March 29, 2012

March 29, 2012

*Ladies and gentleman, Thank you for standing by.   The conference will begin shortly.
B.O.S.

Ve’idan Conference Coordinator:
Ladies and gentlemen, thank you for standing by.
Welcome to the BOS 4th Quarter and full year 2011 results conference call.
All participants are at present in listen-only mode.   Following management’s formal presentation instructions will be given for the question and answer session.  
For operator assistance during the conference, please press *0.
As a reminder, this conference call is being recorded, and will be available on the BOS website as of tomorrow.

I would like to remind everyone that this conference call may contain projections or other forward-looking statements regarding future events or the future performance of the Company.   These statements are only predictions and may change as time passes.   B.O.S. does not assume any obligation to update that information.   Actual events or results may differ materially from those projected, including as a result of changing industry and market trends, reduced demand for our products, the timely development of our new products and their adoption by the market, increased competition in the industry and price reductions, as well as due to risks identified in the documents filed by the Company with the SEC."

I would now like to hand over the call to Mr. Yuval Viner, CEO of the company.  
Go ahead Yuval.
Thank you, and good morning to all our listeners in the US and good afternoon to those who are joining us from Israel and Europe.

Joining me today is Eyal Cohen, BOS CFO. 

Non cash expenses had an adverse effect on year 2011 results as well as on the losses reflected in our software product line. During the fourth quarter of 2011, we have successfully completed a restructuring of our software activity (related to the RFID division) which yieldeda positive gross profit in the fourth quarter of 2011. We anticipate this activity will continue improving in 2012. Recently, we announced the successful completion of our first RFID traceability project in Spain. We hope that this development will result in additional opportunities in Europe throughout year 2012.

Now, I’d like to turn over the call to Eyal Cohen.
 
Eyal Cohen:
Thanks you Yuval.

Year 2011 results were adversely affected by non cash items expenses and by a decrease in our gross margin as compared to year 2010.

Gross margin for year 2011 decreased to 19% from 25% in year 2010.

The major reasons for the gross margin decrease are the inventory write-off and the performance of our software product line.

Excluding these two elements, gross margin for year 2011 amounted to 21% as compared to 23% in year 2010, a 2 points decrease, which fairly presents markets conditions.

We expect a lower inventory write-off and a higher gross profit in the software product line in year 2012.

We have continued our efforts to reduce operating expenses. During the recent 12 months, we reduced our workforce by 17%  which we believe will positively affect our year 2012 financial results.

Year 2011 balance sheet reflects many improvements as compared to year 2010, in: decrease in account receivables days, decrease in inventory days and also a reduction of $1 million of loans.

Cash balance as of December 2011 amounted to $400 and an additional $400 in long term deposit.

This completes the financial review.  
Thank you.

Ve’idan Conference Coordinator:
Thank you, sir.   Ladies and Gentlemen, at this time we will begin the question and answer session.   If you have a question, please press *1.
If you wish to decline from the polling process please press *2
 If you are using speaker equipment, kindly lift the handset before pressing the numbers.   Your questions will be polled in the order they are received.    
 Please standby while we poll for your questions.

[I repeat, if you have a question please press *1]

The first question is from _______________of ________________.

If you have a question, please press *1.
If you wish to decline from the polling process please press *2
 If you are using speaker equipment, kindly lift the handset before pressing the numbers.   Your questions will be polled in the order they are received.    
 Please standby while we poll for your questions.

The next question is from _______________of ________________.

There are no questions at this time.
Before I ask Mr. Viner to go ahead with his closing statement, I would like to remind participants that a replay of this call will be available on the company website:  www.boscorporate.com  by tomorrow.
Mr. Viner would you like to make your concluding statement?

We are continuing our day to day efforts to efficient our operations, to improve our products, to strength our financial position, to expand the business overseas and to remain profitable. We are confident that we will overcome our challenges.

We ended year 2011 with a net loss on non gaap basis of $176,000 and we anticipate that we will end year 2012 with a net profit on a non-GAAP basis.

Thank you all for joining us today.

This concludes B.O.S.  4th Quarter and full year 2011 results conference call.  
Thank you for your participation.   You may go ahead and disconnect.

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