Versatile Systems Inc. (TSX VENTURE:VV) announces its results for the third
quarter of the 2012 fiscal year.
Revenue for the three months ended March 31, 2012 was $12,482,474 generating a
gross profit of $2,335,833 or 18.7% of sales compared to $11,044,100 generating
a gross profit of $2,675,686 or 24.2% of sales for the same quarter last year.
The cash flow generated from operations before other items amounted to $129,706
for the three months ended March 31, 2012 compared to cash used in operations
before other items of $292,241 in the second quarter, an improvement of 421,947.
The Net Earnings for the quarter amounted to $63,682 ($0.00 per share) compared
to Net Earnings of $32,838 ($0.00 per share) for the same period last year.
"We are pleased with the significant improvement in several key financial
metrics, such as revenue, cash flow and net earnings," said John Hardy, Chairman
and CEO of Versatile. "We will continue to focus on operational efficiency,
while cautiously investing in organic growth."
Highlights for the quarter included:
-- Revenue for the three months ended March 31, 2012 was $12,482,474
compared to $11,044,100 for the same quarter last year, an increase of
$1,438,374;
-- Net Earnings for the quarter amounted to $63,682 compared to $32,838 for
the same quarter last year;
-- The cash flow generated from operations before other items amounted to
$129,706 for the three months ended March 31, 2012 compared to cash used
in operations before other items of $292,241 in the second quarter, an
improvement of 421,947; and
-- Deferred revenue at March 31, 2012 was $7,328,936 (of which $5,749,410
is expected to be recognized in the next four quarters) compared to
$6,320,199 at June 30, 2011, an increase of $1,008,737.
The research and development expense for the quarter amounted to $199,568
compared to $278,226 for the same quarter last year. During the current quarter,
the Company incurred $67,781 for research and development activities related to
Mobiquity Route(TM), DEX and related mobile software products and $96,655
related to Smart Sign(TM), Mobiquity Transaction Engine 3.0(TM) and Mobiquity
Kiosk(TM).
"The Company enjoyed a significant increase in cash flow from operations in the
quarter," said Fraser Atkinson, CFO of Versatile. "We will need to focus on
improving the gross profit percentage in order to maintain profitability."
Revenue for the nine months ended March 31, 2012 was $30,669,238 generating a
gross profit of $6,078,044 or 19.8% of sales compared to $35,723,183 generating
a gross profit of $7,747,650 or 21.7% of sales for the same period last year.
The Net Loss for the period amounted to $541,060 ($0.00 per share) compared to
Net Earnings of $122,489 ($0.00 per share) for the same period last year.
The Company adopted IFRS in the first quarter of the current fiscal year. The
Company has applied the transitional exceptions and exemptions to full
retroactive application of IFRS in its preparation of an opening IFRS
consolidated statement of financial position at July 1, 2010. The most
significant changes include the reclassification of deferred contract costs to
intangible assets and the reclassification of current deferred income taxes to
long term. Further details of the conversion to IFRS are provided in
Management's Discussion and Analysis and in the Notes to the Company's unaudited
Consolidated Financial Statements, as at and for the nine months ended March,
2012.
The following table provides a reconciliation of the Company's working capital
under IFRS and under the previous Canadian generally accepted accounting
principles:
31-Mar-12 30-Jun-11 01-Jul-10
---------------------------------------
Current Assets - IFRS 15,546,111 12,501,790 16,478,255
Add back current portion of deferred
contract costs 4,211,777 4,469,066 5,793,180
Add back current portion of deferred
income taxes 536,401 546,252 721,975
---------------------------------------
Current Assets - Canadian GAAP 20,294,289 17,517,108 22,993,410
Current Liabilities - IFRS and
Canadian GAAP - 16,906,141 - 13,502,342 - 18,740,864
---------------------------------------
Working Capital - Canadian GAAP 3,388,148 4,014,766 4,252,546
---------------------------------------
---------------------------------------
On January 3, 2012 the Company delisted its shares from trading on the AIM
market of the London Stock Exchange, which was approved by the shareholders at
the annual general meeting held on November 17, 2011.
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) 2012
Versatile Systems Inc. All rights reserved.
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Versatile Systems Inc.
Consolidated Statements of Financial Position
(Unaudited - Prepared by Management)
----------------------------------------------------------------------------
Expressed in U.S. dollars March 31, 2012 June 30, 2011 July 1, 2010
-----------------------------------------------
ASSETS
Current Assets
Cash and cash equivalents $ 289,304 $ 978,656 $ 1,738,036
Investment in Equus 2,202,098 2,311,109 2,203,043
Accounts receivable 10,298,600 7,134,328 10,580,706
Prepaid expenses 259,612 228,062 236,993
Inventory 2,496,497 1,849,635 1,719,477
-----------------------------------------------
15,546,111 12,501,790 16,478,255
Long-term accounts receivable 216,393 401,742 265,612
Capital Assets 264,307 270,437 519,391
Intangible assets 5,674,254 5,048,776 6,392,005
Deferred income tax assets 7,200,788 7,001,156 6,965,850
Goodwill 9,914,350 9,914,350 9,914,350
-----------------------------------------------
$ 38,816,203 $ 35,138,251 $ 40,535,463
-----------------------------------------------
-----------------------------------------------
LIABILITIES
Current Liabilities
Line of credit $ 1,767,772 $ 1,007,767 $ 1,353,312
Accounts payable and
accrued liabilities 9,388,959 6,823,643 9,955,342
Current portion of deferred
revenue 5,749,410 5,670,932 7,432,210
-----------------------------------------------
16,906,141 13,502,342 18,740,864
Deferred Revenue 1,579,526 649,267 710,269
-----------------------------------------------
18,485,667 14,151,609 19,451,133
-----------------------------------------------
SHAREHOLDERS' EQUITY
Share Capital 54,433,709 54,433,709 54,433,709
Warrants - 42,000 186,367
Equity Reserve 4,629,219 4,578,470 4,231,539
Deficit (37,605,658) (37,064,598) (36,965,836)
Accumulated other
comprehensive loss (1,126,734) (1,002,939) (801,449)
-----------------------------------------------
20,330,536 20,986,642 21,084,330
-----------------------------------------------
$ 38,816,203 $ 35,138,251 $ 40,535,463
-----------------------------------------------
-----------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Versatile Systems Inc.
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
2012 2011 2012 2011
----------------------------------------------------------
SALES $12,482,474 $11,044,100 $30,669,238 $35,723,183
COST OF SALES 10,146,641 8,368,414 24,591,194 27,975,533
----------------------------------------------------------
2,335,833 2,675,686 6,078,044 7,747,650
----------------------------------------------------------
EXPENSES
Selling and
marketing 1,183,949 1,136,728 3,302,067 3,473,173
General and
administrative 812,153 829,900 2,601,131 2,772,247
Research and
development 199,568 278,226 719,525 749,403
Non recurrring
expenses - 235,486 - 293,657
Stock-based
compensation - 60,906 8,749 60,906
Foreign exchange
loss 8,311 21,703 37,092 (9,715)
----------------------------------------------------------
2,203,981 2,562,949 6,668,564 7,339,671
----------------------------------------------------------
OPERATING PROFIT
(LOSS) 131,852 112,737 (590,520) 407,979
Amortization of
capital assets 38,713 54,485 125,224 173,754
Interest expense
(income) 7,262 (1,826) 20,079 13,810
Loss on sale of
capital assets
and investments - 625 1,534 3,200
----------------------------------------------------------
EARNINGS (LOSS)
BEFORE INCOME
TAXES 85,877 59,453 (737,357) 217,215
Current income tax
expense
(recovery) (995) 2,985 (3,335) 995
Deferred income
tax benefit
(expense) (21,200) (29,600) 199,632 (95,721)
----------------------------------------------------------
NET EARNINGS
(LOSS) $ 63,682 $ 32,838 $ (541,060) $ 122,489
----------------------------------------------------------
----------------------------------------------------------
EARNINGS (LOSS)
PER SHARE (basic
and diluted) $0.00 $0.00 ($0.00) $0.00
----------------------------------------------------------
----------------------------------------------------------
Net earnings
(loss) $ 63,682 $ 32,838 $ (541,060) $ 122,489
Other
comprehensive
income (loss)
Net change in
fair value of
available-for-
sale
investments 29,103 96,296 (123,795) (8,898)
----------------------------------------------------------
Total
comprehensive
income (loss) $ 92,785 $ 129,134 $ (664,855) $ 113,591
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Versatile Systems Inc.
Consolidated Statements of Changes in Shareholders' Equity
(Unaudited - Prepared by Management)
----------------------------------------------------------------------------
Expressed in U.S. dollars
Share Equity
Capital Warrants Reserve
---------------------------------------------
Balance, July 1, 2010 $ 54,433,709 $ 186,367 $ 4,231,539
Net earnings
Net change in fair value of
available-for-sale investments
Expiration of warrants (63,307) 63,307
Share-based compensation
expense 60,906
---------------------------------------------
Balance, March 31, 2011 54,433,709 123,060 4,355,752
---------------------------------------------
---------------------------------------------
Balance, June 30, 2011 54,433,709 42,000 4,578,470
Net loss
Net change in fair value of
available-for-sale investments
Expiration of warrants (42,000) 42,000
Share-based compensation
expense - - 8,749
---------------------------------------------
Balance, March 31, 2012 $ 54,433,709 $ - $ 4,629,219
---------------------------------------------
---------------------------------------------
Accumulated
other
comprehensive
Deficit loss Total
---------------------------------------------
Balance, July 1, 2010 $ (36,965,836) $ (801,449) $ 21,084,330
Net earnings 122,489 122,489
Net change in fair value of
available-for-sale investments (8,898) (8,898)
Expiration of warrants -
Share-based compensation
expense 60,906
---------------------------------------------
Balance, March 31, 2011 (36,843,347) (810,347) 21,258,827
---------------------------------------------
---------------------------------------------
Balance, June 30, 2011 (37,064,598) (1,002,939) 20,986,642
Net loss (541,060) (541,060)
Net change in fair value of
available-for-sale investments (123,795) (123,795)
Expiration of warrants -
Share-based compensation
expense - - 8,749
---------------------------------------------
Balance, March 31, 2012 $ (37,605,658) $ (1,126,734) $ 20,330,536
---------------------------------------------
---------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Versatile Systems Inc.
Consolidated Statements of Cash Flows
(Unaudited - Prepared by Management)
----------------------------------------------------------------------------
Expressed in U.S. Three months ended Nine months ended March
dollars March 31 31
2012 2011 2012 2011
----------------------------------------------------
OPERATING ACTIVITIES
Net earnings (loss) $ 63,682 $ 32,838 $ (541,060) $ 122,489
Items not affecting
cash
Amortization of
capital assets 52,725 61,228 147,725 199,077
Stock-based
compensation - 60,906 8,749 60,906
Loss on sale of
capital assets and
investments - 625 1,534 3,200
Unrealized foreign
exchange gain (7,901) 21,624 (17,943) 1,233
Deferred income
taxes 21,200 29,600 (199,632) 95,721
----------------------------------------------------
Cash flow used in
operations before other
items 129,706 206,821 (600,627) 482,626
Net change in non-cash
working capital 314,083 (1,854,160) (80,343) (2,245,893)
----------------------------------------------------
443,789 (1,647,339) (680,970) (1,763,267)
INVESTING ACTIVITIES
Short term Investments - - (14,776) (309,556)
Proceeds from
disposition of
capital assets 14,597 4,087 35,027 107,355
Intangible assets -
contract cost
additions (3,078,726) (1,217,221) (5,712,159) (4,131,789)
Amortization of
intangible assets 1,948,725 2,397,419 5,086,681 5,436,073
Purchase of capital
assets (53,856) (30,220) (163,160) (108,844)
----------------------------------------------------
(1,169,260) 1,154,065 (768,387) 993,239
----------------------------------------------------
FINANCING ACTIVITIES
Proceeds from
(Repayment of) line
of credit 882,647 322,972 760,005 (214,485)
----------------------------------------------------
882,647 322,972 760,005 (214,485)
----------------------------------------------------
Increase (Decrease) in
cash and cash
equivalents 157,176 (170,302) (689,352) (984,513)
Cash and cash
equivalents, beginning
of period 132,128 923,825 978,656 1,738,036
----------------------------------------------------
Cash and cash
equivalents, end of
period $ 289,304 $ 753,523 $ 289,304 $ 753,523
----------------------------------------------------
----------------------------------------------------
