Health Systems Solutions Announces First Quarter 2008 Financial Results

HEALTH SYSTEMS SOLUTIONS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET March 31, 2008 and December 31, 2007 (Unaudited) 2008 2007 ------------- ------------- ASSETS Current assets: Cash $ 342,226 $ 1,218,620 Accounts receivable, net of allowance for doubtful accounts of $165,691 and $234,801 908,537 898,928 Prepaids and other current assets 186,646 138,890 ------------- ------------- Total current assets 1,437,409 2,256,438 Property and equipment, net of accumulated depreciation and amortization of $692,651 and $635,459 432,170 442,879 Security deposits and other assets 96,278 96,278 Deferred financing cost, net of accumulated amortization of $47,127 and $28,332 254,809 273,604 ------------- ------------- Total assets $ 2,220,666 $ 3,069,199 ============= ============- LIABILITIES AND STOCKHOLDERS' DEFICIENCY Current liabilities: Current portion of capital lease obligation $ 24,394 $ 23,932 Accounts payable 604,165 639,881 Accrued expenses 1,363,923 1,404,310 Deferred revenue 1,074,368 962,788 Client deposits 86,059 96,350 Note payable - bank 229,000 229,000 ------------- ------------- Total current liabilities 3,381,909 3,356,261 ------------- ------------- Capital lease obligation, net of current portion 34,414 40,705 ------------- ------------- Total liabilities 3,416,323 3,396,966 ------------- ------------- Stockholders' deficiency: Preferred Stock - 15,000,000 shares authorized;Series C Convertible - 4,625,000 9,250,000 9,250,000 shares issued and outstanding Series D Convertible - 837,500 issued and outstanding 1,675,000 1,675,000 Common Stock $.001 par value - 150,000,000 shares authorized; 7,365,361 issued and outstanding 7,365 7,365 Additional paid-in capital 14,542,482 14,431,040 Accumulated deficit (26,670,504 (25,691,172) ------------- ------------- Total stockholders' equity deficiency (1,195,657) (327,767) ------------- ------------- Total liabilities and stockholders' deficiency $ 2,220,666 $ 3,069,199 ============= ============-

HEALTH SYSTEMS SOLUTIONS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATION For The Three Months Ended March 31, (Unaudited) 2008 2007 ----------- ------------ Net sales $2,950,866 $ 1,586,106 Cost of sales 1,974,295 1,226,119 ----------- ------------ Gross profit 976,571 359,987 ----------- ------------ Operating expenses Selling and marketing 331,601 525,361 Research and development 284,244 357,903 General and administrative 1,220,012 439,589 Depreciation and amortization 57,192 36,353 Impairment of development costs 39,975 -- Interest 22,879 25,887 ----------- ------------ Total operating expenses 1,955,903 1,385,093 ----------- ------------ Net loss (979,332) (1,025,106) Deemed preferred stock dividend -- 177,937 ----------- ------------ Net loss applicable to common shareholders $ (979,332) $(1,203,043) =========== ============ Basic and diluted net loss per share $ (0.13) $ (0.19) =========== ============ Basic and diluted weighted average shares outstanding 7,365,361 6,394,882 =========== ============

HEALTH SYSTEMS SOLUTIONS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For The Three Months Ended March 31, (Unaudited) 2008 2007 ----------- ------------ Cash flows from operating activities: Net loss $ (979,332) $(1,025,106) Adjustments to reconcile net loss to net cash used in operating activities: Stock based compensation expense 111,442 9,988 Depreciation and amortization of property and equipment 57,192 36,353 Amortization of software development costs -- 439,056 Amortization of deferred finance cost 18,795 -- Impairment of software development costs 39,975 -- Changes in operating assets and liabilities: Accounts receivable 59,502 134,704 Allowance for doubtful accounts (69,111) (127,970) Royalties and referral fees receivable -- 3,000 Prepaid expenses and other current assets (47,757) (7,225) Security deposits -- 500 Accounts payable (35,716) (129,630) Accrued expenses (40,389) (61,470) Deferred revenue 111,581 (55,407) Reserve for client refunds -- 120,906 Client deposits (10,290) 9,406 ----------- ------------ Net cash used in operating activities (784,108) (652,895) ----------- ------------ Cash flow from investing activities: Purchase of CareKeeper Software, Inc. -- (198,113) Purchase of property and equipment (46,482) (46,441) Increase in software development costs (39,975) (254,386) ----------- ------------ Net cash used in investing activities (86,457) (498,940) ----------- ------------ Cash flow from financing activities: Repayment of capital leases (5,829) (4,730) Proceeds from the exercise of warrants -- 285 Proceeds form the issuance of preferred stock -- 1,300,000 ----------- ------------ Net cash provided by (used in) financing activities (5,829) 1,295,555 ----------- ------------ Net change in cash (876,394) 143,720 Cash, beginning of period $1,218,620 $ 558,764 =========== ============ Cash, at end of period $ 342,226 $ 702,484 =========== ============ Supplemental cash flow data: Cash paid during the period for interest expense $ 5,378 $ 25,887 =========== ============ Issuance of common stock to members of an acquired company $ -- $ 25,432 =========== ============ Increase in software development costs as a result of an accrued earn out payment to sellers of an acquired company $ 39,975 $ -- =========== ============ Deemed dividends on issuance of preferred stock $ -- $ 177,937 =========== ============