AXS-One announces profitable Q4, year-end financial results for 2002

AXS-One Inc, a provider of e-business solutions, today announced its financial results for the fourth quarter and year ended 31 December 2002.

Revenues for the fourth quarter ended 31 December 2002 were $9.6 million versus $9.6 million for the corresponding prior year period. Net income for the three months totalled $761 000, or $.03 per diluted share, in comparison to $891 000, or $0.04 per share for the fourth quarter of 2001, marking the company`s sixth consecutive quarter of profitability. Operating income increased to $924 000 from $826 000 in the comparable prior year quarter, due to maintaining revenue levels while reducing costs.

Revenues for the year ended 31 December 2002 were $37.4 million compared to $41.2 million for 2001, a decline of 9%. However, included in revenues in 2001 was $1.4 million relating to the Central and Eastern Europe subsidiary sold in September 2001. Net income increased significantly to $1.9 million versus a loss of ($4.7) million for the prior year. Earnings per diluted share for 2002 increased to $.08 from a loss of ($.19) for the year ended 31 December 2001. Operating income increased to $2.8 million compared to an operating loss of ($4.1) million for 2001. The improved operating income in 2002 reflects the benefits of the restructuring activities implemented in 2001.

The company`s balance sheet reflected $2.7 million in cash on 31 December 2002. The company ended the year with $2.3 million in total debt.

During the year, the company`s sales and marketing teams signed on 14 licensing deals with new customers and 50 deals with its existing customers; 77% of the licence revenue from these contracts were signed with customers inside the US, while 23% were signed internationally. New customers included clients in the property management, legal and travel industries for the AXSPoint Solutions and AXS-One Enterprise sales to governments in southern Africa and Australia. The company`s penetration of the finance industry continued with major wins in Poland and Malaysia.

The company`s three software platforms, AXS-One Enterprise Solutions, AXSPoint Solutions and Tivity Solutions, are all driven by the company`s e-Cellerator e-commerce technology. These next generation e-Cellerator technology-based products utilise an open, Internet-ready, n-tier Web services architecture designed to adapt to technological innovation and enable the company`s clients to capitalise on these innovations quickly and cost-effectively.

The solutions are process-centric, highly scalable and robust, and are able to handle the high levels of transaction volumes and availability demanded by today`s e-commerce requirements. The first transaction fee based license revenue from the company`s alliance with ComStrata was also recognised during the period. Continued prudent spending on research and development has helped to maintain the company`s competitive position at a time when some of our competitors have been struggling.

During the year, AXS-One launched the AXS-One Web Services solutions, the result of several years of investment in upgrading its technology to a Web services compliant architecture. The company spent $7.5 million including $0.8 million of capitalised software development costs during 2002, or 20% of its total revenues on development costs in 2002. Approximately 75% of 2002 licence revenue was derived from products introduced during the past two years, evidence that AXS-One continues to meet the needs of approximately 25% of the global 2000 companies.

"We are very pleased to announce this sixth consecutive quarter of profitability as we feel it demonstrates that we have established a successful revenue model by focusing on our recurring revenues and pursuing profitable business relationships," stated John Rade, AXS-One Chief Executive Officer. "While revenues have decreased slightly, our improved operations enabled us to significantly increase both our income and cash positions. We are encouraged by the progress our overseas sales and marketing staff has made and believe they will close several new software licensing deals this year."

The company successfully launched several new products during the year and closed significant customer wins. We were awarded the 2002 "Best of AIIM" award for Best Practices in Enterprise Content Management for AXS-One`s AXSPoint Travel Industry Solution implemented at Brittany Ferries, one of our clients. In addition, the Sarbanes-Oxley Act of 2002 is presenting us with new business opportunities, including in the arena of email compliance and archiving, which we are actively pursuing. Eighty-eight percent of AXS-One`s revenue is related to service and maintenance fees, which historically have been a more predictable revenue stream. We are extremely encouraged by our continued ability to maintain a strong presence in these uncertain economic conditions and look forward to what we hope will be a year of growth in 2003," Rade said.

For further information, please contact Nicky Maredi on telephone (011) 802-4998, fax (011) 802-5161, e-mail nmaredi@axsone.com.