<< Q2 2007 Highlights

• - Total revenues were $7.9 million in the second quarter of fiscal 2007, an increase of 34% from $5.9 million in Q2 2006.
• - The Digital Imaging segment, which represented over 80% of revenues, grew by $2.7 million in the second quarter to $6.5 million of revenues.
• - Transaction volumes for RDM's Image & Transaction Management System (ITMS) averaged 1,271,000 items per week during the second quarter, compared to 618,000 items per week a year earlier, and 995,000 items per week in Q1 2007.
• - ITMS end user locations increased from 4,100 to 5,100 during the second quarter of 2007.
• - Gross profit was $3.4 million or 43% of revenues in the second quarter, compared to $2.6 million or 44% of revenues a year earlier.
• - Net earnings were $587,000 or $0.03 per share, compared to $208,000 or $0.01 per share in the previous year's second quarter. Subsequent Events
• - Subsequent to quarter-end, RDM announced Capture One, which was jointly developed with Epson Corporation. Capture One is a batch scanner and is designed for the emerging eCheck market which includes Remote Deposit Capture (ARC, BOC, Check 21, and Image Exchange) and Branch Automation. Capture One is powered by RDM's MICR Imaging and processing technologies.
• - The Company also announced that its RDM SYNERGY all-in-one POS payment solution will be distributed as part of the Back Office Capture solution by ProfitStars, a division of Jack Henry & Associates Inc., and that it had received Class B certification from Chase Paymentech which opens new distribution channels for RDM SYNERGY.
• - Also subsequent to the quarter, RDM announced that the shareholders and Board of Directors of Xign Corporation have signed an agreement to sell Xign. Upon completion of the transaction RDM expects cash proceeds of at least $9.0 million. The sale of RDM's minority interest in Xign is expected to result in a one-time gain of $0.12 to $0.18 per share, and will enable the Company to redeploy capital to growth opportunities.

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Financial Review RDM's revenues of $7.9 million in the three months ending March 31, 2007 represented growth of $2.0 million or 34% over the same period of 2006. The increase was attributable to growth in the Digital Imaging segment, which encompasses both scanner sales and the ITMS transaction revenue. Digital Imaging revenues grew by $2.7 million or 71% from a year earlier, driven by increasing adoption of remote deposit capture services. On a year-to-date basis, total revenues were $19.6 million in the first six months of fiscal 2007, compared to $10.9 million in the comparable period of 2006.

As disclosed in the Company's first quarter 2007 materials, scanner production levels were elevated in the first quarter as the Company worked through an order backlog that had built up as a result of strong demand. The Company shipped 20,000 scanners in the first quarter, of which 5,000 were attributable to orders not filled in the prior quarter. Second quarter 2007 scanner volume of 12,000 units are more representative of the current period's demand, and compares to 8,000 units a year earlier.

Revenues in the Electronic Payments Solutions segment, comprised of custom development projects for government agencies and financial institution customers, were $775,000 in the quarter compared to $1.6 million a year earlier. The Quality Assurance segment, comprised of quality control products sold to commercial check printers and processors, generated revenues of $594,000, compared to $502,000 in Q2 2006. Results in the two smaller segments were in line with management expectations, and both segments made a positive contribution to operating income in the quarter.

Gross profit grew by $0.7 million or 28% to $3.4 million. Expressed as a percentage of revenue, gross margin declined from 44% to 43% due to changes in the business mix.

Sales and marketing expense grew 42% to $901,000 in Q2 2007 as a result of increased sales efforts and activities associated with the Company's rapidly growing Digital Imaging segment. While revenues have grown significantly, costs have been well managed and the Company recorded modest year-over-year decreases in general and administration, research and development, and depreciation and amortization expenses. Interest and other income improved by $85,000 primarily due to higher cash balances and better interest rates. Total operating expenses increased only marginally to $2.5 million from $2.4 million a year earlier.

RDM's earnings from operations grew to $887,000 in the second quarter of 2007, from $208,000 in Q2 2006. The Company recognized a $300,000 income tax expense in the quarter, compared to no tax expense in the same period of 2006. Net earnings of $587,000, or $0.03 per share, represented 182% growth compared to $208,000 or $0.01 per share in the second quarter of 2006.

Operating activities generated $1.3 million of cash flow in the quarter, compared to $1.8 million in Q2 2006. Cash and equivalents increased $1.1 million during the quarter to $10.1 million. This balance does not include the impact of the sale of the Company's minority interest in Xign Corporation, which was announced April 18, 2007 and is expected to contribute approximately $9.0 million of cash proceeds by the end of RDM's current fiscal year.