GlobalSCAPE Inc (GSB) filed Quarterly Report for the period ended 2009-09-30.
GLOBALSCAPE INC., a provider of Global Managed File Transfer solutions and wide-area file services technologies, delivers a modular approach to solving the enterprise challenges of security, bandwidth, latency and regulatory compliance. GlobalSCAPE's products securely and efficiently move files such as financial data, medical records, customer files, intellectual property, and other sensitive documents of any size between supply chain partners and branch offices. GlobalSCAPE's products are used by mid-sized and large enterprise companies, including virtually all of the Fortune 500 companies, leading technology, banking, healthcare, and public sector organizations. Headquartered in San Antonio, TX, GlobalSCAPE is also the developer of CuteFTP, the most popular file transfer protocol application on the market Globalscape Inc has a market cap of $31.6 million; its shares were traded at around $1.8301 with a P/E ratio of 20.3 and P/S ratio of 2.
Highlight of Business Operations:
The Company continues to enjoy a strong working capital position resulting from net profits from operations over 20 of the last 22 quarters. At September 30, 2009, the Company had net working capital of $7.4 million. The primary component of current liabilities at September 30, 2009 was $3.7 million of deferred revenues which will be recognized over the remaining term (generally one to twelve months) of the maintenance and support contracts. At September 30, 2009, our principal commitments consisted of obligations outstanding under operating leases as well as royalty agreements with third parties, and trade accounts payable. The commitments related to royalty agreements are contingent on sales volumes. We plan to continue to expend significant resources on product development in future periods and may also use our cash to acquire or license technology, products or businesses. At September 30, 2009, we had cash and short term investments available of $10.1 million.
Net cash used in investing activities for the nine months ended September 30, 2009 and 2008 was approximately $1,923,000 and $1,503,000, respectively. Cash used in investing activities for 2009 was for additional furniture and fixtures and leasehold improvements as we made renovations to our office space, as well as investing in short term certificates of deposit.
The approximate $69,000 increase in salaries was due to three full months of salary for the CEO in 2009 as compared to one month in 2008 as well as the addition of a COO subsequent to the third quarter in 2008. Commissions increased by approximately $58,000 due to an increase in sales. The increase in compensation expense of approximately $237,000 is due to a large credit received in 2008 related to the forfeiture of approximately 250,000 options. Consulting fees increased approximately $57,000 due to the hiring of a consultant to specifically drive sales in the government industry. Public relations fees increased approximately $31,000 due to the hiring of an outside marketing communications company earlier in 2009. Finally, in 2008 approximately $25,000 of software development costs were capitalized; no amounts were capitalized in 2009 because there were no projects that were eligible for capitalization.
Bonus expense for the three months ended September 30, 2009 decreased approximately $49,000 as compared to the same period in 2008 due to a new bonus structure in 2009. With the closing of the Andover, MA office in December 2008 a reserve was established at that time for all expenses related to the closing. The rent for that office is being charged against the reserve established, and therefore, resulted in an approximate $18,000 decrease in rent expense for the current period as compared to the prior year. The remaining decrease in rent expense of approximately $19,000 was due to rent expense paid in 2008 for the final payment on the prior office rental space in San Antonio. Professional fees were approximately $25,000 higher in 2008 due to additional work done by our tax accountant in conjunction with the restatement of certain 2007 and 2008 financial statements. The reduction of approximately $14,000 in service fees was due to a larger portion of internet costs being classified in cost of revenues, as well as reduced fees with the closing of the Andover office. Advertising expense decreased by approximately $135,000 due to the optimization of Google search ads. The reduction in bad debt expense of approximately $51,000 as compared to the same period in 2008 was primarily due to a change in the methodology of calculation that better estimated our allowance based on the historical collection patterns of our customer base.
Research and Development. The decrease in research and development expenses of approximately $114,000 was mainly due to a decrease of approximately $89,000 due to a reduction in the number of offshore developers used for software development. Salaries and wages also decreased by approximately $19,000 due to a reduction of two software engineers in 2009.
Other Income (Expense), net. The approximate $16,000 decrease in other income/expense consists of a $28,000 decrease in interest income due to lower interest rates in 2009, offset by a $15,000 loss on fixed assets in 2008 which did not recur in 2009.
GSB is in the portfolios of Kenneth Fisher of Fisher Asset Management, LLC.
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