Bitstream Inc. (Nasdaq: BITS) today reported that total revenue
increased by $826,000 or 14% to $6,808,000 for the three months
ended September 30, 2011 as compared to total revenue of $5,982,000
for the three months ended September 30, 2010. The Company’s
aggregate cash, cash equivalents, and investments at September 30,
2011 totaled $10,505,000, an increase of $103,000 from a balance of
$10,402,000 at June 30, 2011.
GAAP Loss
Our loss from operations increased $720,000 to $1,811,000 for
the three months ended September 30, 2011, as compared to
$1,091,000 for the three months ended September 30, 2010. Our net
loss increased $776,000 to $1,950,000 or $0.19 per share for the
three months ended September 30, 2011 as compared to $1,174,000 or
$0.12 per share for the three months ended September 30, 2010.
Non-GAAP Loss
Our non-GAAP results exclude stock-based compensation expense,
the amortization of intangible assets primarily acquired from
Press-Sense Ltd., acquisition costs for certain assets of
Press-Sense Ltd., the cost of the resignation agreement with our
former CEO, and transaction costs associated with merger and
separation activities. Our non-GAAP loss from operations increased
$184,000 to $771,000 for the three months ended September 30, 2011,
as compared to $587,000 for the three months ended September 30,
2010. Our non-GAAP net loss increased $240,000 to $910,000 or $0.09
per share for the three months ended September 30, 2011, as
compared to $670,000 or $0.07 per share for the three months ended
September 30, 2010. A reconciliation between GAAP and non-GAAP
results is provided at the end of this press release.
“We are pleased to report that revenues across all of our
product lines increased in the third quarter as compared to the
same quarter in 2010,” said Amos Kaminski, Executive Chairman and
Chief Executive Officer. “Revenue for our Pageflex product line
increased 28% as compared to the third quarter of 2010 and the
addition of Elly Perets as Vice President of Sales and Marketing
last quarter has been a strong addition in our effort to drive our
marketing strategy and expand the reach of Pageflex products into
new regions. During the quarter we released our first mobile
application through the Apple App Store and announced a partnership
and OEM agreement with Heidelberg Druckmaschinen AG for Pageflex
Storefront.”
“As a result of our ongoing exploration of strategic
alternatives, we announced on November 10, 2011 that we entered
into a definitive agreement to sell our font business to Monotype
Imaging Holdings Inc. (NASDAQ: TYPE) in a cash merger valued at $50
million, subject to closing adjustments. Prior to the closing of
the merger, we will distribute to Bitstream shareholders shares of
a newly-formed company, Marlborough Software Development Holdings
Inc. that was formed to hold all of Bitstream's non-font assets,
including the Pageflex business and Bolt browser technology.”
The Merger Transaction
The merger between Bitstream and Monotype Imaging will be
effected as a cash merger of a subsidiary of Monotype Imaging into
Bitstream. Prior to the closing of the merger, Bitstream will
distribute to Bitstream shareholders shares of a newly-formed
company, Marlborough Software Development Holdings Inc. (“MSDH”),
that was formed to hold all of Bitstream’s non-font assets,
including the Pageflex business and Bolt browser technology. MSDH
will also assume certain liabilities from Bitstream, primarily
those related to the non-font assets.
Bitstream anticipates that the merger and the spin-off of MSDH
will be taxable transactions to Bitstream’s shareholders. These and
other considerations will be set forth in greater detail in a proxy
statement to be filed with the Securities and Exchange Commission
in connection with the special meeting to approve the merger
transaction. The merger transaction is subject to the completion of
customary closing conditions, including the consummation of the
spin-off transaction, and the approval of Bitstream’s
shareholders.
The spin-off transaction is subject to the effectiveness of the
registration statement on Form S-1 filed by MSDH on November 10,
2011 with the Securities Exchange Commission with respect to the
spin-off transaction. The merger and spin-off transactions are
expected to close in the first quarter of 2012.
Additional information regarding MSDH and the proposed spin-off
is contained in the registration statement filed by MSDH regarding
the spin-off transaction. The registration statement relating to
the MSDH securities has not yet become effective. These securities
may not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective.
This news release shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of the
MSDH securities in any state or jurisdiction in which such an
offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such state or
jurisdiction.
Additional Information about the Merger and Where to Find
it
In connection with the transactions contemplated by the merger
agreement, Bitstream will file a proxy statement with the SEC.
Additionally, Monotype Imaging and Bitstream will file other
relevant materials in connection with the proposed acquisition of
Bitstream by Monotype Imaging pursuant to the terms of the merger
agreement. The materials to be filed by Monotype Imaging and
Bitstream with the SEC may be obtained free of charge at the SEC’s
web site at www.sec.gov. Investors and security holders of
Bitstream are urged to read the proxy statement and the other
relevant materials when they become available before making any
voting or investment decision with respect to the proposed merger
because they will contain important information about the merger
and the parties to the merger.
Bitstream and its executive officers and directors may be deemed
to be participants in the solicitation of proxies from the security
holders of Bitstream in connection with the merger. Information
about executive officers and directors of Bitstream and their
ownership of Bitstream common stock is set forth in Bitstream’s
proxy statement, which was filed with the SEC on May 2, 2011
and is supplemented by other public filings made, and to be made,
with the SEC. Investors and security holders may obtain additional
information regarding the direct and indirect interests of
Bitstream and its executive officers and directors in the merger by
reading the proxy statement and the other filings and documents
referred to above.
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. 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 Bitstream’s Annual Report on Form 10-K for
the year ended December 31, 2010, as supplemented by Bitstream’s
subsequent quarterly reports on Form 10-Q in 2011. 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, as well as expenses from the
amortization of intangible assets primarily acquired from
Press-sense Ltd. , the acquisition costs for acquiring certain
assets of Press-sense Ltd., transaction costs associated with the
merger and separation, and direct costs related to the resignation
of our former CEO.
The Company believes these non-GAAP financial measures will
enhance the reader’s overall understanding of Bitstream’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 Bitstream’s results of operations as determined in
accordance with GAAP.
These non-GAAP measures should only be used to evaluate
Bitstream’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 Bitstream
Bitstream Inc. develops software technologies and applications
for the graphic art and mobile communications industries.
Bitstream’s award-winning fonts and font technologies enable device
manufacturers and application developers to render the highest
quality text in any language, on any device, at any resolution. The
company’s MyFonts brand is the world’s leading provider of fonts to
consumers. Bitstream’s Pageflex brand enables marketers to easily
produce customized communications in print, email and online. The
company’s latest offering is the BOLT mobile browser, which has
been installed by millions of users worldwide since its release in
February 2009. For more information visit www.bitstream.com.
Bitstream Inc. and Subsidiaries
Consolidated Statements of
Operations
(In Thousands, Except Per Share
Data)
(unaudited)
Three Months
EndedSeptember 30,
Nine Months EndedSeptember
30,
2011 2010
2011 2010 Revenue: Software
licenses $ 5,207 $ 4,739 $ 16,021 $ 13,075 Services 1,601
1,243 4,919 3,550 Total revenue 6,808
5,982 20,940 16,625 Cost of revenue:
Software licenses 2,936 2,346 8,598 6,644 Services 666 518
1,822 1,472 Total cost of revenue 3,602 2,864
10,420 8,116 Gross profit 3,206
3,118 10,520 8,509 Operating expenses:
Marketing and selling 1,129 945 3,215 2,647 Research and
development 2,128 2,057 6,402 5,076 General and administrative
1,760 1,207 5,073 2,994 Total
operating expenses 5,017 4,209 14,690 10,717
Operating loss (1,811 ) (1,091 ) (4,170 ) (2,208 )
Interest and other income (expense),
net
(62 ) 45 143 109 Loss before provision
for income taxes (1,873 ) (1,046 ) (4,027 ) (2,099 ) Provision for
income taxes 77 128 208 158 Net
loss $ (1,950 ) $ (1,174 ) $ (4,235 ) $ (2,257 ) Basic and
diluted net loss per share $ (0.19 ) $ (0.12 ) $ (0.41 ) $ (0.23 )
Basic and diluted weighted average shares outstanding 10,394
9,921 10,242 9,878
Bitstream Inc. and Subsidiaries
Consolidated Balance Sheets
(In Thousands)
(unaudited)
September 30,
December 31,
ASSETS 2011 2010
Current assets: Cash and cash equivalents $ 3,913 $ 3,057 Accounts
receivable, net 1,259 1,999 Prepaid expenses and other current
assets 696 750 Short-term investments 114 114
Total current assets 5,982 5,920 Property and
equipment, net 665 606 Restricted cash 191 144 Other 51 43 Goodwill
3,526 3,526 Intangible assets, net 3,182 3,479 Capitalized software
development costs 554 --- Long-term investments 6,478
8,097 Total assets $ 20,629 $ 21,815
LIABILITIES
AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable
$ 1,903 $ 1,155 Accrued payroll and other compensation 1,061 746
Other accrued expenses 744 667 Deferred revenue 2,533
2,413 Total current liabilities 6,241 4,981 Long-term
deferred revenue 442 105 Long-term deferred rent 513
530 Total liabilities 7,196 5,616 Total
stockholders’ equity 13,433 16,199 Total
liabilities and stockholders’ equity $ 20,629 $ 21,815
Bitstream Inc. and Subsidiaries
Non-GAAP Results
(In Thousands, Except Per Share
Data)
(unaudited)
The following table shows Bitstream’s
non-GAAP results reconciled to GAAP results included in this
release.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2011 2010
2011 2010 Operating
loss: GAAP operating loss $ (1,811 ) $ (1,091 ) $ (4,170 ) $
(2,208 ) Stock-based compensation 135 293 488 778 Amortization of
intangible assets 104 102 312 149 Press-Sense acquisition costs ---
109 --- 431 Bitstream merger and separation costs 801 --- 1,092 ---
Resignation costs, former CEO --- --- 695 ---
Non-GAAP operating loss $ (771 ) $ (587 ) $ (1,583 ) $ (850
)
Net loss: GAAP net loss $ (1,950 ) $ (1,174 ) $
(4,235 ) $ (2,257 ) Stock-based compensation 135 293 488 778
Amortization of intangible assets 104 102 312 149 Press-Sense
acquisition costs --- 109 --- 431 Bitstream merger and separation
costs 801 --- 1,092 --- Resignation costs, former CEO ---
--- 695 --- Non-GAAP net loss $ (910 ) $ (670
) $ (1,648 ) $ (899 )
Net loss per share: GAAP net
loss per share $ (0.19 ) $ (0.12 ) $ (0.41 ) $ (0.23 ) Stock-based
compensation per share 0.01 0.03 0.04 0.08 Amortization of
intangible assets per share 0.01 0.01 0.03 0.02 Press-Sense
acquisition costs per share --- 0.01 --- 0.04 Bitstream merger and
separation costs 0.08 --- 0.11 --- Resignation costs, former CEO
per share --- --- 0.07 --- Non-GAAP net
loss per share $ (0.09 ) $ (0.07 ) $ (0.16 ) $ (0.09 )
For the three months ended September 30, 2011 and 2010, net loss
per share is based on 10,394 and 9,921, basic weighted average
shares outstanding, respectively. For the nine months ended
September 30, 2011 and 2010, net loss per share is based on 10,242
and 9,878, basic weighted average shares outstanding,
respectively.
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