Diversinet Corp. Announces Fiscal 2007 Annual Results



    Company Delivers MobiSecure Wallet and Vault, Increases Revenues by 172%
    Through New Customer Wins

    OTCBB: DVNTF
    43,167,783 shares issued and outstanding

    TORONTO, Feb. 25 /CNW/ - Diversinet Corp. (OTCBB: DVNTF), a leading
provider of wireless data application and security infrastructure products and
services, today announced its fiscal 2007 results.
    For the year ended December 31, 2007, Diversinet reported revenue of
$4,537,000 compared to revenue of $1,667,000, for the year ended December 31,
2006. The company reported a net loss of $3,433,000 or $(0.09) per share for
the year ended December 31, 2007, compared to a net loss of $3,451,000 or
$(0.12) per share for the year ended December 31, 2006. Included in the
December 31, 2007 net loss are non-cash items of $1,543,000 in stock-based
compensation expense, depreciation and amortization of $120,000, and $887,000
relating to one time severance costs and legal costs relating to the
settlement of a lawsuit, totaling $2,550,000 or 74% percent of the net loss.
    The company recorded revenues of $1,352,000 in the three months ended
December 31, 2007, compared to $286,000, in the same period in the prior year.
The net loss for the three months ended December 31, 2007 was $1,326,000,
compared to a net loss for the same quarter in fiscal 2006 of $1,050,000.
Included in the three months ended December 31, 2007 net loss are non-cash
items of $794,000 in stock-based compensation expense, $33,000 for
depreciation and amortization, totaling $827,000 or 62% percent of the net
loss.
    The company had $8,394,000 in cash as of December 31, 2007. Cash used in
operations during the three months ended December 31, 2007 amounted to
$620,000 (and includes the one-time litigation settlement payment of $625,000)
compared to cash provided of $348,000 for the fourth quarter of 2006.
    "During 2007 Diversinet completed the development and commercial delivery
of the MobiSecure Wallet and Vault and Strong Authentication product suite.
For 2008 we will continue our focus on sales and product development and
expect to see new customer wins resulting from our expanded global sales
efforts" said Albert Wahbe, Diversinet's CEO.
    We expect customer launches of our Wallet and Vault products licensed in
2007 by the end of the second quarter of 2008. As a result of the long sales
cycle for our products, we anticipate that our quarterly operating results
will vary substantially for the foreseeable future and that 2008 revenues will
be concentrated in the latter part of the fiscal year and may not exceed 2007
revenues.

    Outlined below are the key milestones the company achieved during 2007:

    
    -  In January 2007 Diversinet introduced MobiSecure(TM) Wallet and Vault,
       new solutions that give users secure and immediate access to a host of
       personal, financial, and insurance identity information, as well as
       other critical, privileged data. Offering both convenience and
       security, the new MobiSecure products give banks and other financial
       institutions, insurance companies, and health care providers a unique
       and easy-to-use solution they can use to provide individuals with
       fast, convenient and secure access to new applications and services
       via mobile phone, PDA or PC browser.

    -  In April 2007 Chairman Albert Wahbe was named the new CEO of
       Diversinet. Mr. Wahbe brings seasoned leadership to Diversinet after a
       distinguished career as a senior executive at both Scotiabank and IBM.
       His primary objective is to turn the company from a product
       development organization into a sales and marketing driven company.
       Additionally, the Board appointed Philippe Tardif, an experienced
       securities and capital markets lawyer and Greg Milavsky, a seasoned
       investment banker and private equity executive, to the board
       completing a makeover of the board that began when Mr. Wahbe became
       Chairman and Diversinet's largest shareholder in June 2006.

    -  In May 2007 Diversinet entered into a three year license and VAR
       agreement to provide its MobiSecure Wallet and Vault mobile secure
       access solution to Intersections, a leading provider of identity theft
       protection and credit management solutions for consumers. With over
       5 million customers, this relationship will allow Intersections to
       offer users secure and immediate access to a host of personal,
       financial, and insurance identity information, as well as other
       critical, privileged data. Diversinet's MobiSecure Wallet and Vault
       will provide Intersections with a mobile and desktop security platform
       it can use to extend its core offering to a broad user base.

    -  In August 2007 Diversinet entered into a license and revenue share
       agreement to provide its MobiSecure Wallet and Vault mobile secure
       access solution to AllOne Health Group, to cross license certain
       software and share revenues from the sales of the combined software.
       Under the three year agreement, Diversinet will receive $2 million
       annually as a minimum commitment from AllOne. Diversinet and AllOne
       will initially focus on potential sales from the Blue Cross Blue
       Shield Association licensees and other customers looking to mobilize
       personal health records in the United States.

    -  In August 2007 Diversinet completed a private placement of 6,756,757
       common shares at $0.74 per common share, for gross proceeds of
       $5,000,000 to Hospital Service Association of Northeastern
       Pennsylvania, d/b/a Blue Cross of Northeastern Pennsylvania
       ("BCNEPA"). William Reed, executive vice president of BCNEPA has
       joined the Diversinet Board of Directors.
    

    About Diversinet (OTCBB: DVNTF)

    Diversinet Corp. (OTCBB: DVNTF) is a leading provider of 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 solutions 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 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 is based on the following
material factors and assumptions: that the products licensed in 2007 will be
launched by our customers to their end users in the second quarter of 2008 and
that we will be successful in licensing on products to new customers in 2008.
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. Such risks
include the risk that our customers may not be able to launch and make
available their product offering containing our products in the anticipated
timeframes; the risk that we may not be able to license our product to new
customers for a period of time. 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.



    
    Diversinet Corp.

    Consolidated Balance Sheets
    (In United States dollars)

    -------------------------------------------------------------------------
    As at December 31                                    2007           2006
    -------------------------------------------------------------------------
    Assets
    Current assets:
      Cash and cash equivalents                  $  8,394,286   $  5,146,315
      Accounts receivable                             122,687        154,109
      Prepaid expenses                                 63,105        141,081
    -------------------------------------------------------------------------
      Total current assets                          8,580,078      5,441,505
    -------------------------------------------------------------------------

      Capital assets, net                             379,993        388,723
    -------------------------------------------------------------------------
    Total assets                                 $  8,960,071   $  5,830,228
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Liabilities and Shareholders' Equity
    Current liabilities:
      Accounts payable                           $    249,502   $    172,291
      Accrued liabilities                             731,461        633,661
      Deferred revenue                                130,961        938,550
    -------------------------------------------------------------------------
      Total current liabilities                     1,111,924      1,744,502
    -------------------------------------------------------------------------

    Shareholders' equity:
      Share capital:
      Authorized:
        Unlimited common shares
      Issued and outstanding:
       43,167,783 (33,413,005 - 2006)
       common shares                               65,370,707     58,414,036
      Contributed surplus                           5,621,383      3,646,283
      Share purchase warrants                       1,555,453      3,291,832
      Deficit                                     (63,178,675)   (59,745,704)
      Accumulated other comprehensive income:
        Cumulative translation adjustment          (1,520,721)    (1,520,721)
    -------------------------------------------------------------------------
      Total shareholders' equity                    7,848,147      4,085,726

    Commitments and contingencies

    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity   $  8,960,071   $  5,830,228
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Diversinet Corp.

    Consolidated Statements of Earnings and Deficit
    (In United States dollars)

    -------------------------------------------------------------------------
    Year ended December 31                  2007          2006          2005
    -------------------------------------------------------------------------

    Revenue                         $  4,536,983  $  1,666,965  $  1,101,104
    Cost of sales                        239,878     1,041,096       562,987
    -------------------------------------------------------------------------
    Gross margin                       4,297,105       625,869       538,117

    Expenses:
    Research and development           2,265,755       831,925     1,241,599
    Sales and marketing                1,780,991       700,870     1,289,940
    General and administrative         3,738,545     2,484,556     2,301,032
    Depreciation and amortization        119,647       159,048       539,770
    Goodwill impairment charge                 -             -     1,894,690
    Customer asset impairment charge           -             -       330,768
    -------------------------------------------------------------------------
                                       7,904,938     4,176,399     7,597,799
    -------------------------------------------------------------------------

    Loss before the following         (3,607,833)   (3,550,530)   (7,059,682)

    Foreign exchange loss                 71,106        18,291        10,586
    Interest income and other income    (245,968)     (118,104)      (31,632)
    -------------------------------------------------------------------------

    Loss from continuing operations   (3,432,971)   (3,450,717)   (7,038,636)
    Loss from discontinued operations          -             -       (70,860)
    -------------------------------------------------------------------------

    Loss for the year and
     comprehensive loss               (3,432,971)   (3,450,717)   (7,109,496)

    Deficit, beginning of year       (59,745,704)  (56,294,987)  (49,185,491)
    -------------------------------------------------------------------------
    Deficit, end of year            $(63,178,675) $(59,745,704) $(56,294,987)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted loss per
     share from continuing
     operations                     $      (0.09) $      (0.12) $      (0.34)
    Basic and diluted loss per
     share                          $      (0.09) $      (0.12) $      (0.35)

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

    Weighted average number of
     common shares                    36,872,086    28,740,174    20,578,427

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



    Diversinet Corp.

    Consolidated Statements of Cash Flows
    (In United States dollars)

    -------------------------------------------------------------------------
    For the year ended December 31          2007          2006          2005
    -------------------------------------------------------------------------

    Cash provided by (used in):

    Operating activities:
      Loss for the year from
       continuing operations        $ (3,432,971) $ (3,450,717) $ (7,038,636)
      Items not involving cash:
        Depreciation and amortization    119,647       159,048       539,770
        Goodwill impairment charge             -             -     1,894,690
        Customer asset impairment
         charge                                -             -       330,768
        Stock-based compensation
         expense                       1,542,743       906,444       986,257
                                    -----------------------------------------
                                      (1,770,581)   (2,385,225)   (3,287,151)
      Change in non-cash operating
       working capital:
        Accounts receivable               31,422       (86,804)      258,634
        Prepaid expenses                  77,976       (23,836)       70,408
        Accounts payable                  77,211        19,191         6,016
        Accrued liabilities              190,900       406,982      (252,102)
        Deferred revenue                (807,589)      859,550       (86,343)
    -------------------------------------------------------------------------
      Cash used in continuing
       operations                     (2,200,661)   (1,210,142)   (3,290,538)
      Cash provided by discontinued
       operations                              -             -       (92,042)
    -------------------------------------------------------------------------
      Cash used in operations         (2,200,661)   (1,210,142)   (3,382,580)

    Financing activities:
      Issue of common shares, common
       share purchase options and
       warrants for cash               5,559,548     5,075,656     1,842,183
      Notes payable                            -             -        (4,611)
      Proceeds from sale of
       discontinued operations                 -             -       250,000
    -------------------------------------------------------------------------
      Cash provided by financing
       activities                      5,559,548     5,075,656     2,087,572

    Investing activities:
      Proceeds of disposition of
       short-term investments                  -             -     2,000,000
      Capital assets additions          (110,917)      (74,761)      (72,928)
    -------------------------------------------------------------------------
      Cash provided by (used in)
       investing activities             (110,917)      (74,761)    1,927,072

    -------------------------------------------------------------------------
    Increase in cash and cash
     equivalents                       3,247,970     3,790,753       632,064

    Cash and cash equivalents,
     beginning of year                 5,146,315     1,355,562       723,498

    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of year                    $  8,394,286  $  5,146,315  $  1,355,562
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental cash flow
     information:
      Interest received                  245,968       118,104        31,632
    -------------------------------------------------------------------------

    Supplemental disclosure relating
     to non-cash financing and
     investing activities:
      Issuance of shares to employees    516,409        84,543             -
      Issuance of shares for public
       relations services                 61,545             -             -
    -------------------------------------------------------------------------

    Cash and cash equivalents is
     comprised of:
      Cash                               857,609       674,421       235,391
      Cash equivalents                 7,536,677     4,471,894     1,120,171
    -------------------------------------------------------------------------
                                    $  8,394,286  $  5,146,315  $  1,355,562
    -------------------------------------------------------------------------
    





For further information:

For further information: Diversinet Contact: David Hackett, Chief
Financial Officer, (416) 756-2324 ext. 275

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