Mar 4, 2011

St. Bernard Software, Inc. (dba EdgeWave) (OTCBB:EWVE.OB – News), a leader in Secure Content Management (“SCM”) solutions, today announced unaudited financial results for its fourth quarter and year ended December 31, 2010.

Fourth Quarter and Year to Date 2010 Financial and Operational Highlights

  • During the year, the Company purchased substantially all of the assets and assumed certain liabilities of Red Condor, Inc., an award-winning provider of fully managed email security solutions.
  • Net billings* for the 2010 fourth quarter totaled $5.4 million, an increase of approximately 10% compared to the same period in 2009.
  • Net billings* for the twelve months ended December 31, 2010 were $20.8 million, an increase of approximately 11% over the same period last year.
  • Cash and cash equivalents increased to $2.6 million as of December 31, 2010 from $2.5 million as of December 31, 2009.
  • Generated positive cash flow of $156,000 for YTD 2010 compared to $403,000 positive cash flow for the same period in 2009. Cash flow for the current year includes proceeds of $3.2 million from the issuance of convertible notes. The notes can be converted into shares of Company stock at $1.10 per share.
  • Q4 operating expenses increased approximately 52 % from $3.2 million in 2009 to $4.9 million in 2010 as a result of additional expenses resulting from the integration of operations associated with the Red Condor transaction.
  • Year to date net loss increased to $3.6 million through December 31, 2010 from a net loss of $273,000 for the same period of 2009 mainly as a result of additional operating expenses and transaction costs associated with the Red Condor transaction.
  • The company moved to new corporate offices effective January 1, 2011. The Company’s total lease payment is expected to decrease approximately $1.2 million in 2011.

“We are pleased to exit 2010 cash flow positive with double digit net billings growth,” said Lou Ryan, CEO of St. Bernard Software. “We embarked on an aggressive business transformation strategy during the year that will carry into the second quarter of 2011. This transformation required us to spend a considerable amount of operating capital to invest in our business and our future. The successful integration of Red Condor creates a more strategic platform for us to drive future expansion. Once our migration to new internal systems, new products, new delivery platforms and new channels reaches the completion phase in the second quarter of 2011 we are confident in our ability to drive further organic growth.”

Fourth Quarter and Year-to-Date 2010 Net Billings*
Net billings* increased for the quarter ended December 31, 2010 by approximately 10% from $4.9 million in 2009 to $5.4 million in 2010. For the twelve months ended December 31, 2010, net billings* totaled $20.8 million, an 11% increase compared to $18.7 million for the same period in 2009.

* Net billings represent the amount of subscription contracts billed to customers net of discounts and are not numerical measurements that can be calculated in accordance with GAAP. The Company provides this measurement in its financial performance because this measurement provides a consistent basis for understanding the Company’s sales activities for the current period. The Company believes the billing measurement is useful to investors because the GAAP measurements of revenue and deferred revenue in the current period include subscription contracts commenced in the prior periods. The rollforward of deferred revenue (which includes net billings and revenue) for the fourth quarter and year ended December 31, 2010 is set forth at the end of this press release

Transformation of the Company
We embarked on an aggressive year-long business transformation during the second quarter of 2010. This overhaul of our company was focused on creating a sustainable growth platform. Our efforts centered around the following activities:
new & expanded senior leadership team
new & expanded product portfolio
new on-demand & managed services delivery platform
new back office and customer support systems infrastructure
re-organization of our personnel around expanded technology & market focus
strategic acquisition of Red Condor assets
re-tooling of field sales organization around two primary market segments: larger commercial customers and Managed Service Providers (“MSPs”)
securing convertible debt financing to fund business expansion

As these initiatives reached substantive maturation, we embarked on the process of re-branding our company as EdgeWave. This provides us the opportunity to create a new corporate identity that more adequately reflects the realities of our new business.

Strategic Product Development
The Company is a more strategic supplier in the SCM arena by providing a broader array of world-class solutions to a larger cross-section of customer segments. This expansion is fueled by innovation and acquisition. Our expanded research and development operation embarked on an aggressive new product roadmap that features a broader family of solutions. The acquisition of substantially all the assets of Red Condor provided us with some critical technological and service capabilities that rounded out this new product strategy.

We are introducing new products across three primary technology buckets: web security, messaging security, and data security. Our products foster improved protection, productivity and business continuity for organizations in the private and public sectors. We pride ourselves in offering a choice between onpremises, on-demand and hybrid delivery platforms – giving our customers and partners maximum choice to meet their specific needs.

Corporate Facilities Lease Agreement
On January 1, 2011, the Company moved to new corporate offices. The new facility premises totals approximately 36,000 square feet and will serve as the Company’s headquarters. Per the new lease, total rent to be paid in 2011 will be approximately $477,000, an estimated decrease of $1.2 million from the prior year.

Business Outlook
Mr. Ryan added, “Entering 2011 the Company is better positioned to capitalize on the market dynamics that characterize the expanding SCM landscape. As we work to complete our business transformation during 2011 we expect to pick up steam from our investments. We believe that the Company has built a more sustainable model with our expanded product set, market reach and delivery capabilities.”

About EdgeWave, Inc.
EdgeWave Delivers the World's Safest Inboxes™ by eliminating email-borne security risks from targeted, socially engineered attacks. Our multi-layered Email Security Platform provides unparalleled predelivery protection, postdelivery detection and incident response to secure inboxes from today's proliferating messaging threats like ransomware, spear phishing, business email compromise and more. Headquartered in San Diego, CA, EdgeWave has more than 2,500 customers and over 3.5 million protected users worldwide.

For more information, please visit EdgeWave online at https://www.edgewave.com or follow us on LinkedIn, Twitter, Facebook or Google+

Contact:
Amy Dardinger
847-415-9321
adardinger@sspr.com

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