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B.O.S. Announces Net Profit In The Third Quarter And In The First Nine Months Of 2010

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 and 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.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(U.S. dollars in thousands, except per share amounts)
 
  Nine months ended  September 30, Three months ended September 30,
  2010 2009 2010 2009
  (Unaudited) (Unaudited)
         
Revenues $29,225 $25,096 $9,368 $8,043
Inventory allowance and write off (148) 1,202 7 1,258
Cost of revenues 22,554 19,361 7,256 6,372
Gross profit 6,819 4,533 2,105 413
         
Operating costs and expenses:        
Research and development  275 497 93 136
Sales and marketing  4,116 6,476 1,380 2,260
General and administrative  1,421 1,284 403 526
Impairment of goodwill -- 1,218 -- --
Total operating costs and expenses 5,812 9,475 1,876 2,922
         
Operating profit (loss)  1,007 (4,942) 229 (2,509)
Financial expenses, net  (971) (524) (300) (262)
Other income (expenses), net (51) (304) 37 (59)
Loss before taxes on income (15) (5,770) (34) (2,830)
Taxes benefit (tax on income) 40 (67) 44 125
Net income (loss) $25  $ (5,837) $10  $ (2,705)
         
Basic net income (loss) per share (*)  $0.01  $ (2.25) $0.004  $ (1.05)
         
Diluted net income (loss) per share (*) $0.01  $ (2.25) $0.004  $ (1.05)
         
Weighted average number of shares used in computing basic net earnings per share (*) 2,632,611 2,605,503 2,643,728 2,605,503
Weighted average number of shares used in computing diluted net earnings per share (*) 2,730,834 2,605,503 2,732,703 2,605,503
         
(*) All earnings (loss) per share data are reported after the effect of the 1 for 5 reverse split that occurred on January 12, 2010.
 
CONDENSED CONSOLIDATED BALANCE SHEET
(U.S. dollars in thousands)
     
  September 30, 2010 December 31, 2009
  (Unaudited) (Audited)
ASSETS    
     
CURRENT ASSETS:    
Cash and cash equivalents  $788 $597
Trade receivables, net 10,419 8,685
Other accounts receivable and prepaid expenses  911 1,043
Inventories 7,689 8,776
Investment in other company  -- 361
Total current assets 19,807 19,462
     
LONG-TERM ASSETS:    
Severance pay fund 662 652
Investment in other company  118 218
Other assets 152 123
Total long-term assets 932 993
     
PROPERTY, PLANT AND EQUIPMENT, NET 1,186 1,278
OTHER INTANGIBLE ASSETS, NET 1,583 1,999
GOODWILL 4,298 4,172
     
Total assets $27,806 $27,904
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
     
CURRENT LIABILITIES:    
Short-term bank loans and current maturities $11,579 $11,787
Trade payables  5,290 5,097
Employees and payroll accruals 634 652
Deferred revenues 746 731
Accrued expenses and other liabilities  1,062 1,226
Total Current Liabilities 19,311 19,493
     
LONG-TERM LIABILITIES:    
Long-term bank loans, net of current maturities 491 816
Deferred taxes and income tax accruals 334 377
Accrued severance pay 767 770
Convertible notes 2,354 1,886
Other long-term liabilities 632 919
Total long-term liabilities 4,578 4,768
     
SHAREHOLDERS' EQUITY 3,917 3,643
Total liabilities and shareholders' equity $27,806 $27,904
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (U.S. dollars in thousands)
 
  Nine months ended  September 30, Three months ended  September 30,
  2010 2009 2010 2009
  (Unaudited) (Unaudited)    
         
Cash flows provided by (used in) operating activities 854 (624) 560 942
         
Net cash used in investing activities (18) (1,225) (36) (178)
         
Net cash provided by (used in) financing activities (645) 1,920 (105) 133
         
Increase in cash and cash equivalents 191 71 419 897
         
Cash and equivalents at the beginning of the period 597 1,637 $369 811
         
Cash and cash equivalents at the end of the period $788 $1,708 $788 $1,708
 
CONDENSED CONSOLIDATED EBITDA
 (U.S. dollars in thousands)
         
  Nine months ended  September 30, Three months ended  September 30,
  2010 2009 2010 2009
  (Unaudited) (Unaudited)
         
         
Operating Profit (loss) $1,007  $ (4,942) $229  $ (2,509)
 Add:        
Amortization of intangible assets  437 267 223 86
Stock based compensation 181 451 61 173
Depreciation 200 156 66 55
Impairment of goodwill -- 1,218 -- --
         
EBITDA $1,825  $ (2,850) $579  $ (2,195)
CONTACT:  B.O.S. Better Online Solutions Ltd.
          Mr. Eyal Cohen, CFO
          +972-54-2525925
          eyalc@boscom.com

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