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 $)
9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:    
Loss from discontinued operations $ (1,506,353) $ (2,837,061)
Loss from continuing operations (1,956,661) (3,403,365)
Adjustments required to reconcile net profit (loss) to net cash (used in) provided by operating activities:    
Depreciation 832,831 817,639
Amortization of intangible assets and capitalized software 893,743 1,432,507
Amortization of debt discount   39,351
Compensation related to shares issued to employees, consultants and directors 171,001 245,372
Adjustment to value of warrants and imbedded features on the senior convertible notes   (161,339)
Deferred tax provision 448,875 366,143
Changes in operating assets and liabilities:    
Severance pay, net 156,361 (24,074)
Trade receivables 1,871,336 4,389,601
Other accounts receivable and prepaid expenses 114,167 (275,674)
Inventories (1,405,686) (2,102,933)
Unbilled receivables (7,682,355) (1,466,643)
Deferred revenues 327,341 434,790
Trade payables 2,441,907 4,216,757
Accounts payable and accrued expenses (468,111) (2,322,975)
Discontinued operations (156,434) 58,424
Net cash provided by (used in) operating activities (5,918,038) (593,480)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchase of property and equipment (510,969) (2,434,315)
Additions to capitalized software development (159,616) (46,808)
Investment in marketable securities   399,449
Decrease (increase) in restricted collateral deposits 1,585,885 (6,950)
Discontinued operations 30,695 (72,319)
Net cash provided by (used in) investing activities 945,995 (2,160,943)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Repayment of long term debt (34,785) 338,473
Changes in short term bank credit 3,869,006 (2,451,904)
Purchase of treasury stock   (113,297)
Discontinued operations (384,344) 464,253
Net cash provided by (used in) financing activities 3,449,877 (1,762,475)
DECREASE IN CASH AND CASH EQUIVALENTS (1,522,166) (4,516,898)
CASH ACCRETION (EROSION) DUE TO EXCHANGE RATE DIFFERENCES 25,265 (37,084)
CASH ACCRETION (EROSION) DUE TO EXCHANGE RATE DIFFERENCES – DISCONTINUED OPERATIONS   67,188
NET CHANGE IN CASH AND EQUIVALENTS – DISCONTINUED OPERATIONS (69,522) 240,226
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 757,740 1,553,917
SUPPLEMENTARY INFORMATION ON NON-CASH TRANSACTIONS:    
Interest paid during the period 229,631 127,663
Taxes paid on income during the period $ 40,372 $ 160,847