EX-99.1 2 v086730_ex99-1.htm
 
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FOR IMMEDIATE RELEASE
 
VUANCE LTD. ANNOUNCES SECOND QUARTER OPERATING RESULTS
 
Revenues Increase 56% from Prior-Year Period
 
Qadima, ISRAEL, and McLean, VIRGINIA - August 30, 2007 - Vuance, Ltd. (formerly SuperCom Ltd.) (NASDAQ Capital Market: VUNC; Euronext: VUNC), a provider of incident management, active RFID and credentialing solutions, today announced its unaudited operating results for the second quarter and first half of 2007.

Recent Business Highlights

·        Second quarter revenues and gross profits increased 56% to $2.8 million and $1.7 million, respectively, when compared with prior-year period.
·        Acquisition of SHC completed.
·        Common Stock listed on The NASDAQ Capital Market.
·        Progress continues in penetration of Active RFID and credentialing markets, in accordance with the Company’s strategic plan.

Operating Results

Revenues for the quarter ended June 30, 2007 increased 56% to $2.8 million, when compared with revenues of $1.8 million in the second quarter of 2006. Revenues for the six months ended June 30, 2007 increased 44% to $5.5 million, compared with revenues of $3.8 million in the first half of 2006.

Gross profit increased 56% to $1,741,000 (61.3% of revenue) in the most recent quarter, versus $1,117,000 (61.3% of revenue) in the three months ended June 30, 2006. For the six months ended June 30, 2007, gross profit increased 38% to $3,139,000 (56.8% of revenue), compared with $2,280,000 (59.4% of revenue) in the corresponding period of the previous year.

The Company reported a net loss of $1,330,000, or $0.33 per share, in the three months ended June 30, 2007, compared with a net loss of $993,000, or $0.25 per share, in the second quarter of 2006. A net loss of $2,411,000, or $0.60 per share, was posted for the six months ended June 30, 2007, versus a net loss of $1,718,000, or $0.43 per share, in the first half of 2006.

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 expenses of $354,000, the Company’s net loss totaled $976,000, or $0.24 per share, in the second quarter of 2007, versus a non-GAAP net loss of $867,000, or $0.22 per share, in the three months ended June 30, 2006. Non-cash stock-based compensation of $126,000 was recorded in the second quarter of 2006.
 
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Management Comments
 
“We are pleased to report that both revenue and gross profits increased 56% in the most recent quarter, when compared with the prior-year period, as the process of repositioning the Company for participation in higher-growth and more stable markets moves forward at a pace that is in line with management’s expectations,” stated Eyal Tuchman, Chief Executive Officer of Vuance Ltd. “Our net loss was higher than the second quarter of the previous year, reflecting substantially increased selling and marketing expenses related to our Incident Response Management and active-RF business initiatives in the United States as well as higher sales expenses related to our traditional legacy business.”

“A number of other initiatives were announced or undertaken during and shortly after the second quarter that are consistent with our long-term goals,” continued Tuchman. “We changed the Company’s name from ‘SuperCom Ltd.’ to ‘Vuance Ltd.’ in May, in order to more closely identify with our technological capability of providing a uniquely comprehensive view of every nuance of controlled sites or objects. We also recently completed the listing of our common stock on The NASDAQ Capital Market, and we expect this move to benefit our shareholders as it should improve the trading liquidity of Vuance shares and will allow more institutional investors to invest in our Company.”

“Shortly after the end of our second quarter, we announced an agreement to acquire Security Holding Corp., a U.S.-based manufacturer and distributor of RFID, security management and forward-thinking access control systems and equipment that we believe can leverage Vuance’s technological commitment to the credentialing and tracking of mission-critical people, objects and assets. The acquisition was completed on August 28, 2007. SHC has thousands of commercial, governmental and institutional security management, access control and RFID installations in the U.S., and its acquisition will have an immediate and meaningful impact upon our sales efforts in North America. We expect SHC to contribute between $5 million and $6 million to our consolidated revenues during the upcoming twelve months.”

“Overall, management is pleased with Vuance’s progress in recent months, and I am confident that additional IRMS and PureRF contracts will be forthcoming in the second half of the year. We remain alert for both organic growth and acquisition opportunities that can contribute to our growth and momentum within target markets. With the completion of the SHC acquisition, and based upon information currently available to the Company, we expect an accelerated growth in revenues during the second half of 2007 and in 2008.”

Investor Conference Call

Vuance will host an investor conference call to discuss its second quarter 2007 operating results today, Thursday, August 30, 2007 at 10:00 AM EDT (17:00 Israel Time). During the call, Mr. Eyal Tuchman, CEO, and Mr. Lior Maza, CFO, will discuss the Company’s second quarter results.
 
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To participate in the conference call, please call one of the following numbers five minutes before 10:00 AM EDT (17:00 Israel Time):
      
In Israel: 03-9180691

In the US (toll free): 1-888-407-2553
   
In the UK (toll free): 0-8000-32-3367

A replay of the teleconference will be available for a one-week period from 14:00 Eastern Time (21:00 Israel Time) on August 30, 2007 until midnight (EST) on Sep 6, 2007. To access the replay, please call one of the following numbers:

In Israel: 03- 9255953

In the US (toll free): 1-888-782-4291
 
In the UK (toll free): 0-800-028-6837
 
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). Vuance management believes the non-GAAP financial information provided in this release provides meaningful supplemental information regarding its operating results 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, has deemed it important to provide all this information to investors.

About Vuance Ltd.

Vuance Ltd. provides innovative incident management, Active RFID, access control and credentialing solutions to the public safety, commercial institutional and government sectors. The Company’s Incident Response Management System (IRMS) is the industry's most comprehensive mobile credentialing and access control system, as required by Homeland Security and other initiatives. Its Active RFID is a complete, cost-effective solution for the continuous tracking of assets and individuals. For more information, visit the Company’s website at www.vuance.com.

Vuance Ltd. is headquartered in Qadima, Israel and its U.S. subsidiary, SuperCom, Inc., is based in McLean, Virginia. Vuance common stock is listed on the NASDAQ Capital Market under the symbol “VUNC” and on the Euronext Exchange under the symbol “VUNC”.
 
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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
 
Contact:

In Israel:
 
Alex Somech
 
Tel:         +972-77-3456-302
Fax:         +972-50-8961-570
Mobile:   +972-54-4297-754
E-mail:   [email protected]

In North America:

RJ Falkner & Company, Inc., Investor Relations Counsel

Tel: 800-377-9893

(FINANCIAL HIGHLIGHTS FOLLOW)
 
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CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
 
   
June 30,
  
December 31,
  
   
2007
  
2006
  
   
Unaudited
  
Audited
  
ASSETS
              
               
CURRENT ASSETS:
              
Cash and cash equivalents
  
$
1,222
  
$
2,444
  
Restricted cash deposit
    
1,634
    
859
 
Marketable securities:
              
Municipal bond
    
1,425
    
-
  
Other company
    
14,268
    
11,077
  
Trade receivables, net of doubtful accounts
   
2,237
    
2,625
  
Other accounts receivable and prepaid expenses
    
492
    
717
 
Inventories
    
245
    
270
  
               
 Total current assets
    
21,523
    
17,992
  
               
INVESTMENTS AND LONG-TERM RECIVABLES:
              
Investment in restricted marketable securities of other company
    
-
    
4,431
  
Long term trade receivables
    
-
   
79
  
Severance pay fund
   
277
    
239
  
               
 Total investments and long-term receivables
    
277
   
4,749
  
               
PROPERTY AND EQUIPMENT, NET
   
213
    
160
  
               
INTANGIBLE ASSETS AND DEFERRED CHARGES
    
549
    
197
  
               
TOTAL ASSETS
  
$
22,562
  
$
23,098
  
 
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CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
 
   
June 30,
  
December 31,
  
   
2007
  
2006
  
   
Unaudited
  
Audited
  
           
LIABILITIES AND SHAREHOLDERS' EQUITY
              
               
CURRENT LIABILITIES:
              
Short-term bank credit and current maturities of long-term loan
  
$
2,528
  
$
668
  
Trade payables
    
906
    
823
  
Employees and payroll accruals
    
244
    
533
  
Accrued expenses and other liabilities
   
2,963
    
3,428
 
               
Total current liabilities
    
6,641
    
5,452
  
               
LONG-TERM LIABILITIES:
              
Convertible bonds
    
2,377
    
2,255
  
Long-term loan, net of current maturities
   
209
    
67
 
Accrued severance pay
    
357
    
323
  
               
Total long-term liabilities
    
2,943
    
2,645
  
               
COMMITMENTS AND CONTINGENT LIABILITIES
              
               
               
Shareholders' equity
    
12,978
    
15,001
  
               
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
  
$
22,562
  
$
23,098
  

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share data)
 
   
Six months ended
June 30,
  
Three months ended
June 30,
  
   
2007
 
2006
 
2007
 
2006
  
   
Unaudited
  
Revenues
  
$
5,523
  
$
3,835
  
$
2,838
  
$
1,822
  
Cost of revenues
    
2,384
    
1,555
    
1,097
    
705
  
                           
Gross profit
   
3,139
    
2,280
    
1,741
   
1,117
  
                           
Operating expenses:
                          
Research and development
    
388
   
642
   
200
    
348
  
Selling and marketing
    
3,457
    
2,099
    
1,938
    
1,071
 
General and administrative
    
1,384
    
1,166
    
810
   
575
 
                           
Total operating expenses
    
5,229
    
3,907
   
2,948
    
1,994
 
                           
Operating loss
    
(2,090
)
  
(1,627
)
  
(1,207
)
  
(877
)
Financial expenses, net
    
(321
)
  
(31
)
  
(123
)
  
(53
)
Other expenses, net
    
-
    
(60
)
  
-
   
(63
)
                           
Net loss
  
$
(2,411
)
$
(1,718
)
$
(1,330
)
$
(993
)
                           
                           
Basic and diluted net loss per share (1)
  
$
(0.60
)
$
(0.43
)
$
(0.33
)
$
(0.25
)
                           
Weighted average number of Ordinary shares used in computing basic and diluted net loss per share (1)
    
4,006,935
    
3,958,711
    
4,012,687
    
3,963,719
 
 
(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.
 
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RECONCILIATION BETWEEN GAAP TO NON-GAAP STATEMENTS OF OPERATIONS
 
U.S. dollars in thousands (except share data)

   
Six months ended
June 30, 2007
  
Six months ended
June 30, 2006
  
   
GAAP
  
Adjustment
  
Non-GAAP
  
GAAP
  
Adjustment
  
Non-GAAP
  
   
Unaudited
  
Unaudited
  
                           
Revenues
  
$
5,523
    
-
  
$
5,523
  
$
3,835
    
-
  
$
3,835
  
Cost of revenues
    
2,384
    
-
    
2,384
    
1,555
    
-
    
1,555
  
                                       
Gross profit
   
3,139
    
-
    
3,139
    
2,280
    
-
    
2,280
  
 
                                      
Operating expenses:
                                      
Research and development
    
388
   
(65
)(a)
  
323
   
642
   
(29
)(a)
  
613
 
Selling and marketing
    
3,457
    
(118
)(a)
  
3,339
    
2,099
    
(27
)(a)
  
2,072
  
General and administrative
    
1,384
    
(387
)(a)
  
997
    
1,166
    
(102
)(a)
  
1,064
  
                                       
Total operating expenses
    
5,229
    
(570
)(a)
  
4,659
    
3,907
   
(158
)(a)
  
3,749
 
                                       
Operating loss
    
(2,090
)
  
570
   
(1,520
)
  
(1,627
)
  
158
   
(1,469
)
Financial income (expenses), net
    
(321
)
  
-
    
(321
)
  
(31
)
  
-
    
(31
)
Other income (expenses), net
    
-
    
-
    
-
    
(60
)
  
-
    
(60
)
                                       
Net Income (loss)
  
$
(2,411
)
$
570
  
$
(1,841
)
$
(1,718
)
$
158
  
$
(1,560
)
                                       
Basic and diluted net loss per share (b)
  
$
(0.60
)
$
0.14
  
$
(0.46
)
$
(0.43
)
$
0.04
  
$
(0.39
)
                                       
Weighted average number of Ordinary shares used in computing basic and diluted net loss per share (b)
    
4,006,935
    
4,006,935
    
4,006,935
    
3,958,711
    
3,958,711
    
3,958,711
  

(a) The effect of stock-based compensation. The Company adopted the provisions of Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment” on January 1, 2006 using the modified-prospective transition method.
 
(b) 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.
 
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RECONCILIATION BETWEEN GAAP TO NON-GAAP STATEMENTS OF OPERATIONS
 
U.S. dollars in thousands (except share data)
 
   
Three months ended
June 30, 2007
  
Three months ended
June 30, 2006
  
   
GAAP
  
Adjustment
  
Non-GAAP
  
GAAP
  
Adjustment
  
Non-GAAP
  
   
Unaudited
  
Unaudited
  
                           
Revenues
  
$
2,838
    
-
  
$
2,838
  
$
1,822
    
-
  
$
1,822
  
Cost of revenues
    
1,097
    
-
    
1,097
    
705
    
-
    
705
  
                                       
Gross profit
   
1,741
   
-
    
1,741
   
1,117
    
-
    
1,117
  
                                       
Operating expenses:
                                      
Research and development
    
200
    
(29
)(a)
  
171
    
348
    
(28
)(a)
  
320
  
Selling and marketing
    
1,938
    
(10
)(a)
  
1,928
    
1,071
   
(21
)(a)
  
1,050
 
General and administrative
    
810
   
(315
)(a)
  
495
   
575
   
(77
)(a)
  
498
 
                                       
Total operating expenses
    
2,948
    
(354
)(a)
  
2,594
    
1,994
   
(126
)(a)
  
1,868
 
                                       
Operating loss
    
(1,207
)
  
354
   
(853
)
  
(877
)
  
126
   
(751
)
Financial income (expenses), net
    
(123
)
  
-
    
(123
)
  
(53
)
  
-
    
(53
)
Other income (expenses), net
    
-
    
-
    
-
    
(63
)
  
-
    
(63
)
                                       
Net Income (loss)
  
$
(1,330
)
$
354
  
$
(976
)
$
(993
)
$
126
  
$
(867
)
                                       
Basic and diluted net loss per share (b)
  
$
(0.33
)
$
0.09
  
$
(0.24
)
$
(0.25
)
$
0.03
  
$
(0.22
)
                                       
Weighted average number of Ordinary shares used in computing basic and diluted net loss per share (b)
    
4,012,687
    
4,012,687
    
4,012,687
    
3,963,719
   
3,963,719
   
3,963,719
 

(a) The effect of stock-based compensation. The Company adopted the provisions of Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment” on January 1, 2006 using the modified-prospective transition method.

(b) 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.
 
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
   
Six months ended
June 30,
  
Three months ended
June 30,
  
   
2007
  
2006
  
2007
  
2006
  
   
Unaudited
  
Cash flows from operating activities:
                  
Net loss
  
$
(2,411
)
$
(1,718
)
$
(1,330
)
$
(993
)
Adjustments to reconcile net loss to net cash used in operating activities:
                          
Depreciation and amortization
    
19
    
180
    
9
    
113
  
Accrued severance pay, net
    
(54
)
  
(14
)
  
(20
)
  
(32
)
Deferred stock compensation
    
570
    
155
    
354
   
188
  
Amortization of deferred charges
    
47
    
-
    
21
    
-
 
Amortization of discount on convertible bonds
    
122
    
-
    
61
    
-
 
Decrease (increase) in trade receivables
    
467
    
(1,149
)
  
569
    
(547
)
Decrease (increase) in other accounts receivable and prepaid expenses
    
(44
)
  
176
    
(98
)
  
59
  
Decrease (increase) in inventories
    
25
    
173
    
47
    
44
  
Increase (decrease) in trade payables
    
43
    
(150
)
  
(27
)
  
39
 
Increase (decrease) in employees and payroll accruals 
    
(314
)
  
45
    
15
    
30
  
Increase (decrease) in accrued expenses and other liabilities
    
(146
)
  
571
    
(208
)
  
326
  
Capital gain from sale of marketable securities
    
(75
)
  
-
    
(75
)
  
-
  
Exchange differences on principle of long-term loan 
    
13
    
3
    
(3
)
  
3
  
Others
    
-
    
-
    
-
    
1
  
Net cash used in operating activities
    
(1,738
)
  
(1,728
)
  
(685
)
  
(769
)
                           
Cash flows from investing activities:
                          
Purchase of property and equipment
    
(72
)
  
(63
)
  
(35
)
  
(33
)
Capitalization of software and intangible assets
    
(282
)
  
-
    
(114
)
  
-
  
Amounts carried to deferred charges
    
(52
)
  
-
    
-
   
-
  
Proceeds from short-term deposits, net
    
(775
)
  
220
    
(924
)
  
88
  
Investment in marketable Securities of municipal bond, net
    
(1,425
)
  
400
    
200
    
1,050
  
Proceeds from sale of marketable securities of other company
    
1,081
    
-
    
1,081
    
-
 
Net cash provided by (used in) investing activities
    
(1,525
)
  
557
    
208
    
1,105
  
                           
Cash flows from financing activities:
                          
Short-term bank credit, net
    
(373
)
  
(331
)
  
(180
)
  
(238
)
Proceeds from long-term loan
    
2,500
    
204
    
-
   
204
  
Principal payment of long-term loan
    
(138
)
  
(91
)
  
(70
)
  
(48
)
Proceeds from exercise of options, net
   
52
    
-
    
52
    
-
 
Expenses related to issuance of shares in a private placement 
    
-
    
(170
)
  
-
    
(170
)
Net cash provided by (used in) financing activities
    
2,041
    
(388
)
  
(198
)
  
(252
)
                           
Increase (decrease) in cash and cash equivalents
    
(1,222
)
  
(1,559
)
  
(675
)
  
84
  
Cash and cash equivalents at the beginning of the period
    
2,444
    
2,294
    
1,897
    
651
  
                           
Cash and cash equivalents at the end of the period
  
$
1,222
  
$
735
  
$
1,222
  
$
735
  
                           
Supplemental disclosure of cash flows information:
                          
Cash paid during the period for:
                          
Interest
  
$
92
  
$
39
  
$
52
  
$
20
  
Supplemental disclosure of non-cash activities:
                          
Trade payable and Employees and payroll accruals related to capitalization of software
  
$
65
    
-
 
$
45
    
-
 
Accrued expenses related to issuance of shares
    
-
 
$
19
    
-
 
$
19
  
 
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