January 31, 2003 - First Quarter Results Vertigo Software Corp. (the "Company") (TSX:YVS.T) has released its first Quarter Report containing financial statements in Canadian Funds, prepared without audit, for the three months ended November 30, 2002 (the "Quarterly Report"). Pursuant to the requirements of National Instrument 54-102, this news release provides a summary of the information contained in the Quarterly Report filed with the regulatory authorities through SEDAR (www.sedar.com) and has mailed it to shareholders whose names appear on the Company's Supplemental List. Company Update On June 12, 2002 the Company signed a letter of intent with Digital Accelerator Corporation ("Daccel") where the Company will acquire all of the issued and outstanding shares of Daccel through the issuance of one unit consisting of ¼ common share of the Company with a deemed price of $0.75 per share and 1 series B non-voting preferred share with a deemed price of $0.0001 per share for each Daccel share. Each series B preferred share will be convertible into one share purchase warrant at the option of the holder no later than December 31, 2007. Each share purchase warrant will entitle the holder to acquire one additional common share of the Company at a price of $0.75 per share at any time prior to the 3rd anniversary of the issuance of the warrant. The Company's obligation to complete the offer is conditional upon not less than 90% of the Daccel shares being tendered and there being not more than 20,000,000 shares of Daccel being outstanding at the completion of the offer. At or prior to the closing, subject to approval of the TSX Venture Exchange, the Company shall use its best efforts to complete a brokered or non-brokered private placement to raise a minimum of $1,000,000 at a price of $0.50 per unit. Each unit shall be comprised of 1 Vertigo common share and ¼ share purchase warrant with the warrant exercisable for 12 months at $0.60 per full warrant. The letter of intent also provides for the Company to make loan advances to Daccel totaling $275,000 by June 14, 2002. To the year-end date, the Company had advanced $271,500 and paid expenses totaling $10,091. During Vertigo's first quarter, 3D PopArt 2.0 was launched, on schedule, in October of 2002 to great success. A new, content rich website, and a highly stylized worldwide advertising campaign was also rolled out to support the new release. This marketing effort included ads in Computer Arts, and over 60,000 postcards distributed throughout the world in 10 different languages to announce the launch. Since its release, Vertigo has enjoyed a marked increase in revenues, renewed attention from the graphics software media in the form of positive of reviews, and most importantly, PopArt and Vertigo Software are being recognized by graphics software press around the world once again. Future projects include updating Vertigo's flagship plug-in, HotTEXT, for OS X, and the re-release of Vertigo 9.6 for the SGI. To maintain the momentum of this reclaimed exposure, Vertigo has some key projects planned for 2003. Our most popular plug-in HotTEXT, needs to be updated in order to be used with Apple's new operating system, OS X. Graphic Designers are always early adopters of Apple's latest technology, so this update represents an important step for Vertigo. With continuing customer requests coming in for Vertigo 9.6, plans have been put in place to re-release Vertigo's flagship 3D application for the SGI. Vertigo no longer has a license to distribute its original renderer, Pixar's Renderman. However, the relatively simple engineering project of disabling Renderman and the recent availability of Renderman substitutes now make this re-release opportunity possible. Discussion of Operations and Financial Condition The Company's working capital deficit as at November 30, 2002 was $584,812, compared with $539,713 as at August 31, 2002. Revenue was $19,130 for November 30, 2002 compared to $8,764 for November 30, 2001. The increase in revenue is indicative of the Pop Art launch in October. The foregoing discussion and analysis of the results of operations of the Company for the 2002 and 2001 periods should be read in conjunction with the consolidated financial statements of the Company and notes thereto as at August 31, 2002. There have been no major changes in accounting policies during the two-year period. Liquidity and Capital Resources During the three-month period, cash resources increased by $352 compared to a decrease of $4,351 in the 2001 period. Expenditures for operating activities were $45,098 (2001 - $26,980). Working capital deficit as at November 30, 2002 was $584,812 (2001 deficit - $1,123,069). As at November 30, 2002, the Company had paid up capital of $13,905,727 (2001 - $13,905,727), representing 10,162,820 common shares without par value, 1,942,190 preferred shares, and a deficit of $15,558,650 resulting in a shareholders' equity of ($1,652,923). A copy of the full Quarterly Report will be provided to any shareholder who requests it. On Behalf of the Board of Directors (signed) "Donald R. Sheldon" Donald R. Sheldon President