Diversinet Reports First Quarter 2010 Financial Results

TORONTO, April 30 /PRNewswire-FirstCall/ - Diversinet Corp. (TSX Venture: DIV, OTCBB: DVNTF), a leading innovator of secure mobile applications, reported its first quarter 2010 results for the period ended March 31, 2010. All dollar amounts are in U.S. dollars.

Financial Highlights

Revenues for the first quarter were $576,000, compared to $2.0 million in the same period a year ago. Revenues in the first quarter of 2010 included $346,000 from the company's license and VAR agreement with Intersections, Inc., (Nasdaq: INTX) a global provider of consumer and corporate identity risk management services. The decrease in year over year revenue is largely due to AllOne Mobile Corporation's ("AllOne") failure to pay the quarterly minimum commitment from the license and revenue share agreement signed in Q3 2008.

Net loss for the quarter was $1,005,000 or $(0.02) per share, compared to net income in the same year-ago quarter of $182,000 or $0.00 per share. First quarter 2010 net loss included non-cash items of $223,000 in stock-based compensation, $16,000 in depreciation and amortization, and a foreign exchange gain of $188,000. This compares to non-cash items in the same year-ago quarter of $248,000 in stock-based compensation, $18,000 in depreciation and amortization, and a foreign exchange loss of $323,000.

Cash and cash equivalents at March 31, 2010 were $11,914,000 and $12,668,000 at December 31, 2009.

Operational Highlights

    -   Leveraging years of development in secure applications for the mobile
        world, Diversinet announced an increased focus on delivering secure
        mobile healthcare during the March CTIA Wireless Conference. Elements
        of the company's new mobile health strategy include introducing new
        products and product enhancements, creating customized portals to
        support mobile health applications, and expanding Diversinet's
        network of healthcare partners.

    -   Introduced Release 4.0 of MobiSecure(R) Wallet and Vault, which
        features new advanced personalization tools ideally suited to
        healthcare organizations. This new release allows healthcare
        organizations to reduce costs and improve patient care by extending
        their information management to the mobile world. With MobiSecure's
        turn-key capability, this can now be accomplished without undergoing
        extensive product development and testing, while also maintaining
        feature flexibility, security and branding.

    -   Introduced MobiSecure(R) SMS, a product that allows healthcare
        organizations and providers to exchange sensitive information with
        customers over a wider range of mobile devices and service plans,
        while maintaining a secure and trusted environment.

    -   On January 20, 2010, AllOne and AllOne Health Group, Inc. ("AHG")
        commenced a legal proceeding in Pennsylvania seeking the termination
        of the license and revenue share agreement upon payment of $3,000,000
        to Diversinet. Diversinet believes that the amounts due under the
        agreement, if terminated at this time, are substantially greater than
        AllOne and AHG's claim. In addition, and despite AllOne's contractual
        obligation to pay minimum quarterly amounts of $1.75 million, on
        March 1, 2010 AllOne failed to pay the quarterly minimum commitment
        due to Diversinet at that time. Diversinet has removed the legal
        proceedings to the Federal U.S. District Court located in
        Pennsylvania, where it has asserted, or is intending to assert,
        various counterclaims for breach of confidentiality, misappropriation
        of trade secrets and intellectual property, declaratory judgment,
        monetary damages and equitable relief. Diversinet is intending to
        enter into mediation with AllOne and AHG during the second quarter of
        2010.

Albert Wahbe, Diversinet's CEO and chairman stated: "During the quarter, the company continued the transition from research and development to the commercialization of one of the most feature-rich and capable secure application platforms for the mobile world. We introduced a major new release that makes implementing mobile health faster and easier to deploy, along with secure SMS capability that offers broader accessibility.

"With our new emphasis on mobile health, we expect to benefit from the strengthening and widespread market demand for the secure mobilisation of health information, driven by both clear economics for healthcare organizations and new U.S. federal legislation providing healthcare IT funding and incentives."

    Financial Summary
                                                       Q1 2010       Q1 2009
                                                   ------------  ------------
    Revenues                                          $575,724    $2,010,275
    Cost of revenues                                    19,704        41,937
    -------------------------------------------------------------------------
    Gross margin                                       556,020     1,968,338

    Expenses
      Research and development                         827,854       657,476
      Sales and marketing                              372,361       379,519
      General and administrative                       548,649       439,480
      Depreciation and amortization                     15,705        17,832
    -------------------------------------------------------------------------
                                                     1,764,569     1,494,307
    -------------------------------------------------------------------------
    Income (loss) before the undernoted             (1,208,549)      474,031
    Foreign exchange gain (loss)                       187,856      (323,042)
    Interest income                                     16,112        31,433
    -------------------------------------------------------------------------
    Net income (loss) for the period               $(1,004,581)     $182,422
    -------------------------------------------------------------------------
    Basic and diluted earnings (loss) per share         $(0.02)        $0.00

    Cash and cash equivalents                      $11,913,804   $10,718,887
    Total assets                                   $12,184,670   $11,053,134
    Total current liabilities                         $441,022      $578,786
    Total shareholders' equity                     $11,743,648   $12,422,081

    Weighted average basic common shares
     outstanding                                    48,500,871    47,031,935
    Weighted average fully diluted common shares
     outstanding                                    48,500,871    47,033,810

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, including the uncertainty of the outcome of the proceedings initiated by AllOne, 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.