SEC Comment Letter for SuperCom Ltd (SPCB) (CIK 0001291855) (SPCB) — Sep 30, 2015
SuperCom Ltd (SPCB) (CIK 0001291855)
Date: Sept. 30, 2015 · CIK: 0001291855 · Accession: 0000000000-15-047937
AI Filing Summary & Sentiment
File numbers found in text: 001-33668
Letter
Mail Stop 3030 September 30, 2015 Via E -Mail Mr. Arie Trabelsi SuperCom Ltd . 1 Arie Shenkar Street Hertzliya Pituach 4672514 Israel
Re: Super Com Ltd. Form 20-F for the Fiscal Year ended December 31, 2014 Filed April 13, 2015 File No. 001-33668
Dear Mr. Trabelsi:
We have reviewed your filing an d have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure.
Please respond these comments within ten busine ss days by providing the requested information or advise us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circum stances , please tell us why in your response.
After reviewing your response to these comments, we may have additional comments.
Form 20 -F for the Fiscal Year ended December 31, 2014
Cover page
1. Please provide us with your analysis and cal culations underlying your determination that you qualify as a non -accelerated filer.
Item 5. Operating and Financial Review and Prospects, page 24
Revenues, page 26
2. Please revise future filings to clarify the reasons underlying the changes you disclose, and quantify the amounts attributable to each change. For example, you refer here and pages 25 and 30 to generating revenues, including changes to revenue, from deplo yments under contracts with new customers and relationships acquired via the SmartID
Arie Trabelsi SuperCom Ltd. September 30, 2015 Page 2
acquisition. However, it is unclear from your disclosure the amount of change attributable to new customers, the number of new customers, and the amount attributable to the relations you acquired. Also, while we note the disclosure that the increase is “mainly” due to new projects, it is unclear how much of the change relates to the partial deployment to which you refer and how much deployment remains on those projects.
Gross Profit, page 26
3. We note the disclosure that the decrease in gross margin is attributable to a change in your mix of revenues. Please revise future filings to clarify how your mix of revenues changed such that gross margin was impacted. For examp le, similar to the discussion during management’s fourth quarter earnings call, describe the proportion of revenues generated from new contract deployment and the proportion of revenues categorized recurring, such as consumables, maintenance and licenses, and the impact that proportion had on gross margin.
Item 15. Controls and Procedures, page 54
Management’s Annual Report on Internal Control over Financial Reporting, page 55
4. We note from page F -3 that your independent registered public accounting firm opined that you maintained effective internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework (199 2) issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. However, in this report you indicate your management utilized the COSO Internal Control -Integrated Framework (2013) to perform its assessment.
Clarify for us whic h version of the COSO Integrated Framework was used to assess the effectiveness of your internal control over financial reporting as of December 31, 2014.
Please have your auditor explain why it would be appropriate to use a different version of the COS O integrated framework in performing its audit. Please refer to paragraph 5 of PCAOB Auditing Standard No. 5.
We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes the information the Securities Exchange Act of 1934 and all applicable Exchange Act rules require. Since the company and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy and adequacy of t he disclosures they have made.
Arie Trabelsi SuperCom Ltd. September 30, 2015 Page 3
In responding to our comments, please provide a written statement from the company acknowledging that:
the company is responsible for the adequacy and accuracy of the disclosure in the filing;
staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person u nder the federal securities laws of the United States.
You may contact Dennis Hult at (202) 551-3618 or me at (202) 551-3662 if you have questions regarding comments on the financial statements and related matters. Please contact Geoffrey Kruczek at (202) 551-3641 or Tim Buchmiller, Senior Examiner at (202) 551-3635 with any other questions.
Sincerely,
/s/ Kevin Kuhar
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Mail Stop 3030 September 30, 2015 Via E -Mail Mr. Arie Trabelsi SuperCom Ltd . 1 Arie Shenkar Street Hertzliya Pituach 4672514 Israel Re: Super Com Ltd. Form 20-F for the Fiscal Year ended December 31, 2014 Filed April 13, 2015 File No. 001-33668 Dear Mr. Trabelsi: We have reviewed your filing an d have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. Please respond these comments within ten busine ss days by providing the requested information or advise us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circum stances , please tell us why in your response. After reviewing your response to these comments, we may have additional comments. Form 20 -F for the Fiscal Year ended December 31, 2014 Cover page 1. Please provide us with your analysis and cal culations underlying your determination that you qualify as a non -accelerated filer. Item 5. Operating and Financial Review and Prospects, page 24 Revenues, page 26 2. Please revise future filings to clarify the reasons underlying the changes you disclose, and quantify the amounts attributable to each change. For example, you refer here and pages 25 and 30 to generating revenues, including changes to revenue, from deplo yments under contracts with new customers and relationships acquired via the SmartID Arie Trabelsi SuperCom Ltd. September 30, 2015 Page 2 acquisition. However, it is unclear from your disclosure the amount of change attributable to new customers, the number of new customers, and the amount attributable to the relations you acquired. Also, while we note the disclosure that the increase is “mainly” due to new projects, it is unclear how much of the change relates to the partial deployment to which you refer and how much deployment remains on those projects. Gross Profit, page 26 3. We note the disclosure that the decrease in gross margin is attributable to a change in your mix of revenues. Please revise future filings to clarify how your mix of revenues changed such that gross margin was impacted. For examp le, similar to the discussion during management’s fourth quarter earnings call, describe the proportion of revenues generated from new contract deployment and the proportion of revenues categorized recurring, such as consumables, maintenance and licenses, and the impact that proportion had on gross margin. Item 15. Controls and Procedures, page 54 Management’s Annual Report on Internal Control over Financial Reporting, page 55 4. We note from page F -3 that your independent registered public accounting firm opined that you maintained effective internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control - Integrated Framework (199 2) issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. However, in this report you indicate your management utilized the COSO Internal Control -Integrated Framework (2013) to perform its assessment. Clarify for us whic h version of the COSO Integrated Framework was used to assess the effectiveness of your internal control over financial reporting as of December 31, 2014. Please have your auditor explain why it would be appropriate to use a different version of the COS O integrated framework in performing its audit. Please refer to paragraph 5 of PCAOB Auditing Standard No. 5. We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes the information the Securities Exchange Act of 1934 and all applicable Exchange Act rules require. Since the company and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy and adequacy of t he disclosures they have made. Arie Trabelsi SuperCom Ltd. September 30, 2015 Page 3 In responding to our comments, please provide a written statement from the company acknowledging that: the company is responsible for the adequacy and accuracy of the disclosure in the filing; staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person u nder the federal securities laws of the United States. You may contact Dennis Hult at (202) 551-3618 or me at (202) 551-3662 if you have questions regarding comments on the financial statements and related matters. Please contact Geoffrey Kruczek at (202) 551-3641 or Tim Buchmiller, Senior Examiner at (202) 551-3635 with any other questions. Sincerely, /s/ Kevin Kuhar Kevin Kuhar Accounting Branch Chief Office of Electronics and Machinery cc: Rick Werner, Esq