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Document and Entity Information
6 Months Ended
Jun. 30, 2014
Document and Entity Information [Abstract]  
Document Type 6-K
Document Period End Date Jun. 30, 2014
Amendment Flag false
Entity Registrant Name SuperCom Ltd
Entity Central Index Key 0001291855
Trading Symbol SPCB
Current Fiscal Year End Date --12-31
Document Fiscal Period Focus Q2
Document Fiscal Year Focus 2014
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CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
CURRENT ASSETS    
Cash and cash equivalents $ 2,059 $ 2,673
Restricted bank deposits 563 85
Trade receivable, net 10,430 3,096
Deferred tax short term 1,480 2,183
Other accounts receivable and prepaid expenses 1,999 3,365
Inventories, net 1,049 707
Total current assets 17,580 12,109
LONG-TERM ASSETS    
Severance pay funds 349 294
Deferred tax long term 4,633 3,930
Customer Contracts 7,620 8,100
Software and other IP 5,900 6,210
Goodwill 889 889
Property and equipment, net 317 176
Total assets 37,288 31,708
CURRENT LIABILITIES    
Short-term bank credit 26 1
Trade payables 2,470 1,689
Employees and payroll accruals 961 419
Related parties 404 434
Accrued expenses and other liabilities 1,999 3,636
Short-term liability for future earn-out 1,748 1,978
Total current liabilities 7,608 8,157
LONG-TERM LIABILITIES    
Long-term liability for future earn-out 3,760 3,760
Accrued severance pay 567 399
Total long-term liabilities 4,327 4,159
SHAREHOLDERS' EQUITY:    
Ordinary shares 934 904
Additional paid-in capital 58,011 55,530
Accumulated deficit (33,592) (37,042)
Total shareholders' equity 25,353 19,392
Total Liabilities and Shareholders' Equity $ 37,288 $ 31,708
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CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Thousands, except Share data, unless otherwise specified
6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract]    
REVENUES $ 12,364 $ 3,903
COST OF REVENUES (2,696) (541)
GROSS PROFIT 9,668 3,362
OPERATING EXPENSES    
Research and development, net 1,802 349
Sales and marketing 3,222 1,410
General and administration 1,094 435
Total operating expenses 6,118 2,194
OPERATING INCOME 3,550 1,168
FINANCIAL EXPENSES, NET 100 42
INCOME BEFORE INCOME TAX 3,450 1,126
INCOME TAX BENEFIT    3,001
NET INCOME $ 3,450 $ 4,127
NET INCOME PER SHARE    
Basic $ 0.26 $ 0.47
Diluted $ 0.26 $ 0.43
Weighted average number of ordinary shares used in computing basic income per share 13,391,037 8,740,001
Weighted average number of ordinary shares used in computing diluted income per share 13,471,288 9,553,082
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CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (USD $)
In Thousands, except Share data
Total
Ordinary shares [Member]
Additional paid-in capital [Member]
Amount of liability extinguished on account of shares [Member]
Accumulated deficit [Member]
Balance at Dec. 31, 2012 $ 711 $ 574 $ 43,518 $ 127 $ (43,508)
Balance (in shares) at Dec. 31, 2012   8,651,703      
Shares issued in connection with extinguishments of liabilities    29 98 (127)   
Shares issued in connection with extinguishments of liabilities (in shares)   429,600      
Net income 4,127          4,127
Balance at Jun. 30, 2013 4,838 603 43,616    (39,381)
Balance (in shares) at Jun. 30, 2013   9,081,303      
Balance at Dec. 31, 2013 19,392 904 55,530    (37,042)
Balance (in shares) at Dec. 31, 2013   13,284,144      
Exercise of options and issuance of restricted share capital, net of issuance costs 2,494 30 2,464      
Exercise of options and issuance of restricted share capital, net of issuance costs (in shares)   414,911      
Stock- based compensation 17    17      
Net income 3,450          3,450
Balance at Jun. 30, 2014 $ 25,353 $ 934 $ 58,011    $ (33,592)
Balance (in shares) at Jun. 30, 2014   13,699,055      
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CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Cash flows from operating activities:    
Net income $ 3,450 $ 4,127
Adjustments to reconcile net income to net cash used in operating activities:    
Depreciation and amortization 817 21
Accrued severance pay 168 20
Stock-based compensation 17   
Deferred tax    (3,010)
Increase in trade receivables, net (7,334) (860)
Decrease (increase) in other accounts receivable and prepaid expenses 1,366 (361)
Increase in inventories, net (342) (49)
Increase (decrease) in trade payables 781 (4)
Increase in employees and payroll accruals 542 186
Increase (decrease) in accrued expenses and other liabilities (1,667) 176
Net cash provided by (used in) operating activities (2,202) 246
Cash flows from investing activities:    
Purchase of property and equipment (168) (76)
Decrease in severance pay fund (55) (7)
Liability for future earn-out (230)   
Restricted bank deposits, net (478)   
Net cash used in investing activities (931) (83)
Cash flows from financing activities:    
Short-term bank credit, net 25 (20)
Proceeds from issuance of restricted share capital, net of issuance costs 2,449   
Proceeds from exercise of options, net 45   
Net cash (used in) provided by financing activities 2,519 (20)
Increase (decrease) in cash and cash equivalents (614) 143
Cash and cash equivalents at the beginning of the year 2,673 225
Cash and cash equivalents at the end of the year $ 2,059 $ 368
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SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Cash paid during the period for:    
Interest    [1]    [1]
Income taxes, net    $ 9
[1] Less than $1.
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GENERAL
6 Months Ended
Jun. 30, 2014
GENERAL [Abstract]  
GENERAL

NOTE 1: GENERAL

 

 

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 private and public organizations. The Company provides cutting edge real-time positioning, tracking, monitoring and verification solutions enabled by its PureRF wireless hybrid 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 sales offices in the U.S, Tanzania, Panama, Ecuador and Israel.

 

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.

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UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6 Months Ended
Jun. 30, 2014
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  
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, 2014 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, 2013.

 

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, 2013 and the accompanying notes.

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COMMITMENTS AND CONTINGENT LIABILITIES - LITIGIATION
6 Months Ended
Jun. 30, 2014
COMMITMENTS AND CONTINGENT LIABILITIES - LITIGIATION [Abstract]  
COMMITMENTS AND CONTINGENT LIABILITIES - LITIGIATION

NOTE 3: COMMITMENTS AND CONTINGENT LIABILITIES – LITIGIATION

 

  1. According to a success based consulting agreement from November 29, 2009, Periscope Finance Ltd. (“Periscope”), committed to assist the Company in finding an investor, With the following payments terms: (i) for any investment of up to $2 million, an amount equal to 6% of the investment amount and (ii) options for 3% of the Company's share capital. (iii) for any amount over $2 million, an additional $25 for any $1 million and an additional options for 1% of the Company's share capital. Periscope claims that they are responsible for an investment by Sigma Wave, the Company's current controlling shareholder. The Company believes that Periscope is not entitled to any payment, since the agreement with Periscope was never approved by the Company's authorized organs and since the acquisition of the Company's convertible bond from a bondholder by Sigma Wave was not "an investment in the company" (the Company was not part of the transaction). In addition, the Company position is that even if the agreement was enforceable, it terminated prior to November 28, 2010, and as such the Sigma transaction (not an investment), occurred after the term of the agreement with Periscope terminated.  In April, 2013, Periscope proposed a settlement agreement, which was presented at the Company's general assembly for approval but this agreement was rejected by the general assembly in its annual meeting on May 9, 2013. Both parties agreed to go into a mediation process, which was ended with no agreement between the parties. In August 2014, Periscope proposed a new settlement agreement, which is currently under evaluation.

 

  2. As part of the acquisition of the SmartID division of OTI in December 2013, 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.
 
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GENERAL (Details) (USD $)
In Millions, unless otherwise specified
0 Months Ended
Dec. 26, 2013
GENERAL [Abstract]  
Cash paid for acquisition $ 10
Cash paid for acquisition, net 8.8
Maximum contingent payments $ 12.5
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COMMITMENTS AND CONTINGENT LIABILITIES - LITIGIATION (Details) (Periscope [Member], USD $)
Nov. 29, 2009
Periscope [Member]
 
Registration Payment Arrangement [Line Items]  
Investment amount $ 2,000,000
Incremental investment 1,000,000
Additional fee $ 25,000
Percentage of investment amount 6.00%
Percentage of share capital 3.00%
Additional percentage of share capital 1.00%