-- iPrism experienced 13.5% year-over-year billings growth -- LivePrism acquired 202 new customers in the first six months of 2007 -- Hired new VP Marketing to spearhead global marketing efforts -- Joined Jamcracker Delivery Network -- Secured new $4 Million credit facility with Silicon Valley Bank -- iPrism® and LivePrism™ named Winners of the 2007 Global Product Excellence Awards by Info Security Products GuideFinancial Results Revenue in the second quarter was $5.0 million, in line with the $4.6 to $5.2 million guidance previously provided. Subscription revenue from iPrism and LivePrism was $3.6 million in the second quarter. GAAP net loss was $(4.7) million, or $(0.32) per share for the second quarter compared to $(1.2) million, or $(0.12) loss per share reported for the second quarter of 2006. The company cautioned that the review by the company's independent auditors of the second quarter financial statements contained in this release was not completed at the time of this release, and so, the financial statements that will be filed with the company's Quarterly Report on Form 10-QSB may differ. Divestiture of Legacy Open File Manager™ Product In conjunction with our new strategy to focus the company on network based secure content management solutions, the company signed a definitive agreement on August 13th to sell our legacy Open File Manager product line to EVault. The value of the transaction is $6.875M in cash and is expected to close in August 2007. The proceeds of this sale will provide critically important funding for St. Bernard to support growth of our core iPrism and LivePrism products and continue the execution of our company strategy. We believe that Seagate is an excellent organization that will provide great value to our Open File Manager customers and partners. Third Quarter Business Outlook Mr. Rossi said, "We believe that we will continue to achieve solid sales growth and excellent customer retention in our iPrism and LivePrism product lines. In combination with our sales growth, the expense restructuring in Q2'07 will move our business toward a cash flow positive position. We currently expect our Q3 2007 revenue to range from $4.2 to $4.8 million. As a reminder, the company divested its UpdateEXPERT product line early in the first quarter of 2007 and also divested the Open File Manager product line in August 2007. Our guidance reflects the impact of these divestitures." Conference Call Information What: St. Bernard's Second Quarter 2007 Financial Results Conference Call When: Tuesday, August 14th at 1:30pm PT (4:30 pm ET) Dial In Number: 800-257-3401 (US and Canada) 303-205-0033 (International) Company name, 'St. Bernard' Webcast: To listen to the live Webcast, use the following link: http://www.vcall.com/IC/CEPage.asp?ID=119614 Or, log onto www.stbernard.com under the Investor Relations section. Web Replay: 30 days Call Replay: A replay of the conference call will be available at www.stbernard.com in the Investor Relations area of the site starting two hours after the call through Tuesday, May 22, 2007 at 11:59 pm PT Replay Number: 800-405-2236 or 303-590-3000 (International) and enter the pass code: 11094529# For the conference call, please dial-in five minutes in advance to ensure a proper connection. Questions and answers will be taken only from participants on the line. For the Webcast, please allow 15 minutes to register, download and install any necessary software. About St. Bernard St. Bernard Software, Inc. (
St. Bernard Software, Inc. Consolidated Balance Sheets June 30, 2007 December 31, 2006 ------------------ ------------------ (Unaudited) Assets Current Assets Cash and cash equivalents $ 336,686 $ 4,841,871 Accounts receivable - net of allowance for doubtful accounts of $646,000 and $678,000 at June 30, 2007, and December 31, 2006, respectively 4,087,960 3,964,403 Inventories 725,911 729,739 Prepaid expenses and other current assets 492,000 483,840 ------------------ ------------------ Total current assets 5,642,557 10,019,853 Fixed Assets - Net 1,857,772 1,726,050 Other Assets 3,540,610 3,937,848 Goodwill 7,542,664 7,709,212 ------------------ ------------------ $ 18,583,603 $ 23,392,963 ================== ================== Liabilities and Stockholders' Deficit Current Liabilities Line of credit $ 2,338,408 $ 296,410 Accounts payable 3,995,139 4,559,323 Accrued compensation expenses 1,413,962 1,525,821 Accrued expenses and other current liabilities 386,267 291,718 Current portion of capitalized lease obligations 144,846 75,087 Deferred revenue 10,878,632 11,873,376 ------------------ ------------------ Total current liabilities 19,157,254 18,621,735 Capitalized Lease Obligations, Less Current Portion 249,526 141,617 Deferred Revenue 5,604,670 5,842,809 ------------------ ------------------ Total liabilities 25,011,450 24,606,161 ------------------ ------------------ Commitments and Contingencies Stockholders' Deficit Preferred stock, $0.01 par value; 5,000,000 shares authorized and 0 shares issued and outstanding - - Common stock, $0.01 par value; 50,000,000 shares authorized and 14,742,534 and 14,764,251 shares issued and outstanding in 2007 and 2006, respectively 147,425 147,643 Additional paid-in capital 38,757,731 38,304,771 Accumulated deficit (45,333,003) (39,665,612) ------------------ ------------------ Total stockholders' deficit (6,427,847) (1,213,198) ------------------ ------------------ $ 18,583,603 $ 23,392,963 ================== ================== St. Bernard Software, Inc. Unaudited Consolidated Statements of Operations Three months ended June 30, Six months ended June 30, -------------------------- -------------------------- 2007 2006 2007 2006 ------------ ------------ ------------ ------------ Sales License $ 559,478 $ 975,987 $ 1,415,123 $ 1,860,382 Appliance 881,969 804,729 1,627,239 1,427,929 Subscription 3,600,039 3,831,228 7,372,356 7,592,236 ------------ ------------ ------------ ------------ Total Sales 5,041,486 5,611,944 10,414,718 10,880,547 ------------ ------------ ------------ ------------ Cost of Sales License 17,936 20,505 50,253 29,891 Appliance 778,583 600,950 1,336,592 979,717 Subscription 1,007,742 957,438 2,065,381 1,921,327 ------------ ------------ ------------ ------------ Total Cost of Sales 1,804,261 1,578,893 3,452,226 2,930,935 ------------ ------------ ------------ ------------ Gross Profit 3,237,225 4,033,051 6,962,492 7,949,612 Sales and marketing expenses 3,414,415 2,712,357 7,474,019 5,276,687 Research and development expenses 1,805,270 1,432,447 3,682,872 3,027,811 General and administrative expenses 2,440,123 984,429 4,860,114 1,912,204 ------------ ------------ ------------ ------------ Total Operating Expenses 7,659,808 5,129,233 16,017,005 10,216,702 ------------ ------------ ------------ ------------ Loss from Operations (4,422,583) (1,096,182) (9,054,513) (2,267,090) Other Expense (Income) Interest expense - net 59,162 87,837 72,061 168,301 Loss (Gain) on sale of UpdateExpert 251,007 - (3,463,418) - ------------ ------------ ------------ ------------ Total Other Expense (Income) 310,169 87,837 (3,391,357) 168,301 ------------ ------------ ------------ ------------ Loss Before Income Taxes (4,732,752) (1,184,019) (5,663,156) (2,435,391) Income tax expense - - (4,235) - ------------ ------------ ------------ ------------ Net Loss $ (4,732,752) $ (1,184,019) $ (5,667,391) $ (2,435,391) ============ ============ ============ ============ Basic and Diluted Loss Per Common Share $ (0.32) $ (0.12) $ (0.38) $ (0.25) ------------ ------------ ------------ ------------ Weighted Average Shares Outstanding 14,764,512 9,756,433 14,779,434 9,752,043 ============ ============ ============ ============ St. Bernard Software, Inc. Unaudited Consolidated Statements of Cash Flows Six months ended June 30, ------------------------------- 2007 2006 -------------- -------------- Cash Flows From Operating Activities Net loss $ (5,667,391) $ (2,435,391) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 740,156 294,526 Provision for bad debts (31,654) 20,071 Gain on sale of UpdateExpert (3,463,418) - Compensation expense 580,959 - Noncash interest expense 2,318 - Increase (decrease) in cash resulting from changes in: Accounts receivable (91,903) 486,045 Inventories 3,828 96,077 Prepaid expenses and other current assets (24,169) 16,869 Accounts payable (564,184) 1,296,606 Accrued expenses and other current liabilities 72,113 34,480 Deferred revenue 1,030,535 211,107 -------------- -------------- Net cash provided by (used in) operating activities (7,412,810) 20,390 -------------- -------------- Cash Flows From Investing Activities Additional costs related to purchase of business (83,453) - Purchases of fixed assets (230,573) (30,932) Proceeds from the sale of UpdateExpert 1,200,000 - -------------- -------------- Net cash provided by (used in) investing activities 885,974 (30,932) -------------- -------------- Cash Flows From Financing Activities Merger costs - (464,941) Proceeds from stock option and warrant exercises 30,044 14,066 Principal payments on capitalized lease obligations (50,391) (23,488) Proceeds from note payable - 395,833 Net increase in line of credit 2,041,998 540,890 -------------- -------------- Net cash provided by financing activities 2,021,651 462,360 -------------- -------------- Net Increase (Decrease) in Cash and Cash Equivalents (4,505,185) 451,818 Cash and Cash Equivalents at Beginning of Period 4,841,871 9,211 -------------- -------------- Cash and Cash Equivalents at End of Period $ 336,686 $ 461,029 ============== ============== Cash paid during the period for: Interest $ 125,386 $ 150,608 Income taxes $ 1,677 $ - During the six months ended June 30, 2007, the Company entered into capitalized lease obligations for the purchase of $218,542 in fixed assets. In April 2007, the shares issued in conjunction with the purchase AgaveOne were reduced by 66,667 shares or $250,000 as a result of indemnification claims. In May 2007, the Company issued 100,000 warrants in conjunction with a loan agreement with a bank. See Note 4.
Contact Information: Contact: St Bernard Software: Al Riedler Chief Financial Officer (858) 524-2050 or MKR Group, Inc. Marie Dagresto or Todd Kehrli (323) 468-2300