3SOF

Quote from: tokyopua on August 17, 2007, 10:42:01 AM

Quote from: jorgegr on August 17, 2007, 10:15:32 AM
When these anomalies occur I repeatedly recall the following unconfirmed gossip
running around traders:

Market Maker signals for shares:   

100 - I need shares   
200 - I need shares, but do not take the price down   
300 - take the price down to get shares   
400 - trade it sideways based on supply and demand   
500 - gap the stock, in the direction of the 500 trade   

I would be quite happy if it just stays in the $4 range it has hit now, though the low bid still doesnt seem to move...

jorgegr, can you explain these signals, I dont think I fully understand.

The signal is based on an odd price out of context like those executed today in
GSB.
Nevertheless David's explanation can also be the case.

GSB trades on AMEX & my broker Interactive Brokers has been messaging all morning that AMEX has a 'delayed open", is not open for trading and does not know when it will be...
Here is text of message:
To AMEX traders:
Fri Aug 17 09:24:23 2007 EST

AMEX has announced there will be a delayed opening on all AMEX products, options and equities. No time announced currently

Here we go $4.10  we just need to keep it above this level 

Amex routinely opens late, I really don't like trading Amex for that reason. Yesterday it opened about 15 minutes late and today it was about 45 minutes late.

GSB's trading has been somewhat crazy over the last few days and Friday even brought us some funny episodes with a few 3 SOF folks getting great fills for their shares (at least over the short term).

Fundamentally everything is on track for the stock to close the year in the $8 - $10 range.

I'll keep holding GSB.

GSB closed back above $4, which is a development we certainly welcome. The chart was completely transfigured with those crazy trades on Friday, but since they happened and were valid, I don't think I should erase them from the chart.

At first I was scared about a Form 424B3 the company filed with the SEC yesterday, but then I saw it had already been filed in April 16th, so it's old news, nothing to worry about.

Hi Michael, I'm glad you took the opportunity to join us in GSB, wouldn't you like to share your thoughts on the stock with us? Thanks

Considering the company's products:



I say demand for these products and solutions can only increase with time, therefore GSB (also because it has a cheap valuation - just compare with RVBD, for example, in the same space) is a very attractive long term investment.

GSB was all over the place yesterday. I think that in this chaotic trading environment, it helps to focus on the nature of the business behind the stock:

«Nature of Business

GlobalSCAPE, Inc. (GlobalSCAPE), founded in April 1996, develops and distributes secure file management software that enables users to safely send data over the internet and Wide-Area Files Systems ("WAFS") collaboration and Continuous Data Protection ("CDP") software. Our software is used worldwide across a wide range of industries. Through the end of 2006, we had sold approximately 1.6 million software licenses and support agreements and our customer base includes individual consumers, small to medium-sized businesses, as well as some of the largest corporations in the world.

Our file transfer products provide privacy for critical information such as medical records, financial data, customer files and other similar documents. In addition, these products provide for compliance with government regulations relating to the protection of information while allowing users to reduce IT costs, increase efficiency, track and audit transactions and automate processes.  Our WAFS and CDP products provide data replication, acceleration of file transfer, sharing/collaboration and continuous data backup and recovery to our customers.  We believe that we are uniquely positioned to provide secure transfer, sharing, and replication of files that need to be transmitted inside the user's firewall to distributed offices, or outside the user's firewall to business and trading partners.

During the six months ended June 30, 2007, approximately 82% of our revenues were generated from customers within the United States, with the remaining 18% concentrated mostly in Western Europe, Canada and Australia. Virtually all of our 2007 revenues were derived from sales of software licenses and support agreements. The combined sales of CuteFTP Home and CuteFTP Pro accounted for 34% of our revenues for the first six months of 2006 and 18% of our revenues for the same period of 2007.  The combined sales of our SecureFTP Server and Enhanced File Transfer products represented 62% and 69% of our revenues for the six months ended June 30, 2006 and 2007, respectively.  Sales of the WAFS and CDP products represented 7% of our 2006 annual revenue and 15% of our revenues for the six months ended June 30, 2007.»

There's no doubt this business will grow immensely over the next few years.

The market cap is just $74 M and I see $10 M net income in 2008, on about $40 M in revenue (the company's guidance is for $20 M in 2007, up 100% from 2006).

I'll keep holding GSB for the long term.

 
Globalscape Conference Call Transcript(from RB board)
......

Good afternoon. Welcome to GSB's 2nd quarter earnings release conference call. As with last quarter, I'll handle a few of the highlights, discuss some of our plans, and turn the conversation over to Bernard Schneider, our CFO, for an in-depth look at the numbers. I'll then return to answer some of your questions. If you already read this morning's press release, you'll appreciate my excitement. Globalscape had a wonderful quarter. With revenues of $6.4M, we grew 162% over the 2nd quarter of '06. Our net income increased by 323% to $2.1M. If you permit me a thought here, in 2004, just over $1M in revenue was our typical quarter; this quarter we paid over a million dollars in federal taxes.

Our earnings for the 2nd quarter were 12 cents a share, both basic and fully diluted. This compares to 3 cents for the 2nd quarter of '06. It makes our 6 months numbers 15 cents a share basic, 14 cents a share fully-diluted.

The large Department of Defense order clearly impacted our performance. I offer no apology. This is the kind of event, while harder to forecast, it is a vital part of our total sales strategy. We hope to have these significant revenue occurrences in the future.

For a moment though, I'd like you to focus on our revenue without the DoD order. Sales were roughly $3.9 million, or 60% growth. Our core business is doing very well. Even though our Wide Area File Service, WAFS product, acquired with Availl, has not yet reached the revenue level we expect.

As our engineering team continues to bolster the products' core capabilities, and marketing implements new programs to penetrate the market, we believe our WAFS revenue expectations will be reached. We'll be adding three (3) new WAFS features later this year, and we believe that these additions will get us to the revenue levels we expected six months ago. I have to keep reminding myself that the acquisition is only nine months old.

In the meantime, our secure file transfer business is booming; from $600,000 dollars in '04, to $2.9M million in '05, to $6M million in '06, and this year we believe we'll exceed $13M million.

I'm convinced that it's our focus on our core growth strategies that provides and will continue to provide these major opportunities. This focus makes us the best at what we do, and has driven the national and international recognition that has allowed us to accomplish several things:

#1. Our appointment to the payment card industry (PCI) Security Standards Council. Incidentally, we'll be releasing an EFT PCI-module later this year.
#2. Our partnership with Synteras and the exposure to the vast government security area. If you didn't read our press release on this topic earlier in the Summer, I suggest you do that. It's a tremendous opportunity.
#3. Our pending Federal Information Processing Standards (FIPS) certification.
#4. The high marks we continue to get from Gartner, Inc. (NYSE:IT), the world's leading information & technology research & advisory company.
And all of these things, which have led to
#5.Our Amex listing.

This focus and our continuing success is providing more chances in a variety of ways for us to get the opportunities at these highest deal levels.

Some of our plans for the balance of the year are:
1. to add three (3) WAFS features, as I mentioned earlier.
2. In addition, to EFT 5.0.1, which was released this August 1st, we will add two (2) additional modules later in the year.
3. We will complete our FIPS certification process. We're actually scheduled to complete right now in 1/08, but we're 85% through with our responsibilities, and the rest is basically paperwork.
4. We want to move into a new facility here in San Antonio, roughly 50% larger than where we currently reside, ensuring our ability to add the necessary resources as required.
5. Some of us want to go north and ring the Amex bell.
6. We want to spend some time with our east coast investors. Last quarter we spent a week or so on the west coast. Now it's time to get to the east coast and talk to some of you folks.
7. And last, we want to continue to evaluate these large revenue opportunities that may present themselves to us.

In closing for now, I feel great about our position. I hope you do. I look forward to addressing you and your questions just a little later.

Bernard, if you'll give us a deeper look at the numbers.

Thank you Randy.

Before I begin, I want to remind you that Globalscape had not acquired Availl by this time last year, so our 2nd quarter numbers for 2006 do not include any revenue or expense attributable to Availl. As I compare those numbers to Globalscape's consolidated numbers for the current quarterly reporting period, please remember that some of the difference is due to the presence of the Availl numbers in the current quarter, but not in the same quarter of last year.

Let's look at the revenues. Globalscape total revenue for the 2nd quarter was $6.4 million dollars as Randy mentioned earlier. That represents a 62% increase over the 2nd quarter of last year. Product revenue was $5.5 million of the $6.4 million, or 87% of the total, an increase of 161% over last year. This was fueled by the DoD order that Randy mentioned, as well as strong EFT and Secure Server demand. Maintenance & Support revenue totalled $861,000 dollars and deferred revenue grew by $399,000 dollars to $1.9 million. Remember that deferred revenue is the maintenance & support contracts that have been sold but not yet fully recognized as revenue.

From a channel standpoint, direct sales to customers accounted for 77% of the total, or $4.9 million dollars. Internet sales accounted for 13% of the total, or $832,000. And sales through resellers totalled $668,000 dollars to the remaining 10%.

Our gross margin in the 2nd quarter was 99%, an improvement over last year, which was 97%. The reason for this is the reduced royalties in the current quarter. Sales of Cascade Server, the product with the highest royalties, was a smaller proportion of the total sales.

From an operating expense standpoint, the total operating expenses for the quarter was $3.2 million dollars, an increase of $1.5 million, or 88% over 2006. Of this, Availl was $623,000 dollars; 41% of the increase.

The sales & marketing expenses for the quarter was $1.5 million, an increase of $842,000, or 120% increase over the same period of 2006. The sales & marketing percentage, as a percentage of revenue, was 24% for the quarter.

Research & development expense for the 2nd quarter was $551,000 dollars, an increase of $284,000, or a 106% increase over last year. And research & development as a percentage of revenue was 9%.

General administrative expenses was one million dollars, an increase of $642,000 dollars, or 62% over 2006. And the G&A as a percentage of revenue was 16% for the quarter.

From a depreciation & amortization expense standpoint, that expense increased by 49% to 39,000.

And operating income and operating margins, from a GAAP standpoint operating income for the 2nd quarter was $3.2 million dollars compared to operating income of $722,000 for 2006. The GAAP operating margins as a percentage was 50% compared to 30% for the same period of last year.

And finally, net income for the quarter was $2.1 million dollars compared to net income of $500,000 in the 2nd quarter of 2006. And net margin was 33% for this quarter just ended compared to 20% in 2006.

And now we're ready to answer any questions that you may have.

And your first question comes from the line of Greg Newman with The Newman Agency.
Congratulations everyone on a splendid quarter. I can't say enough about it. Really impressive numbers and looking forward to seeing more of those in the future. The questions I have are on the Synteras partnership, if there's anything more you can tell us on that, to elaborate how that's going to roll out, the time frame, anything in that kind of partnership, the way the team is coming together. I have a question about Nasdaq listing since it was mentioned in one of the analyst reports, if y'all are still considering the Nasdaq, maybe is that going to be a dual listing and how that would come about. I've got another question about the buyback, the current status and progress, how that's going, and it looks like maybe y'all worked that with the stock options instead of purchasing in the open market. Whatever you can tell us on that. It looked like a win-win-win situation for everybody there from what I can make out from it, that it sets a price for the employee, it sets a price for the company and reduces outstanding shares for shareholders. I think that's enough for now. Maybe one last question would be about the music industry, what you can tell us about that, if there's any plan to enter that field and what they might be.
Thank you.

Thanks Greg. Good to hear from you again. (You, too.) Thanks for those kind words.

Synteras is part of a billion-dollar super-eight corporation. For those of you not familiar with the term super-eight, the government requires a certain participation of minority businesses, female-owned businesses. A super-eight is someone who qualifies in two categories. Synteras does (qualify), not as a native-american but Eskimo-owned company, so they have a privileged standing in negotiating federal contracts. We are their partner for all of the products that we provide. All are basically security-related and their strength and their typical dealings with not only the federal but with state and local governments is on the secure side. Our director of sales here, Nick Flores, works directly with one of their vice-presidents on all of the opportunities that they get, and if we have something specific to talk about, Greg, in the future, we will certainly be forthcoming with it. We're excited about the opportunity to get these chances and we'll be ecstatic when we have something to tell you.

Okay.

Greg, we have been with the Amex for less than a month now. We are delighted with the relationship. They have been extremely supportive, extremely easy to work with. I think the comment about Nasdaq was made prior to our Amex listing when we really had waited quite a while and weren't sure how quickly things would occur. At this point, I quite honestly don't see any advantage in a dual listing, although we certainly have our shareholders' interests always in the forefront. At this point and time I'm very happy with where we are and don't have anything further to say on that at this moment.

The buyback information Bernard can probably be more specific with you. I think we bought back just over a hundred thousand shares. (Bernard: 120,000.) A hundred and twenty thousand. There's absolutely no relationship to the options that you were describing. We actually did buy them back on the open market. I think that our average price so far has been $3.61 (Bernard: $3.16). $3.16. And we have not gone beyond that in several weeks because the market's been doing very well, and the price has gotten up, and we've sort of held on to the balance of our committment there.

The music industry is providing some interest to us right now, and our vice-president of engineering is taking a look at a couple of things that may be of interest in the future. I don't have anything to tell you at this point, but you know we had a Napster-like product that we had patented. For some time after Napster and the lawsuits, we completely abandoned that market, and I think that there are now some opportunities, that we may want to relook a couple of things. If so, we'll have something to say on that in the future as well, Greg. Thank you very much for your question.

You're welcome. Thank you.

Our next question comes from the line of Raymond Young with Dolphin Management.

Hi, Randy.

(Randy:) Good afternoon.

Good afternoon
A couple of questions concerning Availl. Can you shed some color on, I guess, on the integration problems that you guys may be seeing, given that they're behind in terms of your expectations for revenues? Secondly, can you give me some sort of roadmap in terms of some of the technical side for the product? It sounds like you're not planning to sell it on a standalone basis, but integrate it with your other products. And lastly, also comment on the (leaving from?) management of Chuck from Availl.

Okay. The Availl product still continues to excite us just as much as it ever did. I think that it is fair to say that maybe I was a little naive in not recognizing that two completely different coding schemes presented problems. We were not happy with the performance of Availl as it related to Globalscape's standards, and did a lot of homework in trying to bring that thing up to speed. And it just simply has taken longer than we thought. We have gone through the process of getting our engineers much more familiar with it, and getting involved. And right now, as I said earlier, I believe that we're in great shape. I believe that the three additions that we'll be announcing in this quarter and early next quarter will get us to the point that we thought we would be.

I think your second question was about Chuck?

Actually the 2nd question was concerning the technical roadmap for the product. Whether you're planning to sell it only in conjunction with your secure file transfer product or are you still planning to sell it on a standalone basis?

No, we DEFINITELY plan to sell it on a standalone basis. Some of the things that we have been working on here that have added to the time here is the integration and being able to sell it AS one product. But Availl and the WAFS product has a very, very definite audience out there for a standalone basis. (Okay.) We expect to be doing that and we expect to be adding it to the enhanced file transfer product. Right now, they work very well independently. There's not that much required to make that a one system sort of operation, if you will, Raymond. We DEFINITELY believe that the market for a standalone Availl product is there, not only on the WAFS but the other products that came with the Availl package, that, we think CDP and those kinds of things, we think DEFINITELY have a market. We do believe that integrating them into EFT ALSO presents us an even higher scale of opportunities.

Okay.

I hope that answers your question.

Yes.

Chuck Shavit, who was the CEO of the company, Chuck is very much an entrepreneur and as chief scientist for us for about seven or eight months was not completely happy with his role in the organization. He was VERY, VERY beneficial to us in understanding the product. But we are still working with Chuck on trying to get some sort of consulting agreement together. I think he will not be a full-time employee going forward; he's got some other interests and some other things he wants to do, but he is very DEFINITELY a FRIEND; a friendly parting of the ways, and we expect to be able to use him and to have his help any time we need it.

Okay. Thank you so much.

You're quite welcome. Thanks for the call.

You're next question comes from the line of George Gardner, G.A.G. Investments & Associates.

Good afternoon and I congratulate you on the wonderful results.

Thank you so much.

My question relates to the margins based on what you've said concerning the partnerships, and in the area of distribution as well as sales of 99%, and hopefully I did hear that number correctly, might be a little difficult to sustain? Could you tell me what, going forward, probably would be a more of an acceptable level on the part of the company's goals in terms of margins?

George, that's an excellent question. Thank you.

Yes, it's difficult to sustain and almost impossible to improve on. The way our product cost is calculated, is simply the selling price less the cost of sales. And in our organization, the cost of sales has really been pretty much fees, etc., that when we're using a competitive product or licensing it, as I think you know if you've been following our press releases over the last couple of years, we have tried to stay focused on the server and the WAFS side of the business, and to eliminate all of the minor distractions and products that have come on board over the last ten years and really don't play much of a role in who we are now, and as we eliminate those things, we have eliminated a lot of those licensing fees. So as Bernard mentioned earlier, about the only thing we do now is we pay for a part of EFT Server that we licensed from someone. It's not a big fee; I don't expect it to increase; and I expect us to maintain upper 90's unless something fairly dramatic occurs and we decide to license someone else's product to enhance what we're doing; right now I don't see that happening, and I think for the foreseeable future, 95 to 99 is probably where we're going to be.

Okay. I sure appreciate it. Thank you.

You're quite welcome.

Your next question comes from the line of Taylor Thompkin with Anderson-Strudwick

Congratulations. Great quarter.

Thanks Taylor.

I just had one or two questions. One of them's been answered. Are you still comfortable with the $20 Million in revenue guidance?

Yes, I am. That guidance, for those of you who don't know, we upped our guidance from $17 Million to $20 Million after receiving the Army order, and like most things, it's never a slam-dunk, but at this point and time, we still believe that's the best guidance we can give the street right now.

Okay. One other thing. Can you comment anything on the competitive front that you're seeing that may have changed in the last six months?

I think that it is fair to say that we are growing more and more of a following, and after two or three years at the enterprise level, with EFT, we are finding more and more people who are coming to us because someone in that Fortune 100 - Fortune 1000 range has recommended us, has recommended our products. So I think as I talk about competition, I guess a fair view for me, early on we had competition on every deal, early on we had to sell the fact that a small San Antonio company that didn't have a lot of financial resources did have a great product, and we could assure people that it was worth taking the chance, if you will. I think those days are gone. From a competitive standpoint now, we have people coming to us directly because someone has said, Get that product. And our customers are growing. They are adding other operations around the world, expanding their own purchases. I mean, we still have competition out there obviously, and if my sales people heard me say we were in that kind of strong position, they'd probably throw rocks at me. But I feel that we don't have any hesitancy whatsoever to take on any competitor in any competitive situation.

Okay. And on the guidance, I would imagine that would not include anything more from the Army or the DoD? Correct?

Uh, Taylor...

I mean, you don't know if you get an order from them until the fact shows up, basically, right?

That's right. We know that when opportunities are presented, and we know when we talk to various people about opportunities, and we know that our relationship with the Army is a good one. In fact, one of the questions that someone faxed in to me was about the large Army/DoD order and how that was going, and as late as Friday, (three days prior to the call), we talked to them. We talk to them regularly, and I can tell you there are no problems, no issues and nothing more that they're expecting from us on this situation. Other opportunities are certainly always out there; there are a lot of things that we are always looking into and working on. I think it would be misleading of me to suggest that, you know, four, five or six of these deals are just hanging getting ready to fall. But I also believe that it's important that I tell you that we ARE always working in this arena, and there ARE opportunities for us.

It looks like if you've already gotten two orders from the Army in the last, what, I guess year or something, chances are you're probably gonna get a third or fourth, if everything's going well like you said.

Actually we have quite a few more than that. We have White Sands Missile Range, and Fort Sam Houston, and a lot of reasonably small by comparison Army orders, but all driven by the same belief in our product.

One other thing I just thought of and I'll drop off is can you refresh my memory as to how Synteras is gonna roll out your product. Remember you told me somthing like in Australia, and then they're going to South America or something like that.

Oh, no, that wasn't Synteras. That was England, let's see

I couldn't remember what customer it was.

Geez, I've got a blank right now. I'll get it before we go off the air. It's the guys who handle all the credit checks. Oh, Experian.

Experian! Right. Right.

Experian has installed our product in Europe, in New Zealand, Australia, and I think that next comes up the US, Latin America and Pacific Rim. It's kind of a rollout process that quite honestly we're seeing from most of our very large customers.

But they're not a 10% customer as of yet, are they?

No, they're not. (Bernard Schneider, prob)

Or could they be?

I hope not, because I hope our total revenue keeps growing to the point that they'll never get there. (background chuckle)

Okay. All right. Thanks a lot.

You're quite welcome.

Your next question comes from the line of Greg Newman with The Newman Agency.

Yes, Randy. I've got a couple more questions. Let's see. I was curious about how many employees there are, as of today's conference call, what you see is the hiring trend, how many employees you're expecting to hire over the next few quarters and what positions, and are you filling the positions as quickly as you need? Also how's the company filling itself out with all the hiring?

I'm sorry, say that again, how's the company?

Filling out, Filling itself out, how are you building out, how is it coming along, the build-out in the different departments that you're looking to expand, whether it's sales & support, engineering, and so forth, partnership teams?

And revenue wise how are you doing on your revenue per employee stats, and things like that?

Okay, Greg I think as you and I speak right now I think we have 61 employees. I believe that our budget for the balance of this year gets me to like 72 or 73. We have planned to continue to increase our engineering piece of the puzzle, in fact, I think we announced with Doug's hiring that we're starting a customers' special services department to provide unique help to customers, and we expect to continue to grow that organization with some really first-class engineering help. It is now also time that we also went back and started to grow our sales organization again. Our customer service piece of the puzzle needs a little bit of growth to help us there. So I guess it's fair to say that across the spectrum we're seeing growth needs in all areas. I did look not long ago at the revenue per employee and see that we're still growing that number, so we're increasing revenue at a rate that allows us to add employees and still increase the revenue per employee.

Great. That sounds good. Real good.

You've been here, Greg, and you know that we've been getting a little cramped.

Yes.

So we're expanding into another facility. It's about 22,000 square feet, which will give us ample ability to grow for the next five or so years, anyway, (yes), and that's exactly what we expect to do; we expect to continue to grow revenue and to continue to grow our manpower.

Well, I'd like to be there for the tape cutting when y'all open the doors.

Bring a cake. You'll be invited!

Okay!

I had one question about how the 3rd quarter is doing since we're all on the call here with a lot of ears to the phone, if there's anything you can tell us about how the first 6 weeks of the 3rd quarter is doing: sales, margins, growth?

And I do have a question about the Amex Internet Index. Has there been any talk to y'all about joining the Internet Index or is that just a given from your industry category there at the AMEX that that will happen in due time?

And one last question about the payment card industry industry that seems really exciting to me. You have the five biggest names in the industry, Visa, Mastercard, Discover, American Express and JCB, who founded that, and I'm curious in what way Globalscape is looking to develop revenue, earnings from that, through these relationships with them. That just sounds like a fantastic opportunity. If you can describe some of the ways it may not be obvious to us but that you're looking at, and things from transactional fees, to monthly retainers based on software sales to those companies that involve working up and down their client list to the point of sales. And one last point on that, what specific companies might you look at for probable partnership, that's if you can even speak on that part, and I think I'll leave it at that.

Greg, you are so far ahead of me I need to get you to come over here and go to work! What we have done so far has been to be appointed to the Council for Standards and Controls. We have decided to add a module to our EFT process, and to look at how we expand our standing and our revenue opportunities in that space. Beyond that we have given very little thought to the specifics that you're getting in to. I know the opportunity is huge. But I think that we've got to, rather than just flying off chasing a lot of things, our practice has been to pretty much narrow down what we want to do, and then go do it. And I think you'll see the same thing in this area.

As for revenue in the 3rd quarter, probably the best thing I can tell you is you can track our quarters for the last twelve or fourteen or sixteen, and be pretty assured of what we're doing. I think my annual guidance is still intact, and I probably wouldn't be well-served to be putting out preliminary numbers right now. But we're the same old company doing the same old things.

Okay, and the Amex Internet Index. Do they talk to y'all about that or is it just kind of fall in place there or

Greg, I don't know. I have had no conversations on it. (Okay.) But again, we have been three and a half weeks with Amex now.

Yeah, not a whole lot

Well, whether anyone has their eye on that or not, I truly do not have any comments. I don't know anything and as a result wouldn't feel good commenting.

All right, well mighty fine. Well, thank you very much.

You bet!

You have a follow-up question from the line of George Gardner with G.A.G. Investments & Assocs.

Good evening gentlemen again. Synteras. I wanted to ask you a question in reference to that partnership. General Clark, that formerly ran for President the last time around, I think that he's working with a consulting firm, and one of the things that he mentioned during the course of his conversation on CNN had reference to a lot of the government, and I'm not just talking about the Army but the military as well as other government agencies, were having difficulty with their data not being secured, and it appears that anybody and everybody was accessing some of that data, which is priority information in a lot of cases. Is that a niche that we are in or probably could serve, especially with our relationship with Synteras?

Absolutely, George. One of the things that Synteras is doing, there is one or more federal directives out right now, and you probably know better than I, they have a number and nomenclature, and I wish I could quote them to you, but they mandate that these problems that you just identified be corrected. And one of the things that Synteras is doing is looking at all those opportunities. What they will typically do is propose something that is far beyond Globalscape. And I'm pulling this right out of the air now; I'm not referencing anything live, or real or being worked on right now. But for example, they might pick up a proposal that has 500 laptops, and satellite communications, antennas, and a lot of, a huge project that a part of would be the software to drive certain things. They would make the proposal that would be from, you know, $500 million to $6 billion dollars. And if they get that order, then we would partner with them on providing the product part of their proposal that we can furnish. That's basically the way it will work.

Okay! I appreciate it! Thank you!

You're quite welcome! Thanks for the question!

You have a follow-up question from the line of Taylor Thompkins with Anderson Strudwick.

Thank you. In order to rollout Availl and to get it to the level that y'all want it to be at, do you foresee having to do another raise at some point later in the year or next year?

No. No, we're generating cash at a significant clip, and I think we have all of the technical ability that we need. We have all of the money that we need. What we need is just a little bit of time. There's several shortcuts we could've taken, Taylor, and probably some people who wish we had've. I think we're making the right decision in going forward slowly with something that we can be proud of. I think you will see some opportunities available to the Availl product line before too long that will be very exciting and will be driven because we chose to do things the right way.

Okay. All right! Fair enough! Thanks.

You have a question from the line of Doug Colton with America Growth Capital.

Hi Randy. Congratulations on another great quarter.

Thanks Doug. I got your email this morning. Appreciate it!

Thanks. Two quick questions. One, I wonder if you could give some insight into the industry verticals that were heavy buyers of the server-side FTP products during the 1st quarter, and I guess a follow-up to that would be could you give us some insight into the health of the market going forward, based on, you know, some client feedback.

Yes, we are focusing on, I guess it's not a major surprise to anybody, but we're focusing on the industries where securing information is being mandated, either by acts of Congress, or industry rules, but you know for a long time security was nice and expensive. Now it is mandatory. In a lot of industries you simply can't afford not to protect certain information. And those are the industries that we're basically focused on because we're getting help from the fed and state governments that are actually demanding that certain types of things be secure. For example, the health industry: I think if you guys have been in to a doctor's office lately, you know every time you go in there you sign a statement that says you know your HIPAA rights, and that everything about you will be secured and nobody will find it. Those things are helping us very much in the health industry. And finance, similar things going on. We're obviously spending a great deal of focus on the government because of some of the things that George mentioned earlier. There's some weaknesses and some mandates to get them fixed. So those are the kinds of things that we believe our very narrow focus on some very specific verticals is exactly what we need to be doing at this time. And that's what we continue to practice here. We're not interested in spreading out and getting broader at the time; we're interested in getting deeper and being the very best company out there so that when people think of securing transmissions over the Internet or securing files that they share, they automatically, as some of our customers are saying to their friends now, call Globalscape.

Okay. Thanks Randy. Appreciate it.

And since there are no more questions, do you have any closing remarks?

I would like to thank all of you for having the interest in GlobalSCAPE to call in and listen. I know that a lot of you, if not all of you, are investors and I thank you for that. I wish I had better news about the impact of our press release today. It drove humongous volume, but apparently there was some selling going on, too. I hope that you believe in Globalscape now and for the long-term. We are committed to being a solid corporate citizen, and we're committed to continuing to deliver the kind of results that you have grown accustomed to, and our very firm belief is if we do the right things in the right fashions, produce the right results, that the market will take care of itself because I don't know how to take care of it anyway.

Once again, thank you very much for calling, and I appreciate your support.

This concludes today's conference call.


cheers from Singapore
Oliver
( I have checked a few statements by listening the CC again, everything fine  )

Thanks a lot for the conference call transcript la-onda

I guess that about 60% revenue CAGR over the next three years and a 25% net profit margin are pretty much a sure thing.

What could bolster these numbers, especially the revenue CAGR number, is the partnership with Synteras, the growth of the WAFS market and Availl's products, when they fully come into play (apparently there's a six month lag between the CEO's initial expectations and reality due to technical difficulties being solved now).

So, we have a stock that probably will be worth something like $12-$15 in late 2008, early 2009, without any positive surprise. If there's a positive surprise, for example, Synteras signing in a huge deal (in the order of the $500 M to $6 B given as an example, and say, GSB gets $100 M or $200 M of that), more big government orders (it seems 5 or 6 are in progress now) or the WAFS market grows at a stratospheric rate (like for example RVBD's valuation is implying), then we could have a much higher stock price.

Either way, GSB is an awesome stock to own for the long term. Just hold and forget.

Wonder why those odd prices we saw on Aug. 17th are not shown in yahoo
nor in stockcharts

Take a look

Date              Open      High      Low    Close   Volume   Adj Close
22/08/2007   4.25   4.38   4.09   4.19    19900    4.19
21/08/2007   4.3    4.93    3.91    4.29     84000     4.29
20/08/2007   4.05   4.43   4     4.3       49800   4.3
17/08/2007   3.83   4.48   3.4    3.91   110600    3.91
16/08/2007   3.76   3.76   2.85   3.32   283600   3.32
15/08/2007   4.14   4.14   3.61   3.65   383700   3.65
14/08/2007   4.87   4.87   4.02   4.15   315600   4.15
13/08/2007   5.5     5.9     4.8      4.87      280600  4.87
10/08/2007   4.71    5.5    4.65    5.3     103900  5.3
09/08/2007   4.75   4.75   4.5    4.7         9700  4.7

you can check this info at:
http://finance.yahoo.com/q/hp?s=GSB&a=07&b=9&c=2007&d=07&e=23&f=2007&g=d

But also this chart doesnt show that shadow

it'sdown 6.92 percent what gives?

The volatility is due to the fact that it's  a low volume stock.   
Several orders of 2000 stocks each or a 6000 one can make these fluctuations.
Observe that usual bid and ask volumes are rather low

Take a look here to see historical volues and prices
http://finance.yahoo.com/q/hp?s=GSB 

QuoteWonder why those odd prices we saw on Aug. 17th are not shown in yahoo
nor in stockcharts

I guess they eliminated those spikes. I'll do that too so that we can have a more comprehensive chart, after all, it was all done with just 1,000 shares or so.

Quote from: pinoleropuro on August 23, 2007, 10:49:44 AM
it'sdown 6.92 percent what gives?

Nothing. It could be up 6.92% and that would mean ... nothing.

That buy the rumor, sell the news activity was extremely strong. If I start thinking that I could have taken a 40% plus profit and four days later buy the stock 50% lower I'll start  . These perfect trades can only happen in our minds (after the fact) or by luck, so I might as well just forget it ever happened and focus on the long term business fundamentals.

I guess people are selling because, at least over the short term, GSB passed its peak, since Q2 numbers were extremely positive because of what is perceived as being a one time event, that DoD $2.7 M order. But, as I read the conference call transcript, it appears to me that, even though the CEO didn't get compromised with it, there are 5 or 6 similar deals in the pipeline.

"Organic" growth is about 60% and positive "surprises" may elevate this number quite a lot. I feel completely confident and safe about holding GSB for the long term and I'll continue to do so, ignoring the short term volatility and spikes. One year from now we'll be getting spikes in the $10 - $15 range in my view.

Just a quick chart update for GSB:
Volatility remains very high and volume very low, not much to say from a TA perspective at this moment.

Portfolio Instructions:
Hold GSB

Best regards,

Chart Update:
Nothing to comment, GSB was down 6% last Friday and now up 6%, volume remains low, and the chart doesn't say much at this point.

Portfolio Instructions:
Hold GSB

Regards,