Magic Software Enterprises : Report of Periodic or Interim Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington 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, 2023
    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: 0-19415

MAGIC SOFTWARE ENTERPRISES LTD. (Exact name of Registrant as specified in its charter and translation of Registrant's name into English)

Israel

(Jurisdiction of incorporation or organization)

Terminal Center, Yahadut Canada 1 Street, Or Yehuda 6037501, Israel

(Address of principal executive offices)

Asaf Berenstin; [phone]; [e-mail]

Yahadut Canada 1 Street, Or Yehuda 6037501, 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 each class		Trading Symbol(s)		Name of each exchange on which registered
Ordinary Shares, NIS 0.1 Par Value		MGIC		Nasdaq Global Select 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 of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:

As of December 31, 2023, the Registrant had 49,099,305 Ordinary Shares, par value NIS 0.1 per share, outstanding

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer:	☐	Accelerated filer:	☒
Non-accelerated filer:	☐	Emerging growth company	☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

• The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).☐

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	☐ Other
	by the International Accounting Standards Board

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 ☐ Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

This annual report on Form 20-F is incorporated by reference into the registrant's Registration Statements on Form S-8, File Nos. 333-113552,333- 132221and 333-149553.

INTRODUCTION

Our legal and commercial name is Magic Software Enterprises Ltd., and we were organized and registered in Israel on February 10, 1983 and began operations in 1986. Together with our subsidiaries we are a global provider of: (i) software services and Information Technologies ("IT") outsourcing software services; (ii) proprietary application development and business process integration platforms; (iii) selected packaged vertical software solutions, as well as (iv) cloud-based services for end-to-end digital transformation.

Our software technology is used by customers to develop, deploy and integrate on-premise, mobile and cloud-based business applications quickly and cost effectively. In addition, our technology enables enterprises to accelerate the process of delivering business solutions that meet current and future needs and allow customers to dramatically improve their business performance and return on investment.

As part of our software services and IT outsourcing services, we offer to hundreds of customers mainly in Israel and in North America an extensive portfolio of professional services in the areas of infrastructure design and delivery, application development, technology consulting planning and implementation services, integration projects, project management, software testing and quality assurance, engineering consulting (including supervision of engineering projects), support services, cloud, cyber, digital, data and DevOps, all according to the specific needs of the customer, and in accordance with the professional expertise required in each case with the goal to create significant value for our clients in managing, streamlining, accelerating and helping their businesses thrive.

In addition, we offer a variety of proprietary comprehensive packaged software solutions through certain of our subsidiaries for (i) enterprise-wide and fully integrated medical platform ("Clicks"), specializing in the design and management of patient-file oriented software solutions for managed care and large-scale health care providers. This platform aims to allow healthcare service providers to securely access an individual's electronic health record at the point of care, and it organizes and proactively delivers information with potentially real time feedback to meet the specific needs of physicians, nurses, laboratory technicians, pharmacists, front and back-office professionals and consumers; (ii) enterprise management system for both hubs and traditional air cargo ground handling operations from physical handling and cargo documentation through customs, seamless electronic data interchange, or EDI communications, dangerous goods, special handling, track and trace, security to billing ("Hermes"); (iii) enterprise human capital management, or HCM, solutions, to facilitate the collection, analysis and interpretation of quality data about people, their jobs and their performance, to enhance HCM decision making ("HR Pulse"); (iv) revenue management and monetization solutions in mobile, wireline, broadband and mobile virtual network operator/enabler, or MVNO/E ("Leap"); (v) comprehensive system for managing broadcast channels in the area of TV broadcast management through cloud-basedon-demand service or on-premise solutions; (vi) comprehensive solution for sales and distribution field activities, such as order taking, route accounting, trade marketing, retail execution, proof of deliveries and B2B E-commerce ("Mobisale"); and (vii) comprehensive solution for efficient management of all types of rehabilitation centers ("Nativ"). Selected by many of the largest rehabilitation and treatment centers in Israel, Nativ serves as a comprehensive solution, the largest and most specialized and equipped system in Israel, with all the capabilities required for operating all aspects of organizations engaged in rehabilitation and treatment. Nativ enables control of all levels of rehabilitation bodies, including monitoring detailed rehabilitation plans, finance, collection, account management, recruitment, working hours, asset management, employment, medical files and management of large organization.

Based on our technological capabilities and our specialists, our software solutions and software services enable our clients to respond to rapidly evolving market needs and regulatory changes, while improving the efficiency of their core operations. We have approximately 3,628 employees, who serve our clients at any given time and whose skills and specialization are a significant source of competitive differentiation. We operate through a large network of independent software vendors, or ISVs, who we refer to as Magic Software Providers, or MSPs, and hundreds of system integrators, distributors, resellers, and consulting and OEM partners. Thousands of enterprises in approximately 50 countries use our products and services.

Our application development and business process integration platforms consist of:

• Magic xpa - a proprietary low-code application platform for developing and deploying business applications.
• AppBuilder - a proprietary low-code application platform for building, deploying, and maintaining high-end,mainframe-grade business applications.
• Magic xpi - a proprietary low-code platform for on premises application integration.

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• Magic xpi cloud native - a configuration based on Kubernetes focuses on scalability, security and resilience.
• FactoryEye - a cloud-basedpre-packaged but flexible end-to-end data management platform for manufacturers enabling smooth migration to Industry 4.0 smart factories. Real-time factory floor visibility and optimization is provided as part of the end-to-end visibility to maximize production performance and ongoing improvement.
• Magic Data Management and Analytics Platform- a cloud-basedpre-packaged but flexible end-to-end data management platform for all verticals enabling smooth digital transformation and full organizational business intelligence
• Magic SmartUX - a proprietary low-code enterprise mobile development application platform for citizen to professional developers to rapidly design, build, analyze, and run cross-platform mobile business applications.

Our vertical packaged software solutions include:

• Clicks™ - a proprietary comprehensive core software solution for medical record information management system, used in the design and management of patient-files for managed care and large-scale healthcare providers. The platform is connected to each provider's clinical, administrative and financial data base system, residing at the provider's central computer, and allows immediate analysis of complex data with potentially real-time feedback to meet the specific needs of physicians, nurses, laboratory technicians, pharmacists, front- and back-office professionals and consumers.
• Leap™ - a proprietary comprehensive core software solution for Business Support Systems, or BSS, including convergent charging, billing, customer management, policy control, mobile money and payment software solutions for the telecommunications, content, Machine to Machine/Internet of Things or M2M/IoT, payment and other industries.
• Hermes Cargo - Hermes Air Cargo Management System and Hub Management System is a proprietary, state-of-the-art,cloud-first event driven software solution for managing air cargo ground handling. The Hermes SaaS, offered as a complete Managed Service, includes Hermes Cloud CMS and HMS, Hermes Business Intelligence (BI) and Data Lakes, Hermes Landside Management, Hermes Track & Trace, Hermes Learning Management System, and Hermes Integration APIs, providing lower entry costs and a pay-as-you-go offering for its customers, as well as pushing customers' digital credentials. The Hermes Solution covers all aspects of cargo handling, from physical handling and cargo documentation through customs, seamless EDI communications, dangerous goods and special handling, tracking and tracing, security and billing. Customers benefit through faster processing and more accurate billing, reporting and ultimately enhanced revenue. the system also features the Hermes Business Intelligence (HBI) solution, adding unprecedented data analysis capabilities and management-decision support tools. The Hermes Solution is delivered on a licensed or fully hosted basis.
• HR Pulse - A customizable single-tenant SaaS tool that helps organizations to monitor employee performance, progress and potential through a menu of templates that can create new HCM solutions, complement existing processes, and/or integrate with legacy HR systems already in use by organizations.
• MBS Solution - a proprietary comprehensive core system for TV broadcast management for use in managing broadcast channels.
• Nativ - a proprietary comprehensive core system for management of rehabilitation centers
• Mobisale - a proprietary comprehensive core system for sales and distribution field activities for consumer goods manufacturers and wholesalers

Our software solutions and software services enable our clients to improve their business performance and return on investment by supporting cost- effective and rapid delivery integration of business applications, systems and databases. Using our platforms and our specialists, enterprises and MSPs can achieve fast time-to-market by rapidly building integrated solutions and deploy them in multiple environments while leveraging existing IT resources. In addition, our software solutions are scalable and platform-agnostic, enabling our clients to build software applications by specifying their business logic requirements in a high-level language rather than in computer code, and to benefit from seamless platform upgrades and cross-platform functionality without the need to re-write their applications. Our platforms also support the development of mobile applications that can be deployed on a variety of mobile devices, and in a cloud environment. In addition, we continuously evolve our platforms to include the latest technologies to meet the demands of our customers and the markets in which they operate.

We sell our platforms and our services globally through a broad channel network, including our own direct sales representatives and offices, independent country distributors, MSPs that use our technology to develop and sell solutions to their customers, and system integrators. We also offer software maintenance, support, training and consulting services to supplement with our products, thus aiding in the successful implementation of Magic xpa, AppBuilder, Magic xpi, Magic Data Management and Analytics Platform, Magic Smart UX and FactoryEye projects, and assuring successful operation of the platforms once installed.

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In addition, we provide on an increasingly global basis a broad range of advanced software professional services and IT outsourcing services in the areas of infrastructure design and delivery, application development, technology consulting planning and implementation services, support services, Digital, DevOps (Development & Operations), Mobile, Open Source, Big Data and Analytical BI, M/F, Security & Cyber, cloud computing for deployment of highly available and massively-scalable applications and APIs and supplemental IT outsourcing services to a wide variety of companies, including Fortune 1000 companies, all in accordance with the professional expertise required in each case with our goal to create significant value for our clients in managing, streamlining, accelerating and helping their businesses thrive.

We have substantial experience in end-to-end development of tailored high-end software solutions, beginning with collection and analysis of system requirements, continuing with architecture specifications and setup, to software implementation, component integration and testing. From concept to implementation, from application of the ideas of startups requiring the early development of an application or a device, to somewhat larger, more established enterprises, vendors or system houses who need our team of experts to take full responsibility for the development of their systems and products. With our ability to draw on our pool of resources, comprised of hundreds of highly trained, skilled, educated and flexible engineers, we adhere to timelines and budget and work in full transparency with our customers every step of the way to create a tailor-made and cost-effective solution to answer our customers' unique needs.

Our consolidated financial statements appearing in this annual report are prepared in U.S. dollars and in accordance with International Financial Reporting Standards, or IFRS.

We have obtained trademark registrations for SmartUX® in the United States and for Magic® in the United States, Canada, Israel, the Netherlands (Benelux), Switzerland, Thailand and the United Kingdom. All other trademarks and trade names appearing in this annual report are owned by their respective holders.

Statements made in this annual report concerning the contents of any contract, agreement or other document are summaries of such contracts, agreements or documents and are not complete descriptions of all of their terms. If we filed any of these documents as an exhibit to this annual report or to any previous filling with the SEC, you may read the document itself for a complete recitation of its terms.

Definitions

In this annual report, unless the context otherwise requires:

• References to "Magic Software" the "Company," the "Registrant," "our company," "us," "we" and "our" refer to Magic Software Enterprises Ltd. and its consolidated subsidiaries;
• References to "our shares," "Ordinary Shares" and similar expressions refer to Magic's Ordinary Shares, par value NIS 0. 1 per share;
• References to "dollars", "U.S. dollars", "U.S. $" and "$" are to United States Dollars;
• 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 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; and
• References to the "SEC" are to the United States Securities and Exchange Commission.

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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, Section 21E of the Exchange Act and the safe harbor provisions of the U.S. Private Securities 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 expressions. Such statements reflect our current views with respect to future events and are subject to certain risks and uncertainties. There are important factors that could cause our actual results, levels of activity, performance, or achievements to differ materially from the results, levels of activity, performance or achievements expressed or implied by the forward- looking statements, including, but not limited to:

• the degree of our success in our plans to leverage our global footprint 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 new solutions;
• 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 and competing effectively for greater market share;
• difficulties in successfully planning and managing changes in the size of our operations;
• the challenges and potential liability that heightened privacy laws and regulations pose to our business;
• occasional disputes with 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, particularly in the current hybrid office/work-from-home environment;
• risks posed by our global sales and operations, such as changes in regulatory requirements, wide-spread viruses and epidemics, or fluctuations in currency exchange rates; and
• risks related to our principal location in Israel.

The forward-looking statements made in this annual report speak only to our views as of the date on which the statements are made. While we believe such forward-looking statements are based on reasonable assumptions, should one or more of the underlying assumptions prove incorrect, or these risks or uncertainties materialize, our actual results may differ materially from those expressed or implied by the forward-looking statements. Please read the risks discussed in Item 3 - "Key Information" under the caption "Risk Factors" and cautionary statements appearing elsewhere in this annual report in order to review conditions that we believe could cause actual results to differ materially from those contemplated 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 the forward- looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in 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 to changes in our expectations.

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	TABLE OF CONTENTS
ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	1
ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	1
ITEM 3.	KEY INFORMATION	1
A.	Reserved	1
B.	Capitalization and Indebtedness	1
C.	Reasons for the Offer and Use of Proceeds	1
D.	Risk Factors	1
ITEM 4.	INFORMATION ON THE COMPANY	23
A.	History and Development of the Company	23
B.	Business Overview	24
C.	Organizational Structure	45
D.	Property, Plants and Equipment	46
ITEM 4A.	UNRESOLVED STAFF COMMENTS	46
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	46
A.	Operating Results	46
B.	Liquidity and Capital Resources	54
C.	Research and Development	57
D.	Trend Information	57
E.	Critical Accounting Estimates.	57
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	64
A.	Directors and Senior Management	64
B.	Compensation	66
C.	Board Practices	67
D.	Employees	77
E.	Share Ownership	78
F.	Disclosure of a registrant's action to recover erroneously awarded compensation	79
ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	80
A.	Major Shareholders	80
B.	Related Party Transactions	81
C.	Interests of Experts and Counsel	81
ITEM 8.	FINANCIAL INFORMATION	82
A.	Consolidated Statements and Other Financial Information	82
B.	Significant Changes	82
ITEM 9.	THE OFFER AND LISTING	82
A.	Offer and Listing Details	82
B.	Plan of Distribution	82
C.	Markets	82
D.	Selling Shareholders	83
E.	Dilution	83
F.	Expenses of the Issue	83

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ITEM 10.	ADDITIONAL INFORMATION	83
A.	Share Capital	83
B.	Memorandum and Articles of Association	83
C.	Material Contracts	84
D.	Exchange Controls	84
E.	Taxation	84
F.	Dividends and Paying Agents	96
G.	Statement by Experts	96
H.	Documents on Display	96
I.	Subsidiary Information	97
ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS	97
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	97
ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	98
ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	98
ITEM 15.	CONTROLS AND PROCEDURES	98
ITEM 16.	RESERVED	99
ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT	99
ITEM 16B.	CODE OF ETHICS	99
ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	100
ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	100
ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	100
ITEM 16F.	CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT	100
ITEM 16G.	CORPORATE GOVERNANCE	100
ITEM 16H.	MINE SAFETY DISCLOSURE	101
ITEM 16I.	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS	101
ITEM 16J.	INSIDER TRADING POLICIES	101
ITEM 16K.	CYBERSECURITY	101
ITEM 17.	FINANCIAL STATEMENTS	102
ITEM 18.	FINANCIAL STATEMENTS	102
ITEM 19.	EXHIBITS	103
S I G N A T U R E S	104

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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

1. RESERVED
2. CAPITALIZATION AND INDEBTEDNESS

Not applicable.

1. REASONS FOR THE OFFER AND USE OF PROCEEDS

Not applicable.

D. RISK FACTORS

Investing in our ordinary shares involves a high degree of risk and uncertainty. We operate globally in a dynamic and rapidly changing environment that involves numerous risks and uncertainties. The following section lists some, but not all, of those risks and uncertainties that may have a material adverse effect on our business, financial position, results of operations or cash flows. You should carefully consider the risks and uncertainties described below before investing in our ordinary shares.

Risks Related to Our Business and Our Industry

• The implementation of our M&A growth strategy involves significant risks, and the failure to integrate acquired companies successfully may adversely affect our future results.
• Our development cycles are lengthy, and we incur significant expenses before we generate revenues, if any, from our solutions.
• Our products have a lengthy sales cycle that could adversely affect our revenues.
• We are dependent on a limited number of core product families.
• Macro-economicheadwinds may again, adversely impact our revenues, profitability and cash flows.
• Our inability to respond to the evolving technological environment could materially affect our results of operations
• Rapid technological changes may adversely affect the market acceptance of our products and services, and our business, results of operations and financial condition could be adversely affected.
• If we are unable to keep our supply of skills and resources in balance with client demand around the world and attract, motivate and retain professionals with strong leadership skills, our business, the utilization rate of our professionals and our results of operations may be materially adversely affected.

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• Failure to manage our growth- both organic and non-organic-could harm our business.
• If we fail to successfully plan and manage changes in the size of our operations in response to changes in demand for our products and services, our business will suffer.
• If existing customers are not satisfied with our solutions and services, fail to make subsequent purchases from us, or discontinue use of such solutions and services, or if our relationships with our largest customers are impaired, our revenue could be negatively affected.
• We enter from time to time into fixed-price contracts that could subject us to losses in the event we fail to properly estimate our costs.
• We face intense competition in the markets in which we operate and we might not be able to compete effectively. This could adversely affect our business, results of operations and financial condition.
• Unfavorable national and global economic conditions could adversely affect our business, operating results and financial condition.
• We are exposed to economic and market conditions that impact the communications industry.
• A reduction of government spending in Israel on IT services, from which some of our revenues are derived, may reduce our revenues and profitability.
• Intangible assets and goodwill recorded on our balance sheet may lead to significant impairment charges in the future.
• Changes in the ratio of our revenues generated from different revenue elements may adversely affect our gross profit margins.
• We may encounter difficulties with our international operations and sales that could adversely affect our business, results of operations and financial condition.
• Fluctuations in foreign currency exchange rates have in recent past adversely affecting, and could again to adversely affect our business.
• Breaches of network or information technology security, natural disasters or terrorist attacks could have an adverse effect on our business.
• Security vulnerabilities in our software solutions could lead to reduced revenue or to liability claims.
• Changes in privacy regulations may impose additional costs and liabilities on us, limit our use of information, and adversely affect our business.
• Errors or defects in our software solutions could inevitably arise.
• Third parties may assert that we have infringed their intellectual property rights.
• We may be liable to our clients for damages caused by a violation of intellectual property rights, unsatisfactory performance of services, or similar matters and our insurance policies may not be sufficient to cover these damages.
• Our intellectual property rights and our source code insufficiently protected.
• The loss of third-party technology and intellectual property could limit the functionality of our products.
• We could be required to provide the source code of our products to our customers.

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