Versatile Mobile Systems (Canada) Inc.
TSX VENTURE : VMS

Versatile Mobile Systems (Canada) Inc.

August 22, 2005 03:30 ET

Versatile Reports Record Fourth Quarter and Fiscal 2005 Year-End Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 22, 2005) - Versatile Mobile Systems (Canada) Inc. (TSX VENTURE:VMS), today announces its results for the fourth quarter and year ended June 30, 2005.

Revenue for the three months ended June 30, 2005 was $16,214,945 compared to $4,711,896 for the same period last year, an increase of 344%. The Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the quarter was $332,119 compared to an EBITDA loss of $665,640 the same quarter last year. The Company has included information concerning EBITDA because it believes that it may be used by certain investors as one measure of the Company's financial performance.

The loss for the quarter was $24,024 ($0.00 per share) compared to a loss of $724,802 ($0.01 per share) for the same quarter last year. Included in this loss are several non cash expenses including stock based compensation for the quarter of $128,367 compared to $23,854 for the same quarter last year and amortization of capital assets and intangible assets for the quarter of $228,996 compared to $58,257 for the same quarter last year. Research and development expense for the quarter amounted to $553,486 compared to $219,871 for the same quarter last year.

"We are approaching our goal of profitability with a break-even quarter that has generated both record revenue and EBITDA," said John Hardy, Chairman and CEO of Versatile Mobile Systems. "We have had a strong finish to the fiscal year, and with the acquisition of Perfect Order, a strengthening pipeline, and the addition of a new management team, the Company now has the critical mass in place to grow the business."



Three months ended June 30 Year ended June 30
2005 2004 2005 2004
---- ---- ---- ----
(unaudited)
SALES $ 16,214,945 $ 4,711,896 $ 26,124,930 $ 19,445,105
COST OF SALES $ 12,358,507 $ 3,935,788 $ 19,700,109 $ 13,839,103
-----------------------------------------------------
3,856,438 776,108 6,424,821 5,606,002
-----------------------------------------------------
EXPENSES
General and
administrative 1,266,114 671,429 2,974,651 2,566,242
Selling and
marketing 1,576,352 591,687 3,394,571 2,544,508
Research and
development 553,486 219,871 1,025,177 1,042,165
Recovery of
premise costs - (65,093) - (260,373)
-----------------------------------------------------
3,395,952 1,417,894 7,394,399 5,892,542
-----------------------------------------------------
NET EARNINGS (LOSS)
BEFORE OTHER ITEMS 460,486 (641,786) (969,578) (286,540)
Interest 127,148 905 129,529 3,989
Amortization of
intangible assets 215,882 34,403 230,511 230,972
Amortization of
capital assets 13,114 23,854 157,395 98,788
Stock-based
compensation 128,367 23,854 137,962 31,284
-----------------------------------------------------
NET EARNINGS (LOSS)
BEFORE INCOME TAXES (24,025) (724,802) (1,624,975) (651,573)
INCOME TAX EXPENSE (1) - 1,000 1,119
-----------------------------------------------------
NET EARNINGS (LOSS)
FOR THE PERIOD (24,024) (724,802) (1,625,975) (652,692)
-----------------------------------------------------
-----------------------------------------------------
NET EARNINGS (LOSS)
PER SHARE: ($0.00) $0.01 ($0.02) $0.01
-----------------------------------------------------


Highlights of the Company's operations for the year included:

- Fourth quarter revenue of over $16 million, a record for the Company and up 344% over the same period last year.

- EBITDA of $332,119 in the fourth quarter, a record for the Company.

- Acquisition of Perfect Order, Inc. and Perfect Order Manufacturing, Inc.

- Restructuring the management team with the additions of Robert Joyce - President, Oliver Poppenberg - Executive Vice-President of Sales and Ian Jobson - Executive Vice-President of Professional Services and Solutions.

- Arranging bank facilities of $7,215,200 (U.S. $5,800,000) and completing a private placement for $1,540,625.

- Versatile named one of Canada's fastest growing technology companies in the 2004 Deloitte Canadian Technology Fast 50 Program.

- Launch of new Sales Supervisor™ "light client" software for light weight and inexpensive PDA (Personal Digital Assistants) or Smartphones.

- Certification by Orange and inclusion in the Orange Partner Program in the UK

Revenue for the year ended June 30, 2005 was $26,124,930 compared to $19,445,105 in 2004, an increase of 34.4%. The loss for the year was $1,625,975 ($0.02 per share) compared to a loss of $652,692 ($0.01 per share) for 2004.

Cost of sales for the year amounted to $19,700,109 resulting in a gross profit of $6,424,821 or 24.6% of sales as compared to $13,839,103 and a gross profit of $5,606,002 or 28.8% of sales in the previous year.

Research and development expense for the year amounted to $1,025,177 compared to $1,042,165 for last year.

The working capital deficiency at June 30, 2005 was $9,393,352, which after taking into account the Promissory Notes due to the Vendors, relating to the acquisition of the Perfect Order business, of $5,964,587 and the Bank Term Loan of $3,357,325 leaves a deficiency of $71,440. The ability of the Company to continue operations on an ongoing basis will be dependent on its ability to continue to generate sales, attain profitable operations, maintain margins and control operating expenses. The Promissory Notes are due on or before April 25, 2006. At June 30, 2005 the Company had cash and cash equivalents of $183,598 and an unused credit line of $3,300,541 (U.S. $2,693,000).

"In the fourth quarter our net income before other items of $460,486 was an improvement by $1,102,272 over the net loss before other items of $641,786 for the same quarter last year," said Fraser Atkinson, CFO. "In fiscal 2006, our primary financial objectives are to drive top-line growth, exceed our EBITDA levels for the fourth quarter on an annualized basis and generate positive cash from operations for the year."

About Versatile

Versatile provides mobile business solutions that enable companies to improve sales, marketing and distribution of their products. By using Versatile's technology, companies in the consumer packaged goods, and transportation industries have gained the benefits of supply chain visibility, shortened fulfillment cycles and improved customer satisfaction. Versatile's international customer list includes Cadbury Schweppes, Albertsons, Michaels, Nordstrom, K&L Distributors, and Kellogg. Versatile's Perfect Order division provides information technology services for the implementation, maintenance and security of mission-critical computing environments. Perfect Order has the ability to architect solutions involving both proprietary and third party components. Customers include Motorola, Tyco (AMP), Comcast, Adelphia Communications, Time Warner(AOL), Mellon Financial, Astra Zeneca, and Bristol Meyers Squibb. Additional information is available at www.versatilemobile.com.

Forward-Looking Statements

This document may contain forward-looking statements relating to Versatile Mobile Systems' operations or to the environment in which it operates, which are based on Versatile Mobile Systems' 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 Mobile Systems' 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 Mobile Systems disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

(C) 2005 Versatile Mobile Systems (Canada) Inc. All rights reserved.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Versatile Mobile Systems (Canada) Inc.
    John Hardy
    Chairman and CEO
    1-800-262-1633 or from Europe 001 425 778-8577
    or
    Versatile Mobile Systems (Canada) Inc.
    Fraser Atkinson
    CFO
    604-683-2915 Ext. 214