Versatile Systems Inc VVVFF

BCSC Second Response

[Psalm9012]

Sorry guys, I meant to post this earlier: Mr. ######, Thank you again for your email detailing your concerns with the activities of Versatile Systems Inc. (VSI). We looked further into the events surrounding the cease trade of VSI and the subsequent sale of Versatile Mobile Systems, Inc. (VMSI) to Barcoding, Inc. We appreciate your frustration with the lack of communication by company management at that time. As you are aware, VSI consistently lost money starting in 2009 and up to our Management Cease Trade Order in October 2016 (which we issued because they did not file their June 2016 audited financial statements and related documents). We followed this up with a full cease trade order in January 2017 because those filings remained outstanding. We appreciate that toward the end of 2016, VSI was optimistic about its ability to take the steps that would allow it to continue operating and make its required filings (and provided public disclosure to that effect). Ultimately, however, it appears that it was unable to hold off its creditors, secure more financing, or establish profitability (or some combination of those). As set out in the table below, they lost nearly $30 million dollars in the last seven years they filed annual financial statements. As you are probably aware, it is common in the venture industry for businesses to fail because they are unprofitable. They run out of money and are unable to pay their auditors and make their regulatory filings. While you are correct that it is technically a breach of the Securities Act for a cease traded reporting issuer to fail to file material change reports and other continuous disclosure (such as annual financial statements and interim financial reports), there is no public interest in pursuing former company management for disclosure failures that occur after a business has failed and when the company is subject to a permanent cease trade order. The cease trade order protects potential public investors from the risk of purchasing securities for which required disclosure has not been provided. We understand that VSI was able to sell its subsidiary (VMSI) in order to pay down some of VSIs debts, which were significant ($9.6 million in total liabilities at March 31, 2016). We further understand that the proceeds were ultimately not enough to provide any return to the public investors, which we appreciate is frustrating. Net loss by fiscal year 2009 $ 666,119 2010 $ 1,236,621 2011 $ 255,770 2012 $14,717,158 2013 $ 3,854,602 2014 $ 6,438,120 2015 $ 2,448,016 ---------------- Total $29,616,406 Sincerely, logo Chris Hall Compliance Officer Corporate Finance British Columbia Securities Commission 1200 - 701 West Georgia Street Vancouver, BC V7Y 1L2 Tel: [phone] Fax: [phone] www.bcsc.bc.ca Email: [e-mail] environ Please consider the environment before printing this email