8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

November 5, 2014

Date of Report (Date of earliest event reported)

GlobalSCAPE, Inc.

(Exact name of registrant as specified in its charter)

Delaware	001-33601	74-2785449
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

4500 Lockhill Selma Road, Suite 150

San Antonio, Texas 78249

(210) 308-8267

(Address of principal executive offices and Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On November 5, 2014, GlobalSCAPE, Inc (“GlobalSCAPE” or the “Company”) issued a press release announcing financial results for the Company’s third quarter of fiscal year 2014. A copy of the press release is furnished with this report as Exhibit 99.1. Such information, including the Exhibit attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits

(d) Exhibit

99.1 Press Release dated November 5, 2014.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

GLOBALSCAPE, INC.
By:	/s/ Jim Albrecht
	Jim Albrecht, Chief Financial Officer
	Dated: November 5, 2014

EXHIBIT INDEX

Exhibit Number	Document Description
99.1	Press release dated November 5, 2014 announcing GlobalSCAPE’s 2014 third quarter financial results.

EX-99.1

Exhibit 99.1

Globalscape Announces Financial Results for Third Quarter 2014

Year to Date Revenue in 2014 is Highest in Company History

SAN ANTONIO — November 5, 2014 — GlobalSCAPE, Inc. (NYSE MKT: GSB), a leading developer of secure information exchange solutions, announced today its financial results for the three and nine month periods ended September 30, 2014.

Revenue for the third quarter of 2014 was $6.5 million, which is the second highest quarterly revenue in Globalscape’s history. This result is an increase of 2 percent when compared with revenue of $6.3 million for third quarter of 2013.

Revenue for the nine months ended September 30, 2014, was $18.9 million, which is the highest combined three consecutive quarter revenue in Globalscape’s history. This result is an increase of 4 percent when compared with revenue of $18.1 million for the nine months ended September 30, 2013.

Deferred revenue, which can be an indicator of future revenue trends, was $14.2 million at September 30, 2014, compared with $10.7 million at September 30, 2013, or an increase of 33 percent.

For the third quarter of 2014, the Company had net income of $782,000 compared with net income of $2.3 million for the third quarter of 2013. Earnings per share was $0.04 for the third quarter of 2014 compared with $0.12 for the third quarter of 2013.

For the nine months ended September 30, 2014, the Company had net income of $1.8 million compared with net income of $3.2 million for the nine months ended September 30, 2013. Earnings per share was $0.09 for the nine months ended September 30, 2014, compared with $0.17 for the nine months ended September 30, 2013.

Net income for the three and nine months ended September 30, 2013, included infrequent items resulting from the TappIn intangible impairment and earnout liability elimination which occurred in the third quarter of fiscal 2013.  Net income excluding infrequent items for the three and nine months ended September 30, 2013, was $946,000 and $1.8 million, respectively. Basic and diluted earnings per share excluding infrequent items for the three and nine months ended September 30, 2013, was $0.05 and $0.10, respectively.

Adjusted EBITDA Excluding Infrequent Items was $1.5 million for the third quarter of 2014 compared with $1.9 million for the third quarter of 2013.  Adjusted EBITDA Excluding Infrequent Items was $3.4 million for the nine months ended September 30, 2014, compared with $3.9 million for the nine months ended September 30, 2013.

Net income excluding infrequent items, and adjusted EBITDA excluding infrequent items, are not measures of financial performance under GAAP and have limitations as analytical tools and when assessing the Company’s operating performance. These measures should not be considered in isolation from or as a substitute for net income or other income statement data prepared in accordance with GAAP.

Cash, cash equivalents and long-term investments were $12.4 million at September 30, 2014.  During the third quarter of 2014 the Company repaid all its notes payable and no longer has any notes payable or long term debt.

“We continue to be pleased with the momentum we are building in 2014. Delivering the second highest revenue quarter in the company’s history, which followed the highest quarter ever in the second quarter of this year, is a powerful indication of the success of our ongoing investments in the sales, channel, demand generation and product development programs that we outlined earlier this year,” said James Bindseil, Globalscape’s President and Chief Executive Officer.   “We remain confident in the plans that we have in place and in our ability to achieve our long-term operational and financial objectives. Our leading edge indicators, such as bookings and the sales pipeline, continue to show a positive trajectory that we believe will begin to mature even more as these initiatives continue to develop.”

Conference Call November 5, 2014 at 4:30 p.m. ET

Globalscape management will hold a conference call Wednesday, November 5, 2014, at 4:30 p.m. Eastern Time/3:30 p.m. Central Time to discuss financial results and other corporate matters for the third quarter of 2014. Those wanting to join should call 888-481-2877 or 719-457-2628 and use Conference ID # 9296867. A live webcast of the conference call will also be available in the investor relations page of the company's website at www.Globalscape.com. A webcast replay of the conference call will be available on the Company’s website through December 5, 2014.

About Globalscape

San Antonio, Texas-based GlobalSCAPE, Inc. (NYSE MKT: GSB) ensures the reliability of mission-critical operations by securing sensitive data and intellectual property. Globalscape’s suite of solutions features the EFT platform, the industry-leading enterprise file transfer solution that delivers military-grade security and a customizable platform for achieving best-in-class control and visibility of data in motion or at rest, across multiple locations. Founded in 1996, Globalscape is a leading enterprise solution provider of secure information exchange software and services to thousands of customers, including global enterprises, governments, and small businesses. For more information, visit www.Globalscape.com or follow the blog and Twitter updates.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words "would," "exceed," "should," "anticipates," "believe," "steady," "dramatic," and variations of such words and similar expressions identify forward-looking statements, but their absence does not mean that a statement is not a forward-looking statement. These forward-looking statements are based upon the Company’s current expectations and are subject to a number of risks, uncertainties and assumptions. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Among the important factors that could cause actual results to differ significantly from those expressed or implied by such forward-looking statements are risks that are detailed in the Company’s Annual Report on Form 10-K for the 2013 calendar year, filed with the Securities and Exchange Commission on March 27, 2014.

INVESTOR RELATIONS CONTACT

Contact: Jim Fanucchi

Phone Number: (408) 404-5400

Email: ir@globalscape.com

PRESS CONTACT

Contact: Christen Gentile

Phone Number: (210) 308-8267

Email: PR@globalscape.com

GlobalSCAPE, Inc.
Condensed Consolidated Balance Sheets
(in thousands except share amounts)
(Unaudited)
	September 30, 2014			December 31, 2013
Assets
Current assets:
Cash and cash equivalents	$	9,265		$	9,455
Accounts receivable (net of allowance for doubtful accounts of $551 and $154 in 2014 and 2013, respectively)		6,722			3,765
Federal income tax receivable		236			113
Current deferred tax asset		174			184
Prepaid expenses		264			349
Total current assets		16,661			13,866
Long term investments		3,169			3,122
Capitalized software development costs, net		2,697			1,028
Deferred tax asset		745			1,476
Goodwill		12,712			12,712
Fixed assets, net		738			744
Other assets		133			144
Total assets	$	36,855		$	33,092
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	632		$	655
Accrued expenses		1,296			898
Deferred revenue		11,047			9,092
Long term debt, current portion		-			1,397
Total current liabilities		12,975			12,042
Deferred revenue, non-current portion		3,159			1,708
Long term debt, non-current portion		-			2,989
Other long term liabilities		51			60
Commitments and contingencies
Stockholders’ equity:
Preferred stock, par value $0.001 per share, 10,000,000 authorized, no shares issued or outstanding		-			-
Common stock, par value $0.001 per share, 40,000,000 authorized, 20,967,617  and 19,592,117 shares issued at September 30, 2014 and December 31, 2013, respectively		25			20
Additional paid-in capital		18,401			15,834
Treasury stock, 403,581 shares, at cost, at September 30, 2014 and December 31, 2013		(1,452	)		(1,452	)
Retained earnings		3,696			1,891
Total stockholders’ equity		20,670			16,293
Total liabilities and stockholders’ equity	$	36,855		$	33,092

GlobalSCAPE, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income
(In thousands, except per share amounts)
(Unaudited)
	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Operating Revenues:
Software licenses	$	2,291		$	2,432		$	6,789		$	6,752
Maintenance and support		3,790			3,493			11,181			10,153
Professional services		409			412			933			1,237
Total Revenues		6,490			6,337			18,903			18,142
Operating Expenses:
Cost of revenues		277			250			679			782
Selling, general and administrative		4,173			3,492			13,077			11,137
Research and development		513			923			1,722			2,653
TappIn intangible asset impairment and earnout liability elimination		-			(128	)		-			(128	)
Depreciation and amortization		263			265			580			787
Total operating expenses		5,226			4,802			16,058			15,231
Income from operations		1,264			1,535			2,845			2,911
Other expense, net		(11	)		(39	)		(58	)		(130	)
Income before income taxes		1,253			1,496			2,787			2,781
Income tax expense		471			(791	)		982			(404	)
Net income	$	782		$	2,287		$	1,805		$	3,185
Comprehensive income	$	782		$	2,287		$	1,805		$	3,185
Net income per common share -
Basic	$	0.04		$	0.12		$	0.09		$	0.17
Diluted	$	0.04		$	0.12		$	0.09		$	0.17

GlobalSCAPE, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
	For the Nine Months Ended September 30,
	2014			2013
Operating Activities:
Net income	$	1,805		$	3,185
Adjustments to reconcile net income to net cash provided by operating activities:
Bad debt expense		318			29
Depreciation and amortization		580			787
Stock-based compensation		380			522
Deferred taxes		740			(1,030	)
Excess tax deficiency from share-based compensation		367			83
TappIn intangible asset impairment and earnout liability elimination		-			(128	)
Subtotal before changes in operating assets and liabilities		4,190			3,448
Changes in operating assets and liabilities:
Deferred revenue		3,405			948
Accrued expenses		398			(149	)
Income tax receivable and payable		(490	)		(107	)
Prepaid expenses		85			8
Other assets		10			(62	)
Other long-term liabilities		(6	)		(2	)
Accounts payable		(24	)		(6	)
Accounts receivable		(3,275	)		(251	)
Net cash provided by operating activities		4,293			3,827
Investing Activities:
Software development costs		(2,028	)		(686	)
Purchase of property and equipment		(215	)		(65	)
Purchase of TappIn, Inc.  and earnout payments		-			(500	)
Interest on long term investments		(47	)		(47	)
Net cash (used in) investing activities		(2,290	)		(1,298	)
Financing Activities:
Proceeds from exercise of stock options		2,559			231
Tax deficiency (benefit) from stock-based compensation		(367	)		(83	)
Notes payable principle payments		(4,385	)		(999	)
Net cash provided by (used in)  financing activities		(2,193	)		(851	)
Net increase (decrease) in cash		(190	)		1,678
Cash at beginning of period		9,455			8,079
Cash at end of period	$	9,265		$	9,757
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	117		$	182
Income taxes	$	642		$	731

GlobalSCAPE, Inc.
Adjusted EBITDA Excluding Infrequent Items
(in thousands)
(Unaudited)
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Net income (loss)	$	782		$	2,287		$	1,805		$	3,185
Add (subtract) items to determine adjusted EBITDA:
Income tax expense		471			(791	)		982			(404	)
Interest expense, net		12			39			59			130
Depreciation and amortization:
Total depreciation and amortization		263			265			580			787
Amortization of capitalized software development costs		(186	)		(47	)		(359	)		(151	)
Stock-based compensation expense		120			225			380			522
Infrequent item:
TappIn intangible asset impairment and earnout liability elimination		-			(128	)		-			(128	)
Adjusted EBITDA Excluding Infrequent Items	$	1,462		$	1,850		$	3,447		$	3,941