☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ |
☐ | 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 |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Ordinary Shares, NIS 0.25 Par Value | SPCB | The NASDAQ Capital Market |
Large accelerated filer ☐ | Accelerated filer ☐ | Non-accelerated filer ☒ | Emerging growth company ☐ |
U.S. GAAP ☒ | International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ | Other ☐ |
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IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
OFFER STATISTICS AND EXPECTED TIMETABLE |
KEY INFORMATION |
A. |
Year Ended December 31, | ||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||
(U.S. dollars in thousands, except per share data) | ||||||||||||||||||||
Summary of Statement of Operations Data: | ||||||||||||||||||||
Revenues | 16,475 | 21,882 | 33,264 | 20,025 | 28,340 | |||||||||||||||
Cost of revenues | 10,127 | 13,743 | 20,351 | 17,461 | 10,446 | |||||||||||||||
Gross profit | 6,348 | 8,139 | 12,913 | 2,564 | 17,894 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Research and development | 3,971 | 4,790 | 7,238 | 6,718 | 3,669 | |||||||||||||||
Selling and marketing | 3,526 | 5,005 | 8,099 | 9,970 | 6,611 | |||||||||||||||
General and administrative | 5,389 | 5,748 | 6,113 | 7,277 | 3,947 | |||||||||||||||
Other (income) expenses | 1,635 | 2,271 | (2,021 | ) | 713 | 2,174 | ||||||||||||||
Gain on bargain acquisitions | - | - | - | (10,515 | ) | - | ||||||||||||||
Total operating expenses | 14,521 | 17,814 | 19,429 | 14,163 | 16,401 | |||||||||||||||
Operating income (loss) | (8,173 | ) | (9,675 | ) | (6,516 | ) | (11,599 | ) | 1,493 | |||||||||||
Financial expenses, net | (3,289 | ) | (335 | ) | (538 | ) | (303 | ) | (277 | ) | ||||||||||
Income (loss) before income tax | (11,462 | ) | (10,010 | ) | (7,054 | ) | (11,902 | ) | 1,216 | |||||||||||
Income tax (expense) benefit | (43 | ) | 5,730 | 393 | (2,091 | ) | (197 | ) | ||||||||||||
Net income (loss) | (11,505 | ) | (15,740 | ) | (6,661 | ) | (13,993 | ) | 1,019 | |||||||||||
Per Share Data: | ||||||||||||||||||||
Basic earnings(loss) per share | (0.71 | ) | (1.03 | ) | (0.45 | ) | (0.93 | ) | 0.07 | |||||||||||
Diluted earnings(loss) per share | (0.71 | ) | (1.03 | ) | (0.45 | ) | (0.93 | ) | 0.07 |
2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||
(U.S. dollars in thousands, except per share data) | ||||||||||||||||||||
Summary of Balance Sheet Data: | ||||||||||||||||||||
Cash and cash equivalents | 1,210 | 1,639 | 1,037 | 1,708 | 22,246 | |||||||||||||||
Total Current Assets | 23,147 | 25,664 | 27,413 | 21,120 | 45,443 | |||||||||||||||
TOTAL ASSETS | 40,004 | 44,349 | 54,198 | 53,473 | 65,942 | |||||||||||||||
Total Current Liabilities | 14,313 | 13,543 | 17,960 | 12,771 | 10,238 | |||||||||||||||
Total Long-term Liabilities | 17,359 | 11,256 | 3,531 | 1,978 | 1,272 | |||||||||||||||
SHAREHOLDERS’ EQUITY | 8,332 | 19,550 | 32,707 | 38,724 | 54,432 |
B. | |
Not applicable. |
C. | |
Not applicable. |
D. |
• | our inability to achieve the operating synergies anticipated in the acquisition, which would prevent us from achieving the positive earnings gains expected as a result of the acquisition; | |
• | diversion of management attention from ongoing business concerns to integration matters; | |
• | difficulties in consolidating and rationalizing information technology and intellectual property platforms and administrative infrastructures; | |
• | complexities associated with managing the combined businesses; | |
• | difficulties in integrating personnel; | |
• | possible termination of some contracts or agreements with customers of the acquired divisions and entities as a result of the acquisitions, which would result in major reduction in our anticipated combined business revenue; | |
• | possible termination of some contracts or agreements with service providers and suppliers of the acquired divisions and entities as a result of the acquisitions, which could result in delays and increases in our cost of revenues; and. | |
• | Possible cash flow interruption or loss of revenue as a result of the change of ownership. |
• | the frequent need to compete against companies or teams of companies with more financial and marketing resources and more experience than we have in bidding on and performing major contracts; |
• | the need to compete against companies or teams of companies that may be long-term, entrenched incumbents for a particular contract we are competing for and which have, as a result, greater domain expertise and established customer relations; |
• | the substantial cost and managerial time and effort necessary to prepare bids and proposals for contracts that may not be awarded to us; |
• | the need to accurately estimate the resources and cost structure that will be required to service any fixed-price contract that we are awarded; and |
• | the expense and delay that may arise if our competitors protest or challenge new contract awards made to us pursuant to competitive bidding or subsequent contract modifications, and the risk that any of these protests or challenges could result in the resubmission of bids on modified specifications, or in termination, reduction or modification of the awarded contract. |
• | issue additional securities that would dilute our current shareholders’ percentage ownership; | |
• | incur debt and assume liabilities; and | |
• | incur large and immediate write-offs of intangible assets, accounts receivable or other assets. |
• | we may not be successful in developing and marketing new products or product features that respond to technological change or evolving industry standards; |
• | we may experience difficulties that could delay or prevent the successful development, introduction and marketing of these new products and features; or |
• | our new products and product features may not adequately meet the requirements of the marketplace and achieve market acceptance. |
• | national ID and e-Government; |
• | counties and municipals; |
• | public safety; |
• | safe and smart cities |
• | educational campus; |
• | healthcare and homecare; and |
• | large enterprises |
• | the cost, performance and reliability of our products and services compared to the products and services of our competitors; |
• | customer perception of the benefits of our products and solutions; |
• | public perception of the intrusiveness of these solutions and the manner in which organizations use the information collected; |
• | public perception of the privacy protection for their personal information; |
• | customer satisfaction with our products and services; and |
• | marketing efforts and publicity for our products and services. |
• | increased collection risks; |
• | trade restrictions; |
• | export duties and tariffs; |
• | uncertain political, regulatory and economic developments; |
• | inability to protect our intellectual property rights; |
• | highly aggressive competitors; |
• | currency issues; |
• | difficulties in staffing, managing and supporting foreign operations; |
• | longer payment cycles; and |
• | difficulties in collecting accounts receivable. |
• | long customer sales cycles; |
• | reduced demand for our products and services; |
• | price reductions; |
• | new competitors, or the introduction of enhanced products or services from new or existing competitors; |
• | changes in the mix of products and services we or our customers and representatives sell; |
• | contract cancellations, delays or amendments by customers; |
• | the lack of government demand for our products and services or the lack of government funds appropriated to purchasing our products and services; |
• | unforeseen legal expenses, including litigation costs; |
• | expenses related to acquisitions; |
• | other non-recurring financial charges; |
• | the lack of availability, or increased cost, of key components and subassemblies; and |
• | the inability to successfully manufacture in volume, and reduce the price of, certain of our products; |
• | actual or anticipated variations in our quarterly operating results or those of our competitors; |
• | announcements by us or our competitors of technological innovations or new and enhanced products; |
• | developments or disputes concerning proprietary rights; |
• | introduction and adoption of new industry standards; |
• | changes in financial estimates by securities analysts; |
• | market conditions or trends in our industry; |
• | changes in the market valuations of our competitors; |
• | announcements by us or our competitors of significant acquisitions; |
• | entry into strategic partnerships or joint ventures by us or our competitors; |
• | failing to meet in the financial projection or guidance |
• | Actual and anticipated market volatility due to the Covid-19. |
• | political and economic conditions, such as a recession or interest rate or currency rate fluctuations or political events; and |
• | other events or factors in any of the countries in which we do business, including those resulting from war, incidents of terrorism, natural disasters or responses to such events. |
• | the rules under the Exchange Act requiring the filing with the Securities and Exchange Commission of quarterly reports on Form 10-Q and current reports on Form 8-K; |
• | the sections of the Exchange Act regulating the solicitation of proxies in connection with shareholder meetings; |
• | the provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information; and |
• | the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and establishing insider liability for profits realized from any “short-swing” trading transaction (i.e., a purchase and sale, or sale and purchase, of the issuer’s equity securities within less than six months). |
INFORMATION ON THE COMPANY |
A. |
B. |
• | Develop strong strategic relationships with our business partners, including the systems integrators and representatives that introduce our products and solutions into their respective markets. |
• | Employ dedicated sales personnel to work closely with our business partners. Our sales personnel will customize and adapt solutions that can then be installed and supported by these business partners. |
• | Expand our IoT and Cyber Security activities globally, particularly in the Americas, Europe, and the Far East. |
• | Leverage our customer base, superior PureSecurity hybrid suite of IoT solutions, and Cyber Security capabilities to secure additional long-term contracts with governments and communities in the public safety markets. |
• | Leverage our reputation, talented personnel, and project management capabilities in the e-Gov market to secure additional projects and solutions in the growing e-Government market. |
• | Leverage our customer base, Connectivity solutions, and Cyber Security capabilities to secure additional long-term contracts with governments and communities in the Communication Infrastructure market. |
• | Develop strong strategic relationships with business partners that will introduce our solutions into the healthcare, homecare, Safe City and Smart Campus markets. |
• | Develop strong strategic relationships with business partners in the financial services industry, and un-banked and mobile payments markets. |
• | Identify and acquire synergistic contracts or businesses in order to reduce time to market, obtain complementary technologies and secure required references for international bids. |
• | Grow our business in emerging markets with perceived significant growth opportunities. |
• | Multiple radios provide concurrent 802.11a/n/ac and 802.11b/g/n connections | |
• | Up to 1300 Mbps combined data rate | |
• | Dual concurrent MIMO, Dual-polarized antennas | |
• | Self-configuring, plug-and-play deployment | |
• | Smart MESH supported |
• | Gigabit outdoor Wi-Fi support up to 450 Mbps, (per band) 900 Mbps for both bands, and maximum aggregated capacity of up to one Gigabit per unit | |
• | Built in Access Controller, for flexible service planning | |
• | Self-configuring, plug-and-play deployment |
• | Optimized for high capacity applications | |
• | Available in the Licensed Exempt frequencies: 5.1-5.9 GHz | |
• | High Performance - supporting up to 500 Mbps net throughpu and distances of up to 50km / 32 miles (w/high-gain antenna) | |
• | Dynamic up-link /down-link bandwidth allocation | |
• | Optimized performance of voice, video and data using four priorities of service | |
• | Optimized interference mitigation and NLOS performance | |
• | Ease of ordering, installation and configuration |
• | Cost effective and scalable network architecture with centralized control plane and distributed | |
• | data plane | |
• | Supporting up to 5000 AP’s and 50,000 users per controller | |
• | Control and manage AP and backhaul radio, including statistic and reporting | |
• | Automatic AP units detection, configuration and firmware distribution | |
• | Secured control layer management |
• | Hotspots/Hotzones and cellular offloading services | |
• | Providing a single peer to the A AA |
• | High capacity, point-to-point, robust outdoor wireless solution | |
• | Flexible rate capacity options: B10, B14, B28, B100 reaching up to 100 Mbps gross | |
• | Long reach: over 60 km | |
• | Optimized uplink/downlink configuration to support different business applications such as public safety and video surveillance | |
• | Robust performance in Non-Line-of-Sight (NLOS) environments | |
• | Simple deployment, management and maintenance |
Year ended December 31, | ||||||||
2019 | 2018 | |||||||
Africa | $ | 1,468 | 4,816 | |||||
Europe | 3,948 | 3,114 | ||||||
South and center America | 30 | 1,279 | ||||||
United States | 9,059 | 10,452 | ||||||
Israel | 1,401 | 1,514 | ||||||
Asia Pacific | 569 | 707 | ||||||
Total | $ | 16,475 | 21,882 |
Year ended December 31, | ||||||||
2019 | 2018 | |||||||
e-Gov | $ | 1,925 | 6,117 | |||||
IoT | 11,664 | 12,470 | ||||||
Cyber Security | 2,886 | 3,295 | ||||||
Total | $ | 16,475 | 21,882 |
Year ended December 31, | ||||||||
2019 | 2018 | |||||||
Revenues | ||||||||
Products | $ | 4,455 | 8,516 | |||||
Services | 12,020 | 13,366 | ||||||
Total revenues | $ | 16,475 | 21,882 |
C. |
D. |
UNRESOLVED STAFF COMMENTS |
OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
A. |
2019 | 2018 | |||||||
Revenues | 100 | % | 100 | % | ||||
Cost of revenues | 61.5 | 62.8 | ||||||
Gross profit | 38.5 | 37.2 | ||||||
Operating expenses: | ||||||||
Research and development | 24.1 | 21.9 | ||||||
Selling and marketing | 21.4 | 22.9 | ||||||
General and administrative | 32.7 | 26.3 | ||||||
Other expenses (income) | 9.9 | 10.4 | ||||||
Total operating expenses | 88.1 | 81.4 | ||||||
Operating income (loss) | (49.6 | ) | (44.2 | ) | ||||
Financial (expenses) income, net | (20.0 | ) | (1.5 | ) | ||||
Income (loss) before income tax | (69.6 | ) | (45.7 | ) | ||||
Income tax (expense) benefit | (0.3 | ) | (26.2 | ) | ||||
Net income (Loss) | (69.8 | ) | (71.9 | ) |
Year ended December 31, | Israeli inflation rate % | NIS devaluation (appreciation) rate % | Israeli inflation adjusted for devaluation (appreciation) % | |||||||||
2018 | 0.8 | 8.1 | (7.3 | ) | ||||||||
2019 | 0.6 | (5.0 | ) | 5.6 |
B. |
Year ended December 31, | ||||||||
2019 | 2018 | |||||||
(in thousands) | ||||||||
Net cash used in operating activities | (7,660 | ) | (6,416 | ) | ||||
Net cash used in investing activities | (1,175 | ) | (1,519 | ) | ||||
Net cash provided by (used in) financing activities | 7,244 | 8,636 | ||||||
Net increase(decrease) in cash and cash equivalents | (1,591 | ) | 701 | |||||
Cash, cash equivalents and restricted cash at beginning of period | 2,801 | 2,100 | ||||||
Cash, cash equivalents and restricted cash at end of period | 1,210 | 2,801 |
Net cash used in operating activities for the year ended December 31, 2019 was $7,660,000, compared to net cash used by operating activities of $6,416,000 during the year ended December 31, 2018, an increase of $1,244,000. The increase was primarily due to a major increase in trade receivables in 2019 in comparison to an increase in similar items in 2018.
Net cash used in investing activities during the year ended December 31, 2019, was $1,175,000 compared to $1,519,000 during the year ended December 31, 2018.
Net cash provided by financing activities during the year ended December 31, 2019, was $7,244,000, and consisted mainly of loans from Fortress and loans from related parties, compared to $8,636,000 during the year ended December 31, 2018, which consisted mainly of loans from Fortress.
Year ended December 31, 2019 | ||||||||||||||||
Cyber Security | IoT | e-Gov | Total | |||||||||||||
Major geographic areas | ||||||||||||||||
Africa | $ | - | $ | - | $ | 1,468 | $ | 1,468 | ||||||||
European countries | 690 | 2,801 | 457 | 3,948 | ||||||||||||
South America | - | 30 | - | 30 | ||||||||||||
United States | 753 | 8,306 | - | 9,059 | ||||||||||||
Israel | 1,271 | 130 | - | 1,401 | ||||||||||||
APAC | 172 | 397 | - | 569 | ||||||||||||
Total revenue | $ | 2,886 | $ | 11,664 | $ | 1,925 | $ | 16,475 | ||||||||
Timing of revenue recognition | ||||||||||||||||
Products and services transferred over time | $ | 1,124 | $ | 9,982 | $ | 1,089 | $ | 12,195 | ||||||||
Products transferred at a point in time | 1,762 | 1,682 | 836 | 4,280 | ||||||||||||
Total revenue | $ | 2,886 | $ | 11,664 | $ | 1,925 | $ | 16,475 |
C. |
D. |
E. |
F. |
Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | ||||||||||||||||
Purchase obligations | 41 | 41 | - | - | - | |||||||||||||||
Operating lease obligations | 386 | 386 | - | - | - | |||||||||||||||
Total contractual cash obligations | $ | 427 | 427 | - | - | - |
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
A. |
Name | Age | Position | ||
Arie Trabelsi | 61 | Director& CEO | ||
Menachem Mirski | 63 | Independent Director (1) (2)(3) | ||
Oren Raoul De Lange | 42 | Independent Director (1)(2)(3) | ||
Shoshana Cohen Shapira | 61 | Independent Director (1)(2)(3) |
(1) | “Independent Director | |
(2) | Member of the Audit Committee | |
(3) | Member of the Compensation Committee |
Name | Age | Position | ||
Arie Trabelsi* | 63 | President, Chief Executive Officer | ||
Barak Trabelsi* | 35 | Vice President, IoT | ||
Galit Gilo* | 63 | Vice President, Land and GIS | ||
Ordan Trabelsi | 36 | President, SuperCom Inc. and LCA. | ||
Gil Alfi | 50 | Vice President Sales, Safend Ltd | ||
Ethan Nash* | 54 | Vice President Finance | ||
Jason Gilbert | 54 | Vice President Sales, Public Sector, |
B. |
Salaries, fees, commissions and bonuses | Pension, retirement and similar benefits | |||||||
All directors and executive officers as a group (8 persons) | $ | 672,412 | $ | 60,891 |
Name and Position | Salary(1) | Bonus and commissions | Equity-Based Compensation (2) | Total | ||||||||||||
Igor Merling CTO, e-Gov | 180,075 | - | - | 180,075 | ||||||||||||
Arkady Tachman R&D director, e-Gov | 188,749 | - | - | 188,749 | ||||||||||||
Barak Trabelsi GM &Vice President, IoT | 178,188 | - | - | 178.188 | ||||||||||||
Vadim Zelser CTO, Cyber | 196,501 | - | - | 196,501 | ||||||||||||
Gil Alfi Vice President Sales, Cyber | 186,181 | 99,510 | - | 285,691 |
(1) | Amounts reported in this column include salary, social benefits, including those mandated by applicable law. |
(2) | Amounts reported in this column represent the expense recorded in our audited consolidated financial statements for the year ended December 31, 2019 based on the grant date fair value in accordance with accounting guidance for stock-based compensation. See Note 12c to our audited consolidated financial statements for the year ended December 31, 2019. |
C. |
Name | Position | Date Service Began | Date of Expiration of Current Term | |||
Arie Trabelsi | Director | February 24, 2019 | 2020 annual general meeting | |||
Oren Raoul De Lange | Independent Director | March 28, 2020 | March 28, 2023 | |||
Shoshana Cohen Shapira | Independent Director | February 24, 2019 | February 23, 2022 | |||
Menachem Mirski | Independent Director | July 25, 2010 | 2020 annual general meeting |
• | Monitoring deficiencies in the management of the company, including in consultation with the independent auditors or the internal auditor, and advising the board of directors on how to correct such deficiencies. If the audit committee finds a material deficiency, it will hold at least one meeting regarding such material deficiency, with the presence of the internal auditor or the independent auditors but without the presence of the senior management of the company. However, a member of the company’s senior management can participate in the meeting in order to present an issue which is under his or her responsibility. |
• | Determining, on the basis of detailed arguments, whether to classify certain engagements or transactions as material or extraordinary, as applicable, and therefore as requiring special approval under the Companies Law. The audit committee must make such determination according to principles and guidelines predetermined on an annual basis. |
• | Determining if transactions (excluding extraordinary transactions) with a controlling shareholder, or in which a controlling shareholder has a personal interest, are required to be rendered pursuant to a competitive procedure. |
• | Deciding whether to approve engagements or transactions that require the audit committee approval under the Companies Law. |
• | Determining the approval procedure of non-extraordinary transactions, following classification as such by the audit committee, including whether such specific non-extraordinary transactions require the approval of the audit committee. |
• | Examining and approving the annual and periodic working plans of the internal auditor. |
• | Overseeing the company’s internal auditing and the performance of the internal auditor and confirming that the internal auditor has sufficient tools and resources at his disposal, taking into account, among other factors, the special requirements of the company and its size; |
• | Examining the scope of work of the independent auditor and its pay, and bringing such recommendations on these issue before the board. |
• | Determining the procedure for addressing complaints of employees regarding shortcomings in the management of the company and ensuring the protection of employees who have filed such complaints. |
• | Determining, with respect to transactions with the controlling shareholder or in which such controlling shareholder has a personal interest, whether such transactions are extraordinary or not, whether there is an obligation to conduct a competitive process under the supervision of the audit committee and whether, prior to entering into such transaction, the company should conduct any other process that the audit committee may deem fit, all taking into account the type of the company. The audit committee may set such qualifications up to one year in advance. |
• | Determining the manner of approval of transactions with the controlling shareholder or in which the controlling shareholder has a personal interest which (i) are not negligible transactions (pursuant to the committee’s determination) and (ii) are not qualified by the committee as extraordinary transactions. |
• | an amendment to the company’s articles of association; |
• | an increase in the company’s authorized share capital; |
• | a merger; and |
• | the approval of related party transactions and acts of office holders that require shareholder approval. |
• | a breach of duty of care towards us or any other person; |
• | a breach of fiduciary obligations towards us, provided that the office holder acted in good faith and had reasonable grounds to assume that his or her act would not be to our detriment; |
• | a financial liability imposed on him or her in favor of another person; or |
• | any other event for which insurance of an office holder is or may be permitted. |
• | financial liability imposed upon said office holder in favor of another person by virtue of a decision by a court of law, including a decision by way of settlement or a decision in arbitration which has been confirmed by a court of law; |
• | reasonable expenses of the proceedings, including lawyers’ fees, expended by the office holder or imposed on him by the court for: |
(1) | proceedings issued against him by or on behalf of our company or by a third party; |
(2) | criminal proceedings in which the office holder was acquitted; |
(3) | criminal proceedings in which he was convicted in an offense, which did not require proof of criminal intent; or |
(4) | any other liability or expense for which the indemnification of an officer holder is not precluded by law. |
• | a breach by the office holder of his or her duty of loyalty towards the company unless, with respect to insurance coverage, the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company; |
• | a breach by the office holder of his or her duty of care if the breach was done intentionally or recklessly; |
• | any act or omission done with the intent to derive an illegal personal benefit; or |
• | any fine levied against the office holder. |
D. |
Dec. 31, 2019 | Dec. 31, 2018 | |||||||
Research, Development & Operations | 87 | 128 | ||||||
Marketing and Sales | 12 | 18 | ||||||
Administration | 10 | 19 | ||||||
Total | 109 | 165 |
Dec. 31, 2019 | Dec. 31, 2018 | |||||||
Israel & Europe | 48 | 82 | ||||||
United States | 61 | 83 | ||||||
Total | 109 | 165 |
E. |
Name | Number of Ordinary Shares Beneficially Owned (1) | Percentage of Outstanding Ordinary Shares (2) | ||||||
Arie Trabelsi(3) | 4,588,212 | 28.13 | % | |||||
Menachem Mirski | — | — | ||||||
Shoshana Cohen Shapira | — | — | ||||||
Oren Raoul De Lange | — | — | ||||||
All executive officers and directors as a group (8 persons) | 4,604,462 | 28.14 | % |
(1) | Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Ordinary shares relating to options currently exercisable or exercisable within 60 days of the date of this table are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person. Except as indicated by footnote, and subject to community property laws where applicable, the persons named in the table above have sole voting and investment power with respect to all shares shown as beneficially owned by them. |
(2) | The percentages shown are based on 16,214,218 ordinary shares issued and outstanding. |
(3) | Sigma Wave Ltd. is controlled by Mrs. Tsviya Trabelsi, and by her husband, Mr. Arie Trabelsi. As such, Mr. Trabelsi may be deemed to beneficially own the 4,588,212 ordinary shares beneficially held by Sigma Wave Ltd. The address of Sigma Wave Ltd. is Tsufit 7, Caesarea, 38900, Israel. |
Year ended December 31, | ||||||||||||||||
2019 | 2018 | |||||||||||||||
Number of options | Weighted average exercise price | Number of options | Weighted average exercise price | |||||||||||||
$ | $ | |||||||||||||||
Outstanding at Beginning of year | 854,656 | 2.53 | 331,660 | 4.03 | ||||||||||||
Granted | - | - | 568,500 | 2.00 | ||||||||||||
Exercised | (47,644 | ) | 0.1 | - | - | |||||||||||
Canceled and forfeited | (242,815 | ) | 1.93 | (45,504 | ) | 6.84 | ||||||||||
Outstanding at end of year | 564,197 | 2.64 | 854,656 | 2.53 | ||||||||||||
Exercisable at end of year | 315,822 | 3.32 | 291,156 | 3.44 |
Year ended December 31, | ||||||||
2019 | 2018 | |||||||
$ | $ | |||||||
Cost of revenues | 66 | 116 | ||||||
Research and development expenses | 31 | 54 | ||||||
Selling and marketing expenses | 29 | 52 | ||||||
General and administrative expenses | 18 | 34 | ||||||
144 | 256 |
Options outstanding | Options Exercisable | |||||||||||||||||||||||||||||||||
Range of exercise price | Number outstanding as of December 31, 2019 | Weighted average remaining contractual life (years) | Weighted average exercise price | Aggregate intrinsic value | Number outstanding as of December 31, 2019 | Weighted average remaining contractual life (years) | Weighted average exercise price | Aggregate intrinsic value | ||||||||||||||||||||||||||
$ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
0.00-2.00 | 408,549 | 7.34 | 1.46 | 84,940 | 160,174 | 7.34 | 0.54 | 84,940 | ||||||||||||||||||||||||||
3.00-5.00 | 121,648 | 4.34 | 4.15 | - | 121,648 | 4.34 | 4.15 | - | ||||||||||||||||||||||||||
7.00-10.00 | 34,000 | 3.75 | 8.75 | - | 34,000 | 3.75 | 8.75 | - | ||||||||||||||||||||||||||
18.75-22.00 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||
564,197 | 6.41 | 2.16 | 84,940 | 315,822 | 5.71 | 2.82 | 84,940 |
Options | Weighted– average grant-date fair value | |||||||
Non-vested at January 1, 2019 | 563,500 | $ | 1.90 | |||||
Granted | - | $ | - | |||||
Vested | (72,310 | ) | $ | 1.83 | ||||
Forfeited and canceled | (242,815 | ) | $ | 1.99 | ||||
Non-vested at December 31, 2019 | 248,375 | $ | 1.84 |
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
A. |
Name of Beneficial Owner | Number of Shares Beneficially Owned | Percentage of Shares Outstanding | ||||||
Sigma Wave Ltd | 4,588,212 | 28.13 | ||||||
Ibex Investors | 1,989,068 | 12.21 |
B. |
C. |
FINANCIAL INFORMATION |
A. |
B. |
THE OFFER AND LISTING |
A. |
Year | High | Low | ||||||
2012 | $ | 0.85 | $ | 0.04 | ||||
2013 | $ | 5.65 | $ | 0.30 | ||||
2014 | $ | 13.78 | $ | 4.85 | ||||
2015 | $ | 13.84 | $ | 4.46 | ||||
2016 | $ | 5.25 | $ | 2.62 | ||||
2017 | $ | 4.36 | $ | 2.17 | ||||
2018 | $ | 3.92 | $ | 1.32 | ||||
2019 | $ | 1.75 | $ | 0.59 |
High | Low | |||||||
2017 | ||||||||
First Quarter | $ | 3.88 | $ | 2.50 | ||||
Second Quarter | $ | 3.19 | $ | 2.17 | ||||
Third Quarter | $ | 3.56 | $ | 2.66 | ||||
Fourth Quarter | $ | 4.36 | $ | 2.72 | ||||
2018 | ||||||||
First Quarter | $ | 3.92 | $ | 2.73 | ||||
Second Quarter | $ | 2.88 | $ | 1.55 | ||||
Third Quarter | $ | 2.14 | $ | 1.71 | ||||
Fourth Quarter | $ | 1.81 | $ | 1.31 | ||||
2019 | ||||||||
First Quarter | $ | 1.75 | $ | 1.38 | ||||
Second Quarter | $ | 1.49 | $ | 0.98 | ||||
Third Quarter | $ | 1.24 | $ | 0.59 | ||||
Fourth Quarter | $ | 0.80 | $ | 0.59 | ||||
2020 | ||||||||
First Quarter | $ | 0.92 | $ | 0.37 | ||||
Second Quarter | $ | 3.09 | $ | 0.66 |
Month | High | Low | ||||||
July 2020 | $ | 1.83 | $ | 1.23 | ||||
August 2020 | $ | 1.64 | $ | 0.83 | ||||
September 2020 | $ | 0.92 | $ | 0.71 | ||||
October 2020 | $ | 1.15 | $ | 0.80 | ||||
Through November 27, 2020 | $ | 0.94 | $ | 0.79 |
B. |
C. |
D. |
E. |
F. |
ITEM 10. | ADDITIONAL INFORMATION |
A. |
B. |
• | any amendment to the articles of association; |
• | an increase of the company’s authorized share capital; |
• | a merger; or |
• | approval of interested party transactions which require shareholder approval. |
• | a breach of duty of care towards us or any other person, |
• | a breach of fiduciary obligations towards us, provided that the office holder acted in good faith and had reasonable grounds to assume that his or her act would not be to our detriment, |
• | a financial liability imposed on him or her in favor of another person, or |
• | any other event for which insurance of an office holder is or may be permitted. |
• | financial liability imposed upon said office holder in favor of another person by virtue of a decision by a court of law, including a decision by way of settlement or a decision in arbitration which has been confirmed by a court of law; |
• | reasonable expenses of the proceedings, including lawyers’ fees, expended by the office holder or imposed on him by the court for: |
(1) | proceedings issued against him by or on behalf of the Company or by a third party; |
(2) | criminal proceedings in which the office holder was acquitted; or |
(3) | criminal proceedings in which he was convicted in an offense, which did not require proof of criminal intent; or |
• | any other liability or expense for which the indemnification of an officer holder is not precluded by law. |
• | a breach by the office holder of his or her duty of loyalty towards the company unless, with respect to insurance coverage, the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company; |
• | a breach by the office holder of his or her duty of care if the breach was done intentionally or recklessly; |
• | any act or omission done with the intent to derive an illegal personal benefit; or |
• | any fine levied against the office holder. |
C. |
D. |
E. |
• | banks, financial institutions or insurance companies; | |
• | real estate investment trusts, regulated investment companies or grantor trusts; | |
• | dealers or traders in securities, commodities or currencies; | |
• | tax-exempt entities or organizations, including an “individual retirement account” or “Roth IRA” as defined in Section 408 or 408A of the Code; | |
• | certain former citizens or long-term residents of the United States; | |
• | persons that received our shares as compensation for the performance of services; | |
• | persons that will hold our shares as part of a “hedging,” “integrated” or “conversion” transaction or as a position in a “straddle” for U.S. federal income tax purposes; | |
• | partnerships or other pass-through, or holders that will hold our shares through such an entity; | |
• | S corporations; | |
• | holders whose functional currency is not the U.S. Dollar; or | |
• | holders that actually or constructively own 10 percent or more of our voting shares. |
• | an individual and either a citizen or, for U.S. federal income tax purposes, a resident of the United States; | |
• | a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any political subdivision thereof; | |
• | an estate whose income is subject to U.S. federal income tax regardless of its source; or | |
• | a trust that (a) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons or (b) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. |
F. |
G. |
H. |
I. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS |
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
ITEM 15. | CONTROLS AND PROCEDURES |
ITEM 16. | [RESERVED] |
ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT |
ITEM 16B. | CODE OF ETHICS |
ITEM 16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Year Ended December 31, | ||||||||
Services Rendered | 2019 | 2018 | ||||||
Audit fees | $ | 155,000 | $ | 185,000 | ||||
Audit-related fees | $ | 65,000 | $ | 5,000 | ||||
Tax fees | $ | - | $ | - | ||||
Total | $ | 215,000 | $ | 190,000 |
ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
ITEM 16E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
ITEM 16F. | CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT |
ITEM 16G. | CORPORATE GOVERNANCE |
• | The requirements regarding the directors’ nominations process. Instead, we follow Israeli law and practice in accordance with which our directors are recommended by our board of directors for election by our shareholders. See Item 6C. “Directors, Senior Management and Employees - Board Practices - Election of Directors. |
• | The requirement to obtain shareholder approval for the establishment or amendment of certain equity based compensation plans, 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. Under Israeli law and practice, the approval of the board of directors is required for the establishment or amendment of equity based compensation plans and private placements. Under Israeli regulations, Israeli companies whose shares have been publicly offered only outside of Israel or are listed for trade only on an exchange outside of Israel, such as our company, are exempt from the Israeli law requirement to obtain shareholder approval for private placements of a 20% or more interest in the company. For the approvals and procedures required under Israeli law and practice for an issuance that will result in a change of control of the company and acquisitions of the stock or assets of another company, see Item 6.C. “Directors, Senior Management and Employee - Board Practices - Approval of Certain Transactions Under Israeli Law-Disclosure of Personal Interests of a Controlling Shareholder; Approval of Transactions with Controlling Shareholders” and Item 10.B. “Additional Information — Memorandum and Articles of Association” |
ITEM 16H. | MINE SAFETY DISCLOSURE |
ITEM 17. | FINANCIAL STATEMENTS |
FINANCIAL STATEMENTS |
Index to Financial Statements | |
80 | |
F-1 | |
F-2 | |
F-3 | |
F-4 | |
F-5 – F-32 |
ITEM 19. | EXHIBITS |
Exhibit | Description | |
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema Document | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | XBRL Taxonomy Label Linkbase Document | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Filed herewith. |
** | Furnished herewith. |
† | Portions of this exhibit (indicated by asterisks) have been omitted pursuant to Regulation S-K, Item 601(b)(10). Such omitted information is not material and would likely cause competitive harm to the registrant if publicly disclosed. |
(1) | Filed as Exhibit 1.1 to the Registrant’s Registration Statement on Form F-1, registration number 333-189910, filed with the Securities and Exchange Commission on July 3, 2013, and incorporated herein by reference. |
(2) | Filed as Exhibit 2 to the Registrant’s Report on Form 6-K filed with the Securities and Exchange Commission on August 22, 2013, and incorporated herein by reference. |
(3) | Filed as Exhibit 2.1 to the Registrant’s Registration Statement on Form F-1, registration number 333-189810, filed with the Securities and Exchange Commission on July 3, 2013, and incorporated herein by reference. |
(4) | Filed as Exhibit 4.2(a) to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2011, filed with the Securities and Exchange Commission on May 9, 2012, and incorporated herein by reference. |
(5) | Filed as Exhibit 4.2(b) to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2011, filed with the Securities and Exchange Commission on May 9, 2012, and incorporated herein by reference. |
(6) | Filed as Exhibit 10.1 to the Registrant’s Registration Statement on Form F-1, registration number 333-189810, filed with the Securities and Exchange Commission on July 3, 2013, and incorporated herein by reference. |
(7) | Filed as Exhibit 11.1 to the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2007, filed with the Securities and Exchange Commission on June 30, 2008, and incorporated herein by reference. |
Stockholders of SuperCom Ltd.
/s/ Halperin Ilanit | |
HALPERIN Ilanit, Certified Public Accountant | |
We have served as the Company’s auditor since 2020. | |
Tel Aviv, Israel | |
November 27, 2020 |
Stockholders of SuperCom Ltd.
/s/ Rosenberg Rich Baker Berman, P.A. | |
Rosenberg Rich Baker Berman, P.A. | |
We have served as the Company’s auditor since 2019. | |
Somerset, New Jersey | |
December 3, 2019 |
SUPERCOM LTD. |
(U.S. dollars in thousands, except share data) |
As of December 31, | ||||||||
2019 | 2018 | |||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 110 | $ | 1,639 | ||||
Restricted bank deposit | 1,100 | 1,162 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $6,667 and $4,747 as of December 31, 2019 and 2018, respectively (Note 14) | 13,047 | 13,460 | ||||||
Other current assets (Note 3) | 961 | 951 | ||||||
Inventories, net (Note 4) | 2,646 | 3,169 | ||||||
Patents held for sale | 5,283 | 5,283 | ||||||
TOTAL CURRENT ASSETS | 23,147 | 25,664 | ||||||
LONG-TERM ASSETS | ||||||||
Severance pay funds | 362 | 361 | ||||||
Deferred tax long term | 510 | 385 | ||||||
Property and equipment, net (Note 5) | 894 | 843 | ||||||
Other Intangible assets, net (Note 6) | 8,065 | 10,070 | ||||||
Goodwill | 7,026 | 7,026 | ||||||
TOTAL LONG-TERM ASSETS | 16,857 | 18,685 | ||||||
TOTAL ASSETS | 40,004 | 44,349 | ||||||
CURRENT LIABILITIES | ||||||||
Short-term loans and other | 445 | - | ||||||
Accounts payable | 3,541 | 3,488 | ||||||
Employees and payroll accruals | 3,229 | 2,773 | ||||||
Related parties (Note 12.c) | 305 | 171 | ||||||
Accrued expenses and other liabilities (Note 7) | 4,667 | 4,475 | ||||||
Deferred revenue | 1,332 | 1,665 | ||||||
Short-term liability for future earn-out | 794 | 971 | ||||||
TOTAL CURRENT LIABILITIES | 14,313 | 13,543 | ||||||
LONG-TERM LIABILITIES | ||||||||
Long-term loan (Note 1c) | 14,187 | 9,624 | ||||||
Related parties (Note 12.c) | 2,383 | 165 | ||||||
Deferred revenues | 210 | 836 | ||||||
Long-term liability for future earn-out | - | 46 | ||||||
Accrued severance pay | 579 | 585 | ||||||
TOTAL LONG TERM LIABILITIES | 17,359 | 11,256 | ||||||
TOTAL LIABILITIES | 31,672 | 24,799 | ||||||
Commitments and contingent liabilities (Note 8) | ||||||||
SHAREHOLDERS’ EQUITY (Note 11) | ||||||||
Ordinary shares, NIS 0.25 par value - authorized 28,000,000 shares, 16,214,228 shares issued and outstanding at December 31, 2019 and 16,126,237 shares issued and outstanding at December 31, 2018 | 1,116 | 1,110 | ||||||
Additional paid-in capital | 84,680 | 84,399 | ||||||
Accumulated deficit | (77,464 | ) | (65,959 | ) | ||||
Total shareholders’ equity | $ | 8,332 | $ | 19,550 | ||||
Total liabilities and shareholders’ equity | 40,004 | 44,349 |
SUPERCOM LTD. |
(U.S. dollars in thousands, except share and per share data) |
Year Ended December 31 | ||||||||
2019 | 2018 | |||||||
Revenues | ||||||||
Products | 4,455 | 8,516 | ||||||
Services | 12,020 | 13,366 | ||||||
Total revenues | 16,475 | 21,882 | ||||||
Cost of revenues | ||||||||
Cost of products | 2,425 | 4,952 | ||||||
Cost of services | 7,702 | 8,791 | ||||||
Total cost of revenues | 10,127 | 13,743 | ||||||
Gross profit | 6,348 | 8,139 | ||||||
Operating expenses: | ||||||||
Research and development | 3,971 | 4,790 | ||||||
Sales and marketing | 3,526 | 5,005 | ||||||
General and administrative | 5,389 | 5,748 | ||||||
Other expense, net | 1,635 | 2,271 | ||||||
Total operating expenses | 14,521 | 17,814 | ||||||
Operating loss | (8,173 | ) | (9,675 | ) | ||||
Financial expenses, net | (3,289 | ) | (335 | ) | ||||
Loss before income taxes | (11,462 | ) | (10,010 | ) | ||||
Income tax expense | (43 | ) | (5,730 | ) | ||||
Net loss | $ | (11,505 | ) | $ | (15,740 | ) | ||
Net loss per share: | ||||||||
Basic and Diluted | $ | (0.71 | ) | $ | (1.03 | ) | ||
Shares used in calculation of net income per share: | ||||||||
Basic and Diluted | 16,149,597 | 15,232,155 |
Ordinary Shares | ||||||||||||||||||||
Number of Shares | Share capital | Additional Paid-in Capital | Accumulated deficit | Total Shareholders’ Equity | ||||||||||||||||
Balance as of January 1, 2018 | 14,958,339 | 1,026 | 82,157 | (50,476 | ) | 32,707 | ||||||||||||||
Accumulated adjustment of adoption of ASC-606 (“Revenue From Contracts With Customers”) | 257 | 257 | ||||||||||||||||||
Balance as of January 1, 2018 | 14,958,339 | 1,026 | 82,157 | (50,219 | ) | 32,964 | ||||||||||||||
Issuance of share capital, net of issuance cost | 1,167,898 | 84 | 1,986 | - | 2,070 | |||||||||||||||
Stock based compensation | - | - | 256 | - | 256 | |||||||||||||||
Net loss | - | - | - | (15,740 | ) | (15,740 | ) | |||||||||||||
Balance as of December 31, 2018 | 16,126,237 | 1,110 | 84,399 | (65,959 | ) | 19,550 | ||||||||||||||
Exercise of options and warrants | 87,991 | 6 | 14 | - | 20 | |||||||||||||||
Stock based compensation | - | - | 144 | - | 144 | |||||||||||||||
Receivable on account of share purchase | - | - | 58 | - | 58 | |||||||||||||||
Detachable warrants | - | - | 65 | - | 65 | |||||||||||||||
Net loss | - | - | - | (11,505 | ) | (11,505 | ) | |||||||||||||
Balance as of December 31, 2019 | 16,214,228 | 1,116 | 84,680 | (77,464 | ) | 8,332 |
Year Ended | December 31 | |||||||
2019 | 2018 | |||||||
CASH FLOWS - OPERATING ACTIVITIES | ||||||||
Net loss | (11,505 | ) | (15,740 | ) | ||||
Adjustments to reconcile net income to net cash from operations: | ||||||||
Depreciation and amortization | 3,128 | 3,692 | ||||||
Stock-based compensation | 144 | 256 | ||||||
Decrease (increase) in deferred tax | (125 | ) | 3,913 | |||||
Decrease (increase) in accounts receivables, net | 413 | (1,004 | ) | |||||
Decrease (increase) in other current assets | (10 | ) | 1,748 | |||||
Decrease in inventories, net | 523 | 1,707 | ||||||
Decrease (increase) in other assets, net | - | 1,807 | ||||||
Increase (decrease) in accounts payables | 53 | (2,069 | ) | |||||
Increase(decrease) in employees and payroll accruals | 456 | (2,137 | ) | |||||
Decrease in accrued severance pay | (6 | ) | - | |||||
Increase (decrease) in accrued expenses and other liabilities, related parties and liability for earnout | (731 | ) | 1,411 | |||||
Net cash used in operating activities | (7,660 | ) | (6,416 | ) | ||||
CASH FLOWS - INVESTING ACTIVITIES | ||||||||
Purchase of property and equipment | (414 | ) | (283 | ) | ||||
Purchase of Intangible assets | (0 | ) | (21 | ) | ||||
Capitalization of software development costs | (760 | ) | (1,173 | ) | ||||
Decrease (Increase) in severance pay fund | (1 | ) | (42 | ) | ||||
Restricted bank deposits, net | - | - | ||||||
Net cash used in investing activities | (1,175 | ) | (1,519 | ) | ||||
CASH FLOWS - FINANCING ACTIVITIES | ||||||||
Short-term bank loan, net | - | (738 | ) | |||||
Related parties | 2,218 | (1 ,737 | ) | |||||
Originator costs for long term Debt | - | (280 | ) | |||||
Long-term Debt, Net | 5,008 | 9,417 | ||||||
Receivable on account of share purchase | 58 | |||||||
Capital Investment | - | 2,070 | ||||||
Payment of liability for future earn-out in business combination | (60 | ) | (96 | ) | ||||
Proceeds from exercise of options and warrants, net | 20 | - | ||||||
Net cash provided by (used in) financing activities | 7,244 | 8,636 | ||||||
Increase (decrease) in cash, cash equivalents, and restricted cash | (1,591 | ) | 701 | |||||
Cash, cash equivalents, and restricted cash - beginning of year | 2,801 | 2,100 | ||||||
Cash, cash equivalents, and restricted cash - end of year | 1,210 | 2,801 |
SUPERCOM LTD. AND SUBSIDIARIES |
U.S. dollars in thousands (except per share data) |
NOTE 1: | GENERAL |
a. | SuperCom Ltd. (the “Company”) is an Israeli resident company organized in 1988 in Israel. On January 24, 2013 the Company changed its name back to SuperCom Ltd, its original name, from Vuance Ltd. On September 12, 2013, the Company’s ordinary shares were approved for listing on the NASDAQ Capital Market and began trading under the ticker symbol “SPCB” on September 17, 2013. Previously, the Company’s ordinary shares traded on the OTCQB® electronic quotation service. |
b. | Liquidity Analysis |
c. | Senior Secured Credit Facility |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 2: | SIGNIFICANT ACCOUNTING POLICIES |
a. | Use of estimates: |
b. | Financial statements in U.S. dollars: |
c. | Principles of consolidation: |
d. | Cash and cash equivalents: |
e. | Restricted Cash: |
f. | Allowance for doubtful accounts: |
g. | Inventories: |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 2: | SIGNIFICANT ACCOUNTING POLICIES (cont.) |
h. | Property and equipment: |
years | ||
Computers and peripheral equipment | 3 | |
Leased Products to Customers | 5 | |
Office furniture and equipment | 5 - 17 | |
Leasehold improvements | Over the shorter of the term of the lease or the life of the asset |
i. | Intangible assets: |
Useful Life (in Years) | ||
Customers relationships & Other | Between 4.5-13 (mainly 13) | |
IP & Technology | Between 4-15 (mainly 15) | |
Capitalized software development costs | Between 4-5 |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 2: | SIGNIFICANT ACCOUNTING POLICIES (cont.) |
j. | Goodwill: |
k. | Impairment of long-lived assets and intangible assets: |
l. | Long lived assets held for sale: |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 2: | SIGNIFICANT ACCOUNTING POLICIES (cont.) |
m. | Accrued severance pay and severance pay fund: |
n. | Revenue recognition: |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 2: | SIGNIFICANT ACCOUNTING POLICIES (cont.) |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 2: | SIGNIFICANT ACCOUNTING POLICIES (cont.) |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 2: | SIGNIFICANT ACCOUNTING POLICIES (cont.) |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 2: | SIGNIFICANT ACCOUNTING POLICIES (cont.) |
Year ended December 31, 2019 | ||||||||||||||||
Cyber Security | IoT | e-Gov | Total | |||||||||||||
Major geographic areas | ||||||||||||||||
Africa | $ | - | $ | - | $ | 1,468 | $ | 1,468 | ||||||||
European countries | 690 | 2,801 | 457 | 3,948 | ||||||||||||
South America | - | 30 | - | 30 | ||||||||||||
United States | 753 | 8,306 | - | 9,059 | ||||||||||||
Israel | 1,271 | 130 | - | 1,401 | ||||||||||||
APAC | 172 | 397 | - | 569 | ||||||||||||
Total revenue | $ | 2,886 | $ | 11,664 | $ | 1,925 | $ | 16,475 | ||||||||
Timing of revenue recognition | ||||||||||||||||
Products and services transferred over time | $ | 1,124 | $ | 9,982 | $ | 1,089 | $ | 12,195 | ||||||||
Products transferred at a point in time | 1,762 | 1,682 | 836 | 4,280 | ||||||||||||
Total revenue | $ | 2,886 | $ | 11,664 | $ | 1,925 | $ | 16,475 |
Year ended December 31, 2018 | ||||||||||||||||
Cyber Security | IoT | e-Gov | Total | |||||||||||||
Major geographic areas | ||||||||||||||||
Africa | $ | - | $ | 70 | $ | 4,746 | $ | 4,816 | ||||||||
European countries | 723 | 2,125 | 266 | 3,114 | ||||||||||||
South America | - | 174 | 1,105 | 1,279 | ||||||||||||
United States | 935 | 9,517 | - | 10,452 | ||||||||||||
Israel | 1,366 | 148 | - | 1,514 | ||||||||||||
APAC | 271 | 436 | - | 707 | ||||||||||||
Total revenue | $ | 3,295 | $ | 12,470 | $ | 6,117 | $ | 21,882 | ||||||||
Timing of revenue recognition | ||||||||||||||||
Products and services transferred over time | $ | 1,084 | $ | 11,102 | $ | 3,999 | $ | 16,185 | ||||||||
Products transferred at a point in time | 2,211 | 1,368 | 2,118 | 5,697 | ||||||||||||
Total revenue | $ | 3,295 | $ | 12,470 | $ | 6,117 | $ | 21,882 |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 2: | SIGNIFICANT ACCOUNTING POLICIES (cont.) |
o. | Research and development costs and software development costs: |
p. | Income taxes: |
q. | Concentrations of credit risk: |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 2: | SIGNIFICANT ACCOUNTING POLICIES (cont.) |
r. | Basic and diluted earnings per share: |
s. | Fair value of financial instruments: |
t. | Accounting for stock-based compensation: |
u. | Treasury Shares: |
v. | Recent accounting pronouncements |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 2: | SIGNIFICANT ACCOUNTING POLICIES (cont.) |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 3: | OTHER CURRENT ASSETS |
December 31, | ||||||||
2019 | 2018 | |||||||
$ | $ | |||||||
Prepaid expenses | 310 | 357 | ||||||
Advances to suppliers | 343 | 187 | ||||||
Government institutions | 20 | 97 | ||||||
Other | 288 | 310 | ||||||
961 | 951 |
NOTE 4: | INVENTORIES, NET |
December 31, | ||||||||
2019 | 2018 | |||||||
$ | $ | |||||||
Raw materials, parts and supplies | 1,414 | 1,105 | ||||||
Finished products | 1,232 | 2,064 | ||||||
2,646 | 3,169 |
As of December 31, 2019 and 2018, inventory is presented net of write offs for slow inventory in the amount of approximately $1,979 and $1,527 , respectively. |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 5: | PROPERTY AND EQUIPMENT, NET |
December 31, | ||||||||
2019 | 2018 | |||||||
$ | $ | |||||||
Cost: | ||||||||
Computers and peripheral equipment | 2,732 | 2,732 | ||||||
Office furniture and equipment | 819 | 819 | ||||||
Trade Equipment | 42 | 42 | ||||||
Leasehold improvements | 196 | 196 | ||||||
Equipment in lease | 1,125 | 711 | �� | |||||
4,914 | 4,500 | |||||||
Accumulated depreciation: | ||||||||
Computers and peripheral equipment | 2,631 | 2,593 | ||||||
Office furniture and equipment | 728 | 656 | ||||||
Trade Equipment | 25 | 25 | ||||||
Leasehold improvements | 179 | 20 | ||||||
Equipment in lease | 457 | 363 | ||||||
4,020 | 3,657 | |||||||
Depreciated cost | 894 | 843 |
Purchasing of Equipment for the years ended December 31, 2019 and 2018, were $414 and $76, respectively. | |
Depreciation expenses for the years ended December 31, 2019 and 2018, were $363 and $651, respectively. |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 6: | OTHER INTANGIBLE ASSETS, NET |
December 31, 2019 | December 31, 2018 | |||||||||||||||||||||||
Carrying Amount | Accumulated Amortization | Net Book Value | Carrying Amount | Accumulated Amortization | Net Book Value | |||||||||||||||||||
Customers relationships & Other | 8,734 | 6,910 | 1,824 | 8,734 | 6,117 | 2,617 | ||||||||||||||||||
IP & Technology | 7,019 | 3,389 | 3,630 | 7,019 | 2,754 | 4,265 | ||||||||||||||||||
Capitalized software development costs | 6,675 | 4,064 | 2,611 | 5,939 | 2,751 | 3,188 | ||||||||||||||||||
22,428 | 14,363 | 8,065 | 21,692 | 11,622 | 10,070 |
NOTE 7: | ACCRUED EXPENSES AND OTHER LIABILITIES |
December 31 | ||||||||
2019 | 2018 | |||||||
$ | $ | |||||||
Liabilities related with the Smart ID acquisition (see note 8 c1) | 805 | 805 | ||||||
Accrued marketing expenses | 240 | 223 | ||||||
Professional services | 283 | 553 | ||||||
Facilities | 466 | 305 | ||||||
Legal contingent liability | 60 | 60 | ||||||
Legal service providers | 76 | 709 | ||||||
Other accrued expenses | 2,739 | 1,820 | ||||||
4,667 | 4,475 |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 8: | COMMITMENTS AND CONTINGENT LIABILITIES |
a. | Lease commitments: |
2020 | $ | 386 | ||
2021 | - | |||
2022 | - | |||
$ | 386 |
b. | Guarantees, indemnity and liens: |
1. | The Company and its subsidiaries issued bank guaranties in the total amount of approximately $792 as a part of the ongoing terms of the contracts with existing customers and for tenders. |
2. | Under the Fortress Agreement, the Company recorded a fix floating charge on all of the Company’s assets in favor of the Fortress, limited in amount, in order to secure long-term loan granted by them in favor of the Company. |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 8: | COMMITMENTS AND CONTINGENT LIABILITIES (cont.) |
c. | Litigation: |
(1) | As part of the acquisition of the SmartID division of OTI, the Company assumed a dispute with Merwell Inc. (“Merwell”). Merwell has alleged that it has not received the full payment it is entitled to for its services in respect of a drivers’ license project. OTI alleged that Merwell breached its commitments under the service agreement and also acted in concert with third parties to damage OTI’s business activities. This matter is now subject to an arbitration proceeding. An appropriate provision is included in the financial statements. |
NOTE 9: | INCOME TAX |
a. | Changes in Israeli corporate tax rates: | |
The regular corporate tax rate in Israel in 2019 and 2018 is 23%. |
b. | Non-Israeli subsidiaries are taxed according to the tax laws of the countries in which they are located. |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 9: | INCOME TAX (cont.) |
c. | Deferred income taxes: |
December 31, | ||||||||
2019 | 2018 | |||||||
$ | $ | |||||||
Operating loss carry forwards | 17,391 | 15,426 | ||||||
Reserves and allowances | 1,599 | 1,467 | ||||||
Net deferred tax assets before valuation allowance | 18,990 | 16,893 | ||||||
Valuation allowance | (18,480 | ) | (16,508 | ) | ||||
Net deferred tax assets | 510 | 385 | ||||||
Deferred income taxes consist of the following: | ||||||||
Domestic | 14,339 | 12,662 | ||||||
Valuation allowance | (13,829 | ) | (12,251 | ) | ||||
Net deferred tax assets | 510 | 411 | ||||||
Foreign | 4,651 | 4,231 | ||||||
Valuation allowance | (4,651 | ) | (4,257 | ) | ||||
- | (26 | ) |
d. | Carryforward tax losses: |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 9: | INCOME TAX (cont.) |
e. | loss before income tax consists of the following: |
Year ended December 31, | ||||||||
2019 | 2018 | |||||||
$ | $ | |||||||
Domestic | (9,349 | ) | (9,556 | ) | ||||
Foreign | (2,113 | ) | (454 | ) | ||||
(11,462 | ) | (10,010 | ) |
f. | Reconciliation of the theoretical tax benefit to the actual tax benefit: |
Year ended December 31, | ||||||||
2019 | 2018 | |||||||
$ | $ | |||||||
Loss before income tax, as reported in the consolidated statements of operations | (11,462 | ) | (10,010 | ) | ||||
Statutory tax rate in Israel | 23 | % | 23 | % | ||||
Theoretical tax benefit | (2,636 | ) | (2,302 | ) | ||||
Current year carryforward losses and other differences for which a valuation allowance was recorded | 2,101 | 1,195 | ||||||
Changes in valuation allowance | 104 | 2,717 | ||||||
Offset of Other non-current assets (accounted for as DTA element) | (56 | ) | - | |||||
Changes in foreign currency exchange rate and other differences | (12 | ) | 139 | |||||
Changes in tax rate | - | 2,091 | ||||||
Non-deductible expenses and other differences | 542 | 1,890 | ||||||
Actual income tax expense (benefit) | 43 | 5,730 |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 10: | FAIR VALUE MEASUREMENTS |
December 31, 2019 | ||||||||||||||||
Description | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
Earn-out liability * | 349 | - | - | 349 | ||||||||||||
Total financial liability | $ | 349 | - | - | $ | 349 |
December 31, 2018 | ||||||||||||||||
Description | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
Earn-out liability * | 451 | - | - | 451 | ||||||||||||
Total financial liability | $ | 451 | - | - | $ | 451 |
NOTE 11: | SHARE CAPITAL |
a. | The Company’s ordinary shares are quoted under the symbol “SPCB” on the NASDAQ Capital Market in the United States. |
b. | Shareholders’ rights: |
The ordinary shares confer upon the holders the right to receive notice to participate and vote in the general meetings of the Company, and the right to receive dividends, if declared. |
c. | Stock options: |
1. | In 2003, the Company adopted a stock option plan under which the Company issues stock options (the “Option Plan”). The Option Plan is intended to provide incentives to the Company’s employees, officers, directors and/or consultants by providing them with the opportunity to purchase ordinary shares of the Company. Subject to the provisions of the Israeli Companies Law, the Option Plan is administered by the Compensation Committee, and is designed: (i) to comply with Section 102 of the Israeli Tax Ordinance or any provision which may amend or replace it and the rules promulgated thereunder and to enable the Company and grantees thereunder to benefit from Section 102 of the Israeli Tax Ordinance and the Commissioner’s Rules; and (ii) to enable the Company to grant options and issue shares outside the context of Section 102 of the Israeli Tax Ordinance. Options granted under the Option Plan will become exercisable ratably over a period of three to five years or immediately in certain circumstances, commencing with the date of grant. The options generally expire no later than 10 years from the date of grant. Any options which are forfeited or canceled before expiration become available for future grants. |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 11: | SHARE CAPITAL (Cont.) |
2. | A summary of the Company’s stock option activity and related information is as follows: |
Year ended December 31 | ||||||||||||||||
2019 | 2018 | |||||||||||||||
Number of options | Weighted average exercise price | Number of options | Weighted average exercise price | |||||||||||||
$ | $ | |||||||||||||||
Outstanding at Beginning of year | 854,656 | 2.53 | 331,660 | 4.03 | ||||||||||||
Granted | - | - | 568,500 | 2.00 | ||||||||||||
Exercised | (47,644 | ) | 0.1 | - | - | |||||||||||
Canceled and forfeited | (242,815 | ) | 1.93 | (45,504 | ) | 6.84 | ||||||||||
Outstanding at end of year | 564,197 | 2.64 | 854.656 | 2.53 | ||||||||||||
Exercisable at end of year | 315,822 | 3.32 | 291,156 | 3.44 |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 11: | SHARE CAPITAL (Cont.) |
Year ended December 31, | ||||||||
2019 | 2018 | |||||||
$ | $ | |||||||
Cost of revenues | 66 | 116 | ||||||
Research and development expenses | 31 | 54 | ||||||
Selling and marketing expenses | 29 | 52 | ||||||
General and administrative expenses | 18 | 35 | ||||||
144 | 257 |
Options outstanding | Options Exercisable | |||||||||||||||||||||||||||||||||
Range of exercise price | Number outstanding as of December 31, 2019 | Weighted average remaining contractual life (years) | Weighted average exercise price | Aggregate intrinsic value | Number outstanding as of December 31, 2019 | Weighted average remaining contractual life (years) | Weighted average exercise price | Aggregate intrinsic value | ||||||||||||||||||||||||||
$ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
0.00-2.00 | 408,549 | 7.34 | 1.46 | 84,940 | 160,174 | 7.34 | 0.54 | 84,940 | ||||||||||||||||||||||||||
3.00-5.00 | 121,648 | 4.34 | 4.15 | - | 121,648 | 4.34 | 4.15 | - | ||||||||||||||||||||||||||
7.00-10.00 | 34,000 | 3.75 | 8.75 | - | 34,000 | 3.75 | 8.75 | - | ||||||||||||||||||||||||||
564,197 | 6.41 | 2.16 | 84,940 | 315,822 | 5.71 | 2.82 | 84,940 |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 11: | SHARE CAPITAL (Cont.) |
Options | Weighted– average grant-date fair value | |||||||
Non-vested as of December 31, 2018 | 563,500 | 1.90 | ||||||
Granted | - | - | ||||||
Vested | (72,310 | ) | 2.00 | |||||
Forfeited and canceled | (242,815 | ) | 1.86 | |||||
Non-vested as of December 31, 2019 | 248,375 | 1.92 |
d. | Private placements and warrants: |
e. | Dividends: |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 12: | RELATED PARTY TRANSACTIONS |
a. | On July 25, 2010, the board of directors of the Company elected Mrs. Tsviya Trabelsi to serve as Chairman. Mrs. Trabelsi is an officer at Sigma Wave Ltd., which is the controlling shareholder of the Company and is also the wife of the Company’s chief executive officer. On May 12, 2011, the special general meeting approved a service agreement with Mrs. Trabelsi whereby she will receive a monthly fee equal to 60% of the Company’s chief executive officer’s monthly cost. In addition to the above consideration, the Company will bear all reasonable costs and expenses incurred by the Chairman in connection with her services and provide her with an automobile. On December 12, 2011, Mrs. Tsviya Trabelsi resigned effective immediately and the board of directors of the Company approved the appointment of Mr. Arie Trabelsi as its new Chairman, effective December 12, 2011. On December 27, 2012, the company’s shareholders at a general meeting of shareholders approved the reappointment of Mrs. Trabelsi as Chairman. On May 9, 2013, the general meeting of shareholders of the Company approved the same management services compensation for Mrs. Trabelsi as those approved in May 2011. |
b. | Mr. Trabelsi has served as the chief executive officer of the Company since June 1, 2012. Mr. Trabelsi is the sole director of Sigma Wave, which is the controlling shareholder of the Company. On May 9, 2013, the general meeting of shareholders of the Company approved the payment of management fees to Mr. Trabelsi of $10.6 per month plus social benefits and an annual bonus of the greater of 2% of the Company’s annual net profit or 0.5% of annual revenues, but in no event greater than Mr. Trabelsi’s annual salary. |
c. | As of December 31, 2019 and 2018, the Company accrued $305 and $110, respectively as expenses arising from related party management services. |
d. | On April 29, 2012, the board of directors approved the recording of a floating charge on all of the Company’s assets in favor of the chairman of the board and the CEO, unlimited in amount, in order to secure personal guarantees granted by them in favor of the Company to a bank and in order to secure loans that are given by them from time to time to the Company. As of December 31,2019, total loans were $2,267. These loans bear no interest and are not attached to any price index. During the year 2019, Mr. Ordan Trabelsi had provided, from time to time, loans to the Company. As of December 31,2019, the total were $116 .These loans bear no interest and are not attached to any price index |
NOTE 13: | SEGMENTS, MAJOR CUSTOMERS AND GEOGRAPHIC INFORMATION |
a. | Summary information about segments: |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 13: | SEGMENTS, MAJOR CUSTOMERS AND GEOGRAPHIC INFORMATION (Cont.) |
Year ended December 31, 2019 | ||||||||||||||||
Cyber Security | IoT | e-Gov | Total | |||||||||||||
Revenues | 2,886 | 11,664 | 1,925 | 16.475 | ||||||||||||
Operating loss | (443 | ) | (3743 | ) | (3,987 | ) | (8,173 | ) | ||||||||
Goodwill | 1,075 | 2,229 | 3,722 | 7,026 | ||||||||||||
Total Property and Equipment, net | 109 | 539 | 246 | 894 |
Year ended December 31, 2018 | ||||||||||||||||
Cyber Security | IoT | e-Gov | Total | |||||||||||||
Revenues | 3,295 | 12,470 | 6,117 | 21,882 | ||||||||||||
Operating loss | (1,064 | ) | (4,560 | ) | (4,051 | ) | (9,675 | ) | ||||||||
Goodwill | 1,075 | 2,229 | 3,722 | 7,026 | ||||||||||||
Total Property and Equipment, net | 38 | 481 | 324 | 843 |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 13: | SEGMENTS, MAJOR CUSTOMERS AND GEOGRAPHIC INFORMATION (Cont.) |
Year ended December 31, | ||||||||
2019 | 2018 | |||||||
Operating loss | ||||||||
Total operating loss of reportable segments | (8,173 | ) | (9,675 | ) | ||||
Financial expenses, net | (3,289 | ) | (335 | ) | ||||
Loss before income taxes | (11,462 | ) | (10,010 | ) |
b. | Summary information about geographic areas: |
Year ended December 31, | ||||||||||||||||
2019 | 2018 | |||||||||||||||
Total | Property and | Total | Property and | |||||||||||||
Revenues | Equipment, net | revenues | Equipment, net | |||||||||||||
$ | $ | $ | $ | |||||||||||||
Africa | 1,468 | - | 4,816 | - | ||||||||||||
European countries | 3,948 | - | 3,114 | - | ||||||||||||
South America | 30 | - | 1,279 | - | ||||||||||||
United States | 9,059 | 147 | 10,452 | 169 | ||||||||||||
Israel | 1,401 | 747 | 1,514 | 674 | ||||||||||||
APAC | 569 | - | 707 | - | ||||||||||||
16,475 | 894 | 21,882 | 843 |
- Revenues were attributed to countries based on the customer’s location. |
- Property and equipment were classified based on geographic areas in which such property and equipment items are held. |
c. | Summary of revenues from external customers based on products and services: |
Year ended December 31, | ||||||||
2019 | 2018 | |||||||
$ | $ | |||||||
Raw materials and equipment | 4,225 | 5,260 | ||||||
Electronic monitoring | 7,110 | 5,930 | ||||||
Treatment programs | 2,731 | 3,040 | ||||||
Maintenance, royalties and project management | 2,409 | 7,652 | ||||||
16,475 | 21,882 |
d. | Major customer data as a percentage of total sales: |
Year ended December 31, | ||||||||
2019 | 2018 | |||||||
Customer A | - | 6 | % | |||||
Customer B | - | 12 | % | |||||
Customer C | 7 | % | 6 | % |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 14: | OTHER EXPENSE, NET |
Year ended December 31, | ||||||||
2019 | 2018 | |||||||
$ | $ | |||||||
Doubtful debt provision | 1,920 | 2,406 | ||||||
Change in liability for future earn-out | (202 | ) | (247 | ) | ||||
Other | (83 | ) | 112 | |||||
Total other expense, net | 1,635 | 2,271 |
Year ended December 31, | ||||||||
2019 | 2018 | |||||||
$ | $ | |||||||
Balance at beginning of period | 4,747 | 2,341 | ||||||
Provision during the period | 1,920 | 2,406 | ||||||
Balance at end of period | 6,667 | 4,747 |
NOTE 15: | FINANCIAL EXPENSES, NET |
2019 | 2018 | |||||||
$ | $ | |||||||
Financial expenses: | ||||||||
Interest, bank charges and fees | (1,946 | ) | (844 | ) | ||||
Exchange differences, net | (1,531 | ) | - | |||||
Total financial expenses | (3,477 | ) | (844 | ) | ||||
Financial income: | ||||||||
Interest income | 188 | - | ||||||
Exchange differences, net | - | 509 | ||||||
Total financial income | 188 | 509 | ||||||
Total financial expenses, net | (3,289 | ) | (335 | ) |
SUPERCOM LTD. AND SUBSIDIARIES |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) |
U.S. dollars in thousands (except per share data) |
NOTE 16: | Subsequent Events |
a. | In December 2019, a new strain of coronavirus (“COVID-19”) was reported to have surfaced in Wuhan, Hubei Province, China. During February until November of 2020, COVID-19 has spread globally, including in Israel, Asia, Europe, and America. In response to the COVID-19 virus, countries have taken different measures in relation to prevention and containment including lock-down and quarantine. The COVID-19 virus continues to impact worldwide economic activity and pose the risk that we or our employees, contractors, suppliers, customers and other business partners may be prevented from conducting certain business activities for an indefinite period of time, including due to lockdown that had been mandated by governmental authorities or otherwise elected by companies as a preventive measure. |
b. | On July 9, 2020 the Company secured a private equity placement raising a gross proceeds of approximately $3.2 million, the Company issued 2,370,000 of SuperCom’s unregistered ordinary shares at $1.35 per ordinary share. Each share was sold together with a warrant with an exercise price of $1.7 per share. |
SUPERCOM LTD. | ||
By: | /s/ Arie Trabelsi | |
Name: | Arie Trabelsi | |
Title: | Chief Executive Officer and acting Chief Financial Officer |