Versus Systems Inc. (VS) - 10-K Summary for Fiscal Year Ended December 31, 2025
Business Context and Reporting Period
This filing covers the fiscal year ended December 31, 2025. Versus Systems Inc. is a technology company providing B2B software solutions for user engagement through gamification and rewards, primarily serving professional sports teams, event venues, and advertising agencies. The company redomiciled from British Columbia to Delaware in December 2024. As of year-end, the company had four active customers, a significant increase from two in the prior year.
Key Financial Metrics
| Metric | 2025 | 2024 |
|---|---|---|
| Revenue | $2,183,415 | $57,288 |
| Gross Margin | $2,166,969 (99.3%) | $17,011 (29.7%) |
| Operating Loss | $(2,161,310) | $(4,539,226) |
| Net Loss | $(2,144,733) | $(4,574,836) |
| Cash and Equivalents (Year-End) | $527,388 | $3,065,914 |
| Operating Cash Flow | $(2,052,862) | $(4,971,948) |
| Accounts Receivable | $836,000 | $0 |
Debt and Liquidity: The company has no outstanding debt as of December 31, 2025, following the conversion of a $2.5 million convertible note into equity in late 2024. Current liabilities totaled $142,759. The company reported a working capital surplus of approximately $1.3 million.
Material Changes vs. Prior Period
- Revenue Surge: Revenue increased by 3,711% to $2.18 million. This was driven almost entirely by a related-party transaction with ASPIS Cyber Technologies, Inc., which accounted for approximately 91% of total revenue and 100% of accounts receivable.
- ASPIS License Agreement: On April 30, 2025, the company entered a 12-month non-cancellable license agreement with ASPIS for $165,000 per month. The company recognized $1.98 million of this as revenue upon delivery of the functional license in Q2 2025.
- Expense Reduction: Operating expenses decreased by approximately 5% to $4.33 million. Research and Development expenses dropped 80% to $48,065 due to significant reductions in engineering staff. Selling, General, and Administrative (SG&A) expenses remained relatively flat at $4.28 million.
- Improved Loss Profile: The operating loss narrowed by 52% compared to 2024, primarily due to the revenue spike from the ASPIS agreement.
Guidance, Risks, and Unusual Items
- Going Concern Warning: The independent auditors issued a "Going Concern" opinion. The company has incurred recurring losses, has an accumulated deficit of over $141 million, and negative operating cash flows. Management states that current resources may not be sufficient to fund operations for the next 12 months without additional financing.
- Internal Control Fraud: In Q1 2026, an internal investigation revealed that the former Chief Financial Officer misappropriated approximately $829,895 of company funds between late 2024 and early 2026. This resulted in the identification of material weaknesses in internal controls over financial reporting. A promissory note was executed for repayment, but collection is not assured.
- Nasdaq Compliance: The company is currently not in compliance with Nasdaq's stockholders' equity requirement ($2.5 million threshold) and expects to receive a formal notice of non-compliance. Failure to regain compliance could lead to delisting.
- Customer Concentration: The company faces significant risk due to reliance on ASPIS for the vast majority of its revenue. The loss of this customer would materially impact operations.
- Strategic Outlook: Management is exploring strategic alternatives, including acquisitions, mergers, or capital raises, to improve liquidity and shareholder value. Expansion efforts in Brazil are underway but have not yet generated revenue.
Investor Verification Checklist
- ASPIS Contract Viability: Verify the enforceability and renewal likelihood of the $1.98 million license agreement with ASPIS, which drives nearly all current revenue.
- Recovery of Misappropriated Funds: Monitor the collection status of the $829,895 promissory note from the former CFO.
- Nasdaq Delisting Risk: Track the company's progress in meeting the $2.5 million stockholders' equity requirement to avoid delisting from the Nasdaq Capital Market.
- Cash Runway: Assess the sufficiency of the $527,388 cash balance against the burn rate of ~$2 million annually to determine the immediate need for equity or debt financing.
- Internal Control Remediation: Review the timeline and effectiveness of the remediation plan for the identified material weaknesses in internal controls.