FALCONSTOR SOFTWARE, INC. | ||
(Exact name of registrant as specified in its charter) | ||
Delaware | 000-23970 | 77-0216135 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
2 Huntington Quadrangle, Melville, New York | 11747 | |
(Address of principal executive offices) | (Zip Code) |
N/A |
(Former name or former address, if changed since last report.) |
Item 2.02. | Results of Operations and Financial Condition |
Item 9.01. | Financial Statements and Exhibits |
(d) | Exhibits | |||
Exhibit Number | Description | |||
99.1 | Press release of the Company dated April 29, 2014. |
FALCONSTOR SOFTWARE, INC. | |||
Date: April 29, 2014 | By: | /s/ Louis J. Petrucelly | |
Name: | Louis J. Petrucelly | ||
Title: | Executive Vice President and Chief Financial Officer |
• | BOOKINGS: |
◦ | Q1 2014 bookings totaled $14.4 million compared with $14.8 million in Q1 2013 and $16.3 million in Q4 2013. |
• | DEFERRED REVENUE: |
◦ | Deferred revenue as of March 31, 2014 totaled $31.9 million which was an increase of 34% compared with March 31, 2013, and an increase of 7% compared with December 31, 2013. |
• | CASH: |
◦ | The Company achieved positive cash flow from operations on a GAAP basis in Q1 2014 of $0.3 million compared with cash used in operations of ($1.8) million in Q1 2013 and cash used in operations of ($3.6) million in Q4 2013; |
◦ | Closed the quarter with $27.9 million of cash, cash equivalents and marketable securities, compared with $28.1 million at December 31, 2013; |
◦ | During the first quarter of 2014; |
▪ | The Company made $0.6 million in payments associated with the company-wide “rebalancing” which commenced during the third quarter of 2013; and |
▪ | The Company made $0.2 million in payments related to the preferred stock dividends accrued for at December 31, 2013. |
• | Non-GAAP EXPENSES and MARGINS: |
◦ | Non-GAAP expenses totaled $13.9 million in Q1 2014 compared with non-GAAP expenses of $18.2 million in Q1 2013 and non-GAAP expenses of $13.8 million in Q4 2013; |
◦ | Non-GAAP gross margins were 78% in Q1 2014 compared with non-GAAP gross margins of 72% in Q1 2013 and non-GAAP gross margins of 78% in Q4 2013. |
• | OTHER ITEMS |
◦ | The Company launched its Optimized Backup and Deduplication Solution version 8.0 - the first delivery of the Company’s new unified technology platform-based approach to data management. |
March 31, 2014 | December 31, 2013 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 17,493,097 | $ | 19,288,340 | ||||
Restricted cash | 750,000 | 750,000 | ||||||
Marketable securities | 9,645,934 | 8,073,108 | ||||||
Accounts receivable, net | 9,715,785 | 11,150,323 | ||||||
Prepaid expenses and other current assets | 2,421,076 | 1,636,891 | ||||||
Inventory | 652,346 | 919,390 | ||||||
Deferred tax assets, net | 358,092 | 358,092 | ||||||
Total current assets | 41,036,330 | 42,176,144 | ||||||
Property and equipment, net | 3,093,740 | 3,317,344 | ||||||
Deferred tax assets, net | 56,059 | 49,651 | ||||||
Software development costs, net | 1,693,772 | 1,796,075 | ||||||
Other assets, net | 1,469,865 | 1,549,255 | ||||||
Goodwill | 4,150,339 | 4,150,339 | ||||||
Other intangible assets, net | 160,579 | 179,596 | ||||||
Total assets | $ | 51,660,684 | $ | 53,218,404 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,282,032 | $ | 1,024,180 | ||||
Accrued expenses | 7,414,251 | 8,658,863 | ||||||
Deferred tax liabilities, net | 18,005 | 18,005 | ||||||
Deferred revenue, net | 19,370,270 | 18,148,268 | ||||||
Total current liabilities | 28,084,558 | 27,849,316 | ||||||
Other long-term liabilities | 587,427 | 617,300 | ||||||
Deferred tax liabilities, net | 199,791 | 193,705 | ||||||
Deferred revenue, net | 12,536,651 | 11,602,177 | ||||||
Total liabilities | 41,408,427 | 40,262,498 | ||||||
Commitments and contingencies | ||||||||
Series A redeemable convertible preferred stock | 6,852,954 | 6,737,578 | ||||||
Total stockholders' equity | 3,399,303 | 6,218,328 | ||||||
Total liabilities and stockholders' equity | $ | 51,660,684 | $ | 53,218,404 |
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Revenues: | ||||||||
Product revenues | $ | 4,963,059 | $ | 7,759,456 | ||||
Support and services revenues | 7,038,440 | 7,525,361 | ||||||
Total revenues | 12,001,499 | 15,284,817 | ||||||
Cost of revenues: | ||||||||
Product | 575,124 | 1,299,654 | ||||||
Support and service | 2,099,251 | 3,008,403 | ||||||
Total cost of revenues | 2,674,375 | 4,308,057 | ||||||
Gross profit | $ | 9,327,124 | $ | 10,976,760 | ||||
Operating expenses: | ||||||||
Research and development costs | 3,348,795 | 4,648,609 | ||||||
Selling and marketing | 5,888,466 | 6,840,571 | ||||||
General and administrative | 2,391,410 | 3,247,067 | ||||||
Investigation, litigation, and settlement related costs | 111,711 | 114,066 | ||||||
Restructuring costs | 223,573 | — | ||||||
Total operating expenses | 11,963,955 | 14,850,313 | ||||||
Operating loss | (2,636,831 | ) | (3,873,553 | ) | ||||
Interest and other income (loss), net | 50,108 | (330,790 | ) | |||||
Loss before income taxes | (2,586,723 | ) | (4,204,343 | ) | ||||
Provision for income taxes | 215,075 | 176,102 | ||||||
Net loss | $ | (2,801,798 | ) | $ | (4,380,445 | ) | ||
Less: Accrual of Preferred stock dividends | 186,904 | — | ||||||
Less: Accretion to redemption value of Series A preferred stock | 115,376 | — | ||||||
Net loss attributable to common stockholders | $ | (3,104,078 | ) | $ | (4,380,445 | ) | ||
Basic net loss per share attributable to common stockholders | $ | (0.06 | ) | $ | (0.09 | ) | ||
Diluted net loss per share attributable to common stockholders | $ | (0.06 | ) | $ | (0.09 | ) | ||
Weighted average basic shares outstanding | 48,031,737 | 47,862,834 | ||||||
Weighted average diluted shares outstanding | 48,031,737 | 47,862,834 |
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
GAAP loss from operations | $ | (2,636,831 | ) | $ | (3,873,553 | ) | ||
Non-cash stock option expense (1) | 412,661 | 890,735 | ||||||
Legal related costs (3) | 111,711 | 114,066 | ||||||
Restructuring costs (4) | 223,573 | — | ||||||
Non-GAAP loss from operations | $ | (1,888,886 | ) | $ | (2,868,752 | ) | ||
GAAP net loss attributable to common stockholders | $ | (3,104,078 | ) | $ | (4,380,445 | ) | ||
Non-cash stock option expense, net of income taxes (2) | 412,661 | 890,735 | ||||||
Legal related costs (3) | 111,711 | 114,066 | ||||||
Restructuring costs (4) | 223,573 | — | ||||||
Effects of preferred stock (5) | 302,280 | — | ||||||
Non-GAAP net loss | $ | (2,053,853 | ) | $ | (3,375,644 | ) | ||
GAAP gross margin | 78 | % | 72 | % | ||||
Non-cash stock option expense (1) | 0 | % | 0 | % | ||||
Non-GAAP gross margin | 78 | % | 72 | % | ||||
GAAP gross margin - Product | 88 | % | 83 | % | ||||
Non-cash stock option expense (1) | 0 | % | 0 | % | ||||
Non-GAAP gross margin - Product | 88 | % | 83 | % | ||||
GAAP gross margin - Support and Service | 70 | % | 60 | % | ||||
Non-cash stock option expense (1) | 0 | % | 1 | % | ||||
Non-GAAP gross margin - Support and Service | 70 | % | 61 | % | ||||
GAAP operating margin | (22 | )% | (25 | )% | ||||
Non-cash stock option expense (1) | 3 | % | 6 | % | ||||
Legal related costs (3) | 1 | % | 1 | % | ||||
Restructuring costs (4) | 2 | % | 0 | % | ||||
Non-GAAP operating margin | (16 | )% | (19 | )% | ||||
GAAP Basic EPS | $ | (0.06 | ) | $ | (0.09 | ) | ||
Non-cash stock option expense, net of income taxes (2) | 0.01 | 0.02 | ||||||
Legal related costs (3) | 0.00 | 0.00 | ||||||
Restructuring costs (4) | 0.00 | 0.00 | ||||||
Effects of preferred stock (5) | 0.01 | 0.00 | ||||||
Non-GAAP Basic EPS | $ | (0.04 | ) | $ | (0.07 | ) | ||
GAAP Diluted EPS | $ | (0.06 | ) | $ | (0.09 | ) | ||
Non-cash stock option expense, net of income taxes (2) | 0.01 | 0.02 | ||||||
Legal related costs (3) | 0.00 | 0.00 | ||||||
Restructuring costs (4) | 0.00 | 0.00 | ||||||
Effects of preferred stock (5) | 0.01 | 0.00 | ||||||
Non-GAAP Diluted EPS | $ | (0.04 | ) | $ | (0.07 | ) | ||
Weighted average basic shares outstanding (GAAP and as adjusted) | 48,031,737 | 47,862,834 | ||||||
Weighted average diluted shares outstanding (GAAP and as adjusted) | 48,031,737 | 47,862,834 |
(1) | Represents non-cash, stock-based compensation charges as follows: |
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Cost of revenues - Product | $ | — | $ | 49 | ||||
Cost of revenues - Support and Service | 21,883 | 50,256 | ||||||
Research and development costs | 88,799 | 134,910 | ||||||
Selling and marketing | 162,187 | 284,038 | ||||||
General and administrative | 139,792 | 421,482 | ||||||
Total non-cash stock based compensation expense | $ | 412,661 | $ | 890,735 |
(2) | Represents the effects of non-cash stock-based compensation expense recognized in accordance with the FASB Accounting Standards Codification, Topic 718, net of related income tax effects. For the three months ended March 31, 2014 and 2013, the tax expense for both GAAP and Non-GAAP basis approximate the same amount. |
(3) | Legal related costs represent expenses in connection with the Company’s investigations, litigation and settlement related costs for each respective period presented. |
(4) | Represents restructuring costs which were incurred during each respective period presented. |
(5) | Represents the effects of the accretion to redemption value of the Series A preferred stock and accrual of preferred stock dividends. |
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