CYREN LTD.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On August 1, 2022, Cyren Ltd. (the “Company” or “Cyren”) completed the previously announced sale of all the equity interests in its legacy secure email gateway business and wholly owned subsidiary, Cyren GmbH (the “Transaction”) for a total purchase price of EUR 10 million, subject to customary post-closing adjustments.
The unaudited pro forma condensed consolidated balance sheet as of March 31, 2022, has been prepared to give effect of the transaction on August 1, 2022, as if such transaction had occurred on March 31, 2022. Beginning in the second quarter of the Company for the period ended June 30, 2022, Cyren GmbH’s historical financial results for periods prior to the transaction will be reflected in the Company’s consolidated financial statements as discontinued operations.
The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2021, and for the three months ended March 31, 2022, and 2021 are presented as if the Transaction had occurred on January 1, 2021. Beginning in the second quarter of the Company for the period ended June 30, 2022, Cyren GmbH’s historical financial results for periods prior to the transaction will be reflected in the Company’s consolidated financial statements as discontinued operations.
The unaudited pro forma condensed consolidated financial statements are subject to the assumptions and adjustments described in the accompanying notes. These assumptions and adjustments are based on information presently available. The unaudited pro forma condensed consolidated financial statements are based on the Company’s historical financial statements for the periods presented and, in the opinion of the Company’s management, all adjustments and disclosures necessary for a fair presentation of the unaudited pro forma condensed consolidated financial statements have been made.
These unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes only and are not necessarily indicative of the results of operations that would have been achieved had the events reflected been completed as of the dates indicated or of the results that may be obtained in the future. The significant accounting policies applied in these unaudited Pro Forma condensed consolidated financial Statements are consistent with those applied in preparing the Company's unaudited interim consolidated financial statements as of March 31, 2022, and for the three months period then ended (the "interim financial statements"), which are consistent with those followed in the preparation of the Company's annual consolidated financial statements as of December 31, 2021, and for the year then ended.
CYREN LTD.
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED BALANCE SHEET
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As of March 31, 2022 (US$ in thousands) | | | | As Reported | | Pro Forma Adjustments | | Pro Forma |
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| Assets | | | | | | | | |
| Current Assets: | | | | | | | | |
| Cash and cash equivalents | | | | $ | 17,630 | | | $ | 9,285 | | (a) | $ | 26,915 | |
| Trade receivables, net | | | | 1,501 | | | (505) | | | 996 | |
| Deferred commissions | | | | 941 | | | (477) | | | 464 | |
| Prepaid expenses and other receivables | | | | 1,290 | | | (149) | | | 1,141 | |
| Total current assets | | | | $ | 21,362 | | | $ | 8,154 | | | $ | 29,516 | |
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| Long-term deferred commissions | | | | 966 | | | (326) | | | 640 | |
| Long-term lease deposits and prepaid expenses | | | | 819 | | | (119) | | | 700 | |
| Operating lease right-of-use assets | | | | 8,784 | | | (2,957) | | | 5,827 | |
| Severance pay fund | | | | 903 | | | — | | | 903 | |
| Property and equipment, net | | | | 1,761 | | | (175) | | | 1,586 | |
| Intangible assets, net | | | | 3,570 | | | (655) | | | 2,915 | |
| Goodwill | | | | 20,128 | | | (7,815) | | | 12,313 | |
| Total long-term assets | | | | 36,931 | | | (12,047) | | | 24,884 | |
| Total assets | | | | $ | 58,293 | | | $ | (3,893) | | | $ | 54,400 | |
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| Liabilities and Shareholders’ Equity | | | | | | | | |
| Current Liabilities: | | | | | | | | |
| Trade payables | | | | $ | 932 | | | $ | (21) | | | $ | 911 | |
| Employees and payroll accruals | | | | 4,627 | | | (220) | | | 4,407 | |
| Accrued expenses and other liabilities | | | | 1,123 | | | (151) | | | 972 | |
| Operating lease liabilities | | | | 1,530 | | | (290) | | | 1,240 | |
| Deferred revenues | | | | 8,109 | | (1,761) | | | 6,348 | |
| Total current liabilities | | | | 16,321 | | | (2,443) | | | 13,878 | |
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| Deferred revenues | | | | 4,466 | | (482) | | | 3,984 | |
| Convertible Debentures | | | | 8,625 | | — | | | 8,625 | |
| Long-term operating lease liabilities | | | | 8,111 | | (2,763) | | | 5,348 | |
| Deferred tax liability, net | | | | 353 | | | (197) | | | 156 | |
| Accrued severance pay | | | | 985 | | | — | | | 985 | |
| Other liabilities | | | | 507 | | (507) | | | — | |
| Total long-term liabilities | | | | 23,047 | | | (3,949) | | | 19,098 | |
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| Shareholders' Equity: | | | | | | | | |
| Ordinary shares | | | | 4,851 | | — | | | 4,851 | |
| Additional paid-in capital | | | | 294,316 | | | — | | | 294,316 | |
| Accumulated other comprehensive loss | | | | (2,128) | | | 2,128 | | | — | |
| Accumulated deficit | | | | (278,114) | | | 371 | | (b) | (277,743) | |
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| Shareholders’ equity | | | | 18,925 | | | 2,499 | | | 21,424 | |
| Total liabilities and shareholders’ equity | | | | $ | 58,293 | | | $ | (3,893) | | | $ | 54,400 | |
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CYREN LTD.
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
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Three Months Ended March 31, 2022 (US$ in thousands except share and per share amounts) | | As Reported | | Pro Forma Adjustments | | | | Pro Forma |
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| Revenues | | $ | 7,259 | | | $ | (1,542) | | | | | $ | 5,717 | |
| Cost of revenues | | 3,817 | | | (385) | | | | | 3,432 | |
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| Gross profit | | 3,442 | | | (1,157) | | | | | 2,285 | |
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| Operating expenses: | | | | | | | | |
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| Research and development, net | | 4,445 | | | (496) | | | | | 3,949 | |
| Sales and marketing | | 2,707 | | | (227) | | | | | 2,480 | |
| General and administrative | | 2,688 | | | (164) | | | | | 2,524 | |
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| Total operating expenses | | 9,840 | | | (887) | | | | | 8,953 | |
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| Operating loss | | (6,398) | | | (270) | | | | | (6,668) | |
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| Other income, net | | 1 | | | (1) | | | | | — | |
| Financial (expenses), net | | (124) | | | 2 | | | | | (122) | |
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| Loss from continuing operations before taxes on income | | (6,521) | | | (269) | | | | | (6,790) | |
| Tax benefit | | 38 | | | (38) | | | | | — | |
| Net loss from continuing operations | | $ | (6,483) | | | $ | (308) | | | | | $ | (6,791) | |
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| Basic and diluted net loss per share | | $ | (1.30) | | | | | | | $ | (1.36) | |
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| Weighted-average number of shares used in computing basic and diluted net loss per share | | 4,989,784 | | | | | | 4,989,784 |
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CYREN LTD.
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
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Three Months Ended March 31, 2021 (US$ in thousands except share and per share amounts) | | As Reported | | Pro Forma Adjustments | | | | Pro Forma |
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| Revenues | | $ | 8,757 | | | $ | (1,911) | | | | | $ | 6,846 | |
| Cost of revenues | | 3,795 | | | (494) | | | | | 3,301 | |
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| Gross profit | | 4,962 | | | (1,417) | | | | | 3,545 | |
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| Operating expenses: | | | | | | | | |
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| Research and development, net | | 4,250 | | | (661) | | | | | 3,589 | |
| Sales and marketing | | 2,638 | | | (343) | | | | | 2,295 | |
| General and administrative | | 2,160 | | | (185) | | | | | 1,975 | |
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| Total operating expenses | | 9,048 | | | (1,189) | | | | | 7,859 | |
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| Operating loss | | (4,086) | | | (228) | | | | | (4,314) | |
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| Other (expense), net | | (18) | | | — | | | | | (18) | |
| Financial (expenses), net | | (214) | | | 47 | | | | | (167) | |
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| Loss from continuing operations before taxes on income | | (4,318) | | | (181) | | | | | (4,499) | |
| Tax benefit/(expense) | | 121 | | | (56) | | | | | 65 | |
| Net loss from continuing operations | | $ | (4,197) | | | $ | (237) | | | | | $ | (4,434) | |
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| Basic and diluted net loss per share | | $ | (1.23) | | | | | | | $ | (1.30) | |
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| Weighted-average number of shares used in computing basic and diluted net loss per share | | 3,423,448 | | | | | | 3,423,448 |
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CYREN LTD.
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
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Year Ended December 31, 2021 (US$ in thousands except share and per share amounts) | | As Reported | | Pro Forma Adjustments | | | | Pro Forma |
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| Revenues | | $ | 31,187 | | | $ | (7,349) | | | | | $ | 23,838 | |
| Cost of revenues | | 15,277 | | | (1,780) | | | | | 13,497 | |
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| Gross profit | | 15,910 | | | (5,569) | | | | | 10,341 | |
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| Operating expenses: | | | | | | | | |
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| Research and development, net | | 17,624 | | | (2,416) | | | | | 15,208 | |
| Sales and marketing | | 10,808 | | | (1,288) | | | | | 9,519 | |
| General and administrative | | 9,283 | | | (695) | | | | | 8,589 | |
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| Total operating expenses | | 37,715 | | | (4,399) | | | | | 33,316 | |
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| Operating loss | | (21,805) | | | (1,170) | | | | | (22,975) | |
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| Other (expense), net | | (12) | | | — | | | | | (13) | |
| Financial (expenses), net | | (1,360) | | | 111 | | | | | (1,248) | |
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| Loss from continuing operations before taxes on income | | (23,177) | | | (1,059) | | | | | (24,236) | |
| Tax benefit/(expense) | | 138 | | | (177) | | | | | (40) | |
| Net loss from continuing operations | | $ | (23,039) | | | $ | (1,237) | | | | | $ | (24,275) | |
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| Basic and diluted net loss per share | | $ | (5.90) | | | | | | | $ | (6.21) | |
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| Weighted-average number of shares used in computing basic and diluted net loss per share | | 3,908,072 | | | | | | 3,908,072 |
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CYREN LTD.
NOTES TO THE
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following items resulted in adjustments in the unaudited pro forma condensed consolidated financial information:
a.For the purposes of these pro forma financial statements, the cash to be received from the Transaction is presented without including the estimated effect of post-closing contractual adjustments.
b.Adjustment reflects the loss on the Transaction calculated as follows:
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| (US$ thousands except for exchange rates and EUR as indicated) | |
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| Purchase price in EUR | € | 10,000 | |
| EUR/USD exchange rate as of March 31, 2022 | 1.1112 | |
| Purchase price in USD | $ | 11,112 | |
| Estimated fees | 1,500 | |
| Cash proceeds, net of estimated fees | 9,612 | |
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| Net assets disposed of | 9,241 | |
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| Pro forma pre-tax gain on disposal | 371 | |
| Estimated income taxes | — | |
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| Pro forma gain on disposal, net of taxes | $ | 371 | |
