Globalscape Announces Financial Results For The Second Quarter 2013

GlobalSCAPE, Inc. (NYSE MKT: GSB), a leading developer of secure information exchange solutions, today announced its financial results for the three and six month periods ended June 30, 2013.

Revenue for the three months ended June 30, 2013, was $5.9 million, a 4% increase over revenue of $5.7 million for the three months ended June 30, 2012. Revenue for the six months ended June 30, 2013 was $11.8 million, a 6% increase over revenue of $11.1 million for the six months ended June 30, 2012.

The Company’s deferred revenue, which the Company believes can be an indicator of future revenue trends, grew to $11.0 million at June 30, 2013, compared to $8.0 million at June 30, 2012, a 37.5% increase.

For the three months ended June 30, 2013, the Company had net income of $381,000, or $0.02 per share, compared to a net loss of $140,000, or ($0.01) per share, for the three months ended June 30, 2012. For the six months ended June 30, 2013, the Company had net income of $898,000, or $0.05 per share, compared to a net loss of $393,000, or ($0.02) per share for the six months ended June 30, 2012.

Adjusted EBITDA Excluding Infrequent Items was $997,000 for the three months ended June 30, 2013, compared to $478,000 for the three months ended June 30, 2012, and was $2.2 million for the six months ended June 30, 2013, compared to $658,000 for the six months ended June 30, 2012. Adjusted EBITDA Excluding Infrequent Items is not a measure of financial performance under GAAP and has limitations as an analytical tools and when assessing the Company’s operating performance. 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 $1.2 million for the six months ended June 30, 2013. This cash flow performance allowed the Company to end the quarter with over $7.8 million of cash and $3.1 million of long term investments.

“Our second quarter results underline our return to profitability and position us for further growth,” said Craig Robinson, President and Chief Executive Officer of Globalscape. “Our revenue and deferred revenue have continued their consistent pattern of growth between comparable periods, which reflects ongoing customer satisfaction with our solutions. We have confidence in our ability to continue driving the business forward for the benefit of our shareholders.”

Conference Call August 7, 2013 at 4:30 p.m. ET

Globalscape management will hold a conference call Wednesday, August 7, 2013 to discuss financial results for the second quarter of 2013 and other corporate matters at 4:30 p.m. Eastern Time/3:30 p.m. Central Time. Those wanting to join should dial 1-888-846-5003 and use Conference ID # 4634013. 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 September 9, 2013.

About Globalscape

San Antonio, Texas-based GlobalSCAPE, Inc. (NYSE MKT: GSB) ensures the reliability of mission-critical operations by securing sensitive data and intellectual property. Globalscape’s suite of solutions features EFT, the industry-leading enterprise file transfer solution that delivers military-grade security and a customizable platform for achieving best in class control and visibility of data in motion or at rest, across multiple locations. Founded in 1996, Globalscape is a leading enterprise solution provider of secure information exchange software and services to thousands of customers, including global enterprises, governments and small businesses. For more information, visit Globalscape, or subscribe to our Blog or 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 2012 calendar year, filed with the Securities and Exchange Commission on March 28, 2013.
 
 
Summary Financial Data
 
GlobalSCAPE, Inc.
Statements of Operations
(Unaudited)
 
(in thousands, except per share amounts)                
 
Three months ended June 30, Six months ended June 30,
  2013     2012     2013     2012  
 
Operating Revenues:
Software license $ 1,905 $ 2,541 $ 3,863 $ 4,885
Maintenance and support 3,367 2,611 6,650 5,251
Professional services 426 411 825 739
Others   227     139     467     220  
Total Revenues 5,925 5,702 11,805 11,095
Operating Expenses:
Cost of revenues 269 313 533 631
Selling, general and administrative expenses 3,796 4,243 7,646 8,395
Research and development expenses 968 897 1,730 1,839
Depreciation and amortization   264     321     521     637  
Total operating expenses   5,297     5,774     10,430     11,502  
Income (loss) from operations 628 (72 ) 1,375 (407 )
Other income (expense), net   (43 )   (61 )   (90 )   (127 )
Income (loss) before income taxes 585 (133 ) 1,285 (534 )
Provision (benefit) for income taxes   204     7     387     (141 )
Net income (loss) $

381
  $

(140

)
$

898
  $

(393
)
Comprehensive income (loss) $

381

 
$

(140

)
$

898

 
$

(393

)
 
Net income (loss) per common share - basic $ 0.02 $ (0.01 ) $ 0.05 $ (0.02 )
Net income (loss) per common share - diluted $ 0.02 $ (0.01 ) $ 0.05 $ (0.02 )
Average shares outstanding:
Basic 18,502 18,320 18,473 18,304
Diluted 18,955 18,320 18,920 18,304
 
 
GlobalSCAPE, Inc.
Balance Sheets
(Unaudited)
 
In thousands except per share amounts.        
 
June 30, December 31,
  2013         2012  
 
Assets
Current assets:
Cash and cash equivalents $ 7,812 $ 8,079
Accounts receivable (net of allowance for doubtful accounts
of $201 and $171 on June 30, 2013 and
December 31, 2012 respectively) 4,799 3,350
Income tax receivable 343 -
Current deferred tax assets 194 177
Prepaid expenses   411         426  
Total current assets 13,559 12,032
 
Fixed assets, net 787 900
Investment in certificate of deposit 3,091 3,060
Intangible assets, net 4,299 4,308
Goodwill 12,712 12,712
Deferred tax asset 437 535
Other assets   103         41  
Total assets $ 34,988       $ 33,588  
 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 592 $ 432
Accrued expenses 1,271 1,353
Deferred revenue 9,402 8,293
Income taxes payable - 46

Tappin earn out, current portion
- 500
Long term debt, current portion   1,366     1,335  
Total current liabilities 12,631 11,959
 
Deferred revenue, non-current portion 1,577 1,480
TappIn earn out, non-current portion 3,694 3,694
Long-term debt. non-current portion 3,696 4,389
Other long term liabilities 61 62
 
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, 19,123,297 and 18,846,547 issued June 30, 2013
and December 31, 2012 19 19
Additional paid-in capital 14,862 14,435

Treasury stock, 403,581 shares, at cost, at June 30, 2013

and December 31, 2012.
(1,452 ) (1,452 )
Retained earnings   (100 )       (998 )
Total stockholders’ equity   13,329         12,004  
Total liabilities and stockholders’ equity $ 34,988       $ 33,588  
 
 
GlobalSCAPE, Inc.
Statements of Cash Flows
(Unaudited)
 
(in thousands)        
For the six months ended June 30,
  2013     2012  
Operating Activities:
Net income (loss) $ 898 $ (393 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 521 637
Stock-based compensation 297 428
Deferred taxes 81 (172 )
Bad debt expense (recoveries) 75 (14 )

Net tax effect of stock option and restricted stock activity
27 5
Changes in operating assets and liabilities:
Accounts receivable (1,524 ) (891 )
CoreTrace receivable - (150 )
Prepaid expenses 15 1
Income tax receivable and payable (416 ) (242 )
Other assets (62 ) (11 )
Accounts payable 160 (265 )
Accrued expenses (82 ) (85 )
Deferred revenues 1,206 404
Other long-term liabilities   (1 )   4  
Net cash provided by (used for) operating activities   1,195     (744 )
Investing Activities:
Purchase of property and equipment (39 ) (190 )
Software development costs (360 ) (178 )
TappIn, Inc, earnout liability paid (500 ) -
Interest reinvested in certificate of deposit   (31 )   -  
Net cash provided by (used for) investing activities (930 ) (368 )
Financing Activities:
Proceeds from exercise of stock options 157 19
Net tax effect of stock option and restricted stock activity (27 ) (5 )
Notes payable principle payments   (662 )   (631 )
Net cash provided by (used for) financing activities (532 ) (617 )
Net increase (decrease) in cash (267 ) (1,729 )
Cash at beginning of period   8,079     8,861  
Cash at end of period $ 7,812   $ 7,132  
 
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest on notes payable $ 125   $ 154  
Income taxes $ 734   $ 271  
               
 
GlobalSCAPE, Inc.
Adjusted EBITDA Excluding Infrequent Items
(Unaudited)
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2013 2012 2013 2012
Net income (loss) 381 (140 ) 898 (393 )
Add (subtract) items to determine adjusted EBITDA excluding infrequent items:
Income tax expense 204 7 387 (141 )
Other expense 43 61 90 127
Depreciation and amortization 264 321 521 637
Stock-based compensation expense   105   229     297   428  
Adjusted EBITDA excluding infrequent items $ 997 $ 478   $ 2,193 $ 658  

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

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