Revenues Increase 52% and Gross Profits 81% Compared to Prior-Year
Period ROCKVILLE, Md., June 3 /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 critical
situation management, today announced its operating results for the
first quarter of 2008. First Quarter 2008 Results Revenues for the
quarter ended March 31, 2008 increased 52% to $4.1 million compared
with revenues of $2.7 million in the first quarter of 2007. Gross
profit increased 81% to $2.5 million in the most recent quarter,
versus $1.4 million in the first quarter of 2007. Gross profit
margin for the first quarter of 2008 was 62.2% compared to gross
profit margin of 52.1% for the first quarter last year. Total
operating expenses for the quarter were $4.5 million, reflecting
the contribution of SHC, which was acquired in August of 2007,
compared to total operating expenses of $2.3 million for the
prior-year first quarter and $4.7 million for the previous quarter.
The Company reported a loss from operations of $1.9 million
compared to a loss from operations of $883,000 in the prior-year
first quarter and $2.6 million in the previous quarter. The Company
reported a net loss of $4.0 million, or $0.77 per share, in the
three months ended March 31, 2008, compared with a net loss of $1.1
million, or $0.27 per share, in the first quarter of 2007. 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 $1 million during the
first quarter of 2008, the Company reported a sequential quarterly
narrowing of its operating loss. The non-GAAP operating loss in the
first quarter of 2008 narrowed to $1.6 million from the non-GAAP
operating loss of $2.1 in the fourth quarter of 2007. In the first
quarter of 2008, the Company's non-GAAP net loss totaled $2.9
million, or $0.57 per share, versus a non-GAAP net loss of
$864,000, or $0.22 per share, in the first quarter of 2007.
Non-cash stock-based compensation of $217,000 was recorded in the
first quarter of 2007. Management Comments "We are pleased to
report that revenue and gross profits increased 52% and 81%,
respectively, in the first quarter of 2008 when compared with the
prior-year first quarter," stated Eyal Tuchman, Chief Executive
Officer of VUANCE Ltd. "This demonstrates that our re-positioned
sales model is working: to increase solution sales that can
generate higher profit margins. Indeed, the numbers were in line
with management's expectations." "The first quarter net loss was
higher than a year earlier, reflecting the impact of acquisition
and integration of SHC, the significant price decrease of OTI
shares and the recognition of onetime deferred expenses related to
our convertible bond agreements," Mr. Tuchman continued. "It's
important to note that our operating loss, excluding non-cash and
non-operational elements, has narrowed to approximately $1.6
million compared with $2.1 million in the previous quarter.
Moreover, we anticipate further reductions throughout this year."
Mr. Tuchman concluded, "VUANCE continues to experience positive
improvements in our pipeline of potential projects as we establish
closer relationships with business partners who appreciate our
comprehensive technological offering. We offer a compelling range
of products and are the only organization equipped to provide
customers with seamless, end-to-end solutions. Therefore, we
reiterate our annual sales goal of over $20 million. Further,
through diligent management of our expenses and execution of cost
control initiatives already put in place, we also repeat our goal
of achieving operational breakeven by the end of 2008 and
profitability in future years." Investor Conference Call VUANCE
will host an investor conference call to discuss its first quarter
and year ended 2008 operating results today, Tuesday, June 3, 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 first 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: 03-9180610 In the US (toll free): 1-888-407-2553
In the UK (toll free): 0-800-917-5108 A replay of the
teleconference will be available for a one-week period from 14:00
EDT (20:00 Israel Time) on June 3, 2008 until 13:00 EDT on June 10,
2008. To access the replay, please call one of the following
numbers: In Israel: 03-9255941 In the US (toll free):
1-877-456-0009 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 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 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: 646-290-7664 Fax: 509-278-7664
CONDENSED CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands
March 31, December 31, 2008 2007 Unaudited Unaudited ASSETS CURRENT
ASSETS: Cash and cash equivalents $492 $2,114 Restricted cash
deposit 2,826 3,172 Marketable securities 2,628 4,054 Trade
receivables, net of allowance for doubtful accounts 1,987 2,463
Other accounts receivable and prepaid expenses 1,807 2,400
Inventories 971 566 Total current assets 10,711 14,769 INVESTMENTS
AND LONG-TERM RECEIVABLES: Severance pay fund 311 309 PROPERTY AND
EQUIPMENT, NET 249 218 OTHER ASSETS Goodwill 3,905 3,644
Intangibles assets and deferred charges 1,694 2,012 Total Other
Assets 5,599 5,656 TOTAL ASSETS $16,870 $20,952 CONDENSED
CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands March 31,
December 31, 2008 2007 Unaudited Unaudited LIABILITIES AND
SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short-term bank credit
and current maturities of long-term loan $38 $478 Trade payables
1,284 1,498 Employees and payroll accruals 292 299 Convertible
bonds 3,157 - Accrued expenses and other liabilities 6,172 6,641
Total current liabilities 10,943 8,916 LONG-TERM LIABILITIES:
Convertible bonds - 2,441 Accrued severance pay 367 362 Total
long-term liabilities 367 2,803 COMMITMENTS AND CONTINGENT
LIABILITIES SHAREHOLDER'S EQUITY 5,560 9,233 TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $16,870 $20,952 CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS U.S. dollars in thousands (except share
data) Three months ended March 31, 2008 2007 Unaudited Revenues
$4,079 $2,685 Cost of revenues 1,543 1,287 Gross profit 2,536 1,398
Operating expenses: Research and development 733 188 Selling and
marketing 2,875 1,519 General and administrative 862 540 Litigation
settlement expenses - 34 Total operating expenses 4,470 2,281
Operating (loss) (1,934) (883) Financial expenses, net (2,030)
(198) Net (loss) $(3,964) $(1,081) Basic and diluted net loss per
share $(0.77) $(0.27) Weighted average number of Ordinary shares
used in computing basic and diluted net loss per share 5,126,677
4,001,119 RECONCILIATION BETWEEN GAAP TO NON-GAAP STATEMENTS OF
OPERATIONS U.S. dollars in thousands (except share data) Three
months ended March 31, 2008 GAAP Adjustment Non-GAAP Unaudited
Revenues $4,079 - $4,079 Cost of revenues 1,543 (5)(a) 1,538 Gross
profit 2,536 5 2,541 Operating expenses: Research and development
733 (148)(a)(b) 585 Selling and marketing 2,875 (107)(a)(b) 2,768
General and administrative 862 (62)(a) 800 Litigation settlement
expenses - - - Total operating expenses 4,470 (317)(a)(b) 4,153
Operating (loss) (1,934) 322 (1,612) Financial (expenses), net
(2,030) 715(c) (1,315) Net (loss) (3,964) 1,037 (2,927) Basic and
diluted net loss per share $(0.77) $0.20 $(0.57) Weighted average
number of Ordinary shares used in computing basic and diluted net
loss per share 5,126,677 5,126,677 5,126,677 Three months ended
March 31, 2007 GAAP Adjustment Non-GAAP Unaudited Revenues $2,685 -
$2,685 Cost of revenues 1,543 (5)(a) 1,538 1,287 - 1,287 Gross
profit 1,398 - 1,398 Operating expenses: Research and development
188 (36)(a) 152 Selling and marketing 1,519 (109)(a) 1,410 General
and administrative 540 (72)(a) 468 Litigation settlement expenses
34 - 34 Total operating expenses 2,281 (217)(a) 2,064 Operating
(loss) (883) 217 (666) Financial (expenses), net (198) - (198) Net
(loss) $(1,081) $217 $(864) Basic and diluted net loss per share
$(0.27) $0.05 $(0.22) Weighted average number of Ordinary shares
used in computing basic and diluted net loss per share 4,001,119
4,001,119 4,001,119 (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. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in thousands
Three months ended March 31, 2008 2007 Unaudited Cash flows from
operating activities: Net (loss) $(3,964) $(1,081) Adjustments to
reconcile net income (loss) to net cash used in operating
activities: Depreciation and amortization 158 10 Accrued severance
pay, net 3 (34) Stock based compensation 211 216 Amortization of
deferred charges 159 26 Amortization of discount on convertible
bonds 715 61 Decrease (increase) in trade receivables 463 (102)
Decrease in other accounts receivable and prepaid expenses 607 54
Increase in inventories (405) (22) Increase (decrease) in trade
payables (214) 70 Decrease in employees and payroll accruals (41)
(329) Increase (decrease) in accrued expenses and other liabilities
(602) 62 Capital loss from sale of marketable securities 194 -
Decrease in value of marketable securities, net 420 - Exchange
differences on principle of long-term loan 2 16 Net cash used in
operating activities (2,294) (1,053) Cash flows from investing
activities: Purchase of property and equipment (44) (37)
Capitalization of software and intangible assets - (168) Amounts
carried to deferred charges - (52) Proceeds from restricted cash
deposits, net 346 149 Investment in marketable Securities, net -
(1,625) Proceeds from sale of marketable securities of other
company 812 - Net cash provided by (used in) investing activities
1,114 (1,733) Cash flows from financing activities: Short-term bank
credit, net (31) (193) Proceeds from long-term loan - 2,500
Principal payment of long-term loan (411) (68) Net cash provided by
(used in) financing activities (442) 2,239 Increase (decrease) in
cash and cash equivalents (1,622) (547) Cash and cash equivalents
at the beginning of the period 2,114 2,444 Cash and cash
equivalents at the end of the period $492 $1,897 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in thousands
Three months ended March 31, 2008 2007 Unaudited Supplemental
disclosure of cash flows information: Cash paid during the period
for: Interest $6 $40 Supplemental disclosure of non-cash
activities: Trade payable and Employees and payroll accruals
related to capitalization of software $- $ 20 1. During the three
months period ended March 31, 2008 an amount of $82 with respect to
accounts payable was repaid using issuance of shares capital. 2.
During the three months period ended March 31, 2008 an additional
amount of goodwill ($261) was recorded with respect to the
acquisition of SHC as a result of clarifying of certain provisions
of the acquired entity. DATASOURCE: VUANCE Ltd. CONTACT: Jerry
Cahn, Ph.D., J.D., of Target 3 Communications, +1-646-290-7664, or
Fax, +1-509-278-7664, , for VUANCE Ltd. Web site:
http://www.vuance.com/
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