SwingTrade Member Forum

[MikeDDKing]

GSB update 05/01/09



GlobalSCAPE is a software company that makes file transfer software. They recently sold a large $2.7M order to the U.S. Army which will add significantly to the bottom line in 2009. My estimate is that 2009 EPS will be $0.15 which is great for a stock that last traded at $1.13. I think they have chances for some additional large orders. Since they have GM of 88% any additional large orders will be a huge addition to the bottom line.

More DD can be found here also see below:
http://investorshub.advfn.com/boards/board.aspx?board_id=9942

GlobalSCAPE, Inc. develops, distributes, and maintains secure managed file transfer software that enables individuals and business users to send data over the Internet, as well as wide-area file system, and collaboration and continuous data protection software. The company offers file transfer protocol (FTP) client programs, including CuteFTP, which permits a user to request a file from or send a file to an FTP server or host computer; and CuteFTP Pro, a program that incorporates encrypted transfers using SSL, HTTP, and SSH2, as well as S/KEY password encryption. It also provides file transfer servers, such as Secure FTP Server, which offers digital certificate management system, as well as facilitates system administrators to create, sign, import, export, and add digital certificates; and Enhanced File Transfer Server, an enterprise file server to provide digital certificate management, multiple secure protocols, remote administration, flexible authentication choices, and automation and advanced security options. In addition, the company offers data replication products, including Wide Area File Services, which delivers a file access system, instant file-sharing, and server-to-server mirroring; and continuous backup software that delivers real-time continuous data protection. Further, it provides Mail Express, an email attachment solution that facilitates to send and receive large files, such as images, video, and data files; and CuteSendIt, a SaaS managed file transfer solution. GlobalSCAPE serves finance, health care, energy, retail, manufacturing, and engineering markets worldwide. The company was founded in 1996 and is based in San Antonio, Texas.

Web Site
http://www.globalscape.com/

Investment Thesis

1. Large New Order - GlobalSCAPE recently announced a $2.7M order from the US Army. They have huge GM so most of that sale will drop to the bottom line. http://investorshub.advfn.com/boards/read_msg.aspx?Message_id=37409094

2. Very High Gross Margins - GlobalSCAPE had gross profit margins of 88% in 2008. As revenue increases, a large percentage of revenue will drop to the bottom line.

3. Prospects for More Large Government Orders - IMO they are hinting at the possibility of more large government orders. I think there is a good chance that they get some although there are no guarantees. http://investorshub.advfn.com/boards/read_msg.aspx?message_id=37475161

4. New Products - They have recently released several new products including MailXpress, new languages for CuteFTP, and an AS2 add-on module for their Enhanced File Transfer Server Product. In some cases the impact of these products have yet to hit the bottom line and in other cases they are just starting. http://investorshub.advfn.com/boards/read_msg.aspx?message_id=37474744

5. Cost Cutting - They have done some cost cutting relative to Q3 levels including closing of the Andover office and elimination of some duplication of executive salary that occurred during management changes. http://investorshub.advfn.com/boards/read_msg.aspx?message_id=37474324 Furthermore, the impairment charge that they made in 2008 will improve quarterly pre-tax income by $75K. In aggregate I expect these changes will improve quarterly earnings by $0.005/share relative to Q3 levels.

6. Strong Balance Sheet - GSB has a book value of $043/share which include $0.36/share in cash. Furthermore, they have no debt.