UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
For the fiscal year ended December 31, 2021
OR
Date of event requiring this shell company report ___________
For the transition period from _____ to _____
Commission File No. 000-51694
Perion Network Ltd.
(Exact Name of Registrant as specified in its charter)
N/A
(Translation of Registrant’s name into English)
Israel
(Jurisdiction of incorporation or organization)
26 HaRokmim Street
Holon, Israel 5885849
(Address of principal executive offices)
Maoz Sigron, Chief Financial Officer
Tel: +972-73-3981582; Fax: +972-3-644-5502
26 HaRokmim Street
Holon, Israel 5885849
(Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of Each Class |
Trading Symbol(s) |
Name of Each Exchange on which Registered |
Ordinary shares, par value NIS 0.03 per share |
PERI |
Nasdaq Global Select Market |
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the Annual Report.
As of December 31, 2021, the Registrant had outstanding 43,696,723 ordinary shares, par value NIS 0.03 per share (excluding treasury shares).
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act
Yes ☐ No ☒
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer, “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act
Large accelerated filer ☐ |
Accelerated filer ☒ |
Non-accelerated filer ☐ |
|
|
|
|
|
Emerging growth company ☐ |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ☒ |
International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ |
Other ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):
Yes ☐ No ☒
2
• |
Our advertising customers may reduce or
terminate their business relationship with us at any time. If customers representing a significant portion of our revenue reduce or terminate
their relationship with us, it could have a material adverse effect on our business, financial condition and results of operations.
|
• |
Large and established internet and technology
companies, such as Google, Facebook and Amazon, play a substantial role in the digital advertising market and may significantly harm our
ability to operate in this industry. |
• |
We depend on supply sources to provide us
with advertising inventory in order for us to deliver advertising campaigns in a cost-effective manner. |
• |
The advertising industry is highly competitive.
If we cannot compete effectively and overcome the technological gaps in this market, our revenues are likely to decline. |
• |
Increased availability of advertisement-blocking
technologies could limit or block the delivery or display of advertisements by our solutions, which could undermine the viability of our
business. |
• |
Our search advertising solution depends
heavily upon revenue generated from our agreement with Microsoft Bing, and any adverse change in that agreement could adversely affect
our business, financial condition and results of operations. |
• |
Our search advertising revenue business
is highly reliant upon a small number of publishers, who account for the substantial majority of pay-outs to publishers and generate most
of our revenues. If we were to lose all or a significant portion of those publishers, our revenues and results of operations would be
materially adversely affected. |
• |
Should the providers of platforms, particularly
browsers, further block, constrain or limit our ability to offer or change search properties, or materially change their guidelines, technology
or the way they operate, our ability to generate revenues from our users’ search activity could be significantly reduced.
|
• |
The global COVID-19 health pandemic has
had and still has an ongoing adverse effect and could potentially severely affect, our business, results of operations and financial condition
due to impacts on our industry, as well as impacts from remote work arrangements, actions taken to contain the virus or treat its impact,
and the speed and extent of the recovery. |
• |
A loss of the services of our senior management
and other key personnel could adversely affect execution of our business strategy. |
• |
Competition for highly skilled technical
and other personnel in Israel is intense, and as a result we may fail to attract, recruit, retain and develop qualified employees, which
could materially and adversely impact our business, financial condition and results of operations. |
• |
We have acquired and may continue to acquire
other businesses. These acquisitions divert a substantial part of our resources and management attention and could in the future,
adversely affect our financial results. |
• |
Our share price has fluctuated significantly
and could continue to fluctuate significantly. |
• |
Our business and financial performance may
be materially adversely affected by information technology issues, data breaches, cyber-attacks and other similar incidents and other business
disruptions. |
• |
If we fail to detect or prevent suspicious
traffic or other invalid traffic or engagement with our ads, or otherwise prevent against malware intrusions, we could lose the confidence
of our advertisers, damage our reputation and be responsible to make-good or refund demands, which would cause our business to suffer.
|
• |
We depend on third party internet, telecommunication and hosting providers to operate our platforms, websites
and services. Temporary failure of these services, including catastrophic or technological interruptions, would materially reduce
our revenues and damage our reputation, and securing alternate sources for these services could significantly increase our expenses
and be difficult to obtain. |
• |
Regulatory, legislative, or self-regulatory developments relating to e-commerce, internet advertising,
privacy and data collection and protection, and uncertainties regarding the application or interpretation of existing laws and regulations,
could harm our business and subject us to significant legal liability for non-compliance. |
• |
Our proprietary information and intellectual
property may not be adequately protected and thus our technology may be unlawfully copied by or disclosed to other third parties.
|
• |
Our business is significantly reliant on
the North American market. Any material adverse change in that market could have a material adverse effect on our results of operations.
|
• |
Our business may be materially affected
by changes to fiscal and tax policies. Potentially negative or unexpected tax consequences of these policies, or the uncertainty surrounding
their potential effects, could adversely affect our results of operations. |
• |
Political, economic and military instability
in the Middle East may impede our ability to operate and harm our financial results. |
Page | |
PART I | |
7 | |
7 | |
7 | |
34 | |
47 | |
47 | |
57 | |
69 | |
71 | |
71 | |
71 | |
81 | |
82 | |
PART II | |
82 | |
82 | |
82 | |
83 | |
83 | |
83 | |
83 | |
84 | |
84 | |
84 | |
84 | |
85 | |
85 | |
PART III | |
85 | |
85 | |
Item 19.Exhibits |
86 |
• |
Supply sources may impose significant restrictions
on the advertising inventory they sell or may impose other unfavorable terms and conditions on the advertisers using their sites or platforms.
For example, these restrictions may include frequency caps, prohibitions on advertisements from specific advertisers or specific industries,
or restrictions on the use of specific creative content or advertising formats as well as content adjacent restrictions, which would restrain
our supply of available inventory. |
• |
Supply sources that offer online content
and mobile applications may shift from an advertising-based monetization method to a pay for content/services model, thereby reducing
available inventory. |
• |
Social media platforms may be successful
in keeping users within their sites via products such as Facebook’s Instant Articles which may be competitive to our offerings and
solutions. If, as a result, users are not on the open web, advertising inventory outside of such platforms (including our publisher’s
and our owned and operated sites) may be reduced or may become less attractive to our advertising customers. |
• |
Supply sources may be reluctant or unable
to adopt certain of our proprietary and unique high-impact, CTV, iCTV and video ad formats for a variety of reasons (such as user preference
changes making such ad formats less desirable, or technological limitations, such as connection with header bidding or the ability to
transact programmatically), resulting in limited advertising inventory supply for such formats and inhibiting our ability to scale such
formats. |
• |
Historically, in most cases our advertising business experienced the lowest revenue levels in the first
quarter and the highest revenue levels in the fourth quarter, with the second and third quarters being slightly stronger than the first
quarter (except for 2020 as a result of the initial effect of COVID-19); |
• |
Product and service revenue are influenced
by political advertising in the US, which generally occurs every two years; |
• |
In any single period, product and service
revenue and delivery costs are subject to significant variation based on changes in the volume and mix of deliveries performed during
such period; |
• |
Revenues are subject to the changes of brand
marketing trends, including when and where brands choose to spend their money in a given year; |
• |
Advertising customers generally retain the
right to supplement, extend, or cancel existing advertising orders at any time prior to their completion, and we have no control over
the timing or magnitude of these revenue changes; and |
• |
Relative complexity of individual advertising formats, and the length of the creative
design process. |
• |
negative fluctuations in our quarterly revenue
and earnings or those of our competitors; |
• |
pending sales into the market due to the
sale of large blocks of shares, due to, among other reasons, the expiration of any tax-related or contractual lock–ups with respect
to significant amounts of our ordinary shares; |
• |
shortfalls in our operating results compared
to levels forecast by us or securities analysts; |
• |
changes in our senior management;
|
• |
changes in regulations or in policies of
search engine companies or other industry conditions; |
• |
mergers and acquisitions by us or our competitors;
|
• |
technological innovations; |
• |
the introduction of new products;
|
• |
the conditions of the securities markets, particularly in the internet and Israeli sectors;
and |
• |
political, economic and other developments
in Israel and worldwide. |
• |
potential loss of proprietary information
due to piracy, misappropriation or laws that may be less protective of our intellectual property rights than those of the United States;
|
• |
costs and delays associated with translating
and supporting our products in multiple languages; |
• |
foreign exchange rate fluctuations and economic
instability, such as higher interest rates and inflation, which could make our products more expensive in those countries; |
• |
costs of compliance with a variety of laws
and regulations; |
• |
restrictive governmental actions such as
trade restrictions and potential trade wars; |
• |
limitations on the transfer and repatriation
of funds and foreign currency exchange restrictions; |
• |
compliance with different consumer, privacy
and data collection and protection laws and regulations, and restrictions on pricing or discounts; |
• |
lower levels of adoption or use of the internet and other technologies vital to our business
and the lack of appropriate infrastructure to support widespread internet usage; |
• |
lower levels of consumer spending on a per
capita basis and fewer opportunities for growth in certain foreign market segments compared to the United States; |
• |
lower levels of credit card usage and increased
payment risk; |
• |
changes in domestic and international tax
regulations; and |
• |
geopolitical events, including war and terrorism.
|
• |
subject to limited exceptions, the judgment
is final and non-appealable; |
• |
the judgment was given by a court competent
under the laws of the state of the court and is otherwise enforceable in such state; |
• |
the judgment was rendered by a court competent
under the rules of private international law applicable in Israel; |
• |
the laws of the state in which the judgment
was given provide for the enforcement of judgments of Israeli courts; |
• |
adequate service of process has been effected
and the defendant has had a reasonable opportunity to present his arguments and evidence; |
• |
the judgment and its enforcement are not contrary
to the law, public policy, security or sovereignty of the State of Israel; |
• |
the judgment was not obtained by fraud and
does not conflict with any other valid judgment in the same matter between the same parties; and |
• |
an action between the same parties in the
same matter was not pending in any Israeli court at the time the lawsuit was instituted in the U.S. court. |
• |
we may be unable to meet the requirements for
continuing to qualify for some programs; |
• |
these programs and tax benefits may be unavailable
at their current levels; or |
• |
we may be required to refund previously recognized
tax benefits if we are found to be in violation of the stipulated conditions. |
• |
The growth in search driven by the growing shift to ecommerce; |
• |
The growth in video which is outpacing other forms of digital marketing; |
• |
The transition from linear TV to Digital TV; |
• |
The inevitable disappearance of the cookie in an increasing privacy-centric world and the corresponding imperative of first-party
data; |
• |
The need for high-engagement creative in what is called the “Attention Economy.”; and |
• |
The importance brands provide to advertising creativity vs. standard formats. |
1. |
Operational Savings – Shared Resources |
2. |
Traffic Acquisition Costs (TAC) Optimization |
3. |
Increased Customer Value |
4. |
Market Agility and Creative Firepower |
• |
Supply and publisher integration;
|
• |
Innovative Creative; |
• |
Demand generation; |
• |
Data and Analytics; |
• |
AI and optimization; and |
• |
Executional channels. |
1. |
Supply Management Platform; |
2. |
Demand Management Platform; |
3. |
Analytics Platform; |
4. |
Creative Platform; |
5. |
AI Platform; |
6. |
Actionable Performance Monitoring; |
7. |
Online video player; and |
8. |
Content monetization system. |
1. |
Publishers management system; |
2. |
Search demand management system; |
3. |
Monetization products; and |
4. |
AI system. |
2019 |
2020 |
2021 |
||||||||||||||||||||||
Search Advertising Revenues
|
Display Advertising
Revenues |
Search Advertising Revenues
|
Display Advertising
Revenues |
Search Advertising Revenues
|
Display Advertising
Revenues |
|||||||||||||||||||
North America (Mainly U.S.) |
67 |
% |
91 |
% |
73 |
% |
95 |
% |
80 |
% |
95 |
% | ||||||||||||
Europe |
25 |
% |
9 |
% |
24 |
% |
5 |
% |
18 |
% |
4 |
% | ||||||||||||
Other |
8 |
% |
0 |
% |
3 |
% |
0 |
% |
2 |
% |
1 |
% | ||||||||||||
Total |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
• |
Codefuel Ltd., our wholly-owned Israeli
subsidiary, incorporated on November 6, 2019. |
• |
IncrediMail, Inc., our wholly-owned Delaware
subsidiary, owns all of the outstanding shares of common stock of Smilebox Inc., a Washington corporation and all of the outstanding shares
of common stock of IncrediTone Inc. and Pub Ocean Inc., our wholly-owned Delaware subsidiaries. IncrediTone Inc. owns all of the outstanding
shares of common stock of Interactive Holding Corp., a Delaware corporation, which was acquired, together with its subsidiaries, in November
2015. |
• |
Content IQ LLC, our wholly-owned New York
subsidiary, was acquired in January 2020, owns all of the membership interest of BT Media LLC, a Nevada limited liability company.
|
• |
Pub Ocean Media UK Limited, our wholly-owned
England and Wales subsidiary, was incorporated in July 2020. |
• |
Make Me Reach SAS, dba Paragone, our wholly
owned French subsidiary, was acquired in February 2015. |
• |
Portilev Ltd., our wholly-owned Israeli
subsidiary, incorporated on September 22, 2019 and was merged into the Company on October 25, 2021. |
• |
Vidazoo Ltd., our wholly-owned Israeli subsidiary,
was acquired on October 4, 2021. |
Square feet
(net) |
Annual Rent
for 2021 in
US$ in
thousands
(net) |
Lease expires
on (not
including
options) |
||||||||||
New York, New York |
25,550 |
$ |
1,737 |
2026 |
||||||||
Chicago, Illinois |
3,984 |
$ |
89 |
2023 |
Year Ended December 31, |
||||||||
2020 |
2021 |
|||||||
Display Advertising |
$ |
148,698 |
$ |
265,323 |
||||
Search Advertising |
179,365 |
213,175 |
||||||
Total Revenue |
$ |
328,063 |
$ |
478,498 |
Year ended December 31, |
||||||||
2020 |
2021 |
|||||||
Cost of revenue |
$ |
22,477 |
$ |
25,197 |
||||
Traffic acquisition costs and media buy |
197,626 |
288,018 |
||||||
Research and development |
30,880 |
35,348 |
||||||
Selling and marketing |
39,085 |
53,209 |
||||||
General and administrative |
15,819 |
20,933 |
||||||
Depreciation and amortization |
9,923 |
9,897 |
||||||
Total Costs and Expenses |
$ |
315,810 |
$ |
432,602 |
Year Ended December 31, |
||||||||
2020 |
2021 |
|||||||
Revenue: |
||||||||
Display Advertising |
45 |
% |
55 |
% | ||||
Search Advertising |
55 |
45 |
||||||
Total revenue |
100 |
% |
100 |
% | ||||
|
||||||||
Costs and expenses: |
||||||||
Cost of revenue |
7 |
% |
5 |
% | ||||
Traffic acquisition costs and media buy |
60 |
60 |
||||||
Research and development |
9 |
8 |
||||||
Selling and marketing |
12 |
11 |
||||||
General and administrative |
5 |
4 |
||||||
Depreciation and amortization |
3 |
2 |
||||||
Total costs and expenses |
96 |
90 |
||||||
|
||||||||
Operating income |
4 |
10 |
||||||
Financial expenses, net |
1 |
(0 |
) | |||||
Income before taxes on income |
3 |
10 |
||||||
Income tax expense (benefit) |
(0 |
) |
2 |
|||||
Net Income |
3 |
% |
8 |
% |
Payments Due by Period(****) |
||||||||||||||||||||
Contractual Commitments as of December 31, 2021 |
Total |
Less than
1 year |
1-3 Years |
3-5 Years |
More than
5 Years |
|||||||||||||||
Accrued severance pay (1)
|
2,371 |
|||||||||||||||||||
Uncertain tax positions (ASC-740)
(2) |
6,928 |
|||||||||||||||||||
Operating leases |
15,368 |
4,485 |
8,205 |
2,678 |
- |
|||||||||||||||
Total |
$ |
24,667 |
$ |
4,485 |
$ |
8,205 |
$ |
2,678 |
$ |
- |
(1) |
Prior notice to our executive employees as well as severance
pay obligations to our Israeli employees, as required under Israeli labor law and as set forth in employment agreements, are payable
only upon termination, retirement or death of the respective employee. Of this amount, $1.8 million is unfunded as of December 31,
2021. Since we are unable to reasonably estimate the timing of settlement, the timing of such payments is not specified in the table.
See also Note 2 to our consolidated financial statements appearing in “ITEM 18. Financial Statements” of this annual report.
|
(2) |
Consists of accruals for certain income tax positions under ASC 740 that are paid upon settlement, and
for which we are unable to reasonably estimate the ultimate amount and timing of settlement. See Note 14(h) to our consolidated financial
statements included in ITEM 18 of this annual report for further information regarding our liability under ASC 740. Payment of these obligations
would result from settlements with tax authorities. Due to the difficulty in determining the timing of resolution of audits, these obligations
are only presented in their total amount. |
A. |
DIRECTORS AND SENIOR MANAGEMENT |
Name |
Age |
Position | ||
Eyal Kaplan*(1)(2)
|
62 |
Chairman of the Board of Directors | ||
Doron Gerstel |
61 |
Chief Executive Officer; Director | ||
Maoz Sigron |
44 |
Chief Financial Officer | ||
Dror Erez*(1)(3)
|
52 |
Director | ||
Sarit Firon*(1)(4)
|
55 |
Director | ||
Rami Schwartz* (3)(4)
|
64 |
Director | ||
Michael Vorhaus*(2)(4)
|
64 |
Director | ||
Joy Marcus*(2)(3)
|
60 |
Director | ||
Daniel E. Aks |
62 |
President, Undertone | ||
Tal Jacobson |
47 |
General Manager, CodeFuel | ||
Eliran Ben Yehuda |
37 |
General Manager, CIQ |
• |
chairperson of our audit committee: $110,000;
|
• |
chairperson of our compensation committee:
$107,500; |
• |
chairperson of our nominating and governance
committee: $105,000; and |
• |
other non-executive directors: $97,500.
|
Name and Principal Position (1)
|
Salary Cost (2)
|
Bonus (3)
|
Equity-Based
Compensation (4)
|
Total |
||||||||||||
Doron Gerstel, Chief Executive Officer |
634 |
1,254 |
946 |
2,834 |
||||||||||||
Maoz Sigron, Chief Financial Officer |
343 |
535 |
514 |
1,392 |
||||||||||||
Daniel E. Aks, President, Undertone Business Unit |
540 |
600 |
202 |
1,342 |
||||||||||||
Tal Jacobson, General Manager, CodeFuel Business Unit |
387 |
677 |
260 |
1,324 |
• |
establishing our policies and overseeing
the performance and activities of our chief executive officer; |
• |
convening shareholders’ meetings;
|
• |
approving our financial statements;
|
• |
determining our plans of action, principles
for funding them and the priorities among them, our organizational structure and examining our financial status; and |
• |
issuing securities and distributing dividends.
|
December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Cost of sales |
79 |
73 |
83 |
|||||||||
Research and development |
117 |
135 |
115 |
|||||||||
Selling and marketing |
136 |
146 |
154 |
|||||||||
General and administration |
67 |
63 |
68 |
|||||||||
Total |
399 |
417 |
420 |
Name |
Number of Ordinary
Shares Beneficially Owned |
Percentage of Ordinary
Shares Outstanding |
||||||
All directors and officers as a group (11 persons) (1)
|
1,233,406 |
2.78 |
% |
(1) |
Includes options to purchase 632,539 ordinary shares that are vested or will vest within 60 days of March
5, 2022. |
Name of Beneficial Owner |
Shares Beneficially Owned |
|||||||
Number |
Percentage |
|||||||
|
||||||||
The Phoenix Holdings Ltd.
(1) |
2,443,477 |
5.52 |
% |
• |
A company's average R&D expenses in
the three years prior to the current tax year must be greater than or equal to 7% of its total revenue or exceed NIS 75 million (approximately
$21 million) per year; and |
• |
A company must also satisfy one of the following
conditions: (1) at least 20% of the workforce (or at least 200 employees) are employed in R&D; (2) a venture capital investment of
an amount approximately equivalent to at least NIS 8 million was previously made in the company; or (3) growth in sales or workforce by
an average of 25% over the three years preceding the tax year. |
• |
Amortization of the cost of purchased know-how,
patents, and right to use patent or know how, which are used for the development or promotion of the Industrial Enterprise, over an eight-year
period; |
• |
Accelerated depreciation rates on equipment
and buildings; |
• |
Under specified conditions, an election
to file consolidated tax returns with additional related Israeli Industrial Companies; and |
• |
Deduction of expenses related to a public
offering in equal amounts over three years. |
• |
certain financial institutions; |
• |
dealers or traders in securities that use
a mark-to-market method of tax accounting; |
• |
persons holding ordinary shares as part
of a straddle, integrated or similar transaction; |
• |
persons whose functional currency for U.S.
federal income tax purposes is not the U.S. dollar; |
• |
entities classified as partnerships for
U.S. federal income tax purposes and their partners; |
• |
tax-exempt entities, “individual retirement
accounts” or “Roth IRAs”; |
• |
persons who acquired our ordinary shares
pursuant to the exercise of an employee stock option or otherwise as compensation; |
• |
persons that own or are deemed to own 10%
or more of our stock by voting power or value; or |
• |
persons holding ordinary shares in connection
with a trade or business outside the United States. |
• |
a citizen or individual resident of the
United States; |
• |
a corporation, or other entity taxable as
a corporation, created or organized in or under the laws of the United States, any state therein or the District of Columbia; or
|
• |
an estate or trust the income of which is
subject to U.S. federal income taxation regardless of its source. |
U.S. dollars |
NIS |
Other Currencies |
Total |
|||||||||||||
In thousands of U.S. dollars |
||||||||||||||||
Current assets |
435,033 |
6,590 |
4,548 |
446,171 |
||||||||||||
Long-term assets |
1,239 |
3,088 |
980 |
5,307 |
||||||||||||
Current liabilities |
(174,474 |
) |
(14,823 |
) |
(558 |
) |
(189,855 |
) | ||||||||
Long-term liabilities |
(46,124 |
) |
(6,188 |
) |
(253 |
) |
(52,565 |
) | ||||||||
Total |
215,674 |
(11,333 |
) |
4,717 |
209,058 |
Year Ended December 31, |
||||||||||||
2019 |
2020 |
2021 |
||||||||||
Average rate for period |
3.564 |
3.437 |
3.231 |
|||||||||
Rate at year-end |
3.456 |
3.215 |
3.110 |
(a) |
Disclosure controls and procedures |
(b) |
Management annual report on internal control over financial reporting |
(c) |
Attestation Report of the Registered Public Accounting Firm |
(d) |
Changes in internal control over financial reporting |
2020 |
2021 |
|||||||
Audit Fees |
$ |
500 |
$ |
568 |
||||
Tax Fees |
236 |
181 |
||||||
Audit Related fees |
86 |
394 |
||||||
|
||||||||
Total |
$ |
822 |
$ |
1,143 |
• |
the securities issued amount to 20% or more
of our outstanding voting rights before the issuance; |
• |
some or all of the consideration is other
than cash or listed securities or the transaction is not on market terms; and |
• |
the transaction will increase the relative
holdings of a shareholder that holds 5% or more of our outstanding share capital or voting rights or will cause any person to become,
as a result of the issuance, a holder of more than 5% of our outstanding share capital or voting rights. |
ITEM 16I.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION |
PERION NETWORK LTD. AND ITS SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2021
IN U.S. DOLLARS
INDEX
|
Kost Forer Gabbay & Kasierer 144 Menachem Begin Road, Building A, Tel-Aviv 6492102, Israel |
Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com |
To the Shareholders and the Board of directors of Perion Network Ltd.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Perion Network Ltd. and subsidiaries ("the Company") as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 16, 2022, expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
F - 2
|
Kost Forer Gabbay & Kasierer 144 Menachem Begin Road, Building A, Tel-Aviv 6492102, Israel |
Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com |
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.
|
Revenue Recognition Gross versus Net presentation |
|
|
Description of the Matter |
As described in Note 2 to the consolidated financial statements, the Company’s revenues are comprised primarily of Search Advertising Revenues and Display Advertising Revenues. To determine whether Search Advertising and Display Advertising revenues should be presented on a gross or net basis, the Company considers whether it controls the promised good or service before transferring that good or service to the customer.
Auditing the Company's gross or net basis evaluation was complex and required a high degree of auditor judgment due to the significant judgment and subjectivity used by the Company in determining whether revenue should be presented on a gross or net basis. The significant judgment was primarily due to the evaluation, for each contract, of whether the Company is the primary obligor in the arrangement. |
|
|
How We Addressed the Matter in Our Audit |
We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Company’s revenue recognition process, including controls over the review of contracts and assessment of principal versus agent, and controls over the completeness and accuracy of data.
Our substantive audit procedures included, among others, reviewing, on a sample basis, the terms of contracts with publishers, evaluating management’s assessment on the principal versus agent analysis, discussing the terms of contracts with legal and finance personnel responsible for managing the contractual arrangements and evaluating the related disclosures in the consolidated financial statements. |
F - 3
|
Kost Forer Gabbay & Kasierer 144 Menachem Begin Road, Building A, Tel-Aviv 6492102, Israel |
Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com |
|
Acquisition accounting for Vidazoo Ltd (Vidazoo) business combination |
|
|
Description of the Matter |
As described in Note 4.c to the consolidated financial statements, on October 04, 2021, the Company acquired 100% of the shares of Vidazoo Ltd ("the Vidazoo Acquisition") for a total consideration of $77.7 million, of which $35 million was paid in cash upon the completion of the transaction and $36.6 million as earn-out tied to financial targets over a two-year period. The Vidazoo Acquisition was accounted for as a business combination in accordance with ASC 805 "Business Combinations". Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including total identified intangible assets of $39.2 million, which consist primarily of $31 million of technology intangible asset.
Auditing the Company's accounting for the Vidazoo acquisition was complex and involved subjective auditor judgment in applying procedures relating to the fair value measurement of the technology intangible asset. The Company used the discounted cash flow method under the income approach ("the valuation model") to measure the fair value of the technology intangible asset. The significant assumptions used to estimate the fair value of the technology intangible asset included the discount rate applied and certain assumptions that form the basis of the forecasted results, such as revenue growth rates and profitability margins. These significant assumptions are forward-looking and could be affected by future economic and market conditions. |
|
|
How We Addressed the Matter in Our Audit |
We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Company's accounting for acquisitions process, such as controls over the measurement of the technology intangible asset, including the valuation model and underlying assumptions used to develop such estimates.
We performed substantive audit procedures that included, among others, evaluating the completeness and accuracy of the underlying data and the reasonableness of management’s significant assumptions and estimates. These procedures included comparing the significant assumptions to current industry, market and economic trends, historical results of the acquired business and to other relevant third-party industry outlooks. We involved our valuation specialists to assist us in evaluating the appropriateness of the Company’s valuation model as well as the significant assumptions used to estimate the fair value of the technology intangible asset such as the weighted average cost of capital calculation. Our audit procedures included comparing the Company’s discount rate to a discount rate range that was independently developed using publicly available market data for comparable peers. We also evaluated the appropriateness of the related disclosures included in Note 4.c to the consolidated financial statements in relation to the Vidazoo Acquisition. |
/s/
KOST FORER GABBAY & KASIERER
A Member of Ernst & Young Global
We have served as the Company‘s auditor since 2004.
Tel-Aviv, Israel
March 16, 2022
F - 4
|
Kost Forer Gabbay & Kasierer 144 Menachem Begin Road, Building A, Tel-Aviv 6492102, Israel |
Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Perion Network Ltd.
Opinion on Internal Control over Financial Reporting
We have audited Perion Network Ltd. and it's subsidiaries' ("the Company") internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.
As indicated in the accompanying Management's Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of the business of Vidazoo Ltd. ("Vidazoo") that was acquired during 2021 and included in the 2021 consolidated financial statements of the Company and constitute 4% of total net assets as of December 31, 2021 and 6% of revenues, for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of the business of Vidazoo.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes, and our report dated March 16, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
F - 5
|
Kost Forer Gabbay & Kasierer 144 Menachem Begin Road, Building A, Tel-Aviv 6492102, Israel |
Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com |
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KOST FORER GABBAY & KASIERER
A Member of Ernst & Young Global
Tel-Aviv, Israel
March 16, 2022
F - 6
|
|
December
31, |
| |||||
|
|
2021
|
|
|
2020
|
| ||
Assets
|
|
|
|
|
|
| ||
Current Assets:
|
|
|
|
|
|
| ||
Cash
and cash equivalents |
|
$ |
104,446
|
|
|
$ |
47,656
|
|
Restricted
cash |
|
|
1,089
|
|
|
|
1,222
|
|
Short-term
bank deposits |
|
|
217,200
|
|
|
|
12,700
|
|
Accounts
receivable (net of allowance of $891
and $694
at December 31, 2021 and 2020, respectively) |
|
|
115,361
|
|
|
|
81,221
|
|
Prepaid
expenses and other current assets |
|
|
8,075
|
|
|
|
4,560
|
|
Total
Current Assets |
|
|
446,171
|
|
|
|
147,359
|
|
|
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
|
4,211
|
|
|
|
6,770
|
|
Operating lease
right-of-use assets |
|
|
11,578
|
|
|
|
20,266
|
|
Intangible assets,
net |
|
|
56,700
|
|
|
|
24,376
|
|
Goodwill
|
|
|
189,265
|
|
|
|
152,303
|
|
Deferred taxes
|
|
|
5,228
|
|
|
|
7,111
|
|
Other assets
|
|
|
79
|
|
|
|
496
|
|
Total
Assets |
|
$
|
713,232
|
|
|
$
|
358,681
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and Shareholders' Equity |
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
107,730
|
|
|
$ |
72,498
|
|
Accrued
expenses and other liabilities |
|
|
40,331
|
|
|
|
21,188
|
|
Short-term
operating lease liability |
|
|
3,615
|
|
|
|
4,514
|
|
Short-term
loans and current maturities of long-term loans |
|
|
-
|
|
|
|
8,333
|
|
Deferred
revenues |
|
|
3,852
|
|
|
|
5,711
|
|
Short-term
payment obligation related to acquisitions |
|
|
38,179
|
|
|
|
7,869
|
|
Total
Current Liabilities |
|
|
193,707
|
|
|
|
120,113
|
|
|
|
|
|
|
|
|
|
|
Long-Term
Liabilities: |
|
|
|
|
|
|
|
|
Long-term operating
lease liability |
|
|
9,774
|
|
|
|
17,698
|
|
Payment obligation
related to acquisition |
|
|
33,250
|
|
|
|
30,035
|
|
Other long-term
liabilities |
|
|
9,541
|
|
|
|
6,713
|
|
Total
Liabilities |
|
|
246,272
|
|
|
|
174,559
|
|
Commitments
and Contingencies |
|
|
|
|
|
| ||
Shareholders'
Equity: |
|
|
|
|
|
|
|
|
Ordinary
shares of ILS 0.03
par value - Authorized: 60,000,000
and 43,333,333
shares at December 31, 2021 and 2020, respectively; Issued: 43,812,062
and 27,467,313
shares at December 31, 2021 and 2020, respectively; Outstanding: 43,696,723
and 27,351,974
shares at December 31, 2021 and 2020, respectively |
|
|
375
|
|
|
|
224
|
|
Additional
paid-in capital |
|
|
496,154
|
|
|
|
251,933
|
|
Treasury
shares at cost (115,339
shares at December 31, 2021 and 2020) |
|
|
(1,002
|
) |
|
|
(1,002
|
) |
Accumulated
other comprehensive income |
|
|
(128
|
) |
|
|
112
|
|
Accumulated
deficit |
|
|
(28,439
|
)
|
|
|
(67,145
|
)
|
Total
Shareholders' Equity |
|
|
466,960
|
|
|
|
184,122
|
|
Total
Liabilities and Shareholders' Equity |
|
$
|
713,232
|
|
|
$
|
358,681
|
|
|
|
Year
ended December 31, |
| |||||||||
|
|
2021
|
|
|
2020
|
|
|
2019
|
| |||
Revenues:
|
|
|
|
|
|
|
|
|
| |||
Display
Advertising |
|
$ |
265,323
|
|
|
$ |
148,698
|
|
|
$ |
87,863
|
|
Search
Advertising |
|
|
213,175
|
|
|
|
179,365
|
|
|
|
173,587
|
|
Total
Revenues |
|
|
478,498
|
|
|
|
328,063
|
|
|
|
261,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs
and Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of revenues |
|
|
25,197
|
|
|
|
22,477
|
|
|
|
25,520
|
|
Traffic
acquisition costs and media buy |
|
|
288,018
|
|
|
|
197,626
|
|
|
|
135,891
|
|
Research
and development |
|
|
35,348
|
|
|
|
30,880
|
|
|
|
22,585
|
|
Selling
and marketing |
|
|
53,209
|
|
|
|
39,085
|
|
|
|
34,736
|
|
General
and administrative |
|
|
20,933
|
|
|
|
15,819
|
|
|
|
14,999
|
|
Depreciation
and amortization |
|
|
9,897
|
|
|
|
9,923
|
|
|
|
9,711
|
|
Total
Costs and Expenses |
|
|
432,602
|
|
|
|
315,810
|
|
|
|
243,442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from Operations |
|
|
45,896
|
|
|
|
12,253
|
|
|
|
18,008
|
|
Financial expenses,
net |
|
|
581
|
|
|
|
2,638
|
|
|
|
3,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before Taxes on Income |
|
|
45,315
|
|
|
|
9,615
|
|
|
|
14,538
|
|
Taxes on income
(benefit) |
|
|
6,609
|
|
|
|
(610
|
) |
|
|
1,645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income |
|
$
|
38,706
|
|
|
$
|
10,225
|
|
|
$
|
12,893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Earnings per Share - Basic: |
|
$
|
1.13
|
|
|
$
|
0.38
|
|
|
$
|
0.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Earnings per Share - Diluted: |
|
$
|
1.02
|
|
|
$
|
0.36
|
|
|
$
|
0.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares – Basic: |
|
|
34,397,134
|
|
|
|
26,687,145
|
|
|
|
25,965,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares – Diluted: |
|
|
37,829,725
|
|
|
|
28,797,747
|
|
|
|
26,357,585
|
|
|
|
Year
ended December 31, |
| |||||||||
|
|
2021
|
|
|
2020
|
|
|
2019
|
| |||
|
|
|
|
|
|
|
|
|
| |||
Net
income |
|
$
|
38,706
|
|
|
$
|
10,225
|
|
|
$
|
12,893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
Change in foreign
currency translation adjustment |
|
|
(315
|
) |
|
|
49
|
|
|
|
(185
|
) |
Cash Flow Hedge:
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gain (loss) from cash flow hedges |
|
|
242
|
|
|
|
697
|
|
|
|
445
|
|
Less:
reclassification adjustment for net gain (loss) included in net income (loss) |
|
|
(167
|
)
|
|
|
(764
|
)
|
|
|
(272
|
) |
Net change
|
|
|
75
|
|
|
(67
|
) |
|
|
173
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
loss |
|
|
(240
|
)
|
|
|
(18
|
)
|
|
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income |
|
$
|
38,466
|
|
|
$
|
10,207
|
|
|
$
|
12,881
|
|
|
|
Common
shares |
|
|
Additional
paid-in capital |
|
|
Accumulated Other
Comprehensive income
(loss) |
|
|
Retained earnings
(Accumulated deficit)
|
|
|
Treasury
shares |
|
|
Total
shareholders' equity |
| ||||||||||
|
|
Number
of Shares |
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Balance
as of December 31, 2018 |
|
|
25,850,188
|
|
|
|
211
|
|
|
|
239,693
|
|
|
|
142
|
|
|
|
(90,263
|
)
|
|
|
(1,002
|
)
|
|
|
148,781
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
- |
|
|
|
- |
|
|
|
2,293
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,293
|
|
Proceeds
from exercise of stock-based compensation |
|
|
392,271
|
|
|
|
2
|
|
|
|
1,225
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,227
|
|
Other comprehensive
loss |
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
(12
|
) |
|
|
-
|
|
|
|
-
|
|
|
|
(12
|
) |
Net income
|
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12,893
|
|
|
|
-
|
|
|
|
12,893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of December 31, 2019 |
|
|
26,242,459
|
|
|
|
213
|
|
|
|
243,211
|
|
|
|
130
|
|
|
|
(77,370
|
)
|
|
|
(1,002
|
)
|
|
|
165,182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
- |
|
|
|
-
|
|
|
|
4,447
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,447
|
|
Proceeds
from exercise of stock-based compensation |
|
|
1,109,515
|
|
|
|
11
|
|
|
|
4,275
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,286
|
|
Other comprehensive
loss |
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
(18
|
) |
|
|
-
|
|
|
|
-
|
|
|
|
(18
|
) |
Net income
|
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,225
|
|
|
|
-
|
|
|
|
10,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of December 31, 2020 |
|
|
27,351,974
|
|
|
|
224
|
|
|
|
251,933
|
|
|
|
112
|
|
|
|
(67,145
|
)
|
|
|
(1,002
|
)
|
|
|
184,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares - Offering
|
14,110,592
|
133
|
230,356
|
- | - | - |
230,489
|
|||||||||||||||||||||
Stock-based compensation
|
|
|
- |
|
|
|
-
|
|
|
|
6,985
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,985
|
|
Proceeds
from exercise of stock-based compensation |
|
|
2,234,157
|
|
|
|
18
|
|
|
|
6,880
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,898
|
|
Other comprehensive
loss |
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
(240
|
) |
|
|
-
|
|
|
|
-
|
|
|
|
(240
|
) |
Net income
|
|
|
- |
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
38,706
|
|
|
|
-
|
|
|
|
38,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of December 31, 2021 |
|
|
43,696,723
|
|
|
|
375
|
|
|
|
496,154
|
|
|
|
(128
|
) |
|
|
(28,439
|
)
|
|
|
(1,002
|
)
|
|
|
466,960
|
|
|
|
Year
ended December 31, |
| |||||||||
|
|
2021
|
|
|
2020
|
|
|
2019
|
| |||
Operating
activities: |
|
|
|
|
|
|
|
|
| |||
Net
income |
|
$
|
38,706
|
|
|
$
|
10,225
|
|
|
$
|
12,893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
required to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization |
|
|
9,897
|
|
|
|
9,923
|
|
|
|
9,711
|
|
Stock-based
compensation expense |
|
|
6,985
|
|
|
|
4,447
|
|
|
|
2,293
|
|
Foreign
currency translation |
|
|
(223
|
) |
|
|
19
|
|
|
|
(86
|
) |
Accrued
interest, net |
|
|
(300
|
)
|
|
|
(125
|
)
|
|
|
(204
|
) |
Deferred
taxes, net |
|
|
(2,755
|
)
|
|
|
(3,093
|
)
|
|
|
(1,756
|
) |
Accrued
severance pay, net |
|
|
663
|
|
|
|
(23
|
) |
|
|
96
|
|
Change
in payment obligation related to acquisitions |
|
|
350
|
|
|
|
4,646
|
|
|
|
1,025
|
|
Fair
value revaluation - convertible debt |
|
|
-
|
|
|
|
-
|
|
|
|
600
|
|
Loss
from sale of property and equipment |
|
|
121
|
|
|
|
10
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable, net |
|
|
(34,239
|
)
|
|
|
(32,049
|
) |
|
|
6,416
|
|
Prepaid
expenses and other current assets |
|
|
(2,781
|
)
|
|
|
(1,185
|
) |
|
|
646
|
|
Operating
lease right-of-use assets |
|
|
8,510
|
|
|
|
2,595
|
|
|
|
3,119
|
|
Operating
lease liabilities |
|
|
(8,643
|
)
|
|
|
(2,255
|
)
|
|
|
(1,518
|
) |
Accounts
payable |
|
|
35,222
|
|
|
|
24,742
|
|
|
|
9,459
|
|
Accrued
expenses and other liabilities |
|
|
21,446
|
|
|
|
2,776
|
|
|
|
1,653
|
|
Deferred
revenues |
|
|
(1,853
|
) |
|
|
1,506
|
|
|
|
394
|
|
Net
cash provided by operating activities |
|
$
|
71,106
|
|
|
$
|
22,159
|
|
|
$
|
44,741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Purchases
of property and equipment |
|
$
|
(627
|
)
|
|
$
|
(459
|
)
|
|
$
|
(1,209
|
)
|
Proceeds
from sale of property and equipment |
|
|
95
|
|
|
|
5
|
|
|
|
492
|
|
Short-term
deposits, net |
|
|
(204,500
|
) |
|
|
10,534
|
|
|
|
(19,234
|
) |
Cash
paid in connection with acquisitions, net of cash acquired |
|
|
(38,438
|
)
|
|
|
(19,000
|
)
|
|
|
(1,200
|
) |
Net
cash used in investing activities |
|
$
|
(243,470
|
)
|
|
$
|
(8,920
|
)
|
|
$
|
(21,151
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares in private placement, net |
230,489
|
- | - | |||||||||
Proceeds
from exercise of stock-based compensation |
|
$
|
6,898
|
|
|
$
|
4,286
|
|
|
$
|
1,227
|
|
Payments
made in connection with acquisition |
|
|
-
|
|
|
|
-
|
|
|
|
(1,813
|
)
|
Repayment
of convertible debt |
|
|
-
|
|
|
|
-
|
|
|
|
(15,850
|
)
|
Repayment
of long-term loans |
|
|
(8,333
|
)
|
|
|
(8,333
|
)
|
|
|
(8,332
|
)
|
Net cash
provided by (used in) financing activities |
|
$
|
229,054
|
|
|
$
|
(4,047
|
)
|
|
$
|
(24,768
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect
of exchange rate changes on cash and cash equivalents |
|
|
(33
|
)
|
|
|
81
|
|
|
|
(20
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents and restricted cash |
|
$
|
56,657
|
|
|
$
|
9,273
|
|
|
$
|
(1,198
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents and restricted cash at beginning of year |
|
|
48,878
|
|
|
|
39,605
|
|
|
|
40,803
|
|
Cash
and cash equivalents and restricted cash at end of year |
|
$
|
105,535
|
|
|
$
|
48,878
|
|
|
$
|
39,605
|
|
|
|
Year
ended December 31 |
| |||||||||
|
|
2021
|
|
|
2020
|
|
|
2019
|
| |||
Reconciliation
of cash, cash equivalents, and restricted cash to the consolidated
balance sheet |
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
| |||
Cash
and cash equivalents |
|
$
|
104,446
|
|
|
$
|
47,656
|
|
|
$
|
38,389
|
|
Restricted
cash |
|
|
1,089
|
|
|
|
1,222
|
|
|
|
1,216
|
|
Total
cash, cash equivalents, and restricted cash |
|
$
|
105,535
|
|
|
$
|
48,878
|
|
|
$
|
39,605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosure of Cash Flow Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid during the year for: |
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes |
|
$
|
4,365
|
|
|
$
|
3,180
|
|
|
$
|
4,007
|
|
Interest
|
|
$
|
203
|
|
|
$
|
1,097
|
|
|
$
|
2,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash
investing and financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Creation
of new lease right-of-use assets arising from lease liability |
|
$
|
-
|
|
|
$
|
1,671
|
|
|
$
|
25,537
|
|
Purchase
of property and equipment on credit |
|
$
|
45
|
|
|
$
|
3
|
|
|
$
|
15
|
|
On January 14, 2020, the Company completed the acquisition of Content IQ LLC and on July 22, 2020, the assets acquisition of Pub Ocean Limited was consummated.
On October 4, 2021, we also completed the acquisition of Vidazoo Ltd. (for additional information on these acquisitions, see Note 4)
F - 13
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2021 and 2020, the Company has recorded an allowance for doubtful debts in the amounts of $891 and $694, respectively.
|
%
|
|||
Computers
and peripheral equipment |
33 | |||
Office
furniture and equipment |
6 - 15 |
F - 14
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Goodwill reflects the excess of the purchase price of business acquired over the fair value of net assets acquired. Goodwill is not amortized but instead is tested for impairment, in accordance with ASC 350, “Intangibles – Goodwill and Other”, at the reporting unit level, at least annually at December 31 each year, or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Following the early adoption of ASU 2017-04, "Simplifying the Test for Goodwill Impairment" by the Company in January 2017, any excess of the carrying amount of the reporting unit over its fair value is recognized as an impairment loss, and the carrying value of goodwill is written down to fair value.
F - 15
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Revenue recognition
The Company applies the provisions of Accounting Standards Codification 606, Revenue from Contracts with Customers ("ASC 606" or "Topic 606").
The Company applies the practical expedient for incremental costs of obtaining contracts when the associated revenues is recognized over less than one year.
F - 16
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F - 17
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F - 18
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The allowance against gross trade receivables reflects the current expected credit loss inherent in the receivables portfolio determined based on the Company’s methodology. The Company’s methodology is based on historical collection experience, customer creditworthiness, current and future economic condition, and market condition. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. Trade receivables are written off after all reasonable means to collect the full amount have been exhausted.
F - 19
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Year ended December 31 | |||||||||||
|
2021
|
2020
|
2019
|
|||||||||
|
||||||||||||
Risk-free
interest rate |
0.94% - 1.52% | 0.29% - 1.60% | 0.70% - 2.90% | |||||||||
Expected
volatility |
59% - 60% | 53% - 59% | 43% - 55% | |||||||||
Early
exercise factor |
130% - 200% | 110% - 200% | 110% - 230% | |||||||||
Forfeiture
rate post vesting |
1% - 27% | 0% - 34% | 0% - 34% | |||||||||
Dividend
yield |
0% | 0% | 0% |
F - 20
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
• Level 1 - Observable inputs obtained from independent sources, such as quoted prices for identical assets and liabilities in active markets.
• Level 2 - Other inputs that are directly or indirectly observable in the market place.
• Level 3 - Unobservable inputs which are supported by little or no market activity.
F - 21
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Recent Accounting Pronouncements not yet adopted
F - 22
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3:FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table present assets and liabilities measured at fair value on a recurring basis as of December 31, 2021:
|
|
Fair value measurements using input type |
| |||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
| ||||
Assets: |
||||||||||||||||
Derivative assets |
$ |
- |
$ |
75 |
$ |
- |
$ |
75 |
||||||||
Total financial assets |
$ |
- |
$ |
75 |
$ |
- |
$ |
75 |
||||||||
|
||||||||||||||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent consideration in connection to the acquisitions |
|
|
- |
|
|
|
- |
|
|
|
63,550 |
|
|
|
63,550 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total financial liabilities |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
63,550 |
|
|
$ |
63,550 |
|
The following table present assets measured at fair value on a recurring basis as of December 31, 2020:
|
|
Fair value measurements using input type |
| |||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
| ||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Contingent consideration in connection to the acquisitions |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
31,859 |
|
|
$ |
31,859 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total financial liabilities |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
31,859 |
|
|
$ |
31,859 |
|
NOTE 4:ACQUISITIONS
a.Content IQ LLC
On January 14, 2020, the Company consummated the acquisition of Content IQ LLC (“Content IQ”), a privately held company founded in 2014, based in New York City. Content IQ has created data algorithm and analytics tools that deconstruct content, revenue and distribution to solve current major digital publishing challenges.
The total consideration for the acquisition was $37,838, comprised of $15,000 paid in cash at closing and a contingent consideration (with a maximum amount of up to $47,050), tied to revenues and EBITDA-based metrics over a period of two years, estimated at fair value of $22,838 on the acquisition date. As of December 31, 2021, the contingent consideration is estimated at fair value of $17,844. The change in fair value of the contingent consideration was recorded to general and administrative expenses. In addition, the acquisition includes a retention-based component of up to $11,000.
F - 23
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
b.Pub Ocean
On July 22, 2020, the Company acquired the net assets of Pub Ocean Limited, also known as “Pub Ocean” (the "Pub Ocean Acquisition"), a rapidly growing digital publisher-focused technology company with scalable content distribution and real-time revenue analytics technology.
The total consideration for the acquisition was $13,399, comprised of $4,000 paid in cash at closing and a contingent consideration (with a maximum amount of up to $17,000), tied to financial targets over a two-year period, estimated at fair value of $9,399 on the acquisition date. As of December 31, 2021, the contingent consideration is estimated at fair value of $8,963. The change in fair value of the contingent consideration was recorded to general and administrative expenses. In addition, the acquisition includes a retention-based component of up to $1,000.
c.Vidazoo
Fair value |
||||
Net Assets |
6,291
|
|||
Technology |
31,005
|
|||
Customer Relationship |
8,194
|
|||
Deferred Taxes |
(4,704
|
) | ||
Goodwill |
36,962
|
|||
Net assets acquired |
$ |
77,748
|
Pro forma results of operations related to this acquisition have not been presented because they are not material to the Company’s consolidated statements of operations.
F - 24
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5: PROPERTY AND EQUIPMENT, NET
|
|
December 31, |
| |||||
|
|
2021 |
|
|
2020 |
| ||
Cost: |
|
|
|
|
|
| ||
Computers and peripheral equipment |
|
$ |
7,219 |
|
|
$ |
6,776 |
|
Office furniture and equipment |
|
|
2,686 |
|
|
|
2,682 |
|
Leasehold improvements |
|
|
8,392 |
|
|
|
8,658 |
|
Capitalized software |
|
|
12,473 |
|
|
|
12,473 |
|
|
|
|
|
|
|
|
|
|
Total cost |
|
|
30,770 |
|
|
|
30,589 |
|
Less: accumulated depreciation and amortization |
|
|
(26,559 |
) |
|
|
(23,819 |
) |
Property and equipment, net |
|
$ |
4,211 |
|
|
$ |
6,770 |
|
NOTE 6:GOODWILL AND OTHER INTANGIBLE ASSETS, NET
a.Goodwill
The changes in the net carrying amount of goodwill in 2021 and 2020 were as follows:
Balance as of January 1, 2020 |
$ |
125,809
|
||
Acquisition of Content IQ |
$ |
23,361
|
||
Acquisition of Pub Ocean |
$ |
3,133
|
||
Balance as of December 31, 2020 |
$ |
152,303
|
||
Acquisition of Vidazoo |
$ |
36,962
|
||
Balance as of December 31, 2021 |
$ |
189,265
|
Goodwill has been recorded as a result of prior acquisitions and represents excess of the consideration over the net fair value of the assets of the businesses acquired. As of December 31, 2021, the Company has two reporting units – Display advertising and Search advertising. The Company performs tests for impairment of goodwill at the reporting unit level at least annually, or more frequently if events or changes in circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value.
No impairment was incurred for the years ended December 31, 2021, 2020 and 2019.
F - 25
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
b.Intangible assets, net
The following is a summary of intangible assets as of December 31, 2021:
|
December
31, 2020 |
Additions
|
Amortization
|
December
31, 2021 |
||||||||||||
|
||||||||||||||||
Acquired technology |
$ | 53,412 | $ | 31,005 | $ | - | $ | 84,417 | ||||||||
Accumulated amortization |
(25,548 | ) | - | (5,589 | ) | (31,137 | ) | |||||||||
Impairment |
(8,749 | ) | - | - | (8,749 | ) | ||||||||||
Acquired technology, net |
19,115 | 31,005 | (5,589 | ) | 44,531 | |||||||||||
|
||||||||||||||||
Customer relationships |
36,860 | 8,194 | - | 45,054 | ||||||||||||
Accumulated amortization |
(22,161 | ) | - | (1,057 | ) | (23,218 | ) | |||||||||
Impairment |
(10,426 | ) | - | - | (10,426 | ) | ||||||||||
Customer relationships, net |
4,273 | 8,194 | (1,057 | ) | 11,410 | |||||||||||
|
||||||||||||||||
Tradename and other |
18,503 | - | - | 18,503 | ||||||||||||
Accumulated amortization |
(12,405 | ) | - | (229 | ) | (12,634 | ) | |||||||||
Impairment |
(5,110 | ) | - | - | (5,110 | ) | ||||||||||
Tradename and other, net |
988 | - | (229 | ) | 759 | |||||||||||
|
||||||||||||||||
Intangible assets, net |
$ | 24,376 | $ | 39,199 | $ | (6,875 | ) | $ | 56,700 |
The following is a summary of intangible assets as of December 31, 2020:
|
|
December
31, 2019 |
|
|
Additions
|
|
|
Amortization |
|
|
OCI |
|
|
December 31, 2020 |
|
|||||
Acquired technology |
|
$ |
31,159 |
|
|
$ |
22,101 |
|
|
$ |
- |
|
|
$ |
152 |
|
|
$ |
53,412 |
|
Accumulated amortization |
|
|
(21,810 |
) |
|
|
- |
|
|
|
(3,579 |
) |
|
|
(159 |
) |
|
|
(25,548 |
) |
Impairment |
|
|
(8,749 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(8,749 |
) |
Acquired technology, net |
|
|
600 |
|
|
|
22,101 |
|
|
|
(3,579 |
) |
|
|
(7 |
) |
|
|
19,115 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships |
|
|
31,911 |
|
|
|
4,901 |
|
|
|
- |
|
|
|
48 |
|
|
|
36,860 |
|
Accumulated amortization |
|
|
(20,727 |
) |
|
|
- |
|
|
|
(1,465 |
) |
|
|
31 |
|
|
|
(22,161 |
) |
Impairment |
|
|
(10,426 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(10,426 |
) |
Customer relationships, net |
|
|
758 |
|
|
|
4,901 |
|
|
|
(1,465 |
) |
|
|
79 |
|
|
|
4,273 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tradename and other |
|
|
18,284 |
|
|
|
- |
|
|
|
- |
|
|
|
219 |
|
|
|
18,503 |
|
Accumulated amortization |
|
|
(11,897 |
) |
|
|
- |
|
|
|
(217 |
) |
|
|
(291 |
) |
|
|
(12,405 |
) |
Impairment |
|
|
(5,110 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(5,110 |
) |
Tradename and other, net |
|
|
1,277 |
|
|
|
- |
|
|
|
(217 |
) |
|
|
(72 |
) |
|
|
988 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets, net |
|
$ |
2,635 |
|
|
$ |
27,002 |
|
|
$ |
(5,261 |
) |
|
$ |
- |
|
|
$ |
24,376 |
|
F - 26
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The estimated useful life of the intangible assets are as follows:
|
|
Estimated useful life |
| |
Acquired technology |
|
|
4-7 years |
|
Customer relationships |
|
|
5-8 years |
|
Tradename and other |
|
|
4-11 years |
|
Amortization of intangible assets, net, in each of the succeeding five years and thereafter is estimated as follows:
2022 |
|
$ |
11,275 |
|
2023 |
|
|
11,150 |
|
2024 |
|
|
10,963 |
|
2025 |
|
|
7,137 |
|
2026 |
|
|
5,735 |
|
Thereafter |
|
|
10,440 |
|
|
|
|
|
|
|
|
$ |
56,700 |
NOTE 7: ACCRUED EXPENSES AND OTHER LIABILITIES
|
|
December 31, |
| |||||
|
|
2021 |
|
|
2020 |
| ||
|
|
|
|
|
|
| ||
Employees and payroll accruals |
|
$ |
19,597 |
|
|
$ |
13,970 |
|
Obligation related to acquisitions |
8,725 |
- | ||||||
Government authorities |
|
|
6,706 |
|
|
|
3,422 |
|
Accrued expenses |
|
|
4,560 |
|
|
|
3,003 |
|
Other short-term liabilities |
|
|
743 |
|
|
|
793 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
40,331 |
|
|
$ |
21,188 |
|
F - 27
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8: DERIVATIVES AND HEDGING ACTIVITES
The fair value of the Company’s outstanding derivative instruments is as follows:
|
December 31, | ||||||||
|
Balance sheet |
2021 |
2020 |
||||||
|
|||||||||
Derivatives designate as hedging instruments: |
|||||||||
Foreign exchange forward contracts and other derivatives |
''Prepaid expenses and other current assets'' |
$ | 75 | $ | - | ||||
|
''Accumulated other comprehensive income'' |
75 | - | ||||||
|
|||||||||
Derivatives not designated as hedging instruments: |
|||||||||
|
|||||||||
Foreign exchange forward contracts and other derivatives |
''Prepaid expenses and other current assets'' |
$ | 21 | $ | - | ||||
|
''Accrued expenses and other liabilities'' |
3 | - |
The net amounts reclassified from accumulated other comprehensive loss to the operating expenses are as follows:
Gain
recognized in |
Gain (loss) recognized in consolidated statements of Income |
||||||||||||||||
|
|
Year ended December 31, |
|
|
|
Year ended December 31, |
|
||||||||||
|
|
2021 |
|
Statement of Income |
|
2021 |
|
|
2020 |
|
|
2019 |
|
||||
Derivatives designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Foreign exchange options and forward contracts |
|
$ |
(75 |
) |
"Operating expenses" |
|
$ |
167 |
|
|
$ |
764 |
|
|
$ |
272 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange options and forward contracts |
|
|
- |
|
"Financial expenses" |
|
|
24 |
|
|
|
(166 |
) |
|
|
59 |
|
SWAP |
|
|
- |
|
"Financial expenses" |
|
|
- |
|
|
|
- |
|
|
|
380 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
(75 |
) |
|
|
$ |
191 |
|
|
$ |
598 |
|
$ |
711 |
|
F - 28
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9: SHORT TERM AND LONG-TERM DEBT
On December 17, 2018, ClientConnect Ltd., a former Israeli subsidiary of Perion, which merged into Perion on June 30, 2020, executed a new loan facility, in the amount of $25,000. Proceeds of the loan facility were applied to refinancing of the existing debt as well as the debt of Undertone, a US subsidiary of Perion. ClientConnect's obligations under the facility were assumed by Perion in the context of the merger. Principal on the loan is payable in twelve equal quarterly instalments beginning March 2019 and maturing on December 31, 2021. The interest on the loan is at the rate of three-month LIBOR plus 5.7% per annum, payable quarterly. The credit facility is secured by liens on the assets of Perion and Undertone and is guaranteed by Undertone. The guarantee by Undertone is limited to $33,000. Financial covenants for the loan facility are tested at the level of Perion on a consolidated basis.
On March 8, 2021, the Company early repaid the full amount of its loan facility with bank Mizrachi of a principal amount of $8,333 together with the accumulated interest up to this date as per the agreement.
NOTE 10: LEASES
In January 2014, the Company entered into a lease agreement for new corporate offices in Holon, Israel. The lease expires in , with an option by the Company to extend for two additional terms of 24 months each. The Company sublease part of the office to three different sub-tenants.
In June 2018, Undertone entered into a lease agreement for its office at World Trade Center (WTC) New York. The lease expires in May 2026. Additionally, the Company may choose an early termination in 2024.
In January 2019, the Company’s French subsidiary entered into a lease agreement for its office at Paris, France. The Company chose an early termination during December 2021.
Certain other facilities of the Company are rented under operating lease agreements, which expire on various dates, the latest of which is in 2023. The Company recognizes rent expense under such arrangements on a straight-line basis.
The Company's capitalized operating lease agreements have remaining lease terms ranging from 0.67 year to 4.33 years.
The following table represents the weighted-average remaining lease term and discount rate:
|
|
Year ended |
| |
|
|
December 31, 2021 |
| |
Weighted average remaining lease term |
|
3.72 Years |
| |
Weighted average discount rate |
|
7.67% |
|
The discount rate was determined based on the estimated collateralized borrowing rate of the Company, adjusted to the specific lease term and location of each lease.
F - 29
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Maturities of operating lease liabilities were as follows:
Year ending December 31, |
|
|
| |
2022 |
|
|
4,485 |
|
2023 |
|
|
4,104 |
|
2024 |
|
|
4,101 |
|
2025 |
|
|
2,057 |
|
Thereafter |
|
|
622 |
|
|
|
|
|
|
Total lease payments *) |
|
|
15,369 |
|
|
|
|
|
|
Less – imputed interest |
|
|
(1,980 |
) |
|
|
|
|
|
Present
value of lease liabilities |
|
$ |
13,389 |
|
*) Total lease payments have not been reduced by sublease rental payments of $5,838 due in the future under non-cancelable subleases.
Facilities leasing expenses (net) in the years 2021, 2020 and 2019 were $4,441, $3,493, and $3,076 respectively. Out of which, Sublease income amounted to $2,838, $2,682 and $2,213 in the years 2021, 2020 and 2019, respectively.
Cash paid for amounts included in measurement of lease liabilities during 2021 was $8,465.
NOTE 11:COMMITMENT AND CONTINGENT LIABILITIES
a.Contingent purchase obligation
On November 30, 2012, the Company completed the acquisition of 100% of Sweet IM’s shares. Pursuant to the terms of the Share Purchase Agreement (“SPA”) between the Company and SweetIM, the Company was obligated to pay SweetIM's shareholders, among other payments, a payment of up to $7,500 in cash in May 2014 if certain milestones were met (the “Contingent Payment”). The milestones were based on the Company's GAAP revenues in 2013, and the absence of certain changes in the industry in which the Company operates. On May 28, 2014, the Company paid $2,500 in respect of the Contingent Payment. Following such payment, on June 22, 2014, SweetIM’s Shareholders’ representative notified the Company claiming that the Company owes SweetIM’s shareholders the entire Contingent Payment. In April 2015, pursuant to the SPA, an arbitration process with respect to this claim has commenced in Israel. Based on the August 2018 ruling of the arbitrator, the remaining balance of the Contingent Payment shall be paid to SweetIM's shareholders in 3 equal installments, the last of which was paid during January 2019.
b.Legal Matters
On December 22, 2015, Adtile Technologies Inc. filed a lawsuit against the Company and Intercept Interactive Inc. (“Intercept”), a subsidiary of Interactive Holding Corp., in the United States District Court for the District of Delaware. The lawsuit alleges various causes of action against Perion and Undertone related to Undertone’s alleged unauthorized use and misappropriation of Adtile’s proprietary information and trade secrets. Adtile is seeking injunctive relief and, unspecified monetary damages. On June 23, 2016, the court denied Adtile’s motion for a preliminary injunction. On June 24, 2016, the court (i) granted the Company’s motion to dismiss, and (ii) granted Intercept’s motion to stay the action and compel arbitration. In November 2017, the court dismissed the case for administrative reasons, since Adtile had not commenced arbitration proceedings. The Company is still unable to predict the outcome or range of possible loss as of the date of these financial statements, since to date Adtile had not commenced arbitration procedures. Regardless, the Company believes it has strong defenses against this lawsuit and intends to defend against it vigorously.
In addition, from time to time, the Company is party to other various legal proceedings, claims and litigation that arise in the ordinary course of business. It is the opinion of management that the ultimate outcome of these matters will not have a material adverse effect on the Company's financial position, results of operations or cash flows.
NOTE 12:SHAREHOLDERS' EQUITY
a.Ordinary shares
The ordinary shares of the Company entitle their holders to voting rights, the right to receive cash dividend and the right to a share in excess assets upon liquidation of the Company.
b.Share Options, Restricted Share Units and Warrants
In 2003, the Company's Board of Directors approved the 2003 Equity Incentive Plan (the "Plan") for an initial term of ten years from adoption and on December 9, 2012, extended the term of the Plan for an additional ten years. On August 7, 2013, the Company’s Board of Directors approved amendments to the Plan which include the ability to grant RSUs and restricted shares.
The contractual term of the share options is generally no more than seven years and the vesting period of the options and RSUs granted under the Plan is between one and three years from the date of grant. The rights of the ordinary shares issued upon the exercise of share options or RSUs are identical to those of the other ordinary shares of the Company.
As of December 31, 2021, there were 625,477 ordinary shares reserved for future share-based awards under the Plan.
The following table summarizes the activities for the Company’s service-based share options for the year ended December 31, 2021:
Weighted average |
||||||||||||||||
|
|
Number of options |
|
|
Exercise price |
|
|
Remaining contractual term (in years) |
|
|
Aggregate intrinsic value |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Outstanding at January 1, 2021 |
|
|
4,527,047 |
|
|
$ |
3.24 |
|
|
|
21.79 |
|
|
$ |
42,942 |
|
Granted |
|
|
1,567,323 |
|
|
|
1.22 |
|
|
|
- |
|
|
|
- |
|
Exercised |
|
|
(2,219,157 |
) |
|
|
3.11 |
|
|
|
- |
|
|
|
39,395 |
|
Cancelled |
|
|
(300,812 |
) |
|
|
4.82 |
|
|
|
- |
|
|
|
- |
|
Outstanding at December 31, 2021 |
|
|
3,574,401 |
|
|
$ |
2.46 |
|
|
|
45.90 |
|
|
$ |
77,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2021 |
|
|
968,706 |
|
|
$ |
4.45 |
|
|
|
4.27 |
|
|
$ |
18,984 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and expected to vest at December 31, 2021 |
|
|
3,432,075 |
|
|
$ |
2.54 |
|
|
|
2.13 |
|
|
$ |
73,693 |
|
The weighted-average grant-date fair value of options granted during the years ended December 31, 2021, 2020 and 2019 was $18.55, $3.14, and $1.75, respectively.
F - 31
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The aggregate intrinsic value of the outstanding share options at December 31, 2021, represents the intrinsic value of all outstanding options since they were all in-the-money as of such date.
The number of options expected to vest reflects an estimated forfeiture rate.
The following table summarizes the activities for the Company’s performance-based share options for the year ended December 31, 2021:
|
Weighted average | |||||||||||||||
|
Number
of |
Exercise price |
Remaining |
Aggregate
intrinsic |
||||||||||||
|
||||||||||||||||
Outstanding at January 1, 2021 |
769,311 | $ | 2.78 | 40.53 | 7,653 | |||||||||||
Granted |
436,963 | - | - | - | ||||||||||||
Exercised |
(15,000 | ) | - | - | 228 | |||||||||||
Cancelled |
(287,374 | ) | - | - | - | |||||||||||
|
||||||||||||||||
Outstanding at December 31, 2021 |
903,900 | $ | 2.37 | 46.16 | $ | 19,599 | ||||||||||
|
||||||||||||||||
Exercisable at December 31, 2021 |
300,000 | $ | 5.35 | 5.58 | $ | 5,610 | ||||||||||
|
||||||||||||||||
Vested and expected to vest at December 31, 2021 |
903,400 | $ | 2.37 | 2.50 | $ | 19,526 |
The weighted-average grant-date fair value of options granted during the year ended December 31, 2021 and 2020 was $20.03 and $3.12, respectively. No performance-based options were granted during 2019.
The aggregate intrinsic value of the outstanding performance-based options at December 31, 2021, represents the intrinsic value of all outstanding options since they were all in-the-money as of such date.
F - 32
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes additional information regarding outstanding and exercisable service-based options under the Company's share Option Plan as of December 31, 2021:
Outstanding |
Exercisable |
|||||||||||||||||||||||||
Range of exercise price |
Number of options |
Weighted average remaining contractual life (years) |
Weighted average exercise price |
Number of options |
Weighted average remaining contractual life (years) |
Weighted average exercise price |
||||||||||||||||||||
$ |
0.01
|
2,009,425
|
78.46
|
$ |
0.01
|
8,658
|
78.18
|
$ |
0.01
|
|||||||||||||||||
2.52
– 3.38
|
521,053
|
3.01
|
3.16
|
456,651
|
2.94
|
3.16
|
||||||||||||||||||||
4.23
– 5.90
|
493,433
|
4.45
|
5.01
|
287,651
|
4.02
|
4.92
|
||||||||||||||||||||
6.23
– 8.34
|
450,989
|
4.49
|
6.77
|
214,413
|
4.45
|
6.72
|
||||||||||||||||||||
$ |
12.02
– 21.35
|
99,501
|
6.24
|
16.28
|
1,333
|
6.11
|
12.02
|
|||||||||||||||||||
3,574,401
|
45.90
|
$ |
2.46
|
968,706
|
4.27
|
$ |
4.45
|
The following table summarizes additional information regarding outstanding and exercisable performance-based options under the Company's share Option Plan as of December 31, 2021:
|
|
|
Outstanding |
|
|
Exercisable |
|
||||||||||||||||||||
Range of exercise price |
|
|
Number of options |
|
|
Weighted
average remaining contractual |
|
|
Weighted average exercise price |
|
|
Number of options |
|
|
Weighted
average remaining contractual |
|
|
Weighted average exercise price |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
$ |
0.01 |
|
|
|
503,900 |
|
|
|
78.37 |
|
|
$ |
0.01 |
|
|
|
- |
|
|
|
- |
|
|
$ |
- |
|
|
$ |
5.35 |
|
|
|
400,000 |
|
|
|
5.58 |
|
|
|
5.35 |
|
|
|
300,000 |
|
|
|
5.58 |
|
|
|
5.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
903,900 |
|
|
|
46.16 |
|
|
$ |
2.37 |
|
|
|
300,000 |
|
|
|
5.58 |
|
|
$ |
5.35 |
|
The Company recognized share-based compensation expenses related to its share-based awards in the consolidated statements of operations as follows:
|
|
Year ended December 31, |
| |||||||||
|
|
2021 |
|
|
2020 |
|
|
2019 |
| |||
|
|
|
|
|
|
|
|
|
| |||
Cost of revenues |
|
$ |
171 |
|
|
$ |
102 |
|
|
$ |
164 |
|
Research and development |
|
|
946 |
|
|
|
887 |
|
|
|
488 |
|
Selling and marketing |
|
|
3,248 |
|
|
|
1,898 |
|
|
|
515 |
|
General and administrative |
|
|
2,620 |
|
|
|
1,560 |
|
|
|
1,126 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
6,985 |
|
|
$ |
4,447 |
|
|
$ |
2,293 |
|
As of December 31, 2021, there was $16,293 of unrecognized compensation cost related to outstanding options. These amounts are expected to be recognized over a weighted-average period of 1.59 years related to outstanding options. To the extent the actual forfeiture rate is different from what has been estimated, share-based compensation related to these awards will differ from the initial expectations.
F - 33
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
c.As part of the acquisition of Undertone, the Company granted warrants to purchase 66,666 ordinary shares, at a weighted average exercise price of $9.09 per share, to a third-party vendor that provides development services to Undertone. The warrants were exercisable until December 27, 2020 and wasn’t exercised by this date. No expense incurred in 2020. The total expense incurred in 2019 was $59.
NOTE 13:FINANCIAL INCOME (EXPENSE), NET
|
|
Year ended December 31, |
| |||||||||
|
|
2021 |
|
|
2020 |
|
|
2019 |
| |||
|
|
|
|
|
|
|
|
|
| |||
Financial income: |
|
|
|
|
|
|
|
|
| |||
Interest income |
|
$ |
539 |
|
|
$ |
287 |
|
|
$ |
624 |
|
Change in fair value of SWAP |
|
|
- |
|
|
|
- |
|
|
|
380 |
|
Other |
|
|
- |
|
|
|
45 |
|
|
|
147 |
|
|
|
$ |
539 |
|
|
$ |
332 |
|
|
$ |
1,151 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial expense: |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation losses |
|
$ |
(528 |
) |
|
$ |
(1,537 |
) |
|
$ |
(950 |
) |
Interest expense on debts |
|
|
(119 |
) |
|
|
(1,045 |
) |
|
|
(2,334 |
) |
Change in fair value of convertible debt |
|
|
- |
|
|
|
- |
|
|
|
(600 |
) |
Bank charges and other |
|
|
(473 |
) |
|
|
(388 |
) |
|
|
(737 |
) |
|
|
$ |
(1,120 |
) |
|
$ |
(2,970 |
) |
|
$ |
(4,621 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial expense, net |
|
$ |
(581 |
) |
|
$ |
(2,638 |
) |
$ |
(3,470 |
) |
NOTE 14:INCOME TAXES
|
|
Year
ended December 31, |
| |||||||||
|
|
2021
|
|
|
2020
|
|
|
2019
|
| |||
|
|
|
|
|
|
|
|
|
| |||
Domestic
|
|
$
|
38,854
|
|
|
$
|
12,175
|
|
|
$
|
21,095
|
|
Foreign
|
|
|
6,461
|
|
|
|
(2,560
|
)
|
|
|
(6,557
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
45,315
|
|
|
$
|
9,615
|
|
|
$
|
14,538
|
|
F - 34
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
b.Taxes on income
|
|
Year
ended December 31, |
| |||||||||
|
|
2021
|
|
|
2020
|
|
|
2019
|
| |||
|
|
|
|
|
|
|
|
|
| |||
Current
taxes |
|
$
|
7,891
|
|
|
$
|
2,498
|
|
|
$
|
3,816
|
|
Taxes
in respect of previous years |
|
|
1,476
|
|
|
|
6
|
|
|
|
(129
|
)
|
Deferred
tax benefit |
|
|
(2,758
|
)
|
|
|
(3,114
|
)
|
|
|
(2,042
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
6,609
|
|
|
$
|
(610
|
)
|
|
$
|
1,645
|
|
|
|
Year
ended December 31, |
| |||||||||
|
|
2021
|
|
|
2020
|
|
|
2019
|
| |||
|
|
|
|
|
|
|
|
|
| |||
Domestic
|
|
$
|
8,060
|
|
|
$
|
1,031
|
|
|
$
|
3,055
|
|
Foreign
|
|
|
(1,451
|
)
|
|
|
(1,641
|
)
|
|
|
(1,410
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
6,609
|
|
|
$
|
(610
|
)
|
|
$
|
1,645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
taxes |
|
$
|
7,447
|
|
|
$
|
1,466
|
|
|
$
|
3,519
|
|
Deferred tax benefit |
|
|
(980
|
)
|
|
|
(984
|
)
|
|
|
(197
|
)
|
Taxes
in respect of previous years |
|
|
1,593
|
|
|
|
549
|
|
|
|
(267
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
- Domestic |
|
$
|
8,060
|
|
|
$
|
1,031
|
|
|
$
|
3,055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
taxes |
|
$
|
444
|
|
|
$
|
1,032
|
|
|
$
|
297
|
|
Deferred
tax benefit |
|
|
(1,778
|
)
|
|
|
(2,130
|
)
|
|
|
(1,845
|
)
|
Taxes
in respect of previous years |
|
|
(117
|
)
|
|
|
(543
|
)
|
|
|
138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
- Foreign |
|
$
|
(1,451
|
)
|
|
$
|
(1,641
|
)
|
|
$
|
(1,410
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
income tax expense (benefit) |
|
$
|
6,609
|
|
|
$
|
(610
|
)
|
|
$
|
1,645
|
|
|
|
December
31, |
| |||||
|
|
2021
|
|
|
2020
|
| ||
Deferred
tax assets: |
|
|
|
|
|
| ||
Net
operating loss and other losses carry forwards |
|
$
|
4,955
|
|
|
$
|
4,049
|
|
Research
and development |
|
|
3,629
|
|
|
|
2,287
|
|
Intangible
assets |
|
|
(3,251
|
)
|
|
|
1,476
|
|
Other
temporary differences mainly relating to reserve and allowances |
|
|
2,539
|
|
|
|
1,553
|
|
Deferred
tax assets, before valuation allowance |
|
$
|
7,872
|
|
|
$
|
9,365
|
|
Valuation
allowance |
|
|
2,644
|
|
|
|
2,254
|
|
Total
deferred tax assets, net |
|
$
|
5,228
|
|
|
$
|
7,111
|
|
|
|
|
|
|
|
|
|
|
Domestic:
|
|
|
|
|
|
|
|
|
Long term deferred tax asset (liability), net |
|
$
|
(732
|
)
|
|
$ |
2,034
|
|
|
|
$
|
(732
|
) |
|
$
|
2,034
|
|
|
|
|
|
|
|
|
|
|
Foreign: |
||||||||
Long term deferred tax asset, net |
|
$
|
5,960
|
|
|
$
|
5,077
|
|
|
|
$
|
5,960
|
|
|
$
|
5,077
|
|
|
|
|
|
|
|
|
|
|
Total
deferred tax asset, net |
|
$
|
5,228
|
|
|
$
|
7,111
|
|
F - 36
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
Year
ended December 31, |
| |||||||||
|
|
2021
|
|
|
2020
|
|
|
2019
|
| |||
|
|
|
|
|
|
|
|
|
| |||
Income
before taxes on income |
|
$
|
45,315
|
|
|
$
|
9,615
|
|
|
$
|
14,538
|
|
Statutory
tax rate in Israel |
|
|
23.0
|
%
|
|
|
23.0
|
%
|
|
|
23.0
|
%
|
Theoretical
tax expense |
|
$
|
10,422
|
|
|
$
|
2,211
|
|
|
$
|
3,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
(decrease) in tax expenses resulting from: |
|
|
|
|
|
|
|
|
|
|
|
|
"Preferred
Enterprise" benefits * |
|
|
(5,610
|
)
|
|
|
(1,701
|
)
|
|
|
(2,973
|
)
|
Non-deductible
expenses |
|
|
710
|
|
|
|
2,409
|
|
|
|
374
|
|
Tax
adjustment in respect of different tax rate of foreign subsidiaries |
|
|
226
|
|
|
|
228
|
|
|
|
397
|
|
Deferred
taxes related to prior years |
|
|
(922
|
)
|
|
|
(1,576
|
)
|
|
|
-
|
|
Previous years taxes |
|
|
1,476
|
|
|
|
(147
|
)
|
|
|
|
|
Change
in valuation allowance |
|
|
390
|
|
|
|
(2,097
|
)
|
|
|
421
|
|
Other
|
|
|
(83
|
)
|
|
|
63
|
|
|
|
82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxes
on income |
|
$
|
6,609
|
|
|
$
|
(610
|
)
|
|
$
|
1,645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Benefit per ordinary share from "Preferred Enterprise" status: |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.16
|
|
|
$
|
0.06
|
|
|
$
|
0.11
|
|
Diluted
|
|
$
|
0.15
|
|
|
$
|
0.06
|
|
|
$
|
0.11
|
|
F - 37
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Company assessed the criteria for qualifying as a “Preferred Technological Enterprise,” status and concluded that the Company and certain of its Israeli subsidiaries are eligible to the above-mentioned benefits.
F - 38
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
December
31, |
| |||||
|
|
2021
|
|
|
2020
|
| ||
|
|
|
|
|
|
| ||
Balance
at the beginning of the year |
|
$
|
4,525
|
|
|
$
|
4,232
|
|
Increase related to prior year tax positions, net |
|
|
1,285
|
|
|
|
293
|
|
Increase related to current year tax positions, net |
|
|
1,118
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Balance
at the end of the year |
|
$
|
6,928
|
|
|
$
|
4,525
|
|
As of December 31, 2021, the Company’s U.S. subsidiaries have Federal net operating loss carry-forwards of $6,752 and States net operating loss carry-forwards of $5,883. Net operating losses generated in fiscal years prior to 2018 in the U.S. may be carried forward through periods which will expire in the years starting from
up to . Net operating losses generated in 2018 and subsequent years in the U.S. may be carried forward indefinitely for Federal tax purposes yet are subject to certain limitations. Different states have varying rules regarding utilization and expiration of net operating losses. Utilization of U.S. net operating losses may be subject to substantial annual limitation due to the "change in ownership" provisions of the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration of net operating losses before utilization.As of December 31, 2021, the Company’s European subsidiaries have net operating loss carry-forwards of $7,293 which may be carried forward indefinitely.
The Company has accumulated net operating losses for Israeli tax purposes as of December 31, 2021, in the amount of approximately $8,534 which may be carried forward and offset against taxable income in the future for an indefinite period. The net operating losses may be offset against taxable income annually with a limitation of up to 20% of the total accumulated losses but not more than 50% of the Company's taxable income. The limitation applies during the years 2020-2024. In addition, the Company has accumulated capital losses for tax purposes as of December 31, 2021, of approximately $1,643, which may be carried forward and offset against taxable capital gains in the future for an indefinite period, but are limited as stated above.
In March 2020, in response to the COVID-19 pandemic the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted. The CARES Act comprises of a spending package and tax reliefs in order to reduce the impact of the pandemic. The tax portion of the CARES Act includes several corporate tax relief provisions such as: eliminating the taxable income limitation and allowing carryback to the prior 5 years for net operating losses (“NOLs”) arising in 2018, 2019 and 2020; increasing the business interest deduction limitation from 30% to 50%; accelerated refunds of AMT credits and other provisions.
F - 39
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15:EARNINGS PER SHARE
The table below presents the computation of basic and diluted net earnings per common share:
Year ended December 31, | ||||||||||||
|
|
2021 |
|
|
2020 |
|
|
2019 |
| |||
Numerator: |
|
|
|
|
|
|
|
|
| |||
Net income attributable to ordinary shares - basic |
|
$ |
38,706 |
|
|
$ |
10,225 |
|
|
$ |
12,893 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income - diluted |
|
$ |
38,706 |
|
|
$ |
10,225 |
|
|
$ |
12,893 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
Number of ordinary shares outstanding during the year |
|
|
34,397,134 |
|
|
|
26,687,145 |
|
|
|
25,965,357 |
|
Weighted average effect of dilutive securities: |
|
|
|
|
|
|
|
|
|
|
|
|
Employee options and restricted share units |
|
|
3,432,591 |
|
|
|
2,110,602 |
|
|
|
392,228 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted number of ordinary shares outstanding |
|
|
37,829,725 |
|
|
|
28,797,747 |
|
|
|
26,357,585 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net earnings per ordinary share |
|
$ |
1.13 |
|
|
$ |
0.38 |
|
|
$ |
0.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net earnings per ordinary share |
|
$ |
1.02 |
|
|
$ |
0.36 |
|
|
$ |
0.49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential ordinary shares equivalents excluded because their effect would have been anti-dilutive |
|
|
1,035,307 |
|
|
|
3,178,024 |
|
|
|
4,087,559 |
NOTE 16:MAJOR CUSTOMERS
A substantial portion of the Company's revenue is derived from search fees and online advertising, the market for which is highly competitive and rapidly changing. Significant changes in this industry or in customer buying behavior would adversely affect the Company’s operating results.
The following table sets forth the customers that represent 10% or more of the Company’s total revenues in each of the years presented below:
|
|
Year ended December 31, |
| |||||||||
|
|
2021 |
|
|
2020 |
|
|
2019 |
| |||
|
|
|
|
|
|
|
|
|
| |||
Customer A |
|
|
37% |
|
|
|
51% |
|
|
|
63% |
F - 40
PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17:GEOGRAPHIC INFORMATION
The Company operates as one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the Chief Operating Decision Maker, who is the Chief Executive Officer, in deciding how to allocate resources and assessing performance. Over the past few years, the Company has completed several acquisitions. These acquisitions have allowed the Company to expand its offerings, presence and reach in various markets. While the Company has offerings in multiple enterprise markets, the Company’s business operates in one segment which is the High Impact Advertising solutions, and the Company’s Chief Operating Decision Maker evaluates the Company’s financial information and resources and assesses the performance of these resources on a consolidated basis.
The following table presents the total revenues for the years ended December 31, 2021, 2020 and 2019, allocated to the geographic areas in which they were generated:
|
|
Year ended December 31, |
| |||||||||
|
|
2021 |
|
|
2020 |
|
|
2019 |
| |||
|
|
|
|
|
|
|
|
|
| |||
North America (mainly U.S.) |
|
$ |
423,571 |
|
|
$ |
272,220 |
|
|
$ |
195,903 |
|
Europe |
|
|
48,109 |
|
|
|
49,222 |
|
|
|
50,669 |
|
Other |
|
|
6,818 |
|
|
|
6,621 |
|
|
|
14,878 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
478,498 |
|
|
$ |
328,063 |
|
|
$ |
261,450 |
|
The total revenues are attributed to geographic areas based on the location of the end-users.
The following table presents the locations of the Company’s long-lived assets as of December 31, 2021 and 2020:
F - 41
Incorporation
by Reference | |||||||
Exhibit
No. |
Description |
Form |
File
No. |
Exhibit
No. |
Filing
Date |
Filed
/ Furnished | |
* | |||||||
* | |||||||
* | |||||||
20-F |
000-51694 |
4.1 |
April
29, 2013 |
||||
6-k |
000-51694 |
99.9 |
October
15, 2013 |
||||
* | |||||||
20-F |
000-51694 |
4.16 |
March
19, 2019 |
||||
20-F |
000-51694 |
4.17 |
March
27, 2018 |
||||
20-F |
000-51694 |
4.6 |
March
25, 2021 |
||||
20-F |
000-51694 |
4.7 |
March
25, 2021 |
||||
20-F |
000-51694 |
4.8 |
March
16, 2020 |
||||
* | |||||||
* | |||||||
* | |||||||
** | |||||||
** | |||||||
* | |||||||
101.INS |
Inline
XBRL Instance Document | ||||||
101.SCH |
Inline
XBRL Taxonomy Extension Schema Document | ||||||
101.CAL |
Inline
XBRL Taxonomy Extension Calculation Linkbase Document | ||||||
101.DEF |
Inline
XBRL Taxonomy Definition Linkbase Document | ||||||
101.LAB |
Inline
XBRL Taxonomy Extension Label Linkbase Document | ||||||
101.PRE |
Inline
XBRL Taxonomy Extension Presentation Linkbase Document | ||||||
104** |
Inline
XBRL for the cover page of this Annual Report on Form 20-F (embedded within the Inline XBRL document) |
* |
Filed herewith. |
** |
Furnished herewith. |
*** |
Certain confidential
information contained in this document, marked by brackets, was omitted because it is both (i) not material and (ii) would likely cause
competitive harm to the Company if publicly disclosed. “[***]” indicates where the information has been omitted from this
exhibit. |
† |
Indicates management
contract or compensatory plan or arrangement. |
86
PERION NETWORK LTD. |
|||
|
|||
By: |
/s/ Doron Gerstel |
||
Name: Doron Gerstel |
|||
Title: Chief Executive
Officer |
|||
|
|||
By: |
/s/ Maoz Sigron |
||
Name: Maoz Sigron |
|||
Title: Chief Financial
Officer |
1. |
Name of the Company: Perion Network Ltd.
|
2. |
The objective for which the Company was formed:
|
(a) |
The development, manufacture and marketing of software.
|
(b) |
Any other objective determined by the Company’s board of directors.
|
3. |
The liability of the shareholders is limited.
|
4. |
The share capital of the Company shall be NIS 1,800,000, consisting of 60,000,000 ordinary shares, each having a nominal value of NIS 0.03.
|
5. |
Amendments to this Memorandum of Association shall be adopted if approved by the holders of a simple majority of the voting power of the Company represented at
the meeting, in person or by proxy, and voting thereon.
|
1.
|
In these Articles, unless the context otherwise requires:
|
2.
|
The Company is a public company as such term is defined in Section 1 of the Law. The liability of the Company’s Shareholders is limited and,
accordingly, each Shareholder’s responsibility for the Company’s obligations shall be limited to the payment of the nominal value of the shares held by such Shareholder, subject to the provisions of these Articles and the Law.
|
3.
|
The Company's objectives are:
|
3.1.
|
The development, manufacture and marketing of software;
|
3.2.
|
Any other objective as determined by the Board.
|
4.
|
Share Capital
|
5.
|
Allotment of Shares
|
6.
|
Bearer Shares
|
7.
|
Special Rights
|
8.
|
Consolidation and Subdivision: Fractional Shares
|
8.1.
|
From time to time, by resolution of the Shareholders, subject to the Articles and the Law:
|
8.1.1.
|
Consolidate all or any of its issued or unissued share capital into shares bearing a per share nominal value that is larger than the per share
nominal value of its existing shares;
|
8.1.2.
|
Cancel any shares that at the date of the adoption of such resolution have not been acquired or agreed to be acquired by any person, and reduce the
amount of its share capital by the amount of the shares so cancelled;
|
8.1.3.
|
Subdivide its shares (issued or unissued) or any of them, into shares of smaller per share nominal value than is fixed by these Articles. The
resolution pursuant to which any share is subdivided may determine that, as among the holders of the shares resulting from such subdivision, one or more of such shares may, as compared with the others, have special rights, or be subject to
any such restrictions, as the Company has power to attach to unissued or new shares;
|
8.1.4.
|
Reduce its share capital in any manner, including with and subject to any incidental authorities and/or consents required by law.
|
8.2.
|
Upon any consolidation or subdivision of shares that may result in fractional shares, the Board may settle any difficulty that may arise with
regard thereto as it deems fit, including, without limitation, by:
|
8.2.1.
|
Allotting, in contemplation of, or subsequent to, such consolidation or other action, such shares or fractional shares sufficient to preclude or
remove fractional shareholdings;
|
8.2.2.
|
Notwithstanding Section 295 of the Law, making such arrangements for the sale or transfer of the fractional shares to such other shareholders of
the Company at such times and at such price as the Board deems fit so as to most expeditiously preclude or remove any fractional shareholdings and cause the transferees of such fractional shares to pay the full fair market value thereof to
the transferors, and the Board is hereby authorized to act as agent for the transferors and transferees with power of substitution and off-setting for purposes of implementing the provisions of this sub-Article;
|
8.2.3.
|
To the extent as may be permitted under the Law, redeeming or purchasing such fractional shares sufficient to preclude and remove such fractional
shareholding; and
|
8.2.4.
|
Determining, as to the holders of shares so consolidated, which issued shares shall be consolidated into each share of a larger nominal value.
|
9.
|
Increase of Capital
|
9.1.
|
The Company, by resolution of the Shareholders, may from time to time, whether or not all the shares then authorized have been issued, and whether
or not all the shares theretofore issued have been fully called up for payment, increase its authorized share capital. Any such new share capital shall be of such amount and divided into shares of such nominal values and (subject to any
special rights then attached to any existing class of shares) bear such rights or preferences or be subject to such conditions or restrictions (if any) as the resolution approving such share capital increase shall provide.
|
9.2.
|
Except so far as otherwise provided in such resolution or pursuant to the Articles, such new shares shall be subject to all the provisions of the
Articles applicable to the shares of such class included in the existing share capital.
|
10.
|
Modification of Class Rights
|
10.1.
|
If at any time the share capital of the Company is divided into different classes of shares, the right attached to any class (unless otherwise
provided by the terms of issue of the shares of that class) may be modified only upon consent of a separate general meeting of the holders of the shares of that class. The provisions of these Articles relating to general meetings of
Shareholders shall apply mutatis mutandis to every such separate general class meeting.
|
10.2.
|
Unless otherwise provided by these Articles, the increase in an authorized class of shares, or the issuance of additional shares thereof out of the
authorized and unissued share capital, shall not be deemed, for the purposes of Article 10.1 to vary, modify or abrogate the rights attached to previously issued shares of such class or of any other class of shares.
|
11.
|
Redeemable Shares
|
12.
|
Issuance of Share Certificates: Replacement, of Lost. Certificates
|
12.1.
|
Share certificates, when issued, shall be issued, upon the written request of a Shareholder, under the Seal and shall bear the signature of any
person or persons so authorized by the Board.
|
12.2.
|
Each Shareholder shall be entitled to one or more numbered certificate(s) for all the shares of any class registered in his name, each of which
shall state the number of shares represented by the certificate, their serial numbers and the amount paid on account of their nominal value.
|
12.3.
|
A share certificate registered in the Shareholders Register in the names of two or more persons shall be delivered to the person first named in the
Shareholders Register in respect of such co-ownership and the Company shall not be obligated to issue more than one certificate to all of the joint holders.
|
12.4.
|
A share certificate that has been defaced, lost or destroyed, may be replaced, and the Company shall issue a new certificate to replace such
defaced, lost or destroyed certificate upon payment of such fee, and upon the furnishing of such evidence of ownership and such indemnity, as the Board, in its discretion, deems fit.
|
13.
|
Registered Holder
|
14.
|
Payment in Installment
|
15.
|
Calls on Shares
|
15.1.
|
The Board may, from time to time, as in its discretion it deems fit, make calls for payment upon Shareholders in respect of any sum which has not
been paid up in respect of shares held by such Shareholders and that is not, pursuant to the terms of allotment or issue of such shares or otherwise, payable at a fixed time. Each Shareholder shall pay the amount of every call so made upon
him (and of each installment thereof if the same is payable in installments), to the person(s) and at the time(s) and place(s) designated by the Board. Unless otherwise stipulated in the resolution of the Board (and in the notice referred to
below), each payment in response to a call shall be deemed to constitute a pro rata payment on account of all the shares in respect of which such call was made.
|
15.2.
|
Notice of any call for payment by a Shareholder shall be given in writing to such Shareholder not less than 14 days prior to the time of payment
fixed in such notice, and shall specify the time and place of payment, and the person to whom such payment is to be made. Prior to the time for any such payment fixed in a notice of a call given to a Shareholder, the Board may in its
discretion, by notice in writing to such Shareholder, revoke such call in whole or in part, extend the time fixed for payment thereof, or designate a different place of payment or person to whom payment is to be made. In the event of a call
payable in installments, only one notice thereof need be given.
|
15.3.
|
If, pursuant to the terms of allotment or issue of a share or otherwise, an amount is made payable at a fixed time (whether on account of such
share or by way of premium), such amount shall be payable at such time as if it were payable by virtue of a call made by the Board and for which notice was given in accordance with this Article 15, and the provisions of these Articles with
regard to calls (and the non-payment thereof) shall be applicable to such amount (and the non-payment thereof).
|
15.4.
|
Joint holders of a share shall be jointly and severally liable to pay all calls for payment in respect of such share and all interest payable
thereon.
|
15.5.
|
Any amount called for payment that is not paid when due shall bear interest from the date fixed for payment until actual payment thereof, at such
rate and payable at such time(s) as the Board may prescribe.
|
15.6.
|
The Board may provide for differences among the allottees of such shares as to the amounts and times for payment of calls for payment in respect of
such shares.
|
16.
|
Prepayment
|
17.
|
Forfeiture and Surrender
|
17.1.
|
If any Shareholder fails to pay an amount payable by virtue of a call, or interest thereon as provided for in accordance herewith, on or before the
day fixed for payment of the same, the Board may, at any time after the day fixed for such payment, so long as such amount (or any portion thereof) or interest thereon (or any portion thereof) remains unpaid, forfeit all or any of the shares
in respect of which such payment was called for. All expenses incurred by the Company in attempting to collect any such amount or interest thereon, including, without limitation, attorneys’ fees and costs of legal proceedings, shall be added
to, and shall, for all purposes (including the accrual of interest thereon), constitute a part of, the amount payable to the Company in respect of such call.
|
17.2.
|
Upon the adoption of a resolution as to the forfeiture of a Shareholder’s share, the Board shall cause notice thereof to be given to such
Shareholder, which notice shall state the place that payment is to be made and that, in the event of the failure to pay the entire amount so payable by a date specified in the notice (which date shall be not less than seven days after the
date such notice is given and which may be extended by the Board), such shares shall be ipso facto forfeited; provided, however, that, prior to such date, the
Board may nullify such resolution of forfeiture, but no such nullification shall prevent the Board from adopting a further resolution of forfeiture in respect of the non-payment of the same amount.
|
17.3.
|
Without derogating from Articles 17.1 and 17.2 hereof, whenever shares are forfeited as herein provided, any and all dividends declared in respect
of such shares and not actually paid shall be deemed to have been forfeited at the same time as the forfeiture of such shares.
|
17.4.
|
The Company, by resolution of the Board, may accept the voluntary surrender of any share. A surrendered share shall be treated as if it had been
forfeited.
|
17.5.
|
Any share forfeited or surrendered as provided herein shall become the property of the Company, and the same, subject to the provisions of these
Articles, may be sold, re-allotted or otherwise disposed of, as the Board deems fit.
|
17.6.
|
Any Shareholder whose shares have been forfeited or surrendered shall cease to be a Shareholder in respect of the forfeited or surrendered shares,
but shall, notwithstanding, be liable to pay, and shall forthwith pay, to the Company, all calls, interest and expenses owing upon or in respect of such shares at the time of forfeiture or surrender, together with interest thereon from the
time of forfeiture or surrender until actual payment, at the rate prescribed in Article 15.5 above, and the Board, in its discretion, may, but shall not be obligated to, enforce the payment of such monies, or any part thereof. In the event of
such forfeiture or surrender, the Company, by resolution of the Board, may accelerate the date(s) of payment of any or all amounts then owing to the Company by the Shareholder in question (but not yet due) in respect of all shares owned by
such Shareholder, solely or jointly with another.
|
17.7.
|
The Board may at any time, before any share so forfeited or surrendered shall have been sold, re-allotted or otherwise disposed of, nullify the
forfeiture or surrender on such conditions as it deems fit, but no such nullification shall prevent the Board from re-exercising its powers of forfeiture pursuant to this Article 17.
|
17.8.
|
A declaration in writing by a director or secretary of the Company that a share in the Company has been duly forfeited on the date stated in the
declaration shall be conclusive evidence of the facts therein stated against all persons claiming to be entitled to the share.
|
17.9.
|
The provisions of these Articles as to forfeiture shall apply in the case of non-payment of any sum which, by the terms of issue of a share,
becomes payable at a fixed time, whether on account of the amount of the share, or by way of premium, as if the same had been payable by virtue of a call duly made and notified.
|
18.
|
Lien
|
18.1.
|
Except to the extent the same may be waived or subordinated in writing, the Company shall have a first and paramount lien upon all the shares
registered in the name of each Shareholder (without regard to any equitable or other claim or interest in such shares on the part of any other person), and upon the proceeds of the sale thereof, for his debts or other liabilities to the
Company arising from any amount payable by such Shareholder in respect of any unpaid or partly paid share, whether or not such debt or other liability has matured. Such lien shall extend to all dividends from time to time declared or paid in
respect of such share. Unless otherwise provided, the registration by the Company of a transfer of shares shall be deemed to be a waiver on the part of the Company of the lien (if any) existing on such shares immediately prior to such
transfer.
|
18.2.
|
The Board may cause the Company to sell a share subject to such a lien when the debt or other liability giving rise to such lien has matured, in
such manner and for such sums as the Board deems fit, but no such sale shall be made unless such debt or other liability has not been satisfied within seven days after written notice of the intention to sell shall have been served on such
Shareholder, his executors or administrators.
|
18.3.
|
The net proceeds of any such sale, after payment of the costs thereof, shall be applied in or toward satisfaction of the debts or other liabilities
of such Shareholder in respect of such share (whether or not the same have matured), and the remainder (if any) shall be paid to the Shareholder, his executors, administrators or assigns.
|
19.
|
Sale After Forfeiture or Surrender or in Enforcement, of Lien
|
20.
|
Purchase of the Company’s Shares
|
21.
|
Registration of Transfer
|
21.1.
|
No transfer of shares shall be registered unless a proper writing or instrument of transfer (in any customary form or any other form satisfactory
to the Board) has been submitted to the Company (or its transfer agent), together with the share certificate(s) or such other evidence of title as the Board may reasonably require.
|
21.2.
|
The Board may, in its discretion to the extent it deems necessary and subject to any restrictions in the Law or the rules of any stock exchange
upon which the Ordinary Shares are listed or included for quotation, close the Shareholders Register for registrations of transfers of shares during any year for periods to be determined by the Board, and no registrations in the Shareholders
Register of transfers of shares shall be made by the Company during any such period during which the Shareholders Register is so closed.
|
22.
|
Decedents’ Shares
|
22.1.
|
In case of a share registered in the name of two or more shareholders, the Company may recognize the survivor(s) as the sole owner(s) thereof
unless and until the provisions of Article 22.2 have been effectively invoked.
|
22.2.
|
Any person becoming entitled to a share in consequence of the death of any person, upon producing evidence of the grant of probate or letters of
administration or declaration of succession (or such other evidence as the Board may reasonably deem sufficient), shall be registered as a Shareholder in respect of such share, or may, subject to the regulations as to transfer herein
contained, transfer such share. However, nothing herein shall release the estate of a deceased Shareholder (whether sole or joint) of a share from any obligation to the Company with respect to any share held by the deceased.
|
23.
|
Receivers and Liquidators
|
23.1.
|
The Company may recognize any receiver, liquidator or similar official appointed to wind-up, dissolve or otherwise liquidate a Shareholder that is
an entity, and a trustee, manager, receiver, liquidator or similar official appointed in bankruptcy or in connection with the reorganization of, or similar proceeding with respect to, a Shareholder or its properties, as being entitled to the
shares registered in the name of such Shareholder.
|
23.2.
|
Any such receiver, liquidator or similar official appointed to wind-up, dissolve or otherwise liquidate a Shareholder that is an entity and any
such trustee, manager, receiver, liquidator or similar official appointed in bankruptcy or in connection with the reorganization of, or similar proceedings with respect to, a Shareholder or its properties, upon producing such evidence as the
Board may deem sufficient as to his authority to act in such capacity or under this Article, shall with the consent of the Board (which the Board may grant or refuse in its discretion), be registered as a Shareholder in respect of such
shares, or may, subject to the provisions as to transfer herein contained, transfer such shares.
|
24.
|
Branch Registers
|
25.
|
Record Date for Notices of General Meetings
|
25.1.
|
Notwithstanding any provision of these Articles to the contrary and subject to applicable law, the Board may fix a date, not exceeding 40 days, and
not less than four days, prior to the date of any general meeting of the Shareholders, as the date of which Shareholders entitled to participate and to vote at such meeting shall be determined, and all persons who were holders of record of
voting shares on such date and no others shall be entitled to notice of, participate in and to vote at such meeting. A determination of Shareholders of record entitled to participate and to vote at any meeting shall apply to any adjournment
of such meeting; provided, however, that the Board may fix a new record date for the adjourned meeting.
|
25.2.
|
Any Shareholder or Shareholders of the Company holding at least one percent of the voting rights in the issued share capital of the Company may,
subject to the Law, request that the Board include a subject in the agenda of a general meeting to be held in the future. Any such request (i) must be in writing, (ii) must include all information related to the subject matter and the reason
that such subject is proposed to be brought before the general meeting and (iii) must be signed by the Shareholder or Shareholders making such request. In addition, subject to the Law, the Board may include such subject in the agenda of a
general meeting only if the request has been delivered to the secretary of the Company at least 75 days and not more than 120 days prior to the date set for the relevant Annual General Meeting or Extraordinary General Meeting, as applicable.
Each such request shall also set forth: (a) the name and address of the Shareholder making the request; (b) a representation that the Shareholder is a holder of shares of the Company entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting; (c) a description of all arrangements or understandings between the Shareholder and any other person or persons (naming such person or persons) in connection with the subject which is requested to be
included in the agenda; and (d) a declaration that all the information that is required under the Law and any other applicable law to be provided to the Company in connection with such subject, if any, has been provided. In addition, if such
subject includes a nomination to the Board in accordance with the Articles, the request shall also set forth the consent of each nominee to serve as a director of the Company if so elected and a declaration signed by each of the nominees
declaring that there is no limitation under applicable law for the appointment of such a nominee. Furthermore, the Board may, in its discretion, to the extent it deems necessary, require that the Shareholders making the request provide
additional information so as to include a subject in the agenda of a general meeting.
|
26.
|
Annual Meetings
|
27.
|
Extraordinary General Meetings
|
28.
|
Powers of the General Meeting
|
29.
|
Notice of General Meetings; Omission to Give Notice
|
30.
|
Manner of Meeting
|
31.
|
Quorum
|
31.1.
|
No business shall be transacted at any general meeting unless a quorum is present when the meeting commences. For all purposes, the quorum shall be
at least two Shareholders present in person, or by proxy, holding in the aggregate at least 33 1/3% (thirty three percent and one-third of a percent) of the voting rights in the issued share capital of the Company.
|
31.2.
|
If within 30 minutes from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the request of the
Shareholders, shall be dissolved; if the meeting is not convened upon the request of a Shareholder it shall stand adjourned to the same day in the next week at the same place and time, or to such day and at such time and place as the
chairperson may determine with the consent of the holders of a majority of the voting power represented at the meeting in person or by proxy and voting on the question of adjournment. No business shall be transacted at any adjourned meeting
except business that might lawfully have been transacted at the meeting as originally called. If at the adjourned meeting a legal quorum is not present after 30 minutes from the time specified for the commencement of the adjourned meeting,
than the meeting shall take place regardless of the number of members present and in such event the required quorum shall consist of any number of shareholders present in person or by proxy.
|
32.
|
Chairperson
|
33.
|
Adoption of Resolutions at General Meetings
|
33.1.
|
Subject to Article 34 below, resolutions of the Shareholders with respect to all matters shall be deemed adopted if approved by the holders of a
simple majority of the voting power of the Company represented at the meeting in person or by proxy and voting thereon, other than as specified in the Articles or otherwise required by the Law.
|
33.2.
|
Every question submitted to a general meeting shall be decided by a show of hands, but if a written ballot is demanded by any Shareholder present
in person or by proxy and entitled to vote at the meeting, the same shall be decided by such ballot. A written ballot may be demanded before the voting on a proposed resolution or immediately after the declaration by the chairperson of the
meeting of the results of the vote by a show of hands. If a vote by written ballot is taken after such declaration, the results of the vote by a show of hands shall be of no effect, and the proposed resolution shall be decided by such written
ballot. The demand for a written ballot may be withdrawn at any time before the same is conducted, in which event another Shareholder may then demand such written ballot. The demand for a written ballot shall not prevent the continuance of
the meeting for the transaction of business other than the question on which the written ballot was demanded.
|
33.3.
|
A declaration by the chairperson of the meeting that a resolution was carried unanimously, or carried by a particular majority, or did not receive
the required majority in order to be carried, and an entry to that effect in the minute book of the Company, shall be prima facie evidence of the fact without proof of the number or proportion of the votes recorded in favor of or against such
resolution.
|
34.
|
Special Resolution
|
35.
|
Voting Power
|
36.
|
Voting Rights
|
36.1.
|
In the case of joint holders, the vote of the senior holder to tender a vote, whether in person or by proxy, shall be accepted to the exclusion of
the votes of the other joint holders. For the purpose of this Article, seniority shall be determined by the order in which the names appear in the Shareholders Register (or in the Company’s transfer agent records). The appointment of a proxy
to vote on behalf of a jointly held share shall be executed by the senior holder.
|
36.2.
|
No Shareholder shall be entitled to vote at any general meeting (or be counted as a part of the quorum thereat), unless all calls and other sums
then payable by him in respect of his shares in the Company have been paid.
|
36.3.
|
Any Shareholder entitled to vote may vote either personally or by proxy (who need not be a shareholder of the Company), or, if the Shareholder is a
company or other entity, by a representative authorized pursuant to Article 36.4.
|
36.4.
|
A company or other corporate body that is a Shareholder of the Company may, by resolution of its directors or any other managing body thereof,
authorize any person to be or to appoint its representative at any meeting of the Company. Any person so authorized shall be entitled to exercise on behalf of such Shareholder all the power that the latter could have exercised if it were an
individual shareholder. Upon the request of the chairperson of the meeting, written evidence of such authorization (in form reasonably acceptable to the chairperson) shall be delivered to him.
|
37.
|
Instrument of Appointment
|
37.1.
|
The instrument appointing a proxy shall be in writing in such form as may be approved by the Board from time to time in compliance with applicable
law.
|
37.2.
|
The instrument appointing a proxy (and the power of attorney or other authority, if any, under which such instrument has been signed) shall either
be delivered to the Company (at its Registered Office, at its principal place of business, at such place as the Board may specify, or by any other means, including electronic form, all in compliance with applicable law) not less than the
close of business on the business day preceding the time fixed for the meeting at which the person named in the instrument proposes to vote, or presented to the chairperson at such meeting.
|
37.3.
|
The Board may cause the Company to send, by mail or otherwise, instruments of proxy to Shareholders for use at any general meeting.
|
38.
|
Effect of Death of Appointer or Revocation of Appointment
|
39.
|
Multiple Proxies
|
40.
|
Number of Directors
|
41.
|
Qualification of Directors
|
42.
|
Continuing Directors in the Event of Vacancies
|
43.
|
Vacation of Office; Removal of Directors
|
43.1.
|
The office of a director shall be vacated, ipso facto, upon his death or if he be found legally
incompetent; if he becomes bankrupt, if he is prevented by applicable law or listing requirements from serving as a director of the Company, if the Board terminates his office according to Section 231 of the Law, if a court order is given in
accordance with Section 233 of the Law, or if under the Law his term otherwise automatically terminates.
|
43.2.
|
The office of a director shall be vacated by his written resignation. Such resignation shall become effective on the date fixed therein, or upon
the delivery thereof to the Company, whichever is later.
|
43.3.
|
A director shall be removed from office only pursuant to the provisions of Article 43.1 or by a resolution of the general meeting of the Company
approved by Shareholders holding more than two-thirds of the voting power of the issued and outstanding share capital of the Company.
|
44.
|
Remuneration of Directors
|
45.
|
Conflict of Interests; Approval of Related Party Transactions
|
45.1.
|
Subject to the Law and the Articles, a transaction between the Company and an Office Holder, and a transaction between the Company and another
entity in which an Office Holder of the Company has a personal interest, which is not an Extraordinary Transaction (as defined by the Law), shall be approved by the Board or a committee of the Board. Such authorization, as well as the actual
approval, may be for a particular transaction or more generally for specific type of transactions.
|
45.2.
|
A director or other Office Holder, shall not participate in deliberations concerning, nor vote upon a resolution approving, a transaction with the
Company in which he has a personal interest, except as otherwise provided for in the Law.
|
46.
|
Powers of the Board of Directors
|
46.1.
|
General
|
46.2.
|
Borrowing Power
|
46.3.
|
Reserves
|
47.
|
Exercise of Powers of Directors
|
47.1.
|
A meeting of the Board at which a quorum is present shall be competent to exercise all the authorities, powers and discretions vested in or
exercisable by the Board.
|
47.2.
|
Except as otherwise specifically set forth in these Articles or as required by the Law, a resolution proposed at any meeting of the Board shall be
deemed adopted if approved by a majority of the directors present when such resolution is put to a vote and voting thereon.
|
47.3.
|
A resolution in writing signed by all directors then in office and lawfully entitled to vote thereon, or to which all such directors have given
their written consent (by letter, telegram, email, facsimile, telecopier, email, or otherwise), shall be deemed to have been unanimously adopted by a meeting of the Board duly convened and held.
|
48.
|
Delegation of Powers
|
48.1.
|
The Board may, subject to the provisions of the Law and any other applicable law, delegate any or all of its powers to committees, and it may from
time to time revoke such delegation or alter the composition of any such committee. Any Committee so formed (in these Articles referred to as a “Committee of the Board”), shall, in the exercise of the powers so delegated, conform to any
regulations imposed on it by the Board. The meetings and proceedings of any Committee of the Board shall be governed, with the relevant changes, by the provisions herein contained for regulating the meetings of the Board, so far as not
superseded by any regulations adopted by the Board under this Article. Unless otherwise expressly provided by the Board in delegating powers to a Committee of the Board, such Committee shall not be empowered to further delegate such powers.
In accordance with and subject to Section 271 of the Law, the Compensation Committee of the Board (if any) shall have the full power and authority to approve the terms of compensation of the Office Holders of the Company, other than Office
Holders who are also directors.
|
48.2.
|
Without derogating from the provisions of Article 48.1, the Board may, subject to the provisions of the Law, from time to time appoint a secretary
to the Company, as well as officers, agents, employees and independent contractors, as the Board may deem fit, and may terminate the service of any such person. The Board may, subject to the provisions of the Law, determine the powers and
duties, as well as the salaries and emoluments, of all such persons, and may require security in such cases and in such amounts as it thinks fit.
|
48.3.
|
The Board may from time to time, by power of attorney or otherwise, appoint any person, company, firm or body of persons to be the attorney or
attorneys of the Company at law or in fact for such purpose(s) and with such powers, authorities and discretions, and for such period and subject to such conditions, as it thinks fit, and any such power of attorney or other appointment may
contain such provisions for the protection and convenience of persons dealing with any such attorney as the Board may think fit, and may also authorize any such attorney to delegate all or any of the powers, authorities and discretions vested
in him.
|
49.
|
Other than External Directors, the directors will be elected in three staggered classes by the vote of a majority of the ordinary shares present
and entitled to vote. The directors of only one class will be elected at each annual meeting for a three year term, so that the regular term of only one class of directors expires annually. The directors serving as of the date these Articles
become effective will be classified as shall be determined by a resolution of the Board. At the Company's Annual General Meeting to be held in 2006, the term of the first class, consisting of two directors will expire, and the directors
elected at that meeting will be elected for a three-year term. At the Company's Annual General Meeting to be held in 2007, the term of the second class, consisting of two directors, will expire and the directors elected at that meeting will
be elected for a three-year term. At the Company's Annual General Meeting to be held in 2008, the term of the third class, consisting of one director, will expire and the director elected at that meeting will be elected for a three-year term.
The External Directors will not be assigned a class.
|
50.
|
Subject to Article 49, directors shall be elected at the Annual General Meeting or an Extraordinary General Meeting of the Company by the vote of
the holders of a majority of the voting power represented at such meeting in person or by proxy and voting on the election of directors.
|
51.
|
Notwithstanding the provisions of Article 49, External Directors shall be elected and hold office in accordance with the provisions of the Law.
|
52.
|
Nominations to the Board
|
52.1.
|
Nominations for the election of directors may be made by the Board or a Committee of the Board or, subject to the Law, by any Shareholder. Any
Shareholder or Shareholders holding at least five percent of the voting rights in the issued share capital of the Company may nominate one or more persons for election as directors at a general meeting only if a written notice of such
Shareholder’s intent to make such nomination or nominations has been given to the secretary of the Company and each such notice sets forth all the details and information set forth in Article 25.2. The chairperson of the meeting may refuse to
acknowledge the nomination of any person not made in compliance with the foregoing procedure.
|
52.2.
|
Notwithstanding the provisions of Articles 52.1 and 51, no person shall be nominated or appointed to the office of a director if such person is
disqualified under the Law from being appointed as a director.
|
52.3.
|
A director’s term (including External Directors) shall begin either on the date of his appointment to the Board or at such later date designated in
the resolution appointing such director.
|
53.
|
Subject to the provisions of Article 49, the Board may at any time appoint any other person as a director, whether to fill a vacancy or as an
addition to the then current number of directors, provided that the total number of directors shall not at any time exceed seven directors. Any director so appointed shall hold office until the Annual General Meeting at which the term for the
other directors of his class expires, unless otherwise stated in the appointing resolution.
|
54.
|
Subject to the provisions of the Law, a director may appoint an alternate director to attend a meeting in his or her place, but an alternate
director so appointed must be approved by the board prior to the relevant meeting.
|
55.
|
Meetings of the Board
|
55.1.
|
The Board may meet and adjourn its meetings at such places either within or out the State of Israel and otherwise regulate such meetings and
proceedings as the directors think fit, provided that meetings shall be convened at least once every three months. Subject to all of the other provisions of the Articles concerning meetings of the Board, the Board may meet by telephone
conference call or other communication equipment so long as each director participating in such call can hear, and be heard by, each other director participating in such call. The directors participating in this manner shall be deemed to be
present in person at such meeting and shall be entitled to vote or be counted in a quorum accordingly.
|
55.2.
|
Board meetings may be convened at any time by the chairperson of the Board. The chairperson of the Board shall convene a Board meeting upon the
written request of any two directors (or one director if the Board is comprised of fewer than seven directors) as soon as practicable after receiving such request and shall otherwise convene a Board meeting as provided by the Law.
|
56.
|
Notice
|
56.1.
|
Notice of a Board meeting shall contain the information required by the Law and shall be delivered to the directors not less than three days before
such meeting.
|
56.2.
|
Notice of a meeting of the Board shall be given in writing, and may be sent by hand, post, facsimile or electronic mail to a director at the
address, facsimile number or electronic mail address given by such director to the Company for such purpose. Any such notice shall be deemed duly received, if sent by post, three days following the day when any such notice was duly posted and
if delivered by hand or transmitted by facsimile transmission or electronic mail, such notice shall be deemed duly received by the director on the date of delivery or, as the case may be, transmission of the same.
|
56.3.
|
Notwithstanding anything contained to the contrary herein, failure to deliver notice to a director of any such meeting in the manner required
hereby may be waived (in advance or retroactively) by such director and a meeting shall be deemed to have been duly convened notwithstanding such defective notice if such failure or defect is waived (in advance or retroactively), by all
directors entitled to participate at such meeting and to whom notice was not duly given. The presence of a director at any such meeting shall be deemed due receipt of prior notice or a waiver of any such notice requirement by such director.
|
57.
|
Quorum
|
57.1.
|
A quorum at a meeting of the Board shall be constituted by the presence in person, or by telephone or similar communication equipment of a majority
of the directors then in office who are lawfully entitled to participate and vote at the meeting. If within 30 minutes (or within such longer time as the chairperson of the meeting may decide) from the time appointed for the holding of the
Board meeting a quorum is not present, the Board meeting shall stand adjourned to the date, time, and place determined by the chairperson. No business shall be transacted at a meeting of the Board unless the requisite quorum is present.
|
57.2.
|
If at any adjourned Board meeting a quorum is not present within 30 minutes (or within such longer time as the chairperson of the meeting may
decide) from the time appointed for holding the meeting, then the quorum at such meeting shall be constituted by the presence in person, or by telephone or similar communication equipment of two of the directors then in office who are
lawfully entitled to participate and vote at the meeting. If at such meeting such quorum is not present within the above mentioned time frame, the Board meeting shall be adjourned in accordance with the provisions of this Article 57. No
business shall be transacted at a meeting of the Board unless the requisite quorum is present.
|
58.
|
Chairperson
|
59.
|
Validity of Acts
|
60.
|
Subject to the Articles and the Law, the Board may from time to time appoint one or more persons, whether or not directors, as the General Manager,
Chief Executive Officer, and/or President of the Company (the “Chief Executive Officer"). Subject to the Law, the powers, authorities and responsibilities any such Chief Executive Officer shall have shall be those that the Board may, at its
discretion, lawfully confer on the same. The Board may, from time to time, as the Board may deem fit, modify or revoke, such title(s), duties and authorities the Board conferred as aforesaid. Subject to the Articles and the Law, any such
appointment(s) and any such powers, authorities and responsibilities may be either for a fixed term or without any limitation of time, and may be made upon such conditions and subject to such limitations and restrictions as the Board may,
from time to time, determine. In addition, the Board may from time to time (subject to the provisions of any applicable law or the rules of any stock exchange upon which securities of the Company are listed or included for quotation and of
any contract between any such person(s) and the Company) determine the salary of any such person(s) and remove or dismiss any such person(s) from office and appoint another or others in his or their place.
|
61.
|
The management and the operation of the Company’s affairs and business in accordance with the policies determined by the Board shall be vested in
the Chief Executive Officer, in addition to all powers and authorities of the Chief Executive Officer, as specified in the Law. Without derogating from the above, all powers of management and executive authority that are not vested by the Law
or by the Articles in another organ of the Company shall be vested in the Chief Executive Officer.
|
62.
|
The Company shall cause minutes to be recorded of all general meetings of the Company and also of all appointments of directors and Office Holders
and of the proceedings of all meetings of the Board and any Committees thereof. Such minutes shall set forth the names of persons present and all business transacted at such meetings. Any such minutes of any meeting, if purporting to be
signed by the chairperson of such meeting or of the next succeeding meeting, or by the chairperson of the Board or the secretary of the Company, shall be prima facie evidence of the facts therein
stated. Minutes of a meeting shall be kept at the Office for the period, and in the manner, prescribed in the Law.
|
63.
|
Declaration of Dividends
|
64.
|
Funds Available for Payment of Dividends
|
65.
|
Amount Payable by Way of Dividends
|
66.
|
Interest
|
67.
|
Payment in Kind
|
67.1.
|
A dividend may be paid, wholly or partly, by the distribution of specific assets, and, in particular, by distribution of paid-up shares, debentures
of the Company or debentures of any other company, or in any one or more such ways.
|
67.2.
|
The Board may resolve that: (a) any monies, investments, or other assets forming part of the undivided profits of the Company standing to the
credit of the reserve fund, or to the credit of any reserve fund for the redemption of capital, or to the credit of a reserve fund for the revaluation of real estate or other assets of the Company or any other reserve fund or investment funds
or assets in the hands of the Company and available for dividends, or representing premiums received on the issue of shares and standing to the credit of the share premium account, be capitalized and distributed among such of the Shareholders
as would be entitled to receive the same if distributed by the way of dividend and in the same proportion on the basis that they become entitled thereto as capital; (b) all or any part of such capitalized fund be applied on behalf of such
Shareholders in paying up in full, either at nominal or at such premiums as the resolution may provide, any unissued shares or debentures of the Company that shall be distributed accordingly or in or towards the payment, in full or in part,
of the uncalled liability on any issued shares or debentures of the Company; and (c) such distribution or payment shall be accepted by such Shareholders in full satisfaction of their share and interest in the said capitalized sum.
|
68.
|
Implementation of Powers under Article 67
|
69.
|
Dividends on Unpaid Shares
|
69.1.
|
Without derogating from Article 65 hereof, the Board may give an instruction that shall prevent the distribution of a dividend to the holders of
shares for which the full amount payable has not been paid.
|
69.2.
|
The Board may deduct from any dividend payable to any Shareholder all sums of money, if any, presently payable by such Shareholder to the Company
on account of calls or otherwise in relation to the shares of the Company. The Board may retain any dividend or other moneys payable on or in respect of a share on which the Company has a lien, and may apply the same in or toward the
satisfaction of the debts, liabilities or engagement in respect of which the lien exists.
|
70.
|
Retention of Dividends
|
70.1.
|
The Board may retain any dividend or other monies payable or property distributable in respect of a share on which the Company has a lien, and may
apply the same in or toward satisfaction of the debts, liabilities, or engagements in respect of which the lien exists.
|
70.2.
|
The Board may retain any dividend or other monies payable or property distributable in respect of a share in respect of which any person is, under
Article 21 entitled to become a Shareholder, or which any person is, under such Article, entitled to transfer, until such person shall become a shareholder in respect of such share or shall transfer the same.
|
71.
|
Unclaimed Dividends
|
72.
|
Payment
|
73.
|
Receipt from a Joint Holder
|
74.
|
Books of Account
|
75.
|
Audit.
|
76.
|
Auditors
|
77.
|
Rights of Signature
|
78.
|
Notices
|
78.1.
|
Any written notice or other document may be served by the Company upon any Shareholder either personally, electronically, or by sending it by
prepaid mail (airmail if sent internationally) addressed to such Shareholder at his address as described in the Shareholders Register or such other address as he may have designated in writing for the receipt of notices and other documents.
Any written notice or other document may be served by any Shareholder upon the Company by tendering the same in person to the secretary or the Chief Executive Officer of the Company at the Office or by sending it by prepaid registered mail
(airmail if posted outside Israel) to the Company at its Office. Any such notice or other document shall be deemed to have been served 48 hours after it has been posted (seven business days if sent internationally), or when actually received
by the addressee if sooner than 48 hours or seven business days, as the case may be, after it has been posted, or when actually tendered in person, to such shareholder (or to the secretary or the Chief Executive Officer). Notice sent by
telegram, facsimile or electronic mail shall be deemed to have been served when actually received by the addressee, including in the event that it was defectively addressed or failed, in some other respect, to comply with the provisions of
this Article 78.1.
|
78.2.
|
All notices to be given to the Shareholders shall, with respect to any share to which persons are jointly entitled, be given to whichever of such
persons is named first in the Shareholders Register or in the records of the Company’s transfer agent, and any notice so given shall be sufficient notice to the holders of such share.
|
78.3.
|
Any Shareholder whose address is not described in the Shareholders Register, and who shall not have designated in writing an address for the
receipt of notices, shall not be entitled to receive any notice from the Company.
|
78.4.
|
Notwithstanding anything to the contrary contained herein and subject to the provisions of the Law, notice to a Shareholder may be served, as
general notice to all Shareholders, in accordance with applicable rules and regulations of any stock exchange upon which the Company’s shares are listed or included for quotation.
|
78.5.
|
Subject to applicable law, any Shareholder, director or any other person entitled to receive notice in accordance with these Articles or Law, may
waive notice, in advance or retroactively, in a particular case or type of cases or generally, and if so, notice will be deemed as having been duly served, and all proceedings or actions for which the notice was required will be deemed valid.
|
78.6.
|
The accidental omission to give notice of a meeting to any Shareholder or the non-receipt of notice by any Shareholder entitled to receive notice
shall not invalidate the proceedings at any meeting or any resolution(s) adopted by such a meeting.
|
79.
|
Subject to the provisions of the Law and the Israeli Securities Law, 5728 - 1968 (the "Israeli Securities Law"), the Company may:
|
79.1.
|
Enter into a contract for the insurance of the liability, in whole or in part, of any of its Office Holders with respect to an obligation imposed
on such Office Holder due to an act performed by the Office Holder in the Office Holder’s capacity as an Office Holder of the Company arising from any of the following:
|
79.1.1.
|
A breach of duty of care to the Company or to any other person;
|
79.1.2.
|
A breach of the duty of loyalty to the Company provided that the Office Holder acted in good faith and had reasonable grounds to assume that the
act would not harm the interests of the Company;
|
79.1.3.
|
A financial liability imposed on such Office Holder in favor of any other person; and
|
79.1.4.
|
Reasonable litigation expenses, including attorney fees, incurred by the Office Holder as a result of an administrative enforcement proceeding
instituted against him. Without derogating from the generality of the foregoing, such expenses will include a payment imposed on the Office Holder in favor of an injured party as set forth in Section 52(54)(a)(1)(a) of the Israeli Securities
Law and expenses that the Office Holder incurred in connection with a proceeding under Chapters H'3, H'4 or I'1 of the Securities Law, including reasonable legal expenses, which term includes attorney fees.
|
79.2.
|
Undertake, in advance to indemnify, or may indemnify retroactively, an Office Holder of the Company with respect to any of the following
liabilities or expenses that arise from an act performed by the Office Holder by virtue of being an Office Holder of the Company:
|
79.2.1.
|
A financial liability imposed on an Office Holder in favor of another person by any judgment, including a judgment given as a result of a settlement or an arbitrator’s
award which has been confirmed by a court;
|
79.2.2.
|
Reasonable litigation expenses including attorney's fees, incurred by him as a result of an investigation or proceedings instituted against him by
an authority empowered to conduct an investigation or proceedings, which are concluded without the filing of an indictment against the Office Holder and without the levying of a monetary obligation in lieu of criminal proceedings upon the
Office Holder, or which are concluded without the filing of an indictment against the Office Holder but with levying a monetary obligation in substitute of such criminal proceedings upon the Office Holder for a crime that does not require
proof of criminal intent; or in connection with an administrative enforcement proceeding or a financial sanction. Without derogating from the generality of the foregoing, such expenses will include a payment imposed on the Office Holder in
favor of an injured party as set forth in Section 52(54)(a)(1)(a) of the Israeli Securities Law, and expenses that the Office Holder incurred in connection with a proceeding under Chapters H'3, H'4 or I'1 of the Securities Law, including
reasonable legal expenses, which term includes attorney fees; and
|
79.2.3.
|
Reasonable litigation expenses, including attorney's fees, expended by an Office Holder or which were imposed on an Office Holder by a court in
proceedings filed against the Office Holder by the Company or in its name or by any other person or in a criminal charge on which the Office Holder was acquitted or in a criminal charge on which the Office Holder was convicted for an offense
which did not require proof of criminal intent;
|
80.
|
Subject to the provisions of the Law and the Israeli Securities Law, the Company hereby releases, in advance, its Office Holders from liability to
the Company for damage that arises from the breach of the Office Holder’s duty of care to the Company.
|
81.
|
The provisions of Articles 79 and 80 are not intended, and shall not be interpreted, to restrict the Company in any manner in respect of the procurement of insurance or in respect of indemnification (i) in
connection with any person who is not an Office Holder, including, without limitation, any employee, agent, consultant or contractor of the Company who is not an Office Holder, or (ii) in connection with any Office Holder to the extent that
such insurance and/or indemnification is not specifically prohibited under law; provided that the procurement of any such insurance or the provision of any such indemnification shall be approved by the Board. Any modification of Articles 79
through 81 shall be prospective in effect and shall not affect the Company’s obligation or ability to indemnify an Office Holder for any act or omission occurring prior to such modification.
|
•
|
amend our articles of association (except as set forth below) or our memorandum of association;
|
|
•
|
make changes in our capital structure such as a reduction of capital, increase of capital or share split, merger or consolidation;
|
|
•
|
authorize a new class of shares;
|
|
•
|
elect directors, other than external directors; or
|
|
•
|
appoint auditors.
|
•
|
the majority must include at least a majority of the shares of the voting shareholders who have no personal interest in the transaction voted at the meeting; or
|
|
•
|
the total shareholdings of those who have no personal interest in the transaction and who vote against the transaction must not represent more than 2% of the aggregate voting rights in the
company.
|
•
|
any amendment to the articles of association;
|
|
•
|
an increase in the company’s authorized share capital;
|
|
•
|
a merger; or
|
|
•
|
approval of related party transactions that require shareholder approval.
|
•
|
any monetary liability whether imposed on him or her in favor of another person pursuant to a judgment, a settlement or an arbitrator’s award approved by a court;
|
|
•
|
reasonable litigation expenses, including attorneys’ fees, incurred by him or her as a result of an investigation or proceedings instituted against him or her by an authority empowered to
conduct an investigation or proceedings, which are concluded either (i) without the filing of an indictment against the office holder and without the levying of a monetary obligation in lieu of criminal proceedings upon the office holder, or
(ii) without the filing of an indictment against the office holder but with levying a monetary obligation in substitute of such criminal proceedings upon the office holder for a crime that does not require proof of criminal intent;
|
|
•
|
reasonable litigation expenses, including attorneys’ fees, in proceedings instituted against him or her by the company, on the company’s behalf or by a third-party, or in connection with
criminal proceedings in which the office holder was acquitted, or as a result of a conviction for a crime that does not require proof of criminal intent, or in connection with an administrative enforcement proceeding or financial sanction
instituted against him; and
|
|
•
|
reasonable litigation expenses, including attorneys’ fees, incurred by him or her as a result of an administrative enforcement proceeding instituted against him or her.
|
1.
|
Introduction
|
2.
|
Objectives
|
2.1.
|
To closely align the interests of the Executive Officers with those of Perion’s shareholders in order to enhance shareholder value;
|
2.2.
|
To align a significant portion of the Executive Officers’ compensation with Perion’s short and long-term goals and performance;
|
2.3.
|
To provide the Executive Officers with a structured compensation package, including competitive salaries, performance-motivating cash and equity incentive programs and benefits, and to be able to present to
each Executive Officer an opportunity to advance in a growing organization;
|
2.4.
|
To strengthen the retention and the motivation of Executive Officers in the long term;
|
2.5.
|
To provide appropriate awards in order to incentivize superior individual excellency
and corporate performance; and
|
2.6.
|
To maintain consistency in the way Executive Officers are compensated.
|
3.
|
Compensation Instruments
|
3.1.
|
Base salary;
|
3.2.
|
Benefits;
|
3.3.
|
Cash bonuses;
|
3.4.
|
Equity based compensation;
|
3.5.
|
Change of control terms; and
|
3.6.
|
Retirement and termination terms.
|
4.
|
Overall Compensation - Ratio Between Fixed and Variable Compensation
|
4.1.
|
This Policy aims to balance the mix of “Fixed Compensation” (comprised of base salary and benefits) and “Variable Compensation” (comprised of cash
bonuses and equity-based compensation) in order to, among other things, appropriately incentivize Executive Officers to meet Perion’s short and long-term goals while taking into consideration the Company’s need to manage a variety of business
risks.
|
4.2.
|
The total annual target bonus and equity-based compensation per vesting annum (based on the fair market value at the time of grant calculated on a
liner basis) of each Executive Officer shall not exceed 90% of the total compensation package of such Executive Officer on an annual basis.
|
5.
|
Inter-Company Compensation Ratio
|
5.1.
|
In the process of drafting and updating this Policy, Perion’s Board and Compensation Committee have examined the ratio between employer cost
associated with the engagement of the Executive Officers, including directors, and the average and median employer cost associated with the engagement of Perion’s other employees (including contractor employees as defined in the Companies
Law) (the “Ratio”).
|
5.2.
|
The possible ramifications of the Ratio on the daily working environment in Perion were examined and will continue to be examined by Perion from
time to time in order to ensure that levels of executive compensation, as compared to the overall workforce will not have a negative impact on work relations in Perion.
|
6.
|
Base Salary
|
6.1.
|
A base salary provides stable compensation to Executive Officers and allows Perion to attract and retain competent executive talent and maintain a
stable management team. The base salary varies among Executive Officers, and is individually determined according to the educational background, prior vocational experience, qualifications, company’s role, business responsibilities and the
past performance of each Executive Officer.
|
6.2.
|
Since a competitive base salary is essential to Perion’s ability to attract and retain highly skilled professionals, Perion will seek to establish
a base salary that is competitive with base salaries paid to Executive Officers in a peer group of other companies operating in technology sectors which are similar in their characteristics to Perion’s, as much as possible, while considering,
among others, such companies’ size and characteristics including their revenues, market capitalization, number of employees and operating arena (in Israel or globally), the list of which shall be reviewed and approved by the Compensation
Committee. To that end, Perion shall utilize as a reference, comparative market data and practices, which will include a compensation survey that compares and analyses the level of the overall compensation package offered to an Executive
Officer of the Company with compensation packages in similar positions to that of the relevant officer) in such companies. Such compensation survey may be conducted internally or through an external independent consultant. Information on such
compensation survey shall be included in the proxy statement published in connection with the annual general meeting of Perion’s shareholders.
|
6.3.
|
The Compensation Committee and the Board may periodically consider and approve base salary adjustments for Executive Officers. The main
considerations for salary adjustment are similar to those used in initially determining the base salary, but may also include change of role or responsibilities, recognition for professional achievements, regulatory or contractual
requirements, budgetary constraints or market trends. The Compensation Committee and the Board will also consider the previous and existing compensation arrangements of the Executive Officer whose base salary is being considered for
adjustment. Any limitation herein based on the annual base salary shall be calculated based on the monthly base salary applicable at the time of consideration of the respective grant or benefit.
|
7.
|
Benefits
|
7.1.
|
The following benefits may be granted to the Executive Officers in order, among other things, to comply with legal requirements:
|
7.1.1.
|
Vacation days in accordance with market practice;
|
7.1.2.
|
Sick days in accordance with market practice;
|
7.1.3.
|
Convalescence pay according to applicable law;
|
7.1.4.
|
Monthly remuneration for a study fund, as allowed by applicable law and with reference to Perion’s practice and the practice in peer group
companies;
|
7.1.5.
|
Perion shall contribute on behalf of the Executive Officer to an insurance policy or a pension fund, as allowed by applicable law and with
reference to Perion’s policies and procedures and the practice in peer group companies (including contributions on bonus payments); and
|
7.1.6.
|
Perion shall contribute on behalf of the Executive Officer towards work disability insurance, as allowed by applicable law and with reference to
Perion’s policies and procedures and to the practice in peer group companies.
|
7.2.
|
Non-Israeli Executive Officers may receive other similar, comparable or customary benefits as applicable in the relevant jurisdiction in which they
are employed. Such customary benefits shall be determined based on the methods described in Section 6.2 of this Policy (with the necessary changes and adjustments).
|
7.3.
|
In events of relocation or repatriation of an Executive Officer to another geography, such Executive Officer may receive other similar, comparable
or customary benefits as applicable in the relevant jurisdiction in which he or she is employed or additional payments to reflect adjustments in cost of living. Such benefits shall include reimbursement for out of pocket one-time payments and
other ongoing expenses, such as housing allowance, car allowance, and home leave visit, etc.
|
7.4.
|
Perion may offer additional benefits to its Executive Officers, which will be comparable to customary market practices, such as, but not limited
to: cellular and land line phone benefits, company car and travel benefits, reimbursement of business travel including a daily stipend when traveling and other business related expenses, insurances, other benefits (such as newspaper
subscriptions, academic and professional studies), etc., provided, however, that such additional benefits shall be determined in accordance with Perion’s policies and procedures.
|
8.
|
Annual Cash Bonuses - The Objective
|
8.1.
|
Compensation in the form of an annual cash bonus is an important element in aligning the Executive Officers’ compensation with Perion’s objectives
and business goals. Therefore, a pay-for-performance element, as payout eligibility and levels are determined based on actual financial and operational results, as well as individual performance.
|
8.2.
|
An annual cash bonus may be awarded to Executive Officers upon the attainment of pre-set periodical objectives and individual targets determined by
the Compensation Committee (and, if required by law, by the Board) at the beginning of each calendar year, or upon engagement, in case of newly hired Executive Officers, taking into account Perion’s short and long-term goals, as well as its
compliance and risk management policies. The Compensation Committee and the Board shall also determine applicable minimum thresholds that must be met for entitlement to the annual cash bonus (all or any portion thereof) and the formula for
calculating any annual cash bonus payout, with respect to each calendar year, for each Executive Officer. In special circumstances, as determined by the Compensation Committee and the Board (e.g., regulatory changes, significant changes in
Perion’s business environment, a significant organizational change, a significant merger and acquisition events etc.), the Compensation Committee and the Board may modify the objectives and/or their relative weights during the calendar year.
|
8.3.
|
In the event the employment of an Executive Officer is terminated prior to the end of a fiscal year, the Company may (but shall not be obligated
to) pay such Executive Officer a full annual cash bonus or a prorated one.
|
8.4.
|
The actual annual cash bonus to be awarded to Executive Officers shall be approved by the Compensation Committee and the Board.
|
9.
|
Annual Cash Bonuses - The Formula
|
9.1.
|
The annual cash bonus of Perion’s Executive Officers, other than the chief executive officer (the “CEO”),
will be based on performance objectives and a discretionary evaluation of the Executive Officer’s overall performance and subject to minimum thresholds based on overall company performance. The performance objectives will be approved by the
Compensation Committee (and, if required by law, by the Board) at the commencement of each calendar year (or upon engagement, in case of newly hired Executive Officers or in special circumstances as indicated in Section 8.2 above) on the
basis of, but not limited to, company, division or individual objectives. The performance measurable objectives, which include the objectives and the weight to be assigned to each achievement in the overall evaluation, may be based on actual
financial and operational results against annual plan, such as revenues, operating income and cash flow and may further include, divisional or personal objectives which may include operational objectives, such as market share, initiation of
new markets and operational efficiency, customer focused objectives, project milestones objectives and investment in human capital objectives, such as employee satisfaction, employee retention and employee training and leadership programs.
|
9.2.
|
The target annual cash bonus that an Executive Officer, other than the CEO, will be entitled to receive for any given calendar year, will not
exceed 100% of such Executive Officer’s annual base salary.
|
9.3.
|
The maximum annual cash bonus including for overachievement performance that an Executive Officer, other than the CEO, will be entitled to receive
for any given calendar year, will not exceed 150% of such Executive Officer’s annual base salary.
|
9.4.
|
The annual cash bonus of Perion’s CEO will be mainly based on performance measurable objectives and subject to minimum thresholds as provided in
Section 8.2 above. Such performance measurable objectives will be determined annually by Perion’s Compensation Committee (and, if required by law, by Perion’s Board) at the commencement of each calendar year (or upon engagement, in case of
newly hired CEO or in special circumstances as indicated in Section 8.2 above) on the basis of, but not limited to, company and personal objectives. These performance measurable objectives will include the objectives and the weight to be
assigned to each achievement in the overall evaluation.
|
9.5.
|
The less significant part of the annual cash bonus granted to Perion’s CEO, and in any event not more than 30% of the annual cash bonus, may be
based on a discretionary evaluation of the CEO’s overall performance by the Compensation Committee and the Board based on quantitative and qualitative criteria.
|
9.6.
|
The target annual cash bonus that the CEO will be entitled to receive for any given calendar year, will not exceed 100% of his or her annual base
salary.
|
9.7.
|
The maximum annual cash bonus including for overachievement performance that the CEO will be entitled to receive for any given calendar year, will
not exceed 150% of his or her annual base salary.
|
10.
|
Other Bonuses
|
10.1.
|
Special Bonus. Perion may grant its Executive Officers a special bonus as an award for special achievements (such as in connection with
mergers and acquisitions, offerings, achieving target budget or business plan under exceptional circumstances or special recognition in case of retirement), as a retention award at the CEO’s discretion (and in the CEO’s case, at the Board’s
discretion) or as a non-compete grant, subject to any additional approval as may be required by the Companies Law (the “Special Bonus”). The Special Bonus will not exceed 100% of the Executive Officer’s
annual base salary.
|
10.2.
|
Signing Bonus. Perion may grant a newly recruited Executive Officer a signing bonus at the CEO’s discretion (and in the CEO’s case, at the
Board’s discretion), subject to any additional approval as may be required by the Companies Law (the “Signing Bonus”). The Signing Bonus will not exceed 100% of the Executive Officer’s annual base
salary.
|
10.3.
|
Relocation/ Repatriation Bonus. Perion may grant its Executive Officers a special bonus in the event of relocation or repatriation of an
Executive Officer to another geography (the “Relocation Bonus”). The Relocation bonus will include customary benefits associated with such relocation and its monetary value will not exceed 100% of the
Executive Officer’s annual base salary.
|
11.
|
Compensation Recovery (“Clawback”)
|
11.1.
|
In the event of an accounting restatement, Perion shall be entitled to recover from its Executive Officers the bonus compensation or
performance-based equity compensation in the amount in which such compensation exceeded what would have been paid under the financial statements, as restated, provided that a claim is made by Perion prior to the second anniversary of fiscal
year end of the restated financial statements.
|
11.2.
|
Notwithstanding the aforesaid, the compensation recovery will not be triggered in the following events:
|
11.2.1.
|
The financial restatement is required due to changes in the applicable financial reporting standards; or
|
11.2.2.
|
The Compensation Committee has determined that clawback proceedings in the specific case would be impossible, impractical or not commercially or
legally efficient.
|
11.3.
|
Nothing in this Section 11 derogates from any other “clawback” or similar provisions regarding disgorging of profits imposed on Executive Officers
by virtue of applicable securities laws.
|
12.
|
The Objective
|
12.1.
|
The equity-based compensation for Perion’s Executive Officers is designed in a manner consistent with the underlying objectives in determining the
base salary and the annual cash bonus, with its main objectives being to enhance the alignment between the Executive Officers’ interests with the long-term interests of Perion and its shareholders, and to strengthen the retention and the
motivation of Executive Officers in the long term. In addition, since equity-based awards are structured to vest over several years, their incentive value to recipients is aligned with longer-term strategic plans.
|
12.2.
|
The equity-based compensation offered by Perion is intended to be in a form of share options and/or other equity-based awards, such as RSUs, in
accordance with the Company’s equity incentive plan in place as may be updated from time to time.
|
12.3.
|
All equity-based incentives granted to Executive Officers shall be subject to vesting periods in order to promote long-term retention of the
awarded Executive Officers. Unless determined otherwise in a specific award agreement approved by the Compensation Committee and the Board, grants to Executive Officers other than non-employee directors shall vest gradually over a period of
between three (3) to five (5) years or based on performance. The exercise price of options shall be determined in accordance with Perion’s policies, the main terms of which shall be disclosed in the annual report of Perion. Equity-based
awards may include dividend adjustment provisions.
|
12.4.
|
All other terms of the equity awards shall be in accordance with Perion’s incentive plans and other related practices and policies. Accordingly,
the Board may, following approval by the Compensation Committee, extend the period of time for which an award is to remain exercisable and make provisions with respect to the acceleration of the vesting period of any Executive Officer’s
awards, including, without limitation, in connection with a corporate transaction involving a change of control, subject to any additional approval as may be required by the Companies Law.
|
13.
|
General Guidelines for the Grant of Awards
|
13.1.
|
The equity-based compensation shall be granted from time to time and be individually determined and awarded according to the performance,
educational background, prior business experience, qualifications, role and the personal responsibilities of the Executive Officer.
|
13.2.
|
In determining the equity-based compensation granted to each Executive Officer, the Compensation Committee and Board shall consider the factors
specified in Section 13.1 above, and in any event the total fair market value of an equity-based compensation at the time of grant shall not exceed per vesting annum: (i) with respect to the CEO - 400% of his or her annual base salary;
and (ii) with respect to each of the other Executive Officers 260% of his or her annual base salary.
|
13.3.
|
The fair market value of the equity-based compensation for the Executive Officers will be determined according to acceptable valuation practices at
the time of grant.
|
14.
|
Advanced Notice Period
|
15.
|
Additional Retirement and Termination Benefits
|
16.
|
Exculpation
|
17.
|
Insurance and Indemnification
|
17.1.
|
Perion may indemnify its directors and Executive Officers to the fullest extent permitted by applicable law, for any liability and expense that may
be imposed on the director or the Executive Officer, as provided in the indemnity agreement between such individuals and Perion, all subject to applicable law and the Company’s articles of association.
|
17.2.
|
Perion will provide directors’ and officers’ liability insurance (the “Insurance Policy”) for its directors
and Executive Officers as follows:
|
17.2.1.
|
Reserved;
|
17.2.2.
|
The limit of liability of the insurer shall not exceed the greater of $100 million or 30% of the Company’s shareholders equity based on the most
recent financial statements of the Company at the time of approval by the Compensation Committee; and
|
17.2.3.
|
The Insurance Policy, as well as the limit of liability and the premium for each extension or renewal shall be approved by the Compensation
Committee (and, if required by law, by the Board) which shall determine that the sums are reasonable considering Perion’s exposures, the scope of coverage and the market conditions and that the Insurance Policy reflects the current market
conditions, and it shall not materially affect the Company’s profitability, assets or liabilities.
|
17.3.
|
Upon circumstances to be approved by the Compensation Committee (and, if required by law, by the Board), Perion shall be entitled to enter into a
“run off” Insurance Policy of up to seven (7) years, with the same insurer or any other insurance, as follows:
|
17.3.1.
|
The limit of liability of the insurer shall not exceed the greater of $100 million or 30% of the Company’s shareholders equity based on the most
recent financial statements of the Company at the time of approval by the Compensation Committee;
|
17.3.2.
|
Reserved; and
|
17.3.3.
|
The Insurance Policy, as well as the limit of liability and the premium for each extension or renewal shall be approved by the Compensation
Committee (and, if required by law, by the Board) which shall determine that the sums are reasonable considering the Company’s exposures covered under such policy, the scope of cover and the market conditions, and that the Insurance Policy
reflects the current market conditions and that it shall not materially affect the Company’s profitability, assets or liabilities.
|
17.4.
|
Perion may extend the Insurance Policy in place to include cover for liability pursuant to a future public offering of securities as follows:
|
17.4.1.
|
Reserved; and
|
17.4.2.
|
The Insurance Policy, as well as the additional premium shall be approved by the Compensation Committee (and if required by law, by the Board)
which shall determine that the sums are reasonable considering the exposures pursuant to such public offering of securities, the scope of cover and the market conditions and that the Insurance Policy reflects the current market conditions,
and it does not materially affect the Company’s profitability, assets or liabilities.
|
18.
|
The following benefits may be granted to Perion's Board members:
|
18.1.
|
All Perion’s non-employee Board members may be entitled to an annual cash fee of $50,000 per year (and in the case of the chairperson of the Board,
$100,000 per year).
|
18.2.
|
The compensation of the Company’s external directors, if elected, shall be in accordance with the Companies Regulations (Rules Regarding the
Compensation and Expenses of an External Director), 5760-2000, as amended by the Companies Regulations (Relief for Public Companies Traded in Stock Exchange Outside of Israel), 5760-2000, as such regulations may be amended from time to time.
|
18.3.
|
Notwithstanding the provisions of Sections 18.1 above, in special circumstances, such as in the case of a professional director, an expert director
or a director who makes a unique contribution to the Company, such director’s compensation may be different than the compensation of all other directors and may be greater than the maximal amount allowed under Section 18.1.
|
18.4.
|
Each non-employee member of Perion’s Board may be granted with an annual equity-based compensation with a fair market value not to exceed $200,000
per vesting annum (calculated at the time of grant on a liner basis). The equity-based compensation may be accelerated in the event of a change of control and include dividend adjustment provisions.
|
18.5.
|
All other terms of the equity awards shall be in accordance with Perion’s incentive plans and other related practices and policies. Accordingly,
the Board may, following approval by the Compensation Committee, extend the period of time for which an award is to remain exercisable or make provisions with respect to the acceleration of the vesting period of any awards, including, without
limitation, in connection with a corporate transaction involving a change of control, subject to any additional approval as may be required by the Companies Law.
|
18.6.
|
In addition, members of Perion’s Board may be entitled to reimbursement of expenses in connection with the performance of their duties.
|
19.
|
Nothing in this Policy shall be deemed to grant any of Perion’s Executive Officers or employees or any third party any right or privilege in
connection with their employment by the Company. Such rights and privileges shall be governed by the respective personal employment agreements. The Board may determine that none or only part of the payments, benefits and perquisites detailed
in this Policy shall be granted, and is authorized to cancel or suspend a compensation package or part of it.
|
20.
|
An Immaterial Change in the Terms of Employment of an Executive Officer other than the CEO may be approved by the CEO, provided that the amended
terms of employment are in accordance with this Policy. An “Immaterial Change in the Terms of Employment” means a change in the terms of employment of an Executive Officer with an annual total cost to the Company not exceeding an amount equal
to two (2) monthly base salaries of such employee.
|
21.
|
In the event that new regulations or law amendment in connection with Executive Officers’ and directors’ compensation will be enacted following the
adoption of this Policy, Perion may follow such new regulations or law amendments, even if such new regulations are in contradiction to the compensation terms set forth herein.
|
Legal Name of Subsidiary
|
|
Jurisdiction of Organization
|
CodeFuel Ltd.
|
|
Israel
|
IncrediMail, Inc.
|
|
United States
|
Smilebox, Inc.
|
|
United States
|
IncrediTone, Inc.
|
|
United States
|
Content IQ, LLC
|
|
United States
|
BT Media, LLC
|
|
United States
|
Pub Ocean Limited
|
|
England and Wales
|
Make Me Reach SAS
|
|
France
|
Vidazoo Ltd.
|
Israel
|
1.
|
I have reviewed this annual report on Form 20-F of Perion Network Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the Company as of, and for, the periods presented in this report;
|
4.
|
The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the
Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over financial reporting.
|
5.
|
The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit
committee of the Company’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s
ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
|
|
/s/ Doron Gerstel
Doron Gerstel
Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 20-F of Perion Network Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the Company as of, and for, the periods presented in this report;
|
4.
|
The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the
Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over financial reporting.
|
5.
|
The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit
committee of the Company’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s
ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
|
|
/s/ Maoz Sigron
Maoz Sigron
Chief Financial Officer
|
1.
|
The Report containing the financial statements fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer.
|
|
By: /s/ Doron Gerstel
Doron Gerstel
Chief Executive Officer
|
1.
|
The Report containing the financial statements fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer.
|
|
by: /s/ Maoz Sigron
Maoz Sigron
Chief Financial Officer
|
|
|
/s/ KOST FORER GABBAY & KASIERER
|
Tel Aviv, Israel
|
|
KOST FORER GABBAY & KASIERER
|
March 16, 2022
|
|
A member of Ernst & Young Global
|