FORM 6-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 or 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of July 2004
Commtouch Software Ltd.
(Translation of registrant's name into English)
1A Hazoran Street
Poleg Industrial Park, P.O. Box 8511
Netanya 42504, Israel
011-972-9-863-6888
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form 20-F ___X___ Form 40-F ______
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes ________ No __X__
COMMTOUCH SOFTWARE LTD.
FORM 6-K
Forward-Looking Statements
This Report on Form 6-K contains forward-looking statements, including
projections about our business, within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
For example, statements in the future tense, and statements including words such
as "expect," "plan," "estimate," anticipate," or "believe" are forward-looking
statements. These statements are based on information available to us at the
time of the Report; we assume no obligation to update any of them. The
statements in this Report are not guarantees of future performance and actual
results could differ materially from our current expectations as a result of
numerous factors, including our ability to raise additional equity in the third
quarter to meet the minimum shareholders' equity requirement for continued
listing on the Small Cap Market, business conditions and growth or deterioration
in our market, commerce and the general economy both domestic as well as
international; fewer than expected new-partner relationships; competitive
factors including pricing pressures; technological developments, and products
offered by competitors; availability of qualified staff for expansion; and
technological difficulties and resource constraints encountered in developing
new products as well as those risks described in the company's Annual Reports on
Form 20-F and reports on Form 6-K, which are available through www.sec.gov.
Purpose of this Report
Following a hearing on June 17, 2004 in front of the Nasdaq Listing
Qualifications Panel (the "Panel") to appeal the Nasdaq staff's decision to
delist the Company's shares from The Nasdaq SmallCap Market, the Panel
determined that the Company's ordinary shares will continue to be listed on The
Nasdaq SmallCap Market pursuant to an exception from the requirement that the
Company maintain at least $2.5 million in shareholders equity. The Company will
remain subject to this exception until the Panel determines that the Company has
demonstrated an ability to sustain compliance with the minimum shareholders'
equity requirement over the long term.
The Panel conditioned the continuing availability of the exception on the
Company's continuing satisfaction of all other listing requirements of the Small
Cap Market and fulfillment of the following specific criteria:
a. On or before July 15, 2004, the Company must make a public filing with the
Securities and Exchange Commission and Nasdaq of a balance sheet no older than
60 days evidencing, on a proforma as adjusted basis for any subsequent
significant events or transactions, compliance with the $2.5 million
shareholders' equity requirement. The Company believes that this filing will
satisfy this condition.
b. On or before July 31, 2004, October 31, 2004 and January 31, 2005, the
Company is required to submit to Nasdaq evidence of continued compliance with
the $2.5 million shareholders' equity requirement for the quarters ending June
30, September 30 and December 31, 2004 respectively.
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Description of Transaction Resulting in Proforma Adjustment
On May 18, 2004, Commtouch entered into a securities purchase agreement and
related agreements for the sale of securities to certain investors of Commtouch
identified in the schedule of buyers in the securities purchase agreement. Those
investors committed to purchase 5,131,583 ordinary shares, additional investment
rights and warrants for an aggregate purchase price of $3,900,003.08 (the
"Financing"). Following shareholder approval of the Financing on June 28, 2004,
the Company closed the Financing on June 30, 2004. The Company intends to seek
additional equity during the third fiscal quarter in order to be able to
demonstrate to Nasdaq satisfaction of the Nasdaq Smallcap Market's minimum
shareholders' equity requirement for such quarter.
The additional investment rights and warrants are exercisable at any time, at
the investors' option, into Commtouch ordinary shares at a price of $0.836. In
addition, in connection with the Financing, the conversion and exercise prices
of the initial notes and warrants (the "Initial November Securities"), issued
pursuant to the convertible note transaction of November 2003, were adjusted
from $1.153 to $0.83, respectively, and the conversion and exercise prices of
the additional notes and warrants, if and when issued thereunder, were adjusted
from $1.153 to $0.90. Additional information pertaining to the Financing is
located in the Company's Form 6-K filing with the SEC on May 19, 2004.
Proforma May 2004 Condensed Balance Sheets
Presented below are the following balance sheets:
1. Audited condensed balance sheet as at December 31, 2003
2. Unaudited condensed balance sheet as at May 2004
3. Unaudited condensed balance sheet as at May 2004 on a pro forma, as
adjusted basis, to give effect to the Financing. The as adjusted
numbers reflect a private placement of 5,131,583 ordinary shares of the
Company for an aggregate amount (net of financing fees) of $3.6 million
and the reduction of the conversion and exercise prices of the Initial
November Securities from $1.153 to $0.83.
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COMMTOUCH SOFTWARE LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(USD in thousands)
May 31, May 31, December 31,
2004 2004 2003
Actual Pro Forma Actual
------ --------- ------
As
adjusted
--------
Assets
Current Assets:
Cash and cash equivalents ....................... $ 3,567 $ 7,208 $ 4,125
Trade receivables, net .......................... 123 123 92
Receivables on account of shares ................ -- -- 955
Prepaid expenses and other accounts receivable .. 267 267 288
------- ------- -------
Total current assets ............................ 3,957 7,598 5,460
------- ------- -------
Long-term lease deposits ......................... 5 5 5
Severance pay fund ............................... 361 361 391
Deferred expenses ................................ 207 207 236
Property and equipment, net ...................... 421 421 452
Investment in affiliate .......................... 342 342 339
------- ------- -------
$ 5,293 $ 8,934 $ 6,883
======= ======= =======
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable ................................ 343 343 479
Employees and payroll accruals .................. 490 490 418
Deferred Revenue ................................ 917 917 222
Accrued expenses and other liabilities .......... 448 448 376
------- ------- -------
Total current liabilities ....................... 2,198 2,198 1,495
------- ------- -------
Convertible loan, net ........................... 2,665 2,665 2,134
Accrued severance pay ........................... 396 396 425
Shares to be registered upon exercise of warrants 324 336 372
------- ------- -------
3,385 3,397 2,931
------- ------- -------
Shareholders' equity ............................ (290) 3,339 2,457
------- ------- -------
$ 5,293 $ 8,934 $ 6,883
======= ======= =======
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Information Incorporated by Reference
The information in this Report on Form 6-K is incorporated by reference into all
Registration Statements which we have filed or which we will file in the future
under the Securities Act of 1933, as amended, which permit such reports to be so
incorporated.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COMMTOUCH SOFTWARE LTD.
(Registrant)
Date: July 12, 2004 By /s/ Devayani Patel
-------------------------
Devyani Patel
VP Finance
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