Versatile Systems Inc. (TSX VENTURE:VV), announces its results for the second
quarter of the 2014 fiscal year.
Revenue for the three months ended December 31, 2013 was $9,857,689, generating
a gross profit of $1,686,298 or 17.1 percent of sales compared to $9,550,579,
generating a gross profit of $1,842,628 or 19.3 percent of sales for the same
quarter last year. The net loss for the quarter amounted to $951,894 ($0.01 per
share), which includes non-recurring expenses of $407,419, compared to a net
loss of $494,389 ($0.00 per share) for the same quarter last year.
Highlights for the quarter included:
-- Revenue for the three months ended December 31, 2013 was $9,857,689
compared to $9,550,579 for the same quarter last year, an increase of
$307,110;
-- The gross profit for the three months ended December 31, 2013 was
$1,686,298 or 17.1 percent of sales compared to $1,842,628 or 19.3
percent of sales for the same quarter last year;
-- The research and development expense for the quarter amounted to
$239,981 compared to $322,849 for the same quarter last year; and
-- Deferred revenue at December 31, 2013 was $6,577,606 (of which
$5,661,284 is expected to be recognized in the next four quarters)
compared to $6,835,938 at June 30, 2013.
During the current quarter, the company appointed Kenny Kahn as the chief
executive officer and Kelly Boyer as the interim chief financial officer. The
company also announced that it will close its Vancouver, Canada head office in
order to centralize finance and administrative functions at its operations
facility, located in Mechanicsburg, Pa.
Revenue for the six months ended December 31, 2013 was $16,497,164 generating a
gross profit of $2,967,155 or 18.0 percent of sales compared to $17,466,427
generating a gross profit of $3,675,407 or 21.0 percent of sales for the same
period last year. The net loss for the period amounted to $2,201,315 ($0.01 per
share) compared to $898,683 ($0.01 per share) for the same period last year.
About Versatile
Versatile is a multi-disciplinary technology company with solutions across the
mobile, digital signage, IT infrastructure, software and hardware landscape. The
company's products are utilized by Fortune 500 companies, leading financial
institutions and large and small retail organizations. For more information,
please visit www.versatilecredit.com, www.versatilemobile.com and
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.
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. All amounts are expressed in U.S.
dollars unless otherwise stated. (C) 2014 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 December 31, 2013 June 30, 2013
---------------------------------
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 63,111 $ 83,724
Investment in Equus 1,798,203 $ 1,798,203
Accounts receivable 7,228,114 6,379,629
Prepaid expenses 5,028,710 4,588,012
Inventory 1,778,501 2,406,355
---------------------------------
15,896,639 15,255,923
Long-term accounts receivable 1,140 14,368
Long-term prepaid expenses 831,568 1,140,311
Capital Assets 155,430 189,274
Intangible assets 166,936 169,959
Deferred income tax assets 336,275 336,275
Goodwill 2,718,970 2,718,970
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$ 20,106,958 $ 19,825,080
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---------------------------------
LIABILITIES
Current Liabilities
Line of credit and bank overdraft $ 4,126,960 $ 3,602,269
Accounts payable and accrued liabilities 8,413,006 6,963,126
Bridge Loan 739,376 -
Current portion of deferred revenue 5,661,284 5,586,738
---------------------------------
18,940,626 16,152,133
Deferred Revenue 916,322 1,249,200
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19,856,948 17,401,333
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SHAREHOLDERS' EQUITY
Share Capital 54,433,709 54,433,709
Equity Reserve 4,637,968 4,637,968
Deficit (58,514,351) (56,313,036)
Accumulated other comprehensive loss (307,315) (334,894)
---------------------------------
250,011 2,423,747
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$ 20,106,958 $ 19,825,080
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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 Six months ended December
dollars December 31 31
2013 2012 2013 2012
SALES $ 9,857,689 $ 9,550,579 $ 16,497,164 $ 17,466,427
COST OF SALES 8,171,391 7,707,951 13,530,009 13,791,020
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1,686,298 1,842,628 2,967,155 3,675,407
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EXPENSES
Selling and marketing 784,437 1,085,949 1,655,226 2,148,492
General and
administrative 1,148,195 845,714 2,364,583 1,654,730
Research and
development 239,981 322,849 624,756 559,095
Non recurring expenses 407,419 - 407,419 -
Amortization of
capital assets 19,945 36,753 40,947 77,001
Share-based
compensation - 2,187 - 4,373
Foreign exchange
(gain) loss (5,293) (2,588) (2,669) 9,546
----------------------------------------------------
2,594,684 2,290,864 5,090,262 4,453,237
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LOSS FROM OPERATIONS (908,386) (448,236) (2,123,107) (777,830)
Interest expense (42,376) (19,899) (75,620) (38,814)
Equity loss from
Investment in Equus - (25,259) - (78,899)
Loss on sale of
capital assets - - (461) -
----------------------------------------------------
LOSS BEFORE INCOME TAXES (950,762) (493,394) (2,199,188) (895,543)
Current income tax
expense (1,132) (995) (2,127) (3,140)
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NET LOSS $ (951,894) $ (494,389) $(2,201,315) $ (898,683)
----------------------------------------------------
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Other comprehensive
income (loss)
Foreign exchange
translation 18,085 (1,015) 27,579 (97)
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Total comprehensive loss $ (933,809) $ (495,404) $(2,173,736) $ (898,780)
----------------------------------------------------
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LOSS PER SHARE (basic
and diluted) ($0.01) ($0.00) ($0.01) ($0.01)
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Weighted average number
of common shares
oustanding, basic and
diluted 157,285,643 157,285,643 157,285,643 157,285,643
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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 Equity
Capital Reserve Deficit
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Balance, June 30, 2012 $ 54,433,709 $ 4,629,219 $ (52,458,434)
Net loss - - (898,683)
Foreign exchange on the translation
of VMS-UK - - -
Share-based compensation expense - 4,373 -
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Balance, December 31, 2012 54,433,709 4,633,592 (53,357,117)
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Balance, June 30, 2013 54,433,709 4,637,968 (56,313,036)
Net loss - - (2,201,315)
Foreign exchange on the translation
of VMS-UK - - -
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Balance, December 31, 2013 $ 54,433,709 $ 4,637,968 $ (58,514,351)
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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
Accumulated
other
comprehensive
loss Total
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Balance, June 30, 2012 $ (337,622) $ 6,266,872
Net loss - (898,683)
Foreign exchange on the translation
of VMS-UK (97) (97)
Share-based compensation expense - 4,373
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Balance, December 31, 2012 (337,719) 5,372,465
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Balance, June 30, 2013 (334,894) 2,423,747
Net loss - (2,201,315)
Foreign exchange on the translation
of VMS-UK 27,579 27,579
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Balance, December 31, 2013 $ (307,315) $ 250,011
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Versatile Systems Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited - Prepared by Management)
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Expressed in U.S. Three months ended Six months ended December
dollars December 31 31
2013 2012 2013 2012
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OPERATING ACTIVITIES
Net loss $ (951,894) $ (494,389) $(2,201,315) $ (898,683)
Items not involving cash
Amortization of
capital assets 19,945 36,753 40,947 77,001
Share-based
compensation - 2,187 - 4,373
Loss on sale of
capital assets - - 461 -
Equity loss from
Investment in Equus - 25,259 - 78,899
Unrealized foreign
exchange loss 991 1,092 991 1,092
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Cash flow used in
operations before other (930,958) (429,098) (2,158,916) (737,318)
items
Net change in non-cash
working capital (56,169) (462,265) 867,861 (584,966)
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(987,127) (891,363) (1,291,055) (1,322,284)
INVESTING ACTIVITIES
Proceeds from
disposition of - - 1,418 -
capital assets
Intangible assets -
contract cost (67,033) (59,574) (109,895) (137,979)
additions
Intangible assets -
contract cost 61,041 60,797 118,753 145,373
recognized
Purchase of capital
assets (2,458) (7,938) (6,762) (27,504)
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(8,450) (6,715) 3,514 (20,110)
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FINANCING ACTIVITIES
Proceeds from the
bridge loan 742,237 - 742,237 -
Proceeds from line of
credit and bank 160,168 703,174 524,691 978,449
overdraft
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902,405 703,174 1,266,928 978,449
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Decrease in cash and
cash equivalents (93,172) (194,904) (20,613) (363,945)
Cash and cash
equivalents, beginning 156,283 265,684 83,724 434,725
of period
----------------------------------------------------
Cash and cash
equivalents, end of $ 63,111 $ 70,780 $ 63,111 $ 70,780
period
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FOR FURTHER INFORMATION PLEASE CONTACT:
Versatile Systems Inc.
Kenny Kahn
CEO
717-620-2531
kkahn@versatile.com
www.versatile.com
Daum Weigle Inc.
Jon Daum
858-538-9755
jdaum@daumweigle.com
