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): February 22, 2021

 

 

 

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 February 22, 2021, Cyren Ltd. issued a press release announcing its financial and operational results for the fourth quarter and fiscal year ended December 31, 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 February 22, 2021

 

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: February 22, 2021 /s/ Kenneth Tarpey
  Kenneth Tarpey
  Chief Financial Officer

 

 

2

 

 

Exhibit 99.1

 

 

PRESS RELEASE

 

Cyren Announces Fourth Quarter and Full Year 2020 Financial Results

- - -

 

McLean, VA. – February 22, 2021 – Cyren (NASDAQ: CYRN) today announced its fourth quarter and full year 2020 financial results for the period ending December 31, 2020.

 

During the fourth quarter, Cyren reported quarterly revenues of $8.4 million, compared to $9.5 million during the fourth quarter of 2019. For the full year ended 2020, revenues were $36.4 million compared to $38.4 million in the prior year. Revenues for the fourth quarter included a one-time reduction of $0.7 million as a result of a multi-year customer contract that was restructured.

 

The Company’s next generation email security product, Cyren Inbox Security, continued to gain traction among enterprises using Microsoft 365, with Q4 revenues increasing 140% over Q3 2020.

 

“2020 was a year of transition for Cyren as we focused on the execution of a new strategy,” said Brett Jackson, CEO of Cyren. “Our teams accomplished our key objectives enhancing our core products, improving customer satisfaction and bringing new product to market. The highlight was the development and launch of our next generation, cloud-based email security product, Cyren Inbox Security. This new product provides Cyren with a significant growth engine into the enterprise market. We plan to continue investing in this opportunity to build market share and grow revenues. We believe that fourth quarter revenue growth is indicative of the potential opportunity we see.”

 

Fourth Quarter and Full Year 2020 Financial Highlights:

 

Revenues for the fourth quarter of 2020 were $8.4 million, compared to $9.5 million during the fourth quarter of 2019. Revenues for the full year were $36.4 million compared to $38.4 million in 2019.

 

GAAP net loss for the fourth quarter of 2020 was $5.0 million, compared to a net loss of $5.3 million in the fourth quarter of 2019. GAAP net loss for the full year ended 2020 was $17.3 million compared to $18.0 million for the full year 2019.

 

GAAP loss per basic and diluted share for the fourth quarter of 2020 was $0.08, compared to a loss of $0.09 per basic and diluted share for the fourth quarter of 2019. GAAP loss per share was $0.29 in 2020 compared to $0.33 in 2019.

 

Non-GAAP net loss for the fourth quarter of 2020 was $4.2 million, compared to a Non-GAAP net loss of $3.3 million for the fourth quarter of 2019. Non-GAAP net loss for the full year 2020 was $13.8 million, a decrease compared to $15.3 million during 2019.

 

 

 

 

Non-GAAP loss per basic and diluted share was $0.07 for the fourth quarter of 2020, compared to a Non-GAAP loss of $0.06 per share in fourth quarter of 2019. Non-GAAP loss per basic and diluted share was $0.23 for 2020 compared to $0.28 per share in 2019.

 

Cash used in operating activities during the fourth quarter of 2020 was $3.0 million, compared to operating cash usage of $4.6 million during the fourth quarter of 2019.

 

Net cash flow for the fourth quarter of 2020 was negative $3.6 million, compared to $2.0 million during the fourth quarter of 2019 when the company raised capital through a rights offering.

 

Cash balance as of December 31, 2020, was $9.3 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.”

 

Registered Direct Offering:

 

Subsequent to the end of the quarter, Cyren announced a registered direct offering with a select group of accredited institutional investors for the purchase of 12 million ordinary shares priced at $1.15 per share, generating gross proceeds of $13.8 million and net proceeds of $12.5 million. The transaction was completed on February 16, 2021 and therefore the proceeds of the transaction are not included in the cash balance on the balance sheet as of December 31, 2020.

 

Financial Results Conference Call:

 

The company will host a conference call at 4:30 p.m. Eastern Time on Monday, February 22, 2021 to discuss fourth quarter and full year 2020 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 link: https://www.webcast-eqs.com/cyren20210222/en.

 

For those unable to participate in the live conference call, a replay will be available until March 8, 2021. 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 13716472. 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.

 

About Cyren:

 

More than 1.3 billion users around the world rely on Cyren’s cloud security solutions to protect them against cyber-attacks every day. Powered by the world’s largest security cloud, Cyren (NASDAQ: CYRN) delivers fast time-to-protection with embedded threat detection, threat intelligence and email security solutions. Learn more at www.cyren.com.

 

Blog: http://blog.cyren.com

LinkedIn: www.linkedin.com/company/cyren

Twitter: www.twitter.com/CyrenInc

 

2

 

 

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
Kenneth Tarpey, CFO
Cyren
+1.703.760.3320

kenneth.tarpey@cyren.com

 

3

 

 

CYREN LTD.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

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

 

    Three months ended     Twelve months ended  
    December 31     December 31  
    2020     2019     2020     2019  
    Unaudited     Unaudited     Unaudited     Unaudited  
                         
Revenues   $ 8,444     $ 9,529     $ 36,388     $ 38,391  
                                 
Cost of revenues     3,618       4,056       14,786       15,557  
                                 
Gross profit     4,826       5,473       21,602       22,834  
                                 
Operating expenses:                                
                                 
Research and development, net     3,819       3,811       16,083       15,801  
                                 
Sales and marketing     2,555       3,352       11,678       13,825  
                                 
General and administrative     2,591       3,563       9,583       10,877  
                                 
Total operating expenses     8,965       10,726       37,344       40,503  
                                 
Operating loss     (4,139 )     (5,253 )     (15,742 )     (17,669 )
                                 
Other income (expense), net     (4 )     4       5       266  
                                 
Financial expenses, net     (890 )     (85 )     (1,647 )     (727 )
                                 
Loss before taxes     (5,033 )     (5,334 )     (17,384 )     (18,130 )
                                 
Tax benefit (provision)     27       (5 )     121       112  
                                 
Loss   $ (5,006 )   $ (5,339 )   $ (17,263 )   $ (18,018 )
                                 
Loss per share - basic and diluted   $ (0.08 )   $ (0.09 )   $ (0.29 )   $ (0.33 )
                                 
Weighted average number of shares outstanding:                                
Basic and Diluted     60,994       57,473       60,327       55,167  

 

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     Twelve months ended  
    December 31     December 31  
    2020     2019     2020     2019  
    Unaudited     Unaudited     Unaudited     Unaudited  
                         
GAAP gross profit   $ 4,826     $ 5,473     $ 21,602     $ 22,834  
GAAP gross margin     57 %     57 %     59 %     59 %
Plus:                                
Stock-based compensation expense     20       143       105       241  
Amortization of intangible assets     672       888       2,370       3,252  
Non-GAAP gross profit     5,518       6,504       24,077       26,327  
Non-GAAP gross margin     65 %     68 %     66 %     69 %
                                 
GAAP operating loss     (4,139 )     (5,253 )     (15,742 )     (17,669 )
Plus:                                
Stock-based compensation expense     515       1,358       2,391       2,360  
Amortization of intangible assets     752       1,019       2,823       3,755  
Expense (Capitalization) of technology     (372 )     (1,230 )     (1,439 )     (3,740 )
Settlement of litigation, net     -       1,078       -       1,078  
Non-GAAP operating loss     (3,244 )     (3,028 )     (11,967 )     (14,216 )
                                 
GAAP loss     (5,006 )     (5,339 )     (17,263 )     (18,018 )
Plus:                                
Stock-based compensation expense     515       1,358       2,391       2,360  
Amortization of intangible assets     752       1,019       2,823       3,755  
Adjustment to earn-out liabilities     -       -       -       -  
Amortization of deferred tax assets     (54 )     (129 )     (198 )     (299 )
Gain from an earn-out liability settlement     -       -       -       (256 )
Settlement of litigation, net     -       1,078       -       1,078  
Expense (Capitalization) of technology     (380 )     (1,254 )     (1,506 )     (3,881 )
Non-GAAP loss   $ (4,173 )   $ (3,267 )   $ (13,753 )   $ (15,261 )
                                 
Numerator for non-GAAP EPS calculation   $ (4,173 )   $ (3,267 )   $ (13,753 )   $ (15,261 )
Non-GAAP loss per share   $ (0.07 )   $ (0.06 )   $ (0.23 )   $ (0.28 )
                                 
GAAP weighted-average shares used to compute loss per share     60,994       57,473       60,327       55,167  

 

5

 

 

CYREN LTD.

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(in thousands of U.S. dollars)

 

    December 31     December 31  
    2020     2019  
    Unaudited     Unaudited  
Assets            
Current Assets:            
Cash and cash equivalents   $ 9,296     $ 11,551  
Trade receivables, net     960       2,187  
Deferred commissions     980       948  
Prepaid expenses and other receivables     779       819  
Total current assets     12,015       15,505  
                 
Long-term deferred commissions     1,125       1,580  
Long-term lease deposits and prepaids     937       767  
Operating lease right-of-use assets     10,900       8,695  
Severance pay fund     745       659  
Property and equipment, net     3,948       4,410  
Intangible assets, net     7,797       8,966  
Goodwill     21,476       20,246  
Total long-term assets     46,928       45,323  
Total assets   $ 58,943     $ 60,828  
                 
Liabilities and Shareholders’ Equity                
Current Liabilities:                
Trade payables   $ 799     $ 1,184  
Convertible notes     10,000       -  
Employees and payroll accruals     3,813       3,427  
Accrued expenses and other liabilities     1,420       1,145  
Operating lease liabilities     1,983       1,946  
Deferred revenues     6,934       7,208  
Total current liabilities     24,949       14,910  
                 
Deferred revenues     644       1,956  
Convertible notes     -       10,000  
Convertible Debentures     9,248       -  
Long-term operating lease liabilities     9,866       7,174  
Deferred tax liability, net     655       796  
Accrued severance pay     838       811  
Other liabilities     706       470  
Total long-term liabilities     21,957       21,207  
                 
Shareholders’ equity     12,037       24,711  
Total liabilities and shareholders’ equity   $ 58,943     $ 60,828  

 

6

 

 

CYREN LTD.

 

CONDENSED CONSOLIDATED CASH FLOW DATA

 

(in thousands of U.S. dollars)

 

    Three months ended     Twelve months ended  
    December 31     December 31  
    2020     2019     2020     2019  
Cash flows from operating activities:   Unaudited     Unaudited     Unaudited     Unaudited  
                         
Loss   $ (5,006 )   $ (5,339 )     (17,263 )   $ (18,018 )
                                 
Adjustments to reconcile loss to net cash provided by (used in) operating activities:                                
(Gain) / loss on disposal of property and equipment     2       (1 )     14       -  
Depreciation     540       526       2,349       1,946  
Stock-based compensation     515       1,358       2,391       2,360  
Amortization of intangible assets     752       1,019       2,823       3,755  
Amortization of deferred commissions     336       2,108       1,517       1,199  
Amortization of operating lease right-of-use assets     649       280       2,157       1,331  
Interest on convertible notes     139       144       575       568  
Interest and amortization of debt issuance costs on Convertible Debentures     201       -       601       -  
Other income related to the earn-out consideration     -       -       -       (257 )
Deferred taxes, net     (13 )     (140 )     (184 )     (322 )
                                 
Changes in assets and liabilities:                                
Trade receivables     1,425       1,339       1,299       1,535  
Prepaid expenses and other receivables     513       436       57       (171 )
Deferred commissions     (195 )     (2,062 )     (1,095 )     (961 )
Change in long-term lease deposits     (27 )     20       (116 )     45  
Trade payables     (110 )     (495 )     (399 )     (759 )
Employees and payroll accruals, accrued expenses and other liabilities     239       (843 )     149       (1,028 )
Deferred revenues     (2,890 )     (3,065 )     (1,856 )     2,932  
Accrued severance pay, net     (24 )     (15 )     (60 )     58  
Operating lease liabilities     (61 )     (171 )     (1,606 )     (1,246 )
Other long-term liabilities     53       277       237       151  
Net cash used in operating activities     (2,962 )     (4,624 )     (8,410 )     (6,882 )
                                 
Cash flows from investing activities:                                
                                 
Capitalization of technology     (382 )     (1,234 )     (1,482 )     (3,696 )
Proceeds from sale of property and equipment     -       2       6       3  
Purchase of property and equipment     (223 )     (211 )     (1,766 )     (1,470 )
Net cash used in investing activities     (605 )     (1,443 )     (3,242 )     (5,163 )
                                 
Cash flows from financing activities:                                
Proceeds from rights offering, net     -       7,967       9,442       7,967  
Proceeds from Convertible Debenture, net of debt issuance costs     -       -       -       -  
Payment of earn-out liability     -       -       -       (2,680 )
Proceeds from options exercised     -       -       -       743  
Net cash provided by financing activities     -       7,967       9,442       6,030  
Effect of exchange rate changes on cash     11       110       (3 )     (14 )
Increase (decrease) in cash, cash equivalents and restricted cash     (3,556 )     2,010       (2,213 )     (6,029 )
Cash, cash equivalents and restricted cash at the beginning of the period     13,470       10,117       12,127       18,156  
Cash, cash equivalents and restricted cash at the end of the period   $ 9,914     $ 12,127     $ 9,914     $ 12,127  
                                 
Reconciliation of cash, cash equivalents and restricted cash as shown in the consolidated statements of cash flow:                                
Cash and cash equivalents   $ 9,296     $ 11,551     $ 9,296     $ 11,551  
Restricted cash included in long-term restricted lease deposits     618       576       618       576  
                                 
Total cash, cash equivalents and restricted cash   $ 9,914     $ 12,127     $ 9,914     $ 12,127  

 

 

 

7