Versus Technology, Inc. ("Versus" or the "Company") announced revenues of $1,246,000 for the fiscal quarter ended April 30, 2006, a 3% increase over revenues for the same period in 2005. Revenues for the six months ended April 30, 2006, were $2,444,000, a 17% increase over the six months ended April 30, 2005.
Versus reported a net loss of $389,000 for the quarter compared to a net loss of $172,000 for the same period in 2005. The increase in net loss compared to 2005 is primarily attributable to higher sales and marketing and administrative expenses as well as additional interest expense due to increases in the prime lending rate and amortization of debt discount.
The Company reported a net loss of $764,000 for the six months ended April 30, 2006, compared to a net loss of $777,000 for the six months ended April 30, 2005.
Versus' cash balance at April 30, 2006, was $1,447,000. Cash at the beginning of the fiscal year was $1,682,000.
On March 31, 2006, management gave notice that the Company is exercising its right to redeem all outstanding Series B Secured Convertible Debentures. As a result of agreements with certain Debenture holders and a capital commitment made by a member of the Company's Board of Directors, the Company anticipates that 100% of the Debentures will be converted into common stock in keeping with the Debenture terms. Accordingly, none of the Company's cash will be required for the redemptions, which are expected to be completed by June 30, 2006, and long-term debt will be extinguished.
Pro forma application of the foregoing transactions to the April 30, 2006, statements would increase the net loss of the Company by approximately $1,374,000, to record a non-cash charge against earnings for the balance of the unamortized debt discount, and decrease liabilities and increase shareholders' equity, respectively, by $3,301,000.
For additional information, please refer to the attached unaudited consolidated financial statements.
Versus Technology, Inc. (Pink Sheets: VSTI.PK) (http://www.versustech.com ) (Versus) is the leader in the development and sale of context-aware systems used for the management of patient flow and medical assets and to improve caregiver/patient communications in medical and long-term care facilities. Versus also supplies Active RFID/IR tags and readers that make locating systems more precise, security systems more intelligent, data collection routines automatic, and asset management systems more efficient. Versus' systems, which are currently installed in hospitals, corporate facilities, government facilities, and other complexes, permit the automatic and accurate registry of essential management and business information. By monitoring the precise location of personnel or equipment and automatically recording events associated with their locations, the systems offer real-time asset and staff locating, automatic data collection, access/egress control, and a passive source of location data that facilitates scheduling and communication interfaces. Versus' proprietary locating systems are sold primarily through an expanding network of resellers and dealers.
Safe Harbor Provision
This document may contain forward-looking statements relating to future events, such as the development of new products, the commencement of production, or the future financial performance of the Company. These statements fall within the meaning of forward-looking information as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to a number of important risks and uncertainties that could cause actual results to differ materially including, but not limited to, economic, competitive, governmental, and technological factors affecting the Company's markets and market growth rates, products and their rate of commercialization, services, prices and adequacy of financing, and other factors. The Company undertakes no obligation to update, amend, or clarify forward-looking statements, whether because of new information, future events, or otherwise.
Report of Management
The accompanying consolidated balance sheets of Versus Technology, Inc. and Subsidiary as of April 30, 2006, and October 31, 2005, and the related consolidated statements of operations and cash flows for the periods ended April 30, 2006 and 2005, have been prepared by management.
Management has elected to omit substantially all of the footnote disclosures required by accounting principles generally accepted in the United States. If the omitted disclosures were included in the financial statements, they might influence the user's conclusions about the Company's financial position, results of operations, and cash flows. Accordingly, these financial statements are not designed for those who are not informed about such matters.
The reader should refer to the Versus Technology, Inc. 2005 Annual Report which is available at http://www.versustech.com/pages/annual_reports.aspx for further details regarding the Company's financial position at October 31, 2005.
Richard W. Ebersole
Chief Financial Officer
May 30, 2006
VERSUS TECHNOLOGY, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(Unaudited)
April 30, 2006 October 31, 2005
Assets
Current Assets
Cash and cash equivalents $1,447,000 $1,682,000
Accounts receivable (net of
allowance for doubtful accounts
of $23,000 and $0) 784,000 1,503,000
Inventories - purchased parts and
assemblies 656,000 282,000
Prepaid expenses and other assets 77,000 62,000
Total Current Assets 2,964,000 3,529,000
Property and Equipment
Machinery and equipment 314,000 298,000
Furniture and fixtures 81,000 76,000
Leasehold improvements 158,000 157,000
553,000 531,000
Less accumulated depreciation 496,000 484,000
Net Property and Equipment 57,000 47,000
Goodwill 1,533,000 1,533,000
Patents and Other Intangible Assets,
net of accumulated amortization of
$1,869,000 and $1,787,000 122,000 203,000
Deferred Financing Costs, net of
accumulated amortization of $126,000
and $124,000 8,000 10,000
Other non-current assets 114,000 109,000
$4,798,000 $5,431,000
See accompanying report of management.
VERSUS TECHNOLOGY, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(Unaudited)
April 30, 2006 October 31, 2005
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $530,000 $655,000
Accrued expenses 322,000 328,000
Deferred revenue - customer advance
payments 72,000 123,000
Total Current Liabilities 924,000 1,106,000
Long-Term Debt
Series B Convertible Debentures 3,301,000 3,036,000
Total Liabilities 4,225,000 4,142,000
Commitments and Contingencies
Shareholders' Equity
Common stock $0.01 par value;
120,000,000 and 75,000,000
shares authorized; 46,773,325 and
45,734,325 shares issued and
outstanding 468,000 457,000
Additional paid-in capital 37,254,000 37,218,000
Accumulated deficit (37,149,000) (36,386,000)
Total Shareholders' Equity 573,000 1,289,000
$4,798,000 $5,431,000
See accompanying report of management.
VERSUS TECHNOLOGY, INC. AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
Three Months Ended April 30, Six Months Ended April 30,
2006 2005 2006 2005
Revenues $1,246,000 $1,211,000 $2,444,000 $2,081,000
Operating Expenses
Cost of revenues 432,000 388,000 921,000 816,000
Research and
development 152,000 170,000 331,000 345,000
Sales and
marketing 425,000 335,000 828,000 789,000
General and
administrative 387,000 316,000 676,000 593,000
1,396,000 1,209,000 2,756,000 2,543,000
Income (loss) From
Operations (150,000) 2,000 (312,000) (462,000)
Other Income (Expense)
Interest income 11,000 5,000 24,000 21,000
Interest expense (111,000) (87,000) (216,000) (167,000)
Interest expense,
accretion of debt
discount (141,000) (86,000) (265,000) (162,000)
Net foreign
currency
transaction gain
(loss) 2,000 (6,000) 5,000 (7,000)
(239,000) (174,000) (452,000) (315,000)
Net Loss $(389,000) $(172,000) $(764,000) $(777,000)
Basic and Diluted
Net Loss Per Share $(0.01) $(-) $(0.02) $(0.02)
See accompanying report of management.
VERSUS TECHNOLOGY, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
For the six months ended April 30,
2006 2005
Operating Activities
Net loss $(764,000) $(777,000)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Depreciation 13,000 11,000
Amortization of intangibles 84,000 84,000
Interest expense related to
beneficial conversion 265,000 162,000
Changes in operating assets and
liabilities:
Accounts receivable, net 714,000 550,000
Inventories (374,000) (77,000)
Prepaid expenses and other current
assets (15,000) (36,000)
Accounts payable (125,000) (61,000)
Accrued expenses (7,000) (76,000)
Deferred revenues - customer advance
payments (51,000) (26,000)
Net cash used in operating activities (260,000) (246,000)
Investing Activities
Additions to property and equipment (23,000) (18,000)
Net cash used in investing activities (23,000) (18,000)
Financing Activities
Issuance of common stock 48,000 -
Repayment of long-term debt - (75,000)
Net cash provided by (used in) financing
activities 48,000 (75,000)
Net Decrease in Cash and Cash Equivalents (235,000) (339,000)
Cash and Cash Equivalents, at the
beginning of the period 1,682,000 1,616,000
Cash and Cash Equivalents, at the end
of the period $1,447,000 $1,277,000
Supplemental Cash Flow Information
Cash paid during the period for
interest $202,000 $154,000
See accompanying report of management.