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 of

the Securities Exchange Act of 1934

 

For the month of September 2019

 

Commission File Number: 0-29452

 

RADCOM LTD.

(Translation of registrant’s name into English)

 

24 Raoul Wallenberg Street, Tel Aviv 69719, Israel

(Address of principal executive offices)

 

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

 

Form 20-F  ☒   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): N/A

 

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): N/A

 

 

 

 

 

 

THIS FORM 6-K OF THE REGISTRANT IS HEREBY INCORPORATED BY REFERENCE INTO THE REGISTRANT’S REGISTRATION STATEMENTS ON FORM S-8 (REGISTRATION STATEMENT NOS. 333-111931, 333-123981, 333-190207, 333-195465, 333-203087, 333-211628 AND 333-215591) AND FORM F-3 (REGISTRATION STATEMENT NOS. 333-170512 AND 333-189111), AND SHALL BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS FILED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.

 

CONTENTS

 

This report on Form 6-K of the registrant consists of the following documents, which are attached hereto and incorporated by reference herein:

 

Exhibit 99.1 Interim Consolidated Financial Statements, as of June 30, 2019.
   
Exhibit 99.2 Management’s Discussion and Analysis of Financial Condition and Results of Operations for the six months ended June 30, 2019.

 

1

 

 

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.

 

  RADCOM LTD.
     
Date: September 12, 2019 By: /s/ Amir Hai
  Name: Amir Hai
  Title: Chief Financial Officer
     

 

 

2

 

Exhibit 99.1

 

RADCOM LTD. AND ITS SUBSIDIARIES

 

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

 

AS OF JUNE 30, 2019

 

UNAUDITED

 

INDEX

 

  Page
   
Consolidated Balance Sheets 2 - 3
   
Consolidated Statements of Operations 4
   
Consolidated Statements of Comprehensive Income (Loss) 5
   
Consolidated Statements of Changes in Shareholders’ Equity 6
   
Consolidated Statements of Cash Flows 7
   
Notes to Consolidated Financial Statements 8 - 21

 

1

 

 

RADCOM LTD. AND ITS SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

 

   June 30,   December 31, 
   2019   2018 
   Unaudited     
ASSETS        
         
CURRENT ASSETS:        
Cash and cash equivalents  $11,260   $61,988 
Short-term bank deposits   47,367    - 
Trade receivables (net of allowances for doubtful accounts amounted to $19 as of June 30, 2019 and December 31, 2018)   21,957    20,381 
Inventories   702    251 
Other accounts receivable and prepaid expenses   1,564    1,766 
           
Total current assets   82,850    84,386 
           
NON- CURRENT ASSETS:          
Severance pay fund   3,199    2,967 
Other long-term receivables   2,391    346 
Property and equipment, net   1,738    1,832 
Operating lease right-of-use assets   6,147    - 
           
Total non-current assets   

13,475

    

5,145

 
           

Total assets

  $96,325   $89,531 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

2

 

 

RADCOM LTD. AND ITS SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands, except share and per share data

 

   June 30,   December 31 
   2019   2018 
   Unaudited     
         
LIABILITIES AND SHAREHOLDERS’ EQUITY        
         
CURRENT LIABILITIES:          
Trade payables  $1,765   $1,559 
Employees and payroll accruals   3,559    3,420 
Deferred revenues and advances from customers   888    266 
Operating lease liabilities   1,176    - 
Other liabilities and accrued expenses   3,228    2,281 
           
Total current liabilities   10,616    7,526 
           
NON- CURRENT LIABILITIES:          
Deferred revenues   206    100 
Accrued severance pay   3,762    3,425 
Operating lease liabilities   5,236    - 
Other liabilities and accrued expenses   1,150    - 
           
Total non-current liabilities   10,354    3,525 
           
Total liabilities  $20,970   $11,051 
           
COMMITMENTS AND CONTINGENCIES          
           
SHAREHOLDERS’ EQUITY:          
Share capital:           
Ordinary Shares of NIS 0.20 par value: Authorized: 20,000,000 shares at June 30, 2019 and December 31, 2018; 13,773,503 and 13,735,759 shares issued and 13,737,471 and 13,699,727 shares outstanding at June 30, 2019 and December 31, 2018, respectively  $645   $643 
Additional paid-in capital   136,702    135,730 
Accumulated other comprehensive loss   (2,631)   (2,612)
Accumulated deficit   (59,361)   (55,281)
           
Total shareholders’ equity   75,355    78,480 
           
Total liabilities and shareholders’ equity  $96,325   $89,531 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

3

 

 

RADCOM LTD. AND ITS SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands, except share and per share data

 

  

Six months ended

June 30,

 
   2019   2018 
   Unaudited 
Revenues:        
Products  $7,549   $11,842 
Services   6,715    3,797 
Projects   328    5,903 
           
    14,592    21,542 
           
Cost of revenues:          
Products   1,920    3,362 
Services   2,005    494 
Projects   66    1,911 
           
    3,991    5,767 
           
Gross profit   10,601    15,775 
           
Operating expenses:          
Research and development   9,222    7,496 
Less - royalty-bearing participation   816    754 
           
Research and development, net   8,406    6,742 
           
Sales and marketing   5,063    6,324 
General and administrative   1,647    1,990 
           
Total operating expenses   15,116    15,056 
           
Operating income (loss)   (4,515)   719 
           
Financial income, net   481    373 
           
Income (loss) before taxes on income   (4,034)   1,092 
Taxes on income   (46)   (13)
Net income (loss)  $(4,080)  $1,079 
           
Basic net income (loss) per Ordinary Share  $(0.30)  $0.08 
           
Diluted net income (loss) per Ordinary Share  $(0.30)  $0.08 
           
Weighted average number of Ordinary Shares used in computing basic net income (loss) per Ordinary Share   13,756,198    13,549,494 
           
Weighted average number of Ordinary Shares used in computing diluted net income (loss) per Ordinary Share   13,756,198    13,817,995 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

4

 

 

RADCOM LTD. AND ITS SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

U.S. dollars in thousands

 

   Six months ended
June 30,
 
   2019   2018 
   Unaudited 
         
Net income (loss)  $(4,080)  $1,079 
           
Other comprehensive loss:          
           
Foreign currency translation adjustments   (19)   (84)
           
Total other comprehensive loss   (19)   (84)
           
Comprehensive income (loss)  $(4,099)  $995 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

5

 

 

RADCOM LTD. AND ITS SUBSIDIARIES

 

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

U.S. dollars in thousands, except share and per share data

 

Six months ended June 30, 2019:

 

   Ordinary Shares   Additional
paid-
   Receivable on account of   Accumulated other comprehensive   Accumulated   Total
shareholders’
 
   Number   Amount   in capital   shares   loss   deficit   equity 
                             
Balance as of December 31, 2018   13,699,727   $643   $135,730   $             -   $(2,612)  $(55,281)  $78,480 
                                    
Exercise of options into Ordinary Shares   1,500    *)   9    -    -    -    9 
RSUs vested   36,244    2    (2)   -    -    -    - 
Share-based compensation and RSUs   -    -    965    -    -    -    965 
Net loss   -    -    -    -    -    (4,080)   (4,080)
Other comprehensive loss   -    -    -    -    (19)   -    (19)
                                    
Balance as of June 30, 2019 (unaudited)   13,737,471   $645   $136,702   $-   $(2,631)  $(59,361)  $75,355 

 

Six months ended June 30, 2018:

 

   Ordinary Shares   Additional
paid-
   Receivable on account of   Accumulated other comprehensive   Accumulated   Total
shareholders’
 
   Number   Amount   in capital   shares   loss   deficit   equity 
                             
Balance as of December 31, 2017   13,409,975   $628   $131,491   $            -   $(2,520)  $(53,203)  $76,396 
                                    
Cumulative effect of changes in accounting principles (ASC 606)   -    -    -    -    -    337    337 
Exercise of options into Ordinary Shares   194,392    10    1,932    (29)   -    -    1,913 
RSUs vested   36,958    2    (2)   -    -    -    - 
Share-based compensation and RSUs   -    -    1,342    -    -    -    1,342 
Net income   -    -    -    -    -    1,079    1,079 
Other comprehensive loss   -    -    -    -    (84)   -    (84)
                                   
Balance as of June 30, 2018 (unaudited)   13,641,325   $640   $134,763   $(29)  $(2,604)  $(51,787)  $80,983 

 

*)Represent an amount lower than $1.

 

The accompanying notes are an integral part of the consolidated financial statements.

 

6

 

 

RADCOM LTD. AND ITS SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

 

   Six months ended
June 30,
 
   2019   2018 
   Unaudited 
         
Cash flows from operating activities:        
Net income (loss)  $(4,080)  $1,079 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:          
Depreciation   359    322 
Share-based compensation and RSUs   965    1,342 
Change in:          
Severance pay, net   105    (17)
Trade receivables, net   (1,568)   6,050 
Other account receivables and prepaid expenses and other long-term receivables   (1,828)   (118)
Inventories   (471)   1,063 
Trade payables   308    184 
Employees and payroll accruals   138    8 
Other liabilities and accrued expenses current and non-current   2,079    (817)
Deferred revenues and advances from customers   728    (1,395)
Operating lease right-of-use assets   638    - 
Operating lease liability   (373)   - 
Accrued interest on short-term bank deposits   (549)   - 
           
Net cash provided by (used in) operating activities   (3,549)   7,701 
           
Cash flows from investing activities:          
           
Investment in bank deposits   (46,818)   - 
Purchase of property and equipment   (375)   (457)
           
Net cash used in investing activities   (47,193)   (457)
           
Cash flows from financing activities:          
           
Exercise of options into Ordinary Shares   9    1,913 
           
Net cash provided by financing activities   9    1,913 
           
Foreign currency translation adjustments on cash and cash equivalents   5    (330)
           
Increase (decrease) in cash and cash equivalents and restricted bank deposits   (50,728)   8,827 
Cash and cash equivalents and restricted bank deposit at beginning of the period   61,988    22,611 
           
Cash and cash equivalents and restricted bank deposits at end of the period  $11,260   $31,438 

 

(a)  Non-cash activities:        
   Purchase of property and equipment  $50   $107 
   Operating lease right-of-use assets  $849   $- 
              
(b)  Cash paid during the period for:          
   Taxes on income  $66   $13 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

7

 

 

RADCOM LTD. AND ITS SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

 

NOTE 1:- GENERAL

 

a.RADCOM Ltd. (the “Company”) is an Israeli corporation which provides NFV and 5G-ready service assurance, cloud-native network intelligence solutions for Communication Service Providers (“CSPs”). The Company’s solutions include RADCOM Service Assurance, a fully virtualized, on-demand service assurance solution that integrates an automated, and efficient data acquisition layer of virtual probes with a smart mediation layer thus providing critical customer and service insights; RADCOM Network Visibility, a cloud-native network packet broker and filtering solution that allows CSPs to manage network traffic at scale across multiple cloud environments and control the visibility layer to perform dynamic, on-demand analysis of select datasets; and RADCOM Network Insights, a business intelligence solution offering smart insights for multiple use cases, enabled by data captured and correlated through RADCOM Network Visibility and RADCOM Service Assurance. The Company specializes in solutions for next-generation mobile and fixed networks, including LTE, LTE-A, VoLTE, IMS, VoIP, WiFi, VoWiFi, UMTS/GSM, mobile broadband and 5G. The Company’s shares (the “Ordinary Shares”) are listed on the Nasdaq Capital Market under the symbol “RDCM”.

 

The Company has wholly-owned subsidiaries in the United States and Brazil, that are primarily engaged in the sales, marketing, deployment and customer support of the Company’s products in United States and Brazil. The Company also has a wholly-owned subsidiary in India, that primarily provides marketing, customer support and development services worldwide. Additionally, the Company has a wholly-owned subsidiary in Israel solely established for the purpose of making various investments, including securities purchases.

 

b.The Company depends on a limited number of contract customers for selling its solution. If these customers become unable or unwilling to continue to buy the Company’s solution, it could adversely affect the Company’s results of operations and financial position.

 

During the six-month period ended June 30, 2019 the Company had one customer in the United States and one in Japan that amounted 52% and 24%, respectively, of the total consolidated revenues. During the six month period ended June 30, 2018, the Company had one customer in the United States and one in the Philippines that amounted 37% and 26%, respectively, of the total consolidated revenues.

 

The loss of any major customer, a significant decrease in business from any such customer or a reduction in customer revenue due to adverse changes in the market, economic or competitive conditions or other factors could have a material adverse effect on the Company’s business, results of operations and financial condition.

 

8

 

 

RADCOM LTD. AND ITS SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

 

NOTE 2: - UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

 

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”) and the standards of the Public Company Accounting Oversight Board for interim financial information. Accordingly, they do not include all the information and footnotes required by US GAAP for complete financial statements. In the opinion of management, the Company has made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) considered necessary for a fair presentation of the Company’s consolidated financial position as of June 30, 2019. The results for the six-month period ended June 30, 2019, are not necessarily indicative of the results that may be expected for the year ending on December 31, 2019.

 

NOTE 3: - SIGNIFICANT ACCOUNTING POLICIES

 

The significant accounting policies applied in the annual consolidated financial statements of the Company as disclosed in the Company’s Annual Report on Form 20-F for the period ended December 31, 2018 filed with the SEC on April 18, 2019, are applied consistently in these unaudited interim consolidated financial statements, except for:

 

a.Short-term bank deposits:

 

Bank deposits with maturities of more than three months at acquisition but less than one year are included in short-term bank deposits. Such deposits are stated at cost which approximates their fair values.

 

b.Adoption of new accounting principles:

 

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02 (Topic 842) “Leases”. The standard supersedes the lease requirements in Accounting Standards Codification (“ASC”) Topic 840, “Leases”. Under ASC 842, lessees are required to recognize assets and liabilities on the balance sheet for most leases and provide enhanced disclosures.

 

The Company adopted ASC 842 on January 1, 2019, using the modified retrospective approach, by applying the new standard to all leases existing at the date of initial application. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under ASC 842, while prior period amounts have not been adjusted and continue to be reported in accordance with the historical accounting under ASC 840. The Company elected the package of practical expedients permitted under the standard related to treating lease and non-lease components as a single lease component for all equipment leases as well as electing a policy exclusion permitting leases with an original lease term of less than one year to be excluded from the operating lease right-of-use (“ROU”) assets and operating lease liabilities.

 

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RADCOM LTD. AND ITS SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

 

NOTE 3: - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

 

Operating leases are included in operating lease ROU assets and operating lease liabilities in the consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at the commencement date to determine the present value of the lease payments.

 

Operating lease expenses are recognized on a straight-line basis over the lease term. Several of the Company’s leases include options to extend the lease and some have termination options that are factored into the Company’s determination of the lease payments when appropriate. For purposes of calculating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company’s lease agreements do not contain any material residual value guarantees. A portion of the Company’s real estate leases is generally subject to annual changes in the Consumer Price Index (“CPI”). The changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred.

 

For all short-term leases which are less than 12 months and existing short-term leases of those assets in transition, the Company does not recognize operating lease ROU assets or operating lease liabilities, but recognizes lease expenses over the lease term on a straight-line basis.

 

As a result of the adoption of ASC 842 on January 1, 2019, the Company recorded both operating lease ROU assets and operating lease liabilities of $5,936. The adoption did not impact the Company’s retained earnings, or prior year consolidated statements of comprehensive loss and statements of cash flows. See Note 8 for further information on leases.

 

c.New accounting standards not yet effective:

 

In January 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses on Financial Instruments”, which requires that expected credit losses related to financial assets measured on an amortized cost basis and available for sale debt securities be recorded through an allowance for credit losses. ASU 2016-13 limits the amount of credit losses to be recognized for available for sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. The new standard will be effective for interim and annual periods beginning after January 1, 2020, and early adoption is permitted. The Company is currently evaluating the potential effect of this standard on its consolidated financial statements.

 

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RADCOM LTD. AND ITS SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

 

NOTE 4: - REVENUES

 

Revenue is recognized when or as performance obligations are satisfied by transferring control of a promised good or service to a customer. Control is either transferred over time or at a point in time, which affects the revenue recognition schedule.

 

Commencing January 1, 2019, Services revenues include revenues related to managed services in addition to service type warranty and post-contract services.

 

The following table presents the significant changes in the deferred revenues balances during the six months ended June 30, 2019:

 

Balance, beginning of the period  $366 
Reclassification to revenue as a result of satisfying performance obligation   (266)
    100 
      
New performance obligations   994 
Balance, end of the period   1,094 
Less: long-term portion of deferred revenue   (206)
      
Current portion, end of the period  $888 

 

As of June 30, 2019, the Company had $59,804 of remaining performance obligations not yet satisfied or partly satisfied related to its revenues. the Company expects to recognize approximately 52% of this amount as revenues during the next 12 months and the rest thereafter.

 

For disaggregation of revenues disclosure please see Note 10c.

 

NOTE 5: - SHORT-TERM BANK DEPOSITS

 

Currency  Interest rate (%)   Deposit amount   Maturity date
As of June 30, 2019
            
U.S. dollars   2.90   $4,000   July 10, 2019
U.S. dollars   3.08   $11,018   August 8, 2019
U.S. dollars   2.55   $1,800   September 12, 2019
U.S. dollars   3.27   $30,000   February 6, 2020
        $46,818    

 

Short-term bank deposits include accrued interest of $549 as of June 30, 2019.

 

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RADCOM LTD. AND ITS SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

 

NOTE 6: - INVENTORIES

 

   June 30,   December 31, 
   2019   2018 
   Unaudited     
         
Finished products (*)  $702   $251 
           
   $702   $251 

 

(*)Including inventory delivered to customers but for which revenue recognition criteria have not been met in the amount of $486 and $35 as of June 30, 2019 and December 31, 2018, respectively.

 

NOTE 7: - COMMITMENTS AND CONTINGENCIES

 

a.Royalty commitments:

 

1.The Company receives research and development grants from the Israel Innovation Authority (the “IIA”). In consideration for the research and development grants received from the IIA, the Company has undertaken to pay royalties as a percentage of revenues from products developed from research and development projects financed. If the Company does not generate sales of products developed with funds provided by the IIA, the Company is not obligated to pay royalties or repay the grants.

 

Royalties are payable at the rate of 3% from the time of commencement of sales of all of the Company’s products until the cumulative amount of the royalties paid equals 100% of the dollar-linked amounts of the grants received, plus interest at LIBOR.

 

As of June 30, 2019, the Company’s total commitment with respect to royalty-bearing participation received or accrued, net of royalties paid or accrued, amounted to $49,601.

 

Royalty expenses relating to the IIA grants included in cost of revenues during the six month periods ended June 30, 2019 and 2018 were $438 and $646, respectively.

 

In May 2010, the Company received a notice from the IIA regarding alleged miscalculations of the amount of royalties paid by the Company to the IIA for the years 1992-2009 and the revenues basis on which the Company had to pay royalties. The Company believes that all royalties due to the IIA from the sale of products developed with funding provided by the IIA during such years were properly paid or were otherwise accrued. The Company reviewed with the IIA the alleged miscalculations. The Company assessed the merits of the aforesaid arguments raised by the IIA and recorded a liability for an estimated loss.

 

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RADCOM LTD. AND ITS SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

 

NOTE 7: - COMMITMENTS AND CONTINGENCIES (Cont.)

 

 

2.In April 2012 and in April 2014, the Israeli Ministry of Economy (“MOE”) approved the Company’s application for participation in funding the setting up of the Company’s India subsidiary and China branch as part of a designated grants plan for setting up and establishing a marketing agency in India and China. The grant is intended to cover up to 50% from the costs of the office establishment, logistics expenses and hiring employees and consultants in India and China, based on the approved budget for the plan over a period of three years. The Company is currently in the process of winding down its operations at the China office. The total marketing grants that the Company had received from the MOE as of December 31, 2017 were in the amount of $668. No further grants are expected to be received from such plans.

 

The Company is obligated to pay to the MOE royalties of 3% on the increased sales in the target market, with respect to the year during which the grant was approved over a period of five years but not more than the total linked amount of the grant received.

 

As of June 30, 2019, the Company paid an aggregate amount of $9 of royalties to the MOE.

 

3.According to the Company’s agreements with the Israel-U.S Bi-National Industrial Research and Development Foundation (“BIRD-F”), the Company is required to pay royalties at a rate of 5% of sales of products developed with funds provided by the BIRD-F, up to an amount equal to 150% of the BIRD-F’s grant, linked to the United States CPI relating to such products. The last funds from the BIRD-F were received in 1996. In the event the Company does not generate sales of products developed with funds provided by the BIRD-F, the Company is not obligated to pay royalties or repay the grants.

 

The total research and development funds that the Company has received from the BIRD-F were $340 (CPI linked amount of $576). According to the above, as of June 30, 2019, the total royalties commitment the Company may be required to pay is an amount of up to $864 out of which $476 was paid by the Company in previous years. The remaining commitment with respect to royalty-bearing participation received, net of royalties paid or accrued, amounted to $388 as of June 30, 2019.

 

Since 2003, the Company has not generated sales of products developed with the funds provided by the BIRD-F. Therefore, the Company has not been obligated to pay royalties or repay the grant since such date.

 

b.From time to time, the Company may be involved in various claims and legal proceedings. The Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss. The Company’s estimations and related accruals, if any, are reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events relating to a particular matter.

 

13

 

 

RADCOM LTD. AND ITS SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

 

NOTE 8: - LEASES

 

The Company has entered into various operating lease agreements for certain of its offices and car leases with an original lease periods expiring between 2020 and 2028. Most of the lease agreements include one or more options to renew. The Company does not assume renewals in determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement.

 

Lease payments included in the measurement of the operating lease liability comprise the following: the fixed non-cancelable lease payments and payments for optional renewal periods where it is reasonably certain the renewal period will be exercised. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

 

As of June 30, 2019, the Company’s operating lease agreements have remaining lease term ranging from 1.4 years to 8.8 years, including options to extend part of the lease agreements for additional 2 years and up to 5 years.

 

The following table represents the weighted-average remaining lease term and discount rate:

 

   June 30, 
   2019 
     
Weighted average remaining lease term   3 years 
      
Weighted average discount rate   3.8%

 

The components of lease expense for the six month period ended June 30, 2019 were as follows:

 

   Six months ended 
   June 30,
2019
 
     
Operating lease  $621 
Short-term lease   70 
Total lease expense  $691 

 

Cash paid for amounts included in the measurement of operating lease liabilities was $567 during the six months ended June 30, 2019.

 

14

 

 

RADCOM LTD. AND ITS SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

 

NOTE 8: - LEASES (Cont.)

 

The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2019:

 

   Operating Leases 
     
2019 (excluding the six months ended June 30, 2019)  $669 
2020   1,312 
2021   1,276 
2022   1,207 
2023   1,092 
2024 and after   1,420 
Total operating lease payments  $6,976 
Less: imputed interest   564 
Present value of lease liabilities  $6,412 

 

NOTE 9: - SHAREHOLDERS’ EQUITY

 

Share-based compensation:

 

a.On October 30, 2016, the Board resolved to increase the number of Ordinary Shares reserved under the 2013 Share Option Plan from 1,250,000 to 2,450,000.

 

The total number of Ordinary Shares available for future grants under the 2013 Share Option Plan as of June 30, 2019 was 712,225.

 

15

 

 

RADCOM LTD. AND ITS SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

 

NOTE 9: - SHAREHOLDERS’ EQUITY (Cont.)

 

b.The following is a summary of the Company’s stock options activity for the six month period ended June 30, 2019:

 

   Number of options   Weighted-average exercise price   Weighted- average remaining contractual term
(in years)
   Aggregate intrinsic value 
                 
Outstanding at January 1, 2019   415,510   $14.62    2.69   $       3 
Granted   -    -           
Exercised   (1,500)   6.00           
Expired and forfeited   (17,400)   15.99           
                     
Outstanding at June 30, 2019   396,610   $14.59    2.20   $2 
                     
Vested and expected to vest at June 30, 2019   396,610   $14.59    2.20   $2 
                     
Exercisable at June 30, 2019   230,884   $12.92    1.78   $2 

 

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the fair value of the Company’s Ordinary Shares on the last day of the six month period ended June 30, 2019 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on June 30, 2019. This amount is impacted by the changes in the fair market value of the Company’s Ordinary Shares.

 

c.As of June 30, 2019, stock options under the 2013 Share Option Plan, as amended are as follows:

 

   Options outstanding at
June 30, 2019
   Options exercisable at
June 30, 2019
 
Exercise price  Number outstanding   Weighted average exercise price   Weighted average remaining contractual life   Number exercisable   Weighted average exercise price   Weighted average remaining contractual life 
$      $   In years       $   In years 
                         
6.00   750    6.00    0.06    750    6.00    0.06 
11.12-14.52   251,708    11.87    1.72    195,133    11.88    1.63 
18.90-19.85   144,152    19.39    3.05    35,001    18.90    2.64 
                               
    396,610              230,884           

 

16

 

 

RADCOM LTD. AND ITS SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

 

NOTE 9: - SHAREHOLDERS’ EQUITY (Cont.)

 

d.The following is a summary of the Company’s restricted stock unit (“RSU”) activity for the six month period ended June 30, 2019:

 

   Number of RSUs   Weighted average remaining contractual term
(in years)
   Aggregate intrinsic value 
             
Outstanding at January 1, 2019   168,869    1.40   $1,253 
Granted   263,220           
Vested   (36,244)          
Cancelled and forfeited   (10,800)          
                
Outstanding at June 30, 2019   385,045    1.81   $3,169 
                
Vested and expected to vest at June 30, 2019   385,045    1.81   $3,169 

 

e.The weighted average fair values of RSUs granted during the six month periods ended June 30, 2019 and 2018 were $7.70 and $19.62 per share, respectively.

 

f.The following table summarizes the departmental allocation of the Company’s share-based compensation charges:

 

   Six months ended
June 30,
 
   2019*   2018* 
   Unaudited 
         
Cost of revenues  $95   $77 
Research and development, net   357    411 
Sales and marketing   330    462 
General and administrative   183    392 
           
   $965   $1,342 

 

(*)Including $772 and $827 of compensation cost related to RSUs for the six month periods ended June 30, 2019 and 2018, respectively.

 

g.Share-based compensation:

 

As of June 30, 2019, there are $2,749 of total unrecognized costs related to non-vested share-based compensation and RSUs that are expected to be recognized over a weighted average period of 1.13 years.

 

17

 

 

RADCOM LTD. AND ITS SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

 

NOTE 10: - SELECTED STATEMENTS OF OPERATIONS DATA

 

a.Financial income, net:

 

   Six months ended
June 30
 
   2019   2018 
   Unaudited 
         
Financial income:        
Exchange rate differences  $217   $298 
Interest from banks   874    696 
           
    1,091    994 
           
Financial expenses:          
Interest and bank charges   (7)   (8)
Exchange rate differences   (603)   (613)
           
    (610)   (621)
           
Financial income, net  $481   $373 

 

b.Net income (loss) per share:

 

The following table sets forth the computation of basic and diluted net income (loss) per share:

 

   Six months ended
June 30
 
   2019   2018 
   Unaudited 
Numerator:        
         
Numerator for basic and diluted net income (loss) per share  $(4,080)  $1,079 
           
Denominator:          
           
Denominator for basic net income (loss) per share - weighted average number of Ordinary Shares   13,756,198    13,549,494 
           
Effect of dilutive securities:          
Outstanding options and RSUs   -    268,501 
           
Denominator for diluted net income (loss) per share - adjusted weighted average number of Ordinary Shares   13,756,198    13,817,995 

 

18

 

 

RADCOM LTD. AND ITS SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

 

NOTE 10: - SELECTED STATEMENTS OF OPERATIONS DATA (Cont.)

 

c.Revenues by geographic region are as follows:

 

  

Six months ended

June 30

 
   2019   2018 
   Unaudited 
         
United States  $8,163   $12,691 
Japan   3,459    - 
Philippines   767    5,566 
Latin America   1,086    1,955 
Other   1,117    1,330 
           
   $14,592   $21,542 

 

NOTE 11: - RELATED PARTY BALANCES AND TRANSACTIONS

 

a.The Company carries out transactions with related parties as detailed below. Certain principal shareholders of the Company are also principal shareholders of affiliates known as the RAD-BYNET Group.

 

1.The Company is a party to a reseller agreement with Allot Communications Inc. (“Allot”), a company as to which the Company’s controlling shareholder and director is an interested party, giving Allot the right to distribute the Company’s products. Effective January 2019, the Company’s controlling shareholder and director divested all of his interest in Allot and therefor Allot is no longer a related party.

 

Revenues derived from this reseller agreement are included in Note 11f below as “revenues”. For the six month period ended June 30, 2018, revenues aggregated to $55.

 

2.Certain premises occupied by the Company and its U.S. subsidiary are rented from related parties. The aggregate amounts of lease and maintenance expenses for the six month periods ended June 30, 2019 and 2018 were $447 and $475, respectively. Such amounts expensed by the Company are disclosed in Note 11f below as part of “Expenses”. The amount presented in “Capital expenditures” in Note 11f below refers to $40 reimbursement of expenses in connection with the renovation of the U.S subsidiary office during the six month period ended June 30, 2018. Following the adoption of ASC 842 commencing January 1, 2019, the Company also recorded operating lease right-of use assets and operating lease liabilities related to such lease and maintenance expenses which are presented in Note 11e below.

 

19

 

 

RADCOM LTD. AND ITS SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

 

NOTE 11: - RELATED PARTY BALANCES AND TRANSACTIONS (Cont.)

 

3.Certain entities within the RAD-BYNET Group provide the Company and its U.S. subsidiary with certain products, administrative and IT services. The aggregate amounts of such services received in each of the six month periods ended June 30, 2019 and 2018 were $15. Such amounts expensed by the Company are disclosed in Note 11f below as part of “Expenses”. An additional amount of $7 is also included as part of “Capital expenditures” for the period ended June 30, 2019 in Note 11f below.

 

b.The executive chairman of the Board (the “Executive Chairman”) is, among other things, also the life partner of the Company’s former chairman of the Board, a currently serving director and a controlling shareholder of the Company. The Executive Chairman is entitled to a fixed monthly salary. During the six month periods ended June 30, 2019 and 2018, the Company recorded salary expenses with respect to the Executive Chairman in the amount of $53 and $55, respectively.

 

c.Since 2015, the Company entered several reseller agreements with Amdocs Software Systems Limited (“Amdocs”), to sell its solution. The Company’s controlling shareholder and director served as a director in Amdocs until January 31, 2019. Effective January 2019, Amdocs is no longer considered a related party.

 

Revenues related to this reseller agreement are included in Note 11f below as “revenues”. For the six month period ended June 30, 2018, revenues aggregated to $7,903.

 

d.The Company’s current Chief Financial Officer is a member of the board and Chairman of the Audit Committee of Matrix IT Ltd., (“Matrix”). Accordingly, as of October 2018, Matrix is considered a related party. The Company has entered into certain limited term engagements with Matrix or its affiliated companies in connection with specific development projects and/or use of software platform. The aggregate amount of services provided by Matrix or its affiliates as a related party, aggregated to $164 during the six month period ended June 30, 2019. Such amount expensed by the Company is disclosed in Note 11f below as part of “Expenses”.

 

 

20

 

 

RADCOM LTD. AND ITS SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

 

NOTE 11: - RELATED PARTY BALANCES AND TRANSACTIONS (Cont.)

 

e.Balances with related parties:

 

   June 30,   December 31, 
   2019   2018 
   Unaudited     
Assets:        
         
Trade receivables  $-   $13,596 
Other account receivables and prepaid expenses  $41   $- 
Operating lease right-of-use assets  $4,883   $- 
           
Liabilities:          
           
Trade payables  $157   $81 
Other liabilities and accrued expenses  $37   $12 
Operating lease liabilities - current  $784   $- 
Operating lease liabilities – non-current  $4,316   $- 

 

f.Transactions with related parties:

 

   Six months ended
June 30,
 
   2019   2018 
   Unaudited 
         
Revenues  $-   $7,958 
           
Expenses:          
Cost of revenues  $97   $58 
           
Operating expenses:          
Research and development, net  $421   $241 
Sales and marketing  $72   $131 
General and administrative  $89   $115 
           
Capital expenditures  $7   $40 

 

 

21

 

Exhibit 99.2

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Cautionary Statement Regarding Forward-Looking Statements

 

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains express or implied “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other U.S. Federal securities laws.  In some cases, forward-looking statements are identified by terminology such as “may,” “will,” “could,” “should,” “expects,” “plans,” “anticipates,” “believes,” “intends,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these terms or other comparable terminology. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or performance to differ materially from those projected. These statements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. The forward-looking statements contained below are subject to risks and uncertainties, including those discussed under Item 3.D “Risk Factors” in our Annual Report on Form 20-F for the year ended December 31, 2018, filed with the Securities and Exchange Commission (“SEC”) on April 18, 2019 (the “2018 Form 20-F”) and in our other filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Except as required by law, we are under no duty to (and expressly disclaim any such obligation to) update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

General

 

You should read the following discussion and analysis in conjunction with our interim unaudited consolidated financial statements for the six months ended June 30, 2019 and notes thereto being filed on Form 6-K with the SEC together with this Management’s Discussion and Analysis of Financial Condition and Results of Operations, and together with our audited consolidated financial statements for the year ended December 31, 2018 as part of the 2018 Form 20-F.

 

Unless indicated otherwise by the context, all references below to:

 

“we”, “us” or “our” are to RADCOM Ltd. and its subsidiaries;
“NIS” is to New Israeli Shekels;
“NFV” is to Network Function Virtualization. NFV is a software-centric design approach for building complex information technology (IT) networks and applications, particularly for use by CSPs; and
“CSP” is to Communication Service Provider.

 

We are a leading provider with a strong track-record of innovation of NFV and 5G-ready service assurance, cloud-native network intelligence solutions for CSPs. NFV is a software-centric design approach which virtualizes entire classes of network functions into building blocks that may be connected or chained together to create services in software-based, virtualized network environments.  NFV is designed to consolidate and deliver the networking components needed to support a fully virtualized network utilizing standard technologies that run on high-volume service, switch and storage hardware to virtualize network functions. NFV is a key enabler of the coming 5G telecommunications infrastructure, helping to virtualize all the various aspects of the network.

 

Since 2016, we have adapted our solutions to meet the highest-level requirements of AT&T, the first CSP launching a full NFV eco-system. We built on that success in 2017 and 2018 with our selection as NFV solution provider to additional tier 1 CSPs and the expansion of our footprint with existing customers by supporting them in their transition to NFV and in 2019 with our entry into a multi-year agreement with Rakuten Mobile, Inc. to provide our Network Intelligence solution for the world’s first fully virtualized, end-to-end cloud-native mobile network that adopts 5G systems architecture from launch . As new and existing customers seek to manage their existing networks while evaluating and deploying NFV-based architectures, we believe we are well positioned with our advanced cloud-native solutions and our growing industry track record.

 

1

 

 

Our portfolio enables CSPs to smoothly transition their networks to NFV and 5G by monitoring and assuring both physical network and NFV-based network and consequentially, ‘hybrid’ networks from tapping point to network insights. With the rate of transition between physical and virtualized networks taking place gradually, CSPs will need to manage ‘hybrid’ networks for the foreseeable future. As a result, service assurance solutions that provide service and network performance visibility in both physical and virtual environments are expected to become an important step in CSPs’ NFV transition.

 

CSPs across the globe use our solutions to deliver high quality services, reduce churn, manage network performance, analyze traffic and enhance customer care. Our solutions incorporate cutting-edge technologies and a wealth of knowledge acquired by partnering with many of the industry’s leading CSPs for over two decades. Our carrier-grade solutions support both mobile and fixed networks and scale to terabit data bandwidths to enable big data analytics.

 

During 2017 and 2018, we improved our NFV capabilities to meet the stringent requirements of top tier CSPs having a large subscriber base and a high level of expertise. We have also continued the development and enhancement of our solutions to meet the complicated needs of monitoring 5G networks and to offer a smart mediation layer which allows us to offer a full end-to-end customer and service view which addresses CSPs’ requirements for a smart CEM solution.

 

Our fully cloud-native solutions enable CSPs to manage both existing physical networks and next-generation, NFV-based architectures. We recognized that CSPs would require a new approach for service assurance and CEM solutions in order to monitor huge volumes of data and support NFV-based network deployments. In February 2014, we launched our service assurance solution which incorporates software-based probes, and which subsequently replaced our OmniQ hardware-based solution. During 2015 and 2016, we launched and substantially enhanced our NFV solution for service assurance and our CEM solution.

 

Financial Highlights

 

Total revenues in the first six months of 2019 decreased by 32% to approximately $14.6 million from approximately $21.5 million in the first six months of 2018. The decrease is mainly due to a decrease in Product and Project revenues from United States and the Philippines accounts due to the completion of certain deliverables in 2018, partially offset by an increase in Product and Services revenues resulting mainly from new engagements in the United States and Japan.

 

Operating loss for the first six months of 2019 was approximately $4.5 million, compared to operating income of approximately $0.7 million in the first six months of 2018. The decrease in operating income is attributed to the decrease in the revenues, partially offset by a decrease in bill of material costs.

 

Net loss for the first six months of 2019 was approximately $4.1 million, or $0.30 per diluted share, compared to net income of approximately $1.1 million, or $0.08 per diluted share, in the first six months of 2018.

 

Cash and cash equivalents and short-term bank deposits were approximately $58.6 million as of June 30, 2019, compared to approximately $62.0 million as of December 31, 2018. The decrease is mainly due to net cash used in operating activities.

 

Shareholders’ equity decreased to approximately $75.4 million as of June 30, 2019, compared to approximately $78.5 million as of December 31, 2018. The decrease is due to net loss of approximately $4.1 million, partially offset by Share-based compensation expenses in the amount of approximately $1.0 million.

 

2

 

 

  

Six months ended June 30,

(U.S. dollars in thousands)

Unaudited

  

% Change

 
   2019   2018   2019 vs. 2018 
Revenues:            
Products  $7,549   $11,842    (36.3)
Services   6,715    3,797    76.9 
Projects   328    5,903    (94.4)
Total revenues   14,592    21,542    (32.3)
Cost of revenues:               
Products   1,920    3,362    (42.9)
Services   2,005    494    305.9 
Projects   66    1,911    (96.6)
Total cost of revenues   3,991    5,767    (30.8)
Gross profit   10,601    15,775    (32.8)
Research and development   9,222    7,496    23.0 
Less royalty-bearing participation   816    754    8.2 
Research and development, net   8,406    6,742    24.7 
Sales and marketing   5,063    6,324    (19.9)
General and administrative   1,647    1,990    (17.2)
Total operating expenses   15,116    15,056    0.4 
Operating income (loss)   (4,515)   719    (727.9)
Financial income, net   481    373    29.0 
Income (loss) before taxes on income   (4,034)   1,092    (469.4)
Taxes on income   (46)   (13)   253.8 
Net income (loss)  $(4,080)  $1,079    (478.1)

 

Revenues per geographic region, based on the location of the end-customer

 

   Six months ended
June 30,
(thousands of U.S. dollars)
   Six months ended June 30,
(as percentages)
 
   2019   2018   2019   2018 
United States  $8,163   $12,691    56    59 
Japan   3,459    -    24    - 
Philippines   767    5,566    5    26 
Latin America   1,086    1,955    7    9 
Other   1,117    1,330    8    6 
Total revenues  $14,592   $21,542    100    100 

 

3

 

 

Cost of Revenues. Our cost of revenues decreased by 30.8% to approximately $4.0 million in the first six months of 2019 from approximately $5.8 million in the first six months of 2018. This was mainly attributed to a decrease in hardware costs corresponding to the decrease in Product revenues.

 

Gross profit decreased to 72.6% in the first six months of 2019 from 73.2% in the first six months of 2018.

 

Research and Development, net. Research and development expenses, net increased by 24.7% to approximately $8.4 million in the first six months of 2019 from approximately $6.7 million in the first six months of 2018. This was mainly attributed to the increase in the average number of employees and subcontractors allocated to research and development.

 

Sales and Marketing. Sales and marketing expenses decreased by 19.9% to approximately $5.1 million in the first six months of 2019 from approximately $6.3 million in the first six months of 2018. This was mainly attributed to a decrease in the average number of employees allocated to sales and marketing, a decrease in commission expenses and a decrease in share-based compensation related to options and restricted share units granted to employees.

 

General and Administrative. General and administrative expenses decreased by 17.2% to approximately $1.6 million in the first six months of 2019 from approximately $2.0 million in the first six months of 2018. This was mainly attributed to a decrease in share-based compensation related to options and restricted share units granted to employees and directors.

 

Financial Income, Net. In the first six months of 2019 we recorded financial income of approximately $0.5 million, compared to financial income of approximately $0.4 million in the first six months of 2018. This increase is mainly due to interest income on short-term bank deposits.

 

Taxes on income. Taxes on income reflects withholding taxes that were deducted by our customers as well as tax expenses of our subsidiaries in India and the United States. Taxes on income increased to approximately $46,000 in the first six months of 2019 from approximately $13,000 in the first six months of 2018. This increase is primarily due to state income tax accruals in the United States.

 

LIQUIDITY AND CAPITAL RESOURCES

 

In the past few years, we have financed our operations through cash generated from operations, governmental grants, and follow-on public offerings of our ordinary shares.

 

Working Capital and Cash Flows

 

Liquidity refers to liquid financial assets available to fund our business operations and pay for near-term obligations. These liquid financial assets mostly consist of cash and cash equivalents and short-term bank deposits. As of June 30, 2019, we had approximately $58.6 million in cash and cash equivalents and short-term bank deposits, compared to approximately $62.0 million as of December 31, 2018.

 

Net cash used in operating activities was approximately $3.5 million in the first six months of 2019 compared to approximately $7.7 million net cash provided by operating activities in the first six months of 2018.

 

The negative cash flow in the first six months of 2019 was primarily due to net loss of approximately $4.1 million, an increase of approximately $1.8 million in other account receivables and prepaid expenses and other long-term receivables, an increase of approximately $1.6 million in trade receivables, an increase of approximately $0.5 million in inventories and accrued interest on short-term bank deposits of approximately $0.5 million, partially offset by an increase of approximately $2.1 million in other liabilities and accrued expenses, share-based compensation and restricted share units of approximately $1.0 million, an increase of approximately $0.7 million in deferred revenues and advances from customers, a decrease of approximately $0.6 million in operating lease right-of-use assets, an increase of approximately $0.3 million in trade payables, and depreciation of approximately $0.4 million.

 

The positive cash flow in the first six months of 2018 was primarily due to net income of approximately $1.1 million, a decrease of approximately $6.1 million in trade receivables, share-based compensation and restricted share units of approximately $1.3 million, a decrease of approximately $1.1 million in inventories and depreciation of approximately $0.3 million, partially offset by a decrease of approximately $1.4 million in deferred revenues and advances from customers, and a decrease of approximately $0.8 million in other liabilities and accrued expenses.

 

4

 

 

The trade receivables and days of sales outstanding are primarily impacted by payment terms, the variations in the levels of shipment in the quarter, and collections performance. Trade receivables as of June 30, 2019 increased to $22.0 million from $20.4 million as of December 31, 2018, reflecting mainly timing differences of contracts payment milestones. We believe that continued expansion of our business may require continued investments in working capital.

 

Net cash used in investing activities was approximately $47.2 million in the first six months of 2019 compared to $0.5 million net cash used in investing activities in the first six months of 2018. In the first six months of 2019, we invested approximately $46.8 million in short-term bank deposits and approximately $0.4 million for the purchase of equipment, compared to investment of approximately $0.5 million for the purchase of equipment in the first six months of 2018.

 

Net cash provided by financing activities was approximately $9,000 in the first six months of 2019 compared to approximately $1.9 million net cash provided by financing activities in the first six months of 2018. Cash provided in the first six months of 2019 and 2018 was due to exercise of options into ordinary shares.

 

We believe that our existing capital resources and expected cash flows from operations will be adequate to satisfy our expected liquidity requirements at least for the next 12 months.

 

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

 

The preparation of financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. A comprehensive discussion of our critical accounting policies is included in the “Liquidity and Capital Resources” section in the 2018 Form 20-F. Other than the adoption of the new accounting standard as discussed in Note 3 and Note 8 of the interim unaudited consolidated financial statements, there have been no changes in our critical accounting policies as compared to what was disclosed in the 2018 Form 20-F.

 

MARKET RISK

 

Reference is made to Item 11 “Quantitative and Qualitative Disclosures About Market Risk” in on the 2018 Form 20-F.

 

 

5

 

v3.19.2
Leases (Details 2)
$ in Thousands
Jun. 30, 2019
USD ($)
Leases [Abstract]  
2019 (excluding the six months ended June 30, 2019) $ 669
2020 1,312
2021 1,276
2022 1,207
2023 1,092
2024 and after 1,420
Total operating lease payments 6,976
Less: imputed interest 564
Present value of lease liabilities $ 6,412
v3.19.2
Inventories (Details Textual) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Inventories (Textual)    
Inventory delivered to customers $ 486 $ 35
v3.19.2
Revenues (Details Textual)
$ in Thousands
Jun. 30, 2019
USD ($)
Revenues (Textual)  
Remaining performance obligations $ 59,804
Percentage of remaining performance obligation expected to be recognized as revenue 52.00%
v3.19.2
Inventories
6 Months Ended
Jun. 30, 2019
Inventory Disclosure [Abstract]  
INVENTORIES

NOTE 6: - INVENTORIES

 

   June 30,   December 31, 
   2019   2018 
   Unaudited     
         
Finished products (*)  $702   $251 
           
   $702   $251 

 

(*)Including inventory delivered to customers but for which revenue recognition criteria have not been met in the amount of $486 and $35 as of June 30, 2019 and December 31, 2018, respectively.
v3.19.2
Selected Statements of Operations Data
6 Months Ended
Jun. 30, 2019
Selected Statements of Operations Data [Abstract]  
SELECTED STATEMENTS OF OPERATIONS DATA

NOTE 10: - SELECTED STATEMENTS OF OPERATIONS DATA

 

a.Financial income, net:

 

   Six months ended
June 30
 
   2019   2018 
   Unaudited 
         
Financial income:        
Exchange rate differences  $217   $298 
Interest from banks   874    696 
           
    1,091    994 
           
Financial expenses:          
Interest and bank charges   (7)   (8)
Exchange rate differences   (603)   (613)
           
    (610)   (621)
           
Financial income, net  $481   $373 

 

b.Net income (loss) per share:

 

The following table sets forth the computation of basic and diluted net income (loss) per share:

 

   Six months ended
June 30
 
   2019   2018 
   Unaudited 
Numerator:        
         
Numerator for basic and diluted net income (loss) per share  $(4,080)  $1,079 
           
Denominator:          
           
Denominator for basic net income (loss) per share - weighted average number of Ordinary Shares   13,756,198    13,549,494 
           
Effect of dilutive securities:          
Outstanding options and RSUs   -    268,501 
           
Denominator for diluted net income (loss) per share - adjusted weighted average number of Ordinary Shares   13,756,198    13,817,995 

 

c.Revenues by geographic region are as follows:

 

  

Six months ended

June 30

 
   2019   2018 
   Unaudited 
         
United States  $8,163   $12,691 
Japan   3,459    - 
Philippines   767    5,566 
Latin America   1,086    1,955 
Other   1,117    1,330 
           
   $14,592   $21,542 
v3.19.2
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Cash flows from operating activities:    
Net income (loss) $ (4,080) $ 1,079
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:    
Depreciation 359 322
Share-based compensation and RSUs 965 1,342
Change in:    
Severance pay, net 105 (17)
Trade receivables, net (1,568) 6,050
Other account receivables and prepaid expenses and other long-term receivables (1,828) (118)
Inventories (471) 1,063
Trade payables 308 184
Employees and payroll accruals 138 8
Other liabilities and accrued expenses current and non-current 2,079 (817)
Deferred revenues and advances from customers 728 (1,395)
Operating lease right-of-use assets 638
Operating lease liability (373)
Accrued interest on short-term bank deposits (549)
Net cash provided by (used in) operating activities (3,549) 7,701
Cash flows from investing activities:    
Investment in bank deposits (46,818)
Purchase of property and equipment (375) (457)
Net cash used in investing activities (47,193) (457)
Cash flows from financing activities:    
Exercise of options into Ordinary Shares 9 1,913
Net cash provided by financing activities 9 1,913
Foreign currency translation adjustments on cash and cash equivalents 5 (330)
Increase (decrease) in cash and cash equivalents and restricted bank deposits (50,728) 8,827
Cash and cash equivalents and restricted bank deposit at beginning of the period 61,988 22,611
Cash and cash equivalents and restricted bank deposits at end of the period 11,260 31,438
(a)   Non-cash activities:    
Purchase of property and equipment 50 107
Operating lease right-of-use assets 849
(b) Cash paid during the period for:    
Taxes on income $ 66 $ 13
v3.19.2
Consolidated Balance Sheets (Parenthetical)
$ in Thousands
Jun. 30, 2019
USD ($)
shares
Jun. 30, 2019
₪ / shares
Dec. 31, 2018
USD ($)
shares
Dec. 31, 2018
₪ / shares
Statement of Financial Position [Abstract]        
Net of allowances for doubtful accounts | $ $ 19   $ 19  
Ordinary shares, par value | ₪ / shares   ₪ 0.20   ₪ 0.20
Ordinary shares, shares authorized 20,000,000   20,000,000  
Ordinary shares, shares issued 13,773,503   13,735,759  
Ordinary shares, shares outstanding 13,737,471   13,699,727  
v3.19.2
Related Party Balances and Transactions (Details) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Jun. 30, 2018
Liabilities:      
Operating lease liabilities - current $ 1,176  
Operating lease liabilities - non-current 5,236  
Related parties [Member]      
Assets:      
Trade receivables, net     $ 13,596
Other accounts receivable and prepaid expenses 41  
Operating lease right-of-use assets 4,883  
Liabilities:      
Trade payables 157   81
Other liabilities and accrued expenses 37   12
Operating lease liabilities - current 784  
Operating lease liabilities - non-current $ 4,316  
v3.19.2
Shareholders' Equity (Details Textual) - USD ($)
$ / shares in Units, $ in Thousands
1 Months Ended 6 Months Ended
Oct. 30, 2016
Jun. 30, 2019
Jun. 30, 2018
Shareholder's Equity (Textual)      
Weighted average fair values   $ 7.70 $ 19.62
Compensation cost   $ 772 $ 827
Unrecognized costs related to non-vested share-based compensation   $ 2,749  
Recognized over a weighted average period   1 year 1 month 16 days  
Ordinary shares issued   712,225  
Minimum [Member]      
Shareholder's Equity (Textual)      
Ordinary shares issued 1,250,000    
Maximum [Member]      
Shareholder's Equity (Textual)      
Ordinary shares issued 2,450,000    
v3.19.2
Shareholders' Equity (Details) - Employee Stock Option [Member] - USD ($)
$ / shares in Units, $ in Thousands
6 Months Ended
Jun. 30, 2019
Dec. 31, 2018
Number of options    
Options outstanding, beginning balance 415,510  
Granted  
Exercised (1,500)  
Expired and forfeited (17,400)  
Options outstanding, ending balance 396,610  
Vested and expected to vest   396,610
Exercisable at June 30, 2019 230,884  
Weighted average exercise price    
Options outstanding, beginning balance $ 14.62  
Granted  
Exercised 6.00  
Expired and forfeited 15.99  
Options outstanding, ending balance 14.59  
Vested and expected to vest 14.59  
Exercisable at June 30, 2019 $ 12.92  
Weighted average remaining contractual term (in years)    
Outstanding, beginning balance 2 years 8 months 9 days  
Outstanding, ending balance 2 years 2 months 12 days  
Vested and expected to vest 2 years 2 months 12 days  
Exercisable at June 30, 2019 1 year 9 months 11 days  
Aggregate intrinsic value    
Outstanding, beginning balance $ 3  
Outstanding, ending balance $ 2  
Vested and expected to vest   $ 2
Exercisable at June 30, 2019   $ 2
v3.19.2
Short-Term Bank Deposits (Tables)
6 Months Ended
Jun. 30, 2019
Debt Disclosure [Abstract]  
Schedule of short-term bank deposits

Currency  Interest rate (%)   Deposit amount   Maturity date
As of June 30, 2019
            
U.S. dollars   2.90   $4,000   July 10, 2019
U.S. dollars   3.08   $11,018   August 8, 2019
U.S. dollars   2.55   $1,800   September 12, 2019
U.S. dollars   3.27   $30,000   February 6, 2020
        $46,818    

v3.19.2
Selected Statements of Operations Data (Tables)
6 Months Ended
Jun. 30, 2019
Selected Statements of Operations Data [Abstract]  
Schedule of financial income, net

   Six months ended
June 30
 
   2019   2018 
   Unaudited 
         
Financial income:        
Exchange rate differences  $217   $298 
Interest from banks   874    696 
           
    1,091    994 
           
Financial expenses:          
Interest and bank charges   (7)   (8)
Exchange rate differences   (603)   (613)
           
    (610)   (621)
           
Financial income, net  $481   $373 
Schedule of computation of basic and diluted net income (loss) per ordinary share

   Six months ended
June 30
 
   2019   2018 
   Unaudited 
Numerator:        
         
Numerator for basic and diluted net income (loss) per share  $(4,080)  $1,079 
           
Denominator:          
           
Denominator for basic net income (loss) per share - weighted average number of Ordinary Shares   13,756,198    13,549,494 
           
Effect of dilutive securities:          
Outstanding options and RSUs   -    268,501 
           
Denominator for diluted net income (loss) per share - adjusted weighted average number of Ordinary Shares   13,756,198    13,817,995 
Schedule of revenues by geographic region

  

Six months ended

June 30

 
   2019   2018 
   Unaudited 
         
United States  $8,163   $12,691 
Japan   3,459    - 
Philippines   767    5,566 
Latin America   1,086    1,955 
Other   1,117    1,330 
           
   $14,592   $21,542 
v3.19.2
Revenues (Details) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2019
Dec. 31, 2018
Revenue Recognition [Abstract]    
Balance, beginning of the period $ 366  
Reclassification to revenue as a result of satisfying performance obligation (266)  
Total 100  
New performance obligations 994  
Balance, end of the period 1,094  
Less: long-term portion of deferred revenue (206) $ (100)
Current portion, end of the period $ 888  
v3.19.2
Selected Statements of Operations Data (Details) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Financial Income:    
Exchange rate differences $ 217 $ 298
Interest from banks 874 696
Financial income 1,091 994
Financial expenses:    
Interest and bank charges (7) (8)
Exchange rate differences (603) (613)
Financial expenses (610) (621)
Financial income, net $ 481 $ 373
v3.19.2
Shareholders' Equity (Details 1)
6 Months Ended
Jun. 30, 2019
$ / shares
shares
Options outstanding at June 30, 2019  
Number outstanding | shares 396,610
Options exercisable at June 30, 2019  
Number exercisable | shares 230,884
Stock Option [Member] | 6.00 [Member]  
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]  
Exercise Price $ 6.00
Options outstanding at June 30, 2019  
Number outstanding | shares 750
Weighted average exercise price $ 6.00
Weighted average remaining contractual life 22 days
Options exercisable at June 30, 2019  
Number exercisable | shares 750
Weighted average exercise price $ 6.00
Weighted average remaining contractual life 22 days
Stock Option [Member] | 11.12-14.52 [Member]  
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]  
Exercise price, Minimum $ 11.12
Exercise price, Maximum $ 14.52
Options outstanding at June 30, 2019  
Number outstanding | shares 251,708
Weighted average exercise price $ 11.87
Weighted average remaining contractual life 1 year 8 months 19 days
Options exercisable at June 30, 2019  
Number exercisable | shares 195,133
Weighted average exercise price $ 11.88
Weighted average remaining contractual life 1 year 7 months 17 days
Stock Option [Member] | 18.90-19.85 [Member]  
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]  
Exercise price, Minimum $ 18.90
Exercise price, Maximum $ 19.85
Options outstanding at June 30, 2019  
Number outstanding | shares 144,152
Weighted average exercise price $ 19.39
Weighted average remaining contractual life 3 years 18 days
Options exercisable at June 30, 2019  
Number exercisable | shares 35,001
Weighted average exercise price $ 18.90
Weighted average remaining contractual life 2 years 7 months 21 days
v3.19.2
Related Party Balances and Transactions (Details 1) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Related Party Transaction [Line Items]    
Revenues $ 14,592 $ 21,542
Expenses:    
Cost of revenues 3,991 5,767
Operating expenses:    
Research and development, net 9,222 7,496
Sales and marketing, net 5,063 6,324
General and administrative 1,647 1,990
Related Party [Member]    
Related Party Transaction [Line Items]    
Revenues 7,958
Expenses:    
Cost of revenues 97 58
Operating expenses:    
Research and development, net 421 241
Sales and marketing, net 72 131
General and administrative 89 115
Capital expenses $ 7 $ 40
v3.19.2
Significant Accounting Policies (Details)
$ in Thousands
12 Months Ended
Dec. 31, 2018
USD ($)
Significant Accounting Policies (Textual)  
Assets and operating lease liabilities $ 5,936
v3.19.2
Revenues (Tables)
6 Months Ended
Jun. 30, 2019
Revenue Recognition [Abstract]  
Schedule of deferred revenue

Balance, beginning of the period  $366 
Reclassification to revenue as a result of satisfying performance obligation   (266)
    100 
      
New performance obligations   994 
Balance, end of the period   1,094 
Less: long-term portion of deferred revenue   (206)
      
Current portion, end of the period  $888 
v3.19.2
Shareholders' Equity (Tables)
6 Months Ended
Jun. 30, 2019
Stockholders' Equity Note [Abstract]  
Schedule of stock options activity
   Number of options   Weighted-average exercise price   Weighted- average remaining contractual term
(in years)
   Aggregate intrinsic value 
                 
Outstanding at January 1, 2019   415,510   $14,62    2.69   $       3 
Granted   -    -           
Exercised   (1,500)   6.00           
Expired and forfeited   (17,400)   15.99           
                     
Outstanding at June 30, 2019   396,610   $14.59    2.20   $2 
                     
Vested and expected to vest at June 30, 2019   396,610   $14.59    2.20   $2 
                     
Exercisable at June 30, 2019   230,884   $12.92    1.78   $2 
Schedule of stock options under 2013 share option plan
   Options outstanding at
June 30, 2019
   Options exercisable at
June 30, 2019
 
Exercise price  Number outstanding   Weighted average exercise price   Weighted average remaining contractual life   Number exercisable   Weighted average exercise price   Weighted average remaining contractual life 
$      $   In years       $   In years 
                         
6.00   750    6.00    0.06    750    6.00    0.06 
11.12-14.52   251,708    11.87    1.72    195,133    11.88    1.63 
18.90-19.85   144,152    19.39    3.05    35,001    18.90    2.64 
                               
    396,610              230,884           
Schedule of RSUs activity
   Number of RSUs   Weighted average remaining contractual term
(in years)
   Aggregate intrinsic value 
             
Outstanding at January 1, 2019   168,869    1.40   $1,253 
Granted   263,220           
Vested   (36,244)          
Cancelled and forfeited   (10,800)          
                
Outstanding at June 30, 2019   385,045    1.81   $3,169 
                
Vested and expected to vest at June 30, 2019   385,045    1.81   $3,169 
Schedule of departmental allocation of share-based compensation charge
   Six months ended
June 30,
 
   2019*   2018* 
   Unaudited 
         
Cost of revenues  $95   $77 
Research and development, net   357    411 
Sales and marketing   330    462 
General and administrative   183    392 
           
   $965   $1,342 
v3.19.2
Commitments and Contingencies (Details) - USD ($)
$ in Thousands
6 Months Ended 12 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Dec. 31, 2018
Dec. 31, 2017
Commitments and Contingencies (Textual)        
Royalties rate, description The Company is required to pay royalties at a rate of 5% of sales of products developed with funds provided by the BIRD-F, up to an amount equal to 150% of the BIRD-F's grant, linked to the United States Consumer Price Index ("CPI") relating to such products.      
Grants intended costs, description The grant is intended to cover up to 50% from the costs of the office establishment, logistics expenses and hiring employees and consultants in India and China, based on the approved budget for the plan over a period of three years.      
Israeli Ministry of Trade [Member]        
Commitments and Contingencies (Textual)        
Proceeds from grants received       $ 668
Royalty expenses $ 9      
Grant approved over a period 5 years      
Israel Innovation Authority [Member]        
Commitments and Contingencies (Textual)        
Royalty payable range 3.00%      
Percent of grants received paid in royalties 100.00%      
Total commitment with respect to royalty-bearing participation received, net of royalties paid $ 49,601      
Royalty expenses 438 $ 646    
Israel United States Bi National Industrial Research and Development Foundation [Member]        
Commitments and Contingencies (Textual)        
Proceeds from grants received 340      
Pay royalties up to an amount 864   $ 476  
Linkage to CPI 576      
Net of royalties paid $ 388      
v3.19.2
Short-Term Bank Deposits (Details)
$ in Thousands
6 Months Ended
Jun. 30, 2019
USD ($)
U.S. dollars [Member]  
Interest rate (%) 2.90%
Deposit amount $ 4,000
Maturity date Jul. 10, 2019
U.S. dollars One [Member]  
Interest rate (%) 3.08%
Deposit amount $ 11,018
Maturity date Aug. 08, 2019
U.S. dollars Two [Member]  
Interest rate (%) 2.55%
Deposit amount $ 1,800
Maturity date Sep. 12, 2019
U.S. dollars Three [Member]  
Interest rate (%) 3.27%
Deposit amount $ 30,000
Maturity date Feb. 06, 2020
v3.19.2
Leases (Details Textual)
$ in Thousands
6 Months Ended
Jun. 30, 2019
USD ($)
Leases (Textual)  
Operating lease liabilities $ 567
Operating lease agreements options to extend, description As of June 30, 2019, the Company's operating lease agreements have remaining lease term ranging from 1.4 years to 8.8 years, including options to extend part of the lease agreements for additional 2 years and up to 5 years.
v3.19.2
Short-Term Bank Deposits
6 Months Ended
Jun. 30, 2019
Debt Disclosure [Abstract]  
SHORT-TERM BANK DEPOSITS

NOTE 5: - SHORT-TERM BANK DEPOSITS

 

Currency  Interest rate (%)   Deposit amount   Maturity date
As of June 30, 2019
            
U.S. dollars   2.90   $4,000   July 10, 2019
U.S. dollars   3.08   $11,018   August 8, 2019
U.S. dollars   2.55   $1,800   September 12, 2019
U.S. dollars   3.27   $30,000   February 6, 2020
        $46,818    

 

Short-term bank deposits include accrued interest of $549 as of June 30, 2019.

v3.19.2
Shareholders' Equity
6 Months Ended
Jun. 30, 2019
Stockholders' Equity Note [Abstract]  
SHAREHOLDERS' EQUITY

NOTE 9: - SHAREHOLDERS' EQUITY

 

Share-based compensation:

 

a.On October 30, 2016, the Board resolved to increase the number of Ordinary Shares reserved under the 2013 Share Option Plan from 1,250,000 to 2,450,000.

 

The total number of Ordinary Shares available for future grants under the 2013 Share Option Plan as of June 30, 2019 was 712,225.

 

b.The following is a summary of the Company's stock options activity for the six month period ended June 30, 2019:

 

   Number of options   Weighted-average exercise price   Weighted- average remaining contractual term
(in years)
   Aggregate intrinsic value 
                 
Outstanding at January 1, 2019   415,510   $14.62    2.69   $       3 
Granted   -    -           
Exercised   (1,500)   6.00           
Expired and forfeited   (17,400)   15.99           
                     
Outstanding at June 30, 2019   396,610   $14.59    2.20   $2 
                     
Vested and expected to vest at June 30, 2019   396,610   $14.59    2.20   $2 
                     
Exercisable at June 30, 2019   230,884   $12.92    1.78   $2 

 

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the fair value of the Company's Ordinary Shares on the last day of the six month period ended June 30, 2019 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on June 30, 2019. This amount is impacted by the changes in the fair market value of the Company's Ordinary Shares.

 

c.As of June 30, 2019, stock options under the 2013 Share Option Plan, as amended are as follows:

 

   Options outstanding at
June 30, 2019
   Options exercisable at
June 30, 2019
 
Exercise price  Number outstanding   Weighted average exercise price   Weighted average remaining contractual life   Number exercisable   Weighted average exercise price   Weighted average remaining contractual life 
$      $   In years       $   In years 
                         
6.00   750    6.00    0.06    750    6.00    0.06 
11.12-14.52   251,708    11.87    1.72    195,133    11.88    1.63 
18.90-19.85   144,152    19.39    3.05    35,001    18.90    2.64 
                               
    396,610              230,884           

 

d.The following is a summary of the Company's restricted stock unit ("RSU") activity for the six month period ended June 30, 2019:

 

   Number of RSUs   Weighted average remaining contractual term
(in years)
   Aggregate intrinsic value 
             
Outstanding at January 1, 2019   168,869    1.40   $1,253 
Granted   263,220           
Vested   (36,244)          
Cancelled and forfeited   (10,800)          
                
Outstanding at June 30, 2019   385,045    1.81   $3,169 
                
Vested and expected to vest at June 30, 2019   385,045    1.81   $3,169 

 

e.The weighted average fair values of RSUs granted during the six month periods ended June 30, 2019 and 2018 were $7.70 and $19.62 per share, respectively.

 

f.The following table summarizes the departmental allocation of the Company's share-based compensation charges:

 

   Six months ended
June 30,
 
   2019*   2018* 
   Unaudited 
         
Cost of revenues  $95   $77 
Research and development, net   357    411 
Sales and marketing   330    462 
General and administrative   183    392 
           
   $965   $1,342 

 

(*)Including $772 and $827 of compensation cost related to RSUs for the six month periods ended June 30, 2019 and 2018, respectively.

 

g.Share-based compensation:

 

As of June 30, 2019, there are $2,749 of total unrecognized costs related to non-vested share-based compensation and RSUs that are expected to be recognized over a weighted average period of 1.13 years.

v3.19.2
Statements of Changes in Shareholders' Equity - USD ($)
$ in Thousands
Ordinary Shares
Additional paid-in capital
Receivable on account of shares
Accumulated other comprehensive loss
Accumulated deficit
Total
Balance at Dec. 31, 2017 $ 628 $ 131,491   $ (2,520) $ (53,203) $ 76,396
Balance, Shares at Dec. 31, 2017 13,409,975          
Cumulative effect of changes in accounting principles (ASC 606)         337 337
Exercise of options into Ordinary Shares $ 10 1,932 $ (29)     1,913
Exercise of options into Ordinary Shares, Shares 194,392          
RSUs vested $ 2 (2)      
RSUs vested, Shares 36,958          
Share-based compensation and RSUs   1,342       1,342
Net loss         1,079 1,079
Other comprehensive loss       (84)   (84)
Balance at Jun. 30, 2018 $ 640 134,763 $ (29) (2,604) (51,787) 80,983
Balance, Shares at Jun. 30, 2018 13,641,325          
Balance at Dec. 31, 2018 $ 643 135,730   (2,612) (55,281) 78,480
Balance, Shares at Dec. 31, 2018 13,699,727          
Exercise of options into Ordinary Shares [1] 9       9
Exercise of options into Ordinary Shares, Shares 1,500          
RSUs vested $ 2 (2)      
RSUs vested, Shares 36,244          
Share-based compensation and RSUs   965       965
Net loss         (4,080) (4,080)
Other comprehensive loss       (19)   (19)
Balance at Jun. 30, 2019 $ 645 $ 136,702   $ (2,631) $ (59,361) $ 75,355
Balance, Shares at Jun. 30, 2019 13,737,471          
[1] Represent an amount lower than $1.
v3.19.2
Consolidated Balance Sheets - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
CURRENT ASSETS:    
Cash and cash equivalents $ 11,260 $ 61,988
Short-term bank deposits 47,367
Trade receivables (net of allowances for doubtful accounts amounted to $19 as of June 30, 2019 and December 31, 2018) 21,957 20,381
Inventories 702 251
Other accounts receivable and prepaid expenses 1,564 1,766
Total current assets 82,850 84,386
NON- CURRENT ASSETS:    
Severance pay fund 3,199 2,967
Other long-term receivables 2,391 346
Property and equipment, net 1,738 1,832
Operating lease right-of-use assets 6,147
Total non-current assets 13,475 5,145
Total assets 96,325 89,531
CURRENT LIABILITIES:    
Trade payables 1,765 1,559
Employees and payroll accruals 3,559 3,420
Deferred revenues and advances from customers 888 266
Operating lease liabilities 1,176
Other liabilities and accrued expenses 3,228 2,281
Total current liabilities 10,616 7,526
NON-CURRENT LIABILITIES:    
Deferred revenues 206 100
Accrued severance pay 3,762 3,425
Operating lease liabilities 5,236
Other liabilities and accrued expenses 1,150
Total non-current liabilities 10,354 3,525
Total liabilities 20,970 11,051
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:    
Share capital: Ordinary Shares of NIS 0.20 par value: Authorized: 20,000,000 shares at June 30, 2019 and December 31, 2018; 13,773,503 and 13,735,759 shares issued and 13,737,471 and 13,699,727 shares outstanding at June 30, 2019 and December 31, 2018, respectively 645 643
Additional paid-in capital 136,702 135,730
Accumulated other comprehensive loss (2,631) (2,612)
Accumulated deficit (59,361) (55,281)
Total shareholders' equity 75,355 78,480
Total liabilities and shareholders' equity $ 96,325 $ 89,531
v3.19.2
Related Party Balances and Transactions (Details Textual) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Related Party Balances and Transactions (Textual)    
Revenues aggregated total amount $ 55
Aggregate net amounts of lease and maintenance expenses 447 475
Administrative and IT services amount 15 15
Salary expenses 53 55
Revenues amount in AT&T engagement $ 7,903
Affiliates amount of related party 164  
Additional capital expenditures $ 7  
v3.19.2
Selected Statements of Operations Data (Details 2) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Schedule of revenues from sales to unaffiliated customers    
Revenues $ 14,592 $ 21,542
United States [Member]    
Schedule of revenues from sales to unaffiliated customers    
Revenues 8,163 12,691
Japan [Member]    
Schedule of revenues from sales to unaffiliated customers    
Revenues 3,459
Philippines [Member]    
Schedule of revenues from sales to unaffiliated customers    
Revenues 767 5,566
Latin America [Member]    
Schedule of revenues from sales to unaffiliated customers    
Revenues 1,086 1,955
Other [Member]    
Schedule of revenues from sales to unaffiliated customers    
Revenues $ 1,117 $ 1,330
v3.19.2
Shareholders' Equity (Details 3) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]    
Share-based compensation charges [1] $ 965 $ 1,342
Cost of revenues [Member]    
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]    
Share-based compensation charges [1] 95 77
Research and development, net [Member]    
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]    
Share-based compensation charges [1] 357 411
Sales and marketing [Member]    
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]    
Share-based compensation charges [1] 330 462
General and administrative [Member]    
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]    
Share-based compensation charges [1] $ 183 $ 392
[1] Including $772 and $827 of compensation cost related to RSUs for the six month periods ended June 30, 2019 and 2018, respectively.
v3.19.2
Inventories (Tables)
6 Months Ended
Jun. 30, 2019
Inventory Disclosure [Abstract]  
Schedule of inventories
   June 30,   December 31, 
   2019   2018 
   Unaudited     
         
Finished products (*)  $702   $251 
           
   $702   $251 

 

(*)Including inventory delivered to customers but for which revenue recognition criteria have not been met in the amount of $486 and $35 as of June 30, 2019 and December 31, 2018, respectively.
v3.19.2
Related Party Balances and Transactions (Tables)
6 Months Ended
Jun. 30, 2019
Balances with related parties [Member]  
Defined Benefit Plan Disclosure [Line Items]  
Schedule of balances and trasactions with related parties

   June 30,   December 31, 
   2019   2018 
   Unaudited     
Assets:        
         
Trade receivables  $-   $13,596 
Other account receivables and prepaid expenses  $41   $- 
Operating lease right-of-use assets  $4,883   $- 
           
Liabilities:          
           
Trade payables  $157   $81 
Other liabilities and accrued expenses  $37   $12 
Operating lease liabilities - current  $784   $- 
Operating lease liabilities – non-current  $4,316   $- 
Transactions with related parties [Member]  
Defined Benefit Plan Disclosure [Line Items]  
Schedule of balances and trasactions with related parties

   Six months ended
June 30,
 
   2019   2018 
   Unaudited 
         
Revenues  $-   $7,958 
           
Expenses:          
Cost of revenues  $97   $58 
           
Operating expenses:          
Research and development, net  $421   $241 
Sales and marketing  $72   $131 
General and administrative  $89   $115 
           
Capital expenditures  $7   $40 
v3.19.2
Significant Accounting Policies
6 Months Ended
Jun. 30, 2019
Accounting Policies [Abstract]  
SIGNIFICANT ACCOUNTING POLICIES

NOTE 3: - SIGNIFICANT ACCOUNTING POLICIES

 

The significant accounting policies applied in the annual consolidated financial statements of the Company as disclosed in the Company's Annual Report on Form 20-F for the period ended December 31, 2018 filed with the SEC on April 18, 2019, are applied consistently in these unaudited interim consolidated financial statements, except for:

 

a.Short-term bank deposits:

 

Bank deposits with maturities of more than three months at acquisition but less than one year are included in short-term bank deposits. Such deposits are stated at cost which approximates their fair values.

 

b.Adoption of new accounting principles:

 

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02 (Topic 842) "Leases". The standard supersedes the lease requirements in Accounting Standards Codification ("ASC") Topic 840, "Leases". Under ASC 842, lessees are required to recognize assets and liabilities on the balance sheet for most leases and provide enhanced disclosures.

 

The Company adopted ASC 842 on January 1, 2019, using the modified retrospective approach, by applying the new standard to all leases existing at the date of initial application. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under ASC 842, while prior period amounts have not been adjusted and continue to be reported in accordance with the historical accounting under ASC 840. The Company elected the package of practical expedients permitted under the standard related to treating lease and non-lease components as a single lease component for all equipment leases as well as electing a policy exclusion permitting leases with an original lease term of less than one year to be excluded from the operating lease right-of-use ("ROU") assets and operating lease liabilities.

  

Operating leases are included in operating lease ROU assets and operating lease liabilities in the consolidated balance sheets. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at the commencement date to determine the present value of the lease payments.

 

Operating lease expenses are recognized on a straight-line basis over the lease term. Several of the Company's leases include options to extend the lease and some have termination options that are factored into the Company's determination of the lease payments when appropriate. For purposes of calculating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company's lease agreements do not contain any material residual value guarantees. A portion of the Company's real estate leases is generally subject to annual changes in the Consumer Price Index ("CPI"). The changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred.

 

For all short-term leases which are less than 12 months and existing short-term leases of those assets in transition, the Company does not recognize operating lease ROU assets or operating lease liabilities, but recognizes lease expenses over the lease term on a straight-line basis.

 

As a result of the adoption of ASC 842 on January 1, 2019, the Company recorded both operating lease ROU assets and operating lease liabilities of $5,936. The adoption did not impact the Company's retained earnings, or prior year consolidated statements of comprehensive loss and statements of cash flows. See Note 8 for further information on leases.

 

c.New accounting standards not yet effective:

 

In January 2016, the FASB issued ASU No. 2016-13, "Financial Instruments – Credit Losses on Financial Instruments", which requires that expected credit losses related to financial assets measured on an amortized cost basis and available for sale debt securities be recorded through an allowance for credit losses. ASU 2016-13 limits the amount of credit losses to be recognized for available for sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. The new standard will be effective for interim and annual periods beginning after January 1, 2020, and early adoption is permitted. The Company is currently evaluating the potential effect of this standard on its consolidated financial statements.

v3.19.2
Commitments and Contingencies
6 Months Ended
Jun. 30, 2019
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

NOTE 7: - COMMITMENTS AND CONTINGENCIES

 

a.Royalty commitments:

 

1.The Company receives research and development grants from the Israel Innovation Authority (the "IIA"). In consideration for the research and development grants received from the IIA, the Company has undertaken to pay royalties as a percentage of revenues from products developed from research and development projects financed. If the Company does not generate sales of products developed with funds provided by the IIA, the Company is not obligated to pay royalties or repay the grants.

 

Royalties are payable at the rate of 3% from the time of commencement of sales of all of the Company's products until the cumulative amount of the royalties paid equals 100% of the dollar-linked amounts of the grants received, plus interest at LIBOR.

 

As of June 30, 2019, the Company's total commitment with respect to royalty-bearing participation received or accrued, net of royalties paid or accrued, amounted to $49,601.

 

Royalty expenses relating to the IIA grants included in cost of revenues during the six month periods ended June 30, 2019 and 2018 were $438 and $646, respectively.

 

In May 2010, the Company received a notice from the IIA regarding alleged miscalculations of the amount of royalties paid by the Company to the IIA for the years 1992-2009 and the revenues basis on which the Company had to pay royalties. The Company believes that all royalties due to the IIA from the sale of products developed with funding provided by the IIA during such years were properly paid or were otherwise accrued. The Company reviewed with the IIA the alleged miscalculations. The Company assessed the merits of the aforesaid arguments raised by the IIA and recorded a liability for an estimated loss.

 

2.In April 2012 and in April 2014, the Israeli Ministry of Economy ("MOE") approved the Company's application for participation in funding the setting up of the Company's India subsidiary and China branch as part of a designated grants plan for setting up and establishing a marketing agency in India and China. The grant is intended to cover up to 50% from the costs of the office establishment, logistics expenses and hiring employees and consultants in India and China, based on the approved budget for the plan over a period of three years. The Company is currently in the process of winding down its operations at the China office. The total marketing grants that the Company had received from the MOE as of December 31, 2017 were in the amount of $668. No further grants are expected to be received from such plans.

 

The Company is obligated to pay to the MOE royalties of 3% on the increased sales in the target market, with respect to the year during which the grant was approved over a period of five years but not more than the total linked amount of the grant received.

 

As of June 30, 2019, the Company paid an aggregate amount of $9 of royalties to the MOE.

 

3.According to the Company's agreements with the Israel-U.S Bi-National Industrial Research and Development Foundation ("BIRD-F"), the Company is required to pay royalties at a rate of 5% of sales of products developed with funds provided by the BIRD-F, up to an amount equal to 150% of the BIRD-F's grant, linked to the United States CPI relating to such products. The last funds from the BIRD-F were received in 1996. In the event the Company does not generate sales of products developed with funds provided by the BIRD-F, the Company is not obligated to pay royalties or repay the grants.

 

The total research and development funds that the Company has received from the BIRD-F were $340 (CPI linked amount of $576). According to the above, as of June 30, 2019, the total royalties commitment the Company may be required to pay is an amount of up to $864 out of which $476 was paid by the Company in previous years. The remaining commitment with respect to royalty-bearing participation received, net of royalties paid or accrued, amounted to $388 as of June 30, 2019.

 

Since 2003, the Company has not generated sales of products developed with the funds provided by the BIRD-F. Therefore, the Company has not been obligated to pay royalties or repay the grant since such date.

 

b.From time to time, the Company may be involved in various claims and legal proceedings. The Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss. The Company's estimations and related accruals, if any, are reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events relating to a particular matter.
v3.19.2
Related Party Balances and Transactions
6 Months Ended
Jun. 30, 2019
Related Party Transactions [Abstract]  
RELATED PARTY BALANCES AND TRANSACTIONS

NOTE 11: - RELATED PARTY BALANCES AND TRANSACTIONS

 

a.The Company carries out transactions with related parties as detailed below. Certain principal shareholders of the Company are also principal shareholders of affiliates known as the RAD-BYNET Group.

 

1.The Company is a party to a reseller agreement with Allot Communications Inc. ("Allot"), a company as to which the Company's controlling shareholder and director is an interested party, giving Allot the right to distribute the Company's products. Effective January 2019, the Company's controlling shareholder and director divested all of his interest in Allot and therefor Allot is no longer a related party.

 

Revenues derived from this reseller agreement are included in Note 11f below as "revenues". For the six month period ended June 30, 2018, revenues aggregated to $55.

 

2.Certain premises occupied by the Company and its U.S. subsidiary are rented from related parties. The aggregate amounts of lease and maintenance expenses for the six month periods ended June 30, 2019 and 2018 were $447 and $475, respectively. Such amounts expensed by the Company are disclosed in Note 11f below as part of "Expenses". The amount presented in "Capital expenditures" in Note 11f below refers to $40 reimbursement of expenses in connection with the renovation of the U.S subsidiary office during the six month period ended June 30, 2018. Following the adoption of ASC 842 commencing January 1, 2019, the Company also recorded operating lease right-of use assets and operating lease liabilities related to such lease and maintenance expenses which are presented in Note 11e below.

 

3.Certain entities within the RAD-BYNET Group provide the Company and its U.S. subsidiary with certain products, administrative and IT services. The aggregate amounts of such services received in each of the six month periods ended June 30, 2019 and 2018 were $15. Such amounts expensed by the Company are disclosed in Note 11f below as part of "Expenses". An additional amount of $7 is also included as part of "Capital expenditures" for the period ended June 30, 2019 in Note 11f below.

 

b.The executive chairman of the Board (the "Executive Chairman") is, among other things, also the life partner of the Company's former chairman of the Board, a currently serving director and a controlling shareholder of the Company. The Executive Chairman is entitled to a fixed monthly salary. During the six month periods ended June 30, 2019 and 2018, the Company recorded salary expenses with respect to the Executive Chairman in the amount of $53 and $55, respectively.

 

c.Since 2015, the Company entered several reseller agreements with Amdocs Software Systems Limited ("Amdocs"), to sell its solution. The Company's controlling shareholder and director served as a director in Amdocs until January 31, 2019. Effective January 2019, Amdocs is no longer considered a related party.

 

Revenues related to this reseller agreement are included in Note 11f below as "revenues". For the six month period ended June 30, 2018, revenues aggregated to $7,903.

 

d.The Company's current Chief Financial Officer is a member of the board and Chairman of the Audit Committee of Matrix IT Ltd., ("Matrix"). Accordingly, as of October 2018, Matrix is considered a related party. The Company has entered into certain limited term engagements with Matrix or its affiliated companies in connection with specific development projects and/or use of software platform. The aggregate amount of services provided by Matrix or its affiliates as a related party, aggregated to $164 during the six month period ended June 30, 2019. Such amount expensed by the Company is disclosed in Note 11f below as part of "Expenses".

 

e.Balances with related parties:

 

   June 30,   December 31, 
   2019   2018 
   Unaudited     
Assets:        
         
Trade receivables  $-   $13,596 
Other account receivables and prepaid expenses  $41   $- 
Operating lease right-of-use assets  $4,883   $- 
           
Liabilities:          
           
Trade payables  $157   $81 
Other liabilities and accrued expenses  $37   $12 
Operating lease liabilities - current  $784   $- 
Operating lease liabilities – non-current  $4,316   $- 

 

f.Transactions with related parties:

 

   Six months ended
June 30,
 
   2019   2018 
   Unaudited 
         
Revenues  $-   $7,958 
           
Expenses:          
Cost of revenues  $97   $58 
           
Operating expenses:          
Research and development, net  $421   $241 
Sales and marketing  $72   $131 
General and administrative  $89   $115 
           
Capital expenditures  $7   $40 
v3.19.2
Leases (Details 1)
$ in Thousands
6 Months Ended
Jun. 30, 2019
USD ($)
Leases [Abstract]  
Operating lease $ 621
Short-term lease 70
Total lease expense $ 691
v3.19.2
Inventories (Details) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Inventory Disclosure [Abstract]    
Finished products [1] $ 702 $ 251
Inventory, net $ 702 $ 251
[1] Including inventory delivered to customers but for which revenue recognition criteria have not been met in the amount of $486 and $35 as of June 30, 2019 and December 31, 2018, respectively.
v3.19.2
General
6 Months Ended
Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
GENERAL

NOTE 1:- GENERAL

 

a.RADCOM Ltd. (the "Company") is an Israeli corporation which provides NFV and 5G-ready service assurance, cloud-native network intelligence solutions for Communication Service Providers ("CSPs"). The Company's solutions include RADCOM Service Assurance, a fully virtualized, on-demand service assurance solution that integrates an automated, and efficient data acquisition layer of virtual probes with a smart mediation layer thus providing critical customer and service insights; RADCOM Network Visibility, a cloud-native network packet broker and filtering solution that allows CSPs to manage network traffic at scale across multiple cloud environments and control the visibility layer to perform dynamic, on-demand analysis of select datasets; and RADCOM Network Insights, a business intelligence solution offering smart insights for multiple use cases, enabled by data captured and correlated through RADCOM Network Visibility and RADCOM Service Assurance. The Company specializes in solutions for next-generation mobile and fixed networks, including LTE, LTE-A, VoLTE, IMS, VoIP, WiFi, VoWiFi, UMTS/GSM, mobile broadband and 5G. The Company's shares (the "Ordinary Shares") are listed on the Nasdaq Capital Market under the symbol "RDCM".

 

The Company has wholly-owned subsidiaries in the United States and Brazil, that are primarily engaged in the sales, marketing, deployment and customer support of the Company's products in United States and Brazil. The Company also has a wholly-owned subsidiary in India, that primarily provides marketing, customer support and development services worldwide. Additionally, the Company has a wholly-owned subsidiary in Israel solely established for the purpose of making various investments, including securities purchases.

 

b.The Company depends on a limited number of contract customers for selling its solution. If these customers become unable or unwilling to continue to buy the Company's solution, it could adversely affect the Company's results of operations and financial position.

 

During the six-month period ended June 30, 2019 the Company had one customer in the United States and one in Japan that amounted 52% and 24%, respectively, of the total consolidated revenues. During the six month period ended June 30, 2018, the Company had one customer in the United States and one in the Philippines that amounted 37% and 26%, respectively, of the total consolidated revenues.

 

The loss of any major customer, a significant decrease in business from any such customer or a reduction in customer revenue due to adverse changes in the market, economic or competitive conditions or other factors could have a material adverse effect on the Company's business, results of operations and financial condition.

v3.19.2
Consolidated Statements of Operations (Unaudited) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Revenues:    
Products $ 7,549 $ 11,842
Services 6,715 3,797
Projects 328 5,903
Total revenues 14,592 21,542
Cost of revenues:    
Products 1,920 3,362
Services 2,005 494
Projects 66 1,911
Total cost of revenues 3,991 5,767
Gross profit 10,601 15,775
Operating expenses:    
Research and development 9,222 7,496
Less - royalty-bearing participation 816 754
Research and development, net 8,406 6,742
Sales and marketing 5,063 6,324
General and administrative 1,647 1,990
Total operating expenses 15,116 15,056
Operating income (loss) (4,515) 719
Financial income, net 481 373
Income (loss) before taxes on income (4,034) 1,092
Taxes on income (46) (13)
Net income (loss) $ (4,080) $ 1,079
Basic net income (loss) per Ordinary Share $ (0.3) $ 0.08
Diluted net income (loss) per Ordinary Share $ (0.3) $ 0.08
Weighted average number of Ordinary Shares used in computing basic net income (loss) per Ordinary Share 13,756,198 13,549,494
Weighted average number of Ordinary Shares used in computing diluted net income (loss) per Ordinary Share 13,756,198 13,817,995
v3.19.2
Significant Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2019
Accounting Policies [Abstract]  
Short-term bank deposit

a.Short-term bank deposits:

 

Bank deposits with maturities of more than three months at acquisition but less than one year are included in short-term bank deposits. Such deposits are stated at cost which approximates their fair values.

Adoption of new accounting principles
b.Adoption of new accounting principles:

 

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02 (Topic 842) "Leases". The standard supersedes the lease requirements in Accounting Standards Codification ("ASC") Topic 840, "Leases". Under ASC 842, lessees are required to recognize assets and liabilities on the balance sheet for most leases and provide enhanced disclosures.

 

The Company adopted ASC 842 on January 1, 2019, using the modified retrospective approach, by applying the new standard to all leases existing at the date of initial application. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under ASC 842, while prior period amounts have not been adjusted and continue to be reported in accordance with the historical accounting under ASC 840. The Company elected the package of practical expedients permitted under the standard related to treating lease and non-lease components as a single lease component for all equipment leases as well as electing a policy exclusion permitting leases with an original lease term of less than one year to be excluded from the operating lease right-of-use ("ROU") assets and operating lease liabilities.

  

Operating leases are included in operating lease ROU assets and operating lease liabilities in the consolidated balance sheets. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at the commencement date to determine the present value of the lease payments.

 

Operating lease expenses are recognized on a straight-line basis over the lease term. Several of the Company's leases include options to extend the lease and some have termination options that are factored into the Company's determination of the lease payments when appropriate. For purposes of calculating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company's lease agreements do not contain any material residual value guarantees. A portion of the Company's real estate leases is generally subject to annual changes in the Consumer Price Index ("CPI"). The changes to the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred.

 

For all short-term leases which are less than 12 months and existing short-term leases of those assets in transition, the Company does not recognize operating lease ROU assets or operating lease liabilities, but recognizes lease expenses over the lease term on a straight-line basis.

 

As a result of the adoption of ASC 842 on January 1, 2019, the Company recorded both operating lease ROU assets and operating lease liabilities of $5,936. The adoption did not impact the Company's retained earnings, or prior year consolidated statements of comprehensive loss and statements of cash flows. See Note 8 for further information on leases.

New accounting standards not yet effective

c.New accounting standards not yet effective:

 

In January 2016, the FASB issued ASU No. 2016-13, "Financial Instruments – Credit Losses on Financial Instruments", which requires that expected credit losses related to financial assets measured on an amortized cost basis and available for sale debt securities be recorded through an allowance for credit losses. ASU 2016-13 limits the amount of credit losses to be recognized for available for sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. The new standard will be effective for interim and annual periods beginning after January 1, 2020, and early adoption is permitted. The Company is currently evaluating the potential effect of this standard on its consolidated financial statements.

v3.19.2
Revenues
6 Months Ended
Jun. 30, 2019
Revenue Recognition [Abstract]  
REVENUES

NOTE 4: - REVENUES

 

Revenue is recognized when or as performance obligations are satisfied by transferring control of a promised good or service to a customer. Control is either transferred over time or at a point in time, which affects the revenue recognition schedule.

 

Commencing January 1, 2019, Services revenues include revenues related to managed services in addition to service type warranty and post-contract services.

 

The following table presents the significant changes in the deferred revenues balances during the six months ended June 30, 2019:

 

Balance, beginning of the period  $366 
Reclassification to revenue as a result of satisfying performance obligation   (266)
    100 
      
New performance obligations   994 
Balance, end of the period   1,094 
Less: long-term portion of deferred revenue   (206)
      
Current portion, end of the period  $888 

 

As of June 30, 2019, the Company had $59,804 of remaining performance obligations not yet satisfied or partly satisfied related to its revenues. the Company expects to recognize approximately 52% of this amount as revenues during the next 12 months and the rest thereafter.

 

For disaggregation of revenues disclosure please see Note 10c.

v3.19.2
Leases
6 Months Ended
Jun. 30, 2019
Leases [Abstract]  
LEASES

NOTE 8: - LEASES

 

The Company has entered into various operating lease agreements for certain of its offices and car leases with an original lease periods expiring between 2020 and 2028. Most of the lease agreements include one or more options to renew. The Company does not assume renewals in determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement.

 

Lease payments included in the measurement of the operating lease liability comprise the following: the fixed non-cancelable lease payments and payments for optional renewal periods where it is reasonably certain the renewal period will be exercised. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

 

As of June 30, 2019, the Company's operating lease agreements have remaining lease term ranging from 1.4 years to 8.8 years, including options to extend part of the lease agreements for additional 2 years and up to 5 years.

 

The following table represents the weighted-average remaining lease term and discount rate:

 

   June 30, 
   2019 
     
Weighted average remaining lease term   3 years 
      
Weighted average discount rate   3.8%

 

The components of lease expense for the six month period ended June 30, 2019 were as follows:

 

   Six months ended 
   June 30,
2019
 
     
Operating lease  $621 
Short-term lease   70 
Total lease expense  $691 

 

Cash paid for amounts included in the measurement of operating lease liabilities was $567 during the six months ended June 30, 2019.

 

The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2019:

 

   Operating Leases 
     
2019 (excluding the six months ended June 30, 2019)  $669 
2020   1,312 
2021   1,276 
2022   1,207 
2023   1,092 
2024 and after   1,420 
Total operating lease payments  $6,976 
Less: imputed interest   564 
Present value of lease liabilities  $6,412 
v3.19.2
Leases (Details)
Jun. 30, 2019
Leases [Abstract]  
Weighted average remaining lease term 3 years
Weighted average discount rate 3.80%
v3.19.2
Short-Term Bank Deposits (Details Textual)
$ in Thousands
Jun. 30, 2019
USD ($)
Short-Term Bank Deposits (Textual)  
Short-term bank deposits include accrued interest $ 549
v3.19.2
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Statement of Comprehensive Income [Abstract]    
Net income (loss) $ (4,080) $ 1,079
Other comprehensive loss:    
Foreign currency translation adjustments (19) (84)
Total other comprehensive loss (19) (84)
Comprehensive income (loss) $ (4,099) $ 995
v3.19.2
Document and Entity Information
6 Months Ended
Jun. 30, 2019
Document and Entity Information [Abstract]  
Entity Registrant Name RADCOM LTD
Entity Central Index Key 0001016838
Amendment Flag false
Current Fiscal Year End Date --12-31
Document Type 6-K
Document Period End Date Jun. 30, 2019
Document Fiscal Period Focus Q2
Document Fiscal Year Focus 2019
Entity File Number 0-29452
v3.19.2
Unaudited Interim Consolidated Financial Statements
6 Months Ended
Jun. 30, 2019
Unaudited Interim Consolidated Financial Statements [Abstract]  
UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2: - UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

 

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”) and the standards of the Public Company Accounting Oversight Board for interim financial information. Accordingly, they do not include all the information and footnotes required by US GAAP for complete financial statements. In the opinion of management, the Company has made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) considered necessary for a fair presentation of the Company’s consolidated financial position as of June 30, 2019. The results for the six-month period ended June 30, 2019, are not necessarily indicative of the results that may be expected for the year ending on December 31, 2019.

v3.19.2
Selected Statements of Operations Data (Details 1) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Numerator:    
Numerator for basic and diluted net income (loss) per share $ (4,080) $ 1,079
Denominator:    
Denominator for basic net income (loss) per share - weighted average number of Ordinary Shares 13,756,198 13,549,494
Effect of dilutive securities:    
Outstanding options and RSUs $ 268,501
Denominator for diluted net income (loss) per Ordinary Share - adjusted weighted average number of Ordinary Shares 13,756,198 13,817,995
v3.19.2
Shareholders' Equity (Details 2) - Restricted Stock Units (RSUs) [Member] - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2019
Dec. 31, 2018
Number of RSUs    
Options outstanding, beginning balance 168,869  
Granted 263,220  
Vested (36,244)  
Cancelled and forfeited (10,800)  
Options outstanding, ending balance 385,045  
Vested and expected to vest at June 30, 2019   385,045
Weighted average remaining contractual term (in years)    
Options outstanding, beginning balance, Weighted average remaining contractual term (in years) 1 year 4 months 24 days  
Options outstanding, ending balance, Weighted average remaining contractual term (in years) 1 year 9 months 22 days  
Vested and expected to vest at June 30, 2019 1 year 9 months 22 days  
Aggregate intrinsic value    
Outstanding, beginning balance $ 1,253  
Outstanding, ending balance $ 3,169  
Vested and expected to vest at June 30, 2019   $ 3,169
v3.19.2
Leases (Tables)
6 Months Ended
Jun. 30, 2019
Leases [Abstract]  
Schedule of weighted-average remaining lease term and discount rate
   June 30, 
   2019 
     
Weighted average remaining lease term   3 years 
      
Weighted average discount rate   3.8%
Schedule of Lease expense
   Six months ended 
   June 30,
2019
 
     
Operating lease  $621 
Short-term lease   70 
Total lease expense  $691 
Schedule of maturities of lease liabilities
   Operating Leases 
     
2019 (excluding the six months ended June 30, 2019)  $669 
2020   1,312 
2021   1,276 
2022   1,207 
2023   1,092 
2024 and after   1,420 
Total operating lease payments  $6,976 
Less: imputed interest   564 
Present value of lease liabilities  $6,412 
v3.19.2
General (Details)
Jun. 30, 2019
Jun. 30, 2018
General (Textual)    
Consolidated revenues percentage 52.00%  
United States [Member]    
General (Textual)    
Consolidated revenues percentage 52.00% 37.00%
Japan [Member]    
General (Textual)    
Consolidated revenues percentage 24.00%  
Philippines [Member]    
General (Textual)    
Consolidated revenues percentage   26.00%