Hotel Outsource Management International, Inc. Presents Q1 2009 Results

Business Wire, May 15, 2009

NEW YORK -- Hotel Outsource Management International, Inc. (“HOMI”) (OTC BB: HOUM.OB) presented its consolidated financial results for the third quarter ended March 31st, 2009.

Highlights:

• Market penetration continued during the first quarter of 2009, with 5 additional contracts signed with hotels worldwide for the installation and operation of the novel HOMI® 336 and HOMI® 330 systems - a total of 16 contracts and 9 installations completed.
• 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. HOMI is currently in the process of a second fund raising from existing shareholders by means of rights offering.

First quarter results:

Revenues for the first quarter ended March 31, 2009 reached US$676,000, compared to US$884,000 in the first quarter of 2008. 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, occupancy rates were seriously affected by the economic recession. This decrease in occupancy rates in the hotels in most of the countries in which HOMI operates, caused a 25% decrease in minibar product consumption and accordingly in revenues.

For the three months ended March 31, 2009, HOMI's three largest customers accounted for approximately 29.4% of total revenues.

Gross Profit for the quarter, after consideration of depreciation expense, was US$182,000, compared to US$353,000 in the first quarter of 2008. Gross profit margin decreased from 40.0% to 26.9%. Commencing the quarter ended March 31, 2009, HOMI has begun to depreciate the cost of the new HOMI® 336 systems which were installed during the past two quarters. The decrease in Gross Profit margin is mainly due to the fact that the cost of revenues already includes the costs associated with the installation and operation of the new HOMI® 336 minibars installed, while such minibars have not yet reached their expected revenue potential. While the material component of the costs was reduced in proportion to the decrease in revenues, menpower component was stable, engaging with installations and improvement of the new minibar systems.

Operating Loss for the quarter was US$448,000, compared to an operating loss of US$560,000 in the fourth quarter of 2008, and an operating loss of US$202,000 in the first quarter of 2008. In the first quarter of 2009, HOMI completed research and development of the advanced minibar system, HOMI® 330.

Selling and Marketing expenses decreased primarily as a result of the reduction of marketing efforts in favor of focusing on the new installations related to the HOMI® 336 and HOMI® 330 systems already signed, as well as enhancing the necessary operating platforms. General and Administrative expenses increased to US$550,000 compared to US$424,000 in the first quarter of 2008, 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, increasing its management and technical support platforms. G&A decreased compared to US$618,000 the fourth quarter of 2008, due to reduction of salaries of the senior management and an organizational streamlining.

Net Loss for the quarter was US$584,000, compared to a net loss of US$325,000 in the first quarter of 2008.

Cash and Cash Equivalents as of March 31, 2009 were US$384,000 compared to US$770,000 as of December 31, 2008. Between January and February 2009, HOMI completed a fund raising of approximately US$600,000, and converted another US$800,000 of debt into equity, a total of US$ 1,400,000. HOMI is currently in the process of a second fund raising from existing shareholders by means of rights offering.

Total Shareholders' Equity as of March 31, 2009 was US$4,830,000, compared to US$4,077,000 as of December 31, 2008.

Mr. Daniel Cohen, HOMI’s President, stated: "During the first quarter of 2009 we focused on completing the development of the HOMI® 336 and HOMI®330 minibar systems. We installed more than 1000 units for which we signed contracts. We also successfully upgraded and improved all units installed in 2008. That, in addition to managing and maintaining the existing 7,000 units from previous years."

"The global economic recession affected the hospitality industry, caused an important decrease in hotel occupancy worldwide, and significantly affected our revenues. Additionally, the strengthening of the US Dollar against non-US currencies affected the revenues in dollar terms. From the information we have it appears that lately there's a sense of improvement in occupancy rates world wide and we are encouraged by that. As we stated previously, we believe that we will see top line results starting the second quarter of 2009, as we complete the HOMI®336 and HOMI®330 installations."