EXHIBIT 99.1
ST. BERNARD SOFTWARE REPORTS GROWTH IN INCOME AND CASH FLOW FROM OPERATIONS FOR THIRD QUARTER 2009
SAN DIEGO, CA, November 12, 2009 -- St. Bernard Software, Inc. (OTC BB:SBSW.OB - News), a leader in Web security appliances, today announced unaudited financial results for its quarter ended September 30, 2009.
Third Quarter 2009 GAAP Financial Highlights:
| | • | | Increased operating profit by $714,000. Operating profit for the 3rd quarter was $205,000 vs. ($509,000) for the 3rd quarter of 2008 |
| | • | | Cash flow from operations grew 284% for the quarter vs. prior year, 973% vs. prior quarter – $515,000 in the 3rd quarter of 2009 vs. $134,000 in the 3rd quarter of 2008 |
| | • | | Operating expenses decreased by 17% for the period |
“Our continued efforts on operational execution has helped deliver solid results”, said Lou Ryan, CEO of St. Bernard Software. “Additionally, our ability to remain focused on our customers’ needs for operational efficiency has enabled us to grow in markets that are increasingly cost conscious including mid-enterprise corporations. Our recent iPrism version 6.4 release further increases our lead as the provider preferred for delivering the lowest total cost of ownership in the web security gateway market.”
Financial Results
Revenue for the quarter ended September 30, 2009 was $4.5 million, an increase of $66,000 or 2% compared to the comparable period in 2008.
Total gross margin of $3.3 million improved 2% for Q3 2009, compared to the same period in 2008.
Sales and marketing expenses were $1.5 million in Q3 2009, which is down from $1.8 million in Q3 2008 resulting in a 19% decrease quarter over prior year quarter. The decrease was 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 increased 15% quarter over prior year quarter. The increase which has been sustained throughout the year has helped deliver the latest iPrism 6.4 version release and the platform for the industry’s first hybrid mobile web filtering solution.
General and administrative expenses were $462,000 in Q3 of 2009, which includes a stock-based compensation credit of $183,000. Compared to the same quarter in 2008 which included stock-based compensation expense of $334,000, general and administrative expenses decreased approximately 65%. This decrease is mainly due to a decrease in stock-based compensation expense as well as our extensive cost cutting efforts which are now complete.
St. Bernard posted Net Income of $117,000 despite a one-time write off of previously capitalized software costs of approximately $473,000 during the quarter.
The Company achieved cash flow positive for the second straight quarter in Q3 showing cash improvement in four of its last five quarters. Cash provided by operations was $515,000 and $134,000, respectively, in Q3 2009 compared to the same period in 2008. Net increase in cash for Q3 2009 was $370,000 compared to a net increase in cash for Q3 2008 of $346,000.
Business Outlook
Mr. Ryan added, “We remain optimistic as we close out 2009. Our increased investment in technology has enabled us to deliver an industry-leading release of our flagship product iPrism while delivering solid operating results. We expect the new release to help fuel continued solid results leading into 2010.”
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 1995 as a market-leader in data security with its flagship product, Open File Manager(TM), the company is now recognized for delivering today's #1 Web filtering and security appliance, iPrism®. With millions of end users worldwide in more than 5,000 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 (OTC BB:SBSW.OB - News) 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.
©2009 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.
Safe Harbor 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), or other financial items; any statements of the plans, strategies, and objectives of management for future operations; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief 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; and the difficulty of keeping expense growth at modest levels while increasing revenues. Announcements of contract awards should not be interpreted as reflecting revenue in any particular period and may relate to revenue recorded in prior periods. 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-KSB, 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.
Contact:
St. Bernard Software
Lorrie Hunsaker
St. Bernard Software
Investor and Public Relations Manager
(858) 524-2002
IR@stbernard.com
St. Bernard Software, Inc.
Consolidated Balance Sheets
| | | September 30, 2009 | | | December 31, 2008 | |
| | | (Unaudited) | | | | |
| Assets | | | | | | |
| | | | | | | |
| Current Assets | | | | | | |
| Cash and cash equivalents | | $ | 1,421,000 | | | $ | 2,051,000 | |
| Accounts receivable - net of allowance for doubtful accounts of | | | | | | | | |
| $20,000 and $52,000 at September 30, 2009 and December 31, 2008, | | | | | | | | |
| respectively | | | 2,707,000 | | | | 3,170,000 | |
| Inventories - net | | | 374,000 | | | | 364,000 | |
| Prepaid expenses and other current assets | | | 337,000 | | | | 381,000 | |
| | | | | | | | | |
| Total current assets | | | 4,839,000 | | | | 5,966,000 | |
| | | | | | | | | |
| Fixed Assets - Net | | | 622,000 | | | | 828,000 | |
| | | | | | | | | |
| Other Assets | | | 154,000 | | | | 281,000 | |
| | | | | | | | | |
| Goodwill | | | 7,568,000 | | | | 7,568,000 | |
| Total Assets | | $ | 13,183,000 | | | $ | 14,643,000 | |
| | | | | | | | | |
| Liabilities and Stockholders’ Deficit | | | | | | | | |
| | | | | | | | | |
| Current Liabilities | | | | | | | | |
| Short-term borrowings | | $ | 2,100,000 | | | $ | 2,462,000 | |
| Accounts payable | | | 894,000 | | | | 1,270,000 | |
| Accrued compensation expenses | | | 818,000 | | | | 1,361,000 | |
| Accrued expenses and other current liabilities | | | 576,000 | | | | 518,000 | |
| Warranty liability | | | 195,000 | | | | 195,000 | |
| Current portion of capitalized lease obligations | | | 52,000 | | | | 147,000 | |
| Deferred revenue | | | 10,145,000 | | | | 10,469,000 | |
| | | | | | | | | |
| Total current liabilities | | | 14,780,000 | | | | 16,422,000 | |
| | | | | | | | | |
| Deferred Rent | | | 30,000 | | | | 118,000 | |
| | | | | | | | | |
| Capitalized Lease Obligations, Less Current Portion | | | - | | | | 22,000 | |
| | | | | | | | | |
| Deferred Revenue | | | 7,543,000 | | | | 7,152,000 | |
| Total liabilities | | | 22,353,000 | | | | 23,714,000 | |
| | | | | | | | | |
| 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 at | | | | | | | | |
| September 30, 2009 and December 31, 2008, respectively | | | 132,000 | | | | 148,000 | |
| Additional paid-in capital | | | 40,644,000 | | | | 40,308,000 | |
| Accumulated deficit | | | (49,946,000 | ) | | | (49,527,000 | ) |
| Total stockholders’ deficit | | | (9,170,000 | ) | | | (9,071,000 | ) |
| Total Liabilities and Stockholders’ Deficit | | $ | 13,183,000 | | | $ | 14,643,000 | |
St. Bernard Software, Inc.
Unaudited Consolidated Statements of Operations
| | | Three months ended September 30, | | | Nine months ended September 30, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| Revenues | | | | | | | | | | | | |
| Subscription | | $ | 3,615,000 | | | $ | 3,519,000 | | | $ | 10,996,000 | | | $ | 10,250,000 | |
| Appliance | | | 875,000 | | | | 906,000 | | | | 2,691,000 | | | | 2,668,000 | |
| License | | | 3,000 | | | | 2,000 | | | | 9,000 | | | | 18,000 | |
| Total Revenues | | | 4,493,000 | | | | 4,427,000 | | | | 13,696,000 | | | | 12,936,000 | |
| | | | | | | | | | | | | | | | | |
| Cost of Revenues | | | | | | | | | | | | | | | | |
| Subscription | | | 552,000 | | | | 545,000 | | | | 1,675,000 | | | | 1,658,000 | |
| Appliance | | | 594,000 | | | | 612,000 | | | | 1,826,000 | | | | 1,848,000 | |
| License | | | 9,000 | | | | - | | | | 11,000 | | | | 5,000 | |
| Total Cost of Revenues | | | 1,155,000 | | | | 1,157,000 | | | | 3,512,000 | | | | 3,511,000 | |
| | | | | | | | | | | | | | | | | |
| Gross Profit | | | 3,338,000 | | | | 3,270,000 | | | | 10,184,000 | | | | 9,425,000 | |
| | | | | | | | | | | | | | | | | |
| Operating Expenses | | | | | | | | | | | | | | | | |
| Sales and marketing | | | 1,474,000 | | | | 1,828,000 | | | | 4,715,000 | | | | 5,709,000 | |
| Research and development | | | 724,000 | | | | 629,000 | | | | 2,629,000 | | | | 2,128,000 | |
| General and administrative | | | 462,000 | | | | 1,322,000 | | | | 2,709,000 | | | | 3,897,000 | |
| Write-off of capitalized software | | | 473,000 | | | | - | | | | 473,000 | | | | - | |
| Total Operating Expenses | | | 3,133,000 | | | | 3,779,000 | | | | 10,526,000 | | | | 11,734,000 | |
| | | | | | | | | | | | | | | | | |
| Income (Loss) from Operations | | | 205,000 | | | | (509,000 | ) | | | (342,000 | ) | | | (2,309,000 | ) |
| | | | | | | | | | | | | | | | | |
| Other Income | | | | | | | | | | | | | | | | |
| Interest expense - net | | | 79,000 | | | | 230,000 | | | | 250,000 | | | | 530,000 | |
| Gain on sale of assets | | | - | | | | (244,000 | ) | | | - | | | | (564,000 | ) |
| Other expense (income) | | | 9,000 | | | | 9,000 | | | | (29,000 | ) | | | (435,000 | ) |
| Total Other Expense (Income) | | | 88,000 | | | | (5,000 | ) | | | 221,000 | | | | (469,000 | ) |
| Income (Loss) Before Income Taxes | | | 117,000 | | | | (504,000 | ) | | | (563,000 | ) | | | (1,840,000 | ) |
| | | | | | | | | | | | | | | | | |
| Income tax expense | | | - | | | | - | | | | (5,000 | ) | | | (3,000 | ) |
| Net Income (Loss) | | $ | 117,000 | | | $ | (504,000 | ) | | $ | (568,000 | ) | | $ | (1,843,000 | ) |
| Income (Loss) Per Common Share - Basic | | $ | 0.01 | | | $ | (0.03 | ) | | $ | (0.04 | ) | | $ | (0.12 | ) |
| Income (Loss) Per Common Share - Diluted | | $ | 0.01 | | | $ | (0.03 | ) | | $ | (0.04 | ) | | $ | (0.12 | ) |
| Weighted Average Shares Outstanding - Basic | | | 13,720,371 | | | | 14,783,090 | | | | 14,467,141 | | | | 14,775,832 | |
| Weighted Average Shares Outstanding - Diluted | | | 13,873,815 | | | | 14,783,090 | | | | 14,467,141 | | | | 14,775,832 | |
St. Bernard Software, Inc.
Unaudited Consolidated Statements of Cash Flows
| | | Nine months ended September 30, | |
| | | 2009 | | | 2008 | |
| Cash Flows From Operating Activities | | | | | | |
| Net loss | | $ | (568,000 | ) | | $ | (1,843,000 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | |
| Depreciation and amortization | | | 281,000 | | | | 455,000 | |
| Allowance for doubtful accounts | | | (32,000 | ) | | | 24,000 | |
| Gain on sale of assets | | | - | | | | (563,000 | ) |
| Write-off of capitalized software | | | 473,000 | | | | - | |
| Gain on change in fair value of warrant derivative liability | | | 8,000 | | | | - | |
| Stock-based compensation expense | | | 486,000 | | | | 668,000 | |
| Noncash interest expense | | | 116,000 | | | | 246,000 | |
| Increase (decrease) in cash resulting from changes in: | | | | | | | | |
| Accounts receivable | | | 495,000 | | | | (349,000 | ) |
| Inventories | | | (10,000 | ) | | | (226,000 | ) |
| Prepaid expenses and other assets | | | (418,000 | ) | | | (64,000 | ) |
| Accounts payable | | | (376,000 | ) | | | (1,461,000 | ) |
| Accrued expenses and other current liabilities | | | (565,000 | ) | | | (299,000 | ) |
| Deferred rent | | | (57,000 | ) | | | - | |
| Warranty liability | | | - | | | | (45,000 | ) |
| Deferred revenue | | | 67,000 | | | | 1,526,000 | |
| Net cash used in operating activities | | | (100,000 | ) | | | (1,931,000 | ) |
| | | | | | | | | |
| Cash Flows From Investing Activities | | | | | | | | |
| Purchases of fixed assets | | | (75,000 | ) | | | (7,000 | ) |
| Proceeds from the sale of assets | | | - | | | | 570,000 | |
| Net cash (used) provided by investing activities | | | (75,000 | ) | | | 563,000 | |
| | | | | | | | | |
| Cash Flows From Financing Activities | | | | | | | | |
| Proceeds from the sales of stock under the employee stock purchase plan | | | 24,000 | | | | 11,000 | |
| Principal payments on capitalized lease obligations | | | (117,000 | ) | | | (114,000 | ) |
| Net (decrease) increase in short-term borrowings | | | (362,000 | ) | | | 896,000 | |
| Net cash (used) provided by financing activities | | | (455,000 | ) | | | 793,000 | |
| Net Decrease in Cash and Cash Equivalents | | | (630,000 | ) | | | (575,000 | ) |
| Cash and Cash Equivalents at Beginning of Period | | | 2,051,000 | | | | 1,297,000 | |
| Cash and Cash Equivalents at End of Period | | $ | 1,421,000 | | | $ | 722,000 | |
