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TERADYON, Israel–(BUSINESS WIRE)–May 26, 2005–B.O.S. Better Online Solutions Ltd. (the “Company” or “BOS”) (NASDAQ:BOSC – News; TASE:BOSC) reported today its results for the quarter ended March 31, 2005.

Revenues for the first quarter of 2005 were $7.3 million, compared to $1.2 million for the first quarter of 2004. Our revenues increased mainly due to the consolidation of Odem Electronic Technologies 1992 (“Odem”) (related to the Electronic Component operating segment), which was acquired in November 2004, as well as an increase of 60% in the sales of the Connectivity and Communication operating segments (including Quasar Telecom (2004) Ltd., which began operating in late September 2004). Net loss for the first quarter of 2005 was $943,000 (or -$0.20 per share), compared to a net loss of $511,000 (or -$0.12 per share), for the comparable period in 2004.

Gross profit for the first quarter of 2005 was $1.96 million, or 27% of revenues, compared to $670,000, or 56% of revenues, for the first quarter of 2004. The lower gross margin is due mainly to the consolidation of Odem’s results since the gross margin of products sold by Odem is lower than the average gross margin of the Company’s other products.

Operating loss for the first quarter of 2005 was $533,000, compared to $452,000 for the first quarter of 2004.

Financial expenses for the first quarter of 2005 were $161,000, compared to financial income of $15,000, for the first quarter of 2004. The financial expenses reflect the interest expenses related to the convertible note of a $2 million principal amount issued in June 2004. During March 2005, $308,000 of the principal amount of the note were converted into 100,000 shares.

As of March 31, 2005, the Company’s balance sheet shows financial resources (cash, cash equivalents and marketable securities) of $4.5 million and loans (long and short term) of $3.5 million.

Adiv Baruch, BOS’ CEO stated: “The first quarter was characterized by growth, and an increase in revenues alongside an increase in sales and marketing costs. This increase in costs was needed in order to strengthen the sales and marketing infrastructure in correlation with the Company’s growth.”

Edouard Cukierman, Chairman of BOS commented: “I believe in the direction that the Company chose and its continuing implementation towards further growth. The Catalyst fund, of which I am the CEO, is participating as a lead investor in the new investment round in the Company.”

About BOS
BOS ( which is traded on the NASDAQ (NASDAQ: BOSC – News) and on Tel-Aviv stock exchange (TASE: BOSC), was established in 1990. Through its subsidiary BOScom Ltd. it develops and markets three types of products under the BOSaNOVA brand:

  • A communications products line provides innovative VoIP solutions to companies and organizations;
  • A connectivity products line provides connectivity solutions for IBM computers, from intermediate computers to personal computers and LAN networks; and
  • Software utilities products line provides solutions for the design, distribution and management documents for a range of operating systems, including mainframe and UNIX.

In addition BOS supplies cellular adapters based on products of Quasar Communication Systems Ltd., whose assets were acquired by BOS, and design components and services through the ODEM Division, based on Odem Electronic Technologies 1992 Ltd. in which a controlling stake was also recently acquired.

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