Full-Year Revenues Increase 55% to Record $20.7 Million; Q4
Revenues up 32% Year-Over-Year to $5.5 Million ROCKVILLE, Md.,
March 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 selected preliminary operating results for the
fourth quarter and full-year periods ending December 31, 2008.
Operational Highlights -- 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. -- The Company
expanded its RAPTOR solution with two existing customers in the
North Eastern United States. VUANCE's RAPTOR system is a smart
card-based system and the industry's only solution that manages the
skills, certifications and licenses (attributes) of the responders
to emergencies and incidents without forcing states, counties and
municipalities to adopt a single definition of what qualifications
a specific type of responder must have. The Massachusetts Homeland
Security Region V and Chester County, PA., both expanded their use
of the RAPTOR system, and the Chester County agreement also
provides opportunities for business in nearby Bucks and Montgomery
counties. -- VUANCE was awarded a stake in a $900,000
government-funded project to develop a crime scene security and
evidentiary tracking system. The project, which is the result of a
grant sponsored by Vice President Joseph Biden, was awarded to
Delaware State University, the Delaware State Police and the
Delaware Department of Safety and Homeland Security. VUANCE's
portion of the project is nearly $700,000 for the first year. --
Due in large part to increased spending by the U.S. Federal
Government, and the particular emphasis on spending for schools and
public safety projects, VUANCE's pipeline of potential business has
substantially expanded compared to the same period in the prior
year. -- Non-GAAP operational losses narrowed 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 $663,000 in the fourth quarter of 2008
compared to the non-GAAP operating loss of $2.0 million in the
fourth quarter of 2007 and compared to the non-GAAP operating loss
of $1.1 million in the third quarter of 2008. The Company's
financial statements for the quarter and the year ended December
31, 2008 have not been finalized and are subject to the completion
of its year-end closing procedures. Therefore, the preliminary
selected unaudited financial data set forth below is likely to
change. As a consequence, actual results could differ materially
from the results below. In addition, once the 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 million during the fourth quarter and the full
year 2008. Preliminary Fourth Quarter 2008 Selected Unaudited
Financial Results Revenues for the quarter ended December 31, 2008
increased 31.8% to $5.5 million from $4.1 million in the year-ago
fourth quarter. The increase was largely driven by growth in the
implementation of international projects including progress in the
previously announced $13.8 million project at a European
International Airport and the Passive RFID business, specifically
related to Electronic access control. Gross profit increased 43.2%
to $3.2 million for the fourth quarter compared to $2.2 million for
the prior-year fourth quarter and essentially flat compared on a
sequential basis to the $3.3 million for the third quarter, despite
a small sequential drop in revenue. Gross profit margin for the
fourth quarter was 57.9%, up compared to the 53.3% for the fourth
quarter of 2007 and also up compared to the 56.6% in the third
quarter of 2008. Total operating expenses from continued operations
for the quarter, excluding any impact of goodwill impairment
charge, were $4.3 million, down 8.3% compared to $4.7 million in
the year-ago fourth quarter and also down sequentially compared to
$4.7 million for the third quarter of 2008. The Company is
expecting a loss from operations of $1.1 million compared to an
operating loss of $2.5 million in the fourth quarter last year and
compared sequentially to a $1.4 million operating loss for the
third quarter of 2008, excluding any impact of goodwill impairment
charges. Eyal Tuchman, Chief Executive Officer of VUANCE Ltd.,
commented, "VUANCE finished the year on a strong note, exceeding
our stated goal of $20 million in revenue. During the quarter we
expanded our gross profit margin despite a slight sequential
decline in revenue, demonstrating the leverage in our business
model. As part of our goal to reaching cash flow neutral status on
a non-GAAP basis, we decided to discontinue our locks initiative, a
complementary business we began in the third quarter. As of Dec 31,
2008 we had approximately $260,000 in inventory for this
initiative, during the first quarter of 2009, we have liquidated
this entire inventory. Our core business, meanwhile, is still
strong. We have seen a significant growth of our pipeline for
potential business with contracts leveraging funding from the
increase in spending by the U.S. government. The renewed focus on
security and public safety, especially for schools and colleges
across the country, is benefiting VUANCE and resulting in increase
in activity." The Company is expecting a net loss from continuing
operations of $1.3 million, or $(0.24) per diluted share, for the
three months ended December 31, 2008, compared with a net loss from
continuing operations of $6.1 million, or $(1.19) per diluted
share, in the fourth quarter of 2007 based on 5.2 million and 5.1
million weighted average shares outstanding, respectively, subject
to any further impact on goodwill impairment charges. The Company
is expecting a net loss of $1.4 million, or $(0.27) per diluted
share, for the three months ended December 31, 2008, compared with
a net loss of $6.1 million, or $(1.19) per diluted share, in the
fourth quarter of 2007 based on 5.2 million and 5.1 million
weighted average shares outstanding, respectively, subject to any
further impact on 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 $484,000 during the fourth quarter of 2008, the
Company reported a non-GAAP operating loss of $663,000 in the
fourth quarter of 2008 compared to the non-GAAP operating loss of
$2.0 million in the fourth quarter of 2007, excluding litigation
expenses. In the fourth quarter of 2008, the Company's non-GAAP net
loss from continuing operations totaled $787,000 or $(0.15) per
diluted share, compared to a non-GAAP net loss from continuing
operations of $5.6 million, or $(1.10) per diluted share in the
fourth quarter last year. The Company's non-GAAP net loss totaled
$926,000 or $(0.18) per diluted share for the fourth quarter of
2008, compared to non-GAAP net loss of $5.6 million, or $(1.10) per
diluted share in the fourth quarter last year. In 2008 all data is
subject to any further impact on goodwill impairment charges.
Preliminary Year Ended 2008 Selected Unaudited Financial Results
Revenues for the year ended December 31, 2008 increased 55.1% to a
record $20.7 million compared with revenues of $13.3 million during
2007. Gross profit increased 58.2% to $12.2 million for the year
versus $7.7 million for 2007. Gross profit margin for the year was
59.1% compared to gross profit margin of 57.9% for the year-ago
period. Total operating expenses for the year were $17.8 million,
reflecting the contribution of SHC, which was acquired at the end
of August 2007, compared to total operating expenses of $14.0
million for the prior-year, which included only four months of SHC,
excluding any further impact of goodwill impairment charges. The
Company is expecting a loss from operations of $5.6 million
compared to a loss from operations of $6.3 million for 2007,
excluding any further impact of goodwill impairment charges. The
Company is expecting a net loss from continuing operations,
excluding any further impact of goodwill impairment charges, of
$8.9 million, or $(1.71) per share, for the year, compared with a
net loss from continuing operations of $11.3 million, or $(2.57)
per share, in the year-ago period based on 5.2 million and 4.4
million weighted average shares outstanding, respectively. The
Company is expecting a net loss, excluding any further impact of
goodwill impairment charges, of $9.1 million, or $(1.76) per share,
for the year, compared with a net loss of $11.3 million, or $(2.57)
per share, in the year-ago period based on 5.2 million and 4.4
million weighted average shares outstanding, respectively. "We
entered 2009 with a backlog of $10.6 million for the next 12 months
and a total backlog of $51 million, setting the stage for another
record year in 2009," added Mr. Tuchman. "Our investment in sales
and marketing has enabled us to expand our market share and
establish VUANCE as a recognized leader in technologies to control
access to secure areas and track sensitive inventory. While we are
not providing specific guidance for 2009 due to the uncertainty in
the global economy, we are confident, based on our existing
backlog, our improving recurring revenue and our rapidly growing
pipeline of business, that we can build on our record 2008 and
improve both our top and bottom line results during 2009 as
compared to 2008." 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
intangibles assets related to the SHC acquisition of $1.5 million
during fiscal 2008, the Company reported a non-GAAP operating loss
of $4.1 million compared with a non-GAAP operating loss of $5.0
million last year, excluding litigation expenses. For the year
ended December 31, 2008, excluding also the Beneficial Conversion
Feature of convertible bonds of $0.8, the Company's non-GAAP net
loss from continuing operations totaled $6.6 million, or $(1.27)
per share, versus a non-GAAP net loss from continuing operations of
$9.7 million, or $(2.21) per share, last year, based on 5.2 million
and 4.4 million weighted average shares outstanding, respectively.
For the year ended December 31, 2008, excluding also the Beneficial
Conversion Feature of convertible bonds of $0.8, the Company's
non-GAAP net loss totaled $6.8 million, or $(1.32) per share,
versus a non-GAAP net loss of $9.7 million, or $(2.21) per share,
last year. In 2008 all data is subject to any further impact on
goodwill impairment charges. VUANCE completed the year with cash
and cash equivalent totaling $812,000. The Company's selected
preliminary 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. Investor Conference Call VUANCE will host
an investor conference call to discuss its fourth quarter 2008
operating results today, March 31 at 9:30 a.m. Eastern Time (ET)
(16:30 Israel Time). During the call, Mr. Eyal Tuchman, CEO, and
Mr. Lior Maza, CFO, will discuss the Company's results. To
participate, please dial 1-888-281-1167 if calling within the
United States. Please dial 0800-917-5108 if calling within the
United Kingdom. Please dial 03-9180687 if calling within Israel. A
replay will be available until December 2, 2009. To access, please
dial 1-888-782-4291 if calling within the United States. Please
dial 0-800-028-6837 if calling within the United Kingdom. Please
dial 03-9255936 if calling within Israel. The call will also be
accessible at the Company's corporate website at
http://www.vuance.com/. 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 and
provision for litigation-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 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 million. The Company expects to publish its
full 2008 financial results as well as its 2008 annual results,
together with the filing of its annual report on Form 20-F with the
Securities and Exchange Commission, in June 2009. The publication
and filing will be followed by a conference call with investors.
The timing of the conference call will be announced separately.
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.
RECONCILIATION BETWEEN GAAP TO NON-GAAP STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share data) Year ended Year ended
December 31, 2008 December 31, 2007 GAAP Adjustment Non-GAAP GAAP
Adjustment Non-GAAP Unaudited Unaudited Revenues $20,653 - $20,653
$13,314(*) - 13,314 Cost of revenues 8,452 (16) a) 8,436 5,600 (5)
a) 5,595 Gross profit 12,201 16 12,217 7,714 5 7,719 Operating
expenses: Research and Develop- Ment 2,571 (598) a) b) 1,973 1,716
(399) a) b) 1,317 Selling and marketing 11,924 (512) a) b) 11,412
9,041 (243) a) b) 8,798 General and adminis- trative 3,299 (343) a)
2,956 3,192 (667) a) c) 2,525 Litigation settlement expenses 8 - 8
34 - 34 Total operating expenses ** 17,802 (1,453) a) b) 16,349
13,983 (1,309) a) b) c) 12,674 Operating loss (5,601) 1,469 (4,132)
(6,269) 1,314 (4,955) Financial income (expenses), net*** (3,113)
809 d) (2,304) (4,652) 268 d) (4,384) Loss before taxes on income
(8,714) 2,278 (6,436) (10,921) 1,582 (9,339) Taxes on income (137)
- (137) (390)(*) - (390) Net loss from continuing opera- tions
(8,851) 2,278 (6,573) (11,311) 1,582 (9,729) Loss from discon-
tinued operations (272) - (272) - - - Net loss $(9,123) $2,278
$(6,845) $(11,311) $1,582 $(9,729) Basic and diluted loss from
continuing operations (1.71) 0.44 (1.27) (2.57) (0.36) (2.21) Basic
and diluted loss from discontinued operations (0.05) - (0.05) - - -
Basic and diluted net loss per share $(1.76) $0.44 $(1.32) $(2.57)
$(0.36) $(2.21) Weighted average number of Ordinary shares used in
computing basic and diluted net loss per share 5,171,406 5,171,406
5,171,406 4,391,860 4,391,860 4,391,860 a) The effect of
stock-based compensation. b) The effect of amortization of
intangibles assets related to acquisition. c) The effect of
provision for litigation-related expenses d) Beneficial conversion
feature and amortization of discount on convertible bonds and other
related expenses. * Certain comparative figures have been
reclassified to confirm to the current period presentation. **
Excluding any further impact of goodwill impairment charges of
approximately $3 million. *** Due to a breach of a certain
convertible bonds covenant, we had to recognize, in the year 2008,
financial expenses in the amount of $553, to accelerate deferred
expenses in the amount of $75 and to classify the Convertible Bond
as a current liability. We currently are negotiating with the major
holder about optional remedies to the violation RECONCILIATION
BETWEEN GAAP TO NON-GAAP STATEMENTS OF OPERATIONS U.S. dollars in
thousands (except share data) Three months ended Three months ended
December 31, 2008 December 31, 2007 GAAP Adjustment Non-GAAP GAAP
Adjustment Non-GAAP Unaudited Unaudited Revenues $5,456 - $5,456
$4,140(*) - $4,140 Cost of revenues 2,297 (3) a) 2,294 1,934 (3) a)
1,931 Gross profit 3,159 3 3,162 2,206 3 2,209 Operating expenses:
Research and development 497 (199) a) b) 298 812 (257) a) b) 555
Selling and marketing 2,998 (142) a) b) 2,856 2,947 (108) a) b)
2,839 General and administrative 803 (140) a) 663 935 (84) a) c)
851 Litigation settlement expenses 8 - 8 - - - Total operating
expenses ** 4,306 (481) a) b) 3,825 4,694 (449) a) b) c) 4,245
Operating loss (1,147) 484 (663) (2,488) 452 (2,036) Financial
income (expenses), net (110) - (110) (3,508) 9 d) (3,499) Loss
before taxes on income (1,257) 484 (773) (5,996) 461 (5,535) Taxes
on income (14) - (14) (103)(*) - (103) Net loss from continuing
operations (1,271) 484 (787) (6,099) 461 (5,638) Loss from
discontinued operations (139) - (139) - - - Net loss $(1,410) $484
$(926) $(6,099) $461 $(5,638) Basic and diluted loss from
continuing operations (0.24) 0.09 (0.15) (1.19) $0.09 (1.10) Basic
and diluted loss from discontinued operations (0.03) - (0.03) - - -
Basic and diluted net loss per share $(0.27) $0.09 $(0.18) $(1.19)
$(0.09) $(1.10) Weighted average number of Ordinary shares used in
computing basic and diluted net loss per share 5,246,529 5,246,529
5,246,529 5,124,273 5,124,273 5,124,273 a) The effect of
stock-based compensation. b) The effect of amortization of
intangibles assets related to acquisition. c) The effect of
provision for litigation-related expenses d) Beneficial conversion
feature and amortization of discount on convertible bonds and other
related expenses. * Certain comparative figures have been
reclassified to confirm to the current period presentation. **
Excluding any further impact of goodwill impairment charges of
approximately $3 million. Investor/Media Contact Hayden IR Brett
Maas, 646-536-7331 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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