Welcome!

Cloud Expo Authors: Jerry Melnick, Liz McMillan, Michelle Drolet, Elizabeth White, Kevin Benedict

News Feed Item

Marlborough Software Development Holdings Inc. Reports Third Quarter Results for 2012

Marlborough Software Development Holdings Inc. (“MSDH”) (OTC: MBGH) today reported revenue of $1,635,000 for the three months ended September 30, 2012, a decrease of $330,000 or 17% as compared to the three months ended June 30, 2012 and a decrease of $478,000 or 23% as compared to revenue of $2,113,000 for the three months ended September 30, 2011. The Company’s cash balance at September 30, 2012 totaled $621,000, an increase of $70,000 from a balance of $551,000 at December 31, 2011 and a decrease of $2,291,000 from a balance of $2,912,000 at June 30, 2012.

MSDH received an equity commitment from two investors in October 2012, scheduled to occur in two tranches. The first in the aggregate amount of $2,000,000 in exchange for 597,000 shares of 6.5% redeemable preferred stock and 2,985,000 common stock warrants closed on October 11, 2012. A second tranche of $1,500,000 of the same securities shall occur in 2013 if certain performance criteria specified in the investment documents are achieved. The two investors were Amos Kaminski, a member of the Company’s board of directors, and The Altshuler Shaham Group, in its management capacity for certain provident and pension funds. In addition, in November 2012 the Company received commitments from certain customers with terms including the prepayment of software licenses in the aggregate amount of $850,000 payable over the course of the next three fiscal quarters.

“We are extremely grateful for the confidence which these investors and customers have shown in us at a pivotal moment. We expect that these investments will strengthen the Company's financial position and reassure the Company's shareholders, partners, employees, and customers that MSDH has the resources it needs to support growth for the future” said Pinhas Romik, President and CEO of MSDH. “In addition to this investment, we have also made progress on our continuing efforts to better align our cost structure with current market conditions. We restructured our global workforce by approximately 26%, eliminating 28 positions, including 7 contractors. We believe these investments, commitments and cost savings will enhance our ability to grow the business. We are also exploring strategic growth initiatives and have engaged Corporate Partners LLC to advise us on strategic alternatives. Although we are disappointed with the sales results in the third quarter, which was primarily due to lower sales in our OEM and reseller channels, we still believe in the long term value of the Pageflex brand of products to the marketplace. This has already been demonstrated in the $850,000 customer commitments we recently received.”

During the third quarter, Pageflex made significant upgrades to its core technology and developed strategic partnerships to further expand its product offering. We released version 8.0 of our Pageflex product line, including Pageflex Storefront, Server, Campaign Manager, and Studio. This release includes support for languages and local business practices that enable users around the globe to successfully create online stores in their region. These globalization features help the company to expand the benefits of the Pageflex product line into new regions where language had been an obstacle. We also released version 6.0 of the Pageflex iWay product. Pageflex iWay is known for helping printers gain efficiencies by automating critical steps in the print production process. Pageflex iWay 6.0 includes new document composition features that will enable those printers to also expand their businesses with new services.

In addition to developments with our own products, we also made progress on products we are creating by forming strategic partnerships. Through a partnership with DynamicVideo, Pageflex is developing Pageflex Dynamic Media, a technology for creating customized web-banner videos that speak directly to the viewer in a personalized, cost-effective, and operationally efficient way. This partnership helps the Company gain a presence in the fast-growing business of personalized video. Pageflex Dynamic Media will be released later this year. Pageflex Connect is the result of a partnership with the cross-channel interaction management company Conversen. Pageflex Connect is a cloud-based solution for creating and deploying multi-channel marketing through a wide range of communication channels. This product is currently available, and expands the Company's presence as a provider of multi-channel marketing solutions.

“As these releases demonstrate, the Company remains committed to the development of the Pageflex brand of products and to expanding the presence of those products to new regions around the world. In addition, our strategic partnerships help us develop and deliver innovative products that will help our customers build on their investment in Pageflex and grow their businesses" said Mr. Romik.

GAAP Loss

Our loss from operations increased $193,000 to $2,219,000 for the three months ended September 30, 2012, as compared to $2,026,000 for the three months ended September 30, 2011. Our net loss increased $145,000 to $2,237,000 or $0.21 per share for the three months ended September 30, 2012, as compared to $2,092,000 or $0.19 per share for the three months ended September 30, 2011.

Our loss from operations decreased $205,000 to $2,219,000 for the three months ended September 30, 2012, as compared to $2,424,000 for the three months ended June 30, 2012. Our net loss decreased $263,000 to $2,237,000 or $0.21 per share for the three months ended September 30, 2012 as compared to $2,500,000 or $0.23 per share for the three months ended June 30, 2012.

Non-GAAP Loss

Our non-GAAP results exclude stock-based compensation expense, allocated costs associated with the resignation in May 2011 of the CEO of our former parent, Bitstream Inc., as well as the amortization of intangible assets primarily acquired from Press-Sense Ltd., and include MSDH expenses charged to Bitstream Inc. via our management fee agreement or allocated to Bitstream Inc. via our allocation methodology. Our non-GAAP loss from operations decreased $958,000 to $2,074,000 for the three months ended September 30, 2012, as compared to $3,032,000 for the three months ended September 30, 2011. Our non-GAAP net loss decreased $1,006,000 to $2,092,000 or $0.19 per share for the three months ended September 30, 2012, as compared to $3,098,000 or $0.29 per share for the three months ended September 30, 2011. A reconciliation between GAAP and non-GAAP results is provided at the end of this press release.

Distribution

On March 14, 2012 MSDH shares were distributed to stockholders of Bitstream common stock. Each taxable U.S. stockholder of Bitstream receiving shares of MSDH common stock in the distribution will generally be treated as if such stockholder received a taxable distribution in an amount equal to the fair market value at the time of the distribution of the MSDH common stock received. We have evaluated the appraisal that was performed and determined $9.3 million to be the appropriate value. Based on shares outstanding of 10,751,609, management expects shareholder tax statements to be issued at $0.8662 per share. Management further expects that none of the distribution will be reported as a dividend due to Bitstream’s current and accumulated deficits and loss. Each shareholder will apply its proportionate amount first to recovery of basis and then to capital gain (long term or short term as applicable). Capital gains may be taxable at a reduced rate of 15% for individuals that have held their shares of Bitstream common stock for more than one year. A stockholder’s tax basis in MSDH common stock will be equal to its fair market value at the time of the spin-off of MSDH and the holding period in MSDH common stock will begin the day after the distribution. Shareholders should consult their tax advisors with respect to the tax consequences of the distribution.

Forward Looking Statements Disclosure

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based on management’s current expectations. Forward-looking statements can be identified by the use of the words "may," "will," "should," "could," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "intends," "potential," "proposed," or "continue" or the negative of those terms. Actual performance and results of operations may differ materially from those projected or suggested in the forward-looking statements due to certain risks and uncertainties, including, without limitation, market acceptance of the Company’s products, competition and the timely introduction of new products. Additional information concerning certain risks and uncertainties that would cause actual results to differ materially from those projected or suggested in the forward-looking statements is contained in the Company’s filings with the Securities and Exchange Commission, including MSDH’s Annual Report on Form 10-K for the year ended December 31, 2011, as supplemented by MSDH’s subsequent quarterly reports on Form 10-Q in 2012. We undertake no obligation to update or supplement forward-looking statements that become untrue because of subsequent events, new information or otherwise after the date of this document.

Use of Non-GAAP Financial Information

To supplement the financial measures presented in the Company's press release in accordance with accounting principles generally accepted in the United States ("GAAP"), the Company also presents non-GAAP measures relating to income or loss from operations, net income or loss, and net income or loss per diluted share which were adjusted from amounts determined based on GAAP to exclude share-based compensation expenses, allocated resignation costs of the CEO of our former parent, as well as expenses from the amortization of intangible assets primarily acquired from Press-sense Ltd., and include non-transaction related MSDH expenses charged to Bitstream Inc. via our management fee agreement or allocated to Bitstream Inc. via our allocation methodology as discussed further in our Form 10-K filed March 30, 2012.

The Company believes these non-GAAP financial measures will enhance the reader’s overall understanding of MSDH’s current financial performance and the Company's prospects for the future by providing a higher degree of transparency for certain financial measures and providing a level of disclosure that helps investors understand how the Company plans and measures its own business.

These financial measures are not in accordance with GAAP, should not be considered an alternative for measures prepared in accordance with GAAP, and may have limitations in that they do not reflect all of MSDH’s results of operations as determined in accordance with GAAP.

These non-GAAP measures should only be used to evaluate MSDH’s results of operations in conjunction with the corresponding GAAP measures. The presentation of non-GAAP information is not meant to be considered superior to, in isolation from, or as a substitute for results prepared in accordance with GAAP.

About Marlborough Software Development Holdings Inc. (“MSDH”)

MSDH’s Pageflex brand enables companies across the globe to communicate their marketing messages more easily and effectively. The award-winning Pageflex product line sets the standard for excellence and innovation in targeted marketing and brand management. Pageflex offers the ability to personalize any form of communication in print, e-mail, or on the Web. Pageflex pioneered the concepts of variable data and web-to-print storefronts, and has expanded to offer software for multi-channel campaign management, dynamic publishing, and back-end production automation. Pageflex solutions use the patented Pageflex variable publishing engine and Adobe® InDesign®. For more information, visit www.pageflex.com.

Marlborough Software Development Holdings Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In Thousands, Except Per Share Data)

(unaudited)

       

Three Months Ended
September 30,

Nine Months Ended
September 30,

2012

2011

2012

2011

Revenue:
Software licenses $ 347 $ 711 $ 1,391 $ 2,078
Services 1,288   1,402   3,977   4,379  
Total revenue 1,635   2,113   5,368   6,457  
 
Cost of revenue:
Software licenses 237 278 700 859
Services 629   539   1,841   1,519  
Total cost of revenue 866 817 2,541 2,378
       
Gross profit 769   1,296   2,827   4,079  
 
Operating expenses:
Marketing and selling 872 954 3,108 2,652
Research and development 1,343 1,703 4,714 5,154
General and administrative 773   665   2,790   2,453  
 
Total operating expenses 2,988   3,322   10,612   10,259  
 
Operating loss (2,219 ) (2,026 ) (7,785 ) (6,180 )
 

Interest and other (expense)

 income, net

17 (25 ) (26 ) 7
       
Loss before provision for income taxes (2,202 ) (2,051 ) (7,811 ) (6,173 )
Provision for income taxes 35   41   146   132  
 
Net loss $ (2,237 ) $ (2,092 ) $ (7,957 ) $ (6,305 )
 
Basic and diluted net loss per share $ (0.21 ) $ (0.19 ) $ (0.74 ) $ (0.59 )
Basic and diluted weighted average shares outstanding 10,763   10,752   10,755   10,752  
 

Marlborough Software Development Holdings Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands)

   
September 30, December 31,

2012

2011

(unaudited)
ASSETS
Current assets:
Cash $ 621 $ 551
Accounts receivable, net 388 628
Prepaid expenses and other current assets 497 394
 
Total current assets 1,506 1,573
 
Property and equipment, net 1,819 1,355
Other 528 238
Goodwill 3,297 3,297
Intangible assets, net 2,769 3,070
 
Total assets $ 9,919 $ 9,533
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 375 $ 169
Accrued payroll and other compensation 709 775
Other accrued expenses 663 388
Short-term deferred revenue 1,993 2,200
Total current liabilities 3,740 3,532
 
Long-term deferred revenue 580 526
Long-term deferred rent 480 506
Total liabilities 4,800 4,564
 
Total stockholders’ equity 5,119 4,969
 
Total liabilities and stockholders’ equity $ 9,919 $ 9,533
 

Marlborough Software Development Holdings Inc. and Subsidiaries

Non-GAAP Results

(In Thousands, Except Per Share Data)

(unaudited)

   

The following table shows MSDH’s non-GAAP results reconciled to GAAP results included in this release.

 

Three Months Ended

September 30,

Nine Months Ended

September 30,

2012

 

2011

2012

 

2011

Operating loss:
GAAP operating loss $ (2,219 ) $ (2,026 ) $ (7,785 ) $ (6,180 )
Stock-based compensation 22 82 1,442 303

Amortization of intangible assets and

 capitalized software

123

103

324

307

Allocation to former parent --- (1,191 ) (818 ) (2,656 )
Resignation costs, former CEO ---   ---   ---   347  
Non-GAAP operating loss $ (2,074 ) $ (3,032 ) $ (6,837 ) $ (7,879 )
 
Net loss:
GAAP net loss $ (2,237 ) $ (2,092 ) $ (7,957 ) $ (6,305 )
Stock-based compensation 22 82 1,442 303

Amortization of intangible assets and

 capitalized software

123

103

324

307

Allocation to former parent --- (1,191 ) (818 ) (2,656 )
Resignation costs, former CEO ---   ---   ---   347  
Non-GAAP net loss $ (2,092 ) $ (3,098 ) $ (7,009 ) $ (8,004 )
 
Net loss per share:
GAAP net loss per share $ (0.21 ) $ (0.19 ) $ (0.74 ) $ (0.59 )
Stock-based compensation per share --- --- 0.13 0.03

Amortization of intangible assets and

 capitalized software per share

0.02

0.01

0.03

0.03

Allocation to former parent per share --- (0.11 ) (0.07 ) (0.24 )
Resignation costs, former CEO per share ---   ---   ---   0.03  
Non-GAAP net loss per share $ (0.19 ) $ (0.29 ) $ (0.65 ) $ (0.74 )
 

For the three and nine month periods ended September 30, 2012, net loss per share is based on 10,763,000 and 10,755,000 weighted average shares outstanding, respectively. For both the three and nine months ended September 30, 2011, net loss per share is based on 10,752,000 weighted average shares outstanding. GAAP and Non-GAAP amounts exclude $0 and $2,254,000 for the three and nine months ended September 30, 2012, respectively, for Separation, Distribution, and Merger costs which were incurred by MSDH and subsequently charged to Bitstream Inc. via a management fee agreement.

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Cloud Expo Breaking News
More and more enterprises today are doing business by opening up their data and applications through APIs. Though forward-thinking and strategic, exposing APIs also increases the surface area for potential attack by hackers. To benefit from APIs while staying secure, enterprises and security architects need to continue to develop a deep understanding about API security and how it differs from traditional web application security or mobile application security. In his session at 14th Cloud Expo, Sachin Agarwal, VP of Product Marketing and Strategy at SOA Software, will walk you through the various aspects of how an API could be potentially exploited. He will discuss the necessary best practices to secure your data and enterprise applications while continue continuing to support your business’s digital initiatives.
Web conferencing in a public cloud has the same risks as any other cloud service. If you have ever had concerns over the types of data being shared in your employees’ web conferences, such as IP, financials or customer data, then it’s time to look at web conferencing in a private cloud. In her session at 14th Cloud Expo, Courtney Behrens, Senior Marketing Manager at Brother International, will discuss how issues that had previously been out of your control, like performance, advanced administration and compliance, can now be put back behind your firewall.
Next-Gen Cloud. Whatever you call it, there’s a higher calling for cloud computing that requires providers to change their spots and move from a commodity mindset to a premium one. Businesses can no longer maintain the status quo that today’s service providers offer. Yes, the continuity, speed, mobility, data access and connectivity are staples of the cloud and always will be. But cloud providers that plan to not only exist tomorrow – but to lead – know that security must be the top priority for the cloud and are delivering it now. In his session at 14th Cloud Expo, Kurt Hagerman, Chief Information Security Officer at FireHost, will detail why and how you can have both infrastructure performance and enterprise-grade security – and what tomorrow's cloud provider will look like.
The social media expansion has shown just how people are eager to share their experiences with the rest of the world. Cloud technology is the perfect platform to satisfy this need given its great flexibility and readiness. At Cynny, we aim to revolutionize how people share and organize their digital life through a brand new cloud service, starting from infrastructure to the users’ interface. A revolution that began from inventing and designing our very own infrastructure: we have created the first server network powered solely by ARM CPU. The microservers have “organism-like” features, differentiating them from any of the current technologies. Benefits include low consumption of energy, making Cynny the ecologically friendly alternative for storage as well as cheaper infrastructure, lower running costs, etc.
The revolution that happened in the server universe over the past 15 years has resulted in an eco-system that is more open, more democratically innovative and produced better results in technically challenging dimensions like scale. The underpinnings of the revolution were common hardware, standards based APIs (ex. POSIX) and a strict adherence to layering and isolation between applications, daemons and kernel drivers/modules which allowed multiple types of development happen in parallel without hindering others. Put simply, today's server model is built on a consistent x86 platform with few surprises in its core components. A kernel abstracts away the platform, so that applications and daemons are decoupled from the hardware. In contrast, networking equipment is still stuck in the mainframe era. Today, networking equipment is a single appliance, including hardware, OS, applications and user interface come as a monolithic entity from a single vendor. Switching between different vendor'...
Cloud backup and recovery services are critical to safeguarding an organization’s data and ensuring business continuity when technical failures and outages occur. With so many choices, how do you find the right provider for your specific needs? In his session at 14th Cloud Expo, Daniel Jacobson, Technology Manager at BUMI, will outline the key factors including backup configurations, proactive monitoring, data restoration, disaster recovery drills, security, compliance and data center resources. Aside from the technical considerations, the secret sauce in identifying the best vendor is the level of focus, expertise and specialization of their engineering team and support group, and how they monitor your day-to-day backups, provide recommendations, and guide you through restores when necessary.
Cloud scalability and performance should be at the heart of every successful Internet venture. The infrastructure needs to be resilient, flexible, and fast – it’s best not to get caught thinking about architecture until the middle of an emergency, when it's too late. In his interactive, no-holds-barred session at 14th Cloud Expo, Phil Jackson, Development Community Advocate for SoftLayer, will dive into how to design and build-out the right cloud infrastructure.
You use an agile process; your goal is to make your organization more agile. What about your data infrastructure? The truth is, today’s databases are anything but agile – they are effectively static repositories that are cumbersome to work with, difficult to change, and cannot keep pace with application demands. Performance suffers as a result, and it takes far longer than it should to deliver on new features and capabilities needed to make your organization competitive. As your application and business needs change, data repositories and structures get outmoded rapidly, resulting in increased work for application developers and slow performance for end users. Further, as data sizes grow into the Big Data realm, this problem is exacerbated and becomes even more difficult to address. A seemingly simple schema change can take hours (or more) to perform, and as requirements evolve the disconnect between existing data structures and actual needs diverge.
SYS-CON Events announced today that SherWeb, a long-time leading provider of cloud services and Microsoft's 2013 World Hosting Partner of the Year, will exhibit at SYS-CON's 14th International Cloud Expo®, which will take place on June 10–12, 2014, at the Javits Center in New York City, New York. A worldwide hosted services leader ranking in the prestigious North American Deloitte Technology Fast 500TM, and Microsoft's 2013 World Hosting Partner of the Year, SherWeb provides competitive cloud solutions to businesses and partners around the world. Founded in 1998, SherWeb is a privately owned company headquartered in Quebec, Canada. Its service portfolio includes Microsoft Exchange, SharePoint, Lync, Dynamics CRM and more.
The world of cloud and application development is not just for the hardened developer these days. In their session at 14th Cloud Expo, Phil Jackson, Development Community Advocate for SoftLayer, and Harold Hannon, Sr. Software Architect at SoftLayer, will pull back the curtain of the architecture of a fun demo application purpose-built for the cloud. They will focus on demonstrating how they leveraged compute, storage, messaging, and other cloud elements hosted at SoftLayer to lower the effort and difficulty of putting together a useful application. This will be an active demonstration and review of simple command-line tools and resources, so don’t be afraid if you are not a seasoned developer.
SYS-CON Events announced today that BUMI, a premium managed service provider specializing in data backup and recovery, will exhibit at SYS-CON's 14th International Cloud Expo®, which will take place on June 10–12, 2014, at the Javits Center in New York City, New York. Manhattan-based BUMI (Backup My Info!) is a premium managed service provider specializing in data backup and recovery. Founded in 2002, the company’s Here, There and Everywhere data backup and recovery solutions are utilized by more than 500 businesses. BUMI clients include professional service organizations such as banking, financial, insurance, accounting, hedge funds and law firms. The company is known for its relentless passion for customer service and support, and has won numerous awards, including Customer Service Provider of the Year and 10 Best Companies to Work For.
Chief Security Officers (CSO), CIOs and IT Directors are all concerned with providing a secure environment from which their business can innovate and customers can safely consume without the fear of Distributed Denial of Service attacks. To be successful in today's hyper-connected world, the enterprise needs to leverage the capabilities of the web and be ready to innovate without fear of DDoS attacks, concerns about application security and other threats. Organizations face great risk from increasingly frequent and sophisticated attempts to render web properties unavailable, and steal intellectual property or personally identifiable information. Layered security best practices extend security beyond the data center, delivering DDoS protection and maintaining site performance in the face of fast-changing threats.
From data center to cloud to the network. In his session at 3rd SDDC Expo, Raul Martynek, CEO of Net Access, will identify the challenges facing both data center providers and enterprise IT as they relate to cross-platform automation. He will then provide insight into designing, building, securing and managing the technology as an integrated service offering. Topics covered include: High-density data center design Network (and SDN) integration and automation Cloud (and hosting) infrastructure considerations Monitoring and security Management approaches Self-service and automation
In his session at 14th Cloud Expo, David Holmes, Vice President at OutSystems, will demonstrate the immense power that lives at the intersection of mobile apps and cloud application platforms. Attendees will participate in a live demonstration – an enterprise mobile app will be built and changed before their eyes – on their own devices. David Holmes brings over 20 years of high-tech marketing leadership to OutSystems. Prior to joining OutSystems, he was VP of Global Marketing for Damballa, a leading provider of network security solutions. Previously, he was SVP of Global Marketing for Jacada where his branding and positioning expertise helped drive the company from start-up days to a $55 million initial public offering on Nasdaq.
Performance is the intersection of power, agility, control, and choice. If you value performance, and more specifically consistent performance, you need to look beyond simple virtualized compute. Many factors need to be considered to create a truly performant environment. In his General Session at 14th Cloud Expo, Marc Jones, Vice President of Product Innovation for SoftLayer, will explain how to take advantage of a multitude of compute options and platform features to make cloud the cornerstone of your online presence.