What changed in this filing

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Item 1. Financial Statements

2026-05-15 compared with 2025-11-14 · 355 added, 276 removed, 263 unchanged (71% of the section changed)

1 unchanged sentence

Versus Systems Inc.

Condensed Consolidated Balance Sheets (Unaudited)

September 30, December 31,

Condensed Consolidated Balance Sheets

Current assets

Cash 1,405,628 3,065,914

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

Prepaids 201,047 469,646

Cash and cash equivalents

Accounts receivable

Prepaid expenses

Total current assets

Intangible assets, net 300,000 -

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

Intangible asset

LIABILITIES AND EQUITY

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Total current liabilities

Non-current liabilities

Total liabilities

Commitments and Contingencies (Note 7)

Stockholders’ equity

Share capital

Preferred stock, no par value.

100,000,000 authorized shares;

no shares issued or outstanding, respectively

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

Unlimited authorized shares;

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

200,000,000 authorized shares;

4,901,677 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively

Accumulated other comprehensive income

Accumulated deficit ( 140,303,579 ) ( 139,476,353 )

( 141,951,719 )

( 141,268,519 )

Total Versus Systems, Inc.

stockholders’ equity

Non-controlling interest

( 8,408,114 )

( 8,272,619 )

Total stockholders’ equity

1 unchanged sentence

The accompanying notes are an integral part of

these condensed interim consolidated financial statements.

these condensed consolidated financial statements.

Versus Systems Inc.

Consolidated Statements of Operations and Comprehensive

Income (Loss) (Unaudited)

September 30,

Revenues – related party

Condensed Consolidated Statements of Operations and Comprehensive

Cost of revenues

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( 1,172,761 )

Other income (expense), net

Loss before provision for income taxes

Other income, net

Loss before provision

( 1,156,477 )

1 unchanged sentence

( 1,156,477 )

Net income (loss) attributable to non-controlling interest

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

( 3,232,807 )

Net loss attributable to non-controlling interest

Net loss attributable to Versus Systems, Inc.

Per Share Data:

Basic and diluted loss per share to shareholders

Basic and diluted earnings per share to shareholders

Weighted average shares - basic and diluted

1 unchanged sentence

( 1,156,477 )

Other comprehensive (loss) income, net of tax

Other comprehensive income (loss), net of tax

Change in foreign currency translation, net of tax

1 unchanged sentence

( 1,164,227 )

( 3,501,716 )

comprehensive loss (income) attributable to non-controlling interest

comprehensive loss attributable to non-controlling interest

Comprehensive loss attributable to shareholders

1 unchanged sentence

$ ( 969,496 )

$ ( 951,208 )

$ ( 3,204,147 )

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 (Unaudited)

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

Condensed Consolidated Statements of Changes in Equity (Unaudited)

Stockholders’

Non-controlling

stockholders’

Balance at December 31, 2024

1 unchanged sentence

( 7,920,052 )

Stock-based compensation

Cumulative translation adjustment

( 1,156,477 )

March 31, 2025

( 140,438,099 )

( 8,114,783 )

Stock-based compensation

Cumulative translation adjustment

Balance at June 30, 2025

( 1,156,477 )

( 7,844,657 )

Stock-based compensation

Cumulative translation adjustment

Balance at September 30, 2025

Balance at March 31, 2025

( 140,438,099 )

( 8,114,783 )

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, 2025

1 unchanged sentence

( 8,272,619 )

Stock-based compensation

Cumulative translation adjustment

( 1,328,391 )

( 1,501,683 )

March 31, 2024

( 136,762,413 )

( 7,560,839 )

Cumulative translation adjustment

( 1,343,545 )

( 1,499,742 )

Balance at June 30, 2024

( 138,105,958 )

( 7,717,036 )

Cumulative translation adjustment

Balance at September 30, 2024

Stock-based compensation

Balance at March 31, 2026

( 141,951,719 )

1 unchanged sentence

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,

Cash flows from operating activities

1 unchanged sentence

( 1,156,477 )

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

Share-based compensation

Adjustments to reconcile net loss to net cash:

Stock-based compensation

Changes in operating assets and liabilities:

Contract assets

( 1,166,000 )

Deferred revenue

Accounts payable and accrued liabilities

Cash flows used in operating activities

( 1,484,267 )

( 4,255,345 )

Cash provided by (used in) operating activities

INVESTING ACTIVITIES

Purchase of intangible assets

Development of intangible assets

Cash flows used in investing activities

Effect of exchange rates on cash and cash equivalents

Change in cash during the period

( 1,660,286 )

( 4,217,759 )

Cash - Beginning of period

Cash - End of period

Effect of foreign exchange

Change in cash and cash equivalents during the period

Cash and cash equivalents - Beginning of period

Cash and cash equivalents - End of period

The accompanying notes are an integral part of

these condensed interim consolidated financial statements.

these condensed consolidated financial statements.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

NATURE OF OPERATIONS AND GOING CONCERN

NATURE OF OPERATIONS AND LIQUIDITY

Versus Systems Inc.

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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”.

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.

was approved 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

headquarters is located at 3500 South DuPont Highway Dover, DE 19901.

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

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.

In June 2021, the Company completed

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

In October 2024, the Company entered

into a $ 2,500,000 funding agreement with ASPIS Cyber Technologies (“ASPIS”).

Pursuant to that agreement, the Company issued

to ASPIS a senior convertible promissory note in the principal amount of $ 2,500,000 (the “Senior Note”).

The Senior 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 .

On December 24, 2024, ASPIS converted

the outstanding Senior Note into 2,155,172 shares of common stock and 1,077,586 common stock warrants at an exercise price of $ 4.00 per

The warrants were deemed to be equity classified, therefore the book value of the Senior Note was converted to equity and recorded

within additional paid in capital on the consolidated balance sheet.

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,

as amended 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.

ASPIS will pay for

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

Company 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.

The Company and ASPIS are currently engaged in discussions on the terms of a potential

renewal or extension of the agreement following the expiration of the Initial Term.

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 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.

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, 2026, the Company 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

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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 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

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.

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.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

NATURE OF OPERATIONS AND LIQUIDITY (continued)

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.

In 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.

However, 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.

BASIS OF PRESENTATION

Basis of presentation

These condensed consolidated financial

statements have been prepared in accordance with U.S.

These condensed interim 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) 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 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.

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, 2025, filed with the SEC on April 15, 2026.

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

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.

3 unchanged sentences

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.

and presentation currency

These consolidated financial statements

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

The functional currency of our operating subsidiaries is generally the currency of the economic environment in which the subsidiary primarily

does business.

Our foreign subsidiaries’ financial statements are translated into U.S.

dollars using the foreign exchange rates

applicable to the dates of the financial statements.

Assets and liabilities are translated using the end-of-period spot foreign exchange

Income, expenses, and cash flows are translated at the average foreign exchange rates for each period.

Equity accounts are translated

at historical foreign exchange rates.

The effects of these translation adjustments are reported as a component of accumulated other comprehensive

income (loss) (“AOCI”) in the consolidated statements of shareholders’ equity.

Basis of consolidation

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inter-company transactions, are eliminated on consolidation.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

BASIS OF PRESENTATION (continued)

Use of estimates

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.

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

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

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

and the impairment of intangible assets.

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 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 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 ).

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.

The following shares have been excluded

from earnings per share as their inclusion would be anti-dilutive, which include options as of March 31, 2026 of 320,557 (March 31, 2025

– 401,633 ) and warrants of 1,726,701 (March 31, 2025 – 1,733,741 ).

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.

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.

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.

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

SIGNIFICANT ACCOUNTING POLICIES (continued)

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.

Revenue recognition

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

During the nine months ended September

During the three months ended March

31, 2026, the Company recognized $ 17,300 of revenue attributed to its legacy Xcite business.

During the three months ended March 31, 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.

2 unchanged sentences

Revenue recognition

License Revenue – Related Party

License Revenue

On April 30, 2025, pursuant to the Technology

1 unchanged sentence

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 September 30, 2025.

ASPIS is an affiliate of Cronus Equity

Capital Group, LLC (“CECG”), a significant shareholder of the Company.

As of March 31, 2026, CECG beneficially owned approximately

20.20 % of the Company’s outstanding common shares, and ASPIS beneficially owned approximately 43.97 % of the Company’s outstanding

common shares.

Under the License Agreement, as amended

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as revenue in the quarter ended June 30, 2025.

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.

Any required technology modifications, improvements, and developments are separately payable

by ASPIS and are not included in the fixed monthly license fee.

The remaining fixed consideration is billed monthly over the remaining

term in accordance with the contract’s billing schedule and, because only the passage of time is required before payment is due,

unpaid amounts are presented as receivables rather than contract assets.

The Company invoices ASPIS with 30 day payment terms.

The Company has elected the practical

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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.

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

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 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

SIGNIFICANT ACCOUNTING POLICIES (continued)

No revenue was recognized attributed

to the license agreement for the three months ended March 31, 2026 and 2025, respectively.

The Company and ASPIS are currently engaged

in discussions on the terms of a potential renewal or extension of the agreement following the expiration of the Initial Term.

Recent accounting pronouncements

not yet adopted

New accounting pronouncements

In November 2024, the FASB issued ASU

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

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

In December 2023, the FASB issued ASU

2023-09, Income Taxes (“Topic 740”):

Improvements to Income Tax Disclosures.

This ASU enhances the transparency and decision

usefulness of income tax disclosures.

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

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

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.

In September 2025, the FASB issued ASU

2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting

for Internal-Use Software (“ASU 2025-06”).

ASU 2025-06 was issued to modernize the accounting for software costs that are

accounted for under Subtopic 350-40, Intangibles—Goodwill and Other—Internal-Use Software (referred to as “internal-use

ASU 2025-06 removes all references to prescriptive and sequential software development stages (referred to as “project

stages”) throughout Subtopic 350-40.

Therefore, an entity is required to start capitalizing software costs when both of the following

Management has authorized and committed to funding the software project.

It is probable that the project will be completed

and the software will be used to perform the function intended (referred to as the “probable-to-complete recognition threshold”).

ASU 2025-06 is effective for the Company January 1, 2028.

The Company is currently evaluating the impact the adoption of the standard

will have on the Company’s consolidated financial position and results of operations.

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 condensed consolidated financial statements.

or future consolidated financial statements.

VERSUS SYSTEMS INC.

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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 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 loss for Versus, LLC for the

three-month periods ended March 31, 2026 and 2025 was $ 748,594 and $ 1,075,861 , respectively.

The net loss attributable to the non-controlling

interest for the three-month periods ended March 31, 2026 and 2025 was $ 135,495 and $ 194,731 , respectively

The following table presents summarized

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

financial information before intragroup eliminations for the non-wholly owned subsidiary as of March 31, 2026 and December 31, 2025, respectively.

Non-current (1)

Non-current (2)

Net liabilities

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( 8,272,619 )

(1) The Company reclassed $ 609,000 into long-term for the year ended December 31, 2025 attributable to intangible assets.

(2) Non-current liabilities primarily relate to intercompany balances within the consolidated group.

INTANGIBLE ASSETS

Intangible assets consist of internally

developed software costs related to the Company's hosted business-to-business software platform.

The platform is used by the Company to

provide services to customers and is not sold, transferred, or licensed to customers for their possession.

The Company accounts for these

costs as internal-use software under ASC 350-40.

No amortization was recorded because the software had not been placed in service and

was not ready for its intended use.

The Company reviews all finite lived intangible assets for impairment

when circumstances indicate that their carrying values may not be recoverable.

If the carrying value of an asset group is not recoverable,

the Company recognizes an impairment loss for the excess carrying value over the fair value in its consolidated statements of operations.

The Company did not record an impairment loss during the three months ended March 31, 2026 and 2025, respectively.

RELATED PARTY TRANSACTIONS

On October 7, 2024, the Company entered into a Business Funding Agreement

(the “Funding Agreement”) with ASPIS Cyber Technologies, Inc.

(“ASPIS”), pursuant to which ASPIS agreed to make

a $ 2,500,000 investment in the Company.

ASPIS, the Company’s largest shareholder, 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.

ASPIS is an affiliate of Cronus Equity Capital Group, LLC (“CECG”).

ASPIS holds approximately 43.97 % and CECG holds approximately 20.20 %, respectively, of the outstanding common shares of the Company based

on the amount of Company common shares issued and outstanding as of March 31, 2026.

In addition, for the three months ended

March 31, 2026 and 2025 ASPIS represented approximately 0 % and 88 % of revenue and 91 % and 100 % of the accounts receivable as of March

31, 2026 and 2025, respectively.

As of March 31, 2026 and December 31,

2025 the Company had a receivable balance owed from ASPIS of $ 176,000 and $ 836,000 , respectively.

VERSUS SYSTEMS INC.

2 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 September 30, 2025 and December 31,

The Company is authorized to issue three

hundred million ( 300,000,000 ) shares, of which two hundred million ( 200,000,000 ) shares shall be Common Stock, and one hundred million

( 100,000,000 ) shares shall be Preferred Stock.

Issued share capital

During the nine month period ended September 30, 2025 and

During the three-month periods ended March 31, 2026 and 2025,

the Company did not issue share capital.

7 unchanged sentences

A continuity schedule of outstanding stock options is as

Number Outstanding

Weighted Average Exercise Price

Exercise Price

Balance – December 31, 2025

Balance – September 30, 2025

Balance – March 31, 2026

Vested and exercisable

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.

For the three months ended March 31,

2026 and 2025 the Company recorded share-based compensation of $ 21,476 and $ 366,000 , respectively, relating to options vested during the

As of March 31, 2026, the remaining share-based compensation of $ 140,571 is expected to be recognized over 2.0 years.

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

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

weighted average contractual term of the options outstanding as of March 31, 2026 is 8.95 years.

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 September 30, 2025 the total intrinsic value of all outstanding options

on the fair market value of the Company’s common stock at March 31, 2026 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:

September 30,

Risk-free interest rate 4.03 %

6 unchanged sentences

Share purchase warrants

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

At March 31, 2026, the Company

had share purchase warrants outstanding as follows:

Expiration Date Warrants

Outstanding Exercise

Price Weighted

Remaining Life

February 28, 2027 20,689 460.80 0.82

7 unchanged sentences

1,726,701 11.46 3.20

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

SEGMENT REPORTING

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

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

COMMITMENTS AND CONTINGENCIES

5 unchanged sentences

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

During the first quarter of 2026, the

Audit Committee of the Board of Directors, with the assistance of outside advisors, completed an investigation into the misappropriation

of Company assets by the Company’s former Chief Financial Officer.

The investigation determined that, between the fourth quarter

of 2024 and the first quarter of 2026, approximately $ 829,895 of Company funds had been misappropriated as follows for the quarters ended

December 31, 2024, March 31, 2025, June 30, 2025, September 30, 2025, December 31, 2025 and March 31, 2026:

$ 10,995 , $ 124,868 , $ 196,711 ,

$ 155,792 , $ 298,568 , and $ 42,961 , respectively.

Management, under the oversight of the

Audit Committee, evaluated the quantitative and qualitative significance of this matter, including the fact that it involved a former

executive officer, in accordance with Staff Accounting Bulletin No.

99, Materiality , and Staff Accounting Bulletin No.

108, Considering

the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements .

Based on that evaluation,

management concluded that the amounts were not material to any previously issued annual or interim financial statements, individually

or in the aggregate.

Accordingly, the Company has not restated or revised any previously issued financial statements in connection with

The Company determined that the misappropriated

amounts related to historical operating expenditures and were recorded within operating expenses in the periods in which they were incurred;

accordingly, no adjustments to previously issued financial statements were required.

In March 2026, the Company’s former Chief Financial Officer executed

a promissory note dated March 23, 2026 to repay the misappropriated funds.

Under the terms of the promissory note, the principal amount

is payable to the Company in two installments due on April 22, 2026 and June 21, 2026.

The Company is pursuing recovery of the amounts

misappropriated;

however, there can be no assurance that the Company will collect the promissory note in part or in full.

As of May 15,

2026, no monies have been repaid on the promissory note.

No receivable was recorded as of March 31, 2026 as collection was not reasonably

VERSUS SYSTEMS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL

SUBSEQUENT EVENTS

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.

The Company has evaluated subsequent

events after the balance sheet date of March 31, 2026 through May 15, 2026, 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

consolidated financial statements or disclosure in the notes thereto, except as described below:

Former CFO Promissory Note

In connection with the matter described

in Note 9, the Company’s former Chief Financial Officer executed a promissory note dated March 23, 2026 to repay the misappropriated

Under the terms of the promissory note, the principal amount is payable to the Company in two installments due on April 22, 2026

and June 21, 2026.

The Company is pursuing recovery of the amounts misappropriated;

however, there can be no assurance that the Company

will collect the promissory note in part or in full.

As of May 15, 2026, no monies have been repaid on the promissory note.

Purchase Agreement

On April 15, 2026, the Company and ASPIS entered into a Stock Purchase

Agreement (the “SPA”).

Pursuant to the SPA, the Company will sell to ASPIS, and ASPIS will purchase for cash, a number of

shares of Company common stock, at a price, equal to $ 1,700,000 divided by 105 % of the closing price of a share of Company common stock

on the day preceding consummation.

The purchase price per share shall be 105 % of such closing price.

On May 15, 2026, the Company received

notification from ASPSIS that they wired $ 1,200,000 pursuant to the Stock Purchase Agreement;

however, no shares had been issued under

the SPA as of such date.

The Company expects to receive the remaining balance of the purchase price in the near future and all shares

will be issued at that time.

Nasdaq Deficiency Letter

On April 29, 2026, the Nasdaq Stock

Market, LLC (“Nasdaq”) issued a deficiency letter to the Company.

The basis of the letter is that as of December 31, 2025,

the Company did not maintain a minimum of $ 2,500,000 in stockholders’ equity as required for continued listing by Nasdaq

Listing Rule 5550(b)(1).

As disclosed in the Company’s Form 10-K for the period ended December 31, 2025, the Company had stockholders’

equity of $ 1,918,303 .

As of April 29, 2026, the Company did not meet the alternatives of market value of listed securities or net income

from continuing operations.

The deficiency letter has no immediate effect on the listing of the

Company’s securities on Nasdaq.

Nasdaq has provided the Company with 45 calendar days, or until June 13, 2026, to submit a plan

to regain compliance with stockholders’ equity requirement.

If the Company’s plan to regain compliance is accepted, Nasdaq

may grant an extension until October 26, 2026, for the Company to regain compliance.

The Company will submit its plans to regain compliance

to Nasdaq on or before June 13, 2026.

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