Versatile Systems Inc.

TSX VENTURE : VV


Versatile Systems Inc.

February 24, 2014 17:41 ET

Versatile Reports Second Quarter Results

MECHANICSBURG, PENNSYLVANIA--(Marketwired - Feb. 24, 2014) - Versatile Systems Inc. (TSX VENTURE:VV), announces its results for the second quarter of the 2014 fiscal year.

Revenue for the three months ended December 31, 2013 was $9,857,689, generating a gross profit of $1,686,298 or 17.1 percent of sales compared to $9,550,579, generating a gross profit of $1,842,628 or 19.3 percent of sales for the same quarter last year. The net loss for the quarter amounted to $951,894 ($0.01 per share), which includes non-recurring expenses of $407,419, compared to a net loss of $494,389 ($0.00 per share) for the same quarter last year.

Highlights for the quarter included:

  • Revenue for the three months ended December 31, 2013 was $9,857,689 compared to $9,550,579 for the same quarter last year, an increase of $307,110;
  • The gross profit for the three months ended December 31, 2013 was $1,686,298 or 17.1 percent of sales compared to $1,842,628 or 19.3 percent of sales for the same quarter last year;
  • The research and development expense for the quarter amounted to $239,981 compared to $322,849 for the same quarter last year; and
  • Deferred revenue at December 31, 2013 was $6,577,606 (of which $5,661,284 is expected to be recognized in the next four quarters) compared to $6,835,938 at June 30, 2013.

During the current quarter, the company appointed Kenny Kahn as the chief executive officer and Kelly Boyer as the interim chief financial officer. The company also announced that it will close its Vancouver, Canada head office in order to centralize finance and administrative functions at its operations facility, located in Mechanicsburg, Pa.

Revenue for the six months ended December 31, 2013 was $16,497,164 generating a gross profit of $2,967,155 or 18.0 percent of sales compared to $17,466,427 generating a gross profit of $3,675,407 or 21.0 percent of sales for the same period last year. The net loss for the period amounted to $2,201,315 ($0.01 per share) compared to $898,683 ($0.01 per share) for the same period last year.

About Versatile

Versatile is a multi-disciplinary technology company with solutions across the mobile, digital signage, IT infrastructure, software and hardware landscape. The company's products are utilized by Fortune 500 companies, leading financial institutions and large and small retail organizations. For more information, please visit www.versatilecredit.com, www.versatilemobile.com and 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. © 2014 Versatile Systems Inc. All rights reserved.

Versatile Systems Inc.
Condensed Consolidated Statements of Financial Position
(Unaudited - Prepared by Management)
Expressed in U.S. dollars December 31, 2013 June 30, 2013
(unaudited )
ASSETS
Current Assets
Cash and cash equivalents $ 63,111 $ 83,724
Investment in Equus 1,798,203 $ 1,798,203
Accounts receivable 7,228,114 6,379,629
Prepaid expenses 5,028,710 4,588,012
Inventory 1,778,501 2,406,355
15,896,639 15,255,923
Long-term accounts receivable 1,140 14,368
Long-term prepaid expenses 831,568 1,140,311
Capital Assets 155,430 189,274
Intangible assets 166,936 169,959
Deferred income tax assets 336,275 336,275
Goodwill 2,718,970 2,718,970
$ 20,106,958 $ 19,825,080
LIABILITIES
Current Liabilities
Line of credit and bank overdraft $ 4,126,960 $ 3,602,269
Accounts payable and accrued liabilities 8,413,006 6,963,126
Bridge Loan 739,376 -
Current portion of deferred revenue 5,661,284 5,586,738
18,940,626 16,152,133
Deferred Revenue 916,322 1,249,200
19,856,948 17,401,333
SHAREHOLDERS' EQUITY
Share Capital 54,433,709 54,433,709
Equity Reserve 4,637,968 4,637,968
Deficit (58,514,351 ) (56,313,036 )
Accumulated other comprehensive loss (307,315 ) (334,894 )
250,011 2,423,747
$ 20,106,958 $ 19,825,080
Versatile Systems Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited - Prepared by Management)
Expressed in U.S. dollars Three months ended December 31 Six months ended December 31
2013 2012 2013 2012
SALES $ 9,857,689 $ 9,550,579 $ 16,497,164 $ 17,466,427
COST OF SALES 8,171,391 7,707,951 13,530,009 13,791,020
1,686,298 1,842,628 2,967,155 3,675,407
EXPENSES
Selling and marketing 784,437 1,085,949 1,655,226 2,148,492
General and administrative 1,148,195 845,714 2,364,583 1,654,730
Research and development 239,981 322,849 624,756 559,095
Non recurring expenses 407,419 - 407,419 -
Amortization of capital assets 19,945 36,753 40,947 77,001
Share-based compensation - 2,187 - 4,373
Foreign exchange (gain) loss (5,293) (2,588) (2,669) 9,546
2,594,684 2,290,864 5,090,262 4,453,237
LOSS FROM OPERATIONS (908,386) (448,236) (2,123,107) (777,830)
Interest expense (42,376) (19,899) (75,620) (38,814)
Equity loss from Investment in Equus - (25,259) - (78,899)
Loss on sale of capital assets - - (461) -
LOSS BEFORE INCOME TAXES (950,762) (493,394) (2,199,188) (895,543)
Current income tax expense (1,132) (995) (2,127) (3,140)
NET LOSS $ (951,894) $ (494,389) $ (2,201,315) $ (898,683)
Other comprehensive income (loss)
Foreign exchange translation 18,085 (1,015) 27,579 (97)
Total comprehensive loss $ (933,809) $ (495,404) $ (2,173,736) $ (898,780)
LOSS PER SHARE (basic and diluted) ($0.01) ($0.00) ($0.01) ($0.01)
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 Equity comprehensive
Capital Reserve Deficit loss Total
Balance, June 30, 2012 $ 54,433,709 $ 4,629,219 $ (52,458,434 ) $ (337,622 ) $ 6,266,872
Net loss - - (898,683 ) - (898,683 )
Foreign exchange on the translation of VMS-UK

-


-


-



(97

)


(97

)
Share-based compensation expense - 4,373 - - 4,373
Balance, December 31, 2012 54,433,709 4,633,592 (53,357,117 ) (337,719 ) 5,372,465
Balance, June 30, 2013 54,433,709 4,637,968 (56,313,036 ) (334,894 ) 2,423,747
Net loss - - (2,201,315 ) - (2,201,315 )
Foreign exchange on the translation of VMS-UK

-


-


-



27,579



27,579

Balance, December 31, 2013 $ 54,433,709 $ 4,637,968 $ (58,514,351 ) $ (307,315 ) $ 250,011
Versatile Systems Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited - Prepared by Management)
Expressed in U.S. dollars Three months ended December 31 Six months ended December 31
2013 2012 2013 2012
OPERATING ACTIVITIES
Net loss $ (951,894 ) $ (494,389 ) $ (2,201,315 ) $ (898,683 )
Items not involving cash
Amortization of capital assets 19,945 36,753 40,947 77,001
Share-based compensation - 2,187 - 4,373
Loss on sale of capital assets - - 461 -
Equity loss from Investment in Equus - 25,259 - 78,899
Unrealized foreign exchange loss 991 1,092 991 1,092
Cash flow used in operations before other items (930,958 ) (429,098 ) (2,158,916 ) (737,318 )
Net change in non-cash working capital (56,169 ) (462,265 ) 867,861 (584,966 )
(987,127 ) (891,363 ) (1,291,055 ) (1,322,284 )
INVESTING ACTIVITIES
Proceeds from disposition of capital assets - - 1,418 -
Intangible assets - contract cost additions (67,033 ) (59,574 ) (109,895 ) (137,979 )
Intangible assets - contract cost recognized 61,041 60,797 118,753 145,373
Purchase of capital assets (2,458 ) (7,938 ) (6,762 ) (27,504 )
(8,450 ) (6,715 ) 3,514 (20,110 )
FINANCING ACTIVITIES
Proceeds from the bridge loan 742,237 - 742,237 -
Proceeds from line of credit and bank overdraft 160,168 703,174 524,691 978,449
902,405 703,174 1,266,928 978,449
Decrease in cash and cash equivalents (93,172 ) (194,904 ) (20,613 ) (363,945 )
Cash and cash equivalents, beginning of period 156,283 265,684 83,724 434,725
Cash and cash equivalents, end of period $ 63,111 $ 70,780 $ 63,111 $ 70,780

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