BakBone Software Announces Fourth Quarter and Full Year Fiscal 2010 Financial
Results


    
    Results Reflect $12.6 Million Charge for Impairment of ColdSpark Assets

    Renewed Focus on Core Storage Management Expected to Result in Improved,
    Consistent Operating Results

    Fiscal 2010 Storage Management Revenues Increase 6%; Storage Management
Net
    Income of $7.0 Million Significantly Improved from $5.5 Million Net loss
in
    Fiscal 2009

    Conference Call Today at 2:00 pm PT








    
</pre>
<p><span class="xn-location">SAN DIEGO</span>, <span class="xn-chron">June 10</span> /CNW/ -- BakBone Software® (OTC Bulletin Board:   BKBO), a leading provider of storage and data protection software, today announced its financial results for the fourth quarter and full fiscal year of 2010, ended <span class="xn-chron">March 31, 2010</span>.  Included in the fiscal fourth quarter and full year results was a <span class="xn-money">$12.6 million</span> non-recurring, non-cash charge for the impairment of goodwill, intangible, and other assets related to the Company's ColdSpark division.</p>
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    Fourth Quarter Fiscal 2010 Financial Highlights

    
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<p> </p>
<p> </p>
<pre>
    
    -- Consolidated Revenues                                 $14.7 million
    -- Consolidated Net Loss                               $(12.2) million
    -- Storage Management Revenues                           $14.4 million
    -- Storage Management Operating Income                    $1.9 million
    -- Storage Management Bookings                           $13.7 million



    
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<p>"With the closing of ColdSpark, we are fully focused on driving our storage management business. During the fourth fiscal quarter, we experienced growing demand for our NetVault® product suite, demonstrated by growth in new customers worldwide," said <span class="xn-person">Steve Martin</span>, senior vice president, Chief Financial Officer and Interim CEO, BakBone. "Our new NetVault: FASTRecover and NetVault: SmartDisk offerings have expanded the breadth of our product line, providing us with additional storage solutions to sell to our customer base. We hit our bookings target with <span class="xn-money">$14.1 million</span> for the quarter, which included approximately <span class="xn-money">$375,000</span> for the discontinued ColdSpark business.</p>
<p/>
<p>"We took steps during the quarter to reduce personnel costs in select areas of the company to align the BakBone team to better serve the needs of our channel partners and end user customers," <span class="xn-person">Mr. Martin</span> continued. "The entire organization is now directed at driving revenues of our core backup and storage business and improving profitability from continuing operations."</p>
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    Fiscal Fourth Quarter Financial Results
    
</pre>
<p>Fiscal fourth quarter 2010 revenues of <span class="xn-money">$14.7 million</span> were two percent above revenues in the fourth quarter of fiscal 2009. The Company reported a net loss of <span class="xn-money">$12.2 million</span>, or $(0.14) per share, in the recent fourth quarter compared with a net loss of <span class="xn-money">$0.9 million</span>, or $(0.01) per share, in the fourth quarter last year. ColdSpark was acquired on <span class="xn-chron">May 14, 2009</span>, following the close of the fourth quarter of fiscal 2009, and therefore there is no contribution from the division in the fiscal fourth quarter or the full year 2009 results.</p>
<p/>
<p>Storage management revenues for the fiscal fourth quarter 2010 totaled <span class="xn-money">$14.4 million</span>, virtually unchanged from the <span class="xn-money">$14.4 million</span> in revenues in the fourth quarter of the prior year. Operating income for the storage management business was <span class="xn-money">$1.9 million</span> in the fiscal fourth quarter 2010 compared with an operating loss of <span class="xn-money">$0.3 million</span> in the fourth quarter of fiscal 2009. Storage management net income was <span class="xn-money">$1.7 million</span> for the fiscal fourth quarter 2010.</p>
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    Fiscal 2010 Financial Results
    
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<p>For the full fiscal year 2010, revenues totaled <span class="xn-money">$61.9 million</span>, 10% above the <span class="xn-money">$56.0 million</span> in revenues in fiscal 2009. The Company reported a net loss for fiscal 2010 of <span class="xn-money">$9.8 million</span>, or $(0.12) per share, compared with a net loss of <span class="xn-money">$5.5 million</span>, or $(0.08) per share, for fiscal 2009.  Bookings for fiscal 2010 totaled <span class="xn-money">$56.5 million</span>.</p>
<p/>
<p>Storage management revenues totaled <span class="xn-money">$60.8 million</span> for fiscal 2010, an increase of 9% over revenues in fiscal 2009. Operating income for the storage management business was <span class="xn-money">$7.6 million</span> in fiscal 2010 compared with an operating loss of <span class="xn-money">$6.1 million</span> in the prior fiscal year. Storage management net income increased to <span class="xn-money">$7.0 million</span>.</p>
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    Total cash at March 31, 2010 was $5.0 million.

    Conference Call Information
    
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<p>The Company has scheduled a conference call for today, <span class="xn-chron">June 10, 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">March 31, 2010</span>. The call will be hosted by <span class="xn-person">Steve Martin</span>, Interim CEO and Chief Financial Officer of BakBone.</p>
<p/>
<p>To access the conference call, please dial 800-854-3238; internationally, dial 706-634-9547 (Passcode: 76750537). 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." The webcast is also being distributed through the Thomson StreetEvents Network. Individual investors can listen to the call at <a href="http://www.earnings.com">www.earnings.com</a>, Thomson's individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson StreetEvents (<a href="http://www.streetevents.com">www.streetevents.com</a>), a password-protected event management site.</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:info@bakbone.com">info@bakbone.com</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>
<p/>
<p>BakBone®, BakBone Software®, NetVault®, Application Plugin Module(TM), BakBone logo®, Integrated Data Protection(TM), NetVault: SmartDisk(TM), Asempra®, FASTRecover(TM), ColdSpark® and SparkEngine(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>
<p/>
<p> </p>
<p> </p>
<p> </p>
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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
    jkirtland@evcgroup.com    IR@bakbone.com         amber.winans@bakbone.com


    (Logo:  http://photos.prnewswire.com/prnh/20031120/SDBAKLOGO)




    
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<p> </p>
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                        BAKBONE SOFTWARE INCORPORATED
                    Condensed Consolidated Balance Sheets
                               (in thousands)
    
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<p> </p>
<pre>
    
                                                   Fiscal Period Ended
                                                   -------------------
                                                   March 31,    March 31,
                                                      2010         2009
                                                  ----------   ----------
                        ASSETS
    Current assets:
             Cash and cash equivalents                 $4,903       $8,398
             Restricted cash                               51          264
             Accounts receivable, net                  10,582        9,646
             Prepaid expenses and other assets            739        1,159
                                                          ---        -----
    
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<p> </p>
<pre>
    
                        Total current assets           16,275       19,467
    Property and equipment, net                         2,020        2,713
    Intangible assets, net                              1,814          824
    Goodwill                                            7,615        7,615
    Other assets                                          946          939
                                                          ---          ---
    
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<p> </p>
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                        Total assets                  $28,670      $31,558
                                                      =======      =======
    
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<p> </p>
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             LIABILITIES AND SHAREHOLDERS'
                        DEFICIT
    Current liabilities:
              Accounts payable and accrued
               liabilities                             $7,942       $9,603
              Current portion of acquisition
               consideration payable                      809            -
              Current portion of deferred revenue      44,337       44,081
                                                       ------       ------
    
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<p> </p>
<pre>
    
                        Total current liabilities      53,088       53,684
    Deferred revenue, excluding current
     portion                                           44,840       47,684
    Acquisition consideration payable,
     excluding current portion                          6,037            -
    Other liabilities                                     697        1,337
                                                          ---        -----
    
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<p> </p>
<pre>
    
                        Total liabilities             104,662      102,705
                                                      -------      -------
    
</pre>
<p> </p>
<pre>
    
    Shareholders' deficit                             (75,992)     (71,147)
                                                      -------      -------
    
</pre>
<p> </p>
<pre>
    
    Total liabilities and shareholders'
     deficit                                          $28,670      $31,558
                                                      =======      =======




    
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<p> </p>
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                         BAKBONE SOFTWARE INCORPORATED
                Condensed Consolidated Statements of Operations
                     (in thousands, except per share data)
    
</pre>
<p> </p>
<pre>
    
                                      Three months        Twelve months
                                    ended March 31,      ended March 31,
                                    ---------------    ---------------
                                      2010      2009     2010       2009
                                      (unaudited)
                                      -----------
    
</pre>
<p> </p>
<pre>
    
    Revenues:
      License and service          $14,749   $14,414  $60,368    $56,020
      Other                              -         -    1,500          -
                                       ---       ---    -----        ---
      Total revenues                14,749    14,414   61,868     56,020
    Cost of revenues                 1,696     1,655    6,570      7,121
                                     -----     -----    -----      -----
      Gross profit                  13,053    12,759   55,298     48,899
                                    ------    ------   ------     ------
    Operating expenses:
      Sales and marketing            6,378     6,226   26,393     27,010
      Research and development       3,474     2,416   13,159     11,220
      General and administrative     2,668     4,401   12,402     16,751
      Impairment of goodwill and
       intangible assets            12,450         -   12,450          -
                                    ------       ---   ------        ---
      Total operating expenses      24,970    13,043   64,404     54,981
                                    ------    ------   ------     ------
      Operating loss               (11,917)     (284)  (9,106)    (6,082)
    Other non-operating
     (expense) income                 (268)     (492)    (817)       985
                                      ----      ----     ----        ---
      Loss before income taxes     (12,185)     (776)  (9,923)    (5,097)
     (Benefit from) provision for
      income taxes                      (2)      107     (171)       354
                                       ---       ---     ----        ---
      Net loss                    $(12,183)    $(883) $(9,752)   $(5,451)
                                  ========     =====  =======    =======
    
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<p> </p>
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    Net loss per common share:
      Basic and diluted             $(0.14)   $(0.01)  $(0.12)    $(0.08)
                                    ======    ======   ======     ======
    
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<p> </p>
<p> </p>
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    Weighted-average common
     shares outstanding:
      Basic and diluted             84,176    64,610   84,176     64,615
                                    ======    ======   ======     ======




    
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<p> </p>
<p> </p>
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      BAKBONE SOFTWARE INCORPORATED
      Condensed Consolidated Statements of Cash Flows
      (in thousands)
    
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<p> </p>
<pre>
    
                                                         Twelve months ended
                                                              March 31,
                                                        --------------------
                                                          2010          2009
                                                          ----          ----
      Cash flows from operating activities:
      Net loss                                         $(9,752)      $(5,451)
      Adjustments to reconcile net loss to net cash
       used in (provided by) operating activities:
        Impairment of goodwill and intangible assets    12,450             -
        Depreciation and amortization                    2,519         1,626
        Non-cash interest expense                          565             -
        Operating expenses funded by financing
         arrangement                                       320           178
        Stock-based compensation                           210           260
        Provision for bad debt                             131           258
        Loss on disposal of capital assets                  12            20
        Other changes in assets and liabilities         (8,582)        4,595
                                                        ------         -----
          Net cash (used in) provided by operating
           activities                                   (2,127)        1,486
                                                        ------         -----
    
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<p> </p>
<pre>
    
      Cash flows from investing activities:
        Cash paid for acquisitions, net of cash
         received                                       (1,014)            -
        Capital expenditures                              (423)         (836)
        Release of restricted cash                         325           227
                                                           ---           ---
          Net cash used in investing activities         (1,112)         (609)
                                                        ------          ----
    
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<p> </p>
<pre>
    
      Cash flows from financing activities:
        Payments on capital lease obligations             (228)         (239)
        Payments on long-term debt obligations            (523)         (681)
                                                          ----          ----
          Net cash used in financing activities           (751)         (920)
                                                          ----          ----
    
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<p> </p>
<pre>
    
      Effect of exchange rates on cash and cash
       equivalents                                         495        (1,055)
                                                           ---        ------
    
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<p> </p>
<pre>
    
        Net decrease in cash and cash equivalents       (3,495)       (1,098)
        Cash and cash equivalents, beginning of
         period                                          8,398         9,496
        Cash and cash equivalents, end of period        $4,903        $8,398
                                                        ======        ======




    
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<p> </p>
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                         BAKBONE SOFTWARE INCORPORATED
              Reconciliation of Bookings to U.S. GAAP Revenue (1)
                                (in thousands)
    
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<p> </p>
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                                Three months          Twelve months
                              ended March 31,        ended March 31,
                                ---------------       ---------------
    
</pre>
<p> </p>
<p> </p>
<pre>
    
                               2010           2009     2010          2009
                               ----           ----     ----          ----
                                (unaudited)
    Revenues sourced from
     current period
     bookings:
      Total bookings for
       the period           $14,107        $13,894  $56,502       $57,738
      Bookings deferred
       into subsequent
       periods              (13,123)       (12,867) (40,753)     (43,461)
                            -------        -------  -------       -------
    
</pre>
<p> </p>
<pre>
    
      Revenues from current
       period bookings          984          1,027   15,749        14,277
    
</pre>
<p> </p>
<pre>
    
    Revenues sourced from
     prior period
     bookings:               13,765         13,387   46,119        41,743
                             ------         ------   ------        ------
    
</pre>
<p> </p>
<pre>
    
      Total revenues
       recognized in the
       period               $14,749        $14,414  $61,868       $56,020
                            =======        =======  =======       =======
    
</pre>
<p> </p>
<pre>
    
    (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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<p> </p>
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                                    BAKBONE SOFTWARE INCORPORATED
                             Statement of Operations by Reporting Segment
                                (in thousands, except per share data)
    
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<p> </p>
<pre>
    
                                               Three months ended
                                               ------------------
                                                 March 31, 2010
                                       Storage      Message
                                      Management   Management   Consolidated
                                      ----------   ----------   ------------
                                                   (unaudited)
    Revenues:
      License and service                $14,366         $383        $14,749
      Other                                    -            -              -
                                             ---          ---            ---
      Total revenues                      14,366          383         14,749
    Cost of revenues                       1,482          214          1,696
                                           -----          ---          -----
      Gross profit                        12,884          169         13,053
                                          ------          ---         ------
    Operating expenses:
      Sales and marketing                  5,840          538          6,378
      Research and development             2,945          529          3,474
      General and administrative           2,193          475          2,668
      Impairment of goodwill and
       intangible assets                       -       12,450         12,450
                                             ---       ------         ------
      Total operating expenses            10,978       13,992         24,970
                                          ------       ------         ------
      Operating income (loss)              1,906      (13,823)       (11,917)
    Other non-operating expense             (266)          (2)          (268)
                                            ----          ---           ----
      Income (loss) before income
       taxes                               1,640      (13,825)       (12,185)
     (Benefit from) provision for
      income taxes                            (7)           5             (2)
                                             ---          ---            ---
      Net income (loss)                   $1,647     $(13,830)      $(12,183)
                                          ======     ========       ========
    
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<p> </p>
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    Net income (loss) per common
     share:
      Basic and diluted                                               $(0.14)
                                                                      ======
      Diluted                                                         $(0.14)
                                                                      ======
    
</pre>
<p> </p>
<pre>
    
    Weighted-average common shares
     outstanding:
      Basic                                                           84,176
                                                                      ======
      Diluted                                                         84,176
                                                                      ======



    
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<p> </p>
<p> </p>
<pre>
    
                                               Twelve months ended
                                               -------------------
                                                 March 31, 2010
                                       Storage      Message
                                      Management   Management   Consolidated
                                      ----------   ----------   ------------
                                                   (unaudited)
    Revenues:
      License and service                $59,324       $1,044        $60,368
      Other                                1,500            -          1,500
                                           -----          ---          -----
      Total revenues                      60,824        1,044         61,868
    Cost of revenues                       5,774          796          6,570
                                           -----          ---          -----
      Gross profit                        55,050          248         55,298
                                          ------          ---         ------
    Operating expenses:
      Sales and marketing                 24,786        1,607         26,393
      Research and development            11,418        1,741         13,159
      General and administrative          11,234        1,168         12,402
      Impairment of goodwill and
       intangible assets                       -       12,450         12,450
                                             ---       ------         ------
      Total operating expenses            47,438       16,966         64,404
                                          ------       ------         ------
      Operating income (loss)              7,612      (16,718)        (9,106)
    Other non-operating expense             (808)          (9)          (817)
                                            ----          ---           ----
      Income (loss) before income
       taxes                               6,804      (16,727)        (9,923)
     (Benefit from) provision for
      income taxes                          (176)           5           (171)
                                            ----          ---           ----
      Net income (loss)                   $6,980     $(16,732)       $(9,752)
                                          ======     ========        =======
    
</pre>
<p> </p>
<pre>
    
    Net income (loss) per common
     share:
      Basic and diluted                                               $(0.12)
                                                                      ======
      Diluted                                                         $(0.12)
                                                                      ======
    
</pre>
<p> </p>
<pre>
    
    Weighted-average common shares
     outstanding:
      Basic                                                           84,176
                                                                      ======
      Diluted                                                         84,176
                                                                      ======







    

For further information: For further information: Investors, Doug Sherk or Jenifer Kirtland, jkirtland@evcgroup.com, +1-415-896-6820, for BakBone Software; or Corporate, Steve Martin, +1-858-795-7525, IR@bakbone.com, or Media, Amber Winans, +1-858-795-7584, amber.winans@bakbone.com, both of BakBone Software Web Site: http://www.bakbone.com PRN Photo Desk, photodesk@prnewswire.com

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