Optibase Ltd. Announces Second Quarter Results

Revenues for the second quarter ended June 30, 2009 were $3.3 million compared with $3.6 million for the first quarter of 2009 and $5.7 million for the second quarter of 2008.

Net loss for the second quarter ended June 30, 2009, was $1 million or $0.06 per basic and fully diluted share, compared with a net income of $2.9 million or $0.18 per basic and fully diluted share for the first quarter of 2009 and with a net loss of $2.1 million or $0.15 per basic and fully diluted share for the second quarter of 2008. Weighted average shares outstanding used in the calculation for the periods were approximately 16.5 million basic and fully diluted for the second quarter of 2009, and approximately 16.5 million basic and fully diluted for the first quarter of 2009, and 14 million for the second quarter of 2008.

For the six months ended June 30, 2009, revenues totaled $6.9 million, compared with $9.8 million for the six months ended June 30, 2008. Net income for the period was $1.9 million or $0.12 per basic and fully diluted share, compared to a net loss of $5 million or $0.36 per basic and fully diluted share for the six months ended June 30, 2008. Weighted average shares outstanding used in the calculation for the periods were approximately 16.5 million basic and fully diluted and 13.8 million basic and fully diluted respectively.

As of June 30, 2009, the Company had cash, cash equivalents, and other financial investments, net, of $38 million, and shareholders' equity of $37 million, compared with $28.8 million, and $38 million as of March 31, 2009.

Commenting on the quarter, CFO of Optibase, Amir Philips, said, "Our second quarter results reflect the continued effects of a slowing economy which contributed to lower revenue and the associated decline in earnings. We continue to keep an eye on expenses and have been diligent in that regard."

He concluded by saying, "Our visibility into upcoming quarters remains challenging as we approach the one-year anniversary of the start of this negative economic environment. As a meaningful recovery appears to be some way off, our focus continues to be on running our business efficiently and controlling our overhead. In addition, we still have a substantial cash balance at our disposal to explore various businesses opportunities that this market downturn has created."

About Optibase

Optibase provides video over IP solutions, specializing in video encoding, decoding and streaming for federal and state government agencies, Telco operators, enterprise organizations and the world's leading broadcast service providers. With a collection of open, standards-based products, Optibase enables its customers to take full advantage of video distribution over their IP network, ensuring superb video quality in a scale of bit-rates for simple and effective video streaming to desktops, STBs and VOD applications. For further information, please visit www.optibase.com.

This press release contains forward-looking statements concerning our marketing and operations plans. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. All forward-looking statements in this press release are made based on management's current expectations which involve risks, uncertainties and other factors that could cause results to differ materially from those expressed in forward-looking statements. These statements involve a number of risks and uncertainties including, but not limited to, risks related to the video technologies market in general, and the evolving IPTV market in particular, competition, our ability to manage growth and expansion, general economic conditions and other risk factors. For a more detailed discussion of these and other risks that may cause actual results to differ from the forward looking statements in this news release, please refer to Optibase's most recent annual report on Form 20-F. The Company does not undertake any obligation to update forward-looking statements made herein.

This release and prior releases are available on the Company's Web site at www.optibase.com.

This release and prior releases are also available on the KCSA Public Relations Worldwide Web site at www.kcsa.com.

Optibase Ltd.
Condensed Consolidated Statement of Operations
For the Period Ended June 30,
2009
                                                            Six months ended        Three months ended
                                                            June 30    June 30      June 30    June 30
                                                            2009       2008         2009       2008
                                                            $          $            $          $
                                                            Unaudited  Unaudited    Unaudited  Unaudited
Revenues                                                    6,875      9,770        3,282      5,743
Gross profit                                                3,132      4,964        1,505      2,936
Operating expenses:
Research and development, net                               2,076      3,289        813        1,588
Selling, general and administrative                         4,286      6,101        2,066      3,195
Total operating expenses                                    6,362      9,390        2,879      4,783
Operating loss                                              (3,230)    (4,426)      (1,374)    (1,847)
Other income (expenses)                                     4,778      (705)        -          (219)
Financial income (expense), net                             378        115          394        (47)
Net income (loss) from continuing                           1,926      (5,016)      (980)      (2,113)
operations
Income related to discontinued                              -          20           -          10
operations
Net income (loss)                                           1,926      (4,996)      (980)      (2,103)
Other comprehensive income
Unrealized holding losses on available for sale securities  -          (267)        -          -
Total comprehensive income (loss)                           1,926      (5,263)      (980)      (2,103)
Net income (loss) per share:
Basic and diluted                                           $0.12      ($0.36)      ($0.06)    ($0.15)
Number of shares used in computing                          16,531     13,829       16,534     14,017
Earning per share
Basic
Diluted                                                     16,547     13,829       16,534     14,017
Amount in thousands except per share data

Optibase Ltd.
Condensed Consolidated Balance Sheets
                                                        June 30    December 31
                                                        2009       2008
                                                        Unaudited  Audited
Assets
Current Assets:
Cash, cash equivalents and short term investments, net  38,053     11,386
Trade receivables net of allowance for bad debts        2,342      3,241
Inventories                                             3,119      4,373
Other receivables and prepaid expenses                  695        690
Assets Related To Discontinued Operations               -          -
Total current assets                                    44,209     19,690
Other long term investments                             2,331      26,388
Fixed assets, net                                       931        1,228
Total assets                                            47,471     47,306
Liabilities and shareholders' equity
Current Liabilities:
Trade payables                                          1,166      2,276
Accrued expenses and other liabilities                  7,227      7,642
Liabilities Related To Discontinued Operations          162        162
Total current liabilities                               8,555      10,080
Accrued severance pay                                   1,829      2,215
Total shareholders' equity                              37,087     35,011
Total liabilities and shareholders' equity              47,471     47,306
Amounts in thousands

SOURCE: Optibase Ltd.

Optibase Ltd. 
Talia Rimon, 011-972-9-9709-125 (Media) 
Director of Corporate Communications 
taliar@optibase.com 
or 
KCSA for Optibase 
Marybeth Csaby, +1-212-896-1236 (Investor Relations) 
mcsaby@kcsa.com