Core Insights - SuperCom has received orders from European governments valued at over $3 million, expected to be delivered by the end of Q3 2024 [1][6] - The company recently secured an additional $5 million in orders from European governments less than two months prior, highlighting the trust in its technology [6] Company Overview - SuperCom is a global provider of secured solutions for e-Government, IoT, and Cybersecurity sectors, with a focus on electronic monitoring solutions [1][5] - The PureSecurity Suite is an end-to-end electronic monitoring solution designed for correctional facilities and law enforcement, featuring advanced GPS tracking and real-time reporting capabilities [2][5] Strategic Positioning - The recent orders strengthen SuperCom's position as a leader in electronic monitoring solutions for public safety, reflecting its commitment to delivering exceptional results [4][6] - The company aims to foster lasting partnerships with governments worldwide through its innovative public safety products and solutions [4][6]

Core Insights - SuperCom's subsidiary, Leaders in Community Alternatives (LCA), has secured a new contract expected to generate nearly $500,000 in annual recurring revenue, marking the fourth new contract win in North America for 2024 [1] - The program will provide housing and evidence-based case management services to youth and those transitioning from housing, starting in summer 2024 for an initial term of two years, with plans for extension [1][2] Company Overview - SuperCom is a global provider of secure solutions for e-Government, IoT, and Cybersecurity sectors, offering advanced safety, identification, and security solutions to governments and organizations worldwide since 1988 [5] - The company focuses on comprehensive support services, particularly in rehabilitative services and secure solutions, aiming to create value for government customers and the communities they serve [4] LCA's Role - LCA has been a leading private criminal justice organization in California for over 33 years, providing community-based services and electronic monitoring programs [6] - The organization employs evidence-based treatment services designed to break the cycle of recidivism, addressing cognitive and behavioral issues as well as substance abuse [6]

Core Insights - SuperCom achieved a 5-year record performance in 2023 with revenues of $26.6 million, a 51% year-over-year increase, and EBITDA of $4.8 million, reflecting a 2350% increase over the prior period [5][6] - The company is focused on expanding its market share in the electronic monitoring of offenders, which is projected to reach a market size of $2.3 billion by 2028 [11] - SuperCom's innovative technology, including the PureProtect and PureOne products, positions the company as a leader in the public safety sector, enhancing its competitive edge [10][14] Financial Performance - SuperCom reported a gross profit of $10.2 million in 2023, a 60% increase year-over-year, driven by strong performance in Q4 [6] - The company secured a new electronic monitoring contract worth approximately $2 million in California and received new orders from European governments valued at $5 million [7][8] - The company’s contract win rate exceeds 65% in National Government Tenders in Europe, indicating strong demand for its solutions [18] Market Position and Strategy - SuperCom has established a significant presence in the public safety sector, with a focus on government and private sector clients [3][12] - The company has invested over $40 million in R&D since 2014, resulting in over 100 patents, showcasing its commitment to innovation [17] - SuperCom aims to revolutionize government sectors through superior technology and solutions, enhancing rehabilitation outcomes and community safety [19][20] Product Development - The company launched two new products, PureProtect for domestic violence monitoring and PureOne ankle-bracelet monitoring solution, which are expected to expand its addressable market [10] - SuperCom's technology offers advantages such as longer battery life and more accurate location tracking compared to competitors [14] Industry Context - The electronic monitoring industry is seen as a cost-effective alternative to incarceration, with potential to improve rehabilitation outcomes and reduce recidivism rates [15][12] - The company’s solutions are designed to support vulnerable populations, including victims of domestic violence, through real-time monitoring and secure communication [16]

Financial Data and Key Metrics Changes - Gross profit increased by 139% to $3.8 million compared to $1.6 million, reflecting progress across projects and enhanced margins as projects mature [1] - Operating income improved by $1.8 million from $700,000 compared to an operating loss of $1.8 million before, resulting in a significant increase in gross profit [2] - EBITDA improved by 400% to $2 million compared to $400,000, reflecting benefits of operating leverage associated with high revenues [30] - Net income improved by $2.3 million from a net loss of $1.5 million last quarter to a net profit of $800,000 this quarter [30] - Non-GAAP net profit improved by $1.6 million to $1.5 million compared to a loss of $250,000 in the prior year [50] Business Line Data and Key Metrics Changes - The company has seen fluctuations in gross margins due to the mix of project stages, with later stages yielding higher margins [6] - The introduction of new products like PureProtect and PureOne has significantly expanded the company's addressable market and improved competitive positioning [34][36] Market Data and Key Metrics Changes - The electronic monitoring market is projected to reach $2.3 billion by 2028, with the U.S. and Europe constituting about 95% of these markets [21] - The company has achieved over a 65% win rate in Europe, indicating strong competitive performance [9][36] Company Strategy and Development Direction - The strategic blueprint focuses on leading with innovative technology, developing superior solutions, expanding global presence, and delivering outstanding service [15] - The company aims to enhance U.S. growth through strategic acquisitions of local electronic monitoring service providers [27] - The focus on the North American market is driven by the potential for growth, with the U.S. market being three to four times the size of the European market [54] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning to capitalize on new opportunities driven by a strong reputation in the U.S. and European markets [4] - The ongoing macroeconomic uncertainties and the Israel-Gaza war have not diminished the relevance of the company's solutions, which are essential for enhancing public safety and reducing costs [37] - Management anticipates sustained growth by further expanding market share in the U.S. and Europe while preserving technological advancements [32] Other Important Information - The company completed a successful public offering of $2.9 million to support continued innovation and growth initiatives [3] - A one-time expense of $280,000 was recorded, mainly related to legacy business and allowance for doubtful debt [3] Q&A Session Summary Question: Can you discuss the gross margin improvements this quarter? - Management noted that gross margins increase as projects reach later stages, with larger projects driving higher margins [60] Question: What is the competitive response to your successes? - Management indicated that competitors are aware of their technological advancements but have not posed significant threats [62] Question: How does the U.S. market compare to Europe? - The U.S. market is seen as a significant opportunity, with the company in early stages of development and a growing pipeline [8] Question: Are there plans for additional capital raises? - Management acknowledged the need for capital to support long-term goals but aims to minimize dilution for existing shareholders [130] Question: How do payment terms differ between U.S. and European clients? - Management explained that payment terms vary, with some projects requiring upfront payments while others are based on monthly leases [91]

Revenue Concentration - In the year ended December 31, 2023, 59% of the consolidated net revenue is attributable to sales to two large customers[42]. - In the year ended December 31, 2022, 36% of the consolidated net revenue is attributable to sales to one large customer[43]. - In the year ended December 31, 2021, 10% of the consolidated net revenue is attributable to sales to two large customers[44]. - During the fiscal year ended December 31, 2023, approximately 75% of the company's revenues were derived from sales to markets outside of the United States, compared to 61% in 2022[77]. Financial Performance - Total revenue for the year ended December 31, 2023, was $26.57 million, a 50.6% increase from $17.65 million in 2022[211]. - Revenue from the IoT segment reached $23.77 million in 2023, up 52.1% from $15.63 million in 2022[212]. - Product revenues increased to $19.77 million in 2023, compared to $10.10 million in 2022, reflecting a growth of 96.4%[213]. - The e-Gov segment generated $1.54 million in revenue in 2023, a significant increase from $637,000 in 2022[212]. - The Cyber Security segment reported revenues of $1.26 million in 2023, a slight decrease from $1.38 million in 2022[212]. Competition and Market Risks - The company faces intense competition in the IoT, e-Gov, and Cyber Security markets, which are characterized by rapidly changing technology and customer requirements[45]. - The average selling prices for products may decline due to competitive pricing pressures, which could adversely affect gross margins[47]. - The company expects competition to intensify in its markets, which may impact margins and market share[219]. Operational Challenges - The company has historically funded operations through equity and/or debt issuances, with losses from operations during the last seven years ended December 31, 2023[52]. - The company relies on third-party representatives, resellers, and distributors for marketing and distribution, which may lead to delays in generating sales revenues[58]. - The company’s reliance on third-party technologies and components may delay product launches and impair its competitive ability in the market[85]. - The company relies on a limited number of vendors and subcontractors, which poses risks of delays and defects that could adversely affect revenues and gross margins[87]. - Significant disruptions at suppliers and subcontractors, including geopolitical tensions and natural disasters, could materially impact the company's financial condition[87]. Geopolitical and Economic Risks - The company faces risks related to political, economic, and military instability in Israel, where its principal executive office and R&D facilities are located, which could adversely affect operations[65]. - The company’s operating results may be adversely affected by unfavorable economic conditions and geopolitical instability, including the ongoing conflict involving Israel[64]. - The company may be adversely affected by inflation and currency fluctuations, particularly the exchange rate between the U.S. dollar and the NIS[118]. Strategic Initiatives - The company has sought to acquire complementary businesses to compete effectively, but future acquisitions may not perform as planned[50]. - The company has made several strategic acquisitions, including Prevision for $1.1 million and Safend, enhancing its cyber security capabilities and customer base[142][144]. - SuperCom has three main Strategic Business Units (SBU): e-Gov, IoT and Connectivity, and Cyber Security, focusing on identity solutions and advanced IoT technologies[148]. - The company aims to expand its IoT and Cyber Security activities globally, particularly in the Americas, Europe, and the Far East, while also targeting emerging markets with significant growth opportunities[168]. Intellectual Property and Compliance - The company owns 52 issued patents in the United States and 74 issued patents globally, highlighting its commitment to intellectual property[221]. - The company faces risks related to the protection of its intellectual property rights, which may not be sufficient to prevent competition from third parties[92]. - Compliance with government regulations regarding radio frequency technology may delay product introductions in the U.S. and European markets[102]. Internal Controls and Governance - The company has failed to maintain effective internal control over financial reporting, which could result in material misstatements in its financial statements[112]. - The company has identified material weaknesses in its internal controls, which could lead to regulatory investigations and affect investor confidence[112]. - SuperCom Ltd. is organized under the laws of Israel and operates under home country corporate governance practices, which may provide shareholders with less protection compared to U.S. companies listed on NASDAQ[128]. Future Outlook - The company anticipates continued investment of up to 15% of revenue in expanding its Cyber Security, e-Gov, IoT, and Connectivity solutions[208]. - The company has begun actively bidding on larger international tenders, positioning itself for significant opportunities in the e-Gov market[158]. - The company’s ability to grow significantly depends on the adoption of its technology and solutions by government and public/private organizations, which is uncertain[60].

Financial Data and Key Metrics Changes - Annual revenue increased by 51% to a five-year record level of $26.6 million, with gross profit rising by 60% to $10.2 million compared to $6.4 million [33][8] - GAAP net loss improved to $4 million from a loss of $7.7 million, while non-GAAP net profit improved by $5.5 million to $3.2 million compared to a loss of $2.3 million in the previous year [4][33] - EBITDA reached a five-year record of $4.8 million, reflecting a 2350% increase compared to $0.2 million, driven by revenue growth and operational improvements [43][33] Business Line Data and Key Metrics Changes - R&D expenses decreased by $300,000 to $3.1 million, indicating maturation of new technology launches [3] - Sales and marketing expenses decreased by $460,000 to $2.2 million, while general and administrative expenses increased by $275,000 due to team expansion in the U.S. [3] Market Data and Key Metrics Changes - Revenue from European countries increased by 85% in 2023, reflecting a successful transition from less stable emerging markets to more stable developed countries [12] - The U.S. market is projected to be three times larger than Europe, with the company actively expanding its presence and pipeline in the U.S. [53][41] Company Strategy and Development Direction - The company aims to lead with innovative technology and expand its global presence, focusing on IoT tracking in developed markets [35][36] - The electronic monitoring market is projected to reach $2.1 billion by 2026, with the U.S. and Europe constituting about 95% of this market [36] - The introduction of the PureOne solution is seen as a game changer, enhancing the company's competitive edge [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong pipeline entering 2024, with ongoing projects and new opportunities expected to drive growth [49] - The company noted that despite macroeconomic uncertainties, its solutions are increasingly relevant due to high recidivism rates and the cost-effectiveness of electronic monitoring [23] Other Important Information - The company secured a $3.6 million national electronic monitoring project in Finland, demonstrating its capability in deploying comprehensive solutions [40] - The company completed a successful close of $2.9 million in public offerings to support continued innovation and growth initiatives [44] Q&A Session Summary Question: How does the pipeline look entering 2024 versus 2023? - Management indicated that the pipeline remains strong with several projects in various stages, including contract negotiations and new opportunities expected to be won [49] Question: How has the U.S. pipeline evolved with the launch of single-piece products? - The U.S. pipeline is growing, with the company exploring opportunities at both national and local levels, indicating a significant market potential [53] Question: Can you provide insight on the declining use of cash from operations? - Management explained that while there is a gap between operational cash flows and EBITDA, this is due to project timelines and cash needs, and they expect stabilization over time [56]

Financial Data and Key Metrics Changes - The company achieved a 550% increase in EBITDA, reaching $2.7 million for Q3 2023, and a five-year record net profit [67][81][72] - Gross profit increased by 89% to $4 million compared to $2.1 million, driven by project progress [68] - Net income improved by 107% to $0.15 million profit, compared to a $2.2 million loss [71] Business Line Data and Key Metrics Changes - The IoT division was identified as the primary growth engine, with a year-over-year revenue increase of 67% to $21 million [96] - The company reported a gross margin improvement to 59.4% from 34% last year, reflecting operational efficiencies [95] Market Data and Key Metrics Changes - The electronic monitoring market is projected to reach $2.1 billion by 2026, with the U.S. and Europe constituting about 95% of this market [43] - The company has secured significant new contracts across over 10 countries in Europe, achieving a 65% win rate in competitive tenders [46] Company Strategy and Development Direction - The strategic focus is on expanding the IoT tracking business in developed markets, capitalizing on the growing demand for electronic monitoring solutions [54][72] - The company aims to enhance its U.S. growth through strategic acquisitions of local electronic monitoring service providers [64] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for their solutions, particularly in light of high recidivism rates and the rising costs of incarceration [87][88] - The company anticipates sustained growth by expanding market share in the U.S. and Europe while maintaining technological advantages [73] Other Important Information - The company completed a successful public offering of $2.75 million to support innovation and growth initiatives [65] - A new national program was secured with the Finnish Government for deploying domestic violence monitoring solutions [89] Q&A Session Summary Question: What is the pipeline opportunity for PureOne in the U.S. market? - Management indicated that the pipeline is well-built, with ongoing engagement with potential customers [12] Question: Can you discuss the recent secure ID card win in Iceland? - Management noted that while not a core business, they continue to support customers in identification projects [28][29] Question: What can investors expect from 2024? - Management suggested that while they may not provide specific guidance, they are optimistic about growth opportunities based on current projects [26] Question: How does the company view the potential for large European contracts? - Management expressed confidence in their ability to win large deals, with several opportunities expected to arise in 2024 [136]

Exhibit 1 SUPERCOM LTD CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS as of June 30, 2023 (Unaudited) SUPERCOM LTD CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS as of June 30, 2023 (Unaudited) IN U.S. DOLLARS INDEX | | Page | | --- | --- | | Interim Consolidated Balance Sheets | 3 | | Interim Consolidated Statements of Operations | 4 | | Interim Statements of Changes in Shareholders' equity | 5 | | Interim Consolidated Statements of Cash Flows | 6 | | Notes to Interim Consolidated Financial State ...

Financial Data and Key Metrics - Revenue increased by 141% year-over-year to $7.7 million in Q2 2023, marking a five-year record [5][11] - Non-GAAP EPS improved to positive $0.07 compared to negative $0.50 in the previous year [5][57] - Gross profit increased by 77% to $2.3 million compared to $1.3 million in Q2 2022 [56] - Operating loss decreased to $650,000 from $1.75 million in the previous year [26] - EBITDA improved to $0.9 million compared to a $0.7 million loss in the previous period [63] - Twelve-Trailing-Month revenue increased by 106% to $25.5 million, driven by IoT division growth [25] Business Line Data and Key Metrics - IoT division achieved over 100% growth in the past 12 months, outpacing the global market growth by 10x [25] - PureSecurity suite, including PureTrack and PureOne, expanded market opportunities by 3-4x [27] - PureProtect, a domestic violence monitoring solution, has been successfully implemented in multiple projects, including a $32 million EM project in Romania [37][45] - PureOne, an all-in-one GPS tracking solution, has been deployed in the U.S. and received positive feedback [30][35] Market Data and Key Metrics - The electronic monitoring market is estimated to reach $2.1 billion by 2026, up from $1.2 billion in 2021 [34] - U.S. and Europe constitute 95% of the electronic monitoring market [34] - In Europe, over $200 million in project bid opportunities were available in the past 18 months [34] - SuperCom expanded its business into over 10 European countries and secured significant new projects, including a $3.6 million National EM project in Finland [9] Company Strategy and Industry Competition - SuperCom focuses on technological leadership, market expansion, and operational efficiency to drive growth [7][13][50] - The company has a 65%-win rate in European competitive tenders, displacing incumbent vendors [52] - SuperCom is recession-resistant due to high recidivism rates, prison overcrowding, and soaring incarceration costs [8] - The company is actively pursuing strategic acquisitions to expand market presence and achieve vertical integration synergies [10][54] Management Commentary on Operating Environment and Future Outlook - Management highlighted the growing global trend of governments adopting innovative solutions to reduce incarceration costs and improve public safety [2] - The company expects sustained growth by expanding market share in the U.S. and Europe, driven by technological advantage and robust growth foundations [13] - SuperCom anticipates rapid expansion in the U.S. market due to the introduction of PureOne and its acceptance as a well-known vendor [17][35] - Management is optimistic about future growth opportunities, particularly in domestic violence monitoring and IoT tracking [38][53] Other Important Information - SuperCom has a stable cash position and credit facilities to support project execution [58] - The company has reduced operating expenses by $350,000, including a $200,000 decrease in sales and marketing expenses and a $55,000 decrease in general and administrative expenses [12][26] - SuperCom has a recurring revenue base of over 70% in 2022, driven by multiyear governmental projects [45] Q&A Session Summary Question: When did PureOne become available in the U.S., and when can we expect to see it deployed? - PureOne was introduced in the U.S. in July 2023 and is already being deployed in various locations with positive feedback [30][35] Question: How does the company structure incentives for sales, particularly in the U.S.? - The company uses a commission structure with on-target quotas and acceleration bonuses for sales teams. Resellers also play a significant role in selling products like PureOne [41] Question: How does the company view the pipeline for PureOne in the U.S. compared to Europe? - The U.S. market is expected to grow faster due to the fragmented nature of the market and the company's established presence. The company has a $200 million pipeline in Europe and is evaluating new opportunities in the U.S. [31][17] Question: How long does it take for resellers to transition from evaluating PureOne to full deployment? - The transition timeline depends on the resellers' confidence in the technology. Initial deployments are small-scale, with larger deployments expected as confidence grows [60][61]

Financial Data and Key Metrics Changes - The company achieved record-breaking revenue of $6.4 million in Q1 2023, representing a 109% year-over-year growth, following previous quarters of 102% and 59% growth [27][42]. - EBITDA for Q1 2023 was $0.4 million, marking the third consecutive quarter of positive EBITDA, attributed to targeted spending and significant revenue increases [28][59]. - Gross profit increased by 19% to $1.6 million compared to $1.3 million in the previous year, despite higher costs associated with new project launches [86]. Business Line Data and Key Metrics Changes - The company has successfully executed a $33 million National EM project in Romania, contributing to its revenue growth and operational leverage [4][45]. - The domestic violence solution, PureProtect, received a follow-on order of $7.1 million, building on an initial order of over $8.1 million [23][66]. - The electronic monitoring market is projected to grow from $1.2 billion in 2021 to $2.1 billion by 2026, with the US and Europe accounting for about 95% of this market [16]. Market Data and Key Metrics Changes - The company has expanded its presence across Europe, now operating in over 10 countries, and has a strong pipeline of new projects due to increased RFP activity [6][22]. - The US market presents significant growth opportunities, with a focus on expanding domestic violence solutions and electronic monitoring services [60][95]. Company Strategy and Development Direction - The company aims to enhance its technological advantage and expand its market presence through strategic investments in R&D and sales [30][59]. - The strategy includes shifting from passive bidding to an active outreach sales strategy, supported by recruiting new sales team members with industry expertise [7][31]. - The company is actively monitoring the market for potential acquisitions to expand its market presence and achieve vertical integration [26]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's recession-resistant business model, supported by high recidivism rates and prison overcrowding [20][21]. - The company anticipates sustained growth by expanding its market share in the US and Europe, while maintaining a commitment to technological innovation [59][58]. - Management highlighted the growing demand for electronic monitoring solutions as governments shift towards alternatives to incarceration [48][93]. Other Important Information - The company has won over 50 new multi-year governmental projects since 2018, with project launches valued at over $40 million in the past year [92]. - The cash balance at the end of 2022 was $3.9 million, with a credit facility in place to support ongoing projects [99]. Q&A Session Summary Question: Can you talk about your strategy towards expanding the domestic violence solutions into the US market and the timing? - The company has started with the European market and is now looking to expand into California and other states, expecting good reception for its products [60][62]. Question: Can you comment on the pipeline of large opportunities in Europe and potential timing? - The company has a strong pipeline, including a $33 million project in Romania and other projects in Croatia, with expectations for announcements in the coming months [64][65]. Question: What is the reason for winning contracts from incumbents? - The company has a strong portfolio of recent projects, competitive pricing, and superior technology scores, which contribute to its success in displacing incumbents [78].