MECHANICSBURG, PENNSYLVANIA–(Marketwired – Feb. 24, 2014) – 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. © 2014 Versatile Systems Inc. All rights reserved.
Versatile Systems Inc. | |||||||
Condensed Consolidated Statements of Financial Position | |||||||
(Unaudited – Prepared by Management) | |||||||
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 | |||||
$ | 20,106,958 | $ | 19,825,080 | ||||
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 | |||||
19,856,948 | 17,401,333 | ||||||
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 | ||||||
$ | 20,106,958 | $ | 19,825,080 |
Versatile Systems Inc. | ||||||||||
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) | ||||||||||
(Unaudited – Prepared by Management) | ||||||||||
Expressed in U.S. dollars | Three months ended December 31 | Six months ended December 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 | ||||||
1,686,298 | 1,842,628 | 2,967,155 | 3,675,407 | |||||||
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 | |||||||
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) | ||||||
NET LOSS | $ | (951,894) | $ | (494,389) | $ | (2,201,315) | $ | (898,683) | ||
Other comprehensive income (loss) | ||||||||||
Foreign exchange translation | 18,085 | (1,015) | 27,579 | (97) | ||||||
Total comprehensive loss | $ | (933,809) | $ | (495,404) | $ | (2,173,736) | $ | (898,780) | ||
LOSS PER SHARE (basic and diluted) | ($0.01) | ($0.00) | ($0.01) | ($0.01) | ||||||
Weighted average number of common shares oustanding, basic and diluted | 157,285,643 | 157,285,643 | 157,285,643 | 157,285,643 |
Versatile Systems Inc. | |||||||||||||
Condensed Consolidated Statements of Changes in Shareholders’ Equity | |||||||||||||
(Unaudited – Prepared by Management) | |||||||||||||
Expressed in U.S. dollars | |||||||||||||
Accumulated | |||||||||||||
other | |||||||||||||
Share | Equity | comprehensive | |||||||||||
Capital | Reserve | Deficit | loss | Total | |||||||||
Balance, June 30, 2012 | $ | 54,433,709 | $ | 4,629,219 | $ | (52,458,434 | ) | $ | (337,622 | ) | $ | 6,266,872 | |
Net loss | – | – | (898,683 | ) | – | (898,683 | ) | ||||||
Foreign exchange on the translation of VMS-UK | – | – | – | (97 | ) | (97 | ) | ||||||
Share-based compensation expense | – | 4,373 | – | – | 4,373 | ||||||||
Balance, December 31, 2012 | 54,433,709 | 4,633,592 | (53,357,117 | ) | (337,719 | ) | 5,372,465 | ||||||
Balance, June 30, 2013 | 54,433,709 | 4,637,968 | (56,313,036 | ) | (334,894 | ) | 2,423,747 | ||||||
Net loss | – | – | (2,201,315 | ) | – | (2,201,315 | ) | ||||||
Foreign exchange on the translation of VMS-UK | – | – | – | 27,579 | 27,579 | ||||||||
Balance, December 31, 2013 | $ | 54,433,709 | $ | 4,637,968 | $ | (58,514,351 | ) | $ | (307,315 | ) | $ | 250,011 |
Versatile Systems Inc. | |||||||||||||
Condensed Consolidated Statements of Cash Flows | |||||||||||||
(Unaudited – Prepared by Management) | |||||||||||||
Expressed in U.S. dollars | Three months ended December 31 | Six months ended December 31 | |||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||
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 | |||||||||
Cash flow used in operations before other items | (930,958 | ) | (429,098 | ) | (2,158,916 | ) | (737,318 | ) | |||||
Net change in non-cash working capital | (56,169 | ) | (462,265 | ) | 867,861 | (584,966 | ) | ||||||
(987,127 | ) | (891,363 | ) | (1,291,055 | ) | (1,322,284 | ) | ||||||
INVESTING ACTIVITIES | |||||||||||||
Proceeds from disposition of capital assets | – | – | 1,418 | – | |||||||||
Intangible assets – contract cost additions | (67,033 | ) | (59,574 | ) | (109,895 | ) | (137,979 | ) | |||||
Intangible assets – contract cost recognized | 61,041 | 60,797 | 118,753 | 145,373 | |||||||||
Purchase of capital assets | (2,458 | ) | (7,938 | ) | (6,762 | ) | (27,504 | ) | |||||
(8,450 | ) | (6,715 | ) | 3,514 | (20,110 | ) | |||||||
FINANCING ACTIVITIES | |||||||||||||
Proceeds from the bridge loan | 742,237 | – | 742,237 | – | |||||||||
Proceeds from line of credit and bank overdraft | 160,168 | 703,174 | 524,691 | 978,449 | |||||||||
902,405 | 703,174 | 1,266,928 | 978,449 | ||||||||||
Decrease in cash and cash equivalents | (93,172 | ) | (194,904 | ) | (20,613 | ) | (363,945 | ) | |||||
Cash and cash equivalents, beginning of period | 156,283 | 265,684 | 83,724 | 434,725 | |||||||||
Cash and cash equivalents, end of period | $ | 63,111 | $ | 70,780 | $ | 63,111 | $ | 70,780 |
Kenny Kahn
CEO
717-620-2531
kkahn@versatile.com
www.versatile.com
Daum Weigle Inc.
Jon Daum
858-538-9755
jdaum@daumweigle.com
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