SofTech Announces Q4 and FY 2014 Operating Results

The estimated financial results contained in this announcement for the Company’s first fiscal quarter ended August 31, 2014 are preliminary, and are subject to the closing of its financial books and the completion of the customary quarter-end review procedures.

FINANCIAL STATEMENTS

The Statements of Operations for the three and twelve month periods ended May 31, 2014 compared to the same periods in the prior fiscal year are presented below. A reconciliation of Net income(loss) to EBITDA, a non-GAAP financial measure, is also provided.


Statements of Operations
(in thousands, except % and per share data)


	For the three months ended
	May 31,			May 31,			Change
		2014			2013			$		%
Product revenue		95		$	347			(252	)	-72.6	%
Service revenue		783			1,211			(428	)	-35.3	%
Total revenue		878			1,558			(680	)	-43.6	%

Cost of sales		369			363			6		1.7	%
Gross margin		509			1,195			(686	)	-57.4	%
Gross margin %		58.0	%		76.7	%

R&D		256			288			(32	)	-11.1	%
SG&A		882			795			87		10.9	%
Gain on sale of CADRA product line		(494	)		-			(494	)	-

Operating income		(135	)		112			(247	)	-220.5	%
Interest expense		48			144			(96	)	-66.7	%
Other (income) expense		(22	)		4			(26	)	-650.0	%
Income(loss) from operations before income taxes		(161	)		(36	)		(125	)	347.2	%
Provision for income taxes		2			15			(13	)	-86.7	%
Net income(loss)		(163	)		(51	)		(112	)	219.6	%

Weighted average shares outstanding		875			1,045			(170	)	-16.3	%
Basic and diluted net income per share:	$	(0.19	)	$	(0.05	)	$	(0.14	)	281.7	%

Reconciliation of Net income to EBITDA:

Net income(loss)	$	(163	)	$	(51	)	$	(112	)	219.6	%
Plus interest expense		48			144			(96	)	-66.7	%
Plus tax expense		2			15			(13	)	-86.7	%
Plus non-cash expenses		128			176			(48	)	-27.3	%
Plus non-cash goodwill expense related to CADRA product line		44			-			44		-
EBITDA	$	59		$	284		$	(225	)	-79.2	%


Statements of Operations
(in thousands, except % and per share data)


	For the fiscal years ended
	May 31,			May 31,			Change
		2014			2013			$		%
Product revenue	$	1,138		$	1,284		$	(146	)	-11.4	%
Service revenue		3,861			4,784			(923	)	-19.3	%
Royalties on sale of patents		10			290			(280	)	-
Total revenue		5,009			6,358			(1,349	)	-21.2	%

Cost of sales		1,567			1,375			192		14.0	%
Gross margin		3,442			4,983			(1,541	)	-0.8	%
Gross margin %		68.7	%		78.4	%

R&D		1,171			1,087			84		7.7	%
SG&A		3,465			3,186			279		8.8	%
Gain on sale of CADRA product line		(649	)		-			(649	)	-

Operating income		(545	)		710			(1,255	)	-176.8	%
Interest expense		251			342			(91	)	-26.6	%
Other (income) expense		(50	)		(7	)		(43	)	614.3	%
Income from operations before income taxes		(746	)		375			(1,121	)	-298.9	%
Provision for income taxes		2			15			(13	)	-86.7	%
Net income		(748	)		360			(1,108	)	-307.8	%

Weighted average shares outstanding		877			1,019			(142	)	-13.9	%
Basic and diluted net income per share:	$	(0.85	)	$	0.35		$	(1.21	)	-341.4	%

Reconciliation of Net income to EBITDA

Net income	$	(748	)	$	360			(1,108	)	-307.8	%
Plus interest expense		251			342			(91	)	-26.6	%
Plus tax expense		2			15			(13	)	-86.7	%
Plus non-cash expenses, net		284			341			(57	)	-16.7	%
Plus non-cash goodwill expense related to CADRA product line		3,305			-			3,305		-
EBITDA	$	3,094		$	1,058		$	2,036		192.4	%


Balance Sheets
(in thousands)


	As of
	May 31,		May 31,
	2014		2013
Cash	$	1,209	$	1,188
Restricted cash		-		100
Accounts receivable		666		895
Receivable due from sale of CADRA product line		547
Other current assets		343		299
Total current assets		2,765		2,482

Property and equipment, net		95		61
Goodwill		948		4,249
Other non-current assets		916		922
Total assets	$	4,724	$	7,714

Accounts payable	$	483	$	137
Accrued expenses		503		602
Deferred maintenance revenue		1,462		2,088
Current portion of long term debt		973		-
Other current liabilities		123		102
Total current liabilities		3,544		2,929

Other non-current liabilities		47		98
Long term debt		-		2,700
Total liabilities		3,591		5,727

Redeemable common stock		275		275

Stockholders' equity		858		1,712
Total liabilities, redeemable common stock
and stockholders' equity	$	4,724	$	7,714

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