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TWST: Could we begin with a brief overview and historical sketch of Radcom (Nasdaq:RDCM)?

Mr. Zigdon: Radcom develops sophisticated network testing and quality management solutions that are used by developers and service providers to test, analyze, and stress complex communications networks. They are used throughout the network lifecycle to improve quality and reduce costs. During network development, our products are used in the laboratory to simulate network conditions and analyze problems. This reduces time-to-market and development costs. During installation, our products are used to identify, diagnose, and resolve network problems. This speeds up the installation process and reduces risk. Our products are also used to monitor quality and isolate problems of working networks. This reduces quality degradation and downtime, and cuts support costs. Our products are the most advanced on the market, and set the standard in our industry. Our newest products for converged networks – especially Next Generation Cellular and Voice Over Packet -- were the first on the market, and are the most comprehensive by far.

TWST: What does the competitive landscape look like in this space?

Mr. Zigdon: This is a hot market, so of course we have competition, from companies like Agilent, Ixea, Acterna Tektronix, Empirix and others. But this is a niche market and we have unique advantages.

TWST: What are some of the issues affecting you now and as you look ahead what trends and developments do you see emerging in this space and what will be Radcom’s response?

Mr. Zigdon: Obviously the biggest trend that has affected us is the industry slowdown. Our products are for network development, and that was the first area to be frozen. However, this is also the first area that is recovering. As soon as markets began to stabilize, the industry began to work on new networks again. Especially in the U.S., during the last few quarters we have seen increased demand for our convergence products. However, the slowdown has gotten worse in Europe, and our sales in Europe have been during the first quarter were lower than in the 4th quarter of 2001. In general, visibility remains lower than it was before the slowdown, and our customers are still cautious. But we are still very optimistic for the long term. The renewed convergence development that we are saying seeing confirms our view. The industry cannot afford to ignore the tremendous advantages and cost-savings of packet technology. Voice quality has been the barrier, and the only way to solve the problem is through sophisticated testing solutions. Our solutions are a very cost-effective way to achieve high voice quality and reliable networks within an acceptable timeframe. So the evolution to converged networks is a big opportunity for us. As I said before, the major trend we are addressing is the move to convergence technologies. Because of the slowdown, this is happening slower than originally expected. But it is happening, and it is a major opportunity for us.

TWST: What are the primary factors that affect your operating margins?

Mr. Zigdon: One of the advantages of our business is that our products are very sophisticated and have a high software content,. So our gross margins are high, averaging about 65% and higher. Since we depend so much on keeping our technology edge, our R&D expenses are also high.