AXS-One Reports Financial Results for Second Quarter of 2005

AXS-One Reports Financial Results for Second Quarter of 2005



RUTHERFORD, N.J., July 28  /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 second quarter
and six month period ended June 30, 2005.

Total revenues for the second quarter were $7.5 million, a decrease of 21
percent, compared with revenues of $9.5 million in the second quarter of 2004. 
License revenues for the second quarter decreased to $0.5 million from $1.0
million in the second quarter of 2004.  Records Compliance Management (RCM)
license revenues were $0.3 million compared to $0.8 million in the second
quarter of 2004.  Total operating expenses were $11.6 million compared to $12.0
million in the second quarter of 2004.  The Company reported a net loss of $4.4
million for the second quarter, or ($0.15) per diluted share compared to a net
loss of $2.6 million in the second quarter of last year or ($0.09) per diluted
share.

"We are clearly disappointed that we did not close several pending deals in the
second quarter," said Bill Lyons, chairman and CEO of AXS-One.  "While we
experienced significant deal slippage during the quarter, AXS-One and our
partners have closed in July a number of these deals representing approximately
$1.6 million in license revenue, more than 90% of which was generated by RCM
products, resulting in the best first month of a quarter in more than three
years.  This includes a major West Coast health care company closed with a
partner along with a significant direct sale to a leading international
financial services provider.  Going into the third quarter, we have streamlined
the company to substantially reduce costs and generate license and service
revenue."  The $1.6 million of license deals closed this month may or may not
be recognized in the company's third quarter financial statements, subject to
meeting contractual commitments and revenue recognition criteria.

Mr. Lyons continued, "We have taken the necessary steps to ensure our future
success.  We raised $6.075 million through an equity private placement in June,
with an additional $675,000 of proceeds committed from management and the board,
subject to shareholder approval.  We are targeting annual cost savings of
approximately $4 million per year principally from a reduction in workforce
effective June 30 which trimmed the expense structure, as well as a reduction
of executive salaries.  The result was an overall reduction during the second
quarter of 33 positions, including several executives, which collectively
represented 13% of the total employee count.  Finally, we made some
considerable changes within our sales organization.  We are confident that
these necessary measures will enable us to improve our financial and sales
performance."

Mr. Lyons concluded, "While the results of the second quarter are extremely
disappointing, we continue to believe that the market for Records Compliance
Management Solutions is still emerging.  The growth opportunity is substantial
and our ability to close business in the past month provides initial validation
for this premise.  We have significantly expanded the quality and depth of our
validated pipeline and have made substantial progress on closing these
potential deals.  We look forward to a continuation of these trends through the
remainder of 2005."

  Highlights from the Second Quarter include:

   * $6.075 million raised in an equity private placement.
   * Release of AXS-One Compliance Platform Version 3.5, featuring AXS-One
     Rapid-AXS.  Benchmark figures point to a new record for search
     performance with a very low total cost of ownership, providing AXS-One
     with an industry leading price-performance ratio.
   * First implementation of AXS-One Compliance Platform to address
     Sarbanes-Oxley requirements completed.
   * MONY Group wins industry regulation compliance and corporate governance
     category industry award from Storage Networking World for successful
     implementation of AXS-One solution.

  Conference call information


Management will conduct a conference call to discuss these results at 5:00 p.m.
Eastern on July 28, 2005.  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 during the conference call by e-mail to . Interested parties
may listen to the call via a live 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 award-winning 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, AXS-One Rapid-AXS, "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 recognize any
revenue or satisfy all contractual commitments on the $1.6 million of license
contracts signed in July 2005, our ability to achieve annual cost savings; our
ability to improve financial and sales performance; 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)
                                 (Unaudited)

                                                 June 30,       December 31,
                                                   2005              2004
                 ASSETS
   Current assets:
     Cash and cash equivalents                     $7,022            $4,809
     Accounts receivable, net of
      allowance for doubtful accounts               3,216             6,084
     Due from joint venture                           106                68
     Prepaid expenses and other current
      assets                                          756             1,283
        Total current assets                       11,100            12,244

   Equipment and leasehold improvements,
    net of accumulated depreciation                   462               509
   Capitalized software development
    costs, net of accumulated amortization          1,462             1,886
   Other assets                                        53               142
   Total assets                                   $13,077           $14,781

   LIABILITIES AND STOCKHOLDERS' DEFICIT
   Current liabilities:
     Accounts payable and accrued expenses          5,362             5,687
     Due to joint venture                              --                29
     Deferred revenue                               9,048             9,786
        Total current liabilities                  14,410            15,502

   Long-term deferred revenue                         168               303

   Stockholders' deficit                           (1,501)           (1,024)
   Total liabilities and stockholders'
    deficit                                       $13,077           $14,781





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 results 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)
                                    (Unaudited)

                                      Three Months Ended  Six Months Ended
                                           June 30,            June 30,
                                       2005       2004     2005       2004
   Revenues:
    License fees                       $518     $1,004   $1,540     $3,464
    Services                          6,944      8,451   13,960     16,862
    Other-related parties                17         50       37        101
      Total revenues                  7,479      9,505   15,537     20,427

   Operating expenses:
    Cost of license fees                406        375      770        786
    Cost of services                  4,383      4,528    9,042      8,797
    Sales and marketing               2,523      2,455    5,111      4,425
    Research and development          2,034      2,037    4,135      3,936
    General and administrative        1,437      1,530    2,785      3,097
    Restructuring and other costs       863      1,103      863      1,103
      Total operating expenses       11,646     12,028   22,706     22,144
   Operating loss                    (4,167)    (2,523)  (7,169)    (1,717)
   Other income (expense):
    Interest income                      28         40       58         65
    Interest expense                     (1)        (2)      (1)       (14)
    Equity in losses of joint ventures   (3)       (49)     (27)       (82)
    Other expense, net                 (241)       (18)    (414)       (51)
      Other expense, net               (217)       (29)    (384)       (82)
   Net loss before income taxes      (4,384)    (2,552)  (7,553)    (1,799)
   Income tax (provision) benefit        25        (28)      25        (28)
   Net loss                         $(4,359)   $(2,580) $(7,528)   $(1,827)

  Basic and diluted net
   loss per common share             $(0.15)    $(0.09)  $(0.26)    $(0.07)

  Weighted average basic
   and diluted common
   shares outstanding                30,016     27,915   29,300     26,582





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 results 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 Matthew Hayden of Hayden Communications,

[phone], , for AXS-One Inc.



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

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