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1、 UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,D.C.20549 FORM 20-F REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)OR(g)OF THE SECURITIES EXCHANGE ACT OF 1934 OR ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31,2019
2、 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _ to _ OR SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report.Commission file number 000
3、-20181 SAPIENS INTERNATIONAL CORPORATION N.V.(Exact name of Registrant as specified in its charter)Cayman Islands(Jurisdiction of incorporation or organization)Azrieli Center26 Harokmim St.Holon,5885800 Israel(Address of principal executive offices)Roni Giladi,Chief Financial OfficerTel:+972-3-790-2
4、000Fax+972-3-790 2942Azrieli Center26 Harokmim St.Holon,5885800 Israel(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 Class:Trading Symbol(s)Name of each exchange onwhich regis
5、tered:Common Shares,par value 0.01 per share SPNS NASDAQ Capital Market Securities registered or to be registered pursuant to Section 12(g)of the Act:None Securities for which there is a reporting obligation pursuant to Section 15(d)of the Act:None Indicate the number of outstanding shares of each o
6、f the issuers classes of capital or common stock as of the close of the period covered by the annualreport As of December 31,2019,the Registrant had 50,159,876 Common Shares,par value 0.01 per share,outstanding(which excludes 2,328,296Common Shares held in treasury).Indicate by check mark if the reg
7、istrant is 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 theSecurities Exchange Act of 1934.Yes No Indicate by
8、checkmark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934during 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 filingrequirements
9、 for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 ofRegulation S-T h(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant w
10、as required to submit 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.Seedefinition of“accelerated filer”and“large accelerated filer”in Rule 12b-2 of the Exchange Act.Large accele
11、rated 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 electednot to use the extended transition period for complying with any new or rev
12、ised financial accounting standards provided pursuant to Section 13(a)of theExchange Act 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 Internat
13、ional 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 tofollow:Item 17 Item 18 If this is an annual report,indicate by check mark whether the registrant is a shell company
14、(as defined in Rule 12b-2 of the Exchange Act).Yes No TABLE OF CONTENTS PageIntroduction ii PART I 1 Item 1Identity of Directors,Senior Management and Advisers1 Item 2Offer Statistics and Expected Timetable1 Item 3Key Information1 Item 4Information on the Company20 Item 4AUnresolved Staff Comments46
15、 Item 5Operating and Financial Review and Prospects46 Item 6Directors,Senior Management and Employees63 Item 7Major Shareholders and Related Party Transactions69 Item 8Financial Information72 Item 9The Offer and Listing73 Item 10Additional Information73 Item 11Quantitative and Qualitative Disclosure
16、s About Market Risk86 Item 12Description of Securities Other Than Equity Securities87 PART II 88 Item 13Defaults,Dividend Arrearages and Delinquencies88 Item 14Material Modifications to the Rights of Security Holders and Use of Proceeds88 Item 15Controls and Procedures88 Item 16Reserved88 Item 16AAu
17、dit Committee Financial Expert88 Item 16BCode of Ethics89 Item 16CPrincipal Accountant Fees and Services89 Item 16DExemptions from the Listing Standards for Audit Committees89 Item 16EPurchases of Equity Securities by the Issuer and Affiliated Purchasers89 Item 16FChange in Registrants Certifying Ac
18、countant89 Item 16GCorporate Governance89 Item 16HMine Safety Disclosures90 PART III 91 Item 17Financial Statements91 Item 18Financial Statements91 Item 19Exhibits91 Signature 92 i INTRODUCTION Definitions In this annual report,unless the context otherwise requires:References to“Sapiens,”the“Company
19、,”the“Registrant,”“our company,”“us,”“we”and“our”refer to Sapiens International CorporationN.V.,a Cayman Islands company,and its consolidated subsidiaries References to“our shares,”“Common Shares”and similar expressions refer to Sapiens Common Shares,par value 0.01 per share References to“Sapiens Po
20、land”refer to Sapiens Software Solutions(Poland)Sp.Z.O.O(formerly Insseco Sp.Z O.O),a Poland-basedsoftware and services provider for the insurance market that Sapiens acquired in the third quarter of 2015 References to“Adaptik”refer to Adaptik Corporation,a New Jersey company engaged in the developm
21、ent of software solutions,whichSapiens acquired during the first quarter of 2018 References to“Clculo”refer to Clculo S.A.U,a provider of a core insurance solution and managed services to the Spanish market,whichSapiens acquired during the fourth quarter of 2019 References to“KnowledgeP”refer to Kno
22、wledgeP,a Latvian company that specializes in digital insurance services andconsulting,which Sapiens acquired in the fourth quarter of 2017 References to“StoneRiver”refer to StoneRiver,Inc.,a Denver,Colorado-based provider of technology solutions and services to theinsurance industry that Sapiens ac
23、quired in the first quarter of 2017 References to“sum.cumo”refer to sum.cumo,a German-based provider of digital,consumer-centric solutions mainly to the insurance sector,which Sapiens acquired in the first quarter of 2020 References to“dollars,”“U.S.dollars,”“U.S.$”and“$”are to United States dollars
24、 References to“Euro”or“”are to the Euro,the official currency of the Eurozone in the European Union References to“shekels”and“NIS”are to New Israeli Shekels,the Israeli currency References to the“Articles”are to our Amended Articles of Association,as currently in effect References to the“Securities
25、Act”are to the Securities Act of 1933,as amended References to the“Exchange Act”are to the Securities Exchange Act of 1934,as amended References to“NASDAQ”are to the NASDAQ Stock Market References to the“TASE”are to the Tel Aviv Stock Exchange References to the“SEC”are to the United States Securitie
26、s and Exchange Commission ii Cautionary Note Regarding Forward-Looking Statements Certain matters discussed in this annual report are forward-looking statements within the meaning of Section 27A of the Securities Act,Section21E of the Exchange Act and the safe harbor provisions of the U.S.Private Se
27、curities Litigation Reform Act of 1995,that are based on our beliefs,assumptions and expectations,as well as information currently available to us.Such forward-looking statements may be identified by the use of the words“anticipate,”“believe,”“estimate,”“expect,”“may,”“will,”“plan”and similar expres
28、sions.Such statements reflect our current views with respect to futureevents and are subject to certain risks and uncertainties.There are important factors that could cause our actual results,levels of activity,performance orachievements to differ materially from the results,levels of activity,perfo
29、rmance or achievements expressed or implied by the forward-looking statements,including,but not limited to:the COVID-19(coronavirus)pandemic,which may last longer than expected and materially adversely affect our results of operations;the degree of our success in our plans to leverage our global foo
30、tprint to grow our sales;the degree of our success in integrating the companies that we have acquired through the implementation of our M&A growth strategy;the lengthy development cycles for our solutions,which may frustrate our ability to realize revenues and/or profits from our potential newsoluti
31、ons;our lengthy and complex sales cycles,which do not always result in the realization of revenues;the degree of our success in retaining our existing customers or competing effectively for greater market share;difficulties in successfully planning and managing changes in the size of our operations;
32、the frequency of the long-term,large,complex projects that we perform that involve complex estimates of project costs and profit margins,which sometimes change mid-stream;the challenges and potential liability that heightened privacy laws and regulations pose to our business;occasional disputes with
33、 clients,which may adversely impact our results of operations and our reputation;various intellectual property issues related to our business;potential unanticipated product vulnerabilities or cybersecurity breaches of our or our customers systems;risks related to the insurance industry in which our
34、 clients operate;risks associated with our global sales and operations,such as changes in regulatory requirements,wide-spread viruses and epidemics like therecent novel coronavirus outbreak,or fluctuations in currency exchange rates;and risks related to our principal location in Israel and our statu
35、s as a Cayman Islands company.While we believe such forward-looking statements are based on reasonable assumptions,should one or more of the underlying assumptions proveincorrect,or these risks or uncertainties materialize,our actual results may differ materially from those expressed or implied by t
36、he forward-lookingstatements.Please read the risks discussed in Item 3 “Key Information”under the caption“Risk Factors”and cautionary statements appearing elsewherein this annual report in order to review conditions that we believe could cause actual results to differ materially from those contempla
37、ted by the forward-looking statements.You should not rely upon forward-looking statements as predictions of future events.Although we believe that the expectations reflected in theforward-looking statements are reasonable,we cannot guarantee that future results,levels of activity,performance and eve
38、nts and circumstances reflectedin the forward-looking statements will be achieved or will occur.Except as required by law,we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this annual report,to conform these statements to actual results or
39、to changes in our expectations.iii PART I ITEM 1.IDENTITY OF DIRECTORS,SENIOR MANAGEMENT AND ADVISERS Not applicable.ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLE Not applicable.ITEM 3.KEY INFORMATION A.Selected Financial Data.The following tables summarize certain selected consolidated financial d
40、ata for the periods and as of the dates indicated.We derived the statementof operations financial data for the years ended December 31,2017,2018 and 2019,and the balance sheet data as of December 31,2018 and 2019,fromour audited consolidated financial statements included elsewhere in this annual rep
41、ort.The selected consolidated statement of income financial data for theyears ended December 31,2015 and 2016,and the balance sheet data as of December 31,2015,2016 and 2017,are derived from our audited financialstatements not included in this annual report.Our historical consolidated financial stat
42、ements are prepared in accordance with U.S.generally acceptedaccounting principles,or U.S.GAAP,and presented in U.S.dollars.You should read the information presented below in conjunction with those statements.The information presented below is qualified by the more detailed historical consolidated f
43、inancial statements,the notes thereto and the discussionunder“Operating and Financial Review and Prospects”included elsewhere in this annual report.Selected Financial Data:Year Ended December 31,(In thousands,except per share data)Statement of Income Data:2015 2016 2017 2018 2019 Revenues$185,636$21
44、6,190$269,194$289,707$325,674 Cost of revenues 111,192 130,402 175,678 180,138 196,153 Gross profit 74,444 85,788 93,516 109,569 129,521 Operating Expenses:Research and development 10,235 16,488 31,955 34,415 37,378 Selling,marketing,general and administrative 39,859 44,460 60,559 52,133 54,274 Tota
45、l operating expenses 50,094 60,948 92,514 86,547 91,652 Operating income 24,350 24,840 1,002 23,022 37,869 Financial expenses(income),net (163)(533)3,010 3,991 2,768 Income(loss)before taxes on income(tax benefit)24,513 25,373 (2,008)19,031 35,101 Taxes on income(tax benefit)4,213 5,772 (2,564)5,031
46、 8,610 Net income 20,300 19,601 556 14,000 26,491 Attributed to non-controlling interest 59 (43)(189)215 244 Attributed to redeemable non-controlling interest 1 (135)43 -Adjustment to redeemable non-controlling interest 224 443 350 -Net income attributable to Sapiens 20,016 19,336 352 13,785 26,247
47、Basic net earnings per share attributable to Sapiens shareholders$0.42$0.40$0.01$0.28$0.53 Diluted net earnings per share attributable to Sapiens shareholders$0.41$0.40$0.01$0.28$0.52 Weighted average number of shares used in computing basic netearnings per share 48,121 48,947 49,170 49,827 50,031 W
48、eighted average number of shares used in computing diluted netearnings per share 49,327 49,780 49,926 50,106 50,653 1 At December 31,Balance Sheet Data:2015 2016 2017 2018 2019 (In thousands)Cash and cash equivalents$54,351$60,908$71,467$64,628$66,295 Marketable securities 39,651 35,448 -Working cap
49、ital 51,342 72,453 60,804 48,206 42,311 Total assets 242,271 257,851 373,619 378,865 452,421 Series B Debentures(1)-78,281 79,809 68,748 Capital stock 234,658 227,463 221,863 215,613 217,711 Total equity(2)$181,809$194,391$200,874$202,484$225,498 (1)In September 2017,we issued NIS 280 million(approx
50、imately$78.3 million,net of$0.96 million of debt discount and issuance costs)principalamount of Series B unsecured,non-convertible debentures,in a public offering and private placement in Israel.For more information concerning theSeries B debentures,please see Item 5.B“Liquidity and Capital Resource
51、s”Israeli Public Offering and Private Placement of Debentures”.(2)On April 22,2015,March 31,2016,October 18,2017,September 16,2018 and August 5,2019,our Board of Directors declared one-time cashdividends of$0.15,$0.20,$0.20,$0.20 and$0.22 per Common Share(or approximately$7.2 million,$10.0 million,$
52、9.8 million,$10.0 million and$11.0 million,in the aggregate,respectively),which were paid on June 1,2015,June 1,2016,December 14,2017,October 30,2018 and September 3,2019,respectively.B.Capitalization and Indebtedness.Not applicable.C.Reasons for the Offer and Use of Proceeds.Not applicable.D.Risk F
53、actors.We operate globally in a dynamic and rapidly changing environment that involves numerous risks and uncertainties.The following section listssome,but not all,of those risks and uncertainties that may have a material adverse effect on our business,financial position,results of operations or cas
54、hflows.Risks Relating to Our Business,Our Industry and Our Financing Activities The global outbreak of COVID-19(coronavirus)may negatively impact the global economy in a significant manner for an extended period of time,andalso adversely affect our operating results in a material manner.As of the da
55、te of this annual report,the COVID-19(coronavirus)pandemic had made a significant impact on global economic activity,withgovernments around the world having closed office spaces,public transportation and schools,and restricting travel.These closures and restrictions,ifcontinued for a sustained perio
56、d,could trigger a global recession that could negatively impact our business in a material manner.Most importantly,ourinsurer customers may be less likely to purchase large insurance software systems if they face a wave of claims related to the virus,or they may reduce theamount of work for which th
57、ey retain our services if they experience a slowdown in their businesses,Prolonged economic uncertainties or downturns in certain regions or industries could materially adversely affect our business.Our businessdepends on our current and prospective customers ability and willingness to invest money
58、in core systems,which in turn is dependent upon their overalleconomic health.Negative economic conditions in the global economy or certain regions such as the U.S.or Europe,including conditions resulting fromfinancial and credit market fluctuations,could cause a decrease in corporate spending on pro
59、ducts and services that we sell.Wide-spread viruses andepidemics like the recent novel coronavirus outbreak,could also negatively affect our customers spending on our products and services.In 2019,50%ofour revenues generated from North America,41%of our revenues generated from Europe,and 9%from the
60、rest of the world.In addition,a significantportion of our revenue is generated from customers in the financial services industry,including banking and insurance.Negative economic conditions maycause customers generally,and in that industry in particular,to reduce their IT spending.Customers may dela
61、y or cancel projects,choose to focus on in-house development efforts or seek to lower their costs by renegotiating maintenance and support agreements.Additionally,customers may be more likelyto make late payments in worsening economic conditions,which could require us to increase our collection effo
62、rts and require us to incur additionalassociated costs to collect expected revenues.To the extent purchases of licenses for our software are perceived by customers and potential customers to bediscretionary,our revenues may be disproportionately affected by delays or reductions in general IT spendin
63、g.If economic conditions generally or in theindustries in which we operate specifically,worsen from present levels,our results of operations could be adversely affected.2 The implementation of our M&A growth strategy,which requires the integration of our multiple acquired companies,including,most re
64、cently,sum.cumo,Clculo,Adaptik,KnowledgeP and StoneRiver and their respective businesses,operations and employees with our own,involvessignificant risks,and the failure to integrate successfully may adversely affect our future results.In the past decade we have completed 13 acquisitions.Most recentl
65、y,in the first quarter of 2020,we acquired o,after having acquiredClculo in the fourth quarter of 2019,Adaptik in the fourth quarter of 2018,and KnowledgeP and StoneRiver in 2017.These acquisitions are partof our integrated M&A growth strategy,which is centered on three key factors:growing our custo
66、mer base,expanding geographically and addingcomplementary solutions to our portfolio all while we seek to ensure our continued high quality of services and product delivery.Any failure tosuccessfully integrate the business,operations and employees of our acquired companies,or to otherwise realize th
67、e anticipated benefits of theseacquisitions,could harm our results of operations.Our ability to realize these benefits will depend on the timely integration and consolidation oforganizations,operations,facilities,procedures,policies and technologies,and the harmonization of differences in the busine
68、ss cultures between thesecompanies and their personnel.Integration of these businesses will be complex and time-consuming,will involve additional expense and could disrupt ourbusiness and divert managements attention from ongoing business concerns.The challenges involved in integrating o,Clculo,Adap
69、tik,and otherformer acquisitions include:Preserving customer,supplier and other important relationships Integrating complex,core products and services that we acquire with our existing products and services Integrating financial forecasting and controls,procedures and reporting cycles Combining and
70、integrating information technology,or IT,systems Integrating employees and related HR systems and benefits,maintaining employee morale and retaining key employees Potential confusion that we may have in our dealings with customers and prospective customers as to the products we are offering to them
71、andpotential overlap among those products The benefits we expect to realize from these acquisitions are,necessarily,based on projections and assumptions about the combined businesses ofour company,and assume,among other things,the successful integration of these acquired entities into our business a
72、nd operations.The acquisitions ofStoneRiver and Adaptik,in particular,significantly expanded our presence and scale in the North American insurance industry,and has been helping us tofurther accelerate our growing market footprint in the U.S.P&C space.Our projections and assumptions concerning our a
73、cquisitions may be inaccurate,however,and we may not successfully integrate the acquired companies and our operations in a timely manner,or at all.We may also be exposed tounexpected contingencies or liabilities of the acquired companies.If we do not realize the anticipated benefits of these transac
74、tions,our growth strategy andfuture profitability could be adversely affected.Our development cycles are lengthy,we may not have the resources available to complete development of new,enhanced or modified solutions and wemay incur significant expenses before we generate revenues,if any,from our solu
75、tions.Because our solutions are complex and require rigorous testing,development cycles can be lengthy,taking us up to two years to develop andintroduce new,enhanced or modified solutions.Moreover,development projects can be technically challenging and expensive.The nature of thesedevelopment cycles
76、 may cause us to experience delays between the time we incur expenses associated with research and development and the time wegenerate revenues,if any,from such expenses.We may also not have sufficient funds or other resources to make the required investments in productdevelopment.Furthermore,we may
77、 invest substantial resources in the development of solutions that do not achieve market acceptance or commercialsuccess.Even where we succeed in our sales efforts and obtain new orders from customers,the complexity involved in delivering our solutions to suchcustomers makes it more difficult for us
78、 to consummate delivery in a timely manner and to recognize revenue and maximize profitability.Failure to deliverour solutions in a timely manner could result in order cancellations,damage our reputations and require us to indemnify our customers.Any of these risksrelating to our lengthy and expensi
79、ve development cycle could have a material adverse effect on our business,financial conditions and results ofoperations.3 Our sales cycle is variable and often lengthy,depends upon many factors outside our control,and requires us to expend significant time and resourcesprior to generating associated
80、 revenues.The typical sales cycle for our solutions and services is lengthy and unpredictable,requires pre-purchase evaluation by a significant number ofpersons in our customers organizations,and often involves a significant operational decision by our customers.Our sales efforts involve educating o
81、urcustomers and industry analysts and consultants about the use and benefits of our solutions,including the technical capabilities of our solutions and theefficiencies achievable by organizations deploying our solutions.Customers typically undertake a significant evaluation process,which frequently
82、involvesnot only our solutions,but also those of our competitors and can result in a lengthy sales cycle.Our sales cycle for new customers is typically one year totwo years and can extend even longer in some cases.We spend substantial time,effort and money in our sales efforts without any assurance
83、that suchefforts will produce any sales.Investment in highly skilled research and development and customer support personnel is critical to our ability to develop and enhance our solutionsand support our customers,but an increase in such investment may reduce our profitability.As a provider of softw
84、are solutions that rely upon technological advancements,we rely heavily on our research and development activities toremain competitive.We consequently depend in large part on the ability to attract,train,motivate and retain highly skilled information technologyprofessionals for our research and dev
85、elopment team,particularly individuals with knowledge and experience in the insurance industry.Because oursoftware solutions are highly complex and are generally used by our customers to perform critical business functions,we also depend heavily on otherskilled technology professionals to provide on
86、going support to our customers.Skilled technology professionals are often in high demand and short supply.If we are unable to hire or retain qualified research and development personnel and other technology professionals to develop,implement and modify oursolutions,we may be unable to meet the needs
87、 of our customers.Even if we succeed in retaining the necessary skilled personnel in our research anddevelopment and customer support efforts,our investments in our personnel and product development efforts increase our costs of operations and therebyreduce our profitability,unless accompanied by in
88、creased revenues.Given the highly competitive industry in which we operate,we may not succeed inincreasing our revenues in line with our increasing investments in our personnel and research and development efforts.Furthermore,as we seek to expand the marketing and offering of our products into new t
89、erritories,it requires the retention of new,additionalskilled personnel with knowledge of the particular market and applicable regulatory regime.Such skilled personnel may not be available at a reasonablecost relative to the additional revenues that we expect to generate in those territories,or may
90、not be available at all.In particular,wage costs in lower-costmarkets where we have recently added personnel,such as India,are increasing and we may need to increase the levels of our employee compensation morerapidly than in the past to remain competitive.The transition of projects to new locations
91、 may also lead to business disruptions due to differing levels ofemployee knowledge and organizational and leadership skills.Although we have never experienced an organized labor dispute,strike or work stoppage,any such occurrence,including in connection with unionization efforts,could disrupt our b
92、usiness and operations and harm our financial condition.Failure to manage our rapid growth both organic and non-organiccould effectively harm our business.We have recently experienced,and expect to continue to experience,rapid growth in our number of employees,especially in India,and in ourinternati
93、onal operations that has placed,and will continue to place,a significant strain on our operational and financial resources and our personnel.Tomanage our anticipated future growth effectively,we must continue to maintain and may need to enhance our information technology infrastructure,financial and
94、 accounting systems and controls and manage expanded operations and employees in geographically distributed locations.We also mustattract,train and retain a significant number of additional qualified sales and marketing personnel,professional services personnel,software engineers,technical personnel
95、 and management personnel.Our failure to manage our rapid growth effectively could have a material adverse effect on our business,results of operations and financial condition.Our growth could require significant capital expenditures and may divert financial resources from otherprojects,such as the
96、development of new services or product enhancements.For example,since it may take as long as six months to hire and train a newmember of our professional services staff,we make decisions regarding the size of our professional services staff based upon our expectations with respectto customer demand
97、for our products and services.If these expectations are incorrect,and we increase the size of our professional services organizationwithout experiencing an increase in sales of our products and services,we will experience reductions in our gross and operating margins and net income.Ifwe are unable t
98、o effectively manage our growth,our expenses may increase more than expected,our revenues could decline or grow more slowly thanexpected and we may be unable to implement our business strategy.Our rapid growth may also be accompanied by greater exposure to litigation,includingsuits by clients,vendor
99、s,employees or former employees,as the sizes of our workforce and our overall international operations increase.All such litigationcarries with it related costs and could divert our managements attention from ongoing business concerns.We also intend to continue to expand intoadditional international
100、 markets which,if not technologically or commercially successful,could harm our financial condition and prospects.4 The skilled and highly qualified workforce that we need to develop,implement and modify our solutions may be difficult to hire,train and retain,andwe could face increased costs to attr
101、act and retain our skilled workforce.Our business operations depend in large part on our ability to attract,train,motivate and retain highly skilled information technologyprofessionals,software programmers and communications engineers on a worldwide basis.In addition,our competitive success will dep
102、end on our abilityto attract and retain other outstanding,highly qualified employees,consultants and other professionals.Because our software products are highly complexand are generally used by our customers to perform critical business functions,we depend heavily on skilled technology professional
103、s.Skilled technologyprofessionals are often in high demand and short supply.If we are unable to hire or retain qualified technology professionals to develop,implement andmodify our solutions,we may be unable to meet the needs of our customers.In addition,serving several new customers or implementing
104、 several new large-scale projects in a short period of time may require us to attract and train additional IT professionals at a rapid rate.Once we hire and train our skilledemployees,if there is a downturn in worldwide economic conditions and in our business,we may need to lay off some of those emp
105、loyees,which willresult in our wasting the time and resources invested in training them,and wasting their accumulated know-how.If we fail to adapt to changing market conditions and cannot compete successfully with existing or new competitors,our business could be harmed.We may be unable to compete s
106、uccessfully with existing or new competitors.Our failure to adapt to changing market conditions and to competesuccessfully with established or new competitors could have a material adverse effect on our results of operations and financial condition.We face intensecompetition for the software product
107、s and services that we sell,including competition for managed services we provide to customers under long-termservice agreements.These managed services include management of data center operations and IT infrastructure,application management and ongoingsupport,systems modernization and consolidation
108、,and management of end-to-end business processes for billing and customer care operations.The market for communications information systems is highly competitive and fragmented,and we expect competition to continue to increase.Wecompete with independent software and service providers and with the in
109、-house IT and network departments of communications companies.Our maincompetitors include firms that provide IT services(including consulting,systems integration and managed services),software vendors that sell products forspecific aspects of a total information system,software vendors that speciali
110、ze in systems for particular communications services(such as internet,wirelineand wireless services,cable,satellite and service bureaus)and network equipment providers that offer software systems in combination with the sale ofnetwork equipment.We also compete with companies that provide digital com
111、merce software and solutions.We believe that our ability to compete with other vendors,as well as with in-house IT and network departments of communications companies,depends on a number of factors,including:The development by others of software products and services that are competitive with our pr
112、oducts and services The price at which others offer competitive software and services 5 The ability of competitors to deliver projects at a level of quality that rivals our own The responsiveness of our competitors to customer needs The ability of our competitors to hire,retain and motivate key pers
113、onnel A number of our competitors have long operating histories;large customer bases;substantial financial,technical,sales,marketing and otherresources;and strong name recognition.Current and potential competitors have established,and may establish in the future,cooperative relationshipsamong themse
114、lves,or with third parties to increase their abilities to address the needs of our existing,or prospective,customers.Additionally,our competitors have acquired,and may continue to acquire in the future,companies that may enhance their market offerings.Newcompetitors or alliances among competitors ma
115、y emerge and rapidly acquire significant market share.As a result,our competitors may be able to adaptmore quickly than us to new or emerging technologies and changes in customer requirements,and may be able to devote greater resources to the promotionand sale of their products.We cannot guarantee t
116、hat we will be able to compete successfully with existing or new competitors.If we fail to adapt tochanging market conditions and to compete successfully with established or new competitors,our results of operations and financial condition may beadversely affected.We may be required to increase or d
117、ecrease the scope of our operations in response to changes in the demand for our products and services,and if wefail to successfully plan and manage changes in the size of our operations,our business will suffer.In the past,we have both grown and contracted our operations,in some cases rapidly,to pr
118、ofitably offer our products and services in acontinuously changing market.If we are unable to manage these changes,or to plan and manage any future changes in the size and scope of our operations,our business will be negatively impacted.Restructurings and cost reduction measures that we have impleme
119、nted in the past have reduced the size of our operations and workforce.Reductions in personnel can result in significant severance,administrative and legal expenses,and may also adversely affect or delay various sales,marketing and product development programs and activities.These cost reduction mea
120、sures have included,and may in the future include,employeeseparation costs and consolidating and/or relocating certain of our operations to different geographic locations.Acquisitions,organic growth and absorption of significant numbers of customers employees in connection with managed services proj
121、ects have,from time to time,increased our headcount.During periods of expansion,we may need to serve several new customers or implement several new large-scale projects in short periods of time.This may require us to attract and train additional IT professionals at a rapid rate,as well as quickly ex
122、pand ourfacilities,which may be difficult to successfully implement.If existing customers are not satisfied with our solutions and services and either do not make subsequent purchases from us or do not continue usingsuch solutions and services,or if our relationships with our largest customers are i
123、mpaired,our revenue could be negatively affected.We depend heavily on repeat product and service revenues from our base of existing customers.Five of our customers accounted for,in theaggregate,20.7%and 15.6%of our revenues in the years ended December 31,2018 and 2019,respectively.If our existing cu
124、stomers are not satisfied withour solutions and services,they may not enter into new project contracts with us or continue using our technologies.A significant decline in our revenuestream from existing customers,including due to termination of agreement(s),would have a material adverse effect on ou
125、r business,results of operationsand financial condition.6 Our business often involves long-term,large,complex implementation projects across the globe,which involve uncertainties,mainly during theimplementation period,such as changes to the estimated project costs and changes in project schedule.Suc
126、h changes may cause disputes between usand our customers,due to failure on our part,or even in absence of failures on our part,and may in some cases result in cancellation of those projects.Such cancellation can adversely impact our revenues,profitability and/or,in some cases,our relationship with t
127、he relevant customer.Our business is characterized by relatively large,complex implementation projects or engagements that can have a significant impact on our totalrevenue and cost of revenue from quarter to quarter.A high percentage of our expenses,particularly employee compensation,are relatively
128、 fixed.Therefore,variations in the timing of the initiation,estimate of scope of work,progress or completion of projects or engagements can cause significantvariations in operating results from quarter to quarter.This is particularly the case for fixed-price contracts,where our delivery requirements
129、 sometimes span more than one year.For a highly complex,fixed-price project that requires customization,we may not be able to accurately estimate our actual costs of completing the project.We are oftendependent on the assistance of third-parties(such as our customers vendors or IT employees,or our s
130、ystem integrator partners)in implementing such aproject,which may not be provided in a timely manner.If our actual cost-to-completion of such a project significantly exceeds the estimated costs,wecould experience a loss on the related contract,which(when multiplied by multiple projects)could have a
131、material adverse effect on our results ofoperations,financial position and cash flow.Similarly,delays in implementation projects(whether fixed price or not)may affect our revenue and cause our operating results to vary widely.Our solutions are delivered over periods of time ranging from several mont
132、hs to a few years.Payment terms are generally based on periodic payments or onthe achievement of milestones.Any delays in payment or in the achievement of milestones may have a material adverse effect on our results of operations,financial position or cash flows.For non-fixed price contracts,we gene
133、rally provide our customers with up-front estimates regarding the duration,budget and costs associated withthe implementation of our products.Due to the complexities described above,however,we may not meet those upfront estimates and/or the expectations ofour customers,which could lead to a dispute
134、with a client.As an example,in 2017,we were involved in a dispute with a significant customer(which accounted for approximately 12%of our revenues in2016)under a software development project agreement.Work on the project was eventually canceled due to the dispute and we entered into a settlementagre
135、ement with the customer,which resulted in a reduction in our revenues and operating profit relative to our prior estimates for 2017.In 2018,asignificant customer in South Africa changed the scope of an ongoing project significantly,which resulted in a decrease in the revenues realized from thatcusto
136、mer during 2018,thereby adversely impacting our revenues in 2018.In 2019,a significant European customer cancelled,for convenience(and notdue a failure by us to comply with the terms of the agreement with such customer)an implementation project.While we recognized and collected the vastmajority of t
137、he sums payable to us under the foregoing implementation project,the cancellation resulted in the loss of potential future revenues from thiscustomer.Similar such disputes with other significant customers in the future,whether due to failure on our part,or even absent such failure on our part,could
138、result in lost revenues,and lower profit margins,and could harm our reputation,thereby adversely affecting our ability to attract new customers andto sell additional solutions and services to existing customers.We may be liable to our clients for damages caused by a violation of intellectual propert
139、y rights,the disclosure of other confidential information,including personally identifiable information,system failures,errors or unsatisfactory performance of services,and our insurance policies may not besufficient to cover these damages.We often have access to,and are required to collect and stor
140、e,sensitive or confidential client information,including personally identifiableinformation.Some of our client agreements do not limit our potential liability for breaches of confidentiality,infringement indemnity and certain othermatters.Furthermore,breaches of confidentiality may entitle the aggri
141、eved party to equitable remedies,including injunctive relief.If any person,includingany of our employees and subcontractors,penetrates our network security or misappropriates sensitive or confidential client information,includingpersonally identifiable information,we could be subject to significant
142、liability from our clients or from our clients customers for breaching contractualconfidentiality provisions or privacy laws.Despite measures we take to protect the intellectual property and other confidential information or personallyidentifiable information of our clients,unauthorized parties,incl
143、uding our employees and subcontractors,may attempt to misappropriate certain intellectualproperty rights that are proprietary to our clients or otherwise breach our clients confidences.Unauthorized disclosure of sensitive or confidential clientinformation,including personally identifiable informatio
144、n,or a violation of intellectual property rights,whether through employee misconduct,breach ofour computer systems,systems failure or otherwise,may subject us to liabilities,damage our reputation and cause us to lose clients.7 Many of our contracts involve projects that are critical to the operation
145、s of our clients businesses and provide benefits to our clients that may bedifficult to quantify.Any failure in a clients system or any breach of security could result in a claim for substantial damages against us,regardless of ourresponsibility for such failure.Furthermore,any errors by our employe
146、es in the performance of services for a client,or poor execution of such services,could result in a client terminating our engagement and seeking damages from us.In addition,while we have taken steps to protect the confidential information that we have access to,including confidential information we
147、 mayobtain through usage of our cloud-based services,our security measures may be breached.If a cyber-attack or other security incident were to result inunauthorized access to or modification of our customers data or our own data or our IT systems or in disruption of the services we provide to ourcu
148、stomers,or if our products or services are perceived as having security vulnerabilities,we could suffer significant damage to our business and reputation.Although we attempt to limit our contractual liability for consequential damages in rendering our services,these limitations on liability may nota
149、pply in all circumstances,may be unenforceable in some cases,or may be insufficient to protect us from liability for damages.There may be instanceswhen liabilities for damages are greater than the insurance coverage we hold and we will have to internalize those losses,damages and liabilities notcove
150、red by our insurance.Changes in privacy regulations may impose additional costs and liabilities on us,limit our use of information,and adversely affect our business.Personal privacy has become a significant issue in the United States,Europe,and many other countries where we operate.Many governmentag
151、encies and industry regulators continue to impose new restrictions and modify existing requirements about the collection,use,and disclosure of personalinformation.Changes to laws or regulations affecting privacy and security may impose additional liability and costs on us and may limit our use of su
152、chinformation in providing our services to customers.If we were required to change our business activities,revise or eliminate services or products,orimplement burdensome compliance measures,our business and results of operations may be harmed.Additionally,we may be subject to regulatoryenforcement
153、actions resulting in fines,penalties,and potential litigation if we fail to comply with applicable privacy laws and regulations.In particular,our European activities are subject to the European Union General Data Protection Regulation,or GDPR,which has createdadditional compliance requirements for u
154、s.GDPR broadens the scope of personal privacy laws to protect the rights of European Union citizens and requiresorganizations to report on data breaches within 72 hours and be bound by more stringent rules for obtaining the consent of individuals on how their datacan be used.GDPR became enforceable
155、on May 25,2018 and non-compliance may expose entities such as our company to significant fines or otherregulatory claims.In the United States,our operations in various states,such as New York and California,are now subject to expanded privacy regulations.In California,we are subject to the Californi
156、a Consumer Privacy Act,or CCPA,a statute that went into effect on January 1,2020.The CCPA imposesenhanced disclosure requirements for us regarding our interactions with customers who are residents of California,such as comprehensive privacy noticesfor consumers when we,or our agents,collect their pe
157、rsonal information.We may be further required to ensure third-party compliance,as under the CCPAwe could be liable if third parties that collect,process or retain personal information on our behalf violate the CCPAs privacy requirements.The sanctionsfor non-compliance could include fines and/or civi
158、l lawsuits.While we have invested in,and intend to continue to invest in,reasonably necessary resources to comply with these standards,to the extent thatwe fail to adequately comply,that failure could have an adverse effect on our business,financial conditions,results of operations and cash flows.8
159、Significant disruptions of our information technology systems or breaches of our data security could adversely affect our business.A significant invasion,interruption,destruction or breakdown of our information technology,or IT,systems and/or infrastructure by persons withauthorized or unauthorized
160、access could negatively impact our business and operations.We could also experience business interruption,information theftand/or reputational damage from cyber attacks,which may compromise our systems and lead to data leakage internally.Both data that has been inputtedinto our main IT platform,whic
161、h covers records of transactions,financial data and other data reflected in our results of operations,as well as data related toour proprietary rights(such as research and development,and other intellectual property-related data),are subject to material cyber security risks.Our ITsystems have been,a
162、nd are expected to continue to be,the target of malware and other cyber attacks.To date,we are not aware that we have experiencedany loss of,or disruption to,material information as a result of any such malware or cyber attack.We have invested in advanced detection,prevention and proactive systems t
163、o reduce these risks.Based on independent audits,we believe that ourlevel of protection is in keeping with the industry standards of peer technology companies.We also maintain a disaster recovery solution,as a means ofassuring that a breach or cyber attack does not necessarily cause the loss of our
164、information.We furthermore review our protections and remedial measuresperiodically in order to ensure that they are adequate.Despite these protective systems and remedial measures,techniques used to obtain unauthorized access are constantly changing,are becomingincreasingly more sophisticated and o
165、ften are not recognized until after an exploitation of information has occurred.We may be unable to anticipate thesetechniques or implement sufficient preventative measures,and we therefore cannot assure you that our preventative measures will be successful inpreventing compromise and/or disruption
166、of our information technology systems and related data.We furthermore cannot be certain that our remedialmeasures will fully mitigate the adverse financial consequences of any cyber attack or incident.Errors or defects in our software solutions could inevitably arise and would harm our profitability
167、 and our reputation with customers,and could evengive rise to claims against us.The quality of our solutions,including new,modified or enhanced versions thereof,is critical to our success.Since our software solutions arecomplex,they may contain errors that cannot be detected at any point in their te
168、sting phase.While we continually test our solutions for errors or defects andwork with customers to identify and correct them,errors in our technology may be found in the future.Testing for errors or defects is complicated becauseit is difficult to simulate the breadth of operating systems,user appl
169、ications and computing environments that our customers use,and our solutionsthemselves are increasingly complex.Errors or defects in our technology have resulted in terminated work orders and could result in delayed or lostrevenue,diversion of development resources and increased services,termination
170、 of work orders,damage to our brand and warranty and insurance costs inthe future.In addition,time-consuming implementations may also increase the number of services personnel we must allocate to each customer,therebyincreasing our costs and adversely affecting our business,results of operations and
171、 financial condition.In addition,since our customers rely on our solutions to operate,monitor and improve the performance of their business processes,they aresensitive to potential disruptions that may be caused by the use of,or any defects in,our software.As a result,we may be subject to claims for
172、 damagesrelated to software errors in the future.Liability claims could require us to spend significant time and money in litigation or to pay significant damages.Regardless of whether we prevail,diversion of key employees time and attention from our business,the incurrence of substantial expenses a
173、nd potentialdamage to our reputation might result.While the terms of our sales contracts typically limit our exposure to potential liability claims and we carry errorsand omissions insurance against such claims,there can be no assurance that such insurance will continue to be available on acceptable
174、 terms,if at all,orthat such insurance will provide us with adequate protection against any such claims.A significant liability claim against us could have a material adverseeffect on our business,results of operations and financial position.9 Incorrect or improper use of our products or our failure
175、 to properly train customers on how to implement or utilize our products could result incustomer dissatisfaction and negatively affect our business,results of operations,financial condition and growth prospects.Our products are complex and are deployed in a wide variety of network environments.The p
176、roper use of our solutions requires training of thecustomer.If our solutions are not used correctly or as intended,inadequate performance may result.Additionally,our customers or third-party partners mayincorrectly implement or use our solutions.Our solutions may also be intentionally misused or abu
177、sed by customers or their employees or third parties whoare able to access or use our solutions.Similarly,our solutions are sometimes installed or maintained by customers or third parties with smaller or lessqualified IT departments,potentially resulting in sub-optimal installation and,consequently,
178、performance that is less than the level anticipated by thecustomer.Because our customers rely on our software,services and maintenance support to manage a wide range of operations,the incorrect or improperuse of our solutions,our failure to properly train customers on how to efficiently and effectiv
179、ely use our solutions,or our failure to properly provideimplementation or maintenance services to our customers has resulted in terminated work orders and may result in termination of work orders,negativepublicity or legal claims against us in the future.Also,as we continue to expand our customer ba
180、se,any failure by us to properly provide these services willlikely result in lost opportunities for follow-on sales of our software and services.In addition,if there is substantial turnover of customer personnel responsible for implementation and use of our products,or if customer personnelare not w
181、ell trained in the use of our products,customers may defer the deployment of our products,may deploy them in a more limited manner thanoriginally anticipated or may not deploy them at all.Further,if there is substantial turnover of the customer personnel responsible for implementation anduse of our
182、products,our ability to make additional sales may be substantially limited.The market for software solutions and related services is highly competitive.The market for software solutions and related services and for business solutions for the insurance and financial services industry in particular,is
183、highly competitive.Many of our smaller competitors have been acquired by larger competitors,which provides such smaller competitors with greaterresources and potentially a larger client base for which they can develop solutions.Our customers or potential customers may prefer suppliers that arelarger
184、 than us,are better known in the market or that have a greater global reach.In addition,we and some of our competitors have developed systems toallow customers to outsource their core systems to external providers(known as BPO).We are seeking to partner with BPO providers,but there can be noassuranc
185、e that such BPO providers will adopt our solutions rather than those of our competitors.Determinations by current and potential customers to useBPO providers that do not use our solutions may result in the loss of such customers and limit our ability to gain new customers.Consolidation in the insura
186、nce industry in which some of our clients operate also increases competitiveness for us by reducing the number ofpotential clients for whose business we and our competitors compete.The high level of continuity with which insurance and other financial services clientsremain with their providers of so
187、ftware-related services also increases general competitiveness by tying clients to their service providers and therebyshrinking the market of potential clients.Assertions by third parties of infringement or other violation by us of their intellectual property rights could result in significant costs
188、 and substantiallyharm our business and results of operations.The software industry is characterized by the existence of a large number of patents and frequent claims and related litigation regarding patentsand other intellectual property rights.In particular,leading companies in the software indust
189、ry own large numbers of patents,copyrights,trademarks andtrade secrets,which they may use to assert claims against us.From time to time,third parties,including certain of these leading companies,may assertpatent,copyright,trademark or other intellectual property claims against us,our customers and p
190、artners,and those from whom we license technology andintellectual property.Although we believe that our products and services do not infringe upon the intellectual property rights of third parties,we cannot assure you thatthird parties will not assert infringement or misappropriation claims against
191、us with respect to current or future products or services,or that any suchassertions will not require us to enter into royalty arrangements or result in costly litigation,or result in us being unable to use certain intellectual property.We cannot assure you that we are not infringing or otherwise vi
192、olating any third party intellectual property rights.Infringement assertions from third partiesmay involve patent holding companies or other patent owners who have no relevant product revenues,and therefore our own issued and pending patentsmay provide little or no deterrence to these patent owners
193、in bringing intellectual property rights claims against us.10 Any intellectual property infringement or misappropriation claim or assertion against us,our customers or partners,and those from whom welicense technology and intellectual property could have a material adverse effect on our business,fin
194、ancial condition,reputation and competitive positionregardless of the validity or outcome.If we are forced to defend against any infringement or misappropriation claims,whether they are with or withoutmerit,are settled out of court,or are determined in our favor,we may be required to expend signific
195、ant time and financial resources on the defense of suchclaims.Furthermore,an adverse outcome of a dispute may require us to pay damages,potentially including treble damages and attorneys fees,if we arefound to have willfully infringed on a partys intellectual property;cease making,licensing or using
196、 our products or services that are alleged to infringe ormisappropriate the intellectual property of others;expend additional development resources to redesign our products or services;enter into potentiallyunfavorable royalty or license agreements in order to obtain the right to use necessary techn
197、ologies or works;and to indemnify our partners,customers,andother third parties.Royalty or licensing agreements,if required or desirable,may be unavailable on terms acceptable to us,or at all,and may requiresignificant royalty payments and other expenditures.Any of these events could seriously harm
198、our business,results of operations and financial condition.In addition,any lawsuits regarding intellectual property rights,regardless of their success,could be expensive to resolve and divert the time and attention ofour management and technical personnel.Although we apply measures to protect our in
199、tellectual property rights and our source code,there can be no assurance that the measures that weemploy to do so will be successful.In accordance with industry practice,since we have no registered patents on our software solution technologies,we rely on a combination ofcontractual provisions and in
200、tellectual property law to protect our proprietary technology.We believe that due to the dynamic nature of the computer andsoftware industries,copyright protection is less significant than factors such as the knowledge and experience of our management and personnel,thefrequency of product enhancemen
201、ts and the timeliness and quality of our support services.We seek to protect the source code of our products as tradesecret information and as unpublished copyright works.We also rely on security and copy protection features in our proprietary software.We distribute ourproducts under software licens
202、e agreements that grant customers a personal,non-transferable license to use our products and contain terms and conditionsprohibiting the unauthorized reproduction or transfer of our products.In addition,while we attempt to protect trade secrets and other proprietaryinformation through non-disclosur
203、e agreements with employees,consultants and distributors,not all of our employees have signed invention assignmentagreements.Although we intend to protect our rights vigorously,there can be no assurance that these measures will be successful.Our failure to protect ourrights,or the improper use of ou
204、r products by others without licensing them from us could have a material adverse effect on our results of operations andfinancial condition.We and our customers rely on technology and intellectual property of third parties,the loss of which could limit the functionality of our products anddisrupt o
205、ur business.We use technology and intellectual property licensed from unaffiliated third parties in certain of our products,and we may license additional third-party technology and intellectual property in the future.Any errors or defects in this third-party technology and intellectual property coul
206、d result in errorsthat could harm our brand and business.In addition,licensed technology and intellectual property may not continue to be available on commerciallyreasonable terms,or at all.The loss of the right to license and distribute this third party technology could limit the functionality of o
207、ur products and mightrequire us to redesign our products.Further,although we believe that there are currently adequate replacements for the third-party technology and intellectual property we presentlyuse and distribute,the loss of our right to use any of this technology and intellectual property co
208、uld result in delays in producing or delivering affectedproducts until equivalent technology or intellectual property is identified,licensed or otherwise procured,and integrated.Our business would be disruptedif any technology and intellectual property we license from others or functional equivalent
209、s of this software were either no longer available to us or nolonger offered to us on commercially reasonable terms.In either case,we would be required either to attempt to redesign our products to function withtechnology and intellectual property available from other parties or to develop these com
210、ponents ourselves,which would result in increased costs and couldresult in delays in product sales and the release of new product offerings.Alternatively,we might be forced to limit the features available in affectedproducts.Any of these results could harm our business and impact our results of oper
211、ations.11 We could be required to provide the source code of our products to our customers.Some of our customers have the right to require the source code of our products to be deposited into a source code escrow.Under certaincircumstances,our source code could be released to our customers.The condi
212、tions triggering the release of our source code vary by customer.A release ofour source code would give our customers access to our trade secrets and other proprietary and confidential information which could harm our business,results of operations and financial condition.A few of our customers have
213、 the right to use the source code of some of our products based on the licenseagreements signed with such clients(mostly with respect to older versions of our solutions),although such use is limited for specific matters and cases,these clients are exposed to some of our trade secrets and other propr
214、ietary and confidential information which could harm us.Some of our services and technologies may use“open source”software,which may restrict how we use or distribute our services or require that werelease the source code of certain products subject to those licenses.Some of our services and technol
215、ogies may incorporate software licensed under so-called“open source”licenses,including,but not limited to,theGNU General Public License and the GNU Lesser General Public License.In addition to risks related to license requirements,usage of open sourcesoftware can lead to greater risks than use of th
216、ird-party commercial software,as open source licensors generally do not provide warranties or controls onorigin of the software.Additionally,open source licenses typically require that source code subject to the license be made available to the public and thatany modifications or derivative works to
217、 open source software continue to be licensed under open source licenses.These open source licenses typicallymandate that proprietary software,when combined in specific ways with open source software,become subject to the open source license.If we combineour proprietary software with open source sof
218、tware,we could be required to release the source code of our proprietary software.We take steps to ensure that our proprietary software is not combined with,and does not incorporate,open source software in ways that wouldrequire our proprietary software to be subject to an open source license.Howeve
219、r,few courts have interpreted open source licenses,and the manner inwhich these licenses may be interpreted and enforced is therefore subject to some uncertainty.Additionally,we rely on multiple software programmers todesign our proprietary technologies,and although we take steps to prevent our prog
220、rammers from including open source software in the technologies andsoftware code that they design,write and modify,we do not exercise complete control over the development efforts of our programmers and we cannot becertain that our programmers have not incorporated open source software into our prop
221、rietary products and technologies or that they will not do so in thefuture.In the event that portions of our proprietary technology are determined to be subject to an open source license,we could be required to publiclyrelease the affected portions of our source code,re-engineer all or a portion of
222、our technologies,or otherwise be limited in the licensing of our technologies,each of which could reduce or eliminate the value of our services and technologies and materially and adversely affect our business,results of operationsand prospects.Catastrophes may adversely impact the P&C insurance ind
223、ustry,preventing us from expanding or maintaining our existing customer base andincreasing our revenues.Our customers include P&C insurance carriers that have experienced,and will likely experience in the future,catastrophe losses that adverselyimpact their businesses.Catastrophes can be caused by v
224、arious events,including,amongst others,hurricanes,tsunamis,floods,windstorms,earthquakes,hail,tornados,explosions,severe weather and fires,or the spread of pandemics of disease,such as the cornoavirus.Moreover,acts of terrorism or warcould cause disruptions in our or our customers businesses or the
225、economy as a whole.The risks associated with natural disasters and catastrophes areinherently unpredictable,and it is difficult to predict the timing of such events or estimate the amount of loss they will generate.In the event a futurecatastrophe adversely impacts our current or potential customers
226、,we may be prevented from maintaining and expanding our customer base and fromincreasing our revenues because such events may cause customers to postpone purchases of new products and professional service engagements ordiscontinue projects.12 Decreases in the capital markets may adversely impact the
227、 life insurance industry,thereby preventing us from expanding or maintaining our existingcustomer base and increasing our revenues.Our customers include life insurance carriers that have invested some of their funds in the capital markets.Those carriers may experience in thefuture major losses in th
228、ose capital market investments that may cause disruptions to their businesses or to the economy as a whole.Any such majordisruption,may cause those existing or potential new customers to postpone purchases of new products or professional service engagements,or discontinueexisting projects,which,in t
229、urn,may prevent us from increasing our revenues,or from maintaining or expanding our customer base.There may be consolidation in the insurance market,which could reduce the use of our products and services and adversely affect our revenues.Mergers or consolidations among our customers could reduce t
230、he number of our customers and potential customers.This could adversely affectour revenues even if these events do not reduce the aggregate number of customers or the activities of the consolidated entities.If our customers mergewith or are acquired by other entities that are not our customers,or th
231、at use fewer of our products and services,they may discontinue or reduce their use ofour products and services.Any of these developments could materially and adversely affect our results of operations and cash flows.Our deed of trust related to our Series B Debentures contains certain affirmative co
232、venants and restrictive provisions that,if breached,could result inan increase in the interest rate and,potentially,an acceleration of our obligation to repay those debentures,which we may be unable to effect.In the deed of trust that we have entered into with the trustee for the holders of our Seri
233、es B Debentures,or the debentures,which we offered andsold in an Israeli public offering and Israeli private placement in September 2017,we have undertaken to maintain a number of conditions and limitationson the manner in which we can operate our business,including limitations on our ability to und
234、ergo a change of control,distribute dividends,incur afloating charge on our assets,or undergo an asset sale or other change that results in a fundamental change in our operations.The deed of trust also requiresus to comply with certain financial covenants,including maintenance of a minimum sharehold
235、ers equity level and a maximum ratio of financialindebtedness to shareholders equity,at levels that are customary for companies of comparable size.These limitations and covenants may force us to pursueless than optimal business strategies or forego business arrangements that could otherwise be finan
236、cially advantageous to us and,by extension,ourdebenture holders.The deed of trust furthermore provides for an upwards adjustment in the interest rate payable under the debentures in the event that ourdebentures rating is downgraded below a certain level.A breach of the financial covenants for more t
237、han two successive quarters or a substantialdowngrade in the Israeli rating of the debentures(below BBB-)would constitute an event of default that could result in the acceleration of our obligation torepay the debentures,of which there is US$58.9 million principal amount outstanding(as of March 1,20
238、20),which accelerated repayment may be difficultfor us to effect.Risks Relating to Our International Operations Our international sales and operations subject us to additional risks that can adversely affect our business,results of operations and financialcondition.We are continuing to expand our in
239、ternational operations as part of our growth strategy.In fiscal years 2018 and 2019,52.8%and 49.8%,respectively,of our revenues were derived from outside of North America.Our current international operations and our plans to further expand ourinternational operations subject us to a variety of risks
240、,including:Increased exposure to fluctuations in foreign currency exchange rates Complexity in our tax planning,and increased exposure to changes in tax regulations in various jurisdictions in which we operate,whichcould adversely affect our operating results and frustrate our ability to conduct eff
241、ective tax planning 13 Increased management,travel,infrastructure and legal compliance costs associated with having multiple international operations Longer payment cycles and difficulties in enforcing contracts and collecting accounts receivable The need to localize our products and licensing progr
242、ams for international customers Lack of familiarity with and unexpected changes in foreign regulatory requirements The burden of complying with a wide variety of foreign laws and legal standards Compliance with the U.S.Foreign Corrupt Practices Act of 1977,as amended,or FCPA,particularly in emerging
243、 market countries The potential worsening of the coronavirus outbreak on a global scale,which may cause customers to cancel projects with us,preventpotential future opportunities for our business and harm our ability to maintain a healthy workforce that can implement our services andsolutions offeri
244、ngs The unknown and potential adverse impact of Brexit on our EU-and UK-based operations and revenues Import and export license requirements,tariffs,taxes and other trade barriers Increased financial accounting and reporting burdens and complexities Weaker protection of intellectual property rights
245、in some countries Multiple and possibly overlapping tax regimes Political,social and economic instability abroad,terrorist attacks and general security concerns As we continue to expand our business globally,our success will depend,in large part,on our ability to anticipate and effectively manage th
246、eseand other risks associated with our international operations.Any of these risks could harm our international operations and reduce our international sales,adversely affecting our business,results of operations,financial condition and growth prospects.International operations in the insurance indu
247、stry,in which a significant portion of our business is concentrated,are accompanied by additional costsrelated to adaptation to regulations in specific territories.As we seek to expand the marketing and offering of our products into new territories,because insurance regulations vary by legal jurisdi
248、ction,theinvestment required to adapt our solutions to the legal and language requirements of such territories may prevent or delay us from effectively expandinginto such territories.Such adaptation process requires the retention of new,additional skilled personnel with knowledge of the particular m
249、arket andapplicable regulatory regime.Such skilled personnel may not be available at a reasonable cost relative to the additional revenues that we expect torecognize in those territories,or may not be available at all.Our international operations expose us to risks associated with fluctuations in fo
250、reign currency exchange rates that could adversely affect ourbusiness.Most of our revenues are derived from international operations that are conducted in local currencies.Those operations are conducted in USdollars,GBP,Euro,NIS,Indian rupee,or INR,and Polish zloty,or PLN.In 2018 and 2019,our revenu
251、es were approximately 56.9%and 55.6%,respectively,in US dollars,with the remainder in the other currencies.14 In some territories,like in Israel,India and Poland,our cost of operations in local currency is higher than the revenues derived from suchoperations.In other territories,our revenues are hig
252、her than our cost of operations in local currency.Because exchange rates between the NIS,GBP,Euro,INR and the PLN against the US dollar fluctuate continuously,exchange rate fluctuations and especially larger periodic devaluations could negativelyaffect our revenue and profitability.In certain locati
253、ons,we engage in currency-hedging transactions intended to reduce the effect of fluctuations in foreign currency exchange rates onour financial position and results of operations.However,there can be no assurance that any such hedging transactions will materially reduce the effect offluctuation in f
254、oreign currency exchange rates on such results.In addition,if for any reason exchange or price controls or other restrictions on theconversion of foreign currencies were imposed,our financial position and results of operations could be adversely affected.Our business may be materially affected by ch
255、anges to fiscal and tax policies.Potentially negative or unexpected tax consequences of these policies,orthe uncertainty surrounding their potential effects,could adversely affect our results of operations and share price.As a multinational corporation,we are subject to income taxes,withholding taxe
256、s and indirect taxes in numerous jurisdictions worldwide.Significant judgment and management attention and resources are required in evaluating our tax positions and our worldwide provision for taxes.In theordinary course of business,there are many activities and transactions for which the ultimate
257、tax determination is uncertain.In addition,our tax obligationsand effective tax rates could be adversely affected by changes in the relevant tax,accounting,and other laws,regulations,principles and interpretations.This may include recognizing tax losses or lower than anticipated earnings in jurisdic
258、tions where we have lower statutory rates and higher than anticipatedearnings in jurisdictions where we have higher statutory rates,changes in foreign currency exchange rates,or changes in the valuation of our deferred taxassets and liabilities.We may be audited in various jurisdictions,and such jur
259、isdictions may assess additional taxes against us.If we experience unfavorable resultsfrom one or more such tax audits,there could be an adverse effect on our tax rate and therefore on our net income.Although we believe our tax estimatesare reasonable,the final determination of any tax audits or lit
260、igation could be materially different from our historical tax provisions and accruals,whichcould have a material adverse effect on our operating results or cash flows in the period or periods for which a determination is made.Additionally,we aresubject to transfer pricing rules and regulations,inclu
261、ding those relating to the flow of funds between us and our affiliates,which are designed to ensurethat appropriate levels of income are reported in each jurisdiction in which we operate.As we continue to expand our business in emerging markets,such as India,we face increasing challenges that could
262、adversely impact our results ofoperations,reputation and business.One-third of our employees are currently located in India.Our significant presence in India,in particular our Research&Development personneland our personnel for the delivery of our professional services,poses a number of challenges.T
263、hese challenges are related to more volatile economicconditions,poor protection of intellectual property,inadequate protection against crime(including counterfeiting,corruption and fraud),lack of dueprocess,and inadvertent breaches of local laws or regulations.In addition,local business practices ma
264、y be inconsistent with international regulatoryrequirements,such as anti-corruption and anti-bribery laws and regulations(including the U.S.Foreign Corrupt Practices Act and the U.K.Bribery Act)towhich we are subject.It is possible that some of our employees,subcontractors,agents or partners may vio
265、late such legal and regulatory requirements,which may expose us to criminal or civil enforcement actions,including penalties and suspension or disqualification from U.S.federal procurementcontracting.If we fail to comply with such legal and regulatory requirements,our business and reputation may be
266、harmed.Conducting business in India involves unique challenges,including potential political instability;threats of terrorism;the transparency,consistency and effectiveness of business regulation;corruption;the protection of intellectual property;and the availability of sufficient qualified localper
267、sonnel.Any of these or other challenges associated with operating in India may adversely affect our business or operations.Terrorist activity in Indiaand Pakistan has contributed to tensions between those countries and our operations in India may be adversely affected by future political and other e
268、ventsin the region.15 Risks Related to an Investment in our Common Shares There is relatively limited trading volume for our common shares,which reduces liquidity for our shareholders,and may furthermore cause the shareprice to be volatile,all of which may lead to losses by investors.There has histo
269、rically been limited trading volume in our common shares,both on the NASDAQ Capital Market and the TASE.While over thepast couple of years,there has been improvement,the trading volume is still relatively low,which results in reduced liquidity for our shareholders.As afurther result of the historica
270、lly limited volume,our common shares have experienced significant market price volatility in the past and may experiencesignificant market price and volume fluctuations in the future,in response to factors such as announcements of developments related to our business,announcements by competitors,qua
271、rterly fluctuations in our financial results and general conditions in the industry in which we compete.We are a foreign private issuer under the rules and regulations of the SEC and are therefore exempt from a number of rules under the Exchange Actand are permitted to file less information with the
272、 SEC than a domestic U.S.reporting company,which reduces the level and amount of disclosure thatyou receive.As a foreign private issuer under the Exchange Act,we are exempt from certain rules under the Exchange Act,including the proxy rules,whichimpose certain disclosure and procedural requirements
273、for proxy solicitations.Moreover,we are not required to file periodic reports and financialstatements with the SEC as frequently or as promptly as domestic U.S.companies with securities registered under the Exchange Act;and are not requiredto comply with Regulation FD,which imposes certain restricti
274、ons on the selective disclosure of material information.In addition,our officers,directors andprincipal shareholders are exempt from the reporting and“short-swing”profit recovery provisions of Section 16 of the Exchange Act and the rules underthe Exchange Act with respect to their purchases and sale
275、s of our common shares.Accordingly,you receive less information about our company than youwould receive about a domestic U.S.company,and are afforded less protection under the U.S.federal securities laws than you would be afforded in holdingsecurities of a domestic U.S.company.As a foreign private i
276、ssuer,we are also permitted,and have begun,to follow certain home country corporate governance practices instead of thoseotherwise required under the Listing Rules of the NASDAQ Stock Market for domestic U.S.issuers.We have informed NASDAQ that we follow homecountry practicein the Cayman Islands wit
277、h regard to,among other things,composition of our Board of Directors(whereby a majority of the membersof our Board of Directors need not be“independent directors,”as is generally required for domestic U.S.issuers),director nomination procedure andapproval of compensation of officers.In addition,we h
278、ave opted to follow home country law instead of the Listing Rules of the NASDAQ Stock Marketthat require that a listed company obtain shareholder approval for certain dilutive events,such as the establishment or amendment of certain equity-basedcompensation plans,an issuance that will result in a ch
279、ange of control of the Company,certain transactions other than a public offering involving issuancesof a 20%or greater interest in the Company,and certain acquisitions of the stock or assets of another company.Following our home country governancepractices as opposed to the requirements that would o
280、therwise apply to a United States company listed on the NASDAQ Capital Market may provide ourshareholders with less protection than they would have as stockholders of a domestic U.S.company.Our controlling shareholder,Formula Systems(1985)Ltd.,beneficially owns approximately 47.8%of our outstanding
281、Common Shares and thereforeasserts a controlling influence over matters requiring shareholder approval,which could delay or prevent a change of control that may benefit ourpublic shareholders.Formula Systems(1985)Ltd.beneficially owns approximately 47.8%of our outstanding Common Shares.As a result,i
282、t exercises a controllinginfluence over our operations and business strategy and has sufficient voting power to control the outcome of various matters requiring shareholderapproval.These matters may include:The composition of our board of directors,which has the authority to direct our business and
283、to appoint and remove our officers 16 Approving or rejecting a merger,consolidation or other business combination Raising future capital Amending our Articles,which govern the rights attached to our Common Shares This concentration of ownership of our Common Shares could delay or prevent proxy conte
284、sts,mergers,tender offers,open-market purchaseprograms or other purchases of our Common Shares that might otherwise give you the opportunity to realize a premium over the then-prevailing marketprice of our Common Shares.This concentration of ownership may also adversely affect our share price.Our U.
285、S.shareholders may suffer adverse tax consequences if we are classified as a passive foreign investment company or as a“controlled foreigncorporation”.Generally,if for any taxable year 75%or more of our gross income is passive income,or at least 50%of the average quarterly value of our assets(which
286、may be measured in part by the market value of our Common Shares,which is subject to change)are held for the production of,or produce,passiveincome,we would be characterized as a passive foreign investment company,or PFIC,for U.S.federal income tax purposes under the Internal RevenueCode of 1986,as
287、amended,or the Code.Based on our gross income and gross assets,and the nature of our business,we believe that we were not classifiedas a PFIC for the taxable year ended December 31,2019.Because PFIC status is determined annually based on our income,assets and activities for theentire taxable year,it
288、 is not possible to determine whether we will be characterized as a PFIC for the taxable year ending December 31,2020,or for anysubsequent year,until we finalize our financial statements for that year.Furthermore,because the value of our gross assets is likely to be determined inlarge part by refere
289、nce to our market capitalization,a decline in the value of our Common Shares may result in our becoming a PFIC.Accordingly,therecan be no assurance that we will not be considered a PFIC for any taxable year.Our characterization as a PFIC could result in material adverse taxconsequences for you if yo
290、u are a U.S.investor,including having gains realized on the sale of our Common Shares treated as ordinary income,rather than acapital gain,the loss of the preferential rate applicable to dividends received on our Common Shares by individuals who are U.S.holders,and havinginterest charges apply to di
291、stributions by us and the proceeds of share sales.Certain elections exist that may alleviate some of the adverse consequences ofPFIC status and would result in an alternative treatment(such as mark-to-market treatment)of our Common Shares.Prospective U.S.investors shouldconsult their own tax adviser
292、s regarding the potential application of the PFIC rules to them.Prospective U.S.investors should refer to“Item 10.E.TaxationU.S.Federal Income Tax Considerations”for discussion of additional U.S.income tax considerations applicable to them based on our treatment as aPFIC.Certain U.S.holders of our C
293、ommon Shares may suffer adverse tax consequences if we or any of our non-U.S.subsidiaries are characterized as a“controlled foreign corporation,”or a CFC,under Section 957(a)of the Code.Certain changes to the CFC constructive ownership rules under Section958(b)of the Code introduced by the U.S.Tax A
294、ct may cause one or more of our non-U.S.subsidiaries to be treated as CFCs,may also impact our CFCstatus,and may adversely affect holders of our Common Shares that are United States shareholders.Generally,for U.S.shareholders that own 10%or moreof the combined vote or combined value of our Common Sh
295、ares,this may result in adverse U.S.federal income tax consequences and these shareholdersmay be subject to certain reporting requirements with the U.S.Internal Revenue Service.Any such 10%U.S.shareholder should consult its own taxadvisors regarding the U.S.tax consequences of acquiring,owning,or di
296、sposing our Common Shares and the impact of the U.S.Tax Act,especially thechanges to the rules relating to CFCs.17 Risks Related to Our Israeli Operations and Our Status as a Cayman Islands Company The tax benefits that are available to us require us to continue to meet various conditions and may be
297、 terminated or reduced in the future,which couldincrease our costs and taxes We derive and expect to continue to derive significant benefits from various programs,including Israeli tax benefits relating to our“PreferredTechnology Enterprise”,or PTE programs.To be eligible for tax benefits as a Prefe
298、rred Technology Enterprise,we must continue to meet certainconditions.If we do not meet the conditions stipulated in the Israeli Law for the Encouragement of Capital Investments,5719-1959,or the Investment Lawand the regulations promulgated thereunder,as amended,for the PTE,any of the associated tax
299、 benefits may be cancelled and we would be required torepay the amount of such benefits,in whole or in part,including interest and consumer price index,or CPI,linkage(or other monetary penalties).Further,in the future these tax benefits may be reduced or discontinued.While we believe that we have me
300、t and continue to meet the conditions that entitle us topreviously-obtained Israeli tax benefits,there can be no assurance that the Israeli Tax Authority will agree.The Israeli government grants that our Israeli subsidiary has received require us to meet several conditions and restrict our ability t
301、o manufactureproducts and transfer know-how developed using such grants outside of Israel and require us to satisfy specified conditions.One of our Israeli subsidiaries received grants in the past from the government of Israel through the National Technological Innovation Authority,or the Innovation
302、 Authority(formerly operating as Office of the Chief Scientist of the Ministry of Economy of the State of Israel,or the OCS),for thefinancing of a portion of its research and development expenditures in Israel with respect to our legacy technology.In consideration for receiving grantsfrom the Innova
303、tion Authority,we are obligated to pay the Innovation Authority royalties from the revenues generated from the sale of products(andrelated services)developed(in whole or in part)using the Innovation Authority funds,in an amount that is up to 100%to 150%of the aggregate amount ofthe total grants that
304、 we received from the Innovation Authority,plus annual interest for grants received after January 1,1999.We must fully and originallyown any intellectual property developed using the Innovation Authority grants and any right derived therefrom unless transfer thereof is approved inaccordance with the
305、 provisions of the Israeli Encouragement of Research,Development and Technological Innovation Law,5744-1984,or the InnovationLaw(formerly known as the Encouragement of Industrial Research and Development Law,5744-1984,or the Research Law),and related regulations.When a company develops know-how,tech
306、nology or products using grants provided by the Innovation Authority,the terms of these grants and theInnovation Law restrict the transfer of such know-how,and the transfer of manufacturing or manufacturing rights of such products,technologies or know-how outside of Israel.Even after the repayment o
307、f such grants in full,we will remain subject to the restrictions set forth under the Innovation Law,including:Transfer of know-how outside of Israel.Any transfer of the know-how that was developed with the funding of the Innovation Authority,outside of Israel,requires prior approval of the Innovatio
308、n Authority,and the payment of a redemption fee.Local manufacturing obligation.The terms of the grants under the Innovation Law require that the manufacturing of products resulting fromInnovation Authority-funded programs be carried out in Israel,unless a prior written approval of the Innovation Aut
309、hority is obtained(exceptfor a transfer of up to 10%of the production rights,for which a notification to the Innovation Authority is sufficient).Certain reporting obligations.We,as any recipient of a grant or a benefit under the Innovation Law,are required to file reports on theprogress of activitie
310、s for which the grant was provided as well as on our revenues from know-how and products funded by the InnovationAuthority.In addition,we are required to notify the Innovation Authority of certain events detailed in the Innovation Law.Therefore,if aspects of our technologies are deemed to have been
311、developed with Innovation Authority funding,the discretionary approval of anInnovation Authority committee would be required for any transfer to third parties outside of Israel of know-how or manufacturing or manufacturing rightsrelated to those aspects of such technologies.We may not receive those
312、approvals.Furthermore,the Innovation Authority may impose certain conditions onany arrangement under which it permits us to transfer technology or development out of Israel.The transfer of Innovation Authority-supported technology or know-how outside of Israel may involve the payment of significant
313、amounts,depending upon the value of the transferred technology or know-how,the amount of Innovation Authority support,the time of completion of the InnovationAuthority-supported research project and other factors.Furthermore,the consideration available to our shareholders in a transaction involving
314、the transferoutside of Israel of technology or know-how developed with Innovation Authority funding(such as a merger or similar transaction)may be reduced by anyamounts that we are required to pay to the Innovation Authority.18 We received grants from the Innovation Authority prior to an extensive a
315、mendment to the Research Law that came into effect as of January 1,2016,or the Amendment,which may also affect the terms of existing grants.The Amendment provides for an interim transition period(which has not yetexpired),after which time our grants will be subject to terms of the Amendment.Under th
316、e Research Law,as amended by the Amendment,the InnovationAuthority is provided with a power to modify the terms of existing grants.Such changes,if introduced by the Innovation Authority in the future,mayimpact the terms governing our grants.Our shareholders may face difficulties in protecting their
317、interests because we are incorporated under Cayman Islands law Our corporate affairs are governed by our memorandum of association,or the Memorandum,our articles of association,or the Articles,theCompanies Law(2016 Revision)of the Cayman Islands,or the Companies Law,and the common law of the Cayman
318、Islands.The rights of ourshareholders and the fiduciary responsibilities of our directors under the laws of the Cayman Islands are not as clearly established under statutes or judicialprecedent as in jurisdictions in the United States.Therefore,you may have more difficulty in protecting your interes
319、ts than would shareholders of acorporation incorporated in a jurisdiction in the United States,due to the comparatively less developed nature of Cayman Islands law in this area.The Companies Law permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies
320、and non-Cayman Islands companies.Dissenting shareholders have the right to be paid the fair value of their shares(which,if not agreed between the parties,will bedetermined by the Cayman Islands court)if they follow the required procedures,subject to certain exceptions.Court approval is not required
321、for a mergeror consolidation which is effected in compliance with these statutory procedures.In addition,there are statutory provisions that facilitate the reconstruction and amalgamation of companies,provided that the arrangement isapproved by a majority in number of each class of shareholders and
322、creditors with whom the arrangement is to be made,and who must in additionrepresent three-fourths in value of each such class of shareholders or creditors,as the case may be,that are present and voting either in person or by proxyat a meeting convened for that purpose.The convening of the meeting an
323、d subsequently the arrangement must be sanctioned by the Grand Court of theCayman Islands.A dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved.When a takeover offer is made and accepted by holders of 90.0%of the shares within four mont
324、hs,the offeror may,within a two-month period,require the holders of the remaining shares to transfer such shares on the terms of the offer.An objection can be made to the Grand Court of the CaymanIslands but this is unlikely to succeed unless there is evidence of fraud,bad faith or collusion.If the
325、arrangement and reconstruction is thus approved,the dissenting shareholder would have no rights comparable to appraisal rights,whichwould otherwise ordinarily be available to dissenting shareholders of a corporation incorporated in a jurisdiction in the United States,providing rights toreceive payme
326、nt in cash for the judicially determined value of the shares.This may make it more difficult for you to assess the value of any considerationyou may receive in a merger or consolidation or to require that the offeror give you additional consideration if you believe the consideration offered isinsuff
327、icient.Shareholders of Cayman Islands exempted companies have no general rights under Cayman Islands law to inspect corporate records and accountsor to obtain copies of lists of shareholders.Our directors have discretion under our Memorandum and Articles to determine whether or not,and under whatcon
328、ditions,our corporate records may be inspected by our shareholders,but are not obliged to make them available to our shareholders.This may make itmore difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from othersharehol
329、ders in connection with a proxy contest.Subject to limited exceptions,under Cayman Islands law,a minority shareholder may not bring a derivative action against the board of directors.19 Our home jurisdiction,the Cayman Islands,has been added by the European Council to the EUs list of non-cooperative
330、 jurisdictions for tax purposes,commonly referred to as the EU blacklist.This status,if not removed,may have an adverse impact upon our reputation and,potentially,our financialcondition and results of our activities.In February 2020,the Cayman Islands was added to a list of non-cooperative jurisdict
331、ions for tax purposes,commonly referred to as the EUblacklist.It is commonly believed that the reason for the inclusion of the Cayman Islands in that list was due to its having missed the EUs deadline(endof 2019)for the introduction of legislation for the registration of private funds domiciled in t
332、he Cayman Islands(the legislation was introduced in the lastquarter of 2019,but did not formally become law until early February 2020).While there is a common expectation that the Cayman Islands will be removed from the blacklist when the list is next updated,in March 2020,wecannot assure you that w
333、ill be the case.The reputational harm associated with our being a Cayman Islands entity could potentially have an adverse impacton our financial condition and results of operations if that status continues for an extended period of time.Service of process and enforcement of legal proceedings commenced against us in the United States may be difficult to obtain.We operate under the laws of the Cayma
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