SOURCE: Spescom Software, Inc.

December 26, 2006 08:00 ET

Spescom Software Announces Fourth Quarter and Yearend 2006 Results

SAN DIEGO, CA -- (MARKET WIRE) -- December 26, 2006 --

Highlights:
Revenues up over 32% vs. 2005 quarter
License revenue up 30% vs. 2005 quarter
Net loss drops to ($299,000) vs. ($1,568,000) in 2005 quarter
Spescom Software, Inc. (OTCBB: SPCO), a leading provider of enterprise information management solutions, today reported results of operations for its fourth quarter and year ended September 30, 2006.

Revenues for the fourth quarter of FY2006 totalled $1.6 million, an increase of 32% versus revenues of $1.2 million in the same period a year ago. The increase brought total FY2006 revenues to $7.0 million versus $5.8 million in FY2005.

Earnings before interest, taxes, depreciation and amortization excluding stock compensation ("EBITDA") for the fourth quarter of FY2006 were ($160,000), or ($0.00) per share, compared with ($1.4 million), or ($0.04) per share, the quarter a year ago. The FY2006 EBITDA loss of ($415,000), or ($0.01) per share was a substantial improvement over the loss of ($3.2 million), or ($0.09) per share, a year ago.

The net loss available to common shareholders was ($370,000) or ($0.01) per share for the fourth quarter of FY2006. The comparable quarter a year ago was a net loss available to common shareholders of ($1.6 million) or ($0.04) per share.

Net loss available to common shareholders was ($2.4 million) or ($0.06) per share for FY2006 after deemed and cumulative preferred dividends of $1.4 million. The net loss available to common shareholders was ($6.0 million), or ($0.17) per share in the prior year after deemed and cumulative preferred dividends of $2.5 million.

"The substantial improvement in operating results in 2006 is attributable to the significant growth in license revenue while successfully executing the company's cost control plans," stated Alan Kiraly, Chief Executive Officer. "The license growth demonstrates the demand for the company's eB product and validates our technology commitment to Microsoft's .NET platform. In addition, the company success in focusing on its strengths in the Nuclear Utilities and Local Government markets lead to the growth this year and positioning the company for continued success 2007."

"With the recently announced sales to Jacksonville Energy Authority (JEA) and Defense Threat Reduction Agency of the US Department of Defense combined with the company's expanding relationship with Microsoft as a Gold Certified Partner and a member of several Microsoft Vista and Office 2007 System early adopter programs, we have created significant momentum entering into fiscal year 2007, and are excited about our prospects."

About Spescom Software, Inc.

Spescom Software (OTCBB: SPCO) develops and delivers solutions for regulated organizations with vast quantities of inter-dependent documents that need to be managed and controlled through their lifecycle. Customers are generally focused on meeting regulatory compliance requirements and reducing business risk while optimizing process efficiency to lower the cost of operations and compliance. The company's product "eB" is an Enterprise Information Management solution that vastly improves the integrity, visibility and access to all relevant information at the time it is needed by uniquely connecting information with relevant assets, people, processes, projects and functions to create a framework for rapid access to accurate information in context.

Key customers include Constellation Energy, Continental Express, AmerenUE, Cities of Las Vegas and Dayton, Lloyds Register of Shipping, Entergy, Northeast Utilities, Network Rail, and many others.

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          For the year
                          ended September 30,       ended September 30,
                        ------------------------  ------------------------
                            2006         2005         2006         2005
                        -----------  -----------  -----------  -----------
                              (Unaudited)
Revenues:
  Licenses              $   304,000  $   234,000  $ 1,775,000  $   737,000
  Services and other      1,277,000      968,000    5,231,000    5,088,000
                        -----------  -----------  -----------  -----------
Total revenues            1,581,000    1,202,000    7,006,000    5,825,000
                        -----------  -----------  -----------  -----------

Cost of revenues:
  Licenses                   52,000       36,000      324,000      206,000

  Services and other        567,000      483,000    2,370,000    2,232,000
                        -----------  -----------  -----------  -----------
Total cost of revenues      619,000      519,000    2,694,000    2,438,000
                        -----------  -----------  -----------  -----------

Gross profit                962,000      683,000    4,312,000    3,387,000
                        -----------  -----------  -----------  -----------

  Operating expenses:
    Research and
     development            284,000      168,000    1,058,000      852,000
    Marketing and sales     519,000    1,116,000    2,410,000    3,799,000
    General and
     administrative         387,000      781,000    1,622,000    1,994,000
                        -----------  -----------  -----------  -----------
Total operating
 expenses                 1,190,000    2,065,000    5,090,000    6,645,000
                        -----------  -----------  -----------  -----------

Loss from operations       (228,000)  (1,382,000)    (778,000)  (3,258,000)

Interest and other
 income                           -            -        4,000        1,000
Interest and other
 expense                    (71,000)    (186,000)    (248,000)    (291,000)
                        -----------  -----------  -----------  -----------
Net loss                   (299,000)  (1,568,000)  (1,022,000)  (3,548,000)

Deemed preferred
 dividend                         -            -   (1,000,000)  (2,200,000)
                        -----------  -----------  -----------  -----------
Net loss available
 after deemed preferred
 dividend                  (299,000)  (1,568,000)  (2,022,000)  (5,748,000)

Cumulative preferred
 dividends                  (71,000)     (66,000)    (354,000)    (301,000)
                        -----------  -----------  -----------  -----------
Net loss available to
 common shareholders    $  (370,000) $(1,634,000) $(2,376,000) $(6,049,000)
                        ===========  ===========  ===========  ===========

Basic and diluted net
 loss per common share  $     (0.01) $     (0.04) $     (0.06) $     (0.17)
                        ===========  ===========  ===========  ===========

Shares used in
 computing basic
 and diluted net loss
 per common share        36,895,000   36,370,000   36,876,000   34,941,000




SPESCOM SOFTWARE INC.
Consolidated Balance Sheets

                                                September 30, September 30,
                                                      2006        2005
                                                ------------- ------------

ASSETS
Current assets:
 Cash and cash equivalents                         $    95,000 $   285,000
 Receivables, net                                      854,000     613,000
 Other current assets                                  190,000      72,000
                                                   ----------- -----------
  Total current assets                               1,139,000     970,000

Property and equipment, net                            131,000     168,000
Computer software, net                                 425,000     477,000
Other assets                                            28,000      30,000
                                                   ----------- -----------
  Total assets                                     $ 1,723,000 $ 1,645,000
                                                   =========== ===========

LIABILITIES AND SHAREHOLDERS' DEFICIT

Current liabilities:
 Accounts payable                                  $   792,000 $   374,000
 Payable to Spescom Ltd.                               550,000     213,000
 Preferred stock dividend payable to Spescom Ltd.      887,000     568,000
 Accrued liabilities                                 1,446,000   1,407,000
 Lease obligation – current portion                     44,000      41,000
 Deferred revenue                                    2,752,000   3,026,000
 Series I redeemable preferred stock                 2,450,000           -
                                                   ----------- -----------
  Total current liabilities                          8,921,000   5,629,000

Notes payable and accrued interest to Spescom Ltd.     664,000     917,000
Lease obligation                                        16,000      59,000
                                                   ----------- -----------
  Total liabilities                                  9,601,000   6,605,000
                                                   ----------- -----------

  Total shareholders' deficit                       (7,878,000) (4,960,000)
                                                   ----------- -----------

  Total liabilities and shareholders' deficit      $ 1,723,000 $ 1,645,000
                                                   =========== ===========



EBITDA Calculation
(unaudited)


                       For the three months       For the twelve months
                        Ended September 30,         ended September 30,
                    --------------------------  --------------------------
                        2006          2005          2006          2005
                    ------------  ------------  ------------  ------------
Loss from
  Operations        $   (228,000) $ (1,382,000) $   (778,000) $ (3,258,000)

 Add back:
   Depreciation and
    amortization          49,000        23,000       167,000        84,000
   FAS 123R stock
    compensation
     expense
                          19,000             -       196,000             -
                    ------------  ------------  ------------  ------------
EBITDA excluding
 FAS 123R stock
 compensation
 expense            $   (160,000) $ (1,359,000) $   (415,000) $ (3,174,000)
                    ============  ============  ============  ============

EBITDA per common
 share              $      (0.00) $      (0.04) $      (0.01) $      (0.09)
                    ============  ============  ============  ============

Shares used in
 computing EBITDA
 per common share     36,895,000    36,370,000    36,876,000    34,941,000

Contact Information

  • COMPANY CONTACT:

    Alan Kiraly
    CEO

    John Low
    CFO

    (858) 625-3000