Daegis Inc. Reports Fiscal 2014 First Quarter Results

  Daegis Inc. Reports Fiscal 2014 First Quarter Results

Business Wire

ROSEVILLE, Calif. -- August 27, 2013

Daegis (NASDAQ:DAEG), an eDiscovery and information management company, today
announced financial results for its fiscal 2014 first quarter ended July 31,
2013.

First Quarter Fiscal 2014 Financial Highlights

  *First quarter total revenue of $8.0 million, a decrease of 17%
    year-over-year.
  *First quarter GAAP net loss of $633,000 or $0.05 per share, compared to
    GAAP net income of $157,000 or $0.00 per share for the same period last
    year.
  *First quarter Adjusted EBITDA of $679,000, compared to $1.1 million last
    year. ^(1)
  *Non-GAAP net loss of $96,000 or $0.01 per share, compared to Non-GAAP net
    income of $257,000, or $0.01 per share last year. ^(1)
  *Cash at July 31, 2013 was $5.0 million, compared to $5.5 million at April
    30, 2013.
  *Total debt outstanding at July 31, 2013 was $16.0 million, a decrease of
    $1.7 million from April 30, 2013.

Commenting on results, Daegis Inc. Chief Executive Officer Tim Bacci said,
“Daegis had a challenging first quarter from a revenue standpoint across both
our segments. We’re taking decisive steps to improve performance. Our strategy
to align our businesses to deliver a comprehensive approach to archiving and
eDiscovery is on course and we believe we have the products, the talent and
the market opportunity to grow the business over the long-term.”

Business Highlights for the First Quarter Fiscal 2014

  *Company announced Susan K. Conner as Chief Financial Officer
  *Daegis released new version of Daegis Edge with high performance document
    viewer to speed the review process
  *Gupta Technologies launched Team Developer 6.2
  *Daegis eDiscovery achieved its fourth straight year of ISO 27001
    information security certification for protection of client data

First Quarter Comparative Financial Summary
$ In Millions, except per share     Q1         Q1         % or $
and % data                             FY 2014       FY 2013       Change ^(3)
Total Revenue                          $8.0          $9.6          (17%)
Total eDiscovery Revenue               $3.3          $4.1          (18%)
Total Database, Archive, and           $4.6          $5.6          (17%)
Migration Revenue
GAAP Net Income (Loss)                 ($0.6)        $0.2          ($0.8)
GAAP Net Income (Loss) Per Share       ($0.05)      $0.00         ($0.04)
- Diluted
Adjusted EBITDA ^(1)                   $0.7          $1.1          ($0.4)
Adjusted EBITDA Margin ^(1)            8.5%          11.6%         (3.1%)
Non-GAAP Net Income (Loss) ^ (1)       ($0.1)        $0.3          ($0.4)
Non-GAAP Net Income (Loss) Per         ($0.01)       $0.01         $(0.02)
Share – Diluted ^(1)
Cash from Operations                   $0.9          $0.6          $0.3
Cash ^(2)                              $5.0          $5.5          ($0.4)
Total Debt Outstanding ^(2)         $16.0      $17.7      ($1.7)

^(1)  See reconciliation table below regarding the presentation of Adjusted
       EBITDA and Non-GAAP net income.
^(2)   Results as of July 31, 2013 and 2012.
^(3)   The calculation of percentage or dollar change is based on whole
       dollars.
       

Investor Conference Call

Management will host a conference call today, August 27, 2013, at 2:00 p.m. PT
(5:00 p.m. ET) to review the first quarter financial results. The call can be
accessed by dialing (877) 941-1427 or (480) 629-9664 for international
callers.Additionally, the conference call will be broadcast live on Daegis’
website at www.daegisinc.com. A replay of the call will be available through
Sept. 6, 2013 by dialing (800) 406-7325 or (303) 590-3030 for international
callers and using the following passcode: 4634828#.

About Daegis Inc.

Daegis Inc. (NASDAQ: DAEG) is an eDiscovery and information management
company, delivering eDiscovery, archiving software, data management tools, and
migration solutions. Daegis delivers leading-edge eDiscovery and archiving
software throughDaegis Edge, an end-to-end platform for managing the
eDiscovery life cycle,Daegis Acumen technology assisted review and AXS-One
enterprise information archiving. Daegis also offers specialized services
including data collection, analytics consulting, project management and
managed document review. TheGupta TechnologiesandComposer
Technologiesbusinesses serve customers around the globe with development
tools, databases and application migration software. Visit our websites to
learn more.

Use of Non-GAAP Financial Information

To supplement the Company's unaudited condensed consolidated financial
statements presented in accordance with GAAP, Daegis uses certain Non-GAAP
measures of financial performance. The presentation of these Non-GAAP
financial measures is not intended to be considered in isolation from, as a
substitute for, or superior to, the financial information prepared and
presented in accordance with GAAP, and may be different from Non-GAAP
financial measures used by other companies. In addition, these Non-GAAP
measures have limitations in that they do not reflect all of the amounts
associated with the Company's results of operations as determined in
accordance with GAAP. For more information on these Non-GAAP financial
measures including how they are calculated, please see the tables in this
release captioned “Reconciliation of GAAP to Non-GAAP Net Income” and
“Reconciliation of GAAP Operating Income to Adjusted EBITDA” which includes a
reconciliation of the GAAP results to Non-GAAP and Adjusted EBITDA results.

Some of the information in this press release may contain projections or other
forward-looking statements regarding future events or the future financial
performance of the Company. We wish to caution you that these statements
involve risks and uncertainties and actual events or results may differ
materially. When the words “believes,” “expects,” “plans,” “projects,”
“estimates” and similar expressions are used, they identify forward-looking
statements. These forward-looking statements are based on management’s current
beliefs and assumptions and information currently available to management and
involve known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievements
expressed or implied by these forward-looking statements. Examples of
forward-looking statements in the press release include the statements made by
Mr. Bacci. Among the important factors which could cause actual results to
differ materially from those in the forward-looking statements are general
market and economic conditions, our ability to execute our business strategy
and integrate acquired businesses, the effectiveness of our sales team and
approach, our ability to target, analyze and forecast the revenue to be
derived from a client and the costs associated with providing services to that
client, the date during the course of a fiscal year that a new client is
acquired, the length of the integration cycle for new clients and the timing
of revenues and costs associated therewith, our client concentration given
that the Company is currently dependent on a few large client relationships,
potential competition in the marketplace, the ability to retain and attract
employees, market acceptance of our service programs and pricing options, our
ability to maintain our existing technology platform and to deploy new
technology, our ability to sign new clients and control expenses, the
possibility of the discontinuation of some client relationships, the financial
condition of our clients' business and other factors detailed in the Company's
filings with the Securities and Exchange Commission.

DAEGIS INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In thousands)
                                                            
                                            July 31,   April 30,
                                               2013             2013     
ASSETS
Current assets:
Cash                                        $   5,044          $   5,459
Accounts receivable, net                        8,100              10,594
Prepaid expenses and other current assets       662                1,203
Assets held for sale                           -                926      
Total current assets                            13,806             18,182
                                                               
Property and equipment, net                     1,672              1,934
Goodwill                                        11,706             11,706
Intangibles, net                                6,767              7,152
Other assets                                   686              733      
Total assets                                $   34,637        $   39,707   
                                                               
LIABILITIES AND STOCKHOLDERS' EQUITY
                                                               
Current liabilities:
Accounts payable                            $   455            $   243
Current portion of long-term debt               1,348              2,519
Accrued compensation and related expenses       1,640              2,697
Common stock warrant liability                  303                204
Other accrued liabilities                       915                863
Deferred revenue                                7,059              8,449
Liabilities held for sale                      -                526      
Total current liabilities                       11,720             15,501
                                                               
Long-term debt, net of current portion          14,644             15,170
Deferred tax liabilities, net                   883                923
Other long-term liabilities                    1,352            1,429    
Total liabilities                              28,599           33,023   
                                                               
Commitments and contingencies                   —                  —
                                                               
Stockholders’ equity:
Preferred stock                                 —                  2
Common stock                                    17                 15
Additional paid-in capital                      100,040            100,053
Accumulated other comprehensive income          280                280
Accumulated deficit                            (94,299   )       (93,666  )
Total stockholders’ equity                     6,038            6,684    
Total liabilities and stockholders’         $   34,637        $   39,707   
equity
                                                                            

DAEGIS INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
                                                                 
                                                       Three Months Ended
                                                       July 31,
                                                        2013       2012   
                                                                    
Revenues:
eDiscovery                                             $ 3,328      $ 4,073
Database, archive, and migration                        4,636      5,565  
Total revenues                                          7,964      9,638  
                                                                    
Operating expenses:
Direct costs of eDiscovery revenue                       1,623        2,155
Direct costs of database, archive, and migration         916          1,282
revenue
Product development                                      1,671        1,884
Selling, general and administrative                      3,778        5,033
Sale of intangible trade name                           —          (1,000 )
Total operating expenses                                7,988      9,354  
Income (loss) from operations                           (24    )    284    
                                                                    
Other income (expense):
Gain (loss) from change in fair value of common          (99    )     460
stock warrant liability
Interest expense                                         (415   )     (442   )
Other, net                                              (31    )    (93    )
Total other income (expense)                            (545   )    (75    )
                                                                    
Income (loss) before income taxes                        (569   )     209
Provision for income taxes                              64         52     
Net income (loss)                                      $ (633   )   $ 157    
                                                                    
Income (loss) per share:
Basic                                                  $ (0.05  )   $ 0.00
Diluted                                                $ (0.05  )   $ 0.00
                                                                    
Weighted-average shares used in computing income
(loss) per share:
Basic                                                    15,297       14,718
Diluted                                                  15,297       14,718
                                                                             

DAEGIS INC.
RECONCILIATION OF GAAP OPERATING INCOME TO ADJUSTED EBITDA
(In thousands, except per share data)
                                                                 
                                                       Three Months Ended
                                                       July 31,
                                                        2013       2012   
                                                                    
                                                                    
GAAP income (loss) from operations                     $ (24    )   $ 284
                                                                    
Amortization of intangible assets                        385          384
Stock based compensation expenses                        53           176
Depreciation                                            265        278    
Total adjustments to GAAP income (loss) from            703        838    
operations
                                                                    
Adjusted EBITDA                                        $ 679       $ 1,122  
                                                                    
                                                                    
                                                                    
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
(In thousands, except per share data)
                                                                    
GAAP net income (loss)                                 $ (633   )   $ 157
                                                                    
Amortization of intangible assets and warrant            385          384
discount
Stock based compensation expenses                        53           176
Gain from change in fair value of common stock          99         (460   )
warrant liability
Total adjustments to GAAP net income (loss)             537        100    
                                                                    
Non-GAAP net income (loss)                             $ (96    )   $ 257    
                                                                    
Non-GAAP diluted income per share                      $ (0.01  )   $ 0.01   
                                                                    
Weighted average shares used in computing income
(loss) per share:
Dilutive                                                 15,297       14,718

Contact:

Daegis Investor Relations
Deb Thornton, 916-218-4779
dthornton@daegis.com
 
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