B.O.S. BETTER ONLINE SOLUTIONS LTD.

AND ITS SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2023

IN U.S. DOLLARS

UNAUDITED

INDEX

Page
Condensed Interim Consolidated Balance SheetsF-2 - F-3
Condensed Interim Consolidated Statements of OperationsF-4
Condensed Interim Consolidated Statements of Comprehensive IncomeF-5
Condensed Interim Consolidated Statements of Changes in Shareholders' EquityF-6
Condensed Interim Consolidated Statements of Cash FlowsF-7 - F-8
Notes to Condensed Interim Consolidated Financial StatementsF-9 - F-16

- - - - - - - - - -

F-1

B.O.S. BETTER ONLINE SOLUTIONS LTD.

AND ITS SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

June 30,
2023 		December 31,
2022
Unaudited Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,931 $ 1,763
Restricted bank deposits 144 130
Trade receivables (net of allowance for doubtful accounts of $148 and $82 at June 30, 2023 and December 31 2022, respectively) 11,011 10,834
Other accounts receivable and prepaid expenses 1,167 1,414
Inventories 7,667 6,433
Total current assets 21,920 20,574
NON-CURRENT ASSETS:
Long-term assets 244 260
Property and equipment, net 3,341 3,270
Operating lease right-of-use assets, net 955 1,110
Intangible assets, net 1,174 486
Goodwill 4,895 4,895
Total non-current assets 10,609 10,021
Total assets $ 32,529 $ 30,595

The accompanying notes are an integral part of the condensed interim consolidated financial statements.

F-2

B.O.S. BETTER ONLINE SOLUTIONS LTD.

AND ITS SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands (except share and per share data)

June 30,
2023 		December 31,
2022
Unaudited Audited
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of non-current loans $ 391 $ 586
Operating lease liabilities, current 235 301
Trade payables 7,801 7,984
Employees and payroll accruals 980 1,016
Deferred revenues 1,550 542
Advances net of inventory in progress 79 47
Accrued expenses and other liabilities 812 719
Total current liabilities 11,848 11,195
NON-CURRENT LIABILITIES:
Loans, net of current maturities 1,209 1,294
Operating lease liabilities, non-current 674 827
Deferred revenues 401 241
Accrued severance pay 363 404
Total non-current liabilities 2,647 2,766
COMMITMENTS AND CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY:
Share capital
Ordinary shares: Authorized; 11,000,000 shares at June 30, 2023 and December 31, 2022; Issued and outstanding: 5,740,518 and 5,701,518 shares at June 30, 2023 and December 31, 2022, respectively 84,915 84,830
Additional paid-in capital 1,228 1,179
Accumulated other comprehensive loss (243 ) (243 )
Accumulated deficit (67,866 ) (69,132 )
Total equity 18,034 16,634
Total liabilities and shareholders' equity $ 32,529 $ 30,595

The accompanying notes are an integral part of the condensed interim consolidated financial statements.

F-3

B.O.S. BETTER ONLINE SOLUTIONS LTD.

AND ITS SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands (except share and per share data)

Six months period ended
June 30,
2023 2022
Unaudited Unaudited
Revenues $ 23,478 $ 21,138
Cost of revenues 18,409 16,667
Gross profit $ 5,069 $ 4,471
Operating costs and expenses:
Research and development 78 87
Sales and marketing 2,470 2,384
General and administrative 912 999
Total operating costs and expenses 3,460 3,470
Operating income 1,609 1,001
Financial expenses, net (343 ) (529 )
Income before taxes on income 1,266 472
Taxes on income
-
-
Net income $ 1,266 $ 472
Basic and diluted net income per share
$ 0.22 $ 0.09
Weighted average number of shares used in computing net income per share:
Basic 5,707 5,395
Diluted 5,767 5,438

The accompanying notes are an integral part of the condensed interim consolidated financial statements.

F-4

B.O.S. BETTER ONLINE SOLUTIONS LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

U.S. dollars in thousands, except per share data

Six months period ended
June 30,
2023 2022
Unaudited Unaudited
Net income $ 1,266 $ 472
Cash flow hedging instruments:
Change in unrealized gains and losses
-
-
Gain in respect of derivative instruments designated for cash flow hedge, net of taxes
-
-
Other comprehensive gain
-
-
Comprehensive income $ 1,266 $ 472

The accompanying notes are an integral part of the consolidated financial statements.

F-5

B.O.S. BETTER ONLINE SOLUTIONS LTD.

AND ITS SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

U.S. dollars in thousands (except share data)

Ordinary
shares 		Share capital
and additional
paid-in
capital 		Accumulated
other
comprehensive
loss 		Accumulated
deficit 		Total shareholders'
equity
Balance as of January 1, 2022 5,250,518 $ 84,854 $ (243 ) $ (70,264 ) $ 14,347
Issuance of ordinary shares and warrants, net 450,000 911
-
-
911
Exercise of options into ordinary shares 1,000 2
-
-
2
Share-based compensation expense - 51
-
-
51
Net income -
-
-
472 472
Balance as of June 30, 2022 (unaudited) 5,701,518 $ 85,818 $ (243 ) $ (69,792 ) $ 15,783
Balance as of January 1, 2023 5,701,518 $ 86,009 $ (243 ) $ (69,132 ) $ 16,634
Issuance of ordinary shares and warrants, net -
-
-
-
-
Exercise of options into ordinary shares 39,000 85
-
-
85
Share-based compensation expense - 49
-
-
49
Net income -
-
-
1,266 1,266
Balance as of June 30, 2023 (unaudited) 5,740,518 $ 86,143 $ (243 ) $ (67,866 ) $ 18,034

The accompanying notes are an integral part of the condensed interim consolidated financial statements.

F-6

B.O.S. BETTER ONLINE SOLUTIONS LTD.

AND ITS SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

Six months period ended
June 30,
2023 2022
Unaudited
Cash flows from operating activities:
Net income $ 1,266 $ 472
Adjustments required to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 239 164
Interest and exchange rate of loans (83 ) (133 )
Severance pay, net (41 ) (31 )
Share-based compensation expenses 49 51
Increase in trade receivables, net (177 ) (830 )
Decrease (Increase) in other accounts receivable and other long term assets 263 (357 )
Increase in inventories (1,202 ) (156 )
Increase (decrease) in trade payables (183 ) 831
Decrease in operating lease liabilities (64 ) (124 )
Decrease (Increase) in employees and payroll accruals, deferred revenues, accrued expenses and other liabilities 809 (218 )
Net cash provided by (used in) operating activities $ 876 $ (331 )
Cash flows to investing activities:
Purchase of property and equipment (237 ) (394 )
Acquisition of assets (b) (344 ) (656 )
Net cash used in investing activities $ (581 ) $ (1,050 )

The accompanying notes are an integral part of the condensed interim consolidated financial statements.

F-7

B.O.S. BETTER ONLINE SOLUTIONS LTD.

AND ITS SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

Six months period ended
June 30,
2023 2022
Unaudited
Cash flows from financing activities:
Proceeds received from issuance units that consist of ordinary shares and warrants, net - 913
Proceeds received from issuance of shares upon options exercised, net 85 -
Proceeds received from loans 88 -
Repayment of loans (286 ) (399 )
Net cash provided by (used in) financing activities $ (113 ) $ 514
Change in cash and cash equivalents, and restricted cash 182 (867 )
Cash, cash equivalents and restricted cash at the beginning of the period 1,893 2,117
Cash, cash equivalents and restricted cash at the end of the period $ 2,075 $ 1,250
Supplementary cash flow activities:
(a) Cash paid during the period for:
Interest $ 198 $ 19

(b) Net cash used to pay for the acquisition of assets (see Note 5):

April 02,
2023
Suppliers relationship 761
Accrued expenses (417 )
Amount of cash paid 344

The accompanying notes are an integral part of the condensed interim consolidated financial statements.

F-8

B.O.S. BETTER ONLINE SOLUTIONS LTD.

AND ITS SUBSIDIARIES

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 1:-GENERAL
A. B.O.S. Better Online Solutions Ltd. ("BOS" or the "Company") is an Israeli corporation. The Company's shares are listed on NASDAQ under the ticker BOSC.
B. As of June 30, 2023, the Company has three operating segments that include Intelligent Robotics, RFID and Supply Chain Solutions.
C. The Company's wholly owned subsidiaries include:
1. BOS-Dimex Ltd., ("BOS-Dimex"), is an Israeli company that comprises the RFID segment. BOS-Dimex provides comprehensive turn-key solutions for Automatic Identification and Data Collection (AIDC), combining a mobile infrastructure with software applications of manufacturers that we represent. BOS-Dimex also offers on-site inventory count services in the fields of apparel, food, convenience and pharma as well as asset tagging and counting services for corporate and governmental entities.
2. BOS-Odem Ltd. ("BOS-Odem"), an Israeli company, is a distributor of electronic components to customers worldwide, mainly in the aerospace and defense industries. BOS-Odem is also a supply chain service provider for aviation customers that prefer to consolidate their component acquisitions through a supplier that is able to provide a comprehensive solution to their components-supply needs. BOS-Odem is part of the Supply Chain Solutions segment; and
3. Ruby-Tech Inc., a New York corporation, is a wholly owned subsidiary of BOS-Odem and a part of the Supply Chain Solutions segment.

F-9

B.O.S. BETTER ONLINE SOLUTIONS LTD.

AND ITS SUBSIDIARIES

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies applied in the financial statements of the Company as of December 31, 2022, were applied consistently in these financial statements.

A.Use of estimates in the preparation of financial statements

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. As applicable to these consolidated financial statements, the most significant estimates and assumptions include (i) net realizable value of the inventory, (ii) impairment analysis of goodwill and intangible assets, (iii) allowance for doubtful accounts; and (vi) revenue recognition.

B.Income per share

The Company computes net income per share in accordance with ASC 260, "Earnings per share". Basic income per share is computed by dividing net loss attributable to ordinary shareholders by the weighted-average number of ordinary shares outstanding during the period, net of the weighted average number of treasury shares (if any).

Diluted income per ordinary share is computed similar to basic income per share, except that the denominator is increased to include the number of additional potential ordinary shares that would have been outstanding if the potential ordinary shares had been issued and if the additional ordinary shares were dilutive. Potential ordinary shares are excluded from the computation for a period in which a net income is reported or if their effect is anti-dilutive.

An amount of 570,000 and 1.2 million weighted average outstanding options and warrants have been excluded from the calculation of the diluted net income per share for the period of six months ended June 30, 2023 and 2022, respectively, because the effect of the ordinary shares issuable as a result of the exercise or conversion of these instruments was determined to be anti-dilutive.

C.Reclassified amounts

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications did not have material effect on the reported results of operations, shareholder's equity or cash flows.

D.Recently issued accounting pronouncements

There are currently no accounting standards that have been issued but not yet adopted that we believe will have a significant impact on our consolidated financial position, results of operations or cash flows.

F-10

B.O.S. BETTER ONLINE SOLUTIONS LTD.

AND ITS SUBSIDIARIES

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 3:-UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

These accompanying unaudited condensed interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States for interim financial information. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company's financial position as of June 30, 2023 have been included. Operating results for the six-month period ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ended December 31, 2023, or any other interim period in the future.

The consolidated balance sheet at December 31, 2022 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles in the United States for complete financial statements.

The unaudited interim financial statements should be read in conjunction with the Company's annual financial statements and accompanying notes as of December 31, 2022 included in the Company's Annual Report on Form 20-F, filed with the Securities Exchange Commission on March 30, 2023.

NOTE 4:-INVENTORIES

Composition:

June 30,
2023 		December 31,
2022
Unaudited Audited
Raw materials $ 31 $ 177
Inventory in progress 955 1,750
Finished goods 6,973 5,788
Net - advances from customers (292 ) (1,282 )
$ 7,667 $ 6,433

F-11

B.O.S. BETTER ONLINE SOLUTIONS LTD.

AND ITS SUBSIDIARIES

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 5:-INTANGIBLE ASSETS, NET

A. Composition:

June 30,
2023

 December 31,
2022 		Weighted
average
amortization
period
Unaudited Audited
Cost:
Customer relationship 1,032 1,032 7-8.84
Suppliers relationship* 761
-
8.84
Non-competition 270 270 4
2,063 1,302
Accumulated amortization and impairments:
Customer relationship 776 758
Suppliers relationship 20
-
Non-competition 93 58
889 816
Amortized cost $ 1,174 $ 486
B. Amortization expenses amounting to $73 and $108 were recorded during the period of six months ended June 30, 2023 and the year ended December 31, 2022, respectively.
* On July 7, 2013, the Company entered into a profit sharing agreement with Proteus Ltd, providing for the joint market and sale of certain products.

On April 2, 2023, Proteus sold to the Company its share in the joint activity in consideration of $723, of which $138 was paid on signing and the rest is paid in monthly installments during a two year period.

Pursuant to the sale agreement, Proteus will gradually phase out its marketing and sale of the products until the end of 2023.

On May 31, 2023, the Company entered into an agreement with Microwave Ltd. for the purchase of its distribution rights for certain products, in consideration of $38, paid at signing.

F-12

B.O.S. BETTER ONLINE SOLUTIONS LTD.

AND ITS SUBSIDIARIES

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 6:- LEASES

We have entered into several non-cancellable operating lease agreements for our offices and vehicles. Our leases have original lease periods expiring between 2023 and 2034. Payments due under such lease contracts include primarily fix payments. We assume renewals in our determination of the lease term. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The components of lease costs, lease term and discount rate are as follows:

Six Months
Ended
June 30,
2023
(unaudited)
Operating lease cost:
Vehicles 91
Facilities rent 107
198
Remaining Lease Term
Vehicles 0.58 -2.34 years
Facilities rent 2.27-11.1 years
Weighted Average Discount Rate
Vehicles 2.02 %
Facilities rent 5.27 %

The following is a schedule, by years, of maturities of operating lease liabilities as of June 30, 2023:

June 30,
2023
(unaudited)
Period:
The remainder of 2023 178
2024 206
2025 140
2026 97
2027 63
2028-2034 467
Total operating lease payments 1,151
Less: imputed interest 242
Present value of lease liabilities 909

F-13

B.O.S. BETTER ONLINE SOLUTIONS LTD.

AND ITS SUBSIDIARIES

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 7:-SEGMENTS AND GEOGRAPHICAL INFORMATION

Commencing January 1, 2020 the Company presents its business operations in three reportable segments, consisting of the RFID segment, Supply Chain Solutions segment and the Intelligent Robotics segment.

The Company's management makes financial decisions and allocates resources, based on the information it receives from its internal management system. The Company allocates resources and assesses performance for each operating segment using information about revenues and gross profit.

a. Information about the operating segments for the six months ended June 30, 2023 and 2022 is as follows:
RFID Supply
Chain Solutions 		Intelligent Robotics Intercompany Consolidated
Six months ended June 30, 2023:
Revenues $ 6,948 $ 15,351 $ 1,257 $ (77 ) $ 23,478
Gross profit $ 1,796 $ 3,253 $ 20 $
-
$ 5,069
Allocated operating expenses $ 1,097 $ 1,859 $ 130 $
-
$ 3,086
Acquisition expenses $
-
-
-
-
$
-
Unallocated operating expenses
-
-
-
-
$ 374
Operating Income (loss) $ 699 $ 1,394 $ (110 ) $
-
$ 1,609
Financial expenses
-
-
-
-
$ (343 )
Net Income before tax
-
-
-
-
$ 1,266
Tax on income
-
-
-
-
$
-
Net Income
-
-
-
-
$ 1,266

F-14

B.O.S. BETTER ONLINE SOLUTIONS LTD.

AND ITS SUBSIDIARIES

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

NOTE 7:- SEGMENTS AND GEOGRAPHICAL INFORMATION - Cont.
RFID

Supply
Chain Solutions

 Intelligent Robotics Intercompany Consolidated
Six months ended June 30, 2022:
Revenues $ 7,693 $ 12,873 $ 572 $
-
$ 21,138
Gross profit $ 1,915 $ 2,575 $ (19 ) $
-
$ 4,471
Allocated operating expenses $ 1,209 $ 1,585 $ 271 $
-
$ 3,065
Acquisition expenses $ 44
-
-
-
$ 44
Unallocated operating expenses
-
-
-
-
$ 361
Operating Income (loss) $ 662 $ 990 $ (290 ) $
-
$ 1,001
Financial expenses
-
-
-
-
$ (529 )
Net Income before tax
-
-
-
-
$ 472
Tax on income
-
-
-
-
$
-
Net Income
-
-
-
-
$ 472
b. The following presents total revenues for the six months ended June 30, 2023 and 2022 based on the location of customers:
June 30,
2023 2022
Unaudited
Israel $ 19,765 $ 16,686
Far East 707 1,536
India 1,060 641
Europe 838 399
United States 1,080 1,733
Others 28 143
$ 23,478 $ 21,138

F-15

B.O.S. BETTER ONLINE SOLUTIONS LTD.

AND ITS SUBSIDIARIES

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except for per share prices)

NOTE 8:-SHAREHOLDERS' EQUITY
a. In June 2023, a total of 39,000 options were exercised for the amount of $85.
b. On May 2, 2022, the Company entered into a definitive agreement with several investors for the sale of 450,000 units, each consisting of one ordinary share and one half warrant to purchase an ordinary share, at a unit purchase price of $2.2. The warrants have an exercise price of $2.2 per ordinary share and are immediately exercisable into ordinary shares over a five-year term. The sale was made in a registered direct offering with a total gross amount of $990 or $911 net of incremental and direct issuance expenses.
c. In April 2022, a total of 1,000 options were exercised for the amount of $2.
NOTE 9:-SUBSEQUENT EVENTS

In July 2023, a total of 17,853 options were exercised for the amount of $18.

F-16

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Disclaimer

BOS - Better Online Solutions Ltd. published this content on 29 September 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 September 2023 22:00:44 UTC.