Versatile Systems Inc.
TSX VENTURE : VV
AIM : VVS

Versatile Systems Inc.

May 10, 2011 03:15 ET

Versatile Reports Third Quarter Results

Positive Earnings and Improved Cash Flow from Operations for the Quarter

VANCOUVER, CANADA--(Marketwire - May 10, 2011) - Versatile Systems Inc. (TSX VENTURE:VV)(AIM:VVS), announces its results for the third quarter of the 2011 fiscal year.

Revenue for the three months ended March 31, 2011 was $11,044,100 generating a gross profit of $2,675,686 or 24.3% of sales compared to $9,795,481 generating a gross profit of $2,301,779 or 23.5% of sales for the same quarter last year, an increase of $1,248,619. The Net Earnings for the quarter amounted to $32,838 ($0.00 per share) compared to a Net Loss of $816,850 ($0.01 per share) for the same period last year.

"We will continue to focus on expanding our customer base, product offerings and improving operational efficiencies," said John Hardy, Chairman and CEO of Versatile. "These initiatives have helped improve key financial metrics over the comparable quarter last year, as revenue, cash flow and earnings have all increased."

Highlights for the quarter included:

  • Revenue for the three months ended March 31, 2011 was $11,044,100 compared to $9,795,481 for the same quarter last year, an increase of $1,248,619;
  • The Earnings before interest, taxes and amortization for the quarter was $112,737 compared to a Loss before interest, taxes and amortization of $931,493 for the same quarter last year, an improvement of $1,044,230.
  • The normalized Earnings before interest, taxes and amortization for the quarter amounted to $409,129, which excludes the non recurring expenses of $235,486 and the stock based compensation of $60,906;
  • The Net Earnings for the quarter amounted to $32,838 ($0.00 per share) compared to a Net Loss of $816,850 ($0.01 per share) for the same period last year;
  • The cash flow generated from operations before other items amounted to $206,821 for the three months ended March 31, 2011 compared to cash flow used in operations before other items of $842,232 for the same period last year, an improvement of $1,049,053;
  • The working capital as of March 31, 2011 was $4,545,712, an increase of $293,166 compared to the working capital of $4,252,546 at June 30, 2010;
  • The research and development expense for the quarter amounted to $278,226 compared to $185,289 for the same quarter last year;
  • Deferred revenue at March 31, 2011 was $6,743,225 (of which $5,943,961 is expected to be recognized in the next four quarters) compared to $6,557,618 at March 31, 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 December 31, 2010 was $4.29 per share.

During the current quarter, the Company incurred $128,802 for research and development activities related to Mobiquity Route™, DEX and related mobile software products and $109,882 related to Mobiquity Transaction Engine 3.0™, Mobiquity Kiosk™ and Autostore.

Revenue for the nine months ended March 31, 2011 was $35,723,183 generating a gross profit of $7,747,650 or 21.7% of sales compared to $32,670,998 generating a gross profit of $7,617,163 or 23.3% of sales for the same period last year. The Net Earnings for the period amounted to $122,489 ($0.00 per share) compared to a Net Loss of $944,286 ($0.00 per share) for the same period last year.

"Versatile generated cash flow from operations before other items of $482,626 for the first nine months of this fiscal year," said Fraser Atkinson, CFO of Versatile. "This has helped to further 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

(Unaudited - Prepared by Management)

Expressed in U.S. dollarsMarch 31, 2011June 30, 2010
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents$753,523$1,738,036
Investment in Equus2,503,7012,203,043
Accounts receivable6,550,19010,580,706
Current portion of deferred contract costs4,371,7495,793,180
Prepaid expenses318,777236,993
Inventory1,923,9661,719,477
Future income tax benefits734,410721,975
17,156,31622,993,410
Long-term accounts receivable427,941265,612
Deferred contract costs715,513598,366
Capital Assets318,856519,391
Intangible assets-459
Future income tax benefits6,135,7196,243,875
Goodwill9,914,3509,914,350
$34,668,695$40,535,463
LIABILITIES
Current Liabilities
Line of credit$1,138,827$1,353,312
Accounts payable and accrued liabilities5,527,8169,955,342
Current portion of deferred revenue5,943,9617,432,210
12,610,60418,740,864
Deferred Revenue799,264710,269
13,409,86819,451,133
SHAREHOLDERS' EQUITY
Share Capital54,433,70954,433,709
Warrants123,058186,367
Contributed surplus4,355,7544,231,539
Deficit(36,843,347)(36,965,836)
Accumulated other comprehensive loss(810,347)(801,449)
21,258,82721,084,330
$34,668,695$40,535,463

Versatile Systems Inc.

Consolidated Statements of Operations and Deficit

(Unaudited - Prepared by Management)

Expressed in U.S. dollars Three months ended March 31 Nine months ended March 31
2011201020112010
SALES$11,044,100$9,795,481$35,723,183$32,670,998
COST OF SALES8,368,4147,493,70227,975,53325,053,835
2,675,6862,301,7797,747,6507,617,163
EXPENSES
Selling and marketing1,136,7281,490,7783,473,1734,471,554
General and administrative829,900944,2662,772,2472,918,759
Research and development278,226185,289749,403679,043
Non recurring expenses235,486525,656293,657573,735
Stock-based compensation60,90623,58560,90669,215
Foreign exchange loss (gain)21,70363,698(9,715)(10,914)
2,562,9493,233,2727,339,6718,701,392
Earnings (loss) before interest, taxes and amortization112,737(931,493)407,979(1,084,229)
Amortization of capital assets54,48561,957173,754190,868
Amortization of intangible assets-90,674-272,023
Interest expense (income)(1,826)7,78113,81021,991
Loss (Gain) on sale of capital assets and investments625-3,200(4,952)
EARNINGS (LOSS) BEFORE INCOME TAXES59,453(1,091,905)217,215(1,564,159)
Current income tax recovery (expense)2,985(993)995(3,741)
Future income tax (expense) benefit(29,600)276,048(95,721)623,614
NET EARNINGS (LOSS)32,838(816,850)122,489(944,286)
DEFICIT, BEGINNING OF PERIOD(36,876,185)(35,856,651)(36,965,836)(35,729,215)
DEFICIT, END OF PERIOD(36,843,347)(36,673,501)(36,843,347)(36,673,501)
EARNINGS (LOSS) PER SHARE (basic and diluted)$ 0.00($0.01)$0.00($0.01)

Versatile Systems Inc.

Consolidated Statements of Comprehensive (Loss) Income

(Unaudited - Prepared by Management)

Expressed in U.S. dollarsThree Months ended March 31Nine Months ended March 31
2011201020112010
Net earnings (loss)32,838(816,850)122,489(944,286)
Other comprehensive (loss) income
Net change in fair value of available-for-sale investments96,296-(8,898)-
Comprehensive (loss) income129,134(816,850)113,591(944,286)

Versatile Systems Inc.

Consolidated Statements of Cash Flows

(Unaudited - Prepared by Management)

Expressed in U.S. dollarsThree Months ended March 31Nine Months ended March 31
2011201020112010
OPERATING ACTIVITIES
Net earnings (loss)$32,838$(816,850)$122,489$(944,286)
Items not affecting cash
Amortization of capital and intangible assets61,228171,385199,077520,372
Stock-based compensation60,90623,58560,90669,215
Loss (Gain) on sale of capital assets and investments625-3,200(4,952)
Unrealized foreign exchange loss21,62455,6961,23313,157
Future income tax expense (benefit)29,600(276,048)95,721(623,614)
Cash flow used in operations before other items206,821(842,232)482,626(970,108)
Net change in non-cash operating balance sheet items(673,962)1,211,698(941,609)(945,544)
(467,141)369,466(458,983)(1,915,652)
INVESTING ACTIVITIES
Short term investments-(425,325)(309,556)(2,726,160)
Proceeds from disposition of capital assets4,08716,033107,35523,734
Additions to capital assets(30,220)(35,950)(108,844)(73,216)
(26,133)(445,242)(311,045)(2,775,642)
FINANCING ACTIVITIES
Proceeds from issuance of shares---3,876,257
Share issue costs---(26,291)
Proceeds from (repayment of) line of credit322,972(1,790,109)(214,485)768,336
322,972(1,790,109)(214,485)4,618,302
Increase (decrease) in cash and cash equivalents(170,302)(1,865,885)(984,513)(72,992)
CASH and cash equivalents, beginning of period923,8253,795,4231,738,0362,002,530
CASH and cash equivalents, end of period$753,523$1,929,538$753,523$1,929,538

Contact Information

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

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