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 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
brett@haydenir.com
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.
SOURCE VUANCE Ltd.
