2009 GAAP Financial Highlights:
-- Q4 2009 income from operations was $291,000, an increase of 170%
compared to Q4 2008
-- Generated positive cash flow for Q4 2009 and the year ended
December 31, 2009
-- Cash flow from operating activities for the year ended
December 31, 2009 increased $1.3 million
-- Revenue increased by 2% while cost of revenues decreased by 2% for
the year ended December 31, 2009
-- Q4 2009 operating expenses decreased $1.0 million from Q4 2008 or
24% and $2.2 million or 14% for the year ended December 31, 2009
Year Ended December 31, 2009 Non-GAAP Financial Highlights:
-- 2009 Non-GAAP operating income increased 116% to $422,000.
Non-GAAP operating income excludes non-recurring expenses of
$473,000 relating to the write off of previously capitalized
software
-- 2009 Non-GAAP net income increased 109% to $200,000 compared to a
net loss of $2.3 million in 2008. Non-GAAP net income excludes
non-recurring expenses of $473,000 relating to the write off of
previously capitalized software
"Continued focus on our operational execution enabled us to deliver greater
efficiency during a difficult economic environment," said Lou Ryan, CEO of
St. Bernard Software. "Moreover, this focus enabled the company to
generate positive cash flow and non-GAAP income. Our ability to achieve
growth in key areas such as the mid-enterprise market, while substantially
reducing operating costs, positions us well as we move into 2010."
Financial Results
St. Bernard recorded income from operations of $291,000 in Q4 2009,
compared to a loss from operations of $413,000 for the comparable period in
2008, an improvement of 171%. For the years ended December 31, 2009 and
2008, the loss from operations was $51,000 and $2.7 million, respectively
-- a 100% improvement. Net loss for the years ended December 31, 2009 and
2008 was $273,000 and $2.3 million, respectively. On a non-GAAP basis,
excluding non-recurring expenses of $473,000 relating to the write-off of
previously capitalized software, non-GAAP operating income was $422,000 and
non-GAAP net income was $200,000, representing increases of 116% and 109%,
respectively, for the year ended December 31, 2009.
The Company ended the year with cash and cash equivalents of $2.5 million,
an increase of 20% from prior year end. Cash provided by operations was
$839,000 for the year ended December 31, 2009 compared to cash used by
operations of $494,000 compared to the same period in 2008. The Company
achieved positive cash flow for the third straight quarter in Q4 2009
showing cash improvement in seven of its last eight quarters.
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 December 31, 2009 the balance outstanding under the line was $1.5
million compared to $1.7 million at December 31, 2008.
Total revenue for the year ended December 31, 2009 was $18.4 million, an
increase of 2% compared to 2008 while cost of revenues decreased 2% during
the same period. Operating expenses were $13.6 million and $15.8 million
for the periods ended December 31, 2009 and 2008, respectively, and this
represents a 14% decrease year over year.
For the years ended December 31, 2009 and 2008, sales and marketing
expenses were $6.4 million and $7.6 million, respectively, resulting in a
15% decrease year over prior year. The decreases were primarily a result of
lower discretionary marketing spending associated with our on-going
commitment to achieve greater leverage out of our sales and marketing
initiatives.
Research and development expenses consist primarily of salaries, related
benefits, and third party consultant fees. Research and development
expenses were $3.2 million in fiscal year 2009, which is up from $2.9
million in fiscal year 2008 resulting in a 10% increase year over prior
year. The increase was primarily the result of a net increase in
compensation costs resulting from additional hires. The majority of
research and development was moved in-house to Company headquarters during
the latter half of 2009, eventually leading to the transitioning of 100% of
the research and development expenses in-house during 2010. 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 $3.5 million and $5.3 million for
the years ended December 31, 2009 and 2008, respectively, a 34% decrease
year over prior year. The decreases were primarily a result of the
reduction in compensation, consulting, and stock-based compensation
expenses.
Business Outlook
Mr. Ryan added, "Our lower Total Cost of Ownership (TCO) position and focus
compared to that of our main competitors has resonated with the
mid-enterprise market and we intend to build on this position throughout
our offerings in 2010. We believe that economic pressures will continue to
prompt IT departments to review all operations including key security areas
like web gateway security and that our iPrism offering will resonate with
them as well."
Non-GAAP Financial Measures
In addition to disclosing financial measures prepared in accordance with
Generally Accepted Accounting Principles (GAAP), this press release
contains non-GAAP financial measures: non-GAAP operating income and
non-GAAP net income. The presentation of this non GAAP financial
information is not intended to be considered in isolation or as a
substitute for, or superior to, the financial information prepared and
presented in accordance with GAAP. Non-GAAP operating income in this press
release is defined as income (loss) from operations less non-recurring
expenses recorded in connection with the write-off of previously
capitalized software. Non-GAAP net income in this press release is defined
as net income (loss) less
non-recurring expenses recorded in connection with the write-off of
previously capitalized software.
The Company's management believes its non-GAAP financial measures provide a
more meaningful reflection of the operating results of the Company.
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.
Originally founded in 1986 as a market-leader in data security with its
flagship product, Open File Manager™, the company is 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, SMB, 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 (
St. Bernard Software, Inc.
Consolidated Balance Sheets
December 31, December 31,
2009 2008
------------ ------------
Assets
Current Assets
Cash and cash equivalents $ 2,454,000 $ 2,051,000
Accounts receivable - net of allowance for
doubtful accounts of $13,000 and $52,000 in
2009 and 2008, respectively 2,534,000 3,170,000
Inventories - net 242,000 364,000
Prepaid expenses and other current assets 335,000 381,000
------------ ------------
Total current assets 5,565,000 5,966,000
Fixed Assets - Net 564,000 828,000
Other Assets 148,000 281,000
Goodwill 7,568,000 7,568,000
------------ ------------
Total Assets $ 13,845,000 $ 14,643,000
============ ============
Liabilities and Stockholders' Deficit
Current Liabilities
Short-term borrowings $ 2,250,000 $ 2,462,000
Accounts payable 817,000 1,270,000
Accrued compensation expenses 834,000 1,361,000
Accrued expenses and other current liabilities 597,000 518,000
Warranty liability 192,000 195,000
Current portion of capitalized lease
obligations 22,000 147,000
Deferred revenue 10,209,000 10,469,000
------------ ------------
Total current liabilities 14,921,000 16,422,000
Deferred Rent - 118,000
Capitalized Lease Obligations, Less Current
Portion - 22,000
Deferred Revenue 7,708,000 7,152,000
------------ ------------
Total liabilities 22,629,000 23,714,000
------------ ------------
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; 13,319,991 and 14,783,090
shares issued and outstanding in 2009 and
2008, respectively 132,000 148,000
Additional paid-in capital 40,774,000 40,308,000
Accumulated deficit (49,690,000) (49,527,000)
------------ ------------
Total stockholders' deficit (8,784,000) (9,071,000)
------------ ------------
Total Liabilities and Stockholders' Deficit $ 13,845,000 $ 14,643,000
============ ============
St. Bernard Software, Inc.
Consolidated Statements of Operations
Quarters ended
December 31, Years ended December 31,
---------------------- ------------------------
2009 2008 2009 2008
---------- ---------- ----------- -----------
(Unaudited) (Unaudited)
Revenues
Subscription $3,563,000 $3,666,000 $14,559,000 $13,916,000
Appliance 1,099,000 1,383,000 3,790,000 4,051,000
License 16,000 13,000 25,000 31,000
---------- ---------- ----------- -----------
Total Revenues 4,678,000 5,062,000 18,374,000 17,998,000
---------- ---------- ----------- -----------
Cost of Revenues
Subscription 554,000 536,000 2,229,000 2,194,000
Appliance 745,000 867,000 2,571,000 2,715,000
License 4,000 6,000 15,000 11,000
---------- ---------- ----------- -----------
Total Cost of Revenues 1,303,000 1,409,000 4,815,000 4,920,000
---------- ---------- ----------- -----------
Gross Profit 3,375,000 3,653,000 13,559,000 13,078,000
Sales and marketing
expenses 1,697,000 1,868,000 6,412,000 7,577,000
Research and development
expenses 612,000 815,000 3,241,000 2,943,000
General and
administrative expenses 775,000 1,383,000 3,484,000 5,280,000
Write-off of capitalized
software - - 473,000 -
---------- ---------- ----------- -----------
Total Operating Expenses 3,084,000 4,066,000 13,610,000 15,800,000
---------- ---------- ----------- -----------
Income (Loss) From
Operations 291,000 (413,000) (51,000) (2,722,000)
Other Expense (Income)
Interest expense - net 10,000 95,000 260,000 625,000
Gain on sale of assets - 1,000 - (563,000)
Other income - net (14,000) (8,000) (43,000) (443,000)
Total Other Expense
(Income) (4,000) 88,000 217,000 (381,000)
---------- ---------- ----------- -----------
Income (Loss) Before
Income Taxes 295,000 (501,000) (268,000) (2,341,000)
Income tax expense - - (5,000) (3,000)
---------- ---------- ----------- -----------
Net Income (Loss) $ 295,000 $ (501,000) $ (273,000) $(2,344,000)
========== ========== =========== ===========
Income (Loss) Per Common
Share - Basic $ 0.02 $ (0.03) $ (0.02) $ (0.16)
========== ========== =========== ===========
Income (Loss) Per Common
Share - Diluted $ 0.02 $ (0.03) $ (0.02) $ (0.16)
---------- ---------- ----------- -----------
Weighted Average Shares
Outstanding - Basic 14,177,996 14,777,656 14,177,996 14,777,656
========== ========== =========== ===========
Weighted Average Shares
Outstanding - Diluted 13,495,680 14,777,656 14,177,996 14,777,656
========== ========== =========== ===========
St. Bernard Software, Inc.
Consolidated Statements of Cash Flows
Quarters ended
December 31, Years ended December 31,
---------------------- -----------------------
2009 2008 2009 2008
---------- ---------- ---------- -----------
Cash Flows From Operating (Unaudited) (Unaudited)
Activities
Net income (loss) $ 295,000 $ (501,000) $ (273,000) $(2,344,000)
Adjustments to reconcile
net loss to net cash
used in operating
activities:
Depreciation and
amortization 84,000 125,000 365,000 580,000
Allowance for doubtful
accounts (7,000) (31,000) (39,000) (7,000)
Gain on change in fair
value of warrant
derivative liability (30,000) - (22,000) -
Gain on sale of assets - - (563,000)
Write-off of capitalized
software - - 473,000 -
Stock-based compensation
expense 91,000 214,000 577,000 882,000
Noncash interest expense (18,000) 38,000 98,000 284,000
Increase (decrease) in
cash resulting from
changes in:
Accounts receivable 180,000 442,000 675,000 93,000
Inventories 132,000 20,000 122,000 (206,000)
Prepaid expenses and
other assets 26,000 18,000 (392,000) (46,000)
Accounts payable (77,000) (295,000) (453,000) (1,756,000)
Accrued expenses and
other current
liabilities 57,000 894,000 (508,000) 595,000
Warranty liability (3,000) (143,000) (3,000) (143,000)
Deferred rent (20,000) 9,000 (77,000) (36,000)
Deferred revenue 229,000 647,000 296,000 2,173,000
---------- ---------- ---------- -----------
Net cash provided (used)
by operating activities 939,000 1,437,000 839,000 (494,000)
---------- ---------- ---------- -----------
Cash Flows From Investing
Activities
Purchases of fixed
assets (26,000) (69,000) (101,000) (76,000)
Proceeds from the sale
of assets - - - 570,000
---------- ---------- ---------- -----------
Net cash (used) provided
by investing activities (26,000) (69,000) (101,000) 494,000
---------- ---------- ---------- -----------
Cash Flows From Financing
Activities
Proceeds from warrant
options purchase - 1,000 - 1,000
Proceeds from the sales
of stock under the
employee stock purchase
plan - - 24,000 11,000
Principal payments on
capitalized lease
obligations (30,000) (40,000) (147,000) (154,000)
Net increase in
short-term borrowings 150,000 - (212,000) 896,000
---------- ---------- ---------- -----------
Net cash (used) provided
by financing activities 120,000 (39,000) (335,000) 754,000
---------- ---------- ---------- -----------
Net Increase in Cash and
Cash Equivalents 1,033,000 1,329,000 403,000 754,000
Cash and Cash Equivalents
at Beginning of Period 1,421,000 722,000 2,051,000 1,297,000
---------- ---------- ---------- -----------
Cash and Cash Equivalents
at End of Period $2,454,000 $2,051,000 $2,454,000 $ 2,051,000
========== ========== ========== ===========
Contact Information: Contact: St. Bernard Software Lorrie Hunsaker St. Bernard Software Investor and Public Relations Manager (858) 524-2002