Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 20, 2015 | Jun. 30, 2014 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Modsys International Ltd | ||
Entity Central Index Key | 1029581 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2014 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $47,828,215 | ||
Entity Common Stock, Shares Outstanding | 17,864,560 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
CURRENT ASSETS: | ||
Cash and cash equivalents | $449 | $2,592 |
Restricted cash | 8 | 35 |
Trade accounts receivable, net (Note 12A1) | 2,479 | 1,960 |
Other current assets (Note 12A2) | 176 | 239 |
Total current assets | 3,112 | 4,826 |
LONG TERM ASSETS: | ||
Property and equipment, net (Note 4) | 321 | 287 |
Goodwill (Note 5) | 25,803 | 12,501 |
Intangible assets and others, net (Note 6) | 5,587 | |
Total long term assets | 31,711 | 12,788 |
Total assets | 34,823 | 17,614 |
CURRENT LIABILITIES: | ||
Short-term bank credit and other (Note 8) | 1,269 | 40 |
Accounts payable and accruals: | ||
Trade accounts payable | 1,230 | 886 |
Deferred revenue | 546 | 719 |
Other current liabilities (Note 12A3) | 989 | 902 |
Total current liabilities | 4,034 | 2,547 |
LONG-TERM LIABILITIES: | ||
Accrued severance pay, net (Note 7) | 229 | 290 |
Loans from others (Note 8) | 114 | 162 |
Derivatives liabilities - warrants | 311 | |
Other non-current liabilities | 40 | |
Total long-term liabilities | 383 | 763 |
Total liabilities | 4,417 | 3,310 |
COMMITMENTS AND CONTINGENCIES (Note 9) | ||
Equity (Note 10): | ||
Share capital - ordinary shares of NIS 0.04 par value (authorized: December 31, 2014 - 25,000,000 shares and authorized in 2013 - 17,500,000; shares issued: December 31, 2014 - 17,877,333 and December 31, 2013 - 11,460,530) | 170 | 105 |
Additional paid-in capital | 153,208 | 133,712 |
Accumulated other comprehensive loss | -1,537 | -1,537 |
Accumulated deficit | -119,619 | -116,224 |
Treasury shares - December 31, 2014 - 33,239 December 31, 2013 - 56,070 shares | -1,821 | -2,084 |
ModSys International Ltd. Shareholders' Equity | 30,401 | 13,972 |
Noncontrolling interest | 5 | 332 |
Total equity | 30,406 | 14,304 |
Total liabilities and equity | $34,823 | $17,614 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical)(USD ($)) | Dec. 31, 2014 | Dec. 31, 2013 |
CONDENSED CONSOLIDATED BALANCE SHEETS [Abstract] | ||
Ordinary shares, par value per share | $0.04 | $0.04 |
Ordinary shares, shares authorized | 25,000,000 | 17,500,000 |
Ordinary shares, shares issued | 17,877,333 | 11,460,530 |
Treasury shares, shares | 33,239 | 56,070 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Revenues (Note 12B1): | ||
Services | $6,088 | $8,148 |
Products | 1,152 | 389 |
Total revenues | 7,240 | 8,537 |
Cost of revenues: | ||
Services | 4,040 | 4,449 |
Products | 36 | 40 |
Total cost of revenues | 4,076 | 4,489 |
Gross profit | 3,164 | 4,048 |
Research and development costs | 932 | 1,508 |
Selling, general, and administrative expenses | 6,044 | 6,305 |
Less: Gain on sales of subsidiaries and AppBuilder | 786 | |
Operating loss | -3,812 | -2,979 |
Financial income (expenses), net (Note 12B3) | 115 | -114 |
Loss before taxes on income | -3,697 | -3,093 |
Taxes on income | 25 | 297 |
Loss from continuing operation | -3,722 | -3,390 |
Net loss from discontinued operation (Note 13) | 399 | |
Net loss | -3,722 | -3,789 |
Less: Net income (loss) attributable to non-controlling interest | -327 | 243 |
Net loss attributable to ModSys International Ltd. shareholders | ($3,395) | ($4,032) |
Loss per share - basic and diluted : | ||
From continued operation | ($0.28) | ($0.34) |
From discontinued operation | ($0.03) | |
Attributable to the shareholders | ($0.28) | ($0.37) |
Weighted average shares outstanding, basic and diluted | 12,020 | 10,770 |
Statements_of_Comprehensive_In
Statements of Comprehensive Income (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
STATEMENTS OF COMPREHENSIVE INCOME [Abstract] | ||
Net loss | ($3,395) | ($4,032) |
Other comprehensive income | ||
Total comprehensive loss | -3,395 | -4,032 |
Comprehensive income attributable to the non-controlling Interests | ||
Comprehensive loss attributable to ModSys International Ltd. shareholders | ($3,395) | ($4,032) |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Equity (USD $) | Total | Share capital | Additional paid-in capital | Accumulated other comprehensive loss | Cost of Company shares held by subsidiaries | Retained earnings (Accumulated deficit) | Noncontrolling interest | |
In Thousands, except Share data | ||||||||
Beginning balance at Dec. 31, 2012 | $15,089 | $97 | $135,348 | ($1,537) | ($6,716) | ($112,192) | $89 | |
Beginning balance, shares at Dec. 31, 2012 | 10,629,253 | |||||||
Net loss | -3,789 | -4,032 | 243 | |||||
Stock-based compensation | 599 | 599 | ||||||
Exercise of warrants | 115 | [1] | 115 | |||||
Exercise of warrants, shares | 25,585 | |||||||
Issuance of shares, net | 2,290 | 7 | 2,283 | |||||
Issuance of shares, net, shares | 625,000 | |||||||
Vested RSUs | 1 | -4,633 | 4,632 | |||||
Vested RSUs, shares | 124,622 | |||||||
Ending balance at Dec. 31, 2013 | 14,304 | 105 | 133,712 | -1,537 | -2,084 | -116,224 | 332 | |
Ending balance, shares at Dec. 31, 2013 | 11,404,460 | |||||||
Net loss | -3,722 | -3,395 | -327 | |||||
Stock-based compensation | 727 | 727 | ||||||
Exercise of warrants | 321 | 1 | 320 | |||||
Exercise of warrants, shares | 102,343 | |||||||
Issuance of shares, net | 18,776 | 63 | 18,713 | |||||
Issuance of shares, net, shares | 6,195,494 | |||||||
Vested RSUs | 1 | -264 | 263 | |||||
Vested RSUs, shares | 141,797 | |||||||
Ending balance at Dec. 31, 2014 | $30,406 | $170 | $153,208 | ($1,537) | ($1,821) | ($119,619) | $5 | |
Ending balance, shares at Dec. 31, 2014 | 17,844,094 | |||||||
[1] | Less than $1 thousand. |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | ($3,722) | ($3,789) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 89 | 432 |
Decrease in accrued severance pay, net | -61 | -118 |
Stock-based compensation | 727 | 599 |
Change in fair value of derivatives | -150 | 17 |
Gain on sale of subsidiary and Appbuilder | -414 | |
Loss on sale of property and equipment | 144 | |
Changes in operating assets and liabilities: | ||
Decrease in trade receivables | 575 | 681 |
Decrease in other current assets | 250 | 503 |
Decrease in trade payables | -296 | -419 |
Decrease in other current liabilities and deferred revenues | -886 | -388 |
Net cash used in operating activities | -3,474 | -2,752 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Restricted cash | 27 | |
Purchase of property and equipment | -51 | -19 |
Proceeds from sale of subsidiary and Appbuilder (Appendix A1) | 800 | |
Proceeds from acquisition of subsidiary (Appendix A2) | 14 | |
Net cash provided by (used in) investing activities | -10 | 781 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Short term bank credit | 1,229 | -216 |
Exercise of warrants | 160 | 40 |
Issuance of shares, net | 2,290 | |
Repayment of long term loan | -48 | -111 |
Net cash provided by financing activities | 1,341 | 2,003 |
NET CASH INCREASE (DECREASE) IN CASH AND CASH EQUVIALETS | -2,143 | 32 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 2,592 | 2,560 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 449 | 2,592 |
Cash paid during the year for: | ||
Income taxes | 25 | 88 |
Interest | 10 | 24 |
1. PROCEEDS FROM SALE OF SUBSIDIARY AND APPBUILDER: | ||
Working capital, other than cash | 14 | |
Gain on sale of subsidiary and AppBuilder | 786 | |
Total | 800 | |
2. PROCEEDS FROM ACQUISITION OF SUBSIDIARY: | ||
Working capital, other than cash | 159 | |
Property and equipment | -72 | |
Intangible assets | -5,587 | |
Goodwill | -13,302 | |
Other non current liabilities | 40 | |
Issuance of shares | 18,776 | |
Total | $14 |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended | |
Dec. 31, 2014 | ||
Summary of Significant Accounting Policies [Abstract] | ||
Summary of Significant Accounting Policies | Note 1 - Summary of Significant Accounting Policies: | |
A. | General: | |
The significant accounting policies, applied on a consistent basis, are as follows: | ||
1. The Company: | ||
ModSys International Ltd. (formerly known as BluePhoenix Solutions Ltd.) (Together with its subsidiaries, the “Company” ,“we”, or “Modern Systems”) is an Israeli corporation, which operates in one operating segment of information technology (“IT”) modernization solutions. | ||
Modern Systems develops and markets enterprise legacy migration solutions and provides tools and professional services to international markets through several entities including wholly-owned subsidiaries located in: USA, UK, Italy, Romania and Israel. These technologies and services allow business to migrate from their legacy mainframe and distributed IT infrastructures to modern environments and programming languages. | ||
The Company has incurred negative cash from operation and net losses in recent years. The Company currently uses its credit line with Comerica to support its negative cash flow position. Management believes that current cash position is sufficient to support the ongoing operations for the foreseeable future. (See also Note 8A). | ||
2. Accounting Principles: | ||
The consolidated financial statements are prepared in accordance with accounting principles generally accepted (“GAAP”) in the United States of America. | ||
3. Functional Currency: | ||
The currency of the primary economic environment in which the operations of the Company and its subsidiaries are conducted is the U.S. dollar (“dollar”). In addition, a substantial portion of the Company’s revenues and costs are incurred in dollars. Thus, the functional and reporting currency of the Company is considered to be the dollar. The functional currency of all subsidiaries is the US dollar therefore there is no unrealized gain/loss. | ||
Non-monetary transactions denominated in currencies other than the dollar are measured and recorded in dollar at the exchange rates prevailing at transaction date. Monetary assets and liabilities denominated in currencies other than the dollar are translated at the exchange rate on the balance sheet date. Transaction gain or losses on foreign currency translation are recorded in consolidated statement of operations. | ||
4. Use of Estimates and Assumptions in the Preparation of the Financial Statements: | ||
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. | ||
B. | Principles of Consolidation: | |
The consolidated financial statements include the accounts of ModSys International Ltd. and its subsidiaries in which it has a controlling interest. Acquisition of subsidiaries is accounted for under the acquisition method. All intercompany balances and transactions have been eliminated upon consolidation. Non-controlling interests are included in equity. | ||
C. | Cash and Cash Equivalents: | |
Cash equivalents are considered by the Company to be highly-liquid investments, including inter-alia, short-term deposits with banks, which do not exceed maturities of three months at the time of deposit and which are not restricted. | ||
D. | Reclassifications: | |
Certain comparative figures have been reclassified to conform to the current year presentation. | ||
E. | Allowance for Doubtful Accounts: | |
The Company establishes an allowance for doubtful accounts to ensure trade and financing receivables are not overstated due to uncollectability. The allowance for doubtful accounts was based on specific receivables, which their collection, in the opinion of Company’s management, is in doubt. Trade receivables are charged off in the period in which they are deemed to be uncollectible. | ||
F. | Property and Equipment, Net: | |
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated by the straight-line method over their estimated useful lives. Annual rates of depreciation are as follows: | ||
% | ||
Computers and peripheral equipment | 20-33 (mainly 33) | |
Office furniture and equipment | 6-15 (mainly 7) | |
Leasehold improvements | Over the shorter of lease term or the life of the assets | |
Motor vehicles | 15 | |
G. | Impairment of Long-Lived Assets: | |
The Company evaluates property and equipment and purchased intangible assets with definite lives for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flow and recognizes an impairment loss when the estimated undiscounted future cash flow expected to result from the use of the asset plus the net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. When the Company identifies an impairment, it reduces the carrying amount of the asset to its estimated fair value based on a discounted cash flow approach or, when available and appropriate, to comparable market values. During the years ending December 31, 2014 and 2013, no impairment losses have been identified. | ||
H. | Goodwill and other purchased intangible assets: | |
Goodwill and certain other purchased intangible assets have been recorded as a result of acquisitions. Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. | ||
Goodwill is not amortized, but rather is subject to an annual impairment test. The Company is one operating segment and one reporting unit related to its overall IT modernization .The goodwill impairment tests are conducted in two steps. In the first step, the Company determines the fair value of the reporting unit. If the net book value of the reporting unit exceeds its fair value, the Company would then perform the second step of the impairment test which requires allocation of the reporting unit’s fair value of all of its assets and liabilities in a manner similar to an acquisition cost allocation, with any residual fair value being allocated to goodwill. The implied fair value of the goodwill is then compared to the carrying value to determine impairment, if any. | ||
In 2014 and 2013, the company determined the fair value of a reporting unit using the market approach which is based on the market capitalization by using the share price of the Company in the NASDAQ stock exchange and an appropriate control premium. As of December 31, 2014 and 2013 market capitalization of the Company was significantly higher than the net book value of the reporting unit and therefore there was no need to calculate a control premium or to continue to step 2. | ||
Intangible assets that are not considered to have an indefinite useful life are amortized using the straight-line basis over their estimated useful lives of between 10 months to 9 years. The carrying amount of these assets is reviewed whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of the asset to the future undiscounted cash flows the assets is expected to generate. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset (see also Note 1G). | ||
I. | Research and Development Costs: | |
Research and development costs are charged to the statement of income as incurred. ASC No. 985, “Software”, requires capitalization of certain software development costs subsequent to the establishment of technological feasibility. | ||
Based on the Company’s product development process, technological feasibility is established when detailed program design is completed and verified. Costs incurred by the Company between completion of detailed program design and the point at which the products are ready for general release, have been insignificant. Therefore, all research and development costs have been expensed. | ||
J. | Stock-based Compensation: | |
In the past two years, the majority of the awards were of restricted stock units (“RSUs”). RSU’s are valued based on the market value of the underlying stock at the date of grant. The Company also has a stock option plan. Stock option awards are measured and recognized as compensation expense based on estimated fair values on the date of grant using the Black-Scholes option-pricing model. This option pricing model requires that the Company makes several estimates, including the option’s expected life and the price volatility of the underlying stock. | ||
The Company recognizes the estimated fair value of option-based awards and RSUs, net of estimated forfeitures, as stock-based compensation costs using the accelerated vesting method. For the years ended December 31, 2014 and 2013 the Company recorded stock-based and RSUs compensation costs in the amount of $0.7 million and 0.6 million, respectively. On December 31, 2014, the total unrecognized stock-based and RSUs compensation costs amounted to $0.7 million, and are expected to be recognized over the next 3 years. | ||
K. | Revenue Recognition: | |
Revenues derived from direct software license agreements are recognized in accordance with FASB ASC Topic 985 “Software” (“ASC 985”), upon delivery of the software, when collection is probable, the license fee is otherwise fixed or determinable and persuasive evidence of an arrangement exists. | ||
The Company recognizes revenues from consulting fees based on the number of hours performed. Revenues from maintenance services are recognized ratably over the term of the maintenance period. | ||
When a project involves significant production, modification or customization of software, revenue is recognized according to the percentage of completion method in accordance with the provisions of FASB ASC Topic 605-35-25. Under this method, estimated revenue is generally accrued based on costs incurred to date, as a percentage of total updated estimated costs. The Company recognizes contract losses, if any, in the period in which they first become evident. There are no rights of return, price protection or similar contingencies in the Company’s contracts. | ||
On December 31, 2014, approximately $2 million of the accounts receivable balance was unbilled due to the customer’s payment terms. On December 31, 2013, the amount of unbilled revenue was $1.2 million. The Company presents revenues from products and revenues from services in separate line items. | ||
The product revenue line item includes revenue generated from stand-alone software products. In the services revenue line item, the Company includes revenue generated from maintenance and consulting fees and revenues accounted for pursuant to ASC 605-35-25. Tax collected from customers and remitted to government authorities (including VAT) are presented in the income statement on a net basis. | ||
L. | Advertising Costs: | |
The Company expenses advertising costs as incurred. Advertising costs for the years ended December 31, 2014 and 2013 were $153 and $109 thousand, respectively. | ||
M. | Income Taxes: | |
Deferred taxes are determined utilizing the “asset and liability” method, whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, when it’s more likely than not that deferred tax assets will not be realized in the foreseeable future. Deferred tax liabilities and assets are classified as current or non-current based on the expected reversal dates of the specific temporary differences. | ||
The Company applied ASC Topic 740-10-05, Income Tax, which provides guidance for recognizing and measuring uncertain tax positions, it prescribes a threshold condition that a tax position must meet for any of the benefits of the uncertain tax position to be recognized in the financial statements. It also provides accounting guidance on derecognizing, classification and disclosure of these uncertain tax positions. The Company’s policy on classification of all interest and penalties related to unrecognized income tax positions, if any, is to present them as a component of income tax expense. | ||
N. | Loss Per Share: | |
Basic net earnings per share are computed based on the weighted average number of ordinary shares outstanding during each year (including fully vested RSUs), net of treasury shares. Diluted earnings per share is computed based on the weighted average number of ordinary shares outstanding during each year, plus dilutive potential ordinary shares considered outstanding during the year (see also Note 12C). Since the Company incurred net loss during the periods presented, no diluted EPS was presented as all the potential ordinary shares were anti-dilutive. | ||
O. | Financial Instruments: | |
1. Concentration of credit risks: | ||
Financial instruments that have the potential to expose the Company to credit risks are mainly cash and cash equivalents, bank deposit accounts, and trade receivables. | ||
The Company holds cash and cash equivalents, and deposit accounts at large banks in Israel, the United States, and Europe, thereby substantially reducing the risk of loss. | ||
The Company performs ongoing credit evaluations of its customers for the purpose of determining the appropriate allowance for doubtful accounts and generally does not require collateral. An appropriate allowance for doubtful accounts is included in the accounts. | ||
2. Fair value measurement: | ||
The Company measures fair value and discloses fair value measurements for financial and non-financial assets and liabilities. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. | ||
The accounting standard establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below: | ||
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. | ||
Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. | ||
Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. | ||
In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value. | ||
P. | Comprehensive loss: | |
Comprehensive loss, net of related taxes where applicable, includes only net income. | ||
Q. | Treasury Shares: | |
In the past, the Company repurchased its ordinary shares from time to time on the open market and they are currently held as treasury stock. The Company presents the cost to repurchase treasury stock as a reduction of shareholders’ equity. When treasury shares are used as consideration for share based payment the reduction is based on average purchase cost. | ||
R. | Derivative Liabilities - Warrants: | |
In connection with , determining whether an instrument (or embedded feature) is indexed to an Entity’s own stock, “ASC 815-40-15,(formerly EITF 07-05), the Company determined that the warrants issued at several occasions (ratchet down of exercise price based upon lower exercise price in future offerings) are not indexed to the Company’s own stock and therefore should be recorded as a derivative financial liability for pursuant FASB ASC Topic 815 “Derivative and Hedging” (ASC 815-40-25). See also note 10A3 | ||
S. | Recently Issued Accounting Pronouncements: | |
In April 2014, the FASB issued ASU No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”. The amendments in this standard change the requirements for reporting discontinued operations in Subtopic 205-20. The amendments in this update will be effective prospectively for annual periods beginning on or after December 15, 2014. The Company is still assessing whether this adoption will have an effect on its consolidated financial statements. | ||
In May 2014, the FASB issued ASU No. 2014-09, Revenue from contracts with customers (Topic 606). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply a five step methodology: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price;(4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. An entity should apply the amendments in this update using one of the following two methods: (1) retrospectively to each prior reporting period presented (along with some practical expedients); or retrospectively with the cumulative effect of initially applying this update recognized at the date of initial application. The amendments in this update will be effective prospectively for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is still assessing whether this adoption will have an effect on its consolidated financial statements. | ||
In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial statements – Going concern (subtopic 205-40), Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern” (“ASU 2014-14”). The new standard provides guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued. ASU 2014-15 applies prospectively to annual periods ending after December 15, 2016, and to annual periods thereafter. Early application is permitted. The Company does not expect material impacts on the consolidated financial statements upon adoption. The Company is still assessing whether this adoption will have an effect on its consolidated financial statements. |
Certain_Transactions
Certain Transactions | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Certain Transactions [Abstract] | |||||||||
Certain Transactions | Note 2 - Certain Transactions: | ||||||||
We have entered into other agreements as explained below to expand our market share. | |||||||||
A. | BP-AT Merger with Sophisticated Business Solutions | ||||||||
On December 1, 2014, we completed a merger with Sophisticated Business Systems, Inc., a Texas corporation doing business as “Ateras.” At the closing, BP-AT Acquisition LLC, a Delaware limited liability company and a direct, wholly-owned subsidiary of Modern Systems Corporation (f/k/a BluePhoenix Solutions USA, Inc.), a Delaware corporation and an indirect, wholly-owned subsidiary of ModSys International Ltd merged with and into Ateras (the “Merger”). As a result of the Merger, the separate corporate existence of BP-AT Acquisition LLC ceased and Ateras continued as the surviving corporation and a wholly-owned subsidiary of Modern Systems Corporation. The new entity was then renamed MS Modernization Services, Inc. | |||||||||
Upon the closing of the Merger, we issued 6,195,494 unregistered ordinary shares, par value NIS 0.04 per share, to the former Ateras shareholders in exchange for the cancellation of the shares of Ateras stock held by such shareholders in connection with the Merger. In connection with the closing of the Merger, Scott Miller was elected to our Board of Directors. In addition, we entered into a Registration Rights Agreement by and a Preemptive Rights Agreement as conditions to the closing of the Merger contemplated by the Merger Agreement. | |||||||||
Due to the fact the issuance was of restricted shares, the purchase consideration was calculated with an 11.4% discount for lack of marketability ("DLOM") on the share price as of the closing date. It should be noted that sales of restricted shares pursuant to Rule 144 will be subject to a minimum six-month holding period and, following any required holding period, sales by any affiliate shareholders will be subject to volume and other limitations. | |||||||||
The purchase consideration was allocated to tangible assets and intangible assets acquired based on their estimated fair values using a purchase price allocation made by an independent third party. The Company is still in a process of obtaining third-party valuations of certain intangible assets, thus, the provisional measurements of intangible assets, goodwill and deferred income tax are subject to change. The estimated fair value assigned to identifiable intangible assets acquired has been determined by using valuation methods that discount expected future cash flows to present value using estimates and assumptions determined by management. Based on the above, the Company determined that the estimated fair values of assets acquired exceeded the purchase price by approximately $13.3 million, which is recognized as goodwill. Upon the provisional purchase price allocation, an amount of $345 thousand was allocated to Order Backlog to be amortized over 10 months and an amount of $5.2 million to technology to be amortized over an 8.7 year period. The table below summarizes the provisional estimates of the fair value of assets acquired at the purchase date. | |||||||||
Cash | $ | 14 | |||||||
Receivables | 1,094 | ||||||||
Other current assets | 187 | ||||||||
Fixed assets | 72 | ||||||||
Other long-term assets | 14 | ||||||||
Accounts payable | (640 | ) | |||||||
Other accounts payable | (412 | ) | |||||||
Deferred revenue | (388 | ) | |||||||
Long term liabilities | (40 | ) | |||||||
Identifiable intangible assets: | |||||||||
Order backlog | 345 | ||||||||
Technology | 5,228 | ||||||||
Goodwill | 13,302 | ||||||||
Total assets acquired | $ | 18,776 | |||||||
The contribution of MS Modernization Services, Inc. results to our consolidated revenues and loss were $235 and $204 thousand for the period from December 1 to December 31, 2014. The transaction costs amounted to $348 thousand and were charged to selling, general, and administrative expenses. | |||||||||
The unaudited pro forma financial information in the table below summarizes the combined results of our operations and those of MS Modernization Services, Inc. for the periods shown as though the Transaction occurred as of the beginning of fiscal year 2013. The pro forma financial information for the periods presented includes the business combination accounting effects of the Transaction, including amortization charges from acquired intangible assets, based on the provisional estimated fair value mentioned above. The pro forma financial information presented below is for informational purposes only, is subject to a number of estimates, assumptions and other uncertainties, and is not indicative of the results of operations that would have been achieved if the transaction had taken place at January 1, 2013. The unaudited pro forma financial information is as follows: | |||||||||
Year Ended December 31, | Year Ended December 31, | ||||||||
2014 | 2013 | ||||||||
Total revenues | $ | 11,012 | $ | 14,315 | |||||
Net loss attribute to MS Modernization Services, Inc. | $ | (4,141 | ) | $ | (5,242 | ) |
Fair_Value_Measurement
Fair Value Measurement | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||
Fair Value Measurement | Note 3 - Fair Value Measurement: | ||||||||||||||||
Items carried at fair value as of December 31, 2014 and 2013 are classified in the table below in one of the three categories described in Note 1.O.2. | |||||||||||||||||
Fair value measurements using input type | |||||||||||||||||
31-Dec-14 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Cash and cash equivalents | $ | 449 | $ | - | $ | - | $ | 449 | |||||||||
Restricted cash | 8 | - | - | 8 | |||||||||||||
$ | 457 | $ | - | $ | - | $ | 457 | ||||||||||
Fair value measurements using input type | |||||||||||||||||
31-Dec-13 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Cash and cash equivalents | $ | 2,592 | $ | - | $ | - | $ | 2,592 | |||||||||
Restricted cash | 35 | - | - | 35 | |||||||||||||
Derivatives liabilities - warrants | - | (311 | ) | - | (311 | ) | |||||||||||
$ | 2,627 | $ | (311 | ) | $ | - | $ | 2,316 |
Property_and_Equipment_Net
Property and Equipment, Net | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Property and Equipment, Net | Note 4 - Property and Equipment, Net: | ||||||||
Composition of property and equipment, grouped by major classifications: | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
Cost: | |||||||||
Computers and peripheral equipment | $ | 8,717 | $ | 8,601 | |||||
Office furniture and equipment | 535 | 529 | |||||||
Leasehold improvements | 268 | 269 | |||||||
Motor vehicles | 25 | 23 | |||||||
9,545 | 9,422 | ||||||||
Accumulated Depreciation: | |||||||||
Computers and peripheral equipment | 8,430 | 8,354 | |||||||
Office furniture and equipment | 438 | 434 | |||||||
Leasehold improvements | 331 | 331 | |||||||
Motor vehicles | 25 | 16 | |||||||
9,224 | 9,135 | ||||||||
$ | 321 | $ | 287 | ||||||
Depreciation expenses totaled $89 and $155 thousand for the years ended December 31, 2014 and 2013, respectively. |
Goodwill
Goodwill | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Goodwill [Abstract] | |||||||||
Goodwill | Note 5 - Goodwill: | ||||||||
The change in the carrying amount of goodwill for the years ended December 31, 2014 and 2013 is as follows: | |||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
Balance as of January 1 | |||||||||
Goodwill | $ | 54,316 | $ | 54,316 | |||||
Accumulated impairment losses at the beginning of the period | (41,815 | ) | (41,815 | ) | |||||
12,501 | 12,501 | ||||||||
Changes during the year | |||||||||
Goodwill related to acquisition of Sophisticated Business Solutions ("Ateras") | 13,302 | - | |||||||
Balance as of December 31 | |||||||||
Goodwill | 67,618 | 54,316 | |||||||
Accumulated impairment losses at the end of the period | (41,815 | ) | (41,815 | ) | |||||
$ | 25,803 | $ | 12,501 |
Intangible_Assets_and_Others_N
Intangible Assets and Others, Net | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||||||||||||
Intangible Assets and Others, Net | Note 6 - Intangible Assets and Others, Net: | ||||||||||||
Composition: | |||||||||||||
Useful | December 31, | ||||||||||||
life years | 2014 | 2013 | |||||||||||
(in thousands) | |||||||||||||
Original amount: | |||||||||||||
Technology | 5-8.7 | $ | 51,494 | $ | 46,266 | ||||||||
Customer related and backlog | 0.8-9 | 5,313 | 4,968 | ||||||||||
Others | 14 | - | |||||||||||
56,821 | 51,234 | ||||||||||||
Accumulated amortization: | |||||||||||||
Technology | 46,266 | 46,266 | |||||||||||
Customer related and backlog | 4,968 | 4,968 | |||||||||||
51,234 | 51,234 | ||||||||||||
$ | 5,587 | $ | - | ||||||||||
* The provisional amounts of technology and backlog from the Merger are $5.2 and $0.3 million, respectively. (See also Note 2A). |
Accrued_Severance_Pay_Net
Accrued Severance Pay, Net | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Accrued Severance Pay, Net [Abstract] | |||||||||
Accrued Severance Pay, Net | Note 7 - Accrued Severance Pay, Net: | ||||||||
A. | Accrued Liability: | ||||||||
The Company is liable for severance pay to its employees pursuant to the applicable local laws prevailing in the respective countries of employment and employment agreements. For Israeli employees, the liability is partially covered by individual managers’ insurance policies under the name of the employee, for which the Company makes monthly payments. The Company may make withdrawals from the managers’ insurance policies only for the purpose of paying severance pay. | |||||||||
U.S. employees are eligible to participate in a 401(k) retirement plan. Under the plan, employees may elect to defer a portion of their salary from taxes and invest it for retirement. The Company may, on a discretionary basis, make matching contributions to the employee deferrals. There were no discretionary contribution during 2014 and 2013. | |||||||||
The amounts accrued and the amounts funded with managers’ insurance policies are as follows: | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
Accrued severance pay | $ | 676 | $ | 1,063 | |||||
Less - amount funded | 447 | 773 | |||||||
$ | 229 | $ | 290 | ||||||
B. | Expenses: | ||||||||
The expenses related to severance pay for the years ended December 31, 2014 and 2013, were $75 and $137 thousand, respectively. |
Loans_from_Banks_and_Others
Loans from Banks and Others | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Loans from Banks and Others [Abstract] | |||||||||||||||||
Loans from Banks and Others | Note 8 - Loans from Banks and Others: | ||||||||||||||||
A. | Credit Facility | ||||||||||||||||
In September, 2014, we entered into an amendment to our existing loan agreement with Comerica Bank to: (i) increase the non-formula revolving line up to the amount of $2 million backed by guarantees; (ii) increase the borrowing base revolving line amount up to $1.5 million upon the closing of the Ateras merger; and (iii) extend the loan maturity date to December 31, 2015. The amendment has a financial covenant for a minimum liquidity ratio. Our obligations under the amendment are secured by a security interest in our copyrights, trademarks and patents. The remaining substantive provisions of the credit facility were not materially changed by this amendment. | |||||||||||||||||
As of December 31, 2014, we had borrowed $1 million against our non-formula revolving line and $233 thousand against the revolving line. The principal terms of the agreement are as follows: | |||||||||||||||||
● | non-formula revolving line in the amount up to $2,000,000 backed by guarantees; | ||||||||||||||||
● | revolving line (accounts receivable based) loan in the amount up to $1,500,000; | ||||||||||||||||
● | both the non-formula revolving line and borrowing base loan are at market based interest rates based on Prime + a margin; and | ||||||||||||||||
● | Financial covenant for a minimum bank debt liquidity ratio calculated monthly as of the last day of each month, upon the closing of the Ateras Merger. | ||||||||||||||||
There is a financial covenant for a minimum liquidity ratio. There are some restrictions on cash balances to be held within banks other than Comerica. As of December 31, 2014, we were in compliance with these restrictions. | |||||||||||||||||
B. | Long Term Loans from others | ||||||||||||||||
Composition: | |||||||||||||||||
December 31, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
*Average Interest rate as of December 31, | Linkage | Total | |||||||||||||||
2014 | Basis | long-term | |||||||||||||||
liabilities | |||||||||||||||||
net of | |||||||||||||||||
current portion | |||||||||||||||||
% | (in thousands) | ||||||||||||||||
Ministry of Production in Italy (Note 9 A3) | 0.87 | € | $ | 154 | $ | 202 | |||||||||||
Less - current portion | (40 | ) | (40 | ) | |||||||||||||
$ | 114 | 162 | |||||||||||||||
C. | Long-term Loans from Others are due as follows: | ||||||||||||||||
December 31, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
(in thousands) | |||||||||||||||||
First year (current portion) | $ | 40 | $ | 40 | |||||||||||||
Second year | 40 | 40 | |||||||||||||||
Third year | 40 | 40 | |||||||||||||||
Fourth year and thereafter | 34 | 82 | |||||||||||||||
Total | $ | 154 | $ | 202 |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Commitments and Contingencies [Abstract] | |||||||||
Commitments and Contingencies | Note 9 - Commitments and Contingencies: | ||||||||
A. | Commitments: | ||||||||
1 | Lease. The Company leases its offices, vehicles and, other equipment under various operating lease agreements. Rent expenses for the years ended December 31, 2014 and 2013 were $237 and $253 thousand, respectively. Aggregate minimum rental commitments under non-cancelable leases as of December 31, 2014 were as follows: | ||||||||
Office Facilities | Vehicles, | ||||||||
Equipment, | |||||||||
and Other | |||||||||
(in thousands) | |||||||||
Fiscal 2015 | $ | 255 | $ | 31 | |||||
Fiscal 2016 | 202 | 20 | |||||||
Fiscal 2017 | 134 | 7 | |||||||
Fiscal 2018 | 159 | - | |||||||
$ | 750 | $ | 58 | ||||||
2 | Chief Scientist. One of the Company’s subsidiaries has entered into an agreement with the OCS; this subsidiary is obliged to pay royalties to the OCS at a rate of 3% on sales of the funded products, up to 100% of the dollar-linked grant received in respect of these products from the OCS. As of December 31, 2014, the contingent liability that was not recognized amounted to $238 thousand. | ||||||||
3 | Ministry of Production in Italy. During 2007, our subsidiary, Blue Phoenix I-ter S.R.L (I-ter)., received an amount of $585 thousand from the Ministry of Production in Italy for I-ter’s Easy4Plan product. Easy4Plan is a workflow management tool designed for ISO9000 companies. Of the funds received, 36.5% constitute a grant, and the remaining 63.5%, is a 10-year loan to be repaid by I-ter in annual installments until September 2018. The loan bears a minimal annual interest of 0.87% and is linked to the euro. As of December 31, 2014, the remaining loan balance was approximately $154 thousand. | ||||||||
B. | Contingencies: | ||||||||
1 | The Company evaluates estimated losses for indemnifications due to product infringement under FASB Topic ASC 450 “Contingencies”. At this time, it is not possible to determine the maximum potential amount under these indemnification clauses due to lack of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Such indemnification agreements may not be subject to maximum loss clauses. Historically, the Company has not incurred material costs as a result of obligations under these agreements and has not accrued any liabilities related to such indemnification obligations in the Company’s financial statements. |
Equity
Equity | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Equity [Abstract] | |||||||||||||||||
Equity | Note 10 - Equity: | ||||||||||||||||
A. | Share Capital: | ||||||||||||||||
1. | On January 31, 1997, the Company’s ordinary shares were first offered in an initial public offering. Since this transaction, the Company’s shares have been traded in the United States on the NASDAQ Global Market under the symbol “BPHX.”. In December 2014, in connection with a change of our corporate name, we changed our symbol to “MDSY.” | ||||||||||||||||
In January 2001, the Company’s ordinary shares were listed for trading on the Tel-Aviv stock Exchange under the “Dual Listing” arrangement. On September 11, 2012, the Company reported the voluntary delisting of its ordinary shares from trading on the Tel Aviv Stock Exchange, which delisting became effective on December 13, 2012. | |||||||||||||||||
Ordinary shares confer upon their holders the rights to receive notice to participate and vote in general meeting of the Company, and the right to receive dividends if declared. In 2009, the Company’s board of directors and shareholders approved the increase of the authorized share capital to NIS 40,000,000 comprised of 40,000,000 ordinary shares of NIS 0.01 par value each. | |||||||||||||||||
In 2012, the authorized number of shares was increased from 10,000,000 to 17,500,000 shares with a par value of NIS 0.04. In 2014, the authorized number of shares was increased from 17,500,000 to 25,000,000 shares with a par value of NIS 0.04. | |||||||||||||||||
On March 19, 2012, the Company entered into a series of agreements that became effective on May 4, 2012 with three of the Company’s shareholders: Lake Union, Prescott and Columbia, or the three shareholders, An Assignment and Assumption Agreement pursuant to which the rights and obligations of the lenders with respect to a $5 million loan granted to us in April 2011 and was due in May 2012, by a financial institution and other lenders, were purchased by the three shareholders in equal shares, subject to certain terms and conditions. The agreement contained conversion option. | |||||||||||||||||
In addition, the three shareholders provided to us a $500 thousand bridge loan for one year bearing nominal interest of 7% per annum. The principal and the accrued interest can be converted into shares according to the lower of 30-day volume weighted average price per share prior to closing or 3$ per share. | |||||||||||||||||
During the second quarter of 2012 the three shareholders exercised their conversion right with respect to the two loans as abovementioned (within the 120 days period), and accordingly, the Company issued to Lake Union 1,221,027 ordinary shares, to Prescott 1,230,820 ordinary shares and to Columbia 1,226,545 ordinary shares based on the $1.56 per share which is the 30-day volume weighted average price per share prior to closing. Upon conversion the principal and accrued interest net of discount and the derivative amounted to $9.6 million were classified to equity. | |||||||||||||||||
In November 2013, the Company issued 625,000 ordinary shares to Prescott Group Aggressive Small Cap Master Fund, G.P. (“Prescott”) at a price per ordinary share of $4.00 in a private placement. The Company received aggregate gross proceeds of $2.5 million. Issuance expenses amounted to $210 thousand the issuance of such shares was exempt from registration in reliance on Section 4(2) of the Securities Act for transactions not involving any public offering. There were no underwriting discounts or commissions in connection with such offering. | |||||||||||||||||
From and after the Closing Date until the earlier of (i) the second anniversary of the Closing Date, or (ii) to the consummation of a Qualified Financing of $5 million as set forth in the agreement if the Company, sells or issues Ordinary Shares or securities exercisable or convertible into Ordinary Shares for a price per share less than $4 than additional shares will be issued to the investors based on a Formula set forth in the agreement. The company analyzed this anti-dilution feature and concluded that (i) it is not a free standing instrument and (ii) it should be bifurcated as an embedded derivative. The Company classified the share in shareholder equity. | |||||||||||||||||
In September 2014, Prescott signed a waiver stating that the issuance of the 6,195,494 ordinary shares for the merger described below shall not result in the issuance of additional ordinary shares or other securities of the Company to Prescott and further agreed that the issuance of securities in connection with the Merger did not terminate the “Protection Period” (as such term is defined in the Prescott Agreement). | |||||||||||||||||
On December 1, 2014, we completed a merger with Sophisticated Business Systems, Inc., a Texas corporation doing business as “Ateras.” At the closing, BP-AT Acquisition LLC, a Delaware limited liability company and a direct, wholly-owned subsidiary of Modern Systems Corporation (f/k/a BluePhoenix Solutions USA, Inc.), a Delaware corporation and an indirect, wholly-owned subsidiary of ModSys International Ltd merged with and into Ateras (the “Merger”). As a result of the Merger, the separate corporate existence of BP-AT Acquisition LLC ceased and Ateras continued as the surviving corporation and a wholly-owned subsidiary of Modern Systems Corporation. The new entity was then renamed MS Modernization Services, Inc. The Merger was approved by our shareholders at a meeting held on November 18, 2014. | |||||||||||||||||
Upon the closing of the Merger, we issued 6,195,494 unregistered ordinary shares, par value NIS 0.04 per share, to the former Ateras shareholders in exchange for the cancellation of the shares of Ateras stock held by such shareholders in connection with the Merger. In connection with the closing of the Merger, Scott Miller was elected to our Board of Directors. In addition, we entered into a Registration Rights Agreement by and a Preemptive Rights Agreement as conditions to the closing of the Merger contemplated by the Merger Agreement. | |||||||||||||||||
2. | As of December 31, 2014, the Company holds a total of 33,239 of its shares in a total consideration of 1.8 million. All of the Company’s ordinary shares have equal voting rights. However, under applicable Israeli law, the shares held by the Company have no voting rights and, therefore, are excluded from the number of its outstanding shares. Since 2010, the Company uses these treasury shares for the issuance of shares pursuant to exercise of options and vested RSUs to meet the Company’s common stock requirements for its stock benefit plans. In March 2008, the board of directors approved two buy-back programs. Under the buy-back programs, the Company may purchase its shares from time to time, subject to market conditions and other relevant factors affecting the Company. In 2009, the Company repurchased 11,249 of its shares for an aggregate amount of $1.7 million under the buy-back programs. | ||||||||||||||||
3 | Derivative liability- warrants: | ||||||||||||||||
As part of a private placement transaction of shares and warrants in 2009, the Company issued warrants to purchase ordinary shares with an exercise price of $1.56. The warrants were exercisable during a 5-year period from October 2009. As a result of anti-dilution protection, the warrants were not considered indexed to the Company’s own stock and (ratchet down of exercise price based upon lower exercise price in future offerings), and therefore recorded at issuance date as a derivative financial liability pursuant to FASB ASC Topic 815 “ Derivative and Hedging” (ASC 815-40-25). The Company measured the fair value of the outstanding warrants at issuance and at the balance sheet date using a Black-Scholes valuation model. In October 2014, the remaining 102,343 warrants were exercised for a total value of $160,003. | |||||||||||||||||
B. | Share Options: | ||||||||||||||||
1 | Employee Share Option Plans: | ||||||||||||||||
Stock-based compensation plans comprise employee stock option plans and restricted stock units (“RSUs”) to employees, officers and directors. The purpose of the plans is to enable the Company to attract and retain qualified personnel and to motivate such persons by providing them with an equity participation in the Company. | |||||||||||||||||
As of December 31, 2014, the Company has two share-based compensation plans: (a) the 1996 Share Option Plan, and (b) the 2007 Award Plan. Both plans are described below. The compensation costs that were charged to income for those plans amounted to $0.7 million and $0.6 million for 2014 and 2013, respectively. | |||||||||||||||||
In 1996, the Company adopted two option plans (the 1996 Share Option Plan). One of these option plans was terminated after all options granted under it were exercised. Pursuant to the other 1996 option plan, as amended, the Company reserved 1,050,000 ordinary shares for issuance to directors, officers, consultants and employees of the Company and its subsidiaries. The exercise price of the options granted under the 1996 option plan ranges from $1.8 to $20. As of December 31, 2014, 80,163 stock options remain available for future awards. | |||||||||||||||||
Under the 1996 option plan, unless determined otherwise by the board, options vest over a three to four years period from the date of grant and expire 10 years after grant date. Unvested options are forfeited 30-90 days following termination of employment. Any options that are forfeited before expiration become available for future grants. | |||||||||||||||||
The following table summarizes information about share options outstanding and exercisable as of December 31, 2014: | |||||||||||||||||
Options Outstanding | Options Exercisable | ||||||||||||||||
Number Outstanding on December 31, 2014 | Weighted Average Remaining Contractual Life | Number Exercisable on December 31, 2014 | Exercise | ||||||||||||||
Price | |||||||||||||||||
Years | $ | ||||||||||||||||
300,000 | 7.32 | 275,000 | 1.8 | ||||||||||||||
70,000 | 8.28 | 46,667 | 3.87 | ||||||||||||||
6,250 | 4.6 | 6,250 | 10.16 | ||||||||||||||
10,000 | 4.6 | 10,000 | 11.08 | ||||||||||||||
7,600 | 1 | 7,600 | 20 | ||||||||||||||
393,850 | 345,517 | ||||||||||||||||
Data related to the share option plan as of December 31, 2014 and 2013 and changes during the years ended on those dates are as follows: | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Number of Options | Weighted Average Exercise Price | Number of Options | Weighted Average Exercise Price | ||||||||||||||
$ | $ | ||||||||||||||||
Options outstanding at the beginning of year | 441,589 | 3.18 | 351,287 | 3.48 | |||||||||||||
Changes during the year: | |||||||||||||||||
Granted | - | 110,000 | 3.97 | ||||||||||||||
Exercised | - | - | |||||||||||||||
Forfeited | (47,739 | ) | 5.56 | (19,698 | ) | 12.95 | |||||||||||
Options outstanding at end of year | 393,850 | 441,589 | |||||||||||||||
Options exercisable at year-end | 345,517 | 235,760 | |||||||||||||||
Weighted-average fair value of options granted during the year* | - | $ | 2.45 | ||||||||||||||
* | The fair value of each option granted is estimated on the date of grant, using the Black-Scholes option-pricing model with the following weighted average assumptions: dividend yield of 0% for all years; expected volatility: 2013 – 69%; risk-free interest rate: 2013 – 1.15%; and expected life: 2013 – 6.06 years. There were no options granted in 2014. | ||||||||||||||||
No options were exercised in 2014 and 2013. | |||||||||||||||||
The Company is required to assume a dividend yield as an input in the Black-Scholes model. The dividend yield assumption is based on the Company’s historical experience and expectation of future dividends payouts and may be subject to change in the future. | |||||||||||||||||
The Company uses historical volatility in accordance with FASB ASC Topic 718, “Compensation - stock compensation”. The computation of volatility uses historical volatility derived from the Company’s exchange-traded shares. | |||||||||||||||||
The risk-free interest assumption is the implied yield currently available on U.S. Treasury zero-coupon bonds, issued with a remaining term equal to the expected life term of the Company’s options. | |||||||||||||||||
Pre-vesting rates forfeitures are approximately 15% and were estimated based on pre-vesting for feature experience. | |||||||||||||||||
The Company uses the simplified method to compute the expected option term for options granted. | |||||||||||||||||
2 | Restricted Share Units (RSU): | ||||||||||||||||
In 2007, the Company adopted the 2007 Award Plan (RSU plan). In 2014 and 2013, under the RSU plan, as amended, the Company granted 140,097 and 248,988 RSUs, respectively. Under the RSU plan, unless determine otherwise by the board of directors, RSUs vest over a three years period from the date of the grant. Approved for immediate vesting on grant date were 7,848 and 33,998 RSUs in 2014 and 2013, respectively. | |||||||||||||||||
Data related to the restricted stock units as of December 31, 2014 and 2013 and changes during the year were as follows: | |||||||||||||||||
Year ended December 31, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
RSUs outstanding at the beginning of the year | 246,838 | 192,923 | |||||||||||||||
Changes during the year: | |||||||||||||||||
Granted * | 140,097 | 223,968 | |||||||||||||||
Vested | (137,136 | ) | (124,622 | ) | |||||||||||||
Forfeited | (30,385 | ) | (45,431 | ) | |||||||||||||
RSUs outstanding at the end of the year | 219,414 | 246,838 | |||||||||||||||
Weighted average fair value at grant date | $ | 4.13 | $ | 4.09 | |||||||||||||
* | The fair value of RSUs is established based on the market value of the Company’s stock on the date of the award. The Company has expensed compensation costs, net of estimated forfeitures, applying the accelerated vesting method. | ||||||||||||||||
C. | Dividends: | ||||||||||||||||
The Company has not paid any cash dividends on its ordinary shares in the past and does not expect to pay cash dividends on its ordinary shares in the foreseeable future. |
Income_taxes
Income taxes | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Income taxes [Abstract] | |||||||||
Income taxes | Note 11 - Income taxes: | ||||||||
A. | Basis of taxation: | ||||||||
The Company and its subsidiaries are subject to tax in many jurisdictions and a certain degree of estimation is required in recording the assets and liabilities related to income taxes. The Company believes that its accruals for tax liabilities are adequate for all open years. The Company considers various factors in making these assessments, including past history, recent interpretations of tax law, and the specifics of each matter. Non-Israeli subsidiaries are taxed according to the tax laws in their respective country of residence. | |||||||||
The Company elected to compute its taxable income in accordance with Income Tax Regulations (Rules for Accounting for Foreign Investors Companies and Certain Partnerships and Setting their Taxable Income), 1986. Accordingly, the Company’s taxable income or loss is calculated in U.S. dollars. Applying these regulations reduces the effect of foreign exchange rate (of NIS against the U.S. dollar) on the Company’s Israeli taxable income. | |||||||||
Taxable income of Israeli companies is subject to tax at the rate of 26.5% and 25% in 2014 and 2013, respectively. | |||||||||
B. | Deferred tax assets and liabilities: | ||||||||
Deferred tax reflect the net tax effects of temporary differences between the carrying amounts of assets or liabilities for financial reporting purposes and the amounts used for income tax purposes. As of December 31, 2014 and 2013, the Company’s deferred taxes were in respect of the following: | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
Net operating losses carry forwards | $ | 30,539 | $ | 29,446 | |||||
Provisions for employee rights and other temporary differences | 61 | 74 | |||||||
Deferred tax assets before valuation allowance | 30,600 | 29,520 | |||||||
Valuation allowance | (30,600 | ) | (29,520 | ) | |||||
Deferred tax assets | - | - | |||||||
Deferred tax liability | - | - | |||||||
Deferred tax assets (liability), net | $ | - | $ | - | |||||
C. | Loss before Income Taxes is composed as follows: | ||||||||
Year ended December 31, | |||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
Domestic (Israel) | $ | (2,939 | ) | (3,073 | ) | ||||
Foreign | (758 | ) | (20 | ) | |||||
$ | (3,697 | ) | (3,093 | ) | |||||
D. | Provision for Taxes: | ||||||||
Year ended December 31, | |||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
Current: | |||||||||
Domestic (Israel) | $ | - | $ | - | |||||
Foreign | 37 | 36 | |||||||
37 | 36 | ||||||||
* Taxes related to prior years | |||||||||
Deferred: | (12 | ) | 261 | ||||||
Deferred taxes, net | - | - | |||||||
Total provision for income taxes | $ | 25 | $ | 297 | |||||
* | In 2014 and 2013, mainly related to withholdings tax for prior years that cannot be realized due to liquidation of subsidiaries as non-future estimated taxable income. | ||||||||
E. | Uncertain Tax Position: | ||||||||
The Company has recorded no liability for income taxes associated with unrecognized tax benefits at the date of adoption and have not recorded any liability associated with unrecognized tax benefits during 2014 and 2013. Accordingly, the Company has not recorded any interest or penalty in regard to any unrecognized benefit. | |||||||||
F. | A reconciliation between statutory tax to effective tax, assuming all income is taxed at the regular rates and the actual tax expense is as follows: | ||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
Loss before income taxes, per consolidated statements of income | $ | (3,697 | ) | $ | (3,093 | ) | |||
At the principal tax rate of the group (26.5% and 25% in 2014 and 2013, respectively) | (980 | ) | (774 | ) | |||||
Decrease in taxes resulting from the following differences: | |||||||||
Carry-forward losses for which the Company provided valuation allowance | 1,080 | 833 | |||||||
Effect of different tax rates in foreign subsidiaries | (63 | ) | (53 | ) | |||||
Taxes related to previous years | (12 | ) | 261 | ||||||
Non-deductible expenses | - | 30 | |||||||
Income tax expense (benefit) in the consolidated statements of income for the reported year | $ | 25 | $ | 297 | |||||
Effective Tax rate | - | - | |||||||
G. | Tax Losses: | ||||||||
The Company and its subsidiaries have NOL carry forwards for income tax purposes as of December 31, 2014 of approximately $90 million. $76 million were generated in Israel with no expiration date and the rest outside of Israel. | |||||||||
H. | Tax Assessments: | ||||||||
The Company received final tax assessments in Israel through tax year 2009. |
Supplementary_Financial_Statem
Supplementary Financial Statement Information | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Supplementary Financial Statement Information [Abstract] | |||||||||
Supplementary Financial Statement Information | Note 12 - Supplementary Financial Statement Information: | ||||||||
A. | Balance Sheets: | ||||||||
1. | Trade Accounts Receivables: | ||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
Trade accounts receivable | $ | 3,033 | $ | 2,140 | |||||
Less allowance for doubtful accounts | (554 | ) | (180 | ) | |||||
$ | 2,479 | $ | 1,960 | ||||||
For the years ended December 31, 2014 and 2013, the Company charged expenses for doubtful accounts amounted to $629 and $2 thousand, respectively. | |||||||||
For the year ended December 31, 2014, the Company deducted from the allowance (bad debts) $ 255 thousand. The amount in 2013 was zero. | |||||||||
2. | Other Current Assets: | ||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
Prepaid expenses | $ | 105 | $ | 114 | |||||
Short-term lease deposits | 19 | 24 | |||||||
Government departments and agencies | 52 | 101 | |||||||
$ | 176 | $ | 239 | ||||||
3. | Other Current Liabilities: | ||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
Government departments and agencies | $ | 133 | $ | - | |||||
Employees and wage-related liabilities | 452 | 745 | |||||||
Promissory note * | 220 | - | |||||||
Accrued expenses and other current liabilities | 184 | 157 | |||||||
$ | 989 | $ | 902 | ||||||
* Promissory note with Scott Miller in the amount of $220,000 bearing interest at 2%. The note is payable in full on either April 8, 2015 or July 8, 2015, given certain performance criteria of MS Modernization Services, Inc. | |||||||||
4. | The Company’s Long-lived Assets are as Follows: | ||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
Israel | $ | 54 | $ | 77 | |||||
U.S.A. | 158 | 91 | |||||||
Europe and other | 109 | 119 | |||||||
$ | 321 | $ | 287 | ||||||
Long-lived assets information is based on the physical location of the assets at the end of each of the fiscal years. It is comprised from the Company’s property and equipment and technology intangible asset. The Company does not identify or allocate goodwill by geographic areas. | |||||||||
B. | Statements of Operations: | ||||||||
1. | Geographic Areas Information: | ||||||||
Sales: Classified by Geographic Areas: | |||||||||
The Company adopted FASB ASC Topic 280, “segment reporting”. The Company operates in one operating segment (see Note 1 for a brief description of the Company’s business). The total revenues are attributed to geographic areas based on the location of end customers. | |||||||||
The following present total revenues for the years ended December 31, 2014 and 2013: | |||||||||
Year ended December 31, | |||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
North America | $ | 3,743 | $ | 4,147 | |||||
Europe | 2,688 | 2,465 | |||||||
Israel | 809 | 1,791 | |||||||
Other | - | 134 | |||||||
$ | 7,240 | $ | 8,537 | ||||||
2. | Principal Customers: | ||||||||
There were two customers that represented 15.5% and 11.1% of the Company’s total revenue in 2014. There was one customer that represented 13.9% of the Company’s total revenues in 2013. | |||||||||
There are four customers that represented more than 10% of total trade receivables at December 31, 2014. There was one customer that represented more than 10% of total trade receivables at December 31, 2013. | |||||||||
3. | Financial Income (Expenses), Net: | ||||||||
Year ended December 31, | |||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
Foreign currency translation adjustments (see Note 1A3) | $ | 5 | $ | (43 | ) | ||||
Interest expense | (40 | ) | (54 | ) | |||||
Change in fair value of warrants, derivatives and discount amortization | 150 | (17 | ) | ||||||
$ | 115 | $ | (114 | ) | |||||
C. | Loss Per Share: | ||||||||
Basic and diluted loss per share (“EPS”) was computed based on the average number of shares outstanding during each year. No effect was given to potential instruments such as: share options unvested, RSUs and warrants since their inclusion would be anti-dilutive. | |||||||||
The following table sets forth the computation of basic and diluted net earnings per share attributable to ModSys International Ltd.: | |||||||||
Year ended December 31, | |||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
1. Numerator: | |||||||||
Amount for basic and diluted loss per share | $ | (3,395 | ) | $ | (4,032 | ) | |||
2. Denominator: | |||||||||
Denominator for basic net loss per share - weighted average of shares | 12,020,474 | 10,770,142 | |||||||
Effect of dilutive securities | - | - | |||||||
Denominator for diluted net earnings per share - weighted average shares and assuming dilution | 12,020,474 | 10,770,142 | |||||||
Basic and diluted loss per share attributed ModSys International Ltd. | $ | (0.28 | ) | $ | (0.37 | ) | |||
Discontinued_Operation
Discontinued Operation | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Discontinued Operation [Abstract] | |||||
Discontinued Operation | Note 13 - Discontinued Operation: | ||||
In February 2013, the Company completed the sale of the operations of BridgeQuest, Inc. and its relevant subsidiary. Total consideration for BridgeQuest, Inc. was $6.5 thousand. In addition, as part of the agreement, the Company received additional amounts upon collection of existing account receivables of BridgeQuest, Inc. collected by the purchaser following the transaction. BridgeQuest, Inc. met the definition of a component. Accordingly, the results of operations in the statement of operations and prior period’s results have been reclassified accordingly. As the transaction was completed following the balance sheet date, in February 2013, assets and liabilities associated with BridgeQuest, Inc. were presented as held for sale in the December 31, 2013 balance sheet. | |||||
The following is the composition from discontinued operation: | |||||
Year ended | |||||
31-Dec-13 | |||||
(in thousands, except per share data) | |||||
Revenues | $ | - | |||
Cost of revenues | 16 | ||||
Gross loss | (16 | ) | |||
Research and development costs | - | ||||
Selling, general, and administrative expenses | 2 | ||||
Loss on realization of shareholdings | 372 | ||||
Operating loss | (390 | ) | |||
Financial expenses, net | 9 | ||||
Loss before provision for income taxes | (399 | ) | |||
Provision for income taxes | - | ||||
Net loss | $ | (399 | ) |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended | |
Dec. 31, 2014 | ||
Summary of Significant Accounting Policies [Abstract] | ||
General | A. | General: |
The significant accounting policies, applied on a consistent basis, are as follows: | ||
1. The Company: | ||
ModSys International Ltd. (formerly known as BluePhoenix Solutions Ltd.) (Together with its subsidiaries, the “Company” ,“we”, or “Modern Systems”) is an Israeli corporation, which operates in one operating segment of information technology (“IT”) modernization solutions. | ||
Modern Systems develops and markets enterprise legacy migration solutions and provides tools and professional services to international markets through several entities including wholly-owned subsidiaries located in: USA, UK, Italy, Romania and Israel. These technologies and services allow business to migrate from their legacy mainframe and distributed IT infrastructures to modern environments and programming languages. | ||
The Company has incurred negative cash from operation and net losses in recent years. The Company currently uses its credit line with Comerica to support its negative cash flow position. Management believes that current cash position is sufficient to support the ongoing operations for the foreseeable future. (See also Note 8A). | ||
2. Accounting Principles: | ||
The consolidated financial statements are prepared in accordance with accounting principles generally accepted (“GAAP”) in the United States of America. | ||
3. Functional Currency: | ||
The currency of the primary economic environment in which the operations of the Company and its subsidiaries are conducted is the U.S. dollar (“dollar”). In addition, a substantial portion of the Company’s revenues and costs are incurred in dollars. Thus, the functional and reporting currency of the Company is considered to be the dollar. The functional currency of all subsidiaries is the US dollar therefore there is no unrealized gain/loss. | ||
Non-monetary transactions denominated in currencies other than the dollar are measured and recorded in dollar at the exchange rates prevailing at transaction date. Monetary assets and liabilities denominated in currencies other than the dollar are translated at the exchange rate on the balance sheet date. Transaction gain or losses on foreign currency translation are recorded in consolidated statement of operations. | ||
4. Use of Estimates and Assumptions in the Preparation of the Financial Statements: | ||
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. | ||
Principles of Consolidation | B. | Principles of Consolidation: |
The consolidated financial statements include the accounts of ModSys International Ltd. and its subsidiaries in which it has a controlling interest. Acquisition of subsidiaries is accounted for under the acquisition method. All intercompany balances and transactions have been eliminated upon consolidation. Non-controlling interests are included in equity. | ||
Cash and Cash Equivalents | C. | Cash and Cash Equivalents: |
Cash equivalents are considered by the Company to be highly-liquid investments, including inter-alia, short-term deposits with banks, which do not exceed maturities of three months at the time of deposit and which are not restricted. | ||
Reclassifications | D. | Reclassifications: |
Certain comparative figures have been reclassified to conform to the current year presentation. | ||
Allowance for Doubtful Accounts | E. | Allowance for Doubtful Accounts: |
The Company establishes an allowance for doubtful accounts to ensure trade and financing receivables are not overstated due to uncollectability. The allowance for doubtful accounts was based on specific receivables, which their collection, in the opinion of Company’s management, is in doubt. Trade receivables are charged off in the period in which they are deemed to be uncollectible. | ||
Property and Equipment, Net | F. | Property and Equipment, Net: |
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated by the straight-line method over their estimated useful lives. Annual rates of depreciation are as follows: | ||
% | ||
Computers and peripheral equipment | 20-33 (mainly 33) | |
Office furniture and equipment | 6-15 (mainly 7) | |
Leasehold improvements | Over the shorter of lease term or the life of the assets | |
Motor vehicles | 15 | |
Impairment of Long-Lived Assets | G. | Impairment of Long-Lived Assets: |
The Company evaluates property and equipment and purchased intangible assets with definite lives for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flow and recognizes an impairment loss when the estimated undiscounted future cash flow expected to result from the use of the asset plus the net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. When the Company identifies an impairment, it reduces the carrying amount of the asset to its estimated fair value based on a discounted cash flow approach or, when available and appropriate, to comparable market values. During the years ending December 31, 2014 and 2013, no impairment losses have been identified. | ||
Goodwill and other purchased intangible assets | H. | Goodwill and other purchased intangible assets: |
Goodwill and certain other purchased intangible assets have been recorded as a result of acquisitions. Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. | ||
Goodwill is not amortized, but rather is subject to an annual impairment test. The Company is one operating segment and one reporting unit related to its overall IT modernization .The goodwill impairment tests are conducted in two steps. In the first step, the Company determines the fair value of the reporting unit. If the net book value of the reporting unit exceeds its fair value, the Company would then perform the second step of the impairment test which requires allocation of the reporting unit’s fair value of all of its assets and liabilities in a manner similar to an acquisition cost allocation, with any residual fair value being allocated to goodwill. The implied fair value of the goodwill is then compared to the carrying value to determine impairment, if any. | ||
In 2014 and 2013, the company determined the fair value of a reporting unit using the market approach which is based on the market capitalization by using the share price of the Company in the NASDAQ stock exchange and an appropriate control premium. As of December 31, 2014 and 2013 market capitalization of the Company was significantly higher than the net book value of the reporting unit and therefore there was no need to calculate a control premium or to continue to step 2. | ||
Intangible assets that are not considered to have an indefinite useful life are amortized using the straight-line basis over their estimated useful lives of between 10 months to 9 years. The carrying amount of these assets is reviewed whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of the asset to the future undiscounted cash flows the assets is expected to generate. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset (see also Note 1G). | ||
Research and Development Costs | I. | Research and Development Costs: |
Research and development costs are charged to the statement of income as incurred. ASC No. 985, “Software”, requires capitalization of certain software development costs subsequent to the establishment of technological feasibility. | ||
Based on the Company’s product development process, technological feasibility is established when detailed program design is completed and verified. Costs incurred by the Company between completion of detailed program design and the point at which the products are ready for general release, have been insignificant. Therefore, all research and development costs have been expensed. | ||
Stock-based Compensation | J. | Stock-based Compensation: |
In the past two years, the majority of the awards were of restricted stock units (“RSUs”). RSU’s are valued based on the market value of the underlying stock at the date of grant. The Company also has a stock option plan. Stock option awards are measured and recognized as compensation expense based on estimated fair values on the date of grant using the Black-Scholes option-pricing model. This option pricing model requires that the Company makes several estimates, including the option’s expected life and the price volatility of the underlying stock. | ||
The Company recognizes the estimated fair value of option-based awards and RSUs, net of estimated forfeitures, as stock-based compensation costs using the accelerated vesting method. For the years ended December 31, 2014 and 2013 the Company recorded stock-based and RSUs compensation costs in the amount of $0.7 million and 0.6 million, respectively. On December 31, 2014, the total unrecognized stock-based and RSUs compensation costs amounted to $0.7 million, and are expected to be recognized over the next 3 years. | ||
Revenue Recognition | K. | Revenue Recognition: |
Revenues derived from direct software license agreements are recognized in accordance with FASB ASC Topic 985 “Software” (“ASC 985”), upon delivery of the software, when collection is probable, the license fee is otherwise fixed or determinable and persuasive evidence of an arrangement exists. | ||
The Company recognizes revenues from consulting fees based on the number of hours performed. Revenues from maintenance services are recognized ratably over the term of the maintenance period. | ||
When a project involves significant production, modification or customization of software, revenue is recognized according to the percentage of completion method in accordance with the provisions of FASB ASC Topic 605-35-25. Under this method, estimated revenue is generally accrued based on costs incurred to date, as a percentage of total updated estimated costs. The Company recognizes contract losses, if any, in the period in which they first become evident. There are no rights of return, price protection or similar contingencies in the Company’s contracts. | ||
On December 31, 2014, approximately $2 million of the accounts receivable balance was unbilled due to the customer’s payment terms. On December 31, 2013, the amount of unbilled revenue was $1.2 million. The Company presents revenues from products and revenues from services in separate line items. | ||
The product revenue line item includes revenue generated from stand-alone software products. In the services revenue line item, the Company includes revenue generated from maintenance and consulting fees and revenues accounted for pursuant to ASC 605-35-25. Tax collected from customers and remitted to government authorities (including VAT) are presented in the income statement on a net basis. | ||
Advertising Costs | L. | Advertising Costs: |
The Company expenses advertising costs as incurred. Advertising costs for the years ended December 31, 2014 and 2013 were $153 and $109 thousand, respectively. | ||
Income Taxes | M. | Income Taxes: |
Deferred taxes are determined utilizing the “asset and liability” method, whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, when it’s more likely than not that deferred tax assets will not be realized in the foreseeable future. Deferred tax liabilities and assets are classified as current or non-current based on the expected reversal dates of the specific temporary differences. | ||
The Company applied ASC Topic 740-10-05, Income Tax, which provides guidance for recognizing and measuring uncertain tax positions, it prescribes a threshold condition that a tax position must meet for any of the benefits of the uncertain tax position to be recognized in the financial statements. It also provides accounting guidance on derecognizing, classification and disclosure of these uncertain tax positions. The Company’s policy on classification of all interest and penalties related to unrecognized income tax positions, if any, is to present them as a component of income tax expense. | ||
Loss Per Share | N. | Loss Per Share: |
Basic net earnings per share are computed based on the weighted average number of ordinary shares outstanding during each year (including fully vested RSUs), net of treasury shares. Diluted earnings per share is computed based on the weighted average number of ordinary shares outstanding during each year, plus dilutive potential ordinary shares considered outstanding during the year (see also Note 12C). Since the Company incurred net loss during the periods presented, no diluted EPS was presented as all the potential ordinary shares were anti-dilutive. | ||
Financial Instruments | O. | Financial Instruments: |
1. Concentration of credit risks: | ||
Financial instruments that have the potential to expose the Company to credit risks are mainly cash and cash equivalents, bank deposit accounts, and trade receivables. | ||
The Company holds cash and cash equivalents, and deposit accounts at large banks in Israel, the United States, and Europe, thereby substantially reducing the risk of loss. | ||
The Company performs ongoing credit evaluations of its customers for the purpose of determining the appropriate allowance for doubtful accounts and generally does not require collateral. An appropriate allowance for doubtful accounts is included in the accounts. | ||
2. Fair value measurement: | ||
The Company measures fair value and discloses fair value measurements for financial and non-financial assets and liabilities. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. | ||
The accounting standard establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below: | ||
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. | ||
Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. | ||
Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. | ||
In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value. | ||
Comprehensive loss | P. | Comprehensive loss: |
Comprehensive loss, net of related taxes where applicable, includes only net income. | ||
Treasury Shares | Q. | Treasury Shares: |
In the past, the Company repurchased its ordinary shares from time to time on the open market and they are currently held as treasury stock. The Company presents the cost to repurchase treasury stock as a reduction of shareholders’ equity. When treasury shares are used as consideration for share based payment the reduction is based on average purchase cost. | ||
Derivative Liabilities - Warrants | R. | Derivative Liabilities - Warrants: |
In connection with , determining whether an instrument (or embedded feature) is indexed to an Entity’s own stock, “ASC 815-40-15,(formerly EITF 07-05), the Company determined that the warrants issued at several occasions (ratchet down of exercise price based upon lower exercise price in future offerings) are not indexed to the Company’s own stock and therefore should be recorded as a derivative financial liability for pursuant FASB ASC Topic 815 “Derivative and Hedging” (ASC 815-40-25). See also note 10A3 | ||
Recently Issued Accounting Pronouncements | S. | Recently Issued Accounting Pronouncements: |
In April 2014, the FASB issued ASU No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”. The amendments in this standard change the requirements for reporting discontinued operations in Subtopic 205-20. The amendments in this update will be effective prospectively for annual periods beginning on or after December 15, 2014. The Company is still assessing whether this adoption will have an effect on its consolidated financial statements. | ||
In May 2014, the FASB issued ASU No. 2014-09, Revenue from contracts with customers (Topic 606). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply a five step methodology: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price;(4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. An entity should apply the amendments in this update using one of the following two methods: (1) retrospectively to each prior reporting period presented (along with some practical expedients); or retrospectively with the cumulative effect of initially applying this update recognized at the date of initial application. The amendments in this update will be effective prospectively for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is still assessing whether this adoption will have an effect on its consolidated financial statements. | ||
In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial statements – Going concern (subtopic 205-40), Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern” (“ASU 2014-14”). The new standard provides guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued. ASU 2014-15 applies prospectively to annual periods ending after December 15, 2016, and to annual periods thereafter. Early application is permitted. The Company does not expect material impacts on the consolidated financial statements upon adoption. The Company is still assessing whether this adoption will have an effect on its consolidated financial statements. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended | |
Dec. 31, 2014 | ||
Summary of Significant Accounting Policies [Abstract] | ||
Schedule of Depreciation Rates | % | |
Computers and peripheral equipment | 20-33 (mainly 33) | |
Office furniture and equipment | 6-15 (mainly 7) | |
Leasehold improvements | Over the shorter of lease term or the life of the assets | |
Motor vehicles | 15 |
Certain_Transactions_Tables
Certain Transactions (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Certain Transactions [Abstract] | |||||||||
Summary of estimated fair value of assets acquired at purchase date | Cash | $ | 14 | ||||||
Receivables | 1,094 | ||||||||
Other current assets | 187 | ||||||||
Fixed assets | 72 | ||||||||
Other long-term assets | 14 | ||||||||
Accounts payable | (640 | ) | |||||||
Other accounts payable | (412 | ) | |||||||
Deferred revenue | (388 | ) | |||||||
Long term liabilities | (40 | ) | |||||||
Identifiable intangible assets: | |||||||||
Order backlog | 345 | ||||||||
Technology | 5,228 | ||||||||
Goodwill | 13,302 | ||||||||
Total assets acquired | $ | 18,776 | |||||||
Schedule of pro forma information | Year Ended December 31, | Year Ended December 31, | |||||||
2014 | 2013 | ||||||||
Total revenues | $ | 11,012 | $ | 14,315 | |||||
Net loss attribute to MS Modernization Services, Inc. | $ | (4,141 | ) | $ | (5,242 | ) |
Fair_Value_Measurement_Tables
Fair Value Measurement (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||
Summary of Fair Value Measurements | Fair value measurements using input type | ||||||||||||||||
31-Dec-14 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Cash and cash equivalents | $ | 449 | $ | - | $ | - | $ | 449 | |||||||||
Restricted cash | 8 | - | - | 8 | |||||||||||||
$ | 457 | $ | - | $ | - | $ | 457 | ||||||||||
Fair value measurements using input type | |||||||||||||||||
31-Dec-13 | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Cash and cash equivalents | $ | 2,592 | $ | - | $ | - | $ | 2,592 | |||||||||
Restricted cash | 35 | - | - | 35 | |||||||||||||
Derivatives liabilities - warrants | - | (311 | ) | - | (311 | ) | |||||||||||
$ | 2,627 | $ | (311 | ) | $ | - | $ | 2,316 |
Property_and_Equipment_Net_Tab
Property and Equipment, Net (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Schedule of Property and Equipment | December 31, | ||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
Cost: | |||||||||
Computers and peripheral equipment | $ | 8,717 | $ | 8,601 | |||||
Office furniture and equipment | 535 | 529 | |||||||
Leasehold improvements | 268 | 269 | |||||||
Motor vehicles | 25 | 23 | |||||||
9,545 | 9,422 | ||||||||
Accumulated Depreciation: | |||||||||
Computers and peripheral equipment | 8,430 | 8,354 | |||||||
Office furniture and equipment | 438 | 434 | |||||||
Leasehold improvements | 331 | 331 | |||||||
Motor vehicles | 25 | 16 | |||||||
9,224 | 9,135 | ||||||||
$ | 321 | $ | 287 |
Goodwill_Tables
Goodwill (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Goodwill [Abstract] | |||||||||
Schedule of Goodwill | 2014 | 2013 | |||||||
(in thousands) | |||||||||
Balance as of January 1 | |||||||||
Goodwill | $ | 54,316 | $ | 54,316 | |||||
Accumulated impairment losses at the beginning of the period | (41,815 | ) | (41,815 | ) | |||||
12,501 | 12,501 | ||||||||
Changes during the year | |||||||||
Goodwill related to acquisition of Sophisticated Business Solutions ("Ateras") | 13,302 | - | |||||||
Balance as of December 31 | |||||||||
Goodwill | 67,618 | 54,316 | |||||||
Accumulated impairment losses at the end of the period | (41,815 | ) | (41,815 | ) | |||||
$ | 25,803 | $ | 12,501 |
Intangible_Assets_and_Others_N1
Intangible Assets and Others, Net (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||||||||||||
Schedule of Intangible Assets and Others, Net | Useful | December 31, | |||||||||||
life years | 2014 | 2013 | |||||||||||
(in thousands) | |||||||||||||
Original amount: | |||||||||||||
Technology | 5-8.7 | $ | 51,494 | $ | 46,266 | ||||||||
Customer related and backlog | 0.8-9 | 5,313 | 4,968 | ||||||||||
Others | 14 | - | |||||||||||
56,821 | 51,234 | ||||||||||||
Accumulated amortization: | |||||||||||||
Technology | 46,266 | 46,266 | |||||||||||
Customer related and backlog | 4,968 | 4,968 | |||||||||||
51,234 | 51,234 | ||||||||||||
$ | 5,587 | $ | - | ||||||||||
* The provisional amounts of technology and backlog from the Merger are $5.2 and $0.3 million, respectively. (See also Note 2A). |
Accrued_Severance_Pay_Net_Tabl
Accrued Severance Pay, Net (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Accrued Severance Pay, Net [Abstract] | |||||||||
Schedule of Accrued Severance Pay Liability | December 31, | ||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
Accrued severance pay | $ | 676 | $ | 1,063 | |||||
Less - amount funded | 447 | 773 | |||||||
$ | 229 | $ | 290 | ||||||
Loans_from_Banks_and_Others_Ta
Loans from Banks and Others (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Loans from Banks and Others [Abstract] | |||||||||||||||||
Schedule of Long-Term Debt | December 31, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
*Average Interest rate as of December 31, | Linkage | Total | |||||||||||||||
2014 | Basis | long-term | |||||||||||||||
liabilities | |||||||||||||||||
net of | |||||||||||||||||
current portion | |||||||||||||||||
% | (in thousands) | ||||||||||||||||
Ministry of Production in Italy (Note 9 A3) | 0.87 | € | $ | 154 | $ | 202 | |||||||||||
Less - current portion | (40 | ) | (40 | ) | |||||||||||||
$ | 114 | 162 | |||||||||||||||
Maturities of Long-Term Debt | |||||||||||||||||
December 31, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
(in thousands) | |||||||||||||||||
First year (current portion) | $ | 40 | $ | 40 | |||||||||||||
Second year | 40 | 40 | |||||||||||||||
Third year | 40 | 40 | |||||||||||||||
Fourth year and thereafter | 34 | 82 | |||||||||||||||
Total | $ | 154 | $ | 202 |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Commitments and Contingencies [Abstract] | |||||||||
Schedule of Minimum Future Lease Payments | Office Facilities | Vehicles, | |||||||
Equipment, | |||||||||
and Other | |||||||||
(in thousands) | |||||||||
Fiscal 2015 | $ | 255 | $ | 31 | |||||
Fiscal 2016 | 202 | 20 | |||||||
Fiscal 2017 | 134 | 7 | |||||||
Fiscal 2018 | 159 | - | |||||||
$ | 750 | $ | 58 | ||||||
Equity_Tables
Equity (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Equity [Abstract] | |||||||||||||||||
Schedule of share options outstanding and exercisable | Options Outstanding | Options Exercisable | |||||||||||||||
Number Outstanding on December 31, 2014 | Weighted Average Remaining Contractual Life | Number Exercisable on December 31, 2014 | Exercise | ||||||||||||||
Price | |||||||||||||||||
Years | $ | ||||||||||||||||
300,000 | 7.32 | 275,000 | 1.8 | ||||||||||||||
70,000 | 8.28 | 46,667 | 3.87 | ||||||||||||||
6,250 | 4.6 | 6,250 | 10.16 | ||||||||||||||
10,000 | 4.6 | 10,000 | 11.08 | ||||||||||||||
7,600 | 1 | 7,600 | 20 | ||||||||||||||
393,850 | 345,517 | ||||||||||||||||
Schedule of share option activity | 2014 | 2013 | |||||||||||||||
Number of Options | Weighted Average Exercise Price | Number of Options | Weighted Average Exercise Price | ||||||||||||||
$ | $ | ||||||||||||||||
Options outstanding at the beginning of year | 441,589 | 3.18 | 351,287 | 3.48 | |||||||||||||
Changes during the year: | |||||||||||||||||
Granted | - | 110,000 | 3.97 | ||||||||||||||
Exercised | - | - | |||||||||||||||
Forfeited | (47,739 | ) | 5.56 | (19,698 | ) | 12.95 | |||||||||||
Options outstanding at end of year | 393,850 | 441,589 | |||||||||||||||
Options exercisable at year-end | 345,517 | 235,760 | |||||||||||||||
Weighted-average fair value of options granted during the year* | - | $ | 2.45 | ||||||||||||||
* | The fair value of each option granted is estimated on the date of grant, using the Black-Scholes option-pricing model with the following weighted average assumptions: dividend yield of 0% for all years; expected volatility: 2013 – 69%; risk-free interest rate: 2013 – 1.15% ; and expected life: 2013 – 6.06 years. There were no options granted in 2014. | ||||||||||||||||
Schedule of restricted share unit activity | Year ended December 31, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
RSUs outstanding at the beginning of the year | 246,838 | 192,923 | |||||||||||||||
Changes during the year: | |||||||||||||||||
Granted * | 140,097 | 223,968 | |||||||||||||||
Vested | (137,136 | ) | (124,622 | ) | |||||||||||||
Forfeited | (30,385 | ) | (45,431 | ) | |||||||||||||
RSUs outstanding at the end of the year | 219,414 | 246,838 | |||||||||||||||
Weighted average fair value at grant date | $ | 4.13 | $ | 4.09 | |||||||||||||
* | The fair value of RSUs is established based on the market value of the Company’s stock on the date of the award. The Company has expensed compensation costs, net of estimated forfeitures, applying the accelerated vesting method. |
Income_taxes_Tables
Income taxes (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Income taxes [Abstract] | |||||||||
Summary of Deferred tax assets and liabilities | December 31, | ||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
Net operating losses carry forwards | $ | 30,539 | $ | 29,446 | |||||
Provisions for employee rights and other temporary differences | 61 | 74 | |||||||
Deferred tax assets before valuation allowance | 30,600 | 29,520 | |||||||
Valuation allowance | (30,600 | ) | (29,520 | ) | |||||
Deferred tax assets | - | - | |||||||
Deferred tax liability | - | - | |||||||
Deferred tax assets (liability), net | $ | - | $ | - | |||||
Schedule of Loss before Income Taxes | |||||||||
Year ended December 31, | |||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
Domestic (Israel) | $ | (2,939 | ) | (3,073 | ) | ||||
Foreign | (758 | ) | (20 | ) | |||||
$ | (3,697 | ) | (3,093 | ) | |||||
Schedule of Provision for Taxes | |||||||||
Year ended December 31, | |||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
Current: | |||||||||
Domestic (Israel) | $ | - | $ | - | |||||
Foreign | 37 | 36 | |||||||
37 | 36 | ||||||||
* Taxes related to prior years | |||||||||
Deferred: | (12 | ) | 261 | ||||||
Deferred taxes, net | - | - | |||||||
Total provision for income taxes | $ | 25 | $ | 297 | |||||
* | In 2014 and 2013, mainly related to withholdings tax for prior years that cannot be realized due to liquidation of subsidiaries as non-future estimated taxable income. | ||||||||
Schedule of reconciliation theoretical tax expense | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
Loss before income taxes, per consolidated statements of income | $ | (3,697 | ) | $ | (3,093 | ) | |||
At the principal tax rate of the group (26.5% and 25% in 2014 and 2013, respectively) | (980 | ) | (774 | ) | |||||
Decrease in taxes resulting from the following differences: | |||||||||
Carry-forward losses for which the Company provided valuation allowance | 1,080 | 833 | |||||||
Effect of different tax rates in foreign subsidiaries | (63 | ) | (53 | ) | |||||
Taxes related to previous years | (12 | ) | 261 | ||||||
Non-deductible expenses | - | 30 | |||||||
Income tax expense (benefit) in the consolidated statements of income for the reported year | $ | 25 | $ | 297 | |||||
Effective Tax rate | - | - | |||||||
Supplementary_Financial_Statem1
Supplementary Financial Statement Information (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Supplementary Financial Statement Information [Abstract] | |||||||||
Schedule of Trade Accounts Receivable | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
Trade accounts receivable | $ | 3,033 | $ | 2,140 | |||||
Less allowance for doubtful accounts | (554 | ) | (180 | ) | |||||
$ | 2,479 | $ | 1,960 | ||||||
Schedule of Other Current Assets | December 31, | ||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
Prepaid expenses | $ | 105 | $ | 114 | |||||
Short-term lease deposits | 19 | 24 | |||||||
Government departments and agencies | 52 | 101 | |||||||
$ | 176 | $ | 239 | ||||||
Schedule of other current liabilities | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
Government departments and agencies | $ | 133 | $ | - | |||||
Employees and wage-related liabilities | 452 | 745 | |||||||
Promissory note * | 220 | - | |||||||
Accrued expenses and other current liabilities | 184 | 157 | |||||||
$ | 989 | $ | 902 | ||||||
* Promissory note with Scott Miller in the amount of $220,000 bearing interest at 2%. The note is payable in full on either April 8, 2015 or July 8, 2015, given certain performance criteria of MS Modernization Services, Inc. | |||||||||
Schedule of Long-Lived Assets by Geographic Area | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
Israel | $ | 54 | $ | 77 | |||||
U.S.A. | 158 | 91 | |||||||
Europe and other | 109 | 119 | |||||||
$ | 321 | $ | 287 | ||||||
Schedule of Sales by Geographic Area | |||||||||
Year ended December 31, | |||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
North America | $ | 3,743 | $ | 4,147 | |||||
Europe | 2,688 | 2,465 | |||||||
Israel | 809 | 1,791 | |||||||
Other | - | 134 | |||||||
$ | 7,240 | $ | 8,537 | ||||||
Schedule of Financial Expenses, Net | |||||||||
Year ended December 31, | |||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
Foreign currency translation adjustments (see Note 1A3) | $ | 5 | $ | (43 | ) | ||||
Interest expense | (40 | ) | (54 | ) | |||||
Change in fair value of warrants, derivatives and discount amortization | 150 | (17 | ) | ||||||
$ | 115 | $ | (114 | ) | |||||
Summary of Computation of Basic and Diluted Earnings per Share | Year ended December 31, | ||||||||
2014 | 2013 | ||||||||
(in thousands) | |||||||||
1. Numerator: | |||||||||
Amount for basic and diluted loss per share | $ | (3,395 | ) | $ | (4,032 | ) | |||
2. Denominator: | |||||||||
Denominator for basic net loss per share - weighted average of shares | 12,020,474 | 10,770,142 | |||||||
Effect of dilutive securities | - | - | |||||||
Denominator for diluted net earnings per share - weighted average shares and assuming dilution | 12,020,474 | 10,770,142 | |||||||
Basic and diluted loss per share attributed ModSys International Ltd. | $ | (0.28 | ) | $ | (0.37 | ) |
Discontinued_Operation_Tables
Discontinued Operation (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Discontinued Operation [Abstract] | |||||
Discontinued Operation | Year ended | ||||
31-Dec-13 | |||||
(in thousands, except per share data) | |||||
Revenues | $ | - | |||
Cost of revenues | 16 | ||||
Gross loss | (16 | ) | |||
Research and development costs | - | ||||
Selling, general, and administrative expenses | 2 | ||||
Loss on realization of shareholdings | 372 | ||||
Operating loss | (390 | ) | |||
Financial expenses, net | 9 | ||||
Loss before provision for income taxes | (399 | ) | |||
Provision for income taxes | - | ||||
Net loss | $ | (399 | ) |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2014 | |
Computer and peripheral equipment [Member] | Minimum [Member] | |
Accounting Policies [Line Items] | |
Annual depreciation rate | 20.00% |
Computer and peripheral equipment [Member] | Maximum [Member] | |
Accounting Policies [Line Items] | |
Annual depreciation rate | 33.00% |
Computer and peripheral equipment [Member] | Majority [Member] | |
Accounting Policies [Line Items] | |
Annual depreciation rate | 33.00% |
Office furniture and equipment [Member] | Minimum [Member] | |
Accounting Policies [Line Items] | |
Annual depreciation rate | 6.00% |
Office furniture and equipment [Member] | Maximum [Member] | |
Accounting Policies [Line Items] | |
Annual depreciation rate | 15.00% |
Office furniture and equipment [Member] | Majority [Member] | |
Accounting Policies [Line Items] | |
Annual depreciation rate | 7.00% |
Leasehold improvements [Member] | |
Accounting Policies [Line Items] | |
Annual depreciation rate, description | Over the shorter of lease term or the life of the assets |
Motor vehicles [Member] | |
Accounting Policies [Line Items] | |
Annual depreciation rate | 15.00% |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details Textual) (USD $) | 0 Months Ended | 12 Months Ended | |
Mar. 19, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | |
Accounting Policies (Textual) | |||
Restricted deposits | $8,000 | $35,000 | |
Impairment losses | 0 | 0 | |
Unrecognized stock-based compensation costs | 700,000 | 600,000 | |
Unrecognized compensation cost, recognition period | 3 years | ||
Unbilled accounts receivable | 2,500,000 | 1,200,000 | |
Advertising costs | $153,000 | $109,000 | |
Intangible asset, Amortization Method | P10M | P5Y8M12D | |
Minimum [Member] | |||
Accounting Policies (Textual) | |||
Intangible asset estimated useful life | 10 months | ||
Maximum [Member] | |||
Accounting Policies (Textual) | |||
Intangible asset estimated useful life | 9 years |
Certain_Transactions_Details
Certain Transactions (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | |||
Schedule of estimated fair value of assets acquired at purchase date | |||
Cash | $14 | ||
Receivables | 1,094 | ||
Other current assets | 187 | ||
Fixed assets | 72 | ||
Other long-term assets | 14 | ||
Accounts payable | -640 | ||
Other accounts payable | -412 | ||
Deferred revenue | -388 | ||
Long term liabilities | -40 | ||
Identifiable intangible assets: | |||
Order backlog | 345 | ||
Technology | 5,228 | ||
Goodwill | 25,803 | 12,501 | 12,501 |
Total assets acquired | $18,776 |
Certain_Transactions_Details_1
Certain Transactions (Details 1) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Schedule of pro forma information | ||
Total revenues | $11,012 | $14,315 |
Net loss attribute to MS Modernization Services, Inc. | ($4,141) | ($5,242) |
Certain_Transactions_Details_T
Certain Transactions (Details Textual) (USD $) | 0 Months Ended | 12 Months Ended |
Mar. 19, 2012 | Dec. 31, 2014 | |
Business Combinations (Textual) | ||
Transaction costs | $348,000 | |
Unregistered ordinary shares issued | 6,195,494 | |
Unregistered ordinary shares issued, par value | $0.04 | |
Consolidated loss amount | 204,000 | |
Consolidated revenue amount | 235,000 | |
Fair values of assets acquired | 13,300,000 | |
Purchase price allocation | 345,000 | |
Order Backlog amortization | 5,200,000 | |
Amortized period | 10 months | |
Percentage of discount for lack of marketability | 11.40% | |
Order Backlog [Member] | ||
Business Combinations (Textual) | ||
Order Backlog amortization | 300,000 | |
Amortized period | 10 months | |
Technology [Member] | ||
Business Combinations (Textual) | ||
Order Backlog amortization | $5,200,000 | |
Amortized period | 8 years 8 months 12 days |
Fair_Value_Measurement_Details
Fair Value Measurement (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | $449 | $2,592 |
Restricted cash | 8 | 35 |
Derivatives liabilities - warrants | -311 | |
Total fair value of assets | 457 | 2,316 |
Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 449 | 2,592 |
Restricted cash | 8 | 35 |
Derivatives liabilities - warrants | ||
Total fair value of assets | 457 | 2,627 |
Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | ||
Restricted cash | ||
Derivatives liabilities - warrants | -311 | |
Total fair value of assets | -311 | |
Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | ||
Restricted cash | ||
Derivatives liabilities - warrants | ||
Total fair value of assets |
Property_and_Equipment_Net_Det
Property and Equipment, Net (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Property, Plant and Equipment [Line Items] | ||
Cost | $9,545 | $9,422 |
Accumulated Depreciation | 9,224 | 9,135 |
Property and equipment, net | 321 | 287 |
Computer and peripheral equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Cost | 8,717 | 8,601 |
Accumulated Depreciation | 8,430 | 8,354 |
Office furniture and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Cost | 535 | 529 |
Accumulated Depreciation | 438 | 434 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Cost | 268 | 269 |
Accumulated Depreciation | 331 | 331 |
Motor vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Cost | 25 | 23 |
Accumulated Depreciation | $25 | $16 |
Property_and_Equipment_Net_Det1
Property and Equipment, Net (Details Textual) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Property and Equipment, Net (Textual) | ||
Depreciation expenses | $89 | $155 |
Goodwill_Details
Goodwill (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Goodwill [Line Items] | ||
Goodwill Balance as of January 1 | $54,316 | $54,316 |
Accumulated impairment losses at the beginning of the period | -41,815 | -41,815 |
Changes during the year | 12,501 | 12,501 |
Goodwill related to acquisition of Sophisticated Business Solutions ("Ateras") | 13,302 | |
Goodwill - Balance at December 31 | 67,618 | 54,316 |
Accumulated impairment losses at the end of the period | -41,815 | -41,815 |
Goodwill - Balance as of December 31 | $25,803 | $12,501 |
Intangible_Assets_and_Others_N2
Intangible Assets and Others, Net (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Finite-Lived Intangible Assets [Line Items] | ||
Original amount | 56,821 | $51,234 |
Accumulated amortization | 51,234 | 51,234 |
Intangible assets, net | 5,587 | |
Customer related and backlog [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Original amount | 5,313 | 4,968 |
Accumulated amortization | 4,968 | 4,968 |
Customer related and backlog [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible asset, useful life | 9 months 18 days | |
Customer related and backlog [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible asset, useful life | 9 years | |
Technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Original amount | 51,494 | 46,266 |
Accumulated amortization | 46,266 | 46,266 |
Technology [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible asset, useful life | 5 years | |
Technology [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible asset, useful life | 8 years 8 months 12 days | |
Others [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Original amount | 14 |
Intangible_Assets_and_Others_N3
Intangible Assets and Others, Net (Details Textual) (USD $) | 12 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2014 |
Business Combinations (Textual) | |
Order Backlog amortization | $5.20 |
Order or Production Backlog [Member] | |
Business Combinations (Textual) | |
Order Backlog amortization | 0.3 |
Technology-Based Intangible Assets [Member] | |
Business Combinations (Textual) | |
Order Backlog amortization | $5.20 |
Accrued_Severance_Pay_Net_Deta
Accrued Severance Pay, Net (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Accrued Severance Pay, Net [Abstract] | ||
Accrued severance pay | $676 | $1,063 |
Less - amount funded | 447 | 773 |
Accrued severance pay, noncurrent | $229 | $290 |
Accrued_Severance_Pay_Net_Deta1
Accrued Severance Pay, Net (Details Textual) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Accrued Severance Pay, Net [Abstract] | ||
Severance Costs | $75 | $137 |
Loans_from_Banks_and_Others_De
Loans from Banks and Others (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Debt Instrument [Line Items] | ||
Long-term debt | $154 | $202 |
Less - current portion | -40 | -40 |
Long-term debt, noncurrent | 114 | 162 |
Ministry of Production in Italy [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | $154 | $202 |
Debt instrument, average spread interest rate during the period | 0.87% |
Loans_from_Banks_and_Others_De1
Loans from Banks and Others (Details 1) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Loans from Banks and Others [Abstract] | ||
First year (current portion) | $40 | $40 |
Second year | 40 | 40 |
Third year | 40 | 40 |
Fourth year and thereafter | 34 | 82 |
Total | $154 | $202 |
Loans_from_Banks_and_Others_De2
Loans from Banks and Others (Details Textual) (USD $) | 1 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Dec. 31, 2014 | |
Non-formula revolving line of credit [Member] | ||
Line of Credit Facility [Line Items] | ||
Increase in the borrowing capacity | $2,000,000 | $2,000,000 |
Maturity date | 31-Dec-15 | |
Line of credit facility amount borrowed | 1,000,000 | |
Revolving line of credit [Member] | ||
Line of Credit Facility [Line Items] | ||
Increase in the borrowing capacity | 1,500,000 | 1,500,000 |
Maturity date | 31-Dec-15 | |
Line of credit facility amount borrowed | $233,000 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
Office Facilities [Member] | |
Operating Leased Assets [Line Items] | |
Fiscal 2015 | $255 |
Fiscal 2016 | 202 |
Fiscal 2017 | 134 |
Fiscal 2018 | 159 |
Total payments due | 750 |
Vehicles, Equipment, and Other [Member] | |
Operating Leased Assets [Line Items] | |
Fiscal 2015 | 31 |
Fiscal 2016 | 20 |
Fiscal 2017 | 7 |
Fiscal 2018 | |
Total payments due | $58 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details Textual) (USD $) | 0 Months Ended | 12 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 19, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2007 |
Other Commitments [Line Items] | ||||
Rent expense | $237 | $253 | ||
Maturity date | 31-May-12 | |||
Long-term debt | 154 | 202 | ||
Ministry of Production in Italy [Member] | ||||
Other Commitments [Line Items] | ||||
Proceeds from issuance of debt and other | 585 | |||
Maturity date | 30-Sep-18 | |||
Debt instrument, minimum interest rate | 0.87% | |||
Long-term debt | 154 | |||
Percent of proceeds considered long-term debt | 63.50% | |||
Percent of proceeds considered a grant | 36.50% | |||
Chief Scientist [Member] | ||||
Other Commitments [Line Items] | ||||
Royal commitment, percent of funded product sales | 3.00% | |||
Royalty commitment, maximum percent of grant linked to product sales | 100.00% | |||
Contingent liability, maximum potential royalty payment | $238 |
Equity_Details
Equity (Details) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Options Outstanding | |
Number Outstanding on December 31, 2014 | 393,850 |
Options Exercisable | |
Number exercisable on December 31, 2014 | 345,517 |
$ 1.80 [Member] | |
Options Outstanding | |
Number Outstanding on December 31, 2014 | 300,000 |
Weighted Average Remaining Contractual Life | 7 years 3 months 26 days |
Options Exercisable | |
Number exercisable on December 31, 2014 | 275,000 |
Exercise Price | $1.80 |
$ 3.87 [Member] | |
Options Outstanding | |
Number Outstanding on December 31, 2014 | 70,000 |
Weighted Average Remaining Contractual Life | 8 years 3 months 11 days |
Options Exercisable | |
Number exercisable on December 31, 2014 | 46,667 |
Exercise Price | $3.87 |
$ 10.16 [Member] | |
Options Outstanding | |
Number Outstanding on December 31, 2014 | 6,250 |
Weighted Average Remaining Contractual Life | 4 years 7 months 6 days |
Options Exercisable | |
Number exercisable on December 31, 2014 | 6,250 |
Exercise Price | $10.16 |
$ 11.08 [Member] | |
Options Outstanding | |
Number Outstanding on December 31, 2014 | 10,000 |
Weighted Average Remaining Contractual Life | 4 years 7 months 6 days |
Options Exercisable | |
Number exercisable on December 31, 2014 | 10,000 |
Exercise Price | $11.08 |
$ 20.00 [Member] | |
Options Outstanding | |
Number Outstanding on December 31, 2014 | 7,600 |
Weighted Average Remaining Contractual Life | 1 year |
Options Exercisable | |
Number exercisable on December 31, 2014 | 7,600 |
Exercise Price | $20 |
Equity_Details_1
Equity (Details 1) (USD $) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | |||
Number of Options | ||||
Options outstanding at beginning of year | 441,589 | 351,287 | ||
Granted | 110,000 | |||
Exercised | ||||
Forfeited | -47,739 | -19,698 | ||
Options outstanding at end of year | 393,850 | 441,589 | ||
Options exercisable at year-end | 345,517 | 235,760 | ||
Weighted Average Exercise Price | ||||
Options outstanding at beginning of year | $3.18 | $3.48 | ||
Granted | $3.97 | |||
Forfeited | $5.56 | $12.95 | ||
Options outstanding at end of year | $3.18 | |||
Weighted Average Fair Value | ||||
Weighted-average fair value of options granted during the year | [1] | $2.45 | [1] | |
[1] | The fair value of each option granted is estimated on the date of grant, using the Black-Scholes option-pricing model with the following weighted average assumptions: dividend yield of 0% for all years; expected volatility: 2013 69%; risk-free interest rate: 2013 1.15% ; and expected life: 2013 6.06 years. There were no options granted in 2014. |
Equity_Details_2
Equity (Details 2) (Restricted Share Units (RSU) [Member], USD $) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | |||
Restricted Share Units (RSU) [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
RSUs outstanding at the beginning of the year | 246,838 | 192,923 | ||
Granted | 140,097 | [1] | 223,968 | [1] |
Vested | -137,136 | -124,622 | ||
Forfeited | -30,385 | -45,431 | ||
RSUs outstanding at the end of the year | 219,414 | 246,838 | ||
Weighted average fair value at grant date | $4.13 | $4.09 | ||
[1] | The fair value of RSUs is established based on the market value of the Company's stock on the date of the award. The Company has expensed compensation costs, net of estimated forfeitures, applying the accelerated vesting method. |
Equity_Details_Textual
Equity (Details Textual) | 0 Months Ended | 3 Months Ended | 12 Months Ended | 12 Months Ended | 1 Months Ended | |||||||||||
Mar. 19, 2012 | Jun. 30, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2009 | Oct. 31, 2014 | Dec. 31, 2012 | Apr. 30, 2011 | Dec. 31, 2009 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2013 | Sep. 30, 2014 | Jun. 30, 2012 | Jun. 30, 2012 | Jun. 30, 2012 | |
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | ILS | USD ($) | ILS | 1996 Share Option Plan [Member] | 1996 Share Option Plan [Member] | Prescott Group Aggressive Small Cap Master Fund [Member] | Prescott Group Aggressive Small Cap Master Fund [Member] | Prescott Group Aggressive Small Cap Master Fund [Member] | Columbia [Member] | Lake Union [Member] | |
2007 Award Plan [Member] | 2007 Award Plan [Member] | USD ($) | ||||||||||||||
USD ($) | USD ($) | |||||||||||||||
plans | ||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||
Ordinary shares, shares authorized | 25,000,000 | 17,500,000 | 17,500,000 | 40,000,000 | ||||||||||||
Ordinary shares, par value per share | $0.04 | $0.04 | 0.04 | 0.01 | ||||||||||||
Ordinary shares, shares outstanding | 15,089 | |||||||||||||||
Treasury stock, shares held by company | 33,239 | |||||||||||||||
Treasury stock, total consideration | $1,821,000 | $2,084,000 | ||||||||||||||
Stock repurchase program, shares repurchased | 11,249 | |||||||||||||||
Stock repurchase program, value of shares repurchased | 1,700,000 | |||||||||||||||
compensation costs | 727,000 | 599,000 | 700,000 | 600,000 | ||||||||||||
Warrants outstanding | 102,343 | |||||||||||||||
Warrants exercised | 160,003 | |||||||||||||||
Exercise price of warrants | $1.56 | |||||||||||||||
Warrants, contractual term | 5 years | |||||||||||||||
Ordinary shares issued during perid | 625,000 | |||||||||||||||
Ordinary shares per price | $1.56 | |||||||||||||||
Issuance expenses | 210,000 | |||||||||||||||
Gross proceed Received aggregate | 18,776,000 | 2,290,000 | 2,500,000 | |||||||||||||
Unregistered ordinary shares | 6,195,494 | |||||||||||||||
Number of plan | 2 | |||||||||||||||
Due date | 31-May-12 | |||||||||||||||
Bridge loan | 500,000 | |||||||||||||||
Debt instrument, term | 1 year | |||||||||||||||
Debt instrument, description | Lower of 30-day volume weighted average price per share prior to closing or 3$ per share. | 30-day volume weighted average price per share prior to closing. | ||||||||||||||
Interest rate | 7.00% | |||||||||||||||
Ordinary shares, shares issued | 17,877,333 | 11,460,530 | 6,195,494 | 1,230,820 | 1,226,545 | 1,221,027 | ||||||||||
Debt conversion, shares issued, value | 9,600,000 | |||||||||||||||
Loan granted | $5,000,000 | |||||||||||||||
Debt conversion, description | Three shareholders exercised their conversion right with respect to the two loans as abovementioned (within the 120 days period) |
Equity_Details_Textual_1
Equity (Details Textual 1) (USD $) | 12 Months Ended | |||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation | $727 | $599 | ||
Exercise price for options under plan | $3.97 | |||
1996 Share Option Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock options remain available for future awards | 80,163 | |||
Ordinary shares reserved for future issuance | 1,050,000 | |||
Shares outstanding, remaining contractual life | 10 years | |||
Minimum [Member] | 1996 Share Option Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Exercise price for options under plan | $1.80 | |||
Vesting period of shares under plan | 3 years | |||
Unvested options, term for forfeiture, post employment | 30 days | |||
Maximum [Member] | 1996 Share Option Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Exercise price for options under plan | $20 | |||
Vesting period of shares under plan | 4 years | |||
Unvested options, term for forfeiture, post employment | 90 days | |||
Stock Options [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Dividend yield | 0.00% | |||
Expected volatility | 69.00% | |||
Risk-free interest rate | 1.15% | |||
Expected life | 6 years 22 days | |||
Pre-vesting forfeiture rate | 15.00% | |||
Restricted Share Units (RSU) [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period of shares under plan | 3 years | |||
Shares granted | 140,097 | [1] | 223,968 | [1] |
Shares approved for immediate vesting on grant date | 7,848 | 33,998 | ||
[1] | The fair value of RSUs is established based on the market value of the Company's stock on the date of the award. The Company has expensed compensation costs, net of estimated forfeitures, applying the accelerated vesting method. |
Income_taxes_Details
Income taxes (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Income taxes [Abstract] | ||
Net operating losses carry forwards | $30,539 | $29,446 |
Provisions for employee rights and other temporary differences | 61 | 74 |
Deferred tax assets before valuation allowance | 30,600 | 29,520 |
Valuation allowance | -30,600 | -29,520 |
Deferred tax assets | ||
Deferred tax liability | ||
Deferred tax assets (liability), net |
Income_taxes_Details_1
Income taxes (Details 1) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Income taxes [Abstract] | ||
Domestic (Israel) | ($2,939) | ($3,073) |
Foreign | -758 | -20 |
Loss before taxes on income | ($3,697) | ($3,093) |
Income_taxes_Details_2
Income taxes (Details 2) (USD $) | 12 Months Ended | |||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | ||
Current: | ||||
Domestic (Israel) | ||||
Foreign | 37 | 36 | ||
Current tax provision (benefit) | 37 | 36 | ||
Taxes related to prior years Deferred: | -12 | [1] | 261 | [1] |
Deferred taxes, net | ||||
Total provision(benefit) for income taxes | $25 | $297 | ||
[1] | In 2014 and 2013, mainly related to withholdings tax for prior years that cannot be realized due to liquidation of subsidiaries as non-future estimated taxable income. |
Income_taxes_Details_3
Income taxes (Details 3) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Income taxes [Abstract] | ||
Loss before income taxes, per consolidated statements of income | ($3,697) | ($3,093) |
At the principal tax rate of the group (26.5% and 25% in 2014 and 2013, respectively) | -980 | -774 |
Decrease in taxes resulting from the following differences: | ||
Carry-forward losses for which the Company provided valuation allowance | 1,080 | 833 |
Effect of different tax rates in foreign subsidiaries | -63 | -53 |
Taxes related to previous years | -12 | 261 |
Non-deductible expenses | 30 | |
Income tax expense (benefit) in the consolidated statementsof income for the reported year | $25 | $297 |
Effective Tax rate |
Income_taxes_Details_Textual
Income taxes (Details Textual) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Income Taxes [Line Items] | ||
Corporate income tax rate | 26.50% | 25.00% |
Net operating loss carry forwards | $90 | |
Israel [Member] | ||
Income Taxes [Line Items] | ||
Corporate income tax rate | 26.50% | 25.00% |
Net operating loss carry forwards | $76 |
Supplementary_Financial_Statem2
Supplementary Financial Statement Information (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Supplementary Financial Statement Information [Abstract] | ||
Trade accounts receivable | $3,033 | $2,140 |
Less allowance for doubtful accounts | -554 | -180 |
Trade accounts receivable, net | $2,479 | $1,960 |
Supplementary_Financial_Statem3
Supplementary Financial Statement Information (Details 1) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Supplementary Financial Statement Information [Abstract] | ||
Prepaid expenses | $105 | $114 |
Short-term lease deposits | 19 | 24 |
Government departments and agencies | 52 | 101 |
Other current assets, total | $176 | $239 |
Supplementary_Financial_Statem4
Supplementary Financial Statement Information (Details 2) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||
Supplementary Financial Statement Information [Abstract] | ||||
Government departments and agencies | $133 | |||
Employees and wage-related liabilities | 452 | 745 | ||
Promissory note * | 220 | [1] | [1] | |
Accrued expenses and other current liabilities | 184 | 157 | ||
Accounts payable and accruals, total | $989 | $902 | ||
[1] | Promissory note with Scott Miller in the amount of $220,000 bearing interest at 2%. The note is payable in full on either April 8, 2015 or July 8, 2015, given certain performance criteria of MS Modernization Services, Inc. |
Supplementary_Financial_Statem5
Supplementary Financial Statement Information (Details 3) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived Assets | $321 | $287 |
Israel [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived Assets | 54 | 77 |
U.S.A. [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived Assets | 158 | 91 |
Europe And Other [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long - lived Assets | $109 | $119 |
Supplementary_Financial_Statem6
Supplementary Financial Statement Information (Details 4) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $7,240 | $8,537 |
North America [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | 3,743 | 4,147 |
Europe [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | 2,688 | 2,465 |
Israel [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | 809 | 1,791 |
Other [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $134 |
Supplementary_Financial_Statem7
Supplementary Financial Statement Information (Details 5) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Supplementary Financial Statement Information [Abstract] | ||
Foreign currency translation adjustments (see Note 1A3) | $5 | ($43) |
Interest expense | -40 | -54 |
Change in fair value of derivatives and discount amortization | 150 | -17 |
Financial income (expenses), net (Note 12B3) | $115 | ($114) |
Supplementary_Financial_Statem8
Supplementary Financial Statement Information (Details 6) (USD $) | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Numerator: | ||
Amount for basic and diluted loss per share | ($3,395) | ($4,032) |
Denominator: | ||
Denominator for basic net loss per share - weighted average of shares | 12,020,474 | 10,770,142 |
Effect of dilutive securities | ||
Denominator for diluted net earnings per share - weighted average shares and assuming dilution | 12,020,474 | 10,770,142 |
Basic and diluted loss per share attributed ModSys International Ltd. | ($0.28) | ($0.37) |
Supplementary_Financial_Statem9
Supplementary Financial Statement Information (Details Textual) (USD $) | 0 Months Ended | 3 Months Ended | 12 Months Ended | |||
Mar. 19, 2012 | Jun. 30, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Expenses for doubtful accounts | $629,000 | $2,000 | ||||
Allowance deducted from bad debts | 255,000 | 0 | ||||
Promissory note payable | 220,000 | [1] | [1] | |||
Interest rate | 7.00% | |||||
Promissory note payable, Description | Lower of 30-day volume weighted average price per share prior to closing or 3$ per share. | 30-day volume weighted average price per share prior to closing. | ||||
Scott Miller [Member] | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Promissory note payable | $220,000 | |||||
Interest rate | 2.00% | |||||
Promissory note payable, Description | The note is payable in full on either April 8, 2015 or July 8, 2015. | |||||
Sales Revenue, Net [Member] | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Concentration risk, Percentage | 13.90% | |||||
Number of Customers | 1 | |||||
Sales Revenue, Net [Member] | Customer One [Member] | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Concentration risk, Percentage | 15.50% | |||||
Number of Customers | 2 | |||||
Sales Revenue, Net [Member] | Customer Two [Member] | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Concentration risk, Percentage | 11.10% | |||||
Number of Customers | 2 | |||||
Trade Accounts Receivable [Member] | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Concentration risk, Percentage | 10.00% | 10.00% | ||||
Number of Customers | 4 | 1 | ||||
[1] | Promissory note with Scott Miller in the amount of $220,000 bearing interest at 2%. The note is payable in full on either April 8, 2015 or July 8, 2015, given certain performance criteria of MS Modernization Services, Inc. |
Discontinued_Operation_Details
Discontinued Operation (Details) (USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2013 |
Discontinued Operation [Abstract] | |
Revenues | |
Cost of revenues | 16 |
Gross loss | -16 |
Research and development costs | |
Selling, general, and administrative expenses | 2 |
Loss on realization of shareholdings | 372 |
Operating loss | -390 |
Financial expenses, net | 9 |
Loss before provision for income taxes | -399 |
Provision for income taxes | |
Net loss | ($399) |
Discontinued_Operation_Details1
Discontinued Operation (Details Textual) (USD $) | 1 Months Ended | |||
Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | Feb. 28, 2013 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Total consideration for sale of subsidiary | $550,000 | $72,000 | $12,500,000 | |
Bridge Quest [Member] | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Total consideration for sale of subsidiary | $6,500 |