GSB Globalscape Inc

GlobalSCAPE, Inc. (NYSE MKT: GSB), a pioneer and worldwide leader in the secure and reliable exchange of business information, today announced its financial results for the fourth quarter and fiscal year, which ended December 31, 2016.

Fourth Quarter 2016 Financial Summary:

• Revenue for the fourth quarter of 2016 was $9 million, an increase of 7 percent when compared with the fourth quarter of 2015. This is the highest revenue quarter in Globalscape’s history.
• For the fourth quarter of 2016, the Company’s net income was $1.3 million, an 8 percent increase when compared to net income for the fourth quarter of 2015.
• Basic earnings per share was $0.06 for the fourth quarter of 2016.

Fiscal 2016 Financial Summary:

• Revenue for fiscal 2016 was $33.3 million, an 8 percent increase when compared to the same time period in 2015.
• Adjusted EBITDA for fiscal 2016 was $7.1 million compared with $7.2 million for the same period in 2015. Adjusted EBITDA is not a measure of financial performance under GAAP. It should not be considered as a substitute for net income presented on our condensed consolidated statement of operations and comprehensive income or for cash flow from operating activities presented on our condensed consolidated statement of cash flows.
• The Company had cash, cash equivalents and short-term investments of $24 million on December 31, 2016.
• Other than liabilities for normal trade payables and taxes, the Company has no debt.

Fiscal 2016 Business Highlights:

Corporate: Globalscape had several corporate milestones in 2016, including:

• The appointment of Matt Goulet as President and CEO;
• The promotions of Dan Burke to Vice President of Worldwide Sales and Adam Snider to Vice President of Operations;
• The appointment of Gary S. Mullen to Vice President of Marketing;
• The Company celebrated its 20th anniversary on April 17, 2016.

Technology: Globalscape refocused on extending the capabilities of its Enhanced File TransferTM (EFTTM) platform, releasing a number of new features and functionalities in 2016, including:

• Accelerate Module: provides fast file transfers which increase the speed, efficiency and reliability of data movement.
• Advanced Authentication Module (AAM) and the Workspaces Outlook plugin: AAM provides a single source of authentication across a customer’s infrastructure. The Workspaces Outlook plugin performs secure ad hoc file transfers via email, providing customers with the reporting features in EFT and combining them with the simplicity and security of sending files with Mail Express®. The integration of the two products takes the best features in Mail Express and incorporates them into EFT.
• Globalscape also made EFT Enterprise available in the Amazon Web Services and Microsoft Azure Marketplaces.

Technology Alliances: In keeping with a core pillar for growth, Globalscape expanded key technology alliances in 2016, including:

• Joining F5 Networks’ Technology Alliance Program (TAP): offering an interoperable solution with EFT with High Availability and F5 BIG-IP® Local Traffic Manager™ (LTM®). In jointly deploying the companies’ products, customers will have horizontal scalability, reduced system downtime and enhanced network reliability, when compared with other file transfer platforms.
• Joining Hewlett Packard Enterprise (HPE) Partner Ready for OEM program: allowing the two companies to work together to provide solutions and resources to address organizations’ struggle to manage and secure data at rest or in motion.

Supporting Quote:

Matt Goulet, President and Chief Executive Officer at Globalscape“Data is the cornerstone of Globalscape’s business, and while we had another record-breaking revenue quarter, we realize that we have only scratched the surface when seeking to help businesses protect and secure their data. The commitment we made in the second half of 2016 to focus on our core EFT platform is propelling the product line forward to proactively address the future data management challenges of our customers. Our sustained focus on strengthening our technology ecosystem while investing in research and development, technology alliance partnerships and technology acquisition is critical to our long-term success and growth.”

Conference Call January 26, 2017 at 4:30 p.m. ET

Globalscape management will hold a conference call on January 26, 2017, at 4:30 p.m. Eastern Time/3:30 p.m. Central Time to discuss financial results and other corporate matters for the fourth quarter and fiscal 2016. Those wanting to join may call 888-438-5448 or 719-325-2244 and use Conference ID # 3545702. A live webcast of the conference call will also be available on the Investor Relations page of the Company's website at www.globalscape.com. A webcast replay will be made available on the Company’s website shortly after the call is completed.

About Globalscape

GlobalSCAPE, Inc. (NYSE MKT: GSB) is a pioneer in the reliable exchange of mission-critical business data and intellectual property. Globalscape’s leading enterprise suite of solutions delivers military-proven security for achieving best-in-class control and visibility of data across multiple locations. Founded in 1996, Globalscape’s software and services are trusted by tens of thousands of customers worldwide, including global enterprises, governments, and small and medium enterprises. For more information, visit www.globalscape.com or follow the blog and Twitter updates.

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,” “expect,” 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 2015 fiscal year, filed with the Securities and Exchange Commission on March 3, 2016.

Use of Non-GAAP Measures

The Company uses Adjusted EBITDA (Earnings Before Interest, Taxes, Total Other Income/Expense, Depreciation, Amortization, other than amortization of capitalized software development costs, and Share-Based Compensation Expense) to provide it with a view of cash flow from operations that is supplemental and secondary to its primary assessment of cash flow from operating activities as presented in its condensed consolidated statement of cash flows. The Company uses EBITDA to assess cash flow from our operations prior to considering the cost of financing its business and the effects of income taxes.

Adjusted EBITDA is not a measure of financial performance under GAAP. It should not be considered as a substitute for net income presented on our condensed consolidated statement of operations and comprehensive income or for cash flow from operating activities presented on our condensed consolidated statement of cash flows. Adjusted EBITDA has limitations as an analytical tool and when assessing our operating performance. Adjusted EBITDA should not be considered in isolation or without a simultaneous reading and consideration of our financial statements prepared in accordance with GAAP.

    GlobalSCAPE, Inc. Condensed Consolidated Balance Sheets (in thousands except share amounts)         December 31, 2016     2015 Assets Current assets: Cash and cash equivalents $ 8,895 $ 15,885 Short term investments 2,754 3,254 Accounts receivable, net 6,964 5,875 Federal income tax receivable 170 547 Prepaid expenses   521         511   Total current assets 19,304 26,072   Property and equipment, net 456 498 Long term investments 12,779 - Capitalized software development costs 3,743 3,982 Goodwill 12,712 12,712 Deferred tax asset 942 940 Other assets   245         60   Total assets $ 50,181       $ 44,264     Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 876 $ 839 Accrued expenses 1,835 1,893 Deferred revenue 13,605 12,460 Income taxes payable  

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        -   Total current liabilities 16,316 15,192   Deferred revenue, non-current portion 3,840 3,808 Other long term liabilities 147 134 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, 21,920,912 and 21,303,467 shares issued at December 31, 2016 and December 31, 2015, respectively 22 21 Additional paid-in capital 21,650 19,583 Treasury stock, 403,581 shares, at cost, at December 31, 2016 and December 31, 2015 (1,452 ) (1,452 ) Retained earnings   9,658         6,978   Total stockholders’ equity   29,878         25,130   Total liabilities and stockholders’ equity $ 50,181       $ 44,264       GlobalSCAPE, Inc. Condensed Consolidated Statements of Operations and Comprehensive Income (in thousands, except per share amounts)                   For the Three Months For the Year Ended December 31, Ended December 31, 2016 2015 2016 2015   Operating revenues: Software licenses $ 3,419 $ 3,433 $ 11,985 $ 12,023 Maintenance and support 4,939 4,351 18,668 16,489 Professional services   671   692   2,684   2,223   Total revenues   9,029   8,476   33,337   30,735   Costs of revenues Software licenses 807 777 3,110 2,428 Maintenance and support 396 409 1,541 1,466 Professional services   403   422   1,671   1,394   Total costs of revenues   1,606   1,608   6,322   5,288   Gross Profit   7,423   6,868   27,015   25,447   Operating expenses Sales and marketing 2,808 3,061 11,682 10,406 General and administrative 1,891 1,539 6,975 6,168 Research and development   811   730   2,539   2,562   Total operating expenses   5,510   5,330   21,196   19,136   Income from operations   1,913   1,538   5,819   6,311   Other income (expense): Interest expense

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(4 ) Interest income   70   26   159   82   Total other income (expense)   70   26   159   78   Income before income taxes 1,983 1,564 5,978 6,389 Provision for income taxes   717   317   2,027   1,867   Net income $ 1,266 $ 1,247 $ 3,951 $ 4,522   Comprehensive income $ 1,266 $ 1,247 $ 3,951 $ 4,522     Net income per common share - basic $ 0.06 $ 0.06 $ 0.19 $ 0.22     Net income per common share - diluted $ 0.06 $ 0.06 $ 0.18 $ 0.21     Weighted average shares outstanding: Basic   21,318   20,949   21,126   20,824     Diluted   21,802   21,562   21,677   21,366       GlobalSCAPE, Inc. Condensed Consolidated Statements of Cash Flows (in thousands)         For the Year Ended December 31, 2016 2015 Operating Activities: Net income $ 3,951 $ 4,522 Adjustments to reconcile net income to net cash provided by operating activities: Bad debt expense 72 62 Depreciation and amortization 2,045 1,553 Stock-based compensation 973 647 Deferred taxes (2 ) (248 ) Excess tax deficiency from exercise of share based compensation   24     (58 ) Subtotal before changes in operating assets and liabilities 7,063 6,478 Changes in operating assets and liabilities: Accounts receivable (1,161 ) 1 Prepaid expenses (10 ) (23 ) Federal income taxes

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(137 ) Accrued interest receivable (163 ) (69 ) Other assets (185 ) 40 Accounts payable 37 (272 ) Accrued expenses (58 ) 303 Deferred revenues 1,177 708 Other long-term liabilities  

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  (8 ) Net cash provided by (used in) operating activities   7,066     7,021   Investing Activities: Software development costs (1,538 ) (1,967 ) Purchase of property and equipment (226 ) (152 ) Purchase of certificates of deposit   (12,116 )   -   Net cash provided by (used in) investing activities   (13,880 )   (2,119 ) Financing Activities: Proceeds from exercise of stock options 1,119 508 Tax deficiency (benefit) from stock-based compensation (24 ) 58 Dividends paid   (1,271 )   (941 ) Net cash provided by (used in) financing activities   (176 )   (375 ) Net increase (decrease) in cash (6,990 ) 4,527 Cash at beginning of period   15,885     11,358   Cash at end of period $ 8,895   $ 15,885     Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ -   $ -   Income taxes $ 1,638   $ 2,146     GlobalSCAPE, Inc. Adjusted EBITDA (in thousands)                   Three Months Ended Year Ended December 31 December 31 2016 2015 2016 2015 Net Income

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1,266 $ 1,247 $ 3,951 $ 4,522 Add (subtract) items to determine adjusted EBITDA: Income tax expense 717 317 2,027 1,867 Interest (income) expense, net

$

(70 ) $ (26 )

$

(159 ) $ (78 ) Depreciation and amortization: Total depreciation and amortization 520 438 2,045 1,553 Amortization of capitalized software development costs (459 ) (371 ) (1,777 ) (1,283 ) Stock-based compensation expense   252     165     973     647   Adjusted EBITDA $ 2,226   $ 1,770   $ 7,060   $ 7,228  

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GlobalSCAPE, Inc.Investor Relations, 210-801-8489ir@globalscape.comorPress:Ciri Haugh, 210-308-8267PR@globalscape.com