What changed in this filing

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Item 1. Financial Statements

2025-11-14 compared with 2025-08-14 · 194 added, 175 removed, 345 unchanged (52% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets (Unaudited)

June 30, December 31,

September 30, December 31,

Current assets

1 unchanged sentence

Contract asset, net – related party 1,166,000 -

Accounts receivable, net – related party 330,000 -

Prepaids 201,047 469,646

Total current assets 2,772,675 3,535,560

Intangible assets, net 300,000 -

Total assets 3,072,675 3,535,560

8 unchanged sentences

Unlimited authorized shares;

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

4,901,677 common shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively 150,995,970 150,587,018

Accumulated other comprehensive income 442,640 318,659

7 unchanged sentences

Versus Systems Inc.

Consolidated Statements of

Operations and Comprehensive Income (Loss) (Unaudited)

Consolidated Statements of Operations and Comprehensive

Income (Loss) (Unaudited)

September 30,

Revenues – related party

3 unchanged sentences

Total operating expenses

Operating income (loss)

( 1,499,668 )

Operating loss

( 3,530,128 )

Other income (expense), net

Income (loss) before provision for income taxes

( 1,499,742 )

Loss before provision for income taxes

( 3,530,376 )

Provision for income taxes

Net income (loss)

( 3,530,376 )

( 3,001,425 )

Net income (loss) attributable to non-controlling interest

1 unchanged sentence

( 3,232,807 )

( 2,671,936 )

Per Share Data:

Basic and diluted earnings (loss) per share to shareholders

Weighted average shares - basic

Diluted earnings (loss) per share to shareholders

Weighted average shares - diluted

Basic and diluted loss per share to shareholders

Weighted average shares – basic and diluted

Comprehensive income (loss):

Net income (loss)

( 3,530,376 )

( 3,001,425 )

Other comprehensive (loss) income, net of tax

Change in foreign currency translation, net of tax

Total comprehensive income (loss)

Total comprehensive loss

( 1,095,994 )

1 unchanged sentence

comprehensive loss (income) attributable to non-controlling interest

Comprehensive income (loss) attributable to shareholders

Comprehensive loss attributable to shareholders

$ ( 536,482 )

1 unchanged sentence

$ ( 951,208 )

$ ( 3,204,147 )

The accompanying notes are an integral part of

3 unchanged sentences

Equity (Unaudited)

Stockholders’

Non- controlling

stockholders’

Number of Common Shares

Number of Class “A” Shares

Common Shares

Class “A” Shares

Additional paid in Capital

Currency translation adjustment

Accumulated deficit

Stockholders’ equity

Non- controlling Interest

Total stockholders’ equity

Balance at December 31, 2024

12 unchanged sentences

( 7,844,657 )

Stockholders’

Non- controlling

stockholders’

Stock-based compensation

Cumulative translation adjustment

Balance at September 30, 2025

( 140,303,579 )

( 8,064,839 )

Number of Common Shares

Number of Class “A” Shares

Common Shares

Class “A” Shares

Additional paid in Capital

Accumulated other comprehensive income (loss)

Accumulated deficit

Stockholders’ equity

Non- controlling Interest

Total stockholders’ equity

Balance at December 31, 2023

9 unchanged sentences

( 7,560,839 )

Stock-based compensation

Cumulative translation adjustment

5 unchanged sentences

( 7,717,036 )

Cumulative translation adjustment

Balance at September 30, 2024

( 138,666,829 )

( 7,685,116 )

The accompanying notes are an integral part of

2 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Six Months Ended

September 30,

Cash flows from operating activities

OPERATING ACTIVITIES

( 3,530,376 )

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

Stock-based compensation

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

Share-based compensation

Changes in operating assets and liabilities:

Receivables – related party

Contract asset – related party

Contract assets

( 1,166,000 )

1 unchanged sentence

Accounts payable and accrued liabilities

Net cash used in operating activities

Cash flows used in operating activities

( 1,484,267 )

( 4,255,345 )

Effect of foreign exchange on cash

INVESTING ACTIVITIES

Purchase of intangible assets

Cash flows used in investing activities

Effect of exchange rates on cash and cash equivalents

Change in cash during the period

9 unchanged sentences

Versus Systems Inc.

(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) 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 “VS”.

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.

The Company is engaged in the technology

sector and has developed a proprietary prizing and promotions tool allowing game developers and creators of streaming media, live events,

broadcast TV, games, apps, and other content to offer real world prizes inside their content.

The ability to win prizes drives increased

levels of consumer engagement creating an attractive platform for advertisers.

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

The Company operates within the technology sector, focusing on engagement-enhancing

solutions through its proprietary prizing and promotions platform.

This technology enables developers and content creators across streaming,

live events, broadcast, gaming, and other media to integrate real-world prizes into their experiences, fostering greater consumer interaction

and providing a compelling opportunity for brand partners and advertisers.

In June 2021, the Company completed

12 unchanged sentences

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

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.

As of September 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, these factors raise substantial doubt regarding the Company’s ability to continue as a going concern within one year

after the date these financial statements are issued.

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

to attain profitable operations and generate funds therefrom and/or raise equity capital or borrowings sufficient to meet current and

future obligations.

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

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

continue as a going concern.

These adjustments could be material.

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.

There can be no assurance that we will be able to obtain required funding

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.

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

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.

There can be no assurance that we will be able to obtain required funding in the future.

the absence of additional financing, the Company’s available cash resources would be reduced in the near term, which could require

the Company to scale back or temporarily defer certain operating or development activities.

Such actions could have a material

effect on the Company’s business and relationships with partners.

If adequate funding is not secured, the Company may need to explore

strategic alternatives, which could include restructuring or other actions that may adversely impact stockholder value.

The Company has

implemented cost-optimization initiatives, including workforce realignment and prioritization of development programs to align expenditures

with near-term strategic objectives.

Management believes that continued focus on strategic partnerships, product licensing, and disciplined

cost management may provide the Company with opportunities to improve liquidity and position the business for longer-term growth.

there can be no assurance that such initiatives will be sufficient to mitigate the conditions raising substantial doubt about the Company’s

ability to continue as a going concern.

VERSUS SYSTEMS INC.

13 unchanged sentences

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.

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.

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

18 unchanged sentences

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.

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 STATEMENTS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

SIGNIFICANT ACCOUNTING POLICIES

8 unchanged sentences

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

acquire common shares of the Company to directors, officers, employees and consultants.

An individual is classified as an employee when

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 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

are issued to non-employees and some or all of the goods or services received by the Company as consideration cannot be specifically identified,

they are measured at fair value of the share-based payment.

Otherwise, share-based payments are measured at the fair value of goods or

services received.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIGNIFICANT ACCOUNTING POLICIES (continued)

Potentially dilutive options as of September 30, 2025 totaled 401,557

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

30, 2024 – 896,645 ).

Revenue recognition

49 unchanged sentences

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

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,

During the nine months ended September

30, 2025 the Company recognized $ 176,000 attributed to professional services.

No revenue was recognized attributed to professional services

for the three months ended September 30, 2025.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

SIGNIFICANT ACCOUNTING POLICIES (continued)

6 unchanged sentences

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.

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

Under the License Agreement, as amended

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

by a side letter executed on August 11, 2025 and supported by a legal opinion and confirmation, 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.

6 unchanged sentences

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.

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

with the contract’s billing schedule.

The Company invoices ASPIS on a monthly basis with 30 day payment terms.

For the nine months ended September 30, 2025 the Company has collected $ 1,001,000 from ASPIS.

The Company has elected the practical

expedient under ASC 606-10-32-18 and does not adjust the consideration for the effects of a significant financing component if the Company

expects that the period between when the Company transfers a promised good or service to a customer and when the customer pays for that

good or service will be one year or less.

Accounts Receivable, net –

Related Party

Accounts receivable are typically unsecured

and are derived from revenue earned from customers.

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.

The Company performs ongoing credit

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

The company has confidence in

its ability to collect on all contracted revenues earned from customers.

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.

Contract assets arise when the Company

has earned revenue on a contract with a customer prior to billing.

As of September 30, 2025, contract assets related to ASPIS totaled

$ 1,166,000 , 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.

Capitalized Software Development

The Company capitalizes the costs of

software developed or obtained for internal use in accordance with FASB ASC 350-40, Internal Use Software.

Capitalized software development

costs consist of costs incurred during the application development stage and include consulting costs for projects that qualify for capitalization.

These costs relate to major new functionality.

All other costs, primarily related to maintenance and minor software fixes, are expensed

The Company will amortize the capitalized software development costs

on a straight-line basis over the estimated useful life of the software, which is generally three years , beginning when the asset is substantially

ready for use.

The amortization of capitalized software development costs will be reflected in cost of revenue.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

SIGNIFICANT ACCOUNTING POLICIES (continued)

26 unchanged sentences

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

NON-CONTROLLING INTEREST IN VERSUS LLC

5 unchanged sentences

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

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

The net loss for Versus, LLC for the three month periods ended September 30, 2025 and 2024 was $( 1,040,474 ) and $( 361,134 ), respectively.

The net loss attributable to the non-controlling interest for the three month periods ended September 30, 2025 and 2024 was $( 188,326 )

and $( 65,365 ), respectively.

The net loss for Versus, LLC for the nine month periods ended September 30, 2025 and 2024 was $( 799,924 )

and $( 2,181,516 ), respectively.

The net loss attributable to the non-controlling interest for the nine month periods ended September 30,

2025 and 2024 was $( 144,786 ) and $( 394,854 ), 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.

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

respectively.

September 30,

Non-controlling interest percentage

9 unchanged sentences

Authorized share capital

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.

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 September 30, 2025 and December 31,

Issued share capital

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

During the nine month period ended September 30, 2025 and

2024, the Company did not issue share capital.

7 unchanged sentences

A continuity schedule of outstanding stock options is as

Exercise Price

Number Outstanding

Weighted Average Exercise Price

Balance – December 31, 2024

Balance – June 30, 2025

Balance – September 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.

For the three months ended September 30, 2025 and 2024 the Company

recorded share-based compensation of $ 21,476 and none , respectively.

For the nine months ended September 30, 2025 and 2024 the Company

recorded share-based compensation of $ 408,952 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 $ 214,761 as of September 30, 2025.

The remaining

expense is expected to be recognized over a weighted-average period of approximately 2.50 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.

during the nine months ended September 30, 2025 was $ 1.56 per share.

No options were granted during the nine months ended September 30,

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

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

The Company used the following assumptions in calculating

the fair value of stock options for the period ended:

2025 June 30,

September 30,

Risk-free interest rate 4.03 %

Expected life of options 5 years 3.38 years

Expected dividend yield Nil Nil

Expected life of options 5 years

Expected dividend yield Nil

Volatility 98.83 %

3 unchanged sentences

Share purchase warrants

During the year ended December 31, 2024, 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:

Expiration Date Warrants

Weighted Average Remaining Life

During the year ended December 31, 2024, the Company 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 September 30, 2025, the

Company had share purchase warrants outstanding as follows:

Expiration Date Warrants Outstanding Exercise Price Weighted Average Remaining Life

January 20, 2026 (1) 7,030 1,800.00 0.33

8 unchanged sentences

1,733,741 18.71 3.46

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

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

SEGMENT REPORTING

15 unchanged sentences

SUBSEQUENT EVENTS

The Company has evaluated subsequent

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.

The Company has evaluated subsequent events after the balance sheet

date of September 30, 2025 through November 13, 2025, the date the condensed consolidated financial statements were issued.

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