Versatile Systems Inc.
TSX VENTURE : VV
AIM : VVS

Versatile Systems Inc.

September 14, 2009 03:15 ET

Versatile Reports Fourth Quarter and Fiscal 2009 Results

Net Earnings of $383,392 for the fourth quarter

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 14, 2009) - Versatile Systems Inc. (TSX VENTURE:VV)(AIM:VVS), announces its results for the fourth quarter of the 2009 fiscal year.

Revenue for the three months ended June 30, 2009 was $11,609,822 generating a gross profit of $2,995,037 or 25.8% of sales compared to $13,721,812 generating a gross profit of $3,541,164 or 25.8% of sales for the same quarter last year. The Net Earnings for the quarter amounted to $383,392 ($0.00 per share) compared to a Net Loss of $362,043 ($0.00 per share) for the same period last year, an increase of $745,435.

"Economic conditions were challenging throughout fiscal 2009," said John Hardy, Chairman and CEO of Versatile. "Nevertheless, we made strategic investments in our product set and partner relationships, which will form the foundation for future growth. We reduced overhead by approximately $2.5 million, and as economic conditions improve, we will be well positioned to capitalize on our growing market opportunity."

Highlights for the quarter included:

- Cash and cash equivalents at June 30, 2009 was $2,002,530 compared to $2,100,645 at March 31, 2009;

- Deferred revenue at June 30, 2009 was $8,732,562 (of which $7,755,151 is expected to be recognized in the next four quarters) compared to $7,515,600 at March 31, 2009, an increase of $1,216,962;

- Revenue for the three months ended June 30, 2009 was $11,609,822 compared to $10,877,354 for the last quarter, an increase of $732,468;

- The Net Earnings for the quarter amounted to $383,392 ($0.00 per share) compared to a Net Loss of $362,043 ($0.00 per share) for the same period last year, an increase of $745,435; and

- The research and development expense for the quarter amounted to $186,568 compared to $448,260 for the same quarter last year.

Revenue for the year ended June 30, 2009 was $49,118,091 generating a gross profit of $12,111,519 or 24.7% of revenue compared to $59,380,354 generating a gross profit of $14,852,818 or 25.0% of revenue for the same period last year. The Net Loss for the year amounted to $666,119 ($0.01 per share) compared to Net Earnings of $200,130 ($0.00 per share) for the prior year.

During the current fiscal year, the Company incurred $515,548 for research and development activities related to Mobiquity Route™ and related mobile software products and $693,587 related to Mobiquity Transaction Engine 3.0™, Mobiquity Kiosk™ and research on Virtualization.

"The Company was able to generate positive earnings in the fourth quarter due to the significant reductions in the cost structure," said Fraser Atkinson, CFO of Versatile. "The Company has maintained a strong financial position with no interest bearing debt."

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) 2009 Versatile Systems Inc. All rights reserved.



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Versatile Systems Inc.
Consolidated Balance Sheets
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Expressed in U.S. dollars June 30, 2009 June 30, 2008
------------- -------------


ASSETS
Current Assets
Cash and cash equivalents $ 2,002,530 $ 1,500,005
Accounts receivable 8,408,093 11,842,754
Current portion of deferred contract
costs 5,745,493 4,918,704
Work-in-progress 92,145 80,668
Prepaid expenses 286,709 309,061
Inventory 1,376,746 1,944,100
Future income tax benefits 944,843 706,249
----------------------------------
18,856,559 21,301,541

Long-term accounts receivable 112,781 26,522
Deferred contract costs 803,246 1,050,694
Capital Assets 794,008 867,771
Intangible assets 332,953 695,726
Future income tax benefits 5,283,896 4,672,907
Goodwill 9,977,659 9,977,659
----------------------------------
$ 36,161,102 $ 38,592,820
----------------------------------
----------------------------------
LIABILITIES
Current Liabilities
Line of credit $ - $ 74,942
Bank overdraft - 127,214
Accounts payable and accrued liabilities 8,530,987 10,704,330
Current portion of deferred revenue 7,755,151 6,582,593
Promissory Notes - 40,000
----------------------------------
16,286,138 17,529,079

Deferred Revenue 977,411 1,272,536
----------------------------------
17,263,549 18,801,615
----------------------------------
SHAREHOLDERS' EQUITY
Share Capital 50,583,743 51,353,054
Warrants 186,367 369,965
Contributed surplus 4,138,437 3,188,496
Deficit (35,729,215) (35,063,096)
Accumulated other comprehensive loss (281,779) (57,214)
----------------------------------
18,897,553 19,791,205

----------------------------------
$ 36,161,102 $ 38,592,820
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----------------------------------


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Versatile Systems Inc.
Consolidated Statements of Earnings (Loss) and Deficit
----------------------------------------------------------------------------

Expressed in Three months ended June 30 Year ended June 30
U.S. dollars 2009 2008 2009 2008
------------------------------------------------------------
(unaudited) (unaudited)

SALES $ 11,609,822 $ 13,721,812 $ 49,118,091 $ 59,380,354

COST OF SALES 8,614,785 10,180,648 37,006,572 44,527,536
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2,995,037 3,541,164 12,111,519 14,852,818
------------------------------------------------------------
EXPENSES
General and
administrative 1,148,758 1,529,268 4,649,659 5,090,959
Selling and
marketing 1,685,829 1,470,184 6,688,676 6,504,762
Research and
development 186,568 448,260 1,281,109 1,745,569
Non recurring
expenses (110,823) - 421,512 -
Foreign
exchange (gain)
loss (161,062) 1,465 (258,306) 175,627
Stock-based
compensation 12,719 (63,219) 21,411 46,671
------------------------------------------------------------
2,761,989 3,385,958 12,804,061 13,563,588
------------------------------------------------------------
Earnings (loss)
before
interest, taxes
and amortization 233,048 155,206 (692,542) 1,289,230
Amortization
of capital
assets 33,392 69,300 282,296 256,929
Amortization
of intangible
assets 90,674 124,355 362,698 693,748
Interest
expense
(income) 5,520 167 33,314 (28,212)
------------------------------------------------------------
EARNINGS (LOSS)
BEFORE INCOME
TAXES 103,462 (38,616) (1,370,850) 366,765

Current income
tax expense (80,563) (29,214) (144,855) (65,031)
Future income
tax benefit 360,493 (294,213) 849,586 (101,604)
------------------------------------------------------------
NET EARNINGS
(LOSS) 383,392 (362,043) (666,119) 200,130
------------------------------------------------------------

DEFICIT,
BEGINNING OF
PERIOD (36,112,607) (34,701,053) (35,063,096) (35,263,226)

------------------------------------------------------------
DEFICIT, END OF
PERIOD (35,729,215) (35,063,096) (35,729,215) (35,063,096)
------------------------------------------------------------
------------------------------------------------------------

EARNINGS (LOSS)
PER SHARE
(basic and
diluted) $0.00 ($0.00) ($0.01) $0.00
------------------------------------------------------------
------------------------------------------------------------



----------------------------------------------------------------------------
----------------------------------------------------------------------------
Versatile Systems Inc.
Consolidated Statements of Comprehensive (Loss) Income
----------------------------------------------------------------------------
Expressed in U.S. dollars Three months ended June 30 Year ended June 30
2009 2008 2009 2008
-------------------------------------------------
(unaudited) (unaudited)

Net earnings (loss) 383,392 (362,043) (666,119) 200,130

Other comprehensive (loss)
income
Foreign currency
translation adjustments 118,721 (230) (224,565) 227,123

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Comprehensive (loss) income 502,113 (362,273) (890,684) 427,253
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-------------------------------------------------



----------------------------------------------------------------------------
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Versatile Systems Inc.
Consolidated Statements of Cash Flows
----------------------------------------------------------------------------

Expressed in U.S. Three months ended June 30 Year ended June 30
dollars 2009 2008 2009 2008
-------------------------------------------------------
(unaudited) (unaudited)

CASH FLOWS FROM
(USED IN) OPERATING
ACTIVITIES
Net earnings
(loss) $ 383,392 $ (362,043) $ (666,119) $ 200,130
Items not
affecting cash
Amortization of
capital and
intangible
assets 177,577 193,655 704,833 950,677
Loss on
disposal
of capital
assets 234 - 234 212
Stock-based
compensation 12,719 (63,219) 21,411 46,671
Unrealized
foreign
exchange
loss (gain) (227,890) 85,847 (194,359) 153,687
Future income
tax expense
(benefit) (360,493) 294,213 (849,586) 101,604
-------------------------------------------------------
Cash flow from
(used in)
operations before
other items (14,461) 148,453 (983,586) 1,452,981
Net change in
non-cash working
capital items (87,211) (1,087,563) 2,051,380 449,708
-------------------------------------------------------
(101,672) (939,110) 1,067,794 1,902,689

CASH FLOWS FROM
(USED IN) INVESTING
ACTIVITIES
Cash acquired on
acquisition of
Sagent Solutions - 5,081 - 5,081
Proceeds from
disposition of
capital assets - - 1,820 1,867
Additions to
capital assets ( 32,932) ( 170,470) ( 267,393) ( 634,181)
-------------------------------------------------------
( 32,932) ( 165,389) ( 265,573) ( 627,233)
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CASH FLOWS FROM
(USED IN) FINANCING
ACTIVITIES
Proceeds from
issuance of
shares, net of
costs - - - 416,202
Purchase of
company shares - (311,511) (24,379) (618,780)
Proceeds from
(Repayment of)
line of credit - 74,942 (74,942) 71,559
Repayment of bank
overdraft - (193,820) (127,214) (43,208)
Repayment of the
Bank Term Loan - - - (2,749,263)
Repayment of the
Term Loan - - - (175,000)
Repayment of
Promissory Notes - (20,000) (40,000) (40,000)
Repayment of
capital lease
obligations - - - (4,748)
-------------------------------------------------------
- ( 450,389) ( 266,535) ( 3,143,238)
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Effect of foreign
exchange rate on
cash 36,489 ( 54,492) (33,161) ( 1,300)

Increase
(decrease) in cash
and cash
equivalents ( 98,115) ( 1,609,380) 502,525 ( 1,869,082)

CASH and cash
equivalents,
beginning of
period 2,100,645 3,109,385 1,500,005 3,369,087
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CASH and cash
equivalents, end
of period $ 2,002,530 $ 1,500,005 $ 2,002,530 $ 1,500,005
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The TSX Venture Exchange and the AIM market of the London Stock Exchange have not reviewed and do not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Versatile Systems Inc.
    John Hardy
    Chairman and CEO
    1-800-262-1633 or International: 001-206-979-6760
    or
    Versatile Systems Inc.
    Fraser Atkinson
    CFO
    1-800-262-1633
    Website: www.versatile.com