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<SEC-DOCUMENT>0001178913-06-000072.txt : 20060112
<SEC-HEADER>0001178913-06-000072.hdr.sgml : 20060112
<ACCEPTANCE-DATETIME>20060112091523
ACCESSION NUMBER:		0001178913-06-000072
CONFORMED SUBMISSION TYPE:	F-3/A
PUBLIC DOCUMENT COUNT:		3
FILED AS OF DATE:		20060112
DATE AS OF CHANGE:		20060112

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			BOS BETTER ONLINE SOLUTIONS LTD
		CENTRAL INDEX KEY:			0001005516
		STANDARD INDUSTRIAL CLASSIFICATION:	COMPUTER COMMUNICATIONS EQUIPMENT [3576]
		IRS NUMBER:				0000000
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		F-3/A
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-130048
		FILM NUMBER:		06526061

	BUSINESS ADDRESS:	
		STREET 1:		100 BOS RD
		CITY:			TERADION ISRAEL
		STATE:			L3
		ZIP:			00000

	MAIL ADDRESS:	
		STREET 1:		TERADION INDUSTRIAL PARK
		CITY:			BEIT RABIN
		STATE:			L3
		ZIP:			20179
</SEC-HEADER>
<DOCUMENT>
<TYPE>F-3/A
<SEQUENCE>1
<FILENAME>zk62128.htm
<TEXT>
<HTML>
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     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        \\Backup\office\EDGAR Filing\BOS better online solutions Ltd\52030\a52030.eep -->
     <!-- Control Number: 52030                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    BOS better online solutions Ltd                                  -->
     <!-- Project Name:   F-3                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>F-3</TITLE>
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<BODY>


<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
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     <TD WIDTH="70%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">As filed with the Securities
and Exchange Commission on January 12, 2006 </FONT></TD>
     <TD WIDTH="30%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Registration No. 333-130048 </FONT></TD></TR>
</TABLE>
<BR>


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<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="3"><B>UNITED STATES</B> </FONT> <BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE="4"><B>SECURITIES AND EXCHANGE COMMISSION</B> </FONT> <BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2">Washington, D.C. 20549 </FONT> </P>

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<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> <B>AMENDMENT NO. 1<BR>
TO</B> </FONT>
<BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE="4"><B>FORM F-3</B> </FONT><BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE="3">REGISTRATION STATEMENT </FONT><BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE="3">UNDER THE SECURITIES ACT OF 1933 </FONT></P>

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<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="5"><B>B.O.S BETTER ONLINE SOLUTIONS LTD.</B> </FONT> <BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I>(Exact name of Registrant as specified in its charter)</I> </FONT> </P>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=50% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Israel</B> </FONT></TD>
     <TD WIDTH=50% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Not Applicable</B> </FONT></TD></TR>
<TR>
      <TD>&nbsp; </TD>
      <TD> </TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I>(State or other jurisdiction of</I> </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I>(I.R.S. Employer</I> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I>incorporation or organization)</I> </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I>Identification No.)</I> </FONT></TD></TR>
</TABLE>
<BR>


<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Beit Rabin, Teradyon Industrial Park,<BR>
Misgav, 20179, Israel<BR>
(+972) 4-990-7555<BR>
     <I>(Address and Telephone Number of Registrant's principal executive offices)</I>
</FONT></P>

<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Corporation Service Company<BR>
1133 Avenue of the Americas, Suite 3100<BR>
New York, NY 10036<BR>
Tel: (212) 299-9100<BR>
<I>(Name, address and telephone number of agent for service)</I> </FONT>
</P>


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<TR VALIGN="TOP">
     <TD WIDTH="100%"><HR SIZE="1" NOSHADE WIDTH="15%" ALIGN="CENTER"></TD></TR>
<TR VALIGN="TOP">
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Copies To:</FONT></TD></TR>
</TABLE>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B></B> </FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B></B> </FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=44% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Brian Brodrick, Esq.</B> </FONT> </TD>
     <TD WIDTH=55% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Shlomo Landress, Adv.</B> </FONT> </TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Phillips Nizer LLP</B> </FONT> </TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Amit, Pollak, Matalon &amp; Co.</B> </FONT> </TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>666 Fifth Avenue</B> </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>NYP Tower, 17 Yitzhak Sadeh Street</B> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>New York, New York 10103</B> </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Tel Aviv 67775, Israel</B> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>(212) 841-0700</B> </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>972-3-561-5268</B> </FONT></TD></TR>
</TABLE><BR>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Approximate
date of commencement of proposed sale to the public</B>: From time to time after this
registration statement becomes effective. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the only securities being registered on this Form are being offered pursuant to dividend
or interest reinvestment plans, please check the following box. <FONT size="3" face="Wingdings">o
</font> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
any of the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the
following box. <FONT size="3" face="Wingdings">x</font> </FONT></P>

<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
this Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the
same offering. <FONT size="3" face="Wingdings">o
</font> _______ </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities
Act, check the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. <FONT size="3" face="Wingdings">o
</font> ________ </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
this Form is a registration statement pursuant to General Instruction I.C. or a
post-effective amendment thereto that shall become effective upon filing with the
Commission pursuant to Rule 462(e) under the Securities Act, check the following
box. <FONT size="3" face="Wingdings">o
</font> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
this Form is a post-effective amendment to a registration statement filed pursuant to
General Instruction I.C. filed to register additional securities or additional classes of
securities pursuant to Rule 413(b) under the Securities Act, check the following box. <FONT size="3" face="Wingdings">o
</font> </FONT></P>

<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="100%"><HR SIZE="1" NOSHADE WIDTH="15%" ALIGN="CENTER"></TD></TR>
<TR VALIGN="TOP">
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>CALCULATION OF REGISTRATION FEE</B> </FONT></TD></TR>
</TABLE>
<BR>







<TABLE CELLPADDING="3" CELLSPACING="0" BORDER="1" WIDTH="100%">
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Title of Each Class<BR>of Securities to be Registered</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Amount to be<BR>Registered</FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Proposed Maximum<BR>Offering Price<BR>Per Share</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Proposed Maximum<BR>Aggregate Offering<BR>Price</FONT></TH>
     <TH ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Amount of<BR>Registration<BR>Fee</FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="40%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ordinary Shares, nominal value NIS 4.00 per share</FONT></TD>
     <TD WIDTH="15%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>953,698(1)(2)</FONT></TD>
     <TD WIDTH="15%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$2.42(3)</FONT></TD>
     <TD WIDTH="15%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$2,307,949(3)</FONT></TD>
     <TD WIDTH="15%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$247&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ordinary Shares, nominal value NIS 4.00 per share</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>572,219(2)(4)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$3.03(5)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$1,733,824(5)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$186&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ordinary Shares, nominal value NIS 4.00 per share</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>625,000(6)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$4.04(5)</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$2,525,000(5)</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$270&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Total</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2,150,917 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$6,566,773&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$703 (7) &nbsp;</FONT></TD></TR>
</TABLE>
<BR>


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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Represents
ordinary shares registered for resale by the selling shareholders. </FONT></TD>
</TR>
</TABLE>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Pursuant
to Rule 416 of the Securities Act of 1933, as amended, this
                    Registration Statement also includes additional ordinary shares
issuable upon                     stock splits, stock dividends or similar transactions. </FONT></TD>
</TR>
</TABLE>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Estimated
solely for the purpose of determining the registration fee pursuant to
                    Rule 457(c) of the Securities Act on the basis of the average of the
high and                     low sales prices of the Registrant&#146;s ordinary shares on
The Nasdaq National                     Market on November 29, 2005 </FONT></TD>
</TR>
</TABLE>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(4) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Represents
shares issuable upon exercise of warrants that were issued to the
                    selling shareholders. The exercise price under the warrants is $2.50
per                     ordinary share during the first year from the issuance, and
increasing to $2.75                     per ordinary share and $3.03 per ordinary share,
on the first and second                     anniversaries of the issuance, respectively. </FONT></TD>
</TR>
</TABLE>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(5) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Calculated
pursuant to Rule 457(g) of the Securities Act. </FONT></TD>
</TR>
</TABLE>


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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(6) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Represents 487,013 shares  issuable upon
conversion of $1.5 million in principal amount of the Registrant&#146;s
Secured Convertible Term Note due September 29, 2008 (the &#147;Note&#148;) at a fixed conversion price (subject to
adjustments) of $3.08 per shares, 64,935 shares issuable upon conversion of  interest thereon solely to the
extent of the mandatory interest conversion  feature set forth in  Section  2.1(b) of the Note, at a fixed
conversion price (subject to adjustments) of $3.08 per share and 73,052 shares issuable upon exercise of
warrants that were issued to the purchaser of the Note, at an exercise price of $4.04 per ordinary share. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(7) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Previously
paid in connection with the filing of the original registration statement on December 1,
     2005.</FONT></TD>
</TR>
</TABLE>
<BR>



<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Pursuant to Rule 429 under the
Securities Act, this Registration Statement contains a combined prospectus that also
relates to: (a) 130,000 ordinary shares issuable upon exercise of a warrant that was
issued to the purchaser of the Registrant&#146;s note in a private placement transaction
on June 10, 2004; and (b) 357,143 ordinary shares issued in a private placement
transaction on December 14, 2003. These shares were registered pursuant to the Registrant&#146;s
Registration Statement on Form F-3 (File No. 333- 117529). The Filing fee associated with
these shares was previously paid with such earlier registration statement.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Registrant hereby amends this
Registration Statement on such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in accordance with Section
8(a) of the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a), may
determine. </FONT></P>

<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="50%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">
<B>THE INFORMATION IN THIS PROSPECTUS
IS NOT COMPLETE AND MAY BE CHANGED. NO SELLING SHAREHOLDER MAY SELL THESE SECURITIES UNTIL
THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.
THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER
TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.</B>
</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD ALIGN="RIGHT"><HR SIZE="1" NOSHADE WIDTH="100%" ALIGN="CENTER"></TD></TR>
<TR VALIGN="TOP">
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">SUBJECT TO COMPLETION, DATED January  12, 2006 </FONT></TD></TR>
</TABLE>
<BR>







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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PROSPECTUS </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>B.O.S BETTER ONLINE
SOLUTIONS LTD. </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up to 2,638,060
Ordinary Shares </FONT></H1>

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<HR SIZE="1" NOSHADE WIDTH="20%" ALIGN="CENTER">

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The selling shareholders identified
in this prospectus, may offer to sell up to an aggregate of 2,638,060 of our ordinary
shares, consisting of the following: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>953,698
ordinary shares that were issued to the selling shareholders in a private placement in
June 2005. </FONT></TD>
</TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up
to 572,219 ordinary shares issuable upon the exercise of warrants which were issued to
the selling shareholders in the abovementioned private placement transaction. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up
to 625,000 ordinary shares issuable upon the conversion of a convertible note due
September 29, 2008 and upon the exercise of a warrant, both of which were issued by BOS
to the selling shareholder, Laurus Master Fund, in a private placement transaction on
September 29, 2005 and shares that are to be issued in lieu of cash interest payments on
the convertible note solely pursuant to the mandatory interest conversion feature of such
note. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up
to 130,000 ordinary shares issuable upon the exercise of a warrant, which was issued to
Laurus Master Fund in connection with a private placement offering on June 10, 2004. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>357,143
ordinary shares that were issued to the selling shareholders in a private placement
completed in December 2003. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOS is filing the registration
statement of which this prospectus is a part at this time primarily to fulfill a
contractual obligations to do so, which the company undertook at the time of the sale of
the shares and warrants. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our ordinary shares are traded on the
Nasdaq National Market, or NMS, under the symbol &#147;BOSC&#148; and on the Tel-Aviv
Stock Exchange under the symbol &#147;BOSC&#148;. On November 29, 2005, the last reported
sale price of our ordinary shares on the NMS was $2.42 per share. You are urged to obtain
current market quotations for the ordinary shares. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We will not receive any of the
proceeds from the sale of these ordinary shares other than the exercise price payable to
us upon the exercise of the warrants held by the selling shareholders. We have agreed to
bear all of the expenses in connection with the registration and sale of these ordinary
shares other than underwriting discounts and sales commissions. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>You should read both this prospectus
and any prospectus supplement, together with the additional information described under
the heading &#147;Incorporation of Certain Documents by Reference&#148; before you decide
to invest in our ordinary shares. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>INVESTING
IN OUR ORDINARY SHARES INVOLVES A HIGH DEGREE OF RISK. SEE &#147;RISK FACTORS&#148;
BEGINNING ON PAGE <U>5 </U>OF THIS PROSPECTUS TO READ ABOUT FACTORS YOU SHOULD CONSIDER
BEFORE PURCHASING OUR ORDINARY SHARES.</B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Neither
the Securities and Exchange Commission nor any state securities commission has approved or
disapproved of these securities or determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense</B>. </FONT></P>

<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD WIDTH="100%"><HR SIZE="1" NOSHADE WIDTH="25%" ALIGN="CENTER"></TD></TR>
<TR VALIGN="TOP">
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">The date of this prospectus is ________, 2006 </FONT></TD></TR>
</TABLE>
<BR>


<p align=center>
<font size=2></font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TABLE OF CONTENTS </FONT></H1>












<TABLE CELLPADDING=3 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Page</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=90% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk101">Prospectus Summary</a></FONT></TD>
     <TD WIDTH=10% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk102">The Offering</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk103">Risk Factors</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk104">Forward-Looking Statements</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk105">Recent Developments</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk106">Use of Proceeds</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk107">Selling Shareholders</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk108">Description of Ordinary Shares</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>19&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk109">Plan of Distribution</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>21&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk110">Validity of Securities</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk111">Experts</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk112">Where You Can Find More Information</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk113">Incorporation of Certain Documents by Reference</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>24&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><a href="#zk114">Enforceability of Civil Liabilities</a></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>25&nbsp;</FONT></TD></TR>
</TABLE><BR>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You
should rely only on the information contained or incorporated by reference in this
prospectus or any supplement. We have not authorized any other person to provide you with
different information. If anyone provides you with different or inconsistent information,
you should not rely on it. We are not, and any underwriter or agent is not, making an
offer to sell these securities in any jurisdiction where the offer or sale is not
permitted. You should assume that the information appearing in this prospectus is accurate
only as of the date on the front cover of this prospectus. Our business, financial
condition, results of operations and prospects may have changed since that date. </FONT></P>

<p align=center>
<font size=2>2</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<a name=zk101></a>



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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PROSPECTUS SUMMARY </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ABOUT THIS PROSPECTUS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
prospectus is part of a registration statement that we filed with the United States
Securities and Exchange Commission, or the SEC, utilizing a &#147;shelf&#148; registration
process. Under this shelf process, the selling shareholders may offer up to a total of
2,638,060 ordinary shares, from time to time, in one or more offerings in any manner
described under the section in this prospectus entitled &#147;Plan of Distribution.&#148; </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
prospectus does not contain all of the information set forth in the registration
statement, certain parts of which are omitted in accordance with the rules and regulations
of the SEC. Accordingly, you should refer to the registration statement and its exhibits
for further information about us and our ordinary shares. Copies of the registration
statement and its exhibits are on file with the SEC. Statements contained in this
prospectus concerning the documents we have filed with the SEC are not intended to be
comprehensive, and in each instance we refer you to copy of the actual document filed as
an exhibit to the registration statement or otherwise filed with the SEC. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have not authorized anyone to provide you with information different from that contained
or incorporated by reference in this prospectus. The selling shareholders are offering to
sell, and seeking offers to buy, our ordinary shares only in jurisdictions where offers
and sales are permitted. The information contained in this prospectus is accurate only as
of the date of this prospectus, regardless of the time of delivery of this prospectus or
of any sale of ordinary shares. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless
the context otherwise requires, all references in this prospectus to &#147;BOS,&#148;
&#147;we,&#148; &#147;our,&#148; &#147;our company,&#148; &#147;us&#148; and the
&#147;Company&#148; refer to BOS Better Online Solutions Ltd. and its consolidated
subsidiaries. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
references in this prospectus to &#147;ordinary shares&#148; refer to our ordinary shares,
nominal value NIS 4.00 per share. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
references in this prospectus to &#147;dollars&#148; or &#147;$&#148; are to United States
dollars. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
references in this prospectus to &#147;shekels&#148; or &#147;NIS&#148; are to New Israeli
Shekels. </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>THE COMPANY </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We were incorporated in Israel in
1990 and are subject to the Israel Companies Law 1999 &#150; 5759. We design, integrate
and test our products in our facilities in three locations in Israel. Our headquarters and
manufacturing facilities are located at Teradyon Industrial Zone, Misgav 20179 Israel. The
facilities of our subsidiaries, Odem Electronic Technologies 1992 Ltd. and Quasar Telecom
(2004) Ltd., are located in the center of Israel. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our telephone number is
972-4-990-7555 and our website address is www.boscorporate.com. The information contained
on, or linked from, our website is not a part of this prospectus. </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We currently manage our operation
through our two wholly-owned subsidiaries: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font></FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOScom
Ltd. that is engaged in connectivity solutions; and</FONT></TD>
</TR>
</TABLE>
<BR>



<p align=center>
<font size=2>3</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Odem
 Electronic  Technologies  1992 Ltd.  that is  engaged in the supply of  electronic
 components  and          solutions.</FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Through our wholly owned
subsidiaries, our activities are focused on two divisions: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Connectivity division, </B>with
products<B> </B>marketed under the BOSaNOVA brand name. These products deliver instant and
transparent connectivity from IBM iSeries computers to personal computers, thin clients
and browsers. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Electronic Components division,
</B>based on Odem Electronic Technologies 1992 Ltd., providing solutions in RFID,
semiconductors, electronic components, CCD, imaging, networking, telecom and automation. </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>An additional focus has been on the
<B>Communications division,</B> providing easy to install and affordable VoIP and cellular gateways solutions for businesses. The Company
sold its Communications Division&#146;s assets and liabilities in December 2005. See Recent Developments below. </FONT></P>


<a name=zk102></a>


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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>THE OFFERING </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>This prospectus relates to 2,638,060
ordinary shares that may be offered for sale by the selling shareholders, as follows: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>953,698
ordinary shares that were issued to the selling shareholders in a private placement in
June 2005. The ordinary shares were issued at a price per share of $2.30. </FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up to 572,219 ordinary shares are issuable
upon the exercise of warrants, which were issued by BOS to the
selling shareholders in the above mentioned private placement. The warrants are exercisable for three years
from their date of issuance. The exercise price is $2.50 per ordinary share during  the first year from
the issue date, and increasing to $2.75 per ordinary share and $3.03 per ordinary share, on the first and
second anniversaries of the issue date, respectively.  The warrant exercise price is subject to proportional
adjustment  in the event of combinations, subdivisions of the ordinary shares or if dividend is paid on the
ordinary shares in ordinary shares. </FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up
to 625,000 ordinary shares are issuable upon the conversion of a convertible note due
September 29, 2008 and upon the exercise of warrants, both of which were issued by BOS to
Laurus Master Fund in a private placement transaction on September 29, 2005, and shares
that are to be issued in lieu of cash interest payments on the convertible note solely
pursuant to the mandatory interest conversion feature of such note. For additional
details see &#147;Selling Shareholders&#148;. </FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up
to 130,000 ordinary shares are issuable upon the exercise of a warrant which was issued
by BOS to Laurus Master Fund in a private placement transaction on June 10, 2004. The
exercise price of the warrant is $4.04 per share, and it is subject to proportional
adjustment in the event of combinations, subdivisions of the ordinary shares or if dividend is
paid on the ordinary shares in ordinary shares. </FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>357,143
ordinary shares that were issued to the selling shareholders in a private placement
completed in December 2003. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOS is filing the registration
statement of which this prospectus is a part at this time primarily to fulfill its
contractual obligations to do so. Registration of the ordinary shares does not necessarily
mean that all or any portion of such ordinary shares will be offered for sale by the
selling shareholders. </FONT></P>

<p align=center>
<font size=2>4</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<a name=zk103></a>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>RISK FACTORS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>You
should carefully consider the risks described below and all the information contained or
incorporated by reference into this prospectus before making an investment decision
regarding our ordinary shares. The risks described below are not the only risks facing our
company. Our business, financial condition or results of operations could be materially
adversely affected by any of these risks. The trading price of our ordinary shares could
decline due to any of these risks, and you may lose all or part of your investment.</I> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Risks related to our business: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>The sales of our connectivity products in the US depend on
one master distributor. In the event that we encounter problems working with the master
distributor, we may experience an interruption in sales until an alternative source of
distribution can be found, which may have a material adverse effect on our business.</I></B> </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up until the fourth quarter of 2002,
we marketed our BOScom products in the USA through a US subsidiary (the BOS US division of
PacInfo). Currently, we market our products in the USA through one master distributor. In
2004 and the first nine months of 2005, sales of our BOScom products in the US market
accounted for 39% and 10%, respectively, of our sales. In the event that we cease working
with the master distributor, we may experience an interruption in sales until an
alternative source of distribution can be found, which may have a material adverse effect on
our business. </FONT></P>





<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B><I>A significant part of&nbsp;the
revenues generated by our wholly owned subsidiary, Odem Electronic Technologies 1992 Ltd.
(&#147;Odem&#148;), is from one major customer. An interruption in our business
relationship which such customer&nbsp;would&nbsp;adversely impact our financial results.</I></B>
</FONT></P>





<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
One of Odem&#146;s major customers
accounted for 11% of our revenues in the first nine months of 2005. An interruption in our
business relationship with such customer&nbsp;would result in a write-off of inventory and
would have an adverse effect on our business and results of operations.
</FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>In
2004 we completed the acquisitions of a controlling stake of Odem. In September 2005, we acquired another
23.9% of Odem&#146;s shares and in November 2005, we increased our holdings in Odem to 100%. The integration may
interrupt the activities of the combined companies and could have an adverse effect on the business, results
of operations, financial condition or prospects of BOS.</I></B> </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The abovementioned acquisition
involves the integration of companies that had previously operated
independently. The difficulties of combining the companies' operations included, and continue to be, but are
not limited to: the necessity of coordinating geographically separate organizations and integrating personnel
with diverse business backgrounds, potential difficulties in retaining employees and the associated adverse
effects on relationships with existing partners. The integration may interrupt the activities of the combined
companies&#146; businesses and may result in the loss of key personnel. This could have an adverse effect on our
business, results of operations, financial condition or prospects. </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>We are engaged in a highly
competitive industry, and if we are unable to keep up with or ahead of the technology our
sales could be adversely affected. </I></B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>IBM sells competing products to our
own, and can exercise significant customer influence and technology control in the IBM
host connectivity market. We may experience increased competition in the future from IBM
or other companies, which may adversely affect our ability to continue to market our
products and services successfully. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We also compete against various
companies that offer computer communications products based on other technologies that in
certain circumstances can be competitive in price and performance to our products. There
can be no assurance that these or other technologies will not capture a significant part
of the existing or potential IBM midrange computer communications market. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The market for our products is also
characterized by significant price competition. We may therefore face increasing pricing
pressures. There can be no assurance that competitors will not develop features or
functions similar to those of our products, or that we will be able to maintain a cost
advantage or that new companies will not enter these markets. </FONT></P>

<p align=center>
<font size=2>5</font></p>
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<page>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Some of our current and potential
competitors have longer operating histories, greater name recognition, access to larger
customer bases and significantly greater financial, technical and marketing resources than
ours. As a result, they may be able to adapt more quickly to new or emerging technologies
and changes in customer requirements or to devote greater resources to the promotion and
sale of their products, than us. </FONT></P>




<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>We recently sold
our Communication Division to Qualmax in exchange for shares of Qualmax Inc. Common Stock.
If Qualmax is not successful in its business, we may lose the value of our investment.</I></B> </FONT>
</P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On December
31, 2005 we closed a  transaction  for the sale of our  Communications  Division to Qualmax Ltd., a
wholly owned subsidiary of Qualmax Inc. (the &#147;Qualmax  Transaction&#148;).  The  consideration  was comprised mostly
of common stock of Qualmax  Inc.  Qualmax Inc.  has a limited  operating  history on which to judge  whether or
not this company will be  successful.  If Qualmax is not  successful in its business,  we may lose the value of
our investment. For additional information on the Qualmax Transaction see &#150; &#147;Recent Developments&#148; below.
</FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>As part of the Qualmax Transaction,
we granted Qualmax Ltd. a $1 million loan for three years. Failure of
Qualmax Ltd. to repay the loan would adversely impact our financial results.</I></B> </FONT></P>

<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>As part of
the Qualmax  Trasnaction,  we have granted to Qualmax Ltd. a three-year bridge loan in the amount of
$1 million.
</FONT></P>


<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In the first 18 months,
Qualmax  Ltd.  shall pay only the interest  accrued on the loan and monthly  principal
and interest  payments shall commence  thereafter.  As a security for the loan,  Qualmax Ltd. has granted BOS a
second  degree-subordinated  floating charge on its assets. The loan is also guaranteed by Qualmax Inc. Failure
of Qualmax to repay the loan would adversely impact our financial results.
</FONT></P>



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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>In late 2002 we decided
to wind up the business of our subsidiary, Pacific Information Systems, Inc.
(&#147;PacInfo&#148;),due to its severe financial situation. PacInfo has already
settled with a majority of its external creditors.</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The wind up process was accompanied
by settlements with a majority of PacInfo&#146;s creditors, however, there can be no
assurance that such a settlement will be reached with the remainder of the creditors, thus
resulting in additional costs to the Company. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Furthermore, certain actions
involving PacInfo, if occurred before the end of 2003, may have triggered a tax event for
PacInfo former owners (the &#147;Sellers&#148;), who sold PacInfo to the Company in 1998.
In such event, we may be obligated, under the purchase agreement, to grant the Sellers a
loan on a full recourse basis for certain tax payments the Sellers may be liable for,
currently estimated at approximately $2 million. The purchase agreement provides that the
Company is to receive a security interest in shares of the Company that the Sellers hold
at the time of the loan with a fair market value as of the date of the loan of at least
125% of the amount of the loan as security for the repayment of the loan. In addition, in
the event we are required to loan such sum to the Sellers, we may also be required to
reimburse the Sellers for certain interest on taxes that they may owe. It is possible that
the windup of PacInfo during 2002 and 2003 may have triggered such a tax event for the
Sellers, which would result in our obligation to loan the Sellers such amount and to
reimburse them for interest expenses incidental to the tax event. Such a loan and
reimbursement may have a material adverse affect on our business condition and results of
operations. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>If actual market
conditions prove less favorable than those projected by management, additional inventorywrite-downs
<BR>may be required</I></B> </FONT> </P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Inventories may be
written down for estimated obsolescence based upon assumptions about future demand and
market conditions and such write-downs could adversely affect our business condition and results of
operations. As of September 30, 2005, inventory is presented net of $240,000 general provision for
technological obsolescence and slow moving items. </FONT></P>



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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>We have had a history of
losses and our future levels of sales and ability to achieve profitability are unpredictable.</I></B> </FONT> </P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We have incurred net losses of
approximately $3.6 million for the first nine months of 2005, $2.1 million in 2004, $21
thousand in 2003 and $8.5 million in 2002. Our ability to maintain and improve future
levels of sales and to achieve profitability depends on many factors. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>These factors include: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font></FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
continued demand for our existing products;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
ability to develop and sell new products to meet customer needs;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>management's
ability to control costs and successfully implement our business strategy; and</FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>6</font></p>
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<page>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
ability to manufacture and deliver products in a timely manner.</FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>There can be no assurance that we
will experience any growth in sales or achieve profitability in the future or that the
levels of historic sales or profitability experienced during previous years will continue
in the future or that our net losses will not increase in the future. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>We depend on certain key
products for the bulk of our sales and if sales of these products decline, it would have a material adverse effect on us.</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We anticipate that our IBM midrange
related products will continue to account for a significant portion of our sales and
profitability. If sales of our IBM midrange products were to decline significantly for any
reason, or the profit margins on such products were to decrease significantly for any
reason (including in response to competitive pressures), our financial results would be
adversely affected. Over the past few years there has been a continuous global decrease in
sales and revenues from the connectivity solutions sector (also known as the legacy family
products). Although our revenues in this sector have decreased as a result, in comparison
to other players in this field, we have fared quite well, but there can be no assurance
that we will continue to do so. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To reduce the risk of such a decline
or decrease due to competitive pressures or technical obsolescence, we are continually
seeking to reduce costs, upgrade and expand the features of our IBM related products,
expand the applications for which the products can be used and increase marketing efforts
to generate new sales. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Although we are developing and
introducing new remote communications products and increasing our marketing efforts, there
can be no assurance that the planned enhancements or the new developments will be
commercially successful, or that we will be able to increase sales of our IBM midrange
products. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>If we are unsuccessful in
developing and introducing new products, we may be unable to expand our business.</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The market for some of our products
is characterized by rapidly changing technology and evolving industry standards. The
introduction of products embodying new technology and the emergence of new industry
standards can render existing products obsolete and unmarketable and can exert price
pressure on existing products. </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our ability to anticipate changes in
technology and industry standards and successfully develop and introduce new and enhanced
products as well as additional applications for existing products, in each case on a
timely basis, will be critical in our ability to grow and remain competitive. Although
these products are related to, and even incorporate our existing products, there can be no
assurance that we will be able to successfully develop and market any such new products.
If we are unable to develop products that are competitive in technology and price and
responsive to customer needs, for technological or other reasons, our business will be
materially adversely affected. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>We depend on key
personnel and need to be able to retain them and our other employees.</I></B> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our success depends, to a significant
extent, on the continued active participation of our executive officers, other members of
management and key technical and sales and marketing personnel. In addition, there is
significant competition for employees with technical expertise in our industry. Our
success will depend, in part on: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
ability to retain the employees who have assisted in the development of our products;</FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>7</font></p>
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<page>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
 ability to attract and retain  additional  qualified  personnel  to provide
 technological  depth and          support to enhance existing products and develop new
products; and</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
ability to attract and retain highly skilled computer operating, marketing and financial
personnel.</FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We cannot make assurances that we
will be successful in attracting, integrating, motivating and retaining key personnel. If
we are unable to retain our key personnel and attract additional qualified personnel as
and when needed, our business may be adversely affected. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I><B>Indemnification of
Directors and Officers</B></I> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company has agreements with its
directors and senior officers which provide, subject to Israeli law, for the Company to
indemnify these directors and senior officers for (a) monetary liability imposed upon them
in favor of a third party by a judgment, including a settlement or an arbitral award
confirmed by the court, as a result of an act or omission of such person in his capacity
as a director or officer of the Company, and (b) reasonable litigation expenses, including
attorney&#146;s fees, incurred by such a director or officer or imposed on him by a court,
in a proceeding brought against him by or on behalf of the Company or by a third party, or
in a criminal action in which he was acquitted, or in a criminal action which does not
require criminal intent in which he was convicted, in each case relating to acts or
omissions of such person in his capacity as a director or officer of the Company. Such
indemnification may materially adversely affect our financial condition. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I><B>We may be unable to
effectively manage our growth and expansion, and as a result, our business results may be adversely affected.</B></I> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our goal is to grow over the next few
years. The management of our growth, if any, will require the continued expansion of our
operational and financial control systems, as well as a significant increase in our
manufacturing, testing, quality control, delivery and service capabilities. These factors
could place a significant strain on our resources. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our inability to meet our
manufacturing and delivery commitments in a timely manner (as a result of unexpected
increases in orders, for example) could result in losses of sales, our exposure to
contractual penalties, costs or expenses, as well as damage to our reputation in the
marketplace. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our inability to manage growth
effectively could have a material adverse effect on our business, financial condition and
results of operations. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I><B>We have limited
experience in making acquisitions.</B></I> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We may wish to pursue the acquisition
of businesses, products and technologies that are complementary to ours. However, to date,
our management has had limited experience in making acquisitions. In June 1998, we
acquired PacInfo, which was based in Portland, Oregon, and in 2001 PacInfo acquired Dean
Technologies LLC (&#147;Dean Tech&#148;), which was based in Grapevine, Texas. Both
businesses have since ceased operations. In September 2004, we acquired the majority of
the assets of Quasar Communications Systems Ltd. In November 2004 we acquired 63.8% of the
outstanding shares of Odem Electronic Technologies 1992 Ltd. from its existing
shareholders. In September 2005, we acquired an additional 23.9% of Odem&#146;s shares and
in November 2005 we increased our holdings in Odem to 100%. Acquisitions involve a
number of other risks, including the difficulty of assimilating geographically diverse
operations and personnel of the acquired businesses or activities and of maintaining
uniform standards, controls, procedures and policies. There can be no assurance that we
will not encounter these and other problems in connection with any acquisitions we may
undertake. There can be no assurance that we will ultimately be effective in executing
additional acquisitions. Any failure to effectively integrate future acquisitions could
have an adverse effect on our business, operating results or financial condition.  </FONT></P>

<p align=center>
<font size=2>8</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I><B>The measures we take in
order to protect our intellectual property may not be efficient or sufficient.</B></I> </FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our success is dependent upon our
proprietary rights and technology. We currently rely on a combination of trade secrets,
copyright and trademark law, together with non-disclosure and invention assignment
agreements, to establish and protect the proprietary rights and technology used in our
products. Much of our proprietary information is not patentable. We generally enter into
confidentiality agreements with our employees, consultants, customers and potential
customers and limit the access to and the distribution of our proprietary information.
Despite these precautions, it may be possible for a third party to copy or otherwise
obtain and use our technology without authorization, or to develop similar technology
independently. We do not believe that our products and proprietary rights infringe upon
the proprietary rights of others. However, there can be no assurance that any other party
will not argue otherwise. The cost of responding and adequately protecting ourselves
against any such assertion may be material, whether or not the assertion is valid.
Further, the laws of certain countries in which we sell our products do not protect our
intellectual property rights to the same extent as do the laws of the United States.
Substantial unauthorized use of our products could have a material adverse effect on our
business. We cannot make assurances that our means of protecting our proprietary rights
will be adequate or that our competitors will not independently develop similar
technology. Additionally, there are risks that arise from the use of intranet networks and
the Internet. Although we utilize firewalls and protection software, we cannot be sure
that our proprietary information is secured against penetration. Such penetration, if
occurs, could have an adverse affect on our business. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I><B>We rely on certain key
suppliers for the supply of components in our products.</B></I> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We purchase certain components and
subassemblies used in our existing products from a single supplier or a limited number of
suppliers. In the event that any of our suppliers or subcontractors becomes unable to
fulfill our requirements in a timely manner, we may experience an interruption in
production until an alternative source of supply can be obtained, although we are of the
opinion that the level of inventory held by us would probably be sufficient to cover such
a period. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I><B>Fluctuations in our
operating results could result in lowered prices.</B></I> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our sales and profitability may vary
in any given year, and from quarter to quarter. In order to increase sales and enter into
new markets with new products we may find it necessary to decrease prices in order to be
competitive. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I><B>We have limited capital
resources and we may encounter difficulties raising capital.</B></I> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Continued expansion requires additional
resources and especially working capital. We may encounter difficulties raising capital
and securing credit lines. If our efforts to raise capital do not succeed, our efforts to
increase the business and to compete with our competitors may be seriously jeopardized,
thus having a materially adverse effect on our business. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I><B>There can be no assurance
that we will not be classified as a passive foreign investment company (a
&#147;PFIC&#148;).</B></I> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Based upon its current and projected
income, assets and activities, we do not believe that at this time the Company is a
passive foreign investment company (a &#147;PFIC&#148;) for US federal income tax
purposes, but there can be no assurance that we won&#146;t be classified as such in the
future. Such classification may have grave tax consequences for US shareholders. One
method of avoiding such tax consequences is by making a &#147;qualified electing
fund&#148; election for the first taxable year in which the Company is a PFIC. However,
such an election is conditioned upon our furnishing US shareholders annually with certain
tax information. We do not presently prepare or provide such information, and such
information may not be available to US shareholders if we are subsequently determined to
be a PFIC. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I><B>We may be required to pay
stamp taxes on documents executed by us on or after June&nbsp;2003.</B></I> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Israeli Stamp Tax on Documents
Law, 1961, or the &#147;Stamp Tax Law&#148;, provides that certain documents signed by
Israeli companies are subject to a stamp tax, generally at a rate of between 0.4% and 1%
of the value of the subject matter of the applicable document. As a result of an amendment
to the Stamp Tax Law that came into effect in June&nbsp;2003, the Israeli tax authorities
have commenced enforcement of the provisions of the Stamp Tax Law. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consequently, we may be liable to pay
stamp taxes on some or all of the documents we have signed since June&nbsp;2003, which
could have a material adverse effect on our results of operations. </FONT></P>

<p align=center>
<font size=2>9</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Recently promulgated
regulations provide for the cancellation of  the stamp tax with respect to documents
signed from January 1, 2006 onwards. </FONT></P>


<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I><B>We have significant sales
worldwide and could encounter problems if conditions change in the places where we market our products.</B></I> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We have sold and intend to continue
to sell our products in markets through distributors in North America, Europe and Asia. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A number of risks are inherent in
engaging in international transactions, including &#150; </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>international
sales and operations being limited or disrupted by longer sales and payment cycles,</FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>possible
encountering of problems in collecting receivables,</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>governmental
controls, or export license requirements being imposed,</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>political
and economic instability in foreign countries,</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>trade
restrictions or changes in tariffs being imposed, and</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>laws
and legal issues concerning foreign countries.</FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If we should encounter such
difficulties in conducting our international operations, it may adversely affect our
business condition and results of operations. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>As part of a global slow
down in technology markets, technology-focused corporations have suffered and as a result their shares have declined in value.</I></B> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our Company, like other technology
companies, has been significantly impacted by the  market slowdown in the
technology industry. Lately, the industry has been showing initial signs of recovery,
however, there can be no assurance that the technology market will fully recover or that
our operating results will not continue to suffer as a consequence. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>Inflation and foreign
currency fluctuations significantly impact on our business results.</I></B> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The vast majority of our sales are
made in US Dollars and most of our expenses are in US Dollars and New Israel Shekels
(&#147;NIS&#148;). The Dollar cost of our operations in Israel is influenced by the extent
to which any increase in the rate of inflation in Israel over the rate of inflation in the
United States is offset by the devaluation of the NIS in relation to the Dollar. Our
Dollar costs in Israel will increase if inflation in Israel exceeds the devaluation of the
NIS against the Dollar or if the timing of such devaluations lags behind inflation rate
increases in Israel. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Risks related to our location in
Israel: </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>Political, economic, and
security conditions in Israel affect our operations and may limit our ability to produce and
sell our products or provide our services.</I></B> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We are incorporated under the laws of
the State of Israel, where we also maintain our headquarters and our principal
manufacturing, research and development facilities. Political, economic, security and
military conditions in Israel directly influence us. We could be adversely affected by any
major hostilities involving Israel, the interruption or curtailment of trade between
Israel and its trading partners or a significant downturn in the economic or financial
condition of Israel. The future of the &#147;peace process&#148; with the Palestinians is
uncertain and has deteriorated due to Palestinian violence. Furthermore, the threat of a
large-scale attack by Palestinians on Israeli civilians and key infrastructure remains a
constant fear. The past four years of renewed terrorist attacks by the Palestinians has
severely affected the Israeli economy in many ways. In addition, several countries still
restrict business with Israel and with companies doing business in Israel. We could be
adversely affected by adverse developments in the &#147;peace process&#148; or by
restrictive laws or policies directed towards Israel or Israeli businesses. </FONT></P>

<p align=center>
<font size=2>10</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Generally, all nonexempt male adult
citizens and permanent residents of Israel, including some of the our officers and
employees, are obligated to perform military reserve duty annually, and are subject to
being called to active duty at any time under emergency circumstances. While we have
operated effectively under these requirements since its incorporation, we cannot predict
the full impact of such conditions on us in the future, particularly if emergency
circumstances occur. If many of our employees are called for active duty, our business may
be adversely affected. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Additionally, in recent years Israel
has been going through a period of recession in economic activity, resulting in low growth
rates and growing unemployment. Our operations could be adversely affected if the economic
conditions in Israel continue to deteriorate. Also, due to significant economic reforms
proposed by the Israeli government, there have been several general strikes and work
stoppages in 2003 and 2004, affecting all banks, airports and ports. These strikes have
had an adverse effect on the Israeli economy and on business. Following the passing of
laws to implement economic measures, the Israeli trade unions have threatened further
strikes or work stoppages, and these may have an adverse effect on the Israeli economy and
our business. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Furthermore, Israel is a party to
certain trade agreements with other countries, and material changes to these agreements
could have an adverse affect on our business. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>If the Israeli Government
programs that we benefit from are reduced or terminated, our costs and taxes may increase.</I></B> </FONT> </P>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Under the Israeli Law for
Encouragement of Capital Investments, 1959, facilities that meet certain conditions can
apply for &#147;Approved Enterprise&#148; status. This status confers certain benefits
including tax benefits. Our existing facilities have been designated as Approved
Enterprises. If we attain taxable income in Israel, these tax benefits will help reduce
our tax burden. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In addition, in order to maintain our
eligibility for the grants and tax benefits we receive, we must continue to satisfy
certain conditions, including making certain investments in fixed assets and operations
and achieving certain levels of exports. If we fail to satisfy such conditions in the
future, we could be required to refund tax benefits which may have been received with
interest and linkage differences to the Israeli Consumer Price Index. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Israeli Government authorities
have indicated that the government may reduce or eliminate these benefits in the future. A
termination or reduction of certain programs and tax benefits (particularly benefits
available to the Company as a result of the Approved Enterprise status of the
Company&#146;s facilities and programs) or a requirement to refund the tax benefits
already received, would have a material adverse effect on the Company&#146;s business,
operating results and financial condition. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Under the Law for the Encouragement
of Industrial Research and Development, 1984 (the &#147;Research Law&#148;), research and
development programs approved by a research committee appointed by the Israeli Government
are eligible for grants in exchange for payment to the Government of royalties from the
sale of products developed in accordance with the Program. Regulations issued under the
Research Law generally provide for the payment of royalties to the Office of the Chief
Scientist equal to 3.5% of sales of products developed as a result of a research project
so funded until 100% of the dollar-linked grant is repaid. Royalties payable with respect
to grants received under programs approved by the OCS after January 1, 1999, are subject
to interest on the U.S. dollar-linked value of the total grants received at the annual
rate of LIBOR applicable to U.S. dollar deposits on the date the grants were received. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Research Law requires that the
manufacture of any product developed as a result of research and development funded by the
Israeli Government take place in Israel. It also provides that know-how from the research
may not be transferred to third parties without the approval of the Israeli Office of the
Chief Scientist in the Ministry of Industry, Trade &amp; Labor. </FONT></P>

<p align=center>
<font size=2>11</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>The anti-takeover effects
of Israeli laws may delay or deter a change of control of the Company.</I></B> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Under the Israeli Companies Law, a
merger is generally required to be approved by the shareholders and Board of Directors of
each of the merging companies. Shareholder approval isn&#146;t required if the company
that will not survive is controlled by the surviving company. Additionally, the law
provides some exceptions to the shareholder approval requirement in the surviving company.
Shares held by a party to the merger and certain of its affiliates are not counted toward
the required approval. If the share capital of the company that will not be the surviving
company is divided into different classes of shares, the approval of each class is also
required. A merger may not be approved if the surviving company will not be able to
satisfy its obligations. At the request of a creditor, a court may block a merger on this
ground. In addition, a merger can be completed only after all approvals have been
submitted to the Israeli Registrar of Companies, provided that 30 days have elapsed since
shareholder approval was received and 50 days have passed from the time that a proposal
for approval of the merger was filed with the Registrar. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Israeli Companies Law provides
that an acquisition of shares in a public company must be made by means of a tender offer,
if as a result of the acquisition, the purchaser would become a holder of 25% or more of
the voting power at general meetings, and no other shareholder owns a 25% stake in the
Company. Similarly, the Israeli Companies Law provides that an acquisition of shares in a
public company must be made by means of a tender offer if, as a result of the acquisition,
the purchaser would become a holder of 45% or more of the voting power at general
meetings, unless someone else already holds 45% of the voting power. An acquisition from a
25% or 45% holder, which turns the purchaser into a 25% or 45% holder respectively, does
not require a tender offer. An exception to the tender offer requirement may also apply
when the additional voting power is obtained by means of a private placement approved by
the general meeting of shareholders. These rules also do not apply if the acquisition is
made by way of a merger. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Israeli Companies Law provides
specific rules and procedures for the acquisition of shares held by minority shareholders,
if the majority shareholder holds more than 90% of the outstanding shares. Israeli tax law
treats specified acquisitions, including a stock-for-stock swap between an Israeli company
and a foreign company, less favorably than does U.S. tax law. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>These laws may have the effect of
delaying or deterring a change in control of the Company, thereby limiting the opportunity
for shareholders to receive a premium for their shares and possible affecting the price
that some investors are willing to pay for the Company&#146;s securities. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>All of our directors and
officers are non-U.S. residents and enforceability of civil liabilities against them is uncertain.</I></B> </FONT> </P>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>All of our directors and officers
reside outside of the United States. Service of process upon them may be difficult to
effect within the United States. Furthermore, because the majority of our assets are
located in Israel, any judgment obtained in the United States against us or any of our
directors and officers may not be collectible within the United States. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Risks related to our ordinary shares: </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>Our share price has been
and may continue to be volatile, which could result in substantial losses for individual shareholders</I></B> </FONT> </P>



<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The market price of our ordinary
shares has been and may continue to be highly volatile and subject to wide fluctuations.
Since January 2004 through December 2005, the daily closing price of our ordinary shares
has ranged from $1.62 to $4.00 per share. We believe that these fluctuations have been in
response to a number of factors including the following, some of which are beyond our
control: </FONT></P>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>actual
or anticipated variations in our quarterly operating results;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>announcements
of technological  innovations or new products or services or new pricing  practices by us
or          our competitors;</FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>12</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 1-TNR" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>increased
market share penetration by our competitors;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>announcements
 by us or  our  competitors  of  significant  acquisitions,  strategic  partnerships,
 joint          ventures or capital commitments;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>additions
or departures of key personnel; and</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>sales
of additional ordinary shares.</FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In addition, the stock market in
general, and stocks of technology companies in particular, have from time to time
experienced extreme price and volume fluctuations. This volatility is often unrelated or
disproportionate to the operating performance of these companies. These broad market
fluctuations may adversely affect the market price of our ordinary shares, regardless of
our actual operating performance. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>The Company&#146;s shares
may be delisted from the Nasdaq National Market for failure to meet Nasdaq&#146;s
requirements. </I></B></FONT> </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In late 2002 and early 2003 the
Company received notice from the Nasdaq Stock Market that its ordinary shares were subject
to delisting from the Nasdaq National Market for failure to meet Nasdaq&#146;s minimum bid
price and shareholders&#146; equity requirements ($10 million) for continued listing on
the National Market. As a result of the hearing requested by the Company and supplemental
information presented by the Company to the Nasdaq Listing Qualifications Panel, the Panel
determined to continue the listing of the Company&#146;s securities on the Nasdaq National
Market pursuant to a detailed exception to the Nasdaq National Market Rules, and the
Company successfully met all the conditions set forth in the exception. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On August 30, 2004, we received
notice from the Nasdaq Stock Market that our ordinary shares are subject to delisting from
the Nasdaq National Market for failure to meet Nasdaq&#146;s minimum market value of
publicly held shares requirement ($5 million) for continued listing on the National
Market. On November 4, 2004 we were notified by Nasdaq that we have regained compliance
with this requirement. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On January 25, 2005, we received
notice from the Nasdaq Stock Market that we were not in compliance with the minimum $10
million shareholders&#146; equity requirement for continued listing on the National
Market. Following that notice, on January 28, 2005, we received an additional notice
indicating that based on further review of our financial statements as they appeared in
our filing on Form 6-K dated January 10, 2005, it was determined that the
shareholders&#146; equity was $10,601,000 on a pro forma basis as of September 30, 2004.
Therefore we were in compliance with the stockholders&#146; equity requirement for
continued listing on the National Market and the matter had been closed. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>On June 2, 2005, the Company again
received notice from the Nasdaq Stock Market indicating that based on the results for the
period ended March 31, 2005, the shareholders&#146; equity was $9,425,000, and accordingly
not in compliance with the minimum $10,000,000 shareholders&#146; equity requirement for
continued listing on the National Market. The Company was requested to provide by June 17,
2005, its specific plan to achieve and sustain compliance with the listing requirements.
The Company subsequently submitted a proposed plan of compliance to Nasdaq based upon
completing a previously announced private placement offering of its ordinary shares. On
July 11, 2005, the Company was advised by the Nasdaq Staff that contingent upon completion
of the private placement by August 11, 2005, the Staff believed that the Company had
provided a definitive plan evidencing its ability to achieve and sustain compliance with
the listing requirements. The private placement took place in June 2005, and consequently
the Company believes it has regained compliance with Nasdaq&#146;s minimum $10,000,000
shareholders&#146; equity requirement for continued listing on the National Market.
However, the Company has been advised by Nasdaq Staff that the Staff will continue to
monitor its ongoing compliance with the stockholder&#146;s equity requirement and, if at
the time of the Company&#146;s next periodic report, the Company does not evidence
compliance, it may be subject to delisting. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>There can be no assurance that we
will be able to meet and continue to meet these or other Nasdaq requirements to maintain
our Nasdaq National Market listing, in which case we will have the right to apply for a
transfer of our ordinary shares to the Nasdaq Small Cap Market. </FONT></P>

<p align=center>
<font size=2>13</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<a name=zk104></a>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>FORWARD-LOOKING
STATEMENTS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>This prospectus contains
forward-looking statements that are intended to be, and are hereby identified as, forward
looking statements for the purposes of the safe harbor provisions of the Private
Securities Reform Act of 1995. These statements address, among other things: our strategy;
the anticipated development of our products; our anticipated use of proceeds; our
projected capital expenditures and liquidity; our development of additional revenue
sources; our development and expansion of relationships; the market acceptance of our
products; and our technological advancement. Actual results could differ materially from
those anticipated in these forward-looking statements as a result of various factors,
including all the risks discussed below and elsewhere in this prospectus. You should
therefore not rely on these forward-looking statements, which are applicable only as of
the date hereof. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
urge you to consider that statements which use the terms &#147;believe&#148;, &#147;do not
believe&#148;, &#147;expect&#148;, &#147;plan&#148;, &#147;intend&#148;,
&#147;estimate&#148;, &#147;anticipate&#148;, &#147;projections&#148;,
&#147;forecast&#148; and similar expressions are intended to identify forward-looking
statements. These statements reflect our current views with respect to future events and
are based on assumptions and are subject to risks and uncertainties. Except as required by
applicable law, including the federal securities laws of the United States, we do not
intend to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. We disclaim any obligation to publicly revise any
such statements to reflect any change in expectations or in events, conditions, or
circumstances on which any such statements may be based. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Market
data and forecasts used in this prospectus have been obtained from independent industry
sources. We have not independently verified the data obtained from these sources and we
cannot assure you of the accuracy or completeness of the data. Forecasts and other
forward-looking information obtained from these sources are subject to the same
qualifications and additional uncertainties accompanying any estimates of future market
size. </FONT></P>

<a name=zk105></a>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>RECENT DEVELOPMENTS </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
July 18, 2005 our wholly-owned subsidiary, BOScom Ltd., signed an asset purchase agreement
with Consist Technologies Ltd. and Consist International Inc., for the sale of our
PrintBOS product line, including all related intellectual property rights, costumer and
supplier agreements, distribution channels, goodwill and workstations. BOScom shall also
transfer employees to Consist. In consideration, BOScom shall receive $500,000, of which
$125,000 have been placed is escrow, pending repayment of royalties related to PrintBOS to
the Office of the Chief Scientist. In addition BOScom shall receive in each of the next
three years a contingent payment, equal to 6-10% of the future revenues exceeding $1
million per year, that Consist generates from the PrintBOS activities. The transaction
closed on September 29, 2005. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
September 29, 2005, we purchased an additional 23.9% of the issued and outstanding shares
of Odem Electronic Technologies 1992 Ltd. from Odem&#146;s existing shareholders. The
consideration for Odem&#146;s shares was comprised of cash in the amount of $716,422 and
of 232,603 of our ordinary shares. On November 1, 2005, we acquired the remaining share
capital of Odem in consideration for $554,105, thus increasing our holdings in Odem to
100%. Odem, an Israeli company, is an international solution provider and distributor of
electronics components and advance technologies in the Israeli market. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
additional information on the Odem transaction, see our filing on Form 6-K, filed with the
SEC on September 29, 2005, which is incorporated by reference into this prospectus. </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October
27, 2005 we entered into a definitive agreement with Qualmax Inc. (Pink Sheets: QMXI.PK), a US
VoIP service and equipment provider, for the sale of the assets of our Communications Division to Qualmax&#146;s
wholly owned Israeli subsidiary, Qualmax Ltd.  The consideration paid to BOS in the transaction was
approximately 3.2 million Qualmax shares of common stock and $800,000 in royalties payable at a rate of 4%
from future revenues Qualmax generates from the sold business. Additional shares may be issued to BOS at the
end of four consecutive fiscal quarters following the closing of the transaction, contingent upon Qualmax
generating by then certain revenues from the sold business. The maximum number of shares that may further be
issued to BOS is approximately one million shares. BOS received certain piggy-back registration rights with
respect to the Qualmax shares.</FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition,  BOS and Qualmax Ltd. entered into an Outsourcing  Agreement,  pursuant to
which BOS will provide Qualmax Ltd. with certain operating services relating to the sold
 Communications  Division.  The first three  months of  services  will be  provided  for
no charge  and  Qualmax  Ltd.  shall pay for these  services starting from the fourth
month.  Qualmax Ltd. can elect to pay for the services  rendered during months four to
six by issuance to BOS of Qualmax  shares valued at $1.43 per share.  BOS  undertook to
provide these  services for at least 12 months from closing. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Qualmax
 also  issued to BOS a  five-year  warrant  for the  purchase  of up to 107,143  shares
of its Common Stock at the exercise price of $2.80 per share.  BOS received  certain
 piggy-back  registration  rights with respect to the shares underlying the warrant. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;BOS
has also signed a Bridge  Loan  Agreement  with  Qualmax  Ltd.  in the amount of $1
 million.  The proceeds of the loan shall be used  exclusively  for the  financing  and
the  operation  of the  Communications Division assets acquired by Qualmax from the
Company. </FONT></P>







<p align=center>
<font size=2>14</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
term of the loan is three years and it bears  interest  equal to the Prime rate plus
2.5%, up to a maximum of 12%.  In the first 18  months,  Qualmax  Ltd.  shall pay only
the  interest  accrued on the loan and monthly principal and interest  payments shall
commence  thereafter.  As a security for the loan,  Qualmax Ltd. has granted BOS a second
 degree-subordinated  floating  charge on its assets.  In  addition,  repayment of the
loan is guaranteed by Qualmax Inc. </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
loan agreement provides that if the sold business generates in the first quarter of 2006
losses that exceed $250,000, the principal amount to be repaid under the loan shall be
reduced by the excess losses. In such event, Qualmax shall issue to BOS additional shares
of Common Stock against such reduction, valued at $1.43 per share. In addition, the loan
shall be immediately repaid in the event Qualmax raises by way of equity financing (or a
series of equity financings) an aggregate amount equal to at least $4.5 million. </FONT></P>




<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
additional information on the Qualmax Transaction, see our filing on Form 6-K, filed with the SEC on
October 27, 2005 and on January 3, 2006, which are incorporated by reference into this prospectus.. </FONT></P>


<a name=zk106></a>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>USE OF PROCEEDS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
of the proceeds from the sale of the ordinary shares offered under this prospectus are for
the account of the selling shareholders. Accordingly, we will not receive any proceeds
from the sales of these shares other than the exercise price payable to us upon the
exercise of warrants held by the selling shareholders. </FONT></P>

<a name=zk107></a>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SELLING SHAREHOLDERS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>This prospectus relates to 2,638,060
ordinary shares that may be offered for sale by the selling shareholders, as follows: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A
total of 953,698 ordinary shares were issued to the selling shareholders in a private
placement in June 2005. The ordinary shares were issued at a price per share of $2.30. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up
to 572,219 ordinary shares are issuable upon the exercise of warrants, which were issued
by BOS to the selling shareholders in the abovementioned private placement. The warrants
are exercisable for three years from their date of issuance. The exercise price is $2.50
per ordinary share during for the first year from their issue date, and increasing to
$2.75 per ordinary share and $3.03 per ordinary share, on the first and second
anniversaries of the issue date, respectively. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
warrants may be exercised in whole or in part, and payment of the exercise price may be
made either in cash or in a &#147;cashless&#148; exercise (or in a combination of both
methods). The warrant exercise price is also subject to proportional adjustment in the
event of combinations, subdivisions of the ordinary shares or if dividend is paid on the
ordinary shares in ordinary shares. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Under
our registration rights agreement with the selling shareholders, a delay in the
effectiveness of the registration of our ordinary shares beyond a certain date subjects
us to payment to the selling shareholders of liquidated damages. The liquidated damages
are equal to 1.0% of the value of the shares subject to registration, less any shares
that can then be freely sold by the selling shareholders pursuant to any available
exemption. The abovementioned value shall be determined on the basis of the average
closing price of the ordinary shares on the market. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Selling Shareholders include Catalyst Fund L.P., our biggest shareholder. In March 2003,
we purchased from Catalyst most of the shares it held in Surf Communications Solutions
Ltd., in consideration of $1,755,000 by the issuance of our ordinary shares, and as a
result Catalyst held 16.6% of our outstanding shares, after the issuance. </FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up to 625,000 ordinary shares are issuable upon the conversion of a convertible note due September 29, 2008
and upon the exercise of warrants to purchase up to 73,052 ordinary shares, both of which were issued by BOS
to Laurus Master Fund in a private placement transaction on September 29, 2005, and shares that are to be
issued in lieu of cash interest payments on the convertible note solely pursuant to the mandatory interest
conversion feature of such note. </FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
convertible note has an aggregate principal amount of $1.5 million and a conversion price
of $3.08 per share. The principal amount of the note is repayable in monthly installments
commencing as of January 1, 2006, in the initial amount of $15,000 eventually increasing
to $55,200. The interest on the note is payable in monthly installments, together with
the principal monthly repayment. The principal and the interest may be paid in cash or,
under certain conditions described below, in ordinary shares. </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>15</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
note conversion price is subject to proportional adjustment in the event of stock splits,
combinations, subdivisions of the ordinary shares or if dividend is paid on the ordinary
shares in ordinary shares. In addition, if BOS issues stock in certain types of
transactions at a price lower than the initial conversion price, then the conversion
price will be adjusted to a lower price based on a weighted average formula. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
convertible note bears interest at a fluctuating interest rate equal at all times to the
prime rate plus 1.5%, subject to reduction in any particular month, if the average
closing price of our ordinary shares for any five consecutive trading days during the
fifteen days immediately prior to the last business day of the previous month, exceeded
the conversion price by at least 25%. The interest reduction rate is 100 basis points
(1.0%) for each incremental twenty five percent increase, or 200 basis points (2.0%) for
such increase, if the ordinary shares shall have already been, at that time, registered
pursuant to an effective registration statement. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Each
month, the note holder may elect to convert all or a portion of the convertible note
monthly payments (comprised of principal amortization and interest) into ordinary shares.
If the market price of the ordinary shares at the time of payment is at least 10% greater
than the conversion price per ordinary share, the monthly payment shall be made in the
form of ordinary shares, and the ordinary shares issuable upon such mandatory interest
conversion are registered hereunder for sale by Laurus. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Under
our registration rights agreement with Laurus, a delay in the effectiveness of the
registration of our ordinary shares beyond a certain date subjects us to payment to
Laurus of liquidated damages equal to 1.0% of the outstanding principal amount of the
note for each thirty day period of delay (prorated for partial periods). </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
note is secured by a first priority floating charge on all of our company&#146;s assets
and by a first priority fixed charge on all of our company&#146;s right, title and
interest in our wholly-owned subsidiaries, BOScom Ltd. and Quasar Telecom (2004) Ltd. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
warrants are exercisable at $4.04 per share. The warrants may be exercised in whole or in
part, and payment of the exercise price may be made either in cash or in a &#147;cashless&#148; exercise
(or in a combination of both methods). The warrant exercise price is also subject to
proportional adjustment in the event of combinations, subdivisions of the ordinary shares
or if dividend is paid on the ordinary shares in ordinary shares. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Conversion
of the note and exercise of the warrants are limited as follows: at no time shall the
note be convertible (or the warrants be exercised) into that number of ordinary shares
which, when added to the number of ordinary shares otherwise beneficially owned by the
note (or warrants) holder, exceed (i) 4.99% of our outstanding ordinary shares, or (ii)
25% of the aggregate dollar trading volume of the ordinary shares for the 30-day trading
period immediately preceding the conversion or exercise notice. These limitations expire,
however, in an event of default under the note or with 75 days prior notice by the
holder, provided that in no time shall the holder&#146;s beneficial ownership of ordinary
shares exceed 19.9% of our ordinary shares. In addition, the number of ordinary shares
issuable under the note and/or the warrants shall not exceed an aggregate of 625,000
ordinary shares. </FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up to
130,000 ordinary shares are issuable upon the exercise of a warrant, which was issued by BOS to Laurus
Master Fund in a private placement transaction on June 10, 2004. The warrant was issued together with a
convertible note due June 10, 2007, with an aggregate principal amount of $2.0 million and a conversion price
of $3.08 per share. In March 2005, Laurus elected to convert $308,000 of the principal amount of the Note
into ordinary shares and in July 2005 the remaining  $1.58 million principal and accrued interest on the Note
was converted into ordinary shares. </FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The exercise price of the warrant
is $4.04 per share, which is subject to proportional adjustment in  the
event of combinations, subdivisions of the ordinary shares or if dividend is paid on the ordinary shares in
ordinary shares. Exercise of the warrant is limited as follows: at no time shall  the warrant be exercised
into that number of ordinary shares which, when added to the number of ordinary shares otherwise beneficially
owned by holder, exceed (i) 4.99% of  our outstanding ordinary shares,  or (ii) 25% of the aggregate dollar
trading volume of the ordinary shares for the 30-day trading period immediately preceding the exercise
notice.  These limitations expire, however, with 75 days prior notice by the holder, provided that in no time
shall the holder&#146;s beneficial ownership of ordinary shares exceed 19.9% of our ordinary shares. </FONT></TD>
</TR>
</TABLE>
<BR>




<p align=center>
<font size=2>16</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A total of 357,143
ordinary shares were issued to certain selling  shareholders,  Hillswood  Holdings
Limited  and  Vamos  Inc.,  in  a  private   placement  that  was
completed  on  December  14,  2003.  These  ordinary  shares were
issued  at  a  price   per  share  of  $2.80.   As  part  of  the
transaction,  BOS agreed to grant to these  selling  shareholders
certain incidental registration rights.
 </FONT></TD>
</TR>
</TABLE>
<BR>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Other than the sale and purchase of
the ordinary shares in the  transactions  described  above,  and the initial purchase of
the  Company&#146;s  shares by Catalyst  Investments  L.P.,  which  closed on March 30,  2003,
 the selling shareholders have not entered into any material transactions with BOS during
the past three years. </FONT></P>



<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The table below sets forth certain
information concerning the number of ordinary shares and warrants owned by the selling
shareholders as of September 30, 2005, and the number of ordinary shares and warrants that
may be offered from time to time by the selling shareholders under this prospectus.
Because the selling shareholders may offer all or some portion of the ordinary, BOS has
assumed for the purposes of the table below that the selling shareholders will sell all of
the ordinary shares they have acquired from us. </FONT></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH ><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Shares Owned or Underlying<BR>Convertible Securities<BR>
Prior to Offering</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Shares Being<BR>
Offered</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Shares Beneficially Owned<BR>
After the Offering</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Number</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Percent (1)</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Number</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Percent</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1>&nbsp;</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=32% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Catalyst Fund L.P.</B>(2) </FONT></TD>
     <TD WIDTH=15% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=11% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=15% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=15% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=12% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3 Daniel Frish St</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tel Aviv 64731,</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Israel</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,499,275&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>22.06%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>552,000&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>947,275&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>13.94%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Brada Investments</B> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Limited </B>(3) </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>57/63 Line Wall Road</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PO Box 199</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>GIBRALTAR</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>173,912&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.61%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>173,912&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Many Weiss</B> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c/o Manro-Haydan</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1 Knightsbridge</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>London</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SW1X 7LX</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>69,565&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.05%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>69,565&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>H J M and Hilda Levy</B> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>(as trustees of the</B> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Herne Hill</B> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Settlement)</B>(3) </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>57/63 Line Wall Road</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PO Box 199</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>GIBRALTAR</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>69,565&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.05%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>69,565&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Daniel Tannen</B> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>36 Brampton Grove,</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>London NW4, England</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8,696&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0.13%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8,696&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Sylvie Tannen</B> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>36 Brampton Grove,</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>London NW4, England</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8,696&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0.13%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8,696&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0%</FONT></TD></TR>
</TABLE>
<BR>


<p align=center>
<font size=2>17</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT> </TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=30% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Emmanuel Tannen</B></FONT></TD>
     <TD WIDTH=15% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></TD>
     <TD WIDTH=2%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT> </TD>
     <TD WIDTH=11% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></TD>
     <TD WIDTH=15% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></TD>
     <TD WIDTH=15% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></TD>
     <TD WIDTH=12% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>36 Brampton Grove,</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>London NW4, England</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8,696 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT> </TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0.13%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8,696 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Yuri Tannen</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>36 Brampton Grove,</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>London NW4, England</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8,695 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT> </TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0.13%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8,695 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Arizona Maritime</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Inc.</B> (4)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c/o Lyras Financial</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Services Ltd.,</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>24-26 Baltic St.,</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>London, EC1Y 0RP,</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>England</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>139,130 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT> </TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.09%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>139,130 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Egean Financiera</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Corporation </B>(5)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c/o Halkdon Shipping</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Corp.</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>85 Akti Mlaouli &amp; 2</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Flessa St., 185 38</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Piraeus, Greece</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>139,130 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT> </TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.09%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>139,130 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Meitav Gemel Ltd.</B> (6)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4 Berkowitz St.,</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>P.O. Box 18096</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tel Aviv 61180</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Israel</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>173,920 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT> </TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.61%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>173,920 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Vamos Inc.</B> (7)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c/o GISE</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>37 G. Sisini Street</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Athens 115 28</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Greece</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>263,198 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT> </TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.96%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>263,198 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Hillswood Holdings</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Ltd.</B> (8)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PO Box 3136, Akara</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Building, Suite 8,</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Wickams Cay 1, Road</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Town, Tortola BVI</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>297,719 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT> </TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.52%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>267,857 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>29,862 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0.45%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Laurus Master Fund,</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Ltd.</B> (9)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>825 Third Avenue,</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14th Floor</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>New York, NY 10022</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>755,000</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(10)</FONT> </TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.28%</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>755,000 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0 </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0%</FONT></TD></TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1) </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>    Calculated
based upon 6,589,385 ordinary shares outstanding as of September 30,           2005.
&nbsp; &nbsp;  </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>18</font></p>
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<page>


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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#147;Catalyst
Fund&#148; refers collectively to           Catalyst Fund L.P., Catalyst Fund II L.P. and
Catalyst Fund III, L.P., all of which are limited partnerships organized and existing
under the laws of the State of Israel, and which share the same general partner, Catalyst
Investments L.P. Mr. Edouard Cukierman may be deemed to have sole voting and dispositive power with respect to the shares
offered for resale by Catalyst. Mr. Cukierman disclaims beneficial ownership in such shares, except to the
extent of his proportionate interest in them as an indirect limited partner in the Catalyst Fund.</FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Brada
Investments Limited and Herne Hill Settlement are controlled by Mr. H J M
Levy, who has sole voting and dispositive power over the shares owned by Brada Investments Ltd and Herne Hill
Settlement. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(4)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Arizona
Maritime Inc. is controlled by Mrs. Maria Hadjilias, who has sole
voting and dispositive power over the shares owned by Arizona Maritime Inc. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(5)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Egean
Financiera Corporation is beneficially owned by Ms. Olympia Kedros, who has sole voting and
dispositive power over the shares owned by Egean Financiera Corporation. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(6)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Meitav
Gemel Ltd. is controlled by Messrs Zvi Stepak and Shlomo Simanovski, who
share the voting and dispositive power over the shares owned by Meitav Gemel. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(7)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Vamos Inc.
is controlled by Mr. Minos A. Zombanakis, who may be deemed to have sole voting and dispositive
power over the shares owned by Vamos Inc.  The ordinary shares being offered by Vamos include 89,286 ordinary
shares purchased in a private placement completed in December 2003 and 108,700 ordinary shares and 65,200
ordinary shares that are issuable upon exercise of warrants  purchased in a private placement  in June 2005. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(8)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Hillswood
Holdings Ltd. is indirectly owned by a trust whose principal beneficiary is Mr. Robert Haggiag. By
virtue of such relationship, Mr. Haggiag may be deemed to have sole voting and dispositive power over the
shares owned by Hillswood Holdings Ltd. </FONT></TD>
</TR>
</TABLE>
<BR>


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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(9)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Laurus
Capital Management, LLC is the investment manager of Laurus Master Fund           Ltd.,
and in accordance with Rule 13d-3 under the Securities Exchange Act of           1934, as
amended, may be deemed a control person of the ordinary shares owned by           Laurus
Master Fund Ltd. Messrs. David Grin and Eugene Grin are the managing           members of
Laurus Capital Management, LLC and as such share sole voting and           investment
control over the ordinary shares owned by Laurus Master Fund Ltd.,           and each
disclaims beneficial ownership of such shares. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(10)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Number
of shares represents the maximum number of shares receivable by Laurus           Master
Fund, Ltd. upon the full conversion of the note and exercise of the           warrants
into ordinary shares. However, the terms of the note and the warrants           expressly
limit the number of shares into which Laurus can convert or exercise,           and
beneficially own at any one time pursuant to such conversion or exercises           (as
defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended) to
          4.99% of the total outstanding ordinary shares. These limitations expire,
          however, with 75 days prior notice by Laurus, provided that in no time shall
          Laurus&#146; beneficial ownership of ordinary shares exceed 19.9% of our
          ordinary shares. </FONT></TD>
</TR>
</TABLE>
<BR>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>DESCRIPTION OF
ORDINARY SHARES </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The following is a summary
description of our Ordinary Shares under our Articles of Association. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Dividend and Liquidation Rights.
</I> All holders of paid-up Ordinary Shares of the Company have an equal right to
participate in a distribution of (i) dividends, whether by cash or by bonus shares; (ii)
Company assets; and (iii) the Company&#146;s surplus assets upon winding up, all pro rata
to the nominal value of the shares held by them. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors may issue shares and other securities, which are convertible or
exercisable into shares, up to the limit of the Company&#146;s authorized share capital. </FONT></P>

<p align=center>
<font size=2>19</font></p>
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<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company&#146;s Board of Directors is the organ authorized to decide upon the distribution
of dividends or bonus shares. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Voting, Shareholders&#146;
Meetings, Notices and Resolutions. </I> Holders of paid-up Ordinary Shares have one vote
for each share held on all matters submitted to a vote of shareholders. Such voting rights
may be affected in the future by the grant of any special voting rights to the holders of
a class of shares with preferential rights. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
quorum required for a general meeting of shareholders (whether annual or special) consists
of at least two shareholders present in person or by proxy/voting instrument and holding,
or representing, at least 33 1/3% of the voting rights of the issued share capital. A meeting
adjourned for lack of quorum shall be postponed by one week, to the same day, time and
place, or to a later time if stated in the invitation to the meeting or in the notice of
the meeting. The quorum for the commencement of the adjourned meeting shall be any number
of participants. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless
otherwise determined by the Israeli Companies Law 1999 or the Company&#146;s Articles of
Association, a resolution requires approval by the holders of a majority of the shares
represented at the meeting, in person or by proxy, and voting thereon. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Companies Law 1999 requires that certain transactions, actions and arrangements be
approved by shareholders, including (i) arrangements with a director as to the terms of
his office and compensation and arrangements for insurance, exemption and indemnity of
directors; (ii) certain Extraordinary Transactions (as defined in the Companies Law) of
the Company with its controlling shareholders or any Extraordinary Transaction in which a
controlling shareholder has a personal interest; (iii) certain private placements; and
(iv) any action or Extraordinary Transaction in which the majority of the members of the
Board of Directors have a personal interest. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
shareholder of record is entitled to receive at least a 21 day prior notice of
shareholders&#146; meetings. The accidental omission to give notice of a meeting to any
member, or the non receipt of notice sent to such member, shall not invalidate the
proceedings at such meeting. For purposes of determining the shareholders entitled to
notice and to vote, the Board of Directors may fix a record date subject to the provisions
of the law. Currently, Israeli law provides that the record date not be any earlier than
40 days prior to the meeting. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Transfer of Shares. </I> Fully
paid Ordinary Shares may be transferred freely. The transfer of Ordinary Shares not fully
paid up requires the approval of the Board of Directors. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Modification of Class Rights. </I>
Subject to the provisions of any law, the rights attached to any class (unless otherwise
provided by the terms of issue of such class), such as voting, rights to dividends and the
like, may be altered after a resolution is passed by the Company, with the approval of a
resolution passed by a majority of the voting power present by person or proxy and voting
hereon at a general meeting of the holders of the shares of such class, or the written
agreement of all the class holders. The rights vested in the holders of shares of a
particular class that were issued with special rights shall not be deemed to have been
altered by the creation or issue of further shares ranking equally with them, unless
otherwise provided in such shares&#146; issue terms. </FONT></P>

<p align=center>
<font size=2>20</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Election of Directors</I>. The
Company&#146;s directors are elected by the shareholders at a shareholders&#146; meeting.
The Ordinary Shares do not have cumulative voting rights in the election of directors. The
holders of Ordinary Shares conferring more than 50% of the voting power present by person
or by proxy at the shareholders&#146; meeting, have the power to elect the directors. The
directors elected shall hold office until the next annual meeting, or sooner if they cease
to hold office pursuant to the provisions of the Company&#146;s Articles. In addition, the
Board of Directors may appoint a director (to fill a vacancy or otherwise) between
shareholder meetings, and such appointment shall be valid until the next annual meeting or
until such appointee ceases to hold office pursuant to the provisions of the
Company&#146;s Articles. In compliance with the Companies Law, the Company has two
external directors. The external directors are also appointed by the shareholders and
their term of office is three years. </FONT></P>

<a name=zk109></a>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PLAN OF DISTRIBUTION </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The selling shareholders and any of
their pledgees, donees, assignees, transferees, and successors in interest, may sell any
or all of their securities from time to time on any stock exchange or automated
interdealer quotation system on which the securities are listed, in the over-the-counter
market, in privately negotiated transactions or otherwise, at fixed prices that may be
changed, at market prices prevailing at the time of sale, at prices related to prevailing
market prices or at prices otherwise negotiated. The selling shareholders may sell the
securities by one or more of the following methods, without limitation: </FONT></P>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>block
trades in which the broker or dealer so engaged will attempt to sell the securities as
agent but may position and resell a portion of the block as principal to facilitate the
transaction; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>purchases
 by a broker or dealer as  principal  and  resale by the  broker or dealer  for its own
 account          pursuant to this prospectus;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>an
exchange  distribution  in accordance  with the rules of any stock exchange on which the
securities are          listed;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchases,
which may include long sales or short sales effected after the effective date of the
prospectus of which this registration statement is part; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>privately
negotiated transactions;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>"at
the market" or through market makers or into an existing market for the shares;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>through
the writing or settlement  of options or other hedging  transactions  on the  securities,
 whether          through an options exchange or otherwise;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>through
 the  distribution  of the  securities  by any selling  shareholder  to its  partners,
 members or          shareholders;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>one
or more underwritten offerings on a firm commitment or best efforts basis;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>any
combination of any of these methods of sale; and</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>any
other method permitted pursuant to applicable law.</FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A selling shareholder may also
transfer the securities by gift. We do not know of any arrangements by any of the selling
shareholders for the sale of any of the securities. </FONT></P>

<p align=center>
<font size=2>21</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A selling shareholder may engage
brokers and dealers, and any brokers or dealers may arrange for other brokers or dealers
to participate in effecting sales of the securities. These brokers, dealers or
underwriters may act as principals, or as an agent of the selling shareholder.
Broker-dealers may agree with the selling shareholder to sell a specified number of the
securities at a stipulated price per security. If the broker-dealer is unable to sell
securities acting as agent for the selling shareholder, it may purchase as principal any
unsold securities at the stipulated price. Broker-dealers who acquire securities as
principals may thereafter resell the securities from time to time in transactions in any
stock exchange or automated interdealer quotation system on which the securities are then
listed, at prices and on terms then prevailing at the time of sale, at prices related to
the then-current market price or in negotiated transactions. Broker-dealers may use block
transactions and sales to and through broker-dealers, including transactions of the nature
described above. A selling shareholder may also sell the securities in accordance with
Rule 144 under the Securities Act, rather than pursuant to this prospectus, regardless of
whether the securities are covered by this prospectus. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>From time to time, a selling
shareholder may pledge, hypothecate or grant a security interest in some or all of the
securities owned by it. The pledgees, secured parties or persons to whom the securities
have been hypothecated will, upon foreclosure in the event of default, be deemed to be
selling shareholders. The number of the selling shareholder&#146;s securities offered
under this prospectus will decrease as and when it takes such actions. The plan of
distribution for a selling shareholder&#146;s securities will otherwise remain unchanged. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To the extent required under the
Securities Act, the aggregate amount of the selling shareholder&#146;s securities being
offered and the terms of the offering, the names of any agents, brokers, dealers or
underwriters and any applicable commission with respect to a particular offer will be set
forth in an accompanying prospectus supplement. Any underwriters, dealers, brokers or
agents participating in the distribution of the securities may receive compensation in the
form of underwriting discounts, concessions, commissions or fees from the selling
shareholder and/or purchasers of selling shareholders&#146; securities, for whom they may
act (which compensation as to a particular broker-dealer might be in excess of customary
commissions). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The selling shareholder and any
underwriters, brokers, dealers or agents that participate in the distribution of the
securities may be deemed to be &#147;underwriters&#148; within the meaning of the
Securities Act, and any discounts, concessions, commissions or fees received by them and
any profit on the resale of the securities sold by them may be deemed to be underwriting
discounts and commissions. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A selling shareholder may enter into
hedging transactions with broker-dealers and the broker-dealers may engage in short sales
of the securities in the course of hedging the positions they assume with that selling
shareholder, including, without limitation, in connection with distributions of the
securities by those broker-dealers. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The anti-manipulation provisions of
Regulation M under the Exchange Act will apply to purchases and sales of ordinary shares
by the selling shareholders. Under Regulation M, the selling shareholders or their agents
may not bid for, purchase, or attempt to induce any person to bid for or purchase our
ordinary shares while such selling shareholders are distributing ordinary shares covered
by this prospectus. The selling shareholders are not permitted to cover short sales by
purchasing ordinary shares while the distribution is taking place. Furthermore, Regulation
M provides for restrictions on market-making activities by persons engaged in the
distribution of the ordinary shares. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A selling shareholder may enter into
option or other transactions with broker-dealers that involve the delivery of the
securities offered hereby to the broker-dealers, who may then resell or otherwise transfer
those securities. A selling shareholder may also loan or pledge the securities offered
hereby to a broker-dealer and the broker-dealer may sell the securities offered hereby so
loaned or upon a default may sell or otherwise transfer the pledged securities offered
hereby. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We have agreed to indemnify in
certain circumstances the selling shareholders of the securities covered by the
registration statement, against certain liabilities, including liabilities under the
Securities Act. The selling shareholders have agreed to indemnify us in certain
circumstances against certain liabilities, including liabilities under the Securities Act. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The securities offered hereby were
originally issued to the selling shareholders pursuant to an exemption from the
registration requirements of the Securities Act. </FONT></P>

<p align=center>
<font size=2>22</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We have agreed to pay certain fees
and expenses in connection with this offering, not including any selling commissions. We
will not receive any proceeds from sales of any securities by the selling shareholder. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We cannot assure you that the selling
shareholder will sell all or any of the securities offered for sale under this prospectus. </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>VALIDITY OF SECURITIES </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
validity of the ordinary shares, including the ordinary shares issuable upon conversion of
the note and the exercise of the warrants, will be passed upon for us by Amit, Pollak,
Matalon &amp; Co., our Israeli counsel. </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXPERTS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
consolidated financial statements, included in our Annual Report on Form 20-F for the year
ended December 31, 2004, have been audited by Kost Forer Gabbay &amp; Kasierer,
independent registered public accounting firm and a member of Ernst &amp; Young Global as
set forth in their report thereon included therein and incorporated herein by reference.
Such consolidated statements are incorporated herein by reference in reliance upon such
report given on the authority of such firm as experts in auditing and accounting. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
consolidated financial statements of Odem Electronic Technologies 1992 Ltd., included
herein have been audited by Kesselman &amp; Kesselman, independent registered public
accounting firm and a member of PricewaterhouseCoopers, as set forth in their report
thereon included herein. Such consolidated statements are included herein in reliance upon
such report given on the authority of such firm as experts in auditing and accounting. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
consolidated financial statements of Surf Communication Solutions Ltd., included in our
Annual Report for the year ended December 31, 2004, have been audited by Kost Forer Gabbay
&amp; Kasierer, independent registered public accounting firm and a member of Ernst &amp;
Young Global as set forth in their report thereon included therein and incorporated herein
by reference. Such consolidated statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in auditing and
accounting. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
financial statements of Surf Communication Solutions, Inc. and of Surf Communication
Solutions BV. have been audited by Walter Fey, CPA and by Mazars Paardekooper Hoffman,
respectively. The reports of these independent auditors are included in our Annual Report
for the year ended December 31, 2004, which is incorporated by reference herein. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The value attributed to our holdings
in Surf Communication Systems Ltd., was supported by an external valuation prepared by
Variance Economic Consulting Ltd. </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
value attributed to our holdings in Qualmax Inc. was supported by an external valuation
prepared by Melnik Oded Business Advisory Ltd. </FONT></P>





<a name=zk112></a>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>WHERE YOU CAN FIND
MORE INFORMATION </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have filed with the SEC a registration statement on Form F-3 under the Securities Act,
with respect to the securities offered by this prospectus. However, as is permitted by the
rules and regulations of the SEC, this prospectus, which is part of our registration
statement on Form F-3, omits certain non-material information, exhibits, schedules and
undertakings set forth in the registration statement. For further information about us,
and the securities offered by this prospectus, please refer to the registration statement. </FONT></P>

<p align=center>
<font size=2>23</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are subject to the reporting requirements of the Securities Exchange Act of 1934, as
amended, or the Exchange Act, that are applicable to a foreign private issuer. In
accordance with the Exchange Act, we file reports, including annual reports on Form 20-F
by June 30 of each year. We also furnish to the SEC under cover of Form 6-K material
information required to be made public in Israel, filed with and made public by any stock
exchange or distributed by us to our shareholders. </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
registration statement on Form F-3 of which this prospectus forms a part, including the exhibits and
schedules thereto, and reports and other information filed by us with the SEC may be inspected without charge
and copied at prescribed rates at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C.
20549. Copies of this material are also available by mail from the Public Reference Section of the SEC, at
100 F. Street, N.E., Washington D.C. 20549, at prescribed rates. The public may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet
site that contains reports, proxy and information statements, and other information regarding issuers, such
as us, that file electronically with the SEC (http://www.sec.gov). </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing
the furnishing and content of proxy statements to shareholders and our officers, directors
and principal shareholders are exempt from the &#147;short-swing profits&#148; reporting
and liability provisions contained in Section 16 of the Exchange Act and related Exchange
Act rules. </FONT></P>

<a name=zk113></a>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
SEC allows us to &#147;incorporate by reference&#148; the information we file with or
submit to it, which means that we can disclose important information to you by referring
to those documents. The information incorporated by reference is considered to be part of
this prospectus, and later information filed with or submitted to the SEC will update and
supersede this information. We incorporate by reference into this prospectus the documents
listed below: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our
annual report on Form 20-F for the fiscal year ended December 31, 2004,           filed
with the SEC on June 27, 2005 (SEC File No. 001-14184); </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
description of our ordinary shares contained in our registration statement           on
Form 8-A filed with the SEC on April 1, 1996. The prospectus includes an
          updated description of our ordinary shares, reflecting changes due to
amendments           to the Articles of Association adopted by our shareholders, at the
Annual           Meetings held on March 13, 2002 and on August 5, 2004; and </FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our current
reports on Form 6-K filed with the SEC on January 10, 2004 (only items A(iii) and D), on July 5,
2005, on July 14, 2005, on July 18, 2005, on July 25, 2005, on August 23, 2005, on September 29, 2005, on
October 27, 2005,  on November 29, 2005, on December 29, 2005 (only the first paragraph), on January 3, 2006
and on January 12, 2006. </FONT></TD>
</TR>
</TABLE>
<BR>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, all subsequent annual reports on Form 20-F filed prior to the termination of
this offering and any reports on Form 6-K subsequently submitted to the SEC or portions
thereof that we specifically identify in such forms as being incorporated by reference
into the registration statement of which this prospectus forms a part, shall be considered
to be incorporated into this prospectus by reference and shall be considered a part of
this prospectus from the date of filing or submission of such documents. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
you read the above documents, you may find inconsistencies in information from one
document to another. If you find inconsistencies between the documents and this
prospectus, you should rely on the statements made in the most recent document. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
will deliver to each person (including any beneficial owner) to whom this prospectus has
been delivered a copy of any or all of the information that has been incorporated by
reference into this prospectus but not delivered with this prospectus. We will provide
this information upon written or oral request, and at no cost to the requester. Requests
should be directed to: </FONT></P>

<p align=center>
<font size=2>24</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>



<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">

     <TH WIDTH="5%"> </TH>
     <TH WIDTH="10%"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH WIDTH="85%"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH></TR>
<TR VALIGN="TOP">
     <TD> </TD>
     <TD colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE="2">B.O.S. Better Online Solutions Ltd.</FONT></TD>
</TR>
<TR VALIGN="TOP">
     <TD> </TD>
     <TD colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Beit Rabin, BOS Road</FONT></TD>
</TR>
<TR VALIGN="TOP">
     <TD> </TD>
     <TD colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Teradyon Industrial Park,</FONT></TD>
</TR>
<TR VALIGN="TOP">
     <TD> </TD>
     <TD colspan=2><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Misgav 20179, Israel</FONT></TD>
</TR>
<TR VALIGN="TOP">
     <TD> </TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Tel.:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(+972) 4-990-7555</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD> </TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Fax:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(+972) 4-999-0334</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD> </TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Attn.:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Nehemia Kaufman, CFO</FONT></TD></TR>
</TABLE>
<BR>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ENFORCEABILITY OF
CIVIL LIABILITIES </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have been informed by our legal counsel in Israel, Amit, Pollak, Matalon &amp; Co., that
there is doubt concerning the enforceability of civil liabilities under the Securities Act
and the Exchange Act in original actions instituted in Israel. However, subject to
specified time limitations, Israeli courts may enforce a United States final executory
judgment in a civil matter, including a monetary or compensatory judgment in a non-civil
matter, obtained after due process before a court of competent jurisdiction according to
the laws of the state in which the judgment is given and the rules of private
international law currently prevailing in Israel. The rules of private international law
currently prevailing in Israel do not prohibit the enforcement of a judgment by Israeli
courts provided that: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> <FONT size="2" face="Wingdings 2">&#151;</font> </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
judgment is enforceable in the state in which it was given;</FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> <FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>adequate
 service of process has been effected and the defendant has had a reasonable  opportunity
 to                 present his arguments and evidence;</FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
judgment and the enforcement of the judgment are not contrary to the law, public policy,
 security                 or sovereignty of the State of Israel;</FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> <FONT size="2" face="Wingdings 2">&#151;</font>  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
 judgment was not  obtained by fraud and does not  conflict  with any other valid
 judgment in the                 same matter between the same parties; and</FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><FONT size="2" face="Wingdings 2">&#151;</font></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>an
action between the same parties in the same matter is not pending in any Israeli court at
the time the lawsuit is instituted in the foreign court. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have appointed Corporation Service Company<B> </B>as our agent to receive service of
process in any action against us in any competent court of the United States arising out
of this offering or any purchase or sale of securities in connection with this offering. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
a foreign judgment is enforced by an Israeli court, it generally will be payable in
Israeli currency, which can then be converted into non-Israeli currency and transferred
out of Israel. The usual practice in an action before an Israeli court to recover an
amount in a non-Israeli currency is for the Israeli court to issue a judgment for the
equivalent amount in Israeli currency at the rate of exchange in force on the date of the
judgment, but the judgment debtor may make payment in foreign currency. Pending
collection, the amount of the judgment of an Israeli court stated in Israeli currency
ordinarily will be linked to the Israeli consumer price index plus interest at an annual
statutory rate set by Israeli regulations prevailing at the time. Judgment creditors must
bear the risk of unfavorable exchange rates. </FONT></P>

<p align=center>
<font size=2>25</font></p>
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<page>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BOS BETTER ONLINE
SOLUTIONS LTD. </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Up to 2,638,060 Ordinary
Shares </FONT></H1>

<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>PROSPECTUS</B> </FONT></TD></TR>
<TR VALIGN="TOP">
     <TD WIDTH="100%"><HR SIZE="1" NOSHADE WIDTH="100%" ALIGN="CENTER"></TD></TR>
</TABLE>
<BR>

<p align=center>
<font size=2>26</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>




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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART II<BR>INFORMATION NOT REQUIRED
IN PROSPECTUS </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 8.
INDEMNIFICATION OF DIRECTORS AND OFFICERS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consistent
with the provisions of the Israeli Companies Law, 1999 (the &#147;Companies Law&#148;),
the amended Articles of Association of the Registrant (the &#147;Articles&#148;) include
provisions permitting the Registrant to procure insurance coverage for its &#147;office
holders&#148;, exempt them from certain liabilities and indemnify them, to the maximum
extent permitted by law. An &#147;office holder&#148; is defined in the Companies Law and
the Articles as a director, managing director, chief business manager, executive vice
president, vice president, other manager reporting directly to the managing director and
any other person assuming the responsibilities of any of the foregoing positions without
regard to such person&#146;s title. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;INSURANCE </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
the Companies Law, a company may obtain insurance for any of its office holders for: (i) a
breach of his duty of care to the company or to another person; (ii) a breach of his duty
of loyalty to the company provided that the office holder acted in good faith and had
reasonable cause to assume that his act would not prejudice the company&#146;s interests;
or (iii) a financial liability imposed upon him in favor of another person concerning an
act preformed by him in his capacity as an office holder. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have obtained directors&#146; and officers&#146; liability insurance covering our officers
and directors and those of our subsidiaries. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;INDEMNIFICATION </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Companies Law provides that a company may indemnify an officer holder against: (i) a
financial liability imposed on him in favor of another person by any judgment concerning
an act preformed in his capacity as an office holder; (ii) reasonable litigation expenses,
including attorneys&#146; fees, expended by the office holder or charged to him by a court
relating to an act preformed in his capacity as an office holder in connection with: (a)
proceedings the company institutes against him or instituted on its behalf or by another
person; (b) a criminal charge from which he was acquitted; (c) a criminal charge in which
he was convicted for a criminal offence that does not require proof of criminal intent;
and (d) an investigation or a proceeding instituted against him by an authority competent
to administrate such an investigation or proceeding that ended without the filing of an
indictment against the office holder and, either without any financial obligation imposed
on the office holder in lieu of criminal proceedings; or with financial obligation imposed
on him in lieu of criminal proceedings, in a crime which does not require proof of
criminal intent. The Articles of the Registrant authorize the Registrant to indemnify its
office holders to the fullest extent permitted under the law, except for indemnification
under subsection (d) above, which is a recent amendment to the Companies Law with respect
to which Registrant intends to update its Articles. The Companies Law also authorizes a
company to undertake in advance to indemnify an office holder with respect to events
specified above, provided that, with respect to indemnification under sub-section (i)
above, the undertaking: (a) is limited to events which the board of directors determines
can be anticipated, based on the activity of the Company at the time the undertaking is
given; (b) is limited in amount or criteria determined by the board of directors to be
reasonable for the circumstances; and (c) specifies the abovementioned events, amounts or
criteria. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We have entered into indemnification
agreements with directors and some officers providing for indemnification under certain
circumstances for acts and omissions which may not be covered (or not be covered in full)
by any directors&#146; and officers&#146; liability insurance. Such indemnification
agreement appears in our Current Report on Form 6-K as filed with the Securities and
Exchange Commission on January 17, 2003. </FONT></P>

<p align=center>
<font size=2>27</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;EXEMPTION </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Under the Companies Law, an Israeli
company may not exempt an office holder from liability for a breach of his duty of
loyalty, but may exempt in advance an office holder from his liability to the company, in
whole or in part, for a breach of his duty of care, provided that in no event shall the
office holder be exempt from any liability for damages caused as a result of a breach of
his duty of care to the company in the event of a &#147;distribution&#148; (as defined in
the Companies Law). The Articles authorize the Registrant to exempt any office holder from
liability to the Registrant to the extent permitted by law. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Both the Companies Law and the
Articles provide that the Registrant may not exempt or indemnify an office holder nor
enter into an insurance contract which would provide coverage for liability incurred as a
result of any of the following: (a) a breach by the office holder of his duty of loyalty
(however, the Registrant may insure against such breach if the office holder acted in good
faith and had a reasonable basis to assume that the act would not harm the Registrant);
(b) a breach by the office holder of his duty of care if the breach was done intentionally
or recklessly, unless made in negligence only; (c) any act of omission done with the
intent to derive an illegal personal benefit; or (d) any fine or monetary penalty levied
against the office holder. </FONT></P>

<p align=center>
<font size=2>28</font></p>
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<page>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 9. EXHIBITS </FONT></H1>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="10%" ALIGN="CENTER"> <FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Exhibit No.</B> </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE> </TD>
<TD WIDTH="90%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Description</B> </FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE> </TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.1**  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Articles
of Association </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.1***  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[Form
of] Ordinary Shares Purchase Warrant (June 2005 private placement). </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.2**  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Secured
Convertible Term Note (September 2005 private placement). </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.3**  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ordinary
Shares Purchase Warrant (September 2005 private placement). </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.4****  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Form
of share certificate. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.5*****  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Share
Purchase Agreement by and among BOS, Hillswood Holdings Limited and Vamos Inc. dated
                        December 14, 2003 and related Registration Rights Agreement </FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.6*****  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Registration
Rights Agreement by and between the Company and Laurus Master Fund dated June
                        10, 2004 </FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.7***  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Share
Purchase Agreement by and among BOS, Catalyst Fund L.P. and the additional investors
                        listed therein, dated May 24, 2005 and the related Registration
Rights Agreement </FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.8*  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Registration
Rights Agreement by and between the Company and Laurus Master Fund dated
                        September 29, 2005 </FONT></TD>
</TR>
</TABLE>




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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5.1**  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Opinion
of Amit,  Pollak,  Matalon &amp; Co.  Israeli  counsel for B.O.S Better  Online  Solutions
                        Ltd., as to the validity of the ordinary shares. </FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.1**  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Amit, Pollak, Matalon &amp; Co. (included in Exhibit 5.1). </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.2**  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Kost Forer Gabbay &amp; Kasierer, a Member Firm of Ernst &amp; Young Global. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.3**  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Kesselman &amp; Kesselman, a member of PricewaterhouseCoopers International Limited. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.4**  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Walter Fey, CPA </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.5**  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Mazars Paardekooper Hoffman </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.6**  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Variance Economic Consulting Ltd. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.7*  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Melnik Oded Business Advisory Ltd. </FONT></TD>
</TR>
</TABLE>




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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=9%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>24.1**  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Power
of Attorney (included on signature page). </FONT></TD>
</TR>
</TABLE>
<BR>




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<HR SIZE=1 NOSHADE WIDTH=15% ALIGN=LEFT>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>*  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Filed
herewith. </FONT></TD>
</TR>
</TABLE>


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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>**  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Previously
Filed</FONT></TD>
</TR>
</TABLE>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>***  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Previously
filed with the SEC on June 27, 2005 as Exhibit 4.12 to the Company&#146;s Annual Report
on Form 20-F, and incorporated herein by reference. </FONT></TD>
</TR>
</TABLE>


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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>****  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Previously
filed with the SEC on November 24, 2003 as Exhibit 4.1 to the Company&#146;s Registration
Statement on Form S-8, SEC File Number 333-110696, and incorporated herein by reference. </FONT></TD>
</TR>
</TABLE>


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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>*****  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Previously
filed with the SEC on June 17, 2004 as an Exhibit to the Company&#146;s Annual Report on Form
20-F, and incorporated herein by reference.</FONT></TD>
</TR>
</TABLE>
<BR>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ITEM 10. UNDERTAKINGS </FONT></H1>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a)</FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>        The
undersigned registrant hereby undertakes: </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To
file, during any period in which offers or sales are being made, a
          post-effective amendment to this registration statement:  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=20%>&nbsp;</TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
(i) &nbsp;&nbsp;To include any prospectus required by Section 10(a)(3) of the Securities Act
of           1933; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=20%>&nbsp;</TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
(ii) &nbsp;&nbsp;           To reflect in the prospectus any facts or events arising after the effective
          date of the registration statement (or the most recent post- effective
amendment           thereof) which, individually or in the aggregate, represent a
fundamental change           in the information set forth in the registration statement.
Notwithstanding the           foregoing, any increase or decrease in volume of securities
offered (if the           total dollar value of securities offered would not exceed that
which was           registered) and any deviation from the low or high end of the
estimated maximum           offering range may be reflected in the form of prospectus
filed with the           Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume           and price represent no more than a 20% change in the maximum
aggregate offering           price set forth in the &#147;Calculation of Registration Fee&#148; table
in the           effective registration statement; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=20%>&nbsp;</TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
(iii) &nbsp;&nbsp;             To include any material information with respect to the plan of distribution
          not previously disclosed in the registration statement or any material change
to           such information in the registration statement; </FONT></TD>
</TR>
</TABLE>
<BR>


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<TR VALIGN=TOP>
<TD WIDTH=15%>&nbsp;</TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<I>provided,
however,</I> that Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not
apply if the registration statement is on Form S-3 or Form F-3 and the information
required to be included in a post-effective amendment by those paragraphs is contained in
reports filed with or furnished to the Commission by the registrant pursuant to section
13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement, or is contained in a form of prospectus filed
pursuant to Rule 424(b) that is part of the registration statement. </FONT></TD>
</TR>
</TABLE>
<BR>


<p align=center>
<font size=2>29</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>



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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>That,
for the purpose of determining any liability under the Securities Act of           1933,
each such post-effective amendment shall be deemed to be a new           registration
statement relating to the securities offered therein, and the           offering of such
securities at that time shall be deemed to be the initial bona           fide offering
thereof.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To
remove from registration by means of a post-effective amendment any of the
          securities being registered which remain unsold at the termination of the
          offering.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(4) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To
file a post-effective amendment to the registration statement to include any
          financial statements required by Item 8.A of Form 20-F at the start of any
          delayed offering or throughout a continuous offering. Financial statements and
          information otherwise required by Section 10(a)(3) of the Act need not be
          furnished, provided that the registrant includes in the prospectus, by means of
          a post-effective amendment, financial statements required pursuant to this
          paragraph (a)(4) and other information necessary to ensure that all other
          information in the prospectus is at least as current as the date of those
          financial statements. Notwithstanding the foregoing, with respect to
          registration statements on Form F-3, a post-effective amendment need not be
          filed to include financial statements and information required by Section
          10(a)(3) of the Act Item 8.A of Form 20-F if such financial statements and
          information are contained in periodic reports filed with or furnished to the
          Commission by the registrant pursuant to Section 13 or Section l5(d) of the
          Securities Exchange Act of 1934 that are incorporated by reference in the Form
          F-3.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(5) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>That,
for the purpose of determining liability under the Securities Act of 1933           to
any purchaser:  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(i)</FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>        If
the registrant is relying on Rule 430B (Sec 230.430B of this chapter):  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=20%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A. </FONT></TD>
<TD WIDTH=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Each
prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be           deemed
to be part of the registration statement as of the date the filed           prospectus
was deemed part of and included in the registration statement; and  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=20%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>B. </FONT></TD>
<TD WIDTH=75%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or           (b)(7)
as part of a registration statement in reliance on Rule 430B relating to           an
offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of
          providing the information required by section 10(a) of the Securities Act of
          1933 shall be deemed to be part of and included in the registration statement
as           of the earlier of the date such form of prospectus is first used after
          effectiveness or the date of the first contract of sale of securities in the
          offering described in the prospectus. As provided in Rule 430B, for liability
          purposes of the issuer and any person that is at that date an underwriter, such
          date shall be deemed to be a new effective date of the registration statement
          relating to the securities in the registration statement to which that
          prospectus relates, and the offering of such securities at that time shall be
          deemed to be the initial bona fide offering thereof. Provided, however, that no
          statement made in a registration statement or prospectus that is part of the
          registration statement or made in a document incorporated or deemed
incorporated           by reference into the registration statement or prospectus that is
part of the           registration statement will, as to a purchaser with a time of
contract of sale           prior to such effective date, supersede or modify any
statement that was made in           the registration statement or prospectus that was
part of the registration           statement or made in any such document immediately
prior to such effective date;           or  </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>30</font></p>
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<page>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(ii) </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>If
the registrant is subject to Rule 430C, each prospectus filed pursuant to           Rule
424(b) as part of a registration statement relating to an offering, other           than
registration statements relying on Rule 430B or other than prospectuses           filed
in reliance on Rule 430A, shall be deemed to be part of and included in           the
registration statement as of the date it is first used after effectiveness.
          Provided, however, that no statement made in a registration statement or
          prospectus that is part of the registration statement or made in a document
          incorporated or deemed incorporated by reference into the registration
statement           or prospectus that is part of the registration statement will, as to
a purchaser           with a time of contract of sale prior to such first use, supersede
or modify any           statement that was made in the registration statement or
prospectus that was           part of the registration statement or made in any such
document immediately           prior to such date of first use.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(6) </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>That,
for the purpose of determining liability of the registrant under the           Securities
Act of 1933 to any purchaser in the initial distribution of the           securities: The
undersigned registrant undertakes that in a primary offering of           securities of
the undersigned registrant pursuant to this registration           statement, regardless
of the underwriting method used to sell the securities to           the purchaser, if the
securities are offered or sold to such purchaser by means           of any of the
following communications, the undersigned registrant will be a           seller to the
purchaser and will be considered to offer or sell such securities           to such
purchaser:  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(i) </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Any
preliminary prospectus or prospectus of the undersigned registrant relating           to
the offering required to be filed pursuant to Rule 424;  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(ii) </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Any
free writing prospectus relating to the offering prepared by or on behalf           of
the undersigned registrant or used or referred to by the undersigned
          registrant;  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(iii) </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
portion of any other free writing prospectus relating to the offering
          containing material information about the undersigned registrant or its
          securities provided by or on behalf of the undersigned registrant; and  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(iv) </FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Any
other communication that is an offer in the offering made by the           undersigned
registrant to the purchaser.  </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>31</font></p>
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<page>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
undersigned registrant hereby undertakes that, for purposes of determining
               any liability under the Securities Act of 1933, each filing of the
               registrant&#146;s annual report pursuant to Section 13(a) or Section 15(d)
of                the Securities Exchange Act of 1934 (and, where applicable, each filing
of an                employee benefit plan&#146;s annual report pursuant to Section l5(d)
of the                Securities Exchange Act of 1934) that is incorporated by reference
in the                registration statement shall be deemed to be a new registration
statement                relating to the securities offered therein, and the offering of
such securities                at that time shall be deemed to be the initial bona fide
offering thereof. </FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c) </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Insofar
as indemnification for liabilities arising under the Securities Act of
               1933 may be permitted to the directors, officers and controlling persons
of the                registrant pursuant to the provisions described under &#147;Item 8.
               Indemnification of Directors and Officers&#148; above, or otherwise, the
               registrant has been advised that in the opinion of the Securities and
Exchange                Commission such indemnification is against public policy as
expressed in the Act                and is, therefore, unenforceable. In the event that a
claim for indemnification                against such liabilities (other than the payment
by the registrant of expenses                incurred or paid by a director, officer or
controlling person of the registrant                in the successful defense of any
action, suit or proceeding) is asserted by such                director, officer or
controlling person in connection with the securities being                registered, the
registrant will, unless in the opinion of our counsel the matter                has been
settled by controlling precedent, submit to a court of appropriate
               jurisdiction the question whether such indemnification by it is against
public                policy as expressed in the Act and will be governed by the final
adjudication of                such issue. </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>32</font></p>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SIGNATURES </FONT></H1>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Pursuant to the requirements of
the Securities Act of 1933, the registrant certifies that it has reasonable
grounds to believe that it meets all of the requirements for filing on Form F-3 and has duly caused this
Amendment No. 1  to be signed on its behalf by the undersigned, thereunto duly authorized, in Misgav, in the
State of Israel, on January 12, 2006. </FONT></P>





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<TD ><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD COLSPAN="2" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>B.O.S. Better Online Solutions Ltd.</B></U></FONT> </TD>
</TR>
<TR>
      <TD> &nbsp;</TD>
      <TD> </TD>
      <TD> </TD></TR>
<TR VALIGN=TOP>
<TD WIDTH="35%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR><BR><BR>By:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD WIDTH=35%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR><BR>
<BR>/s/ Adiv Baruch<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Adiv Baruch<BR>President and Chief<BR>Executive Officer</FONT></TD>
<TD WIDTH=30%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR><BR>
<BR>/s/ Nehemia Kaufman<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Nehemia Kaufman<BR>Chief Financial <BR>Officer</FONT></TD>
</TR>
</TABLE>
<BR>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Pursuant to the requirements of the
Securities Act of 1933, as amended, this Registration Statement has been signed by the
following persons in the capacities and on the dates indicated: </FONT></P>



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<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=33% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><U>Signature</U></B> </FONT> </TD>
     <TD WIDTH=45% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><U>Title</U></B> </FONT> </TD>
     <TD WIDTH=22% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><U>Date</U></B> </FONT> </TD></TR>
</TABLE>
<BR>


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<TD WIDTH="33%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Mr. Edouard Cukierman</FONT></TD>
<TD WIDTH="45%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Chairman of the Board of Directors</FONT></TD>
<TD WIDTH="22%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>January 12, 2006</FONT></TD>
</TR>
</TABLE>
<BR>




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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="33%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Mr. Adiv Baruch </FONT></TD>
<TD WIDTH="45%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>President, Chief Executive Officer and Director<BR>(Principal Executive Officer)</FONT></TD>
<TD WIDTH="22%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>January 12, 2006</FONT></TD>
</TR>
</TABLE>
<BR><BR>




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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="33%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Mr. Nehemia Kaufman</FONT></TD>
<TD WIDTH="45%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Chief Financial Officer<BR>(Principal Financial and Accounting Officer)</FONT></TD>
<TD WIDTH="22%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>January 12, 2006</FONT></TD>
</TR>
</TABLE>
<BR><BR>


<p align=center>
<font size=2></font></p>
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<page>


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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH="33%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Mr. Joel Adler</FONT></TD>
<TD WIDTH="45%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD>
<TD WIDTH="22%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2> January 12, 2006</FONT></TD>
</TR>
</TABLE>
<BR><BR>




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<TABLE WIDTH=100% CELLSPACING=0 CELLPADDING=0 BORDER=0>
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<TD WIDTH="33%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Mr. Ronen Zavlik</FONT></TD>
<TD WIDTH="45%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD>
<TD WIDTH="22%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>January 12, 2006</FONT></TD>
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<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Mr. Andrea Mandel-Mantello</FONT></TD>
<TD WIDTH="45%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD>
<TD WIDTH="22%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>January 12, 2006</FONT></TD>
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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Mr. Avishai Gluck</FONT></TD>
<TD WIDTH="45%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD>
<TD WIDTH="22%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>January 12, 2006</FONT></TD>
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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Dr. Yael Ilan</FONT></TD>
<TD WIDTH="45%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD>
<TD WIDTH="22%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>January 12, 2006</FONT></TD>
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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Prof. Adi Raveh</FONT></TD>
<TD WIDTH="45%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD>
<TD WIDTH="22%" VALIGN="top" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>January 12, 2006</FONT></TD>
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<TD WIDTH=100%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Authorized Representative in the U.S.:</B><BR><BR>Corporation Service Company
<BR><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
John H. Pelletier<BR><BR>Assistant Secretary<BR><BR>January 12, 2006</FONT></TD>
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<BR>*By: /s/ Adiv Baruch<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
(Attorney-in-Fact)</FONT></TD>
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<DOCUMENT>
<TYPE>EX-4.8
<SEQUENCE>2
<FILENAME>exhibit_4-8.htm
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     <!-- Project:        \\backup\office\EDGAR Filing\BOS better online solutions Ltd\62128\a62128.eep -->
     <!-- Control Number: 62128                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    BOS better online solutions Ltd                                  -->
     <!-- Project Name:   F-3/A                                                            -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>F-3/A</TITLE>
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<P ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 4.8</B></U> </FONT> </P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>REGISTRATION RIGHTS
AGREEMENT </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Registration Rights Agreement (this &#147;Agreement&#148;) is made and entered into as of
September 29, 2005, by and between B.O.S. Better On-Line Solutions Ltd., an Israeli
corporation (the &#147;Company&#148;), and Laurus Master Fund, Ltd., a Cayman Islands
Company (the &#147;Purchaser&#148;). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date
hereof, by and between the Purchaser and the Company (the &#147;Securities Purchase
Agreement&#148;), and pursuant to the Note and the Warrant referred to therein. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company and the Purchaser hereby agree as follows: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;1. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Definitions</U>.
Capitalized terms used and not otherwise defined herein that           are defined in the
Securities Purchase Agreement shall have the meanings given           to such terms in
the Securities Purchase Agreement. As used in this Agreement,           the following
terms shall have the following meanings:  </FONT></P>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Affiliate</I>&#148;of
any specified person means any other person, directly or indirectly, controlling or
controlled by or under common control with such specified person. For the purpose of this
definition &#147;control&#148; as used with respect to any person, shall mean the
possession, directly or indirectly, of the power to direct or cause the direction of the
management or policies of such person, whether through the ownership of voting securities
or by agreement or otherwise.  </FONT>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Commission</I>&#148;&nbsp;means
the Securities and Exchange Commission.  </FONT>
</TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Ordinary
S</I>hares&#148;&nbsp;means the Company&#146;s Ordinary Shares, NIS 4.00 nominal value per
share.  </FONT>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Effectiveness
Date</I>&#148;&nbsp;means the 135th day following the date hereof.  </FONT>
</TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Effectiveness
Period</I>&#148;&nbsp;shall have the meaning set forth in Section 2(a).  </FONT>
</TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Exchange
Act</I>&#148;&nbsp;means the Securities Exchange Act of 1934, as amended, and any successor
statute.  </FONT>
</TD>
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<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Filing
Date</I>&#148;&nbsp;means, with respect to the Registration Statement required to be filed
hereunder, a date no later than forty five (45) days following the date hereof, and with
respect to shares of Ordinary Stock issuable to the Holder as a result of adjustments to
the Fixed Conversion Price made pursuant to Section 3.4 of the Secured Convertible Term
Note or Section 4 of the Warrant or otherwise, sixty (60) days (ninety (90) days if the
request is made between February 1 and March 31,) days after the occurrence such event or
the date of the adjustment of the Fixed Conversion Price.  </FONT>
</TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Holder</I>&#148;or
&#147;<I>Holders</I>&#148;&nbsp;means the Purchaser or any of its successors to the extent any
of them hold Registrable Securities, provided that only registered holders of Registrable
Securities shall be counted for purposes of calculating any proportion of holders
entitled to take any action, receive any damages or give any notice pursuant to this
Agreement.  </FONT>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Indemnified
Party</I>&#148;&nbsp;shall have the meaning set forth in Section 5(c).  </FONT>
</TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Indemnifying
Party</I>&#148;&nbsp;shall have the meaning set forth in Section 5(c).  </FONT>
</TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Majority
Holders</I>&#148;&nbsp;shall means the Holders of a majority of the then outstanding aggregate
principal amount of Registrable Securities, provided that Registrable Securities which
have been sold or otherwise transferred pursuant to the Registration Statement or Rule
144 shall not be included in the calculation of Majority Holders.  </FONT>
</TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Note</I>&#148;&nbsp;has
the meaning set forth in the Securities Purchase Agreement.  </FONT>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Proceeding</I>&#148;&nbsp;means
an action, claim, suit, investigation or proceeding (including, without limitation, an
investigation or partial proceeding, such as a deposition), whether commenced or
threatened.  </FONT>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Prospectus</I>&#148;&nbsp;means
the prospectus included in the Registration Statement (including, without limitation, a
prospectus that includes any information previously omitted from a prospectus filed as
part of an effective registration statement in reliance upon Rule 430A promulgated under
the Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable Securities covered
by the Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated by
reference or deemed to be incorporated by reference in such Prospectus.  </FONT>
</TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Registrable
Securities</I>&#148;&nbsp;means the shares of Ordinary Shares issued upon the conversion of
the Note and issuable upon exercise of the Warrant.  </FONT>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Registration
Statement</I>&#148;&nbsp;means each registration statement required to be filed hereunder,
including the Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all
material incorporated by reference or deemed to be incorporated by reference in such
registration statement.  </FONT>
</TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Rule
144</I>&#148;&nbsp;means Rule 144 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as such Rule.  </FONT>
</TD>
</TR>
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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Rule
415</I>&#148;&nbsp;means Rule 415 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as such Rule.  </FONT>
</TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Securities
Act</I>&#148;&nbsp;means the Securities Act of 1933, as amended, and any successor statute.  </FONT>
</TD>
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<p align=center>
<font size=2>2</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Trading
Market</I>&#148;&nbsp;means any of the NASD OTC Bulletin Board, NASDAQ SmallCap Market, the
Nasdaq National Market, the American Stock Exchange, the New York Stock Exchange and the
Tel Aviv Stock Exchange.  </FONT>
</TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<I>Warrant</I>&#148;&nbsp;means
the Ordinary Shares Purchase Warrant issued pursuant to the Securities Purchase
Agreement.  </FONT>
</TD>
</TR>
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<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
references in this Agreement to amendments or supplements to the           Registration
Statement, any preliminary Prospectus or Prospectus shall be deemed           to mean and
include the filing of any document under the Exchange Act, after the           date of
such Registration Statement, preliminary Prospectus or Prospectus, as           the case
may be, which is incorporated by reference therein.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Registration.</U> </FONT> </P>


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               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               On or prior to the Filing Date the Company shall prepare and file with the
               Commission a Registration Statement covering the Registrable Securities for an
               offering to be made on a continuous basis pursuant to Rule 415. The Registration
               Statement shall be on Form F-3 (except if the Company is not then eligible to
               register for resale the Registrable Securities on Form F-3, in which case such
               registration shall be on another appropriate form in accordance herewith). The
               Company shall cause the Registration Statement to become effective and remain
               effective as provided herein. The Company shall use its reasonable commercial
               efforts to cause the Registration Statement to be declared effective under the
               Securities Act as promptly as possible after the filing thereof, but in any
               event no later than the Effectiveness Date. The Company shall use its reasonable
               commercial efforts to keep the Registration Statement continuously effective
               under the Securities Act until the date which is the earlier date of when (i)
               all Registrable Securities have been sold; (ii) all Registrable Securities may
               be sold by non-Affiliates of the Company immediately without registration under
               the Securities Act and without volume restrictions pursuant to Rule 144(k), as
               determined by the counsel to the Company on the basis of the Holders&#146;
               representations, pursuant to a written opinion letter to such effect, addressed
               and acceptable to the Company&#146;s transfer agent; or (iii) the second
               anniversary of the Closing Date (the &#147;Effectiveness Period&#148;). </FONT></TD>
               </TR>
               </TABLE>
               <BR>

<p align=center>
<font size=2>3</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               If: (i) the Registration Statement is not filed on or prior to the Filing Date;
               (ii) the Registration Statement is not declared effective by the Commission by
               the Effectiveness Date; (iii) after the Registration Statement is filed with and
               declared effective by the Commission, the Registration Statement ceases to be
               effective (by suspension, excluding a suspension of all trading on the Trading
               Market, or otherwise) as to all Registrable Securities to which it is required
               to relate at any time prior to the expiration of the Effectiveness Period
               (without being succeeded immediately by an additional registration statement
               filed and declared effective) for a period of time which shall exceed 30 days in
               the aggregate per year or more than 20 consecutive calendar days (defined as a
               period of 365 days commencing on the date the Registration Statement is declared
               effective); or (iv) the Ordinary Shares are not listed or quoted on any Trading
               Market, or is suspended from trading on any Trading Market (except for the Tel
               Aviv Stock Exchange) for a period of three (3) consecutive trading days
               (provided the Company shall not have been able to cure such trading suspension
               within 30 days of the notice thereof or list the Ordinary Stock on another
               Trading Market); (any such failure or breach being referred to as an
               &#147;Event,&#148; and for purposes of clause (i) or (ii) the date on which such
               Event occurs, or for purposes of clause (iii) the date which such 30 day or 20
               consecutive day period (as the case may be) is exceeded, or for purposes of
               clause (iv) the date on which such three (3) trading day period is exceeded,
               being referred to as &#147;Event Date&#148;), then until the applicable Event is
               cured, the Company shall pay to each Holder an amount in cash, as liquidated
               damages, equal to 1.0% for each thirty (30) day period (prorated for partial
               periods) on a daily basis of the outstanding principal amount of the Note. While
               such Event continues, such liquidated damages shall be paid not less often than
               each thirty (30) days. Any unpaid liquidated damages as of the date when an
               Event has been cured by the Company shall be paid within seven (7) business days
               following the date on which such Event has been cured by the Company. </FONT></TD>
               </TR>
               </TABLE>
               <BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c)  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Within
three business days of the Effectiveness Date, the Company shall cause                its
counsel to issue a blanket opinion in the form attached hereto as Exhibit A,
               to the transfer agent stating that the shares are subject to an effective
               registration statement and can be reissued free of restrictive legend upon
               notice of a sale by Purchaser and confirmation by Purchaser that it has
complied                with the prospectus delivery requirements, provided that the
Company has not                advised the transfer agent orally or in writing that the
opinion has been                withdrawn. Copies of the blanket opinion required by this
Section 2(c) shall be                delivered to Purchaser within the time frame set
forth above.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Registration
Procedures</U>. If and whenever the Company is required by the                provisions
hereof to effect the registration of any Registrable Securities under                the
Securities Act, the Company will, by the Filing Date:  </FONT></P>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               prepare and file with the Commission the Registration Statement with respect to
               such Registrable Securities, respond as promptly as possible to any comments
               received from the Commission, and use its reasonable commercial efforts to cause
               the Registration Statement to become and remain effective for the Effectiveness
               Period with respect thereto, and promptly provide to the Purchaser copies of all
               filings and Commission letters of comment relating thereto; </FONT></TD>
               </TR>
               </TABLE>
               <BR>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               prepare and file with the Commission such amendments and supplements to the
               Registration Statement and the Prospectus used in connection therewith as may be
               necessary to comply with the provisions of the Securities Act with respect to
               the disposition of all Registrable Securities covered by the Registration
               Statement and to keep such Registration Statement effective until the expiration
               of the Effectiveness Period; </FONT></TD>
               </TR>
               </TABLE>
               <BR>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               furnish to the Purchaser such number of copies of the Registration Statement and
               the Prospectus included therein (including each preliminary Prospectus) as the
               Purchaser reasonably may request to facilitate the public sale or disposition of
               the Registrable Securities covered by the Registration Statement; </FONT></TD>
               </TR>
               </TABLE>
               <BR>

<p align=center>
<font size=2>4</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(d) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               use its commercially reasonable efforts to register or qualify the
               Purchaser&#146;s Registrable Securities covered by the Registration Statement
               under the securities or &#147;blue sky&#148; laws of such jurisdictions within
               the United States as the Purchaser may reasonably request, provided, however,
               that the Company shall not for any such purpose be required to qualify generally
               to transact business as a foreign corporation in any jurisdiction where it is
               not so qualified or to consent to general service of process in any such
               jurisdiction; </FONT></TD>
               </TR>
               </TABLE>
               <BR>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(e) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               list the Registrable Securities covered by the Registration Statement with any
               securities exchange on which the Ordinary Shares of the Company are then listed; </FONT></TD>
               </TR>
               </TABLE>
               <BR>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(f) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               immediately notify the Purchaser at any time when a Prospectus relating thereto
               is required to be delivered under the Securities Act, of the happening of any
               event, of which the Company has knowledge, as a result of which the Prospectus
               contained in such Registration Statement, as then in effect, includes an untrue
               statement of a material fact or omits to state a material fact required to be
               stated therein or necessary to make the statements therein not misleading in
               light of the circumstances then existing; and </FONT></TD>
               </TR>
               </TABLE>
               <BR>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(g) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               make available for inspection by the Purchaser and any attorney, accountant or
               other agent retained by the Purchaser, all relevant publicly available,
               non-confidential financial and other records, pertinent corporate documents and
               properties of the Company as is customary for due diligence examinations in
               connection with public offerings, and cause the Company&#146;s officers,
               directors and employees to supply all such relevant publicly available
               non-confidential information reasonably requested by the attorney, accountant or
               agent of the Purchaser. </FONT></TD>
               </TR>
               </TABLE>
               <BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Registration
Expenses</U>. All expenses relating to the Company&#146;s                compliance with
Sections 2 and 3 hereof, including, without limitation, all                registration
and filing fees, printing expenses, fees and disbursements of                counsel and
independent public accountants for the Company, fees and expenses
               (including reasonable counsel fees) incurred in connection with complying
with                state securities or &#147;blue sky&#148; laws, fees of the NASD,
transfer taxes,                fees of transfer agents and registrars, fees of, and
disbursements incurred by,                one counsel for the Holders (to the extent such
counsel is required due to                Company&#146;s failure to meet any of its
obligations hereunder), are called                &#147;Registration Expenses&#148;. All
selling commissions applicable to the                sale of Registrable Securities,
including any fees and disbursements of any                special counsel to the Holders
beyond those included in Registration Expenses,                are called &#147;Selling
Expenses.&#148; The Company shall only be responsible                for all Registration
Expenses and not for any Selling Expenses.  </FONT></P>

<p align=center>
<font size=2>5</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Indemnification</U>.  </FONT></P>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               In the event of a registration of any Registrable Securities under the
               Securities Act pursuant to this Agreement, the Company will indemnify and hold
               harmless the Purchaser, and its officers, directors and each other person, if
               any, who controls the Purchaser within the meaning of the Securities Act,
               against any losses, claims, damages or liabilities, joint or several, to which
               the Purchaser, or such persons may become subject under the Securities Act or
               otherwise, insofar as such losses, claims, damages or liabilities (or actions in
               respect thereof) arise out of or are based upon any untrue statement or alleged
               untrue statement of any material fact contained in any Registration Statement
               under which such Registrable Securities were registered under the Securities Act
               pursuant to this Agreement, any preliminary Prospectus or final Prospectus
               contained therein, or any amendment or supplement thereof, or arise out of or
               are based upon the omission or alleged omission to state therein a material fact
               required to be stated therein or necessary to make the statements therein not
               misleading, and will reimburse the Purchaser, and each such person for any
               reasonable legal or other expenses incurred by them in connection with
               investigating or defending any such loss, claim, damage, liability or action;
               provided, however, that the Company will not be liable in any such case if and
               to the extent that any such loss, claim, damage or liability arises out of or is
               based upon (A) any untrue statement or alleged untrue statement or omission or
               alleged omission so made in conformity with information furnished by or on
               behalf of the Purchaser or any such person in writing specifically for use in
               any such document; (B) use of the Registration Statement or the related
               Prospectus following a Discontinuation Event, provided Purchaser received prior
               notice of such Discontinuation Event; or (C) if the Purchaser fails to deliver a
               Prospectus, as then amended or supplemented, provided that the Company shall
               have delivered to the Purchaser such Prospectus. </FONT></TD>
               </TR>
               </TABLE>
               <BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Notwithstanding
the foregoing, the Company shall not be liable for any losses, claims, damages or
liabilities by reason of any compromise, consent to entry of judgment, or settlement
effected without the Company&#146;s prior written consent, which consent shall not be
unreasonably withheld or conditioned. </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>6</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               In the event of a registration of the Registrable Securities under the
               Securities Act pursuant to this Agreement, the Purchaser will indemnify and hold
               harmless the Company, and its officers, directors and each other person, if any,
               who controls the Company within the meaning of the Securities Act, against all
               losses, claims, damages or liabilities, joint or several, to which the Company
               or such persons may become subject under the Securities Act or otherwise,
               insofar as such losses, claims, damages or liabilities (or actions in respect
               thereof) arise out of or are based upon any untrue statement or alleged untrue
               statement of any material fact which was furnished in writing by the Purchaser
               to the Company expressly for use in (and such information is contained in) the
               Registration Statement under which such Registrable Securities were registered
               under the Securities Act pursuant to this Agreement, any preliminary Prospectus
               or final Prospectus contained therein, or any amendment or supplement thereof,
               or arise out of or are based upon the omission or alleged omission to state
               therein a material fact required to be stated therein or necessary to make the
               statements therein not misleading, and will reimburse the Company and each such
               person for any reasonable legal or other expenses incurred by them in connection
               with investigating or defending any such loss, claim, damage, liability or
               action, provided, however, that the Purchaser will be liable in any such case if
               and only to the extent that any such loss, claim, damage or liability arises out
               of or is based upon an untrue statement or alleged untrue statement or omission
               or alleged omission so made in conformity with information furnished in writing
               to the Company by or on behalf of the Purchaser specifically for use in any such
               document. Notwithstanding the provisions of this paragraph, the Purchaser shall
               not be required to indemnify any person or entity in excess of the amount of the
               aggregate net proceeds received by the Purchaser in respect of Registrable
               Securities in connection with any such registration under the Securities Act. </FONT></TD>
               </TR>
               </TABLE>
               <BR>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               Promptly after receipt by a party entitled to claim indemnification hereunder
               (an &#147;Indemnified Party&#148;) of notice of the commencement of any action,
               such Indemnified Party shall, if a claim for indemnification in respect thereof
               is to be made against a party hereto obligated to indemnify such Indemnified
               Party (an &#147;Indemnifying Party&#148;), notify the Indemnifying Party in
               writing thereof, but the omission so to notify the Indemnifying Party shall not
               relieve it from any liability which it may have to such Indemnified Party other
               than under this Section 5(c) and shall only relieve it from any liability which
               it may have to such Indemnified Party under this Section 5(c) if and to the
               extent the Indemnifying Party is substantially prejudiced by such omission. In
               case any such action shall be brought against any Indemnified Party and it shall
               notify the Indemnifying Party of the commencement thereof, the Indemnifying
               Party shall be entitled to participate in and, to the extent it shall wish, to
               assume and undertake the defense thereof with counsel satisfactory to such
               Indemnified Party, and, after notice from the Indemnifying Party to such
               Indemnified Party of its election so to assume and undertake the defense
               thereof, the Indemnifying Party shall not be liable to such Indemnified Party
               under this Section 5(c) for any legal expenses subsequently incurred by such
               Indemnified Party in connection with the defense thereof; if the Indemnified
               Party retains its own counsel, then the Indemnified Party shall pay all fees,
               costs and expenses of such counsel, provided, however, that, if the defendants
               in any such action include both the indemnified party and the Indemnifying Party
               and the Indemnified Party shall have reasonably concluded that there may be
               reasonable defenses available to it which are different from or additional to
               those available to the Indemnifying Party or if the interests of the Indemnified
               Party reasonably may be deemed to conflict with the interests of the
               Indemnifying Party, the Indemnified Party shall have the right to select one
               separate counsel and to assume such legal defenses and otherwise to participate
               in the defense of such action, with the reasonable expenses and fees of such
               separate counsel and other expenses related to such participation to be
               reimbursed by the Indemnifying Party as incurred. </FONT></TD>
               </TR>
               </TABLE>
               <BR>

<p align=center>
<font size=2>7</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(d) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               In order to provide for just and equitable contribution in the event of joint
               liability under the Securities Act in any case in which that an Indemnified
               Party or any officer, director or controlling person thereof, makes a claim for
               indemnification pursuant to this Section 5 but it is judicially determined (by
               the entry of a final judgment or decree by a court of competent jurisdiction and
               the expiration of time to appeal or the denial of the last right of appeal) that
               such indemnification may not be enforced, notwithstanding the fact that this
               Section 5 provides for indemnification in such case, then the Indemnifying Party
               will contribute to the aggregate losses, claims, damages or liabilities to which
               it may be subject (after contribution from others) in such proportion as is
               appropriate to reflect the relative fault of the Indemnifying Party and the
               relative fault of the Indemnified Party as well as any other relevant equitable
               considerations. Relative fault shall be determined by reference to, among other
               things, whether any untrue statement or omission or alleged untrue statement of
               a material fact or the omission to state a material fact relates to information
               provided by the Indemnifying Party or the Indemnified Party, and the
               parties&#146; relative intent, knowledge, access to information and opportunity
               to correct or prevent such statement or omission. Notwithstanding the foregoing,
               no person or entity guilty of fraudulent misrepresentation (within the meaning
               of Section 11(f) of the Securities Act) will be entitled to contribution from
               any person or entity who was not guilty of such fraudulent misrepresentation. </FONT></TD>
               </TR>
               </TABLE>
               <BR>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(e) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               The provisions of this Section 5 will remain in full force and effect and
               survive the sale by the Purchaser of the Registrable Securities covered by the
               Registration Statement. </FONT></TD>
               </TR>
               </TABLE>
               <BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>[Reserved]</U>.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;7. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Miscellaneous</U>.  </FONT></P>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               <U>Remedies</U>. In the event of a breach by the Company or by a Holder, of any
               of their respective obligations under this Agreement, each Holder or the
               Company, as the case may be, in addition to being entitled to exercise all
               rights granted by law and under this Agreement, including recovery of damages,
               will be entitled to specific performance of its rights under this Agreement. </FONT></TD>
               </TR>
               </TABLE>
               <BR>

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               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               <U>No Piggyback on Registrations</U>. Except as and to the extent specified in
               Schedule 7(b) hereto, neither the Company nor any of its security holders (other
               than the Holders in such capacity pursuant hereto) may, without the consent of
               the Holder, which consent shall not be unreasonably withheld, include securities
               of the Company in any Registration Statement other than the Registrable
               Securities, and the Company shall not after the date hereof enter into any
               agreement providing any such right for inclusion of shares in the Registration
               Statement to any of its security holders. Except as and to the extent specified
               in Schedule 7(b) hereto, the Company has not previously entered into any
               agreement granting any registration rights with respect to any of its securities
               to any person that have not been fully satisfied. </FONT></TD>
               </TR>
               </TABLE>
               <BR>

<p align=center>
<font size=2>8</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               <U>Compliance</U>. Each Holder covenants and agrees that it will comply with the
               prospectus delivery requirements of the Securities Act as applicable to it in
               connection with sales of Registrable Securities pursuant to the Registration
               Statement. </FONT></TD>
               </TR>
               </TABLE>
               <BR>

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               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(d) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               <U>Discontinued Disposition</U>. Each Holder agrees by its acquisition of such
               Registrable Securities that, upon receipt of a notice from the Company of the
               occurrence of a Discontinuation Event (as defined below), such Holder will
               forthwith discontinue disposition of such Registrable Securities under the
               applicable Registration Statement until such Holder&#146;s receipt of the copies
               of the supplemented Prospectus and/or amended Registration Statement or until it
               is advised in writing by the Company that the use of the applicable Prospectus
               may be resumed, and, in either case, has received copies of any additional or
               supplemental filings that are incorporated or deemed to be incorporated by
               reference in such Prospectus or Registration Statement. The Company may provide
               appropriate stop orders to enforce the provisions of this paragraph. For
               purposes of this Section 7(d), a &#147;Discontinuation Event&#148; shall mean
               (i) when the Commission notifies the Company whether there will be a
               &#147;review&#148; of such Registration Statement and whenever the Commission
               comments in writing on such Registration Statement (the Company shall provide
               true and complete copies thereof and all written responses thereto to each of
               the Holders); (ii) any request by the Commission or any other Federal or state
               governmental authority for amendments or supplements to such Registration
               Statement or Prospectus or for additional information; (iii) the issuance by the
               Commission of any stop order suspending the effectiveness of such Registration
               Statement covering any or all of the Registrable Securities or the initiation of
               any Proceedings for that purpose; (iv) the receipt by the Company of any
               notification with respect to the suspension of the qualification or exemption
               from qualification of any of the Registrable Securities for sale in any
               jurisdiction, or the initiation or threatening of any Proceeding for such
               purpose; (v) the occurrence of any event or passage of time that makes the
               financial statements included in such Registration Statement ineligible for
               inclusion therein or any statement made in such Registration Statement or
               Prospectus or any document incorporated or deemed to be incorporated therein by
               reference untrue in any material respect or that requires any revisions to such
               Registration Statement, Prospectus or other documents so that, in the case of
               such Registration Statement or Prospectus, as the case may be, it will not
               contain any untrue statement of a material fact or omit to state any material
               fact required to be stated therein or necessary to make the statements therein,
               in light of the circumstances under which they were made, not misleading; </FONT></TD>
               </TR>
               </TABLE>
               <BR>

<p align=center>
<font size=2>9</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(e) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               <U>Piggy-Back Registrations</U>. If at any time during the Effectiveness Period
               there is not an effective Registration Statement covering all of the Registrable
               Securities and the Company shall determine to prepare and file with the
               Commission a registration statement relating to an offering for its own account
               or the account of others under the Securities Act of any of its equity
               securities, other than on Form F-4 or Form S-8 (each as promulgated under the
               Securities Act) or their then equivalents relating to equity securities to be
               issued solely in connection with any acquisition of any entity or business or
               equity securities issuable in connection with stock option or other employee
               benefit plans, then the Company shall send to each Holder written notice of such
               determination and, if within fifteen (15) days after receipt of such notice, any
               such Holder shall so request in writing, the Company shall include in such
               registration statement all or any part of such Registrable Securities such
               holder requests to be registered to the extent the Company may do so without
               violating registration rights of others which exist as of the date of this
               Agreement, subject to customary underwriter cutbacks applicable to all holders
               of registration rights and subject to obtaining the consent of any selling
               stockholder(s) to such inclusion under such registration statement. </FONT></TD>
               </TR>
               </TABLE>
               <BR>

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               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(f) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               <U>Amendments and Waivers</U>. The provisions of this Agreement, including the
               provisions of this sentence, may not be amended, modified or supplemented, and
               waivers or consents to departures from the provisions hereof may not be given,
               unless the same shall be in writing and signed by the Company and the Majority
               Holders. Notwithstanding the foregoing, a waiver or consent to depart from the
               provisions hereof with respect to a matter that relates exclusively to the
               rights of certain Holders and that does not directly or indirectly affect the
               rights of other Holders may be given by Holders of at least a majority of the
               Registrable Securities to which such waiver or consent relates; provided,
               however, that the provisions of this sentence may not be amended, modified, or
               supplemented except in accordance with the provisions of the immediately
               preceding sentence. </FONT></TD>
               </TR>
               </TABLE>
               <BR>

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               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(g) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               <U>Notices</U>. Any notice or request hereunder may be given to the Company or
               the Purchaser at the respective addresses set forth below or as may hereafter be
               specified in a notice designated as a change of address under this Section 7(g).
               Any notice or request hereunder shall be given by registered or certified mail,
               return receipt requested, hand delivery, overnight mail, Federal Express or
               other national overnight next day carrier (collectively, &#147;Courier&#148;) or
               telecopy (confirmed by mail). Notices and requests shall be, in the case of
               those by hand delivery, deemed to have been given when delivered to any party to
               whom it is addressed, in the case of those by mail or overnight mail, deemed to
               have been given five (5) business days after the date when deposited in the mail
               or three (3) business days after the date when deposited with the overnight mail
               carrier, in the case of a Courier, the two (2) business days following timely
               delivery of the package with the Courier, and, in the case of a telecopy, when
               confirmed. The address for such notices and communications shall be as follows: </FONT></TD>
               </TR>
               </TABLE>
               <BR>


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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=45%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>If to the Company:  </I></FONT></TD>
<TD WIDTH=45%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>B.O.S. Better On-Line Solutions Ltd.<BR>
To the address set forth under the Company's<BR> name on
the signature page hereto. </FONT></TD>
</TR>
</TABLE>
<BR>

<p align=center>
<font size=2>10</font></p>
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<page>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=55%>&nbsp;</TD>
<TD WIDTH=45%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<I>with a copy to: </I><BR>
Amit, Pollak, Matalon &amp; Ben-Naftali, Erez &amp; Co. <BR>
NYP Tower, 17 Yitzhak Sadeh Street, 19<SUP>th</SUP> Floor <BR>
Tel Aviv 67775 <BR>
Attention: Shlomo Landress, Esq. <BR>
<BR>
Facsimile: (972) 3 561-3620</FONT></TD>
</TR>
</TABLE>
<BR>




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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=45%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>If to a Purchaser:  </I></FONT></TD>
<TD WIDTH=45%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To the address set forth under Purchaser's name on the
signature page hereto. </FONT></TD>
</TR>
</TABLE>
<BR>





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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=45%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>If to any other person who is<BR>
then the registered Holder:</I>
</FONT></TD>
<TD WIDTH=45%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To the address of such Holder as it appears in the
stock transfer books of the Company
</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
or
such other address as may be designated in writing hereafter in accordance with this
Section 7(g) by such person. </FONT></TD>
</TR>
</TABLE>
<BR>

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               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(h) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               <U>Successors and Assigns</U>. This Agreement shall inure to the benefit of and
               be binding upon the successors and permitted assigns of each of the parties and
               shall inure to the benefit of each Holder. The Company may not assign its rights
               or obligations hereunder without the prior written consent of each Holder. Each
               Holder may assign their respective rights hereunder in the manner and to the
               persons as permitted under the Note and the Securities Purchase Agreement with
               the prior written consent of the Company, which consent shall not be
               unreasonably withheld. </FONT></TD>
               </TR>
               </TABLE>
               <BR>

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               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(i) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               <U>Execution and Counterparts</U>. This Agreement may be executed in any number
               of counterparts, each of which when so executed shall be deemed to be an
               original and, all of which taken together shall constitute one and the same
               Agreement. In the event that any signature is delivered by facsimile
               transmission, such signature shall create a valid binding obligation of the
               party executing (or on whose behalf such signature is executed) the same with
               the same force and effect as if such facsimile signature were the original
               thereof. </FONT></TD>
               </TR>
               </TABLE>
               <BR>

<p align=center>
<font size=2>11</font></p>
<HR SIZE="1" NOSHADE  STYLE="margin-top: -2px"><HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<page>

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          <TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(j) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               <U>Governing Law</U>. All questions concerning the construction, validity,
               enforcement and interpretation of this Agreement shall be governed by and
               construed and enforced in accordance with the internal laws of the State of New
               York, without regard to the principles of conflicts of law thereof. Each party
               agrees that all Proceedings concerning the interpretations, enforcement and
               defense of the transactions contemplated by this Agreement shall be commenced
               exclusively in the state and federal courts sitting in the City of New York,
               Borough of Manhattan. Each party hereto hereby irrevocably submits to the
               exclusive jurisdiction of the state and federal courts sitting in the City of
               New York, Borough of Manhattan for the adjudication of any dispute hereunder or
               in connection herewith or with any transaction contemplated hereby or discussed
               herein, and hereby irrevocably waives, and agrees not to assert in any
               Proceeding, any claim that it is not personally subject to the jurisdiction of
               any such court, that such Proceeding is improper. Each party hereto hereby
               irrevocably waives personal service of process and consents to process being
               served in any such Proceeding by mailing a copy thereof via registered or
               certified mail or overnight delivery (with evidence of delivery) to such party
               at the address in effect for notices to it under this Agreement and agrees that
               such service shall constitute good and sufficient service of process and notice
               thereof. Nothing contained herein shall be deemed to limit in any way any right
               to serve process in any manner permitted by law. Each party hereto hereby
               irrevocably waives, to the fullest extent permitted by applicable law, any and
               all right to trial by jury in any legal proceeding arising out of or relating to
               this Agreement or the transactions contemplated hereby. If either party shall
               commence a Proceeding to enforce any provisions hereunder, then the prevailing
               party in such Proceeding shall be reimbursed by the other party for its
               reasonable attorneys fees and other costs and expenses incurred with the
               investigation, preparation and prosecution of such Proceeding. </FONT></TD>
               </TR>
               </TABLE>
               <BR>

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               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(k) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               <U>Cumulative Remedies</U>. The remedies provided herein are cumulative and not
               exclusive of any remedies provided by law. </FONT></TD>
               </TR>
               </TABLE>
               <BR>

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               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(l) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               <U>Severability</U>. If any term, provision, covenant or restriction of this
               Agreement is held by a court of competent jurisdiction to be invalid, illegal,
               void or unenforceable, the remainder of the terms, provisions, covenants and
               restrictions set forth herein shall remain in full force and effect and shall in
               no way be affected, impaired or invalidated, and the parties hereto shall use
               their reasonable efforts to find and employ an alternative means to achieve the
               same or substantially the same result as that contemplated by such term,
               provision, covenant or restriction. It is hereby stipulated and declared to be
               the intention of the parties that they would have executed the remaining terms,
               provisions, covenants and restrictions without including any of such that may be
               hereafter declared invalid, illegal, void or unenforceable. </FONT></TD>
               </TR>
               </TABLE>
               <BR>

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               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(m) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               <U>Headings</U>. The headings in this Agreement are for convenience of reference
               only and shall not limit or otherwise affect the meaning hereof. </FONT></TD>
               </TR>
               </TABLE>
               <BR>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[BALANCE OF PAGE
INTENTIONALLY LEFT BLANK; <BR>
SIGNATURE PAGE FOLLOWS] </FONT></H1>

<p align=center>
<font size=2>12</font></p>
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<page>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the
date first written above. </FONT></P>




<TABLE WIDTH="100%" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">B.O.S. BETTER ON-LINE SOLUTIONS LTD.
</FONT></TD>
     <TD> </TD>
     <TD COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">LAURUS MASTER FUND, LTD.
</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD> </TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD> </TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">By:</FONT></TD>
     <TD COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_____________________________________</FONT></TD>
     <TD> </TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">By:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_____________________________________</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Name:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Adiv Baruch</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Nehemia Kaufman</FONT></TD>

     <TD> </TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Name:</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_____________________________________</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD WIDTH="8%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Title:</FONT></TD>
     <TD WIDTH="15%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">CFO</FONT></TD>
     <TD WIDTH="15%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">CFO</FONT></TD>
     <TD WIDTH="5%">&nbsp; </TD>
     <TD WIDTH="8%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Title:</FONT></TD>
     <TD WIDTH="49%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">_____________________________________</FONT></TD></TR>
</TABLE>
<BR>



<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="TOP">
     <TD COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I>Address for Notices:</I> </FONT>
</TD>
     <TD COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><I>Address for Notices:</I> </FONT>
</TD></TR>
<TR VALIGN="TOP">
     <TD COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Beit Rabin, 100 BOS Road
</FONT></TD>
     <TD COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">825 Third Avenue - 14<SUP>th</SUP> Floor
</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Teradyon Industrial Park, Misgav 20179 Israel
</FONT></TD>
     <TD COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">New York, NY  10022
</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Attention:
</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Nehemia Kaufman, CFO
</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Attention:
</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">David Grin
</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD WIDTH="10%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Facsimile:
</FONT></TD>
     <TD WIDTH="40%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(972) 4 999-0334
</FONT></TD>
     <TD WIDTH="10%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Facsimile:
</FONT></TD>
     <TD WIDTH="40%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">212-541-4434
</FONT></TD></TR>
</TABLE>
<BR>

<p align=center>
<font size=2>13</font></p>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXHIBIT A </FONT></H1>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[Month __, 200_] </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[Transfer Agent] </FONT></P>

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<TD WIDTH=25%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Re: </FONT></TD>
<TD WIDTH=35%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>B.O.S.
Better On-line Solutions Ltd.  Registration Statement on
Form [F-3] </FONT></TD>
<TD WIDTH=35%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR>
      <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT> </TD>
      <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT> </TD>
      <TD><HR SIZE=1 NOSHADE WIDTH=100% ALIGN=LEFT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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<BR>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ladies
and Gentlemen:  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
counsel to [company name], an Israeli corporation (the &#147;Company&#148;), we have been
requested to render our opinion to you in connection with the resale by the individuals or
entitles listed on Schedule A attached hereto (the &#147;Selling Shareholders&#148;), of
an aggregate of [amount] shares (the &#147;Shares&#148;) of the Company&#146;s Ordinary
Shares. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
Registration Statement on Form [F-3] under the Securities Act of 1933, as amended (the
&#147;Act&#148;), with respect to the resale of the Shares was declared effective by the
Securities and Exchange Commission on [date]. Enclosed is the Prospectus dated [date]. We
understand that the Shares are to be offered and sold in the manner described in the
Prospectus. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based
upon the foregoing, upon request by the Selling Shareholders at any time while the
registration statement remains effective, it is our opinion that the Shares have been
registered for resale under the Act and new certificates evidencing the Shares upon their
transfer or re-registration by the Selling Shareholders may be issued without restrictive
legend. The Company will advise you if the registration statement is not available or
effective at any point in the future. </FONT></P>


<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Very truly yours,</FONT></P>



<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[Company counsel]</FONT></P>



<P align=center><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Schedule A</B> </FONT></P>





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     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="TOP">
     <TD WIDTH="34%" VALIGN="Bottom"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>Selling Shareholder</U> </FONT></TD>
     <TD WIDTH="33%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="33%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Shares<BR>
<U>Being Offered</U> </FONT></TD></TR>
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<BR>

<p align=center>
<font size=2>14</font></p>
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<DOCUMENT>
<TYPE>EX-23.7
<SEQUENCE>3
<FILENAME>exhibit_23-7.htm
<TEXT>
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     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        \\Backup\office\EDGAR Filing\BOS better online solutions Ltd\62128\a62128.eep -->
     <!-- Control Number: 62128                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    BOS better online solutions Ltd                                  -->
     <!-- Project Name:   F-3/A                                                            -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>F-3/A</TITLE>
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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 23.7</B></U> </FONT> </P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Melnik Oded Business
Advisory Ltd. </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Re: <U>Consent letter</U></B> </FONT> </H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We consent to the reference to our
firm under the caption &#147;Experts&#148; in the Registration Statement on Form F-3 and
related prospectus of BOS Better Online Solutions Ltd. </FONT></P>

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<TD WIDTH="40%" VALIGN="Bottom"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>January 11, 2006</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH="50%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<BR>/s/ Melnik Oded Business Advisory Ltd.<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Melnik Oded Business Advisory Ltd.</FONT></TD>
</TR>
</TABLE>
<BR>




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