10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

______________________

Form 10-Q

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended July 31, 2014

OR

o Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 001-11807

______________________

DAEGIS INC.
(Exact name of registrant as specified in its charter)

Delaware	94-2710559
(State or other jurisdiction of	(I.R.S. Employer Identification
incorporation or organization)	Number)

Address of principal executive offices: 600 E. Las Colinas Blvd., Suite 1500, Irving, Texas 75039

Registrant’s telephone number, including area code: (214) 584-6400

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES    x NO    o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o	Non-accelerated filer o	Smaller reporting company x
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act),

YES    o NO    x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 16,384,444 shares of common stock, $0.001 par value, as of August 26, 2014.

DAEGIS INC.
FORM 10-Q

INDEX

PART I.	FINANCIAL INFORMATION	3
Item 1.	Financial Statements	3
	Unaudited Condensed Consolidated Balance Sheets as of July 31, 2014 and April 30,	3
	2014
	Unaudited Condensed Consolidated Statements of Operations for the three months	4
	ended July 31, 2014 and 2013
	Unaudited Condensed Consolidated Statements of Cash Flows for the three months	5
	ended July 31, 2014 and 2013
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of	14
	Operations
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	20
Item 4.	Controls and Procedures	20
PART II.	OTHER INFORMATION	21
Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3.	Defaults Upon Senior Securities	21
Item 4.	Mine Safety Disclosure	21
Item 5.	Other Information	21
Item 6.	Exhibits	22

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

DAEGIS INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

		July 31,			April 30,
		2014			2014
ASSETS
Current assets:
Cash	$	5,088		$	7,178
Accounts receivable, net of allowances of $209 and $211, respectively		5,137			6,657
Prepaid expenses		557			617
Other current assets		384			358
Total current assets		11,166			14,810
Property and equipment, net of accumulated depreciation of $5,086 and $4,921, respectively		902			1,053
Goodwill		11,706			11,706
Intangibles, net		5,230			5,614
Other assets		435			470
Total assets	$	29,439		$	33,653
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	433		$	308
Current portion of long-term debt		1,123			3,123
Accrued compensation and related expenses		865			1,185
Other accrued liabilities		957			971
Deferred revenue		7,365			8,590
Total current liabilities		10,743			14,177
Long term debt, net of current portion		11,565			11,848
Deferred tax liabilities, net		1,028			1,032
Common stock warrant liability		181			276
Other long-term liabilities		918			1,095
Total liabilities		24,435			28,428
Commitments and contingencies
Stockholders’ equity:
Common stock		17			17
Additional paid-in capital		100,179			100,152
Accumulated other comprehensive income		280			280
Accumulated deficit		(95,472	)		(95,224	)
Total stockholders’ equity		5,004			5,225
Total liabilities and stockholders’ equity	$	29,439		$	33,653

Seeaccompanyingnotestounaudited condensed consolidatedfinancialstatements.

3

DAEGIS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

		Three Months Ended
		July 31,
		2014			2013
Revenues:
Archive and eDiscovery	$	4,104			5,415
Development, Database and Migration tools		2,558			2,549
Total revenues		6,662			7,964
Operating expenses:
Direct costs of Archive and eDiscovery revenue		1,557			2,199
Direct costs of Development, Database and Migration tools revenue		504			418
Product development		1,173			1,671
Selling, general and administrative		3,370			3,700
Total operating expenses		6,604			7,988
Income (loss) from operations		58			(24	)
Other income (expenses)
Gain (loss) from change in fair value of common stock warrant liability		95			(99	)
Interest expense		(303	)		(415	)
Other, net		(100	)		(31	)
Total other income (expenses)		(308	)		(545	)
Loss before income taxes		(250	)		(569	)
Provision (benefit) for income taxes		(3	)		64
Net loss	$	(247	)	$	(633	)
Loss per share:
Basic	$	(0.02	)	$	(0.05	)
Diluted	$	(0.02	)	$	(0.05	)
Weighted-average shares used in computing loss per share:
Basic		16,384			15,297
Diluted		16,384			15,297

Seeaccompanyingnotestounaudited condensedconsolidatedfinancialstatements.

4

DAEGIS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

		Three Months Ended
		July 31,
		2014			2013
Cash flows from operating activities:
Net loss	$	(247	)	$	(633	)
Reconciliation of net loss to net cash provided by operating activities:
Depreciation		183			265
Amortization of intangible assets		384			385
Provision for doubtful accounts		108			118
Stock based compensation expense		27			53
Deferred tax liability		(4	)		(40	)
(Gain) loss from change in fair value of common stock warrant liability		(95	)		99
Changes in operating assets and liabilities:
Accounts receivable		1,412			2,376
Prepaid expenses and other current assets		34			541
Other assets		35			47
Accounts payable		125			212
Accrued compensation and related expenses		(320	)		(1,057	)
Other accrued liabilities		(15	)		(14	)
Deferred revenue		(1,382	)		(1,420	)
Other long term liabilities		(20	)		(47	)
Net cash provided by operating activities		225			885
Cash flows from investing activities:
Proceeds from assets held for sale		-			400
Purchases of property and equipment		(33	)		(3	)
Net cash provided by (used in) investing activities		(33	)		397
Cash flows from financing activities:
Principal payments under debt obligations		(2,251	)		(1,641	)
Principal payments on capital leases		(31	)		(56	)
Net cash used in financing activities		(2,282	)		(1,697	)
Net change in cash		(2,090	)		(415	)
Cash, beginning of year		7,178			5,459
Cash, end of period	$	5,088		$	5,044
Supplemental cash flow information:
Cash paid for interest	$	256		$	341
Cash paid for income taxes		52			14

Seeaccompanyingnotestounaudited condensedconsolidatedfinancialstatements.

5

DAEGIS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2014

1. Basis of Presentation

The condensed consolidated financial statements prepared by Daegis Inc. (the “Company”, “we”, “us”, “our”) have been derived from our audited financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations.

The accompanying condensed consolidated financial statements include our accounts and those of our subsidiaries that we control due to ownership of a controlling interest. Intercompany transactions and balances have been eliminated. While the interim financial information contained in this filing is unaudited, such financial statements, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) which we consider necessary for a fair presentation. The results for interim periods are not necessarily indicative of the results to be expected for the entire fiscal year. These financial statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2014, as filed with the SEC.

In the third quarter of fiscal year 2014, after the alignment of our archive and eDiscovery operations, we determined that we have two reportable segments: (i) Archive and eDiscovery and (ii) Development, Database and Migration tools. As a result, we have restated historical results to reflect those new reporting segments.

Certain prior period balances in our consolidated statements of operations have been reclassified between direct costs of eDiscovery revenue and selling, general and administrative expenses to conform with current presentation.

2.Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards update No. 2014-09 Revenue from Contracts with Customers (ASU 204-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP.

The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting periods with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption. We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard in 2017.

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3.Intangible Assets

Intangible asset balances by major asset class are as follows (in thousands):

		Gross					Net
		carrying		Accumulated			carrying
July 31, 2014		amount		amortization			amount
Customer-related	$	6,236	$	(4,572	)	$	1,664
Technology-based		2,638		(2,112	)		526
Trademarks		4,600		(1,560	)		3,040
Trade name		100		(100	)		-
Total	$	13,574	$	(8,344	)	$	5,230
		Gross					Net
		carrying		Accumulated			carrying
April 30, 2014		amount		amortization			amount
Customer-related	$	6,236	$	(4,403	)	$	1,833
Technology-based		2,638		(2,034	)		604
Trademarks		4,600		(1,423	)		3,177
Trade name		100		(100	)		-
Total	$	13,574	$	(7,960	)	$	5,614

Acquired finite-lived intangible assets are generally amortized on a straight-line basis over their estimated useful lives. The useful life of finite-lived intangible assets is the period over which the asset is expected to contribute directly or indirectly to future cash flows of the Company. Intangible asset amortization expense for the three months ended July 31, 2014 and 2013 was $0.4 million for each quarter. The estimated future amortization expense related to intangible assets as of July 31, 2014 is as follows (in thousands):

Fiscal Year Ending April 30,		Amount
Remainder of 2015	$	1,130
2016		1,096
2017		814
2018		774
2019		774
Thereafter		642
Total	$	5,230

4. Accrued Restructuring Charge

On December 3, 2013, we announced the completion of our organizational alignment in which the Archive and eDiscovery businesses were combined. The alignment included movement of our operations, workforce reductions, abandonment of excess facilities and other charges in the Archive and eDiscovery reportable segment.

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A summary of the restructuring and other costs recognized for the three months ended July 31, 2014 are as follows:.

								Deferred
				Lease		Asset		Rent			Other
		Severance		Abandonment		Impairment		Liability			Costs		Total
Amounts incurred and expected to be
incurred	$	420	$	933	$	127	$	(356	)	$	88	$	1,212
Amounts incurred for the three months
ended July 31, 2014	$	-	$	150	$	-	$	-		$	21	$	171

At July 31, 2014, the accrued liability associated with the realignment consisted of the following:

					Lease
		Severance			Abandonment			Total
Accrued liability at April 30, 2014	$	96		$	464		$	560
Charges		-			117			117
Payments		(96	)		(262	)		(358	)
Adjustments		-			33			33
Accrued liability at July 31, 2014	$	-		$	352		$	352

The restructuring and other related charges are included in the selling, general administrative expense line item in the Consolidated Statements of Operations.

5. Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.

In determining fair value, we use various valuation approaches and establish a hierarchy for inputs used in measuring fair value that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the observability of inputs as follows:

• Level 1 – Quoted prices in active markets for identical assets and liabilities.
• Level 2 – Observable inputs other than those included in Level 1, such as quoted market prices for similar assets and liabilities in active markets or quoted prices for identical assets in inactive markets.
• Level 3 – Unobservable inputs are used when little or no market data is available and reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

We value our common stock warrant liability on a recurring basis based on open form option pricing models which, based on the relevant inputs, render the fair value estimate Level 3. Changes in the fair value of the warrants are reflected in the consolidated statements of operations as “Gain (loss) from change in fair value of common stock warrant liability.”

8

Fair Value on a Recurring Basis

The following table summarizes the activity of Level 3 inputs measured on a recurring basis for the three months ended July 31, 2014:

(in thousands)		Common stock warrants
Balance at April 30, 2014	$	276
Change in fair value of common stock warrant liability		(95	)
Balance at July 31, 2014	$	181

6. Long-Term Debt

Effective July 31, 2014, the Company entered into an amendment to its Revolving Credit and Term Loan Agreement with Wells Fargo Capital Finance (the “Credit Agreement”). In order to secure its obligations under the Wells Fargo Credit Agreement, the Company has granted the lender a first priority security interest in substantially all of our assets. Under the terms of the amendment, the Company is entitled to borrow up to $15.1 million. The total amount that can be borrowed under the Credit Agreement is based on a multiplier factor of the trailing twelve months of maintenance and Software-as-a-Service revenue.

The Credit Agreement consisted of two term notes and a revolving credit note agreement. The Amendment extended the term of the Credit Agreement through June 30, 2017, reduced the interest rate and modified certain financial covenants. This Amendment, in conjunction with a prepayment made on July 31, 2014, under the Credit Agreement, reduced the outstanding principal balance on the Term A Loan to $10.1 million, and the Term B Loan, which incurred a minimum interest rate of 12.0%, has now been fully repaid. The Term Note A requires quarterly principal payments of $252,000 plus an additional annual payment based on the Company’s free cash flow for the year with any remaining amount due at maturity. To the extent the Company makes annual principal payments based on free cash flow, the quarterly principal payments will be reduced. The Company incurs interest at the prevailing LIBOR rate plus 3.5-4.0% per annum with a minimum rate of 5.0%. During the first quarter of fiscal year 2015, we incurred interest at the pre-amendment minimum rate of 6.5%.

Our long-term debt consists of the following (in thousands):

		July 31,			April 30,
		2014			2014
Term Note A	$	10,072		$	11,324
Term Note B		-			1,000
Revolving line of credit		2,500			2,500
Capital leases		116			147
		12,688			14,971
Less current portion		(1,123	)		(3,123	)
Total long term debt, net	$	11,565		$	11,848

The Wells Fargo Credit Agreement requires ongoing compliance with certain affirmative and negative covenants. The affirmative covenants include, but are not limited to: (i) maintenance of existence and conduct of business; (ii) compliance with laws; (iii) use of proceeds; and (iv) books and records and inspection. The negative covenants set forth in the Wells Fargo Credit Agreement include, but are not limited to, restrictions on our ability (and on our subsidiaries): (i) with certain limited exceptions, to create, incur, assume or allow to exist indebtedness; (ii) with certain limited exceptions, to create, incur, assume or allow to exist liens on properties; (iii) with certain limited exceptions, to make certain payments, transfers of property, or investments; or (iv) with certain limited exceptions, to make acquisitions.

We are obligated to maintain certain minimum consolidated adjusted EBITDA levels, certain minimum liquidity levels, certain total leverage ratios, and certain fixed charge coverage ratios, all as calculated in accordance with the terms and definitions determining such amounts as contained in the Wells Fargo Credit Agreement. The Wells Fargo Credit Agreement also contains various information and financial reporting requirements. The Company is in compliance with all such covenants and requirements at July 31, 2014.

9

A summary of expected future principal payments, excluding any annual principal payments based on free cash flow, on long-term debt obligations as of July 31, 2014 is as follows (in thousands):

Fiscal Year Ending April 30,		Amount
Remainder of 2015	$	840
2016		1,039
2017		1,007
2018		9,802
	$	12,688

7. Stock Compensation Information

Stock-based compensation expense is determined from the estimated fair value of stock-based awards at the date of grant and is recognized over the vesting period of the awards, net of estimated forfeitures. For the three months ended July 31, 2014 and 2013, stock-based compensation expense was comprised of the following (in thousands):

		Three Months Ended
		July 31,
		2014		2013
Direct costs of revenue	$	2	$	5
Product development		3		13
Selling, general, and administrative		22		35
Total equity-based compensation	$	27	$	53

We estimate the fair value of our stock-based awards using the Black-Scholes option pricing model. The Black-Scholes option pricing model incorporates various assumptions including expected term, interest rates and expected volatility. Changes in the assumptions can materially affect the fair value estimates and ultimately how much we recognize as stock-based compensation expense. The weighted-average input assumptions used and resulting fair values were as follows:

		Three Months Ended
		July 31,
		2014			2013
Expected term (in years)		4.0			4.0
Risk-free interest rate		1.3	%		0.8	%
Volatility		74	%		57	%
Dividend yield		-			-
Weighted-average fair value of stock options granted during the period	$	0.68		$	0.50

We base our expected term assumption on our historical experience and on the terms and conditions of the stock awards we grant to employees. The risk-free interest rate is based upon United States Treasury interest rates appropriate for the expected term of the awards. The expected volatility is based on the historical volatility of our common stock over the most recent period commensurate with the estimated expected term of our stock options. We did not pay cash dividends to common stockholders in fiscal 2014 or year to date in fiscal 2015, and do not anticipate paying any cash dividends on common stock in the foreseeable future. Accordingly, an expected dividend yield of zero is used in the Black-Scholes option pricing model.

At July 31, 2014, there was approximately $0.3 million of unrecognized compensation expense related to unvested stock-based awards granted. The unrecognized expense is expected to be recognized over a weighted-average period of 3.2 years.

10

A summary of our stock option activity for the three months ended July 31, 2014 is as follows:

				Weighted-	Weighted-
				average	average remaining		Aggregate
				exercise	contractual		intrinsic
	Shares			price	term (in years)		value (1)
Outstanding at April 30, 2014	1,254,629		$	2.38	6.82	$	41,972
Granted	196,922
Exercised	-
Cancelled/expired	(97,398	)
Outstanding at July 31, 2014	1,354,153			2.26	6.92		14,612
Exercisable at July 31, 2014	882,961		$	2.80	5.76	$	2,631

(1)       Aggregate intrinsic value is defined as the difference between the current market value and the exercise price and is estimated using the closing price of our common stock on the last trading day of the periods ended as of the dates indicated.

There were no awards exercised during the three months ended July 31, 2014 and 2013. The total fair value of awards vested during the three months ended July 31, 2014 and 2013 was $27 thousand and $53 thousand, respectively. The total fair value of awards granted during the three months ended July 31, 2014 and 2013 was $0.1 million and $0.1 million, respectively.

8. Income Taxes

We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

We are subject to income taxes in the U.S. federal jurisdiction, and various states and foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. In general, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for the fiscal years before 2008. We do not believe there will be any material changes in our unrecognized tax positions over the next 12 months. Therefore, no reserves for uncertain income tax positions have been recorded.

Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. As of July 31, 2014 and April 30, 2014, we did not have any accrued interest or penalties associated with any unrecognized tax benefits, nor did we record any interest expense associated with any unrecognized tax benefits in the three months ended July 31, 2014 and 2013.

9. Preferred Stock

In June 2011, we issued, through a private placement, 1,666,667 shares of preferred stock to a group of related party institutional investors at a price of $2.40 per share for a total of $4.0 million. These shares of preferred stock were automatically converted on a 1-for-1 basis into shares of common stock on June 30, 2013. The preferred stock included an annual dividend of $0.24 per share payable in cash or stock at our option. In August 2013, we paid a final dividend of $66,000 on this preferred stock ($0.04 per preferred share).

11

10. Loss Per Share

Basic loss per share is computed by dividing net loss less dividends payable on preferred stock by the weighted-average number of common shares outstanding during the reporting period. Diluted loss per share is computed similar to basic loss per share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock.

(in thousands, except per share amounts)		Three Months Ended
		July 31,
		2014			2013
Net loss	$	(247	)	$	(633	)
Dividends paid and payable on preferred stock		-			(66	)
Net loss available to common stockholders	$	(247	)	$	(699	)
Weighted-average shares of common stock outstanding, basic		16,384			15,297
Effect of dilutive securities		-			-
Weighted-average shares of common stock outstanding, diluted		16,384			15,297
Loss per share of common stock:
Basic	$	(0.02	)	$	(0.05	)
Diluted	$	(0.02	)	$	(0.05	)
Antidilutive securities
Weighted average number of stock options		1,091			1,695
Weighted average number of warrants		719			909
Weighted average number of preferred stock		-			1,111

Potentially dilutive securities that are not included in the diluted net loss calculation are antidilutive because the exercise prices of these securities are greater than the average market price of the stock during the respective periods. As noted above, the 1,666,667 shares of preferred stock were converted into shares of common stock on a 1-for-1 basis on June 30, 2013.

11. Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our Chief Executive Officer. We have evaluated our approach for making operating decisions and assessing the performance of our business and, in the third quarter of fiscal year 2014 after the alignment of our Archive and eDiscovery operations, we determined that we have two reportable segments: (i) Archive and eDiscovery and (ii) Development, Database and Migration Tools. As a result, we have adjusted historical results to reflect those new reporting segments.

The accounting policies of the segments are the same as those described Note 1 of Part III, Item 15 of our Annual Report on Form 10-K for our fiscal year ended April 30, 2014. We evaluate performance based on income from operations (total revenues less operating costs). We do not allocate certain corporate costs to each segment and therefore disclose these amounts separately in our segment table.

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For the three months ended July 31, 2014 and 2013, total revenue from the United States was $4.2 million and $5.5 million, respectively. Total revenue from all other countries for the three months ended July 31, 2014 and 2013 was $2.5 million and $2.5 million, respectively. Total long-lived assets as of July 31, 2014 and April 30, 2014, for the United States, were $18.3 million and $18.8 million, respectively. There were no long-lived assets in other countries as of July 31, 2014 and April 30, 2014.

(in thousands)		Three Months Ended
		July 31,
		2014			2013
Total revenues:
Archive and eDiscovery	$	4,104		$	5,415
Development, Database and Migration tools		2,558			2,549
Total revenues	$	6,662		$	7,964
Operating expenses:
Archive and eDiscovery	$	3,259		$	4,658
Direct costs of Development, Database and Migration tools revenue		1,673			1,524
Unallocated corporate expenses		1,672			1,806
Total operating expenses	$	6,604		$	7,988
Income (loss) from operations:
Archive and eDiscovery	$	845		$	757
Development, Database and Migration tools		885			1,025
Unallocated corporate expenses		(1,672	)		(1,806	)
Total income (loss) from operations	$	58		$	(24	)
		July 31,			April 30,
		2014			2014
Total assets:
Archive and eDiscovery	$	25,057		$	28,242
Development, Database and Migration tools		4,382			5,411
Total assets	$	29,439		$	33,653

13

DAEGIS INC.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The discussion in this Quarterly Report on Form 10-Q contains forward-looking statements that have been made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations, estimates and projections about the software and eDiscovery industries and certain assumptions made by the Company’s management. Words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, statements that refer to the anticipated impacts of acquisitions, statements made on goodwill, intangible assets, and impairment, statements about the ability to utilize deferred tax assets, and statements about other characterizations of future events or circumstances are forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements. Such risks and uncertainties include, but are not limited to, those set forth in the Company’s Annual Report on Form 10-K under “Business – Risk Factors” and in the Company’s other filings with the Securities and Exchange Commission (“SEC”). Unless required by law, the Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. However, readers should carefully review the risk factors set forth in other reports or documents the Company files from time to time with the SEC, particularly the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K.

The following discussion should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and Notes thereto in Part I, Item 1 of this Quarterly Report on Form 10-Q and with the audited Consolidated Financial Statements and Notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2014, as filed with the SEC.

Overview

Daegis Inc. (the “Company”, “we”, “us” or “our”) is a global provider of archive, eDiscovery, application development, data management and migration software solutions. In fiscal 2014, we completed the restructuring and realignment of our company to meet customer and market needs and to operate with a more effective cost structure. We combined our Archive and eDiscovery businesses to offer a complete, cohesive information governance and eDiscovery solution that provides end-to-end data preservation and litigation readiness for our customers and clients. Accordingly, today we sell our solutions through two segments: the Archive and eDiscovery segment and the Development, Database, and Migration Tools segment.

Our archive and eDiscovery solutions simplify and reduce the cost of information governance and eDiscovery while mitigating risk by improving data management. Our software includes Daegis AXS-One archiving for managing the preservation, collection, review and disposal of structured and unstructured data; Daegis Edge, our hosted, end-to-end eDiscovery software for processing, search, review and production of data; and Daegis Acumen technology-assisted review. Our services include managed document review, project management, search analytics consulting, collection and hosting of data.

Our development, database, and migration tools business, Gupta Technologies (“Gupta”), includes mobile, Web and ..NET application development, data management and application modernization software. Gupta Technologies delivers highly productive application development software for developers of all skill levels. Gupta’s data management solutions are highly scalable and high performance. Gupta’s Composer Technologies product line offers automated software and services for migrating Lotus Notes and Oracle Forms applications. Our products include TD Mobile, Team Developer, SQLBase, Report Builder, NXJ, DataServer, VISION, ACCELL, Composer Notes and Composer CipherSoft.

Our customers and clients include corporate legal departments, law firms, information technology (“IT”) departments, software value-added resellers (“VARs”), solutions integrators (“SIs”) and independent software vendors (“ISVs”) from a variety of industries. We are headquartered in Irving, Texas, with offices in Roseville, California and Rutherford, New Jersey and international offices in Australia, Canada, France, Germany, and the United Kingdom (“UK”). We market and sell our software directly in the United States, Europe, Canada, Japan, Singapore and Australia and indirectly through global distributors and resellers on a worldwide basis.

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Certain prior period balances in our consolidated statements of operations have been reclassified between direct costs of eDiscovery revenue and selling, general and administrative expenses to conform with current presentation.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as set forth in the Financial Accounting Standards Board’s Accounting Standards Codification (Codification) and consider the various staff accounting bulletins and other applicable guidance issued by the SEC. GAAP, as set forth within the Codification, requires us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. To the extent there are differences between these estimates, judgments or assumptions and actual results, our financial statements will be affected. The accounting policies that reflect our more significant estimates, judgments and assumptions and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:

• Revenue Recognition
• Goodwill and Intangible Assets 
• Deferred Tax Asset Valuation Allowance 
• Accounts Receivable and Allowances for Doubtful Accounts 
• Accounting for Stock-based Compensation 
• Fair Value of Common Stock Warrant Liability

In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting among available alternatives would not produce a materially different result. Our senior management has reviewed these critical accounting policies and related disclosures with the Audit Committee of the Board of Directors.

During the first quarter of fiscal 2015, there were no significant changes to our critical accounting policies and estimates. Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for our fiscal year ended April 30, 2014 provides a more complete discussion of our critical accounting policies and estimates. In the first quarter of fiscal 2015, we recorded an additional restructuring charge related to the lease abandonment of $150 thousand. As of July 31, 2014, our accrued liability for unpaid restructuring charges was $0.4 million and is expected to be paid at various dates through May 2016.

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Results of Operations

The following table sets forth our consolidated statement of operations expressed as a percentage of total revenues for the periods indicated:

	Three Months Ended
	July 31,
	2014		2013
Revenues:
Archive and eDiscovery	61.6	%	68.0	%
Development, Database and Migration tools	38.4		32.0
Total revenues	100.0		100.0
Operating expenses:
Direct costs of Archive and eDiscovery revenue	23.4		27.6
Direct costs of Development, Database and Migration tools revenue	7.6		5.2
Product development	17.6		21.0
Selling, general and administrative	50.6		46.5
Total operating expenses	99.1		100.3
Income (loss) from operations	0.9		(0.3	)
Other income (expenses)
Gain (loss) from change in fair value of common stock warrant liability	1.4		(1.2	)
Interest expense	(4.6	)	(5.2	)
Other, net	(1.5	)	(0.4	)
Total other income (expenses)	(4.7	)	(6.8	)
Loss before income taxes	(3.8	)	(7.1	)
Provision for income taxes	(0.1	)	0.8
Net Loss	(3.7	)	(7.9	)

Total Revenues

We generate revenue from Archive and eDiscovery software and service sales as well as maintenance, support and consulting services. Our Archive and eDiscovery solutions are sold by our direct sales force in the United States and Europe. We also generate Development, Database, and Migration Tools revenue from software license sales and related services, including maintenance, support and consulting services. We sell our Development, Database, and Migration Tools solutions through our direct sales force in the United States and Europe, and through indirect channels comprised of distributors, ISVs, VARs, and other partners worldwide.

Total revenues in the first quarter of fiscal 2015 were $6.7 million, a decrease of $1.3 million from the first quarter of fiscal 2014, or 16%.

Total Archive and eDiscovery revenues in the first quarter of fiscal 2015 were $4.1 million, a decrease of $1.3 million from the first quarter of fiscal 2014, or 24%. The revenue from Archive and eDiscovery fluctuates depending on the activity of our clients’ legal matters as well as the timing of Archive license sales and performance of professional service engagements. The decrease in Archive and eDiscovery revenue as compared to the prior year period is primarily related to a reduction in our professional services and hosting revenues. We have a continued reduction in services to our largest client as the consulting services for this particular matter was substantially complete at the end of fiscal year 2014. This client, which represented 20% of our consolidated revenue during the first quarter of fiscal year 2014, has declined to 15% of consolidated revenue during the first quarter of fiscal year 2015. In addition, we have begun transitioning our business model to bring to market a single managed solution for information governance, compliance and litigation readiness. This transition is negatively impacting our revenues during the first quarter of fiscal year 2015 due to longer sales cycles with this type of business model.

Development, Database and Migration revenues in the first quarter of fiscal year 2014 were $2.6 million compared to $2.5 million in the prior year period, an increase of $0.1 million. This increase is the result of a growing interest in our migration tools license sales.

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Operating Expenses

Direct Costs of archive and eDiscovery Revenue. Direct costs of archive and eDiscovery revenue consist primarily of expenses related to employees, facilities, third party assistance and the amortization of purchased technology from third parties that were directly related to the generation of Archive and eDiscovery revenue. Direct costs of Archive and eDiscovery revenue were $1.6 million for the first quarter of fiscal 2015 compared to $2.2 million in the same period of fiscal 2014, a decline of $0.6 million. This decrease for the first quarter is a result of actions related to the organizational alignment during the third quarter of fiscal 2014.

Direct Costs of Development, Database, and Migration Tools Revenue. Direct costs of development, database and migration tools revenue consist primarily of expenses related to employees, facilities, third party assistance, and royalty payments that were directly related to the generation of database and migration revenue. Direct costs of development, database and migration tools revenue were $0.5 million and $0.4 million for the first quarter of fiscal 2015 and fiscal 2014, respectively. The increase in direct costs of development, database and migration tools revenue is primarily due to a slight increase in salaries and related costs.

Product Development. Product development efforts are focused on on-going enhancements and increased functionality for all of our core products: Daegis Edge, Daegis Acumen, Daegis AXS-One Archive, Team Developer, SQLBase, Report Builder, NXJ, VISION, Composer CipherSoft and Composer Notes. Within Gupta Technologies, we developed a new mobile enterprise application development product, TD Mobile. Product development expenses consist primarily of employee and facilities costs incurred in the development and testing of new products and in the porting of new and existing products to additional hardware platforms and operating systems. Product development costs decreased $0.5 million to $1.2 million for the first quarter of fiscal 2015 from $1.7 million in the first quarter of fiscal 2014. The decrease in product development expenses is primarily a result of open positions.

Selling, General and Administrative.Selling, general and administrative (“SG&A”) expenses consist primarily of salaries and benefits, marketing programs, travel expenses, professional services, facilities expenses, amortization of intangible assets, and bad debt expense. SG&A expenses were $3.4 million in the first quarter of fiscal 2015 and $3.7 million for the first quarter of fiscal 2014. The decrease in SG&A expense is primarily due to a reduction in outside consulting costs and employee benefits costs.

Gain/(loss) from Change in Fair Value of Common Stock Warrant Liability.The change in fair value of common stock warrant liability for the third quarter of fiscal year 2015 resulted in a gain of $0.1 million, compared to a loss of $0.1 million in same period last year. This gain and loss are due primarily to changes in our common stock share price during the periods.

Interest Expense. Interest expense for the first quarter of fiscal year 2015 was $0.3 million compared to $0.4 million for the same period last year. The decrease in interest expense in fiscal 2014 is due primarily to the amendment of our Revolving Credit and Term Loan Agreement with Wells Fargo in July 2013 which allowed us to move more of our debt from the higher interest bearing Term Note B to Term Note A as well as a decrease in the total outstanding debt as a result of the additional annual payment based on the Company’s free cash flow.

Other, Net. Other, net consists primarily of foreign exchange rate gains and losses and other income. Other, net was a loss of $0.1 million for the first quarter of fiscal 2015 and $31 thousand for the same period last year.

Provision for Income Taxes. The provision for income taxes was a benefit of $3,000 for the first quarter of fiscal year 2015 and was primarily related to a federal tax benefit. The provision for income tax was $64,000 for the first quarter of fiscal year 2014. For the first quarter of fiscal year 2014, we recorded $20 thousand in foreign tax expense and $44 thousand in state and federal tax expense.

Liquidity and Capital Resources

At July 31, 2014, the Company had cash of $5.1 million compared to $7.2 million at April 30, 2014. Cash declined primarily as a result of our excess cash flow debt payments of $1.9 million and our quarterly principal payment of $0.3 million. The Company had net accounts receivable of $5.1 million as of July 31, 2014 compared to $6.7 million as of April 30, 2014. The decline in accounts receivable is primarily the result of collection activities as well as lower revenue during the period.

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Effective July 31, 2014, the Company entered into an amendment to its Revolving Credit and Term Loan Agreement with Wells Fargo Capital Finance (the “Credit Agreement”). In order to secure its obligations under the Wells Fargo Credit Agreement, the Company has granted the lender a first priority security interest in substantially all of our assets. Under the terms of the amendment, the Company is entitled to borrow up to $15.1 million. The total amount that can be borrowed under the Credit Agreement is based on a multiplier factor of the trailing twelve months of maintenance and Software-as-a-Service revenue.

The Credit Agreement consisted of two term notes and a revolving credit note agreement. The Amendment extended the term of the Credit Agreement through June 30, 2017, reduced the interest rate and modified certain financial covenants. This Amendment, in conjunction with a prepayment made on July 31, 2014, under the Credit Agreement, reduced the outstanding principal balance on the Term A Loan to $10.1 million, and the Term B Loan, which incurred a minimum interest rate of 12.0%, has now been fully repaid. The Term Note A requires quarterly principal payments of $252,000 plus an additional annual payment based on the Company’s free cash flow for the year with any remaining amount due at maturity. To the extent the company makes annual principal payments based on free cash flow, the quarterly principal payments will be reduced. The Company incurs interest at the prevailing LIBOR rate plus 3.5-4.0% per annum with a minimum rate of 5.0%. During the first quarter of fiscal year 2015, we incurred interest at the pre-amendment minimum rate of 6.5%.

As of July 31, 2014 there is $10.1 million outstanding on the term note of which $1.0 million is current.

Under the terms of the revolving line of credit, the Company can borrow up to $5.0 million. The Company incurs interest expense on funds borrowed at the prevailing LIBOR rate plus 3.5-4.0% per annum with a minimum rate of 5.0%. The revolver has a maturity date of June 30, 2017. As of July 31, 2014 there is $2.5 million borrowed on the revolving line of credit, none of which is current. As of July 31, 2014, the Company was eligible to borrow an additional $1.6 million.

The Company is obligated to maintain certain minimum consolidated adjusted EBITDA levels, certain minimum liquidity levels, certain total leverage ratios, and certain fixed charge coverage ratios, all as calculated in accordance with the terms and definitions determining such amounts as contained in the Credit Agreement. The Credit Agreement also contains various information and financial reporting requirements. The Company is in compliance with all such covenants and requirements at July 31, 2014.

We believe our existing cash, along with forecasted operating cash flows and the revolving line of credit under the Wells Fargo Credit Agreement, will provide us with sufficient working capital for us to meet our operating plan for fiscal year 2015.

Operating Cash Flows. For the three months ended July 31, 2014 cash provided by operations was $0.2 million compared to $0.9 million for the same period last year. The reduction in operating cash flows was primarily the result of a smaller reduction in accounts receivable in the first quarter of fiscal 2015 as compared to the prior year.

Investing Cash Flows. Net cash used in investing activities was $33,000 for the three months ended July 31, 2014 and consisted of capital expenditures. Net cash provided by investing activities was $0.4 million for the three months ended July 31, 2013 and was the result of proceeds from the sale of our Composer Mainframe product line, offset by capital expenditures.

Financing Cash Flows. Net cash used in financing activities for the three months ended July 31, 2014 was $2.3 million compared to $1.7 million for the same period last year and consisted primarily of principal payments on the Credit Agreement.

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A summary of certain contractual obligations is as follows (in thousands):

as of July 31, 2014 (in thousands)		Payments Due by Period
				1 year						After
Contractual Obligations		Total		or less		2-3 years		4-5 years		5 years
Debt financing	$	12,572	$	1,007	$	11,565	$	-	$	-
Estimated interest expense		1,624		601		1,023		-		-
Other liabilities		158		-		-		-		158
Capital lease obligations		116		116		-		-		-
Operating leases		3,436		1,482		1,954		-		-
Total contractual cash obligations	$	17,906	$	3,206	$	14,542	$	-	$	158

Other liabilities primarily include mandatory severance costs associated with a French statutory government regulated plan covering all France employees.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk. The Company’s exposure to market rate risk for changes in interest rates relates primarily to its long term debt, which contains notes with variable interest rates.

The Wells Fargo Credit Agreement consists of outstanding balances of a $10.1 million Term Note A and a revolving line of credit agreement of $2.5 million. The Term Note A and revolving line of credit bear interest at LIBOR plus 3.5-4.0%. The minimum LIBOR used in the interest rate is 1. 0% for Term Note A and the revolving line of credit. LIBOR at July 31, 2014 is approximately 0.24%. A hypothetical 1% increase in the LIBOR rate would have no impact on our interest expense for the three months ended July 31, 2014 as the minimum LIBOR rate under the credit agreement was more than the current LIBOR rate plus 1%.

Foreign Currency Exchange Rate Risk. As a global concern, we face exposure to adverse movements in foreign currency exchange rates. These exposures may change over time as business practices evolve and could have an adverse impact on the Company’s business, operating results and financial position. Due to the substantial volatility of currency exchange rates, among other factors, we cannot predict the effect of exchange rate fluctuations on its future operating results. A hypothetical 1% change in foreign currency rates would not have a significant impact on the Company’s business, operating results and financial position.

Item 4. Controls and Procedures

(a)Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of July 31, 2014. The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based on that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective. Management recognizes that any disclosure controls and procedures no matter how well designed and operated, can only provide reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

(b) Changes in Internal Controls. There have been no changes in our internal control over financial reporting that occurred during that period that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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DAEGIS INC.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Litigation

The Company is subject to legal proceedings and claims arising in the ordinary course of business. If such matters arise, the Company cannot assure that it would prevail in such matters, nor can it assure that any remedy could be reached on mutually agreeable terms, if at all. Due to the inherent uncertainties of litigation, were there any such matters, the Company would not be able to accurately predict their ultimate outcome. As of July 31, 2014, there were no current proceedings or litigation involving the Company that management believes would have a material adverse impact on its financial position, results of operations, or cash flows.

Item 1A. Risk Factors

A description of the risks associated with our business, financial condition, and results of operations is set forth in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended April 30, 2014. There have been no material changes in our risks from such descriptions.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosure

Not applicable

Item 5. Other Information

Termination Benefits Arrangement

Effective August 20, 2014, the Company entered into a termination benefits arrangement with a continuing executive, Mr. Frank Verardi, Vice President and General Manager – Database, Development and Migration Tools Division. The termination agreement provides for payment to Mr. Verardi of six months of his base salary and the reimbursement for health benefits for six months if his employment is terminated by the Company other than for “cause” or as a result of a “change in control”. The termination benefits arrangement is attached hereto as Exhibit 10.1.

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Item 6. Exhibits

	Exhibits
10.1	Termination Benefits Arrangement by and between Frank Verardi and the Registrant effective August 20, 2014.
31.1	Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer under 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer under 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.
101.LAB	XBRL Taxonomy Extension Label Linkbase.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF	XBRL Taxonomy Extension Definition Linkbase.

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DAEGIS INC.
SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 26, 2014	Daegis Inc.
	(Registrant)
	By:
	/s/ SUSAN K. CONNER
	Susan K. Conner
	Chief Financial Officer
	(Principal Financial Officer)

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EX-10.1

August 13^th, 2014
 

Frank Verardi
13751 Cassinelli Ranch Road
P.O. Box 1328
Sutter Creek, CA 95685

Dear Frank:

The letter sets forth the terms of your severance agreement with Daegis Inc. (“Daegis”).

Although Daegis or you may terminate your employment at-will, with or without Cause, if Daegis terminates your employment without Cause or upon a Change in Control, you shall receive (1) cash severance payments equivalent to six (6) months of your base salary then in effect on the termination date, payable as “salary continuation” in accordance with Daegis’ regular payroll cycle, commencing on the first payroll period that is 31 days following the termination date; and (2) continuation of your existing health insurance benefits for a six (6) month period, if permitted by Daegis’ health insurance plan (at the then-current contribution levels), or, if not permitted by Daegis’ health insurance plan, Daegis will reimburse you for the cost of six (6) months of COBRA health insurance continuation benefits (assuming you are COBRA-eligible), or Medicare supplement insurance premiums.

Provision of these severance payments is contingent on your continued compliance with all Daegis confidentiality, invention assignment, and non-disclosure agreements, and your execution of a full general release, releasing all claims, known and unknown, that you may have against Daegis, arising out of or in any way related to your employment or termination of employment, on terms satisfactory to Daegis. If such a general release has not been executed and delivered and become irrevocable on or before the 30th day following your termination date, no severance payments shall be or become payable.

The following definitions apply:

“Cause” is defined as:

(1) an intentional act of fraud, embezzlement, theft or any other material violation of law that occurs during or in the course of your employment with Daegis;

(2) intentional damage to Daegis’ assets;

(3) intentional disclosure of Daegis’ confidential information contrary to its policies;

600 E. Las Colinas Blvd, Suite 1500 • Irving, TX 75039 • 214.584.6400 • daegisinc.com

(4) intentional engagement in any competitive activity which would constitute a breach of your duty of loyalty;

(5) intentional breach of any of Daegis policies;

(6) the willful and continued failure to substantially perform your duties for Daegis (other than as a result of incapacity due to disability); or

(7) willful conduct by you that is demonstrably and materially injurious to Daegis, monetarily or otherwise.

An act, or a failure to act, shall not be deemed willful or intentional, as those terms are used herein, unless it is done, or omitted to be done, by you in bad faith or without a reasonable belief that your action or omission was in the best interest of Daegis. Failure to meet performance goals or objectives, by itself, does not constitute “Cause.” “Cause” also includes any of the above grounds for dismissal regardless of whether Daegis learns of it before or after terminating your employment.

“Change in Control” is defined as any one of the following occurrences:

(1) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities and Exchange Act of 1934 as amended (the “Exchange Act”), other than a trustee or other fiduciary holding securities of Daegis under an employee benefit plan of Daegis, becomes the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of the securities of Daegis representing more than 50% of a) the outstanding shares of common stock of Daegis or b) the combined voting power of Daegis’ then-outstanding securities; or

(2) The sale or disposition of all or substantially all of Daegis’ assets (or any transaction having similar effect is consummated); or

(3) Daegis is party to a merger or consolidation that results in the holders of voting securities of Daegis outstanding immediately prior thereto failing to continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of Daegis or such surviving entity outstanding immediately after such merger or consolidation; or

(4) There occurs a sale to a “person” (as such term is defined in Section 13(d) of the Exchange Act) of securities of Daegis representing more than fifty percent (50%) of the total number of votes that may be cast for the election of directors of Daegis.

600 E. Las Colinas Blvd, Suite 1500 • Irving, TX 75039 • 214.584.6400 • daegisinc.com

Section 409A of the Internal Revenue Code of 1986 (the “Code”). This letter is intended to meet the requirements of Section 409A of the Code, and will be interpreted and construed consistent with that intent. For purposes of this letter, the terms “terminate,” “terminated” and “termination” mean a termination of your employment that constitutes a “separation from service” within the meaning of the default rules of Section 409A of the Code. Notwithstanding any other provision of this letter, to the extent that the right to any payment (including the provision of benefits) hereunder provides for the “deferral of compensation” within the meaning of Section 409A(d)(1) of the Code, the payment will be paid (or provided) in accordance with the following:

(i) If you are a “Specified Employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code upon a separation from service, then no such payment shall be made or commence during the period beginning on the termination date and ending on the date that is six (6) months following the termination date or, if earlier, on the date of your death. The amount of any payment that would otherwise be paid to you during this period will instead be paid on the fifteenth (15th) day of the first calendar month following the end of the period.

(ii) Payments with respect to reimbursements of expenses, including COBRA or Medicare supplement insurance premiums, shall be made or provided in accordance with the requirements of Code Section 409A, including, where applicable, the requirement that the reimbursement be made on or before the last day of the calendar year following the calendar year in which the relevant expense is incurred. The amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year. In no event will any reimbursement be made following the last day of the third calendar year following the year in which termination of employment occurred.

(iii) The right to a series of installment payments under this letter shall be treated as a right to a series of separate payments for purposes of Code Section 409A.

Please sign and date this letter below and return to me.

Sincerely,

/s/ Timothy Bacci

Timothy Bacci, Interim CEO

Agreed and Accepted:

/s/ Frank Verardi

Frank Verardi

August 15, 2014

Date

600 E. Las Colinas Blvd, Suite 1500 • Irving, TX 75039 • 214.584.6400 • daegisinc.com

EX-31.1

Exhibit 31.1

CERTIFICATION OF
CHIEF EXECUTIVE OFFICER

I, Timothy P. Bacci, certify that:

     1.I have reviewed this quarterly report on Form 10-Q of Daegis Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles; and

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ TIMOTHY P. BACCI

Timothy P. Bacci

Interim Chief Executive Officer

(Principal Executive Officer)

Dated: August 26, 2014

EX-31.2

Exhibit 31.2

CERTIFICATION OF
CHIEF FINANCIAL OFFICER

I, Susan K. Conner, certify that:

     1.I have reviewed this quarterly report on Form 10-Q of Daegis Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles; and

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ SUSAN K. CONNER

Susan K. Conner

Chief Financial Officer

(Principal Financial Officer)

Dated: August 26, 2014

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Daegis Inc. (the “Registrant”) on Form 10-Q for the quarter ended July 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Timothy P. Bacci, Interim Chief Executive Officer of the Registrant, do hereby certify in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:

     (1) the Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Dated: August 26, 2014	/s/ TIMOTHY P. BACCI
	Timothy P. Bacci
	Interim Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Daegis Inc. and will be retained by Daegis Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Daegis Inc. (the “Registrant”) on Form 10-Q for the quarter ended July 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Susan K. Conner, Chief Financial Officer of the Registrant, do hereby certify in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:

     (1) the Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

     (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Dated: August 26, 2014	/s/ SUSAN K. CONNER
	Susan K. Conner
	Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Daegis Inc. and will be retained by Daegis Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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Preferred Stock (Details) (Convertible Preferred Stock [Member], USD $)	1 Months Ended
	Aug. 31, 2013	Jun. 30, 2013	Jun. 30, 2011
Convertible Preferred Stock [Member]
Class of Stock [Line Items]
Stock issued during period, shares, new issues			1,666,667
Stock issued during period, per share, new issues			$ 2.40
Stock issued during period, value, new issues			$ 4,000,000
Convertible preferred stock, shares of common stock issued upon conversion		1
Preferred stock annual dividend, per share		$ 0.24
Dividends, preferred stock	$ 66,000
Preferred stock cash dividend paid	$ 0.04

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Long-Term Debt (Schedule Of Maturities Of Long-term Debt) (Details) (USD $) In Thousands, unless otherwise specified	Jul. 31, 2014
Long-Term Debt [Abstract]
Remainder of 2015	$ 840
2016	1,039
2017	1,007
2018	9,802
Total debt	$ 12,688

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Intangible Assets (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jul. 31, 2014	Jul. 31, 2013
Intangible Assets [Abstract]
Intangible assets amortization expense	$ 384	$ 385

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Segment Information (Narrative) (Details) (USD $)	3 Months Ended
	Jul. 31, 2014	Jul. 31, 2013	Apr. 30, 2014
Revenues from External Customers and Long-Lived Assets [Line Items]
Number of reportable segments	2
Revenues	$ 6,662,000	$ 7,964,000
United States [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	4,200,000	5,500,000
Long-lived assets	18,300,000		18,800,000
All Other Countries [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	2,500,000	2,500,000
Long-lived assets	$ 0		$ 0

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Stock Compensation Information (Summary Of Stock Option Activity) (Details) (USD $)	3 Months Ended			12 Months Ended
	Jul. 31, 2014		Jul. 31, 2013	Apr. 30, 2014
Stock Compensation Information [Abstract]
Shares, Outstanding at April 30, 2014	1,254,629
Shares, Granted	196,922
Shares, Exercised	0		0
Shares, Cancelled/expired	(97,398)
Shares, Outstanding at July 31, 2014	1,354,153			1,254,629
Shares, Exercisable at July 31, 2014	882,961
Weighted average exercise price, Outstanding at April 30, 2014	$ 2.38
Weighted average exercise price, Exercised
Weighted average exercise price, Outstanding at July 31, 2014	$ 2.26			$ 2.38
Weighted average exercise price, Exercisable at July 31, 2014	$ 2.80
Weighted average remaining contractual term (in years), Outstanding	6 years 11 months 1 day			6 years 9 months 26 days
Weighted average remaining contractual term (in years), Exercisable at July 31, 2014	5 years 9 months 4 days
Aggregate intrinsic value, Outstanding	$ 14,612	[1]		$ 41,972	[1]
Aggregate intrinsic value, Exercisable at July 31, 2014	$ 2,631	[1]

[1] Aggregate intrinsic value is defined as the difference between the current market value and the exercise price and is estimated using the closing price of our common stock on the last trading day of the periods ended as of the dates indicated.

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Accrued Restructuring Charge

3 Months Ended

Jul. 31, 2014

Accrued Restructuring Charge [Abstract]

Accrued Restructuring Charge

4.   Accrued Restructuring Charge

On December 3, 2013, we announced the completion of our organizational alignment in which the Archive and eDiscovery businesses were combined.  The alignment included movement of our operations, workforce reductions, abandonment of excess facilities and other charges in the Archive and eDiscovery reportable segment. 

A summary of the restructuring and other costs recognized for the three months ended July 31, 2014 are as follows:. 

								Deferred
				Lease		Asset		Rent		Other
		Severance		Abandonment		Impairment		Liability		Costs		Total
Amounts incurred and expected to be
incurred	$	420	$	933	$	127	$	(356)	$	88	$	1,212
Amounts incurred for the three months ended
July 31, 2014	$	-	$	150	$	-	$	-	$	21	$	171

At July 31, 2014, the accrued liability associated with the realignment consisted of the following:

				Lease
		Severance		Abandonment		Total
Accrued liability at April 30, 2014	$	96	$	464	$	560
Charges		-		117		117
Payments		(96)		(262)		(358)
Adjustments		-		33		33
Accrued liability at July 31, 2014	$	-	$	352	$	352

The restructuring and other related charges are included in the selling, general administrative expense line item in the Consolidated Statements of Operations.

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Segment Information (Schedule Of Segment Reporting Information By Segment) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jul. 31, 2014	Jul. 31, 2013	Apr. 30, 2014
Segment Reporting Information [Line Items]
Revenues	$ 6,662	$ 7,964
Operating Expenses	6,604	7,988
Operating Income (Loss)	58	(24)
Assets	29,439		33,653
Archive And eDiscovery [Member]
Segment Reporting Information [Line Items]
Revenues	4,104	5,415
Operating Expenses	3,259	4,658
Operating Income (Loss)	845	757
Assets	25,057		28,242
Development, Database, and Migration Tools [Member]
Segment Reporting Information [Line Items]
Revenues	2,558	2,549
Operating Expenses	1,673	1,524
Operating Income (Loss)	885	1,025
Assets	4,382		5,411
Unallocated Corporate Expenses [Member]
Segment Reporting Information [Line Items]
Operating Expenses	1,672	1,806
Operating Income (Loss)	$ (1,672)	$ (1,806)

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Accrued Restructuring Charge (Schedule Of Accrued Liability Associated With Realignment) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jul. 31, 2014
Restructuring Cost and Reserve [Line Items]
Accrued liability at April 30, 2014	$ 560
Charges	117
Payments	(358)
Adjustments	33
Accrued liability at July 31, 2014	352
Severance [Member]
Restructuring Cost and Reserve [Line Items]
Accrued liability at April 30, 2014	96
Payments	(96)
Lease Abandonment [Member]
Restructuring Cost and Reserve [Line Items]
Accrued liability at April 30, 2014	464
Charges	117
Payments	(262)
Adjustments	33
Accrued liability at July 31, 2014	$ 352

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Accrued Restructuring Charge (Summary Of Restructuring And Other Costs) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jul. 31, 2014
Restructuring Cost and Reserve [Line Items]
Amounts incurred and expected to be incurred	$ 1,212
Amounts incurred for the three months ended July 31, 2014	171
Severance [Member]
Restructuring Cost and Reserve [Line Items]
Amounts incurred and expected to be incurred	420
Lease Abandonment [Member]
Restructuring Cost and Reserve [Line Items]
Amounts incurred and expected to be incurred	933
Amounts incurred for the three months ended July 31, 2014	150
Asset Impairment [Member]
Restructuring Cost and Reserve [Line Items]
Amounts incurred and expected to be incurred	127
Deferred Rent Liability [Member]
Restructuring Cost and Reserve [Line Items]
Amounts incurred and expected to be incurred	(356)
Other Costs [Member]
Restructuring Cost and Reserve [Line Items]
Amounts incurred and expected to be incurred	88
Amounts incurred for the three months ended July 31, 2014	$ 21

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Fair Value Of Financial Instruments (Summary Of Activity Of Level 3 Inputs Measured On A Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jul. 31, 2014
Fair Value Of Financial Instruments [Abstract]
Balance at April 30, 2014	$ 276
Change in fair value of common stock warrant liability	(95)
Balance at July 31, 2014	$ 181

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Long-Term Debt (Narrative) (Details) (USD $)	1 Months Ended	3 Months Ended		3 Months Ended		3 Months Ended
	Jul. 31, 2014 Wells Fargo Credit Agreement [Member] item	Jul. 31, 2014 Term Note A [Member]	Apr. 30, 2014 Term Note A [Member]	Jul. 31, 2014 Term Note B [Member]	Apr. 30, 2014 Term Note B [Member]	Jul. 31, 2014 Minimum [Member] Term Note A [Member]	Jul. 31, 2014 Maximum [Member] Term Note A [Member]
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 15,100,000
Number of term loans	2
Number of revolving lines of credit	1
Maturity date	Jun. 30, 2017
Term loan amount		10,072,000	11,324,000		1,000,000
Stated interest rate, minimum		5.00%		12.00%
Quarterly principal payment		$ 252,000
Reference rate		LIBOR
Basis spread on variable reference rate						3.50%	4.00%
Effective interest rate at period end		6.50%

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Intangible Assets

3 Months Ended

Jul. 31, 2014

Intangible Assets [Abstract]

Intangible Assets

3.Intangible Assets    

Intangible asset balances by major asset class are as follows (in thousands):

		Gross				Net
		carrying		Accumulated		carrying
July 31, 2014		amount		amortization		amount
Customer-related	$	6,236	$	(4,572)	$	1,664
Technology-based		2,638		(2,112)		526
Trademarks		4,600		(1,560)		3,040
Trade name		100		(100)		-
Total	$	13,574	$	(8,344)	$	5,230
		Gross				Net
		carrying		Accumulated		carrying
April 30, 2014		amount		amortization		amount
Customer-related	$	6,236	$	(4,403)	$	1,833
Technology-based		2,638		(2,034)		604
Trademarks		4,600		(1,423)		3,177
Trade name		100		(100)		-
Total	$	13,574	$	(7,960)	$	5,614

Acquired finite-lived intangible assets are generally amortized on a straight-line basis over their estimated useful lives. The useful life of finite-lived intangible assets is the period over which the asset is expected to contribute directly or indirectly to future cash flows of the Company.  Intangible asset amortization expense for the three months ended July31, 2014 and 2013 was $0.4 million for each quarter.The estimated future amortization expense related to intangible assets as of July 31, 2014 is as follows (in thousands):

Fiscal Year Ending April 30,		Amount
Remainder of 2015	$	1,130
2016		1,096
2017		814
2018		774
2019		774
Thereafter		642
Total	$	5,230

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Long-Term Debt (Schedule Of Long-Term Debt) (Details) (USD $) In Thousands, unless otherwise specified	Jul. 31, 2014	Apr. 30, 2014
Debt Instrument [Line Items]
Capital leases	$ 116	$ 147
Total debt	12,688	14,971
Less current portion	(1,123)	(3,123)
Total long term debt, net	11,565	11,848
Term Note A [Member]
Debt Instrument [Line Items]
Term loan amount	10,072	11,324
Term Note B [Member]
Debt Instrument [Line Items]
Term loan amount		1,000
Wells Fargo Revolving Line Of Credit [Member]
Debt Instrument [Line Items]
Revolving line of credit	$ 2,500	$ 2,500

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Loss Per Share (Narrative) (Details) (Convertible Debt Securities [Member])	1 Months Ended
	Jun. 30, 2013
Convertible Debt Securities [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive securities that are not included in the diluted net loss calculation	1,666,667
Convertible preferred stock, shares of common stock issued upon conversion	1

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jul. 31, 2014	Apr. 30, 2014
Current assets:
Cash	$ 5,088	$ 7,178
Accounts receivable, net of allowances of $209 and $211, respectively	5,137	6,657
Prepaid expenses	557	617
Other current assets	384	358
Total current assets	11,166	14,810
Property and equipment, net of accumulated depreciation of $5,086 and $4,921, respectively	902	1,053
Goodwill	11,706	11,706
Intangibles, net	5,230	5,614
Other assets	435	470
Total assets	29,439	33,653
Current liabilities:
Accounts payable	433	308
Current portion of long-term debt	1,123	3,123
Accrued compensation and related expenses	865	1,185
Other accrued liabilities	957	971
Deferred revenue	7,365	8,590
Total current liabilities	10,743	14,177
Long term debt, net of current portion	11,565	11,848
Deferred tax liabilities, net	1,028	1,032
Common stock warrant liability	181	276
Other long-term liabilities	918	1,095
Total liabilities	24,435	28,428
Commitments and contingencies
Stockholders' equity:
Common stock	17	17
Additional paid-in capital	100,179	100,152
Accumulated other comprehensive income	280	280
Accumulated deficit	(95,472)	(95,224)
Total stockholders' equity	5,004	5,225
Total liabilities and stockholders' equity	$ 29,439	$ 33,653

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Basis Of Presentation

3 Months Ended

Jul. 31, 2014

Basis Of Presentation [Abstract]

Basis Of Presentation

1.Basis of Presentation

The condensed consolidated financial statements prepared by Daegis Inc. (the “Company”, “we”, “us”, “our”) have been derived from our audited financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations.

The accompanying condensed consolidated financial statements include our accounts and those of our subsidiaries that we control due to ownership of a controlling interest. Intercompany transactions and balances have been eliminated. While the interim financial information contained in this filing is unaudited, such financial statements, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) which we consider necessary for a fair presentation. The results for interim periods are not necessarily indicative of the results to be expected for the entire fiscal year. These financial statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations, which are included in the Company’s Annual Report on Form10-K for the fiscal year ended April 30, 2014, as filed with the SEC.

In the third quarter of fiscal year 2014, after the alignment of our archive and eDiscovery operations, we determined that we have two reportable segments: (i) Archive and eDiscovery and (ii) Development, Database and Migration tools.  As a result, we have restated historical results to reflect those new reporting segments.

Certain prior period balances in our consolidated statements of operations have been reclassified between direct costs of eDiscovery revenue and selling, general and administrative expenses to conform with current presentation.

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Stock Compensation Information (Summary Of Equity-Based Compensation Expense From Operations) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jul. 31, 2014	Jul. 31, 2013
Employee Service Share-based Compensation, Allocation Of Recognized Period Costs [Line Items]
Total equity based compensation	$ 27	$ 53
Direct Costs of Revenue [Member]
Employee Service Share-based Compensation, Allocation Of Recognized Period Costs [Line Items]
Total equity based compensation	2	5
Product Development
Employee Service Share-based Compensation, Allocation Of Recognized Period Costs [Line Items]
Total equity based compensation	3	13
Selling, General and Administrative[Member]
Employee Service Share-based Compensation, Allocation Of Recognized Period Costs [Line Items]
Total equity based compensation	$ 22	$ 35

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Loss Per Share (Tables)

3 Months Ended

Jul. 31, 2014

Loss Per Share [Abstract]

Schedule Of Earnings Per Share, Basic And Diluted

(in thousands, except  per share amounts)		Three Months Ended
		July 31,
		2014		2013
Net loss	$	(247)	$	(633)
Dividends paid and payable on preferred stock		-		(66)
Net loss available to common stockholders	$	(247)	$	(699)
Weighted-average shares of common stock outstanding, basic		16,384		15,297
Effect of dilutive securities		-		-
Weighted-average shares of common stock outstanding, diluted		16,384		15,297
Loss per share of common stock:
Basic	$	(0.02)	$	(0.05)
Diluted	$	(0.02)	$	(0.05)
Antidilutive securities
Weighted average number of stock options		1,091		1,695
Weighted average number of warrants		719		909
Weighted average number of preferred stock		-		1,111

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Stock Compensation Information (Summary Of Fair Value Assumptions) (Details) (USD $)	3 Months Ended		12 Months Ended
	Jul. 31, 2014	Jul. 31, 2013	Apr. 30, 2014
Stock Compensation Information [Abstract]
Expected term (in years)	4 years	4 years
Risk-free interest rate	1.30%	0.80%
Volatility	74.00%	57.00%
Dividend yield	0.00%	0.00%	0.00%
Weighted-average fair value of stock options granted during the period	$ 0.68	$ 0.50

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Basis Of Presentation (Details)	3 Months Ended
	Jul. 31, 2014 segment
Basis Of Presentation [Abstract]
Number of reportable segments	2

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Recent Accounting Pronouncements

3 Months Ended

Jul. 31, 2014

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

2.Recent Accounting Pronouncements    

In May 2014, the FASB issued Accounting Standards update No. 2014-09 Revenue from Contracts with Customers (ASU 204-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP.

The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting periods with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption. We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard in 2017.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, unless otherwise specified	Jul. 31, 2014	Apr. 30, 2014
Condensed Consolidated Balance Sheets [Abstract]
Accounts receivable, allowance	$ 209	$ 211
Property and equipment, accumulated depreciation	$ 5,086	$ 4,921

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Intangible Assets (Tables)

3 Months Ended

Jul. 31, 2014

Intangible Assets [Abstract]

Schedule Of Intangible Assets And Goodwill

		Gross				Net
		carrying		Accumulated		carrying
July 31, 2014		amount		amortization		amount
Customer-related	$	6,236	$	(4,572)	$	1,664
Technology-based		2,638		(2,112)		526
Trademarks		4,600		(1,560)		3,040
Trade name		100		(100)		-
Total	$	13,574	$	(8,344)	$	5,230
		Gross				Net
		carrying		Accumulated		carrying
April 30, 2014		amount		amortization		amount
Customer-related	$	6,236	$	(4,403)	$	1,833
Technology-based		2,638		(2,034)		604
Trademarks		4,600		(1,423)		3,177
Trade name		100		(100)		-
Total	$	13,574	$	(7,960)	$	5,614

Schedule Of Finite-Lived Intangible Assets, Future Amortization Expense

Fiscal Year Ending April 30,		Amount
Remainder of 2015	$	1,130
2016		1,096
2017		814
2018		774
2019		774
Thereafter		642
Total	$	5,230

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Document And Entity Information	3 Months Ended
	Jul. 31, 2014	Aug. 26, 2014
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jul. 31, 2014
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2015
Entity Registrant Name	DAEGIS INC.
Entity Central Index Key	0000880562
Current Fiscal Year End Date	--04-30
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		16,384,444

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Accrued Restructuring Charge (Tables)

3 Months Ended

Jul. 31, 2014

Accrued Restructuring Charge [Abstract]

Summary Of Restructuring And Other Costs

								Deferred
				Lease		Asset		Rent		Other
		Severance		Abandonment		Impairment		Liability		Costs		Total
Amounts incurred and expected to be
incurred	$	420	$	933	$	127	$	(356)	$	88	$	1,212
Amounts incurred for the three months ended
July 31, 2014	$	-	$	150	$	-	$	-	$	21	$	171

Schedule Of Accrued Liability Associated With Realignment

				Lease
		Severance		Abandonment		Total
Accrued liability at April 30, 2014	$	96	$	464	$	560
Charges		-		117		117
Payments		(96)		(262)		(358)
Adjustments		-		33		33
Accrued liability at July 31, 2014	$	-	$	352	$	352

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Condensed Consolidated Statements Of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Jul. 31, 2014	Jul. 31, 2013
Revenues:
Archive and eDiscovery	$ 4,104	$ 5,415
Development, Database, and Migration Tools	2,558	2,549
Total revenues	6,662	7,964
Operating expenses:
Direct costs of Archive and eDiscovery revenue	1,557	2,199
Direct costs of Development, Database, and Migration Tools revenue	504	418
Product development	1,173	1,671
Selling, general and administrative	3,370	3,700
Total operating expenses	6,604	7,988
Income (loss) from operations	58	(24)
Other income (expenses)
Gain (loss) from change in fair value of common stock warrant liability	95	(99)
Interest expense	(303)	(415)
Other, net	(100)	(31)
Total other income (expense)	(308)	(545)
Loss before income taxes	(250)	(569)
Provision (benefit) for income taxes	(3)	64
Net loss	$ (247)	$ (633)
Loss per share:
Basic	$ (0.02)	$ (0.05)
Diluted	$ (0.02)	$ (0.05)
Weighted-average shares used in computing loss per share:
Basic	16,384	15,297
Diluted	16,384	15,297

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Stock Compensation Information

3 Months Ended

Jul. 31, 2014

Stock Compensation Information [Abstract]

Stock Compensation Information

7.Stock Compensation Information

Stock-based compensation expense is determined from the estimated fair value of stock-based awards at the date of grant and is recognized over the vesting period of the awards, net of estimated forfeitures.  For the three months ended July 31, 2014 and 2013, stock-based compensation expense was comprised of the following (in thousands):     

		Three Months Ended
		July 31,
		2014		2013
Direct costs of revenue	$	2	$	5
Product development		3		13
Selling, general, and administrative		22		35
Total equity-based compensation	$	27	$	53

We estimate the fair value of our stock-based awards using the Black-Scholes option pricing model. The Black-Scholes option pricing model incorporates various assumptions including expected term, interest rates and expected volatility. Changes in the assumptions can materially affect the fair value estimates and ultimately how much we recognize as stock-based compensation expense. The weighted-average input assumptions used and resulting fair values were as follows:     

		Three Months Ended
		July 31,
		2014		2013
Expected term (in years)		4.0		4.0
Risk-free interest rate		1.3	%	0.8	%
Volatility		74	%	57	%
Dividend yield		-		-
Weighted-average fair value of stock options granted during the period	$	0.68	$	0.50

We base our expected term assumption on our historical experience and on the terms and conditions of the stock awards we grant to employees. The risk-free interest rate is based upon United States Treasury interest rates appropriate for the expected term of the awards. The expected volatility is based on the historical volatility of our common stock over the most recent period commensurate with the estimated expected term of our stock options. We did not pay cash dividends to common stockholders in fiscal 2014 or year to date in fiscal 2015, and do not anticipate paying any cash dividends on common stock in the foreseeable future. Accordingly, an expected dividend yield of zero is used in the Black-Scholes option pricing model.   

At July 31, 2014, there was approximately $0.3 million of unrecognized compensation expense related to unvested stock-based awards granted. The unrecognized expense is expected to be recognized over a weighted-average period of 3.2years.     

A summary of our stock option activity for the three months ended July 31, 2014 is as follows:    

			Weighted-	Weighted-
			average	average remaining		Aggregate
			exercise	contractual		intrinsic
	Shares		price	term (in years)		value (1)
Outstanding at April 30, 2014	1,254,629	$	2.38	6.82	$	41,972
Granted	196,922
Exercised	-
Cancelled/expired	(97,398)
Outstanding at July 31, 2014	1,354,153		2.26	6.92		14,612
Exercisable at July 31, 2014	882,961	$	2.80	5.76	$	2,631

(1) Aggregate intrinsic value is defined as the difference between the current market value and the exercise price and is estimated using the closing price of our common stock on the last trading day of the periods ended as of the dates indicated.

There were no awards exercised during the three months ended July 31, 2014and 2013. The total fair value of awards vested during the three months ended July 31, 2014and 2013 was $27 thousand and $53 thousand, respectively.  The total fair value of awards granted during the three months ended July 31, 2014and 2013 was $0.1 million and $0.1 million, respectively. 

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Long-Term Debt

3 Months Ended

Jul. 31, 2014

Long-Term Debt [Abstract]

Long-Term Debt

6.   Long-Term Debt

Effective July 31, 2014, the Company entered into an amendment to its Revolving Credit and Term Loan Agreement with Wells Fargo Capital Finance (the “Credit Agreement”). In order to secure its obligations under the Wells Fargo Credit Agreement, the Company has granted the lender a first priority security interest in substantially all of our assets. Under the terms of the amendment, the Company is entitled to borrow up to $15.1 million. The total amount that can be borrowed under the Credit Agreement is based on a multiplier factor of the trailing twelve months of maintenance and Software-as-a-Service revenue. 

The Credit Agreement consisted of two term notes and a revolving credit note agreement. The Amendment extended the term of the Credit Agreement through June 30, 2017, reduced the interest rate and modified certain financial covenants. This Amendment, in conjunction with a prepayment made on July 31, 2014, under the Credit Agreement, reduced the outstanding principal balance on the Term A Loan to $10.1 million, and the Term B Loan, which incurred a minimum interest rate of 12.0%, has now been fully repaid.  The Term Note A requires quarterly principal payments of $252,000 plus an additional annual payment based on the Company’s free cash flow for the year with any remaining amount due at maturity.  To the extent the Company makes annual principal payments based on free cash flow, the quarterly principal payments will be reduced.  The Company incurs interest at the prevailing LIBOR rate plus 3.5-4.0% per annum with a minimum rate of 5.0%. During the first quarter of fiscal year 2015, we incurred interest at the pre-amendment minimum rate of 6.5%. 

Our long-term debt consists of the following (in thousands):    

		July 31,		April 30,
		2014		2014
Term Note A	$	10,072	$	11,324
Term Note B		-		1,000
Revolving line of credit		2,500		2,500
Capital leases		116		147
		12,688		14,971
Less current portion		(1,123)		(3,123)
Total long term debt, net	$	11,565	$	11,848

The Wells Fargo Credit Agreement requires ongoing compliance with certain affirmative and negative covenants. The affirmative covenants include, but are not limited to: (i) maintenance of existence and conduct of business; (ii) compliance with laws; (iii) use of proceeds; and (iv) books and records and inspection. The negative covenants set forth in the Wells Fargo Credit Agreement include, but are not limited to, restrictions on our ability (and on our subsidiaries): (i) with certain limited exceptions, to create, incur, assume or allow to exist indebtedness; (ii) with certain limited exceptions, to create, incur, assume or allow to exist liens on properties; (iii) with certain limited exceptions, to make certain payments, transfers of property, or investments; or (iv) with certain limited exceptions, to make acquisitions.

We are obligated to maintain certain minimum consolidated adjusted EBITDA levels, certain minimum liquidity levels, certain total leverage ratios, and certain fixed charge coverage ratios, all as calculated in accordance with the terms and definitions determining such amounts as contained in the Wells Fargo Credit Agreement. The Wells Fargo Credit Agreement also contains various information and financial reporting requirements. The Company is in compliance with all such covenants and requirements at July 31, 2014.

A summary of expected future principal payments, excluding any annual principal payments based on free cash flow, on long-term debt obligations as of July 31, 2014is as follows (in thousands):    

Fiscal Year Ending April 30,		Amount
Remainder of 2015	$	840
2016		1,039
2017		1,007
2018		9,802
	$	12,688

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Segment Information (Tables)

3 Months Ended

Jul. 31, 2014

Segment Information [Abstract]

Schedule Of Segment Reporting Information, By Segment

(in thousands)		Three Months Ended
		July 31,
		2014		2013
Total revenues:
Archive and eDiscovery	$	4,104	$	5,415
Development, Database and Migration tools		2,558		2,549
Total revenues	$	6,662	$	7,964
Operating expenses:
Archive and eDiscovery	$	3,259	$	4,658
Direct costs of Development, Database and Migration tools revenue		1,673		1,524
Unallocated corporate expenses		1,672		1,806
Total operating expenses	$	6,604	$	7,988
Income (loss) from operations:
Archive and eDiscovery	$	845	$	757
Development, Database and Migration tools		885		1,025
Unallocated corporate expenses		(1,672)		(1,806)
Total income (loss) from operations	$	58	$	(24)
		July 31,		April 30,
		2014		2014
Total assets:
Archive and eDiscovery	$	25,057	$	28,242
Development, Database and Migration tools		4,382		5,411
Total assets	$	29,439	$	33,653

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Fair Value Of Financial Instruments (Tables)

3 Months Ended

Jul. 31, 2014

Fair Value Of Financial Instruments [Abstract]

Summary Of Activity Of Level 3 Inputs Measured On A Recurring Basis

(in thousands)	Common stock warrants
Balance at April 30, 2014	$	276
Change in fair value of common stock warrant liability		(95)
Balance at July 31, 2014	$	181

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Loss Per Share

3 Months Ended

Jul. 31, 2014

Loss Per Share [Abstract]

Loss Per Share

10.   Loss Per Share

Basic loss per share is computed by dividing net loss less dividends payable on preferred stock by the weighted-average number of common shares outstanding during the reporting period. Diluted loss per share is computed similar to basic loss per share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock.   

(in thousands, except  per share amounts)		Three Months Ended
		July 31,
		2014		2013
Net loss	$	(247)	$	(633)
Dividends paid and payable on preferred stock		-		(66)
Net loss available to common stockholders	$	(247)	$	(699)
Weighted-average shares of common stock outstanding, basic		16,384		15,297
Effect of dilutive securities		-		-
Weighted-average shares of common stock outstanding, diluted		16,384		15,297
Loss per share of common stock:
Basic	$	(0.02)	$	(0.05)
Diluted	$	(0.02)	$	(0.05)
Antidilutive securities
Weighted average number of stock options		1,091		1,695
Weighted average number of warrants		719		909
Weighted average number of preferred stock		-		1,111

Potentially dilutive securities that are not included in the diluted net loss calculation are antidilutive because the exercise prices of these securities are greater than the average market price of the stock during the respective periods.  As noted above, the 1,666,667 shares of preferred stock were converted into shares of common stock on a 1-for-1 basis on June 30, 2013.  

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Income Taxes

3 Months Ended

Jul. 31, 2014

Income Taxes [Abstract]

Income Taxes

8.   Income Taxes

We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.   

We are subject to income taxes in the U.S. federal jurisdiction, and various states and foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. In general, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for the fiscal years before 2008. We do not believe there will be any material changes in our unrecognized tax positions over the next 12 months. Therefore, no reserves for uncertain income tax positions have been recorded.   

Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. As of July 31, 2014and April 30, 2014, we did not have any accrued interest or penalties associated with any unrecognized tax benefits, nor did we record any interest expense associated with any unrecognized tax benefits in the three months ended July 31, 2014 and 2013.

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Preferred Stock

3 Months Ended

Jul. 31, 2014

Preferred Stock [Abstract]

Preferred Stock

9.   Preferred Stock    

In June 2011, we issued, through a private placement,1,666,667 shares of preferred stock to a group of related party institutional investors at a price of $2.40 per share for a total of $4.0 million.  These shares of preferred stock were automatically converted on a 1-for-1 basis into shares of common stock on June 30, 2013. The preferred stock included an annual dividend of $0.24 per share payable in cash or stock at our option. In August 2013, we paid a final dividend of  $66,000on this preferred stock ($0.04 per preferred share).

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Segment Information

3 Months Ended

Jul. 31, 2014

Segment Information [Abstract]

Segment Information

11.   Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our Chief Executive Officer. We have evaluated our approach for making operating decisions and assessing the performance of our business and, in the third quarter of fiscal year 2014 after the alignment of our Archive and eDiscovery operations, we determined that we have two reportable segments: (i) Archive and eDiscovery and (ii) Development, Database and Migration Tools.  As a result, we have adjusted historical results to reflect those new reporting segments.

The accounting policies of the segments are the same as those described Note 1 of Part III, Item 15 of our Annual Report on Form 10-K for our fiscal year ended April 30, 2014.  We evaluate performance based on income from operations (total revenues less operating costs).  We do not allocate certain corporate costs to each segment and therefore disclose these amounts separately in our segment table.

For the three months ended July 31, 2014 and 2013, total revenue from the United States was $4.2 million and $5.5 million, respectively.Total revenue from all other countries for the three months ended July 31, 2014 and 2013 was $2.5 million and $2.5 million, respectively.Total long-lived assets as of July 31, 2014 and April 30, 2014, for the United States, were $18.3 million and $18.8 million, respectively. There were no long-lived assets in other countries as of July 31, 2014 and April 30, 2014.

(in thousands)		Three Months Ended
		July 31,
		2014		2013
Total revenues:
Archive and eDiscovery	$	4,104	$	5,415
Development, Database and Migration tools		2,558		2,549
Total revenues	$	6,662	$	7,964
Operating expenses:
Archive and eDiscovery	$	3,259	$	4,658
Direct costs of Development, Database and Migration tools revenue		1,673		1,524
Unallocated corporate expenses		1,672		1,806
Total operating expenses	$	6,604	$	7,988
Income (loss) from operations:
Archive and eDiscovery	$	845	$	757
Development, Database and Migration tools		885		1,025
Unallocated corporate expenses		(1,672)		(1,806)
Total income (loss) from operations	$	58	$	(24)
		July 31,		April 30,
		2014		2014
Total assets:
Archive and eDiscovery	$	25,057	$	28,242
Development, Database and Migration tools		4,382		5,411
Total assets	$	29,439	$	33,653

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Stock Compensation Information (Narrative) (Details) (USD $)	3 Months Ended		12 Months Ended
	Jul. 31, 2014	Jul. 31, 2013	Apr. 30, 2014
Stock Compensation Information [Abstract]
Dividend payments	$ 0		$ 0
Dividend yield	0.00%	0.00%	0.00%
Unrecognized compensation expense	300,000
Cost recognition, weighted-average period, years	3 years 2 months 12 days
Exercise of stock options, shares	0	0
Fair value of awards vested	27,000	53,000
Fair value of awards granted	$ 100,000	$ 100,000

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Stock Compensation Information (Tables)

3 Months Ended

Jul. 31, 2014

Stock Compensation Information [Abstract]

Schedule Of Equity-Based Compensation Expense From Operations

		Three Months Ended
		July 31,
		2014		2013
Direct costs of revenue	$	2	$	5
Product development		3		13
Selling, general, and administrative		22		35
Total equity-based compensation	$	27	$	53

Summary Of Fair Value Assumptions

		Three Months Ended
		July 31,
		2014		2013
Expected term (in years)		4.0		4.0
Risk-free interest rate		1.3	%	0.8	%
Volatility		74	%	57	%
Dividend yield		-		-
Weighted-average fair value of stock options granted during the period	$	0.68	$	0.50

Summary Of Stock Option Activity

			Weighted-	Weighted-
			average	average remaining		Aggregate
			exercise	contractual		intrinsic
	Shares		price	term (in years)		value (1)
Outstanding at April 30, 2014	1,254,629	$	2.38	6.82	$	41,972
Granted	196,922
Exercised	-
Cancelled/expired	(97,398)
Outstanding at July 31, 2014	1,354,153		2.26	6.92		14,612
Exercisable at July 31, 2014	882,961	$	2.80	5.76	$	2,631

(1) Aggregate intrinsic value is defined as the difference between the current market value and the exercise price and is estimated using the closing price of our common stock on the last trading day of the periods ended as of the dates indicated.

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Intangible Assets (Schedule Of Intangible Assets And Goodwill) (Details) (USD $) In Thousands, unless otherwise specified	Jul. 31, 2014	Apr. 30, 2014
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, Gross carrying amount	$ 13,574	$ 13,574
Finite-lived intangible assets, Accumulated amortization	(8,344)	(7,960)
Finite-lived intangible assets, Net carrying amount	5,230	5,614
Customer-Related [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, Gross carrying amount	6,236	6,236
Finite-lived intangible assets, Accumulated amortization	(4,572)	(4,403)
Finite-lived intangible assets, Net carrying amount	1,664	1,833
Technology-Based [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, Gross carrying amount	2,638	2,638
Finite-lived intangible assets, Accumulated amortization	(2,112)	(2,034)
Finite-lived intangible assets, Net carrying amount	526	604
Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, Gross carrying amount	4,600	4,600
Finite-lived intangible assets, Accumulated amortization	(1,560)	(1,423)
Finite-lived intangible assets, Net carrying amount	3,040	3,177
Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, Gross carrying amount	100	100
Finite-lived intangible assets, Accumulated amortization	$ (100)	$ (100)

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Loss Per Share (Schedule Of Earnings (Loss) Per Share) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Jul. 31, 2014	Jul. 31, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Net loss	$ (247)	$ (633)
Dividends paid and payable on preferred stock		(66)
Net loss available to common stockholders	$ (247)	$ (699)
Weighted-average shares of common stock outstanding, basic	16,384,000	15,297,000
Weighted-average shares of common stock outstanding, diluted	16,384,000	15,297,000
Basic	$ (0.02)	$ (0.05)
Diluted	$ (0.02)	$ (0.05)
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Weighted average number of antidilutive securities	1,091	1,695
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Weighted average number of antidilutive securities	719	909
Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Weighted average number of antidilutive securities		1,111

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Condensed Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jul. 31, 2014	Jul. 31, 2013
Cash flows from operating activities:
Net loss	$ (247)	$ (633)
Reconciliation of net loss to net cash provided by operating activities:
Depreciation	183	265
Amortization of intangible assets	384	385
Provision for doubtful accounts	108	118
Stock based compensation expense	27	53
Deferred tax liability	(4)	(40)
(Gain) loss from change in fair value of common stock warrant liability	(95)	99
Changes in operating assets and liabilities:
Accounts receivable	1,412	2,376
Prepaid expenses and other current assets	34	541
Other assets	35	47
Accounts payable	125	212
Accrued compensation and related expenses	(320)	(1,057)
Other accrued liabilities	(15)	(14)
Deferred revenue	(1,382)	(1,420)
Other long term liabilities	(20)	(47)
Net cash provided by operating activities	225	885
Cash flows from investing activities:
Proceeds from assets held for sale		400
Purchases of property and equipment	(33)	(3)
Net cash provided by (used in) investing activities	(33)	397
Cash flows from financing activities:
Principal payments under debt obligations	(2,251)	(1,641)
Principal payments on capital leases	(31)	(56)
Net cash used in financing activities	(2,282)	(1,697)
Net change in cash	(2,090)	(415)
Cash, beginning of year	7,178	5,459
Cash, end of period	5,088	5,044
Supplemental cash flow information:
Cash paid for interest	256	341
Cash paid for income taxes	$ 52	$ 14

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Fair Value Of Financial Instruments

3 Months Ended

Jul. 31, 2014

Fair Value Of Financial Instruments [Abstract]

Fair Value of Financial Instruments

5.  Fair Value of Financial Instruments     

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.

In determining fair value, we use various valuation approaches and establish a hierarchy for inputs used in measuring fair value that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.  Observable inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company.  Unobservable inputs are inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.  The hierarchy is broken down into three levels based on the observability of inputs as follows:

· Level 1 – Quoted prices in active markets for identical assets and liabilities.

· Level 2 – Observable inputs other than those included in Level 1, such as quoted market prices for similar assets and liabilities in active markets or quoted prices for identical assets in inactive markets.

· Level 3 – Unobservable inputs are used when little or no market data is available and reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

We value our common stock warrant liability on a recurring basis based on open form option pricing models which, based on the relevant inputs, render the fair value estimate Level 3.  Changes in the fair value of the warrants are reflected in the consolidated statements of operations as “Gain (loss) from change in fair value of common stock warrant liability.”

Fair Value on a Recurring Basis

The following table summarizes the activity of Level 3 inputs measured on a recurring basis for the three months ended July 31, 2014:   

(in thousands)	Common stock warrants
Balance at April 30, 2014	$	276
Change in fair value of common stock warrant liability		(95)
Balance at July 31, 2014	$	181

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Intangible Assets (Schedule Of Finite-Lived Intangible Assets, Future Amortization Expense) (Details) (USD $) In Thousands, unless otherwise specified	Jul. 31, 2014	Apr. 30, 2014
Intangible Assets [Abstract]
Remainder of 2015	$ 1,130
2016	1,096
2017	814
2018	774
2019	774
Thereafter	642
Finite-lived intangible assets, Net carrying amount	$ 5,230	$ 5,614

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Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jul. 31, 2014	Jul. 31, 2013	Apr. 30, 2014
Income Taxes [Abstract]
Reserve for uncertain tax positions	$ 0
Accrued interest or penalties associated with unrecognized tax benefits	0		0
Interest expense associated with unrecognized tax benefits	$ 0	$ 0

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Long-Term Debt (Tables)

3 Months Ended

Jul. 31, 2014

Long-Term Debt [Abstract]

Schedule Of Long-Term Debt

		July 31,		April 30,
		2014		2014
Term Note A	$	10,072	$	11,324
Term Note B		-		1,000
Revolving line of credit		2,500		2,500
Capital leases		116		147
		12,688		14,971
Less current portion		(1,123)		(3,123)
Total long term debt, net	$	11,565	$	11,848

Schedule Of Maturities Of Long-term Debt

Fiscal Year Ending April 30,		Amount
Remainder of 2015	$	840
2016		1,039
2017		1,007
2018		9,802
	$	12,688