<SEC-DOCUMENT>0001213900-20-041742.txt : 20210114
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<ACCEPTANCE-DATETIME>20201209135112
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ACCESSION NUMBER:		0001213900-20-041742
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20201209

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			FORMULA SYSTEMS (1985) LTD
		CENTRAL INDEX KEY:			0001045986
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-COMPUTER PROGRAMMING SERVICES [7371]
		IRS NUMBER:				000000000
		STATE OF INCORPORATION:			L3
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		5 HAPLADA ST.
		CITY:			OR YEHUDA
		STATE:			L3
		ZIP:			6021805
		BUSINESS PHONE:		011-972-3-538-9487

	MAIL ADDRESS:	
		STREET 1:		5 HAPLADA ST.
		CITY:			OR YEHUDA
		STATE:			L3
		ZIP:			6021805

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	FORMULA SYSTEMS \1985\ LTD
		DATE OF NAME CHANGE:	19970911
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><IMG SRC="img_001.jpg" ALT=""></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 2in; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">December 9,
2020</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Securities and Exchange Commission</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Division of Corporate Finance</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">100 F Street, N.E.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Washington, D.C. 20549</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Attention: Craig D. Wilson,</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Senior Assistant Chief Accountant, Office
of Information Technologies and Services</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 37.2pt 0pt 0.5in; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>VIA EDGAR</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.5in"><B>Re:</B></TD><TD STYLE="text-align: justify; padding-right: 37.2pt"><B>Formula Systems (1985) Ltd. (the &ldquo;Company&rdquo;)</B></TD></TR>                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD STYLE="text-align: justify; padding-right: 37.2pt"><B>Form 20-F for the Fiscal Year Ended December
                              31, 2019 (the &ldquo;2019 Form 20-F&rdquo;)</B></TD></TR>
<TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD STYLE="text-align: justify; padding-right: 37.2pt"><B>Filed June 29, 2020</B></TD></TR>
<TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD><TD STYLE="text-align: justify; padding-right: 37.2pt"><B>File No. 000-29442</B></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 37.2pt 0pt 1in; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 37.2pt 0pt 1in; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Dear Mr. Wilson:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We hereby provide the
following responses to the comments of the staff (the &ldquo;<B>Staff</B>&rdquo;) of the Securities and Exchange Commission (the
&ldquo;<B>Commission</B>&rdquo;) concerning the above-referenced filing that were provided to the Company by the Staff in its letter
dated November 10, 2020. To assist your review, we have retyped the text of the Staff&rsquo;s comments below in bold face type
and have provided the Company&rsquo;s responses immediately following each numbered comment. Please note that all references to
page numbers in the responses below refer to the page numbers of the 2019 Form 20-F, as previously filed with the Commission.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Consolidated Statements of Profit or
Loss, page F-7</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0%"></TD><TD STYLE="width: 0.5in"><B>1.</B></TD><TD STYLE="text-align: justify"><B>We note that your presentation of revenue as &quot;software services&rdquo; and proprietary
software products and related services&rdquo; is based on the category for which each subsidiary earns the most revenue. Please
tell us the amount of product and service revenue included in each line item and tell us what consideration was given to separately
presenting revenue from products (i.e. licenses and hardware) and revenue from services. We refer you to Rule 5-03(b) of Regulation
S-X. As part of your response, clarify whether you consider the sale of proprietary licenses with significant related services
(treated as one performance obligation) to be a product or service and quantify the related revenue.</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 35.45pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a global information
technology holding company that is engaged, through its directly held investees, in providing software consulting services and
computer-based business solutions, and in developing proprietary software products and providing related services. Our presentation
of revenues as &ldquo;software services&rdquo; and &ldquo;proprietary software products and related services&rdquo; is based on
our business perspective and the substance of our deliverables:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 35.45pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 53.45pt"></TD><TD STYLE="width: 18pt">1.</TD><TD STYLE="text-align: justify">Deliverables that relate to our proprietary software which include the software and services related
to such software and</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 71.45pt; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 53.45pt"></TD><TD STYLE="width: 18pt">2.</TD><TD STYLE="text-align: justify">Deliverables that consist of services that are unrelated to our proprietary software, in which
we provide only services and no products).</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 71.45pt; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The revenue presented
under the &ldquo;software services&rdquo; line item is generated primarily from our subsidiaries&rsquo; sales of non-proprietary
software services including maintenance, integration, infrastructure, outsourcing, training and deployment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 35.45pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The revenue presented
under the &ldquo;proprietary software products and related services&rdquo; line item, is generated from our subsidiaries&rsquo;
sales of proprietary licenses, &nbsp;provision of related IT professional services (which may or may not be considered essential
to the functionality of the software license), related maintenance and technical support, implementation, and post-implementation
consulting services. Most of the subsidiaries&rsquo; contracts with customers under the proprietary category contain multiple performance
obligations. For these contracts, the Company accounts for individual performance obligations separately, if they are distinct.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 35.45pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 35.45pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 35.45pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On some occasions,
our subsidiaries&rsquo; sales of proprietary software licenses include significant implementation and customization services that
are not considered distinct performance obligation and are accounted for as combined performance obligations, which are satisfied
over time. We consider the sale of proprietary licenses with significant related services (treated as one performance obligation)
to be a service, however, due to the inseparable linkage between the proprietary software and the non-distinct services and the
fact that our offering of proprietary products and services as subsets of our overall offering to our proprietary software customers
we concluded that presenting such revenues within the &ldquo;proprietary software products and related services&rdquo; line item
is more appropriate. We came to this conclusion in light of the business nature of our sales of proprietary licenses with significant
related services (treated as one performance obligation), as a packaged base software solutions that include the grant of a license
to use our product, implementation ,and customization services related to the product sold and maintenance and support services,
and due to the significant long sale cycle of these transactions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 35.45pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The amount of product
and service revenue included in the &ldquo;proprietary software products and related services&rdquo; line item is $36,628 and $377,545,
respectively. Of the $377,545 services, revenue from proprietary licenses with significant related services (treated as one performance
obligation) amounts to $123,796.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 35.45pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The amount of product
and service revenue included in the &ldquo;software services&rdquo; line item is $0 and $1,286,942, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 35.45pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The total amount
of product and service revenue included in our total revenue is $59,210 and $1,641,905, respectively, reflecting 3% and 97%, respectively,
of total revenue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company will
provide in future filings a disclosure, similar to the description in the preceding paragraphs, that will elaborate on the breakdown
of our revenues as included in each line item.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 35.45pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><U>Note 2. Significant Accounting Policies</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 34.6pt; text-align: justify; text-indent: -34.6pt"><U>12.
Revenue recognition, page F-25</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 34.6pt; text-align: justify; text-indent: -34.6pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0%"></TD><TD STYLE="width: 0.5in"><B>2.</B></TD><TD STYLE="text-align: justify"><B>You disclose that the residual approach is used to determine the standalone selling prices of
software licenses due to the lack of selling software licenses on a stand-alone basis.</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 34.6pt; text-align: justify"><B>Tell us how you evaluated
other methods to estimate standalone selling price of your software licenses. Also, tell us if and how you considered whether the
selling price of the software is highly variable. Refer to IFRS 15.79.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 34.6pt; text-align: justify; text-indent: -34.6pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company generates
revenues in the form of software license fees and related maintenance and services fees. All of the Company&rsquo;s software licenses
are sold with maintenance and, to a lesser extent, with professional services (&ldquo;<B>PS</B>&rdquo;).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 35.45pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under IFRS 15.79(c),
an entity may use the residual approach to estimate the standalone selling price (&ldquo;<B>SSP</B>&rdquo;) by reference to the
total transaction price less the sum of the observable standalone selling prices of other goods or services promised in the contract.
However, in accordance with IFRS 15.79(c), an entity may use the&nbsp;residual approach to estimate the standalone selling price
of a good or service only if one of the following criteria is met:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 24px">&nbsp;</TD>
    <TD STYLE="width: 24px; text-align: left; font-size: 10pt"><FONT STYLE="font-size: 10pt">(i)</FONT></TD>
    <TD STYLE="text-align: justify; font-size: 10pt"><FONT STYLE="font-size: 10pt">The entity sells the same good or service to different customers (at or near the same time) for a broad range of amounts (i.e. the selling price is highly variable because a representative stand-alone selling price is not discernible from past transactions or other observable evidence); or</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 24px">&nbsp;</TD>
    <TD STYLE="width: 24px; text-align: left; font-size: 10pt"><FONT STYLE="font-size: 10pt">(ii)</FONT></TD>
    <TD STYLE="text-align: justify; font-size: 10pt"><FONT STYLE="font-size: 10pt">The entity has not yet established a price for that good or service and the good or service has not previously been sold on a stand-alone basis (i.e. the selling price is uncertain).</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 35.45pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 35.45pt"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 35.45pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company considered
the other methods included in IFRS 15.79 (i.e., the adjusted market assessment approach&nbsp;and the cost-plus margin approach)
to estimate the stand-alone selling price of the license and determined that these alternative methods would not be appropriate
to apply given insufficient data about the market factors necessary to estimate standalone selling prices.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 24px">&nbsp;</TD>
    <TD STYLE="width: 24px; text-align: left; font-size: 10pt"><FONT STYLE="font-size: 10pt">1.</FONT></TD>
    <TD STYLE="text-align: justify; font-size: 10pt"><FONT STYLE="font-size: 10pt"><I>Adjusted market assessment&nbsp;approach:</I> The Company&rsquo;s software licenses contain proprietary technology that highly differentiates its licenses from the offerings of its competitors. &nbsp;Moreover, each of the Company&rsquo;s individual products does not have a direct correlation with other products available in an observable market. The Company&rsquo;s solution and offers are different from those of competitors, which make use of market competitor pricing even less relevant. Although published competitor list price information may be available, actual selling price information is not. Based upon the results of this analysis, the adjusted market assessment&nbsp;approach&nbsp;would not provide for the appropriate use of observable internal company inputs and/or third-party sales inputs in estimating SSP for the Company&rsquo;s licenses.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 24px">&nbsp;</TD>
    <TD STYLE="width: 24px; text-align: left; font-size: 10pt"><FONT STYLE="font-size: 10pt">2.</FONT></TD>
    <TD STYLE="text-align: justify; font-size: 10pt"><FONT STYLE="font-size: 10pt"><I>Expected cost-plus margin&nbsp;approach:</I> There is no expected cost-plus margin&nbsp;approach available for the software component of the bundled packages. The Company&rsquo;s software licenses do not have clear identifiable fulfillment costs, so the expected cost-plus margin&nbsp;approach is not practical. Moreover, the Company&rsquo;s selling and pricing strategies are focused on the value its products and solutions provide to customers and vary based on several factors, such as customer classification, the volume of users of each license ,and term of the license (whether perpetual or defined term). In addition, estimating a margin based on what the market is willing to pay for the Company products cannot be done reliably given the multiple factors involved, including rapid changes in technologies offered in the marketplace, changes in customer spending behavior impacted by internal budget cycles and constraints, and macroeconomic changes beyond the Company&rsquo;s control. Based on the results of this analysis, the expected cost-plus margin&nbsp;approach&nbsp;would not be appropriate to estimate SSP for the Company&rsquo;s licenses.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company does not
sell software licenses on a stand-alone basis (i.e., unbundled) but does sell maintenance and PS on a stand-alone basis (i.e.,
optional maintenance renewals and additional PS hours). Since the SSP for maintenance and PS (if included) are directly observable,
the&nbsp;residual approach can be used for the license for which observable inputs are not available if the pricing of the license
is highly variable or uncertain in accordance with IFRS 15.79(c).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Software license selling
prices have historically been highly variable or uncertain, as a range of discounts is typically provided. Pricing can vary from
large discounts to sales at the original list price, based on the facts and circumstances of the arrangement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Based on the factors
discussed above, the Company believes that the selling prices of its software licenses are uncertain and highly variable and meet
the definition in IFRS 15.79(c). Thus, the Company believes its use of the residual approach&nbsp;in allocating SSP for licenses
represents the appropriate method. As set forth above, this conclusion was based on a thorough annual analysis and evaluation of
both qualitative and quantitative factors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0%"></TD><TD STYLE="width: 0.5in"><B>3.</B></TD><TD STYLE="text-align: justify"><B>Please tell us what consideration was given to disclosing the revenue recognized in the reporting
period that was included in the contract liability balance at the beginning of the period. Refer to IFRS 15.116.</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="background-color: white">We
believe that we have met the disclosure requirements under IFRS 15.116.&nbsp; We present the opening and closing balances of short-term
contract liability (deferred revenues) on the face of the Consolidated Balance Sheets. All amounts included in the balance sheet
are recognized in the subsequent period. Because this is not material to our operations, disclosure of the revenue recognized in
the reporting period that was included in the contract liability balance at the beginning of the period is not deemed necessary.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 34.6pt">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 34.6pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0%"></TD><TD STYLE="width: 0.5in"><B>4.</B></TD><TD STYLE="text-align: justify"><B>Tell us what consideration was given to disclosing the aggregate amount of the transaction price
allocated to the performance obligations that are unsatisfied as of the end of the reporting period as well as an explanation of
when you expect to recognize such revenue. Refer to IFRS 15.120.</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 34.6pt; text-align: justify; text-indent: -34.6pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="background-color: white">In
the future filings of our annual report on Form&nbsp;20-F, the Company will disclose the aggregate amounts of transaction prices
allocated to its performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period
on a quantitative basis that apply the duration periods that the Company believes to be appropriate.</FONT> We have provided <FONT STYLE="background-color: white">the
following disclosure as an example of our planned disclosure, using information as of December&nbsp;31, 2019:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 24.5pt; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The
following table details the order backlog as of December&nbsp;31, 2019:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; background-color: white">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="14" STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">U.S. dollars in thousands</TD><TD STYLE="text-align: center; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</TD><TD STYLE="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2021</TD><TD STYLE="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022 and beyond</TD><TD STYLE="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Total</TD><TD STYLE="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 52%; text-align: left; text-indent: -12pt; padding-left: 12pt">Fixed price projects and post contract support services</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">152,058</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">96,414</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">89,754</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 9%; text-align: right">338,227</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 35.45pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We acknowledge
to the Commission that the Company and its management are responsible for the accuracy and adequacy of our disclosures, notwithstanding
any review, comments, action or absence of action by the Staff.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 3.85pt 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We appreciate your
time and attention to our responses to the Staff&rsquo;s comments set forth in this letter. Should you wish to discuss this letter
at any time, please do not hesitate to contact our legal counsel, Meitar Law Offices (Mike Rimon, Adv., phone: 011-972-3-610-3621;
email: mrimon@meitar.com, or Jonathan M. Nathan, Adv., phone: 011-972-3-610-3182; email: jonathann@meitar.com).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 60%; text-align: justify">&nbsp;</TD>
    <TD STYLE="width: 40%; text-align: justify"><FONT STYLE="font-size: 10pt">Sincerely,</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1.5pt solid; text-align: justify"><FONT STYLE="font-size: 10pt">/s/ Asaf Berenstin</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Asaf Berenstin</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Chief Financial Officer</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Formula Systems (1985) Ltd.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%; text-align: justify"><FONT STYLE="font-size: 10pt">cc:</FONT></TD>
    <TD STYLE="width: 95%; text-align: justify"><FONT STYLE="font-size: 10pt">Megan Akst, Senior Staff Accountant</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-indent: 0in">&nbsp;</TD>
    <TD STYLE="text-indent: 0in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Securities and Exchange Commission)</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Mike Rimon, Adv.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">Jonathan M. Nathan, Adv.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: justify">&nbsp;</TD>
    <TD STYLE="text-align: justify"><FONT STYLE="font-size: 10pt">(Meitar Law Offices)</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">3</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"></P>

<!-- Field: Rule-Page --><DIV STYLE="width: 100%"><DIV STYLE="font-size: 1pt; border-top: Black 1.5pt solid">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
