Document And Entity Information
Document And Entity Information | 12 Months Ended |
Dec. 31, 2020shares | |
Document And Entity Information [Abstract] | |
Document Type | 20-F |
Amendment Flag | false |
Document Registration Statement | false |
Document Annual Report | true |
Document Transition Report | false |
Document Shell Company Report | false |
Document Period End Date | Dec. 31, 2020 |
Document Fiscal Year Focus | 2020 |
Document Fiscal Period Focus | FY |
Entity Registrant Name | SuperCom Ltd |
Entity Central Index Key | 0001291855 |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Incorporation State Country Code | L3 |
Entity Common Stock, Shares Outstanding | 19,998,745 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 3,137 | $ 110 |
Restricted bank deposit | 815 | 1,100 |
Accounts receivable, net of allowance for doubtful accounts of $8,667 and $6,667 as of December 31, 2020 and 2019, respectively (Note 14) | 12,427 | 13,047 |
Other current assets (Note 3) | 876 | 961 |
Inventories, net (Note 4) | 2,404 | 2,646 |
Patents held for sale | 5,283 | 5,283 |
TOTAL CURRENT ASSETS | 24,942 | 23,147 |
LONG-TERM ASSETS | ||
Severance pay funds | 531 | 362 |
Deferred tax long term | 204 | 510 |
Property and equipment, net (Note 5) | 1,371 | 894 |
Other Intangible assets, net (Note 6) | 6,270 | 8,065 |
Goodwill | 7,026 | 7,026 |
TOTAL LONG-TERM ASSETS | 15,402 | 16,857 |
TOTAL ASSETS | 40,344 | 40,004 |
CURRENT LIABILITIES | ||
Short-term loans and other | 7,204 | 445 |
Accounts payable | 2,860 | 3,541 |
Employees and payroll accruals | 2,627 | 3,229 |
Related parties (Note 12.c) | 1,749 | 305 |
Accrued expenses and other liabilities (Note 7) | 4,393 | 4,667 |
Deferred revenue | 766 | 1,332 |
Short-term liability for future earn-out | 794 | |
TOTAL CURRENT LIABILITIES | 19,598 | 14,313 |
LONG-TERM LIABILITIES | ||
Long-term loan (Note 1c) | 14,952 | 14,187 |
Related parties (Note 12.c) | 2,383 | |
Deferred revenues | 49 | 210 |
Deferred tax liability LT | 170 | |
Accrued severance pay | 656 | 579 |
TOTAL LONG TERM LIABILITIES | 15,827 | 17,359 |
TOTAL LIABILITIES | 35,425 | 31,672 |
Commitments and contingent liabilities (Note 8) | ||
SHAREHOLDERS' EQUITY (Note 11) | ||
Ordinary shares, NIS 0.25 par value - athorized 28,000,000 shares, 19,998,745 shares issued and outstanding at December 31, 2020 and 16,214,228 shares issued and outstanding at 12/31/2019 | 1,397 | 1,116 |
Additional paid-in capital | 88,853 | 84,680 |
Accumulated deficit | (85,331) | (77,464) |
Total shareholders' equity | 4,919 | 8,332 |
Total liabilities and shareholders' equity | $ 40,344 | $ 40,004 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) $ in Thousands | Dec. 31, 2020₪ / shares | Dec. 31, 2020USD ($)shares | Dec. 31, 2019₪ / shares | Dec. 31, 2019USD ($)shares |
Statement of Financial Position [Abstract] | ||||
Accounts receivables, allowance for doubtful accounts | $ | $ 8,667 | $ 6,667 | ||
Ordinary shares, par value per share | ₪ / shares | ₪ 0.25 | ₪ 0.25 | ||
Ordinary shares, shares authorized | 28,000,000 | 28,000,000 | ||
Ordinary shares, shares issued | 19,998,745 | 16,214,228 | ||
Ordinary shares, shares outstanding | 19,998,745 | 16,214,228 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues | ||
Total revenues | $ 11,770 | $ 16,475 |
Cost of revenues | ||
Total cost of revenues | 6,189 | 10,127 |
Gross profit | 5,581 | 6,348 |
Operating expenses: | ||
Research and development | 2,386 | 3,971 |
Sales and marketing | 1,721 | 3,526 |
General and administrative | 4,074 | 5,389 |
Other expense, net | 1,149 | 1,635 |
Total operating expenses | 9,330 | 14,521 |
Operating loss | (3,749) | (8,173) |
Financial expenses, net | (4,113) | (3,289) |
Loss before income taxes | (7,862) | (11,462) |
Income tax expense | (5) | (43) |
Net loss | $ (7,867) | $ (11,505) |
Net loss per share: | ||
Basic and Diluted | $ (0.45) | $ (0.71) |
Shares used in calculation of net income per share: | ||
Basic and Diluted | 17,386,369 | 16,149,597 |
Product [Member] | ||
Revenues | ||
Total revenues | $ 4,528 | $ 4,455 |
Cost of revenues | ||
Total cost of revenues | 2,178 | 2,425 |
Service [Member] | ||
Revenues | ||
Total revenues | 7,242 | 12,020 |
Cost of revenues | ||
Total cost of revenues | $ 4,011 | $ 7,702 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Ordinary Shares [Member] | Additional Paid in Capital [Member] | Accumulated deficit [Member] | Total |
Balance at Dec. 31, 2018 | $ 1,110 | $ 84,399 | $ (65,959) | $ 19,550 |
Balance, shares at Dec. 31, 2018 | 16,126,237 | |||
Exercise of options and warrants | $ 6 | 14 | 20 | |
Exercise of options and warrants, shares | 87,991 | |||
Share based compensation | 144 | 144 | ||
Receivable on account of share purchase | 58 | 58 | ||
Detachable warrants | 65 | 65 | ||
Net loss | (11,505) | (11,505) | ||
Balance at Dec. 31, 2019 | $ 1,116 | 84,680 | (77,464) | $ 8,332 |
Balance, shares at Dec. 31, 2019 | 16,214,228 | 16,214,228 | ||
Exercise of options and Convertible loans | $ 109 | 1,248 | $ 1,357 | |
Exercise of options and Convertible loans, shares | 1,414,517 | |||
Share based compensation | 211 | 211 | ||
Share Issuance | $ 172 | 2,772 | 2,944 | |
Share Issuance, shares | 2,370,000 | |||
Receivable on account of share purchase | (58) | (58) | ||
Net loss | (7,867) | (7,867) | ||
Balance at Dec. 31, 2020 | $ 1,397 | $ 88,853 | $ (85,331) | $ 4,919 |
Balance, shares at Dec. 31, 2020 | 19,998,745 | 19,998,745 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
CASH FLOWS - OPERATING ACTIVITIES | ||
Net loss | $ (7,867) | $ (11,505) |
Adjustments to reconcile net income to net cash from operations: | ||
Depreciation and amortization | 2,720 | 3,128 |
Stock-based compensation | 211 | 144 |
Decrease (increase) in deferred tax | 384 | (125) |
Decrease (increase) in accounts receivables, net | 620 | 413 |
Decrease (increase) in other current assets | 177 | (10) |
Decrease in inventories, net | 242 | 523 |
Increase (decrease) in accounts payables | (681) | 53 |
Increase (decrease) in employees and payroll accruals | (602) | 456 |
Decrease in accrued severance pay | 77 | (6) |
Increase (decrease) in accrued expenses and other liabilities, related parties & liability for earn out | (1,794) | (731) |
Net cash used in operating activities | (6,514) | (7,660) |
CASH FLOWS - INVESTING ACTIVITIES | ||
Purchase of property and equipment | (812) | (414) |
Capitalization of software development costs | (590) | (760) |
Increase in severance pay fund | (169) | (1) |
Net cash used in investing activities | (1,571) | (1,175) |
CASH FLOWS - FINANCING ACTIVITIES | ||
Related parties | (939) | 2,218 |
Long-term Debt, Net | 7,523 | 5,008 |
Receivable on account of share purchase | (58) | 58 |
Capital Investment | 2,945 | |
Payment of liability for future earn-out in business combination | (60) | |
Proceeds from exercise of options and warrants, net | 1,356 | 20 |
Net cash provided by (used in) financing activities | 10,827 | 7,244 |
Increase (decrease) in cash, cash equivalents, and restricted cash | 2,742 | (1,591) |
Cash, cash equivalents, and restricted cash - beginning of year | 1,210 | 2,801 |
Cash, cash equivalents, and restricted cash - end of year | $ 3,952 | $ 1,210 |
GENERAL
GENERAL | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GENERAL | NOTE 1: GENERAL a. SuperCom Ltd. (the “Company”) is an Israeli resident company organized in 1988 in Israel. On January 24, 2013 the Company changed its name back to SuperCom Ltd, its original name, from Vuance Ltd. On September 12, 2013, the Company’s ordinary shares were approved for listing on the NASDAQ Capital Market and began trading under the ticker symbol “SPCB” on September 17, 2013. Previously, the Company’s ordinary shares traded on the OTCQB® electronic quotation service. The Company is a global provider of traditional and digital identity solutions, providing advanced safety, identification, tracking and security products to governments and organizations, both private and public, throughout the world. The Company provides cutting edge real-time positioning, tracking, monitoring and verification solutions enabled by its RFID &Mobile pure security advanced solutions suite of products and technologies, all connected to a web-based, secure, proprietary, interactive and user-friendly interface. The Company offers a wide range of solutions including, national ID registries, e-passports, biometric visas, automated fingerprint identification systems, digitized driver’s licenses, and electronic voter registration and election management using the common platform (“MAGNA”). The Company sells its products through marketing offices in the U.S, and Israel. b. In December 2019, a new strain of coronavirus (“COVID-19”) was reported to have surfaced in Wuhan, Hubei Province, China. During February until November of 2020, COVID-19 has spread globally, including in Israel, Asia, Europe, and America. In response to the COVID-19 virus, countries have taken different measures in relation to prevention and containment including lock-down and quarantine. The COVID-19 virus continues to impact worldwide economic activity and pose the risk that we or our employees, contractors, suppliers, customers and other business partners may be prevented from conducting certain business activities for an indefinite period of time, including due to lockdown that had been mandated by governmental authorities or otherwise elected by companies as a preventive measure. The company’s business, trading and operations were impacted materially by the COVID-19 global. COVID-19 related imposed government restrictions in California and other geographies limited our ability to interact with our clients to provide full services as well as adding new clients to our monitoring programs given court systems shutdown. The government imposed lockdowns and travel restrictions also hindered proper project deployment, productions, support, sales and R&D processes: (i) had prevented our sales teams to meet customers and demonstrate our products, (ii) had prevented our support teams to travel and visit customers in order to provide the adequate support and upgrades to our products (iii) had prevented our customers to complete tenders, purchases, (iv) had prevented proper collection of our client debt due to travel limitation or liquidity problems with our customers, (v) had prevented our customers and partners to complete the integrations and deployments of the Company current contacts. (vi) As the Company relies, on manufacturers our products in China, Israel, and USA, such products had not produced and/or shipped to the Company or to its customers. COVID-19 continuous spread and protective measures taken by the authorities may adversely affect our future results of operations, cash flows and financial condition. c. Liquidity Analysis The Company has experienced net losses and significant cash outflows from cash used in operating activities over the past 3 years. As of and for the year ended December 31, 2020, the Company had an accumulated deficit of $85,331, and net cash used in operating activities of $6,514, compared to $7,660 for the year ended December 31, 2019. Management has evaluated the significance of the conditions described above in relation to the Company’s ability to meet its obligations and noted that as of December 31, 2020, the Company had cash, cash equivalent and restricted cash of $3,952 and positive working capital of $5,343. Further, during 2020, the Company was underwent a cost optimization process to have a more efficient structure to operate through the Covid-19 imposed lockdowns, travel limitations and other related effects. During the optimization process, the Company has reduced its expenses through the reduction in its headcount and overhead costs that resulted in a reduction of operating expenses by 36%, between the years 2019 and 2020. Additionally, the Company secured financing of $20,000 during 2018, of which, $6,000 remains available to the Company to draw during the 12 months following the balance sheet date, under certain conditions. Throughout 2020, the Company also secured through the issuance of multiple notes, aggregate gross proceeds of $7,000 of subordinated debt (“Subordinated Debt”). The Company raised a gross amount of approximately $3,200 in a private placement in July 2020. To date, the Company has used the proceeds from the secured financing, subordinated debt and private placement (i) to satisfy certain indebtedness; and (ii) for general corporate purposes and (iii) working capital needs for multiple new government customer contracts with significant positive cash flow. In February 2021, the Company secured additional subordinated debt with gross proceeds of $7,000. Furthermore, the available $6 million secured credit facility from Fortress Investment Group may provide the Company additional access to capital if needed. The Company believes that based on the above mentioned secured financings, management’s plans, significant cost savings and expected cash streams from the Company’s current contracts with customers worldwide, it will be able to fund its operations for at least the next 12 months. d. Senior Secured Credit Facility and Subordinated Debt On September 6, 2018 and October 26, 2018, through a two-stage closing process, the Company entered into a Senior Secured Credit Facility with affiliates of Fortress Investment Group LLC("Fortress") with an aggregate principal amount of up to $20,000 (the "Credit Facility"). The Initial Term Loan which finalized on October 26, 2018 has an aggregate principal of $10,000, and the Incremental Term Loan provides for up to an additional $10,000 in principal through Incremental Draws of at least $1,000 each. In 2019, a total of $4,000 gross was drawn on the Incremental Term Loan, and some of the terms of the Credit Facility were amended to support the needs of the company. The Credit Facility bears interest on the borrowed balance at a rate per annum equal to LIBOR plus an applicable margin (the "Interest Margin") dependent on the EBITDA Leverage Ratio which is calculated and reset on a quarterly basis (8.0% for an EBITDA Leverage Ratio greater than or equal to 2.50x; 7.0% for an EBITDA Leverage Ratio less than 2.50x). At the Company's election, interest is paid in cash or in-kind in the amount of 4% per annum of the Interest Margin. The balance of interest is payable in cash monthly in arrears. For amounts which remain un-borrowed, the Company incurs interest at a rate of 0.50% per annum ("Unused Fee"). From closing and until today, the Company only paid monthly interest payments. In 2021 the Company expects to start making partial monthly amortization payments towards the principal balance, with the majority of the principal to be paid via a bullet payment at the maturity date, which the company expects to be amended from September 2021 to September 2022. The Credit Facility is subject to an original issue discount equal to 2.5% of any drawn amounts, and amounts repaid cannot be re-borrowed. At maturity, an end-of-term fee of 2.25% to 4.5% is owed by the Company for any amounts drawn. In connection with securing the Credit Facility, the Company incurred legal and due diligence fees, which are recorded together with the original issue discount and end-of-term fee, and amortized into interest expense over the life of the Credit Facility. In connection with the Credit Facility, the Investor received 25,000 warrants initially and an additional 75,000 warrants for amendments (the “Credit Facility Warrants”) and purchased 106,705 unregistered common shares at a share price of $1.87 from Company at a total of $200. The Credit Facility Warrants mature 7 years from the date of issuance, were set to be issued at a strike price at a premium to the then current market price. As of December 31, 2020, the outstanding principal, including accrued interest, of the Credit Facility was $15,625 and the aggregate balance for these Subordinated Debt was $7,407. In February 2021, the Company secured through the issuance of an additional subordinated note, gross proceeds of $7,000. For the consideration of $7,000 in gross proceeds, SuperCom issued a 2-year unsecured, subordinated promissory note to a certain institutional investor. The note has a 5% annual coupon and a built-in increase to the balance of the note by 5% every 6 months, for any portion of the note which has not been paid down prior to maturity. All principal and interest accrued is required to be paid in only one-bullet payment at maturity, and the company has the right to pre-pay any portion of the note at any time without a pre-payment penalty. The company has an option at its discretion only, at any time after 12 months to pay down all or a portion of the note using its ordinary shares, subject to certain conditions being met. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2: SIGNIFICANT ACCOUNTING POLICIES The Company purchases certain services and products used by it to generate revenues in its projects and sales from several sole suppliers. Although there are only a limited number of manufacturers of those particular services and products, management believe that other suppliers could provide similar services and products on comparable terms without affecting operating results. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”). a. Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. b. Financial statements in U.S. dollars: Most of the revenues of the Company and its subsidiaries are received in U.S. dollars. In addition, a substantial portion of the costs of the Company and its subsidiaries are incurred in U.S. dollars. Therefore, management believes that the dollar is the currency of the primary economic environment in which the Company and its subsidiaries operate. Thus, the functional and reporting currency of the Company and its subsidiaries is the U.S. dollar. Transactions and balances denominated in U.S. dollars are presented at their original amounts. Monetary accounts denominated in currencies other than the dollar are re-measured into dollars in accordance with ASC No. 830, "Foreign Currency Matters". All transaction gains and losses from the re-measurement of monetary balance sheet items are reflected in the statements of operations as financial income or financial expenses as appropriate. c. Principles of consolidation: The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany transactions and balances were eliminated upon consolidation. Profits from intercompany sales, not yet realized outside the group, were also eliminated. d. Cash and cash equivalents: The Company considers unrestricted short-term highly liquid investments originally purchased with maturities of three months or less to be cash equivalents. The Company has not held any cash equivalents during 2020 and 2019. e. Restricted Cash: Restricted cash held in interest bearing saving accounts which are used as a security for the Company's Israeli facility leasehold bank guarantee, and as a security for ongoing terms of the contracts with existing customers and commercial tenders guarantees. f. Allowance for doubtful accounts: The allowance for doubtful accounts is determined with respect to specific amounts the Company has determined to be doubtful of collection. In determining the allowance for doubtful accounts, the Company considers, among other things, its past experience with such customers and the information available regarding such customers. g. Inventories: Inventories are stated at the lower of cost or net realizable value. Inventory write-offs are mainly provided to cover risks arising from slow-moving items or technological obsolescence. Cost is determined for all types of inventory using the moving average cost method. h. Property and equipment: Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method, over the estimated useful lives, at the following annual rates: years Computers and peripheral equipment 3 Leased Products to Customers 5 Office furniture and equipment 5 - 17 Leasehold improvements Over the shorter of the term of the lease or the life of the asset i. Intangible assets: Intangible assets that are not considered to have an indefinite useful life are amortized using units of production and the straight-line basis over their estimated useful lives, as noted below. Recoverability of these assets is measured by a comparison of the carrying amount of the asset to the undiscounted future cash flows expected to be generated by the assets. If the assets are considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired assets. Intangible assets and their useful lives are as follows: Useful Life (in Years) Customers relationships & Other Between 4.5-13 (mainly 13) IP & Technology Between 4-15 (mainly 15) Capitalized software development costs Between 4-5 As of December 31, 2020, and 2019 no impairment losses were identified. Acquisition-related intangible assets: The Company accounts for its business combinations in accordance with ASC 805 “Business Combinations” and with ASC 350-20 “Goodwill and Other Intangible Assets” (“ASC 350-20”). ASC 805-10 specifies the accounting for business combinations and the criteria for recognizing and reporting intangible assets apart from goodwill. Acquisition-related intangible assets result from the Company’s acquisitions of businesses accounted for under the purchase method and consist of the value of identifiable intangible assets including developed software products, brand and patents, as well as goodwill. Goodwill is the amount by which the acquisition cost exceeds the fair values of identifiable acquired net assets on the date of purchase. Acquisition-related definite lived intangible assets are reported at cost, net of accumulated amortization. j. Goodwill: The Company’s goodwill reflects the excess of the consideration paid or transferred including the fair value of contingent consideration over the fair values of the identifiable net assets acquired. The goodwill impairment test is performed by evaluating an initial qualitative assessment of the likelihood of impairment. If this step indicates that the qualitative assessment does not result in a more likely than not indication of impairment, no further impairment testing is required. If it does result in a more likely than not indication of impairment, the impairment test is performed. In step one of the impairment test, the Company compares the fair value of the reporting unit to the carrying value of the reporting unit. If the fair value of the reporting unit exceeds the carrying value of the net assets allocated to that unit, goodwill is not impaired, and no further testing is required. If the fair value is less than the carrying value of the reporting unit, then the second step of the impairment test is performed to measure the amount of the impairment. In the second step, the reporting unit’s fair value is allocated to all the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that simulates the business combination principles to derive an implied goodwill value. If the implied fair value of the reporting unit’s goodwill is less than its carrying value, the difference is recorded as impairment. For the years ended December 31, 2020 and 2019 the Company performed an annual impairment analysis and no impairment losses have been identified. k. Impairment of long-lived assets and intangible assets: The Company’s long-lived assets and certain identifiable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset. l. Long lived assets held for sale: The company accounted for its long lived assets held for sale under ASC 360-10 ("Impairment or disposal of Long-lived Assets"). Under management decision, the patents acquired under Alvarion Ltd. and Safend Ltd. acquisitions during 2016, were not intended for internal use by the Company, and thus accounted for as Long lived assets held for sale. During 2019 and 2020, following management decision, the Company elected to enter into engagements with several brokers for the purpose of marketing and sale of those patents. Realization costs of the patents are immaterial. For the years ended December 31, 2020 and 2019 the Company did not identify any triggers for impairment. m. Accrued severance pay and severance pay fund: The liabilities of the Company for severance pay of its Israeli employees are calculated pursuant to Israel’s Severance Pay Law. Employees are entitled to one month’s salary for each year of employment, or portion thereof. The Company’s liability for all its employees is presented under “accrued severance pay”. The Company deposits on a monthly basis to severance pay funds and insurance policies. The value of these policies is presented as an asset on the Company’s balance sheet. The deposited funds include accrued income up to the balance sheet date. The deposited funds may be withdrawn only upon the fulfillment of the Company’s obligation pursuant to Israel’s Severance Pay Law or labor agreements. Severance expenses for the years ended December 31, 2020 and 2019 amounted to $304 and $756, respectively. n. Revenue recognition: The Company and its subsidiaries generate their revenues from the sale of products, licensing, maintenance, royalties and long term contracts (including training and installation). Effective January 1, 2018, the Company adopted Financial Accounting Standards Board (“FASB”) Topic 606, Revenue from Contracts with Customers Revenue Recognition Upon adoption of ASC 606, the Company identified a change in the Company’s revenue recognition policies related to combined license and maintenance sales, as noted within the Company’s Safend contracts. Under ASC 605, revenue for these contracts was recognized over the life of the contract. In accordance with ASC 606, license revenue is recognized upon delivery while maintenance is recognized over the life of the contract. As a result of applying the new standard, the Company had recognized a cumulative effect adjustment to Retained Earnings as of January 1, 2018 in the amount of $257. Aside from its combined license and maintenance sales, no other changes were identified to the characteristics of the Company’s other revenue recognition policies, other than the enhanced disclosure regarding revenue recognition, including disclosures of revenue streams, performance obligations, variable consideration and the related judgments and estimates necessary to apply the new standard. T he Company measures revenue based upon the consideration specified in the client arrangement, and revenue is recognized when the performance obligations in the client arrangement are satisfied. A performance obligation is a promise in a contract to transfer a distinct service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as, the customer receives the benefit of the performance obligation. Under ASC 606, revenue is recognized when a customer obtains control of promised services in an amount that reflects the consideration the Company expect to receive in exchange for those services. To achieve this core principal, the Company applies the following five steps: 1) Identify the contract with a customer A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer. 2) Identify the performance obligations in the contract Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation. 3) Determine the transaction price The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. T he Company evaluates whether a significant financing component exists when t he Company recognizes revenue in advance of customer payments that occur over time. For example, some of the Company contracts include payment terms greater than one year from when we transfer control of goods and services to the Company customers and the receipt of the final payment for those goods and services. If a significant financing component exists, t he Company classifies a portion of the transaction price as interest income, instead of recognizing all of the transaction price as revenue. T he Company does not adjust the transaction price for the effects of financing if, at contract inception, the period between the transfer of control to a customer and final payment is expected to be one year or less. 4) Allocate the transaction price to performance obligations in the contract If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. Contracts that contain multiple performance obligations require an allocation of the transaction price based on management’s judgement. 5) Recognize revenue when or as the Company satisfies a performance obligation The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised good or service to a customer. Nature of goods and services The following is a description of the Company’s goods and services from which the Company generates revenue, as well as the nature, timing of satisfaction of performance obligations, and significant payment terms for each, as applicable: Software Maintenance and Support Services Revenue Software maintenance and support services contracts are sold in conjunction with the Company’s software products for its e-Govt, IoT and Connectivity, and Cyber Security revenue streams. The contract terms for software maintenance and support span one to five years in length and provide customers with the rights to unspecified software product updates if and when available, online and telephone access to technical support personnel. The Company recognizes revenue from fixed-price service and maintenance contracts using the input method of accounting. Under the input method, revenue is recognized on the basis of an entity’s efforts toward satisfying a performance obligation. T he Company recognizes revenue from maintenance and support services provided pursuant to the time elapsed under such contracts, as that is when the performance obligation to the Company customers under such arrangements is fulfilled. Perpetual Software License Revenue The Company generates revenue from the sales of perpetual software licenses for its Cyber Security and e-Gov segments, including sales for its Magna_DL, Magna_VL, Magna_Passport, and Magna_ID software products. The intellectual property rights for usage of these products are transferred to the customer at the time of purchase and the software does not require implementation services, ongoing maintenance and support, or other adaptions in order to maintain utility. In arrangements where ongoing services are not essential to the functionality of the delivered software, the Company recognizes perpetual software license revenue when the license agreement has been approved and the software has been delivered. The Company can identify each party’s rights, payment terms, and commercial substance of the content. Where applicable, the Company identifies multiple performance obligations and record as revenue as the performance obligations are fulfilled based on the adjusted market assessment approach. Annual Software License Revenue The Company generates revenue from the sales of time-based software licenses for certain of its software products. The intellectual property rights for access to these products are transferred to the customer for contract terms of one year and the software requires ongoing maintenance, support, or other adaptions in order to maintain utility. The Company recognizes revenue over time using the input method for its annual software licenses when ongoing services are determined to be essential to the functionality of the delivered software. The license along with the any customization services are transferred to the Company customers pursuant to the time elapsed under such contracts, as that is when the Company performance obligation to its customers under such arrangements is fulfilled. System Design Revenue System design revenue relate to services provided to governments and national agencies in the early stages of a new project including incumbent system data information extraction, customer interviewing and specification mapping, architecture and software design, secure credential design, project management and planning, data migration design, project operation planning, training, assimilation, and operational processes optimization for the Company’s e-Gov and IoT solutions. The Company recognizes revenue from its system design services using the input method of accounting. Under the input method, revenue is recognized on the basis of an entity’s efforts or inputs toward satisfying a performance obligation. The Company recognizes revenue from system design services provided pursuant to time-and-materials based contracts as the services are performed, as that is when the Company performance obligation to its customers under such arrangements is fulfilled. Where applicable, the Company identifies multiple performance obligations and record as revenue as the performance obligations are fulfilled based on the using the expected cost plus a margin approach. Implementation and System Deployment Revenue Implementation and system deployment revenue relate to services provided to governments and national agencies typically after the design stage is concluded including infrastructure setup and deployment, software and chip design development, software customizations, purchase, and deployment of hardware and necessary system components, system integration and implementation, process engineering, customer training, system quality assurance testing, load balancing and local environment optimizations, and operational system launch for the Company’s e-Gov and IoT solutions. The Company recognizes revenue from its implementation and system deployment revenue using the input method of accounting. Under the input method, revenue is recognized on the basis of an entity’s efforts or inputs toward satisfying a performance obligation. The Company recognizes revenue from implementation and system deployment services provided pursuant to time-and-materials based contracts as the services are performed, as that is when the Company performance obligation to its customers under such arrangements is fulfilled. Where applicable, the Company identifies multiple performance obligations and record as revenue as the performance obligations are fulfilled based on the using the residual approach. Procurement of Secure Document Consumables Revenue The Company procures secure document consumables for its e-Gov government customers which are needed to issue secure documents after a project deployment is complete and a system in actively running and operational. These consumables are manufactured generally at secure printing facilities utilizing proprietary and customized designs, which the Company has developed during the project design stage, to provide multiple layers of security preventing falsification of documents. These consumables include base card stock, security laminates, holograms, passive RFID chip inlays, passport booklets, secure chip cards, and various other secure credentialing necessities. The Company recognizes revenue on procurement of secure document consumables products when the customer has control of the product, which is determined to be at the point in time when the products are delivered. Where applicable, the Company identifies multiple performance obligations and record as revenue as the performance obligations are fulfilled based on their stated prices within the contract. Wireless & RFID Products Revenue The Company’s wireless products include solutions for carrier wi-fi, enterprise connectivity, smart city, smart hospitality, connected campuses and connected events which enhance productivity and performance. The Company’s RFID products include asset tags which provide real-time asset loss prevention, inventory management, and personnel/asset tracking and vehicle tags which provide long-range vehicle ID for parking and fleet management, access control, asset loss prevention at airports, gated communities, truck and bus terminals, employee parking lots, hospitals, industrial facilities, railroads, mines and military installations. The Company recognizes revenue on wireless and RFID products when the customer has control of the equipment, which is determined to be at the point in time when the products are shipped. Where applicable, the Company identifies multiple performance obligations and record as revenue as the performance obligations are fulfilled based on their stated prices within the contract. Electronic Monitoring Services Revenue Electronic monitoring services represent fees the Company collects through the sale or rental of its PureSecurity Suite of products, which include the PureMonitor, PureTrack, PureTag, PureCom, PureBeacon, and SCRAM devices. These devices identify, track, and monitor people or objects in real time through the Company’s GPS monitoring, home monitoring, and alcohol tracking solutions. The Company recognizes revenue on the sale of electronic monitoring products when the customer has control of the equipment, which is determined to be at the point in time when the products are shipped. For devices which are rented and for electronic monitoring services provided, the Company recognizes revenue pursuant to the time elapsed for such contracts, as that is when the Company performance obligation to its customers under such arrangements is fulfilled. The Company customers typically pay for these services based on a net rate per day per individual or on a fixed monthly rate. Treatment Services Revenue Treatment services revenue is an extension of the Company’s electronic monitoring services. The Company provides individuals who have completed or are near the end of their sentence with the resources necessary to productively transition back into society. Through the Company daily reporting centers, we provide criminal justice programs and reentry services to help reduce recidivism which include case management, substance abuse education, vocational training, parental support, employment readiness and job placement. These activities are considered to be a bundle of services which are a part of a series of distinct services recognized over time. The Company recognizes revenue from its treatment services using the input method of accounting. Under the input method, revenue is recognized revenue on the basis of an entity’s efforts or inputs toward satisfying a performance obligation. The Company recognizes revenue from implementation and system deployment services provided pursuant to time-and-materials based contracts as the services are performed, as that is when the Company performance obligation to its customers under such arrangements is fulfilled. Where applicable, the Company identify multiple performance obligations and record as revenue as the performance obligations are fulfilled based on the using the expected cost plus a margin approach. Professional Services Revenue The Company offers professional services for the Company’s Cyber Security software products, which includes an on-site / remote visit by a specialist technician to assist with installation, deployment and configuration. The Company recognizes revenue from professional services upon completion of the service performed for the customer. As these services are completed during a single onsite visit, revenue is recognized at a point in time of such onsite visit. Disaggregation of revenue In the following table, revenue is disaggregated by major geographic region and timing of revenue recognition. The table also includes a reconciliation of the disaggregated revenue with the reportable segments: Year ended December 31, 2020 Cyber IoT e-Gov Total Major geographic areas Africa $ - $ - $ 1,791 $ 1,791 European countries 762 2,155 120 3,037 South America - 21 - 21 United States 544 5,312 - 5,856 Israel 677 69 - 746 APAC 220 99 - 319 Total revenue $ 2,203 $ 7,656 $ 1,911 $ 11,770 Timing of revenue recognition Products and services transferred over time $ 92 $ 6,020 $ 1,466 $ 7,578 Products transferred at a point in time 2,111 1,636 445 4,192 Total revenue $ 2,203 $ 7,656 $ 1,911 $ 11,770 Year ended December 31, 2019 Cyber IoT e-Gov Total Major geographic areas Africa $ - $ - $ 1,468 $ 1,468 European countries 690 2,801 457 3,948 South America - 30 - 30 United States 753 8,306 - 9,059 Israel 1,271 130 - 1,401 APAC 172 397 - 569 Total revenue $ 2,886 $ 11,664 $ 1,925 $ 16,475 Timing of revenue recognition Products and services transferred over time $ 1,124 $ 9,982 $ 1,089 $ 12,195 Products transferred at a point in time 1,762 1,682 836 4,280 Total revenue $ 2,886 $ 11,664 $ 1,925 $ 16,475 Transaction price allocated to the remaining performance obligations Remaining performance obligations represent the transaction price of system deployment, service and maintenance contracts for which work has not been performed as of the period end date. As of December 31, 2020, the aggregate amount of the transaction price allocated to remaining performance totals $9.75 million. The Company expects approximately 35% of remaining performance obligations to be recognized into revenue within the next 12 months, with the remaining 65% recognized thereafter. The Company applies the practical expedient in paragraph ASC 606-10-50-14 and do not disclose information about remaining performance obligations that have original expected durations of one-year or less. We apply the transition practical expedient in paragraph ASC 606-10-65-1(f)(3) and do not disclose the amount of the transaction price allocated to the remaining performance obligations and an explanation of when the Company expects to recognize that amount as revenue. Additionally, applying the practical expedient in paragraph ASC 340-40-25-4, the Company recognizes the incremental costs of obtaining contracts (i.e., commissions) as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one-year or less. o. Research and development costs and software development costs: Research and development costs are expensed as incurred. Software development costs eligible for capitalization are accounted for in accordance with 985-20 Software — Costs of Software to be Sold, Leased or Marketed. Capitalization of software development costs for products to be sold to third parties begins upon the establishment of technological feasibility and ceases when the product is available for general release. Amortization is calculated and provided over the estimated economic life of the software, using the greater of (i) straight-line method or if applicable (ii) the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product. Amortization commences when developed software is available for general release to clients. The estimated useful life of capitalized software development costs is 5 years. p. Income taxes: The Company and its subsidiaries account for income taxes in accordance with ASC Topic 740, “Income Taxes”. This Statement prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws, that will be in effect when the differences are expected to reverse. The Company and its subsidiaries provide a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value. The Company accounts for uncertain tax positions in accordance with ASC Topic 740-10, which prescribes detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in an enterprise’s financial statements. According to ASC Topic 740-10, tax positions must meet a more-likely-than-not recognition and measurement threshold. The Company’s accounting policy is to classify interest and penalties relating to uncertain tax positions under income taxes, however the Company did not recognize such items in its fiscal 2020 and 2019 financial statements. ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, requires a reporting entity to classify all deferred tax assets and liabilities as noncurrent in a classified balance sheet. As of December 31, 2018, the Company adopted in a retrospective method the new Income Tax guidelines, stating all deferred tax assets and liabilities need be presented as non-current in the balance sheet. q. Concentrations of credit risk: Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, restricted cash deposits and trade receivables. The Company’s trade receivables are derived from sales to customers located primarily in Eastern Europe, Africa, the United States and South America. The Company performs ongoing credit evaluations of its customers’ financial condition. The allowance for doubtful accounts is determined with respect to specific debts that the Company has determined to be doubtful of collection. Cash and cash equivalents and restricted cash deposits are deposited with major banks in Israel and the United States. Management believes that such financial institutions are financially sound and, accordingly, minimal credit risk exists with respect to these financial instruments. The Company has no significant off-balance-sheet concentration of credit risk. r. Basic and diluted earnings per share: Basic earnings per share are computed based on the weighted average number of ordinary shares outstanding during each year. Diluted earnings per share are computed based on the weighted average number of ordinary shares outstanding during each year, plus the dilutive potential of stock options and warrants outstanding during the year using the treasury stock method. The numbers of potential shares from the conversion of options and warrants that have been excluded from the calculation were 334,839 and 564,597 for the years ended December 31, 2020 and 2019, respectively. s. Fair value of financial instruments: The Company applies ASC 820, "Fair Value Measurements and Disclosures" ("ASC 820"), pursuant to which fair value is defined as the price that would be received to sell an |
OTHER CURRENT ASSETS
OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
OTHER CURRENT ASSETS | NOTE 3: OTHER CURRENT ASSETS December 31, 2020 2019 $ $ Prepaid expenses 157 310 Advances to suppliers 308 343 Government institutions 124 20 Other 287 288 876 961 |
INVENTORIES, NET
INVENTORIES, NET | 12 Months Ended |
Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | |
INVENTORIES, NET | NOTE 4: INVENTORIES, NET December 31, 2020 2019 $ $ Raw materials, parts and supplies 1,256 1,414 Finished products 1,148 1,232 2,404 2,646 As of December 31, 2020 and 2019, inventory is presented net of write offs for slow inventory in the amount of approximately $2,129 and $1,979, respectively. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | NOTE 5 : PROPERTY AND EQUIPMENT, NET December 31, 2020 2019 $ $ Cost: Computers and peripheral equipment 2,770 2,732 Office furniture and equipment 824 819 Trade Equipment 42 42 Leasehold improvements 196 196 Equipment in lease 1,899 1,125 5,730 4,914 Accumulated depreciation: Computers and peripheral equipment 2,650 2,631 Office furniture and equipment 735 728 Trade Equipment 33 25 Leasehold improvements 196 179 Equipment in lease 745 457 4,359 4,020 Depreciated cost 1,371 894 Purchasing of Equipment for the years ended December 31, 2020 and 2019, were $812 and $414, respectively. Depreciation expenses for the years ended December 31, 2020 and 2019, were $335 and $363, respectively. |
OTHER INTANGIBLE ASSETS, NET
OTHER INTANGIBLE ASSETS, NET | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
OTHER INTANGIBLE ASSETS, NET | NOTE 6 : OTHER INTANGIBLE ASSETS, NET Other intangible assets consisted of the following: December 31, 2020 December 31, 2019 Carrying Accumulated Net Book Carrying Accumulated Net Book Customers relationships & Other 8,734 7,484 1,250 8,734 6,910 1,824 IP & Technology 7,019 3,959 3,060 7,019 3,389 3,630 Capitalized software development costs 7,265 5,305 1,960 6,675 4,064 2,611 23,018 16,748 6,270 22,428 14,363 8,065 Amortization expenses amounted to $2,385 and $2,161 for the years ended December 31, 2020 and 2019, respectively. |
ACCRUED EXPENSES AND OTHER LIAB
ACCRUED EXPENSES AND OTHER LIABILITIES | 12 Months Ended |
Dec. 31, 2020 | |
Accrued Liabilities and Other Liabilities [Abstract] | |
ACCRUED EXPENSES AND OTHER LIABILITIES | NOTE 7: ACCRUED EXPENSES AND OTHER LIABILITIES December 31 2020 2019 $ $ Liabilities related with the Smart ID acquisition (see note 8 c1) 805 805 Accrued marketing expenses 125 240 Professional services 155 283 Facilities 39 466 Legal contingent liability 60 60 Legal service providers 39 76 Authorities 382 - Other accrued expenses 2,788 2,737 4,393 4,667 |
COMMITMENTS AND CONTINGENT LIAB
COMMITMENTS AND CONTINGENT LIABILITIES | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENT LIABILITIES | NOTE 8 : COMMITMENTS AND CONTINGENT LIABILITIES a. Lease commitments: The Company’s facilities and those of certain subsidiaries are rented under several operating lease agreements for periods ending 2020. Future minimum lease commitments under non-cancelable operating leases for the years ended December 31, 2020, are as follows: 2021 $ 285 2022 237 2023 78 $ 600 Rent expenses amounted to $753 and $1,133 for the years ended December 31, 2020 and 2019, respectively. b. Guarantees, indemnity and liens: 1. The Company and its subsidiaries issued bank guaranties in the total amount of approximately $800 as a part of the ongoing terms of the contracts with existing customers and for tenders. 2. Under the Fortress Agreement, the Company recorded a fix floating charge on all of the Company’s assets in favor of the Fortress, limited in amount, in order to secure long-term loan granted by them in favor of the Company. c. Litigation: (1) As part of the acquisition of the SmartID division of OTI, the Company assumed a dispute with Merwell Inc. (“Merwell”). Merwell has alleged that it has not received the full payment it is entitled to for its services in respect of a drivers’ license project. OTI alleged that Merwell breached its commitments under the service agreement and also acted in concert with third parties to damage OTI’s business activities. This matter is now subject to an arbitration proceeding. An appropriate provision is included in the financial statements. |
INCOME TAX
INCOME TAX | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAX | NOTE 9 : INCOME TAX a. Changes in Israeli corporate tax rates: The regular corporate tax rate in Israel in 20 20 and 201 9 is 23%. b. Non-Israeli subsidiaries are taxed according to the tax laws of the countries in which they are located. c. Deferred income taxes: Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the deferred tax assets of the Company and its subsidiaries are as follows: December 31, 2020 2019 $ $ Operating loss carry forwards 18,658 17,391 Reserves and allowances 2,589 1,599 Net deferred tax assets before valuation allowance 21,247 18,990 Valuation allowance (21,121) (18,480 ) Net deferred tax assets 126 510 Deferred income taxes consist of the following: Domestic 16,285 14,339 Valuation allowance (16,159 ) (13,829 ) Net deferred tax assets 126 510 Foreign 4,962 4,651 Valuation allowance (4,962 ) (4,651 ) - - d. Carryforward tax losses: As of December 31, 2020, SuperCom Ltd and its subsidiaries in Israel have accumulated losses for tax purposes of approximately $43,104, which may be carried forward and offset against taxable income in the future for an indefinite period. SuperCom Ltd. also has a capital loss of approximately $15,436, which may be carried forward and offset against capital gains for an indefinite period. Loss carryforwards in Israel are measured in NIS. As of December 31, 2020, SuperCom’ s subsidiaries in the United States have estimated total available carryforward tax losses of approximately $19,165 which expires in the years 2028 to 2037. Utilization of the U.S. net operating losses may be subject to substantial annual limitation due to the "change in ownership" provisions of the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration of net operating losses before utilization. SuperCom Ltd has assessments which are considered as final until the tax year ended December 31, 2014. SuperCom’s subsidiaries in the United States and Israel have not received final assessments since their incorporation. e. loss before income tax consists of the following: Year ended December 31, 2020 2019 $ $ Domestic (6,301 ) (9,349 ) Foreign (1,561 ) (2,113 ) (7,862 ) (11,462 ) Substantially, all tax expenses are as a result of changes in deferred taxes. f. Reconciliation of the theoretical tax benefit to the actual tax benefit: A reconciliation of theoretical tax expense, assuming all income is taxed at the statutory rate applicable to the income of companies in Israel, and the actual tax expense (benefit), is as follows: Year ended December 31, 2020 2019 $ $ Loss before income tax, as reported in the consolidated statements of operations (7,862 ) (11,462 ) Statutory tax rate in Israel 23 % 23 % Theoretical tax benefit (1,808 ) (2,636 ) Current year carryforward losses and other differences for which a valuation allowance was recorded 1,278 2,101 Changes in valuation allowance 48 104 Offset of Other non-current assets (accounted for as DTA element) (56 ) (56 ) Changes in foreign currency exchange rate and other differences 5 (12 ) Non-deductible expenses and other differences 538 542 Actual income tax expense (benefit) 5 43 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | NOTE 10 : FAIR VALUE MEASUREMENTS In accordance with ASC 820 "Fair Value Measurements and Disclosures", the Company measures its earn-out liability at fair value. Earn-out liability is classified within Level 3 as the valuation inputs are based on inputs that are unobservable. The measurement of earn-out liability is based on of the revenues derived from two businesses acquired: Alvarion and OTI, over a period of two and seven years following the acquisition dates, respectively. During the year ended December 31, 2019, the Company had an adjustment through the statement of operations of $349. As of December 31, 2020, both earn-out programs are expired. The Company's financial assets and liabilities measured at fair value on a recurring basis, consisted of the following types of instruments as of the following dates: December 31, 2020 Description Fair Value Level 1 Level 2 Level 3 Earn-out liability - - - - Total financial liability $ - - - $ - December 31, 2019 Description Fair Value Level 1 Level 2 Level 3 Earn-out liability 349 - - 349 Total financial liability $ 349 - - $ 349 |
SHARE CAPITAL
SHARE CAPITAL | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
SHARE CAPITAL | NOTE 11 : SHARE CAPITAL a. The Company’s ordinary shares are quoted under the symbol “SPCB” on the NASDAQ Capital Market in the United States. b. Shareholders’ rights: The ordinary shares confer upon the holders the right to receive notice to participate and vote in the general meetings of the Company, and the right to receive dividends, if declared. c. Stock options: 1. In 2003, the Company adopted a stock option plan under which the Company issues stock options (the “Option Plan”). The Option Plan is intended to provide incentives to the Company’s employees, officers, directors and/or consultants by providing them with the opportunity to purchase ordinary shares of the Company. Subject to the provisions of the Israeli Companies Law, the Option Plan is administered by the Compensation Committee, and is designed: (i) to comply with Section 102 of the Israeli Tax Ordinance or any provision which may amend or replace it and the rules promulgated thereunder and to enable the Company and grantees thereunder to benefit from Section 102 of the Israeli Tax Ordinance and the Commissioner’s Rules; and (ii) to enable the Company to grant options and issue shares outside the context of Section 102 of the Israeli Tax Ordinance. Options granted under the Option Plan will become exercisable ratably over a period of three to five years or immediately in certain circumstances, commencing with the date of grant. The options generally expire no later than 10 years from the date of grant. Any options which are forfeited or canceled before expiration become available for future grants. As a result of an amendment to Section 102 of the Israeli Tax Ordinance as part of the 2003 Israeli tax reform, and pursuant to an election made by the Company thereunder, capital gains derived by grantees arising from the sale of shares issued pursuant to the exercise of options granted to them under Section 102 after January 1, 2003, will generally be subject to a flat capital gains tax rate of 25%. However, as a result of this election, the Company will no longer be allowed to claim as an expense for tax purposes the amounts credited to such employees as a benefit when the related capital gains tax is payable by them, as the Company had previously been entitled to do under Section 102. On June 27, 2007, the Compensation Committee and board of directors of the Company approved a new option plan under which the Company may grant stock options to the U.S. employees of the Company and its subsidiaries. Under this new option plan, the Company may grant both qualified (for preferential tax treatment) and non-qualified stock options. On August 15, 2007, the new option plan was approved by the shareholders of the Company at the general shareholders meeting. In June 2013, the Option plan was extended for another period of ten years, until December, 31, 2023. During the year 2018, the Company issued options to purchase up to 568,500 shares to several employees of the Company. The options (fair value of which was estimated at $1061) have a weighted average exercise price of $2.00. During the year 2020, the Company did not grant any option to purchase shares. 2. A summary of the Company’s stock option activity and related information is as follows: Year ended December 31 2020 2019 Number of Weighted Number of Weighted $ $ Outstanding at Beginning of year 564,197 2.64 854,656 2.53 Granted - - - - Exercised (123,545 ) 0.1 (47,644 ) 0.1 Canceled and forfeited (105,813 ) 2.94 (242,815 ) 1.93 Outstanding at end of year 334,839 2.31 564,197 2.64 Exercisable at end of year 193,089 1.73 315,822 3.32 The weighted average fair value of options granted during the year ended December 31, 2018 was $1.87 per option. The fair value of these options was estimated on the date of grant using the Black & Scholes option pricing model. The following weighted average assumptions were used for the 2018 grants: risk-free rate of 2.89% and 3.04%, dividend yield of 0%, expected volatility factor of 238% and 240% and expected term of 6.25 years. The expected volatility was based on the historical volatility of the Company’s stock. The expected term was based on the historical experience and based on Management estimate. Compensation expenses recognized by the Company related to its stock-based employee compensation awards were $211 and $144 for the years ended December 31, 2020 and 2019, respectively. The following table summarizes the allocation of the stock-based compensation and warrants charge Year Ended December 31, 2020 2019 $ $ Cost of revenues 84 66 Research and development expenses 48 31 Selling and marketing expenses 77 29 General and administrative expenses 2 18 211 144 The options outstanding and exercisable as of December 31, 2020, have been separated into ranges of exercise prices as follows: Options outstanding Options Exercisable Range of Number Weighted Weighted Aggregate Number Weighted Weighted Aggregate $ $ $ $ $ 0.00-2.00 316,839 7.71 1.10 - 175,089 7.69 1.02 - 3.00-5.00 18,000 8.05 4.88 - 18,000 8.05 4.88 - 7.00-10.00 - - - - - - - - 334,839 7.73 1.34 - 193,089 7.73 1.41 - The total intrinsic value of options exercised for the years ended December 31, 2020 and 2019 was $0 A summary of the status of the Company’s non-vested options granted to employees as of December 31, 2020 and changes during the year ended December 31, 2020 is presented below: Options Weighted– Non-vested as of December 31, 2019 248,375 1.92 Granted - - Vested (48,426 ) 2.00 Forfeited and canceled (58,199 ) 2.45 Non-vested as of December 31, 2020 141,750 1.64 As of December 31, 2020, there was $174 of unrecognized compensation cost related to non-vested stock-based compensation arrangements granted under the stock option plans, to be recognized over a weighted average period of approximately 1.64 years. d. Private placements and warrants: During 2019, the Company issued 348,132 warrants to purchase the Company ordinary shares at an exercise price of $0.76 per share, no warrants were issued during the year 2018. e. Dividends: No dividends were declared in the reported periods. In the event that cash dividends are declared in the future, such dividends will be paid in NIS. The Company does not intend to distribute cash dividends in the foreseeable future. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 12 : RELATED PARTY TRANSACTIONS a. On July 25, 2010, the board of directors of the Company elected Mrs. Tsviya Trabelsi to serve as Chairman. Mrs. Trabelsi is an officer at Sigma Wave Ltd., which is the controlling shareholder of the Company and is also the wife of the Company’s chief executive officer. On May 12, 2011, the special general meeting approved a service agreement with Mrs. Trabelsi whereby she will receive a monthly fee equal to 60% of the Company’s chief executive officer’s monthly cost. In addition to the above consideration, the Company will bear all reasonable costs and expenses incurred by the Chairman in connection with her services and provide her with an automobile. On December 12, 2011, Mrs. Tsviya Trabelsi resigned effective immediately and the board of directors of the Company approved the appointment of Mr. Arie Trabelsi as its new Chairman, effective December 12, 2011. On December 27, 2012, the company’s shareholders at a general meeting of shareholders approved the reappointment of Mrs. Trabelsi as Chairman. On May 9, 2013, the general meeting of shareholders of the Company approved the same management services compensation for Mrs. Trabelsi as those approved in May 2011. b. Mr. Trabelsi has served as the chief executive officer of the Company since June 1, 2012. Mr. Trabelsi is the sole director of Sigma Wave, which is the controlling shareholder of the Company. On May 9, 2013, the general meeting of shareholders of the Company approved the payment of management fees to Mr. Trabelsi of $10.6 per month plus social benefits and an annual bonus of the greater of 2% of the Company’s annual net profit or 0.5% of annual revenues, but in no event greater than Mr. Trabelsi’s annual salary. c. As of December 31, 2020 and 2019, the Company accrued $391 and $305, respectively as expenses arising from related party management services. d. On April 29, 2012, the board of directors approved the recording of a floating charge on all of the Company’s assets in favor of the chairman of the board and the CEO, unlimited in amount, in order to secure personal guarantees granted by them in favor of the Company to a bank and in order to secure loans that are given by them from time to time to the Company. As of December 31,2020, total loans were $1,358. These loans bear no interest and are not attached to any price index. During the year 2020, Mr. Ordan Trabelsi had provided, from time to time, loans to the Company. As of December 31,2020, the total was $0. These loans bear no interest and are not attached to any price index. |
SEGMENTS, MAJOR CUSTOMERS AND G
SEGMENTS, MAJOR CUSTOMERS AND GEOGRAPHIC INFORMATION | 12 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
SEGMENTS, MAJOR CUSTOMERS AND GEOGRAPHIC INFORMATION | NOTE 13 : SEGMENTS, MAJOR CUSTOMERS AND GEOGRAPHIC INFORMATION a. Summary information about segments: ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is its Chief Executive Officer. As part of the Company decision to switch from one technology segment, the e-government, into 3 separate technologies segments or Strategic business units; e-Gov, IoT, and Cyber Security, the Company acquired during 2016, 4 different companies with various technologies and customers base which enrich and strengthen the capacities and offering of each of the 3 segments: e-Gov: Through the Company proprietary e-Government platforms and innovative solutions for traditional and biometrics enrollment, personalization, issuance and border control services, the Company has helped governments and national agencies design and issue secured multi-identification, or Multi-ID, documents and robust digital identity solutions to their citizens, visitors and Lands. IoT: The Company’s IoT products and solutions reliably identify, track and monitor people or objects in real time, enabling the customers to detect unauthorized movement of people, vehicles and other monitored objects. The Company provides all-in-one field proven IoT suite, accompanied with services specifically tailored to meet the requirements of an IoT solutions. The Company’s proprietary IoT suite of hybrid hardware, connectivity and software components are the foundation of these solutions and services. Cyber Security: The Company operates in the fields of cutting edge endpoint data protection guarding against corporate data loss and theft through content discovery and inspection, encryption methodologies, and comprehensive device and port control and cyber security services. As a result, all prior period information has been recast to reflect the new segment composition. Year ended December 31, 2020 Cyber IoT e-Gov Total Revenues 2,203 7,656 1,911 11.770 Operating loss 581 (1,373 ) (2,957 ) (3,749 ) Goodwill 1,075 2,229 3,722 7,026 Total Property and Equipment, net 109 1,016 246 1,371 Year ended December 31, 2019 Cyber IoT e-Gov Total Revenues 2,886 11,664 1,925 16,475 Operating loss (443 ) (3,743 ) (3,987 ) (8,173 ) Goodwill 1,075 2,229 3,722 7,026 Total Property and Equipment, net 109 539 246 894 Following is a reconciliation of the operating income (loss) of the reportable segments to the data included in the statements of operations: Year ended December 31, 2020 2019 Operating loss Total operating loss of reportable segments (3,749 ) (8,173 ) Financial expenses, net (4,113 ) (3,289 ) Loss before income taxes (7,862 ) (11,462 ) b. Summary information about geographic areas: The following is a summary of revenues from external customers of the continued operations within geographic areas and data regarding property and equipment, net: Year ended December 31, 2020 2019 Total Revenues Property and Equipment, net Total revenues Property and Equipment, net $ $ $ $ Africa 1,791 - 1,468 - European countries 3,037 - 3,948 - South America 21 - 30 - United States 5,856 89 9,059 147 Israel 746 1,282 1,401 747 APAC 319 - 569 - 11,770 1,371 16,475 894 - Revenues were attributed to countries based on the customer’s location. - Property and equipment were classified based on geographic areas in which such property and equipment items are held. c. Summary of revenues from external customers based on products and services: Year ended December 31, 2020 2019 $ $ Raw materials and equipment 2,926 4,225 Electronic monitoring 6,019 7,110 Treatment programs 1,640 2,731 Maintenance, royalties and project management 1,185 2,409 11,770 16,475 d. Major customer data as a percentage of total sales: Year ended December 31, 2020 2019 Customer A 11 % 7 % Customer B 13 % - |
OTHER EXPENSE, NET
OTHER EXPENSE, NET | 12 Months Ended |
Dec. 31, 2020 | |
Other Income and Expenses [Abstract] | |
OTHER EXPENSE, NET | NOTE 14: OTHER EXPENSE, NET Year ended December 31, 2020 2019 $ $ Doubtful debt provision 2,000 1,920 Change in liability for future earn-out (59 ) (202 ) Other (792 ) (83 ) Total other expense, net 1,149 1,635 Bad debt The following is a summary of the accounts receivables allowance for doubtful accounts for the years ended December 31: Year ended December 31, 2020 2019 $ $ Balance at beginning of period 6,667 4,747 Provision during the period 2,000 1,920 Balance at end of period 8,667 6,667 |
FINANCIAL EXPENSES, NET
FINANCIAL EXPENSES, NET | 12 Months Ended |
Dec. 31, 2020 | |
Nonoperating Income (Expense) [Abstract] | |
FINANCIAL EXPENSES, NET | NOTE 15: FINANCIAL EXPENSES, NET 2020 2019 $ $ Financial expenses: Interest, bank charges and fees (3,812 ) (1,946 ) Exchange differences, net (316 ) (1,531 ) Total financial expenses (4,128 ) (3,477 ) Financial income: Interest income 15 188 Total financial income 15 188 Total financial expenses, net (4,113 ) (3,289 ) |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 16: Subsequent Events b. In February 2021, the Company secured through the issuance of a new subordinated note, additional gross proceeds of $7,000. For the consideration of $7,000in gross proceeds, SuperCom issued a 2-year unsecured, subordinated promissory note to a certain institutional investor. The note has a 5% annual coupon and a built-in increase to the balance of the note by 5% every 6 months, for any portion of the note which has not been paid down prior to maturity. All principal and interest accrued is required to be paid in only one-bullet payment at maturity, and the company has the right to pre-pay any portion of the note at any time without a pre-payment penalty. The company has an option at its discretion only, at any time after 12 months to pay down all or a portion of the note using its ordinary shares, subject to certain conditions being met. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Use of estimates | a. Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. |
Financial statements in U.S. dollars | b. Financial statements in U.S. dollars: Most of the revenues of the Company and its subsidiaries are received in U.S. dollars. In addition, a substantial portion of the costs of the Company and its subsidiaries are incurred in U.S. dollars. Therefore, management believes that the dollar is the currency of the primary economic environment in which the Company and its subsidiaries operate. Thus, the functional and reporting currency of the Company and its subsidiaries is the U.S. dollar. Transactions and balances denominated in U.S. dollars are presented at their original amounts. Monetary accounts denominated in currencies other than the dollar are re-measured into dollars in accordance with ASC No. 830, "Foreign Currency Matters". All transaction gains and losses from the re-measurement of monetary balance sheet items are reflected in the statements of operations as financial income or financial expenses as appropriate. |
Principles of consolidation | c. Principles of consolidation: The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany transactions and balances were eliminated upon consolidation. Profits from intercompany sales, not yet realized outside the group, were also eliminated. |
Cash and cash equivalents | d. Cash and cash equivalents: The Company considers unrestricted short-term highly liquid investments originally purchased with maturities of three months or less to be cash equivalents. The Company has not held any cash equivalents during 2020 and 2019. |
Restricted Cash | e. Restricted Cash: Restricted cash held in interest bearing saving accounts which are used as a security for the Company's Israeli facility leasehold bank guarantee, and as a security for ongoing terms of the contracts with existing customers and commercial tenders guarantees. |
Allowance for doubtful accounts | f. Allowance for doubtful accounts: The allowance for doubtful accounts is determined with respect to specific amounts the Company has determined to be doubtful of collection. In determining the allowance for doubtful accounts, the Company considers, among other things, its past experience with such customers and the information available regarding such customers. |
Inventories | g. Inventories: Inventories are stated at the lower of cost or net realizable value. Inventory write-offs are mainly provided to cover risks arising from slow-moving items or technological obsolescence. Cost is determined for all types of inventory using the moving average cost method. |
Property and equipment | h. Property and equipment: Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method, over the estimated useful lives, at the following annual rates: years Computers and peripheral equipment 3 Leased Products to Customers 5 Office furniture and equipment 5 - 17 Leasehold improvements Over the shorter of the term of the lease or the life of the asset |
Intangible assets | i. Intangible assets: Intangible assets that are not considered to have an indefinite useful life are amortized using units of production and the straight-line basis over their estimated useful lives, as noted below. Recoverability of these assets is measured by a comparison of the carrying amount of the asset to the undiscounted future cash flows expected to be generated by the assets. If the assets are considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired assets. Intangible assets and their useful lives are as follows: Useful Life (in Years) Customers relationships & Other Between 4.5-13 (mainly 13) IP & Technology Between 4-15 (mainly 15) Capitalized software development costs Between 4-5 As of December 31, 2020, and 2019 no impairment losses were identified. Acquisition-related intangible assets: The Company accounts for its business combinations in accordance with ASC 805 “Business Combinations” and with ASC 350-20 “Goodwill and Other Intangible Assets” (“ASC 350-20”). ASC 805-10 specifies the accounting for business combinations and the criteria for recognizing and reporting intangible assets apart from goodwill. Acquisition-related intangible assets result from the Company’s acquisitions of businesses accounted for under the purchase method and consist of the value of identifiable intangible assets including developed software products, brand and patents, as well as goodwill. Goodwill is the amount by which the acquisition cost exceeds the fair values of identifiable acquired net assets on the date of purchase. Acquisition-related definite lived intangible assets are reported at cost, net of accumulated amortization. |
Goodwill | j. Goodwill: The Company’s goodwill reflects the excess of the consideration paid or transferred including the fair value of contingent consideration over the fair values of the identifiable net assets acquired. The goodwill impairment test is performed by evaluating an initial qualitative assessment of the likelihood of impairment. If this step indicates that the qualitative assessment does not result in a more likely than not indication of impairment, no further impairment testing is required. If it does result in a more likely than not indication of impairment, the impairment test is performed. In step one of the impairment test, the Company compares the fair value of the reporting unit to the carrying value of the reporting unit. If the fair value of the reporting unit exceeds the carrying value of the net assets allocated to that unit, goodwill is not impaired, and no further testing is required. If the fair value is less than the carrying value of the reporting unit, then the second step of the impairment test is performed to measure the amount of the impairment. In the second step, the reporting unit’s fair value is allocated to all the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that simulates the business combination principles to derive an implied goodwill value. If the implied fair value of the reporting unit’s goodwill is less than its carrying value, the difference is recorded as impairment. For the years ended December 31, 2020 and 2019 the Company performed an annual impairment analysis and no impairment losses have been identified. |
Impairment of long-lived assets and intangible assets | k. Impairment of long-lived assets and intangible assets: The Company’s long-lived assets and certain identifiable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset. |
Long lived assets held for sale | l. Long lived assets held for sale: The company accounted for its long lived assets held for sale under ASC 360-10 ("Impairment or disposal of Long-lived Assets"). Under management decision, the patents acquired under Alvarion Ltd. and Safend Ltd. acquisitions during 2016, were not intended for internal use by the Company, and thus accounted for as Long lived assets held for sale. During 2019 and 2020, following management decision, the Company elected to enter into engagements with several brokers for the purpose of marketing and sale of those patents. Realization costs of the patents are immaterial. For the years ended December 31, 2020 and 2019 the Company did not identify any triggers for impairment. |
Accrued severance pay and severance pay fund | m. Accrued severance pay and severance pay fund: The liabilities of the Company for severance pay of its Israeli employees are calculated pursuant to Israel’s Severance Pay Law. Employees are entitled to one month’s salary for each year of employment, or portion thereof. The Company’s liability for all its employees is presented under “accrued severance pay”. The Company deposits on a monthly basis to severance pay funds and insurance policies. The value of these policies is presented as an asset on the Company’s balance sheet. The deposited funds include accrued income up to the balance sheet date. The deposited funds may be withdrawn only upon the fulfillment of the Company’s obligation pursuant to Israel’s Severance Pay Law or labor agreements. Severance expenses for the years ended December 31, 2020 and 2019 amounted to $304 and $756, respectively. |
Revenue recognition | n. Revenue recognition: The Company and its subsidiaries generate their revenues from the sale of products, licensing, maintenance, royalties and long term contracts (including training and installation). Effective January 1, 2018, the Company adopted Financial Accounting Standards Board (“FASB”) Topic 606, Revenue from Contracts with Customers Revenue Recognition Upon adoption of ASC 606, the Company identified a change in the Company’s revenue recognition policies related to combined license and maintenance sales, as noted within the Company’s Safend contracts. Under ASC 605, revenue for these contracts was recognized over the life of the contract. In accordance with ASC 606, license revenue is recognized upon delivery while maintenance is recognized over the life of the contract. As a result of applying the new standard, the Company had recognized a cumulative effect adjustment to Retained Earnings as of January 1, 2018 in the amount of $257. Aside from its combined license and maintenance sales, no other changes were identified to the characteristics of the Company’s other revenue recognition policies, other than the enhanced disclosure regarding revenue recognition, including disclosures of revenue streams, performance obligations, variable consideration and the related judgments and estimates necessary to apply the new standard. T he Company measures revenue based upon the consideration specified in the client arrangement, and revenue is recognized when the performance obligations in the client arrangement are satisfied. A performance obligation is a promise in a contract to transfer a distinct service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as, the customer receives the benefit of the performance obligation. Under ASC 606, revenue is recognized when a customer obtains control of promised services in an amount that reflects the consideration the Company expect to receive in exchange for those services. To achieve this core principal, the Company applies the following five steps: 1) Identify the contract with a customer A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer. 2) Identify the performance obligations in the contract Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation. 3) Determine the transaction price The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. T he Company evaluates whether a significant financing component exists when t he Company recognizes revenue in advance of customer payments that occur over time. For example, some of the Company contracts include payment terms greater than one year from when we transfer control of goods and services to the Company customers and the receipt of the final payment for those goods and services. If a significant financing component exists, t he Company classifies a portion of the transaction price as interest income, instead of recognizing all of the transaction price as revenue. T he Company does not adjust the transaction price for the effects of financing if, at contract inception, the period between the transfer of control to a customer and final payment is expected to be one year or less. 4) Allocate the transaction price to performance obligations in the contract If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. Contracts that contain multiple performance obligations require an allocation of the transaction price based on management’s judgement. 5) Recognize revenue when or as the Company satisfies a performance obligation The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised good or service to a customer. Nature of goods and services The following is a description of the Company’s goods and services from which the Company generates revenue, as well as the nature, timing of satisfaction of performance obligations, and significant payment terms for each, as applicable: Software Maintenance and Support Services Revenue Software maintenance and support services contracts are sold in conjunction with the Company’s software products for its e-Govt, IoT and Connectivity, and Cyber Security revenue streams. The contract terms for software maintenance and support span one to five years in length and provide customers with the rights to unspecified software product updates if and when available, online and telephone access to technical support personnel. The Company recognizes revenue from fixed-price service and maintenance contracts using the input method of accounting. Under the input method, revenue is recognized on the basis of an entity’s efforts toward satisfying a performance obligation. T he Company recognizes revenue from maintenance and support services provided pursuant to the time elapsed under such contracts, as that is when the performance obligation to the Company customers under such arrangements is fulfilled. Perpetual Software License Revenue The Company generates revenue from the sales of perpetual software licenses for its Cyber Security and e-Gov segments, including sales for its Magna_DL, Magna_VL, Magna_Passport, and Magna_ID software products. The intellectual property rights for usage of these products are transferred to the customer at the time of purchase and the software does not require implementation services, ongoing maintenance and support, or other adaptions in order to maintain utility. In arrangements where ongoing services are not essential to the functionality of the delivered software, the Company recognizes perpetual software license revenue when the license agreement has been approved and the software has been delivered. The Company can identify each party’s rights, payment terms, and commercial substance of the content. Where applicable, the Company identifies multiple performance obligations and record as revenue as the performance obligations are fulfilled based on the adjusted market assessment approach. Annual Software License Revenue The Company generates revenue from the sales of time-based software licenses for certain of its software products. The intellectual property rights for access to these products are transferred to the customer for contract terms of one year and the software requires ongoing maintenance, support, or other adaptions in order to maintain utility. The Company recognizes revenue over time using the input method for its annual software licenses when ongoing services are determined to be essential to the functionality of the delivered software. The license along with the any customization services are transferred to the Company customers pursuant to the time elapsed under such contracts, as that is when the Company performance obligation to its customers under such arrangements is fulfilled. System Design Revenue System design revenue relate to services provided to governments and national agencies in the early stages of a new project including incumbent system data information extraction, customer interviewing and specification mapping, architecture and software design, secure credential design, project management and planning, data migration design, project operation planning, training, assimilation, and operational processes optimization for the Company’s e-Gov and IoT solutions. The Company recognizes revenue from its system design services using the input method of accounting. Under the input method, revenue is recognized on the basis of an entity’s efforts or inputs toward satisfying a performance obligation. The Company recognizes revenue from system design services provided pursuant to time-and-materials based contracts as the services are performed, as that is when the Company performance obligation to its customers under such arrangements is fulfilled. Where applicable, the Company identifies multiple performance obligations and record as revenue as the performance obligations are fulfilled based on the using the expected cost plus a margin approach. Implementation and System Deployment Revenue Implementation and system deployment revenue relate to services provided to governments and national agencies typically after the design stage is concluded including infrastructure setup and deployment, software and chip design development, software customizations, purchase, and deployment of hardware and necessary system components, system integration and implementation, process engineering, customer training, system quality assurance testing, load balancing and local environment optimizations, and operational system launch for the Company’s e-Gov and IoT solutions. The Company recognizes revenue from its implementation and system deployment revenue using the input method of accounting. Under the input method, revenue is recognized on the basis of an entity’s efforts or inputs toward satisfying a performance obligation. The Company recognizes revenue from implementation and system deployment services provided pursuant to time-and-materials based contracts as the services are performed, as that is when the Company performance obligation to its customers under such arrangements is fulfilled. Where applicable, the Company identifies multiple performance obligations and record as revenue as the performance obligations are fulfilled based on the using the residual approach. Procurement of Secure Document Consumables Revenue The Company procures secure document consumables for its e-Gov government customers which are needed to issue secure documents after a project deployment is complete and a system in actively running and operational. These consumables are manufactured generally at secure printing facilities utilizing proprietary and customized designs, which the Company has developed during the project design stage, to provide multiple layers of security preventing falsification of documents. These consumables include base card stock, security laminates, holograms, passive RFID chip inlays, passport booklets, secure chip cards, and various other secure credentialing necessities. The Company recognizes revenue on procurement of secure document consumables products when the customer has control of the product, which is determined to be at the point in time when the products are delivered. Where applicable, the Company identifies multiple performance obligations and record as revenue as the performance obligations are fulfilled based on their stated prices within the contract. Wireless & RFID Products Revenue The Company’s wireless products include solutions for carrier wi-fi, enterprise connectivity, smart city, smart hospitality, connected campuses and connected events which enhance productivity and performance. The Company’s RFID products include asset tags which provide real-time asset loss prevention, inventory management, and personnel/asset tracking and vehicle tags which provide long-range vehicle ID for parking and fleet management, access control, asset loss prevention at airports, gated communities, truck and bus terminals, employee parking lots, hospitals, industrial facilities, railroads, mines and military installations. The Company recognizes revenue on wireless and RFID products when the customer has control of the equipment, which is determined to be at the point in time when the products are shipped. Where applicable, the Company identifies multiple performance obligations and record as revenue as the performance obligations are fulfilled based on their stated prices within the contract. Electronic Monitoring Services Revenue Electronic monitoring services represent fees the Company collects through the sale or rental of its PureSecurity Suite of products, which include the PureMonitor, PureTrack, PureTag, PureCom, PureBeacon, and SCRAM devices. These devices identify, track, and monitor people or objects in real time through the Company’s GPS monitoring, home monitoring, and alcohol tracking solutions. The Company recognizes revenue on the sale of electronic monitoring products when the customer has control of the equipment, which is determined to be at the point in time when the products are shipped. For devices which are rented and for electronic monitoring services provided, the Company recognizes revenue pursuant to the time elapsed for such contracts, as that is when the Company performance obligation to its customers under such arrangements is fulfilled. The Company customers typically pay for these services based on a net rate per day per individual or on a fixed monthly rate. Treatment Services Revenue Treatment services revenue is an extension of the Company’s electronic monitoring services. The Company provides individuals who have completed or are near the end of their sentence with the resources necessary to productively transition back into society. Through the Company daily reporting centers, we provide criminal justice programs and reentry services to help reduce recidivism which include case management, substance abuse education, vocational training, parental support, employment readiness and job placement. These activities are considered to be a bundle of services which are a part of a series of distinct services recognized over time. The Company recognizes revenue from its treatment services using the input method of accounting. Under the input method, revenue is recognized revenue on the basis of an entity’s efforts or inputs toward satisfying a performance obligation. The Company recognizes revenue from implementation and system deployment services provided pursuant to time-and-materials based contracts as the services are performed, as that is when the Company performance obligation to its customers under such arrangements is fulfilled. Where applicable, the Company identify multiple performance obligations and record as revenue as the performance obligations are fulfilled based on the using the expected cost plus a margin approach. Professional Services Revenue The Company offers professional services for the Company’s Cyber Security software products, which includes an on-site / remote visit by a specialist technician to assist with installation, deployment and configuration. The Company recognizes revenue from professional services upon completion of the service performed for the customer. As these services are completed during a single onsite visit, revenue is recognized at a point in time of such onsite visit. Disaggregation of revenue In the following table, revenue is disaggregated by major geographic region and timing of revenue recognition. The table also includes a reconciliation of the disaggregated revenue with the reportable segments: Year ended December 31, 2020 Cyber IoT e-Gov Total Major geographic areas Africa $ - $ - $ 1,791 $ 1,791 European countries 762 2,155 120 3,037 South America - 21 - 21 United States 544 5,312 - 5,856 Israel 677 69 - 746 APAC 220 99 - 319 Total revenue $ 2,203 $ 7,656 $ 1,911 $ 11,770 Timing of revenue recognition Products and services transferred over time $ 92 $ 6,020 $ 1,466 $ 7,578 Products transferred at a point in time 2,111 1,636 445 4,192 Total revenue $ 2,203 $ 7,656 $ 1,911 $ 11,770 Year ended December 31, 2019 Cyber IoT e-Gov Total Major geographic areas Africa $ - $ - $ 1,468 $ 1,468 European countries 690 2,801 457 3,948 South America - 30 - 30 United States 753 8,306 - 9,059 Israel 1,271 130 - 1,401 APAC 172 397 - 569 Total revenue $ 2,886 $ 11,664 $ 1,925 $ 16,475 Timing of revenue recognition Products and services transferred over time $ 1,124 $ 9,982 $ 1,089 $ 12,195 Products transferred at a point in time 1,762 1,682 836 4,280 Total revenue $ 2,886 $ 11,664 $ 1,925 $ 16,475 Transaction price allocated to the remaining performance obligations Remaining performance obligations represent the transaction price of system deployment, service and maintenance contracts for which work has not been performed as of the period end date. As of December 31, 2020, the aggregate amount of the transaction price allocated to remaining performance totals $9.75 million. The Company expects approximately 35% of remaining performance obligations to be recognized into revenue within the next 12 months, with the remaining 65% recognized thereafter. The Company applies the practical expedient in paragraph ASC 606-10-50-14 and do not disclose information about remaining performance obligations that have original expected durations of one-year or less. We apply the transition practical expedient in paragraph ASC 606-10-65-1(f)(3) and do not disclose the amount of the transaction price allocated to the remaining performance obligations and an explanation of when the Company expects to recognize that amount as revenue. Additionally, applying the practical expedient in paragraph ASC 340-40-25-4, the Company recognizes the incremental costs of obtaining contracts (i.e., commissions) as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one-year or less. |
Research and development costs and software development costs | o. Research and development costs and software development costs: Research and development costs are expensed as incurred. Software development costs eligible for capitalization are accounted for in accordance with 985-20 Software — Costs of Software to be Sold, Leased or Marketed. Capitalization of software development costs for products to be sold to third parties begins upon the establishment of technological feasibility and ceases when the product is available for general release. Amortization is calculated and provided over the estimated economic life of the software, using the greater of (i) straight-line method or if applicable (ii) the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product. Amortization commences when developed software is available for general release to clients. The estimated useful life of capitalized software development costs is 5 years. |
Income taxes | p. Income taxes: The Company and its subsidiaries account for income taxes in accordance with ASC Topic 740, “Income Taxes”. This Statement prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws, that will be in effect when the differences are expected to reverse. The Company and its subsidiaries provide a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value. The Company accounts for uncertain tax positions in accordance with ASC Topic 740-10, which prescribes detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in an enterprise’s financial statements. According to ASC Topic 740-10, tax positions must meet a more-likely-than-not recognition and measurement threshold. The Company’s accounting policy is to classify interest and penalties relating to uncertain tax positions under income taxes, however the Company did not recognize such items in its fiscal 2020 and 2019 financial statements. ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, requires a reporting entity to classify all deferred tax assets and liabilities as noncurrent in a classified balance sheet. As of December 31, 2018, the Company adopted in a retrospective method the new Income Tax guidelines, stating all deferred tax assets and liabilities need be presented as non-current in the balance sheet. |
Concentrations of credit risk | q. Concentrations of credit risk: Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, restricted cash deposits and trade receivables. The Company’s trade receivables are derived from sales to customers located primarily in Eastern Europe, Africa, the United States and South America. The Company performs ongoing credit evaluations of its customers’ financial condition. The allowance for doubtful accounts is determined with respect to specific debts that the Company has determined to be doubtful of collection. Cash and cash equivalents and restricted cash deposits are deposited with major banks in Israel and the United States. Management believes that such financial institutions are financially sound and, accordingly, minimal credit risk exists with respect to these financial instruments. The Company has no significant off-balance-sheet concentration of credit risk. |
Basic and diluted earnings per share | r. Basic and diluted earnings per share: Basic earnings per share are computed based on the weighted average number of ordinary shares outstanding during each year. Diluted earnings per share are computed based on the weighted average number of ordinary shares outstanding during each year, plus the dilutive potential of stock options and warrants outstanding during the year using the treasury stock method. The numbers of potential shares from the conversion of options and warrants that have been excluded from the calculation were 334,839 and 564,597 for the years ended December 31, 2020 and 2019, respectively. |
Fair value of financial instruments | s. Fair value of financial instruments: The Company applies ASC 820, "Fair Value Measurements and Disclosures" ("ASC 820"), pursuant to which fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the inputs as follows: Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date. Level 2 - Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The carrying amounts of cash and cash equivalents, restricted cash, short-term bank deposits, other accounts receivable, trade payable, and other accounts payable and accrued expenses approximate their fair values due to the short-term maturities of such instruments. The Company measures its earn-out liability at fair value (see also Note 1 0 ). |
Accounting for stock-based compensation | t. Accounting for stock-based compensation: Stock-based compensation, including grants of stock options, is recognized in the consolidated statement of operations over the requisite service period as an operating expense, based on the fair value of the award on the date of grant. The fair value of stock-based compensation is estimated using an option-pricing model. The Company elected to recognize compensation costs for awards conditioned only on continued service that have a graded vesting schedule using the straight-line method and to value the awards based on the single-option award approach. The Company accounts for forfeitures as they occur. |
Treasury Shares | u. Treasury Shares: Treasury shares are recorded at cost and presented as a reduction of shareholders' equity. |
Recent accounting pronouncements | v. Recent accounting pronouncements ASU 2016-13, “Financial Instruments – Credit Losses on Financial Instruments”, In January 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses on Financial Instruments”, which requires that expected credit losses relating to financial assets measured on an amortized cost basis and available for sale debt securities be recorded through an allowance for credit losses. ASU 2016-13 limits the amount of credit losses to be recognized for available for sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. The new standard will be effective for interim and annual periods beginning after January 1, 2020, and early adoption was permitted. The Company had elected to not to early adopt this standard and the potential effect on its consolidated financial statements. ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment” In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. Under the new standard, goodwill impairment would be measured as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value of goodwill. This ASU eliminates existing guidance that requires an entity to determine goodwill impairment by calculating the implied fair value of goodwill by hypothetically assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. The guidance is effective for interim and annual periods beginning after January 1, 2020, and early adoption was permitted. The Company had elected to not to early adopt this standard and the potential effect on its consolidated financial statements. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Depreciation of Property and Equipment | Depreciation is computed using the straight-line method, over the estimated useful lives, at the following annual rates: years Computers and peripheral equipment 3 Leased Products to Customers 5 Office furniture and equipment 5 - 17 Leasehold improvements Over the shorter of the term of the lease or the life of the asset |
Schedule of Intangible Assets and their Useful Lives | Intangible assets and their useful lives are as follows: Useful Life (in Years) Customers relationships & Other Between 4.5-13 (mainly 13) IP & Technology Between 4-15 (mainly 15) Capitalized software development costs Between 4-5 |
Schedule of disaggregation of revenue by major geographic region and timing of revenue recognition | Year ended December 31, 2020 Cyber IoT e-Gov Total Major geographic areas Africa $ - $ - $ 1,791 $ 1,791 European countries 762 2,155 120 3,037 South America - 21 - 21 United States 544 5,312 - 5,856 Israel 677 69 - 746 APAC 220 99 - 319 Total revenue $ 2,203 $ 7,656 $ 1,911 $ 11,770 Timing of revenue recognition Products and services transferred over time $ 92 $ 6,020 $ 1,466 $ 7,578 Products transferred at a point in time 2,111 1,636 445 4,192 Total revenue $ 2,203 $ 7,656 $ 1,911 $ 11,770 Year ended December 31, 2019 Cyber IoT e-Gov Total Major geographic areas Africa $ - $ - $ 1,468 $ 1,468 European countries 690 2,801 457 3,948 South America - 30 - 30 United States 753 8,306 - 9,059 Israel 1,271 130 - 1,401 APAC 172 397 - 569 Total revenue $ 2,886 $ 11,664 $ 1,925 $ 16,475 Timing of revenue recognition Products and services transferred over time $ 1,124 $ 9,982 $ 1,089 $ 12,195 Products transferred at a point in time 1,762 1,682 836 4,280 Total revenue $ 2,886 $ 11,664 $ 1,925 $ 16,475 |
OTHER CURRENT ASSETS (Tables)
OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Current Assets | December 31, 2020 2019 $ $ Prepaid expenses 157 310 Advances to suppliers 308 343 Government institutions 124 20 Other 287 288 876 961 |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Net | December 31, 2020 2019 $ $ Raw materials, parts and supplies 1,256 1,414 Finished products 1,148 1,232 2,404 2,646 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment, Net | PROPERTY AND EQUIPMENT, NET December 31, 2020 2019 $ $ Cost: Computers and peripheral equipment 2,770 2,732 Office furniture and equipment 824 819 Trade Equipment 42 42 Leasehold improvements 196 196 Equipment in lease 1,899 1,125 5,730 4,914 Accumulated depreciation: Computers and peripheral equipment 2,650 2,631 Office furniture and equipment 735 728 Trade Equipment 33 25 Leasehold improvements 196 179 Equipment in lease 745 457 4,359 4,020 Depreciated cost 1,371 894 |
OTHER INTANGIBLE ASSETS, NET (T
OTHER INTANGIBLE ASSETS, NET (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | Other intangible assets consisted of the following: December 31, 2020 December 31, 2019 Carrying Accumulated Net Book Carrying Accumulated Net Book Customers relationships & Other 8,734 7,484 1,250 8,734 6,910 1,824 IP & Technology 7,019 3,959 3,060 7,019 3,389 3,630 Capitalized software development costs 7,265 5,305 1,960 6,675 4,064 2,611 23,018 16,748 6,270 22,428 14,363 8,065 |
ACCRUED EXPENSES AND OTHER LI_2
ACCRUED EXPENSES AND OTHER LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accrued Liabilities and Other Liabilities [Abstract] | |
Schedule of Accrued Expenses and Other Liabilities | December 31 2020 2019 $ $ Liabilities related with the Smart ID acquisition (see note 8 c1) 805 805 Accrued marketing expenses 125 240 Professional services 155 283 Facilities 39 466 Legal contingent liability 60 60 Legal service providers 39 76 Authorities 382 - Other accrued expenses 2,788 2,737 4,393 4,667 |
COMMITMENTS AND CONTINGENT LI_2
COMMITMENTS AND CONTINGENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Payments under Operating Leases | 2021 $ 285 2022 237 2023 78 $ 600 |
INCOME TAX (Tables)
INCOME TAX (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Deferred Tax Assets and Liabilities | Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the deferred tax assets of the Company and its subsidiaries are as follows: December 31, 2020 2019 $ $ Operating loss carry forwards 18,658 17,391 Reserves and allowances 2,589 1,599 Net deferred tax assets before valuation allowance 21,247 18,990 Valuation allowance (21,121 ) (18,480 ) Net deferred tax assets 126 510 Deferred income taxes consist of the following: Domestic 16,285 14,339 Valuation allowance (16,159 ) (13,829 ) Net deferred tax assets 126 510 Foreign 4,962 4,651 Valuation allowance (4,962 ) (4,651 ) - - |
Schedule of Income (Loss) before Income Tax | Year ended December 31, 2020 2019 $ $ Domestic (6,301 ) (9,349 ) Foreign (1,561 ) (2,113 ) (7,862 ) (11,462 ) |
Schedule of Effective Income Tax Reconciliation | A reconciliation of theoretical tax expense, assuming all income is taxed at the statutory rate applicable to the income of companies in Israel, and the actual tax expense (benefit), is as follows: Year ended December 31, 2020 2019 $ $ Loss before income tax, as reported in the consolidated statements of operations (7,862 ) (11,462 ) Statutory tax rate in Israel 23 % 23 % Theoretical tax benefit (1,808 ) (2,636 ) Current year carryforward losses and other differences for which a valuation allowance was recorded 1,278 2,101 Changes in valuation allowance 48 104 Offset of Other non-current assets (accounted for as DTA element) (56 ) (56 ) Changes in foreign currency exchange rate and other differences 5 (12 ) Non-deductible expenses and other differences 538 542 Actual income tax expense (benefit) 5 43 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Financial Assets and Liabilities Measured at Fair Value | December 31, 2020 Description Fair Value Level 1 Level 2 Level 3 Earn-out liability - - - - Total financial liability $ - - - $ - December 31, 2019 Description Fair Value Level 1 Level 2 Level 3 Earn-out liability 349 - - 349 Total financial liability $ 349 - - $ 349 |
SHARE CAPITAL (Tables)
SHARE CAPITAL (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Stock Option Activity | Year ended December 31 2020 2019 Number of Weighted Number of Weighted $ $ Outstanding at Beginning of year 564,197 2.64 854,656 2.53 Granted - - - - Exercised (123,545 ) 0.1 (47,644 ) 0.1 Canceled and forfeited (105,813 ) 2.94 (242,815 ) 1.93 Outstanding at end of year 334,839 2.31 564,197 2.64 Exercisable at end of year 193,089 1.73 315,822 3.32 |
Schedule of Stock-Based Compensation and Warrants Charge | Year Ended December 31, 2020 2019 $ $ Cost of revenues 84 66 Research and development expenses 48 31 Selling and marketing expenses 77 29 General and administrative expenses 2 18 211 144 |
Schedule of Options Outstanding and Exercisable | Options outstanding Options Exercisable Range of Number Weighted Weighted Aggregate Number Weighted Weighted Aggregate $ $ $ $ $ 0.00-2.00 316,839 7.71 1.10 - 175,089 7.69 1.02 - 3.00-5.00 18,000 8.05 4.88 - 18,000 8.05 4.88 - 7.00-10.00 - - - - - - - - 334,839 7.73 1.34 - 193,089 7.73 1.41 - |
Schedule of Non-vested Option Activity | Options Weighted– Non-vested as of December 31, 2019 248,375 1.92 Granted - - Vested (48,426 ) 2.00 Forfeited and canceled (58,199 ) 2.45 Non-vested as of December 31, 2020 141,750 1.64 |
SEGMENTS, MAJOR CUSTOMERS AND_2
SEGMENTS, MAJOR CUSTOMERS AND GEOGRAPHIC INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Year ended December 31, 2020 Cyber IoT e-Gov Total Revenues 2,203 7,656 1,911 11.770 Operating loss 581 (1,373 ) (2,957 ) (3,749 ) Goodwill 1,075 2,229 3,722 7,026 Total Property and Equipment, net 109 1,016 246 1,371 Year ended December 31, 2019 Cyber IoT e-Gov Total Revenues 2,886 11,664 1,925 16,475 Operating loss (443 ) (3,743 ) (3,987 ) (8,173 ) Goodwill 1,075 2,229 3,722 7,026 Total Property and Equipment, net 109 539 246 894 |
Reconciliation of Operating Profit (Loss) from Segments to Consolidated | Year ended December 31, 2020 2019 Operating loss Total operating loss of reportable segments (3,749 ) (8,173 ) Financial expenses, net (4,113 ) (3,289 ) Loss before income taxes (7,862 ) (11,462 ) |
Schedule of External Customer Revenues by Geographic Area | Year ended December 31, 2020 2019 Total Revenues Property and Equipment, net Total revenues Property and Equipment, net $ $ $ $ Africa 1,791 - 1,468 - European countries 3,037 - 3,948 - South America 21 - 30 - United States 5,856 89 9,059 147 Israel 746 1,282 1,401 747 APAC 319 - 569 - 11,770 1,371 16,475 894 |
Schedule of Revenues by External Customers by Products and Services | Year ended December 31, 2020 2019 $ $ Raw materials and equipment 2,926 4,225 Electronic monitoring 6,019 7,110 Treatment programs 1,640 2,731 Maintenance, royalties and project management 1,185 2,409 11,770 16,475 |
Schedule of Major Customers, Percent of Total Sales | Year ended December 31, 2020 2019 Customer A 11 % 7 % Customer B 13 % - |
OTHER EXPENSE, NET (Tables)
OTHER EXPENSE, NET (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Other Income and Expenses [Abstract] | |
Schedule of Other (Income) Expenses | Year ended December 31, 2020 2019 $ $ Doubtful debt provision 2,000 1,920 Change in liability for future earn-out (59 ) (202 ) Other (792 ) (83 ) Total other expense, net 1,149 1,635 |
Summary of Allowance for Doubtful Accounts | Year ended December 31, 2020 2019 $ $ Balance at beginning of period 6,667 4,747 Provision during the period 2,000 1,920 Balance at end of period 8,667 6,667 |
FINANCIAL EXPENSES, NET (Tables
FINANCIAL EXPENSES, NET (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Nonoperating Income (Expense) [Abstract] | |
Schedule of Financial (Expenses), Net | 2020 2019 $ $ Financial expenses: Interest, bank charges and fees (3,812 ) (1,946 ) Exchange differences, net (316 ) (1,531 ) Total financial expenses (4,128 ) (3,477 ) Financial income: Interest income 15 188 Total financial income 15 188 Total financial expenses, net (4,113 ) (3,289 |
GENERAL (Details)
GENERAL (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Feb. 28, 2021 | Jul. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Accumulated deficit | $ 85,331 | $ 77,464 | |||
Net cash used in operating activities | 6,514 | 7,660 | |||
Cash, cash equivalents and restricted cash | 3,952 | $ 1,210 | $ 2,801 | ||
Net working capital | $ 5,343 | ||||
Reduction in operating expenses (as a percent) | 36.00% | ||||
Amount of secured financing | 20,000 | ||||
Remaining available secured financing | $ 6,000 | ||||
Amount raised from private equity placement | $ 3,200 | ||||
Subsequent Event [Member] | |||||
Gross proceeds of subordinated debt | $ 7,000 | ||||
Secured Credit Facility [Member] | Fortress Investment Group [Member] | |||||
Remaining available secured financing | $ 6,000 |
GENERAL - Senior Secured Credit
GENERAL - Senior Secured Credit Facility and subordinated Debt (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Feb. 28, 2021USD ($) | Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2019USD ($) | Oct. 26, 2018USD ($) | |
Line of Credit Facility [Line Items] | ||||
Stock Issued During Period, Value, New Issues | $ 2,944 | |||
Subordinated notes | $ 7,407 | |||
Subsequent Event [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Gross proceeds of subordinated debt | $ 7,000 | |||
Subsequent Event [Member] | Unsecured Debt [Member] | Certain Institutional Investor [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Interest Margin | 5.00% | |||
Gross proceeds of subordinated debt | $ 7,000 | |||
Subordinated promissory note term | 2 years | |||
Built-in increase in interest rate | 5.00% | |||
Fortress [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Initial warrants received by investor | shares | 25,000 | |||
Additional warrants | shares | 75,000 | |||
Stock Issued During Period, Shares, New Issues | shares | 106,705 | |||
Stock Issued During Period, Value, New Issues | $ 200 | |||
Sale of Stock, Price Per Share | $ / shares | $ 1.87 | |||
Warrants and Rights Outstanding, Term | 7 years | |||
Credit Facility [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Interest rate to be paid per annum in cash or in kind | 4.00% | |||
Unused Fee (as a percent) | 0.50% | |||
Original issue discount (as a percent) | 2.50% | |||
Long-term Line of Credit | $ 15,625 | |||
Credit Facility [Member] | Minimum [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Term fee (as a percent) | 2.25% | |||
Credit Facility [Member] | Maximum [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Term fee (as a percent) | 4.50% | |||
Credit Facility [Member] | EBITDA Leverage Ratio Greater Than or Equal to 2.50 Times [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Interest Margin | 8.00% | |||
EBITDA Leverage Ratio | 2.50 | |||
Credit Facility [Member] | EBITDA Leverage Ratio Less Tan 2.50x [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Interest Margin | 7.00% | |||
EBITDA Leverage Ratio | 2.50 | |||
Credit Facility [Member] | Fortress [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Aggregate principal amount | $ 20,000 | |||
Current borrowing capacity | 1,000 | |||
Gross draw down amount | $ 4,000 | |||
Incremental Term Loan [Member] | Fortress [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Current borrowing capacity | 10,000 | |||
Initial Term Loan [Member] | Fortress [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Current borrowing capacity | $ 10,000 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) - USD ($) $ in Thousands | Jan. 02, 2018 | Dec. 31, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | |||
Severance expenses | $ 304 | $ 756 | |
Cumulative effect adjustment to Retained Earnings | $ 257 | ||
Antidilutive shares | 334,839 | 564,597 | |
Customer Relationships [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Intangible asset, useful life | 13 years | ||
Intellectual Property [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Intangible asset, useful life | 15 years | ||
Minimum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Contract term (in years) | 1 year | ||
Minimum [Member] | Customer Relationships [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Intangible asset, useful life | 4 years 6 months | ||
Minimum [Member] | Intellectual Property [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Intangible asset, useful life | 4 years | ||
Maximum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Contract term (in years) | 5 years | ||
Maximum [Member] | Customer Relationships [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Intangible asset, useful life | 13 years | ||
Maximum [Member] | Intellectual Property [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Intangible asset, useful life | 15 years | ||
Computers and peripheral equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Tangible asset, useful life | 3 years | ||
Leased Products to Customers [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Tangible asset, useful life | 5 years | ||
Office furniture and equipment [Member] | Minimum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Tangible asset, useful life | 5 years | ||
Office furniture and equipment [Member] | Maximum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Tangible asset, useful life | 17 years | ||
Capitalized software development costs [Member] | Minimum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Intangible asset, useful life | 4 years | ||
Capitalized software development costs [Member] | Maximum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Intangible asset, useful life | 5 years |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 11,770 | $ 16,475 |
Products and services transferred over time [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 7,578 | 12,195 |
Products transferred at a point in time [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 4,192 | 4,280 |
Cyber Security [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 2,203 | 2,886 |
Cyber Security [Member] | Products and services transferred over time [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 92 | 1,124 |
Cyber Security [Member] | Products transferred at a point in time [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 2,111 | 1,762 |
IoT [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 7,656 | 11,664 |
IoT [Member] | Products and services transferred over time [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 6,020 | 9,982 |
IoT [Member] | Products transferred at a point in time [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 1,636 | 1,682 |
e-Gov [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 1,911 | 1,925 |
e-Gov [Member] | Products and services transferred over time [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 1,466 | 1,089 |
e-Gov [Member] | Products transferred at a point in time [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 445 | 836 |
Africa [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 1,791 | 1,468 |
Africa [Member] | Cyber Security [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | ||
Africa [Member] | IoT [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | ||
Africa [Member] | e-Gov [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 1,791 | 1,468 |
European countries [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 3,037 | 3,948 |
European countries [Member] | Cyber Security [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 762 | 690 |
European countries [Member] | IoT [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 2,155 | 2,801 |
European countries [Member] | e-Gov [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 120 | 457 |
South America [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 21 | 30 |
South America [Member] | Cyber Security [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | ||
South America [Member] | IoT [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 21 | 30 |
South America [Member] | e-Gov [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | ||
United States [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 5,856 | 9,059 |
United States [Member] | Cyber Security [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 544 | 753 |
United States [Member] | IoT [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 5,312 | 8,306 |
United States [Member] | e-Gov [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | ||
Israel [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 746 | 1,401 |
Israel [Member] | Cyber Security [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 677 | 1,271 |
Israel [Member] | IoT [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 69 | 130 |
Israel [Member] | e-Gov [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | ||
Asia Pacific [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 319 | 569 |
Asia Pacific [Member] | Cyber Security [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 220 | 172 |
Asia Pacific [Member] | IoT [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 99 | 397 |
Asia Pacific [Member] | e-Gov [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES - Remaining Performance Obligations (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Optional Exemption, Performance Obligation [true false] | true |
Revenue, Practical Expedient, Incremental Cost of Obtaining Contract [true false] | true |
2020-01-01 [Member] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Expected amount of remaining performance obligations | $ 9,750 |
Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 0 years |
2021-01-01 [Member] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 0 years |
Expected percent of remaining performance obligations | 35.00% |
2019-01-01 [Member] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 12 months |
Expected percent of remaining performance obligations | 65.00% |
OTHER CURRENT ASSETS (Details)
OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid expenses | $ 157 | $ 310 |
Advances to suppliers | 308 | 343 |
Government institutions | 124 | 20 |
Other | 287 | 288 |
Other current assets | $ 876 | $ 961 |
INVENTORIES, NET (Details)
INVENTORIES, NET (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials, parts and supplies | $ 1,256 | $ 1,414 |
Finished products | 1,148 | 1,232 |
Inventories, net | 2,404 | 2,646 |
Valuation adjustment for slow inventory | $ 2,129 | $ 1,979 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | ||
Purchasing of Equipment | $ 812 | $ 414 |
Depreciation expense | 335 | 363 |
Property and equipment | 5,730 | 4,914 |
Accumulated depreciation | 4,359 | 4,020 |
Depreciated cost | 1,371 | 894 |
Trade Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Purchasing of Equipment | 812 | 414 |
Property and equipment | 42 | 42 |
Accumulated depreciation | 33 | 25 |
Computers and peripheral equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 2,770 | 2,732 |
Accumulated depreciation | 2,650 | 2,631 |
Office furniture and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 824 | 819 |
Accumulated depreciation | 735 | 728 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 196 | 196 |
Accumulated depreciation | 196 | 179 |
Equipment In lease [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 1,899 | 1,125 |
Accumulated depreciation | $ 745 | $ 457 |
OTHER INTANGIBLE ASSETS, NET -
OTHER INTANGIBLE ASSETS, NET - Other Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Carrying Amount | $ 23,018 | $ 22,428 |
Accumulated Amortization | 16,748 | 14,363 |
Net Book Value | 6,270 | 8,065 |
Customer Relationships [Member] | ||
Carrying Amount | 8,734 | 8,734 |
Accumulated Amortization | 7,484 | 6,910 |
Net Book Value | 1,250 | 1,824 |
Intellectual Property [Member] | ||
Carrying Amount | 7,019 | 7,019 |
Accumulated Amortization | 3,959 | 3,389 |
Net Book Value | 3,060 | 3,630 |
Capitalized Software Development Costs [Member] | ||
Carrying Amount | 7,265 | 6,675 |
Accumulated Amortization | 5,305 | 4,064 |
Net Book Value | $ 1,960 | $ 2,611 |
OTHER INTANGIBLE ASSETS, NET _2
OTHER INTANGIBLE ASSETS, NET - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of Intangible Assets | $ 2,385 | $ 2,161 |
ACCRUED EXPENSES AND OTHER LI_3
ACCRUED EXPENSES AND OTHER LIABILITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Accrued Liabilities and Other Liabilities [Abstract] | ||
Liabilities related with the Smart ID acquisition (see note 8 c1) | $ 805 | $ 805 |
Accrued marketing expenses | 125 | 240 |
Professional services | 155 | 283 |
Facilities | 39 | 466 |
Legal contingent liability | 60 | 60 |
Legal service providers | 39 | 76 |
Authorities | 382 | |
Other accrued expenses | 2,788 | 2,737 |
Accrued expenses and other liabilities | $ 4,393 | $ 4,667 |
COMMITMENTS AND CONTINGENT LI_3
COMMITMENTS AND CONTINGENT LIABILITIES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Future minimum lease commitments | ||
2021 | $ 285 | |
2022 | 237 | |
2023 | 78 | |
Total | 600 | |
Bank guarantee | 800 | |
Operating Leases, Rent Expense | $ 753 | $ 1,133 |
INCOME TAX - Deferred Tax Asset
INCOME TAX - Deferred Tax Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Income Tax [Line Items] | ||
Operating loss carry forwards | $ 18,658 | $ 17,391 |
Reserves and allowances | 2,589 | 1,599 |
Net deferred tax assets before valuation allowance | 21,247 | 18,990 |
Valuation allowance | (21,121) | (18,480) |
Net deferred tax assets | 126 | 510 |
Domestic [Member] | ||
Income Tax [Line Items] | ||
Net deferred tax assets before valuation allowance | 16,285 | 14,339 |
Valuation allowance | (16,159) | (13,829) |
Net deferred tax assets | 126 | 510 |
Foreign [Member] | ||
Income Tax [Line Items] | ||
Net deferred tax assets before valuation allowance | 4,962 | 4,651 |
Valuation allowance | (4,962) | (4,651) |
Deferred Tax Liabilities, Net |
INCOME TAX - Income Tax Reconci
INCOME TAX - Income Tax Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Domestic | $ (6,301) | $ (9,349) |
Foreign | (1,561) | (2,113) |
Loss before income tax, as reported in the consolidated statements of operations | $ (7,862) | $ (11,462) |
Statutory tax rate in Israel | 23.00% | 23.00% |
Theoretical tax benefit | $ (1,808) | $ (2,636) |
Current year carryforward losses and other differences for which a valuation allowance was recorded | 1,278 | 2,101 |
Changes in valuation allowance | 48 | 104 |
Offset of Other non-current assets (accounted for as DTA element) | (56) | (56) |
Changes in foreign currency exchange rate and other differences | 5 | (12) |
Non-deductible expenses and other differences | 538 | 542 |
Actual income tax expense (benefit) | $ 5 | $ 43 |
INCOME TAX - Additional Informa
INCOME TAX - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax [Line Items] | ||
Corporate tax rate (as a percent) | 23.00% | 23.00% |
Other carryforward | $ 565 | |
Deferred Tax Assets, Valuation Allowance | 21,121 | $ 18,480 |
Domestic [Member] | ||
Income Tax [Line Items] | ||
Deferred Tax Assets, Valuation Allowance | 16,159 | 13,829 |
Domestic [Member] | Capital Loss Carryforward [Member] | ||
Income Tax [Line Items] | ||
Other carryforward | 15,436 | |
Foreign [Member] | ||
Income Tax [Line Items] | ||
Operating loss carryforward | 19,165 | |
Deferred Tax Assets, Valuation Allowance | 4,962 | $ 4,651 |
Parent Company [Member] | Foreign [Member] | ||
Income Tax [Line Items] | ||
Operating loss carryforward | $ 43,104 |
FAIR VALUE MEASUREMENTS - Finan
FAIR VALUE MEASUREMENTS - Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2020 | |
Earn-out liability | $ 349 | |
Total financial liability | 349 | |
Updated Revenue Forecast Due to Acquisition | 349 | |
Fair Value, Inputs, Level 1 [Member] | ||
Earn-out liability | ||
Total financial liability | ||
Fair Value, Inputs, Level 2 [Member] | ||
Earn-out liability | ||
Total financial liability | ||
Fair Value, Inputs, Level 3 [Member] | ||
Earn-out liability | 349 | |
Total financial liability | $ 349 |
SHARE CAPITAL - Stock Option Ac
SHARE CAPITAL - Stock Option Activity (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Shares Under Options | |||
Outstanding at beginning of year | 564,197 | 854,656 | |
Granted | 568,500 | ||
Exercised | (123,545) | (47,644) | |
Canceled and forfeited | (105,813) | (242,815) | |
Outstanding at end of year | 334,839 | 564,197 | 854,656 |
Exercisable at end of year | 193,089 | 315,822 | |
Weighted Average Exercise Price | |||
Outstanding at beginning of year | $ 2.64 | $ 2.53 | |
Granted | $ 2 | ||
Exercised | 0.1 | 0.1 | |
Canceled and forfeited | 2.94 | 1.93 | |
Outstanding at end of year | 2.31 | 2.64 | $ 2.53 |
Exercisable at end of year | $ 1.73 | $ 3.32 |
SHARE CAPITAL - Stock-based Com
SHARE CAPITAL - Stock-based Compensation and Warrants Change (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Stock-based compensation charge | $ 211 | $ 144 |
Cost of revenues [Member] | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Stock-based compensation charge | 84 | 66 |
Research and development expenses [Member] | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Stock-based compensation charge | 48 | 31 |
Selling and marketing expenses [Member] | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Stock-based compensation charge | 77 | 29 |
General and administrative expenses [Member] | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Stock-based compensation charge | $ 2 | $ 18 |
SHARE CAPITAL - Options Outstan
SHARE CAPITAL - Options Outstanding and Exercisable (Details) | 12 Months Ended |
Dec. 31, 2020USD ($)$ / sharesshares | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Options outstanding | shares | 334,839 |
Weighted average remaining contractual life | 7 years 8 months 23 days |
Weighted average exercise price | $ 1.34 |
Aggregate intrinsic value | $ | |
Options exercisable | shares | 193,089 |
Weighted average remaining contractual life | 7 years 8 months 23 days |
Weighted average exercise price | $ 1.41 |
Aggregate intrinsic value | $ | |
Exercise Price Range One [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Range of exercise price, lower limit | $ 0 |
Range of exercise price, upper limit | $ 2 |
Options outstanding | shares | 316,839 |
Weighted average remaining contractual life | 7 years 8 months 16 days |
Weighted average exercise price | $ 1.10 |
Aggregate intrinsic value | $ | |
Options exercisable | shares | 175,089 |
Weighted average remaining contractual life | 7 years 8 months 9 days |
Weighted average exercise price | $ 1.02 |
Aggregate intrinsic value | $ | |
Exercise Price Range Two [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Range of exercise price, lower limit | $ 3 |
Range of exercise price, upper limit | $ 5 |
Options outstanding | shares | 18,000 |
Weighted average remaining contractual life | 8 years 18 days |
Weighted average exercise price | $ 4.88 |
Aggregate intrinsic value | $ | |
Options exercisable | shares | 18,000 |
Weighted average remaining contractual life | 8 years 18 days |
Weighted average exercise price | $ 4.88 |
Aggregate intrinsic value | $ | |
Exercise Price Range Three [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Range of exercise price, lower limit | $ 7 |
Range of exercise price, upper limit | $ 10 |
Options outstanding | shares | |
Weighted average remaining contractual life | 0 years |
Weighted average exercise price | |
Aggregate intrinsic value | $ | |
Options exercisable | shares | |
Weighted average remaining contractual life | 0 years |
Weighted average exercise price | |
Aggregate intrinsic value | $ |
SHARE CAPITAL - Non-vested Opti
SHARE CAPITAL - Non-vested Options (Details) | 12 Months Ended |
Dec. 31, 2020$ / sharesshares | |
Options | |
Non-vested at beginning of year | shares | 248,375 |
Granted | shares | |
Vested | shares | (48,426) |
Forfeited and canceled | shares | (58,199) |
Non-vested at end of year | shares | 141,750 |
Weighted-average grant-date fair value | |
Non-vested at beginning of year | $ / shares | $ 1.92 |
Granted | $ / shares | |
Vested | $ / shares | 2 |
Forfeited and canceled | $ / shares | 2.45 |
Non-vested at end of period | $ / shares | $ 1.64 |
SHARE CAPITAL - Additional Info
SHARE CAPITAL - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 568,500 | ||
Stock Granted, Value, Share-based Compensation, Gross | $ 1,061 | ||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 2 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 1 year 7 months 21 days | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 1.87 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 6 years 2 months 30 days | ||
Allocated Share-based Compensation Expense | $ 211 | $ 144 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value | $ 0 | $ 0 | |
Share-based Compensation Arrangement by Share-based Payment Award, Per Share Weighted Average Price of Shares Purchased | $ 1.04 | $ 1.01 | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options | $ 174 | ||
Warrant issued purchase of ordinary shares | 348,132 | ||
Exercise price | $ 0.76 | ||
Minimum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 2.89% | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Weighted Average Volatility Rate | 238.00% | ||
Maximum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 10 years | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 3.04% | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Weighted Average Volatility Rate | 240.00% |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | May 09, 2013 | May 12, 2011 | Dec. 31, 2020 | Dec. 31, 2019 |
Related Party Transaction [Line Items] | ||||
Accrued management services | $ 391 | $ 305 | ||
Chairman [Member] | ||||
Related Party Transaction [Line Items] | ||||
Monthly fee equal to a percentage of CEO cost | 60.00% | |||
Chief Executive Officer [Member] | ||||
Related Party Transaction [Line Items] | ||||
Monthly payment | $ 106 | |||
Bonus as a percentage of net profit | 2.00% | |||
Bonus as a percentage of revenue | 0.50% | |||
Chairman and CEO [Member] | ||||
Related Party Transaction [Line Items] | ||||
Proceeds from Related Party Debt | 1,358 | |||
Mr. Ordan Trabelsi [Member] | ||||
Related Party Transaction [Line Items] | ||||
Proceeds from Related Party Debt | $ 0 |
SEGMENTS, MAJOR CUSTOMERS AND_3
SEGMENTS, MAJOR CUSTOMERS AND GEOGRAPHIC INFORMATION - Segment Reporting Information, by Segment (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues | $ 11,770 | $ 16,475 |
Operating Loss | (3,749) | (8,173) |
Goodwill | 7,026 | 7,026 |
Total Property and Equipment, net | 1,371 | 894 |
Cyber Security [Member] | ||
Revenues | 2,203 | 2,886 |
Operating Loss | 581 | (443) |
Goodwill | 1,075 | 1,075 |
Total Property and Equipment, net | 109 | 109 |
IoT [Member] | ||
Revenues | 7,656 | 11,664 |
Operating Loss | (1,373) | (3,743) |
Goodwill | 2,229 | 2,229 |
Total Property and Equipment, net | 1,016 | 539 |
e-Gov [Member] | ||
Revenues | 1,911 | 1,925 |
Operating Loss | (2,957) | (3,987) |
Goodwill | 3,722 | 3,722 |
Total Property and Equipment, net | $ 246 | $ 246 |
SEGMENTS, MAJOR CUSTOMERS AND_4
SEGMENTS, MAJOR CUSTOMERS AND GEOGRAPHIC INFORMATION - Reconciliation of Operating Income (loss) of Reportable Segments (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Operating loss | ||
Total operating loss of reportable segments | $ (3,749) | $ (8,173) |
Financial expenses, net | (4,113) | (3,289) |
Loss before income taxes | $ (7,862) | $ (11,462) |
SEGMENTS, MAJOR CUSTOMERS AND_5
SEGMENTS, MAJOR CUSTOMERS AND GEOGRAPHIC INFORMATION - Operations by Geographic Area (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 11,770 | $ 16,475 |
Property and equipment, net | 1,371 | 894 |
Africa [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | 1,791 | 1,468 |
Property and equipment, net | ||
European countries [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | 3,037 | 3,948 |
Property and equipment, net | ||
South America [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | 21 | 30 |
Property and equipment, net | ||
United States [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | 5,856 | 9,059 |
Property and equipment, net | 89 | 147 |
Israel [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | 746 | 1,401 |
Property and equipment, net | 1,282 | 747 |
Asia Pacific [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | 319 | 569 |
Property and equipment, net |
SEGMENTS, MAJOR CUSTOMERS AND_6
SEGMENTS, MAJOR CUSTOMERS AND GEOGRAPHIC INFORMATION - Revenues from External Customers by Products and Services (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue from External Customer [Line Items] | ||
Revenues | $ 11,770 | $ 16,475 |
Raw Materials and Equipment [Member] | ||
Revenue from External Customer [Line Items] | ||
Revenues | 2,926 | 4,225 |
Electronic Monitoring [Member] | ||
Revenue from External Customer [Line Items] | ||
Revenues | 6,019 | 7,110 |
Treatment Programs [Member] | ||
Revenue from External Customer [Line Items] | ||
Revenues | 1,640 | 2,731 |
Maintenance, Royalties and Project Management [Member] | ||
Revenue from External Customer [Line Items] | ||
Revenues | $ 1,185 | $ 2,409 |
SEGMENTS, MAJOR CUSTOMERS AND_7
SEGMENTS, MAJOR CUSTOMERS AND GEOGRAPHIC INFORMATION - Schedule of Major Customer Concentration (Details) - Sales [Member] - Customer [Member] | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Customer A [Member] | ||
Concentration Risk [Line Items] | ||
Concentration percentage | 11.00% | 7.00% |
Customer B [Member] | ||
Concentration Risk [Line Items] | ||
Concentration percentage | 13.00% |
OTHER EXPENSE, NET - Other Expe
OTHER EXPENSE, NET - Other Expenses (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Other Income and Expenses [Abstract] | ||
Doubtful debt provision | $ 2,000 | $ 1,920 |
Change in liability for future earn-out | (59) | (202) |
Other | (792) | (83) |
Total other expense, net | $ 1,149 | $ 1,635 |
OTHER EXPENSE, NET - Accounts R
OTHER EXPENSE, NET - Accounts Receivables Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Other Income and Expenses [Abstract] | ||
Balance at beginning of period | $ 6,667 | $ 4,747 |
Provision during the period | 2,000 | 1,920 |
Balance at end of period | $ 8,667 | $ 6,667 |
FINANCIAL EXPENSES, NET (Detail
FINANCIAL EXPENSES, NET (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Financial expenses: | ||
Interest, bank charges and fees | $ (3,812) | $ (1,946) |
Exchange differences, net | (316) | (1,531) |
Total financial expenses | (4,128) | (3,477) |
Financial income: | ||
Interest income | 15 | 188 |
Total financial income | 15 | 188 |
Total financial expenses, net | $ (4,113) | $ (3,289) |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] $ in Thousands | 1 Months Ended |
Feb. 28, 2021USD ($) | |
Gross proceeds of subordinated debt | $ 7,000 |
Unsecured Debt [Member] | Certain Institutional Investor [Member] | |
Gross proceeds of subordinated debt | $ 7,000 |
Subordinated promissory note term | 2 years |
Built-in increase in interest rate | 5.00% |
Interest Margin | 5.00% |