“ProductCenter is showing significant strength in the marketplace in fiscal 2015 as a robust, affordable PLM solution,” said Joe Mullaney, SofTech’s CEO. “ProductCenter’s license revenue year-to-date increased approximately 176% as compared to the same period in the prior year and maintenance renewal rates have improved significantly as compared to the last several fiscal years. Consulting revenue has lagged behind due to a delay in several large projects, however, these projects have begun to ramp up in the fourth quarter,” he added.
“The sale of the CADRA product line in 2014 provided the capital and the flexibility for us to make a significant current year investment in the development of a new PLM-based product aimed at the consumer market. The product was created using our employees’ deep PLM expertise and it is currently in beta testing; we expect to be ready for commercial launch this coming summer. We believe this product has the potential to get SofTech on a revenue growth path, an essential element of shareholder value enhancement,” Mullaney concluded.
FINANCIAL STATEMENTS
The
Statements of Operations for the three and nine month periods ended
February 28, 2015 compared to the same periods in the prior fiscal year
are presented below. A reconciliation of Net loss 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 nine month periods ended February 28, 2014 in accordance with ASC 250, Accounting Changes and Error Corrections.
| Statements of Operations | |||||||||||||||
| (in thousands, except % and per share data) | |||||||||||||||
| For the three months ended | |||||||||||||||
| February 28, | February 28, | Change | |||||||||||||
| 2015 | 2014 | $ | % | ||||||||||||
| Product revenue | 184 | 426 | (242) | -56.8% | |||||||||||
| Service revenue | 741 | 916 | (175) | -19.1% | |||||||||||
| Total revenue | 925 | 1,342 | (417) | -31.1% | |||||||||||
| Cost of sales | 430 | 566 | (136) | -24.0% | |||||||||||
| Gross margin | 495 | 776 | (281) | -36.2% | |||||||||||
| Gross margin % | 53.5% | 57.8% | |||||||||||||
| R&D | 183 | 276 | (93) | -33.7% | |||||||||||
| SG&A | 592 | 835 | (243) | -29.1% | |||||||||||
| Gain on sale of CADRA product line | - | - | - | - | |||||||||||
| Change in fair value of earn-out payments and holdback payment | (10) | - | (10) | - | |||||||||||
| Operating loss | (270) | (335) | 65 | -19.4% | |||||||||||
| Interest expense | 31 | 10 | 21 | 210.0% | |||||||||||
| Other expense (income) | 55 | (6) | 61 | -1016.7% | |||||||||||
| Loss from operations before income taxes | (356) | (339) | (17) | 5.0% | |||||||||||
| Provision for income taxes | - | - | - | - | |||||||||||
| Net loss | (356) | (339) | (17) | 5.0% | |||||||||||
| Weighted average shares outstanding | 894 | 875 | 19 | 2.2% | |||||||||||
| Basic and diluted net loss per share: | $ | (0.40) | $ | (0.39) | $ | (0.01) | 2.6% | ||||||||
| Reconciliation of Net loss to EBITDA: | |||||||||||||||
| Net loss | $ | (356) | $ | (339) | (17) | 5.0% | |||||||||
| Plus tax expense | - | - | - | - | |||||||||||
| Plus interest expense | 31 | 10 | 21 | 210.0% | |||||||||||
| Plus non-cash expense related to product line sale | - | - | - | - | |||||||||||
| Plus other non-cash expenses | 154 | 70 | 84 | 120.0% | |||||||||||
| EBITDA | $ | (171) | $ | (259) | 88 | -34.0% | |||||||||
| Statements of Operations | |||||||||||||||
| (in thousands, except % and per share data) | |||||||||||||||
| For the nine months ended | |||||||||||||||
| February 28, | February 28, | Change | |||||||||||||
| 2015 | 2014 | $ | % | ||||||||||||
| Product revenue | 454 | 1,042 | (588) | -56.4% | |||||||||||
| Service revenue | 2,362 | 3,089 | (727) | -23.5% | |||||||||||
| Total revenue | 2,816 | 4,131 | (1,315) | -31.8% | |||||||||||
| Cost of sales | 1,307 | 1,199 | 108 | 9.0% | |||||||||||
| Gross margin | 1,509 | 2,932 | (1,423) | -48.5% | |||||||||||
| Gross margin % | 53.6% | 71.0% | |||||||||||||
| R&D | 677 | 915 | (238) | -26.0% | |||||||||||
| SG&A | 1,953 | 2,582 | (629) | -24.4% | |||||||||||
| Gain on sale of CADRA product line | - | (649) | 649 | -100.0% | |||||||||||
| Change in fair value of earn-out payments and holdback payment | (70) | - | (70) | - | |||||||||||
| Operating (loss) income | (1,051) | 84 | (1,135) | -1351.2% | |||||||||||
| Interest expense | 158 | 203 | (45) | -22.2% | |||||||||||
| Other expense (income) | 98 | (28) | 126 | 450.0% | |||||||||||
| Loss from operations before income taxes | (1,307) | (91) | (1,216) | 1336.3% | |||||||||||
| Provision for income taxes | - | - | - | - | |||||||||||
| Net loss | (1,307) | (91) | (1,216) | 1336.3% | |||||||||||
| Weighted average shares outstanding | 889 | 884 | 5 | 0.6% | |||||||||||
| Basic and diluted net loss per share: | $ | (1.47) | $ | (0.10) | $ | (1.37) | 1370.0% | ||||||||
| Reconciliation of Net loss to EBITDA: | |||||||||||||||
| Net loss | $ | (1,307) | $ | (91) | (1,216) | 1336.3% | |||||||||
| Plus tax expense | - | - | - | - | |||||||||||
| Plus interest expense | 158 | 203 | (45) | -22.2% | |||||||||||
| Plus non-cash expense related to product line sale | - | 3,305 | (3,305) | -100.0% | |||||||||||
| Plus other non-cash expenses | 463 | 163 | 300 | 184.0% | |||||||||||
| EBITDA | $ | (686) | $ | 3,580 | (4,266) | -119.2% | |||||||||
