August 23, 2004

August 23, 2004

TERADYON, ISRAEL August 23, 2004 B.O.S. Better On-line Solutions Ltd. (the "Company" or "BOS") (NASDAQ: BOSC, TASE:BOS) announced today its financial results for the quarter ended June 30, 2004.

Financial results of Continuing Segments

  1. Revenues for the second quarter ended June 30, 2004 were $1.4 million, compared to $1.2 million for the quarter ended March 31, 2004 and $1.5 million for the quarter ended June 30, 2003. The net loss in the second quarter of 2004 was narrowed to $387,000 (or -$0.10 per share), compared to net loss of $437,000 or (-$0.10 per share) in the first quarter of 2004 and $969,000 or (-$0.25 per share) in the second quarter of 2003.
  2. Second quarter gross profit decreased to 49% of revenues, compared to 69% in the second quarter of 2003. The decrease mainly reflects lower revenues from more profitable products as well as from a change in the Company's product mix.
  3. The operating expenses for the second quarter narrowed to $1 million, compared to $2 million for the second quarter of 2003. The decrease mainly reflects the results of reorganization made during the second half of the year 2003.
  4. Revenues for the six months ended June 30, 2004, were $2.6 million, compared to $2.9 million for the six months ended June 30, 2003. The net loss for the six months ended June 30, 2004 was $824,000 or (-$0.20 per share), compared to a net loss of $1.9 million or (-$0.55 per share) for the six months ended June 30, 2003.
  5. As of June 30, 2004, the Company's balance sheet shows liquid financial resources (cash and equivalents, deposits and marketable securities) of $8 million and a convertible liability note (long and short term) of $1.9 million.
  6. Adiv Baruch, B.O.S.' CEO stated:
    "We are continuing to work according to our planned budget and we are in line with our expectations. During the quarter the revenues increased by 17.4% and the net loss decreased by 11.4%, compared to the first quarter of 2004, reflecting the strengthening of our communication VOIP product line. Also, we have finalized our $2 Million financing transaction from Laurus Master Fund Ltd., enabling us to move forward with our mergers and acquisitions and expansion plans."


Financial results of Discontinued Segment

  1. The Company discloses the financial information related to its US subsidiary, Pacific Information Systems, Inc. ("Pacinfo") in accordance with accounting standards for "discontinued operations".
  2. There was no significant operation in the discontinued segment in the six months ended June 30, 2004.


About B.O.S.

Through its wholly owned subsidiary, BOScom, the Company develops, produces and markets multi-functional, cross-enterprise communication and networking products. Marketed under the BOS?NOVA brand, these products are renowned for their simplicity of use, quality, and reliability.

Communication line offers VOIP innovative convergence migration solutions that leverage a corporation's existing equipment infrastructure.

The Connectivity line provides solutions for IBM midrange-to-PC and LAN connectivity and GUI emulation, and printing solutions that are operating system-independent.

Software Utilities line provides solutions for document design, distribution and management for a wide range of operating systems, including mainframe and UNIX.

B.O.S. (www.boscorporate.com) was established in 1990 and became a public company traded on the Nasdaq National Market in 1996 (Nasdaq:BOSC - News), and on the Tel Aviv Stock Market in 2002 (TASE:BOS).

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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