Non-GAAP operating loss decreases to $267,000 compared to $481,000
in Q1 2009 and $984,000 in Q2 2008 Non-GAAP operating loss for the
six month period decreases to $705,000 compared to $2.5 million in
the year-ago period FRANKLIN, Wis., Aug. 31 /PRNewswire-FirstCall/
-- VUANCE Ltd. (NASDAQ: VUNC), a leading provider of innovative
Radio Frequency Verification Solutions, including active RFID,
electronic access control, credentialing, accountability and
critical situation management, today announced operating results
for the second quarter period ending June 30, 2009. Operational
Highlights -- Non-GAAP operational losses continued to narrow
substantially. On a non-GAAP basis (see reconciliation between GAAP
and non-GAAP results at the end of this press release) the Company
reported a non-GAAP operating loss of $267,000 in the second
quarter of 2009 compared sequentially to a non-GAAP operating loss
of $481,000 in the first quarter of 2009 and compared to a non-GAAP
operating loss of $984,000 in the second quarter last year. --
Revenues, excluding those related to the Eastern European airport
project which was essentially completed in the second quarter,
increased across each of VUANCE's business segments due to
continued strong demand for the Company's technologies within each
market vertical. -- The Company announced a five-year project worth
approximately $5 million to supply and assist in the programming of
a new integrated security system based on VUANCE's proprietary
Managed Automated Security Controls (MASC) system to protect the
facilities for Allens, Inc. a privately held, family-owned company
that grows and packs vegetables under 11 well-known brand names.
Second Quarter 2009 Selected Unaudited Financial Results Revenues
for the quarter ended June 30, 2009 decreased 30.9% to $3.7 million
from $5.3 million in the year-ago second quarter. The decrease was
largely driven by a decrease in revenues from the airport security
project that was nearly completed during second quarter 2009 as
well as a delay in revenues of over $200,000 that is expected to be
recognized in third quarter 2009. Eyal Tuchman, Chief Executive
Officer of VUANCE Ltd., commented, "Demand for our expertise
remained strong across our entire business, with particular
strength in government and public safety sectors. We are active in
bidding projects financed by government funds, and believe these
projects will become revenue-generating beginning in the second
half of this year and throughout 2010. Excluding sales related to
the airport in Eastern Europe, revenues across our business
increased both sequentially and year-over-year. "We are pleased to
have completed the major portion of the work on the international
airport project and are now preparing to enter the ongoing
maintenance phase," continued Mr. Tuchman. "In the prior-year
second quarter, we recognized approximately $2.3 million in revenue
related to the airport project, an amount about three times greater
than the revenue generated in the second quarter of 2009, resulting
in a year-over-year top-line decrease. However, we expect to show
sequential revenue growth in the third quarter of 2009." Gross
profit decreased 32.0% to $2.2 million for the second quarter
compared to $3.2 million for the prior-year second quarter. Gross
profit margin for the quarter was 59.2%, compared to the 60.1% for
the second quarter of 2008. Total operating expenses for the
quarter were $2.8 million, down 8.6% sequentially compared to the
$3.1 million for the first quarter 2009 and down 37.3% compared to
the $4.5 million for the second quarter last year. The Company
reported a loss from operations for the quarter of $647,000
compared sequentially to a loss from operations of $744,000 and
down 50.2% compared to the $1.3 million for the second quarter last
year. The net loss from continuing operations was $819,000, or
$(0.15) per basic and diluted share, compared sequentially to a net
loss from continuing operations of $875,000, or $(0.17) per basic
and diluted share, for the three months ended March 31, 2009 and
compared with a net loss from continuing operations of $1.6
million, or $(0.30) per basic and diluted share, in the second
quarter of 2008. The Company's net loss was $819,000, or $(0.15)
per basic and diluted share, for the three months ended June 30,
2009, compared sequentially with a net loss of $940,000, or $(0.18)
per basic and diluted share in the first quarter 2009 and compared
with a net loss of $1.6 million, or $(0.30) per basic and diluted
share for the second quarter last year. The Company used 5.5
million weighted average shares outstanding in the calculation of
net loss per share for the second quarter of 2009, compared to 5.2
million for the second quarter last year. On a non-GAAP basis (see
reconciliation between GAAP and non-GAAP results at the end of this
press release), excluding non-cash stock-based compensation and
amortization of intangible assets during the second quarter of
2009, the Company reported a non-GAAP operating loss of $267,000
compared sequentially to a non-GAAP operating loss of $481,000 in
the first quarter 2009 and compared to a non-GAAP operating loss of
$984,000 in the second quarter of 2008. In the second quarter of
2009, the Company's non-GAAP net loss from continuing operations
totaled $439,000 or $(0.08) per basic and diluted share, compared
sequentially to a non-GAAP net loss from continuing operations of
$612,000, or $(0.12) per basic and diluted share for the first
quarter 2009 and compared to a non-GAAP net loss from continuing
operations of $1.2 million, or $(0.24) per basic and diluted share
in the second quarter last year. Mr. Tuchman continued, "Management
remains focused on achieving our core financial objectives as well
as identifying market opportunities to leverage in this challenging
economic environment. Our efforts to reduce expenses have lowered
our Non-GAAP operational break-even point." Revenues for the six
months ended June 30, 2009 decreased 15.2% to $8.0 million compared
with revenues of $9.4 million during the same period in 2008. Gross
profit decreased 22.4% to $4.5 million for the six months versus
$5.8 million for the year-ago period. Gross profit margin for the
six months was 56.1% compared to gross profit margin of 61.3% for
the year-ago period. Total operating expenses for the six months
were $5.9 million, compared to total operating expenses of $8.9
million for the prior-year. The Company reported a loss from
operations of $1.4 million compared to a loss from operations of
$3.2 million for the year-ago period. The Company reported a net
loss from continuing operations of $1.7 million, or $(0.32) per
basic and diluted share, for the six months compared with a net
loss from continuing operations of $5.5 million, or $(1.07) per
basic and diluted share, in the year-ago period based on 5.4
million and 5.1 million weighted average shares outstanding,
respectively. The Company reported a net loss of $1.8 million, or
$(0.33) per basic and diluted share, for the six months compared
with a net loss of $5.5 million, or $(1.07) per basic and diluted
share, in the year-ago period based on 5.4 million and 5.1 million
weighted average shares outstanding, respectively. On a non-GAAP
basis (see reconciliation between GAAP and non-GAAP results at the
end of this press release), excluding non-cash stock-based
compensation and amortization of intangible assets during the first
six months of 2009, the Company reported a non-GAAP operating loss
of $705,000 compared with a non-GAAP operating loss of $2.5 million
last year. For the six months ended June 30, 2009, the Company's
non-GAAP net loss from continuing operations totaled $1.0 million,
or $(0.19) per basic and diluted share, versus a non-GAAP net loss
from continuing operations of $4.2 million, or $(0.81) per basic
and diluted share, last year, based on 5.4 million and 5.1 million
weighted average shares outstanding, respectively. For the six
months ended June 30, 2009, the Company's non-GAAP net loss totaled
$1.1 million, or $(0.20) per basic and diluted share, versus a
non-GAAP net loss of $4.2 million, or $(0.81) per basic and diluted
share, last year based on 5.4 million and 5.1 million weighted
average shares outstanding, respectively. VUANCE completed the
quarter with cash, restricted cash and cash equivalents totaling
$1.1 million and approximately $570,000 utilized on its accounts
receivable-based credit line as of June 30, 2009. The Company's
financial results have been prepared on a going concern basis,
which presumes the realization of assets and the settlement of
liabilities in the normal course of operations. The application of
the going concern basis is dependent upon the Company having
sufficient available cash resources and achieving profitable
operations to generate sufficient cash flows to fund continued
operations. Should the Company fail to generate sufficient cash
flows from operations, it will require additional financing to
remain a going concern. Use of Non-GAAP Financial Information In
addition to reporting financial results in accordance with
generally accepted accounting principles, or GAAP, VUANCE uses
non-GAAP measures of operational profit, net income and earnings
per share, which are adjustments from results based on GAAP to
exclude non-cash equity-based compensation charges in accordance
with SFAS 123(R), amortization of intangible assets related to
acquisitions, Beneficial conversion feature and amortization of
discount on convertible bonds and other related expenses. VUANCE
management believes the non-GAAP financial information provided in
this release provides meaningful supplemental information regarding
our performance and enhances the understanding of the Company's
on-going economic performance. The presentation of this non-GAAP
financial information is not intended to be considered in isolation
or as a substitute for results prepared in accordance with GAAP.
Management uses both GAAP and non-GAAP information in evaluating
and operating the business and as such deemed it important to
provide all this information to investors. About VUANCE Ltd. VUANCE
Ltd. develops and markets state-of-the-art security solutions for
viewing, tracking, locating, credentialing, and managing essential
assets and personnel. VUANCE solutions encompass electronic access
control, urban security, and critical situation management systems
as well as long-range Active RFID for public safety, commercial,
and government sectors. The Company's comprehensive product line
enables end-to-end solutions that can be employed to successfully
overcome the most difficult security challenges. Its Critical
Situation Management System (CSMS) is the industry's most
comprehensive mobile credentialing and access control system,
designed to meet the needs of Homeland Security and other public
initiatives. VUANCE is serious about security. VUANCE Ltd. is
headquartered in Franklin, WI. Its common stock is listed on the
NASDAQ Capital Market under the symbol "VUNC." For more
information, visit http://www.vuance.com/. Safe Harbor This press
release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Statements
preceded or followed by or that otherwise include the words
"believes", "expects", "anticipates", "intends", "projects",
"estimates", "plans", and similar expressions or future or
conditional verbs such as "will", "should", "would", "may" and
"could" are generally forward-looking in nature and not historical
facts. Forward-looking statements in this release also include
statements about business and economic trends. Investors should
also consider the areas of risk described under the heading
"Forward Looking Statements" and those factors captioned as "Risk
Factors" in the Company's periodic reports under the Securities
Exchange Act of 1934, as amended, or in connection with any
forward-looking statements that may be made by the Company. These
statements are subject to known and unknown risks, uncertainties
and other factors that may cause actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements arising from the annual audit by
management and the Company's independent auditors. The Company
undertakes no obligation to update or revise these forward-looking
statements, whether as a result of new information, future events
or otherwise, after the date of this press release. The Company
also disclaims any duty to comment upon or correct information that
may be contained in reports published by the investment community.
Investor/Media Contact Hayden IR Brett Maas, 646-536-7331 CONDENSED
CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands June 30,
December 31, 2009 2008 ---- ---- Unaudited Audited ---------
------- ASSETS CURRENT ASSETS: Cash and cash equivalents $106 $812
Restricted cash deposit 988 2,150 Trade receivables, net of
allowance for doubtful accounts 1,441 840 Other accounts receivable
and prepaid expenses 363 1,074 Inventories 905 1,307 Assets
attributed to discontinued operations - 260 --- --- Total current
assets 3,803 6,443 -------------------- ----- ----- INVESTMENTS AND
LONG-TERM RECEIVABLES: Severance pay fund 253 314 --- --- PROPERTY
AND EQUIPMENT, NET 199 218 --- --- OTHER ASSETS Goodwill 685 685
Intangible assets and deferred charges 1,268 1,275 ----- -----
Total Other Assets 1,953 1,960 ------------------ ----- ----- TOTAL
ASSETS $6,208 $8,935 ====== ====== (*) Includes $535 that is
pledged to the holder of $2,500 of convertible bonds. In August
2009 the parties amended the agreement and agreed among other terms
to release the pledged cash. For more information on the amendment
please see the Company's 6-K dated Aug 20, 2009. CONDENSED
CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands June 30,
December 31, 2009 2008 ---- ---- Unaudited Audited ---------
------- LIABILITIES AND SHAREHOLDERS' DEFICIT CURRENT LIABILITIES:
Short-term bank credit $572 $299 Trade payables 1,301 1,714
Employees and payroll accruals 275 247 Accrued expenses and other
liabilities 2,386 5,007 Convertible bonds 820 3,157 --- ----- Total
current liabilities 5,354 10,424 ------------------------- -----
------ LONG-TERM LIABILITIES: Convertible bonds (*) 2,304 -
Long-term loan and others (*) 1,425 - Accrued severance pay 296 378
--- --- Total long-term liabilities 4,025 378
--------------------------- ----- --- COMMITMENTS AND CONTINGENT
LIABILITIES SHAREHOLDER'S DEFICIT (3,171) (1,867) ------ ------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $6,208 $8,935 ======
====== (*) In August 2009, the Company amended the agreement with
the holder of $2,500 of convertible bonds under which the parties
agreed to set up a new payment schedule of the total debt. As a
result, an amount of $3,613 (convertible bond, unpaid interest and
additional amounts) was classified as long-term liabilities.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in
thousands (except share data) Six months ended Three months ended
June 30, June 30, -------- -------- 2009 2008 2009 2008 ---- ----
---- ---- Unaudited --------- Revenues $7,990 $9,423 $3,646 $5,278
Cost of revenues 3,510 3,648 1,489 2,105 ----- ----- ----- -----
Gross profit 4,480 5,775 2,157 3,173 ----- ----- ----- -----
Operating expenses: Research and development 871 1,463 497 730
Selling and marketing 3,756 5,812 1,672 2,937 General and
administrative 1,244 1,666 635 804 ----- ----- --- --- Total
operating expenses 5,871 8,941 2,804 4,471 ------------------------
----- ----- ----- ----- Operating loss (1,391) (3,166) (647)
(1,298) Financial expenses, net (289) (2,233) (164) (203) ----
------ ---- ---- Loss before taxes on income (1,680) (5,399) (811)
(1,501) Taxes on income (14) (115) (8) (49) --- ---- --- --- Net
loss from continuing operations (1,694) (5,514) (819) (1,550) Loss
from discontinuing operations (65) - - - --- --- --- --- Net loss
$(1,759) $(5,514) $(819) $(1,550) ======= ======= ===== =======
Basic and diluted loss from continuing operations $(0.32) $(1.07)
$(0.15) $(0.30) ====== ====== ====== ====== Basic and diluted loss
from discontinuing operations $(0.01) $- $- $- ====== === === ===
Basic and diluted net loss per share $(0.33) $(1.07) $(0.15)
$(0.30) ====== ====== ====== ====== Weighted average number of
Ordinary shares used in computing basic and diluted net loss per
share 5,386,092 5,138,834 5,495,539 5,150,991 ========= =========
========= ========= RECONCILIATION BETWEEN GAAP TO NON-GAAP
STATEMENTS OF OPERATIONS U.S. dollars in thousands (except share
data) Six months ended Six months ended June 30, 2009 June 30, 2008
------------- ------------- GAAP Adjustment Non-GAAP GAAP
Adjustment Non-GAAP ---- ---------- -------- ---- ----------
-------- Unaudited Unaudited --------- --------- Revenues $7,990 -
$7,990 $9,423 - $9,423 Cost of revenues 3,510 (5)(a) 3,505 3,648
(10)(a) 3,638 ----- ----- ----- ----- ------ ----- Gross profit
4,480 5 4,485 5,775 10 5,785 ----- --- ----- ----- --- -----
Operating expenses: Research and development 871 (293)(a)(b) 578
1,463 (285)(a)(b) 1,178 Selling and marketing 3,756 (242)(a)(b)
3,514 5,812 (226)(a)(b) 5,586 General and administrative 1,244
(146)(a) 1,098 1,666 (115)(a) 1,551 ----- ------- ----- -----
------- ----- Total operating expenses 5,871 (681)(a)(b) 5,190
8,941 (626)(a)(b) 8,315 ----- ---------- ----- ----- ----------
----- Operating loss (1,391) 686 (705) (3,166) 636 (2,530)
Financial expenses, net (289) - (289) (2,233) 715(c) (1,518) ----
--- ---- ------ ----- ------ Loss before taxes on income (1,680)
686 (994) (5,399) 1,351 (4,048) Taxes on income (14) - (14) (115) -
(115) --- --- --- ---- --- ---- Net loss from continuing operations
(1,694) 686 (1,008) (5,514) 1,351 (4,163) Loss from discontinuing
operations (65) - (65) - - - --- --- --- --- --- --- Net loss
$(1,759) $686 $(1,073) $(5,514) $1,351 $(4,163) ======== ====
======= ======= ====== ======= Basic and diluted loss from
continuing operations $(0.32) $0.13 $(0.19) $(1.07) $0.26 $(0.81)
====== ===== ====== ====== ===== ====== Basic and diluted loss from
discontinuing operations $(0.01) $- $(0.01) $- $- $- ====== ===
====== === === === Basic and diluted net loss per share $(0.33)
$0.13 $(0.20) $(1.07) $0.26 $(0.81) ====== ===== ====== ======
===== ====== Weighted average number of Ordinary shares used in
computing basic and diluted net loss per share 5,386,092 5,386,092
5,386,092 5,138,834 5,138,834 5,138,834 ========= =========
========= ========= ========= ========= (a) The effect of
stock-based compensation. (b) The effect of amortization of
intangible assets related to acquisition. (c) Beneficial conversion
feature and amortization of discount on convertible bonds and other
related expenses. RECONCILIATION BETWEEN GAAP TO NON-GAAP
STATEMENTS OF OPERATIONS U.S. dollars in thousands (except share
data) Three months ended Three months ended June 30, 2009 June 30,
2008 ------------- ------------- GAAP Adjustment Non-GAAP GAAP
Adjustment Non-GAAP ---- ---------- -------- ---- ----------
-------- Unaudited Unaudited --------- --------- Revenues $3,646 -
$3,646 $5,278 - $5,278 Cost of revenues 1,489 (1)(a) 1,488 2,105
(5)(a) 2,100 ----- ----- ----- ----- ----- ----- Gross profit 2,157
1 2,158 3,173 5 3,178 ----- --- ----- ----- --- ----- Operating
expenses: Research and development 497 (190)(a)(b) 307 730
(137)(a)(b) 593 Selling and marketing 1,672 (93)(a)(b) 1,579 2,937
(119)(a)(b) 2,818 General and administrative 635 (96)(a) 539 804
(53)(a) 751 --- ------ --- --- ------ --- Total operating expenses
2,804 (379)(a)(b) 2,425 4,471 (309)(a)(b) 4,162 ----- ----------
----- ----- ---------- ----- Operating loss (647) 380 (267) (1,298)
314 (984) Financial expenses, net (164) - (164) (203) - (203) ----
--- ---- ---- --- ---- Loss before taxes on income (811) 380 (431)
(1,501) 314 (1,187) Taxes on income (8) - (8) (49) - (49) --- ---
--- --- --- --- Net loss $(819) $380 $(439) $(1,550) $314 $(1,236)
===== ==== ===== ======= ==== ======= Basic and diluted net income
(loss) per share $(0.15) $0.07 $(0.08) $(0.30) $0.06 $(0.24) ======
===== ====== ====== ===== ====== Weighted average number of
Ordinary shares used in computing basic and diluted net loss per
share 5,495,539 5,495,539 5,495,539 5,150,991 5,150,991 5,150,991
========= ========= ========= ========= ========= ========= (a) The
effect of stock-based compensation. (b) The effect of amortization
of intangible assets related to acquisition. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS U.S. dollars in thousands Six months ended
Three months ended June 30, June 30, -------- -------- 2009 2008
2009 2008 ---- ---- ---- ---- Unaudited --------- Cash flows from
operating activities: --------------- Net loss $(1,759) $(5,514)
$(819) $(1,550) Less: Loss for the period from discontinued
operations (65) - - - --- --- --- --- Net income (loss) from
continuing operations (1,694) (5,514) (819) (1,550) Adjustments to
reconcile net loss to net cash used in operating activities:
Depreciation and amortization 359 325 195 167 Accrued severance
pay, net (21) 13 (13) 10 Stock based compensation 387 412 221 201
Amortization of deferred charges - 159 - - Amortization of discount
on convertible bonds - 715 - - Decrease (increase) in trade
receivables (527) 80 (268) (383) Decrease in other accounts
receivable and prepaid expenses 711 1,113 301 506 Decrease
(increase) in inventories 402 (445) 15 (40) Increase (decrease) in
trade payables (425) 184 (169) 398 Increase (decrease) in employees
and payroll accruals 28 54 (31) 95 Decrease in accrued expenses and
other liabilities (1,442) (1,889) (73) (1,287) Capital loss from
sale of marketable securities - 575 - 381 Decrease (increase) in
value of marketable securities, net - 252 - (168) Exchange
differences on principle of long-term loan - 5 - 3 --- --- --- ---
Net cash used in operating activities from continuing operations
(2,222) (3,961) (641) (1,667) Net cash provided by operating
activities from discontinued operations 195 - - - --- --- --- ---
Net cash used in operating activities (2,027) (3,961) (641) (1,667)
------ ------ ---- ------ Cash flows from investing activities:
--------------- Purchase of property and equipment (16) (53) (6)
(9) Proceeds from restricted cash deposits, net 1,162 635 312 289
Proceeds from sale of marketable securities of other company -
2,299 - 1,487 --- ----- --- ----- Net cash provided by investing
activities 1,146 2,881 306 1,767 ----- ----- --- ----- Cash flows
from financing activities: --------------- Short-term bank credit,
net 273 (45) 302 (14) Proceeds from long-term loan - - - -
Principal payment of long-term loan and convertible bonds (33)
(438) (33) (27) Payment to former owner of the acquiree (65) - (54)
- Proceeds from exercise of options, net *- - *- - --- --- --- ---
Net cash provided by (used in) financing activities 175 (483) 215
(41) --- ---- --- --- Increase (decrease) in cash and cash
equivalents (706) (1,563) (120) 59 Cash and cash equivalents at the
beginning of the period 812 2,114 226 492 --- ----- --- --- Cash
and cash equivalents at the end of the period $106 $551 $106 $551
==== ==== ==== ==== * Less than $1 Supplemental disclosure of cash
flows information: --------------------------- Acquisition of
certain assets and liabilities of Intelli-Site, Inc.: Assets and
liabilities of the subsidiaries, as of date of purchase: Working
capital (excluding cash and cash equivalents) $(62) $- $- $-
Property and equipment, net (4) - - - Intangible assets (313) - - -
Shares issued 68 - - - Liabilities to former owner of the acquiree
(*) 311 - - - --- --- --- --- $- $- $- $- === === === === Cash paid
during the period for: Interest $3 $8 $2 $2 === === === === Taxes
on income $14 $115 $8 $49 === ==== === === 1. During the six months
period and the three months period ended June 30, 2008 an amount of
$90 and $8, respectively related to accounts payable was repaid
using issuance of shares capital. 2. During the six months period
and the three months period ended June 30, 2008 an additional
amount of $276 and $15, respectively was recorded as goodwill with
respect to the acquisition of SHC as a result of clarifying of
certain provisions of the acquired entity. (*) Including $68 which
represents the acquisition date fair value of contingent
consideration. DATASOURCE: VUANCE Ltd. CONTACT: Brett Maas of
Hayden IR, +1-646-536-7331, , for VUANCE Ltd. Web Site:
http://www.vuance.com/
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