13D Filing: Prescott Group Capital Management and Modsys International Ltd (NASDAQ:MDSY)

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Prescott Capital, as the general partner of the Small Cap Funds, and Mr. Frohlich, as
managing member of Prescott Capital, may also be deemed to beneficially own the 5,685,929 Ordinary Shares held by the Small Cap Funds, representing approximately 27.9% of the issued and outstanding Ordinary Shares of the Issuer.

Prescott Capital and Mr. Frohlich disclaim beneficial ownership of the Ordinary Shares held by the Small Cap Funds except to the extent
of their pecuniary interest therein.

(b) By virtue of his position with Prescott Capital and the Small Cap Funds, Mr. Frohlich has
the sole power to vote and dispose of the Ordinary Shares owned by the Small Cap Funds reported in this Schedule 13D.

The filing of this
Schedule 13D shall not be construed as admission that Prescott Capital or Mr. Frohlich is for the purposes of Section 13(d) or 13(g) of the Act the beneficial owner of any of the 5,685,929 Ordinary Shares owned by the Small Cap Funds.
Pursuant to Rule 13d-4, Prescott Capital and Mr. Frohlich disclaim all such beneficial ownership.

(c) Other than the acquisitions
described in Item 6 hereof and the receipt by the Reporting Persons of 16,000 preferred shares convertible into 16,000 Ordinary Shares as a dividend for 2016 on the preferred shares held by the Reporting Persons, there were no transactions in
the Issuers securities during the sixty days prior to the date hereof made by the Reporting Persons.

(d) No person other than the
Reporting Persons is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, the Ordinary Shares.

(e) Not applicable.

Item 6
of the Schedule 13D is hereby amended as follows:

Item 6.

Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer

In connection with the increased line of credit from $2.0 million to $3.0 million as part of the Seventh Amendment (the Amendment)
to the Credit Agreement, the Issuer agreed to issue warrants to purchase 378,788 Ordinary Shares to the Reporting Persons in exchange for extending a guaranty for 2017 pursuant to that certain Amendment to and Affirmation of Guaranty dated as of
February 15, 2017 by and between Prescott Master Fund and Comerica Bank (the Guaranty). In addition, the Company agreed to issue warrants to purchase 441,176 Ordinary Shares to the Reporting Persons in exchange for the guaranty of
the Credit Agreement for 2016 and 2017 pursuant to the Guaranty. The issuance of the warrants was contingent upon approval of the Issuers shareholders and other customary closing conditions, and the warrants were issued on March 29, 2017.