SOURCE: Computer Software Innovations, Inc.

March 10, 2008 16:00 ET

Computer Software Innovations, Inc. Announces Record Financial Results for the Quarter and Full Year Ended December 31, 2007

EASLEY, SC--(Marketwire - March 10, 2008) - Computer Software Innovations, Inc. (OTCBB: CSWI)

--  Record Revenues of $55.2 Million for the 2007 fiscal year, up 93%
    versus 2006;
--  Net Income $1.7 Million or $.14 per diluted share in 2007, versus net
    loss of $0.9 Million in 2006;
--  Operating Income Increases to $3.1 Million, versus operating loss of
    $0.2 Million in 2006;
--  Fourth Quarter Revenues Increase Over 88% to $11.1 Million versus Q4
    2006;
    

Computer Software Innovations, Inc. (OTCBB: CSWI), CSI Technology Outfitters™ ("CSI") today announced its financial results for the quarter and full year ended December 31, 2007.

Financial Results - Fiscal Year 2007:

For the year ended December 31, 2007, revenues were approximately $55.2 million, up 93%, or $26.6 million, from $28.6 million in the comparable period a year ago. The technology solutions segment increased revenue $21.2 million, or 90%, primarily driven by increased adoption of interactive classroom technologies and engineered infrastructure solutions. The software applications segment also improved revenues by $5.5 million, or 109%, with the acquisition of McAleer Computer Associates, Inc. ("McAleer") contributing $4.5 million of the improvement and the remaining $1.0 million coming from organic growth in new software sales and support services.

Gross profit for the year was approximately $11.3 million, an increase of $4.9 million, or 78%, compared to $6.4 million in 2006. Operating income for the year was approximately $3.1 million compared to an operating loss of approximately $243,000 for the same period in 2006. Net income for 2007 was $1.7 million, or earnings of $0.46 per basic share and $0.14 per diluted share, as compared to a net loss of approximately $0.9 million, or $0.27 loss per basic and diluted share for the comparable period ended December 31, 2006.

EBITDA improved to $4.8 million for the year ended December 31, 2007, an increase of $4.3 million from $0.5 million in the prior year (EBITDA is a non-GAAP financial measure. See reconciliation to GAAP measure Net Income (Loss) which follows).

For the year ended December 31, 2007, shareholders equity improved to $2.5 million from a deficit of approximately $104,000 for the same period in 2006.

"The record performance we achieved in 2007 is the result of increased demand for the interactive classrooms in our markets, coupled with organic software revenue growth and the addition of McAleer. We anticipate continued demand for our technology products and service solutions as we proceed into 2008. Additionally, the McAleer acquisition continues to contribute significantly to the software applications segment of our business, where we expect continued growth as well as cross-selling opportunities within the expanded territory."

"We enter 2008 with a positive outlook. Our efforts remain focused on increasing revenues, improving gross margins and earnings, and providing value to our shareholders. We look to capitalize on the strong demand for our technology and software solutions through deeper penetration into our existing client base, take advantage of cross selling opportunities in the newly acquired footprint, and expand into new geographic regions," continues Ms. Hedrick.

Financial Results - Fourth Quarter 2007:

CSI posted record revenues of approximately $11.1 million for the fourth quarter ended December 31, 2007, up approximately $5.2 million, or 89%, compared to $5.9 million in the fourth quarter of 2006. CSI experienced significant organic growth in its technology solutions segment during the fourth quarter of $3.9 million, or 81%, primarily from increased sales of interactive classroom products and related services and infrastructure product. CSI's software applications segment increased revenues $1.3 million, or 126%, with $1.1 million added from its McAleer acquisition, and $0.1 million from organic growth.

Gross profit for the fourth quarter was approximately $1.7 million, an increase of $0.7 million or 72% compared to the fourth quarter 2006. The increase in gross profit can be attributed primarily to both higher volume sales of interactive whiteboard solutions product and related services, and the increase in software applications segment revenues. Operating loss for the fourth quarter of 2007 was approximately $307,000, compared to an operating loss of approximately $576,000 for the same period in 2006. While operating costs increased, primarily from the McAleer acquisition and increased selling efforts, those costs declined as a percent of sales, resulting in improved economies of scale.

CSI posted a net loss for the quarter ended December 31, 2007 of approximately $138,000 or $0.03 loss per basic and diluted share, compared to a net loss of approximately $812,000 or $0.24 loss per basic and diluted share for the same period in 2006. Due to the seasonality of CSI's business, the fourth quarter is traditionally the lowest performing quarter in its fiscal year.

CSI's EBITDA, or earnings before interest, income taxes, depreciation and amortization, improved in the fourth quarter to $0.2 million, an increase of $0.8 million over the prior year's negative EBITDA of $0.6 million (EBITDA is a non-GAAP financial measure. See reconciliation to GAAP measure Net Income (Loss) which follows).

Nancy Hedrick, CEO of CSI, stated, "We are very pleased with our financial performance during the fourth quarter. We continued our growth trend, which was fueled by the technology solutions segment and the increased number of interactive classroom installs conducted during the quarter. Our significant growth in both the technology and software solutions segments of our business resulted in record setting top line performance. Overall, we are excited to see that our financial performance not only met, but exceeded, our previously announced guidance for both revenues and EBITDA for the year end."

Conference Call Reminder for Today

The Company will host a conference call today, Monday, March 10, 2008 at 4:15 p.m. Eastern Time to discuss the company's financial and operational results for fourth quarter and full year 2007, which ended December 31, 2007.

Conference Call Details
Date: Monday, March 10, 2008
Time: 4:15 p.m. (EST)
Dial-in Number: 1-800-762-8795
International Dial-in Number: 1-480-248-5085

It is recommended that participants phone-in approximately 5 to 10 minutes prior to the start of the 4:15 p.m. call. A replay of the conference call will be available approximately 2 hour after the completion of the call for 7 days, until March 17, 2008. To listen to the replay, dial (800) 406-7325 if calling within the U.S. or (303) 590-3030 if calling internationally and enter the pass code 3850420.

The call is also being webcast and may be accessed at CSI's website at www.csioutfitters.com. The webcast will be archived and accessible until April 10, 2008 on the Company website.

About Computer Software Innovations, Inc.

Computer Software Innovations, Inc. is a full service company providing software and technology solutions primarily to public sector organizations. The software solutions include financial management, billing and revenue management, school activity accounting, lesson planning and automated workflow. The technology solutions include IP telephony, IP video surveillance, visual communications, interactive classrooms, network security and traffic monitoring, infrastructure design, wireless solutions, network management, engineering services and hardware solutions. CSI's client base includes school districts, higher education, municipalities, county governments, and other non-profit organizations. Currently, more than 600 public sector organizations utilize CSI's software systems and network integration services. Additional information on CSI can be obtained through its website at www.csioutfitters.com.

Forward-Looking and Cautionary Statements

This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Among other things, these statements relate to our financial condition, results of operations and future business plans, operations, opportunities and prospects. In addition, we and our representatives may from time to time make written or oral forward-looking statements, including statements contained in filings with the Securities and Exchange Commission and in our reports to stockholders. These forward-looking statements are generally identified by the words or phrases "may," "could," "should," "expect," "anticipate," "plan," "believe," "seek," "estimate," "predict," "project" or words of similar import. These forward-looking statements are based upon our current knowledge and assumptions about future events and involve risks and uncertainties that could cause our actual results, performance or achievements to be materially different from any anticipated results, prospects, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are not guarantees of future performance. Many factors are beyond our ability to control or predict. You are accordingly cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date that we make them. We do not undertake to update any forward-looking statement that may be made from time to time by or on our behalf.

In our most recent Form 10-K, we have included risk factors and uncertainties that might cause differences between anticipated and actual future results. We have attempted to identify, in context, some of the factors that we currently believe may cause actual future experience and results to differ from our current expectations regarding the relevant matter or subject area. The operations and results of our software and systems integration businesses also may be subject to the effects of other risks and uncertainties, including, but not limited to:

--  a reduction in anticipated sales;
--  an inability to perform customer contracts at anticipated cost levels;
--  our ability to otherwise meet the operating goals established by our
    business plan;
--  market acceptance of our new software, technology and services
    offerings;
--  an economic downturn; and
--  changes in the competitive marketplace and/or customer requirements.
    

                    COMPUTER SOFTWARE INNOVATIONS, INC.
                  CONSOLIDATED STATEMENTS OF OPERATIONS

                          Three Months Ended            Year Ended
                       ------------------------  -------------------------
                       December 31, December 31, December 31,  December 31,
                           2007        2006         2007          2006
                       -----------  -----------  ------------  -----------
REVENUES
   Software
    applications
    segment            $ 2,310,210  $ 1,021,603  $ 10,477,885  $ 5,019,860
   Technology
    solutions segment    8,781,396    4,860,289    44,718,735   23,533,670
                       -----------  -----------  ------------  -----------
      Net sales and
       service revenue  11,091,606    5,881,892    55,196,620   28,553,530
COST OF SALES
   Software
    applications segment
   Cost of sales excluding
    depreciation,
    amortization and
    capitalization       1,516,733      862,942     5,988,497    2,738,281
   Depreciation             30,688       14,729        76,728       65,011
   Amortization of
    capitalized
    software costs         323,251      180,052     1,108,811      709,175
   Capitalization of
    software costs        (344,079)    (229,004)   (1,058,070)  (1,156,307)
                       -----------  -----------  ------------  -----------
      Total Software
       applications
       segment cost of
       sales             1,526,593      828,719     6,115,966    2,356,160

   Technology solutions
    segment
   Cost of sales
    excluding
    depreciation         7,823,650    4,029,161    37,670,256   19,732,931
   Depreciation             23,396       22,093        89,812       91,516
                       -----------  -----------  ------------  -----------
      Total technology
       solutions segment
       cost of sales     7,847,046    4,051,254    37,760,068   19,824,447

         Total cost of
          sales          9,373,639    4,879,973    43,876,034   22,180,607
                       -----------  -----------  ------------  -----------

         Gross profit    1,717,967    1,001,919    11,320,586    6,372,923
                       -----------  -----------  ------------  -----------

OPERATING EXPENSES
   Salaries, wages and
    benefits (excluding
    stock-based
    compensation)        1,206,215      928,637     5,031,730    3,442,095
   Stock-based
    compensation            10,053       95,746       102,361      970,894
   Reverse merger
    costs                       --       21,105            --       85,234
   Acquisition costs         2,187          (56)       10,823       38,217
   Professional and
    legal compliance
    and litigation
    costs                  194,899      175,094       694,175      609,117
   Sales consulting
    fees                    58,295           --       222,349           --
   Marketing costs          38,470       (7,978)      140,024      116,661
   Travel and mobile
    costs                  166,877      132,446       617,263      462,417
   Depreciation and
    amortization            83,495       56,153       358,438      180,975
   Other selling,
    general and
    administrative
    expenses               264,847      176,515       997,321      710,323
                       -----------  -----------  ------------  -----------
      Total operating
       expenses          2,025,338    1,577,662     8,174,484    6,615,933

      Operating income    (307,371)    (575,743)    3,146,102     (243,010)
                       -----------  -----------  ------------  -----------

OTHER INCOME (EXPENSE)
   Interest income             143          421        12,756        3,522
   Interest expense       (142,091)     (97,032)     (561,444)    (409,334)
   Net unrealized gain
    (loss) on warrants
    to purchase of
    common stock                --     (329,153)           --     (329,153)
   Amortization of
    loan fees                   --           --            --           --
   Loss on disposal of
    asset                       --           --        (1,218)          --
                       -----------  -----------  ------------  -----------
      Net other income
       (expense)          (141,948)    (425,764)     (549,906)    (734,965)

         Income before
          income taxes    (449,319)  (1,001,507)    2,596,196     (977,975)
                       -----------  -----------  ------------  -----------
INCOME TAX EXPENSE        (311,627)    (189,798)      855,142      (98,361)
                       -----------  -----------  ------------  -----------

NET INCOME (LOSS)      $  (137,692) $  (811,709) $  1,741,054  $  (879,614)
                       ===========  ===========  ============  ===========


BASIC EARNINGS (LOSS)
 PER SHARE             $     (0.03) $     (0.24) $       0.46  $     (0.27)
                       ===========  ===========  ============  ===========

DILUTED EARNINGS
 (LOSS) PER SHARE      $     (0.03) $     (0.24) $       0.14  $     (0.27)
                       ===========  ===========  ============  ===========
  WEIGHTED AVERAGE
   SHARES OUTSTANDING:
   - Basic               4,620,366    3,429,030     3,809,026    3,236,327
                       ===========  ===========  ============  ===========
   - Diluted             4,620,366    3,429,030    12,198,431    3,236,327
                       ===========  ===========  ============  ===========



                    COMPUTER SOFTWARE INNOVATIONS, INC.
                        CONSOLIDATED BALANCE SHEETS

                                                       DECEMBER 31,
                                                --------------------------
                                                    2007          2006
                                                ------------  ------------
                             ASSETS
CURRENT ASSETS
Cash and cash equivalents                       $         --  $         --
Accounts receivable, net                           8,697,036     3,828,190
Inventories                                          470,485     2,569,382
Prepaid expenses                                      42,832        56,174
Income tax receivable                                177,147        43,651
                                                ------------  ------------

Total current assets                               9,387,500     6,497,397
                                                ------------  ------------

PROPERTY AND EQUIPMENT, net                        1,316,713       771,472
COMPUTER SOFTWARE COSTS, net                       2,162,717     1,505,458
DEFERRED TAX ASSET                                   263,324       366,476
GOODWILL                                           1,480,587            --
OTHER INTANGIBLE ASSETS, net                       1,574,809       318,884
                                                ------------  ------------

Total assets                                    $ 16,185,650  $  9,459,687
                                                ============  ============

           LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable                                $  4,023,936  $  3,995,021
Deferred revenue                                   5,323,889     2,079,492
Deferred tax liability                               469,046       373,960
Bank line of credit                                       --       551,000
Current portion of notes payable                     283,187       109,274
Subordinated notes payable to shareholders         2,250,400     2,250,400
                                                ------------  ------------

Total current liabilities                         12,350,458     9,359,147
                                                ------------  ------------

NOTES PAYABLE, less current portion                  763,717       204,680
BANK LINE OF CREDIT, less current portion            575,000            --
                                                ------------  ------------

Total liabilities                                 13,689,175     9,563,827
                                                ------------  ------------


SHAREHOLDERS' EQUITY (DEFICIT)
Preferred stock - $0.001 par value; 15,000,000
 shares authorized; 6,859,736 and 7,012,736
 shares issued and outstanding, respectively           6,860         7,013
Common stock - $0.001 par value; 40,000,000
 shares authorized; 4,698,970 and 3,429,030
 shares issued and outstanding, respectively           4,699         3,429
Additional paid-in capital                         7,400,939     6,473,342
Accumulated deficit                               (4,784,719)   (6,525,773)
Unearned stock compensation                         (131,304)      (62,151)
                                                ------------  ------------

Total shareholders' equity (deficit)               2,496,475      (104,140)
                                                ------------  ------------

Total liabilities and shareholders' equity
 (deficit)                                      $ 16,185,650  $  9,459,687
                                                ============  ============

Non-GAAP Financial Measure: Explanation and Reconciliation of EBITDA

EBITDA is a non-GAAP financial measure used by management, lenders and certain investors as a supplemental measure in the evaluation of some aspects of a corporation's financial position and core operating performance. Investors sometimes use EBITDA as it allows for some level of comparability of profitability trends between those businesses differing as to capital structure and capital intensity by removing the impacts of depreciation and amortization. EBITDA does not include changes in major working capital items such as receivables, inventory and payables, which can also indicate a significant need for, or source of, cash. Since decisions regarding capital investment and financing and changes in working capital components can have a significant impact on cash flow, EBITDA is not a good indicator of a business's cash flows. We use EBITDA for evaluating the relative underlying performance of the Company's core operations and for planning purposes, including a review of this indicator and discussion of potential targets in the preparation of annual operating budgets. We calculate EBITDA by adjusting net income or loss to exclude net interest expense, income tax expense or benefit and depreciation and amortization, thus the term "Earnings Before Interest, Taxes, Depreciation and Amortization" and the acronym "EBITDA."

EBITDA is presented as additional information because management believes it to be a useful supplemental analytic measure of financial performance of our core business, and as it is frequently requested by sophisticated investors. However, management recognizes it is no substitute for GAAP measures and should not be relied upon as an indicator of financial performance separate from GAAP measures (as discussed further below).

When evaluating EBITDA, investors should consider, among other things, increasing and decreasing trends in the measure and how it compares to levels of debt and interest expense, ongoing investing activities, other financing activities and changes in working capital needs. Moreover, this measure should not be construed as an alternative to net income (as an indicator of operating performance) or cash flows (as a measure of liquidity) as determined in accordance with GAAP.

While some investors use EBITDA to compare between companies with different investment and capital structures, all companies do not calculate EBITDA in the same manner. Accordingly, the EBITDA presented below may not be comparable to similarly titled measures of other companies.

A reconciliation of net income reported under GAAP to EBITDA is provided below:



                                          Three Months Ended   Year Ended
                                             December 31,     December 31,
                                            --------------  ---------------
Amounts in thousands                         2007    2006    2007    2006
                                            ------  ------  ------- ------
Reconciliation of Net income (loss) per
 GAAP to EBITDA:
Net income (loss) per GAAP                  $ (138) $ (812) $ 1,741 $ (880)
  Adjustments:
    Income tax expense (benefit)              (312)   (190)     855    (98)
    Interest expense, net                      142      97      549    406
    Depreciation and amortization of fixed
     assets and trademarks                     138      93      525    338
    Amortization of software development
     costs                                     323     180    1,109    709
                                            ------  ------  ------- ------
EBITDA                                      $  153  $ (632) $ 4,779 $  475
                                            ------  ------  ------- ------

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