Diversinet Corp. Announces Fiscal 2004 Annual Results
Thursday February 24, 8:30 am ET
TORONTO--(BUSINESS WIRE)--Feb. 24, 2005--Diversinet Corp. (OTCBB:DVNTF - News) -
Company Positioned to Deliver Mobile Authentication Services to Mass Market Mobile Device Users in 2005
Diversinet Corp. (OTCBB:DVNTF - News), a leading provider of mobile device security for the mobile data ecosystem, today announced its fiscal 2004 results.
For the twelve months ended December 31, 2004, Diversinet reported revenue of $7,045,000 compared to revenue of $8,522,000, for the twelve months ended December 31, 2003. The Company reported a net loss of $7,517,000 or $(0.62) per share, for the twelve months ended December 31, 2004, compared to a net loss of $4,959,000 or $(0.71) per share, for the twelve months ended December 31, 2003. Included in the December 31, 2004 net loss are non-cash items of $761,000 in stock-based compensation expense, depreciation and amortization of $936,000 and $3,025,000 in goodwill impairment charges, totaling $4,722,000 or 63% percent of the net loss.
The Company recorded revenues of $1,380,000 in the three months ended December 31, 2004, compared to $2,332,000, in the same period in the prior year. The net loss for the three months ended December 31, 2004 was $4,166,000, compared to a net loss for the same quarter in fiscal 2003 of $2,264,000. Included in the three months ended December 31, 2004 net loss are non-cash items of $256,000 in stock-based compensation expense, $336,000 for depreciation and amortization and $3,025,000 in goodwill impairment charges, totaling $3,617,000 or 86% percent of the net loss. EBITDA(i) before stock-based compensation expense for the fourth quarter of 2004 was $(554,000) compared to $(1,131,849) in the fourth quarter of 2003.
In December 2004, the Company successfully raised $2.65 million through an oversubscribed private placement. The Company had $2,734,000 in cash and short-term investments as of December 31, 2004. Cash resources used in continuing operations during the three months ended December 31, 2004 amounted to $861,000, compared to $757,000 for the fourth quarter of 2003.
2004 was a year of consolidation for Diversinet enabling the company to extend its market viability while maintaining its industry leading mobile device security intellectual capital and property. In 2005, Diversinet's management will focus on harnessing its eight years of research and product development in mobile device security to commercialize mobile-optimized, device-centric strong authentication services. The company will leverage its global channel and partner relationships to deliver a suite of standards-based mobile authentication products and services to the global mass market of mobile device users.
To deliver on its strategic initiatives for 2005, Diversinet:
- Focused cost reallocation and financing activities in 2004 to provide the necessary foundation in executing its strategy to deliver mobile authentication product and service offerings;
- Successfully secured $2.65 million in an oversubscribed private placement in December 2004 that included investment from its management, mobile industry executives and micro-cap institutional investors;
- Appointed several new key executives in January 2005 who bring strong mobile industry and operational expertise to the company;
- Concluded important pre-commercial research and development projects in January 2005 supporting initiatives for Open AuTHentication (OATH) reference architecture on mobile devices for One-Time-Password (OTP) solutions;
- Collaborated with Verisign, RIM, Symbian, PalmSource and Microsoft to further develop mobile authentication services utilizing the OATH reference architecture for mobile devices. Diversinet is now well-positioned as the category leader for OATH-based mobile authentication services.
About Diversinet Corp.
Diversinet is a leading mobile device security provider for the mobile data ecosystem. Diversinet products and services allow users to protect their identity, data and device for personal communications and commercial transactions. The Diversinet MobileSecure Client and suite of Mobile Authentication Services enable application providers, mobile network operators and security service providers to rapidly develop, deploy and manage secure mobile data services for the over 1.5 billion mobile device users worldwide. The Diversinet MobileSecure Client delivers the industry's first open mobile security platform to support OATH-Compliant strong authentication on mobile devices and networks. For more information about the initiative for Open AuTHentication (OATH) please go to www.openauthentication.org. For more information visit www.diversinet.com.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Certain information included in this press release (as well as information included in oral statements or other written statements made or to be made by the company) contains statements that are forward-looking, such as statements relating to anticipated future revenues of the company and success of current product offerings. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ materially from those expressed in any forward-looking statements made by or on behalf of the company. For a description of additional risks and uncertainties, please refer to the company's filings with the Securities and Exchange Commission.
(i)EBITDA is defined as operating revenues less cash operating expenses and therefore reflects earnings before interest, taxes, depreciation and amortization. Diversinet uses EBITDA, among other measures, to assess the operating performance of its ongoing business, and applies the use of such measure consistently from quarter to quarter. The term EBITDA does not have a standardized meaning prescribed by Canadian generally accepted accounting principles (GAAP) and therefore may not be comparable to similarly titled measures presented by other companies. EBITDA should not be construed as the equivalent of net cash flows from operating activities.
19,182,941 shares issued and outstanding
DIVERSINET CORP.
Consolidated Balance Sheets
(In United States dollars)
As at
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December 31 December 31 October 31
2004 2003 2002
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Assets
Current assets:
Cash and cash equivalents $ 734,058 $ 722,569 $ 608,692
Short-term investments 2,000,000 1,243,960 1,843,657
Accounts receivable
(including $nil, $62,293,
$110,148 from joint venture,
note 8) 761,978 1,081,760 265,672
Other receivables 52,189 85,748 15,933
Prepaid expenses 201,857 375,009 77,012
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Total current assets 3,750,082 3,509,046 2,810,966
Capital assets, net (note 4) 593,673 986,316 1,198,527
Purchased technology, net of
accumulated amortization of
$251,333, (2003-$62,833,
2002-$nil) (note 3) 125,667 314,167 -
Customer assets net of
accumulated amortization of
$441,024, (2003- $110,256,
2002-$nil) (note 3) 551,280 882,048 -
Goodwill (notes 2c and 3) 2,286,932 5,311,932 -
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Total assets $ 7,307,634 $ 11,003,509 $ 4,009,493
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Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable $ 591,356 $ 899,644 $ 352,025
Accrued liabilities (note 5) 710,923 1,351,400 698,137
Notes payable 4,611 28,192 -
Current portion of
promissory note - 300,000 -
Deferred revenue 165,343 477,449 9,228
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Total current liabilities 1,472,233 3,056,685 1,059,390
Promissory note - 300,000 -
Shareholders' equity:
Share capital (note 6):
Authorized:
Unlimited common shares
Issued and outstanding:
19,157,941, 11,043,027,
3,222,308 common
shares 52,445,135 49,191,482 40,677,645
Contributed surplus 1,265,549 126,173 72,680
Cumulative translation
adjustment (1,520,721) (1,520,721) (1,936,534)
Share purchase warrants
(note 6) 2,830,929 1,331,652 -
Deficit (49,185,491) (41,481,762) (35,863,688)
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Total shareholders' equity 5,835,401 7,646,824 2,950,103
Future operations (note 1)
Commitments and contingencies
(note 11)
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Total liabilities and
shareholders' equity $ 7,307,634 $ 11,003,509 $ 4,009,493
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DIVERSINET CORP.
Consolidated Statements of Earnings and Deficit
(In United States dollars)
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Fourteen-month
Year ended Year ended period ended Year ended
December 31 December 31 December 31 October 31
2004 2003 2003 2002
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Revenue
(including
$nil, $nil,
$85,138,
$127,034,
from joint
venture,
note 8) $ 7,044,888 $ 8,521,516 $ 8,562,676 $ 710,250
Cost of sales 5,238,727 6,622,495 6,622,495 -
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Gross margin 1,806,161 1,899,021 1,940,181 710,250
Expenses:
Research and
development 1,153,758 1,275,598 1,513,323 1,478,980
Sales and
marketing 1,729,568 2,487,881 2,656,099 1,103,722
General and
admin-
istrative 2,665,294 2,418,004 2,654,214 1,899,302
Other
(note 3) (171,000) - - -
Depreciation
and
amortization 935,981 681,719 740,049 404,015
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6,313,601 6,863,202 7,563,685 4,886,019
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Loss before
the
following (4,507,440) (4,964,181) (5,623,504) (4,175,769)
Interest
income and
other income (15,598) (5,430) (26,302) (111,096)
Interest
expense - - 20,872 -
Goodwill
impairment
charge
(note 2c) 3,025,000 - - -
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Loss for the
period (7,516,842) (4,958,751) (5,618,074) (4,064,673)
Deficit,
beginning
of period (41,481,762) (36,523,011) (35,863,688) (31,799,015)
Adjustment
for
cumulative
effect of
change in
accounting
for stock
based
compensation
(note 2p) (186,887) - - -
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Deficit,
end of
period $ (49,185,491) $ (41,481,762) $ (41,481,762) $ (35,863,688)
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Basic and
diluted
loss per
share
(note 7) $ (0.62) $ (0.71) $ (0.87) $ (1.37)
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Weighted
average
number of
common
shares 12,144,565 7,022,447 6,478,296 2,971,692
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DIVERSINET CORP.
Consolidated Statements of Cash Flows
(In United States dollars)
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Fourteen-month
Year ended Year ended Year ended Year ended
December 31 December 31 December 31 October 31
2004 2003 2003 2002
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Cash provided
by (used in):
Operating
activities:
Loss for
the period $ (7,516,842) $ (4,958,751) $ (5,618,074) $ (4,064,673)
Items not
involving
cash:
Depreciation
and
amortization 935,981 681,719 740,049 404,015
Goodwill
impairment
charge
(note 2c) 3,025,000 - - -
Stock-based
compensation
expense 760,916 825,010 825,010 -
Other
(note 3) (171,000) - - -
Unrealized
foreign
exchange
loss - 477,210 415,813 71,603
Change in
non-cash
operating
working
capital:
Accounts
receivable 319,782 2,421,204 2,425,570 (91,726)
Other
receivables 33,559 (55,757) (69,815) 47,094
Prepaid
expenses 173,152 13,457 (98,846) 300,700
Accounts
payable (308,288) (1,196,927) (571,786) (402,707)
Accrued
liabilities (640,477) 1,130,029 431,892 (777,766)
Deferred
revenue (312,106) (152,162) (156,371) (18,552)
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Cash used in
continuing
operations (3,700,323) (814,968) (1,676,558) (4,532,012)
Financing
activities:
Issue of
common shares,
common share
purchase
options and
warrants for
cash 4,565,503 2,920,746 2,920,646 3,108,317
Notes payable (23,581) (873,323) (873,323) -
Repayment of
promissory
notes payable (50,000) - - -
Bank
indebtedness - (240,979) (240,979) -
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Cash provided
by financing
activities 4,491,922 1,806,444 1,806,344 3,108,317
Investing
activities:
Short-term
investments (756,040) (269,777) 599,698 112,799
Acquisitions,
net of cash
received - (541,084) (541,084) -
Net (addition)
disposal of
capital
assets (24,070) 42,085 (74,523) (20,525)
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Cash provided
by (used in)
investing
activities (780,110) (768,776) (15,909) 92,274
Increase
(decrease) in
cash and cash
equivalents 11,489 222,700 113,877 (1,331,421)
Cash and cash
equivalents,
beginning of
period 722,569 499,869 608,692 1,940,113
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Cash and cash
equivalents,
end of period $ 734,058 $ 722,569 $ 722,569 $ 608,692
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Supplementary
non-cash
financing and
investing
activities:
Issue of
warrants on
acquisitions $ - $ 1,044,640 $ 1,044,640 $ -
Issue of
common shares
on acquisitions - 4,959,875 4,959,875 -
Issuance of
shares in
settlement
of debt 400,000 - - -
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Diversinet Corp. (OTC Bulletin Board:DVNTF - News)
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Contact:
Diversinet Corp.
David Hackett
416-756-2324, ext. 275
www.diversinet.com
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Source: Diversinet Corp. |
