Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 06, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Modsys International Ltd | |
Entity Central Index Key | 1,029,581 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,015 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 17,936,476 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
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 |
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 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Condensed Consolidated Statements of Operations [Abstract] | ||||
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 |
Condensed Consolidated Stateme4
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Condensed Consolidated Statements of Comprehensive Income [Abstract] | ||||
Net loss | $ (1,215) | $ (848) | $ (2,764) | $ (2,488) |
Other comprehensive income | ||||
Total comprehensive loss | $ (1,215) | $ (848) | $ (2,764) | $ (2,488) |
Comprehensive loss attributable to the non-controlling interests | (28) | (70) | (90) | (35) |
Comprehensive loss attributable to ModSys International Ltd. shareholders | $ (1,187) | $ (778) | $ (2,674) | $ (2,453) |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
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 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2015 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies: | Note 1 – Summary of Significant Accounting Policies: A. The Company ModSys International Ltd. (together with its subsidiaries, “the Company”, “we”, or “Modern Systems”) is an Israeli corporation, which operates in one operating segment of information technology 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 and majority-owned subsidiaries located in: the United States, the United Kingdom, Italy, Romania and Israel. These technologies and services allow businesses to migrate from their legacy mainframe and distributed information technology infrastructures to modern environments and programming languages. The Company has incurred negative cash flows from operating activities and net losses in recent years. The Company currently uses its credit line with Comerica to support its negative cash flows position. Management believes that the Company’s current cash position, together with its available credit line and expected equity event secured by a commitment by one of the Company's major shareholders, is sufficient to support the ongoing operations for the next twelve months. See also Note 6. B. Recently Issued Accounting Pronouncements In September 2015, the Financial Accounting Standard Board ("FASB") issued Accounting Standards Update 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments" (“ASU 2015-16”). ASU 2015-16 eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. ASU 2015-16 is effective for annual reporting periods beginning after December 15, 2015 including interim periods within those fiscal years, and should be applied prospectively. Early adoption is permitted for financial statements that have not been previously issued. The Company is still assessing whether the adoption of this ASU will have a material impact on its consolidated financial statements. In April 2015, the FASB issued Accounting Standards Update 2015-03, "Simplifying the Presentation of Debt Issuance Costs" (“ASU 2015-03”). ASU 2015-03 requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability in a manner consistent with the treatment for debt discounts. The amendments in this update do not affect the recognition and measurement guidance for debt issuance costs. In addition, ASU 2015-03 requires that the amortization of debt issuance costs be reported as interest expenses. ASU 2015-03 is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. ASU 2015-03 should be applied retrospectively to all prior periods presented in the financial statements, subject to the disclosure requirements for a change in an accounting principle. Early adoption is permitted for financial statements that have not been previously issued. In August 2015, the FASB published Accounting Standards Update 2015-15 (“Subtopic 835-30”), “Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of Credit Arrangements” (“ASU 2015-15”), which provides additional guidance on the presentation and subsequent measurement of debt issuance costs related to line-of-credit arrangements. ASU 2015-15 notes that the Securities and Exchange Commission (“SEC”) staff would not object to an entity presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company is still assessing whether the adoption of ASU 2015-03 and ASU 2015-15 will have a material impact on its consolidated financial statements. C. Unaudited Interim Condensed Consolidated Financial Statements The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles in the United States for the annual financial statements. In the opinion of the management, all adjustments considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ended December 31, 2015. The interim financial statements should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. D. Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. E. Principles of Consolidation The consolidated financial statements include the Company's and its subsidiaries’ financial statements. The consolidated financial statements of subsidiaries are included in the condensed consolidated financial statements from the date that control is achieved until the date that the control ceases. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its operating activities. In assessing control, legal and contractual rights are taken into account. Intercompany transactions and balances are eliminated upon consolidation. |
Mergers
Mergers | 9 Months Ended |
Sep. 30, 2015 | |
Mergers [Abstract] | |
Mergers: | Note 2 – Mergers: A. Ateras Merger On December 1, 2014, the Company 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 “Ateras Merger”). As a result of the Ateras 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. As of April 2015, due to the Zulu Intercompany Merger, MS Modernization Services is now a majority-owned subsidiary of Modern Systems Corporation and directly and indirectly owned at 88.7% by ModSys International Ltd. (See below discussion on Zulu Intercompany Merger). Upon the closing of the Ateras Merger, the Company 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 Ateras Merger. Due to the fact the issuance was of restricted shares, the purchase consideration was calculated with an 11.4% discount for lack of marketability on the share price as of the closing date. It should be noted that sales of restricted shares pursuant to Rule 144 were subject to a minimum six-month holding period and 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 which was finalized during 2015 and performed by an independent third party. The 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. The Company determined that purchase price exceeded the fair values of net assets acquired by approximately $13.3 million, which is recognized as goodwill. Upon the purchase price allocation, an amount of $345 thousand was allocated to order backlog to be amortized over a 10 month period and an amount of $5.2 million was allocated to technology to be amortized over an 8.7 year period. The table below summarizes 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 B. Zulu Intercompany Merger On April 23, 2015, the Company completed the intercompany merger (the "Zulu Intercompany Merger") of their majority-owned subsidiary (71.83% ownership), Zulu Software, Inc. with and into the Company’s wholly-owned subsidiary, MS Modernization Services, Inc. as part of an internal organizational restructuring. The name of the surviving subsidiary is MS Modernization Services, Inc. As a result of the intercompany merger, ModSys International Ltd. owns 88.7% of the surviving subsidiary, MS Modernization Services, Inc. The transaction was accounted for as an equity transaction with non-controlling interests. |
Goodwill
Goodwill | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill [Abstract] | |
Goodwill: | Note 3 – Goodwill: The following is a summary of the change in the carrying amount of goodwill as of September 30, 2015 and December 31, 2014: September 30, December 31, 2015 2014 Unaudited Audited (in thousands) Balance as of January 1 $ 67,618 $ 54,316 Accumulated impairment losses at the beginning of the period (41,815 ) (41,815 ) 25,803 12,501 Changes during the period Goodwill related to acquisition of Sophisticated Business Solutions, Inc. (“Ateras”) - 13,302 Balance at end of period $ 25,803 $ 25,803 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 information technology 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. The Company determines 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. During the third quarter, due to a decrease of the Company's share price, the Company assessed whether goodwill impairment is required. As of September 30, 2015, the market capitalization of the Company was 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. |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Measurement [Abstract] | |
Fair Value Measurement: | Note 4 – Fair Value Measurements: The accounting guidance establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 – Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date. Level 2 – Observable inputs such as quoted prices for similar instruments and quoted prices in markets that are not active, and inputs that are directly observable or can be corroborated by observable market data. The types of assets and liabilities included in Level 2 are typically either comparable to actively traded securities or contracts, such as treasury securities with pricing interpolated from recent trades of similar securities, or priced with models using highly observable inputs, such as commodity options priced using observable forward prices and volatilities. Level 3 – Significant inputs to pricing that have little or no observability as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as the complex and subjective models and forecasts used to determine the fair value of financial instruments. The Company's financial assets which are considered Level 1 are cash, cash equivalents and restricted cash. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies: | Note 5 – Commitments and Contingencies: A. Commitments Israel’s Office of the Chief Scientist Ministry of Production in Italy. B. Contingencies 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 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. C. Other On July 13, 2015, the Company was notified by the Nasdaq Stock Market that it is not in compliance with Nasdaq Listing Rule 5450(b)(1)(C) requiring the Company to maintain a minimum $5 million of Market Value of Publicly Held Shares (“MVPHS”), which consists of shares not held directly or indirectly by an officer, director or any person who is the beneficial owner of more than 10 percent of the total shares outstanding. Pursuant to Nasdaq Listing Rules, the Company has 180 calendar days, or until January 11, 2016, to regain compliance with Nasdaq Listing Rule 5450(b)(1)(C). To regain compliance, the Company’s MVPHS must close at $5 million or more for a minimum of 10 consecutive business days. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events: | Note 6 – Subsequent Events: On November 10, 2015, the Company received a commitment letter from Comerica Bank to provide Modern Systems Corporation and MS Modernization Services, Inc., “Borrowers” a renewal of the revolving line in the amount of $1.5 million and the non-formula revolving line in the amount of $2.0 million and to extend the maturity date to January 31, 2017. The new covenants are (a) minimum liquidity ratio of 1.25:1.00, (b) trailing six month EBITDA, and (c) to raise new equity of not less than $1.0 million on or before December 31, 2015, which was secured by a commitment by one of the Company’s major shareholders. The remaining substantive provisions of the credit facility were not materially changed by the commitment letter. |
Summary of Significant Accoun12
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Summary of Significant Accounting Policies [Abstract] | |
The Company | A. The Company ModSys International Ltd. (together with its subsidiaries, “the Company”, “we”, or “Modern Systems”) is an Israeli corporation, which operates in one operating segment of information technology 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 and majority-owned subsidiaries located in: the United States, the United Kingdom, Italy, Romania and Israel. These technologies and services allow businesses to migrate from their legacy mainframe and distributed information technology infrastructures to modern environments and programming languages. The Company has incurred negative cash flows from operating activities and net losses in recent years. The Company currently uses its credit line with Comerica to support its negative cash flows position. Management believes that the Company’s current cash position, together with its available credit line and expected equity event secured by a commitment by one of the Company's major shareholders, is sufficient to support the ongoing operations for the next twelve months. See also Note 6. |
Recently Issued Accounting Pronouncements | B. Recently Issued Accounting Pronouncements In September 2015, the Financial Accounting Standard Board ("FASB") issued Accounting Standards Update 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments" (“ASU 2015-16”). ASU 2015-16 eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. ASU 2015-16 is effective for annual reporting periods beginning after December 15, 2015 including interim periods within those fiscal years, and should be applied prospectively. Early adoption is permitted for financial statements that have not been previously issued. The Company is still assessing whether the adoption of this ASU will have a material impact on its consolidated financial statements. In April 2015, the FASB issued Accounting Standards Update 2015-03, "Simplifying the Presentation of Debt Issuance Costs" (“ASU 2015-03”). ASU 2015-03 requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability in a manner consistent with the treatment for debt discounts. The amendments in this update do not affect the recognition and measurement guidance for debt issuance costs. In addition, ASU 2015-03 requires that the amortization of debt issuance costs be reported as interest expenses. ASU 2015-03 is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. ASU 2015-03 should be applied retrospectively to all prior periods presented in the financial statements, subject to the disclosure requirements for a change in an accounting principle. Early adoption is permitted for financial statements that have not been previously issued. In August 2015, the FASB published Accounting Standards Update 2015-15 (“Subtopic 835-30”), “Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of Credit Arrangements” (“ASU 2015-15”), which provides additional guidance on the presentation and subsequent measurement of debt issuance costs related to line-of-credit arrangements. ASU 2015-15 notes that the Securities and Exchange Commission (“SEC”) staff would not object to an entity presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company is still assessing whether the adoption of ASU 2015-03 and ASU 2015-15 will have a material impact on its consolidated financial statements. |
Unaudited Interim Condensed Consolidated Financial Statements | C. Unaudited Interim Condensed Consolidated Financial Statements The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles in the United States for the annual financial statements. In the opinion of the management, all adjustments considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ended December 31, 2015. The interim financial statements should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. |
Use of Estimates | D. Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. |
Principles of Consolidation | E. Principles of Consolidation The consolidated financial statements include the Company's and its subsidiaries’ financial statements. The consolidated financial statements of subsidiaries are included in the condensed consolidated financial statements from the date that control is achieved until the date that the control ceases. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its operating activities. In assessing control, legal and contractual rights are taken into account. Intercompany transactions and balances are eliminated upon consolidation. |
Mergers (Tables)
Mergers (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Mergers [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 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill [Abstract] | |
Schedule of Goodwill | September 30, December 31, 2015 2014 Unaudited Audited (in thousands) Balance as of January 1. $ 67,618 $ 54,316 Accumulated impairment losses at the beginning of the period (41,815 ) (41,815 ) 25,803 12,501 Changes during the period Goodwill related to acquisition of Sophisticated Business Solutions, Inc. (“Ateras”) - 13,302 Balance at end of period $ 25,803 $ 25,803 |
Mergers (Details)
Mergers (Details) $ in Thousands | Sep. 30, 2015USD ($) |
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract] | |
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 |
Mergers (Details Textual)
Mergers (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | |||
Sep. 30, 2015 | Apr. 23, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Mergers (Textual) | ||||
Goodwill | $ 25,803 | $ 25,803 | $ 54,316 | |
Zulu Intercompany Merger [Member] | ||||
Mergers (Textual) | ||||
Intercompany merger, description | On April 23, 2015, the Company completed the intercompany merger (the "Zulu Intercompany Merger") of their majority-owned subsidiary (71.83% ownership), Zulu Software, Inc. with and into the Company's wholly-owned subsidiary, MS Modernization Services, Inc. as part of an internal organizational restructuring. The name of the surviving subsidiary is MS Modernization Services, Inc. As a result of the intercompany merger, ModSys International Ltd. owns 88.7% of the surviving subsidiary, MS Modernization Services, Inc. The transaction accounted as an equity transaction with the non-controlling interests. | |||
Zulu Intercompany Merger [Member] | MS Modernization Services, Inc [Member] | ||||
Mergers (Textual) | ||||
Ownership equity percentage | 88.70% | |||
Ateras Merger [Member] | ||||
Mergers (Textual) | ||||
Unregistered ordinary shares issued | 6,195,494 | |||
Unregistered ordinary shares issued, par value | $ 0.04 | |||
Percentage of discount for lack of marketability | 11.40% | |||
Goodwill | $ 13,300 | |||
Ateras Merger [Member] | Order Backlog [Member] | ||||
Mergers (Textual) | ||||
Amortized period | 10 months | |||
Amount allocated to be amortized | $ 345 | |||
Ateras Merger [Member] | Technology [Member] | ||||
Mergers (Textual) | ||||
Amortized period | 8 years 8 months 12 days | |||
Amount allocated to be amortized | $ 5,200 |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Goodwill [Abstract] | ||
Goodwill - Beginning Balance | $ 25,803 | $ 54,316 |
Accumulated impairment losses at the beginning of the period | (41,815) | (41,815) |
Changes during the period | $ 25,803 | 12,501 |
Goodwill related to acquisition of Sophisticated Business Solutions ("Ateras") | 13,302 | |
Goodwill - Ending Balance | $ 25,803 | $ 25,803 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | Jul. 13, 2015 | Jul. 31, 2007 | Sep. 30, 2015 |
Ministry of Production in Italy [Member] | |||
Other Commitments [Line Items] | |||
Proceeds from issuance of debt and other | $ 585 | ||
Loan payment period | 10 years | ||
Maturity date | Sep. 30, 2018 | ||
Debt instrument, minimum interest rate | 0.87% | ||
Long-term debt | $ 102 | ||
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 | $ 172 | ||
Nasdaq Stock Market [Member] | |||
Other Commitments [Line Items] | |||
Beneficial ownership percentage | 10.00% | ||
Other commitments description | The Company has 180 calendar days, or until January 11, 2016, to regain compliance with Nasdaq Listing Rule 5450(b)(1)(C). To regain compliance, the Company's MVPHS must close at $5 million or more for a minimum of 10 consecutive business days. | ||
Number of consecutive business days | 10 days | ||
Minimum market value of publicly held shares | $ 5,000 |
Subsequent Events (Details)
Subsequent Events (Details) | Nov. 10, 2015 |
Subsequent Event [Member] | |
Subsequent Events (Textual) | |
Description of commitment | A renewal of the revolving line in the amount of $1.5 million and the non-formula line in the amount of $2.0 million and to extend the maturity date to January 31, 2017. The new covenants are (a) minimum liquidity ratio of 1.25:1.00, (b) trailing six month EBITDA, and (c) to raise new equity of not less than $1.0 million on or before December 31, 2015, which was secured by a commitment by one of our major shareholders. |