Customer Dependence and Revenue Sources - In the year ended December 31, 2021, 10% of consolidated net revenue was attributable to sales to one large customer[42]. - In the year ended December 31, 2020, 23% of consolidated net revenue was attributable to sales to two large customers[43]. - In the year ended December 31, 2019, 7% of consolidated net revenue was attributable to sales to one large customer[44]. - The company depends on orders from large customers for a substantial portion of its revenues, and the loss of these customers could adversely impact its business[42]. - Approximately 44% of the company's revenues for the years ended December 31, 2021, and 50% for 2020 were derived from sales to markets outside of the United States[70]. Financial Performance and Challenges - The company has had profitable operations in only one of the last seven years ended December 31, 2021[54]. - The global macroeconomic environment remains challenging, influenced by factors such as the COVID-19 pandemic and geopolitical tensions, which may adversely affect business operations[67]. - The company may experience material impacts on its business if global economic conditions deteriorate further[67]. - The company’s financial and operating results have historically fluctuated due to reliance on a limited number of customers and the nature of e-Gov and IoT solutions[74]. - Total revenue for the year ended December 31, 2021, was 11,770,000 in 2020[211]. 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 the company's products may decline due to competitive pricing pressures, which could adversely affect gross margins[47]. - The company faces significant risks in expanding international operations, including regulatory approvals and geopolitical uncertainties[70]. - The company’s operating results may be adversely affected by unfavorable economic conditions and supply chain disruptions[79]. Technology and Product Development - The company has sought to acquire complementary businesses to compete effectively, but future acquisitions may not perform as planned and could disrupt operations[51]. - The company plans to continue acquiring technologies to expedite time to market for new products[208]. - The company altered its IoT strategy in 2012 to focus on public safety, healthcare, and transportation management, enhancing its product offerings including the Pure Security Suite and PureTrack[135]. - The company currently holds 52 issued patents in the United States and 74 issued patents globally[222]. Government Contracts and Regulations - The company is subject to risks associated with government contracts, including budgetary restrictions and potential cancellation of contracts[59]. - Government regulations on radio frequency technology may delay product introductions in the U.S. and European markets[95]. - The sales cycle for government customers typically ranges from three to 24 months, while for commercial customers it ranges from one to 12 months, impacting revenue timing[76]. COVID-19 Impact - The COVID-19 pandemic has materially adversely affected the company's financial results and operations during the fiscal year ended December 31, 2021[98]. - The company is continuously monitoring operations to mitigate risks arising from the COVID-19 pandemic[103]. Shareholder and Corporate Governance - The company has a significant shareholder, Sigma Wave Ltd., owning approximately 16.1% of outstanding shares, which may influence corporate decisions[106]. - SuperCom Ltd. operates under Israeli law, which may differ from U.S. corporate governance standards, affecting shareholder rights[117][118]. Employee and Operational Challenges - The company faces high competition for qualified technical personnel, which may disrupt its operations[92]. - The company relies on third-party representatives, resellers, and distributors for marketing and distribution, which could result in delays and impact sales revenues[61]. Acquisitions and Historical Context - SuperCom Ltd. was incorporated in Israel on July 4, 1988, and has undergone several reorganizations and acquisitions since its establishment[125][126]. - The company sold its entire equity interest in a U.S. subsidiary, InkSure Technologies, Inc., for approximately 4.34 million in ordinary shares and direct expenses of about $600,000[129]. - The company has made four acquisitions in 2016 to enhance capabilities in e-Gov, IoT, and Cyber Security segments[212]. Product Offerings and Innovations - The company offers a complete end-to-end in-house solution for credentialing and verifying individuals, utilizing the MAGNA™ platform for e-passports, national identity cards, and more[169]. - The IoT division features a hybrid IoT suite tailored for industries such as public safety and healthcare, enhancing resource utilization and real-time monitoring[175]. - The PureRF Suite offers a comprehensive asset management solution using active RFID technology, enabling precise identification and tracking of people and objects[177]. - The GPS offender tracking system includes the PureTrack smartphone device and supports various communication methods, enhancing monitoring capabilities[188].
Super .(SPCB) - 2021 Q4 - Annual Report