GLOBALSCAPE INC - FORM 8-K - EX-99.1 - October 27, 2016

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Exhibit 99.1


GlobalSCAPE, Inc. Announces Financial Results for the Third Quarter 2016
Quarterly Revenue Up 15 Percent Compared with Q3 2015
SAN ANTONIO, TX — October 27, 2016 — 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 third quarter 2016, which ended September 30, 2016.
Third Quarter 2016 Financial Highlights:
·
Revenue for the third quarter of 2016 was $8.8 million, an increase of 15 percent when compared with revenue of $7.6 million for the third quarter of 2015. This is the highest revenue quarter in Globalscape’s history.
·
License revenue for the third quarter of 2016 was $3.4 million, an increase of 18 percent when compared to license revenue of $2.9 million for the third quarter of 2015.
·
Revenue for the first nine months of 2016 was $24.4 million, a nine percent increase over the same time period last year.
·
For the third quarter of 2016, the Company’s net income was $1.4 million compared with net income of $1.2 million for the third quarter of 2015.
·
Basic earnings per share was $0.07 for the third quarter of 2016 vs. $0.06 for the third quarter of 2015.
·
Adjusted EBITDA for the third quarter of 2016 was $2.3 million compared with $2.0 million for the third quarter of 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 $20.7 million at September 30, 2016. Other than liabilities for normal trade payables and taxes, the Company has no debt.
Recent Business Highlights:
·
Technology Alliances Activities: As a member of the F5 Networks’ Technology Alliance Program (TAP), Globalscape exhibited and demonstrated its technology at F5 Agility 2016 in Chicago, IL, showcasing EFT Enterprise with High Availability.
·
Company Awards: Over the past quarter, Globalscape was certified as a great workplace by the independent analysts at Great Place to Work®.
·
Product Awards: Globalscape received a number of product excellence awards by the 2016 Golden Bridge Awards for multiple delivery methods of the Company’s core product in Access Compliance and Risk Management (Gold Winner) for Enhanced File TransferTM (EFTTM) and Managed File Transfer (Gold Winner) for EFT Cloud ServicesSM.


Supporting Quote:
Matt Goulet, President and Chief Executive Officer at Globalscape
“No matter the industry, the amount of data that organizations need to collect, access, mine, store and share continues to grow. The need to handle that data in a secure and reliable manner makes Globalscape’s products a trusted solution in enterprise-level sharing of mission-critical information.  With the landscape becoming more complex and varied, we are continually improving our products to meet these changing needs. The third quarter of 2016 was the best quarter in company history, achieving an increase in revenues of 15 percent when compared with the third quarter of 2015. As we invest more in our core EFT platform, we expect to continue to see positive results for Globalscape and most importantly, for our current and future customers.”
Conference Call October 27, 2016 at 4:30 p.m. ET
Globalscape management will hold a conference call on October 27, 2016, at 4:30 p.m. Eastern Time/3:30 p.m. Central Time to discuss financial results and other corporate matters for the third quarter 2016. Those wanting to join may call 888-481-2844 or 719-325-2215 and use Conference ID # 1418344. 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.
INVESTOR RELATIONS CONTACT
Contact: Casey Stegman
Phone Number: (210) 801-8489
Email: ir@globalscape.com

PRESS CONTACT
Contact: Ciri Haugh
Phone Number: (210) 308-8267
Email: PR@globalscape.com

###
GlobalSCAPE, Inc.
Condensed Consolidated Balance Sheets
(in thousands except share amounts)
Unaudited
 
   
September 30,
    
December 31,
  
   
2016
    
2015
  
Assets
            
Current assets:
            
Cash and cash equivalents
  
$
17,421
    
$
15,885
  
Short term investments
    
3,303
      
3,254
  
Accounts receivable (net of allowance for doubtful accounts
      of $335 and $325 in 2016 and 2015, respectively)
    
8,870
      
6,081
  
Federal income tax receivable
    
104
      
290
  
Prepaid and other expenses
    
425
      
511
  
Total current assets
    
30,123
      
26,021
  
                 
Fixed assets, net
    
463
      
498
  
Capitalized software development costs
    
3,961
      
3,982
  
Goodwill
    
12,712
      
12,712
  
Deferred tax asset
    
976
      
940
  
Other assets
    
30
      
60
  
Total assets
  
$
48,265
    
$
44,213
  
                 
 Liabilities and Stockholders’ Equity
                
Current liabilities:
                
Accounts payable
  
$
622
    
$
839
  
Accrued expenses
    
1,841
      
1,893
  
Deferred revenue
    
13,005
      
12,000
  
Income taxes payable
    
517
      
127
  
Total current liabilities
    
15,985
      
14,859
  
                 
Deferred revenue, non-current portion
    
3,688
      
3,612
  
Other long term liabilities
    
34
      
44
  
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, 21,548,602 and 21,383,467 shares issued
at September 30, 2016, and December 31, 2015, respectively
    
21
      
21
  
Additional paid-in capital
    
20,632
      
19,583
  
Treasury stock, 403,581 shares, at cost, at
September 30, 2016 and December 31, 2015
    
(1,452
)
    
(1,452
)
Retained earnings
    
9,357
      
7,546
  
Total stockholders’ equity
    
28,558
      
25,698
  
Total liabilities and stockholders’ equity
  
$
48,265
    
$
44,213
  
 
 
GlobalSCAPE, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income
(In thousands, except per share amounts)
(Unaudited)
 
   
Three months ended September 30,
    
Nine months ended September 30,
  
   
2016
    
2015
    
2016
    
2015
  
                         
Operating Revenues:
                        
Software licenses
  
$
3,373
    
$
2,852
    
$
8,565
    
$
8,590
  
Maintenance and support
    
4,713
      
4,142
      
13,843
      
12,269
  
Professional services
    
667
      
653
      
2,013
      
1,531
  
Total Revenues
    
8,753
      
7,647
      
24,421
      
22,390
  
Cost of revenues
                                
Software licenses
    
873
      
562
      
2,303
      
1,651
  
Maintenance and support
    
363
      
341
      
1,145
      
1,057
  
Professional services
    
534
      
605
      
1,689
      
1,257
  
Total cost of revenues
    
1,770
      
1,508
      
5,137
      
3,965
  
Gross profit
    
6,983
      
6,139
      
19,284
      
18,425
  
Operating expenses
                                
Sales and marketing
    
2,759
      
2,289
      
8,453
      
7,060
  
General and administrative
    
1,638
      
1,449
      
5,083
      
4,629
  
Research and development
    
528
      
646
      
1,727
      
1,832
  
Total operating expenses
    
4,925
      
4,384
      
15,263
      
13,521
  
Income from operations
    
2,058
      
1,755
      
4,021
      
4,904
  
Other income (expense), net
    
28
      
17
      
88
      
51
  
Income before income taxes
    
2,086
      
1,772
      
4,109
      
4,955
  
Income tax expense
    
687
      
542
      
1,348
      
1,585
  
Net income
  
$
1,399
    
$
1,230
    
$
2,761
    
$
3,370
  
Comprehensive income
  
$
1,399
    
$
1,230
    
$
2,761
    
$
3,370
  
                                 
Net income per common share -
                                
Basic
  
$
0.07
    
$
0.06
    
$
0.13
    
$
0.16
  
Diluted
  
$
0.06
    
$
0.06
    
$
0.13
    
$
0.16
  
                                 
Weighted average shares outstanding:
                                
Basic
    
21,122
      
20,892
      
21,061
      
20,782
  
Diluted
    
21,674
      
21,440
      
21,640
      
21,294
  
                                 
Cash dividends declared per share
  
$
0.015
    
$
0.015
    
$
0.045
    
$
0.030
  
 
GlobalSCAPE, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 
   
For the Nine Months Ended September 30,
  
   
2016
    
2015
  
Operating Activities:
            
Net income
  
$
2,761
    
$
3,370
  
Items not involving cash at the time they are recorded in the statement of operations:
          
Bad debt expense
    
67
      
147
  
Depreciation and amortization
    
1,522
      
1,116
  
Share-based compensation
    
721
      
482
  
Deferred taxes
    
(36
)
    
(320
)
Excess tax benefit from share-based compensation
    
5
      
(49
)
Subtotal before changes in operating assets and liabilities
    
5,040
      
4,746
  
Changes in operating assets and liabilities:
                
Accounts receivable
    
(2,856
)
    
(1,690
)
Prepaid expenses
    
86
      
154
  
Deferred revenue
    
1,081
      
531
  
Accounts payable
    
(217
)
    
(757
)
Accrued expenses
    
(52
)
    
10
  
Other Assets
    
30
      
37
  
Other long-term liabilities
    
(10
)
    
(5
)
Income tax receivable and payable
    
571
      
403
  
Net cash provided by operating activities
    
3,673
      
3,429
  
Investing Activities:
                
Software development costs capitalized
    
(1,298
)
    
(1,613
)
Purchase of property and equipment
    
(168
)
    
(108
)
Interest reinvested in short and long term investments
    
(49
)
    
(48
)
Net cash (used in) investing activities
    
(1,515
)
    
(1,769
)
Financing Activities:
                
Proceeds from exercise of stock options
    
333
      
417
  
Excess tax benefit from share-based compensation
    
(5
)
    
49
  
Dividends paid
    
(950
)
    
(626
)
Net cash provided by (used in) financing activities
    
(622
)
    
(160
)
                 
Net increase in cash
    
1,536
      
1,500
  
Cash at beginning of period
    
15,885
      
11,358
  
Cash at end of period
  
$
17,421
    
$
12,858
  
                 
Supplemental disclosure of cash flow information:
                
Cash paid during the period for:
                
Interest
  
$
-
    
$
-
  
Income taxes
  
$
776
    
$
1,341
  
 
GlobalSCAPE, Inc.
Adjusted EBITDA
(in thousands)
(Unaudited)
 
   
Three Months Ended
    
Nine Months Ended
  
   
September 30,
    
September 30,
  
   
2016
    
2015
    
2016
    
2015
  
Net Income
  
$
1,399
    
$
1,230
    
$
2,761
    
$
3,370
  
Add (subtract) items to determine adjusted EBITDA:
                  
Income tax expense
    
687
      
542
      
1,348
      
1,585
  
Interest (income) expense, net
    
(28
)
    
(17
)
    
(88
)
    
(51
)
Depreciation and amortization:
                                
Total depreciation and amortization
    
513
      
433
      
1,522
      
1,116
  
Amortization of capitalized software development costs
    
(450
)
    
(366
)
    
(1,319
)
    
(911
)
Stock-based compensation expense
    
221
      
167
      
721
      
482
  
Adjusted EBITDA
  
$
2,342
    
$
1,989
    
$
4,945
    
$
5,591
  

GLOBALSCAPE INC Reports