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): November 16, 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:

 

Title of Each Class   Trading Symbol(s)   Name of Each Exchange on Which 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 November 16, 2020, Cyren Ltd. issued a press release announcing its financial and operational results for the third quarter ended September 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 November 16, 2020

 

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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: November 16, 2020 /s/ J. Michael Myshrall
  J. Michael Myshrall
  Chief Financial Officer

 

 

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Exhibit 99.1

 

 

 

PRESS RELEASE

 

Cyren Reports Third Quarter 2020 Financial Results

- - -

Cyren Inbox Security continues to gain momentum supporting company’s growth strategy

 

McLean, Va. – November 16, 2020 – Cyren (NASDAQ: CYRN), a provider of email security and threat intelligence solutions, today announced its third quarter 2020 financial results for the period ending September 30, 2020.

 

“The third quarter was our first full quarter in the market with our next generation email security product, Cyren Inbox Security, and we are very pleased with product-market fit and customer wins within the quarter,” said Brett Jackson, Chief Executive Officer of Cyren. “With most employees working from home, there has been an uptick in compromised email and phishing attempts, and increased demand for innovative solutions to combat these attacks. During the third quarter, we closed a number of new enterprise customers in the US and Europe, ranging from 3,000 to 20,000 users. It is clear to us that the phishing problem is widespread, the addressable market is large and Cyren Inbox Security has the potential to be a significant new enterprise revenue stream for our company.”

 

Third Quarter 2020 Financial Highlights:

 

Revenues for the third quarter of 2020 were $9.1 million, compared to $9.5 million during the third quarter of 2019. Revenue declined year-over-year as a result of the wind-down of retired legacy products, while recognition from new enterprise offerings introduced during Q2 have not yet had a material impact on quarterly results.

 

GAAP net loss for the third quarter of 2020 was $4.9 million, compared to a net loss of $3.5 million in the third quarter of 2019. GAAP net loss includes lower R&D capitalization from prior quarters and a one-time adjustment for previously capitalized technology development totaling $0.7 million.

 

GAAP loss per basic and diluted share for the third quarter of 2020 was $0.08, compared to a loss of $0.06 per basic and diluted share for the third quarter of 2019.

 

Non-GAAP net loss for the third quarter of 2020 was $2.9 million, compared to a Non-GAAP net loss of $3.5 million for the third quarter of 2019.

 

Non-GAAP loss per basic and diluted share was $0.05 for the third quarter, compared to a Non-GAAP loss of $0.06 per share in Q3 2019.

 

Cash and cash equivalents balance as of September 30, 2020, was $12.9 million, compared to $11.6 million as of December 31, 2019.

 

 

 

 

Operating cash usage during the third quarter of 2020 was $3.6 million, compared to operating cash flow of usage $1.7 million during the third quarter of 2019.

 

Net cash flow for the third quarter of 2020 was negative $3.2 million, compared to negative $2.9 million during the third quarter of 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:

 

During the third quarter, Cyren continued to experience strong market reaction to its next generation email security product focused on the phishing problem for enterprise users of Microsoft 365. At the end of the third quarter, Cyren Inbox Security was protecting over 60,000 mailboxes and analyzing over 15 million suspicious emails on a weekly basis.

 

Also in the quarter, Cyren launched its incident response service which provides 24x7 expert support for phishing investigation and remediation. Cyren Incident Response Service is a complementary add-on service to Cyren Inbox Security that relieves the burden on IT and security teams from complicated and time consuming threat investigation and response.

 

Cyren’s CIS and email security offerings attracted the attention of industry analysts and were highlighted as innovative cloud-based phishing solutions in Gartner’s 2020 Market Guide for Email Security as well as Forrester’s ‘Now Tech’ Report on enterprise email security providers.

 

Financial Results Conference Call:

 

The company will host a conference call at 4:30 p.m. Eastern Time on Monday, November 16, 2020 to discuss third 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://www.webcast-eqs.com/cyren20201116/en.

 

For those unable to participate in the live conference call, a replay will be available until November 30, 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 13713213. An archived version of the call will also be available on the investor relations section of the company’s website at https://ir.cyren.com/events.

 

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.

 

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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

 

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CYREN LTD.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

(in thousands of U.S. dollars, except per share amounts)

 

    Three months ended     Nine months ended  
    September 30     September 30  
    2020     2019     2020     2019  
    Unaudited     Unaudited     Unaudited     Unaudited  
                         
Revenues   $ 9,114     $ 9,496     $ 27,944     $ 28,862  
                                 
Cost of revenues     3,792       3,712       11,168       11,501  
                                 
Gross profit     5,322       5,784       16,776       17,361  
                                 
Operating expenses:                                
                                 
Research and development, net     4,769       3,516       12,264       11,990  
                                 
Sales and marketing     2,942       3,027       9,123       10,473  
                                 
General and administrative     2,302       2,484       6,992       7,314  
                                 
Total operating expenses     10,013       9,027       28,379       29,777  
                                 
Operating loss     (4,691 )     (3,243 )     (11,603 )     (12,416 )
                                 
Other income, net     1       (3 )     9       262  
                                 
Financial expenses, net     (235 )     (321 )     (757 )     (642 )
                                 
Loss before taxes     (4,925 )     (3,567 )     (12,351 )     (12,796 )
                                 
Tax benefit     33       37       94       117  
                                 
Net loss   $ (4,892 )   $ (3,530 )   $ (12,257 )   $ (12,679 )
                                 
Loss per share - basic and diluted   $ (0.08 )   $ (0.06 )   $ (0.20 )   $ (0.23 )
                                 
Weighted average number of shares outstanding:                                
Basic and Diluted     60,580       54,554       60,103       54,389  

 

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CYREN LTD.

 

RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES

 

(in thousands of U.S. dollars, except per share amounts)

 

    Three months ended     Nine months ended  
    September 30     September 30  
    2020     2019     2020     2019  
    Unaudited     Unaudited     Unaudited     Unaudited  
                         
GAAP gross profit   $ 5,322     $ 5,784     $ 16,776     $ 17,361  
GAAP gross margin     58 %     61 %     60 %     60 %
Plus:                                
Stock-based compensation expense     21       36       85       98  
Amortization of intangible assets     673       758       1,698       2,364  
Non-GAAP gross profit     6,016       6,578       18,559       19,823  
Non-GAAP gross margin     66 %     69 %     66 %     69 %
                                 
GAAP operating loss     (4,690 )     (3,243 )     (11,603 )     (12,416 )
Plus:                                
Stock-based compensation expense     724       419       1,876       1,002  
Amortization of intangible assets     788       885       2,071       2,736  
Expense (Capitalization) of technology     536       (1,118 )     (1,067 )     (2,510 )
Settlement of litigation, net     -       -       -       -  
Non-GAAP operating loss     (2,643 )     (3,057 )     (8,723 )     (11,188 )
                                 
GAAP net loss     (4,892 )     (3,530 )     (12,257 )     (12,679 )
Plus:                                
Stock-based compensation expense     724       419       1,876       1,002  
Amortization of intangible assets     788       885       2,071       2,736  
Adjustment to earn-out liabilities     -       -       -       -  
Amortization of deferred tax assets     (48 )     (55 )     (144 )     (170 )
Gain from an earn-out liability settlement     -       -       -       (256 )
Settlement of litigation, net     -       -       -       -  
Expense (Capitalization) of technology     531       (1,169 )     (1,126 )     (2,627 )
Non-GAAP net loss   $ (2,896 )   $ (3,450 )   $ (9,580 )   $ (11,994 )
                                 
Numerator for non-GAAP EPS calculation   $ (2,896 )   $ (3,450 )   $ (9,580 )   $ (11,994 )
Non-GAAP net loss per share   $ (0.05 )   $ (0.06 )   $ (0.16 )   $ (0.22 )
                                 
GAAP weighted-average shares used to compute net loss per share     60,580       54,554       60,103       54,389  

 

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CYREN LTD.

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(in thousands of U.S. dollars)

 

    September 30     December 31  
    2020     2019  
    Unaudited        
Assets            
Current Assets:            
Cash and cash equivalents     12,894     $ 11,551  
Trade receivables, net     2,348       2,187  
Deferred commissions     1,004       948  
Prepaid expenses and other receivables     1,284       819  
Total current assets     17,530       15,505  
                 
Long-term deferred commissions     1,243       1,580  
Long-term lease deposits     863       767  
Operating lease right-of-use assets     11,191       8,695  
Severance pay fund     646       659  
Property and equipment, net     4,410       4,410  
Intangible assets, net     8,093       8,966  
Goodwill     20,818       20,246  
Total long-term assets     47,264       45,323  
Total assets   $ 64,794     $ 60,828  
                 
Liabilities and Shareholders’ Equity                
Current Liabilities:                
Trade payables   $ 1,103     $ 1,184  
Employees and payroll accruals     3,676       3,427  
Accrued expenses and other liabilities     1,160       1,145  
Operating lease liabilities     1,889       1,946  
Deferred revenues     9,272       7,208  
Total current liabilities     17,100       14,910  
                 
Deferred revenues     1,064       1,956  
Convertible notes     10,000       10,000  
Convertible debentures     9,344       -  
Long-term operating lease liabilities     9,678       7,174  
Deferred tax liability     646       796  
Accrued severance pay     762       811  
Other liabilities     653       470  
Total long-term liabilities     32,147       21,207  
                 
Shareholders’ equity     15,547       24,711  
Total liabilities and shareholders’ equity   $ 64,974     $ 60,828  

 

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CYREN LTD.

 

CONDENSED CONSOLIDATED CASH FLOW DATA

 

(in thousands of U.S. dollars)

 

    Three months ended     Nine months ended  
    September 30     September 30  
    2020     2019     2020     2019  
  Unaudited     Unaudited     Unaudited     Unaudited  
Cash flows from operating activities:                        
                         
Loss   $ (4,892 )   $ (3,530 )     (12,257 )   $ (12,679 )
                                 
Adjustments to reconcile loss to net cash provided by (used in) operating activities:                                
Loss on disposal of property and equipment     (1 )     -       12       1  
Depreciation     594       484       1,809       1,420  
Stock-based compensation     724       419       1,876       1,002  
Amortization of intangible assets     788       885       2,071       2,736  
Amortization of deferred commissions     378       (297 )     1,181       (909 )
Amortization of operating lease right-of-use assets     586       338       1,508       1,051  
Interest on convertible notes     153       142       436       424  
Interest and amortization of debt issuance costs on Convertible Debentures     188       -       400       -  
Other income related to the earn-out consideration     -       -       -       (257 )
Deferred taxes, net     (53 )     (55 )     (171 )     (182 )
                                 
Changes in assets and liabilities:                                
Trade receivables     36       (509 )     (126 )     196  
Prepaid expenses and other receivables     (73 )     168       (456 )     (607 )
Deferred commissions     (236 )     353       (900 )     1,101  
Change in long-term lease deposits     (3 )     2       (89 )     25  
Trade payables     (175 )     559       (289 )     (264 )
Employees and payroll accruals, accrued expenses and other liabilities     (43 )     39       (90 )     (185 )
Deferred revenues     (955 )     (357 )     1,034       5,997  
Accrued severance pay, net     (37 )     5       (36 )     73  
Operating lease liabilities     (591 )     (342 )     (1,545 )     (1,075 )
Other long-term liabilities     21       (15 )     184       (126 )
Net cash (used in) operating activities     (3,590 )     (1,711 )     (5,448 )     (2,258 )
                                 
Cash flows from investing activities:                                
                                 
Proceeds from sale of property and equipment     2       1       6       1  
Capitalization of technology     489       (1,027 )     (1,100 )     (2,462 )
Purchase of property and equipment     (105 )     (309 )     (1,543 )     (1,259 )
Net cash provided by (used in) investing activities     386       (1,335 )     (2,637 )     (3,720 )
                                 
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     -       231       -       743  
Net cash provided (used) by financing activities     -       231       9,442       (1,937 )
Effect of exchange rate changes on cash     (1 )     (76 )     (14 )     (124 )
Increase (decrease) in cash, cash equivalents and restricted cash     (3,205 )     (2,891 )     1,343       (8,039 )
Cash, cash equivalents and restricted cash at the beginning of the period     16,675       13,008       12,127       18,156  
Cash, cash equivalents and restricted cash at the end of the period   $ 13,470     $ 10,117     $ 13,470     $ 10,117  
                                 
Reconciliation of cash, cash equivalents and restricted cash as shown in the consolidated statements of cash flow:                                
Cash and cash equivalents   $ 12,894     $ 9,546     $ 12,894     $ 9,546  
Restricted cash included in long-term restricted lease deposits     576       571       576       571  
                                 
Total cash, cash equivalents and restricted cash   $ 13,470     $ 10,117     $ 13,470     $ 10,117  

 

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