Versus Systems Inc.
For the period ended Mar 31, 2025. Filed May 15, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 15, 2025
VS$0.82-2.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-14.
0001213900-24-098269
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-15.
0001213900-25-044132
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 81 previous paragraphs and 58 current paragraphs.
30 unchanged; 14 reworded; 12 added; 35 removed; 2 previous and 2 current paragraphs rearranged.
Tables are not compared: 8 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
Revenue was $199,347 for the three month period ended March 31, 2025, representing an increase of $172,844, or 652%, from $26,403 for the three month period ended March 31, 2024. The increase was primarily due to consulting services attributed to the ASPIS arrangement which accounted for approximately $176,000 during the three months ended March 31, 2025.
Current report
Selling, general and administrative was $1,357,736 for the three month period ended March 31, 2025, representing a decrease of $106,745, or 7%, from $1,464,481 for the three month period ended March 31, 2024. The decrease was primarily due to a decrease in administrative employees and professional fees.
Current report
No cash was used in or provided by investing activities for the three months ended March 31, 2025 and 2024, respectively.
Current report
No cash was used in or provided by financing activities for the three months ended March 31, 2025 and 2024, respectively.
Current report
The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”), the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (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.
Current report
The Company earns revenue in two primary ways: 1) the sales of software-as-a-service (SAAS) from its interactive production software platform or 2) development and maintenance of custom-built software or other professional services.
Current report
The Company recognizes SAAS revenues from its interactive production sales over the life of the contract as its performance obligations are satisfied. Payment terms vary by contract and can be periodic or one-time payments. The Company determines that the customer receives and consumes the benefits of the service simultaneously as the service is provided. The transaction price is allocated to the contractual performance obligations and recognized ratably over the contract term.
Current report
For revenues received from the sales of advertising, the Company is deemed the agent in its revenue agreements. The Company does not own or obtain control of the digital advertising inventory. The Company recognizes revenues upon the achievement of agreed-upon performance criteria for the advertising inventory, such as a number of views, or clicks. As the Company is acting as an agent in the transaction, the Company recognizes revenue from sales of advertising on a net basis, which excludes amounts payable to partners under the Company’s revenue sharing agreements.
Current report
During the three months ended March 31, 2025, the Company recognized $176,000 attributed to professional services.
Current report
License Revenue
Current report
We recognize revenue when or as 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.
Current report
Stock-based compensation
Removed paragraphs (35)
Previous report
Our revenues are derived primarily from software licensing. Revenue was $3,848 for the three month period ended September 30, 2024, representing a decrease of $19,102, or 83%, from $22,950 for the three month period ended September 30, 2023. The decrease was primarily due to a significant reduction in the number of clients from September 30, 2023 to September 30, 2024.
Previous report
Cost of revenues was none for the three month period ended September 30, 2024, representing a decrease of $23,570, or 100%, from $23,570 for the three month period ended September 30, 2023. The decrease was in line with the decrease in revenue
Previous report
Selling, general and administrative was $521,410 for the three month period ended September 30, 2024, representing a decrease of $1,095,751, or 68%, from $1,617,161 for the three month period ended September 30, 2023. The decrease was primarily due to a decrease in payroll as the Company reduced head count and a decrease in professional fees.
Previous report
Operating Results
Previous report
Revenue
Previous report
Our revenues are derived primarily from software licensing. Revenue was $57,288 for the nine month period ended September 30, 2024, representing a decrease of $179,665, or 76%, from $236,953 for the nine month period ended September 30, 2023. The decrease was primarily due to a significant reduction in the number of clients from September 30, 2023 to September 30, 2024.
Previous report
Cost of revenues
Previous report
Cost of revenues was $40,277 for the nine month period ended September 30, 2024, representing a decrease of $39,220, or 49%, from $79,497 for the nine month period ended September 30, 2023. The decrease was in line with the decrease in revenue.
Previous report
Research and development
Previous report
Selling, general and administrative
Previous report
Selling, general and administrative was $3,429,062 for the nine month period ended September 30, 2024, representing a decrease of $1,044,648, or 23%, from $4,473,710 for the nine month period ended September 30, 2023. The decrease was primarily due to a decrease in payroll as the Company reduced head count and a decrease in professional fees.
Previous report
Loss from Operations
Previous report
Loss from operations was $3,530,128 for the nine month period ended September 30, 2024, representing a decrease of $1,843,044, or 34%, from $5,373,172 for the nine month period ended September 30, 2023. The decrease was primarily the result of decreased spend on professional fees and payroll.
Previous report
Net cash used in investing activities for the nine month period ended September 30, 2024 was none as compared to $14,106 for the nine month period ended September 30, 2023. The change in cash flow used in investing activities was primarily attributable to a significant reduction in payroll capitalized for the development of intangible assets.
Previous report
Net cash provided by financing activities was none for the nine month period ended September 30, 2024 as compared to $5,362,978 for the nine month period ended September 30, 2023. The change in cash flow provided by financing activities was mainly attributable to proceeds we received from the issuance of common shares, net of issuance costs, exercise of warrants and options, which was offset by repayments on notes payable and lease liabilities in 2023.
Previous report
Indebtedness
Previous report
Notes Payable
Previous report
From 2017 to December 31, 2022, we issued $4,750,818 aggregate principal amount of promissory notes primarily to Brian Tingle, one of our directors. The notes bore interest at the prime rate of the Bank of Canada, which has ranged from 2.45% to 3.95% per annum, compounded annually, that was payable quarterly, and had a maturity date of three years from the date of issuance. As of December 31, 2023, all loans have been repaid and we had recorded $0 in accrued interest that was included in accounts payable and accrued liabilities.
Previous report
Estimate for excess credit losses
Previous report
We apply the Current Expected Credit Loss (CECL) model under ASC 326 for impairment of financial assets. This model requires the recognition of an allowance for credit losses based on expected losses over the life of the asset. If the credit risk of a financial asset decreases in a subsequent period, any previously recognized impairment loss is reversed through profit or loss, limited to the extent that the carrying amount does not exceed what the amortized cost would have been had the impairment not been recognized.
Previous report
Deferred financing costs
Previous report
Deferred financing costs consist primarily of direct incremental costs related to our public offerings of our common stock completed in February 2023. Upon completion of our public offering and financing any deferred costs were offset against the proceeds.
Previous report
Property and equipment
Previous report
Property and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the property and equipment. All other repair and maintenance costs are recognized in the consolidated statements of operations and comprehensive loss. The initial cost of property and equipment comprises its purchase price or construction cost and any costs directly attributable to bringing it to a working condition for its intended use. The purchase price or construction cost is the aggregate amount of cash consideration paid and the fair value of any other consideration given to acquire the asset. Where an item of property and equipment is comprised of significant components with different useful lives, the components are accounted for as separate items of property and equipment. For all property and equipment, depreciation is calculated over the depreciable amount, which is the cost of an asset less its residual value. Depreciation is calculated starting on the date that property and equipment is available for its intended use.
Previous report
Intangible assets
Previous report
Intangible assets acquired separately were measured upon initial recognition at cost, which comprises the purchase price plus any costs directly attributable to the preparation of the asset for its intended use. Intangible assets acquired through business combinations (Xcite Interactive) or asset acquisitions were initially recognized at fair value as at the date of acquisition. After initial recognition, intangible assets were carried at cost less accumulated amortization and any accumulated impairment charges.
Previous report
Income taxes
Previous report
We account for income taxes utilizing the assets and liability method. Under this method, deferred tax assets and liabilities are determined based on differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, and net operating loss and tax credit carry forwards, using enacted tax rates and laws that are expected to be in effect when the differences reverse.
Previous report
A valuation allowance is recorded against deferred tax assets (DTA’s) when management does not believe that the realization of DTA’s is more likely than not. While management believes that its judgements and estimates regarding deferred tax assets and liabilities are appropriate, significant differences in actual results may materially affect our future financial results.
Previous report
We recognize any uncertain income tax positions at the largest amount that is more-likely-than-not to be sustained upon audit by relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Our policy is to recognize interest and/or penalties related to income tax matters in income tax expense. As of September 30, 2024 and 2023, we did not record any accruals for interest and penalties. We do not foresee material changes to our uncertain tax positions within the next twelve months.
Previous report
Determination of share-based payments
Previous report
Deferred revenues and revenue recognition
Previous report
Revenue recognition of sales is recorded on a monthly basis upon delivery or as the services are provided. Cash received in advance for services are recorded as deferred revenue based on the proportion of time remaining under the service arrangement as of the reporting date.
Previous report
Functional currency
Previous report
The functional currency for each of our subsidiaries is the currency of the primary economic environment in which the respective entity operates. Such determination involves certain judgements to identify the primary economic environment. We reconsider the functional currency of our subsidiaries if there is a change in events and/or conditions which determine the primary economic environment.
Reworded paragraphs (14)
Previous wording
You should read the following discussion and analysis of our financial condition and results of operations for the years ended December 31, 2023 and 2022, in addition to the Quarterly Report for the period ended March 31, 2024 and June 30, 2024, in conjunction with our unaudited condensed consolidated interim financial statements and the related notes included elsewhere in this Quarterly Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this Quarterly Report.
Current wording
You should read the following discussion and analysis of our financial condition and results of operations for the years ended December 31, 2024 and 2023 in conjunction with our audited consolidated financial statements and the related notes included elsewhere in this Quarterly Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this Quarterly Report.
Previous wording
Our customers are mostly sports teams, venues, and advertising agencies, who typically use our products as part of their live events or as part of an advertising campaign with the goal of engaging fans, increasing consented first-party data, and increasing sales. At December 31, 2023 and at September 30, 2024, we had five and one active customers due to the decrease in our sales force.
Current wording
Our customers mostly sports teams (Professional and Collegiate), venues (Arenas, Football Stadiums, Baseball Stadiums), and advertising agencies, which typically use our products as part of their live events or as part of an advertising campaign with the goal of engaging fans, increasing consented first-party data, and increasing sales. At March 31, 2025 and December 31, 2024, we had two active customers.
Previous wording
Our products and games are designed so that end users of our products can earn prizes by registering on our system and completing in-content challenges like trivia, polls, or casual mobile games. Players can use our system to play a variety of games and earn a wide range of prize types provided by advertisers and sponsors. Our products include our in-venue XEO and Filter Fan Cam products for live events, and our new stand-alone “Winfinite” product that can be used by brands, advertising agencies, and content partners to reach potential customers outside of sports venues, on mobile devices. We also have an IP portfolio that could create future licensing and product development opportunities including our recently allowed Artificial Intelligence (“AI”) and Machine Learning (“ML”) series of patent claims.
Current wording
Our products and games are designed so that end users of our products can earn prizes by registering on our system and completing in-content challenges like trivia, polls, or casual mobile games. Players could use our system to play a variety of games and earn a wide range of prize types, provided by advertisers and sponsors. Our products, include our in-venue XEO and Filter Fan Cam products for live events, and our new stand-alone “Winfinite” product line that can be used by brands, advertising agencies, and content partners to reach potential customers outside of sports venues, on mobile devices. We also have an IP portfolio that could create future licensing and product development opportunities including our recently allowed Artificial Intelligence (“AI”) and Machine Learning (“ML”) series of patent claims.
Previous wording
With the acquisition of Xcite Interactive in June 2021, we acquired a number of key pieces of technology and relationships that have helped to drive our engagement and rewards business, including a live events fan engagement business that has partnered with professional sports franchises in the National Football League (“NFL”), the National Basketball Association (“NBA”), the National Hockey League (“NHL”) and others to increase audience engagement using interactive gaming functions like trivia, polling, and casual games that can be played alongside live experiences whether a player is at-home, in a restaurant, or in-venue at the event itself. Our three largest customers in 2023 were the San Jose Sharks, the Sacramento Kings, and ENT Marketing, a marketing agency that used our platform to promote Coca-Cola products.
Current wording
With the acquisition of Xcite Interactive in June 2021, we acquired a number of key pieces of technology and relationships that have helped to drive our engagement and rewards business, including a live events fan engagement business that has partnered with professional sports franchises in the National Football League (“NFL”), the National Basketball Association (“NBA”), the National Hockey League (“NHL”) and others to increase audience engagement using interactive gaming functions like trivia, polling, and casual games that can be played alongside live experiences whether a player is at-home, in a restaurant, or in-venue at the event itself. Our largest customers in 2024 were the Texas Rangers and San Jose Sharks.
Previous wording
Comparison of Results of Operations for the three months ended September 30, 2024 and September 30, 2023
Current wording
Comparison of Results of Operations for the Three-Month periods ended March 31, 2025 and March 31, 2024
Previous wording
The following table summarizes our results of operations for the three months ended September 30, 2024 and 2023:
Current wording
The following table summarizes our results of operations for the three month periods ended March 31, 2025 and 2024:
Previous wording
Research and development was $11,462 for the three month period ended September 30, 2024, representing a decrease of $260,649, or 96%, from $272,111 for the three month period ended September 30, 2023. The decrease was primarily due to significant reductions in staff related to our company restructuring.
Current wording
Cost of revenues was $8,223 for the three month period ended March 31, 2025, representing a decrease of $15,823, or 66%, from $24,046 for the three month period ended March 31, 2024. The decrease was primarily due to significant reductions in staff related to our company restructuring and third-party support.
Previous wording
Research and development was $118,077 for the nine month period ended September 30, 2024, representing a decrease of $938,841, or 89%, from $1,056,918 for the nine month period ended September 30, 2023. The decrease was primarily due to a reduction in staffing levels, including a large portion of our engineering staff, and a reduction in software costs.
Current wording
Research and development was $6,149 for the three month period ended March 31, 2025, representing a decrease of $33,263, or 84%, from $39,412 for the three month period ended March 31, 2024. The decrease was primarily due to a reduction in staffing levels, including a large portion of our engineering staff, and a reduction in software costs.
Previous wording
Loss from operations was $529,024 for the three month period ended September 30, 2024, representing a decrease of $1,360,868, or 72%, from $1,889,892 for the three month period ended September 30, 2023. The decrease was primarily the result of decreased spend on professional fees and payroll.
Current wording
Loss from operations was $1,172,761 for the three month period ended March 31, 2025, representing a decrease of $328,675, or 22%, from $1,501,436 for the three month period ended March 31, 2024. The decrease was primarily the result of decreased spend on professional fees and headcount.
Previous wording
We had cash of $471,248 and a working capital surplus of $1,215,990 as at September 30, 2024, compared to a cash position of $4,689,007 and working capital surplus of $4,546,227 as at December 31, 2023. The decrease in our cash position and decrease in working capital surplus was related to using cash to fund operations and ongoing losses.
Current wording
We had cash of $2,432,219 and a working capital balance of $2,726,545 as at March 31, 2025, compared to a cash position of $3,065,914 and working capital balance of $3,509,272 as at December 31, 2024. The decrease in our cash position and decrease in working capital balance was related to using cash to fund operations and ongoing losses.
Previous wording
Since inception, we have incurred significant operating losses. For the years ended December 31, 2023 and 2022, we incurred net losses of approximately $10.5 million and $22.4 million, respectively. For the nine months ended September 30, 2024 the company incurred a net loss of $3.5 million. During such periods, we have financed our operations primarily through an initial public offering of our common shares in January 2021 and subsequent public offerings, registered direct offerings, and private placements. In February 2023, we completed a registered direct offering of our common shares in which we received gross proceeds of $2.25 million and net proceeds of approximately $2 million. In October 2023, we completed a public direct offering of our common shares in which we received gross proceeds of approximately $3 million and net proceeds of approximately $2.5 million. In November 2023, we completed a private placement of our equity securities in which we received gross proceeds of $2.6 million. Throughout 2023, we received approximately $4.6 million in proceeds from warrant exercises. Our cash and cash equivalents as of December 31, 2023 was $4.7 million. Our primary cash needs are for working capital requirements, capital expenditures and to fund our operations.
Current wording
Since inception, we have incurred significant operating losses. For the three months ended March 31, 2025 and 2024, we incurred net losses of approximately $1.2 million and $1.5 million, respectively. During such periods, we have financed our operations primarily through an initial public offering of our common shares in January 2021 and subsequent public offerings, registered direct offerings, convertible debt, warrant exercises and private placements. In October 2024 warrant holders exercised $0.9 million of warrants into common stock. Also, in November and December 2024 the Company raised $2.5 million of convertible debt. Our cash and cash equivalents as of March 31, 2025 was $2.4 million. Our primary cash needs are for working capital requirements, capital expenditures and to fund our operations.
Previous wording
While we plan to increase our cash flow from our operations to address some of our liquidity concerns, to date we have been unable to do so and are experiencing declining revenues. Accordingly, we are evaluating other strategic alternatives. However, to execute our business plan and implement our business strategy, we anticipate that we will need to obtain additional financing and may choose to raise additional funds through public or private equity or debt financings, a bank line of credit, borrowings from affiliates or other arrangements. We cannot be sure that any additional funding, if needed, will be available on terms favorable to us or at all. Furthermore, any additional capital raised through the sale of equity or equity-linked securities may dilute our current shareholders’ ownership in us and could also result in a decrease in the market price of our common shares. The terms of those securities issued by us in future capital transactions may be more favorable to new investors and may include the issuance of warrants or other derivative securities, which may have a further dilutive effect. Furthermore, any debt financing, if available, may subject us to restrictive covenants and significant interest costs. There can be no assurance that we will be able to raise additional capital, when needed, to continue operations in their current form. If we cannot raise needed funds, we might be forced to make substantial reductions in our operating expenses, including reductions in our research and development expenses or headcount reductions, which could adversely affect our ability to implement our business plan and ultimately our viability as a company, or we may be forced to liquidate the company.
Current wording
We plan to increase our cash flow from our operations to address some of our liquidity concerns and are evaluating other strategic alternatives. However, to execute our business plan and implement our business strategy, we anticipate that we will need to obtain additional financing from time to time and may choose to raise additional funds through public or private equity or debt financings, a bank line of credit, borrowings from affiliates or other arrangements. We cannot be sure that any additional funding, if needed, will be available on terms favorable to us or at all. Furthermore, any additional capital raised through the sale of equity or equity-linked securities may dilute our current shareholders’ ownership in us and could also result in a decrease in the market price of our common shares. The terms of those securities issued by us in future capital transactions may be more favorable to new investors and may include the issuance of warrants or other derivative securities, which may have a further dilutive effect. Furthermore, any debt financing, if available, may subject us to restrictive covenants and significant interest costs. There can be no assurance that we will be able to raise additional capital, when needed, to continue operations in their current form. If we cannot raise needed funds, we might be forced to make substantial reductions in our operating expenses, including reductions in our research and development expenses or headcount reductions, which could adversely affect our ability to implement our business plan and ultimately our viability as a company.
Previous wording
The following summarizes the key components of our cash flows for the nine months period ended September 30, 2024 and 2023:
Current wording
The following summarizes the key components of our cash flows for the three month periods ended March 31, 2025 and 2024:
Previous wording
Net cash used in operating activities for the nine month period ended September 30, 2024 was $4,255,345 as compared to $4,355,723 for the nine month period ended September 30, 2023. The decrease in cash used in operating activities was primarily attributable to the change in our net loss of $1,436,364 offset by increase in non-cash stock compensation offset by a decrease in amortization of intangible assets.
Current wording
Net cash used in operating activities for the three month period ended March 31, 2025 was $641,445 as compared to $1,757,911 for the three month period ended March 31, 2024. The decrease in cash used in operating activities was primarily attributable to a decrease in the net loss of $345,206, increase of stock-based compensation of $205,135 and a decrease of working capital accounts of $566,125.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
The Company recognizes revenues received from the development and maintenance of custom-built software and other professional services provided upon the satisfaction of its performance obligation in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services. Performance obligations can be satisfied either at a single point in time or over time. For those performance obligations that are satisfied at a single point in time, the revenue is recognized at that time. For each performance obligation satisfied over time, the Company recognizes revenue by measuring the progress toward complete satisfaction of that performance obligation. The Company generally measures progress comparing hours incurred to total estimated hours.
Current report — wording carried from elsewhere
The Company’s contracts with customers may include promises to transfer multiple products and services. For these contracts, the Company accounts for individual performance obligations separately if they are capable of being distinct and distinct within the context of the contract. Determining whether products and services are considered distinct performance obligations may require significant judgment. Judgment is also required to determine the stand-alone selling price, for each distinct performance obligation.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Comparison of Results of Operations for the nine month period ended September 30, 2024 and September 30, 2023
Previous report — wording carried elsewhere
The following table summarizes our results of operations for the nine months ended September 30, 2024 and 2023: