Versatile Reports First Quarter Results

Cash flow from operations of $149,408 for the quarter

• Press Release
• Source: Versatile Systems Inc.
• On 3:15 am EDT, Monday October 26, 2009

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 26, 2009) - Versatile Systems Inc. (TSX VENTURE:VV - News; AIM:VVS) announces its results for the first quarter of the 2010 fiscal year.

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Symbol	Price	Change
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Revenue for the three months ended September 30, 2009 was $11,616,225 generating a gross profit of $2,655,304 or 22.9% of sales compared to $14,303,851 generating a gross profit of $3,753,100 or 26.2% of sales for the same quarter last year. The Net Loss for the quarter amounted to $46,775 ($0.00 per share) compared to a Net Earnings of $56,615 ($0.00 per share) for the same period last year.

"Economic conditions remained challenging throughout the first quarter," said John Hardy, Chairman and CEO of Versatile. "Nevertheless, we made enhancements to our product set, spending $246,670 on research and development which will help drive future growth. In addition, we secured major orders from customers in the telecommunications, cable, manufacturing and education verticals, which enabled the Company to generate positive cash flow from operations."

Highlights for the quarter included:

- Cash and cash equivalents and short term investments at September 30, 2009 was $2,999,104 compared to $2,002,530 at June 30, 2009, an increase of $996,574;

- Revenue for the three months ended September 30, 2009 was $11,616,225 compared to $10,877,354 for the last quarter, an increase of $738,871;

- Earnings before interest, taxes and amortization (EBITDA) of $115,795 for the three months ended September 30, 2009 compared to $252,572 for the same period last year;

- The Net Loss for the quarter amounted to $46,775 ($0.00 per share) compared to Net Earnings of $56,615 ($0.00 per share) for the same period last year, a decrease of $103,390;

- The cash flow generated from operations, before non-cash working capital items amounted to $149,408 for the three months ended September 30, 2009 compared to cash flow generated from operations of $236,674 for the same period last year;

- The research and development expense for the quarter amounted to $246,670 compared to $424,752 for the same quarter last year;

- Deferred revenue at September 30, 2009 was $8,260,060 (of which $7,375,423 is expected to be recognized in the next four quarters) compared to $7,773,787 at September 30, 2008, an increase of $486,273;

- The Company acquired 531,680 shares of Equus Total Return, Inc., which is a public company trading on the NYSE under the symbol EQS;

- Completing development and certification of an Electronic Credit Application of Mobiquity Kiosk(TM) for a major Canadian bank to be deployed in a leading Canadian retailer and Canadian sports arena; and

- Completing development and certification testing for a new Electronic Credit Application of Mobiquity Kiosk(TM) for a major United States healthcare financing lender.

The working capital as of September 30, 2009 was $2,593,260, an increase of $22,839 compared to the working capital of $2,570,421 at June 30, 2009. The cash flow generated from operations, before non-cash working capital items amounted to $149,408 for the three months ended September 30, 2009 compared to cash flow generated from operations of $236,674 for the same period last year.

During the current quarter, the Company incurred $134,655 for research and development activities related to Mobiquity Route(TM), DEX and related mobile software products and $106,139 related to Mobiquity Transaction Engine 3.0(TM), Mobiquity Kiosk(TM) and research on Virtualization.

"The Company's cost structure in the current quarter is at its lowest level in four years," said Fraser Atkinson, CFO of Versatile. "Consequently, the Company was able to generate positive EBITDA and cash flow from operations."

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.

© 2009 Versatile Systems Inc. All rights reserved.

---------------------------------------------------------------------------
Versatile Systems Inc. 
Consolidated Balance Sheets 
(unaudited - prepared by management)
---------------------------------------------------------------------------

Expressed in U.S. dollars                  September 30, 2009 June 30, 2009
                                           ------------------ -------------
                                                   (unaudited)
ASSETS
Current Assets
 Cash and cash equivalents                      $   1,265,827 $   2,002,530
 Short term investments                             1,733,277             -
 Accounts receivable                                8,622,176     8,408,093
 Current portion of deferred contract costs         5,883,066     5,745,493
 Work-in-progress                                      16,560        92,145
 Prepaid expenses                                     382,061       286,709
 Inventory                                          1,522,585     1,376,746
 Future income tax benefits                           944,843       944,843
                                           --------------------------------
                                                   20,370,395    18,856,559

Long-term accounts receivable                         206,670       112,781
Deferred contract costs                               728,448       803,246
Capital Assets                                        726,638       794,008
Intangible assets                                     242,209       332,953
Future income tax benefits                          5,283,896     5,283,896
Goodwill                                            9,977,659     9,977,659
                                           --------------------------------
                                                $ 37,535,915  $  36,161,102
                                           --------------------------------
                                           --------------------------------

LIABILITIES
Current Liabilities
 Line of credit and bank overdraft              $   3,061,496 $           -
 Accounts payable and accrued liabilities           7,340,216     8,530,987
 Current portion of deferred revenue                7,375,423     7,755,151
                                           --------------------------------
                                                   17,777,135    16,286,138
Deferred Revenue                                      884,637       977,411
                                           --------------------------------
                                                   18,661,772    17,263,549
                                           --------------------------------

SHAREHOLDERS' EQUITY
 Share Capital                                     50,583,743    50,583,743
 Warrants                                             186,367       186,367
 Contributed surplus                                4,161,802     4,138,437
 Deficit                                          (35,775,990)  (35,729,215)
 Accumulated other comprehensive loss                (281,779)     (281,779)
                                           --------------------------------
                                                   18,874,143    18,897,553
                                                 $ 37,535,915 $  36,161,102
                                           --------------------------------
                                           --------------------------------


---------------------------------------------------------------------------
Versatile Systems Inc. Consolidated Statements of Earnings (Loss) and
 Deficit
(unaudited - prepared by management)
---------------------------------------------------------------------------

                                            Three Months ended September 30
Expressed in U.S. dollars                           2009               2008
                                            -------------------------------
SALES                                       $ 11,616,225       $ 14,303,851
COST OF SALES                                  8,960,921         10,550,751
                                            -------------------------------
                                               2,655,304          3,753,100
                                            -------------------------------

EXPENSES
 General and administrative                      874,348          1,323,060
 Selling and marketing                         1,361,701          1,769,825
 Research and development                        246,670            424,752
 Non recurrring expenses                          19,860                  -
 Foreign exchange (gain) loss                     14,542            (20,352)
 Stock-based compensation                         22,388              3,243
                                            -------------------------------
                                               2,539,509          3,500,528
                                            -------------------------------
Earnings before interest, taxes and
 amortization                                    115,795            252,572

 Amortization of capital assets                   66,624             69,900
 Amortization of intangible assets                90,674             90,674
 Interest expense                                  3,769             29,088
                                            -------------------------------

EARNINGS (LOSS) BEFORE INCOME TAXES              (45,272)            62,910
Current income tax expense                        (1,503)            (4,500)
Future income tax expense                              -             (1,795)
                                            -------------------------------
NET EARNINGS (LOSS)                              (46,775)            56,615
                                            -------------------------------
DEFICIT, BEGINNING OF PERIOD                 (35,729,215)       (35,063,096)
                                            -------------------------------
DEFICIT, END OF PERIOD                       (35,775,990)       (35,006,481)
                                            -------------------------------
                                            -------------------------------
EARNINGS (LOSS) PER SHARE (basic and
 diluted)                                         ($0.00)             $0.00
                                            -------------------------------
                                            -------------------------------


---------------------------------------------------------------------------
Versatile Systems Inc.
Consolidated Statements of Comprehensive (Loss) Income
(unaudited - prepared by management)
---------------------------------------------------------------------------

                                           Three Months ended September 30
Expressed in U.S. dollars                      2009                   2008
                                           -------------------------------
Net earnings (loss)                         (46,775)                56,615

Other comprehensive (loss) income
 Foreign currency translation adjustments         0                (33,429)
                                           -------------------------------
Comprehensive (loss) income                 (46,775)                23,186
                                           -------------------------------
                                           -------------------------------


---------------------------------------------------------------------------
Versatile Systems Inc.
Consolidated Statements of Cash Flows
(unaudited - prepared by management)
---------------------------------------------------------------------------

                                            Three Months ended September 30
Expressed in U.S. dollars                             2009             2008
                                            -------------------------------

CASH FLOWS FROM (USED IN) OPERATING
 ACTIVITIES
 Net earnings (loss)                        $      (46,775)  $       56,615
 Items not affecting cash
  Amortization of capital and intangible
   assets                                          178,125          166,902
  Stock-based compensation                          22,388            3,243
  Unrealized foreign exchange loss (gain)           (4,330)           8,119
  Future income tax expense (benefit)                    -            1,795
                                            -------------------------------
 Cash flow from (used in) operations before
  other items                                      149,408          236,674
  Net change in non-cash working capital
   items                                        (2,198,478)        (385,172)
                                            -------------------------------
                                                (2,049,070)        (148,498)

CASH FLOWS FROM (USED IN) INVESTING
 ACTIVITIES
 Short term investments                         (1,733,277)               -
 Additions to capital assets                       (15,852)        (103,478)
                                            -------------------------------
                                               ( 1,749,129)       ( 103,478)
                                            -------------------------------

CASH FLOWS FROM (USED IN) FINANCING
 ACTIVITIES
 Proceeds from (Repayment of) line of credit     3,061,496          (74,942)
 Repayment of bank overdraft                             -         (127,214)
 Repayment of Promissory Notes                           -          (20,000)
                                            -------------------------------
                                                 3,061,496         (222,156)
                                            -------------------------------

Effect of foreign exchange rate on cash                  -          110,559

Increase (decrease) in cash and cash
 equivalents                                      (736,703)        (363,573)

CASH and cash equivalents, beginning of
 period                                          2,002,530        1,500,005

                                            -------------------------------
CASH and cash equivalents, end of period    $    1,265,827   $    1,136,432
                                            -------------------------------
                                            -------------------------------

The TSX Venture Exchange and the AIM market of the London Stock Exchange have not reviewed and do not accept responsibility for the adequacy or accuracy of this release.

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

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