Optibase Announces Fourth Quarter and Year-end Results

Company Reports First Sale of H.264 IPTV Head End Solution to a Telecom Carrier in Asia

HERZLIYA, Israel, February 1, 2006 – Optibase, Ltd. (NASDAQ: OBAS) a leader in advanced digital video solutions today announced financial results for the fourth quarter and year ended December 31, 2005.
For the year ended December 31, 2005, revenues were $22.4 million compared with $20.8 for the year ended in December 31, 2004. Net loss for the year ended December 31, 2005 was $3.4 million or $0.26 per basic and diluted share, compared with a net loss of $3.7 million, or $0.28 per basic and diluted share, for the year ended in December 31, 2004. Weighted average shares outstanding used in the calculations were approximately 13.2 million for the year ended December 2005 and 13.1 million for the year ended in December 31, 2004.
Revenues for the fourth quarter ended December 31, 2005 were $3.9 million compared with $6.6 million for the fourth quarter of 2004 and with $5 million for the third quarter of 2005. Net loss for the fourth quarter was $3.2 million or $0.24 per basic and diluted share compared with a net loss of $2.8 million or $0.22 per basic and diluted share for the fourth quarter of 2004 and with a net loss of $176,000 or $0.01 per basic and diluted share for the third quarter of 2005. Weighted average shares outstanding used in the calculations were approximately 13.2 million for the fourth quarter of 2005, 13.1 million for the fourth quarter of 2004 and 13.2 million for the third quarter of 2005.

As of December 31, 2005, the Company had cash, cash equivalents, long terms investments in marketable securities and other financial investments, net, of $44.9 million, and shareholders’ equity of $44.8 million, compared with, $52 million and $50.8 million as of December 31, 2004.

Uzi Breier CEO of Optibase, said, “Our fourth quarter results were negatively impacted by the fact that our H.264 IPTV head-end solution was released late to the market, and by the decline in sales of our legacy video technologies products. Although we are disappointed that these factors weighed on our performance during the quarter, Q4 was important in preparing our business for the future. We have streamlined our operations to concentrate more directly on IPTV, increased our geographic reach and enhanced our sales force. Furthermore, with a leading product at hand, we are confident that we are well positioned to address the opportunities in the emerging IPTV market.

“We are pleased by the favorable reception to our newly released H.264 IP video head end solution. Since its commercial release in September 2005, we have closed several contracts with new customers, including a telecom carrier in South Asia. We remain optimistic that market acceptance will continue in 2006 as telcos further embrace our H.264 solutions, which we believe are of the highest quality available on the market.”

Mr. Breier concluded, “We plan to concentrate on establishing and building relationships with systems integrators and partners, in addition to pursuing direct sales with telecom carriers and other potential customers. With our broad range of advanced, value-added products, a dedicated sales team and concentrated focus on the IPTV market, we hope that these efforts will be successful as the industry continues to mature.”

Contact Information

Yael Paz

Director Corporate Communications

Optibase, Ltd.

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