BackWeb Reports Q3 2006 Results and Will Host Business Overview Conference Call November 9th at 11:30 A.M. EST

  
    
  
  
    
      BackWeb Technologies Ltd. (Nasdaq: BWEB):
    
     Conference
 call:           Tomorrow, Thursday, Nov. 9th, 11:30 a.m. EST

 Dial-in
 numbers:        888-632-5950 or 713-481-1320 - 5-10 minutes
                 in advance

 Replay URL:     http://www.backweb.com/aboutus/investor_relations.cfm
    
      BackWeb Technologies Ltd. (Nasdaq: BWEB), a leading provider of offline 
      and mobile Web software, today reported financial results for its third 
      quarter and nine months ended September 30, 2006. The Company will hold 
      a conference call tomorrow at 11:30 a.m. EST (details above) to review 
      its business strategy and its year-to-date financial performance. All 
      investors are encouraged to participate in the call or to review the 
      replay which will be available online.
    
    
      BackWeb reported Q3 2006 revenue of $0.72 million, below revenue of 
      $1.14 million in Q2 2006 and revenue of $1.78 million in Q3 2005. The 
      decrease in total revenue is the result of lower license and consulting 
      revenue, offsetting strength in maintenance revenue. License revenue 
      declined as certain larger opportunities with customers were initiated 
      via smaller pilot projects as part of longer sales cycles. The pilots 
      carry with them the potential for additional and more substantial 
      revenue in future quarters as their results are reviewed. Pilots 
      initiated in the third quarter were with a branch of the U.S. Department 
      of Defense as well as with a major medical device manufacturer. 
      Consulting revenue was in line with Q2 2006 levels and lower as compared 
      to Q3 2005 due to the previously announced strategy of working with 
      services partners in some of the Company’s 
      services activities. Maintenance revenue continued to demonstrate strong 
      renewal trends as Q3 2006 maintenance revenue was $516,000, compared to 
      $493,000 in Q2 2006 and $504,000 in Q3 2005.
    
    
      License sales in the Q3 2006 period were $61,000 and reflected modest 
      sales to Novartis Pharmaceuticals and Abbot Vascular (which acquired the 
      vascular/endovascular businesses of Guidant, a previous BackWeb client), 
      as well as some revenue recognition from previously announced sales. 
      Additional license revenue of approximately $100,000 was booked with 
      other customers during the quarter and will be recognized in future 
      periods. As anticipated, Q3 2006 included no license revenue 
      contribution from F-Secure Corporation, whereas during Q3 2005 the 
      Company recognized license revenue of $375,000 from this customer 
      relating to a large one-time order.
    
    
      Including approximately $200,000 in severance and other costs for 
      personnel and expense reductions announced at the time of the Company’s 
      second quarter results, total net expenses in Q3 2006 were $2.3 million, 
      resulting in a net loss of $1.56 million, or $0.04 per share. This 
      compares to a net loss of $1.1 million, or $0.03 per share, in Q2 2006 
      and a net loss of $208,000, or $0.01 per share, in Q3 2005. Non-cash 
      stock-based compensation (FAS 123R) related expenses of approximately 
      $100,000 and $300,000, were included in operating expenses for Q3 2006 
      and the first nine months of 2006, respectively, with no comparable 
      expense reflected for Q3 2005 and the first nine month results of 2005.
    
    
      BackWeb’s CEO, Bill Heye, stated, “Obviously 
      our sales execution was below our expectations this quarter, though we 
      believe we have developed a good pipeline of larger-sized opportunities 
      for delivering valuable solutions to prospects. These opportunities 
      sometimes have long sales cycles that include initial pilots prior to 
      possible larger rollouts. We believe our strong maintenance renewals are 
      evidence of the lasting value our product delivers to customers, and the 
      main challenge we have in building the business is finding the most 
      profitable way to market and sell our product.
    
    
      “To that end, we are in the midst of a 
      transition from a heavily direct sales-oriented model to one that makes 
      substantial use of partner and channel marketing and sales. We believe 
      this transition is a key both to growing the business and managing our 
      operating expenses, but we must continue executing on direct sales even 
      while building our partnerships to enable growth. On the partner front 
      we have made important progress, announcing a new partnership last 
      month, and we believe we will see more progress in the coming quarters. 
      Of note, our existing partnerships were very active in the third 
      quarter. Our relationships with Oracle/PeopleSoft and a major service 
      partner led to the pilot engagement with the medical device 
      manufacturer, and our Department of Defense pilot was initiated in 
      conjunction with another of our major service partners.”
    
    
      Ken Holmes, BackWeb’s VP Finance said, “The 
      cost reductions we identified at the close of Q2 2006 have been largely 
      implemented and the benefit of these actions will begin to impact our 
      performance in Q4 2006. We are currently anticipating expense levels to 
      be approximately $1.8 million in Q4 2006, and we are in the process of 
      implementing further cost reductions that we believe should bring our 
      operating expenses down to approximately $1.5 million per quarter by Q1 
      or Q2 of 2007. These reductions involve personnel and non-personnel 
      expenses and further streamlining of our operations as we focus our 
      efforts and spending on our most productive go-to-market activities, 
      relationships and personnel.
    
    
      “Our cash position declined to $5.3 million 
      as of September 30, 2006. Given our cost reduction actions and 
      discipline, we believe BackWeb has sufficient capital to meet the needs 
      of our planned spending levels and to execute on our business plan in 
      the near term.”
    
    
      Nasdaq Non-Compliance:
    
    
      Mr. Holmes added, “With respect to our 
      previously announced non-compliance with the Nasdaq Capital Market’s 
      minimum requirements for continued listing, after thorough review by 
      management, advisors and the board of directors, we have decided to take 
      no action, such as a reverse split, to stay the expected delisting our 
      shares on or after January 16, 2007. Our decision was based on our 
      review of the requirements for continued listing, the costs, resources 
      and risks associated with efforts aimed at delaying or preventing such a 
      delisting, and the relative benefit of deploying our resources in 
      support of our business. If as expected, we do receive a determination 
      by Nasdaq to delist our common shares from the Capital Market, we intend 
      to actively pursue the transfer of our common stock listing to the OTC 
      Bulletin Board, an exchange that we believe provides adequate liquidity 
      for a company of our size.”
    
    
      About BackWeb Technologies:
    
    
      BackWeb (http://www.backweb.com) 
      mobilizes critical web applications and content for mobile workforces 
      and remote offices. Mobile professionals can be productive anytime, 
      anywhere, without interruption, regardless of connection status or 
      network availability. BackWeb's patented web and polite synchronization 
      mobile solution delivers a seamless and simple user experience. The 
      solution is commonly deployed to sales forces, field employees, mobile 
      managers and remote operations. Typical e-business applications include 
      enterprise sales force automation, CRM, e-learning and training and 
      Human Capital Management (HCM). Content examples include document 
      repositories and rich media.
    
    
      BackWeb customers include market leaders such as Boehringer Ingelheim, 
      Eastman Kodak, GE Healthcare, Hewlett-Packard, Johnson & Johnson, KLA 
      Tencor, Lam Research, and Pfizer. BackWeb also serves customers through 
      partnerships with BEA, Oracle PeopleSoft and SAP. BackWeb's operations 
      are centred in San Jose, California, New York, New York, and Rosh Ha 
      'akin, Israel. Make every minute of your mobile professional's day 
      productive; visit www.backweb.com 
      or call [phone].
    
    
      © 2006 BackWeb Technologies Ltd. All rights 
      reserved. BackWeb is a registered trademark and Offline Access Server is 
      a trademark of BackWeb Technologies Ltd. All other trademarks are 
      property of their respective owners.
    
    
      Cautionary Note regarding Forward-Looking Statements
    
    
      Statements in this news release, which are not purely historical, are 
      forward-looking statements within the meaning of Section 27A of the 
      Securities Act of 1933 and Section 21E of the Securities Exchange Act of 
      1934, including statements of beliefs, plans, expectations or intentions 
      regarding the future. Such forward-looking statements include, but are 
      not limited to, statements regarding: the demand for the Company’s 
      products and services and its pipeline of opportunities; the level of 
      activity and sales prospects with the Company’s 
      partners; that pilot or other larger future opportunities will mature 
      into future revenues; the Company’s ability 
      to transition from a heavily direct sales oriented model to one that 
      primarily depends on partner and channel sales; the Company’s 
      ability to execute on direct opportunities and to continue to build 
      partnerships; the adjustment of expense levels, and the expected benefit 
      of these actions in the future; and the Company’s 
      ability to regain compliance with NASDAQ’s 
      minimum bid price per share requirement. Actual results could differ 
      materially from those in such forward-looking statements. Factors that 
      could cause actual results to differ materially from expectations 
      include, but are not limited to: the Company has a history of operating 
      losses and expects to continue to incur losses; the uncertainty of 
      market acceptance of offline access products or our ability to license 
      those products to customers; general economic conditions or any downturn 
      in IT industry spending; the ability of BackWeb to develop innovative 
      technology and deliver solutions that meet customer needs; and the 
      potential emergence of competitive technologies or competitor companies. 
      In addition, please refer to our periodic filings with the Securities 
      and Exchange Commission, including our report on Form 10-Q for the 
      quarter ended June 30, 2006, which contain more detailed descriptions of 
      the risk factors facing our business. BackWeb assumes no obligation to 
      update any of the forward-looking statements in this release.
    
    
      
        
          
            BackWeb Technologies Ltd.
          
          
            Condensed Consolidated Statements of Operations
          
          
            (In thousands, except per share data)
          
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
          Three months ended
        
        
        
        
        
        
          Nine months ended
        
      
      
        
        
        
          September 30, 2006
        
        
        
        
        
        
          September 30, 2005
        
        
        
        
        
        
          September 30, 2006
        
        
        
        
        
        
          September 30, 2005
        
      
      
        
        
        
          Unaudited
        
        
        
        
        
        
          Unaudited
        
        
        
        
        
        
          Unaudited
        
        
        
        
        
        
          Unaudited
        
      
      
        
          Revenue:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          License
        
        
          $
        
        
          61 
        
        
        
        
        
        
          $
        
        
          942 
        
        
        
        
        
        
          $
        
        
          1,314 
        
        
        
        
        
        
          $
        
        
          2,569 
        
      
      
        
          Service
        
        
           
        
        
          663 
        
        
        
        
        
        
           
        
        
          840 
        
        
        
        
        
        
           
        
        
          2,208 
        
        
        
        
        
        
           
        
        
          2,588 
        
      
      
        
          Total revenue
        
        
        
        
          724 
        
        
        
        
        
        
        
        
          1,782 
        
        
        
        
        
        
        
        
          3,522 
        
        
        
        
        
        
        
        
          5,157 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Cost of revenue:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          License
        
        
        
        
          26 
        
        
        
        
        
        
        
        
          14 
        
        
        
        
        
        
        
        
          67 
        
        
        
        
        
        
        
        
          27 
        
      
      
        
          Service
        
        
           
        
        
          149 
        
        
        
        
        
        
           
        
        
          183 
        
        
        
        
        
        
           
        
        
          570 
        
        
        
        
        
        
           
        
        
          533 
        
      
      
        
          Total cost of revenue
        
        
           
        
        
          175 
        
        
        
        
        
        
           
        
        
          197 
        
        
        
        
        
        
           
        
        
          637 
        
        
        
        
        
        
           
        
        
          560 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Gross profit
        
        
           
        
        
          549 
        
        
        
        
        
        
           
        
        
          1,585 
        
        
        
        
        
        
           
        
        
          2,885 
        
        
        
        
        
        
           
        
        
          4,597 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Operating expenses:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Research and development
        
        
        
        
          541 
        
        
        
        
        
        
        
        
          530 
        
        
        
        
        
        
        
        
          1,742 
        
        
        
        
        
        
        
        
          1,670 
        
      
      
        
          Sales and marketing
        
        
        
        
          928 
        
        
        
        
        
        
        
        
          787 
        
        
        
        
        
        
        
        
          2,980 
        
        
        
        
        
        
        
        
          2,317 
        
      
      
        
          General and administrative
        
        
           
        
        
          699 
        
        
        
        
        
        
           
        
        
          511 
        
        
        
        
        
        
           
        
        
          1,780 
        
        
        
        
        
        
           
        
        
          1,359 
        
      
      
        
          Total operating expenses
        
        
           
        
        
          2,168 
        
        
        
        
        
        
           
        
        
          1,828 
        
        
        
        
        
        
           
        
        
          6,502 
        
        
        
        
        
        
           
        
        
          5,346 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Loss from operations
        
        
        
        
          (1,619)
        
        
        
        
        
        
        
        
          (208)
        
        
        
        
        
        
        
        
          (3,617)
        
        
        
        
        
        
        
        
          (749)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Finance and other income, net
        
        
           
        
        
          
            56 
          
        
        
        
        
        
        
           
        
        
          35 
        
        
        
        
        
        
           
        
        
          
            115 
          
        
        
        
        
        
        
           
        
        
          61 
        
      
      
        
          Net loss
        
        
          $
        
        
          
            (1,563)
          
        
        
        
        
        
        
          $
        
        
          (208)
        
        
        
        
        
        
          $
        
        
          
            (3,502)
          
        
        
        
        
        
        
          $
        
        
          (688)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net loss per share
        
        
          $
        
        
          (0.04)
        
        
        
        
        
        
          $
        
        
          (0.01)
        
        
        
        
        
        
          $
        
        
          (0.08)
        
        
        
        
        
        
          $
        
        
          (0.02)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Shares used in computing net loss per share
        
        
           
        
        
          41,266 
        
        
        
        
        
        
           
        
        
          41,036 
        
        
        
        
        
        
           
        
        
          
            41,229 
          
        
        
        
        
        
        
           
        
        
          
            40,971 
          
        
      
    
    
    
    
      
        
          
            BackWeb Technologies Ltd.
          
          
            Condensed Consolidated Balance Sheets
          
          
            (In thousands)
          
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          
          
        
        
          September 30,

          
            2006
          
        
        
        
        
          December 31,

          
            2005
          
        
      
      
        
        
        
          Unaudited
        
        
        
        
        
      
      
        
          ASSETS
        
        
        
        
        
        
        
      
      
        
          Current assets:
        
        
        
        
        
        
        
      
      
        
          Cash and investments
        
        
          $
        
        
          5,268 
        
        
        
        
          $
        
        
          7,876 
        
      
      
        
          Trade accounts receivable, net
        
        
        
        
          722 
        
        
        
        
        
        
          1,554 
        
      
      
        
          Other current assets
        
        
           
        
        
          424 
        
        
        
        
           
        
        
          325 
        
      
      
        
          Total current assets
        
        
        
        
          6,414 
        
        
        
        
        
        
          9,755 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Long-term investments and other assets
        
        
        
        
          44 
        
        
        
        
        
        
          35 
        
      
      
        
          Property and equipment, net
        
        
           
        
        
          158 
        
        
        
        
           
        
        
          213 
        
      
      
        
          Total assets
        
        
          $
        
        
          6,616 
        
        
        
        
          $
        
        
          10,003 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          LIABILITIES AND SHAREHOLDERS' EQUITY
        
        
        
        
        
        
        
      
      
        
          Current liabilities:
        
        
        
        
        
        
        
      
      
        
          Accounts payable and accrued liabilities
        
        
          $
        
        
          1,805 
        
        
        
        
          $
        
        
          1,978 
        
      
      
        
          Deferred revenue
        
        
           
        
        
          882 
        
        
        
        
           
        
        
          976 
        
      
      
        
          Total current liabilities
        
        
        
        
          2,687 
        
        
        
        
        
        
          2,954 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Long-term liabilities
        
        
          
            - 
          
        
        
        
        
        
        
          8 
        
      
      
        
          Total shareholders' equity
        
        
           
        
        
          3,929 
        
        
        
        
           
        
        
          7,041 
        
      
      
        
          Total liabilities and shareholders' equity
        
        
          $
        
        
          6,616 
        
        
        
        
          $
        
        
          10,003 
        
      
    
  
BackWeb Technologies Ltd. (Nasdaq: BWEB):

-0-
*T
 Conference
 call:           Tomorrow, Thursday, Nov. 9th, 11:30 a.m. EST

 Dial-in
 numbers:        888-632-5950 or 713-481-1320 - 5-10 minutes
                 in advance

 Replay URL:     http://www.backweb.com/aboutus/investor_relations.cfm
*T

   BackWeb Technologies Ltd. (Nasdaq: BWEB), a leading provider of
offline and mobile Web software, today reported financial results for
its third quarter and nine months ended September 30, 2006. The
Company will hold a conference call tomorrow at 11:30 a.m. EST
(details above) to review its business strategy and its year-to-date
financial performance. All investors are encouraged to participate in
the call or to review the replay which will be available online.

   BackWeb reported Q3 2006 revenue of $0.72 million, below revenue
of $1.14 million in Q2 2006 and revenue of $1.78 million in Q3 2005.
The decrease in total revenue is the result of lower license and
consulting revenue, offsetting strength in maintenance revenue.
License revenue declined as certain larger opportunities with
customers were initiated via smaller pilot projects as part of longer
sales cycles. The pilots carry with them the potential for additional
and more substantial revenue in future quarters as their results are
reviewed. Pilots initiated in the third quarter were with a branch of
the U.S. Department of Defense as well as with a major medical device
manufacturer. Consulting revenue was in line with Q2 2006 levels and
lower as compared to Q3 2005 due to the previously announced strategy
of working with services partners in some of the Company's services
activities. Maintenance revenue continued to demonstrate strong
renewal trends as Q3 2006 maintenance revenue was $516,000, compared
to $493,000 in Q2 2006 and $504,000 in Q3 2005.

   License sales in the Q3 2006 period were $61,000 and reflected
modest sales to Novartis Pharmaceuticals and Abbot Vascular (which
acquired the vascular/endovascular businesses of Guidant, a previous
BackWeb client), as well as some revenue recognition from previously
announced sales. Additional license revenue of approximately $100,000
was booked with other customers during the quarter and will be
recognized in future periods. As anticipated, Q3 2006 included no
license revenue contribution from F-Secure Corporation, whereas during
Q3 2005 the Company recognized license revenue of $375,000 from this
customer relating to a large one-time order.

   Including approximately $200,000 in severance and other costs for
personnel and expense reductions announced at the time of the
Company's second quarter results, total net expenses in Q3 2006 were
$2.3 million, resulting in a net loss of $1.56 million, or $0.04 per
share. This compares to a net loss of $1.1 million, or $0.03 per
share, in Q2 2006 and a net loss of $208,000, or $0.01 per share, in
Q3 2005. Non-cash stock-based compensation (FAS 123R) related expenses
of approximately $100,000 and $300,000, were included in operating
expenses for Q3 2006 and the first nine months of 2006, respectively,
with no comparable expense reflected for Q3 2005 and the first nine
month results of 2005.

   BackWeb's CEO, Bill Heye, stated, "Obviously our sales execution
was below our expectations this quarter, though we believe we have
developed a good pipeline of larger-sized opportunities for delivering
valuable solutions to prospects. These opportunities sometimes have
long sales cycles that include initial pilots prior to possible larger
rollouts. We believe our strong maintenance renewals are evidence of
the lasting value our product delivers to customers, and the main
challenge we have in building the business is finding the most
profitable way to market and sell our product.

   "To that end, we are in the midst of a transition from a heavily
direct sales-oriented model to one that makes substantial use of
partner and channel marketing and sales. We believe this transition is
a key both to growing the business and managing our operating
expenses, but we must continue executing on direct sales even while
building our partnerships to enable growth. On the partner front we
have made important progress, announcing a new partnership last month,
and we believe we will see more progress in the coming quarters. Of
note, our existing partnerships were very active in the third quarter.
Our relationships with Oracle/PeopleSoft and a major service partner
led to the pilot engagement with the medical device manufacturer, and
our Department of Defense pilot was initiated in conjunction with
another of our major service partners."

   Ken Holmes, BackWeb's VP Finance said, "The cost reductions we
identified at the close of Q2 2006 have been largely implemented and
the benefit of these actions will begin to impact our performance in
Q4 2006. We are currently anticipating expense levels to be
approximately $1.8 million in Q4 2006, and we are in the process of
implementing further cost reductions that we believe should bring our
operating expenses down to approximately $1.5 million per quarter by
Q1 or Q2 of 2007. These reductions involve personnel and non-personnel
expenses and further streamlining of our operations as we focus our
efforts and spending on our most productive go-to-market activities,
relationships and personnel.

   "Our cash position declined to $5.3 million as of September 30,
2006. Given our cost reduction actions and discipline, we believe
BackWeb has sufficient capital to meet the needs of our planned
spending levels and to execute on our business plan in the near term."

   Nasdaq Non-Compliance:

   Mr. Holmes added, "With respect to our previously announced
non-compliance with the Nasdaq Capital Market's minimum requirements
for continued listing, after thorough review by management, advisors
and the board of directors, we have decided to take no action, such as
a reverse split, to stay the expected delisting our shares on or after
January 16, 2007. Our decision was based on our review of the
requirements for continued listing, the costs, resources and risks
associated with efforts aimed at delaying or preventing such a
delisting, and the relative benefit of deploying our resources in
support of our business. If as expected, we do receive a determination
by Nasdaq to delist our common shares from the Capital Market, we
intend to actively pursue the transfer of our common stock listing to
the OTC Bulletin Board, an exchange that we believe provides adequate
liquidity for a company of our size."

   About BackWeb Technologies:

   BackWeb (http://www.backweb.com) mobilizes critical web
applications and content for mobile workforces and remote offices.
Mobile professionals can be productive anytime, anywhere, without
interruption, regardless of connection status or network availability.
BackWeb's patented web and polite synchronization mobile solution
delivers a seamless and simple user experience. The solution is
commonly deployed to sales forces, field employees, mobile managers
and remote operations. Typical e-business applications include
enterprise sales force automation, CRM, e-learning and training and
Human Capital Management (HCM). Content examples include document
repositories and rich media.

   BackWeb customers include market leaders such as Boehringer
Ingelheim, Eastman Kodak, GE Healthcare, Hewlett-Packard, Johnson &
Johnson, KLA Tencor, Lam Research, and Pfizer. BackWeb also serves
customers through partnerships with BEA, Oracle PeopleSoft and SAP.
BackWeb's operations are centred in San Jose, California, New York,
New York, and Rosh Ha 'akin, Israel. Make every minute of your mobile
professional's day productive; visit www.backweb.com or call (877)
222-5932.

   (C) 2006 BackWeb Technologies Ltd. All rights reserved. BackWeb is
a registered trademark and Offline Access Server is a trademark of
BackWeb Technologies Ltd. All other trademarks are property of their
respective owners.

   Cautionary Note regarding Forward-Looking Statements

   Statements in this news release, which are not purely historical,
are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934, including statements of beliefs, plans, expectations or
intentions regarding the future. Such forward-looking statements
include, but are not limited to, statements regarding: the demand for
the Company's products and services and its pipeline of opportunities;
the level of activity and sales prospects with the Company's partners;
that pilot or other larger future opportunities will mature into
future revenues; the Company's ability to transition from a heavily
direct sales oriented model to one that primarily depends on partner
and channel sales; the Company's ability to execute on direct
opportunities and to continue to build partnerships; the adjustment of
expense levels, and the expected benefit of these actions in the
future; and the Company's ability to regain compliance with NASDAQ's
minimum bid price per share requirement. Actual results could differ
materially from those in such forward-looking statements. Factors that
could cause actual results to differ materially from expectations
include, but are not limited to: the Company has a history of
operating losses and expects to continue to incur losses; the
uncertainty of market acceptance of offline access products or our
ability to license those products to customers; general economic
conditions or any downturn in IT industry spending; the ability of
BackWeb to develop innovative technology and deliver solutions that
meet customer needs; and the potential emergence of competitive
technologies or competitor companies. In addition, please refer to our
periodic filings with the Securities and Exchange Commission,
including our report on Form 10-Q for the quarter ended June 30, 2006,
which contain more detailed descriptions of the risk factors facing
our business. BackWeb assumes no obligation to update any of the
forward-looking statements in this release.

-0-
*T
                      BackWeb Technologies Ltd.
           Condensed Consolidated Statements of Operations
                (In thousands, except per share data)

                             Three months ended    Nine months ended
                            --------------------  --------------------
                            September  September  September  September
                             30, 2006   30, 2005   30, 2006   30, 2005
                            Unaudited  Unaudited  Unaudited  Unaudited
                            ---------  ---------  ---------  ---------
Revenue:
  License                    $    61    $   942    $ 1,314    $ 2,569
  Service                        663        840      2,208      2,588
                            ---------  ---------  ---------  ---------
          Total revenue          724      1,782      3,522      5,157

Cost of revenue:
  License                         26         14         67         27
  Service                        149        183        570        533
                            ---------  ---------  ---------  ---------
          Total cost of
           revenue               175        197        637        560
                            ---------  ---------  ---------  ---------

Gross profit                     549      1,585      2,885      4,597
                            ---------  ---------  ---------  ---------

Operating expenses:
   Research and development      541        530      1,742      1,670
   Sales and marketing           928        787      2,980      2,317
   General and
    administrative               699        511      1,780      1,359
                            ---------  ---------  ---------  ---------
          Total operating
           expenses            2,168      1,828      6,502      5,346
                            ---------  ---------  ---------  ---------

Loss from operations          (1,619)      (208)    (3,617)      (749)

 Finance and other income,
  net                             56         35        115         61
                            ---------  ---------  ---------  ---------
Net loss                     $(1,563)   $  (208)   $(3,502)   $  (688)
                            =========  =========  =========  =========

Net loss per share           $ (0.04)   $ (0.01)   $ (0.08)   $ (0.02)
                            =========  =========  =========  =========

 Shares used in computing
  net loss per share          41,266     41,036     41,229     40,971
                            =========  =========  =========  =========
*T

-0-
*T
                      BackWeb Technologies Ltd.
                Condensed Consolidated Balance Sheets
                            (In thousands)

                                           September 30,  December 31,
                                               2006           2005
                                             Unaudited
                                           -------------
ASSETS
Current assets:
   Cash and investments                        $  5,268       $ 7,876
   Trade accounts receivable, net                   722         1,554
   Other current assets                             424           325
                                           -------------  ------------
Total current assets                              6,414         9,755

Long-term investments and other assets               44            35
Property and equipment, net                         158           213
                                           -------------  ------------
     Total assets                              $  6,616       $10,003
                                           =============  ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable and accrued liabilities    $  1,805       $ 1,978
   Deferred revenue                                 882           976
                                           -------------  ------------
     Total current liabilities                    2,687         2,954

Long-term liabilities                                 -             8
Total shareholders' equity                        3,929         7,041
                                           -------------  ------------
     Total liabilities and shareholders'
      equity                                   $  6,616       $10,003
                                           =============  ============
*T