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<SEC-DOCUMENT>0001119083-06-000002.txt : 20060221
<SEC-HEADER>0001119083-06-000002.hdr.sgml : 20060220
<ACCEPTANCE-DATETIME>20060221093228
ACCESSION NUMBER:		0001119083-06-000002
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20060221
FILED AS OF DATE:		20060221
DATE AS OF CHANGE:		20060221

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MIND CTI LTD
		CENTRAL INDEX KEY:			0001119083
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-COMPUTER PROGRAMMING SERVICES [7371]
		IRS NUMBER:				000000000
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-31215
		FILM NUMBER:		06631376

	BUSINESS ADDRESS:	
		STREET 1:		INDUSTRIAL PARK BUILDING 7
		CITY:			YOQNEAM ILIT ISRAEL
		STATE:			L3
		ZIP:			20692
		BUSINESS PHONE:		97249936666

	MAIL ADDRESS:	
		STREET 1:		PO BOX 144
		CITY:			YOQNEAM ILIT ISRAEL
		ZIP:			20692
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>mindcti6k.htm
<TEXT>
<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 3.2//EN">

<html>
<head>
	<title>MIND CTI </title>
</head>
<body bgcolor="#ffffff" text="#000000" link="#0000ff" vlink="#0000ff" alink="#ff0000">
<P ALIGN="CENTER"><strong>FORM 6-K</strong></P>
<CENTER>
<P ALIGN="CENTER"><STRONG>SECURITIES AND EXCHANGE COMMISSION</STRONG></P>
<P ALIGN="CENTER"><STRONG>Washington D.C. 20549</STRONG></P>
<P><STRONG>Report of Foreign Private Issuer</STRONG></P>
<P ALIGN="CENTER">
<STRONG>Pursuant to Rule 13a-16 or 15d-16</STRONG></P>
<P ALIGN="CENTER"><STRONG>of the Securities Exchange Act of 1934</STRONG></P>
<P align="left">For the month of February, 2006</P>
<P align="left">Commission File Number: 000-31215</P>
<P></P>
<P><STRONG>MIND C.T.I. LTD.</STRONG></P>
<P>(Translation of registrant's name into English)</P>
<P><STRONG>&nbsp;</STRONG></P>
<P><STRONG>Industrial Park, Building 7, Yokneam 20692 , Israel</STRONG></P>
<P>(Address of principal executive offices)</P>
</CENTER>
<P>Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F:</P>
<P ALIGN="CENTER">Form 20-F&nbsp;X&nbsp;&nbsp;&nbsp;&nbsp; Form 40-F_______</P>
<P>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): N/A</P>
<P>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): N/A</P>
<P>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:</P>
<P>&nbsp;</P>
<P ALIGN="CENTER">
	Yes _______  No&nbsp;&nbsp;&nbsp;&nbsp; X
</P>
<P>If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- N/A</P>
<!-- _________________________________________________________________________________________________-->
<p>
<hr width="100%">
<BR>

<P ALIGN="CENTER"><STRONG>INCORPORATION BY REFERENCE</STRONG></P>
<p>The financial statements included in the press release attached as Exhibit 1 to this Report on Form 6-K are hereby incorporated by reference into: (i) the Registrant's Registration Statement on Form S-8, Registration No. 333-117054; (ii) the Registrant's Registration Statement on Form S-8, Registration No. 333-100804; and (iii) the Registrant's Registration Statement on Form S-8, Registration No. 333-54632.</P>
<P ALIGN="CENTER">
	<STRONG>CONTENTS</STRONG>
</P>
<P>This report on Form 6-K of the registrant consists of the following document, which is attached hereto and incorporated by reference herein:</P>
<OL>
	<LI>Press Release: MIND CTI Reports Record Results for Q4 2005.<br>
	 Dated February 20, 2006.</LI>
</OL>
<P ALIGN="CENTER">
<STRONG>
	SIGNATURES
</STRONG>
</P>
<P>&nbsp;</P>
<P>
	Pursuant to the requirements of the Securities Exchange Act 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
</P>
<P>
	Date: February 21, 2006</P>
<TABLE>
<TR>
<TD WIDTH="50%">&nbsp;

</TD>
<TD>
	MIND CTI Ltd.
<P>
	/s/ Monica Eisinger
<BR>
	Title: Chairperson of the Board of Directors, President and Chief Executive Officer
</TD>
</TR>
</TABLE>
<BR>

<P ALIGN="CENTER"><STRONG>EXHIBIT INDEX</STRONG></P>
<table cellpadding="2">
	<tr><td width="150">Exhibit Number</td><td>Description of Exhibit</td></tr>
	<tr><td align="right" valign="top">1.</td><td>Press Release: MIND CTI Reports Record Results for Q4 2005, <br>
	 Dated February 20, 2006.</td>
	</tr>
</table>

<center>
	<h1>MIND CTI Reports Record Results for Q4 2005<br>
		2005 EPS of 19 cents
	</h1>
	<h2>* Board declares cash dividend</h2>
</center>

<b>Key Highlights</b><br>
<ul>
	<li>Fourth quarter 2005 revenues were $5.04 million, a 3% increase over the fourth quarter of 2004 and a 24% increase over the third quarter of 2005.</li>
	<li>Fourth quarter operating income was $1.21 million, a 17% increase over the fourth quarter of 2004.</li>
	<li>Net income for 2005 was $4.06 million or $0.19 per diluted share.</li>
	<li>Third consecutive quarter of revenue growth.</li>
	<li>MIND completed acquisition of US based billing company and the merge process has been successfully completed.</li>
</ul>

<p>
	<b>Yoqneam, Israel, February 20, 2006</b>- MIND C.T.I. LTD. (NASDAQ: MNDO), a leading provider of convergent end-to-end billing and customer care solutions for VoIP, Mobile, 3G and Triple-play carriers worldwide, today announced results for the fourth quarter and year ended December 31, 2005.
</p><p>
	Monica Eisinger, Chairperson and CEO, commented: "I am extremely pleased with reaching record results this quarter, both for revenue and operating income. In 2005 we achieved our long-term goal of finding the right acquisition target and closing it in a beneficial way. The strategic acquisition of Sentori strengthened our presence in the US and in the mobile market. During the quarter we completed deployments for some existing orders and had some new wins. The revival of the US markets and our focus on the wireless markets combined with our successful integration of the two businesses result in a stronger than ever backlog and pipeline, which we expect to lead to growth in the coming quarters."
</p><p>
	MIND also announced today the appointment of Shalom Bronstein, 56, as the Company's new Chief Financial Officer (CFO). Mr. Bronstein replaces Arie Ganot who served at MIND since 1998 and as CFO since 2002 and who now intends to pursue other business opportunities. We thank Mr. Ganot for his contribution to the company's success. The appointment becomes effective February 20, 2006. Mr. Bronstein comes to MIND after serving as CFO for Matav Cable Systems Media Ltd. (NASDAQ: MATV) from 1989 to 2005. Mr. Bronstein is a Certified Public Accountant. He holds a B.A. in Accounting and Economics from Tel- Aviv University and an MBA from Bradford University.
</p><p>
	Monica Eisinger commented on the appointment: "We welcome Shalom, a veteran and accomplished executive, to our strong management team and we believe that with his international financial experience as CFO for a public company, he will play a key role in the continued implementation of our growth strategy."
</p><p>
	As of December 31, 2005, we had 284 employees in our four offices.
</p><p>
	<b>Financial Highlights of Q4 2005</b><br>
	<ul>
		<li>Revenues were $5.04 million, a 3% increase over the fourth quarter of 2004.</li>
		<li>Operating income was $1.21 million, an increase of 17% over the fourth quarter of 2004.</li>
		<li>Net income was $1.31 million or $0.06 per diluted share, compared with a net income of $2.14 million or $0.10 per share in the fourth quarter of 2004.</li>
	</ul>
</p><p>
	<b>Year 2005 Financial Highlights</b><br>
	<ul>
		<li>Revenues were $15.6 million, a 12% decrease from 2004.</li>
		<li>Operating income was $2.8 million, an 11% decrease from 2004.</li>
		<li>Net income was $4.06 million or $0.19 per diluted share, compared with a net income of $6.88 million or $0.32 per diluted share in 2004.</li>
		<li>Cash position decreased by $8.51 million to $40.2 million on December 31, 2005, due mainly to the dividend paid in March 2005 and the acquisition of Sentori cost, offset by our positive cash flow.</li>
	</ul>
</p><p>
	<b>Revenue Distribution for Q4 2005</b><br>
	The geographic revenue breakdown, as a percentage of total revenues, was as follows: sales in the Americas represented 52%, Europe represented 35%, Africa, APAC and Israel represented 13%.
</p><p>
	Revenue from our customer care and billing software totaled $4.37 million, while revenue from our enterprise call management software was $667 thousand. The revenue breakdown from our business lines of products was $2.59 million, or 51%, from licenses, $1.44 million, or 29%, from maintenance and $1.01 million, or 20%, from services.
</p><p>
	<b>Revenue Distribution for Full Year 2005</b><br>
	The geographic revenue breakdown, as a percentage of total revenues, was as follows: sales in Europe represented 40%, the Americas represented 36%, Africa represented 11%, APAC represented 6% and Israel represented 7%.
</p><p>
	Revenue from our customer care and billing software totaled $12.69 million, while revenue from our enterprise call management software was $2.91 million. The revenue breakdown from our business lines of products was $7.42 million, or 47%, from licenses, $5.28 million, or 34%, from maintenance and $2.9 thousand, or 19%, from services.
</p><p>
	<b>Dividend Distribution</b><br>
	On February 20, 2006, the Board declared a cash dividend in the amount just about equal to our 2005 net income, which is approximately $4 million. After deduction of a 25% tax payable by the Company on the amount of the dividend (because the dividend is from income that was tax exempt), a cash dividend of $0.14 per share will be distributable to shareholders, subject to an Israeli withholding tax of 15%. Accordingly, each shareholder will receive $0.119 per share after deduction of taxes required by the Israeli Tax Authority.
</p><p>
	The record date for the dividend will be March 14, 2006 at 5:00 p.m. Eastern Standard Time and the payment date will be March 27, 2006.
</p><p>
	<b>Conference Call Information</b><br>
MIND will host a conference call on February 21, at 8:30 a.m., Eastern Standard Time, to discuss the Company's fourth quarter and 2005 results and other financial and business information. The call will be carried live on the Internet via www.fulldisclosure.com and the MIND website, www.mindcti.com. For those unable to listen to the live web cast, a replay will be available.
</p><p>
	<b>About MIND</b><br>
	MIND CTI Ltd. is a leading provider of convergent prepaid and postpaid end-to-end billing and customer care solutions for VoIP, Mobile, 3G and Triple-play carriers worldwide. Since 1997 MIND has been a pioneer in enabling the VoIP technology for emerging and incumbent service providers. In August 2005 MIND acquired Sentori, Inc., a US based provider of customer care and billing solutions to wireless carriers and mobile virtual network operators (MVNO's). Sentori, Inc. brings over ten years of wireless experience staff and seven years of a wireless operational solution to carriers.  MIND operates from offices in Europe, Israel and the United States.
</p><p>
	For financial information, reports and presentations, please visit the Investor Relations site: http://www.mindcti.com/ir
</p><p>
	Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995: All statements other than historical facts included in the foregoing press release regarding the Company's business strategy are "forward looking statements." These statements are based on management's beliefs and assumptions and on information currently available to management. Forward-looking statements are not guarantees of future performance, and actual results may materially differ. The forward looking statements involve risks, uncertainties, and assumptions, including the risks discussed in the Company's filings with the United States Securities Exchange Commission.  The Company does not undertake to update any forward-looking information.
</p><p>
	<b>For more information please contact:</b><br>
	Andrea Dray<br>
	MIND CTI Ltd.<br>
	Tel: +972-4-993-6666<br>
	investor@mindcti.com
</p>

<center>(tables to follow)</center>
<!-- _________________________________________________________________________________________________-->
<p>
<hr width="100%">

<a name="table"></a>
<a href="#top"><font size="1"><b>Back to top</b></font></a>

<center><h2>CONDENSED CONSOLIDATED BALANCE SHEETS</h2></center>
<table cellpadding="0" cellspacing="0" border="0" width="100%">
	<tr>
		<td></td>
		<td align="center" colspan="2"><font size="2"><b>December 31</b></font></td>
		<td align="center"><font size="2"><b>September 30</b></font></td>
	</tr><tr>
		<td></td>
		<td align="center" colspan="2"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="center"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td></td>
		<td align="center"><font size="2"><b>2005</b></font></td>
		<td align="center"><font size="2"><b>2004</b></font></td>
		<td align="center"><font size="2"><b>2005</b></font></td>
	</tr><tr>
		<td></td>
		<td align="center" colspan="3"><font size="2">(In thousands of U.S. dollars)</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td><font size="2"><b>A  s  s  e  t  s</b></font></td>
		<td></td>
		<td></td>
		<td></td>
	</tr><tr>
		<td><font size="2"><b>CURRENT ASSETS:</b></font></td>
		<td></td>
		<td></td>
		<td></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:20px"><font size="2">Cash and cash equivalents</font></td>
		<td align="right"><font size="2">$10,174</font></td>
		<td align="right"><font size="2">$18,687</font></td>
		<td align="right"><font size="2">$10,984</font></td>
	</tr><tr>
		<td style="padding-left:20px"><font size="2">Accounts receivable:</font></td>
		<td></td>
		<td></td>
		<td></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:40px"><font size="2">Trade</font></td>
		<td align="right"><font size="2">3,389</font></td>
		<td align="right"><font size="2">3,418</font></td>
		<td align="right"><font size="2">3,694</font></td>
	</tr><tr>
		<td style="padding-left:40px"><font size="2">Interest accrued on long-term bank deposits</font></td>
		<td></td>
		<td align="right"><font size="2">242</font></td>
		<td></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:40px"><font size="2">Other</font></td>
		<td align="right"><font size="2">739</font></td>
		<td align="right"><font size="2">773</font></td>
		<td align="right"><font size="2">716</font></td>
	</tr><tr>
		<td style="padding-left:20px"><font size="2">Inventories</font></td>
		<td align="right"><font size="2">30</font></td>
		<td align="right"><font size="2">18</font></td>
		<td align="right"><font size="2">18</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td><font size="2">T o t a l  current assets</font></td>
		<td align="right"><font size="2">$14,332</font></td>
		<td align="right"><font size="2">$23,138</font></td>
		<td align="right"><font size="2">$15,412</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td><font size="2"><b>LONG-TERM BANK DEPOSITS</b></font></td>
		<td align="right"><font size="2">30,000</font></td>
		<td align="right"><font size="2">30,000</font></td>
		<td align="right"><font size="2">30,000</font></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td><font size="2"><b>OTHER LONG-TERM ASSETS</b></font></td>
		<td align="right"><font size="2">480</font></td>
		<td align="right"><font size="2">538</font></td>
		<td align="right"><font size="2">437</font></td>
	</tr><tr>
		<td><font size="2"><b>PROPERTY AND EQUIPMENT, net of accumulated depreciation</b></font></td>
		<td align="right"><font size="2">1,957</font></td>
		<td align="right"><font size="2">1,790</font></td>
		<td align="right"><font size="2">2,057</font></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td><font size="2"><b>INTANGIBLE ASSETS, net of accumulated amortization</b></font></td>
		<td align="right"><font size="2">1,660</font></td>
		<td align="right"><font size="2">250</font></td>
		<td align="right"><font size="2">1,834</font></td>
	</tr><tr>
		<td><font size="2"><b>GOODWILL</b></font></td>
		<td align="right"><font size="2">6,966</font></td>
		<td></td>
		<td align="right"><font size="2">6,966</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td><font size="2">T o t a l  assets</font></td>
		<td align="right"><font size="2">$55,395</font></td>
		<td align="right"><font size="2">$55,716</font></td>
		<td align="right"><font size="2">$56,706</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td><font size="2"><b>Liabilities and shareholders' equity</b></font></td>
		<td></td>
		<td></td>
		<td></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td><font size="2"><b>CURRENT LIABILITIES - </b></font></td>
		<td></td>
		<td></td>
		<td></td>
	</tr><tr>
		<td style="padding-left:20px"><font size="2">Accounts payable and accruals:</font></td>
		<td></td>
		<td></td>
		<td></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:40px"><font size="2">Trade</font></td>
		<td align="right"><font size="2">$686</font></td>
		<td align="right"><font size="2">$466</font></td>
		<td align="right"><font size="2">$809</font></td>
	</tr><tr>
		<td style="padding-left:40px"><font size="2">Other</font></td>
		<td align="right"><font size="2">1,741</font></td>
		<td align="right"><font size="2">2,126</font></td>
		<td align="right"><font size="2">2,009</font></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:20px"><font size="2">Deferred revenues</font></td>
		<td align="right"><font size="2">1,644</font></td>
		<td align="right"><font size="2">1,680</font></td>
		<td align="right"><font size="2">1,899</font></td>
	</tr><tr>
		<td style="padding-left:20px"><font size="2">Advances from customers, net of cost of contracts in progress</font></td>
		<td align="right"><font size="2">790</font></td>
		<td></td>
		<td align="right"><font size="2">2,715</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td><font size="2">T o t a l  current liabilities</font></td>
		<td align="right"><font size="2">4,861</font></td>
		<td align="right"><font size="2">4,272</font></td>
		<td align="right"><font size="2">7,432</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td><font size="2"><b>EMPLOYEE RIGHTS UPON RETIREMENT </b></font></td>
		<td align="right"><font size="2">1,049</font></td>
		<td align="right"><font size="2">1,200</font></td>
		<td align="right"><font size="2">1,098</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td><font size="2">T o t a l  liabilities</font></td>
		<td align="right"><font size="2">5,910</font></td>
		<td align="right"><font size="2">5,472</font></td>
		<td align="right"><font size="2">8,530</font></td>
	</tr><tr>
		<td><font size="2"><b>SHAREHOLDERS' EQUITY:</b></font></td>
		<td></td>
		<td></td>
		<td></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:20px"><font size="2">Share capital</font></td>
		<td align="right"><font size="2">53</font></td>
		<td align="right"><font size="2">53</font></td>
		<td align="right"><font size="2">53</font></td>
	</tr><tr>
		<td style="padding-left:20px"><font size="2">Additional paid-in capital</font></td>
		<td align="right"><font size="2">59,399</font></td>
		<td align="right"><font size="2">59,077</font></td>
		<td align="right"><font size="2">59,399</font></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:20px"><font size="2">Accumulated deficit</font></td>
		<td align="right"><font size="2">(9,967)</font></td>
		<td align="right"><font size="2">(8,886)</font></td>
		<td align="right"><font size="2">(11,276)</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td><font size="2">T o t a l  shareholders' equity</font></td>
		<td align="right"><font size="2">49,485</font></td>
		<td align="right"><font size="2">50,244</font></td>
		<td align="right"><font size="2">48,176</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td><font size="2">T o t a l  liabilities and shareholders' equity</font></td>
		<td align="right"><font size="2">$55,395</font></td>
		<td align="right"><font size="2">$55,716</font></td>
		<td align="right"><font size="2">$56,706</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td></tr>
</table>

<p><center><font size="2">I</font></center>
<!-- _________________________________________________________________________________________________-->
<hr width="100%">
</p>

<a name="table2"></a>
<a href="#top"><font size="1"><b>Back to top</b></font></a>

<center><h2>CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS</h2></center>
<table cellpadding="0" cellspacing="0" border="0" width="100%">
	<tr>
		<td></td>
		<td align="center" colspan="2"><font size="2"><b>Twelve months ended December 31</b></font></td>
		<td align="center" colspan="2"><font size="2"><b>Three months ended december 31</b></font></td>
	</tr><tr>
		<td></td>
		<td align="center" colspan="2"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="center" colspan="2"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td></td>
		<td align="center"><font size="2"><b>2005</b></font></td>
		<td align="center"><font size="2"><b>2004</b></font></td>
		<td align="center"><font size="2"><b>2005</b></font></td>
		<td align="center"><font size="2"><b>2004</b></font></td>
	</tr><tr>
		<td></td>
		<td align="center"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="center"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="center"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td></td>
		<td align="center" colspan="4"><font size="2"><b>U.S. $ in thousands (except per share data)</b></font></td>
	</tr><tr>
		<td></td>
		<td colspan="3"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td><font size="2"><b>REVENUES</b></font></td>
		<td align="right"><font size="2">$15,601</font></td>
		<td align="right"><font size="2">$ 17,806</font></td>
		<td align="right"><font size="2">$5,039</font></td>
		<td align="right"><font size="2">$4,880</font></td>
	</tr><tr>
		<td><font size="2"><b>COST OF REVENUES</b></font></td>
		<td align="right"><font size="2">4,015</font></td>
		<td align="right"><font size="2">4,394</font></td>
		<td align="right"><font size="2">1,324</font></td>
		<td align="right"><font size="2">1,205</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td><font size="2"><b>GROSS PROFIT</b></font></td>
		<td align="right"><font size="2">11,586</font></td>
		<td align="right"><font size="2">13,412</font></td>
		<td align="right"><font size="2">3,715</font></td>
		<td align="right"><font size="2">3,675</font></td>
	</tr><tr>
		<td><font size="2"><b>RESEARCH AND DEVELOPMENT EXPENSES - net</b></font></td>
		<td align="right"><font size="2">5,086</font></td>
		<td align="right"><font size="2">3,833</font></td>
		<td align="right"><font size="2">1,525</font></td>
		<td align="right"><font size="2">963</font></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td colspan="5"><font size="2"><b>SELLING, MARKETING, GENERAL AND ADMINISTRATIVE EXPENSES:</b></font></td>
	</tr><tr>
		<td style="padding-left:20px"><font size="2">Selling and marketing</font></td>
		<td align="right"><font size="2">2,148</font></td>
		<td align="right"><font size="2">4,517</font></td>
		<td align="right"><font size="2">582</font></td>
		<td align="right"><font size="2">1,057</font></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:20px"><font size="2">General and administrative, net</font></td>
		<td align="right"><font size="2">1,507</font></td>
		<td align="right"><font size="2">1,857</font></td>
		<td align="right"><font size="2">402</font></td>
		<td align="right"><font size="2">626</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td><font size="2"><b>OPERATING INCOME</b></font></td>
		<td align="right"><font size="2">2,845</font></td>
		<td align="right"><font size="2">3,205</font></td>
		<td align="right"><font size="2">1,206</font></td>
		<td align="right"><font size="2">1,029</font></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td><font size="2"><b>FINANCIAL INCOME - net</b></font></td>
		<td align="right"><font size="2">1,260</font></td>
		<td align="right"><font size="2">3,834</font></td>
		<td align="right"><font size="2">112</font></td>
		<td align="right"><font size="2">1,149</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td><font size="2"><b>INCOME BEFORE TAXES ON INCOME</b></font></td>
		<td align="right"><font size="2">4,105</font></td>
		<td align="right"><font size="2">7,039</font></td>
		<td align="right"><font size="2">1,318</font></td>
		<td align="right"><font size="2">2,178</font></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td><font size="2"><b>TAXES ON INCOME</b></font></td>
		<td align="right"><font size="2">43</font></td>
		<td align="right"><font size="2">162</font></td>
		<td align="right"><font size="2">9</font></td>
		<td align="right"><font size="2">41</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td><font size="2"><b>NET INCOME</b></font></td>
		<td align="right"><font size="2">$4,062</font></td>
		<td align="right"><font size="2">$ 6,877</font></td>
		<td align="right"><font size="2">$1,309</font></td>
		<td align="right"><font size="2">$2,137</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td colspan="5"><font size="2"><b>EARNING PER SHARE:</b></font></td>
	</tr><tr>
		<td style="padding-left:20px"><font size="2">Basic</font></td>
		<td align="right"><font size="2">$0.19</font></td>
		<td align="right"><font size="2">$0.33</font></td>
		<td align="right"><font size="2">$0.06</font></td>
		<td align="right"><font size="2">$0.10</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:20px"><font size="2">Diluted</font></td>
		<td align="right"><font size="2">$0.19</font></td>
		<td align="right"><font size="2">$0.32</font></td>
		<td align="right"><font size="2">$0.06</font></td>
		<td align="right"><font size="2">$0.10</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td><font size="2"><b>WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES USED IN COMPUTATION OF EARNINGS PER ORDINARY SHARE - IN THOUSANDS:</b></font></td>
		<td></td>
		<td></td>
		<td></td>
		<td></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:20px"><font size="2">Basic</font></td>
		<td align="right"><font size="2">21,431</font></td>
		<td align="right"><font size="2">21,089</font></td>
		<td align="right"><font size="2">21,463</font></td>
		<td align="right"><font size="2">21,184</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td style="padding-left:20px"><font size="2">Diluted</font></td>
		<td align="right"><font size="2">21,619</font></td>
		<td align="right"><font size="2">21,468</font></td>
		<td align="right"><font size="2">21,513</font></td>
		<td align="right"><font size="2">21,585</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td></tr>
</table>

<p><center><font size="2">II</font></center>
<!-- _________________________________________________________________________________________________-->
<hr width="100%">
</p>

<a name="table3"></a>
<a href="#top"><font size="1"><b>Back to top</b></font></a>
<center><h2>CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS</h2></center>
<table cellpadding="0" cellspacing="0" border="0" width="100%">
	<tr>
		<td></td>
		<td align="center" colspan="2"><font size="2"><b>Years ended  December 31</b></font></td>
		<td align="center" colspan="2"><font size="2"><b>Three months ended December 31</b></font></td>
	</tr><tr>
		<td></td>
		<td align="center" colspan="2"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="center" colspan="2"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td></td>
		<td align="center"><font size="2">2005</font></td>
		<td align="center"><font size="2">2004</font></td>
		<td align="center"><font size="2">2005</font></td>
		<td align="center"><font size="2">2004</font></td>
	</tr><tr>
		<td></td>
		<td align="center"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="center"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="center"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td></td>
		<td align="center" colspan="4"><font size="2">(U.S. dollars in thousands)</font></td>
	</tr><tr>
		<td></td>
		<td align="center" colspan="4"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td colspan="5"><font size="2"><b>CASH FLOWS FROM OPERATING ACTIVITIES:</b></font></td>
	</tr><tr>
		<td style="padding-left:20px"><font size="2">Net income</font></td>
		<td align="right"><font size="2">$4,062</font></td>
		<td align="right"><font size="2">$6,877</font></td>
		<td align="right"><font size="2">$1,309</font></td>
		<td align="right"><font size="2">$2,137</font></td>
	</tr><tr>
		<td style="padding-left:20px"><font size="2">Adjustments to reconcile net income to net cash provided by (used in) operating activities:</font></td>
		<td></td>
		<td></td>
		<td></td>
		<td></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:20px"><font size="2">Depreciation and amortization</font></td>
		<td align="right"><font size="2">987</font></td>
		<td align="right"><font size="2">680</font></td>
		<td align="right"><font size="2">319</font></td>
		<td align="right"><font size="2">160</font></td>
	</tr><tr>
		<td style="padding-left:20px"><font size="2">Accrued severance pay</font></td>
		<td align="right"><font size="2">(151)</font></td>
		<td align="right"><font size="2">202</font></td>
		<td align="right"><font size="2">(140)</font></td>
		<td align="right"><font size="2">83</font></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:20px"><font size="2">Capital loss (gain) on sale of property and equipment - net</font></td>
		<td align="right"><font size="2">(38)</font></td>
		<td align="right"><font size="2">(7)</font></td>
		<td></td>
		<td align="right"><font size="2">5</font></td>
	</tr><tr>
		<td style="padding-left:20px" colspan="5"><font size="2">Changes in operating asset and liability items:</font></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:40px" colspan="5"><font size="2">Decrease (increase) in accounts receivable:</font></td>
	</tr><tr>
		<td style="padding-left:60px"><font size="2">Trade</font></td>
		<td align="right"><font size="2">196</font></td>
		<td align="right"><font size="2">(1,237)</font></td>
		<td align="right"><font size="2">305</font></td>
		<td align="right"><font size="2">(347)</font></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:60px"><font size="2">Interest accrued on short-term bank deposits</font></td>
		<td align="right"><font size="2">242</font></td>
		<td align="right"><font size="2">240</font></td>
		<td></td>
		<td align="right"><font size="2">1,269</font></td>
	</tr><tr>
		<td style="padding-left:60px"><font size="2">Other</font></td>
		<td align="right"><font size="2">48</font></td>
		<td align="right"><font size="2">93</font></td>
		<td align="right"><font size="2">(23)</font></td>
		<td align="right"><font size="2">27</font></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:40px"><font size="2">Increase in inventories</font></td>
		<td align="right"><font size="2">(12)</font></td>
		<td align="right"><font size="2">(7)</font></td>
		<td align="right"><font size="2">(12)</font></td>
		<td align="right"><font size="2">(7)</font></td>
	</tr><tr>
		<td style="padding-left:40px"  colspan="5"><font size="2">Increase (decrease) in accounts payable and accruals:</font></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:60px"><font size="2">Trade</font></td>
		<td align="right"><font size="2">(697)</font></td>
		<td align="right"><font size="2">(252)</font></td>
		<td align="right"><font size="2">(123)</font></td>
		<td align="right"><font size="2">144</font></td>
	</tr><tr>
		<td style="padding-left:60px"><font size="2">Other</font></td>
		<td align="right"><font size="2">(1,510)</font></td>
		<td align="right"><font size="2">1,008</font></td>
		<td align="right"><font size="2">(39)</font></td>
		<td align="right"><font size="2">263</font></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:40px"><font size="2">Increase (decrease) in deferred revenues</font></td>
		<td align="right"><font size="2">(799)</font></td>
		<td align="right"><font size="2">73</font></td>
		<td align="right"><font size="2">(255)</font></td>
		<td align="right"><font size="2">5</font></td>
	</tr><tr>
		<td style="padding-left:40px"><font size="2">Decrease in advances from customers net of contracts in progress</font></td>
		<td align="right"><font size="2">(1,467)</font></td>
		<td></td>
		<td align="right"><font size="2">(1,925)</font></td>
		<td></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:20px"><font size="2">Net cash provided by (used in) operating activities</font></td>
		<td align="right"><font size="2">861</font></td>
		<td align="right"><font size="2">7,670</font></td>
		<td align="right"><font size="2">(584)</font></td>
		<td align="right"><font size="2">3,739</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td colspan="5"><font size="2"><b>CASH FLOWS FROM INVESTING ACTIVITIES:</b></font></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:20px"><font size="2">Purchase of property and equipment</font></td>
		<td align="right"><font size="2">(589)</font></td>
		<td align="right"><font size="2">(1,226)</font></td>
		<td align="right"><font size="2">(46)</font></td>
		<td align="right"><font size="2">(196)</font></td>
	</tr><tr>
		<td style="padding-left:20px"><font size="2">Acquisition of a subsidiary</font></td>
		<td align="right"><font size="2">(a)(4,233)</font></td>
		<td></td>
		<td align="right"><font size="2">(231)</font></td>
		<td></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:20px"><font size="2">Amounts funded in respect of accrued severance pay</font></td>
		<td align="right"><font size="2">94</font></td>
		<td align="right"><font size="2">(120)</font></td>
		<td align="right"><font size="2">51</font></td>
		<td align="right"><font size="2">(53)</font></td>
	</tr><tr>
		<td style="padding-left:20px"><font size="2">Investment in short-term bank deposits</font></td>
		<td align="right"><font size="2">(10,000)</font></td>
		<td align="right"><font size="2">(40,000)</font></td>
		<td></td>
		<td align="right"><font size="2">(30,000)</font></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:20px"><font size="2">Withdrawal of long-term bank deposits</font></td>
		<td align="right"><font size="2">10,000</font></td>
		<td align="right"><font size="2">50,000</font></td>
		<td></td>
		<td align="right"><font size="2">47,000</font></td>
	</tr><tr>
		<td style="padding-left:20px"><font size="2">Proceeds from sale of fixed assets</font></td>
		<td align="right"><font size="2">175</font></td>
		<td align="right"><font size="2">145</font></td>
		<td></td>
		<td align="right"><font size="2">59</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:20px"><font size="2">Net cash  provided by (used in) investing activities</font></td>
		<td align="right"><font size="2">(4,553)</font></td>
		<td align="right"><font size="2">8,799</font></td>
		<td align="right"><font size="2">(226)</font></td>
		<td align="right"><font size="2">16,810</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td><font size="2"><b>CASH FLOWS FROM FINANCING ACTIVITIES:</b></font></td>
		<td></td>
		<td></td>
		<td></td>
		<td></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:20px"><font size="2">Employee stock options exercised and paid</font></td>
		<td align="right"><font size="2">322</font></td>
		<td align="right"><font size="2">563</font></td>
		<td></td>
		<td align="right"><font size="2">351</font></td>
	</tr><tr>
		<td style="padding-left:20px"><font size="2">Dividend paid</font></td>
		<td align="right"><font size="2">(5,143)</font></td>
		<td align="right"><font size="2">(2,736)</font></td>
		<td></td>
		<td></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:20px"><font size="2">Short term bank loans</font></td>
		<td></td>
		<td></td>
		<td></td>
		<td align="right"><font size="2">(10,083)</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td style="padding-left:20px"><font size="2">Net cash used in financing activities</font></td>
		<td align="right"><font size="2">(4,821)</font></td>
		<td align="right"><font size="2">(2,173)</font></td>
		<td align="right"><font size="2">-,-</font></td>
		<td align="right"><font size="2">(9,732)</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td><font size="2"><b>NET INCREASE (DECREASE) IN CASH AND  CASH EQUIVALENTS</b></font></td>
		<td align="right"><font size="2">(8,513)</font></td>
		<td align="right"><font size="2">14,296</font></td>
		<td align="right"><font size="2">(810)</font></td>
		<td align="right"><font size="2">10,817</font></td>
	</tr><tr>
		<td><font size="2"><b>BALANCE OF CASH AND CASH  EQUIVALENTS AT BEGINNING OF PERIOD</b></font></td>
		<td align="right"><font size="2">18,687</font></td>
		<td align="right"><font size="2">4,391</font></td>
		<td align="right"><font size="2">10,984</font></td>
		<td align="right"><font size="2">7,870</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td><font size="2"><b>BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD</b></font></td>
		<td align="right"><font size="2">$10,174</font></td>
		<td align="right"><font size="2">$18,687</font></td>
		<td align="right"><font size="2">$10,174</font></td>
		<td align="right"><font size="2">$18,687</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr>
</table>

<p><center><font size="2">III</font></center>
<!-- _________________________________________________________________________________________________-->
<hr width="100%">
</p>

<a name="table4"></a>
<a href="#toc"><font size="1"><b>Back to top</b></font></a>
<center><h2>CONSOLIDATED STATEMENTS OF CASH FLOWS  </h2></center>
<table cellpadding="0" cellspacing="0" border="0" width="50%" align="center">
	<tr>
		<td></td>
		<td align="center"><font size="2"><b>Year ended December 31, 2005</b></font></td>
	</tr><tr>
		<td></td>
		<td align="center"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td></td>
		<td align="center"><font size="2"><b>U.S. $ in thousands</b></font></td>
	</tr><tr>
		<td></td>
		<td align="center"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td><font size="2"><b>(a) Acquisition of a subsidiary:</b></font></td>
		<td></td>
	</tr><tr>
		<td style="padding-left:20px"><font size="2">Assets and liabilities of the subsidiary upon acquisition:</font></td>
		<td></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:40px"><font size="2">Working capital (excluding cash and cash equivalents)</font></td>
		<td align="right"><font size="2">($4,881)</font></td>
	</tr><tr>
		<td style="padding-left:40px"><font size="2">Property and equipment</font></td>
		<td align="right"><font size="2">277</font></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:40px"><font size="2">Intangible assets</font></td>
		<td align="right"><font size="2">1,871</font></td>
	</tr><tr>
		<td style="padding-left:40px"><font size="2">Goodwill</font></td>
		<td align="right"><font size="2">6,966</font></td>
	</tr><tr>
		<td></td>
		<td align="right"><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr BGCOLOR="#CCEEFF">
		<td style="padding-left:40px"><font size="2">Cash paid - net</font></td>
		<td align="right"><font size="2">$4,233</font></td>
	</tr><tr>
		<td></td>
		<td align="right" ><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td>
	</tr><tr>
		<td></td>
		<td align="right" ><div style="width:90%;line-height:1px;color:black;border-bottom:1px solid black"></div></td></tr>
</table>
<p><center><font size="2">IV</font></center>
<!-- _________________________________________________________________________________________________-->
<hr width="100%">
</p>
<a href="#top"><font size="1"><b>Back to top</b></font></a>
<center><font size="2">- end of file -</font></center>
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</html>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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