B.V.R. Technologies Ltd. reports results for the first quarter of 1996.

TEL AVIV, Israel--(BUSINESS WIRE)--July 14, 1996--B.V.R. Technologies Ltd. (NASDAQ:BVRTF) today reported the results of its operations for the three months ended March 31, 1996. (All dollar amounts are approximate).

Total sales for the three months ended March 31, 1996 amounted to $4,775,000 compared to $2,137,000 for the first three months of 1995, an increase of 123.44%. Total sales for the year ended Dec. 31, 1995, amounted to $10,469,000. Revenues from long-term contracts are charged to income using the percentage-of-completion method. This method creates significant changes in periodic rate of sales. Backlog of orders increased to $49,322,000 to be supplied through 1998.

Gross profit for the period amounted to $1,883,000, representing 39% of sales, compared to $544,000, representing 25% of sales, for the first quarter of 1995. Gross profit for the whole of 1995 amounted to $2,427,000, representing 23% of sales. The growth in the gross margin is part of the company's effort to minimize the cost of sales by additional sales of products, which until now "absorbed" the higher costs of research and development.

The company had an operating loss for the three months ended March 31, 1996 totalling $991,000 compared to $1,030,000 for the first three months of 1995 (a decrease of 3.79%). Operating loss for the year ended Dec. 31, 1995 was $5,312,000.

The net income for the first three months of 1996 amounted to $704,000 compared to a net loss of $1,602,000 for the first three months of the last year. The net loss for the year ended Dec. 31, 1995 amounted to $7,082,000. In computing the net income for the period, the company's share in the losses of two affiliated companies, Nexus Telecommunication Systems Ltd. ("Nexus") and ITS Technologies (Pte.) Ltd. ("ITS"), was taken into account.

The company's share in losses of Nexus, in which the company had a 26.43% interest on March 31, 1996 (32.2% on Dec. 31, 1995), totalling $342,000, compared to a loss of $568,000 for the first three months of the previous year, and $1,919,000 for the year ended Dec. 31, 1995. The company recorded other income from the issue of shares by Nexus totalling $1,750,000 for the first three months of 1996, compared to $167,000 for the year ended Dec. 31, 1995. The company's share in the income of ITS, including amortization of negative goodwill, was $321,000, for the first three months of 1996. The company has a 49% interest in ITS.

Affiliate - Nexus

In November 1995, Nexus effected a private placement of securities, in which it raised $6.8 million in gross proceeds (before commissions and expenses) through the sale of 1.6 million units at a price of $4.25 per unit. Each unit consists of one ordinary share and one warrant exercisable through November 1997, at an exercise price of $6 per share. The proceeds were kept in an escrow account and were released to Nexus after registration of the units, as required by the Securities Act of 1933. The registration was declared effective by the United States Securities and Exchange Commission in December 1995, but the actual formal issuance was effected at the end of January 1996. As a consequence of this private placement, BVR's share holding in Nexus was reduced by approximately 6% to 26.43%, and the company thereby realized a gain of $1,750,000 in the first quarter of 1996.

EVR, Netgame and RT-SET

The results for the period also take into consideration the financial results of EVR. EVR, through RT-SET and Netgame, develops businesses in the entertainment industry, utilizing various new applications of BVR's proprietary simulation software. BVR's holding in EVR is 100%. Since its formation, EVR has invested in two companies, Netgame Ltd. ("Netgame"), of which EVR holds 60% of the outstanding shares, and Real-Time Synthesized Entertainment Technology Ltd. ("RT-SET"), of which EVR holds 66% of the outstanding shares (on Dec. 31, 1995 - 96%).

Netgame is developing hardware and software that will facilitate various interactive applications over the cable network. Netgame recently received a certificate from the Israeli Ministry of Communications to operate its systems in Israel. During the reported period, Netgame commenced site testing for its system under development with Cablevision, one of the largest Multiple System Operators (MSO) in the United States, with Telecom Eireann of Dublin, Ireland, and with Planet Internet Holdings, a subsidiary of KPN Multimedia of the Netherlands. Netgame is also currently negotiating potential cooperation agreements with several major United States MSO's.

Negotiations with the strategic partner, described in the financial statements of Dec. 31, 1995 have continued. Consultancy fees regarding the negotiations, accrued as of March 31, 1996, totalling approximately $350,000 will be charged to the statement of operations in case of failure of the negotiations.

Upon successful completion of certain stages of product development, and upon signing with the said investor, bonuses and management fees totalling approximately $500,000 will be payable. These stages of development had not been reached by March 31, 1996.

During the reported period, Netgame issued additional options to consultants and senior employees. As of March 31, 1996, the abovementioned options will entitle the holders to a 5% shareholding in Netgame.

RT-SET is developing virtual movie technology that will enable the integration of live studio filming with a virtual background. During 1995, RT-SET moved its activities to a major Israeli television studio where RT-SET can begin to produce programs based on the technology developed during the last year by RT-SET. The development of RT-SET's main product has been completed. RT-SET contributed $538,000 to the consolidated sales for the reported period.

As a result of the above, B.V.R.'s share in the losses of EVR, for the three months ended March 31, 1996, was $448,000, compared to $220,000 for the first three months of 1995 (an increase of 100.04%), and $2,328,000 for the year ended Dec. 31, 1995. The losses are primarily due to the increase of research and development costs and G&A expenses relating to the operations of EVR's subsidiaries.

In February 1996, BVR, RT-SET and EVR entered into an agreement with Chyron Corporation ("Chyron") according to RT-SET issued preferred shares of a new class to Chyron, representing 19% of the share capital of RT-SET. In addition, RT-SET granted Chyron an option to increase its holdings in RT-SET to a maximum of 51% of the share capital of RT-SET (in exchange for additional consideration on exercise of the option). In exchange, Chyron issued to RT-SET 800,000 ordinary shares of Chyron common stock and issued an additional 1,600,000 shares under certain registration of Chyron's shares will be held in Escrow and will be released to RT-SET on the fulfillment of certain conditions. In addition, Chyron was granted a conditional option to transfer the preferred stock back to RT-SET (in which case the 800,000 shares of Chyron, which have been transferred to RT-SET, would remain in the possession of RT-SET).

Chyron will assist in marketing, sales, and distribution of RT-SET's Virtual Reality Studio Systems alongside RT-SET's own specialized sales teams. Chyron will also provide infrastructure for installation, service, and support functions on a worldwide basis. In January 1996, Chyron purchased an RT-SET software system at an amount of $450,000, in order to develop specific software application programs for the television broadcast and high-end post-production markets.

On May 22, 1996, the company, RT-SET and Chyron signed an agreement with the Challenge Fund ETGAR L.P. ("the investors") according to which RT-SET issued the investors shares which entitle the investors to 11.7% of the ownership and control rights in RT-SET for consideration of US$2,024,000.

As a result of the transaction, the company's shareholding in RT-SET fell to 66%. In addition, the investors received an option to exchange their shares in RT-SET into approximately up to 190,000 ordinary shares of the company in accordance with the terms and conditions set in the agreement. The option will expire either in the event of an IPO of RT-SET common stock or on May 21, 1999, whichever is earlier.

In the second quarter of 1996, when the first contingency described was cleared, the company recorded its share in the increase of RT-SET's equity as a capital reserve of approximately $1,500,000, since the decrease in RT-SET's shareholding is still conditional.

Working Capital and Backlog

On March 31, 1996, the company had working capital amounting to $2,456,000 compared to $6,513,000 at March 31, 1995. (On Dec. 31, 1995, BVR had working capital amounting to $3,027,000). Backlog on March 31, 1996 totalled approximately $49,322,000 to be supplied through 1998. At present, a material part of the backlog to be supplied is under negotiation with one of the company's clients, which may result in the production work, currently included in the backlog, being performed on the client's premises. Although this will reduce the backlog the company will collect royalties on such production work.

B.V.R. Technologies Ltd. is engaged in the development, manufacture and marketing of advanced training and simulation systems for the aircraft and other industries. Nexus is engaged in the development, manufacture and marketing of low-energy wireless communications and location systems through applications of digital spread spectrum technologies. EVR is engaged in developing businesses in the entertainment industry, which will utilize civilian applications of the technologies developed by BVR for military use. -0-

B.V.R. Technologies Ltd.
Selected Financial Data
(US$ in thousands)

Statement of Income Data:
(Consolidated)
                                   Three Months Ended    Year Ended
                                        March 31,         Dec. 31,
                                    1996       1995         1995

Sales                              4,775       2,137       10,469
Gross profit                       1,883         544        2,427
Operating loss                      (991)     (1,030)      (5,312)
Income (loss) for the period         704      (1,602)      (7,082)
Income (loss) per share             0.12       (0.31)       (1.21)
Weighted average number of
 shares outstanding
 (in thousands)                    6,080       5,189        5,861

Figures for the Company Only
(excluding subsidiaries):

Sales                              4,237       2,107       10,442
Gross profit                       1,375         514        2,400
Operating loss                      (543)       (778)      (3,047)

Consolidated Balance Sheet Data:

                                       March 31,          Dec. 31,
                                   1996        1995         1995

Total assets                      21,051      23,761       19,933
Working capital                    2,456       6,513        3,027
Shareholders' equity               7,208      11,227        6,339

CONTACT: B.V.R. Technologies Ltd.

Yaron Sheinman, 972-3-571-5671