Diversinet Reports Second Quarter 2010 Financial Results

TORONTO, July 30 /CNW/ - Diversinet Corp. (TSX Venture: DIV, OTCBB: DVNTF), a leading innovator of secure mobile applications, reported its second quarter 2010 results for the period ended June 30, 2010. All dollar amounts are in U.S. dollars.

Financial Highlights

Revenues for the second quarter were $3.8 million, compared to $1.9 million in the same quarter a year ago. Revenues for the six months ended June 30, 2009 were $4.4 million, up 12% from $3.9 million in the same period in 2009. Revenues in the second quarter of 2010 included $3.4 million from the settlement agreement with AllOne Mobile Corporation ("AllOne") and $330,000 from the company's license and VAR agreement with Intersections, Inc.

Net income for the quarter was $5.3 million or $0.11 per share, compared to net income in the same year-ago quarter of $1.1 million or $0.02 per share. The net income for the six months ended June 30, 2010 was $4.3 million, or $0.09 per share, compared to $1.2 million or $0.03 per share in the similar six months of 2009.

Included in the second quarter net income was non-cash stock-based compensation, depreciation and amortization of $223,000 versus $259,000 in Q2 2009 and a foreign exchange loss of $210,000 versus a $707,000 gain in Q2 2009. The company recognized other income of $3.6 million from the settlement with AllOne including the return of the company's common shares from HSA.

Cash and cash equivalents at June 30, 2010 were $14.5 million as compared to $12.7 million at December 31, 2009.

    
    Operational Highlights

    -   In June 2010, AllOne and its parent company, AllOne Heath Group, Inc.
        ("AHG"), and Diversinet entered into a Settlement and Mutual Release
        Agreement whereby the 2008 license and revenue sharing agreement was
        terminated, including any future revenue sharing obligations and
        AllOne paid Diversinet $4 million. Additionally, the parent company
        of AHG, Hospital Service Association of Northeastern Pennsylvania,
        d/b/a Blue Cross of Northeastern Pennsylvania ("HSA"), returned to
        Diversinet all of the common shares of Diversinet it owned, totalling
        6,956,152 shares for cancellation, representing a reduction of
        approximately 14% of the issued and outstanding number of common
        shares. At the end of the second quarter there were 41.9 million
        issued and outstanding common shares. Furthermore, under the
        Settlement and Mutual Release Agreement the Stock Purchase Agreement
        dated August 31, 2007 between HSA and Diversinet was terminated,
        including certain common share put rights and board representation
        rights of HSA. Diversinet also retains complete ownership and control
        over its related intellectual property developed during the term of
        the 2008 license and revenue sharing agreement.

    -   In April 2010, Diversinet was awarded two new patents to provide
        wireless carriers, device vendors and other members of the mobile
        ecosystem advanced methods for resolving two of the industry's
        biggest problems: security and fragmentation. U.S. Patent No.
        7,680,755 covers the automatic detection and classification of a
        mobile device, such as a smartphone or feature phone. The second
        patent, Canadian Patent No. 2,365,441, provides unprecedented
        security for mobile digital communications of information, like those
        involved in financial transactions and maintaining patient health
        care records. With the award of these two new patents, Diversinet's
        intellectual property portfolio has 14 patents in the U.S., Canada
        and Israel, with 35 patents pending.

    -   At the end of June, Colonel Ronald Poropatich, M.D., the deputy
        director of the U.S. Army's Telemedicine and Advanced Technology
        Research Center, part of the U.S. Army Medical Research and Materiel
        Command, provided the House Veterans' Affairs Health Subcommittee
        hearing on wireless health technologies the latest results from the
        adoption of mCare, the Army's mobile health application for wounded
        warriors that is powered by Diversinet. As of June 1, 2010, mCare has
        delivered over 18,500 messages to more than 300 "warriors in
        transition." The initial rollout of mCare has been to patients
        assigned to five sites in Alabama; Florida; Illinois; Massachusetts;
        and Virginia. Four additional sites for mCare are currently under
        consideration.

    -   In May 2010, Diversinet hired Mark Trigsted to the new position of
        executive vice president, healthcare, with responsibilities for
        global business development and sales. Mr. Trigsted will lead the
        expansion of Diversinet's partner network and customer base in the
        rapidly growing market for mobile healthcare applications that easily
        and securely connect people with their healthcare information,
        providers and payers.
    

"This quarter marked the beginning of a third stage for Diversinet," said the company's chairman and CEO, Albert Wahbe. "Our first task was to secure the mobile infrastructure and build secure mobile applications. We established our technology across all existing mobile technologies, including iPhone, Android, BlackBerry or PCs and others, and we demonstrated these applications are highly secure and connected for the mobile world."

"Our subsequent relationships with Intersections and AllOne Mobile represented our second stage, where we rolled out our technology to live users. AllOne was particularly important, because they introduced us to the healthcare industry and helped with our mobile health care application.

"Now we have entered a third, very exciting stage. In this recent quarter as a result of the termination of the AllOne license and revenue sharing agreement we can now pursue the many opportunities in mobile healthcare. We are well financed, have proven product in the field, and own all of our intellectual property. In addition to the tremendous progress of mCare reported by the Army in June, we are up and running with a number of pilots. And our new executive vice president, Mark Trigsted, has set a new pace in developing our global business message of 'Healthcare. Connected and Protected.'"

    
    Financial Summary
                                                       Q2 2010       Q2 2009
                                                   -----------   ------------
    Revenues                                        $3,856,460    $1,944,683
    Cost of revenues                                       993        42,491
    -------------------------------------------------------------------------
    Gross margin                                     3,855,467     1,902,192

    Expenses
      Research and development                         970,172       689,483
      Sales and marketing                              387,315       379,198
      General and administrative                       534,243       472,904
      Depreciation and amortization                     16,276        18,799
    -------------------------------------------------------------------------
                                                     1,908,006     1,560,384
    -------------------------------------------------------------------------
    Income (loss) before the undernoted              1,947,461       341,808
    Foreign exchange gain (loss)                      (210,332)      706,820
    Interest income                                     12,036         7,133
    Other income                                     3,560,707             -
    -------------------------------------------------------------------------
    Net income for the period                       $5,309,872    $1,055,761
    -------------------------------------------------------------------------
    Basic and diluted earnings per share                 $0.11         $0.02

    Cash and cash equivalents                      $14,524,336   $10,671,462
    Total assets                                   $14,763,853   $11,172,543
    Total current liabilities                         $616,545      $383,913
    Total shareholders' equity                     $14,147,308   $10,788,630

    Weighted average basic common
     shares outstanding                             47,721,191    47,106,935
    Weighted average fully diluted common
     shares outstanding                             47,721,191    47,221,687
    

For complete financial statements, including the notes and management's discussion and analysis, please visit the investors section on our website at www.diversinet.com/AboutUs/Investors.html.

About Diversinet

Diversinet Corp. (TSX Venture: DIV, OTCBB: DVNTF) provides the healthcare industry with applications that securely connect people with their healthcare information, providers and payers - anyway, anytime and anywhere. Diversinet's reliable, end-to-end MobiSecure platform offers global, secure and cost-effective applications to meet rapidly growing needs for mobile personal health records. Connect with Diversinet Corp. at www.diversinet.com. Healthcare. Connected and Protected.

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 the 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 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.

SOURCE Diversinet Corp.

For further information: For further information: Company Contact, Diversinet Corp., David Hackett, Chief Financial Officer, 416-756-2324 ext. 275, dhackett@diversinet.com; Investor Relations, Liolios Group, Inc., Ron Both, Managing Director, 949-574-3860 ext 1710, rboth@liolios.com

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