Modsys International Ltd - FORM 8-K - EX-99.1 - PRESS RELEASE - August 14, 2014

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Exhibit 99.1
 
 
BluePhoenix Solutions Ltd. Reports Second Quarter 2014 Results

Thursday, August 14, 2014

SEATTLE, Washington — August 14, 2014 — BluePhoenix Solutions Ltd. (NASDAQ: BPHX) today announced second quarter 2014 results with revenue of $1.9M and operating loss of ($797K) that was favorable $63K on a sequential quarter over quarter basis vs. Q1 2014.

On a non-GAAP basis, operating expenses were $1.4M and $405K favorable vs. Q2 2013.  Also, non-GAAP operating loss was ($595K) and $83K favorable on a sequential quarter over quarter basis vs. Q1 2014.

Matt Bell, Chief Executive Office and President, commented, “We are satisfied with the stabilization in the numbers and are excited about this pending merger. The combined entity not only makes us bigger and serves a more global market but it broadens our technology and solution set.  The combined companies have synergies that we're excited to leverage as soon as the deal is officially closed.”
 
See related 8-K and 10-Q filings for additional details.
 
BluePhoenix 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- 888-430-8691 within the United States, or via local US number 1-719-325-2435 if calling internationally, approximately five minutes prior to its scheduled commencement.  The participant code for the call is 1768811.
 
A replay can be accessed through a link on the BluePhoenix website.
 
GAAP Results (in thousands US$)
     Q2 2014       Q1 2014       Q2 2013  
Revenue
     1,881       1,871       2,363  
Operating loss
     (797 )     (860 )     (739 )
Net loss
     (791 )     (923 )     (711 )
Loss per share, diluted
   $ (0.07 )   $ (0.08 )   $ (0.07 )
 
Non-GAAP Results (in thousands US$)
     Q2 2014       Q1 2014       Q2 2013  
Revenue
     1,881       1,871       2,363  
Operating loss
     (595 )     (678 )     (524 )
Net loss
     (608 )     (767 )     (535 )
Loss per share, diluted
   $ (0.05 )   $ (0.07 )   $ (0.05 )
 
 
 
 

Non-GAAP financial measures
The release includes non-GAAP diluted earnings per share and other non-GAAP financial measures, including non-GAAP operating income and non-GAAP net income. These non-GAAP measures exclude the following items:
 
·  
Amortization of intangible assets;
·  
Stock-based compensation;
·  
Gain on sales of subsidiaries and Appbuilder;
·  
Revaluation of derivatives and discount amortization;
·  
Net loss from discontinued operation.

The presentation of these non-GAAP financial measures should be considered in addition to BluePhoenix’s 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. BluePhoenix’s 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 BluePhoenix’s core business operating results. BluePhoenix believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing BluePhoenix’s performance. These non-GAAP financial measures also facilitate comparisons to BluePhoenix’s historical performance. BluePhoenix 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.”
 
About BluePhoenix Solutions
BluePhoenix Solutions Ltd. (NASDAQ: BPHX) provides legacy language and database translation.  The BluePhoenix portfolio includes a comprehensive suite of tools and services for automated database and application migration. Leveraging over 20 years of best-practice domain expertise, BluePhoenix 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.  BluePhoenix customers come from diverse industries and vertical markets such as automotive, banking and financial services, insurance, manufacturing, and retail. BluePhoenix has six offices in the United States, United Kingdom, Italy, Romania, and Israel.
 
 
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Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on BluePhoenix’s management’s beliefs and assumptions and on information currently available to BluePhoenix’s management. All statements other than statements of historical facts are “forward-looking statements” for purposes of these provisions, including those relating to future events or our future financial performance and financial guidance. In some cases, you can identify forward-looking statements by terminology such as “may,” “might,” “will,” “should,” “expect,” “plan,” “anticipate,” “project,” “believe,” “estimate,” “predict,” “potential,” “intend” or “continue,” the negative of terms like these or other comparable terminology, and other words or terms of similar meaning in connection with any discussion of future operating or financial performance. These statements are only predictions. All forward-looking statements included in this document are based on information available to BluePhoenix on the date hereof, and BluePhoenix assumes no obligation to update any such forward-looking statements. Any or all forward-looking statements in this document may turn out to be wrong. Actual events or results may differ materially. Forward-looking statements can be affected by inaccurate assumptions BluePhoenix might make or by known or unknown risks, uncertainties and other factors. These risks and uncertainties include but are not limited to: the effects of the global economic and financial trends; market demand for BluePhoenix’s products; successful implementation of BluePhoenix’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 BluePhoenix’s most recent Annual Report on Form 10-K and other reports filed by it with the SEC. This press release is also available at www.bphx.com. All names and trademarks are their owners’ property.
 
 
Company Contact:
 
Rick Rinaldo, CFO
BluePhoenix Solutions
www.bphx.com
rrinaldo@bphx.com
 
 
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BluePhoenix Solutions Ltd.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
   
June 30,
  
December 31,
   
2014
  
2013
   
Unaudited
  
Audited
ASSETS
                
Current Assets:
                
                 
Cash and cash equivalents
  
$
387
    
$
2,592
  
Restricted cash
    
12
      
35
  
Trade accounts receivable, net
    
2,351
      
1,960
  
Other current assets
    
322
      
239
  
Total Current Assets
    
3,072
      
4,826
  
                 
Non-Current Assets:
                
                 
Property and equipment, net
    
274
      
287
  
Goodwill
    
12,501
      
12,501
  
Total Non-Current Assets
    
12,775
      
12,788
  
                 
TOTAL ASSETS
  
$
15,847
    
$
17,614
  
                 
LIABILITIES AND EQUITY
                
                 
Current Liabilities:
                
                 
Short-term bank credit and others
  
$
40
    
$
40
  
Trade accounts payable
    
903
      
886
  
Deferred revenue
    
407
      
719
  
Other current liabilities
    
752
      
902
  
Total Current Liabilities
    
2,102
      
2,547
  
                 
Non-Current Liabilities
                
                 
Accrued severance pay, net
    
267
      
290
  
Loans from others
    
162
      
162
  
Derivative liabilities - warrants
    
266
      
311
  
Total Non-Current Liabilities
    
695
      
763
  
                 
Total Equity
    
13,050
      
14,304
  
                 
TOTAL LIABILITIES AND EQUITY
  
$
15,847
    
$
17,614
  
 
 
4
 
 
BluePhoenix Solutions Ltd.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
 
   
Three months ended
  
Six months ended
   
June 30,
  
June 30,
   
2014
  
2013
  
2014
  
2013
   
Unaudited
  
Unaudited
                 
Revenue
  
$
1,881
    
$
2,363
    
$
3,752
    
$
4,561
  
Cost of revenue
    
1,029
      
1,088
      
2,011
      
2,178
  
Gross profit
    
852
      
1,275
      
1,741
      
2,383
  
                                 
Research and development costs
    
191
      
349
      
525
      
696
  
Selling, general and administrative expenses
    
1,458
      
1,606
      
2,873
      
3,115
  
Less: Gain on sales of subsidiaries and Appbuilder
    
-
      
59
      
-
      
(786
)
                                 
Total operating expenses
    
1,649
      
2,014
      
3,398
      
3,025
  
                                 
Operating loss
    
(797
)
    
(739
)
    
(1,657
)
    
(642
)
                                 
Financial income (expense), net
    
6
      
31
      
35
      
(42
)
Loss before taxes
    
(791
)
    
(708
)
    
(1,622
)
    
(684
)
                                 
Taxes on income
            
3
      
18
      
51
  
Net loss from continued operation
    
(791
)
    
(711
)
    
(1,640
)
    
(735
)
                                 
Net loss from discontinued operation
    
-
      
-
      
-
      
399
  
Net loss
    
(791
)
    
(711
)
    
(1,640
)
    
(1,134
)
                                 
Net result attributed to noncontrolling interests
    
(40
)
    
44
      
35
      
221
  
Loss attributed to BluePhoenix shareholders
  
$
(751
)
  
$
(755
)
  
$
(1,675
)
  
$
(1,355
)
Loss per share:
                                
From continued operation- basic and diluted
  
$
(0.07
)
  
$
(0.07
)
  
$
(0.15
)
  
$
(0.09
)
From discontinued operation- basic and diluted
    
-
      
-
      
-
      
(0.04
)
Attributed to the shareholders
  
$
(0.07
)
  
$
(0.07
)
  
$
(0.15
)
  
$
(0.13
)
Shares used in per share calculation:
                                
Basic and diluted
    
11,453
      
10,694
      
11,435
      
10,668
  
 
 
5
 
 
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP RESULTS
  
(In thousands, except per share data)
  
                         
   
Three months ended
    
Six months ended
  
   
June 30,
    
June 30,
  
   
2014
    
2013
    
2014
    
2013
  
   
Unaudited
    
Unaudited
  
                         
GAAP gross profit
   $ 852     $ 1,275     $ 1,741     $ 2,383  
                                 
Amortization of intangible assets
     -       42       -       115  
Non-GAAP gross profit
   $ 852     $ 1,317     $ 1,741     $ 2,498  
                                 
GAAP operating loss
   $ (797 )   $ (739 )   $ (1,657 )   $ (642 )
                                 
Amortization of intangible assets
     -       42       -       115  
Stock-based compensation
     202       115       386       263  
Less: Gain on sales of subsidiaries and Appbuilder
     -       58       -       (787 )
Non-GAAP operating loss
   $ (595 )   $ (524 )   $ (1,271 )   $ (1,051 )
                                 
GAAP net loss attributed to BluePhoenix
   $ (751 )   $ (755 )   $ (1,675 )   $ (1,355 )
                                 
Amortization of intangible assets
     -       42       -       115  
Stock-based compensation
     202       115       386       263  
Less: Gain on sales of subsidiaries and Appbuilder
     -       58       -       (787 )
Revaluation of derivatives and discount amortization
     (19 )     (39 )     (45 )     (36 )
Net loss from discontinued operation
     -       -        -       399  
Non-GAAP net loss attributed to BluePhoenix
   $ (568 )   $ (579 )   $ (1,334 )   $ (1,401 )
                                 
Shares used in diluted earnings per share calculation
     11,453       10,694       11,435       10,668  
                                 
Non - GAAP diluted loss per share
   $ (0.05 )   $ (0.05 )   $ (0.12 )   $ (0.13 )
 
 
 
6
 
BluePhoenix Solutions Ltd.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
   
Three months ended
  
Six months ended
   
June 30,
  
June 30,
   
2014
  
2013
  
2014
  
2013
   
Unaudited
  
Unaudited
CASH FLOWS FROM OPERATING ACTIVITIES:
                                
Net loss
  
$
(791
)
  
$
(711
)
  
$
(1,640
)
  
$
(1,134
)
Adjustments to reconcile net loss to net cash used in operating activities:
                                
Depreciation and amortization
    
16
      
77
      
54
      
204
  
Decrease in accrued severance pay, net
    
(9
)
    
(2
)
    
(23
)
    
(11
)
Stock–based compensation
    
203
      
115
      
385
      
263
  
Change in fair value of derivatives
    
(20
)
    
(38
)
    
(45
)
    
(36
)
Gain on sales of subsidiaries and Appbuilder
    
-
      
-
      
-
      
(473
)
Changes in operating assets and liabilities:
                                
Decrease (increase) in trade receivables
    
118
      
78
      
(391
)
    
226
  
Increase (decrease) in other current assets
    
(12
)
    
40
      
(60
)
    
(62
)
Increase (decrease) in trade payables
    
2
      
(80
)
    
18
      
(258
)
Increase (decrease) in other current liabilities and deferred revenues
    
11
      
309
      
(462
)
    
(59
)
Net cash used in operating activities
    
(482
)
    
(212
)
    
(2,164
)
    
(1,340
)
                                 
CASH FLOWS FROM INVESTING ACTIVITIES:
                                
Purchase of property and equipment
    
(2
)
    
(3
)
    
(41
)
    
(9
)
Proceeds from sales of subsidiaries and Appbuilder
    
-
      
-
      
-
      
800
  
Net cash provided by (used in) investing activities
    
(2
)
    
(3
)
    
(41
)
    
791
  
                                 
CASH FLOWS FROM FINANCING ACTIVITIES:
                                
Short term bank credit and convertible notes, net
    
-
      
(28
)
    
-
      
(149
)
Net cash used in financing activities
    
-
      
(28
)
    
-
      
(149
)
                                 
NET CASH DECREASE IN CASH AND CASH EQUVIALETS
    
(484
)
    
(243
)
    
(2,205
)
    
(698
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
871
      
2,105
      
2,592
      
2,560
  
CASH AND CASH EQUIVALENTS AT END OF PERIOD
  
$
387
    
$
1,862
    
$
387
    
$
1,862
  
 
 
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