LOWELL, Mass. — (BUSINESS WIRE) — April 16, 2013 — SofTech, Inc. (OTCQB: SOFT), a proven provider of Product Lifecycle Management (PLM) solutions today announced its third quarter fiscal 2013 operating results. Revenue for the three months ended February 28, 2013 was $1.459 million, a decrease of 12.1% from the same period in the prior fiscal year. The net loss was $(14,000) or $(.01) per share for the three months ended February 28, 2013, as compared to net income of $137,000 or $.14 for the same period in the prior fiscal year.
Revenue for the nine months ended February 28, 2013 was $4.8 million, a decrease of 2.6% from the same period in the prior fiscal year. Net income increased 9% to $411,000 or $.41 per share for the nine months ended February 28, 2013, from net income of $377,000 or $.38 for the same period in the prior fiscal year.
During the current quarter, the Company reduced its outstanding debt by $495,000 bringing its total debt to $1.645 million, its lowest quarter ending outstanding debt position since August 31, 1997. Since the March 2011 Recapitalization Transaction the Company has paid down its debt by $1.255 million.
“Last quarter we had our best revenue quarter since the Recapitalization Transaction,” said Joe Mullaney, SofTech’s CEO. “This quarter we experienced our weakest revenue quarter as some license revenue orders we were expecting did not close. Despite the revenue weakness in the current quarter we still generated nearly $200K of EBITDA and more than $300K of cash from operating activities. In addition to strengthening our balance sheet, our consulting revenue increased 45% in the current quarter compared to the same period in fiscal 2012. While disappointed with the product revenue, the pipeline is sufficient to get back on track in the next several quarters,” he added.
“Although the debt outstanding at the end of the quarter is less than at any point in more than 15 years, it is due in full on February 28, 2014 and has therefore been classified as a current liability. We are actively engaged in refinancing activities and based, on those efforts, we are comfortable that we can meet our liquidity needs over the course of the next year,” Mullaney stated.
FINANCIAL STATEMENTS
The Statements of Operations for the three and nine month periods ended February 28, 2013 compared to the same periods in the prior fiscal year are presented below. A reconciliation of Net income(loss) 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 | ||||||||||||||||||||||||
| Feb. 28, | Feb. 29, | Change | ||||||||||||||||||||||
| 2013 | 2012 | $ | % | |||||||||||||||||||||
| Product revenue | $ | 244 | $ | 530 | $ | (286 | ) | -54.0 | % | |||||||||||||||
| Service revenue | 1,215 | 1,130 | 85 | 7.5 | % | |||||||||||||||||||
| Royalties on sale of patents | - | - | - | - | ||||||||||||||||||||
| Total revenue | 1,459 | 1,660 | (201 | ) | -12.1 | % | ||||||||||||||||||
| Cost of sales | 331 | 380 | (49 | ) | -12.9 | % | ||||||||||||||||||
| Gross margin | 1,128 | 1,280 | (152 | ) | -11.9 | % | ||||||||||||||||||
| Gross margin % | 77.3 | % | 77.1 | % | ||||||||||||||||||||
| R&D | 231 | 238 | (7 | ) | -2.9 | % | ||||||||||||||||||
| SG&A | 848 | 830 | 18 | 2.2 | % | |||||||||||||||||||
| Operating income | 49 | 212 | (163 | ) | -76.9 | % | ||||||||||||||||||
| Interest expense | 63 | 74 | (11 | ) | -14.9 | % | ||||||||||||||||||
| Other (income) expense | - | 1 | (1 | ) | -100.0 | % | ||||||||||||||||||
| Income(loss) from operations before income taxes | (14 | ) | 137 | (151 | ) | -110.2 | % | |||||||||||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||||||||||
| Net income(loss) | (14 | ) | 137 | (151 | ) | -110.2 | % | |||||||||||||||||
| Weighted average shares outstanding | 1,039 | 995 | 44 | 4.4 | % | |||||||||||||||||||
| Basic and diluted net income per share: | $ | (0.01 | ) | $ | 0.14 | $ | (0.15 | ) | -107.1 | % | ||||||||||||||
| Reconciliation of Net income to EBITDA: | ||||||||||||||||||||||||
| Net income(loss) | $ | (14 | ) | $ | 137 | $ | (151 | ) | -110.2 | % | ||||||||||||||
| Plus interest expense | 63 | 74 | (11 | ) | -14.9 | % | ||||||||||||||||||
| Plus tax expense | - | - | - | - | ||||||||||||||||||||
| Plus depreciation and amortization | 63 | 36 | 27 | 75.0 | % | |||||||||||||||||||
| Plus non-recurring professional fees | 71 | - | 71 | - | ||||||||||||||||||||
| EBITDA | $ | 183 | $ | 247 | $ | (64 | ) | -25.9 | % | |||||||||||||||
| Statements of Operations | ||||||||||||||||||||||||
| (in thousands, except % and per share data) | ||||||||||||||||||||||||
| For the nine months | ||||||||||||||||||||||||
| Feb. 28, | Feb. 29, | Change | ||||||||||||||||||||||
| 2013 | 2012 | $ | % | |||||||||||||||||||||
| Product revenue | $ | 936 | $ | 1,166 | $ | (230 | ) | -19.7 | % | |||||||||||||||
| Service revenue | 3,574 | 3,763 | (189 | ) | -5.0 | % | ||||||||||||||||||
| Royalties on sale of patents | 290 | - | 290 | - | ||||||||||||||||||||
| Total revenue | 4,800 | 4,929 | (129 | ) | -2.6 | % | ||||||||||||||||||
| Cost of sales | 1,012 | 1,080 | (68 | ) | -6.3 | % | ||||||||||||||||||
| Gross margin | 3,788 | 3,849 | (61 | ) | -1.6 | % | ||||||||||||||||||
| Gross margin % | 78.9 | % | 78.1 | % | ||||||||||||||||||||
| R&D | 799 | 958 | (159 | ) | -16.6 | % | ||||||||||||||||||
| SG&A | 2,391 | 2,257 | 134 | 5.9 | % | |||||||||||||||||||
| Operating income | 598 | 634 | (36 | ) | -5.7 | % | ||||||||||||||||||
| Interest expense | 198 | 250 | (52 | ) | -20.8 | % | ||||||||||||||||||
| Other (income) expense | (11 | ) | 7 | (18 | ) | -257.1 | % | |||||||||||||||||
| Income from operations before income taxes | 411 | 377 | 34 | 9.0 | % | |||||||||||||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||||||||||
| Net income | 411 | 377 | 34 | 9.0 | % | |||||||||||||||||||
| Weighted average shares outstanding | 1,010 | 995 | 15 | 1.5 | % | |||||||||||||||||||
| Basic and diluted net income per share: | $ | 0.41 | $ | 0.38 | $ | 0.03 | 7.9 | % | ||||||||||||||||
| Reconciliation of Net income to EBITDA | ||||||||||||||||||||||||
| Net income | $ | 411 | $ | 377 | 34 | 9.0 | % | |||||||||||||||||
| Plus interest expense | 198 | 250 | (52 | ) | -20.8 | % | ||||||||||||||||||
| Plus tax expense | - | - | - | - | ||||||||||||||||||||
| Plus depreciation and amortization | 167 | 112 | 55 | 49.1 | % | |||||||||||||||||||
| Plus non-cash foreign exchange gain | (11 | ) | 0 | (11 | ) | - | ||||||||||||||||||
| Plus non-recurring professional fees | 71 | 12 | 59 | 491.7 | % | |||||||||||||||||||
| EBITDA | $ | 836 | $ | 751 | 85 | 11.3 | % | |||||||||||||||||
