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(TM) and other mobile software products and
$215,597 for research and development activities primarily related to
Smart Sign (TM); 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. (C) 2013
Versatile Systems Inc. All rights reserved.
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Versatile Systems Inc.
Condensed Consolidated Statements of Financial Position
(Unaudited - Prepared by Management)
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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
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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
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$ 18,893,643 $ 20,512,651
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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
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13,252,157 12,825,922
Deferred Revenue 1,041,646 1,419,857
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14,293,803 14,245,779
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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)
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4,599,840 6,266,872
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$ 18,893,643 $ 20,512,651
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Versatile Systems Inc.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Loss)
(Unaudited - Prepared by Management)
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Expressed in U.S. Three months ended Nine months ended
dollars March 31 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
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1,697,798 2,335,833 5,373,205 6,078,044
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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
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NET EARNINGS (LOSS) $ (780,888) $ 35,603 $(1,679,571) $ (641,919)
----------------------------------------------------
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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)
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EARNINGS (LOSS) PER
SHARE (basic and
diluted) ($0.00) $0.00 ($0.01) ($0.00)
----------------------------------------------------
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Versatile Systems Inc.
Condensed Consolidated Statements of Changes in Shareholders' Equity
(Unaudited - Prepared by Management)
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Expressed in U.S. dollars
Share Warrant Equity
Capital Reserve Reserve
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Balance, June 30, 2011 $ 54,433,709 $ 42,000 $ 4,578,470
Net loss - - -
Foreign exchange on the
translation of VMS-UK - - -
Expiration of warrants - (42,000) 42,000
Share-based compensation
expense - - 8,749
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Balance, March 31, 2012 54,433,709 - 4,629,219
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-----------------------------------------------
Balance, June 30, 2012 54,433,709 - 4,629,219
Net loss - - -
Foreign exchange on the
translation of VMS-UK - - -
Share-based compensation
expense - - 6,561
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Balance, March 31, 2013 $ 54,433,709 $ - $ 4,635,780
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Versatile Systems Inc.
Condensed Consolidated Statements of Changes in Shareholders' Equity
(Unaudited - Prepared by Management)
---------------------------------------------------------------------------
Expressed in U.S. dollars
Accumulated
other
comprehensive
Deficit loss Total
------------------------------------------------
(Restated) (Restated) (Restated)
Balance, June 30, 2011 $ (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 - - -
Share-based compensation
expense - - 8,749
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Balance, March 31, 2012 (38,383,195) (339,939) 20,339,794
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Balance, June 30, 2012 (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
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Balance, March 31, 2013 $ (54,138,005) $ (331,644) $ 4,599,840
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Versatile Systems Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited - Prepared by Management)
----------------------------------------------------------------------------
Three months ended Nine months ended
Expressed in U.S. dollars March 31 March 31
2013 2012 2013 2012
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(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)
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FINANCING ACTIVITIES
Proceeds from line of
credit 36,167 882,647 1,014,616 760,005
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36,167 882,647 1,014,616 760,005
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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
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FOR FURTHER INFORMATION PLEASE CONTACT:
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
