Versatile Systems Inc.
TSX VENTURE : VV

Versatile Systems Inc.

March 22, 2006 05:00 ET

Versatile to Raise up to U.S. $4.5 Million in a Proposed Issuance of a Convertible Debenture

VANCOUVER, CANADA--(CCNMatthews - March 22, 2006) - Versatile Systems Inc. (TSX VENTURE:VV), announces a non-brokered proposed financing for up to U.S. $4,500,000 with the issuance of a convertible debenture to a U.S. based institutional investor. Closing of the transaction is subject to the completion of documents, final due diligence and regulatory approval. The proceeds from the financing will be used to repay the Promissory Notes that are due in the current fiscal year.

"Our objective is to close this transaction in the next few weeks," said Fraser Atkinson, CFO of Versatile. "This will allow us to complete the final step in restructuring our current obligations in a manner that is not dilutive to our shareholders. In the process we will also have secured a financial partner to support future growth initiatives."

The proposed financing will consist of:

a. A three-year convertible debenture for up to U.S. $4.5 million (the "Investment") based on eligible accounts receivable and inventory, with interest at the Wall Street Journal prime rate of lending plus 2%,

b. The conversion price for the debenture shall be at an average premium of 33% to the market price of Versatile's share on the closing date ("Market Price") based on the following tiered schedule: a premium of 5% for one-third of the Investment, a premium of 20% for one-third of the Investment and a premium of 75% for one-third of the Investment,

c. Warrants equal to 30% of the Investment with an exercise price at an average premium of 32% to the Market Price based on the following schedule: a 10% premium to the Market Price with a three year term for one-third of the warrants, a 20% premium to the Market Price with a three year term for one-third of the warrants; and a 65% premium to the Market Price with a five year term for one-third of the warrants,

d. An early termination fee of 5% if the convertible debenture is repaid in the first year, 4% in the second year and 3% in the third year, and

e. A security interest, including a lien on the accounts receivable and inventory of all of the Company's U.S. subsidiaries as well as the assets of the Company.

About Versatile

Versatile provides business solutions that enable companies to improve sales, marketing and distribution of their products. By using Versatile's technology, companies in the consumer packaged goods, and transportation industries have gained the benefits of supply chain visibility, shortened fulfillment cycles and improved customer satisfaction. Versatile also provides information technology services for the implementation, maintenance and security of mission-critical computing environments. Versatile has the ability to architect solutions involving both proprietary and third party components. For more information go to www.versatile.com.

Forward-Looking Statements

Certain of the statements contained in this news release are forward looking statements, including without limitation, statements relating to the proposed terms and closing of the private placement. Such forward looking statements involve unknown risks, uncertainties and other factors which may cause actual results, performance or achievements of Versatile to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. 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.

(c) 2006 Versatile Systems Inc. All rights reserved.

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

Contact Information

  • Versatile Systems Inc.
    John Hardy
    Chairman and CEO
    1 (800) 262-1633
    or
    Versatile Systems Inc.
    Fraser Atkinson
    CFO
    1 (800) 262-1633
    www.versatile.com