Vertical Computer Systems in Joint Venture to Target $3 Billion Government e-Procurement Market with a Web-based Smart Card

LOS ANGELES, CA., January 31, 2001 - Vertical Computer Systems, Inc. (OTC BB: VCSY), announced today a joint venture between iNet Government Services LLC (iNet) and Apollo Industries, Inc. ("Apollo") to form a separate LLC under the name "SmarteGov." SmarteGov will pursue smart-card opportunities in public sector e-procurement, which is estimated to amount to approximately $3 billion a year.

SmarteGov will be an Internet-based platform for public sector smart card transactions and will seek to leverage the convenience, portability and next-generation interactive data management capabilities of Web-enabled smart card technology. SmarteGov's smart card will include a conventional financial transaction card with an embedded programmable microprocessor chip offering multi-application facilities.

Smart card technology has been available and utilized internationally for decades. A smart card can hold a wide range of information and offer multiple applications for multiple purposes. In the U.S., smart cards could be used to store motor vehicle licensing information, voter registration certification, and medical and tax data, among other potential applications. SmarteGov's strategy is to anticipate the need of government to establish valid, highly portable, user-friendly tools to authenticate users, pulling together the best of available technologies to offer a total solution.

"State and local governments are quickly moving to the Internet for prompt and cost-effective delivery of services. The need for secure and intelligent media for this delivery creates the perfect environment for smart card technology," remarked Jerome Svigals, Director of MIS at Apollo and SmarteGov. Mr. Svigals is an internationally recognized authority on smart card technology and generally regarded as the 'father of the magnetic stripe card.' A former senior marketing development officer and systems executive for IBM, he is the holder of fifteen patents and a contributor to a further twenty-nine. In addition, Mr. Svigals is the author of fifteen books devoted to the implications and practicalities of electronic banking.

"There is a major thrust by the public sector to offer both traditional and innovative uses of smart card technologies, not only for information authentication and verification, but for uses such as asset control, medical record filing, purchasing, SmartVoting, etc. Government is embracing the Internet and smart card technologies at an unparalleled rate," said Basil Nikas, CEO of iNetPurchasing, Inc. and SmarteGov.

"The market for e-procurement in the public sector is estimated to be approximately $3 billion a year," said Richard Wade, President of Vertical Computer Systems, Inc. "The complementary skill sets that VCSY, iNetPurchasing and Apollo bring to this new venture will ensure that SmarteGov is positioned to play a leading role in extending the benefits of e-purchasing to the public sector."


SmarteGov LLC, a Nevada limited liability company, is a joint venture between Apollo Industries, Inc. ("Apollo"), a Nevada corporation, and iNet Government Services, LLC ("iNet"), a Nevada limited liability company. iNet is a joint venture between Vertical Computer Systems, Inc., a Delaware corporation, and iNetPurchasing, Inc., a Delaware corporation. VCSY is a 30% owner of Apollo.

About Vertical Computer Systems Inc.

Vertical Computer Systems, Inc. is a leading provider of web-based multilingual gateways, developer of proprietary software, and e-commerce solutions. The Company is based in the United States. VCSY's products and services, technology and distribution channels complement each other and are supported by its e-commerce business model, the Home Country Gateway (HCG). Utilizing its growing global network of online HCGs, the Company offers B2B, B2G and B2C solutions through its wide range of accessible resources that specifically cater to the needs and desires of targeted communities around the world.

At present, VCSY has five HCGs in operation:,,, and, and anticipates other HCG partnerships to be completed. VCSY also acquired - a complete online travel information center, The company is also developing the Emily™ Framework ( ), a programming language that enables the creation of websites that use the XML standard and intercommunicate via XML and HTTP. Also, VCSY offers a free, easy and personalized email service for all Web users ( For more information, visit the company's website at

This release contains, in addition to historical information, forward-looking statements. These statements are subject to a number of uncertainties and risks that could cause actual results to differ materially from those described in the forward-looking statements. Factors that may cause such a difference include, but are not limited to, competition from other portals, the company's ability to integrate and market the EmilyTM software, the market reception to VCSY'S new products, the potential benefits to customers, the conversion of sales leads into customers and the ramp-up of ASP users and other factors over which VCSY may have little or no control such as those described in the company's filings with the SEC.