Pursuant to agreements with certain of our customers, we have placed, and in the future may be required to place, in escrow, the source code of certain software. Under the escrow arrangements, the software may, in specified circumstances, be made available to our customers. From time to time, we also provide our software directly to customers. These factors may increase the likelihood of misappropriation or other misuse of our software. Risks Related to International Operations Marketing our solutions in international markets may cause increased expenses and greater exposure to risks that we may not be able to successfully address. We have international operations, which require significant management attention and financial resources. Depending on market conditions, we may consider establishing additional marketing and sales operations, hire additional personnel, and recruit additional resellers internationally. Risks inherent in our worldwide business activities generally include: currency exchange fluctuations; ● unexpected changes in regulatory requirements; ● tariffs and other trade barriers; ● costs of localizing products for foreign countries; ● difficulties in operation of management; ● potentially adverse tax consequences, including restrictions on the repatriation of earnings; and ● the burdens of complying with a wide variety of local legislation. ● We cannot assure you that these factors will not have a material adverse effect on our future international sales and, consequently, on our business, operating results, and financial condition. Inflation, devaluation, and fluctuation of various currencies may adversely affect our results of operations, liabilities, and assets. Since we operate in several countries, we are impacted by inflation, deflation, devaluation and fluctuation of various currencies. We enter into transactions with customers and suppliers in local currencies, while the reporting currency of our consolidated financial statements and the functional currency of our business is the U.S. dollar. Fluctuations in foreign currency exchange rates in countries where we operate can adversely affect the reflection of these activities in our consolidated financial statements. In addition, fluctuations in the value of our non-dollar revenue, costs, and expenses measured in dollars could materially affect our results of operations, and our balance sheet reflects non-dollar denominated assets and liabilities, which can be adversely affected by fluctuations in the currency exchange rates. Consequently, we are exposed to risks related to changes in currency exchange rates and fluctuations of exchange rates, any of which could result in a material adverse effect on our business, financial condition and results of operations. 25
Pursuant to agreements with certain of our customers, we have placed, and in the future may be required to place, in escrow, the source code of certain software. Under the escrow arrangements, the software may, in specified circumstances, be made available to our customers. From time to time, we also provide our software directly to customers. These factors may increase the likelihood of misappropriation or other misuse of our software. Risks Related to International Operations Marketing our solutions in international markets may cause increased expenses and greater exposure to risks that we may not be able to successfully address. We have international operations, which require significant management attention and financial resources. Depending on market conditions, we may consider establishing additional marketing and sales operations, hire additional personnel, and recruit additional resellers internationally. Risks inherent in our worldwide business activities generally include: ● currency exchange fluctuations; ● unexpected changes in regulatory requirements; ● tariffs and other trade barriers; ● costs of localizing products for foreign countries; ● difficulties in operation of management; ● potentially adverse tax consequences, including restrictions on the repatriation of earnings; and ● the burdens of complying with a wide variety of local legislation. We cannot assure you that these factors will not have a material adverse effect on our future international sales and, consequently, on our business, operating results, and financial condition. Inflation, devaluation, and fluctuation of various currencies may adversely affect our results of operations, liabilities, and assets. Since we operate in several countries, we are impacted by inflation, deflation, devaluation and fluctuation of various currencies. We enter into transactions with customers and suppliers in local currencies, while the reporting currency of our consolidated financial statements and the functional currency of our business is the U.S. dollar. Fluctuations in foreign currency exchange rates in countries where we operate can adversely affect the reflection of these activities in our consolidated financial statements. In addition, fluctuations in the value of our non-dollar revenue, costs, and expenses measured in dollars could materially affect our results of operations, and our balance sheet reflects non-dollar denominated assets and liabilities, which can be adversely affected by fluctuations in the currency exchange rates. Consequently, we are exposed to risks related to changes in currency exchange rates and fluctuations of exchange rates, any of which could result in a material adverse effect on our business, financial condition and results of operations. 25
f10q0616_modsysinterEDGAR13.docx