BakBone Software Announces Fourth Quarter and Full Year Fiscal 2010 Financial
Results
Results Reflect $12.6 Million Charge for Impairment of ColdSpark Assets
Renewed Focus on Core Storage Management Expected to Result in Improved,
Consistent Operating Results
Fiscal 2010 Storage Management Revenues Increase 6%; Storage Management
Net
Income of $7.0 Million Significantly Improved from $5.5 Million Net loss
in
Fiscal 2009
Conference Call Today at 2:00 pm PT
</pre>
<p><span class="xn-location">SAN DIEGO</span>, <span class="xn-chron">June 10</span> /CNW/ -- BakBone Software® (OTC Bulletin Board: BKBO), a leading provider of storage and data protection software, today announced its financial results for the fourth quarter and full fiscal year of 2010, ended <span class="xn-chron">March 31, 2010</span>. Included in the fiscal fourth quarter and full year results was a <span class="xn-money">$12.6 million</span> non-recurring, non-cash charge for the impairment of goodwill, intangible, and other assets related to the Company's ColdSpark division.</p>
<pre>
Fourth Quarter Fiscal 2010 Financial Highlights
</pre>
<p> </p>
<p> </p>
<pre>
-- Consolidated Revenues $14.7 million
-- Consolidated Net Loss $(12.2) million
-- Storage Management Revenues $14.4 million
-- Storage Management Operating Income $1.9 million
-- Storage Management Bookings $13.7 million
</pre>
<p>"With the closing of ColdSpark, we are fully focused on driving our storage management business. During the fourth fiscal quarter, we experienced growing demand for our NetVault® product suite, demonstrated by growth in new customers worldwide," said <span class="xn-person">Steve Martin</span>, senior vice president, Chief Financial Officer and Interim CEO, BakBone. "Our new NetVault: FASTRecover and NetVault: SmartDisk offerings have expanded the breadth of our product line, providing us with additional storage solutions to sell to our customer base. We hit our bookings target with <span class="xn-money">$14.1 million</span> for the quarter, which included approximately <span class="xn-money">$375,000</span> for the discontinued ColdSpark business.</p>
<p/>
<p>"We took steps during the quarter to reduce personnel costs in select areas of the company to align the BakBone team to better serve the needs of our channel partners and end user customers," <span class="xn-person">Mr. Martin</span> continued. "The entire organization is now directed at driving revenues of our core backup and storage business and improving profitability from continuing operations."</p>
<pre>
Fiscal Fourth Quarter Financial Results
</pre>
<p>Fiscal fourth quarter 2010 revenues of <span class="xn-money">$14.7 million</span> were two percent above revenues in the fourth quarter of fiscal 2009. The Company reported a net loss of <span class="xn-money">$12.2 million</span>, or $(0.14) per share, in the recent fourth quarter compared with a net loss of <span class="xn-money">$0.9 million</span>, or $(0.01) per share, in the fourth quarter last year. ColdSpark was acquired on <span class="xn-chron">May 14, 2009</span>, following the close of the fourth quarter of fiscal 2009, and therefore there is no contribution from the division in the fiscal fourth quarter or the full year 2009 results.</p>
<p/>
<p>Storage management revenues for the fiscal fourth quarter 2010 totaled <span class="xn-money">$14.4 million</span>, virtually unchanged from the <span class="xn-money">$14.4 million</span> in revenues in the fourth quarter of the prior year. Operating income for the storage management business was <span class="xn-money">$1.9 million</span> in the fiscal fourth quarter 2010 compared with an operating loss of <span class="xn-money">$0.3 million</span> in the fourth quarter of fiscal 2009. Storage management net income was <span class="xn-money">$1.7 million</span> for the fiscal fourth quarter 2010.</p>
<pre>
Fiscal 2010 Financial Results
</pre>
<p>For the full fiscal year 2010, revenues totaled <span class="xn-money">$61.9 million</span>, 10% above the <span class="xn-money">$56.0 million</span> in revenues in fiscal 2009. The Company reported a net loss for fiscal 2010 of <span class="xn-money">$9.8 million</span>, or $(0.12) per share, compared with a net loss of <span class="xn-money">$5.5 million</span>, or $(0.08) per share, for fiscal 2009. Bookings for fiscal 2010 totaled <span class="xn-money">$56.5 million</span>.</p>
<p/>
<p>Storage management revenues totaled <span class="xn-money">$60.8 million</span> for fiscal 2010, an increase of 9% over revenues in fiscal 2009. Operating income for the storage management business was <span class="xn-money">$7.6 million</span> in fiscal 2010 compared with an operating loss of <span class="xn-money">$6.1 million</span> in the prior fiscal year. Storage management net income increased to <span class="xn-money">$7.0 million</span>.</p>
<pre>
Total cash at March 31, 2010 was $5.0 million.
Conference Call Information
</pre>
<p>The Company has scheduled a conference call for today, <span class="xn-chron">June 10, 2010</span>, at <span class="xn-chron">2:00 p.m. PT</span> to discuss the results for the quarter ended <span class="xn-chron">March 31, 2010</span>. The call will be hosted by <span class="xn-person">Steve Martin</span>, Interim CEO and Chief Financial Officer of BakBone.</p>
<p/>
<p>To access the conference call, please dial 800-854-3238; internationally, dial 706-634-9547 (Passcode: 76750537). This call will also be webcast and can be accessed at <a href="http://www.bakbone.com">www.bakbone.com</a> by clicking on "Company Info" and then "Investor Relations." The webcast is also being distributed through the Thomson StreetEvents Network. Individual investors can listen to the call at <a href="http://www.earnings.com">www.earnings.com</a>, Thomson's individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson StreetEvents (<a href="http://www.streetevents.com">www.streetevents.com</a>), a password-protected event management site.</p>
<pre>
About BakBone Software
</pre>
<p>BakBone makes data protection a simple, straightforward process with an award-winning product suite. From real-time data protection to deduplication, disk-based and tape backup and application protection, BakBone's solutions manage resources across all platforms, providing improved operational efficiency, reduced system downtime, improved data and application availability and enhanced security to support the business growth of enterprise environments. For more information about BakBone, visit <a href="http://www.bakbone.com">www.bakbone.com</a> or email <a href="mailto:[email protected]">[email protected]</a>.</p>
<pre>
Safe Harbor
</pre>
<p>This press release contains express and/or implied forward-looking statements including, without limitation, statements regarding anticipated financial results and market developments that involve risks, uncertainties, assumptions and other factors, which, if they do not materialize or prove correct, could cause BakBone's results to differ materially from historical results, or those expressed or implied by such forward-looking statements. The potential risks and uncertainties may include, but are not limited to: risks that the costs of exiting the ColdSpark business will be higher than anticipated; risks that the ongoing weak economic and market conditions, particularly in <span class="xn-location">North America</span>, could continue to lead to reduced spending on information technology products; competition in our target markets; potential capital needs; management of future growth and expansion; the development, implementation and execution of the Company's strategic vision; risk of third-party claims of infringement; protection of proprietary information; customer acceptance of the Company's existing and newly introduced products and fee structures; the success of the Company's brand development efforts; risks associated with strategic alliances; reliance on distribution channels; product concentration; need to develop new and enhanced products; potential product defects; our ability to hire and retain qualified employees and key management personnel; and risks associated with changes in domestic and international market conditions and the entry into and development of international markets for the Company's products. Our forward-looking statements should be considered in the context of these and other risk factors disclosed in our most recent report filed with the Securities and Exchange Commission, which may be found at <a href="http://www.sec.gov">www.sec.gov</a>, as well as those risk factors disclosed in our current report filed with the relevant Canadian securities regulators, which is available on SEDAR at <a href="http://www.sedar.com">www.sedar.com</a>. All future written and oral forward-looking statements made by us or on our behalf are also subject to these factors. BakBone assumes no obligation to update any forward-looking statement to reflect events or circumstances arising after the date on which it was made, other than as required under applicable securities laws.</p>
<p/>
<p>BakBone®, BakBone Software®, NetVault®, Application Plugin Module(TM), BakBone logo®, Integrated Data Protection(TM), NetVault: SmartDisk(TM), Asempra®, FASTRecover(TM), ColdSpark® and SparkEngine(TM) are all trademarks or registered trademarks of BakBone Software, Inc., in the <span class="xn-location">United States</span> and/or in other countries. All other brands, products or service names are or may be trademarks, registered trademarks or service marks of, and used to identify, products or services of their respective owners.</p>
<p/>
<p> </p>
<p> </p>
<p> </p>
<pre>
Investor Contact: Corporate Contact: Media Contact:
Doug Sherk /Jenifer
Kirtland Steve Martin Amber Winans
415-896-6820 858-795-7525 858-795-7584
[email protected] [email protected] [email protected]
(Logo: http://photos.prnewswire.com/prnh/20031120/SDBAKLOGO)
</pre>
<p> </p>
<pre>
BAKBONE SOFTWARE INCORPORATED
Condensed Consolidated Balance Sheets
(in thousands)
</pre>
<p> </p>
<pre>
Fiscal Period Ended
-------------------
March 31, March 31,
2010 2009
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $4,903 $8,398
Restricted cash 51 264
Accounts receivable, net 10,582 9,646
Prepaid expenses and other assets 739 1,159
--- -----
</pre>
<p> </p>
<pre>
Total current assets 16,275 19,467
Property and equipment, net 2,020 2,713
Intangible assets, net 1,814 824
Goodwill 7,615 7,615
Other assets 946 939
--- ---
</pre>
<p> </p>
<pre>
Total assets $28,670 $31,558
======= =======
</pre>
<p> </p>
<pre>
LIABILITIES AND SHAREHOLDERS'
DEFICIT
Current liabilities:
Accounts payable and accrued
liabilities $7,942 $9,603
Current portion of acquisition
consideration payable 809 -
Current portion of deferred revenue 44,337 44,081
------ ------
</pre>
<p> </p>
<pre>
Total current liabilities 53,088 53,684
Deferred revenue, excluding current
portion 44,840 47,684
Acquisition consideration payable,
excluding current portion 6,037 -
Other liabilities 697 1,337
--- -----
</pre>
<p> </p>
<pre>
Total liabilities 104,662 102,705
------- -------
</pre>
<p> </p>
<pre>
Shareholders' deficit (75,992) (71,147)
------- -------
</pre>
<p> </p>
<pre>
Total liabilities and shareholders'
deficit $28,670 $31,558
======= =======
</pre>
<p> </p>
<pre>
BAKBONE SOFTWARE INCORPORATED
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
</pre>
<p> </p>
<pre>
Three months Twelve months
ended March 31, ended March 31,
--------------- ---------------
2010 2009 2010 2009
(unaudited)
-----------
</pre>
<p> </p>
<pre>
Revenues:
License and service $14,749 $14,414 $60,368 $56,020
Other - - 1,500 -
--- --- ----- ---
Total revenues 14,749 14,414 61,868 56,020
Cost of revenues 1,696 1,655 6,570 7,121
----- ----- ----- -----
Gross profit 13,053 12,759 55,298 48,899
------ ------ ------ ------
Operating expenses:
Sales and marketing 6,378 6,226 26,393 27,010
Research and development 3,474 2,416 13,159 11,220
General and administrative 2,668 4,401 12,402 16,751
Impairment of goodwill and
intangible assets 12,450 - 12,450 -
------ --- ------ ---
Total operating expenses 24,970 13,043 64,404 54,981
------ ------ ------ ------
Operating loss (11,917) (284) (9,106) (6,082)
Other non-operating
(expense) income (268) (492) (817) 985
---- ---- ---- ---
Loss before income taxes (12,185) (776) (9,923) (5,097)
(Benefit from) provision for
income taxes (2) 107 (171) 354
--- --- ---- ---
Net loss $(12,183) $(883) $(9,752) $(5,451)
======== ===== ======= =======
</pre>
<p> </p>
<pre>
Net loss per common share:
Basic and diluted $(0.14) $(0.01) $(0.12) $(0.08)
====== ====== ====== ======
</pre>
<p> </p>
<p> </p>
<pre>
Weighted-average common
shares outstanding:
Basic and diluted 84,176 64,610 84,176 64,615
====== ====== ====== ======
</pre>
<p> </p>
<p> </p>
<pre>
BAKBONE SOFTWARE INCORPORATED
Condensed Consolidated Statements of Cash Flows
(in thousands)
</pre>
<p> </p>
<pre>
Twelve months ended
March 31,
--------------------
2010 2009
---- ----
Cash flows from operating activities:
Net loss $(9,752) $(5,451)
Adjustments to reconcile net loss to net cash
used in (provided by) operating activities:
Impairment of goodwill and intangible assets 12,450 -
Depreciation and amortization 2,519 1,626
Non-cash interest expense 565 -
Operating expenses funded by financing
arrangement 320 178
Stock-based compensation 210 260
Provision for bad debt 131 258
Loss on disposal of capital assets 12 20
Other changes in assets and liabilities (8,582) 4,595
------ -----
Net cash (used in) provided by operating
activities (2,127) 1,486
------ -----
</pre>
<p> </p>
<pre>
Cash flows from investing activities:
Cash paid for acquisitions, net of cash
received (1,014) -
Capital expenditures (423) (836)
Release of restricted cash 325 227
--- ---
Net cash used in investing activities (1,112) (609)
------ ----
</pre>
<p> </p>
<pre>
Cash flows from financing activities:
Payments on capital lease obligations (228) (239)
Payments on long-term debt obligations (523) (681)
---- ----
Net cash used in financing activities (751) (920)
---- ----
</pre>
<p> </p>
<pre>
Effect of exchange rates on cash and cash
equivalents 495 (1,055)
--- ------
</pre>
<p> </p>
<pre>
Net decrease in cash and cash equivalents (3,495) (1,098)
Cash and cash equivalents, beginning of
period 8,398 9,496
Cash and cash equivalents, end of period $4,903 $8,398
====== ======
</pre>
<p> </p>
<pre>
BAKBONE SOFTWARE INCORPORATED
Reconciliation of Bookings to U.S. GAAP Revenue (1)
(in thousands)
</pre>
<p> </p>
<pre>
Three months Twelve months
ended March 31, ended March 31,
--------------- ---------------
</pre>
<p> </p>
<p> </p>
<pre>
2010 2009 2010 2009
---- ---- ---- ----
(unaudited)
Revenues sourced from
current period
bookings:
Total bookings for
the period $14,107 $13,894 $56,502 $57,738
Bookings deferred
into subsequent
periods (13,123) (12,867) (40,753) (43,461)
------- ------- ------- -------
</pre>
<p> </p>
<pre>
Revenues from current
period bookings 984 1,027 15,749 14,277
</pre>
<p> </p>
<pre>
Revenues sourced from
prior period
bookings: 13,765 13,387 46,119 41,743
------ ------ ------ ------
</pre>
<p> </p>
<pre>
Total revenues
recognized in the
period $14,749 $14,414 $61,868 $56,020
======= ======= ======= =======
</pre>
<p> </p>
<pre>
(1) We define bookings as the gross dollars invoiced through the
sale of software licenses, maintenance contracts and professional
services. We utilize bookings information as an operations measure,
but it is not intended to replace U.S. GAAP accounting. Under the
ratable revenue recognition method, license bookings are recognized
as revenue over the appropriate period (generally three to five
years). In general, variations in revenues period-over-period are
affected by the amortization of current and prior period license
bookings. Accordingly, we believe that trends in current and
historical bookings are key factors in analyzing our operating
results.
</pre>
<p> </p>
<pre>
BAKBONE SOFTWARE INCORPORATED
Statement of Operations by Reporting Segment
(in thousands, except per share data)
</pre>
<p> </p>
<pre>
Three months ended
------------------
March 31, 2010
Storage Message
Management Management Consolidated
---------- ---------- ------------
(unaudited)
Revenues:
License and service $14,366 $383 $14,749
Other - - -
--- --- ---
Total revenues 14,366 383 14,749
Cost of revenues 1,482 214 1,696
----- --- -----
Gross profit 12,884 169 13,053
------ --- ------
Operating expenses:
Sales and marketing 5,840 538 6,378
Research and development 2,945 529 3,474
General and administrative 2,193 475 2,668
Impairment of goodwill and
intangible assets - 12,450 12,450
--- ------ ------
Total operating expenses 10,978 13,992 24,970
------ ------ ------
Operating income (loss) 1,906 (13,823) (11,917)
Other non-operating expense (266) (2) (268)
---- --- ----
Income (loss) before income
taxes 1,640 (13,825) (12,185)
(Benefit from) provision for
income taxes (7) 5 (2)
--- --- ---
Net income (loss) $1,647 $(13,830) $(12,183)
====== ======== ========
</pre>
<p> </p>
<pre>
Net income (loss) per common
share:
Basic and diluted $(0.14)
======
Diluted $(0.14)
======
</pre>
<p> </p>
<pre>
Weighted-average common shares
outstanding:
Basic 84,176
======
Diluted 84,176
======
</pre>
<p> </p>
<p> </p>
<pre>
Twelve months ended
-------------------
March 31, 2010
Storage Message
Management Management Consolidated
---------- ---------- ------------
(unaudited)
Revenues:
License and service $59,324 $1,044 $60,368
Other 1,500 - 1,500
----- --- -----
Total revenues 60,824 1,044 61,868
Cost of revenues 5,774 796 6,570
----- --- -----
Gross profit 55,050 248 55,298
------ --- ------
Operating expenses:
Sales and marketing 24,786 1,607 26,393
Research and development 11,418 1,741 13,159
General and administrative 11,234 1,168 12,402
Impairment of goodwill and
intangible assets - 12,450 12,450
--- ------ ------
Total operating expenses 47,438 16,966 64,404
------ ------ ------
Operating income (loss) 7,612 (16,718) (9,106)
Other non-operating expense (808) (9) (817)
---- --- ----
Income (loss) before income
taxes 6,804 (16,727) (9,923)
(Benefit from) provision for
income taxes (176) 5 (171)
---- --- ----
Net income (loss) $6,980 $(16,732) $(9,752)
====== ======== =======
</pre>
<p> </p>
<pre>
Net income (loss) per common
share:
Basic and diluted $(0.12)
======
Diluted $(0.12)
======
</pre>
<p> </p>
<pre>
Weighted-average common shares
outstanding:
Basic 84,176
======
Diluted 84,176
======
For further information: Investors, Doug Sherk or Jenifer Kirtland, [email protected], +1-415-896-6820, for BakBone Software; or Corporate, Steve Martin, +1-858-795-7525, [email protected], or Media, Amber Winans, +1-858-795-7584, [email protected], both of BakBone Software Web Site: http://www.bakbone.com PRN Photo Desk, [email protected]
Share this article