MedcomSoft Inc. reports year-end financial results



    TORONTO, Sept. 24 /CNW/ - MedcomSoft Inc. (TSX - MSF) today announced its
financial results for the fourth quarter and the full year periods ended
June 30, 2007.

    Highlights
    ----------
    During the 2007 fiscal year, the Company achieved significant growth,
enhanced its products and achieved market validation.

    
    -   revenues increased 171% for the fourth quarter of fiscal 2007,
        compared with the fourth quarter of fiscal 2006; and increased 59%
        for the 2007 fiscal year compared with fiscal 2006.

    -   during the fourth quarter of fiscal 2007 cash levels decreased by
        approximately $300,000, and the Company's cash levels at year end
        were approximately $1.87 million compared to approximately $811,000
        as at June 30, 2006.

    -   subsequent to year end, the Company received proceeds of
        approximately $1.1 million from the exercise of warrants.

    -   the Company achieved certification by the Certification Commission
        for Healthcare Information Technology (CCHIT(SM)) of MedcomSoft
        Record 2006 V 3.0 in meeting CCHIT ambulatory EHR criteria for 2006.

    -   the Company was rewarded with a 1st place ranking in the Ambulatory
        EMR 1-5 Physicians category in KLAS' 2007 Mid-Year Report. KLAS is
        the only research and consulting firm specializing in monitoring and
        reporting the performance of healthcare information technology
        vendors and products.

    -   MedcomSoft Record received the AC Group's top mark - a 5-Star rating
        - in its Survey for Practice Management Systems and EHR rating for
        2006. The AC Group is one of the leading companies specializing in
        the evaluation, selection, and ranking of vendors in the PMS/EMR/EHR
        healthcare marketplace.

    -   the Company grew its funnel of qualified sales opportunities
        generated for its direct sales force (which does not include
        corporate initiatives and its value added reseller funnel) by 257%
        compared to the funnel at the end of fiscal 2006.

    -   Independent Physicians Network, Inc. (IPN) accelerated the adoption
        of MedcomSoft Record within the IPN community with the purchase of 60
        MedcomSoft Record licenses in the fourth quarter. Cumulatively, over
        100 licenses have been acquired by IPN and its members.

    -   the Company unveiled the latest version of its software, MedcomSoft
        Record UE (Ultimate Edition), for Microsoft Windows Vista and
        Microsoft Office 2007 at the TEPR 2007 Conference and Exhibition in
        Dallas, Texas in May 2007. MedcomSoft Record UE is expected to be
        released in October 2007.
    

    More recently, the Company 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).
    These achievements provide concrete evidence that the Company's new
marketing and sales strategy, together with its customer-centric approach, is
producing positive results. Management continues to remain optimistic
regarding the outlook for increased revenues by the Company in fiscal 2008.

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

    -------------------------------------------------------------------------
                                Three Months ended       Twelve Months ended
                                           June 30,                  June 30,
    -------------------------------------------------------------------------
    Operating Results            2007         2006         2007         2006
    -------------------------------------------------------------------------
    Revenue               $   932,276  $   344,123  $ 2,062,742  $ 1,294,069
    -------------------------------------------------------------------------
    Departmental Operating
     Expenses:
      Sales and marketing     426,817      329,616    1,853,573    1,139,513
      Services                351,235      264,279    1,307,299      977,488
      Research and
       development            337,471      258,709    1,091,324    1,035,803
      General and
       administrative         395,310      349,515    1,661,236    1,539,486
    -------------------------------------------------------------------------
    Total departmental
     operating expenses     1,510,833    1,202,119    5,913,432    4,692,290
    Licenses and other
     product costs             28,908       16,672      103,572       70,833
    Amortization               16,040       13,685       57,734       54,234
    Stock compensation        102,328      110,064      513,491      382,257
    Interest expense            1,829        2,991        7,088       13,693
    -------------------------------------------------------------------------
    Total operating
     expenses               1,659,938    1,345,531    6,595,317    5,213,307
    -------------------------------------------------------------------------
    Loss from operations     (727,662)  (1,001,408)  (4,532,575)  (3,919,238)
    -------------------------------------------------------------------------
    Other income                    -      119,109            -      119,109
    Interest Income             9,362        8,013       60,069       53,566
    -------------------------------------------------------------------------
    Net loss for
     the period          $   (718,300) $  (874,286) $(4,472,506) $(3,746,563)
    -------------------------------------------------------------------------
    Average number
     of shares
     outstanding           68,453,635   55,035,491   65,217,479   54,895,935
    -------------------------------------------------------------------------
    Net earnings (loss)
     per share:
    - non-diluted basis         (0.01)       (0.02)       (0.07)       (0.07)
    - diluted basis             (0.01)       (0.02)       (0.07)       (0.07)
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                            As at June 30,
    -------------------------------------------------------------------------
    Financial Position                                     2007         2006
    -------------------------------------------------------------------------

    Cash                                              1,874,460      811,823
    Other current assets                                380,977      348,105
    Capital assets and long term assets                 323,670      236,500
    -------------------------------------------------------------------------
    Total assets                                      2,579,107    1,396,428
    -------------------------------------------------------------------------
    Current liabilities                               1,309,732    1,063,509
    Long term capital lease obligations                  49,992       42,087
    Shareholders' equity                              1,219,383      290,832
    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity        2,579,107    1,396,428
    -------------------------------------------------------------------------
    

    Operating Results
    -----------------
    Revenues of $932,276 for the fourth quarter of fiscal 2007 were $588,153
or 171% higher than the revenues recorded for the fourth quarter of the prior
year, of $344,123. Revenues for the year ended June 30, 2007 of $2,062,742
were $768,673 or 59% higher than the revenues recorded for the prior year, of
$1,294,069. Overall, the Company achieved more license unit sales resulting in
higher license revenues, higher maintenance revenues from a larger customer
install base and higher training and support services revenues.
    Notwithstanding the significant increase in revenues during fiscal 2007,
the level of revenues were not as high as expected as (i) the sales cycle was
longer than originally planned, particularly on larger transactions, and (ii)
we experienced certain delays in training implementations in the fourth
quarter due to decisions by our customers to defer their previously scheduled
training dates.
    The Company's sales bookings have increased consistently quarter over
quarter in fiscal 2007, and the Company's deferred revenue levels increased
from $413,364 as at June 30, 2006 to $651,446 as at June 30, 2007. The
Company's sales invoicing activity in the fourth quarter of fiscal 2007 had a
value to the Company of US$888,651 compared with US$353,293 for the fourth
quarter of fiscal 2006. The Company's sales invoicing activity in the prior
three quarters of fiscal 2007 were US$530,672, US$325,480 and US$202,893,
respectively.
    Overall operating expenses (which include non-cash expenses of
amortization and stock compensation expense) increased by $314,407 or by 23%,
to $1,659,938 in the fourth quarter of fiscal 2007 from $1,345,531 in the
fourth quarter of fiscal 2006, due primarily to increases in sales and
marketing and services expenses. Overall operating expenses for fiscal 2007
increased by $1,382,010 or by 27% to $6,595,317 from $5,213,307 in fiscal
2006.
    On a quarterly basis, in fiscal 2007, expenses rose from approximately
$1.38 million in the first quarter to approximately $1.69 million,
$1.87 million, and $1.66 million in the second, third and fourth quarters,
respectively.
    On a quarterly basis in fiscal 2007, cash operating expenses, excluding
non-cash expenses of amortization and stock compensation, rose from
approximately $1.26 million in the first quarter to approximately
$1.53 million, $1.7 million, and $1.54 million in the second, third and fourth
quarters, respectively.
    The Company incurred a net loss for the fourth quarter of fiscal 2007 of
$718,300 or a loss of $0.01 per common share, compared to a net loss of
$874,286 or $0.02 per common share in the fourth quarter of the prior year. On
a year to date basis, the Company incurred a net loss in fiscal 2007 of
$4,472,506 or a loss of $0.07 per common share, compared to a net loss of
$3,746,563 or $0.07 per common share in fiscal 2006.
    The Company closed an equity private placement financing raising gross
proceeds of $5 million on September 26, 2006. The Company had cash of
$1,874,460 as at June 30, 2007 compared to $811,823 as at June 30, 2006 for a
net increase of $1,062,637. During the fourth quarter of fiscal 2007, there
was a decrease of net cash of $298,000. The net increase of cash during the
year was due primarily to the Company's financing activities, net of its use
of cash in its operating activities of $3,714,546 for the year.

    Outlook
    -------
    As previously disclosed, over the past two fiscal years, management has
taken numerous steps to increase sales and in connection therewith has also
built a scaleable infrastructure that would prepare the Company for growth as
a pre-eminent service-focused organization at the forefront of the industry
from the perspective of technology, compliance, security and communication.
These actions led to an increase in expenses. The Company's gross cash
expenses were highest during the third quarter of fiscal 2007 amounting to
approximately $1.7 million, and were $1.54 million during the fourth quarter
of fiscal 2007. Management expects its gross cash expenses run rate to be
approximately $1.6 million and $1.7 million in the first and second quarters
of fiscal 2008, respectively.
    Notwithstanding the significant increase in sales in fiscal 2007, the
Company's sales have not yet achieved sufficient levels to cover its operating
expenditures. Nonetheless, we remain confident that (i) the significant and
growing marketing efforts, along with an experienced direct sales force, (ii)
the growing sales funnel of the Company and its distribution channel partners
(including that management expects that the size of the Company's direct sales
force funnel of qualified sales opportunities will double over the next three
months, and the funnel of corporate initiatives is currently significantly
greater than the direct sales force funnel), (iii) the successful release of
MedcomSoft Record 2006 and the expected release shortly of MedcomSoft Record
UE, (iv) the continued successful deployment of our product to IPN physicians
and the establishment of other similar and significant relationships, and (v)
the development of a significant number of physician reference sites, will
lead to a significant increase in revenues over the next six months and
beyond. As a result, management is hopeful that the Company's increasing sales
will lead to positive cash flow for the second quarter of fiscal 2008.

    For further details on these operational and business highlights as well
as the financial results of the Company for fiscal 2007, please see the
Company's Management's Discussion and Analysis of Financial Condition and
Results of Operations and the Company's Audited Consolidated Financial
Statements for fiscal 2007, 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, has received a 5-STAR rating
from the AC Group, Inc. and a user thereof has been awarded the 2007 HIMSS
Davies Award of Excellence.

    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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