Omtool(TM) Reports Results for Second Quarter and First Half of Fiscal Year 2008

ANDOVER, Mass.--(Business Wire)--
Omtool, Ltd. (OTCBB:OMTL), a leading provider of document capture
and handling solutions, today reported results of operations for the
second quarter of fiscal year 2008. Total revenue for the quarter
ended June 30, 2008, was approximately $3.8 million compared with
revenue of approximately $4.3 million for the second quarter of 2007,
representing an 11% decrease. This decrease in overall revenue is
attributed to a 19% decrease in software license revenue and a 52%
decrease in hardware revenue. Service and other revenue remained
relatively flat during the second quarter of 2008 as compared to the
same quarter of last year.

For the six-month periods ended June 30, 2008 and June 30, 2007,
total revenue was $7.7 million and $8.1 million, respectively,
representing a 4% decrease. This decrease in total revenue is
attributed to a $292,000, or 39%, decrease in hardware revenue
resulting from a 42% decrease in software license revenue from our
legacy fax product line. Total software license revenue decreased by
$35,000 during the six month period ended June 30, 2008 as compared to
the same period in 2007 as a result of this decrease in software
license revenue from our legacy fax product line, offset by an
increase in AccuRoute software license revenue. Service and other
revenue remained relatively flat during the first six months of 2008
compared to the first six months of 2007.

Operating expenses for the quarter ended June 30, 2008 were $2.9
million, which amount was $582,000 or 17%, lower than the $3.5 million
of operating expenses, excluding $131,000 of restructuring charges,
for the quarter ended June 30, 2007. Net loss for the quarter ended
June 30, 2008 was approximately $(367,000), or $(0.08) per basic and
diluted share, as compared to a net loss of approximately $(779,000),
or $(0.17) per basic and diluted share for the same quarter of 2007.
For the six months ended June 30, 2008, operating expenses were $6.0
million compared to total operating expenses of $7.5 million,
excluding $343,000 of restructuring charges, for the six months ended
June 30, 2007. Net loss for the six months ended June 30, 2008 was
$(861,000), or $(0.18) per basic and diluted share, as compared to a
net loss of $(2.7 million), or $(0.60), per basic and diluted share
for the six months ended June 30, 2007.

Commenting on Omtool's results, Robert L. Voelk, Omtool's chief
executive officer, president and chairman of the board of directors,
said, "We continue to spend our resources on marketing directly and
indirectly through our partners to the legal and professional services
vertical market as well as on expanding our presence in the healthcare
and financial services vertical markets, primarily through our
partners. Some of the opportunities we are pursuing with our partners,
particularly in the financial services vertical market, are longer
term in nature and require a significant amount of resources prior to
closing. We believe we are improving our partner activity and will see
a return on the investments we have made. In the meantime, we are
monitoring our expenses and are investing in areas which we believe
will maximize our return on investment. Our strategy to broaden our
presence into other vertical markets is designed to help us navigate
the generally soft U.S. economic conditions which we believe had some
adverse impact on our results this quarter."

About Omtool, Ltd.

Omtool, Ltd. is a leading provider of document capture and
handling solutions that simplify the integration of paper and
electronic documents in enterprise information management systems. Its
flagship product family, AccuRoute, streamlines the capture,
conversion, communication and archive of paper and electronic
documents, enabling fast, secure, simultaneous distribution to
multiple destinations in multiple formats. Available at any
network-enabled scan device or from a user's desktop computer,
AccuRoute provides faster, more efficient workflows, while reducing
cost, complexity and risk. Omtool solutions are used worldwide by
businesses in document-intensive industries that demand secure
handling, integration and tracking of documents in full compliance
with a range of regulatory requirements. Based in Andover, Mass., with
offices in the United Kingdom, Omtool can be contacted at
1-800-886-7845 or www.omtool.com.

This press release contains forward-looking statements, including,
without limitation, statements regarding Omtool's objectives and
expectations for future financial and operating performance; customer
interest in Omtool's AccuRoute and other products; long-term sales
strategy; distribution channels and partner activity; and the future
plans of Omtool's management. These forward-looking statements are
neither promises nor guarantees, and are subject to risk and
uncertainties that could cause actual results to differ materially
from the expectations set forth in these forward-looking statements,
including but not limited to, risks associated with the continuation
of Omtool's operating losses; the pursuit of strategic, financial and
operating alternatives; the introduction of new product offerings,
including the AccuRoute software product; the success of Omtool's
channel sales strategies, business partner strategies and new sales
and marketing efforts; Omtool's investments in vertical markets,
including legal, financial services and healthcare; the continuation
of market demand for fax-based software solutions; fluctuations in
quarterly results of operations; changes in the regulatory
environment; dependence on continuing growth in the number of
organizations implementing secure electronic document exchange;
competition; product enhancements; product concentration; declines in
Omtool's legacy fax business; seasonality; international sales;
Omtool's ability to manage expansion; Omtool's ability to obtain
desired financing; acquisitions and integration of complementary
businesses; Omtool's ability to comply with the internal control over
financial reporting requirements of the Sarbanes-Oxley Act of 2002;
Omtool's continued compliance with the requirements of the OTC
Bulletin Board and the Pink Sheets; and those other risk factors
described in Omtool's periodic reports and registration statements as
filed with the Securities and Exchange Commission (SEC), including
Omtool's Annual Report on Form 10-K filed with the SEC on March 28,
2008. Reported results should not be considered an indication of
future performance. Readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the date
hereof. Omtool undertakes no responsibility to update any such
forward-looking statements.

The consolidated statement of operations and condensed
consolidated balance sheet follows.

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*T
OMTOOL, LTD.
Consolidated Summary Financial Data

Consolidated Statements of Operations
(in thousands except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
2008 2007 2008 2007
Revenue:
Software license $1,037 $1,281 $2,294 $2,329
Hardware 217 450 450 742
Media 143 144 276 314
Service and other 2,401 2,400 4,730 4,723
----------- ----------- ----------- -----------
Total revenue 3,798 4,275 7,750 8,108
----------- ----------- ----------- -----------
Cost of revenue:
Software license 107 107 198 209
Hardware 154 312 305 504
Media 85 88 162 190
Service and other 940 944 1,892 2,012
----------- ----------- ----------- -----------
Total cost of
revenue 1,286 1,451 2,557 2,915
----------- ----------- ----------- -----------
Gross profit 2,512 2,824 5,193 5,193
----------- ----------- ----------- -----------
Operating expenses:
Sales and marketing 1,470 1,870 3,146 4,067
Research and
development 693 730 1,394 1,610
General and
administrative 710 855 1,500 1,852
Restructuring - 131 - 343
----------- ----------- ----------- -----------
Total operating
expenses 2,873 3,586 6,040 7,872
----------- ----------- ----------- -----------
Loss from operations (361) (762) (847) (2,679)
Interest and other
expense, net (6) (17) (14) (47)
----------- ----------- ----------- -----------
Net Loss $(367) $(779) $(861) $(2,726)
=========== =========== =========== ===========

Net loss per share
Basic and diluted $(0.08) $(0.17) $(0.18) $(0.60)
=========== =========== =========== ===========

Weighted average
number of common
shares outstanding
Basic and diluted 4,733 4,543 4,696 4,512
=========== =========== =========== ===========
*T

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OMTOOL, LTD.
Consolidated Summary Financial Data

June 30, December 31,
Condensed Consolidated Balance Sheets 2008 2007
(Unaudited)
(in thousands)

Assets:
Cash and cash equivalents $2,057 $2,328
Unbilled accounts receivable 377 420
Accounts receivable, net 2,116 2,133
Inventory 102 76
Prepaids and other 411 369
----------- ------------
5,063 5,326
Property and equipment, net 1,187 1,278
Goodwill and intangibles, net 2,972 3,160
Unbilled accounts receivable, long-term 97 217
Other assets 292 291
----------- ------------
$9,611 $10,272
=========== ============
Liabilities and stockholders' equity:
Accounts payable $806 $950
Accrued liabilities 1,523 1,571
Deferred revenue, current 4,699 4,347
Note payable, current 561 561
Capital lease obligations, current 98 95
----------- ------------
7,687 7,524
Deferred revenue, long-term 699 524
Deferred rent 468 467
Note payable, long-term 421 702
Capital lease obligations, long-term 210 259
Stockholders' equity 126 796
----------- ------------
$9,611 $10,272
=========== ============
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Omtool, Ltd.
Dan Coccoluto, 978-327-5700
Chief Financial Officer
coccoluto@omtool.com
or
Blanc & Otus
Eric Snow, 617-451-7350
Investor Relations
esnow@blancandotus.com

Copyright Business Wire 2008