Daegis Inc. Reports Fiscal 2014 Fourth Quarter and Full Year Results

  Daegis Inc. Reports Fiscal 2014 Fourth Quarter and Full Year Results

  *Fourth Quarter GAAP Net Income of $163,000
  *Cash at $7.2 million at April 30, 2014

Business Wire

IRVING, Texas -- June 17, 2014

Daegis Inc. (NASDAQ: DAEG), a global archiving, eDiscovery and software
development and migration tools company, today announced financial results for
its fiscal 2014 fourth quarter and full year ended April 30, 2014.

Fourth Quarter Fiscal 2014 Financial Highlights

  *Fourth quarter total revenue of $7.4 million, compared to $9.8 million
    year over year.
  *Fourth quarter GAAP net income of $163,000 or $0.01 per share, compared to
    GAAP net income of $188,000 or $0.01 per share for the same period last
    year.
  *Fourth quarter Adjusted EBITDA of $1.6 million, compared to $1.5 million
    last year and up sequentially from $1.0 million in the third quarter. ^
    (1)
  *Non-GAAP net income of $1.1 million or $0.07 per share, compared to
    $610,000 or $0.03 per share last year. ^ (1)
  *Cash at April 30, 2014 was $7.2 million, compared to $5.5 million at April
    30, 2013.
  *Total debt outstanding at April 30, 2014 was $15.0 million, a decrease of
    $2.7 million from April 30, 2013.

Full Year Fiscal 2014 Financial Highlights

  *Total revenue of $31.0 million, compared to $40.2 million last year.
  *GAAP net loss of $1.6 million or $0.10 per share, compared to GAAP net
    income of $532,000 or $0.01 per share in the prior year.
  *Adjusted EBITDA of $4.3 million, compared to $6.5 million last year. ^ (1)
  *Non-GAAP net income of $1.7 million or $0.10 per share, compared to
    Non-GAAP net income of $3.2 million or $0.19 per share last year. ^ (1)

Commenting on the results, Daegis Inc. Chief Executive Officer Tim Bacci said,
“Daegis accomplished several key objectives in fiscal 2014 to advance its
long-term strategy. We successfully aligned archive and eDiscovery into a
cohesive, complete solution for information governance and eDiscovery, and
launched our new mobile enterprise development solution, TD Mobile. We made
decisions to increase the operational efficiency of our business which
significantly improved the health of our financials in the fourth quarter. We
are excited about our product offerings and opportunities and remain confident
that we’ll demonstrate growth in the second half of calendar 2014.”

Fourth Quarter and Full Year 2014 Comparative Financial Summary

$ In
Millions,         Q4           Q4           % or $           FY            FY          % or $
except per     FY2014    FY2013    Change^(2)    2014       2013     Change^(2)
share and %
data
Total          $7.4      $9.8      ($2.4)        $31.0      $40.2    ($9.2)
Revenue
Total
Archive and    $4.4      $6.6      ($2.2)        $19.3      $26.1    ($6.8)
Discovery
Revenue
Total
Database
and            $3.0      $3.2      ($0.2)        $11.6      $14.1    ($2.4)
Migration
Revenue
GAAP Net
Income         $0.2      $0.2      $0.0          ($1.6)     $0.5     ($2.1)
(Loss)
GAAP Net
Income
(Loss) Per     $0.01     $0.01     $0.00         ($0.10)    $0.01    ($0.11)
Share –
Diluted
Adjusted       $1.6      $1.5      $0.1          $4.3       $6.5     ($2.2)
EBITDA^(1)
Adjusted
EBITDA         22%       16%       6%            14%        16%      (2%)
Margin^(1)
Non-GAAP
Net Income     $1.1      $0.6      $0.5          $1.7       $3.2     ($1.6)
(Loss) ^
(1)
Non-GAAP
Net Income
(Loss) Per     $0.07     $0.03     $0.04         $0.10      $0.19    ($0.09)
Share -
Diluted^(1)

^(1) See reconciliation table below regarding the presentation of Adjusted
EBITDA and Non-GAAP net income.
^(2) The calculation of percentage or dollar change is based on unrounded
numbers.

Investor Conference Call

Management will host a conference call June 17, 2014, at 4:00 p.m. CT (5:00
p.m. ET) to review the financial results. The call can be accessed by dialing
(888) 505-4375 or (719) 325-2281 for international callers. Additionally, the
conference call will be webcast on the Daegis website at www.daegis.com. A
replay of the call will be available through June 27, 2014 by dialing (888)
203-1112 or (719) 457-0820 for international callers and using the following
passcode: 8990389#.

About Daegis Inc.

Daegis Inc. (NASDAQ: DAEG) is a global archiving, eDiscovery and software
development tools company. Daegis delivers leading-edge archive and eDiscovery
software throughDaegis Edge, an end-to-end platform for managing the
eDiscovery life cycle,Daegis Acumen technology assisted review and Daegis
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 for mobile and web application development, databases and application
migration software. Visit our websites to learn more.

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)
                                                            
                                                 April 30,         April 30,
                                                  2014            2013    
ASSETS
Current assets:
Cash                                             $ 7,178           $ 5,459
Accounts receivable, net                           6,657             10,594
Prepaid expenses                                   617               754
Other current assets                               358               449
Assets held for sale                              —               926     
Total current assets                               14,810            18,182
                                                                   
Property and equipment, net                        1,053             1,934
Goodwill                                           11,706            11,706
Intangibles, net                                   5,614             7,152
Other assets                                      470             733     
Total assets                                     $ 33,653         $ 39,707  
                                                                   
LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                   
Current liabilities:
Accounts payable                                 $ 308             $ 243
Current portion of long-term debt                  3,123             2,519
Accrued compensation and related expenses          1,185             2,697
Other accrued liabilities                          971               863
Deferred revenue                                   8,590             8,449
Liabilities held for sale                         —               526     
Total current liabilities                          14,177            15,297
                                                                   
Long-term debt, net of current portion             11,848            15,170
Deferred tax liabilities, net                      1,032             923
Common stock warrant liability                     276               204
Other long-term liabilities                       1,095           1,429   
Total liabilities                                 28,428          33,023  
                                                                   
Commitments and contingencies
                                                                   
Stockholders’ equity:
Preferred stock                                    —                 2
Common stock                                       17                15
Additional paid-in capital                         100,152           100,053
Accumulated other comprehensive income             280               280
Accumulated deficit                               (95,224 )        (93,666 )
Total stockholders’ equity                        5,225           6,684   
Total liabilities and stockholders’ equity       $ 33,653         $ 39,707  

                                                            
                                                                        
DAEGIS INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
                                                                        
                       Three Months Ended                Twelve Months Ended
                       April 30,                         April 30,
                        2014         2013             2014         2013   
                                                                        
Revenues:
Archive and            $ 4,384        $ 6,598            $ 19,320       $ 26,126
eDiscovery
Database and            2,986        3,172            11,638       14,067 
migration
Total revenues          7,370        9,770            30,958       40,193 
                                                                        
Operating
expenses:
Direct costs of
Archive and              1,618          2,188              7,929          10,091
eDiscovery
revenue
Direct costs of
database and             524            775                1,881          3,027
migration
revenue
Product                  1,215          2,067              5,898          7,478
development
Selling, general
and                      3,507          3,978              15,080         18,282
administrative
Sale of
intangible trade        —            —                —            (1,000 )
name
Total operating         6,864        9,008            30,788       37,878 
expenses
Income from             506          762              170          2,315  
operations
                                                                        
Other income
(expense):
Gain (loss) from
change in fair
value of common          (21    )       62                 (72    )       365
stock warrant
liability
Interest expense         (293   )       (383   )           (1,332 )       (1,632 )
Other, net              60           (145   )          9            (234   )
Total other             (254   )      (466   )          (1,395 )      (1,501 )
income (expense)
                                                                        
Income (loss)
before income            252            296                (1,225 )       814
taxes
Provision for           89           108              333          282    
income taxes
Net income             $ 163         $ 188             $ (1,558 )     $ 532    
(loss)
                                                                        
Income (loss)
per share:
Basic                  $ 0.01         $ 0.01             $ (0.10  )     $ 0.01
Diluted                $ 0.01         $ 0.01             $ (0.10  )     $ 0.01
                                                                        
Weighted-average
shares used in
computing income
(loss) per
share:
Basic                    16,384         14,718             16,110         14,718
Diluted                  16,386         14,736             16,110         14,728

                                                        
                                                                    
DAEGIS INC.
RECONCILIATION OF GAAP OPERATING INCOME TO ADJUSTED EBITDA
(In thousands, except per share data)
                                                                    
                     Three Months Ended              Twelve Months Ended
                     April 30,                       April 30,
                      2014        2013             2014         2013   
                                                                    
                                                                    
GAAP income
(loss) from          $ 506        $ 762              $ 170          $ 2,315
operations
                                                                    
Amortization
of intangible          384          384                1,538          1,538
assets
Stock based
compensation           34           100                165            593
expenses
Depreciation           207          281                947            1,123
Charges
related to
alignment of          485         -                1,451        935    
business
units^(1)
Total
adjustments to
GAAP income           1,110       765              4,101        4,189  
from
operations
                                                                    
Adjusted             $ 1,616      $ 1,527           $ 4,271       $ 6,504  
EBITDA
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
(In thousands, except per share data)
                                                                    
GAAP net             $ 163        $ 188              $ (1,558 )     $ 532
income (loss)
                                                                    
Amortization
of intangible          384          384                1,538          1,538
assets
Stock based
compensation           34           100                165            593
expenses
(Gain) loss
from change in
fair value of          21           (62    )           72             (365   )
common stock
warrant
liability
Charges
related to
alignment of          485         -                1,451        935    
business
units^(1)
Total
adjustments to        924         422              3,226        2,701  
GAAP net
income (loss)
                                                                    
Non-GAAP net         $ 1,087      $ 610             $ 1,668       $ 3,233  
income
                                                                    
Non-GAAP
diluted income       $ 0.07       $ 0.03            $ 0.10        $ 0.19   
per share
                                                                    
Weighted
average shares
used in
computing
income per
share:
Dilutive               16,386       14,736             16,110         14,728
                                                                    
(1) Prior year alignment costs have been reported to conform with the current
year presentation.

                    Use of Non-GAAP Financial Information

Daegis utilizes financial measures not calculated in accordance with generally
accepted accounting principles in the United States ("GAAP") to supplement the
Company's unaudited condensed consolidated financial statements and provide
investors with an alternative method for assessing our operating results. We
also believe these Non-GAAP measures provide investors with a more informed
baseline for modeling the Company's future financial performance. Management
uses the Non-GAAP financial measures to make operational decisions, to
evaluate the Company's performance and to forecast. We believe that our
investors should have access to, and that we are obligated to provide, the
same set of tools that we use in analyzing our results. 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.

Our Non-GAAP measures adjust GAAP income (loss) from operations and GAAP net
income (loss) for non-cash stock based compensation expenses, amortization of
intangible assets, depreciation and non-recurring charges. 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.

Contact:

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