SWK (SWKH) 8-K Results of Operations and Financial Condition

Exhibit 99.01

KANA Software Reports Fiscal Year and Fourth Quarter 2008

Financial Results

Year-over-Year Revenue Increases 7.3% for Full Fiscal Year

Menlo Park, CA, March 25, 2009 – KANA Software, Inc. (OTCBB: KANA.OB), a world leader in multi-channel customer service solutions, today announced financial results for the fiscal year and fourth quarter ended December 31, 2008.

Company Highlights:

¡ KANA’s total revenues for Fiscal 2008 were $65.2 million, a 7.3% increase from $60.8 million in Fiscal 2007. The company’s revenues in the fourth quarter of 2008 were $13.6 million, compared to $17.5 million in the same period in 2007.

¡ License revenue for Fiscal 2008 was $17.7 million, as compared to $18.1 million in the previous year. License revenue for the fourth quarter of 2008 was $2.7 million, compared to $5.2 million in the fourth quarter of 2007.

¡ Services revenue for Fiscal 2008 was $47.5 million, compared to $42.7 million in Fiscal 2007. Services revenue for the fourth quarter of 2008 was $10.9 million, compared to $12.4 million for the fourth quarter of 2007.

¡ Non-GAAP operating income was $55,000 for fiscal 2008 compared to a loss of $3.4 million in 2007.

¡ KANA generated $1.8 million in net cash from operating activities in the fourth quarter of 2008.

¡ Customers making new and follow-on purchases of KANA solutions in Fiscal 2008 included Aegon, Aetna, Best Buy, Best Western International, Com Hem, General Motors, PNC Bank, Sprint, Verizon and Yahoo.

¡ KANA remains on schedule on this year’s plan with IBM to jointly market, sell and support Service Oriented Architecture (SOA)-based customer service solutions in the second half of 2009.

¡ KANA received numerous product and innovation awards in 2008, and was named a leader in its category by Forrester Research. The “Leader” designation was the result of Forrester’s comprehensive evaluation of 10 Interaction-Centric Customer Service Software vendors, each of which were assessed on over 160 criteria.

¡ Additional awards to KANA in 2008 came fromCRM Magazine, KMWorld Magazine andCustomer Interaction Solutions^® magazine.

The Company reported a net loss in accordance with accounting principles generally accepted in the United States (GAAP) of $3.7 million, or $0.09 per share for Fiscal 2008, compared to a loss of $8.0 million or $0.22 per share for Fiscal 2007. For the fourth quarter of 2008, KANA reported a GAAP net loss of $2.6 million, or $0.06 per share, versus GAAP net income of $539,000, or $0.01 per share, for the quarter ended December 31, 2007.

“The global economic downturn had an impact on KANA in 2008, just as it did on virtually every other company,” said Michael Fields, KANA’s chief executive officer. “The sudden severity of the macroeconomic decline in the Fourth Quarter caused us to miss achieving our quantitative goals. KANA’s core business remains very sound, and we intend to continue to achieve non-GAAP operating income in 2009, in spite of the macro environment.”

Notwithstanding the current economic conditions, Mr. Fields noted that the number of seven-figure sales KANA is working on continues to grow. The state of the economy has caused large enterprises to put more emphasis on multi-channel customer service and customer retention, enabling KANA to convert this heightened interest into revenue-generating opportunities, Mr. Fields said.

Investor Conference Call Information

KANA will host a conference call to discuss the results today at 1:30 p.m. PT (4:30 p.m. ET) . Investors are invited to listen to the call by dialing (617) 224-4326 and entering passcode #80895380. The conference call will also be broadcast from KANA’s website at www.kana.com. A digital recording will be provided by telephone two hours after the completion of the conference call, through midnight on March 27, 2009. To access the replay, please dial (617) 801-6888 and enter passcode #28819149. The replay will also be available on the Company’s website for one year.

About KANA Software, Inc.

KANA Software, Inc. is a world leader in multi-channel customer service solutions. KANA’s solutions allow companies to deliver consistent service across all channels, including email, chat, call centers and Web self-service, giving their customers the freedom to choose the service they want, how and when they want it. KANA’s clients report double-digit increases in customer satisfaction, while reducing call volumes by an average of 20 percent. KANA’s award-winning solutions are proven in more than hundreds of companies worldwide, including approximately half of the Fortune 50. For more information visitwww.KANA.com.

Non-GAAP Financial Measures

To supplement our financial results presented on a GAAP basis, we use the non-GAAP measures indicated in the attached table, which exclude certain expenses including stock-based compensation, that we believe are helpful in understanding our past financial performance and our future results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business based on these non-GAAP measures.

Cautionary Note Regarding Forward-looking Statements Under the Private Securities Litigation Reform Act of 1995: Information in this release regarding KANA’s forecasts, projections, expectations, beliefs, and intentions are forward-looking statements that involve risks and uncertainties. All forward-looking statements included in this release are based upon information available to KANA as of the date of this release, which will likely change, and we assume no obligation to update any such forward-looking statement. These statements include statements about anticipated growth, profitability, expansion of the relationship with IBM, demand for KANA’s software, and customers’ expected benefits and results from KANA applications. These statements are not guarantees of future performance and actual results could differ materially from our current expectations. Factors that could cause or contribute to such differences include, but are not limited to: competition in our marketplace, including introductions of new products or services, or reductions in prices, by competitors; risks associated with lack of market acceptance of KANA’s products or services; inability to enhance and develop our products and services within budget and on schedule; inability to attract and retain qualified employees, to manage cash and expenditures or to expand sales; KANA’s history of losses; the effect of potential military action and terrorist activities; and slow economic conditions, particularly as they affect spending by our prospective customers on multi-channel customer service and similar enterprise software products. These and other factors are risks associated with our business that may affect our operating results and are discussed in KANA’s filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and our quarterly reports on Form 10-Q.

NOTE:KANA is a registered trademark of KANA Software, Inc. All other company and product names may be trademarks of their respective owners.

Kana Software, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2008			2007			2008			2007
Revenues:
License fees	$	2,740		$	5,151		$	17,745		$	18,071
Services		10,887			12,375			47,474			42,723
Total revenues		13,627			17,526			65,219			60,794
Costs and expenses:
Cost of license fees		222			297			1,012			1,239
Cost of services		4,241			5,015			19,675			16,004
Amortization of acquired intangible assets		125			124			500			288
Sales and marketing		5,733			5,965			22,299			25,261
Research and development		3,650			2,782			13,818			12,650
General and administrative		2,139			2,643			10,572			11,900
Restructuring costs		—			—			582			567
Total costs and expenses		16,110			16,826			68,458			67,909
Income (loss) from operations		(2,483	)		700			(3,239	)		(7,115	)
Interest and other income (expense), net		(153	)		(127	)		(411	)		(739	)
Income (loss) before income tax expense		(2,636	)		573			(3,650	)		(7,854	)
Income tax benefit (expense)		84			(34	)		(5	)		(167	)
Net income (loss)	$	(2,552	)	$	539		$	(3,655	)	$	(8,021	)
Basic net income (loss) per share	$	(0.06	)	$	0.01		$	(0.09	)	$	(0.22	)
Shares used in computing basic net income (loss) per share		41,213			38,876			41,212			37,085
Diluted net income (loss) per share	$	(0.06	)	$	0.01		$	(0.09	)	$	(0.22	)
Shares used in computing diluted net income (loss) per share		41,213			39,967			41,212			37,085
Stock-based compensation included in the expense line items:
Cost of services	$	69		$	110		$	325		$	336
Sales and marketing		152			211			652			869
Research and development		71			98			331			359
General and administrative		237			210			904			1,309
	$	529		$	629		$	2,212		$	2,873
Reconciliation of GAAP net loss to non-GAAP net income (loss):
	Three Months Ended December 31,						Twelve Months Ended December 31,
	2008			2007			2008			2007
Net income (loss), GAAP	$	(2,552	)	$	539		$	(3,655	)	$	(8,021	)
Non-GAAP adjustments:
Stock-based compensation		529			629			2,212			2,873
Restructuring		—			—			582			567
Amortization of acquired intangible assets		125			124			500			288
Net income (loss), non-GAAP	$	(1,898	)	$	1,292		$	(361	)	$	(4,293	)
Net income (loss) per share, non-GAAP
Basic	$	(0.05	)	$	0.03		$	(0.01	)	$	(0.12	)
Diluted	$	(0.05	)	$	0.03		$	(0.01	)	$	(0.12	)
Shares used in per share calculation
Basic		41,213			38,876			41,212			37,085
Diluted		41,213			39,967			41,212			37,085

Kana Software, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

	December 31, 2008		December 31, 2007
Assets
Cash and cash equivalents	$	6,988	$	4,306
Accounts receivable, net		7,556		10,247
Other current assets		2,030		2,391
Total current assets		16,574		16,944
Restricted cash, long-term		751		771
Property and equipment, net		1,923		2,292
Goodwill		12,415		12,500
Acquired intangible assets, net		1,726		2,226
Other assets		428		667
Total Assets	$	33,817	$	35,400
Liabilities and Stockholders’ Equity
Line of credit	$	6,000	$	1,177
Notes payable, current portion		961		1,873
Accounts payable		3,618		2,943
Accrued liabilities		5,084		5,486
Accrued restructuring		946		1,261
Deferred revenue		12,946		15,825
Total current liabilities		29,555		28,565
Deferred revenue, long-term		86		297
Accrued restructuring, long-term		234		1,491
Notes payable, long-term		873		110
Other long-term liabilities		479		531
Total liabilities		31,227		30,994
Total stockholders’ equity		2,590		4,406
Total Liabilities and Stockholders’ Equity	$	33,817	$	35,400

Kana Software, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2008			2007			2008			2007
OPERATING ACTIVITIES
Net income (loss)	$	(2,552	)	$	539		$	(3,655	)	$	(8,021	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		348			267			1,275			1,015
Loss on the disposal of property and equipment					9						9
Amortization of acquired intangible assets		125			124			500			288
Employee and non-employee stock-based compensation		529			629			2,212			2,873
Provision for doubtful accounts		807			8			814			49
Non-cash interest accretion		18			48			118			201
Restructuring costs		—			—			302			327
Changes in operating assets and liabilities:
Accounts receivable		4,071			(408	)		1,701			(479	)
Prepaid expenses and other assets		(41	)		1,712			600			1,940
Accounts payable and accrued liabilities		(626	)		(501	)		188			(2,219	)
Accrued restructuring		(691	)		(2,238	)		(1,610	)		(3,741	)
Deferred revenue		(160	)		13			(2,863	)		(675	)
Net cash provided by (used in) operating activities		1,828			202			(418	)		(8,433	)
INVESTING ACTIVITIES
Purchases of property & equipment		(10	)		(552	)		(1,169	)		(1,951	)
Acquisition, net of cash acquired		—			(156	)		85			(918	)
Restricted cash		10			88			20			74
Net cash used in investing activities		—			(620	)		(1,064	)		(2,795	)
FINANCING ACTIVITIES
Net borrowings (repayments) under line of credit		4,000			(5,299	)		6,885			639
Borrowings under notes payable		160			290			160			361
Repayments under notes payable		(263	)		(614	)		(2,425	)		(1,454	)
Proceeds from issuance of Common stock		—			9,106			—			10,392
Net cash provided by financing activities		3,897			3,483			4,620			9,938
Effect of exchange rate changes on cash		(352	)		(200	)		(456	)		(123	)
Net increase (decrease) in cash and cash equivalents		5,373			2,865			2,682			(1,413	)
Cash and cash equivalents at beginning of period		1,615			1,441			4,306			5,719
Cash and cash equivalents at end of period	$	6,988		$	4,306		$	6,988		$	4,306

Contact:

Investors –

KANA Software

650-614-8160

InvestorRelations@KANA.com

Press/Media –

New Venture Communications for KANA

Ted Rossman, 914-432-7083

trossman@newventurecom.com

Lauren Dresnick, 650-343-2735

ldresnick@newventurecom.com