| HOTEL      OUTSOURCE MANAGEMENT INTERNATIONAL INC.    |
|-------------------------------------------------------|
| (Name      of Small Business Issuer in its charter)   |
|                                                  |   |
| Delaware                                              | 13-4167393 |
| (State      of Incorporation)                         | (IRS      Identification Number) |
|                                                  |   |
| 80      Wall Street, Suite 815New      York, New York | 10005 |
| (Address      of principal executive offices)         | (Zip      Code) |

|                     | Name      of each exchange on which |
|--------------------------|-------------------------------------|
| Title      of each class | Registered                          |
| 0                        | 0                                   |

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| PART      I  |                                                                              |
|--------------|-----------------------------------------------------------------------------------|
| Item      1  | Business                                                                          | 4 |
|         | General                                                                           | 4 |
|         | Our      Growth Strategy                                                          | 4 |
|         | Operations                                                                        | 5 |
|         | Competition                                                                       | 6 |
|         | Customers      and Markets                                                        | 7 |
|         | Government      Regulations                                                       | 8 |
|         | Intellectual      Property                                                        | 8 |
|         | Employees                                                                         | 8 |
|         | Corporate      Structure                                                          | 8 |
|         | Risk      Factors                                                                 | 8 |
| Item      2  | Description      of Property                                                      | 9 |
| Item      3  | Legal      Proceedings                                                            | 10 |
| Item      4  | Submission      of Matters to a Vote of Security Holders                          | 10 |
| PART      II |                                                                              |
| Item      5  | Market      for Registrant’s Common Equity, Related Stockholder    Matters, |   |
|         |                                                                              | and      Small Business Issuer Purchases of Equity Securities | 10 |
| Item      6  | Management’s      Discussion and Analysis of Financial Condition and        |   |
|         |                                                                              | Results      of Operations | 10 |
|         | Forward-Looking      Statements                                                   | 10 |
|         | Critical      Accounting Policies                                                 | 11 |
|         | Revenue      Recognition, Accounts Receivable and Allowance forDoubtful           |   |
|         |                                                                              | Accounts | 11 |
|         | Long-Lived      Assets                                                            | 11 |
|         | Overview                                                                          | 12 |
|         | Cost      and Expenses                                                            | 12 |
|         | Results      of Operations                                                        | 13 |
|         | Liquidity      and Capital Resources                                              | 14 |
|         | Subsequent      Events                                                            | 15 |
|         | Off-Balance      Sheet Arrangements                                               | 15 |
|         | Inflation                                                                         | 15 |
|         | International      Tax Implications                                               | 15 |
| Item      7  | Financial      Statements                                                         | 17 |
|         | Report      of Independent Registered Public Accounting Firm                      | FS      2 |
|         | Consolidated      Balance Sheets                                                  | FS      3 |
|         | Consolidated      Statements of Operations                                        | FS      5 |
|         | Consolidated      Statements of shareholders’ Equity                        | FS      6 |
|         | Consolidated      Statements of Cash Flows                                        | FS      7 |
|         | Notes      to Consolidated Financial Statements                                   | FS      9 |
| Item      8  | Changes      In and Disagreements With Accountants on Accounting on               |   |
|         |                                                                              | Accounting      and Financial Disclosure | 47 |
| Item      8A | Controls      and Procedures                                                      | 47 |
| Item      8B | Other      Information                                                            | 48 |

| PART      III |                                                                    |
|---------------|-------------------------------------------------------------------------|
| Item      9   | Directors      and Executive Officers of the Registrant                 | 49 |
| Item      10  | Executive      Compensation                                             | 51 |
| Item      11  | Security      Ownership of Certain Beneficial Owners and Management and |   |
|          |                                                                    | Related      Stockholder Matters | 52 |
| Item      12  | Certain      Relationships and Related Transactions                     | 53 |
| Item      13  | Exhibits                                                                | 54 |
| Item      14  | Principal      Accountant Fees and Services                             | 55 |
|          | Signatures                                                              | 56 |

----

----

|   | · | Mechanism against mistaken      charges . This has been designed to increase the accuracy of the      automatic billing.                                                                                                                                                                                             |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | · | Substantially lower operating      costs . This should improve profit margins and means that HOMI will      be able to offer the HOMI®      336 and the New Range of Products to midscale/mid-market hotels, a very      large sector previously closed to HOMI in the past, as well as to upscale      hotels. |
|   | · | No need for infrastructure at      hotel . A standard electrical outlet is the only infrastructure      required. Minibar data is transferred automatically via an integral,      dedicated wireless system. This makes installation easier, and more      attractive to hotels.                                     |

----

|   | § | No      capital expenditure on the minibars |
|--------|--------|---------------------------------------------|

|   | § | A      new revenue stream, if no minibars were previously installed and      operational |
|--------|--------|------------------------------------------------------------------------------------------|

|   | § | No      labor expenses and no operatingcosts |
|--------|--------|----------------------------------------------|

|   | § | No      purchase of goods and no inventorymanagement |
|--------|--------|------------------------------------------------------|

|   | § | Added      service to guests, thereby improving the customer’s competitive      edge |
|--------|--------|--------------------------------------------------------------------------------------------|

|   | § | No      downside: hotel is minimizing its risks, both financial and      other |
|--------|--------|--------------------------------------------------------------------------------|

|   | § | Added      flexibility, via the customer’s option to purchase the    system |
|--------|--------|-----------------------------------------------------------------------------------|

|   | § | Outsourcing      allows the hotel to focus on major revenue  sources |
|--------|--------|----------------------------------------------------------------------|

|   | § | Quality      of service: we specialize in thefield |
|--------|--------|----------------------------------------------------|

|   | § | Increased      control and management, extensivereporting |
|--------|--------|-----------------------------------------------------------|

|   | § | No      maintenance by customer |
|--------|--------|---------------------------------|

|   | § | Periodic      technical and technologicalupgrades |
|--------|--------|---------------------------------------------------|

----

|   | § | Implementation      of our exclusive operatingprocedures |
|--------|--------|----------------------------------------------------------|

|   | § | Procurement      of the consumables that are offered in the  minibars |
|--------|--------|-----------------------------------------------------------------------|

|   | § | Management      of inventory control and monitoring of expiry dates of      consumables |
|--------|--------|-----------------------------------------------------------------------------------------|

|   | § | Implementation      of procedures to handle and reducerebates |
|--------|--------|---------------------------------------------------------------|

|   | § | Periodic      reconciliation of accounts |
|--------|--------|------------------------------------------|

|   | § | Training      of minibar attendants and front officeemployees |
|--------|--------|---------------------------------------------------------------|

|   | § | Maintenance      and support |
|--------|--------|------------------------------|

|   | § | Taking      active involvement in the selection and pricing of    consumables |
|--------|--------|-------------------------------------------------------------------------------|

|   | § | Implementing      innovative and attractive product mixes for different room      categories |
|--------|--------|----------------------------------------------------------------------------------------------|

|   | § | Producing      attractive, creative and novelmenus |
|--------|--------|----------------------------------------------------|

|   | § | Improving      minibar visibility |
|--------|--------|-----------------------------------|

|   | § | Proposing      and implementing effective promotional  activities |
|--------|--------|-------------------------------------------------------------------|

|   | § | Reducing      rebates & manual emptying of minibars by  guests |
|--------|--------|--------------------------------------------------------------------|

|   | § | In-depth      and real-time data logging and reporting, thereby creating extensive sales      statistics and enabling effective data-mining, designed to adapt the      system to improve performance |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | · | Our      corporate headquarters are located at 80 Wall Street, Suite 815, New York,      New York, in the offices of Schonfeld & Weinstein, L.L.P., at no      additional cost to us. Schonfeld & Weinstein, L.L.P. serves as our US      Counsel and also owns shares in ourcompany. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | HOMI      Israel’s corporate headquarters are currently located at  100      Levi Eshkol Street, Tel-Aviv 69361 Israel with a monthly rent of $800.      This office is leased from an unaffiliated third party. We also lease a      virtual office at 116 West 23rd Street, New York, New York from Select      Office Suites, an unrelated third party, for $100 per month on a      month-to-month basis. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | HOMI      USA has its corporate headquarters at 1 Embarcadero Center, Suite 500, San      Francisco, California 94111. The monthly rent is $500. Most of HOMI USA’s      operations are conducted from the office we utilize at the Hyatt Regency      San Francisco, which is one of ourcustomers. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | HOMI      South Africa operates from an office in Johannesburg for a monthly rent of      $350. |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | In      connection with our European operations, we also lease an office in      Geneva, Switzerland, for a monthly rent of approximately $1,600      (approximately CHF1,535 ). |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| First Quarter 2007  |
|---------------------|
|                |
| High      Bid $0.45 | Low      Bid $0.36 |
|                |   |
|                |   |
| Second Quarter 2007 |
|                |
| High      Bid $0.40 | Low      Bid $0.30 |
|                |   |
|                |   |
| Third Quarter 2007  |
|                |   |
| High      Bid $0.34 | Low      Bid $0.26 |
|                |   |
|                |   |
| Fourth Quarter 2007 |
|                |
| High      Bid $0.32 | Low      Bid $0.28 |
|                |   |

----

----

----

|   | (1) | The      purchase of the minibars system to be installed in hotels; this capital      expense is charged to property and equipment and depreciated over a period      of ten years; |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | The      purchase of the consumables to be placed in the minibars; we purchase      these products from various vendors; sometimes the customer will purchase      the alcoholic beverages to be placed in the minibars and we reimburse the      customer for such purchases; |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Labor      costs of the minibar attendants; |
|--------|-----|---------------------------------------------|

|   | (4) | General      and Administrative, and marketingexpenses; |
|--------|-----|---------------------------------------------------------|

|   | (5) | Maintenance      of the minibar systems; |
|--------|-----|------------------------------------------|

|   | (6) | Finance      expenses. |
|--------|-----|------------------------|

| Location                      | Percentage      of Revenues |
|-------------------------------|-----------------------------|
|                          | 2006                        |   | 2007 |
|                          |                        |   |   |
| United      States of America | 33%                         |   | 30% |
| ROW                           | 35%                         |   | 36% |
| Israel                        | 21%                         |   | 21% |
| South      Africa             | 11%                         |   | 13% |
| Totals                        | 100%                        |   | 100% |

----

|   | · | BSI      sold to Hila International Corp., a wholly owned subsidiary of HOMI      (“Hila”) all of      BSI’s shares and rights in HOMI USA (formerly “HOS”). Prior to February      13, 2007, HOMI USA was owned 30% by BSI and 70% by Hila. As a result of      this sale, HOMI USA is now a directly wholly owned subsidiary of HOMI, and      the previously existing stockholders agreement in HOMI USA has been      terminated and voided, with no surviving provisions. The purchase price      paid by Hila for all of BSI’s shares and rights in HOMI USA was the      nominal sum of $1. The purchase by Hila of the 30% of HOMI USA that was      previously held by BSI and the termination of related agreements has      resulted in a profit of approximately $472,000 to the    Company. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | · | Hila      and BSI gave notice of the discontinuance, with prejudice, of the      arbitration proceedings that were pending between them before the American      Arbitration Association.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | · | BSI      granted HOMI and its subsidiaries preferred customer terms on any further      purchases that HOMI and its subsidiaries may make from BSI and its      subsidiaries, for a minimum and revolving term. Aside from these preferred      terms, all non-competition restrictions, exclusivity provisions and all      prior agreements between HOMI and its subsidiaries and BSI and its      subsidiaries were terminated and voided, with no surviving      provisions.                                                                                                                                                                                                                                                                                                                                                             |

----

----

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| INDEX |
|-------|

|                                                          | Page   |
|---------------------------------------------------------------|--------|
|                                                          |   |
| Reports      of Independent Registered Public Accounting Firm | 2      |
|                                                          |   |
| Consolidated      Balance Sheets                              | 3-4    |
|                                                          |   |
| Consolidated      Statements of Operations                    | 5      |
|                                                          |   |
| Statement      of Changes in Shareholders' Equity             | 6      |
|                                                          |   |
| Consolidated      Statements of Cash Flows                    | 7-8    |
|                                                          |   |
| Notes      to the Consolidated Financial Statements           | 9-29   |

----

|        | Jerusalem,City Tower,34      Ben-Yehuda St. 94583Tel:  972      - 2 - 6256341    Fax:  972 - 2 -      6231340Tel-Aviv,Shalom Tower,9      Ahad Ha’am St.65251Tel:  972      - 3 - 5176383    Fax:  972 - 3 -      5176392 | ירושלים,מגדל העיר, רח' בן יהודה 34,      94583טל':  6256341      - 02    פקס:  6231340      - 02תל אביב,מגדל שלום,רח' אחד העם 9,      65251טל':  5176383      - 03    פקס:  5176392      - 03 |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |  Barzily      & Co. is a member of MSI, a network of independent professional      firms                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | w      w w . b a r z i l y . c o . I l                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

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|                                                                                                            |   |   | December      31, |
|-----------------------------------------------------------------------------------------------------------------|--------|--------|-------------------|
|                                                                                                            | Note   |   | 2007              |   | 2006 |
|                                                                                                            |   |   |              |   |   |
|  ASSETS                                                                                                    |   |   |              |   |   |
|                                                                                                            |   |   |              |   |   |
| CURRENT      ASSETS:                                                                                            |   |   |              |   |   |
|                                                                                                            |   |   |              |   |   |
| Cash      and cash equivalents                                                                                  |   |   | 2,344             |   | 609 |
| Short-term      bank deposits                                                                                   |   |   | 5                 |   | 18 |
| Trade      receivables (net of allowance for doubtful accounts of $ 0.00 as of      December 31, 2007 and 2006) |   |   | 791               |   | 539 |
| Other      accounts receivable                                                                                  | 3      |   | 125               |   | 163 |
| Inventories                                                                                                     |   |   | 251               |   | 243 |
|                                                                                                            |   |   |              |   |   |
|                                                                                                            |   |   | 3,516             |   | 1,572 |
|                                                                                                            |   |   |              |   |   |
| LONG-TERM      INVESTMENTS:                                                                                     |   |   |              |   |   |
|                                                                                                            |   |   |              |   |   |
| Investments      in affiliated companies                                                                        | 4      |   |  -           |   | 1,713 |
| Severance      pay fund                                                                                         |   |   | 33                |   | 23 |
|                                                                                                            |   |   |              |   |   |
|                                                                                                            |   |   | 33                |   | 1,736 |
|                                                                                                            |   |   |              |   |   |
|                                                                                                            |   |   |              |   |   |
| PROPERTY      AND EQUIPMENT, NET:                                                                               | 5      |   |              |   |   |
|                                                                                                            |   |   |              |   |   |
| Minibars      and related equipment                                                                             |   |   | 4,541             |   | 4,236 |
| Other      property and equipment                                                                               |   |   | 56                |   | 91 |
|                                                                                                            |   |   |              |   |   |
|                                                                                                            |   |   | 4,597             |   | 4,327 |
|                                                                                                            |   |   |              |   |   |
| OTHER      ASSETS:                                                                                              | 6      |   |              |   |   |
|                                                                                                            |   |   |              |   |   |
| Contract      rights, net                                                                                       |   |   | 26                |   | 37 |
| Deferred      expenses                                                                                          |   |   | 90                |   | 66 |
| Trademark                                                                                                       |   |   | 30                |   | - |
|                                                                                                            |   |   | 146               |   | 103 |
|                                                                                                            |   |   |              |   |   |
|                                                                                                            |   |   | 8,292             |   | 7,738 |

----

----

|                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | December      31, |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                     | Note   |   | 2007              |   | 2006 |
|  LIABILITIES      AND SHAREHOLDERS' EQUITY                                                                                                                                                                                                                                                                                                                                                                          |   |   |              |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |              |   |   |
| CURRENT      LIABILITIES:                                                                                                                                                                                                                                                                                                                                                                                                |   |   |              |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |              |   |   |
| Current      maturities of long-term loans                                                                                                                                                                                                                                                                                                                                                                               | 9      |   | 292               |   | 332 |
| Trade      payables                                                                                                                                                                                                                                                                                                                                                                                                      |   |   | 374               |   | 252 |
| Accrued      and other liabilities                                                                                                                                                                                                                                                                                                                                                                                       | 8      |   | 299               |   | 469 |
|                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |              |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | 965               |   | 1,053 |
| LONG-TERM      LIABILITIES:                                                                                                                                                                                                                                                                                                                                                                                              |   |   |              |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |              |   |   |
| Long-term      loans,  net of current maturities                                                                                                                                                                                                                                                                                                                                                               | 9      |   | 785               |   | 1,116 |
| Convertible      notes                                                                                                                                                                                                                                                                                                                                                                                                   | 7      |   | 494               |   | 118 |
| Accrued      severance pay                                                                                                                                                                                                                                                                                                                                                                                               |   |   | 45                |   | 31 |
| Deferred      taxes                                                                                                                                                                                                                                                                                                                                                                                                      | 14     |   | 21                |   | 10 |
|                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |              |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | 1,345             |   | 1,275 |
|                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |              |   |   |
| COMMITMENTS      AND CONTINGENT LIABILITIES                                                                                                                                                                                                                                                                                                                                                                              | 10     |   |              |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |              |   |   |
| MINORITY      INTEREST                                                                                                                                                                                                                                                                                                                                                                                                   |   |   | (26)              |   | 459 |
|                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |              |   |   |
| SHAREHOLDERS'      EQUITY:                                                                                                                                                                                                                                                                                                                                                                                               |   |   |              |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |              |   |   |
| Share      capital -                                                                                                                                                                                                                                                                                                                                                                                                     | 11     |   |              |   |   |
| Preferred      stock of $ 0.001 par value –5,000,000      shares  Authorized;0      shares  issued and outstanding as of December 31, 2007 and      2006;Common      stock of $ 0.001 par value – 105,000,000      shares Authorized; 41,122,078 shares and 39,967,937 shares issued and      outstanding: as of December 31, 2007 and  2006,      respectively |   |   | 41                |   | 40 |
| Additional      paid-in capital                                                                                                                                                                                                                                                                                                                                                                                          |   |   | 8,048             |   | 7,585 |
| Accumulated      other comprehensive income                                                                                                                                                                                                                                                                                                                                                                              |   |   | 195               |   | 52 |
| Accumulated      deficit                                                                                                                                                                                                                                                                                                                                                                                                 |   |   | (2,276)           |   | (2,726) |
|                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |              |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | 6,008             |   | 4,951 |
|                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |              |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   | 8,292             |   | 7,738 |

----

----

|                                                                                                                             |   |   |   | Year      ended December 31, |
|----------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|------------------------------|
|                                                                                                                             |   | Note   |   |                         |   | 2007 |   | 2006 |
|                                                                                                                             |   |   |   |                         |   |   |   |   |
| Revenues                                                                                                                         |   | 12     |   |                         |   | 3,775 |   | 3,261 |
|                                                                                                                             |   |   |   |                         |   |   |   |   |
| Cost      of revenues:                                                                                                           |   |   |   |                         |   |   |   |   |
|                                                                                                                             |   |   |   |                         |   |   |   |   |
|   Depreciation                                                                                                         |   |   |   |                         |   | (607) |   | (572) |
|                                                                                                                             |   |   |   |                         |   |   |   |   |
|   Other                                                                                                                |   |   |   |                         |   | (1,606) |   | (1,385) |
|                                                                                                                             |   |   |   |                         |   |   |   |   |
| Gross      profit                                                                                                                |   |   |   |                         |   | 1,562 |   | 1,304 |
|                                                                                                                             |   |   |   |                         |   |   |   |   |
| Operating      expenses:                                                                                                         |   |   |   |                         |   |   |   |   |
|                                                                                                                             |   |   |   |                         |   |   |   |   |
| Research      and Development                                                                                                    |   |   |   |                         |   | (134) |   | (261) |
|                                                                                                                             |   |   |   |                         |   |   |   |   |
| Selling      and marketing                                                                                                       |   |   |   |                         |   | (296) |   | (223) |
|                                                                                                                             |   |   |   |                         |   |   |   |   |
| General      and administrative                                                                                                  |   |   |   |                         |   | (1,410) |   | (990) |
|                                                                                                                             |   |   |   |                         |   |   |   |   |
| Loss      before financial expenses and other income, net                                                                        |   |   |   |                         |   | (278) |   | (170) |
|                                                                                                                             |   |   |   |                         |   |   |   |   |
| Financial      expenses, net                                                                                                     |   | 13     |   |                         |   |           - |   | (132) |
|                                                                                                                             |   |   |   |                         |   |   |   |   |
| Other      income, net                                                                                                           |   | 13A    |   |                         |   | 752 |   | 20 |
|                                                                                                                             |   |   |   |                         |   |   |   |   |
| Income      (loss) before taxes on income                                                                                        |   |   |   |                         |   | 474 |   | (282) |
|                                                                                                                             |   |   |   |                         |   |   |   |   |
| Taxes      on income                                                                                                             |   | 14     |   |                         |   | (36) |   | (32) |
|                                                                                                                             |   |   |   |                         |   |   |   |   |
| Income      (loss) before equity in earnings of an affiliated company and minority      interests in losses of subsidiaries, net |   |   |   |                         | 438 |   | (314) |
|                                                                                                                             |   |   |   |                         |   |   |   |   |
| Equity      in losses of an affiliated company                                                                                   |   |   |   |                         |   |           - |   | (3) |
|                                                                                                                             |   |   |   |                         |   |   |   |   |
| Minority      interest in losses of subsidiaries, net                                                                            |   |   |   |                         |   | 12 |   | 14 |
|                                                                                                                             |   |   |   |                         |   |   |   |   |
| Net      income (loss)                                                                                                           |   |   |   |                         |   | 450 |   | (303) |
|                                                                                                                             |   |   |   |                         |   |   |   |   |
|                                                                                                                             |   |   |   |                         |   |   |   |   |
| Basic      and diluted net income (loss) per share                                                                               |   |   |   |                         |   | 0.011 |   |              (0.008) |
|                                                                                                                             |   |   |   |                         |   |   |   |   |
| Weighted      average number of shares used in computing basic and diluted net income      (loss) per share                      |   |   |   |                         |   |    40,361,891 |   | 38,098,371 |

----

----

|                                          |   | Number      ofShares      of CommonStock |   | Common      Stock Par Value |   | Additional      paid-in capital |   | Accumulated      other comprehensive income (loss) |   | Accumulateddeficit |   | Other      Comprehensive income (loss) |   | Total  |
|-----------------------------------------------|--------|------------------------------------------|--------|-----------------------------|--------|---------------------------------|--------|----------------------------------------------------|--------|--------------------|--------|----------------------------------------|--------|--------|
| Balance      as of December 31, 2005          |   | 30,447,522                               |   | 30                          |   | 4,556                           |   | (71)                                               |   | (2,423)            |   | -                                      |   | 2,092  |
|                                          |   |                                     |   |                        |   |                            |   |                                               |   |               |   |                                   |   |   |
| Issuance      of shares (see also Note 11)    |   | 9,520,415                                |   | 10                          |   | 3,029                           |   | -                                                  |   | -                  |   | -                                      |   | 3,039  |
| Foreign      currency translation adjustments |   | -                                        |   | -                           |   | -                               |   | 123                                                |   |   -      |   | 123                                    |   | 123    |
| Net      loss                                 |   | -                                        |   | -                           |   | -                               |   | -                                                  |   | (303)              |   | (303)                                  |   | (303)  |
|                                          |   |                                     |   |                        |   |                            |   |                                               |   |               |   |                                   |   |   |
| Total      comprehensive loss                 |   |                                     |   |                        |   |                            |   |                                               |   |               |   | (180)                                  |   |   |
|                                          |   |                                     |   |                        |   |                            |   |                                               |   |               |   |                                   |   |   |
| Balance      as of December 31, 2006          |   | 39,967,937                               |   | 40                          |   | 7,585                           |   | 52                                                 |   | (2,726)            |   |                                   |   | 4,951  |

| Issuance      of shares (see also Note 11)    |   | 1,154,141  |   | 1      |   | 463    |   |   |   |    |   |   |   | 464    |
|-----------------------------------------------|--------|------------|--------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|
| Foreign      currency translation adjustments |   | -          |   | -      |   | -      |   | 143    |   |    |   | 143    |   | 143    |
| Net      profit                               |   | -          |   | -      |   | -      |   | -      |   | 450     |   | 450    |   | 450    |
|                                          |   |       |   |   |   |   |   |   |   |    |   |   |   |   |
| Total      comprehensive income               |   |       |   |   |   |   |   |   |   |    |   | 593    |   |   |
|                                          |   |       |   |   |   |   |   |   |   |    |   |   |   |   |
| Balance      as of December 31, 2007          |   | 41,122,078 |   | 41     |   | 8,048  |   | 195    |   | (2,276) |   |   |   | 6,008  |

----

----

|                                                                                               | Year      ended December 31, |
|----------------------------------------------------------------------------------------------------|------------------------------|
|                                                                                               |                         |   | 2007 |   | 2006 |
| CASH      FLOWS FROM OPERATING ACTIVITIES:                                                         |                         |   |   |   |   |
| Net      income (loss)                                                                             |                         |   |      450 |   |  (303) |
| Adjustments      to reconcile net income (loss) to net cash provided by operating      activities: |                         |   |   |   |
| Gain      on sale of investment                                                                    |                         |   | (275) |   | - |
| Depreciation      and amortization                                                                 |                         |   | 641 |   | 596 |
| Share-based      compensation                                                                      |                         |   |  15 |   | - |
| Increase      in accrued severance pay, net                                                        |                         |   | 4 |   | 8 |
| Accrued      interest and linkage difference on loans, net                                         |                         |   | (2) |   | - |
| Interest      and linkage differences in regard to shareholders                                    |                         |   | 18 |   | 27 |
| Equity      in losses of an affiliated company                                                     |                         |   | - |   | 3 |
| Gain      on sale of property and equipment                                                        |                         |   | (2) |   | - |
| Minority      interest in losses of subsidiaries, net                                              |                         |   | (12) |   | (14) |
| Provision      for deferred income taxes                                                           |                         |   | 10 |   | - |
| Other      income                                                                                  |                         |   | (472) |   | - |
| Changes      in assets and liabilities:                                                            |                         |   |   |   |   |
| Decrease      (increase) in inventories                                                            |                         |   | 7 |   | (61) |
| Increase      in trade receivables                                                                 |                         |   | (227) |   | (28) |
| Decrease      in other accounts receivable                                                         |                         |   | 10 |   | 15 |
| Increase      (decrease) in trade payables                                                         |                         |   | 53 |   | (33) |
| Increase      (decrease) in other accounts payable and accrued expenses                            |                         |   | (191) |   | 216 |
|                                                                                               |                         |   |   |   |   |
| Net      cash provided by operating activities                                                     |                         |   | 27 |   | 426 |
|                                                                                               |                         |   |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                                                         |                         |   |   |   |   |
| Proceeds      from sale of shares in an affiliate                                                  |                         |   |   2,353 |   | - |
| Purchases      of property and equipment                                                           |                         |   |  (640) |   | (803) |
| Proceeds      from sales of property and equipment                                                 |                         |   | 11 |   | - |
| Investment      in an affiliated company                                                           |                         |   | - |   | (120) |
| Short-term      bank deposits, net                                                                 |                         |   | 13 |   | 74 |
| Acquisition      of intangibles                                                                    |                         |   | (30) |   | - |
| Acquisition      of a newly consolidated company  (Appendix A)                           |                         |   | 16 |   |   - |
|                                                                                               |                         |   |   |   |   |
| Net      cash provided by (used in) investing activities                                           |                         |   |    1,723 |   | (849) |
|                                                                                               |                         |   |   |   |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES:                                                         |                         |   |   |   |   |
| Issue      of shares, net                                                                          |                         |   | 1 |   | 927 |
| Proceeds      from issuance of convertible notes, net of deferred    expenses                      |                         |   | 338 |   | 106 |
| Repayments      of long-term loans from banks and others                                           |                         |   | (310) |   | (281) |
| Repayments      of long-term loans from shareholders                                               |                         |   | (5) |   | (261) |
| Dividend      from an affiliated company                                                           |                         |   | 6 |   | - |
|                                                                                               |                         |   |   |   |   |
| Net      cash provided by financing activities                                                     |                         |   | 30 |   | 491 |
|                                                                                               |                         |   |   |   |   |
| Effect      of exchange rate changes on cash and cash equivalents                                  |                         |   | (45) |   | (2) |
| Increase      in cash and cash equivalents                                                         |                         |   | 1,735 |   | 66 |
| Cash      and cash equivalents at the beginning of the year                                        |                         |   | 609 |   | 543 |
| Cash      and cash equivalents at the end of the year                                              |                         |   | 2,344 |   | 609 |

----

----

| Appendix      A -                                             |                                                            |
|---------------------------------------------------------------|-----------------------------------------------------------------|
|   Acquisition      of a newly consolidated company: | Year      ended December 31,                                    |
|                                                          |                                                            |   |   | 2007 |   | 2006 |
|                                                          | Working      capital, net (excluding cash and cash equivalents) |   |   | 32 |   | - |
|                                                          | Excess      cost attributed to fixed assets                     |   |   | (16) |   | - |
|                                                          |                                                            |   |   | 16 |   | - |

| Appendix      B -                                                                                           |                                                                                                                                     |
|-------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------|
| Supplemental      disclosure of non-cash investing and financing activities and cash flow      information: | Year      ended December 31,                                                                                                             |
|                                                                                                        |                                                                                                                                     |   |   | 2007 |   | 2006 |
|                                                                                                        |                                                                                                                                     |   |   |   |   |   |
|                                                                                                        |  Non-cash      investing and financing activities:                                                                                  |   |   |   |   |   |
|                                                                                                        |                                                                                                                                     |   |   |   |   |   |
|                                                                                                        |   Acquisition      of property and equipment on short-term credit                                                              |   |   |            58 |   |              - |
|                                                                                                        |                                                                                                                                     |   |   |   |   |
|                                                                                                        |   Cash      paid during the year for interest                                                                                  |   |   | 116 |   | 130 |
|                                                                                                        |                                                                                                                                     |   |   |   |   |   |
|                                                                                                        |   Conversion      of accounts payable into share capital                                                                       |   |   | 77 |   | 78 |
|                                                                                                        |                                                                                                                                     |   |   |   |   |   |
|                                                                                                        |   Investment      in shares of an affiliate in exchange for shares issued by  the      Company net of issue expenses |   |   | 371 |   | 1,476 |
|                                                                                                        |                                                                                                                                     |   |   |   |   |   |
|                                                                                                        |   Payables      in regard to investment in an affiliate                                                                        |   |   | - |   | 100 |

----

----

| NOTE      1:- | GENERAL |
|---------------|---------|

| a.   | Hotel      Outsource Management International, Inc. ("HOMI") was incorporated in      Delaware on November 9, 2000. HOMI and its subsidiaries, as identified in      Note 2c below, are engaged in the distribution, marketing and operation of      computerized minibars in hotels located in the United States, Europe,      Israel, Australia and South Africa. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Hereinafter,      HOMI and its subsidiaries will be referred to as the      "Company". |
|--------|----------------------------------------------------------------------------------------|

|        b. | During      2006, the Company commenced its own research and development program aimed      at the development of a new range of products. The HOMI®      336, a novel, computerized minibar system designed to increase the      accuracy of the automatic billing and reduce the cost of operating the      minibars, is the first of the new range of products, the research and      development of which was completed in 2007. Subsequently, during the      second half of 2007, the Company entered the production phase of the      HOMI®      336 system. The first pilot installation of the HOMI®      336 system commenced during the fourth quarter of  2007. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Until      February 13, 2007, HOMI and its subsidiaries were dependent upon a sole      supplier, Bartech Systems International, Inc. ("BSI") to provide minibars      custom built to their specifications. As mentioned in note 1c, subsequent      to the abovementioned date, the Company is no longer subject to such      dependence. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c.   | On      February 13, 2007, HOMI and several of its subsidiaries entered into a      series of agreements with BSI and one of its subsidiaries, pursuant to      which the parties settled and resolved all outstanding disputes between      them. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | BSI      sold to Hila International Corp., a wholly owned subsidiary of HOMI      ("Hila") all of BSI's shares and rights in HOMI USA (formerly HOS). Prior      to February 13, 2007, HOMI USA was owned 30% by BSI and 70% by Hila. As a      result of this sale, HOMI USA is now a directly wholly owned subsidiary of      HOMI, and the previously existing stockholders agreement in HOMI USA has      been terminated and voided, with no surviving provisions. The purchase      price paid by Hila for all of BSI's shares and rights in HOMI was the      nominal sum of $ 1. The purchase by Hila of 30% of HOMI USA that was      previously held by BSI has resulted in other income of approximately $ 472      to the Company. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -              | Hila      and BSI gave notice of the discontinuance, with prejudice, of the      arbitration proceedings that were pending between them before the American      Arbitration Association. |
|---------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -              | BSI      granted HOMI and its subsidiaries preferred customer terms on any further      purchases that HOMI and its subsidiaries may make from BSI and its      subsidiaries for a minimum and revolving term. Aside from these preferred      terms, all non-competition restrictions, exclusivity provisions and all      prior agreements between HOMI and its subsidiaries were terminated and      voided, with no remainingprovisions. |
|---------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| NOTE      2:- | SIGNIFICANT      ACCOUNTING POLICIES |
|---------------|--------------------------------------|

|   | a. | Use      of estimates: |
|--------|----|------------------------|

|   | b. | Financial      statements in US dollars: |
|--------|----|------------------------------------------|

|   | c. | Principles      of consolidation: |
|--------|----|-----------------------------------|

|                                             |              |                      | Number      of Operational Minibars |
|--------------------------------------------------|-------------------|---------------------------|-------------------------------------|
|  Subsidiary      Name                       |  Area        | Ownership      Percentage |  31.12.2007                    |   |  31.12.2006 |
| HOMI      Israel Ltd.                            | Israel            | 100%                      | 1,611                               |   | 1,572 |
| HOMI      USA, Inc. (1)(2)                       | U.S.A.            | 100%                      | 2,610                               |   | 2,610 |
| HOMI      Europe Sarl                            | ROW      (3)      | 100%                      | 2,580                               |   | 2,580 |
| HOMI      South Africa (Proprietary) Limited (4) | South      Africa | 60%                       |    858               |   |    858 |
| HOMI      (Operation 99) Ltd. (5)                | Israel            | 100%                      |    167               |   |    167 |
|                                             |              |                      | 7,826                               |   | 7,787 |

| (1)   | Previous      name – Hotel Outsource Services, Inc.(HOS). |
|-----------------|-----------------------------------------------------------------|

| (2)   | Until      February 2007 – the company's ownership was 70%. See note    1c. |
|-----------------|-----------------------------------------------------------------------------------|

| (3)   |      -   Through      subsidiaries in Malta, Italy, Germany, Australia and the    U.K. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------|

|        -    | The      subsidiary in the United Kingdom commenced its operations in August 2006.      Operation of this subsidiary was suspended at the beginning of      2007. |
|---------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)   | As      of March 2008, HOMI South Africa is 100% owned by HOMI (see Note      16). |
|-----------------|------------------------------------------------------------------------------------|

| (5)   | See      Note 4 (2). |
|-----------------|----------------------|

----

----

| NOTE      2:- | SIGNIFICANT      ACCOUNTING POLICIES (cont.) |
|---------------|----------------------------------------------|

|   | d. | Cash      and cash equivalents: |
|--------|----|---------------------------------|

|   | f. | Inventory: |
|--------|----|------------|

|   | g. | Property      and equipment: |
|--------|----|------------------------------|

|                                    |               | % |   |
|-----------------------------------------|--------------------|---|--------|
| Minibars                                | 10                 |
| Computers      and electronic equipment | 15      – 33 |
| Office      furniture and equipment     | 7                  |

----

----

| NOTE      2:- | SIGNIFICANT      ACCOUNTING POLICIES (cont.) |
|---------------|----------------------------------------------|

|   | The      Company's long-lived assets and certain identifiable intangibles are      reviewed for impairment in accordance with Statement of Financial      Accounting Standard No. 144 "Accounting for the Impairment or Disposal of      Long-Lived Assets" ("SFAS No. 144") whenever events or changes in      circumstances indicate that the carrying amount of an asset may not be      recoverable. Recoverability of assets to be held and used is measured by a      comparison of the carrying amount of an asset to the future undiscounted      cash flows expected to be generated by the assets. If such assets are      considered to be impaired, the impairment to be recognized is measured by      the amount by which the carrying amount of the assets exceeds the fair      value of the assets. As of December 31, 2007, management believes that all      of the Company’s long-lived assets are  recoverable. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | j. | Revenue      Recognition, Accounts Receivable and Allowance for Doubtful      Accounts: |
|--------|----|-----------------------------------------------------------------------------------------|

|   | Revenues      from product sales derived from outsource activity (minibar's content),      under the exclusive long-term revenue sharing agreements with hotels, net      of the hotel’s portion and/or other participation of, or payments due from      the hotel, and revenues from disposal of minibars are recognized in      accordance with Staff Accounting Bulletin No. 101 "Revenue Recognition in      Financial Statements" ("SAB No. 101") and SAB No. 104 when delivery has      occurred, persuasive evidence of an arrangement exists, the vendor’s fee      is fixed or determinable and collectability is  probable. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      investment in companies over which the Company can exercise significant      influence (generally, entities in which the Company holds 20% to 50% of      ownership or voting rights) is presented using the equity method of      accounting. The Company generally discontinues applying the equity method      when its investment (including advances and loans) is reduced to zero and      it has not guaranteed obligations of the affiliate or otherwise committed      to provide further financial support to the affiliate. Where the Company’s      share of an affiliate’s losses is greater than the investment in such an      affiliate and in which the Company has guaranteed obligations of the      affiliate, the excess amount is presented as a  liability. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| US      Dollars in thousands |
|------------------------------|

| NOTE      2:- | SIGNIFICANT      ACCOUNTING POLICIES (cont.) |
|---------------|----------------------------------------------|

|   | l. | Research      and Development costs: |
|--------|----|--------------------------------------|

|   | Research      and Development costs are charged to the statement of operations as      incurred. |
|--------|--------------------------------------------------------------------------------------------------|

|   | Costs      and acquisitions related to the pre-production phase, tooling, forms, etc.      are charged to fixed assets. |
|--------|-------------------------------------------------------------------------------------------------------------------------|

|   | m. | Accounting      for stock based compensation: |
|--------|----|-----------------------------------------------|

|   | Through      December 31, 2005, the Company used Statement of Financial Accounting      Standards No. 148 “Accounting for Stock-Based Compensation – Transition      and Disclosure” (SFAS No. 148) to account for its stock based compensation      arrangements. This Statement amended the disclosure provision of FASB      Statement No. 123 to require prominent disclosure about the effects on      reported net income of an entity’s accounting policy decisions with      respect to stock-based employee compensation. As permitted by SFAS No. 123      and amended by SFAS No. 148, the Company continued to apply the intrinsic      value method under Accounting Principles Board (“APB”) Opinion No. 25,      “Accounting for Stock Issued to Employees,” to account for its stock-based      employee compensation arrangements. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      Company uses Financial Accounting Standards Board Statement Number 123      (“FAS 123 (R)”), “Share-Based Payments,” to recognize compensation expense      in an amount equal to the fair value of share-based payments such as stock      options granted to employees. Since the Company does not have any share      based arrangements, the adoption of this Statement has not affected the      Company’s consolidated financialstatements. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      Company accounts for stock-based compensation issued to non-employees and      consultants in accordance with the provision of SFAS 123 and the Emerging      Issues Task Force consensus in Issue No. 96-18 (“EITF 96-18”), “Accounting      for Equity Instruments that are Issued to Other Than Employees for      Acquiring or in Conjunction with Selling, Goods or    Services”. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | n. | Income      taxes: |
|--------|----|--------------------|

----

----

| NOTE      2:- | SIGNIFICANT      ACCOUNTING POLICIES (cont.) |
|---------------|----------------------------------------------|

|   | o. | Concentrations      of credit risk: |
|--------|----|-------------------------------------|

|   | p. | Severance      pay: |
|--------|----|---------------------|

|   | q. | Basic      and diluted net loss per share: |
|--------|----|--------------------------------------------|

|   | r. | Fair      value of financial instruments: |
|--------|----|-------------------------------------------|

----

----

| NOTE      2:- | SIGNIFICANT      ACCOUNTING POLICIES (cont.) |
|---------------|----------------------------------------------|

| (1)   | Exchange      rates: |
|-----------------|----------------------|

|   |   |                                          | December    31, |
|--------|--------|-----------------------------------------------|-----------------|
|   |   |                                          |            | 2007 |   | 2006 |
|   |   | New      Israeli Shekel (NIS)                 |            |    $      0.260 | $ 0      .237 |
|   |   | Euro      (EU)                                |            |    $  1.471 | $      1.317 |
|   |   | South      African Rand (SAR)                 |            |    $  0.147 | $      0.143 |
|   |   | Australian      Dollar (AU$)                  |            |    $  0.887 |   $      0.791 |
|   |   | Pound      Sterling (GBP)                     |            |    $  2.005 |   $      1.961 |
|   |   |                                          |            |   |   |
|   |   |                                          |            |      Year      Ended December 31, |
|   |   | Increase      (Decrease) in Rate of Exchange: |            | 2007 |   | 2006 |
|   |   | NIS                                           |            | 9.7% |   9.1% |
|   |   | EU                                            |            | 11.7% | 11.3% |
|   |   | SAR                                           |            | 2.8% |   (9.5%) |
|   |   | AU$                                           |            | 12.2% |   7.7% |
|   |   | GBP                                           |            | 2.2% | 13.7% |

----

----

| NOTE      2:- | SIGNIFICANT      ACCOUNTING POLICIES (cont.) |
|---------------|----------------------------------------------|

----

----

| NOTE      2:- | SIGNIFICANT      ACCOUNTING POLICIES (cont.) |
|---------------|----------------------------------------------|

| a.   | An      investment in a subsidiary that the entity is required to      consolidate |
|----------------|------------------------------------------------------------------------------------|

| b.   | An      interest in a variable interest entity that the entity is required to      consolidate |
|----------------|------------------------------------------------------------------------------------------------|

| c.   | Employers’      and plans’ obligations (or assets representing net over funded positions)      for pension benefits, other postretirement benefits (including health care      and life insurance benefits), post employment benefits, employee stock      option and stock purchase plans, and other forms of deferred compensation      arrangements. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| d.   | Financial      assets and financial liabilities recognized under leases as defined in      FASB Statement No. 13, Accounting forLeases. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------|

----

----

| NOTE      2:- | SIGNIFICANT      ACCOUNTING POLICIES (cont.) |
|---------------|----------------------------------------------|

| e.   | Withdrawable      on demand deposit liabilities of banks, savings and loan associations,      credit unions, and other similar depository  institutions. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

| f.   | Financial      instruments that are, in whole or in part, classified by the issuer as a      component of shareholders' equity (including “temporary equity”). An      example is a convertible debt security with a non-contingent beneficial      conversion feature. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | Firm      commitments that would otherwise not be recognized at inception and that      involve only financial instruments |
|----------------|----------------------------------------------------------------------------------------------------------------------------|

| 3.   | Non-financial      insurance contracts and warranties that the insurer can settle by paying a      third party to provide those goods orservices |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.   | Host      financial instruments resulting from separation of an embedded      non-financial derivative instrument from a non-financial hybrid      instrument. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      fair value option: |
|--------|-----------------------------|

| 1.   | May      be applied instrument by instrument, with a few exceptions, such as      investments otherwise accounted for by the equity  method |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | Is      irrevocable (unless a new election dateoccurs) |
|----------------|--------------------------------------------------------|

| 3.   | Is      applied only to entire instruments and not to portions of      instruments. |
|----------------|-------------------------------------------------------------------------------------|

| v.   | Reclassifications: |
|----------------|--------------------|

| NOTE      3:- | OTHER      ACCOUNTS RECEIVABLE |
|---------------|--------------------------------|

|                        | December      31,                                                                           |
|-----------------------------|---------------------------------------------------------------------------------------------|
|                        | 2007                                                                                        |   | 2006 |
|                        |                                                                                        |   |   |
| Prepayment      and others  | 72                                                                                          |   | 116 |
| Government      authorities | 51                                                                                          |   | 26 |
| Shareholders                | 2                                                                                           |   | 5 |
| Affiliated      company     |                - |   | 16 |
|                        |                                                                                        |   |   |
|                        | 125                                                                                         |   | 163 |

----

----

| NOTE      4:- | INVESTMENTS      IN AFFILIATED COMPANIES |
|---------------|------------------------------------------|

|   |                                                   | December      31,                           |    |
|--------|--------------------------------------------------------|---------------------------------------------|---------|
|   |                                                   | 2007                                        |    | 2006 |   |
|   |                                                   |                                        |    |   |   |
|   | Total      investments in affiliated companies (1) (2) |  -                                     |    | 1,713 |   |
|   |                                                   |                                        |    |   |   |
|   |                                                   | Composition:                                |    |   |   |   |
|   |                                                   | Net      equity as at purchase date         |  - |   | 1,708 |   |
|   |                                                   | Changes      commencing with purchase date: |    |   |   |   |
|   |                                                   |   Accumulated      profits        | -       |   | 5 |   |
|   |                                                   |                                        |    |   |   |   |
|   |                                                   |                                        | -       |   | 1,713 |   |
|   |                                                   |                                        |    |   |   |   |

|   | (1)                                                                                                                                                                                                                                                                                                                                                       | Investment      in BSI.                                                                                                                                                                                                                                                                                                                         |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                            |
|   | a.                                                                                                                                                                                                                                                                                                                                                        | On      March 6, 2006 the Company entered into agreements with certain      shareholders of  BSI to purchase a total of 3,592,965 shares of      BSI Common and Preferred shares for an equal number of the Company shares,      which number of shares represented approximately 24% of    BSI.                                      |
|   | b.                                                                                                                                                                                                                                                                                                                                                        | On      May 18, 2006, the Company entered into an agreement to acquire an      additional 753,705 shares of BSI that constituted approximately 5% of BSI      shares. As consideration, the Company paid cash of $220 and agreed to      issue an equal amount of its shares to the sellers.                                                    |
|   | c.                                                                                                                                                                                                                                                                                                                                                        | On      May 25, 2006 the Company signed an agreement to acquire 50,000 Preferred      Shares of BSI using the proportional exchange rate of 1.2 shares of HOMI      Common Stock for each share of BSI Preferred Stock. The Preferred Stock      bore interest at the rate of 8% per annum and had no super-voting or other      voting rights. |
|   | d.                                                                                                                                                                                                                                                                                                                                                        | On      February 13, 2007, HOMI sold all its common and preferred shares which it      held in BSI to Eurogest Foundation, a Vaduz, Liechtenstein Corporation      ("Eurogest"), at a price of $ 0.55 per share, for the total sale price of      $ 2.35 million, which was paid to HOMI by Eurogest.                                           |
|   |                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                      | The      sale of HOMI's shares in BSI resulted in a profit of approximately $      270.                                                                                                                                                                                                                                                    |
|   | (2)                                                                                                                                                                                                                                                                                                                                                       | Investment      in Homi (Operation 99) Ltd.                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                      |
|   | On      October 31, 2007, HOMI Israel acquired 50% of a previously jointly owned      subsidiary, "HOMI (Operation 99) Ltd." ("HOMI Operation"), from three      other entities who are not affiliated to HOMI. As a result, as of the said      date, HOMI Operation, which is an Israeli company, became a wholly owned      subsidiary of HOMI Israel. |

----

----

| NOTE      4:- | INVESTMENTS      IN AFFILIATED COMPANIES (cont.) |
|---------------|--------------------------------------------------|

|   |   |                                                                                                                                                                                                                 |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | The      purchase price was $ 16. This amount is excess cost recorded in fixed      assets and attributed to the minibars.                                                                                           |
|   |   |                                                                                                                                                                                                                 |
|   |   | As      a result of the abovementioned, the investment was amortized, after      receiving dividend from the affiliated company, and the subsidiary's      financial statements were consolidated with the  Company. |

| NOTE      5:- | PROPERTY      AND EQUIPMENT, NET |
|---------------|----------------------------------|

|                                       | December  31,               |
|--------------------------------------------|---------------------------------------|
|                                       | 2007                                  |   | 2006 |
| Cost:                                      |                                  |   |   |
| Minibars                                   | 6,168                                 |   | 5,761 |
| Production      equipment and parts        | 547                                   |   |           - |
| Computers      and electronic equipment    | 221                                   |   | 91 |
| Office      furniture, equipment and other | 91                                    |   | 60 |
| Vehicles                                   |       - |   | 27 |
|                                       |                                  |   |   |
|                                       | 7,027                                 |   | 5,939 |
| Accumulated      depreciation:             |                                  |   |   |
| Minibars                                   | 2,174                                 |   | 1,525 |
| Production      equipment and parts        |       - |   | - |
| Computers      and electronic equipment    | 208                                   |   | 50 |
| Office      furniture, equipment and other | 48                                    |   | 22 |
| Vehicles                                   |       - |   | 15 |
|                                       |                                  |   |   |
|                                       | 2,430                                 |   | 1,612 |
|                                       |                                  |   |   |
| Depreciated      cost                      | 4,597                                 |   | 4,327 |

----

----

| NOTE      6:- | OTHER      ASSETS |
|---------------|-------------------|

|                                            | December      31, |
|-------------------------------------------------|-------------------|
|                                            | 2007              |   | 2006 |
| Contract      rights -                          |              |   |   |
|   Cost                                | 53                |   | 53 |
|   Accumulated      amortization (1)   | (42)              |   | (35) |
|   Effect      of exchange rate change | 15                |   | 19 |
|                                            | 26                |   | 37 |
| Deferred      expenses -                        |              |   |   |
|   Cost                                | 116               |   | 78 |
|   Accumulated      amortization (2)   | (26)              |   | (12) |
|                                            | 90                |   | 66 |
| Trademark      (3)                              | 30                |   | - |
|                                            | 146               |   | 103 |

|  (1)   | Amortization      expenses amounted to $7 for each of the years ended December 2007 and 2006      (see Note 2h). |
|-----------------------|------------------------------------------------------------------------------------------------------------------|

|  (2)   | Deferred      expenses in regard to loans received are amortized over the loan period of      nine years. |
|-----------------------|-----------------------------------------------------------------------------------------------------------|

|  (3)   | See      Note 2h. |
|-----------------------|-------------------|

| NOTE      7:- | CONVERTIBLE      NOTES |
|---------------|------------------------|

| In      December 2006, HOMI raised $ 118 through issue of notes. During the year      2007, an additional sum of $ 376 was raised through the issue of      additional notes. The notes bear interest at a rate of 8% per annum and      are convertible into common stock at a conversion price ranging between $      0.50 and $ 0.80 per share, depending on the conversion    dates. |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                     |
| Interest      on the notes is due and payable on a quarterly basis commencing March      2007. Principal will be repaid in eight equal quarterly installments      commencing March 2009.                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                     |
| The      financing under the notes was performed via a third party company,      unaffiliated with the  Company, based on a Memorandum of      Understanding dated September 2006 as amended in February 2007, in return      for a 10% commission on the amount raised.                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                     |
| As      of December 31, 2007, an amount of $ 494 of such notes was      outstanding.                                                                                                                                                                                                                                                                                                     |

----

----

| NOTE      8:- | ACCRUED      AND OTHER LIABILITIES |
|---------------|------------------------------------|

|                                   | December      31, |
|----------------------------------------|-------------------|
|                                   | 2007              |   | 2006 |
| Related      parties                   | 90                |   | 201 |
| Government      authorities and others | 66                |   | 77 |
| Accrued      expenses                  | 64                |   | 102 |
| Employees      and payroll accruals    | 49                |   | 28 |
| Other                                  | 30                |   | 61 |
|                                   |              |   |   |
|                                   | 299               |   | 469 |

| NOTE      9:- | LONG-TERM LOANS, NET OF CURRENT  MATURITIES |
|---------------|---------------------------------------------|

| a.   | Composed      as follows: |
|----------------|---------------------------|

|   | Annual                                                                                                                         |   | December      31, |
|--------|--------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|
|   | interest      rates                                                                                                            |   | 2007              |   | 2006 |
|   | From      Banks:                                                                                                               |   |              |   |   |   |
|   | In      Rand                                                                                                                   | 10.8%  |              |     - |   | 113 |
|   | In      US dollar  (1)                                                                                               | 10.0%  |              |      - |   | 110 |
|   |                                                                                                                           |   |              |      - |   | 223 |
|   | From      others (2)                                                                                                           |   |              | 885 |   | 973 |
|   |                                                                                                                           |   |              |   |   |   |
|   |                                                                                                                           |   |              | 885 |   | 1,196 |
|   | From      Shareholders and Minority (3)                                                                                        |   |              | 192 |   | 252 |
|   |                                                                                                                           |   |              |   |   |   |
|   | Total                                                                                                                          |   |              | 1,077 |   | 1,448 |
|   |                                                                                                                           |   |              |   |   |   |
|   | Less      - current maturities (includes $ 192 and $ 48 from shareholders as of      December 31, 2007 and 2006, respectively) |   |              | (292) |   | (332) |
|   |                                                                                                                           |   |              |   |   |   |
|   |                                                                                                                           |   | 785               |   | 1,116 |

| (1)     | The      loan required a monthly principal and interest payment of approximately $      11 through December 1, 2007, at which time it was fully repaid, principal      and interest.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|-----------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (2)                         | In      March and June, 2005, the Company and the subsidiary in the U.S. received      from   Horizon Challenges Investment Company Ltd.      (“Horizon”) loans in the total amount of $1.1 million, which Horizon      undertook to provide to the Company (“the Financing”), pursuant to a      Financing Agreement, dated as of March 1, 2005, as amended on May 17,      2005. The loans bear interest at the rate of 11.67% and are to be repaid      in monthly installments for nine years. The loans are secured by a lien on      all minibars in respect of which the loan was received, and a security      interest and assignment of a portion of the Company’s and/or its      subsidiaries’ monthly revenues from those minibars, in the amount required      to pay each month’s repayments on all outstanding loans, principal plus      interest. |
|                        |
|                        |

----

----

| NOTE      9:- | LONG-TERM LOANS FROM BANKS AND OTHERS  (cont.) |
|---------------|------------------------------------------------|

| (3) | Shareholders'      and minority balance is composed asfollows: |
|-----|----------------------------------------------------------------|

|                            |   | December      31, |
|---------------------------------|--------|-------------------|
|                            |   | 2007              |   | 2006 |
|  See      Note 15i         |   |   192   |   | 171 |
|  See      Note 15e and 15f |   |   -     |   | 81 |
|                            |   |              |   |   |
|                            |   | 192               |   | 252 |

| b.   | Aggregate      maturities of long-term loans for years subsequent to December 31, 2007      are as follows: |
|----------------|-------------------------------------------------------------------------------------------------------------|

|  Year               |   | Amount |
|--------------------------|--------|--------|
| 2008                     |   | 292    |
| 2009                     |   | 113    |
| 2010                     |   | 126    |
| 2011                     |   | 142    |
| 2012      and thereafter |   | 404    |
|                     |   |   |
|                     |   | 1,077  |

| NOTE      10:- | COMMITMENTS AND CONTINGENTLIABILITIES |
|----------------|---------------------------------------|

|   | a. | The      Company and its affiliate have contractual obligations towards hotels with      regard to the operation of minibars in hotel rooms. The Company and its      affiliates own most of these minibars. Several hotels have a contractual      purchase option granted which enables them to purchase the minibars at a      price which results in a profit for the Company, and the agreement with      the hotel is then terminated. To date, no hotel has exercised such an      option. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | b. | As      of the balance sheet date, there existed unlimited personal guarantees      given by certain shareholders of the Company to a bank in respect of      certain of the Company's liabilities. Total liabilities in regard to this      guarantee to the bank as of December 31, 2007 and 2006 were      immaterial. |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  |   | In      addition one shareholder gave another guarantee, which is limited to $10,      to a bank. |
|--|--------|---------------------------------------------------------------------------------------------------|

|   | c. | Liens      have been placed on certain of the Company's assets, including the rights      to receivables from customers, in favor of banks and others, as security      for amounts due. Total liabilities that are secured by these liens as of      December 31, 2007 and 2006 amount to approximately $885 and $1,083,      respectively. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | d. | Liens      on behalf of the loan received from Horizon – see Note      9(a)(2). |
|--------|----|---------------------------------------------------------------------------------------|

|   | e. | Liens      placed by shareholders – see Note15f. |
|--------|----|--------------------------------------------------------|

----

----

| NOTE      10:- | COMMITMENTS AND CONTINGENT LIABILITIES  (cont.) |
|----------------|-------------------------------------------------|

| NOTE      11:- | SHAREHOLDERS’ EQUITY |
|----------------|----------------------------|

|   | Shareholders’      Rights: |
|--------|----------------------------------|

| a.   | During      the second quarter of 2007, shareholders signed a notice of conversion to      convert shareholders' loans in the amount of approximately $ 77 to 153,396      common shares of the Company, at the rate of $ 0.50 per share, in      accordance with a resolution of the Company's Board of      Directors. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | As      to issue of shares in return for investment in BSI, see Note 4      (1). |
|----------------|----------------------------------------------------------------------------------|

| c.   | During      the third quarter of 2007, the Company issued 48,387 shares of common      stock at a price of $ 0.295 per share (representing a value of      approximately $15), as consideration for bona fide legal consulting      services that it received from its legal  counsel. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| NOTE      11:- | SHAREHOLDERS’ EQUITY(cont.) |
|----------------|-----------------------------------|

|        d. | During      the year ended December 31, 2005, the Company engaged a shareholder to      provide certain consulting services under an agreement pursuant to which      the Company was entitled to pay the consultant in cash and/or shares of      its common stock.  In 2006, the Company made the decision to pay      the amount owed for such consulting services ($68) to this shareholder      through the issue of 135,000  shares of its common      stock. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        e. | On      February 10, 2006, the Company completed a rights offering of 6,000,000      shares of its Common Stock. Pursuant to the terms of this offering, for      each 5,028 shares held as of the record date, existing shareholders of the      Company were able to purchase one new share of Common Stock at $0.25 per      share. Shareholders subscribed for the full amount of shares offered,      providing the Company with gross offering proceeds of $ 1,500 (including      approximately $650 arising from the conversion of shareholder      loans). |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE      12:- | CUSTOMERS AND GEOGRAPHICINFORMATION |
|----------------|-------------------------------------|

|   | a. | Major      customers’ data as a percentage of total sales to unaffiliated      customers: |
|--------|----|-------------------------------------------------------------------------------------------------|

|            | Year      ended December 31, |
|-----------------|------------------------------|
|            |                         |   | 2007 |   | 2006 |
|            |                         |   |   |   |   |
| Customer      A |                         |   | 9.1% |   | 8.2% |
| Customer      B |                         |   | 8.7% |   | 7.9% |
| Customer      C |                         |   | 6.3% |   | 9.4% |
| Customer      D |                         |   | 8.5% |   | 8.4% |
| Customer      E |                         |   |     10.7% |   | 11.2% |
| Customer      F |                         |   | 8.2% |   | 6.7% |

|              | Year      ended December 31, |
|-------------------|------------------------------|
|              |                         |   | 2007 |   | 2006 |
|              |                         |   |   |   |   |
| Israel            |                         |   | 21% |   | 21% |
| South      Africa |                         |   | 13% |   | 11% |
| USA               |                         |   | 30% |   | 33% |
| ROW               |                         |   | 36% |   | 35% |
| Total             |                         |   | 100% |   | 100% |

----

----

| NOTE      12:- | CUSTOMERS AND GEOGRAPHIC INFORMATION  (cont.) |
|----------------|-----------------------------------------------|

| c.   | As      of December 31, 2007, $489 of the consolidated long-lived assets were      located in South Africa; $383 were located in Israel;, $2,182 in the USA;      and $1,543  in ROW. As of December 31, 2006, $576 of the      consolidated long-lived assets were located in South Africa, $290 were      located in Israel, $1,914 in the USA and $1,547 in  ROW. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE      13:- | FINANCIAL EXPENSES, NET |
|----------------|-------------------------|

|                                 | Year      ended December 31, |
|--------------------------------------|------------------------------|
|                                 |                         |   | 2007 |   | 2006 |
|                                 |                         |   |   |   |   |
| Interest      on long-term loans (1) |                         |   | 117 |   | 130 |
| Other,      net                      |                         |   | (117) |   |          2 |
|                                 |                         |   |   |   |   |
|                                 |                         |   | - |   | 132 |

| (1)      As for financial expenses to shareholders, see Note  15a. |
|--------------------------------------------------------------------|

| NOTE      13A:- | OTHER INCOME, NET |
|-----------------|-------------------|

|                                                          | Year      ended December 31, |
|---------------------------------------------------------------|------------------------------|
|                                                          |                         |   | 2007 |   | 2006 |
| Income      from termination of agreements, net (see Note 1c) | 472                          |   |   - |
| Income      from sale of investment, net (see Note 4(1)(d))   |                         |   | 270 |   |   - |
| Others                                                        |                         |   |  10 |   |   20 |
|                                                          |                         |   |   |   |   |
|                                                          |                         |   | 752 |   |   20 |

| NOTE      14:- | TAXES ON INCOME |
|----------------|-----------------|

|  | a. | Corporate      tax structure: |
|--|----|-------------------------------|

|   | Taxable      income of Israeli companies is subject to tax at the rate of 31% in 2006,      29% in 2007, 27% in 2008, 26% in 2009 and 25% in 2010 and      thereafter.  The      subsidiary in South Africa is subject to a 29% corporate tax rate. The      subsidiary in the USA is subject to a 15% -35% corporate tax rate.      Subsidiaries in Europe are subject to 35% - 45% corporate tax rate (in      Germany, corporate and business tax calculation is based on company’s      EBITDA).The subsidiary in Australia is subject to 30% corporate tax      rate. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b. | Pursuant      to the Income Tax (Inflationary Adjustments) Law - 1985, results for tax      purposes in Israel are measured in real terms, in accordance with changes      in the Israeli Consumer Price Index. However, Paragraph 9(f) of Statement      of Financial Accounting Standard No. 109, "Accounting for Income Taxes,"      prohibits the recognition of deferred tax liabilities or assets that arise      from differences between the financial reporting and tax bases of assets      and liabilities that are remeasured from the local currency into US      dollars using historical exchange rates and that result from changes in      exchange rates or indexing for taxpurposes. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c. | The      subsidiary in the USA is subject to both federal and state tax. The      federal tax is determined according to taxable income, for the first $50      taxable income the rate is 15%. In addition, a 9.3% California state tax      is applicable. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| NOTE      14:- | TAXES ON INCOME (cont.) |
|----------------|-------------------------|

|  | d. | (1)  As of December 31,      2007 HOMI Israel Ltd. had approximately $148 Israeli net operating loss      carryforwards. The loss carryforwards in Israel have no expiration      date |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2)   As      of December 31, 2007, HOMI USA had approximately $1,628 net operating loss      carryforwards. Utilization of US net operating losses may be subject to      substantial annual limitation due to the “change in ownership” provisions      of the Internal Revenue Code of 1986 and similar state provisions. The      annual limitations may result in the expiration of net operating losses      before utilization. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3)  As      of December 31, 2007 the Subsidiary in Australia had net operating loss      carryforwards of $88. |
|--------|---------------------------------------------------------------------------------------------------------------------------|

|   | e. | Deferred      income taxes: |
|--------|----|-----------------------------|

|   | Deferred      income taxes reflect the net tax effects of temporary differences between      the carrying amounts of assets and liabilities for financial reporting      purposes and the amounts used for income tax purposes. Significant      components of the Company and its subsidiaries deferred tax assets and      liabilities are as follows: |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                          | December      31, |
|---------------------------------------------------------------|-------------------|
|                                                          | 2007              |   | 2006 |
| Operating      loss carryforwards                             | 673               |   | 967 |
| Temporary      differences in regard to expenses and property | (84)              |   | (165) |
|                                                          |              |   |   |
| Net      deferred tax asset before valuation allowance        | 589               |   | 802 |
| Valuation      allowance                                      | (610)             |   | (812) |
|                                                          |              |   |   |
| Net      deferred tax (foreign)                               | (21)              |   | (10) |

|   | f. | Composition      of tax benefit (taxes on income): |
|--------|----|----------------------------------------------------|

|                | Year      ended December 31, |
|---------------------|------------------------------|
|                |                         |   | 2007 |   | 2006 |
|                |                         |   |   |   |   |
| Current      taxes  |                         |   | (25) |   | (33) |
| Deferred      taxes |                         |   | (11) |   |  1 |
|                |                         |   |   |   |   |
|                |                         |   | (36) |   | (32) |

----

| NOTE      14:- | TAXES ON INCOME (cont.) |
|----------------|-------------------------|

|   | g. | Breakdown      of losses (income) before taxes: |
|--------|----|-------------------------------------------------|

|              |   |   | Year      Ended December 31, |
|-------------------|--------|--------|------------------------------|
|              |   |   | 2007                         |   | 2006 |
| Israel            |   |   | (598)                        |   | (27) |
| South      Africa |   |   | 28                           |   | 3 |
| USA               |   |   | 114                          |   | 384 |
| ROW               |   |   | (18)                         |   | (78) |
|              |   |   |                         |   |   |
| Total             |   |   | (474)                        |   |  282 |

|   | h. | The      main items for reconciliation between the statutory tax rate of the      Company and the effective tax rate are the non-recognition of tax benefits      from accumulated net operating losses carryforward among the various      subsidiaries worldwide due to uncertainty of the realization of such tax      benefits. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE      15:- | RELATED PARTY TRANSACTIONS |
|----------------|----------------------------|

|   | a. | The      following transactions with related parties are included in the financial      statements: |
|--------|----|-----------------------------------------------------------------------------------------------------|

|                                         |   |   | Year      ended December 31,                                                                             |
|----------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------------|
|                                         |   |   | 2007                                                                                                     |   | 2006 |
|                                         |   |   |                                                                                                     |   |   |
| Directors'      fees and liability insurance |   |   |                66             |   |               54 |
|                                         |   |   |                                                                                                     |   |   |
| Consulting      and management fees          |   |   | 575                                                                                                      |   | 358 |
|                                         |   |   |                                                                                                     |   |   |
| Financial      Expenses                      |   |   |                  18 |   |               27 |
|                                         |   |   |                                                                                                     |   |   |
|                                         |   |   | 659                                                                                                      |   | 439 |

|   | b. | Guarantees      and participation of shareholders - see Note10. |
|--------|----|-----------------------------------------------------------------|

|   | c. | During      the years 2007 and 2006, an affiliated company paid the Company,      reimbursement of expense and management fees of $ 70 and $ 48,      respectively. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | d. | As      for balances as of December 31, 2007 and 2006 - see Note 3 and Note      8. |
|--------|----|-------------------------------------------------------------------------------------|

|  | e. | In December 2003, the Company entered into agreement with      two shareholders pursuant to which each agreed to lend the Company $150      with notes payable bearing interest at fixed rate of 4%. In 2007, the      outstanding balance of the loans was converted into shares of the      Company’s common stock. Interest expenses in regard to these loans were $      1 and $ 10 for the years 2007 and 2006,respectively. |
|--|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| NOTE      15:- | RELATED PARTY  TRANSACTIONS  (cont.) |
|----------------|------------------------------------------------|

|   | f. | In      November 2004, the Company entered into agreements with two shareholders      pursuant to which each agreed to lend the Company $350. Prior to their      satisfaction, the loans had an initial term of six months (that was      subsequently extended), required interest at a fixed rate of 10% per      annum, and were secured by a (i) general lien and security interest over      all of the Company’s assets (except that such security position was      subordinate to all pre-existing liens on such assets) and (ii) the pledge      of 2,000,000 shares of the Company’s common stock owned by certain other      shareholders. The Company had the right to satisfy the loans plus accrued      interest through the issuance of its common stock at a price of $0.25 per      share. The Company elected to exercise such option and the balance owed as      of December 31, 2006 was converted into the Company's common      stock. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | g. | The      Management of the Company is entitled to an annual bonus which is computed      as a percentage of the Company's Earnings before Income Tax, Depreciation      and Amortization ("EBITDA") and as a percentage of the Company's Net      Profits (cumulative). In the year 2007, such bonus expense, as it relates      to managers which are related parties, was in the amount of $      73. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | h. | The      Company agreed to pay an annual management and consulting fee to a company      that is owned by its Chairman. The services are in addition to the      Chairman's normal duties as an officer of the Company. The fee, payable      only if the Company is profitable, is graduated according to defined      profit milestones. In the year 2007, such fees amounted to $      60. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | i. | The      minority shareholder of the Company’s South African subsidiary granted a      loan to the subsidiary amounting to $ 192 as of December 31, 2007 and $      171 as of December 31, 2006 (see Note 9a). The loan is linked to the South      African Rand with variable annual interest that is 14% for 2007. The loan      will be repaid during 2008, as part of the agreement by which the Company      (through a subsidiary) acquired all of the minority shareholder's shares      in HOMI South Africa (see Note 16). Interest expense in regard to this      loan was $ 17 for each of the years 2007 and  2006. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | j. | Directors'      fees of $ 30 and $ 20 for the years 2007 and 2006, respectively and      directors' insurance expenses are $ 36 and $ 38 for the years 2007 and      2006, respectively. |
|--|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE      16:- | EVENTS SUBSEQUENT TO BALANCE SHEETDATE |
|----------------|----------------------------------------|

----

| • |   | pertain      to the maintenance of records that in reasonable detail accurately and      fairly reflect the transactions and dispositions of our      assets; |
|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • |   | provide      reasonable assurance that transactions are recorded as necessary to permit      preparation of financial statements in accordance with generally accepted      accounting principles, and that our receipts and expenditures are being      made only in accordance with authorizations of our management and our      board of directors; and |
|---------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • |   | provide      reasonable assurance regarding prevention or timely detection of      unauthorized acquisition, use, or disposition of our assets that could      have a material effect on our financial  statements. |
|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 1 |   | Entity control level.      Management concluded that entity control level was not optimal. This      material weakness is a result of significant deficiencies in the company's      control environment. The Company corrected the errors prior to the      issuance of the 2007 consolidated financial  statements. |
|---|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 |   | Segregation of duties in the      finance department. Management’s job description of financial      employees were not properly designed. Specifically, the Company did not      maintain proper segregation of duties between its financial personnel. The      Company corrected the errors prior to issuance of the Company’s 2007      consolidated financial statements by expanding its financial department      and distributing tasks in order to create proper segregation of      duties. |
|---|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | • |   | All      key information put into the spreadsheet used in the financial statement      process will be verified by someone other than the person who prepared the      original input. |
|--------|--------|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | • |   | Creating      proper segregation of duties in the finance department via additional      staffing, software update and application controls in material      spreadsheets. |
|--------|--------|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | • |   | Increased      levels of discussion and documentation by senior financial      management. |
|--------|--------|---------|--------|--------------------------------------------------------------------------------------------|

|   |   | • |   | Initiated      a comprehensive review and re-design of our controls over the financial      statement review process. |
|--------|--------|---------|--------|-----------------------------------------------------------------------------------------------------------------------|

----

| NAME                   | AGE    | POSITION                      |
|------------------------|--------|-------------------------------|
|                   |   |                          |
| Jacob      Ronnel      | 51     | CEO,      President, Director |
|                   |   |                          |
| Ariel      Almog       | 40     | COO,      Director            |
|                   |   |                          |
| Linor      Labandter   | 31     | CFO                           |
|                   |   |                          |
| Avraham      Bahry     | 62     | Chairman                      |
|                   |   |                          |
| Jules      Polak       | 61     | Director                      |
|                   |   |                          |
| Jacob      Faigenbaum  | 54     | Director                      |
|                   |   |                          |
| Yoav      Ronen        | 48     | Director                      |
|                   |   |                          |
| Philippe      Schwartz | 47     | Director                      |
|                   |   |                          |
| Uri      Kellner       | 80     | Director                      |

----

----

ITEM.10                      EXECUTIVECOMPENSATION

| NameAndPrincipalPosition   | Year                                            | Annual      Compensation | Long-Term      Compensation | All      Other Compensation ($) |
|----------------------------|-------------------------------------------------|--------------------------|-----------------------------|--------------------------------------|
| Salary      ($)            | Bonus      ($)                                  | Other                    | Awards                      |
| RestrictedStockAward(s)($) | Securities      UnderlyingOptions/SARs      ($) |
| Jacob      Ronnel(1)       |                                            |                     |                        |                                 |   |   |   |
| CEO,      President        | 2005                                            | $107,994                 |                        | $4,750-      interest                |   |   | $13,491 |
|                       | 2006                                            | $96,000                  |                        |                                 |   |   |   |
|                       | 2007                                            | $144,288                 | $41,690                     | $500                                 |   |   |   |
| Ariel      Almog           |                                            |                     |                        |                                 |   |   |   |
| COO,      Secretary        | 2005(1)                                         | $153,979                 |                        | $6,000-      interest                |   |   |   |
|                       | 2006                                            | $153,979                 |                        |                                 |   |   |   |
|                       | 2007                                            | $193,389                 | $30,850                     | $500                                 |   |   |   |
| Sigal      Grinboim(2)     |                                            |                     |                        |                                 |   |   |   |
| CFO                        | 2005                                            | $48,000                  |                        |                                 |   |   |   |
|                       | 2006                                            | $48,000                  |                        |                                 |   |   |   |
|                       | 2007                                            | $38,500                  | $1,024                      |                                 |   |   |   |
| Linor      Labandter(3)    |                                            |                     |                        |                                 |   |   |   |
|                       | 2005                                            | N/A                      |                        |                                 |   |   |   |
|                       | 2006                                            | N/A                      |                        |                                 |   |   |   |
|                       | 2007                                            | $80,000                  | $9,816                      |                                 |   |   |   |

----

| (1)   | Mr.      Ronnel's salary was paid by HOMI USA (1/3) and by HOMI    (2/3). |
|-----------------|---------------------------------------------------------------------------|

| (2)   | Ms.      Grinboim's position as CFO terminated on May 9,  2007. |
|-----------------|-----------------------------------------------------------------|

| (3)   | Ms.      Labandter was appointed Chief Financial Officer on May 9, 2007 and is an      employee of HOMI Israel Ltd. Ms. Labandter's annual salary of $120,000 is      paid by HOMI Israel Ltd. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Name                   | Fees      Earned or Paid      in Cash | Stock      Awards | Option      Awards | Non-Equity      Incentive Plan      Compensation | Non      Qualified Deferred Compensation Earnings | All      Other Compensation | Total   |
|------------------------|---------------------------------------|-------------------|--------------------|--------------------------------------------------|---------------------------------------------------|-----------------------------|---------|
| Avraham      Bahry     | $5,000                                |              |               |                                             |                                              | $60,000                     | $65,000 |
| Jacob      Ronnel*     |                                  |              |               |                                             |                                              |                        |    |
| Ariel      Almog*      |                                  |              |               |                                             |                                              |                        |    |
| Jules      Polak       | $7,000                                |              |               |                                             |                                              |                        | $7,000  |
| Phillipe      Schwartz | $5,500                                |              |               |                                             |                                              |                        | $5,500  |
| Jacob      Faigenbaum  | $4,000                                |              |               |                                             |                                              |                        | $4,000  |
| Yoav      Ronen        | $5,500                                |              |               |                                             |                                              |                        | $5,500  |
| Uri      Kellner       | $3,000                                |              |               |                                             |                                              |                        | $3,000  |

| · | More      than 5% of the outstanding shares of our common  stock; |
|--------|-------------------------------------------------------------------|

| · | Each      of our officers and directors; |
|--------|------------------------------------------|

| · | All      of our officers and directors as agroup. |
|--------|---------------------------------------------------|

----

| Names      and Address of Beneficial Owner                                                                | Number      of Shares Beneficially Owned | % Beneficially Owned(1) |
|-----------------------------------------------------------------------------------------------------------|------------------------------------------|-------------------------|
| Jacob      Ronnel (4)21      Hasvoraim StreetTel      Aviv, Israel                                        | 2,471,142                                | 6.01%                   |
|                                                                                                      |                                     |                    |
| Ariel      Almog (4)224      Maypoint Drive,San      Raphael, CA                                          | 2,249,481                                | 5.47%                   |
|                                                                                                      |                                     |
| Sigal      Grinboim(5)7      Barazani StreetRamat      Aviv, Israel                                       | 0                                        | 0%                      |
|                                                                                                      |                                     |                    |
| Linor      Labandter(6)100      Levi Eshkol Street, Apt # 9Tel-Aviv  69361  Israel    | 0                                        | 0%                      |
|                                                                                                      |                                     |                    |
| Avraham      Bahry (4)1      Gan Hashikmin StreetGanei-Yehuda-Savion,      Israel                         | 3,204,339                                | 7.79%                   |
|                                                                                                      |                                     |                    |
| Jules      Polak (4)4      Kiriati StreetRamat      Gan, Israel                                           | 0                                        | 0%                      |
|                                                                                                      |                                     |                    |
| Yoav      Ronen (4)2      Mivza Horev StreetModiin,      Israel                                           | 26,565                                   | 0.06%                   |
|                                                                                                      |                                     |                    |
| Philippe      Schwartz (4)999      California StreetSan      Francisco, CA 94108                          | 0                                        | 0%                      |
|                                                                                                      |                                     |                    |
| Uri      Kellner (4)6      Herzel Rosenblum Street, Apt #6210,Tel      Aviv, Israel 69379                 | 0                                        | 0%                      |
|                                                                                                      |                                     |                    |
| Jacob      Faigenbaum (4)Migdal      Moshe Aviv7      Jabotinsky Street, 19th FloorRamat      Gan, Israel | 0                                        | 0%                      |
|                                                                                                      |                                     |                    |
|                                                                                                      |                                     |                    |
| All      officers and directors as agroup      (9 people) (2)(3)                                          | 7,951,527                                | 19.34%                  |
|                                                                                                      |                                     |                    |

| (1) | Based      on a total of 41,122,078 shares outstanding as of December 31,      2007. |
|-----|--------------------------------------------------------------------------------------|
| (2) | Ms.      Grinboim served as Chief Financial Officer of HOMI until May 9,      2007.  |
| (3) | Ms.      Labandter has been Chief Financial Officer since May 9,    2007.            |
| (4) | Director      Nominee.                                                               |

----

| Description                                        |   | 2007         |
|----------------------------------------------------|--------|--------------|
| Directors’      fees and liability insurance | $      |  66,000 |
| Consulting      fees                               | $      | 575,000      |
| Interest      Payments                             | $      |  18,000 |
| Totals                                             | $      | 659,000      |

----

| (a) | Exhibits      required by Item 601 of RegulationS-B |
|-----|-----------------------------------------------------|

| 2.1   | Acquisition Agreement between      Benjamin Acquisitions, Inc. and Bartech Mediterranean International, Ltd.      (1)        (2)                                                   |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1   | Certificate of Incorporation      (1) (2)                                                                                                                                          |
| 3.1A  | Certificate of Amendment to      Certificate of Incorporation (1) (2)                                                                                                              |
| 3.2   | By-Laws (1) (2)                                                                                                                                                                    |
| 10.1  | HOMI Israel-BSI Agreement for      Israel, Jordan and Turkey (1) (3)                                                                                                               |
| 10.2  | HOMI Israel-BSI Agreement for      South Africa (1) (3)                                                                                                                            |
| 10.3  | HOS-BSI Stock Purchase Agreement      ((1) 3)                                                                                                                                      |
| 10.4  | HOS-BSI Stockholders' Agreement      (1) (3)                                                                                                                                       |
| 10.5  | HOS-BSI Option (1) (3)                                                                                                                                                             |
| 10.6  | HOS Purchase Option Agreement      (1) (3)                                                                                                                                         |
| 10.7  | Bank Leumi Credit Agreement      (1) (3)                                                                                                                                           |
| 10.8  | Bank Leumi Promissory Note      (1) (3)                                                                                                                                            |
| 10.9  | Bank Leumi Security Agreement      (1) (3)                                                                                                                                         |
| 10.10 | Assignment by HOMI Israel to      Protel Bilgisayar Limited Sirketi (1) (3)                                                                                                        |
| 10.11 | Agreement between HOMI Israel and      Intercontinental Hotels Corporation (1)  (4)                                                                                                |
| 10.12 | Strategic Alliance between      Bartech E.M.E.A SARL and HOMI (1) (6)                                                                                                              |
| 10.13 | Consulting Agreement between HOMI      Israel and Muscum Holding Corp. (1)   (5)                                                                                                   |
| 10.14 | Employment Agreement between HOS      and Ariel Almog (1) (5)                                                                                                                      |
| 10.15 | Employment Agreement between HOS      and Jacob Ronnel (1) (5)                                                                                                                     |
| 10.16 | Agreement with Rodia Mihali      (1) (6)                                                                                                                                           |
| 10.17 | Loan Agreement by and between      HOMI and Jacky Ronnel dated December 1, 2003 (1)  (7)                                                                                                |
| 10.18 | Loan Agreement by and between      HOMI and Ariel Almog dated December 1, 2003 (1)  (7)                                                                                                 |
| 10.19 | Loan Agreement by and between      HOMI and Avraham Bahry and Rodia Mihali dated March 1, 2003 (1)      (7)                                                                             |
| 10.20 | Financing Agreement between HOMI      and Solog Mifalelei Srigah Ltd. dated February 28, 2005      (9)                                                                                  |
| 10.21 | Financing Agreement between HOMI      and Solog Mifalelei Srigah Ltd., as amended on May 17, 2005      (10)                                                                             |
| 10.22 | Loan      Agreement by and between HOMI and Avraham Bahry and Rodia Mihali dated      November 2004.                                                                                    |
| 14.0  | Code of Ethics      (8)                                                                                                                                                                 |
| 21.0  | Subsidiaries      (3)                                                                                                                                                                   |
| 31.1  | Certification      of Sigal Grinboim and Jacob Ronnel pursuant to Rule 13q-14(a) of the      Securities Exchange Act of 1934                                                            |
| 32.1  | Certification      required by Rule 13a-14(b) under the Securities Exchange Act of 1934 and      Section 1350 of Chapter 63 of Title 18 of the United States Code (18      U.S.C. 1350) |

|   | (1) | Incorporated      by reference. |
|--------|-----|---------------------------------|

|   | (2) | Incorporated      by reference from initial filing of registration statement on Form SB-2      filed July 7, 2002. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------|

|   | (3) | Incorporated      by reference from Amendment No. 1 to registration statement on Form SB-2      filed October 15, 2002. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------|

|   | (4) | Incorporated      by reference from Amendment No. 2 to registration statement on Form SB-2      filed January 21, 2003. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------|

|   | (5) | Incorporated      by reference from Amendment No. 3 to registration statement on Form SB-2      filed July 3, 2003. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------|

|   | (6) | Incorporated      by reference from Amendment No. 4 to registration statement on Form SB-2      filed August 6, 2003. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------|

|   | (7) | Incorporated      by reference from Form 8-K filed April 8,2004. |
|--------|-----|------------------------------------------------------------------|

|   | (8) | Incorporated      by reference from Form 10-KSB filed on April 16,  2004. |
|--------|-----|---------------------------------------------------------------------------|

|   | (9) | Incorporated      by reference from Form 8-k filed March 1,2005 |
|--------|-----|-----------------------------------------------------------------|

|   | (10) | Incorporated      by reference from Form 8-k filed May 19,2005 |
|--------|------|----------------------------------------------------------------|

----

----

| HOTEL      OUTSOURCE MANAGEMENT INTERNATIONAL, INC. |
|-----------------------------------------------------|
|                                                |   |   |
| Dated:       March 31, 2008                    | By: | /s/Jacob      Ronnel |
|                                                |   | Jacob      Ronnel, President |
|                                                |   |   |
|                                                |   |   |

|   | /s/Jacob      Ronnel                          |   |  /s/Jules      Polak    |
|--------|-----------------------------------------------|--------|---------------------------------------------|
|   | Jacob      Ronnel, President, Director        |   | Jules      Polak, Director                  |
| Dated: | March      31, 2008                           | Dated: | March      31, 2008                         |
|   |                                          |   |                                        |
|   | /s/Linor      Labandter                  |   | /s/Philippe      Schwartz              |
|   | Linor      Labandter, Chief Financial Officer |   | Philippe      Schwartz, Director            |
| Dated: | March      31, 2008                           | Dated: | March      31, 2008                         |
|   |                                          |   |                                        |
|   | /s/Yoav Ronen                                 |   | /s/Avraham      Bahry                       |
|   | Yoav      Ronen, Director                     |   | Avraham      Bahry, Director                |
| Dated: | March      31, 2008                           | Dated: | March      31, 2008                         |
|   |                                          |   |                                        |
|   | /s/Uri Kellner                                |   | /s/Ariel Almog               |
|   | Uri      Kellner, Director                    |   | Ariel Almog, Director                       |
| Dated: | March      31, 2008                           | Dated: | March 31,  2008                        |