Translate
Achieves Profitability in Q3
Completes $40 Million License and Revenue Share Agreement
Quarter over Quarter Revenues up 216%
TORONTO, Nov. 5 /CNW/ - Diversinet Corp. (TSX Venture: DIV, OTCBB: DVNTF), ("Diversinet" or "Company"), a leading provider of secure application platforms for the mobile world, today announced financial results for the third quarter of 2008. All dollar amounts are in U.S. dollars.
Revenues for the third quarter were $1,784,000, up 216 percent compared to $565,000 in the second quarter of 2008 and 41 percent from the third quarter of 2007. Revenues for the nine months ended September 30, 2008 were $2,690,000, down from $3,185,000 in the same period in 2007. During the third quarter of 2008 Diversinet signed a $40 million five-year worldwide license and revenue share agreement with AllOne Mobile Corporation ("AllOne").
Net income for the third quarter of 2008 was $142,000 or $0.00 per share compared to a net loss of $730,000, or $0.02 per share in the third quarter of 2007. Net loss for the nine months ended September 30, 2008 was $2,221,000, or $0.05 per share, compared to a net loss of $2,107,000 or $0.06 per share in the comparable period in 2007. Included in the net loss for the nine month period are non-cash stock-based compensation, depreciation and amortization of $339,000 ($467,000 in Q3 2007). Cash and cash equivalents at September 30, 2008 were $12,005,000 and $8,394,000 at December 31, 2007. Cash flow from operations grew to $4,103,000 in the third quarter of 2008, primarily due to the receipt of $4.5 million under the AllOne agreement. At September 30, 2008, Diversinet had no long-term debt.
"The third quarter of 2008 marks a significant period in Diversinet's history, reporting its first quarterly profit and its largest quarterly cash provided by operations of $4,103,000" stated Albert Wahbe, Chairman and CEO of Diversinet.
Company, customer, and product solution highlights include:
- In September, Diversinet signed an exclusive worldwide license and
revenue share agreement with AllOne, a subsidiary of Hospital Service
Association of Northeastern Pennsylvania to cross license certain
software and to share revenues from the secure mobile access to
personal health records and information. During the five year
agreement, Diversinet is to receive a minimum commitment fee of
$5.5 million in the first year, $7 million per year in years two and
three and $10 million per year in years four and five from AllOne.
The agreement may be cancelled after the third year if, through no
fault of either party, there are changes in market conditions, law or
regulation, or technology obsolescence. In addition, Diversinet also
completed a $500,000 statement of work for AllOne, bringing the
combined total to $40 million. This agreement replaces the agreement
with AllOne Health Group, Inc. signed in August 2007.
- During the third quarter of 2008, Diversinet refocused its sales
efforts primarily towards mobile personal health records and related
secured payments and identity protection.
- In June, Intersections launched Mobile Lockbox, a major enhancement
to the Identity Guard(R) Total Protection service. MobiSecure(TM)
Wallet and Vault mobile secure encrypted access solution is at the
heart of the offering. MobiSecure Wallet and Vault provides
Intersections with a mobile security platform to extend its core
Identity Guard offering by creating a host of new services that build
closer, more personal and "sticky" relationships with new and
existing customers.
- In April, AllOne launched its mobile application that uses
Diversinet's secure MobiSecure Wallet and Vault product line to place
personal health records (PHR) at consumers' fingertips through their
mobile phones. AllOne Mobile accesses an individual's PHR in a secure
environment and links to the users' mobile phones, giving them well-
organized, easy-to-use, 24/7 mobile access. Users can manage and
share their PHRs with physicians, hospitals, clinics and emergency
personnel helping to improve medical outcomes. AllOne data is stored
behind a password-protected encrypted channel through a partnership
with Diversinet. The application is downloaded wirelessly to phones
and is automatically updated with the most current security and
features available. This level of security and control gives users
the confidence and comfort to create, manage and enhance their PHRs
using the mobile phone or the Web.
Mr. Wahbe continued "By refocusing our global sales group, Diversinet is able to engage the global personal health record and identity management/security markets. Our platform allows us to continue to enhance and expand our product offering in order to grow our presence in our current markets, penetrate new markets and enhance our long term shareholder value."
Diversinet also intends to satisfy certain Director compensation fees through the issuance of common shares ("Common Shares") of Diversinet (the "Shares for Debt Transaction"). The Board of Directors of Diversinet has resolved to satisfy $200,000 of outstanding Board of Director compensation owed by the Corporation through the issuance of Common Shares at a deemed price of $0.62 per share. The issuance of such Common Shares will result in 322,580 additional Common Shares being issued from treasury. The Shares for Debt Transaction is subject to approval of the Shares for Debt Transaction by the TSX Venture Exchange and compliance with applicable securities laws.
Diversinet also announced that it has retained Spinnaker Capital Markets Inc. as its investor relations advisor and independent capital markets advisor. The advisory agreement is for a term of three months and is renewable thereafter. The mandate will be to focus on developing and expanding the network of investors, analysts, and financial intermediaries who are interested in following the Diversinet growth and investment story. The agreement also provides for a full range of investor relations services in exchange for a monthly retainer of Cdn$6,500 and 75,000 options to purchase Diversinet common shares.
About Diversinet
Diversinet Corp. (TSX Venture: DIV, OTCBB: DVNTF) is a leading provider of secure application platforms for the mobile world utilizing wireless authentication and access solutions that secure the personal identity, transactions and data of consumers over almost any mobile phone or handheld device. Diversinet's reliable, end-to-end MobiSecure Wallet and Vault products provide global, secure and cost effective applications to mobilize personal health records, financial services transactions and identity protection management. Connect with Diversinet Corp. at www.diversinet.com.
The Private Securities Litigation Reform Act of 1995 and Canadian securities laws provide a "safe harbour" 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 and the term of the agreement with AllOne Mobile Corporation. 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 available at www.sec.gov and Canadian securities regulatory authorities available at www.sedar.com.
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release.
Diversinet Corp.
CONSOLIDATED BALANCE SHEETS
(in United States dollars)
(Unaudited)
September 30 December 31
2008 2007
$ $
-------------------------------------------------------------------------
ASSETS
Current assets
Cash and cash equivalents 12,004,721 8,394,286
Accounts receivable, net (note 3) 193,058 122,687
Prepaid expenses 28,195 63,105
-------------------------------------------------------------------------
Total current assets 12,225,974 8,580,078
-------------------------------------------------------------------------
Property and equipment, net (note 4) 325,282 379,993
-------------------------------------------------------------------------
Total assets 12,551,256 8,960,071
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable 166,018 249,502
Accrued liabilities (note 5) 166,975 731,461
Deferred revenue 4,026,356 130,961
-------------------------------------------------------------------------
Total current liabilities 4,359,349 1,111,924
-------------------------------------------------------------------------
Commitments and contingencies (note 10) 799,962 1,045,019
Shareholders' equity
Share capital (note 6) 67,602,254 65,370,707
Contributed surplus 7,480,383 5,621,383
Share purchase warrants (note 6) 30,119 1,555,453
Deficit (65,400,128) (63,178,675)
Accumulated other comprehensive income:
Cumulative translation adjustment (1,520,721) (1,520,721)
-------------------------------------------------------------------------
Total shareholders' equity 8,191,907 7,848,147
-------------------------------------------------------------------------
Total liabilities and shareholders' equity 12,551,256 8,960,071
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to interim consolidated financial statements.
Diversinet Corp.
CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT AND COMPREHENSIVE
INCOME (LOSS)
(in United States dollars)
(Unaudited)
Three months ended Nine months ended
September 30 September 30
2008 2007 2008 2007
$ $ $ $
-------------------------------------------------------------------------
Revenues 1,784,136 1,262,063 2,690,440 3,184,907
Cost of revenues 154,968 64,238 305,791 167,134
-------------------------------------------------------------------------
Gross margin 1,629,168 1,197,825 2,384,649 3,017,773
Expenses
Research and
development 435,773 465,137 1,778,844 1,570,202
Sales and
marketing 491,866 420,132 1,388,167 979,631
General and
administrative 569,431 1,055,941 1,541,297 2,557,624
Depreciation and
amortization 27,216 30,028 79,256 86,702
-------------------------------------------------------------------------
1,524,286 1,151,864 4,787,564 2,835,716
-------------------------------------------------------------------------
Gain (loss)
before the
undernoted 104,882 (773,413) (2,402,915) (2,176,386)
Foreign exchange
loss (gain) (2,558) 28,172 (39,060) 75,672
Interest income (34,260) (71,203) (142,402) (145,454)
-------------------------------------------------------------------------
Gain (loss) for
the period and
comprehensive
loss 141,700 (730,382) (2,221,453) (2,106,604)
-------------------------------------------------------------------------
Deficit, beginning
of period (65,541,828) (61,121,926) (63,178,675) (59,745,704)
Gain (loss) for
the period 141,700 (730,382) (2,221,453) (2,106,604)
-------------------------------------------------------------------------
Deficit, end of
period (65,400,128) (61,852,308) (65,400,128) (61,852,308)
-------------------------------------------------------------------------
Basic and diluted
loss per share
(note 8) 0.00 (0.02) (0.05) (0.06)
Weighted average
common shares
outstanding 45,650,731 37,059,788 44,026,382 35,108,539
See accompanying notes to interim consolidated financial statements.
Diversinet Corp.
CONSOLIDATED STATEMENTS OF CASH FLOWS
( in United States dollars)
(Unaudited)
Three months ended Nine months ended
September 30 September 30
2008 2007 2008 2007
$ $ $ $
-------------------------------------------------------------------------
OPERATING ACTIVITIES
Loss from
continuing
operations for
the period 141,700 (730,382) (2,221,453) (2,106,604)
Add (deduct) items
not requiring an
outlay of cash:
Depreciation and
amortization 27,216 30,028 79,256 86,702
Stock-based
compensation
expense (note 7) 312,245 437,341 791,714 748,928
-------------------------------------------------------------------------
481,161 (263,013) (1,350,483) (1,270,974)
Changes in non-cash
operating working
capital items
related to
operations:
Accounts
receivable
and other
receivables (193,058) (141,054) (70,371) (63,020)
Prepaid expenses 14,591 17,667 34,910 122,341
Accounts payable (113,427) (108,090) (83,484) (15,054)
Accrued
liabilities (40,751) 363,323 (564,486) 344,449
Deferred revenue 3,954,422 123,364 3,895,395 (698,055)
-------------------------------------------------------------------------
Cash provided (used)
in operations 4,102,938 (7,803) 1,861,481 (1,580,313)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Issue of
common shares,
compensation
options, warrants
for cash 48,500 4,973,379 1,773,500 5,439,549
-------------------------------------------------------------------------
Cash provided by
financing
activities 48,500 4,973,379 1,773,500 5,439,549
-------------------------------------------------------------------------
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of
property and
equipment (10,631) (8,466) (24,546) (86,808)
-------------------------------------------------------------------------
Cash used in
investing
activities (10,631) (8,466) (24,546) (86,808)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net increase in
cash and cash
equivalents during
the period 4,140,807 4,957,110 3,610,435 3,772,428
Cash and cash
equivalents,
beginning of
the period 7,863,914 3,961,633 8,394,286 5,146,315
-------------------------------------------------------------------------
Cash and cash
equivalents,
end of the
period 12,004,721 8,918,743 12,004,721 8,918,743
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Supplementary
non-cash
transactions
Issuance of
shares to
employees
(note 6(a)(ii)) 48,750 - 120,250 131,019
Issuance of
shares for
public
relations
services (note - 11,395 - 46,045
-------------------------------------------------------------------------
Cash and cash
equivalents is
comprised of:
Cash 319,230 182,455
Cash equivalents 11,685,491 8,736,288
-------------------------------------------------------------------------
12,004,721 8,918,743
-------------------------------------------------------------------------
See accompanying notes to interim consolidated financial statements.