AXS-One Reports Financial Results for First Quarter of 2006

RUTHERFORD, N.J., May 11  /PRNewswire-FirstCall/ -- AXS-One Inc. (AMEX:AXO), a leading provider of high performance Records Compliance Management (RCM) software solutions today announced its financial results for the first quarter ended March 31, 2006.

Total revenues for the first quarter were $7.5 million, a decrease of 7.0 percent, compared with revenues of $8.1 million in the first quarter of 2005.  License revenues for the first quarter were $1.0 million, unchanged from $1.0 million in the first quarter of 2005.  Total expenses decreased 8.1 percent to $10.2 million compared to $11.1 million in the first quarter of 2005.  The Company reported a net loss of $2.7 million for the first quarter, or $(0.08) per diluted share compared to a net loss of $3.2 million, or $(0.11) per diluted share in the first quarter of last year.

"During the past few months, we have experienced an increase in license deal closures and believe that our growth prospects for 2006 remain strong," said Bill Lyons, chairman and CEO of AXS-One.  "We are witnessing significantly improved activity as a result of the partner programs we initiated at the beginning of this year, fueling our confidence going forward. During the first quarter of 2006, we closed a number of deals with Sun, a clear sign that this partnership is now delivering on its revenue opportunity. Since the beginning of April, we have experienced even more activity with Sun and our other partners world wide, providing further evidence that our sales model is gaining momentum and thus creating a foundation for future success."

  Highlights from the First Quarter include:

  *  New RCM contracts were signed with an Australian government agency, a
     government agency in Canada and a large U.S. bank.

  *  Completion of enhancements to AXS-One Compliance Platform(TM), enabling
     transition of Sun Microsystems' Infinite Mailbox customers to commence.

  *  Expansion of partner network: announcements with MailFrontier and
     Onsite E-Discovery in North America and Automated Systems Limited in
     Hong Kong.

  *  Two industry awards: KMWorld's "100 Companies That Matter in Knowledge
     Management" and Lotus Advisor Editors' Choice Award for IT Governance
     and Compliance.

  Conference call information


Management will conduct a conference call to discuss these results at 4:30 p.m. Eastern on May 11, 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 .  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 (AMEX:AXO) 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, "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 in 2006; our ability to grow license and service revenue in 2006; potential vulnerability to technological obsolescence; the risks that its 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 Securities and Exchange Commission filings.

  Company Contact:                         IR Contact:
  Joseph Dwyer                             Matthew Hayden
  AXS-One Inc.                             Hayden Communications
                          
  [phone]                           [phone]



                      AXS-ONE INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                              (In thousands)


                                                  March 31,   December 31,
                                                    2006          2005
                       ASSETS                    (unaudited)
  Current assets:
    Cash and cash equivalents                      $7,641        $3,613
    Accounts receivable, net of allowance
     for doubtful accounts                          3,565         5,153
    Prepaid expenses and other current
     assets                                         1,126           775
      Total current assets                         12,332         9,541

  Equipment and leasehold improvements, net
   of accumulated depreciation                        393           395
  Capitalized software development cost, net
   of accumulated amortization                        835         1,038
  Other assets                                         96            92
  Total assets                                    $13,656       $11,066

      LIABILITIES AND STOCKHOLDERS' DEFICIT
  Current liabilities:
    Accounts payable and accrued expenses          $4,199        $4,843
    Due to joint venture                               78            52
    Deferred revenue                               11,421         8,224
      Total current liabilities                    15,698        13,119

  Long-term deferred revenue                        2,627            63

  Stockholders' deficit                            (4,669)       (2,116)
  Total liabilities and stockholders'
   deficit                                        $13,656       $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 result 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
                                                         March 31,
                                                    2006          2005
  Revenues:                                             (Unaudited)
    License fees                                     $965        $1,022
    Services                                        6,488         7,016
    Other-related parties                              39            20
      Total revenues                                7,492         8,058

  Operating expenses:
    Cost of license fees                              443           364
    Cost of services                                3,435         4,659
    Sales and marketing                             2,819         2,588
    Research and development                        2,226         2,101
    General and administrative                      1,262         1,348
      Total operating expenses                     10,185        11,060
  Operating loss                                   (2,693)       (3,002)
  Other income (expense):
    Interest income                                    84            30
    Interest expense                                  (27)           --
    Equity in losses of joint venture                 (27)          (24)
    Other income (expense), net                       (83)         (173)
      Other income (expense), net                     (53)         (167)
  Loss before income taxes                         (2,746)       (3,169)
  Income tax benefit                                   --            --
  Net loss                                        $(2,746)      $(3,169)

  Basic and diluted net loss per common
   share                                           $(0.08)       $(0.11)
  Weighted average basic and diluted
   common shares outstanding                       34,247        28,576





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 result 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. 

DATASOURCE: AXS-One Inc.



CONTACT:  Joseph Dwyer of AXS-One Inc., [phone],

; or Investors, Matthew Hayden of Hayden Communications,

[phone], , for AXS-One Inc.



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

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