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B.O.S Announces Financial Results for Third Quarter of 2011

RISHON LEZION, Israel, November 30, 2011 (GLOBE NEWSWIRE) – B.O.S Better Online Solutions Ltd. (the “Company”, “BOS”) (Nasdaq: BOSC), a leading Israeli provider of RFID and Supply Chain solutions to global enterprises, today reported its financial results for the three and nine months ended September 30, 2011.

On a GAAP basis, the Company had a net loss of $826,000, for the three months ended September 30, 2011 as compared to net income of $10,000 in the three months ended September 30, 2010 (and a net loss of $324,000 in the three months ended June 30, 2011.) The Company had a net loss of $1,113,000 in the nine months ended September 30, 2011, as compared to net income of $25,000 in the nine months ended September 30, 2010.

On a non GAAP basis, the Company had a net loss of $381,000 for the three months ended September 30, 2011, as compared to net income of $288,000 for the three months ended September 30, 2010. The Company had a net loss of $20,000 for the nine months ended September 30, 2011, as compared to net income of $869,000 in the nine months of 2010.
The increase in loss on a GAAP basis in the third quarter resulted mainly from: (a) a reduction in the gross margin of the Supply Chain division (from 18.9% to 15%, or $200,000) due to increased competition, and  (b) a $150,000 loss related to currency hedging contracts.  The gross margin of our RFID & Mobile Solutions division increased from 21% in the second quarter to 23% in the third quarter, due to improved results of the software activity.

Yuval Viner, BOS CEO, stated: “We are continuing to invest in our software solutions, which are our strategic growth engine for the coming years. In the recent months we have made significant progress toward our goal to turn our software activity into a profitable business.

We have implemented cost reductions, which we expect will lower our expenses by $100,000 in the fourth quarter of 2011, and by an additional $70,000 in the first quarter of 2012. The cost reductions include non-cash savings in the amount of $20,000 per quarter, due to the voluntary waiver by our senior management of all of its unvested options, reflecting management’s commitment to the Company’s profitability targets.

     In light of the financial results, we are updating our forecast for 2011, as follows:
• Revenue forecast remains unchanged: we expect revenues to exceed $33 million.
• EBITDA forecast is reduced to $0.8 million, from our latest forecast of $1.4 million.
• Net profit, on a non-GAAP basis, will reflect a minor loss.”
Eyal Cohen, BOS CFO, said: “The previously announced conversion of our debt at a premium of 36% over the current share price, which is subject to shareholders’ approval, will result in: (a) a reduction in our short term liabilities by $3 million, (b) an increase in our equity by $2.5 million, (c) a reduction in our annual finance expense that amounted to $360,000 in the first nine months of 2011, and (d) an expected $1.5 million non cash expense in the fourth quarter of 2011, due to the reduced conversion share price.”
 Mr. Cohen added: “The cost reductions and the conversion will lower our expenses by approximately $1 million in 2012, and allow us to allocate additional funds for further development of our business.”

Conference Call
BOS will host a conference call on Thursday, December 1, 2011 at 10:00 a.m. Eastern Standard Time / 5:00 p.m. Israel Time. A question-and-answer session will follow management’s presentation. Interested parties may participate in the conference call by dialing the following numbers approximately five to ten minutes before the call start time:
 North America + 1-888-668-9141
Israel + 03-9180644
International + 972-3-9180644
For those unable to listen to the live call, a replay of the call will be available from the day after the call on BOS’s website, at:
B.O.S. Better Online Solutions Ltd.
Mr. Eyal Cohen, CFO

About BOS
B.O.S. Better Online Solutions Ltd. (Nasdaq:BOSC – News) is a leading provider of RFID and Supply Chain solutions to global enterprises. BOS’ RFID and mobile division offers both turnkey integration services as well as stand-alone products, including best-of-breed RFID and AIDC hardware and communications equipment, BOS middleware and industry-specific software applications. The Company’s supply chain division provides electronic components consolidation services to the aerospace, defense, medical and telecommunications industries as well as to enterprise customers worldwide.
For more information, please visit:
Use of Non-GAAP Financial Information
BOS reports financial results in accordance with U.S. GAAP and herein provides some non-GAAP measures. These non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures. These non-GAAP measures are intended to supplement the Company’s presentation of its financial results that are prepared in accordance with GAAP. The Company uses the non-GAAP measures presented to evaluate and manage the Company’s operations internally. The Company is also providing this information to assist investors in performing additional financial analysis that is consistent with financial models developed by research analysts who follow the Company. The reconciliation set forth below is provided in accordance with Regulation G and reconciles the non-GAAP financial measures with the most directly comparable GAAP financial measures.
Safe Harbor Regarding Forward-Looking Statements
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.  These risk factors and uncertainties include, amongst others, the dependency of sales being generated from one or few major customers, the uncertainty of BOS being able to maintain current gross profit margins, inability to keep up or ahead of technology and to succeed in a highly competitive industry, inability to maintain marketing and distribution arrangements and to expand our overseas markets, uncertainty with respect to the prospects of legal claims against BOS, the effect of exchange rate fluctuations, general worldwide economic conditions and continued availability of financing for working capital purposes and to refinance outstanding indebtedness; and additional risks and uncertainties detailed in BOS’s 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.

Click here to download the full Q3 2011 results

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