SOURCE: Top Image Systems Ltd.

May 16, 2007 02:17 ET

Top Image Systems Reports First Quarter 2007 Results

TEL AVIV, ISRAEL -- (MARKET WIRE) -- May 16, 2007 -- Top Image Systems Ltd. (NASDAQ: TISA) (TELAVIV: TISA) ("TIS"), the leading innovator of data capture solutions, today announced its financial results for the first quarter of 2007.

First Quarter 2007 Results

Revenues for the first quarter reached $4.04 million, a decrease of 11% from the first quarter of last year and a decrease of 27% compared with the prior quarter. 57% of first quarter revenues were generated from services and 43% from products.

GAAP net loss for the first quarter was $1.4 million compared to a net income of $181 thousand in the first quarter of last year and a net income of $160 thousand, in the prior quarter. GAAP basic and fully diluted net loss per share in the first quarter totaled $0.157. This is compared to a basic net earnings per share of $0.021 and fully diluted net earnings per share of $0.020 in the first quarter of last year and basic and fully net earnings per share of $0.017 in the prior quarter.

Non-GAAP adjustments with regard to stock options compensation in the first quarter had no material effect on the net loss and the basic and diluted net loss per share.

"As we announced two weeks ago, this is the first time, after four years of continuous growth and seven profitable quarters, that we did not achieve our goal for the quarter," commented Dr. Ido Schechter, CEO of TIS. The first quarter is our weakest quarter in our European and North American markets; nevertheless, TIS Japan ('TISJ') usually provides some balance as it traditionally is their strongest quarter of the year. While indeed we are disappointed, it is important to understand that this problem is localized to Japan and we intend to work very hard to bring TISJ back on track. Our top management has spent the last week in Japan and, with some internal changes, we expect to resume our growth in this vital marketplace.

We enjoyed a high level of activity in Germany, APAC and Latin America in the quarter. Our business fundamentals remain solid, our pipeline is strong and we remain confident in our market position and potential.

Our M&A activities are moving on. The integration of CPL is progressing even better than we anticipated and we expect our second quarter performance to reflect this. We also continue to explore additional opportunities in other geographies where we have identified some interesting positive growth potential.

Our second quarter is a critical one and so far the signs are that we are back on track, and our business targets for 2007 are still very much achievable. We believe at this time that our ability to resume our sequential organic growth rates and a selective acquisition strategy will bring us to our 2007 revenue goals of $30m.

Conference Call

TIS management will host a conference call today, May 16, 2007, at 10:00am EDT (07:00am Pacific Time, 03:00pm UK Time, 05:00pm Israel Time) to review the first quarter of 2007 financial results and other corporate events.

Dr. Ido Schechter, CEO, and Arie Rand, CFO, will be on-line to discuss these results and take part in a question and answer session.

The call can be accessed by dialing:

          US Dial-in Number: 1 888 281 1167
          UK Dial-in Number: 0 800 917 5108
          ISRAEL Dial-in Number: 03 918 0610
          INTERNATIONAL Dial-in Number:  +972 3 918 0610
Participants are asked to call the number approximately 10 minutes before the conference call begins.

For those unable to listen to the live call, a replay of the call will be available for three months from the day after the call in the investor relations section of Top Image Systems' website, at: www.topimagesystems.com

About Top Image Systems

Top Image Systems is a leading innovator of enterprise solutions for managing and validating content entering organizations from various sources. Whether originating from mobile, electronic, paper or other sources, TIS solutions deliver the content to applications that drive the organization. TIS's eFLOW Unified Content Platform is a common platform for the company's solutions. TIS markets its platform in more than 30 countries through a multi-tier network of distributors, system integrators, value added resellers as well as strategic partners. Visit the company's website www.topimagesystems.com for more information.

Caution Concerning Forward-Looking Statements

Certain matters discussed in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "project," "expect," "plan," "intend," "may," "should," "will" and similar words or expressions identify some, but not all, of these statements. These statements are based on management's current expectations or beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially including, but not limited to, risks in product development plans and schedules, rapid technological change, changes and delays in product approval and introduction, customer acceptance of new products, the impact of competitive products and pricing, market acceptance, the lengthy sales cycle, proprietary rights of the Company and its competitors, risk of operations in Israel, government regulation, dependence on third parties to manufacture products, quarterly fluctuations in sales of products in the Data Capture market (where in general the fourth quarter is the strongest and the first quarter is the weakest), the Company's ability to successfully integrate TIS Japan, litigation (including litigation over intellectual property rights), general economic conditions and other risk factors detailed in the Company's most recent annual report on Form 20-F and other subsequent filings with the United States Securities and Exchange Commission. We are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements, whether as a result of new information, future events or otherwise.

FINANCIAL TABLES FOLLOW

Top Image Systems Ltd.
Consolidated Balance Sheet as of

                                    March 31,    December 31
                                  ------------  -------------
                                      2007          2006
                                  ------------  -------------
                                       In thousands $US
                                  ---------------------------

Assets

Current assets:
Cash and cash equivalents                1,772          6,195
Short term Deposit                       3,039          3,000
Marketable securities                   16,127         12,597
Trade receivables, net                   7,128          7,642
Other current assets                     1,278          1,120
                                  ------------  -------------

Total current assets                    29,344         30,554
                                  ------------  -------------

Severance funds pay                        679            717
Property and equipment                     676            588
Goodwill                                   465            465
Net intangible assets                    1,708          1,835
Other  long-term assets, net               133            136
                                  ------------  -------------
                                         3,661          3,741
                                  ------------  -------------
                                  ------------  -------------
Total assets                            33,005         34,295
                                  ============  =============


Liabilities and Shareholders' Equity

Current liabilities:
Short-term bank loans                       68            339
Trade payables                             771            397
Accrued liabilities and other
 payables                                2,790          2,966
                                  ------------  -------------

Total current liabilities                3,629          3,702
                                  ------------  -------------

Long-term liabilities:
Convertible debenture                   14,220         14,197
Liability for severance pay, net         1,027          1,016
                                  ------------  -------------

Total long-term liabilities             15,247         15,213
                                  ------------  -------------

Total liabilities                       18,876         18,915
                                  ------------  -------------

Shareholders' equity
Share capital - Ordinary share
 of NIS 0.04 par value                      98             98
Surplus capital                         30,064         29,921
Accumulated deficit                    (16,033)       (14,639)
                                  ------------  -------------

Total shareholders' equity              14,129         15,380
                                  ------------  -------------
                                  ------------  -------------
Total liabilities and
 shareholders' equity                   33,005         34,295
                                  ============  =============



Top Image Systems Ltd.
Consolidated Statements of Operations for the


                                  Three months  Three months
                                      ended         ended      Year ended
                                  ------------  ------------- ------------
                                    March 31,     March 31,   December 31,
                                  ------------  ------------- ------------
                                      2007          2006          2006
                                  ------------  ------------- ------------
                                   In thousands $US, except per share data
                                  ---------------------------------------

Revenues
Product sales                            1,747          2,607       12,144
Service revenues                         2,294          1,933        8,080
                                  ------------  ------------- ------------

Total revenues                           4,041          4,540       20,224
                                  ------------  ------------- ------------

Cost of revenues
Product costs                              580            563        2,391
Service costs                            1,554          1,203        5,257
                                  ------------  ------------- ------------

Total cost of revenues                   2,134          1,766        7,648
                                  ------------  ------------- ------------

Gross profit                             1,907          2,774       12,576


Research and development costs             567            421        1,792
Selling and marketing                    1,835          1,435        6,695
General and administrative                 967            817        3,568

                                  ------------  ------------- ------------

                                         3,369          2,673       12,055
                                  ------------  ------------- ------------

Operating profit (loss)                 (1,462)           101          521

Financing income (expenses), net           (33)            71          325
                                  ------------  ------------- ------------

Income (loss) before taxes on
 income                                 (1,495)           172          846

Taxes on Income                             (9)             9          (45)

Other Income                               110              -            -
                                  ------------  ------------- ------------

Net income (loss) for the period        (1,394)           181          801
                                  ============  ============= ============

Basic net income (loss) per share       (0.157)         0.021        0.090
                                  ============  ============= ============

Weighted average number of        ------------  ------------- ------------
 shares used to compute basic
 income (loss) per share             8,857,695      8,794,866    8,819,857
                                  ============  ============= ============

 Diluted net income (loss) per
  share                                 (0.157)         0.020        0.090
                                  ============  ============= ============

Weighted average number of        ------------  ------------- ------------
 shares used to compute diluted
 income (loss) per share             8,857,695      8,963,435    9,032,354
                                  ============  ============= ============

Contact Information

  • Contact:
    Sari Fadlun
    Investor Relations
    Tel: +972 3 767 9137
    Email Contact

    External Investor Relations Contact:
    Ehud Helft & Kenny Green
    GK Investor Relations
    Tel: 1 646 201 9246
    Email Contact