UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

 

 

FORM 6-K

 

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of August, 2018

 

 

 

SUPERCOM LTD.

(Translation of Registrant’s name into English)

 

 

1, Shenkar Street,

Hertzliya Pituach,

Israel

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F  x    Form 40-F  ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ¨

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.  Yes  ¨    No  x

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-             

 

 

 

 

 

This report on Form 6-K incorporated by reference into all effective registration statements filed by the registrant under the securities Act of 1933.

 

 

Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  SuperCom Ltd.
   
  By: /s/ Arie Trabelsi
  Name: Arie Trabelsi
  Title: Chief Executive Officer

 

Date: August 13, 2018

 

 

Exhibit 99.1

 


SuperCom Reports Significant Improvements in Gross Profit, Earnings, and EPS With $1.4 Million in EBITDA for Q2 2018

 

 

 

Non-GAAP gross margin 59.2%; EBITDA margin 21%; Non-GAAP EPS $0.07

 

HERZLIYA, Israel, Aug. 13, 2018 /PRNewswire/ -- SuperCom (NASDAQ: SPCB), a global provider of secure solutions for the e-government, public safety, healthcare, and finance sectors, reported results for the second quarter of 2018. 

 

Second Quarter 2018 Financial Highlights (Compared to the Second Quarter of 2017)     

 

·Revenue decreased to $6.8 million from $7.5 million.

·Gross Profit increased 30% to $3.83 million from $3.4 million.

·Non-GAAP Gross Margin increased to 59.2% from 48.6%.

·Non-GAAP core operating expenses decreased 33% to $3.3 million from $5.4 million.

·EBITDA improved to $1.4 million compared to $1.0 million.

·Non-GAAP Net Profit improved to $1.1 million or $0.07 per share from $0.46 million or $0.03 per share.

·Working Capital increased to $11.3 million from $7.6 million.

·Current Ratio increased to 1.62 from 1.5

 

First Half 2018 Financial Highlights (Compared to the First Half of 2017)

 

·Revenue decreased to $13.8 million from $15.8 million.

·Gross Profit increased 19% to $7.7 million from 6.5 million.

·Non-GAAP Gross Margin increased to 58.7% from 43.6%.

·Non-GAAP core operating expenses decreased 31% to $6.8 million from $9.9 million.

·EBITDA improved to $2.9 million compared to $0.7 million.

·Non-GAAP Net Profit improved to $2.1 million or $0.14 per share from non-GAAP Net Loss of $(.46) million or $(0.03) per share.

 

First Half 2018 and Recent Operational Highlights by Business Segment: 

 

e-Gov:

 

·In April 2018, signed a new contract worth approximately $4 million in value with an existing national government customer in Africa. Built around SuperCom's Magna platform, the deployment will allow for quick expansion of additional e-Gov modules, which would lead to potential increases in the overall contract size. The majority of the new contract is expected to be recognized over the next two years and will grow SuperCom's steady-state recurring revenues.

·Continued progress on national project deployments as well as transition of recent projects in Africa into Steady State.

 

IoT and Connectivity:

 

·In January 2018, secured an additional contract to provide PureSecurity EM Suite in Idaho.

·In March 2018, secured an additional contract to provide PureSecurity EM Suite in South Carolina.

 

 

 

 

·In April 2018, secured an additional contract to provide PureSecurity EM Suite in eastern Texas to an established service provider.

·In April 2018, awarded a $7 million project with the national government of Sweden to deploy PureSecurity EM Suite.

·In June 2018, announced the deployment of an innovative protection from domestic violence project with the Sweden national police, a second national EM project win in Sweden within two months.

·Continued progress on 13 EM project deployments, including those in Denmark, Czech Republic, Bulgaria, Canada and the USA.

 

Cyber Security:

 

·Safend maintains numerous Fortune 500 customers and a greater than 90% retention rate in the US, driven by sustained customer satisfaction and continued technological improvements.

·Continued progress in the development of new advanced cyber security products, adding more capabilities, including anti-malware to be incorporated into the Safend cyber security platform.

 

Management Commentary

 

"We are pleased with our second quarter 2018 results, highlighted by a dramatic improvement in our financial performance compared to the same quarter last year. We also achieved sequential quarterly improvements in profitability margins with 21% EBITDA margins and Non-GAAP gross margins of 59%, and as we continued to optimize our cost structure, Non-GAAP core operating expenses reached a low of $3.3m," said Arie Trabelsi, President and CEO of SuperCom. "We expect more cost optimizations in the following quarters brining us closer to the lean operating structure that we have not seen since 2015, before the strategic acquisitions took place. Yet today, I believe our business prospects are multiples greater, with 2 additional business segments, a major presence in developed markets, over 50% growth in our steady-state recurring revenue, and significant enhancements to our technology portfolio backed by 119 patents."

 

"We continue to execute on our growth strategy across our business segments. In the recent past we have been expanding organically into new countries and governments faster than ever before with an exceptionally high win rate, including 8 new multi-year project wins in the last 8 months alone. This brings us to over 16 concurrent multi-year project deployments globally, which are expected to generate long term recurring revenues for years to come as well as additional business from customer references."

 

SuperCom management will host the conference call, followed by a question and answer period.

 

Date: Monday, August 13, 2018
Time: 10:00 a.m. Eastern time (7:00 a.m. Pacific time)
U.S. toll-free: 877-407-9124
Israel toll-free: 180-940-6247 
International: 201-689-8584

 

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.

 

 

 

 

About SuperCom 

 

Since 1988, SuperCom has been a global provider of traditional and digital identity solutions, providing advanced safety, identification and security solutions to governments and organizations, both private and public, throughout the world. Through its proprietary e-government platforms and innovative solutions for traditional and biometrics enrollment, personalization, issuance and border control services, SuperCom has inspired governments and national agencies to design and issue secure Multi-ID documents and robust digital identity solutions to its citizens and visitors. SuperCom offers a unique all-in-one field-proven RFID & mobile technology and product suite, accompanied by advanced complementary services for various industries including healthcare and homecare, security and safety, community public safety, law enforcement, electronic monitoring, livestock monitoring, and building and access automation. For more information, visit www.supercom.com.

 

Notice Regarding Forward-Looking Statements

 

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements preceded or followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "projects", "estimates", "plans", and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. Forward-looking statements in this release also include statements about business and economic trends. Investors should also consider the areas of risk described under the heading "Forward Looking Statements" and those factors captioned as "Risk Factors" in the Company's periodic reports under the Securities Exchange Act of 1934, as amended, or in connection with any forward-looking statements that may be made by the Company. These statements are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the Securities and Exchange Commission (SEC), including the Company's Annual Report on Form 20-F filed with the SEC on May 21, 2018. The Company undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this press release.

 

Use of Non-GAAP Financial Information

 

In addition to disclosing financial results calculated in accordance with United States generally accepted accounting principles (GAAP), this release of operating results also contains non-GAAP financial measures, which SuperCom believes are the principal indicators of the operating and financial performance of its business. Management believes the non-GAAP financial measures provided are useful to investors' understanding and assessment of the Company's on-going core operations and prospects for the future, as the charges eliminated are not part of the day-to-day business or reflective of the core operational activities of the Company. Management uses these non-GAAP financial measures as a basis for strategic decisions, forecasting future results and evaluating the Company's current performance. However, such measures should not be considered in isolation or as substitutes for results prepared in accordance with GAAP. Reconciliation of the non-GAAP measures to the most comparable GAAP measures are provided in the schedules attached to this release.

 

 

 

[Tables to follow]

 

 

 

 

SUPERCOM LTD.

CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

         

 

   June 30,   December 31, 
   2018   2017 
   Unaudited   Audited 
         
CURRENT ASSETS          
Cash and cash equivalents   1,920    1,037 
Restricted bank deposits   1,314    1,063 
Trade receivable, net   15,633    12,456 
Patents   5,283    5,283 
Other accounts receivable and prepaid expenses   531    2,698 
Inventories, net   4,889    4,876 
           
Total current assets   29,570    27,413 
           
LONG-TERM ASSETS          
Severance pay funds   303    319 
Deferred tax long term   4,591    4,505 
Customer Contracts   3,130    3,640 
Software and other IP   4,646    5,006 
Other Asset, net   5,250    5,071 
Goodwill   7,026    7,026 
Property & equipment, net   816    1,218 
Total long-term assets:   25,762    26,785 
           
Total Assets   55,332    54,198 

 

 

CURRENT LIABILITIES        
Short-term Bank credit   1,113    738 
Trade payables   4,295    5,838 
Employees and payroll accruals   5,171    4,910 
Related parties   997    61 
Accrued expenses and other liabilities   4,614    3,739 
Deferred revenues ST   1,074    1,511 
Short-term liability for future earn-out   1,038    1,163 
           
Total current liabilities   18,302    17,960 
           
LONG-TERM LIABILITIES          
           
Long-term bank loan   0    0 
Accrued severance pay   558    585 
Related Parties   2,980    2,082 
Deferred tax liability   39    49 
Deferred revenues   802    668 
Long-term liability for future earn-out   114    147 
           
Total long-term liabilities   4,493    3,531 
           
SHAREHOLDERS' EQUITY:          
Ordinary shares   1,026    1,026 
Additional paid-in capital   82,274    82,157 
Accumulated deficit   (50,763)   (50,476)
           
Total shareholders' equity   32,537    32,707 
           
Total liabilities and equity   55,332    54,198 

 

 

 

 

 

SUPERCOM LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands)

 

 

  

3 months ended

 
   June 30
2018
   June 30 
2017
 
   Unaudited   Unaudited 
         
REVENUES   6,761    7,502 
COST OF REVENUES   2,927    4,071 
           
GROSS PROFIT (LOSS)   3,834    3,431 
           
OPERATING EXPENSES:          
Research and development   1,203    1,960 
Selling and marketing   1,481    2,337 
General and administrative   1,254    1,516 
Other expense (Income)   133    (1,917)
           
Total operating expenses   4,071    3,896 
           
OPERATING LOSS   (237)   (465)
FINANCIAL INCOME (EXPENSES), NET   226    (226)
           
LOSS BEFORE INCOME TAX   (11)   (691)
INCOME TAX BENEFIT (EXPENSES )   44    30 
           
NET PROFIT(LOSS) FOR THE PERIOD   33    (661)
           
EPS Basic   0    (0.04)
EPS Diluted   0    (0.04)
Weighted average number of ordinary shares  used in computing basic income per share     14,958,339    14,938,339 
Weighted average number of ordinary shares  used in computing diluted income per share     15,011,129    15,012,263 

 

 

 

 

SUPERCOM LTD.

Reconciliation Table of GAAP to Non-GAAP Figures and EBITDA to Net Income

(U.S. dollars in thousands, except per share data)

 

 

  

3 months ended

 
   June 30,
2018
   June 30, 
2017
 
   Unaudited   Unaudited 
         
GAAP gross profit   3,834    3,431 
Amortization of Software and IP   153    152 
Stock-based compensation expenses   18    64 
Non-GAAP gross profit   4,005    3,647 
           
GAAP operating Loss   (237)   (465)
Amortization of Software/IP, Customer Contracts and Brand, and Stock-based compensation expenses   761    671 
Foreign Currency Loss   342    478 
Non-GAAP operating Income(Loss)   866    684 

 

 

GAAP net PROFIT (Loss)   33    (661)
Amortization of Software/IP, Customer Contracts and Brand, and Stock-based compensation expenses   761    671 
Foreign Currency Loss   342    478 
Income tax expense (benefit)   (44)   (30)
Non-GAAP net Profit(Loss)   1,092    458 
           
Non-GAAP EPS   0.07    0.03 
           
NET PROFIT )LOSS( FOR THE PERIOD   33    (661)
Income tax expenses (benefit), net   (44)   (30)
Financial expenses (income), net   (226)   226 
Depreciation, amortization and stock-based compensation expenses   1,298    1,012 
Foreign Currency Lossncy (benefit)20F annual report. k out the  APAC.om ssing   342    478 
EBITDA *   1,403    1,025 

 

EBITDA is a non-GAAP financial measure generally defined as earnings before interest, taxes, depreciation and amortization.  

 

 

 

 

SUPERCOM LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands)

 

 

  

6 months ended

 
   June 30
2018
   June 30 
2017
 
   Unaudited   Unaudited 
         
REVENUES   13,775    15,829 
COST OF REVENUES   6,054    9,356 
           
GROSS PROFIT (LOSS)   7,721    6,473 
           
OPERATING EXPENSES:          
Research and development   2,544    3,641 
Selling and marketing   3,182    4,271 
General and administrative   2,602    3,191 
Other expenses(Income)   183    (2,317)
           
Total operating expenses   8,511    8,786 
           
OPERATING LOSS   (790)   (2,313)
FINANCIAL INCOME (EXPENSES), NET   278    (402)
           
LOSS BEFORE INCOME TAX   (512)   (2,715)
INCOME TAX BENEFIT )EXPENSES(   225    58 
           
NET LOSS FOR THE PERIOD   (287)   (2,657)

 

 

 

 

SUPERCOM LTD.

Reconciliation Table of GAAP to Non-GAAP Figures and EBITDA to Net Income

(U.S. dollars in thousands, except per share data)

 

 

  

6 months ended

 
   June 30,
2018
   June 30,
2017
 
   Unaudited   Unaudited 
         
GAAP gross profit   7,721    6,473 
Amortization of Software and IP   307    306 
Stock-based compensation expenses   59    117 
Non-GAAP gross profit   8,087    6,896 
           
GAAP operating Loss   (790)   (2,313)
Amortization of Software/IP, Customer Contracts and Brand, and Stock-based compensation expenses   1816    1,581 
Foreign Currency Loss   787    679 
Non-GAAP operating Income(Loss)   1,813    (53)

 

 

GAAP net Income (Loss)   (287)   (2,657)
Amortization of Software/IP, Customer Contracts and Brand, and Stock-based compensation expenses   1,816    1,581 
Foreign Currency Loss   787    679 
Income tax expense (benefit)   (225)   (58)
Non-GAAP net Income(Loss)   2,091    (455)
           
Non-GAAP EPS   0.14    (0.03)
           
NET LOSS FOR THE PERIOD   (287)   (2,657)
Income tax expenses (benefit), net   (225)   (58)
Financial expenses (income), net   (278)   402 
Depreciation, amortization and stock-based compensation expenses   2,886    2,326 
Foreign Currency Loss   787    679 
EBITDA *   2,883    692 

 

EBITDA is a non-GAAP financial measure generally defined as earnings before interest, taxes, depreciation and amortization.

 

 

 

 

SuperCom Corporate Contact:
Ordan Trabelsi, President, Americas
Tel: 1-212-675-4606
ordan@supercom.com