Modsys International (MDSY) 8-K Modern Systems Reports Third Quarter 2015 Results

Exhibit 99.1

Modern Systems Reports Third Quarter 2015 Results

Monday, November 16, 2015

SEATTLE, Washington — November 16, 2015 — ModSys International Ltd. “Modern Systems” (NASDAQ: MDSY) today reported third quarter financial results for 2015 with revenue of $2.1 million and operating loss of ($1.2 million).

Revenue was $2.1 million a 29% increase compared to revenue of $1.6 million in Q3 2014. On a Non-GAAP basis, the operating loss was ($820,000) or ($0.05) loss per share which is favorable to Q3 2014.

See related 10-Q filing for additional details.

Modern Systems will go over the following numbers during the quarterly conference call, Tuesday, November 17, 2015, at 4:30PM Eastern Daylight Savings Time. The call can be accessed by dialing 1-888-401-4668 within the United States, or via local US number 1-719-325-2452 if calling internationally, approximately five minutes prior to its scheduled commencement. The conference ID for the call is 5336488.

GAAP Results (in thousands US$)	Q3 2015			Q2 2015			Q3 2014
Revenue		2,057			3,327			1,594
Operating loss		(1,163	)		(123	)		(895	)
Net loss attributable to ModSys International Ltd. Shareholders		(1,187	)		(108	)		(778	)
Loss per share, basic and diluted	$	(0.07	)	$	(0.01	)	$	(0.07	)

Non-GAAP Results (in thousands US$)	Q3 2015			Q2 2015		Q3 2014
Revenue		2,057			3,327		1,594
Operating loss		(820	)		239		(729	)
Net loss attributable to ModSys International Ltd. Shareholders		(844	)		254		(660	)
Loss per share, basic and diluted	$	(0.05	)	$	0.01	$	(0.06	)

Non-GAAP financial measures

The release includes non-GAAP diluted earnings (loss) per share and other non-GAAP financial measures, including non-GAAP operating income (loss) and non-GAAP net income (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 seven offices throughout 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.

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 Quarterly Report on Form 10-Q 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)

	September 30,		December 31,
	2015		2014
	Unaudited		Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	697	$	449
Restricted cash		4		8
Trade accounts receivable, net		2,411		2,479
Other current assets		228		176
Total current assets		3,340		3,112
LONG-TERM ASSETS:
Property and equipment, net		255		321
Goodwill		25,803		25,803
Intangible assets and others, net		4,825		5,587
Total long-term assets		30,883		31,711
TOTAL ASSETS	$	34,223	$	34,823
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term bank credit and others	$	3,114	$	1,269
Trade accounts payable		1,310		1,230
Deferred revenue		454		546
Other current liabilities		803		989
Total current liabilities		5,681		4,034
LONG-TERM LIABILITIES:
Accrued severance pay, net		236		229
Loans from others		68		114
Other non-current liabilities		252		40
Total long-term liabilities		556		383
TOTAL EQUITY		27,986		30,406
TOTAL LIABILITIES AND EQUITY	$	34,223	$	34,823

The accompanying notes are an integral part of the condensed consolidated financial statements.

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ModSys International Ltd.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Three months ended						Nine months ended
	September 30,						September 30,
	2015			2014			2015			2014
	Unaudited						Unaudited
Revenue	$	2,057		$	1,594		$	7,670		$	5,346
Cost of revenue		1,325			1,042			4,688			3,053
Gross profit		732			552			2,982			2,293
Research and development costs		361			168			1,107			693
Selling, general and administrative expenses		1,280			1,279			3,773			4,152
Amortization of intangible assets		254			-			762			-
Total operating expenses		1,895			1,447			5,642			4,845
Operating loss		(1,163	)		(895	)		(2,660	)		(2,552	)
Financial income (expense), net		(46	)		58			(84	)		93
Loss before taxes on income		(1,209	)		(837	)		(2,744	)		(2,459	)
Taxes on income		6			11			20			29
Net loss		(1,215	)		(848	)		(2,764	)		(2,488	)
Less: Net loss attributable to non-controlling interest		(28	)		(70	)		(90	)		(35	)
Net loss attributable to ModSys International Ltd. shareholders	$	(1,187	)	$	(778	)	$	(2,674	)	$	(2,453	)
Loss per share - basic and diluted:
Attributable to the shareholders	$	(0.07	)	$	(0.07	)	$	(0.15	)	$	(0.21	)
Weighted average shares outstanding, basic and diluted		17,906			11,497			17,886			11,460

The accompanying notes are an integral part of the condensed consolidated financial statements.

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ModSys International Ltd.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(In thousands, except per share data)

	Three months ended						Nine months ended
	September 30,						September 30,
	2015			2014			2015			2014
	Unaudited						Unaudited
GAAP gross profit	$	732		$	552		$	2,982		$	2,293
		-			-			-			-
Non-GAAP gross profit	$	732		$	552		$	2,982		$	2,293
GAAP operating loss	$	(1,163	)	$	(895	)	$	(2,660	)	$	(2,552	)
Amortization of intangible assets		254			-			762			-
Stock-based compensation		89			166			344			552
Non-GAAP operating loss	$	(820	)	$	(729	)	$	(1,554	)	$	(2,000	)
GAAP net loss attributable to ModSys International Ltd. shareholders	$	(1,187	)	$	(778	)	$	(2,674	)	$	(2,453	)
Amortization of intangible assets		254			-			762			-
Stock-based compensation		89			166			344			552
Revaluation of derivatives		-			(48	)		-			(94	)
Non-GAAP net loss attributable to ModSys International Ltd. shareholders	$	(844	)	$	(660	)	$	(1,568	)	$	(1,995	)
Weighted average shares outstanding
Basic and Diluted		17,906			11,497			17,886			11,460
Non - GAAP loss per share
Basic and Diluted	$	(0.05	)	$	(0.06	)	$	(0.09	)	$	(0.17	)

The accompanying notes are an integral part of the condensed consolidated financial statements.

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ModSys International Ltd.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Three months ended						Nine months ended
	September 30,						September 30,
	2015			2014			2015			2014
	Unaudited						Unaudited
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,215	)	$	(848	)	$	(2,764	)	$	(2,488	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		277			18			832			68
Increase (decrease) in accrued severance pay, net		(7	)		(12	)		7			(35	)
Stock–based compensation		89			166			344			552
Change in fair value of derivatives		-			(48	)		-			(93	)
Changes in operating assets and liabilities:
Decrease (increase) in trade receivables		806			(50	)		68			(441	)
Decrease (increase) in other current assets		74			64			(41	)		4
Increase (decrease) in trade payables		(198	)		193			80			211
Decrease in other liabilities and deferred revenues		(152	)		(165	)		(66	)		(628	)
Net cash used in operating activities		(326	)		(682	)		(1,540	)		(2,850	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(3	)		(5	)		(11	)		(42	)
Net cash used in investing activities		(3	)		(5	)		(11	)		(42	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Short term bank credit		312			571			1,845			571
Repayment of long term loan		(46	)		(48	)		(46	)		(48	)
Net cash provided by financing activities		266			523			1,799			523
NET CASH INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(63	)		(164	)		248			(2,369	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		760			387			449			2,592
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	697		$	223		$	697		$	223

The accompanying notes are an integral part of the condensed consolidated financial statements.

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