6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

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

THE SECURITIES EXCHANGE ACT OF 1934

For the month of December, 2017

SUPERCOM LTD.

(Translation of Registrant’s name into English)

1, Shenkar Street,

Hertzliya Pituach,

Israel

(Address of principal executive office)

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

Form 20-F  x    Form 40-F  ¨

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

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

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

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

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

Signatures

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

SuperCom Ltd.

By: /s/ Arie Trabelsi

Name: Arie Trabelsi

Title: Chief Executive Officer

Date: December 29, 2017

EX-99.1

Exhibit 99.1

 

SUPERCOM LTD

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
as of June 30, 2017

(Unaudited)

1

SUPERCOM LTD

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
as of June 30, 2017

(Unaudited)

IN U.S. DOLLARS

INDEX

	Page
Interim Consolidated Balance Sheets	3
Interim Consolidated Statements of Operations	4
Interim Statements of Changes in Shareholders' equity	5
Interim Consolidated Statements of Cash Flows	6 – 7
Notes to Interim Consolidated Financial Statements	8 – 10

- - - - - - - - - - - - - - - - - - - - -

2

SUPERCOM LTD

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

	June 30,			December 31,
	2017			2016
	Unaudited			Audited
CURRENT ASSETS
Cash and cash equivalents		925			1,708
Restricted bank deposits		304			1,110
Trade receivable, net		10,737			10,310
Deferred tax short term		1,573			1,567
Other accounts receivable and prepaid expenses		5,116			2,500
Inventories, net		6,190			5,965
Total current assets		24,845			23,160
LONG-TERM ASSETS
Severance pay funds		346			282
Deferred tax long term		3,141			2,656
Property and equipment, net		924			1,165
Customer Contracts		4,069			4,684
Software and other IP		5,580			5,987
Patents		5,283			5,283
Other Intangible assets, net		3,350			3,230
Goodwill		7,026			7,026
Total assets		54,564			53,473
CURRENT LIABILITIES
Trade payables		5,860			3,958
Employees and payroll accruals		3,602			2,948
Related parties		121			56
Accrued expenses and other liabilities		3,148			3,497
Deferred revenue short term		1,514			1,633
Deferred tax liability short term		93			156
Short-term liability for future earn-out		903			679
Total current liabilities		15,241			12,927
LONG-TERM LIABILITIES
Long-term loans		471			-
Long-term liability for future earn-out		946			946
Deferred revenue long term		514			423
Deferred tax liability long term		440			-
Accrued severance pay		554			453
Total long-term liabilities		2,925			1,822
SHAREHOLDERS' EQUITY:
Ordinary shares		1,024			1,024
Additional paid-in capital		81,846			81,515
Accumulated deficit		(46,472	)		(43,815	)
Total shareholders' equity		36,398			38,724
Total Liabilities and Shareholders' Equity		54,564			53,473

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

3

SUPERCOM LTD

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

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

	Six months ended June 30
	2017			2016
REVENUES		15,829			10,883
COST OF REVENUES		9,356			8,689
GROSS PROFIT		6,473			2,194
OPERATING EXPENSES
Research and development, net		3,641			2,694
Sales and marketing		4,271			4,511
General and administration		3,191			3,437
Other income		(2,317	)		(677	)
Gain on barging purchase		-			(4,958	)
Total operating expenses		8,786			5,007
OPERATING LOSS		(2,313	)		(2,813	)
FINANCIAL EXPENSES, NET		402			110
LOSS BEFORE INCOME TAX		(2,715	)		(2,923	)
INCOME TAX BENEFIT		58			1,492
NET LOSS FOR THE PERIOD		(2,657	)		(1,431	)
NET LOSS PER SHARE
Basic		(0.18	)		(0.09	)
Diluted		(0.18	)		(0.09	)
Weighted average number of ordinary shares used in computing basic net loss per share		14,938,339			15,075,177
Weighted average number of ordinary shares used in computing diluted net loss per share		15,015,582			15,163,123

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

4

SUPERCOM LTD

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

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

	Ordinary shares
	Number of Shares			Share capital			Additional paid-in capital			Accumulated deficit			Total shareholders' equity
Balance as of December 31, 2015		15,493,615			1,053			83,201			(29,822	)		54,432
Changes during the six months ended June 30, 2016 (unaudited):
Exercise of options		2,500			-			17			-			17
Stock- based compensation		-			-			599			-			599
Treasury shares acquired		(475,610	)		(29	)		(2,350	)					(2,379	)
Net loss		-			-			-			(1,431	)		(1,431	)
Balance as of June 30, 2016		15,020,505			1,024			81,467			(31,253	)		51,238
Balance as of December 31, 2016		14,938,339			1,024			81,515			(43,815	)		38,724
Changes during the six months ended June 30, 2017 (unaudited):
Exercise of options		-			-			-			-			-
Stock- based compensation		-			-			331			-			331
Net loss		-			-			-			(2,657	)		(2,657	)
Balance as of June 30, 2017		14,938,339			1,024			81,846			(46,472	)		36,398

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

5

SUPERCOM LTD

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW

(U.S. dollars in thousands)

	Six months ended June 30
	2017			2016
Cash flows from operating activities:
Net loss		(2,657	)		(1,431	)
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		1,847			1,287
Stock-based compensation		331			599
Decrease (Increase) in deferred tax		(114	)		(1,666	)
Capital loss from disposal of property and equipment		-			(2	)
Gain on barging purchase		-			(4,958	)
Increase in trade receivables, net		(427	)		(549	)
Increase in other accounts receivable and prepaid expenses		(2,616	)		(413	)
Decrease (Increase) in inventories, net		(225	)		589
Increase (decrease) in trade payables		1,902			(1,372	)
Increase in employees and payroll accruals		654			637
Increase in accrued severance pay		101			103
Increase in accrued expenses and other liabilities, related parties and liability for earn-out		407			1,123
Net cash used in operating activities		(797	)		(6,053	)
Cash flows from investing activities:
Purchase of property and equipment		(39	)		(165	)
Acquisitions of subsidiaries, net of cash acquired		-			(2,896	)
Acquisition of group of assets (non-business)		-			(1,174	)
Increase in severance pay fund		(64	)		(29	)
Restricted bank deposits, net		806			1,649
Capitalization of software development costs		(665	)		(1,224	)
Net cash  provided (used in) by investing activities		38			(3,839	)
Cash flows from financing activities:
Treasury shares acquired		-			(2,379	)
Liability for future earn-out		(24	)		(2,050	)
Proceeds from exercise of options and warrants, net		-			17
Net cash used in financing activities		(24	)		(4,412	)
Decrease in cash and cash equivalents		(783	)		(14,304	)
Cash and cash equivalents at the beginning of the year		1,708			22,246
Cash and cash equivalents at the end of the period		925			7,942

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

6

SUPERCOM LTD

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW

(U.S. dollars in thousands)

	Six months ended June 30
	2017		2016
Supplemental disclosure of cash flows information:
Appendix A:
Acquisitions of subsidiaries consolidated for the first time (*)
Assets and liabilities of the acquired business, as of date of acquisition:
Working capital (excluding cash and cash equivalents)		-		2,264
Property and equipment, net		-		364
Deferred taxes, net		-		219
Intangible Assets including goodwill		-		6,198
Contingent consideration		-		(491	)
Payable on account of an acquisition		-		(700	)
		-		7,854
Gain on bargain purchase (**)		-		(4,958	)
Acquisitions of subsidiaries, net of cash acquired		-		(2,896	)

(*) All purchase price allocations of the acquisitions are provisional.

(**) Gain on bargain purchase is attributed to two of the acquisitions.

	Six months
	Ended June 30,
	2017		2016
Supplementary cash flows activities:
Cash paid during the period for:
Interest		4		-

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

7

SUPERCOM LTD

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: GENERAL

a. SuperCom Ltd. (the “Company") is an Israeli resident company organized in 1988 in Israel. On January 24, 2013 the Company changed its name back to SuperCom Ltd, its original name, from Vuance Ltd. On September 12, 2013, the Company’s ordinary shares were approved for listing on the NASDAQ Capital Market and began trading under the ticker symbol “SPCB” on September 17, 2013. Previously, the Company’s ordinary shares traded on the OTCQB® electronic quotation service.

The Company is a global provider of traditional and digital identity solutions, providing advanced safety, identification, tracking and security products to governments and organizations, both private and public, throughout the world. The Company provides cutting edge real-time positioning, tracking, monitoring and verification solutions enabled by its RFID &Mobile pure security advanced solutions suite of products and technologies, all connected to a web-based, secure, proprietary, interactive and user-friendly interface. The Company offers a wide range of solutions including, national ID registries, e-passports, biometric visas, automated fingerprint identification systems, digitized driver’s licenses, and electronic voter registration and election management using the common platform ("MAGNA"). The Company sells its products through marketing offices in the U.S, Tanzania, Ecuador, and Israel.

b. On December 26, 2013 the Company acquired the SmartID Division of On Track Innovations Ltd. (NASDAQ: OTIV) (“OTI”), consisting of customer contracts, software, other related technologies and IP assets. The Company paid OTI $8.8 million ($10 million less certain price adjustments) at the closing and agreed to make contingent payments of up to $12.5 million pursuant to an earn-out mechanism based on certain performance and other milestones. The SmartID Division has a strong international presence, with a broad range of competitive and well-known e-ID solutions and technology. The acquisition significantly expanded the breadth of the Company’s e-ID capabilities globally, while providing it with market and technological experts, together with its ID software platforms and technologies.

c. On November 17, 2015, the Company acquired Prevision Ltd., an Israeli based company. The Company paid $1.1 million at the closing and agreed to make contingent annual payments of approximately $250,000 pursuant to an earn-out mechanism for the next four years. The contingent consideration is subject to service provided by the seller to the Company during the earn-out period and therefore is not part of the business combination. Prevision has a strong presence in the market and offers a broad range of competitive and well-known Cyber Security services.

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d. On January 1, 2016, the Company acquired Leaders in Community Alternatives, Inc., or LCA, a U.S. based company, including all contracts, software, other related technologies and IP assets. The Company paid $3 million at the closing and committed to certain contingent earn-out payments over the next three years that are structured as a single digit percentage of annual revenues in excess of standalone LCA management revenue projections. LCA is a California based, private criminal justice organization, providing community-based services and electronic monitoring programs to government agencies in the U.S. for more than 24 years. LCA offers a broad range of competitive solutions for governmental institutions across the U.S. in addressing realignment strategies and plans.

e. On March 13, 2016, the Company acquired Safend Ltd, an Israeli based company. In consideration for this acquisition, the Company agreed to provide up to $1.5 million in working capital to Safend to support its activity and growth through a structured debt and equity vehicle. Safend is an international provider of cutting edge endpoint data protection guarding against corporate data loss and theft through content discovery and inspection, encryption methodologies, and comprehensive device and port control. Safend maps sensitive information and controls data flow through email, web, external devices and additional channels.

Founded in 2003 and headquartered in Tel Aviv, Israel, Safend has over 3,000 customers in the United States, Europe, and Asia, and more than three million software license seats deployed by multinational enterprises, government agencies and small to mid-size companies around the globe.

f. On April 18, 2016, the Company acquired the assets of PowaPOS, a division of POWA Technologies Ltd., the developer of a fully-integrated mobile and tablet-based system integrating industry-leading retail and secure payment solutions into one simplified, attractive and innovative POS platform,

g. On May 18, 2016, the Company acquired Alvarion Technologies Ltd. (“Alvarion”). In consideration for this acquisition, the Company will pay up to $1 million in cash and an additional earn-out of up to $1 million during the next two years following the acquisition, mainly based on sales from the Alvarion division. Alvarion designs solutions for Carrier Wi-Fi, Enterprise Connectivity, Smart City, Smart Hospitality, Connected Campuses and Connected Events that are both complete and heterogeneous to ensure ease-of-use and optimize operational efficiency. Carriers, Local Governments and Hospitality sectors worldwide deploy Alvarion’s intelligent Wi-Fi networks to enhance productivity and performance. In the past few years, Alvarion went through a transition from being a market leader of Wi- Max and backhaul services to being one of the most influential players in the Wi-Fi based solution.

h. Concentration of risk that may have a significant impact on the Company:

9

In the first half of year 2017, the Company derived 36% of its total revenue from 3 major customers.

In the first half of year 2016, the Company derived 39% of its total revenue from 3 major customers.

The Company purchases certain services and products used by it to generate revenues in its projects and sales from several sole suppliers. Although there are only a limited number of manufacturers of those particular services and products, management believe that other suppliers could provide similar services and products on comparable terms without affecting operating results.

NOTE 2: UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Financial Statement preparation

These unaudited interim consolidated financial statements of the Company and its subsidiaries (collectively referred to in its report as "Company"), as of June 30, 2017 and for the six months then ended have been prepared, in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). They do not include all information and notes required by U.S. GAAP in the preparation of annual consolidated financial statements.

The accounting policies used in the preparation of the unaudited interim consolidated financial statements is the same as those described in the Company's audited consolidated financial statements prepared in accordance with U.S. GAAP for the year ended December 31, 2016.

The Company makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated interim Financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.

The Company believes all adjustments necessary for a fair statement of the results for the period presented have been made and all such adjustments were of a normal recurring nature unless otherwise disclosed. The financial results for the period are not necessarily indicative of financial results for the full year.

These financial statements should be read in conjunction with the Company's consolidated financial statements for the year ended December 31, 2016 and the accompanying notes. There have been no changes in the significant accounting policies from those that were disclosed in the audited consolidated financial statements for the fiscal year ended December 31, 2016 included in the 2016 Form 20-F.

NOTE 3: INVENTORIES, NET

	June 30,		December 31,
	2017		2016
	$		$
Raw materials, parts and supplies		2,581		1,758
Finished products		3,609		4,207
		6,190		5,965

As of June 30, 2017 and December 31, 2016, inventory is presented net of write offs for slow inventory in the amount of approximately $218 and $218, respectively.

NOTE 4: COMMITMENTS AND CONTINGENT LIABILITIES – LITIGIATION

As part of the acquisition of the SmartID division of OTI, the Company assumed a dispute with Merwell Inc. (“Merwell”). Merwell has alleged that it has not received the full payment it is entitled to for its services in respect of a drivers’ license project. OTI alleged that Merwell breached its commitments under the service agreement and also acted in concert with third parties to damage OTI’s business activities. This matter is now subject to an arbitration proceeding. An appropriate provision is included in the financial statements.

In August 2016, three claims previously filed against the Company and a number of defendants affiliated with the Company were consolidated into a class action lawsuit. The claims assert causes of action based on alleged false and misleading projections made by the Company in 2015. The complaint seeks unspecified compensatory damages. The Company believes that the claim has no merits and that the probability of the legal proceeding resulting in an unfavorable outcome to the Company is remote.

10

EX-99.2

Exhibit 99.2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OPERATIONS

The following discussion and analysis should be read together with our unaudited consolidated financial statements and the related notes as June 30, 2017, which appear elsewhere in this report.

Cautionary Note Regarding Forward-Looking Statements

The discussion and analysis in this section contain “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, with respect to our business, financial condition and results of operations. Such forward-looking statements reflect our current views with respect to future events and financial results. Words such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” and similar expressions, as well as statements in future tense, identify forward-looking statements. These include statements regarding our earnings, projected growth and forecasts, and similar matters which are not historical facts. We remind readers that forward-looking statements are merely predictions and therefore are inherently subject to uncertainties and other factors which could cause the actual future events or results to differ materially from those described in the forward-looking statements. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: (i) inability to realize benefits from acquisitions, (ii) our inability to manage our growth profitably, (iii) intense competition in our industry, (iv) acquisition of businesses disrupting our business and harming our financial condition and operations, (v) the need to obtain additional financing , (vi) our ability to respond promptly and effectively to market changes, (vii) our ability to obtain and maintain contracts with governments, (viii) our dependence on third-party representatives to generate revenues and supply components, (ix) unfavorable global economic conditions, (x) developments affecting international operations and foreign markets, (xi) breaches of network or information technology security, (xii) intellectual property litigation, and (xiii) such other factors discussed throughout Item 3. D. Risk Factors of our Annual Report on Form 20-F for the year ended December 31, 2016. . Any forward-looking statement made by us in this section is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

1

Overview

we are a global provider of traditional and digital identity solutions, advanced IoT/M2M solutions, cyber security devices and solutions, secure payment solutions and connectivity products and solutions to governments and private and public organizations throughout the world.

We are comprised of five main divisions: e-Gov, IoT/M2M, Cyber Security, SFS and Connectivity.

e-Gov

Through our proprietary e-Government platforms and innovative solutions for traditional and biometrics enrollment, personalization, issuance, border control services, Land and GIS management, we have helped governments and national agencies design and issue secured Multi-ID, secured documents and robust digital identity solutions to their citizens and visitors.

We have focused on expanding our activities in the traditional ID and e-ID market, including the design, development and marketing of identification technologies and solutions to governments in Europe, Asia and Africa using our e-Government platforms. Our activities include: (i) utilizing paper secured by different levels of security patterns (UV, holograms, etc.); and (ii) electronic identification secured by biometric data, principally in connection with the issuance of national Multi-ID documents (IDs, passports, driver’s licenses, vehicle permits, and visas) and border control applications.

On December 26, 2013 we acquired the SmartID division of OTI, including all contracts, software, other related technologies and IP assets. The SmartID division has a strong international presence, with a broad range of competitive and well-known e-ID solutions and technology. The acquisition significantly expanded the breadth of our e-ID capabilities globally, while providing us with outstanding market and technological experts, together with leading ID software platforms and technologies.

IoT/M2M

Our M2M solutions reliably identify, track and monitor people or objects in real time, enabling our customers to detect unauthorized movement of people, vehicles and other monitored objects. We provide all-in-one field-proven RFID and mobile technology, accompanied with services specifically tailored to meet the requirements of electronic monitoring.   Our proprietary RFID and Mobile PureRF® suite of hybrid hardware and software components are the foundation of these products and services. Our M2M division has primarily focused on growing three markets: (i) public safety; (ii) healthcare and homecare; and (iii) transportation.

During 2012, we entered into the growing electronic monitoring vertical markets for public safety, real time healthcare and homecare, and transportation management. We have developed products and solutions including the PureSecurity Hybrid Suite of wrist band, tags, beacons, PureCom, Pure Monitors, PureTrack and other components,

On January 1, 2016 we acquired LCA. LCA is a California based, private criminal justice organization, providing community-based services and electronic monitoring programs to government agencies in the U.S. for more than 25 years. LCA offers a broad range of competitive solutions for governmental institutions across the U.S. in addressing realignment strategies and plans.

2

Cyber Security

During 2015, we identified the cyber security market as a very fast growing market where we believe that SuperCom has major advantages due to synergic technologies and shared customer base to our e-Gov, M2M and SFS divisions. In 2015, we acquired Prevision, a company with a strong presence in the market and a broad range of competitive and well-known cyber security services. During the first quarter of 2016, we acquired Safend, an international provider of cutting edge endpoint data protection guarding against corporate data loss and theft through content discovery and inspection, encryption methodologies, and comprehensive device and port control. Safend maps sensitive information and controls data flow through email, web, external devices and additional channels.

Both acquisitions significantly expanded the breadth of our cyber security capabilities globally, while providing us with outstanding market and technological experts and over 3,000 customers in the United States, Europe, and Asia, and more than three million software license seats deployed by multinational enterprises, government agencies and small to mid-size companies around the globe, together with leading data and cyber security platforms and technologies. We have also developed and introduced our Mobile Security platform, the SafeMobile, which we believe expands our cyber security offering to governments, public sectors, enterprises and mobile users.

Secure Financial Solutions (SFS)

During 2014, we identified the secure financial services market as a very fast growing market where we believe that SuperCom has major advantages due to synergic technologies and shared customer base to our e-ID division. Since 2014, we have developed and introduced our secure financial services suite of products, the SuperPay ^TM.

3

Our SFS division offers a product called SuperPay, which includes a full suite of solutions ranging from mobile wallet to mobile POS using a set of components and platforms to enable secure mobile payments and financial services. SuperPay allows customers to securely make payments using any mobile device and allows merchants to use any smartphone, tablet or existing POS to receive secure mobile payments.

On April 18, 2016 we acquired the PowaPOS business, a division of POWA Technologies Ltd., the developer of a fully-integrated mobile and tablet-based system integrating industry-leading retail and secure payment solutions into one simplified, attractive and innovative POS platform.

Connectivity

In 2016, as part of our strategy to enhance and broaden our products and solutions offerings for public safety, enterprises, hospitality and smart cities markets, on May 18, 2016, we acquired Alvarion. Alvarion designs solutions for carrier wi-fi, enterprise connectivity, smart city, smart hospitality, connected campuses and connected events that are both complete and heterogeneous to ensure ease-of-use and optimize operational efficiency. Carriers, local governments and hospitality sectors worldwide deploy Alvarion’s intelligent wi-fi networks to enhance productivity and performance, as well as its legacy backhaul

Recent Acquisitions of Business

On January 1, 2016 we acquired Leaders in Community Alternatives, Inc., or LCA, a U.S. based company, including all contracts, software, other related technologies and IP assets. We paid $3 million at the closing and committed to certain contingent earn-out payments over the next three years that are structured as a single digit percentage of annual revenues in excess of standalone LCA management revenue projections. LCA is a California based, private criminal justice organization, providing community-based services and electronic monitoring programs to government agencies in the U.S. for more than 24 years. LCA offers a broad range of competitive solutions for governmental institutions across the U.S. in addressing realignment strategies and plans.

On March 13, 2016, we acquired Safend Ltd, an Israeli based company. In consideration for this acquisition, we agreed to provide up to $1.5 million in working capital to Safend to support its activity and growth through a structured debt and equity vehicle. Safend is an international provider of cutting edge endpoint data protection guarding against corporate data loss and theft through content discovery and inspection, encryption methodologies, and comprehensive device and port control. Safend maps sensitive information and controls data flow through email, web, external devices and additional channels. Founded in 2003 and headquartered in Tel Aviv, Israel, Safend has over 3,000 customers in the United States, Europe, and Asia, and more than three million software license seats deployed by multinational enterprises, government agencies and small to mid-size companies around the globe. As of June 30, 2017, we have provided $0.7 million in working capital to Safend.

4

On April 18, 2016, we acquired the assets of PowaPOS, a division of POWA Technologies Ltd., the developer of a fully-integrated mobile and tablet-based system integrating industry-leading retail and secure payment solutions into one simplified, attractive and innovative POS platform,

On May 18, 2016, we acquired Alvarion Technologies Ltd. (“Alvarion”). In consideration for this acquisition, we will pay up to $1 million in cash and an additional earn-out of up to $1 million during the next two years following the acquisition, mainly based on sales from the Alvarion division. Alvarion designs solutions for Carrier Wi-Fi, Enterprise Connectivity, Smart City, Smart Hospitality, Connected Campuses and Connected Events that are both complete and heterogeneous to ensure ease-of-use and optimize operational efficiency. Carriers, Local Governments and Hospitality sectors worldwide deploy Alvarion’s intelligent Wi-Fi networks to enhance productivity and performance. In the past few years, Alvarion went through a transition from being a market leader of Wi- Max and backhaul services to being one of the most influential players in the Wi-Fi based solution. As of June 30, 2017, we have paid $0.12 million in earn-out payments.

General

Our consolidated financial statements appearing in this report are prepared in U.S. dollars and in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. Transactions and balances originally denominated in dollars are presented at their original amounts. Transactions and balances in other currencies are re-measured into dollars in accordance with the principles set forth in Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 830, “Foreign Currency Translation.” The majority of our sales are made outside Israel in U.S. dollars. In addition, substantial portions of our costs are incurred in U.S. dollars. Since the U.S. dollar is the primary currency of the economic environment in which we and certain of our subsidiaries operate, the U.S. dollar is our functional and reporting currency and, accordingly, monetary accounts maintained in currencies other than the U.S. dollar are re-measured using the foreign exchange rate at the balance sheet date. Operational accounts and non-monetary balance sheet accounts are measured and recorded at the exchange rate in effect at the date of the transaction. The financial statements of certain subsidiaries, whose functional currency is not the U.S. dollar, have been translated into U.S. dollars. All balance sheet accounts have been translated using the exchange rates in effect at the balance sheet date. Statement of operations amounts have been translated using the average exchange rate for the period. The resulting translation adjustments are reported as a component of shareholders’ equity in accumulated other comprehensive income (loss).

5

Results of Operations

Revenues

Our revenues for the six months ended June 30, 2017, increased by $4.9 million or 45.0%, to $15.8 million compared to $10.9 million for the six months period ended June 30, 2016. The increase in our revenues in the first half of 2017 was attributable mainly to an increase in revenue from our e-Gov, Cyber Security and M2M/Connectivity Divisions.

Cost of Sales

Our cost of sales increased in the first six months of 2017 to $9.4 million from $8.7 million in the first six months of 2016, an increase of 8.0%. This increase was primarily due to (i) An increase in cost of sales related to $4.9 million increase in revenue(ii) offset by a mix of revenue characterized with higher gross margin.

Gross Profit

Our gross profit margin increased from 20.2% in the first half of 2016 to 40.9% in the first half of 2017. This increase in the first half of year 2017 in gross profit margins is due to the greater proportion of recurring revenue characterized with higher margins, coupled with lower revenue from completed contract characterized with lower margins.

Expenses

Excluding the gain from a bargain purchase of $5.0 million in the first half of 2016, our operating expenses decreased in the first six months of 2017 to $8.8 million, or by 12.0%, from $10.0 million in the first six months of 2016. This decrease in operating expenses in the first half of 2017 was primarily due to (i) an increase of $1 million in research and development expenses (ii) a decrease of $0.3 million in sales and marketing expenses (ii) a decrease of $0.2 million in general and administration expenses (iii) and an increase in other income of $1.6 million derived mainly from one time income.

Financial Expenses, net

We had financial expenses of $0.4 million in the first half of 2017 compared to financial expenses of $0.1 million in the first half of 2016. Our Financial expenses consist primarily of guaranties cost related to new contracts received, bank fees and exchange rate expenses.

Income Tax Benefit

We recorded an income tax benefit in the amount of $0.1 million during the first half of year 2017, compared to an income tax benefit in the amount of $1.5 million during the first half of year 2016. The tax benefit recorded in 2016 is attributed to a deferred tax asset arising from net losses carried forward.

Net Loss

As a result of the changes in our gross margin, operational expenses and the income tax benefit that we recorded in the first half of 2017, as described above, our net loss in first half of 2017 was $2.7 million compared to a net loss of $1.4 million in the first half of 2016.

6

Liquidity and Capital Resources

As of June 30, 2017, we had approximately $0.9 million in cash and cash equivalents, and our working capital was approximately $ 9.6 million compared to approximately $1.7 million in cash and cash equivalents and working capital of $10.2 million as of December 31, 2016.

The decrease of $0.8 million in our cash and cash equivalents for the six months ended June 30, 2017 is primarily attributed to net cash used in operating activities.

Net cash provided by investing activities during the first six months of 2017 was approximately $0.0 million mainly due to $0.7 million used for capitalization of software development costs offset by a decrease of $0.8 million in our restricted bank deposits,

Net cash used in financing activities during the first six months of 2017 is not material.

We currently do not have significant capital spending or purchase commitments other than with respect to the contingent and earn-out payments associated with our acquisition of the SmartID Division from OTI. We anticipate that our cash on hand and cash flow from operations will be sufficient to meet our working capital and capital expenditure requirements for at least 12 months.

7

XML

Document And Entity Information	6 Months Ended
	Jun. 30, 2017
Document Information [Line Items]
Document Type	6-K
Amendment Flag	false
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Entity Registrant Name	SuperCom Ltd
Entity Central Index Key	0001291855
Current Fiscal Year End Date	--12-31
Trading Symbol	SPCB

XML

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
CURRENT ASSETS
Cash and cash equivalents	$ 925	$ 1,708
Restricted bank deposits	304	1,110
Trade receivable, net	10,737	10,310
Deferred tax short term	1,573	1,567
Other accounts receivable and prepaid expenses	5,116	2,500
Inventories, net	6,190	5,965
Total current assets	24,845	23,160
LONG-TERM ASSETS
Severance pay funds	346	282
Deferred tax long term	3,141	2,656
Property and equipment, net	924	1,165
Customer Contracts	4,069	4,684
Software and other IP	5,580	5,987
Patents	5,283	5,283
Other Intangible assets, net	3,350	3,230
Goodwill	7,026	7,026
Total assets	54,564	53,473
CURRENT LIABILITIES
Trade payables	5,860	3,958
Employees and payroll accruals	3,602	2,948
Related parties	121	56
Accrued expenses and other liabilities	3,148	3,497
Deferred revenue short term	1,514	1,633
Deferred tax liability short term	93	156
Short-term liability for future earn-out	903	679
Total current liabilities	15,241	12,927
LONG-TERM LIABILITIES
Long-term loans	471	0
Long-term liability for future earn-out	946	946
Deferred revenue long term	514	423
Deferred tax liability long term	440	0
Accrued severance pay	554	453
Total long-term liabilities	2,925	1,822
SHAREHOLDERS' EQUITY:
Ordinary shares	1,024	1,024
Additional paid-in capital	81,846	81,515
Accumulated deficit	(46,472)	(43,815)
Total shareholders' equity	36,398	38,724
Total Liabilities and Shareholders' Equity	$ 54,564	$ 53,473

XML

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
REVENUES	$ 15,829	$ 10,883
COST OF REVENUES	9,356	8,689
GROSS PROFIT	6,473	2,194
OPERATING EXPENSES
Research and development, net	3,641	2,694
Sales and marketing	4,271	4,511
General and administration	3,191	3,437
Other income	(2,317)	(677)
Gain on barging purchase	0	(4,958)
Total operating expenses	8,786	5,007
OPERATING LOSS	(2,313)	(2,813)
FINANCIAL EXPENSES, NET	402	110
LOSS BEFORE INCOME TAX	(2,715)	(2,923)
INCOME TAX BENEFIT	58	1,492
NET LOSS FOR THE PERIOD	$ (2,657)	$ (1,431)
NET LOSS PER SHARE
Basic	$ (0.18)	$ (0.09)
Diluted	$ (0.18)	$ (0.09)
Weighted average number of ordinary shares used in computing basic net loss per share	14,938,339	15,075,177
Weighted average number of ordinary shares used in computing diluted net loss per share	15,015,582	15,163,123

XML

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Ordinary Shares [Member]	Additional Paid-in Capital [Member]	Accumulated deficit [Member]
Balance at Dec. 31, 2015	$ 54,432	$ 1,053	$ 83,201	$ (29,822)
Balance (in shares) at Dec. 31, 2015		15,493,615
Exercise of options	17	$ 0	17	0
Exercise of options (in shares)		2,500
Stock- based compensation	599	$ 0	599	0
Treasury shares acquired	(2,379)	$ (29)	(2,350)
Treasury shares acquired (in shares)		(475,610)
Net loss	(1,431)	$ 0	0	(1,431)
Balance at Jun. 30, 2016	51,238	$ 1,024	81,467	(31,253)
Balance (in shares) at Jun. 30, 2016		15,020,505
Balance at Dec. 31, 2016	38,724	$ 1,024	81,515	(43,815)
Balance (in shares) at Dec. 31, 2016		14,938,339
Exercise of options	0	$ 0	0	0
Exercise of options (in shares)		0
Stock- based compensation	331	$ 0	331	0
Net loss	(2,657)	0	0	(2,657)
Balance at Jun. 30, 2017	$ 36,398	$ 1,024	$ 81,846	$ (46,472)
Balance (in shares) at Jun. 30, 2017		14,938,339

XML

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW - USD ($) $ in Thousands		6 Months Ended
		Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities:
Net loss		$ (2,657)	$ (1,431)
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		1,847	1,287
Stock-based compensation		331	599
Decrease (Increase) in deferred tax		(114)	(1,666)
Capital loss from disposal of property and equipment		0	(2)
Gain on barging purchase		0	(4,958)
Increase in trade receivables, net		(427)	(549)
Increase in other accounts receivable and prepaid expenses		(2,616)	(413)
Decrease (Increase) in inventories, net		(225)	589
Increase (decrease) in trade payables		1,902	(1,372)
Increase in employees and payroll accruals		654	637
Increase in accrued severance pay		101	103
Increase in accrued expenses and other liabilities, related parties and liability for earn-out		407	1,123
Net cash used in operating activities		(797)	(6,053)
Cash flows from investing activities:
Purchase of property and equipment		(39)	(165)
Acquisitions of subsidiaries, net of cash acquired		0	(2,896)
Acquisition of group of assets (non-business)		0	(1,174)
Increase in severance pay fund		(64)	(29)
Restricted bank deposits, net		806	1,649
Capitalization of software development costs		(665)	(1,224)
Net cash provided (used in) by investing activities		38	(3,839)
Cash flows from financing activities:
Treasury shares acquired		0	(2,379)
Liability for future earn-out		(24)	(2,050)
Proceeds from exercise of options and warrants, net		0	17
Net cash used in financing activities		(24)	(4,412)
Decrease in cash and cash equivalents		(783)	(14,304)
Cash and cash equivalents at the beginning of the year		1,708	22,246
Cash and cash equivalents at the end of the period		925	7,942
Assets and liabilities of the acquired business, as of date of acquisition:
Working capital (excluding cash and cash equivalents)	[1]	0	2,264
Property and equipment, net	[1]	0	364
Deferred taxes, net	[1]	0	219
Intangible Assets including goodwill	[1]	0	6,198
Contingent consideration	[1]	0	(491)
Payable on account of an acquisition	[1]	0	(700)
Assets and liabilities of the acquired business, as of date of acquisition	[1]	0	7,854
Gain on bargain purchase	[1],[2]	0	(4,958)
Acquisitions of subsidiaries, net of cash acquired	[1]	0	(2,896)
Cash paid during the period for:
Interest		$ 4	$ 0

[1] All purchase price allocations of the acquisitions are provisional.

[2] Gain on bargain purchase is attributed to two of the acquisitions.

XML

GENERAL

6 Months Ended

Jun. 30, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

GENERAL

NOTE 1: GENERAL

a. SuperCom Ltd. (the “Company") is an Israeli resident company organized in 1988 in Israel. On January 24, 2013 the Company changed its name back to SuperCom Ltd, its original name, from Vuance Ltd. On September 12, 2013, the Company’s ordinary shares were approved for listing on the NASDAQ Capital Market and began trading under the ticker symbol “SPCB” on September 17, 2013. Previously, the Company’s ordinary shares traded on the OTCQB® electronic quotation service.

The Company is a global provider of traditional and digital identity solutions, providing advanced safety, identification, tracking and security products to governments and organizations, both private and public, throughout the world. The Company provides cutting edge real-time positioning, tracking, monitoring and verification solutions enabled by its RFID &Mobile pure security advanced solutions suite of products and technologies, all connected to a web-based, secure, proprietary, interactive and user-friendly interface. The Company offers a wide range of solutions including, national ID registries, e-passports, biometric visas, automated fingerprint identification systems, digitized driver’s licenses, and electronic voter registration and election management using the common platform ("MAGNA"). The Company sells its products through marketing offices in the U.S, Tanzania, Ecuador, and Israel.

b. On December 26, 2013 the Company acquired the SmartID Division of On Track Innovations Ltd. (NASDAQ: OTIV) (“OTI”), consisting of customer contracts, software, other related technologies and IP assets. The Company paid OTI $8.8 million ($10 million less certain price adjustments) at the closing and agreed to make contingent payments of up to $12.5 million pursuant to an earn-out mechanism based on certain performance and other milestones. The SmartID Division has a strong international presence, with a broad range of competitive and well-known e-ID solutions and technology. The acquisition significantly expanded the breadth of the Company’s e-ID capabilities globally, while providing it with market and technological experts, together with its ID software platforms and technologies.

c. On November 17, 2015, the Company acquired Prevision Ltd., an Israeli based company. The Company paid $1.1 million at the closing and agreed to make contingent annual payments of approximately $250,000 pursuant to an earn-out mechanism for the next four years. The contingent consideration is subject to service provided by the seller to the Company during the earn-out period and therefore is not part of the business combination. Prevision has a strong presence in the market and offers a broad range of competitive and well-known Cyber Security services. 

d. On January 1, 2016, the Company acquired Leaders in Community Alternatives, Inc., or LCA, a U.S. based company, including all contracts, software, other related technologies and IP assets. The Company paid $3 million at the closing and committed to certain contingent earn-out payments over the next three years that are structured as a single digit percentage of annual revenues in excess of standalone LCA management revenue projections. LCA is a California based, private criminal justice organization, providing community-based services and electronic monitoring programs to government agencies in the U.S. for more than 24 years. LCA offers a broad range of competitive solutions for governmental institutions across the U.S. in addressing realignment strategies and plans. 

e. On March 13, 2016, the Company acquired Safend Ltd, an Israeli based company. In consideration for this acquisition, the Company agreed to provide up to $1.5 million in working capital to Safend to support its activity and growth through a structured debt and equity vehicle. Safend is an international provider of cutting edge endpoint data protection guarding against corporate data loss and theft through content discovery and inspection, encryption methodologies, and comprehensive device and port control. Safend maps sensitive information and controls data flow through email, web, external devices and additional channels.

Founded in 2003 and headquartered in Tel Aviv, Israel, Safend has over 3,000 customers in the United States, Europe, and Asia, and more than three million software license seats deployed by multinational enterprises, government agencies and small to mid-size companies around the globe.

f. On April 18, 2016, the Company acquired the assets of PowaPOS, a division of POWA Technologies Ltd., the developer of a fully-integrated mobile and tablet-based system integrating industry-leading retail and secure payment solutions into one simplified, attractive and innovative POS platform,

g. On May 18, 2016, the Company acquired Alvarion Technologies Ltd. (“Alvarion”). In consideration for this acquisition, the Company will pay up to $1 million in cash and an additional earn-out of up to $1 million during the next two years following the acquisition, mainly based on sales from the Alvarion division. Alvarion designs solutions for Carrier Wi-Fi, Enterprise Connectivity, Smart City, Smart Hospitality, Connected Campuses and Connected Events that are both complete and heterogeneous to ensure ease-of-use and optimize operational efficiency. Carriers, Local Governments and Hospitality sectors worldwide deploy Alvarion’s intelligent Wi-Fi networks to enhance productivity and performance. In the past few years, Alvarion went through a transition from being a market leader of Wi- Max and backhaul services to being one of the most influential players in the Wi-Fi based solution.

h. Concentration of risk that may have a significant impact on the Company:

In the first half of year 2017, the Company derived 36% of its total revenue from 3 major customers.

In the first half of year 2016, the Company derived 39% of its total revenue from 3 major customers.

The Company purchases certain services and products used by it to generate revenues in its projects and sales from several sole suppliers. Although there are only a limited number of manufacturers of those particular services and products, management believe that other suppliers could provide similar services and products on comparable terms without affecting operating results.

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UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6 Months Ended

Jun. 30, 2017

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS [Abstract]

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2: UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Financial Statement preparation

These unaudited interim consolidated financial statements of the Company and its subsidiaries (collectively referred to in its report as "Company"), as of June 30, 2017 and for the six months then ended have been prepared, in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). They do not include all information and notes required by U.S. GAAP in the preparation of annual consolidated financial statements.

The accounting policies used in the preparation of the unaudited interim consolidated financial statements is the same as those described in the Company's audited consolidated financial statements prepared in accordance with U.S. GAAP for the year ended December 31, 2016.

The Company makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated interim Financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.

The Company believes all adjustments necessary for a fair statement of the results for the period presented have been made and all such adjustments were of a normal recurring nature unless otherwise disclosed. The financial results for the period are not necessarily indicative of financial results for the full year.

These financial statements should be read in conjunction with the Company's consolidated financial statements for the year ended December 31, 2016 and the accompanying notes. There have been no changes in the significant accounting policies from those that were disclosed in the audited consolidated financial statements for the fiscal year ended December 31, 2016 included in the 2016 Form 20-F.

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INVENTORIES, NET

6 Months Ended

Jun. 30, 2017

Inventory Disclosure [Abstract]

INVENTORIES, NET

NOTE 3: INVENTORIES, NET

	June 30,		December 31,
	2017		2016
	$		$
Raw materials, parts and supplies		2,581		1,758
Finished products		3,609		4,207
		6,190		5,965

As of June 30, 2017 and December 31, 2016, inventory is presented net of write offs for slow inventory in the amount of approximately $218 and $218, respectively.

XML

COMMITMENTS AND CONTINGENT LIABILITIES - LITIGIATION

6 Months Ended

Jun. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENT LIABILITIES - LITIGIATION

NOTE 4: COMMITMENTS AND CONTINGENT LIABILITIES – LITIGIATION

As part of the acquisition of the SmartID division of OTI, the Company assumed a dispute with Merwell Inc. (“Merwell”). Merwell has alleged that it has not received the full payment it is entitled to for its services in respect of a drivers’ license project. OTI alleged that Merwell breached its commitments under the service agreement and also acted in concert with third parties to damage OTI’s business activities. This matter is now subject to an arbitration proceeding. An appropriate provision is included in the financial statements.

In August 2016, three claims previously filed against the Company and a number of defendants affiliated with the Company were consolidated into a class action lawsuit. The claims assert causes of action based on alleged false and misleading projections made by the Company in 2015. The complaint seeks unspecified compensatory damages. The Company believes that the claim has no merits and that the probability of the legal proceeding resulting in an unfavorable outcome to the Company is remote.

XML

INVENTORIES, NET (Tables)

6 Months Ended

Jun. 30, 2017

Inventory Disclosure [Abstract]

Schedule of Inventory, Net

	June 30,		December 31,
	2017		2016
	$		$
Raw materials, parts and supplies		2,581		1,758
Finished products		3,609		4,207
		6,190		5,965

XML

GENERAL (Details)		1 Months Ended			6 Months Ended		12 Months Ended
	Mar. 13, 2016 USD ($)	May 18, 2016 USD ($)	Jan. 31, 2016 USD ($)	Nov. 17, 2015 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)	Dec. 31, 2013 USD ($)
Number of major customers					3	3
Cash paid for acquisition							$ 10,000,000
Cash paid for acquisition, net					$ 0	$ 2,896,000	8,800,000
Earn Out Agreement [Member]
Maximum contingent payments							$ 12,500,000
Three Customers [Member] | Sales Revenue, Net [Member]
Concentration risk, percentage					36.00%	39.00%
Prevision Ltd [Member]
Contingent annual payments for earn-out mechanism				$ 250,000
Cash paid for acquisition				$ 1,100,000
Alternatives, Inc [Member]
Cash paid for acquisition			$ 3,000,000
Alvarion Technologies Ltd [Member]
Contingent annual payments for earn-out mechanism		$ 1,000,000
Cash paid for acquisition		$ 1,000,000
Safend Ltd [Member]
Cash paid for acquisition	$ 1,500,000

XML

INVENTORIES, NET (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Raw materials, parts and supplies	$ 2,581	$ 1,758
Finished products	3,609	4,207
Inventory, Net	6,190	5,965
Valuation adjustment for slow inventory	$ 218	$ 218