Versatile Systems Inc.
TSX VENTURE : VV

Versatile Systems Inc.

May 30, 2013 19:25 ET

Versatile Reports Third Quarter Results

VANCOUVER, CANADA--(Marketwired - May 30, 2013) - Versatile Systems Inc. (TSX VENTURE:VV), announces its results for the third quarter of the 2013 fiscal year.

Revenue for the three months ended March 31, 2013 was $10,222,371, generating a gross profit of $1,697,798 or 16.6% of sales compared to $12,482,474, generating a gross profit of $2,335,833 or 18.7% of sales for the same quarter last year. The Net Loss for the quarter amounted to $780,888 ($0.00 per share) compared to Net Earnings of $35,603 ($0.00 per share) for the same period last year.

The Company has incurred significant losses, the continuation of which is unacceptable. The Company is currently exploring all strategic alternatives to deal with the losses.

Highlights for the quarter included:

  • Revenue for the three months ended March 31, 2013 was $10,222,371 compared to $9,550,579 for the previous quarter and $12,482,474 for the same quarter last year;
  • The gross profit for the three months ended March 31 2013 was $1,697,798 or 16.6% of sales compared to $2,335,833 or 18.7% of sales for the same quarter last year;
  • The research and development expense for the quarter amounted to $366,890 compared to $199,568 for the same quarter last year. The Company incurred $133,814 for research and development activities related to Mobiquity Route™ and other mobile software products and $215,597 for research and development activities primarily related to Smart Sign ; and
  • Deferred revenue at March 31, 2013 was $5,834,685 (of which $4,793,039 is expected to be recognized in the next four quarters) compared to $6,712,216 at June 30, 2012, a decrease of $877,531.

Revenue for the nine months ended March 31, 2013 was $27,688,798 generating a gross profit of $5,373,205 or 19.4% of sales compared to $30,669,238 generating a gross profit of $6,078,044 or 19.8% of sales for the same period last year. The Net Loss for the period amounted to $1,679,571 ($0.01 per share) compared to $641,919 ($0.00 per share) for the same period last year.

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.

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
(Unaudited - Prepared by Management)
Expressed in U.S. dollars March 31, 2013 June 30, 2012
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 41,645 $ 434,725
Accounts receivable 5,479,586 5,994,377
Prepaid expenses 4,087,680 4,152,994
Inventory 2,349,292 2,347,110
11,958,203 12,929,206
Long-term accounts receivable 45,715 181,366
Long-term prepaid expenses 940,596 1,278,432
Investment in Equus 2,002,693 2,105,473
Capital Assets 193,553 251,591
Intangible assets 153,506 167,206
Deferred income tax assets 880,407 880,407
Goodwill 2,718,970 2,718,970
$ 18,893,643 $ 20,512,651
LIABILITIES
Current Liabilities
Line of credit $ 3,003,291 $ 1,988,675
Accounts payable and accrued liabilities 5,455,827 5,544,888
Current portion of deferred revenue 4,793,039 5,292,359
13,252,157 12,825,922
Deferred Revenue 1,041,646 1,419,857
14,293,803 14,245,779
SHAREHOLDERS' EQUITY
Share Capital 54,433,709 54,433,709
Equity Reserve 4,635,780 4,629,219
Deficit (54,138,005 ) (52,458,434 )
Accumulated other comprehensive loss (331,644 ) (337,622 )
4,599,840 6,266,872
$ 18,893,643 $ 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
March 31
Nine months ended
March 31
2013 2012 2013 2012
(Restated) (Restated)
SALES $ 10,222,371 $ 12,482,474 $ 27,688,798 $ 30,669,238
COST OF SALES 8,524,573 10,146,641 22,315,593 24,591,194
1,697,798 2,335,833 5,373,205 6,078,044
EXPENSES
Selling and marketing 1,183,700 1,183,949 3,332,192 3,302,067
General and administrative 859,206 812,153 2,513,936 2,601,131
Research and development 366,890 199,568 925,985 719,525
Amortization of capital assets 24,408 38,713 101,409 125,224
Share-based compensation 2,188 - 6,561 8,749
Foreign exchange loss (gain) (7,348 ) 1,303 2,198 23,414
2,429,044 2,235,686 6,882,281 6,780,110
EARNINGS (LOSS) FROM OPERATIONS (731,246 ) 100,147 (1,509,076 ) (702,066 )
Interest expense (24,766 ) (7,262 ) (63,580 ) (20,079 )
Equity loss from Investment in Equus (23,881 ) (35,087 ) (102,780 ) (114,537 )
Loss on sale of capital assets and investments - - - (1,534 )
EARNINGS (LOSS) BEFORE INCOME TAXES (779,893 ) 57,798 (1,675,436 ) (838,216 )
Current income tax expense (995 ) (995 ) (4,135 ) (3,335 )
Deferred income taxes - (21,200 ) - 199,632
NET EARNINGS (LOSS) $ (780,888 ) $ 35,603 $ (1,679,571 ) $ (641,919 )
Other comprehensive income (loss)
Foreign exchange translation 6,075 (7,008 ) 5,978 (13,678 )
Total comprehensive income (loss) $ (774,813 ) $ 28,595 $ (1,673,593 ) $ (655,597 )
EARNINGS (LOSS) PER SHARE (basic and diluted) ($0.00 ) $0.00 ($0.01 ) ($0.00 )
Versatile Systems Inc.
Condensed Consolidated Statements of Changes in Shareholders' Equity
(Unaudited - Prepared by Management)
Expressed in U.S. dollars



Share
Capital
Warrant
Reserve




Equity
Reserve


Deficit


Accumulated other comprehensive loss


Total



(Restated) (Restated) (Restated)
Balance, June 30, 2011 $ 54,433,709 $ 42,000 $ 4,578,470 $ (37,741,276 ) $ (326,261 ) $ 20,986,642
Net loss - - - (641,919 ) - (641,919 )
Foreign exchange on the translation of VMS-UK - - - - (13,678 ) (13,678 )
Expiration of warrants - (42,000 ) 42,000 - - -
Share-based compensation expense - - 8,749 - - 8,749
Balance, March 31, 2012 54,433,709 - 4,629,219 (38,383,195 ) (339,939 ) 20,339,794
Balance, June 30, 2012 54,433,709 - 4,629,219 (52,458,434 ) (337,622 ) 6,266,872
Net loss - - - (1,679,571 ) - (1,679,571 )
Foreign exchange on the translation of VMS-UK - - - - 5,978 5,978
Share-based compensation expense - - 6,561 - - 6,561
Balance, March 31, 2013 $ 54,433,709 $ - $ 4,635,780 $ (54,138,005 ) $ (331,644 ) $ 4,599,840
Versatile Systems Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited - Prepared by Management)
Expressed in U.S. dollars Three months ended
March 31
Nine months ended
March 31
2013 2012 2013 2012
(Restated) (Restated)
OPERATING ACTIVITIES
Net earnings (loss) $ (780,888 ) $ 35,603 $ (1,679,571 ) $ (641,919 )
Items not involving cash
Amortization of capital assets 24,408 52,725 101,409 147,725
Share-based compensation 2,188 - 6,561 8,749
Loss on sale of capital assets and investments - - - 1,534
Equity loss from Investment in Equus 23,881 35,087 102,780 114,537
Unrealized foreign exchange loss (gain) (409 ) (28,587 ) 683 (45,299 )
Deferred income taxes - 21,200 - (199,632 )
Cash flow generated from (used in) operations before other items (730,820 ) 116,028 (1,468,138 ) (614,305 )
Net change in non-cash working capital 675,027 (811,631 ) 90,061 (672,193 )
(55,793 ) (695,603 ) (1,378,077 ) (1,286,498 )
INVESTING ACTIVITIES
Short term investments - - - (14,776 )
Proceeds from disposition of capital assets - 14,597 - 35,027
Intangible assets - contract cost additions (52,185 ) (101,501 ) (190,164 ) (274,287 )
Amortization of Intangible assets 58,491 110,892 203,864 254,337
Purchase of capital assets (15,815 ) (53,856 ) (43,319 ) (163,160 )
(9,509 ) (29,868 ) (29,619 ) (162,859 )
FINANCING ACTIVITIES
Proceeds from line of credit 36,167 882,647 1,014,616 760,005
36,167 882,647 1,014,616 760,005
Increase (Decrease) in cash and cash equivalents (29,135 ) 157,176 (393,080 ) (689,352 )
Cash and cash equivalents, beginning of period 70,780 132,128 434,725 978,656
Cash and cash equivalents, end of period $ 41,645 $ 289,304 $ 41,645 $ 289,304

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.

Contact Information

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

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