Unassociated Document


EXHIBIT 10.1








	
Contact:

David Zigdon, CFO

(972) 3-6455004

davidz@radcom.com






RADCOM REPORTS FINANCIAL RESULTS 

FOR THE FOURTH QUARTER AND FULL YEAR 2004




-- Quarterly Sales Up 26% YOY, Full Year Sales Up 43%




TEL-AVIV, Israel—January 26, 2005-- RADCOM Ltd. (”the Company”) (NASDAQ: RDCM) today announced unaudited financial results for the fourth quarter and fiscal year ended December 31, 2004. 




Fourth Quarter 2004 Results 

Revenues for the fourth quarter of 2004 were $5,078,000, an increase of 26% compared to $4,046,000 in the fourth quarter of 2003, and the Company’s highest revenues since Q4 2000. Net loss for the fourth quarter of 2004 was $243,000, or $0.02 per share compared to a net loss of $351,000, or $0.03 per share, for the fourth quarter of 2003. 




Reported results in the fourth quarter of 2004 included a non-recurring charge of $520,000 in General and Administrative expenses. This charge was related to settlement of a patent claim that was filed against the Company. While the Company did not acknowledge any infringement of the patent, it settled the case to save time and litigation costs. 




Full Year 2004 Results 

Revenues for the fiscal year ended December 31, 2004 were $16,055,000, an increase of 43% compared to $11,203,000 for fiscal 2003, and the Company’s highest full-year revenues since 2001. Net loss for 2004 was $1,678,000, or $0.12 per share, compared to a net loss of $6,225,000, or $0.59 per share for 2003.

 

Comments of Management

Commenting on the results, Arnon Toussia-Cohen, President and CEO of RADCOM, said, “We are proud to have returned to profitability (excluding the non-recurring charge for the patent claim settlement) after four years of losses, reporting our highest quarterly revenues since Q4 2001, steady gross magins, and stable expenses. These strong results reflect significant improvement in our North American performance, together with continued worldwide growth in demand for our Cellular Performer and Omni-Q Voice Quality Management solutions. 




“As we projected, mainstream Voice Over IP and 3G deployments have brought with them the need for a new class of tools to expedite installation and manage service quality. Our 

comprehensive ‘industrial strength’ troubleshooting and monitoring solutions are proving to be exactly what operators are looking for, giving us a marked competitive edge. With average prices that are many times larger than those of our legacy products and roll-outs that span several quarters, our solutions for these markets, the Cellular Performer and Omni-Q, are bringing us to a new level of revenues while building our backlog and visibility.”




Mr. Toussia-Cohen continued, “To maintain and expand our technological leadership, we continue to enhance existing products and to develop solutions for the market’s future needs. Taken as a whole, with the right products, the right timing and fast-growing markets, we are well positioned and working to achieve the Company’s full potential.”






	 
	 	 	 
	





	 







Guidance

The following statements are forward-looking in nature, and actual results may differ materially. 




-- Revenues for the first quarter of 2005 are expected to decline slightly compared to the fourth quarter of 2004 due to the Company’s normal seasonality. However, year-over-year growth is projected for all four quarters of 2005.




-- The Company expects to record operating and net profit in each quarter of 2005.




RADCOM’s management invites you to take part in an interactive teleconference to discuss the results today, January 26th, at 9:00 a.m. Eastern Standard Time. To participate, please call 1-877-209-0397 from the U.S., or +1-612-332-0802 from international locations, approximately five minutes before the call is scheduled to begin. A replay of the call will be available from 10:45 AM Eastern Time on January 26th until
midnight February 2nd. To access the replay, please call 1-800-475-6701 from the U.S., or +1-320-365-3844 from international locations, and use the access code 765109. The conference call can also be accessed online at www.radcom.com.




RADCOM REPORTS/3




RADCOM designs, manufactures, markets and supports network test and quality management solutions for service providers, developers and enterprises worldwide. The company specializes in comprehensive performance measurement and voice quality management systems for VoIP and cellular converged networks as well as in a line of high quality, integrated, multitechnology WAN/LAN/ATM test solutions. For more information, please visit 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 which could cause the actual results, performance or achievements of the Company to be materially different from those which may be expressed or implied by such statements, including, among others, changes in general economic and business conditions and specifically, decline in demand to 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 Securities and Exchange Commission. The Company does not undertake to update forward-looking statements. 




(Financial tables follow)


	  
	 	 	 
	





	 





	
RADCOM REPORTS/4

 

RADCOM Ltd.

 

	
Consolidated Statements of Operations

	
(1000's of U.S. dollars, except per share data)



 


	 	 	
Three months ended 

December 31,
	 	
Twelve months ended 

December 31,
	 
	 	 	
2004
	 	
2003
	 	
2004
	 	
2003
	 
	 	 	
(unaudited)
	 	
(unaudited)
	 	
(unaudited)
	 	
(unaudited)
	 
	
Sales 
	 	
$
	
5,078
	 	
$
	
4,046
	 	
$
	
16,055
	 	
$
	
11,203
	 
	
Cost of sales
	 	 	
1,612 
	 	 	
1,141 
	 	 	
5,127
	 	 	
4,894
	 
	
Gross profit 
	 	 	
3,466 
	 	 	
2,905 
	 	 	
10,928
	 	 	
6,309
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Research and development, gross
	 	 	
1,376 
	 	 	
1,259 
	 	 	
5,232 
	 	 	
5,593
	 
	
Less - royalty-bearing participation
	 	 	
420
	 	 	
491 
	 	 	
1,722
	 	 	
1,997
	 
	
Research and development, net
	 	 	
956 
	 	 	
768 
	 	 	
3,510 
	 	 	
3,596
	 
	
Sales and marketing 
	 	 	
1,884 
	 	 	
2,071 
	 	 	
6,983 
	 	 	
7,411
	 
	
General and administrative
	 	 	
899 
	 	 	
439 
	 	 	
2,191
	 	 	
1,620
	 
	
Total operating expenses
	 	 	
3,739 
	 	 	
3,278 
	 	 	
12,684
	 	 	
12,627
	 
	
Operating loss
	 	 	
(273
	
)
	 	
(373
	
)
	 	
(1,756
	
)
	 	
(6,318
	
)

	
Financing income, net
	 	 	
30 
	 	 	
22 
	 	 	
78 
	 	 	
93
	 
	
Net loss
	 	 	
(243
	
)
	 	
(351
	
)
	 	
(1,678
	
)
	 	
(6,225
	
)

	
Basic loss per ordinary share 
	 	
$
	
(0.02
	
)
	
$
	
(0.03
	
)
	
$
	
(0.12
	
)
	
$
	
(0.59
	
)

	
Weighted average number of ordinary shares (basic)
	 	 	
14,417,980
	 	 	
10,496,550 
	 	 	
13,453,509 
	 	 	
10,493,184 
	 









(Additional table to follow)


	  
	 	 	 
	





	 






	
RADCOM REPORTS/5

RADCOM Ltd.

Consolidated Balance Sheets

(1000's of U.S. dollars)



 


	 	 	
As of
	 	
As of
	 
	 	 	
December 31, 2004
	 	
December 31, 
2003
	 
	 	 	
(unaudited)
	 	
(unaudited)
	 
	
Current Assets 
	 	 	 	 	 	 	 
	
Cash and cash equivalents 
	 	 	
6,558
	 	 	
5,614 
	 
	
Marketable securities
	 	 	
1,992
	 	 	
-
	 
	
Trade receivables, net 
	 	 	
5,341
	 	 	
3,769
	 
	
Inventories and inventory prepayments 
	 	 	
2,400 
	 	 	
1,739
	 
	
Other current assets 
	 	 	
880 
	 	 	
346
	 
	
Total Current Assets
	 	 	
17,171 
	 	 	
11,468
	 
	 	 	 	 	 	 	 	 
	
Assets held for severance benefits
	 	 	
1,784
	 	 	
1,449
	 
	
 
	 	 	 	 	 	 	 
	
Property and equipment, net
	 	 	
1,174
	 	 	
1,486 
	 
	
 
	 	 	 	 	 	 	 
	
Total Assets
	 	 	
20,129
	 	 	
14,403 
	 
	 	 	 	

	 	 	 	 
	
Liabilities and Shareholders' Equity
	 	 	 	 	 	 	 
	
Current Liabilities 
	 	 	 	 	 	 	 
	
Trade payables 
	 	 	
2,027 
	 	 	
1,152 
	 
	
Current deferred revenue 
	 	 	
889
	 	 	
*823
	 
	
Other payables and accrued expenses 
	 	 	
4,204
	 	 	
*3,791 
	 
	
Total Current Liabilities
	 	 	
7,120
	 	 	
5,766 
	 
	 	 	 	 	 	 	 	 
	
Long-Term Liabilities 
	 	 	 	 	 	 	 
	
Long-term deferred revenue 
	 	 	
583 
	 	 	
*235
	 
	
Liability for employees’ severance pay benefits
	 	 	
2,402
	 	 	
2,156
	 
	
Total Long-Term Liabilities
	 	 	
2,985
	 	 	
2,391
	 
	 	 	 	 	 	 	 	 
	
Total Liabilities
	 	 	
10,105
	 	 	
8,157 
	 
	 	 	 	 	 	 	 	 
	
Shareholders' Equity 
	 	 	 	 	 	 	 
	
Share capital 
	 	 	
101
	 	 	
57 
	 
	
Additional paid-in capital
	 	 	
43,698
	 	 	
38,273 
	 
	
Accumulated other comprehensive loss
	 	 	
(13
	
)
	 	
-
	 
	
Accumulated deficit
	 	 	
(33,762
	
)
	 	
(32,084
	
)

	
Total Shareholders' Equity
	 	 	
10,024 
	 	 	
6,246
	 
	 	 	 	

	 	 	 	 
	
Total Liabilities and Shareholders' Equity
	 	 	
20,129
	 	 	
14,403
	 



 

* reclassified