New Mexico Software, Inc. (OTCBB: NMXC) announced today that it is continuing to gain new orders in its rapidly expanding Telemedicine business. The new surge of business is offsetting losses associated with the termination of a client.

The result of the termination was a second quarter drop in teleradiology cases that adversely affected second quarter financial results. Preliminary unaudited numbers for the second quarter show that revenue for the quarter dropped from $902,000 to $788,000. For the first six months, unaudited preliminary numbers show revenue of $1,694,000 versus $1,828,000 in the first six months of 2009. For the quarter and the first six months, the company expects to report a small loss but positive cash flow.

New Mexico Software CEO Dick Govatski said, “The transition from our unfortunate association with Premier Medical and the transition from customers dealing directly with us instead of through a middleman customer, caused a temporary dip in case load in the second quarter. However in July, 2010 our case volume increased nearly 30% from May, 2010. In addition, we are seeing a doubling of the number of cases in our emerging Ultrasound segment, which carries a higher margin. We are still working on the technical issues with our cardio system but we are starting to see growth in this new area as compared to the second quarter. This is similar to the experience we had when TeleRad started over two years ago.

“Over the rest of the summer, we expect to add cases from Arizona, California, Florida, Indiana, Kentucky, Maryland, Nevada, New York, Ohio, Tennessee, Texas, Utah, Wisconsin and West Virginia. This represents an important uptick in daily revenue.

“As a result, we expect the second half of 2010 to produce good revenue numbers for our company and increasing profitability,” Govatski said.

The company expects to formally release audited financials for the second quarter prior to August 16, 2010.

About New Mexico Software, Inc.

New Mexico Software, Inc. develops and provides medical IT services and solutions that enable improved and faster communication within the preventative, comprehensive and critical healthcare segments. New Mexico also provides software and hardware that streamlines administrative processes for a more efficient working environment. For more information, visit www.nmxc.net or www.nmxs.com or contact Dick Govatski, president and CEO, at 505-255-1999 or ceo@nmxs.com.

An investment profile on New Mexico Software may be found at www.hawkassociates.com/profile/nmxc.cfm. For an online investor relations kit visit www.hawkassociates.com or www.americanmicrocapinstitute.com. For more investor-related questions contact Frank Hawkins, Hawk Associates, at 305-451-1888 or ceo@nmxs.com.

To subscribe to future releases via e-mail alert visit www.hawkassociates.com/about/alert/.

This press release may contain forward-looking information within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), including all statements that are not statements of historical fact regarding the intent, belief or current expectations of the company, its directors or its officers with respect to, among other things: (i) the company’s financing plans; (ii) trends affecting the company’s financial condition or results of operations; (iii) the company’s growth strategy and operating strategy; and (iv) the declaration and payment of dividends. The words “may,” “would,” “will,” “expect,” “estimate,” “anticipate,” “believe,” “intend” and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the company’s ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors including the risk disclosed in the company’s Forms 10-K and 10-Q filed with the SEC.

Copyright Business Wire 2010

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