WESTBOROUGH, Mass., Feb. 10 /PRNewswire-FirstCall/ -- ClearStory Systems, Inc. (OTC:CSYS) (BULLETIN BOARD: CSYS) , an established provider of digital asset management (DAM) and enterprise content management (ECM) solutions, today announced financial results for its third quarter ended December 31, 2005. Total revenues for the third quarter of fiscal 2006 were $2.1 million, compared to total revenues of $2.7 million for the third quarter of fiscal 2005. For the nine-month period ended December 31, 2005, total revenues were $6.1 million, compared to total revenues of $8.3 million for the first nine months of fiscal 2005. The net loss for the third quarter of fiscal 2006 was $761,000, or a loss per share of $0.16, compared to net loss of $421,000, or a net loss per share of $0.10, for the third quarter of fiscal 2005. Net loss for the first nine months of fiscal 2006 was $2.7 million, or a loss per share of $0.55, compared to net loss of $916,000, or a net loss per share of $0.23, for the first nine months of fiscal 2005. "We have made strides that are enhancing our leadership position in the emerging digital media market, including very positive market acceptance for ActiveMedia 7.0," commented Henry F. Nelson, ClearStory President and Chief Executive Officer, "We continue to expand our strategic relationships and are encouraged by our sales pipeline." During the quarter, the Company announced the release of ActiveMedia 7.0, its completely re-architected DAM application built on the Enterprise Media Server (EMS) platform. This highly scalable solution is designed for large global organizations, and is the industry's only enterprise-class DAM system that is available as both a hosted service and installed application. The company also announced a new version of EMS, which supports the IBM WebSphere Application Server environment. ClearStory announced the achievement of two awards during the quarter. Kinetic Information's Process Innovation Award in connection with Harvard Business School's (HBS) implementation of ActiveMedia; and recognition for Enterprise Media Server, a platform for developing rich media applications, by industry publication, KMWorld, as a top Trend Setting Product for 2005. About ClearStory Systems ClearStory Systems is the leader in high-performance, content management solutions for digital media communications. ClearStory software manages the enterprise digital media supply chain -- from creation and collaboration, to lifecycle management and delivery -- to give companies a competitive advantage, marketing agility, cost avoidance, and maximum efficiency. Backed by premier customer support and service, ClearStory award-winning products are easy to use and readily align with our customers' business objectives for both a rapid return-on-investment and low total cost of ownership. Visit us at http://www.clearstorysystems.com/ There are statements in this news release that contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including for example the expected benefits of ClearStory's in-house hosting model, the anticipated customer demand for ClearStory's products and services and the expected benefits to be derived from ClearStory's products and services. These forward-looking statements include all statements that are not statements of historical fact and relate to the intent, belief, plans or expectations of ClearStory Systems, their management, and their customers. Words like "plans," "intends," "believes," "signifies," "estimates," "anticipate," "will," "expect," and words of similar meaning are intended to identify forward-looking statements. Actual results may vary significantly from the forward-looking statements. For a detailed discussion of cautionary statements that may affect ClearStory's future results of operations and financial results, please refer to ClearStory's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-KSB for the year-ended March 31, 2005, and its Quarterly Reports on Form 10-QSB. Actual results, events and performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. CONTACTS: ClearStory Systems Ripple Effect Communications Susan Worthy Valerie Harding (Media) (508) 870-4225 (617) 536-8887 ClearStory Systems, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share amounts) Three Months Ended Nine Months Ended December 31, December 31, 2005 2004 2005 2004 Revenue: Product $212 $861 $1,318 $3,031 Services 1,900 1,843 4,782 5,233 2,112 2,704 6,100 8,264 Cost of revenues: Product 113 12 274 138 Services 737 841 2,203 2,604 850 853 2,477 2,742 Gross profit 1,262 1,851 3,623 5,522 Operating expenses: Sales and marketing 524 802 1,838 2,260 Product development 818 659 2,445 1,862 General and administrative 522 717 1,727 2,168 1,864 2,178 6,010 6,290 Operating loss (602) (327) (2,387) (768) Interest expense, net (159) (94) (309) (148) Net loss $(761) $(421) $(2,696) $(916) Net loss per share - basic and diluted $(0.16) $(0.10) $(0.55) $(0.23) Weighted average common shares outstanding - basic and diluted 5,992 5,992 5,992 5,992 DATASOURCE: ClearStory Systems, Inc. CONTACT: Susan Worthy of ClearStory Systems, Inc., +1-508-870-4225, ; or Media, Valerie Harding of Ripple Effect Communications, +1-617-536-8887, , for ClearStory Systems, Inc. Web site: http://www.clearstorysystems.com/

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