Convera Reports Second Quarter Financial Results.

VIENNA, Va. -- Convera Corporation (NASDAQ:CNVR), a leading provider of search technologies for professional workers, today announced financial results for the three-month period ended July 31, 2006.

Revenue for the second quarter of fiscal 2007 totaled $3.3 million, a 58% decrease when compared to the year-ago quarter principally due to a decline in RetrievalWare license sales. Convera completed several contracts during the second quarter for its RetrievalWare enterprise search product, including a contract with an international intelligence agency within the quarter in excess of $1 million that has been recorded as deferred revenue until future contact obligations are met. No single transaction represented more than 10% of total revenues for the second quarter of fiscal 2007. Conversely, during the second quarter of fiscal 2006, there were two contracts with revenues aggregating $3.7 million collectively representing 47% of revenues in that period.

The net loss for the three-month period ended July 31, 2006 was $11.1 million, or $0.21 per share, compared to a net loss of $0.0 million, or $0.00 per share, for the comparable year-ago period. The increased net loss was influenced by stock option expenses related to the Company's adoption of FAS 123R and the transition from capitalization of Excalibur development costs to amortization of these costs. The combined net loss impact of these charges totaled $5.8 million.

Cash and investments as of July 31, 2006 totaled $57.6 million. The Company carries no debt.

Convera launched www.govmine.com during the second quarter of fiscal 2007, as part of its web indexing initiative. The search site allows government workers to form an online community which researches the vast information on the Internet. Convera was also awarded a three-year agreement to provide private-label Web search technology for the healthcare and entertainment sectors to All In One Solution (AIOSL), Inc., a Tokyo-based systems integrator and Web hosting firm.

"The relationship with All In One Solutions, the launching of our branded search site (www.govmine.com), and our partnership with United Business Media plc validates our strategy to expand into new industries, like business-to-business (B2B) publishing. While we maintain a strong leadership position within the U.S. Federal Government, Convera will focus throughout fiscal 2007 on penetrating commercial verticals," stated, Patrick C. Condo, Convera's President and Chief Executive Officer.

The attached financial information compares the results of operations for the three-month period ended July 31, 2006 to the same period in 2005 and the balance sheet as of July 31, 2006 to the balance sheet as of January 31, 2006.

About Convera

Convera is a leading provider of search technologies for professional workers. Convera has developed a unified product platform that makes sense of vast amounts of information--wherever it resides--across multiple data formats, languages and meanings. Based on proprietary technologies that extract relevant results from public and private data, Convera enables professionals to quickly retrieve exactly the information essential for action. Convera's search platform is delivered as a hosted service, software or a bundled hardware and software package. Government and business professionals in 40 countries rely on Convera search solutions to power a broad range of mission critical applications. For more information, contact Convera at 800-755-7005, via e-mail at [e-mail] or on the Web at www.convera.com.

This release, including any statements from Convera personnel, contains statements about Convera's future expectations, performance, plans, and prospects, as well as assumptions about future events. The reader is cautioned not to put undue reliance on these forward-looking statements, as these statements are subject to numerous factors and uncertainties, including without limitation, business and economic conditions and trends; the ability of the Excalibur offering to achieve market acceptance; continued success in technological advances and development including the Excalibur Web offering; possible disruption in commercial activities caused by terrorist activity and armed conflict, such as changes in logistics and security arrangements; reduced customer demand relative to expectations; competitive factors; and other risk factors listed from time to time in the company's SEC reports. Actual results may differ materially from our expectations as the result of these and other important factors relating to Convera's business and product development efforts, which are further described in Convera's filings with the Securities and Exchange Commission. These filings can be obtained from the SEC's website located at www.sec.gov. Any forward-looking statements are based on information available to Convera on the date of this release, and Convera assumes no obligation to update such statements. The Convera design logo and the following are worldwide trademarks of Convera: Convera(TM), RetrievalWare(R), and Screening Room(R). The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

The condensed, consolidated statements of operations for the Company appear below and are presented in accordance with accounting principles generally accepted in the United States. All amounts, except per share amounts, are expressed in thousands of US dollars.

Three Months Ended       Six Months Ended
                              July 31,                July 31,
                          2006        2005        2006        2005
                       ----------- ----------- ----------- -----------
                       (unaudited) (unaudited) (unaudited) (unaudited)
Revenues:
  License              $    1,077  $    5,230  $    3,371  $    7,417
  Services                    425         590         953       1,430
  Maintenance               1,810       1,984       3,657       4,035
                       ----------- ----------- ----------- -----------
Total Revenue               3,312       7,804       7,981      12,882
                       ----------- ----------- ----------- -----------

Expenses:
Cost of revenues
  License                     372         167         902         597
  Services                  2,222         814       4,538       1,642
  Maintenance                 304         288         577         509
Sales and marketing         3,145       2,360       5,955       4,556
Research and product
 development                3,922       1,420       7,940       3,074
General and
 administrative             4,042       2,855       8,139       5,155
Restructuring charge            -           -           -         (56)
Amortization of
 capitalized R&D costs      1,016           -       2,030           -
                       ----------- ----------- ----------- -----------
Total Expense              15,023       7,904      30,081      15,477
                       ----------- ----------- ----------- -----------

Operating loss            (11,711)       (100)    (22,100)     (2,595)

Interest income
 (expense), net               649          75       1,022         100

Net loss               $  (11,062) $      (25) $  (21,078) $   (2,495)
                       =========== =========== =========== ===========


Earnings per share -
 basic & diluted       $    (0.21) $    (0.00) $    (0.41) $    (0.06)
                       =========== =========== =========== ===========

Weighted average
 number of common
 shares outstanding -
 basic and diluted         52,529      40,803      51,666      39,597

The condensed, consolidated balance sheets for the Company appear below and are presented in accordance with accounting principles generally accepted in the United States. All amounts are expressed in thousands of U.S. dollars.

Assets                                          July 31,   January 31,
                                                   2006        2006
                                               ----------- -----------
                                               (unaudited)
Current Assets:
   Cash and cash equivalents                   $   57,485  $   37,741
   Short term investments                              71          71
   Accounts receivable, net                         5,280       4,364
   Prepaid expenses and other                       1,909       2,396
                                               ----------- -----------
       Total current assets                        64,745      44,572

Other assets, net
                                                    7,820       9,971
Capitalized software development costs, net
                                                    5,075       7,102
Goodwill and other intangible assets                2,437       2,572
                                               ----------- -----------
       Total assets                            $   80,077  $   64,217
                                               =========== ===========

Liabilities and Shareholders' Equity
Current Liabilities:
   Accounts payable                            $    1,932  $    1,367
   Accrued expenses                                 2,841       2,680
   Deferred revenues                                4,542       3,931
   Current maturities of long-term debt                 -       1,283
                                               ----------- -----------
       Total current liabilities                    9,315       9,261

   Other long-term liability                            -       3,717
   Deferred revenues - long term                      290         398
                                               ----------- -----------

       Total liabilities                            9,605      13,376

Shareholders' Equity                               70,472      50,841
                                               ----------- -----------

       Total liabilities and shareholders'
        equity                                 $   80,077  $   64,217
                                               =========== ===========