“The increased revenue from our ProductCenter technology and our progress with new product development make this a very exciting time at SofTech,” said Joe Mullaney, SofTech’s CEO. “Based on the forecast, I expect ProductCenter to end the fiscal year with its first revenue increase in eight years as the economy improves and several of our long standing customers expand the use of the technology. In addition, we are developing a new product for a new market that leverages the skillset of our existing engineers and expect to be in beta testing by the fourth quarter.”
“Our balance sheet continues to improve. In December 2014 we made our final principal payment on the debt facility connected to the March 2011 recapitalization transaction. During the recently completed quarter, we were able to attract an additional $300,000 in equity investment from the sale of common stock. We continue to make steady progress in transforming the Company”, he added.
FINANCIAL STATEMENTS
The Statements of Operations for the three and six month periods ended November 30, 2014 compared to the same periods in the prior fiscal year are presented below. A reconciliation of Net (loss) income to EBITDA, a non-GAAP financial measure, is also provided.
During the fourth quarter of fiscal 2014, we changed our accounting policy with regard to certain deferred payments we expect to receive from the sale of the CADRA product line. The effects of this change have been made retrospectively to the prior year three and six month periods ended November 30, 2013 in accordance with ASC 250, Accounting Changes and Error Corrections.
Statements of Operations (unaudited)
(in thousands,
except % and per share data)
| For the three months ended | ||||||||||||||||||
|
November 30,
|
November 30,
|
Change | ||||||||||||||||
| $ | % | |||||||||||||||||
| Product revenue | $ | 199 | $ | 376 | $ | (177 | ) | -47.1 | % | |||||||||
| Service revenue | 828 | 1,038 | (210 | ) | -20.2 | % | ||||||||||||
| Total revenue | 1,027 | 1,414 | (387 | ) | -27.4 | % | ||||||||||||
| Cost of sales | 469 | 292 | 177 | 60.6 | % | |||||||||||||
| Gross margin | 558 | 1,122 | (564 | ) | -50.3 | % | ||||||||||||
| Gross margin % | 54.3 | % | 79.3 | % | ||||||||||||||
| R&D | 222 | 304 | (82 | ) | -27.0 | % | ||||||||||||
| SG&A | 645 | 866 | (221 | ) | -25.5 | % | ||||||||||||
| Gain on sale of CADRA product line | - | (649 | ) | 649 | - | |||||||||||||
| Change in fair value of deferred payments | (21 | ) | - | (21 | ) | - | ||||||||||||
| Operating (loss) income | (288 | ) | 601 | (889 | ) | -147.9 | % | |||||||||||
| Interest expense | 63 | 104 | (41 | ) | -39.4 | % | ||||||||||||
| Other expense (income) | 28 | (17 | ) | 45 | -264.7 | % | ||||||||||||
| (Loss) income from operations before income taxes | (379 | ) | 514 | (893 | ) | -173.7 | % | |||||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||||
| Net (loss) income | (379 | ) | 514 | (893 | ) | -173.7 | % | |||||||||||
| Weighted average shares outstanding | 867 | 875 | (8 | ) | -0.9 | % | ||||||||||||
| Basic and diluted net income per share: | $ | (0.44 | ) | $ | 0.59 | $ | (1.03 | ) | -174.6 | % | ||||||||
| Reconciliation of Net (loss) income to EBITDA: | ||||||||||||||||||
| Net (loss) income | $ | (379 | ) | $ | 514 | $ | (893 | ) | -173.7 | % | ||||||||
| Plus tax expense | - | - | - | - | ||||||||||||||
| Plus interest expense | 63 | 104 | (41 | ) | -39.4 | % | ||||||||||||
| Plus non-cash expense related to product line sale | - | 3,261 | (3,261 | ) | - | |||||||||||||
| Plus other non-cash expenses | 177 | 41 | 136 | 331.7 | % | |||||||||||||
| EBITDA | $ | (139 | ) | $ | 3,920 | $ | (4,059 | ) | -103.5 | % | ||||||||
Statements of Operations (unaudited)
