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 September 2018

SUPERCOM LTD.

(Translation of Registrant’s name into English)

11 Hamenufim 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 Form 6-K is being incorporated by reference into the Registrant’s Registration Statements on S-8, File Nos. 333-121231 and 333-175785. 

SUPERCOM LTD.

6-K Items

1.	Condensed Interim Consolidated Financial Statements of Supercom Ltd. and its subsidiaries as of June 30, 2018.
2.	Management's Discussion and Analysis of Results Operations.
101.1NS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document

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: September 28, 2018

EX-99.1

Exhibit 1

SUPERCOM LTD

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
as of June 30, 2018

(Unaudited)

1

SUPERCOM LTD

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
as of June 30, 2018

(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 – 11

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

2

SUPERCOM LTD

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

	June 30,			December 31,
	2018			2017
	Unaudited			Audited
CURRENT ASSETS
Cash and cash equivalents		1,920			1,037
Restricted bank deposits		1,314			1,063
Trade receivable, net		15,633			12,456
Other accounts receivable and prepaid expenses		531			2,698
Inventories, net (Note 3)		4,889			4,876
Patents		5,283			5,283
Total current assets		29,570			27,413
LONG-TERM ASSETS
Severance pay funds		303			319
Deferred tax long term		4,591			4,505
Property and equipment, net		816			1,218
Other Intangible assets, net (Note 4)		11,191			11,910
Goodwill		7,026			7,026
Other non-current assets		1,835			1,807
Total current assets		25,762			26,785
Total assets		55,332			54,198
CURRENT LIABILITIES
Short-term bank loans		1,113			738
Trade payables		4,295			5,838
Employees and payroll accruals		5,171			4,910
Related parties		997			61
Accrued expenses and other liabilities		4,614			3,739
Deferred revenue		1,074			1,511
Short-term liability for future earn-out		1,038			1,163
Total current liabilities		18,302			17,960
LONG-TERM LIABILITIES
Related parties		2,980			2,082
Deferred tax liability		39			49
Deferred revenue		802			668
Long-term liability for future earn-out		114			147
Accrued severance pay		558			585
Total long-term liabilities		4,493			3,531
SHAREHOLDERS' EQUITY:
Ordinary shares		1,026			1,026
Additional paid-in capital		82,274			82,157
Accumulated deficit		(50,763	)		(50,476	)
Total shareholders' equity		32,537			32,707
Total Liabilities and Shareholders' Equity		55,332			54,198

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
	2018			2017
REVENUES		13,775			15,829
COST OF REVENUES		6,054			9,356
GROSS PROFIT		7,721			6,473
OPERATING EXPENSES
Research and development, net		2,544			3,641
Sales and marketing		3,182			4,271
General and administration		2,602			3,191
Other expenses (income)		183			(2,317	)
Total operating expenses		8,511			8,786
OPERATING LOSS		(790	)		(2,313	)
FINANCIAL EXPENSES  (INCOME), NET		(278	)		402
LOSS BEFORE INCOME TAX		(512	)		(2,715	)
INCOME TAX BENEFIT		225			58
NET LOSS FOR THE PERIOD		(287	)		(2,657	)
NET LOSS PER SHARE
Basic		(0.02	)		(0.18	)
Diluted		(0.02	)		(0.18	)
Weighted average number of ordinary shares used in computing basic net loss per share		14,958,339			14,938,339
Weighted average number of ordinary shares used in computing diluted net loss per share		14,958,339			14,938,339

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, 2016		14,938,339		1,024		81,515		(43,815	)		38,724
Changes during the six months ended June 30, 2017 (unaudited):
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
Balance as of December 31, 2017		14,958,339		1,026		82,157		(50,476	)		32,707
Changes during the six months ended June 30, 2018 (unaudited):
Stock- based compensation		-		-		117		-			117
Net loss		-		-		-		(287	)		(287	)
Balance as of June 30, 2018		14,958,339		1,026		82,274		(50,763	)		32,537

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
	2018			2017
Cash flows from operating activities:
Net loss		(287	)		(2,657	)
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		1,961			1,847
Stock-based compensation		117			331
Increase in deferred tax		(96	)		(114	)
Increase in trade receivables, net		(3,177	)		(427	)
Decrease (Increase) in other accounts receivable and prepaid expenses		2,167			(2,616	)
Increase in inventories, net		(13	)		(225	)
Increase in other non-current assets		(28	)		-
Increase (decrease) in trade payables		(1,543	)		1,902
Increase in employees and payroll accruals		261			654
Increase (decrease) in accrued severance pay		(27	)		101
Increase in accrued expenses and other liabilities, related parties and liability for earn-out		566			407
Net cash used in operating activities		(99	)		(797	)
Cash flows from investing activities:
Purchase of property and equipment		(95	)		(39	)
Purchase of Intangible assets		(21	)		-
Decrease (Increase) in severance pay fund		16			(64	)
Restricted bank deposits, net		(251	)		806
Capitalization of software development costs		(724	)		(665	)
Net cash  provided by (used in) investing activities		(1,075	)		38
Cash flows from financing activities:
Short-term bank loan, net		375			-
Related parties		1,778			-
Liability for future earn-out		(96	)		(24	)
Net cash provided by (used in) financing activities		2,057			(24	)
Increase (decrease) in cash and cash equivalents		883			(783	)
Cash and cash equivalents at the beginning of the year		1,037			1,708
Cash and cash equivalents at the end of the period		1,920			925

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,
	2018		2017
Supplemental disclosure of cash flows information:
Cash paid during the period for:
Interest		7		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.

Founded in 1988, we are a global provider of traditional and digital identity solutions, advanced IoT and connectivity solutions, and cyber security products and solutions, to governments and private and public organizations throughout the world. The Company sells its products through marketing offices in the U.S, 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 SmartID Division has a strong international presence, with a broad range of competitive and well-known e-ID solutions and technology.

c. On November 17, 2015, the Company acquired Prevision Ltd., an Israeli based company. 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. 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.

e. On March 13, 2016, the Company acquired Safend Ltd, an Israeli based company. 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.

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.

8

g. On May 18, 2016, the Company acquired Alvarion Technologies Ltd. (“Alvarion”). Alvarion designs solutions for Carrier Wi-Fi, Enterprise Connectivity, Smart City, Smart Hospitality, Connected Campuses. 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 2018, the Company derived 23% of its revenue from 3 major customers.

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

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

In the first half of year 2015, the Company derived most of its revenues 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, 2018 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, 2017.

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, 2017 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, 2017 included in the 2017 Form 20-F.

9

NOTE 3: INVENTORIES, NET

	June 30,		December 31,
	2018		2017
	$		$
Raw materials, parts and supplies		1,804		1,707
Finished products		3,085		3,169
		4,889		4,876

As of June 30, 2018 and December 31, 2017, inventory is presented net of write offs for slow inventory in the amount of approximately $232 and $232, respectively.

NOTE 4: OTHER INTANGIBLE ASSETS, NET

	June 30,		December 31,
	2018		2017
	$		$
Customer relationship & Other		3,246		3,747
IP & Technology		4,571		4,940
Capitalized software development costs		3,374		3,223
		11,191		11,910

10

NOTE 5: 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.

11

EX-99.2

Exhibit 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, 2018, 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, 2017. . 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 comprised of three main Strategic Business Units(SBU) : e-Gov, IoT and Connectivity, and Cyber Security:

e-Gov

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

We have focused on expanding our activities in the traditional identification, or ID, and electronic identification, or e-Gov, market, including the design, development and marketing of identification technologies and solutions to governments in Europe, Asia, America 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, Secure Land Certificated) border control applications and Land Information System(LIS) .

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

IoT and Connectivity

Our IoT products and 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 IoT suite, accompanied with services specifically tailored to meet the requirements of an IoT solutions.  Our proprietary IoT suite of hybrid hardware, connectivity and software components are the foundation of these solutions and services. Our IoT division has primarily focused on growing the following markets: (i) public safety; (ii) healthcare and homecare; (iii) Smart Cities (iv) Smart Campus and (iv) transportation.

During 2006, we identified the growing electronic tracking and monitoring vertical markets for public safety, real time healthcare and homecare, and transportation management. We have developed the PureRF Hybrid suit of wrist devices, connectivity, and controlling software, from 2012 we have developed the next generation IoT suite of devices, connectivity and Monitoring software; the PureSecurity Hybrid Suite of wrist band, tags, beacons, PureCom, Pure Monitors, PureTrack and other components.

On January 1, 2016 we acquired Leaders in Community Alternatives, Inc., or 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

Connectivity, In 2016, as part of our strategy to enhance and broaden our IoT connectivity products and solutions offerings for public safety, enterprises, hospitality and smart cities markets, on May 18, 2016, we acquired Alvarion Technologies Ltd., or 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 services and products.

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 other divisions. Since 2014, we have developed and introduced secure financial services suite of products, the SuperPay^TM. We offer advanced secure mobile payments ranging from mobile wallet to mobile point of sale (POS) using a set of components and platforms to enable secure mobile payments and financial services.

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. PowaPOS has been deployed in countries all over the world, and has been integrated by cloud-based POS software providers, we believes this technology will be a highly value-added solution to our secure payment customers around the world.

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, IoT and connectivity SBUs. In 2015, we acquired Prevision Ltd., or 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 Ltd, or 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.

3

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).

4

Results of Operations

Revenues

Our revenues for the six months ended June 30, 2018, decreased by $2.0 million or 12.7%, to $13.8 million compared to $15.8 million for the six months period ended June 30, 2017. The decrease in our revenues in the first half of 2018 was attributable mainly to a decrease in revenue from our e-Gov, offset partially by increase in revenue from our IoT/Connectivity Units.

Cost of Sales

Our cost of sales decreased in the first six months of 2018 to $6.1 million from $9.4 million in the first six months of 2017, a decrease of 35.1%. This decrease was primarily due to (i) a decrease in cost of sales related to $2.0 million decrease in our revenues (ii) an offset by a mix of revenue characterized with higher gross margin.

Gross Profit

Our gross profit margin increased from 40.9% in the first half of 2017 to 56.1% in the first half of 2018. This increase in the first half of year 2018 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

Our operating expenses decreased in the first six months of 2018 to $8.5 million, or by 3.4%, from $8.8 million in the first six months of 2017. This decrease in operating expenses in the first half of 2018 was primarily due to (i) a decrease of $1.1 million in research and development expenses (ii) a decrease of $1.1 million in sales and marketing expenses (iii) a decrease of $0.6 million in general and administration expenses, offset by a decrease in other income of $2.5 million derived mainly from one time income in the first six months of 2017.

Financial Expenses, net

We had financial income of $0.3 million in the first half of 2018 compared to financial expenses of $0.4 million in the first half of 2017. This decrease in our financial expenses in the first half of 2018 was primarily due to exchange rate income.

Income Tax Benefit

We recorded an income tax benefit in the amount of $0.2 million during the first half of year 2018, compared to an income tax benefit in the amount of $0.1 million during the first half of year 2017.

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 2018, as described above, our net loss in first half of 2018 was $0.3 million compared to a net loss of $2.7 million in the first half of 2017.

5

Liquidity and Capital Resources

As of June 30, 2018, we had approximately $1.9 million in cash and cash equivalents, and our working capital was approximately $ 11.3 million compared to approximately $1.0 million in cash and cash equivalents and working capital of $9.4 million as of December 31, 2017.

The increase of $0.9 million in our cash and cash equivalents for the six months ended June 30, 2018 is primarily attributed to an increase of $ 1.1 million net cash used in investing activities partially offset by an increase of $ 2.1 million net cash provided by financing activities

Net cash used in investing activities during the first six months of 2018 was approximately $1.1 million mainly due to $0.7 million used for capitalization of software development costs and an increase of $0.3 million in our restricted bank deposits.

Net cash provided by financing activities during the first six months of 2018 was approximately $2.1 million mainly due to $1.8 million line of credit received from related parties and $0.4 million short-term bank credit received from bank.

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

6

XML

Document And Entity Information	6 Months Ended
	Jun. 30, 2018
Document Information [Line Items]
Document Type	6-K
Amendment Flag	false
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
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, 2018	Dec. 31, 2017
CURRENT ASSETS
Cash and cash equivalents	$ 1,920	$ 1,037
Restricted bank deposits	1,314	1,063
Trade receivable, net	15,633	12,456
Other accounts receivable and prepaid expenses	531	2,698
Inventories, net (Note 3)	4,889	4,876
Patents	5,283	5,283
Total current assets	29,570	27,413
LONG-TERM ASSETS
Severance pay funds	303	319
Deferred tax long term	4,591	4,505
Property and equipment, net	816	1,218
Other Intangible assets, net (Note 4)	11,191	11,910
Goodwill	7,026	7,026
Other non-current assets	1,835	1,807
Total current assets	25,762	26,785
TOTAL ASSETS	55,332	54,198
CURRENT LIABILITIES
Short-term bank loans	1,113	738
Trade payables	4,295	5,838
Employees and payroll accruals	5,171	4,910
Related parties	997	61
Accrued expenses and other liabilities	4,614	3,739
Deferred revenue	1,074	1,511
Short-term liability for future earn-out	1,038	1,163
Total current liabilities	18,302	17,960
LONG-TERM LIABILITIES
Related parties	2,980	2,082
Deferred tax liability	39	49
Deferred revenue	802	668
Long-term liability for future earn-out	114	147
Accrued severance pay	558	585
Total long-term liabilities	4,493	3,531
SHAREHOLDERS' EQUITY:
Ordinary shares	1,026	1,026
Additional paid-in capital	82,274	82,157
Accumulated deficit	(50,763)	(50,476)
Total shareholders' equity	32,537	32,707
Total Liabilities and Shareholders' Equity	$ 55,332	$ 54,198

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CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
REVENUES	$ 13,775	$ 15,829
COST OF REVENUES	6,054	9,356
GROSS PROFIT	7,721	6,473
OPERATING EXPENSES
Research and development, net	2,544	3,641
Sales and marketing	3,182	4,271
General and administration	2,602	3,191
Other expenses (income)	183	(2,317)
Total operating expenses	8,511	8,786
OPERATING LOSS	(790)	(2,313)
FINANCIAL EXPENSES (INCOME), NET	(278)	402
LOSS BEFORE INCOME TAX	(512)	(2,715)
INCOME TAX BENEFIT	225	58
NET LOSS FOR THE PERIOD	$ (287)	$ (2,657)
NET LOSS PER SHARE
Basic	$ (0.02)	$ (0.18)
Diluted	$ (0.02)	$ (0.18)
Weighted average number of ordinary shares used in computing basic net loss per share	14,958,339	14,938,339
Weighted average number of ordinary shares used in computing diluted net loss per share	14,958,339	14,938,339

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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, 2016	$ 38,724	$ 1,024	$ 81,515	$ (43,815)
Balance (in shares) at Dec. 31, 2016		14,938,339
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
Balance at Dec. 31, 2017	32,707	$ 1,026	82,157	(50,476)
Balance (in shares) at Dec. 31, 2017		14,958,339
Stock- based compensation	117	$ 0	117	0
Net loss	(287)	0	0	(287)
Balance at Jun. 30, 2018	$ 32,537	$ 1,026	$ 82,274	$ (50,763)
Balance (in shares) at Jun. 30, 2018		14,958,339

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CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash flows from operating activities:
Net loss	$ (287)	$ (2,657)
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	1,961	1,847
Stock-based compensation	117	331
Increase in deferred tax	(96)	(114)
Increase in trade receivables, net	(3,177)	(427)
Decrease (Increase) in other accounts receivable and prepaid expenses	2,167	(2,616)
Increase in inventories, net	(13)	(225)
Increase in other non-current assets	(28)	0
Increase (decrease) in trade payables	(1,543)	1,902
Increase in employees and payroll accruals	261	654
Increase (decrease) in accrued severance pay	(27)	101
Increase in accrued expenses and other liabilities, related parties and liability for earn-out	566	407
Net cash used in operating activities	(99)	(797)
Cash flows from investing activities:
Purchase of property and equipment	(95)	(39)
Purchase of Intangible assets	(21)	0
Decrease (Increase) in severance pay fund	16	(64)
Restricted bank deposits, net	(251)	806
Capitalization of software development costs	(724)	(665)
Net cash provided by (used in) investing activities	(1,075)	38
Cash flows from financing activities:
Short-term bank loan, net	375	0
Related parties	1,778	0
Liability for future earn-out	(96)	(24)
Net cash provided by (used in) financing activities	2,057	(24)
Increase (decrease) in cash and cash equivalents	883	(783)
Cash and cash equivalents at the beginning of the year	1,037	1,708
Cash and cash equivalents at the end of the period	1,920	925
Cash paid during the period for:
Interest	$ 7	$ 4

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GENERAL

6 Months Ended

Jun. 30, 2018

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.

Founded in 1988, we are a global provider of traditional and digital identity solutions, advanced IoT and connectivity solutions, and cyber security products and solutions, to governments and private and public organizations throughout the world. The Company sells its products through marketing offices in the U.S, 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 SmartID Division has a strong international presence, with a broad range of competitive and well-known e-ID solutions and technology.

c. On November 17, 2015, the Company acquired Prevision Ltd., an Israeli based company. 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. 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.

e. On March 13, 2016, the Company acquired Safend Ltd, an Israeli based company. 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.

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”). Alvarion designs solutions for Carrier Wi-Fi, Enterprise Connectivity, Smart City, Smart Hospitality, Connected Campuses. 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 2018, the Company derived 23% of its revenue from 3 major customers.

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

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

In the first half of year 2015, the Company derived most of its revenues 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, 2018

Condensed 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, 2018 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, 2017.

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, 2017 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, 2017 included in the 2017 Form 20-F.

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INVENTORIES, NET

6 Months Ended

Jun. 30, 2018

Inventory Disclosure [Abstract]

INVENTORIES, NET

NOTE 3: INVENTORIES, NET

	June 30,		December 31,
	2018		2017
	$		$
Raw materials, parts and supplies		1,804		1,707
Finished products		3,085		3,169
		4,889		4,876

As of June 30, 2018 and December 31, 2017, inventory is presented net of write offs for slow inventory in the amount of approximately $232 and $232, respectively.

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OTHER INTANGIBLE ASSETS, NET

6 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

OTHER INTANGIBLE ASSETS, NET

NOTE 4: OTHER INTANGIBLE ASSETS, NET

	June 30,		December 31,
	2018		2017
	$		$
Customer relationship & Other		3,246		3,747
IP & Technology		4,571		4,940
Capitalized software development costs		3,374		3,223
		11,191		11,910

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COMMITMENTS AND CONTINGENT LIABILITIES - LITIGIATION

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENT LIABILITIES

NOTE 5: 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.

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INVENTORIES, NET (Tables)

6 Months Ended

Jun. 30, 2018

Inventory Disclosure [Abstract]

Schedule of Inventory, Net

	June 30,		December 31,
	2018		2017
	$		$
Raw materials, parts and supplies		1,804		1,707
Finished products		3,085		3,169
		4,889		4,876

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OTHER INTANGIBLE ASSETS, NET (Tables)

6 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets

	June 30,		December 31,
	2018		2017
	$		$
Customer relationship & Other		3,246		3,747
IP & Technology		4,571		4,940
Capitalized software development costs		3,374		3,223
		11,191		11,910

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GENERAL (Details)	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2016
Three Customers [Member] | Sales Revenue, Net [Member]
Business Acquisition, Contingent Consideration [Line Items]
Concentration Risk, Percentage	23.00%	36.00%	39.00%

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INVENTORIES, NET (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Raw materials, parts and supplies	$ 1,804	$ 1,707
Finished products	3,085	3,169
Inventories, net	4,889	4,876
Valuation adjustment for slow inventory	$ 232	$ 232

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OTHER INTANGIBLE ASSETS, NET (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Carrying Amount	$ 11,191	$ 11,910
Customer Relationships [Member]
Carrying Amount	3,246	3,747
Intellectual Property [Member]
Carrying Amount	4,571	4,940
Capitalized Software Development Costs [Member]
Carrying Amount	$ 3,374	$ 3,223