Vuance update

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09/01/2009
Some of you may remember that Vuance had some questions about whether it could remain a going concern, so I thought I'd give you an update now that their 2Q numbers are out. They've been posted here. They say they're getting close to cash-flow positive, but here are the numbers:
Revenues for the quarter ended June 30, 2009 decreased 30.9% to $3.7 million from $5.3 million in the year-ago second quarter. The decrease was largely driven by a decrease in revenues from the airport security project that was nearly completed during second quarter 2009 as well as a delay in revenues of over $200,000 that is expected to be recognized in third quarter 2009.
That's sort of a big decrease in revenues and shows how project-driven the company is. There are not a lot of small deals going down - it's all or nothing. Luckily, they recently announced a $5 million deal with a family-run company that packages vegetables.
Eyal Tuchman, Chief Executive Officer of VUANCE Ltd., commented, "Demand for our expertise remained strong across our entire business, with particular strength in government and public safety sectors. We are active in bidding projects financed by government funds, and believe these projects will become revenue-generating beginning in the second half of this year and throughout 2010. Excluding sales related to the airport in Eastern Europe, revenues across our business increased both sequentially and year-over-year.
So, other than the huge block of revenue that's not there anymore, revenues increased? Okay.
Gross profit decreased 32.0% to $2.2 million for the second quarter compared to $3.2 million for the prior-year second quarter. Gross profit margin for the quarter was 59.2%, compared to the 60.1% for the second quarter of 2008. Total operating expenses for the quarter were $2.8 million, down 8.6% sequentially compared to the $3.1 million for the first quarter 2009 and down 37.3% compared to the $4.5 million for the second quarter last year. The Company reported a loss from operations for the quarter of $647,000 compared sequentially to a loss from operations of $744,000 and down 50.2% compared to the $1.3 million for the second quarter last year.
So, they did $3.7 million in revenue and lost $647,000. That doesn't seem particularly sustainable.
The net loss from continuing operations was $819,000, or $(0.15) per basic and diluted share, compared sequentially to a net loss from continuing operations of $875,000, or $(0.17) per basic and diluted share, for the three months ended March 31, 2009 and compared with a net loss from continuing operations of $1.6 million, or $(0.30) per basic and diluted share, in the second quarter of 2008.
So, actually, they lost more than that. I'm foggy on the difference between loss from operations and net loss from continuing operations. Maybe the latter accounts for debt service? I should probably know that. Anyway, how did they spin the overall results?
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 $267,000 in the second quarter of 2009 compared sequentially to a non-GAAP operating loss of $481,000 in the first quarter of 2009 and compared to a non-GAAP operating loss of $984,000 in the second quarter last year.
Wow! Non-GAAP operational losses continued to narrow? Why didn't you say so in the first place? Oh, that's right, you did say that first. I just kind of chose to ignore it. Whenever I see "non-GAAP," I read, "non-real."