GSB Globalscape Inc

Revenue for the Quarter is the Highest in Company History

GlobalSCAPE, Inc. (NYSE MKT: GSB), a leading developer of secure information exchange solutions, announced today its financial results for the three and six month periods ended June 30, 2014.

Revenue for the three months ended June 30, 2014, was $6.7 million, which is the highest quarterly revenue in Globalscape’s history. This result is an increase of 13% when compared with revenue of $5.9 million for the three months ended June 30, 2013.

Revenue for the six months ended June 30, 2014, was $12.4 million, which is the highest combined first and second quarter revenue in Globalscape’s history. This result is an increase of 5% when compared with revenue of $11.8 million for the six months ended June 30, 2013.

Deferred revenue, which the Company believes can be an indicator of future revenue trends, was $12.1 million at June 30, 2014, compared with $10.9 million at June 30, 2013, or an increase of 11%.

For the three months ended June 30, 2014, the Company had net income of $488,000 compared with net income of $381,000 for the three months ended June 30, 2013. Earnings per share was $0.02 for both periods.

For the six months ended June 30, 2014, the Company had net income of $1.0 million compared with net income of $898,000 for the six months ended June 30, 2013. Earnings per share was $0.05 for both periods.

Adjusted EBITDA Excluding Infrequent Items was $975,000 for the three months ended June 30, 2014, compared with $808,000 for the three months ended June 30, 2013, and was $1.9 million for the six months ended June 30, 2014, compared with $1.8 million for the six months ended June 30, 2013. Adjusted EBITDA Excluding Infrequent Items is not a measure of financial performance under GAAP and has limitations as an analytical tool and when assessing the Company’s operating performance. Adjusted EBITDA Excluding Infrequent Items should not be considered in isolation or as a substitute for net income or other income statement data prepared in accordance with GAAP.

Cash and cash equivalents were $11.7 million at June 30, 2014, up from $9.5 million at December 31, 2013.

“I am pleased with our accomplishments during 2014. Our record revenue in the second quarter is a testament to the success of our recent and ongoing investment in sales, channel, demand generation and product development initiatives we discussed earlier this year. At the same time, we maintained profitability and consistent earnings per share,” said James Bindseil, Globalscape’s President and Chief Executive Officer. “While this quarter’s numbers are positive, we still have a lot of work ahead of us and recognize our results, while headed in an upward trajectory, will vary on a quarterly basis. However, we are confident in the plans we have in place and in our ability to achieve our long-term operational and financial objectives.”

Conference Call August 13, 2014 at 4:30 p.m. ET

Globalscape management will hold a conference call Wednesday, August 13, 2014 to discuss financial results for the second quarter of 2014 and other corporate matters at 4:30 p.m. Eastern Time/3:30 p.m. Central Time. Those wanting to join should dial 888-576-4387 or 719-325-2455 and use Conference ID # 2278812. A live webcast of the conference call will also be available in the investor relations page of the company's website at www.Globalscape.com. A webcast replay of the conference call will be available on the Company’s website through September 12, 2014.

About Globalscape

San Antonio, Texas-based GlobalSCAPE, Inc. (NYSE MKT: GSB) ensures the reliability of mission-critical operations by securing sensitive data and intellectual property. Globalscape’s suite of solutions features EFT, the industry-leading enterprise file transfer solution that delivers military-grade security and a customizable platform for achieving best in class control and visibility of data in motion or at rest, across multiple locations. Founded in 1996, Globalscape is a leading enterprise solution provider of secure information exchange software and services to thousands of customers, including global enterprises, governments and small businesses. For more information, visit Globalscape, or subscribe to our Blog or Twitter updates.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words "would," "exceed," "should," "anticipates," "believe," "steady," "dramatic," and variations of such words and similar expressions identify forward-looking statements, but their absence does not mean that a statement is not a forward-looking statement. These forward-looking statements are based upon the Company’s current expectations and are subject to a number of risks, uncertainties and assumptions. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Among the important factors that could cause actual results to differ significantly from those expressed or implied by such forward-looking statements are risks that are detailed in the Company’s Annual Report on Form 10-K for the 2013 calendar year, filed with the Securities and Exchange Commission on March 27, 2014.

GlobalSCAPE, Inc. Condensed Consolidated Statements of Operations and Comprehensive Income (In thousands, except per share amounts) (Unaudited)                   Three months ended June 30, Six months ended June 30, 2014 2013 2014 2013   Operating Revenues: Software licenses $ 2,495 $ 1,905 $ 4,096 $ 3,863 Maintenance and support 3,697 3,367 7,265 6,650 Professional services 287 426 524 825 Other   207     227     528     467   Total Revenues   6,686     5,925     12,413     11,805   Operating Expenses: Cost of revenues 197 269 401 533 Selling, general and administrative 4,850 3,796 8,897 7,646 Research and development 689 968 1,215 1,730 Depreciation and amortization   177     264     318     521   Total operating expenses   5,913     5,297     10,831     10,430   Income from operations 773 628 1,582 1,375 Other expense, net   (27 )   (43 )   (48 )   (90 ) Income before income taxes 746 585 1,534 1,285 Income tax expense   258     204     511     387   Net income $ 488   $ 381   $ 1,023   $ 898   Comprehensive income $ 488   $ 381   $ 1,023   $ 898     Net income per common share - Basic $ 0.02 $ 0.02 $ 0.05 $ 0.05 Diluted $ 0.02 $ 0.02 $ 0.05 $ 0.05   Weighted average shares outstanding: Basic 20,071 18,502 19,789 18,473 Diluted 20,622 18,955 20,487 18,920     GlobalSCAPE, Inc. Condensed Consolidated Balance Sheets (in thousands except share amounts)         June 30, 2014     December 31, 2013 Assets Current assets: Cash and cash equivalents $ 11,693 $ 9,455

Accounts receivable (net of allowance for doubtful accounts of $394 and $154 in 2014 and 2013, respectively)

5,624 3,765 Federal income tax receivable 371 113 Current deferred tax asset 138 184 Prepaid expenses   415         349   Total current assets 18,241 13,866   Long term investments 3,153 3,122 Capitalized software development costs, net 2,139 1,028 Deferred tax asset 824 1,476 Goodwill 12,712 12,712 Fixed assets, net 724 744 Other assets   93         144   Total assets $ 37,886       $ 33,092     Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 998 $ 655 Accrued expenses 1,691 898 Deferred revenue 9,493 9,092 Long term debt, current portion   1,429         1,397   Total current liabilities 13,611 12,042   Deferred revenue, non-current portion 2,646 1,708 Long term debt, non-current portion 2,268 2,989 Other long term liabilities 56 60 Commitments and contingencies   Stockholders’ equity:

Preferred stock, par value $0.001 per share, 10,000,000 authorized, no shares issued or outstanding

- -

Common stock, par value $0.001 per share, 40,000,000 authorized, 20,837,727 and 19,592,117 shares issued at June 30, 2014 and December 31, 2013, respectively

21 20 Additional paid-in capital 17,822 15,834

Treasury stock, 403,581 shares, at cost, at June 30, 2014 and December 31, 2013

(1,452 ) (1,452 ) Retained earnings   2,914         1,891   Total stockholders’ equity   19,305         16,293   Total liabilities and stockholders’ equity $ 37,886       $ 33,092       GlobalSCAPE, Inc. Condensed Consolidated Statements of Cash Flows (in thousands)         For the Six Months Ended June 30, 2014 2013 Operating Activities: Net income $ 1,023 $ 898 Adjustments to reconcile net income to net cash provided by operating activities: Bad debt expense 240 75 Depreciation and amortization 318 521 Stock-based compensation 256 297 Deferred taxes 697 81

Excess tax deficiency from share-based compensation

294 27 Changes in operating assets and liabilities: Accounts receivable (2,099 ) (1,524 ) Prepaid expenses (66 ) 15 Income tax receivable and payable (551 ) (416 ) Other assets 51 (62 ) Accounts payable 342 160 Accrued expenses 793 (82 ) Deferred revenue 1,338 1,206 Other long-term liabilities   (2 )   (1 ) Net cash provided by operating activities   2,634     1,195   Investing Activities: Software development costs (1,284 ) (360 ) Purchase of property and equipment (124 ) (39 ) Purchase of TappIn, Inc. and earnout payments - (500 ) Interest on long term investments   (32 )   (31 ) Net cash (used in) investing activities   (1,440 )   (930 ) Financing Activities: Proceeds from exercise of stock options 2,026 157 Tax deficiency (benefit) from stock-based compensation (294 ) (27 ) Notes payable principle payments   (688 )   (662 ) Net cash provided by (used in) financing activities   1,044     (532 ) Net increase (decrease) in cash 2,238 (267 ) Cash at beginning of period   9,455     8,079   Cash at end of period $ 11,693   $ 7,812     Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 93   $ 125   Income taxes $ 379   $ 734       GlobalSCAPE, Inc. Adjusted EBITDA Before Infrequent Items (in thousands)       Three Months Ended       Six Months Ended June 30, June 30, 2014     2013 2014     2013 Net income (loss) $ 488 $ 381 $ 1,023 $ 898 Add (subtract) items to determine adjusted EBITDA: Income tax expense 258 204 511 387 Interest expense, net 27 43 47 90 Depreciation and amortization: Total depreciation and amortization 177 264 318 521 Amortization of capitalized software development costs (105 ) (189 ) (173 ) (369 ) Stock-based compensation expense   130     105     256     297   Adjusted EBITDA $ 975   $ 808   $ 1,982   $ 1,824  

GlobalSCAPE, Inc.Jim AlbrechtChief Financial Officerir@Globalscape.comorDarrow Associates, Inc.Jim Fanucchi, 408-404-5400ir@Globalscape.com