BakBone Software Announces Fourth Quarter and Full Year Fiscal 2010 Financial Results

Results Reflect $12.6 Million Charge for Impairment of ColdSpark Assets

Renewed Focus on Core Storage Management Expected to Result in Improved, Consistent Operating Results

Fiscal 2010 Storage Management Revenues Increase 6%; Storage Management Net Income of $7.0 Million Significantly Improved from $5.5 Million Net loss in Fiscal 2009

Conference Call Today at 2:00 pm PT

News provided by

BakBone Software

Jun 10, 2010, 04:05 ET

SAN DIEGO, June 10 /PRNewswire-FirstCall/ -- BakBone Software® (OTC Bulletin Board: BKBO), a leading provider of storage and data protection software, today announced its financial results for the fourth quarter and full fiscal year of 2010, ended March 31, 2010. Included in the fiscal fourth quarter and full year results was a $12.6 million non-recurring, non-cash charge for the impairment of goodwill, intangible, and other assets related to the Company's ColdSpark division.

Fourth Quarter Fiscal 2010 Financial Highlights

Consolidated Revenues	$14.7 million
Consolidated Net Loss	$(12.2) million
Storage Management Revenues	$14.4 million
Storage Management Operating Income	$1.9 million
Storage Management Bookings	$13.7 million

"With the closing of ColdSpark, we are fully focused on driving our storage management business. During the fourth fiscal quarter, we experienced growing demand for our NetVault® product suite, demonstrated by growth in new customers worldwide," said Steve Martin, senior vice president, Chief Financial Officer and Interim CEO, BakBone. "Our new NetVault: FASTRecover and NetVault: SmartDisk offerings have expanded the breadth of our product line, providing us with additional storage solutions to sell to our customer base. We hit our bookings target with $14.1 million for the quarter, which included approximately $375,000 for the discontinued ColdSpark business.

"We took steps during the quarter to reduce personnel costs in select areas of the company to align the BakBone team to better serve the needs of our channel partners and end user customers," Mr. Martin continued. "The entire organization is now directed at driving revenues of our core backup and storage business and improving profitability from continuing operations."

Fiscal Fourth Quarter Financial Results

Fiscal fourth quarter 2010 revenues of $14.7 million were two percent above revenues in the fourth quarter of fiscal 2009. The Company reported a net loss of $12.2 million, or $(0.14) per share, in the recent fourth quarter compared with a net loss of $0.9 million, or $(0.01) per share, in the fourth quarter last year. ColdSpark was acquired on May 14, 2009, following the close of the fourth quarter of fiscal 2009, and therefore there is no contribution from the division in the fiscal fourth quarter or the full year 2009 results.

Storage management revenues for the fiscal fourth quarter 2010 totaled $14.4 million, virtually unchanged from the $14.4 million in revenues in the fourth quarter of the prior year. Operating income for the storage management business was $1.9 million in the fiscal fourth quarter 2010 compared with an operating loss of $0.3 million in the fourth quarter of fiscal 2009. Storage management net income was $1.7 million for the fiscal fourth quarter 2010.

Fiscal 2010 Financial Results

For the full fiscal year 2010, revenues totaled $61.9 million, 10% above the $56.0 million in revenues in fiscal 2009. The Company reported a net loss for fiscal 2010 of $9.8 million, or $(0.12) per share, compared with a net loss of $5.5 million, or $(0.08) per share, for fiscal 2009. Bookings for fiscal 2010 totaled $56.5 million.

Storage management revenues totaled $60.8 million for fiscal 2010, an increase of 9% over revenues in fiscal 2009. Operating income for the storage management business was $7.6 million in fiscal 2010 compared with an operating loss of $6.1 million in the prior fiscal year. Storage management net income increased to $7.0 million.

Total cash at March 31, 2010 was $5.0 million.

Conference Call Information

The Company has scheduled a conference call for today, June 10, 2010, at 2:00 p.m. PT to discuss the results for the quarter ended March 31, 2010. The call will be hosted by Steve Martin, Interim CEO and Chief Financial Officer of BakBone.

To access the conference call, please dial 800-854-3238; internationally, dial 706-634-9547 (Passcode: 76750537). This call will also be webcast and can be accessed at www.bakbone.com by clicking on "Company Info" and then "Investor Relations." The webcast is also being distributed through the Thomson StreetEvents Network. Individual investors can listen to the call at www.earnings.com, Thomson's individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson StreetEvents (www.streetevents.com), a password-protected event management site.

About BakBone Software

BakBone makes data protection a simple, straightforward process with an award-winning product suite. From real-time data protection to deduplication, disk-based and tape backup and application protection, BakBone's solutions manage resources across all platforms, providing improved operational efficiency, reduced system downtime, improved data and application availability and enhanced security to support the business growth of enterprise environments. For more information about BakBone, visit www.bakbone.com or email [email protected].

Safe Harbor

This press release contains express and/or implied forward-looking statements including, without limitation, statements regarding anticipated financial results and market developments that involve risks, uncertainties, assumptions and other factors, which, if they do not materialize or prove correct, could cause BakBone's results to differ materially from historical results, or those expressed or implied by such forward-looking statements. The potential risks and uncertainties may include, but are not limited to: risks that the costs of exiting the ColdSpark business will be higher than anticipated; risks that the ongoing weak economic and market conditions, particularly in North America, could continue to lead to reduced spending on information technology products; competition in our target markets; potential capital needs; management of future growth and expansion; the development, implementation and execution of the Company's strategic vision; risk of third-party claims of infringement; protection of proprietary information; customer acceptance of the Company's existing and newly introduced products and fee structures; the success of the Company's brand development efforts; risks associated with strategic alliances; reliance on distribution channels; product concentration; need to develop new and enhanced products; potential product defects; our ability to hire and retain qualified employees and key management personnel; and risks associated with changes in domestic and international market conditions and the entry into and development of international markets for the Company's products. Our forward-looking statements should be considered in the context of these and other risk factors disclosed in our most recent report filed with the Securities and Exchange Commission, which may be found at www.sec.gov, as well as those risk factors disclosed in our current report filed with the relevant Canadian securities regulators, which is available on SEDAR at www.sedar.com. All future written and oral forward-looking statements made by us or on our behalf are also subject to these factors. BakBone assumes no obligation to update any forward-looking statement to reflect events or circumstances arising after the date on which it was made, other than as required under applicable securities laws.

BakBone®, BakBone Software®, NetVault®, Application Plugin Module™, BakBone logo®, Integrated Data Protection™, NetVault: SmartDisk™, Asempra®, FASTRecover™, ColdSpark® and SparkEngine™ are all trademarks or registered trademarks of BakBone Software, Inc., in the United States and/or in other countries. All other brands, products or service names are or may be trademarks, registered trademarks or service marks of, and used to identify, products or services of their respective owners.


Investor Contact:	Corporate Contact:	Media Contact:
Doug Sherk / Jenifer Kirtland	Steve Martin	Amber Winans
415-896-6820	858-795-7525	858-795-7584
[email protected]	[email protected]	[email protected]

(Logo: http://photos.prnewswire.com/prnh/20031120/SDBAKLOGO)

BAKBONE SOFTWARE INCORPORATED
Condensed Consolidated Balance Sheets
(in thousands)
	Fiscal Period Ended
	March 31, 2010	March 31, 2009
ASSETS
Current assets:
Cash and cash equivalents	$ 4,903	$ 8,398
Restricted cash	51	264
Accounts receivable, net	10,582	9,646
Prepaid expenses and other assets	739	1,159

Total current assets	16,275	19,467
Property and equipment, net	2,020	2,713
Intangible assets, net	1,814	824
Goodwill	7,615	7,615
Other assets	946	939

Total assets	$ 28,670	$ 31,558

LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued liabilities	$ 7,942	$ 9,603
Current portion of acquisition consideration payable	809	-
Current portion of deferred revenue	44,337	44,081

Total current liabilities	53,088	53,684
Deferred revenue, excluding current portion	44,840	47,684
Acquisition consideration payable, excluding current portion	6,037	-
Other liabilities	697	1,337

Total liabilities	104,662	102,705

Shareholders’ deficit	(75,992)	(71,147)

Total liabilities and shareholders’ deficit	$ 28,670	$ 31,558

BAKBONE SOFTWARE INCORPORATED
Condensed Consolidated Statements of Operations
(in thousands, except per share data)


		Three months ended March 31,		Twelve months ended March 31,
		2010	2009	2010	2009
		(unaudited)

Revenues:
	License and service	$ 14,749	$ 14,414	$ 60,368	$ 56,020
	Other	-	-	1,500	-
	Total revenues	14,749	14,414	61,868	56,020
Cost of revenues		1,696	1,655	6,570	7,121
	Gross profit	13,053	12,759	55,298	48,899
Operating expenses:
	Sales and marketing	6,378	6,226	26,393	27,010
	Research and development	3,474	2,416	13,159	11,220
	General and administrative	2,668	4,401	12,402	16,751
	Impairment of goodwill and intangible assets	12,450	-	12,450	-
	Total operating expenses	24,970	13,043	64,404	54,981
	Operating loss	(11,917)	(284)	(9,106)	(6,082)
Other non-operating (expense) income		(268)	(492)	(817)	985
	Loss before income taxes	(12,185)	(776)	(9,923)	(5,097)
(Benefit from) provision for income taxes		(2)	107	(171)	354
	Net loss	$ (12,183)	$ (883)	$ (9,752)	$ (5,451)

Net loss per common share:
	Basic and diluted	$ (0.14)	$ (0.01)	$ (0.12)	$ (0.08)


Weighted-average common shares outstanding:
	Basic and diluted	84,176	64,610	84,176	64,615

BAKBONE SOFTWARE INCORPORATED
Condensed Consolidated Statements of Cash Flows
(in thousands)

			Twelve months ended March 31,
			2010	2009
Cash flows from operating activities:
Net loss			$ (9,752)	$ (5,451)
Adjustments to reconcile net loss to net cash used in (provided by) operating activities:
	Impairment of goodwill and intangible assets		12,450	-
	Depreciation and amortization		2,519	1,626
	Non-cash interest expense		565	-
	Operating expenses funded by financing arrangement		320	178
	Stock-based compensation		210	260
	Provision for bad debt		131	258
	Loss on disposal of capital assets		12	20
	Other changes in assets and liabilities		(8,582)	4,595
		Net cash (used in) provided by operating activities	(2,127)	1,486

Cash flows from investing activities:
	Cash paid for acquisitions, net of cash received		(1,014)	-
	Capital expenditures		(423)	(836)
	Release of restricted cash		325	227
		Net cash used in investing activities	(1,112)	(609)

Cash flows from financing activities:
	Payments on capital lease obligations		(228)	(239)
	Payments on long-term debt obligations		(523)	(681)
		Net cash used in financing activities	(751)	(920)

Effect of exchange rates on cash and cash equivalents			495	(1,055)

	Net decrease in cash and cash equivalents		(3,495)	(1,098)
	Cash and cash equivalents, beginning of period		8,398	9,496
	Cash and cash equivalents, end of period		$ 4,903	$ 8,398

BAKBONE SOFTWARE INCORPORATED
Reconciliation of Bookings to U.S. GAAP Revenue (1)
(in thousands)

		Three months ended March 31,		Twelve months ended March 31,

		2010	2009	2010	2009
		(unaudited)
Revenues sourced from current period bookings:
	Total bookings for the period	$ 14,107	$ 13,894	$ 56,502	$ 57,738
	Bookings deferred into subsequent periods	(13,123)	(12,867)	(40,753)	(43,461)

	Revenues from current period bookings	984	1,027	15,749	14,277

Revenues sourced from prior period bookings:		13,765	13,387	46,119	41,743

	Total revenues recognized in the period	$ 14,749	$ 14,414	$ 61,868	$ 56,020

(1) We define bookings as the gross dollars invoiced through the sale of software licenses, maintenance contracts and professional services. We utilize bookings information as an operations measure, but it is not intended to replace U.S. GAAP accounting. Under the ratable revenue recognition method, license bookings are recognized as revenue over the appropriate period (generally three to five years). In general, variations in revenues period-over-period are affected by the amortization of current and prior period license bookings. Accordingly, we believe that trends in current and historical bookings are key factors in analyzing our operating results.

BAKBONE SOFTWARE INCORPORATED
Statement of Operations by Reporting Segment
(in thousands, except per share data)

		Three months ended			Twelve months ended
		March 31, 2010			March 31, 2010
		Storage	Message		Storage	Message
		Management	Management	Consolidated	Management	Management	Consolidated
		(unaudited)			(unaudited)
Revenues:
	License and service	$ 14,366	$ 383	$ 14,749	$ 59,324	$ 1,044	$ 60,368
	Other	-	-	-	1,500	-	1,500
	Total revenues	14,366	383	14,749	60,824	1,044	61,868
Cost of revenues		1,482	214	1,696	5,774	796	6,570
	Gross profit	12,884	169	13,053	55,050	248	55,298
Operating expenses:
	Sales and marketing	5,840	538	6,378	24,786	1,607	26,393
	Research and development	2,945	529	3,474	11,418	1,741	13,159
	General and administrative	2,193	475	2,668	11,234	1,168	12,402
	Impairment of goodwill and intangible assets	-	12,450	12,450	-	12,450	12,450
	Total operating expenses	10,978	13,992	24,970	47,438	16,966	64,404
	Operating income (loss)	1,906	(13,823)	(11,917)	7,612	(16,718)	(9,106)
Other non-operating expense		(266)	(2)	(268)	(808)	(9)	(817)
	Income (loss) before income taxes	1,640	(13,825)	(12,185)	6,804	(16,727)	(9,923)
(Benefit from) provision for income taxes		(7)	5	(2)	(176)	5	(171)
	Net income (loss)	$ 1,647	$ (13,830)	$ (12,183)	$ 6,980	$ (16,732)	$ (9,752)

Net income (loss) per common share:
	Basic and diluted			$ (0.14)			$ (0.12)
	Diluted			$ (0.14)			$ (0.12)

Weighted-average common shares outstanding:
	Basic			84,176			84,176
	Diluted			84,176			84,176