* License revenue up 33% YTD - down $350,000
versus Q2 '03
* Cash increases to $9.2 million and debt
reduced to zero during 2004
* Management implements organizational
improvements to support product
development and marketing initiatives
* Company announces $1.1 million in
restructuring and othercosts - $3.2
million of potential savings to fund
future growth
* Significant partnerships announced to
support release of Records Compliance
Management (RCM) solution
RUTHERFORD, N.J., July 29 /PRNewswire-FirstCall/ -- AXS-One
Inc. (Amex: AXO), a leading provider of Records Compliance
Management (RCM) software solutions today announced its
financial results for the second quarter and six-month period
ended June 30, 2004. The Company also announced significant
restructuring during the second quarter, designed to improve
the organization's competitive position by aligning its
operations for future growth in the RCM market while servicing
existing enterprise customers worldwide more effectively.
Financial results for the quarter were impacted by
restructuring and other costs of $1.1 million related to
severance and retirement related costs to the former CEO. In
addition, the quarter was impacted by costs associated with
implementing the infrastructure to exploit the growing RCM
market.
Revenues for the quarter were $9.5 million, a slight
decrease from the $9.6 million reported in the corresponding
prior year period. License revenues were $1.0 million,
including $0.8 million (80 percent) related to e-mail
management and archiving products, a decrease of 26 percent
from the $1.3 million in total license revenues reported in
the same quarter last year. Operating expenses, including the
$1.1 million in restructuring and other costs, increased 28
percent as management focused on improving key aspects of the
organization, including sales, marketing and research and
development, with the goal of rationalizing its product mix
and revenue opportunities. Sales and marketing expenses
increased 16 percent and R&D expenses increased 29
percent. The Company reported an operating loss of $2.5
million versus operating income of $157,000 in the second
quarter of 2003. The Company reported a net loss of $2.6
million, or ($0.09) per diluted share, versus net income of
$155,000, or $0.01 per diluted share last year.
For the quarter, 65 percent of the license revenue
recognized was with customers inside the United States, while
35 percent was recognized internationally.
For the first six months of 2004, revenues increased 7.3
percent to $20.4 million, compared to $19.0 million reported
for the first six months of 2003. License fees increased 33
percent to $3.5 million compared to license fees of $2.6
million for the first six months of 2003. Total operating
expenses, including the restructuring and other costs,
increased 21 percent to $22.1 million compared to $18.4
million for the first six months of 2003. The Company reported
an operating loss of $1.7 million compared to operating income
of $677,000 for the first six months of 2003. The net loss for
the six-month period was $1.8 million, or ($0.07) per diluted
share, compared to net income of $582,000, or $0.02 per
diluted share, for the first six months of 2003.
The Company's balance sheet reported $9.2 million in cash
as of June 30, 2004, compared to cash of $2.9 million as of
December 31, 2003, the result of the $7.7 million private
placement completed in April 2004. The Company carries no
long-term debt.
During the quarter, management embarked on a restructuring
effort, eliminating 36 positions around the world and
reorganizing to focus on higher growth products within its
Records Compliance Management solutions. As a result of these
initiatives, the Company incurred $0.8 million of severance
costs which are included in the $1.1 million total
restructuring and other costs. Management believes the
restructuring will provide approximately $3.2 million in
annual working capital savings which will be used to invest in
the growth of its Records Compliance Management solutions and
ensure the Company's long-term profitability.
"AXS-One is uniquely positioned from a technology
standpoint, with a comprehensive compliance offering,
including e-mail management, that satisfies the growing and
much publicized need for corporate governance and regulatory
compliance worldwide," commented Bill Lyons, AXS-One's Chief
Executive Offer. "My first goal was to package our product
offering so it is suitable for the reseller channel. In order
to accomplish this we conducted a reorganization of our
Company, aligning our workforce with our needs both from a
product development, as well as a marketing standpoint. I
firmly believe that the Company is now in an excellent
position to capitalize on the opportunities which are before
us."
The Company executed two significant partnerships during
the quarter and made progress on other channel
initiatives:
* An alliance was entered into with Sun Microsystems,
whereby Sun will resell the AXS-One(R) Compliance
Platform to its existing enterprise customers and
new customers in targeted markets. As an
accredited Sun iForce(SM) partner, AXS-One has
collaborated with Sun to test and optimize its
compliance solution for the Sun platform.
* AXS-One signed an agreement with RedFile, a
digital risk and information management solution
provider, to collaboratively develop and offer
a comprehensive hosted active archival
solution designed to help corporations meet
evolving regulations, expedite legal discovery
and streamline Records Management. Under the
terms of the agreement, RedFile will resell the
AXS-One(R) Compliance Platform as well as
provide a hosted option for organizations to
outsource their records retention needs.
* At the end of Q1, AXS-One announced a strategic
alliance with Sector, a leading managed services
provider to the financial services industry.
During Q2 four new accounts, including one of the
25 largest banks in the world, chose the
AXS-One/Sector solution to address regulatory
compliance, operational efficiency and Records
Management of all electronic communication.
* The AXS-Link(TM) for SAP product, announced during
the first quarter, received significant acclaim at AP's
Sapphire Asia Pacific conference at the beginning of
June. The Company expects to finalize reseller
agreements for this product as well as complete sales
in multiple geographies through the remainder of 2004.
* The AXS-One e-delivery solution has been implemented
by one of the largest travel agencies in the UK.
AXS-One will begin monthly revenue recognition
of this solution and expect to gain wider
traction in this market in Q3. In addition,
AXS-One has signed a 3 year deal with one of the
major European ferry companies.
Mr. Lyons continues, "We believe these partnerships
validate the competitive position of our software-based
solutions, and demonstrate that large, established companies
are interested in partnering with AXS-One to market our
software to their customers and prospects. Based on my success
forging high profile partnerships in previous assignments, I
recognize the immense leverage these relationships can
provide. Aligning with such companies as Sun, SAP, Sector and
RedFile provide an established base of potential customers and
increase our visibility without the substantial increases in
infrastructure typically required in a direct selling
model."
Mr. Lyons concludes, "We now have a streamlined
organization and are positioned to successfully grow revenues
with an emphasis on profitability. Clearly, this was a
challenging quarter for our organization, but I am extremely
confident about our ability to capitalize on future
opportunities."
About AXS-One Inc.
AXS-One (Amex: AXO) is a leading provider of Records
Compliance Management software. The AXS-One Compliance
solutions provide a platform for regulatory compliance,
corporate governance and operational efficiency. AXS-One's Web
Services-based technology has been critically acclaimed as
best of class. AXS-One's high-volume, interoperable, scalable
and secure business solutions have been implemented by the
global 2000. AXS-One has offices worldwide, including United
States, Australia, Singapore, United Kingdom and South Africa.
AXS-One was founded in 1978, and is headquartered in
Rutherford, New Jersey, U.S.A. For further information, visit
the AXS-One web site at http://www.axsone.com.
AXS-One, the AXS-One logo, "Access Tomorrow Today,"
AXSPoint and TransAXS are registered trademarks of, and
e-Cellerator, AXS Desk, "AXS-One Collaboration FrameWorks,"
SMART, AXS-Link and Tivity are trademarks of, AXS-One Inc. in
the U.S. All other company and product names are trademarks or
registered trademarks of their respective companies.
Special Note Regarding Forward-Looking Statements: A number
of statements contained in this release are forward-looking
statements within the meaning of the Private Securities
Litigation Reform Act of 1995 that involve risks and
uncertainties that could cause actual results to differ
materially from those expressed or implied in the applicable
statements. These risks and uncertainties include, but are not
limited to: potential vulnerability to technological
obsolescence; the risks that its current and future products
may contain errors or defects that would be difficult and
costly to detect and correct; potential difficulties in
managing growth; dependence on key personnel; the possible
impact of competitive products and pricing; and other risks
described in more detail in AXO's Securities and Exchange
Commission filings.
For further information, please contact William Levering of
AXS-One Inc., +1-201-935-3400, wlevering@axsone.com; or IR
contact, Matthew Hayden of Hayden Communications,
+1-858-456-4533, matt@haydenir.com.
AXS-ONE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
Revenues:
License fees $1,004 $1,354 $3,464 $2,595
Services 8,451 8,160 16,862 16,249
Other - related
parties 50 74 101 189
Total revenues 9,505 9,588 20,427 19,033
Operating expenses:
Cost of license fees 375 378 786 719
Cost of services 4,528 4,003 8,797 7,967
Sales and marketing 2,455 2,124 4,425 3,755
Research and
development 2,037 1,578 3,936 3,252
General and
administrative 1,530 1,348 3,097 2,663
Restructuring and
other costs 1,103 -- 1,103 --
Total operating
expenses 12,028 9,431 22,144 18,356
Operating income
(loss) (2,523) 157 (1,717) 677
Other income
(expense):
Interest income 40 20 65 32
Interest expense (2) (46) (14) (119)
Gain on sale of
subsidiary -- -- -- 71
Equity in income
(losses) of
joint venture (49) 134 (82) 115
Other expense, net (18) (82) (51) (166)
Other income
(expense), net (29) 26 (82) (67)
Net income (loss)
before income taxes (2,552) 183 (1,799) 610
Income tax expense (28) (28) (28) (28)
Net income (loss) $(2,580) $155 $(1,827) $582
Basic net income
(loss) per common
share $(0.09) $0.01 $(0.07) $0.02
Weighted average
basic common
shares outstanding 27,915 24,960 26,582 24,913
Diluted net income
(loss) per
common share $(0.09) $0.01 $(0.07) $0.02
Weighted average
diluted common
shares outstanding 27,915 25,462 26,582 25,773
The unaudited financial information included in this document
is intended only as summary provided for your convenience,
and should be read in conjunction with the complete
consolidated financial statements of the Company (including
the Notes thereto, which set forth important information)
contained in its Reports on Form 10-K and 10-Q filed by the
Company with the U.S. Securities and Exchange Commission(SEC.
Such reports are available on the public EDGAR electronic
filing system maintained by the SEC.
This press release contains forward-looking statements. Such
statements are only predictions, and actual events or results
may differ materially. All forward-looking statements involve
risks and uncertainties, including, without limitation, the
risks detailed in the Company's documents and reports filed
from time to time with the Securities and Exchange Commission.
AXS-ONE INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, December 31,
2004 2003
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $9,216 $2,946
Accounts receivable,
net of allowance
for doubtful accounts 7,549 5,541
Due from joint venture 96 107
Prepaid expenses and other
current assets 773 659
Total current assets 17,634 9,253
Equipment and leasehold improvements,
net of accumulated depreciation 412 336
Capitalized software development costs,
net of accumulated amortization 2,348 2,364
Other assets 199 197
Total assets $20,593 $12,150
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt $-- $547
Accounts payable and accrued expenses 6,208 4,848
Due to joint venture 62 4
Deferred revenue 10,879 8,946
Total current liabilities 17,149 14,345
Long-term deferred revenue 915 1,504
Stockholders' equity (deficit): 2,529 (3,699)
Total liabilities and stockholders' equity
(deficit) $20,593 $12,150
The unaudited financial information included in this document
is intended only as summary provided for your convenience,
and should be read in conjunction with the complete
consolidated financial statements of the Company (including
the Notes thereto, which set forth important Reports on Form
10-K and 10-Q filed by the Company with the U.S. Securities
and Exchange Commission (SEC). Such reports are available on
the public EDGAR electronic filing system maintained by the
SEC.
This press release contains forward-looking statements. Such
statements are only predictions, and actual events or results
may differ materially. All forward-looking statements
involve risks and uncertainties, including, without
limitation, the risks detailed in the Company's documents and
reports filed from time to time with the Securities and
Exchange Commission.
CONTACT:
William Levering
AXS-One Inc.
+1-201-935-3400,
wlevering@axsone.com
or IR contact
Matthew Hayden
Hayden Communications,
+1-858-456-4533
matt@haydenir.com
