• Quarterly non - GAAP - operating income and break even at the bottom
  line
• Revenues of $5.7 million, up 27.6% as compared to revenues of second
  quarter of 2006
• Backlog of $7.8 million, 28% higher than the backlog at the beginning
  of the year 2007
• Reduction in operation expenses to $1.4 million from $1.6 million in
  the second quarter of 2006
• Financial expenses include non cash expenses related to the
  conversion of convertible notes in the amount of $611 thousand

Shmuel Koren, BOS's President and CEO, said: "I'm very proud in the Q2 results that reflect the implementation of our operating strategy to increase sales of existing products and expand our product offerings . After many years of losses, we show a non GAAP operating income and break even at the bottom line. In Q2, we were also able to significantly increase our product offerings, and are now well positioned to continue pursuing our objectives and implementing our strategy " Edouard Cukierman, BOS’s Chairman of the Board added: "We are very pleased with the Company’s Q2 results and look forward to the continuation of our positive trend and to the future sales of our new product offerings."

Revenues for the second quarter of 2007 amounted to $5.7 million, a 27.6% increase over the revenues in the second quarter of 2006 and a 5.6% increase over the revenues of the first quarter of 2007. Our backlog as of June 30, 2007 amounted to a record number of $7.8 million, reflecting a 28% increase over backlog as of the end of year 2006 and a 20% growth over the backlog as of the end of the first quarter of 2007.

Operating results show profits of $126 thousand on a non - GAAP basis (excluding option compensation and amortization of intangible assets) in the second quarter of 2007 as compared to a non - GAAP operating loss of $71 thousand in the second quarter of the year 2006. Operating loss in the second quarter of the year 2007, on a GAAP basis, was $90 thousand as compared to operating loss of $457 thousand in the second quarter of 2006. On June 21, 2007, we announced that Laurus Master Fund Ltd., the holder of our convertible notes, converted the entire outstanding principal amount of the notes, of approximately $ 2.2 million, into BOS Ordinary Shares. The conversion is expected to result in savings in financial expenses of approximately $250 thousand in the second half of 2007 and of approximately a total of $350 thousand in the years 2008 and 2009. As a result of the conversion, the Company recorded a one-time non-cash expense in the second quarter of 2007, in the amount of $611 thousand.

Financial expenses in the second quarter of 2007 were $159 thousand, of which $113 thousand are related to the aforementioned convertible notes and will not recur in the next quarters.

Income from continuing operations on a non - GAAP basis for the second quarter of year 2007 amounted to $3 thousand as compared to a non - GAAP loss of $186 thousand in the second quarter of the year 2006. Net loss on a GAAP basis for the second quarter of 2007 amounted to $824 thousand (or $0.09 per share) as compared to a net loss of $572 thousand (or $0.09 per share) in the second quarter of 2006 (excluding a gain of $609 thousand from discontinued operations). Net loss for the six months period ending June 30, 2007, amounted to $1,150 thousand (or $0.15 per share) compared to net loss of $732 thousand (or $0.10 per share) in the six month period ending June 30, 2006 (excluding a gain of $906 thousand from discontinued operations). Information with respect to non-GAAP reconciliation to GAAP accompanies the condensed financial statements in this release.

Liquidity and Capital Resources

• As of June 30, 2007, our shareholders' equity amounted to $18.5 million compared to $12.3 million in December 31, 2006. During the second quarter of 2007 we raised $4.4 million through a rights offering to our shareholders, $600 thousands through a private placement and $2.2 million of our debt was converted into equity.
• As of June 30, 2007 cash and cash equivalents increased to $5.6 million from $2 million in December 31, 2006.
• Loans were reduced to $4.4 million in June 30, 2007 from $5.3 million in December 31, 2006.

Product Highlights
We are focused on providing RFID & Software based solutions for the Enterprise market and were recently able to significantly expand our product offerings.

Below is a list of our products and solutions, which were developed and enhanced in the first half of 2007: - RFID solutions - by leveraging our expertise in enterprise connectivity and RFID technology, we are developing a fully integrated RFID solution that combines a seamless interface with business applications, system management, data transfer, hardware and support services.

• Data management - our next-generation tools help manage and control digital documents throughout the enterprise, providing a reliable and revolutionary solution for transferring encrypted data, and for backup recovery and retrieval.
• License management - a unique new solution for automatically monitoring concurrent license utilization, allowing enterprises to optimally load balance their license pools and increase ROI per license.
• Mobile Connectivity solutions - our workforce mobility solutions allow remote users to access and interact with enterprise applications and resources, anywhere and anytime. We support mobile connectivity solutions for IBM System i, UNIX and Blackberry environments.
• Bosanova System i - This family of branded middleware extends the compatibility of IBM's System i Servers with a variety of networks, mobile, printing and web-based applications and with RFID application environments.

About BOS
B.O.S Better Online Solutions Ltd. ("BOS") was established in 1990. BOS operates through two divisions based in Israel: (1) The Software Division, which provides specialized enterprise software, including IBM System i middleware, data and license management, mobile connectivity and RFID solutions; (2) The Supply Chain Division, which resells electronic systems and components for security, aerospace, networking and RFID. BOS is traded on NASDAQ and on the Tel-Aviv stock exchange. Our website is http://www.boscorporate.com.

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 our 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; 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.