Versatile Systems Inc. (TSX VENTURE:VV), announces its results for the fourth
quarter and the 2013 fiscal year.
Revenue for the three months ended June 30, 2013 was $8,584,095, generating a
gross profit of $1,050,994 or 12.2% of sales compared to $8,832,150, generating
a gross profit of $1,942,201 or 22.0% of sales for the same quarter last year.
The Net Loss for the quarter amounted to $2,175,031 ($0.01 per share) compared
to a Net Loss of $14,075,239 ($0.09 per share) for the same period last year.
Highlights for the quarter included:
-- Revenue for the three months ended June 30, 2013 was $8,584,095 compared
to $8,832,150 for the same quarter last year;
-- The gross profit for the three months ended June 30 2013 was $1,050,994
or 12.2% of sales compared to $1,942,201 or 22.0% of sales for the same
quarter last year;
-- The research and development expense for the quarter amounted to
$339,273 compared to $208,356 for the same quarter last year; and
-- Deferred revenue at June 30, 2013 was $6,835,938 (of which $5,586,738 is
expected to be recognized in the next four quarters) compared to
$6,712,216 at June 30, 2012, an increase of $123,722.
Revenue for the year ended June 30, 2013 was $36,272,893 generating a gross
profit of $6,424,199 or 17.7% of sales compared to $39,501,388 generating a
gross profit of $8,020,245 or 20.3% of sales for the same period last year. The
Net Loss for the year amounted to $3,854,602 ($0.02 per share) compared to
$14,717,158 ($0.09 per share) for the same period last year.
On June 26, 2013 the Board of Directors formally approved the disposition of the
Company's investment in Equus. The disposition is by way of a spin-out of the
shares of the Company's wholly owned subsidiary, Mobiquity Investments Corp
("MIC"). The Company signed an Arrangement Agreement with MIC. Under the
Arrangement Agreement, Versatile and MIC have agreed to undertake a plan of
arrangement (the "Spin-out Transaction") under which the shares of MIC will be
distributed to Versatile shareholders. Existing Versatile shareholders will
receive the same percentage interest in MIC as they presently hold in Versatile
such that following the completion of the transaction, shareholders will hold
shares in both Versatile and MIC.
On September 27, 2013 the Company completed an Information Circular setting out
the details of the Spin-out Transaction which was mailed to the shareholders of
the Company. A shareholder meeting to approve the Spin-out Transaction will be
held on October 31, 2013. The completion of the Spin-out Transaction is subject
to a number of conditions precedent, including the approval of the Versatile
shareholders, the approval of the Supreme Court of British Columbia, the
approval of the TSX Venture Exchange, and the listing of the common shares of
MIC on the CNSX.
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.
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) 2013 Versatile Systems Inc. All rights
reserved.
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Versatile Systems Inc.
Condensed Consolidated Statements of Financial Position
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Expressed in U.S. dollars June 30, 2013 June 30, 2012
-------------------------------
ASSETS
Current Assets
Cash and cash equivalents $ 83,724 $ 434,725
Investment in Equus 1,798,203 -
Accounts receivable 6,379,629 5,994,377
Prepaid expenses 4,588,012 4,152,994
Inventory 2,406,355 2,347,110
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15,255,923 12,929,206
Long-term accounts receivable 14,368 181,366
Long-term prepaid expenses 1,140,311 1,278,432
Investment in Equus - 2,105,473
Capital Assets 189,274 251,591
Intangible assets 169,959 167,206
Deferred income tax assets 336,275 880,407
Goodwill 2,718,970 2,718,970
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$ 19,825,080 $ 20,512,651
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LIABILITIES
Current Liabilities
Line of credit and bank overdraft $ 3,602,269 $ 1,988,675
Accounts payable and accrued liabilities 6,963,126 5,544,888
Current portion of deferred revenue 5,586,738 5,292,359
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16,152,133 12,825,922
Deferred Revenue 1,249,200 1,419,857
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17,401,333 14,245,779
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SHAREHOLDERS' EQUITY
Share Capital 54,433,709 54,433,709
Equity Reserve 4,637,968 4,629,219
Deficit (56,313,036) (52,458,434)
Accumulated other comprehensive loss (334,894) (337,622)
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2,423,747 6,266,872
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$ 19,825,080 $ 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.
dollars Three months ended June 30 Year ended June 30
2013 2012 2013 2012
--------------------------------------------------------
(unaudited) (unaudited)
SALES $ 8,584,095 $ 8,832,150 $ 36,272,893 $ 39,501,388
COST OF SALES 7,533,101 6,889,949 29,848,694 31,481,143
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1,050,994 1,942,201 6,424,199 8,020,245
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EXPENSES
Selling and
marketing 1,113,068 1,269,214 4,445,260 4,571,281
General and
administrative 971,171 819,595 3,485,107 3,420,726
Research and
development 339,273 208,356 1,265,258 927,881
Amortization of
capital assets 18,300 43,164 119,709 168,388
Share-based
compensation 2,188 - 8,749 8,749
Foreign exchange
loss (gain) 2,204 (7,353) 4,402 16,061
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2,446,204 2,332,976 9,328,485 9,113,086
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LOSS FROM OPERATIONS (1,395,210) (390,775) (2,904,286) (1,092,841)
Interest expense (30,204) (62,203) (93,784) (82,282)
Goodwill
impairment - (7,195,380) - (7,195,380)
Equity loss from
Investment in
Equus (204,490) (105,875) (307,270) (220,412)
Loss on sale of
capital assets
and investments - (190) - (1,724)
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LOSS BEFORE INCOME
TAXES (1,629,904) (7,754,423) (3,305,340) (8,592,639)
Current income tax
expense (995) (995) (5,130) (4,330)
Deferred income
taxes (544,132) (6,319,821) (544,132) (6,120,189)
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NET LOSS $ (2,175,031) $ (14,075,239) $ (3,854,602) $(14,717,158)
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Other comprehensive
income (loss)
Foreign exchange
translation (3,250) 2,317 2,728 (11,361)
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Total comprehensive
loss $ (2,178,281) $ (14,072,922) $ (3,851,874) $(14,728,519)
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LOSS PER SHARE
(basic and diluted) ($0.01) ($0.09) ($0.02) ($0.09)
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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 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, June 30, 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 - - 8,749
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Balance, June 30, 2013 $ 54,433,709 $ - $ 4,637,968
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Expressed in U.S. dollars
Accumulated
other
comprehensive
Deficit loss Total
--------------------------------------------------
Balance, June 30, 2011 $ (37,741,276) $ (326,261) $ 20,986,642
Net loss (14,717,158) - (14,717,158)
Foreign exchange on the
translation of VMS-UK - (11,361) (11,361)
Expiration of warrants - - -
Share-based compensation
expense - - 8,749
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Balance, June 30, 2012 (52,458,434) (337,622) 6,266,872
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Balance, June 30, 2012 (52,458,434) (337,622) 6,266,872
Net loss (3,854,602) - (3,854,602)
Foreign exchange on the
translation of VMS-UK - 2,728 2,728
Share-based compensation
expense - - 8,749
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Balance, June 30, 2013 $ (56,313,036) $ (334,894) $ 2,423,747
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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. dollars Three months ended June 30
2013 2012
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(unaudited) (unaudited)
OPERATING ACTIVITIES
Net loss $ (2,175,031) $ (14,075,239)
Items not involving cash
Amortization of capital assets 18,300 43,164
Share-based compensation 2,188 -
Goodwill impairment - 7,195,380
Loss on sale of capital assets and
investments - 190
Equity loss from Investment in Equus 204,490 105,875
Unrealized foreign exchange loss
(gain) ( 2,728) 29,389
Deferred income taxes 544,132 6,319,821
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Cash flow generated from (used in)
operations before other items (1,408,649) (381,420)
Net change in non-cash working
capital 882,631 326,310
------------------------------------
(526,018) (55,110)
INVESTING ACTIVITIES
Purchase of shares in Equus - -
Proceeds from disposition of capital
assets - (17,387)
Intangible assets - contract cost
additions (71,197) (80,321)
Intangible assets - contract cost
recognized 54,744 107,293
Purchase of capital assets (14,428) (29,957)
------------------------------------
(30,881) (20,372)
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FINANCING ACTIVITIES
Proceeds from line of credit and bank
overdraft 598,978 220,903
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598,978 220,903
------------------------------------
Increase (Decrease) in cash and cash
equivalents 42,079 145,421
Cash and cash equivalents, beginning of
period 41,645 289,304
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Cash and cash equivalents, end of
period $ 83,724 $ 434,725
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Expressed in U.S. dollars Year ended June 30
2013 2012
------------------------------------
OPERATING ACTIVITIES
Net loss $ (3,854,602) $ (14,717,158)
Items not involving cash
Amortization of capital assets 119,709 177,159
Share-based compensation 8,749 8,749
Goodwill impairment - 7,195,380
Loss on sale of capital assets and
investments - 1,724
Equity loss from Investment in Equus 307,270 220,412
Unrealized foreign exchange loss
(gain) (2,045) 11,498
Deferred income taxes 544,132 6,120,189
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Cash flow generated from (used in)
operations before other items (2,876,787) (982,047)
Net change in non-cash working
capital 972,692 (344,877)
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(1,904,095) (1,326,924)
INVESTING ACTIVITIES
Purchase of shares in Equus - (14,776)
Proceeds from disposition of capital
assets - 17,640
Intangible assets - contract cost
additions (261,361) (321,283)
Intangible assets - contract cost
recognized 258,608 313,621
Purchase of capital assets (57,747) (193,117)
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(60,500) (197,915)
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FINANCING ACTIVITIES
Proceeds from line of credit and bank
overdraft 1,613,594 980,908
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1,613,594 980,908
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Increase (Decrease) in cash and cash
equivalents (351,001) (543,931)
Cash and cash equivalents, beginning of
period 434,725 978,656
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Cash and cash equivalents, end of
period $ 83,724 $ 434,725
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FOR FURTHER INFORMATION PLEASE CONTACT:
Versatile Systems Inc.
John Hardy, CEO
1-800-262-1633
International: 001-206-979-6760
Versatile Systems Inc.
Fraser Atkinson, CFO
1-800-262-1633
www.versatile.com
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