Thursday August 30, 2:00 am Eastern Time

Yaskal Holdings Ltd. to Acquire Ordinary Shares of Formula Systems (1985) Ltd. From Dan and Gad Goldstein; Goldsteins to Acquire Securities Convertible Into 53% of Equity of Yaskal

HERZLIYA, Israel, Aug. 30 /PRNewswire/ -- Formula Systems (1985) Ltd., (Nasdaq: FORTY - news), a leading provider of information technology products, solutions and services, today announced that Dan Goldstein, its Chairman and Chief Executive Officer, and Gad Goldstein, its President, have entered into an agreement with Yaskal Holdings Ltd., an Israeli corporation traded on the Tel Aviv Stock Exchange. Under the agreement, 600,000 ordinary shares of Formula (including 900,000 Mashov Computers Ltd., (Mashov) shares which were distributed by Formula with respect thereto as a dividend in kind on August 28, 2001) were sold to Yaskal for cash consideration of US$25,000,000.00. Within 180 days, an additional 1,000,000 ordinary shares of Formula (including 1,500,000 Mashov shares distributed with respect thereto) will be sold to Yaskal in exchange for convertible notes. If the notes are converted in full, Messrs. Goldstein will be issued ordinary shares of Yaskal representing in the aggregate 53% of the currently outstanding capital stock of Yaskal, on a fully diluted basis, after giving effect to the newly-issued shares. After giving effect to this transaction, Yaskal's principal assets will consist of Formula shares. The notes, in the aggregate principal amount of US$43,000,000.00, will bear no interest, and, if not earlier converted, will be payable on June 30, 2004.

Messrs. Goldstein will remain as officers and directors of Formula. Prior to the maturity or earlier conversion of the notes, Messrs. Goldstein will collectively have the right to nominate 50% of the board of directors of Formula, subject to its Articles of Association.

Dan Goldstein, Chairman and Chief Executive Officer of Formula, said: "We are enthusiastic to continue in our roles as officers and directors of Formula. We believe that the addition of Yaskal as a principal investor will strengthen Formula's investor base."

The agreement is subject to certain customary closing conditions. The obligations under the notes will be secured by the 1,600,000 ordinary shares of Formula, as well as the 2,400,000 shares of Mashov, to be purchased by Yaskal under the agreement which shares will be held in trust until the maturity or earlier conversion of the notes

Formula Systems (1985) Ltd. (Nasdaq: FORTY - news):
Formula Systems (1985) Ltd., is a global information technology company principally engaged, through its subsidiaries and affiliates, in providing software consulting services, developing proprietary software products and providing computer-based business solutions.

Cautionary Statement About Forward-Looking Statements:
Statements contained in this press release that are not historical facts are forward-looking statements subject to the risks and uncertainties as discussed more fully in Formula's filings with the Securities and Exchange Commission, including its most recent Form 20-F.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
Certain statements in this press release constitute forward-looking statements. Such statements involve various risks that may cause actual results to differ materially. These risks and uncertainties include, but are not limited to: successful consummation of the transactions contemplated in this press release, market demand for the companies' products, dependence on strategic partners, integration of new business, successful implementation of Formula's products, economic and competitive factors, international market conditions, management of growth, technological developments, the ability to finance operations and other factors which are detailed in Formula's Securities and Exchange Commission filings. Formula undertakes no obligation to publicly release any revision to any forward-looking statement.