What changed in this filing

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Item 1. Financial Statements

2025-08-14 compared with 2025-05-15 · 245 added, 198 removed, 275 unchanged (62% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets (Unaudited)

March 31, December 31,

June 30, December 31,

Current assets

Cash 1,682,256 3,065,914

Contract asset, net – related party 1,650,000 -

Accounts receivable, net – related party 330,000 -

Prepaids 179,977 469,646

1 unchanged sentence

Total assets 3,842,233 3,535,560

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES AND EQUITY

Current liabilities

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Unlimited authorized shares;

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

4,901,677 common shares and no Class A shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively

150,974,494 150,587,018

Accumulated other comprehensive income 443,973 318,659

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Total stockholders’ equity 3,808,046 3,509,272

Total liabilities and stockholders’ equity 2,728,607 3,535,560

Total liabilities, non-controlling interest and stockholders’ equity 3,842,233 3,535,560

The accompanying notes are an integral part of

these condensed consolidated financial statements.

these condensed interim consolidated financial statements.

Versus Systems Inc.

Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

Consolidated Statements of

Operations and Comprehensive Income (Loss) (Unaudited)

Revenues – related party

Cost of revenues

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Total operating expenses

Operating loss

Operating income (loss)

( 1,499,668 )

1 unchanged sentence

Other income (expense), net

Loss before provision

Income (loss) before provision for income taxes

( 1,499,742 )

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Provision for income taxes

Net income (loss)

( 1,499,742 )

( 3,001,425 )

Net loss attributable to non-controlling interest

Net loss attributable to Versus Systems, Inc.

net income (loss) attributable to non-controlling interest

Net income (loss) attributed to Versus Systems, Inc.

( 1,343,545 )

( 2,671,936 )

Per Share Data:

Basic and diluted earnings per share to shareholders

Weighted average shares - basic and diluted

Basic and diluted earnings (loss) per share to shareholders

Weighted average shares - basic

Diluted earnings (loss) per share to shareholders

Weighted average shares - diluted

Comprehensive income (loss):

Net income (loss)

( 1,499,742 )

( 3,001,425 )

Other comprehensive income (loss), net of tax

Other comprehensive (loss) income, net of tax

Change in foreign currency translation, net of tax

Total comprehensive loss

Total comprehensive income (loss)

( 1,378,568 )

( 2,840,560 )

comprehensive income attributable to non-controlling interest

Comprehensive loss attributable to shareholders

comprehensive loss (income) attributable to non-controlling interest

Comprehensive income (loss) attributable to shareholders

$ ( 1,222,371 )

$ ( 414,726 )

$ ( 2,511,071 )

The accompanying notes are an integral part of

these condensed consolidated financial statements.

these condensed interim consolidated financial statements.

Versus Systems Inc.

Condensed Consolidated Statements of Changes in Equity (Unaudited)

Condensed Consolidated Statements of Changes in

Equity (Unaudited)

Stockholders’

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( 1,156,477 )

March 31, 2025

( 140,438,099 )

( 8,114,783 )

Balance at March 31, 2024

Stock-based compensation

Cumulative translation adjustment

Balance at June 30, 2025

( 139,765,764 )

( 7,844,657 )

Stockholders’

Non- controlling

stockholders’

Balance at December 31, 2023

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( 7,387,547 )

Stock-based compensation

Cumulative translation adjustment

( 1,328,391 )

( 1,501,683 )

March 31, 2024

( 136,762,413 )

( 7,560,839 )

Stock-based compensation

Cumulative translation adjustment

( 1,343,545 )

Balance at March 31, 2025

( 1,343,545 )

( 1,499,742 )

Balance at June 30, 2024

( 138,105,958 )

( 7,717,036 )

The accompanying notes are an integral part of

these condensed consolidated financial statements.

these condensed interim consolidated financial statements.

Versus Systems Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

Three Months Ended

Condensed Consolidated Statements of Cash Flows

Six Months Ended

Cash flows from operating activities

OPERATING ACTIVITIES

( 3,001,425 )

( 1,501,683 )

Adjustments to reconcile net loss to net cash:

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

Stock-based compensation

Changes in operating assets and liabilities:

Receivables – related party

Contract asset – related party

( 1,650,000 )

Deferred revenue

Accounts payable and accrued liabilities

Cash used in operating activities

Net cash used in operating activities

( 1,508,972 )

Effect of foreign exchange

( 3,874,311 )

Effect of foreign exchange on cash

Change in cash during the period

( 1,383,658 )

( 3,783,092 )

Cash - Beginning of period

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The accompanying notes are an integral part of

these condensed consolidated financial statements.

these condensed interim consolidated financial statements.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

NATURE OF OPERATIONS AND LIQUIDITY

NATURE OF OPERATIONS AND GOING CONCERN

Versus Systems Inc.

(the Company) was

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

The Company’s head office and registered

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) was continued under the Business

Corporations Act (British Columbia) effective January 2, 2007.

On December 24, 2024 a special resolution authorizing and approving the

continuance of the Company from the Province of British Columbia in accordance with the Business Corporations Act (British Columbia) into

the State of Delaware in accordance with the Delaware General Corporation Law.

The Company’s head office and registered 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

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

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

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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.

These unaudited 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 June 30, 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

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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 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.

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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.

These condensed consolidated financial

statements have been prepared in accordance with U.S.

generally accepted accounting principles (U.S.

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.

These condensed interim consolidated financial statements

have been prepared on the same basis as the annual condensed 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

interim 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.

We consider 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.

Significant Accounting Policies

There have been no material changes

to the accounting policies discussed in Note 2 to the condensed consolidated financial statements included in the Company’s Annual

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

Basis of consolidation

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Use of estimates

The preparation of these condensed interim

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.

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.

These estimates

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

and the impairment of goodwill and intangible

The preparation of these condensed 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 condensed 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.

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.

These estimates and assumptions include valuing

equity securities in share-based payments and warrants.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIGNIFICANT ACCOUNTING POLICIES

Basic and diluted loss per share

Basic earnings (loss) per share is computed

by dividing net earnings (loss) available to common shareholders by the weighted average number of shares outstanding during the reporting

Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share, except that the weighted average shares

outstanding are increased to include additional shares for the assumed exercise of stock options and warrants, if dilutive.

of additional shares is calculated by assuming that outstanding stock options and warrants were exercised and that the proceeds from such

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

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 ).

Basic earnings (loss) per share is computed by dividing net earnings

(loss) available to common shareholders by the weighted average number of shares outstanding during the reporting periods.

Diluted earnings

(loss) per share is computed similar to basic earnings (loss) per share, except that the weighted average shares outstanding are increased

to include additional shares for the assumed exercise of stock options and warrants, if dilutive.

The number of additional shares is calculated

by assuming that outstanding stock options and warrants were exercised and that the proceeds from such exercises were used to acquire

common stock at the average market price during the reporting periods.

Potentially dilutive options as of June 30, 2025 totaled 401,633

( June 30, 2024 – 15,130 ) and warrants excluded from diluted loss per share as of June 30, 2025 totaled 1,733,741 (June 30, 2024

Share-based compensation

The Company grants stock options to

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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 on a straight-line basis.

The Black-Scholes pricing

model requires the use of subjective assumptions including the option’s expected term, the volatility of the underlying stock, the

fair value of the stock and the expected forfeiture rate.

Consideration paid for the shares on the exercise of stock options is credited

to capital stock.

In situations where equity instruments

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services received.

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIGNIFICANT ACCOUNTING POLICIES (continued)

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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:

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

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

(ii) identify the performance obligations in the contract;

determine the transaction price;

(iii) 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.

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

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

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

During the six months ended June 30, 2025 the Company recognized $ 176,000

attributed to professional services.

No revenue was recognized attributed to professional services for the three months ended June 30,

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

License Revenue – Related Party

On April 30, 2025, pursuant to the Technology

License and Software Development Agreement (the “License Agreement”) with ASPIS Cyber Technologies, Inc.

the Company delivered a functional license for its gamification, engagement, and QR code technology.

ASPIS is an affiliate of the Company’s

largest shareholder—Cronus Equity Capital Group, LLC (“CECG”)—which holds approximately 20.20 % of the outstanding

common shares of the Company as of June 30, 2025.

Under the License Agreement, as amended

by the first amendment executed on January 15, 2025, the monthly license fees of $ 165,000 were due and payable commencing on April 30,

2025 and on the 5 th of each subsequent month thereafter for the initial term and subsequent terms of renewal.

Under the License Agreement, as amended

by a side letter executed on August 11, 2025, the Initial Term is non-cancellable for

twelve (12) months commencing April 30, 2025, with monthly license fees of $ 165,000 payable regardless of use.

ASPIS will pay for any

required technology modifications, improvements, and developments to Versus’ technology in addition to the license fee.

retains ownership of the technology, and ASPIS holds an exclusive license to use it in the cybersecurity industry so long as ASPIS continues

to pay the monthly license fee.

Since the license is a functional license

and the performance obligation was satisfied upon delivery on April 30, 2025, the Company recognized the entire transaction price of $ 1,980,000

as revenue in the quarter ended June 30, 2025.

Of this amount, $ 330,000 was billed and recorded as accounts receivable – related

party, representing two months of license fees, and $ 1,650,000 was recorded as a contract asset – related party for the unbilled

portion of the non-cancellable term.

The unbilled amounts will be invoiced and collected over the remaining term in accordance with the

contract’s billing schedule.

Accounts Receivable, net –

Related Party

Accounts receivable are typically unsecured

and are derived from revenue earned from customers.

They are stated at invoice value less estimated allowances for credit losses.

Company performs ongoing credit evaluations of its customers to determine allowances for potential credit losses and doubtful accounts.

As of June 30, 2025, the Company’s receivable balance of $ 330,000 was attributed to ASPIS and represented two months of license

payments at $ 165,000 per month.

No allowance for credit losses was recorded as of June 30, 2025 and December 31, 2024.

Contract Assets – Related Party

Contract assets arise when the Company has earned revenue on a contract

with a customer prior to billing.

As of June 30, 2025, contract assets related to ASPIS totaled $ 1,650,000 , representing the unbilled

portion of the twelve-month non-cancellable Initial Term under the License Agreement.

Contract assets are recorded on the Company’s

consolidated balance sheets net of an allowance for credit losses.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIGNIFICANT ACCOUNTING POLICIES (continued)

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In November 2024, the FASB issued ASU

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.

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

in the notes to the condensed consolidated 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 condensed consolidated financial statements and related disclosures.

Recent adopted accounting pronouncements

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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.

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.

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.

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 second quarter of 2025 did not have a material impact on our condensed consolidated

financial statements and related disclosures.

Management does not believe any other

recently issued but not yet effective accounting pronouncement, if adopted, would have a material effect on the Company’s present

or future consolidated financial statements.

or future condensed consolidated financial statements.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NON-CONTROLLING INTEREST IN VERSUS LLC

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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 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.

The net income (loss) for Versus, LLC for the three-month periods ended June

30, 2025 and 2024 was $ 1,492,412 and $( 862,967 ), respectively.

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

the three month periods ended June 30, 2025 and 2024 was $ 270,126 and $( 156,197 ), respectively.

The net income (loss) for Versus, LLC

for the six month periods ended June 30, 2025 and 2024 was $ 416,551 and $( 1,820,382 ), respectively.

The net income (loss) attributable to

the non-controlling interest for the six month periods ended June 30, 2025 and 2024 was $ 75,396 and $( 329,489 ), respectively.

The following table presents summarized

financial information before intragroup eliminations for the non-wholly owned subsidiary as of June 30, 2025 and December 31, 2024, respectively.

Non-controlling interest percentage

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Authorized share capital

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.

The Company is authorized to issue an unlimited number of common stock.

The Company had 4,901,677 shares of common stock outstanding as of June 30, 2025 and December 31, 2024.

Issued share capital

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

During the six month periods ended June 30, 2025 and 2024,

the Company did not issue share capital.

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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.

Balance – June 30, 2025

Vested and exercisable

For the three months ended June 30,

2025 and 2024 the Company recorded share-based compensation of $ 21,476 and none , respectively.

For the six months ended June 30, 2025

and 2024 the Company recorded share-based compensation of $ 387,476 and $ 160,865 , respectively, relating to options vested during the period.

The remaining share-based compensation to be recognized is over the vesting term of the unvested options is $ 235,843 as of June 30, 2025.

The remaining expense is expected to be recognized over a weighted-average period of approximately 2.75 years.

The fair value of the options granted

during the six months ended June 30, 2025 was $ 1.56 per share.

No options were granted during the six months ended June 30, 2024.

The intrinsic value represents the difference

between the fair market value of the Company’s common stock on the date of exercise and the exercise price of each option.

on the fair market value of the Company’s common stock at June 30, 2025 the total intrinsic value of all outstanding options was

The Company used the following assumptions in calculating

the fair value of stock options for the period ended:

2025 March 31,

2025 June 30,

Risk-free interest rate 4.03 % 3.93 %

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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

i) Issued 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 June 30, 2025, the Company

had share purchase warrants outstanding as follows:

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1,733,741 18.71 3.71

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

(1) Unit A warrant balance is 7,030 as of June 30, 2025.

SEGMENT REPORTING

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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.

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 cash flows.

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

SUBSEQUENT EVENTS

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.

events after the balance sheet date of June 30, 2025 through August 14, 2025, the date the condensed consolidated financial statements

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

in the accompanying condensed 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