CORRECTION: Altigen Communications, Inc. Reports First Quarter Results for Fiscal Year 2022

This correction release is being issued to update the Trended Financial Information table to include the Fiscal Year 2021 and the Fiscal Year to Date 2022 information.

MILPITAS, CA / ACCESSWIRE / January 27, 2022 / Altigen Communications, Inc. (OTCQB:ATGN), a Silicon Valley based Microsoft ISV and Cloud Solutions provider, announced today its financial results for the first quarter ended December 31, 2021.

"This quarter was generally consistent with our past few quarters", said Jerry Fleming Altigen's President & CEO. "More importantly we made substantial progress toward the release of our next generation cloud solutions. I expect these solutions, which are in the process of being released, to be significant revenue drivers for Altigen as they start gaining traction in the market."

First-Quarter Highlights (Fiscal 2022 versus Fiscal 2021)

• Net Revenue increased 2.7% to $2.7 million;
• Gross margin of 72.0%, compared with 74.0%;
• Cloud services revenue of $1.9 million, compared to $1.8 million;
• GAAP net income and diluted EPS of $0.01 million and $0.00, compared to GAAP net income and diluted EPS of $0.06 million and $0.00, respectively;
• Non-GAAP net income and diluted EPS of $0.3 million and $0.01, respectively, compared to $0.2 million and $0.01, respectively;
• Adjusted EBITDA increased to $0.3 million, compared to $0.2 million.

Select Financial Metrics: Fiscal 2022 versus Fiscal 2021 as of 12/31/2021*
(in thousands, except for EPS and percentages)	1Q22	1Q21	Change
Total Revenue	$ 2,732	$ 2,661	2.7%
Cloud Services	1,910	1,841	3.7%
Professional and Other Services	139	71	95.8%
Legacy Products	683	749	-8.7%
Software Assurance	505	633	-20.2%
Perpetual Software License	178	116	53.4%
GAAP Operating Income	$ 10	$ 55	-81.8%
Operating Margin	0.4%	2.1%
Non-GAAP Operating Income	$ 66	$ 77	-14.3%
Non-GAAP Operating Margin	2.4%	2.9%
GAAP Net Income	$ 11	$ 56	-80.4%
Non-GAAP Net Income	$ 312	$ 235	32.8%
Non-GAAP Diluted Earnings Per Share	$ 0.01	$ 0.01	0.0%
Adjusted EBITDA (1)	$ 312	$ 235	32.8%
Cash Flow from Operations	$ 110	$ (312)	nm

nm = not measurable/meaningful; *may not add up due to rounding

1. Throughout this release, Adjusted EBITDA is a non-GAAP financial measure intended to provide useful information that supplements Altigen's results in accordance with GAAP. Please refer to the Reconciliation of Non-GAAP Financial Measure at the end of this release for an explanation of Altigen's formulation of Adjusted EBITDA and reconciliations to the most directly comparable GAAP measure.

Trended Financial Information*

Trended Financial Information*
(in thousands, except for EPS and percentages)	1Q21	2Q21	3Q21	4Q21	1Q22	FY 2021	FYTD 2022
Period Ended:	12/31/2020	3/30/2021	6/30/2021	9/30/2021	12/31/2021
Total Revenue	$ 2,661	$ 2,687	$ 2,848	$ 2,794	$ 2,732	$ 10,990	$ 2,732
Cloud Services	1,841	1,855	1,964	1,970	1,910	7,630	1,910
Professional and Other Services	71	75	211	144	139	501	139
Legacy Products	749	757	673	680	683	2,859	683
Software Assurance	633	577	550	523	505	2,283	505
Perpetual Software License	116	180	123	157	178	576	178
GAAP Operating Income/(loss)	$ 55	$ (325)	$ 179	$ 71	$ 10	$ (20)	$ 10
Operating Margin	2.1%	-12.1%	6.3%	2.5%	0.4%	-0.2%	0.4%
Non-GAAP Operating Income	$ 77	$ 21	$ 217	$ 121	$ 66	$ 436	$ 66
Non-GAAP Operating Margin	2.9%	0.8%	7.6%	4.3%	2.4%	4.0%	2.4%
GAAP Net Income (loss)	$ 56	$ (336)	$ 982	$ (1,193)	$ 11	$ (491)	$ 11
Non-GAAP Net Income	$ 235	$ 239	$ 452	$ 358	$ 312	$ 1,284	$ 312
Non-GAAP Diluted Earnings Per Share	$ 0.01	$ 0.01	$ 0.02	$ 0.01	$ 0.01	$ 0.05	$ 0.01
Adjusted EBITDA (1)	$ 235	$ 238	$ 452	$ 360	$ 312	$ 1,285	$ 312
nm = not measurable/meaningful; *may not add up due to rounding

nm = not measurable/meaningful; *may not add up due to rounding

1. Throughout this release, Adjusted EBITDA is a non-GAAP financial measure intended to provide useful information that supplements Altigen's results in accordance with GAAP. Please refer to the Reconciliation of Non-GAAP Financial Measure at the end of this release for an explanation of Altigen's formulation of Adjusted EBITDA and reconciliations to the most directly comparable GAAP measure.

Non-GAAP Financial Measures

In calculating non-GAAP financial measures, we exclude certain items to facilitate a review of the comparability of our core operating performance on a period-to-period basis. The excluded items represent stock-based compensation expense, depreciation and amortization expenses and other non-recurring or unusual items that may arise from time to time that we do not consider to be directly related to core operating performance. We use non-GAAP measures to evaluate the core operating performance of our business and to perform financial planning. Since we find these measures to be useful, we believe that investors benefit from seeing results reviewed by management in addition to seeing GAAP results. We believe that these non-GAAP measures, when read in conjunction with our GAAP financials, provide useful information to investors by facilitating: (i) the comparability of our on-going operating results over the periods presented and (ii) the ability to identify trends in our underlying business.

The following are explanations of each type of adjustment that we incorporate into non-GAAP financial measures:

Stock-based compensation expense

Stock-based compensation expense is impacted by the Company's future hiring and retention needs and the future fair market value of the Company's common stock, all of which are difficult to predict and subject to constant change. Furthermore, stock-based compensation expense is generally fixed at the time of grant, then amortized over a period of several years, and generally cannot be changed or influenced by management after the grant. The Company believes that the exclusion of stock-based compensation expense assists investors in the comparisons of operating results to peer companies. Stock-based compensation expense can vary significantly based on the timing, size and nature of awards granted.

Depreciation and amortization expenses

Depreciation and amortization expense includes the depreciation of property and equipment, amortization of capitalized software, as well as amortization of intangible assets. Such expenses are fixed at the time of an acquisition, then amortized over a period of several years. While depreciation and amortization are considered operating costs under GAAP, these expenses primarily represent non-cash current period expense which vary widely from company to company. Management believes that the exclusion of depreciation and amortization expense provides a supplemental measure of the Company's ongoing operating performance.

Acquisition-related amortization

Acquisition-related amortization consists of customer relationships recorded in connection with our acquisition of Blue Panda Communications in September 2020. We exclude acquisition-related amortization as we believe the amount of such non-cash expenses in any specific period may not directly correlate to the underlying performance of our business operations.

Gain on forgiveness of PPP loan

Gain on forgiveness of PPP loan has been excluded because this is a one-time forgiveness of debt that is not recurring across all periods, and we believe inclusion of the gain is not representative of operating performance.

Valuation allowance on deferred tax assets

Valuation allowance on deferred tax assets consists of a valuation allowance recorded against certain deferred tax assets where certain strategic decisions associated with our operational improvement initiatives have made it more likely than not that such deferred tax assets will not be realized. We have excluded this charge as we believe the amount of such expense does not directly correlate to the underlying performance of our business operations in the period recorded.

Other non-recurring or unusual charges

The Company has excluded certain other expenses that are the result of other, non-comparable events to measure operating performance. These events arise outside of the ordinary course of continuing operations. Given the unique nature of the matters relating to these costs, the Company believes these items are not normal operating expenses. For example, legal settlements and judgments vary significantly, in their nature, size and frequency, and, due to this volatility, the Company believes the costs associated with legal settlements and judgments are not normal operating expenses. The Company believes that the exclusion of such out-of-the-ordinary-course amounts provides supplemental information to assist in the comparison of the financial results of the Company from period to period and, therefore, provides useful supplemental information to investors.

Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation. They should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.

Conference Call

Altigen will be discussing its financial results and outlook on a conference call today at 2:00 p.m. Pacific Time (5:00 p.m. ET). The conference call can be accessed by dialing (877) 545-0320 (domestic) or (973) 528-0002 (international), conference ID #502194. A live webcast will also be made available at www.altigen.com . To access the replay, dial (877) 481-4010 (domestic) or (919) 882-2331 (international), conference ID #44438. A web archive will be made available at www.altigen.com for 90 days following the call's conclusion.

About Altigen Communications

Altigen Communications, Inc. (OTCQB:ATGN), based in Silicon Valley, is a leading provider of Cloud-based Unified Communications solutions built on Microsoft technologies. Altigen's all software solutions include hosted PBX, enterprise routing and queuing, call recording, and complete omni-channel contact center solutions. We also provide cost-effective integrated SIP communications services in conjunction with our solutions in order to deliver a complete end-to-end, fully managed cloud service for our customers and partners. Our solutions are available through our global network of certified resellers. For more information, call 1-888-ALTIGEN or visit our website at www.altigen.com.

Safe Harbor Statement

This press release contains forward‐looking information. The statements are based on reasonable assumptions, beliefs and expectations of management and the Company provides no assurance that actual events will meet management's expectations. Furthermore, the forward-looking statements contained in this press release are based on the Company's views of future events and financial performances which are subject to known and unknown risks and uncertainties including, but not limited to, statements regarding our ability to successfully release our next generation cloud solutions, our ability to accelerate business opportunities and drive the adoption of our next generation cloud solutions, and our ability to achieve increased market acceptance for our service offerings. There can be no assurances that the Company will achieve expected results, and actual results may be materially different than expectations and from those stated or implied in forward-looking statements.

Please refer to the Company's most recent Annual Report filed with the OTCQB over-the-counter market for a further discussion of risks and uncertainties. Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. The Company does not undertake any obligation to update any forward-looking statements.

Contact:
Brian Siegel, IRC, MBA
Managing Director
Hayden IR
(346) 396-8696
brian@haydenir.com

ALTIGEN COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, amounts in thousands)

		December 31, 2021				September 30, 2021
Cash and cash equivalents		$	6,824			$	6,799
Accounts receivable, net			586				596
Other current assets			269				145
Property and equipment, net			23				27
Operating lease right-of-use			752				826
Intangible assets, net			389				433
Capitalized software, net			1,574				1,669
Deferred tax asset			6,597				6,597
Other long-term assets			37				45
Total assets		$	17,051			$	17,137
Current liabilities		$	1,833			$	1,932
Long-term liabilities			664				736
Stockholders' equity			14,554				14,469
Total liabilities and stockholders' equity		$	17,051			$	17,137

ALTIGEN COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(amounts in thousands, except per share data)

		Three Months Ended
		December 31,
		2021				2020
Net revenue		$	2,732			$	2,661
Gross profit			1,966				1,969
Operating expenses:
Research and development			1,022				751
Selling, general & administrative			934				1,163
Operating income			10				55
Other income/(expense), net			1				1
Net income before provision for income taxes			11				56
Net income		$	11			$	56
Per share data:
Basic		$	0.00			$	0.00
Diluted		$	0.00			$	0.00
Weighted average shares outstanding:
Basic			23,759				23,035
Diluted			25,533				25,643

ALTIGEN COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, amounts in thousands)

		Three Months Ended December 31,
		2021				2020
Cash flows from operating activities:
Net income		$	11			$	56
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization			4				10
Amortization of intangible assets			44				43
Amortization of capitalized software			198				104
Stock-based compensation			56				22
Changes in operating assets and liabilities:
Accounts receivable and unbilled accounts receivable			10				(175	)
Prepaid expenses and other current assets			(124	)			(68	)
Other long-term assets			8				(20	)
Accounts payable			(50	)			(55	)
Accrued expenses			(55	)			(101	)
Deferred revenue			8				(128	)
Net cash provided by/(used in) operating activities			110				(312	)
Cash flows from investing activities:
Capitalized software development costs			(103	)			(180	)
Net cash used in investing activities			(103	)			(180	)
Cash flows from financing activities:
Proceeds from issuances of common stock			18				6
Net cash provided by financing activities			18				6
Net increase in cash and cash equivalents			25				(486	)
Cash and cash equivalents, beginning of period			6,799				6,659
Cash and cash equivalents, end of period		$	6,824			$	6,173

ALTIGEN COMMUNICATIONS, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(amounts in thousands, except per share data)

		Three Months Ended
		December 31,
		2021				2020
Reconciliation of GAAP to Non-GAAP Gross Profit:
GAAP gross profit		$	1,966			$	1,969
Amortization of capitalized software			162				71
Amortization related to acquisitions			44				44
Non-GAAP gross profit		$	2,172			$	2,084
Reconciliation of GAAP to Non-GAAP Expenses:
GAAP operating expenses		$	1,956			$	1,914
Depreciation and amortization			4				9
Amortization of capitalized software			35				33
Stock-based compensation			56				22
Non-GAAP operating expenses		$	1,861			$	1,850
Reconciliation of GAAP to Non-GAAP Net Income:
GAAP net income		$	11			$	56
Depreciation and amortization			4				9
Amortization of capitalized software			197				104
Stock-based compensation			56				22
Acquisition related expenses			44				44
Non-GAAP net income		$	312			$	235
Per share data:
Basic		$	0.01			$	0.01
Diluted		$	0.01			$	0.01
Weighted average shares outstanding:
Basic			23,759				23,035
Diluted			25,533				25,643

SOURCE: Altigen Communications, Inc.

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