BakBone Software Generates 12% Revenue Growth and Reports Continued
Profitability in the Second Quarter of Fiscal 2010


    


    
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<p><location>SAN DIEGO</location>, <chron>Nov. 10</chron> /CNW/ -- BakBone Software, Incorporated (OTC Bulletin Board:   BKBO), a leading provider of Universal Data Management solutions, today announced its financial results for the second quarter of fiscal 2010 ended <chron>September 30, 2009</chron>.</p>
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    Second Quarter Fiscal 2010 financial and operational highlights include:

    
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    --  GAAP Revenues                        $15.2 million
    --  Operating Income                     $0.9 million
    --  Net Income                           $1.1 million
    --  Net Income per Share                 $0.01
    --  Total Bookings                       $13.6 million

    
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<p>"We continued to generate solid revenue growth and improved profitability," said <person>Jim Johnson</person>, president and CEO, BakBone. "Our GAAP results were driven by continued strong sales performance in Asia and <location>Europe</location> and new revenue contributions from ColdSpark as well as operational cost efficiencies in the second quarter of this fiscal year."</p>
<p/>
<p>"The bookings related to our acquisitions are growing. In mid-June, we launched the NetVault: FASTRecover(TM) solutions, our new disk-based, real-time data protection products for Microsoft Exchange, SQL Server and Windows file systems based on Asempra's technology. We have received good customer interest in the new products and expect them to be meaningful contributors to future financial results."</p>
<p/>
<p>"ColdSpark continues to expand its capabilities in enterprise messaging and infrastructure. In October, we released new versions of the ColdSpark SparkEngine(TM), Compliance Catalyst and MailFusion products that expand policy management and workflow integration for enterprise message management. We continue to aggressively pursue additional customers in the financial services, healthcare and other regulated industries that will benefit from the more powerful corporate compliance features offered by the ColdSpark solutions. Our relationship with the large healthcare client that we announced in August is going well and we are implementing the ColdSpark product throughout its system. We are optimistic about our prospects for additional new customers in the vertical markets we are targeting," Johnson continued.</p>
<p/>
<p>As planned, in mid-October BakBone introduced the newest version of the Company's flagship product NetVault®: Backup and new disk-based backup and deduplication options with NetVault: SmartDisk. NetVault: SmartDisk is based on BakBone's Open Data Protection Platform, which will offer more affordable, long-term disk-based storage to customers, with features such as data deduplication.</p>
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<p>"BakBone is continuing to execute on its growth strategy - introducing proprietary, innovative software solutions, expanding its markets and driving revenue. We are pleased with our momentum and remain optimistic about the outlook for continued financial progress this fiscal year. Recognizing that the ColdSpark business is based on large orders with somewhat unpredictable timing, we continue to expect total bookings for fiscal 2010 in the range of <money>$62 to $64 million</money>," Johnson concluded.</p>
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    Financial Results
    
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<p>Total revenue grew 12% to <money>$15.2 million</money> in the second quarter of fiscal 2010 from <money>$13.6 million</money> in the second quarter of fiscal 2009. Operating income totaled <money>$0.9 million</money> in the second quarter of fiscal 2010 compared with an operating loss of <money>$2.0 million</money> in the second quarter of the prior fiscal year. The increase in operating income in the second quarter ended <chron>September 30, 2009</chron>, was the result of higher revenue and a significant reduction in general and administrative costs primarily associated with accounting and auditing fees incurred in the prior fiscal year.</p>
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<p>The Company reported net income of <money>$1.1 million</money>, or <money>$0.01</money> per share, in the second quarter compared with a net loss of <money>$1.9 million</money>, or (<money>$0.03</money>) per share, in the second quarter last year.</p>
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    Total cash at September 30, 2009, totaled $6.5 million.

    Conference Call Information
    
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<p>The Company has scheduled a conference call for today, <chron>November 10, 2009</chron>, at <chron>2:00 p.m. PT</chron> to discuss the results for the quarter ended <chron>September 30, 2009</chron>. The call will be hosted by <person>Jim Johnson</person>, CEO of BakBone, and <person>Steve Martin</person>, CFO of BakBone.</p>
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<p>To access the conference call, please dial 800-854-3238; internationally, dial 706-634-9547 (Passcode: 36174773). 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 Software is a leader in Universal Data Management. This provides a data-centric approach to integrating data protection, centralizing policy management and managing organizations' messaging infrastructure to optimize performance, increase data availability and improve corporate compliance. Learn more about BakBone's Universal Data Management vision at <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 forward-looking statements including, without limitation, statements regarding anticipated revenue and bookings growth 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 anticipated benefits of the acquisitions will not be achieved; risks that the integrations will take longer, cost more or result in more management distraction than anticipated; risks that future resale of the shares issued in the acquisitions will have an adverse impact on the trading price of the BakBone common shares;  the ongoing weak economic and market conditions that 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 Universal Data Management 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 BakBone'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>
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<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 <location>United States</location> 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>
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    Investor Contact:         Corporate Contact:     Media Contact:
    Doug Sherk / Jenifer      Steve Martin           Amber Winans
     Kirtland
    415-896-6820              858-795-7525           858-795-7584
    jkirtland@evcgroup.com    IR@bakbone.com         amber.winans@bakbone.com

    (Logo:  http://www.newscom.com/cgi-bin/prnh/20031120/SDBAKLOGO)


    
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    BAKBONE SOFTWARE INCORPORATED
    Condensed Consolidated Balance Sheets
    (in thousands)
                                                        Fiscal Period Ended
                                                        -------------------
                                                      (unaudited)
                                                     September 30,   March 31,
                                                         2009           2009
    
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<p>                       ASSETS</p>
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    Current assets:
             Cash and cash equivalents                  $6,461         $8,398
             Restricted cash                                51            264
             Accounts receivable, net                    8,783          9,646
             Prepaid and other assets                    1,443          1,159
                                                         -----          -----
    
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                        Total current assets            16,738         19,467
    Property and equipment, net                          2,512          2,713
    Intangible assets, net                               8,128            824
    Trademarks                                             400              -
    Goodwill                                            14,007          7,615
    Other assets                                           972            939
                                                           ---            ---
    
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                        Total assets                   $42,757        $31,558
                                                       =======        =======
    
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                 LIABILITIES AND SHAREHOLDERS' DEFICIT
    Current liabilities:
              Accounts payable and accrued
               liabilities                              $9,570         $9,603
              Current portion of acquisition
               consideration payable                     2,265              -
              Current portion of
               deferred revenue                         44,772         44,081
                                                        ------         ------
    
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                        Total current liabilities       56,607         53,684
    Deferred revenue, excluding
     current portion                                    47,359         47,684
    Acquisition consideration payable,
     excluding current portion                           4,402              -
    Other liabilities                                    1,123          1,337
                                                         -----          -----
    
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                        Total liabilities              109,491        102,705
                                                       -------        -------
    
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    Shareholders' deficit                              (66,734)       (71,147)
                                                       -------        -------
    
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    Total liabilities and shareholders' deficit        $42,757        $31,558
                                                       =======        =======
    
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                          BAKBONE SOFTWARE INCORPORATED
                  Condensed Consolidated Statements of Operations
                                 (in thousands)
                                  (unaudited)
    
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                                Three months ended        Six months ended
                                  September 30,             September 30,
                                  -------------             -------------
                                2009         2008        2009          2008
                                       Restated (1)              Restated (1)
                                ----   ------------      ----    ------------
    
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    Revenues:
      License and
       service               $15,230      $13,587     $30,420       $27,258
      Other                        -            -       1,500             -
                                 ---          ---       -----           ---
      Total revenues          15,230       13,587      31,920        27,258
    Cost of revenues           1,742        1,816       3,214         3,648
                               -----        -----       -----         -----
      Gross profit            13,488       11,771      28,706        23,610
                              ------       ------      ------        ------
    Operating expenses:
      Sales and
       marketing               6,542        6,723      13,174        14,301
      Research and
       development             3,258        2,867       6,393         6,024
      General and
       administrative          2,768        4,206       7,120         7,984
                               -----        -----       -----         -----
      Total operating
       expenses               12,568       13,796      26,687        28,309
                              ------       ------      ------        ------
      Operating
       income (loss)             920       (2,025)      2,019        (4,699)
    Other non-operating
     income (expense)            248          142        (135)         (360)
                                 ---          ---        ----          ----
      Income (loss)
       before income
       taxes                   1,168       (1,883)      1,884        (5,059)
    Provision for income
     taxes                        37           61          62           147
                                 ---          ---         ---           ---
      Net income (loss)       $1,131      $(1,944)     $1,822       $(5,206)
                              ======      =======      ======       =======
    
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    Net income (loss) per
     common share:
      Basic                    $0.01       $(0.03)      $0.02        $(0.08)
                               =====       ======       =====        ======
    
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      Diluted                  $0.01       $(0.03)      $0.02        $(0.08)
                               =====       ======       =====        ======
    
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    Weighted-average common
     shares outstanding:
      Basic                   86,644       64,633      81,723        64,619
                              ======       ======      ======        ======
    
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      Diluted                104,661       64,633      99,817        64,619
                             =======       ======      ======        ======
    
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    (1) As discussed in the Company's Annual Report on Form 10-K for the year
    ended March 31, 2009, the Company restated its consolidated financial
    statements for each of the first three quarters in fiscal 2009, in
    accordance with Staff Accounting Bulletin No. 108, Considering the Effect
    of Prior Year Misstatements When Quantifying Misstatements in the Current
    Year Financial Statements, to correct errors in such consolidated
    financial statements that would have had a material effect on the
    financial statements for the three and twelve months ended March 31, 2009
    if not corrected. The Company does not believe that these adjustments are
    material to any of the restated periods.
    
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                           BAKBONE SOFTWARE INCORPORATED
                  Condensed Consolidated Statements of Cash Flows
                                   (in thousands)
                                    (unaudited)
                                                Six months ended September 30,
                                                ------------------------------
                                                      2009          2008
                                                                Restated (1)
                                                      ----      ------------
    
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      Cash flows from operating activities:
      Net income (loss)                               $1,822       $(5,206)
      Adjustments to reconcile net income (loss)
       to net cash (used in)
       provided by operating activities:
        Depreciation and amortization                  1,203           828
        Non-cash interest expense                        284             -
        Operating expenses funded by
         financing arrangement                           213             -
        Provision for bad debt                           142             -
        Stock-based compensation                          20           195
        Loss on disposal of
         capital assets                                    6            11
        Other changes in assets
         and liabilities                              (4,863)        4,471
                                                      ------         -----
          Net cash (used in) provided by
           operating activities                       (1,173)          299
                                                      ------           ---
    
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      Cash flows from investing activities:
        Cash paid for acquisitions, net
         of cash received                             (1,014)            -
        Capital expenditures                            (161)         (901)
        Release of restricted cash                       325           227
                                                         ---           ---
          Net cash used in
           investing activities                         (850)         (674)
                                                        ----          ----
    
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      Cash flows from financing activities:
        Payments on capital
         lease obligations                              (214)         (157)
        Payments on long-term
         debt obligations                               (326)         (226)
                                                        ----          ----
          Net cash used in
           financing activities                         (540)         (383)
                                                        ----          ----
    
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      Effect of exchange rates on cash and
       cash equivalents                                  626          (620)
                                                         ---          ----
    
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        Net decrease in cash and
         cash equivalents                             (1,937)       (1,378)
        Cash and cash equivalents,
         beginning of period                           8,398         9,496
                                                       -----         -----
        Cash and cash equivalents,
         end of period                                $6,461        $8,118
                                                      ======        ======
    
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                          BAKBONE SOFTWARE INCORPORATED
               Reconciliation of Bookings to U.S. GAAP Revenue (2)
                            (unaudited, in thousands)
    
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                                    Three months ended       Six months ended
                                       September 30,           September 30,
                                       -------------           -------------
                                       2009     2008          2009     2008
                                       ----     ----          ----     ----
    
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    Revenues sourced from current
     period bookings:
      Total bookings for
       the period                   $13,561  $13,950       $27,130  $28,303
      Bookings deferred
       into subsequent periods      (12,460) (13,046)      (23,167) (26,534)
                                    -------  -------       -------  -------
    
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      Revenues from current period
       bookings                       1,101      904         3,963    1,769
    
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    Revenues sourced from prior
     period bookings:                14,129   12,683        27,957   25,489
                                     ------   ------        ------   ------
    
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      Total revenues recognized in
       the period                   $15,230  $13,587       $31,920  $27,258
                                    =======  =======       =======  =======
    
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    (2)  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.





    

For further information: For further information: Investors, Doug Sherk or Jenifer Kirtland, jkirtland@evcgroup.com, both for BakBone Software, +1-415-896-6820; 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

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