Versus Technology Announces Third Quart...(ues $1176000 $1283000 ...),Health

Operating Expenses

Cost of revenues 340,000 403,000 1,166,000 1,229,000

Research and development 218,000 137,000 601,000 455,000

Sales and marketing 814,000 648,000 2,371,000 1,733,000

General and

administrative 261,000 246,000 752,000 728,000

Total Operating Expenses 1,633,000 1,434,000 4,890,000 4,145,000

Loss From Operations (457,000) (151,000) (864,000) (591,000)

Other Income (Expense)

Interest income 9,000 17,000 40,000 45,000

Net foreign currency

transaction gains - - (1,000) 2,000

Total Other Income

(Expense) 9,000 17,000 39,000 47,000

Net Loss $(448,000) $(134,000) $(825,000) $(544,000)

Basic and Diluted Net

Loss Per Share $(-) $(-) $(-) $(-)

See accompanying report of management.

VERSUS TECHNOLOGY, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

(Unaudited)

For the nine months ended

July 31,

2008 2007

Operating Activities

Net loss $(825,000) $(544,000)

Adjustments to reconcile net loss to net cash

provided by operating activities:

Depreciation 35,000 24,000

Amortization of intangibles - 41,000

Non-cash equity based compensation 82,000 82,
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