SofTech Reports Q1 FY 2007 Results.

TEWKSBURY, Mass. -- SofTech, Inc. (OTCBB:SOFT - news), a proven provider of product lifecycle management (PLM) solutions, announced results for its first quarter of fiscal year 2007. Revenue for the first quarter of fiscal 2007 was about $2.5 million as compared to about $3.07 million for the same period in the prior year, a decrease of about 19%. The net loss for Q1 2007 was $(738,000) or $(.06) per share as compared to a net loss of $(334,000) or $(.03) per share for the prior year. The net loss adjusted for non-cash expenses related to amortization of intangible assets resulting from acquisitions, a Non-GAAP financial measure, was $(371,000) in the first quarter of fiscal 2007 as compared to $276,000 in the same period in fiscal 2006. A reconciliation of GAAP results to this non-GAAP financial measure for each of the periods is presented in a table below.

The Company's revenue is derived almost entirely from technology acquisitions completed between 1997 and 2002. As a result, management believes the Company's financial profile is very unique, at least in the industry in which it operates. As of August 31, 2006, approximately 76% of its assets are composed of intangible assets related to these acquisitions. The amortization of these intangible assets was approximately 11% of its total expenses and 14% of its revenue in the current quarter. Further, the periods over which these intangible costs are expensed are highly judgmental.

It is management's opinion that comparing results of operations from period to period and to other companies in our industry absent these non-cash expenses related to acquisitions is a more meaningful measure of our performance given the Company's unique financial profile detailed above. It is also management's belief that this Non-GAAP measure of performance is one of the most critical measures of Company valuation for investors. Lastly, this measure of performance has been, and is expected to continue to be, a significant component of the incentive compensation plan for the Company's President.

"Our very disappointing Q1 results were the direct result of much lower than expected product revenue from our ProductCenter technology," said Joe Mullaney, President and COO. "This product line grew at nearly 18% from fiscal 2005 to 2006 and captured a significant number of new customers, many in competitive selection processes. However, the sales cycle for this technology is quite long and is often delayed beyond the expected date. One of our largest wins in fiscal 2006 took over two years to close. It is our opinion based on pre-sale activity and known qualified leads that the Q1 fiscal 2007 performance is not indicative of future results for this product line."

"In September we reduced our quarterly cash spending to approximately $2.5 to $2.6 million. We expect to incur a Q2 charge to operations of approximately $300,000 resulting from those reductions that were primarily related to our non-ProductCenter technology in Europe. With those cost reductions and a more normalized revenue run rate we believe we can return to generating positive cash flows from operations as we did in the recent past," Mullaney added.

About SofTech

SofTech, Inc. (OTCBB: SOFT) is a proven provider of product lifecycle management (PLM) solutions with its flagship ProductCenter[TM] PLM solution, and its computer-aided design and manufacturing (CAD/CAM) products, including CADRA[TM] and Prospector[TM].

SofTech's solutions accelerate products and profitability by fostering innovation, extended enterprise collaboration, product quality improvements, and compressed time-to-market cycles. SofTech excels in its sensible approach to delivering enterprise PLM solutions, with comprehensive out-of-the-box capabilities, to meet the needs of manufacturers of all sizes quickly and cost-effectively.

Over 100,000 users benefit from SofTech solutions, including General Electric Company, Goodrich, Honeywell, Siemens, Sikorsky Aircraft, U.S. Army, and Whirlpool Corporation. Headquartered in Tewksbury, Massachusetts, SofTech (www.softech.com) has locations and distribution partners throughout North America, Europe, and Asia.

SofTech, CADRA, ProductCenter and Prospector are trademarks of SofTech, Inc. All other products or company references are the property of their respective holders.

Cautionary Note Regarding Forward-Looking Statements

The statements made above with respect to SofTech's outlook for fiscal 2007 and beyond represent "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934 and are subject to a number of risks and uncertainties. These include, among other risks and uncertainties, general business and economic conditions, generating sufficient cash flow from operations to fund working capital needs, potential obsolescence of the Company's technologies, maintaining existing relationships with the Company's lender, remaining in compliance with debt covenants, successful introduction and market acceptance of planned new products and the ability of the Company to attract and retain qualified personnel both in our existing markets and in new territories.

SOFTECH, INC.

FINANCIAL SUMMARY

                      For the Three Month Periods Ended

(in thousands)        August 31, 2006                    August 31, 2005
Revenue               $ 2,496                            $ 3,068
Loss from operations  (398)                              (91)
Net loss              (738)                              (334)
Loss per share        (.06)                              (.03)

Reconciliation of Net Loss to Non-GAAP Financial Measures:

The net loss calculated in accordance with GAAP is adjusted below by non-cash expenses related to amortization of intangible assets resulting from acquisitions. It is management's view that this Non-GAAP financial measure provides important information in understanding the Company's financial performance.

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