RUTHERFORD, N.J., Aug. 2 /PRNewswire-FirstCall/ -- AXS-One Inc. , a leading provider of high performance Records Compliance Management (RCM) software solutions today announced its financial results for the second quarter and six-month period ended June 30, 2006.

Total revenues for the second quarter were $8.0 million, an increase of 6.8 percent compared with revenues of $7.5 million for the second quarter of 2005 and up 6.5 percent sequentially compared to the $7.5 million reported for the first quarter. License revenues for the second quarter were $1.0 million, up $.5 million from the $.5 million reported for the second quarter last year and approximately unchanged from the first quarter. Total expenses decreased 9.5 percent to $10.5 million compared to $11.6 million in the second quarter of 2005. For comparison purposes, last year's second quarter results included $0.9 million in restructuring and related expenses, absent from the 2006 second quarter. The Company reported a net loss of $2.5 million for the second quarter, or $(0.07) per diluted share (based on 34.4 million fully diluted shares) compared to a net loss of $4.4 million, or $(0.15) per diluted share (based on 30.0 million fully diluted shares) in the second quarter of last year.

For the first six months of 2006, total revenues were $15.5 million compared with total revenues of $15.5 million for the first six months of 2005. License fees were $1.9 million, up 24.5 percent, or $.4 million, from the $1.5 million in license fees recognized for the first six months last year. Total operating expenses were $20.7 million, a decrease of 8.7 percent from the $22.7 million last year, which included the $0.9 million in restructuring expenses. The net loss for the first six months of 2006 was $5.2 million, or $(0.15) per fully diluted share (based on 34.3 million fully diluted shares) compared to a net loss of $7.5 million, or $(0.26) per fully diluted share (based on 29.3 million fully diluted shares) for the comparable prior-year period.

The Company completed the quarter with $3.3 million in cash and cash equivalents. The Company's accounts receivable were $4.3 million as of June 30, and the Company completed the quarter with $1.7 million of borrowing availability on its $4 million line of credit.

"While we saw an increase in deal closings during the second quarter, specifically with our partner Sun Microsystems, our reported results are below our expectations," commented Bill Lyons, chairman and CEO of AXS-One. "We continue to experience lengthy sales cycles which resulted in a number of deals that were anticipated to close being pushed out into subsequent quarters. However, recently released industry studies that highlight AXS-One's complete integrated platform solution validate our belief that our software is appropriately positioned within this growing and dynamic market. These factors, combined with improved execution on our sales pipeline, should allow us to grow revenues and continue our progress toward a return to profitability."

Conference call information

Management will conduct a conference call to discuss these results at 5:00 p.m. Eastern on August 2, 2006. Interested parties can participate in the call by dialing 706-645-0399 or can access the webcast at http://www.axsone.com/. The webcast will be archived for 30 days following the call. Interested parties may submit questions that they would like answered during the conference call by e-mail to info@axsone.com. Interested parties may listen to the call via a live CCBN webcast that will be available via the company website http://www.axsone.com/. Interested parties should access the webcast approximately 10-15 minutes before the scheduled start time.

About AXS-One Inc.

AXS-One is a leading provider of high performance Records Compliance Management solutions. The AXS-One Compliance Platform enables organizations to implement secure, scalable and enforceable policies that address records management for corporate governance, legal discovery and industry regulations such as SEC17a-4, NASD 3010, Sarbanes-Oxley, HIPAA, The Patriot Act and Gramm-Leach Bliley. AXS-One's technology has been critically acclaimed as best of class and delivers digital archiving, business process management, electronic document delivery and integrated records disposition and discovery for e-mail, instant messaging, images, SAP and other corporate records. Founded in 1979, and headquartered in Rutherford, NJ, AXS-One has offices worldwide including in the United States, Australia, Singapore, United Kingdom and South Africa. For further information, visit the AXS-One website at http://www.axsone.com/.

AXS-One, the AXS-One logo, "Access Tomorrow Today," AXSPoint, and TransAXS are registered trademarks of, and AXS-One Compliance Platform, AXS-One Retention Manager, AXS-One Rapid-AXS, AXS-Link for Desktop, AXS-Link for SAP, AXS-Link for Lotus Notes, AXS-Link for Microsoft Exchange, "The Records Compliance Management Company," e-Cellerator, AXS Desk, "AXS-One Collaboration FrameWorks," SMART, AXS-Link and Tivity are trademarks of, AXS-One Inc., in the U.S. All other company and product names are trademarks or registered trademarks of their respective companies.

Special Note Regarding Forward-Looking Statements: A number of statements contained in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the applicable statements. These risks and uncertainties include, but are not limited to: our ability to return to profitability; our ability to grow license and service revenue; potential vulnerability to technological obsolescence; the risks that our current and future products may contain errors or defects that would be difficult and costly to detect and correct; potential difficulties in managing growth; dependence on key personnel; the possible impact of competitive products and pricing; and other risks described in more detail in AXO's most recent Form 10-K and other Securities and Exchange Commission filings.

Company Contact: IR Contact: Joseph Dwyer Matthew Hayden AXS-One Inc. Hayden Communications jdwyer@axsone.commatt@haydenir.com (201) 935-3400 (858) 704-5065 AXS-ONE INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) June 30, December 31, 2006 2005 ASSETS (unaudited) Current assets: Cash and cash equivalents $3,341 $3,613 Accounts receivable, net of allowance for doubtful accounts 4,300 5,153 Prepaid expenses and other current assets 958 775 Total current assets 8,599 9,541 Equipment and leasehold improvements, net of accumulated depreciation 442 395 Capitalized software development costs, net of accumulated amortization 661 1,038 Other assets 97 92 Total assets $9,799 $11,066 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable and accrued expenses $5,171 $4,843 Due to joint venture 52 Deferred revenue 9,503 8,224 Total current liabilities 14,674 13,119 Long-term deferred revenue 2,213 63 Stockholders' deficit (7,088) (2,116) Total liabilities and stockholders' deficit $9,799 $11,066

The unaudited financial information included in this document is intended only as summary provided for your convenience, and should be read in conjunction with the complete consolidated financial statements of the Company (including the Notes thereto, which set forth important information) contained in its Reports on Form 10-K and 10-Q filed by the Company with the U.S. Securities and Exchange Commission (SEC). Such reports are available on the public EDGAR electronic filing system maintained by the SEC.

This press release contains forward-looking statements. Such statements are only predictions, and actual events or results may differ materially. All forward-looking statements involve risks and uncertainties, including, without limitation, the risks detailed in the Company's documents and reports filed from time to time with the Securities and Exchange Commission.

AXS-ONE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, 2006 2005 2006 2005 Revenues: License fees $952 $518 $1,917 $1,540 Services 7,006 6,944 13,494 13,960 Other-related parties 25 17 64 37 Total revenues 7,983 7,479 15,475 15,537 Operating expenses: Cost of license fees 456 406 899 770 Cost of services 3,922 4,383 7,357 9,042 Sales and marketing 2,481 2,523 5,300 5,111 Research and development 2,195 2,034 4,421 4,135 General and administrative 1,485 1,437 2,747 2,785 Restructuring costs and other costs -- 863 -- 863 Total operating expenses 10,539 11,646 20,724 22,706 Operating loss (2,556) (4,167) (5,249) (7,169) Other expense: Interest income 55 28 139 58 Interest expense (29) (1) (56) (1) Equity in losses of joint ventures (43) (3) (70) (27) Other expense, net 85 (241) 2 (414) Total other expense, net 68 (217) 15 (384) Loss before income taxes (2,488) (4,384) (5,234) (7,553) Income tax benefit -- 25 -- 25 Net loss $(2,488) $(4,359) $(5,234) $(7,528) Basic & diluted net loss per share: $(0.07) $(0.15) $(0.15) $(0.26) Weighted average basic & diluted common shares outstanding 34,354 30,016 34,301 29,300

The unaudited financial information included in this document is intended only as summary provided for your convenience, and should be read in conjunction with the complete consolidated financial statements of the Company (including the Notes thereto, which set forth important information) contained in its Reports on Form 10-K and 10-Q filed by the Company with the U.S. Securities and Exchange Commission (SEC). Such reports are available on the public EDGAR electronic filing system maintained by the SEC.

This press release contains forward-looking statements. Such statements are only predictions, and actual events or results may differ materially. All forward-looking statements involve risks and uncertainties, including, without limitation, the risks detailed in the Company's documents and reports filed from time to time with the Securities and Exchange Commission.

CONTACT: Joseph Dwyer of AXS-One Inc., +1-201-935-3400,
jdwyer@axsone.com; or Matthew Hayden of Hayden Communications,
+1-858-704-5065, matt@haydenir.com, for AXS-One Inc.

Web site: http://www.axsone.com/