|  ̈ | REGISTRATION      STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT      OF 1934 |
|--------|----------------------------------------------------------------------------------------------------------|

| x | ANNUAL      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|---|------------------------------------------------------------------------------------------------|

|  ̈ | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|--------|----------------------------------------------------------------------------------------------------|

|  ̈ | SHELL      COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE      ACT OF 1934 |
|--------|-------------------------------------------------------------------------------------------------------|

| Title of Each Class                     |   | Name of Each Exchange on WhichRegistered |
|--------------------------------------------------------|--------|-------------------------------------------------------------------|
| Ordinary      Shares, NIS 0.20 parvalue      per share |   | NASDAQ      Capital Market                                        |

----

----

| ITEM      16F. | CHANGE      IN REGISTRANT’S CERTIFYINGACCOUNTANT |
|----------------|--------------------------------------------------------|

----

----

| ITEM      18. | FINANCIAL      STATEMENTS |
|---------------|---------------------------|

| Index to the Consolidated Financial      Statements                                                  |   | Page   |   |
|------------------------------------------------------------------------------------------------------|--------|--------|--------|
| Reports      of Independent Registered Public Accounting Firm                                        |   | F-2    |   |
|                                                                                                 |   |   |   |
| Consolidated      Balance Sheets at December 31, 2009 and 2008                                       |   |   |   |
|                                                                                                 |   | F-4    |   |
| Consolidated      Statements of Operations for the Years Ended December 31, 2009, 2008 and      2007 |   | F-6    |   |
|                                                                                                 |   |   |   |
| Consolidated      Statements of Changes in Shareholders’ Equity for the Years      Ended       |   | F-7    |   |
|                                                                                                 |   |   |   |
| December      31, 2009, 2008 and 2007                                                                |   |   |   |
|                                                                                                 |   |   |   |
| Consolidated      Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and      2007 |   | F-8    |   |
|                                                                                                 |   |   |   |
| Notes      to Consolidated Financial Statements                                                      |   | F-10   |   |

| ITEM      19. | EXHIBITS |
|---------------|----------|

| Exhibit No. |    | Description                                                                                                                                                                                                                                                       |
|------------------|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |         |                                                                                                                                                                                                                                                              |
| 1.1              |         | Memorandum      of Association(1)                                                                                                                                                                                                                                 |
|             |         |                                                                                                                                                                                                                                                              |
| 1.2              |         | Articles      of Association, as amended(14)                                                                                                                                                                                                                      |
|             |         |                                                                                                                                                                                                                                                              |
| 2.1              |         | Form      of ordinary share certificate(1)                                                                                                                                                                                                                        |
|             |         |                                                                                                                                                                                                                                                              |
| 4.1              |         | 2000      Share Option Plan(2)                                                                                                                                                                                                                                    |
|             |         |                                                                                                                                                                                                                                                              |
| 4.2              |         | 1998      Employee Bonus Plan(3)                                                                                                                                                                                                                                  |
|             |         |                                                                                                                                                                                                                                                              |
| 4.3              |         | 1998      Share Option Plan(4)                                                                                                                                                                                                                                    |
|             |         |                                                                                                                                                                                                                                                              |
| 4.4              |         | International      Employee Stock Option Plan(5)                                                                                                                                                                                                                  |
|             |         |                                                                                                                                                                                                                                                              |
| 4.5              |         | Directors      Share Incentive Plan (1997)(6)                                                                                                                                                                                                                     |
|             |         |                                                                                                                                                                                                                                                              |
| 4.6              |         | Key      Employee Share Incentive Plan (1996)(7)                                                                                                                                                                                                                  |
|             |         |                                                                                                                                                                                                                                                              |
| 4.7              |         | 2001      Share Option Plan(8)                                                                                                                                                                                                                                    |
|             |         |                                                                                                                                                                                                                                                              |
| 4.8              |         | 2003      Share Option Plan(9)                                                                                                                                                                                                                                    |
|             |         |                                                                                                                                                                                                                                                              |
| 4.9              |         | Lease      Agreement, dated November 15, 2000, among Vitalgo Textile Industries      Ltd., Zisapel Properties (1992) Ltd., Klil and Michael Properties (1992)      Ltd. and RADCOM  Ltd. (English summary accompanied by Hebrew      original)(10) |
|             |         |                                                                                                                                                                                                                                                              |
| 4.10             |         | Lease      Agreement, dated March 1, 2001, among Zisapel Properties (1992) Ltd.,      Klil and Michael Properties (1992) Ltd. and RADCOM  Ltd.      (English summary accompanied by Hebrew original)(10)                                           |
|             |         |                                                                                                                                                                                                                                                              |
| 4.11             |         | Lease      Agreement, dated August 12, 1998, between RAD Communications Ltd. and      RADCOM  Ltd. (English summary accompanied by Hebrew      original)(10)                                                                                       |
|             |         |                                                                                                                                                                                                                                                              |
| 4.12             |         | Lease      Agreement, dated December 1, 2000, among Zohar Zisapel Properties,      Inc., Yehuda Zisapel Properties, Inc. and RADCOM  Equipment,      Inc.(10)                                                                                      |

----

| 4.13       |   | Lease      Agreement, dated January 22, 2002, between Regus Business Centre and      RADCOM  Ltd.(11)                                                                                            |
|------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |   |                                                                                                                                                                                                       |
| 4.14       |   | Software      License Agreement, dated as of January 13, 1999, between RADVision,      Ltd. and RADCOM  Ltd., and Supplement No. 1 thereto, dated      as of January 24, 2001(10) |
|       |   |                                                                                                                                                                                                       |
| 4.15       |   | Share      and Warrant Purchase Agreement, dated as of March 17, 2004, by and between      RADCOM Ltd. and the purchasers listed therein(12)                                                               |
|       |   |                                                                                                                                                                                                       |
| 4.16       |   | Form      of Warrant(12)                                                                                                                                                                                   |
|       |   |                                                                                                                                                                                                       |
| 4.17       |   | Share      and Warrant Purchase Agreement, dated as of December 19, 2007, by and      between RADCOM Ltd. and the purchasers listed therein(13)                                                            |
|       |   |                                                                                                                                                                                                       |
| 4.18       |   | Form      of Warrant - Share and Warrant Purchase Agreement dated December 19,      2007(13)                                                                                                               |
|       |   |                                                                                                                                                                                                       |
| 4.19       |   | Loan      Agreement, dated as of April 1, 2008, by and between RADCOM Ltd., Plenus      Management (2004) and the other parties thereto(13)                                                                |
|       |   |                                                                                                                                                                                                       |
| 4.20       |   | Fixed      Charge Agreement, dated as of April 1, 2008, by and between RADCOM Ltd.,      Plenus Management (2004) and the other parties thereto(13)                                                        |
|       |   |                                                                                                                                                                                                       |
| 4.21       |   | Floating      Charge Agreement, dated as of April 1, 2008, by and between RADCOM Ltd.,      Plenus Management (2004) and the other parties thereto(13)                                                     |
|       |   |                                                                                                                                                                                                       |
| 4.22       |   | Security      Agreement, dated as of April 1, 2008, by and between RADCOM Equipment      Inc., Plenus Management (2004) and the other parties thereto(13)                                                  |
|       |   |                                                                                                                                                                                                       |
| 4.23       |   | Form      of Warrant – Loan Agreement, dated as of April 1, 2008(13)                                                                                                                                 |
|       |   |                                                                                                                                                                                                       |
| 8.1        |   | List      of Subsidiaries(14)                                                                                                                                                                              |
|       |   |                                                                                                                                                                                                       |
| 11.1       |   | Code      of Ethics(12)                                                                                                                                                                                    |
|       |   |                                                                                                                                                                                                       |
| 12.1       |   | Certification      of the Chief Executive Officer pursuant to Section 302 of the      Sarbanes-Oxley Act of 2002(15)                                                                                       |
|       |   |                                                                                                                                                                                                       |
| 12.2       |   | Certification      of the Chief Financial Officer pursuant to Section 302 of the      Sarbanes-Oxley Act of 2002(15)                                                                                       |
|       |   |                                                                                                                                                                                                       |
| 13.1       |   | Certification      of the Chief Executive Officer pursuant to Section 906 of the      Sarbanes-Oxley Act of 2002(15)                                                                                       |
|       |   |                                                                                                                                                                                                       |
| 13.2       |   | Certification      of the Chief Financial Officer pursuant to Section 906 of the      Sarbanes-Oxley Act of 2002(15)                                                                                       |
|       |   |                                                                                                                                                                                                       |
| 15.1       |   | Consent      of Somekh Chaikin, a member firm of KPMG International, dated March 25,      2010(14).                                                                                                        |
|       |   |                                                                                                                                                                                                       |
| 15.2       |   | Consent      of Kost Forer Gabbay & Kasierer, A Member of Ernst and Young Global,      dated March 25, 2010(14).                                                                                       |
|       |   |                                                                                                                                                                                                       |
| 15.3       |   | Letter      of Somekh Chaikin, a member firm of KPMG International, dated March 25,      2010.(14)                                                                                                         |
|       |   |                                                                                                                                                                                                       |
| 15.4  |   | Letter      of Somekh Chaikin, a member firm of KPMG International, dated November 2,      2010.(15)                                                                                                       |

----

----

| (1) | Incorporated      herein by reference to the Registration Statement on Form F-1 of RADCOM      Ltd. (File No. 333-05022), filed with the SEC on June 12,      1996. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Incorporated      herein by reference to the Registration Statement on Form S-8 of RADCOM      Ltd. (File No. 333-13244), filed with the SEC on March 7,      2001. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Incorporated      herein by reference to the Registration Statement on Form S-8 of RADCOM      Ltd. (File No. 333-13246), filed with the SEC on March 7,      2001. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Incorporated      herein by reference to the Registration Statement on Form S-8 of RADCOM      Ltd. (File No. 333-13248) filed with the SEC on March 7,    2001. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Incorporated      herein by reference to the Registration Statement on Form S-8 of RADCOM      Ltd. (File No. 333-13250), filed with the SEC on March 7,      2001. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Incorporated      herein by reference to the Registration Statement on Form S-8 of RADCOM      Ltd. (File No. 333-13254), filed with the SEC on March 7,      2001. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | Incorporated      herein by reference to the Registration Statement on Form S-8 of RADCOM      Ltd. (File No. 333-13252), filed with the SEC on March 7,      2001. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8) | Incorporated      herein by reference to the Registration Statement on Form S-8 of RADCOM      Ltd. (File No. 333-14236), filed with the SEC on December 28,      2001. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (9) | Incorporated      herein by reference to the Registration Statement on Form S-8 of RADCOM      Ltd. (File No. 333-111931), filed with the SEC on January 15,      2004. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (10) | Incorporated      herein by reference to the Form 20-F of RADCOM Ltd. for the fiscal year      ended December 31, 2000, filed with the SEC on June 29,    2001. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (11) | Incorporated      herein by reference to the Form 20-F of RADCOM Ltd. for the fiscal year      ended December 31, 2001, filed with the SEC on March 27,    2002. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (12) | Incorporated      herein by reference to the Form 20-F of RADCOM Ltd. for the fiscal year      ended December 31, 2003, filed with the SEC on May 6,  2004. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (13) | Incorporated      herein by reference to the Form 20-F of RADCOM Ltd. for the fiscal year      ended December 31, 2007, filed with the SEC on June 30,    2008. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (14)   | Incorporated      herein by reference to the Original Filing. |
|--------|---------------------------------------------------------------|
|   |                                                          |
| (15)   | Filed      herewith.                                     |

----

|   | RADCOM      LTD.                               |
|--------|------------------------------------------------|
|   |                                           |   |
|   | By:                                            |   /s/ DavidRipstein |
|   | Name:      David Ripstein                      |
|   | Title:  Chief      Executive Officer |
|   | Date:  November      2, 2010              |

----

----

|                                                            | Page             |
|-----------------------------------------------------------------|------------------|
|                                                            |             |
| Reports      of Independent Registered Public Accounting Firm   | F-2      - F-3   |
|                                                            |             |
| Consolidated      Balance Sheets                                | F-4      - F-5   |
|                                                            |             |
| Consolidated      Statements of Operations                      | F-6              |
|                                                            |             |
| Consolidated      Statements of Changes in Shareholders' Equity | F-7              |
|                                                            |             |
| Consolidated      Statements of Cash Flows                      | F-8      - F-9   |
|                                                            |             |
| Notes      to Consolidated Financial Statements                 | F-10      - F-36 |

----

| Tel-Aviv,      Israel | KOST FORER GABBAY & KASIERER |
|-----------------------|------------------------------------------------------|
| March      25, 2010   | A      Member of Ernst & YoungGlobal             |

----

----

----

|                                                                                                                                                                |   | December 31, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|
|                                                                                                                                                                |   | 2009              |   |   | 2008 |   |
| ASSETS                                                                                                                                                              |   |              |   |   |   |   |
|                                                                                                                                                                |   |              |   |   |   |   |
| CURRENT      ASSETS:                                                                                                                                                |   |              |   |   |   |   |
| Cash      and cash equivalents                                                                                                                                      |   | $                 | 3,274  |   |   | $ | 3,513 |   |
| Trade      receivables (net of allowances for doubtful accounts of $ 1,004 and      $ 1,059 as of December 31, 2009 and 2008, respectively) (Note      3) |   |              | 3,610  |   |   |   | 7,118 |   |
| Inventories      (Note 4)                                                                                                                                           |   |              | 2,879  |   |   |   | 2,752 |   |
| Other      current assets (Note 5)                                                                                                                                  |   |              | 607    |   |   |   | 973 |   |
|                                                                                                                                                                |   |              |   |   |   |   |   |   |
| Total current      assets                                                                                                                                           |   |              | 10,370 |   |   |   | 14,356 |   |
|                                                                                                                                                                |   |              |   |   |   |   |   |   |
| SEVERENCE      PAY FUND                                                                                                                                             |   |              | 2,495  |   |   |   | 2,496 |   |
|                                                                                                                                                                |   |              |   |   |   |   |   |   |
| PROPERTY      AND EQUIPMENT, NET (Note 6)                                                                                                                           |   |              | 575    |   |   |   | 989 |   |
|                                                                                                                                                                |   |              |   |   |   |   |   |   |
| Total      assets                                                                                                                                                   |   | $                 | 13,440 |   |   | $ | 17,841 |   |

----

----

|                                                                                                                                                                                                                            |   | December 31, |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|
|                                                                                                                                                                                                                            |   | 2009              |    |   | 2008 |   |
| LIABILITIES      AND SHAREHOLDERS' EQUITY                                                                                                                                                                                       |   |              |    |   |   |   |
|                                                                                                                                                                                                                            |   |              |    |   |   |   |
| CURRENT      LIABILITIES:                                                                                                                                                                                                       |   |              |    |   |   |   |
| Trade      payables                                                                                                                                                                                                             |   | $                 | 1,117   |   |   | $ | 2,121 |   |
| Deferred      revenue                                                                                                                                                                                                           |   |              | 478     |   |   |   | 1,057 |   |
| Current      maturities of long-term loan (Note 8)                                                                                                                                                                              |   |              | 1,022   |   |   |   | 1,167 |   |
| Other      payables and accrued expenses (Note 7)                                                                                                                                                                               |   |              | 4,781   |   |   |   | 3,817 |   |
|                                                                                                                                                                                                                            |   |              |    |   |   |   |   |   |
| Total current      liabilities                                                                                                                                                                                                  |   |              | 7,398   |   |   |   | 8,162 |   |
|                                                                                                                                                                                                                            |   |              |    |   |   |   |   |   |
| LONG-TERM      LIABILITIES:                                                                                                                                                                                                     |   |              |    |   |   |   |   |   |
| Deferred      revenue                                                                                                                                                                                                           |   |              | 85      |   |   |   | 277 |   |
| Long-term      loan net of current maturities (Note 8)                                                                                                                                                                          |   |              | 170     |   |   |   | 1,152 |   |
| Warrants      related to long term loan (Note 8)                                                                                                                                                                                |   |              | 248     |   |   |   | - |   |
| Accrued      severance pay                                                                                                                                                                                                      |   |              | 2,899   |   |   |   | 3,265 |   |
|                                                                                                                                                                                                                            |   |              |    |   |   |   |   |   |
| Total long-term      liabilities                                                                                                                                                                                                |   |              | 3,402   |   |   |   | 4,694 |   |
|                                                                                                                                                                                                                            |   |              |    |   |   |   |   |   |
| Total      liabilities                                                                                                                                                                                                          |   |              | 10,800  |   |   |   | 12,856 |   |
|                                                                                                                                                                                                                            |   |              |    |   |   |   |   |   |
| COMMITMENTS      AND CONTINGENCIES (Note 10)                                                                                                                                                                                    |   |              |    |   |   |   |   |   |
|                                                                                                                                                                                                                            |   |              |    |   |   |   |   |   |
| SHAREHOLDERS'      EQUITY (Note 12):                                                                                                                                                                                            |   |              |    |   |   |   |   |   |
| Share      capital:                                                                                                                                                                                                             |   |              |    |   |   |   |   |   |
| Ordinary      shares of NIS 0.20 par value: 9,997,670 shares authorized at      December 31, 2009 and 2008; 5,102,778 and 5,081,426 shares issued and      outstanding at December 31, 2009 and 2008,    respectively |   |              | 177     |   |   |   | 176 |   |
| Additional      paid-in capital                                                                                                                                                                                                 |   |              | 51,544  |   |   |   | 51,474 |   |
| Accumulated      deficit                                                                                                                                                                                                        |   |              | (49,081 | ) |   |   | (46,665 | ) |
|                                                                                                                                                                                                                            |   |              |    |   |   |   |   |   |
| Total      shareholders' equity                                                                                                                                                                                                 |   |              | 2,640   |   |   |   | 4,985 |   |
|                                                                                                                                                                                                                            |   |              |    |   |   |   |   |   |
| Total      liabilities and shareholders' equity                                                                                                                                                                                 |   | $                 | 13,440  |   |   | $ | 17,841 |   |

----

----

|                                                                                                               |   | Year ended December 31, |        |
|--------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|-------------|
|                                                                                                               |   | 2009                                   |        |   | 2008 |   |   | 2007 |   |
|                                                                                                               |   |                                   |        |   |   |   |   |   |   |
| Revenues      (Note 14a):                                                                                          |   |                                   |        |   |   |   |   |   |   |
| Products                                                                                                           |   | $                                      | 9,190       |   |   | $ | 12,480 |   |   | $ | 10,158 |   |
| Services                                                                                                           |   |                                   | 2,728       |   |   |   | 2,758 |   |   |   | 3,339 |   |
|                                                                                                               |   |                                   |        |   |   |   |   |   |   |   |   |   |
|                                                                                                               |   |                                   | 11,918      |   |   |   | 15,238 |   |   |   | 13,497 |   |
|                                                                                                               |   |                                   |        |   |   |   |   |   |   |   |   |   |
| Cost      of revenues :                                                                                            |   |                                   |        |   |   |   |   |   |   |   |   |   |
| Products                                                                                                           |   |                                   | 3,469       |   |   |   | 5,523 |   |   |   | 4,927 |   |
| Services                                                                                                           |   |                                   | 590         |   |   |   | 502 |   |   |   | 466 |   |
|                                                                                                               |   |                                   |        |   |   |   |   |   |   |   |   |   |
|                                                                                                               |   |                                   | 4,059       |   |   |   | 6,025 |   |   |   | 5,393 |   |
|                                                                                                               |   |                                   |        |   |   |   |   |   |   |   |   |   |
| Gross      profit                                                                                                  |   |                                   | 7,859       |   |   |   | 9,213 |   |   |   | 8,104 |   |
|                                                                                                               |   |                                   |        |   |   |   |   |   |   |   |   |   |
| Operating      expenses:                                                                                           |   |                                   |        |   |   |   |   |   |   |   |   |   |
| Research      and development                                                                                      |   |                                   | 4,223       |   |   |   | 6,506 |   |   |   | 7,378 |   |
| Less      - royalty-bearing participation (Note 10a1)                                                              |   |                                   | 1,633       |   |   |   | 2,113 |   |   |   | 2,096 |   |
|                                                                                                               |   |                                   |        |   |   |   |   |   |   |   |   |   |
| Research      and development, net                                                                                 |   |                                   | 2,590       |   |   |   | 4,393 |   |   |   | 5,282 |   |
|                                                                                                               |   |                                   |        |   |   |   |   |   |   |   |   |   |
| Selling      and marketing                                                                                         |   |                                   | 5,835       |   |   |   | 7,486 |   |   |   | 9,279 |   |
| General      and administrative                                                                                    |   |                                   | 1,643       |   |   |   | 2,818 |   |   |   | 2,391 |   |
|                                                                                                               |   |                                   |        |   |   |   |   |   |   |   |   |   |
| Total operating      expenses                                                                                      |   |                                   | 10,068      |   |   |   | 14,697 |   |   |   | 16,952 |   |
|                                                                                                               |   |                                   |        |   |   |   |   |   |   |   |   |   |
| Operating      loss                                                                                                |   |                                   | (2,209      | ) |   |   | (5,484 | ) |   |   | (8,848 | ) |
|                                                                                                               |   |                                   |        |   |   |   |   |   |   |   |   |   |
| Financial      income (expenses), net (Note 14b):                                                                  |   |                                   | (440        | ) |   |   | (309 | ) |   |   | 265 |   |
|                                                                                                               |   |                                   |        |   |   |   |   |   |   |   |   |   |
| Net      loss                                                                                                      |   | $                                      | (2,649      | ) |   | $ | (5,793 | ) |   | $ | (8,583 | ) |
|                                                                                                               |   |                                   |        |   |   |   |   |   |   |   |   |   |
| Net      loss per share:                                                                                           |   |                                   |        |   |   |   |   |   |   |   |   |   |
| Basic      and diluted net loss per Ordinary Share                                                                 |   | $                                      |  (0.52 | ) |   | $ |  (1.16 | ) |   | $ |  (2.10 | ) |
|                                                                                                               |   |                                   |        |   |   |   |   |   |   |   |   |   |
| Weighted      average number of Ordinary Shares used to compute basic and diluted net      loss per Ordinary Share |   |                                   | 5,081,986   |   |   |   | 4,995,586 |   |   |   | 4,084,789 |   |

----

----

|                                                                            |   | Share capital   |      |   | Additional |   |                  |           |   |   |               |   |
|---------------------------------------------------------------------------------|--------|----------------------|-----------|--------|------------|--------|-----------------------|----------------|--------|--------|--------------------|--------|
|                                                                            |   | Number ofshares |      |   | Amount     |   |                  | paid-incapital |   |   | Accumulateddeficit |   |   | Total |   |
|                                                                            |   |                 |      |   |       |   |                  |           |   |   |               |   |   |   |   |
| Balance      as of January 1, 2007                                              |   |                 | 4,058,069 |   |       | $      | 120                   |           |   | $      | 47,542             |   |   | $ | (32,289 | ) |   | $ | 15,373 |   |
|                                                                            |   |                 |      |   |       |   |                  |           |   |   |               |   |   |   |   |   |   |   |   |   |
| Net      loss                                                                   |   |                 | -         |   |       |   | -                     |           |   |   | -                  |   |   |   | (8,583 | ) |   |   | (8,583 | ) |
| Share-based      compensation                                                   |   |                 | -         |   |       |   | -                     |           |   |   | 564                |   |   |   | - |   |   |   | 564 |   |
| Exercise      of options                                                        |   |                 | 33,153    |   |       |   | 2                     |           |   |   | 222                |   |   |   | - |   |   |   | 224 |   |
|                                                                            |   |                 |      |   |       |   |                  |           |   |   |               |   |   |   |   |   |   |   |   |   |
| Balance      as of December 31, 2007                                            |   |                 | 4,091,222 |   |       |   | 122                   |           |   |   | 48,328             |   |   |   | (40,872 | ) |   |   | 7,578 |   |
|                                                                            |   |                 |      |   |       |   |                  |           |   |   |               |   |   |   |   |   |   |   |   |   |
| Net      loss                                                                   |   |                 | -         |   |       |   | -                     |           |   |   | -                  |   |   |   | (5,793 | ) |   |   | (5,793 | ) |
| Issuance      of shares and warrants, net of issuance expenses of $     96 |   |                 | 976,563   |   |       |   | 54                    |           |   |   | 2,350              |   |   |   | - |   |   |   | 2,404 |   |
| Issuance      of a warrant related to long-term loan (Notes 8 and 12)           |   |                 | -         |   |       |   | -                     |           |   |   | 266                |   |   |   | - |   |   |   | 266 |   |
| Share-based      compensation                                                   |   |                 | -         |   |       |   | -                     |           |   |   | 530                |   |   |   | - |   |   |   | 530 |   |
| Exercise      of options                                                        |   |                 | 13,641    |   |       |   | *)   - |           |   |   | -                  |   |   |   | - |   |   |   | - |   |
|                                                                            |   |                 |      |   |       |   |                  |           |   |   |               |   |   |   |   |   |   |   |   |   |
| Balance      as of December 31, 2008                                            |   |                 | 5,081,426 |   |       |   | 176                   |           |   |   | 51,474             |   |   |   | (46,665 | ) |   |   | 4,985 |   |
|                                                                            |   |                 |      |   |       |   |                  |           |   |   |               |   |   |   |   |   |   |   |   |   |
| Net      loss                                                                   |   |                 | -         |   |       |   | -                     |           |   |   | -                  |   |   |   | (2,649 | ) |   |   | (2,649 | ) |
| Cumulative-effect      adjustment upon adoption of ASC 815-40 relating warrants |   |                 | -         |   |       |   | -                     |           |   |   | (266               | )      |   |   | 233 |   |   |   | (33 | ) |
| Share-based      compensation                                                   |   |                 | -         |   |       |   | -                     |           |   |   | 272                |   |   |   | - |   |   |   | 272 |   |
| Exercise      of options                                                        |   |                 | 1,039     |   |       |   | *)   - |           |   |   | *)-                |   |   |   | *)- |   |   |   | *)- |   |
| Exercise      of warrants                                                       |   |                 | 20,313    |   |       |   | 1                     |           |   |   | 64                 |   |   |   | - |   |   |   | 65 |   |
|                                                                            |   |                 |      |   |       |   |                  |           |   |   |               |   |   |   |   |   |   |   |   |   |
| Balance      as of December 31, 2009                                            |   |                 | 5,102,778 |   |       | $      | 177                   |           |   | $      | 51,544             |   |   | $ | (49,081 | ) |   | $ | 2,640 |   |

----

----

|                                                                                                             |   | Year ended December 31, |                  |
|------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|-----------------------|
|                                                                                                             |   | 2009                                   |                  |   | 2008 |   |   | 2007 |   |
| Cash flows from operating      activities:                                                                       |   |                                   |                  |   |   |   |   |   |   |
|                                                                                                             |   |                                   |                  |   |   |   |   |   |   |
| Net      loss                                                                                                    |   | $                                      | (2,649                | ) |   | $ | (5,793 | ) |   | $ | (8,583 | ) |
| Adjustments      to reconcile net loss to net cash used in operating      activities:                            |   |                                   |                  |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                                                     |   |                                   | 481                   |   |   |   | 610 |   |   |   | 687 |   |
| Loss      from property and equipment                                                                            |   |                                   | -                     |   |   |   | 88 |   |   |   | - |   |
| Share-based      compensation                                                                                    |   |                                   | 272                   |   |   |   | 530 |   |   |   | 564 |   |
| Provision      for doubtful accounts                                                                             |   |                                   | -                     |   |   |   | 460 |   |   |   | 2 |   |
| Amortization      of discount on long-term loan                                                                  |   |                                   | 40                    |   |   |   | 85 |   |   |   | - |   |
| Increase      (decrease) in severance pay, net                                                                   |   |                                   | (365                  | ) |   |   | 9 |   |   |   | 51 |   |
| Decrease      (increase) in trade receivables                                                                    |   |                                   | 3,508                 |   |   |   | (1,704 | ) |   |   | 3,834 |   |
| Decrease      (increase) in other current assets                                                                 |   |                                   | 366                   |   |   |   | 130 |   |   |   | (195 | ) |
| Decrease      (increase) in inventories                                                                          |   |                                   | (167                  | ) |   |   | 584 |   |   |   | (1,141 | ) |
| Increase      (decrease) in trade payables                                                                       |   |                                   | (1,004                | ) |   |   | 865 |   |   |   | (1,099 | ) |
| Increase      (decrease) in other payables and accrued expenses                                                  |   |                                   | 937                   |   |   |   | (788 | ) |   |   | 378 |   |
| Increase      in value of warrants                                                                               |   |                                   | 215                   |   |   |   | - |   |   |   | - |   |
| Decrease      (increase) of interest on short-term bank deposits and long-term      loan                         |   |                                   | 27                    |   |   |   | (63 | ) |   |   | 73 |   |
| Increase      (decrease) in deferred revenue                                                                     |   |                                   | (771                  | ) |   |   | 31 |   |   |   | (589 | ) |
|                                                                                                             |   |                                   |                  |   |   |   |   |   |   |   |   |   |
| Net      cash provided by (used in) operating activities                                                         |   |                                   | 890                   |   |   |   | (4,956 | ) |   |   | (6,018 | ) |
|                                                                                                             |   |                                   |                  |   |   |   |   |   |   |   |   |   |
| Cash flows from investing      activities:                                                                       |   |                                   |                  |   |   |   |   |   |   |   |   |   |
|                                                                                                             |   |                                   |                  |   |   |   |   |   |   |   |   |   |
| Investment      in short-term deposits                                                                           |   |                                   | -                     |   |   |   | - |   |   |   | (2,515 | ) |
| Proceeds      from short-term deposits                                                                           |   |                                   | -                     |   |   |   | - |   |   |   | 10,502 |   |
| Purchase      of property and equipment                                                                          |   |                                   | (27                   | ) |   |   | (120 | ) |   |   | (437 | ) |
|                                                                                                             |   |                                   |                  |   |   |   |   |   |   |   |   |   |
| Net      cash provided by (used in) investing activities                                                         |   |                                   | (27                   | ) |   |   | (120 | ) |   |   | 7,550 |   |
|                                                                                                             |   |                                   |                  |   |   |   |   |   |   |   |   |   |
| Cash flows from financing      activities:                                                                       |   |                                   |                  |   |   |   |   |   |   |   |   |   |
|                                                                                                             |   |                                   |                  |   |   |   |   |   |   |   |   |   |
| Issuance      of a warrant related to long-term loan                                                             |   |                                   | -                     |   |   |   | 266 |   |   |   | - |   |
| Proceeds      from issuance of long-term loan net of issuance expenses      $ 78                            |   |                                   | -                     |   |   |   | 2,156 |   |   |   | - |   |
| Payments      of long term loan                                                                                  |   |                                   | (1,167                | ) |   |   | - |   |   |   | - |   |
| Proceeds      from issuance of ordinary shares and warrants, net of issuance expenses of      $ 96 thousand |   |                                   | -                     |   |   |   | 2,404 |   |   |   | - |   |
| Exercise      of warrants                                                                                        |   |                                   | 65                    |   |   |   | - |   |   |   | - |   |
| Exercise      of options                                                                                         |   |                                   | *)   - |   |   |   | *)   - |   |   |   | 224 |   |
|                                                                                                             |   |                                   |                  |   |   |   |   |   |   |   |   |   |
| Net      cash (used in) provided by financing activities                                                         |   |                                   | (1,102                | ) |   |   | 4,826 |   |   |   | 224 |   |
|                                                                                                             |   |                                   |                  |   |   |   |   |   |   |   |   |   |
| Increase      (decrease) in cash and cash equivalents                                                            |   |                                   | (239                  | ) |   |   | (250 | ) |   |   | 1,756 |   |
| Cash      and cash equivalents at beginning of year                                                              |   |                                   | 3,513                 |   |   |   | 3,763 |   |   |   | 2,007 |   |
|                                                                                                             |   |                                   |                  |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents at end of year                                                                    |   | $                                      | 3,274                 |   |   | $ | 3,513 |   |   | $ | 3,763 |   |

----

----

|   |                                                        |   | Year ended December 31, |      |
|--------|-------------------------------------------------------------|--------|----------------------------------------|-----------|
|   |                                                        |   | 2009                                   |      |   | 2008 |   |   | 2007 |   |
|   |                                                        |   |                                   |      |   |   |   |   |   |   |
| (a)    | Non-cash investing    activities:                           |   |                                   |      |   |   |   |   |   |   |
|   |                                                        |   |                                   |      |   |   |   |   |   |   |
|   | Purchase      of property and equipment on credit           |   | $                                      |  -   |   |   | $ |  1 |   |   | $ |  12 |   |
|   |                                                        |   |                                   |      |   |   |   |   |   |   |   |   |   |
|   | Inventories      capitalized as property and equipment, net |   | $                                      |  40  |   |   | $ |  118 |   |   | $ |  362 |   |
|   |                                                        |   |                                   |      |   |   |   |   |   |   |   |   |   |
|   |                                                        |   |                                   |      |   |   |   |   |   |   |   |   |   |
| (b)    | Cash      paid for interest                                 |   | $                                      |  258 |   |   | $ |  118 |   |   | $ |  - |   |

----

----

| NOTE      1:- | GENERAL |
|---------------|---------|

|  | a. | Radcom      Ltd. (the "Company") is an Israeli corporation that operates in one      business segment of communication networks. The Company provides      innovative network test and service monitoring solutions for      communications service providers and equipment vendors. The Company      specializes in Next Generation Wireless and Wireline technologies for      Voice, Data and Video. 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. |
|--|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | b. | The      Company generated significant losses attributable to its operations. The      Company has managed its liquidity during this time through a series of      cost reduction initiatives, including reduction in workforce, expansion of      its sales into new markets, private placement transactions and a venture      capital loan. The Company believes that its existing capital resources and      cash flows from operations will be adequate to satisfy its expected      liquidity requirements expected through the calendar year 2010. The      Company’s foregoing estimate is based, among others, on its current      backlog and on the positive trends demonstrated in most of the markets in      which it operates during the latter part of 2009. There is no assurance      that, if required, the Company will be able to raise additional capital or      reduce discretionary spending to provide the required liquidity in order      to continue as a goingconcern. |
|--|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE      2:- | SIGNIFICANT      ACCOUNTING POLICIES |
|---------------|--------------------------------------|

|   | a. | Use      of estimates: |
|--------|----|------------------------|

|   | b. | Financial      statements in U.S. dollars ("dollar" or  "dollars"): |
|--------|----|---------------------------------------------------------------------|

----

----

| NOTE      2:- | SIGNIFICANT      ACCOUNTING POLICIES (Cont.) |
|---------------|----------------------------------------------|

|   | c. | Principles      of consolidation: |
|--------|----|-----------------------------------|

|   | d. | Cash      equivalents: |
|--------|----|------------------------|

|   | e. | Concentration      of credit risk: |
|--------|----|------------------------------------|

----

----

| NOTE      2:- | SIGNIFICANT      ACCOUNTING POLICIES (Cont.) |
|---------------|----------------------------------------------|

|   | f. | Inventories: |
|--------|----|--------------|

|   | g. | Property      and equipment: |
|--------|----|------------------------------|

|                                    |   | %            |   |
|-----------------------------------------|--------|--------------|--------|
|                                    |   |         |   |
| Demonstration      and rental equipment |   | 33           |   |
| Research      and development equipment |   | 25      - 50 |   |
| Manufacturing      equipment            |   | 15      - 33 |   |
| Office      furniture and equipment     |   | 7 -      33  |   |
| Leasehold      improvements             |   | (*)          |   |

|   | *) | At the shorter of the lease period or      useful life of the leaseholdimprovement. |
|--------|----|-------------------------------------------------------------------------------------|

|   | h. | Impairment      of long-lived assets: |
|--------|----|---------------------------------------|

----

----

| NOTE      2:- | SIGNIFICANT      ACCOUNTING POLICIES (Cont.) |
|---------------|----------------------------------------------|

|   | i. | Revenue      recognition: |
|--------|----|---------------------------|

|  | 1. | Revenue      from product sales is recognized in accordance with ASC 985-605, "Software      Revenue Recognition", when the following criteria are met: (1) persuasive      evidence of an arrangement exists, (2) delivery has occurred, (3) the      vendor's fee is fixed or determinable and (4) collectability is probable.      In instances where final acceptance of the product, system, or solution is      specified by the customer, revenue is deferred until all acceptance      criteria have been met. Amounts received from customers prior to product      shipments are classified as advances from  customers. |
|--|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 2. | Most      of the Company's revenues are generated from sales to independent      distributors. The Company has a standard contract with its distributors.      Based on this contract, sales to distributors are final and distributors      have no rights of return or price protection. The Company is not a party      to the agreements between distributors and their  customers. |
|--|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 3. | The      Company also generates sales through independent representatives. These      representatives do not hold any of the Company's inventories, and they do      not buy products from the Company. The Company invoices the end-user      customers directly, collects payment directly and then pays commissions to      the representative for the sales in its  territory. |
|--|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 4. | With      its products, the Company provides a one-year warranty, which includes bug      fixing and a hardware warranty ("Warranty"). The Company records an      appropriate provision for Warranty in accordance with ASC 450      "Contingencies". After the Warranty period initially provided with the      Company's products, the Company may sell extended warranty contracts on a      standalone basis, which includes bug fixing and a hardware warranty. In      such cases, revenues attributable to the extended warranty are deferred at      the time of the initial sale and recognized ratably over the extended      contract warranty period. |
|--|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 5. | As      required by ASC 985-605, the Company determines the value of the product      component of its multiple-element arrangements (generally when selling      product with extended warranty contracts) using the residual method when      vendor specific objective evidence (VSOE) of fair value exists for the      undelivered elements. VSOE is based on the price charged when an element      is sold separately or renewed. Under the residual method, the fair value      of the undelivered elements is deferred and the remaining portion of the      arrangement fee is allocated to the delivered elements and is recognized      as revenue. |
|--|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6. | Deferred      revenues represent mainly the unrecognized fees collected for extended      warranty services. |
|--------|----|--------------------------------------------------------------------------------------------------------------|

|   | j. | Share-based      compensation: |
|--------|----|--------------------------------|

----

----

| NOTE      2:- | SIGNIFICANT      ACCOUNTING POLICIES (Cont.) |
|---------------|----------------------------------------------|

|   | 1. | The      current price of the share on the grant date is the market value of such      date; |
|--------|----|----------------------------------------------------------------------------------------------|

|   | 2. | The      dividend yield is zero percent for all relevant  years; |
|--------|----|------------------------------------------------------------------|

|   | 3. | Risk      free interest rates are asfollows: |
|--------|----|----------------------------------------------|

|                              |   | %              |   |
|-----------------------------------|--------|----------------|--------|
|                              |   |           |   |
| Year      ended December 31, 2009 |   | 1.6      - 2.7 |   |
| Year      ended December 31, 2008 |   | 2.4      - 3.5 |   |
| Year      ended December 31, 2007 |   | 3.9      - 4.9 |   |

|  | 4. | Each      option granted has an expected life of 4 - 5.5 years (as of the date of      grant); The Company currently uses simplified method until sufficient      historical exercise data will support using expected life assumptions;      and |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 5. | Expected      annual volatility is 93% - 111%, 71% - 79% and 73% - 85% for the years      ended December 31, 2009, 2008 and 2007, respectively. This is a measure of      the amount by which a price has fluctuated or is expected to fluctuate.      Actual historical changes in the market value of the Company's share were      used to calculate the volatility assumption, as management believes that      this is the best indicator of futurevolatility. |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | k. | Derivative      Instruments |
|--------|----|-----------------------------|

----

----

| NOTE      2:-  | SIGNIFICANT      ACCOUNTING POLICIES (Cont.) |
|---------------------|----------------------------------------------|

|   | l. | Allowance      for product warranty: |
|--------|----|--------------------------------------|

| Balance      at January 1, 2007                         |   | $      | 355    |   |
|---------------------------------------------------------|--------|--------|--------|--------|
|                                                    |   |   |   |   |
| Accrual      for warranties issued during the year      |   |   | 193    |   |
| Reduction      for payments and costs to satisfy claims |   |   | (328   | )      |
|                                                    |   |   |   |   |
| Balance      at December 31, 2007                       |   |   | 220    |   |
|                                                    |   |   |   |   |
| Accrual      for warranties issued during the year      |   |   | 108    |   |
| Reduction      for payments and costs to satisfy claims |   |   | (192   | )      |
|                                                    |   |   |   |   |
| Balance      at December 31, 2008                       |   |   | 136    |   |
|                                                    |   |   |   |   |
| Accrual      for warranties issued during the year      |   |   | 299    |   |
| Reduction      for payments and costs to satisfy claims |   |   | (210   | )      |
|                                                    |   |   |   |   |
| Balance      at December 31, 2009                       |   | $      | 225    |   |

|   | m. | Research      and development costs: |
|--------|----|--------------------------------------|

|   | n. | Government      grants: |
|--------|----|-------------------------|

----

----

| NOTE      2:- | SIGNIFICANT      ACCOUNTING POLICIES (Cont.) |
|---------------|----------------------------------------------|

|   | o. | Loss      per share: |
|--------|----|----------------------|

|   | p. | Income      taxes: |
|--------|----|--------------------|

|   | q. | Income      tax uncertainties: |
|--------|----|--------------------------------|

|   | r. | Cost      of revenues: |
|--------|----|------------------------|

----

----

| NOTE      2:- | SIGNIFICANT      ACCOUNTING POLICIES (Cont.) |
|---------------|----------------------------------------------|

|   | s. | Severance      pay: |
|--------|----|---------------------|

|   | t. | Recently      issued accountingpronouncements: |
|--------|----|------------------------------------------------|

----

----

| NOTE      3:-  | TRADE      RECEIVABLES, NET |
|---------------------|-----------------------------|

| Balance      at January 1, 2007   |   | $      | 690         |   |
|-----------------------------------|--------|--------|-------------|--------|
|                              |   |   |        |   |
| Additions      during 2007        |   |   | 2           |   |
| Deductions      during 2007       |   |   | (4          | )      |
|                              |   |   |        |   |
| Balance      at December 31, 2007 |   |   | 688         |   |
|                              |   |   |        |   |
| Additions      during 2008        |   |   | 460         |   |
| Deductions      during 2008       |   |   | (89         | )      |
|                              |   |   |        |   |
| Balance      at December 31, 2008 |   |   | 1,059       |   |
|                              |   |   |        |   |
| Additions      during 2009        |   |   | -           |   |
| Deductions      during 2009       |   |   | (55         | )      |
|                              |   |   |        |   |
| Balance      at December 31, 2009 |   | $      |  1,004 |   |

| NOTE      4:- | INVENTORIES |
|---------------|-------------|

|                       |   | December 31, |        |
|----------------------------|--------|-------------------|-------------|
|                       |   | 2009              |        |   | 2008 |   |
|                       |   |              |        |   |   |   |
| Raw      materials         |   | $                 | 497         |   |   | $ | 725 |   |
| Work      in process       |   |              | 588         |   |   |   | 627 |   |
| Finished      products (*) |   |              | 1,794       |   |   |   | 1,400 |   |
|                       |   |              |        |   |   |   |   |   |
|                       |   | $                 |  2,879 |   |   | $ |  2,752 |   |

|   | (*) | Includes      amounts of $ 1,637 and $ 824 for 2009 and 2008, respectively,      with respect to inventory delivered to customers but for which revenue      will be recognized in the future. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE      5:-  | OTHER      CURRENT ASSETS |
|---------------------|---------------------------|

|                                       |   | December 31, |      |
|--------------------------------------------|--------|-------------------|-----------|
|                                       |   | 2009              |      |   | 2008 |   |
|                                       |   |              |      |   |   |   |
| Value      Added Tax authorities           |   | $                 | -         |   |   | $ | 81 |   |
| Government      of Israel - OCS receivable |   |              | 112       |   |   |   | 260 |   |
| Prepaid      expenses                      |   |              | 343       |   |   |   | 424 |   |
| Others                                     |   |              | 152       |   |   |   | 208 |   |
|                                       |   |              |      |   |   |   |   |   |
|                                       |   | $                 |  607 |   |   | $ |  973 |   |

----

----

| NOTE6:-  | PROPERTY      AND EQUIPMENT, NET |
|---------------|----------------------------------|

|   | a. | Composition      of assets, grouped by major classification, is as  follows: |
|--------|----|------------------------------------------------------------------------------|

|                                    |   | December 31, |      |
|-----------------------------------------|--------|-------------------|-----------|
|                                    |   | 2009              |      |   | 2008 |   |
| Cost:                                   |   |              |      |   |   |   |
| Demonstration      and rental equipment |   | $                 | 2,092     |   |   | $ | 2,067 |   |
| Research      and development equipment |   |              | 3,667     |   |   |   | 3,647 |   |
| Manufacturing      equipment            |   |              | 1,165     |   |   |   | 1,156 |   |
| Office      furniture and equipment     |   |              | 1,040     |   |   |   | 1,042 |   |
| Leasehold      improvements             |   |              | 411       |   |   |   | 398 |   |
|                                    |   |              |      |   |   |   |   |   |
|                                    |   |              | 8,375     |   |   |   | 8,310 |   |
| Accumulated      depreciation:          |   |              |      |   |   |   |   |   |
| Demonstration      and rental equipment |   |              | 2,007     |   |   |   | 1,918 |   |
| Research      and development equipment |   |              | 3,467     |   |   |   | 3,215 |   |
| Manufacturing      equipment            |   |              | 1,070     |   |   |   | 984 |   |
| Office      furniture and equipment     |   |              | 964       |   |   |   | 939 |   |
| Leasehold      improvements             |   |              | 292       |   |   |   | 265 |   |
|                                    |   |              |      |   |   |   |   |   |
|                                    |   |              | 7,800     |   |   |   | 7,321 |   |
|                                    |   |              |      |   |   |   |   |   |
|                                    |   | $                 |  575 |   |   | $ |  989 |   |

| NOTE      7:- | OTHER      PAYABLES AND ACCRUED EXPENSES |
|---------------|------------------------------------------|

|                                      |   | December 31, |   |
|-------------------------------------------|--------|-------------------|--------|
|                                      |   | 2009              |   |   | 2008 |   |
|                                      |   |              |   |   |   |   |
| Employees      and employee institutions  |   | $                 | 1,741  |   |   | $ | 2,068 |   |
| Advances      from customers              |   |              | 1,512  |   |   |   | 228 |   |
| Royalties      - OCS payable              |   |              | 364    |   |   |   | 363 |   |
| Commissions      payable                  |   |              | 216    |   |   |   | 365 |   |
| Allowance      for product warranty       |   |              | 225    |   |   |   | 136 |   |
| Government      of Israel tax authorities |   |              | 127    |   |   |   | 59 |   |
| Others                                    |   |              | 596    |   |   |   | 598 |   |
|                                      |   |              |   |   |   |   |   |   |
|                                      |   | $                 | 4,781  |   |   | $ |  3,817 |   |

----

| RADCOM      LTD. AND ITS SUBSIDIARIES            |
|--------------------------------------------------|
| (An      Israeli Corporation)                    |
| NOTES TO CONSOLIDATED FINANCIAL      STATEMENTS  |
| U.S.      dollars in thousands, except sharedata |

| NOTE      8:- | LONG-TERM      VENTURE LOAN |
|---------------|-----------------------------|

----

| RADCOM      LTD. AND ITS SUBSIDIARIES            |
|--------------------------------------------------|
| (An      Israeli Corporation)                    |
| NOTES TO CONSOLIDATED FINANCIAL      STATEMENTS  |
| U.S.      dollars in thousands, except sharedata |

| NOTE      8:- | LONG-TERM      VENTURE LOAN (Cont.) |
|---------------|-------------------------------------|

| NOTE      9:- | RELATED      PARTY BALANCES AND TRANSACTIONS |
|---------------|----------------------------------------------|

|  | a. | The      Company carries out transactions with related parties as detailed below.      Certain principal shareholders of the Company are also principal      shareholders of affiliates known as the RAD-BYNET Group. The Company's      transactions with related parties are carried out on an arm's-length      basis. |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 1. | Certain      premises occupied by the Company and the US subsidiary are rented from      related parties (see Note 10b). The US subsidiary also sub-leases certain      premises to a related party. The aggregate net amounts of lease payments      were $ 497, $ 517 and $ 521 in 2009, 2008 and 2007,      respectively. |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 2. | Certain      entities within the RAD-BYNET Group provide the Company with      administrative services. Such amounts expensed by the Company are      disclosed in c below as "Cost of sales, Sales and marketing, General and      administrative expenses". Additionally, certain entities within the      RAD-BYNET Group perform research and development on behalf of the Company.      Such amounts expensed by the Company are disclosed in c below as "Research      and development". |
|--|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 3. | The      Company purchases from certain entities within the RAD-BYNET Group      software packages included in the Company's products and is thus      incorporated into its product line. Such purchases by the Company are      disclosed in c as "Cost of sales" and as "Research and      development". |
|--|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 4. | The      Company is party to a distribution agreement with Bynet Electronics Ltd.      ("BYNET"), a related party, giving BYNET the exclusive right to distribute      the Company's products inIsrael. |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| RADCOM      LTD. AND ITS SUBSIDIARIES            |
|--------------------------------------------------|
| (An      Israeli Corporation)                    |
| NOTES TO CONSOLIDATED FINANCIAL      STATEMENTS  |
| U.S.      dollars in thousands, except sharedata |

| NOTE      9:- | RELATED      PARTY BALANCES AND TRANSACTIONS(Cont.) |
|---------------|-----------------------------------------------------|

|  | b. | Balances      with related parties: |
|--|----|-------------------------------------|

|                                     |   | December 31, |   |
|------------------------------------------|--------|-------------------|--------|
|                                     |   | 2009              |   |   | 2008 |   |
| Receivables:                             |   |              |   |   |   |   |
| Trade                                    |   | $                 | 453    |   |   | $ | 88 |   |
| Other      current assets                |   | $                 | 42     |   |   | $ | 54 |   |
|                                     |   |              |   |   |   |   |   |   |
| Accounts      payable:                   |   |              |   |   |   |   |   |   |
| Trade                                    |   | $                 | 31     |   |   | $ | 37 |   |
| Other      payables and accrued expenses |   | $                 | 280    |   |   | $ | 167 |   |

|  | c. | Expenses      to or income from relatedparties: |
|--|----|-------------------------------------------------|

|                            |   | Year ended December 31, |   |
|---------------------------------|--------|----------------------------------------|--------|
|                            |   | 2009                                   |   |   | 2008 |   |   | 2007 |   |
|                            |   |                                   |   |   |   |   |   |   |   |
| Revenues                        |   | $                                      | 383    |   |   | $ | 188 |   |   | $ | 407 |   |
|                            |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Expenses:                       |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Cost      of sales              |   | $                                      | 16     |   |   | $ | 246 |   |   | $ | 104 |   |
|                            |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Operating      expenses:        |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Research      and development   |   | $                                      | 197    |   |   | $ | 235 |   |   | $ | 222 |   |
| Sales      and marketing        |   | $                                      | 209    |   |   | $ | 218 |   |   | $ | 196 |   |
| General      and administrative |   | $                                      | 62     |   |   | $ | 78 |   |   | $ | 88 |   |

|  | d. | Acquisition      of fixed assets from related parties amounted to $ 1, $ 39 and      $ 24 in the years ended December 31, 2009, 2008 and 2007,      respectively. |
|--|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE      10:- | COMMITMENTS      AND CONTINGENCIES |
|----------------|------------------------------------|

|  | a. | Royalty      commitments: |
|--|----|---------------------------|

|  | 1. | The      Company receives research and development grants from the OCS. In      consideration for the research and development grants received from the      OCS, the Company has undertaken to pay royalties as a percentage of      revenues from products developed from research and development projects      financed. Royalty rates were 3.5% in 2004 and subsequent years. If the      Company will not generate sales of products developed with funds provided      by the OCS, the Company is not obligated to pay royalties or repay the      grants. |
|--|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| RADCOM      LTD. AND ITS SUBSIDIARIES            |
|--------------------------------------------------|
| (An      Israeli Corporation)                    |
| NOTES TO CONSOLIDATED FINANCIAL      STATEMENTS  |
| U.S.      dollars in thousands, except sharedata |

| NOTE      10:- | COMMITMENTS      AND CONTINGENCIES (Cont.) |
|----------------|--------------------------------------------|

|  | 2. | According      to the Company's agreements with the Israel - US Bi-National Industrial      Research and Development Foundation ("BIRD-F"), the Company is required to      pay royalties at a rate of 5% of sales of products developed with funds      provided by the BIRD-F, up to an amount equal to 150% of BIRD-F's grant      (linked to the United States Consumer Price Index) relating to such      products. The last funds from the BIRD-F were received in 1996. In the      event the Company does not generate sales of products developed with funds      provided by BIRD-F, the Company is not obligated to pay royalties or repay      the grants. |
|--|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | b. | Operating      leases: |
|--|----|------------------------|

|  | 1. | Premises      occupied by the Company and the US Subsidiary are rented under various      rental agreements part of which are with related parties (see Note 9)      . |
|--|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Year ended December 31 |   |   |   |
|---------------------------------------|--------|--------|--------|
|                                  |   |   |   |
| 2010                                  |   | $      | 596    |   |
| 2011                                  |   | $      | 477    |   |
| 2012                                  |   | $      | 481    |   |

----

| RADCOM      LTD. AND ITS SUBSIDIARIES            |
|--------------------------------------------------|
| (An      Israeli Corporation)                    |
| NOTES TO CONSOLIDATED FINANCIAL      STATEMENTS  |
| U.S.      dollars in thousands, except sharedata |

| NOTE      10:- | COMMITMENTS      AND CONTINGENCIES (Cont.) |
|----------------|--------------------------------------------|

|  | 2. | The      Company leases motor vehicles under operating leases. The leases typically      run for an initial period of three years with an option to renew the      leases after that date. |
|--|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Year ended December 31 |   |   |   |
|---------------------------------------|--------|--------|--------|
|                                  |   |   |   |
| 2010                                  |   |   | 327    |   |
| 2011                                  |   |   | 262    |   |
| 2012                                  |   |   | 173    |   |
| 2013                                  |   |   | 34     |   |

|  | c. | Bank      guarantee: |
|--|----|----------------------|

|  | d. | Guarantees      and charges - Plenus: |
|--|----|---------------------------------------|

| NOTE      11:- | INCOME      TAXES |
|----------------|-------------------|

|  | a. | Israel      Tax Reform: |
|--|----|-------------------------|

----

| RADCOM      LTD. AND ITS SUBSIDIARIES            |
|--------------------------------------------------|
| (An      Israeli Corporation)                    |
| NOTES TO CONSOLIDATED FINANCIAL      STATEMENTS  |
| U.S.      dollars in thousands, except sharedata |

| NOTE      11:- | INCOME      TAXES (Cont.) |
|----------------|---------------------------|

|  | b. | Tax      benefits under the Israeli Law for the Encouragement of Capital      Investments, 1959: |
|--|----|--------------------------------------------------------------------------------------------------|

|  | 1. | The      Law for the Encouragement of Capital Investments, 1959, ("the Law"),      provides that a capital investment in eligible facilities may, upon      application to the Investment Center of the Ministry of Industry and      Commerce of the State of Israel, be designated as an "Approved      Enterprise". |
|--|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| RADCOM      LTD. AND ITS SUBSIDIARIES            |
|--------------------------------------------------|
| (An      Israeli Corporation)                    |
| NOTES TO CONSOLIDATED FINANCIAL      STATEMENTS  |
| U.S.      dollars in thousands, except sharedata |

| NOTE      11:- | INCOME      TAXES (Cont.) |
|----------------|---------------------------|

|  | 2. | Programs: |
|--|----|-----------|

|  | c. | Measurement      of results for tax purposes under the Israeli Inflationary Adjustments      Law, 1985 (the "Inflationary AdjustmentsLaw"): |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------|

|  | d. | Tax      assessments: |
|--|----|-----------------------|

|  | e. | Tax      loss carryforward: |
|--|----|-----------------------------|

----

| RADCOM      LTD. AND ITS SUBSIDIARIES            |
|--------------------------------------------------|
| (An      Israeli Corporation)                    |
| NOTES TO CONSOLIDATED FINANCIAL      STATEMENTS  |
| U.S.      dollars in thousands, except sharedata |

| NOTE      11:- | INCOME      TAXES (Cont.) |
|----------------|---------------------------|

|  | f. | US      subsidiary: |
|--|----|---------------------|

|  | 1. | The      US subsidiary is taxed under United States federal and state tax      rules. |
|--|----|---------------------------------------------------------------------------------------|

|  | 2. | The      US subsidiary's tax loss carry forward amounted to approximately      $ 11,021 as of December 31, 2009 for federal and state tax purposes.      Such losses are available to offset any future US taxable income of the US      subsidiary and will expire in the years 2010-2027 for federal tax      purpose and in the years 2010-2014 for state tax    purpose. |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 3. | The      US subsidiary has not received final tax assessments since incorporation.      In accordance with the tax laws, tax returns submitted up to and including      the 2004 tax year can be regarded asfinal. |
|--|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | g. | Deferred      taxes: |
|--|----|----------------------|

|                                 |   | December 31 |    |
|--------------------------------------|--------|------------------|---------|
|                                 |   | 2009             |    |   | 2008 |   |
| Deferred      tax assets:            |   |             |    |   |   |   |
| Carryforward      tax losses         |   | $                | 12,004  |   |   | $ | 13,782 |   |
| Allowance      for doubtful accounts |   |             | 253     |   |   |   | 263 |   |
| Severance      pay                   |   |             | 73      |   |   |   | 192 |   |
| Vacation      pay                    |   |             | 222     |   |   |   | 272 |   |
| Research      and development        |   |             | 440     |   |   |   | 495 |   |
| Other                                |   |             | 1       |   |   |   | 52 |   |
|                                 |   |             |    |   |   |   |   |   |
|                                 |   |             | 12,993  |   |   |   | 15,056 |   |
| Less      - valuation allowance      |   |             | (12,993 | ) |   |   | (15,056 | ) |
|                                 |   |             |    |   |   |   |   |   |
| Net      deferred tax assets         |   | $                | -       |   |   | $ |  - |   |

----

| RADCOM      LTD. AND ITS SUBSIDIARIES            |
|--------------------------------------------------|
| (An      Israeli Corporation)                    |
| NOTES TO CONSOLIDATED FINANCIAL      STATEMENTS  |
| U.S.      dollars in thousands, except sharedata |

| NOTE      11:- | INCOME      TAXES (Cont.) |
|----------------|---------------------------|

|  | h. | The      components of loss before income taxes are as  follows: |
|--|----|------------------------------------------------------------------|

|                          |   | Year ended December 31, |   |
|-------------------------------|--------|----------------------------------------|--------|
|                          |   | 2009                                   |   |   | 2008 |   |   | 2007 |   |
|                          |   |                                   |   |   |   |   |   |   |   |
| Israel                        |   | $                                      | (2,721 | ) |   | $ | (5,876 | ) |   | $ | (8,694 | ) |
| US                            |   |                                   | 72     |   |   |   | 83 |   |   |   | 111 |   |
|                          |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Loss      before income taxes |   | $                                      | (2,649 | ) |   | $ | (5,793 | ) |   | $ | (8,583 | ) |

|  | i. | Reconciliation      of the theoretical tax benefit and the actual tax  expense: |
|--|----|---------------------------------------------------------------------------------|

|                                                                                                              |   | Year ended December 31, |    |
|-------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|---------|
|                                                                                                              |   | 2009                                   |    |   | 2008 |   |   | 2007 |   |
|                                                                                                              |   |                                   |    |   |   |   |   |   |   |
| Loss      before income taxes, as reported in the statements of      operations                                   |   | $                                      | (2,649  | ) |   | $ | (5,793 | ) |   | $ | (8,583 | ) |
|                                                                                                              |   |                                   |    |   |   |   |   |   |   |   |   |   |
| Statutory      tax rate in Israel                                                                                 |   |                                   | 26      | % |   |   | 27 | % |   |   | 29 | % |
|                                                                                                              |   |                                   |    |   |   |   |   |   |   |   |   |   |
| Theoretical      tax benefit                                                                                      |   | $                                      | (689    | ) |   |   | (1,564 | ) |   |   | (2,489 | ) |
|                                                                                                              |   |                                   |    |   |   |   |   |   |   |   |   |   |
| Increase      (decrease) in income taxes resulting from:                                                          |   |                                   |    |   |   |   |   |   |   |   |   |   |
| Tax      rate differential on US subsidiary                                                                       |   |                                   | 10      |   |   |   | 11 |   |   |   | (99 | ) |
| Non-deductible      share-based compensation and other operating expenses                                         |   |                                   | 94      |   |   |   | 182 |   |   |   | 246 |   |
| Losses      and timing differences for which no deferred taxes were      recorded                                 |   |                                   | 598     |   |   |   | 1,340 |   |   |   | 2,966 |   |
| Utilization      of tax losses in respect of which deferred tax assets were not recorded in      prior years      |   |                                   | -       |   |   |   | (35 | ) |   |   | (31 | ) |
| Differences      in taxes arising from differences between Israeli currency income and      dollar income, net *) |   |                                   | (13     | ) |   |   | 66 |   |   |   | (593 | ) |
|                                                                                                              |   |                                   |    |   |   |   |   |   |   |   |   |   |
| Income      taxes                                                                                                 |   | $                                      |  - |   |   | $ |  - |   |   | $ |  - |   |

|  | *) | In      2007 difference also resulted from differences between the changes in the      Israeli CPI (the basis for computation of taxable income of the Company)      and the exchange rate of Israeli currency relative to the dollar. Refer to      c above. |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| RADCOM      LTD. AND ITS SUBSIDIARIES            |
|--------------------------------------------------|
| (An      Israeli Corporation)                    |
| NOTES TO CONSOLIDATED FINANCIAL      STATEMENTS  |
| U.S.      dollars in thousands, except sharedata |

| NOTE      11:- | INCOME      TAXES (Cont.) |
|----------------|---------------------------|

|  | i. | Accounting      for uncertainty in incometaxes: |
|--|----|-------------------------------------------------|

| NOTE      12:- | SHAREHOLDERS'      EQUITY |
|----------------|---------------------------|

|  | a. | Share      capital: |
|--|----|---------------------|

|  | 1. | The      Company's share capital is comprised of the  following: |
|--|----|------------------------------------------------------------------|

|                                           |   | December 31, 2009 |
|------------------------------------------------|--------|-----------------------------|
|                                           |   | Authorized                  |   | Issued |   | Outstanding |
|                                           |   | Number of shares  |
|                                           |   |                        |   |   |   |   |
| Ordinary      shares of NIS 0.20 par value (i) |   |                        | 9,997,670 |   | *) 5,102,778 |   | *)5,102,778 |

|                                           |   | December 31, 2008 |
|------------------------------------------------|--------|-----------------------------|
|                                           |   | Authorized                  |   | Issued |   | Outstanding |
|                                           |   | Number of shares  |
|                                           |   |                        |   |   |   |   |
| Ordinary      shares of NIS 0.20 par value (i) |   |                        | 9,997,670 |   | *) 5,081,426 |   | *)5,081,426 |

|  | *) | This      number does not include 5,189 Ordinary shares, which are held by a      subsidiary, and 30,843 Ordinary shares which are held by the      Company. |
|--|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (i) | Ordinary      shares confer all rights to their holders, e.g. voting, equity and receipt      of dividend. In March and April 2001, the Company purchased 30,843 shares      of the Company's Ordinary shares in the over-the-counter market. This      purchase was approved by the Tel Aviv-Jaffa District  Court. |
|--|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 2. | On      February 3, 2008, the Company entered into a private placement transaction      (the "PIPE 2008"). Under the PIPE investment, the Company issued 976,563      Ordinary shares to investors (investors in the PIPE 2008 included certain      existing shareholders and directors of the Company) at an aggregate      purchase price of $ 2,500 or $ 2.56 per Ordinary share. The      Company also issued to the investors warrants to purchase one Ordinary      share for every three Ordinary shares purchased by each investor in the      PIPE 2008 (up to 325,520 shares) for an exercise price of $ 3.20 per      Ordinary share. The warrants are exercisable for three years from the      closing of the PIPE 2008. As at December 31, 2009, 20,313 warrants were      exercised. |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| RADCOM      LTD. AND ITS SUBSIDIARIES            |
|--------------------------------------------------|
| (An      Israeli Corporation)                    |
| NOTES TO CONSOLIDATED FINANCIAL      STATEMENTS  |
| U.S.      dollars in thousands, except sharedata |

| NOTE      12:- | SHAREHOLDERS'      EQUITY (Cont.) |
|----------------|-----------------------------------|

|  | 3. | On      April 1, 2008, in connection with the venture loan, the Company granted      Plenus warrants to purchase up to 175,781 Ordinary shares with an exercise      price of $ 2.56 per Ordinary share for a total amount of $ 450.      As more fully explained in Note 8 the proceeds from the issuance of the      loan were allocated between the debt and the warrants instrument based on      relative fair value. As of December 31, 2008 in accordance with 815-40-25      "Derivative and Hedging", the warrants met the criteria for equity      classification and were presented in the balance sheet in      equity. |
|--|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 4. | On      May 6, 2008, the Company's shareholders approved a one-to-four reverse      share split. The purpose of the reverse share split was to enable the      Company to continue to comply with the minimum $ 1.00 bid price of      the Nasdaq Capital Market. The reverse share split became effective on      June 16, 2008. Immediately after the reverse share split, the total number      of Ordinary shares was reduced from 20,303,638 to 5,076,174. Share and per      share amounts for all periods herein have been restated in order to      reflect the impact of such reverse sharesplit. |
|--|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | b. | Share      option plans: |
|--|----|--------------------------|

|  | 1. | The      Company has granted options under option plans as  follows: |
|--|----|----------------------------------------------------------------------|

|  | a) | The      Radcom Ltd. 1998 Share Option Plan (the "Radcom 3(9)    Plan"): |
|--|----|--------------------------------------------------------------------------|

|  | b) | The      Radcom Ltd. International Employee Stock Option Plan (the "International      Plan"): |
|--|----|------------------------------------------------------------------------------------------------|

|  | c) | The      2000 Share Option Plan: |
|--|----|----------------------------------|

----

| RADCOM      LTD. AND ITS SUBSIDIARIES            |
|--------------------------------------------------|
| (An      Israeli Corporation)                    |
| NOTES TO CONSOLIDATED FINANCIAL      STATEMENTS  |
| U.S.      dollars in thousands, except sharedata |

| NOTE      12:- | SHAREHOLDERS'      EQUITY (Cont.) |
|----------------|-----------------------------------|

|  | d) | The      2001 Share Option Plan: |
|--|----|----------------------------------|

|  | e) | The      2003 Share Option Plan: |
|--|----|----------------------------------|

|  | 2. | Grants      in 2009, 2008 and 2007 were at exercise prices equal to the market value      of the Ordinary shares at the date ofgrant. |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------|

|  | 3. | Following      is the stock option data as of December 31, 2009 and 2008, by      plan: |
|--|----|-----------------------------------------------------------------------------------------|

|                        |   | December 31, 2009 |    |
|-----------------------------|--------|-----------------------------|---------|
|                        |   | Vested                      |    |   | Unvested |   |   | Exerciseprice |   |   | Vestingperiod |   |   | Expiration(fromresolutiondate) |   |
|                        |   | Number of options |    |   | $ |   |   | Years |   |
|                        |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |
| International      Plan     |   |                        | 62,398  |   |   |   | 37,930 |   |   |   | 0 -      11.9 |   |   |   | 3 -      4 |   |   |   | 7 -      10 |   |
| 2000      Share Option Plan |   |                        | 29,500  |   |   |   | - |   |   |   | 0 -      24.5 |   |   |   | 3 |   |   |   | 10 |   |
| 2001      Share Option Plan |   |                        | 6,563   |   |   |   | - |   |   |   | 7.4 |   |   |   | 4 |   |   |   | 10 |   |
| 2003      Share Option Plan |   |                        | 161,641 |   |   |   | 571,329 |   |   |   | 0.5      - 8.7 |   |   |   | 3 -      4 |   |   |   | 7 -      10 |   |
|                        |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                        |   |                        | 260,102 |   |   |   | 609,259 |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                        |   | December 31, 2008 |    |
|-----------------------------|--------|-----------------------------|---------|
|                        |   | Vested                      |    |   | Unvested |   |   | Exerciseprice |   |   | Vestingperiod |   |   | Expiration(fromresolutiondate) |   |
|                        |   | Number of options |    |   | $ |   |   | Years |   |
|                        |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Radcom      3(9) Plan       |   |                        | 28,750  |   |   |   | - |   |   |   | 12.5      - 23 |   |   |   | 3 -      6 |   |   |   | 10 |   |
| International      Plan     |   |                        | 57,114  |   |   |   | 29,402 |   |   |   | 0 -      11.9 |   |   |   | 3 -      4 |   |   |   | 7 -      10 |   |
| 2000      Share Option Plan |   |                        | 49,714  |   |   |   | - |   |   |   | 0 -      24.5 |   |   |   | 3 |   |   |   | 10 |   |
| 2001      Share Option Plan |   |                        | 37,688  |   |   |   | - |   |   |   | 5.8      - 7.4 |   |   |   | 3 -      4 |   |   |   | 10 |   |
| 2003      Share Option Plan |   |                        | 235,772 |   |   |   | 303,598 |   |   |   | 0.9      - 18.3 |   |   |   | 2 -      4 |   |   |   | 7 -      10 |   |
|                        |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                        |   |                        | 409,038 |   |   |   | 333,000 |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| RADCOM      LTD. AND ITS SUBSIDIARIES            |
|--------------------------------------------------|
| (An      Israeli Corporation)                    |
| NOTES TO CONSOLIDATED FINANCIAL      STATEMENTS  |
| U.S.      dollars in thousands, except sharedata |

| NOTE      12:- | SHAREHOLDERS'      EQUITY (Cont.) |
|----------------|-----------------------------------|

|  | 4. | Stock      options under the Radcom plans are as follows for the periods      indicated: |
|--|----|------------------------------------------------------------------------------------------|

|                                             |   | Number ofoptions |     |    | Weightedaverageexerciseprice |   |
|--------------------------------------------------|--------|-----------------------|----------|---------|------------------------------|--------|
|                                             |   |                  |     |    | $                            |   |
|                                             |   |                  |     |    |                         |   |
| Options      outstanding as of January 1, 2007   |   |                  | 667,455  |    |                         |   | 9.9 |   |
|                                             |   |                  |     |    |                         |   |   |   |
| Granted                                          |   |                  | 248,515  |    |                         |   | 5.5 |   |
| Exercised                                        |   |                  | (33,153  | )       |                         |   | 6.7 |   |
| Expired                                          |   |                  | (58,606  | )       |                         |   | 16.96 |   |
| Forfeited                                        |   |                  | (50,322  | )       |                         |   | 8.2 |   |
|                                             |   |                  |     |    |                         |   |   |   |
| Options      outstanding as of December 31, 2007 |   |                  | 773,889  |    |                         |   | 8.17 |   |
|                                             |   |                  |     |    |                         |   |   |   |
| Granted                                          |   |                  | 175,377  |    |                         |   | 2.7 |   |
| Exercised                                        |   |                  | (13,641  | )       |                         |   | - |   |
| Expired                                          |   |                  | (35,000  | )       |                         |   | 9.5 |   |
| Forfeited                                        |   |                  | (158,587 | )       |                         |   | 10.7 |   |
|                                             |   |                  |     |    |                         |   |   |   |
| Options      outstanding as of December 31, 2008 |   |                  | 742,038  |    |                         |   | 6.9 |   |
|                                             |   |                  |     |    |                         |   |   |   |
| Granted                                          |   |                  | 551,264  |    |                         |   | 0.8 |   |
| Exercised                                        |   |                  | (1,039   | )  |                         |   | - |   |
| Expired                                          |   |                  | (10,000  | )  |                         |   | 12.3 |   |
| Forfeited                                        |   |                  | (412,902 | )       |                         |   | 6.4 |   |
|                                             |   |                  |     |    |                         |   |   |   |
| Options      outstanding as of December 31, 2009 |   |                  | 869,361  |    |                         |   | 3.2 |   |

|                                                  |   | Numberof options |    |   | Weightedaverageexerciseprice |   |   | Weightedaverageremainingcontractuallife |   |   | Aggregateintrinsicvalue |   |
|-------------------------------------------------------|--------|-----------------------|---------|--------|------------------------------|--------|--------|-----------------------------------------|--------|--------|-------------------------|--------|
|                                                  |   |                  |    |   | $                            |   |   | In years                           |   |   | $                       |   |
|                                                  |   |                  |    |   |                         |   |   |                                    |   |   |                    |   |
| Vested      and expected to vest at December 31, 2009 |   |                  | 761,829 |   |                         |   | 1.3    |                                    |   |   | 6.2                     |   |   |   | 389 |   |

|  | (1) | At      December 31, 2009, 2008 and 2007, the number of options exercisable was      260,102, 409,038 and 436,702 respectively, and the total number of shares      available for future grants as of December 31, 2009 was      883,304. |
|--|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (2) | The      aggregate intrinsic value of options exercised during 2009, 2008 and 2007      was approximately $ 2, $ 8 and $ 147,      respectively. |
|--|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| RADCOM      LTD. AND ITS SUBSIDIARIES            |
|--------------------------------------------------|
| (An      Israeli Corporation)                    |
| NOTES TO CONSOLIDATED FINANCIAL      STATEMENTS  |
| U.S.      dollars in thousands, except sharedata |

| NOTE      12:- | SHAREHOLDERS'      EQUITY (Cont.) |
|----------------|-----------------------------------|

|  | 5. | Stock      options under the Radcom plans are as follows for the periods      indicated: |
|--|----|------------------------------------------------------------------------------------------|

|               |   | Options outstandingat December 31, 2009 |    |   | Options exercisableat December 31, 2009 |   |
|--------------------|--------|-------------------------------------------------------------|---------|--------|-------------------------------------------------------------|--------|
| Exerciseprice      |   | Numberoutstanding                                           |    |   | Weightedaverageexerciseprice                                |   |   | Weightedaverageremainingcontractuallife |   |   | Numberoutstanding |   |   | Weightedaverageexerciseprice |   |   | Weightedaverageremainingcontractuallife |   |
| $                  |   |                                                        |    |   | $                                                           |   |   | In years |   |   |   |   |   | $ |   |   | In years |   |
|               |   |                                                        |    |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 0.00               |   |                                                        | 9,687   |   |                                                        |   | - |   |   |   | 0.6 |   |   |   | 9,687 |   |   |   | - |   |   |   | 0.6 |   |
| 0.5      - 0.7     |   |                                                        | 456,851 |   |                                                        |   | 0.7 |   |   |   | 6.1 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| 1.57      - 4.88   |   |                                                        | 193,400 |   |                                                        |   | 3.0 |   |   |   | 5.3 |   |   |   | 76,735 |   |   |   | 3.8 |   |   | 4.4` |   |
| 5.08-8.72          |   |                                                        | 171,923 |   |                                                        |   | 7.1 |   |   |   | 4.9 |   |   |   | 138,367 |   |   |   | 7.3 |   |   |   | 4.9 |   |
| 10.52      - 11.88 |   |                                                        | 17,500  |   |                                                        |   | 11.2 |   |   |   | 4.4 |   |   |   | 15,313 |   |   |   | 11.1 |   |   |   | 4.5 |   |
| 24.5               |   |                                                        | 20,000  |   |                                                        |   | 24.5 |   |   |   | 0.6 |   |   |   | 20,000 |   |   |   | 24.5 |   |   |   | 0.6 |   |
|               |   |                                                        |    |   |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|               |   |                                                        | 869,361 |   |                                                        |   |   |   |   |   |   |   |   |   | 260,102 |   |   |   |   |   |   |   |   |   |

|  | 6. | The      weighted average fair values of options granted during the years ended      December 31, 2009, 2008 and 2007were: |
|--|----|----------------------------------------------------------------------------------------------------------------------------|

|                                            |   | Year ended December 31, |   |
|-------------------------------------------------|--------|----------------------------------------|--------|
|                                            |   | 2009                                   |   |   | 2008 |   |   | 2007 |   |
|                                            |   |                                   |   |   |   |   |   |   |   |
| Weighted      average fair values on grant date |   |                                   | 0.6    |   |   |   | 1.7 |   |   |   | 3.6 |   |

|  | 7. | The      following table summarizes the departmental allocation of the Company's      share-based compensationcharge: |
|--|----|-----------------------------------------------------------------------------------------------------------------------|

|                            |   | Year ended December 31, |      |
|---------------------------------|--------|----------------------------------------|-----------|
|                            |   | 2009                                   |      |   | 2008 |   |   | 2007 |   |
|                            |   |                                   |      |   |   |   |   |   |   |
| Cost      of sales              |   | $                                      | 16        |   |   | $ | 18 |   |   | $ | 18 |   |
| Research      and development   |   |                                   | 53        |   |   |   | 114 |   |   |   | 123 |   |
| Selling      and marketing      |   |                                   | 86        |   |   |   | 177 |   |   |   | 203 |   |
| General      and administrative |   |                                   | 117       |   |   |   | 221 |   |   |   | 220 |   |
|                            |   |                                   |      |   |   |   |   |   |   |   |   |   |
|                            |   | $                                      |  272 |   |   | $ |  530 |   |   | $ |  564 |   |

----

| RADCOM      LTD. AND ITS SUBSIDIARIES            |
|--------------------------------------------------|
| (An      Israeli Corporation)                    |
| NOTES TO CONSOLIDATED FINANCIAL      STATEMENTS  |
| U.S.      dollars in thousands, except sharedata |

| NOTE      12:- | SHAREHOLDERS'      EQUITY (Cont.) |
|----------------|-----------------------------------|

|  | c. | Share-based      compensation: |
|--|----|--------------------------------|

| NOTE      13:- | FINANCIAL      INSTRUMENTS AND RISK MANAGEMENT |
|----------------|------------------------------------------------|

|  | a. | Concentrations      of business risk: |
|--|----|---------------------------------------|

|  | b. | Monetary      balances in non-dollarcurrencies: |
|--|----|-------------------------------------------------|

|                     |   | December 31, 2009            |   |
|--------------------------|--------|----------------------------------------|--------|
|                     |   | Israeli currency                  |   |   | Other |   |
|                     |   | Not linked tothe dollar |   |   | Linked tothe dollar |   |   | Non-dollarcurrency |   |
|                     |   |                                   |   |   |   |   |   |   |   |
| Current      assets      |   | $                                      | 616    |   |   | $ | - |   |   | $ | 1,816 |   |
| Current      liabilities |   | $                                      | 1,767  |   |   | $ | 364 |   |   | $ | 45 |   |

----

| RADCOM      LTD. AND ITS SUBSIDIARIES            |
|--------------------------------------------------|
| (An      Israeli Corporation)                    |
| NOTES TO CONSOLIDATED FINANCIAL      STATEMENTS  |
| U.S.      dollars in thousands, except sharedata |

| NOTE      13:- | FINANCIAL      INSTRUMENTS AND RISK MANAGEMENT(Cont.) |
|----------------|-------------------------------------------------------|

|                     |   | December 31, 2008            |   |
|--------------------------|--------|----------------------------------------|--------|
|                     |   | Israeli currency                  |   |   | Other |   |
|                     |   | Not linked tothe dollar |   |   | Linked tothe dollar |   |   | Non-dollarcurrency |   |
|                     |   |                                   |   |   |   |   |   |   |   |
| Current      assets      |   | $                                      | 958    |   |   | $ | - |   |   | $ | 1,858 |   |
| Current      liabilities |   | $                                      | 2,583  |   |   | $ | 363 |   |   | $ | 243 |   |

|  | c. | Fair      value of financialinstruments: |
|--|----|------------------------------------------|

| NOTE      14:- | SELECTED      STATEMENTS OF OPERATIONS DATA |
|----------------|---------------------------------------------|

|  | a. | Revenues: |
|--|----|-----------|

|  | 1. | Classified      by geographical destination: |
|--|----|----------------------------------------------|

|               |   | Year ended December 31, |   |
|--------------------|--------|----------------------------------------|--------|
|               |   | 2009                                   |   |   | 2008 |   |   | 2007 |   |
|               |   |                                   |   |   |   |   |   |   |   |
| North      America |   | $                                      | 2,765  |   |   | $ | 2,480 |   |   | $ | 4,315 |   |
| Europe             |   |                                   | 5,857  |   |   |   | 6,256 |   |   |   | 5,685 |   |
| Far      East      |   |                                   | 2,152  |   |   |   | 2,385 |   |   |   | 1,541 |   |
| South      America |   |                                   | 712    |   |   |   | 3,835 |   |   |   | 1,248 |   |
| Other              |   |                                   | 432    |   |   |   | 282 |   |   |   | 708 |   |
|               |   |                                   |   |   |   |   |   |   |   |   |   |   |
|               |   | $                                      | 11,918 |   |   | $ | 15,238 |   |   | $ | 13,497 |   |

|  | 2. | Major      customers: |
|--|----|-----------------------|

----

| RADCOM      LTD. AND ITS SUBSIDIARIES            |
|--------------------------------------------------|
| (An      Israeli Corporation)                    |
| NOTES TO CONSOLIDATED FINANCIAL      STATEMENTS  |
| U.S.      dollars in thousands, except sharedata |

| NOTE      14:- | SELECTED      STATEMENTS OF OPERATIONS DATA(Cont.) |
|----------------|----------------------------------------------------|

|  | 3. | Substantially      all Company's long-lived assets are located in  Israel. |
|--|----|----------------------------------------------------------------------------|

|  | b. | Financial      income (expenses), net: |
|--|----|----------------------------------------|

|                                                      |   | Year ended December 31, |       |
|-----------------------------------------------------------|--------|----------------------------------------|------------|
|                                                      |   | 2009                                   |       |   | 2008 |   |   | 2007 |   |
| Financial      income:                                    |   |                                   |       |   |   |   |   |   |   |
| Exchange      translation Income                          |   | $                                      | 23         |   |   | $ | - |   |   | $ | - |   |
| Interest      from banks                                  |   |                                   | 4          |   |   |   | 109 |   |   |   | 280 |   |
|                                                      |   |                                   |       |   |   |   |   |   |   |   |   |   |
|                                                      |   |                                   | 27         |   |   |   | 109 |   |   |   | 280 |   |
|                                                      |   |                                   |       |   |   |   |   |   |   |   |   |   |
| Financial      expenses:                                  |   |                                   |       |   |   |   |   |   |   |   |   |   |
| Interest      and bank charges on short- term bank credit |   |                                   | (16        | ) |   |   | (11 | ) |   |   | (15 | ) |
| Interest      and accretion of discount on long-term loan |   |                                   | (236       | ) |   |   | (266 | ) |   |   | - |   |
| Valuation      of Fair Value of Warrant                   |   |                                   | (215       | ) |   |   | - |   |   |   | - |   |
| Exchange      translation loss                            |   |                                   | -          |   |   |   | (141 | ) |   |   | - |   |
|                                                      |   |                                   |       |   |   |   |   |   |   |   |   |   |
|                                                      |   |                                   | (467       | ) |   |   | (418 | ) |   |   | (15 | ) |
|                                                      |   |                                   |       |   |   |   |   |   |   |   |   |   |
| Financial      income (expenses), net                     |   | $                                      |  (440 | ) |   | $ |  (309 | ) |   | $ |  265 |   |

----