FormScape Announces Record Revenues - Receives Certification from SAP

FormScape, the leading provider of Document Process Automation Solutions, today announced record revenues of $5.5 million for its first quarter of fiscal 2005.

"I am pleased with the excellent progress that the Company continues to make and particularly with the results that we achieved in the United States in Q1. Total revenues in the United States were up 35% in the quarter and direct license revenues increased 149%, demonstrating the traction that our Covus solution is gaining in the marketplace," says Malcolm Peden, FormScape's chief executive officer. "We began making significant investments in the U.S. sales and marketing teams about 18 months ago and I am very pleased to see that the business is now moving forward at the pace we achieved in Q1."

Comments Peden: "Covus sales continue to exceed expectations and this is demonstrated by the fact that the Company signed 3 license transactions in excess of quarter of a million dollars in the U.S. for Q1. Covus continues to see strong demand among Global 1000 companies for what is a unique solution that helps companies improve document processes, enhance customer and supplier service, and drive substantial costs out of the enterprise."

Highlights of first quarter fiscal 2005 include:

- Revenue growth of 21% over the same quarter last year and 149% growth in direct license revenues in the US. Software license revenue contributed more than 54% of total revenues.

- Strong Gross Margins of 85% in the quarter.

- Maintenance retention at record levels with maintenance base now in excess of $7.2M at the end of the quarter.

- Selected new clients include Wal-Mart, Wells Fargo, WS Atkins, Cellcom, and Heinz Italia.

- Existing customers purchasing additional licenses included Hill Rom, Unilever, Atlanta Public Schools, Zimmer and Summit Electric.

"FormScape has made a strong start to the new fiscal year and continues to add worldwide recognized brands to its customer roster," says Chairman Don Cruickshank. "FormScape V3 continues to take market share from competitors and with Covus we believe we are unique in tapping a $1 billion market at the overlap of Enterprise Content Management and Business Process Automation. Q1 was a good start to the year and we are looking forward to establishing the Company as the true market leader in document process automation."