Versatile Systems Inc. (TSXV:VV) managed to cut its second-quarter loss despite a drop in revenue which the software and information technology company blamed on the recession and Oracle Corp.'s purchase of Sun Microsystems Inc.

"The overall economic environment continues to be difficult," said chairman and chief executive John Hardy.

"In addition, Oracle's potential acquisition of Sun Microsystems has created uncertainty and had a negative effect on both our pipeline and top-line revenue," he added.

The European Union is expected to approve the US$7.4-billion purchase of Sun Microsystems by the world's No. 1 maker of database software.

Versatile Systems, which reports in U.S. dollars, booked a loss of US$80,661 in the quarter ended Dec. 31. That compared with a loss of US$533,171 in the same year-earlier period.

Net losses for both quarters amounted to less than a penny a share, while revenues slipped eight per cent to US$11.3 million from US$12.3 million.

The Vancouver-based company said a nearly 40 per cent reduction on research and development expenses helped cut its loss.

Versatile's working capital totalled US$6.1 million at the end of December. That's up from $2.6 million recorded at the end of June.

"With working capital exceeding US$6 million at December 31, 2009, the company has the strongest financial position in its history," said chief financial officer Fraser Atkinson.

During early trading Monday, shares of the company were at nine cents on the Toronto Stock Exchange.