Hotel Outsource Management International, Inc. Presents Q3 2008 Results

Business Wire, Nov 14, 2008

NEW YORK -- Hotel Outsource Management International, Inc. ("HOMI") (OTCBB:HOUM) presented its consolidated financial results for the third quarter ended September 30, 2008.

Highlights:

* Revenues for the third quarter of 2008 were US$1,014,000, up 8.3% compared to the second quarter.

* Market penetration continued with a total of 4 installations completed and 16 agreements, signed with hotels worldwide for the installation and operation of the novel HOMI([R]) 336 and HOMI([R]) 330 systems.

Third quarter results:

Revenues for the quarter reached US$1,014,000, compared to US$960,000 in the third quarter of 2007, an increase of US$54,000 or 5.6%. Revenues also represent an increase of 8.3% compared to revenues of US$936,000 in the second quarter of 2008. The increase in revenues is as a result of the sales of refreshments in the HOMI([R]) 336 systems which were installed in additional hotels. For the three months ended September 30, 2008, HOMI's three largest customers accounted for approximately 31.32% of total revenues.

Gross Profit for the quarter, after consideration of depreciation expense, was US$337,000, compared to US$416,000 in the third quarter of 2007. Gross profit margin decreased from 43.3% to 33.2%. The decrease in the gross profit margin is mainly due to the fact that the cost of revenues already includes the full costs associated with the operation of the new HOMI([R]) 336 minibars. These systems have been installed, but, being new installations, have yet to realize their expected revenue potential.

Operating Loss for the quarter was US$261,000, compared to an operating loss of US$36,000 in the third quarter of 2007. Part of the increase is due to the fact that in the last quarter we have begun depreciating certain tools, molds and other assets related to the production process of the HOMI([R]) 336 systems. In addition, this quarter we have begun to depreciate the cost of the new HOMI([R]) 336 systems which were installed during the last two quarters. In addition, research and development expenses for the three months ended September 30, 2007 were $22,000 and $54,000 for the three months ended September 30, 2008. Selling and Marketing expenses increased as a result of the continued marketing efforts related to the HOMI([R]) 336 and HOMI([R]) 330 systems and the creation of new sales and marketing infrastructure for the new range of products. General and Administrative expenses increased due to additional consulting services that HOMI retained, to support the expected growth, as well as the expansion of HOMI's financial department and hiring a new President.

Net Loss for the quarter was US$498,000, compared to a net loss of US$20,000 in the third quarter of 2007, and a net loss of US$228,000 in the second quarter of 2008.

This quarter the company incurred financial expenses of US$222,000, compared to financial income of US$36,000 in the third quarter of 2007. The additional financial expenses are primarily due to currency exchange losses on US$ denominated intercompany balances which arose primarily due to the fact that this quarter the US$ gained strength against various currencies.

Cash and Cash Equivalents as of September 30, 2008 were US$848,000 compared to US$2,344,000 as of December 31, 2007. The company is currently in the process of raising funds from existing shareholders by means of rights offering.

Total Shareholders' Equity as of September 30, 2008 was US$4,970,000, compared to US$6,008,000 as of December 31, 2007.

Mr. Daniel Cohen, HOMI's President, commented: "During the third quarter we continued to focus on broadening our presence in target markets and have signed 2 new contracts for the installation of the HOMI([R]) 336 and HOMI([R]) 330 Computerized Minibar Systems. Additional agreements with 5 new hotels have been signed during October. To date, more than 3000 units of our minibars are either already installed or currently being manufactured. Revenues are growing and are expected to increase rapidly in the future. We need, however, to prepare HOMI for installing, maintaining and operating the systems in the additional hotels which requires an immediate increase in operating costs. We are also currently working on upgrades for the HOMI([R]) 336 minibars, aimed at improving the system's reliability and performance."

About HOMI

HOMI is a multi-national service provider in the hospitality industry, supplying a range of services in relation to computerized minibars that are primarily intended for in-room refreshments. HOMI was incorporated under the laws of Delaware in 2000 and is listed on the Over-the-Counter Bulletin Board, or "OTC Bulletin Board" under the symbol "HOUM.OB."

HOMI and its subsidiaries are engaged in the distribution, marketing and operation of computerized minibars in major branded hotel chains, operating approximately 8,500 computerized minibar systems at 22 hotels located in the United States, Europe, Israel, Australia and South Africa, and in the development and manufacture of a new range of computerized minibar systems, designed to improve the performance of minibar departments, and thereby improving the hotel's bottom line.