Versus Systems Inc. quarterly report, Q2 FY2026

Versus Systems Inc. (VS) - 10-Q Summary

Business Context and Reporting Period

This report covers the quarterly period ended June 30, 2026. Versus Systems Inc. is a fan engagement and rewards technology company providing interactive experiences for media, entertainment, and sports environments. The company is classified as a non-accelerated filer, smaller reporting company, and emerging growth company. As of August 12, 2026, there were 6,212,646 common shares outstanding.

Key Financial Metrics

Metric Three Months Ended June 30, 2026 Six Months Ended June 30, 2026
Total Revenue $1,491,821 $1,509,121
Related Party Revenue $1,485,000 (99.5%) $1,485,000 (98.4%)
Net Income (Loss) $594,273 $(224,422)
Net Income (Loss) Attributable to Shareholders $473,297 $(209,902)
EPS (Basic & Diluted) $0.10 $(0.04)
Cash and Cash Equivalents $1,361,714 (as of June 30, 2026)
Total Assets $4,312,004
Total Liabilities $761,499
Stockholders' Equity $3,550,505 (Total); $11,837,643 (Versus Systems Inc.)

Liquidity: Cash increased by $834,326 during the six-month period, primarily driven by $1.7 million in financing activities (stock issuance) and improved operating cash flow compared to the prior year.

Material Changes vs. Prior Period

  • Revenue Concentration: Revenue is heavily dependent on a single related party, ASPIS Cyber Technologies (affiliate of significant shareholder Cronus Equity Capital Group). ASPIS accounted for 99.5% of Q2 2026 revenue. Total revenue decreased 25% in Q2 2026 compared to Q2 2025 due to lower license fees.
  • Profitability: The company reported a net income of $594,273 for Q2 2026, a decrease from $942,461 in Q2 2025. However, for the six-month period, the company reported a net loss of $224,422, an improvement from the $214,016 loss in the prior year.
  • Operating Expenses: SG&A expenses decreased by 13% in Q2 2026 and 27% in the six-month period compared to the prior year, driven by headcount reductions and lower stock-based compensation.
  • Capital Structure: The company issued 1,310,969 shares of common stock to ASPIS for $1.7 million in June 2026 to regain compliance with Nasdaq stockholders' equity requirements.

Outlook, Risks, and Contingencies

  • Going Concern: Management has expressed substantial doubt about the company's ability to continue as a going concern. The company is not currently able to finance day-to-day activities through operations and relies on future equity/debt financing or strategic partnerships.
  • Nasdaq Compliance: The company received a deficiency letter in April 2026 regarding stockholders' equity. Following the June 2026 stock issuance, Nasdaq confirmed the company regained compliance as of July 27, 2026.
  • Internal Control Weaknesses: The company identified material weaknesses in internal controls over financial reporting, specifically regarding segregation of duties and cash disbursements. This was highlighted by an investigation into the misappropriation of approximately $829,895 by the former CFO between late 2024 and Q1 2026. A promissory note was executed for repayment, but collection is not assured, and no receivable was recorded.
  • Revenue Recognition: A significant portion of revenue ($1.485 million in Q2) was recognized upfront from a functional license agreement with ASPIS, creating volatility in future revenue recognition.

Investor Verification Checklist

  • Related Party Dependence: Verify the sustainability of the ASPIS license agreement, which represents nearly 100% of revenue.
  • Cash Runway: Assess the sufficiency of the $1.36 million cash balance against operating burn rates given the "substantial doubt" going concern warning.
  • Recovery of Misappropriated Funds: Monitor the status of the $829,895 owed by the former CFO and the likelihood of collection.
  • Internal Controls: Review the progress of the remediation plan for material weaknesses in financial reporting and cash disbursements.
  • Future Financing: Evaluate the company's ability to secure additional capital if operating losses continue.