2. Acquisitions

AXS-One Inc.

On June 30, 2009, the Company acquired all of the issued and outstanding shares of common stock and warrants of AXS-One. The common stock and warrants were converted into, in the aggregate, 1,000,000 shares of Company common stock. The outstanding convertible notes of AXS-One with an aggregate outstanding principal and interest balance of approximately $13 million were exchanged for 1,642,600 shares of Company common stock. The note holders were also issued additional shares of Company common stock based on revenue generated from AXS-One's products over 13 months after the effective date of the merger.

AXS-One provides integrated content archiving software solutions which enables organizations to implement secure, scalable and enforceable policies that address records management for corporate governance, legal discovery and industry regulations. The acquisition of AXS-One advanced the Company's growth strategy to acquire superior technology companies that could leverage its technology strengths, extensive customer base and worldwide distribution channel while enabling the combined company to meet a broader set of customers' needs, accelerate direct and channel sales, and achieve cost synergies.

The goodwill of $11.2 million arising from the acquisition consists of increased market presence and opportunities, enhanced product mix and operating efficiencies expected from combining the operations of the Company and AXS-One. All of the goodwill was assigned to the Database, Archive, and Migrations segment. None of the goodwill recognized is deductible for income tax purposes.

The following table summarizes the consideration paid for AXS-One and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date, June 30, 2009 (in thousands):

Consideration
Equity instruments (2,642,600 common shares of the Company)		$ 8,853
Contingent consideration arrangement		3,592

Fair value of total consideration		$ 12,445

Recognized amounts of identifiable assets acquired and liabilities assumed
Financial assets		$ 117
Accounts receivable		561
Other assets		640
Property, plant and equipment		132
Identifiable intangible assets		8,065
Financial liabilities		(5,772)
Deferred revenue		(2,493)
Total identifiable net assets		1,250

Goodwill		11,195
		$ 12,445

Acquisition related costs (included in selling, general and administrative expense in the Company's statement of operations for the year ended April 30, 2010.		$ 611

The fair value of the 2,642,600 common shares issued as part of the consideration paid for AXS-One ($8,853,000) was determined on the basis of the closing market price of the Company's common shares on the acquisition date.

The contingent consideration arrangement required the Company to issue to the former holders of AXS-One convertible notes 0.35 shares of Company common stock for every $1 of AXS-One net license revenue over the first $2,000,000 for the 13 month period following the acquisition date. The number of shares that the Company issued under the contingent consideration arrangement was 415,422. The fair value of the contingent consideration was $1.3 million, which resulted in a reduction in the acquisition liability in the six months ended October 31, 2011 and 2010 of $0 and $164,000, respectively, and a corresponding reduction in operating expenses.

Strategic Office Solutions, Inc., dba Daegis

On June 29, 2010, the Company acquired all of the issued and outstanding shares of common stock of Strategic Office Solutions, Inc., dba Daegis, for approximately $37.4 million. Payment was made in the form of $24.0 million in cash, $7.2 million in equity, and $6.2 million in convertible notes. The Company issued 2,085,714 shares of common stock to the former owners of Daegis at $3.46 per share (closing market price on the acquisition date) for a total of $7.2 million. The notes consisted of a $5.0 million Subordinated Purchase Note and a $1.2 million Subordinated Indemnity (Escrow) Note. Under the terms of the Subordinated Purchase Note the Company incurred interest at 8% per annum. On September 1, 2010 the Company converted the Subordinated Purchase Note and all related accrued interest into 1,448,614 shares of common stock at a conversion price of $3.50 per share. Under the terms of the Subordinated Indemnity (Escrow) Note the Company incurred interest at 3% per annum for the first eighteen months and 8% per annum thereafter. On September 1, 2010 the Company converted the Subordinated Indemnity (Escrow) Note and all related accrued interest into 344,667 shares of common stock at a conversion price of $3.50 per share. Both notes were cancelled upon conversion.

Daegis is a provider of eDiscovery solutions for corporate legal departments and law firms. The Company believes that its eDiscovery solutions compliment its integrated content archiving product and that this acquisition advances the Company's growth strategy to acquire superior software and services companies that can leverage its technology strengths and extensive customer base while enabling the combined company to meet a broader set of customer and market needs.

The goodwill of $19.5 million arising from the acquisition consists of increased market presence and opportunities, enhanced product mix and operating efficiencies expected from combining the operations of the two entities. All of the goodwill was assigned to the eDiscovery segment. All of the goodwill recognized is deductible for income tax purposes.

The following table summarizes the consideration paid for Daegis and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date, June 29, 2010 (in thousands):

Consideration
Cash		$ 24,000
Equity instruments (2,085,714 common shares of the Company)		7,217
Convertible notes		6,200

Fair value of total consideration		$ 37,417

Recognized amounts of identifiable assets acquired and liabilities assumed
Financial assets		$ 2,270
Accounts receivable		5,422
Other assets		705
Property, plant and equipment		1,867
Identifiable intangible assets		11,000
Financial liabilities		(3,366)
Total identifiable net assets		17,898

Goodwill		19,519

		$ 37,417

Acquisition related costs (included in selling, general and administrative expense in the Company's statement of operations for the six months ended October 31, 2010)		$ 1,423

The fair value of the 2,085,714 common shares issued as part of the consideration paid for Daegis ($7,216,570) was determined on the basis of the closing market price of the Company's common shares on the acquisition date.