TORONTO, Canada, November 5, 2008 – 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® Total Protection service. MobiSecure® 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.
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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.
Contacts:
Diversinet
David Hackett
Chief Financial Officer
416-756-2324 ext. 275
dhackett@diversinet.com
| 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 2(c)) |
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 |
| |
|
|
| 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 |
| |
| Commitments and contingencies (note 10) |
| |
| 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. |
|