Versatile Systems Inc. (TSX VENTURE:VV)(AIM:VVS), announces its results for the
third quarter of the 2011 fiscal year.
Revenue for the three months ended March 31, 2011 was $11,044,100 generating a
gross profit of $2,675,686 or 24.3% of sales compared to $9,795,481 generating a
gross profit of $2,301,779 or 23.5% of sales for the same quarter last year, an
increase of $1,248,619. The Net Earnings for the quarter amounted to $32,838
($0.00 per share) compared to a Net Loss of $816,850 ($0.01 per share) for the
same period last year.
"We will continue to focus on expanding our customer base, product offerings and
improving operational efficiencies," said John Hardy, Chairman and CEO of
Versatile. "These initiatives have helped improve key financial metrics over the
comparable quarter last year, as revenue, cash flow and earnings have all
increased."
Highlights for the quarter included:
-- Revenue for the three months ended March 31, 2011 was $11,044,100
compared to $9,795,481 for the same quarter last year, an increase of
$1,248,619;
-- The Earnings before interest, taxes and amortization for the quarter was
$112,737 compared to a Loss before interest, taxes and amortization of
$931,493 for the same quarter last year, an improvement of $1,044,230.
-- The normalized Earnings before interest, taxes and amortization for the
quarter amounted to $409,129, which excludes the non recurring expenses
of $235,486 and the stock based compensation of $60,906;
-- The Net Earnings for the quarter amounted to $32,838 ($0.00 per share)
compared to a Net Loss of $816,850 ($0.01 per share) for the same period
last year;
-- The cash flow generated from operations before other items amounted to
$206,821 for the three months ended March 31, 2011 compared to cash flow
used in operations before other items of $842,232 for the same period
last year, an improvement of $1,049,053;
-- The working capital as of March 31, 2011 was $4,545,712, an increase of
$293,166 compared to the working capital of $4,252,546 at June 30, 2010;
-- The research and development expense for the quarter amounted to
$278,226 compared to $185,289 for the same quarter last year;
-- Deferred revenue at March 31, 2011 was $6,743,225 (of which $5,943,961
is expected to be recognized in the next four quarters) compared to
$6,557,618 at March 31, 2010; and
-- The Investment in Equus consists of 962,962 shares of Equus Total
Return, Inc. which is a public company trading on the NYSE under the
symbol EQS. The net asset value of Equus at December 31, 2010 was $4.29
per share.
During the current quarter, the Company incurred $128,802 for research and
development activities related to Mobiquity Route(TM), DEX and related mobile
software products and $109,882 related to Mobiquity Transaction Engine 3.0(TM),
Mobiquity Kiosk(TM) and Autostore.
Revenue for the nine months ended March 31, 2011 was $35,723,183 generating a
gross profit of $7,747,650 or 21.7% of sales compared to $32,670,998 generating
a gross profit of $7,617,163 or 23.3% of sales for the same period last year.
The Net Earnings for the period amounted to $122,489 ($0.00 per share) compared
to a Net Loss of $944,286 ($0.00 per share) for the same period last year.
"Versatile generated cash flow from operations before other items of $482,626
for the first nine months of this fiscal year," said Fraser Atkinson, CFO of
Versatile. "This has helped to further strengthen the Company's financial
position."
About Versatile
Versatile provides business solutions that enable companies to improve sales,
marketing and distribution of their products. Versatile also provides
information technology services for the implementation, maintenance and security
of mission-critical computer environments. Versatile has the ability to
architect solutions involving both proprietary and third party components. For
more information: www.versatile.com.
Forward-Looking Statements
This document may contain forward-looking statements relating to Versatile's
operations or to the environment in which it operates, which are based on
Versatile's operations, estimates, forecasts and projections. These statements
are not guarantees of future performance and involve risks and uncertainties
that are difficult to predict or are beyond Versatile's control. A number of
important factors including those set forth in other public filings could cause
actual outcomes and results to differ materially from those expressed in these
forward-looking statements. Consequently, readers should not place any undue
reliance on such forward-looking statements. In addition, these forward-looking
statements relate to the date on which they are made. Versatile disclaims any
intention or obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise.
All amounts are expressed in U.S. dollars unless otherwise stated. (C) 2011
Versatile Systems Inc. All rights reserved.
Versatile Systems Inc.
Consolidated Balance Sheets
(Unaudited - Prepared by Management)
Expressed in U.S. dollars March 31, 2011 June 30, 2010
-------------------------------
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 753,523 $ 1,738,036
Investment in Equus 2,503,701 2,203,043
Accounts receivable 6,550,190 10,580,706
Current portion of deferred contract costs 4,371,749 5,793,180
Prepaid expenses 318,777 236,993
Inventory 1,923,966 1,719,477
Future income tax benefits 734,410 721,975
-------------------------------
17,156,316 22,993,410
Long-term accounts receivable 427,941 265,612
Deferred contract costs 715,513 598,366
Capital Assets 318,856 519,391
Intangible assets - 459
Future income tax benefits 6,135,719 6,243,875
Goodwill 9,914,350 9,914,350
-------------------------------
$ 34,668,695 $ 40,535,463
-------------------------------
LIABILITIES
Current Liabilities
Line of credit $ 1,138,827 $ 1,353,312
Accounts payable and accrued liabilities 5,527,816 9,955,342
Current portion of deferred revenue 5,943,961 7,432,210
-------------------------------
12,610,604 18,740,864
Deferred Revenue 799,264 710,269
-------------------------------
13,409,868 19,451,133
-------------------------------
SHAREHOLDERS' EQUITY
Share Capital 54,433,709 54,433,709
Warrants 123,058 186,367
Contributed surplus 4,355,754 4,231,539
Deficit (36,843,347) (36,965,836)
Accumulated other comprehensive loss (810,347) (801,449)
-------------------------------
21,258,827 21,084,330
-------------------------------
$ 34,668,695 $ 40,535,463
-------------------------------
Versatile Systems Inc.
Consolidated Statements of Operations and Deficit
(Unaudited - Prepared by Management)
Expressed in U.S.
dollars Three months ended March 31 Nine months ended March 31
2011 2010 2011 2010
---------------------------------------------------------
SALES $ 11,044,100 $ 9,795,481 $ 35,723,183 $ 32,670,998
COST OF SALES 8,368,414 7,493,702 27,975,533 25,053,835
---------------------------------------------------------
2,675,686 2,301,779 7,747,650 7,617,163
---------------------------------------------------------
EXPENSES
Selling and
marketing 1,136,728 1,490,778 3,473,173 4,471,554
General and
administrative 829,900 944,266 2,772,247 2,918,759
Research and
development 278,226 185,289 749,403 679,043
Non recurring
expenses 235,486 525,656 293,657 573,735
Stock-based
compensation 60,906 23,585 60,906 69,215
Foreign exchange
loss (gain) 21,703 63,698 (9,715) (10,914)
---------------------------------------------------------
2,562,949 3,233,272 7,339,671 8,701,392
---------------------------------------------------------
Earnings (loss)
before interest,
taxes and
amortization 112,737 (931,493) 407,979 (1,084,229)
Amortization of
capital assets 54,485 61,957 173,754 190,868
Amortization of
intangible
assets - 90,674 - 272,023
Interest expense
(income) (1,826) 7,781 13,810 21,991
Loss (Gain) on
sale of capital
assets and
investments 625 - 3,200 (4,952)
---------------------------------------------------------
EARNINGS (LOSS)
BEFORE INCOME
TAXES 59,453 (1,091,905) 217,215 (1,564,159)
Current income tax
recovery (expense) 2,985 (993) 995 (3,741)
Future income tax
(expense) benefit (29,600) 276,048 (95,721) 623,614
---------------------------------------------------------
NET EARNINGS (LOSS) 32,838 (816,850) 122,489 (944,286)
---------------------------------------------------------
DEFICIT, BEGINNING
OF PERIOD (36,876,185) (35,856,651) (36,965,836) (35,729,215)
---------------------------------------------------------
DEFICIT, END OF
PERIOD (36,843,347) (36,673,501) (36,843,347) (36,673,501)
---------------------------------------------------------
EARNINGS (LOSS) PER
SHARE (basic and
diluted) $ 0.00 ($0.01) $ 0.00 ($0.01)
---------------------------------------------------------
Versatile Systems Inc.
Consolidated Statements of Comprehensive (Loss) Income
(Unaudited - Prepared by Management)
Three Months ended Nine Months ended
Expressed in U.S. dollars March 31 March 31
2011 2010 2011 2010
---------------------------------------
Net earnings (loss) 32,838 (816,850) 122,489 (944,286)
Other comprehensive (loss) income
Net change in fair value of
available-for-sale investments 96,296 - (8,898) -
---------------------------------------
Comprehensive (loss) income 129,134 (816,850) 113,591 (944,286)
---------------------------------------
Versatile Systems Inc.
Consolidated Statements of Cash Flows
(Unaudited - Prepared by Management)
Expressed in U.S. dollars Three Months ended Nine Months ended March
March 31 31
2011 2010 2011 2010
-------------------------------------------------
OPERATING ACTIVITIES
Net earnings (loss) $ 32,838 $ (816,850) $ 122,489 $ (944,286)
Items not affecting cash
Amortization of capital
and intangible assets 61,228 171,385 199,077 520,372
Stock-based
compensation 60,906 23,585 60,906 69,215
Loss (Gain) on sale of
capital assets and
investments 625 - 3,200 (4,952)
Unrealized foreign
exchange loss 21,624 55,696 1,233 13,157
Future income tax
expense (benefit) 29,600 (276,048) 95,721 (623,614)
-------------------------------------------------
Cash flow used in
operations before other
items 206,821 (842,232) 482,626 (970,108)
Net change in non-cash
operating balance
sheet items (673,962) 1,211,698 (941,609) (945,544)
-------------------------------------------------
(467,141) 369,466 (458,983) (1,915,652)
INVESTING ACTIVITIES
Short term investments - (425,325) (309,556) (2,726,160)
Proceeds from disposition
of capital assets 4,087 16,033 107,355 23,734
Additions to capital
assets (30,220) (35,950) (108,844) (73,216)
-------------------------------------------------
(26,133) (445,242) (311,045) (2,775,642)
-------------------------------------------------
FINANCING ACTIVITIES
Proceeds from issuance of
shares - - - 3,876,257
Share issue costs - - - (26,291)
Proceeds from (repayment
of) line of credit 322,972 (1,790,109) (214,485) 768,336
-------------------------------------------------
322,972 (1,790,109) (214,485) 4,618,302
-------------------------------------------------
Increase (decrease) in cash
and cash equivalents (170,302) (1,865,885) (984,513) (72,992)
CASH and cash equivalents,
beginning of period 923,825 3,795,423 1,738,036 2,002,530
-------------------------------------------------
CASH and cash equivalents,
end of period $ 753,523 $ 1,929,538 $ 753,523 $ 1,929,538
-------------------------------------------------