tax assets 881 130 Prepaid expenses   319     132   Total current assets 15,803 10,692   Fixed assets, net 1,286 1,653 Investment - CoreTrace, at cost 2,278 2,278 Intangible assets, net 531 832 Goodwill 619 619 Deferred tax assets - 46 Other assets   30     53     Total assets $ 20,547   $ 16,173     Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 250 $ 316 Accrued expenses 1,392 764 Deferred revenue   5,554     4,071   Total current liabilities 7,196 5,151   Deferred tax liabilities 7 - Other long term liabilities 1,185 1,079   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, 18,346,982 and 17,686,252 issued December 31, 2010 and 2009 18 18 Additional paid-in capital 12,137 10,802 Treasury stock, 403,581 shares, at cost, at December 31, 2010

and 2009

(1,452 ) (1,452 ) Retained earnings   1,456     575   Total stockholders’ equity   12,159     9,943   Total liabilities and stockholders’ equity $ 20,547   $ 16,173      

GlobalSCAPE, Inc.

Statements of Cash Flows

  (in thousands) For the year ended December 31,   2010     2009   Operating Activities: Net income $ 881 $ 1,400 Adjustments to reconcile net income to net cash provided by operating activities: Bad debt expense (recoveries) 121 (60 ) Depreciation and amortization 852 724 Loss on disposition of assets - 85 Stock-based compensation 1,006 1,021 Deferred taxes (698 ) (424 ) Excess tax benefits from exercise of stock-based compensation (97 ) - Changes in operating assets and liabilities:

Accounts receivable

(1,083 ) (70 ) CoreTrace receivable (298 ) - Prepaid expenses (187 ) (12 ) Federal income tax 40 (17 ) Other assets 23 (5 ) Accounts payable (66 ) (197 ) Accrued expenses 628 203 Deferred revenues 1,483 2,225 Deferred compensation - (216 ) Other long-term liabilities   106     19   Net cash provided by operating activities   2,711     4,676   Investing Activities: Proceeds from sale of property and equipment - 1 Purchase of property and equipment (184 ) (530 ) Investment in CoreTrace - (2,278 ) Purchase of short-term investments (350 ) (1,705 ) Redemption of short-term investments   1,555     500   Net cash provided by (used in) investing activities 1,021 (4,012 ) Financing Activities: Proceeds from exercise of stock options 232 43 Tax benefit from stock-based compensation   97     -   Net cash provided by financing activities 329 43 Net increase in cash 4,061 707 Cash at beginning of period   7,026     6,319   Cash at end of period $ 11,087   $ 7,026     Supplemental disclosure of cash flow information: Cash paid during the period for: Income taxes $ 1,128   $ 764  

Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted EBITDA Margin

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 and Adjusted EBITDA Margin are metrics that are 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 and Adjusted EBITDA Margin are not measures 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 and Adjusted EBITDA Margin have limitations as analytical tools, and when assessing our operating performance, you should not consider Adjusted EBITDA and Adjusted EBITDA Margin 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 and Adjusted EBITDA Margin differently than we do, limiting their 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, 2009 2010 2010 2010 2010 Net Revenue $ 4,170 $ 4,413 $ 4,466 $ 4,768 $ 4,918   Income from operations $ 192 $ 556 $ 185 $ 268 $ 272   Net income: $ 125 $ 364 $ 134 $ 233 $ 150 Plus: Income taxes 37 193 55 35 127 Plus: Total other (income) expense 30 (1 ) (4 ) 0 (4 ) Plus: Depreciation and amortization 187 200 250 201 201 Plus: Stock-based compensation expense   253     263     219     275     249   Adjusted EBITDA $ 632   $ 1,019   $ 654   $ 744   $ 723     Operating income margin 4.6 % 12.6 % 4.1 % 5.6 % 5.5 %   Adjusted EBITDA margin 15.2 % 23.1 % 14.6 % 15.6 % 14.7 %   Year Ended December 31,   December 31,   2010     2009   Net Revenue $ 18,565 $ 16,451   Income from operations $ 1,281 $ 1,788   Net income: $ 881 $ 1,400 Plus: Income taxes 410 321 Plus: Total other (income) expense (10 ) 67 Plus: Depreciation and amortization 852 724 Plus: Stock-based compensation expense   1,006     1,021   Adjusted EBITDA $ 3,139   $ 3,533     Operating income margin 6.9 % 10.9 %   Adjusted EBITDA margin 16.9 % 21.5 %