Versatile Systems Provides Default Status Report

Versatile Systems Inc. (TSX VENTURE:VV) ( the “Company”) is providing this bi-weekly default status report in accordance with National Policy 12-203 Management Cease Trade Orders (“NP 12-203”) for the Management Cease Trade Order (“MCTO”) issued by the British Columbia Securities Commission on October 31, 2016. On November 1st, 2016, the Company announced by way of press release that the filings of the Company’s annual financial statements for the fiscal year ended June 30, 2016 and the related management’s discussion and analysis (collectively, the “2016 Annual Financial Statements”) were not completed by the legal deadline of October 28, 2016. The Company made an application to the provincial securities commissions under NP 12-203 and on October 31, 2016, received the MCTO in respect of the late filing. The MCTO does not affect the ability of other shareholders of the Company to trade their securities, however, Bertrande des Pallieres, the Executive Chairman, Chief Executive Officer and acting Chief Financial Officer of the Company and Andrew Lynch, the President of the Company, will not be able to trade the Company’s shares.

As previously reported, the Company’s failure to file the 2016 Annual Financial Statements by the prescribed deadline is due to a data corruption issue with its inventory count and the Company’s management, together with its audit committee will continue to cooperate with its auditors to provide the information as soon as possible. The Company is not yet in a position to file the 2016 Annual Financial Statements.

The Company confirms that it intends to satisfy the provisions of the alternative information guidelines found in NP 12-203 for so long as it is delayed in filing the 2016 Annual Financial Statements. The Company further reports that since October 31, 2016, except as stated in this default status report, there have not been any material changes to the information contained in its press releases dated November 1st, 2016, November 15, 2016, November 28, 2016 and December 12, 2016; nor any failure by Company to fulfill its intentions as stated therein with respect to satisfying the provisions of NP 12-203, and there are no additional defaults or anticipated defaults subsequent to the disclosure therein, other than the delay in filing the 2016 Annual Financial Statements. Further, the Company confirms that, at the date hereof, it is not aware of any other material information concerning its affairs which has not been generally disclosed.

About Versatile

Versatile is a multi-disciplinary technology company with solutions across the mobile software and hardware landscape. The company’s products are utilized by Fortune 500 retailers, as well as large and small distribution companies representing grocery, dairy, beverage and consumer packaged goods. For more information please visit www.versatile.com.