SofTech, Inc. (OTCQB: SOFT), a proven provider of Product Lifecycle Management (PLM) solutions today announced its second quarter fiscal year 2014 operating results. Revenue for the three months ended November 30, 2013 was approximately $1.41 million as compared to approximately $1.77 million for the same period in the prior fiscal year. Net income (loss) for the current quarter was about ($44,000) or ($.05) per share compared to net income of $252,000 or $.25 per share for the same period in the prior fiscal year. The sale of the Company’s CADRA product line was completed on October 18, 2013, which accounted for most of the revenue decline.
EBITDA for current quarter was about $3.37 million as compared to about $369,000 for the same period in fiscal year 2013. The EBITDA in the current quarter was generated from the sale of the aforementioned CADRA product line.
As disclosed in the Form 10-Q filed with the Securities and Exchange Commission and in our Form 8-K filed on December 11, 2013, subsequent to the end of the fiscal quarter, the Company entered into an agreement with its lender to amend its loan agreement pursuant to which a portion of the cash generated from the CADRA product line sale was used to reduce the principal of the loan by $1.7 million.
“The current management team purchased a controlling equity interest in the business in March 2011 when the Company was facing what appeared to be insurmountable issues on multiple fronts,” said Joe Mullaney, SofTech’s CEO. “The sale of the CADRA product line during the current quarter and the resulting improved liquidity represents a transformative event for the shareholders. The management team is committed to continuing its efforts to carefully and systematically explore alternatives for maximizing shareholder value,” he added.
Mullaney continued: “Since March 2011 we have completed the following actions that we believe have enhanced shareholder value:
Sold the AMT product line in May 2011;
Sold the CADRA product line in October 2013;
Sold five patents in the PLM space to Acacia Research Group and retained a 30% interest in future recoveries in two transactions in early fiscal 2013;
Filed or acquired four new patent applications;
Developed and launched the Connector technology platform that provides a bi-directional bridge between third party CAD and PLM technologies;
Entered into partnership agreements with Aras and SpaceClaim;
Increased our market opportunity for our professional services resulting in profitable revenue growth for our Consulting business group; and
Repurchased approximately 16% of our outstanding shares.
The above actions have significantly increased our liquidity, reduced our debt and our financial risk. We have a fantastic customer base, solid recurring revenue, future cash flow from the CADRA product line both as a reseller and from contingent royalty payments, new products coming on-line and tax assets with a value in excess of $20 million. We will continue to strive to unlock the value of these assets for the benefit of our shareholders.”
The Company also announced that it entered into a five-year office lease for about 9,100 square feet for its new corporate headquarters at 650 Suffolk Street, Lowell, MA. The office is part of the historic Wannalancit Mills, a 19th century textile mill located alongside the Northern Canal in Lowell. “The 14 foot ceilings, high windows and brick-and-beam design were very appealing,” said Bob Anthonyson, Vice President, Business Development. “The close proximity to downtown Lowell and the University of Massachusetts Lowell Campus are added benefits that we hope to take advantage of in the future,” he added. FINANCIAL STATEMENTS The Statements of Operations for the three and six-month periods ended November 30, 2013 compared to the same period in the prior fiscal year are presented below. A reconciliation of Net income (loss) to EBITDA, a non-GAAP financial measure, is also provided. Statements of Operations(in thousands, except % and per share data)For the three months endedNov. 30,Nov. 30,Change20132012$% Product revenue
