Quarterly report pursuant to Section 13 or 15(d)

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

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CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (USD $)
3 Months Ended
Mar. 31, 2012
Mar. 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:    
Income (loss) from discontinued operations $ 64,160 $ (1,684,174)
Loss from continuing operations (1,123,603) (958,971)
Adjustments required to reconcile net profit (loss) to net cash (used in) provided by operating activities:    
Depreciation 273,007 268,517
Amortization of intangible assets and capitalized software 301,371 476,306
Amortization of debt discount   21,596
Compensation related to shares issued to employees, consultants and directors 63,203 41,657
Adjustment to value of warrants and imbedded features on the senior convertible notes   (118,385)
Deferred tax provision 149,625 99,760
Changes in operating assets and liabilities:    
Severance pay, net 43,877 12,524
Trade receivables 4,417,875 4,291,611
Other accounts receivable and prepaid expenses 177,523 (241,623)
Inventories (344,719) (409,669)
Unbilled receivables (2,558,355) (1,888,368)
Deferred revenues (574,116) (1,339,306)
Trade payables (1,683,114) (255,053)
Accounts payable and accrued expenses 91,249 (1,030,372)
Discontinued operations 598,458 326,428
Net cash provided by (used in) operating activities (103,559) (2,387,522)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchase of property and equipment (302,876) (87,927)
Additions to capitalized software development   (8,000)
Investment in marketable securities   8,084
Decrease (increase) in restricted collateral deposits 1,581,377 (341,972)
Discontinued operations 54,553 (149,283)
Net cash provided by (used in) investing activities 1,333,054 (579,098)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Repayment of long term debt (31,071) (473,505)
Changes in short term bank credit (1,202,964) (575,826)
Purchase of treasury stock   (58,441)
Discontinued operations (331,711) 18,099
Net cash provided by (used in) financing activities (1,565,746) (1,089,673)
DECREASE IN CASH AND CASH EQUIVALENTS (336,251) (4,056,293)
CASH ACCRETION (EROSION) DUE TO EXCHANGE RATE DIFFERENCES (13,566) 6,766
CASH ACCRETION (EROSION) DUE TO EXCHANGE RATE DIFFERENCES – DISCONTINUED OPERATIONS   (29,657)
NET CHANGE IN CASH AND EQUIVALENTS – DISCONTINUED OPERATIONS (250,392) 227,710
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 2,324,163 5,800,485
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 1,723,954 1,949,011
SUPPLEMENTARY INFORMATION ON NON-CASH TRANSACTIONS:    
Interest paid during the period 64,216 59,864
Taxes paid on income during the period   $ 8,296