o
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December 31, 2014
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
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o
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report ____________
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Title of Each Class
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Name of Each Exchange on Which Registered
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Ordinary Shares, NIS 0.20 par value per share
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NASDAQ Capital Market
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PART I
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6 | ||
6 | ||
6 | ||
A.
SELECTED FINANCIAL DATA
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6 | |
B.
CAPITALIZATION AND INDEBTEDNESS
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8 | |
C.
REASONS FOR THE OFFER AND USE OF PROCEEDS
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8 | |
D.
RISK FACTORS
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8 | |
26 | ||
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A.
HISTORY AND DEVELOPMENT OF THE COMPANY
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26 |
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B.
BUSINESS OVERVIEW
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27 |
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C.
ORGANIZATIONAL STRUCTURE
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40 |
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D.
PROPERTY, PLANTS AND EQUIPMENT
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41 |
41 | ||
41 | ||
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A.
OPERATING RESULTS
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45 |
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B.
LIQUIDITY AND CAPITAL RESOURCES
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50 |
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C.
RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES
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55 |
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D.
TREND INFORMATION
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55 |
E.
OFF–BALANCE SHEET ARRANGEMENTS
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56 | |
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F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
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56 |
57 | ||
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A.
DIRECTORS AND SENIOR MANAGEMENT
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57 |
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B.
COMPENSATION
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60 |
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C.
BOARD PRACTICES
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62 |
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D.
EMPLOYEES
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65 |
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E.
SHARE OWNERSHIP
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65 |
66 | ||
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A.
MAJOR SHAREHOLDERS
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66 |
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B.
RELATED PARTY TRANSACTIONS
|
68 |
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C.
INTERESTS OF EXPERTS AND COUNSEL
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70 |
70 | ||
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A.
CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
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70 |
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B.
SIGNIFICANT CHANGES
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70 |
70 | ||
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A.
OFFER AND LISTING DETAILS
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70 |
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B.
PLAN OF DISTRIBUTION
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71 |
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C.
MARKETS
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71 |
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D.
SELLING SHAREHOLDERS
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72 |
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E.
DILUTION
|
72 |
F.
EXPENSES OF THE ISSUE
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72 | |
72 | ||
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A.
SHARE CAPITAL
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72 |
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B.
MEMORANDUM AND ARTICLES OF ASSOCIATION
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72 |
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C.
MATERIAL CONTRACTS
|
79 |
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E.
TAXATION
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79 |
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F.
DIVIDENDS AND PAYING AGENTS
|
87 |
G.
STATEMENT BY EXPERTS
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87 | |
H.
DOCUMENTS ON DISPLAY
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87 | |
I.
SUBSIDIARY INFORMATION
|
88 | |
88 | ||
88 |
PART II
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89 | ||
89 | ||
89 | ||
90 | ||
90 | ||
90 | ||
91 | ||
91 | ||
91 | ||
91 | ||
92 | ||
PART III
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||
92 | ||
92 | ||
93 |
A. SELECTED FINANCIAL DATA |
2014
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2013
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2012
|
2011
|
2010
|
||||||||||||||||
Revenues:
|
||||||||||||||||||||
Products
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$ | 20,547 | $ | 17,917 | $ | 12,480 | $ | 19,199 | $ | 16,770 | ||||||||||
Services
|
3,089 | 2,565 | 3,306 | 2,788 | 2,403 | |||||||||||||||
23,636 | 20,482 | 15,786 | 21,987 | 19,173 | ||||||||||||||||
Cost of revenues:
|
||||||||||||||||||||
Products
|
8,350 | 7,540 | 5,765 | 6,074 | 6,052 | |||||||||||||||
Services
|
343 | 350 | 417 | 606 | 434 | |||||||||||||||
8,693 | 7,890 | 6,182 | 6,680 | 6,486 | ||||||||||||||||
Gross profit
|
14,943 | 12,592 | 9,604 | 15,307 | 12,687 | |||||||||||||||
Operating expenses:
|
||||||||||||||||||||
Research and development
|
5,812 | 5,615 | 6,102 | 5,866 | 4,310 | |||||||||||||||
Less - royalty-bearing participation
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1,664 | 1,537 | 1,567 | 1,235 | 1,424 | |||||||||||||||
Research and development, net
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4,148 | 4,078 | 4,535 | 4,631 | 2,886 | |||||||||||||||
Sales and marketing, net
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7,295 | 7,592 | 8,515 | 9,962 | 6,971 | |||||||||||||||
General and administrative
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2,262 | 2,051 | 2,107 | 2,234 | 1,538 | |||||||||||||||
Total operating expenses
|
13,705 | 13,721 | 15,157 | 16,827 | 11,395 | |||||||||||||||
Operating (loss) income
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1,238 | (1,129 | ) | (5,553 | ) | (1,520 | ) | 1,292 | ||||||||||||
Financing expenses, net
|
(332 | ) | (291 | ) | (314 | ) | (384 | ) | (722 | ) | ||||||||||
Income (loss) before taxes on income
|
906 | (1,420 | ) | (5,867 | ) | (1,904 | ) | 570 | ||||||||||||
Taxes on Income
|
(180 | ) | --- | (120 | ) | --- | --- | |||||||||||||
Net (loss) income
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726 | (1,420 | ) | (5,987 | ) | (1,904 | ) | 570 | ||||||||||||
Basic net (loss) income per ordinary share
|
$ | 0.09 | $ | (0.19 | ) | $ | (0.93 | ) | $ | (0.30 | ) | $ | 0.11 | |||||||
Weighted average number of ordinary shares used to compute basic net income (loss) per ordinary share
|
8,088,974 | 7,340,056 | 6,442,068 | 6,367,560 | 5,373,515 | |||||||||||||||
Diluted net (loss) income per ordinary share
|
$ | 0.08 | $ | (0.19 | ) | $ | (0.93 | ) | $ | (0.30 | ) | $ | 0.10 | |||||||
Weighted average number of ordinary shares used to compute diluted net (loss) income per ordinary share
|
8,592,387 | 7,340,056 | 6,442,068 | 6,367,560 | 5,947,310 | |||||||||||||||
Balance Sheet Data:
|
||||||||||||||||||||
Working capital
|
$ | 10,062 | $ | 7,762 | $ | 5,194 | $ | 10,670 | $ | 11,144 | ||||||||||
Total assets
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$ | 20,318 | $ | 19,645 | $ | 19,867 | $ | 21,345 | $ | 21,386 | ||||||||||
Shareholders' equity
|
$ | 10,262 | $ | 7,499 | $ | 4,997 | $ | 10,392 | $ | 10,903 | ||||||||||
Share capital
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$ | 361 | $ | 335 | $ | 251 | $ | 250 | $ | 234 |
Month
|
High
(NIS)
|
Low
(NIS)
|
||||||
March (through March 23, 2015)
|
4.053
|
3.984
|
||||||
February 2015
|
3.966
|
3.844
|
||||||
January 2015
|
3.998
|
3.899
|
||||||
December 2014
|
3.994
|
3.889
|
||||||
November 2014
|
3.889
|
3.782
|
||||||
October 2014
|
3.793
|
3.644
|
||||||
September 2014
|
3.695
|
3.578
|
Year
|
Average
(NIS)
|
|||
2015 (through March 23, 2015)
|
3.943 | |||
2014
|
3.577 | |||
2013
|
3.609 | |||
2012
|
3.858 | |||
2011
|
3.582 | |||
2010
|
3.732 |
B. CAPITALIZATION AND INDEBTEDNESS |
C. REASONS FOR THE OFFER AND USE OF PROCEEDS |
D. RISK FACTORS |
·
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the variation in size and timing of individual purchases by our customers;
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·
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seasonal factors that may affect capital spending by customers, such as the varying fiscal year-ends of customers and the reduction in business during the summer months, particularly in Europe;
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·
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the relatively long sales cycles for our products;
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·
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the request for longer payment terms from us or long-term financing of customers' purchases from us, as well as additional conditions tied to such payment terms;
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·
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competitive conditions in our markets;
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·
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the timing of the introduction and market acceptance of new products or product enhancements by us and by our customers, competitors and suppliers;
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·
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changes in the level of operating expenses relative to revenues;
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·
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product quality problems;
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·
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supply interruptions;
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·
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changes in global or regional economic conditions or in the telecommunications industry;
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·
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delays in or cancellation of projects by customers;
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·
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changes in the mix of products sold;
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·
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the size and timing of approval of grants from the Government of Israel; and
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·
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foreign currency exchange rates.
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·
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increased price competition;
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·
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local sales taxes which may be incurred for direct sales;
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·
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increased industry consolidation among our customers, which may lead to decreased demand for and downward pricing pressure on our products;
|
·
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changes in customer, geographic or product mix;
|
·
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our ability to reduce and control production costs;
|
·
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increases in material or labor costs;
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·
|
excess inventory and inventory holding costs;
|
·
|
obsolescence charges;
|
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·
|
reductions in cost savings due to changes in component pricing or charges incurred due to inventory holding periods if parts ordering does not correctly anticipate product demand;
|
·
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changes in distribution channels;
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·
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losses on customer contracts; and
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·
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increases in warranty costs.
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·
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legal and cultural differences in the conduct of business;
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·
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difficulties in staffing and managing foreign operations;
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·
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longer payment cycles;
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·
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difficulties in collecting accounts receivable and withholding taxes that limit the repatriation of earnings;
|
·
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difficulties in complying with varied legal and regulatory requirements across jurisdictions, including additional labor laws, particularly in Brazil;
|
·
|
political instability;
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·
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variations in effective income tax rates among countries where we conduct business;
|
|
·
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fluctuations in foreign currency exchange rates; and
|
·
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laws and business practices favoring local competitors;
|
·
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the time involved for our customers to determine and announce their specifications;
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·
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the time required for our customers to process approvals for purchasing decisions;
|
·
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the complexity of the products involved;
|
·
|
the technological priorities and budgets of our customers; and
|
·
|
the need for our customers to obtain or comply with any required regulatory approvals.
|
·
|
Delays in delivery or shortages in components could interrupt and delay delivery and result in cancellations of orders for our products.
|
|
|
·
|
Suppliers could increase component prices significantly and with immediate effect.
|
·
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We may not be able to locate alternative sources for product components.
|
|
|
·
|
Suppliers could discontinue the manufacture or supply of components used in our products. This may require us to modify our products, which may cause delays in product shipments, increased manufacturing costs and increased product prices.
|
·
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We may be required to hold more inventory than would be immediately required in order to avoid problems from shortages or discontinuance.
|
·
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substantial cash expenditures;
|
|
|
·
|
potentially dilutive issuances of equity securities;
|
|
·
|
the incurrence of debt and contingent liabilities;
|
·
|
a decrease in our profit margins; and
|
|
·
|
amortization of intangibles and potential impairment of goodwill.
|
· |
challenges in staffing and managing foreign operations due to the limited number of qualified candidates, employment laws and business practices in foreign countries, any of which could increase the cost and reduce the efficiency of operating in foreign countries;
|
·
|
our inability to comply with import/export, environmental and other trade compliance and other regulations of the countries in which we do business, together with unexpected changes in such regulations;
|
·
|
insufficient measures to ensure that we design, implement, and maintain adequate controls over our financial processes and reporting in the future;
|
·
|
our failure to adhere to laws, regulations, and contractual obligations relating to customer contracts in various countries;
|
·
|
our inability to maintain a competitive list of distributors for indirect sales;
|
·
|
tariffs and other trade barriers;
|
·
|
economic instability in foreign markets;
|
·
|
wars, acts of terrorism and political unrest;
|
·
|
language and cultural barriers;
|
·
|
lack of integration of foreign operations;
|
·
|
currency fluctuations;
|
·
|
potential foreign and domestic tax consequences;
|
·
|
technology standards that differ from those on which our products are based, which could require expensive redesign and retention of personnel familiar with those standards;
|
·
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longer accounts receivable payment cycles and possible difficulties in collecting payments, which may increase our operating costs and hurt our financial performance; and
|
·
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failure to meet certification requirements.
|
·
|
our results of operations;
|
|
·
|
market conditions or trends in our industry and the global economy as a whole;
|
|
|
·
|
political, economic and other developments in the State of Israel and worldwide;
|
|
·
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actual or anticipated variations in our quarterly operating results or those of our competitors;
|
|
·
|
announcements by us or our competitors of technological innovations or new and enhanced products;
|
|
·
|
Announcements by us or our competitors of significant contracts or capital commitments;
|
|
·
|
changes in the market valuations of our competitors;
|
|
·
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introductions of new products or new pricing policies by us or our competitors;
|
|
·
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trends in the communications or software industries, including industry consolidation;
|
|
·
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regulatory changes that impact our pricing of products and services and competition in our markets;
|
|
·
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acquisitions or strategic alliances by us or others in our industry;
|
|
·
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changes in estimates of our performance or recommendations by financial analysts;
|
|
·
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operating results that vary from the expectations of financial analysts and investors;
|
|
·
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changes in our shareholder base;
|
|
·
|
changes in status of our intellectual property rights;
|
|
·
|
future sales
of our ordinary shares;
|
|
·
|
fluctuations in the trading volume of our ordinary shares;
|
|
·
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additions or departures of key personnel.
|
|
·
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the judgment is obtained after due process before a court of competent jurisdiction, according to the laws of the foreign state in which the judgment is given and the rules of private international law currently prevailing in Israel;
|
|
·
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the prevailing law of the foreign state in which the judgment is rendered allows for the enforcement of judgments of Israeli courts;
|
|
·
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adequate service of process has been effected and the defendant has had a reasonable opportunity to be heard and to present his or her evidence;
|
|
·
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the judgment is not contrary to the public policy of Israel, and the enforcement of the civil liabilities set forth in the judgment is not likely to impair the security or sovereignty of Israel;
|
|
·
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an action between the same parties in the same matter was not pending in any Israeli court at the time the lawsuit was instituted in the foreign court; and
|
|
·
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the judgment is enforceable according to the laws of Israel and according to the law of the foreign state in which the relief was granted.
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A. HISTORY AND DEVELOPMENT OF THE COMPANY |
B. BUSINESS OVERVIEW |
GLOSSARY
|
3G
|
Third-generation digital cellular networks.
|
|
4G
|
Fourth-generation digital cellular networks.
|
|
BSS
|
Business Support System. The components that a telephone operator uses to run its business operations that relate to the customer/subscriber usage; handles taking orders, processing bills, and collecting payments.
|
|
CODEC
|
CODer/DECoder. Converts and compresses voice signals from their analog form to digital signals acceptable to modern digital PBXs (private branch exchanges) and digital transmission systems. It then converts and decompresses those digital signals back to analog signals so that they can be heard and understood.
|
|
CEM
GSM
|
Customer Experience Management
. A solution to support the strategy that focuses the operations and processes of a business around the needs of the individual customer.
Global System for Mobile Communications. A digital wireless technology that is widely deployed in Europe and, increasingly, in other parts of the world.
|
|
GPRS
|
General Packet Radio Service. A packet-based digital intermediate speed wireless technology based on GSM (2.5 generation).
|
|
IMS
|
IP Multimedia Subsystem. An internationally recognized standard defining a generic architecture for offering Voice over IP and multimedia services to multiple-access technologies.
|
|
LTE
|
Long Term Evolution. LTE is a set of enhancements to the Universal Mobile Telecommunications System (UMTS) which was introduced in 3rd Generation Partnership Project (3GPP) Release 8. Much of 3GPP Release 8 focuses on adopting 4G mobile communications technology, including an all-IP flat networking architecture.
|
NFV
|
Network Function Virtualization. NFV is an alternative design approach for building complex information technology (IT) applications, particularly in the telecommunications and service provider industries, that virtualizes entire classes of function into building blocks that may be connected, or chained together to create services. NFV offers a new way to design, deploy and manage networking services. It decouples the network functions, such as network address translation (NAT), firewalling, intrusion detection, domain name service (DNS), caching, etc., from proprietary hardware appliances, so they can run in software. It is designed to consolidate and deliver the networking components needed to support a fully virtualized infrastructure – including virtual servers, storage and even other networks. It utilizes standard IT virtualization technologies that run on high-volume service, switch and storage hardware to virtualize network functions. It is applicable to any data plane processing or control plane function in both wired and wireless network infrastructures.
|
|
NGN
|
Next Generation Network. General term for packet-based networks, whether wireline (Voice Over IP, Video Over IP, etc.) or 3G networks.
|
|
OSS
|
Operational Support System. A suite of programs that enables the enterprise to monitor, analyze and manage a network system. Used in general to mean a system that supports an organization's network operations.
|
|
Protocol
|
A specific set of rules, procedures or conventions governing the format, means and timing of transmissions between two devices.
|
|
Session
|
A lasting connection between a user (or a user agent) and a peer, typically a server, usually involving the exchange of many packets between the user's computer and the server. A session is typically implemented as a layer in a network protocol.
|
|
RAN
|
Radio Access Network. A part of a mobile telecommunication system. It implements a radio access technology. Conceptually, it sits between the mobile phone, and the core network.
|
|
SIGTRAN
|
The name, derived from signaling transport, of a defunct Internet Engineering Task Force (IETF) working group that produced specifications for a family of protocols that provide reliable datagram service and user layer adaptations for Signaling System 7 (SS7) and ISDN communications protocols. The SIGTRAN protocols are an extension of the SS7 protocol family and are used today together with IMS.
|
|
SIP
|
Session Initiation Protocol. A simple application layer signaling protocol for VoIP implementations. It is a textual client server based protocol and provides the necessary mechanisms so that end user systems and proxy servers can provide various different services.
|
|
TCP
|
Transmission Control Protocol is defined in IETF RFC793. TCP provides a reliable stream delivery and virtual connection service to applications through the use of sequenced acknowledgment with retransmission of packets when necessary. It is one of the core protocols of the Internet Protocol Suite. TCP is one of the two original components of the suite (the other being Internet Protocol, or IP), so the entire suite is commonly referred to as TCP/IP. Whereas IP handles lower-level transmissions from computer to computer as a message makes its way across the Internet, TCP operates at a higher level, concerned only with the two end systems, for example a Web browser and a Web server.
|
·
|
improved quality, availability and network utilization and lower churn rates;
|
·
|
improved efficiency of human resources allocation due to the utilization of a unified monitoring solution, ensuring ease of use and reduced learning curves; and
|
·
|
decreased support costs through centralized management, ability to offer premium service level agreements ("SLAs") and level of experience ("LOE") results based on measurable parameters and all-inclusive, probe-based solutions.
|
·
|
In emerging regions, targeting mainly UMTS, LTE and VoIP operators
. In many regions of Latin America, Eastern Europe, Africa and Asia, service providers continue to roll out and expand UMTS, LTE and VoIP networks. We believe this represents a significant opportunity for RADCOM. In 2014, approximately 68% of our sales were derived from these regions, compared to approximately 75% in 2013, and we expect these regions to continue to make significant contributions to our revenues in the future.
|
·
|
In developed regions, targeting service providers migrating to LTE and VoLTE,.
In Europe and North America, we have begun to benefit from the migration of top-tier service providers to VoLTE and LTE activities and deployments, despite the fact that this market has been developing more slowly than initially expected. We are seeing the growing deployment of hybrid IMS/NGN networks, whose greater complexity dictates a need for more sophisticated monitoring solutions. We believe that our ability to secure initial customers with deployments of our solution in live LTE and VoLTE operational networks positions us to benefit from this trend in the future.
|
·
|
Investment in the RADCOM brand "Radically Better" approach and technological excellence of our solutions.
In September 2012, we initiated a re-branding process both internally and towards third parties, including our customers and suppliers. The brand is known as the "Radically Better" brand. The philosophy behind this new brand is that the Company aims to be the best company for its subscribers, customers, distributors, employees and investors in the service assurance market segment. The brand also encompasses the view that RADCOM's uniqueness is in delivering superior service assurance products to the market, and supporting them with the finest deployment and service execution. The brand's marketing message is one of promising to be significantly better in the Company's values: radically better products, radically better service, radically better people, and radically better performance]. RADCOM's products have always been differentiated by their advanced technology and their ability to offer comprehensive solutions in response to the industry's most difficult problems. We intend to continue a high level of investment to maintain our technological edge in a dynamic environment. This includes hiring skilled personnel and investing significant resources in training, retention and motivation of high quality personnel. Training programs cover areas such as technology, applications, development methodology and programming standards.
|
·
|
Shifting into a software-based solution
.
In February 2014, we officially launched MaveriQ, our software-based solution, which replaces our Omni-Q solution. Communications service providers have started deploying virtualized solutions (software-based solutions installed on standard, non-proprietary 3
rd
party hardware) for some of their network functionality. This is known as Network Functions Virtualization (NFV). Service providers constantly need to upgrade their hardware in an effort to keep up with the increasing demand for network capacity and to rapidly deploy new network technology. The current trend for virtualized solutions derives both from the need to improve deployment efficiency, reduce the amount of proprietary hardware installed in the network (which requires support) and reduce operating expenses. We recognised that communications service providers will need a service assurance solution that will support NFV, both as a virtualized option or as a probe appliance that can be gradually transitioned to the virtual option. MaveriQ is a probe-based software solution and provides communications service providers with a service assurance that supports terabit capacity for 4G LTE, VoLTE and LTE-Advanced networks. As a software-based solution, it is designed for rapid deployment in a virtualized environment, giving operators a new agility that reduces OPEX and CAPEX – even as it increases service availability.
|
·
|
deployment of next-generation networks such as LTE, high-speed downlink packet access and Triple Play;
|
|
·
|
integration of new architectures such as high-speed packet access ("HSPA"), LTE, VoLTE and IMS;
|
|
·
|
migration of the network core to IP technology using IMS or SIGTRAN;
|
|
·
|
successful delivery of advanced, complex services such as VoIP IMS and video conferencing; and
|
|
·
|
proactive management of call quality on existing and next-generation service providers' production networks, along with maintenance of high-availability, high-quality voice services over packet telephony.
|
·
|
Troubleshooting
– the MaveriQ enables service providers to "drill down" to identify the source of specific problems, using tools ranging from call or session tracing to a full decoding of the call flow.
|
|
·
|
Performance monitoring
– service providers use MaveriQ to analyze the behavior of network components and customer network usage to understand trends and performance level and optimization, with the goal of identifying faults before they compromise the end-user experience
|
|
·
|
Fault detection
– service providers use MaveriQ's automatic fault detection and service KPIs to alert them to network problems as they arise.
|
|
·
|
Pre-Mediation
– MaveriQ generates CDRs needed to feed third-party OSSs or other solutions.
|
|
·
|
Customer Care Application, or QiCare,
which helps service providers to reduce churn by monitoring and maintaining a high level of satisfaction for the individual subscriber, groups of subscribers, and the entire subscriber base. QiCare enables service providers to view subscriber reports for individual subscribers and helps them to understand the subscriber's behavior and the quality of the different services being used online.
|
|
·
|
(QVIP) – Reports SLA for defined subscriber groups. In today's saturated telecom market, subscribers often abandon their service provider due to frustration over quality of service, with customer churn contributing to significant loss of revenue. RADCOM's QVIP application helps service providers to monitor and maintain a high level of satisfaction for the individual subscriber, a group of subscribers and an entire network.
|
|
·
|
(QMyHandset) enables identification of problematic handsets, and provides analysis of the cause of the problem. By identifying problematic handsets, operators can quickly make the required adjustments to their network to provide support for more handset models, thus improving the customer experience and hopefully preventing customer churn
.
|
Year ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
(in thousands of U.S. dollars)
|
||||||||||||
The Omni-Q family (including the MaveriQ)
|
$ | 23,023 | $ | 19,976 | $ | 15,205 | ||||||
The Performer family and others
|
$ | 613 | $ | 506 | $ | 581 | ||||||
Total
|
$ | 23,636 | $ | 20,482 | $ | 15,786 |
·
|
Enhancement of support
:
We are dedicated to the provision of timely, effective and professional support for all our customers. On-call support is provided by our direct sales/support force as well as by our representatives, distributors, and OEM partners. In addition, we routinely contact our customers to solicit feedback and promote full usage of our solutions. We provide all customers with a free one-year warranty, which includes bug-fixing solutions and a hardware warranty on our products. After the initial warranty period, we offer extended warranties which can be purchased for one, two, or three-year periods. Generally the cost of the extended warranty is based on a percentage of the overall cost of the product, as an annual maintenance fee.
|
·
|
Customer-oriented product development:
With the goal of continuously enhancing our customer relationships, we meet regularly with customers, and use the feedback from these discussions to improve our products and guide our R&D roadmap.
|
·
|
Regional technical support:
As the sale of a system and solutions requires a high level of technical skill, we decided to enhance our support with local experts located in our regional offices. For example, in our Brazil office we established a local support team responsible for first level engagements with customers, which is advantageous in terms of the time zone, culture and language.
|
·
|
Support of our representatives and distributors:
We provide a high level of pre- and post-sale technical support to our distributors and representatives in the field. We use a broad range of channels to deliver this support, including help desks, websites, newsletters, technical briefs, E-Learning systems, technical seminars, and others.
|
C. ORGANIZATIONAL STRUCTURE |
Name of Subsidiary
|
Jurisdiction of Incorporation
|
RADCOM Equipment
|
New Jersey
|
RADCOM Investments
|
Israel
|
RADCOM Brazil
|
Brazil
|
RADCOM India
|
India
|
D. PROPERTY, PLANTS AND EQUIPMENT |
ITEM 4A. UNRESO LVE D STAFF COMMENTS |
·
|
Focusing in emerging markets, including South America, Central America, Eastern Europe and Asia, where our strategy has been to target customers rolling out 3G Cellular, LTE and Voice Over IP services.
|
|
·
|
In developed markets, we have been targeting the IMS activities and deployments of top-tier wireline service providers, and the LTE & mobile broadband networks of wireless operators.
|
|
·
|
To improve our ability to penetrate targeted customers in all regions, we have pursued strategic partnering relationships, including OEM partnerships and teaming agreements and distribution agreements.
|
RADCOM
|
Subcontractor
|
Planning
|
Purchasing component parts
|
Integration
|
Assembly
|
Testing
|
A. OPERATING RESULTS |
2014
|
2013
|
2012
|
||||||||||
Sales
|
100 | % | 100 | % | 100 | % | ||||||
Cost of sales
|
36.8 | 38.5 | 39.2 | |||||||||
Gross profit
|
63.2 | 61.5 | 60.8 | |||||||||
Operating expenses:
|
||||||||||||
Research and development
|
24.6 | 27.4 | 38.7 | |||||||||
Less royalty-bearing participation
|
7.1 | 7.5 | 9.9 | |||||||||
Research and development, net
|
17.5 | 19.9 | 28.8 | |||||||||
Sales and marketing ,net
|
30.9 | 37.1 | 53.9 | |||||||||
General and administrative
|
9.6 | 10.0 | 13.3 | |||||||||
Total operating expenses
|
58.0 | 67.0 | 96.0 | |||||||||
Operating income (loss)
|
5.2 | (5.5 | ) | (35.2 | ) | |||||||
Financial expenses, net
|
(1.4 | ) | (1.4 | ) | (2.0 | ) | ||||||
Income (loss) before taxes on income
|
3.8 | (6.9 | ) | (37.2 | ) | |||||||
Taxes on income
|
(0.8 | ) | - | (0.7 | ) | |||||||
Net income (loss)
|
3.0 | (6.9 | ) | (37.9 | ) |
Revenues
|
||||||||||||||||||||
Year Ended December 31,
|
% Change
|
% Change
|
||||||||||||||||||
(in millions of U.S. dollars)
|
2014 vs. 2013
|
2013 vs. 2012
|
||||||||||||||||||
2014
|
2013
|
2012
|
||||||||||||||||||
The Omni-Q family (including the MaveriQ)
|
23.0 | 20.0 | 15.2 | 15 | 32 | |||||||||||||||
The Performer family and others
|
0.6 | 0.5 | 0.6 | 20 | (17 | ) | ||||||||||||||
Total revenues
|
23.6 | 20.5 | 15.8 | 15 | 30 |
Year ended December 31,
|
||||||||||||
(in millions of U.S. dollars)
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Cost of sales - Product
|
8.4 | 7.5 | 5.8 | |||||||||
Cost of sales - Services
|
0.3 | 0.4 | 0.4 | |||||||||
Total Cost of sales
|
8.7 | 7.9 | 6.2 | |||||||||
Gross profit
|
14.9 | 12.6 | 9.6 |
Year ended December 31,
(in millions of U.S. dollars)
|
% Change
2014 vs. 2013
|
% Change
2013 vs. 2012
|
||||||||||||||||||
2014
|
2013
|
2012
|
||||||||||||||||||
Research and development
|
5.8 | 5.6 | 6.1 | 3.6 | (8.2 | ) | ||||||||||||||
Less royalty-bearing participation
|
1.7 | 1.5 | 1.6 | 13.3 | (6.2 | ) | ||||||||||||||
Research and development, net
|
4.1 | 4.1 | 4.5 | - | (8.9 | ) | ||||||||||||||
Sales and marketing, net
|
7.3 | 7.6 | 8.5 | (3.9 | ) | (10.6 | ) | |||||||||||||
General and administrative
|
2.3 | 2.0 | 2.1 | 15.0 | (4.8 | ) | ||||||||||||||
Total operating expenses
|
13.7 | 13.7 | 15.1 | - | (9.0 | ) |
B. LIQUIDITY AND CAPITAL RESOURCES |
C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES |
D. TREND INFORMATION |
E. OFF–BALANCE SHEET ARRANGEMENTS |
F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS |
Payments due by period
|
||||||||||||||||||||
Contractual Obligations
|
Total
|
Less than
1 year
|
1-3
years
|
3-5
years
|
More than
5 years
|
|||||||||||||||
(in thousands of U.S. dollars) | ||||||||||||||||||||
Operating leases obligation (1)
|
$ |
1,643
|
$ |
601
|
$ |
1,042
|
--
|
--
|
||||||||||||
Open Purchase Orders (2)
|
357
|
357
|
--
|
--
|
--
|
|||||||||||||||
Other long-term commitments (3)
|
402
|
--
|
--
|
--
|
--
|
|||||||||||||||
Total
|
$ |
2,402
|
$ |
958
|
$ |
1,042
|
--
|
--
|
A. DIRECTORS AND SENIOR MANAGEMENT |
Name
|
Age
|
Position
|
||
Zohar Zisapel
|
66
|
Chairman of our Board of Directors
|
||
David Ripstein
|
48
|
President, Chief Executive Officer
|
||
Uri Birenberg
|
39
|
Chief Financial Officer
|
||
Eyal Harari
|
39
|
Vice President, Products and Marketing
|
||
Yuval Porat
|
56
|
Vice President, Research and Development
|
||
Miki Shilinger
|
60
|
Vice President, Operations
|
||
Uri Har (1)(2)(3)(4)(5)
|
78
|
Director
|
||
Irit Hillel (1)(2)(4)(5)
|
52
|
Director
|
||
Matty Karp (2)(4)(5)
|
66
|
Director
|
||
Rachel (Heli) Bennun
|
61
|
Director
|
B . COMPENSATION |
Name and Principal Position
|
Year
|
Salary ($)
|
Bonus ($)***
|
Equity-Based
Compensation
($)*
|
All Other
Compensation
($)**
|
Total ($)
|
||||||||||||||||
David Ripstein
CEO
|
2014
|
305,940 | 274,621 | 57,465 | 82,397 | 720,423 | ||||||||||||||||
Ronen Hovav
VP Americas
|
2014
|
233,460 | 239,887 | 7,330 | 3,856 | 484,533 | ||||||||||||||||
Eyal Harari
VP Products
|
2014
|
143,098 | 46,510 | 41,404 | 59,201 | 290,213 | ||||||||||||||||
Yoram Sherman
VP Sales
|
2014
|
152,692 | 46,990 | 7,330 | 59,656 | 266,668 | ||||||||||||||||
Yuval Porat
VP R&D
|
2014
|
161,239 | - | 14,712 | 55,984 | 231,935 |
C. BOARD PRACTICES |
|
·
|
a majority of the shares of non-controlling shareholders and shareholders who do not have a personal interest in the election of the candidate (other than a personal interest that is unrelated to a relationship with the controlling shareholders) voted at the meeting, voted in favor of the external director's election; or
|
|
·
|
the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in the election of the candidate (other than a personal interest that is unrelated to a relationship with the controlling shareholders) that voted against the election of the external director, does not exceed two percent of the aggregate number of voting rights in the company.
|
NASDAQ Requirements |
Israeli Companies Law Requirements |
Audit committee
|
D. EMPLOYEES |
E. SHARE OWNERSHIP |
(1)
|
Except as otherwise noted and subject to applicable community property laws, each person named in the table has sole voting and investment power with respect to all ordinary shares listed as owned by such person. Shares beneficially owned include shares that may be acquired pursuant to options to purchase ordinary shares that are exercisable within 60 days of March 23, 2015.
|
(2)
|
In determining the percentage owned by each person or group, ordinary shares for each person or group includes ordinary shares that may be acquired by such person or group pursuant to options to purchase ordinary shares that are exercisable within 60 days of March 23, 2015.
|
(3)
|
The number of outstanding ordinary shares does not include 5,189 shares held by RADCOM Equipment, Inc., a wholly owned subsidiary, and 30,843 shares that were repurchased by us.
|
(4)
|
Includes (i) 2,016,472 ordinary shares held of record by Mr. Zohar Zisapel, (ii) 13,625 ordinary shares held by Klil & Michael Ltd., an Israeli company wholly owned by Mr. Zohar Zisapel,( iii) 224,562 Ordinary Shares held of record by Michael & Klil Holdings (93) Ltd ("Klil"), an Israeli company, wholly owned by Mr. Zohar Zisapel (iv) 238,187 ordinary shares held of record by Lomsha Ltd. ("Lomsha"), an Israeli company wholly owned by Mr. Zohar Zisapel, (v) 150,000 ordinary shares issuable upon exercise of options, with an average exercise price per share of $5.68, expiring between the years 2015 and 2019, and (vi) 74,854 ordinary shares issuable upon exercise of warrants held by Michael & Klil Holdings (93) and 60,683 ordinary shares issuable upon exercise of warrants held by Lomsha, all of which have an exercise price per share of $3.49, and expire in June 2016. The options and warrants listed above are exercisable currently or within 60 days of March 23, 2015. Mr. Zohar Zisapel is a principal shareholder and Chairman of the Board of Directors of RDC. Mr. Zohar Zisapel and his brother, Mr. Yehuda Zisapel, have shared voting and dispositive power with respect to the shares held by RDC. This information is based on information provided by Mr. Zohar Zisapel.
|
(5)
|
Comprised of 127,500 ordinary shares issuable upon exercise of options at an average exercise price per share of $4.24, which expire between the years 2016 and 2019, and are all exercisable within 60 days of March 23, 2015.
|
(6)
|
Each of the directors and executive officers not separately identified in the above table beneficially owns less than 1% of our outstanding ordinary shares (including options or warrants held by each such party, which are vested or shall become vested within 60 days of March 23, 2015 and have, therefore, not been separately disclosed. The amount of shares is comprised of 157,875 ordinary shares issuable upon exercise of options and warrants exercisable within 60 days of March 23, 2015.
|
A. MAJOR SHAREHOLDERS |
Name
|
Number of Ordinary
Shares
(1)
|
Percentage of
Outstanding Ordinary
Shares
(2)
|
||||||
Zohar Zisapel
|
2,778,383 | (3) | 31.7 | % | ||||
G2 Investment Partners Management LLC
|
805,726 | (4) | 9.5 | % | ||||
G2 Investment Partners QP LP
|
712,586 | (4) | 8.4 | % | ||||
Yehuda Zisapel
|
462,330 | (5) | 5.5 | % |
(1)
|
Except as otherwise noted and subject to applicable community property laws, each person named in the table has sole voting and investment power with respect to all ordinary shares listed as owned by such person. Shares beneficially owned include shares that may be acquired pursuant to options to purchase ordinary shares that are exercisable within 60 days of March 23, 2015.
|
|||||
(2)
|
The percentage of outstanding ordinary shares is based on 8,475,257 ordinary shares outstanding as of March 23, 2015. In determining the percentage owned by each person, ordinary shares for each person includes ordinary shares that may be acquired by such person pursuant to options to purchase ordinary shares that are exercisable within 60 days of March 23, 2015. The number of outstanding ordinary shares does not include 5,189 shares held by RADCOM Equipment, Inc., a wholly owned subsidiary and 30,843 shares that were repurchased by us.
|
|||||
(3)
|
Includes (i) 2,016,472 ordinary shares held of record by Mr. Zohar Zisapel, (ii) 13,625 ordinary shares held by Klil&Michael Ltd. (iii) 224,462 ordinary shares held of record by Klil (iv) 238,187 ordinary shares held of record by Lomsha, (v) 150,000 ordinary shares issuable upon exercise of options, with an average exercise price per share of $5.68, expiring between the years 2015 and 2019, and (vi) 74,854 ordinary shares issuable upon exercise of warrants held by Michael & Klil Holdings (93) and 60,683 ordinary shares issuable upon exercise of warrants held by Lomsha, all of which have an exercise price per share of $3.49, and expire in June 2016. The options and warrants listed above are exercisable currently or within 60 days of March 23, 2015. Mr. Zohar Zisapel and his brother, Mr. Yehuda Zisapel, have shared voting and dispositive power with respect to the shares held by RDC. Mr. Zohar Zisapel is a principal shareholder and Chairman of the Board of Directors of RDC and, as such, Mr. Zisapel may be deemed to have voting and dispositive power over the ordinary shares held by RDC. Mr. Zisapel disclaims beneficial ownership of these ordinary shares except to the extent of his pecuniary interest therein. This information is based on information provided to the Company by Mr. Zohar Zisapel and based on Mr. Zohar Zisapel's Schedule 13D/A filed with the SEC on February 18, 2014.
|
|||||
(4) |
This information is based on G2 Investment Partners Management LLC’s Schedule 13G/A, filed with the SEC on February 17, 2015.
|
|||||
(5)
|
Includes (i) 234,740 Ordinary Shares held of record by Mr. Yehuda Zisapel, and (ii) 227,590 ordinary shares held of record by Retem Local Networks Ltd., an Israeli company. Mr. Yehuda Zisapel and his brother, Mr. Zohar Zisapel, have shared voting and dispositive power with respect to the shares held by RDC. Mr. Yehuda Zisapel is a principal shareholder and director of each of RDC and Retem Local Networks Ltd. and, as such, Mr. Yehuda Zisapel may be deemed to have voting and dispositive power over the ordinary shares held by such companies. Mr. Yehuda Zisapel disclaims beneficial ownership of these ordinary shares except to the extent of his pecuniary interest therein. This information is based on Mr. Yehuda Zisapel's Schedule 13G/A, filed with the SEC on February 14, 2007.
|
B. RELATED PARTY TRANSACTIONS |
C. INTERESTS OF EXPERTS AND COUNSEL |
A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION |
B. SIGNIFICANT CHANGES |
A. OFFER AND LISTING DETAILS |
Annual
|
High
|
Low
|
||||||
2014
|
$
|
13.23
|
$
|
4.65
|
||||
2013
|
$
|
7.35
|
$
|
2.21
|
||||
2012
|
$
|
5.69
|
$
|
2.08
|
||||
2011
|
$
|
13.98
|
$
|
3.45
|
||||
2010
|
$
|
12.50
|
$
|
1.60
|
||||
Quarterly 2015
|
||||||||
First Quarter (Through March 23)
|
$
|
11.97
|
$
|
9.62
|
||||
Quarterly 2014
|
||||||||
Fourth Quarter
|
$
|
13.23
|
$
|
5.60
|
||||
Third Quarter
|
$
|
6.14
|
$
|
5.09
|
||||
Second Quarter
|
$
|
7.05
|
$
|
4.65
|
||||
First Quarter
|
$
|
6.69
|
$
|
5.05
|
||||
Quarterly 2013
|
||||||||
Fourth Quarter
|
$
|
5.89
|
$
|
4.00
|
||||
Third Quarter
|
$
|
7.35
|
$
|
3.20
|
||||
Second Quarter
|
$
|
4.80
|
$
|
2.56
|
||||
First Quarter
|
$
|
4.19
|
$
|
2.21
|
||||
Most recent six months
|
||||||||
March (Through March 23)
|
$
|
10.17
|
$
|
9.62
|
||||
February 2015
|
$
|
11.68
|
$
|
9.73
|
||||
January 2015
|
$
|
11.97
|
$
|
10.56
|
||||
December 2014
|
$
|
13.23
|
$
|
9.83
|
||||
November 2014
|
$
|
11.22
|
$
|
8.37
|
||||
October 2014
|
$
|
8.95
|
$
|
5.60
|
||||
September 2014
|
$
|
6.02
|
$
|
5.52
|
B. PLAN OF DISTRIBUTION |
C. MARKETS |
D. SELLING SHAREHOLDERS |
E. DILUTION |
F. EXPENSES OF THE ISSUE |
A. SHARE CAPITAL |
B. MEMORANDUM AND ARTICLES OF ASSOCIATION |
·
|
information regarding the advisability of a given action submitted for his or her approval or performed by him or her by virtue of his position; and
|
|
·
|
all other important information pertaining to such actions.
|
·
|
refrain from any conflict of interest between the performance of his or her duties for the company and the performance of his or her other duties or personal affairs;
|
|
·
|
refrain from any activity that is competitive with the company;
|
|
|
·
|
refrain from exploiting any business opportunity of the company to receive a personal gain for himself or herself, or for others; and
|
|
·
|
disclose to the company any information or documents relating to the company's affairs which the office holder has received due to his or her position as an office holder.
|
·
|
not in the ordinary course of business;
|
|
|
·
|
not on market terms; or
|
·
|
is likely to have a material impact of the Company's profitability, assets or liabilities.
|
·
|
a majority of the shares of shareholders who have no personal interest in the transaction and are present and voting, in person, by proxy or by written ballot, at the meeting, vote in favor of the transaction; or
|
|
·
|
the shareholders who have no personal interest in the transaction who vote against the transaction do not represent more than two percent of the voting power of the company.
|
·
|
a breach of an office holder's duty of care to us or to another person;
|
|
·
|
a breach of an office holder's duty of loyalty to us, provided that the office holder acted in good faith and had reasonable cause to assume that his or her act would not prejudice our interests;
|
|
·
|
a financial obligation imposed on him in favor of another person; or
|
|
·
|
reasonable litigation expenses, including attorneys' fees, incurred by the office holder as a result of administrative enforcement proceedings instituted against him. Without derogating from the generality of the foregoing, such expenses will include a payment imposed on the office holder in favor of an injured party as set forth in Section 52(54)(a)(1)(a) of the Israeli Securities Law, 5728-1968, as amended (the "Israeli Securities Law") and expenses that the office holder incurred in connection with a proceeding under Chapters H'3, H'4 or I'1 of the Israeli Securities Law, including reasonable legal expenses, which term includes attorneys' fees.
|
·
|
a financial obligation imposed on him in favor of another person by a court judgment, including a compromise judgment or an arbitrator's award approved by court;
|
|
·
|
reasonable litigation expenses, including attorneys' fees, expended by the office holder as a result of an investigation or proceeding instituted against him by a competent authority, provided that such investigation or proceeding was concluded without the filing of an indictment against him and either (A) concluded without the imposition of any financial liability in lieu of criminal proceedings or (B) concluded with the imposition of a financial liability in lieu of criminal proceedings but relates to a criminal offense that does not require proof of criminal intent; or in connection with an administrative enforcement proceeding or a financial sanction. Without derogating from the generality of the foregoing, such expenses will include a payment imposed on the office holder in favor of an injured party as set forth in Section 52(54)(a)(1)(a) of the Israeli Securities Law, and expenses that the office holder incurred in connection with a proceeding under Chapters H'3, H'4 or I'1 of the Israeli Securities Law, including reasonable legal expenses, which term includes attorney fees; and
|
·
|
reasonable litigation expenses, including attorneys' fees, expended by an office holder or charged to the office holder by a court, in a proceeding instituted against the office holder by the Company or on its behalf or by another person, or in a criminal charge from which the office holder was acquitted, or in a criminal proceeding in which the office holder was convicted of an offense that does not require proof of criminal intent.
|
·
|
in advance, provided that in respect of bullet number 1 above, the undertaking is restricted to events which our Board of Directors deems to be foreseeable in light of our actual operations at the time of the undertaking and limited to an amount or criteria determined by our Board of Directors to be reasonable under the circumstances, and further provided that such events and amounts or criteria are set forth in the undertaking to indemnify; and
|
|
·
|
retroactively.
|
·
|
a breach by the office holder of his duty of loyalty unless, with respect to insurance coverage or indemnification, the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;
|
|
·
|
a breach by the office holder of his duty of care if the breach was done intentionally or recklessly (other than if solely done in negligence);
|
|
·
|
any act or omission done with the intent to derive an illegal personal benefit
|
|
·
|
a fine, civil fine or ransom levied on an office holder, or a financial sanction imposed upon an office holder under Israeli Law.
|
C. MATERIAL CONTRACTS |
D. EXCHANGE CONTROLS |
E. TAXATION |
General Corporate Tax Structure
|
Tax Benefits under the Law for the Encouragement of Industry (Taxes), 1969
|
·
|
deductions over an eight-year period for purchases of know-how and patents, which are used for the development or the advancement of the company;
|
|
·
|
deductions over a three-year period in equal amounts of expenses involved with the issuance and listing of shares on a stock exchange;
|
|
·
|
the right to elect, under specified conditions, to file a consolidated tax return with other related Israeli Industrial Companies; and
|
|
·
|
accelerated depreciation rates on equipment and buildings.
|
Capital Gains Tax on Sales of Our Ordinary Shares
|
Taxation of Non-Residents on Dividends
|
• an individual who is a citizen or resident of the United States for U.S. federal income tax purposes;
|
|
• a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in the United States or under the laws of the United States or any political subdivision thereof or the District of Columbia;
|
|
• an estate, the income of which is subject to U.S. federal income tax regardless of its source; or
|
|
• a trust (i) if, in general, a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions, or (ii) that has in effect a valid election under applicable U.S. Treasury Regulations to be treated as a U.S. person.
|
• are broker-dealers or insurance companies;
|
|
|
• have elected mark-to-market accounting;
|
• are tax-exempt organizations or retirement plans;
|
• are financial institutions;
|
|
• hold our ordinary shares as part of a straddle, "hedge" or "conversion transaction" with other investments;
|
|
• acquired our ordinary shares upon the exercise of employee stock options or otherwise as compensation;
|
|
• own directly, indirectly or by attribution at least 10% of our voting power;
|
|
• own our warrants;
|
|
• have a functional currency that is not the U.S. dollar;
|
|
• are grantor trusts;
|
|
• are S corporations;
|
|
• are certain former citizens or long-term residents of the United States; or
|
|
• are real estate investment trusts or regulated investment companies.
|
Taxation for Non-U.S. Holders of Ordinary Shares |
·
|
such item is effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the United States and, in the case of a resident of a country which has a treaty with the United States, such item is attributable to a permanent establishment or, in the case of an individual, a fixed place of business, in the United States; or
|
·
|
the Non-U.S. Holder is an individual who holds the ordinary shares as a capital asset and is present in the United States for 183 days or more in the taxable year of the disposition and certain other conditions are met.
|
Information Reporting and Backup Withholding |
F. DIVIDENDS AND PAYING AGENTS |
G. STATEMENT BY EXPERTS |
H. DOCUMENTS ON DISPLAY |
I. SUBSIDIARY INFORMATION |
2014
|
2013
|
|||||||
Audit Fees
|
137,000 | $ | 135,500 | |||||
Tax Fees
|
7,500 | $ | 5,000 | |||||
All Other Fees
|
3,000 | $ | 0 | |||||
Total
|
147,500 | $ | 140,500 |
Audit Committee's Pre-Approval Policies and Procedures |
ITEM 16H. MINE SAFETY DISCLOSURE |
Index to the Consolidated Financial Statements
|
Page
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
Consolidated Balance Sheets
|
F-3
|
Consolidated Statements of Operations
|
F-5
|
Consolidated Statement of Comprehensive Income (Loss)
|
F-6
|
Consolidated Statements of Changes in Shareholders' Equity
|
F-7
|
Consolidated Statements of Cash Flows
|
F-8
|
Notes to Consolidated Financial Statements
|
F-10
|
15.1
|
Consent of Kost Forer Gabbay & Kasierer, a member of Ernst and Young Global, dated March 26, 2015
(2)
.
|
|
101
|
The following financial information from RADCOM Ltd.'s Annual Report on Form 20-F for the year ended December 31, 2014 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for the years ended December 31, 2014, 2013 and 2012; (ii) Consolidated Statement of Comprehensive Income (Loss) for the years ended December 31, 2014, 2013 and 2012 (iii) Consolidated Balance Sheets at December 31, 2014 and 2013; (iv) Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2014, 2013 and 2012 ; (v) Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012; and (vi) Notes to Consolidated Financial Statements. Users of this data are advised, in accordance with Rule 406T of Regulation S-T promulgated by the SEC, that this Interactive Data File is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Exchange Act, and otherwise is not subject to liability under these sections
(8)
.
|
(2)
Filed herewith.
|
(3)
Incorporated herein by reference to the Form 20-F of RADCOM Ltd. for the fiscal year ended December 31, 2012, filed with the SEC on April 22, 2013.
|
(4)
Incorporated herein by reference to the Registration Statement on Form S-8 of RADCOM Ltd. (File No. 333-13250), filed with the SEC on March 7, 2001.
|
(5)
Incorporated herein by reference to the Form 20-F of RADCOM Ltd. for the fiscal year ended December 31, 2000, filed with the SEC on June 29, 2001.
|
(6)
Incorporated herein by reference to the Form F-3/A of RADCOM Ltd., filed with the SEC on July 3, 2013.
(7)
Incorporated herein by reference to the Form 20-F of RADCOM Ltd. for the fiscal year ended December 31, 2003, filed with the SEC on May 6, 2004.
|
(8)
In accordance with Rule 406T of Regulation S-T, the information in Exhibit 101 is furnished and deemed not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Exchange Act of 1934, and otherwise is not subject to liability under these sections and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
|
RADCOM LTD.
|
|||
By:
|
/s/
David Ripstein
|
||
Name: David Ripstein
|
|||
Title: Chief Executive Officer
|
|||
Date: March 26, 2015
|
Page
|
|
F-2
|
|
F-3 - F-4
|
|
F-5
|
|
F-6
|
|
F-7
|
|
F-8 - F-9
|
|
F-10 - F-36
|
Tel-Aviv, Israel
|
KOST FORER GABBAY & KASIERER
|
March 26, 2015
|
A Member of Ernst & Young Global
|
December 31,
|
||||||||
2014
|
2013
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$ | 6,848 | $ | 1,185 | ||||
Restricted bank deposits
|
32 | 1,505 | ||||||
Trade receivables (net of allowances for doubtful accounts amounted to $20 as of December 31, 2013)
|
5,477 | 5,723 | ||||||
Inventories
|
2,699 | 4,352 | ||||||
Other accounts receivable and prepaid expenses
|
1,411 | 3,092 | ||||||
Total
current assets
|
16,467 | 15,857 | ||||||
SEVERANCE PAY FUND
|
3,051 | 3,535 | ||||||
OTHER LONG -TERM RECEIVABLES
|
600 | - | ||||||
PROPERTY AND EQUIPMENT, NET
|
200 | 253 | ||||||
Total
assets
|
$ | 20,318 | $ | 19,645 |
Year ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Revenues:
|
||||||||||||
Products
|
$ | 20,547 | $ | 17,917 | $ | 12,480 | ||||||
Services
|
3,089 | 2,565 | 3,306 | |||||||||
23,636 | 20,482 | 15,786 | ||||||||||
Cost of revenues :
|
||||||||||||
Products
|
8,350 | 7,540 | 5,765 | |||||||||
Services
|
343 | 350 | 417 | |||||||||
8,693 | 7,890 | 6,182 | ||||||||||
Gross profit
|
14,943 | 12,592 | 9,604 | |||||||||
Operating expenses:
|
||||||||||||
Research and development
|
5,812 | 5,615 | 6,102 | |||||||||
Less - royalty-bearing participation
|
1,664 | 1,537 | 1,567 | |||||||||
Research and development, net
|
4,148 | 4,078 | 4,535 | |||||||||
Selling and marketing, net
|
7,295 | 7,592 | 8,515 | |||||||||
General and administrative
|
2,262 | 2,051 | 2,107 | |||||||||
Total
operating expenses
|
13,705 | 13,721 | 15,157 | |||||||||
Operating income (loss)
|
1,238 | (1,129 | ) | (5,553 | ) | |||||||
Financial expenses, net
|
(332 | ) | (291 | ) | (314 | ) | ||||||
Loss before taxes on income
|
906 | (1,420 | ) | (5,867 | ) | |||||||
Taxes on income
|
(180 | ) | - | (120 | ) | |||||||
Net income (loss)
|
$ | 726 | $ | (1,420 | ) | $ | (5,987 | ) | ||||
Net profit (loss) per share:
|
||||||||||||
Basic net income (loss) per Ordinary Share
|
$ | 0.09 | $ | (0.19 | ) | $ | (0.93 | ) | ||||
Diluted net income (loss) per Ordinary Share
|
$ | 0.08 | $ | (0.19 | ) | $ | (0.93 | ) | ||||
Weighted average number of Ordinary Share used in computing basic net income (loss) per share
|
8,088,974 | 7,340,056 | 6,442,068 | |||||||||
Weighted average number of Ordinary Share used in computing diluted net income (loss) per share
|
8,592,387 | 7,340,056 | 6,442,068 |
Year ended
December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Net income (loss)
|
$ | 726 | $ | (1,420 | ) | $ | (5,987 | ) | ||||
Other comprehensive loss:
|
||||||||||||
Foreign currency translation adjustments
|
(257 | ) | (483 | ) | (125 | ) | ||||||
Other comprehensive loss
|
(257 | ) | (483 | ) | (125 | ) | ||||||
Comprehensive income (loss)
|
$ | 469 | $ | (1,903 | ) | $ | (6,112 | ) |
Number of shares
|
Share capital Amount
|
Additional
paid-in capital
|
Accumulated other comprehensive loss
|
Accumulated deficit
|
Total
|
|||||||||||||||||||
Balance as of January 1, 2012
|
6,415,698 | $ | 250 | $ | 60,754 | $ | (197 | ) | $ | (50,415 | ) | $ | 10,392 | |||||||||||
Share-based compensation
|
- | - | 672 | - | - | 672 | ||||||||||||||||||
Exercise of options
|
34,082 | 1 | 44 | - | - | 45 | ||||||||||||||||||
Net loss
|
- | - | - | - | (5,987 | ) | (5,987 | ) | ||||||||||||||||
Other comprehensive loss
|
- | - | - | (125 | ) | - | (125 | ) | ||||||||||||||||
Balance as of December 31, 2012
|
6,449,780 | 251 | 61,470 | (322 | ) | (56,402 | ) | 4,997 | ||||||||||||||||
Issuance of shares and warrants, net of issuance expenses of $ 35 (private placement)
|
1,239,639 | 68 | 3,356 | - | - | 3,424 | ||||||||||||||||||
Share-based compensation
|
- | - | 499 | - | - | 499 | ||||||||||||||||||
Exercise of warrants
|
73,333 | 4 | 252 | - | - | 256 | ||||||||||||||||||
Exercise of options
|
184,588 | 12 | 214 | - | - | 226 | ||||||||||||||||||
Net loss
|
- | - | - | - | (1,420 | ) | (1,420 | ) | ||||||||||||||||
Other comprehensive loss
|
- | - | - | (483 | ) | - | (483 | ) | ||||||||||||||||
Balance as of December 31, 2013
|
7,947,340 | 335 | 65,791 | (805 | ) | (57,822 | ) | 7,499 | ||||||||||||||||
Share-based compensation
|
- | - | 579 | - | - | 579 | ||||||||||||||||||
Exercise of warrants
|
5,974 | * | ) | 21 | - | - | 21 | |||||||||||||||||
Exercise of options
|
493,993 | 26 | 1,668 | - | - | 1,694 | ||||||||||||||||||
Net income
|
- | - | - | - | 726 | 726 | ||||||||||||||||||
Other comprehensive loss
|
- | - | - | (257 | ) | - | (257 | ) | ||||||||||||||||
Balance as of December 31, 2014
|
8,447,307 | $ | 361 | $ | 68,059 | $ | (1,062 | ) | $ | (57,096 | ) | $ | 10,262 |
*)
|
Represent an amount lower than $1.
|
Year ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Cash flows used in operating activities:
|
||||||||||||
Net income (loss)
|
$ | 726 | $ | (1,420 | ) | $ | (5,987 | ) | ||||
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
||||||||||||
Depreciation
|
87 | 108 | 119 | |||||||||
Share-based compensation
|
579 | 499 | 672 | |||||||||
Increase (decrease) in severance pay, net
|
(7 | ) | (19 | ) | 10 | |||||||
Decrease (increase) in trade receivables net of allowance for doubtful accounts
|
61 | (2,716 | ) | 2,080 | ||||||||
Decrease in other current assets
|
804 | 348 | 767 | |||||||||
Decrease (increase) in inventories
|
1,379 | 2,131 | (222 | ) | ||||||||
Increase (decrease) in trade payables
|
(705 | ) | 348 | (775 | ) | |||||||
Increase (decrease) in employees and payroll accrued
|
276 | 123 | (88 | ) | ||||||||
Increase (decrease) in other accounts payable and accrued expenses
|
584 | (9 | ) | (131 | ) | |||||||
Interest and linkage on short-term loan and restricted cash
|
(4 | ) | 8 | 12 | ||||||||
Increase (decrease) in deferred revenue and advances from customers
|
(394 | ) | (1,531 | ) | 1,082 | |||||||
Net cash provided (used) in operating activities
|
3,386 | (2,130 | ) | (2,461 | ) | |||||||
Cash flows used in investing activities:
|
||||||||||||
Investment in Restricted bank deposits
|
- | (38 | ) | (1,437 | ) | |||||||
Maturity of Restricted bank deposits
|
1,477 | - | - | |||||||||
Purchase of property and equipment
|
(65 | ) | (88 | ) | (66 | ) | ||||||
Net cash provided (used) in investing activities
|
1,412 | (126 | ) | (1,503 | ) | |||||||
Cash flows from financing activities:
|
||||||||||||
Receipts (repayment) of short-term bank credit, net
|
(629 | ) | (429 | ) | 1,058 | |||||||
Receipts (repayment) of short-term loan (includes $750 from related party)
|
- | (1,550 | ) | 1,500 | ||||||||
Proceeds from issuance of shares and warrants , net of issuance expenses of $ 35 (private placement)
|
- | 3,424 | - | |||||||||
Exercise of warrants
|
21 | 256 | - | |||||||||
Exercise of options
|
1,694 | 226 | 45 | |||||||||
Net cash provided by financing activities
|
1,086 | 1,927 | 2,603 |
Year ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Foreign currency translation adjustments on cash and cash equivalents
|
(221 | ) | 40 | (66 | ) | |||||||
Increase in cash and cash equivalents
|
5,663 | (289 | ) | (1,427 | ) | |||||||
Cash and cash equivalents at beginning of year
|
1,185 | 1,474 | 2,901 | |||||||||
Cash and cash equivalents at end of year
|
$ | 6,848 | $ | 1,185 | $ | 1,474 |
NOTE 1:-
|
GENERAL
|
a.
|
RADCOM Ltd. (the "Company") is an Israeli corporation which provides innovative service assurance and customer experience management solutions for leading telecom operators and communications service providers. The Company specializes in solutions for next-generation mobile and fixed networks, including LTE, VoLTE, IMS, VoIP, UMTS/GSM and mobile broadband. RADCOM's comprehensive, carrier-grade solutions are designed for big data analytics on terabit networks, and are used to prevent service provider revenue leakage and to enhance customer care management. The Company's products interact with policy management to provide self-optimizing network solutions. RADCOM's shares are listed on the NASDAQ Capital Market under the symbol RDCM.
|
b.
|
In December 2014, one of the Company's customers in Latin America sent a termination announcement to the agreement between the parties, claiming for refund of all amounts previously paid and damages. The Company currently concludes that no potential loss with respect to claim to refund or damages fee is considered probable.
|
c.
|
The Company has an accumulated deficit of $57,096 as of December 31, 2014. The Company has managed its liquidity during this time through a series of cost reduction initiatives, including reduction in workforce and private placement transactions. In addition, in 2014 the Company became profitable and generated $3,386 from its operating activities. The Company believes that its existing capital resources and expected cash flows from operations will be adequate to satisfy its expected liquidity requirements at least through the end of March 2016. The Company’s foregoing estimate is based, among others, on its current backlog and pipeline.
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES
|
a.
|
Use of estimates:
|
b.
|
Financial statements in U.S. dollars ("dollar" or "dollars"):
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
c.
|
Principles of consolidation:
|
d.
|
Cash equivalents:
|
e.
|
Restricted cash:
|
f.
|
Concentration of credit risk:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
g.
|
Inventories:
|
h.
|
Property and equipment:
|
%
|
||
Research and development equipment
|
25 - 33
|
|
Manufacturing equipment
|
15 - 33
|
|
Office furniture and equipment
|
7 - 33
|
|
Leasehold improvements
|
At the shorter of the lease period or
useful life of the leasehold improvement
|
i.
|
Impairment of long-lived assets:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
j.
|
Revenue recognition:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
k.
|
Cost of revenues:
|
l.
|
Share-based compensation:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
2014
|
2013
|
2012
|
||||
Dividend yield
|
0%
|
0%
|
0%
|
|||
Expected volatility
|
70%-74%
|
74%
|
80-100%
|
|||
Risk-free interest
|
0.6%-0.8%
|
0.3%-0.6%
|
0.3-0.4%
|
|||
Expected life (in years)
|
2.81
|
2.81
|
1.5-5.5
|
m.
|
Provision for product warranty:
|
n.
|
Research and development costs:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
o.
|
Government grants:
|
p.
|
Income (loss) per share:
|
q.
|
Income taxes:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
r.
|
Income tax uncertainties:
|
s.
|
Severance pay:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
t.
|
Fair value of financial instruments:
|
u.
|
Concentrations of business risk:
|
v.
|
Legal contingencies:
|
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
w.
|
Comprehensive loss:
|
x.
|
Recently issued accounting standards:
|
1.
|
In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (ASU 2014-09) "Revenue from Contracts with Customers" which supersedes the revenue recognition requirements in "Revenue Recognition"(Topic 605), and requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods and services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. The Company is currently in the process of evaluating the impact of the adoption of ASU 2014-09 on its consolidated financial statements.
|
2.
|
In August 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity s Ability to Continue as a Going Concern, which defines management’s responsibility to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosures if there is substantial doubt about its ability to continue as a going concern. The pronouncement is effective for annual reporting periods ending after December 15, 2016 with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.
|
NOTE 3:-
|
INVENTORIES
|
December 31,
|
||||||||
2014
|
2013
|
|||||||
Raw materials
|
$ | 919 | $ | 1,304 | ||||
Finished products (*)
|
1,780 | 3,048 | ||||||
$ | 2,699 | $ | 4,352 |
(*)
|
Includes amounts of $ 1,208 and $ 2,109 for 2014 and 2013, respectively, with respect to inventory delivered to customers but for which revenue criteria have not been met yet.
|
NOTE 4:-
|
OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES
|
December 31,
|
||||||||
2014
|
2013
|
|||||||
Indirect taxes
|
$ | 27 | $ | 82 | ||||
Government of Israel - OCS receivable
|
357 | 389 | ||||||
Prepaid expenses and work in progress
|
738 | 2,328 | ||||||
Advances to suppliers
|
26 | 151 | ||||||
Others
|
263 | 142 | ||||||
$ | 1,411 | $ | 3,092 |
NOTE 5:-
|
PROPERTY AND EQUIPMENT, NET
|
December 31,
|
||||||||
2014
|
2013
|
|||||||
Cost:
|
||||||||
Demonstration and rental equipment
|
$ | 16 | $ | 4 | ||||
Research and development equipment
|
206 | 206 | ||||||
Manufacturing equipment
|
149 | 149 | ||||||
Office furniture and equipment
|
482 | 461 | ||||||
Leasehold improvements
|
419 | 418 | ||||||
1,272 | 1,238 | |||||||
Accumulated depreciation:
|
||||||||
Demonstration and rental equipment
|
- | - | ||||||
Research and development equipment
|
179 | 146 | ||||||
Manufacturing equipment
|
101 | 77 | ||||||
Office furniture and equipment
|
393 | 378 | ||||||
Leasehold improvements
|
399 | 384 | ||||||
1,072 | 985 | |||||||
$ | 200 | $ | 253 |
NOTE 6:-
|
OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES
|
December 31,
|
||||||||
2014
|
2013
|
|||||||
Royalties - OCS payable
|
$ | 827 | $ | 690 | ||||
Commissions
|
76 | 62 | ||||||
Provision for product warranty
|
75 | 142 | ||||||
Accrued expenses
|
761 | 901 | ||||||
$ | 1,739 | $ | 1,795 |
NOTE 7:-
|
COMMITMENTS AND CONTINGENCIES
|
a.
|
Royalty commitments:
|
1.
|
The Company receives research and development grants from the OCS. In consideration for the research and development grants received from the OCS, the Company has undertaken to pay royalties as a percentage of revenues from products developed from research and development projects financed. If the Company will not generate sales of products developed with funds provided by the OCS, the Company is not obligated to pay royalties or repay the grants.
|
2.
|
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 BIRD-F's grant (linked to the United States Consumer Price Index) 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 BIRD-F, the Company is not obligated to pay royalties or repay the grants.
|
NOTE 7:-
|
COMMITMENTS AND CONTINGENCIES (Cont.)
|
3.
|
In April 2012, the Israeli Ministry of Economy, commerce and labor approved the Company's application for participation in funding the setting up of the Company’s Indian subsidiary as part of a designated grants plan for the purpose of setting up and establishing a marketing agency in India. 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, based on the approved budget for the plan over a period of 3 years.
|
b.
|
Operating leases:
|
As of December 31, 2014:
|
||||
2015
|
$ | 601 | ||
2016
|
519 | |||
2017
|
523 | |||
Total
|
$ | 1,643 |
NOTE 7:-
|
COMMITMENTS AND CONTINGENCIES (Cont.)
|
c.
|
Bank guarantee:
|
d.
|
Pledge:
|
NOTE 8:-
|
TAXES ON INCOME
|
a.
|
Israeli taxation:
|
b.
|
Foreign subsidiaries:
|
1.
|
The U.S subsidiary is taxed under United States federal and state tax rules.
|
2.
|
The U.S subsidiary's tax loss carryforward amounted to $8,516 as of December 31, 2014 for federal and state tax purposes. Such losses are available to offset any future U.S taxable income of the U.S subsidiary and will
expire in the years 2014-2027 for federal tax purpose and in the year 2014 for state tax purpose.
|
3.
|
The U.S subsidiary has not received final tax assessments since incorporation. In accordance with the tax laws, tax returns submitted up to and including the 2010 tax year can be regarded as final.
|
1.
|
The Brazilian subsidiary is taxed under Brazilian tax rules.
|
2.
|
The Brazilian subsidiary's tax loss carryforward amounted to $742 as of December 31, 2014 for tax purposes. Tax losses may be carried forward indefinitely, but can only offset up to 30% of the company taxable income for a tax period.
|
NOTE 8:-
|
TAXES ON INCOME (Cont.)
|
c.
|
Deferred taxes:
|
December 31
|
||||||||
2014
|
2013
|
|||||||
Deferred tax assets:
|
||||||||
Carryforward tax losses
|
$ | 14,781 | $ | 16,638 | ||||
Research and development credit
|
513 | 635 | ||||||
Accrued social benefits and other
|
767 | 1,114 | ||||||
16,061 | 18,387 | |||||||
Less - valuation allowance
|
(16,061 | ) | (18,387 | ) | ||||
Net deferred tax assets
|
$ | - | $ | - |
d.
|
Taxes on income are comprised from withholding taxes that were deducted by the Company's clients.
|
e.
|
The components of income (loss) before income taxes are as follows:
|
Year ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Domestic
|
$ | 3,350 | $ | (1,618 | ) | $ | (5,684 | ) | ||||
Foreign
|
(2,444 | ) | 198 | (183 | ) | |||||||
Income (loss) before income taxes
|
$ | 906 | $ | (1,420 | ) | $ | (5,867 | ) |
NOTE 8:-
|
TAXES ON INCOME (Cont.)
|
f.
|
Reconciliation of the theoretical tax benefit and the actual tax expense:
|
Year ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Income (loss) before income taxes, as reported in the statements of operations
|
$ | 906 | $ | (1,420 | ) | $ | (5,867 | ) | ||||
Statutory tax rate in Israel
|
26.5 | % | 25 | % | 25 | % | ||||||
Theoretical tax benefit
|
$ | 240 | $ | (355 | ) | $ | (1,467 | ) | ||||
Increase (decrease) in income taxes resulting from:
|
||||||||||||
Tax rate differential on foreign subsidiaries
|
(176 | ) | 19 | (11 | ) | |||||||
Non-deductible expenses and other permanent differences
|
222 | 165 | 185 | |||||||||
Change of deferred tax as result of tax rate change
|
- | (727 | ) | - | ||||||||
Utilization of tax losses in respect of which deferred tax assets were not recorded in prior years
|
- | (469 | ) | - | ||||||||
Differences in taxes arising from foreign currency exchange, net
|
1,715 | 186 | ||||||||||
Losses and timing differences for which no deferred taxes were recorded
|
(2,326 | ) | 1,619 | 1,083 | ||||||||
withholding taxes that were deducted by the Company's clients
|
180 | 120 | ||||||||||
Other
|
325 | (438 | ) | 210 | ||||||||
Income taxes
|
$ | 180 | $ | - | $ | 120 |
g.
|
Accounting for uncertainty in income taxes:
|
NOTE 9:-
|
SHAREHOLDERS' EQUITY
|
a.
|
The number of shares issued and outstanding at December 31, 2014 and 2013 does not include 5,189 Ordinary Shares, which are held by a subsidiary, and 30,843 Ordinary Shares which are held by the Company.
|
1.
|
Ordinary Shares confer all rights to their holders, e.g. voting, equity and receipt of dividend.
|
2.
|
On April 24, 2013, the Company entered into a private placement transaction (the "2013 PIPE"). Under the 2013 PIPE investment, the Company issued 1,239,639 Ordinary Shares to existing and new investors (investors in the 2013 PIPE included certain existing shareholders) at an aggregate gross purchase price of $ 3,459 or $ 2.79 per Ordinary Share. The related issuance costs amounted to $35. The Company also issued to the investors warrants to purchase one Ordinary Share for every three Ordinary Shares purchased by each investor (up to 413,213 shares) for an exercise price of $ 3.49 per Ordinary Share and therefore were recorded and classified as part of shareholders' equity. The warrants are exercisable for three years from the closing of the 2013 PIPE. As of December 31, 2014, 79,307 warrants were exercised.
|
b.
|
Share option plans:
|
1.
|
The Company has granted options under option plans as follows:
|
a)
|
The 2003 Share Option Plan:
|
b)
|
The 2013 Share Option Plan:
|
NOTE 9:-
|
SHAREHOLDERS' EQUITY (Cont.)
|
2.
|
Grants in 2014, 2013 and 2012 were at exercise prices equal to the market value of the Ordinary Shares at the date of grant.
|
3.
|
Stock options under the Radcom plans are as follows for the periods indicated:
|
Number of options(in thousands)
|
Weighted average exercise price
|
Weighted average remaining contractual term
(in years)
|
Aggregate intrinsic value
|
|||||||||||||
Outstanding at January 1, 2014
|
1,013,492 | 4.34 | 3.64 | $ | 1,813 | |||||||||||
Granted
|
282,000 | 5.85 | ||||||||||||||
Exercised
|
(493,993 | ) | 3.44 | |||||||||||||
Expired & forfeited
|
(35,374 | ) | 6.41 | |||||||||||||
Outstanding at December 31, 2014
|
766,125 | 5.38 | 3.55 | $ | 5,221 | |||||||||||
Vested and expected to vest at December 31, 2014
|
766,125 | 5.38 | 3.55 | $ | 5,221 | |||||||||||
Exercisable at December 31, 2014
|
588,525 | 5.33 | 3.21 | $ | 4,050 |
NOTE 9:-
|
SHAREHOLDERS' EQUITY (Cont.)
|
4.
|
As of December 31, 2014, stock options under the Radcom 2003 Share Option Plan and 2013 Share Option Plan are as follows for the periods indicated:
|
Options outstanding
at December 31, 2014
|
Options exercisable
at December 31, 2014
|
|||||||||||||||||||||||||
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
|
||||||||||||||||||||||
0.7 - 1.95 | 58,150 | 1.83 | 1.98 | 58,150 | 1.83 | 1.98 | ||||||||||||||||||||
2.56 - 4.86 | 345,700 | 3.50 | 3.82 | 305,700 | 3.55 | 3.69 | ||||||||||||||||||||
5.0 - 8.60 | 257,125 | 6.07 | 4.12 | 119,875 | 5.90 | 3.57 | ||||||||||||||||||||
10.80 - 13.16 | 105,150 | 11.81 | 2.10 | 104,800 | 11.80 | 2.10 | ||||||||||||||||||||
766,125 | 588,525 |
5.
|
The weighted average fair values of options granted during the years ended December 31, 2014, 2013 and 2012 were $2.7, $1.7 and $2.5, respectively.
|
6.
|
The following table summarizes the departmental allocation of the Company's share-based compensation charge:
|
Year ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Cost of sales
|
$ | 12 | $ | 7 | $ | 14 | ||||||
Research and development
|
178 | 117 | 205 | |||||||||
Selling and marketing
|
146 | 82 | 167 | |||||||||
General and administrative
|
243 | 293 | 286 | |||||||||
$ | 579 | $ | 499 | $ | 672 |
7.
|
Share-based compensation:
|
c.
|
Warrants:
|
Issuance date
|
Outstanding and exercisable
|
Exercise price
|
Exercisable through
|
|||
April 24, 2013
|
333,906
|
3.49
|
April 23, 2016
|
NOTE 10:-
|
SELECTED STATEMENTS OF OPERATIONS DATA
|
a.
|
The Company applies ASC topic 280, "Segment Reporting", ("ASC 820"). The Company operates in one reportable segment (see also Note 1 for a brief description of the Company's business). The total revenues are attributed to geographic areas based on the location of the end customer.
|
b.
|
The following table present total revenues for the years ended December 31, 2014, 2013 and 2012 and long-lived assets as of December 31, 2014, 2013 and 2012:
|
1.
|
Revenues from sales to unaffiliated customers:
|
Year ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
North America
|
$ | 1,922 | $ | 1,687 | $ | 3,850 | ||||||
Europe
|
3,189 | 4,044 | 2,970 | |||||||||
Asia (Excluding Philippines)
|
847 | 435 | 1,534 | |||||||||
Philippines
|
3,544 | 3,173 | 1,292 | |||||||||
South America (Excluding Brazil)
|
4,235 | 4,579 | 2,848 | |||||||||
Brazil
|
6,448 | 5,469 | 1,896 | |||||||||
Other (Including Israel)
|
3,451 | 1,095 | 1,396 | |||||||||
$ | 23,636 | $ | 20,482 | $ | 15,786 |
2.
|
Property and equipment, net, by geographic areas:
|
Year ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Israel
|
$ | 151 | $ | 213 | $ | 222 | ||||||
Other
|
49 | 40 | 46 | |||||||||
$ | 200 | $ | 253 | $ | 268 |
3.
|
Major customer data as a percentage of total revenues:
|
NOTE 10:-
|
SELECTED STATEMENTS OF OPERATIONS DATA (Cont.)
|
c.
|
Financial expenses, net:
|
Years ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Financial Income:
|
||||||||||||
Interest income
|
$ | 170 | $ | 49 | $ | 15 | ||||||
Foreign currency exchange gain
|
193 | 36 | 77 | |||||||||
363 | 85 | 92 | ||||||||||
Financial expenses:
|
||||||||||||
Interest and bank charges
|
(40 | ) | (117 | ) | (108 | ) | ||||||
Foreign currency exchange gain
|
(655 | ) | (259 | ) | (298 | ) | ||||||
(695 | ) | (376 | ) | (406 | ) | |||||||
$ | (332 | ) | $ | (291 | ) | $ | (314 | ) |
d.
|
Net income (loss) per share:
|
Years ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Numerator:
|
||||||||||||
Numerator for basic net income (loss) per share
|
$ | 726 | $ | (1,420 | ) | $ | (5,987 | ) | ||||
Effect of dilutive securities:
|
||||||||||||
Option and warrants issued to grantees and investors, respectively
|
- | - | - | |||||||||
Numerator for dilutive net income (loss) per share
|
$ | 726 | $ | (1,420 | ) | $ | (5,987 | ) | ||||
Denominator:
|
||||||||||||
Denominator for dilutive net income (loss) per share - weighted average number of ordinary share
|
8,088,974 | 7,340,056 | 6,442,068 | |||||||||
Effect of dilutive securities:
|
||||||||||||
Option and warrants issued to grantees and investors, respectively
|
503,413 | - | - | |||||||||
Denominator for diluted net income (loss) per share - adjusted weighted average number of ordinary share
|
8,592,387 | 7,340,056 | 6,442,068 |
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 which as of December 31, 2014 have joint ownership of approximately 38% in the Company's equity are also principal shareholders of affiliates known as the RAD-BYNET Group. The Company's transactions with related parties are carried out on an arm's-length basis.
|
1.
|
Certain premises occupied by the Company and the US subsidiary are rented from related parties (see also Note 7b). The US subsidiary also sub-leases certain premises to a related party. The aggregate net amounts of lease payments were $417, $ 410 and $ 438 in 2014, 2013 and 2012, respectively.
|
2.
|
Certain entities within the RAD-BYNET Group provide the Company with administrative services. Such amounts expensed by the Company are disclosed in "d" below as "Cost of sales, Sales and marketing, General and administrative expenses and research and development".
|
3.
|
The Company purchases from certain entities within the RAD-BYNET Group software packages included in the Company's products and is thus incorporated
into certain of its product lines. Such purchases by the Company are disclosed in "d" as "Cost of sales and Research and development".
|
4.
|
The Company was a party to a distribution agreement with Bynet Electronics Ltd. ("BYNET"), a related party, giving BYNET the exclusive right to distribute the Company's products in Israel. The agreement was terminated during 2013.
|
b.
|
In December 2012, the Company entered into a consulting agreement ("Agreement") with a consultant which is also the domestic partner of one of its controlling shareholders and Chairman of the Company's Board of Directors. Based on the key terms of the Agreement, the consultant provided advisory services to the management with respect to business operations for a monthly amount which equaled the average monthly salary of employees in Israel, plus Israeli Value Added Tax. The Agreement was expired in January 2013 but was extended through to January 2015. Expenses incurred under this Agreement are immaterial. During the years ended December 31, 2014, 2013 and 2012 the Company recorded expenses incurred under this Agreement in amount of $ 39, $ 43 and $ 37, respectively.
|
NOTE 11:-
|
RELATED PARTY BALANCES AND TRANSACTIONS (Cont.)
|
c.
|
In November 2012, the Company secured a loan of $ 750 (equivalent to 2,900 NIS at that time) from one of its principal shareholder and Chairman of the Company's Board of Directors to finance its operations. The term of the loan was initially until March 31, 2013 which was extended until June 30, 2013. The loan was exposed to changes in the USD/NIS exchange rates. The loan was fully repaid by the Company during June 2013. The loan was interest-free, but the amount of principal required to be repaid was linked to the Israeli CPI. The average Israeli CPI increased during the years ended December 31,
2012 and 2013, by 1.6% and 1.8% respectively which caused finance expenses amounted to $ 23 and $ 27 for the aforementioned years, respectively.
|
d.
|
Following to Note 9a2, in April and June 2013, the Company completed 2013 PIPE in which $ 3,459 have been raised from certain existing and new investors, including $ 1,100 and $ 50 were invested by one of its principal shareholder and Chairman of the Company's Board of Directors and the Company's President and Chief Executive Officer, respectively.
|
e.
|
Balances with related parties:
|
December 31,
|
||||||||
2014
|
2013
|
|||||||
Assets:
|
||||||||
Trade receivables
|
$ | 2 | $ | 11 | ||||
Other accounts receivable and prepaid expenses
|
$ | - | $ | - | ||||
Liabilities:
|
||||||||
Trade Payables
|
$ | 155 | $ | 159 | ||||
Other accounts payables and accrued expenses
|
$ | 11 | $ | 46 |
f.
|
Transactions with related parties:
|
Year ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Revenues
|
$ | 19 | $ | 403 | $ | 451 | ||||||
Expenses:
|
||||||||||||
Cost of sales
|
$ | 56 | $ | 54 | $ | 66 | ||||||
Operating expenses:
|
||||||||||||
Research and development
|
$ | 249 | $ | 208 | $ | 198 | ||||||
Sales and marketing
|
$ | 125 | $ | 126 | $ | 181 | ||||||
General and administrative
|
$ | 60 | $ | 53 | $ | 57 | ||||||
Financial expenses (income)
|
$ | - | $ | 27 | $ | 23 |
NOTE 12:-
|
SUBSEQUENT EVENTS
|
a.
|
On February 2, 2015, our Board of Directors resolved to increase the number of outstanding shares reserved under the 2013 Share Option Plan, from 500,000 to 750,000.
|
b.
|
On February 19, 2015, the Company's Board of Directors amended the Company's 2013 Stock Option Plan. The 2013 Plan expires on April 2, 2023. Under the amended 2013 Plan, the Company may in addition to granting options to purchase its ordinary shares, also grant restricted shares and Restricted Share Units ("RSUs") to its employees, directors, consultants and contractors.
|
EXHIBIT INDEX
|
Exhibit No.
|
Description
|
|
1.2
|
Amended and Restated Articles of Association, as amended.
|
|
8.1
|
List of Subsidiaries.
|
|
12.1
|
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
12.2
|
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
13.1
|
Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
13.2
|
Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
15.1
|
Consent of Kost Forer Gabbay & Kasierer, a member of Ernst and Young Global, dated March 26, 2014.
|
|
101
|
The following financial information from RADCOM Ltd.'s Annual Report on Form 20-F for the year ended December 31, 2014 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Operations for the years ended December 31, 2014, 2013 and 2012; (ii) Consolidated Balance Sheets at December 31, 2014, 2013 and 2012; (iii) Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2014, 2013 and 2012; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012; and (v) Notes to Consolidated Financial Statements. Users of this data are advised, in accordance with Rule 406T of Regulation S-T promulgated by the SEC, that this Interactive Data File is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Exchange Act, and otherwise is not subject to liability under these sections
(1)
.
|
1.
|
Object and Purpose of the Company
|
(a)
|
The object and purpose of the Company shall be as set forth in the Company’s Memorandum of Association, as the same shall be amended from time to time in accordance with applicable law.
|
2.
|
Limitation of Liability
|
3.
|
Interpretation
|
4.
|
Share Capital
|
5.
|
Increase of Share Capital
|
6.
|
Special Rights; Modifications of Rights
|
7.
|
Consolidation, Subdivision, Cancellation and Reduction of Share Capital
|
8.
|
Issuance of Shares; Replacement of Lost Certificates
|
9.
|
Registered Holder
|
15.
|
Lien
|
|
"I _____________________ of __________________________________
|
|
being a member of ___________________________ hereby appoint
|
|
________________________of _____________________________
|
|
as my proxy to vote for me and on my behalf at the General Meeting of the Company to be held on the _____ day of ___________, 20__ and at any adjournment(s) thereof.
|
|
Signed this ______ day of ____________, 20__.
|
_________________________
(Signature of Appointer)"
|
Name
|
Jurisdiction of
Incorporation
|
|
RADCOM Equipment, Inc.
|
New Jersey
|
|
RADCOM Investments (96) Ltd.
|
Israel
|
|
RADCOM do Brasil Comercio, Importacao E Exportacao Ltda.
|
Brazil
|
|
RADCOM Trading India Private Limited. | India |
/s/ David Ripstein
|
|
David Ripstein
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
/s/ Uri Birenberg
|
|
Uri Birenberg
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|
/s/ David Ripstein
|
|
David Ripstein
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
Tel-Aviv, Israel
March 26, 2015
|
KOST FORER GABBAY and KASIERER
A Member of Ernst & Young Global |