¨
|
REGISTRATION
STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT
OF 1934
|
x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
¨
|
SHELL
COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
|
Title of Each Class
|
Name of Each Exchange on Which
Registered
|
|
Ordinary
Shares, NIS 0.20 par
value
per share
|
NASDAQ
Capital Market
|
PART
I
|
1
|
||
ITEM
1.
|
IDENTITY
OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
|
1
|
|
ITEM
2.
|
OFFER
STATISTICS AND EXPECTED TIMETABLE
|
1
|
|
ITEM
3.
|
KEY
INFORMATION
|
1
|
|
A.
|
SELECTED
FINANCIAL DATA
|
1
|
|
B.
|
CAPITALIZATION
AND INDEBTEDNESS
|
3
|
|
C.
|
REASONS
FOR THE OFFER AND USE OF PROCEEDS
|
3
|
|
D.
|
RISK
FACTORS
|
3
|
|
ITEM
4.
|
INFORMATION
ON THE COMPANY
|
21
|
|
A.
|
HISTORY
AND DEVELOPMENT OF THE COMPANY
|
21
|
|
B.
|
BUSINESS
OVERVIEW
|
22
|
|
C.
|
ORGANIZATIONAL
STRUCTURE
|
38
|
|
D.
|
PROPERTY,
PLANTS AND EQUIPMENT
|
39
|
|
ITEM
4A.
|
UNRESOLVED
STAFF COMMENTS
|
39
|
|
ITEM
5.
|
OPERATING
AND FINANCIAL REVIEW AND PROSPECTS
|
39
|
|
A.
|
OPERATING
RESULTS
|
43
|
|
B.
|
LIQUIDITY
AND CAPITAL RESOURCES
|
49
|
|
C.
|
RESEARCH
AND DEVELOPMENT, PATENTS AND LICENSES
|
55
|
|
D.
|
TREND
INFORMATION
|
55
|
|
E.
|
OFF–BALANCE
SHEET ARRANGEMENTS
|
56
|
|
F.
|
TABULAR
DISCLOSURE OF CONTRACTUAL OBLIGATIONS
|
56
|
|
ITEM
6.
|
DIRECTORS,
SENIOR MANAGEMENT AND EMPLOYEES
|
57
|
|
A.
|
DIRECTORS
AND SENIOR MANAGEMENT
|
57
|
|
B.
|
COMPENSATION
|
59
|
|
C.
|
BOARD
PRACTICES
|
61
|
|
D.
|
EMPLOYEES
|
64
|
|
E.
|
SHARE
OWNERSHIP
|
64
|
|
ITEM
7.
|
MAJOR
SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
|
65
|
|
A.
|
MAJOR
SHAREHOLDERS
|
65
|
|
B.
|
RELATED
PARTY TRANSACTIONS
|
66
|
|
C.
|
INTERESTS
OF EXPERTS AND COUNSEL
|
67
|
|
ITEM
8.
|
FINANCIAL
INFORMATION
|
67
|
|
A.
|
CONSOLIDATED
STATEMENTS AND OTHER FINANCIAL INFORMATION
|
67
|
|
B.
|
SIGNIFICANT
CHANGES
|
68
|
|
ITEM
9.
|
THE
OFFER AND LISTING
|
68
|
|
A.
|
OFFER
AND LISTING DETAILS
|
68
|
|
B.
|
PLAN
OF DISTRIBUTION
|
70
|
C.
|
MARKETS
|
70
|
|
D.
|
SELLING
SHAREHOLDERS
|
70
|
|
E.
|
DILUTION
|
70
|
|
F.
|
EXPENSES
OF THE ISSUE
|
70
|
|
ITEM
10.
|
ADDITIONAL
INFORMATION
|
70
|
|
A.
|
SHARE
CAPITAL
|
70
|
|
B.
|
MEMORANDUM
AND ARTICLES OF ASSOCIATION
|
70
|
|
C.
|
MATERIAL
CONTRACTS
|
77
|
|
D.
|
EXCHANGE
CONTROLS
|
77
|
|
E.
|
TAXATION
|
77
|
|
F.
|
DIVIDENDS
AND PAYING AGENTS
|
87
|
|
G.
|
STATEMENT
BY EXPERTS
|
87
|
|
H.
|
DOCUMENTS
ON DISPLAY
|
88
|
|
I.
|
SUBSIDIARY
INFORMATION
|
88
|
|
ITEM
11.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
88
|
|
ITEM
12.
|
DESCRIPTION
OF SECURITIES OTHER THAN EQUITY SECURITIES
|
89
|
|
PART
II
|
89
|
||
ITEM
13.
|
DEFAULTS,
DIVIDEND ARREARAGES AND DELINQUENCIES
|
89
|
|
ITEM
14.
|
MATERIAL
MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS
|
89
|
|
ITEM 15T.
|
CONTROLS
AND PROCEDURES
|
90
|
|
ITEM 16A.
|
AUDIT
COMMITTEE FINANCIAL EXPERT
|
91
|
|
ITEM 16B.
|
CODE
OF ETHICS
|
91
|
|
ITEM 16C.
|
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
|
91
|
|
ITEM 16D.
|
EXEMPTIONS
FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
|
92
|
|
ITEM 16E.
|
PURCHASES
OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
PURCHASERS
|
92
|
|
ITEM 16F.
|
CHANGE
IN REGISTRANT’S CERTIFYING ACCOUNTANT
|
92
|
|
ITEM 16G.
|
CORPORATE
GOVERNANCE
|
93
|
|
PART
III
|
93
|
||
ITEM 17.
|
FINANCIAL
STATEMENTS
|
93
|
|
ITEM 18.
|
FINANCIAL
STATEMENTS
|
94
|
|
ITEM 19.
|
EXHIBITS
|
94
|
ITEM 1.
|
IDENTITY
OF DIRECTORS, SENIOR MANAGEMENT AND
ADVISERS
|
ITEM 2.
|
OFFER
STATISTICS AND EXPECTED
TIMETABLE
|
ITEM 3.
|
KEY
INFORMATION
|
|
A.
|
SELECTED
FINANCIAL DATA
|
Year Ended December 31,
|
||||||||||||||||||||
(in thousands of U.S. dollars – except weighted average number of
ordinary shares, and basic and diluted income (loss) per ordinary
share)
|
||||||||||||||||||||
2009
|
2008
|
2007
|
2006
|
2005
|
||||||||||||||||
Statement
of Operations Data:
|
||||||||||||||||||||
Revenues:
|
||||||||||||||||||||
Products
|
$ | 9,190 | $ | 12,480 | $ | 10,158 | $ | 20,641 | $ | 20,514 | ||||||||||
Services
|
2,728 | 2,758 | 3,339 | 2,900 | 1,826 | |||||||||||||||
11,918 | 15,238 | 13,497 | 23,541 | 22,340 | ||||||||||||||||
Cost
of revenues:
|
||||||||||||||||||||
Products
|
3,469 | 5,523 | 4,927 | 7,213 | 7,290 | |||||||||||||||
Services
|
590 | 502 | 466 | 183 | 108 | |||||||||||||||
4,059 | 6,025 | 5,393 | 7,396 | 7,398 | ||||||||||||||||
Gross
profit
|
7,859 | 9,213 | 8,104 | 16,145 | 14,942 | |||||||||||||||
Operating
expenses:
|
||||||||||||||||||||
Research
and development
|
4,223 | 6,506 | 7,378 | 6,826 | 5,815 | |||||||||||||||
Less
- royalty-bearing participation
|
1,633 | 2,113 | 2,096 | 1,904 | 1,735 | |||||||||||||||
Research
and development, net
|
2,590 | 4,393 | 5,282 | 4,922 | 4,080 | |||||||||||||||
Sales
and marketing
|
5,835 | 7,486 | 9,279 | 9,196 | 7,881 | |||||||||||||||
General
and administrative
|
1,643 | 2,818 | 2,391 | 2,553 | 1,689 | |||||||||||||||
Total
operating expenses
|
10,068 | 14,697 | 16,952 | 16,671 | 13,650 | |||||||||||||||
Operating
(loss) income
|
(2,209 | ) | (5,484 | ) | (8,848 | ) | (526 | ) | 1,292 | |||||||||||
Financing
income (expenses), net
|
(440 | ) | (309 | ) | 265 | 472 | 235 | |||||||||||||
Net
(loss) income
|
(2,649 | ) | (5,793 | ) | (8,583 | ) | (54 | ) | 1,527 | |||||||||||
Basic
net (loss) income per ordinary share
|
$ | (0.52 | ) | $ | (1.16 | ) | $ | (2.10 | ) | $ | (0.01 | ) | $ | 0.42 | ||||||
Weighted
average number of ordinary shares used to compute basic net income (loss)
per ordinary share
|
5,081,986 | 4,995,586 | 4,084,789 | 3,973,509 | 3,674,023 | |||||||||||||||
Diluted
net (loss) income per ordinary share
|
$ | (0.52 | ) | $ | (1.16 | ) | $ | (2.10 | ) | $ | (0.01 | ) | $ | 0.39 | ||||||
Weighted
average number of ordinary shares used to compute diluted net (loss)
income per ordinary share
|
5,081,986 | 4,995,586 | 4,084,789 | 3,973,509 | 3,890,396 | |||||||||||||||
Balance
Sheet Data:
|
||||||||||||||||||||
Working
capital
|
$ | 2,972 | $ | 6,194 | $ | 7,224 | $ | 15,783 | $ | 12,987 | ||||||||||
Total
assets
|
$ | 13,440 | $ | 17,841 | $ | 18,056 | $ | 27,753 | $ | 23,790 | ||||||||||
Shareholders’
equity
|
$ | 2,640 | $ | 4,985 | $ | 7,578 | $ | 15,373 | $ | 12,485 | ||||||||||
Share
capital
|
$ | 177 | $ | 176 | $ | 122 | $ | 120 | $ | 107 |
Month
|
High
(NIS)
|
Low
(NIS)
|
||||||
March
2010 (through March 22)
|
3.787 | 3.714 | ||||||
February
2010
|
3.796 | 3.704 | ||||||
January
2010
|
3.765 | 3.667 | ||||||
December
2009
|
3.815 | 3.772 | ||||||
November
2009
|
3.826 | 3.741 | ||||||
October
2009
|
3.780 | 3.690 | ||||||
September
2009
|
3.807 | 3.729 |
Year
|
Average
(NIS)
|
|||
2010
(through March 22)
|
3.753 | |||
2009
|
3.927 | |||
2008
|
3.568 | |||
2007
|
4.085 | |||
2006
|
4.442 | |||
2005
|
4.503 |
|
B.
|
CAPITALIZATION
AND INDEBTEDNESS
|
|
C.
|
REASONS
FOR THE OFFER AND USE OF PROCEEDS
|
|
D.
|
RISK
FACTORS
|
|
·
|
the
variation in size and timing of individual purchases by our
customers;
|
|
·
|
the
absence of long-term customer purchase
contracts;
|
|
·
|
seasonal
factors that may affect capital spending by customers, such as the varying
fiscal year-ends of customers and the reduction in business during the
summer months, particularly in
Europe;
|
|
·
|
the
relatively long sales cycles for our
products;
|
|
·
|
competitive
conditions in our markets;
|
|
·
|
the
timing of the introduction and market acceptance of new products or
product enhancements by us and by our customers, competitors and
suppliers;
|
|
·
|
changes
in the level of operating expenses relative to
revenues;
|
|
·
|
product
quality problems;
|
|
·
|
supply
interruptions;
|
|
·
|
changes
in global or regional economic conditions or in the telecommunications
industry;
|
|
·
|
delays
in or cancellation of projects by
customers;
|
|
·
|
changes
in the mix of products sold;
|
|
·
|
the
size and timing of approval of grants from the Government of Israel;
and
|
|
·
|
foreign
currency exchange rates.
|
|
·
|
increased
price competition;
|
|
·
|
increased
industry consolidation among our customers, which may lead to decreased
demand for and downward pricing pressure on our
products;
|
|
·
|
changes
in customer, geographic, or product
mix;
|
|
·
|
our
ability to reduce and control production
costs;
|
|
·
|
increases
in material or labor costs;
|
|
·
|
excess
inventory and inventory holding
costs;
|
|
·
|
obsolescence
charges;
|
|
·
|
reductions
in cost savings due to changes in component pricing or charges incurred
due to inventory holding periods if parts ordering does not correctly
anticipate product demand;
|
|
·
|
changes
in distribution channels;
|
|
·
|
losses
on customer contracts; and
|
|
·
|
increased
warranty costs.
|
|
·
|
the
time involved for our customers to determine and announce their
specifications;
|
|
·
|
the
time required for our customers to process approvals for purchasing
decisions;
|
|
·
|
the
complexity of the products
involved;
|
|
·
|
the
technological priorities and budgets of our customers;
and
|
|
·
|
the
need for our customers to obtain or comply with any required regulatory
approvals.
|
|
·
|
Delays
in delivery or shortages in components could interrupt and delay
manufacturing and result in cancellations of orders for our
products.
|
|
·
|
Suppliers
could increase component prices significantly and with immediate
effect.
|
|
·
|
We
may not be able to locate alternative sources for product
components.
|
|
·
|
Suppliers
could discontinue the manufacture or supply of components used in our
products. This may require us to modify our products, which may
cause delays in product shipments, increased manufacturing costs and
increased product prices.
|
|
·
|
We
may be required to hold more inventory than would be immediately required
in order to avoid problems from shortages or
discontinuance.
|
|
·
|
We
have experienced delays and shortages in the supply of components on more
than one occasion in the past. This resulted in delays in our
delivering products to our
customers.
|
|
·
|
challenges
in staffing and managing foreign operations due to the limited number of
qualified candidates, employment laws and business practices in foreign
countries, any of which could increase the cost and reduce the efficiency
of operating in foreign countries;
|
|
·
|
our
inability to comply with import/export, environmental and other trade
compliance regulations of the countries in which we do business,
together with unexpected changes in such
regulations;
|
|
·
|
insufficient
measures to ensure that we design, implement and maintain adequate
controls over our financial processes and reporting in the
future;
|
|
·
|
our
failure to adhere to laws, regulations and contractual obligations
relating to customer contracts in various
countries;
|
|
·
|
our
inability to maintain a competitive list of distributors for indirect
sales;
|
|
·
|
tariffs
and other trade barriers;
|
|
·
|
economic
instability in foreign markets;
|
|
·
|
wars,
acts of terrorism and political
unrest;
|
|
·
|
language
and cultural barriers;
|
|
·
|
lack
of integration of foreign
operations;
|
|
·
|
currency
fluctuations;
|
|
·
|
potential
foreign and domestic tax
consequences;
|
|
·
|
technology
standards that differ from those on which our products are based, which
could require expensive redesign and retention of personnel familiar with
those standards;
|
|
·
|
longer
accounts receivable payment cycles and possible difficulties in collecting
payments, which may increase our operating costs and hurt our financial
performance; and
|
|
·
|
failure
to meet certification requirements.
|
|
·
|
market
conditions or trends in our industry and the economy as a
whole;
|
|
·
|
political,
economic and other developments in the State of Israel and
worldwide;
|
|
·
|
actual
or anticipated variations in our quarterly operating results or those of
our competitors;
|
|
·
|
announcements
by us or our competitors of technological innovations or new and enhanced
products;
|
|
·
|
changes
in the market valuations of our
competitors;
|
|
·
|
introductions
of new products or new pricing policies by us or our
competitors;
|
|
·
|
trends
in the communications or software industries, including industry
consolidation;
|
|
·
|
acquisitions
or strategic alliances by us or others in our
industry;
|
|
·
|
changes
in estimates of our performance or recommendations by financial
analysts;
|
|
·
|
changes
in our shareholder base; and
|
|
·
|
additions
or departures of key personnel.
|
ITEM
4.
|
INFORMATION
ON THE COMPANY
|
A.
|
HISTORY
AND DEVELOPMENT OF THE COMPANY
|
B.
|
BUSINESS
OVERVIEW
|
GLOSSARY
|
||
3G
|
A
third-generation digital cellular telecommunication.
|
|
3.5G
|
3.5
generation digital cellular networks.
|
|
Code
Division Multiple Access (CDMA)
|
A
digital wireless technology that uses a modulation technique in which many
channels are independently coded for transmission over a single wideband
channel.
|
|
CODEC
|
CODer/DECoder.
Converts and compresses voice signals from their analog form to digital
signals acceptable to modern digital PBXs and digital transmission
systems. It then converts and decompresses those digital signals back to
analog signals so that they can be heard and
understood.
|
|
CDMA2000
1X (EV-DO)
|
A
third-generation digital high-speed wireless technology for packet-based
transmission of text, digitized voice, video, and multimedia that is the
successor to CDMA.
|
|
Global
System for Mobile Communications (GSM)
|
A
digital wireless technology that is widely deployed in Europe and,
increasingly, in other parts of the world.
|
|
General
Packet Radio Service (GPRS)
|
A
packet-based digital intermediate speed wireless technology based on GSM
(2.5 generation)
|
|
Global
Positioning System (GPS)
|
A
satellite-based navigation system made up of a network of 24 satellites
placed into orbit by the U.S. Department of Defense. The system
is available for civilian use. GPS works in any weather conditions,
anywhere in the world, 24 hours a day. GPS satellites circle the earth
twice a day in a very precise orbit and transmit signal information to
earth. GPS receivers take this information and use triangulation to
calculate the user's exact
location.
|
IP
Multimedia Subsystem (IMS)
|
An
internationally recognized standard defining a generic architecture for
offering Voice over IP and multimedia services to multiple-access
technologies.
|
|
Internet
Protocol TV (IPTV)
|
Transmitting
video in IP packets. Also called “TV over IP,” IPTV uses streaming video
techniques to deliver scheduled TV programs or video on demand
(VOD).
|
|
Network-Attached
Storage (NAS)
|
File-level
computer data storage connected to a computer network providing data
access to heterogeneous network clients. NAS systems contain one or more
hard disks, often arranged into logical, redundant storage containers or
RAID arrays (redundant arrays of inexpensive/independent
disks).
|
|
NGN
– Next Generation Network
|
General
term for packet-based networks, whether wireline (Voice Over IP, Video
Over IP, etc.) or third-generation digital cellular telecommunications
networks
|
|
Protocol
|
A
specific set of rules, procedures or conventions governing the format,
means and timing of transmissions between two devices.
|
|
Session
|
A
lasting connection between a user (or user agent) and a peer, typically a
server, usually involving the exchange of many packets between the user’s
computer and the server. A session is typically implemented as a layer in
a network protocol.
|
|
Radio
Access Network (RAN)
|
A
part of a mobile telecommunication system. It implements a radio access
technology. Conceptually, it sits between the mobile phone, and the core
network .
|
|
Single
Board Computer (SBC)
|
A
complete computer built on a single circuit board. The design is centered
on a single or dual microprocessor with RAM, I/O and all other features
needed to be a functional computer on the one board. The term "Single
Board Computer" now generally applies to an architecture where the Single
Board Computer is plugged into a backplane to provide for I/O
cards
Single
board computers are most commonly used in industrial situations in
rackmount format for process control or embedded within other devices to
provide control and interfacing.
|
|
SIGTRAN
|
The
name, derived from signaling transport, of a defunct Internet Engineering
Task Force (IETF) working group that produced specifications for a family
of protocols that provide reliable datagram service and user layer
adaptations for Signaling System 7 (SS7) and ISDN communications
protocols. The SIGTRAN protocols are an extension of the SS7 protocol
family and are used today together with IMS.
|
|
Session
Initiation Protocol
(SIP)
|
A
simple application layer signaling protocol for VoIP implementations. It
is a textual client server based protocol and provides the necessary
mechanisms so that end user systems and proxy servers can provide various
different services.
|
Transmission
Control Protocol (TCP)
|
Is
defined in IETF RFC793. TCP provides a reliable stream delivery and
virtual connection service to applications through the use of sequenced
acknowledgment with retransmission of packets when necessary. It is one of
the core protocols of the Internet Protocol Suite. TCP is one of the two
original components of the suite (the other being Internet Protocol, or
IP), so the entire suite is commonly referred to as TCP/IP. Whereas IP
handles lower-level transmissions from computer to computer as a message
makes its way across the Internet, TCP operates at a higher level,
concerned only with the two end systems, for example a Web browser and a
Web server.
|
|
Time
Division Synchronous Code Division Multiple Access
(TD-SCDMA)
|
A
3G mobile telecommunications standard, being pursued in the People’s
Republic of China by the Chinese Academy of Telecommunications Technology
(CATT).
|
|
Triple
Play
|
A
marketing term for the provisioning of the three services: high-speed
Internet, television (Video on Demand or regular broadcasts) and telephone
service over a single broadband connection.
|
|
Universal
Mobile Telecommunications Service (UMTS)
|
A
third-generation digital high-speed wireless technology for packet-based
transmission of text, digitized voice, video, and multimedia that is the
successor to GSM.
|
|
Voice
Over IP (VoIP)
|
A
telephone service that uses the Internet as a global telephone
network.
|
|
Wireless
Application Protocol (WAP)
|
Aims
to provide Internet content and advanced telephony services to digital
mobile phones, pagers and other wireless terminals. The protocol family
works across different wireless network environments and makes web pages
visible on low-resolution and low-bandwidth devices. WAP phones are "smart
phones" allowing their users to respond to e-mail, access computer
databases and to empower the phone to interact with Internet-based content
and
e-mail.
|
|
·
|
reduced
quality degradation, reduced outages, improved network utilization and
lower churn rates;
|
|
·
|
ability
to employ fewer and less experienced maintenance staff due to the
utilization of a single test system, controlled by a central console,
ensuring ease of use and reduced learning curves;
and
|
|
·
|
decreased
support costs through centralized management, portable high-end solutions
for in-depth troubleshooting, ability to offer premium service level
agreements (“SLAs”) and level of experience (“LOE”) parameters based on
measurable parameters and all-inclusive, probe-based
solutions.
|
|
·
|
Fault
detection – to detect when there is a
problem;
|
|
·
|
Performance
– to analyze the behavior of network components and customer network usage
in order to understand trends, performance and optimization (to help
identify faults before the customer
complains);
|
|
·
|
Troubleshooting
– to drill down to resolve specific issues;
and
|
|
·
|
Pre-Mediation
– to provide call detail records (“CDR”) information to third-party
operations support systems (“OSS”) or other
solutions.
|
·
|
In developing regions,
targeting of cellular and VoIP operators. In many
regions of Latin America, Eastern Europe, Africa and the Far East, service
providers continue to roll out cellular and VoIP networks. We
believe this represents a significant opportunity for RADCOM. In 2009,
approximately 27% of our sales were derived from these regions, and we
expect them to continue to make significant contributions to our revenues
in the future. To improve our ability to reach and support customers in
emerging markets, we continue to expand our distributor network and to
provide comprehensive support.
|
·
|
In developed regions, targeting
of service providers migrating to IMS. In Europe and North America,
we have begun to benefit from the migration of top-tier service providers
to IMS activities and deployments, despite the fact that this market has
been developing more slowly than initially expected. We are seeing the
growing deployment of hybrid IMS/NGN networks, whose greater complexity
dictates a need for more sophisticated monitoring solutions. We believe
that the fact that we have secured initial customers with deployments of
our solution in live IMS operational networks positions us to benefit from
this trend in the future.
|
·
|
Continuous investment in the
RADCOM brand as the industry’s “Number One in Customer Satisfaction.”
Customer satisfaction is difficult to achieve in the network
monitoring business because of the technology challenges inherent in
monitoring complex multi-service, multi-technology, interconnected
networks, and our pursuit of this goal is a differentiating advantage. We
believe that our efforts to assure customer satisfaction have contributed
to the growth of our sales to existing customers, and, in some cases, have
helped us to replace competitors’ systems. These efforts include
enhancement of on-site support, customer-oriented product development and
support of our representatives and
distributors.
|
·
|
Formation of strategic
relationships to extend our market reach. To expand our market
reach, we have been actively pursuing selected strategic partnering
relationships, including original equipment manufacturer, or “OEM”
partners, teaming agreements and distribution agreements. Our existing
strategic relationships include an OEM and reseller agreement with NSN
Nokia Siemens and an OEM and reseller agreement with Nortel Networks.
Nortel is currently in the process of selling its relevant business unit
to a third party. Although our current sales through these relationships
are not significant, we believe that our current and future relationships
will enhance our ability to acquire additional business in the
future.
|
·
|
Continued investment in the
technological excellence of our solutions. RADCOM’s products have
always been differentiated by their advanced technology and their ability
to offer comprehensive solutions to the industry’s most difficult
problems. We intend to continue a high level of investment to maintain our
technological edge in a dynamic environment. This includes hiring of
skilled personnel and investing significant resources in training,
retention and motivation of high quality personnel. Training programs
cover areas such as technology, applications, development methodology, and
programming standards.
|
|
·
|
deployment
of next-generation networks such as UMTS, CDMA2000 and
Triple-Play;
|
|
·
|
integration
of new architectures such as high-speed downlink packet access (“HSDPA”),
high-speed uplink packet access (“HSUPA”), long-term evolution (“LTE”),
IMS, UMTS Release 6 and CDMA Rev’ A or evolution data voice
(“EVDV”);
|
|
·
|
migration
of the network core to IP technology using IMS or SIGTRAN ;
|
|
·
|
successful
delivery of advanced, complex services such as VoIP, IPTV and video
conferencing; and
|
|
·
|
proactive
management of call quality on existing and next-generation service
providers’ production networks, along with maintenance of
high-availability, high-quality voice services over packet
telephony.
|
|
·
|
Troubleshooting
– Omni-Q enables them to “drill down” to identify the source of specific
problems, using tools ranging from call or session tracing to a full
decoding of the call flow.
|
|
·
|
Performance
monitoring – service providers use Omni-Q to analyze the behavior of
network components and customer network usage to understand trends,
performance level and optimization, with the goal of identifying faults
before they compromise the end-user
experience.
|
|
·
|
Fault
detection – service providers use Omni-Q’s automatic fault detection and
service KPIs to alert them to network problems as they
arise.
|
|
·
|
Pre-Mediation
– Omni-Q generates CDRs needed to feed third-party OSSs or other
solutions.
|
|
·
|
Roaming
& interconnect management – Omni-Q can be used by service providers to
monitor their roaming and interconnect traffic. By identifying problematic
links, service providers are able to avoid revenue loss, to detect
problems with specific roaming partners and to manage interconnection
KPIs.
|
|
·
|
Statistical
reports for individual subscribers and groups of
subscribers;
|
|
·
|
Quality
of Service experienced by the subscriber over time and
location;
|
|
·
|
Aggregated
statistics for long periods of time;
and
|
|
·
|
Alerts
when thresholds are crossed.
|
|
·
|
Single
Platform: Our single-platform technology enables all functions to
be performed on one platform, as opposed to the multi-system architecture
of its competitors;
|
|
·
|
Scalable: Our
solution is fully scalable, can be migrated quickly for use with new
applications, and can be easily integrated with third-party applications;
and
|
|
·
|
Distributed
system: Our solution’s usage of GPS synchronization technology, IP
connectivity and management console/server architecture makes it ideal for
distributed environments.
|
|
·
|
converged
service providers – for post-deployment quality management solutions and
troubleshooting.
|
|
·
|
vendors
of converged network solutions – for pre-deployment, predictive test
systems.
|
|
·
|
SIPSim – a SIP services load
generator that focuses on high-stress load testing of SIP applications.
The SIPSim provides high volume performance while retaining the
flexibility needed to emulate all types of services. By emulating up to
hundreds of thousands of users over the SIPSim’s Triple M capability
(multi-IP, multi-MAC and multi-VLAN), it allows users to emulate any
service that can be emulated over any type of network configuration. The
SIPSim is capable of stress-testing different SIP services and network
elements, including softswitch, SBC and IMS networks. Using the SipStudio,
the user can build scripts to customize the SipSim to simulate almost any
call flow. This is especially important in the IMS environment, where
network topology is complex and each new service introduces a new
flow.
|
|
·
|
MediaPro – a real-time
hardware-based, multi-protocol, multi-technology VoIP and Video analyzer,
capable of analyzing a wide variety of VoIP signaling protocols and media
CODECs.
|
|
·
|
QPro – a
multi-technology call quality analyzer that enables users to test many
call quality parameters over a variety of
interfaces.
|
Year ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
(in thousands of U.S. dollars)
|
||||||||||||
The
Omni-Q family
|
$ | 9,050 | $ | 11,681 | $ | 9,537 | ||||||
The
Performer family and others
|
$ | 2,868 | $ | 3,557 | $ | 3,960 | ||||||
Total
|
$ | 11,918 | $ | 15,238 | $ | 13,497 |
Year ended December 31,
|
Year ended December 31,
|
|||||||||||||||||||||||
(in millions of U.S. dollars)
|
(in percentages)
|
|||||||||||||||||||||||
2009
|
2008
|
2007
|
2009
|
2008
|
2007
|
|||||||||||||||||||
Europe
|
5.8 | 6.3 | 5.7 | 48.7 | % | 41.4 | % | 42.2 | % | |||||||||||||||
North
America
|
2.8 | 2.5 | 4.3 | 23.5 | 16.4 | 31.8 | ||||||||||||||||||
Far
East
|
2.2 | 2.4 | 1.6 | 18.5 | 15.8 | 11.9 | ||||||||||||||||||
South
America
|
0.7 | 3.8 | 1.2 | 5.9 | 25.0 | 8.9 | ||||||||||||||||||
Others
|
0.4 | 0.2 | 0.7 | 3.4 | 1.4 | 5.2 | ||||||||||||||||||
Total
revenues
|
11.9 | 15.2 | 13.5 | 100.0 | % | 100.0 | % | 100.0 | % |
|
·
|
Enhancement of on-site support:
We are dedicated to the provision of timely, effective and
professional support of all our customers. On-call support is provided by
our direct sales/support force as well as by our representatives,
distributors and OEM partners. In addition, we routinely contact our
customers to solicit feedback and promote full usage of our solutions. We
provide all customers with a free one-year warranty, which includes
bug-fixing solutions and a hardware warranty on our
products. After the initial update period, we offer extended
warranties which can be purchased for one, two or three-year periods.
Generally the cost of the extended warranty is based on a percentage of
the overall cost of the product as an annual maintenance
fee.
|
|
·
|
Customer-oriented product
development: with the goal of continuously enhancing our customer
relationships, we meet regularly with customers, and use the feedback from
these discussions to improve our products and guide our R&D
roadmap.
|
|
·
|
Support of our representatives
and distributors: we provide a high level of pre and post sale
technical support to our distributors and representatives in the field. We
use a broad range of channels to deliver this support, including help
desks, websites, newsletters, technical briefs, E-Learning systems,
technical seminars, and others.
|
Name of Subsidiary
|
Jurisdiction of
Incorporation
|
|
RADCOM Equipment,
Inc.
|
New
Jersey
|
|
RADCOM
Investments (1996) Ltd.
|
Israel
|
|
·
|
In
emerging markets, including South America, Eastern Europe, Africa and the
Far East, our strategy has been to target customers rolling out cellular
and Voice Over IP services.
|
|
·
|
In
developed markets, including Europe and North America, we have been
targeting the IMS activities and deployments of top-tier wireline service
providers, and the mobile broadband networks of wireless
operators.
|
|
·
|
To
improve our ability to penetrate targeted customers in all regions, we
have pursued strategic partnering relationships, including OEM
partnerships and teaming agreements and distribution agreements. During
2008, we announced an OEM partnership with MSN Nokia Siemens and initiated
joint marketing activities with some of its local
offices.
|
Subcontractor
|
||
Planning
|
Purchasing
component parts
|
|
Assembly
|
||
Testing
|
Year Ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
Sales
|
100.0 | % | 100.0 | % | 100.0 | % | ||||||
Cost
of sales
|
34.1 | 39.5 | 40.0 | |||||||||
Gross
profit
|
65.9 | 60.5 | 60.0 | |||||||||
Operating
expenses:
|
||||||||||||
Research
and development
|
35.4 | 42.7 | 54.7 | |||||||||
Less
royalty-bearing participation
|
13.7 | 13.9 | 15.5 | |||||||||
Research
and development, net
|
21.7 | 28.8 | 39.1 | |||||||||
Sales
and marketing
|
49.0 | 49.1 | 68.7 | |||||||||
General
and administrative
|
13.8 | 18.5 | 17.7 | |||||||||
Total
operating expenses
|
84.5 | 96.4 | 125.6 | |||||||||
Operating loss
|
18.5 | 36.0 | 65.6 | |||||||||
Financial
income (loss), net
|
(3.7 | ) | (2.0 | ) | 2.0 | |||||||
Net loss
|
(22.2 | ) | (38.0 | ) | (63.6 | ) |
Revenues
|
||||||||||||||||||||
Year Ended December 31,
|
% Change
|
% Change
|
||||||||||||||||||
(in millions of U.S. dollars)
|
2009 vs.
|
2008 vs.
|
||||||||||||||||||
2009
|
2008
|
2007
|
2008
|
2007
|
||||||||||||||||
The
Omni-Q family
|
9.0 | 11.7 | 9.5 | (23 | ) | 23 | ||||||||||||||
The
Performer family and others
|
2.9 | 3.5 | 4.0 | (17 | ) | (12 | ) | |||||||||||||
Total
revenues
|
11.9 | 15.2 | 13.5 | (22 | ) | 13 |
Year Ended December 31,
|
Year Ended December 31,
|
|||||||||||||||||||||||
(in millions of U.S. dollars)
|
(as percentages)
|
|||||||||||||||||||||||
2009
|
2008
|
2007
|
2009
|
2008
|
2007
|
|||||||||||||||||||
Europe
|
5.8 | 6.3 | 5.7 | 48.7 | % | 41.4 | % | 31.8 | % | |||||||||||||||
North
America
|
2.8 | 2.5 | 4.3 | 23.5 | 16.4 | 42.2 | ||||||||||||||||||
Far
East
|
2.2 | 2.4 | 1.6 | 18.5 | 15.8 | 11.9 | ||||||||||||||||||
South
America
|
0.7 | 3.8 | 1.2 | 5.9 | 25.0 | 8.9 | ||||||||||||||||||
Others
|
0.4 | 0.2 | 0.7 | 3.4 | 1.4 | 5.2 | ||||||||||||||||||
Total
revenues
|
11.9 | 15.2 | 13.5 | 100.0 | % | 100.0 | % | 100.0 | % |
Year ended December 31,
|
||||||||||||
(in millions of U.S. dollars)
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
Cost
of sales - Product
|
3.5 | 5.5 | 4.9 | |||||||||
Cost
of sales - Services
|
0.6 | 0.5 | 0.5 | |||||||||
Total
Cost of sales
|
4.1 | 6.0 | 5.4 | |||||||||
Gross
profit
|
7.9 | 9.2 | 8.1 |
Year ended December 31,
|
% Change
|
% Change
|
||||||||||||||||||
(in millions of U.S. dollars)
|
2009 vs.
|
2008 vs.
|
||||||||||||||||||
2009
|
2008
|
2007
|
2008
|
2007
|
||||||||||||||||
Research
and development
|
4.2 | 6.5 | 7.4 | (35.4 | ) | (12.2 | ) | |||||||||||||
Less
royalty-bearing participation
|
1.6 | 2.1 | 2.1 | (23.8 | ) | - | ||||||||||||||
Research
and development, net
|
2.6 | 4.4 | 5.3 | (40.9 | ) | (17.0 | ) | |||||||||||||
Sales
and marketing
|
5.8 | 7.5 | 9.3 | (22.7 | ) | (19.4 | ) | |||||||||||||
General
and administrative
|
1.6 | 2.8 | 2.4 | (42.9 | ) | 16.7 | ||||||||||||||
Total
operating expenses
|
10.0 | 14.7 | 17.0 | (32.0 | ) | (13.5 | ) |