Versatile Systems Inc.
TSX VENTURE : VV
AIM : VVS

Versatile Systems Inc.

May 04, 2009 03:15 ET

Versatile Reports Third Quarter Results

VANCOUVER, CANADA--(Marketwire - May 4, 2009) - Versatile Systems Inc. (TSX VENTURE:VV)(AIM:VVS), announces its results for the third quarter of the 2009 fiscal year.

Revenue for the three months ended March 31, 2009 was $10,877,354 generating a gross profit of $2,323,987 or 21.4% of sales compared to $14,519,869 generating a gross profit of $3,425,037 or 23.6% of sales for the same quarter last year. The Net Loss for the quarter, excluding the non-recurring expenses of $160,158, amounted to $412,797 ($0.00 per share) compared to a Net Loss of $67,622 ($0.00 per share) for the same period last year.

The EBITDA loss for the quarter, excluding the non-recurring expenses of $160,158, was $372,057 compared to an EBITDA of $4,245 for the same quarter last year. EBITDA is defined as net earnings before interest expense, income taxes, depreciation and amortization. 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.

"Economic conditions continued to be challenging during the quarter, which led to lower revenue and gross profit," said John Hardy, Chairman and CEO of Versatile. "Nevertheless, excluding the non-recurring and R&D expenses, the Company was close to operational break even. We have made a considered decision to continue the R&D program in a measured way as the sale of proprietary products will drive future growth. In addition, we will continue to adjust our cost structures to match our revenue stream. As economic conditions improve, we will be well positioned with a leaner cost structure combined with an innovative product set."

Highlights for the quarter included:

- Cash and cash equivalents at March 31, 2009 was $2,100,645;

- Deferred revenue at March 31, 2009 was $7,515,600 (of which $6,447,454 is expected to be recognized in the next four quarters) compared to $7,986,465 at December 31, 2008, a decrease of $470,865;

- Revenue for the three months ended March 31, 2009 was $10,877,354 compared to $14,519,869 for the same period last year;

- The Company recorded a one time charge for non-recurring expenses of $160,158 for the quarter ended March 31, 2009 relating to an additional provision, the majority of which is financing costs, for transactions occurring in prior periods;

- Research and development expense for the quarter amounted to $278,701 compared to $397,591 for the same quarter last year;

- Several substantial orders for its core products and services, from its existing customer base, including $1,122,935 from the Bank of Oklahoma; and

- The Company announced cost reductions at the beginning of the quarter of approximately $1,670,000. The Company will continue a process of aligning its cost structure in relation to its revenue stream.

Technology Highlights

For the Mobiquity Route™ these included:

- Expanding the retail mode for self service customers; and

- Developing recovery from interrupted communication sessions.

For the Mobiquity Transaction Engine 3.0™ these included:

- Completing integration with the Asterisk open-source voice-over-IP solution;

- Completing integration with Motorola devices for real-time location services;

- Completing integration with Motorola Enterprise hand-held products; and

- Creating enterprise visibility module for the large venue marketplace;

For the Mobiquity Kiosk™, these included:

- Implementing multi-output services on the kiosks, allowing one kiosk computer to drive multiple applications (for example, a credit application and digital signage) at the same time;

- Improvements for remote management and monitoring software to provide greater web-based visibility and easier remote configuration of kiosks;

- Commencing the integration with a Canadian credit provider to provide instant credit for Canadian retailers; and

- Adding support for new Motorola 2D bar-code scanner.

Revenue for the nine months ended March 31, 2009 was $37,508,269 generating a gross profit of $9,116,482 or 24.3% of revenue compared to $45,658,542 generating a gross profit of $11,311,654 or 24.8% of revenue for the same period last year. The EBITDA loss for the period was $925,590 or $393,255 excluding the non-recurring expenses of $532,335 compared to an EBITDA of $1,134,024 for the same period last year. The Net Loss for the period amounted to $1,049,511 ($0.01 per share) compared to Net Earnings of $562,173 ($0.00 per share) for the same period last year.

"The Company has reduced its total expenses to the lowest level in the past three years," said Fraser Atkinson, CFO of Versatile. "The Company continues to maintain a strong financial position with no interest bearing debt."

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. (C) 2009 Versatile Systems Inc. All rights reserved.



--------------------------------------------------------------------------
Versatile Systems Inc.
Consolidated Balance Sheets
--------------------------------------------------------------------------


Expressed in U.S. dollars
March 31, 2009 June 30, 2008
-------------- -------------
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 2,100,645 $ 1,500,005
Accounts receivable 6,362,585 11,842,754
Current portion of deferred contract costs 4,670,355 4,918,704
Work-in-progress 91,246 80,668
Prepaid expenses 470,905 309,061
Inventory 1,456,467 1,944,100
Future income tax benefits 718,002 706,249
-----------------------------
15,870,205 21,301,541

Long-term accounts receivable 100,401 26,522
Deferred contract costs 866,324 1,050,694
Capital Assets 850,874 867,771
Intangible assets 423,387 695,726
Future income tax benefits 4,789,177 4,672,907
Goodwill 9,977,659 9,977,659
-----------------------------
$ 32,878,027 $ 38,592,820
-----------------------------
-----------------------------

LIABILITIES
Current Liabilities
Line of credit $ - $ 74,942
Bank overdraft - 127,214
Accounts payable and accrued liabilities 7,028,228 10,704,330
Current portion of deferred revenue 6,447,454 6,582,593
Promissory Notes - 40,000
-----------------------------
13,475,682 17,529,079

Deferred Revenue 1,068,146 1,272,536
-----------------------------
14,543,828 18,801,615
-----------------------------

SHAREHOLDERS' EQUITY
Share Capital 50,689,367 51,353,054
Warrants 186,367 369,965
Contributed surplus 4,028,786 3,188,496
Deficit (36,112,607) (35,063,096)
Accumulated other comprehensive income (loss) (457,714) (57,214)
-----------------------------
18,334,199 19,791,205

-----------------------------
$ 32,878,027 $ 38,592,820
-----------------------------
-----------------------------


---------------------------------------------------------------------------
Versatile Systems Inc.
Consolidated Statements of Earnings and Deficit
(unaudited - prepared by management)
---------------------------------------------------------------------------

Expressed in Three months ended March 31 Nine months ended March 31
U.S. dollars 2009 2008 2009 2008
-------------------------------------------------------


SALES $ 10,877,354 $ 14,519,869 $ 37,508,269 $ 45,658,542

COST OF SALES 8,553,367 11,094,832 28,391,787 34,346,888
-------------------------------------------------------
2,323,987 3,425,037 9,116,482 11,311,654
-------------------------------------------------------

EXPENSES
General and
administrative 899,421 1,176,901 3,500,901 3,561,691
Selling and
marketing 1,515,711 1,746,710 5,002,847 5,034,578
Research and
development 278,701 397,591 1,094,541 1,297,309
Non recurrring
expenses 160,158 - 532,335 -
Foreign Exchange
(gain) Loss (485) 43,003 (97,244) 174,162
Stock-based
compensation 2,696 56,587 8,692 109,890
-------------------------------------------------------
2,856,202 3,420,792 10,042,072 10,177,630
-------------------------------------------------------

Earnings (loss)
before interest,
taxes and
amortization (532,215) 4,245 (925,590) 1,134,024

Amortization of
capital assets 91,598 70,282 248,904 187,629
Amortization of
intangible assets 90,675 191,669 272,024 569,393
Interest expense
(income) (1,648) (90,375) 27,794 (28,379)
-------------------------------------------------------

EARNINGS (LOSS)
BEFORE INCOME
TAXES (712,840) (167,331) (1,474,312) 405,381

Current income
tax expense (43,748) (19,269) (64,292) (35,817)
Future income
tax benefit 183,633 118,978 489,093 192,609
-------------------------------------------------------

NET EARNINGS (LOSS)
FOR THE PERIOD (572,955) (67,622) (1,049,511) 562,173
-------------------------------------------------------

DEFICIT, BEGINNING
OF PERIOD (35,539,652) (34,633,431) (35,063,096) (35,263,226)

-------------------------------------------------------
DEFICIT, END
OF PERIOD (36,112,607) (34,701,053) (36,112,607) (34,701,053)
-------------------------------------------------------
-------------------------------------------------------

EARNINGS (LOSS)
PER SHARE (basic
and fully diluted) ($0.00) $0.00 ($0.01) $0.00
-------------------------------------------------------
-------------------------------------------------------


---------------------------------------------------------------------------
Versatile Systems Inc.
Consolidated Statements of Comprehensive Income (Loss)
(unaudited - prepared by management)
---------------------------------------------------------------------------


Expressed in Three months ended March 31 Nine months ended March 31
U.S. dollars 2009 2008 2009 2008
-------------------------------------------------------
Net earnings (loss)
for the period (572,955) (67,622) (1,049,511) 562,173

Other comprehensive
income (loss)
Foreign currency
translation
adjustments (24,608) (54,506) (400,500) 227,353

-------------------------------------------------------
Comprehensive
income (loss)
for the period (597,563) (122,128) (1,450,011) 789,526
-------------------------------------------------------
-------------------------------------------------------


---------------------------------------------------------------------------
Versatile Systems Inc.
Consolidated Statements of Cash Flows
(unaudited - prepared by management)
---------------------------------------------------------------------------

Expressed in Three months ended March 31 Nine months ended March 31
U.S. dollars 2009 2008 2009 2008
--------------------------------------------------------


CASH FLOWS FROM
(USED IN)
OPERATING
ACTIVITIES
Net earnings
(loss) for
the period $ (572,955) $ (67,622) $(1,049,511) $ 562,173
Items not
affecting cash
Amortization of
capital and
intangible
assets 182,273 261,951 527,256 757,022
Loss on disposal
of capital
assets - - - 212
Stock-based
compensation 2,696 56,587 8,692 109,890
Foreign exchange
loss (gain) (2,501) 43,375 33,531 67,840
Future income
tax expense
(benefit) (183,633) (118,978) (489,093) (192,609)
--------------------------------------------------------
Cash flow from
(used in)
operations
before other
items (574,120) 175,313 (969,125) 1,304,528
Net change in
non-cash
working capital
items 309,926 2,597,341 2,138,591 1,534,730
--------------------------------------------------------
(264,194) 2,772,654 1,169,466 2,839,258

CASH FLOWS FROM
(USED IN)
INVESTING
ACTIVITIES
Purchase of
net assets - - - 2,541
Proceeds from
disposition of
capital assets 1,820 - 1,820 1,867
Additions to
capital assets (24,472) (155,839) (234,461) (463,711)
--------------------------------------------------------
(22,652) (155,839) (232,641) (459,303)
--------------------------------------------------------

CASH FLOWS FROM
(USED IN)
FINANCING
ACTIVITIES
Proceeds from
issuance of
shares, net
of costs - - - 416,202
Purchase of
company shares 709 (219,791) (24,379) (307,269)
Repayment of line
of credit - - (74,942) (3,383)
Proceeds from
(Repayment of)
bank overdraft - (1,147,336) (127,214) 150,612
Repayment of
the Bank
Term Loan - (2,749,263) - (2,749,263)
Repayment of the
Term Loan - - - (175,000)
Repayment of
Promissory Notes - (20,000) (40,000) (20,000)
Repayment of
capital lease
obligations - (844) - (3,904)
-------------------------------------------------------
709 (4,137,234) (266,535) (2,692,005)
-------------------------------------------------------

Effect of foreign
exchange rate
on cash 15,269 (276,896) (69,650) 53,192

Increase (decrease)
in cash and cash
equivalents (270,868) (1,797,315) 600,640 (259,702)

CASH and cash
equivalents,
beginning
of period 2,371,513 4,906,700 1,500,005 3,369,087

-------------------------------------------------------
CASH and cash
equivalents,
end of period $ 2,100,645 $ 3,109,385 $ 2,100,645 $ 3,109,385
-------------------------------------------------------
-------------------------------------------------------


The TSX Venture Exchange has not reviewed and does 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
    International: 001-206-979-6760
    or
    Versatile Systems Inc.
    Fraser Atkinson
    CFO
    1-800-262-1633
    www.versatile.com