Versatile Systems Inc.
TSX VENTURE : VV
AIM : VVS

Versatile Systems Inc.

September 09, 2011 03:30 ET

Versatile Reports Fourth Quarter and Fiscal 2011 Results

Positive cash flow from operations for the year

VANCOUVER, CANADA--(Marketwire - Sept. 9, 2011) - Versatile Systems Inc. (TSX VENTURE:VV)(AIM:VVS), announces its results for the fourth quarter and the 2011 fiscal year.

Revenue for the year ended June 30, 2011 was $45,903,472 generating a gross profit of $10,129,378 or 22.1% of sales compared to $44,188,021 generating a gross profit of $10,036,501 or 22.7% of sales for the previous fiscal year. The Net Loss for the period amounted to $98,762 ($0.00 per share) compared to a Net Loss of $1,236,621 ($0.01 per share) for the previous fiscal year, an improvement of $1,137,859.

The Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) for the year ended June 30, 2011 was $112,195 compared to an EBITDA loss of $1,291,424 for the previous fiscal year, an improvement of $1,403,619.

"While economic conditions continue to be challenging, we are pleased with the significant turnaround from the previous fiscal year," said John Hardy, Chairman and CEO of Versatile. "Heading into fiscal 2012 we remain committed to improving profitability, while carefully managing our expenses."

Revenue for the three months ended June 30, 2011 was $10,180,289 generating a gross profit of $2,381,728 or 23.4% of sales compared to $11,517,023 generating a gross profit of $2,419,338 or 21.0% of sales for the same quarter last year. The Net Loss for the quarter amounted to $221,251 ($0.00 per share) compared to a Net Loss of $292,335 ($0.01 per share) for the same period last year.

Highlights for the quarter included:

  • Revenue for the three months ended June 30, 2011 was $10,180,289 compared to $11,517,023 for the same quarter last year;
  • The normalized EBITDA for the quarter was $45,167, compared to a normalized EBITDA loss of $398,232 for the same quarter last year. Normalized EBITDA excludes the non- recurring expenses and the non-cash stock based compensation charge;
  • The research and development expense for the quarter amounted to $210,996 compared to $177,744 for the same quarter last year;
  • Deferred revenue at June 30, 2011 was $6,320,199 (of which $5,670,932 is expected to be recognized in the next four quarters) compared to $8,142,479 at June 30, 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 June 30, 2011 was $3.92 per share.

During the current quarter, the Company incurred $116,328 for research and development activities related to Mobiquity Route™, DEX and related mobile software products and $53,181 related toMobiquity Transaction Engine 3.0™ and Mobiquity Kiosk™.

Subsequent to the year-end 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.

"Versatile generated cash flow from operations before non-cash operating balance sheet items of $319,649 for the current fiscal year compared to cash flow used in operations before non-cash operating balance sheet items of $1,164,160 for last year," said Fraser Atkinson, CFO of Versatile. "This is an improvement of $1,483,809 and has helped to 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. © 2011 Versatile Systems Inc. All rights reserved.

Versatile Systems Inc.
Consolidated Balance Sheets
Expressed in U.S. dollars June 30, 2011 June 30, 2010
ASSETS
Current Assets
Cash and cash equivalents $ 978,656 $ 1,738,036
Investment in Equus 2,311,109 2,203,043
Accounts receivable 7,134,328 10,580,706
Current portion of deferred contract costs 4,469,066 5,793,180
Prepaid expenses 228,062 236,993
Inventory 1,849,635 1,719,477
Future income tax benefits 546,252 721,975
17,517,108 22,993,410
Long-term accounts receivable 401,742 265,612
Deferred contract costs 579,710 598,366
Capital Assets 270,437 519,391
Intangible assets - 459
Future income tax benefits 6,454,904 6,243,875
Goodwill 9,914,350 9,914,350
$ 35,138,251 $ 40,535,463
LIABILITIES
Current Liabilities
Line of credit and bank overdraft $ 1,007,767 $ 1,353,312
Accounts payable and accrued liabilities 6,823,643 9,955,342
Current portion of deferred revenue 5,670,932 7,432,210
13,502,342 18,740,864
Deferred Revenue 649,267 710,269
14,151,609 19,451,133
SHAREHOLDERS' EQUITY
Share Capital 54,433,709 54,433,709
Warrants 42,000 186,367
Contributed surplus 4,578,470 4,231,539
Deficit (37,064,598 ) (36,965,836 )
Accumulated other comprehensive loss (1,002,939 ) (801,449 )
20,986,642 21,084,330
$ 35,138,251 $ 40,535,463
Versatile Systems Inc.
Consolidated Statements of Operations and Deficit
(Unaudited - Prepared by Management)
Expressed in U.S. dollars Three months ended June 30 Year ended June 30
2011 2010 2011 2010
(unaudited) (unaudited)
SALES $ 10,180,289 $ 11,517,023 $ 45,903,472 $ 44,188,021
COST OF SALES 7,798,561 9,097,685 35,774,094 34,151,520
2,381,728 2,419,338 10,129,378 10,036,501
EXPENSES
Selling and marketing 1,186,724 1,497,988 4,659,897 5,969,542
General and administrative 929,913 1,140,105 3,702,160 4,058,864
Research and development 210,996 177,744 960,399 856,787
Non recurrring expenses 199,293 (214,924 ) 492,950 358,811
Stock-based compensation 141,658 23,887 202,564 93,102
Foreign exchange loss (gain) 8,928 1,733 (787 ) (9,181 )
2,677,512 2,626,533 10,017,183 11,327,925
Earnings (loss) before interest, taxes and amortization (295,784 ) (207,195 ) 112,195 (1,291,424 )
Amortization of capital assets 51,473 67,874 225,227 258,742
Amortization of intangible assets - 60,191 - 332,214
Interest expense 2,616 10,248 16,426 32,239
Goodwill Impairment - 63,309 - 63,309
Loss (Gain) on sale of capital assets and investments 1,410 - 4,610 (4,952 )
LOSS BEFORE INCOME TAXES (351,283 ) (408,817 ) (134,068 ) (1,972,976 )
Current income tax recovery (expense) (995 ) 2,985 - (756 )
Future income tax benefit 131,027 113,497 35,306 737,111
NET LOSS (221,251 ) (292,335 ) (98,762 ) (1,236,621 )
DEFICIT, BEGINNING OF PERIOD (36,843,347 ) (36,673,501 ) (36,965,836 ) (35,729,215 )
DEFICIT, END OF PERIOD (37,064,598 ) (36,965,836 ) (37,064,598 ) (36,965,836 )
EARNINGS (LOSS) PER SHARE (basic and diluted) $ (0.00 ) $ (0.00 ) $ (0.00 ) $ (0.01 )
Versatile Systems Inc.
Consolidated Statements of Comprehensive Loss
(Unaudited - Prepared by Management)
Expressed in U.S. dollars Three months ended June 30 Year ended June 30
2011 2010 2011 2010
(unaudited) (unaudited)
Net earnings (loss) (221,251 ) (292,335 ) (98,762 ) (1,236,621 )
Other comprehensive (loss) income
Net change in fair value of available-for-sale investments (192,592 ) (519,670 ) (201,490 ) (519,670 )
Comprehensive (loss) income (413,843 ) (812,005 ) (300,252 ) (1,756,291 )
Versatile Systems Inc.
Consolidated Statements of Cash Flows
(Unaudited - Prepared by Management)
Expressed in U.S. dollars Three months ended June 30 Year ended June 30
2011 2010 2011 2010
(unaudited) (unaudited)
OPERATING ACTIVITIES
Net loss $ (221,251 ) $ (292,335 ) $ (98,762 ) $ (1,236,621 )
Items not affecting cash
Amortization of capital and intangible assets 56,998 144,719 256,075 665,091
Stock-based compensation 141,658 23,887 202,564 93,102
Goodwill Impairment - 63,309 - 63,309
Loss (Gain) on sale of capital assets and investments 1,410 - 4,610 ( 4,952 )
Unrealized foreign exchange gain ( 10,765 ) ( 20,135 ) ( 9,532 ) ( 6,978 )
Future income tax benefit ( 131,027 ) ( 113,497 ) ( 35,306 ) ( 737,111 )
Cash flow used in operations before other items ( 162,977 ) ( 194,052 ) 319,649 ( 1,164,160 )
Net change in non-cash operating balance sheet items 523,092 ( 593,002 ) ( 418,517 ) ( 1,538,546 )
360,115 ( 787,054 ) ( 98,868 ) ( 2,702,706 )
INVESTING ACTIVITIES
Purchase of investment in Equus - 3,447 (309,556 ) (2,722,713 )
Proceeds from disposition of capital assets (30,387 ) 33,519 76,968 57,253
Purchase of capital assets 26,465 ( 26,390 ) ( 82,379 ) ( 99,606 )
( 3,922 ) 10,576 ( 314,967 ) ( 2,765,066 )
FINANCING ACTIVITIES
Proceeds from issuance of shares - - - 3,876,257
Share issue costs - - - (26,291 )
Proceeds from (repayment of) line of credit (131,060 ) 584,976 (345,545 ) 1,353,312
( 131,060 ) 584,976 ( 345,545 ) 5,203,278
Increase (decrease) in cash and cash equivalents 225,133 ( 191,502 ) ( 759,380 ) ( 264,494 )
CASH and cash equivalents, beginning of period 753,523 1,929,538 1,738,036 2,002,530
CASH and cash equivalents, end of period $ 978,656 $ 1,738,036 $ 978,656 $ 1,738,036

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. All amounts are expressed in U.S. dollars unless otherwise stated.

Contact Information

  • Versatile Systems Inc.
    John Hardy
    Chairman and CEO
    1-800-262-1633
    International: 001-206-979-6760

    Versatile Systems Inc.
    Fraser Atkinson
    CFO
    1-800-262-1633
    www.versatile.com