Document:

Exhibit 10.1

 

 

PRESS RELEASE

 

Magic Reports First Quarter 2015 Results
with Non-GAAP Operating Income Increasing 5% Year over Year to $6.7 Million and Non-GAAP Operating Margin of 16.6%

 

Non-GAAP Net Income Increased 5% Year over
Year to $5.2 Million

 

OR YEHUDA, Israel, May 11, 2015
/PRNewswire/ -- Magic Software Enterprises Ltd. (NASDAQ
and TASE: MGIC), a global provider
of mobile and cloud-enabled application and business integration platforms, announced today its
financial results for the quarter ended March 31, 2015.

 

Financial Highlights for
the First Quarter Ended March 31, 2015

 

		·	Revenues for the first quarter were $40.3 million compared to $40.9 million in the same
period last year. Reported revenues were negatively impacted by the devaluation of the New Israeli Shekel, Euro and Japanese Yen
against the U.S Dollar by 13%, 18% and 16%, respectively. Excluding the negative impact from foreign exchange rates erosion compared
to the first quarter of 2014, revenues for the first quarter would have reflected an increase of 5% year over year to a record-breaking
result of $42.8 million. Revenues for the first quarter 2015 do not reflect the revenues from our recent acquisition, which was
announced in February and finalized in April 2015.

 

		·	Non-GAAP operating income for the first quarter increased 5% to $6.7 million, compared to $6.4 million
in the same period last year. Eliminating the impact of exchange rates erosion compared to the first quarter of 2014 (mainly resulting
from the devaluation of the Euro and Japanese Yen versus the U.S Dollar), non-GAAP operating income would have reflected an increase
of 14% year over year to a record-breaking result of $7.3 million. Non-GAAP operating margin increased by 100 basis points to 16.6%,
up from 15.6% in same period last year. Operating income for the first quarter decreased to $5.8 million from $6.0 million in the
same period last year.

 

		·	Non-GAAP net income for the first quarter increased 5% to $5.2 million, or $0.12 per fully diluted share,
compared to $5.0 million, or $0.12 per fully diluted share in the same period last year. Eliminating the impact of exchange rates
erosion compared to the first quarter of 2014 (including the negative impact of devaluation of cash balances denominated mainly
in Euros, Japanese Yen and New Israeli Shekels following the devaluation of foreign currencies against the US Dollar amounting
to $0.9 million), non-GAAP net income would have reflected an increase of 23% year over year to a record-breaking result of $6.1
million, or $0.14 per fully diluted share. Net income for the first quarter decreased to $4.3 million from $4.5 million in the
same period last year.

 

    	 

    	 

    

 

		·	Operating cash flow for the quarter amounted to $9.0 million.

 

		·	During the first quarter, in accordance with our semi-annual dividend distribution policy, Magic
distributed a cash dividend of $0.081 per share (approximately $3.6 million in the aggregate) with respect to its 2014 second half
results of operations. As of March 31, 2015, our total cash, cash equivalents and short-term investments amounted to $88.5 million.

 

Comments of Management

 

Guy Bernstein, Chief Executive Officer
of Magic Software Enterprises, said:

 

“We are pleased to report another
solid quarter with increasing non-GAAP operating income and operating margin, demonstrating strong leverage in our business model.
We would have reported record-breaking operating income and operating margin this quarter had it not been for the negative impact
of foreign exchange rates. License sales are strong in all regions, reflecting growing market demand for our products. We continue
to invest in our products to enable customers to benefit from the latest technologies, including in-memory computing, HTML5 and
mobile.

 

We are confident in our growth strategy, remaining focused on
profitable growth and enhancing our position with strategic acquisitions. We are on track to continue to create and deliver long-term
shareholder value," added Bernstein.

 

Magic is providing the following guidance
for its 2015 fiscal year:

 

Revenue between $166 million to $173 million
for the full-year 2015, on a constant currency basis. This guidance, when measured based on 2014 foreign currency exchange rates,
represents full year 2015 revenue of approximately $175 to $182 million, reflecting management growth expectations of between
7% to 11%.

 

Conference Call Details

 

Magic’s management will host an interactive
conference today, May 11, at 10:00 am Eastern Time (7:00 am Pacific Time, 17:00 Israel Time). On the call, management will review
and discuss the results, and will also be available to answer investors’ questions.

 

To participate, please call one of the
following teleconferencing numbers. Please begin placing your calls at least 10 minutes before the conference call commences. If
you are unable to connect using the toll-free numbers, call the international dial-in number.

 

NORTH AMERICA: 1.888.668.9141

 

UK: 0 800 917 5108

 

ISRAEL: 03 918 0609

 

INTERNATIONAL: +972 3 918 0609

 

For those unable to listen to the live
call, a replay of the call will be available for three months from the day after the call under the investor relations section
of Magic’s website.

 

 

    	 

    	 

    

 

Non-GAAP Financial Measures

 

This release includes non-GAAP operating
income, net income, basic and diluted earnings per share and other non-GAAP financial measures. These non-GAAP measures exclude
the following items:

 

		·	Amortization of purchased intangible assets;

 

		·	In-process research and development capitalization and amortization;

 

		·	Equity-based compensation expense;

 

		·	Change in valuation of contingent consideration; and

 

		·	The related tax effects of the above items.

 

 

Summary of Non-GAAP Financial
Information

 

U.S. Dollars in thousands, except per share
amounts

 

	 	 	Three months ended 	 
	 	 	March 31,	 
	 	 	2015	 	 	2014	 
	 	 	Unaudited	 
	Non-GAAP	 	 	 	 	 	 
	Revenues	 	$	40,336	 	 	$	40,949	 
	Gross profit	 	 	16,531	 	 	 	17,717	 
	Operating income	 	 	6,704	 	 	 	6,408	 
	Net income attributable to Magic Software shareholders	 	 	5,200	 	 	 	4,962	 
	Basic earnings per share	 	 	0.12	 	 	 	0.13	 
	Diluted earnings per share	 	 	0.12	 	 	 	0.12	 

 

Magic Software’s management believes
that the presentation of non-GAAP measures provides useful information to investors and management regarding financial and business
trends relating to the Company’s financial condition and results of operations as well as the net amount of cash generated
by its business operations after taking into account capital spending required to maintain or expand the business.

 

These non-GAAP financial measures are not
in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP financial
measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting
rules or principles. Magic Software believes that non-GAAP financial measures have limitations in that they do not reflect all
of the amounts associated with Magic Software’s results of operations as determined in accordance with GAAP and that these
measures should only be used to evaluate Magic Software’s results of operations in conjunction with the corresponding GAAP
measures.

 

    	 

    	 

    

 

Please refer to the Reconciliation of Selected
Financial Metrics from GAAP to Non-GAAP tables below.

 

 

 

About Magic Software Enterprises

 

Magic Software Enterprises Ltd. (NASDAQ
and TASE: MGIC) is a global provider of mobile and cloud-enabled application and business integration platforms.

 

For more information, visit www.magicsoftware.com.

 

 

 

Forward Looking Statements

 

Some of the statements in this press release
may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section
21E of the Securities and Exchange Act of 1934 and the United States Private Securities Litigation Reform Act of 1995. Words such
as "will," "expects," "believes" and similar expressions are used to identify these forward-looking
statements (although not all forward-looking statements include such words). These forward-looking statements, which may include,
without limitation, projections regarding our future performance and financial condition, are made on the basis of management’s
current views and assumptions with respect to future events. Any forward-looking statement is not a guarantee of future performance
and actual results could differ materially from those contained in the forward-looking statement. These statements speak only as
of the date they were made, and we undertake no obligation to update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise. We operate in a changing environment. New risks emerge from time to time and it
is not possible for us to predict all risks that may affect us. For more information regarding these risks and uncertainties as
well as certain additional risks that we face, you should refer to the Risk Factors detailed in our Annual Report on Form 20-F
for the year ended December 31, 2014 and subsequent reports and registration statements filed from time to time with the Securities
and Exchange Commission.

 

Magic is a registered trademark of Magic
Software Enterprises Ltd. All other product and company names mentioned herein are for identification purposes only and are the
property of, and might be trademarks of, their respective owners.

 

Press Contact:

 

Stephanie Myara, PR Manager

Magic Software Enterprises

 

Tel: +972 (0)3 538 9352

 

smyara@magicsoftware.com

 

 

    	 

    	 

    

 

	MAGIC SOFTWARE ENTERPRISES LTD. AND ITS SUBSIDIARIES
	CONDENSED CONSOLIDATED STATEMENTS OF INCOME	 	 
	U.S. dollars in thousands (except per share data)	 	 	 

  

	 	 	Three months ended 	 
	 	 	March, 31	 
	 	 	2015	 	 	2014	 
	 	 	Unaudited	 
	Revenues	 	 	40,336	 	 	 	40,949	 
	Cost of Revenues	 	 	24,917	 	 	 	24,307	 
	Gross profit 	 	 	15,419	 	 	 	16,642	 
	Research and development, net	 	 	1,204	 	 	 	1,180	 
	Selling, marketing and general and	 	 	 	 	 	 	 	 
	    administrative expenses	 	 	8,411	 	 	 	9,509	 
	Total operating costs and expenses	 	 	9,615	 	 	 	10,689	 
	Operating income 	 	 	5,804	 	 	 	5,953	 
	Financial expenses, net	 	 	(909	)	 	 	(139	)
	Income before taxes on income	 	 	4,895	 	 	 	5,814	 
	Taxes on income	 	 	455	 	 	 	966	 
	Net income	 	 	4,440	 	 	 	4,848	 
	Change in redeemable non-controlling interests	 	 	(208	)	 	 	-	 
	Net income attributable to non-controlling interests	 	 	39	 	 	 	(353	)
	Net income attributable to Magic's shareholders 	 	 	4,271	 	 	 	4,495	 
	 	 	 	 	 	 	 	 	 
	Net earnings per share	 	 	 	 	 	 	 	 
	Basic	 	 	0.10	 	 	 	0.11	 
	Diluted	 	 	0.10	 	 	 	0.11	 
	 	 	 	 	 	 	 	 	 
	Weighted average number of shares used in	 	 	 	 	 	 	 	 
	     computing net earnings per share	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	        Basic	 	 	44,199	 	 	 	39,505	 
	 	 	 	 	 	 	 	.	 
	        Diluted	 	 	44,217	 	 	 	39,858	 

 

 

    	 

    	 

    

 

	MAGIC SOFTWARE ENTERPRISES LTD. AND ITS SUBSIDIARIES	 	 
	RECONCILIATION OF GAAP AND NON-GAAP RESULTS	 	 	 
	U.S. dollars in thousands (except per share data)	 	 	 	 

 

	 	 	Three months ended 	 
	 	 	March, 31	 
	 	 	2015	 	 	2014	 
	 	 	Unaudited	 
	 	 	 	 	 	 	 
	GAAP gross profit	 	$	15,419	 	 	$	16,642	 
	Amortization of capitalized software	 	 	1,025	 	 	 	954	 
	Amortization of other intangible assets	 	 	75	 	 	 	46	 
	Stock-based compensation	 	 	12	 	 	 	1	 
	Non-GAAP gross profit	 	$	16,531	 	 	$	17,643	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	GAAP operating income	 	$	5,804	 	 	$	5,953	 
	Gross profit adjustments	 	 	1,112	 	 	 	1,001	 
	Amortization of other intangible assets	 	 	862	 	 	 	910	 
	Capitalization of software development	 	 	(1,005	)	 	 	(1,099	)
	Change in valuation of contingent consideration	 	 	-	 	 	 	(400	)
	Stock-based compensation	 	 	(69	)	 	 	43	 
	Total adjustments to GAAP	 	 	900	 	 	 	455	 
	Non-GAAP operating income	 	$	6,704	 	 	$	6,408	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	GAAP net income  attributable to Magic's shareholders	 	$	4,271	 	 	$	4,495	 
	Operating income adjustments	 	 	900	 	 	 	455	 
	Amortization expenses attributed to redeemable non-controlling interests	 	 	(30	)	 	 	(37	)
	Deferred taxes on the above items	 	 	59	 	 	 	49	 
	Total adjustments to GAAP	 	 	929	 	 	 	467	 
	Non-GAAP net income attributable to Magic's shareholders	 	$	5,200	 	 	$	4,962	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Non-GAAP basic net earnings per share	 	 	0.12	 	 	 	0.13	 
	Weighted average number of shares used in	 	 	 	 	 	 	 	 
	   computing basic net earnings per share	 	 	44,172	 	 	 	39,505	 
	 	 	 	 	 	 	 	 	 
	Non-GAAP diluted net earnings per share	 	 	0.12	 	 	 	0.12	 
	Weighted average number of shares used in	 	 	 	 	 	 	 	 
	   computing diluted net earnings per share	 	 	44,461	 	 	 	39,897	 

 

 

    	 

    	 

    

 

	MAGIC SOFTWARE ENTERPRISES LTD. AND ITS SUBSIDIARIES
	CONDENSED CONSOLIDATED BALANCE SHEETS
	U.S. dollars in thousands

 

	 	 	March, 31	 	 	December 31,	 
	 	 	2015	 	 	2014	
	 	 	Unaudited	 	 	 	 
	 	 	 	 	 	 	 
	ASSETS	 	 	 	 	 	 	 	 
	CURRENT ASSETS:	 	 	 	 	 	 	 	 
	     Cash and cash equivalents	 	 	73,954	 	 	 	72,515	 
	     Short-term bank deposits	 	 	2,523	 	 	 	-	 
	     Available-for-sale marketable securities	 	 	12,001	 	 	 	11,915	 
	     Trade receivables, net	 	 	39,546	 	 	 	40,358	 
	     Other accounts receivable and  prepaid expenses	 	 	6,833	 	 	 	3,973	 
	Total current assets	 	 	134,857	 	 	 	128,761	 
	 	 	 	 	 	 	 	 	 
	LONG-TERM RECEIVABLES:	 	 	 	 	 	 	 	 
	    Severance pay fund	 	 	1,433	 	 	 	1,426	 
	    Deferred taxes and other long-term receivables	 	 	3,671	 	 	 	3,959	 
	Total long-term receivables	 	 	5,104	 	 	 	5,385	 
	 	 	 	 	 	 	 	 	 
	PROPERTY AND EQUIPMENT, NET	 	 	1,965	 	 	 	2,005	 
	IDENTIFIABLE INTANGIBLE ASSETS AND	 	 	 	 	 	 	 	 
	    GOODWILL, NET	 	 	87,034	 	 	 	88,033	 
	 	 	 	 	 	 	 	 	 
	TOTAL ASSETS	 	 	228,960	 	 	 	224,184	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	   LIABILITIES AND EQUITY	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	CURRENT LIABILITIES:	 	 	 	 	 	 	 	 
	     Short-term debt	 	 	2,842	 	 	 	2,853	 
	     Trade payables	 	 	4,478	 	 	 	3,861	 
	     Accrued expenses and other accounts payable	 	 	16,457	 	 	 	15,013	 
	     Deferred tax liabilities	 	 	1,317	 	 	 	760	 
	     Deferred revenues	 	 	8,689	 	 	 	3,431	 
	Total current liabilities	 	 	33,783	 	 	 	25,918	 
	 	 	 	 	 	 	 	 	 
	NON CURRENT LIABILITIES:	 	 	 	 	 	 	 	 
	     Long term debt	 	 	471	 	 	 	490	 
	     Deferred taxes and other long term liabilities	 	 	3,622	 	 	 	4,086	 
	     Liabilities due to acquisition activities	 	 	610	 	 	 	474	 
	     Accrued severance pay	 	 	2,575	 	 	 	2,562	 
	Total non-current liabilities	 	 	7,278	 	 	 	7,612	 
	 	 	 	 	 	 	 	 	 
	REDEEMABLE NON-CONTROLLING INTEREST	 	 	3,015	 	 	 	2,930	 
	 	 	 	 	 	 	 	 	 
	EQUITY:	 	 	 	 	 	 	 	 
	   Magic Software Enterprises equity	 	 	183,316	 	 	 	185,065	 
	   Non-controlling interests	 	 	1,568	 	 	 	2,659	 
	Total equity	 	 	184,884	 	 	 	187,724	 
	 	 	 	 	 	 	 	 	 
	TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND EQUITY	 	 	228,960	 	 	 	224,184Exhibit10.81 Sillerman Demand Note

Exhibit 10.81

DEMAND PROMISSORY NOTE

$500,000.00                                May 5, 2015
New York, New York

FOR VALUE RECEIVED, the undersigned, Viggle Inc. (the “Borrower”), with an address at 902 Broadway, 11th Floor, New York, NY 10010, hereby promises to pay to the order of Sillerman Investment Company III LLC (the “Lender”), with an address at c/o SFX Entertainment, Inc., 902 Broadway, 11h Floor, New York, NY 10010, the principal sum of Five Hundred Thousand Dollars ($500,000.00), together with interest thereon from the date hereof at an annual rate equal to 12.00% per annum.  Principal and interest due under this Note shall be due and payable upon demand.
Interest hereunder shall be computed on the basis of a 360-day year consisting of twelve 30-day months and shall accrue so long as any sum remains outstanding under this Note.  Anything in this Note to the contrary notwithstanding, the obligation of the Borrower to make payments of interest shall be subject to the limitation that payments of interest shall not be required to be made by the Borrower to the extent that the receipt thereof would not be permissible under the law or laws applicable to the Lender limiting rates of interest which may be charged or collected by the Lender.  Any such payments of interest which are not made as a result of the limitation referred to in the preceding sentence shall be made by the Borrower to the Lender on the earliest interest payment date or dates on which the receipt thereof would be permissible under the laws applicable to the Lender limiting rates of interest which may be charged or collected by the Lender.
Payments of principal and interest made more than (10) days after they are due, shall bear interest at the lesser of (i) 5% per annum or (ii) the highest rate permitted by applicable law.  Payment of the principal and interest due under this Note shall be made at such place as the Lender shall designate to the Borrower and in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of all public and private debts.
The principal amount of this Note may be prepaid at any time and from time to time, in whole or in part, without premium or penalty.

Exhibit 10.81

The Borrower hereby waives presentment, demand for payment, notice of dishonor, and any and all other notices or demands in connection with the delivery, acceptance, performance, default or enforcement of this Note.  The Borrower shall pay all fees, expenses and disbursements of the Lender’s counsel in connection with the enforcement of this Note and the collection of all sums due hereunder.
This Note shall be binding upon the Borrower, its successors and assigns and shall inure to the benefit of the heirs, successors and assigns of the Lender.
This Note and the rights and obligations of the Borrower hereunder shall be governed by and construed and interpreted in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the Borrower has executed this Note as of the day and year first written above.
VIGGLE INC.

By:                    
Name:                    
Title:

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