What changed in this filing

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Item 1. Financial Statements

2025-05-15 compared with 2024-11-14 · 292 added, 564 removed, 181 unchanged (83% of the section changed)

1 unchanged sentence

Versus Systems Inc.

Condensed Consolidated Balance Sheets

September 30, December 31,

Condensed Consolidated Balance Sheets (Unaudited)

March 31, December 31,

Current assets

Cash 2,432,219 3,065,914

Receivables, net of allowance 754 18,222

Prepaids 296,388 469,646

Total current assets 2,728,607 3,535,560

Restricted deposit -

Property and equipment, net -

Total assets 2,728,607 3,535,560

2 unchanged sentences

Accounts payable and accrued liabilities 2,062 26,288

Deferred revenue 1,164 35,049

Total current liabilities 2,062 26,288

Total liabilities 2,062 26,288

1 unchanged sentence

Stockholders’ equity

Share capital

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

Unlimited authorized shares;

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

4,901,677 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively 150,953,018 150,587,018

Accumulated other comprehensive income 326,409 318,659

5 unchanged sentences

The accompanying notes are an integral part of

these condensed interim consolidated financial statements.

these condensed consolidated financial statements.

Versus Systems Inc.

Condensed Consolidated Statements of

Operations and Comprehensive Loss (Unaudited)

September 30,

Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

Cost of revenues

3 unchanged sentences

Operating loss

Other income (expense):

Employee retention credit refund

Other income (expense)

( 1,172,761 )

( 1,501,436 )

Other income/(expense), net

Loss before provision

( 1,156,477 )

( 1,501,683 )

Provision for income taxes

Other total comprehensive income (loss):

( 1,156,477 )

( 1,501,683 )

Net loss attributable to non-controlling interest

Net loss attributable to Versus Systems, Inc.

( 1,328,391 )

Per Share Data:

Basic and diluted earnings per share to shareholders

Weighted average shares - basic and diluted

Comprehensive income (loss)

( 1,156,477 )

( 1,501,683 )

Other comprehensive income (loss), net of tax

Change in foreign currency translation, net of tax

Total other comprehensive income (loss)

Total comprehensive loss

comprehensive income (loss) attributable to non-controlling interest

( 1,164,227 )

( 1,461,992 )

comprehensive income attributable to non-controlling interest

Comprehensive loss attributable to shareholders

Basic and diluted earnings per share to shareholders

Weighted average shares - basic and diluted

$ ( 1,288,700 )

The accompanying notes are an integral part of

these condensed interim consolidated financial statements.

these condensed consolidated financial statements.

Versus Systems Inc.

Condensed Consolidated Statements of Changes

in Equity (Deficit) (Unaudited)

comprehensive

Condensed Consolidated Statements of Changes in Equity (Unaudited)

Stockholders’

Non-controlling

stockholders’

at December 31, 2023

Balance at December 31, 2023

( 135,434,022 )

translation adjustment

( 7,387,547 )

translation adjustment

at June 30, 2024

Stock-based compensation

Cumulative translation adjustment

( 1,328,391 )

translation adjustment

at September 30, 2024

( 1,328,391 )

comprehensive

income (loss)

Stockholders’

stockholders’

at December 31, 2022

( 1,501,683 )

issued in public offering

issuance costs

translation adjustment

Balance at March 31, 2024

( 127,101,220 )

translation adjustment

at June 30, 2023

( 6,535,081 )

translation adjustment

at September 30, 2023

Balance at December 31, 2024

( 139,476,353 )

( 7,920,052 )

Cumulative translation adjustment

Stock-based compensation

( 1,156,477 )

Balance at March 31, 2025

( 140,438,099 )

( 8,114,783 )

The accompanying notes are an integral part of

these condensed interim consolidated financial statements.

these condensed consolidated financial statements.

Versus Systems Inc.

Condensed Consolidated Statements of Cash Flows

September 30,

Condensed Consolidated Statements of Cash Flows (unaudited)

Three Months Ended

Cash flows from operating activities

OPERATING ACTIVITIES

Adjustments to reconcile net loss to cash used in operating activities:

Amortization of intangible assets

Loss on sale of equipment

Accrued interest

Share-based compensation

( 1,156,477 )

( 1,501,683 )

Adjustments to reconcile net loss to net cash:

Stock-based compensation

Changes in operating assets and liabilities:

Proceeds from office security deposit

Deferred revenue

Accounts payable and accrued liabilities

Cash flows used in operating activities

INVESTING ACTIVITIES

Proceeds from sale of equipment

Purchase of intangible assets

Cash flows used in investing activities

FINANCING ACTIVITIES

Repayment of notes payable - related party

Proceeds from warrant exercises

Proceeds from share issuances

Payments for finance lease liabilities

Payments of share issuance costs

Cash flows provided by financing activities

Effect of exchange rates on cash and cash equivalents

Cash used in operating activities

( 1,757,911 )

Effect of foreign exchange

Change in cash during the period

( 1,796,651 )

Cash - Beginning of period

4 unchanged sentences

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

NATURE OF OPERATIONS

NATURE OF OPERATIONS AND LIQUIDITY

Versus Systems Inc.

2 unchanged sentences

The Company’s head office and registered

and records office is 1558 West Hastings Street, Vancouver, BC, V6C 3J4, Canada.

The Company’s common stock is traded on the NASDAQ

under the symbol “VS”.

and records office is located at 3500 South DuPont Highway Dover, DE 19901.

The Company’s common stock is traded on the NASDAQ under

the symbol “VS”.

The Company’s Unit A warrants are traded on NASDAQ under “VSSYW”.

On November 9,

2022, the Company completed a one-for-15 reverse stock split of the Company’s common shares.

On December 28, 2023, the Company completed

a one-for-16 reverse stock split of the Company’s common shares.

All share and per share data are presented to reflect the reverse

share splits on a retroactive basis.

All share and per share

data are presented to reflect the reverse share splits on a retroactive basis.

The Company is engaged in the technology

7 unchanged sentences

The Company partners with professional sports franchises across Major League Baseball

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

(“MLB”), National Hockey League (“NHL”), National Basketball Association (“NBA”) and the National

Football League (“NFL”) to drive audience engagement.

In September 2024 the Company closed

down its operations within the United Kingdom, Versus Systems UK, Ltd.

The United Kingdom had limited activity for the nine months ended

September 30, 2024 and 2023, respectively.

On August 22, 2024, the Company received

a letter from The Nasdaq Capital Market (“Nasdaq”), notifying the Company that it is no longer in compliance with the minimum

stockholders’ equity requirement for continued listing on the Nasdaq Capital Market.

Nasdaq Listing Rule 5550(b)(1) requires listed

companies to maintain stockholders’ equity of at least $ 2.5 million.

In addition, as of August 22, 2024, the Company did not meet

the alternative compliance standards relating to the market value of listed securities or net income from continuing operations.

In October 2024, the Company entered into a $ 2,500,000

funding agreement with ASPIS Cyber Technologies (“ASPIS”).

At that time, ASPIS delivered to the Company $ 500,000 and agreed

to, on or before November 15, 2024, deliver to the Company an additional $ 2,000,000 .

However, the Company has informally agreed to defer

the $ 2,000,000 until Nasdaq has progressed further with its review of the Company’s plan.

Pursuant to that agreement, the Company

issued to ASPIS a senior convertible promissory note in the principal amount of the total amount funded.

The note provides that upon approval

by the Company’s shareholders and the Company’s redomiciling to Delaware the amount funded to date plus, at ASPIS’s

option, any accrued and unpaid interest thereon, will be converted into units of the Company, each equal to (a) one common share of the

Company and (b) a warrant to purchase one-half of one Common Share at a purchase price of $ 4.00 per one whole share, exercisable for five

Under the terms of the agreement, upon the Company’s shareholders’

approval and the Company’s redomiciling to Delaware, assuming only $ 2,500,000 is funded, ASPIS will receive upon the Conversion

2,155,172 Common Shares and warrants to purchase an additional 1,077,586 shares.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

NATURE OF OPERATIONS (CONTINUED)

Additionally,

the Company entered into a Technology License and Software Development Agreement (the “License Agreement”) in October 2024

which provides for the Company to license its gamification, engagement and QR code technology to ASPIS for use in ASPIS’s website

business and for development of additional functionality for Versus’ technology.

to the License Agreement, the Company granted ASPIS a license to use Versus’ technology in ASPIS’s website business that

provides cybersecurity technology.

ASPIS will pay for any required technology modifications, improvements and developments to Versus’

technology in addition to a license fee of $ 165,000 per month beginning in January 2025.

The Company will retain ownership of Versus’

technology and ASPIS will hold an exclusive license to use Versus’ technology in the cybersecurity industry so long as ASPIS continues

to pay the monthly license fee.

The License Agreement has an initial term of one year with successive renewal terms of one year each

upon ASPIS’s written approval, subject to earlier termination by the Company or ASPIS.

In October 2024, the Company warrant holders exercised

240,490 warrants issued in December 2023 offering upon such exercise, the Company issued 240,490 common shares at a price of $ 3.68 per

share, for $ 885,003 proceeds.

Going Concern

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 September 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 condensed 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.

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

31, 2025, 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 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.

Management’s plans include attempting to

secure additional required funding through equity or debt financing, if available, seeking to enter into a partnership or other strategic

Management’s plans include attempting

to secure additional required funding through equity or debt financing, if available, seeking to enter into a partnership or other strategic

agreement regarding, or sales or out-licensing of, its technology.

1 unchanged sentence

in the future.

If the Company does not obtain required funding, the Company’s cash resources will be depleted in the near term

and the Company would be required to materially reduce or suspend operations, which would likely have a material adverse effect on the

Company’s business, stock price and our relationships with third parties with whom the Company have business relationships.

Company does not have sufficient funds to continue operations, the Company could be required to seek bankruptcy protection, dissolution

or liquidation, or other alternatives that could result in the Company’s stockholders losing some or all of their investment in

The Company has implemented expense reduction measures including, without limitation, employee headcount reductions and the reduction

or discontinuation of certain product development programs.

Additionally, the Company is not in compliance with certain listing standards

of the Nasdaq National Market and there can be no assurance that the Company will be successful in curing the deficiencies and regaining

compliance by the applicable cure dates.

(See Note 11 for additional information).

If the Company does not obtain required funding, the Company’s cash resources will be depleted in the near term and

the Company would be required to materially reduce or suspend operations, which would likely have a material adverse effect on the Company’s

business, stock price and our relationships with third parties with whom the Company have business relationships.

If the Company does

not have sufficient funds to continue operations, the Company could be required to seek bankruptcy protection, dissolution or liquidation,

or other alternatives that could result in the Company’s stockholders losing some or all of their investment in us.

has implemented expense reduction measures including, without limitation, employee headcount reductions and the reduction or discontinuation

of certain product development programs.

Additionally, the Company is not in compliance with certain listing standards of the Nasdaq National

Market and there can be no assurance that the Company will be successful in curing the deficiencies and regaining compliance by the applicable

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying unaudited interim condensed consolidated financial

statements have been prepared in accordance with U.S.

generally accepted accounting principles for interim financial information and with

the instructions to Form 10-Q and Article 8 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”).

Accordingly, certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted.

In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments (including

normal recurring adjustments and the elimination of intercompany accounts) considered necessary for a fair statement of all periods presented.

The results of operations of the Company for any interim periods are not necessarily indicative of the results of operations for any other

interim periods or for a full fiscal year.

These unaudited interim condensed consolidated financial statements should be read in conjunction

with the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for

the year ended December 31, 2023.

Basis of presentation

These condensed interim consolidated financial statements have been prepared in accordance with U.S.

generally accepted accounting principles

GAAP) and the requirements of the Securities Exchange Commission (“SEC”) for interim reporting.

As permitted under those

rules, certain footnotes or other financial information that are normally required by U.S.

GAAP can be condensed or omitted.

These condensed

consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements included in the

Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 31, 2025.

In the opinion of our management, the

information in these condensed consolidated financial statements reflects all adjustments, all of which are of a normal and recurring

nature necessary for a fair statement of the financial position and results of operations for the reported interim periods.

events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence

relative to certain estimates or to identify matters that require additional disclosure.

The results of operations for interim periods

are not necessarily indicative of results to be expected for the full year or any other interim period.

Basis of consolidation

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 its returns.

All inter-company balances and transactions, and any unrealized

income and expenses arising from inter-company transactions, are eliminated on consolidation.

Non-controlling

Non-controlling interest in the Company’s

less than wholly owned subsidiaries are classified as a separate component of equity.

On initial recognition, non-controlling interest

is measured at the fair value of the non-controlling entity’s contribution into the related subsidiary.

Subsequent to the original

transaction date, adjustments are made to the carrying amount of non-controlling interest for the non-controlling interest’s share

of changes to the subsidiary’s equity.

in the Company’s ownership interest in a subsidiary that do not result in a loss of control are recorded as equity transactions.

The carrying amount of non-controlling 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.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Name of Subsidiary Place of Incorporation Proportion of

Ownership Interest Principal Activity

Versus Systems (Holdco) Inc.

United States of America 81.9 % Holding Company

Versus LLC United States of America 81.9 % Technology Company

Xcite Interactive, Inc.

United States of America 100.0 % Technology Company

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 its returns.

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

inter-company transactions, are eliminated on consolidation.

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 be relevant.

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

and liabilities at the date of the 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

Actual results could differ from these estimates.

1 unchanged sentence

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:

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

These estimates

and assumptions include valuing equity securities in share-based payments and warrants;

and the impairment of goodwill and intangible

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

SIGNIFICANT ACCOUNTING POLICIES

Basic and diluted loss per share

5 unchanged sentences

exercises were used to acquire common stock at the average market price during the reporting periods.

Potentially dilutive options and

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property and equipment

Property and equipment is recorded at cost less

accumulated amortization and any impairments.

Depreciation 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:

Computers Straight line, 3 years

Right of use assets Shorter of useful life or lease term

Fair Value Measurements and Financial

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.

Level 2-Includes other inputs that are directly or indirectly observable in the marketplace.

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:

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

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.

Deferred financing costs

Deferred financing costs consist primarily of

direct incremental costs related to the Company’s public offering of its common stock.

Upon completion of the Company’s financings

any deferred costs were offset against the proceeds in the condensed consolidated statement changes in shareholders’ equity.

The Company accounts for income taxes

utilizing the assets and liability method.

Under this method, deferred tax assets and liabilities are determined based on differences

between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, and net operating

loss and tax credit carry forwards, using enacted tax rates and laws that are expected to be in effect when the differences reverse.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

A valuation allowance is recorded against

deferred tax assets in these cases then management does not believe that the realization is more likely than not.

While management believes

that its judgements and estimates regarding deferred tax assets and liabilities are appropriate, significant differences in actual results

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.

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 September 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 assesses at contract inception

whether a contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of

time in exchange for consideration.

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 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

A loss contingency is recognized if,

as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably and it is probable

that an outflow of economic benefits will be required to settle the obligation.

Loss contingencies are determined by discounting the expected

future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Valuation of Equity Units Issued

in Private Placements

In accordance with U.S.

GAAP, particularly

ASC 505-10 and ASC 815, the Company has adopted the fair value method for the valuation of equity units issued in private placements,

which typically comprise common shares and warrants.

For each private placement, the Company separately estimates the fair value of both

the common shares and the warrants at the date of issuance.

The determination of fair value is based on market conditions, volatility,

and other relevant factors at the time of issuance.

Common Shares:

The fair value of the common shares issued is measured based on observable market prices, if available, or estimated using appropriate valuation techniques considering the terms of the shares and market conditions.

Warrants are valued using an appropriate option-pricing model, such as the Black-Scholes or a binomial model.

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.

This method of valuation and allocation

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

Share-based compensation

Potentially dilutive options as

of March 31, 2025 totaled 401,633 ( March 31, 2024 – 18,509 ) and warrants excluded from diluted loss per share as of March 31, 2025

totaled 1,733,741 (March 31, 2024 – 896,645 ).

The Company grants stock options to

11 unchanged sentences

services received.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Non-controlling interest

Non-controlling interest in the Company’s

less than wholly owned subsidiaries are classified as a separate component of equity.

On initial recognition, non-controlling interest

is measured at the fair value of the non-controlling entity’s contribution into the related subsidiary.

Subsequent to the original

transaction date, adjustments are made to the carrying amount of non-controlling interest for the non-controlling interest’s share

of changes to the subsidiary’s equity.

Changes in the Company’s ownership

interest in a subsidiary that do not result in a loss of control are recorded as equity transactions.

The carrying amount of non-controlling

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.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

SIGNIFICANT ACCOUNTING POLICIES (continued)

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.

The Company recognizes revenue when

its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive

in exchange for those goods or services.

To determine revenue recognition for arrangements that an entity determines are within the scope

of Accounting Standards Codification ASC 606, Revenue from Contracts with Customers (“ASC 606”), the entity performs

the following five steps:

(i) identify the contract(s) with a customer;

(ii) identify the performance obligations in the contract;

determine the transaction price;

(iv) allocate the transaction price to the performance obligations in the contract;

and (v) recognize

revenue when (or as) the entity satisfies a performance obligation.

The Company only recognizes revenue from contracts when it is probable

that the entity will collect substantially all the consideration it is entitled to in exchange for the goods or services it transfers

to the customer.

The Company earns revenue in two primary

5 unchanged sentences

contract and can be periodic or one-time payments.

The Company determines that the customer receives and consumes the benefits of the

service simultaneously as the service is provided.

The transaction price is allocated to the contractual performance obligations and recognized

ratably over the contract term.

The Company recognizes revenues received

6 unchanged sentences

revenue by measuring the progress toward complete satisfaction of that performance obligation.

The Company generally measures progress

comparing hours incurred to total estimated hours.

For revenues received from the sales

13 unchanged sentences

the stand-alone selling price, for each distinct performance obligation.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Deferred revenue

Revenue recognition of sales is recorded

on a monthly basis upon delivery or as the services are provided.

Cash received in advance for services are recorded as deferred revenue

based on the proportion of time remaining under the service arrangement as of the reporting date.

Foreign exchange

The functional currency is the currency

of the primary economic environment in which the Company operates and has been determined for each entity within the Company.

The functional

currency for the Company and its subsidiaries is the United States dollar.

The functional currency determinations were conducted through

an analysis of the consideration factors identified in ASC 830, Foreign Currency Matters.

Foreign currency transactions in currencies

other than the United States dollar are recorded at exchange rates prevailing on the dates of the transactions.

Foreign currency transaction

gains and losses are generally recognized in profit or loss and presented within gain (loss) on foreign exchange.

At the end of each reporting period,

the monetary assets and liabilities of the Company and its subsidiaries that are denominated in foreign currencies are translated at the

rate of exchange at the date of the condensed interim consolidated balance sheets.

Non-monetary assets and liabilities that are denominated

in foreign currencies are translated at historical rates.

Revenues and expenses that are denominated in foreign currencies are translated

at the exchange rates approximating those in effect on the date of the transactions.

Foreign currency translation gains and losses are

recognized in other comprehensive income and accumulated in equity on the condensed interim consolidated statements of stockholders’

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 September 30, 2024 and 2023, due to the effects of foreign translation gains and losses.

During the three months ended March 31, 2025 the Company recognized

$ 176,000 attributed to professional services.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue recognition

License Revenue

The Company entered into a Technology

License and Software Development Agreement (the “License Agreement”) in October 2024 which provides for the Company to license

its gamification, engagement and QR code technology to ASPIS for use in ASPIS’s website business and for development of additional

functionality for Versus’ technology.

Pursuant to the License Agreement, the

Company granted ASPIS a license to use Versus’ technology in ASPIS’s website business that provides cybersecurity technology.

ASPIS will pay for any required technology modifications, improvements and developments to Versus’ technology in addition to a license

fee of $ 165,000 per month.

The Company will retain ownership of Versus’ technology and ASPIS will hold an exclusive license to use

Versus’ technology in the cybersecurity industry so long as ASPIS continues to pay the monthly license fee.

The License Agreement

has an initial term of one year with successive renewal terms of one year each upon ASPIS’s written approval, subject to earlier

termination by the Company or ASPIS.

We recognize revenue when the

performance obligations in the contract are satisfied.

For performance obligations that are fulfilled at a point in time, revenue is recognized

at the fulfillment of the performance obligation.

Since the IP is determined to be a functional license, the value of the grant of use

is recognized in the first period of the contract term in which the license agreement is in force.

For the three months ended March 31,

2025 no revenue was recognized on our functional IP as the Technology Agreement with ASPIS as the license had not been delivered to ASPIS

during the year.

As of March 31, 2025 the Company had

not granted ASPIS access to its technology for use in ASPIS’s cybersecurity technology.

The Company expects to begin the License

Agreement in during the second quarter of 2025.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

SIGNIFICANT ACCOUNTING POLICIES (continued)

Recent accounting pronouncements

1 unchanged sentence

New accounting pronouncements

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.

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

financial statements and disclosures.

In November 2024, the FASB issued ASU

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

This ASU enhances the disclosures related to segment

reporting for public entities.

It requires entities to disclose significant segment expenses for each reportable segment, providing greater

transparency in segment performance.

The ASU is effective for fiscal years beginning after December 15, 2023, and for interim periods

within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The Company is currently evaluating how this ASU will

impact its condensed interim consolidated financial statements and disclosures.

2024-04, Debt-Debt with Conversion and Other Options (“Subtopic 470-20”) (“ASU No.

2024-04”), which

intends to clarify the conditions in which induced conversion applies to convertible debt by outlining three criteria that must be met

for an entity to apply the induced conversion model.

The amendments in this ASU are effective for annual reporting periods beginning

after December 15, 2025 (and interim reporting periods within those annual reporting periods).

Early adoption is permitted as of the

beginning of a reporting period if the entity has also adopted ASU 2020-06 for that period.

The Company is currently evaluating how this

ASU will impact its consolidated financial statements and disclosures.

In November 2024, the FASB issued ASU

2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (“Subtopic 220-40”).

This ASU improves financial reporting by requiring that public business entities disclose additional information about specific expense

categories in the notes to financial statements at interim and annual reporting periods.

This ASU will be effective for annual periods

beginning after December 15, 2026, for interim reporting periods beginning after December 15, 2027, with early adoption is permitted.

We are evaluating the potential impact of this guidance on our consolidated financial statements and related disclosures.

Recent adopted accounting pronouncements

In December 2023, the FASB issued ASU

1 unchanged sentence

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 information.

The ASU is effective for public

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

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent adopted accounting pronouncements

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

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

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

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.

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 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 adoption of the guidance in the first quarter of 2025 did not have a material impact on our consolidated financial

statements and related disclosures.

Management does not believe any other

1 unchanged sentence

or future consolidated financial statements.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PROPERTY AND EQUIPMENT

At December 31, 2023

At September 30, 2024

Accumulated amortization

At December 31, 2023

Amortization for the period

At September 30, 2024

Carrying amounts

At December 31, 2023

At September 30, 2024

The Company recorded depreciation expense of $ 878 and $ 8,444 for the

three months ended September 30, 2024 and 2023, respectively.

The Company recorded depreciation expense of $ 1,688 and $ 22,344 for the

nine months ended September 30, 2024 and 2023, respectively.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

NON-CONTROLLING INTEREST IN VERSUS LLC

The Company holds a 81.9 % ownership interest in

Versus LLC, a privately held limited liability company organized under the laws of the state of Nevada.

The Company consolidates Versus

LLC as a result of having full control over the voting shares.

The Company holds an 81.9 % ownership

interest in Versus LLC, a privately held limited liability company organized under the laws of the state of Nevada.

The Company consolidates

Versus LLC as a result of having full control over the voting shares.

Versus LLC is a technology company that is developing a business-to-business

software platform that allows video game publishers and developers to offer prize-based matches of their games to their players.

The net loss for Versus, LLC for the three month and nine month periods

ended September 30, 2024 was $ 543,107 and $ 3,448,893 , respectively.

The net loss for Versus, LLC for the three month and nine month periods

ended September 30, 2023 was $ 2,363,489 and $ 4,995,685 , respectively.

The net income (loss) attributable to the non-controlling interest

for the three month and nine month periods ended September 30, 2024 was $( 31,920 ) and $ 297,569 , respectively The net income (loss) attributable

to the non-controlling interest for the three month and nine month periods ended September 30, 2023 was $ 215,958 and $ 603,271 , respectively

The following table presents summarized financial information before intragroup eliminations for the non-wholly owned subsidiary as of

September 30, 2024 and 2023.

September 30,

The net loss for Versus, LLC for the

three-month periods ended March 31, 2025 and 2024 was $ 1,075,861 and $ 957,415 , respectively.

The net loss attributable to the non-controlling

interest for the three-month periods ended March 31, 2025 and 2024 was $ 194,731 and $ 173,292 , respectively

The following table presents summarized financial information before

intragroup eliminations for the non-wholly owned subsidiary as of March 31, 2025 and December 31, 2024, respectively.

Non-controlling interest percentage

5 unchanged sentences

( 7,920,052 )

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

INTANGIBLE ASSETS

Intangible assets were comprised of a business-to-business

software platform that allows video game publishers and developers to offer prize-based matches of their games to their players.

continued to develop new apps, therefore additional costs were capitalized during the years ended December 31, 2023 and 2022.

year ended December 31, 2023, the Company completed an impairment analysis of its intangible assets and concluded the assets were impaired.

As a result, the Company impaired the remaining carrying value of the intangible assets.

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

The Company’s accounts payable

and accrued liabilities are comprised of the following:

September 30,

Accounts payable

Due to related parties (Note 10 and Note12)

Accrued liabilities

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES PAYABLE –

RELATED PARTY

the year ended December 31, 2023, 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.

the three and nine months ended September 30, 2024 and 2023 the Company recorded interest expense of $0 .

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

SHARE CAPITAL

Authorized share capital

Company is authorized to issue an unlimited number of Class A Shares and an unlimited number of common shares.

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.

A shares were converted to common shares on March 31, 2025, and as of December 31, 2024, there were 0 Class A Shares issued and outstanding.

Issued share capital

the year ended December 31, 2023, the Company:

i) Issued 156,250 shares at a price of $ 14.40 per share for total proceeds of $ 2,250,000 in a registered direct offering.

In connection with the offering, the Company incurred $ 226,544 in issuance costs as part of the transaction.

ii) Issued 283,875 common shares pursuant to exercise of 283,875 warrants at a price of $ 17.37 per share for total proceeds of $ 4,561,200 .

the nine months ended September 30, 2024, the Company:

Did not enter into any

capital transactions.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SHARE CAPITAL (continued)

During the three-month periods ended March 31, 2025 and 2024,

the Company did not issue share capital.

Stock options

Company may grant incentive stock options to its officers, directors, employees, and consultants.

The Company has implemented a rolling

Stock Option Plan (the “Plan”) whereby the Company can issue up to 10 % of the issued and outstanding common shares of the

Options have a maximum term of ten years and vesting is determined by the Board of Directors.

continuity schedule of outstanding stock options is as follows:

Weighted Average

The Company may grant incentive stock

options to its officers, directors, employees, and consultants.

The Company has implemented a rolling Stock Option Plan (the “Plan”)

whereby the Company can issue up to 10 % of the issued and outstanding common shares of the Company.

Options have a maximum term of ten

years and vesting is determined by the Board of Directors.

A continuity schedule of outstanding stock options is as

Exercise Price

– December 31, 2023

Outstanding –

September 30, 2024

the three months ended September 30, 2024 and 2023 the Company recorded share-based compensation of none and $ 1,909 , respectively, relating

to options vested during the period.

During the nine months ended September 30, 2024 and 2023 the Company recorded share-based compensation

of $ 160,865 and $( 1,154,308 ), respectively.

were no grants in the three-month and nine-month period ended September 30, 2024.

There were no grants in the three-month period ended

September 30, 2023.

The Company used the following assumptions in calculating the grant date fair value of stock options granted for

the nine-month period ended September 30, 2023:

September 30,

Balance – December 31, 2024

Balance – March 31, 2025

For the three months ended March 31,

2025 and 2024 the Company recorded share-based compensation of $ 366,000 and $ 160,865 , respectively, relating to options vested during

The remaining share-based compensation to be recognized is over the vesting term of the unvested options is $ 258,000 as of

March 31, 2025.

The Company used the following assumptions in calculating

the fair value of stock options for the period ended:

2025 March 31,

Risk-free interest rate 4.03 % 3.93 %

Expected life of options 5.0 years

Expected dividend yield Nil

Expected life of options 5 years 3.38 years

Expected dividend yield Nil Nil

Volatility 98.83 % 132.65 %

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

SHARE CAPITAL (continued)

Share purchase warrants

continuity schedule of outstanding share purchase warrants is as follows:

Balance –December

Balance – December

Balance – September

the year ended December 31, 2023, the Company:

i) Issued 10,938 placement agent warrants in conjunction with a registered direct offering on February 2, 2023, with an exercise price of $ 14.40 per share.

ii) Issued 815,217 warrants in conjunction with a public offering on October 17, 2023, with an exercise price of $ 3.68 per share.

iii) Issued 24,457 placement agent warrants in conjunction with a public offering on October 17, 2023, with an exercise price of $ 4.05 per share.

Company used the following assumptions in calculating the fair value of the warrants for the period ended:

Risk-free interest rate

4.13 % – 4.49 %

Expected life of warrants

2.06 – 4.80 years

Expected dividend yield

Weighted average fair value per warrant

September 30, 2024, the Company had share purchase warrants outstanding as follows:

During the year ended December 31, 2024, the Company:

1,077,586 common stock warrants in conjunction with the conversion of the Senior Note issuance, with an exercise price of $ 4.00 per share.

At March 31, 2025, the Company

had share purchase warrants outstanding as follows:

Expiration Date Warrants

Weighted Average Remaining Life

January 20, 2026 (1) 7,030 1,800.00 0.83

6 unchanged sentences

October 17, 2028 24,457 4.05 3.33

December 24, 2029 1,077,586 4.00 4.42

1,733,741 18.71 3.96

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONCENTRATION OF RISK

risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its payment obligations.

The Company has no material counterparties to its financial instruments with the exception of the financial institutions which hold its

The Company manages its credit risk by ensuring that its cash is placed with a major financial institution with strong investment

grade ratings by a primary ratings agency.

The Company’s receivables consist of goods and services due from customers and tax due

from the Canadian government.

and CONTINGENCIES

time to time, the Company is involved in legal proceedings and other matters arising in connection with the conduct of its business activities.

Many of these proceedings may be at the preliminary stages and/or seek an indeterminate amount of damages.

In the opinion of management,

after consultation with legal counsel, such routine claims and lawsuits are not significant and we do not currently expect them to have

a material adverse effect on our business, financial condition, results of operations, or liquidity.

(1) Unit A warrant balance is 7,030 as of March 31, 2025.

SEGMENT REPORTING

Our chief operating decision maker (“CODM”),

the Chief Executive Officer, manages the Company’s business activities as a single operating and reportable segment at the consolidated

Accordingly, our CODM uses consolidated net loss to measure segment profit or loss, allocate resources and assess performance.

Further, the CODM reviews and utilizes functional expenses (cost of revenues, research and development, and general and administrative)

at the consolidated level to manage the Company’s operations.

Other segment items included in consolidated net loss are interest

income, other expense, net and the provision for income taxes, which are reflected in the consolidated statements of operations and comprehensive

The measure of segment assets is reported on the consolidated balance sheet as total assets.

COMMITMENTS AND CONTINGENCIES

From time to time the Company

may become involved in other legal proceedings or be subject to claims arising in the ordinary course of business.

Although the results

of ordinary course litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of

these ordinary course matters will not have a material adverse effect on its business, financial condition, results of operations or

Regardless of the outcome, litigation can have an adverse impact because of defense and settlement costs, diversion of management

resources and other factors.

SUBSEQUENT EVENTS

ASPIS Agreements

On October 7, 2024, the Company entered into two

agreements with ASPIS.ASPIS, an affiliate of the Company’s largest shareholder—Cronus Equity Capital Group, LLC (“CECG”)—is

a cloud-based mobile endpoint cyber security technology company for anti-tapping and anti-hacking within the government, finance, gaming

and social media sectors.

CEGC holds approximately 39.5 % of the outstanding common shares of the Company.

The first agreement was a $ 2,500,000 funding agreement

At that time, ASPIS delivered to the Company $ 500,000 and agreed to, on or before November 15, 2024, deliver to the Company

an additional $ 2,000,000 .

However, the Company has informally agreed to defer the $ 2,000,000 until Nasdaq has progressed further with

its review of the Company’s plan.

Pursuant to that agreement, the Company issued to ASPIS a senior convertible promissory note in

the principal amount of the total amount funded.

The note provides that upon approval by the Company’s shareholders and the Company’s

redomiciling to Delaware the amount funded to date plus, at ASPIS’s option, any accrued and unpaid interest thereon, will be converted

into units of the Company, each equal to (a) one common share of the Company and (b) a warrant to purchase one-half of one Common Share

at a purchase price of $ 4.00 per one whole share, exercisable for five years.

Under the terms of the agreement, upon the Company’s

shareholders’ approval and the Company’s redomiciling to Delaware, assuming only $2,500,000 is funded, ASPIS will receive

upon the Conversion 2,155,172 Common Shares and warrants to purchase an additional 1,077,586 shares.

Additionally, the Company entered into a Technology

License and Software Development Agreement (the “License Agreement”) in October 2024 which provides for the Company to license

its gamification, engagement and QR code technology to ASPIS for use in ASPIS’s website business and for development of additional

functionality for Versus’ technology.

Pursuant to the License Agreement, the Company

granted ASPIS a license to use Versus’ technology in ASPIS’s website business that provides cybersecurity technology.

will pay for any required technology modifications, improvements and developments to Versus’ technology in addition to a license

fee of $ 165,000 per month beginning in January 2025.

The Company will retain ownership of Versus’ technology and ASPIS will hold

an exclusive license to use Versus’ technology in the cybersecurity industry so long as ASPIS continues to pay the monthly license

The License Agreement has an initial term of one year with successive renewal terms of one year each upon ASPIS’s written approval,

subject to earlier termination by the Company or ASPIS.

In October 2024, the Company warrant holders

exercised 240,490 warrants issued in December 2023 offering upon such exercise, the Company issued 240,490 common shares at a price of

$ 3.68 per share, for $ 885,003 proceeds.

The Company has evaluated subsequent

events after the balance sheet date of March 31, 2025 through May 15, 2025, 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