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 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of December 2004
Commission File Number 000-26495
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 if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
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 the failure of the Company to satisfy the conditions
imposed by the Nasdaq Listing Qualifications Panel for the continued listing of
Commtouch shares on The Nasdaq SmallCap Market; business conditions and growth
or deterioration in the Internet 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
Attached as Exhibit 99.1 to the Company's Form 6-K filed with the Securities and
Exchange Commission ("SEC") on November 5, 2004 (the "Prior Form 6-K") is a
press release summarizing certain Nasdaq Listing Qualifications Panel ("Panel")
requirements relating to continued listing of the Company's Ordinary Shares on
The Nasdaq SmallCap Market. Included in that summary is the requirement of a
filing by December 15, 2004 with the SEC and Nasdaq of an unaudited balance
sheet no older than 60 days, on a proforma as adjusted basis for any significant
events or transactions occurring subsequent to the date of the balance sheet
(but before the date of this filing), evidencing compliance with the $2.5
million shareholders' equity requirement.
The Company believes that the filing of this Form 6-K, inclusive of the pro
forma balance sheet set forth below, is sufficient to meet the above described
Nasdaq requirement. However, the Company remains subject to the Panel's hearings
exception until the Company has demonstrated an ability to sustain compliance
with the minimum shareholders' equity requirement over the long term.
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Description of Transactions Resulting in Proforma Adjustment
On October 31, 2004, Commtouch entered into two transactions: 1) a Securities
Purchase Agreement ("SPA") for the sale of 6.38 million Series A Preferred
Shares to new and existing investors of Commtouch for $3.19 million at a
purchase price of $0.50 per share and 2) a Redemption, Amendment and Exchange
Agreement ("RAE"), pursuant to which the Company and note holders under the
convertible loan transaction of November 2003 agreed that the Company would make
an early repayment of the $3 million (plus interest) loan, issue approximately
3.3 million warrants and 900,000 Series A Preferred Shares in exchange for the
note holders' agreement to allow for the early repayment of the loan, removal of
security interests and waivers of certain rights. A more detailed summary of the
provisions of the SPA and RAE transactions is included in the Prior Form 6-K
filing.
The SPA and RAE transactions were subject to certain closing conditions,
including the approval of shareholders. On December 6, 2004, the Company's
shareholders approved the two transactions, as well as related amendments to the
Company's Amended and Restated Articles of Association. Coupled with the
satisfaction of all other closing conditions, this enabled the parties to call a
closing of the transactions on December 9, 2004.
Proforma October 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 October 31, 2004
3. Unaudited condensed balance sheet as at October 31, 2004 on a pro
forma, as adjusted basis, to give effect to the SPA and RAE
transactions. The as adjusted numbers reflect:
a. The private placement of 6,380,000 Series A Preferred shares
of the Company for an aggregate amount of $3.19 million. As
of the date of the filing of the Form 6-K, the Company had
received $2.92 million of these investment funds.
b. The repayment of $3 million in principal, plus accrued
interest, outstanding under convertible notes issued pursuant
to the November 2003 convertible loan transaction.
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COMMTOUCH SOFTWARE LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(USD in thousands)
Oct. 31, Oct. 31, December 31,
2004 2004 2003
---- ---- ----
Actual Pro Forma Actual
------ --------- ------
As adjusted
-----------
Assets
Current Assets:
Cash and cash equivalents............................. $ 4,556 $ 4,425 $ 4,125
Trade receivables, net................................ 11 11 92
Prepaid expenses ..................................... 193 193 156
Receivables on account of shares...................... -- -- 955
Other accounts receivable............................. 33 33 15
-------- -------- ---------
Total current assets.................................. 4,793 4,662 5,343
-------- -------- ---------
Long-term lease deposits............................... 5 5 5
Equity investment in Imatrix .......................... 223 223 339
Deferred charges ...................................... 266 -- 353
Severance pay fund..................................... 426 426 391
Property and equipment, net............................ 322 322 452
Intangible asset....................................... 40 40 --
-------- -------- ---------
$ 6,075 $ 5,678 $ 6,883
-------- -------- ---------
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable...................................... 302 302 479
Employees and payroll accruals........................ 464 464 418
Accrued expenses and other liabilities................ 447 447 376
Deferred revenue...................................... 1,037 1,037 222
-------- -------- ---------
Total current liabilities............................. 2,250 2,250 1,495
-------- -------- ---------
Convertible loan, net................................. 2,753 -- 2,134
Shares to be registered upon exercise of warrants..... 186 186 372
Accrued severance pay................................. 493 493 425
-------- -------- ---------
3,432 679 2,931
-------- -------- ---------
Shareholders' equity.................................. 393 2,749 2,457
-------- -------- ---------
$ 6,075 $ 5,678 $ 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.
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: December 15, 2004 By ______________________________________
Devyani Patel
VP of Finance
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