Aladdin Reports 3Q96 and Nine Months Results.

TEL AVIV, Israel--(BUSINESS WIRE)--Nov. 6, 1996--Aladdin Knowledge Systems Ltd. (NASDAQ/NMS: ALDNF) today reported third quarter 1996 sales rose 14 percent to $6.32 million compared with $5.54 million during third quarter 1995. For the nine months, sales rose 14 percent to $20.27 million compared with $17.80 million.

Net income for the third quarter reached $1.18 million, compared with net income of $1.15 million for the comparable 1995 quarter. Earnings per share for the third quarter were $0.12, based on 10.049 million shares outstanding, compared with $0.12 per share in the third quarter of 1995, based on 9.94 million shares outstanding.

Selling, general and administrative expenses were higher than last year, mainly due to the consolidation of both Aladdin Japan and of the new Aladdin office in Chicago.

"This is the first quarter following the acquisitions of FAST and Glenco. Even though revenues were up, earnings per share were flat due to the increase in the fixed costs necessary to gear the business to higher revenues," said Yanki Margalit, President & CEO. "We are confident that the growth of the software security market and the growth of Aladdin are on track."

Due to one-time combination and reorganization expenses associated with Aladdin's strategic business combination with FAST Software Security AG during the second quarter, the Company's net loss for the nine months was $5.21 million, compared with net income of $4.24 million in the same period last year.

Aladdin's nine months loss per share was $0.52, based on 10.016 million shares outstanding, compared with earnings per share of $0.43 in the comparable 1995 period, based on 9.84 million shares outstanding.

Aladdin's management will conduct a teleconference call on Thursday Nov. 7, at 10 a.m. (Eastern time) to discuss the Company's third quarter and nine months results. Those wishing to participate may call 719-386-9006, confirmation code 288692, shortly before 10 a.m.

Aladdin Knowledge Systems Ltd. is a leading supplier of advanced solutions for software developers. Aladdin develops, manufactures and markets proprietary software security and development systems, including HASP(R) and Hardlock(R), which combine hardware and software to prevent unauthorized use of computer programs, and ASE (The Aladdin Smartcard Environment), an integrated toolkit for developing PC-based smartcard applications. Aladdin has five international offices, distributors in more than 40 countries, and 20,000 clients in over 100 countries.

Statements contained in this press release which are not historical facts are forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to a number of risks and uncertainties which could cause actual results to differ materially from those projected. Such risks and uncertainties include in particular the size and timing of orders received during the quarter. -0-

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CONTACT: Aladdin

Nurit Benjamini, 972-3-636-2222

or

The Anne McBride Company Inc,

Katerina Charalambous, 212/752-0504