While revenues of the MGW 5100 during the first quarter were low, our efforts were not without results. During the first quarter, our sales and marketing efforts, in addition to our efforts to finalize our agreement with Nokia, were focused on the international markets where we began to realize increased interest from large operators in Europe and Asia. We are currently involved in several large-scale trials with major International telecom operators. While the rollout of triple play services by major telecom operators is key to the success of the video-over-IP industry, the decision making process associated with such deployments tends to be longer than with independent operating companies (IOCs) in the United States, which have accounted for the majority of MGW 5100 sales since the product’s introduction early last year.”

        Mr. Halperin continued, “In addition, we remain highly committed to marketing and developing our Building Blocks products. During the first quarter we introduced both MPEG-4 platforms at the lower end and MPEG-2 platforms at the high end, to strengthen and enhance our board business. Our new MPEG-4 encoder, the MPEG MovieMaker 400, offers high quality encoding at low bit rates for many enterprise applications. At the high end, to meet the increasing demand for high definition video, we have introduced VideoPlex HD, a versatile HD MPEG-2 decoding platform. Our well-known MPEG-2 standard definition encoder products have been enhanced with support for the MXF file exchange format and Sony’s MPEG IMX technology. These exciting new technologies add even more value for our customers in the evolving TV Production market. Moreover, our proposed purchase of the assets of Media 100 Inc. is positioned to further strengthen the suite of products offered by Optibase and we believe will enhance the Company’s already strong position within the professional content creation market.”

        Mr. Halperin concluded, “Financially, Optibase remains very sound with our balance sheet continuing to possess $53.5 million in cash and financial investments. During the first quarter we remained profitable with substantial financial income for the quarter and other income resulting from a favorable award in our arbitration with Merrill Lynch totaling $1.4 million net of legal expenses. We remain committed to growing revenues for 2004 over 2003 and we are strengthening our sales teams to achieve this goal. We will also work hard to achieve operational profitability during the year. We believe that Optibase has the right combination of financial wherewithal and technological expertise to be among the leaders in the broadband video delivery market and we are confident in our ability to meet these goals.”