Gilat (GSA) Risk Analysis
Risk Overview Q4, 2021
Source: the company's latest filing for the period ended Dec 31, 2021, filed May 16, 2022
Risk Change Over Time
No filing history is available.
- Accounting & Financial Operations - Risk 1We identified material weaknesses in our internal control over financial reporting as of December 31, 2021, which we are still in the process of remediating. If we are unable to remediate these material weaknesses, or if we experience additional material weaknesses or other deficiencies in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately and timely report our financial results, which could cause shareholders to lose confidence in our financial and other public reporting, and adversely affect our share price.
In the course of preparing our consolidated financial statements for the year ended December 31, 2021, we identified material weaknesses in our internal control over financial reporting. A “material weakness” is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses identified were with respect to revenue recognition relating to our regional projects in Peru. As a result, we have restated our audited consolidated financial statements for the years ended December 31, 2019 and 2020 and revised the previously reported unaudited quarterly and year-end results for the year ended December 31, 2021. The material weaknesses that were identified are in the design and implementation of our Company’s internal controls over the revenue recognition process of our subsidiary in Peru relating to its complex projects. As a result, management concluded that our internal control over financial reporting was not effective as of December 31, 2021. To remediate our identified material weaknesses, we are now in the process of developing a remediation plan to improve our internal control over financial reporting. For additional information regarding the material weaknesses and our remediation plan, see ITEM 15 – “Controls and Procedures - Management’s Annual Report on Internal Control over Financial Reporting” and Note 2 and Note 17 to our audited consolidated financial statements included in Part III, Item 18 to this Annual Report on Form 20-F. Although we plan to adopt a remediation plan and implement the measures identified under the remediation plan to address the material weaknesses, there can be no assurance that our efforts will be successful. Implementation of these measures may not fully remediate the material weaknesses in a timely manner, and there is no assurance that we will not have material weaknesses or significant deficiencies in the future. Our failure to restore effective internal controls and procedures, could prevent us from meeting our financial reporting obligations on a timely basis. If other currently undetected material weaknesses in our internal controls exist, it could result in material misstatements in our financial statements requiring us to restate previously issued financial statements, which could cause investors to lose confidence in our reported financial information, and could subject us to regulatory scrutiny and to litigation from shareholders, which could have a material adverse effect on our business and the price of our shares.
Risk Highlights Q4, 2021
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 60
- Share Price & Shareholder Rights - Risk 1As a foreign private issuer whose shares are listed on the NASDAQ Global Select Market, we follow certain home country corporate governance practices instead of certain NASDAQ requirements, which may not afford shareholders with the same protections that shareholders of domestic companies have.
As a foreign private issuer whose shares are listed on the NASDAQ Global Select Market, we are permitted to follow certain home country corporate governance practices instead of certain requirements of The NASDAQ Marketplace Rules. We follow Israeli law and practice instead of The NASDAQ Marketplace Rules with respect to the director nominations process and the requirement to obtain shareholder approval for the establishment or material amendment of certain equity-based compensation plans and arrangements. As a foreign private issuer listed on the NASDAQ Global Select Market, we may also follow home country practice with regard to, among other things, the requirement to obtain shareholder approval for certain dilutive events (such as for an issuance that will result in a change of control of the company, certain transactions other than a public offering involving issuances of a 20% or more interest in the company and certain acquisitions of the stock or assets of another company). A foreign private issuer that elects to follow a home country practice instead of NASDAQ requirements must submit to NASDAQ in advance a written statement from an independent counsel in such issuer’s home country certifying that the issuer’s practices are not prohibited by the home country’s laws. In addition, a foreign private issuer must disclose in its annual reports filed with the SEC each such requirement that it does not follow and describe the home country practice followed by the issuer instead of any such requirement. Accordingly, our shareholders may not be afforded the same protection as provided under NASDAQ’s corporate governance rules.
- Share Price & Shareholder Rights - Risk 2Your rights and responsibilities as a shareholder are governed by Israeli law and differ in some respects from those under Delaware law.
Because we are an Israeli company, the rights and responsibilities of our shareholders are governed by our Articles of Association and by Israeli law. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders in a Delaware corporation. In particular, a shareholder of an Israeli company has a duty to act in good faith towards the company and other shareholders and to refrain from abusing his, her or its power in the company, including, among other things, in voting at the general meeting of shareholders on certain matters. Israeli law provides that these duties are applicable to shareholder votes on, among other things, amendments to a company’s articles of association, increases in a company’s authorized share capital, mergers and interested party transactions requiring shareholder approval. In addition, a shareholder who knows that it possesses the power to determine the outcome of a shareholders’ vote or to appoint or prevent the appointment of a director or executive officer in the company has a duty of fairness towards the company. However, Israeli law does not define the substance of this duty of fairness. There is little case law available to assist in understanding the implications of these provisions that govern shareholder behavior.
- Share Price & Shareholder Rights - Risk 3Our ordinary shares are traded on more than one market and this may result in price variations.
Our ordinary shares are traded on the NASDAQ Global Select Market and on the TASE. Trading in our ordinary shares on these markets is made in different currencies (U.S. dollars on the NASDAQ Global Select Market, and NIS on the TASE), and at different times (resulting from different time zones, different trading days and different public holidays in the U.S. and Israel). Consequently, the trading prices of our ordinary shares on these two markets often differ. Any decrease in the trading price of our ordinary shares on one of these markets could cause a decrease in the trading price of our ordinary shares on the other market.
- Share Price & Shareholder Rights - Risk 4Our share price has been highly volatile and may continue to be volatile and decline.
The trading price of our shares as well as the market generally has fluctuated widely in the past and may continue to do so in the future as a result of a number of factors, many of which are outside our control. During the period from January 4, 2021 to May 9, 2022, our ordinary shares traded in a range from $6.58 to a high of $22.69 and the daily trade volume on NASDAQ ranged from 126,800 shares to 10,735,800 shares. In addition, the stock market has experienced extreme price and volume fluctuations that have affected the market prices of many technology companies, particularly telecommunication and internet related companies, and that have often been unrelated or disproportionate to the operating performance of these companies or stimulated by market rumors. These broad market fluctuations could adversely affect the market price of our shares. In the past, following periods of volatility in the market price of a particular company’s securities, securities class action litigation has often been brought against that company. Securities class action litigation against us could result in substantial costs and a diversion of our management’s attention and resources.
- Share Price & Shareholder Rights - Risk 5Certain of our shareholders beneficially own a substantial percentage of our ordinary shares.
FIMI Funds, our largest shareholder, holds approximately 9.8% of our outstanding ordinary shares, Phoenix holds approximately 9.3% of our outstanding ordinary shares and options to purchase FIMI Funds’ holdings in our company, and our third largest shareholder holds approximately 6.6% of our outstanding ordinary shares. This concentration of ownership of our ordinary shares could delay or prevent mergers, tender offers, or other purchases of our ordinary shares that might otherwise give our shareholders the opportunity to realize a premium over the then-prevailing market price for our ordinary shares. This concentration could also accelerate these same transactions in lieu of others depriving shareholders of opportunities. This concentration of ownership may also cause a decrease in the volume of trading or otherwise adversely affect our share price.
- Share Price & Shareholder Rights - Risk 6Future sales of our ordinary shares and the future exercise of options may cause the market price of our ordinary shares to decline and may result in a substantial dilution.
During 2021 and through the date of this filing, our largest shareholder, FIMI Opportunity Funds, or the FIMI Funds, sold approximately 24.0% of our outstanding ordinary shares and granted an option to Phoenix Holdings Ltd., or Phoenix, to acquire its remaining ordinary shares (approximately 9.8% of our outstanding ordinary shares) through the end of 2022. We cannot predict what effect, if any, future sales of our ordinary shares by our significant shareholders, or the availability for future sale of our ordinary shares, including shares issuable upon the exercise of our options, will have on the market price of our ordinary shares. In July 2019, we filed a shelf registration statement with the Securities and Exchange Commission allowing for our issuance and sale of up to $150 million of ordinary shares and other securities. At that time, we also registered ordinary shares of our company then held by the FIMI Funds and Mivtach Shamir Holdings Ltd for resale, most of which shares have subsequently been resold pursuant to Rule 144. The registration statement will expire in July 2022. Sales of substantial amounts of our ordinary shares in the public market by our company or our significant shareholders, or the perception that such sales could occur, could adversely affect the market price of our ordinary shares and may make it more difficult for you to sell your ordinary shares at a time and price you deem appropriate.
See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.