Reports Q3 Revenue of $6.3 million and Gross Profit of $2.1 million, approximately double compared to the third quarter of last year, and swing to Positive EBITDA of $0.4 million

TEL AVIV, Israel, Oct. 26, 2022 /PRNewswire/ -- SuperCom (NASDAQ:SPCB), a global provider of secured solutions for the e-Government, IoT, and Cybersecurity sectors, today reported results for the third quarter of 2022, ended September 30, 2022.

Third Quarter Financial Highlights Ended September 30, 2022 (Compared to the Third Quarter of 2021)

Revenue increased 102% to $6.3 million from $3.1 million in the third quarter of last year and increased 97% from $3.2 million in the second quarter of 2022.
Gross Profit increased 96% to $2.1 million compared to $ 1.1 million last year.
Research and Development expenses increased 52% to $0.96 million compared to $0.63 million, reflecting increased investment to enhance existing solutions and to accelerate development of new products in the IoT and Cyber Security sectors.
Sales and Marketing expenses were $0.65 million compared to $0.46 million, reflecting investment in a proactive sales strategy to expand SuperCom's footprint in the European and North American markets.
Non-GAAP Operating Income increased by $415,000 to positive $230,000 from an Operating Loss of ($185,000) last year.
Positive EBITDA of $0.41 million compared to negative EBITDA of ($0.05) million last year, reflecting the benefits of deployment of new IoT projects and operating leverage.
Non-GAAP EPS was ($0.02) compared to ($0.03).
Cash and cash equivalents and restricted cash were $3.1 million on September 30, 2022, compared to $4.6 million at the end of 2021.

Recent Business Highlights:

Won and launched a $33 million national EM project in Romania, the largest new European EM project awarded in the industry this year. With a focus on domestic violence, the project is expected to help protect up to 15,000 families per month over a six year period and includes the deployment of SuperCom's PureSecurity Electronic Monitoring (EM) Suite for Domestic Violence monitoring, GPS Tracking of offenders, and a home detention monitoring program.
Won a new $1.7 million contract with an existing customer of the e-Government division.
Signed second and third new GPS monitoring contracts in Idaho with two County Juvenile Departments, which will use SuperCom's PureTrack GPS smartphone products to monitor their caseload for location compliance.
Won a contract with a new customer in Southern California to deploy SuperCom's PureSecurity Electronic Monitoring Suite. The new customer is a long-standing provider of products and services to the Criminal Justice market with operations primarily in Southern California.
Secured a new GPS monitoring contract in Texas to monitor juvenile probation clients.
Awarded a contract with the Swedish National Board of Institutional Care for a full-scale high-security Juvenile electronic monitoring project to deploy SuperCom's PureSecurity Electronic Monitoring (EM) Suite. This project marks SuperCom's third national electronic monitoring project in Sweden and its fifth national project in the Nordic countries.
Won and launched Croatia's first full-scale electronic monitoring project in the country, which will include deployment of SuperCom's PureSecurity Electronic Monitoring Suite. The project was formally awarded earlier this year through a formal bid process conducted by Croatia's Ministry of Justice and Administration.
Secured a new governmental electronic monitoring contract in Wyoming. The contracting agency is an Adult and Juvenile Probation Agency with plans to use SuperCom's PureTrack GPS smartphone products to monitor their caseload for location compliance.

Management Commentary:

"In recent years, we have worked tirelessly to build Supercom's reputation in the IoT offender tracking space while gradually climbing the value chain of the projects we've won and executed. We are proud to have won the largest European Electronic Monitoring project launched this year, valued at over $33 million. We believe that we have developed the best technology in the market and the necessary infrastructure to support EM projects of almost any complexity and magnitude, as we've repeatedly demonstrated over the past years. We also believe that the stellar reputation that we've built will serve us well as we strive for further growth and continue to participate in tenders for additional projects around the world," commented Ordan Trabelsi, President and CEO of SuperCom.

"We're gratified to start to realize the significant return we had expected from our years of investment in the IoT division, as reflected in our third quarter financial results. Revenue reached $6.3 million, a year-over-year increase of 102%, and a quarterly sequential increase of 98%. New project launches and orders from existing customers in Europe and North America also supported revenue growth. This quarter the IoT division grew 150% year over year, which was significantly more than the decline in the legacy business, leading to strong total revenue growth."

"In the third quarter, we also returned to positive EBITDA, which reached $0.4 million compared to negative EBITDA of $0.7 million in the previous sequential quarter. The positive swing of $1.1 million reflects the benefits of operating leverage and scalability associated with deploying new IoT projects on top of a stable and robust operating structure."

"We expect our significant investments in R&D and sales and marketing to continue to yield nice returns as we work hard to maintain our leading edge in technology and expedite market expansion with our new proactive sales approach. Taken together with our high win rates in competitive RFPs and a steady recurring revenue base of over 80%, we are excited and feel confident about SuperCom's growth in the years ahead," concluded Mr. Trabelsi.

Conference Call

The Company will hold a conference call on October 26, 2022, at 10:00 a.m. Eastern time (7 a.m. Pacific time) to discuss the second quarter results, followed by a question and answer session.

Conference Call Dial-In Information:

Date: Wednesday, October 26, 2022

Time: 10:00 a.m. Eastern Time / 7:00 a.m. Pacific Time / 17:00 p.m. Israel Time

U.S. toll-free: 877-545-0320

Israel toll-free: 1-809-423-853

International: 973-528-0002

Access Code: 577031

Link: https://www.webcaster4.com/Webcast/Page/2259/46925

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.

SuperCom Investor Relations:

ir@supercom.com

About SuperCom

Since 1988, SuperCom has been a global provider of traditional and digital identity solutions, providing advanced safety, identification and security solutions to governments and organizations, both private and public, throughout the world. Through its proprietary e-government platforms and innovative solutions for traditional and biometrics enrollment, personalization, issuance and border control services, SuperCom has inspired governments and national agencies to design and issue secure Multi-ID documents and robust digital identity solutions to its citizens and visitors. SuperCom offers a unique all-in-one field-proven RFID & mobile technology and product suite, accompanied by advanced complementary services for various industries including healthcare and homecare, security and safety, community public safety, law enforcement, electronic monitoring, livestock monitoring, and building and access automation. For more information, visit www.supercom.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements preceded or followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "projects", "estimates", "plans", and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical or current facts. These forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from the statements made. Examples of these statements include, but are not limited to, statements regarding business and economic trends, the anticipated effects of the COVID-19 outbreak on travel and physical locations, the levels of consumer, business and economic confidence generally, the duration of the COVID-19 outbreak and severity of such outbreak, the pace of recovery following the COVID-19 outbreak, the effect on our supply chain, our ability to implement cost containment and business recovery strategies and resulting anticipated impact of such outbreak on our business, financial condition and results of operations, the adverse effects of the COVID-19 outbreak on our business or the market price of our ordinary shares, and other risks and uncertainties described in the forward looking statements and in the section captioned "Risk Factors" in our Annual Report on Form 20-F for the year ended December 31, 2021, filed with the U.S. Securities and Exchange Commission (the "SEC") on April 4, 2022, our reports on Form 6-K filed from time to time with the SEC and our other filings with the SEC. Except as required by law, we not undertake any obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this press release.

Results presented in this press release are based on management's estimated unaudited analysis of financial results for the presented periods. SuperCom's independent registered accounting firm has not audited the financial data discussed in this press release. During the course of SuperCom's quarter- and fiscal year-end closing procedures and review process, SuperCom may identify items that would require it to make adjustments, which may be material, to the information presented in this press release. As a result, the estimate financial results constitute forward-looking information and are subject to risks and uncertainties, including possible adjustments to such results.

Use of Non-GAAP Financial Information

In addition to disclosing financial results calculated in accordance with United States generally accepted accounting principles (GAAP), this release of operating results also contains non-GAAP financial measures, which SuperCom believes are the principal indicators of the operating and financial performance of its business. Management believes the non-GAAP financial measures provided are useful to investors' understanding and assessment of the Company's on-going core operations and prospects for the future, as the charges eliminated are not part of the day-to-day business or reflective of the core operational activities of the Company. Management uses these non-GAAP financial measures as a basis for strategic decisions, forecasting future results and evaluating the Company's current performance. However, such measures should not be considered in isolation or as substitutes for results prepared in accordance with GAAP. Reconciliation of the non-GAAP measures to the most comparable GAAP measures are provided in the schedules attached to this release.

SUPERCOM LTD.
CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)




	As of September 30, 2022	As of December 31, 2021
	Unaudited	Audited

CURRENT ASSETS
Cash and cash equivalents	2,114	3,537
Restricted bank deposits	1,017	1,067
Trade receivable, net	13,704	11,061
Patents	5,283	5,283
Other accounts receivable and prepaid expenses	1,865	1,599
Inventories, net	3,592	3,561

Total current assets	27,575	26,108

LONG-TERM ASSETS
Severance pay funds	465	487
Deferred tax long term	202	202
Customer Contracts	699	936
Software and other IP	2,211	2,495
Operating lease right-of-use assets	584	882
Other Assets, net	2,443	2,179
Goodwill	7,026	7,026
Property and equipment, net	1,640	1,804
Total long-term assets	15,270	16,011

Total Assets	42,845	42,119

CURRENT LIABILITIES
Short-term loans and other	-	207
Trade payables	1,188	1,395
Employees and payroll accruals	1,682	2,119
Related parties	159	172
Accrued expenses and other liabilities	1,374	1,559
Deferred revenues ST	685	151

Total current liabilities	5,088	5,603

LONG-TERM LIABILITIES

Long-term loan	33,332	30,451
Accrued severance pay	505	529
Deferred tax liability	170	170
Deferred revenues	49	49
Operating lease liabilities	600	925

Total long-term liabilities	34,656	32,124

SHAREHOLDERS' EQUITY:
Ordinary shares	3,057	2,028
Additional paid-in capital	102,862	97,833
Accumulated deficit	(102,818)	(95,469)

Total shareholders' equity	3,101	4,392

Total liabilities and equity	42,845	42,119

SUPERCOM LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands)




	Three months ended
	September 30, 2022		September 30, 2021
	Unaudited		Unaudited

REVENUES		6,263	3,108
COST OF REVENUES		(4,132)	(2,022)

GROSS PROFIT		2,131	1,086

OPERATING EXPENSES:
Research and development		958	625
Selling and marketing		652	457
General and administrative		1,370	1,107
Other expenses		-	689


Total operating expenses		2,980	2,878

OPERATING LOSS		(849)	(1,792)
FINANCIAL EXPENSES, NET		(1,253)	(647)

LOSS BEFORE INCOME TAX		(2,102)	(2,439)
INCOME TAX EXPENSE		-	-

NET LOSS FOR THE PERIOD		(2,102)	(2,439)

SUPERCOM LTD.
Reconciliation Table of GAAP to Non-GAAP Figures and EBITDA to Net Income
(U.S. dollars in thousands)




	Three months ended
	September 30, 2022		September 30, 2021
	Unaudited		Unaudited

GAAP gross profit		2,131	1,086
Amortization of intangible assets		88	88
Non-GAAP gross profit		2,219	1,174

GAAP Operating Loss		(849)	(1,792)
Amortization of intangible assets		484	380
Foreign Currency Loss		595	538
One-time expense related to settlement		-	689
Non-GAAP operating profit		230	(185)
GAAP net Loss		(2,102)	(2,439)
Amortization of intangible assets		484	380
One-time expense related to settlement		-	689
Foreign Currency Loss		595	538
Non-GAAP net Loss		(1,023)	(832)
Non-GAAP EPS		(0.02)	(0.03)

Net loss for the period		(2,102)	(2,439)
Financial expenses (income), net		1,253	647
Depreciation and Amortization		665	512
One-time expense related to settlement		-	689
Foreign Currency Loss		595	538
EBITDA *		411	(53)
* *EBITDA* is a non-GAAP financial measure generally defined as earnings before interest, taxes, depreciation and amortization and other non-cash or one-time expenses.

SUPERCOM LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands)




	Nine months ended
	September 30, 2022		September 30, 2021
	Unaudited		Unaudited

REVENUES		12,527	9,233
COST OF REVENUES		(7,780)	(4,691)

GROSS PROFIT		4,747	4,542

OPERATING EXPENSES:
Research and development		2,750	1,871
Selling and marketing		2,115	1,204
General and administrative		3,858	2,913
Other expenses, net		-	689

Total operating expenses		8,723	6,677

OPERATING LOSS		(3,976)	(2,135)
FINANCIAL EXPENSES, NET		(3,285)	(2,566)

LOSS BEFORE INCOME TAX		(7,261)	(4,701)
INCOME TAX EXPENSE		-	(5)

NET LOSS FOR THE PERIOD		(7,261)	(4,706)

SUPERCOM LTD.
Reconciliation Table of GAAP to Non-GAAP Figures and EBITDA to Net Income
(U.S. dollars in thousands)




	Nine months ended
	September 30, 2022		September 30, 2021
	Unaudited		Unaudited

GAAP gross profit		4,747	4,542
Amortization of intangible assets		265	264
Non-GAAP gross profit		5,012	4,806

GAAP Operating Loss		(3,976)	(2,135)
Amortization of intangible assets		1,411	1,135
One-time expenses		-	723
Foreign Currency Loss		1,479	1,195
Non-GAAP operating profit		(1,086)	918

GAAP net Loss		(7,261)	(4,706)
Amortization of intangible assets		1,411	1,135
One-time expenses		-	723
Foreign Currency Loss		1,479	1,195

Non-GAAP net Loss		(4,371)	(1,648)
Non-GAAP EPS		(0.01)	(0.01)

Net loss for the period		(7,261)	(4,706)
Income tax expense (benefit)		-	5
Financial expenses (income), net		3,285	2,566
Depreciation and Amortization		1,928	1,501
One-time expense		-	723
Foreign Currency Loss		1,479	1,195
EBITDA *		(569)	1,284
* *EBITDA* is a non-GAAP financial measure generally defined as earnings before interest, taxes, depreciation and amortization and other non-cash or one-time expenses.

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SOURCE SuperCom Ltd.

SuperCom Reports Year-over-Year Revenue Growth of 102% for the Third Quarter 2022