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Daegis Reports Fiscal 2012 Third Quarter Financial 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. Wille. 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 CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
   
January 31, April 30,

2012
2011
ASSETS
Current assets:
Cash and cash equivalents $ 6,466 $ 4,577
Accounts receivable, net 10,915 15,670
Prepaid expenses and other current assets   1,288     1,166  
Total current assets 18,669 21,413
 
Property and equipment, net 2,861 2,240
Goodwill 25,161 25,161
Intangibles, net 10,765 12,396
Other assets, net   1,150     1,524  
Total assets $ 58,606   $ 62,734  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
Accounts payable $ 450 $ 1,433
Current portion of long term debt 1,594 1,869
Accrued compensation and related expenses 2,182 2,894
Common stock warrant liability 987 1,623
Other accrued liabilities 1,468 2,131
Deferred revenue   8,244     7,951  
Total current liabilities 14,925 17,901
 
Long term debt, net of current portion 20,353 24,731
Deferred tax liabilities 653 555
Other long term liabilities   1,045     1,513  
Total liabilities   36,976     44,700  
 
Commitments and contingencies

— 

 

— 
 
Stockholders’ equity:
Preferred stock 2

— 
Common stock 15 15
Additional paid-in capital 99,735 95,111
Accumulated other comprehensive income 345 443
Accumulated deficit   (78,467 )   (77,535 )
Total stockholders’ equity   21,630     18,034  
Total liabilities and stockholders’ equity $ 58,606   $ 62,734  
 
DAEGIS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
       
Three Months Ended Nine Months Ended
January 31, January 31,
2012 2011 2012   2011  
 
Revenues:
eDiscovery $ 4,159 $ 6,508 $ 15,714 $ 16,617
Database, archive, and migrations   6,910     5,923     17,944     18,567  
Total revenues   11,069     12,431     33,658     35,184  
 
Operating expenses:
Direct costs of eDiscovery revenue 2,491 2,200 7,123 4,725
Direct costs of database, archive, and migration revenue 1,255 1,254 3,955 4,308
Product development 1,830 1,973 5,669 5,738
Selling, general and administrative 4,889 5,866 14,264 18,966
Change in fair value of contingent consideration               (164 )
Total operating expenses   10,465     11,293     31,011     33,573  
Income from operations   604     1,138     2,647     1,611  
 
Other income (expense):
Loss on extinguishment of debt

(2,166 )
Gain (loss) from change in fair value of common stock warrant liability 34 (240 ) 636 427
Interest expense (462 ) (1,009 ) (1,832 ) (2,450 )
Other, net   (93 )   2     (66 )   (162 )
Total other income (expense)   (521 )   (1,247 )   (3,428 )   (2,185 )
 
Earnings (loss) before income taxes 83 (109 ) (781 ) (574 )
Provision for income taxes   30     97     150     219  
Net income (loss) $ 53   $ (206 ) $ (931 ) $ (793 )
 
Net income (loss) per share:
Basic $ 0.00 $ (0.01 ) $ (0.08 ) $ (0.06 )
Dilutive $ 0.00 $ (0.01 ) $ (0.08 ) $ (0.06 )
 
Shares used in computing net income (loss) per share:
Basic 14,713 14,577 14,657 13,220
Dilutive 14,713 14,577 14,657 13,220
DAEGIS INC.
RECONCILIATION OF GAAP OPERATING INCOME TO ADJUSTED EBITDA
(In thousands)
       
Three Months Ended Nine Months Ended
January 31, January 31,
2012 2011 2012 2011
 
GAAP income from operations $ 604   $ 1,138   $ 2,647   $ 1,611  
 
Amortization of intangible assets 508 737 1,632 2,679
Stock based compensation expenses 230 239 704 726
Depreciation   287     242     796     627  
Total adjustments to GAAP income from operations   1,025     1,218     3,132     4,032  
 
Adjusted EBITDA $ 1,629   $ 2,356   $ 5,779   $ 5,643  
 
 
 
 
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
(In thousands, except per share data)
 
GAAP net income (loss) $ 53   $ (206 ) $ (931 ) $ (793 )
 
Amortization of intangible assets and warrant discount 508 801 1,675 2,832
Stock based compensation expenses 230 239 704 726
Professional fees related to mergers 1,423
Change in fair value of contingent consideration (164 )
(Gain) loss from change in fair value of common stock warrant liability (34 ) 240 (636 ) (427 )
Loss on extinguishment of debt           2,166      
Total adjustments to GAAP net income (loss)   704     1,280     3,909     4,390  
 
Non-GAAP net income (1) $ 757   $ 1,074   $ 2,978   $ 3,597  
 
Non-GAAP diluted earnings per share (1) $ 0.05   $ 0.07   $ 0.18   $ 0.26  
 
Weighted average shares used in computing earnings per share:
Dilutive 16,447 15,045 16,109 13,730
 
(1) Does not include the impact of dividends on preferred shares

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