Ophthalmic Imaging Systems Reports First Quarter Financial Results

SACRAMENTO, CA--(Marketwire - May 13, 2011) - Ophthalmic Imaging Systems (OIS) (OTCBB: OISI), a leading digital imaging, image management, Electronic Medical Records (EMR) and Practice Management (PM) company, today reported financial results for the three months ended March 31, 2011, and provided an update on recent corporate developments.

For the first quarter of 2011, OIS reported net revenue of $3.5 million, compared with net revenue of $4.1 million for the first quarter of 2010. Lower product sales in the 2011 quarter are attributable primarily to the introduction of improved software in March for the OIS EyeScan™, which delayed product sales for two months during the quarter, and lower EMR/PM product sales due to a shift of focus and priorities at OIS' wholly owned subsidiary Abraxas Medical Systems, following the appointment of a full-time Chief Executive Officer.

Operating expenses for the first quarter of 2011 were $3.2 million, compared with $2.9 million for the first quarter of 2010. Sales and marketing expenses increased to $1.7 million, compared with $1.5 million in the prior year period, with the increase primarily due to an increase in the sales force at OIS and Abraxas.

Net loss for the first quarter of 2011 was $1.5 million, or $0.05 per share, compared with net loss of $1.5 million, or $0.06 per share, for the first quarter of 2010.

"We are reporting important recent developments aimed at supporting growth and improving our position in both the informatics solutions and ophthalmic digital imaging markets," said Gil Allon, Chief Executive Officer of OIS. "To better capitalize on favorable market dynamics in the informatics solutions market, we appointed Garret Erskine as full-time Chief Executive Officer of Abraxas. Garret is a seasoned professional with more than 20 years in healthcare IT experience. He brings Abraxas proven leadership, revenue building and operational efficiency abilities, and first-hand knowledge of the EMR solutions market. We thank our Chief Financial Officer Ariel Shenhar who had taken on the additional responsibility of leading Abraxas since inception in January 2008. With Garret's appointment, Ariel will be able to place additional focus on overseeing our financial operations during this critical time when we see prospects for significant growth.

"We also introduced improved software for the OIS EyeScan toward the end of March, which delayed product sales for two months during the quarter. Our ultraportable, modular EyeScan imaging device has capabilities to capture images of both the anterior and posterior of the eye, opening new marketing opportunities in international markets as well as within the domestic optometry market. With the introduction of the new software, we believe sales of the OIS EyeScan are now back on track."

"We increased our investment in sales and marketing activities, primarily in the U.S. market," he added. "Our sales function is separated into teams with one team solely focused on selling the OIS EyeScan, another selling Abraxas EMR and PM systems to the non-ophthalmic markets and the third selling all other product lines, including our other ophthalmic digital imaging product and OIS EMR and PM solutions, to the eye-care market. We believe this strategy and our investment will support future revenue increases."

About Ophthalmic Imaging Systems
Ophthalmic Imaging Systems (www.oisi.com) is the leading provider of ophthalmic digital imaging and informatics systems. The Company designs, develops, manufactures and markets digital imaging systems, image management and integrated EMR and PM solutions for the eye care market. With more than 25 years in the ophthalmic imaging business, the Company has consistently introduced new, innovative technologies. Through its wholly owned subsidiary, Abraxas Medical Solutions, the Company provides EMR and PM software to OB/GYN, orthopedic and primary care physicians. Both OIS EMR Version 4.1.7 and Abraxas EMR Version 4.1.7 are 2011/2012 compliant and have been certified as Complete EHR by the Certification Commission for Health Information Technology (CCHIT®), an ONCATCB, in accordance with the applicable ELIGIBLE PROVIDER certification criteria adopted by the Secretary of Health and Human Services. The 2011/2012 criteria support the Stage 1 meaningful use measures required to qualify eligible providers and hospitals for funding under the American Recovery and Reinvestment Act (ARRA). The Company markets and supports its products through an extensive network of dealers, distributors and direct representatives.

Statements in this press release which are not historical data are forward-looking statements which involve known and unknown risks, uncertainties, or other factors not under the Company's control, which may cause actual results, performance, or achievements of the Company to be materially different from the results, performance, or other expectations implied by these forward-looking statements. These factors include, but are not limited to, those detailed in the Company's periodic filings with the Securities and Exchange Commission.

                                                                            
                                                                            
                         Ophthalmic Imaging Systems                         
                          Selected Financial Data                           
              Condensed Consolidated Statements of Operations               
                                                                            
                                                     Three Months Ended     
                                                          March 31,         
                                                   UNAUDITED     UNAUDITED  
                                                     2011          2010     
Net Revenue                                      $  3,463,940  $  4,133,315 
Cost of Sales                                       2,071,845     1,866,753 
                                                 ------------  ------------ 
Gross Profit                                        1,392,095     2,266,562 
                                                                            
    Sales And Marketing                             1,716,821     1,544,594 
    General And Administrative                        618,889       516,879 
    Research and development                          849,406       844,198 
                                                                            
                                                 ------------  ------------ 
Total Operating Expenses                            3,185,116     2,905,671 
                                                 ------------  ------------ 
Loss From Operations                               (1,793,021)     (639,109)
Interest And Other Income (Expense), Net              253,933      (879,981)
                                                 ------------  ------------ 
Net Loss Before Income Taxes                       (1,539,088)   (1,519,090)
      Income Tax (Expense) Benefit                    (12,862)       12,876 
                                                 ------------  ------------ 
Net Loss                                           (1,551,950)   (1,506,214)
                                                 ------------  ------------ 
                                                                            
Less Noncontrolling Interest's Share                    9,647        11,224 
                                                                            
Net Loss Attributable To Ophthalmic Imaging                                 
 Systems                                           (1,542,303)   (1,494,990)
                                                 ============  ============ 
                                                                            
    Basic And Diluted Net Loss Per Share               ($0.05)       ($0.06)
                                                                            
    Shares Used In The Calculation Of Basic And                             
     Diluted Net Loss Per Share                    30,304,151    26,518,618 
                                                                            
                                                                            
                                                                            
                                                                            
                         Ophthalmic Imaging Systems                         
                   Condensed Consolidated Balance Sheets                    
                                (Unaudited)                                 
                                                                            
                                                   March 31,   December 31, 
Assets                                               2011          2010     
                                                 ------------  ------------ 
Current assets:                                    UNAUDITED     UNAUDITED  
    Cash and cash equivalents                    $  2,795,627  $  3,905,910 
    Accounts receivable, net                        3,688,335     4,088,269 
    Inventories, net                                1,635,996     1,757,873 
    Prepaid expenses and other current assets         495,063       357,380 
                                                 ------------  ------------ 
        Total current assets                        8,615,021    10,109,432 
                                                                            
Furniture and equipment, net of accumulated                                 
 depreciation of $986,598 and $934,371                                      
 respectively                                         458,035       470,717 
Capitalized imaging software, net of accumulated                            
 amortization of $378,531 and $336,472,                                     
 respectively                                         126,180       168,239 
Capitalized software development, net of                                    
 accumulated amortization of $863,127 and                                   
 $767,224, respectively                               287,704       383,607 
AcerMed asset purchase, net of accumulated                                  
 amortization of $427,554 and $380,048,                                     
 respectively                                         142,523       190,029 
Goodwill                                              807,000       807,000 
Customer relationship intangible assets and                                 
 other intangible assets, net of accumulated                                
 amortization of $98,512 and $81,137,                                       
 respectively                                         394,488       411,863 
Licensing rights intangible asset, net of                                   
 accumulated amortization of $41,297 and                                    
 $33,037, respectively                                 57,815        66,075 
Other assets                                           32,738        12,524 
                                                 ------------  ------------ 
        Total assets                             $ 10,921,504  $ 12,619,486 
                                                 ============  ============ 
                                                                            
Liabilities and Stockholders' Equity                                        
Current liabilities:                                                        
    Accounts payable                             $    934,087  $  1,256,515 
    Accrued liabilities                             1,421,416     1,709,616 
    Derivative liability financial instruments      1,369,182     1,698,416 
    Deferred extended warranty revenue-current                              
     portion                                        1,978,094     1,722,235 
    Customer deposits                                 276,670       312,731 
    Notes payable-current portion                   1,470,897     1,518,099 
                                                 ------------  ------------ 
        Total current liabilities                   7,450,346     8,217,612 
                                                                            
    Deferred extended warranty revenue, less                                
     current portion                                  252,346       251,785 
    Notes payable, less current portion             1,807,773     1,301,523 
                                                 ------------  ------------ 
        Total liabilities                           9,510,465     9,770,920 
                                                 ------------  ------------ 
                                                                            
Commitments and contingencies                                               
                                                                            
Equity                                                                      
Ophthalmic Imaging Systems' stockholders'                                   
 equity:                                                                    
    Preferred stock, 20,000,000 shares                                      
     authorized; 0 shares issued and outstanding                            
     at March 31, 2011 and December 31, 2010,                               
     respectively                                                           
    Common stock, no par value, 100,000,000                                 
     shares authorized; 30,304,151 and                                      
     30,304,151 issued and outstanding at March                             
     31, 2011 and December 31, 2010,                                        
     respectively                                  21,722,550    21,708,743 
    Additional paid-in-capital                        139,095        65,544 
    Accumulated deficit                           (20,826,730)  (19,284,427)
    Cumulative translation adjustment                 (31,303)      (58,368)
                                                 ------------  ------------ 
    Total Ophthalmic Imaging Systems'                                       
     stockholders' equity                           1,003,612     2,431,492 
                                                 ------------  ------------ 
    Noncontrolling interest                           407,427       417,074 
                                                 ------------  ------------ 
        Total equity                                1,411,039     2,848,566 
                                                 ------------  ------------ 
        Total liabilities and stockholders'                                 
         equity                                  $ 10,921,504  $ 12,619,486 
                                                 ============  ============ 
                                                                            

Contacts:

Gil Allon
CEO
Ariel Shenhar
CFO
(916) 646-2020

INVESTOR RELATIONS
Jody Cain
Lippert/Heilshorn & Associates
(310) 691-7100

Ophthalmic Imaging Systems
221 Lathrop Way, Suite I
Sacramento, CA 95815

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