OTG Software Reports Higher Revenue And Financial Results for First Quarter 2001

Consolidated Highlights:



- $13.9 Million in Quarterly Revenues, A 30% Increase Over Q1 2000

- Another Quarter of Positive Cash Flow

Which Leads to Over $103 Million in Cash

- Break-Even Profitability on a Pro-Forma Basis

- Completed Acquisition of Smart Storage



Apr 26, 2001, 01:00 ET from OTG Software

    BETHESDA, Md., April 26 /PRNewswire/ -- OTG Software (Nasdaq:   OTGS), a
 leading provider of online data storage, data access and email management
 software, today announced financial results for its first quarter ended March
 31, 2001.  Consolidated revenues for the first quarter totaled $13.9 million,
 representing an increase of 30% over first quarter 2000 consolidated results
 of $10.7 million.  Software license revenues were $10.3 million while services
 revenues were $3.6 million.
     On a consolidated pro forma basis, excluding certain merger related and
 purchase accounting adjustments associated with the acquisitions of both Smart
 Storage and xVault, net income per share for the first quarter was break even
 which, on a consolidated basis, equaled the results realized for the first
 quarter of 2000.
     Operating cash flow for the first quarter was a positive $205,000, as
 compared to negative cash flow of $1.3 million realized during the first
 quarter 2000.
     "We are pleased with our results during the first quarter.  OTG continued
 to invest heavily in the future of the Company while remaining cash flow
 positive.  Through our investments, we continue to enhance our ability to
 serve the needs of IT decision makers.  Because our products provide storage
 virtualization and access for applications and their users, we believe they
 provide a high return on investment and reduce the total cost of IT
 ownership," stated Richard Kay, Chairman and CEO of OTG Software.
     "The acquisition of Smart Storage helps us fulfill many of our long-term
 strategic goals including: opening new market opportunities, broadening our
 product line, increasing our sales channels and expanding our international
 footprint," Mr. Kay continued.  "We are already realizing the benefits of the
 merger with the launch of the first product from the combined companies,
 VideoXtender, which opens the door to the fast growing rich media and
 streaming video storage market."
 
     INVESTOR'S NOTE:  Investors can listen to a teleconference of OTG's
 management's review of the first quarter financial results and comments about
 the outlook for its operations today April 26, 2001 at approximately 5:00 p.m.
 EDT.  The call may be accessed through OTG's website at http://www.otg.com or
 by calling 888-428-4478 (domestic) and 612-332-0820 (international.)  A
 recording of the conference call will be available beginning at approximately
 8:30 p.m. EST on April 26, 2001 and remain available through approximately
 11:59 p.m. May 3, 2001.  The access code for the replay is 584277.
 
     About OTG Software
     Headquartered in Bethesda, Maryland, OTG Software is a provider of online
 storage management and access solutions, including EmailXtender, its patent
 pending dynamic email management solution.  OTG's software enables enterprises
 to store, track and retrieve data over a variety of network architectures,
 including the Web and storage area networks.  Through its application-centric
 product suite, OTG offers a Web and e-commerce solution that provides robust
 functionality across many industries.  OTG empowers storage by combining
 storage with access and email management.  OTG's products support over 750
 storage devices, are easy to install and use, and can manage storage systems
 ranging in size from a single storage device to an enterprise-wide network
 storage system.  OTG Software's products are used by over 15,000 organizations
 worldwide and are available through a network of over 450 VARs, distributors,
 and OEMs.  For more information, visit the company's web site at
 http://www.otg.com or call 800-324-4222.
 
     This press release contains forward-looking statements within the meaning
 of the federal Private Securities Litigation Reform Act of 1995.  Statements
 contained herein that are not statements of historical fact may be deemed to
 be forward-looking information.  Without limiting the foregoing, references to
 future growth or expansion are forward-looking, and words such as
 "anticipates," "believes," "could," "estimate," "expect," "intend," "may,"
 "might," "should," "will," and "would" and other forms of these words or
 similar words are intended to identify forward-looking information.  You
 should read statements that contain these words carefully because they discuss
 our future expectations, contain projections of our future results of
 operations or of our financial position or state other forward-looking
 information. There may be events in the future that we are not able to predict
 or control accurately, and any forward-looking statements are subject to risks
 and uncertainties that could cause our actual results to differ materially.
 These risks and uncertainties include:  (i) the ability to recruit and retain
 qualified technical and other personnel in a highly competitive market, (ii)
 market acceptance of our new and future products, (iii) the growth and
 adoption rate of Windows NT, Windows 2000, UNIX and Linux (iv) growing
 competition and (v) our ability to maintain and manage our growth. For
 additional information regarding risk factors that could affect our future
 results, please refer to the discussions of "Risk Factors" in our Annual
 Report on Form 10-K for the year ended December 31, 2000, filed with the SEC
 on March 7, 2001.
 
                               OTG Software, Inc.
                           Statements of Operations*
                    (in thousands, except per share amounts)
 
                                      Three Months Ended March 31,
                               2001         2000          2001         2000
                                   GAAP Basis                Pro Forma**
     Revenues
       Software licenses    $10,286       $ 8,488      $10,286       $ 8,488
       Services               3,637         2,195        3,637         2,195
         Total revenues      13,923        10,683       13,923        10,683
     Cost of revenues
       Software licenses        909           473          841           427
       Services               1,574         1,078        1,574         1,078
         Total cost of
           revenues           2,483         1,551        2,415         1,505
           Gross profit      11,440         9,132       11,508         9,178
 
     Operating expenses
       Sales and marketing    6,682         4,743        6,682         4,743
       Research and
         development          4,053         2,523        4,053         2,523
       General and
         administrative       2,122         1,642        2,122         1,642
       Merger-related costs   1,585             -            -             -
       Amortization of
         acquired intangible
         assets                 208             -            -             -
         Total operating
           expenses          14,650         8,908       12,857         8,908
     Income (loss) from
       operations            (3,210)          224       (1,349)          270
 
     Other income (expense)
       Interest income        1,406           211        1,406           211
       Interest expense         (19)         (624)         (19)         (624)
       Foreign exchange
         gain (loss)            (38)           55          (38)           55
         Total other income
           (expense)          1,349          (358)       1,349          (358)
     Income (loss) before
       income taxes          (1,861)         (134)           -           (88)
     Credit for income
       taxes                   (502)             -           -             -
     Net income (loss)     $ (1,359)      $  (134)     $     -       $   (88)
 
     Net income (loss)
       per common share
       Basic and Diluted   $  (0.04)      $ (0.01)     $     -       $     -
     Shares used for
       computation
       Basic and Diluted     31,127        21,444       31,127        21,444
 
     *   Unaudited.
     **  The pro forma statements of operations exclude merger-related costs
         related to the Company's acquisition of Smart Storage in the first
         quarter of 2001, amortization expenses associated with certain
         intangible assets resulting from the Company's acquisition of xVault
         in the second quarter of 2000 and amortization expenses associated
         with Smart Storage's acquisition of certain intangible assets in the
         first quarter of 2000.
 
                               OTG Software, Inc.
                                 Balance Sheets
                                 (in thousands)
 
                                                     March 31,    December 31,
                                                      2001           2000
                                                           (unaudited)
     Assets
     Current assets
       Cash and cash equivalents                     $102,819       $102,197
       Accounts receivable, net of allowance           18,389         20,613
       Deferred income taxes                            2,656          2,066
       Other current assets                             3,878          2,919
         Total current assets                         127,742        127,795
     Other assets
       Property and equipment, net                      5,015          4,744
       Goodwill, net                                    2,365          2,510
       Other intangibles, net                           1,080          1,212
       Deferred income taxes                            1,221          1,302
       Other noncurrent assets, net                       767            759
         Total other assets                            10,448         10,527
           Total assets                              $138,190       $138,322
 
     Liabilities
     Current liabilities
       Accounts payable                              $  3,551       $  4,080
       Income taxes payable                                 -          1,143
       Accrued expenses                                 8,602          7,572
       Current portion of long-term debt                   61             61
       Current portion of note payable                    397            225
       Current portion of notes payable to stockholder    518             67
       Deferred revenues                                7,505          7,586
         Total current liabilities                     20,634         20,734
     Other liabilities
       Long-term debt, net of current portion               8             23
       Note payable, net of current portion                 -            225
       Notes payable to stockholder, net of
         current portion                                    -             18
       Deferred revenues                                  490            446
         Total other liabilities                          498            712
           Total liabilities                           21,132         21,446
     Shareholders' equity
       Preferred stock                                      -              -
       Common stock                                       314            309
       Additional paid-in capital                     141,425        140,025
       Deferred compensation, net                      (1,467)        (1,637)
       Accumulated other comprehensive loss               (62)           (28)
       Accumulated deficit                            (22,080)       (20,741)
         Shareholders' equity before stock
           subscription receivable                    118,130        117,928
             Less: stock subscription receivable       (1,072)        (1,052)
               Total shareholders' equity             117,058        116,876
                 Total liabilities and
                   shareholders' equity              $138,190       $138,322
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X49623443
 
 

SOURCE OTG Software
    BETHESDA, Md., April 26 /PRNewswire/ -- OTG Software (Nasdaq:   OTGS), a
 leading provider of online data storage, data access and email management
 software, today announced financial results for its first quarter ended March
 31, 2001.  Consolidated revenues for the first quarter totaled $13.9 million,
 representing an increase of 30% over first quarter 2000 consolidated results
 of $10.7 million.  Software license revenues were $10.3 million while services
 revenues were $3.6 million.
     On a consolidated pro forma basis, excluding certain merger related and
 purchase accounting adjustments associated with the acquisitions of both Smart
 Storage and xVault, net income per share for the first quarter was break even
 which, on a consolidated basis, equaled the results realized for the first
 quarter of 2000.
     Operating cash flow for the first quarter was a positive $205,000, as
 compared to negative cash flow of $1.3 million realized during the first
 quarter 2000.
     "We are pleased with our results during the first quarter.  OTG continued
 to invest heavily in the future of the Company while remaining cash flow
 positive.  Through our investments, we continue to enhance our ability to
 serve the needs of IT decision makers.  Because our products provide storage
 virtualization and access for applications and their users, we believe they
 provide a high return on investment and reduce the total cost of IT
 ownership," stated Richard Kay, Chairman and CEO of OTG Software.
     "The acquisition of Smart Storage helps us fulfill many of our long-term
 strategic goals including: opening new market opportunities, broadening our
 product line, increasing our sales channels and expanding our international
 footprint," Mr. Kay continued.  "We are already realizing the benefits of the
 merger with the launch of the first product from the combined companies,
 VideoXtender, which opens the door to the fast growing rich media and
 streaming video storage market."
 
     INVESTOR'S NOTE:  Investors can listen to a teleconference of OTG's
 management's review of the first quarter financial results and comments about
 the outlook for its operations today April 26, 2001 at approximately 5:00 p.m.
 EDT.  The call may be accessed through OTG's website at http://www.otg.com or
 by calling 888-428-4478 (domestic) and 612-332-0820 (international.)  A
 recording of the conference call will be available beginning at approximately
 8:30 p.m. EST on April 26, 2001 and remain available through approximately
 11:59 p.m. May 3, 2001.  The access code for the replay is 584277.
 
     About OTG Software
     Headquartered in Bethesda, Maryland, OTG Software is a provider of online
 storage management and access solutions, including EmailXtender, its patent
 pending dynamic email management solution.  OTG's software enables enterprises
 to store, track and retrieve data over a variety of network architectures,
 including the Web and storage area networks.  Through its application-centric
 product suite, OTG offers a Web and e-commerce solution that provides robust
 functionality across many industries.  OTG empowers storage by combining
 storage with access and email management.  OTG's products support over 750
 storage devices, are easy to install and use, and can manage storage systems
 ranging in size from a single storage device to an enterprise-wide network
 storage system.  OTG Software's products are used by over 15,000 organizations
 worldwide and are available through a network of over 450 VARs, distributors,
 and OEMs.  For more information, visit the company's web site at
 http://www.otg.com or call 800-324-4222.
 
     This press release contains forward-looking statements within the meaning
 of the federal Private Securities Litigation Reform Act of 1995.  Statements
 contained herein that are not statements of historical fact may be deemed to
 be forward-looking information.  Without limiting the foregoing, references to
 future growth or expansion are forward-looking, and words such as
 "anticipates," "believes," "could," "estimate," "expect," "intend," "may,"
 "might," "should," "will," and "would" and other forms of these words or
 similar words are intended to identify forward-looking information.  You
 should read statements that contain these words carefully because they discuss
 our future expectations, contain projections of our future results of
 operations or of our financial position or state other forward-looking
 information. There may be events in the future that we are not able to predict
 or control accurately, and any forward-looking statements are subject to risks
 and uncertainties that could cause our actual results to differ materially.
 These risks and uncertainties include:  (i) the ability to recruit and retain
 qualified technical and other personnel in a highly competitive market, (ii)
 market acceptance of our new and future products, (iii) the growth and
 adoption rate of Windows NT, Windows 2000, UNIX and Linux (iv) growing
 competition and (v) our ability to maintain and manage our growth. For
 additional information regarding risk factors that could affect our future
 results, please refer to the discussions of "Risk Factors" in our Annual
 Report on Form 10-K for the year ended December 31, 2000, filed with the SEC
 on March 7, 2001.
 
                               OTG Software, Inc.
                           Statements of Operations*
                    (in thousands, except per share amounts)
 
                                      Three Months Ended March 31,
                               2001         2000          2001         2000
                                   GAAP Basis                Pro Forma**
     Revenues
       Software licenses    $10,286       $ 8,488      $10,286       $ 8,488
       Services               3,637         2,195        3,637         2,195
         Total revenues      13,923        10,683       13,923        10,683
     Cost of revenues
       Software licenses        909           473          841           427
       Services               1,574         1,078        1,574         1,078
         Total cost of
           revenues           2,483         1,551        2,415         1,505
           Gross profit      11,440         9,132       11,508         9,178
 
     Operating expenses
       Sales and marketing    6,682         4,743        6,682         4,743
       Research and
         development          4,053         2,523        4,053         2,523
       General and
         administrative       2,122         1,642        2,122         1,642
       Merger-related costs   1,585             -            -             -
       Amortization of
         acquired intangible
         assets                 208             -            -             -
         Total operating
           expenses          14,650         8,908       12,857         8,908
     Income (loss) from
       operations            (3,210)          224       (1,349)          270
 
     Other income (expense)
       Interest income        1,406           211        1,406           211
       Interest expense         (19)         (624)         (19)         (624)
       Foreign exchange
         gain (loss)            (38)           55          (38)           55
         Total other income
           (expense)          1,349          (358)       1,349          (358)
     Income (loss) before
       income taxes          (1,861)         (134)           -           (88)
     Credit for income
       taxes                   (502)             -           -             -
     Net income (loss)     $ (1,359)      $  (134)     $     -       $   (88)
 
     Net income (loss)
       per common share
       Basic and Diluted   $  (0.04)      $ (0.01)     $     -       $     -
     Shares used for
       computation
       Basic and Diluted     31,127        21,444       31,127        21,444
 
     *   Unaudited.
     **  The pro forma statements of operations exclude merger-related costs
         related to the Company's acquisition of Smart Storage in the first
         quarter of 2001, amortization expenses associated with certain
         intangible assets resulting from the Company's acquisition of xVault
         in the second quarter of 2000 and amortization expenses associated
         with Smart Storage's acquisition of certain intangible assets in the
         first quarter of 2000.
 
                               OTG Software, Inc.
                                 Balance Sheets
                                 (in thousands)
 
                                                     March 31,    December 31,
                                                      2001           2000
                                                           (unaudited)
     Assets
     Current assets
       Cash and cash equivalents                     $102,819       $102,197
       Accounts receivable, net of allowance           18,389         20,613
       Deferred income taxes                            2,656          2,066
       Other current assets                             3,878          2,919
         Total current assets                         127,742        127,795
     Other assets
       Property and equipment, net                      5,015          4,744
       Goodwill, net                                    2,365          2,510
       Other intangibles, net                           1,080          1,212
       Deferred income taxes                            1,221          1,302
       Other noncurrent assets, net                       767            759
         Total other assets                            10,448         10,527
           Total assets                              $138,190       $138,322
 
     Liabilities
     Current liabilities
       Accounts payable                              $  3,551       $  4,080
       Income taxes payable                                 -          1,143
       Accrued expenses                                 8,602          7,572
       Current portion of long-term debt                   61             61
       Current portion of note payable                    397            225
       Current portion of notes payable to stockholder    518             67
       Deferred revenues                                7,505          7,586
         Total current liabilities                     20,634         20,734
     Other liabilities
       Long-term debt, net of current portion               8             23
       Note payable, net of current portion                 -            225
       Notes payable to stockholder, net of
         current portion                                    -             18
       Deferred revenues                                  490            446
         Total other liabilities                          498            712
           Total liabilities                           21,132         21,446
     Shareholders' equity
       Preferred stock                                      -              -
       Common stock                                       314            309
       Additional paid-in capital                     141,425        140,025
       Deferred compensation, net                      (1,467)        (1,637)
       Accumulated other comprehensive loss               (62)           (28)
       Accumulated deficit                            (22,080)       (20,741)
         Shareholders' equity before stock
           subscription receivable                    118,130        117,928
             Less: stock subscription receivable       (1,072)        (1,052)
               Total shareholders' equity             117,058        116,876
                 Total liabilities and
                   shareholders' equity              $138,190       $138,322
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X49623443
 
 SOURCE  OTG Software