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Alarum Technologies Ltd.

Alarum Technologies Ltd.ALAR決算レポート

Nasdaq

What changed in Alarum Technologies Ltd.'s 20-F — 2022 vs 2023

Top changes in Alarum Technologies Ltd.'s 2023 20-F

493 paragraphs added · 507 removed · 318 edited across 6 sections

Item 2. Properties

Properties — owned and leased real estate

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ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE. 1 ITEM 3. KEY INFORMATION. 1 A. [Reserved.] 1 B. Capitalization and Indebtedness. 1 C. Reasons for the Offer and Use of Proceeds. 1 D. Risk Factors. 1 ITEM 4. INFORMATION ON THE COMPANY. 28 A. History and Development of the Company. 28 B. Business Overview. 29 C. Organizational Structure. 38 D.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE. 1 ITEM 3. KEY INFORMATION. 1 A. [Reserved.] 1 B. Capitalization and Indebtedness. 1 C. Reasons for the Offer and Use of Proceeds. 1 D. Risk Factors. 1 ITEM 4. INFORMATION ON THE COMPANY. 27 A. History and Development of the Company. 27 B. Business Overview. 27 C. Organizational Structure. 38 D.
Property, Plant and Equipment. 39 ITEM 4A. UNRESOLVED STAFF COMMENTS. 39 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS. 40 A. Operating Results. 41 B. Liquidity and Capital Resources. 46 C. Research and Development, Patents and Licenses, etc. 49 D. Trend Information. 49 E. Critical Accounting Estimates. 49 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES. 50 A.
Property, Plant and Equipment. 38 ITEM 4A. UNRESOLVED STAFF COMMENTS. 38 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS. 38 A. Operating Results. 41 B. Liquidity and Capital Resources. 45 C. Research and Development, Patents and Licenses, etc. 48 D. Trend Information. 48 E. Critical Accounting Estimates. 49 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES. 50 A.
Directors and Senior Management. 50 B. Compensation. 52 C. Board Practices. 54 D. Employees. 67 E. Share Ownership. 67 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS. 69 A. Major Shareholders. 69 B. Related Party Transactions. 71 C. Interests of Experts and Counsel. 71 ITEM 8. FINANCIAL INFORMATION. 72 A. Consolidated Statements and Other Financial Information. 72 B.
Directors and Senior Management. 50 B. Compensation. 52 C. Board Practices. 54 D. Employees. 67 E. Share Ownership. 67 F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation. 69 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS. 70 A. Major Shareholders. 70 B. Related Party Transactions. 71 C. Interests of Experts and Counsel. 71 ITEM 8.
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FINANCIAL INFORMATION. 71 A. Consolidated Statements and Other Financial Information. 71 B. Significant Changes. 72

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Any claim brought against us, regardless of its merit, could result in material expense, diversion of management time and attention, and damage to our reputation, and could cause us to fail to retain or attract customers.
Any claim brought against us, regardless of its merit, could result in material expense, diversion of management time and attention, and damage to our reputation, and could cause us to fail to retain or attract customers.
As a result of the difficulty associated with enforcing a judgment against us in Israel, you may not be able to collect any damages awarded by either a U.S. or foreign court. Our headquarters and other significant operations are located in Israel, and, therefore, our results may be adversely affected by political, economic and military instability in Israel.
As a result of the difficulty associated with enforcing a judgment against us in Israel, you may not be able to collect any damages awarded by either a U.S. or foreign court. 21 Our headquarters and other significant operations are located in Israel, and, therefore, our results may be adversely affected by political, economic and military instability in Israel.
If our internal network system is compromised by cyber attackers or other data thieves, or if our hosting and infrastructure fails, public perception of our products and services will be harmed. We will not succeed unless the marketplace is confident that we provide effective cybersecurity protection. Further, we may be targeted by cyber terrorists because we are an Israeli company.
If our network system is compromised by cyber attackers or other data thieves, or if our hosting and infrastructure fails, public perception of our products and services will be harmed. We will not succeed unless the marketplace is confident that we provide effective cybersecurity protection. Further, we may be targeted by cyber terrorists because we are an Israeli company.
In such cases, we may not be in a position to develop or commercialize products or our product candidates unless we successfully pursue litigation to nullify or invalidate the third-party intellectual property right concerned, or enter into a license agreement with the intellectual property right holder, if available on commercially reasonable terms.
In such cases, we may not be in a position to develop or commercialize products or our product candidates unless we successfully pursue litigation to nullify or invalidate the third-party intellectual property right concerned or enter a license agreement with the intellectual property right holder, if available on commercially reasonable terms.
Any of these events, even if we were ultimately to prevail, could require us to divert substantial financial and management resources that we would otherwise be able to devote to our business. 15 Third-party claims of intellectual property infringement may prevent or delay our development and commercialization efforts.
Any of these events, even if we were ultimately to prevail, could require us to divert substantial financial and management resources that we would otherwise be able to devote to our business. Third-party claims of intellectual property infringement may prevent or delay our development and commercialization efforts.
If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the share price or trading volume of our ADSs or Ordinary Shares to decline.
If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the share price or trading volume of our ADSs or Ordinary Shares to decline. 26
A failure to meet market expectations regarding our profitability and our position as a growth company have had and could continue to have an adverse effect on the price of our Ordinary Shares and ADSs. Our quarterly and annual results of operations may fluctuate for a variety of reasons.
A failure to meet market expectations regarding our profitability and our position as a growth company has had and could continue to have an adverse effect on the price of our Ordinary Shares and ADSs. Our quarterly and annual results of operations may fluctuate for a variety of reasons.
As part of our business strategy and in order to remain competitive, we are evaluating acquiring or making investments in complementary companies, products or technologies on an on-going basis. We have completed two main acquisitions to date – the acquisition of NetNut Ltd. and CyberKick.
As part of our business strategy and in order to remain competitive, we are evaluating acquiring or making investments in complementary companies, products or technologies on an on-going basis. We have completed two main acquisitions to date – the acquisition of NetNut and CyberKick.
Continued market fluctuations could result in extreme volatility in the price of our ADSs which could cause a decline in the value of our ADSs and the loss of some or all of your investment. 27 We may be subject to securities litigation, which is expensive and could divert management attention.
Continued market fluctuations could result in extreme volatility in the price of our ADSs which could cause a decline in the value of our ADSs and the loss of some or all of your investment. We may be subject to securities litigation, which is expensive and could divert management attention.
Because of such claims, we could be required to pay additional remuneration or royalties to our current and former employees, or be forced to litigate such claims, which could negatively affect our business. 17 We may not be able to protect our intellectual property rights.
Because of such claims, we could be required to pay additional remuneration or royalties to our current and former employees, or be forced to litigate such claims, which could negatively affect our business. We may not be able to protect our intellectual property rights.
Future patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
Future patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. 15 Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
In addition, if the license terms for the open-source code change, we may be forced to re-engineer our software or incur additional costs. 13 Under applicable employment laws, we may not be able to enforce covenants not to compete and therefore may be unable to prevent our competitors from benefiting from the expertise of some of our former employees.
In addition, if the license terms for the open-source code change, we may be forced to re-engineer our software or incur additional costs. 10 Under applicable employment laws, we may not be able to enforce covenants not to compete and therefore may be unable to prevent our competitors from benefiting from the expertise of some of our former employees.
Any such delisting may also severely complicate trading of our Ordinary Shares by our shareholders or prevent them from re-selling their Ordinary Shares at/or above the price they paid. Issuance of a significant amount of additional Ordinary Shares on exercise or conversion of outstanding warrants and/or substantial future sales of our Ordinary Shares may depress our share price.
Any such delisting may also severely complicate trading of our Ordinary Shares by our shareholders or prevent them from re-selling their Ordinary Shares at/or above the price they paid. 16 The issuance of a significant amount of additional Ordinary Shares or exercise or conversion of outstanding warrants and/or substantial future sales of our Ordinary Shares may depress our share price.
Federal Income Tax Considerations—Passive Foreign Investment Companies” for additional information. 22 ADSs holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in less favorable results to the plaintiff(s) in any such action.
Federal Income Tax Considerations—Passive Foreign Investment Companies” for additional information. 19 ADSs holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in less favorable results to the plaintiff(s) in any such action.
These restrictions may cause a material decline in the value of the ADSs. Our warrants are speculative in nature.
These restrictions may cause a material decline in the value of the ADSs. 17 Our warrants are speculative in nature.
Our use of third-party software and other intellectual property may expose us to risks. Some of our products and services include software or other intellectual property licensed from third parties, and we otherwise use software and other intellectual property licensed from third parties in our business. This exposes us to risks over which we may have little or no control.
Some of our products and services include software or other intellectual property licensed from third parties, and we otherwise use software and other intellectual property licensed from third parties in our business. This exposes us to risks over which we may have little or no control.
We expect that the majority of our revenues will continue to be generated in U.S. dollars with the balance in NIS for the foreseeable future, and that a significant portion of our expenses will continue to be denominated in NIS and partially in U.S. dollar.
We expect that most of our revenues will continue to be generated in U.S. dollars with the balance in NIS for the foreseeable future, and that a significant portion of our expenses will continue to be denominated in NIS and partially in U.S. dollar.
Specifically, commencing on the date of issuance, holders of the warrants may exercise their right to acquire ADSs and pay an exercise price per ADS ranging between $6.75 and $2,870, subject to adjustment upon certain events, prior to five years from the date of issuance, after which date any unexercised warrants will expire and have no further value.
Specifically, commencing on the date of issuance, holders of the warrants may exercise their right to acquire ADSs and pay an exercise price per ADS ranging between $2.27 and $2,870, subject to adjustment upon certain events, prior to five years from the date of issuance, after which date any unexercised warrants will expire and have no further value.
Based on the projected composition of our income and valuation of our assets, we do not expect to be a PFIC for 2022, and we do not expect to become a PFIC in the future, although there can be no assurance in this regard.
Based on the projected composition of our income and valuation of our assets, we do not expect to be a PFIC for 2023, and we do not expect to become a PFIC in the future, although there can be no assurance in this regard.
Our business is subject to risks arising from the continuous effects of the COVID-19 pandemic - the risk that we may not be able to successfully execute our business or strategic plans, as well as the risk that we will not be able to anticipate, identify and respond quickly to changing market trends and customer preferences or changes in the consumer environment, including changing expectations of service, all of which could have a material adverse effect on our business and results of operations.
Our business is subject to risks arising from a pandemic, such as COVID-19, include the risk that we may not be able to successfully execute our business or strategic plans, as well as the risk that we will not be able to anticipate, identify and respond quickly to changing market trends and customer preferences or changes in the consumer environment, including changing expectations of service, all of which could have a material adverse effect on our business and results of operations.
Anti-Bribery Act; ● heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, consolidated financial statements; ● reduced or uncertain protection of intellectual property rights in some countries; ● social, economic and political instability, terrorist attacks and security concerns in general; ● an outbreak of a contagious disease, such as coronavirus, which may cause us, third party vendors and manufacturers and/or customers to temporarily suspend our or their respective operations in the affected city or country; 26 ● laws and business practices favoring local competition; ● being subject to the laws, regulations and the court systems of many jurisdictions; and ● potentially adverse tax consequences.
Anti-Bribery Act; ● heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, consolidated financial statements; ● reduced or uncertain protection of intellectual property rights in some countries; 24 ● social, economic and political instability, terrorist attacks and security concerns in general, and specifically the impact of the war between Israel and Hamas; ● an outbreak of a contagious disease, such as coronavirus, which may cause us, third party vendors and manufacturers and/or customers to temporarily suspend our or their respective operations in the affected city or country; ● laws and business practices favoring local competition; ● being subject to the laws, regulations and the court systems of many jurisdictions; and ● potentially adverse tax consequences.
If such a provider will choose to terminate the agreement, we will be at a risk of reducing the size of our IP pool, and might not be able to support the demands of our customer base. If we are unable to acquire new customers, our future revenues and operating results will be harmed.
If such a provider chooses to terminate the agreement, we will be at a risk of reducing the size of our IP pool and might not be able to support the demands of our customer base. 3 If we are unable to acquire new customers, our future revenues and operating results will be harmed.
In response to the foregoing developments, individuals, organizations and institutions, both within and outside of Israel, have voiced concerns that the proposed changes may negatively impact the business environment in Israel including due to reluctance of foreign investors to invest or conduct business in Israel, as well as to increased currency fluctuations, downgrades in credit rating, increased interest rates, increased volatility in securities markets, and other changes in macroeconomic conditions.
Additionally, individuals, organizations, and institutions, both within and outside of Israel, have voiced concerns that the proposed changes may negatively impact the business environment in Israel including due to reluctance of foreign investors to invest or conduct business in Israel, as well as to increased currency fluctuations, downgrades in credit rating, increased interest rates, increased volatility in securities markets, and other changes in macroeconomic conditions.
The markets in which we operate are characterized by intense competition, constant innovation and evolving security threats. We compete with companies that offer a broad array of internet access products. Our current and potential future competitors include providers of access solutions, such as Bright Data Ltd. (formerly Luminati Networks Ltd.), or Bright Data, Oxylabs Networks Pvt.
The markets in which we operate are characterized by intense competition, constant innovation and evolving security threats. We compete with companies that offer a broad array of internet access and web data collection products. Our current and potential future competitors include providers of access solutions, such as Bright Data Ltd., or Bright Data, Oxylabs Networks Pvt.
Fluctuations in our operating results and financial condition may be due to a number of factors: ● the degree of market acceptance of our products and services; ● our ability to attract and retain new customers; ● our ability to sell additional products to current customers; ● changes in consumers’ and enterprises’ requirements and expectations or channel partner requirements; ● changes in the growth rate of the internet access solutions markets; ● the timing and success of new product and service introductions by us or our competitors or any other change in the competitive landscape of the internet access markets, including consolidation among our customers or competitors; ● a disruption in, or termination of, our relationship with partners; ● our ability to successfully expand our business globally; ● changes in our pricing policies or those of our competitors and our responses to price competition; ● general economic conditions in our markets; ● unexpected changes in regulatory practices, laws, regulations and the court systems of certain jurisdictions; ● future accounting pronouncements or changes in our accounting policies or practices; ● the amount and timing of our operating costs; ● a change in our mix of products and services; and ● increases or decreases in our expenses caused by fluctuations in foreign currency exchange rates.
Fluctuations in our operating results and financial condition may be due to several factors: ● the degree of market acceptance of our products and services; ● our ability to attract and retain new customers; ● our ability to sell additional products to current customers; ● changes in consumers’ and enterprises’ requirements and expectations or channel partner requirements; ● changes in the growth rate of the internet access solutions markets; ● the timing and success of new product and service introductions by us or our competitors or any other change in the competitive landscape of the internet access markets, including consolidation among our customers or competitors; ● a disruption in, or termination of, our relationship with partners; ● our ability to successfully expand our business globally; ● changes in our pricing policies or those of our competitors and our responses to price competition; ● general economic conditions in our markets, including political, economic and military instability due to the Israel-Hamas war in Israel; 2 ● unexpected changes in regulatory practices, laws, regulations and the court systems of certain jurisdictions; ● future accounting pronouncements or changes in our accounting policies or practices; ● the amount and timing of our operating costs; ● a change in our mix of products and services; and ● increases or decreases in our expenses caused by fluctuations in foreign currency exchange rates.
In addition, defending our intellectual property rights may depend upon our ability to retain the qualified legal counsel to prosecute patent infringement litigation.
In addition, defending our intellectual property rights may depend upon our ability to retain a qualified legal counsel to prosecute patent infringement litigation.
We may seek additional capital through a combination of private and public equity offerings, debt financings and collaborations and strategic and licensing arrangements.
We may seek additional capital through a combination of private and public equity offerings, debt financing and collaborations and strategic and licensing arrangements.
Competitors may infringe our intellectual property. If we were to initiate legal proceedings against a third party to enforce a patent covering one of our products, the defendant could counterclaim that the patent covering our product candidate is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace.
If we were to initiate legal proceedings against a third party to enforce a patent covering one of our products, the defendant could counterclaim that the patent covering our product candidate is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace.
Consequently, the current market price of the ADSs may not be indicative of future market prices, and we may be unable to sustain or increase the value of your investment in the ADSs.
The market price of the ADSs has fluctuated in the past. Consequently, the current market price of the ADSs may not be indicative of future market prices, and we may be unable to sustain or increase the value of your investment in the ADSs.
Even if patents do successfully issue, and even if such patents cover our products, third parties may challenge their validity, enforceability, or scope, which may result in such patents being narrowed, found unenforceable or invalidated.
Even if patents are successfully issued, and even if such patents cover our products, third parties may challenge their validity, enforceability, or scope, which may result in such patents being narrowed, found unenforceable or invalidated.
In addition, if government regulations and industry standards related to the access sectors are changed in a manner that makes them less onerous, our customers may view compliance as less critical to their businesses, and our customers may be less willing to purchase our products and services.
In addition, if government regulations and industry standards related to the access sectors are changed in a manner that makes them less onerous, our customers may view compliance as less critical to their businesses, and our customers may be less willing to purchase our products and services. In either case, our sales and financial results would suffer.
Our operating results and financial condition may fluctuate from quarter to quarter and year to year and are likely to continue to vary due to a number of factors, many of which will not be within our control.
Our operating results and financial condition may fluctuate from quarter to quarter and year to year and may continue to vary due to several factors, many of which will not be within our control.
Our product enhancements or new products could fail to attain sufficient market acceptance for many reasons, including: ● delays in releasing product enhancements or new products; ● failure to accurately predict market demand and to supply products that meet this demand in a timely fashion; ● inability to interoperate effectively with the existing or newly introduced technologies, systems or applications of our existing and prospective customers; ● inability to protect against new types of attacks or techniques used by cyber attackers or other data thieves; ● defects in our products, errors or failures of our solutions to secure privileged accounts; ● negative publicity about the performance or effectiveness of our products; ● introduction or anticipated introduction of competing products by our competitors; ● installation, configuration or usage errors by our customers; and ● easing or changing of regulatory requirements related to IT / cybersecurity / privacy.
Even if we are able to anticipate, develop and commercially introduce enhancements and new products, there can be no assurance that enhancements or new products will achieve widespread market acceptance. 7 Our product enhancements or new products could fail to attain sufficient market acceptance for many reasons, including: ● delays in releasing product enhancements or new products; ● failure to accurately predict market demand and to supply products that meet this demand in a timely fashion; ● inability to interoperate effectively with the existing or newly introduced technologies, systems or applications of our existing and prospective customers; ● inability to protect against new types of attacks or techniques used by cyber attackers or other data thieves; ● defects in our products, errors or failures of our solutions to secure privileged accounts; ● negative publicity about the performance or effectiveness of our products; ● introduction or anticipated introduction of competing products by our competitors; ● installation, configuration or usage errors by our customers; and ● easing or changing of regulatory requirements related to IT / cybersecurity / privacy.
If any third-party patents were held by a court of competent jurisdiction to cover aspects of our formulations, processes for designs, or methods of use, the holders of any such patents may be able to block our ability to develop and commercialize the applicable product candidate unless we obtain a license or until such patent expires or is finally determined to be invalid or unenforceable.
In addition, third parties may obtain patents in the future and claim that the use of our technologies infringes upon these patents. 13 If any third-party patents were held by a court of competent jurisdiction to cover aspects of our formulations, processes for designs, or methods of use, the holders of any such patents may be able to block our ability to develop and commercialize the applicable product candidate unless we obtain a license or until such patent expires or is finally determined to be invalid or unenforceable.
We are therefore exposed to foreign currency risk due to fluctuations in exchange rates. This may result in gains or losses with respect to movements in exchange rates which may be material and may also cause fluctuations in reported financial information that are not necessarily related to its operating results.
This may result in gains or losses with respect to movements in exchange rates which may be material and may also cause fluctuations in reported financial information that are not necessarily related to its operating results.
Moreover, with respect to certain share swap transactions, the tax deferral is limited in time, and when such time expires, the tax becomes payable even if no disposition of the shares has occurred. See “Item 10.E.
Moreover, with respect to certain share swap transactions, the tax deferral is limited in time, and when such time expires, the tax becomes payable even if no disposition of the shares has occurred. See “Item 10.E. Taxation—Israeli Tax Considerations and Government Programs” for additional information.
Our competitors may enjoy potential competitive advantages over us, such as: ● greater name recognition, a longer operating history and a larger customer base; ● larger sales and marketing budgets and resources; ● broader distribution and established relationships with channel and distribution partners and customers; ● greater customer support resources; ● greater resources to make acquisitions; ● larger intellectual property portfolios; and ● greater financial, technical and other resources.
Such increased competition can lead to lower margins and, consequently, impact our revenues, profitability and business. 4 Our competitors may enjoy potential competitive advantages over us, such as: ● greater name recognition, a longer operating history and a larger customer base; ● larger sales and marketing budgets and resources; ● broader distribution and established relationships with channel and distribution partners and customers; ● greater customer support resources; ● greater resources to make acquisitions; ● larger intellectual property portfolios; and ● greater financial, technical and other resources.
Since we might be unable to generate sufficient revenue or cash flow to fund our operations for the foreseeable future, we may need to seek additional equity or debt financing to provide the capital required to maintain or expand our operations.
Nevertheless, in case we won’t be able to generate sufficient revenue or cash flow to fund our operations for the foreseeable future, we may need to seek additional equity or debt financing to provide the capital required to maintain or expand our operations.
Failure to obtain the necessary capital when needed may force us to delay, limit or terminate our product development efforts or other operations. According to our management’s estimates, based on our current cash on hand and further based on our budget, we believe that we have sufficient resources to continue our activities until December 31, 2023.
Failure to obtain the necessary capital when needed may force us to delay, limit or terminate our product development efforts or other operations. According to our management’s estimates, based on our current cash on hand and further based on our budget, we believe that we have sufficient resources to continue our activities for a period of more than 12 months.
The United States patent system is frequently changing, however, as are other international patent systems, and thus we may experience uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of any issued patents, all of which could have a material adverse effect on our business and financial condition. 16 We may be involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming, and unsuccessful.
The United States patent system is frequently changing, however, as are other international patent systems, and thus we may experience uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of any issued patents, all of which could have a material adverse effect on our business and financial condition.
It is inherently difficult to conclusively assess our freedom to operate without infringing on third party rights. Our competitive position may be adversely affected if existing patents or patents resulting from patent applications issued to third parties or other third-party intellectual property rights are held to cover our products or elements thereof, or uses relevant to our development plans.
Our competitive position may be adversely affected if existing patents or patents resulting from patent applications issued to third parties or other third-party intellectual property rights are held to cover our products or elements thereof or uses relevant to our development plans.
During the first quarter of 2023 and up to March 24, 2023, the market price of our ADSs has fluctuated from a low of $1.53 per ADS to a high of $2.88 per ADS, and our ADS price continues to fluctuate, as does the daily volume of trading of our ADSs.
During the first quarter of 2024 and up to March 10, 2024, the market price of our ADSs has fluctuated from a low of $8.53 per ADS to a high of $18.00 per ADS, and our ADS price continues to fluctuate, as does the daily volume of trading of our ADSs.
Taxation—Israeli Tax Considerations and Government Programs” for additional information. 23 The rights and responsibilities of a holder of our securities will be governed by Israeli law, which differs in some material respects from the rights and responsibilities of shareholders of U.S. companies.
The rights and responsibilities of a holder of our securities will be governed by Israeli law, which differs in some material respects from the rights and responsibilities of shareholders of U.S. companies.
If we raise additional funds through collaborations and licensing arrangements, we may be required to relinquish some rights to our technologies or candidate products, or to grant licenses on terms that are not favorable to us.
If we raise additional funds through collaborations and licensing arrangements, we may be required to relinquish some rights to our technologies or candidate products, or to grant licenses on terms that are not favorable to us. We maintain some of our cash balances at financial institutions that may exceed federally insured limits.
As a result, holders of our ADSs may not be able to exercise their right to vote and they may lack recourse if their ADSs are not voted as they requested. In addition, in the capacity as a holder of ADSs, they will not be able to call a shareholders’ meeting.
As a result, holders of our ADSs may not be able to exercise their right to vote and they may lack recourse if their ADSs are not voted as they requested.
International regulatory bodies are increasingly focused on online privacy issues and user data protection. In particular, the General Data Protection Regulation, or the GDPR, in the European Union, or EU, and the UK intends to strengthen and unify data protection for all individuals within the EU. It also addresses the export of personal data outside the EU.
In particular, the General Data Protection Regulation, or the GDPR, in the European Union, or EU, and the UK intends to strengthen and unify data protection for all individuals within the EU. It also addresses the export of personal data outside the EU.
If we fail to comply with the Nasdaq minimum bid requirement, our ADSs could be delisted from Nasdaq, and as a result we and our shareholders could incur material adverse consequences, including a negative impact on our liquidity, our shareholders’ ability to sell shares and our ability to raise capital. Our ADSs are currently listed on Nasdaq.
If we fail to comply with Nasdaq requirements, our ADSs could be delisted from Nasdaq, and as a result we and our shareholders could incur material adverse consequences, including a negative impact on our liquidity, our shareholders’ ability to sell shares and our ability to raise capital. We cannot guarantee that we will continue to comply with Nasdaq requirements.
Our efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could impact our financial condition or results of operations. 14 If we are unable to maintain effective proprietary rights for our products, we may not be able to compete effectively in our markets.
Our efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could impact our financial condition or results of operations.
Holders of the ADSs may not be able to exercise voting rights attaching to the Ordinary Shares underlying the ADSs on an individual basis. Instead, holders of the ADSs appoint the depositary or its nominee as their representative to exercise the voting rights attaching to the Ordinary Shares in the form of ADSs.
Instead, holders of the ADSs appoint the depositary or its nominee as their representative to exercise the voting rights attaching to the Ordinary Shares in the form of ADSs.
Competition for highly skilled personnel is frequently intense, especially in Israel, where we are headquartered. Moreover, certain of our competitors or other technology businesses may seek to hire our employees. There is no assurance that any equity or other incentives that we grant to our employees will be adequate to attract, retain and motivate employees in the future.
Moreover, certain of our competitors or other technology businesses may seek to hire our employees. There is no assurance that any equity or other incentives that we grant to our employees will be adequate to attract, retain and motivate employees in the future. If we fail to attract, retain and motivate highly qualified personnel, our business will suffer.
In such event, a court may issue monetary sanctions against us or our operating subsidiaries or award attorney’s fees and/or expenses to the counterclaiming defendant, which could be material, and if we or our operating subsidiaries are required to pay such monetary sanctions, attorneys’ fees and/or expenses, such payment could materially harm our operating results, our financial position and our ability to continue in business. 18 Risks Related to the Ownership of Our ADSs or Ordinary Shares We cannot guarantee that we will continue to comply with the Nasdaq minimum bid requirement.
In such event, a court may issue monetary sanctions against us or our operating subsidiaries or award attorney’s fees and/or expenses to the counterclaiming defendant, which could be material, and if we or our operating subsidiaries are required to pay such monetary sanctions, attorneys’ fees and/or expenses, such payment could materially harm our operating results, our financial position and our ability to continue in business.
Larger competitors with more diverse product offerings may reduce the price of products that compete with ours in order to promote the sale of other products or may bundle them with other products, which would lead to increased pricing pressure on our products and could cause the average sales prices for our products to decline. 6 In addition, other cybersecurity technologies exist or could be developed in the future by current or future competitors, and our business could be materially and adversely affected if such technologies are widely adopted.
Larger competitors with more diverse product offerings may reduce the price of products that compete with ours in order to promote the sale of other products or may bundle them with other products, which would lead to increased pricing pressure on our products and could cause the average sales prices for our products to decline.
Proxy networks are well understood, and virtual private networks are commonly popular, but access solutions are still in the early adoption phase among companies and individuals that stand to benefit from them.
Proxy networks are well understood, and virtual private networks are commonly popular, but access solutions are still in the early adoption phase among companies and individuals that stand to benefit from them. This restraint accounts for not all enterprise access vendors having the marketing budgets to promote themselves.
In addition, our articles of association provide for a staggered board of directors, which mechanism may delay, defer or prevent a change of control of the Company. See “Item 10.B Memorandum and Articles of Association — Provisions Restricting Change in Control of Our Company” for additional information.
In addition, our articles of association provide for a staggered board of directors, which mechanism may delay, defer or prevent a change of control of the Company.
If we fail to meet such expectations for these or other reasons, the market price of our Ordinary Shares and the ADSs could fall substantially, and we could face costly lawsuits, including securities class action suits. 4 Our reputation and business could be harmed based on real or perceived shortcomings, defects or vulnerabilities in our solution or the failure of our solution to meet customers’ expectations.
If we fail to meet such expectations for these or other reasons, the market price of our Ordinary Shares and the ADSs could fall substantially, and we could face costly lawsuits, including securities class action suits.
If we fail to anticipate market requirements or fail to develop and introduce product enhancements or new products to meet those needs in a timely manner, it could cause us to lose existing customers and prevent us from gaining new customers, which would significantly harm our business, financial condition, and results of operations. 9 Defects and bugs in products could give rise to product returns, cancellation of orders or product liability, warranty or other claims that could result in material expenses, diversion of management time and attention, and damage to our reputation.
If we fail to anticipate market requirements or fail to develop and introduce product enhancements or new products to meet those needs in a timely manner, it could cause us to lose existing customers and prevent us from gaining new customers, which would significantly harm our business, financial condition, and results of operations.
Our future success depends, in part, on our ability to continue to attract and retain highly skilled personnel. Our inability to attract or retain qualified personnel or delays in hiring required personnel, particularly in sales and software engineering, may seriously harm our business, financial condition and results of operations. Any of our employees may terminate their employment at any time.
Our inability to attract or retain qualified personnel or delays in hiring required personnel, particularly in sales and software engineering, may seriously harm our business, financial condition and results of operations. Any of our employees may terminate their employment at any time. Competition for highly skilled personnel is frequently intense, especially in Israel, where we are headquartered.
On the consumers side, we experience intense competition from well established companies as well as smaller new players, and need to constantly adapt our solutions to the new technologies and growing and constantly changing challenges. It is therefore difficult to predict how large the markets will be for our solutions.
We operate in a rapidly evolving industry focused on providing organizations and consumers with internet access solutions. We experience intense competition from smaller new players and need to constantly adapt our solutions to the new technologies and growing and constantly changing challenges. It is therefore difficult to predict how large the markets will be for our solutions.
As of March 24, 2023, we had approximately 32.9 million Ordinary Shares issued and outstanding and approximately 16.1 million of additional Ordinary Shares which are issuable upon exercise of outstanding warrants and employee options.
As of March 10, 2024, we had approximately 62.85 million Ordinary Shares issued and outstanding and approximately 15.15 million of additional Ordinary Shares which are issuable upon exercise of outstanding warrants and employee options.
Even if a substantial number of sales do not occur, the mere existence of this “market overhang” could have a negative impact on the market for, and the market price of, our Ordinary Shares. 19 Holders of ADSs may not receive the same distributions or dividends as those we make to the holders of our Ordinary Shares, and, in some limited circumstances, holders of ADSs may not receive dividends or other distributions on our Ordinary Shares and may not receive any value for them, if it is illegal or impractical to make them available to holders of ADSs.
Holders of ADSs may not receive the same distributions or dividends as those we make to the holders of our Ordinary Shares, and, in some limited circumstances, holders of ADSs may not receive dividends or other distributions on our Ordinary Shares and may not receive any value for them, if it is illegal or impractical to make them available to holders of ADSs.
We expect to continue to expand our sales personnel and face a number of challenges in achieving our hiring and integration goals. There is intense competition for individuals with sales training and experience. In addition, the training and integration of a large number of sales personnel in a short time requires the allocation of internal resources.
There is intense competition for individuals with sales training and experience. In addition, the training and integration of a large number of sales personnel in a short time requires the allocation of internal resources. We invest significant time and resources in training new sales force personnel to understand our solutions and growth strategy.
Our operations and business have been impacted and may continue to be impacted by COVID-19 as we were forced to modify our day to day operation and adopt early and strict prevention measures to protect the health of our employees (including employees’ travel, employees’ work locations and cancellation of physical participation in meetings, events, and conferences).
Our operations and business were impacted by COVID-19 as we were forced to modify our day-to-day operation and adopt early and strict prevention measures to protect the health of our employees (including employees’ travel, employees’ work locations and cancellation of physical participation in meetings, events, and conferences). 8 Market events and conditions, including disruptions in the financial markets and deteriorating global economic conditions, could increase the cost of capital or impede our access to capital.
Also, our information technology networks and infrastructure may still be vulnerable to damage, disruptions, or shutdowns due power outages, computer viruses, telecommunication or utility failures, systems failures, natural disasters or other catastrophic events.
Also, our information technology networks and infrastructure may still be vulnerable to damage, disruptions, or shutdowns due power outages, computer viruses, telecommunication or utility failures, systems failures, natural disasters or other catastrophic events. Any such compromise could disrupt our operations, damage our reputation, and subject us to additional costs and liabilities, any of which could adversely affect our business.
We may not be able to successfully implement these improvements in a timely or efficient manner, and our failure to do so may materially impact our projected growth rate.
Our growth to date has placed significant demands on our management, sales, operational and financial infrastructure, and our growth will continue to place significant demands on these resources. We may not be able to successfully implement these improvements in a timely or efficient manner, and our failure to do so may materially impact our projected growth rate.
Market events and conditions, including disruptions in the financial markets and deteriorating global economic conditions, could increase the cost of capital or impede our access to capital. Economic and geopolitical events, as well as global outbreaks of contagious diseases, such as COVID 19, may create uncertainty in global financial and equity markets.
Economic and geopolitical events, as well as global outbreaks of contagious diseases, such as COVID 19, may create uncertainty in global financial and equity markets. Such disruptions could make it more difficult for us to obtain capital and financing for our operations, or increase the cost of it, among other things.
In addition, Israeli law limits our ability to declare and pay dividends, and may subject our dividends to Israeli withholding taxes, and our payment of dividends (out of tax-exempt income) may subject us to certain Israeli taxes, to which we would not otherwise be subject. 20 Holders of ADSs may not have the same voting rights as the holders of our Ordinary Shares and may not receive voting materials in time to be able to exercise the right to vote.
In addition, Israeli law limits our ability to declare and pay dividends, and may subject our dividends to Israeli withholding taxes, and our payment of dividends (out of tax-exempt income) may subject us to certain Israeli taxes, to which we would not otherwise be subject.
Failure to file patent applications or obtain patent grants may allow other entities to manufacture our products and compete with them. Further, there is no assurance that all potentially relevant prior art relating to our patent applications has been found, which can invalidate a patent or prevent a patent from issuing from a pending patent application.
Further, there is no assurance that all potentially relevant prior art relating to our patent applications has been found, which can invalidate a patent or prevent a patent from being issued from a pending patent application.
In either case, our sales and financial results would suffer. 8 Our model for long-term growth depends upon the introduction of new products. If we are unable to develop new products or if these new products are not adopted by customers, our growth will be adversely affected.
Our model for long-term growth depends upon the introduction of new products. If we are unable to develop new products or if these new products are not adopted by customers, our growth will be adversely affected. Our business depends on the successful development and marketing of new products, including adding complementary offerings to our current products.
A material portion of our operating expenses is incurred outside the United States, mainly in NIS and are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in NIS. Our foreign currency-denominated expenses consist primarily of personnel, rent and other overhead costs.
Our functional and reporting currency is the U.S. dollar, and we generate a majority of our revenues in U.S. dollars. A material portion of our operating expenses is incurred outside the United States, mainly in NIS and are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in NIS.
For example, there is no guarantee that the features we use will be provided for the same price in the future, there is a risk in relying on a cloud service for business-related tasks because no service can guarantee 100% uptime and there is always a risk of data leakage when a company’s data is held by a third-party vendor.
For example, there is no guarantee that the features we use will be provided for the same price in the future, there is a risk in relying on a cloud service for business-related tasks because no service can guarantee 100% uptime and there is always a risk of data leakage when a company’s data is held by a third-party vendor. 5 Information technology systems, including those managed or hosted by third parties, could be subject to sophisticated cyber-attacks (including phishing and ransomware attacks) and threats by external or internal parties’ intent on disrupting business processes or otherwise extracting or corrupting information.
To the extent that any of these negative developments do occur, they may have an adverse effect on our business, our results of operations and our ability to raise additional funds, if deemed necessary by our management and board of directors. 25 General Risk Factors Raising additional capital would cause dilution to holders of our equity securities, and may affect the rights of existing holders of equity securities.
To the extent that any of these negative developments do occur, they may have an adverse effect on our business, our results of operations and our ability to raise additional funds, if deemed necessary by our management and board of directors. 23 General Risk Factors Our securities are traded on more than one market or exchange, and this may result in price variations.
Since a significant portion of our expenses is incurred in NIS and is substantially greater than our revenues in NIS, any appreciation of the NIS relative to the U.S. dollar would adversely impact our net loss or net income, as relevant. During 2022, the NIS depreciated by more than 13% against the dollar but has appreciated in prior years.
Our foreign currency-denominated expenses consist primarily of personnel, rent and other overhead costs. Since a significant portion of our expenses is incurred in NIS and is substantially greater than our revenues in NIS, any appreciation of the NIS relative to the U.S. dollar would adversely impact our net loss or net income, as relevant.
If we spend significant time and effort on research and development and are unable to generate an adequate return on our investment, our business and results of operations may be materially and adversely affected.
If we spend significant time and effort on research and development and are unable to generate an adequate return on our investment, our business and results of operations may be materially and adversely affected. 1 If we fail to effectively manage our growth, our business and operations will be negatively affected, and as we invest in the growth of our business, we expect our operating and net profit margins to decline in the near-term.
However, we may be unable to achieve or maintain our target performance levels with large numbers of new sales personnel as quickly as we have done in the past. Our failure to hire a sufficient number of qualified sales force members and train them to operate at target performance levels may materially and adversely impact our projected growth rate.
Our failure to hire a sufficient number of qualified sales force members and train them to operate at target performance levels may materially and adversely impact our projected growth rate.
If some investors find our ADSs or Ordinary Shares less attractive as a result, there may be a less active trading market for our ADSs or Ordinary Shares, and our market prices may be more volatile and may decline. 21 As a “foreign private issuer” we are permitted to follow certain home country corporate governance practices instead of otherwise applicable SEC and Nasdaq requirements, which may result in less protection than is accorded to investors under rules applicable to domestic U.S. issuers.
In addition, in their capacity as a holder of ADSs, they will not be able to call a shareholders’ meeting. 18 As a “foreign private issuer” we are permitted to follow certain home country corporate governance practices instead of otherwise applicable SEC and Nasdaq requirements, which may result in less protection than is accorded to investors under rules applicable to domestic U.S. issuers.
We depend significantly on our sales force to attract new customers and expand sales to existing customers. As a result, our ability to grow our revenues depends in part on our success in recruiting, training and retaining sufficient numbers of sales personnel to support our growth.
As a result, our ability to increase our revenues depends in part on our success in recruiting, training and retaining sufficient numbers of sales personnel to support our growth. We expect to continue to expand our sales personnel and face a number of challenges in achieving our hiring and integration goals.
If our management is unable to effectively manage our growth, our expenses may increase more than expected, our ability to generate and/or grow revenue could be reduced, and we may not be able to implement our business strategy. 3 As we invest in the growth of our business, we expect that these investments will result in increased costs and may impact our short and mid-term operating and net profit margins.
If our management is unable to effectively manage our growth, our expenses may increase more than expected, our ability to generate and/or grow revenue could be reduced, and we may not be able to implement our business strategy.
In particular, we may suffer significant adverse publicity and reputational harm if a significant breach occurs generally or if any breach occurs at a high-profile customer. Moreover, if our solutions are adopted by an increasing number of enterprises and consumers, it is possible that attackers will begin to focus on finding ways to defeat our solutions.
Moreover, if our solutions are adopted by an increasing number of enterprises and consumers, it is possible that attackers will begin to focus on finding ways to defeat our solutions.
Any hostilities involving Israel or the interruption or curtailment of trade between Israel and its trading partners could adversely affect business conditions in Israel in general and our business in particular, and adversely affect our product development, our operations and results of operations.
Any hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners, or a significant downturn in the economic or financial condition of Israel, could affect adversely our operations. Ongoing and revived hostilities or other Israeli political or economic factors could harm our operations, product development and results of operations.
Our business, operations and financial condition could be materially affected by the outbreak of epidemics or pandemics or other health crises. For example, the COVID-19 pandemic has caused governments of most countries to take actions to reduce the spread of the virus.
Our business, operations and financial condition could be materially affected by the outbreak of epidemics or pandemics or other health crises. For example, the COVID-19 pandemic disrupted businesses globally resulting in general economic slowdown.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

36 edited+65 added−67 removed19 unchanged
In the age of information technology, data is arguably the world’s most precious resource and the way we use and consume data has evolved considerably. The publicly available web data is one of the main driving forces behind digital transformation and helps corporations and brands to develop, improve and build business strategies faster.
In the age of information technology, data is arguably the world’s most precious resource and the way we use and consume data has evolved considerably. Publicly available web data is one of the main driving forces behind digital transformation and helps corporations and brands to develop, improve and build business strategies faster.
Our solutions’ main advantages over competitors include: ● NetNut's web data collection service has been designed to handle massive amounts of traffic, with the capacity to process hundreds of terabytes per second. ● Our web data collection service has the widest set of IP options offered to our customers. ● Our direct connections to top ISPs worldwide allow for fast and reliable access to any geo-targeted web data. ● NetNut has formed strategic partnerships with leading ISPs and technology providers to enhance its network capabilities and offer customers the best possible solution. 32 ● NetNut's solution has been rigorously tested and validated by independent research firms and experts in the field. ● Results have shown that the company's solution outperforms its competitors in terms of speed, security, and reliability. ● NetNut's solution has received positive feedback from customers, with many praising its fast, secure, and reliable performance. ● The company has received recognition from industry experts for its innovative approach to proxy solutions. 2.
Our solutions’ main advantages over competitors include: ● NetNut’s web data collection service has been designed to handle massive amounts of traffic, with the capacity to process hundreds of terabytes per second. ● Our web data collection service has the widest set of IP options offered to our customers. ● Our direct connections to top ISPs worldwide allow for fast and reliable access to any geo-targeted web data. ● NetNut has formed strategic partnerships with leading ISPs and technology providers to enhance its network capabilities and offer customers the best possible solution. ● NetNut’s solution has been rigorously tested and validated by independent research firms and experts in the field. ● Results have shown that the company’s solution outperforms its competitors in terms of speed, security, and reliability. ● NetNut’s solution has received positive feedback from customers, with many praising its fast, secure, and reliable performance. ● The Company has received recognition from industry experts for its innovative approach to proxy solutions.
From these needs, the market of web data collection services has emerged, allowing businesses to gather data over the Internet using different types of IP addresses (ISP, residential, data center) from various locations around the world. Web data collection services support a wide variety of use cases and provide several significant benefits to their business users.
From these needs, the market of web data collection services has emerged, allowing businesses to gather data over the Internet using different types of IP addresses (ISP, residential, data center, mobile) from various locations around the world. Web data collection services support a wide variety of use cases and provide several significant benefits to their business users.
For example, flight prices to the United States may differ for a person browsing an American airline from New York rather than from London. In addition, to conduct competitor analysis, price comparisons and data extraction, companies need to access websites as a “simulated user” to capture the real and accurate information.
For example, flight prices to the United States may differ for a person browsing an American airline from New York rather than browsing the same flight from London. In addition, to conduct competitor analysis, price comparisons and data extraction, companies need to access websites as a “simulated user” to capture the real and accurate information.
The service’s performance and scalability are enhanced by our proprietary proxy traffic optimization and routing technology. Customers in the web data collection market use the proxy service for various needs and for a wide variety of use cases, as mentioned above. To address all these use cases, different types of web data collection services are needed.
The services’ performance and scalability are enhanced by our proprietary proxy traffic optimization and routing technology. Customers in the web data collection market use the proxy service for various needs and for a wide variety of use cases, as mentioned above. To address all these use cases, different types of web data collection services are needed.
From June 2011 until June 2016, we did not have any active business operations, excluding administrative management. On June 15, 2016, we completed a merger transaction, or the Merger Transaction, with Safe-T Data A.R Ltd., or Safe-T Data, whereby we acquired 100% of the share capital of Safe-T Data.
From June 2011 until June 2016, we did not have any active business operations, excluding administrative management. On June 15, 2016, we completed a merger transaction, or the Merger Transaction, with Safe-T Data, whereby we acquired 100% of the share capital of Safe-T Data.
For these reasons, providers in the web data collection market are required to provide a wide selection and web data collection services types. We have invested heavily in the last year in expanding our offering in order to become a leading provider in this market.
For these reasons, providers in the web data collection market are required to provide a wide selection and web data collection service types. We have invested heavily in the last year in expanding our offering in order to become a leading provider in this market.
Proxy servers are intermediaries between devices requesting information from other servers. Rotating proxy servers tend to be used by companies to simulate actual customers in different locations and to collect data, also known as web scraping.
Proxy servers are intermediaries between devices requesting information from other servers. Rotating proxy servers tend to be used by companies to simulate actual customers in different locations and to collect data, also known as web data collection.
The service is based on partnership agreements with tens of ISPs around the world, as well as our proprietary software deployed at data centers and devices which enable our customers to access the internet through millions of end points globally, and collect valuable data for their needs.
The services are based on partnership agreements with tens of ISPs around the world, as well as our proprietary software deployed at data centers and devices which enable our customers to access the internet through millions of end points globally and collect valuable data for their needs.
NetNut operates in the field of internet access services for enterprises, which enables customers to collect data anonymously at any scale from any public sources over the web using a unique hybrid network. CyberKick Ltd. is our wholly-owned subsidiary incorporated in Israel.
NetNut Ltd. is our wholly owned subsidiary incorporated in Israel. NetNut operates in the field of internet access and web data collection services, which enables customers to collect data anonymously at any scale from any public sources over the web using a unique hybrid network. CyberKick Ltd. is our wholly owned subsidiary incorporated in Israel.
Since the date of the Merger Transaction, we have devoted substantially all of our financial resources to develop and commercialize our products and to extend our business organically as well as by acquisitions. Our Ordinary Shares have been trading on the Tel Aviv Stock Exchange, or TASE, since January 2000.
Since the date of the Merger Transaction, we have devoted substantially all of our financial resources to develop and commercialize our products and to extend our business organically as well as by acquisitions. Our Ordinary Shares have been trading on the TASE since January 2000.
Proxy servers provide varying levels of functionality, security, and primarily privacy, depending on the use case, needs, or user policy. Proxy servers have many purposes, such as anonymizing identities, filtering information, getting around filters, and improving information retrieval performance. From the target website’s perspective, no information about the original machine is sent. Only the proxy device’s IP address gets transmitted.
Proxy servers provide varying levels of functionality, security, and primarily privacy, depending on the use case, needs, or user policy. Proxy servers have many purposes, such as anonymizing identities, filtering information, getting around filters, and improving information retrieval performance. 29 From the target website’s perspective, no information about the original machine is sent.
In addition, we will not be required to file annual, quarterly and current reports and consolidated financial statements with the SEC as frequently or as promptly as U.S. domestic companies registered under the Exchange Act. Our capital expenditures for 2022, 2021 and 2020 amounted to $49,000, $73,000 and $41,000, respectively.
In addition, we will not be required to file annual, quarterly, and current reports and consolidated financial statements with the SEC as frequently or as promptly as U.S. domestic companies registered under the Exchange Act. Our capital expenditures for 2023, 2022 and 2021 amounted to $55,000, $49,000 and $73,000, respectively. These expenditures were primarily for purchases of fixed assets.
Its most common use is to guard against hackers and snoops on public networks, and are also useful to hide IP addresses for anonymous browsing, and to protect personal data on any Wi-Fi network.
Our Privacy solution is available for iOS and Android users. Its most common use is to guard against hackers and snoops on public networks and is also useful to hide IP addresses for anonymous browsing, and to protect personal data on any Wi-Fi network.
Safe-T Data operated in the field of enterprise cybersecurity, specifically in the development and marketing of information security solutions for organizations that will allow secure and controlled sharing of information. Currently, this subsidiary is inactive. NetNut Networks Inc. is a wholly-owned subsidiary of NetNut Ltd.
Safe-T Data operated in the field of enterprise cybersecurity, specifically in the development and marketing of information security solutions for organizations that allow secure and controlled sharing of information. In July 2023, we completed the sale of our legacy cybersecurity solutions and therefore, currently, Safe-T Data is inactive. NetNut Networks Inc. is a wholly owned subsidiary of NetNut Ltd.
CyberKick operates in the field of internet access for consumers and provides a wide security blanket against ransomware, viruses, phishing, and other online threats as well as a powerful, secured and encrypted connection, masking the customers online activity and keeping them safe from hackers. 38 Safe-T Data A.R Ltd. is our wholly-owned subsidiary incorporated in Israel.
CyberKick operates in the field of internet access for consumers and provides powerful, secured and encrypted connection, masking the customers’ online activity and keeping them safe from hackers. Safe-T Data A.R Ltd. is our wholly owned subsidiary incorporated in Israel.
The software can handle the connectivity between hundreds of our global access servers and the ISPs’ networks and is able to manage the routing on the TCP level of hundreds of thousands of concurrent connections without any degradation in the network performance. Customers In the last several years, our customer base has steadily increased.
The software can handle the connectivity between hundreds of our global access servers and the ISPs’ networks and is able to manage the routing on the transmission control protocol level of hundreds of thousands of concurrent connections without any degradation in the network performance.
Our customers can choose from various types of IPs from our IP pool which contains millions of IPs, including ISP IPs, data center IPs, and residential service provider IPs. With our web data collection service, organizations can collect accurate, transparent web data from public online sources.
Our IPPN solutions allow organizations to collect vast amounts of accurate, transparent web data from public online sources by simultaneously connecting to the Internet from different IP addresses. Our customers can choose from various types of IPs from our IP pool which contains millions of IPs, including ISP IPs, data center IPs, and residential service provider IPs.
NetNut Networks Inc. is our agent in the United States, and its address is 4607 Library Rd Ste 220 #1067 Bethel Park, PA 15102. 28 We are an emerging growth company, as defined in Section 2(a) of the Securities Act, as implemented under the JOBS Act.
NetNut Networks Inc. is our agent in the United States, and its address is 4607 Library Rd Ste 220 #1067 Bethel Park, PA 15102. We are a foreign private issuer as defined by the rules under the Securities Act and the Exchange Act.
These expenditures were primarily for purchases of fixed assets and development expenditures capitalized as intangible assets. Our purchases of fixed assets primarily include leasehold improvements, computers, and equipment used for the development of our products, and we financed these expenditures primarily from cash on hand. B. Business Overview We are a global SaaS provider for enterprises and consumers.
Our purchases of fixed assets primarily include leasehold improvements, computers, and equipment used for the development of our products, and we financed these expenditures primarily from cash on hand. B. Business Overview We are a global SaaS provider. Our company operates mainly in the Enterprise Web Data Collection market - offering web data collection and a private internet browsing platform.
Property, Plants and Equipment Our headquarters is located at 30 Haarba’a St., Tel Aviv, 6473926, Israel, where we occupy approximately 4,200 square feet. We lease our facilities and our lease ends in October 2023. Our monthly rent payment is approximately NIS 58,000 (approximately $16,000). NetNut’s offices are located at the same place.
Property, Plants and Equipment Our headquarters is located at 30 Haarba’a St., Tel Aviv, 6473926, Israel, where we occupy approximately 4,200 square feet. We lease our facilities through NetNut. The lease ends in October 2025, with an option to extend it for one additional year. Our monthly rent payment is approximately NIS 110,000 (approximately $31,000).
As markets become more and more competitive, so does the need for large amounts of data to be analyzed in real time in order to make business decisions.
Web Data Collection Background Today, data is the core and essence of all companies, and decisions are made based on data analysis rather than gut feelings. As markets become more and more competitive, so does the need for large amounts of data to be analyzed in real time in order to make business decisions.
An added benefit to our customer is the fact that utilizing our network completely hides enterprises from the internet by modifying IP addresses, thus ensuring high levels of privacy for their online presence. 29 Our web data collection service enables access to the Internet through millions of end points globally, thus ensuring multiple business use cases, including large-scale data collection and analysis, cyber security, price comparison, ad verification, Search Engine Optimization (SEO) validations, web data extraction, collection of data for financial analysis, and more.
Our products enable access to the Internet through millions of end points globally, thus ensuring multiple business use cases, including large-scale data collection and analysis, cyber security, price comparison, ad verification, search engine optimization, or SEO, validations, web data extraction, collection of data for financial analysis, and more.
The Access Gateway performs Transmission Control Protocol (TCP), offloading, allowing it to support any TCP based application without the need to perform secure sockets layer offloading and traffic processing. 35 Carrier grade routing technology Our unique carrier grade routing technology system is based on software which is installed both on our global access servers’ network and on servers at the premises of ISPs which are part of our global network platform.
Carrier grade routing technology Our unique carrier grade routing technology system is based on software which is installed both on our global access servers’ network and on servers at the premises of ISPs that are part of our global network platform.
Ltd., BI Science Ltd. and others; and in the consumer internet access, we compete with providers such as Kape Technologies, Nord VPN, McAfee, Norton LifeLock, Aura and others.
Our current and potential future competitors in the web data collection service segment include providers such as Similarweb, Bright Data, Oxylabs Networks, and others; and in the consumer internet access, we compete with providers such as Kape Technologies, Nord VPN, McAfee, Norton LifeLock, Aura and others.
We offer the following solutions: Enterprise Internet Access Service : ● Static residential proxy network: a proxy network, which is based on our unique technology and deployment through tens of ISPs partners around the world. ● Rotating residential proxy network: a proxy network, which is based on routing traffic through millions of residential ISP based end points in the United States, Europe, Asia, South America and Canada. ● Data center proxy network: a proxy network, which is based on routing traffic, deployed through servers located in data centers with leading carriers in the United States, the EU, Asia Pacific, or APAC, and more. ● Premium dedicated static residential proxies: a solution that creates a dedicated static IP for each user.
We offer the following services & solutions: Internet Access and Web Data Collection : ● Static residential proxy network: a proxy network, which is based on our unique technology and deployment through tens of ISPs partners around the world. ● Rotating residential proxy network: a proxy network, which is based on routing traffic through millions of residential ISP based end points in the United States, Europe, Asia, South America and Canada. ● Data center proxy network: a proxy network, which is based on routing traffic, deployed through servers located in data centers with leading carriers in the United States, the EU, Asia Pacific, or APAC, and more. ● Premium dedicated static residential proxies: a solution that creates a dedicated static IP for each user, providing a highly effective proxy, that remains stable during heavy traffic and saves the customer additional bandwidth charges. ● Mobile proxies: a proxy network, which is based on routing traffic through millions of mobile devices. ● SERP data collection service: a tool that delivers real-time structured data from global search engines, tailored to the customer’s needs. ● Social data collection service: a tool that is designed to easily collect accurate data from social platforms. 28 Consumer Internet Access : ● Privacy Solutions and services: a software solution that uses an encryption protocol which is defined upon the process being used to generate a secured encrypted path and keep the users’ data private and safe.
We believe that our current office spaces are sufficient to meet our anticipated needs for the foreseeable future and is suitable for the conduct of our business.
CyberKick’s offices are located also in the same offices. NetNut Networks’ registered address is 4607 Library Rd Ste 220 #1067, Bethel Park, PA 15102. We believe that our current office spaces are sufficient to meet our anticipated needs for the foreseeable future and are suitable for the conduct of our business.
Marketing Our internal marketing and sales staff consist of approximately 20 persons as of March 24, 2023. We also work through marketing and distribution channels. In the enterprise segment, we enter into engagements with resellers for the purpose of reselling our services to their customers.
Sales and Marketing Our internal marketing and sales staff consists currently of approximately 25 people. We also work through marketing and distribution channels. We maintain in-house marketing and sales personnel where we employ traditional and non-traditional internet-based marketing methods, tools, and techniques. We enter into engagements with resellers for the purpose of reselling our services to their customers.
Spell Me Ltd. is a wholly-owned subsidiary of CyberKick. Spell Me Ltd. is incorporated in Seychelles and is engaged is the selling of our consumer access solutions. iShield Inc. is a wholly-owned subsidiary of CyberKick. iShield is incorporated in the State of Delaware, and is engaged in the selling of our consumer cybersecurity solution.
NetNut Networks is incorporated in the State of Delaware, and is engaged in the field of internet access and web data collection services. Spell Me Ltd. is a wholly owned subsidiary of CyberKick. Spell Me Ltd. is incorporated in Seychelles and is currently inactive. D.
The web data collection market includes a variety of vendors in addition to NetNut, including Bright Data (formerly Luminati Networks Ltd., which was acquired in August 2017 by EMK Capital for $160 million according to their sources), Similarweb Ltd., Oxylabs Networks Pvt. Ltd., BiScience Inc., SmartProxy, and others.
The web data collection market includes a variety of vendors in addition to NetNut, including Bright Data, Similarweb Ltd., Oxylabs Networks Pvt. Ltd., SmartProxy, and others. Market Size and Growth Drivers of the ADCL Market In today’s market-driven economy, data collection, retrieval, and its analysis, is the lifeblood by which companies make their business decisions.
Normally, the term of engagement with partners/marketing entities is one year and it is extended automatically, unless cancelled by one of the parties. The consideration in respect of those engagements is paid to us from time to time when sales are made by the distributors.
The engagement with each partner or marketing entity is limited to a specific territory and/or specific customers and is not exclusive. Normally, the term of engagement with partners or marketing entities is one year and it is extended automatically, unless cancelled by one of the parties.
In addition, NetNut Ltd. has one wholly-owned subsidiary, NetNut Networks Inc. CyberKick Ltd. owns four wholly owned subsidiaries - Spell Me Ltd., Robo VPN Inc., Robo VPN Technologies Ltd. and iShield Inc. NetNut Ltd. is our wholly-owned subsidiary incorporated in Israel.
Organizational Structure We have three wholly owned subsidiaries: NetNut Ltd., CyberKick Ltd. and Safe-T Data A.R Ltd. In addition, NetNut Ltd. has one wholly-owned subsidiary, NetNut Networks Inc. CyberKick Ltd. owns one wholly owned subsidiary - Spell Me Ltd. and one wholly owned subsidiary under voluntary dissolution – RoboVPN Technologies Ltd.
The solution also allows access to undiscovered data from non-traditional data sources and allows customers to gain additional data-driven information that provides valuable insights with respect to predictive capabilities or behaviors, thereby assisting ongoing business management operation and decision making.
With our solutions, customers gain data-driven information that provides valuable insights with respect to predictive capabilities or behaviors, thereby assisting ongoing business management operation and decision making. An added benefit to our customers is the fact that utilizing our network completely hides enterprises from the internet by modifying IP addresses, thus ensuring high levels of privacy for their online presence.
We participate from time to time in web data and internet exhibitions and conferences. We market our products through our websites https://www.cyberkick.com/; https://netnut.io/; https://chiproxies.com/; and digital media.
Our web site management and content writing is done in-house. In addition, we utilize local partners in certain countries such as China, where there is a language barrier as well as time zone differences. We participate from time to time in web data and internet exhibitions and conferences. We market our products through our website https://netnut.io and digital media.
Our reverse access technology is patent protected in several jurisdictions: United States (patent number US9935958 (in re-issue) and US10110606 titled “Reverse Access Method for Securing Front-End Applications and Others”), Europe (patent number EP2815554A1, including Austria, Switzerland, Germany, Spain, France, United Kingdom and Italy, titled “Reveres access method for securing front-end applications and others”), Israel (patent number 218185 titled “Reverse Access System for Securing Front-End Applications”), China (patent number ZL2013800207104, titled “Reverse Access Method for Securing Front-End Applications and Others”) and Hong-Kong (patent number HK1207766, titled “Reverse Access Method for Securing Front-End Applications and Others”)..
The result is a secured, faster, more efficient, and streamlined method of connecting to the internet, with all the advantages of a proxy but none of the traditional drawbacks. Reverse access technology Our reverse access technology is patent protected in the United States (patent number US9935958 (in re-issue) and US10110606 titled “Reverse Access Method for Securing Front-End Applications and Others”).
“SAFE-T”, “SAFE-T BOX”, “IF YOU CAN’T BE SEEN, YOU CAN’T BE HACKED”, “ZoneZero”, “Zero+”, “NetNut” and “iShield” are our registered and pending trademarks. Our logo, and the logos of our subsidiaries are our and our subsidiaries’ unregistered trademarks.
“NetNut” is a registered trademark in the United States and in Israel and pending trademark in various additional jurisdictions. Our logo, and the logos of our subsidiaries are our and our subsidiaries’ unregistered trademarks.
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As such, we are eligible to, and intend to, take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies including but not limited to not being required to comply with the auditor attestation requirements of the SEC rules under Section 404 of the Sarbanes-Oxley Act.
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Also, we offer internet access solutions for consumers by providing a powerful, secured and encrypted connection, masking consumers’ online activity and keeping them safe from hackers. The solutions are designed for advanced and basic users, ensuring complete protection for all personal and digital information.
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We could remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the date of our first sale of common equity securities pursuant to an effective registration statement under the Securities Act, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Ordinary Shares that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
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At the end of 2022, we set as our leading goal to start our path towards profitability. As part of our focus on generating profitable revenues we decided in July 2023 to downscale our investment towards the consumer internet accesses segment of our business, operated under our wholly owned subsidiary, CyberKick.
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We are a foreign private issuer as defined by the rules under the Securities Act and the Exchange Act.
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CyberKick’s business model was based on acquiring new users to download and use our solutions.
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Our company consists of two internet access segments: ● Enterprise Internet Access - offering web data collection and private internet browsing platform ● Consumer Internet Access – offering solutions for secure and private internet browsing In addition to the above-mentioned two segments, we are engaged with TerraZone Ltd., an information security provider, as an exclusive reseller of our legacy enterprise cyber security products.
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Following a careful analysis of prevailing market conditions, including the costs of acquiring such users, we identified that while this business model may provide a potential to generate future revenues, it requires significant resources and investments in advance that cause operational loss, resulting in non-profitable revenues.
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Our Enterprise Internet Access arm offers a global web data collection cloud service, based on a secured hybrid proxy network and comprising both exit points based on our proprietary reflection technology, and hundreds of servers through partnership agreements with tens of ISPs around the world.
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We therefore decided to scale down the operations of the internet access solutions for consumers, a decision that resulted in material reductions of expenses and headcount.
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Our web data collection solution allows organizations to collect vast amounts of web and internet data by simultaneously connecting to the Internet from different IP addresses, while maintaining full anonymity and privacy.
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We continue to maintain our products and the service only to current paying users, which allows us to generate revenue from past investments in acquiring such users, with minimal costs. 27 Our Enterprise Web Data Collection products offer secured, fast, and anonymous IP Proxy Network Solutions & Services, or IPPN or IPPN Solutions, to our business customers which, in turn, enables them to anonymously and securely browse the internet as well as to collect data from any publicly available source on the web, for their own business purposes.
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Our Consumer Internet Access offers privacy and cybersecurity solutions to consumers. These solutions are designed to protect consumers against attacks, such as phishing, ransomware, identity theft, and more.
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In this segment, our engagements include monthly or annually renewable contracts, upon the customer’s discretion, where we offer multiple plans. As mentioned above, since July 2023 we scaled down operations in this segment by discontinuing further investment into acquisition of new customers, and we continue to maintain our products and the service only to current paying users.
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These solutions are designed for basic and advanced use cases, ensuring complete protection of personal and digital information, and are installed on the consumers’ computers or mobile phones and through various browser and mobile application stores.
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Only the proxy device’s IP address gets transmitted.
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The end result is a highly effective proxy, that remains stable during heavy traffic and saves the customer additional bandwidth charges. ● Data collection API cloud service: a service which allows our customers to use our application programming interface, or A PI, to request content from any public source on the internet.
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As both traditional and online businesses become increasingly more competitive, so does their need for larger amounts of empirical, statistical, anecdotal, behavioral, and projected data to be analyzed in real time in order to compete. The internet is full of various information: big data, software data, analytics, content, and others. Data-oriented strategies that companies follow require data collection and analysis.
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Consumer Internet Access Solutions and services : ● Privacy Solutions and services: a software solution that uses an encryption protocol which is defined upon the process being used in order to generate a secured encrypted path and keep the users’ data private and safe. Our Privacy solution is available for iOS, PC and Android users.
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Every click, search, and interaction on the internet generates information, waiting to be deciphered. Businesses, both big and small, realize that their survival and success heavily depend on how well they can collect, interpret, and act on this data, allowing companies to make informed decisions and adhere to stable advancement.
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We also provide advertising services to third party privacy products. ● iShield™: a cybersecurity cloud software, which proactively protects users from online threats including phishing, malware, ransomware and more. As cyber threats are becoming more complex and sophisticated, users must adopt a well-rounded approach to mitigating such risks.
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As straightforward as data collection might seem, it’s not without challenges. IP blocking, inaccurate data due to location restrictions, and concerns about privacy and anonymity are some of the hurdles data collectors often face.
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Contrary to a reactive approach, a proactive cybersecurity approach is about acting before an attack occurs and iShield provides exactly that, by sending an alert and blocking the very access of a potential attack.
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To combat these issues, more and more businesses are turning to proxies. ● We believe that existing and new customers seek this end-to-end solution because it provides them with; a.
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Our algorithm detects in real time if a website contains malicious elements or activity, in addition to a database that we constantly collect for potential threats. iShield is currently available for Chrome browser users only.
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A more complete Data Set, derived from a more complete set of data that was comprised and collected from a global IPPN network which has open (proxy) global access to more websites (without localized “silo effect” bias) at real-time throughput – and all written and driven on the same software code, b.
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In this segment, our engagements include monthly or annually renewable contracts, upon the customer’s discretion, where we offer multiple plans. 30 Enterprise Internet Access Background Today, data is the core and essence of all companies, and decisions are made based on data analysis rather than gut feelings.
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A more accurate Data Set , which is stored, structured, and updated as the information gathered from (a) web site change(s) (either minute by minute on social media sites, hours on e-commerce sites or weeks on government sites).
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According to a Frost and Sullivan report from July 2019, the estimated revenue in the Service Obtainable Market, or SOM, was forecasted to grow from 2018 to 2025 at a compound annual growth rate of 16.8%, reaching revenues of $259.7 million by 2025. 31 Consumer Internet Access Background The global data privacy software market is expected to grow to reach $25.85 billion by 2029.
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NetNut’s newly introduced AI-based Data Collection Service, or DCS, solutions were designed to automatically learn the design of websites, thus allowing fast and simple data collection, while ensuring the highest levels of data accuracy with the least human involvement in the process, c.
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During the COVID-19 pandemic, various business and organizations experienced temporary to longer-term shutdowns, increasing the need for remote access and work-from-home practices. Working outside the corporate infrastructures prompted major data breaches and cyber incidents during that time and had brought forth a great increase in the demand for access solutions.
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A faster and more efficient data gathering and analysis experience , based on NetNut’s IPPN capability in processing enormous amounts of data at hundreds of terabytes per second for our customers, d.
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The increasing adoption of remote working has created immense challenges for organizations to protect and manage remote workers identities and devices and has prompted a whole new security perimeter.
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A more central management/dashboard – our customers can utilize a single dashboard via which they can order, track, manage and pay for any of NetNut’s four main solution or service packages.
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According to a 2022 report by Digital Information World: - more than 52% of people think the realm of online privacy doesn’t exist. - 46% of respondents were concerned that their personal information will be misused by cyber criminals.
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According to research by Grand View Research, the global data collection market size was valued at $2.2 billion in 2022, expected to expand at a compound annual growth rate of 28.9% from 2023 to 2030 to reach $17.1 billion by 2030. 1 1 https://www.grandviewresearch.com/industry-analysis/data-collection-labeling-market#:~:text=The%20global%20data%20collection%20and%20labeling%20market%20is%20expected%20to,USD%2017.10%20billion%20by%202030 30 Our Solutions/Services Following our acquisition of NetNut in June 2019, we launched our web data collection services.
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The growing public awareness of the value of personal data and demand for data privacy and transparency create significant opportunities for businesses to differentiate themselves. Our Solutions/Services 1. Enterprise Internet Access Following our acquisition of NetNut in June 2019, as further detailed below, we launched our web data collection service.
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Strategy As the future of data collection unfolds, we believe that proxies will continue to play a vital role in enabling comprehensive and ethical big data analytics.
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The uniqueness of our web data collection service is based on the fact that unlike our competitors that provide predominantly host-based solutions, which require installation of software on third-party uncontrolled end user devices, we support not only running software on end user devices, but also routing the customer’s traffic through residential routers of our ISP partners.
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We therefore seek to leverage our existing IPPN Solutions and service offering to enter the much larger Automated Data Collection & Labeling Market, or the ADCL Market, which is projected to reach $17 billion dollars by 2030 according to Grand View Research.
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Consumer Internet Access Following the acquisition of CyberKick in July 2021, as further detailed below, we launched our consumer online access solutions.
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We believe that our IPPN’s unique architecture, which includes our patented reflection technology, the way we make use of our AI and machine learning algorithms, the flexibility and scalability of our network, effective IP rotation for scaling proxy usage and our hands-on experience with industry best practices to collect data ethically and effectively, uniquely position us to enter the ADCL Market. 31 We believe that the key drivers of our business growth are based on: ● Enterprise Customers Seek a Full End-to-End Solution: which includes providing a full data set collected through the full end-to-end process, from the IPPN Solution to the web data collection tools, to the data processing process. ● Increasing Growth in Data-Backed Decision Making : The growing importance of accurate, and real time data requires tight control and monitoring of each element of the process. ● Increasing Use of AI-based Data Optimization : Data collection and labeling is playing an increasingly important role in developing the accuracy, functionality and modeling of AI-based systems currently being developed to optimize the analysis of data. ● Increasing Use of Complex Forms of Digital Marketing; Particularly through social media, requires better and more efficient use of automated real-time data collection and labeling.
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We provide SaaS security and privacy tools, designed to reduce users’ vulnerability to threats while making them more resilient in their online activity, to prevent and defend against a wide spectrum of cyber threats as well as to provide users with control of their accounts and management of access to sensitive data.
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The ADCL Market is an inherent evolution for the growth of our business where we look forward to: ● Leveraging on our key strengths in the IPPN business (i.e. stable global network presence, pinpoint accuracy, at high-speed data throughput) to add and bundle together an overall ADCL Service Package, which will include a DCS, a Data Set Library, or DSL, and DSL Insight & Analysis service. ● Growing our revenue base both outwards (i.e. cross-sale of ADCL Service Package to existing IPPN customers) as well as upwards (i.e. upsizing existing IPPN service packages required to meet the increasing demand of customers who migrate to our ADCL Service Package. ● Improving overall margin growth, resulting from the sale of DSLs which (once created for one client) can be re-sold as an off-the-shelf product at diminishing marginal costs. 32 Below is the complete stack of solutions and service offering that we intend to provide in the ADCL Market, along with our current offering in the IPPN market.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

62 edited+37 added−36 removed18 unchanged
The period-to-period comparison of results is not necessarily indicative of results for future periods.
The period-to-period comparison of results is not necessarily indicative of results for future periods.
The period-to-period comparison of results is not necessarily indicative of results for future periods.
The period-to-period comparison of results is not necessarily indicative of results for future periods.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this annual report on Form 20-F.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS 38 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this annual report on Form 20-F.
We believe that the accounting policies below are critical in order to fully understand and evaluate our financial condition and results of operations. We prepare our consolidated financial statements in accordance with IFRS, as issued by the IASB.
We believe that the accounting policies below are critical to fully understand and evaluate our financial condition and results of operations. We prepare our consolidated financial statements in accordance with IFRS, as issued by the IASB.
The ADSs will be offered and sold pursuant to our shelf Registration Statement on Form F-3 (File No. 333-253983), or the F-3, which became effective on March 15, 2021, and the prospectus supplement relating to the Sales Agreement, dated November 25, 2022. In that regard, we registered up to $100,000,000 of the ADSs on such registration statement.
The ADSs were to be offered and sold pursuant to our shelf Registration Statement on Form F-3 (File No. 333-253983), or the F-3, which became effective on March 15, 2021, and the prospectus supplement relating to the Sales Agreement, dated November 25, 2022. In that regard, we registered up to $100,000,000 of the ADSs on such registration statement.
Our prospective customers in the enterprise access segment often do not have a specific portion of their information technology budgets allocated for products that address the next generation of advanced cyber-attacks or privacy solutions. We invest in sales and marketing efforts to increase market awareness, educate prospective customers and drive the adoption of our solution.
Our prospective customers in the enterprise access segment often do not have a specific portion of their information technology budgets allocated for products that address the next generation of privacy solutions. We invest in sales and marketing efforts to increase market awareness, educate prospective customers, and drive the adoption of our solution.
General and administrative personnel include our executive, finance, legal, human resources and administration. Professional services included in our general and administrative expenses consist primarily of legal, auditing, accounting and other consulting costs. We expect general and administrative expenses to decrease in absolute dollars in 2023 due to the settlement of legal proceedings in May 2022.
General and administrative personnel include our executive, finance, legal, human resources and administration. Professional services included in our general and administrative expenses consist primarily of legal, auditing, accounting and other consulting costs. Our general and administrative expenses decreased in absolute dollars in 2023 due to the settlement of legal proceedings in May 2022.
Research and development expenses consist primarily of personnel costs and allocated overhead, as well as the costs of subcontractors assisting our research and development team.
Research and development expenses consist primarily of personnel costs and allocated overheads, as well as the costs of subcontractors assisting our research and development team.
Our future capital requirements will depend on many factors, including: ● the progress and costs of our research and development activities; ● the potential costs of contracting with third parties to provide marketing and distribution services for us or for building such capacities internally; ● the scope of our general and administrative expenses; and ● potential future acquisitions.
Our future capital requirements will depend on many factors, including: ● the progress and costs of our research and development activities; ● the potential costs of contracting with third parties to provide marketing and distribution services for us or for building such capacities internally; ● the scope of our general and administrative expenses; and ● potential future acquisitions. 5.C Research and development, patents and licenses, etc.
Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced product and service offerings, and the continuing market acceptance of our products.
Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced product and service offerings, the continuing market acceptance of our products and our pursuit of strategic opportunities, including, but not limited to, strategic acquisitions.
In addition, our enterprise access solutions rely on businesses requiring gathering data over the Internet using residential and Data Center IP addresses from various localities around the world. Lastly, our revenues from consumers access tools rely on consumers’ willingness to spend money in order to increase their safety and privacy while using the internet.
Factors Affecting our Performance We rely on businesses requiring gathering data over the Internet using residential and Data Center IP addresses from various localities around the world. Also, our revenues from consumers access tools rely on consumers’ willingness to spend money in order to increase their safety and privacy while using the internet.
Gross Margin Gross margin, or gross profit as a percentage of revenue, has been and will continue to be affected by a variety of factors, including the average sales price of our products and services, the mix of products sold including third parties’ products, the costs related to our enterprise access solutions, the amortization of acquired technologies and the personnel costs involved in the generation of the revenue.
Gross Margin Gross margin, or gross profit as a percentage of revenue, has been and will continue to be affected by a variety of factors, including the average sales price of our products and services, the mix of products sold, the costs related to our enterprise access solutions, the amortization of acquired technologies and the personnel costs involved in the generation of the revenue. 41 Operating Expenses Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses.
We expect research and development expenses to continue to increase in absolute dollars as we continue to invest in our research and product development efforts to enhance our product capabilities, address new threat vectors and access new customer markets. 41 ● Sales and marketing .
We expect research and development expenses to continue to increase in absolute dollars as we continue to invest in our research and product development efforts to enhance our product capabilities, address new threat vectors and access new customer markets. ● Sales and marketing . Sales and marketing expenses consist primarily of personnel costs, incentive commission costs and allocated overhead.
Cash Flows Received from Financing Activities During the year ended December 31, 2022, net cash provided by financing activities was $2,603,000, primarily attributed to short-term bank loans (net funding of $1,600,000) and proceeds from long term loan, net after repayments ($1,420,000). The cash provided by the loans was partially offset by increased lease payments of $384,000.
During the year ended December 31, 2022, net cash provided by continuing financing activities was $2.6 million, primarily attributed to short-term bank loans ($1.6 million) and proceeds from long term loan, net after repayments ($1.4 million). The cash provided by the loans was partially offset by increased lease payments of $0.4 million.
Amounts drawn under the credit line bear interest at the Secured Overnight Financing Rate plus 5.5% per annum, and are paid quarterly for the actual withdrawn balance. The credit line offers three times multiple on eligible revenues, is secured against all of the assets of CyberKick, is guaranteed by us and includes a refundable deposit by us of $500,000.
Amounts drawn under the credit line bore interest at the Secured Overnight Financing Rate plus 5.5% per annum and were payable quarterly for the actual withdrawn balance. The credit line offered three times multiple on eligible revenues, was secured against all the assets of CyberKick, was guaranteed by us and included a refundable deposit by us of $0.5 million.
Finance Expense/Income Finance expense/income consists primarily of interest payments derived from our bank loans and strategic funding (for more information, see “Item 5.B - Liquidity and Capital Resources - Change in cash and cash equivalents”). We also have changes in financial liabilities at fair value through profit or loss as well as exchange rate differences, which impact our finance expense/income.
Finance Expense/Income Finance expense/income consists primarily of interest payments derived from our strategic funding (for more information, see “Item 5.B - Liquidity and Capital Resources - Change in cash and cash equivalents”). We also have exchange rate differences, which can impact our finance expense/income.
Our discussion and analysis for the year ended December 31, 2021 can be found in our annual report on Form 20-F for the fiscal year ended December 31, 2021, filed with the SEC on March 29, 2022. Our Business Model We generate primarily SaaS revenues and advertising services revenues.
Our discussion and analysis for the year ended December 31, 2022, can be found in our annual report on Form 20-F for the fiscal year ended December 31, 2022, filed with the SEC on March 31, 2023.
Gross Profit As a result of a higher increase in revenues compared to cost of revenues, gross profit grew by $4,991,000 to $10,127,000, representing a 97% increase during 2022, compared to gross profit in 2021. 43 Research and Development Expenses, net The following table summarizes our research and development costs for the periods presented.
Gross Profit As a result of a higher increase in revenues compared to cost of revenues, gross profit grew by $8.7 million to $18.8 million, representing an 86% increase during 2023, compared to gross profit in 2022. 43 Research and Development Expenses The following table summarizes our research and development costs for the periods presented.
Operating Results — Comparison of the year ended December 31, 2022 to the year ended December 31, 2021 — Research and Development Expenses, net.” 5.D Trend Information The trends impacting us are described elsewhere in this annual report on Form 20-F, including in Items 3.D., 4.B., 5.A. and B. and 10.C.
Operating Results — Comparison of the year ended December 31, 2033, to the year ended December 31, 2022 — Research and Development Expenses, net.” 5.D Trend Information The trends impacting us are described elsewhere in this annual report on Form 20-F, including in Items 3.D., 4.B., 5.A. and B. and 10.C. 48 5.E Critical Accounting Policies and Estimates We describe our significant accounting policies more fully in Note 2 to our consolidated financial statements for the year ended December 31, 2023, included elsewhere in this annual report in Form 20-F.
We also have personnel costs associated with our operations and global customer support, including salaries, benefits, bonuses and share-based compensation. The personnel consist of post-sales services on-site, such as support teams that provide our customers with on-line support. Other costs include mainly clearing fees and overhead costs which consist of certain facilities, depreciation, benefits and IT costs.
We also have amortization of technology purchased in our acquisition of NetNut in June 2019, and personnel costs associated with our operations and global customer support, including salaries, benefits, bonuses, and share-based compensation. The personnel consist of post-sales services on-site, such as support teams that provide our customers with on-line support.
The decrease of $1,055,000 compared to $9,106,000 used in operating activities during the year ended December 31, 2021, is attributed to the cost reduction in the enterprise security segment, slightly offset by increased loss from the consumer access segment, due to the full consolidation of CyberKick’s operations in 2022, compared to half a year of consolidation in 2021.
The increase of $2.2 million compared to $4.9 million used in continuing operating activities during the year ended December 31, 2021, is attributed to the increased loss from the consumer access segment, due to the full consolidation of CyberKick’s operations in 2022, compared to half a year of consolidation in 2021.
Year ended December 31, U.S. dollars in thousands 2022 2021 Payroll, related expenses and share-based payment 2,168 2,265 Professional fees 4,009 4,320 Other 585 428 Total general and administration expenses 6,762 7,013 Our general and administrative expenses totaled $6,762,000 for the year ended December 31, 2022, a decrease of $251,000, or 4%, compared to $7,013,000 for the year ended December 31, 2021.
Year ended December 31, U.S. dollars in millions 2023 2022 Payroll, related expenses and share-based payment 2.0 2.1 Professional fees 2.1 4.0 Other 0.3 0.6 Total General and administrative expenses 4.4 6.7 Our general and administrative expenses totaled $4.4 million for the year ended December 31, 2023, a decrease of $2.3, or 34%, compared to $6.7 million for the year ended December 31, 2022.
Net loss for the year As a result of the foregoing, our net loss for the year ended December 31, 2022 was $13,151,000, compared to a loss of $13,125,000 during the year ended December 31, 2021. 45 5.B Liquidity and Capital Resources Overview As of March 24, 2023, our cash and cash equivalents of approximately $3.1 million were held for working capital, capital expenditures, investment in technology and business acquisition purposes.
Loss from continuing operations As a result of the foregoing, our loss from continuing operations for the year ended December 31, 2023, was $5.6 million, compared to a loss of $12.5 million for the year ended December 31, 2022. 5.B Liquidity and Capital Resources Overview As of February 29, 2024, our cash and cash equivalents of approximately $14.0 million were held for working capital, capital expenditures, investment in technology and business acquisition purposes.
The evaluation to present revenue on a gross versus net basis requires significant judgment. We determined that we act as the principal and recognize revenue as it relates to these transactions on a gross basis as the Company controls the service to the customer and it is the primary obligor in the transaction.
Management has determined that it acts as the principal and recognizes revenue as it relates to these transactions on a gross basis as the Company controls the service to the customer and it is the primary obligor in the transaction. 49
Operating Loss As a result of the foregoing, our operating loss for the year ended December 31, 2022 was $13,424,000, compared to an operating loss of $15,012,000 in the year ended December 31, 2021.
Operating Loss As a result of the foregoing, our operating loss for the year ended December 31, 2023, was $5.5 million, compared to an operating loss of $12.7 million for the year ended December 31, 2022.
Sales and marketing expenses consist primarily of media costs, required for customer acquisitions in the consumer access segment. We have also material personnel costs, incentive commission costs and allocated overhead. We expense commission costs as incurred. We spend money for market development programs, promotions and other marketing activities, outside consulting costs, and travel expense.
We expense commission costs as incurred. Until the second quarter of 2023, we had material media costs, which were required for customer acquisitions in the consumer access segment – an activity we stopped in July 2023. We also spend money on market development programs, promotions and other marketing activities, outside consulting costs, and travel expense.
Year ended December 31, U.S. dollars in thousands 2022 2021 Payroll, related expenses and share-based payment 2,880 2,856 Subcontractors 900 1,429 Other 253 486 Total Research and development expenses 4,033 4,771 Our research and development costs for the year ended December 31, 2022 amounted to $4,033,000, representing a decrease of $738,000, or 15%, compared to $4,771,000 for the year ended December 31, 2021.
Year ended December 31, U.S. dollars in millions 2023 2022 Payroll, related expenses and share-based payment 2.9 2.8 Subcontractors 0.2 0.6 Other 0.5 0.4 Total Research and development expenses 3.6 3.8 Our research and development costs for the year ended December 31, 2023, amounted to $3.6 million, representing a decrease of $0.2 million, or 5%, compared to $3.8 million for the year ended December 31, 2022.
Having said that, we are still tracking consumer access segment revenues in order to determine the impacts of seasonality. Overall, historical patterns in our business may not be a reliable indicator of our future sales activity or performance due to the early stage of the businesses we operate with and recent acquisitions.
We believe that our business is not sensitive to seasonal trends but still, historical patterns in our business may not be a reliable indicator of our future sales activity or performance due to the early stage of the businesses we operate and recent acquisitions.
Financial Income, net We had net financial expenses of $54,000 for the year ended December 31, 2022, compared to net financial income of $942,000 for the year ended December 31, 2021.
Financial Expenses, net We had net financial expenses of $0.6 million for the year ended December 31, 2023, compared to net financial expenses of $0.1 million for the year ended December 31, 2022.
In November 2022, we entered into an ATM Sales Agreement, or the Sales Agreement, with ThinkEquity LLC, or the Sales Agent, pursuant to which we may offer and sell, from time to time, through the Sales Agent ADSs, for an aggregate offering price of up to $5 million.
As of March 10, 2024, 344,672 PP Warrants were exercised to 344,672 ADSs in exchange for $938 thousand and 91,851 Agents Warrants were exercised to 91,851 ADSs in exchange to $209 thousand. 47 At the Market Offering (“ATM”) In November 2022, we entered into an ATM Sales Agreement, or the Sales Agreement, with ThinkEquity LLC, or the Sales Agent, pursuant to which we could offer and sell, from time to time, through the Sales Agent ADSs, for an aggregate offering price of up to $5 million.
Accounting for advertising We evaluate if revenues should be presented on a gross basis, which is the amount that a customer pays for the service, or on a net basis, which is the amount of the customer payment less amounts the Company pays to digital property owners.
Management evaluates whether its revenues should be presented on a gross basis, which is the amount that a customer pays for the service, or on a net basis, which is the amount of the customer payment less amounts the Company pays to digital property owners for placing the customers’ products on their digital property, also known as “traffic acquisition costs”.
We believe that our current cash and cash equivalents will be sufficient to meet our anticipated cash needs until at least December 31, 2023.
We believe that our current cash and cash equivalents will be sufficient to meet our anticipated cash needs for the next twelve months.
The period-to-period comparison of results is not necessarily indicative of results for future periods.
Sales and Marketing Expenses The following table summarizes our sales and marketing costs for the periods presented. The period-to-period comparison of results is not necessarily indicative of results for future periods.
Year ended December 31, U.S. dollars in thousands 2022 2021 Payroll, related expenses and share-based payment 4,235 4,414 Media costs 5,572 2,067 Professional fees 131 576 Marketing 868 523 Amortization and impairment of intangible assets and depreciation 1,001 416 Other 380 352 Total selling and marketing expenses 12,187 8,348 Our sales and marketing expenses totaled $12,187,000 for the year ended December 31, 2022, an increase of $3,839,000, or 46%, compared to $8,348,000 for the year ended December 31, 2021.
Year ended December 31, U.S. dollars in millions 2023 2022 Payroll, related expenses and share-based payment 4.5 3.9 Media costs 1.5 5.6 Professional fees 0.1 0.1 Marketing 0.7 0.8 Amortization and impairment of intangible assets and depreciation 2.8 1.0 Other 0.4 0.4 Total Selling and marketing expenses 10.0 11.8 Our sales and marketing expenses totaled $10.0 million for the year ended December 31, 2023, a decrease of $1.8 million, or 15%, compared to $11.8 million for the year ended December 31, 2022.
Cash Flows Used in Investing Activities During the year ended December 31, 2022, net cash provided by investing activities was $5,037,000, compared to net cash used in investing activities of $9,796,000 during the year ended December 31, 2021.
Cash Flows Provided by continuing Investing Activities During the year ended December 31, 2023, net cash provided by continuing investing activities was $0.6 million, compared to $5.1 million during the year ended December 31, 2022.
We generate revenues on the consumer access arena also from providing advertising services to enterprise customers, using marketing tools on various sites in order to persuade the user to acquire the enterprise customers’ privacy products. Revenue is recognized at the point in time when a user purchased an application or software of a customer.
Our revenue is recognized on a straight-line basis over the package period. Until July 2023, we generated revenues on the consumer access arena also from providing advertising services to enterprise customers, using marketing tools on various sites in order to persuade users to acquire our enterprise customers’ privacy products.
If we are unable to raise additional capital when desired, our business, operating results, and financial condition would be adversely affected, and there is substantial doubt about our ability to continue as a going concern.
If we are unable to raise additional capital when desired or can’t generate profit from operating activities, our business, operating results, and financial condition would be adversely affected.
Comparison of the year ended December 31, 2022, to the year ended December 31, 2021 Results of Operations Year ended December 31, U.S. dollars in thousands 2022 2021 Consolidated Statements of Profit or Loss Revenues 18,779 10,281 Cost of revenues 8,652 5,145 Gross profit 10,127 5,136 Research and development expenses 4,033 4,771 Selling and marketing expenses 12,187 8,348 General and administrative expenses 6,762 7,013 Impairment of goodwill 569 700 Contingent consideration measurement - (684 ) Operating loss (13,424 ) (15,012 ) Financial income (expense), net (54 ) 942 Loss before taxes on income (13,478 ) (14,070 ) Tax benefit 327 945 Net loss for the year (13,151 ) (13,125 ) 42 Revenues The following table summarizes our revenues through types for the periods presented.
Comparison of the year ended December 31, 2023, to the year ended December 31, 2022 Results of Operations from Continuing Operations Year ended December 31, U.S. dollars in millions 2023 2022 Consolidated Statements of Profit or Loss Revenue 26.5 18.5 Cost of revenue 7.7 8.4 Gross profit 18.8 10.1 Research and development expenses 3.6 3.8 Selling and marketing expenses 10.0 11.8 General and administrative expenses 4.4 6.6 Impairment of goodwill 6.3 0.6 Operating loss (5.5 ) (12.7 ) Financial expense, net (0.6 ) (0.1 ) Loss from continuing operations before income tax (6.1 ) (12.8 ) Tax benefit 0.5 0.3 Loss from continuing operations (5.6 ) (12.5 ) 42 Revenues The following table summarizes our revenues by types for the periods presented.
The decrease is primarily due to a $280,000 reduction in legal fees connected to intellectual property protection activities (see also “Item 8.A. — Legal Proceedings”), with respect to patent related proceedings that were resolved by a settlement on May 17, 2022.
The decrease is primarily due to a $2.4 million reduction in legal fees connected to intellectual property protection activities, with respect to patent related proceedings that were resolved by a settlement on May 17, 2022. 44 Impairment of Goodwill We recorded impairment of goodwill of $6.3 million related to the CyberKick cash-generating-unit in 2023, compared to a goodwill impairment of $0.6 million related to the NetNut Networks cash-generating-unit in 2022.
This is a non-IFRS financial measure that we define as net loss before depreciation and amortization, interest and tax, as further adjusted to remove the impact of (i) impairment of intangible assets and goodwill (if any); (ii) share-based compensation expense; (iii) contingent consideration measurement (if any); and (iv) issuance costs in connection with our securities offerings (if any).
This is a non-IFRS financial measure that we define as EBITDA or EBITDA loss, as further adjusted to remove the impact of (i) impairment of goodwill (if any); (ii) share-based compensation; (iii) contingent consideration measurement (if any). 39 In accordance with accounting standards, we are required to record non-cash expenses and non-core expenses, which have a material effect on our profitability.
The changes to the accounting estimates are credited during the period in which the change in the estimate is made. Revenue Recognition We determine whether revenue should be reported on a gross or net basis.
The changes to the accounting estimates are credited during the period in which the change in the estimate is made.
Year ended December 31, U.S. dollars in thousands 2022 2021 SaaS 11,850 7,328 Advertising services 6,699 2,325 Software licenses 28 227 Software support services 202 401 Total Revenues 18,779 10,281 Our revenues for the year ended December 31, 2022 amounted to $18,779,000, representing an increase of $8,498,000, or 83%, compared to $10,281,000 for the year ended December 31, 2021.
Year ended December 31, U.S. dollars in millions 2023 2022 Software as a Service 23.7 11.9 Advertising services 2.8 6.7 Total Revenues 26.5 18.6 Our revenues for the year ended December 31, 2023, amounted to $26.5 million, representing an increase of $7.9 million, or 42%, compared to $18.6 million for the year ended December 31, 2022.
Key Business Metric We monitor the key business metrics set forth below to help us evaluate and establish budgets, measure the effectiveness of our sales and marketing efforts, and assess operational efficiencies. Our non-IFRS key business metrics are EBITDA loss and Adjusted EBITDA loss. EBITDA loss.
Also, in July 2023 we sold our legacy cybersecurity solutions, which is considered in this annual report on Form 20-F as a discontinued operation. Key Business Metric We monitor the key business metrics set forth below to help us evaluate and establish budgets, measure the effectiveness of our sales and marketing efforts, and assess operational efficiencies.
Until March 24, 2023, the Company repaid to O.R.B. an amount of approximately $0.54 million from the sales that were generated as a result of the funding.
As of December 31, 2023, we received aggregate funding of $2.55 million and repaid to O.R.B. an amount of approximately $1.3 million from the revenues that were generated as a result of the funding, and approximately $1.25 million is currently outstanding.
December 31, U.S. dollars in thousands 2022 2021 Net cash used in operating activities (8,051 ) (9,106 ) Net cash provided by (used in) investing activities 5,037 (9,796 ) Net cash provided by financing activities 2,603 11,640 Exchange rate differences (127 ) 73 Net decrease in cash and cash equivalents (538 ) (7,189 ) Cash Flows Used in Operating Activities During the year ended December 31, 2022, net cash used in operating activities was $8,051,000, primarily attributed to operational costs which exceeded cash flows from customers’ payments.
Results of cashflows from continuing operations December 31, U.S. dollars in millions 2023 2022 Net cash provided by (used in) continuing operating activities 4.7 (7.1 ) Net cash provided by continuing investing activities 0.6 5.1 Net cash provided by continuing financing activities 2.2 2.6 Change in cash and cash equivalents 7.5 0.5 45 Cash Flows Provided by (Used in) continuing Operating Activities During the year ended December 31, 2023, net cash provided by continuing operating activities was $4.7 million, primarily attributed to cash flows from customers’ payments which exceeded the cost of revenues and the operational costs, primarily form the enterprise internet access segment.
Taxes on income We had a tax benefit of $327,000 for the year ended December 31, 2022, compared to a tax benefit of $945,000 for the year ended December 31, 2021. The decrease is resulted primarily from a recognition of smaller carryforward loss tax assets in the year ended December 31, 2022 compared to the year ended December 31, 2021.
Taxes on income We had a tax benefit of $0.5 million for the year ended December 31, 2023, compared to a tax benefit of $0.3 million for the year ended December 31, 2022.
We have drawn short-term bank loans out of a one-year credit line which was secured from United Mizrahi-Tefahot Bank on May 25, 2022, in a total amount of $2 million. The credit facility is used predominantly to fund the operations and growth of our subsidiary, CyberKick, and as a result will reduce the usage of our own cash.
Change in Cash and Cash Equivalents As a result of the foregoing, our cash and cash equivalents from continuing operations increased in the amount of $7.5 million during the year ended December 31, 2023, compared to an increase in the amount of $0.5 million during the year ended December 31, 2022. 46 United Mizrahi-Tefahot Bank Credit Line We drew a $1.6 million short-term bank loan from our $2 million one-year credit line which was secured from Mizrahi Bank on May 25, 2022.
The period-to-period comparison of results is not necessarily indicative of results for future periods.
Cost of Revenues The following table summarizes our cost of revenues for the periods presented, as well as presenting the gross profit as a percentage of total revenues. The period-to-period comparison of results is not necessarily indicative of results for future periods.
The packages are usually for the earlier of one day to three months or maximum bandwidth usage in the enterprise privacy segment, and for a month or a year in the consumers access segment. Our revenue is recognized on a straight-line basis over the package period.
Our Business Model We generate SaaS revenues when customers are subscribing to our enterprise and consumer access platforms and paying for the packages they choose. The packages are usually for the earlier of one to twelve months or maximum bandwidth usage in the enterprise access segment, and for a month or a year in the consumers access segment.
The degree to which prospective customers recognize the mission critical need for next-generation protection solutions against threats, and subsequently allocate budgets for our platform, will drive our ability to acquire new customers, increase renewals and follow-on sales opportunities, which, in turn, will affect our future financial performance. 5.A Operating Results Components of Operating Results Revenue We generate SaaS revenues and advertising services revenues as detailed under “Our Business Model” above.
The degree to which prospective customers recognize the mission critical need for collecting valuable information from internet sites will drive our ability to acquire new customers, increase renewals and follow-on sales opportunities, which, in turn, will affect our future financial performance.
Year ended December 31, U.S. dollars in thousands 2022 2021 Internet services providers 2,135 1,747 Depreciation, amortization and impairment of intangible assets 1,244 1,156 Traffic acquisition costs 3,070 1,118 Payroll, related expenses and share-based payment 399 518 Networks and servers 570 341 Clearing fees 1,113 213 Other 121 52 Total cost of revenues 8,652 5,145 Gross profit 10,127 5,136 Gross profit out of revenues % 54 % 50 % Our cost of revenues for the year ended December 31, 2022 amounted to $8,652,000, representing an increase of $3,507,000 or 68%, compared to $5,145,000, for the year ended December 31, 2021.
Year ended December 31, U.S. dollars in millions 2023 2022 Internet protocols addresses costs 3.8 2.1 Amortization and impairment of intangible assets and depreciation 0.9 1.1 Traffic acquisition costs 1.1 3.1 Payroll, related expenses and share-based payment 0.4 0.4 Networks and servers 0.8 0.6 Clearing fees 0.7 1.1 Other * * Total cost of revenues 7.7 8.4 Gross profit 18.8 10.1 Gross profit out of revenues % 71 % 55 % * Less than $0.1.
As a result of the above, subcontractors costs dropped by $529,000 to $900,000, after an offset of $248,000 resulting from an increase in the enterprise internet access segment compared to 2022. Sales and Marketing Expenses The following table summarizes our sales and marketing costs for the periods presented.
The decrease was offset by an increase of $1.6 million in the enterprise internet access segment (43%), as a result of the increase in revenues which required higher resources and increased incentive payments. General and Administrative Expenses The following table summarizes our general and administrative costs for the periods presented.
During the year ended December 31, 2021, net cash used in operating activities was $9,106,000, primarily attributed to operational costs which exceeded cash flows from customers’ payments.
Also, the Company benefited from a reduction of $2.4 million of legal fees, due to patent related proceedings that were resolved by a settlement on May 17, 2022. During the year ended December 31, 2022, net cash used in continuing operating activities was $7.1 million, primarily attributed to operational costs which exceeded cash flows from customers’ payments.
The following tables show the reconciled effect of the non-cash expenses/income on our net loss for the years ended December 31, 2022, and 2021: December 31, U.S. dollars in thousands 2022 2021 Net loss for the year (13,151 ) (13,125 ) Adjustments: Assets depreciation, amortization and impairment 2,205 1,512 Finance expense (income), net 54 (942 ) Tax benefit (327 ) (945 ) EBITDA loss (11,219 ) (13,500 ) Adjustments: Share-based compensation 1,679 2,356 Contingent consideration measurement - (684 ) Impairment of goodwill 569 700 Adjusted EBITDA loss (8,971 ) (11,128 ) 40 Factors Affecting our Performance We rely on market education to raise awareness of today’s next-generation cyber-attacks, articulate the need for our solutions and, in particular, the reasons to purchase our products.
The following tables show the reconciled effect of the non-cash expenses/income on our net loss for the years ended December 31, 2023, and 2022: December 31, U.S. dollars in millions 2023 2022 Loss from continuing operations for the year (5.6 ) (12.4 ) Adjustments: Assets depreciation, amortization and impairment 3.5 2.0 Finance expense (income), net 0.6 * Tax benefit (0.5 ) (0.3 ) EBITDA loss (2.0 ) (10.7 ) Adjustments: Share-based compensation 0.9 1.6 Impairment of goodwill 6.3 0.6 Adjusted EBITDA (Adjusted EBITDA loss) for the year 5.2 (8.5 ) * Less than $0.1 million.
Cost of Revenues Our total cost of revenue consists mainly of traffic acquisition costs required for generating advertising revenues in the consumer access segment. Also, we have payments to ISPs and servers’ costs related to our enterprise access solutions, as well as amortization of technology purchased in our acquisitions of NetNut in June 2019 and CyberKick in July 2021.
Cost of Revenues Our total cost of revenue consists mainly of payments related to our enterprise access solutions with respect to publishers and ISPs for IP addresses, including servers’ costs required for the IP’s routing.
The switch to positive generated cash is attributed mainly to the sale of short-term investments in the amount of $5,707,000. 46 During the year ended December 31, 2021, net cash used in investing activities was $9,796,000, compared to net cash used in investing activities of $1,189,000 during the year ended December 31, 2020.
During the year ended December 31, 2022, net cash provided by continuing investing activities was $5.0 million, due to the sale of the short-term investments, as stated above, compared to net cash used in continuing investing activities of $9.8 million during the year ended December 31, 2021, which stemmed from the investment of $5.8 in short-term investments and $3.7 million that was paid with respect to the purchase of CyberKick.
During the year ended December 31, 2021, net cash provided by financing activities was $11,640,000, primarily attributed to net proceeds from a registered direct offering closed in February 2021, as well as proceeds from the exercise of warrants, in the aggregate amount of $12,932,000, which was slightly offset by the contingent consideration payment of $915,000 related to the NetNut acquisition.
Cash Flows Provided by continuing Financing Activities During the year ended December 31, 2023, net cash provided by continuing financing activities was $2.2 million, primarily attributed to funding from a private placement, our ATM (as defined below) and warrants exercises in the aggregate net amount of $4.7 million.
This is a non-IFRS financial measure that we define as a loss which excludes: (i) amortization and impairment (if any) of intangible assets and goodwill; (ii) share-based compensation expense; (iii) issuance costs in connection with our securities offerings (if any); and (iv) contingent consideration measurement (if any). Adjusted EBITDA loss .
Our non-IFRS key business metrics are EBITDA, EBITDA loss, Adjusted EBITDA and Adjusted EBITDA loss. EBITDA or EBITDA loss. This is a non-IFRS financial measure that we define as a net loss from continuing operations before depreciation, amortization and impairment of intangible assets, interest, and tax. Adjusted EBITDA or Adjusted EBITDA loss .
As of March 24, 2023, we have sold 25,847 ADSs pursuant to the Sales Agreement for aggregate gross proceeds of approximately $75 thousand. Current Outlook We have financed our operations to date primarily through proceeds from sales of our Ordinary Shares, and recently also from long and short term loans.
Current Outlook Until December 31, 2022, we financed our operations primarily through proceeds from sales of our equity securities, and recently also from long- and short-term loans. We have incurred losses and generated negative cash flows from operations since our inception. During 2023, we financed our operations mainly from cash generated from operating activities.
Until March 24, 2023, the Company received aggregate funding of $2.22 million. We repay the funding using a revenue share model that is based on sales generated only from customers of the new consumer access solutions acquired with each funding installment.
Spring Ltd., or O.R.B., as further amended, of up to $4.0 million to support the growth of our consumer access solutions and its customer acquisition program. The repayment of the funding was based on a revenue share model in connection with sales generated from new customers acquired with each funding installment.
In addition, our operating plans may change as a result of many factors that may currently be unknown to us, and we may need to seek additional funds sooner than planned.
As of February 29, 2024, our cash and cash equivalents were approximately $14.0 million. We expect that our current resources will be sufficient to meet our anticipated cash needs for the next twelve months. Our operating plans may change as a result of many factors that may currently be unknown to us, which may impact our funding plans.
Any impairment loss is recognized immediately in profit or loss and is not subsequently reversed. 49 Business combination We account for business combinations by applying the acquisition method.
Any impairment loss is recognized immediately in profit or loss and is not subsequently reversed. Goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it may be impaired.
Removed
We also generate immaterial software licenses revenues and software support services revenues in the enterprise security segment through TerraZone, a third party provider (see also “Item 4B- Business Overview”). The SaaS revenues are generated when customers are subscribing to our enterprise and consumer access platforms and paying for the packages they choose.
Added
Revenue was recognized at the point in time when a user purchased an application or software of a customer. On July 4, 2023, we announced our intention to scale down the Consumer Internet Access business operations (see “Item 4.B. Business Overview”). As a result, we ceased to generate these advertising revenues.
Removed
Due to accounting standards, we are required to record non-cash expenses and non-core expenses, which have a material effect on our profitability.
Added
Lack of reliance on large customers We work continuously to increase our customer base, in order to reduce reliance on large customers.
Removed
We believe that the comparison of our year-over-year total revenue provides a more significant insight of our activity than a comparison of our quarterly results, predominately due to seasonality in the sale of some of our products, subscriptions and services. Our fourth quarter has historically been our strongest quarter for revenues as a result of large enterprises purchase patterns.
Added
During 2023, 46% of our enterprise internet access revenue derived from 34 customers who purchased services in amounts ranging between $100,000 and $1,000,000, and 22% of our revenue was generated from 131 customers who bought services at amounts range between $10,000 and $100,000.
Removed
Nevertheless, since the acquisition of NetNut in 2019 and the consolidation of the SaaS revenues, and in a larger manner since the acquisition of CyberKick in July 2021, we believe that the effect of these seasonal trends on our quarterly results may be reduced.
Added
We had three customers that purchased services in amounts greater than $1,000,000, and they generated together approximately 27% of the total enterprise internet access business revenues. 40 Expansion from existing customers Our large base of customers represents a significant opportunity for further sales expansion.
Removed
We expect our gross margins to increase over time as revenues continue to grow, subject to the factors described above. Operating Expenses Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses.
Added
Once a customer has purchased a subscription from us, we have historically experienced significant expansion with them over time as they add additional features, geographic coverage, users, and digital intelligence solutions. We look at the increase in spending from our customers as an indication of the value we provide them over time.
Removed
Our financial liabilities at fair value through profit or loss in our consolidated statement of financial position consist of derivative financial instruments.
Added
An indication of our success to increase spending from existing customers in the internet access business is our net dollar-based retention rate, or NRR, which compares our Annual Recurring Revenue, or ARR, from the same set of customers as of a certain point in time, relative to the same point in time in the previous year ago period.
Removed
The increase is mainly attributed to a $6,681,000 increase to $10,070,000 (197%) in the consumer access segment revenues generated by CyberKick compared to 2021, where the revenues were consolidated only from its acquisition on July 4, 2021.
Added
We calculate our NRR as of a period end by starting with the ARR from the cohort of all customers as of 12 months prior to such period-end, or the Prior Period ARR. We then calculate the ARR from these same customers as of the current period-end, or the Current Period ARR.
Removed
Revenues grew also due to an increase of $2,214,000 (35%) to $8,479,000 in SaaS revenue in the enterprise access segment, generated by NetNut and NetNut Networks in 2022, compared to $6,265,000 of such revenue in 2021.
Added
Current Period ARR includes any expansion and is net of contraction or attrition over the last 12 months but excludes ARR from new customers in the current period. We then divide the Current Period ARR by the Prior Period ARR to arrive at the point-in-time NRR.
Removed
These increases were partially offset by a $398,000 decrease in the enterprise cybersecurity segment revenues, due to the outsourcing of this segment’s operations to TerraZone. Cost of Revenues The following table summarizes our cost of revenues for the periods presented, as well as presenting the gross profit as a percentage of total revenues.
Added
We then calculate the average of the trailing four quarter point-in-time NRR to arrive at the NRR. As of December 31, 2023, our NRR was 1.53, which means that the existing customers increased their ARR from 2022 by 53%, regardless of any increase in revenues generated from new customers.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

100 edited+20 added−7 removed94 unchanged
Pursuant to the regulations under the Israeli Companies Law, the board of directors of a company such as ours is not required to have external directors if: (i) the company does not have a controlling shareholder (as such term is defined in the Companies Law); (ii) a majority of the directors serving on the board of directors are “independent,” as defined under Nasdaq Rule 5605(a)(2); and (iii) the company follows Nasdaq Rule 5605(e)(1), which requires that the nomination of directors be made, or recommended to the board of directors, by a Nominating Committee of the board of directors consisting solely of independent directors, or by a majority of independent directors.
Pursuant to the regulations under the Israeli Companies Law, the board of directors of a company such as ours is not required to have external directors if: (i) the company does not have a controlling shareholder (as such term is defined in the Israeli Companies Law); (ii) a majority of the directors serving on the board of directors are “independent,” as defined under Nasdaq Rule 5605(a)(2); and (iii) the company follows Nasdaq Rule 5605(e)(1), which requires that the nomination of directors be made, or recommended to the board of directors, by a Nominating Committee of the board of directors consisting solely of independent directors, or by a majority of independent directors.
Independent Directors Under the Companies Law An “independent director” is either an external director or a director who meets the same non-affiliation criteria as an external director (except for (i) the requirement that the director be an Israeli resident (which does not apply to companies such as ours whose securities have been offered outside of Israel or are listed outside of Israel) and (ii) the requirement for accounting and financial expertise or professional qualifications), as determined by the audit committee, and who has not served as a director of the company for more than nine consecutive years.
Independent Directors Under the Israeli Companies Law An “independent director” is either an external director or a director who meets the same non-affiliation criteria as an external director (except for (i) the requirement that the director be an Israeli resident (which does not apply to companies such as ours whose securities have been offered outside of Israel or are listed outside of Israel) and (ii) the requirement for accounting and financial expertise or professional qualifications), as determined by the audit committee, and who has not served as a director of the company for more than nine consecutive years.
Our audit committee may not conduct any discussions or approve any actions requiring its approval (see “—Approval of Related Party Transactions under Israeli Law”), unless at the time of the approval a majority of the committee’s members are present, which majority consists of independent directors under the Companies Law, including at least one external director.
Our audit committee may not conduct any discussions or approve any actions requiring its approval (see “—Approval of Related Party Transactions under Israeli Law”), unless at the time of the approval a majority of the committee’s members are present, which majority consists of independent directors under the Israeli Companies Law, including at least one external director.
Moshe Tal (the chairman), Mr. Yehuda Halfon and Ms. Rakefet Remigolski, each of whom is “independent,” as such term is defined in under Nasdaq Stock Market rules. All members of our audit committee meet the requirements for financial literacy under the Nasdaq Stock Market rules.
Yehuda Halfon (the chairman), Mr. Moshe Tal and Ms. Rakefet Remigolski, each of whom is “independent,” as such term is defined in under Nasdaq Stock Market rules. All members of our audit committee meet the requirements for financial literacy under the Nasdaq Stock Market rules.
From time to time, as necessary and required to approve our financial statements, the audit committee holds separate meetings, prior to the scheduled meetings of the entire board of directors regarding financial statement approval. As detailed above, the members of our audit committee are Mr. Moshe Tal, Mr. Yehuda Halfon and Ms. Rakefet Remigolski.
From time to time, as necessary and required to approve our financial statements, the audit committee holds separate meetings, prior to the scheduled meetings of the entire board of directors regarding financial statement approval. As detailed above, the members of our audit committee are Mr. Yehuda Halfon, Mr. Moshe Tal and Ms. Rakefet Remigolski.
Under the Nasdaq rules, we are required to maintain a compensation committee consisting of at least two members, each of whom must be independent directors. Our compensation committee is acting pursuant to a written charter, and consists of Mr. Moshe Tal, Mr. Yehuda Halfon and Ms.
Under the Nasdaq rules, we are required to maintain a compensation committee consisting of at least two members, each of whom must be independent directors. Our compensation committee is acting pursuant to a written charter, and consists of Mr. Yehuda Halfon, Mr. Moshe Tal, and Ms.
As noted above, the members of our compensation committee include Mr. Moshe Tal, Mr. Yehuda Halfon and Ms. Rakefet Remigolski, each of whom is “independent,” as such term is defined under Nasdaq rules. Mr. Moshe Tal serves as the chairman of our compensation committee.
As noted above, the members of our compensation committee include Mr. Yehuda Halfon, Mr. Moshe Tal and Ms. Rakefet Remigolski, each of whom is “independent,” as such term is defined under Nasdaq rules. Yehuda Halfon serves as the chairman of our compensation committee.
Under the Companies Law, our audit committee is responsible for: (i) determining whether there are deficiencies in the business management practices of our company, and making recommendations to the board of directors to improve such practices; (ii) determining whether to approve certain related party transactions (including transactions in which an office holder has a personal interest and whether such transaction is extraordinary or material under Companies Law) and establishing the approval process for certain transactions with a controlling shareholder or in which a controlling shareholder has a personal interest (see “—Approval of Related Party Transactions under Israeli Law”); (iii) determining the approval process for transactions that are “non-negligible” (i.e., transactions with a controlling shareholder that are classified by the audit committee as non-negligible, even though they are not deemed extraordinary transactions), as well as determining which types of transactions would require the approval of the audit committee, optionally based on criteria which may be determined annually in advance by the audit committee; (iv) examining our internal controls and internal auditor’s performance, including whether the internal auditor has sufficient resources and tools to dispose of its responsibilities; (v) examining the scope of our auditor’s work and compensation and submitting a recommendation with respect thereto to our board of directors or shareholders, depending on which of them is considering the appointment of our auditor; (vi) establishing procedures for the handling of employees’ complaints as to deficiencies in the management of our business and the protection to be provided to such employees; and (vii) where the board of directors approves the working plan of the internal auditor, examining such working plan before its submission to the board of directors and proposing amendments thereto.
Under the Israeli Companies Law, our audit committee is responsible for: (i) determining whether there are deficiencies in the business management practices of our company, and making recommendations to the board of directors to improve such practices; (ii) determining whether to approve certain related party transactions (including transactions in which an office holder has a personal interest and whether such transaction is extraordinary or material under Israeli Companies Law) and establishing the approval process for certain transactions with a controlling shareholder or in which a controlling shareholder has a personal interest (see “—Approval of Related Party Transactions under Israeli Law”); (iii) determining the approval process for transactions that are “non-negligible” (i.e., transactions with a controlling shareholder that are classified by the audit committee as non-negligible, even though they are not deemed extraordinary transactions), as well as determining which types of transactions would require the approval of the audit committee, optionally based on criteria which may be determined annually in advance by the audit committee; (iv) examining our internal controls and internal auditor’s performance, including whether the internal auditor has sufficient resources and tools to dispose of its responsibilities; (v) examining the scope of our auditor’s work and compensation and submitting a recommendation with respect thereto to our board of directors or shareholders, depending on which of them is considering the appointment of our auditor; 57 (vi) establishing procedures for the handling of employees’ complaints as to deficiencies in the management of our business and the protection to be provided to such employees; and (vii) where the board of directors approves the working plan of the internal auditor, examining such working plan before its submission to the board of directors and proposing amendments thereto.
Our audit committee is acting pursuant to a written charter, which sets forth, among others, the responsibilities of the audit committee consistent with the rules of the SEC and Nasdaq Listing Rules (in addition to the requirements for such committee under the Companies Law), including, among others, the following: ● oversight of our independent registered public accounting firm and recommending the engagement, compensation or termination of engagement of our independent registered public accounting firm to the board of directors in accordance with Israeli law; ● recommending the engagement or termination of the person filling the office of our internal auditor, reviewing the services provided by our internal auditor and reviewing effectiveness of our system of internal control over financial reporting; 58 ● recommending the terms of audit and non-audit services provided by the independent registered public accounting firm for pre-approval by our board of directors; and ● reviewing and monitoring, if applicable, legal matters with significant impact, finding of regulatory authorities’ findings, receive reports regarding irregularities and legal compliance, acting according to “whistleblower policy” and recommend to our board of directors if so required.
Our audit committee is acting pursuant to a written charter, which sets forth, among others, the responsibilities of the audit committee consistent with the rules of the SEC and Nasdaq Listing Rules (in addition to the requirements for such committee under the Israeli Companies Law), including, among others, the following: ● oversight of our independent registered public accounting firm and recommending the engagement, compensation or termination of engagement of our independent registered public accounting firm to the board of directors in accordance with Israeli law; ● recommending the engagement or termination of the person filling the office of our internal auditor, reviewing the services provided by our internal auditor and reviewing effectiveness of our system of internal control over financial reporting; ● recommending the terms of audit and non-audit services provided by the independent registered public accounting firm for pre-approval by our board of directors; and ● reviewing and monitoring, if applicable, legal matters with significant impact, finding of regulatory authorities’ findings, receive reports regarding irregularities and legal compliance, acting according to “whistleblower policy” and recommend to our board of directors if so required.
The compensation policy must furthermore consider the following additional factors: ● the knowledge, skills, expertise and accomplishments of the relevant director or executive; ● the director’s or executive’s roles and responsibilities and prior compensation agreements with him or her; ● the relationship between terms offered and the average and median compensation of the other employees of the company; ● the possibility of reducing variable compensation at the discretion of the board of directors; and the possibility of setting a limit on the exercise value of non-cash variable compensation; and ● as to severance compensation, the period of service of the director or executive, the terms of his or her compensation during such service period, the company’s performance during that period of service, the person’s contribution towards the company’s achievement of its goals and the maximization of its profits, and the circumstances under which the person is leaving the company.
The compensation policy must furthermore consider the following additional factors: ● the knowledge, skills, expertise and accomplishments of the relevant director or executive; ● the director’s or executive’s roles and responsibilities and prior compensation agreements with him or her; ● the relationship between terms offered and the average and median compensation of the other employees of the company; ● the possibility of reducing variable compensation at the discretion of the board of directors; and the possibility of setting a limit on the exercise value of non-cash variable compensation; and 59 ● as to severance compensation, the period of service of the director or executive, the terms of his or her compensation during such service period, the company’s performance during that period of service, the person’s contribution towards the company’s achievement of its goals and the maximization of its profits, and the circumstances under which the person is leaving the company.
The duty of loyalty of an office holder requires an office holder to act in good faith and for the benefit of the company, and includes a duty to: ● refrain from any conflict of interest between the performance of his duties in the company and his performance of his other duties or personal affairs; ● refrain from any action that is competitive with the company’s business; ● refrain from exploiting any business opportunity of the company to receive a personal gain for himself or others; and ● disclose to the company any information or documents relating to the company’s affairs which the office holder has received due to his position as an office holder.
The duty of loyalty of an office holder requires an office holder to act in good faith and for the benefit of the company, and includes a duty to: ● refrain from any conflict of interest between the performance of his duties in the company and his performance of his other duties or personal affairs; ● refrain from any action that is competitive with the company’s business; 61 ● refrain from exploiting any business opportunity of the company to receive a personal gain for himself or others; and ● disclose to the company any information or documents relating to the company’s affairs which the office holder has received due to his position as an office holder.
The approval of each of the compensation committee and the board of directors, with regard to the office holders and directors above, must be in accordance with the company’s stated compensation policy; however, under special circumstances, the compensation committee and the board of directors may approve compensation terms of a chief executive officer that are inconsistent with the company’s compensation policy provided that they have considered those provisions that must be included in the compensation policy according to the Companies Law and that shareholder approval was obtained by a Special Majority requirement.
The approval of each of the compensation committee and the board of directors, with regard to the office holders and directors above, must be in accordance with the company’s stated compensation policy; however, under special circumstances, the compensation committee and the board of directors may approve compensation terms of a chief executive officer that are inconsistent with the company’s compensation policy provided that they have considered those provisions that must be included in the compensation policy according to the Israeli Companies Law and that shareholder approval was obtained by a Special Majority requirement.
Rubinstein also served as a member of our advisory board between 2014 and 2019, and with CyberX Labs (cyber defense for critical infrastructure) since 2014 and also provided management and/or consulting services on an hourly basis to different companies between 2008 to 2020. 51 Yehuda Halfon, Director Mr. Yehuda Halfon has served on our board of directors since March 2016.
Rubinstein also served as a member of our advisory board between 2014 and 2019, and with CyberX Labs (cyber defense for critical infrastructure) since 2014 and also provided management and/or consulting services on an hourly basis to different companies between 2008 to 2020. Yehuda Halfon, Director Mr. Yehuda Halfon has served on our board of directors since March 2016.
If the compensation of our directors is inconsistent with our stated compensation policy, then, provided that those provisions that must be included in the compensation policy according to the Israeli Companies Law have been considered by the compensation committee and board of directors, shareholder approval by a Special Majority will be required. Executive officers other than the chief executive officer.
If the compensation of our directors is inconsistent with our stated compensation policy, then, provided that those provisions that must be included in the compensation policy according to the Israeli Companies Law have been considered by the compensation committee and board of directors, shareholder approval by a Special Majority will be required. 65 Executive officers other than the chief executive officer.
Tal is a certified Israeli public accountant. Family Relationships There are no family relationships between any of our office holders. Arrangements for Election of Directors and Members of Management There are no arrangements or understandings with major shareholders, customers, suppliers or others pursuant to which any of our executive management or our directors were selected. See “Item 7.B.
Tal is a certified Israeli public accountant. 51 Family Relationships There are no family relationships between any of our office holders. Arrangements for Election of Directors and Members of Management There are no arrangements or understandings with major shareholders, customers, suppliers, or others pursuant to which any of our executive management or our directors were selected. See “Item 7.B.
Our independent registered public accounting firm and our internal auditor are invited to attend all meetings of the audit committee when it is acting in the role of the financial statements examination committee. Compensation Committee Under the Israeli Companies Law, the board of directors of any public company must establish a compensation committee.
Our independent registered public accounting firm and our internal auditor are invited to attend all meetings of the audit committee when it is acting in the role of the financial statements examination committee. 58 Compensation Committee Under the Israeli Companies Law, the board of directors of any public company must establish a compensation committee.
The Companies Law requires the approval of the compensation of a public company’s executive officers (other than the chief executive officer) in the following order: (i) the compensation committee, (ii) the company’s board of directors, and (iii) only if such compensation arrangement is inconsistent with the company’s stated compensation policy, the company’s shareholders by a Special Majority.
The Israeli Companies Law requires the approval of the compensation of a public company’s executive officers (other than the chief executive officer) in the following order: (i) the compensation committee, (ii) the company’s board of directors, and (iii) only if such compensation arrangement is inconsistent with the company’s stated compensation policy, the company’s shareholders by a Special Majority.
Indemnification The Israeli Companies Law and the Israeli Securities Law, 5728-1968, or the Securities Law, provide that a company may indemnify an office holder against the following liabilities and expenses incurred for acts performed by him or her as an office holder, either pursuant to an undertaking made in advance of an event or following an event, provided its articles of association include a provision authorizing such indemnification: ● a financial liability imposed on him or her in favor of another person by any judgment concerning an act performed in his or her capacity as an office holder, including a settlement or arbitrator’s award approved by a court; 62 ● reasonable litigation expenses, including attorneys’ fees, expended by the office holder (a) as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (1) no indictment (as defined in the Companies Law) was filed against such office holder as a result of such investigation or proceeding; and (2) no financial liability as a substitute for the criminal proceeding (as defined in the Companies Law) was imposed upon him or her as a result of such investigation or proceeding, or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent; or (b) in connection with a monetary sanction; ● reasonable litigation expenses, including attorneys’ fees, expended by the office holder or imposed on him or her by a court: (1) in proceedings that the company institutes, or that another person institutes on the company’s behalf, against him or her; (2) in a criminal proceeding of which he or she was acquitted; or (3) as a result of a conviction for a crime that does not require proof of criminal intent; and ● expenses incurred by an office holder in connection with an Administrative Procedure under the Securities Law, including reasonable litigation expenses and reasonable attorneys’ fees.
Indemnification The Israeli Companies Law and the Israeli Securities Law provide that a company may indemnify an office holder against the following liabilities and expenses incurred for acts performed by him or her as an office holder, either pursuant to an undertaking made in advance of an event or following an event, provided its articles of association include a provision authorizing such indemnification: ● a financial liability imposed on him or her in favor of another person by any judgment concerning an act performed in his or her capacity as an office holder, including a settlement or arbitrator’s award approved by a court; ● reasonable litigation expenses, including attorneys’ fees, expended by the office holder (a) as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (1) no indictment (as defined in the Israeli Companies Law) was filed against such office holder as a result of such investigation or proceeding; and (2) no financial liability as a substitute for the criminal proceeding (as defined in the Israeli Companies Law) was imposed upon him or her as a result of such investigation or proceeding, or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent; or (b) in connection with a monetary sanction; ● reasonable litigation expenses, including attorneys’ fees, expended by the office holder or imposed on him or her by a court: (1) in proceedings that the company institutes, or that another person institutes on the company’s behalf, against him or her; (2) in a criminal proceeding of which he or she was acquitted; or (3) as a result of a conviction for a crime that does not require proof of criminal intent; and ● expenses incurred by an office holder in connection with an Administrative Procedure under the Securities Law, including reasonable litigation expenses and reasonable attorneys’ fees.
The Companies Law defines an interested party as a holder of 5% or more of the outstanding shares or voting rights of a company, any person or entity that has the right to appoint at least one director or the general manager of the company or any person who serves as a director or as the general manager of a company.
The Israeli Companies Law defines an interested party as a holder of 5% or more of the outstanding shares or voting rights of a company, any person or entity that has the right to appoint at least one director or the general manager of the company or any person who serves as a director or as the general manager of a company.
Our amended and restated articles of association permit us to exculpate (subject to the aforesaid limitation), indemnify and insure our office holders to the fullest extent permitted or to be permitted by the Companies Law. The foregoing descriptions summarize the material aspects and practices of our board of directors.
Our amended and restated articles of association permit us to exculpate (subject to the aforesaid limitation), indemnify and insure our office holders to the fullest extent permitted or to be permitted by the Israeli Companies Law. The foregoing descriptions summarize the material aspects and practices of our board of directors.
If a majority of the board of directors has a personal interest, then shareholder approval is generally also required. Disclosure of Personal Interests of a Controlling Shareholder Under the Israeli Companies Law, the disclosure requirements that apply to an office holder also apply to a controlling shareholder of a public company.
If a majority of the board of directors has a personal interest, then shareholder approval is generally also required. 64 Disclosure of Personal Interests of a Controlling Shareholder Under the Israeli Companies Law, the disclosure requirements that apply to an office holder also apply to a controlling shareholder of a public company.
Avi Rubinstein as a director and member of the board until the conclusion of the next annual general meeting of shareholders of the Company. Committees of the Board of Directors Our board of directors has established three standing committees, the audit committee, the compensation committee and the Financial Statements Examination Committee.
Avi Rubinstein as a director and member of the board until the conclusion of the next annual general meeting of shareholders of the Company. 56 Committees of the Board of Directors Our board of directors has established three standing committees, the audit committee, the compensation committee, and the Financial Statements Examination Committee.
Under the Companies Law, an extraordinary transaction is a transaction: ● not in the ordinary course of business; ● not on market terms; or ● that is likely to have a material effect on the company’s profitability, assets or liabilities.
Under the Israeli Companies Law, an extraordinary transaction is a transaction: ● not in the ordinary course of business; ● not on market terms; or ● that is likely to have a material effect on the company’s profitability, assets or liabilities.
Duties of Shareholders Under the Israeli Companies Law, a shareholder has a duty to refrain from abusing his power in the company and to act in good faith and in an acceptable manner in exercising his rights and performing his obligations toward the company and other shareholders, including, among other things, in voting at general meetings of shareholders (and at shareholder class meetings) on the following matters: ● amendment of the articles of association; ● increase in the company’s authorized share capital; ● merger; and ● the approval of related party transactions and acts of office holders that require shareholder approval. 66 A shareholder also has a general duty to refrain from oppressing other shareholders.
Duties of Shareholders Under the Israeli Companies Law, a shareholder has a duty to refrain from abusing his power in the company and to act in good faith and in an acceptable manner in exercising his rights and performing his obligations toward the company and other shareholders, including, among other things, in voting at general meetings of shareholders (and at shareholder class meetings) on the following matters: ● amendment of the articles of association; ● increase in the company’s authorized share capital; ● merger; and ● the approval of related party transactions and acts of office holders that require shareholder approval.
Our directors are divided among the three classes as follows: (i) Class I directors are Ms. Rakefet Remigolski and Mr. Yehuda Halfon, whose current terms expire at the Company’s 2023 annual general meeting of shareholders and upon the election and qualification of their respective successors, (ii) Class II directors are Mr. Shachar Daniel and Mr.
Our directors are divided among the three classes as follows: (i) Class I directors are Ms. Rakefet Remigolski and Mr. Yehuda Halfon, whose current terms expire at the Company’s 2026 annual general meeting of shareholders and upon the election and qualification of their respective successors, (ii) Class II directors are Mr. Shachar Daniel and Mr.
The Companies Law does not describe the substance of this duty except to state that the remedies generally available upon a breach of contract will also apply in the event of a breach of the duty to act with fairness, taking the shareholder’s position in the company into account. D. Employees.
The Israeli Companies Law does not describe the substance of this duty except to state that the remedies generally available upon a breach of contract will also apply in the event of a breach of the duty to act with fairness, taking the shareholder’s position in the company into account. 66 D. Employees.
Related Party Transactions” for additional information. B. Compensation Compensation The following table presents in the aggregate all compensation we paid to our office holders as a group for the year ended December 31, 2022.
Related Party Transactions” for additional information. B. Compensation Compensation The following table presents in the aggregate all compensation we paid to our office holders as a group for the year ended December 31, 2023.
The table does not include any amounts we paid to reimburse any of such persons for costs incurred in providing the Company with services during this period. 52 All amounts reported in the tables below reflect the cost to the Company, in thousands of U.S. Dollars, for the year ended December 31, 2022.
The table does not include any amounts we paid to reimburse any of such persons for costs incurred in providing the Company with services during this period. All amounts reported in the tables below reflect the cost to the Company, in thousands of U.S. Dollars, for the year ended December 31, 2023.
Our Global Incentive Plan is administered by our board of directors, regarding the granting of options, restricted shares or restricted share units and the terms of such grants, including exercise price, method of payment, vesting schedule, acceleration of vesting and the other matters necessary in the administration of this plan.
Our Global Incentive Plan is administered by our board of directors, regarding the granting of options, restricted shares or RSUs and the terms of such grants, including exercise price, method of payment, vesting schedule, acceleration of vesting and the other matters necessary in the administration of this plan.
On January 20, 2019, our board of directors adopted an appendix to the Global Incentive Plan for U.S. residents, which was thereafter amended by the board of directors, with effect from September 22, 2022. Under this appendix, the Global Incentive Plan will provide for the granting of options to U.S. residents. The U.S.
On January 20, 2019, our board of directors adopted an appendix to the Global Incentive Plan for U.S. residents, which was thereafter amended by the board of directors, with effect from September 22, 2022. Under this appendix, the Global Incentive Plan provides for the granting of options to U.S. residents. The U.S.
See also Item 7.A., with respect to certain Ordinary Shares over which the Chairman of the Company or another designee may exercise a proxy with respect to limited items. Such shares are not included in the table above, as they are based on the office of chairperson rather than Mr. Katz’s personal beneficial ownership.
See also Item 7.A., with respect to certain Ordinary Shares over which the Chairman of the Company or another designee may exercise a proxy with respect to limited items. Such shares are not included in the table above, as they are based on the office of chairperson rather than Mr.
Amounts paid in NIS are translated into U.S. dollars at the rate of NIS 3.3596 = $1.00, based on the average representative rate of exchange between the NIS and the U.S. dollar as reported by the Bank of Israel in the year ended December 31, 2022.
Amounts paid in NIS are translated into U.S. dollars at the rate of NIS 3.6898 = $1.00, based on the average representative rate of exchange between the NIS and the U.S. dollar as reported by the Bank of Israel in the year ended December 31, 2023.
For these purposes, ceasing to serve as a director for a period of two years or less would not be deemed to sever the consecutive nature of such director’s service. 56 Regulations promulgated pursuant to the Israeli Companies Law provide that a director in a public company whose shares are listed for trading on specified exchanges outside of Israel, including the Nasdaq Capital Market, who qualifies as an independent director under the relevant non-Israeli rules and who meets certain non-affiliation criteria, which are less stringent than those applicable to independent directors as set forth above, would be deemed an “independent” director pursuant to the Companies Law provided: (i) he or she has not served as a director for more than nine consecutive years; (ii) he or she has been approved as such by the audit committee; and (iii) his or her remuneration shall be in accordance with the Companies Law and the regulations promulgated thereunder.
Regulations promulgated pursuant to the Israeli Companies Law provide that a director in a public company whose shares are listed for trading on specified exchanges outside of Israel, including the Nasdaq Capital Market, who qualifies as an independent director under the relevant non-Israeli rules and who meets certain non-affiliation criteria, which are less stringent than those applicable to independent directors as set forth above, would be deemed an “independent” director pursuant to the Israeli Companies Law provided: (i) he or she has not served as a director of the company for more than nine consecutive years; (ii) he or she has been approved as such by the audit committee; and (iii) his or her remuneration shall be in accordance with the Israeli Companies Law and the regulations promulgated thereunder.
Rakefet Remigolski has served on our board of directors since September 2020. Since 2018, Ms. Remigolski has served as Chief Finance Officer at Arazim Investments Ltd., an Israeli real-estate company publicly traded on the Tel Aviv Stock Exchange. Since September 2021, Ms. Remigolski has served as an external director at IDENTI Healthcare Ltd. Between 2015 and 2020, Ms.
Since 2018, Ms. Remigolski has served as Chief Finance Officer at Arazim Investments Ltd., an Israeli real-estate company publicly traded on the Tel Aviv Stock Exchange. Since September 2021, Ms. Remigolski has served as an external director at IDENTI Healthcare Ltd. Between 2015 and 2020, Ms.
Under the Israeli Companies Law, the board of directors may adopt the compensation policy if it is not approved by the shareholders, provided that after the shareholders oppose the approval of such policy, the compensation committee and the board of directors revisit the matter and determine that adopting the compensation policy would be in the best interests of the company.
Under the Israeli Companies Law, the board of directors may adopt the compensation policy if it is not approved by the shareholders, provided that after the shareholders oppose the approval of such policy, the compensation committee and then the board of directors revisit the matter and determine, by detailed resolutions, that adopting the compensation policy despite shareholders declining the policy, would be in the best interests of the company.
Our compensation policy was approved by our shareholders on May 8, 2016, and amendments thereto were approved by our shareholders on August 8, 2017, September 26, 2019, and September 15, 2020.
Our compensation policy was approved by our shareholders on May 8, 2016, and amendments thereto were approved by our shareholders on August 8, 2017, September 26, 2019, September 15, 2020, and November 2, 2023.
The share-based compensation was calculated based on the binomial model. The table below reflects the compensation granted to the five most highly compensated officers 5 during or with respect to the year ended December 31, 2022.
The share-based compensation was calculated based on the binomial model. 52 The table below reflects the compensation granted to the five most highly compensated senior officers 5 during or with respect to the year ended December 31, 2023.
The majority of our employees and consultants were located in Israel, while 15 employees, sub-contractor’s employees and consultants were located in Ukraine, United States, Spain, Germany and India.
The majority of our employees and consultants were located in Israel, while 15 employees, sub-contractor’s employees and consultants were located in Ukraine, United States, Spain, Germany and India. E. Share Ownership.
We currently have directors’ and officers’ liability insurance, providing total coverage of $10 million for the benefit of all of our directors and officers, in respect of which we paid a twelve-month premium of approximately $148,000, which expires on August 14, 2023, as well as Public Offering of Securities Insurance (POSI) providing a total coverage of $10 million for the benefit of all of our directors and officers, and covering a public offering of our securities on the Nasdaq Capital Market in August 2018, in respect of which we paid a seven-year premium of approximately $120,000, which expires on August 21, 2025.
We currently have directors’ and officers’ liability insurance, providing total coverage of $15 million for the benefit of all of our directors and officers, which expires on January 15, 2025, as well as Public Offering of Securities Insurance (POSI) providing a total coverage of $10 million for the benefit of all of our directors and officers, and covering a public offering of our securities on the Nasdaq Capital Market in August 2018, in respect of which we paid a seven-year premium of approximately $120,000, which expires on August 21, 2025.
As of December 31, 2022, we had 2 senior management positions on a full-time basis and one executive on part-time basis. All are engaged as employees. In addition to our senior management, we had approximately 50 employees, sub-contractor’s employees and consultants, on full and part time basis, almost all of whom are located in Israel.
As of December 31, 2023, we had 2 senior management positions on a full-time basis, both engaged as employees. In addition to our senior management, we had approximately 50 employees, sub-contractor’s employees and consultants, on full and part time basis, almost all of whom are located in Israel.
(4) Resulting from options to purchase an aggregate of 1,080,000 Ordinary Shares, at exercise prices ranging between NIS 1.51 (approximately $0.4) to NIS 6.04 (approximately $1.7) with expiration dates between September 15, 2030 and November 28, 2032.
(1) Resulting from options to purchase an aggregate of 1,080,000 Ordinary Shares, at exercise prices ranging between NIS 1.51 (approximately $0.42) to NIS 6.04 (approximately $1.67) with expiration dates between September 15, 2030, and November 28, 2032, and 300,000 RSUs.
Under the Israeli Companies Law, an Israeli company whose shares have been offered to the public or whose shares are listed for trading on a stock exchange in or outside of Israel is required to appoint at least two external directors to serve on its board of directors.
Board Practices Introduction Our board of directors presently consists of six members. Under the Israeli Companies Law, an Israeli company whose shares have been offered to the public or whose shares are listed for trading on a stock exchange in or outside of Israel is required to appoint at least two external directors to serve on its board of directors.
Our internal auditor is not our employee, but partner of a firm which specializes in internal auditing.
Our internal auditor is not an employee of the company, but a partner of a firm which specializes in internal auditing.
Limitations The Israeli Companies Law provides that we may not exculpate or indemnify an office holder nor enter into an insurance contract that would provide coverage for any liability incurred as a result of any of the following: (1) a breach by the office holder of his or her duty of loyalty unless (in the case of indemnity or insurance only, but not exculpation) the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice us; (2) a breach by the office holder of his or her duty of care if the breach was carried out intentionally or recklessly (as opposed to merely negligently); (3) any act or omission committed with the intent to derive an illegal personal benefit; or (4) any fine, monetary sanction, penalty or forfeit levied against the office holder. 63 Under the Israeli Companies Law, exculpation, indemnification and insurance of office holders in a public company must be approved by the compensation committee and the board of directors and, with respect to certain office holders or under certain circumstances, also by the shareholders.
Limitations The Israeli Companies Law provides that we may not exculpate or indemnify an office holder nor enter into an insurance contract that would provide coverage for any liability incurred as a result of any of the following: (1) a breach by the office holder of his or her duty of loyalty unless (in the case of indemnity or insurance only, but not exculpation) the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice us; (2) a breach by the office holder of his or her duty of care if the breach was carried out intentionally or recklessly (as opposed to merely negligently); (3) any act or omission committed with the intent to derive an illegal personal benefit; or (4) any fine, monetary sanction, penalty or forfeit levied against the office holder.
Except as indicated by footnote, and subject to community property laws where applicable, the persons named in the table above have sole voting and investment power with respect to all shares shown as beneficially owned by them. 67 (2) The percentages shown are based on 32,947,810 Ordinary Shares as issued and outstanding as of March 24, 2023.
Except as indicated by footnote, and subject to community property laws where applicable, the persons named in the table above have sole voting and investment power with respect to all shares shown as beneficially owned by them. (2) The percentages shown are based on 62,847,403 Ordinary Shares as issued and outstanding as of March 10, 2023.
Salary, bonuses and Related Benefits (1) Pension, Retirement and Other Similar Benefits Share Based Compensation* All office holders as a group, consisting of 8 persons $ 778 $ 130 $ 395 (1) Represents the office holders’ gross salary plus payment of mandatory social benefits made by the company on behalf of such officer.
Salary, bonuses and Related Benefits (1) Pension, Retirement and Other Similar Benefits Share Based Compensation* All office holders as a group, consisting of 7 persons $ 925 $ 94 $ 319 (1) Represents the office holders’ gross salary plus payment of mandatory social benefits made by the company on behalf of such officer.
We require our office holders to make such disclosures to our board of directors. 64 Under the Israeli Companies Law, once an office holder complies with the above disclosure requirement, the board of directors may approve a transaction between the company and an office holder, or a third party in which an office holder has a personal interest, unless the articles of association provide otherwise and provided that the transaction is in the company’s interest.
Under the Israeli Companies Law, once an office holder complies with the above disclosure requirement, the board of directors may approve a transaction between the company and an office holder, or a third party in which an office holder has a personal interest, unless the articles of association provide otherwise and provided that the transaction is in the company’s interest.
(3) Resulting from options to purchase an aggregate of 200,004 Ordinary Shares, at exercise prices ranging between NIS 0 to NIS 4.00 (approximately $1.1) with expiration dates between August 2, 2030 and November 28, 2032.
(3) Resulting from options to purchase an aggregate of 300,012 Ordinary Shares, at exercise prices ranging between NIS 0 to NIS 4.00 (approximately $1.10) with expiration dates between August 2, 2030, and November 28, 2033.
The remedies generally available upon a breach of contract will also apply to a breach of the above-mentioned duties, and in the event of oppression of other shareholders, additional remedies are available to the injured shareholder.
A shareholder also has a general duty to refrain from oppressing other shareholders. The remedies generally available upon a breach of contract will also apply to a breach of the above-mentioned duties, and in the event of oppression of other shareholders, additional remedies are available to the injured shareholder.
Our board of directors has determined that the minimum number of directors of our company who are required to have accounting and financial expertise is two – Mrs. Rakefet Remigolski, Mr. Moshe Tal and Mr.
Our board of directors has determined that the minimum number of directors of our company who are required to have accounting and financial expertise is two – Mrs. Rakefet Remigolski, Mr. Moshe Tal and Mr. Yehuda Halfon qualify and declared their respective accounting and financial expertise to that effect.
Shachar Daniel is one of our co-founders and has served as our Chief Executive Officer and director since June 2016. Prior to serving as the Chief Executive Officer of Safe-T Data, he served as Safe-T Data’s Chief Operating Officer from November 2013. Mr. Daniel has more than 10 years of experience in various managerial roles in operations and project management.
Prior to serving as the Chief Executive Officer of Safe-T Data, he served as Safe-T Data’s Chief Operating Officer from November 2013. Mr. Daniel has more than 10 years of experience in various managerial roles in operations and project management.
For this purpose, the holdings of all shareholders who have a personal interest in the same transaction will be aggregated. 65 Approval of the Compensation of Directors and Executive Officers The compensation of, or an undertaking to indemnify, insure or exculpate, an office holder who is not a director requires the approval of the company’s compensation committee, followed by the approval of the company’s board of directors, and, if such compensation arrangement or an undertaking to indemnify, insure or exculpate is inconsistent with the company’s stated compensation policy, or if the said office holder is the chief executive officer of the company (subject to a number of specific exceptions), then such arrangement is subject to the approval of our shareholders, subject to a Special Majority .
Approval of the Compensation of Directors and Executive Officers The compensation of, or an undertaking to indemnify, insure or exculpate, an office holder who is not a director requires the approval of the company’s compensation committee, followed by the approval of the company’s board of directors, and, if such compensation arrangement or an undertaking to indemnify, insure or exculpate is inconsistent with the company’s stated compensation policy, or if the said office holder is the chief executive officer of the company (subject to a number of specific exceptions), then such arrangement is subject to the approval of our shareholders, subject to a Special Majority .
Generally, such bonuses are in accordance with our compensation policy and are payable upon meeting objectives and targets that are set by our Chief Executive Officer and approved annually by our board of directors that also set the bonus targets for our Chief Executive Officer. For a description of the terms of our options and option plans, see “Item 6.E.
Generally, such bonuses are in accordance with our compensation policy and are payable upon meeting objectives and targets that are set by our Chief Executive Officer and approved annually by our board of directors that also set the bonus targets for our Chief Executive Officer.
Approval of Related Party Transactions under Israeli Law General Under the Israeli Companies Law, we may approve an action by an office holder from which the office holder would otherwise have to refrain, as described above, if: ● the office holder acts in good faith and the act or its approval does not cause harm to the company; and ● the office holder disclosed the nature of his or her interest in the transaction (including any significant fact or document) to the company at a reasonable time before the company’s approval of such matter.
There are no service contracts between the Company, on the one hand, and our directors in their capacity as directors, on the other hand, providing for benefits upon termination of service. 63 Approval of Related Party Transactions under Israeli Law General Under the Israeli Companies Law, we may approve an action by an office holder from which the office holder would otherwise have to refrain, as described above, if: ● the office holder acts in good faith and the act or its approval does not cause harm to the company; and ● the office holder disclosed the nature of his or her interest in the transaction (including any significant fact or document) to the company at a reasonable time before the company’s approval of such matter.
Daniel holds options to purchase 697,500 Ordinary Shares at exercise prices range between NIS 1.51 to NIS 6.04 per share that are not exercisable within 60 days. Mr. Daniel’s options have expiration dates ranging from September 15, 2030, to December 19, 2032.
In addition, Mr. Daniel holds 250,000 RSUs and options to purchase 337,500 Ordinary Shares at exercise prices ranging between NIS 1.51 to NIS 4.60 per share that are not exercisable within 60 days. Mr. Daniel’s options have expiration dates ranging from September 15, 2030, to December 19, 2032.
Rubinstein holds, through his wholly owned affiliate, options to purchase 109,165 Ordinary Shares at exercise prices range between NIS 1.51 to NIS 6.04 per share that are not exercisable within 60 days. Mr. Rubinstein’s options have expiration dates ranging between August 2, 2030, to December 19, 2032.
Rubinstein holds, through his wholly owned affiliate, 62,500 RSUs and options to purchase 69,791 Ordinary Shares at exercise prices ranging between NIS 1.51 to NIS 4.60 per share that are not exercisable within 60 days. Mr. Rubinstein’s options have expiration dates ranging from August 2, 2030, to December 19, 2032.
Katz holds options to purchase 348,750 Ordinary Shares at exercise prices range between NIS 1.51 to NIS 6.04 per share that are not exercisable within 60 days. Mr. Katz’s options have expiration dates ranging between September 15, 2030, to December 19, 2032.
In addition, Mr. Katz holds 116,668 RSUs and options to purchase 168,750 Ordinary Shares at exercise prices ranging between NIS 1.51 to NIS 4.60 per share that are not exercisable within 60 days. Mr. Katz’s options have expiration dates ranging between September 15, 2030, to December 19, 2032.
Our compensation committee reviews and recommends to our board of directors: with respect to our executive officers’ and directors’: (1) annual base compensation (2) annual incentive bonus, including the specific goals and amounts; (3) equity compensation; (4) employment agreements, severance arrangements, and change in control agreements and provisions; (5) retirement grants and/or retirement bonuses; and (6) any other benefits, compensation, compensation policies or arrangements. 59 The duties of the compensation committee include the recommendation to the company’s board of directors of a policy regarding the terms of engagement of office holders, to which we refer as a compensation policy.
Our compensation committee reviews and recommends to our board of directors: with respect to our executive officers’ and directors’: (1) annual base compensation (2) annual incentive bonus, including the specific goals and amounts; (3) equity compensation; (4) employment agreements, severance arrangements, and change in control agreements and provisions; (5) retirement grants and/or retirement bonuses; and (6) any other benefits, compensation, compensation policies or arrangements.
Such benefits may include, to the extent applicable, payments, contributions and/or allocations for savings funds, education funds (referred to in Hebrew as “Keren Hishtalmut”), pension, severance, risk insurances (e.g., life or work disability insurance) and payments for social security. * Resulting from options to purchase an aggregate of 3,077,526 Ordinary Shares granted to all office holders as a group, at exercise prices between NIS 1.27 (approximately $0.38) and NIS 6.04 (approximately $1.80) per share with expiration dates between May 13, 2024, and November 28, 2032.
Such benefits may include, to the extent applicable, payments, contributions and/or allocations for savings funds, education funds (referred to in Hebrew as “Keren Hishtalmut”), pension, severance, risk insurances (e.g., life or work disability insurance) and payments for social security. * Resulting from options to purchase an aggregate of 3,060,829 Ordinary Shares granted to all office holders as a group, at exercise prices between NIS 1.27 (approximately $0.35) and NIS 6.04 (approximately $1.67) per share with expiration dates between August 2, 2030, and November 28, 2032, and 900,000 restricted share units, or RSUs, vesting fully until January 19, 2027.
Halfon holds options to purchase 65,625 Ordinary Shares at exercise prices range between NIS 1.51 to NIS 6.04 per share that are not exercisable within 60 days. Mr. Halfon’s options have expiration dates ranging between September 15, 2030, to December 19, 2032.
Halfon holds 62,500 RSUs and options to purchase 32,813 Ordinary Shares at exercise prices ranging between NIS 1.51 to NIS 4.60 per share that are not exercisable within 60 days. Mr. Halfon’s options have expiration dates ranging between September 15, 2030, to December 19, 2032.
In addition, our amended and restated articles of association allow our board of directors to appoint directors to fill vacancies on our board of directors or in addition to the acting directors (subject to the limitation on the number of directors), to serve for the remaining period of time during which the director whose service has ended would have held office, or in case of an addition to the board of directors, in accordance with the class assigned to such appointed director, as determined by the board of directors at the time of such appointment.
Avi Rubinstein, whose current terms expire at the Company’s 2025 annual general meeting of shareholders and upon the election and qualification of their respective successors. 54 In addition, our amended and restated articles of association allow our board of directors to appoint directors to fill vacancies on our board of directors or in addition to the acting directors (subject to the limitation on the number of directors), to serve for the remaining period of time during which the director whose service has ended would have held office, or in case of an addition to the board of directors, in accordance with the class assigned to such appointed director, as determined by the board of directors at the time of such appointment.
Avnit holds options to purchase 459,169 Ordinary Shares at exercise prices range between NIS 1.27 to NIS 6.04 per share that are not exercisable within 60 days. Mr. Avnit’s options have expiration dates ranging from August 2, 2030, to November 28, 2032.
Avnit holds 150,000 RSUs and options to purchase 243,335 Ordinary Shares at exercise prices ranging between NIS 1.27 to NIS 4.00 per share that are not exercisable within 60 days. Mr. Avnit’s options have expiration dates ranging from August 2, 2030, to November 28, 2032.
The Israeli Companies Law also permits a company to undertake in advance to indemnify an office holder, provided that if such indemnification relates to financial liability imposed on him or her, as described above, then the undertaking should be limited and shall detail the following foreseen events and amount or criterion: ● to events that in the opinion of the board of directors can be foreseen based on the company’s activities at the time that the undertaking to indemnify is made; and ● an amount or criterion determined by the board of directors, at the time of the giving of such undertaking to indemnify, to be reasonable under the circumstances.
An “Administrative Procedure” is defined as a procedure pursuant to chapters H3 (Monetary Sanction by the ISA), H4 (Administrative Enforcement Procedures of the Administrative Enforcement Committee) or I1 (Arrangement to prevent Procedures or Interruption of procedures subject to conditions) to the Securities Law. 62 The Israeli Companies Law also permits a company to undertake in advance to indemnify an office holder, provided that if such indemnification relates to financial liability imposed on him or her, as described above, then the undertaking should be limited and shall detail the following foreseen events and amount or criterion: ● to events that in the opinion of the board of directors can be foreseen based on the company’s activities at the time that the undertaking to indemnify is made; and ● an amount or criterion determined by the board of directors, at the time of the giving of such undertaking to indemnify, to be reasonable under the circumstances.
Annual Compensation- in thousands of USD – Office holders Salary, Fees and Related Benefits Pension, Retirement and Other Similar Benefits Share Based Compensation Total Roni Lev 570 73 43 (1) 686 Yotam Benattia 570 73 43 (2) 686 Moshe Kremer 653 - 21 (3) 674 Shachar Daniel 293 51 106 (4) 450 Tomer Cohen 309 40 29 (5) 378 5 “Senior officer” as defined under the Israeli Securities Law includes the definition of an officer, as defined in the Israeli Companies Law, and also the chairman of the board of directors, a substitute director, an individual who under section 236 of the Israeli Companies Law was appointed on behalf of a body corporate and who serves as director, accountant, internal auditor, independent signatory and every person who holds a said position, even if the title of his position is different, and also a senior officer in a body corporate controlled by the body corporate, who has substantive influence over the body corporate, and every individual who is employed by the body corporate in a different position and holds 5% or more of the nominal value of the issued share capital or of the voting power, as the case may be; for this purpose.
Annual Compensation- in thousands of USD – Office holders Salary, Fees and Related Benefits Pension, Retirement and Other Similar Benefits Share Based Compensation Total Shachar Daniel 405 49 106 (1) 560 Jeffy Binhas 571 37 19 (2) 627 Moshe Kremer 570 - 24 (3) 594 Tomer Cohen 345 39 24 (4) 408 Ezra Mualem 348 - 27 (5) 375 “Senior officer” as defined under the Israeli Securities Law 5728-1968, or the Securities Law, includes the definition of an officer, as defined in the Israeli Companies Law, and also the chairman of the board of directors, a substitute director, an individual who under section 236 of the Israeli Companies Law was appointed on behalf of a corporate and who serves as director, accountant, internal auditor, independent signatory and every person who holds a said position, even if the title of his position is different, and also a senior officer in a body corporate controlled by the body corporate, who has substantive influence over the body corporate, and every individual who is employed by the body corporate in a different position and holds 5% or more of the nominal value of the issued share capital or of the voting power, as the case may be; for this purpose.
Chen Katz has served as Chairman of our board of directors since January 2019. Mr. Katz is also a director of Nanomedic Technologies Ltd., Coral Smart Pool Inc. and Nicast Ltd., where he serves as the chairman of the board, Aminach Furniture and Mattresses Industry Ltd., Coral Smart Pool Ltd., Nanomedic Technologies Inc. NCK Capital Ltd. and Tripod Investments. Mr.
Katz is also a director of Nanomedic Technologies Ltd., Coral Smart Pool Inc. and Nicast Ltd., where he serves as the chairman of the board, Aminach Furniture and Mattresses Industry Ltd., Coral Smart Pool Ltd., Nanomedic Technologies Inc. NCK Capital Ltd. and Tripod Investments. Mr. Katz is also a Co-Founder and director of Connexa Capital Ltd. since February 2022.
The audit committee may not include the chairman of the board; a controlling shareholder of the company or a relative of a controlling shareholder; a director employed by or providing services on a regular basis to the company, to a controlling shareholder or to an entity controlled by a controlling shareholder; or a director who derives most of his or her income from a controlling shareholder. 57 In addition, a majority of the members of the audit committee of a publicly traded company must be independent directors under the Companies Law.
The audit committee may not include the chairman of the board; a controlling shareholder of the company or a relative of a controlling shareholder; a director employed by or providing services on a regular basis to the company, to a controlling shareholder or to an entity controlled by a controlling shareholder; or a director who derives most of his or her income from a controlling shareholder.
Our Global Incentive Plan was adopted by our board of directors in July 2016, and expires in July 2026. Our employees, directors, officers, and services providers, including those who are our controlling shareholders, as well as those of our affiliated companies, are eligible to participate in this plan.
Our employees, directors, officers, and services providers, including those who are our controlling shareholders, as well as those of our affiliated companies, are eligible to participate in this plan.
Their terms of employment are subject to the approval of the board of directors’ compensation committee and of the board of directors, and are subject to the terms of any applicable employment agreements that we may enter into with them, and are subject to the Company’s compensation policy. 54 Each director, will hold office in accordance with our articles of association, or until he or she resigns or unless he or she is removed by a 65% majority vote of our shareholders at an annual general meeting of our shareholders, provided that such majority constitutes more than 50% of the our then issued and outstanding share capital, or upon the occurrence of certain events, in accordance with the Israeli Companies Law and our amended and restated articles of association.
Each director, will hold office in accordance with our articles of association, or until he or she resigns or unless he or she is removed by a 65% majority vote of our shareholders at an annual general meeting of our shareholders, provided that such majority constitutes more than 50% of the our then issued and outstanding share capital, or upon the occurrence of certain events, in accordance with the Israeli Companies Law and our amended and restated articles of association.
Such policy must be adopted by the company’s board of directors, after considering the recommendations of the compensation committee. The compensation policy is then brought for approval by our shareholders, which requires a Special Majority (see “—Approval of Related Party Transactions under Israeli Law”).
The compensation policy is then brought for approval by our shareholders, which requires a Special Majority (see “—Approval of Related Party Transactions under Israeli Law”).
(6) Includes 750 ADSs (7,500 Ordinary Shares) acquired through open market stock purchases and stock options to purchase 260,831 Ordinary Shares at an exercise price range between NIS 4.00 and NIS 6.04 per share that are exercisable within 60 days, held by Orit Rubinstein, Mr. Rubinstein’s wife. In addition, Mr.
(6) Includes 750 ADSs (7,500 Ordinary Shares) acquired through open market stock purchases, 12,500 Ordinary Shares issued from RSUs and stock options to purchase 371,250 Ordinary Shares at an exercise price range between NIS 1.51 and NIS 6.04 per share that are exercisable within 60 days, held by Mr. Rubinstein’s wholly owned affiliate. In addition, Mr.
The compensation policy must also consider appropriate incentives from a long-term perspective and maximum limits for severance compensation. 60 The compensation committee is responsible for: (1) recommending the compensation policy to a company’s board of directors for its approval (and subsequent approval by the shareholders); and (2) duties related to the compensation policy and to the compensation of a company’s office holders, including: ● recommending whether a compensation policy should continue in effect, if the then-current policy has a term of greater than three years (approval of either a new compensation policy or the continuation of an existing compensation policy must in any case occur every three years); ● recommending to the board of directors’ periodic updates to the compensation policy; ● assessing implementation of the compensation policy; ● determining whether the terms of compensation of certain office holders of the company need not be brought to approval of the shareholders; and Nasdaq Stock Market Requirements for Compensation Committee Under Nasdaq rules, we are required to maintain a compensation committee consisting of at least two members, all of whom are independent.
The compensation committee is responsible for: (1) recommending the compensation policy to a company’s board of directors for its approval (and subsequent approval by the shareholders); and (2) duties related to the compensation policy and to the compensation of a company’s office holders, including: ● recommending whether a compensation policy should continue in effect, if the then-current policy has a term of greater than three years (approval of either a new compensation policy or the continuation of an existing compensation policy must in any case occur every three years); ● recommending to the board of directors’ periodic updates to the compensation policy; ● assessing implementation of the compensation policy; ● determining whether the terms of compensation of certain office holders of the company need not be brought to approval of the shareholders; and ● exercising all rights, authority and functions of the Board under the Company’s Clawback Policy.
However, if the shareholders of the company do not approve the compensation arrangement with the chief executive officer, the compensation committee and board of directors may override the shareholders’ decision if each of the compensation committee and the board of directors provide detailed reasons for their decision.
However, if the shareholders of the company do not approve the compensation arrangement with the chief executive officer, the compensation committee and board of directors may, under special circumstances, override the shareholders’ decision if each of the compensation committee and the board of directors provide detailed reasons for their decision, and after another review of the compensation arrangement, and reviewing in the aforementioned discussion, among other things, the shareholders’ objection.
In case the remuneration of the directors is in accordance with regulations applicable to remuneration of the external directors then such remuneration shall be exempt from the approval of the general meeting.
In case the remuneration of the directors is in accordance with regulations applicable to remuneration of the external directors then such remuneration shall be exempt from the approval of the general meeting. Where the director is also a controlling shareholder, the requirements for approval of transactions with controlling shareholders apply.
The Israeli Companies Law does not specify to whom within us or the manner in which required disclosures are to be made.
The Israeli Companies Law does not specify to whom within us or the manner in which required disclosures are to be made. We require our office holders to make such disclosures to our board of directors.
External Directors Under the Israeli Companies Law, except as provided below, companies incorporated under the laws of the State of Israel that are publicly traded, including Israeli companies with shares listed on the Nasdaq, are required to appoint at least two external directors who meet the qualification requirements set forth in the Israeli Companies Law.
The internal auditor undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to our audit committee. 55 External Directors Under the Israeli Companies Law, except as provided below, companies incorporated under the laws of the State of Israel that are publicly traded, including Israeli companies with shares listed on the Nasdaq, are required to appoint at least two external directors who meet the qualification requirements set forth in the Israeli Companies Law.
(7) Includes stock options to purchase 39,375 Ordinary Shares at an exercise price range between NIS 4.60 and NIS 6.04 per share that are exercisable within 60 days. In addition, Ms. Remigolski holds options to purchase 65,625 Ordinary Shares at exercise prices range between NIS 1.51 to NIS 6.04 per share that are not exercisable within 60 days. Ms.
(7) Includes 12,500 Ordinary Shares issued from RSUs, stock options to purchase 72,188 Ordinary Shares at an exercise price range between NIS 1.51 and NIS 6.04 per share that are exercisable within 60 days. In addition, Ms.
(9) Includes stock options to purchase 39,375 Ordinary Shares at an exercise price range between NIS 4.60 and NIS 6.04 per share that are exercisable within 60 days. In addition, Mr. Tal holds options to purchase 65,625 Ordinary Shares at exercise prices range between NIS 1.51 to NIS 6.04 per share that are not exercisable within 60 days. Mr.
(9) Includes 12,500 Ordinary Shares issued from RSUs, stock options to purchase 72,188 Ordinary Shares at an exercise price range between NIS 1.51 and NIS 6.04 per share that are exercisable within 60 days. In addition, Mr.
The duty of care requires an office holder to act with the level of care with which a reasonable office holder in the same position would have acted under the same circumstances.
Fiduciary Duties of Office Holders The Israeli Companies Law imposes a duty of care and a duty of loyalty on all office holders of a company. The duty of care requires an office holder to act with the level of care with which a reasonable office holder in the same position would have acted under the same circumstances.
Share Ownership ” below. Directors’ Service Contracts Other than with respect to our directors that are also executive officers, we do not have written agreements with any director providing for benefits upon the termination of his directorship with our company. C. Board Practices Introduction Our board of directors presently consists of six members.
For a description of the terms of our equity awards and equity incentive plan, see “Item 6.E. Share Ownership ” below. 53 Directors’ Service Contracts Other than with respect to our directors that are also executive officers, we do not have written agreements with any director providing for benefits upon the termination of his directorship with our company. C.
In sales and development/support activities we employed approximately 20 employees/consultants in each activity, while 14 employees were occupied in general, administrative and corporate activities. None of our employees is represented by labor unions or covered by collective bargaining agreements. As of December 31, 2021, we had approximately 60 employees, sub-contractor’s employees and dedicated consultants world-wide.
In sales and development/support activities we employed approximately 20 employees/consultants in each activity, while 14 employees were occupied in general, administrative and corporate activities. None of our employees is represented by labor unions or covered by collective bargaining agreements. As of December 31, 2022, we had 2 senior management positions on a full-time basis and one executive on part-time basis.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

12 edited+7 added−8 removed6 unchanged
Over the course of 2021, there were decreases in the percentage ownership of some of our former major shareholders: (i) the entities affiliated with Alpha Capital Anstalt, or Alpha (from 9.9% to 4.99%), and (ii) the entities affiliated with Anson Funds Management LP, or Anson (from 5.2% to 0%). In addition, Mr. Lev and Mr.
Over the course of 2021, there were decreases in the percentage ownership of some of our former major shareholders: (i) the entities affiliated with Alpha Capital Anstalt (from 9.9% to 4.99%), and (ii) the entities affiliated with Anson Funds Management LP. (from 5.2% to 0%). In addition, Messrs.
Name Number of Ordinary Shares Beneficially Owned (1) Percent of Class (2) Roni Lev (3) 2,784,740 8.5 % Yotam Benattia (4) 2,784,740 8.5 % (1) Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities.
Name Number of Ordinary Shares Beneficially Owned (1) Percent of Class (2) Yotam Benattia (3) 3,391,745 5.4 % (1) Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities.
On the other hand, there were increases in the percentage ownership of some of our former major shareholders: (i) Mr. Roni Lev (from 6.4% to 8.5%), and (ii) Mr. Yotam Benattia (from 6.4% to 8.5%) .
There were increases in the percentage ownership of some of our former major shareholders: (i) Mr. Lev (from 6.4% to 8.5%), and (ii) Mr. Benattia (from 6.4% to 8.5%) .
Based upon a review of the information provided to us by The Bank of New York Mellon, the depository of the ADSs, as of March 22, 2023, there were 68 holders of record of the ADSs on record with the Depository Trust Company.
Based upon a review of the information provided to us by The Bank of New York Mellon, the depository of the ADSs, as of March 10, 2024, there were 80 holders of record of the ADSs on record with the Depository Trust Company.
Options Since our inception, we have granted options to purchase our Ordinary Shares to our officers and directors. Such option agreements may contain acceleration provisions upon certain merger, acquisition, or change of control transactions.
Options Since our inception, we have granted options to purchase our Ordinary Shares and RSUs, or, collectively, equity incentive awards, to our officers and directors. Such equity incentive award agreements may contain acceleration provisions upon certain merger, acquisition, or change of control transactions.
We describe our option plans under “Share Ownership—Stock Option Plans.” If the relationship between us and an executive officer or a director is terminated, except for cause (as defined in the various option plan agreements), options that are vested will generally remain exercisable for three months after such termination. C. Interests of Experts and Counsel Not applicable. 71
We describe our equity incentive plans under “Share Ownership—Stock Option Plans.” If the relationship between us and an executive officer or a director is terminated, except for cause (as defined in the various equity incentive plan agreements), and unless otherwise approved by our board of directors and shareholders, as applicable, options that are vested will generally remain exercisable for three months after such termination.
The Company is not controlled by another corporation, by any foreign government or by any natural or legal persons except as set forth herein, and there are no arrangements known to the Company which would result in a change in control of the Company at a subsequent date. B.
These numbers are not representative of the number of beneficial holders of our shares nor is it representative of where such beneficial holders reside, since many of these shares were held of record by brokers or other nominees. 70 The Company is not controlled by another corporation, by any foreign government or by any natural or legal persons except as set forth herein, and there are no arrangements known to the Company which would result in a change in control of the Company at a subsequent date.
Related Party Transactions Employment and Services Agreements We have entered into written employment or services agreements with each of our executive officers. All of these agreements contain customary provisions regarding noncompetition, confidentiality of information and assignment of inventions. However, the enforceability of the noncompetition provisions may be limited under applicable law.
All of these agreements contain customary provisions regarding noncompetition, confidentiality of information and assignment of inventions. However, the enforceability of the noncompetition provisions may be limited under applicable law.
Major Shareholders The following table presents as of March 24, 2023 (unless otherwise noted below), the beneficial ownership of our Ordinary Shares by each person who is known to us to be the beneficial owner of 5% or more of our outstanding Ordinary Shares (to whom we refer as our Major Shareholders). 69 Except where otherwise indicated, and except pursuant to community property laws, we believe, based on information furnished by such owners, that the beneficial owners of the shares listed below have sole investment and voting power with respect to, and the sole right to receive the economic benefit of ownership of, such shares.
Except where otherwise indicated, and except pursuant to community property laws, we believe, based on information furnished by such owners, that the beneficial owners of the shares listed below have sole investment and voting power with respect to, and the sole right to receive the economic benefit of ownership of, such shares.
Roni Lev and Mr. Yotam Benattia, which Ordinary Shares were not beneficially owned as of December 31, 2022. Changes in Percentage Ownership by Major Shareholders Over the course of 2022 and until March 24, 2023, there were no decreases in the percentage ownership of major shareholders.
Changes in Percentage Ownership by Major Shareholders Over the course of 2023 and through March 2024, there were decreases in the percentage ownership of Messrs. Benattia (from 8.5% to 5.8%) and Lev (from 8.5% to 4.8%). Over the course of 2022 and until March 24, 2023, there were no decreases in the percentage ownership of major shareholders.
Accordingly, as of March 24, 2023, there was one shareholder of record of our Ordinary Shares, which is located in Israel.
Accordingly, as of March 10, 2024, there are two shareholders of record of our Ordinary Shares, one which is located in Israel and another which is located in the U.S.
(2) The percentage of outstanding ordinary shares is based on 32,628,044 Ordinary Shares outstanding as of November 23, 2022, the date on which the individuals in the table based their beneficial ownership in their Schedules 13G/A filed with the SEC as described in the following footnotes. (3) The beneficial ownership is based on a Schedule 13G/A filed by Mr.
(2) The percentage of outstanding ordinary shares is based on 62,847,403 Ordinary Shares outstanding as of March 10, 2024. (3) The beneficial ownership is based on a Schedule 13G/A filed by Mr. Benattia with the SEC on January 16, 2024.
Removed
Lev with the SEC on February 8, 2023.
Added
Major Shareholders The following table presents as of March 10, 2024 (unless otherwise noted below), the beneficial ownership of our Ordinary Shares by each person who is known to us to be the beneficial owner of 5% or more of our outstanding Ordinary Shares (to whom we refer as our Major Shareholders).
Removed
The amounts set forth in the Schedule 13G/A are presented after giving effect to a change of ratio between the ADSs and the Company’s Ordinary Shares, from a ratio of one (1) ADS to one (1) Ordinary Share to a new ratio of one (1) ADS to ten (10) Ordinary Shares that took place in November 2022. Mr.
Added
Roni Lev and Yotam Benattia became major shareholders of the Company during 2021.
Removed
Lev also owns options to purchase 135,000 Ordinary Shares, of which 67,500 options are beneficially owned and the remainder of which vest equally over seven quarters beginning on May 25, 2023. Mr. Lev also received 192,866 Ordinary Shares in January 2023 pursuant to the Share Purchase Agreement, dated July 1, 2021, among Takoomi Ltd., Safe-T Group Ltd., CyberKick Ltd., Mr.
Added
B. Related Party Transactions September 2023 Private Placement Mr. Chen Katz, our Chairman of the Board of Directors, and Mr. Shachar Daniel, our Chief Executive Officer, each purchased 21,189 Units of ten ADSs and three warrants for an aggregate purchase price of $481,000 in the private placement we completed in September 2023. Mr.
Removed
Roni Lev and Mr. Yotam Benattia, which Ordinary Shares were not beneficially owned as of December 31, 2022. (4) The beneficial ownership is based on a Schedule 13G/A filed by Mr. Benattia with the SEC on February 8, 2023.
Added
Shai Avnit, our Chief Financial Officer, purchased 3,524 Units of ten ADSs and three warrants for an aggregate purchase price of $80,000 in the private placement we completed in September 2023. Mr. Katz and Mr.
Removed
The amounts set forth in the Schedule 13G/A are presented after giving effect to a change of ratio between the ADSs and the Company’s Ordinary Shares, from a ratio of one (1) ADS to one (1) Ordinary Share to a new ratio of one (1) ADS to ten (10) Ordinary Shares that took place in November 2022. Mr.
Added
Daniel used, in part, $400 thousand each loaned to them in a non-recourse loan, by the rest of the investors in the private placement, other than Mr. Avnit. The loans bear an annual interest of 8% and should be repaid in three equal installments on September 14, 2024, March 14, 2025, and September 14, 2025. Mr.
Removed
Benattia also owns options to purchase 135,000 Ordinary Shares, of which 67,500 options are beneficially owned and the remainder of which vest equally over seven quarters beginning on May 25, 2023. Mr. Benattia also received 192,866 Ordinary Shares in January 2023 pursuant to the Share Purchase Agreement, dated July 1, 2021, among Takoomi Ltd., Safe-T Group Ltd., CyberKick Ltd., Mr.
Added
Katz’s and Daniel’s loans are secured by ADSs they already own and the ADSs they purchased in the private placement along with their PP Warrants. See also “Item 5.B - Liquidity and Capital Resources -Private Placement.” Employment and Services Agreements We have entered into written employment or services agreements with each of our executive officers.
Removed
Benattia became major shareholders of the Company during 2021. 70 Over the course of 2020, there were decreases in the percentage ownership of some of our former major shareholders: the entities affiliated with Morgan Stanley (from 5.7% to 4.0%).
Added
Any unvested RSUs at the time of such termination shall be automatically cancelled. C. Interests of Experts and Counsel Not applicable.
Removed
These numbers are not representative of the number of beneficial holders of our shares nor is it representative of where such beneficial holders reside, since many of these shares were held of record by brokers or other nominees.

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