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:

 

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 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

 

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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: August 12, 2020 /s/ J. Michael Myshrall
  J. Michael Myshrall
  Chief Financial Officer

 

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Exhibit 99.1

 

 

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.

 

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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

 

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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  

 

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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     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  

 

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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  

 

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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  

 

 

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