New Mexico Software Reports Second Quarter Revenue Growth.

Company Reports Significant Improvement in Financial Performance Over Prior Year

ALBUQUERQUE, N.M. -- New Mexico Software, Inc. (OTCBB:NMXC) a leading provider of next-generation business and medical information software, today announced its financial results for the second quarter of

Revenues for the second quarter ending June 30, 2007 increased 8.5% to $267,000 from $246,000 for the comparable quarter last year, primarily due to increased software hosting and XR-EXpress sales. Gross margins for the quarter increased to 61.0% from 49.6% in the same quarter last year. Operating expenses decreased in the second quarter by $440,000 on a year-over-year basis due to cost controls related to consulting, legal and administrative fees. Net loss for the quarter decreased by $472,000 to $77,000 or $0.00 per diluted share from a loss of $549,000 or $0.01 per diluted share in the second quarter of 2006.

For the first six months of 2007, sales revenue was $507,000, an increase of nearly 14% as compared to sales revenue of $445,000 in the first six months of 2006. Gross profit rose 50% from $220,000 for the first six months of 2006 to $330,000 in the first six months of 2007. Net loss for the first six months of the year decreased by $663,000 to $245,000 or $0.00 per diluted share from $908,000 or $0.02 per diluted share in the year ago period.

New Mexico Software CEO Dick Govatski said, "The growth in year-over-year revenues is a validation of our renewed focus on recurring revenue offerings implemented in January 2006. We have continued to keep our costs low, again reporting the lowest quarterly costs we have experienced in the last two years. The company also remains on track with its goals of reducing liabilities by approximately 50% since the beginning of the year by the end of the third quarter. All bank debt has been retired.

"We are showing strong improvements in sales of our XR-EXpress product in the medical practice area as well as in sales of our hosted services. Our DDS-EXpress practice management system was released at the end of June and we are seeing very positive market response. We feel quite optimistic about the second half of 2007 and look forward to keeping shareholders updated on our progress."

About New Mexico Software, Inc.

New Mexico Software, Inc. is a leading provider of business and medical information software that significantly improve the interface between the paper world and the digital world, facilitating a true paperless environment. For more information, visit http://www.nmxc.net or http://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 http://www.hawkassociates.com/nmxcprofile.aspx. For an online investor relations kit, visit http://www.hawkassociates.com or http://www.americanmicrocaps.com. For more investor-related questions, contact Frank Hawkins, Hawk Associates, at 305-451-1888 or info@hawkassociates.com. To subscribe to future releases via e-mail alert, visit http://www.hawkassociates.com/email.aspx.

The foregoing press release contains forward-looking statements including statements regarding the company's expectation of its future business. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the company's control. Actual results could differ materially from these forward-looking statements.