SOURCE: Top Image Systems Ltd.

August 22, 2005 08:24 ET

Top Image Systems Revenues Up by 66% in the Second Quarter of 2005

TEL AVIV, ISRAEL -- (MARKET WIRE) -- August 22, 2005 -- Top Image Systems, Ltd. (NASDAQ: TISA), a leading innovator of Data Capture solutions, announced today the financial results for its second quarter, which ended June 30, 2005.

Revenues for the second quarter of 2005 were a record $4.04 million, 66% more than the $2.44 million revenues for the second quarter of 2004, and 2% more than the $3.95 million revenues for the first quarter of 2005. TIS' net income for the second quarter was $56.7 thousand, compared with a net income of $21.8 thousand in the second quarter of 2004, and a net loss of $770.0 thousand in the first quarter of 2005. The net income per share in this quarter was $0.007 compared with a net income per share of $0.004 in the second quarter of 2004, and a net loss per share of $0.086 in the first quarter of 2005.

Second quarter highlights:

-- First half of 2005 revenues increased to $8.0 million, up 67% from
   $4.8 million in first half of 2004

-- Total quarterly revenues in the second quarter this year increased
   to $4.04 million, up 66% from $2.44 million in the second quarter
   of 2004.

-- During the second quarter, TIS crossed the break-even point,
   marking a return to profitability net of significant investment
   in growth opportunities.

-- The year-on-year increase in revenues is attributed to:

   -- Organic growth as well as revenues from our Japanese subsidiary;

   -- Growing level of activity in France and Australia;

   -- Success in Germany with revenues exceeding the local branch's
      sales goals

   -- Growing success for Smart, eFLOW's innovative automatic solution
      for mail sorting and routing, with several new projects and
      existing customers choosing to add the new module to their systems.

   -- eFLOW3, the latest version of the Company's leading software,
      strengthening its position in the market. Several existing large
      customers chose to upgrade their systems to the new version.
      These customers include IBM, Australian Department of Defense,
      SEB Bank, Festo, and Dynevo in Germany.

-- Several major new customers were acquired, including the U.S.
   Social Security Administration, AZ Direct, a Bertelsmann Company,
   Discovery in South Africa and Festo AG & Co. KG Germany.
"We are pleased with our second quarter financial performance. We are particularly pleased with our significant year-over-year growth," commented Dr. Ido Schechter, Chief Executive Officer of Top Image Systems.

"We brought our operating expenses in line with our business, and returned the Company to profitability. We are enjoying a growing level of sales activity, and we are seeing an increased interest in our newest products and the solutions that we are bringing to the market. In addition, our customers are demonstrating their strong confidence in our latest products by choosing to upgrade their systems to the newest version of eFLOW," added Dr. Schechter. "Our newly established Japanese subsidiary has become an integral part of the Company and is making a major contribution to our growth. Looking ahead to the second half of 2005, we believe that we are well-positioned to continue delivering efficient solutions to address the challenges faced by our customers."

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 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. 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 Statements of Operations for the


                                 Three months  Three months
                                     ended       ended
                                    June 30,    June 30
                                     2004         2005
                                     ----         ----
                                       $            $
Revenues
Product sales                      1,276,251    2,382,344
Service revenues                   1,162,695    1,660,742
                                   ---------    ---------

Total revenues                     2,438,946    4,043,086
                                   ---------    ---------

Cost of revenues
Product costs                        383,370      742,359
Service costs                        284,383      795,472
                                   ---------    ---------
Total cost of revenues               667,753    1,537,831
                                   ---------    ---------

Gross profit                       1,771,193    2,505,255

Expenses

Research and development costs       205,161      360,710
Selling and marketing                996,834    1,185,579
Genaral and administrative           522,047      840,809
                                   ---------    ---------

                                   1,724,042    2,387,098
                                   ---------    ---------

Operating profit (loss)               47,151      118,157

Financing income (expenses), net     (25,344)     (61,447)
                                   ---------    ---------

                                   ---------    ---------
Net income (loss) for the period      21,807       56,710
                                   =========    =========
Net income (loss) per share            0.004        0.007
                                   =========    =========
Weighted average number of shares  6,369,640    8,944,534


                                    Six months     Six months   Year ended
                                      ended          ended
                                     June 30,       June 30   December 31,
                                       2004           2005         2004
                                       ----           ----         ----
                                         $              $            $
Revenues
Product sales                       3,085,624       4,471,096    6,964,418
Service revenues                    1,717,808       3,529,275    4,214,030
                                    ---------      ----------   ----------
Total revenues                      4,803,432       8,000,371   11,178,448
                                    ---------      ----------   ----------

Cost of revenues
Product costs                         753,836       1,446,838    1,970,670
Service costs                         534,708       1,755,312    1,501,429
                                    ---------      ----------   ----------

Total cost of revenues              1,288,544       3,202,150    3,472,099
                                    ---------      ----------   ----------

Gross profit                        3,514,888       4,798,221    7,706,349

Expenses

Research and development costs        401,983         729,433      929,432
Selling and marketing               2,060,338       2,543,870    4,546,695
Genaral and administrative            998,717       1,723,953    2,588,014
Annual Marketing
 Conference expenses                        -         211,048            -
Liquidated damages
 related to September
 PIPE                                       -         163,670            -

                                    ---------      ----------   ----------
                                    3,461,038       5,371,974    7,134,709
                                    ---------      ----------   ----------

Operating profit (loss)                53,850        (573,753)    (357,792)

Financing income (expenses), net      (17,037)       (140,396)     179,400
                                    ---------      ----------   ----------

                                    ---------      ----------   ----------
Net income (loss) for the period       36,813        (714,149)    (178,392)
                                    =========      ==========   ==========

Net income (loss) per share             0.006          (0.080)      (0.025)
                                    =========      ==========   ==========
Weighted average number of shares   6,345,116       8,944,534    7,092,434


Top Image Systems Ltd.
Consolidated Balance Sheet as at

                                                 June 30     December 31
                                                  2005          2004
                                                  ----          ----
                                                    $             $

Assets

Current assets:
Cash and cash equivalents                       8,125,720    10,136,141
Marketable securities                           1,503,235       278,635
Trade receivables, net                          6,493,101     5,541,006
Other current assets                              709,666       566,258
                                              -----------   -----------
Total current assets                           16,831,722    16,522,040
                                              -----------   -----------
Property and equipment

Cost                                            2,292,785     2,194,509
Less / accumulated depreciation                (1,688,308)   (1,576,285)
                                              -----------   -----------
Net property and equipment                        604,477       618,224

Goodwill                                          430,324       453,584

Net intangible assets                           1,259,372     1,418,750

Other long-term assets, net                      144,406       147,065
                                              -----------   -----------
                                              -----------   -----------
Total assets                                   19,270,301    19,159,663
                                              ===========   ===========

Liabilities and Shareholders' Equity

Current liabilities:
Short-term bank loans                           2,396,151     1,707,151
Trade payables                                    645,590       404,522
Accrued liabilities and other payables          2,154,273     2,177,951
                                              -----------   -----------
Total current liabilities                       5,196,014     4,289,624
                                              -----------   -----------
Long-term liabilities:
Liability for severance pay, net                  176,307       186,514
                                              -----------   -----------
Total liabilities                               5,372,321     4,476,138
                                              -----------   -----------

Shareholders' equity
Share capital - Ordinary
 share of NIS 0.04 par value                       96,797        96,767
Surplus capital                                29,507,554    29,578,980
Accumulated deficit                           (15,706,371)  (14,992,222)
                                              -----------   -----------
Total shareholders' equity                     13,897,980    14,683,525
                                              -----------   -----------
                                              -----------   -----------
Total liabilities and
 shareholders' equity                          19,270,301    19,159,663
                                              ===========   ===========

Contact Information

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