Company News: Page (1) of 1 - 11/29/12

Versatile Reports First Quarter Results

Improved Gross Profit and Reduced Expenses

November 29, 2012 --

VANCOUVER, CANADA -- (Marketwire) -- 11/29/12 -- Versatile Systems Inc. (TSX VENTURE:VV) announces its results for the first quarter of the 2013 fiscal year.

Revenue for the three months ended September 30, 2012 was $7,915,848, generating a gross profit of $1,832,779 or 23.2% of sales compared to $9,039,212, generating a gross profit of $1,790,378 or 19.8% of sales for the same quarter last year. The Loss from Operations for the quarter amounted to $329,594 compared to $488,503 for the same quarter last year, an improvement of $158,909. The Net Loss for the quarter amounted to $404,094 ($0.00 per share) compared to the Net Loss of $413,827 ($0.00 per share) for the same period last year.

Highlights for the quarter included:

-- Revenue for the three months ended September 30, 2012 was $7,915,848 compared to $9,039,212 for the same quarter last year, a decrease of $1,123,364; -- The gross profit for the three months ended September 30, 2012 was $1,832,779 or 23.2% of sales compared to $1,790,378 or 19.8% of sales for the same quarter last year; -- The Earnings before interest, taxes, depreciation and amortization ("EBITDA") loss for the three months ended September 30, 2012 was $289,346 compared to an EBITDA loss of $440,084 for the same quarter last year, an improvement of $150,738; -- The research and development expense for the quarter amounted to $236,246 compared to $244,110 for the same quarter last year; -- Deferred revenue at September 30, 2012 was $6,453,971 (of which $5,269,399 is expected to be recognized in the next four quarters) compared to $6,047,097 at September 30, 2011, an increase of $406,874; and -- The expenses for the quarter were lower than any previous quarter in the last two years.


The research and development expense for the quarter amounted to $236,246 compared to $244,110 for the same quarter last year. During the current quarter, the Company incurred $87,728 for research and development activities related to an iPad application for Mobiquity Sell, Mobiquity Route(TM) and $106,956 primarily related to Smart Sign(TM).

About Versatile

Versatile provides business solutions that enable companies to improve sales, marketing and distribution of their products. Versatile also provides information technology services for the implementation, maintenance and security of mission-critical computer environments. Versatile has the ability to architect solutions involving both proprietary and third party components. For more information: www.versatile.com.

Forward-Looking Statements

This document may contain forward-looking statements relating to Versatile's operations or to the environment in which it operates, which are based on Versatile's operations, estimates, forecasts and projections. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict or are beyond Versatile's control. A number of important factors including those set forth in other public filings could cause actual outcomes and results to differ materially from those expressed in these forward-looking statements. Consequently, readers should not place any undue reliance on such forward-looking statements. In addition, these forward-looking statements relate to the date on which they are made. Versatile disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

All amounts are expressed in U.S. dollars unless otherwise stated. 2012 Versatile Systems Inc. All rights reserved.

---------------------------------------------------------------------------- Versatile Systems Inc. Condensed Consolidated Statements of Financial Position (Unaudited - Prepared by Management) ---------------------------------------------------------------------------- September 30, June 30, Expressed in U.S. dollars 2012 2012 ---------------------------------- (unaudited) ASSETS Current Assets Cash and cash equivalents $ 265,684 $ 434,725 Accounts receivable 5,523,198 5,994,377 Prepaid expenses 4,472,890 4,152,994 Inventory 2,395,005 2,347,110 ---------------------------------- 12,656,777 12,929,206 Long-term accounts receivable 135,489 181,366 Long-term prepaid expenses 1,068,012 1,278,432 Investment in Equus 2,051,833 2,105,473 Capital Assets 229,989 251,591 Intangible assets 161,035 167,206 Deferred income tax assets 880,407 880,407 Goodwill 2,718,970 2,718,970 ---------------------------------- $ 19,902,512 $ 20,512,651 ---------------------------------- ---------------------------------- LIABILITIES Current Liabilities Line of credit $ 2,263,950 $ 1,988,675 Accounts payable and accrued liabilities 5,320,745 5,544,888 Current portion of deferred revenue 5,269,399 5,292,359 ---------------------------------- 12,854,094 12,825,922 Deferred Revenue 1,184,572 1,419,857 ---------------------------------- 14,038,666 14,245,779 ---------------------------------- SHAREHOLDERS' EQUITY Share Capital 54,433,709 54,433,709 Equity Reserve 4,631,405 4,629,219 Deficit (52,862,728) (52,458,434) Accumulated other comprehensive loss (338,540) (337,622) ---------------------------------- 5,863,846 6,266,872 ---------------------------------- $ 19,902,512 $ 20,512,651 ---------------------------------- ---------------------------------- ---------------------------------------------------------------------------- Versatile Systems Inc. Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited - Prepared by Management) ---------------------------------------------------------------------------- Three months ended Expressed in U.S. dollars September 30 2012 2011 ------------------------ (Restated) SALES $7,915,848 $9,039,212 COST OF SALES 6,083,069 7,248,834 ------------------------ 1,832,779 1,790,378 ------------------------ EXPENSES Selling and marketing 1,062,543 1,019,931 General and administrative 809,016 961,127 Research and development 236,246 244,110 Amortization of capital assets 40,248 48,419 Share-based compensation 2,186 4,470 Foreign exchange loss 12,134 824 ------------------------ 2,162,373 2,278,881 ------------------------ LOSS FROM OPERATIONS (329,594) (488,503) Interest expense (18,915) (5,223) Equity loss from Investment in Equus (53,640) (53,916) ------------------------ LOSS BEFORE INCOME TAXES (402,149) (547,642) Current income tax expense (2,145) (1,345) Deferred income tax recovery - 135,160 ------------------------ NET LOSS $ (404,294) $ (413,827) ------------------------ ------------------------ Other comprehensive loss Foreign exchange translation (918) - ------------------------ Total comprehensive loss $ (405,212) $ (413,827) ------------------------ ------------------------ LOSS PER SHARE (basic and diluted) ($0.00) ($0.00) ------------------------ ------------------------ ---------------------------------------------------------------------------- Versatile Systems Inc. Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited - Prepared by Management) ---------------------------------------------------------------------------- Expressed in U.S. dollars Share Warrant Equity Capital Reserve Reserve ------------------------------------------- Balance, June 30, 2011 $ 54,433,709 $ 42,000 $ 4,578,470 Net loss - - - Expiration of warrants - (42,000) 42,000 Share-based compensation expense - - 4,470 ------------------------------------------- Balance, September 30, 2011 54,433,709 - 4,624,940 ------------------------------------------- ------------------------------------------- Balance, June 30, 2012 54,433,709 - 4,629,219 Net loss - - - Foreign exchange on the translation of VMS-UK - - - Share-based compensation expense - - 2,186 ------------------------------------------- Balance, September 30, 2012 $ 54,433,709 $ - $ 4,631,405 ------------------------------------------- ------------------------------------------- ---------------------------------------------------------------------------- Versatile Systems Inc. Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited - Prepared by Management) ---------------------------------------------------------------------------- Expressed in U.S. dollars Accumulated other comprehensive Deficit loss Total ------------------------------------------- (Restated) (Restated) Balance, June 30, 2011 $(37,741,276) $ (326,261) $20,986,642 Net loss (413,827) - (413,827) Expiration of warrants - - - Share-based compensation expense - - 4,470 ------------------------------------------- Balance, September 30, 2011 (38,155,103) (326,261) 20,577,285 ------------------------------------------- ------------------------------------------- Balance, June 30, 2012 (52,458,434) (337,622) 6,266,872 Net loss (404,294) - (404,294) Foreign exchange on the translation of VMS-UK - (918) (918) Share-based compensation expense - - 2,186 ------------------------------------------- Balance, September 30, 2012 $(52,862,728) $ (338,540) $ 5,863,846 ------------------------------------------- ------------------------------------------- Versatile Systems Inc. Condensed Consolidated Statements of Cash Flows (Unaudited - Prepared by Management) Three months ended Expressed in U.S. dollars September 30 2012 2011 -------------------------- (Restated) OPERATING ACTIVITIES Net loss $ (404,294) $ (413,827) Items not involving cash Amortization of capital assets 40,248 52,509 Share-based compensation 2,186 4,470 Equity loss from Investment in Equus 53,640 53,916 Deferred income taxes - (135,160) -------------------------- Cash flow used in operations before other items (308,220) (438,092) Net change in non-cash working capital (122,701) 333,991 -------------------------- (430,921) ( 104,101) INVESTING ACTIVITIES Proceeds from disposition of capital assets - 1,341 Intangible assets - contract cost additions (78,405) (103,147) Intangible assets - contract cost recognized 84,576 81,245 Purchase of capital assets (19,566) ( 7,209) -------------------------- (13,395) ( 27,770) -------------------------- FINANCING ACTIVITIES Proceeds from (Repayment of) line of credit 275,275 (282,786) -------------------------- 275,275 (282,786) -------------------------- Decrease in cash and cash equivalents (169,041) (414,657) Cash and cash equivalents, beginning of period 434,725 978,656 -------------------------- Cash and cash equivalents, end of period $ 265,684 $ 563,999 -------------------------- --------------------------

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contacts:
Versatile Systems Inc.
John Hardy
Chairman and CEO
1-800-262-1633 or International: 001-206-979-6760

Versatile Systems Inc.
Fraser Atkinson
CFO
1-800-262-1633
www.versatile.com


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