MedcomSoft Inc. reports first quarter financial results



    TORONTO, Nov. 14 /CNW/ - MedcomSoft Inc. (TSX - MSF) today announced its
financial results for the first quarter ended September 30, 2007.

    Highlights
    ----------
    The Company achieved its strongest revenue levels for a first quarter
during this first quarter of fiscal 2008, and also achieved additional market
validation.

    During the first quarter of fiscal 2008:

    
    -   Revenues for the first quarter of fiscal 2008 were 35% higher than
        the revenues recorded for the first quarter of the prior year.
        Overall, the Company achieved higher maintenance revenues from a
        larger customer install base and higher training and support services
        revenues.

    -   The Company continued to improve its marketing and sales strategy in
        order to take advantage of its significant market differentiators. In
        this regard, the Company announced the formation of a Healthcare
        Advisory Board which consists of leading and prominent individuals in
        the healthcare industry. The first appointment was Dr. Robert I.
        Kramer. The goal of this Board is to assist the Company with
        marketing, sales and product initiatives.

    -   Buoyed by the Company's new marketing initiatives and profile,
        including its first place ranking in KLAS' 2007 Mid Year Report for
        the Ambulatory EMR 1-5 Physicians category, the Company has
        experienced an approximately 241% growth in leads for its direct
        sales force in the first quarter of fiscal 2008 compared to the
        average number of leads generated in the previous five fiscal
        quarters. This pace has subsequently accelerated following the first
        quarter as total leads for October 2007 were approximately the same
        as the total number of leads for all of the first quarter.

    -   Furthermore, the Company's sales pipeline of corporate initiatives
        (large transactions which generally have a long sales cycle) has
        increased significantly and is larger than the direct sales force
        pipeline. Finally, the number of value added resellers also continues
        to increase.

    -   The Company also received additional validation by having one of its
        users, Valdez Family Clinic, receive the prestigious Davies Award of
        Excellence for Ambulatory Care, in connection with its use of
        MedcomSoft Record, from the Healthcare Information and Management
        Systems Society (HIMSS).


    Summary Financial Information
    -----------------------------

    -------------------------------------------------------------------------
                                                      Three Months ended
                                                         September 30,
    -------------------------------------------------------------------------
    Operating Results                                     2007          2006
    -------------------------------------------------------------------------
    Revenue                                        $   343,313   $   254,226
    -------------------------------------------------------------------------
    Departmental Operating Expenses:
      Sales and marketing                              414,424       373,632
      Services                                         353,029       240,417
      Research and development                         339,244       210,207
      General and administrative                       382,029       404,033
    -------------------------------------------------------------------------
    Total departmental operating expenses            1,488,726     1,228,289
    Licenses and other product costs                    32,256        24,706
    Amortization                                        17,223        13,422
    Stock compensation                                 144,656       108,389
    Interest expense                                     1,902         2,147
    -------------------------------------------------------------------------
    Total operating expenses                         1,684,763     1,376,953
    -------------------------------------------------------------------------
    Loss from operations                            (1,341,450)   (1,122,727)
    Interest Income                                     10,060         4,455
    -------------------------------------------------------------------------
    Net loss for the period                        $(1,331,390)  $(1,118,272)
    -------------------------------------------------------------------------
    Average number of shares outstanding            69,884,501    56,126,158
    -------------------------------------------------------------------------
    Net earnings (loss) per share:
    - non-diluted basis                                  (0.02)        (0.02)
    - diluted basis                                      (0.02)        (0.02)
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
                                                  September 30,      June 30,
    Financial Position (as at)                            2007          2007
    -------------------------------------------------------------------------
    Cash                                             1,698,715     1,874,460
    Other current assets                               367,011       380,977
    Capital assets and long term assets                310,329       323,670
    -------------------------------------------------------------------------
    Total assets                                     2,376,055     2,579,107
    -------------------------------------------------------------------------
    Current liabilities                              1,156,465     1,309,732
    Long term capital lease obligations                 39,137        49,992
    Shareholders' equity                             1,180,453     1,219,383
    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity       2,376,055     2,579,107
    -------------------------------------------------------------------------
    

    Operating Results
    -----------------
    Consolidated revenues for the first quarter of fiscal 2008 increased by
$89,087 or 35% to $343,313 from $254,226 in the first quarter of the prior
year. The increase is attributed to higher U.S. revenues, by $92,853 or 43%,
due to higher maintenance revenues from a larger customer install base and
higher training and support services revenues relative to the prior quarter.
This was offset by lower Canadian revenues - by $3,766 or 9%.
    Deferred revenue levels increased from $427,434 as at September 30, 2006
to $511,874 as at September 30, 2007; however, the amount was $139,572 lower
than the amount ($651,446) as at June 30, 2007. The deferred revenue levels
would have been lower but for the fact that the delivery of training services
is usually relatively low in the summer.
    Overall operating expenses for the first quarter of fiscal 2008 increased
by $307,810 or by 22% to $1,684,763 from $1,376,953 in the first quarter of
fiscal 2007. Cash operating expenses, excluding non-cash expenses of
amortization and stock compensation, were $1,522,884 in the first quarter of
fiscal 2008 compared to $1,255,142 in the first quarter of the prior year.
Overall operating expenses and cash operating expenses for the first quarter
of fiscal 2008 were consistent with the level of overall operating expenses
and cash operating expenses in the fourth quarter of fiscal 2007 of $1,659,938
and $1,541,570, respectively.
    The Company incurred a net loss for the first quarter of fiscal 2008 of
$1,331,390 or a loss of $0.02 per common share, compared to a net loss of
$1,118,272 or $0.02 per common share in the first quarter of the prior year.
    The Company had cash of $1,698,715 as at September 30, 2007 compared to
$1,874,460 at June 30, 2007 for a net outflow of cash of $175,745 during the
first quarter of fiscal 2008.
    Cash used in operating activities comprised the majority of the use of
cash during the first quarter of fiscal 2008, of $1,304,980, compared with
$789,423 in the first quarter of the prior year. Offsetting this use of cash
were financing activities which produced proceeds of $1,147,804 from the
exercise of purchase warrants and stock options, and payments for capital
lease obligations of $14,687, during the first quarter of fiscal 2008,
compared with proceeds of $4,751,126 from an equity private placement and the
exercise of stock options, and payments for capital lease obligations of
$8,218, in the first quarter of the prior year. Cash outflows from investing
activities included the acquisition of capital assets of $9,349 and reduction
in long term receivable of $5,467 in the first quarter of fiscal 2008, versus
cash outflows from investing activities for the acquisition of capital assets
of $14,296 in the first quarter of the prior year.

    Outlook
    -------
    Management believes that revenues for subsequent quarters in fiscal 2008
will continue to surpass fiscal 2007 levels due to (i) the growing sales
pipeline of the Company and its distribution channel partners, (ii) recent and
continuing market validation and recognition of the Company's products and
services, (iii) the successful release of MedcomSoft Record UE, and (iv) the
development of a significant number of physician reference sites. Management
also expects its gross cash expenses run rate to be approximately $1.6 million
for each of the second and third quarters of fiscal 2008. The Company believes
that in order to dramatically increase its market share and to alleviate any
liquidity concerns, it may need to develop other strategic relationships
and/or strengthen its balance sheet and therefore the Company is pursuing
various alternatives in this regard. The Company is unable to predict at this
time with any degree of certainty whether it will be cash flow positive for
the second quarter as this is dependent on the timing of sales as well as the
results of these various alternative initiatives being pursued by the Company.
The Company will update its shareholders at or prior to its annual general
meeting of shareholders to be held on December 7, 2007.

    For further details on these operational and business highlights as well
as the financial results of the Company for first quarter of fiscal 2008,
please see the Company's Management's Discussion and Analysis of Financial
Condition and Results of Operations and the Company's Interim Unaudited
Consolidated Financial Statements for the first quarter of fiscal 2008, which
will be filed later today on SEDAR at www.sedar.com.

    About MedcomSoft Inc.

    Founded in 1994, MedcomSoft Inc. develops cutting edge software solutions
for the healthcare industry, including its fully integrated Electronic Health
Record (EHR) and practice management solution, MedcomSoft(R) Record.
MedcomSoft has pioneered the use of numerically codified point-of-care
clinical terminologies to create a new generation of highly interoperable
EHRs, which significantly enhance disease surveillance and accelerate clinical
research. The Company has achieved strong growth in license sales year over
year while MedcomSoft Record 2006 placed first in KLAS' Ambulatory EMR 1-5
Physicians Category in the 2007 Mid-Year Report, and has received a 5-STAR
rating from the AC Group, Inc.

    This news release contains forward-looking statements regarding
MedcomSoft's expectations and beliefs with respect to future events and/or
financial performance. These forward-looking statements involve known and
unknown risks, uncertainties and other factors, which may cause the actual
events or results to differ materially from those expressed or implied in such
forward-looking statements. Such factors and risks include, but are not
limited to, competition and rapid change in the software industry, including
price, product feature competition and consolidation; the introduction of new
products by existing or new competitors; the economic environment; government
regulation and the regulatory environment in general, including government
initiatives and guidelines in healthcare technology and the ability of the
Company to obtain and maintain certification of its products from the
Certification Commission for Healthcare Information Technology (CCHIT);
dependence on distributors; the impact of the Company's enlarged direct sales
force; the timing and customer acceptance of new or upgraded products; and the
ability of the Company to develop, market, and support new products and
enhance its existing products in an environment of rapidly changing
technology. The reader is referred to the documents that the Company files
from time to time with applicable Canadian securities and regulatory
authorities for a discussion on certain risks and uncertainties that could
cause actual results to differ from those projected, anticipated or implied.
MedcomSoft does not undertake to update forward-looking statements.

    %SEDAR: 00010549E




For further information:

For further information: Paul Davis, Chief Operating Officer, MedcomSoft
Inc., Phone: (877) 673-0101, Fax: (416) 443-9693, www.medcomsoft.com

Organization Profile

MEDCOMSOFT INC.

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