Attached files
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| 8-K - CURRENT REPORT ON FORM 8-K - EdgeWave, Inc. | edgewave_8k-080912.htm |
Exhibit 99.1
SAN DIEGO, CA, August 10, 2012 – EdgeWave, Inc. (“EdgeWave”, “we”, or the “Company”) (PINK: EWVE), a leading provider in Secure Content Management (“SCM”) solutions, announced financial results for its second quarter ended June 30, 2012.
Second Quarter 2012 Financial and Operational Summary
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Net billings* for the three months ended June 30, 2012 totaled $4.7 million, a decrease of approximately 5% compared to the same period in 2011. Net billings* for the six months ended June 30, 2012 totaled $9.6 million, an increase of approximately 8% compared to the same period in 2011.
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Revenue for the three months ended June 30, 2012 decreased to $4.3 million as compared to $4.8 million for the comparable period in 2011. | ||
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Cash and cash equivalents as of June 30, 2012 and December 31, 2011were $1.9 million and $2.6 million, respectively.
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Cash used by operating activities for the three months ended June 30, 2012 was $862,000 compared to $153,000 for the same period in 2011, an increase of 463%. Cash used by operating activities for the six months ended June 30, 2012 was approximately $2.1 million, an increase of approximately 35% from $1.5 million for the same period in 2011.
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| • | Q2 2012 operating expenses decreased 13% from $4.6 million to $4.0 million in the same period in 2011. 2012 YTD operating expenses decreased approximately $1.0 million, or 11%, as compared to same period during 2011. | ||
| • | Loss from operations for the three months ended June 30, 2012 was $1.0 million, a 21% improvement over the same period in 2011. Loss from operations for the six months ended June 30, 2012 was $2.3 million, a 23% improvement over the same period in 2011. | ||
Financial Results and Net Billings*
Net billings* for the quarter ended June 30, 2012 decreased approximately $247,000, or 5%, from the second quarter of 2011, while revenues decreased $502,000, or 10%, for the three months ended June 30, 2012 as compared to the same period in 2011.
Operating expenses for the quarter ended June 30, 2012 improved to $4.0 million as compared to $4.6 million for the second quarter of 2011 largely due to reductions in salaries and related expenses. This reduction was also responsible for a 21% improvement in Loss from Operations which was $1.0 million and $1.3 million for the three months ended June 30, 2012 and 2011, respectively.
Cash used by operating activities for the three months ended June 30, 2012 increased 464% to $862,000 as compared to $153,000 for the same period in 2011 due to changes in operating assets and liabilities during the period.
* Net billings represent the amount of subscription contracts billed to customers net of discounts and are not numerical measurements that can be calculated in accordance with GAAP. The Company provides this measurement in its financial performance because this measurement provides a consistent basis for understanding the Company’s sales activities for the current period. The Company believes the billing measurement is useful to investors because the GAAP measurements of revenue and deferred revenue in the current period include subscription contracts commenced in the prior periods. The rollforward of deferred revenue (which includes net billings and revenue) for the second quarter ended June 30, 2012 is set forth at the end of this press release.
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Product Releases
In May 2012, EdgeWave announced iPrism Social Media Security, a new service that transcends traditional Web filtering by seamlessly monitoring and controlling user interactions with social media applications such as Facebook, Twitter and Google. iPrism Social Media Security positions the company as a global leader in social networking safety by enabling access to popular social media sites, while providing enforcement of acceptable use policies. iPrism Social Media Security protects enterprises and educational institutions from loss of proprietary, confidential and sensitive data, and gives them control over inappropriate content postings, while helping to prevent cyber bullying.
About EdgeWave, Inc™
EdgeWave Inc. (PINK: EWVE - News) develops and markets on-demand, appliance, and hybrid Secure Content Mangement (“SCM”) solutions to the mid-market enterprise and service provider markets. The EdgeWave portfolio of web, messaging and social media security technologies delivers SCM with ease of deployment and the lowest Total Cost of Ownership (“TCO”) on the market. The Company’s award-winning iPrism Web Security appliance and ePrism Messaging Security Suite and iPrism Social Media Security solutions can be delivered as hosted, on-premises, and hybrid services. With approximately 6,500 customers and over 200 partners worldwide, EdgeWave strives to deliver high performance, easy-to-use solutions that offer excellent value.
Based in San Diego, California, EdgeWave markets its solutions through a network of distributors, Value-Added Resellers, Managed Service Providers, and directly to end users. For more information about EdgeWave, visit www.edgewave.com
©2012 EdgeWave, Inc. All rights reserved. The EdgeWave logo, iPrism, and the Red Condor Logo, are trademarks of EdgeWave, Inc. All other trademarks and registered trademarks are hereby acknowledged.
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| EdgeWave, Inc. | |||||||
| Condensed Consolidated Balance Sheets | |||||||
| June 30, 2012 | December 31, 2011 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 1,932,000 | $ | 2,609,000 | ||||
| Accounts receivable - net of allowance for doubtful accounts of $25,000 at June 30, 2012 and December 31, 2011 | 4,073,000 | 4,097,000 | ||||||
| Inventories - net | 629,000 | 647,000 | ||||||
| Prepaid expenses and other current assets | 852,000 | 755,000 | ||||||
| Total current assets | 7,486,000 | 8,108,000 | ||||||
| Fixed Assets - Net | 648,000 | 660,000 | ||||||
| Prepaid Expenses, Net of Current Portion | 361,000 | – | ||||||
| Goodwill | 8,279,000 | 8,279,000 | ||||||
| Other Intangible Assets - Net | 395,000 | 459,000 | ||||||
| Other Assets | 447,000 | 97,000 | ||||||
| Total Assets | $ | 17,616,000 | $ | 17,603,000 | ||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current Liabilities | ||||||||
| Line of credit | $ | 1,700,000 | $ | 1,700,000 | ||||
| Term loan, current portion | 908,000 | 158,000 | ||||||
| Accounts payable | 1,014,000 | 1,370,000 | ||||||
| Accrued compensation | 1,272,000 | 1,169,000 | ||||||
| Accrued expenses and other current liabilities | 610,000 | 560,000 | ||||||
| Warranty liability | 176,000 | 186,000 | ||||||
| Capitalized lease obligations, current portion | 38,000 | 37,000 | ||||||
| Deferred revenue, current portion | 11,044,000 | 10,547,000 | ||||||
| Total current liabilities | 16,762,000 | 15,727,000 | ||||||
| Convertible Notes Payable | 5,312,000 | 4,836,000 | ||||||
| Term Loan, Net of Current Portion | 883,000 | 400,000 | ||||||
| Deferred Rent | 314,000 | 302,000 | ||||||
| Capitalized Lease Obligations, Net of Current Portion | 127,000 | 146,000 | ||||||
| Deferred Revenue, Net of Current Portion | 12,146,000 | 11,651,000 | ||||||
| Total liabilities | 35,544,000 | 33,062,000 | ||||||
| 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; 17,025,242 and 17,019,736 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively | 166,000 | 166,000 | ||||||
| Additional paid-in capital | 42,321,000 | 42,228,000 | ||||||
| Accumulated deficit | (60,415,000 | ) | (57,853,000 | ) | ||||
| Total stockholders’ deficit | (17,928,000 | ) | (15,459,000 | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | 17,616,000 | $ | 17,603,000 | ||||
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| EdgeWave, Inc. | ||||||||||||
| Condensed Consolidated Statements of Operations (Unaudited) | ||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Revenues | ||||||||||||||||
| Subscription | $ | 3,516,000 | $ | 3,644,000 | $ | 7,017,000 | $ | 7,314,000 | ||||||||
| Appliance | 787,000 | 1,159,000 | 1,582,000 | 1,867,000 | ||||||||||||
| License | – | 2,000 | – | 4,000 | ||||||||||||
| Total Revenues | 4,303,000 | 4,805,000 | 8,599,000 | 9,185,000 | ||||||||||||
| Cost of Revenues | ||||||||||||||||
| Subscription | 750,000 | 719,000 | 1,452,000 | 1,509,000 | ||||||||||||
| Appliance | 601,000 | 802,000 | 1,064,000 | 1,255,000 | ||||||||||||
| License | – | – | – | 2,000 | ||||||||||||
| Total Cost of Revenues | 1,351,000 | 1,521,000 | 2,516,000 | 2,766,000 | ||||||||||||
| Gross Profit | 2,952,000 | 3,284,000 | 6,083,000 | 6,419,000 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Sales and marketing | 1,970,000 | 2,277,000 | 4,179,000 | 4,720,000 | ||||||||||||
| Research and development | 1,167,000 | 1,267,000 | 2,357,000 | 2,731,000 | ||||||||||||
| General and administrative | 831,000 | 1,029,000 | 1,845,000 | 1,935,000 | ||||||||||||
| Total Operating Expenses | 3,968,000 | 4,573,000 | 8,381,000 | 9,386,000 | ||||||||||||
| Loss from Operations | (1,016,000 | ) | (1,289,000 | ) | (2,298,000 | ) | (2,967,000 | ) | ||||||||
| Other Expense (Income) | ||||||||||||||||
| Interest expense - net | 156,000 | 61,000 | 279,000 | 105,000 | ||||||||||||
| Other income | (11,000 | ) | (66,000 | ) | (26,000 | ) | (86,000 | ) | ||||||||
| Total Other Expense (Income) | 145,000 | (5,000 | ) | 253,000 | 19,000 | |||||||||||
| Loss Before Income Taxes | (1,161,000 | ) | (1,284,000 | ) | (2,551,000 | ) | (2,986,000 | ) | ||||||||
| Income tax expense | 2,000 | – | 11,000 | – | ||||||||||||
| Net Loss | $ | (1,163,000 | ) | $ | (1,284,000 | ) | $ | (2,562,000 | ) | $ | (2,986,000 | ) | ||||
| Loss Per Common Share - Basic and Diluted | $ | (0.07 | ) | $ | (0.08 | ) | $ | (0.15 | ) | $ | (0.18 | ) | ||||
| Weighted Average Shares Outstanding - Basic and Diluted | 17,212,025 | 16,390,811 | 17,023,831 | 16,382,363 | ||||||||||||
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| EdgeWave, Inc. | |||||||||
| Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||||||
| Six Months Ended June 30, | ||||||||
| 2012 | 2011 | |||||||
| Cash Flows From Operating Activities | ||||||||
| Net loss | $ | (2,562,000 | ) | $ | (2,986,000 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 218,000 | 358,000 | ||||||
| Allowance for doubtful accounts | – | 44,000 | ||||||
| Gain on change in fair value of warrant derivative liability | (26,000 | ) | (85,000 | ) | ||||
| Stock-based compensation expense | 90,000 | 100,000 | ||||||
| Noncash interest expense | 176,000 | 47,000 | ||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable | 24,000 | 41,000 | ||||||
| Inventories | 18,000 | 113,000 | ||||||
| Prepaid expenses and other assets | (809,000 | ) | 661,000 | |||||
| Accounts payable | (356,000 | ) | 629,000 | |||||
| Accrued expenses and other current liabilities | 55,000 | (182,000 | ) | |||||
| Accrued compensation | 103,000 | (122,000 | ) | |||||
| Warranty liability | (9,000 | ) | (7,000 | ) | ||||
| Deferred rent | 32,000 | 187,000 | ||||||
| Deferred revenue | 992,000 | (318,000 | ) | |||||
| Net cash used in operating activities | (2,054,000 | ) | (1,520,000 | ) | ||||
| Cash Flows From Investing Activities | ||||||||
| Purchases of fixed assets | (142,000 | ) | (297,000 | ) | ||||
| Net cash used by investing activities | (142,000 | ) | (297,000 | ) | ||||
| Cash Flows From Financing Activities | ||||||||
| Proceeds from convertible notes issued | 300,000 | – | ||||||
| Proceeds from stock option exercises | 1,000 | 35,000 | ||||||
| Warrants issued in connection with Partners for Growth III, L.P loan agreement | 2,000 | – | ||||||
| Proceeds from the sales of stock under the employee stock purchase plan | – | 44,000 | ||||||
| Principal payments on capitalized lease obligations | (18,000 | ) | (17,000 | ) | ||||
| Principal payments on term loans | (265,000 | ) | (50,000 | ) | ||||
| Proceeds from term loans | 1,500,000 | – | ||||||
| Net (decrease) increase on line of credit | (1,000 | ) | 1,200,000 | |||||
| Net cash provided by financing activities | 1,519,000 | 1,212,000 | ||||||
| Net Decrease in Cash and Cash Equivalents | (677,000 | ) | (605,000 | ) | ||||
| Cash and Cash Equivalents at Beginning of Period | 2,609,000 | 2,610,000 | ||||||
| Cash and Cash Equivalents at End of Period | $ | 1,932,000 | $ | 2,005,000 | ||||
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EdgeWave, Inc.
Rollforward of GAAP Deferred Revenue (Unaudited)
| Three Months Ended June 30, 2012 | ||||
| GAAP deferred revenue balance at March 31, 2012 | $ | 22,198 | ||
| Net billings during second quarter 2012 | 4,722 | |||
| Less GAAP revenue recognized during second quarter 2012 | (4,303 | ) | ||
| GAAP deferred revenue balance at June 30, 2012 | $ | 22,617 | ||
| Three Months Ended June 30, 2011 | ||||
| GAAP deferred revenue balance at March 31, 2011 | $ | 21,173 | ||
| Net billings during second quarter 2011 | 4,969 | |||
| Less GAAP revenue recognized during second quarter 2011 | (4,805 | ) | ||
| GAAP deferred revenue balance at June 30, 2011 | $ | 21,337 | ||
| Six Months Ended June 30, 2012 | ||||
| GAAP deferred revenue balance at December 31, 2011 | $ | 22,198 | ||
| Net billings year to date 2012 | 9,604 | |||
| Less GAAP revenue recognized year to date 2012 | (9,185 | ) | ||
| GAAP deferred revenue balance at June 30, 2012 | $ | 22,617 | ||
| Six Months Ended June 30, 2011 | ||||
| GAAP deferred revenue balance at December 31, 2010 | $ | 21,655 | ||
| Net billings year to date 2011 | 8,867 | |||
| Less GAAP revenue recognized year to date 2011 | (9,185 | ) | ||
| GAAP deferred revenue balance at June 30, 2011 | $ | 21,337 | ||
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