Avatar Systems, Inc. Reports Second Quarter and Six Month Results

Revenues Increase 26.9% for Six Months and 18.6% for 2nd Quarter

FRISCO, TX–(EMWNews – August 21, 2008) – Avatar Systems, Inc. (PINKSHEETS: AVSY) today

announced 2nd Quarter and six month results for the period ending June 30,

2008. Revenues for the 2nd Quarter were $1,154,808 and increased 18.6%

over the corresponding period of 2007 which had revenues of $973,423. For

the six month period, 2008 revenues were $2,460,773 compared to $1,939,672

for 2007, a 26.9% increase. Maintenance revenues for the 2nd Quarter

increased 15.7% to $753,097 from $651,099 in 2007.

Net income was $96,807 for the 2008 2nd Quarter compared to $15,472 for

2007. Amortization expense (non-cash) decreased $14,279 and interest

expense decreased $18,322 for the 2nd Quarter of 2008 versus the 2nd

Quarter of 2007. Fully diluted shares outstanding decreased 7.3% to

9,079,061 shares for six months ended June 30, 2008.

Chuck Shreve, President and Chief Executive Officer of Avatar Systems,

Inc., commented, “Our revenue components other than software were up and we

expect that to be a 2nd Quarter abnormality with regards to no increase in

software sales. Avatar anticipates releasing two significant new modules

for its current and new customers in the 4th Quarter 2008. These modules

will produce significant sales in the 4th Quarter 2008 and the first and

second Quarters of 2009. In addition, Avatar is making a contractually

allowed, across the board Software Maintenance and Professional Services

rate increase to current and future customers. This increase will affect

all subsequent quarters beginning September 1, 2008.”

Avatar Systems’ Headquarters are in Frisco, Texas, USA with branch offices

in Midland and Tyler, TX. The Company provides ERP / Accounting Software

and Computing Infrastructure Solutions for companies engaged in the

petroleum exploration and production industry. Avatar has a growing

customer base on its Petroware2000™, Integra Energy™ products for

Microsoft Windows, Avatar400™ on the IBM AS400 platform, and subscribers

utilizing its Software as a Service (SaaS) On-Demand ASP services.

Avatar’s products and services provide an excellent resource for critical

information management requirements of the petroleum industry. Avatar also

provides document imaging, workflow and business process management as well

as disaster recovery and remote backup services for all vertical markets.

The information in this news release includes certain forward-looking

statements that are based upon assumptions that in the future may prove not

to have been accurate and are subject to significant risks and

uncertainties, including statements to the future financial performance of

the Company. Although the Company believes that the expectations reflected

in its forward-looking statements are reasonable, it can give no assurance

that such expectation or any of its forward-looking statements will prove

to be correct. Factors that could cause results to differ include, but are

not limited to, successful performance of internal plans, product

development and acceptance, the impact of competitive services and pricing,

or general economic risks and uncertainties.