ISG International Software Group Ltd. Announces Second Quarter Results

Business Wire, August 13, 1997

BURLINGTON, Mass.--(BUSINESS WIRE)--August 13, 1997--

Tandem and CA Signed Strategic Agreements

for the Distribution of ISG Navigator

Independent Review Cites ISG Navigator's Performance and Ease of

Use, Hails OLE DB as "Future of Data Access"

ISG International Software Group Ltd. (NASDAQ:SISGF) today reported its operating results for the second quarter ended June 30, 1997.

Total revenues in the second quarter of 1997 were $3,013,000 compared with $3,018,000 in the second quarter of 1996. The Company's revenues from licenses and maintenance were $2,013,000. The Company's cost of revenues in the 1997 second quarter were $944,000 compared with $1,167,000 in 1996. Gross Profit for the second quarter of 1997 increase to $2,069,000 from $1,851,000 in the 1996 period due to the shift of revenues from consulting to licenses. The Company had a net income of $178,000, or $0.02 per share in the second quarter of 1997 compared with a net income of $45,000, or $0.01 per share in the second quarter of 1996.

Total revenues in the first six months ended June 30, 1997 were $6,169,000 compared with $6,048,000 in the first six months of 1996. The Company's cost of revenues in the first six months of 1997 were $1,860,000 compared with $2,281,000 in the first six months of 1996. Gross Profit for the first six months of 1997 was $4,309,000 compared to $3,767,000 in the 1996 period. The Company had net income of $521,000, or $0.06 per share in the first six months of 1997 compared with a net loss of ($94,000), or $(0.01) per share in the first six months of 1996.

Arie Gonen, President and Chief Executive Officer of ISG, said, "I am very pleased with our results which met our internal expectations. We continue to maintain a profitable business while introducing a new product to the market. I am encouraged by the growing level of revenues our new product, ISG Navigator, generated and the acceptance of ISG Navigator by our customers. ISG Navigator proves to be the best Universal Data Access solution in the market. Our goal is to continue to increase our high margin indirect sales operation for ISG Navigator. This indirect sales operation will generate an accelerating level of higher margin revenues in subsequent quarters."

Gonen added, "Our main target during 1997 is to form as many strategic alliances as possible with leading hardware and software vendors. Our main strategy is to increase our indirect channel and make leading companies adopt our product as their Universal Data Access solution. In our Q1 report I stated that we expect to close 3-6 strategic alliance agreements during 1997. We will meet our goals. During Q2/1997 we signed strategic alliance agreements with Tandem and with Computer Associates (CA). These agreements represent opportunities and market potential for ISG that are equivalent to the opportunity that the Digital relationship represents. Tandem is a leading provider for the financial and banking market while CA is one of the three largest software vendors in our industry.

"We released our ISG Navigator version 1.1 at the end of Q2 and are planning to release the IBM AS/400 version of ISG Navigator in Q4/1997. The product was tested by leading technology magazine InfoWorld. InfoWorld released in early July an independent review which praised ISG Navigator 1.1 for its performance and ease of use for accessing and unifying multiple data sources. The review also noted that the product is able to access data sources faster than existing ODBC data access products. This first independent technology endorsement is encouraging for ISG and a significant independent evaluation of ISG Navigator. The InfoWorld review indicates that we delivered a high-quality product for customers working with distributed data. The review lists ISG Navigator's pros as transparent, simplified, rapid data access and cons as none significant. ISG Navigator's downloads which are available from our web site as well as Digital's and Microsoft's web sites has doubled as a result of InfoWorld's endorsement."

Gonen concluded, "We at ISG are very excited by the acceptance our product receives by our customers, our partners, the analysts and the trade press. We are very encouraged by InfoWorld's comments stating that:

"Microsoft's new standard - OLE DB is the future of

data access.ISG Navigator implementation of OLE DB

and its implementation of ODBCprovide a single point

to data. Developers should be able to create

applications that are faster, less prone to error

and easier to manage." -0-

ISG

ISG is the leading provider of Universal Data Access middleware based on Microsoft's new OLE DB standard and standards-based (OLE DB, ODBC and ActiveX) development and integration tools. ISG products are available on multiple platforms and provide simultaneous database- independent access to many databases and file systems. The company's principal products are: ISG Navigator; CorVision; and APTuser. ISG has sales and support offices in the United States, Israel, United Kingdom, Hong Kong, and Australia. For more information, visit ISG's Web site at http://www.isgsoft.com.