RADCOM Announces Third Quarter Results

• Press Release
• Source: Radcom Ltd
• On 7:02 am EDT, Monday October 26, 2009

TEL AVIV, Israel, October 26 /PRNewswire-FirstCall/ --

- Positive Momentum Continues: Revenues Up 19% & Net Loss Down 54% Compared to Q2 2009; Strong Backlog Going Into 2010

RADCOM Ltd. (RADCOM) (NASDAQ: RDCM - News) today announced its unaudited financial results for the third quarter and nine month period ended September 30, 2009.

(Logo: http://www.newscom.com/cgi-bin/prnh/20090331/342930 )

Financial Results for the Third Quarter

Revenues for the third quarter of 2009 were $3.1 million, up 19% compared with $2.6 million for the second quarter of 2009, and up 54% compared with the first quarter of 2009. Revenues for the third quarter of 2008 were $4.4 million.

Net loss for the quarter according to U.S. generally accepted accounting principles (GAAP) was ($394,000) or $(0.08) per ordinary share (basic and diluted), a decline of 54% compared with $(856,000), or $(0.17) per ordinary share (basic and diluted) for the second quarter of 2009, and a 64% decline compared to $(1.1) million, or $(0.22) per ordinary share (basic and diluted), for the third quarter of 2008. The decrease in net loss reflects cost-cutting programs implemented in 2008, together with the quarter's higher sales as compared with the first and second quarters of 2009.

Net loss according to GAAP for all quarters included non-cash share-based compensation expense taken in respect of Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based Payment" ("SFAS 123R"). This share-based compensation expense totaled $77,000 for the third quarter of 2009, $73,000 for the second quarter of 2009, $87,000 for the first quarter of 2009 and $135,000 for the third quarter of 2008. To provide investors with insight into the Company's underlying operating results, results are also being presented on a non-GAAP basis excluding share-based compensation from all periods. According to this non-GAAP basis, net loss for the third quarter of 2009 was $(317,000), or $(0.06) per ordinary share (basic and diluted), compared with $(783,000), or $(0.15) per ordinary share (basic and diluted), for the second quarter of 2009, $(1.4 million), or $(0.28) per ordinary share (basic and diluted), for the first quarter of 2009, and $(1.0) million, or $(0.19) per ordinary share (basic and diluted), for the third quarter of 2008.

Comments of Management

Commenting on the results, Mr. David Ripstein, RADCOM's President and CEO, said, "We are pleased to report that the third quarter was a period of significant progress, as demonstrated by continued improvement across key financial and operational parameters. Despite slow sales cycles that continue to characterize our target markets, we continue to build forward momentum. This, together with the significant backlog that we built over the past year, confirms that we are working from a stable basis and according to a sound strategy.

"Repeat sales remain the largest proportion of our sales, confirming the success of our customer satisfaction initiatives. We are confident that our strategy of ongoing investment in developing regions, technology and customer satisfaction will enable us to continue improving our results as global telecommunication markets recover and develop."

Financial Results for the Nine Months Ended September 30, 2009

Revenues for the nine months ended September 30, 2009 were $7.7 million compared with $12.6 million for the nine months of 2008. On an operating basis, the Company generated positive cash flow from operating activities of $0.8 million during the first nine months of 2009, which does not include loan principal repayments of $1.0 million, compared to a cash burn of $4.6 million during the first nine months of 2008.

Despite the reduction in sales, the Company succeeded in reducing its net loss for the period by 28% to $(2.8) million, or $(0.54) per ordinary share (basic and diluted), compared with $(3.8) million, or $(0.77) per ordinary share (basic and diluted), for the first nine months of 2008.

The Company has also presented its net results on a non-GAAP basis excluding share-based compensation, which totaled $237,000 for the first nine months of 2009 and $437,000 for the first nine months of 2008. On such non-GAAP basis, net loss for the first nine months of 2009 was $(2.5) million, or $(0.49) per ordinary share (basic and diluted), a decrease of 34% compared with $(3.4) million, or $(0.68) per ordinary share (basic and diluted), for the first nine months of 2008.

Non-GAAP Information

Certain non-GAAP financial measures are included in this press release. These non-GAAP financial measures are provided to enhance the reader's overall understanding of our financial performance. By excluding non-cash equity based compensation that has been expensed in accordance with SFAS 123R, our non-GAAP results provide information to both management and investors that is useful in assessing our core operating performance and in evaluating and comparing our results of operations on a consistent basis from period to period. These non-GAAP financial measures are also used by management to evaluate financial results and to plan and forecast future periods. The presentation of this additional information is not meant to be considered a substitute for the corresponding financial measures prepared in accordance with GAAP.

About RADCOM

RADCOM develops, manufactures, markets and supports innovative network test and service monitoring solutions for communications service providers and equipment vendors. The Company specializes in next-generation Cellular as well as IMS, Voice, Data and VoIP networks. Its solutions are used in the development and installation of network equipment and in the maintenance of operational networks. The Company's products facilitate fault management, network service performance monitoring and analysis, troubleshooting and pre-mediation. RADCOM's shares are listed on the NASDAQ Capital Market under the symbol RDCM. For more information, please visit http://www.RADCOM.com.

Risks Regarding Forward-Looking Statements

Certain statements made herein that use the words "estimate," "project," "intend," "expect," "'believe" and similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks and uncertainties that could cause the actual results, performance or achievements of the Company to be materially different from those that may be expressed or implied by such statements, including, among others, changes in general economic and business conditions and specifically, decline in the demand for the Company's products, inability to timely develop and introduce new technologies, products and applications, and loss of market share and pressure on prices resulting from competition. For additional information regarding these and other risks and uncertainties associated with the Company's business, reference is made to the Company's reports filed from time to time with the United States Securities and Exchange Commission. The Company does not undertake to revise or update any forward-looking statements for any reason.

                               RADCOM Ltd.
                  Consolidated Statements of Operations
             (1000's of U.S. dollars, except per share data)

                                     Three months ended    Nine months ended
                                         September 30,        September 30,
                                        2009a    2008b      2009c      2008d
                                 (unaudited)(unaudited)(unaudited)(unaudited)
    Sales                            $ 3,115  $ 4,395     $ 7,741   $ 12,641
    Cost of sales                      1,045    1,741       2,887      4,984
    Gross profit                       2,070    2,654       4,854      7,657
    Research and development, gross    1,046    1,582       3,156      5,229
    Less - royalty-bearing
    participation                        480      500       1,265      1,613
    Research and development, net        566    1,082       1,891      3,616
    Sales and marketing                1,370    1,971       4,312      5,922
    General and administrative           413      584       1,245      1,831
    Total operating expenses           2,349    3,637       7,448     11,369
    Operating loss                      (279)    (983)     (2,594)    (3,712)
    Financing income (loss), net        (115)    (124)       (157)       (84)
    Net loss                            (394)  (1,107)     (2,751)    (3,796)
    Basic and Diluted net loss per
    ordinary share                   $ (0.08) $ (0.22)    $ (0.54)   $ (0.77)
    Weighted average number of
    ordinary shares used in
    computing basic and diluted net
    loss per ordinary share        5,081,707 5,076,217   5,081,521 4,948,703

Note a: The Company's results for the third quarter of 2009 according to U.S. GAAP include non-cash share-based compensation expense of $77,,000 allocated as follows: $3,000 to cost of sales, $17,,000 to research and development, $26,000 to sales and marketing and $31,000 to general and administrative.

Note b: The Company's results for the third quarter of 2008 according to U.S. GAAP include non-cash share-based compensation expense of $135,000 allocated as follows: $5,000 to cost of sales, $31,000 to research and development, $43,000 to sales and marketing and $56,000 to general and administrative.

Note c: The Company's results for the first nine months of 2009 according to U.S. GAAP include non-cash share-based compensation expense of $237,000 allocated as follows: $9,000 to cost of sales, $60,000 to research and development, $81,000 to sales and marketing and $87,000 to general and administrative.

    Note d: The Company's results for the first nine months of 2008 according
to U.S. GAAP include non-cash share-based compensation expense of $437,000
allocated as follows: $17,000 to cost of sales, $90,000 to research and
development, $135,000 to sales and marketing and $195,000 to general and
administrative.

                                  RADCOM Ltd.
                          Consolidated Balance Sheets
                            (1000's of U.S. dollars)
                                                  As of            As of
                                              September 30,     December 31,
                                                  2009              2008
                                               (unaudited)      (unaudited)
    Current Assets
    Cash and cash equivalents                         3,076            3,513
    Trade receivables, net                            3,743            7,118
    Inventories                                       2,708            2,752
    Other current assets                                827              973
    Total Current Assets                             10,354           14,356

    Assets held for severance benefits                2,472            2,496

    Property and equipment, net                         667              989

    Total Assets                                     13,493           17,841

    Liabilities and Shareholders' Equity
    Current Liabilities
    Trade payables                                    1,336            2,121
    Current deferred revenue                          1,007            1,057
    Current maturities of long-term venture
    loan                                                917            1,167
    Other payables and accrued expenses               4,295            3,817
    Total Current Liabilities                         7,555            8,162

    Long-Term Liabilities
    Long-term deferred revenue                          128              277
    Venture loan Less - current maturities              458            1,152
    Liability for employees' severance pay
    benefits                                          2,915            3,265
    Total Long-Term Liabilities                       3,501            4,694

    Total Liabilities                                11,056           12,856

    Shareholders' Equity
    Share capital                                       176              176
    Additional paid-in capital                       51,444           51,474
    Accumulated deficit                             (49,183)         (46,665)
    Total Shareholders' Equity                        2,437            4,985

    Total Liabilities and Shareholders'
    Equity                                           13,493           17,841



    Contact:

    Jonathan Burgin
    CFO
    +972-3-645-5004
    jonathanb@radcom.com

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