UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER PURSUANT TO RULE 13A-16 AND L5D-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(JUNE 7, 2001)
DIVERSINET CORP.
_______________________________________________________________________
(Name of Registrant)
2225 Sheppard Avenue East, Suite 1700, Toronto, Ontario M2J 5C2
________________________________________________________________________
(Address of principal executive offices)
1. Press Release - Quarter ended April 30, 2001
2. Management's Discussion and Analysis of Financial Condition and Results of
Operations - Quarter ended April 30, 2001
Indicate by check mark whether the Registrant files or will file annual reports
under cover of Form 20-F or Form 40-F
Form 20-F X Form 40-F
-------- -------
Indicate by check mark whether the Registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934
YES NO XXX
--- ---
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Form 6-K to be signed on its behalf by the
undersigned, thereunto duly authorized
DIVERSINET CORP. - SEC FILE NO.0-23304
--------------------------------------
(REGISTRANT)
DATE: JUNE 7, 2001 BY:
-------------------------------------
RICHARD PALMER, VICE PRESIDENT & CFO
DIVERSINET
# OF SHARES ISSUED AND OUTSTANDING
26,369,708
FOR IMMEDIATE RELEASE:
DIVERSINET CORP. ANNOUNCES
SECOND QUARTER FISCAL 2001 RESULTS
TORONTO, CANADA - JUNE 7, 2001 - Diversinet Corp. (NASDAQ Small Cap: DVNT), a
leading provider of m-commerce security infrastructure solutions, today
announced its second quarter fiscal 2001 results.
Revenues of $127,000 were recorded for the Company in the three months ended
April 30, 2001, compared to $310,000 for the second quarter of fiscal 2000. The
net loss for the three months ended April 30, 2001 was $5,079,000, or $(0.19)
per share, compared to a net loss for the same quarter in fiscal 2000 of
$3,759,000, or $(0.16) per share. The increased net loss in fiscal 2001 is
attributable to increased product development and sales and marketing
activities, compared to the same period in the prior year.
For the six months ended April 30, 2001, Diversinet reported revenue of $698,000
compared to revenue of $629,000 for the six months ended April 30, 2000. The
Company reported a net loss of $10,516,000, or $(0.40) per share, for the six
months ended April 30, 2001, compared to $6,787,000, or $(0.30) per share, for
the same period last year.
As stated in the Company's first quarter report, the information technology
slowdown has resulted in a deferral of purchases by the Company's potential
customers. This has continued through the second quarter, resulting in reduced
revenue compared to the previous quarter and compared to the same quarter in the
prior year. The Company is in an early stage in an emerging market, and its
present revenues are predominantly from license sales and related Professional
Services revenue. Accordingly, the Company's revenues can fluctuate widely from
one period to the next, and results from one period may not be indicative of
future prospects.
Nagy Moustafa, President and CEO of Diversinet stated, "We are continuing our
efforts to execute our strategic plan and grow the business. Further progress
was made in the second quarter through relationship building and developing
partnered solutions that will facilitate deployment of the Company's
infrastructure products."
HIGHLIGHTS FOR Q2, 2001
Due to the complexity and expense of wireless technology, enterprises have been
cautious to enter into the wireless arena. In order to accelerate enterprise
adoption of wireless commerce, wireless vendors must work together to simplify
and reduce the cost of implementing secure wireless applications.
During the second quarter of fiscal 2001, Diversinet made significant progress
in easing the road to deployment for the enterprise with the announcement and
launch of practical and economical tools such as AirTight, and the Company's new
Hosted Development and Testing Service. As announced, AirTight is a strategic
alliance between Diversinet, Digital Signature Trust (DST), and Schlumberger to
offer an off-the-shelf wireless security pilot and implementation program. The
Hosted Development and Testing Service gives enterprises an opportunity to learn
about wireless PKI security and test out their own legacy applications on an
actual secure wireless server. The introduction of these programs will help make
secure wireless application implementations easier and more cost effective for
enterprises.
During the quarter, Diversinet also continued to improve its presence globally
with the addition of several new agreements in Europe and North America. In
addition to the AirTight initiative in North America, Diversinet entered into
several agreements with wireless companies in Europe, including Euronet, iPlato,
More Magic Software, Wireless Solutions, and Worldlink. A number of these new
partners are examining the full integration of Diversinet's security technology
into their wireless products, thereby enhancing the security of their wireless
technology.
Diversinet launched its new Passport Portal product for the provision of
end-to-end security solutions in m-commerce transactions over WAP-enabled
devices. The second quarter also saw the introduction of the Company's new SIM
V2.0 client, which fully integrates into Diversinet's application security and
Public-Key Infrastructure (PKI) suite of products allowing network operators and
application developers the ability to support strong user authentication and
digital signatures over both WAP and non-WAP GSM phones.
Diversinet was awarded a U.S. Patent for a System and Method for Handling
Permits during the quarter. The patent is for a unique certificate and permit
separation model that enhances the security and privacy of wired and wireless
e-commerce systems by improving the management of personal privileges in
advanced PKI security environments. The patented permit technology is ideal for
wireless m-wallets, wireless micro payments, receipts, e-coupons, and other
permissions-based transactions in both wired and wireless e-commerce and offers
enterprises improved cost efficiency in the implementation and operation of PKI
environments.
DIVERSINET CORP.
CONSOLIDATED BALANCE SHEETS
[in Canadian dollars]
(Unaudited)
APRIL 30 October 31
2001 2000
$ $
- ------------------------------------------------------------------------
ASSETS
CURRENT
Cash and cash equivalents 13,676,841 23,192,586
Accounts receivable 724,144 1,657,748
Other receivables 147,212 154,644
Prepaid expenses 669,820 567,470
- ------------------------------------------------------------------------
TOTAL CURRENT ASSETS 15,218,017 25,572,448
- ------------------------------------------------------------------------
Capital assets, net 2,218,410 1,855,966
Purchased technology, net 361,988 723,975
Deferred development costs, net - 618,726
- ------------------------------------------------------------------------
TOTAL ASSETS 17,798,415 28,771,115
========================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Accounts payable 672,519 420,140
Accrued liabilities 2,699,190 3,421,380
Deferred revenue 52,603 83,336
- ------------------------------------------------------------------------
TOTAL LIABILITIES 3,424,312 3,924,856
========================================================================
SHAREHOLDERS' EQUITY
Share capital 53,931,057 53,887,264
Contributed surplus 97,500 97,500
Deficit (39,654,454) (29,138,505)
- ------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 14,374,103 24,846,259
========================================================================
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY 17,798,415 28,771,115
========================================================================
DIVERSINET CORP.
CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
[in Canadian dollars]
Three and six months ended April 30, 2001
(Unaudited)
THREE MONTHS APRIL 30 SIX MONTHS APRIL 30
2001 2000 2001 2000
- ------------------------------------------------------------------ ---------------------------
$ $ $ $
REVENUE 127,268 309,945 697,923 628,782
- ------------------------------------------------------------------ ---------------------------
EXPENSES
Research and development 1,835,640 1,232,134 4,033,469 1,999,326
Sales and marketing 2,301,957 1,372,739 4,655,530 2,087,197
General and administrative 649,566 1,019,543 1,822,001 2,110,210
Depreciation and amortization 627,057 541,864 1,250,475 1,407,817
- ------------------------------------------------------------------ ---------------------------
5,414,220 4,166,280 11,761,475 7,604,550
- ------------------------------------------------------------------ ---------------------------
Loss before the following (5,286,952) (3,856,335) (11,063,552) (6,975,768)
Interest income, net (207,784) (97,032) (547,603) (188,576)
================================================================== ===========================
NET LOSS FOR THE PERIOD (5,079,168) (3,759,303) (10,515,949) (6,787,192)
================================================================== ===========================
NET LOSS PER SHARE (0.19) (0.16) (0.40) (0.30)
================================================================== ===========================
SHARES USED IN PER SHARE COMPUTATION 26,363,659 22,766,708 26,360,859 22,324,840
================================================================== ===========================
DEFICIT, BEGINNING OF PERIOD (34,575,286) (17,139,186) (29,138,505) (14,111,297)
Net loss for the period (5,079,168) (3,759,303) (10,515,949) (6,787,192)
DEFICIT, END OF PERIOD (39,654,454) (20,898,489) (39,654,454) (20,898,489)
================================================================== ===========================
DIVERSINET CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
[in Canadian dollars]
Three and six months ended April 30, 2001
(Unaudited)
THREE MONTHS SIX MONTHS SIX MONTHS SIX MONTHS
APRIL 30 APRIL 30 APRIL 30 APRIL 30
2001 2000 2001 2000
$ $ $ $
- ---------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net loss for the period (5,079,168) (3,759,303) (10,515,949) (6,787,192)
Add (deduct) items not requiring an outlay of cash:
Depreciation and amortization 627,057 541,864 1,250,475 1,407,817
Foreign exchange gain on debenture - - (78,864)
Interest on debenture - - 4,833
Changes in non-cash working capital
items related to operations:
Accounts receivable and other receivables 249,205 (311,037) 941,037 (334,487)
Prepaid expenses 459,295 (113,648) (102,353) (217,450)
Accounts payable and accrued liabilities (116,633) (173,873) (468,999) 195,533
Deferred Revenue (123,076) 46,177 (30,733) 60,390
- ---------------------------------------------------------------------------------------------------------------
CASH USED IN OPERATING ACTIVITIES (3,983,320) (3,769,820) (8,926,522) (5,749,420)
===============================================================================================================
FINANCING ACTIVITIES
Issue of common shares, common share
purchase options and warrants for cash 10,529 1,219,699 43,793 5,877,300
- ---------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY FINANCING ACTIVITIES 10,529 1,219,699 43,793 5,877,300
===============================================================================================================
INVESTING ACTIVITIES
Additions to capital assets (157,252) (311,586) (633,016) (370,472)
- ---------------------------------------------------------------------------------------------------------------
CASH USED IN INVESTING ACTIVITIES (157,252) (311,586) (633,016) (370,472)
===============================================================================================================
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS DURING THE PERIOD (4,130,043) (2,861,707) (9,515,745) (242,592)
CASH AND CASH EQUIVALENTS,
BEGINNING OF THE PERIOD 17,806,884 10,022,527 23,192,586 7,403,412
===============================================================================================================
CASH AND CASH EQUIVALENTS,
END OF THE PERIOD 13,676,841 7,160,820 13,676,841 7,160,820
===============================================================================================================
INVESTOR TELECONFERENCE CALL
Diversinet's executive team will hold a conference call Friday, June 8, 2001 at
8:30 a.m. Eastern Time to discuss second quarter fiscal 2001 results. Investors
should contact The Investor Relations Group Inc. at 212-825-3210 for the dial-in
number. Investors are encouraged to listen to the live call from the home page
and investor relation's portion of the Company's Web site: http://www.dvnet.com.
--------------------
In order to hear this conference call on the website, your computer must be
appropriately configured. The webcast will be available for 90 days.
ABOUT DIVERSINET CORP.
Diversinet is enabling mobile e-commerce (m-commerce) services with its wireless
security infrastructure solutions. The Company has recently been confirmed by
the Yankee Group (reference; The Yankee Group Report: Wireless/Mobile
Technologies, Vol. 1, No. 7, September 2000, by Emily Williams and David
Berndt), as having the leading product technology for the delivery of end-to-end
wireless security infrastructure solutions to wireless device makers, ASPs and
operators, application software developers and network infrastructure providers.
For more information on Diversinet, visit the Company's web site at
www.dvnet.com.
- -------------
###
The Private Securities Litigation Reform Act of 1995 provides 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 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.
FOR MEDIA INQUIRIES FOR INVESTOR INQUIRIES
Diversinet Corp. The Investor Relations Group Inc., NY, NY
Sandra Lemaitre Juan Dominguez or Dian Griesel, Ph.D.
Tel: (416) 756-2324 Tel: (212) 825-3210
Email: pr@dvnet.com Email: TheProTeam@aol.com
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - QUARTER ENDED APRIL 30, 2001
Diversinet recorded revenue of $127,000 in the three months ended April 30,
2001 compared to $310,000 in the three months ended April 30, 2000. Revenue
increased to $698,000 in the six months ended April 30, 2001 from $629,000 in
the six months ended April 30, 2000. The Company's revenue is presently derived
primarily from the sale of licenses to its software products and related
professional services. License sale revenues are volatile in nature and past
performance is not indicative of future revenue.
The net loss for the three months ended April 30, 2001 was $5,079,000
compared to the three months ended April 30, 2000 of $3,759,000. The net loss
for the six months ended April 30, 2001 was $10,516,000 as compared to the six
months ended April 30, 2000 of $6,787,000. The increase in net loss was the
result of increasing investment in employees and research and development
required to grow and develop the business and its products.
Research and development expenses increased to $1,836,000 in the three
months ended April 30, 2001 compared to $1,232,000 in the three months ended
April 30, 2000, primarily attributable to a higher number of employees and
contractors resulting in increases in remuneration of $571,000.
Sales and marketing expenses were $2,302,000 in the three months ended
April 30, 2001 compared to $1,373,000 in the three months ended April 30, 2000.
The increase in sales and marketing expenses of $929,000 in the three months
ended April 30, 2001 is primarily attributable to a higher number of sales and
marketing employees reflected in increased remuneration of $390,000 and an
increase of $533,000 in promotions and trade shows.
General and administrative expenses were $650,000 in the three months ended
April 30, 2001 compared to $1,020,000 in the three months ended April 30, 2000.
The decrease in general and administrative expenses of $370,000 arises from the
net of larger foreign exchange gains of $636,000 and a reduction of professional
fees of $291,000, offset by increased remuneration costs of $192,000, an
increase in facilities and office expenses, resulting principally from the
leasing of new head office space, of $88,000, an increase in capital tax of
$185,000 an increase in public reporting costs of $86,000.
Interest income increased by $111,000 compared to the three months ended
April 30, 2000 as a result of having a cash balance that on average was $6.5
million higher than that period's average balance.
Amortization expense in the six months ended April 30, 2001 decreased to
$1,250,000 from $1,408,000 in the comparable period in 2000. The decrease is due
to the full amortization of the deferred development costs related to the
Passport Certificate Server.
Liquidity and Capital Resources
- ----------------------------------
Cash and cash equivalents as at April 30, 2001 were $13,677,000 compared to
$7,161,000 as at April 30, 2000. The increase in cash resources was primarily
due to the issuance of common shares of the Company, completed during August
2000, amounting to approximately $23,544,000. The ability of the Company to
continue operations is dependant on the commercialization of its security
infrastructure products and the Company's ability to obtain additional financing
to fund future operations. Management is of the opinion that sufficient working
capital will be obtained from operations and external financing to meet its
liabilities and commitments as they become due.