BakBone Software Reports First Quarter Fiscal 2011 Financial Results
Operating Income from Continuing Operations of $1.0 Million
Positive Cash Flow from Continuing Operations of $1.3 Million
Conference Call Today at 2:00 pm PT
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<p><span class="xn-location">SAN DIEGO</span>, <span class="xn-chron">Aug. 5</span> /CNW/ -- BakBone Software® (OTC Bulletin Board: BKBO), a leading provider of storage and data protection software, today announced its financial results for the first quarter of fiscal 2011, ended <span class="xn-chron">June 30, 2010</span>.</p>
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<p>First Quarter Fiscal 2011 Financial Highlights</p>
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-- Revenues from Continuing Operations $14.0 million
-- Operating Income from Continuing Operations $1.0 million
-- Total Bookings $11.5 million
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<p>"Our first quarter bookings reflect strong demand from Asia, especially <span class="xn-location">Japan</span>, offset by reduced bookings in <span class="xn-location">Europe</span> and <span class="xn-location">North America</span> as compared to the prior year," said <span class="xn-person">Steve Martin</span>, senior vice president, chief financial officer and interim CEO, BakBone. "<span class="xn-location">Japan</span> was especially strong for BakBone. During the recent quarter, we received a commitment for approximately <span class="xn-money">$2 million</span> from a large financial services company in <span class="xn-location">Japan</span>. Approximately 25% of the order is included in our bookings for the first fiscal quarter with the remaining amounts expected over future quarters including the next fiscal year.</p>
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<p>"We continue to move aggressively toward an enhanced channel-centric sales model in our North American operations, similar to the one we use for our successful sales efforts in <span class="xn-location">Japan</span>," continued <span class="xn-person">Mr. Martin</span>. "We are working closely with our resellers and distributors to drive additional sales of our NetVault® storage offerings in the marketplace.</p>
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<p>"NetVault: FASTRecover(TM) and NetVault: SmartDisk(TM) have been well-received, and we continue to enhance these offerings with additional features to ensure that our products are on the leading-edge. For the remainder of fiscal 2011, we will be focused on strengthening our channel-centric sales model and on expanding our presence in the growing markets of the Asia-Pacific region, while maintaining good control of operating expenses. We remain committed to increasing revenues and improving profitability," <span class="xn-person">Mr. Martin</span> concluded.</p>
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Fiscal First Quarter Financial Results
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<p>The first quarter income statements reflect the continuing operations of BakBone's core storage business following the closure of the ColdSpark message management business in May of 2010.</p>
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<p>Fiscal first quarter 2011 revenues were <span class="xn-money">$14.0 million</span>, <span class="xn-money">$2.6 million</span> below the <span class="xn-money">$16.6 million</span> in revenues in the first quarter of fiscal 2010. Fiscal first quarter 2011 bookings were <span class="xn-money">$11.5 million</span>, <span class="xn-money">$2.1 million</span> below the <span class="xn-money">$13.6 million</span> in bookings in the first quarter of fiscal 2010. Included in the bookings in the prior fiscal year's first quarter was a <span class="xn-money">$1.5 million</span> contribution from the sale of non-core intellectual property rights to an OEM customer. Excluding this item, bookings in the recent quarter decreased 4% from the comparable quarter last year.</p>
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<p>Operating income from continuing operations totaled <span class="xn-money">$1.0 million</span> compared with <span class="xn-money">$1.7 million</span> in the first quarter of fiscal 2010. Excluding the non-recurring contribution from the sale of non-core IP in the first quarter of 2010, operating income from continuing operations in the recent first quarter increased by <span class="xn-money">$0.8 million</span>. Operating expenses from continuing operations decreased by <span class="xn-money">$2.0 million</span> as a result of lower accounting and professional fees as well as strategic cost reductions across most operating functions. The Company reported a net loss of <span class="xn-money">$3,000</span>, or <span class="xn-money">$0.00</span> per share, compared with net income of <span class="xn-money">$691,000</span>, or <span class="xn-money">$0.01</span> per share, in the first quarter of the prior fiscal year.</p>
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<p>Total cash at <span class="xn-chron">June 30, 2010</span> was <span class="xn-money">$4.9 million</span>, and is net of the payment in <span class="xn-chron">June 2010</span> of approximately <span class="xn-money">$0.5 million</span> in cash consideration to ColdSpark investors under the terms of the purchase agreement. Total common shares issued and outstanding at <span class="xn-chron">June 30, 2010</span> were 80.5 million.</p>
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Conference Call Information
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<p>The Company has scheduled a conference call for today, <span class="xn-chron">August 5, 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">June 30, 2010</span>. The call will be hosted by <span class="xn-person">Steve Martin</span>, Interim CEO and Chief Financial Officer of BakBone.</p>
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<p>To access the conference call, please dial 800-854-3238 (Passcode: 90772190). 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." An audio replay of the call will be available for seven days following the call at 800-642-1687 for U.S. callers or 706-645-9291 for those calling outside the U.S. (Passcode: 90772190). The archived webcast will also be available at the same website location.</p>
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Note Regarding Use of Non-GAAP Financial Measures
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<p>Certain of the information set forth herein, including non-GAAP measures for operating income from continuing operations excluding a non-recurring revenue item, may be considered non-GAAP financial measures. BakBone believes the presentation of these non-GAAP financial measures is useful to investors because it provides a basis for understanding of BakBone's historical financial and operating performance, capital resources and cash flow, excluding non-recurring items. BakBone's management uses these non-GAAP financial measures along with the most directly comparable GAAP financial measures in evaluating the Company's operating performance and capital resources and cash flow. The presentation of non-GAAP financial measures is not meant to be considered in isolation or as a substitute for the company's financial information presented in compliance with GAAP, and non-GAAP financial measures as reported by BakBone may be different from non-GAAP financial measures used by other companies.</p>
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About BakBone Software
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<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>
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Safe Harbor
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<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>
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<p>BakBone®, BakBone Software®, NetVault®, Application Plugin Module(TM), BakBone logo®, Integrated Data Protection(TM), NetVault: SmartDisk(TM), Asempra®, and FASTRecover(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>
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BAKBONE SOFTWARE INCORPORATED
Condensed Consolidated Balance Sheets
(in thousands)
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Fiscal Period Ended
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June 30, March 31,
2010 2010
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ASSETS (unaudited)
Current assets:
Cash and cash equivalents $4,883 $4,903
Restricted cash 51 51
Accounts receivable, net 8,619 10,582
Prepaid expenses and other assets 1,406 739
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Total current assets 14,959 16,275
Property and equipment, net 1,719 2,020
Intangible assets, net 1,642 1,814
Goodwill 7,615 7,615
Other assets 440 946
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Total assets $26,375 $28,670
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LIABILITIES AND SHAREHOLDERS'
DEFICIT
Current liabilities:
Accounts payable and accrued
liabilities $8,547 $7,942
Current portion of acquisition
consideration payable 2,369 809
Current portion of deferred
revenue 44,641 44,337
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Total current liabilities 55,557 53,088
Deferred revenue, excluding
current portion 43,432 44,840
Acquisition consideration payable,
excluding current portion 4,101 6,037
Other liabilities 599 697
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Total liabilities 103,689 104,662
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Shareholders' deficit (77,314) (75,992)
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Total liabilities and
shareholders' deficit $26,375 $28,670
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BAKBONE SOFTWARE INCORPORATED
Condensed Consolidated Statements of Operations (1)
(in thousands, except per share data)
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Three months
ended June 30,
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2010 2009
(unaudited)
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Revenues:
License and service $13,983 $15,100
Other - 1,500
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Total revenues 13,983 16,600
Cost of revenues 1,426 1,345
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Gross profit 12,557 15,255
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Operating expenses:
Sales and marketing 5,860 6,536
Research and development 2,343 2,828
General and administrative 3,330 4,215
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Total operating expenses 11,533 13,579
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Operating income from continuing
operations 1,024 1,676
Other non-operating expense (212) (383)
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Income before income taxes and
discontinued operations 812 1,293
Provision for income taxes 9 25
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Income from continuing operations 803 1,268
Loss from discontinued operations, net 806 577
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Net (loss) income $(3) $691
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Basic net (loss) income per common share:
Income from continuing operations $0.01 $0.02
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Loss from discontinued operations $(0.01) $(0.01)
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Net (loss) income $(0.00) $0.01
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Diluted net (loss) income per common
share:
Income from continuing operations $0.01 $0.01
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Loss from discontinued operations $(0.01) $(0.00)
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Net (loss) income $(0.00) $0.01
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Weighted-average common shares
outstanding:
Basic 86,328 76,747
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Diluted 86,328 94,819
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(1) In May 2010, the Company decided to close its ColdSpark Message
Management division.
As a result, the results of operations related to the division have
been classified as discontinued
operations in the consolidated financial statements for all periods
presented. Thus, certain
account balances from the prior period comparative financial
statements have been reclassified
to conform to the discontinued operations presentation.
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BAKBONE SOFTWARE INCORPORATED
Condensed Consolidated Statements of Cash Flows (1)
(in thousands)
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Three months ended
June 30,
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2010 2009
(unaudited)
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Cash flows from operating activities:
Net (loss) income $(3) $691
Adjustments to reconcile net (loss)
income to net cash provided by
operating activities from continuing
operations:
Loss from discontinued operations 806 577
Depreciation and amortization 465 447
Non-cash interest expense 185 125
Stock-based compensation 134 12
Operating expenses funded by financing
arrangement 55 103
Bad debts expense 26 -
Loss on disposal of capital assets 6 6
Other changes in assets and liabilities (402) (1,777)
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Net cash provided by operating
activities 1,272 184
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Cash flows from investing activities:
Cash paid for acquisitions, net of cash
received (476) (1,014)
Capital expenditures (89) (67)
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Net cash used in investing activities (565) (1,081)
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Cash flows from financing activities:
Payments on capital lease obligations (8) (74)
Payments on long-term debt obligations (69) (224)
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Net cash used in financing activities (77) (298)
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Cash flows from discontinued operations:
Net cash used in operating activities of
discontinued operations (752) (274)
Net cash used in financing activities of
discontinued operations (21) (2)
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(773) (276)
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Effect of exchange rates on cash and
cash equivalents 123 500
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Net decrease in cash and cash
equivalents (20) (971)
Cash and cash equivalents, beginning of
period 4,903 8,398
Cash and cash equivalents, end of period $4,883 $7,427
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(1) In May 2010, the Company decided to close its ColdSpark Message
Management division. As a result,
the cash flow activity related to the division have been classified
as discontinued operations in the consolidated
financial statements for all periods presented. Thus, certain cash
flow activity from the prior period comparative
financial statements has been reclassified to conform to the
discontinued operations presentation.
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BAKBONE SOFTWARE INCORPORATED
Reconciliation of Bookings to U.S. GAAP Revenue (1)
(in thousands)
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Three months ended June
30,
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2010 2009
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(unaudited)
Revenues sourced from current period
bookings:
Total bookings for the period $11,473 $13,478
Bookings deferred into subsequent
periods (10,753) (10,686)
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Revenues from current period
bookings 720 2,792
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Revenues sourced from prior period
bookings: 13,263 13,808
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Total revenues recognized in the
period $13,983 $16,600
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(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.
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BAKBONE SOFTWARE INCORPORATED
Reconciliation of Selected GAAP Measures to Non-GAAP Measures (1)
(in thousands)
(unaudited)
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Three months ended
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June 30, 2009
GAAP Adj Non-GAAP
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Revenues:
License and service $15,100 $- $15,100
Other 1,500 (1,500) -
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Total revenues 16,600 (1,500) 15,100
Cost of revenues 1,345 - 1,345
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Gross profit 15,255 (1,500) 13,755
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Operating expenses:
Sales and marketing 6,536 - 6,536
Research and development 2,828 - 2,828
General and administrative 4,215 - 4,215
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Total operating expenses 13,579 - 13,579
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Operating income from continuing
operations 1,676 (1,500) 176
Other non-operating expense (383) - (383)
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Income (loss) before income taxes and
discontinued operations 1,293 (1,500) (207)
Provision for income taxes 25 - 25
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Income (loss) from continuing operations 1,268 (1,500) (232)
Loss from discontinued operations, net 577 - 577
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Net income (loss) $691 $(1,500) $(809)
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(1) This presentation includes non-GAAP measures. Our non-GAAP
measures are not meant to be considered in
isolation or as a substitute for comparable GAAP measures, and should
be read only in conjunction with our
consolidated financial measures prepared in accordance with GAAP.
The following is an explanation of these
non-GAAP measures.
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Non-recurring revenue item: We recorded $1.5 million in non-
recurring revenue related to the sale of non-critical
intellectual property assets.
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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)
(Logo: http://www.newscom.com/cgi-bin/prnh/20031120/SDBAKLOGO)
For further information: Investors, Doug Sherk or Jenifer Kirtland, [email protected], both at +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
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