Marlborough Software Development Holdings Inc. ("MSDH") today reported that revenue decreased by $494,000 or 22% to $1,768,000 for the three months ended March 31, 2012 as compared to total revenue of $2,262,000 for the three months ended March 31, 2011. The Company's cash balance at March 31, 2012 totaled $5,558,000, an increase of $5,007,000 from a balance of $551,000 at December 31, 2011.

GAAP Loss
Our loss from operations increased $1,339,000 to $3,142,000 for the three months ended March 31, 2012, as compared to $1,803,000 for the three months ended March 31, 2011. Our net loss increased $1,400,000 to $3,220,000 or $0.30 per share for the three months ended March 31, 2012, as compared to $1,820,000 or $0.17 per share for the three months ended March 31, 2011.

Non-GAAP Loss
Our non-GAAP results exclude stock-based compensation expense, as well as the amortization of intangible assets primarily acquired from Press-Sense Ltd., and include MSDH expenses charged to Bitstream Inc. via our management fee agreement or allocated to Bitstream Inc. via our allocation methodology. Our non-GAAP loss from operations increased $334,000 to $2,441,000 for the three months ended March 31, 2012, as compared to $2,107,000 for the three months ended March 31, 2011. Our non-GAAP net loss increased $395,000 to $2,519,000 or $0.23 per share for the three months ended March 31, 2012, as compared to $2,124,000 or $0.20 per share for the three months ended March 31, 2011. A reconciliation between GAAP and non-GAAP results is provided at the end of this press release.

Commenting on these results, Pinhas Romik, President and Chief Executive Officer, noted that "the three months ended March 31, 2012 was a transitional period for us, one in which we were separated from Bitstream Inc. ("Bitstream" or our former "Parent") as the result of the distribution of our common stock to Bitstream shareholders on March 14, 2012, following which Bitstream merged with Monotype Imaging Inc. on March 19, 2012. So we have only recently been a fully independent company. At this point we believe the distraction and disruption to our business caused by the separation is primarily behind us." "As expected, revenue for the first quarter was down from the previous year. We believe that this is due in part to the distraction caused by the separation and merger transactions. In addition, based on previous experience we believe that the lower level of sales activity in the first quarter may be because print shops, currently our primary market, delayed investing in print-related hardware and software until the Drupa exposition, which is takes place during May 2012. Drupa is the largest print industry trade show and is held every four years in Dusseldorf, Germany." "The first quarter of this year has been a time of rebuilding and expansion for Pageflex. We have made significant progress in our efforts to expand the distribution of our products into international markets by opening offices in Brazil and in Eastern Europe. In addition, we have added additional distributors to our international network of distribution partners.

Finally, our international efforts have been aided by the globalization of our entire product line, including the localization of our software in ten languages. These new software versions will be released this summer. Together, these efforts will broaden our product distribution to new regions" said Mr. Romik.