0001213900-20-021517 8-K 3 20200812 2.02 9.01 20200812 20200812 CYREN Ltd. 0001084577 7372 000000000 L3 1231 8-K 34 000-26495 201094028 1 SAPIR ROAD 5TH FLOOR, BEIT AMPA P.O. BOX 4014 HERZLIYA L3 46140 7037603320 C/O CYREN INC. 1430 SPRING HILL ROAD, SUITE 330 MCLEAN VA 22102 COMMTOUCH SOFTWARE LTD 19990419 8-K 1 ea125413-8k_cyrenltd.htm CURRENT REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): August 12, 2020 CYREN LTD. (Exact name of Registrant as specified in its charter) Israel 000–26495 Not applicable (State or other jurisdiction of (Commission file number) (I.R.S. Employer incorporation or organization) Identification No.) 10 Ha-Menofim St., 5th Floor Herzliya, Israel 4672561 (Address of principal executive offices) (Zip Code) 011–972–9–863–6888 (Registrant’s telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): ? Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ? Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) ? Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) ? Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Securities registered pursuant to Section 12(b) of the Act: Name of Each Exchange on Which Title of Each Class Trading Symbol(s) Registered Ordinary Shares, par value ILS 0.15 per share CYRN Nasdaq Capital Market Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ? If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ? Item 2.02 Results of Operations and Financial Condition On August 12, 2020, Cyren Ltd. issued a press release announcing its financial and operational results for the second quarter ended June 30, 2020. A copy of the press release is attached hereto as Exhibit 99.1. All information in Item 2.02 of this Form 8-K and in Exhibit 99.1 attached hereto is furnished but not filed. Item 9.01 Financial Statements and Exhibits. (d) Exhibits Exhibit No. Description of Exhibits 99.1 Press Release of Cyren Ltd. dated August 12, 2020 1 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CYREN LTD. Date: August 12, 2020 /s/ J. Michael Myshrall J. Michael Myshrall Chief Financial Officer 2 EX-99.1 2 ea125413ex99-1_cyrenltd.htm PRESS RELEASE OF CYREN LTD. DATED AUGUST 12, 2020 Exhibit 99.1 [[Image Removed]] PRESS RELEASE Cyren Reports Second Quarter 2020 Financial Results - - - Positive initial market traction with new strategy and enterprise offerings McLean, Va. – August 12, 2020 – Cyren (NASDAQ: CYRN), a provider of email security and threat intelligence solutions, today announced its second quarter 2020 financial results for the period ending June 30, 2020. “During the second quarter Cyren continued to make good progress implementing our strategy. We achieved our key quarterly operational milestones, including completing the retooling of our U.S. salesforce, delivering two new enterprise products and closing our first customers for these new offerings” said Brett Jackson, Chief Executive Officer of Cyren. “With the key pieces of our foundational work behind us, we believe that we are positioned for bookings to accelerate in the second half as our new product sales execution matures and our first half pipeline building efforts begin to yield results”. Second Quarter 2020 Financial Highlights: ? Revenues for the second quarter of 2020 were $9.2 million, compared to $9.7 million during the second quarter of 2019. ? GAAP net loss for the second quarter of 2020 was $4.6 million, compared to a net loss of $4.6 million in the second quarter of 2019. ? GAAP loss per basic and diluted share for the second quarter of 2020 was $0.08, compared to a loss of $0.08 per basic and diluted share for the second quarter of 2019. ? Non-GAAP net loss for the second quarter of 2020 was $3.8 million, compared to a Non-GAAP net loss of $4.1 million for the second quarter of 2019. ? Non-GAAP loss per basic and diluted share was $0.06 for the Q2 2020, compared to a Non-GAAP loss of $0.08 per share in Q2 2019. ? Operating cash flow during the second quarter of 2020 was positive $2.5 million, compared to operating cash flow of positive $0.8 million during the second quarter of 2019. ? Net cash flow for the second quarter of 2020 was positive $1.1 million, compared to negative $31 thousand during the second quarter of 2019. ? Cash and cash equivalents balance as of June 30, 2020, was $16.1 million, compared to $11.6 million as of December 31, 2019. For information regarding the non-GAAP financial measures discussed in this release, please see “Use of Non-GAAP Financial Measures” and “Reconciliation of Selected GAAP Measures to Non-GAAP Measures.” Recent Business Highlights: ? In April, Cyren launched a new cloud-based anti-phishing product targeted at enterprise customers using Microsoft 365 (formerly Office 365) email. Cyren Inbox Security (CIS) is fully integrated within Microsoft 365 and provides continuous email monitoring and threat detection with automated response and remediation. ? Cyren recently announced positive early traction with Cyren Inbox Security and validating product market fit. In the first quarter of availability, Cyren converted several enterprise accounts and is protecting tens of thousands of Microsoft 365 mailboxes from phishing attacks, business email compromise (BEC) and fraudulent account takeovers. ? Also during the second quarter, Cyren launched Threat InDepth, a threat intelligence data product that provides detailed and actionable intelligence to enterprise security teams. Threat InDepth leverages Cyren’s GlobalView threat intelligence cloud, which analyzes billions of transactions daily to identify emerging security threats across email, web and files globally. Threat InDepth is the first product offering resulting from Cyren’s strategy to expand its core threat intelligence services beyond the OEM market into the larger enterprise market. ? In June, Cyren appointed a new Chairman of the Board, James Hamilton, who is an experienced security industry veteran. Mr. Hamilton was first appointed to the Cyren board of directors in 2012, and succeeds Lior Samuelson as Chairman. Financial Results Conference Call: The company will host a conference call at 10 a.m. Eastern Time (5 p.m. Israel Time) on Wednesday, August 12, 2020 to discuss second quarter results. U.S. Dial-in Number: 1-877-407-0312 Israel Dial-in Number: 1-80-940-6247 International Dial-in Number: 1-201-389-0899 The call will be simultaneously webcast live on the investor relations section of Cyren’s website at https://ir.cyren.com, or by using the following link: https://webcasts.eqs.com/cyren20200812/en. For those unable to participate in the live conference call, a replay will be available until August 26, 2020. To access the replay, the U.S. dial in number is 1-877-660-6853 and the non-U.S. dial in number is 1-201-612-7415. Callers will be prompted for replay conference ID number 13707843. An archived version of the webcast will also be available on the investor relations section of the company’s website at https://ir.cyren.com/events. 2 About Cyren: More than 1.3 billion users around the world rely on Cyren’s cloud security solutions to protect them against cyber attacks and data loss every day. Powered by GlobalView, Cyren’s global security cloud that identifies emerging threats on a global basis in real-time, Cyren (NASDAQ: CYRN) delivers fast time-to-protection with embedded threat detection services, threat intelligence and enterprise email security products for leading email providers, cybersecurity vendors, service providers and enterprises. Learn more at www.cyren.com. Blog: http://blog.cyren.com Facebook: www.facebook.com/CyrenWeb LinkedIn: www.linkedin.com/company/cyren Twitter: www.twitter.com/CyrenInc Use of Non-GAAP Financial Measures: Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: stock-based compensation expenses, amortization of acquired intangible assets, and deferred taxes related to acquisitions, adjustments to earn-out obligations, and capitalization of technology. The purpose of such adjustments is to give an indication of the company’s performance exclusive of non-cash charges and other items that are considered by management to be outside of the company’s core operating results. The company’s non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with the company’s consolidated financial statements prepared in accordance with GAAP. Company management regularly uses supplemental non-GAAP financial measures internally to understand, manage and evaluate the business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. The company believes this adjustment is useful to investors as a measure of the ongoing performance of the business. The company believes these non-GAAP financial measures provide consistent and comparable measures to help investors understand the company’s current and future operating cash flow performance. These non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies. Reconciliation between results on a GAAP and non-GAAP basis is provided in a table immediately following the Consolidated Statements of Income. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management uses both GAAP and non-GAAP measures when evaluating the business internally and therefore felt it important to make these non-GAAP adjustments available to investors. This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. For example, statements in the future tense, and statements including words such as “expect,” “plan,” “estimate,” “anticipate,” or “believe” are forward-looking statements. These statements are based on information available at the time of the press release and the company assumes no obligation to update any of them. The statements in this press release are not guarantees of future performance and actual results could differ materially from current expectations as a result of numerous factors, including business conditions and growth or deterioration in the internet security market, technological developments, products offered by competitors, availability of qualified staff, and technological difficulties and resource constraints encountered in developing new products, as well as those risks described in the company’s publicly filed reports, which are available through www.sec.gov. Company Contact Mike Myshrall, CFO Cyren +1.703.760.3320 mike.myshrall@cyren.com 3 CYREN LTD. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands of U.S. dollars, except per share amounts) Three months ended Six months ended June 30 June 30 2020 2019 2020 2019 Unaudited Unaudited Unaudited Unaudited Revenues $ 9,181 $ 9,711 $ 18,830 $ 19,366 Cost of revenues 3,778 3,789 7,376 7,789 Gross profit 5,403 5,922 11,454 11,577 Operating expenses: Research and development, net 4,151 4,297 7,495 8,474 Sales and marketing 3,146 3,590 6,182 7,446 General and administrative 2,476 2,398 4,690 4,830 Total operating expenses 9,773 10,285 18,367 20,750 Operating loss (4,370 ) (4,363 ) (6,913 ) (9,173 ) Other income, net 2 17 8 265 Financial expenses, net (290 ) (268 ) (521 ) (321 ) Loss before taxes (4,658 ) (4,614 ) (7,426 ) (9,229 ) Tax benefit 44 41 61 80 Net loss $ (4,614 ) $ (4,573 ) $ (7,365 ) $ (9,149 ) Loss per share - basic and diluted $ (0.08 ) $ (0.08 ) $ (0.12 ) $ (0.17 ) Weighted average number of shares outstanding: Basic and Diluted 60,041 54,424 59,862 54,300 4 CYREN LTD. RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (in thousands of U.S. dollars, except per share amounts) Three months ended Three months ended June 30 June 30 2020 2019 2020 2019 Unaudited Unaudited Unaudited Unaudited GAAP gross profit $ 5,403 $ 5,922 $ 11,454 $ 11,577 GAAP gross margin 59 % 61 % 61 % 60 % Plus: Stock-based compensation expense 20 33 64 62 Amortization of intangible assets 593 767 1,024 1,606 Non-GAAP gross profit 6,016 6,722 12,542 13,245 Non-GAAP gross margin 66 % 69 % 67 % 68 % GAAP operating loss (4,370 ) (4,363 ) (6,913 ) (9,173 ) Plus: Stock-based compensation expense 507 314 1,152 583 Amortization of intangible assets 723 885 1,283 1,851 Capitalization of technology (389 ) 650 ) (1,602 ) (1,392 ) Settlement of litigation, net - - - - Non-GAAP operating loss (3,529 ) (3,814 ) (6,081 ) (8,131 ) GAAP net loss (4,614 ) (4,573 ) (7,365 ) (9,149 ) Plus: Stock-based compensation expense 507 314 1,152 583 Amortization of intangible assets 723 885 1,283 1,851 Adjustment to earn-out liabilities - - - - Amortization of deferred tax assets (48 ) (58 ) (96 ) (115 ) Gain from an earn-out liability settlement - - - (256 ) Settlement of litigation, net - - - - Capitalization of technology (414 ) (688 ) (1,657 ) (1,458 ) Non-GAAP net loss $ (3,846 ) $ (4,120 ) $ (6,684 ) $ (8,544 ) Numerator for non-GAAP EPS calculation $ (3,846 ) $ (4,120 ) $ (6,684 ) $ (8,544 ) Non-GAAP net loss per share $ (0.06 ) $ (0.08 ) $ (0.11 ) $ (0.16 ) GAAP weighted-average shares used to compute net loss per share 60,041 54,424 59,862 54,300 5 CYREN LTD. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands of U.S. dollars) June 30 December 31 2020 2019 Unaudited Assets Current Assets: Cash and cash equivalents $ 16,103 $ 11,551 Trade receivables, net 2,366 2,187 Deferred commissions 1,037 948 Prepaid expenses and other receivables 1,203 819 Total current assets 20,709 15,505 Long-term deferred commissions 1,352 1,580 Long-term lease deposits 850 767 Operating lease right-of-use assets 11,466 8,695 Severance pay fund 582 659 Property and equipment, net 4,675 4,410 Intangible assets, net 9,338 8,966 Goodwill 20,251 20,246 Total long-term assets 48,514 45,323 Total assets $ 69,223 $ 60,828 Liabilities and Shareholders’ Equity Current Liabilities: Trade payables $ 1,106 $ 1,184 Employees and payroll accruals 3,714 3,427 Accrued expenses and other liabilities 1,200 1,145 Operating lease liabilities 1,886 1,946 Deferred revenues 9,714 7,208 Total current liabilities 17,620 14,910 Deferred revenues 1,460 1,956 Convertible notes 10,000 10,000 Convertible debentures 9,447 - Long-term operating lease liabilities 9,966 7,174 Deferred tax liability 677 796 Accrued severance pay 735 811 Other liabilities 633 470 Total long-term liabilities 32,918 21,207 Shareholders’ equity 18,685 24,711 Total liabilities and shareholders’ equity $ 69,223 $ 60,828 6 CYREN LTD. CONDENSED CONSOLIDATED CASH FLOW DATA (in thousands of U.S. dollars) Three months ended Six months ended June 30 June 30 2020 2019 2020 2019 Cash flows from operating activities: Unaudited Unaudited Unaudited Unaudited Loss $ (4,614 ) $ (4,573 ) (7,365 ) $ (9,149 ) Adjustments to reconcile loss to net cash provided by (used in) operating activities: Loss on disposal of property and equipment 26 - 13 1 Depreciation 597 475 1,215 936 Stock-based compensation 507 314 1,152 583 Amortization of intangible assets 723 885 1,283 1,851 Amortization of deferred commissions 452 (280 ) 803 (612 ) Amortization of operating lease right-of-use assets 534 362 922 713 Interest on convertible notes 142 142 283 282 Interest and amortization of debt issuance costs on Convertible Debentures 187 - 211 - Other income related to the earn-out consideration - (1 ) - (257 ) Deferred taxes, net (54 ) (58 ) (118 ) (127 ) Changes in assets and liabilities: Trade receivables 490 27 (162 ) 705 Prepaid expenses and other receivables (57 ) (37 ) (383 ) (775 ) Deferred commissions (276 ) 341 (664 ) 748 Change in long-term lease deposits 28 3 (86 ) 23 Trade payables (159 ) (418 ) (114 ) (823 ) Employees and payroll accruals, accrued expenses and other liabilities 444 50 (47 ) (224 ) Deferred revenues 4,062 3,891 1,989 6,354 Accrued severance pay, net 24 27 1 68 Operating lease liabilities (534 ) (368 ) (954 ) (733 ) Other long-term liabilities 10 - 163 (111 ) Net cash provided by (used in) operating activities 2,532 782 (1,858 ) (547 ) Cash flows from investing activities: Proceeds from sale of property and equipment 2 - 4 - Capitalization of technology (588 ) (808 ) (1,589 ) (1,435 ) Purchase of property and equipment (880 ) (406 ) (1,438 ) (950 ) Net cash used in investing activities (1,466 ) (1,214 ) (3,023 ) (2,385 ) Cash flows from financing activities: Proceeds from convertible debenture, net of debt issuance costs - - 9,442 - Payment of earn-out consideration - - - (2,680 ) Proceeds from options exercised - 323 - 512 Net cash provided (used) by financing activities - 323 9,442 (2,168 ) Effect of exchange rate changes on cash (7 ) 78 (13 ) (48 ) Increase (decrease) in cash, cash equivalents and restricted cash 1,059 (31 ) 4,548 (5,148 ) Cash, cash equivalents and restricted cash at the beginning of the period 15,616 13,039 12,127 18,156 Cash, cash equivalents and restricted cash at the end of the period $ 16,675 $ 13,008 $ 16,675 $ 13,008 Reconciliation of cash, cash equivalents and restricted cash as shown in the consolidated statements of cash flow: Cash and cash equivalents $ 16,103 $ 12,405 $ 16,103 $ 12,405 Restricted cash included in long-term restricted lease deposits 572 603 572 603 Total cash, cash equivalents and restricted cash $ 16,675 $ 13,008 $ 16,675 $ 13,008 7