AXS-One 2008 Q3 Results

AXS-One Inc. (OTC:AXSO) (BULLETIN BOARD: AXSO) , provider of high performance Records Compliance Management (RCM) software, today announced its financial results for the third quarter and nine month periods ended September 30, 2008.
Total revenues for the third quarter of 2008 were $3.7 million, an increase of $1.2 million or 47% from the third quarter 2007 revenues of $2.5 million. License revenue for the third quarter was $1.6 million, an increase of 186% compared to $0.5 million in the third quarter of 2007. Service revenue for the third quarter was $2.1 million, an increase of $0.2 million or 9% from the third quarter of 2007. Total operating expenses for the third quarter were $5.0 million, a decrease of 27% percent compared to $6.8 million in the third quarter of 2007. The operating loss for the third quarter of 2008 was $1.3 million, a $3.0 million or 70% improvement from the third quarter 2007 operating loss of $4.3 million. The Company reported a net loss of $2.0 million for the third quarter of 2008, or $(0.05) per diluted share compared to a net loss of $4.6 million in the third quarter of last year, or $(0.13) per diluted share.

Additionally, the Company announced that on October 30, 2008, it completed a $1.1 million convertible note financing led by BlueLine Partners and William Jurika and including several AXS-One board and management team members. The notes, which are secured by substantially all the assets of the Company, mature on May 29, 2009, bear interest at the rate of 6 percent per year and are convertible into AXS-One common stock at a $1.00 conversion price. The Company also issued warrants to the investors to purchase an aggregate of 3,300,000 shares of common stock at an exercise price of $0.01. If all of the warrants are exercised and the entire principal amount of the notes is converted into shares of common stock, the average purchase price of such shares issued pursuant to this financing will be $0.26 per share. Proceeds of these notes will be used to strengthen the Company's balance sheet and working capital position.

Highlights for the third quarter include:

-- 15 deals worldwide, including contracts with eight new customers.

-- The Company's first contract for Dynamic Data Migrator, AXS-One's
patent-pending data migration product announced in June 2008. The
contract is with an existing AXS-One financial services customer who is
planning to migrate from Lotus Notes to Microsoft Exchange.

-- The Company's largest win to date for Sun JMS archiving at one of the
world's largest conglomerates. The initial order, closed through
AXS-One channel partner Sun Microsystems, is for 20,000 users in Asia.

-- A competitive replacement win with one of the largest banks in Europe.
The bank will implement AXS-One's Lotus Notes archiving, instant
messaging archiving, retention management and case management modules.
The AXS-One Compliance Platform has been selected to support the bank's
MiFID compliance requirements as well as their broad regulatory
compliance needs, mailbox management, retention management and
e-discovery.

-- A competitive replacement win with the world's largest post-trade
financial services company. The bank will implement AXS-One for Lotus
Notes mail archiving for broad regulatory compliance needs, mailbox
management, retention management and e-discovery.

-- A leader in the entertainment distribution industry selected AXS-One
after a recommendation from the customer's outside counsel to address
e-discovery requirements.

-- A number of existing customers worldwide expanded their use of the
AXS-One Compliance Platform, adding additional users, record types
and/or functionality.


Bill Lyons, Chairman & CEO of AXS-One, commented, "These results represent a continued positive trend of progress across all aspects of our business and convey accelerating demand for our solutions. In particular, our new Dynamic Data Migrator product continues to gain momentum in the industry while the ongoing series of competitive wins prove the appeal of our products, our platform and industry vision. We have made great progress in developing and enhancing our sales channel for this innovative solution and believe it will become an expanding contributor to our financial results in the coming quarters."
For the first nine months of 2008, total revenues were $11.0 million, an increase of 26% compared with total revenues of $8.7 million for the first nine months of 2007. License revenue was $4.1 million, up 44% from the $2.8 million in license revenue for the first nine months last year. Total operating expenses were $16.1 million for the first nine months of 2008, a decrease of 17% from $19.4 million in the prior year. The operating loss narrowed to $5.2 million for the first nine months of 2008, down from an operating loss of $10.7 million in the first nine months of last year. The net loss for the first nine months of 2008 was $6.7 million, or $(0.18) per diluted share compared to a net loss of $10.9 million, or $(0.31) per diluted share for the comparable prior-year period.