Annual report pursuant to Section 13 and 15(d)

CONSOLIDATED STATEMENT OF CASH FLOWS

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CONSOLIDATED STATEMENT OF CASH FLOWS (USD $)
 12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (3,016,677) $ (11,527,005)
Adjustments required to reconcile net loss to net cash provided by (used in) operating activities:    
Depreciation 1,087,178 1,103,943
Amortization of intangible assets 1,185,539 1,905,097
Amortization of debt discount 0 39,351
Stock based compensation 447,680 408,492
Adjustment to value of warrants and embedded features on the senior convertible notes 0 (161,339)
Capital (gain) loss from sale of property and equipment 15,668 (150)
Deferred tax provision 598,500 1,658,813
Changes in continuing operating assets and liabilities:    
Severance pay, net 241,604 186,238
Trade receivables 2,244,070 186,547
Other accounts receivable and prepaid expenses 277,812 (416,270)
Inventories (530,354) (1,735,022)
Unbilled receivables (7,651,223) (2,441,960)
Deferred revenues (221,339) (1,749,100)
Trade payables 462,200 3,437,054
Other accounts payable and accrued expenses 622,022 (2,026,504)
Discontinued operations, including impairment of goodwill and other long-lived assets (165,884) 5,315,233
Net cash provided by (used in) operating activities (4,403,204) (5,816,582)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchase of property and equipment (950,132) (2,633,562)
Additions to capitalized software development (334,700) (406,118)
Proceeds from sale of property and equipment 13,713 12,354
Sales of available for sale securities 0 399,449
Decrease (increase) in restricted collateral deposits 1,493,303 (6,820)
Discontinued operations 148,661 (114,674)
Net cash provided by (used in) investing activities 370,845 (2,749,371)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from (repayment of) long term debt 756,863 (816,415)
Change in short term bank credit 3,169,348 4,130,226
Purchase of treasury stock 0 (113,298)
Additions to long term debt 0 1,125,000
Discontinued operations (393,314) 293,509
Net cash provided by (used in) financing activities 3,532,897 4,619,022
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (499,462) (3,946,931)
CASH DIFFERENCES DUE TO EXCHANGE RATE CHANGES (212,471) (97,961)
CASH DIFFERENCES DUE TO EXCHANGE RATE CHANGES – DISCONTINUED OPERATIONS 0 108,689
NET CHANGE IN CASH AND CASH EQUIVALENTS - DISCONTINUED (31,603) 459,881
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 2,324,163 5,800,485
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 1,580,627 2,324,163
SUPPLEMENTARY INFORMATION ON NON-CASH AND OTHER TRANSACTIONS:    
Interest paid during the year 400,905 160,215
Taxes on income paid during the year 38,118 160,847
Note conversion to common stock $ 0 $ 642,419