MedcomSoft Inc. reports second quarter financial results



    TORONTO, Feb. 14 /CNW/ - MedcomSoft Inc. (TSX - MSF) today announced its
financial results for the second quarter ended December 31, 2007.

    Summary of Operating Results and Highlights
    -------------------------------------------
    Consolidated revenues for the second quarter of fiscal 2008 decreased by
$109,491 or 29% to $264,089 from $373,580 in the second quarter of the prior
year. On a year to date basis, revenues for the six months of fiscal 2008
decreased by $20,404 or 3% to $607,402 from $627,806 in the comparable period
of fiscal 2007. The second quarter decrease is attributable to lower software
license fees by 97%, offset by higher maintenance revenues by 51% from a
larger customer install base and higher training and support services revenues
by 15%.
    Overall operating expenses for the second quarter of fiscal 2008
increased by $26,825 or by 2% to $1,713,469 from $1,686,644 in the second
quarter of fiscal 2007. On a year to date basis, total operating expenses for
the six months of fiscal 2008 increased by $334,635 or 9% to $3,398,232 from
$3,063,597 in the comparable period of fiscal 2007. Cash operating expenses,
excluding non-cash expenses of amortization and stock compensation, were
$1,549,534 in the second quarter of fiscal 2008 compared to $1,526,886 in the
second quarter of the prior year. On a year to date basis, total cash
operating expenses for the six months of fiscal 2008 increased by $290,390 or
10% to $3,072,418 from $2,782,028 in the comparable period of fiscal 2007.
    The Company incurred a net loss for the second quarter of fiscal 2008 of
$1,443,334 or a loss of $0.02 per common share, compared to a net loss of
$1,284,495 or $0.02 per common share in the second quarter of the prior year.
On a year to date basis, the Company incurred a net loss in fiscal 2008 of
$2,774,724 or a loss of $0.04 per common share, compared to a net loss of
$2,402,767 or $0.04 per common share for the comparative period in fiscal
2007.
    December 2007, MedcomSoft was named as "Best in KLAS" in the Ambulatory
EMR 1-5 Physicians category pursuant to KLAS' "2007: Top 20 Year-End Best in
KLAS Awards", retaining its position as the top product in a highly
competitive market, having also been ranked No. 1 in the 2007 Mid-Year Report.
KLAS, an organization dedicated to improving healthcare information technology
(HIT) delivery, bestows its Year-End "Best in KLAS" Awards to technology,
service, and medical equipment providers based on information in customer
satisfaction surveys completed by healthcare professionals at physician
practices throughout the country.
    During its second fiscal quarter, the Company reviewed its sales,
marketing and corporate strategies in order to take advantage of its
significant market differentiators, and announced the formation of a
Healthcare Advisory Board (HAB), drawing members from both the public and
private sector to provide guidance on a number of corporate programs,
including product enhancements and strategic marketing.
    The recent appointments to the HAB include leading and prominent
individuals in the healthcare industry: Robert I. Kramer, MD, a nationally
prominent physician and healthcare business leader, and James Haveman, a
prominent health and human services expert and former U.S. presidential health
advisor.

    
    -------------------------------------------------------------------------
                              Three months ended            Six months ended
                                     December 31,                December 31,
    -------------------------------------------------------------------------
    Operating Results         2007          2006          2007          2006
    -------------------------------------------------------------------------
    Revenue           $    264,089  $    373,580  $    607,402  $    627,806
    -------------------------------------------------------------------------
    Departmental
     Operating
     Expenses:
      Sales and
       marketing           370,360       490,611       784,784       864,243
      Services             348,680       330,662       701,709       571,079
      Research and
       development         329,963       228,817       669,207       439,024
      General and
       administrative      469,023       451,448       851,052       855,481
    -------------------------------------------------------------------------
    Total departmental
     operating expenses  1,518,026     1,501,538     3,006,752     2,729,827
    Licenses and other
     product costs          29,745        23,628        62,001        48,334
    Amortization            17,249        13,720        34,472        27,142
    Stock compensation     146,686       146,038       291,342       254,427
    Interest expense         1,763         1,720         3,665         3,867
    -------------------------------------------------------------------------
    Total operating
     expenses            1,713,469     1,686,644     3,398,232     3,063,597
    -------------------------------------------------------------------------
    Loss from
     operations         (1,449,380)   (1,313,064)   (2,790,830)   (2,435,791)
    Interest Income          6,046        28,569        16,106        33,024
    -------------------------------------------------------------------------
    Net loss for the
     period           $ (1,443,334) $ (1,284,495) $ (2,774,724) $ (2,402,767)
    -------------------------------------------------------------------------
    Average number of
     shares
     outstanding        70,622,308    68,187,712    70,253,404    62,156,935
    -------------------------------------------------------------------------
    Net earnings (loss)
     per share:
     - non-diluted
        basis                (0.02)        (0.02)        (0.04)        (0.04)
     - diluted basis         (0.02)        (0.02)        (0.04)        (0.04)
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                      December 31,   June 30,
    Financial Position (as at)                               2007       2007
    -------------------------------------------------------------------------

    Cash                                                  421,348  1,874,460
    Other current assets                                  245,578    380,977
    Capital assets and long term assets                   313,823    323,670
    -------------------------------------------------------------------------
    Total assets                                          980,749  2,579,107
    -------------------------------------------------------------------------

    Current liabilities                                 1,032,583  1,309,732
    Long term capital lease obligations                    42,761     49,992
    Shareholders' (deficit) equity                        (94,595) 1,219,383
    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity            980,749  2,579,107
    -------------------------------------------------------------------------
    

    The Company had cash of $421,348 as at December 31, 2007 compared to
$1,874,460 at June 30, 2007 for a net outflow of cash of $1,453,112 during
fiscal 2008.
    Cash used in operating activities comprised the majority of the use of
cash during the second quarter of fiscal 2008, of $1,279,909, compared with
$1,301,009 in the second quarter of the prior year. There were limited
investing and financing activities in the second quarter of fiscal 2008, which
were consistent with the investing and financing activities of the comparative
period in the prior year.

    Outlook
    -------
    Following the resignations of Paul Davis, as Chief Operating Officer of
the Company, and Ray Harris, as director of the Company, MedcomSoft engaged
the services of Dr. Steven Small and Capital Partners Corporation, and through
the Florida Institute for Human and Machine Cognition (FIHMC), the services of
former healthcare investment banker Robert Wilson, a Senior Research Director
of FIHMC, to conduct an independent strategic review of the Company -
including, among other things, its go-to-market strategies, strategic
alliances, capitalization and human resource requirements.
    Subsequent to the second quarter of fiscal 2008, the Company made changes
to the composition and structure of its board of directors. The board accepted
the resignations of Peter Langer, Dr. Peter Aldor, Dr. Ross Black and Dr.
Thomas A. Riemenschneider. Replacing the former directors, Dr. Steven Small,
Mr. John Gillberry and Mr. Ray Simonson were appointed to the board. Dr.
Steven Small was appointed Chairman of the board, and a Special Executive
Committee, to be chaired by Dr. Small, was appointed with the mandate to lead
the necessary changes within the Company including, among other things, to
commence a search for a US-based Chief Executive Officer. The Special
Executive Committee is comprised of Dr. Small and Mr. Gillberry, and supported
by Mr. Robert Wilson on a consultative basis.
    Further, subsequent to the second quarter of fiscal 2008, the Company
closed private placement equity financings consisting of the issue of a total
of 14,720,000 common shares raising gross proceeds of $1,840,000.
    The Company believes that in order to alleviate liquidity concerns and
increase its market share, it will need to develop other strategic
relationships and strengthen its balance sheet further and therefore the
Company is pursuing various alternatives.
    For further details on these operational and business highlights as well
as the financial results of the Company for second quarter of fiscal 2008,
please see the Company's Interim Management's Discussion and Analysis of
Financial Condition and Results of Operations and the Company's Interim
Unaudited Consolidated Financial Statements for the second 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. 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. MedcomSoft award winning software
applications includes Electronic Health Records, physician order entry systems
with e-prescribing, document management, practice management and clinical data
search, data mining and disease surveillance systems.
    MedcomSoft is the recipient of the "Best of KLAS" award in 2007 year-end
report in the Ambulatory EMR 1-5 Physicians category. In addition a MedcomSoft
practice was recently awarded the prestigious 2007 HIMSS Davies Award.
www.medcomsoft.com.

    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, market conditions, competition including price and product
functionality; economic environment; and the ability to develop and deliver
new products in a timely manner. 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: Steven Small, MedcomSoft Inc., Phone: (877)
673-0101, Fax: (416) 443-9693, www.medcomsoft.com

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MEDCOMSOFT INC.

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