UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
April 26, 2006
Date of Report (Date of earliest event reported)
GlobalSCAPE, Inc.
(Exact name of registrant as specified in its charter)
Delaware | | 000-30617 | | 74-2785449 |
(State or other
jurisdiction
of incorporation) | | (Commission
File Number) | | (IRS Employer
Identification
No.) |
6000 Northwest Parkway, Suite 100
San Antonio, Texas 78249
(210) 308-8267
(Address of principal executive offices and Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 4.02(a). Non-Reliance on Previously Issued Financial Statements or a Related Audit Report of Completed Interim Review.
On April 26, 2006, in connection with the Company’s quarter-end accounting procedures, after consultation with the Company’s independent registered public accounting firm, management and the Company’s Board of Directors determined that there was an error in the calculation of revenue from maintenance and support (net of deferred revenues) for the year ended December 31, 2005. The Company mistakenly recorded $154,433 as current revenue which should have been recorded as deferred revenue. The correction of the error resulted in a decrease of $154,433 in the Company’s revenue as reported on the Company’s income statement and an increase of $154,433 to the previously stated deferred revenue on the Company’s balance sheet at December 31, 2005. The error was caused by a failure to properly code deferred revenue percentages on products introduced to our product line into our sales and order entry database. The error has been corrected.
The Board of Directors has discussed the matters disclosed in this Report with the Company’s independent registered public accounting firm, Helin, Donovan, Trubee & Wilkinson, LLP.
Accordingly, the audited consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005 should not be relied upon. The Company intends to effect the restatement through filing an amended Annual Report on Form 10-K for the year ended December 31, 2005.
The following table summarizes the impact of the restatement:
| | As | | | | As | |
| | Reported | | Adjustments | | Restated | |
2005 Summary Balance Sheet | | | | | | | |
Current Assets | | $ | 2,685,505 | | — | | $ | 2,685,505 | |
Property and equipment (net) | | 152,571 | | — | | 152,571 | |
Other assets | | 63,595 | | — | | 63,595 | |
Total Assets | | $ | 2,901,671 | | $ | — | | $ | 2,901,671 | |
| | | | | | | |
Current Liabilities | | | | | | | |
Accounts payable | | $ | 91,763 | | — | | $ | 91,763 | |
Accrued expenses | | 234,236 | | (3,325 | ) | 290,911 | |
Federal income tax payable | | 117,529 | | (56,630 | ) | 60,899 | |
Deferred revenue | | 406,145 | | 154,433 | | 560,578 | |
Total current liabilities | | 849,673 | | 94,478 | | 944,151 | |
Long-term liabilities | | 28,945 | | — | | 28,945 | |
Stockholders’ equity | | | | | | | |
Preferred stock | | — | | — | | — | |
Common stock | | 13,797 | | — | | 13,797 | |
Additional paid in capital | | 684,281 | | — | | 684,281 | |
Retained earnings | | 1,324,975 | | (94,478 | ) | 1,230,497 | |
Total liabilities and stockholders’ equity | | $ | 2,901,671 | | $ | — | | $ | 2,901,671 | |
2
| | As | | | | As | |
| | Reported | | Adjustments | | Restated | |
2005 Summary Consolidated Statement of Operations | | | | | | | |
Software Product Revenues | | $ | 6,096,045 | | $ | — | | $ | 6,096,045 | |
Maintenance and support (net of deferred revenues) | | 737,003 | | (154,433 | ) | 582,570 | |
Total Revenues | | 6,833,048 | | (154,433 | ) | 6,678,615 | |
Operating expenses | | | | | | | |
Cost of revenues (exclusive of depreciation and amortization shown seperately below) | | 279,964 | | — | | 279,964 | |
Selling, general and administrative expenses | | 3,989,372 | | (3,325 | ) | 3,986,047 | |
Research and development expenses | | 869,155 | | — | | 869,155 | |
Depreciation and amortization | | 98,071 | | — | | 98,071 | |
Total operating expenses | | 5,236,562 | | (3,325 | ) | 5,233,237 | |
Income from operations | | 1,596,486 | | (151,108 | ) | 1,445,378 | |
Other income (expense) | | 11,307 | | — | | 11,307 | |
Income before income taxes | | | | | | | |
Income tax provision | | | | | | | |
Current federal | | 117,529 | | (56,630 | ) | 60,899 | |
Current state | | 1,065 | | — | | 1,065 | |
Deferred federal (benefit) | | (51,983 | ) | — | | (51,983 | ) |
Total income tax provision | | 66,611 | | (56,630 | ) | 9,981 | |
Net Income | | $ | 1,541,182 | | $ | (94,478 | ) | $ | 1,446,704 | |
| | | | | | | |
Basic per common share | | $ | 0.11 | | | | $ | 0.10 | |
Diluted per common share | | $ | 0.10 | | | | $ | 0.09 | |
As a result of the restatement of our December 31, 2005 financial statements as disclosed in this Report, our Chief Executive Officer and Principal Accounting Officer can no longer conclude that after evaluating the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) for the period ended December 31, 2005, that our disclosure controls and procedures relating to revenue recognition from maintenance and support were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief
3
Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Therefore, we will amend our assertion regarding the effectiveness of our disclosure controls and procedures in our Annual Report on Form 10-K for the year ended December 31, 2005. Similarly, our Quarterly Report on Form 10-Q for the three months ended March 31, 2006 will reflect that at the end of the period, our disclosure controls and procedures relating to revenue recognition from maintenance and support were not effective. As stated above, the cause of the problem has been identified and corrected. The results of operations reported in our Form 10-Q for the quarter ended March 31, 2006 will reflect the correction we have made regarding revenue recognition from maintenance and support.
4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| GLOBALSCAPE, INC. |
| |
| |
| By: | /s/ Charles R. Poole | |
| | Charles R. Poole, President and Chief
Executive Officer |
| | |
| | Dated: May 2, 2006 |
5
