Versatile Systems Inc. (TSX VENTURE:VV)(AIM:VVS) announces its results for the
first quarter of the 2012 fiscal year.
Revenue for the three months ended September 30, 2011 was $9,039,212 generating
a gross profit of $1,790,378 or 19.8% of sales compared to $9,219,050 generating
a gross profit of $2,103,827 or 22.8% of sales for the same quarter last year.
The Net Loss for the quarter amounted to $359,911 ($0.00 per share) compared to
a Net Loss of $89,314 ($0.01 per share) for the same period last year.
"As a result of economic events occurring mid-quarter, several key customers
reduced spending, which negatively impacted both revenue and gross profit," said
John Hardy, Chairman and CEO of Versatile. "Nevertheless, we managed to be
effectively cash flow neutral. In addition, we obtained a new credit facility of
$4.5 million, and reduced operating expenses with a strategic relocation of our
Mechanicsburg facility. We are in the process of adding new sales resources and
remain committed to improving profitability, while carefully managing our
expenses."
Highlights for the quarter included:
-- Revenue for the three months ended September 30, 2011 was $9,039,212
compared to $9,219,050 for the same quarter last year, a decrease of
$179,838;
-- The cash flow used in operations amounted to $51,134 for the three
months ended September 30, 2011 compared to cash flow generated from
operations of $150,269 for the same period last year;
-- The research and development expense for the quarter amounted to
$244,110 compared to $192,268 for the same quarter last year;
-- Deferred revenue at September 30, 2011 was $6,047,097 (of which
$5,449,475 is expected to be recognized in the next four quarters)
compared to $6,320,199 at June 30, 2011; and
-- In order to save costs, the Company relocated to a smaller facility in
Mechanicsburg, PA incurring a one-time cost of $65,040. This move will
lead to a reduction in premise costs of approximately $200,000 per
annum.
During the current quarter, the Company incurred $129,294 for research and
development activities related to Mobiquity Route(TM), DEX and related mobile
software products and $72,362 related to Mobiquity Transaction Engine 3.0(TM)
and Mobiquity Kiosk(TM).
During the current quarter the Company changed its banking facilities for its
U.S. based operations to a new financial institution, which is providing a
credit facility for up to $4,500,000 on more favorable terms than the former
bank.
"While the Company incurred a loss of $359,911 the cash used in operations
amounted to $51,134," said Fraser Atkinson, CFO of Versatile. "Excluding the
one-time moving costs the Company would have generated positive cash flow from
operations. In addition, restoring the gross profit of 19.8% to the historical
average of 21% to 22% will have a positive impact on cash flow."
The Company adopted IFRS during the current reporting period. The Company has
applied the transitional exceptions and exemptions to full retroactive
application of IFRS in its preparation of an opening IFRS consolidated statement
of financial position at July 1, 2010. The most significant changes include the
reclassification of deferred contract costs to intangible assets and the
reclassification of current deferred income taxes to long term. Further details
of the conversion to IFRS are provided in Management's Discussion and Analysis
and in the Notes to the Company's unaudited, Condensed Consolidated Financial
Statements, as at and for the three months ended September 30, 2011.
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 Statements of Financial Position
(Unaudited - Prepared by Management)
----------------------------------------------------------------------------
Expressed in U.S. dollars September 30, 2011 June 30, 2011 July 1, 2010
--------------------- --------------------------
ASSETS
Current Assets
Cash and cash equivalents $ 563,999 $ 978,656 1,738,036
Investment in Equus 1,810,369 2,311,109 2,203,043
Accounts receivable 5,535,268 7,134,328 10,580,706
Prepaid expenses 253,291 228,062 236,993
Inventory 1,910,121 1,849,635 1,719,477
------------------------------------------------
10,073,048 12,501,790 16,478,255
Long-term accounts
receivable 312,339 401,742 265,612
Capital Assets 221,587 270,437 519,391
Intangible assets 5,123,645 5,048,776 6,392,005
Deferred income tax assets 7,136,316 7,001,156 6,965,850
Goodwill 9,914,350 9,914,350 9,914,350
------------------------------------------------
$ 32,781,285 $ 35,138,251 40,535,463
------------------------------------------------
LIABILITIES
Current Liabilities
Line of credit $ 724,981 1,007,767 1,353,312
Accounts payable and
accrued liabilities 5,878,754 6,823,643 9,955,342
Current portion of
deferred revenue 5,449,475 5,670,932 7,432,210
------------------------------------------------
12,053,210 13,502,342 18,740,864
Deferred Revenue 597,622 649,267 710,269
------------------------------------------------
12,650,832 14,151,609 19,451,133
------------------------------------------------
SHAREHOLDERS' EQUITY
Share Capital 54,433,709 54,433,709 54,433,709
Warrants 42,000 42,000 186,367
Equity Reserve 4,582,940 4,578,470 4,231,539
Deficit (37,424,509) (37,064,598) (36,965,836)
Accumulated other
comprehensive loss (1,503,687) (1,002,939) (801,449)
------------------------------------------------
20,130,453 20,986,642 21,084,330
------------------------------------------------
$ 32,781,285 $ 35,138,251 40,535,463
------------------------------------------------
----------------------------------------------------------------------------
Versatile Systems Inc.
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited - Prepared by Management)
----------------------------------------------------------------------------
Expressed in U.S. dollars Three months ended September 30
2011 2010
--------------------------------
SALES $ 9,039,212 $ 9,219,050
COST OF SALES 7,248,834 7,115,223
--------------------------------
1,790,378 2,103,827
--------------------------------
EXPENSES
Selling and marketing 1,019,931 1,008,567
General and administrative 961,127 890,450
Research and development 244,110 192,268
Non recurrring expenses - 20,668
Stock-based compensation 4,470 -
Foreign exchange loss 824 2,333
--------------------------------
2,230,462 2,114,286
--------------------------------
OPERATING LOSS (440,084) (10,459)
Amortization of capital assets 48,419 71,161
Interest expense 5,223 14,970
--------------------------------
LOSS BEFORE INCOME TAXES (493,726) (96,590)
Current income tax expense (1,345) (995)
Deferred income tax benefit 135,160 8,271
--------------------------------
NET LOSS (359,911) (89,314)
--------------------------------
LOSS PER SHARE (basic and diluted) ($0.00) ($0.00)
--------------------------------
Net loss (359,911) (89,314)
Other comprehensive loss
Net change in fair value of available-for-
sale investments (500,748) (246,609)
--------------------------------
Total comprehensive loss (860,659) (335,923)
-------------------------------
----------------------------------------------------------------------------
Versatile Systems Inc.
Consolidated Statements of Changes in Shareholders' Equity
(Unaudited - Prepared by Management)
----------------------------------------------------------------------------
Expressed in U.S. dollars
Accumulated
other
comprehensiv
Share Equity e
Capital Warrants Reserve Deficit loss Total
Balance,
July 1,
2010 54,433,709 186,367 4,231,539 (36,965,836) (801,449) 21,084,330
Net loss (89,314) (89,314)
Net
change
in fair
value
of
availab
le-for-
sale
investm
ents (246,609) (246,609)
--------------------------------------------------------------------
Balance,
Septemb
er 30,
2010 54,433,709 186,367 4,231,539 (37,055,150) (1,048,058) 20,748,407
--------------------------------------------------------------------
Balance,
June
30,
2011 54,433,709 42,000 4,578,470 (37,064,598) (1,002,939) 20,986,642
Net loss (359,911) (359,911)
Net
change
in fair
value
of
availab
le-for-
sale
investm
ents (500,748) (500,748)
Share-
based
compens
ation
expense - - 4,470 - - 4,470
--------------------------------------------------------------------
Balance,
Septemb
er 30,
2011 54,433,709 42,000 4,582,940 (37,424,509) (1,503,687) 20,130,453
--------------------------------------------------------------------
----------------------------------------------------------------------------
Versatile Systems Inc.
Consolidated Statements of Cash Flows
(Unaudited - Prepared by Management)
----------------------------------------------------------------------------
Expressed in U.S. dollars Three months ended September 30
2011 2010
--------------------------------
OPERATING ACTIVITIES
Net loss $ (359,911) $ (89,314)
Items not affecting cash
Amortization of capital assets 52,509 74,252
Stock-based compensation 4,470 -
Unrealized foreign exchange gain - 495
Deferred income taxes ( 135,160) ( 8,271)
--------------------------------
Cash flow used in operations before other
items ( 438,092) ( 22,838)
Net change in non-cash working capital 386,958 173,107
--------------------------------
( 51,134) 150,269
INVESTING ACTIVITIES
Proceeds from disposition of capital
assets 1,341 73,094
Intangible assets - contract cost
additions (1,355,780) (1,629,194)
Amortization of intangible assets 1,280,911 1,604,148
Purchase of capital assets ( 7,209) ( 39,825)
--------------------------------
( 80,737) 8,223
--------------------------------
FINANCING ACTIVITIES
Repayment of line of credit (282,786) (433,031)
--------------------------------
( 282,786) ( 433,031)
--------------------------------
Decrease in cash and cash equivalents ( 414,657) ( 274,539)
Cash and cash equivalents, beginning of
period 978,656 1,738,036
--------------------------------
Cash and cash equivalents, end of period $ 563,999 $ 1,463,497
--------------------------------