Versatile Systems Inc.
TSX VENTURE : VV

Versatile Systems Inc.

October 24, 2013 22:25 ET

Versatile Reports Fourth Quarter and Fiscal 2013 Results

VANCOUVER, CANADA--(Marketwired - Oct. 24, 2013) - Versatile Systems Inc. (TSX VENTURE:VV), announces its results for the fourth quarter and the 2013 fiscal year.

Revenue for the three months ended June 30, 2013 was $8,584,095, generating a gross profit of $1,050,994 or 12.2% of sales compared to $8,832,150, generating a gross profit of $1,942,201 or 22.0% of sales for the same quarter last year. The Net Loss for the quarter amounted to $2,175,031 ($0.01 per share) compared to a Net Loss of $14,075,239 ($0.09 per share) for the same period last year.

Highlights for the quarter included:

  • Revenue for the three months ended June 30, 2013 was $8,584,095 compared to $8,832,150 for the same quarter last year;
  • The gross profit for the three months ended June 30 2013 was $1,050,994 or 12.2% of sales compared to $1,942,201 or 22.0% of sales for the same quarter last year;
  • The research and development expense for the quarter amounted to $339,273 compared to $208,356 for the same quarter last year; and
  • Deferred revenue at June 30, 2013 was $6,835,938 (of which $5,586,738 is expected to be recognized in the next four quarters) compared to $6,712,216 at June 30, 2012, an increase of $123,722.

Revenue for the year ended June 30, 2013 was $36,272,893 generating a gross profit of $6,424,199 or 17.7% of sales compared to $39,501,388 generating a gross profit of $8,020,245 or 20.3% of sales for the same period last year. The Net Loss for the year amounted to $3,854,602 ($0.02 per share) compared to $14,717,158 ($0.09 per share) for the same period last year.

On June 26, 2013 the Board of Directors formally approved the disposition of the Company's investment in Equus. The disposition is by way of a spin-out of the shares of the Company's wholly owned subsidiary, Mobiquity Investments Corp ("MIC"). The Company signed an Arrangement Agreement with MIC. Under the Arrangement Agreement, Versatile and MIC have agreed to undertake a plan of arrangement (the "Spin-out Transaction") under which the shares of MIC will be distributed to Versatile shareholders. Existing Versatile shareholders will receive the same percentage interest in MIC as they presently hold in Versatile such that following the completion of the transaction, shareholders will hold shares in both Versatile and MIC.

On September 27, 2013 the Company completed an Information Circular setting out the details of the Spin-out Transaction which was mailed to the shareholders of the Company. A shareholder meeting to approve the Spin-out Transaction will be held on October 31, 2013. The completion of the Spin-out Transaction is subject to a number of conditions precedent, including the approval of the Versatile shareholders, the approval of the Supreme Court of British Columbia, the approval of the TSX Venture Exchange, and the listing of the common shares of MIC on the CNSX.

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 go to 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.

Neither TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. All amounts are expressed in U.S. dollars unless otherwise stated. © 2013 Versatile Systems Inc. All rights reserved.

Versatile Systems Inc.
Condensed Consolidated Statements of Financial Position
Expressed in U.S. dollars June 30, 2013 June 30, 2012
ASSETS
Current Assets
Cash and cash equivalents $ 83,724 $ 434,725
Investment in Equus 1,798,203 -
Accounts receivable 6,379,629 5,994,377
Prepaid expenses 4,588,012 4,152,994
Inventory 2,406,355 2,347,110
15,255,923 12,929,206
Long-term accounts receivable 14,368 181,366
Long-term prepaid expenses 1,140,311 1,278,432
Investment in Equus - 2,105,473
Capital Assets 189,274 251,591
Intangible assets 169,959 167,206
Deferred income tax assets 336,275 880,407
Goodwill 2,718,970 2,718,970
$ 19,825,080 $ 20,512,651
LIABILITIES
Current Liabilities
Line of credit and bank overdraft $ 3,602,269 $ 1,988,675
Accounts payable and accrued liabilities 6,963,126 5,544,888
Current portion of deferred revenue 5,586,738 5,292,359
16,152,133 12,825,922
Deferred Revenue 1,249,200 1,419,857
17,401,333 14,245,779
SHAREHOLDERS' EQUITY
Share Capital 54,433,709 54,433,709
Equity Reserve 4,637,968 4,629,219
Deficit (56,313,036 ) (52,458,434 )
Accumulated other comprehensive loss (334,894 ) (337,622 )
2,423,747 6,266,872
$ 19,825,080 $ 20,512,651
Versatile Systems Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited - Prepared by Management)
Expressed in U.S. dollars Three months ended June 30 Year ended June 30
2013 2012 2013 2012
(unaudited) (unaudited)
SALES $ 8,584,095 $ 8,832,150 $ 36,272,893 $ 39,501,388
COST OF SALES 7,533,101 6,889,949 29,848,694 31,481,143
1,050,994 1,942,201 6,424,199 8,020,245
EXPENSES
Selling and marketing 1,113,068 1,269,214 4,445,260 4,571,281
General and administrative 971,171 819,595 3,485,107 3,420,726
Research and development 339,273 208,356 1,265,258 927,881
Amortization of capital assets 18,300 43,164 119,709 168,388
Share-based compensation 2,188 - 8,749 8,749
Foreign exchange loss (gain) 2,204 (7,353 ) 4,402 16,061
2,446,204 2,332,976 9,328,485 9,113,086
LOSS FROM OPERATIONS (1,395,210 ) (390,775 ) (2,904,286 ) (1,092,841 )
Interest expense (30,204 ) (62,203 ) (93,784 ) (82,282 )
Goodwill impairment - (7,195,380 ) - (7,195,380 )
Equity loss from Investment in Equus (204,490 ) (105,875 ) (307,270 ) (220,412 )
Loss on sale of capital assets and investments - (190 ) - (1,724 )
LOSS BEFORE INCOME TAXES (1,629,904 ) (7,754,423 ) (3,305,340 ) (8,592,639 )
Current income tax expense (995 ) (995 ) (5,130 ) (4,330 )
Deferred income taxes (544,132 ) (6,319,821 ) (544,132 ) (6,120,189 )
NET LOSS $ (2,175,031 ) $ (14,075,239 ) $ (3,854,602 ) $ (14,717,158 )
Other comprehensive income (loss)
Foreign exchange translation (3,250 ) 2,317 2,728 (11,361 )
Total comprehensive loss $ (2,178,281 ) $ (14,072,922 ) $ (3,851,874 ) $ (14,728,519 )
LOSS PER SHARE (basic and diluted) ($0.01 ) ($0.09 ) ($0.02 ) ($0.09 )
Weighted average number of common shares oustanding, basic and diluted
157,285,643

157,285,643

157,285,643

157,285,643
Versatile Systems Inc.
Condensed Consolidated Statements of Changes in Shareholders' Equity
(Unaudited - Prepared by Management)
Expressed in U.S. dollars
Accumulated
other
Share Warrant Equity comprehensive
Capital Reserve Reserve Deficit loss Total
Balance, June 30, 2011 $ 54,433,709 $ 42,000 $ 4,578,470 $ (37,741,276 ) $ (326,261 ) $ 20,986,642
Net loss - - - (14,717,158 ) - (14,717,158 )
Foreign exchange on the
translation of VMS-UK - - - - (11,361 ) (11,361 )
Expiration of warrants - (42,000 ) 42,000 - - -
Share-based compensation expense - - 8,749 - - 8,749
Balance, June 30, 2012 54,433,709 - 4,629,219 (52,458,434 ) (337,622 ) 6,266,872
Balance, June 30, 2012 54,433,709 - 4,629,219 (52,458,434 ) (337,622 ) 6,266,872
Net loss - - - (3,854,602 ) - (3,854,602 )
Foreign exchange on the
translation of VMS-UK - - - - 2,728 2,728
Share-based compensation expense - - 8,749 - - 8,749
Balance, June 30, 2013 $ 54,433,709 $ - $ 4,637,968 $ (56,313,036 ) $ (334,894 ) $ 2,423,747
Versatile Systems Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited - Prepared by Management)
Expressed in U.S. dollars Three months ended June 30 Year ended June 30
2013 2012 2013 2012
(unaudited) (unaudited)
OPERATING ACTIVITIES
Net loss $ (2,175,031 ) $ (14,075,239 ) $ (3,854,602 ) $ (14,717,158 )
Items not involving cash
Amortization of capital assets 18,300 43,164 119,709 177,159
Share-based compensation 2,188 - 8,749 8,749
Goodwill impairment - 7,195,380 - 7,195,380
Loss on sale of capital assets and investments - 190 - 1,724
Equity loss from Investment in Equus 204,490 105,875 307,270 220,412
Unrealized foreign exchange loss (gain) ( 2,728 ) 29,389 (2,045 ) 11,498
Deferred income taxes 544,132 6,319,821 544,132 6,120,189
Cash flow generated from (used in) operations before other items (1,408,649 ) (381,420 ) (2,876,787 ) (982,047 )
Net change in non-cash working capital 882,631 326,310 972,692 (344,877 )
(526,018 ) (55,110 ) (1,904,095 ) (1,326,924 )
INVESTING ACTIVITIES
Purchase of shares in Equus - - - (14,776 )
Proceeds from disposition of capital assets - (17,387 ) - 17,640
Intangible assets - contract cost additions (71,197 ) (80,321 ) (261,361 ) (321,283 )
Intangible assets - contract cost recognized 54,744 107,293 258,608 313,621
Purchase of capital assets (14,428 ) (29,957 ) (57,747 ) (193,117 )
(30,881 ) (20,372 ) (60,500 ) (197,915 )
FINANCING ACTIVITIES
Proceeds from line of credit and bank overdraft 598,978 220,903 1,613,594 980,908
598,978 220,903 1,613,594 980,908
Increase (Decrease) in cash and cash equivalents 42,079 145,421 (351,001 ) (543,931 )
Cash and cash equivalents, beginning of period 41,645 289,304 434,725 978,656
Cash and cash equivalents, end of period $ 83,724 $ 434,725 $ 83,724 $ 434,725

Contact Information

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

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