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Tuesday, 05/17/2005 9:23:35 AM

Tuesday, May 17, 2005 9:23:35 AM

Post# of 91531
~NMXS Earnings News...


New Mexico Software Reports Q1 '05 Financial Results
ALBUQUERQUE, N.M., May 17, 2005 /PRNewswire-FirstCall via COMTEX/ --
New Mexico Software, Inc. (OTC Bulletin Board: NMXS) reported today that revenue for the first quarter ended March 31, 2005, increased to $464,000, a 26.4% improvement over revenue of $367,000 in the first quarter a year ago. Net income was $13,000 or $0.00 earnings per share versus $19,000 or $0.00 per share in the comparable quarter a year ago.

Revenue generated by software sales in Q1 '05 increased 51%, or $84,000, compared to the same quarter last year. This increase in software sales is mostly attributable to a single customer.

Custom programming revenue for the quarter increased to $49,000 compared to negligible sales a year ago. Revenues generated by license fees decreased by 68%, or $17,000 during the quarter compared to the prior year's period. The decrease is primarily because the company did not enter into any significant license agreements. Revenue generated by scanning services increased 12%, or $5,000 in the quarter compared to Q1 '04.

New Mexico Software President and CEO Dick Govatski said, "In general, our key indicator of operating progress is gross revenue. For the three-month periods ending March 31, 2005 and 2004, personnel-related expenses have accounted for approximately 56% of our operating expenses, with fixed costs such as building and equipment rent, utilities, insurance, communications and depreciation accounting for an additional 13%. The only personnel-related costs that are directly variable with sales are those associated with custom programming because they are directly billable. This means that approximately 70% of our expenses are relatively fixed. All of the remaining expenses vary, but less than 5% varies directly with sales. We will incur more definite variable costs associated with our new customer products in 2005. At that time, we may be able to use some other indicators such as gross margins to help analyze performance, but for 2004 and in the first quarter of 2005, gross revenue is our primary indicator of when we will achieve profitability and break-even cash flow.

"We anticipate that sales of Roswell and XR-EXpress will increase gradually over the next two years," Govatski continued. "However, since they are high-level enterprise systems, their sales are characterized by a small number of contracts with much higher revenues than our other products. As a result, their sales growth will most likely be inconsistent from one quarter to the next. Sales of these enterprise products will be balanced by sales of our desktop products.

"Overall, we are pleased with our results this quarter. We are committed to focusing on our cash flow and solidifying the consistency of our revenue stream."

About New Mexico Software

The company is a leading provider of next-generation digital lifecycle management solutions. It is the only public company providing totally integrated services that a customer would normally need to outsource to several different suppliers. With the New Mexico Software business model and technology, the company is able to provide the software, custom programming, hosting and database administration as a total solution.

For more information on New Mexico Software, contact Dick Govatski, (505) 255-1999, ceo@nmxs.com . An investment profile on New Mexico Software may be found at http://www.hawkassociates.com/nms/profile.htm . To be placed on an e-mail alert for news about New Mexico Software, contact Frank Hawkins or Ken AuYeung, Hawk Associates, at (305) 451-1888 or via e-mail at info@hawkassociates.com . For an online investor relations kit, go to http://www.hawkassociates.com or http://www.hawkmicrocaps.com .

The foregoing press release contains forward-looking statements including statements regarding the company's expectation of its future business. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the company's control. Actual results could differ materially from these forward-looking statements.

SOURCE New Mexico Software, Inc.

Dick Govatski, New Mexico Software, +1-505-255-1999, or
ceo@nmxs.com
; or Frank
Hawkins or Ken AuYeung, both of Hawk Associates, +1-305-451-1888, or

info@hawkassociates.com
, for New Mexico Software

http://www.prnewswire.com


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