Edgar Filing: ON TRACK INNOVATIONS LTD

zk1008639.htm

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of August, 2010

ON TRACK INNOVATIONS LTD.

(Name of Registrant)

Z.H.R. Industrial Zone, P.O. Box 32, Rosh-Pina, Israel, 12000

(Address of Principal Executive Office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F x Form 40-F o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes o No x

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes o No x

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o No x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):

ON TRACK INNOVATIONS LTD.

6-K ITEM

The GAAP financial statements in this Form 6-K of On Track Innovations Ltd. are incorporated by reference into the Form F-3 registration numbers 333-111770, 333-115953, 333-121316, 333-127615, 333-130324, 333-135742, 333-142320 and 333-153667 and Form S-8 registration numbers 333-128106, 333-140786, 333-149034 and 333-149575 of the Company, filed with the Security and Exchange Commission, to be a part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ON TRACK INNOVATIONS LTD.

(Registrant)

By: /s/ Oded Bashan

Oded Bashan

Chief Executive Officer and Chairman

Date: August 9, 2010

Press Release

OTI Reports Strong First Half 2010 Financial Results with Second Consecutive

Quarter of Non-GAAP Operating Profit

· Non GAAP Operating Profit of $2.2 Million

· Gross Margin Increased to 54%

· Revenues Increased to $27.8 Million

Iselin, NJ – August 9, 2010 – On Track Innovations Ltd. (OTI) (NASDAQ: OTIV), a global leader in contactless microprocessor-based smart card solutions for homeland security, payments, petroleum payments and other applications, today announced its consolidated financial results for the first half ended June 30, 2010. Following are various financial figures that compare the first half of 2010 to 2009.

Total revenues of $27.8 million, an 86% increase from last year.

Revenues from Licensing and Transaction Fees of $1.8 million, a 50% increase from last year.

Gross margin increased to 54% vs. 51% last year.

Non-GAAP operating expenses of $13 million, a 15% increase compared to $11.2 million last year. GAAP operating expenses of $15.1 million, a 10% increase compared to $13.7 million last year.

Non-GAAP operating profit of $2.2 million, compared to operating loss of $3.6 million last year. GAAP operating profit of $27,000, compared to operating loss of $6.1 million last year.

Strong balance sheet with cash, cash equivalents and short-term investments of $35.8 million as of June 30, 2010.

Oded Bashan, Chairman and CEO of OTI, said: “The financial results for the first half manifest the unique story of OTI: an excellent technology company with solid financial results. We are in a unique strategic position with proven track record, demonstrated growth potential and improved financial results, we are optimistic about the future for OTI. The successful execution of large scale projects strengthens our credibility, provides more opportunities in existing markets and in new ones, and further strengthens our pipeline for the next two to three years.”

Mr. Bashan continued: “Our unique position increases the comfort level generated from the improved visibility of revenues and the growing number and size of opportunities we are working on, which enables us to increase our revenue guidance. We expect to maintain a similar level of revenues in the second half of the year, and we therefore increase the earlier provided revenue guidance for 2010 by 15% to $53-$55 million. We expect to maintain the already achieved non-GAAP operating profitability for the remainder of the year.”

Discontinued Operations

During the fourth calendar quarter of 2009, the Company signed an agreement for the sale of the assets of OTI’s subsidiary Millennium Card's Technology Ltd ("MCT") including the machinery and inlay production IP of OTI to SMARTRAC NV. Results for the discontinued operations have been separated and are presented separately for both 2009 and 2010 statements.

Use of Non-GAAP Financial Information

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, OTI uses non-GAAP measures of gross profit, net income and earnings per share, which are adjustments from results based on GAAP to exclude non-cash equity-based compensation charges related to employees and non employees in accordance with the requirements of Accounting Standards Codification (“ASC”) Topic 718 (originally issued as SFAS No. 123(R)) and ASC Subtopic 505-50 - Equity-Based Payments to Non-Employees (formerly EITF 96-18), amortization of intangible assets and results from discontinued operations. OTI management believes the non-GAAP financial information provided in this release provides meaningful supplemental information regarding our performance and enhances the understanding of the Company’s on-going economic performance. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Management uses both GAAP and non-GAAP information in evaluating and operating the business and as such deemed it important to provide all this information to investors. Reconciliations between GAAP measures and non-GAAP are provided later in this press release.

Conference call and Webcast Information

The Company has scheduled a conference call and simultaneous Web cast for August 9, 2010, at 9:00 AM ET to discuss operating results and future outlook. To participate, call:

1-888-668-9141 (U.S. toll free), 1-800-227-297 (Israel toll free). To listen to the Web cast, use the following link: http://www.otiglobal.com/Investors_Introduction

For those unable to participate, the teleconference will be available for replay until midnight August 16th, by calling U.S: 1-888-782-4291 on the web at: http://www.otiglobal.com/Investors_Introduction

About OTI

Established in 1990, OTI (NASDAQ GM: OTIV) designs, develops and markets secure contactless microprocessor-based smart card technology to address the needs of a wide variety of markets. Applications developed by OTI include product solutions for petroleum payment systems, homeland security solutions, electronic passports and IDs, payments, mass transit ticketing, parking and loyalty programs. OTI has a global network of regional offices to market and support its products. The company was awarded the Frost & Sullivan 2005 and 2006 Company of the Year Award in the field of smart cards.

For more information on OTI, visit www.otiglobal.com, the content of which is not part of this press release.

OTI Contact:	Investor Relations:
Galit Mendelson	Miri Segal
Vice President of Corporate Relations	MS-IR LLC
201 944 5200 ext. 111	917-607-8654
galit@otiglobal.com	msegal@ms-ir.com

# # #

(TABLES TO FOLLOW)

Safe Harbor for Forward-Looking Statements:

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other Federal securities laws. Whenever we use words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions, we are making forward-looking statements. Because such statements deal with future events and are based on OTI’s current expectations, they are subject to various risks and uncertainties and actual results, performance or achievements of OTI could differ materially from those described in or implied by the statements in this press release. Forward-looking statements include statements regarding our goals, beliefs, future growth strategies, objectives, products, plans, revenues target or current expectations. For example, among our forward-looking statements are the following:

·	when we say that we are in a unique strategic position with proven track record, demonstrated growth potential and improved financial results

·	when we say that we are optimistic about the future for OTI

·	when we say that the successful execution of large scale projects strengthens our credibility, provides more opportunities in existing markets and in new ones, and further strengthens our pipeline for the next two to three years

·	when we say that our unique position increases the comfort level generated from the improved visibility of revenues and the growing number and size of opportunities we are working on, which enables us to increase our revenue guidance

·	when we say that we expect to maintain a similar level of revenues in the second half of the year

·	or when we say that we therefore increase the earlier provided revenue guidance for 2010 by 15% to $53-$55 million, or when we say that we expect to maintain the already achieved non-GAAP operating profitability for the remainder of the year.

Forward-looking statements could be impacted by the effects of the protracted evaluation and validation periods in the U.S. and other markets for contactless payment cards, market acceptance of new and existing products and our ability to execute production on orders, as well as other risks and uncertainties, including those discussed in the “Risk Factors” section and elsewhere in our Annual Report on Form 20-F for the year ended December 31, 2009 and in subsequent filings with the Securities and Exchange Commission. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be achieved. Except as otherwise required by law, OTI disclaims any intention or obligation to update or revise any forward-looking statements, which speak only as of the date hereof, whether as a result of new information, future events or circumstances or otherwise.

ON TRACK INNOVATIONS LTD.

CONDENSED CONSOLIDATED BALANCE SHEET

(In thousands, except share and per share data)

	June 30		December 31
	2010		2009
	(Unaudited)		(Audited)

Assets

Current assets
Cash and cash equivalents	$	28,374	$	26,884
Short-term investments		7,467		5,086
Trade receivables (net of allowance for doubtful accounts of $2,750 and $2,777 as of June 30, 2010 and December 31, 2009, respectively)		3,866		6,595
Other receivables and prepaid expenses		2,066		2,478
Inventories		10,188		6,265

Total current assets		51,961		47,308

Severance pay deposits fund		1,109		1,112

Property, plant and equipment, net		13,614		14,366

Intangible assets, net		1,214		1,532

Assets related to discontinued operation and held for sale		3,223		12,358

Total Assets	$	71,121	$	76,676

ON TRACK INNOVATIONS LTD.

CONDENSED CONSOLIDATED BALANCE SHEET

(In thousands, except share and per share data)

	June 30			December 31
	2010			2009
	(Unaudited)			(Audited)

Liabilities and Shareholders' Equity

Current Liabilities
Short-term bank credit and current maturities of long-term bank loans	$	5,799		$	6,255
Trade payables		10,483			9,649
Other current liabilities		17,534			16,174
Total current liabilities		33,816			32,078

Long-Term Liabilities
Long-term loans, net of current maturities		5,064			2,642
Accrued severance pay		3,417			3,373
Deferred tax liability		102			120
Total long-term liabilities		8,583			6,135

Total Liabilities		42,399			38,213

Liabilities related to discontinued operation		776			8,495

Commitments and Contingencies

Equity
Shareholders' Equity
Ordinary shares of NIS 0.1 par value: Authorized –
50,000,000 shares as of June 30, 2010 and December 31, 2009;
issued and outstanding 24,684,905 and 23,946,316 shares
as of June 30, 2010 and December 31, 2009, respectively		591			571
Additional paid-in capital		189,357			187,473
Accumulated other comprehensive income (loss)		(239	)		570
Treasury shares at cost – 235,436 and 0 shares as of June 30, 2010
and December 31, 2009, respectively		(497	)		-
Accumulated deficit		(161,200	)		(158,623	)
Shareholder’s equity		28,012			29,991
Noncontrolling interest		(66	)		(23	)

Total Equity		27,946			29,968

Total Liabilities and Shareholders’ Equity	$	71,121		$	76,676

ON TRACK INNOVATIONS LTD.

NON GAAP CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(In thousands, except share and per share data)

	Six months ended June 30						Three months ended June 30
	2010			2009			2010			2009
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)

Revenues
Sales	$	26,001		$	13,769		$	12,461		$	5,813
Licensing and transaction fees		1,799			1,200			925			743
Total revenues		27,800			14,969			13,386			6,556

Cost of revenues
Cost of sales		12,654			7,280			6,502			3,180
Total cost of revenues		12,654			7,280			6,502			3,180

Gross profit		15,146			7,689			6,884			3,376
Operating expenses
Research and development		3,200			2,895			1,666			1,514
Selling and marketing		6,036			5,170			2,479			2,238
General and administrative		3,718			3,181			1,748			1,545

Total operating expenses		12,954			11,246			5,893			5,297

Operating profit (loss)		2,192			(3,557	)		991			(1,921	)
Financial expense, net		(575	)		(368	)		(30	)		(572	)

Profit (loss) before taxes on income		1,617			(3,925	)		961			(2,493	)

Taxes on income		(155	)		42			(73	)		19

Net profit (loss)		1,462			(3,883	)		888			(2,474	)

Net loss attributable to noncontrolling interest		47			141			38			97
Net profit (loss) attributable to shareholders	$	1,509		$	(3,742	)	$	926		$	(2,377	)

Basic and diluted net profit (loss) attributable to shareholders per ordinary share	$	0.06		$	(0.17	)	$	0.04		$	(0.11	)

Weighted average number of ordinary shares used in computing basic Net profit (loss) per ordinary share		24,310,558			22,027,070			24,465,199			22,266,869

Weighted average number of ordinary shares used in computing diluted Net profit (loss) per ordinary share		26,269,717			22,027,070			26,424,358			22,266,869

Adjustments from results based on GAAP to exclude:

(a)

The effect of stock-based compensation related to employees and non employees in accordance with ASC Topic 718 (originally issued as SFAS No. 123(R)) and ASC Subtopic 505-50 (formerly EITF 96-18).

(b)

The effect of amortization of intangible assets.

(c)

The effect of discontinued operation.

ON TRACK INNOVATIONS LTD.

GAAP CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(In thousands, except share and per share data)

	Six months ended June 30						Three months ended June 30
	2010			2009			2010			2009
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)

Revenues
Sales	$	26,001		$	13,769		$	12,461		$	5,813
Licensing and transaction fees		1,799			1,200			925			743
Total revenues		27,800			14,969			13,386			6,556

Cost of revenues
Cost of sales		12,665			7,308			6,507			3,193
Total cost of revenues		12,665			7,308			6,507			3,193

Gross profit		15,135			7,661			6,879			3,363
Operating expenses
Research and development		4,017			4,036			1,969			2,072
Selling and marketing		6,657			5,521			2,924			2,447
General and administrative		4,147			3,649			1,891			1,799
Amortization of intangible assets		287			515			143			251

Total operating expenses		15,108			13,721			6,927			6,569

Operating profit (loss)		27			(6,060	)		(48	)		(3,206	)
Financial expense, net		(575	)		(368	)		(30	)		(572	)

Loss before taxes on income		(548	)		(6,428	)		(78	)		(3,778	)

Taxes on income		(155	)		42			(73	)		19

Net loss from continuing operations		(703	)		(6,386	)		(151	)		(3,759	)
Net loss from discontinued operations		(1,921	)		(2,512	)		(1,980	)		(1,305	)

Net loss		(2,624	)		(8,898	)		(2,131	)		(5,064	)

Net loss attributable to noncontrolling interest		47			141			38			97
Net loss attributable to shareholders	$	(2,577	)	$	(8,757	)	$	(2,093	)	$	(4,967	)

Basic and diluted net loss attributable to shareholders per ordinary share
From continuing operations	$	(0.03	)	$	(0.29	)	$	(0.01	)	$	(0.16	)
From discontinued operations	$	(0.08	)	$	(0.11	)	$	(0.08	)	$	(0.06	)
	$	(0.11	)	$	(0.40	)	$	(0.09	)	$	(0.22	)

Weighted average number of ordinary shares used in computing basic and diluted net loss per ordinary share		24,310,558			22,027,070			24,465,199			22,266,869

ON TRACK INNOVATIONS LTD.

RECONCILIATION BETWEEN GAAP TO NON-GAAP

UNAUDITED STATEMENT OF OPERATIONS

(In thousands, except share and per share data)

	GAAP			Six months ended June 30, 2010 Adjustments			Non-GAAP

Revenues
Sales	$	26,001			-		$	26,001
Licensing and transaction fees		1,799			-			1,799
Total revenues		27,800						27,800

Cost of Revenues
Cost of sales		12,665			(11	) (a)		12,654
Total cost of revenues		12,665			(11	)		12,654

Gross profit		15,135			11			15,146

Operating Expenses
Research and development		4,017			(817	) (a)		3,200
Selling and marketing		6,657			(621	) (a)		6,036
General and administrative		4,147			(429	) (a)		3,718
Amortization of intangible assets		287			(287	) (b)		-
Total operating expenses		15,108			(2,154	)		12,954

Operating profit		27			2,165			2,192
Financial expenses, net		(575	)		-			(575	)
Profit (loss) before taxes on income		(548	)		2,165			1,617
Taxes on income		(155	)		-			(155	)

Net profit (loss) from continuing operation		(703	)		2,165			1,462
Net loss from discontinued operation		(1,921	)		1,921	(c)		-

Net profit (loss)	$	(2,624	)	$	4,086		$	1,462

Net loss attributable to noncontrolling interest		47			-			47
Net profit (loss) attributable to shareholders	$	(2,577	)	$	4,086		$	1,509

Basic and diluted net profit (loss) attributable to shareholders per ordinary share
From continuing operation	$	(0.03	)	$	0.09		$	0.06
From discontinued operation	$	(0.08	)	$	0.08			-
Weighted average number of ordinary shares used in computing basic net profit (loss) per ordinary share		24,310,558						24,310,558
Weighted average number of ordinary shares used in computing diluted net profit (loss) per ordinary share		26,269,717						26,269,717

(a)

The effect of stock-based compensation related to employees and non employees in accordance with ASC Topic 718 (originally issued as SFAS No. 123(R)) and ASC Subtopic 505-50 (formerly EITF 96-18).

(b)

The effect of amortization of intangible assets.

(c)

The effect of discontinued operation.

ON TRACK INNOVATIONS LTD.

RECONCILIATION BETWEEN GAAP TO NON-GAAP

UNAUDITED STATEMENT OF OPERATIONS

(In thousands, except share and per share data)

	GAAP			Three months ended June 30, 2010 Adjustments			Non-GAAP

Revenues
Sales	$	12,461			-		$	12,461
Licensing and transaction fees		925			-			925
Total revenues		13,386						13,386

Cost of Revenues
Cost of sales		6,507			(5	) (a)		6,502
Total cost of revenues		6,507			(5	)		6,502

Gross profit		6,879			5			6,884

Operating Expenses
Research and development		1,969			(303	) (a)		1,666
Selling and marketing		2,924			(445	) (a)		2,479
General and administrative		1,891			(143	) (a)		1,748
Amortization of intangible assets		143			(143	) (b)		-
Total operating expenses		6,927			(1,034	)		5,893

Operating profit (loss)		(48	)		1,039			991
Financial expenses, net		(30	)		-			(30	)
Profit (loss) before taxes on income		(78	)		1,039			961
Taxes on income		(73	)		-			(73	)

Net profit (loss) from continuing operation		(151	)		1,039			888
Net loss from discontinued operation		(1,980	)		1,980	(c)		-

Net profit (loss)	$	(2,131	)	$	3,019		$	888

Net loss attributable to noncontrolling interest		38			-			38
Net profit (loss) attributable to shareholders	$	(2,093	)	$	3,019		$	926

Basic and diluted net profit (loss) attributable to shareholders per ordinary share
From continuing operation	$	(0.01	)	$	0.05		$	0.04
From discontinued operation	$	(0.08	)	$	0.08			-
Weighted average number of ordinary shares used in computing basic net profit (loss) per ordinary share		24,465,199						24,465,199
Weighted average number of ordinary shares used in computing diluted net profit (loss) per ordinary share		26,424,358						26,424,358

(a)

The effect of stock-based compensation related to employees and non employees in accordance with ASC Topic 718 (originally issued as SFAS No. 123(R)) and ASC Subtopic 505-50 (formerly EITF 96-18).

(b)

The effect of amortization of intangible assets.

(c)

The effect of discontinued operation.

ON TRACK INNOVATIONS LTD.

RECONCILIATION BETWEEN GAAP TO NON-GAAP

UNAUDITED STATEMENT OF OPERATIONS

(In thousands, except share and per share data)

	GAAP			Six months ended June 30, 2009 Adjustments			Non-GAAP

Revenues
Sales	$	13,769			-		$	13,769
Licensing and transaction fees		1,200			-			1,200
Total revenues		14,969						14,969

Cost of Revenues
Cost of sales		7,308			(28	) (a)		7,280
Total cost of revenues		7,308			(28	)		7,280

Gross profit		7,661			28			7,689

Operating Expenses
Research and development		4,036			(1,141	) (a)		2,895
Selling and marketing		5,521			(351	) (a)		5,170
General and administrative		3,649			(468	) (a)		3,181
Amortization of intangible assets		515			(515	) (b)		-
Total operating expenses		13,721			(2,475	)		11,246

Operating loss		(6,060	)		2,503			(3,557	)
Financial expenses, net		(368	)		-			(368	)
Loss before taxes on income		(6,428	)		2,503			(3,925	)
Taxes on income		42			-			42

Net loss from continuing operation		(6,386	)		2,503			(3,883	)
Net loss from discontinued operation		(2,512	)		2,512	(c)		-

Net loss	$	(8,898	)	$	5,015		$	(3,883	)

Net loss attributable to noncontrolling interest		141			-			141
Net loss attributable to shareholders	$	(8,757	)	$	5,015		$	(3,742	)

Basic and diluted net loss attributable to shareholders per ordinary share
From continuing operation	$	(0.29	)	$	0.12		$	(0.17	)
From discontinued operation	$	(0.11	)	$	0.11			-
Weighted average number of ordinary shares used in computing basic and diluted net loss per ordinary share		22,027,070						22,027,070

(a)

The effect of stock-based compensation related to employees and non employees in accordance with ASC Topic 718 (originally issued as SFAS No. 123(R)) and ASC Subtopic 505-50 (formerly EITF 96-18).

(b)

The effect of amortization of intangible assets.

(c)

The effect of discontinued operation.

ON TRACK INNOVATIONS LTD.

RECONCILIATION BETWEEN GAAP TO NON-GAAP

UNAUDITED STATEMENT OF OPERATIONS

(In thousands, except share and per share data)

	GAAP			Three months ended June 30, 2009 Adjustments			Non-GAAP

Revenues
Sales	$	5,813			-		$	5,813
Licensing and transaction fees		743			-			743
Total revenues		6,556						6,556

Cost of Revenues
Cost of sales		3,193			(13	) (a)		3,180
Total cost of revenues		3,193			(13	)		3,180

Gross profit		3,363			13			3,376

Operating Expenses
Research and development		2,072			(558	) (a)		1,514
Selling and marketing		2,447			(209	) (a)		2,238
General and administrative		1,799			(254	) (a)		1,545
Amortization of intangible assets		251			(251	) (b)		-
Total operating expenses		6,569			(1,272	)		5,297

Operating loss		(3,206	)		1,285			(1,921	)
Financial expenses, net		(572	)		-			(572	)
Loss before taxes on income		(3,778	)		1,285			(2,493	)
Taxes on income		19			-			19

Net loss from continuing operation		(3,759	)		1,285			(2,474	)
Net loss from discontinued operation		(1,305	)		1,305	(c)		-

Net loss	$	(5,064	)	$	2,590		$	(2,474	)

Net loss attributable to noncontrolling interest		97			-			97
Net loss attributable to shareholders	$	(4,967	)	$	2,590		$	(2,377	)

Basic and diluted net loss attributable to shareholders per ordinary share
From continuing operation	$	(0.16	)	$	0.05		$	(0.11	)
From discontinued operation	$	(0.06	)	$	0.06			-
Weighted average number of ordinary shares used in computing basic and diluted net loss per ordinary share		22,266,869						22,266,869

(a)

The effect of stock-based compensation related to employees and non employees in accordance with ASC Topic 718 (originally issued as SFAS No. 123(R)) and ASC Subtopic 505-50 (formerly EITF 96-18).

(b)

The effect of amortization of intangible assets.

(c)

The effect of discontinued operation.

ON TRACK INNOVATIONS LTD.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands, except share and per share data)

	Six months ended June 30
	2010			2009
	(Unaudited)			(Unaudited)

Cash flows from operating activities
Net loss from continuing operations	$	(703	)	$	(6,386	)
Adjustments required to reconcile net loss to net cash used in operating activities:
Stock-based compensation related to options and shares issued to employees and others		1,878			1,988

Gain on sale of property and equipment		(11	)		-
Amortization of intangible assets		287			515
Depreciation		727			671

Accrued severance pay, net		47			(230	)
Accrued interest on short term investments and linkage differences on long-term loans		115			(11	)
Decrease in deferred tax liability		(18	)		(43	)
Decrease (increase) in trade receivables, net		2,584			(122	)
Decrease (increase) in other receivables and prepaid expenses		290			(877	)
increase in inventories		(4,298	)		(257	)
Increase (decrease) in trade payables		1,363			(553	)
Increase in other current liabilities		1,458			206
Net cash provided by (used in) continuing operating activities		3,719			(5,099	)

Cash flows from investing activities

Purchase of property and equipment		(1,275	)		(553	)
Purchase of available-for-sale securities		(3,543	)		(514	)
Proceeds from maturity of available-for-sale securities		1,185			1,372
Other, net		10			-
Net cash provided by (used in) continuing investing activities		(3,623	)		305

Cash flows from financing activities
Increase (decrease) in short-term bank credit, net		(533	)		936
Proceeds from long-term bank loans		3,616			368
Repayment of long-term bank loans		(454	)		(257	)
Payments to acquire treasury shares		(497	)		-
Proceeds from receipt on account of shares and exercise of options and warrants, net		26			250
Net cash provided by continuing financing activities		2,158			1,297

Cash flows from discontinued operations
Net cash used in discontinued operating activities		(1,600	)		(1,890	)
Net cash provided by discontinued investing activities		1,121			-
Total net cash used in discontinued activities		(479	)		(1,890	)

Effect of exchange rate changes on cash		(285	)		54

Increase (decrease) in cash and cash equivalents		1,490			(5,333	)
Cash and cash equivalents at the beginning of the year		26,884			27,196

Cash and cash equivalents at the end of the year		28,374			21,863