SOURCE: Top Image Systems Ltd.

May 10, 2006 07:00 ET

Top Image Systems Reports Fourth Consecutive Quarter of Growing Profitability

First Quarter 2006 Revenues Up 15% Year-Over-Year

TEL AVIV, ISRAEL -- (MARKET WIRE) -- May 10, 2006 -- Top Image Systems, Ltd. (NASDAQ: TISA), the leading innovator of data capture solutions, today announced its financial results for the first quarter of 2006.

Revenues for the first quarter of 2006 were $4.54 million, an increase of 15% from the $3.96 million revenues recorded for the first quarter of 2005, and a 4% decrease from the $4.71 million revenues for the fourth quarter of 2005. The first quarter is seasonally the weakest quarter of the year in TIS' market. 43% of first quarter revenues were generated from services and 57% from products. 55% of the quarterly revenues were generated from existing customers and 45% from new customers.

Net income for the first quarter was $181 thousand, compared with a net loss of $771 thousand in the first quarter of 2005, and net income of $152 thousand in the fourth quarter of 2005. Net income per share in this quarter was $0.021 compared with net loss per share of $0.888 in the first quarter of 2005, and net income per share of $0.017 in the fourth quarter of 2005.

First quarter highlights:

--  First quarter revenues increased 15% year-over-year.
--  Operating profit in the first quarter was $101 thousand, compared with
    an operating loss of $692 thousand in the first quarter of 2005.
--  Company generated positive operating cash flow.
--  Success in Japan and the UK generated 20% and 27% of company's
    quarterly revenues respectively.
--  Levels of activity in the USA and Latin America showed growth. A new
    project for The World's Foremost Bank broke new ground for eFLOW Ability in
    the USA.
--  A number of sales activities in Europe are expected to mature in the
    second quarter of 2006.
--  Increased awareness, mainly in the UK, of TIS' compelling solution for
    Oracle enterprise resource planning (ERP) was achieved.
"We are delighted to announce strong first-quarter 2006 results. Revenues, operating profits and net income are all up with strong organic year-over-year growth," commented Dr. Ido Schechter, Chief Executive Officer of Top Image Systems. "Although our first quarter is seasonally the weakest, there has only been a slight sequential revenue decline. The significant revenue increase over the first quarter of 2005 is a good sign for the rest of the year."

Dr. Schechter continued, "This was the last quarter of the Japanese fiscal year and we have witnessed growing levels of activity in this market. With the recently reported acquisition of the Nagase Healthcare business, we have gained direct access to many of the Japanese healthcare companies, resulting in introductions of eFLOW to a growing number of potential customers. Furthermore, the current regulatory changes in the healthcare business in Japan significantly increase the potential of our offering to the market."

Dr. Schechter concluded, "In the past few months, we have seen strong and growing market interest, particularly in Europe, for eFLOW Ability, our SAP-based solution. We have already announced a number of projects and are implementing over half a dozen new projects. This, and our general performance over the last few months, makes us increasingly confident in our ability to maintain our growth and improve our profitability throughout 2006."

Conference Call

TIS management will host a conference call today, May 10, 2006, at 10:00am EST (7:00 am. PST, 3:00pm UK Time, 5:00pm Israel Time) to review the first quarter of 2006 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: 1 866 744 5399

UK Dial-in Number: 0 800 917 5108

ISRAEL Dial-in Number: 03 918 0600

INTERNATIONAL Dial-in Number:  +972 3 918 0600
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:

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' 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 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.

Top Image Systems Ltd.
Consolidated Balance Sheet as of

                                         December 31,       March 31,
                                          ----------        --------
                                             2005             2006
                                          ----------        --------
                                               In thousands US$

  Current assets:
  Cash and cash equivalents                    8,200           8,407
  Marketable securities                        1,805           1,805
  Trade receivables, net                       6,802           6,432
  Other current assets                           620             899
                                          ----------        --------

  Total current assets                        17,427          17,543
                                          ----------        --------

  Severance funds pay                            654             662
                                          ----------        --------

  Property and equipment

  Cost                                         2,358           2,429
  Less / accumulated depreciation             (1,781)         (1,844)
                                          ----------        --------

  Net property and equipment                     577             585
                                          ----------        --------

  Goodwill                                       465             465

  Net intangible assets                        1,100           1,025

  Other  long-term assets, net                   135              72
                                          ----------        --------

                                          ----------        --------
  Total assets                                20,358          20,352
                                          ==========        ========

  Liabilities and Shareholders' Equity

  Current liabilities:
  Short-term bank loans                        2,179           1,893
  Trade payables                                 900             544
  Accrued liabilities and other payables       2,213           2,555
                                          ----------        --------

  Total current liabilities                    5,292           4,992
                                          ----------        --------

  Long-term liabilities:
  Liability for severance pay, net               850             914
                                          ----------        --------

  Total long-term liabilities                    850             914
                                          ----------        --------

  Total liabilities                            6,142           5,906
                                          ----------        --------

  Shareholders' equity
  Share capital -
   Ordinary share of NIS 0.04 par value           97              97
  Surplus capital                             29,561          29,609
  Comprehensive income
  Accumulated deficit                        (15,442)        (15,260)
                                          ----------        --------

  Total shareholders' equity                  14,216          14,446
                                          ----------        --------

                                          ----------        --------
  Total liabilities and
   shareholders' equity                       20,358          20,352
                                          ==========        ========

Top Image Systems Ltd.
Consolidated Statements of Operations for the

                                       Three months ended     Year ended
                                      ---------------------  ------------
                                      March 31,   March 31,  December 31,
                                      ---------   ---------  ------------
                                        2006        2005        2005
                                      ---------   ---------   ---------
                                    In thousands US$, except per share data
  Product sales                           2,607       2,089       9,888
  Service revenues                        1,933       1,868       6,932
                                      ---------   ---------   ---------

  Total revenues                          4,540       3,957      16,820
                                      ---------   ---------   ---------

  Cost of revenues (*)
  Product costs                             563         527       2,225
  Service costs                           1,203       1,179       4,538
                                      ---------   ---------   ---------

  Total cost of revenues                  1,766       1,706       6,763
                                      ---------   ---------   ---------

  Gross profit                            2,774       2,251      10,057

  Research and development costs            421         327       1,312
  Selling and marketing                   1,435       1,569       5,396
  General and administrative                817         883       3,470
  Liquidated damages related to
   September PIPE                             -         164         164
                                      ---------   ---------   ---------

                                          2,673       2,943      10,342
                                      ---------   ---------   ---------

  Operating profit (loss)                   101        (692)       (285)

  Financing income (expenses), net           71         (79)       (146)
                                      ---------   ---------   ---------

  Income (loss) before taxes on
   income                                   172        (771)       (431)

  Taxes on Income                             9           -         (30)
                                      ---------   ---------   ---------

  Net income (loss) for the period          181        (771)       (461)
                                      =========   =========   =========

  Basic net income (loss) per share       0.021      (0.888)     (0.053)
                                      =========   =========   =========

  Weighted average number of
   shares used to compute basic       ---------   ---------   ---------
   income (loss) per share            8,794,866   8,753,991   8,764,222
                                      =========   =========   =========

  Diluted net income (loss) per share     0.020      (0.888)     (0.052)
                                      =========   =========   =========

  Weighted average number of
   shares used to compute diluted net ---------   ---------   ---------
   income (loss) per share            8,963,435   8,753,991   8,891,921
                                      =========   =========   =========

  (*) Certain costs have been reclassified for prior periods

Contact Information

  • Contacts:
    Adi Bar-Lev
    Investor and Public Relations Manager
    Top Image Systems Ltd.
    +972 3 7679114
    Email Contact