SUPERCOM REPORTS FINANCIAL RESULTS FOR THE SECOND QUARTER OF 2005
-- Revenues Up 84% YOY for 3rd Consecutive Quarter of Substantial YOY Growth -- -- 1st Homeland Security Deployment Complete --

New York, NY, and Ra'anana, Israel, August 25, 2005 ­ SuperCom Ltd. (OTCBB: SPCBF.OB; Euronext: SUP), a leading provider of smart card and electronic identification (e-ID)
solutions, today announced unaudited financial results for the second quarter ended June 30,
2005.

Financial Results
Revenues for the second quarter of 2005 increased by 84% to $2,160,000 compared to $1,173,000 in the second quarter of 2004, marking the Company's third consecutive quarter of substantial YOY quarterly revenue growth. Net loss for the period according to U.S. GAAP was ($1,545,000), or ($0.08) per diluted share, compared to ($880,000), or ($0.07) per diluted share, for the second quarter of 2004. The higher loss resulted primarily from $496,000 in one-time
expenses related to cost-cutting measures implemented by the Company. Excluding these expenses, the Company's non-U.S. GAAP net loss for the second quarter of 2005 was ($1,049,000), or ($0.06) per diluted share. Management believes that it is useful to investors to present net loss excluding the $496,000 of expenses related to the cost-cutting measures because of the one-time nature of these expenses.

Revenues for the first half of 2005 increased by 93% to $4,788,000 compared with $2,484,000 for the first half of 2004. Net loss for the period according to U.S. GAAP was ($2,135,000), or ($0.12) per diluted share, compared to ($1,660,000), or ($0.13) per diluted share, for the first half of 2004. Excluding the aforementioned expenses, the Company's non-U.S. GAAP net loss for the first half of 2005 was ($1,639,000), or ($0.09) per diluted share.

Use of Non-GAAP Financial Measures

This press release contains certain financial measures related to one-time expenses totaling $496,000 that are associated with cost-cutting measures implemented by the Company which are not calculated in accordance with generally accepted accounting principles in the United States (GAAP). Management believes that it is useful to investors to present net loss excluding the $496,000 of expenses because of their one-time, non-recurring nature. A reconciliation of
the Company's results is presented through the two Consolidated Statements of Operations provided with this press release: the first Condensed Consolidated Statements of Operations includes the effect of the one-time $496,000 in expenses related to the Company's cost-cutting measures and was prepared in accordance with GAAP, and the second Pro Forma Condensed Consolidated Statements of Operations excludes the effect of these expenses on all reported
periods and was not prepared in accordance with GAAP. These non-GAAP financial measures should not be viewed as a substitute for comparable GAAP financial measures.