Document:

NEWS

          
	
             

            
              Contact:

              Jonathan
                Burgin

              CFO

              (972)
                3-645-5004

              jonathanb@radcom.com

            

          

    FOR
      IMMEDIATE RELEASE

    

    RADCOM
      ANNOUNCES PRELIMINARY SECOND QUARTER 2006 RESULTS 

    

    TEL-AVIV,
      Israel—July 14, 2006-- RADCOM Ltd. (RADCOM) (NASDAQ and TASE: RDCM) today
      announced preliminary financial results for the quarter ended June 30, 2006.
      

     

    Based
      on
      preliminary results, RADCOM anticipates total revenues for the second quarter
      of
      2006 to be approximately $5.7 million, an increase of 19% compared to $4.8
      million recorded in the second quarter of 2005, representing the Company’s
      11th
      straight
      quarter of year-over-year revenue growth, and a sequential increase of 12%
      compared to $5.1 million recorded in the first quarter of 2006. This is a slight
      shortfall compared with the revenue range of $6.0 to $6.5 million that was
      forecast in the Q1 earnings release, reflecting accounting policies relating
      to
      a multiple element agreement that prevented the recognition of revenues
      associated with an order shipped during the second quarter. The second quarter’s
      revenues do include the contribution of the major order discussed in the first
      quarter earnings release that was delayed from the first to the second quarter
      and taken into account in our projections for the second quarter.

     

    Commenting
      on the news, Mr. Arnon Toussia-Cohen, President and CEO, said, “Although our
      second quarter revenues fell marginally short of our original projection, we
      are
      pleased to continue building on an eleven-quarter record of year-over-year
      revenue growth, a testament to the fact that we continue to win new business
      and
      customers. We look forward to reporting our full results and to giving you
      an
      update regarding our markets and prospects during our conference call on July
      24th.”

     

    RADCOM
      will report its full results for the second quarter of 2006 on Monday, July
      24,
      2006, before the opening of trade. RADCOM’s management will hold an interactive
      conference call on the same day at 9:00 AM EDT (16:00 Israel Time) to discuss
      the results and to answer investor questions. To participate, please call
      1-877-209-0397 from the U.S., or +1-612-332-0819
      from international locations, approximately five minutes before the call is
      scheduled to begin. A replay of the call will be available from 10:45 AM Eastern
      Time on July 24th
      until
      midnight July 31st.
      To
      access the replay, please call 1-800-475-6701 from the U.S., or +1-320-365-3844
      from international locations, and use the access code 836284. The conference
      call can also be accessed online at www.radcom.com.

    ###

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    RADCOM
      develops, manufactures, markets and supports innovative network test and service
      monitoring solutions for communications service providers and equipment vendors.
      The company specializes in Next Generation Cellular as well as Voice, Data
      and
      Video over IP networks. Its solutions are used in the development and
      installation of network equipment and in the maintenance of operational
      networks. The company’s products facilitate fault management, network service
      performance monitoring and analysis, troubleshooting and pre-mediation. RADCOM’s
      shares are listed on both the Nasdaq National Market and the Tel Aviv Stock
      Exchange under the symbol RDCM. For more information, please visit www.RADCOM.com.

    

    Risks
      Regarding Forward Looking Statements

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

            
	
               

              
                Contact:

                Jonathan
                  Burgin

                CFO

                (972)
                  3-645-5004

                jonathanb@radcom.com

              

            

    

    FOR
      IMMEDIATE RELEASE

    

    RADCOM
      ANNOUNCES SECOND QUARTER 2006 RESULTS 

    --
      11th
      Straight Quarter of YOY Revenue Growth --

    

    TEL-AVIV,
      Israel—July 24, 2006-- RADCOM Ltd. (RADCOM) (NASDAQ and TASE: RDCM) today
      announced financial results for the second quarter and six months ended June
      30,
      2006. 

    

    Financial
      Results for the Second Quarter

     

    Revenues
      for the second quarter of 2006 were $5.7 million, an increase of 18% compared
      with $4.8 million for the second quarter of 2005, representing the Company’s
      11th
      straight
      quarter of year-over-year revenue growth, and an increase of 12% compared with
      the $5.1 million recorded in the first quarter of 2006. Gross margin for the
      second quarter of 2006 increased to 70% compared with 68% for the parallel
      period of 2005 as well as for the first quarter of 2006. 

     

    On
      the
      basis of U.S. generally accepted accounted principles (GAAP), the Company
      recorded net income for the second quarter of 2006 of $208,000, or $0.01 per
      ordinary share (basic and diluted). Net income for the quarter included a
      non-cash share-based compensation expense of $105,000 taken in respect of the
      Company’s mandatory adoption of Statement of Financial Accounting Standards No.
      123 (revised 2004), "Share-Based Payment" ("SFAS 123R"). SFAS 123R requires
      that
      companies recognize the fair value of share-based incentives as compensation.
      

     

    The
      Company is also presenting its results on a non-GAAP basis excluding share-based
      compensation to provide investors and management with insight into RADCOM’s
      underlying operating results. On such non-GAAP basis, RADCOM’s net income for
      the second quarter of 2006 was $313,000, or $0.02 per share, an increase of
      204%
      compared with $103,000, or $0.01 per ordinary share (basic and diluted), for
      the
      second quarter of 2005, which did not include share-based compensation.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Financial
      Results for the First Half

     

    Revenues
      for the first six months of 2006 rose by 9% to $10.8 million compared to $9.9
      million for the first half of 2005. Gross margin for the first half of 2006
      was
      69%, a slight rise compared to 68% for the parallel period of 2005.

     

    On
      the
      basis of U.S. generally accepted accounted principles (GAAP), the Company
      recorded net income of $89,000, or $0.01 per ordinary share (basic and diluted)
      for the first half of 2006. Net income for the six-month period included
      non-cash share-based compensation expense of $233,000 taken in respect of SFAS
      123R, as explained above. 

     

    The
      Company has also presented its results on a non-GAAP basis excluding share-based
      compensation to provide investors and management with insight into RADCOM’s
      underlying operating results. On such non-GAAP basis, RADCOM’s net income for
      the first six months of 2006 was $322,000, or $0.02 per share. Net income for
      the first six months of 2005, which did not include share-based compensation,
      was $237,000, or $0.02 per share.

    

    Comments
      of Management

     

    Commenting
      on the news, Mr. Arnon Toussia-Cohen, President and CEO, said, “The second
      quarter was another period of revenue growth, profitability and strategic
      progress for RADCOM. Our revenues fell marginally short of our original
      projections due to accounting policies relating to a multiple element agreement
      that prevented the recognition of revenues associated with an order shipped
      during the second quarter. Nevertheless, we were able to post our eleventh
      straight quarter of year-over-year revenue growth and a 12% sequential increase
      in sales, achieving another solidly profitable quarter for RADCOM.”

    

    Mr.
      Toussia-Cohen continued, “We are very pleased by the overall development of our
      business in line with our plan for building the company to the next level.
      The
      rising pace of global 3G deployments continues to drive demand for our 3G
      service monitoring solutions, as demonstrated by the follow-on
      orders that we continue to receive from cellular operators in North America,
      Europe and Australia. In addition, we are seeing a rise in Omni-Q demand from
      wireline operators as they ramp up their VoIP and other converged network
      deployments.” 

    

    Mr.
      Toussia-Cohen concluded, “Taken
      as
      a whole, we are optimistic regarding the future and believe that market trends
      are working in our favor. We are on track for achieving a stronger second half
      of the year and continue working to build the Company to the next
      level.”

    

    Guidance

     

    The
      following statement is forward-looking in nature, and actual results may differ
      materially. See below under “Risks Regarding Forward Looking Statements”.

    

    Given
      the
      reliance of the Company’s performance for any specific quarter on the timing of
      a relatively small number of relatively large orders, the Company’s quarterly
      results of operations are subject to fluctuations. Nonetheless, management
      projects that the Company’s revenues for the third quarter of 2006 will range
      between $6.7 million and $7.1 million, and that its revenues for the second
      half
      of the year will be significantly improved compared with those of the first
      half
      of the year.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Conference
      Call Information

     

    RADCOM’s
      management will hold an interactive conference call today, July 24th,
      at 9:00
      AM EDT (16:00 Israel Time) to discuss the results and to answer investor
      questions. To participate, please call 1-877-209-0397 from the U.S., or
+1-612-332-0819
      from international locations, approximately five minutes before the call is
      scheduled to begin. A replay of the call will be available from 10:45 AM Eastern
      Time on July 24th
      until
      midnight July 31st.
      To
      access the replay, please call 1-800-475-6701 from the U.S., or 
+1-320-365-3844
      from international locations, and use the access code 836284. The conference
      call can also be accessed online at www.radcom.com.

     

    ###

     

    Non-GAAP
      Information

    

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

     

    RADCOM
      develops, manufactures, markets and supports innovative network test and service
      monitoring solutions for communications service providers and equipment vendors.
      The company specializes in Next Generation Cellular as well as Voice, Data
      and
      Video over IP networks. Its solutions are used in the development and
      installation of network equipment and in the maintenance of operational
      networks. The company’s products facilitate fault management, network service
      performance monitoring and analysis, troubleshooting and pre-mediation. RADCOM’s
      shares are listed on both the Nasdaq Global Market and the Tel Aviv Stock
      Exchange under the symbol RDCM. For more information, please visit www.RADCOM.com.

     

    Risks
      Regarding Forward Looking Statements

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

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               

              RADCOM
                Ltd.

            
	
              Consolidated
                Statements of Operations

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

            

    

     

    
      	 	 	
              Three
                months ended 

              June
                30,

            	 	
              Six
                months ended 

              June
                30,

            	 
	 	 	
              2006a

            	 	
              2005

            	 	
              2006b

            	 	
              2005

            	 
	 	 	
              (unaudited)

            	 	
              (unaudited)

            	 	
              (unaudited)

            	 	
              (unaudited)

            	 
	
              Sales
                

            	 	
              $

            	
              5,701

            	 	
              $

            	
              4,837

            	 	
              $

            	
              10,781

            	 	
              $

            	
              9,854

            	 
	
              Cost
                of sales

            	 	 	
              1,704
                

            	 	 	
              1,571
                

            	 	 	
              3,319

            	 	 	
              3,192

            	 
	
              Gross
                profit 

            	 	 	
              3,997

            	 	 	
              3,266

            	 	 	
              7,462

            	 	 	
              6,662

            	 
	
              Research
                and development, gross

            	 	 	
              1,620
                

            	 	 	
              1,416
                

            	 	 	
              3,183
                

            	 	 	
              2,831
                

            	 
	
              Less
                - royalty-bearing participation

            	 	 	
              554
                

            	 	 	
              489
                

            	 	 	
              1,004

            	 	 	
              884
                

            	 
	
              Research
                and development, net

            	 	 	
              1,066

            	 	 	
              927

            	 	 	
              2,179
                

            	 	 	
              1,947
                

            	 
	
              Sales
                and marketing 

            	 	 	
              2,374
                

            	 	 	
              1,870
                

            	 	 	
              4,473
                

            	 	 	
              3,736
                

            	 
	
              General
                and administrative

            	 	 	
              475
                

            	 	 	
              422
                

            	 	 	
              945
                

            	 	 	
              833
                

            	 
	
              Total
                operating expenses

            	 	 	
              3,915

            	 	 	
              3,219
                

            	 	 	
              7,597
                

            	 	 	
              6,516
                

            	 
	
              Operating
                income (loss)

            	 	 	
              82

            	 	 	
              47

            	 	 	
              (135

            	
              )

            	 	
              146

            	 
	
              Financing
                income, net

            	 	 	
              126

            	 	 	
              56
                

            	 	 	
              224

            	 	 	
              91
                

            	 
	
              Net
                income 

            	 	 	
              208

            	 	 	
              103

            	 	 	
              89

            	 	 	
              237

            	 
	
              Basic
                net earnings per ordinary share

            	 	
              $

            	
              0.01

            	 	
              $

            	
              0.01

            	 	
              $

            	
              0.01

            	 	
              $

            	
              0.02

            	 
	
              Diluted
                net earnings per ordinary share

            	 	
              $

            	
              0.01

            	 	
              $

            	
              0.01

            	 	
              $

            	
              0.01

            	 	
              $

            	
              0.02

            	 
	
              Weighted
                average number of ordinary
                shares used in computing
                basic net earnings per
                ordinary share

            	 	 	
              16,074,528

            	 	 	
              14,792,288

            	 	 	
              15,661,349
                

            	 	 	
              14,540,644
                

            	 
	
              Weighted
                average number of ordinary
                shares used in computing
                diluted net earnings per
                ordinary share

            	 	 	
              16,591,986

            	 	 	
              16,069,930

            	 	 	
              16,748,398

            	 	 	
              16,152,875

            	 

    

     

    Note
      a:
      The
      Company’s results for the second quarter of 2006 according to U.S. GAAP include
      non-cash share-based compensation expense of $105,000 allocated as follows:
      $3,000 to cost of sales, $25,000 to research and development, $48,000 to sales
      and marketing and $29,000 to general and administrative. 

    

    Note
      b: The
      Company’s results for the six months of 2006 according to U.S. GAAP include
      non-cash share-based compensation expense of $233,000 allocated as follows:
      $6,000 to cost of sales, $52,000 to research and development, $91,000 to sales
      and marketing and $84,000 to general and administrative. 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              RADCOM
                Ltd.

              Consolidated
                Balance Sheets

              (1000's
                of U.S. dollars) 

            

    

     

    
      	 	 	
              As
                of

            	 	
              As
                of

            	 
	 	 	
              June
                30, 

              2006

            	 	
              December
                31, 

              2005

            	 
	 	 	
              (unaudited)

            	 	
              (unaudited)

            	 
	
              Current
                Assets

            	 	 	 	 	 
	
              Cash
                and cash equivalents 

            	 	 	
              11,682

            	 	 	
              10,520

            	 
	
              Trade
                receivables, net 

            	 	 	
              8,437
                

            	 	 	
              7,856
                

            	 
	
              Inventories
                

            	 	 	
              2,364
                

            	 	 	
              1,938
                

            	 
	
              Other
                current assets 

            	 	 	
              951

            	 	 	
              380

            	 
	
              Total
                Current Assets

            	 	 	
              23,434

            	 	 	
              20,694

            	 
	 	 	 	 	 	 	 	 
	
              Assets
                held for severance benefits

            	 	 	
              2,075

            	 	 	
              1,863

            	 
	
               

            	 	 	 	 	 	 	 
	
              Property
                and equipment, net

            	 	 	
              1,400

            	 	 	
              1,233

            	 
	
               

            	 	 	 	 	 	 	 
	
              Total
                Assets

            	 	 	
              26,909

            	 	 	
              23,790

            	 
	 	 	 	
            	 	 	
            	 
	
              Liabilities
                and Shareholders' Equity

            	 	 	 	 	 	 	 
	
              Current
                Liabilities 

            	 	 	 	 	 	 	 
	
              Trade
                payables 

            	 	 	
              2,262

            	 	 	
              2,148

            	 
	
              Current
                deferred revenue

            	 	 	
              1,735

            	 	 	
              1,545

            	 
	
              Other
                payables and accrued expenses 

            	 	 	
              4,010

            	 	 	
              4,014

            	 
	
              Total
                Current Liabilities

            	 	 	
              8,007

            	 	 	
              7,707

            	 
	 	 	 	 	 	 	 	 
	
              Long-Term
                Liabilities 

            	 	 	 	 	 	 	 
	
              Long-term
                deferred revenue

            	 	 	
              1,229
                

            	 	 	
              1,161
                

            	 
	
              Liability
                for employees’ severance pay benefits

            	 	 	
              2,727

            	 	 	
              2,437

            	 
	
              Total
                Long-Term Liabilities

            	 	 	
              3,956

            	 	 	
              3,598

            	 
	 	 	 	 	 	 	 	 
	
              Total
                Liabilities

            	 	 	
              11,963

            	 	 	
              11,305

            	 
	 	 	 	 	 	 	 	 
	
              Shareholders'
                Equity 

            	 	 	 	 	 	 	 
	
              Share
                capital 

            	 	 	
              118

            	 	 	
              107

            	 
	
              Additional
                paid-in capital

            	 	 	
              46,974

            	 	 	
              44,613

            	 
	
              Accumulated
                deficit

            	 	 	
              (32,146

            	
              )

            	 	
              (32,235

            	
              )

            
	
              Total
                Shareholders' Equity

            	 	 	
              14,946
                

            	 	 	
              12,485
                

            	 
	 	 	 	 	 	 	 	 
	
              Total
                Liabilities and Shareholders' Equity

            	 	 	
              26,909

            	 	 	
              23,790

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