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SOURCE: St. Bernard
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May 05, 2010 08:00 ET
St. Bernard Software Announces Growth in Cash Flow From Operations and Its Financial Results for the First Quarter Ended March 31, 2010
SAN DIEGO, CA--(Marketwire - May 5, 2010) - St.
Bernard Software, Inc. (OTCBB: SBSW), a leader in Web security
appliances, today announced unaudited financial results for its first
quarter ended March 31, 2010.
First Quarter 2010 Financial Highlights:
-- Cash and cash equivalents increased to $2.8 million as of March 31,
2010 from $2.5 million as of December 31, 2009 and $930,000 as of
March 31, 2009
-- Generated positive cash flow of $332,000 for Q1 2010 compared to $1.1
million negative cash flow for the same period in 2009, an increase of
130% vs. Q1 2009
-- Cash flow provided by operating activities increased $936,000 to
$273,000, an increase of 141% for the current quarter
-- Q1 2010 general and administrative expenses decreased $209,000 from
Q1 2009 or 18%
-- Q1 2010 operating expenses decreased $499,000 from Q1 2009 or 13%
-- Net loss of $149,000 as of March 31, 2010, compared to a net loss of
$633,000 for the same period in 2009
"The first quarter met our operational expectations," said Lou Ryan, CEO of
St. Bernard Software. "In addition to exiting the quarter with greater
overall financial strength, we were able to increase our development
efforts through a more efficient cost structure compared to 2009 which will
help as we execute on our broader product roadmap throughout 2010."
Financial Results
St. Bernard reported revenues of $4.4 million for the three months ended
March 31, 2010 compared to revenues of $4.4 million for the same period in
2009; operating expenses of $3.5 million and $4.0 million for the periods
ended March 31, 2010 and 2009, respectively, representing a decrease of
approximately $499,000, or 13%, quarter over prior year quarter; a net loss
for the three months ended March 31, 2010 of $149,000, compared to a net
loss of $633,000 for the same period in 2009.
The Company ended the first quarter of 2010 with cash and cash equivalents
of $2.8 million compared to $2.5 million at December 31, 2009 and $930,000
at March 31, 2009. Cash provided by operations increased $936,000 to
$273,000 for the three months ended March 31, 2010 compared to cash used by
operations of $663,000 for the same period in 2009. The Company achieved
positive cash flow for the fourth straight quarter in Q1 2010.
During the first quarter of 2010, the Company successfully negotiated with
Silicon Valley Bank ("SVB") to enter into a sixth amendment to its Loan and
Security Agreement, which was originally executed on May 11, 2007.
Pursuant to the terms of the amendment, SVB extended the maturity date to
May 2011, increased the available line, and reduced the interest rate. As
of March 31, 2010 the balance outstanding under the line was $1.6 million
compared to $1.5 million at December 31, 2009 and $1.4 million at March 31,
2009.
Sales and marketing expense consists primarily of salaries, related
benefits, commissions, consultant fees, advertising, lead generation and
other costs associated with our sales and marketing efforts. For the three
months ended March 31, 2010 sales and marketing expense increased 4.2%, or
approximately $70,000, over the same period in 2009.
Research and development expense consists primarily of salaries, related
benefits, third-party consultant fees and other engineering related costs.
Research and development expenses were $788,000 in Q1 2010, which is down
from $1.1 million in Q1 2009 resulting in a 31% decrease quarter over prior
year quarter. The decrease was primarily the result of a net decrease in
compensation costs. During 2009, after making the decision to move
research and development in-house, the Company modified its consulting
agreement with Softworks Group Pty Ltd. The transition from outside
consulting to in-house occurred during the latter half of 2009 and into
2010, resulting in a significant decrease in consulting expenses.
Management believes that significant investments in research and
development is required to remain competitive, and as such, expects
research and development expenses to increase in order to extend the core
functionality and features within our products.
General and administrative expenses were $985,000 and $1.2 million for the
three months ended March 31, 2010 and 2009, respectively, a $209,000 or
18%, decrease year over prior year. The decreases were primarily a result
of the reduction in compensation, consulting, and stock-based compensation
expenses. The company's current corporate facility lease expires at the end
of 2010. Management is currently exploring alternate office space and
expects rent expense to decrease significantly beginning January 2011.
Business Outlook
Mr. Ryan added, "We plan to continue to build on our experience leading the
industry with our lower Total Cost of Ownership ("TCO") web security
solution as we move through 2010. New customers that joined St. Bernard in
the first quarter, many of whom abandoned their older more costly
software-only solutions, confirmed that operational efficiency in IT will
continue to be a driving force throughout the year. We remain optimistic
that our position will be reinforced with this trend as the economy
rebuilds and as we deliver on our roadmap throughout the year. Our
customers will benefit not only from reduced TCO, but also reduced total
cost of IT security acquisition and deployment."
Important Dates
St. Bernard filed its 2010 Proxy on April 30, 2010. It can be viewed /
downloaded on
http://www.sec.gov/Archives/edgar/data/1288496/000119312510101494/0001193125-10-101494-index.htm.
The Company will hold its 2010 Annual Meeting of Stockholders on Tuesday,
June 15, 2010 at 9:00 a.m. local time at 15015 Avenue of Science, San
Diego, CA 92128. Meeting objectives include:
1. Elect three directors to hold office until the 2011 Annual Meeting of
Stockholders.
2. Approve an amendment to the Company's 2005 Stock Option Plan to
authorize the issuance of an additional 900,000 shares of common stock
under such plan.
3. Ratify the selection by the Audit Committee of the Board of Directors
of Squar, Milner, Peterson, Miranda & Williamson, LLP as independent
auditors of the Company for its fiscal year ending December 31, 2010.
4. Conduct any other business properly brought before the meeting.
These items are described in greater detail in the proxy statement.
The record date for the 2010 Annual Meeting is April 23, 2010. Only
stockholders of record at the close of business on that date may vote at
the meeting or any adjournment thereof.
About St. Bernard
St. Bernard Software develops and markets Internet security appliances and
services that empower IT professionals to effectively, efficiently and
intelligently manage their enterprise's Internet-based resources.
Incorporated in 1986, the Company has evolved to become a well recognized
leader in the SWG market and now recognized for delivering one of the
leading Web filtering and security appliances, iPrism®. With millions of
end users worldwide in approximately 6,000 enterprises, educational
institutions, small and medium businesses, and government agencies, St.
Bernard strives to deliver simple, high performance solutions that offer
excellent value to our customers. Based in San Diego, California, St.
Bernard (OTCBB: SBSW) markets its solutions through a network of value
added resellers, distributors, system integrators, OEM partners and
directly to end users. For more information about St. Bernard Software,
visit www.stbernard.com.
©2010 St. Bernard Software, Inc. All rights reserved. The St. Bernard
Software logo, LivePrism, iPrism, and iGuard are trademarks of St. Bernard
Software, Inc. All other trademarks and registered trademarks are hereby
acknowledged.
Forward Looking Statement
This press release may contain forward-looking statements that involve
risks and uncertainties, as well as assumptions that, if they prove
incorrect, could cause our results to differ materially from those
expressed or implied by such forward-looking statements. All statements
other than statements of historical fact are statements that could be
deemed forward-looking statements, including, among other things, any
projections of earnings, revenues (including where the underlying contract
has already been signed), expenses (including statements about our expected
decrease in our rent expense starting in 2011 and research and development
expenses), or other financial items; any statements of the plans,
strategies, and objectives of management for future operations (including
statements about our ability to execute on our broader product roadmap
throughout 2010 and continue to build on our experience to lead in the
industry without lower Total Cost of Ownership ("TCO") web security
solution) ); any statements concerning proposed new products, services, or
developments (including the statement regarding the transitioning of the
research and development in house); any statements regarding future
economic conditions or performance; statements of belief (such as
statements that management believes that significant investments in
research and development is required to remain competitive) and any
statement of assumptions underlying any of the foregoing. The risks,
uncertainties and assumptions referred to above include, among other
things, performance of contracts by customers and partners; employee
management issues; the timely development, production and acceptance of
products and services and their feature sets; the challenge of managing
asset levels, including inventory; the flow of products into third-party
distribution channels; our ability to maintain a lower Total Cost of
Ownership; and the difficulty of keeping expense growth at modest levels
while increasing revenues. These and other risks and factors that could
cause events or our results to differ from those expressed or implied by
such forward-looking statements are described in our most recent annual
report on Form 10-K, as well as other subsequent filings with the
Securities and Exchange Commission. We assume no obligation and do not
intend to update these forward-looking statements.
St. Bernard Software, Inc.
Consolidated Balance Sheets
March 31, December 31,
2010 2009
------------ ------------
(Unaudited)
Assets
Current Assets
Cash and cash equivalents $ 2,786,000 $ 2,454,000
Accounts receivable - net of allowance for
doubtful accounts of $12,000 and $13,000
at March 31, 2010 and December 31, 2009,
respectively 2,780,000 2,534,000
Inventories - net 216,000 242,000
Prepaid expenses and other current assets 322,000 335,000
------------ ------------
Total current assets 6,104,000 5,565,000
Fixed Assets - Net 510,000 564,000
Other Assets 398,000 148,000
Goodwill 7,568,000 7,568,000
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Total Assets $ 14,580,000 $ 13,845,000
============ ============
Liabilities and Stockholders' Deficit
Current Liabilities
Short-term borrowings $ 2,350,000 $ 2,250,000
Accounts payable 915,000 817,000
Accrued compensation 948,000 834,000
Accrued expenses and other current
liabilities 748,000 597,000
Warranty liability 193,000 192,000
Current portion of capitalized lease
obligations - 22,000
Deferred revenue 10,145,000 10,209,000
------------ ------------
Total current liabilities 15,299,000 14,921,000
Deferred Revenue 8,165,000 7,708,000
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Total liabilities 23,464,000 22,629,000
------------ ------------
Commitments and Contingencies (Note 10)
Stockholders' Deficit
Preferred stock, $0.01 par value; 5,000,000
shares authorized; no shares issued and
outstanding - -
Common stock, $0.01 par value; 50,000,000
shares authorized; 13,391,439 and
13,319,991 shares issued and outstanding
at March 31, 2010 and December 31, 2009,
respectively 133,000 132,000
Additional paid-in capital 40,822,000 40,774,000
Accumulated deficit (49,839,000) (49,690,000)
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Total stockholders' deficit (8,884,000) (8,784,000)
------------ ------------
Total Liabilities and Stockholders' Deficit $ 14,580,000 $ 13,845,000
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St. Bernard Software, Inc.
Unaudited Consolidated Statements of Operations
Three months ended March 31,
----------------------------
2010 2009
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Revenues
Subscription $ 3,496,000 $ 3,689,000
Appliance 883,000 754,000
License 9,000 6,000
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Total Revenues 4,388,000 4,449,000
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Cost of Revenues
Subscription 393,000 461,000
Appliance 600,000 536,000
License 2,000 2,000
------------- -------------
Total Cost of Revenues 995,000 999,000
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Gross Profit 3,393,000 3,450,000
Sales and marketing expenses 1,730,000 1,660,000
Research and development expenses 788,000 1,148,000
General and administrative expenses 985,000 1,194,000
Total Operating Expenses 3,503,000 4,002,000
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Loss from Operations (110,000) (552,000)
Other Expense (Income)
Interest expense - net 41,000 92,000
Other income - net (2,000) (16,000)
Total Other Expense 39,000 76,000
------------- -------------
Loss Before Income Taxes (149,000) (628,000)
Income tax expense - (5,000)
------------- -------------
Net Loss $ (149,000) $ (633,000)
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Loss Per Common Share - Basic and Diluted $ (0.01) $ (0.04)
------------- -------------
Weighted Average Shares Outstanding - Basic
and Diluted 13,388,264 14,837,699
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St. Bernard Software, Inc.
Unaudited Consolidated Statements of Cash Flows
Three months ended March 31,
----------------------------
2010 2009
------------- -------------
Cash Flows From Operating Activities
Net loss $ (149,000) $ (633,000)
Adjustments to reconcile net loss to net
Cash used in operating activities:
Depreciation and amortization 85,000 104,000
Allowance for doubtful accounts (1,000) (2,000)
Gain on change in fair value of warrant
derivative liability (2,000) (16,000)
Stock-based compensation expense 37,000 357,000
Noncash interest expense 15,000 38,000
Increase (decrease) in cash resulting from
changes in:
Accounts receivable (245,000) 573,000
Inventories 26,000 (73,000)
Prepaid expenses and other assets (252,000) (421,000)
Accounts payable 98,000 267,000
Accrued expenses and other current
liabilities 153,000 30,000
Accrued compensation 114,000 (410,000)
Warranty liability 1,000 (16,000)
Deferred revenue 393,000 (461,000)
------------- -------------
Net cash provided (used) by operating
activities 273,000 (663,000)
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Cash Flows From Investing Activities
Purchases of fixed assets (31,000) (63,000)
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Net cash used by investing activities (31,000) (63,000)
------------- -------------
Cash Flows From Financing Activities
Proceeds from the sales of stock under the
employee stock purchase plan 12,000 9,000
Principal payments on capitalized lease
obligations (22,000) (42,000)
Net increase (decrease) in short-term
borrowings 100,000 (362,000)
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Net cash (used) provided by financing
activities 90,000 (395,000)
------------- -------------
Net Increase (Decrease) in Cash and Cash
Equivalents 332,000 (1,121,000)
Cash and Cash Equivalents at Beginning of
Period 2,454,000 2,051,000
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Cash and Cash Equivalents at End of Period $ 2,786,000 $ 930,000
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