Modsys International (MDSY) 8-K ModSys International Ltd. “Modern Systems” Reports First Quarter 2015 Results

Exhibit 99.1

ModSys International Ltd. “Modern Systems” Reports First Quarter 2015 Results

Thursday, May 14, 2015

SEATTLE, Washington — May 14, 2015 — ModSys International Ltd. “Modern Systems” (NASDAQ: MDSY) today announced first quarter financial results for 2015 with revenue of $2.3 million and operating loss of ($1.4 million).

Revenue was $2.3 million an improvement of over 20% to both Q1 2014 and Q4 2014. On a Non-GAAP basis, the Loss per Share in the quarter was ($0.05) which is favorable to both Q1 2014 and Q4 2014.

Matt Bell, Chief Executive Office and President, commented, “We are excited to report positive results in our Q1 2015 numbers where revenue grew, we decreased operating expenses as reported on a non-GAAP basis, and our cash flow improved. This quarter we have also seen positive changes with our investments in sales and marketing which resulted in a bigger pipeline and we signed several new customers.”

See related 8-K and 10-Q filings for additional details.

Modern Systems will go over the following numbers during the quarterly conference call today at 4:30PM Eastern Daylight Savings Time. The call can be accessed by dialing 1-888-572-7025 within the United States, or via local US number 1-719-457-2664 if calling internationally, approximately five minutes prior to its scheduled commencement. The participant code for the call is 1957833.

GAAP Results (in thousands US$)	Q1 2015			Q4 2014			Q1 2014
Revenue		2,286			1,894			1,871
Operating profit (loss)		(1,374	)		(1,260	)		(860	)
Net loss attributable to ModSys International Ltd. Shareholders		(1,379	)		(942	)		(923	)
Loss per share, diluted	$	(0.08	)	$	(0.07	)	$	(0.08	)

Non-GAAP Results (in thousands US$)	Q1 2015			Q4 2014			Q1 2014
Revenue		2,286			1,894			1,871
Operating loss		(973	)		(1,085	)		(678	)
Net loss attributable to ModSys International Ltd. Shareholders		(978	)		(823	)		(767	)
Loss per share, diluted	$	(0.05	)	$	(0.06	)	$	(0.07	)

Non-GAAP financial measures

The release includes non-GAAP diluted loss per share and other non-GAAP financial measures, including non-GAAP operating loss and non-GAAP net loss. These non-GAAP measures exclude the following items:

· Amortization of intangible assets;

· Stock-based compensation; and

· Revaluation of derivatives.

The presentation of these non-GAAP financial measures should be considered in addition to Modern Systems’ GAAP results and is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Modern Systems’ management believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance by excluding certain charges and gains that may not be indicative of Modern Systems’ core business operating results. Modern Systems believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing Modern Systems’ performance. These non-GAAP financial measures also facilitate comparisons to Modern Systems’ historical performance. Modern Systems includes these non-GAAP financial measures because management believes they are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making. Non-GAAP measures are reconciled to comparable GAAP measures in the table entitled “Unaudited Reconciliation of GAAP to Non-GAAP Results.”

About Modern Systems

ModSys International Ltd. (”Modern Systems”) (NASDAQ: MDSY) is a legacy platform modernization provider. The Modern Systems portfolio includes a comprehensive suite of tools and services for automated database and application migration. Leveraging over 20 years of best-practice domain expertise, Modern Systems works closely with its customers to minimize risk and provide a clear path from legacy platforms like COBOL, Natural/Adabas and others to modern solutions like SQL, DB2, Java and more.  Modern Systems’ customers come from diverse industries and vertical markets such as automotive, banking and financial services, insurance, manufacturing, and retail.  Modern Systems has six offices in the United States, the United Kingdom, Italy, Romania, and Israel. Unless the context requires otherwise, all references in this press release to “we,” “our,” “us,” “the Company,” and “Modern Systems” refer to ModSys International Ltd. and its subsidiaries.

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Cautionary Statement Regarding Forward-Looking Statements

Certain statements contained in this release may be deemed forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and other Federal Securities laws. You can identify these and other forward-looking statements by the use of words such as “may,” “will,” “plans,” “believes,” “estimates,” “expects,” “predicts”, “intends,”  the negative of such terms, or other comparable terminology. Because such statements deal with future events, plans, projections, or future performance of the Company, they are subject to various risks and uncertainties that could cause actual results to differ materially from the Company’s current expectations. These risks and uncertainties include but are not limited to: the effects of the global economic and financial trends; market demand for the Company’s products; successful implementation of the Company’s products; changes in the competitive landscape, including new competitors or the impact of competitive pricing and products; and such other risks and uncertainties as identified in Modern Systems’ most recent Annual Report on Form 10-K and other reports filed by it with the SEC. Except as otherwise required by law, Modern Systems undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.  This press release is also available at www.modernsystems.com. All names and trademarks are their owners’ property.

Company Contact:

Rick Rinaldo, CFO

Modern Systems

www.modernsystems.com

rrinaldo@modernsystems.com

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ModSys International Ltd.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	March 31,		December 31,
	2015		2014
	Unaudited		Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	806	$	449
Restricted cash		4		8
Trade accounts receivable, net		2,632		2,479
Other current assets		232		176
Total current assets		3,674		3,112
LONG-TERM ASSETS:
Property and equipment, net		303		321
Goodwill		25,803		25,803
Intangible assets and others, net		5,333		5,587
Total long-term assets		31,439		31,711
Total assets	$	35,113	$	34,823
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term bank credit and others	$	2,219	$	1,269
Trade accounts payable		1,603		1,230
Deferred revenue		848		546
Other current liabilities		725		989
Total current liabilities		5,395		4,034
LONG-TERM LIABILITIES:
Accrued severance pay, net		228		229
Loans from others		114		114
Other non-current liabilities		257		40
Total long-term liabilities		599		383
Total Equity		29,119		30,406
Total liabilities and equity	$	35,113	$	34,823

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ModSys International Ltd.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Three months ended
	March 31,
	2015			2014
	Unaudited
Revenue	$	2,286		$	1,871
Cost of revenue		1,700			982
Gross profit		586			889
Research and development costs		386			335
Selling, general and administrative expenses		1,320			1,414
Amortization of intangible assets		254			-
Total operating expenses		1,960			1,749
Operating loss		(1,374	)		(860	)
Financial income (expense), net		(47	)		30
Loss before taxes on income		(1,421	)		(830	)
Taxes on income		13			18
Net loss		(1,434	)		(848	)
Less: Net income (loss) attributable to non-controlling interest		(55	)		75
Net loss attributable to ModSys International Ltd. shareholders	$	(1,379	)	$	(923	)
Loss per share - basic and diluted:
Attributable to the shareholders	$	(0.08	)	$	(0.08	)
Weighted average shares outstanding, basic and diluted		17,863			11,416

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UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(In thousands, except per share data)

	Three months ended
	March 31,
	2015			2014
	Unaudited
GAAP gross profit	$	586		$	889
Amortization of intangible assets		-			-
Non-GAAP gross profit	$	586		$	889
GAAP operating loss	$	(1,374	)	$	(860	)
Amortization of intangible assets		254			-
Stock-based compensation		147			182
Non-GAAP operating loss	$	(973	)	$	(678	)
GAAP net loss attributable to ModSys International Ltd. shareholders	$	(1,379	)	$	(923	)
Amortization of intangible assets		254			-
Stock-based compensation		147			182
Revaluation of derivatives		-			(26	)
Non-GAAP net loss attributable to ModSys International Ltd. shareholders	$	(978	)	$	(767	)
Weighted average shares outstanding, basic and diluted		17,863			11,416
Non - GAAP diluted loss per share	$	(0.05	)	$	(0.07	)

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ModSys International Ltd.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Three months ended
	March 31,
	2015			2014
	Unaudited
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,434	)	$	(848	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		280			38
Decrease in accrued severance pay, net		(1	)		(14	)
Stock–based compensation		147			182
Change in fair value of derivatives		-			(26	)
Changes in operating assets and liabilities:
Increase in trade receivables		(153	)		(509	)
Increase in other current assets		(52	)		(48	)
Increase in trade payables		373			16
Increase (decrease) in other liabilities and deferred revenues		255			(473	)
Net cash used in operating activities		(585	)		(1,682	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(8	)		(39	)
Net cash used in investing activities		(8	)		(39	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Short term bank credit and others		950			-
Net cash provided by financing activities		950			-
NET CASH INCREASE (DECREASE) IN CASH AND CASH EQUVIALETS		357			(1,721	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		449			2,592
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	806		$	871

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