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RADCOM LTD

RADCOM LTDRDCMEarnings & Financial Report

Nasdaq

RADCOM Ltd. is a provider of quality monitoring and service assurance software for telecommunications carriers, founded in 1991. RADCOM's U.S. headquarters is in Paramus, New Jersey and its international headquarters is in Tel Aviv, Israel. RADCOM is a member of the RAD Group of companies. The company is traded on the Nasdaq exchange.

What changed in RADCOM LTD's 20-F — 2022 vs 2023

Top changes in RADCOM LTD's 2023 20-F

396 paragraphs added · 361 removed · 274 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

56 edited+24 added−22 removed143 unchanged
Factors that may contribute to fluctuations in our quarterly results of operations including, ● the variation in size and timing of individual purchases by our customers and the relatively long sales cycles for our solutions; ● the request for longer payment terms from us or long-term financing of customers’ purchases from us, as well as additional conditions tied to such payment terms; ● competitive conditions in our markets; ● the timing of the introduction and market acceptance of new solutions or enhancements by us and by our customers, competitors and suppliers; ● changes in the level of operating expenses relative to revenues; ● quality problems and 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 product mix; ● the size and timing of approval of grants from the Government of Israel; and ● foreign currency exchange rates. 4 Our costs of revenues consist of variable costs, which include labor and related costs, including costs incurred in software development customization for projects and deployment costs, the use of hardware, inventory write-offs, packaging, importation taxes, shipping and handling costs, license fees for software components of third parties, warranty expenses, allocation of overhead expenses, subcontractors’ expenses, royalties to the Israel Innovation Authority, or IIA, and share-based compensation.
Factors that may contribute to fluctuations in our quarterly results of operations including, ● the variation in size and timing of individual purchases by our customers and the relatively long sales cycles for our solutions; ● the request for longer payment terms from us or long-term financing of customers’ purchases from us, as well as additional conditions tied to such payment terms; ● competitive conditions in our markets; ● the timing of the introduction and market acceptance of new solutions or enhancements by us and by our customers, competitors and suppliers; ● changes in the level of operating expenses relative to revenues; ● quality problems and 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 product mix; ● the size and timing of approval of grants from the Government of Israel; and ● foreign currency exchange rates. 4 Our costs of revenues consist of variable costs, which include labor and related costs, including costs incurred in software development customization for projects and deployment costs, the use of hardware, inventory write-offs, packaging, importation taxes, shipping and handling costs, license fees for software components of third parties, warranty expenses, allocation of overhead expenses, subcontractors’ expenses, royalties to the IIA, and share-based compensation.
Also, in the event that we choose not to convene an extraordinary shareholders meeting pursuant to such a request, Sections 64-65 of the Companies Law provide, among others, that such shareholders may independently convene an extraordinary shareholders meeting within three months (or under court’s ruling) and require us to cover the costs, within reason, and as a result thereof, our directors might be required to repay us such costs.
Also, in the event that we choose not to convene an extraordinary shareholders meeting pursuant to such a request, Sections 64-65 of the Israeli Companies Law provide, among others, that such shareholders may independently convene an extraordinary shareholders meeting within three months (or under court’s ruling) and require us to cover the costs, within reason, and as a result thereof, our directors might be required to repay us such costs.
Failure to complete a larger project successfully could expose us to potential contractual penalties, claims for breach of contract and in extreme cases, to cancellation of the entire project, and may result in difficulty in collecting payment and recognizing revenues from such project. Cyber-attacks on our customers’ networks involving our products could have an adverse effect on our business.
Failure to complete a larger project successfully could expose us to potential contractual penalties, claims for breach of contract and in extreme cases, to cancellation of the entire project, and may result in difficulty in collecting payment and recognizing revenues from such project. 7 Cyber-attacks on our customers’ networks involving our products could have an adverse effect on our business.
Disruptions to our information technology, or IT, systems due to system failures or cybersecurity attacks may impact our operations, result in sensitive customer information being compromised, which would negatively materially adversely affect our reputation and business. We believe that an appropriate IT infrastructure is important in order to support our daily operations and the growth of our business.
Disruptions to our IT systems due to system failures or cybersecurity attacks may impact our operations, result in sensitive customer information being compromised, which would negatively materially adversely affect our reputation and business. We believe that an appropriate IT infrastructure is important in order to support our daily operations and the growth of our business.
If our shareholders decide to exercise these rights in a way inconsistent with our management’s strategic plans, our management’s ability to run our company may be disrupted, and this process may entail significant costs to us. We currently benefit from government programs that may be discontinued or reduced. We currently receive grants under Government of Israel programs.
If our shareholders decide to exercise these rights in a way inconsistent with our management’s strategic plans, our management’s ability to run our company may be disrupted, and this process may entail significant costs to us. 13 We currently benefit from government programs that may be discontinued or reduced. We currently receive grants under Government of Israel programs.
Furthermore, Israeli tax considerations may make potential transactions undesirable to us or to some of our shareholders. 13 It may be difficult to effect service of process, assert U.S. securities laws claims and enforce U.S. judgments in Israel against us or our directors, officers and auditors named in this Annual Report. We were incorporated in Israel.
Furthermore, Israeli tax considerations may make potential transactions undesirable to us or to some of our shareholders. It may be difficult to effect service of process, assert U.S. securities laws claims and enforce U.S. judgments in Israel against us or our directors, officers and auditors named in this Annual Report. We were incorporated in Israel.
A regional or global health pandemic, depending upon its duration and severity, could have a material adverse effect on our business. For example, the COVID-19 pandemic has had numerous effects on the global economy and governmental authorities around the world implemented measures to reduce the spread of COVID-19.
A regional or global health pandemic, depending upon its duration and severity, could have a material adverse effect on our business. For example, the COVID-19 pandemic had numerous effects on the global economy and governmental authorities around the world implemented measures to reduce the spread of COVID-19.
Accordingly, our shareholders may not be afforded the same protection as provided under Nasdaq’s corporate governance rules. For more information, see “Item 16G—Corporate Governance”. General Risk Factors Natural disasters and other events beyond our control could harm our business.
Accordingly, our shareholders may not be afforded the same protection as provided under Nasdaq’s corporate governance rules. For more information, see “Item 16G—Corporate Governance”. 14 General Risk Factors Natural disasters and other events beyond our control could harm our business.
If we are unable to implement these changes effectively or efficiently, it could have a material adverse effect on our business, financial condition, results of operations, financial reporting or financial results and could result in our conclusion that our internal controls over financial reporting are not effective.
If we are unable to implement these changes effectively or efficiently, it could have a material adverse effect on our business, financial condition, results of operations, financial reporting or financial results and could result in our conclusion that our internal controls over financial reporting are not effective. 16
If the implementation of our growth strategy by acquiring other businesses will result operational disruption, our business, financial condition and results of operations could be adversely affected. Because we received grants from the IIA, we are subject to ongoing restrictions.
If the implementation of our growth strategy by acquiring other businesses will result in operational disruption, our business, financial condition and results of operations could be adversely affected. Because we received grants from the IIA, we are subject to ongoing restrictions.
As a foreign private issuer whose shares are listed on the Nasdaq, we are permitted to follow certain home country corporate governance practices instead of certain requirements of the Nasdaq Stock Market Rules including requirements regarding compensation of officers, shareholder approval for certain dilutive events (such as for the establishment or amendment of certain equity-based compensation plans, an issuance that will result in a change of control of the company, certain transactions other than a public offering involving issuances of a 20% or more interest in the company and certain acquisitions of the stock or assets of another company) and other matters.
As a foreign private issuer whose shares are listed on the Nasdaq, we are permitted to follow certain home country corporate governance practices instead of certain requirements of the Nasdaq Stock Market Rules including requirements regarding compensation of officers, related party transactions, shareholder approval for certain dilutive events (such as for the establishment or amendment of certain equity-based compensation plans, an issuance that will result in a change of control of the company, certain transactions other than a public offering involving issuances of a 20% or more interest in the company and certain acquisitions of the stock or assets of another company), and other matters.
As a result, we may have to defer recognition of revenues, our reserves for doubtful accounts and write-offs of accounts receivable may increase and we may incur losses. 14 Certain privacy and data security laws and regulations may affect the use of our solutions.
As a result, we may have to defer recognition of revenues, our reserves for doubtful accounts and write-offs of accounts receivable may increase and we may incur losses. Certain privacy and data security laws and regulations may affect the use of our solutions.
This low trading volume may also result in greater share price volatility as result of short trading activities or the acquisition or disposition of shares by any single larger or institutional shareholder. 12 Risks Related to Our Location in Israel Security, political and economic instability in the Middle East may harm our business.
This low trading volume may also result in greater share price volatility as result of short trading activities or the acquisition or disposition of shares by any single larger or institutional shareholder. 12 Risks Related to Our Location in Israel Security, political and economic instability in the Middle East in general, and in Israel in particular may harm our business.
The Israeli Companies Law, 5759-1999, or the Israeli Companies Law, regulates acquisitions of shares through tender offers, requires special approvals for transactions involving shareholders holding 25% or more of the company’s capital, and regulates other matters that may be relevant to these types of transactions.
The Israeli Companies Law, regulates acquisitions of shares through tender offers, requires special approvals for transactions involving shareholders holding 25% or more of the company’s capital, and regulates other matters that may be relevant to these types of transactions.
Furthermore, many Israeli citizens are obligated to perform several days, and in some cases more, of annual military reserve duty each year until they reach the age of 40 (or older, for reservists who are military officers or who have certain occupations) and, in the event of a military conflict, may be called to active duty.
Furthermore, many Israeli citizens are obligated to perform several days, and in some cases more, of annual military reserve duty each year until they reach the age of 40 (or older, for reservists who are military officers or who have certain occupations) and, in the event of a military conflict, may be called to active duty for substantial periods of time.
We believe that the significant share of cloud-native, software-based, virtualized networks and 5G deployment activity is expected to take place in North America, Europe, selected CSPs in Asia-Pacific and selected CSPs in developing markets such as Latin America. We have accordingly enhanced our presence and focused our sales and marketing resources in these markets.
We believe that the significant share of cloud-native, software-based and 5G deployment activity is expected to continue to take place in North America, Europe, selected CSPs in Asia-Pacific and selected CSPs in developing markets such as Latin America. We have accordingly enhanced our presence and focused our sales and marketing resources in these markets.
In addition, as a result of the intense competition for qualified human resources, the high-tech market has also experienced and may continue to experience significant increases in the levels of salaries and other compensation. Accordingly, our efforts to attract, retain and develop personnel may also result in significant additional expenses, which could adversely affect our profitability.
In addition, as a result of the competition for qualified human resources, the high-tech market has also experienced and may experience in the future significant increases in the levels of salaries and other compensation. Accordingly, our efforts to attract, retain and develop personnel may also result in significant additional expenses, which could adversely affect our profitability.
If we fail to comply with these conditions in the future, the benefits received could be cancelled and we could be required to refund any payments previously received under these programs. Additionally, these programs may be discontinued or curtailed in the future.
If we fail to comply with these conditions in the future, the benefits received could be canceled and we could be required to refund any payments previously received under these programs. Additionally, these programs may be discontinued or curtailed in the future.
The recent inflation, geopolitical issues, increase in energy costs, increases in interest rates, unstable global conditions and changes in currency exchange rates have led to global economic instability.
The recent inflation, geopolitical issues, increase in energy costs, high interest rates, unstable global conditions and changes in currency exchange rates have led to global economic instability.
While we are headquartered in Israel, approximately 97% of our sales in 2022, 94% of our sales in 2021 and 96% of our sales in 2020 were generated outside of Israel.
While we are headquartered in Israel, approximately 96 % of our sales in 2023, 97% of our sales in 2022 and 94% of our sales in 2021 were generated outside of Israel.
We have received an aggregate of $48.4 million in royalty-bearing grants for certain research and development activities pursuant to an incentive program. Accordingly, we are obligated to pay royalties to the IIA on revenues from products developed pursuant to the program or deriving therefrom.
We have received an aggregate of $50.2 million in royalty-bearing grants for certain research and development activities pursuant to an incentive program. Accordingly, we are obligated to pay royalties to the IIA on revenues from products developed pursuant to the program or deriving therefrom.
In September 2021, the Bank of Israel, which determines annual interest rates, published a directive which stated that annual interest at a variable rate linked to the LIBOR rate for loans in U.S. dollars will be replaced by the Secured Overnight Financing Rate, or the SOFR, in June 2023.
In September 2021, the Bank of Israel, which determines annual interest rates, published a directive which stated that annual interest at a variable rate linked to the LIBOR rate for loans in U.S. dollars will be replaced by SOFR, in June 2023.
All our directors reside outside of the United States, and most of our assets are located outside of the United States.
All but one of our directors reside outside of the United States, and most of our assets are located outside of the United States.
Securities and Exchange Commission, or SEC, adopted pursuant to Section 404, or Section 404, of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, we are required to include in our annual report a report of management on our internal control over financial reporting including an assessment by management of the effectiveness of our internal control over financial reporting.
Pursuant to rules of the SEC, adopted pursuant to Section 404, or Section 404, of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, we are required to include in our annual report a report of management on our internal control over financial reporting including an assessment by management of the effectiveness of our internal control over financial reporting.
Section 63(b) of the Companies Law may allow any one or more of our shareholders holding at least 5% of our voting rights to demand that we convene an extraordinary shareholders meeting.
Section 63(b) of the Israeli Companies Law, 5759-1999, or the Israeli Companies Law, may allow any one or more of our shareholders holding at least 10% of our voting rights to demand that we convene an extraordinary shareholders meeting.
The market price of our ordinary shares has been and is likely to continue to be highly volatile and could be subject to wide fluctuations in response to numerous factors, including the other risks identified in this “Item 3.D—Risk Factors”.
The market price of our ordinary shares has been and is likely to continue to be volatile and could be subject to wide fluctuations in response to numerous factors, including the other risks identified in this “Item 3.D—Risk Factors”. In addition, the stock market in general, and the market for Israeli and technology companies in particular, has been highly volatile.
To the extent COVID-19 or any other pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk factors” section. 7 The complexity and scope of the solutions we provide to larger CSPs is increasing.
To the extent COVID-19 or any other pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk factors” section. The complexity and scope of the solutions we provide to larger CSPs is increasing. Larger projects entail greater operational risk and an increased chance of failure.
We could be subject to claims under our warranties and extended maintenance and support agreements which may affect our financial condition. Our solutions are complex and may sometimes contain undetected errors which can delay introductions or necessitate redesign.
See Item “16.K Cybersecurity” for additional information. We could be subject to claims under our warranties and extended maintenance and support agreements which may affect our financial condition. Our solutions are complex and may sometimes contain undetected errors which can delay introductions or necessitate redesign.
Larger projects entail greater operational risk and an increased chance of failure. The complexity and scope of the solutions we provide to larger CSPs is increasing. The larger and more complex such projects are, the greater the operational risks associated with such projects.
The complexity and scope of the solutions we provide to larger CSPs is increasing. The larger and more complex such projects are, the greater the operational risks associated with such projects.
We are committed to pay royalties with respect to aforesaid grants until 100% of the U.S. dollar-linked grant plus annual London Interbank Offered Rate, or LIBOR, interest is repaid.
We are committed to pay royalties with respect to aforesaid grants until 100% of the U.S. dollar-linked grant plus annual London Interbank Offered Rate, or LIBOR, interest is repaid, or, as outlined below, according to Secured Overnight Financing Rate, or the SOFR.
Additionally, the CCPA, the CPRA, and other legal and regulatory changes are making it easier for certain individuals to opt-out of having their personal data processed and disclosed to third parties through various opt-out mechanisms, which could result in an increase to our operational costs to ensure compliance with such legal and regulatory changes.
Additionally, the CCPA, the CPRA, and other legal and regulatory changes are making it easier for certain individuals to opt-out of having their personal data processed and disclosed to third parties through various opt-out mechanisms, which could result in an increase to our operational costs to ensure compliance with such legal and regulatory changes. 15 Use of our solutions could be subject to such regulations, which could significantly increase the cost of implementing our solutions and impact our ability to compete in the marketplace.
To the extent that any of these negative developments do occur, they may have an adverse effect on our business, our results of operations and our ability to hire and preserve our employees and to raise additional funds, if deemed necessary by our management and board of directors.
To the extent that the Israeli government would further pursue such extensive changes to Israel’s judicial system and any of these negative developments do occur, they may have an adverse effect on our business, our results of operations and our ability to hire and preserve our employees and to raise additional funds, if deemed necessary by our management and board of directors.
For example, our two largest customers accounted for approximately 77% of our revenue in fiscal year 2022.
For example, our two largest customers accounted for approximately 76% of our revenue in fiscal year 2023.
Our shares have been traded at low volumes in the past and may be traded at low volumes in the future for reasons related or unrelated to our performance.
The trading volume of our shares is relatively low, and it may remain low in the future. Our shares have been traded at low volumes in the past and may be traded at low volumes in the future for reasons related or unrelated to our performance.
In order for us to successfully compete and grow, we must attract, recruit, retain and develop personnel with requisite qualifications to provide expertise across the entire spectrum of our intellectual capital and business needs.
We compete in a market marked by rapidly changing technologies and an evolving competitive landscape. In order for us to successfully compete and grow, we must attract, recruit, retain and develop personnel with requisite qualifications to provide expertise across the entire spectrum of our intellectual capital and business needs.
Our international sales will be limited if we cannot continue to establish and maintain relationships with international distributors and resellers, set up additional foreign operations, expand international sales channel management, hire additional personnel, develop relationships with international CSPs and operate adequate after-sales support internationally. 10 Even if we are able to successfully further expand our international operations, we may not be able to maintain or increase international market demand for our solutions.
Our international sales will be limited if we cannot continue to establish and maintain relationships with international distributors and resellers, set up additional foreign operations, expand international sales channel management, hire additional personnel, develop relationships with international CSPs and operate adequate after-sales support internationally.
The GDPR further implemented through binding guidance by the European Data Protection Board (and supplemented by national laws in individual European Union member states), imposes more stringent data protection compliance requirements and provides for more significant penalties for noncompliance in Europe.
Such regulations may impose significant penalties for non-compliance, such as the penalties proposed under the European data protection regulations, or GDPR. The GDPR imposes through binding guidance by the European Data Protection Board (and supplemented by national laws in individual European Union member states), stringent data protection compliance requirements and provides for significant penalties for noncompliance in Europe.
Compliance with the GDPR is an ongoing process. Additionally, in California the Consumer Privacy Act, or CCPA, provides new data privacy rights for consumers and new operational requirements for companies. Further, the California Privacy Rights Act, or CPRA came into effect on January 1, 2023.
Compliance with the GDPR is an ongoing process. Additionally, in California the Consumer Privacy Act, or CCPA, provides new data privacy rights for consumers and new operational requirements for companies. Further, the California Privacy Rights Act, or CPRA, significantly modified the CCPA, including adding new privacy rights and increasing regulation on online advertising.
Additionally, effective intellectual property protection may not be available in every country in which we offer, or intend to offer, our solutions. We may expand our business or enhance our technology through partnerships and acquisitions that could result in diversion of resources and extra expenses. This could disrupt our business and adversely affect our financial condition.
We may expand our business or enhance our technology through partnerships and acquisitions that could result in diversion of resources and extra expenses. This could disrupt our business and adversely affect our financial condition.
Any violation of these or similar laws, intentional or unintentional, could have a material adverse effect on our business, financial condition or results of operations. 15 Any inability to comply with Section 404 of the Sarbanes-Oxley Act of 2002 regarding effective internal control procedures may negatively impact the report on our financial statements to be provided by our independent auditors.
Any inability to comply with Section 404 of the Sarbanes-Oxley Act of 2002 regarding effective internal control procedures may negatively impact the report on our financial statements to be provided by our independent auditors.
Between January 1, 2022, and March 23, 2023, our ordinary shares’ closing price on the Nasdaq Capital Market, or the Nasdaq, was as high as $14.28 and as low as $9.38 per share. As of March 23, 2023, the closing price of our ordinary shares on Nasdaq was $9.95 per share.
Between January 1, 2023, and March 27, 2024, our ordinary shares’ closing price on the Nasdaq Capital Market, or the Nasdaq, was as high as $11.87 and as low as $7.58 per share. As of March 27, 2024, the closing price of our ordinary shares on Nasdaq was $10.80 per share.
Our international presence exposes us to risks associated with varied and changing political, cultural, legal and economic conditions worldwide and if we fail to adapt appropriately to the challenges associated with operating internationally the expected growth of our business may be impeded, and our operating results may be affected.
We may be unable to sustain profitability or may again incur losses in the future, which could materially affect our cash and liquidity and could adversely affect the value and market price of our ordinary shares. 10 Our international presence exposes us to risks associated with varied and changing political, cultural, legal and economic conditions worldwide and if we fail to adapt appropriately to the challenges associated with operating internationally the expected growth of our business may be impeded, and our operating results may be affected.
In addition, acquisitions could result in, among other things, substantial cash expenditures, potentially dilutive issuances of equity securities, the incurrence of debt and contingent liabilities, a decrease in our profit margins, and amortization of intangibles and potential impairment of goodwill.
We may not realize the intended benefits of any acquisition, investment or joint venture and we may incur future losses from any acquisition, investment or joint venture. 9 In addition, acquisitions such as our recent acquisition of Continual Ltd., or Continual, could result in, among other things, substantial cash expenditures, potentially dilutive issuances of equity securities, the incurrence of debt and contingent liabilities, a decrease in our profit margins, and amortization of intangibles and potential impairment of goodwill.
The Russia-Ukraine conflict may affect our business Our business may be affected by sanctions, export controls and similar measures targeting Russia and other countries and territories in response to Russia’s military conflict in Ukraine, including by indefinite suspension of operations in Russia and dealings with Russian entities. 11 Because our revenues are generated primarily in foreign currencies (mostly in U.S. dollars but also in other currencies), but a significant portion of our expenses are incurred in New Israeli Shekels, our results of operations may be seriously harmed by currency fluctuations.
Depending on the extent and breadth of sanctions, export controls and other measures that may be imposed in connection with the conflict in Ukraine, it is possible that our business and results of operations could be materially adversely affected. 11 Because our revenues are generated primarily in foreign currencies (mostly in U.S. dollars but also in other currencies), but a significant portion of our expenses are incurred in New Israeli Shekels, our results of operations may be seriously adversely affected by currency fluctuations.
As a result, the high-tech industry in Israel has experienced significant levels of employee attrition and is currently facing a severe shortage of skilled human capital, including research and development, marketing, operations and customer service professionals.
Our principal research and development as well as significant elements of our marketing and general and administrative activities are conducted at our headquarters in Israel, where we face significant competition. The high-tech industry in Israel has experienced significant levels of employee attrition and a shortage of skilled human capital, including research and development, marketing, operations and customer service professionals.
Our future growth and success depend to an extent upon the continuing services of our executive officers and other key employees including our Chief Executive Officer, Eyal Harari, our Chief Operating Officer, Hilik Itman, and our Chief Technology Officer, Rami Amit.
Our future growth and success depend to an extent upon the continuing services of our executive officers and other key employees including our Chief Operating Officer, Hilik Itman, and our Chief Technology Officer, Rami Amit. Competition for qualified management and other high-level telecommunications industry personnel is intense, and we may not be successful in attracting and retaining qualified personnel.
Acquired businesses, technologies or joint ventures may not be successfully integrated with our solutions and operations. We may not realize the intended benefits of any acquisition, investment or joint venture and we may incur future losses from any acquisition, investment or joint venture.
Acquired businesses, technologies or joint ventures may not be successfully integrated with our solutions and operations.
Our success and ability to compete depend in large part upon protecting our proprietary technology. We rely upon a combination of contractual rights, software licenses, trade secrets, copyrights, non-disclosure agreements and technical measures to establish and protect our intellectual property rights in our solutions and technologies.
We rely upon a combination of contractual rights, software licenses, trade secrets, copyrights, non-disclosure agreements and technical measures to establish and protect our intellectual property rights in our solutions and technologies. In addition, we sometimes enter into non-competition, non-disclosure and confidentiality agreements with our employees, distributors, sales representatives and certain suppliers with access to sensitive information.
Shareholders may not be able to resell their ordinary shares following periods of volatility because of the market’s adverse reaction to such volatility. The trading volume of our shares is relatively low, and it may remain low in the future.
Many of these factors are beyond our control and may materially adversely affect the market price of our ordinary shares, regardless of our performance. Shareholders may not be able to resell their ordinary shares following periods of volatility because of the market’s adverse reaction to such volatility.
The costs of complying with these and similar laws may be significant and may require significant management time and focus.
The costs of complying with these and similar laws may be significant and may require significant management time and focus. Any violation of these or similar laws, intentional or unintentional, could have a material adverse effect on our business, financial condition or results of operations.
In response to increases in terrorist activity, there have been periods of significant call-ups of military reservists. It is possible that there will be military reserve duty call-ups in the future. Our operations could be disrupted by such call-ups, which may include the call-up of members of our management.
In response to the October attack and the ensuing war that followed along with the increases in terrorist activity, the Israeli army has exercised significant call-ups of military reservists, for substantial periods. It is possible that there will be additional military reserve duty call-ups in the future.
Such disruption could materially adversely affect our business, prospects, financial condition and results of operations. In addition, the Israeli government is currently pursuing extensive changes to Israel’s judicial system. This has sparked extensive political debate and protests.
In addition, during 2023, the Israeli government pursued extensive changes to Israel’s judicial system. This sparked extensive political debate and protests.
For more information, see “Item 7.B-Major Shareholders and Related Party Transactions—Related Party Transactions” and “Item 10.B-Fiduciary Duties of Shareholders.” We incurred net losses on a GAAP-basis in the past and may not achieve or sustain profitability in the future. In 2022, 2021 and 2020, we incurred net losses of approximately $2.3 million, $5.3 million and $4.0 million respectively.
Prior to 2023 we incurred net losses and we may not sustain profitability in the future. In 2023, we achieved net income of approximately $3.7 million while in 2022 and 2021, we incurred net losses of approximately $2.3 million and $5.3 million, respectively.
In addition, we sometimes enter into non-competition, non-disclosure and confidentiality agreements with our employees, distributors, sales representatives and certain suppliers with access to sensitive information. We currently have three registered patents and five pending patent applications. However, these measures may not be adequate to protect our technology from third-party infringement.
We currently have nine registered patents and one pending patent application. However, these measures may not be adequate to protect our technology from third-party infringement. Additionally, effective intellectual property protection may not be available in every country in which we offer, or intend to offer, our solutions.
Any such requirement to disclose or grant rights in our source code or other confidential information related to our solutions could, therefore, materially adversely affect our competitive advantage and impact our business, financial condition and results of operations. 8 Our proprietary technology is difficult to protect and unauthorized use of our proprietary technology by third parties may impair our ability to compete effectively.
Any such requirement to disclose or grant rights in our source code or other confidential information related to our solutions could, therefore, materially adversely affect our competitive advantage and impact our business, financial condition and results of operations. 8 Our use of AI, GenAI, ML, data analytics and similar tools and technologies, or, collectively, AI and Related Tools, as well as applications, features, and functionality that we may introduce in the future, may result in difficulties, including with product development and integration and accuracy of the results and may otherwise not prove efficient or profitable, may not be widely or timely accepted by our customers or the market, may enhance intellectual property, cybersecurity, operational and technological risks, or may otherwise adversely impact our business or operations, or subject us to possible litigation .
However, we cannot be sure that the IIA will accept our arguments mentioned above, which, if not accepted, may result in the expenditure of financial resources. 9 We may be subject to claims of infringement of third-party intellectual property which may have an adverse effect on our business.
Grants approved after January 1, 2024 will bear the higher of (i) the 12 months SOFR interest rate, plus 1%, or (ii) a fixed annual interest rate of 4%. We may be subject to claims of infringement of third-party intellectual property which may have an adverse effect on our business.
Removed
Competition for qualified management and other high-level telecommunications industry personnel is intense, and we may not be successful in attracting and retaining qualified personnel.
Added
As we continue to diversify our product offerings, we may utilize AI and Related Tools in connection with our business and in our solutions. We have begun to include GenAI capabilities through our RADCOM ACE portfolio and as part of our RADCOM AIM (AI Framework).
Removed
Our principal research and development as well as significant elements of our marketing and general and administrative activities are conducted at our headquarters in Israel, where we face significant competition.
Added
Given the short time that has elapsed since GenAI became commercially viable, and the rapid pace of change in the GenAI space, we have limited experience with GenAI and may experience any number of difficulties including with respect to product development and integration with our existing offerings and IT systems, or accuracy of the results.
Removed
While there has been intense competition for qualified human resources in the Israeli high-tech industry historically, the industry experienced record growth and activity in 2021 and 2022, both at the earlier stages of venture capital and growth equity financings, and at the exit stage of initial public offerings and mergers and acquisitions.
Added
Additionally, there are significant risks involved in utilizing AI and Related Tools and no assurance can be provided that the usage of such AI and Related Tools will enhance our business, the business of our customers, or assist us in being more efficient or profitable. Further, AI and Related Tools may have errors or inadequacies that are not easily detectable.
Removed
This growth in activity has caused a sharp increase in job openings in both Israeli high-tech companies and Israeli research and development centers of foreign companies, and intensification of competition between these employers to attract qualified employees in Israel.
Added
For example, certain AI and Related Tools may utilize historical telecom related data in their analytics.
Removed
In addition, due to the reasons outlined above, our employees may be increasingly targeted for recruitment by competitors and other companies in the technology industry, which may make it more difficult for us to retain employees and may increase retention costs. Training of new employees with no prior relevant experience could be time-consuming and require significant resources.
Added
To the extent that such historical data is not indicative of the current or future conditions in the sector, or the AI and Related Tools fail to filter biases in the underlying data or collection methods, the usage of AI and Related Tools may lead us or our customers to make determinations on behalf of our products or our customers’ business that are based on such flawed data, including decisions, that may have an adverse effect.
Removed
The United Kingdom’s Financial Conduct Authority, which regulates the LIBOR, announced in July 2017 that it will no longer persuade or require banks to submit rates for LIBOR after 2021.
Added
If AI and Related Tools are incorrectly designed or the data used to train them is incomplete, inadequate or biased in some way, use of AI and Related Tools may inadvertently reduce efficiency or cause unintentional or unexpected outputs that are incorrect, do not match our or our customers’ business goals, do not comply with our or our customers’ policies or interfere with the performance of our or our customers’ products, services, business and reputation.
Removed
While it is not currently possible to determine precisely whether, or to what extent, the replacement of LIBOR with SOFR would affect us, and given that, as of the date of this Annual Report, the IIA has not yet published the alternative interest that will be applied on the grants that the Company received from the IIA, the implementation of SOFR (if so implied) may increase our financial liabilities to the IIA.
Added
Additionally, there can be no assurance that any GenAI or other AI and Related Tool solutions we develop will be adopted by the market, or be profitable or viable.
Removed
Management continues to monitor the status and discussions regarding SOFR. We are not yet able to reasonably estimate the expected impact.
Added
Our limited experience with respect to GenAI offerings could limit our ability to successfully bring new GenAI and other AI and Related Tool solutions and offerings to market or adapt to market changes.
Removed
Additionally, in May 2010, we received a notice from the IIA regarding alleged miscalculations in the amount of royalties paid by us to the IIA for the years 1992 through 2009 and the revenues on which the Company must pay royalties. During 2011, we reviewed with the IIA these alleged miscalculations.
Added
If we are unsuccessful in developing, integrating and offering GenAI and other AI and Related Tool solutions, our business, results of operations and financial condition could be adversely affected. In addition, the use of AI and Related Tools may enhance intellectual property, cybersecurity, operational and technological risks.
Removed
We believe that all royalties due to the IIA from the sale of products developed with funding provided by the IIA during such years were properly paid or were otherwise accrued as of December 31, 2022.
Added
The technologies underlying AI and Related Tools and their use cases are subject to a variety of laws, including intellectual property, privacy, consumer protection and federal equal opportunity laws.
Removed
Zohar Zisapel and Yehuda Zisapel beneficially own, in the aggregate, approximately 22% of our ordinary shares and therefore have significant influence over the outcome of matters requiring shareholder approval including the election of directors.
Added
If we do not have sufficient rights to use the data on which AI and Related Tools rely, we may incur liability through the violation of such laws, third-party privacy or other rights or contracts to which we are a party.
Removed
As of March 23, 2023, Zohar Zisapel, a member of our Board of Directors, and Yehuda Zisapel, who are brothers, may be deemed to beneficially own an aggregate of 3,256,381 ordinary shares, including options exercisable for 37,240 ordinary shares that are exercisable within 60 days of March 23, 2023, representing approximately 22% of our outstanding ordinary shares.
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Furthermore, the technologies underlying AI and Related Tools are complex and rapidly developing, and as a result, it is not possible to predict all of the legal, operational or technological risks related to the use of AI and Related Tools.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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In April 2022, we announced the extension of our contract with AT&T, providing automated service assurance for AT&T’s cloud network to ensure the network performance and service quality. In addition, we announced our entrance into a multi-year agreement to provide RADCOM ACE to enhance the end-to-end customer experience for a 5G mobile CSP in Europe.
In April 2022, we announced the extension of our contract with AT&T, providing automated service assurance for AT&T’s cloud network to ensure network performance and service quality. In addition, we announced our entrance into a multi-year agreement to provide RADCOM ACE to enhance the end-to-end customer experience for a 5G mobile CSP in Europe.
Over time, SA 5G is expected to enable new use cases such as autonomous cars, remote control of critical infrastructure/machinery, smart-grid control, industrial automation, robotics, drone control, and remote telehealth services which will be empowered by an ultra-reliable, low latency network (up to ten times that of 4G).
Over time, 5G SA is expected to enable new use cases such as autonomous cars, remote control of critical infrastructure/machinery, smart-grid control, industrial automation, robotics, drone control, and remote telehealth services which will be empowered by an ultra-reliable, low latency network (up to ten times that of 4G).
The R&D Law requires the grant recipient and its controlling shareholders or the foreign interested party of such grant recipient to notify the IIA of any change in control of the recipient or a change in the holdings of the means of control of the grant recipient that results in a non-Israeli citizen or non-Israeli resident or corporation incorporated in Israel becoming an interested party directly in the grant recipient, and requires the new interested party to undertake to the IIA to comply with the R&D Law.
The R&D Law requires the grant recipient and its controlling shareholders or the foreign interested party of such grant recipient to notify the IIA of any change in control of the recipient or a change in the holdings of the means of control of the grant recipient that results in a non-Israeli citizen or non-Israeli resident or an Israeli citizen or corporation incorporated in Israel becoming an interested party directly in the grant recipient, and requires the new interested party to undertake to the IIA to comply with the R&D Law.
Generally, the cost of the extended warranty is an annual maintenance fee based on a percentage of the overall cost of the solutions. ● 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 solutions and guide our R&D roadmap. ● Regional technical support: As the sale of a system and solutions requires a high level of technical skills, we decided to enhance our support with local experts located in our regional offices.
Generally, the cost of the extended warranty is an annual maintenance fee based on a percentage of the overall cost of the solutions. 28 ● 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 solutions and guide our R&D roadmap. ● Regional technical support: As the sale of a system and solutions requires a high level of technical skills, we decided to enhance our support with local experts located in our regional offices.
We believe that our key role in Rakuten’s innovative and unique deployment, and our work on their 5G deployment, as well as our deployment in Dish on AWS, places us at an advantage as we seek to engage with other CSPs looking to deploy similar networks. ● Entering into multi-year contracts providing for recurring revenues .
We believe that our key role in Rakuten’s innovative and unique deployment, and our work on their 5G deployment, as well as our deployment in Dish on AWS, places us at an advantage as we seek to engage with other CSPs looking to deploy similar networks. 23 ● Entering into multi-year contracts providing for recurring revenues .
Once our AI/ML capabilities are deployed on the network, they learn baseline behavior and automatically create thresholds without operators needing to configure them. 25 RADCOM VIA RADCOM VIA provides complete visibility into the CSP’s network with network tapping, advanced filtering, and packet brokers that can be deployed stand-alone or with RADCOM ACE.
Once our AI/ML capabilities are deployed on the network, they learn baseline behavior and automatically create thresholds without operators needing to configure them. RADCOM VIA RADCOM VIA provides complete visibility into the CSP’s network with network tapping, advanced filtering, and packet brokers that can be deployed stand-alone or with RADCOM ACE.
We believe that the Rakuten 5G Agreement is the first 5G assurance contract in our industry and is a testimony to the significant investment in product development we have been making over the last few years as well as a market validation to our ability to monitor the entire end-to-end network, providing superior insights.
We believe that the Rakuten 5G Agreement is the first 5G assurance contract in our industry and is a testimony to the significant investment in product development we have been making over the last few years, as well as a market validation of our ability to monitor the entire end-to-end network, providing superior insights.
For more information, see “Item 3.D—Risk Factors— Risks Related to Our Business and Our Industry.” We believe that we are differentiated from our competitors due to: ● our recognized class-leading, cloud-native 5G-ready service assurance solutions; ● our experience deploying and scaling cloud-native solutions with Tier 1 CSPs such as AT&T; ● our telecom domain expertise and knowhow of key members of our company in advanced software development; ● our experience deploying our solutions on the world’s first fully virtualized network and expansion to 5G NSA and SA; ● our advanced technology offering an end-to-end solution for service assurance from the RAN to the core; ● our multi-technology correlation capabilities that can support all major technologies – 5G, 4G, LTE, IMS, VoLTE, VoIP and legacy 3G - within the same solution; ● our cloud-native solutions provide cost-efficiency, rapid deployment times and agility in development; and ● our proven flexibility and responsiveness in a dynamic customer and technology environment; Our solutions are deployed with leading and innovative CSPs such as AT&T, Dish and Rakuten.
For more information, see “Item 3.D—Risk Factors— Risks Related to Our Business and Our Industry.” We believe that we are differentiated from our competitors due to: ● our recognized class-leading, cloud-native 5G-ready service assurance solutions; ● our experience deploying and scaling cloud-native solutions with Tier 1 CSPs such as AT&T; ● our telecom domain expertise and knowhow of key members of our company in advanced software development; ● our experience deploying our solutions on the world’s first fully virtualized network and expansion to 5G SA; ● our advanced technology offering an end-to-end solution for service assurance from the RAN to the core; ● our proven 5G-ready solutions deployed in existing 5G networks such as Rakuten Mobile and Dish Networks; ● our multi-technology correlation capabilities that can support all major technologies – 5G, 4G, LTE, IMS, VoLTE, VoIP and legacy 3G - within the same solution; ● our cloud-native solutions provide cost-efficiency, rapid deployment times and agility in development; and ● our proven flexibility and responsiveness in a dynamic customer and technology environment.
RADCOM ACE is an automated, 5G assurance platform for end-to-end network visibility, built based on our cloud-native expertise and designed to allow CSPs to manage their networks in a more dynamic and agile way, which can run on private and public clouds such as AWS, RCP and Azure.
RADCOM ACE is an automated, 5G assurance platform for end-to-end network monitoring, built based on our cloud-native expertise and designed to allow CSPs to manage their networks in a more dynamic and agile way, which can run on private and public clouds such as AWS, RCP and Azure.
As of December 31, 2022, royalties at a rate of 3% are due on revenues from sales of products and related services that incorporate know-how developed, in whole or in part, within the framework of projects funded by the IIA. In 2022, and in previous years, we participated in a Magnet consortium program sponsored by IIA.
As of December 31, 2023, royalties at a rate of 3% are due on revenues from sales of products and related services that incorporate know-how developed, in whole or in part, within the framework of projects funded by the IIA. In 2023, and in previous years, we participated in a Magnet consortium program sponsored by IIA, or Magnet Program.
We expect to continue this significant investment in 2023, as we develop new features and new solution offerings to meet the requirements of transition to 5G networks, as well as establishing a modular approach for the enabling of targeted packages for the service assurance market.
We expect to continue this significant investment in 2024, as we develop new features and new solution offerings to meet the requirements of transition to 5G networks, as well as establishing a modular approach for the enabling of targeted packages for the service assurance market.
Award for NFV Innovation and being recommended for the most innovative cloud offering in the Glotel Awards competition. By developing and adapting our solutions to meet the industry’s most stringent requirements we have expanded our customer base to include new opportunities and markets while expanding our footprint with existing customers by supporting them in their transition to a 5G network.
Award for NFV Innovation and being recommended for the most innovative cloud offering in the Glotel Awards competition. By developing and adapting our solutions to meet the industry’s most stringent requirements, we have expanded our customer base to include new opportunities and markets while expanding our footprint with existing customers by supporting them in transitioning to a 5G network.
In the United States, we provide benefits in the form of health, dental, vision and disability coverage and matching 401(k) plan contributions, in an average amount equal to approximately 19.1% of the employee’s base salary.
In the United States, we provide benefits in the form of health, dental, vision and disability coverage and matching 401(k) plan contributions, in an average amount equal to approximately 19.65% of the employee’s base salary.
Investments that we are making to achieve this goal include: ● Enhancement of support: We are dedicated to the provision of timely, effective and professional support for all our customers. We have established 24x7 Network Operations Center services, or NOC services, monitoring customers’ environments remotely, troubleshooting and resolving system and application incidents, and supporting the continuance services of our solutions.
Investments that we are making to achieve this goal include: ● Enhancement of support: We are dedicated to the provision of timely, effective and professional support for all our customers. We provide 24x7 Network Operations Center services, or NOC services, monitoring customers’ environments remotely, troubleshooting and resolving system and application incidents, and supporting the continuance services of our solutions.
RADCOM ACE Our automated assurance portfolio of solutions helps CSPs monitor data in real-time and proactively resolve customer experience issues before they impact your business for 5G and 4G.
RADCOM ACE Our automated assurance portfolio of solutions helps CSPs monitor data in real-time and proactively resolve customer experience issues before they impact their business for 5G and 4G.
In 2022, we signed agreements with new distributors to penetrate new geographical markets and engage with new customers, and to better serve our target markets. We continue to search for more of these channels to expand our outreach further.
In 2023, we signed agreements with new distributors to penetrate new geographical markets and engage with new customers, and to better serve our target markets. We continue to search for more of these channels to expand our outreach further.
CSPs across the globe use our solutions to deliver high quality services, reduce churn, manage network performance, analyze traffic and enhance customer experiences. Our solutions incorporate cutting edge technologies and a vast knowledge gained in our advanced work with some of the most technologically innovative CSPs in the industry.
CSPs across the globe use our solutions to deliver high-quality services, reduce churn, manage network performance, analyze traffic, and enhance customer experiences. Our solutions incorporate cutting-edge technologies and the vast knowledge we have gained in our advanced work with some of the most technologically innovative CSPs in the industry.
Our solutions are tightly integrated across Rakuten’s distributed telecommunications cloud to assure the highest service quality is delivered to customers for voice, video, VoLTE and data services from the mobile edge up to the network core. In August 2020, we announced the launch of RADCOM ACE.
Our solutions are tightly integrated across Rakuten’s distributed telecommunications cloud to ensure the highest service quality is delivered to customers for voice, video, VoLTE, and data services from the mobile edge to the network core. In August 2020, we announced the launch of RADCOM ACE.
Sales and Marketing Organization We mainly sell directly to customers throughout the world through our executives and sales representatives in North America, Europe, Latin America, Asia Pacific and Israel, which are supported by local representatives and subcontractors in the local markets. During 2022, these direct sales were made mainly in North America, South America and Asia.
Sales and Marketing Organization We mainly sell directly to customers throughout the world through our executives and sales representatives in North America, Europe, Latin America, Asia Pacific and Israel, which are supported by local representatives and subcontractors in the local markets. During 2023, these direct sales were made mainly in North America and Asia.
Each participating employee contributes an amount equal to up to 7% of such employee’s base salary, and we contribute between 15.3% and 19.1% of the employee’s base salary.
Each participating employee contributes an amount equal to up to 7% of such employee’s base salary, and we contribute between 15.83% and 19.1% of the employee’s base salary.
In Brazil, we provide benefits in the form of health coverage, including health, vision and dental coverage, in an amount that varies from 3% - 13% of the employee’s base salary.
In Brazil, we provide benefits in the form of health coverage, including health, vision and dental coverage, in an amount that varies from 4% - 13% of the employee’s base salary.
In May 2022, we announced our selection by Dish to provide RADCOM ACE solution to monitor customers’ experience across Dish’s 5G Smart Network™ — the first cloud-native, OpenRAN-based 5G network in the United States. RADCOM ACE at Dish runs on AWS.
In May 2022, we announced our selection by Dish to provide RADCOM ACE solution to monitor customers’ experience across Dish’s 5G Smart Network™ — the first cloud-native, Open RAN-based 5G network in the United States. RADCOM ACE at Dish runs on AWS.
The solution is fully integrated with the Network Repository Function enabling communications with other network functions in the core with analytics provided through APIs. The solution offers automated, AI/ML-based analytics as a 3GPP standards-based NWDAF function enabling closed-loop, zero-touch network operations and an improved customer experience.
The solution is fully integrated with the Network Repository Function enabling communications with other network functions in the core with analytics provided through Application Programming Interface or APIs. The solution offers automated, AI/ML-based analytics as a 3GPP standards-based NWDAF function enabling closed-loop, zero-touch network operations and an improved customer experience.
We plan to maintain our technical advantage over competitors by further investing in enhancing the analytics and automation capabilities (including advanced AI\ML capabilities) of our solutions to meet the evolving needs of 5G networks. 22 Key elements of our strategy include: ● Targeting Tier 1, Greenfield Operators and other CSPs worldwide, who are evaluating or deploying to 5G networks as well as providing solutions for legacy networks .
We plan to maintain our technical advantage over competitors by further investing in enhancing the analytics and automation capabilities (including advanced AI\ML capabilities) of our solutions to meet the evolving needs of 5G networks. Key elements of our strategy include: ● Targeting Tier 1, Greenfield Operators and other CSPs worldwide, who are evaluating or deploying to 5G networks .
In the years ended December 31, 2022, 2021 and 2020, our capital expenditures were approximately $150,000, $437,000, and $427,000 respectively, and were spent primarily on computers and electronic equipment. We have no current significant commitments for capital expenditures.
In the years ended December 31, 2023, 2022 and 2021, our capital expenditures were approximately $232,000, $150,000 and $437,000 respectively, and were spent primarily on computers and electronic equipment. We have no current significant commitments for capital expenditures.
The aggregate annual lease and maintenance payments for those premises in 2022 were approximately $6,000 and $91,000, respectively. We believe that our offices and facilities are adequate for our current needs and that suitable additional or substitute space will be available when needed. ITEM 4A. UNRESOLVED STAFF COMMENTS Not applicable.
The aggregate annual lease and maintenance payments for those premises in 2023 were approximately $7,000 and $85,000, respectively. We believe that our offices and facilities are adequate for our current needs and that suitable additional or substitute space will be available when needed. ITEM 4A. UNRESOLVED STAFF COMMENTS Not applicable.
Our solution is deployed at multiple operators (CSPs) globally, such as AT&T, Dish, Beeline, Globe, Rakuten and Telefonica and has received wide industry recognition, winning a Frost & Sullivan Product Differentiation Innovation Awards three times, winning multiple TMC Labs Innovation Awards, winning the Technology Marketing Corp.
Our global customer base Our solution is deployed at multiple CSPs globally, such as AT&T, Dish, Rakuten, and Telefonica, and has received wide industry recognition, winning a Frost & Sullivan Product Differentiation Innovation Awards three times, winning multiple TMC Labs Innovation Awards, winning the Technology Marketing Corp.
Rakuten chose RADCOM Network Intelligence because of its ability to monitor the entire end-to-end network, including the world’s first fully virtualized RAN. In April 2020 we announced that we successfully supported Rakuten’s commercial launch of the world’s first fully virtualized mobile network. Our solution helped Rakuten to launch its new virtualized network and ensured the delivery of superior customer experience.
Rakuten chose RADCOM Network Intelligence because it monitors the entire end-to-end network, including the world’s first fully virtualized RAN. In April 2020, we announced that we had successfully supported Rakuten’s commercial launch of the world’s first fully virtualized mobile network. Our solution helped Rakuten launch its virtualized network and ensured a superior customer experience delivery.
In May 2019, we entered into a multi-year agreement with Rakuten to provide our Network Intelligence solution for Rakuten’s unique and innovative mobile network. Rakuten’s network is considered the world’s first fully virtualized, end-to-end cloud-native mobile network that adopts 5G systems architecture from launch.
In May 2019, we entered into a multi-year agreement with Rakuten to provide our Network Intelligence solution for Rakuten’s unique and innovative mobile network. Rakuten’s network is the world’s first fully virtualized, end-to-end cloud-native mobile network that has adopted 5G systems architecture since its launch.
We also continued the development and enhancement of our solutions to meet the complicated needs of monitoring virtualized networks and to offer a smart mediation layer which allows us to offer a full end-to-end customer and service view which addresses CSPs’ requirements for a smart network intelligence solution, including for 5G networks.
We also continued developing and enhancing our solutions to meet the complicated needs of monitoring virtualized networks and to offer a mediation layer that allows us to offer a full end-to-end customer and service view that addresses CSPs’ requirements for a network intelligence solution, including for 5G networks.
Our continued and increased investment in research and development was validated in 2019 by our renewed engagement with AT&T, when we entered into a multi-year engagement continuing our relationship and expanding the integration of our solutions into AT&T’s network.
Our continued and increased investment in research and development was validated in 2019 by our renewed engagement with AT&T. We entered a multi-year engagement to continue our relationship and expand the integration of our solutions into AT&T’s network.
In India, we provide benefits in form of health coverage, education fund, house rent allowance and health insurance fund, in an amount equal to 28% of the employee’s salary. 31 C.
In India, we provide benefits in form of health coverage, education fund, house rent allowance and health insurance fund, in an amount equal to 21.22% of the employee’s salary. 32 C.
Although we are not a party to a collective bargaining agreement in Israel, we are subject to certain provisions of collective bargaining agreements among the General Federation of Labor in Israel, or the Histadrut, and the Coordinating Bureau of Economic Organizations (including the Industrialists’ Association), or the CBEO, that are applicable to our Israeli employees by virtue of expansion orders of the MOE, including transportation allowance, annual recreation allowance, the lengths of the workday and workweek and mandatory general insurance pension.
Except for employees located in Brazil, none of our employees are represented by labor unions. 31 Although we are not a party to a collective bargaining agreement in Israel, we are subject to certain provisions of collective bargaining agreements among the General Federation of Labor in Israel, or the Histadrut, and the Coordinating Bureau of Economic Organizations (including the Industrialists’ Association), or the CBEO, that are applicable to our Israeli employees by virtue of expansion orders of the Israeli Ministry of Economy and Industry, including transportation allowance, annual recreation allowance, the lengths of the workday and workweek and mandatory general insurance pension.
RADCOM ACE is an automated, end-to-end assurance solution for 5G networks, built based on our cloud-native expertise and designed so CSPs can manage their networks in a more dynamic and agile way.
RADCOM ACE is an automated, end-to-end assurance solution for 5G networks, built based on our cloud-native expertise and designed so CSPs can manage their networks more dynamically and agilely.
RADCOM ACE includes automated assurance, advanced network insights, automated insights via AI/ML, and cloud-native network visibility. 23 RADCOM Service Assurance RADCOM Service Assurance is a full assurance solution that smartly and passively collects and analyzes multiple data types (network packets, events, PM/FM counters, and more) across various domains (fixed and mobile) and generations of technologies (5G, 4G, 3G) from access to the core to provide real-time subscriber analytics.
RADCOM Service Assurance RADCOM Service Assurance is a full assurance solution that smartly and passively collects and analyzes multiple data types (network packets, events, PM/FM counters, and more) across various domains (fixed and mobile) and generations of technologies (5G, 4G, 3G) from access to the core to provide real-time subscriber analytics.
We also lease an aggregate of approximately 5,946 square feet of office space in Paramus, New Jersey, from an affiliate of our principal shareholder. In 2022, our aggregate annual lease payments for such premises were approximately $116,000. We also lease an aggregate of approximately 40 square feet of office space in Brazil and 5,809 square feet in India.
We also lease an aggregate of approximately 5,377 square feet of office space in Paramus, New Jersey, from an affiliate of certain of our principal shareholders. In 2023, our aggregate annual lease payments for such premises were approximately $114,000. We also lease an aggregate of approximately 40 square feet of office space in Brazil and 5,809 square feet in India.
Accordingly, any non-Israeli who acquires 5% or more of our ordinary shares will be required to notify the IIA that it has become an interested party and to sign an undertaking to comply with the R&D Law.
Accordingly, any non-Israeli who acquires 5% or more of our ordinary shares will be required to notify the IIA that it has become an interested party and to sign an undertaking to comply with the R&D Law. Since we commenced operations, we have received royalty-bearing grants from the IIA.
The introduction of 5G networks is expected to drive a greater opportunity for advanced automated assurance solutions like ours.
The ongoing deployments of 5G networks are expected to drive a greater opportunity for advanced automated assurance solutions like ours.
Our solution is built to ensure that both CPSs who are deploying 5G virtualized networks and CSPs who are evaluating or migrating their 4G, 3G and 2G networks to fully virtualized cloud-native networks, will benefit from our cutting-edge network intelligence solution that covers their entire network visibility and service assurance needs.
Our solution is built to ensure that both CPSs who are deploying 5G networks and CSPs who are evaluating or migrating their 4G, 3G and 2G networks to fully virtualized cloud-native networks, will benefit from our cutting-edge network intelligence solution that covers their entire network visibility and service assurance needs. 22 With the new 5G network being fully cloud-native, network functions will run as stateless, container-based, virtual network functions.
We believe that we are positioned to be one of the most advanced leaders in cloud-native 5G network intelligence solutions for CSPs deploying 5G networks on private and public cloud (such as RCP, AWS and Azure).
Our solutions are deployed with leading and innovative CSPs such as AT&T, Dish and Rakuten. We believe that we are positioned to be one of the most advanced leaders in cloud-native 5G network intelligence solutions for CSPs deploying 5G networks on private and public cloud (such as RCP, AWS, GCP and Azure).
In 1993, we established a wholly-owned subsidiary in the United States, currently named RADCOM, Inc., or RADCOM US. In 1996, we incorporated a wholly-owned subsidiary in Israel, RADCOM Investments (96) Ltd., or RADCOM Investments, located at our office in Tel Aviv, Israel.
In 1993, we established a wholly-owned subsidiary in the United States, currently named RADCOM, Inc., or RADCOM US. In 1996, we incorporated a wholly-owned subsidiary in Israel, RADCOM Investments (96) Ltd., located at our office in Tel Aviv, Israel. In 2010, we established a wholly-owned subsidiary in Brazil, RADCOM do Brasil Comercio, Importacao e Exportacao Ltda., or RADCOM Brazil.
RADCOM ACE is the culmination of our significant product investment over the last few years and reinforced by customer feedback to enable a new way of monitoring 5G services that ensures a high-quality customer experience as operators transition to 5G.
RADCOM ACE is the culmination of our significant product investment over the last few years and reinforced by customer feedback to enable a new way of monitoring 5G services that ensures a high-quality customer experience as operators transition to 5G. RADCOM ACE includes automated assurance, advanced network insights, automated insights via AI/ML, and cloud-native network visibility.
Fixed-Wireless Access Using RADCOM ACE for Fixed Wireless Access monitoring enables CSPs the transition to customer-focused network operations, focus on committed SLAs vs. mobility and plan the full lifecycle of the subscriber while monitoring devices at home, applications used, usage patterns, and bottleneck.
Fixed-Wireless Access Using RADCOM ACE for Fixed Wireless Access monitoring enables CSPs the transition to customer-focused network operations, focus on committed SLAs vs. mobility and plan the full lifecycle of the subscriber while monitoring devices at home, applications used, usage patterns, and bottleneck. 25 Virtual Drive Test RADCOM’s Virtual Drive Testing solution, or VDT, delivers mobility experience insights and optimization to network quality teams.
RADCOM ACE is built to ensure that 5G services continuously run at optimal quality, while at the same time improving the operators’ operational efficiency through automation. 20 In October 2020, we entered into a new multi-year agreement with Rakuten to provide our RADCOM ACE solution for Rakuten’s recently launched 5G NSA service and future 5G SA service launch, which is expected to be deployed during 2023, or the Rakuten 5G Agreement.
It is built to ensure that 5G services continuously run at optimal quality while improving operators’ operational efficiency through automation. 20 In October 2020, we entered into a multi-year agreement with Rakuten to provide our RADCOM ACE solution for Rakuten’s 5G NSA and 5G SA services.
In certain territories, our distributors and resellers serve as part of our sales, marketing and support teams as our local representatives, helping to sell, deploy and service our solutions, offer technical support in the end-user’s native language, and attend to customer needs during local business hours. 26 Geographic Markets : The table below indicates the approximate breakdown of our revenue by territory, based on the location of the end-customer: Year ended December 31, (in millions of U.S. dollars) Year ended December 31, (in percentages) 2022 2021 2020 2022 2021 2020 North America 23.0 21.8 20.3 49.8 54.1 54.1 Asia 12.5 14.7 15.2 27.2 36.5 40.4 Latin America 3.0 1.1 0.2 6.4 2.7 0.6 EMEA (including Israel) 7.6 2.7 1.9 16.6 6.7 4.9 Total revenues 46.1 40.3 37.6 100 % 100 % 100 % Competition The market for our solutions is competitive, and we expect that competition will continue in the future, both with respect to solutions that we are currently offering and solutions that we are developing.
Geographic Markets : The table below indicates the approximate breakdown of our revenue by territory, based on the location of the end-customer: Year ended December 31, (in millions of U.S. dollars) Year ended December 31, (in percentages) 2023 2022 2021 2023 2022 2021 North America 31.8 23.0 21.8 61.6 49.8 54.1 Asia 9.8 12.5 14.7 19.0 27.2 36.5 Latin America 1.3 3.0 1.1 2.5 6.4 2.7 EMEA (including Israel) 8.7 7.6 2.7 16.9 16.6 6.7 Total revenues 51.6 46.1 40.3 100 % 100 % 100 % 27 Competition The market for our solutions is competitive, and we expect that competition will continue in the future, both with respect to solutions that we are currently offering and solutions that we are developing.
Know-How and Know-How Transfer Limitation ● The R&D Law provides that the IIA is authorized to determine the ownership requirements of know-how developed under an approved research and development program and/or rights associated with such know-how including intellectual property, which is not the product that was developed under such program, or the Funded Know-How. 29 ● The R&D Law further provides that Funded Know-How may not be transferred to any third parties, unless certain requirements are met, as determined in each project separately. ● Among others, the IIA may determine that certain Funded Know-How can be transferred to third parties in Israel only if such transferee company will also be subject to the same terms and conditions that were levied upon the transferor company under the R&D Law prior to the transfer of such know-how. ● The IIA may approve the transfer of Funded Know-How from Israel to abroad, generally, in the following cases: (a) the grant recipient pays to the IIA up to 600% of the total amount of the grants and interest in consideration for such Funded Know-How ; (b) if the grant recipient receives an alternative know-how from a third party in exchange for its Funded Know-How, subject to certain requirements, among which the alternative know-how will generate higher revenues than the Funded Know-How for the company; (c) if such transfer of Funded Know-How arises in connection with certain types of cooperation in research and development activities; or (d) if such transfer of know-how arises in connection with a liquidation by reason of insolvency or receivership of the grant recipient and the Funded Know-How is sold for a lower price than the amount of funds invested in it, in which case the payment set forth in (a) may be reduced. ● Approval to manufacture products outside of Israel or consent to the transfer of Funded Know-How, if requested, is within the discretion of the IIA.
The approval may be subject to certain requirements, as determined in each project separately. ● Among others, the IIA may determine that certain Funded Know-How can be transferred to third parties in Israel only if such transferee company will also be subject to the same terms and conditions that were levied upon the transferor company under the R&D Law prior to the transfer of such know-how. ● The IIA may approve the transfer of Funded Know-How from Israel to abroad, generally, provided that (a) the IIA will receive a payment of the portion of the sale price, which portion will not exceed six times the amount of the grants received plus interest (or three times the amount of the grant received plus interest, in the event that the recipient of the know-how has committed to retain most of the R&D positions of the grant recipient in Israel after the transfer); (b) the grant recipient receives an alternative know-how from a third party in exchange for its Funded Know-How, subject to certain requirements, among which the alternative know-how will generate higher revenues than the Funded Know-How for the company; or (c) such transfer of know-how arises in connection with a liquidation by reason of insolvency or receivership of the grant recipient and the Funded Know-How is sold for a lower price than the amount of funds invested in it, in which case the payment set forth in (a) may be reduced. 30 ● Approval to manufacture products outside of Israel or consent to the transfer of Funded Know-How, if requested, is within the discretion of the IIA.
For more information, the SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding us that has been filed electronically with the SEC. 16 B. BUSINESS OVERVIEW Overview We are a leading provider of 5G ready cloud-native network intelligence and service assurance solutions for CSPs.
For more information, the SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding us that has been filed electronically with the SEC. B. BUSINESS OVERVIEW Overview We are an assurance expert for telecom operators transitioning to 5G and deploying cloud-native networks.
We intend to leverage our success with industry leading customers as we seek to engage with other CSPs that are looking to manage existing networks while evaluating their transition to the cloud-native architectures and 5G network.
During 2024, we expect to maintain the level of our investment in research and development and increase our sales and marketing efforts. We intend to leverage our success with industry-leading customers as we seek to engage with other CSPs looking to manage existing networks while evaluating their transition to the cloud-native architectures and 5G network.
In 2022, we paid to affiliates of our principal shareholders aggregate annual lease and maintenance payments in the sum of approximately $647,000 for our Tel Aviv offices. We may, in the future, lease additional space from affiliated parties.
In 2023, our aggregate annual lease and maintenance expenses were approximately $795,000 for our Tel Aviv offices, which are leased from affiliates of certain of our principal shareholders. We may, in the future, lease additional space from affiliated parties.
RADCOM Service Assurance is designed to enable CSPs to succeed in their efforts to address significant technology challenges, including: ● deployment of next-generation networks such as 5G; ● migration to and integration of new network architectures; ● delivery of advanced, complex services such as VoIP IMS and video quality analytics; and ● proactive management and quality assurance for all data sessions and calls on existing and next-generation service providers’ production networks. 24 CSPs use RADCOM Service Assurance for a wide array of use cases, such as: Customer and Service Assurance ● Troubleshooting – enables CSPs 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 – allows CSPs to analyze and optimize network component performance levels and customer experience with the goal of identifying faults before they compromise the customer’s experience. ● Fault detection – automatic fault detection and service KPIs alert CSPs to network problems as they arise. ● Mediation – generates call detail records needed to feed the solutions’ smart mediation layer as well as third-party operations support systems and other solutions.
CSPs use RADCOM Service Assurance for a wide array of use cases, such as: Customer and Service Assurance ● Troubleshooting – enables CSPs 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 – allows CSPs to analyze and optimize network component performance levels and customer experience with the goal of identifying faults before they compromise the customer’s experience. ● Fault detection – automatic fault detection and service KPIs alert CSPs to network problems as they arise. ● Mediation – generates call detail records needed to feed the solutions’ smart mediation layer as well as third-party operations support systems and other solutions.
RADCOM Service Assurance displays performance and quality measurements from both the signaling and the user planes, based on a broad range of passive software-based probes, which are installed on standard, non-proprietary third-party hardware that function together with RADCOM Service Assurance to deliver essential functionality.
RADCOM Service Assurance displays performance and quality measurements from both the signaling and the user planes, based on a broad range of passive software-based probes, which are installed on standard, non-proprietary third-party hardware that function together with RADCOM Service Assurance to deliver essential functionality. 24 RADCOM Service Assurance consists of a powerful and user-friendly central management module and a broad range of passive software-based probes used to gather transmission quality data from various types of networks and services, including 5G, VoIP, UMTS, LTE, IMS data and others.
Israel Innovation Authority We have received royalty-bearing grants from the IIA for certain research and development activities pursuant to an incentive program, in an aggregate amount of $48.4 million, calculated from our inception through December 31, 2022, which are subject to provisions of the R&D Law and the regulations promulgated thereunder.
This modular approach will enable us to offer not just the full solution, but also specific modules for smaller deployment of CSPs. 29 Israel Innovation Authority We have received royalty-bearing grants from the IIA for certain research and development activities pursuant to an incentive program, in an aggregate amount of $50.2 million, calculated from our inception through December 31, 2023, which are subject to provisions of the R&D Law and the regulations promulgated thereunder.
This order expands our deployment at this top-tier operator to its mobile network and covers assurance for this top-tier operator’s 4G network, such as the operator’s cloud-based VoLTE offering, and we expect them to expand our solutions to their 5G network in the future.
In May 2021, we announced an additional order from a Top-Tier Latin American operator selected for our 4G and 5G capabilities. This order expands our deployment at this top-tier operator to its mobile network and covers assurance for this top-tier operator’s 4G network, such as the operator’s cloud-based VoLTE offering.
RADCOM VIA enables CSPs to virtually, intelligently and efficiently: ● manage, scale and load balance the network traffic; ● automate and synchronize visibility and assurance, onboarding and configuration; ● distribute traffic between probes without having to duplicate traffic and waste network resources; ● filter and analyze traffic with application-based routing; and ● utilize a unified and centralized management solution.
RADCOM VIA enables CSPs to virtually, intelligently and efficiently: ● manage, scale and load balance the network traffic; ● automate and synchronize visibility and assurance, onboarding and configuration; ● distribute traffic between probes without having to duplicate traffic and waste network resources; ● filter and analyze traffic with application-based routing; and ● utilize a unified and centralized management solution. 26 RADCOM NWDAF The RADCOM NWDAF (Network Data Analytics Function or NWDAF) is a network function in the 5G core which intends to collect data, analyze it in multiple use-cases and cause changes in the core to improve the overall performance and quality of experience.
With the new 5G network being fully cloud-native, network functions will run as stateless, container-based, virtual network functions. Being fully virtualized will make CSPs more agile and faster to innovate and deliver new services. Containerization means that individual services will be updated with minimal impact on other services.
Being fully virtualized will make CSPs more agile and faster to innovate and deliver new services. Containerization means that individual services will be updated with minimal impact on other services. This fully virtualized cloud-native design will enable CSPs to reduce costs, accelerate the introduction of new services, and deliver faster iterations to their network and services.
In 2010, we established a wholly-owned subsidiary in Brazil, RADCOM do Brasil Comercio, Importacao e Exportacao Ltda., or RADCOM Brazil. In 2012, we incorporated a wholly-owned subsidiary in India, RADCOM Trading India Private Limited, or RADCOM India. In 2022, we incorporated a wholly-owned subsidiary in Canada, RADCOM Canada Limited, or RADCOM Canada.
In 2012, we incorporated a wholly-owned subsidiary in India, RADCOM Trading India Private Limited, or RADCOM India. In 2022, we incorporated a wholly-owned subsidiary in Canada, RADCOM Canada Limited, or RADCOM Canada.
We believe that the widescale rollout of 5G will bring with it a larger wave of cloud native deployments by CSPs. Through our research and development efforts, we believe that we are well positioned to offer state of the art technologies and capabilities to CSPs.
Through our research and development efforts, we believe that we are well positioned to offer state of the art technologies and capabilities to CSPs.
We own registered trademarks for the name RADCOM and for the name Omni-Q ® . We currently have seven registered patents and several pending patent applications in the United States. In addition, we usually enter into non-disclosure and confidentiality agreements with our employees, distributors, sales representatives and with suppliers and sub-contractors who have access to sensitive information.
We currently have nine registered patents and one pending patent application in the United States. In addition, we usually enter into non-disclosure and confidentiality agreements with our employees, distributors, sales representatives and with suppliers and sub-contractors who have access to sensitive information. Employees Our total headcount as of December 31, 2023, was 295 including employees and contractors.
In addition, we believe that our solutions are also the most advanced for CSPs that are evaluating or migrating their 4G, 3G and 2G networks to fully virtualized cloud-native networks (such as RCP, AWS and Azure). 27 Customer Service and Support We believe that providing a high level of customer service and support to end-users is essential to our success, and it is our goal to establish RADCOM as an industry leader in customer satisfaction.
In addition, we believe that our solutions are also the most advanced for CSPs that are evaluating or migrating their 4G, 3G and 2G networks to fully virtualized cloud-native networks (such as RCP, AWS, GCP and Azure).
PROPERTY, PLANTS AND EQUIPMENT We currently lease an aggregate of approximately 22,830 square feet of office space in Tel Aviv, Israel, from affiliates of our principal shareholders. This space includes our development facilities, which consist primarily of programming, documenting, quality control, testing and bug fixing, as well as from time to time, installation of software components on third party hardware.
This space includes our development facilities, which consist primarily of programming, documenting, quality control, testing and bug fixing, as well as from time to time, installation of software components on third party hardware.
After the initial warranty period, we offer extended warranties which can be purchased for multi-year periods.
We may provide our customers with a free warranty period which includes bug-fixing and a warranty on our solutions. After the initial warranty period, we offer extended warranties which can be purchased for multi-year periods.
We offer an advanced 5G network intelligence portfolio of solutions for large scale networks, providing operators with a smart, efficient and on-demand approach to network intelligence that meets the challenges of assuring the customer experience and service quality in the 5G era.
We offer advanced cloud-native assurance solutions for large-scale networks, providing operators with an innovative, efficient, and on-demand approach to network monitoring that meets the challenges of assuring the customer experience in the 5G era. Our solution supports any hybrid deployments of public and private clouds as required in the market.
In addition to that, we are constantly focusing on automation as a key goal to reduce costs and optimize the operations of CSPs. In parallel, we continued to enhance and develop both our cloud native virtualized network and 5G solutions to offer greater value and benefit to our current and potential customers.
In parallel, we continued to enhance and develop both our cloud native virtualized network and 5G solutions to offer greater value and benefit to our current and potential customers.
In December 2015, we were selected by AT&T for its next-generation virtualized network environment. AT&T’s deployment represents the first NFV networks of scale in the industry and since then, we have been working with AT&T, in its continuing efforts to transition to a full NFV network.
AT&T’s deployment represents the first NFV networks of scale in the industry, and since then, we have been working with AT&T in its continuing efforts to transition to a full NFV network. From 2016 until 2018, we improved our cloud-native virtualized network capabilities while working on one of the world’s first and biggest virtual networks.
In the early stages, 5G is expected to deliver enhanced mobile broadband with higher data speeds (up to twenty times faster than 4G) as well as better coverage for use cases such as Fixed Wireless Access.
In order to fight for their customers’ satisfaction, CSPs will need to gain deeper insight into customer behavior, enabling them to tailor processes based on customer preferences. 5G is expected to deliver enhanced mobile broadband with higher data speeds (up to twenty times faster than 4G) as well as better coverage for use cases such as Fixed Wireless Access.
In February 2023, we announced the entry into definitive agreements to acquire the technology, intellectual property, and customer agreements of Continual Ltd, a leading mobility experience analytics company that uses AI and ML to deliver advanced insights to help telecom operators improve their subscribers’ mobility experience, for an amount of up to $2,500,000.
In April 2023, we acquired Continual’s technology, intellectual property, and customer agreements for $2.5 million in cash. This leading mobility experience analytics company uses AI and ML to deliver advanced insights to help telecom operators improve their subscribers’ mobility experience.
Employees Our total headcount as of December 31, 2022, was 284 including employees and contractors. See “Item 6.D—Directors, Senior Management and Employees—Employees.” We consider our relations with our employees to be good and we have never experienced a strike or work stoppage. Except for employees located in Brazil, none of our employees are represented by labor unions.
See “Item 6.D—Directors, Senior Management and Employees—Employees.” We consider our relations with our employees to be good and we have never experienced a strike or work stoppage.
As a result, our success depends in part upon our ability to continue to enhance our existing solutions and to develop and introduce new solutions that improve performance and reduce total costs on a cost-effective and timely basis. 28 During the last several years, we invested significant amounts in research and development in order to create and maintain our technological leadership and to meet the current and future needs of the world’s most advanced CSPs.
As a result, our success depends in part upon our ability to continue to enhance our existing solutions and to develop and introduce new solutions that improve performance and reduce total costs on a cost-effective and timely basis.
It solves the critical challenges telecom operators face today when trying to gain visibility into the new container-based network functions in 5G. The solution offers host-based and pod-based tapping and filtering, thus enabling to mirror traffic to our system in a containerized-based network.
It solves the critical challenges telecom operators face today when trying to gain visibility into the new container-based network functions in 5G. Our advanced packet brokers enable intelligent traffic distribution, filtering, and load balancing across multiple clouds and domains.
While CPSs are adopting 5G in some countries and preparing for the adoption of 5G technologies in other countries, they continue to operate their 4G, 3G and 2G networks and search for superior solutions that will enable them full end-to-end network visibility.
CPSs’ adoption of 5G is accelerating while they continue to operate their 4G, 3G and 2G networks and search for superior solutions that will enable them full end-to-end network visibility. Our solution offering is built on years of industry experience, is 5G ready and supports the CSPs entire network offerings.
Our solution portfolio enables CSPs that are deploying 5G networks as well as CSPs that are evaluating or migrating their 4G, 3G and 2G legacy networks to fully virtualized cloud-native networks to have one platform that covers their entire network, from 5G, 4G, and 2G, providing fully virtualized cloud-native network intelligence and service assurance.
Our solution portfolio enables CSPs to deploy 5G networks and those still running or migrating their 4G, 3G, and 2G legacy networks to have one platform covering their entire network, providing fully cloud-native network intelligence and service assurance. Monitoring 5G SA requires a new approach that supports different options for traffic tapping and data acquisition.
Such NOC service captures and resolves problems before customers report them. In addition, we routinely contact our customers to solicit feedback and promote full usage of our solutions. We may provide our customers with a free warranty period which includes bug-fixing and a warranty on our solutions.
Such NOC service captures and resolves problems before customers report them. We have invested in additional AI based automation with a variety of alerts and alarms monitoring, improving our capabilities to identify and address near real time problems. In addition, we routinely contact our customers to solicit feedback and promote full usage of our solutions.
As of December 31, 2022, our total contingent liability to the IIA in respect of grants received including accumulated interest and net of accumulated royalties paid was approximately $54.2 million. 30 Proprietary Rights To protect our rights to our intellectual property, we rely upon a combination of trademarks, contractual rights, trade secret law, copyrights, non-disclosure agreements and technical measures to establish and protect our proprietary rights in our solutions and technologies.
Proprietary Rights To protect our rights to our intellectual property, we rely upon a combination of trademarks, contractual rights, trade secret law, copyrights, non-disclosure agreements and technical measures to establish and protect our proprietary rights in our solutions and technologies. We own registered trademarks for the name RADCOM ® and for the name Omni-Q ® .
In addition, CSPs are facing strong competition both from other CSPs and from over-the-top (OTT) players who are offering more and more similar services. In order to fight for their customers’ satisfaction, CSPs will need to gain deeper insight into customer behavior, enabling them to tailor processes based on customer preferences.
In addition, CSPs are facing strong competition both from other CSPs and from over-the-top (OTT) players who are offering more and more similar services.
Removed
Our solutions support CSPs while launching and running 5G networks (as well as 4G and 3G), delivering dynamic, on-demand service assurance and network troubleshooting for real time customer and service insights.
Added
When CSPs seek a solution to assure their network, transition to the cloud, deploy new greenfield networks or deploy a new 5G network, they may select RADCOM as their assurance partner. Chosen by AT&T, DISH Purchasing Corporation, or Dish, Rakuten, and others, we offer an innovative cloud-native assurance solution - RADCOM ACE - that seamlessly integrates into multi-cloud environments.
Removed
The 5G telecommunications infrastructure introduces a transformational approach for the design of a new network core and an Open-RAN (a standard for cellular radio-access networks) solution, which is a fully cloud-native, software-based, virtualized network architecture. This new core network architecture uses building blocks, or containers, to enable a wide range of new services envisioned using 5G.
Added
It monitors, analyzes, and delivers real-time subscriber analytics and network insights into how the network performs 24/7. It also provides advanced troubleshooting capabilities to help the operator launch 5G smoothly and ensure customers enjoy a great user experience. With over 30 years of deep network understanding, we have extensive experience with leading telecom operators globally.
Removed
The new 5G network is designed in an agile approach, which virtualizes entire classes of network functions into containers, which may dynamically create various services.
Added
We specialize in solutions for next-generation mobile and fixed networks, including 5G, Long Term Evolution, or LTE, VoLTE, Voice over Wifi, or VoWifi, Voice over NewRadio, or VoNR, IP Multimedia Subsystem, or IMS, Voice over IP, or VoIP, and Universal Mobile Telecommunication Service, or UMTS.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Such accounting policies require significant judgments, assumptions, and estimations used in the preparation of the Consolidated Financial Statements, and actual results could differ materially from the amounts reported based on these policies. 40 Revenue recognition . We recognize revenues in accordance with ASC No. 606, “Revenue from Contracts with Customers”.
Such accounting policies require significant judgments, assumptions, and estimations used in the preparation of the Consolidated Financial Statements, and actual results could differ materially from the amounts reported based on these policies. Revenue recognition . We recognize revenues in accordance with ASC No. 606, “Revenue from Contracts with Customers”.
Research and Development expenses, Net . Research and development expenses, net consist primarily of salaries and related expenses, including share-based compensation, payments for subcontractors and overhead expenses. Overhead expenses consist of a variety of costs, including rent, office and associated expenses. The R&D expenses have been partially offset by royalty-bearing grants from the IIA. Sales and Marketing expenses, Net .
Research and Development expenses, Net . Research and development expenses, net consist primarily of salaries and related expenses, including share-based compensation, payments for subcontractors and overhead expenses. Overhead expenses consist of a variety of costs, including rent, office and associated expenses. The R&D expenses have been partially offset by royalty-bearing grants from the IIA. 34 Sales and Marketing expenses .
In evaluating the contract with a customer, we analyze the customer’s intent and ability to pay the amount of promised consideration (credit risk) and consider the probability of collecting substantially all of the consideration. b) Identify the performance obligations in the contract: At a contract’s inception, we assess the goods or services promised in a contract with a customer and identify the performance obligations.
In evaluating the contract with a customer, we analyze the customer’s intent and ability to pay the amount of promised consideration (credit risk) and consider the probability of collecting substantially all of the consideration. 41 b) Identify the performance obligations in the contract: At a contract’s inception, we assess the goods or services promised in a contract with a customer and identify the performance obligations.
Sales and marketing expenses, net consist primarily of salaries and related expenses, including share-based compensation, commissions and fees to third party representatives, advertising, trade shows, promotional expenses, domestic and international travels, web site maintenance, and overhead expenses. General and Administrative Expenses .
Sales and marketing expenses consist primarily of salaries and related expenses, including share-based compensation, commissions and fees to third party representatives, advertising, trade shows, promotional expenses, domestic and international travels, web site maintenance, and overhead expenses. General and Administrative Expenses .
Because a measure of operating profit or loss by product groups or geographical regions is not presented to management due to shared resources, we have concluded that we operate in one reportable segment. 34 A.
Because a measure of operating profit or loss by product groups or geographical regions is not presented to management due to shared resources, we have concluded that we operate in one reportable segment. A.
For projects authorized as a research and development program under the R&D Law since January 1, 1999, the repayment interest rate was LIBOR, as further detailed below.
For projects authorized as a research and development program under the R&D Law since January 1, 1999, the repayment interest rate was LIBOR, as further detailed and qualified below.
Control is either transferred over time or at a point in time, which affects the revenue recognition schedule. 41 Products . Revenues from sales of software solutions which include customer acceptance or software licenses only are recognized at a point in time of the acceptance of the solution or the point in time the software license is delivered. Services .
Control is either transferred over time or at a point in time, which affects the revenue recognition schedule. 42 Products . Revenues from sales of software solutions which include customer acceptance or software licenses only are recognized at a point in time of the acceptance of the solution or the point in time the software license is delivered. Services .
The change in the recognition of share-based compensation expense represents a change in accounting principle which the Company believes to be preferable because the straight-line attribution method is the predominant method used in its industry and because estimating forfeitures will result in a more accurate attribution of share-based compensation expense since the Company has accumulated during the last few years sufficient historical experience to make a reasonable estimate of the forfeiture pattern of its employees.
The change in the recognition of share-based compensation expense represents a change in accounting principle which the Company believes to be preferable because the straight-line attribution method is the predominant method used in its industry and because estimating forfeitures will result in a more accurate attribution of share-based compensation expense since the Company has accumulated during the last few years sufficient historical experience to make a reasonable estimate of the forfeiture pattern of its employees. 43 Business combination.
Reportable Segments Management receives sales information by customers and by geographical regions. Research and development, sales and marketing, and general and administrative expenses are reported on a combined basis only ( i.e. , they are not allocated to product groups or geographical regions).
Reportable Segments Management receives sales information by customers and by geographical regions. Cost of revenues, research and development, sales and marketing, and general and administrative expenses are reported on a combined basis only ( i.e. , they are not allocated to product groups or geographical regions).
The following table provides the operating costs and expenses of the Company in 2022 and 2021 as well as the percentage change of such expenses in 2022 as compared to 2021.
The following table provides the operating costs and expenses of the Company in 2023 and 2022 as well as the percentage change of such expenses in 2023 as compared to 2022.
Since then, we have focused on developing and enhancing our products, building our worldwide direct and indirect distribution network and establishing and expanding our sales, marketing, and customer support infrastructures. Most of our revenues are generated in U.S. dollars and the financing activities are made in U.S. dollars.
We commenced operations in 1991. Since then, we have focused on developing and enhancing our products, building our worldwide direct and indirect distribution network and establishing and expanding our sales, marketing, and customer support infrastructures. 33 Most of our revenues are generated in U.S. dollars and the financing activities are made in U.S. dollars.
The increase in our financial income, net is related to a positive impact of currency exchange rates and an increase in interest income from bank deposits. Taxes on Income . In 2022, we recorded tax expenses of approximately $159,000 as compared to tax expenses of approximately $124,000 in 2021.
The increase in our financial income, net is related to a positive impact of currency exchange rates and an increase in interest income from bank deposits. Taxes on Income . In 2023, we recorded tax expenses of approximately $182,000 as compared to tax expenses of approximately $159,000 in 2022.
Royalties to the BIRD Foundation are generally payable at the rate of 5% of the sales of such products, up to 150% of the grant received, linked to the United States Consumer Price Index. As of December 31, 2022, we had a contingent obligation to pay the BIRD Foundation aggregate royalties in the amount of approximately $450,000.
Royalties to the BIRD Foundation are generally payable at the rate of 5% of the sales of such products, up to 150% of the grant received, linked to the United States Consumer Price Index. As of December 31, 2023, we had a contingent obligation to pay the BIRD Foundation aggregate royalties in the amount of approximately $466,000. C.
We followed the below sales strategy in 2022 in order to expand our sales pipeline and revenues: ● We focused on leveraging our implementations with AT&T, Rakuten and other customers to expand our value proposition to additional carriers; ● We expanded our business with our key existing customers; ● We continued our investment in our sales and marketing resources and have expanded our reach through the engagement of local representatives; ● We invested in marketing campaigns globally to enhance our market positioning and open new opportunities; ● We increased our investment in research and development to maintain our recognized technological leadership in cloud-based, 5G solutions, to meet the requirements of our customers, and to develop new product offerings and capabilities; ● We invested in our professional services team and resources to meet our customers’ deployment, customization and support requirements and to allow us to successfully deliver multiple proof of concept demonstrations to potential new customers; and ● We pursued strategic partnerships, including OEM partnerships, and teaming agreements.
We followed the below sales strategy in 2023 in order to expand our sales pipeline and revenues: ● We focused on leveraging our implementations with AT&T, Rakuten and other customers to expand our value proposition to additional carriers; ● We expanded our business with our key existing customers; ● We continued our investment in our sales and marketing resources and have expanded our reach through the engagement of local representatives; ● We invested in marketing campaigns globally to enhance our market positioning and open new opportunities; ● We invested in research and development to maintain our recognized technological leadership in cloud-based, 5G solutions, to meet the requirements of our customers, and to develop new product offerings and capabilities; ● We invested in sales and marketing to create more sales engagements that can lead to additional multi-year contracts and increased market share; ● We invested in our professional services team and resources to meet our customers’ deployment, customization and support requirements and to allow us to successfully deliver multiple proof of concept demonstrations to potential new customers; and ● We pursued strategic partnerships, including OEM partnerships, and teaming agreements.
Royalty expenses relating to the IIA grants included in the cost of revenues for years ended December 31, 2022 and 2021 were approximately $1.4 million and $1.2 million, respectively. The total grants regarding projects that we have received from the IIA as of December 31, 2022 were approximately $48.4 million.
Royalty expenses relating to the IIA grants included in the cost of revenues for years ended December 31, 2023 and 2022 were approximately $1.5 million and $1.4 million, respectively. The total grants regarding projects that we have received from the IIA as of December 31, 2023 were approximately $50.2 million.
TREND INFORMATION During 2022, we saw more deployments of 5G SA by CSPs, but still in small numbers. According to industry research, 36 operators launched 5G standalone networks so we expect that the number of 5G SA deployments will grow during 2023 and beyond, although the pace of such growth is still unknown.
TREND INFORMATION During 2023, we saw more deployments of 5G SA by CSPs, but still in small numbers. According to industry research, 46 operators in 27 countries, launched 5G standalone networks so we expect that the number of 5G SA deployments will grow during 2024 and beyond, although the pace of such growth is still unknown.
Our general and administrative expenses included approximately $0.9 million for share-based compensation in 2022, as compared to approximately $0.9 million for share-based compensation in 2021. Financial Income, Net . In 2022, the financial income, net, was approximately $2.0 million, as compared to financial income, net, of approximately $0.4 million in 2021.
Our general and administrative expenses included approximately $1.2 million for share-based compensation in 2023, as compared to approximately $0.9 million for share-based compensation in 2022. Financial Income, Net . In 2023, the financial income, net, was approximately $4.6 million, as compared to financial income, net, of approximately $2.0 million in 2022.
Comparison of Financial Data for Year Ended December 31, 2021, compared with Year Ended December 31, 2020 For a discussion of the financial data for the year ended December 31, 2021, compared with the year ended December 31, 2020, see “Item 5.A. —Operating and Financial Review and Prospects—Operating Results—Summary of Our Financial Performance for the Fiscal Year Ended 2021 Compared to the Fiscal Year Ended 2020” included in our Annual Report on Form 20-F for the fiscal year ended December 31, 2021, filed with the SEC on March 29, 2022.
Comparison of Financial Data for Year Ended December 31, 2022, compared with Year Ended December 31, 2021 For a discussion of the financial data for the year ended December 31, 2022, compared with the year ended December 31, 2021, see “Item 5.A. —Operating and Financial Review and Prospects—Operating Results—Summary of Our Financial Performance for the Fiscal Year Ended 2022 Compared to the Fiscal Year Ended 2021” included in our Annual Report on Form 20-F for the fiscal year ended December 31, 2022, filed with the SEC on March 30, 2023.
An increase or a decrease in our total revenues would not necessarily result in a proportional increase or decrease in the levels of our research and development expenditures, which could affect our operating margin. 36 Sales and Marketing Expenses. Sales and marketing expenses increased from approximately $10.4 million in 2021 to approximately $12.3 million in 2022.
An increase or a decrease in our total revenues would not necessarily result in a proportional increase or decrease in the levels of our research and development expenditures, which could affect our operating margin. Sales and Marketing Expenses. Sales and marketing expenses increased from approximately $12.3 million in 2022 to approximately $14.6 million in 2023.
For graded vesting awards subject to service conditions only, we use the straight-line attribution method. We estimate expected forfeitures. We selected the Black-Scholes option-pricing model as the most appropriate fair value method for our stock options awards. This option-pricing model requires several assumptions, of which the most significant are the expected stock price volatility and the expected option term.
For graded vesting awards subject to service conditions only, we use the straight-line attribution method. We estimate expected forfeitures. We selected the Black-Scholes option-pricing model as the most appropriate fair value method for its share-options awards. The option-pricing model requires a number of assumptions, of which the most significant are the expected share price volatility and the expected option term.
During 2022, our gross profit as a percentage of revenues, calculated to include variable costs such as salaries and related expenses was approximately 72.4% compared to approximately 71.6% in 2021. Our cost of revenues for 2022 includes an expense of approximately $0.4 million for share-based compensation, as compared to approximately $0.2 million for share-based compensation in 2021.
During 2023, our gross profit as a percentage of revenues, calculated to include variable costs such as salaries and related expenses was approximately 73.3% compared to approximately 72.4% in 2022. Our cost of revenues for both 2023 and 2022 includes an expense of approximately $0.4 million for share-based compensation.
Year ended December 31, (in millions of U.S. dollars) % Change 2022 2021 2022 vs. 2021 Research and development 21.5 20.3 5.6 Less royalty-bearing participation 0.8 0.5 41.9 Research and development, net 20.7 19.8 4.6 Sales and marketing 12.3 10.4 18.5 General and administrative 4.5 4.2 6.6 Total operating expenses 37.5 34.4 9.0 Research and Development Expenses .
Year ended December 31, (in millions of U.S. dollars) % Change 2023 vs. 2023 2022 2022 Research and development 19.6 21.5 (8.8 ) Less royalty-bearing participation 0.8 0.8 - Research and development, net 18.8 20.7 (9.2 ) Sales and marketing 14.6 12.3 18.7 General and administrative 5.1 4.5 13.3 Total operating expenses 38.5 37.5 2.7 Research and Development Expenses, gross .
Revenues per geographic region, based on the location of the end-customer Year Ended December 31, (in millions of U.S. dollars) Year Ended December 31, (as percentages) 2022 2021 2022 2021 North America 23.0 21.8 49.8 54.0 Asia 12.5 14.7 27.2 40.4 Latin America 3.0 1.1 6.4 0.5 EMEA (including Israel) 7.6 2.7 16.6 5.1 Total revenues 46.1 40.3 100 % 100 % 35 In 2022, our two largest customers amounted to approximately 77% of our total consolidated revenues.
Revenues per geographic region, based on the location of the end-customer Year Ended December 31, (in millions of U.S. dollars) Year Ended December 31, (as percentages) 2023 2022 2023 2022 North America 31.8 23.0 61.7 49.8 Asia 9.8 12.5 18.9 27.2 Latin America 1.3 3.0 2.5 6.4 EMEA (including Israel) 8.7 7.6 16.9 16.6 Total revenues 51.6 46.1 100 % 100 % In 2023, our two largest customers amounted to approximately 76% of our total consolidated revenues.
Impact of Inflation and Foreign Currency Fluctuations Most of our revenues are generated in U.S. dollars and the financing activities are made in U.S. dollars. We also generate revenues in BRLs, euros and other currencies; however, we consider the U.S. dollar to be our functional currency. In the future additional revenues may be denominated in currencies other than U.S. dollars.
Impact of Inflation and Foreign Currency Fluctuations Most of our revenues are generated in U.S. dollars and the financing activities are made in U.S. dollars. We also generate revenues in Brazilian reals, or BRLs, euros and other currencies; however, we consider the U.S. dollar to be our functional currency.
In 2021, we received approximately $55.5 million from the maturity of a short-term bank deposit, invested approximately $58.6 million in a short-term bank deposits and invested approximately $0.4 million for the purchase of equipment. Net Cash provided by (Used in) Financing Activities. In 2022 and in 2021, there was no net cash provided by or used in financing activities.
In 2022, we invested approximately $66.9 million in bank deposits, received approximately $58.6 million from the maturity of a short-term bank deposit and invested approximately $0.2 million for the purchase of equipment. 39 Net Cash provided by (Used in) Financing Activities. In 2023 and in 2022, there was no net cash provided by or used in financing activities.
Our sales and marketing expenses included an expense of approximately $1.4 million for share based compensation in 2022, as compared to approximately $0.9 million for share-based compensation in 2021. General and Administrative Expenses . General and administrative expenses increased from approximately $4.2 million in 2021 to approximately $4.5 million in 2022.
Our sales and marketing expenses included an expense of approximately $1.8 million for share based compensation in 2023, as compared to approximately $1.4 million for share-based compensation in 2022. 37 General and Administrative Expenses . General and administrative expenses increased from approximately $4.5 million in 2022 to approximately $5.1 million in 2023.
OPERATING RESULTS Results for the Year Ended December 31, 2022, compared to Year Ended December 31, 2021 The following table sets forth, for the periods indicated, certain financial data expressed as a percentage of revenues: Year ended December 31, 2022 2021 Revenues 100 % 100 % Cost of revenues 27.6 28.4 Gross profit 72.4 71.6 Operating expenses: Research and development 46.7 50.5 Less royalty-bearing participation 1.7 1.3 Research and development, net 45.0 49.2 Sales and marketing 26.6 25.7 General and administrative 9.7 10.4 Total operating expenses 81.3 85.3 Operating loss (8.9 ) (13.7 ) Financial income, net 4.3 0.9 Loss before taxes on income (4.6 ) (12.8 ) Taxes on income (0.3 ) (0.3 ) Net loss (4.9 ) (13.1 ) Revenues Year Ended December 31, (in millions of U.S. dollars) 2022 2021 Products 19.0 15.3 Services 27.1 25.0 Total Revenues 46.1 40.3 Revenues .
OPERATING RESULTS Results for the Year Ended December 31, 2023, compared to Year Ended December 31, 2022 The following table sets forth, for the periods indicated, certain financial data expressed as a percentage of revenues: Year ended December 31, 2023 2022 Revenues 100 % 100 % Cost of revenues 26.7 27.6 Gross profit 73.3 72.4 Operating expenses: Research and development 37.9 46.7 Less royalty-bearing participation 1.4 1.7 Research and development, net 36.5 45.0 Sales and marketing 28.3 26.6 General and administrative 9.8 9.7 Total operating expenses 74.6 81.3 Operating loss (1.3 ) (8.9 ) Financial income, net 8.8 4.3 Income (loss) before taxes on income 7.5 (4.6 ) Taxes on income (0.4 ) (0.3 ) Net Income (loss) 7.1 (4.9 ) 35 Revenues Year Ended December 31, (in millions of U.S. dollars) 2023 2022 Products 22.8 19.0 Services 28.8 27.1 Total Revenues 51.6 46.1 Revenues .
As of December 31, 2022, our cash and cash equivalents and bank deposits totaled approximately $77.7 million, compared with cash and cash equivalents of approximately $70.6 million as of December 31, 2021. Our 2022 loss includes non-cash expenses due to share-based compensation of approximately $5.2 million, compared to $3.4 million in 2021.
As of December 31, 2023, our cash and cash equivalents and bank deposits totaled approximately $82.2 million, compared with cash and cash equivalents and bank deposits of approximately $77.7 million as of December 31, 2022. Our 2023 income includes non-cash expenses due to share-based compensation of approximately $6.1 million, compared to $5.2 million in 2022.
The increase in our general and administrative expenses is mainly attributed to an increase in salaries and benefits and to an increase in professional services expenses in 2022 compared to 2021. As a percentage of total revenues, general and administrative expenses were 9.7% in 2022, with no significant change from 10.4% in 2021.
The increase in our general and administrative expenses is mainly attributed to an increase in share-based compensation expenses and to an increase in professional services expenses in 2023 compared to 2022. As a percentage of total revenues, general and administrative expenses were 9.8% in 2023, with no significant change from 9.7% in 2022.
For additional information, see “Item 4.B—Information on the Company—Business Overview—Binational Industrial Research and Development Foundation.” C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC. See “Item 4.B—Information on the Company—Business Overview—Research and Development,” “Item 4.B—Information on the Company—Business Overview—Proprietary Rights”, and “Item 5—Operating and Financial Review and Prospects—Research and Development” and “Item 5.A—Operating and Financial Review and Prospects—Operating Results”. D.
RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC. See “Item 4.B—Information on the Company—Business Overview—Research and Development,” “Item 4.B—Information on the Company—Business Overview—Proprietary Rights”, and “Item 5—Operating and Financial Review and Prospects—Research and Development expenses, Net” and “Item 5.A—Operating and Financial Review and Prospects—Operating Results”. D.
Since a significant portion of our expenses is in NIS, as we pay our Israeli employees’ salaries in NIS, the dollar cost of our operations is influenced by the exchange rates between the NIS and the U.S. dollar.
In the future additional revenues may be denominated in currencies other than U.S. dollars. Since a significant portion of our expenses is in NIS, as we pay our Israeli employees’ salaries in NIS, the dollar cost of our operations is influenced by the exchange rates between the NIS and the U.S. dollar.
Summary of Our Financial Performance for the Fiscal Year Ended 2022 Compared to the Fiscal Year Ended 2021 For the year ended December 31, 2022, our revenues were approximately $46.1 million, compared to approximately $40.3 million in 2021, reflecting an increase of approximately 14.4%.
Summary of Our Financial Performance for the Fiscal Year Ended 2023 Compared to the Fiscal Year Ended 2022 For the year ended December 31, 2023, our revenues were approximately $51.6 million, compared to approximately $46.1 million in 2022, reflecting an increase of approximately 12%.
Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available. As our standard payment terms are less than one year, the contracts have no significant financing component.
Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available.
In 2022, our revenues increased by approximately $5.8 million, or approximately 14.4%, compared to 2021 due to an increase of approximately $2.1 million in services revenues, and an increase of approximately $3.7 million in product revenues. The increase in services revenues relates mainly to an increase in revenues in North America and Asia.
In 2023, our revenues increased by approximately $5.5 million, or approximately 12%, compared to 2022 due to an increase of approximately $3.8 million in product revenues, and an increase of approximately $1.7 million in services revenues. The increase in product revenues relates mainly to an increase in revenues in North America and derives from existing and new customers.
As of December 31, 2022, the accumulated interest was approximately $25.0 million, the accumulated royalties paid to the IIA were approximately $19.3 million and our total amount of contingent liability to the IIA in respect of grants received was, according to our records, approximately $54.2 million.
As of December 31, 2023, the accumulated interest was approximately $26.7 million, the accumulated royalties paid to the IIA were approximately $21 million and our total amount of contingent liability to the IIA in respect of grants received was, according to our records, approximately $56 million.
We were provided with approximately $6.0 million in cash from operating activities during 2022, compared to approximately $2.0 million provided in 2021. Our net loss for the year ended December 31, 2022, was approximately $2.3 million, compared to a net loss of approximately $5.3 million in 2021.
Our operating activities generated approximately $4.7 million in cash during 2023, compared to approximately $6.0 million generated in 2022. Our net income for the year ended December 31, 2023, was approximately $3.7 million, compared to a net loss of approximately $2.3 million in 2022.
In 2021 our three largest customers amounted to approximately 88% our total consolidated revenues. Cost of Revenues and Gross Profit Year Ended December 31, (in millions of U.S. dollars) 2022 2021 Products 5.5 5.5 Services 7.2 5.9 Total cost of revenues 12.7 11.4 Gross profit 33.3 28.9 Cost of Revenues .
In 2022 our two largest customers amounted to approximately 77% our total consolidated revenues. Cost of Revenues and Gross Profit Year Ended December 31, (in millions of U.S. dollars) 2023 2022 Products 5.7 5.5 Services 8.1 7.2 Total cost of revenues 13.8 12.7 Gross profit 37.8 33.3 36 Cost of Revenues .
We recorded a valuation allowance of approximately $14.9 million on December 31, 2022, for all of our deferred tax assets. Based on the weight of available evidence, we believe it is more likely than not that all of our deferred tax assets will not be realized. B.
Based on the weight of available evidence, we believe it is more likely than not that all of our deferred tax assets will not be realized. B.
The positive net cash flow in 2021 was primarily due to share-based and restricted share compensation expenses of approximately $3.4 million, a decrease in trade receivables of approximately $2.4 million, an increase in trade payable of approximately $1.0 million, an increase in other liabilities and accrued expenses of approximately $0.7 million, and depreciation of $0.5 million.
The positive net cash flow in 2023 was primarily due to share-based and restricted share compensation expenses of approximately $6.1 million, net income of approximately $3.7 million, an increase in other account payables and accrued expenses of approximately $2.2 million, a decrease of approximately $1.4 million in other account receivables and prepaid expenses, a decrease in inventory of approximately $0.6 million, depreciation and amortization of $0.6 million, and an increase of approximately $0.2 million in employees and payroll accruals.
Members of our audit committee of the Board of Directors, or the Audit Committee, Board of Directors and management reviewed the pricing of the leases and confirmed that these leases were not different from terms that could have been obtained from unaffiliated third parties.
Members of our audit committee of the Board of Directors, or the Audit Committee, Board of Directors and management reviewed the pricing of the leases and confirmed that these agreements were not different from terms that could have been obtained from unaffiliated third parties. For more information, see “Item 7.B—Major Shareholders and Related Party Transactions—Related Party Transactions” below.
Other than a grant of 4,906 options to purchase our ordinary shares granted to our director, Zohar Zisapel, no other options to purchase ordinary shares (other than RSUs) were granted by us during the years ended December 31, 2022, 2021 and 2020. 42 In 2021, the Company elected to change its accounting policy for recognizing share-based compensation expense for graded vesting share awards subject to service conditions only by applying the straight-line attribution method instead of the accelerated attribution method and using an estimated forfeiture rate of awards expected to be forfeited for each award rather than account for the forfeitures as they occur.
In 2021, the Company elected to change its accounting policy for recognizing share-based compensation expense for graded vesting share awards subject to service conditions only by applying the straight-line attribution method instead of the accelerated attribution method and using an estimated forfeiture rate of awards expected to be forfeited for each award rather than account for the forfeitures as they occur.
In 2022, we invested approximately $66.9 million in bank deposits, received approximately $58.6 million from the maturity of a short-term bank deposit and invested approximately $0.2 million for the purchase of equipment.
In 2023, we invested approximately $2.5 million in acquiring Continual, invested approximately $65 million in bank deposits, received approximately $64.1 million from the maturity of a short-term bank deposit and invested approximately $0.2 million for the purchase of equipment.
We may receive grants from the IIA at the rates that range from 20% to 60% of the research and development expenses, as prescribed by the research committee of the IIA in accordance with the R&D Law. We recorded such grants from the IIA in the total amount of approximately $0.8 million in 2022 and $0.5 million in 2021.
We may receive grants from the IIA at rates that range from 20% to 60% (and with respect to Magnet Programs up to 66%) of the research and development expenses, as prescribed by the research committee of the IIA in accordance with the R&D Law.
We believe that our existing capital resources and cash flows from operations will be adequate to satisfy our expected liquidity requirements through the next twelve months. Without derogating from the foregoing estimate regarding our existing capital resources and cash flows from operations, we may decide to raise additional funds in the future.
Without derogating from the foregoing estimate regarding our existing capital resources and cash flows from operations, we may decide to raise additional funds in the future. We believe that, if required, we will be able to raise additional capital or reduce discretionary spending to provide the required liquidity beyond the next twelve months. Net Cash Provided by Operating Activities .
Our world leading, innovative solutions are well-positioned to fulfill the CSPs’ ongoing needs to monitor their networks (fixed and mobile) and assure the delivery of a quality service to their subscribers; both on cloud-native virtualized network and non-virtual networks. 32 General Our discussion and analysis of our financial condition and results of operation are based upon our consolidated financial statements, which have been prepared in accordance with U.S.
Our world leading, innovative solutions are well-positioned to fulfill the CSPs’ ongoing needs to monitor their networks (fixed and mobile) and assure the delivery of a quality service to their subscribers; both on cloud-native virtualized network and non-virtual networks.
As part of our plan to reduce product cost and improve flexibility, we shifted during the last few years to a model whereby we install our software-based solutions on standard, non-proprietary third-party hardware that functions together with our software to deliver the product’s essential functionality. 33 Our gross profit is affected by several factors, including the introduction of new products, price erosion due to increasing competition, the bargaining power of larger clients, the number of employees that we have in operations, deployment, software development customization, managed services and customer support, integration of third-party software components into our own, product mix, and exchange rate fluctuations.
Our gross profit is affected by several factors, including the introduction of new products, price erosion due to increasing competition, the bargaining power of larger clients, the number of employees that we have in operations, deployment, software development customization, managed services and customer support, integration of third-party software components into our own, product mix, and exchange rate fluctuations.
The increase in our sales and marketing expenses is mainly related to an increase in third party commissions and to an increase in share-based compensation expenses in 2022 compared to 2021. As a percentage of total revenues, sales and marketing expenses were 26.6% in 2022, with no significant change from 25.7% in 2021.
The increase in our sales and marketing expenses is mainly related to expansion of the global sales and marketing team and to an increase in share-based compensation expenses in 2023 compared to 2022. As a percentage of total revenues, sales and marketing expenses were 28.3% in 2023, compared to 26.6% in 2022.
Israeli resident companies are generally subject to capital gains tax at the corporate tax rate. We do not generate taxable income in Israel, as we have historically incurred operating losses resulting in carry forward losses for tax purposes totaling approximately $38.4 million and an additional $1.5 million of capital loss as of December 31, 2022.
We do not generate taxable income in Israel, as we have historically incurred operating losses resulting in carry forward losses for tax purposes totaling approximately $38.4 million and an additional $1.7 million of capital loss as of December 31, 2023. We believe that we will be able to carry forward these tax losses to future tax years.
Pursuant to the specific terms of these grants, we are obligated to pay royalties of 3% of the revenues generated by sales of products (and certain related services) funded with these grants.
We recorded such grants from the IIA in the total amount of approximately $0.8 million in each of 2023 and 2022. Pursuant to the specific terms of these grants, we are obligated to pay royalties of 3% of the revenues generated by sales of products (and certain related services) funded with these grants (excluding grants received in the Magnet project).
Based on our budget for 2023, we expect that an increase of NIS 0.10 to the exchange rate of the NIS to U.S. dollar will decrease our expenses expressed in dollar terms by approximately $610,000 per fiscal year and vice versa. 37 Effective Corporate Tax Rate As of January 1, 2018, Israeli resident companies were generally subject to corporate tax at the rate of 23%.
Based on our budget for 2024, we expect that a change of NIS 0.10 to the exchange rate of the NIS to U.S. dollar will change our expenses expressed in dollar terms by approximately $490,000 per fiscal year and vice versa.
Our U.S. and Brazilian subsidiaries will generally be subject to applicable federal, state, local and foreign taxation, and we may also be subject to taxation in the other foreign jurisdictions in which we own assets, have employees or conduct business activities.
Our non-Israeli subsidiaries will generally be subject to applicable federal, state and local taxation, and we may also be subject to taxation in the other foreign jurisdictions in which we own assets, have employees or conduct business activities. We recorded a valuation allowance of approximately $13.5 million on December 31, 2023, for all of our deferred tax assets and liabilities.
LIQUIDITY AND CAPITAL RESOURCES We have financed our operations through cash generated from operations, the proceeds from our private and public offerings, proceeds from the exercise of options and royalty-bearing participation from the IIA and others. Cash and cash equivalents, and bank deposits on December 31, 2022, and 2021, were approximately $77.7 and $70.6 million, respectively.
LIQUIDITY AND CAPITAL RESOURCES We have financed our operations through cash generated from operations, the proceeds from our private and public equity offerings we conducted until 2017, proceeds from the exercise of options and royalty-bearing participation from the IIA and others.
The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The standalone selling prices of software licenses are typically estimated using the residual approach. Standalone selling prices of services are typically estimated based on observable transactions when these services are sold on a standalone basis or on a cost basis.
Standalone selling prices of services are typically estimated based on observable transactions when these services are sold on a standalone basis or on a cost basis.
The primary purpose of the invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to receive or provide financing. d) Allocate the transaction price to the performance obligations in the contract: Our selling price is highly variable. Each contract is different by its scope and price.
The primary purpose of the invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to receive or provide financing. d) Allocate the transaction price to the performance obligations in the contract: For software licenses where the standalone selling prices, cannot be determined based on observable prices, given the same products are sold for a broad range of amounts and the selling price is highly variable, the standalone selling prices included in a contract with multiple performance obligations are determined by applying a residual approach.
We believe that we will be able to carry forward these tax losses to future tax years. We do not expect to pay taxes in Israel, on our incomes from operations, until we utilize our carry forward tax losses. We may be required to pay taxes on our passive income, if any.
We do not expect to pay taxes in Israel, on our incomes from operations, until we utilize our carry forward tax losses. We may be required to pay taxes on our passive income, if any. For more information on taxation, see “Item 10.E — Taxation.” 38 Our effective corporate tax rate may exceed the Israeli tax rate.
Our investing activities generally consist of the purchase of equipment and investment in bank deposits. Net cash used in investing activities in 2022 was approximately $8.4 million, compared to net cash used in investing activities in 2021 of $3.5 million.
Net cash used in investing activities in 2023 was approximately $3.6 million, compared to net cash used in investing activities in 2022 of $8.4 million.
Historically the Company has not paid dividends and in addition has no plans in the foreseeable future to pay dividends, and therefore use an expected dividend yield of zero in the option pricing model. Determining the fair value of share-based awards at the grant date requires the exercise of judgment.
Treasury zero-coupon bonds with an equivalent term to the expected term of the options. Historically the Company has not paid dividends and in addition has no foreseeable plans to pay dividends, and therefore uses an expected dividend yield of zero in the option-pricing model.
Trade receivables for 2022 increased to approximately $11 million from approximately $10 million in 2021. The decrease in inventories in 2022 was mainly due to a decrease in inventory delivered to customers for which revenue criteria have been met and recognized. 38 Net Cash Provided by (Used in) Investing Activities.
The decrease in inventories in 2023 was mainly due to an increase in inventory delivered to customers for which revenue criteria have been met and recognized. Net Cash Provided by (Used in) Investing Activities. Our investing activities generally consist of the purchase of equipment and investment in bank deposits.
Research and development expenses, gross, increased from approximately $20.3 million in 2021 to approximately $21.5 million in 2022. As a percentage of total revenues, research and development expenses, gross, decreased from approximately 50.5% in 2021 to approximately 46.7% in 2022.
Research and development expenses, gross, decreased from approximately $21.5 million in 2022 to approximately $19.6 million in 2023. As a percentage of total revenues, research and development expenses, gross, decreased from approximately 46.7% in 2022 to approximately 37.9% in 2023. The decrease in our gross research and development expenses is attributable mostly to favorable foreign exchange rates.
GAAP. Our operating and financial review and prospects should be read in conjunction with our financial statements, accompanying notes thereto and other financial information appearing elsewhere in this Annual Report. We commenced operations in 1991.
General Our discussion and analysis of our financial condition and results of operation are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. Our operating and financial review and prospects should be read in conjunction with our financial statements, accompanying notes thereto and other financial information appearing elsewhere in this Annual Report.
Expected volatility was calculated based upon actual historical stock price movements over the most recent periods ending on the grant date, equal to the expected option term, as management believes that this is the best indicator of future volatility.
Expected volatility was calculated based upon actual historical share price movements over the most recent periods ending on the grant date, equal to the expected option term. The expected term was generated pursuant to historical option exercise information. The risk-free interest rate is based on the yield from U.S.
This was partially offset by net loss of approximately $5.3 million, an increase in inventories of approximately $0.4 million and an increase in deferred revenue and advances from customers of approximately $0.4 million. The trade receivables and days of sales outstanding are primarily impacted by payment terms, variations in the levels of shipment in the quarter, and collections performance.
The trade receivables and days of sales outstanding are primarily impacted by payment terms, variations in the levels of shipment in the quarter, and collections performance. Trade receivables for 2023 increased to approximately $13.4 million from approximately $11.1 million in 2022.
Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Deferred revenues represent unrecognized fees collected as well as other advances and payments received from customers, for which revenue has not yet been recognized.
Revenues related to managed services, service type warranty and post-contract customer support are recognized over time. Deferred revenues represent unrecognized fees collected as well as other advances and payments received from customers, for which revenue has not yet been recognized.
The increase in our gross research and development expenses is attributable mostly to an increase in salaries and benefit expenses and to an increase in share-based compensation expenses in 2022 compared to 2021. As of December 31, 2022, our total research and development headcount, including contractors, was 137, compared to 142 employees and contractors as of December 31, 2021.
As of both December 31, 2023, and December 31, 2022, our total research and development headcount, including contractors, was 137. Our research and development costs included an expense of approximately $2.7 million for share-based compensation in 2023, as compared to approximately $2.5 million for share-based compensation in 2022.
The increase in product revenues relates to North America and EMEA.
The increase in services revenues relates to Asia and EMEA, and mainly derives from existing customers.
On February 19, 2023, we entered into definitive agreements to acquire the technology, intellectual property, and customer agreements of Continual Ltd for an amount of up to $2.5 million in cash.
On April 30, 2023, we acquired the technology, intellectual property, and customer agreements of Continual for $2.5 million in cash. The post-acquisition synergies from integrating Continual’s technology into our portfolio contributed to our product and services offering and to our operation.
Our research and development costs included an expense of approximately $2.5 million for share-based compensation in 2022, as compared to approximately $1.4 million for share-based compensation in 2021. We believe that our research and development efforts are a key element of our strategy and are essential to our success.
We expect to keep the levels of our research and development expenses at similar levels as they were in 2022 and 2023. We believe that our research and development efforts are a key element of our strategy and are essential to our success.
For additional information, see “Item 4.B—Information on the Company—Business Overview—Israel Innovation Authority.” 39 We are also obligated to pay royalties to the BIRD Foundation, with respect to sales of products based on technology resulting from research and development funded by the BIRD Foundation.
Grants approved after January 1, 2024 will bear the higher of (i) the 12 months SOFR, plus 1%, or (ii) a fixed annual interest rate of 4%. 40 We are also obligated to pay royalties to the BIRD Foundation, with respect to sales of products based on technology resulting from research and development funded by the BIRD Foundation.
We believe that, if required, we will be able to raise additional capital or reduce discretionary spending to provide the required liquidity beyond the next twelve months. Net Cash Provided by Operating Activities . Net cash provided by operating activities was approximately $6.0 million in 2022 compared to net cash provided by operating activities of approximately $2.0 million in 2021.
Net cash provided by operating activities was approximately $4.7 million in 2023 compared to net cash provided by operating activities of approximately $6.0 million in 2022.
Removed
For more information on taxation, see “Item 10.E — Taxation.” Our effective corporate tax rate may exceed the Israeli tax rate.
Added
As part of our plan to reduce product cost and improve flexibility, we shifted during the last few years to a model whereby we install our software-based solutions on standard, non-proprietary third-party hardware that functions together with our software to deliver the product’s essential functionality.
Removed
The closing of the acquisition is expected to occur within three months after the signing of the definitive agreements, pending the satisfaction of customary and transaction specific closing conditions and regulatory approvals.
Added
Effective Corporate Tax Rate As of January 1, 2018, Israeli resident companies were generally subject to corporate tax at the rate of 23%. Israeli resident companies are generally subject to capital gains tax at the corporate tax rate.
Removed
We believe, however, that due to the affiliation between us and the RAD-BYNET Group, we have greater flexibility on certain issues than what may be available from unaffiliated third parties. For more information, see “Item 7.B—Major Shareholders and Related Party Transactions—Related Party Transactions” below.
Added
Cash and cash equivalents, and bank deposits on December 31, 2023, and 2022, were approximately $82.2 and $77.7 million, respectively. We believe that our existing capital resources and cash flows from operations will be adequate to satisfy our expected liquidity requirements through the next twelve months.
Removed
The United Kingdom’s Financial Conduct Authority, which regulates the LIBOR, announced in July 2017 that it will no longer persuade or require banks to submit rates for LIBOR after 2021.
Added
This was partially offset by a decrease in deferred revenue and advances from customers of approximately $5.6 million, an increase in accrued interest on short-term bank deposits of approximately $2.2 million, and an increase of approximately $2.2 million in trade receivables, net.
Removed
As of the date of this Annual Report, the IIA has not yet published the alternative interest that will be applied on the grants that the Company received from the IIA.
Added
Grants received from the IIA before June 30, 2017, bear an annual interest rate based on the 12-month LIBOR, and grants received from the IIA after June 30, 2017, bear an annual interest rate based on the 12-month LIBOR, until December 31, 2023, and as of January 1, 2024, bear an annual interest rate based on the 12-month SOFR, or at an alternative rate published by the Bank of Israel, with the addition of 0.72%.
Removed
While the effect that the replacement of the LIBOR interest will have on the Company remains uncertain as of the date of this Annual Report, the Company assesses that such change will not have a material effect on its operations and financial condition in light of the common interests in the market.

… 15 more changes not shown on this page.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

48 edited+14 added−11 removed32 unchanged
Karp has served as a director of a number of companies, including: Elta Ltd.; Galileo Technology, which was acquired by Marvell Technology, Inc. (Nasdaq: MRVL); Accord Networks which was acquired by Polycom, Inc.; Saifun Semiconductors, which merged with Spansion, and El Al Israel Airlines Ltd. (TASE: ELAL). Mr.
Karp has served as a director of a number of companies, including: Elta Ltd.; Galileo Technology, which was acquired by Marvell Technology, Inc. (Nasdaq: MRVL); Accord Networks which was acquired by Polycom, Inc.; Saifun Semiconductors, Ltd. which merged with Spansion Inc., and El Al Israel Airlines Ltd. (TASE: ELAL). Mr.
Our directors are elected by the shareholders at the annual general meeting of the shareholders, except in certain cases where directors are appointed by the Board of Directors and their appointment is later ratified at the first meeting of the shareholders thereafter. All of our directors were elected in by our shareholders in our annual general meeting.
Our directors are elected by the shareholders at the annual general meeting of the shareholders, except in certain cases where directors are appointed by the Board of Directors and their appointment is later ratified at the first meeting of the shareholders thereafter. All of our directors were elected by our shareholders at our annual general meeting.
Under the Companies Law and the Nasdaq Listing Rules, our Audit Committee is responsible for, among others (i) determining whether there are deficiencies in the business management practices of our Company, including in consultation with our internal auditor or the independent auditor, and making recommendations to the Board to improve such practices, (ii) determining whether to approve certain related party transactions (including transactions in which an Office Holder has a personal interest) and whether such transaction should be deemed as material or extraordinary, (iii) where the Board approves the working plan of the internal auditor, to examine such working plan before its submission to the Board and propose amendments thereto, (iv) examining our internal controls and internal auditor’s performance, including whether the internal auditor has sufficient resources and tools to dispose of its responsibilities, (v) examining the scope of our auditor’s work and compensation and submitting a recommendation with respect thereto to our Board or shareholders, depending on which of them is considering the appointment of our auditor, and (vi) establishing procedures for the handling of employee complaints as to the management of our business and the protection to be provided to such employees.
Under the Israeli Companies Law and the Nasdaq Listing Rules, our Audit Committee is responsible for, among others (i) determining whether there are deficiencies in the business management practices of our Company, including in consultation with our internal auditor or the independent auditor, and making recommendations to the Board to improve such practices, (ii) determining whether to approve certain related party transactions (including transactions in which an Office Holder has a personal interest) and whether such transaction should be deemed as material or extraordinary, (iii) where the Board approves the working plan of the internal auditor, to examine such working plan before its submission to the Board and propose amendments thereto, (iv) examining our internal controls and internal auditor’s performance, including whether the internal auditor has sufficient resources and tools to dispose of its responsibilities, (v) examining the scope of our auditor’s work and compensation and submitting a recommendation with respect thereto to our Board or shareholders, depending on which of them is considering the appointment of our auditor, and (vi) establishing procedures for the handling of employee complaints as to the management of our business and the protection to be provided to such employees.
The compensation policy must furthermore consider the following additional factors: ● the knowledge, skills, expertise and accomplishments of the relevant Office Holder; ● the Office Holder’s roles and responsibilities and prior compensation agreements with him or her; ● the relationship between the terms offered and the average compensation of the other employees of the company, including those employed through human resource companies; ● the impact of disparities in salary upon work relationships in the company; ● the possibility of reducing variable compensation at the discretion of the Board of Directors or the possibility of setting a limit on the exercise value of non-cash variable equity-based compensation; and ● as to severance compensation, the period of service of the Office Holder, the terms of his or her compensation during such service period, the company’s performance during that period of service, the person’s contributions towards the company’s achievement of its goals and the maximization of its profits and the circumstances under which the person is leaving the company.
The compensation policy must furthermore consider the following additional factors: ● the knowledge, skills, expertise and accomplishments of the relevant Office Holder; ● the Office Holder’s roles and responsibilities and prior compensation agreements with him or her; ● the relationship between the terms offered and the average compensation of the other employees of the company, including those employed through human resource companies; ● the impact of disparities in salary upon work relationships in the company; 50 ● the possibility of reducing variable compensation at the discretion of the Board of Directors or the possibility of setting a limit on the exercise value of non-cash variable equity-based compensation; and ● as to severance compensation, the period of service of the Office Holder, the terms of his or her compensation during such service period, the company’s performance during that period of service, the person’s contributions towards the company’s achievement of its goals and the maximization of its profits and the circumstances under which the person is leaving the company.
Bennun holds a M.Sc. and a B.Sc. in Industrial and Management Engineering from Ben-Gurion University. 43 Mr. Matty Karp has served as a director since December 2009. From 1996 to 2015, he was the managing partner of Concord Ventures, an Israeli venture capital fund focused on Israeli early-stage technology companies, which he co-founded in 1997.
Bennun holds a M.Sc. and a B.Sc. in Industrial and Management Engineering from Ben-Gurion University. Mr. Matty Karp has served as a director since December 2009. From 1996 to 2015, he was the managing partner of Concord Ventures, an Israeli venture capital fund focused on Israeli early-stage technology companies, which he co-founded in 1997.
In compliance with regulations promulgated under the Israeli Companies Law, our Audit Committee also approves our financial statements, thereby fulfilling the requirement that a board committee provide such approval. Compensation Committee The current members of our Compensation Committee are Oren Most, Matty Karp and Rami Schwartz. Mr. Most is the Chairman of the Compensation Committee.
In compliance with regulations promulgated under the Israeli Companies Law, our Audit Committee also approves our financial statements, thereby fulfilling the requirement that a board committee provide such approval. 49 Compensation Committee The current members of our Compensation Committee are Matty Karp, Oren Most, and Rami Schwartz. Mr. Schwartz is the Chairman of the Compensation Committee.
Most of our agreements with our key employees are subject to termination by either party upon the delivery of notice of termination as provided therein. Nominating Committee Our Board of Directors does not currently have a nominating committee.
Most of our agreements with our key employees are subject to termination by either party upon the delivery of notice of termination as provided therein. 51 Nominating Committee Our Board of Directors does not currently have a nominating committee.
Options and RSUs granted under our 2013 Plan generally vest over a period of between one and four years, with expiration term for options of five to seven years from the date of grant, subject to the discretion of our Board of Directors, which has the authority to deviate from such parameters in respect of specific grants.
Options and RSUs granted under our 2013 Plan generally vest over a period of between one and four years, with expiration term for Options of five to seven years from the date of grant, subject to the discretion of our Board of Directors, which had the authority to deviate from such parameters in respect of specific grants.
The bonus and commission payments made to our other officers and the Executive Chairman of our Board of Directors are based on the achievements of goals and objectives that are set and communicated at the beginning of each year and which are made in accordance with our Compensation Policy, as approved by our shareholders from time to time and most recently on July 11, 2019, as amended on July 8, 2021 and July 21, 2022.
The bonus and commission payments made to our other officers and the Executive Chairman of our Board of Directors are based on the achievements of goals and objectives that are set and communicated at the beginning of each year and which are made in accordance with our Compensation Policy, as approved by our shareholders from time to time and most recently on July 11, 2019, as amended on July 8, 2021, July 21, 2022 and August 3, 2023.
(formerly Nasdaq: ARLC) in 1988, a company focused on offering integrated video, audio and data-enabled conferencing solutions, including real time Interactive Distance Learning, and served as CEO, CFO, and director, leading the company to its initial public offering on Nasdaq in 1994. Ms. Bennun also co-founded ArelNet Ltd.
Bennun co-founded Arel Communications & Software Ltd. (formerly Nasdaq: ARLC) in 1988, a company focused on offering integrated video, audio and data-enabled conferencing solutions, including real time Interactive Distance Learning, and served as CEO, CFO, and director, leading the company to its initial public offering on Nasdaq in 1994. Ms. Bennun also co-founded ArelNet Ltd.
For a description of our compensation of directors see “Item 6.B—Directors, Senior Management and Employees—Compensation.” External Directors Under the Israeli Companies Law, a public company incorporated under the laws of the State of Israel must appoint at least two External Directors; however, pursuant to an exemption provided under section 5D of the Israeli Companies Regulations (Relief for Public Companies with Shares Listed for Trading on a Stock Market Outside of Israel), 5760-2000, or the Exemption, a public company with securities listed on certain foreign exchanges, including Nasdaq, that satisfies the applicable foreign country laws and regulations that apply to companies organized in that country relating to the appointment of independent directors and composition of audit and compensation committees and has no controlling shareholder is exempt from the requirement to elect External Directors or comply with the audit committee and compensation committee composition requirements under the Companies Law. 47 On July 31, 2019, our Board adopted the Exemption.
For a description of our compensation of directors see “Item 6.B—Directors, Senior Management and Employees—Compensation.” External Directors Under the Israeli Companies Law, a public company incorporated under the laws of the State of Israel must appoint at least two External Directors; however, pursuant to an exemption provided under section 5D of the Israeli Companies Regulations (Relief for Public Companies with Shares Listed for Trading on a Stock Market Outside of Israel), 5760-2000, or the Exemption, a public company with securities listed on certain foreign exchanges, including Nasdaq, that satisfies the applicable foreign country laws and regulations that apply to companies organized in that country relating to the appointment of independent directors and composition of audit and compensation committees and has no controlling shareholder is exempt from the requirement to elect External Directors or comply with the audit committee and compensation committee composition requirements under the Israeli Companies Law.
The aggregate direct remuneration paid to all our directors and executive officers as a group for the year ended December 31, 2022, was approximately $2.1 million in salaries, bonus, commissions and directors’ fees. This amount includes approximately $0.3 million that was set aside or accrued to provide pension, retirement or similar benefits.
The aggregate direct remuneration paid to all our directors and executive officers as a group for the year ended December 31, 2023, was approximately $2.4 million in salaries, bonus, commissions and directors’ fees. This amount includes approximately $0.3 million that was set aside or accrued to provide pension, retirement or similar benefits.
COMPENSATION The following table presents information regarding compensation accrued in our financial statements for our five most highly compensated office holders (within the meaning of the Companies Law), during or with respect to the year ended December 31, 2022.
COMPENSATION The following table presents information regarding compensation accrued in our financial statements for our five most highly compensated office holders (within the meaning of the Israeli Companies Law), during or with respect to the year ended December 31, 2023.
The 2013 Plan is administered either by our Board of Directors or, subject to applicable law, by our Compensation Committee, which has the discretion to make all decisions relating to the interpretation and operation of the 2013 Plan, including determining who will receive an option award and the terms and conditions of the option awards.
The 2013 Plan was administered either by our Board of Directors or, subject to applicable law, by our Compensation Committee, which had the discretion to make all decisions relating to the interpretation and operation of the 2013 Plan, including determining who will receive an option award and the terms and conditions of the option awards.
As stated in our Compensation Committee Charter and as provided under the Israeli Companies Law and the Nasdaq Listing Rules, our Compensation Committee is responsible for (i) proposing Office Holder compensation policies to the Board, (ii) proposing necessary revisions to any compensation policy and examining its implementation, (iii) determining whether to approve transactions with respect to compensation of Office Holders, (iv) determining, in accordance with Office Holder compensation policies, whether to exempt an engagement with an unaffiliated nominee for the position of chief executive officer from requiring shareholder approval, and (v) administration of our share option plan. 48 Subject to the provisions of the Israeli Companies Law, compensation of executive officers is generally determined and approved by our Compensation Committee and our Board of Directors.
As stated in our Compensation Committee Charter and as provided under the Israeli Companies Law and the Nasdaq Listing Rules, our Compensation Committee is responsible for (i) proposing Office Holder compensation policies to the Board, (ii) proposing necessary revisions to any compensation policy and examining its implementation, (iii) determining whether to approve transactions with respect to compensation of Office Holders, (iv) determining, in accordance with Office Holder compensation policies, whether to exempt an engagement with an unaffiliated nominee for the position of chief executive officer from requiring shareholder approval, and (v) administration of our share option plan.
As a result, the terms of office of Mr. Schwartz and Mr. Most were shortened. Audit Committee The current members of our Audit Committee are Mirella Kuvent, Matty Karp and Oren Most. Ms. Kuvent is the Chairman of the Audit Committee.
As a result, the terms of office of Mr. Schwartz and Mr. Most were shortened. Audit Committee The current members of our Audit Committee are, Matty Karp, Oren Most and, Rami Schwartz. Mr. Karp is the Chairman of the Audit Committee.
We measure the compensation expense for all share-based payments (including employee stock options) at fair value, in accordance with ASC 718. We recorded an expense of approximately $5.2 million for share-based compensation plans during 2022.
We measure the compensation expense for all share-based payments (including employee stock options) at fair value, in accordance with ASC 718. We recorded an expense of approximately $6.1 million for share-based compensation plans during 2023.
(2) All other compensation includes social benefits and car leasing costs. 45 The bonus paid to our CEO is based on a formula which takes into consideration independent measurable and non-measurable components and which was approved by Board of Directors in accordance with the Compensation Policy and the CEO’s amended terms of employment approved by general meeting of our shareholders on July 21, 2022.
The bonus paid to our former CEO is based on a formula which takes into consideration independent measurable and non-measurable components, and which was approved by the Board of Directors in accordance with the Compensation Policy and the former CEO’s amended terms of employment approved by general meeting of our shareholders on July 21, 2022.
The 2023 Plan expires on March 27, 2033. Under the 2023 Plan, we may grant options to purchase our ordinary shares, restricted shares and RSUs to our employees, directors, consultants and contractors.
Under the 2023 Plan, we may grant options to purchase our ordinary shares, or Options, restricted shares and RSUs to our employees, directors, consultants and contractors.
Mr. Amit holds a B.Sc. in electrical engineering from Tel Aviv University. Ms. Bennun is the life partner of Mr. Zohar Zisapel. Otherwise, there are no family relationships between any of the directors or executive officers named above. B.
Mr. Amit holds a B.Sc. in electrical engineering from Tel Aviv University. There are no family relationships between any of the directors or executive officers named above. 46 B.
Karp received a B.Sc., cum laude, in Electrical Engineering from the Technion - Israel Institute of Technology and is a graduate of the Harvard Business School Advanced Management Program. Ms. Mirella Kuvent has served as a director since July 2019. Ms.
Karp received a B.Sc., cum laude, in Electrical Engineering from the Technion - Israel Institute of Technology and is a graduate of the Harvard Business School Advanced Management Program. Mr. Andre Fuetsch has served as a director since August 2023. Mr.
In February 2023 and During 2022, we granted 235,000 and 418,733 RSUs, respectively, which will result in ongoing accounting charges that will significantly reduce our net income. See Notes 2(n) and 11(b) of the Notes to the Consolidated Financial Statements for further information.
In January 2024 and during 2023, we granted 867,814 and 1,198,500 RSUs, respectively, which will result in ongoing accounting charges that will significantly reduce our net income. See Notes 2(n) and 11(b) of the Notes to the Consolidated Financial Statements for further information.
(2) Chairman of Audit Committee. (3) Chairman of Compensation Committee. (4) Audit Committee Member. (5) Compensation Committee Member. Ms. Rachel (Heli) Bennun has served as a director since December 2012 and was appointed as the Executive Chairman of our Board of Directors in September 2015. Ms. Bennun has also served as a director of Electreon Wireless Ltd.
(2) Chairman of Audit Committee. (3) Chairman of Compensation Committee. (4) Audit Committee Member. (5) Compensation Committee Member. 44 Ms. Rachel (Heli) Bennun has served as a director since December 2012 and was appointed as the Executive Chairman of our Board of Directors in September 2015. Ms. Bennun has over 25 years of professional experience in hi-tech companies. Ms.
“ Major Shareholders and Related Party Transactions—Major Shareholders. ” For information as to our equity incentive plan, see Item 6.B. “ Director, Senior Management and Employees—B. Compensation—Share Option Plan. ”
“ Major Shareholders and Related Party Transactions—Major Shareholders. ” For information as to our equity incentive plan, see Item 6.B. “ Director, Senior Management and Employees—B. Compensation—Share Option Plan. ” F. DISCLOSURE OF A REGISTRANT’S ACTION TO RECOVER ERRONEOUSLY AWARDED COMPENSATION Not applicable.
EMPLOYEES Our total headcount as of December 31, 2022, was 284, compared to 278 in 2021 and 276 in 2020, including full-time and part-time employees and contractors, broken down geographically and by function as follows: Research and Development Sales, Marketing and Customer Support Operations Administration and Management Total Headcount Israel 92 26 3 10 131 India 18 43 0 2 63 United States 0 15 0 4 19 Brazil 0 11 0 1 12 Other 37 22 0 0 59 Total 147 117 3 17 284 50 We consider our relations with our employees to be good and we have never experienced a strike or work stoppage.
EMPLOYEES Our total headcount as of December 31, 2023, was 295, compared to 284 in 2022 and 278 in 2021, including full-time and part-time employees and contractors, broken down geographically and by function as follows: Research and Development Sales, Marketing and Customer Support Operations Administration and Management Total Headcount Israel 95 23 2 11 131 India 13 46 0 2 61 United States 0 24 0 4 28 Brazil 0 12 0 1 13 Other 40 22 0 0 62 Total 148 127 2 18 295 We consider our relations with our employees to be good and we have never experienced a strike or work stoppage.
Consequently, we have adopted share option plans and material amendments thereto by action of our board of directors, without shareholder approval. See also “Item 16G—Corporate Governance.” Compensation Policy On June 5, 2019, our Compensation Committee and Board of Directors approved our compensation policy for our Executive Officers and Directors, and our shareholders approved the compensation policy on July 11, 2019.
Consequently, we have adopted share option plans and material amendments thereto by action of our board of directors, without shareholder approval. See also “Item 16G—Corporate Governance.” Compensation Policy Our compensation policy for our executive officers and directors, was last approved by our shareholders on July 21, 2022, and most recently amended on August 3, 2023.
On July 21, 2022, our shareholders re-approved our then amended Compensation Policy. 49 Internal Auditor Under the Israeli Companies Law, the board of directors of a public company must also appoint an internal auditor proposed by the audit committee.
Our compensation policy for our executive officers and directors, was last approved by our shareholders on July 21, 2022, and most recently amended on August 3, 2023. Internal Auditor Under the Israeli Companies Law, the board of directors of a public company must also appoint an internal auditor proposed by the audit committee.
DIRECTORS AND SENIOR MANAGEMENT The following table lists our current directors and executive officers: Name Age Position Rachel (Heli) Bennun 69 Executive Chairman of our Board of Directors Matty Karp (1)(4)(5) 73 Director Mirella Kuvent (1)(2)(4) 62 Director Oren Most (1)(3)(4)(5) 72 Director Yaron Ravkaie 54 Director Rami Schwartz (1)(5) 65 Director Zohar Zisapel 74 Director Eyal Harari 46 Chief Executive Officer Hadar Rahav 35 Chief Financial Officer Hilik Itman 51 Chief Operating Officer Rami Amit 57 Chief Technology Officer and Head of Product (1) Independent Director, under Nasdaq Stock Market Rules, or the Nasdaq Listing Rules.
DIRECTORS AND SENIOR MANAGEMENT The following table lists our current directors and executive officers: Name Age Position Rachel (Heli) Bennun 70 Executive Chairman of our Board of Directors Matty Karp (1)(2)(4)(5) 74 Director Andre Fuetsch (1) 53 Director Oren Most (1) (4)(5) 73 Director Yaron Ravkaie 55 Director Rami Schwartz (1)(3)(4)(5) 66 Director Guy Shemesh 50 Chief Executive Officer Hadar Rahav 36 Chief Financial Officer Hilik Itman 52 Chief Operating Officer Rami Amit 58 Chief Technology Officer and Head of Product (1) Independent Director, under Nasdaq Stock Market Rules, or the Nasdaq Listing Rules.
(ECP.TA) from 2015 until 2018. Before 2018, Ms. Rahav served in various positions with Ernst & Young Israel. Ms. Rahav holds a BA (cum laude) in Business Management Accounting and Risk Management from the College of Management and Academic Studies, Rishon Le-Zion and is certified in Israel as a CPA. Mr.
Rahav holds a BA (cum laude) in Business Management Accounting and Risk Management from the College of Management and Academic Studies, Rishon Le-Zion and is certified in Israel as a CPA. Mr.
As of December 31, 2022, our current directors and officers, as a group, held options to purchase an aggregate of 40,006 ordinary shares of the Company and 319,198 RSUs that were granted under our 2013 Plan. Our directors are reimbursed for expenses and receive cash and equity compensation, which terms are detailed below.
As of December 31, 2023, our current directors and officers, as a group, held, in the aggregate 310,283 RSUs that were granted under our 2013 Plan and the 2023 Plan. Our directors are reimbursed for expenses and receive cash and equity compensation, which terms are detailed below.
As of March 23, 2023, there were 40,006 outstanding options to purchase ordinary shares and 739,838 unvested RSUs. Pursuant to Rule 5615(a)(3) of the Nasdaq Listing Rules, we follow our home country practice in lieu of the Nasdaq Listing Rules with respect to the approvals required for the establishment and for material amendments to our share option plans.
Pursuant to Rule 5615(a)(3) of the Nasdaq Listing Rules, we follow our home country practice in lieu of the Nasdaq Listing Rules with respect to the approvals required for the establishment and for material amendments to our share option plans.
The cash compensation currently paid to our independent directors as approved by a resolution of our shareholders in the annual general meeting held on July 9, 2020 and ratified in the annual general meeting of shareholders held on July 21, 2022 (other than to our Executive Chairman, as of July 21, 2022) is an annual fee of NIS 52,000 (currently equivalent to approximately $15,580) and a per meeting attendance fee of NIS 2,000 (currently equivalent to approximately $600).
The cash compensation currently paid to our non-executive directors as approved by a resolution of our shareholders in the annual general meeting held on July 9, 2020 and ratified in the annual general meeting of shareholders held on July 21, 2022 and August 3, 2023 (other than to our Executive Chairman, as of July 21, 2022 and other than Mr.
These amounts do not include the expense of share-based compensation as per ASC 718. During 2022, our office holders, as such term is defined in the Israeli Companies Law, 1999, or Office Holders, who are not directors, received, in the aggregate, 212,800 restricted share units, or RSUs, under our 2013 Share Option Plan, or the 2013 Plan.
During 2023, our office holders, as such term is defined in the Israeli Companies Law, or Office Holders, who are not directors, received, in the aggregate, 127,800 restricted share units, or RSUs, under our 2013 Share Option Plan, or the 2013 Plan and the 2023 Equity Incentive Plan or the 2023 Plan.
None of our directors have service contracts with the Company relating to their service as a director, and none of the directors will receive benefits upon termination of their position as a director.
None of the directors will receive benefits upon termination of their position as a director.
BOARD PRACTICES Terms of Office Our current Board of Directors is comprised of Rachel (Heli) Bennun (Executive Chairman), and our non-executive directors, Matty Karp, Mirella Kuvent, Oren Most, Yaron Ravkaie, Rami Schwartz, and Zohar Zisapel.
See “Item 6.C—Directors, Senior Management and Employees—Board Practices—Compensation Committee.” 48 C. BOARD PRACTICES Terms of Office Our current Board of Directors is comprised of Rachel (Heli) Bennun (Executive Chairman), and our non-executive directors, Andre Fuetsch, Matty Karp, Oren Most, Yaron Ravkaie, and Rami Schwartz.
Ravkaie served for nine years in information systems, industrial engineering and logistics with the Israeli Air Force as a Major. Mr. Ravkaie holds an M.B.A. from the University of Beersheba and a B.Sc. in Industrial Engineering & Management from the Technion, Haifa. Mr. Rami Schwartz has served as a director since July 2019. Mr.
Ravkaie holds an M.B.A. from the University of Beersheba and a B.Sc. in Industrial Engineering & Management from the Technion, Haifa. 45 Mr. Rami Schwartz has served as a director since July 2019. Mr. Schwartz has over 20 years’ experience in leadership positions in the technology and enterprise software fields. Mr.
Oren Most has served as a director since July 2019. Mr. Most is the founder and former president of Golan Telecom, Ltd., an Israeli cellular operator. Mr. Most has also served in executive positions with several private and public companies including as President and Chief Executive Officer of Gilat Satellite Networks Ltd.
Most has also served in executive positions with several private and public companies including as President and Chief Executive Officer of Gilat Satellite Networks Ltd. (Nasdaq and TASE: GILT) and as Founder and Deputy Chief Executive Officer of Cellcom (Israel) Ltd. Mr. Most has also served as director for several public and private corporations. Mr.
(Nasdaq and TASE: GILT) and as Founder and Deputy Chief Executive Officer of Cellcom (Israel) Ltd. Mr. Most has also served as director for several public and private corporations. Mr. Most holds a B.A. in Sociology & Anthropology, Film & Television from the Tel Aviv University and an M.B.A. from New York University. Mr.
Most holds a B.A. in Sociology & Anthropology, Film & Television from the Tel Aviv University and an M.B.A. from New York University. Mr. Yaron Ravkaie has served as a director since January 2020. Mr. Ravkaie is the chief executive officer of Teridion Technologies Ltd., having assumed that role in January 2020. Mr.
Ravkaie served during 2015 as the Chief Business Officer of RR Media Ltd. Prior to serving at RR Media Ltd., and between 1998 and 2015, Mr. Ravkaie served in various roles with Amdocs Ltd. (Nasdaq: DOX), including as the President of the Mobile Financial Services Division, President of the AT&T division, and other director and vice president roles. Mr.
Ravkaie previously served as the Company’s chief executive officer from January 2016 through December 2019. Prior to joining RADCOM, Mr. Ravkaie served during 2015 as the Chief Business Officer of RR Media Ltd. Prior to serving at RR Media Ltd., and between 1998 and 2015, Mr. Ravkaie served in various roles with Amdocs Ltd.
Schwartz previously served in senior positions, including as business group president, founder, Chief Executive Officer and Active Chairman, with several public and private companies including Amdocs. Mr. Schwartz also served as Chief of System Development for the Israeli Air Force. Mr. Schwartz holds a B.Sc. in math and computer science form the Hebrew University of Jerusalem. Mr.
Schwartz also served as Chief of System Development for the Israeli Air Force. Mr. Schwartz holds a B.Sc. in math and computer science form the Hebrew University of Jerusalem. Mr . Guy Shemesh, has served as our Chief Executive Officer since February 2024. Prior to joining our Company, Mr.
Hadar Rahav has served as our Chief Financial Officer since January 2022. Ms. Rahav joined us in May 2020 as our Head of Global Finance. Prior to joining our Company, Ms. Rahav served as Corporate Director of Finance at TAT Technologies Ltd. (Nasdaq: TATT; TASE: TATT.TA) from 2018 until 2020, and as Corporate Controller at Electra Consumer Products (1970) Ltd.
Rahav served as Corporate Director of Finance at TAT Technologies Ltd. (Nasdaq: TATT; TASE: TATT.TA) from 2018 until 2020, and as Corporate Controller at Electra Consumer Products (1970) Ltd. (ECP.TA) from 2015 until 2018. Before 2018, Ms. Rahav served in various positions with Ernst & Young Israel. Ms.
We have reserved 1,500,000 ordinary shares under our 2023 Plan and to date, no grants were made hereunder. 46 On April 3, 2013, our Board of Directors adopted the 2013 Share Option Plan, or the 2013 Plan. The 2013 Plan expires on April 2, 2023.
On April 3, 2013, our Board of Directors adopted the 2013 Plan. The 2013 Plan expired on April 2, 2023, or the 2013 Plan Expiration Date. Under the 2013 Plan, we were able to grant Options, restricted shares and RSUs to our employees, directors, consultants and contractors.
Under the 2013 Plan, we may grant options to purchase our ordinary shares, restricted shares and RSUs to our employees, directors, consultants and contractors. As of March 23, 2023, we have granted 1,278,808 options and 2,544,031 RSUs under the 2013 Plan. In addition, we granted 40,000 RSUs to our CEO in February 2023, which are pending shareholders’ approval.
We have reserved an aggregate of 3,000,000 ordinary shares under our 2023 Plan. As of March 27, 2024, we have granted 1,831,314 RSUs and no Options under the 2023 Plan. This number includes the grant of 180,000 RSUs to our CEO in February 2024 under the 2023 Plan, which grant is pending shareholders’ approval.
The terms of office of Mr. Schwartz and Mr. Most will expire on our 2024 annual general meeting. The terms of office of Mr. Zisapel, Mr. Ravkaie and Ms. Kuvent will expire on our 2023 annual general meeting. The terms of office of Ms. Bennun and Mr. Karp will expire on our 2025 annual general meeting.
The terms of office of Ms. Bennun and Messrs. Fuetsch, Karp, Most, Ravkaie and Schwartz, will expire on our 2026 annual general meeting. Except our Executive Chairman, Ms. Bennun, and Mr. Andre Fuetsch, none of our directors have service contracts with the Company relating to their service as a director.
In addition, upon his or her election or re-election, each of our non-executive directors receives a grant of 15,600 RSU or the equivalent in options to purchase ordinary shares, vesting over a period of three years. Share Option Plans On March 28, 2023, our Board of Directors adopted the 2023 Equity Incentive Plan, or the 2023 Plan.
Fuetsch ) receives a grant of 15,600 RSU or the equivalent in options to purchase ordinary shares, vesting over a period of three years. The cash compensation currently paid to our director Mr.
The grants awarded during 2022 and 2023 were for a vesting term of up to 4 years.
The grants awarded during 2023 and 2024 were for a vesting term of up to 4 years. (2) All other compensation includes social benefits and car leasing costs. (3) Mr. Harari served as the Chief Executive Officer of the Company until February 2024.
Schwartz has over 20 years’ experience in leadership positions in the technology and enterprise software fields. Mr. Schwartz currently serves as the Managing Director of the Portland Trust Israel and as an Advisory Board Member to AlgoSec. Mr.
Schwartz currently serves as the Managing Director of the Portland Trust Israel and as an Advisory Board Member to AlgoSec and a director at Perion Network Ltd. Mr. Schwartz previously served in senior positions, including as business group president, founder, Chief Executive Officer and Active Chairman, with several public and private companies including Amdocs. Mr.
Name and Principal Position Year Salary ($) Bonus ($) Equity-Based Compensation ($) (1) All Other Compensation ($) (2) Total ($) Eyal Harari, CEO 2022 300,000 204,491 324,059 44,275 872,825 Hilik Itman, COO 2022 234,827 125,987 360,715 82,608 804,137 Rami Amit, CTO and Head of Product 2022 234,827 117,621 278,591 88,421 719,460 Hadar Rahav, CFO 2022 133,394 142,067 84,935 52,586 412,982 Rachel (Heli) Bennun, Executive Chairman of our Board of Directors 2022 102,826 106,000 127,286 36,729 372,841 (1) Equity based compensation includes the cost of non-cash share-based compensation of the Company in 2022.
Name and Principal Position Year Salary ($) Bonus ($) Equity-Based Compensation ($) (1) All Other Compensation ($) (2) Total ($) Eyal Harari, former CEO (3) 2023 300,000 200,000 408,506 46,564 955,070 Hilik Itman, COO 2023 213,867 145,059 380,336 74,973 814,235 Rami Amit, CTO and Head of Product 2023 213,867 114,507 326,081 80,469 734,923 Rachel (Heli) Bennun, Executive Chairman of our Board of Directors 2023 213,867 232,903 201,930 76,595 725,294 Hadar Rahav, CFO 2023 178,222 134,450 121,933 52,890 487,495 (1) Equity based compensation includes the cost of non-cash share-based compensation of the Company in 2023.
Removed
(TASE:ELWS) since March 2021 until November 2022. Ms. Bennun has over 25 years of professional experience in hi-tech companies. Ms. Bennun co-founded Arel Communications & Software Ltd.
Added
Fuetsch has served in various senior capacities in AT&T Inc. since his joining in 1995, the most recent of which is AT&T’s Executive Vice President and CTO Network Services. As part of his role, Mr. Fuetsch oversaw the global technology direction for AT&T, including network planning, innovation road map and led AT&T Labs, AT&T Foundry, and the intellectual property organization.
Removed
Kuvent served as an external director and member of the risk management and audit committees for Diners Club Israel Ltd. and Diners Finance Ltd from 2018 until 2021. Ms.
Added
In his previous roles in AT&T, Mr. Fuetsch supported and led several organizations responsible for software, systems, and network architecture, planning and engineering, where he held six patents in the field of network traffic optimization and database design. Mr. Fuetsch holds a B.Sc. in Industrial Engineering and Operations Research at U.C.
Removed
Kuvent has also served as an external director to Ham-Let (Israel Canada) Ltd. from 2007 to 2013 and for the Company for the Reconstruction and Development of the Jewish Quarter in the Old City of Jerusalem Ltd. from 2014 to 2017 and has been a member of finance committees, audit committees and compensation committees, having also served as chair of an audit committee.
Added
Berkeley and completed his graduate coursework in Computer Science at Stanford University. Mr. Oren Most has served as a director since July 2019. Mr. Most is the founder and former president of Golan Telecom, Ltd., an Israeli cellular operator. Mr.
Removed
Ms. Kuvent also has extensive experience in senior commercial, marketing and business development roles with technology companies offering solutions to communications services providers as well as with a large communication services company. Ms. Kuvent holds a B.A. in business administration from Fundação Getúlio Vargas and an M.B.A. from the Hebrew University of Jerusalem. Mr.
Added
(Nasdaq: DOX), including as the President of the Mobile Financial Services Division, President of the AT&T division, and other director and vice president roles. Mr. Ravkaie served for nine years in information systems, industrial engineering and logistics with the Israeli Air Force as a Major. Mr.
Removed
Yaron Ravkaie has served as a director since January 2020. Mr. Ravkaie is the chief executive officer of Teridion Technologies Ltd., having assumed that role in January 2020. Mr. Ravkaie previously served as the Company’s chief executive officer from January 2016 through December 2019. Prior to joining RADCOM, Mr.
Added
Shemesh served as Vice President of Business Applications R&D from 2020 to 2022 and Vice President CloudBand Business Unit from 2017 to 2020, both at Nokia Solutions and Networks Israel Ltd. where he spent over ten years in various leadership roles. Mr.
Removed
Zohar Zisapel, a co-founder of our Company, has served as a director since our inception in 1985 and served as our Chairman of the Board from inception until September 2015. Mr. Zisapel is the Chairman of Ceragon Networks Ltd.
Added
Shemesh holds a B.A. in Computer Science and a B.A. in Economics and Management from the Tel Aviv Academic College and an M.B.A. from Tel-Aviv University. Ms. Hadar Rahav has served as our Chief Financial Officer since January 2022. Ms. Rahav joined us in May 2020 as our Head of Global Finance. Prior to joining our Company, Ms.
Removed
(Nasdaq: CRNT) and serves as chairman or director of several private companies in the in the areas of communications, cyber security and automotive. Mr. Zisapel holds a B.Sc. and a M.Sc. in Electrical Engineering from the Technion - Israel Institute of Technology and an M.B.A. from Tel-Aviv University. 44 Mr .
Added
These amounts do not include the expense of share-based compensation as per ASC 718.
Removed
Eyal Harari, our Chief Executive Officer, joined us in November 2000 as a software R&D group manager and was appointed to his current position effective January 1, 2020, having previously served as Chief Executive Officer of RADCOM US and as our Chief Operating Officer. Before joining RADCOM, Mr.
Added
Fuetsch ) is an annual fee of NIS 52,000 (currently equivalent to approximately $14,337) and a per meeting attendance fee of NIS 2,000 (currently equivalent to approximately $551). In addition, upon his or her election or re-election, each of our non-executive directors (other than Mr.
Removed
Harari served in the Communication, Computers & Electronics Corps of the Israel Defense Forces, managing large-scale software projects. Mr. Harari received a B.A. in Computer Science from the Open University of Tel Aviv and holds an M.B.A. from Tel-Aviv University and an LL.M. in Business Law from Bar Ilan University. Ms.
Added
Fuetsch as approved by a resolution of our shareholders in the annual general meeting held on August 3, 2023, is an annual fee of $52,000 and a per meeting attendance fee of $2,000. In addition, Mr.
Removed
On July 8, 2021, our shareholders approved an amendment to our compensation policy. On July 21, 2022, our shareholders re-approved our compensation policy, in the form approved on July 11, 2019 as amended on July 8, 2021. See “Item 6.C—Directors, Senior Management and Employees—Board Practices—Compensation Committee.” C.
Added
Fuetsch received a grant of 23,400 RSU, vesting over a period of three years . 47 Share Option Plans On March 28, 2023, our Board of Directors adopted the 2023 Plan. The 2023 Plan expires on March 27, 2033.
Removed
On June 5, 2019, our Compensation Committee and Board of Directors approved an amended compensation policy for Executive Officers and Directors, and our shareholders approved such compensation policy on July 11, 2019.
Added
As of the 2013 Plan Expiration Date, we had granted 1,278,808 Options and 2,554,031 RSUs under the 2013 Plan.
Added
As of March 27, 2024, there were (i) 39,597 outstanding Options and 285,187 unvested RSUs under the 2013 Plan, and (ii) no outstanding Options and 1,724,272 unvested RSUs under the 2023 Plan.
Added
On July 31, 2019, our Board adopted the Exemption.
Added
Subject to the provisions of the Israeli Companies Law, compensation of executive officers is generally determined and approved by our Compensation Committee and our Board of Directors.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

27 edited+22 added−6 removed3 unchanged
Each of Dov Yelin and Yair Lapidot owns 24.4% of the share capital and 25.0% of the voting rights of Yelin Lapidot Holdings Ltd. The address of each of the Yelin Lapidot Holders and each of Messrs. Yelin and Lapidot is 50 Dizengoff St., Dizengoff Center, Gate 3, Top Tower, 13th floor, Tel Aviv 64332, Israel.
Each of Dov Yelin and Yair Lapidot owns 24.4% of the share capital and 25.0% of the voting rights of Yelin Lapidot Holdings. The address of each of the Yelin Lapidot Holders and each of Messrs. Yelin and Lapidot is 50 Dizengoff St., Dizengoff Center, Gate 3, Top Tower, 13th floor, Tel Aviv 64332, Israel.
Certain products of members of the RAD-BYNET Group are complementary to, and may be used in connection with, products of ours, and others of such products may be used in place of (and thus may be deemed to be competitive with) our products.
Certain products of members of the RAD-BYNET Group are complementary to, and may be used in connection with, products of ours, and certain of such products may be used in place of (and thus may be deemed to be competitive with) our products.
Rachel (Heli) Bennun, who is the Executive Chairman of our Board of Directors, is Mr. Zohar Zisapel’s life partner. We and other members of the RAD-BYNET Group also market certain of our products through the same distribution channels.
Rachel (Heli) Bennun, who is the Executive Chairman of our Board of Directors, was Mr. Zohar Zisapel’s life partner. We and other members of the RAD-BYNET Group may also market certain of our products through the same distribution channels.
Cynthia Paul, the Chief Investment Officer of the Investment Manager and Sole Member of Lynrock Lake Partners LLC, the general partner of the Investment Manager, may be deemed to exercise voting and investment power over securities of the Issuer held by Lynrock Lake Master.
Cynthia Paul, the Chief Investment Officer of the Investment Manager and Sole Member of Lynrock Lake Partners LLC, the general partner of the Investment Manager, may be deemed to exercise voting and investment power over securities of the Company held by Lynrock Lake Master.
For purposes of the table below, we deem shares subject to options that are currently exercisable or exercisable within 60 days of March 23, 2023, and restricted share units, or RSUs, that shall vest within 60 days of March 23, 2023, to be outstanding and to be beneficially owned by the person holding the options or restricted share units for the purposes of computing the percentage ownership of that person but we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person.
For purposes of the table below, we deem shares subject to options that are currently exercisable or exercisable within 60 days of March 27, 2024, and restricted share units, or RSUs, that shall vest within 60 days of March 27, 2024, to be outstanding and to be beneficially owned by the person holding the options or restricted share units for the purposes of computing the percentage ownership of that person but we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person.
Pursuant to an investment management agreement, the Investment Manager has been delegated full voting and investment power over securities of the Issuer held by Lynrock Lake Master.
Pursuant to an investment management agreement, the Investment Manager has been delegated full voting and investment power over securities of the Company held by Lynrock Lake Master.
MAJOR SHAREHOLDERS The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of March 23, 2023, by: ● each person or entity known by us to own beneficially more than 5% of our outstanding ordinary shares; ● each of our directors and executive officers individually; and ● all of our executive officers and directors as a group.
MAJOR SHAREHOLDERS The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of March 27, 2024, by: ● each person or entity known by us to own beneficially more than 5% of our outstanding ordinary shares; ● each of our directors and executive officers individually; and ● all of our executive officers and directors as a group.
In determining the percentage owned by each person, ordinary shares for each person includes ordinary shares that may be acquired by such person pursuant to options to purchase ordinary shares that are exercisable within 60 days of March 23, 2023.
In determining the percentage owned by each person, ordinary shares for each person includes ordinary shares that may be acquired by such person pursuant to options to purchase ordinary shares that are exercisable within 60 days of March 27, 2024.
(6) Each of the directors and executive officers not separately identified in the above table beneficially owns less than 1% of our outstanding ordinary shares, including options held by each such party, which are vested or shall become vested within 60 days of March 23, 2023, and have, therefore, not been separately disclosed.
(9) Each of the directors and executive officers not separately identified in the above table beneficially owns less than 1% of our outstanding ordinary shares, including options held by each such party, which are vested or shall become vested within 60 days of March 27, 2024, and have, therefore, not been separately disclosed.
Nava Zisapel, and Mr. Zohar Zisapel. When these agreements were signed, the lease payments were at fair market prices based on quotes we received from third parties for similar space. Historically, we have had some additional flexibility to change the leased space, which we might not have had with unrelated third parties.
Nava Zisapel, widow of late Yehuda Zisapel, and his heirs. When these agreements were signed, the lease payments were at fair market prices based on quotes we received from third parties for similar space. Historically, we have had some additional flexibility to change the leased space, which we might not have had with unrelated third parties.
The address of each of Cynthia Paul, Lynrock Lake Partners LLC, and Lynrock Lake LP is 2 International Drive, Suite 130 Rye Brook, NY 10573. 52 (5) Based on a Schedule 13G/A filed with the SEC on February 9, 2023.
The address of each of Cynthia Paul, Lynrock Lake Partners LLC, and Lynrock Lake LP is 2 International Drive, Suite 130 Rye Brook, NY 10573. (5) Based on a Schedule 13G/A filed with the SEC on January 31, 2024.
The aggregate amount of lease and maintenance payments was approximately $684,000 in 2022. We believe that the terms of the transactions in which we have entered and are currently engaged with other members of the RAD-BYNET Group are beneficial to us and no less favorable to us than terms that might be available to us from unaffiliated third parties.
We believe that the terms of the transactions in which we have entered and are currently engaged with other members of the RAD-BYNET Group are beneficial to us and no less favorable to us than terms that might be available to us from unaffiliated third parties.
Zohar Zisapel, (ii) 299,416 ordinary shares held by Michael & Klil Holdings (93) Ltd or Klil, an Israeli company, wholly owned by Mr. Zohar Zisapel, (iii) 242,731 ordinary shares held by Lomsha Ltd. or Lomsha, an Israeli company wholly owned by Mr.
Zohar Zisapel, prior to his death (ii) 299,416 ordinary shares held by Michael & Klil Holdings (93) Ltd, an Israeli company, which was wholly owned by Mr. Zohar Zisapel, prior to his death (iii) 242,731 ordinary shares held by Lomsha Ltd., an Israeli company, which was wholly owned by Mr.
The above list does not constitute a complete list of Mr. Yehuda Zisapel’s holdings. Some of the above companies may be suppliers/distributors/consumers of RADCOM products or may render additional services by arm’s length transactions or share logistical arrangements with the Company. Some of the above companies are known as the “RAD-BYNET Group.” Ms.
The above list does not constitute a complete list of Mr. Yehuda Zisapel’s holdings prior to his death. 55 The above companies are suppliers of RADCOM and may render additional services by arm’s length transactions or share logistical arrangements with the Company. The above companies are part of a group of companies known as the “RAD-BYNET Group.” Ms.
Includes 756,503 Ordinary Shares beneficially owned by mutual funds managed by Yelin Lapidot Mutual Funds Management Ltd. and 730,749 Ordinary Shares beneficially owned by provident funds managed by Yelin Lapidot Provident Funds Management Ltd, each of which a wholly-owned subsidiary of Yelin Lapidot Holdings Management Ltd. (each a “Yelin Lapidot Holder”).
Includes 555,920 Ordinary Shares beneficially owned by mutual funds managed by Yelin Lapidot Mutual Funds Management Ltd. and 730,749 Ordinary Shares beneficially owned by provident funds managed by Yelin Lapidot Provident Funds Management Ltd, or each a Yelin Lapidot Holder, each of which a wholly-owned subsidiary of Yelin Lapidot Holdings Management Ltd., or Yelin Lapidot Holdings.
The percentage of shares beneficially owned is based on 14,986,532 ordinary shares outstanding as of March 23, 2023. The information presented below is based on information provided to us by the directors, officers, and shareholders or disclosed in public filings with the SEC.
The percentage of shares beneficially owned is based on 15,471,117 ordinary shares outstanding as of March 27, 2024. 52 The information presented below is based on information provided to us by the directors, officers, and shareholders or disclosed in public filings with the SEC.
Shares beneficially owned include shares that may be acquired pursuant to options to purchase ordinary shares that are exercisable within 60 days of March 23, 2023. (2) The percentage of outstanding ordinary shares is based on 14,986,532 ordinary shares outstanding as of March 23, 2023.
Shares beneficially owned include shares that may be acquired pursuant to options to purchase ordinary shares that are exercisable within 60 days of March 27, 2024. 53 (2) The percentage of outstanding ordinary shares is based on 15,471,117 ordinary shares outstanding as of March 27, 2024.
The number of shares is comprised of 139,363 ordinary shares and 27,184 RSUs that will vest within 60 days of March 23, 2023.
The number of shares is comprised of 184,701 ordinary shares and 39,426 RSUs that will vest within 60 days of March 27, 2024.
(4) Based on a Schedule 13G/A filed with the SEC on February 14, 2023. Includes 1,981,823 Ordinary Shares held by Lynrock Lake LP (the “ Investment Manager ”), the investment manager of Lynrock Lake Master.
(4) Based on a Schedule 13G/A filed with the SEC on February 14, 2024. Includes 2,266,666 Ordinary Shares held by Lynrock Lake Master Fund LP, or Lynrock Lake Master. Lynrock Lake LP, or Investment Manager, is the investment manager of Lynrock Lake Master.
Name Number of Ordinary Shares beneficially owned (1) Percentage of Outstanding Ordinary Shares beneficially owned (2) Principal Shareholders Zohar Zisapel 2,911,572 (3) 19.4 % Lynrock Lake LP 1,981,823 (4) 13.2 % Yelin Lapidot Holdings Management Ltd. 1,487,252 (5) 9.9 % Directors and Officers, except for Zohar Zisapel Rachel (Heli) Bennun * * Matty Karp * * Mirella Kuvent * * Oren Most * * Yaron Ravkaie * * Rami Schwartz * * Eyal Harari * * Hadar Rahav * * Hilik Itman * * Rami Amit * * All directors and executive officers as a group, except for Zohar Zisapel (10 persons) 166,547 (6) 1.1 % * less than 1% (1) Except as otherwise noted and subject to applicable community property laws, each person named in the table has sole voting and investment power with respect to all ordinary shares listed as owned by such person.
Name Number of Ordinary Shares beneficially owned (1) Percentage of Outstanding Ordinary Shares beneficially owned (2) Principal Shareholders The heirs of Zohar Zisapel 2,793,551 (3) 18.1 % Lynrock Lake LP 2,266,666 (4) 14.7 % Yelin Lapidot Holdings Management Ltd. 1,286,669 (5) 8.3 % Barclays PLC 861,020 (6) 5.6 % Value Base Ltd. 826,670 (7) 5.3 % AWM Investment Company, Inc. 795,795 (8) 5.1 % Directors and Officers Rachel (Heli) Bennun * * Andre Fuetsch * * Matty Karp * * Oren Most * * Yaron Ravkaie * * Rami Schwartz * * Guy Shemesh * * Hadar Rahav * * Hilik Itman * * Rami Amit * * All directors and executive officers as a group (10 persons) 224,127 (9) 1.5 % * less than 1% (1) Except as otherwise noted and subject to applicable community property laws, each person named in the table has sole voting and investment power with respect to all ordinary shares listed as owned by such person.
The voting rights of our major shareholders do not differ from the voting rights of other holders of our ordinary shares. Except for Mr.
The voting rights of our major shareholders do not differ from the voting rights of other holders of our ordinary shares. None of our executive officers or directors beneficially owns 1% or more of our outstanding ordinary shares.
The number of outstanding ordinary shares does not include 5,189 ordinary shares held by RADCOM US, a wholly owned subsidiary and 30,843 ordinary shares that were repurchased by us. (3) Includes (i) 2,332,185 ordinary shares held by Mr.
The number of outstanding ordinary shares does not include 5,189 ordinary shares held by RADCOM US, a wholly owned subsidiary and 30,843 ordinary shares that were repurchased by us. (3) Mr. Zohar Zisapel, who was our largest shareholder passed away on May 19, 2023. Each of Mr. Zohar Zisapel children, Michael Zisapel and Klil Zisapel, or the Heirs of Mr.
Each of the Yelin Lapidot Holders and Messrs. Yelin and Lapidot and is a resident of Israel.
Each of the Yelin Lapidot Holders and Messrs. Yelin and Lapidot and is a resident of Israel. (6) Based on a Schedule 13G filed on February 16, 2024 by Barclays PLC.
Zohar Zisapel, none of our executive officers or directors beneficially owns 1% or more of our outstanding ordinary shares. 51 As of March 23, 2023, our ordinary shares had a total of 15 holders of record, of which 8 were registered with addresses in the United States.
As of March 27, 2024, our ordinary shares had a total of 13 holders of record, of which 7 were registered with addresses in the United States.
All future transactions and arrangements (or modifications of existing ones) with members of the RAD-BYNET Group in which our Office Holders have a personal interest or which raise issues of such Office Holders’ fiduciary duties will require approval by our Board of Directors and, in certain circumstances, approval of our Audit Committee and shareholders under the Israeli Companies Law. C.
All future transactions and arrangements (or modifications of existing ones) with members of the RAD-BYNET Group will be approved in accordance with the requirements of the Israeli Companies Law. C. INTERESTS OF EXPERTS AND COUNSEL Not applicable. 56
Heli Bennun, holds 40,570 ordinary shares, and 2,600 RSUs which shall vest within 60 days of March 23, 2023. Mr. Zohar Zisapel disclaims beneficial ownership of the ordinary shares held by Mr. Yehuda Zisapel and by Ms. Heli Bennun. This information is based on information provided to the Company by Mr. Zohar Zisapel.
Zohar Zisapel prior to his death, and (iv) 39,597 ordinary shares issuable upon exercise of options, currently exercisable or exercisable within 60 days of March 27, 2024, which were owned by Mr. Zohar Zisapel, prior to his death. This information is based on information provided to the Company by the Heirs of Zohar Zisapel.
Zohar Zisapel) serves also as director in additional companies, including: RADWARE Ltd., Bynet Data Communications Ltd., Bynet Electronics Ltd., Bynet Semech (Outsourcing) Ltd., Bynet Systems Applications Ltd., Ab-Net Communications Ltd., BYNET Software Systems Ltd., Internet Binat Ltd., SecurityDam Ltd., Binat Business Ltd. and several other private holdings, real estate and medical devices companies.
Zohar Zisapel and uncle of Michael and Klil Zisapel), who passed away on March 10, 2024, was also a director of RAD Communications and of additional companies, including, Bynet Data Communications Ltd., or Bynet Communication, Bynet Systems Applications Ltd., or Bynet Applications, Internet Binat Ltd., or Internet Binat, and had several other private holdings.
Removed
Zohar Zisapel, and (iv) 37,240 ordinary shares issuable upon exercise of options, currently exercisable or exercisable within 60 days of March 23, 2023. Mr. Zohar Zisapel’s brother, Mr. Yehuda Zisapel, may be deemed the beneficial owner of 344,809 ordinary shares. Additionally, Mr. Zohar Zisapel’s life partner and Executive Chairman of the Company’s Board of Directors, Ms.
Added
Zohar Zisapel, inherited half of the ordinary shares and options to purchase ordinary shares beneficially owned by Mr. Zohar Zisapel prior to his death. The process of transferring such ordinary shares and options to purchase ordinary shares to the Heirs of Mr.
Removed
Significant Changes in Percentage Ownership by Major Shareholders To our knowledge, the significant change in the percentage of ownership held by our major shareholders during the past three years has been the increase in the percentage of ownership held by Lynrock Lake LP above 5% as of 2021 and additional increases until it has a beneficial ownership percentage of 13.2% as of December 31, 2022, according to the Schedule 13G/A filed with the SEC on February 14, 2023.
Added
Zohar Zisapel has not been completed yet, but assuming that such process shall have been completed, as of March 27, 2024, each of Michael Zisapel and Klil Zisapel, may be deemed to beneficially own one-half of the (i) 2,211,807 ordinary shares which were held directly by Mr.
Removed
Zohar Zisapel, a member of our Board of Directors, is the Chairman of the board of Ceragon Networks Ltd., RADWIN Ltd., RADIFLOW Ltd., Hailo, HiAuto Ltd. and Innoviz Ltd. and director in the following companies: Nuance Hearing Ltd., RAD Data Communications Ltd., RAD-Bynet Properties and Assets (1981) Ltd., Packetlight Networks Ltd., CyberInt Technologies Ltd., Armis Security Ltd., Cylus Ltd. and several other private holdings, real estate and medical devices companies.
Added
Barclays PLC reported sole voting power and sole dispositive power with respect to 861,020 ordinary shares; Barclays Bank PLC reported sole voting power and sole dispositive power with respect to 11,941 ordinary shares; Barclays Capital Inc. reported sole voting power and sole dispositive power with respect to 849,079 ordinary shares.
Removed
The above list does not constitute a complete list of Mr. Zohar Zisapel’s holdings. In some of these companies his brother, Mr. Yehuda Zisapel is also a director. Mr. Yehuda Zisapel (brother of Mr.
Added
The securities being reported on by Barclays PLC, as a parent holding company, are owned, or may be deemed to be beneficially owned, by Barclays Bank PLC.
Removed
Supplier and Service Provider Arrangements We purchase certain inventory, as well as personnel, administrative, Dev-Ops, Research and Development and IT products and services from members of the RAD-BYNET group, on terms that are either beneficial to us or are no less favorable than terms that might be available to us from unrelated third parties, based on quotes we received from unrelated third parties.
Added
Barclays Bank PLC is a non-US banking institution registered with the Financial Conduct Authority authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom. Barclays Bank PLC is a wholly-owned subsidiary of Barclays PLC. Barclays Capital Inc., is a Connecticut business entity.
Removed
Members of the RAD-BYNET group may provide to us, for which we pay on market terms and rates. The aggregate amount of such purchases was approximately $133,000 in 2022. 53 Office Leases We currently lease office premises in Tel Aviv, Israel and in Paramus, New Jersey, from private companies controlled by Mr. Yehuda Zisapel and his wife, Ms.
Added
The address of the principal office of Barclays PLC and Barclays Bank PLC is 1 Churchill Place, London, E14 5HP, England. The address of the principal office of Barclays Capital Inc. is 745 Seventh Ave, New York, NY 10019. (7) Based on a Schedule 13G/A filed with the SEC on February 13, 2024.
Added
Includes (i) 362,224 Ordinary Shares owned directly by Value Base Ltd., an Israeli company which is controlled by Messrs. Victor Shamrich and Ido Nouberger and wholly owns Value Base Hedge Fund Ltd., an Israeli company, and the general partner of Harmony Base L.P., and (ii) 464,446 ordinary shares owned directly by Harmony Base L.P., an Israeli limited partnership.
Added
The address of each of Value Base Ltd. and Harmony Base L.P. is 23 Yehuda Halevi St., Tel-Aviv 6513601, Israel. 54 (8) Based on a Schedule 13G filed with the SEC on February 14, 2024 by AWM Investment Company, Inc., or AWM, reporting that AWM is the investment adviser to Special Situations Fund III QP, L.P., or SSFQP, Special Situations Cayman Fund, L.P., or Cayman, Special Situations Technology Fund, L.P., or TECH and Special Situations Technology Fund II, L.P., or TECH II and referred to together with SSFQP, Cayman, and TECH as the Funds.
Added
As the investment adviser to the Funds, AWM holds sole voting and investment power over 295,363 ordinary shares held by SSFQP, 89,246 ordinary shares held by Cayman, 60,871 ordinary shares held by TECH and 350,315 ordinary shares held by TECH II. David M. Greenhouse and Adam C.
Added
Stettner are members of SSCayman, L.L.C., a Delaware limited liability company, or SSCAY, the general partner of CAYMAN. David M. Greenhouse and Adam C. Stettner are members of MGP Advisers Limited Partnership, a Delaware limited partnership, the general partner of SSFQP and SST Advisers, L.L.C., a Delaware limited liability company, the general partner of TECH and TECH II. David M.
Added
Greenhouse and Adam C. Stettner are also controlling principals of AWM. The business address AWM Investment Company, Inc.is c/o Special Situations Funds, 527 Madison Avenue, Suite 2600, New York, NY 10022.
Added
Significant Changes in Percentage Ownership by Major Shareholders To our knowledge, the significant change in the percentage of ownership held by our major shareholders during the past three years has been: (i) the transfer by inheritance of the ordinary shares and options to purchase ordinary shares beneficially owned by our largest shareholder, Zohar Zisapel, who passed away on May 19, 2023, to each of his children, Michael Zisapel and Klil Zisapel in equal parts, such that each of them may be deemed to beneficially own one-half of the 2,793,551 ordinary shares, including options exercisable for 39,597 ordinary shares that are exercisable within 60 days of March 27, 2024, beneficially owned by Mr.
Added
Zohar Zisapel prior to his death, representing approximately 18.1% of our outstanding ordinary shares as of March 27, 2024 (ii) increase in the percentage of ownership held by Lynrock Lake LP above 5% as of 2021 and additional increases until it has a beneficial ownership percentage of 14.7% as of December 31, 2023, (iii) a decrease in the percentage of ownership held by Yelin Lapidot Holdings Management Ltd from 9.9% as of December 31, 2022 to 8.3% as of December 31, 2023, (iv) an increase in the percentage of ownership held by Barclays PLC above 5% until it has a beneficial ownership percentage of 5.6% as of December 31, 2023, (v) an increase in the percentage of ownership held by Value Base Ltd. above 5% until it has a beneficial ownership percentage of 5.3% as of December 31, 2023, and (vi) an increase in the percentage of ownership held by AWM Investment Company, Inc. above 5% until it has a beneficial ownership percentage of 5.1% as of December 31, 2023.
Added
B. RELATED PARTY TRANSACTIONS RAD-BYNET Group Mr. Zohar Zisapel, who served as a member of our Board of Directors until he passed away on May 19, 2023, was also a director of RAD Data Communications Ltd., or RAD Communications, and served as the Chairman of the board and as a director and held shares in several other companies.
Added
Based on information received by the Company, following Mr. Zohar Zisapel’s death, his children, Michael Zisapel and Klil Zisapel, as heirs are entitled to representation on the board of directors of RAD Communications and in certain of such other companies and hold shares in RAD Communications and certain of such other companies.
Added
Michael Zisapel and Klil Zisapel, may be deemed to have “significant influence,” as such term is defined in Item 7.B to form 20-F, over the Company, as a result of their holdings of ordinary shares of the Company. Mr. Yehuda Zisapel (brother of late Mr.
Added
Supplier and Service Provider Arrangements During 2023 we purchased products and services from the following members of the RAD-BYNET Group, for which we pay on market terms and rates: RAD Communications, from which we purchased certain operating services, Bynet Communication, from which we purchased network management, IT and communication equipment, testing and repair services, and manpower services, Bynet Applications, from which we purchased, communication equipment and services, and Internet Binat, from which we purchase, internet communication services.
Added
The aggregate amount of such purchases, which may constitute related party transactions under Item 7.B to Form 20-F was approximately $29,000 in 2023 which amount includes products and services purchased (i) from Bynet Communication, Bynet Applications and Internet Binat until May 19, 2023, the date upon which these vendors may no longer be considered related parties of the Company under Item 7.B to Form 20-F, following the passing away of Mr.
Added
Zohar Zisapel and (ii) from RAD Communications throughout 2023, as this company remained a related party of the Company pursuant to Item 7.B to Form 20-F. Office Leases We currently lease office premises in Tel Aviv, Israel and in Paramus, New Jersey, from private companies controlled by Michael and Klil Zisapel and by Ms.
Added
The aggregate amount of lease and maintenance payments, which may constitute related party transactions under Item 7.B to Form 20-F, was approximately $443,000 in 2023, which amount includes payments made to (i) the companies currently controlled by Ms.
Added
Nava Zisapel and the heirs of Yehuda Zisapel - until May 19, 2023, the date upon which these companies may no longer be considered related parties of the Company under Item 7.B to Form 20-F, following the passing away of Mr.
Added
Zohar Zisapel, and (ii) companies controlled by Michael and Klil Zisapel - throughout 2023, as these companies remain related parties of the Company pursuant to Item 7.B to Form 20-F.

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