Solid Q2 Revenue Performance with Increase of Nearly 4%; Q2’13 EPS of $.25 vs. $.19 Prior Year; YTD’13 EPS of $.43 vs. $.24 Prior Year

LOWELL, Mass. — (BUSINESS WIRE) — December 19, 2012 — SofTech, Inc. (OTCQB: SOFT), a proven provider of Product Lifecycle Management (PLM) solutions today announced its second quarter fiscal 2013 operating results. Revenue for the three months ended November 30, 2012 was $1.772 million, an increase of 3.9% from the same period in the prior fiscal year. Net income was $252,000 or $.25 per share for the three months ended November 30, 2012, an increase of nearly 35% from the net income of $187,000 or $.19 for the same period in the prior fiscal year.

Revenue for the six months ended November 30, 2012 was $3.342 million, an increase of 2.2% from the same period in the prior fiscal year. Net income increased 77% to $425,000 or $.43 per share for the six months ended November 30, 2012, from net income of $240,000 or $.24 for the same period in the prior fiscal year.

The current quarter revenue included $100,000 of royalties on our previously announced sale of patents. The same period in the prior year included approximately $100,000 of maintenance revenue from a large customer for whom the services were delivered over the previous eleven months but not recognized until Q2 fiscal 2012.

“This was our best quarter since the March 2011 Recapitalization Transaction. Our CADRA product line revenue was 10% higher than the same period last year and represented the best quarterly performance in four years while the pipeline of opportunities for ProductCenter and for our new Connector technology offerings strengthened,” said Joe Mullaney, CEO. “We have now completed six full fiscal quarters since the Recapitalization Transaction and during that time period the average quarterly license revenue for our technology was 22% higher than the average quarterly license revenue during the two year period prior to the aforementioned transaction,” he added.

“Our cash levels are lowest at the end of the calendar year just before the majority of our annual maintenance contracts renew in the January through May time period. The recently announced sale of 45,000 common shares at $5.00 per share helped strengthen our balance sheet and will provide additional working capital,” Mullaney added.

FINANCIAL STATEMENTS

The Statement of Operations for the three and six month periods ended November 30, 2012 compared to the same periods in the prior fiscal years are presented below. A reconciliation of Net income to EBITDA, a non-GAAP financial measure, is also provided.

Statements of Operations
(in thousands, except % and per share data)
				For the three months
				ended November 30,										Change
				2012					2011					$					%
Product revenue				$	478				$	333				$	145				43.5	%
Service revenue					1,194					1,372					(178	)			-13.0	%
Royalties on sale of patents					100					-					100				-
Total revenue					1,772					1,705					67				3.9	%
Cost of sales					347					352					(5	)			-1.4	%
Gross margin					1,425					1,353					72				5.3	%
Gross margin %					80.4	%				79.4	%
R&D					323					337					(14	)			-4.2	%
SG&A					789					718					71				9.9	%
Operating income					313					298					15				5.0	%
Interest expense					69					85					(16	)			-18.8	%
Other (income) expense					(8	)				26					(34	)			-130.8	%
Income from operations before income taxes					252					187					65				34.8	%
Provision for income taxes					-					-					-				-
Net income					252					187					65				34.8	%
Weighted average shares outstanding					995					995					-				-
Basic and diluted net income per share:				$	0.25				$	0.19				$	0.07				34.8	%
Reconciliation of Net income to EBITDA:
Net income				$	252				$	187				$	65				34.8	%
Plus interest expense					69					85					(16	)			-18.8	%
Plus tax expense					-					-					-				-
Plus Depreciation and amortization					56					39					17				43.6	%
EBITDA				$	377				$	311				$	66				21.2	%

Statements of Operations
(in thousands, except % and per share data)
				For the six months
				ended November 30,										Change
				2012					2011					$					%
Product revenue				$	693				$	636				$	57				9.0	%
Service revenue					2,359					2,633					(274	)			-10.4	%
Royalties on sale of patents					290					-					290				-
Total revenue					3,342					3,269					73				2.2	%
Cost of sales					680					700					(20	)			-2.9	%
Gross margin					2,662					2,569					93				3.6	%
Gross margin %					79.7	%				78.6	%
R&D					567					720					(153	)			-21.3	%
SG&A					1,547					1,427					120				8.4	%
Operating income					548					422					126				29.9	%
Interest expense					134					176					(42	)			-23.9	%
Other (income) expense					(11	)				6					(17	)			-283.3	%
Income from operations before income taxes					425					240					185				77.1	%
Provision for income taxes					-					-					-				-
Net income					425					240					185				77.1	%
Weighted average shares outstanding					995					995					-				-
Basic and diluted net income per share:				$	0.43				$	0.24				$	0.19				77.1	%
Reconciliation of Net income to EBITDA
Net income				$	425				$	240					185				77.1	%
Plus interest expense					134					176					(42	)			-17.5	%
Plus tax expense					-					-					-				-
Plus Depreciation and amortization					106					79					27				34.2	%
EBITDA				$	665				$	495					170				34.3	%

1 | 2 | 3  Next Page »