SOURCE: Spescom Software Inc.

February 14, 2007 08:00 ET

Spescom Software Announces First Quarter 2007 Results

SAN DIEGO, CA -- (MARKET WIRE) -- February 14, 2007 --

Highlights:
Revenue up 9% vs. previous quarter
EBITDA up $260,000 vs. previous quarter
Backlog up 60% vs. previous quarter
Spescom Software Inc. (OTCBB: SPCO), a leading provider of enterprise information management solutions, today reported results of operations for its first quarter of fiscal 2007 ended December 31, 2006.

Revenues for the first quarter of FY2007 were $1.73 million versus $1.58 million reported in the previous quarter and $1.83 million in the same period a year ago. Earnings before interest, taxes, depreciation and amortization excluding stock compensation ("EBITDA") for the first quarter of FY2007 were $100,000, or $0.00 per share, compared with a loss of ($160,000) or ($0.00) per share the previous quarter and a loss of ($48,000), or ($0.00) per share, for the same quarter a year ago.

Net loss available to common shareholders was ($117,000) or ($0.00) per share for the first quarter of FY 2007 after cumulative preferred dividends of $66,000 versus a net loss in the previous quarter of ($370,000) or ($ 0.01) per share after cumulative preferred dividends of $71,000. The net loss was ($767,000), or ($0.02) per share in the prior year after deemed and cumulative preferred dividends of $588,000.

Deferred revenue increased to $5.1 million at December 31, 2006 from $2.8 million at the end of FY 2006. In addition, the company's contract backlog, which includes deferred revenue, was $6.7 million at December 31, 2006 versus $4.2 million at September 30, 2006. The significant increase was primarily due to the $2.0 million license contract announced last October.

"Achieving positive EBITDA is a significant accomplishment and confirms that we are on the proper track," stated Alan Kiraly, Chief Executive Officer. "In addition, the balance sheet was significantly strengthened by the $2.0 million license contract signed during the quarter. That sale enabled us to reduce our debt and close the quarter with $1.3 million in cash."

"Operationally we continue to capitalize on our success in the Nuclear Energy market as demonstrated by the recently announced contract with Nuclear Fuel Services. We continue to expand our product footprint in long term customer accounts such as Network Rail, which owns and operates the rail infrastructure in the UK and JEA, the eighth-largest community-owned utility in the US. From a marketing and sales perspective, our efforts remain focused on the nuclear and city/county government markets where meeting compliance requirements is critical. Finally, we anticipate a broader industry awareness of the eB product suite as we participate in the Microsoft Vista product launch and leverage our Gold Partner status."

About Spescom Software

Spescom Software (OTCBB: SPCO) is a leading provider of enterprise information management solutions that enable organizations to reduce the cost of meeting compliance requirements, minimize business risk and optimize process efficiency. Spescom's advanced software product, eB, ensures the integrity of the controlled information by uniquely managing the connectivity to all relevant information such as documents, records, assets, people, processes and projects - creating an ecosystem for the rapid access of accurate information in context. eB vastly improves the integrity, visibility and access to all relevant information at the time it is needed.

Key customers include Entergy, NuStart Energy, Constellation Energy, Florida Power & Light, Continental Express, Ameren UE, City of Dayton, Lloyds Register of Shipping, Northeast Utilities, Network Rail, Aker Kvaerner, City of Las Vegas, City of Winston Salem, Fayetteville Public Works Commission and many others. www.spescomsoftware.com

Except for historical information contained herein, the matters set forth in this release include forward-looking statements that are dependent on certain risks and uncertainties, including such factors, among others, as market acceptance, market demand, pricing, changing regulatory environment, the effect of the company's accounting policies, potential seasonality and other risk factors detailed in the Company's SEC filings.

SPESCOM SOFTWARE INC.
Consolidated Statements of Operations

                                                     For the three months
                                                      ended December 31,
                                                    ----------------------
                                                       2006       2005
                                                    ----------  ----------
                                                          (Unaudited)
Revenues:
  Licenses                                          $  390,000  $  564,000
  Services and other                                 1,337,000   1,268,000
                                                    ----------  ----------
Total revenues                                       1,727,000   1,832,000
                                                    ----------  ----------

Cost of revenues:
  Licenses                                              38,000     122,000
  Services and other                                   591,000     540,000
                                                    ----------  ----------
Total cost of revenues                                 629,000     662,000
                                                    ----------  ----------

Gross profit                                         1,098,000   1,170,000
                                                    ----------  ----------

  Operating expenses:
    Research and development                           258,000     203,000
    Marketing and sales                                460,000     653,000
    General and administrative                         368,000     441,000
                                                    ----------  ----------
Total operating expenses                             1,086,000   1,297,000
                                                    ----------  ----------

Income (loss) from operations                           12,000    (127,000)

Interest and other expense                             (63,000)    (52,000)
                                                    ----------  ----------
Net loss                                               (51,000)   (179,000)

Deemed preferred dividend                                    -    (500,000)
                                                    ----------  ----------
Net loss available after deemed preferred dividend     (51,000)   (679,000)

Cumulative preferred dividends                         (66,000)    (88,000)
                                                    ----------  ----------
Net loss available to common shareholders           $ (117,000) $ (767,000)
                                                    ==========  ==========

Basic and diluted net loss per common share         $    (0.00) $    (0.02)
                                                    ==========  ==========

Shares used in computing basic and diluted net loss
 per common share                                   37,144,000  36,819,000


SPESCOM SOFTWARE INC.
Consolidated Balance Sheets


                                              December 31,  September 30,
                                                  2006           2006
                                              ------------  --------------
                                              (unaudited)
ASSETS
  Current assets:

    Cash and cash equivalents                 $  1,304,000  $       95,000
    Receivables, net                               964,000         854,000
    Other current assets                           154,000         190,000
                                              ------------  --------------
      Total current assets                       2,422,000       1,139,000

  Property and equipment, net                      119,000         131,000
  Computer software, net                           399,000         425,000
  Other assets                                      31,000          28,000
                                              ------------  --------------
      Total assets                            $  2,971,000  $    1,723,000
                                              ============  ==============

LIABILITIES AND SHAREHOLDERS' DEFICIT

  Current liabilities:
    Accounts payable                          $    347,000  $      792,000
    Payable to Spescom Ltd.                        190,000         550,000
    Notes and accrued interest payable to
     Spescom Ltd.                                  683,000               -
    Preferred stock dividend payable to
     Spescom Ltd.                                  971,000         887,000
    Accrued liabilities                          1,239,000       1,446,000
    Lease obligation – current portion              40,000          44,000
    Deferred revenue                             5,054,000       2,752,000
    Series I redeemable preferred stock          2,450,000       2,450,000
                                              ------------  --------------
      Total current liabilities                 10,974,000       8,921,000

  Notes and accrued interest payable to
   Spescom Ltd.                                          -         664,000
  Lease obligation                                  10,000          16,000
                                              ------------  --------------
      Total liabilities                         10,984,000       9,601,000
                                              ------------  --------------

      Total shareholders' deficit               (8,013,000)     (7,878,000)
                                              ------------  --------------

        Total liabilities and shareholders'
         deficit                              $  2,971,000  $    1,723,000
                                              ============  ==============


EBITDA Calculation
(unaudited)

                                                     For the three months
                                                      ended December 31,
                                                    ----------------------
                                                       2006       2005
                                                    ----------- ----------

Income (loss) from Operations                       $    12,000 $ (127,000)
Add back:

   Depreciation and amortization                         46,000     25,000
   FAS 123R share-based compensation expense             42,000     54,000
                                                    ----------- ----------

EBITDA excluding FAS 123R share-based compensation
 expense                                            $   100,000 $  (48,000)
                                                    =========== ==========

EBITDA per common share                             $      0.00 $    (0.00)
                                                    =========== ==========

Shares used in computing
   EBITDA per common share                           37,144,000 36,819,000



Contact Information

  • COMPANY CONTACT:
    Alan Kiraly
    CEO
    John Low
    CFO
    (858) 625-3000