TIDMVVS 
 
Versatile Reports Third Quarter Results 
FOR:  VERSATILE SYSTEMS INC. 
 
TSX VENTURE SYMBOL:  VV 
AIM SYMBOL:  VVS 
 
June 1, 2010 
 
Versatile Reports Third Quarter Results 
 
VANCOUVER, CANADA--(Marketwire -- June 1, 2010) - Versatile Systems Inc. (TSX VENTURE:VV)(AIM:VVS) announces its 
results for the third quarter of the 2010 fiscal year. All amounts are expressed in U.S. dollars unless otherwise 
stated. 
 
Revenue for the three months ended March 31, 2010 was $9,795,481 generating a gross profit of $2,301,779 or 23.5% of 
sales compared to $10,877,354 generating a gross profit of $2,323,987 or 21.4% of sales for the same quarter last year. 
The EBITDA loss for the quarter amounted to $405,837 excluding the Non-recurring expense of $525,656 compared to an 
EBITDA loss of $372,057 excluding the Non-recurring expense of $160,158 for the same period last year. 
 
"Oracle's acquisition of Sun Microsystems was completed during the quarter. The acquisition created uncertainty amongst 
our customer base, and had a negative effect on both our pipeline and top line revenue which continued throughout the 
quarter," said John Hardy, Chairman and CEO of Versatile. "Nevertheless, we generated substantially the same gross 
profit dollars, used less cash to fund operations, and had an operational loss less than the comparable quarter last 
year." 
 
Highlights for the quarter included: 
 
- Cash and cash equivalents at March 31, 2010 was $1,929,538 compared to $2,002,530 at June 30, 2009; 
 
- Short term investment of 822,031 shares of Equus Total Return, Inc. which is a public company trading on the NYSE 
under the symbol EQS; 
 
- Revenue for the three months ended March 31, 2010 was $9,795,481 compared to $10,877,354 for the same quarter last 
year, a decrease of $1,081,873; 
 
- Gross profit of $2,301,779 or 23.5% of sales as compared to a gross profit of $2,323,987 or 21.4% of sales for the 
same quarter last year; 
 
- Non-recurring expense of $525,656 (March 31, 2009 - $160,158) primarily for legal costs, incurred in the prosecution 
of an Arbitration matter, the trial of which lasted three weeks and was completed in March. The Arbitration dealt with a 
transaction that occurred in a prior period; 
 
- Cash flow used in operations (before working capital items and the Non recurring expense) was $316,576 compared to 
$413,962 for the same quarter last year; 
 
- EBITDA loss for the quarter amounted to $405,837 excluding the Non-recurring expense of $525,656 compared to an EBITDA 
loss of $372,057 excluding Non-recurring expense of $160,158 for the same period last year; 
 
- Deferred revenue at March 31, 2010 was $6,557,618 (of which $5,767,807 is expected to be recognized in the next four 
quarters) compared to $7,515,600 for the same quarter last year; 
 
- Net Loss for the quarter amounted to $816,850 ($0.01 per share) compared to a Net Loss of $572,955 ($0.00 per share) 
for the same period last year; 
 
- Working capital as of March 31, 2010 was $5,195,084, compared to the working capital of $2,570,421 at June 30, 2009, 
an increase of $2,624,663; and 
 
- Research and development expense for the quarter amounted to $185,289 compared to $278,701 for the same quarter last 
year. 
 
The working capital as of March 31, 2010 was $5,195,084, an increase of $2,624,663 compared to the working capital of 
$2,570,421 at June 30, 2009. 
 
Revenue for the nine months ended March 31, 2010 was $32,670,998 generating a gross profit of $7,617,163 or 23.3% of 
sales compared to $37,508,269 generating a gross profit of $9,116,482 or 24.3% of sales for the same period last year. 
The Net Loss before interest, taxes and amortization for the period amounted to $510,494 excluding the Non-recurring 
expense of $573,735 compared to $393,255 excluding the Non-recurring expense of $532,335 for the same period last year. 
 
"While other companies in similar sectors have experienced a drop in quarterly revenue of more than a third over the 
previous year, the Company has managed to maintain its customer base during these difficult economic times," said Fraser 
Atkinson, CFO of Versatile. 
 
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. (C) 2010 Versatile Systems Inc. All rights reserved. 
 
=-------------------------------------------------------------------------- 
Versatile Systems Inc. 
Consolidated Financial Statements 
(unaudited - prepared by management) 
March 31, 2010 
=-------------------------------------------------------------------------- 
 
=-------------------------------------------------------------------------- 
 
Consolidated Balance Sheets 
 
Consolidated Statements of Operations and Deficit 
 
Consolidated Statements of Comprehensive (Loss) Income 
 
Consolidated Statements of Cash Flows 
 
Notes to Consolidated Financial Statements 
 
=-------------------------------------------------------------------------- 
Versatile Systems Inc. 
Consolidated Balance Sheets 
(unaudited - prepared by management) 
=-------------------------------------------------------------------------- 
 
Expressed in U.S. dollars                     March 31, 2010  June 30, 2009 
                                              --------------  ------------- 
                                                  (unaudited) 
 
ASSETS 
Current Assets 
 Cash and cash equivalents                    $    1,929,538 $    2,002,530 
 Short term investments (note 3)                   2,726,160              - 
 Accounts receivable                               4,817,366      8,408,093 
 Current portion of deferred contract costs        4,154,312      5,745,493 
 Work-in-progress                                     92,630         92,145 
 Prepaid expenses                                    353,596        286,709 
 Inventory                                         1,705,666      1,376,746 
 Future income tax benefits (Note 9)                 944,843        944,843 
                                              ----------------------------- 
                                                  16,724,111     18,856,559 
 
Long-term accounts receivable                        281,060        112,781 
Deferred contract costs                              652,947        803,246 
Capital Assets                                       587,230        794,008 
Intangible assets                                     60,719        332,953 
Future income tax benefits (Note 9)                5,907,510      5,283,896 
Goodwill                                           9,977,659      9,977,659 
                                              ----------------------------- 
                                              $   34,191,236 $   36,161,102 
                                              ----------------------------- 
                                              ----------------------------- 
 
LIABILITIES 
Current Liabilities 
 Line of credit and bank overdraft (Note 4)   $      768,336 $            - 
 Accounts payable and accrued liabilities          4,992,884      8,530,987 
 Current portion of deferred revenue               5,767,807      7,755,151 
                                              ----------------------------- 
                                                  11,529,027     16,286,138 
 
Deferred Revenue                                     789,811        977,411 
                                              ----------------------------- 
                                                  12,318,838     17,263,549 
                                              ----------------------------- 
SHAREHOLDERS' EQUITY 
 Share Capital (Note 5)                           54,433,709     50,583,743 
 Warrants (Note 6)                                   186,367        186,367 
 Contributed surplus                               4,207,602      4,138,437 
 Deficit                                         (36,673,501)   (35,729,215) 
 Accumulated other comprehensive loss               (281,779)      (281,779) 
                                              ----------------------------- 
                                                  21,872,398     18,897,553 
                                              ----------------------------- 
                                              $   34,191,236 $   36,161,102 
                                              ----------------------------- 
                                              ----------------------------- 
 
     APPROVED BY THE DIRECTORS: 
 
     DIRECTOR: John Hardy                   DIRECTOR: Fraser Atkinson 
 
See Notes to Consolidated Financial Statements 
 
 
=-------------------------------------------------------------------------- 
Versatile Systems Inc. 
Consolidated Statements of Earnings (Loss) and Deficit 
(unaudited - prepared by management) 
=-------------------------------------------------------------------------- 
 
Expressed in        Three Months ended March 31  Nine Months ended March 31 
U.S. dollars                2010           2009         2010           2009 
                    ------------------------------------------------------- 
 
SALES               $  9,795,481   $ 10,877,354 $ 32,670,998   $ 37,508,269 
COST OF SALES          7,493,702      8,553,367   25,053,835     28,391,787 
                    ------------------------------------------------------- 
                       2,301,779      2,323,987    7,617,163      9,116,482 
                    ------------------------------------------------------- 
EXPENSES 
 General and 
  administrative         944,266        899,421    2,918,759      3,500,901 
 Selling and 
  marketing            1,490,778      1,515,711    4,471,554      5,002,847 
 Research and 
  development            185,289        278,701      679,043      1,094,541 
 Non recurring 
  expenses               525,656        160,158      573,735        532,335 
 Foreign exchange 
  (gain) loss             63,698           (485)     (10,914)       (97,244) 
 Stock-based 
  compensation            23,585          2,696       69,215          8,692 
                    ------------------------------------------------------- 
                       3,233,272      2,856,202    8,701,392     10,042,072 
                    ------------------------------------------------------- 
Earnings (loss) 
 before interest, 
 taxes and 
 amortization           (931,493)      (532,215)  (1,084,229)      (925,590) 
 
 Amortization of 
  capital assets          61,957         91,598      190,868        248,904 
 Amortization of 
  intangible assets       90,674         90,675      272,023        272,024 
 Interest expense          7,781         (1,648)      21,991         27,794 
 Gain on sale of 
  investments                  -              -       (4,952)             - 
                    ------------------------------------------------------- 
EARNINGS (LOSS) 
 BEFORE INCOME TAXES  (1,091,905)      (712,840)  (1,564,159)    (1,474,312) 
 
Current income 
 tax expense                (993)       (43,748)      (3,741)       (64,292) 
Future income tax 
 benefit                 276,048        183,633      623,614        489,093 
                    ------------------------------------------------------- 
NET EARNINGS (LOSS)     (816,850)      (572,955)    (944,286)    (1,049,511) 
                    ------------------------------------------------------- 
 
DEFICIT, BEGINNING 
 OF PERIOD           (35,856,651)   (35,539,652) (35,729,215)   (35,063,096) 
 
                    ------------------------------------------------------- 
 
DEFICIT, END OF 
 PERIOD              (36,673,501)   (36,112,607) (36,673,501)   (36,112,607) 
                    ------------------------------------------------------- 
                    ------------------------------------------------------- 
 
EARNINGS (LOSS) 
 PER SHARE (basic 
 and diluted)             ($0.01)        ($0.00)      ($0.01)        ($0.01) 
                    ------------------------------------------------------- 
                    ------------------------------------------------------- 
 
See Notes to Consolidated Financial Statements 
 
 
=-------------------------------------------------------------------------- 
Versatile Systems Inc. 
Consolidated Statements of Comprehensive (Loss) Income 
(unaudited - prepared by management) 
=-------------------------------------------------------------------------- 
 
Expressed in        Three Months ended March 31  Nine Months ended March 31 
U.S. dollars             2010              2009       2010             2009 
                    ------------------------------------------------------- 
 
 
Net earnings (loss)  (816,850)         (572,955)  (944,286)      (1,049,511) 
 
Other comprehensive 
 (loss) income 
 Foreign currency 
 translation 
 adjustments                0           (24,608)         0         (400,500) 
                    ------------------------------------------------------- 
 
Comprehensive 
 (loss) income       (816,850)         (597,563)  (944,286)      (1,450,011) 
                    ------------------------------------------------------- 
                    ------------------------------------------------------- 
 
See Notes to Consolidated Financial Statements 
 
 
=-------------------------------------------------------------------------- 
Versatile Systems Inc. 
Consolidated Statements of Cash Flows 
(unaudited - prepared by management) 
=-------------------------------------------------------------------------- 
 
 
Expressed in       Three Months ended March 31   Nine Months ended March 31 
U.S. dollars                 2010         2009           2010          2009 
                   -------------------------------------------------------- 
 
 
CASH FLOWS FROM 
 (USED IN) 
 OPERATING 
 ACTIVITIES 
 Net earnings 
  (loss)           $     (816,850) $  (572,955) $    (944,286) $ (1,049,511) 
 Items not 
  affecting 
  cash 
  Amortization of 
   capital and 
   intangible 
   assets                 171,385      182,273        520,372       527,256 
  Stock-based 
   compensation            23,585        2,696         69,215         8,692 
  Gain on sale of 
   investments                  -            -         (4,952)            - 
  Unrealized 
   foreign exchange 
   loss (gain)             55,696       (2,501)        13,157        33,531 
  Future income 
   tax benefit           (276,048)    (183,633)      (623,614)     (489,093) 
                   -------------------------------------------------------- 
Cash flow from 
 (used in) 
 operations before 
 other items             (842,232)    (574,120)      (970,108)     (969,125) 
 Net change in 
  non-cash working 
  capital items         1,211,698      309,926       (945,544)    2,138,591 
                   -------------------------------------------------------- 
                          369,466     (264,194)    (1,915,652)    1,169,466 
 
CASH FLOWS FROM 
 (USED IN) 
 INVESTING 
 ACTIVITIES 
 Short term 
  investments            (425,325)           -     (2,726,160)            - 
 Proceeds from 
  disposition of 
  capital assets           16,033        1,820         23,734         1,820 
 Additions to 
  capital assets          (35,950)     (24,472)       (73,216)     (234,461) 
                   -------------------------------------------------------- 
                         (445,242)     (22,652)    (2,775,642)     (232,641) 
                   -------------------------------------------------------- 
 
CASH FLOWS FROM 
 (USED IN) 
 FINANCING 
 ACTIVITIES 
 Proceeds from 
  issuance of 
  shares                        -            -      3,876,257             - 
 Share issue 
  costs                         -            -        (26,291)            - 
 Purchase of 
  company shares                -          709              -       (24,379) 
 Proceeds from 
  (Repayment of) 
  line of credit       (1,790,109)           -        768,336       (74,942) 
 Repayment of 
  bank overdraft                -            -              -      (127,214) 
 Repayment of 
  Promissory 
  Notes                         -            -              -       (40,000) 
                   -------------------------------------------------------- 
                       (1,790,109)         709      4,618,302      (266,535) 
                   -------------------------------------------------------- 
 
Effect of foreign 
 exchange rate 
 on cash                        -       15,269              -       (69,650) 
 
Increase in cash 
 and cash 
 equivalents           (1,865,885)    (270,868)       (72,992)      600,640 
 
CASH and cash 
 equivalents, 
 beginning of 
 period                 3,795,423    2,371,513      2,002,530     1,500,005 
 
                   -------------------------------------------------------- 
 
CASH and cash 
 equivalents, 
 end of period     $    1,929,538  $ 2,100,645  $   1,929,538  $  2,100,645 
                   -------------------------------------------------------- 
 
Supplementary 
 information 
 Cash paid for 
  interest expense $       11,170  $       757  $      25,842  $     26,558 
 Cash paid for 
  income taxes                440       54,089          3,403        84,694 
 
See Notes to Consolidated Financial Statements 
 
 
=-------------------------------------------------------------------------- 
Versatile Systems Inc. 
Notes to Consolidated Financial Statements 
For the period ended March 31, 2010 
(Unaudited - Prepared by Management) 
=-------------------------------------------------------------------------- 
 
1. Consolidated financial statement presentation: 
 
These unaudited interim consolidated financial statements at March 31, 2010 and the consolidated statements of 
operations and deficit, comprehensive income (loss) and cash flows for the periods ended March 31, 2010 and 2009, have 
been prepared in accordance with Canadian generally accepted accounting principles. These unaudited interim financial 
statements do not include all the disclosures required for annual audited financial statements and should be read in 
conjunction with the Company's annual audited consolidated financial statements and notes therein for the year ended 
June 30, 2009. 
 
The results of operations for the period ended March 31, 2010 are not necessarily indicative of the results for the full 
year ending June 30, 2010. All amounts herein, including the comparative figures, have been expressed in United States 
dollars unless otherwise noted. 
 
The financial statements as at and for the periods ended March 31, 2010 have not been reviewed or audited by the 
Company's auditor. 
 
2. Accounting Policies 
 
The accounting policies applied in these interim financial statements are consistent with those applied in the Annual 
financial statements. 
 
3. Short term investments 
 
The short term investments consists of 822,031 shares of Equus Total Return, Inc. which is a public company trading on 
the NYSE under the symbol EQS. The share price as at March 31, 2010 was $2.81 so the unrealized loss was $416,253. 
 
4. Bank Line of Credit 
 
The Company has a credit line facility for up to $5,800,000, which is limited to 70% of eligible accounts receivable of 
certain U.S. subsidiaries from a U.S. based financial institution. At March 31, 2010 this amounted to $2,390,592. The 
line of credit bears interest at the prime rate of lending as published in the Wall Street Journal and is secured with a 
first charge on the assets of these U.S. subsidiaries. 
 
5. Share Capital 
 
Authorized 
 Unlimited common shares without par value 
 
Issued and outstanding 
                                                       Number 
                                                    of shares        Amount 
                                                  ------------------------- 
                                                  ------------------------- 
 Issued and outstanding - June 30, 2009           118,285,643  $ 50,583,743 
 Issued in the second quarter                      39,000,000     3,876,257 
 Less share issue costs                                             (26,291) 
                                                  ------------------------- 
 
 Balance - March 31, 2010                         157,285,643  $ 54,433,709 
                                                  ------------------------- 
 
6. Warrants 
 
Issued and outstanding: 
                                          Exercise   Number of 
Expiry date                             Price CDN$    Warrants     Cost 
=---------------------------------------------------------------------- 
 
March 31, 2011                          $    0.569   1,411,808   63,309 
April 16, 2011                          $   0.6636     583,770   81,058 
January 22, 2012                        $     0.30     600,000   42,000 
                                                     ------------------ 
 
Balance - March 31, 2010                            2,595,578  186,367 
                                                     ------------------ 
                                                     ------------------ 
 
7. Stock Options 
 
                                                         Weighted 
                                     Number of   average exercise 
                                 Stock Options         price CDN$ 
                                 -------------------------------- 
                                 -------------------------------- 
 
Balance - June 30, 2009              9,160,000             $ 0.42 
Granted during the period                    - 
Forfeited during the period                  - 
Expired during the period           (1,179,000)            $ 0.28 
                                 -------------------------------- 
 
Balance - March 31, 2010              7,981,000            $ 0.44 
                                 -------------------------------- 
                                 -------------------------------- 
 
 
During the first quarter 600,000 stock options expired and in the second quarter 579,000 stock options expired. 
 
8. Non Recurring Expenses 
 
During the current quarter the Company recorded an additional provision, primarily for legal costs, for transactions 
occurring in prior periods. 
 
9. Income taxes 
 
Canadian GAAP requires a valuation allowance to be recorded against any future tax asset to the extent that it is more 
likely than not that the future income tax asset will not be realized. This is also the Company's stated accounting 
policy. 
 
Prior to the 2006 fiscal year the Company determined that it had not met this test so the Company recorded a full 
valuation allowance against the potential value of all of its tax losses and deductions available to be taken against 
future years' income tax returns. As a result there has been no future income tax asset. 
 
During the 2006 fiscal year, the Company determined that the U.S. subsidiaries were generating sufficient profits that 
they were more likely than not to utilize the losses and deductions attributable to these U.S. subsidiaries. 
Consequently, the Company concluded that the valuation allowance be reduced accordingly. The difference between the 
total value of these tax benefits less the valuation allowance is the amount of the future income tax asset that is 
recorded by the Company. 
 
The tax effects of temporary differences that give rise to significant portions of future income tax assets and future 
income tax liabilities at the statutory enacted rates are as follows: 
 
 
                                     March 31, 2010  June 30, 2009 
                                     --------------  ------------- 
                                         (unaudited) 
 
Future income tax assets 
 Tax losses and deductions               $8,909,872    $ 8,378,058 
 Capital assets                           1,134,697      1,134,697 
 Share issuance costs                       217,338        217,338 
 Other                                      392,741        392,741 
                                     ----------------------------- 
 
Future income tax assets                 10,654,648     10,122,834 
Valuation allowance                      (3,046,644)    (3,138,444) 
                                     ----------------------------- 
 
Net Future income tax asset               7,608,004      6,984,390 
Future income tax 
 liabilities - Goodwill                    (755,651)      (755,651) 
                                     ----------------------------- 
 
Net Future income tax asset               6,852,353      6,228,739 
 
Less current portion                       (944,843)      (944,843) 
                                     ----------------------------- 
Non-current portion of net 
 future income tax asset                 $5,907,510    $ 5,283,896 
                                     ----------------------------- 
 
 
During the three months ended March 31, 2010 the Company recorded a future income tax benefit of $276,048 (2009 - 
$183,633) related to the recognition of future income tax assets. 
 
10. Segmented Information 
 
The Company's only reportable segment is the development and sales of computer software, hardware and system integration 
services. 
 
The Company's assets and sales by geographic area are as follows: 
 
 
                                                        Three months ended 
                         March 31            June 30          March 31 
                             2010               2009       2010        2009 
                ----------------------------------------------------------- 
                       (unaudited)                   (unaudited) (unaudited) 
 
                   Capital assets,    Capital assets, 
                intangible assets  intangible assets 
                     and goodwill       and goodwill    Revenue     Revenue 
 
U.S. companies 
 United States        $10,622,060        $11,104,620 $9,637,272 $10,765,407 
 Canada                                                   8,841      27,686 
 Netherlands                                             16,579           - 
 France                                                  32,390      21,038 
 United Kingdom                                          16,884           - 
 Other                                                   18,154           - 
UK and Canadian 
 companies 
 United Kingdom             3,547              3,950     65,361      63,223 
 Canada                         -              2,046          -           - 
                ------------------------------------------------------------ 
 
                       10,625,607         11,110,616  9,795,481  10,877,354 
                ------------------------------------------------------------ 
                ------------------------------------------------------------ 
 
 
During the three months ended March 31, 2010 and 2009 the Company did not generate revenue from any one customer for 
more than 10% of the total revenue for the period. 
 
During the three months ended March 31, 2010 the Company purchased products and services from one vendor for $2,205,988 
(2009 - $4,704,496) representing 29.4% (2009 - 55.0%) of the cost of sales. 
 
 
=-------------------------------------------------------------------------- 
Versatile Systems Inc. 
Management Discussion and Analysis 
Nine months ended March 31, 2010 
=-------------------------------------------------------------------------- 
 
 
The following management discussion and analysis of the consolidated results of operations and financial condition of 
Versatile Systems Inc. (the "Company" or "Versatile") is made as of May 26, 2010 on the consolidated financial 
statements and notes for the nine months ended March 31, 2010. 
 
The consolidated financial statements of the Company have been prepared in accordance with Canadian generally accepted 
accounting principles ("Canadian GAAP") and are stated in United States dollars unless otherwise specified. The 
consolidated financial statements and management discussion and analysis have been reviewed and approved by the 
Company's Audit Committee as directed by the Company's Board of Directors. 
 
The preparation of financial statements in conformity with Canadian GAAP requires management to make estimates and 
assumptions, which affect the reported amounts of assets and liabilities and the disclosure of contingent assets and 
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the 
reported periods. Actual results could differ from those estimates. 
 
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. 
 
Non-GAAP Disclosure 
 
EBITDA is defined by the Company as net earnings before interest, income taxes, depreciation and amortization. The 
Company has included information concerning EBITDA because it believes that it may be used by certain investors as one 
measure of the Company's financial performance. EBITDA is not a measure of financial performance under Canadian GAAP and 
is not necessarily comparable to similarly titled measures used by other companies. EBITDA should not be construed as an 
alternative to operating income or to cash flows from operating activities (as determined in accordance with Canadian 
GAAP) as a measure of liquidity. 
 
In addition, the Company has included information concerning its cash flow from operations before the net change in non- 
cash working capital items as it may be used by certain investors as a measure of the Company's financial performance. 
 
Overview 
 
The Company's core business is developing solutions that solve customers' problems in the storage, security, 
transmission and collection of mission critical data. The Company's proprietary software applications, the Mobiquity(TM) 
Solution Suite, are a key component of this solution. This enables companies to improve the sales, marketing and 
distribution of their products. The Company delivers wireless/wired solutions to the consumer packaged goods, retail, 
financial, pharmaceutical, healthcare, and logistics verticals through an integrated combination of licensed software, 
professional services, and the re-sale of mobile-computing devices and related hardware. The Company also offers 
maintenance and support via a 24 hour call centre. 
 
Highlights of the Third quarter 
 
Highlights of the Company's operations for the quarter included: 
 
 
=-  Cash and cash equivalents at March 31, 2010 was $1,929,538 compared to 
    $2,002,530 at June 30, 2009; 
=-  Short term investment of 822,031 shares of Equus Total Return, Inc. 
    which is a public company trading on the NYSE under the symbol EQS; 
=-  Revenue for the three months ended March 31, 2010 was $9,795,481 
    compared to $10,877,354 for the same quarter last year, a decrease of 
    $1,081,873; 
=-  Gross profit of $2,301,779 or 23.5% of sales as compared to a gross 
    profit of $2,323,987 or 21.4% of sales for the same quarter last year; 
=-  Non-recurring expense of $525,656 (March 31, 2009 - $160,158) primarily 
    for legal costs, incurred in the prosecution of an Arbitration matter, 
    the trial of which lasted three weeks and was completed in March. The 
    Arbitration dealt with a transaction that occurred in a prior period; 
=-  Cash flow used in operations (before working capital items and the Non 
    recurring expense) was $316,576 compared to $413,962 for the same 
    quarter last year; 
=-  EBITDA loss for the quarter amounted to $405,837 excluding the Non- 
    recurring expense of $525,656 compared to an EBITDA loss of $372,057 
    excluding Non- recurring expense of $160,158 for the same period last 
    year; 
=-  Deferred revenue at March 31, 2010 was $6,557,618 (of which $5,767,807 
    is expected to be recognized in the next four quarters) compared to 
    $7,515,600 for the same quarter last year; 
=-  Net Loss for the quarter amounted to $816,850 ($0.01 per share) compared 
    to a Net Loss of $572,955 ($0.00 per share) for the same period last 
    year; 
=-  Working capital as of March 31, 2010 was $5,195,084, compared to the 
    working capital of $2,570,421 at June 30, 2009, an increase of 
    $2,624,663; 
=-  Research and development expense for the quarter amounted to $185,289 
    compared to $278,701 for the same quarter last year; and 
=-  The Company generated revenue of $722,162 from the State of PA, $706,270 
    from Music Choice, $491,970 from Motorola, $356,813 from Comcast, 
    $325,468 from Hershey and $316,520 from Thermo Fisher. 
 
 
Review of the Third quarter 
 
Revenue for the three months ended March 31, 2010 was $9,795,481 compared to $10,877,354 for the same quarter last year, 
a decrease of $1,081,873. During the current quarter the Company generated revenue of $722,162 from the State of PA, 
$706,270 from Music Choice, $491,970 from Motorola, $356,813 from Comcast, $325,468 from Hershey and $316,520 from 
Thermo Fisher. While the Company had repeat business from its existing customer base including Comcast, Tyco, Motorola, 
PASAP Software, Hershey, Thermo Fisher, and various retailers, universities and government organizations, the Company 
has been impacted by the overall macro-economic environment and continued to experience a slowdown in orders from 
customers for routine expenditures on infrastructure. 
 
The EBITDA loss for the quarter was $931,493 compared to an EBITDA loss of $532,215 for the same quarter last year. 
 
During the current quarter the Company recorded a Non-recurring expense consisting of an additional provision of 
$525,656 (March 31, 2009 - $160,158) primarily for legal costs, incurred in the prosecution of an Arbitration matter, 
the trial of which lasted three weeks and was completed in March. The Arbitration dealt with a transaction that occurred 
in a prior period. 
 
Excluding the Non recurring expenses and before working capital items the cash flow used in operations was $316,576 
compared to $413,962 for the same quarter last year. 
 
During the quarter the Company recorded a future income tax benefit of $276,048 compared to $183,633 for the same 
quarter last year. 
 
The Net Loss for the quarter amounted to $816,850 ($0.01 per share) compared to a Net Loss of $572,955 ($0.00 per share) 
for the same period last year. 
 
Cost of sales 
 
Cost of sales for the quarter amounted to $7,493,702 resulting in a gross profit of $2,301,779 or 23.5% of sales as 
compared to $8,553,367 resulting in a gross profit of $2,323,987 or 21.4% of sales for the same quarter last year. 
 
The Company determines its provision for inventory obsolescence based upon historical experience, expected inventory 
turnover, inventory aging and current condition, and current and future expectations with respect to product offerings. 
Assumptions underlying the provision for inventory obsolescence include future sales trends and product offerings, and 
the expected inventory requirements and inventory composition necessary to support these future sales and offerings. The 
estimate of the Company's provision for inventory obsolescence could materially change from period to period due to 
changes in product offerings and consumer acceptance of those products. At March 31, 2010 the Company had an inventory 
provision of $175,961 (June 30, 2009 - $172,569). 
 
General and administrative 
 
General and administrative expenses for the quarter amounted to $944,266 compared to $899,421 for the same quarter last 
year, an increase of $44,845. As a percentage of sales the general and administrative expenses were 9.6% in the quarter 
compared to 8.3% in the same quarter last year. 
 
Technology Investment 
 
Over the past ten years the Company has made a significant investment in the form of expenses to advance the abilities 
of its technology and resulting service offering. This investment does not contribute directly to revenues during the 
period that the research and development expenses are incurred. 
 
Research and development expense for the quarter amounted to $185,289 compared to $278,701 for the same quarter last 
year. The significant expense item in this category is salary and benefit costs. As a percentage of sales the research 
and development expenses are 2.0% in the quarter compared to 2.6% in the same quarter last year. The decrease in the 
overall expenditures on research and development expense can be attributed to the reduction in the number of research 
and development projects. 
 
During the current quarter the Company's technology investment related to enhanced product functionality and 
requirements from various partners: 
 
For the Mobiquity Route(TM) these included the following: 
 
=-  Developing support tools for the .NET and Visual Studio environments; 
    and 
=-  Developing tools to support the new 4G Windows Mobile 6 handhelds (such 
    as Intermec CN50 and Motorola MC55). 
 
 
For the Mobiquity Kiosk(TM), these included the following: 
 
=-  Enhancing the Electronic Credit Application engine for: the Spring 3.0 
    framework, nightly synchronization of kiosk configuration data, the web 
    service XML logging and log rotation processes, Directory Services for 
    user authentication and authorization, and PDF stamping abilities; 
=-  Integrating the Mobiquity Kiosk(TM)application framework on the Dell 
    Optiplex FX160 for a thin-client environment; 
=-  Integrating the Mobiquity Kiosk(TM)operating system on the Elo 
    TouchSystems 19R2 touchcomputer; and 
=-  Integrating support for swiping driver's license for selected states on 
    the Mobiquity Kiosk(TM). 
 
For the Mobiquity Transaction Engine 3.0(TM) these included the following: 
 
=-  Implementing advanced rules engine; and 
=-  Implementing improved mapping and location capability. 
 
During the current period, the Company incurred $82,639 for research and development activities related to Mobiquity 
Route(TM) and related mobile software products. 
 
During the current period, the Company incurred $83,561 for research and development activities related to Mobiquity 
Transaction Engine 3.0(TM)and Mobiquity Kiosk(TM). 
 
Selling and marketing expenses 
 
Selling and marketing expense for the quarter amounted to $1,490,778 compared to 1,515,711 for the same quarter last 
year, a decrease of $24,933. Selling and marketing expenses includes salaries, commissions, advertising, trade shows and 
promotion costs to support the various sales initiatives. As a percentage of sales the selling and marketing expenses 
are 15.2% in the quarter compared to 13.9% in the same quarter last year. As a percentage of gross profit the selling 
and marketing expenses were 64.8% in the quarter compared to 65.2% in the same quarter last year. There were no 
significant changes in the selling and marketing activities during the quarter. 
 
Future Income Tax Benefits 
 
Canadian GAAP requires a valuation allowance to be recorded against any future tax asset to the extent that it is more 
likely than not that the future income tax asset will not be realized. 
 
Prior to the 2006 fiscal year, the Company determined that it had not met this test so the Company recorded a full 
valuation allowance against the potential value of all of its tax losses and deductions available to be taken against 
future years' taxable income. As a result, future income tax assets were fully provided for. 
 
During the 2006 fiscal year, the Company determined that the U.S. subsidiaries were generating sufficient profits such 
that they were more likely than not to utilize the losses and deductions attributable to these U.S. subsidiaries. 
Consequently, the Company concluded that the valuation allowance be reduced accordingly. The difference between the 
total value of these tax benefits less the valuation allowance is the amount of the future income tax asset that is 
recorded by the Company. 
 
For the three months ended March 31, 2010 the Company recorded a future income tax benefit of $276,048 compared to 
$183,633 for the same quarter last year. 
 
To the extent that the Company expects to generate sufficient profits in the following fiscal period, that portion of 
the Future income tax benefits have been classified as current. 
 
Amortization 
 
The amortization of capital assets and intangible assets for the quarter amounted to $171,385 (March 31, 2009 - 
$182,273) including amortization of $18,754 included in cost of sales for Kiosks deployed pursuant to various 
subscription agreements. 
 
Foreign Exchange Gain 
 
The foreign exchange loss for the quarter amounted to $63,698 compared to a foreign exchange gain of $485 for the same 
quarter last year. The gain was primarily due to the fluctuation in the U.S. dollar against the Canadian dollar in the 
quarter. 
 
Review of the operations for the nine months ended March 31, 2010 
 
Revenue for the nine months ended March 31, 2010 was $32,670,998 generating a gross profit of $7,617,163 or 23.3% of 
sales compared to $37,508,269 generating a gross profit of $9,116,482 or 24.3% of sales for the same period last year. 
The EBITDA loss for the period was $1,084,229 compared to $925,590 for the same period last year. The Net Loss for the 
period amounted to $944,286 ($0.01 per share) compared to $1,049,511 ($0.01 per share) for the same period last year. 
 
Cost of sales 
 
Cost of sales for the nine months ended March 31, 2010 amounted to $25,053,835 resulting in a gross profit of $7,617,163 
or 23.3% of sales as compared to $28,391,787 resulting in a gross profit of $9,116,482 or 24.3% of sales for the same 
period last year. 
 
General and administrative 
 
General and administrative expenses for the nine months ended March 31, 2010 amounted to $2,918,759 compared to 
$3,500,901 for the same period last year. 
 
Technology Investment 
 
Research and development expense for the nine months ended March 31, 2010 amounted to $679,043 compared to $1,094,541 
for the same period last year. The significant expense item in this category is salary and benefit costs. As a 
percentage of sales the research and development expenses are 2.1% compared to 2.9% in the same period last year. 
 
Selling and marketing expenses 
 
Selling and marketing expense for the nine months ended March 31, 2010 amounted to $4,471,554 compared to $5,002,847 for 
the same period last year. The drop related to cost reductions made over the past year as well as the decline in sales. 
 
Amortization 
 
The amortization of capital assets and intangible assets for the nine months ended March 31, 2010 amounted to $520,372 
(March 31, 2009 - $527,256). 
 
Foreign exchange gain 
 
The foreign exchange gain for the nine months ended March 31, 2010 was $10,914 compared to $97,244 for the same period 
last year. 
 
Summary of Quarterly Results 
 
The table below provides a summary of certain selected unaudited financial information from the Consolidated Statements 
of Operations for the most recent eight fiscal quarters comprising the Company's preceding two years: 
 
                                   Q4 2008    Q1 2009    Q2 2009    Q3 2009 
                                    Jun 08    Sept 08     Dec 08     Mar 09 
                                ------------------------------------------- 
 
Revenue                         13,721,812 14,303,851 12,327,064 10,877,354 
Cost of Sales                   10,180,648 10,550,751  9,287,669  8,553,367 
                                ------------------------------------------- 
Gross Profit                     3,541,164  3,753,100  3,039,395  2,323,987 
                                ------------------------------------------- 
Expenses: 
 General and administrative      1,530,733  1,302,708  1,202,013    898,936 
 (including foreign exchange) 
 Non recurring expenses                  -          -    372,177    160,158 
 Research and Development          448,260    424,752    391,088    278,701 
 Selling and Marketing           1,470,184  1,769,825  1,717,311  1,515,711 
 Stock-based compensation          (63,219)     3,243      2,753      2,696 
                                ------------------------------------------- 
                                 3,385,958  3,500,528  3,685,342  2,856,202 
                                ------------------------------------------- 
Earnings (loss) before interest 
 taxes and amortization            155,206    252,572   (645,947)  (532,215) 
 
 Amortization                     (193,655)  (160,574)  (178,081)  (182,273) 
 Interest                             (167)   (29,088)      (354)     1,648 
 Gain on sale of investments 
 Income taxes                     (323,427)    (6,295)   291,211    139,885 
 
                                ------------------------------------------- 
Net Earnings (loss)               (362,043)    56,615   (533,171)  (572,955) 
                                ------------------------------------------- 
                                ------------------------------------------- 
 
Per share, basic and diluted         (0.00)      0.00      (0.00)     (0.00) 
                                ------------------------------------------- 
 
 
                                    Q4 2009    Q1 2010    Q2 2010   Q3 2010 
                                     Jun 09    Sept 09     Dec 09    Mar 10 
                                 ------------------------------------------ 
 
Revenue                          11,609,822 11,616,225 11,259,292 9,795,481 
Cost of Sales                     8,614,785  8,960,921  8,599,212 7,493,702 
                                 ------------------------------------------ 
Gross Profit                      2,995,037  2,655,304  2,660,080 2,301,779 
                                 ------------------------------------------ 
Expenses: 
 General and administrative         987,696    888,890  1,010,991 1,007,964 
 (including foreign exchange) 
 Non recurring expenses            (110,823)    19,860     28,219   525,656 
 Research and Development           186,568    246,670    247,084   185,289 
 Selling and Marketing            1,685,829  1,361,701  1,619,075 1,490,778 
 Stock-based compensation            12,719     22,388     23,242    23,585 
                                 ------------------------------------------ 
                                  2,761,989  2,539,509  2,928,611 3,233,272 
                                 ------------------------------------------ 
Earnings (loss) before interest 
 taxes and amortization             233,048    115,795   (268,531) (931,493) 
 
 Amortization                      (124,066)  (157,298)  (152,962) (152,631) 
 Interest                            (5,520)    (3,769)   (10,441)   (7,781) 
 Gain on sale of investments                                4,952         - 
 Income taxes                       279,930     (1,503)   346,321   275,055 
 
                                 ------------------------------------------ 
Net Earnings (loss)                 383,392    (46,775)   (80,661) (816,850) 
                                 ------------------------------------------ 
                                 ------------------------------------------ 
 
Per share, basic and diluted           0.00      (0.00)     (0.00)    (0.01) 
                                 ------------------------------------------ 
 
The Company's revenues and earnings fluctuate from quarter to quarter. A number of factors can cause such fluctuations, 
including the timing of substantial orders, the timing of releases of new products, timing of the deployment of 
solutions and delays by customers. Because the Company's operating expenses are determined based on anticipated sales, 
are generally fixed and are incurred throughout each fiscal quarter, any of the factors listed above can cause 
significant variations in the Company's revenues and earnings in any given quarter. Thus, the Company's quarterly 
results are not necessarily indicative of the Company's overall business, results of operations and financial condition. 
 
Over the past three years the Company has improved its financial position while maintaining selling, marketing, general 
and administration expenses at relatively the same level as revenue. 
 
Financial position 
 
The working capital as of March 31, 2010 was $5,195,084, an increase of $2,624,663 compared to the working capital of 
$2,570,421 at June 30, 2009. 
 
Cash and cash equivalents at March 31, 2010 was $1,929,538 compared to $2,002,530 at June 30, 2009. The short term 
investments consist of 822,031 shares of Equus Total Return, Inc. 
 
The cash flow used in operations, before non-cash working capital items amounted to $842,232 for the three months ended 
March 31, 2010 compared to cash flow used in operations of $574,120 for the same period last year. Excluding the Non 
recurring expenses the cash flow used in operations (before working capital items) was $316,576 compared to $413,962 for 
the same quarter last year. 
 
The Company has a credit line facility of $5,800,000, which is limited to 70% of eligible accounts receivable of certain 
U.S. subsidiaries from a U.S. based financial institution. The line of credit bears interest at the prime rate of 
lending as published in the Wall Street Journal and is secured with a first charge on the assets of VAC, VSI and POI. At 
March 31, 2010 the line of credit was $768,336 (June 30, 2009 - Nil). 
 
The amount that may be advanced under the credit line is limited to 70% of eligible accounts receivable of VAC, POI and 
VSI less than 90 days from the invoice date. At March 31, 2010 this amounted to $2,390,592. At March 31, 2010 the 
financial covenants for these companies include the requirement of a minimum Tangible Net worth of $4,800,000. The 
companies met this test. 
 
Included in accounts payable and accrued liabilities is $1,352,160 owing to a major supplier. 
 
Investment in Equus Total Return, Inc. 
 
The short term investments are held by Mobiquity Investments Limited ("Mobiquity") and consists of 822,031 shares of 
Equus Total Return, Inc. which is a public company trading on the NYSE under the symbol EQS (the "Fund"). The share 
price as at March 31, 2010 was $2.81 so the unrealized loss was $416,253. 
 
On April 14, 2010 Mobiquity filed a Schedule 13D/A (Amendment No. 1) with the U.S. Securities and Exchange Commission 
and reported that the Fund had agreed to nominate Fraser Atkinson, Alessandro Benedetti, John Hardy and Bertrand des 
Pallieres as directors of the Fund (the "Nominees") and to support the election of the Nominees at the Fund's Annual 
Meeting scheduled to be held on May 12, 2010. On April 13, 2010, the Fund filed a definitive proxy statement on Schedule 
14A with the Securities and Exchange Commission to, among other things, solicit stockholders of the Fund to vote in 
favor of the Nominees selected by the Reporting Persons, along with the other nominees for director in connection with 
the Fund's 2010 Annual Meeting. 
 
On May 20, 2010 the Inspector of Elections who attended the Annual Meeting of the Equus stockholders held on May 12, 
2010 certified that Fraser Atkinson, Alessandro Benedetti, John Hardy and Bertrand des Pallieres had been elected to the 
Board of Directors of Equus. 
 
Capital Expenditures 
 
During the three months ended March 31, 2010 the additions to capital assets amounted to $35,950. The majority of the 
capital expenditures relate to the costs of Kiosks that have been deployed under various subscription agreements. 
 
Share Capital 
 
As of May 26, 2010 the Company had 157,285,643 common shares issued and outstanding. 
 
Stock Options 
 
The Company can grant up to 10% of the issued shares pursuant to its stock option plan. 
 
                                                         Weighted 
                                    Number of    average exercise 
                                       shares          price CDN$ 
=---------------------------------------------------------------- 
Outstanding - June 30, 2009         9,160,000                0.42 
Granted                                     - 
Forfeited                                   - 
Expired                            (1,179,000)               0.28 
Exercised                                   -                   - 
                                  ------------------------------- 
Outstanding - March 31, 2010        7,981,000                0.44 
                                  ------------------------------- 
 
For the three months ended March 31, 2010, the Company recognized $23,585 (March 31, 2009 - $2,696) in stock-based 
compensation, a non-cash item, for vesting of stock options granted to employees, consultants, directors and officers of 
the Company in prior years. 
 
Warrants 
 
The details of the outstanding warrants at March 31, 2010 are as follows: 
 
                      Exercise     Number of 
Expiry date         Price CDN$      Warrants        Cost 
=------------------------------------------------------- 
 
March 31, 2011         $ 0.569     1,411,808      63,309 
April 16, 2011         $0.6636       583,770      81,058 
January 22, 2012       $  0.30       600,000      42,000 
                                   --------------------- 
 
Balance                            2,595,578     186,367 
                                   --------------------- 
                                   --------------------- 
 
Related Party Transactions 
 
During the current quarter, the Company paid consulting fees and salaries, which are included in the general and 
administration expense, of $184,703 (2009 - $168,223) to Directors and Officers of the Company. 
 
Risk Factors 
 
The securities of the Company should be considered a highly speculative investment and investors should carefully 
consider all of the information disclosed in this Management Discussion & Analysis prior to making an investment in the 
Company. In addition to the other information presented in this Management Discussion & Analysis, the following risk 
factors should be given special consideration when evaluating an investment in the Company's securities. 
 
Operating History 
 
The Company's predecessor company commenced operations in March 1987 to distribute and sell Maximizer products in 
European countries, as well as provide consulting services and Customer Relationship Management ("CRM") solutions to 
companies. In January 1997, the Company changed its focus to research and development of CRM software. The Company 
purchased Versatile Mobile Systems on September 19, 2000, Perfect Order, Inc. and Versatile Systems, Inc. on April 26, 
2005 and Sagent Solutions on December 28, 2007. The Company may face many of the risks and uncertainties encountered by 
early-stage companies in rapidly evolving markets. 
 
History of Losses 
 
The Company had a history of losses up to September 30, 2005 and since that time has had varying results, but has an 
accumulated deficit of $36.7 million to March 31, 2010. Although the Company has decreased its operating expenses 
(excluding non recurring expenses) the Company cannot be assured that it can consistently maintain profitable 
operations. 
 
No Certainty of Future Profitability 
 
The Company's product revenues are not predictable with any significant degree of certainty and future product revenues 
may differ from historical patterns. If customers cancel or delay orders, it can have a material adverse impact on the 
Company's revenues and results of operations from quarter to quarter. Because the Company's results of operations may 
fluctuate from quarter to quarter, investors should not assume that results of operations in future periods can be 
predicted based on results of operations in past periods. 
 
Even though the Company's revenues are difficult to predict, the Company's expense levels are based in part on future 
revenue projections. Many of the Company's expenses are fixed and, accordingly, the Company cannot quickly reduce 
spending if revenues are lower than expected. 
 
Competitive Market 
 
The market for the Company's software is intensely competitive, fragmented and rapidly changing. Some of the Company's 
actual and potential competitors are larger, established companies that have greater technical, financial and marketing 
resources. In addition, as the Company develops new products, particularly applications focused on electronic commerce 
or specific industries, it may begin competing with companies with whom it has not previously competed. It is also 
possible that new competitors will enter the market or that the Company's competitors will form alliances that may 
enable them to rapidly increase market share. 
 
Increased competition may result in price reductions, lower gross margins or loss of the Company's market share, any of 
which could materially adversely affect its business, financial condition and operating results. 
 
Technological Change 
 
The market for the Company's solutions is characterized by rapidly changing technology and evolving industry standards. 
The market is affected by changes in end user requirements and frequent new product introductions and enhancements. The 
Company's products embody complex technology and may not always be compatible with current and evolving technical 
standards and products, developed by others. Failure or delays by the Company to meet or comply with the requisite and 
evolving industry or user standards could have a material adverse effect on the Company's business, results of 
operations and financial condition. The Company's ability to anticipate changes in technology, technical standards and 
product offerings will be a significant factor in the Company's ability to compete. There can be no assurance that the 
Company will be successful in identifying, developing, manufacturing and marketing products that will respond to 
technological change, evolving standards or individual wireless communications service provider standards or 
requirements. The Company's business will be adversely affected if the Company incurs delays in developing new products 
or enhancements or if such products or enhancements do not gain market acceptance. In addition, there can be no 
assurance that products or technologies developed by others will not render the Company's products or technologies non- 
competitive or obsolete. 
 
Limited Sales and Support Infrastructure 
 
The Company's future revenue growth will depend in large part on its ability to successfully expand its direct sales 
force and its customer support capability. The Company may not be able to successfully manage the expansion of these 
functions or to recruit and train additional direct sales, consulting and customer support personnel. 
 
If the Company is unable to hire and retain additional highly skilled direct sales personnel, it may not be able to 
increase its license revenue to the extent necessary to achieve profitability. If the Company is unable to hire highly 
trained consulting and customer support personnel, it may be unable to meet customer demands. The Company is unlikely to 
be able to increase its revenues as planned if it fails to expand its direct sales force or its consulting and customer 
support staff. Even if the Company is successful in expanding its direct sales force and customer support capability, 
the expansion may not result in revenue growth. 
 
Dependence on Business Alliances 
 
A key element of the Company's business strategy is the formation of corporate alliances with leading companies. The 
Company is currently investing and plans to continue to invest significant resources to develop these relationships. The 
Company believes that its success in penetrating new markets for its products will depend in part on its ability to 
maintain these relationships and to cultivate additional or alternative relationships. There can be no assurance that 
the Company will be able to develop additional corporate alliances with such companies, that existing relationships will 
continue or be successful in achieving their purposes or that such companies will not form competing arrangements. 
 
Dependence on Key Personnel 
 
The Company's success depends largely upon the continued service of its executive officers and other key management, 
sales and marketing and technical personnel. The loss of the services of one or more of the Company's executive officers 
or other key employees could have a material adverse effect on its business, results of operations or financial 
condition. 
 
The Company's future success also depends on its ability to attract and retain highly qualified personnel. The 
competition for qualified personnel in the computer software and Internet markets is intense, and the Company may be 
unable to attract or retain highly qualified personnel in the future. In addition, due to intense competition for 
qualified employees, it may be necessary for the Company to increase the level of compensation paid to existing and new 
employees to the degree that operating expenses could be materially increased. 
 
Management of Growth 
 
The Company expects to experience a period of significant growth in the number of personnel that will place a strain 
upon its management systems and resources. The Company's future will depend in part on the ability of its officers and 
other key employees to implement and improve its financial and management controls, reporting systems and procedures on 
a timely basis and to expand, train and manage its employee workforce. There can be no assurance that the Company will 
be able to effectively manage such growth. The Company's failure to do so could have a material adverse effect upon the 
Company's business, prospects, results of operation and financial condition. 
 
Integration of Newly Acquired Businesses or Technology 
 
The Company may expand its operations through acquisitions of additional businesses or technology. There can be no 
assurance that the Company will be able to identify, acquire or profitably manage additional businesses or technology or 
successfully integrate acquired businesses or technology into the Company without substantial expense, delay or other 
operational or financial problems. Further, acquisitions may involve a number of additional risks, including diversion 
of management's attention, failure to retain key acquired personnel, unanticipated events or circumstances, legal 
liabilities and amortization of acquired intangible assets, some or all of which could have a material adverse effect on 
the Company's business, financial condition and results of operation. In addition, there can be no assurance that 
acquired businesses, if any, will achieve anticipated revenues and earnings. The failure of the Company to manage its 
acquisition strategy successfully could have a material adverse effect on the Company's business, financial condition 
and results of operation. 
 
Potential Fluctuations in Quarterly Financial Results 
 
The Company's quarterly financial results may be affected by the timing of new releases of its products and/or 
substantial customer orders. The Company's operating expenses are based on anticipated revenue levels in the short term, 
are relatively fixed, and are incurred throughout the quarter. As a result, if expected revenues are not realized on a 
timely basis as anticipated, the Company's financial results could be materially and adversely affected. These or other 
factors, including possible delays in the shipment of new products, may influence quarterly financial results in the 
future. Accordingly, there may be significant variation in the Company's quarterly financial results. 
 
International Sales 
 
Sales outside of the United States currently represent less than 10% of the Company's total gross revenues. The Company 
believes that its continued growth and profitability will require additional expansion of its sales in international 
markets. To the extent that the Company is unable to expand international sales in a timely and cost effective manner, 
the Company's business, results of operations and financial condition could be materially and adversely affected. In 
addition, even with the successful recruitment of additional personnel and international resellers, there can be no 
assurance that the Company will be successful in maintaining or increasing international market demand for the Company's 
products. 
 
Currency Exchange Rate Risk 
 
The Company's results have been stated into U.S. dollars as a substantial portion of the Company's revenues and a 
material portion of its expenses are denominated in US dollars. 
 
Dependence on Proprietary Technology and Limited Patent and Trademark Protection 
 
The Company relies on a combination of copyright and trademark laws, trade secret, confidentiality procedures and 
contractual provisions to protect its proprietary rights. Unauthorized parties may attempt to copy aspects of the 
Company's products or obtain and use information that the Company regards as proprietary. Policing unauthorized use of 
the Company's product is difficult, time-consuming and costly as is the pursuing of patents in each jurisdiction in 
which the Company carries on business. Although the Company is unable to determine the extent to which piracy of its 
software product exists, software piracy is a possibility. In addition, the laws of certain countries in which the 
Company's products may be licensed do not protect its product and intellectual property rights to the same extent as the 
laws do in Canada or the United States. There is no assurance that the Company's means of protecting its proprietary 
rights will be adequate or the Company's competitors will not independently develop similar technology, the effect of 
either of which may be materially adverse to the Company's business, results of operations and financial condition. 
 
Risk of Third Party Claims for Infringement 
 
The Company is not aware that its product infringes the proprietary rights of third parties. There can be no assurance, 
however, that third parties will not claim such infringement by the Company or its licensees with respect to current or 
future products. The Company expects that software product developers will increasingly be subject to such claims as the 
number of products and competitors in the Company's industry segment grows and the functionality of products in 
different industry segments overlaps. Any such claims, with or without merit, could be time-consuming, result in costly 
litigation, cause product shipment delays or require the Company to enter into royalty or licensing agreements which, if 
required, may not be available on terms acceptable to the Company. Any of the foregoing could have a materially adverse 
effect on the Company's business, results of operations and financial condition. 
 
Lengthy Sales and Implementation Cycle 
 
The adoption of the Company's product generally involves a significant commitment of resources by potential customers. 
As a result, the Company's sales process is often subject to delays associated with lengthy approval processes by 
potential customers. For these and other reasons, the sales cycle associated with the license of the Company's product 
varies substantially from customer to customer and typically lasts between 6 to 12 months during which time the Company 
may devote significant time and resources to a prospective customer, including costs associated with multiple site 
visits, product demonstrations and feasibility studies, and experience a number of significant delays over which the 
Company has no control. Any significant or ongoing failure by the Company to ultimately achieve such sales could have a 
material adverse effect on the Company's business, results of operations and financial condition. In addition, following 
license sales, the implementation period is expected to involve a time period for customer training and integration with 
the customer's existing systems. A successful implementation program requires a close working relationship between the 
Company, the customer and, generally, third party consultants and system integrators who assist in the process. There 
can be no assurance that delays or difficulties in the implementation process for any given customer will not have a 
material adverse effect on the Company's business, results of operations and financial condition. 
 
Risk of System Defects 
 
System development involves the integration of the Company's proprietary software and software of others into the 
customer's operating systems. There can be no assurance that defects and errors will not be found in the Company's 
product when integrated with other products or systems. Any such defects and errors could result in adverse customer 
reactions, negative publicity regarding the Company and its product or damages. Consequently, there could be a material 
adverse effect on the Company's business, results of operations and financial condition. 
 
Requirements for New Capital 
 
As a growing business, the Company typically needs more capital than it has available to it or can expect to generate 
through the sale of its products. In the past, the Company has had to raise, by way of debt and equity financing, 
considerable funds to meet its capital needs. There is no guarantee that the Company will be able to continue to raise 
funds needed for its business. Failure to raise the necessary funds in a timely fashion will limit the Company's growth. 
 
Critical Accounting Estimates 
 
General 
 
Unless otherwise specified in the discussion of the specific critical accounting estimates, the Company is not aware of 
trends, commitments, events, or uncertainties that it reasonably expects to materially affect the methodology or 
assumptions associated with the critical accounting estimates, subject to the circumstances identified above. 
 
Changes are made to assumptions underlying all critical accounting estimates to reflect current economic conditions and 
updating of historical information used to develop the assumptions, where applicable. Unless otherwise specified in the 
discussion of the specific critical accounting estimates, it is expected that no material changes in overall financial 
performance and financial statement line items would arise either from reasonably likely changes in material assumptions 
underlying the estimate or within a valid range of estimates, from which the recorded estimate was selected. 
 
All critical accounting estimates are uncertain at the time of making the estimate. 
 
Accounts Receivable 
 
Allowance for doubtful accounts 
 
The Company considers the business area that gives rise to the accounts receivable, maintains procedures for granting 
credit terms on sales transactions and performs specific account identification when determining its allowance for 
doubtful accounts. This accounting estimate is in respect of the accounts receivable line item on the Company's 
consolidated balance sheet comprising approximately 14% of total assets as at March 31, 2010. In the event the future 
results were to adversely differ from management's best estimate of the allowance for doubtful accounts, the Company 
could experience a bad debt charge in the future. Such a bad debt charge would not result in a cash outflow. 
 
The estimate of the Company's allowance for doubtful accounts could materially change from period to period due to the 
allowance being a function of the balance and composition of accounts receivable, which can vary on a month-to-month 
basis. The variance in the balance of accounts receivable can arise from a variance in the amount and composition of 
operating revenues and from variances in accounts receivable collection performance. 
 
Inventories 
 
Provision for inventory obsolescence 
 
The Company determines its provision for inventory obsolescence based upon historical experience, expected inventory 
turnover, inventory aging and current condition, and current and future expectations with respect to product offerings. 
 
Assumptions underlying the provision for inventory obsolescence include the activity levels over previous fiscal years, 
and the expected inventory requirements and inventory composition necessary to support these future sales and offerings. 
The estimate of the Company's provision for inventory obsolescence could materially change from period to period due to 
changes in product offerings and consumer acceptance of those products. 
 
This accounting estimate is in respect of the inventory line item on the Company's consolidated balance sheet comprising 
approximately 5% of total assets as at March 31, 2010. If the provision for inventory obsolescence was inadequate, the 
Company could experience a charge to direct cost of sales in the future. Such an inventory obsolescence charge would not 
result in a cash outflow. 
 
Long-Lived Assets 
 
The accounting estimates for long-lived assets that include capital assets, purchased technology, intellectual property, 
customer contracts and licenses, in aggregate, represent approximately 17% of the Company's total assets as at March 31, 
2010, presented in its consolidated balance sheet. If the Company's estimated useful lives of assets were different as a 
result of changes in facts and circumstances, the Company could experience increased or decreased charges for 
amortization and the Company could potentially experience future material impairment charges in respect of its recovery 
of long-lived assets. 
 
The estimated useful lives of capital assets are determined by a continuing program of asset life studies. The 
recoverability of capital assets is significantly impacted by the estimated useful lives. Assumptions underlying the 
estimated useful lives of capital assets include timing of technological obsolescence, competitive pressures and future 
infrastructure utilization plans. In the event management's best estimate of the useful lives of capital assets was 
adversely affected, the Company could potentially experience a charge to amortization expense in the future. Such a 
charge to amortization would not result in a cash outflow. 
 
Purchased Technology 
 
The recoverability of the Company's investment in purchased technology is determined by an ongoing analysis of the 
economic benefits attributed to the purchased technology. The Company estimates the future economic benefits attributed 
to the purchased technology and compares the results with the net book value of the asset. Assumptions underlying the 
estimated future economic benefits of purchased technology costs include future sales trends, product offerings, timing 
of technological obsolescence, competitive pressures and consumer acceptance of product offerings. If management's best 
estimate of the future economic benefits of purchased technology costs was adversely affected, the Company could 
potentially experience a charge to amortization expense in the future. Such a charge to amortization would not result in 
a cash outflow. 
 
Customer Contracts 
 
The recoverability of the Company's investment in customer contracts is determined by an ongoing analysis of the 
economic benefits attributed to the customer contracts in place at the date of the acquisition. The Company estimates 
the future economic benefits attributed to the customer contracts and compares the results with the net book value of 
the asset. Assumptions underlying the estimated future economic benefits of customer contracts include future sales 
trends, product offerings, timing of technological obsolescence, competitive pressures and consumer acceptance of 
product offerings. If management's best estimate of the future economic benefits of customer contracts was adversely 
affected, the Company could potentially experience a charge to amortization expense in the future. Such a charge to 
amortization would not result in a cash outflow. 
 
Future Income Tax Benefits 
 
The amount recorded for Future Income Tax Benefits represents approximately 20% of the Company's assets as at March 31, 
2010, presented in its consolidated balance sheet. If the Company determines that the valuation allowances relating to 
the loss carry forwards and tax deductions should be increased, the Company could experience a reduction in the recorded 
future income tax benefits. 
 
Goodwill 
 
The accounting estimates for goodwill represents approximately 29% of the Company's total assets as at March 31, 2010, 
presented in its consolidated balance sheet. If the Company's estimated fair value were incorrect, the Company could 
experience increased or decreased charges for changes to the estimated fair value in the future. If the future were to 
adversely differ from management's best estimate to recover the Company's investments in its goodwill, the Company could 
potentially experience future material impairment losses in respect of its goodwill. The impairment losses would be 
recognized and presented as a separate line item in the consolidated statements of loss and deficit. Impairment losses 
to goodwill would not result in a cash outflow. 
 
Changes in accounting policies 
 
The Company retroactively adopted, on July 1, 2008, the following new Handbook sections issued by the CICA: 
 
(i) General standards on financial statement presentation 
 
In June 2007, the CICA amended Section 1400, General Standards on Financial Statement Presentation. The new section is 
applicable to financial statements relating to fiscal years beginning on or after January 1, 2008. The amended section 
includes requirements to assess and disclose a company's ability to continue as a going concern. 
 
(ii) Inventories 
 
The Company adopted the recommendations of CICA Handbook Section 3031 on inventories which provides guidance on the 
determination of cost of inventories and its subsequent recognition as an expense, and includes additional disclosure 
requirements. The new section also requires the Company to account for the reversal of write-downs previously recognized 
when there is a subsequent increase in the value of inventories. This accounting policy was applied retroactively; the 
retroactive application did not have an impact on the comparative financial statements presented. There was no effect as 
of March 31, 2010 or the period then ended. 
 
(iii) Financial instrument disclosures 
 
On July 1, 2008, the Company adopted three new CICA Handbook sections: Section 1535, Capital Disclosures; Section 3862, 
Financial Instruments - Disclosures; and Section 3863, Financial Instruments - Presentation. Prior year financial 
statements have not been restated. These sections relate to disclosure and presentation only and have no impact on the 
consolidated financial results. 
 
Section 1535 requires disclosure of an entity's objectives, policies, and processes for managing capital; information 
about what the entity regards as capital; whether the Company has complied with any external capital requirements; and 
the consequences of not complying with these capital requirements. 
 
Sections 3862 and 3863 replace Handbook Section 3861, Financial Instruments - Disclosure and Presentation. Section 3863 
carries forward unchanged the presentation requirements of Section 3861 while Section 3862 requires enhanced financial 
instrument disclosures focusing on disclosures related to the nature and extent of risks arising from financial 
instruments and how the entity manages those risks. 
 
The following is an overview of accounting standard changes that the Company will be required to adopt in future 
periods: 
 
(i) Goodwill and intangible assets 
 
In February 2008, the CICA issued Section 3064, Goodwill and Intangible Assets, replacing Section 3062, Goodwill and 
Other Intangible Assets, and Section 3450, Research and Development Costs. The new section will be applicable to 
financial statements relating to fiscal years beginning on or after October 1, 2008. Accordingly, the Company will adopt 
the new standards for its fiscal year beginning July 1, 2009. 
 
This section establishes standards for the recognition, measurement, presentation and disclosure of goodwill subsequent 
to its initial recognition and of intangible assets by profit-oriented enterprises. In February 2007, the CICA amended 
Section 1000, Financial Statement Concepts, to clarify the criteria for the recognition of an asset. The amended section 
is applicable to all entities and is effective for interim and annual financial statements relating to fiscal years 
beginning on or after October 1, 2008. Accordingly, the Company will adopt the new standards for its fiscal year 
beginning July 1, 2009. 
 
Key International Financial Reporting Standards (IFRS) conversion dates 
 
According to dates set out by the AcSB, the Company will be required to changeover to IFRS on July 1, 2010 and begin 
publicly reporting under IFRS in the fiscal year ending June 30, 2012. Because of the need to present comparative 
financial information, the Company will need to create its first IFRS compliant balance sheet as at July 1, 2010. For 
the fiscal year ending June 30, 2011, the Company will need to prepare information for financial statements and note 
disclosures under both Canadian GAAP and IFRS in order to meet Canadian GAAP reporting requirements that year and to 
allow for comparative information to be presented in 2012. 
 
Additional information relating to the Company can be found on the Canadian Securities Administrators System for 
Electronic Document Analysis and Retrieval (SEDAR), located at www.sedar.com. 
 
 
FOR FURTHER INFORMATION PLEASE CONTACT: 
 
Versatile Systems Inc. 
John Hardy 
Chairman and CEO 
1-800-262-1633 
International: 001-206-979-6760 
 
OR 
 
Versatile Systems Inc. 
Fraser Atkinson 
CFO 
1-800-262-1633 
www.versatile.com 
 
OR 
 
NCB Stockbrokers Limited (Nominated Adviser) 
Christopher Caldwell or Barclay Clibborn 
+44 (0) 20 7071 5200 
 
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. 
 
 
Versatile Systems Inc. 
 

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