Nuvo Network Management Inc.
TSX VENTURE : NVO

Nuvo Network Management Inc.

February 01, 2007 16:15 ET

NUVO Reports First Quarter Results

Five consecutive quarters of positive EBITDA

OTTAWA, ONTARIO--(CCNMatthews - Feb. 1, 2007) - NUVO Network Management Inc., (TSX VENTURE:NVO), a leading managed services provider of solutions that MAXimize IT® availability and performance, today announced results from operations for its first quarter ended December 31, 2006.



Highlights - Q1

- Revenue was $4.2 million, up from $4.0 million last year.

- Earnings before interest, taxes, depreciation and amortization
(EBITDA) was $478,995 compared to $220,081 last year

- Net income was $119,759 compared to a loss of $270,631 last year

- Gross margin was 41%, up from 36% last year

- Signed $6.0 million of new contracts and renewals

- Five consecutive quarters of positive EBITDA and positive EBITDA in
14 of the last 17 quarters


"We are pleased with the start of our fiscal 2007 year. Year over year our first quarter revenue increased 5% to $4,153,841 and net income was $119,759 compared to a loss last year of $270,631" said Phil Weaver, Nuvo's President and CEO. "We continued to have strong bookings this quarter, with new orders and renewals totaling $6.0 million."

"During the quarter we initiated a marketing plan for our software solution, MAXadvantage, with a roll out scheduled to start in the second quarter" added Mr. Weaver. "The marketing initiatives will focus on increasing awareness and generating revenue growth of our MAXadvantage software product. In Q1, we had over $1 million of MAXadvantage orders that are delivered on a subscription basis over a three to five year term. We believe our software solution, MAXadvantage, is a natural expansion of our remote managed services, which provide an integrated solution to address IT automation, monitoring and performance reporting for networks, servers and applications. MAXadvantage will expand our market opportunity by addressing companies that want to retain management of their IT infrastructure but need to improve performance and availability of the IT infrastructure."

Q1 Financial Results

First quarter revenues were $4,153,841 compared with revenues of $3,950,711 in the same period a year ago. First quarter IT infrastructure management revenues were $3,603,659 compared to $3,301,572 in the same period a year ago. Maintenance, support and equipment revenues for the first quarter were $550,182 compared to $649,139 in the same period a year ago.

Gross margins for the first quarter of fiscal 2007 were 41% compared with 36% in the same period a year ago.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) for the first quarter of fiscal 2007 was $478,995 compared to $220,081 in the same period a year ago.

Net income in the first quarter of fiscal 2007 was $119,759 compared to a net loss of $270,631 in the same period a year ago.

About NUVO

NUVO provides remote management and protection of IT infrastructures for businesses worldwide to maximize the availability of their computing infrastructure. NUVO enables our customers to excel by delivering fully integrated, proactive management services and business data. This provides the critical information needed for effective analysis and decision-making to maximize performance and control costs. NUVO achieves this through certified experts, best-of-class technology, deep integration, highly automated processes, and best practices in a 24x7, resilient infrastructure.

Forward Looking Statements

Certain statements included in this press release are forward-looking and are subject to certain risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Factors that may cause results or events to differ from current expectations include, but are not limited to, those set out on NUVO's website at http://www.nuvo.com



NUVO NETWORK MANAGEMENT INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
First Quarters Ended December 31, 2006 and 2005
(Unaudited)

Three Months Ended
December 31, December 31,
2006 2005
---------------------------------------------------------------------
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Revenues
IT Infrastructure management $3,603,659 $3,301,572
Maintenance, support and equipment 550,182 649,139
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4,153,841 3,950,711
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Costs of revenues
IT Infrastructure management 2,096,278 2,113,073
Maintenance, support and equipment 346,347 420,344
---------------------------------------------------------------------
2,442,625 2,533,417
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Gross margin 1,711,216 1,417,294
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Selling and marketing 584,315 654,536
General and administration 580,324 494,699
Research and development 278,630 278,551
Stock-based compensation expense 27,000 18,000
Amortization of purchased intangibles 106,317 192,855
---------------------------------------------------------------------
1,576,586 1,638,641
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Operating income (loss) 134,630 (221,347)

Interest (expense) (14,871) (49,284)
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Net income (loss) for the period $119,759 $(270,631)
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Basic income (loss) per common share $0.00 $(0.01)
Diluted income (loss) per common share $0.00 $(0.01)

Weighted average number of common shares
used in:
Basic earnings per common share
calculation 30,970,439 29,843,120
Diluted earnings per common share
calculation 30,981,800 29,843,120



NUVO NETWORK MANAGEMENT INC.
CONSOLIDATED BALANCE SHEETS

As at As at
December 31, September 30,
2006 2006
(Unaudited) (Audited)
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---------------------------------------------------------------------
ASSETS
Current
Cash and cash equivalents $1,453,326 $1,760,919
Accounts receivable 2,761,030 2,179,970
Tax credits receivable 456,086 406,085
Work in process 433,193 443,884
Prepaid expenses and other assets 636,764 880,233
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5,740,399 5,671,091

Other assets 272,919 265,591
Capital assets 2,903,032 2,989,783
Purchased intangibles 1,329,994 1,436,311
Goodwill 9,917,938 9,917,938
---------------------------------------------------------------------
$20,165,282 $20,280,714
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LIABILITIES

Current
Accounts payable and accrued
liabilities $2,402,448 $2,627,313
Deferred revenue 1,111,334 1,028,936
Current portion of long-term obligations 821,521 851,603
---------------------------------------------------------------------
4,335,303 4,507,852

Long-term obligations 383,986 473,629
---------------------------------------------------------------------
4,719,289 4,981,481
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SHAREHOLDERS' EQUITY
Share capital 24,424,956 24,397,956
Deficit (8,978,963) (9,098,723)
---------------------------------------------------------------------
15,445,993 15,299,233
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$20,165,282 $20,280,714
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