Advertisement

All amounts are expressed in U.S. dollars unless otherwise stated.

Versatile Systems Inc. (TSX VENTURE: VV)(AIM: VVS), announces its results for the second quarter of the 2010 fiscal year.

Revenue for the three months ended December 31, 2009 was $11,259,292 generating a gross profit of $2,660,080 or 23.6% of sales compared to $12,327,064 generating a gross profit of $3,039,395 or 24.7% of sales for the same quarter last year. The Net Loss for the quarter amounted to $80,661 ($0.00 per share) compared to a Net Loss of $533,171 ($0.00 per share) for the same period last year, an improvement of $452,510.

"The overall economic environment continues to be difficult. In addition, Oracle's potential acquisition of Sun Microsystems has created uncertainty and had a negative effect on both our pipeline and top line revenue," said John Hardy, Chairman and CEO of Versatile. "Nevertheless, we managed to significantly reduce our Net Loss by $452,510 over the same quarter last year. We continue to monitor our cost structures to ensure they are in line with anticipated revenues and Gross Profit. Our goal is to move back to sustained profitability by year end."

Highlights for the quarter included:

- Cash and cash equivalents and short term investments at December 31, 2009 was $6,096,258 compared to $2,002,530 at June 30, 2009, an increase of $4,093,728;

- Revenue for the three months ended December 31, 2009 was $11,259,292 compared to $12,327,064 for the same quarter last year, a decrease of $1,067,772;

- Deferred revenue at December 31, 2009 was $7,512,605 (of which $6,641,170 is expected to be recognized in the next four quarters);

- Net Loss for the quarter amounted to $80,661 ($0.00 per share) compared to a Net Loss of $533,171 ($0.00 per share) for the same period last year, an improvement of $452,510;

- Research and development expense for the quarter amounted to $247,084 compared to $391,088 for the same quarter last year;

- Non-brokered private placement with the issuance of 39,000,000 shares for proceeds of $3,876,257; and

- The Company increased its position to 696,869 shares of Equus Total Return, Inc. which is a public company trading on the NYSE under the symbol EQS.

The working capital as of December 31, 2009 was $6,148,754, an increase of $3,578,333 compared to the working capital of $2,570,421 at June 30, 2009.

Revenue for the six months ended December 31, 2009 was $22,875,517 generating a gross profit of $5,315,384 or 23.2% of revenue compared to $26,630,915 generating a gross profit of $6,792,495 or 25.5% of revenue for the same period last year. The Net Loss for the period amounted to $127,436 ($0.00 per share) compared to $476,556 ($0.00 per share) for the same period last year, an improvement of $349,120.

"With working capital exceeding $6 million at December 31, 2009 the Company has the strongest financial position in its history," said Fraser Atkinson, CFO of Versatile.

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 (http://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. 5/8 2010 Versatile Systems Inc. All rights reserved. ------------------------------------------------------------------- ------- Versatile Systems Inc. Consolidated Balance Sheets (unaudited - prepared by management) ------------------------------------------------------------------- ------- Expressed in U.S. dollars

December 31, 2009 June 30, 2009

----------------- -------------

(unaudited) ASSETS Current Assets

Cash and cash equivalents $ 3,795,423 $ 2,002,530

Short term investments 2,300,835 -

Accounts receivable 7,499,668 8,408,093

Current portion of deferred contract costs 5,029,092 5,745,493

Work-in-progress 42,822 92,145

Prepaid expenses 387,000 286,709

Inventory 1,446,357 1,376,746

Future income tax benefits 944,843 944,843

---------------------------

21,446,040 18,856,559 Long-term accounts receivable 238,868 112,781 Deferred contract costs 678,291 803,246 Capital Assets 644,145 794,008 Intangible assets 242,138 332,953 Future income tax benefits 5,631,462 5,283,896 Goodwill 9,977,659 9,977,659

---------------------------

$ 38,858,603 $ 36,161,102

---------------------------

--------------------------- LIABILITIES Current Liabilities

Line of credit and bank overdraft $ 2,558,445 $ -

Accounts payable and accrued liabilities 6,097,671 8,530,987

Current portion of deferred revenue 6,641,170 7,755,151

---------------------------

15,297,286 16,286,138 Deferred Revenue 871,435 977,411

---------------------------

16,168,721 17,263,549

--------------------------- SHAREHOLDERS' EQUITY

Share Capital 54,433,709 50,583,743

Warrants 186,367 186,367

Contributed surplus 4,208,236 4,138,437

Deficit (35,856,651) (35,729,215)

Accumulated other comprehensive loss (281,779) (281,779)

---------------------------

22,689,882 18,897,553

---------------------------

$ 38,858,603 $ 36,161,102

---------------------------

---------------------------------------------------------------------------------------------- ------- Versatile Systems Inc. Consolidated Statements of Earnings (Loss) and Deficit (unaudited - prepared by management) ------------------------------------------------------------------- ------- Expressed in Three Months ended Six Months ended U.S. dollars December 31 December 31

2009 2008 2009 2008

--------------------------------------------------- SALES $ 11,259,292 $ 12,327,064 $ 22,875,517 $ 26,630,915 COST OF SALES 8,599,212 9,287,669 17,560,133 19,838,420

---------------------------------------------------

2,660,080 3,039,395 5,315,384 6,792,495

--------------------------------------------------- EXPENSES

General and

administrative 1,100,145 1,278,420 1,974,493 2,601,480

Selling and

marketing 1,619,075 1,717,311 2,980,776 3,487,136

Research and

development 247,084 391,088 493,754 815,840

Non recurring expenses 28,219 372,177 48,079 372,177

Foreign exchange (gain)

loss (89,154) (76,407) (74,612) (96,759)

Stock-based

compensation 23,242 2,753 45,630 5,996

---------------------------------------------------

2,928,611 3,685,342 5,468,120 7,185,870

--------------------------------------------------- Earnings before

interest, taxes and

amortization (268,531) (645,947) (152,736) (393,375)

Amortization of

capital assets 62,287 87,406 128,911 157,306

Amortization of

intangible assets 90,675 90,675 181,349 181,349

Interest expense 10,441 354 14,210 29,442

Gain on sale of

investments (4,952) - (4,952) -

--------------------------------------------------- EARNINGS (LOSS)

BEFORE INCOME TAXES (426,982) (824,382) (472,254) (761,472) Current income tax

expense (1,245) (16,044) (2,748) (20,544) Future income tax

expense 347,566 307,255 347,566 305,460

--------------------------------------------------- NET EARNINGS (LOSS) (80,661) (533,171) (127,436) (476,556)

--------------------------------------------------- DEFICIT, BEGINNING

OF PERIOD (35,775,990) (35,006,481) (35,729,215) (35,063,096)

--------------------------------------------------- DEFICIT, END OF PERIOD (35,856,651) (35,539,652) (35,856,651) (35,539,652)

---------------------------------------------------

--------------------------------------------------- EARNINGS (LOSS) PER

SHARE (basic and

diluted) ($0.00) ($0.00) ($0.00) ($0.00)

---------------------------------------------------

---------------------------------------------------------------------------------------------------------------------- ------- Versatile Systems Inc. Consolidated Statements of Comprehensive (Loss) Income (unaudited - prepared by management) ------------------------------------------------------------------- ------- Expressed in Three Months ended Six Months ended U.S. dollars December 31 December 31

2009 2008 2009 2008

--------------------------------------------------- Net earnings (loss) (80,661) (533,171) (127,436) (476,556) Other comprehensive

(loss) income

Foreign currency

translation

adjustments 0 (367,732) 0 (400,981)

--------------------------------------------------- Comprehensive (loss)

income (80,661) (900,903) (127,436) (877,537)

---------------------------------------------------

---------------------------------------------------------------------------------------------------------------------- ------- Versatile Systems Inc. Consolidated Statements of Cash Flows (unaudited - prepared by management) ------------------------------------------------------------------- ------- Expressed in Three Months ended Six Months ended U.S. dollars December 31 December 31

2009 2008 2009 2008

------------------------------------------------ CASH FLOWS FROM (USED

IN) OPERATING

ACTIVITIES

Net earnings (loss) $ (80,661) $ (533,171) $ (127,436) $ (476,556)

Items not affecting

cash

Amortization of

capital and

intangible assets 170,862 178,081 348,987 344,983

Stock-based

compensation 23,242 2,753 45,630 5,996

Gain on sale of

investments (4,952) - (4,952) -

Unrealized foreign

exchange loss (gain) (38,209) 27,913 (42,539) 36,032

Future income tax

expense (benefit) (347,566) (307,255) (347,566) (305,460)

------------------------------------------------- Cash flow from (used in)

operations before other

items (277,284) (631,679) (127,876) (395,005)

Net change in non-cash

working capital items 41,236 2,213,837 (2,157,242) 1,828,665

-------------------------------------------------

(236,048) 1,582,158 (2,285,118) 1,433,660 CASH FLOWS FROM (USED IN)

INVESTING ACTIVITIES

Short term investments (567,558) - (2,300,835) -

Proceeds from

disposition of capital

assets 7,701 - 7,701 -

Additions to capital

assets (21,414) (106,511) (37,266) (209,989)

-------------------------------------------------

(581,271) (106,511) (2,330,400) (209,989)

------------------------------------------------- CASH FLOWS FROM (USED IN)

FINANCING ACTIVITIES

Proceeds from issuance

of shares 3,876,257 - 3,876,257 -

Share issue costs (26,291) - (26,291) -

Purchase of company

shares - (25,088) - (25,088)

Proceeds from (Repayment

of) line of credit (503,051) - 2,558,445 (74,942)

Repayment of bank

overdraft - - - (127,214)

Repayment of Promissory

Notes - (20,000) - (40,000)

-------------------------------------------------

3,346,915 (45,088) 6,408,411 (267,244)

------------------------------------------------- Effect of foreign

exchange rate on cash - (195,478) - (84,919) Increase in cash and

cash equivalents 2,529,596 1,235,081 1,792,893 871,508 CASH and cash

equivalents, beginning

of period 1,265,827 1,136,432 2,002,530 1,500,005

------------------------------------------------- CASH and cash

equivalents, end

of period $3,795,423 $2,371,513 $ 3,795,423 $2,371,513

-------------------------------------------------

-------------------------------------------------

The TSX Venture Exchange and the AIM market of the London Stock Exchange have not reviewed and do not accept responsibility for the adequacy or accuracy of this release.

Advertisement
Advertisement