Versus Systems (VS) - 2025 Q2 - Quarterly Report

Revenue - Revenue for the three months ended June 30, 2025, was $1,980,000, a significant increase of $1,953,063, or 7,250%, from $26,937 for the same period in 2024, attributed to the ASPIS license revenue[78] - For the six months ended June 30, 2025, revenue was $2,179,348, an increase of $2,125,908, or 3,978%, from $53,440 for the same period in 2024, driven by ASPIS license revenue and professional services[83] - The Company recognized $1,980,000 of revenue from functional IP for the three and six months ended June 30, 2025, as the Technology Agreement with ASPIS was delivered during the quarter[107] - The Company recognized $176,000 attributed to professional services for the three and six months ended June 30, 2025[105] - The Company earns revenue primarily through software-as-a-service (SAAS) and development and maintenance of custom-built software or other professional services[100] - Revenue from advertising sales is recognized on a net basis, as the Company acts as an agent in the transaction[103] - The Company recognizes revenue when performance obligations are satisfied, either at a point in time or over time, depending on the nature of the service provided[102] Costs and Expenses - Cost of revenues decreased to $8,222 for the three months ended June 30, 2025, down by $8,222, or 49%, from $16,231 for the same period in 2024, due to reduced infrastructure needs[79] - Cost of revenues for the six months ended June 30, 2025, was $16,446, a decrease of $23,831, or 59%, from $40,277 for the same period in 2024, attributed to decreased infrastructure needs[84] - Research and development expenses were $6,219 for the three months ended June 30, 2025, representing a decrease of $60,984, or 91%, from $67,203 for the same period in 2024, primarily due to staff reductions[80] - Selling, general and administrative expenses were $1,026,758 for the three months ended June 30, 2025, a decrease of $416,413, or 29%, from $1,443,171 for the same period in 2024, mainly due to reduced payroll and professional fees[81] - Total operating expenses for the six months ended June 30, 2025, were $2,396,862, down by $617,405, or 20%, from $3,014,267 for the same period in 2024[86] Net Loss and Cash Flow - The company reported a net loss of $214,016 for the six months ended June 30, 2025, compared to a net loss of $3,001,425 for the same period in 2024[82] - Net cash used in operating activities for the six months ended June 30, 2025, was $1,508,972, a decrease of 61% compared to $3,874,311 for the same period in 2024[94] - The decrease in cash used in operating activities was primarily due to a reduction in net loss by $2,787,409 and a decrease in prepaids by $1,042,853, offset by an increase in stock-based compensation of $226,611 and an increase in accounts receivable of $1,987,972[94] - As of June 30, 2025, the company had cash of $1,682,256 and a working capital balance of $3,808,046, compared to cash of $3,065,914 and working capital of $3,509,272 as of December 31, 2024[88] - The company plans to increase cash flow from operations and is evaluating strategic alternatives, indicating a need for additional financing to support operations[92] Investing and Financing Activities - No cash was used in or provided by investing activities for the six months ended June 30, 2025, and 2024[95] - No cash was used in or provided by financing activities for the six months ended June 30, 2025, and 2024[96] Share-Based Payments - The Company uses the Black-Scholes valuation model for estimating share-based payments, which includes considerations of volatility, expected life, and dividend yield[108]