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GLOBALSCAPE INC
Symbol U : GSB
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Globalscape Announces Financial Results for the Fourth Quarter 2012 and 2012 Fiscal Year

2013-03-12 16:10 ET - News Release

Reports Record Annual Revenue of $23.4 Million


Company Website: http://www.globalscape.com
SAN ANTONIO -- (Business Wire)

GlobalSCAPE, Inc. (NYSE MKT: GSB), a leading developer of secure information exchange solutions, today announced its financial results for fiscal year 2012 and the three month period ended December 31, 2012.

Revenue for fiscal year 2012 was $23.4 million, a 12 percent increase over fiscal year 2011 revenue of $20.9 million. Revenue for the three months ended December 31, 2012, was $6.2 million, a 21% increase over revenue of $5.1 million for the three months ended December 31, 2011.

The Company’s deferred revenue, which the Company believes can be an indicator of future revenue trends, grew to $9.8 million at December 31, 2012, compared to $7.6 million at December 31, 2011, a 28% increase.

For fiscal year 2012, the Company had a net loss of $1.8 million, or ($0.10) per share. This net loss resulted primarily from a $3.3 million, non-cash impairment charge related to the Company’s investment in and notes receivable from CoreTrace Corporation, which was partially offset by a $1.3 million non-cash credit to income related to a previously recorded liability for a potential earn out payment associated with the acquisition of TappIn, Inc. that will not have to be paid. Excluding these infrequent items that occurred only in fiscal year 2012, the Company had non-GAAP net income of $121,000, or $0.01 per share. The Company’s comparable net income for fiscal year 2011 on both a GAAP and non-GAAP basis was $635,000, or $0.04 per basic common share.

For the three months ended December 31, 2012, the Company had net income of $1.3 million, or $0.07 per share. This result includes the $1.3 million non-cash credit to income, which is an infrequent item related to the previously recorded liability for a potential earn out payment associated with the acquisition of TappIn, Inc. that will not have to be paid. Excluding this infrequent item, the Company had a net loss on a non-GAAP basis for the three months ended December 31, 2012, of $36,000, or ($0.00) per share. For the three months ended December 31, 2011, the Company had a net loss of $505,000, or ($0.03) per share.

Adjusted EBITDA Excluding Infrequent Items was $2.7 million for fiscal year 2012 compared to $2.6 million for fiscal year 2011. Adjusted EBITDA Excluding Infrequent Items was $929,000 for the three months ended December 31, 2012, compared to ($115,000) for the three months ended December 31, 2011.

Amounts reported on a non-GAAP basis and Adjusted EBITDA Excluding Infrequent Items are not measures of financial performance under GAAP. Non-GAAP financial measurements and Adjusted EBITDA Excluding Infrequent Items have limitations as analytical tools and when assessing the Company’s operating performance. Non-GAAP financial measurements and Adjusted EBITDA Excluding Infrequent Items should not be considered in isolation or as a substitute for net income or other income statement data prepared in accordance with GAAP.

Net cash provided by operating activities was $3.8 million for fiscal year 2012 compared to $2.8 million for fiscal year 2011. This cash flow performance allowed the Company to pay a special cash dividend of $0.07 per share in December 2012 and end the year with over $8 million of cash and $3 million of long term investments at December 31, 2012.

“Our continued revenue growth and strong cash flow performance demonstrates the strength of our solution portfolio, particularly our Enhanced File Transfer platform, and also reflects increased maintenance and support contract revenue across the majority of our product lines,” said Craig Robinson, President and Chief Executive Officer of Globalscape. “I look forward to continued growth and increased profitability for fiscal year 2013.”

Conference Call March 12, 2013 at 4:30 p.m. ET

Globalscape management will hold a conference call Tuesday, March 12, 2013 to discuss financial results for the fourth quarter of 2012 and the fiscal year as a whole as well as other corporate matters at 4:30 p.m. Eastern Time/3:30 p.m. Central Time. Those wishing to join should dial 1-877-941-8416 and use Conference ID # 4606251. 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 13, 2013.

About Globalscape

San Antonio, Texas-based GlobalSCAPE, Inc. (NYSE MKT: GSB) is a leading provider of secure information exchange capabilities for enterprises and consumers through the development and distribution of software, delivery of managed and hosted solutions, and provision of associated services. The Company’s solution portfolio facilitates transmission of critical information such as financial data, medical records, customer files, vendor files, personnel files and other similar documents between diverse and geographically separated network infrastructures while supporting a range of information protection approaches to meet privacy and other security requirements. These products provide the ability to monitor these activities, as well as access the underlying data, securely and flexibly through a wide range of network-enabled, mobile devices, including tablets and smartphones. The Company has thousands of enterprise customers and more than one million individual consumers in over 150 countries. 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," 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 2011 calendar year, filed with the Securities and Exchange Commission on March 29, 2012.

       
GlobalSCAPE, Inc.
Statements of Operations
(Unaudited)
 
(in thousands, except per share amounts)
 
Three months ended December 31, For the Year Ended December 31,
  2012     2011     2012     2011
 
Operating Revenues:
Software license $ 2,231 $ 2,022 $ 9,447 $ 9,149
Maintenance and support 3,108 2,491 11,298 9,424
Professional services 534 406 1,547 1,772
Others   326     204     1,080     549
Total Revenues 6,199 5,123 23,372 20,894
Operating Expenses:
Cost of revenues 334 374 1,296 1,723
Selling, general and administrative expenses 4,270 4,310 16,801 14,466
Research and development expenses 870 765 3,531 3,124
Affiliated entity asset impairment 0 0 3,264 0
TappIn earnout liability not earned (1,343 ) 0 (1,343 ) 0
Depreciation and amortization   266     220     1,217     790
Total operating expenses   4,397     5,669     24,766     20,103
Income (loss) from operations 1,802 (546 ) (1,394 ) 791
Other income (expense)   (51 )   (10 )   (189 )   13
Income (loss) before income taxes 1,751 (556 ) (1,583 ) 804
Provision (benefit) for income taxes   444     (51 )   217     169
Net (loss) income $ 1,307   $ (505 ) $ (1,800 ) $ 635
 
Net income (loss) per common share - basic $ 0.07 $ (0.03 ) $ (0.10 ) $ 0.04
Net income (loss) per common share - diluted $ 0.07 $ (0.03 ) $ (0.10 ) $ 0.03
Average shares outstanding:
Basic 18,421 18,262 18,358 18,081
Diluted 18,959 18,262 18,358 18,747
   
GlobalSCAPE, Inc.
Balance Sheets
(Unaudited)
(in thousands except share amounts)
 
December 31, December 31,
  2012       2011  
 
Assets
Current assets:
Cash and cash equivalents $ 8,079 $ 8,861
Accounts receivable (net of allowance for doubtful accounts
of $171 and $170 on December 31, 2012 and
December 31, 2011 respectively) 3,350 3,433
CoreTrace receivable - 761
Federal income tax receivable - 244
Current deferred tax assets 177 938
Prepaid expenses   426       239  
Total current assets 12,032 14,476
 
Fixed assets, net 1,202 1,067
Long-term investments 3,060 3,000
Investment in affiliated entity - 2,278
Intangible assets, net 4,006 4,815
Goodwill 12,712 12,712
Deferred tax asset 535 -
Other assets   41       30  
Total assets $ 33,588     $ 38,378  
 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 432 $ 591
Accrued expenses 1,353 1,396
Deferred revenue 8,293 6,248
Income taxes payable 46 -

TappIn earn out, current portion

500 3,303
Long term debt, current portion   1,335     1,276  
Total current liabilities 11,959 12,814
 
Deferred revenue, non-current portion 1,480 1,384
TappIn earn out, non-current portion 3,694 3,694
Long-term debt. non-current portion 4,389 5,724
Deferred tax liability - 573
Other long term liabilities 62 53
 
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, 18,846,547 and 18,691,947 issued December 31, 2012
and December 31, 2011 19 19
Additional paid-in capital 14,435 13,478
Treasury stock, 403,581 shares, at cost, at December 31, 2012
and December 31, 2011. (1,452 ) (1,452 )
Retained earnings   (998 )     2,091  
Total stockholders’ equity   12,004       14,136  
Total liabilities and stockholders’ equity $ 33,588     $ 38,378  
   
GlobalSCAPE, Inc.
Statements of Cash Flows
(Unaudited)
 
(in thousands)
For the year ended December 31,
  2012     2011  
Operating Activities:
Net (loss) income $ (1,800 ) $ 635
Adjustments to reconcile net income to net cash provided by operating activities:
Bad debt expense (recoveries) 68 (62 )
Depreciation and amortization 1,217 790
Stock-based compensation 915 1,003
Deferred taxes (347 ) (352 )
Excess tax deficiency (benefit) from
exercise of share based compensation 28 13
Affiliated entity asset impairment 3,264 -
TappIn earnout liability not earned (1,343 ) -
Other 40
Changes in operating assets and liabilities:
Accounts receivable (60 ) (78 )
CoreTrace receivable (150 ) (463 )
Prepaid expenses (187 ) 108
Federal income tax 262 (52 )
Other assets (11 ) -
Accounts payable (159 ) 341
Accrued expenses (43 ) 1
Deferred revenues 2,141 690
Other long-term liabilities   9     252  
Net cash provided by operating activities   3,844     2,826  
Investing Activities:
Software development costs (330 ) -
Purchase of property and equipment (213 ) (201 )
Purchase of TappIn, Inc. (1,500 ) (9,190 )
Purchase of short-term investments - -
Interest on long-term investments (60 ) -
Purchase of long-term investments   -     (3,000 )
Net cash provided by (used in) investing activities (2,103 ) (12,391 )
Financing Activities:
Proceeds from exercise of stock options 70 352
Tax deficiency (benefit) from stock-based compensation (28 ) (13 )
Notes payable principle payments (1,276 ) -
Proceeds from note payable 7,000
Dividends paid out   (1,289 )   -  
Net cash provided by (used in) financing activities (2,523 ) 7,339
Net (decrease) increase in cash (782 ) (2,226 )
Cash at beginning of period   8,861     11,087  
Cash at end of period $ 8,079   $ 8,861  
 
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 294   $ -  
Income taxes $ 271   $ 1,225  
Noncash - TappIn earn out $ -   $ 6,997  
       
GlobalSCAPE, Inc.
Adjusted EBITDA Excluding Infrequent Items
(In thousands)
(Unaudited)
Three Months Ended Twelve Months Ended

December 31,

December 31,
  2012     2011     2012     2011  
Net income (loss) 1,307 (505 ) (1,800 ) 635
Add (subtract) items to determine adjusted EBITDA excluding infrequent items
Income tax expense 444 (51 ) 217 169
Other expense 51 10 189 (13 )
Depreciation and amortization 266 220 1,217 790
Affiliated entity asset impairment - - 3,264 -
TappIn earnout liability (1,343 ) - (1,343 ) -
Stock-based compensation expense 204 211 915 1,003
       
Adjusted EBITDA $ 929   $ (115 ) $ 2,659   $ 2,584  
 

Adjusted EBITDA [Earnings before Interest, Taxes, Total Other Income (Expense), Depreciation, and Amortization (including amortized stock-based compensation expense)] is not a measure of financial performance under generally accepted accounting principles and should not be considered a substitute for net income. Adjusted EBITDA has limitations as an analytical tool and when assessing our operating performance. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or other income statement data prepared in accordance with generally accepted accounting principles.

       
GlobalSCAPE, Inc.
Reconciliation of GAAP Net Loss to Non-GAAP Net Loss:
(Unaudited)
(In thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
  2012     2011     2012     2011
 

Non-GAAP Net Income (Loss)

GAAP net income (loss) 1,307 (505 ) (1,800 ) 635
Affiliated entity asset impairment 0 0 3,264 0
TappIn earnout liability not earned   (1,343 )   0     (1,343 )   0

Non-GAAP net income (loss)

$ (36 ) $ (505 ) $ 121   $ 635
 

Non-GAAP Earnings Per Share

Non-GAAP net income (loss) $ (36 ) $ (505 ) $ 121 $ 635
Weighted average share outstanding:
Basic 18,421 18,262 18,358 18,081
Diluted 18,959 18,262 19,016 18,747
Non-GAAP net income (loss) per common share:
Basic $ (0.00 ) $ (0.03 ) $ 0.01 $ 0.04
Diluted $ (0.00 ) $ (0.03 ) $ 0.01 $ 0.03

 

Non-GAAP net income is not a measure of financial performance under generally accepted accounting principles and should not be considered a substitute for net income. Non-GAAP net income has limitations as an analytical tool and when assessing our operating performance. Non-GAAP net income should not be considered in isolation or as a substitute for net income or other income statement data prepared in accordance with generally accepted accounting principles.

Contacts:

GlobalSCAPE, Inc.
Jim Albrecht, Chief Financial Officer
ir@Globalscape.com
or
Summit IR Group, Inc.
Jim Fanucchi, 408-404-5400
ir@Globalscape.com

Source: GlobalSCAPE, Inc.

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