March 27, 2006

March 27, 2006

B.O.S. Better Online Solutions Ltd. Reports Results for the Fourth Quarter and Year 2005 Reflecting a Fourth Quarter Breakeven

TERADYON, Israel--(BUSINESS WIRE)--March 27, 2006--B.O.S. Better Online Solutions Ltd. (the "Company" or "BOS") (NASDAQ: BOSC - News ; TASE:BOSC) reported today its results for the fourth quarter and year ended December 31, 2005.

Edouard Cukierman, Chairman of BOS stated: "After an extended period of losses, we broke-even in the fourth quarter of 2005. We are pleased with the transactions we consummated in 2005. We were able to restructure the company, sell and merge those divisions which were not our growth engines and generated a loss of over $2.4M in 2005, and strengthen our position going forward, on the basis of two profitable divisions: Odem and Connectivity."

Revenues for the fourth quarter of 2005 increased to $6.3M from $4.2M in the fourth quarter of 2004. Gross profit for the fourth quarter of 2005 represented a gross margin of 19.3%, compared to 36.7% in the fourth quarter of the year 2004. The increase in revenues and decrease in gross margin rate is attributed mainly to the consolidation, starting from November 18, 2004, of the results of operation of Odem Electronic Technologies 1992 Ltd. ("Odem") (related to the Electronic Component division).

Profit from continuing operations for the fourth quarter of year 2005 amounted to $22 thousands compared to a loss of $620 thousands for the fourth quarter of 2004.

Other income for the fourth quarter of 2005 includes capital gain of $779 thousands that related to the sale of the Communication division to IP Gear, a subsidiary of Qualmax Inc. (Pink Sheets: QMXI - News ). The operating loss of the Communication division amounted to $517 thousands in the fourth quarter of the year 2005.

Revenues for the year 2005 were $27M, an increase of 226% compared to $8.3M in the year 2004. The increase in revenues attributed mainly to the consolidation of Odem's results of operation since November 18, 2004.

Operating loss for the year 2005 amounted to $2.1M compared to loss of $1.5M in the year 2004. The operating loss for year 2005 attributed by the Communication division, which was sold, amounted to $2.4M.

Other income for year 2005 includes capital gain amounted to $1.1M that related to the sale of the Communication division in December 2005 and the sale of the Software Utilities product line in September 2005.

Equity in losses of an affiliated company, Surf Communication Solutions Ltd., amounted to $1.75M in the year 2005 as compared to $308 thousands in year 2004. The equity loss in the year 2005 includes a cost of $1.4M related to the impairment of the investment in Surf.

Minority interest in the earnings of a subsidiary (Odem) amounted to $223 thousands in the year 2005 as compared to $17 thousands in the year 2004. In November 2005 the Company increased its holding in Odem to 100%.

Loss from continuing operations for the year 2005 amounted to $3.6M (or -$0.64 per share) compared to a loss of $2M (or -$0.44 per share), in the year 2004.

As of December 31, 2005, the Company's balance sheet shows financial resources (cash, cash equivalents and marketable securities) of $3.7M and loans (long and short term) of $3.6M.

The Company's audited consolidated financial statements as of December 31, 2005, are being filed with the Securities and Exchange Commission on Form 6-K.

Adiv Baruch , BOS's CEO commented: "In the last two years the company completed several financing and M&A transactions. As a result, it is now well positioned to enhance profitability with its core assets as well as to develop new businesses and create future growth."

About BOS
B.O.S. Better Online Solutions Ltd. (the "Company" or "BOS") (NASDAQ:BOSC; TASE:BOSC) was established in 1990. Through its wholly owned subsidiaries, BOS activities are focused on two divisions:
Connectivity division, with products marketed under the BOSaNOVA brand name. These products deliver instant and transparent connectivity from IBM iSeries computers to personal computers, thin clients and browsers.

Electronic Components division, based on Odem Electronic Technologies 1992 Ltd., providing solutions in RFID, semiconductors, electronic components, CCD, imaging, networking, telecom and automation.

BOS, www.boscorporate.com is traded on NASDAQ and on the Tel-Aviv stock exchange.

The forward-looking statements contained herein reflect management's current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause the actual results to differ materially from those in the forward-looking statements, all of which are difficult to predict and many of which are beyond the control of BOS, including, but not limited to, those risks and uncertainties detailed in BOS' periodic reports and registration statements filed with the U.S. Securities Exchange Commission. BOS undertakes no obligation to publicly update or revise any such forward-looking statements to reflect any change in its expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

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