Versatile Systems Inc.
TSX VENTURE : VV
AIM : VVS

Versatile Systems Inc.

January 26, 2011 03:15 ET

Versatile Reports Second Quarter Results

Revenue of $15,460,033 for the Quarter Produces Net Earnings of $178,965

VANCOUVER, CANADA--(Marketwire - Jan. 26, 2011) - Versatile Systems Inc. (TSX VENTURE:VV)(AIM:VVS) announces its results for the second quarter of the 2011 fiscal year.

Revenue for the three months ended December 31, 2010 was $15,460,033 compared to $11,259,292 for the same quarter last year, an increase of $4,200,741. The Net Earnings for the quarter amounted to $178,965 ($0.00 per share) compared to a Net Loss of $80,661 ($0.00 per share) for the same period last year.

"All key financial metrics have shown substantial improvement over the comparable quarter last year, as well as the first quarter ended September 30, 2010," said John Hardy, Chairman and CEO of Versatile. "Revenue, deferred revenue, working capital, cash flow and earnings have all increased. We will continue our efforts to improve the Company's financial performance in future quarters."

Highlights for the quarter included:

  • Revenue for the three months ended December 31, 2010 was $15,460,033 compared to $11,259,292 for the same quarter last year, an increase of $4,200,741;
  • Deferred revenue at December 31, 2010 was $8,112,256 (of which $7,264,273 is expected to be recognized in the next four quarters) compared to $7,512,605 at December 31, 2009;
  • The Earnings before interest, taxes and amortization for the quarter was $305,701 compared to a Loss before interest, taxes and amortization of $268,531 for the same quarter last year, an improvement of $574,232;
  • The cash flow generated from operations before other items amounted to $299,384 for the three months ended December 31, 2010 compared to cash flow used in operations before other items of $277,284 for the same period last year, an improvement of $576,668;
  • The Net Earnings for the quarter amounted to $178,965 ($0.00 per share) compared to a Net Loss of $80,661 ($0.00 per share) for the same period last year, an improvement of $259,626;
  • The working capital as of December 31, 2010 was $4,381,730, an increase of $352,858 compared to the working capital of $4,028,872 at September 30, 2010;
  • The research and development expense for the quarter amounted to $278,909 compared to $247,084 for the same quarter last year; 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. During the quarter the Company acquired an additional 140,391 shares, thereby increasing its holdings to 10.9% of the total issued shares. On November11, 2010 Equus released its results for the third quarter. The net asset value of Equus at September 30, 2010 was $3.55 per share.

During the current quarter, the Company incurred $124,442 for research and development activities related to Mobiquity Route™, DEX and related mobile software products and $114,660 related to Mobiquity Transaction Engine 3.0™, Mobiquity Kiosk™ and Autostore.

Revenue for the six months ended December 31, 2010 was $24,679,083 compared to $22,875,517 for the same period last year, an increase of $1,803,566. Net Earnings for the period amounted to $89,651 ($0.00 per share) compared to a Net Loss of $127,436 ($0.00 per share) for the same period last year.

"Versatile generated cash flow from operations before other items of $299,384 this quarter," said Fraser Atkinson, CFO of Versatile. "This has helped to further strengthen the Company's financial position in addition to $5 million that was unused and available on its bank line of credit."

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
(Unaudited - Prepared by Management)
Expressed in U.S. dollars December 31, 2010 June 30, 2010
    (unaudited)    
 
ASSETS        
Current Assets        
  Cash and cash equivalents $ 923,825 $ 1,738,036
  Investment in Equus   2,407,405   2,203,043
  Accounts receivable   10,814,932   10,580,706
  Current portion of deferred contract costs   5,509,052   5,793,180
  Prepaid expenses   277,956   236,993
  Inventory   1,806,109   1,719,477
  Future income tax benefits   731,006   721,975
    22,470,285   22,993,410
Long-term accounts receivable   318,386   265,612
Deferred contract costs   758,408   598,366
Capital Assets   356,972   519,391
Intangible assets   -   459
Future income tax benefits   6,186,924   6,243,875
Goodwill   9,914,350   9,914,350
  $ 40,005,325 $ 40,535,463
LIABILITIES        
Current Liabilities        
  Line of credit $ 815,855 $ 1,353,312
  Accounts payable and accrued liabilities   10,008,427   9,955,342
  Current portion of deferred revenue   7,264,273   7,432,210
    18,088,555   18,740,864
Deferred Revenue   847,983   710,269
    18,936,538   19,451,133
SHAREHOLDERS' EQUITY        
  Share Capital   54,433,709   54,433,709
  Warrants   186,367   186,367
  Contributed surplus   4,231,539   4,231,539
  Deficit   (36,876,185)   (36,965,836)
  Accumulated other comprehensive loss   (906,643)   (801,449)
    21,068,787   21,084,330
  $ 40,005,325 $ 40,535,463
Versatile Systems Inc.
Consolidated Statements of Operations and Deficit
(Unaudited - Prepared by Management)
Expressed in U.S. dollars Three months ended December 31   Six months ended December 31
    2010   2009   2010   2009
 
SALES $ 15,460,033 $ 11,259,292 $ 24,679,083 $ 22,875,517
COST OF SALES   12,491,896   8,599,212   19,607,119   17,560,133
    2,968,137   2,660,080   5,071,964   5,315,384
EXPENSES                
  Selling and marketing   1,327,878   1,619,075   2,336,445   2,980,776
  General and administrative   1,051,897   1,100,145   1,942,347   1,974,493
  Research and development   278,909   247,084   471,177   493,754
  Non recurrring expenses   37,503   28,219   58,171   48,079
  Stock-based compensation   -   23,242   -   45,630
  Foreign exchange gain   (33,751)   (89,154)   (31,418)   (74,612)
    2,662,436   2,928,611   4,776,722   5,468,120
Earnings (loss) before interest, taxes and amortization   305,701   (268,531)   295,242   (152,736)
  Amortization of capital assets   48,108   62,287   119,269   128,911
  Amortization of intangible assets   -   90,675   -   181,349
  Interest expense   666   10,441   15,636   14,210
  Loss (Gain) on sale of capital assets and investments   2,575   (4,952)   2,575   (4,952)
EARNINGS (LOSS) BEFORE INCOME TAXES   254,352   (426,982)   157,762   (472,254)
Current income tax expense   (995)   (1,245)   (1,990)   (2,748)
Future income tax (expense) benefit   (74,392)   347,566   (66,121)   347,566
NET EARNINGS (LOSS)   178,965   (80,661)   89,651   (127,436)
 
DEFICIT, BEGINNING OF PERIOD   (37,055,150)   (35,775,990)   (36,965,836)   (35,729,215)
 
DEFICIT, END OF PERIOD   (36,876,185)   (35,856,651)   (36,876,185)   (35,856,651)
 
EARNINGS (LOSS) PER SHARE (basic and diluted)   $0.00   ($0.00)   $0.00   ($0.00)
Versatile Systems Inc.
Consolidated Statements of Comprehensive (Loss) Income
(Unaudited - Prepared by Management)
Expressed in U.S. dollars Three Months ended December 31 Six Months ended December 31
  2010 2009 2010 2009
 
Net earnings (loss) 178,965 (80,661) 89,651 (127,436)
 
Other comprehensive (loss) income        
  Net change in fair value of available-for-sale investments 141,415 - (105,194) -
 
Comprehensive (loss) income 320,380 (80,661) (15,543) (127,436)
Versatile Systems Inc.
Consolidated Statements of Cash Flows
(Unaudited - Prepared by Management)
Expressed in U.S. dollars Three Months ended December 31   Six Months ended December 31
    2010   2009   2010   2009
 
OPERATING ACTIVITIES                
  Net earnings (loss) $ 178,965 $ (80,661) $ 89,651 $ (127,436)
  Items not affecting cash                
    Amortization of capital and intangible assets   63,597   170,862   137,849   348,987
    Stock-based compensation   -   23,242   -   45,630
    Loss (Gain) on sale of capital assets and investments   2,575   ( 4,952)   2,575   ( 4,952)
    Unrealized foreign exchange gain   ( 20,886)   ( 38,209)   ( 20,391)   ( 42,539)
    Future income tax expense (benefit)   74,392   ( 347,566)   66,121   ( 347,566)
Cash flow used in operations before other items   298,643   ( 277,284)   275,805   ( 127,876)
    Net change in non-cash operating balance sheet items   ( 415,708)   41,236   ( 267,647)   ( 2,157,242)
    ( 117,065)   ( 236,048)   8,158   ( 2,285,118)
 
INVESTING ACTIVITIES                
  Short term investments   (309,556)   (567,558)   (309,556)   (2,300,835)
  Proceeds from disposition of capital assets   30,174   7,701   103,268   7,701
  Additions to capital assets   ( 38,799)   ( 21,414)   ( 78,624)   ( 37,266)
    ( 318,181)   ( 581,271)   ( 284,912)   ( 2,330,400)
 
FINANCING ACTIVITIES                
  Proceeds from issuance of shares   -   3,876,257   -   3,876,257
  Share issue costs   -   (26,291)   -   (26,291)
  Proceeds from (repayment of) line of credit   (104,426)   (503,051)   (537,457)   2,558,445
    ( 104,426)   3,346,915   ( 537,457)   6,408,411
 
Increase (decrease) in cash and cash equivalents   ( 539,672)   2,529,596   ( 814,211)   1,792,893
 
CASH and cash equivalents, beginning of period   1,463,497   1,265,827   1,738,036   2,002,530
 
CASH and cash equivalents, end of period $ 923,825 $ 3,795,423 $ 923,825 $ 3,795,423

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
    www.versatile.com