Bitstream Inc. (Nasdaq: BITS) today reported that total revenue increased by $1,884,000 or 35% to $7,319,000 for the three months ended June 30, 2011 as compared to total revenue of $5,435,000 for the three months ended June 30, 2010 and by $506,000 or 7% sequentially as compared to $6,813,000 for the three months ended March 31, 2011. The Company’s aggregate cash, cash equivalents, and investments at June 30, 2011 totaled $10,402,000, a decrease of $1,054,000 from a balance of $11,456,000 at March 31, 2011.

“We are pleased to report that revenues increased sequentially for the fifth consecutive quarter to $7,319,000 for the second quarter of 2011, exceeding the $7 million threshold for the first time,” said Amos Kaminski, Executive Chairman and Chief Executive Officer. “The increase from the prior year was the result of increased sales across all of our product lines, as well as across all of our channels. We are also pleased that Elly Perets has joined us as Vice President of Sales and Marketing for our publishing products. Elly will be responsible for managing all of the functions that support our goals for growth and market development, overseeing the direct selling effort, managing relationships with our OEM partners, as well as driving our marketing strategy and helping expand the reach of Pageflex products into new regions. As a result of our ongoing exploration of strategic alternatives, we continue to actively pursue a sale of the business, in whole or in part. No definitive agreements or understandings have been reached and there can be no assurance that any such transaction will be consummated.”

The increase in cost of license revenue for the three months ended June 30, 2011 as compared to the three months ended June 30, 2010 is due to the increase in direct third party cost of $774,000, which is primarily comprised of royalties from the sale of third party products of $499,000 and $244,000 from hosting fees for the browsing product line. Prior to the monetization of the browser user base, hosting fees had been classified as a research and development expense which was its primary function at that time. Cost of services increased primarily due to the additional personnel added with the iWay acquisition.

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