EX-99.1 2 v018569_ex99-1.htm
PRESS RELEASE
Exhibit 99.1
 

SUPERCOM REPORTS FINANCIAL RESULTS
FOR THE FIRST QUARTER OF 2005

-- 100% YOY Revenue Growth With 52% Gross Margins -

New York, NY, and Ra’anana, Israel, May 17, 2005 - SuperCom Ltd. (OTCBB: SPCBF.OB; Euronext: SUP), a leading provider of smart card and electronic identification (e-ID) solutions, today announced unaudited financial results for the first quarter ended March 31, 2005.

Financial Results 
Revenues for the first quarter of 2005 increased by 100% to $2,628,000 compared to $1,311,000 in the first quarter of 2004. Net loss for the first quarter of 2005 was ($590,000), or ($0.03) per share (($0.03) per diluted share), a 24% improvement compared to ($780,000), or ($0.06) per share, for the first quarter of 2004.

Recent Highlights
 
·  
A $2.5 million, three-year renewal agreement was signed with a customer in Hong Kong.
·  
The Company received the first order for its cutting-edge Homeland Security product, the SmartDSMS (Smart Disaster Site Management System), from the city government of Columbus, Ohio. The SmartDSMS “First Responder” is the industry’s first disaster recovery system to meet the requirements of Homeland Security. Presidential Directives (HSPD) 5 and 8 for management of domestic incidents and national preparedness.
·  
Sales of the Company’s commercial solutions (access control, payment solutions, etc.) continued to grow.
·  
Successful installations of cashless environment products were conducted with end users and pilot tests with OEM vendors.

Comments of Management
 
Commenting on the results, Mr. Avi Schechter, CEO of SuperCom, said, “In line with our guidance, we are proud to have delivered another quarter of strong year-over-year growth in revenues, together with a significant reduction in our net loss. Our business momentum continues, as demonstrated by our success in closing important long-term orders and our other achievements during the last two quarters.

“The $2.5 million renewal agreement we signed in the quarter with a customer in Hong Kong, and the recent order of our exciting ‘First Responder’ Homeland Security system are recent examples of positive Company developments. As the focus on Homeland Security increases, we hope to see increased demand for our state-of-the-art solutions, some of which are currently under evaluation by a number of customers throughout the U.S. In addition, we see the emerging ‘cashless environment’ as a new trend with the power to drive our long-term sales.”

Mr. Schechter concluded, “Overall, we are optimistic regarding our growth prospects.”


1

PRESS RELEASE
Guidance:
 
With expected recurring revenues of $7-8 million associated with existing contracts, the Company expects total 2005 revenues at least as high as those recorded in 2004, with similar operating margins.
 
About SuperCom:
 
SuperCom, Ltd. provides innovative solutions in smart-card and e-ID technologies to the commercial and government sectors.  The Company offers a wide range of standard and customized smart-card-based solutions for physical and logical security, education, corrections facilities and air & seaports.  It is also a leader in the manufacturing of secure and durable documents such as national identity cards, passports, visas, drivers’ licenses and vehicle registration to improve homeland security, governmental efficiency and document ease of use. Headquartered in Israel, SuperCom has subsidiaries in the US and Hong Kong.  For more information, visit our website at www.supercomgroup.com.

Safe Harbor:
Statements in this release that are "forward-looking statements" are based on the Company's current expectations and assumptions. Forward-looking statements in this release include statements about business and economic trends, and estimated revenues and operating margins. These statements are not guarantees of future performance and are subject to risks and uncertainties. Actual results could differ materially because of risks and uncertainties such as: market acceptance of new products and ability to execute production on orders, changes in government and customer priorities and requirements, the award or termination of contracts, the competitive environment for government and information technology products and services; and economic, business and political conditions in Israel and internationally. 

These are only some of the factors that may affect the forward-looking statements contained in this press release. For further information regarding risks and uncertainties associated with the Company's business, pleases refer to the Company's SEC filings.

All information in this release is as of May 17, 2005. The Company undertakes no duty to update any forward-looking statement to reflect subsequent events, actual results or changes in the Company's expectations. The Company also disclaims any duty to comment upon or correct information that may be contained in reports published by the investment community.

This press release and other releases are available on www.supercomgroup.com.

Contact:
Eyal Tuchman, CFO  
SuperCom, Ltd.  
+972 9 775 0800
eyalt@supercomgroup.com



2
PRESS RELEASE



CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
 
   
December 31,
  
March 31,
  
   
2004
  
2005
  
   
Unaudited
  
Unaudited
  
ASSETS
          
           
CURRENT ASSETS:
          
Cash and cash equivalents
  
$
2,894
  
$
2,436
  
Short-term deposit
    
1,482
    
1,351
  
Trade receivables
   
1,463
    
1,404
  
Other accounts receivable and prepaid expenses
    
1,250
    
1,210
  
Inventories
    
2,165
    
2,325
  
               
Total current assets
    
9,254
    
8,726
  
               
LONG-TERM INVESTMENTS:
              
Long term trade receivables
    
247
    
216
  
Investment in an affiliate
    
275
    
275
  
Severance pay fund
   
428
    
459
  
               
Total long-term investments
    
950
    
950
  
               
PROPERTY AND EQUIPMENT, NET
   
3,641
    
3,730
  
               
OTHER ASSETS
    
93
    
86
  
               
   
$
13,938
  
$
13,492
  




3
PRESS RELEASE



CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
 

   
December 31,
  
March 31,
  
   
2004
  
2005
  
   
Unaudited
  
Unaudited
  
           
LIABILITIES AND SHAREHOLDERS' EQUITY
          
           
CURRENT LIABILITIES:
          
Short-term bank credit and current maturities of long-term loan
  
$
1,022
  
$
1,062
  
Trade payables
    
1,135
    
1,141
  
Employees and payroll accruals
    
357
    
519
  
Accrued expenses and other liabilities
   
1,745
    
884
  
               
Total current liabilities
    
4,259
    
3,606
  
               
LONG-TERM LIABILITIES:
              
Long-term loan, net of current maturities
   
—
    
319
  
Accrued severance pay
    
564
    
593
  
               
Total long-term liabilities
    
564
    
912
  
               
               
Shareholders' equity
    
9,115
    
8,974
  
               
   
$
13,938
  
$
13,492
  



4
PRESS RELEASE




CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share data)

 
   
Three months ended
  
   
March 31,
  
   
2004
  
2005
  
   
Unaudited
  
           
Revenues
  
$
1,311
  
$
2,628
  
Cost of revenues
    
826
    
1,251
  
               
Gross profit
   
485
    
1,377
  
               
Operating expenses:
              
Research and development
    
194
    
348
  
Selling and marketing
    
557
    
960
  
General and administrative
    
503
    
642
  
               
Total operating expenses
    
1,254
    
1,950
  
               
Operating loss
    
(769
)
  
(573
)
Financial expenses, net
    
(7
)
  
(17
)
Other expenses, net
    
(4
)
  
-
  
               
Net loss
  
$
(780
)
$
(590
)
               
               
Basic and diluted net loss per share
  
$
(0.06
)
$
(0.03
)
               
Weighted average number of Ordinary shares used in computing basic and diluted net loss per share
    
12,931,268
    
18,172,228
  





5
PRESS RELEASE





CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
 
   
Three months ended
March 31,
  
   
2004
  
2005
  
   
Unaudited
  
Cash flows from operating activities:
          
Net loss
  
$
(780
)
$
(590
)
Adjustments to reconcile net loss to net cash used in operating activities:
              
Depreciation and amortization
    
86
    
87
  
Accrued severance pay, net
   
9
    
(2
)
Amortization of deferred stock compensation
    
4
    
33
  
Decrease in trade receivables
    
195
    
90
  
Decrease in other accounts receivable and prepaid expenses
    
115
    
40
  
Decrease (increase) in inventories
    
280
    
(160
)
Increase (decrease) in trade payables
    
(239
)
  
6
  
Increase in employees and payroll accruals
    
71
    
162
  
Decrease in accrued expenses and other liabilities
    
(369
)
  
(738
)
Accumulated interest of long-term loan
    
(2
)
  
—
  
               
Net cash used in operating activities
    
(630
)
  
(1,072
)
Cash flows from investing activities:
              
Purchase of property and equipment
    
(157
)
  
(169
)
Proceeds in short-term deposit
    
301
    
131
  
Proceeds from sale of marketable debt securities
    
108
    
—
  
               
Net cash provided by (used in) investing activities
    
252
    
(38
)
               
Cash flows from financing activities:
              
Short-term bank credit, net
    
(343
)
  
8
  
Principal payment of long-term loan
    
(118
)
  
(149
)
Proceed from Long-term loan
   
—
    
500
  
Proceed from exercise of warrant and options, net
    
—
    
293
  
Issuance expenses
    
(1
)
  
—
  
               
Net cash provided by (used in) financing activities
    
(462
)
  
652
  
               
Decrease in cash and cash equivalents
    
(840
)
  
(458
)
Cash and cash equivalents at the beginning of the period
    
1,912
    
2,894
  
               
Cash and cash equivalents at the end of the period
  
$
1,072
  
$
2,436
  
               
Supplemental disclosure of cash flows information:
              
Cash paid during the period for:
              
Interest
  
$
29
  
$
23
  
               
Supplemental disclosure of non-cash investing activities:
              
Transfer of inventory to property and equipment
  
$
70
  
$
—
  
               
Conversion of loan into shares
  
$
25
  
$
—
  
 
6