Quarterly Revenues Increase 71% and Annual Revenues Increase 47.4%
from Prior-Year Periods ROCKVILLE, Md., March 27
/PRNewswire-FirstCall/ -- VUANCE, Ltd. (Nasdaq and Euronext: VUNC),
a leading provider of innovative Radio Frequency Verification
Solutions, including active RFID, electronic access control,
credentialing, accountability and incident response management,
today announced its operating results for the fourth quarter and
the full year of 2007. Recent Business Highlights -- Fourth quarter
revenues increased 71%, to $4.1 million, when compared with the
prior-year period. -- Fourth quarter gross profit increased 73%, to
$2.1 million, when compared with the prior-year period. -- During
the fourth quarter, the August acquisition of Milwaukee based
Security Holding Corp ("SHC") was fully integrated into the
Company. It was the first full quarter for which its finances were
recognized as part of VUANCE. In addition, the sales teams have now
been fully integrated into a reorganized and market-focused sales
team. -- A pilot program by Anglo America's Chilean copper mines to
increase safety and productivity was completed and VUANCE's Active
RFID solutions are now being implemented in other mines. --
VUANCE's announced how its Active RFID and electronic access
control products offered a set of solutions for Charlotte Country
Florida Airport in Punta Gorda, and other airports in the future.
-- VUANCE's AAID Security Solutions President, Pete Martin, was
selected as an Influential Security Industry Vendor by Security
Magazine. Fourth Quarter and Year Ended 2007 Operating Results
Revenues for the quarter ended December 31, 2007 increased 71% to
$4.1 million compared with revenues of $2.4 million in the fourth
quarter of 2006. For the year ended December 31, 2007, revenues
increased 47.4% to $13 million versus $8.8 million in 2006. Gross
profit increased 73% to $2.1 million in the most recent quarter,
versus $1.2 million in the three months ended December 31, 2006.
For the year ended December 31, 2007, gross profit increased 38.9%
to $7.4 million, compared with $5.3 million for the year ended
December 31, 2006. The Company reported a net loss of $6.1 million,
or $(1.19) per share, in the three months ended December 31, 2007,
compared with a net income of $7.9 million, or $1.90 per diluted
share, in the fourth quarter of 2006. A net loss of $11.3 million,
or $(2.57) per share, was recorded during the full year 2007,
versus a net income of $5.4 million, or $1.32 per diluted share, in
2006. A significant amount of the net loss in the fourth quarter of
2007 reflected a permanent reduction in the value of the shares of
On Track Innovation (NASDAQ:OTIV). 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,
amortization of intangibles assets related to SHC acquisition and
Beneficial Conversion Feature (hereinafter "BCF") of convertible
bonds of $461,000, the Company's net loss totaled $5.6 million, or
$(1.10) per share, in the fourth quarter of 2007, versus a non-GAAP
net income of $8.1 million, or $1.94 per diluted share, in the
three months ended December 31, 2006. Non- cash stock-based
compensation and BCF of convertible bonds of $184,000 was recorded
in the fourth quarter of 2006. Excluding non-cash stock-based
compensation, amortization of intangibles assets related to SHC
acquisition, onetime expenses and BCF of convertible bonds of $1.6
million the Company's non-GAAP net loss totaled $9.7 million, or
$(2.21) per share, in the year ended December 31, 2007, compared
with a non-GAAP net income of $5.8 million, $1.41 per diluted
share, in the previous year. Non-cash stock-based compensation and
BCF of convertible bonds of $391,000 was recorded in 2006.
Management Comments "We are pleased to report that revenue and
gross profits increased 71% and 73%, respectively, in the fourth
quarter of 2007 and 47% and 39% for the year as a whole when
compared with the prior-year periods. This demonstrates that
re-positioning the Company to focus on selling within the more
stable US market can create a solid business model for VUANCE,"
stated Eyal Tuchman, Chief Executive Officer of VUANCE Ltd.
"Indeed, the numbers were in line with management's expectations."
"The fourth quarter net loss was higher than a year earlier,
reflecting (1) the need to recognize the significant price decrease
of OTI shares, (2) the impact of SHC consolidation, and (3) higher
selling and marketing expenses related to our focus on providing
Real-time Location, Electronic Access Control, and Incident
Response Management Solutions within select vertical markets within
the United States. The annual net loss was higher for these reasons
as well as the substantial additional costs related to the two
completed acquisitions during 2007." "This was a significant
quarter for VUANCE, as we began executing management's plan to grow
revenues in the United States by acquiring synergistic companies
that can increase our sales power. With the integration now in
place, we can focus on our goals of increasing our share of the
market for long-range active RFID, electronic access control,
credentialing and incident response management systems within the
public safety, commercial, and government sectors. Indeed, we're
building closer relationships with our business partners, leading
system integrators and distributors, who appreciate VUANCE's strong
competitive advantage: we're the only company to offer this full
range of products enabling the business partners to provide their
clients with seamless, end-to-end solutions." Mr. Tuchman
concluded, "With a solid business model on which to build, we are
optimistic about 2008. We anticipate sales revenues of over $20
million this year. We will remain alert for organic growth and
acquisition opportunities that can contribute to our forward
momentum within target vertical markets. In addition, during the
fourth quarter of 2007 we began implementing added cost controls,
which will take effect during 2008 and assist VUANCE in achieving
operational profitability by the end of 2008 and net profitability
in future years." Investor Conference Call VUANCE will host an
investor conference call to discuss its fourth quarter and year
ended 2007 operating results today, Thursday, March 27, 2008 at
10:00 AM Eastern Daylight Time (EDT) (16:00 Israel Time). During
the call, Mr. Eyal Tuchman, CEO, and Mr. Lior Maza, CFO, will
discuss the Company's fourth quarter and annual results. To
participate in the conference call, please call one of the
following numbers five minutes before 10:00 AM EDT (16:00 Israel
Time): In Israel: 03-9180609 In the US (toll free): 1-888-407-2553
In the UK (toll free): 0-800-917-9141 A replay of the
teleconference will be available for a one-week period from 14:00
EDT (20:00 Israel Time) on March 27, 2008 until 13:00 EDT on April
03, 2008. To access the replay, please call one of the following
numbers: In Israel: 03- 9255946 In the US (toll free):
1-888-254-7270 In the UK (toll free): 0-800-917-1246 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), onetime
expenses and beneficial conversion feature and amortization of
discount on convertible bonds and 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 range of
products enables end-to-end solutions that can be employed to
successfully overcome the most difficult security challenges. Its
Incident Response Management System (IRMS) 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 and on the Euronext Exchange 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. 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. 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. 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 Jerry Cahn, Ph.D.,
J.D. Target 3 Communications Tel: 646-827-0009 Fax: 646-827-9009
CONDENSED CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands
December 31, December 31, 2007 2006 Unaudited Audited ASSETS
CURRENT ASSETS: Cash and cash equivalents $2,114 $2,444 Restricted
cash deposit 3,172 859 Marketable securities 4,054 11,077 Trade
receivables, net of allowance for doubtful accounts 2,463 2,625
Other accounts receivable and prepaid expenses 2,400 717
Inventories 566 270 Total current assets 14,769 17,992 INVESTMENTS
AND LONG-TERM RECEIVABLES: Investment in restricted marketable
securities of other company - 4,431 Long term trade receivables -
79 Severance pay fund 309 239 Total investments and long-term
receivables 309 4,749 PROPERTY AND EQUIPMENT, NET 218 160 OTHER
ASSETS Goodwill 3,644 - Intangibles assets and deferred charges
2,012 197 Total Other Assets 5,656 197 TOTAL ASSETS $20,952 $23,098
CONDENSED CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands
December 31, December 31, 2007 2006 Unaudited Audited LIABILITIES
AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short-term bank
credit and current maturities of long-term loan $478 $668 Trade
payables 1,498 823 Employees and payroll accruals 299 533 Accrued
expenses and other liabilities 6,641 3,428 Total current
liabilities 8,916 5,452 LONG-TERM LIABILITIES: Convertible bonds
2,441 2,255 Long-term loan, net of current maturities - 67 Accrued
severance pay 362 323 Total long-term liabilities 2,803 2,645
COMMITMENTS AND CONTINGENT LIABILITIES SHAREHOLDER'S EQUITY 9,233
15,001 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $20,952 $23,098
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in
thousands (except share data) Year ended Three months ended
December 31, December 31, 2007 2006 2007 2006 Unaudited Audited
Unaudited Unaudited Revenues $12,961 $8,795 $4,074 $2,383 Cost of
revenues 5,600 3,494 1,934 1,147 Gross profit 7,361 5,301 2,140
1,236 Operating expenses: Research and development 1,716 1,362 812
356 Selling and marketing 9,041 5,619 2,947 2,030 General and
administrative 3,192 2,737 935 902 Litigation settlement expenses
34 108 - 43 Total operating expenses 13,983 9,826 4,694 3,331
Capital gain from the sale of the e-ID Division - 10,536 - 10,536
Operating income (loss) (6,622) 6,011 (2,554) 8,441 Financial
expenses, net (4,652) (204) (3,508) (120) Other expenses, net -
(367) - (372) Income (Loss) before taxes on income (11,274) 5,440
(6,062) 7,949 Taxes on income (37) - (37) - Net Income (loss)
$(11,311) $5,440 $(6,099) $7,949 Basic earnings (loss) per share(1)
$(2.57) $1.37 $(1.19) $1.99 Diluted earnings (loss) per share(1)
$(2.57) $1.32 $(1.19) $1.90 Weighted average number of Ordinary
shares used in computing basic earnings (loss) per share (1)
4,391,860 3,969,209 5,124,273 3,986,054 Weighted average number of
Ordinary shares used in computing diluted earnings (loss) per share
(1) 4,391,860 4,133,225 5,124,273 4,173,651 (1) A 1 for 5.88235
reverse split of our common stock became effective for trading
purposes on May 14, 2007. All earnings per share and
weighted-average share amounts are presented on a post-split basis.
RECONCILIATION BETWEEN GAAP TO NON-GAAP STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share data) Year ended Year ended
December 31, 2007 December 31, 2006 GAAP Adjustment Non-GAAP GAAP
Adjustment Non-GAAP Unaudited Unaudited Revenues $12,961 - $12,961
$8,795 - $8,795 Cost of revenues 5,600 (5)(a) 5,595 3,494 - 3,494
Gross profit 7,361 5 7,366 5,301 - 5,301 Operating expenses:
Research and development 1,716 (399)(a)(b) 1,317 1,362 (31)(a)
1,331 Selling and marketing 9,041 (243)(a)(b) 8,798 5,619 (106)(a)
5,513 General and admini- strative 3,192 (667)(a)(c) 2,525 2,737
(224)(a) 2,513 Litigation settlement expenses 34 - 34 108 - 108
Total operating expenses 13,983 (1,309)(a)(b)(c) 12,674 9,826
(361)(a) 9,465 Capital gain from the sale of the e-ID Division - -
- 10,536 - 10,536 Operating Income (loss) (6,622) 1,314 (5,308)
6,011 361 6,372 Financial income (expenses), net (4,652) 268(d)
(4,384) (204) 30(d) (174) Other income (expenses), net - - - (367)
- (367) Income (Loss) before taxes on income (11,274) 1,582 (9,692)
5,440 391 5,831 Taxes on income (37) - (37) - - - Net Income (loss)
$(11,311) $1,582 $(9,729) $5,440 $391 $5,831 Basic earnings (loss)
per share (e) $(2.57) $0.36 $(2.21) $1.37 $0.10 $1.47 Diluted
earnings (loss) per share (e) $(2.57) $0.36 $(2.21) $1.32 $0.09
$1.41 Weighted average number of Ordinary shares used in computing
basic earnings (loss) per share(e) 4,391,860 4,391,860 4,391,860
3,969,209 3,969,209 3,969,209 Weighted average number of Ordinary
shares used in computing diluted earnings (loss) per share(e)
4,391,860 4,391,860 4,133,860 4,133,225 4,133,225 4,133,225 (a) The
effect of stock-based compensation. (b) The effect of amortization
of intangibles assets related to acquisition. (c) The effect of
onetime provision for litigation-related expenses (d) Beneficial
conversion feature and amortization of discount on convertible
bonds and other related expenses. (e) A 1-for-5.88235 reverse split
of our common stock became effective for trading purposes on May
14, 2007. All earnings per share and weighted- average share
amounts are presented on a post-split basis. 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, 2007 December 31, 2006 GAAP Adjustment Non-GAAP GAAP Adjustment
Non-GAAP Unaudited Unaudited Revenues $4,074 - $4,074 $2,383 -
$2,383 Cost of revenues 1,934 (3)(a) 1,931 1,147 - 1,147 Gross
profit 2,140 3 2,143 1,236 - 1,236 Operating expenses: Research and
development 812 (257)(a)(b) 555 356 - 356 Selling and marketing
2,947 (108)(a)(b) 2,839 2,030 (72)(a) 1,958 General and
administrative 935 (84)(a)(c) 851 902 (82)(a) 820 Litigation
settlement expenses - - - 43 - 43 Total operating expenses 4,694
(449)(a)(b)(c) 4,245 3,331 (154)(a) 3,177 Capital gain from the
sale of the e-ID Division - - - 10,536 - 10,536 Operating Income
(loss) (2,554) 452 (2,102) 8,441 154 8,595 Financial income
(expenses), net (3,508) 9(c) (3,499) (120) 30(c) (90) Other income
(expenses), net - - - (372) - (372) Income (Loss) before taxes on
income (6,062) 461 (5,601) $7,949 $184 $8,133 Taxes on income (37)
- (37) - - - Net Income (loss) $(6,099) $461 $(5,638) $7,949 $184
$8,133 Basic earnings (loss) per share(d) $(1.19) $0.09 $(1.10)
$1.99 $0.05 $2.04 Diluted earnings (loss) per share(d) $(1.19)
$0.09 $(1.10) $1.90 $0.04 $1.94 Weighted average number of Ordinary
shares used in computing basic earnings (loss)per share(d)
5,124,273 5,124,273 5,124,273 3,986,054 3,986,054 3,986,054
Weighted average number of Ordinary shares used in computing
diluted earnings (loss) per share(d) 5,124,273 5,124,273 5,124,273
4,173,651 4,173,651 4,173,651 (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. (d) A 1-for-5.88235 reverse split of our common stock
became effective for trading purposes on May 14, 2007. All earnings
per share and weighted average share amounts are presented on a
post-split basis. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands Year ended Three months ended December
31, December 31, 2007 2006 2007 2006 Unaudited Audited Unaudited
Unaudited Cash flows from operating activities: Net Income (loss)
$(11,311) $5,440 $(6,099) $7,949 Adjustments to reconcile net
income (loss) to net cash used in operating activities:
Depreciation and amortization 225 355 133 88 Increase (decrease) in
accrued severance pay (382) 128 (149) 55 Stock based compensation
1,072 361 321 154 Capital gain from the sale of the e-ID Division -
(10,536) - (10,536) Amortization of deferred charges 90 6 22 6
Amortization of discount on convertible bonds 268 30 85 30 Write
down of loan regarding an investment in an affiliated company - 275
- 275 Decrease (increase) in trade receivables 883 (1,442) 276 350
Decrease (increase) in other accounts receivable and prepaid
expenses (1,943) 254 (490) 90 Decrease (increase) in inventories 32
212 (16) 128 Increase (decrease) in trade payables 95 53 100 (129)
Increase (decrease) in employees and payroll accruals (234) 211 36
120 Increase (decrease) in accrued expenses and other liabilities
2,433 1,586 (2,199) 405 Capital loss from sale of marketable
securities 1,116 - 636 - Loss on sale of property and equipment 58
8 49 8 Decrease in value of marketable securities, net 2,699 -
2,699 - Exchange differences on principle of long-term loan 9 12 2
3 Net cash used in operating activities (4,890) (3,047) (4,594)
(1,004) Cash flows from investing activities: Purchase of property
and equipment (116) (93) (35) (1) Purchase of subsidiary that was
consolidated for the first time.* (153) - - - Decrease (increase)
in severance pay fund 278 (95) 106 (38) Capitalization of software
and intangible assets (509) - - - Amounts carried to deferred
charges (52) (163) - (163) Proceeds from restricted cash deposits,
net (2,313) 229 (40) 67 Proceeds from marketable securities of
municipal bond, net - 650 350 - Cash paid in respect of sale of the
e-ID Division - (52) - (52) Proceeds from sale of marketable
securities of other company 7,639 - 2,916 - Net cash provided by
(used in) investing activities 4,774 476 3,297 (187) Cash flows
from financing activities: Short-term bank credit, net (336) (307)
45 3 Long-term loan received 2,850 204 - - Proceeds from issuance
of convertible bonds and warrants, net - 3,139 - 3,139 Principal
payment of long-term loan (2,780) (224) (71) (67) Proceeds from
exercise of options and warrants, net 82 92 30 54 Issuance of share
capital through a private placement, net of issuance costs (30)
(183) (30) (3) Net cash provided by (used in) financing activities
(214) 2,721 (26) 3,126 Increase (decrease) in cash and cash
equivalents (330) 150 (1,323) 1,935 Cash and cash equivalents at
the beginning of the period 2,444 2,294 3,437 509 Cash and cash
equivalents at the end of the period $2,114 $2,444 $2,114 $2,444
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in
thousands Year ended Three months ended December 31, December 31,
2007 2006 2007 2006 Unaudited Audited Unaudited Unaudited
Supplemental disclosure of cash flows information: Sale of the e-ID
Division Assets and Liabilities of the division, at the date of
sale: Working Capital, net - 2,073 - 2,073 Fixed assets, net -
2,800 - 2,800 Intangible assets - 47 - 47 Fair value of Marketable
securities received as proceeds, net - (15,508) - (15,508) Capital
gain from the sale of the e-ID Division: - 10,536 - 10,536 $- $(52)
$- $(52) Cash paid during the period for: Interest $146 $76 $20 $19
Supplemental disclosure of non-cash activities: Trade payable and
Employees and payroll accruals related to capitalization of
software $- $- $- $- Issuing shares capital against redemption of
note payable $432 $- $- $- Accrued expenses related to issuance of
shares $- $19 $- $- Issuance of warrants to service provider $- $40
$- $40 *Purchase of subsidiary that was consolidated for the first
time: Year ended December 31, 2007 Unaudited Assets and Liabilities
of the subsidiary for the purchase day: Operating capital
(excluding cash and cash equivalents) 1,156 Property and equipment,
net (38) Other assets (1,531) Goodwill that was formed at the
purchase (3,643) Share capital 14 Additional paid-in capital 3,889
$(153) DATASOURCE: VUANCE, Ltd. CONTACT: Jerry Cahn, Ph.D., J.D. of
Target 3 Communications, +1-646-827-0009, or fax, +1-646-827-9009,
Web site: http://www.vuance.com/
Copyright
