Versatile Systems Inc. (TSX VENTURE:VV)(AIM:VVS), today announces its results
for the fourth quarter and the year ended June 30, 2008.
Revenue for the twelve months ended June 30, 2008 was $59,380,354 generating a
gross profit of $14,852,818 or 25.0% of revenue compared to $62,230,275
generating a gross profit of $14,715,797 or 23.7% of revenue for the same period
last year. The Company generated sales of higher margin products resulting in an
increase in gross profit of $137,021 compared with the prior year. Net Earnings
for the period amounted to $200,130 ($0.00 per share) compared to $1,379,445
($0.01 per share) for the prior year with the significant change relating to the
future income tax expense of $101,604 for the current year compared to a benefit
of $951,622 for the prior year. Comprehensive income for the year amounted to
$427,253 compared to $1,403,649 for the prior year.
The EBITDA for the year was $1,289,230 compared to an EBITDA of $1,992,905 for
the same period 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.
"The downturn in the U.S. economy has impacted all aspects of our business,"
said John Hardy, Chairman and CEO of Versatile. "Nevertheless we continued to
generate significant cash flow from operations while also investing in our
proprietary products and sales resources. As the economy improves we will be
positioned to respond to and support growth opportunities."
The cash flow from operations, before non-cash working capital items, was
$1,452,981 for the year ended June 30, 2008 compared to cash flow of $2,159,289
for the same period last year. Over the past four years the cash flow from
operations, before non-cash working capital items, has been as follows:
2008 $1,452,981
2007 2,159,289
2006 1,099,233
2005 (878,482)
The Company had working capital of $3,772,462 at June 30, 2008, an improvement
of $1,084,963 over the working capital at the year-end on June 30, 2007. During
the current fiscal year the Company repaid two term loans in the amount of
$2,924,263, which had been classified with current liabilities.
"During the year our financial position improved," said Fraser Atkinson, CFO of
Versatile. "Our working capital increased by $1,084,963, and we generated
$1,452,981 cash flow from operations. We repaid two term loans totaling
$2,924,263. In addition our deferred revenue increased by $1,067,850."
Highlights for the year included:
- Revenue for the twelve months ended June 30, 2008 was $59,380,354 generating a
gross profit of $14,852,818 or 25.0% of revenue compared to $62,230,275
generating a gross profit of $14,715,797 or 23.7% of revenue for the same period
last year;
- Deferred revenue at June 30, 2008 was $7,855,129 (of which $6,582,593 is
expected to be recognized in the next four quarters) compared to $6,787,279 at
June 30, 2007, an increase of $1,067,850 or 15.7%;
- The working capital as of June 30, 2008 was $3,772,462, an improvement of
$1,084,963 over the working capital at the year-end of June 30, 2007;
- Obtained a line of credit of $5,800,000 from the Commerce Bank, an increase
from the previous line of credit of $3,000,000; and
- Mobiquity Kiosk(TM): implementation of a new HSBC-based financial services
kiosk which enables electronic processing of private label credit applications,
MasterCard loyalty credit card applications, credit limit checks and information
on other HSBC financial products and services;
- Mobiquity Kiosk(TM) implementation of a kiosk-based electronic credit
application for Citi Financial;
- Deployed a large scale virtualization solution in each of the healthcare and
telecommunication sectors;
- Completed the first phase of deployment of a route accounting system for Tree
of Life, a major U.S. distributor, with Versatile's Mobiquity Route(TM) 4.0 as
the core driver of this system.
- Partnering with CitiFinancial in order to simplify and streamline the credit
application process for Shaw flooring retailers with the Mobiquity Kiosk(TM);
- Completed large Proof of Concept deployments of Virtual Desktop Infrastructure
for a leading global financial services company and a global education provider;
and
- Opened the Versatile Virtual Desktop Infrastructure Center of Excellence in
conjunction with Sun Microsystems at their New York City Metro headquarters in
Manhattan.
Revenue for the three months ended June 30, 2008 was $13,721,812 compared to
$18,193,167 for the same quarter last year, a decrease of $4,471,355. While the
Company had repeat business from its existing customer base, the Company
experienced a slowdown in orders from customers for routine expenditures on
infrastructure. The EBITDA for the quarter was $155,206 compared to an EBITDA of
$977,377 for the same quarter last year. The Net Loss for the quarter amounted
to $362,043 ($0.00 per share) compared to Net Earnings of $992,566 ($0.01 per
share) for the same period last year with the significant change relating to the
future income tax expense of $294,213 for the current year compared to a future
income tax benefit of $408,067 for the same quarter last year.
Technology Development
During the fourth quarter the Company spent $448,260 on Research and development
compared to $339,369 in the same period last year. Versatile had many feature
improvements to current product lines.
For the Mobiquity Route(TM) these included the following:
- Implementation of new features into Mobiquity Route(TM), including:
-- Non-APL warnings and APL filterings
-- Warehouse stock-on-hand quantities
-- Brand lookup capabilities
-- Discontinued Items warnings
-- Historical Data
-- Promotional Items
-- Suggested Product Substitutions
-- CheckSelect(TM) feature
-- Intelligent Orders(TM) feature set
- Implementation of a demonstration system for AT&T sales representatives to
pre-sell Mobiquity Route(TM); and
For the Mobiquity Transaction Engine 3.0(TM) these included the following:
- Implementation of an RFID-based manufacturing solution for tracking pallets
and work-in-progress in a manufacturing facility;
- Implementation of support for WiFi Location tracking using Cisco access points
and Cisco's Location Appliance;
- Implementation of the Mobiquity Transaction Engine 3.0(TM) Health Care
asset-tracking solution, which allows high-value assets to be tracked and
intelligently monitored using Mobiquity Transaction Engine 3.0(TM) and WiFi
location tags;
- Expanded device support for the Mobiquity Transaction Engine 3.0(TM),
including Symbol handheld scanners, Alien RFID readers, Data Logic RFID Readers,
Cisco Wifi Location data, Newbury Wifi Location data; and
- Enhancing the functionality of the Mobiquity Transaction Engine 3.0(TM) Time
Tracking System.
For the Mobiquity Kiosk(TM), these included the following:
- Deployment of the hardware and operating system support for the new Madison
Kiosk desktop computer;
- Implementation of the Shaw Flooring Alliance credit application in association
with Citi Financial;
- Implementation of self-service conference registration kiosk application;
- Implementation of an application to allow customers to register for retailer
mailings at the kiosk; and
- Enhancements to the Kiosk platform including improved networking support,
better system performance, expanded device support, improved configuration, and
support for new banking requirements.
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) 2008
Versatile Systems Inc. All rights reserved.
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Versatile Systems Inc.
Consolidated Balance Sheets
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Expressed in U.S. dollars June 30, 2008 June 30, 2007
------------- -------------
ASSETS
Current Assets
Cash and cash equivalents $ 1,500,005 $ 3,369,087
Accounts receivable 11,842,754 15,200,919
Current portion of deferred contract costs 4,918,704 4,489,111
Work-in-progress 80,668 41,705
Prepaid expenses 309,061 347,023
Inventory 1,944,100 1,268,682
Future income tax benefits 706,249 1,094,579
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21,301,541 25,811,106
Long-term accounts receivable 26,522 812,000
Deferred contract costs 1,050,694 396,423
Capital Assets 867,771 492,979
Intangible assets 695,726 1,335,877
Future income tax benefits 4,672,907 4,326,136
Goodwill 9,977,659 9,914,350
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$ 38,592,820 $ 43,088,871
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LIABILITIES
Current Liabilities
Line of credit $ 74,942 $ 3,383
Bank overdraft 127,214 170,422
Accounts payable and accrued liabilities 10,704,330 13,720,928
Current portion of deferred revenue 6,582,593 6,299,863
Bank term loan - 2,749,263
Term loan - 175,000
Promissory Notes 40,000 -
Current portion of capital lease obligations - 4,748
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17,529,079 23,123,607
Deferred Revenue 1,272,536 487,416
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18,801,615 23,611,023
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SHAREHOLDERS' EQUITY
Share Capital 51,353,054 51,643,963
Warrants 369,965 382,650
Contributed surplus 3,188,496 2,998,798
Deficit (35,063,096) (35,263,226)
Accumulated other comprehensive income (57,214) (284,337)
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19,791,205 19,477,848
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$ 38,592,820 $ 43,088,871
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Versatile Systems Inc.
Consolidated Statements of Earnings and Deficit
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Expressed in U.S. Three months Twelve months
dollars ended June 30 ended June 30
2008 2007 2008 2007
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(unaudited)
SALES $ 13,721,812 $ 18,193,167 $ 59,380,354 $ 62,230,275
COST OF SALES 10,180,648 13,770,768 44,527,536 47,514,478
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3,541,164 4,422,399 14,852,818 14,715,797
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EXPENSES
General and
administrative 1,529,268 1,263,358 5,090,959 4,588,693
Selling and
marketing 1,470,184 1,587,817 6,504,762 6,502,051
Research and
development 448,260 339,369 1,745,569 1,068,216
Foreign Exchange
Loss 1,465 (10,418) 175,627 8,488
Stock-based
compensation (63,219) 264,896 46,671 555,444
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3,385,958 3,445,022 13,563,588 12,722,892
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Earnings before
interest, taxes and
amortization 155,206 977,377 1,289,230 1,992,905
Amortization of
capital assets 69,300 90,251 256,929 288,291
Amortization of
intangible assets 124,355 192,454 693,748 874,550
Interest expense
(income) 167 69,236 (28,212) 300,918
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EARNINGS (LOSS)
BEFORE INCOME TAXES (38,616) 625,436 366,765 529,146
Current income tax
expense (29,214) (40,937) (65,031) (101,323)
Future income tax
(expense) benefit (294,213) 408,067 (101,604) 951,622
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NET EARNINGS (LOSS)
FOR THE PERIOD (362,043) 992,566 200,130 1,379,445
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DEFICIT, BEGINNING
OF PERIOD (34,701,053) (36,255,792) (35,263,226) (36,642,671)
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DEFICIT, END OF
PERIOD (35,063,096) (35,263,226) (35,063,096) (35,263,226)
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EARNINGS PER SHARE
(basic and fully
diluted) ($0.00) $0.01 $0.00 $0.01
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Versatile Systems Inc.
Consolidated Statements of Comprehensive Income (Loss)
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Expressed in U.S. Three months Twelve months
dollars ended June 30 ended June 30
2008 2007 2008 2007
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(unaudited)
Net earnings (loss)
for the period (362,043) 992,566 200,130 1,379,445
Other comprehensive
income (loss)
Foreign currency
translation
adjustments (230) 21,749 227,123 24,204
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Comprehensive income
(loss) for the
period (362,273) 1,014,315 427,253 1,403,649
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Versatile Systems Inc.
Consolidated Statements of Cash Flows
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Expressed in U.S. Three months Twelve months
dollars ended June 30 ended June 30
2008 2007 2008 2007
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(unaudited)
CASH FLOWS FROM
(USED IN) OPERATING
ACTIVITIES
Net earnings (loss)
for the period $ (362,043) $ 992,566 $ 200,130 $ 1,379,445
Items not affecting
cash
Amortization of
capital and
intangible assets 193,655 282,705 950,677 1,162,841
Loss on disposal
of capital assets - 4,293 212 4,693
Stock-based
compensation (63,219) 264,896 46,671 555,444
Foreign exchange
loss 85,847 8,488 153,687 8,488
Future income tax
expense (benefit) 294,213 (408,067) 101,604 (951,622)
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Cash flow from
operations before
other items 148,453 1,144,881 1,452,981 2,159,289
Net change in
non-cash working
capital items (1,087,563) 24,665 449,708 (1,907,534)
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(939,110) 1,169,546 1,902,689 251,755
CASH FLOWS FROM
(USED IN) INVESTING
ACTIVITIES
Cash acquired on
acquisition of
Sagent Solutions 5,081 - 5,081 -
Proceeds from
disposition of
capital assets - 700 1,867 2,640
Additions to
capital assets (170,470) (63,921) (634,181) (455,234)
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(165,389) (63,221) (627,233) (452,594)
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CASH FLOWS FROM
(USED IN) FINANCING
ACTIVITIES
Proceeds from
issuance of
shares, net of
costs - 4,050,642 416,202 4,564,059
Purchase of Company
shares (311,511) - (618,780) -
Repayment of
convertible
debenture - - - (107,594)
Proceeds from
(repayment of)
line of credit 74,942 (1,680,236) 71,559 (367,377)
Repayment of bank
overdraft (193,820) (276,334) (43,208) (587,546)
Repayment of the
Bank Term Loan - - (2,749,263) -
Repayment of the
Term Loan - - (175,000) -
Repayment of
Promissory Notes (20,000) - (40,000) -
Repayment of
capital lease
obligations - (1,196) (4,748) (6,422)
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(450,389) 2,092,876 (3,143,238) 3,495,120
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Effect of foreign
exchange rate on
cash (54,492) (37,922) (1,300) (24,204)
Increase (decrease)
in cash and cash
equivalents (1,609,380) 3,161,279 (1,869,082) 3,270,077
CASH and cash
equivalents,
beginning of period 3,109,385 207,808 3,369,087 99,010
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CASH and cash
equivalents, end of
period $ 1,500,005 $ 3,369,087 $ 1,500,005 $ 3,369,087
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