Hotel Outsource Management International, Inc. Presents Full Year 2008 Results

Business Wire, April 13, 2009

NEW YORK -- Hotel Outsource Management International, Inc. (“HOMI”) (OTCBB: HOUM) presented its consolidated financial results for the year ended December 31st, 2008.

Highlights:

• Market penetration continued on 2008 with a total of 9 installations completed and 16 agreements signed with hotels worldwide for the installation and operation of the novel HOMI® 336 and HOMI® 330 systems. The company signed 5 additional contracts since the beginning of 2009.
• Between January and February 2009, the Company completed a fund raising of approximately US$600,000, and converted another US$800,000 of debt into equity, a total of US$ 1.4 million.

Full Year 2008 results:

Revenues for the year ended December 31, 2008 reached US$3,700,000, compared to US$3,775,000 in the year ended December 31, 2007. The decrease in sales is due to the fact that a large part of sales are denominated in non-U.S. currencies most of which have lost strength against the U.S. dollar resulting in a decrease in revenues as reported in U.S. dollars. In addition, there was a decrease in occupancy rates in some of the countries in which HOMI operates, resulting in a decrease in minibar product consumption and accordingly in revenues, especially in Q4 2008.

For the year ended December 31, 2008, HOMI's three largest customers accounted for 30.3% of total revenues.

Gross Profit in 2008, after consideration of depreciation expense, was US$1,341,000, compared to US$1,562,000 in 2007. Gross profit margin decreased from 41.4% to 36.2%. The decrease in gross profit is in correlation to the decrease in revenues. The decrease in the gross profit margin is due to an increase of cost of revenues, mainly due to the introduction of our own computerized minibar, the HOMI® 336, in various countries. These systems have been installed, but, being new installations, have yet to realize their expected revenue potential.

Operating Loss in 2008 was US$1,286,000, compared to an operating loss of US$278,000 in 2007.

Selling and Marketing expenses increased primarily as a result of the marketing efforts related to the HOMI® 336 system. General and Administrative expenses increased due to the change of structure related to HOMI's becoming a manufacturer of its proprietary computerized minibars and in view of preparations to increase HOMI’s business from 2009 onward. HOMI increased its management and technical support platforms in order to support those changes, including management changes: appointed Daniel Cohen as President, added Renaud Escudier as VP operations in Europe, added a logistics manager and rented office space for the financial department and logistic department.

Net Loss in 2008 was US$1,974,000, compared to a net profit of US$450,000 in 2007. Excluding onetime gains in the amount of US$752,000, net loss in 2007 was US$302,000.

In 2008, the company incurred interest and financial expenses of US$680,000, mainly due to currency exchange rates changes.

Cash and Cash Equivalents as of December 31, 2008 were US$770,000 compared to US$2,344,000 as of December 31, 2007.

Total Shareholders' Equity as of December 31, 2008 was US$4,077,000, compared to US$6,008,000 as of December 31, 2007.

Mr. Daniel Cohen, HOMI’s President, stated: "2008 was a year in which we started HOMI's independent manufacture of our proprietary computerized minibar systems, the HOMI® 336 and 330. During the fourth quarter of 2008 and into the first quarter of 2009, we improved the system reliability using our experience from the first installations and then upgraded all our installations with the latest improvements.

"We are now efficiently developing, manufacturing, maintaining and managing our own systems, in addition to managing and maintaining the 7,000 units from previous years.

"During the year, we followed our strategic plan: expanding our business by focusing on three target markets: the United States, Europe and Israel. As a part of this plan we sold our interest in a fully owned South African subsidiary.

"We are quite pleased with the positive responses we are receiving from hotels, most of which are members of well known hotel chains. We believe that this shows that our new systems can accommodate 3 to 5 stars hotels.

"During 2008, we invested much time and resources to improve the reliability of our systems, as well as to create a proper marketing, installation and service infrastructure. Today we have nearly 3,000 HOMI 336 units operating in the US, Canada, Israel, UK, France and Spain. We expect to increase the number of installed and operating HOMI® 336 and HOMI® 330 units to 4,000 by June 2009.