Versus Systems' Q3 Loss Narrows on Related Party Revenue Surge

TL;DR

**VS is still burning cash and relying on related party deals, making it a high-risk bet despite improved net loss.**

AI Summary

Versus Systems Inc. (VS) reported a net loss of $972,013 for the nine months ended September 30, 2025, a significant improvement from the $3,530,376 net loss in the same period of 2024. Total revenues for the nine months ended September 30, 2025, surged to $2,179,348, primarily driven by $2,156,000 in related party revenues, compared to just $57,288 in 2024. Despite this revenue growth, the company's cash balance decreased from $3,065,914 at December 31, 2024, to $1,405,628 at September 30, 2025. Operating loss improved substantially to $990,361 for the nine months ended September 30, 2025, from $3,530,128 in the prior year. Selling, general and administrative expenses decreased to $3,126,425 from $3,429,062 year-over-year. The company also recognized a new contract asset, net – related party, of $1,166,000 as of September 30, 2025, stemming from a Technology License and Software Development Agreement with ASPIS Cyber Technologies, Inc. The filing explicitly states a 'substantial doubt regarding the Company's ability to continue as a going concern' due to not achieving positive cash flow from operations.

Why It Matters

This 10-Q filing is critical for investors as it highlights Versus Systems' precarious 'going concern' status, indicating significant financial instability despite a substantial increase in related party revenue. The reliance on a single related party, ASPIS Cyber Technologies, Inc., for the majority of its revenue introduces concentration risk, which could severely impact future financial performance if that relationship changes. For employees, the going concern warning suggests potential job insecurity, while customers and the broader market might question the long-term viability of Versus Systems' engagement-enhancing solutions, especially given its competitive landscape in interactive gaming and live events. Competitors like Twitch or other interactive platform providers benefit from VS's struggles, potentially gaining market share.

Risk Assessment

Risk Level: high — The company explicitly states 'substantial doubt regarding the Company's ability to continue as a going concern' due to not achieving positive cash flow from operations. Cash decreased from $3,065,914 to $1,405,628, and cash flows used in operating activities were $(1,484,267) for the nine months ended September 30, 2025, indicating ongoing operational losses.

Analyst Insight

Investors should exercise extreme caution and consider avoiding Versus Systems (VS) stock given the explicit 'going concern' warning and continued cash burn. Those holding shares should re-evaluate their position, as the company's future is highly dependent on securing additional financing or strategic partnerships, which are not guaranteed.

Financial Highlights

debt To Equity

0.00

revenue

$2,179,348

operating Margin

-45.45%

total Assets

$3,072,675

total Debt

$0

net Income

-$972,013

eps

-$0.17

gross Margin

99.22%

cash Position

$1,405,628

revenue Growth

N/A

Revenue Breakdown

Key Numbers

• $972,013 — Net Loss (Improved from $3,530,376 in prior year, but still a loss.)
• $2,179,348 — Total Revenues (Significant increase from $57,288 in 2024, largely due to related party revenue.)
• $2,156,000 — Related Party Revenues (Comprises 98.9% of total revenues for the nine months ended September 30, 2025, indicating high concentration risk.)
• $1,405,628 — Cash Balance (Decreased from $3,065,914 at December 31, 2024, highlighting ongoing cash burn.)
• $(1,484,267) — Cash Flows Used in Operating Activities (Indicates continued operational cash drain, contributing to the going concern doubt.)
• $1,166,000 — Contract Asset, Net – Related Party (New asset from the ASPIS Cyber Technologies, Inc. license agreement.)
• $990,361 — Operating Loss (Improved from $3,530,128 in 2024, but still a significant loss.)
• 4,901,677 — Common Shares Outstanding (As of November 12, 2025.)

Key Players & Entities

• Versus Systems Inc. (company) — registrant
• ASPIS Cyber Technologies, Inc. (company) — related party in license agreement
• Xcite Interactive (company) — acquired multimedia company
• The Nasdaq Capital Market (regulator) — exchange where VS common shares and VSSYW warrants are traded
• SEC (regulator) — Securities Exchange Commission
• $972,013 (dollar_amount) — net loss for nine months ended September 30, 2025
• $3,530,376 (dollar_amount) — net loss for nine months ended September 30, 2024
• $2,179,348 (dollar_amount) — total revenues for nine months ended September 30, 2025
• $2,156,000 (dollar_amount) — related party revenues for nine months ended September 30, 2025
• $1,405,628 (dollar_amount) — cash balance as of September 30, 2025

FAQ

Risk Factors

• Going Concern Uncertainty [high — financial]: The company has not achieved positive cash flow from operations and has a history of net losses. This raises substantial doubt about its ability to continue as a going concern.
• Declining Cash Reserves [high — financial]: The cash balance has decreased from $3,065,914 at December 31, 2024, to $1,405,628 at September 30, 2025, indicating significant cash burn.
• High Dependence on Related Party Revenue [high — financial]: The company's revenue for the nine months ended September 30, 2025, is overwhelmingly derived from related party transactions ($2,156,000 out of $2,179,348). Any disruption in these relationships could severely impact revenue.
• Operating Losses Persist [medium — operational]: Despite an improvement, the company reported an operating loss of $990,361 for the nine months ended September 30, 2025, compared to $3,530,128 in the prior year. Continued operating losses strain financial resources.
• Intangible Assets Recognition [medium — financial]: The company recognized a new intangible asset, 'Contract asset, net – related party,' of $1,166,000 related to a technology license and software development agreement. The valuation and future realization of this asset are critical.

Industry Context

Versus Systems operates in the technology and gaming sectors, focusing on engagement and monetization solutions. The industry is characterized by rapid innovation, intense competition, and evolving user engagement models. Companies often rely on strategic partnerships and licensing agreements to scale and generate revenue. The current market demands seamless integration of technology with entertainment platforms.

Regulatory Implications

As a publicly traded company, Versus Systems is subject to SEC regulations, including timely and accurate financial reporting. The 'going concern' disclosure is a significant regulatory flag that requires careful monitoring by investors and potential creditors. Compliance with accounting standards for revenue recognition and asset valuation is crucial.

What Investors Should Do

1. Scrutinize the nature and sustainability of related party revenues.
2. Monitor cash burn rate and future funding needs.
3. Assess the recoverability of the new contract asset.
4. Evaluate the improvement in operating loss against the backdrop of going concern risk.

Key Dates

• 2025-09-30: Nine Months Ended — Reporting period for the 10-Q, showing significant revenue increase driven by related parties but continued net loss and cash burn.
• 2024-09-30: Nine Months Ended — Prior year comparison period, highlighting the substantial improvement in revenue and reduction in operating loss, albeit from a very low base.
• 2024-12-31: Year-End — Balance sheet date, showing a higher cash balance ($3,065,914) compared to the current period's end.

Glossary

Contract asset, net – related party

An asset recognized when a company has a right to consideration in exchange for goods or services that have been transferred to a customer, but that right is conditional on something other than the passage of time. 'Related party' indicates the transaction is with an entity that has a relationship with the reporting company. (Represents a significant new asset ($1,166,000) arising from a specific agreement with ASPIS Cyber Technologies, Inc., impacting the balance sheet and future revenue recognition.)

Going concern

An accounting assumption that a business will continue to operate for the foreseeable future. If there is substantial doubt about this, it must be disclosed. (The filing explicitly states 'substantial doubt regarding the Company's ability to continue as a going concern,' a critical warning for investors about the company's viability.)

Non-controlling interest

The portion of equity interest in a subsidiary that is not attributable to the parent company. It represents the ownership stake of outside shareholders in a consolidated subsidiary. (The company reports a negative non-controlling interest ($8,064,839 as of Sep 30, 2025), which impacts the total equity and net income attributable to Versus Systems shareholders.)

Accumulated deficit

The cumulative net losses of a company since its inception that have not been offset by net income. It represents a negative retained earnings balance. (Versus Systems has a substantial accumulated deficit of $140,303,579 as of September 30, 2025, reflecting its history of unprofitability.)

Year-Over-Year Comparison

Compared to the prior year period (nine months ended September 30, 2024), Versus Systems Inc. has reported a dramatic increase in total revenues from $57,288 to $2,179,348. This surge is almost entirely attributable to new related party revenues of $2,156,000. Concurrently, the net loss has significantly improved from $3,530,376 to $972,013, and the operating loss has also decreased substantially. However, the company's cash position has declined from $3,065,914 at year-end 2024 to $1,405,628, and a new risk factor regarding 'substantial doubt regarding the Company's ability to continue as a going concern' has been highlighted due to the lack of positive cash flow from operations.

Filing Documents

• ea0263337-10q_versus.htm (10-Q) — 551KB
• ea026333701ex31-1_versus.htm (EX-31.1) — 11KB
• ea026333701ex31-2_versus.htm (EX-31.2) — 12KB
• ea026333701ex32-1_versus.htm (EX-32.1) — 4KB
• ea026333701ex32-2_versus.htm (EX-32.2) — 5KB
• image_001.jpg (GRAPHIC) — 5KB
• 0001213900-25-110337.txt ( ) — 3098KB
• vs-20250930.xsd (EX-101.SCH) — 25KB
• vs-20250930_cal.xml (EX-101.CAL) — 24KB
• vs-20250930_def.xml (EX-101.DEF) — 125KB
• vs-20250930_lab.xml (EX-101.LAB) — 229KB
• vs-20250930_pre.xml (EX-101.PRE) — 130KB
• ea0263337-10q_versus_htm.xml (XML) — 281KB

Financial Statements (Unaudited)

Financial Statements (Unaudited) 1 Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 1 Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2025 and 2024. 2 Condensed Consolidated Statements of Equity for the three and nine months ended September 30, 2025 and 2024. 3 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024. 4 Notes to the Condensed Unaudited Consolidated Financial Statements 5 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 13 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 19 Item 4.

Controls and Procedures

Controls and Procedures 19 PART II OTHER INFORMATION 20 Item 1.

Legal Proceedings

Legal Proceedings 20 Item 1A.

Risk Factors

Risk Factors 20 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 20 Item 3. Default Upon Senior Securities 20 Item 4. Mine Safety Disclosures 20 Item 5. Other Information 20 Item 6. Exhibits 21

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

: Financial Statements

Item 1: Financial Statements Versus Systems Inc. Condensed Consolidated Balance Sheets (Unaudited) September 30, December 31, 2025 2024 ($) ($) ASSETS Current assets Cash 1,405,628 3,065,914 Contract asset, net – related party 1,166,000 - Prepaids 201,047 469,646 Total current assets 2,772,675 3,535,560 Intangible assets, net 300,000 - Total assets 3,072,675 3,535,560 LIABILITIES AND EQUITY Current liabilities Accounts payable and accrued liabilities 2,483 26,288 Total current liabilities 2,483 26,288 Total liabilities 2,483 26,288 Commitments and Contingencies (Note 7) Stockholders' equity 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 Accumulated other comprehensive income 442,640 318,659 Accumulated deficit ( 140,303,579 ) ( 139,476,353 ) 11,135,031 11,429,324 Non-controlling interest ( 8,064,839 ) ( 7,920,052 ) Total stockholders' equity 3,070,192 3,509,272 Total liabilities, non-controlling interest and stockholders' equity 3,072,675 3,535,560 The accompanying notes are an integral part of these condensed interim consolidated financial statements. 1 Versus Systems Inc. Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024 ($) ($) ($) ($) REVENUES Revenues - 3,848 23,348 57,288 Revenues – related party - - 2,156,000 - Cost of revenues - - 16,446 40,277 Gross margin - 3,848 2,162,902 17,011 EXPENSES Research and development 14,470 11,462 26,838 118,077 Selling, general and administrative 741,931 521,410 3,126,425 3,429,062 Total operating expenses 756,401 532,872 3,153,263 3,547,139 Operating loss ( 756,401 ) ( 529,024 )

View Full Filing

View this 10-Q filing on SEC EDGAR