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TERADYON, ISRAEL – May 17, 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 March 31, 2004.

First Quarter 2004 – Consolidated Statement of Operation – continuing segment:

Results of operations for the first quarter of year 2004 reflected the reorganization made during the second half of year 2003. The major actions that were taken were a) marketing our products through distributors in Europe instead of marketing through subsidiaries, which decreased the revenues and the gross profit due to the distributors’ margin, and b) reduction of headcount cost which reduced the operating expenses.

As a result of the reorganization and while continuing to support the extensive development of the Company’s distribution channels, the revenues of the first quarter of year 2004 were reduced by 15.6% to $1.2 million compared to $1.4 million for the first quarter of 2003. The net loss was reduced to $437,000 (or -$0.10 per share), compared to a net loss of $949,000 (or -$0.30 per share), for the first quarter of 2003.

The improvement of the operating results reflected in a significant decrease in the cash used in operating activities to $84,000 for the first quarter of year 2004 compared to $1.2 million for the first quarter of year 2003.

Adiv Baruch, B.O.S.’ CEO stated: “The first quarter results were in line with our expectations. We have introduced the Company’s strategic plan during the first quarter and we are working according to our budget plan. As part of the plan, we have decided to focus on three products lines: Connectivity solutions, Communication products, and Enterprise software utilities. This structure will enable the Company to leverage the existing assets with a clear path to market. If market conditions remain the same, we believe that the continuous marketing efforts to develop our global distribution and reseller channels for each of the products lines, shall improve our results in the second half of the year.”

Edouard Cukierman the Chairman of the Board stated: “During the first quarter, with the help of the new management, we focused on stabilizing the business, and now, with the additional talent on board, we will begin to explore our expansion opportunities both through generic growth and through merger and acquisitions strategy.”

First Quarter and the year 2004 – Discontinued Segment
The Company discloses the financial information related to its US subsidiary, Pacific Information Systems, Inc. (“Pacinfo”) in accordance with accounting standards for “discontinued operations”. There was no significant operation in the discontinued segment in the first quarter of year 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. 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).

For further information, please contact:
Mr. Nehemia Kaufman
Tel. +972-4-9907555

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.

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