What changed in this filing

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Item 1. Financial Statements

2024-08-14 compared with 2024-05-15 · 464 added, 480 removed, 614 unchanged (61% of the section changed)

Financial Statements

Versus Systems Inc.

Condensed Interim Consolidated Balance Sheets (Unaudited)

(Expressed in US Dollars)

Interim Consolidated Balance Sheets

in US Dollars)

June 30 December 31,

ASSETS (Unaudited)

Current assets

Cash 905,915 4,689,007

Receivables, net of allowance (Note 4) 10,250 18,222

Prepaids 913,658 160,474

Total current assets 1,829,823 4,867,703

1 unchanged sentence

Property and equipment, net (Note 6) 878 1,935

Total assets 1,830,701 4,878,317

LIABILITIES AND STOCKHOLDERS’ EQUITY

6 unchanged sentences

Common stock and additional paid in capital, no par value.

Unlimited authorized shares;

2,506,015 and 260,761 shares issued and outstanding, respectively

authorized shares;

2,506,015 common shares and no Class A shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively 147,290,988 147,130,123

Accumulated other comprehensive income 329,770 248,287

1 unchanged sentence

9,514,800 11,944,388

( 135,434,022 )

Non-controlling interest (Note 7) ( 7,717,036 ) ( 7,387,547 )

( 7,560,839 )

( 7,387,547 )

Total stockholders’ equity 1,797,764 4,556,841

Total liabilities and stockholders’ equity 1,830,701 4,878,317

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Versus Systems Inc.

Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

(Expressed in US Dollars)

Three Months Ended

accompanying notes are an integral part of these condensed interim consolidated financial statements.

Statements of Operations and Comprehensive Loss (Unaudited)

in US Dollars, except share and per share amounts)

Cost of revenues

5 unchanged sentences

( 2,310,655 )

( 3,001,104 )

( 3,637,544 )

Other income/(expense), net

2 unchanged sentences

( 2,310,655 )

( 3,001,425 )

( 3,637,544 )

Provision for income taxes

1 unchanged sentence

( 2,310,655 )

Other total comprehensive loss:

( 3,001,425 )

( 3,637,544 )

Other total comprehensive income (loss):

Change in foreign currency translation, net of tax

Total other comprehensive loss

Total other comprehensive income (loss)

Total comprehensive loss

1 unchanged sentence

( 2,291,806 )

( 2,840,560 )

( 3,609,347 )

comprehensive income attributable to non-controlling interest

2 unchanged sentences

( 2,022,912 )

( 2,511,071 )

( 3,207,759 )

Basic and diluted earnings per share to shareholders

Weighted average shares - basic and diluted

The accompanying notes are an integral part of

these condensed interim consolidated financial statements.

Versus Systems Inc.

Condensed Interim Consolidated Statements of Changes in Equity (Deficit)

(Expressed in US Dollars)

accompanying notes are an integral part of these condensed interim consolidated financial statements.

Interim Consolidated Statements of Changes in Equity (Deficit) (Unaudited)

in US Dollars)

Stockholders’

Non-controlling

stockholders’

Balance at December 31, 2022

at December 31, 2023

( 135,434,022 )

( 7,387,547 )

Exercise of warrants

Shares issued in public offering

Share issuance costs

Stock-based compensation

translation adjustment

and comprehensive loss

( 1,328,391 )

1 unchanged sentence

( 1,501,683 )

Cumulative translation adjustment

Loss and comprehensive loss

( 136,762,413 )

( 7,560,839 )

translation adjustment

and comprehensive loss

( 1,343,545 )

Balance at March 31, 2023

( 1,343,545 )

( 1,499,742 )

Balance at December 31, 2023

at June 30, 2024

( 138,105,958 )

( 7,717,036 )

Stock-based compensation

Cumulative translation adjustment

Loss and comprehensive loss

Stockholders’

stockholders’

at December 31, 2022

( 125,907,025 )

( 6,402,387 )

issued in public offering

issuance costs

( 1,247,113 )

Balance at March 31, 2024

( 1,247,113 )

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Versus Systems Inc.

Condensed Interim Consolidated Statements of Cash Flows (unaudited)

(Expressed in US Dollars)

Three Months Ended

translation adjustment

and comprehensive loss

( 1,194,195 )

( 1,326,889 )

( 127,101,220 )

( 6,535,081 )

translation adjustment

and comprehensive loss

( 2,041,761 )

( 2,310,655 )

at June 30, 2023

( 129,142,981 )

( 6,803,975 )

accompanying notes are an integral part of these condensed interim consolidated financial statements.

Interim Consolidated Statements of Cash Flows (unaudited)

in US Dollars)

Cash flows from operating activities

4 unchanged sentences

Amortization (Note 8)

Amortization of intangible assets (Note 8)

Amortization of intangible assets

Loss on sale of equipment

Accrued interest

Effect of foreign exchange

3 unchanged sentences

Accounts payable and accrued liabilities

Cash flows from operating activities

Cash flows used in operating activities

( 3,783,092 )

6 unchanged sentences

Payments of share issuance costs

Cash flows from financing activities

Cash flows provided by financing activities

INVESTING ACTIVITIES

1 unchanged sentence

Purchase of intangible assets

Cash flows from investing activities

Cash flows used in investing activities

Change in cash during the period

2 unchanged sentences

Cash - End of period

The accompanying notes are an integral part of

these condensed interim consolidated financial statements.

accompanying notes are an integral part of these condensed interim consolidated financial statements.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2024

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE

(Expressed in United States dollars)

1 unchanged sentence

Versus Systems Inc.

(the Company)

was continued under the Business Corporations Act (British Columbia) effective January 2, 2007.

(the Company) was

continued under the Business Corporations Act (British Columbia) effective January 2, 2007.

The Company’s head office and registered

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(MLB), National Hockey League (NHL), National Basketball Association (NBA) and the National Football League (NFL) to drive audience engagement.

The Company is in the process of considering

a number of strategic alternatives for the Company focused on maximizing shareholder value, including, but not limited to, an acquisition,

merger, reverse merger, sale of assets, strategic partnership, capital raise or other transaction.

The Company is hopeful that the change

in governing jurisdiction from British Columbia to Delaware will more appropriately reflect its shift in strategy and will (i) improve

our access to capital markets, increase funding and strategic flexibility and reduce the cost of capital, (ii) improve the Company’s

ability to execute an acquisitive growth strategy using its capital stock as consideration, and (iii) better focus management efforts

and international operation and better attract and retain key employees.

These condensed interim

consolidated financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it

will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary

course of operations.

Different bases of measurement may be appropriate if the Company is not expected to continue operations for

the foreseeable future.

As of March 31, 2024, the Company has not achieved positive cash flow from operations and is not able to

finance day to day activities through operations and as such, there is substantial doubt as to the Company’s ability to

continue as a going concern.

The Company’s continuation as a going concern is dependent upon its ability to attain profitable

operations and generate funds therefrom and/or raise equity capital or borrowings sufficient to meet current and future obligations.

These condensed interim consolidated financial statements do not include any adjustments as to the recoverability and classification

of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a

going concern.

The Company is actively pursuing a

range of strategic alternatives aimed at maximizing shareholder value and strengthening its market position.

We are in the process

of evaluating and implementing commercial agreements to expand the distribution of applications that leverage our proprietary

These arrangements are intended to enhance market reach, drive user growth, and establish relationships with

distribution partners.

These collaborations may support technology and development, integrate complementary technologies, and

improve our competitive edge.

In parallel, we are exploring various

strategic options, including potential acquisitions, mergers, reverse mergers, and the sale of non-core assets.

These alternatives would

be designed to create synergies, streamline operations, and generate revenue.

We are also seeking strategic partnerships and evaluating

opportunities for capital raises to support our growth initiatives.

Furthermore, the Company is focused on enhancing operational efficiency

by optimizing processes and upgrading technology systems to reduce costs and improve profitability.

Strengthening our financial health

through better cash flow management and prudent financial practices is also a key priority.

These comprehensive efforts are aimed at positioning

the Company for long-term success and delivering sustainable value to our shareholders.

The Company is undertaking a strategic

transition by shifting its governing jurisdiction from British Columbia to Delaware.

This change is expected to better align with our

evolving business strategy and deliver several key benefits.

Firstly, the transition to Delaware is anticipated to enhance our access

to investors and financial institutions within the United States.

Delaware’s renowned business-friendly legal environment and proximity

Northeast’s economic and financial centers is expected to facilitate easier access to funding, increase our strategic

flexibility, and reduce the overall cost of capital.

This improved access to funding would be crucial in supporting our future growth

initiatives and financing our strategic plans.

Secondly, the move is expected to bolster

our ability to execute an acquisitive growth strategy.

By operating under Delaware’s well-established corporate laws, we believe

that we will be better positioned to use our capital stock as consideration for acquisitions and be able to structure transactions with

more legal certainty.

This capability will allow us to pursue strategic opportunities more effectively, expand our business portfolio,

and achieve our growth objectives through well-structured transactions.

Additionally, the change in jurisdiction

will enable us to more effectively focus management efforts on our U.S.

and international operations.

This realignment would help streamline

our governance and operational strategies across different regions, thereby enhancing our ability to manage and optimize each market effectively.

Furthermore, the enhanced profile of companies incorporated in Delaware with operations in the U.S.

is likely to make the Company more

attractive to key employees and executives, aiding in the recruitment and retention of top talent critical for driving innovation and

In conjunction with these changes, the

Company is also exploring opportunities to raise capital through its shareholders.

Engaging with our shareholder base could provide an

additional source of funding that aligns with our strategic goals.

Accretive capital raises would support our expansion plans, enable

us to capitalize on growth opportunities, and strengthen our financial position.

Overall, the shift to Delaware, combined with the exploration of acquisition

opportunities and investor engagement, is part of our broader strategy to enhance operational effectiveness, execute our growth strategy,

and maximize shareholder value.

These condensed interim consolidated

financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue

in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations.

Different bases of measurement may be appropriate if the Company is not expected to continue operations for the foreseeable future.

of June 30, 2024, the Company has not achieved positive cash flow from operations and is not able to finance day to day activities through

operations and as such, there is substantial doubt as to the Company’s ability to continue as a going concern.

The Company’s

continuation as a going concern is dependent upon its ability to attain profitable operations and generate funds therefrom and/or raise

equity capital or borrowings sufficient to meet current and future obligations.

These condensed interim consolidated financial statements

do not include any adjustments as to the recoverability and classification of recorded asset amounts and classification of liabilities

that might be necessary should the Company be unable to continue as a going concern.

These adjustments could be material.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE

(Expressed in United States dollars)

BASIS OF PRESENTATION

4 unchanged sentences

Basis of measurement

These condensed interim consolidated financial statements have been

prepared on a historical cost basis, except for financial instruments classified as financial instruments at fair value.

these condensed interim consolidated financial statements have been prepared using the accrual basis of accounting.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2024

(Expressed in United States dollars)

BASIS OF PRESENTATION (continued)

These condensed interim consolidated

financial statements have been prepared on a historical cost basis, except for financial instruments classified as financial instruments

at fair value.

In addition, these condensed interim consolidated financial statements have been prepared using the accrual basis of accounting.

Functional and presentation

These condensed interim consolidated financial statements are presented

in United States dollars, unless otherwise noted, which is the functional currency of the Company and its subsidiaries.

These condensed interim consolidated

financial statements are presented in United States dollars, unless otherwise noted, which is the functional currency of the Company and

its subsidiaries.

Basis of consolidation

These condensed interim consolidated financial statements include the

accounts of Versus Systems Inc.

These condensed interim consolidated

financial statements include the accounts of Versus Systems Inc.

and its subsidiaries, from the date control was acquired.

Control exists when the Company possesses power

over an investee, has exposure to variable returns from the investee and has the ability to use its power over the investee to affect

All inter-company balances and transactions, and any unrealized income and expenses arising from inter-company transactions,

are eliminated on consolidation.

For partially owned subsidiaries, the interest attributable to non-controlling shareholders is reflected

in non-controlling interest.

Adjustments to non-controlling interest are accounted for as transactions with owners and adjustments that

do not involve the loss of control are based on a proportionate amount of the net assets of the subsidiary.

Name of Subsidiary

Place of Incorporation

Proportion of

Ownership Interest

Principal Activity

Control exists

when the Company possesses power over an investee, has exposure to variable returns from the investee and has the ability to use its power

over the investee to affect its returns.

All inter-company balances and transactions, and any unrealized income and expenses arising from

inter-company transactions, are eliminated on consolidation.

For partially owned subsidiaries, the interest attributable to non-controlling

shareholders is reflected in non-controlling interest.

Adjustments to non-controlling interest are accounted for as transactions with

owners and adjustments that do not involve the loss of control are based on a proportionate amount of the net assets of the subsidiary.

Name of Subsidiary Place of Incorporation Proportion of

Ownership Interest Principal Activity

Versus Systems (Holdco) Inc.

United States of America

Holding Company

United States of America 81.9 % Holding Company

Versus Systems UK, Ltd.

United Kingdom

Sales Company

United States of America

Technology Company

United Kingdom 81.9 % Sales Company

Versus LLC United States of America 81.9 % Technology Company

Xcite Interactive, Inc.

United States of America

Technology Company

United States of America 100.0 % Technology Company

Use of estimates

The preparation of these condensed interim consolidated financial statements

requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at

the date of the condensed interim consolidated financial statements.

Estimates and assumptions are continually evaluated and are based

on historical experience and management’s assessment of current events and other facts and circumstances that are considered to

The preparation of these condensed interim

consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts

of assets and liabilities at the date of the condensed interim consolidated financial statements.

Estimates and assumptions are continually

evaluated and are based on historical experience and management’s assessment of current events and other facts and circumstances

that are considered to be relevant.

Actual results could differ from these estimates.

Significant assumptions about the future and other sources of estimation

uncertainty that management has made at the end of the reporting period, that could result in a material adjustment to the carrying amounts

of assets and liabilities in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

i) Deferred income taxes

Significant assumptions about the future

and other sources of estimation uncertainty that management has made at the end of the reporting period, that could result in a material

adjustment to the carrying amounts of assets and liabilities in the event that actual results differ from assumptions made, relate to,

but are not limited to, the following:

Deferred income taxes

Deferred tax assets, including those

arising from un-utilized tax losses, require management to assess the likelihood that the Company will generate sufficient

taxable earnings in future periods in order to utilize recognized deferred tax assets.

Assumptions about the generation of future taxable

profits depend on management’s estimates of future cash flows.

In addition, future changes in tax laws could limit the ability of

the Company to obtain tax deductions in future periods.

To the extent that future cash flows and taxable income differ significantly from

estimates, the ability of the Company to realize the net deferred tax assets recorded at the reporting date could be impacted.

arising from un-utilized tax losses, require management to assess the likelihood that the Company will generate sufficient taxable earnings

in future periods in order to utilize recognized deferred tax assets.

Assumptions about the generation of future taxable profits depend

on management’s estimates of future cash flows.

In addition, future changes in tax laws could limit the ability of the Company to

obtain tax deductions in future periods.

To the extent that future cash flows and taxable income differ significantly from estimates,

the ability of the Company to realize the net deferred tax assets recorded at the reporting date could be impacted.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2024

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2024

(Expressed in United States dollars)

1 unchanged sentence

Valuation of share-based compensation

The Company uses the Black-Scholes

Option Pricing Model for valuation of share-based compensation.

Option pricing models require the input of subjective assumptions including

expected price volatility, interest rate, and forfeiture rate.

Input assumptions changes can materially affect the fair value estimate

and the Company’s earnings (losses).

The Company uses the Black-Scholes Option

Pricing Model for valuation of share-based compensation.

Option pricing models require the input of subjective assumptions including expected

price volatility, interest rate, and forfeiture rate.

Input assumptions changes can materially affect the fair value estimate and the

Company’s earnings (losses).

Depreciation and Amortization

12 unchanged sentences

Revenue Recognition

The Company’s contracts with

customers may include promises to transfer multiple products and services.

The Company’s contracts with customers

may include promises to transfer multiple products and services.

For these contracts, the Company accounts for individual performance

13 unchanged sentences

Potentially dilutive options and

warrants excluded from diluted loss per share as of March 31, 2024 totaled 915,154 (March 31, 2023 – 123,684 ).

warrants excluded from diluted loss per share as of June 30, 2024 totaled 911,775 (June 30, 2023 – 127,041 ).

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2024

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2024

(Expressed in United States dollars)

1 unchanged sentence

Property and equipment

Property and equipment is recorded

at cost less accumulated amortization and any impairments.

Property and equipment is recorded at

cost less accumulated amortization and any impairments.

Amortization is calculated based on the estimated residual value and estimated

economic life of the specific assets using the straight-line method over the period indicated below:

Straight line, 3 years

Right of use assets

Shorter of useful life or lease term

Computers Straight line, 3 years

Right of use assets Shorter of useful life or lease term

Financial instruments

13 unchanged sentences

or if the Company opts to measure them at FVTPL.

Company applies Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures (ASC 820).

ASC 820 defines fair value,

establishes a framework for measuring fair value and expands disclosures about fair value measurements.

ASC 820 requires disclosures to

be provided for fair value measurements.

ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs

used in measuring fair value as follows:

The Company applies Accounting Standards

Codification (ASC) 820, Fair Value Measurements and Disclosures (ASC 820).

ASC 820 defines fair value, establishes a framework for measuring

fair value and expands disclosures about fair value measurements.

ASC 820 requires disclosures to be provided for fair value measurements.

ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1-Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

1 unchanged sentence

Level 3-Unobservable inputs which are supported by little or no market activity.

ASC 820 recommends three main

approaches for measuring the fair value of assets and liabilities:

ASC 820 recommends three main approaches

for measuring the fair value of assets and liabilities:

the market approach, the income approach, and the cost approach.

Company uses the appropriate approach based on the nature of the asset or liability being measured.

Financial instruments include

cash, receivables, restricted deposit, accounts payable and accrued liabilities.

The carrying values of the financial instruments included

in current assets and liabilities approximate their fair values due to their short-term maturities.

The Company uses

the appropriate approach based on the nature of the asset or liability being measured.

Financial instruments include cash, receivables,

restricted deposit, accounts payable and accrued liabilities.

The carrying values of the financial instruments included in current assets

and liabilities approximate their fair values due to their short-term maturities.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2024

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2024

(Expressed in United States dollars)

SIGNIFICANT ACCOUNTING POLICIES (continued)

For fair value

measurements categorized within Level 3 of the fair value hierarchy, the Company uses its valuation processes to decide its valuation

policies and procedures and analyze changes in fair value measurements from period to period.

For assets and liabilities that are recognized

in the financial statements at fair value on a recurring basis, the Company determines whether transfers have occurred between levels

in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement

as a whole) at the end of each reporting.

For fair value measurements categorized

within Level 3 of the fair value hierarchy, the Company uses its valuation processes to decide its valuation policies and procedures

and analyze changes in fair value measurements from period to period.

For assets and liabilities that are recognized in the financial

statements at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy

by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole)

at the end of each reporting.

Financial assets and liabilities

20 unchanged sentences

Derecognition of financial assets

The Company derecognizes financial

assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and

substantially all of the associated risks and rewards of ownership to another entity.

Gains and losses on derecognition are generally

recognized in profit or loss.

As at March 31, 2024, the Company does

The Company derecognizes financial assets

only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially

all of the associated risks and rewards of ownership to another entity.

Gains and losses on derecognition are generally recognized in

profit or loss.

As at June 30, 2024, the Company does

not have any derivative financial assets and liabilities.

Intangible assets acquired separately were carried at cost at the time

of initial recognition.

Intangible assets acquired in a business combination and recognized separately from goodwill were initially recognized

at their fair value at the acquisition date.

Expenditure on research activities is recognized as an expense in the period in which it

Intangibles with a finite useful life were amortized and those with

an indefinite useful life are not amortized.

The useful life is the best estimate of the period over which the asset is expected to contribute

directly or indirectly to the future cash flows of the Company.

The useful life is based on the duration of the expected use of the asset

by the Company and the legal, regulatory or contractual provisions that constrain the useful life and future cash flows of the asset,

including regulatory acceptance and approval, obsolescence, demand, competition and other economic factors.

If an income approach is used

to measure the fair value of an intangible asset, the Company considers the period of expected cash flows used to measure the fair value

of the intangible asset, adjusted as appropriate for Company-specific factors discussed above, to determine the useful life for amortization

If no regulatory, contractual, competitive, economic or other factors limit the useful life of the intangible to the Company,

the useful life is considered indefinite.

Intangible assets acquired separately

were carried at cost at the time of initial recognition.

Intangible assets acquired in a business combination and recognized separately

from goodwill were initially recognized at their fair value at the acquisition date.

Expenditure on research activities is recognized

as an expense in the period in which it is incurred.

Intangibles with a finite useful life

were amortized and those with an indefinite useful life are not amortized.

The useful life is the best estimate of the period over which

the asset is expected to contribute directly or indirectly to the future cash flows of the Company.

The useful life is based on the duration

of the expected use of the asset by the Company and the legal, regulatory or contractual provisions that constrain the useful life and

future cash flows of the asset, including regulatory acceptance and approval, obsolescence, demand, competition and other economic factors.

If an income approach is used to measure the fair value of an intangible asset, the Company considers the period of expected cash flows

used to measure the fair value of the intangible asset, adjusted as appropriate for Company-specific factors discussed above, to determine

the useful life for amortization purposes.

If no regulatory, contractual, competitive, economic or other factors limit the useful life

of the intangible to the Company, the useful life is considered indefinite.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2024

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2024

(Expressed in United States dollars)

6 unchanged sentences

prospectively over the revised remaining useful life.

The Company’s intangible assets are amortized on a straight-line basis over

The Company’s intangible assets were amortized on a straight-line basis over

In the year development costs are incurred, amortization is based on a half year.

The Company allocates goodwill arising from business combinations to

reporting units that are expected to receive the benefits from the synergies of the business combination.

The carrying amount reporting

units to which goodwill has been allocated was tested annually for impairment or when there is an indication that the goodwill may be

The Company allocates goodwill arising

from business combinations to reporting units that are expected to receive the benefits from the synergies of the business combination.

The carrying amount reporting units to which goodwill has been allocated was tested annually for impairment or when there is an indication

that the goodwill may be impaired.

Any impairment is recognized as an expense immediately.

4 unchanged sentences

financings any deferred costs were offset against the proceeds.

Impairment of intangible assets

excluding goodwill

There are special requirements for the development of software to be

The costs incurred to establish the technological feasibility of the software that will be sold are expensed as research and development

when incurred.

Once technological feasibility has been achieved, the Company capitalizes the remaining costs incurred to develop the software

Costs were capitalized until the product is ready to be sold or marketed to customers, at which time, amortization of the capitalized

costs begins.

Impairment of intangible assets excluding

There are special requirements for the

development of software to be sold.

The costs incurred to establish the technological feasibility of the software that will be sold are

expensed as research and development when incurred.

Once technological feasibility has been achieved, the Company capitalizes the remaining

costs incurred to develop the software for sale.

Costs were capitalized until the product is ready to be sold or marketed to customers,

at which time, amortization of the capitalized costs begins.

At the end of each reporting period,

12 unchanged sentences

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2024

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2024

(Expressed in United States dollars)

5 unchanged sentences

may materially affect the Company’s future financial results.

The Company recognizes any uncertain income tax positions at the largest

amount that is more-likely-than-not to be sustained upon audit by relevant taxing authority.

An uncertain income tax position will not

be recognized if it has less than a 50 % likelihood of being sustained.

The Company’s policy is to recognize interest and/or penalties

related to income tax matters in income tax expense.

As of March 31, 2024 and December 31, 2023, the Company did not record any accruals

for interest and penalties.

The Company does not foresee material changes to its uncertain tax positions within its next twelve months.

The Company recognizes any uncertain

income tax positions at the largest amount that is more-likely-than-not to be sustained upon audit by relevant taxing authority.

income tax position will not be recognized if it has less than a 50 % likelihood of being sustained.

The Company’s policy is to recognize

interest and/or penalties related to income tax matters in income tax expense.

As of June 30, 2024 and December 31, 2023, the Company

did not record any accruals for interest and penalties.

The Company does not foresee material changes to its uncertain tax positions within

its next twelve months.

The Company’s tax years are subject to examination for 2020 and forward for U.S.

Federal tax purposes and for 2019 and forward for

state tax purposes.

The Company early adopted ASC 842,

Leases, as of January 1, 2019 using the modified retrospective application.

Federal tax purposes and

for 2019 and forward for state tax purposes.

The Company early adopted ASC 842, Leases,

as of January 1, 2019 using the modified retrospective application.

The Company assesses at contract inception

2 unchanged sentences

The lease term corresponds to the non-cancellable period of each contract.

All leases are accounted for as operating leases wherein rental payments

are expensed on a straight-line basis over the periods of their respective leases.

Operating leases (with an initial term of more than

12 months) are included in operating lease right-of-use (ROU) assets, operating lease liabilities (current), and operating lease liabilities

(non-current) in the condensed interim consolidated balance sheets.

ROU assets represent the Company’s right to use an underlying

asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease

The Company utilizes a market-based approach to estimate the incremental borrowing rate based on the information available at commencement

date in determining the present value of lease payments.

The operating lease ROU asset also includes any lease prepayments, reduced by

lease incentives and accrued rent.

The lease terms may include options to extend or terminate the lease when it is reasonably certain

that the Company will exercise that option.

All leases are accounted for as operating

leases wherein rental payments are expensed on a straight-line basis over the periods of their respective leases.

Operating leases (with

an initial term of more than 12 months) are included in operating lease right-of-use (ROU) assets, operating lease liabilities (current),

and operating lease liabilities (non-current) in the condensed interim consolidated balance sheets.

ROU assets represent the Company’s

right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments

arising from the lease.

Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease

payments over the lease term.

The Company utilizes a market-based approach to estimate the incremental borrowing rate based on the information

available at commencement date in determining the present value of lease payments.

The operating lease ROU asset also includes any lease

prepayments, reduced by lease incentives and accrued rent.

The lease terms may include options to extend or terminate the lease when it

is reasonably certain that the Company will exercise that option.

Loss contingencies

16 unchanged sentences

interest is adjusted to reflect the change in the non-controlling interest’s relative interest in the subsidiary, and the difference

between the adjustment to the carrying amount of non-controlling interests and the Company’s

share of proceeds received and/or consideration paid is recognized directly in equity and attributed to owners of the Company.

between the adjustment to the carrying amount of non-controlling interests and the Company’s share of proceeds received and/or consideration

paid is recognized directly in equity and attributed to owners of the Company.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2024

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2024

(Expressed in United States dollars)

14 unchanged sentences

The model incorporates various inputs, including the share price, expected volatility, expected term, risk-free interest rate, and any dividends.

The total proceeds from the issuance of equity units are allocated

between the common shares and the warrants based on their relative fair values at the date of issuance.

This allocation is reflected in

the equity section of the condensed interim consolidated balance sheet, with the fair value of the warrants recorded as a component of

additional paid-in capital in the equity section.

If the warrants expire unexercised, the amount remains in additional paid-in capital.

The total proceeds from the issuance

of equity units are allocated between the common shares and the warrants based on their relative fair values at the date of issuance.

This allocation is reflected in the equity section of the condensed interim consolidated balance sheet, with the fair value of the warrants

recorded as a component of additional paid-in capital in the equity section.

If the warrants expire unexercised, the amount remains in

additional paid-in capital.

This method of valuation and allocation

ensures compliance with the fair value measurement and equity classification requirements of U.S.

Warrants issued in equity financing

The Company engages in equity financing

transactions to obtain funds necessary to continue operations.

These equity financing transactions may involve issuance of common shares

Each unit comprises a certain number of shares and a certain number of warrants.

Depending on the terms and conditions of each

equity financing transaction, the warrants are exercisable into additional common shares at a price prior to expiry as stipulated by the

Warrants that are part of units are

assigned a value based on the residual value, if any.

As of February 1, 2021, the warrants

were considered a derivative liability since the obligation to issue shares was not fixed in the Company’s functional currency.

The derivative warrant liability was measured as fair value at issue with subsequent changes recognized in the consolidated statement

of loss and comprehensive loss.

A $ 9,743,659 warrant derivative loss was recorded in the consolidated statement of loss and comprehensive

loss beginning February 1, 2021 when the Company changed its functional currency.

As of March 31, 2024 and the associated warrants have

expired and the remaining balance of the warrant liability is $ 0 .

The Company uses the Black-Scholes

Option Pricing Model for valuation of share-based payments and derivative financial assets (e.g.

investments in warrants).

Option pricing

models require the input of subjective assumptions including expected price volatility, interest rates, and forfeiture rates.

in the input assumptions can materially affect the fair value estimate and the Company’s earnings.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2024

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2024

(Expressed in United States dollars)

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the individual is an employee for legal or tax purposes, or provides services similar to those performed by an employee.

The fair value of stock options is

measured on the date of grant, using the Black-Scholes option pricing model, and is recognized over the vesting period.

Consideration

paid for the shares on the exercise of stock options is credited to capital stock.

The fair value of stock options is measured

on the date of grant, using the Black-Scholes option pricing model, and is recognized over the vesting period.

Consideration paid for

the shares on the exercise of stock options is credited to capital stock.

In situations where equity instruments

4 unchanged sentences

Revenue recognition

In general, the Company recognizes

revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company, where

there is evidence of an arrangement, when the selling price is fixed or determinable, and when specific criteria have been met or there

are no significant remaining performance obligations for each of the Company’s activities as described below.

Foreseeable losses,

if any, are recognized in the year or period in which the loss is determined.

In general, the Company recognizes revenue

when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company, where there

is evidence of an arrangement, when the selling price is fixed or determinable, and when specific criteria have been met or there are

no significant remaining performance obligations for each of the Company’s activities as described below.

Foreseeable losses, if

any, are recognized in the year or period in which the loss is determined.

The Company earns revenue in two primary

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advertising on a net basis, which excludes amounts payable to partners under the Company’s revenue sharing agreements.

The Company’s contracts with

customers may include promises to transfer multiple products and services.

The Company’s contracts with customers

may include promises to transfer multiple products and services.

For these contracts, the Company accounts for individual performance

5 unchanged sentences

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2024

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2024

(Expressed in United States dollars)

24 unchanged sentences

Foreign currency translation gains and losses are recognized in other comprehensive income

and accumulated in equity on the condensed interim consolidated statement of stockholders’ equity.

and accumulated in equity on the condensed interim consolidated statements of stockholders’ equity.

Comprehensive income (loss)

Comprehensive income (loss) consists of net income (loss) and other

comprehensive income (loss) and represents the change in shareholders’ equity (deficit) which results from transactions and events

from sources other than the Company’s shareholders.

Comprehensive loss differs from net loss for the periods ended March 31, 2024

and 2023, due to the effects of foreign translation gains and losses.

Comprehensive income (loss) consists

of net income (loss) and other comprehensive income (loss) and represents the change in shareholders’ equity (deficit) which results

from transactions and events from sources other than the Company’s shareholders.

Comprehensive loss differs from net loss for the

periods ended June 30, 2024 and 2023, due to the effects of foreign translation gains and losses.

Recent accounting pronouncements

1 unchanged sentence

New accounting pronouncements

In March 2023, the FASB issued ASU 2023-01, Leases (Topic 842):

Control Arrangements.

This ASU clarifies leasing transactions among entities under common control, emphasizing the use of written terms

for lease existence and classification.

It is effective for public business entities for fiscal years beginning after December 15, 2023,

including interim periods within those fiscal years.

The Company is currently evaluating how this will impact its condensed interim consolidated

financial statements and disclosures.

In March 2023, the FASB issued ASU 2023-02, Investments—Equity

Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method.

This ASU expands the proportional amortization method to additional types of tax equity investments.

It allows entities to apply this

method to a broader range of investments that generate tax credits, providing greater flexibility in accounting for these investments.

ASU 2023-02 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

Company is currently evaluating how this ASU will impact its condensed interim consolidated financial statements and disclosures.

In March 2023, the FASB issued

ASU 2023-03, which amends various SEC paragraphs in the Accounting Standards Codification.

This includes amendments to Presentation

of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities

from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718).

The amendments are in response

to SEC Staff Accounting Bulletin No.

120 and other SEC staff announcements and guidance.

This ASU does not introduce new

guidance and therefore does not have a specified transition or effective date.

However, for smaller reporting companies, the ASU is

effective for fiscal years beginning after December 15, 2023.

The Company is currently evaluating how this ASU will impact its

condensed interim consolidated financial statements and disclosures.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2024

(Expressed in United States dollars)

SIGNIFICANT ACCOUNTING POLICIES (continued)

In August 2023, the FASB issued ASU

2023-05, Business Combinations—Joint Venture Formations (Subtopic 805-60):

In August 2023, the FASB issued ASU 2023-05, Business Combinations—Joint

Venture Formations (Subtopic 805-60):

Recognition and Initial Measurement.

This ASU addresses

accounting for assets and liabilities contributed to a joint venture.

It requires entities to recognize and measure these contributions

at fair value as of the joint venture formation date.

This ASU is applicable to all entities involved in forming joint ventures and is

effective for joint ventures formed on or after January 1, 2025.

Entities may choose to apply these

amendments retrospectively if sufficient information is available.

The Company is currently evaluating how this ASU will impact its

condensed interim consolidated financial statements and disclosures.

In October 2023, the FASB issued

ASU 2023-06, Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification

This ASU introduces changes to the disclosure requirements, aligning them more closely with the SEC’s initiatives

for simplification and update.

It specifically addresses various amendments in the FASB Accounting Standards Codification in

response to the SEC’s drive for clearer and more streamlined disclosures.

This ASU is effective for public business entities

classified as smaller reporting companies for fiscal years beginning after December 15, 2023.

The Company is currently evaluating

how this ASU will impact its condensed interim consolidated financial statements and disclosures.

This ASU addresses accounting for assets and liabilities contributed

to a joint venture.

It requires entities to recognize and measure these contributions at fair value as of the joint venture formation

This ASU is applicable to all entities involved in forming joint ventures and is effective for joint ventures formed on or after

January 1, 2025.

The Company is currently evaluating how this ASU will impact its condensed interim consolidated financial statements

and disclosures.

In November 2023, the FASB issued ASU

10 unchanged sentences

impact its condensed interim consolidated financial statements and disclosures.

In December 2023, the FASB issued

ASU 2023-09, Income Taxes (Topic 740):

In December 2023, the FASB issued ASU

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

This ASU enhances the transparency and decision

usefulness of income tax disclosures.

It is designed to provide more detailed information about an entity’s income tax

expenses, liabilities, and deferred tax items, potentially affecting how companies report and disclose their income tax-related

The ASU is effective for public business entities for annual periods beginning after December 15, 2024, including

interim periods within those fiscal years.

The Company is currently evaluating how this ASU will impact its condensed interim

consolidated financial statements and disclosures.

Recent adopted accounting pronouncements

In January 2017, the FASB issued ASU

2017-04, Intangibles—Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment, to simplify the subsequent

measurement of goodwill by eliminating Step 2 from the goodwill impairment test.

An entity no longer will determine goodwill impairment

by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities

as if the reporting unit had been acquired in a business combination.

Instead, under the amendments in this update, an entity should perform

its annual, or interim, goodwill impairment test by comparing

the fair value of a reporting unit with its carrying amount.

The FASB also eliminated the requirements for any reporting unit with a zero

or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill

impairment test.

It is effective for public business entities for fiscal years beginning after December 15, 2022, with early adoption

The Company adopted the amendments in this update during the current year and the adoption did not have a material impact on

its condensed interim consolidated financial statements and disclosures.

This ASU enhances the transparency and decision usefulness

of income tax disclosures.

It is designed to provide more detailed information about an entity’s income tax expenses, liabilities,

and deferred tax items, potentially affecting how companies report and disclose their income tax-related information.

The ASU is effective

for public business entities for annual periods beginning after December 15, 2024, including interim periods within those fiscal years.

The Company is currently evaluating how this ASU will impact its condensed interim consolidated financial statements and disclosures.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2024

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2024

(Expressed in United States dollars)

SIGNIFICANT ACCOUNTING POLICIES (continued)

In October 2021, the FASB issued ASU

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which

provides an exception to fair value measurement for contract assets and contract liabilities related to revenue contracts acquired in

a business combination.

ASU 2021-08 requires an entity (acquirer) to recognize and measure contract assets and contract liabilities acquired

in a business combination in accordance with Topic 606.

At the acquisition date, an acquirer should account for the related revenue contracts

in accordance with Topic 606 as if it had originated the contract.

Recent adopted accounting pronouncements

In March 2023, the FASB issued ASU 2023-01,

Leases (Topic 842):

Common Control Arrangements.

This ASU clarifies leasing transactions among entities under common control, emphasizing

the use of written terms for lease existence and classification.

It is effective for public business entities for fiscal years beginning

after December 15, 2022, with early adoption permitted.

The Company adopted the amendments in this update during the current year and

the adoption did not have a material impact on its condensed interim consolidated financial statements and disclosures.

In June 2016, the FASB issued ASU 2016-13,

Financial Instruments—Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments, which significantly changes

how entities measure credit losses for most financial assets and certain other instruments.

ASU 2016-13 introduces a new model for recognizing

credit losses, known as the current expected credit loss (CECL) model, which is based on expected losses rather than incurred losses.

Under the CECL model, entities will be required to estimate all expected credit losses over the life of the asset.

This update applies

to all entities holding financial assets and net investment in leases that are not accounted for at fair value through net income.

ASU is effective for public business entities classified as smaller reporting companies for fiscal years beginning after December 15,

after December 15, 2023, including interim periods within those fiscal years.

The Company adopted the amendments in this update during

the current year and the adoption did not have a material impact on its condensed interim consolidated financial statements and disclosures.

In March 2023, the FASB issued ASU 2023-02,

Investments—Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional

Amortization Method.

This ASU expands the proportional amortization method to additional types of tax equity investments.

It allows entities

to apply this method to a broader range of investments that generate tax credits, providing greater flexibility in accounting for these

ASU 2023-02 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal

The Company adopted the amendments in this update during the current year and the adoption did not have a material impact on its

condensed interim consolidated financial statements and disclosures.

In March 2023, the FASB issued ASU 2023-03,

which amends various SEC paragraphs in the Accounting Standards Codification.

This includes amendments to Presentation of Financial Statements

(Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity

(Topic 505), and Compensation—Stock Compensation (Topic 718).

The amendments are in response to SEC Staff Accounting Bulletin No.

120 and other SEC staff announcements and guidance.

This ASU does not introduce new guidance and therefore does not have a specified transition

or effective date.

However, for smaller reporting companies, the ASU is effective for fiscal years beginning after December 15, 2023.

The Company adopted the amendments in this update during the current year and the adoption did not have a material impact on its condensed

interim consolidated financial statements and disclosures.

In October 2023, the FASB issued ASU

2023-06, Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.

This ASU introduces changes to the disclosure requirements, aligning them more closely with the SEC’s initiatives for simplification

It specifically addresses various amendments in the FASB Accounting Standards Codification in response to the SEC’s

drive for clearer and more streamlined disclosures.

This ASU is effective for public business entities classified as smaller reporting

companies for fiscal years beginning after December 15, 2023.

The Company adopted the amendments in this update during the current year

and the adoption did not have a material impact on its condensed interim consolidated financial statements and disclosures.

Management does not believe any other

1 unchanged sentence

or future consolidated financial statements.

As of March 31, 2024, accounts receivable

consists of customer receivables of $ 3,874 (net an allowance for credit losses of $ 754 ) and Goods and Services Tax (GST) receivable of

As of December 31, 2023, accounts receivable consists of customer receivables of $ 8,680 (net an allowance for credit losses of

$ 2,700 ) and GST receivable of $ 9,542 .

As of June 30, 2024, accounts receivable

consists of customer receivables of none and Goods and Services Tax (GST) receivable of $ 10,250 As of December 31, 2023, accounts receivable

consists of customer receivables of $ 8,680 (net an allowance for credit losses of $ 2,700 ) and GST receivable of $ 9,542 .

RESTRICTED DEPOSIT

As at March 31, 2024, restricted deposits

consisted of $ 8,491 (December 31, 2023 - $ 8,679 ) held in a guaranteed investment certificate as collateral for a corporate credit card.

As at June 30, 2024, restricted deposits

consisted of none (December 31, 2023 - $ 8,679 ) held in a guaranteed investment certificate as collateral for a corporate credit card.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2024

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2024

(Expressed in United States dollars)

2 unchanged sentences

At December 31, 2023

At March 31, 2024

At June 30, 2024

Accumulated amortization

3 unchanged sentences

Amortization for the period

At March 31, 2024

At June 30, 2024

Carrying amounts

1 unchanged sentence

At December 31, 2023

At March 31, 2024

At June 30, 2024

NON-CONTROLLING INTEREST IN VERSUS LLC

14 unchanged sentences

The effect on non-controlling interest was a reduction of $ 4,376,337 .

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2024

(Expressed in United States dollars)

NON-CONTROLLING INTEREST IN VERSUS LLC (continued)

The following table presents summarized financial information before

intragroup eliminations for the non-wholly owned subsidiary as of and for the three months ended March 31, 2024 and 2023.

The following table presents summarized

financial information before intragroup eliminations for the non-wholly owned subsidiary as of and for the six months ended June 30, 2024

Non-controlling interest percentage

6 unchanged sentences

( 3,001,425 )

( 2,218,719 )

Net loss attributed to non-controlling interest

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2024

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2024

(Expressed in United States dollars)

15 unchanged sentences

At December 31, 2023

At March 31, 2024

At June 30, 2024

Accumulated amortization

1 unchanged sentence

At December 31, 2023

At March 31, 2024

At June 30, 2024

Carrying amounts

1 unchanged sentence

At December 31, 2023

At March 31, 2024

At June 30, 2024

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

5 unchanged sentences

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2024

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2024

(Expressed in United States dollars)

2 unchanged sentences

the Company repaid $ 2,519,835 of principal on its outstanding note payable – related party balances.

As at December 31, 2023,

the Company had recorded $0 in accrued interest.

During the three months ended March 31, 2023 the Company recorded finance expense of

$ 24,625 (December 31, 2023 - $ 60,770 ), related to bringing the notes to their present value.

As at December 31, 2023, the

Company had recorded $0 in accrued interest.

During the three and six months ended

June 30, 2023 the Company recorded finance expense of $ 0 (December 31, 2023 - $ 60,770 ), related to bringing the notes to their present

Balance, December 31, 2022

6 unchanged sentences

The Company is authorized to issue

an unlimited number of Class A Shares.

The Class A Shares do not have any special rights or restrictions attached., respectively.

Class A shares were converted to common shares on December 22, 2023, and as of December 31, 2023, there were 0 Class A Shares issued and

an unlimited number of Class A Shares and an unlimited number of common shares.

The Class A Shares and common shares do not have any

special rights or restrictions attached, respectively.

The Class A shares were converted to common shares on December 22, 2023, and as of December

31, 2023, there were no Class A Shares issued and outstanding and only common shares outstanding.

Issued share capital

7 unchanged sentences

v) Issued 21 shares upon the conversion of Class A shares.

During the six months ended June 30, 2024, the Company:

Did not enter into any capital transactions.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2024

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2024

(Expressed in United States dollars)

12 unchanged sentences

Balance – December 31, 2023

Balance – March 31, 2024

During the periods ended March 31, 2024 and 2023 the Company recorded

share-based compensation of $ 160,865 and $ 1,247,113 , respectively, relating to options vested during the period.

Balance – June 30, 2024

During the three months ended June 30, 2024 and 2023 the Company recorded

share-based compensation of none and $ 90,896 , respectively, relating to options vested during the period.

During the six months ended

June 30, 2024 and 2023 the Company recorded share-based compensation of $ 160,865 and $( 1,156,217 ), respectively, relating to options vested

during the period.

The Company used the following assumptions in calculating

the fair value of stock options for the period ended:

2024 June 30,

Risk-free interest rate 3.93 % 3.93 %

Expected life of options

Expected dividend yield

Expected life of options 3.38 years 5.0 years

Expected dividend yield Nil Nil

Volatility 132.65 % 132.65 %

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2024

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2024

(Expressed in United States dollars)

SHARE CAPITAL (continued)

At March 31, 2024, the Company had

incentive stock options outstanding as follows:

Weighted Average

At June 30, 2024, the Company had incentive

stock options outstanding as follows:

Expiry Date Options Outstanding Exercise

Price Weighted

Remaining Life

April 2, 2024

June 27, 2024

September 27, 2024 572 1,087.20 0.24

October 22, 2024

July 24, 2025 287 715.20 1.07

July 31, 2025 276 715.20 1.08

August 10, 2025

June 1, 2026 59 1,689.60 1.92

3 unchanged sentences

February 13, 2028 11,531 14.40 3.62

15,130 146.03 3.27

Share purchase warrants

1 unchanged sentence

is as follows:

Number Outstanding

Weighted Average Exercise Price

Balance –December 31, 2022

Balance – December 31, 2023

Balance – March 31, 2024 (1)

(1) Unit A warrant balance is

7,030 as of March 31, 2024.

– June 30, 2024

During the year ended December 31, 2023, the Company:

1 unchanged sentence

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2024

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2024

(Expressed in United States dollars)

12 unchanged sentences

Weighted average fair value per warrant

At March 31, 2024, the Company had

share purchase warrants outstanding as follows:

Expiration Date

Weighted Average

Remaining Life

At June 30, 2024, the Company had share

purchase warrants outstanding as follows:

Expiration Date Warrants

January 20, 2026 7,030 1,800.00 1.56

6 unchanged sentences

October 17, 2028 24,457 4.05 4.30

(1) Unit A warrant balance is 7,030 as of March 31, 2024.

896,645 32.36 4.19

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2024

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2024

(Expressed in United States dollars)

RELATED PARTY TRANSACTIONS

The following summarizes the

Company’s related party transactions, not disclosed elsewhere in these condensed interim consolidated financial statements,

during the three months ended March 31, 2024 and 2023.

Key management personnel includes the Chief Executive Officer (CEO), Chief

Financial Officer (CFO) and certain directors and officers and companies controlled or significantly influenced by them.

The following summarizes the Company’s

related party transactions, not disclosed elsewhere in these condensed interim consolidated financial statements, during the six months

ended June 30, 2024 and 2023.

Key management personnel includes the Chief Executive Officer (CEO), Chief Financial Officer (CFO) and certain

directors and officers and companies controlled or significantly influenced by them.

Key Management Personnel

7 unchanged sentences

Other Related Party Payments

Office sharing and occupancy costs

of $ 0 (December 31, 2023 - $ 64,741 ) were paid or accrued to a corporation that shares management in common with the Company.

Office sharing and occupancy costs of

$ 0 (December 31, 2023 - $ 64,741 ) were paid or accrued to a corporation that shares management in common with the Company.

Amounts Outstanding

a) At March 31, 2024, a total of $ 71,471 (December 31, 2023 - $ 177,500 ) was included in accounts payable and accrued liabilities owing to officers, directors, or companies controlled by them.

a) At June 30, 2024, a total of $ 0 (December 31, 2023 - $ 177,500 ) was included in accounts payable and accrued liabilities owing to officers, directors, or companies controlled by them.

These amounts are unsecured and non-interest bearing (Note 9).

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2024

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2024

(Expressed in United States dollars)

14 unchanged sentences

in business accounts which are available on demand.

The Company has not raised additional capital during the three months ended March

The Company has not raised additional capital during the three and six months ended

June 30, 2024.

Interest rate risk

2 unchanged sentences

The fair value of its portfolio is relatively unaffected by changes in short-term interest rates.

1% change in interest rates would have no significant impact on profit or loss for the year ended March 31, 2024.

1% change in interest rates would have no significant impact on profit or loss for the six months ended June 30, 2024.

Foreign exchange risk

3 unchanged sentences

The Company was exposed to the following

foreign currency risk as at March 31, 2024 and December 31, 2023:

foreign currency risk as at June 30, 2024 and December 31, 2023:

Accounts payable and accrued liabilities

As at March 31, 2024, with other variables

As at June 30, 2024, with other variables

unchanged, a +/- 10 % change in the United States dollar to Canadian dollar exchange rate would impact the Company’s net loss by

1 unchanged sentence

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2024

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2024

(Expressed in United States dollars)

17 unchanged sentences

There have been no changes to the Company’s

approach to capital management during the year ended March 31, 2024.

approach to capital management during the six months ended June 30, 2024.

GEOGRAPHICAL SEGMENTED INFORMATION

6 unchanged sentences

segments are as follows:

March 31, 2024

March 31, 2023

June 30, 2024

June 30, 2023

SUBSEQUENT EVENTS

The Company has evaluated subsequent events after the balance sheet

date of March 31, 2024 through May 15, 2024, the date the consolidated financial statements were issued.

Based upon its evaluation, management

has determined that no subsequent events have occurred that would require recognition in the accompanying condensed interim consolidated

financial statements or disclosure in the notes thereto.

The Company has evaluated subsequent

events after the balance sheet date of June 30, 2024 through August 14, 2024, the date the consolidated financial statements were issued.

Based upon its evaluation, management has determined that no subsequent events have occurred that would require recognition in the accompanying

condensed interim consolidated financial statements or disclosure in the notes thereto.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements