Versus Systems Inc. (VS) - Q1 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended March 31, 2026. Versus Systems Inc. is a technology company providing proprietary gamification and audience engagement tools for sports franchises and media content. The company is a smaller reporting company and an emerging growth company. As of May 14, 2026, there were 4,901,677 common shares outstanding.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Revenue | $17,300 | $199,347 |
| Net Loss (Total) | $(818,695) | $(1,156,477) |
| Net Loss (Attributable to Shareholders) | $(683,200) | $(961,746) |
| Operating Loss | $(818,695) | $(1,172,761) |
| Cash and Cash Equivalents (End of Period) | $422,903 | $2,432,219 |
| Operating Cash Flow | $143,986 | $(641,445) |
| Stockholders' Equity | $1,199,613 | $2,726,545 |
| Accounts Receivable | $193,300 | $836,000 |
| Current Liabilities | $459,340 | $142,759 |
Material Changes vs. Prior Period
- Revenue Decline: Revenue decreased 91% to $17,300, primarily due to the absence of one-time consulting services from a related party (ASPIS) that generated approximately $176,000 in Q1 2025.
- Expense Reduction: Operating expenses decreased 38% to $835,995, driven by reduced headcount and a significant drop in stock-based compensation ($21,476 vs. $366,000 in the prior year).
- Cash Flow Improvement: Operating cash flow turned positive ($143,986) compared to a burn of $641,445 in Q1 2025, largely due to the collection of $642,700 in accounts receivable.
- Investing Activity: The company spent $327,000 on the development of intangible assets (software), compared to zero in the prior period.
Outlook, Risks, and Unusual Items
- Going Concern Warning: The filing explicitly states there is substantial doubt about the company's ability to continue as a going concern. Management plans to secure additional funding through equity/debt or strategic partnerships, but no assurance is given.
- Internal Control Failure & Fraud: An investigation revealed the former CFO misappropriated approximately $829,895 of company funds between Q4 2024 and Q1 2026. A promissory note was executed for repayment, but as of May 15, 2026, no funds have been repaid. This resulted in a material weakness in internal controls.
- Nasdaq Deficiency: The company received a deficiency letter from Nasdaq for failing to maintain the required $2.5 million in stockholders' equity (ended Q1 2026 at ~$1.2 million). The company has until June 13, 2026, to submit a compliance plan.
- Subsequent Financing: On April 15, 2026, the company entered a Stock Purchase Agreement with ASPIS for up to $1.7 million. As of May 15, 2026, $1.2 million was wired, but shares had not yet been issued.
- Related Party Dependence: ASPIS (a significant shareholder owning ~44%) was the sole source of revenue in Q1 2025 and holds the majority of accounts receivable.
Investor Verification Checklist
- Verify the status of the $1.2 million wire from ASPIS and the issuance of shares under the Stock Purchase Agreement to determine if it resolves the Nasdaq equity deficiency.
- Monitor the collection status of the $829,895 promissory note from the former CFO; the filing notes no repayment as of mid-May 2026.
- Assess the timeline for the Nasdaq compliance plan submission (due June 13, 2026) and the risk of delisting if equity requirements are not met.
- Review the company's ability to generate revenue independent of ASPIS, given the 91% revenue drop when ASPIS consulting fees were absent.
- Confirm the effectiveness of new internal controls regarding cash disbursements and segregation of duties following the CFO fraud.