VANCOUVER, CANADA--(Marketwire - Feb. 5, 2013) - Versatile Systems Inc. (TSX VENTURE:VV) announces its results for the second quarter of the 2013 fiscal year.

Revenue for the three months ended December 31, 2012 was $9,550,579, generating a gross profit of $1,842,628 or 19.3% of sales compared to $9,147,552, generating a gross profit of $1,951,833 or 21.3% of sales for the same quarter last year. The Net Loss for the quarter amounted to $494,389 ($0.00 per share) compared to the Net Loss of $263,695 ($0.00 per share) for the same period last year.

Highlights for the quarter included:

• Revenue for the three months ended December 31, 2012 was $9,550,579 compared to $9,147,552 for the same quarter last year, an increase of $403,027;
  
  
• The gross profit for the three months ended December 31, 2012 was $1,842,628 or 19.3% of sales compared to $1,951,833 or 21.3% of sales for the same quarter last year;
  
  
• The research and development expense for the quarter amounted to $322,849 compared to $275,847 for the same quarter last year. The Company incurred $105,277 for research and development activities related to an iPad application for Mobiquity Route™ and $176,317 primarily related to Smart Sign TM; and
  
  
• Deferred revenue at December 31, 2012 was $5,969,441 (of which $4,924,276 is expected to be recognized in the next four quarters) compared to $6,712,216 at June 30, 2012, a decrease of $742,775.
  
  

Revenue for the six months ended December 31, 2012 was $17,466,427 generating a gross profit of $3,675,407 or 21.0% of sales compared to $18,186,764 generating a gross profit of $3,742,211 or 20.6% of sales for the same period last year. The Net Loss for the period amounted to $898,683 ($0.01 per share) compared to $677,522 ($0.00 per share) for the same period last year.

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. © 2013 Versatile Systems Inc. All rights reserved.

Versatile Systems Inc.

Condensed Consolidated Statements of Financial Position

(Unaudited - Prepared by Management)

Expressed in U.S. dollars		December 31, 2012			June 30, 2012
			(unaudited)
ASSETS
Current Assets
	Cash and cash equivalents	$	70,780		$	434,725
	Accounts receivable		5,585,111			5,994,377
	Prepaid expenses		4,443,223			4,152,994
	Inventory		2,272,065			2,347,110
			12,371,179			12,929,206
Long-term accounts receivable			88,673			181,366
Long-term prepaid expenses			938,983			1,278,432
Investment in Equus			2,026,574			2,105,473
Capital Assets			200,905			251,591
Intangible assets			159,812			167,206
Deferred income tax assets			880,407			880,407
Goodwill			2,718,970			2,718,970
		$	19,385,503		$	20,512,651
LIABILITIES
Current Liabilities
	Line of credit	$	2,967,124		$	1,988,675
	Accounts payable and accrued liabilities		5,076,473			5,544,888
	Current portion of deferred revenue		4,924,276			5,292,359
			12,967,873			12,825,922
Deferred Revenue			1,045,165			1,419,857
			14,013,038			14,245,779
SHAREHOLDERS' EQUITY
	Share Capital		54,433,709			54,433,709
	Equity Reserve		4,633,592			4,629,219
	Deficit		(53,357,117	)		(52,458,434	)
	Accumulated other comprehensive loss		(337,719	)		(337,622	)
			5,372,465			6,266,872
		$	19,385,503		$	20,512,651

Versatile Systems Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited - Prepared by Management)

Expressed in U.S. dollars		Three months ended December 31							Six months ended December 31
			2012			2011			2012			2011
						(Restated)						(Restated)
SALES		$	9,550,579		$	9,147,552		$	17,466,427		$	18,186,764
COST OF SALES			7,707,951			7,195,719			13,791,020			14,444,553
			1,842,628			1,951,833			3,675,407			3,742,211
EXPENSES
	Selling and marketing		1,085,949			1,098,187			2,148,492			2,118,118
	General and administrative		845,714			827,851			1,654,730			1,788,978
	Research and development		322,849			275,847			559,095			519,957
	Amortization of capital assets		36,753			38,092			77,001			86,511
	Share-based compensation		2,187			4,279			4,373			8,749
	Foreign exchange loss (gain)		(2,588	)		21,287			9,546			22,111
			2,290,864			2,265,543			4,453,237			4,544,424
LOSS FROM OPERATIONS			(448,236	)		(313,710	)		(777,830	)		(802,213	)
	Interest expense		(19,899	)		(7,594	)		(38,814	)		(12,817	)
	Equity loss from Investment in Equus		(25,259	)		(25,534	)		(78,899	)		(79,450	)
	Loss on sale of capital assets and investments		-			(1,534	)		-			(1,534	)
LOSS BEFORE INCOME TAXES			(493,394	)		(348,372	)		(895,543	)		(896,014	)
Current income tax expense			(995	)		(995	)		(3,140	)		(2,340	)
Deferred income tax recovery			-			85,672			-			220,832
NET LOSS		$	(494,389	)	$	(263,695	)	$	(898,683	)	$	(677,522	)
Other comprehensive loss
	Foreign exchange translation		(1,015	)		(6,670	)		(97	)		(6,670	)
Total comprehensive loss		$	(495,404	)	$	(270,365	)	$	(898,780	)	$	(684,192	)
LOSS PER SHARE (basic and diluted)			($0.00	)		($0.00	)		($0.01	)		($0.00	)

Versatile Systems Inc.

Condensed Consolidated Statements of Changes in Shareholders' Equity

(Unaudited - Prepared by Management)

Expressed in U.S. dollars		Share Capital		Warrant Reserve		Equity Reserve		Deficit		Accumulated other comprehensive loss				Total
								(Restated)			(Restated)			(Restated)
Balance, June 30, 2011	$	54,433,709	$	42,000	$	4,578,470	$	(37,741,276	)	$	(326,261	)	$	20,986,642
Net loss		-		-		-		(677,522	)		-			(677,522	)
Foreign exchange on the translation of VMS-UK		-		-		-		-			(6,670	)		(6,670	)
Expiration of warrants		-				-		-			-			-
Share-based compensation expense		-		-		8,749		-			-			8,749
Balance, December 31, 2011		54,433,709		42,000		4,587,219		(38,418,798	)		(332,931	)		20,311,199
Balance, June 30, 2012		54,433,709		-		4,629,219		(52,458,434	)		(337,622	)		6,266,872
Net loss		-		-		-		(898,683	)		-			(898,683	)
Foreign exchange on the translation of VMS-UK		-		-		-		-			(97	)		(97	)
Share-based compensation expense		-		-		4,373		-			-			4,373
Balance, December 31, 2012	$	54,433,709	$	-	$	4,633,592	$	(53,357,117	)	$	(337,719	)	$	5,372,465

Versatile Systems Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited - Prepared by Management)

Expressed in U.S. dollars				Three months ended December 31						Six months ended December 31
				2012			2011			2012			2011
							(Restated)						(Restated)
OPERATING ACTIVITIES
	Net loss		$	(494,389	)	$	(263,695	)	$	(898,683	)	$	(677,522	)
	Items not involving cash
		Amortization of capital assets		36,753			42,491			77,001			95,000
		Share-based compensation		2,187			4,279			4,373			8,749
		Loss on sale of capital assets and investments		-			1,534			-			1,534
		Equity loss from Investment in Equus		25,259			25,534			78,899			79,450
		Unrealized foreign exchange loss (gain)		1,092			(16,712	)		1,092			(16,712	)
		Deferred income taxes		-			(85,672	)		-			(220,832	)
Cash flow used in operations before other items				(429,098	)		(292,241	)		(737,318	)		(730,333	)
		Net change in non-cash working capital		(462,265	)		(194,553	)		(584,966	)		139,438
				(891,363	)		(486,794	)		(1,322,284	)		(590,895	)
INVESTING ACTIVITIES
	Short term investments			-			(14,776	)		-			(14,776	)
	Proceeds from disposition of capital assets			-			19,089			-			20,430
	Intangible assets - contract cost additions			(59,574	)		(69,639	)		(137,979	)		(172,786	)
	Intangible assets - contract cost recognized			60,797			62,200			145,373			143,445
	Purchase of capital assets			(7,938	)		(102,095	)		(27,504	)		(109,304	)
				(6,715	)		(105,221	)		(20,110	)		(132,991	)
FINANCING ACTIVITIES
	Proceeds from (Repayment of) line of credit			703,174			160,144			978,449			(122,642	)
				703,174			160,144			978,449			(122,642	)
Decrease in cash and cash equivalents				(194,904	)		(431,871	)		(363,945	)		(846,528	)
Cash and cash equivalents, beginning of period				265,684			563,999			434,725			978,656
Cash and cash equivalents, end of period			$	70,780		$	132,128		$	70,780		$	132,128