First Quarter Revenues Increase 6.5% to $4.3 Million; Non-GAAP
operating loss decreases to $481,000 compared to $663,000 in Q4
2008 and $1.6 Million in Q1 2008 FRANKLIN, Wis., May 28
/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 first quarter period ending March 31,
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
$481,000 in the first quarter of 2009 compared sequentially to a
non-GAAP operating loss of $663,000 in the fourth quarter of 2008
and compared to a non-GAAP operating loss of $1.6 million in the
first quarter last year. -- The Company announced it will 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 Daytona Beach International Airport
(DBIA). VUANCE will develop a comprehensive security system to
monitor and control all activity and movement through VUANCE's MASC
graphical interface, creating an intelligent, easy-to-use, powerful
security communications network within the Airport. -- VUANCE was
selected to monitor and control all activity in the Decker Lake
Youth Complex, a correctional facility designed for housing youth
in a Medium/High security setting, in West Valley City, Utah. --
VUANCE continues to gain traction in all of its business segments,
resulting in record levels of RFP activity and a growing pipeline.
U.S. Federal Government-funded projects, including a particular
emphasis on spending for schools and public safety projects, have
increased the total market opportunity for near-term projects.
First Quarter 2009 Selected Unaudited Financial Results Revenues
for the quarter ended March 31, 2009 increased 6.5% to $4.3 million
from $4.1 million in the year-ago first quarter. The increase was
largely driven by growth related to Electronic access control and
to the IRMS business, partially offset by lower revenues from the
European Airport project. The Company expects to complete phase one
of the European Airport project, which includes the design and
installation of VUANCE technology, during the second quarter and
will be transitioning to the ongoing, contracted maintenance and
support phase. As previously announced, VUANCE has signed a
10-year, $6.2 million contract for maintenance and support,
resulting in approximately $620,000 in annual revenue to VUANCE for
this phase of the project. Gross profit decreased 8.4% to $2.3
million for the first quarter compared to $2.5 million for the
prior-year first quarter. Gross profit margin for the quarter was
53.5%, compared to the 62.1% for the first quarter of 2008. The
change in gross profit margins was due to a shift in the Company's
mix of revenue as revenues from electronic access control and CSMS
have lower gross margin then Airport project. However, the lower
margin revenues from these products typically carry lower operating
expenses and therefore contribute higher operating margin. Total
operating expenses from continued operations for the quarter were
$3.1 million, down 28.8% sequentially compared to the $4.3 million
for the fourth quarter last year and down 31.4% compared to the
$4.5 million for the first quarter last year. The Company reported
a loss from operations for the quarter of $744,000 compared
sequentially to a loss from operations of $1.1 million and compared
to a $1.9 million loss from operations in the first quarter of
2008. In the fourth quarter 2008, the operating expenses and
operating loss exclude any impact of goodwill impairment charges.
Eyal Tuchman, Chief Executive Officer of VUANCE Ltd., commented,
"VUANCE made solid progress in its efforts to reduce costs and
narrow the Company's operating loss. We expect continued reductions
in operating expenses, and further improvement in our bottom line
performance, as we move forward during 2009. Revenue for the
quarter was up 6.5% compared to the first quarter last year, but
was lower when compared sequentially with the fourth quarter of
2008 due to seasonality, as our first quarter is historically our
slowest period of the year, and also us nearing completion and
entering into the second phase of the $13.8 million contract with a
European International Airport to provide for the integrated
perimeter security system and border control system. We will now
begin to transition into the 10-year maintenance and support phase,
resulted in lower, but recurring revenue to VUANCE from this
project." Mr. Tuchman continued, "We completed the quarter with a
backlog of $8.6 million for the next 12 months and a total backlog
of $47.4 million, providing optimism for the remainder of 2009.
Demand for our technology and expertise has not been impacted by
the recession, and RFP activity remains high. We are expecting
initial revenue from relatively large projects for regional
governments, backed by Federal stimulus funding, beginning in the
third quarter. In addition, we continue to see improved traction in
every part of our business, as airports, train stations, power
plants, schools and colleges, all look to add state-of-the-art
technology to help secure their facilities and protect their
constituents. We remain optimistic about the remainder of the year
and beyond." The net loss from continuing operations was $875,000,
or $(0.17) per diluted share, compared sequentially to a net loss
from continuing operations of $1.3 million, or $(0.24) per diluted
share, for the three months ended December 31, 2008 and compared
with a net loss from continuing operations of $4.0 million, or
$(0.77) per diluted share, in the first quarter of 2008. The
Company's net loss was $940,000, or $(0.18) per diluted share, for
the three months ended March 31, 2009, compared sequentially with a
net loss of $1.4 million, or $(0.27) per diluted share in the
fourth quarter of last year and compared with a net loss of $4.0
million, or $(0.77) per share for the first quarter last year. The
Company used 5.3 million weighted average shares outstanding in the
calculation of net loss per share for the first quarter of 2009,
compared to 5.1 million for the first quarter last year. In the
fourth quarter 2008, the net loss excludes any impact of goodwill
impairment charges. 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 related to the SHC acquisition of $263,000 during
the first quarter of 2009, the Company reported a non-GAAP
operating loss of $481,000 compared sequentially to a non-GAAP
operating loss of $663,000 in the fourth quarter of last year and
compared to a non-GAAP operating loss of $1.6 million in the first
quarter of 2008. In the first quarter of 2009, the Company's
non-GAAP net loss from continuing operations totaled $612,000 or
$(0.12) per diluted share, compared sequentially to a non-GAAP net
loss from continuing operations of $787,000, or $(0.15) for the
fourth quarter of last year and compared to a non-GAAP net loss
from continuing operations of $2.9 million, or $(0.57) per diluted
share in the first quarter last year. In the fourth quarter 2008,
the results exclude any impact of goodwill impairment charges.
VUANCE completed the quarter with cash, restricted cash and cash
equivalents totaling $1.5 million and approximately $270,000
utilized on its accounts receivable-based credit line as of March
31, 2009. The Company is nearing completion of its review of
potential Goodwill impairment charges related to its annual report,
Form 20-F. The Company expects to file its 20-F by the end of June,
and expects to record an impairment of its Goodwill of
approximately $3.2 million. Since this review is ongoing and not
yet complete, the Company is not providing an interim balance sheet
for the period ended March 31, 2009 in this press release. 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 intangibles 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 Rockville, MD. Its common stock is listed on the
NASDAQ Capital Market under the symbol "VUNC." For more
information, visit http://www.vuance.com/. Statement Regarding
Unaudited Financial Information The unaudited financial information
set forth above is subject to adjustments that may be identified
when audit work is performed on our year-end financial statements,
which could result in significant differences from this unaudited
financial information. In addition, once the 2008 financial
statements have been finalized and the audit is complete, the
Company may be required to record a non-cash charge for the
impairment of Goodwill of approximately $3.2 million. The Company
expects to publish its full 2008 annual results, together with the
filing of its annual report on Form 20-F with the Securities and
Exchange Commission, in June 2009. 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 STATEMENTS OF OPERATIONS U.S. dollars in thousands
(except share data) Three months ended March 31, 2009 2008
Unaudited Revenues $4,344 $4,079 Cost of revenues 2,021 1,543 Gross
profit 2,323 2,536 Operating expenses: Research and development 374
733 Selling and marketing 2,084 2,875 General and administrative
609 862 Total operating expenses 3,067 4,470 Operating (loss) (744)
(1,934) Financial expenses, net 125 2,030 Loss before taxes on
income (869) (3,964) Taxes on income 6 - Net loss from continuing
operations (875) (3,964) Loss from discontinued operations 65 - Net
(loss) $(940) $(3,964) Basic and diluted loss from continuing
operations $(0.17) $(0.77) Basic and diluted loss from discontinued
operations $( 0.01) $- Basic and diluted net loss per share $(
0.18) $(0.77) Weighted average number of Ordinary shares used in
computing basic and diluted net loss per share 5,273,207 5,126,677
RECONCILIATION BETWEEN GAAP TO NON-GAAP STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share data) Three months ended
Three months ended March 31, 2009 March 31, 2008 GAAP Adjustment
Non-GAAP GAAP Adjustment Non-GAAP Unaudited Unaudited Revenues
$4,344 - $4,344 $4,079 - $4,079 Cost of 2,021 (4)(a) 2,017 1,543
(5)(a) 1,538 revenues Gross profit 2,323 4 2,327 2,536 5 2,541
Operating expenses: Research and development 374 (103)(a)(b) 271
733 (148)(a)(b) 585 Selling and marketing 2,084 (107)(a)(b) 1,977
2,875 (107)(a)(b) 2,768 General and administrative 609 (49)(a) 560
862 (62)(a) 800 Total operating expenses 3,067 (259)(a)(b) 2,808
4,470 (317)(a)(b) 4,153 Operating(loss) (744) 263 (481) (1,934) 322
(1,612) Financial (expenses), net (125) - (125) (2,030) 715(c)
(1,315) Loss before taxes on income (869) 263 (606) (3,964) 1,037
(2,927) Taxes on income 6 - 6 - - - Net loss from continuing
operations (875) 263 (612) (3,964) 1,037 (2,927) Loss from
discontinued operations 65 - 65 - - - Net (loss) $(940) 263 $(677)
(3,964) 1,037 (2,927) Basic and diluted loss from continuing
operations $(0.17) $0.05 $(0.12) $(0.77) $0.20 $(0.57) Basic and
diluted loss from discontinued operations $( 0.01) $- $( 0.01) $-
$- $- Basic and diluted net loss per share $( 0.18) $0.05 $( 0.13)
$(0.77) $0.20 (0.57) Weighted average number of Ordinary shares
used in computing basic and diluted net loss per share 5,273,207
5,273,207 5,273,207 5,126,677 5,126,677 5,126,677 (a) The effect of
stock-based compensation. (b) The effect of amortization of
intangibles assets related to acquisition. (c) Beneficial
conversion feature and amortization of discount on convertible
bonds and other related expenses. DATASOURCE: VUANCE Ltd. CONTACT:
Investor/Media Contact, Brett Maas of Hayden IR, +1-646-536-7331, ,
for VUANCE Ltd. Web Site: http://www.vuance.com/
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