VS 10-K & 10-Q changes, risk factors and insider trading
Versus Systems Inc. · Nasdaq · Services-Computer Processing & Data Preparation · CIK 1701963 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We derive a significant portion of our revenue from a limited number of customers, including related parties, and therefore are subject to customer concentration and collectability risks.”
New heading “We have identified material weaknesses in our internal control over financial reporting. If we are unable to maintain effective internal controls, the accuracy and timeliness of our financial reporting may be materially adversely affected, which could cause the market price of our common stock to decline, lessen investor confidence and harm our business.”
Removed heading “Holders of our warrants have no rights as a common shareholder until they acquire our common shares.”
Largest changes
“There can be no assurance that our remediation efforts will be successful, that additional fraudulent activity has not occurred beyond the isolated activity identified by management and thoroughly investigated and confirmed by the Audit Committee or that the related promissory note will be collected in part or in full. …”see in full comparison
“We have identified material weaknesses in our internal control over financial reporting. If we are unable to maintain effective internal controls, the accuracy and timeliness of our financial reporting may be materially adversely affected, which could cause the market price of our common stock to decline, lessen investor confidence and harm our business.”see in full comparison
“As previously disclosed in the Company’s Form 12b-25 filed on April 1, 2026, in the first quarter of 2026, the Audit Committee of the Company’s Board of Directors conducted an internal investigation and determined that fraudulent activity involving the Company’s former Chief Financial Officer had occurred and that there were material weaknesses in the Company’s internal control over financial reporting as of December 31, 2025. …”see in full comparison
“There can be no assurance that we will be able to maintain compliance with all Nasdaq continued listing standards in the future. If we are unable to maintain such compliance, our securities may be delisted from Nasdaq. Delisting from the Nasdaq Capital Market may adversely affect our ability to raise additional financing through the public or private sale of equity securities, may significantly affect the ability of investors to trade our securities and may negatively affect the value and liquidity of our common stock. …”see in full comparison
“We derive a significant portion of our revenue from a limited number of customers, including related parties, and therefore are subject to customer concentration and collectability risks.”see in full comparison
see in full comparisonInWe arethe event we docurrently notregainin compliance with Nasdaq’s stockholders’ equity requirement and expect to receive formal notificationthoseofrequirements,non-complianceourfromsecuritiesNasdaqmayshortly after filing this Form 10-K. We will have 45 calendar days from the date the notice is delivered from Nasdaq to provide to Nasdaq a compliance plan for regaining (and maintaining) compliance with the $2.5 million stockholders’ equity threshold. Acceptance of the plan is at Nasdaq’s discretion. If the Company’s plan is accepted, Nasdaq will grant the Company an extension of up to 180 calendar days from the date the Company received the notice of deficiency. However, if the Company does not then timely regain compliance, the stock will bedelisted from Nasdaq.delisted. Delisting from the Nasdaq Capital Market may adversely affect our abilityabilityto raise additional financing through the public or private sale of equity securities, may significantly affect the ability of investorsinvestorsto trade our securities and may negatively affect the value and liquidity of our common stock. Delisting also could have other negativenegativeresults, including the potential loss of employee confidence, the loss of institutional investors or interest in business development opportunities.If we are delisted from Nasdaq and we are not able to list our common stock on another exchange, our common stock could be quoted on the OTC Bulletin Board or in the “pink sheets.” As a result, we could face significant adverse consequences including, among others:
Full comparison: every changed paragraph (35)
An
investment in our securities
carries a significant degree of risk. You should carefully consider the following risks, as well as the
other information contained in
this Annual Report, including our historical consolidated financial statements and related notes included
elsewhere in this Annual Report,
before you decide to purchase our securities. Any one of these risks and uncertainties has the potential
to cause material adverse effects
on our business, prospects, financial condition and operating results which could cause actual results
to differ materially from any forward-looking
statements expressed by us and a significant decrease in the value of our common shares and warrants. shares.
Refer to “Cautionary Note
Regarding Forward-Looking Statements.”
We derive a significant portion of our revenue from a limited number of customers, including related parties, and therefore are subject to customer concentration and collectability risks.
A significant portion of the Company’s revenue is derived from a limited number of customers, including related parties. As a result, the Company’s operating results, financial condition, and cash flows are dependent on the continued engagement and financial stability of these customers.
The loss of, or a significant reduction in business from, one or more of these customers could have a material adverse effect on the Company’s results of operations and liquidity. In addition, the concentration of revenue with a small number of customers increases the Company’s exposure to credit risk. To the extent that any of these customers experience financial difficulty or delay in payment, the Company’s ability to collect outstanding receivables may be adversely affected, which could impact cash flows and require the Company to record additional allowances for credit losses.
Management monitors customer creditworthiness and payment trends on an ongoing basis; however, there can be no assurance that such measures will fully mitigate the risks associated with customer concentration. The Company continues to evaluate opportunities to diversify its customer base, although there can be no assurance that these efforts will be successful.
Since January 2024, we have undertaken a strategic realignment of the business, including changes to our leadership and operating structure to support a more focused growth strategy. The current management team has expanded our presence by establishing a contractor-based sales presence in Brazil, while also working to renew relationships with existing and former customers in the United States. Early progress has been encouraging as we advance the implementation of our strategic initiatives.
Prior significant reductions in workforce may, however, limit our ability to resume suspended development activities or pursue new initiatives. Rebuilding critical capabilities may require hiring qualified personnel, potentially resulting in additional and unanticipated costs. The loss of a substantial portion of our personnel, including nearly all full-time engineering staff, may impair our ability to continue operations or meet ongoing obligations.
If these risks materialize, they could have a material adverse impact on our business, financial condition, and results of operations
Since January 2024, we have
strategically realigned the focus of the business. To achieve this, we changed our operating team, fostering a new energy and growth mindset
to the company. This initiative began in June of 2024 with the addition of the new interim CEO and CFO. The CFO was made permanent later
in the year and the then CEO completed their tasks and transitioned to a new position, installing a new and permanent CEO to steer the
company into the future. This new management team since taking over, has opened new offices and a sales team in Brazil and has a clear
vision to grow the company in this market, whilst renewing existing contracts with existing and prior customers in the US. This is an
exciting time for Versus and the company is making headway in its new strategy implementation. Although changes to date have been positive,
we may also discover the prior major reductions in workforce and cost cutting measures may make it difficult for us to resume development
activities we have suspended or pursue new initiatives, requiring us to hire qualified replacement personnel, which may require us to
incur additional and unanticipated costs and expenses. As a result of the loss of services of a
significant percentage of our personnel, including nearly all of our full-time engineering staff, we may be unable to continue our operations
and meet our ongoing obligations. Any of these unintended consequences will likely have a material adverse impact on our business, financial
condition, and results of operations.
We have identified material weaknesses in our internal control over financial reporting. If we are unable to maintain effective internal controls, the accuracy and timeliness of our financial reporting may be materially adversely affected, which could cause the market price of our common stock to decline, lessen investor confidence and harm our business.
As a public company, we are subject to significant requirements for enhanced financial reporting and internal controls. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company.
The rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex and require significant documentation, testing, and possible remediation. Testing and maintaining internal controls may divert our management’s attention from other matters that are important to our business.
Our ability to comply with the annual internal control reporting requirements will depend on the effectiveness of our financial reporting and data systems and controls across our company.
As previously disclosed in the Company’s Form 12b-25 filed on April 1, 2026, in the first quarter of 2026, the Audit Committee of the Company’s Board of Directors conducted an internal investigation and determined that fraudulent activity involving the Company’s former Chief Financial Officer had occurred and that there were material weaknesses in the Company’s internal control over financial reporting as of December 31, 2025. For more information about the fraudulent activity and a promissory note that was executed by the former Chief Financial Officer in connection therewith, please see Notes 11 and 12 to our consolidated financial statements for the year ended December 31, 2025, which disclosure is incorporated herein by reference, and for more information about the material weaknesses in internal control over financial reporting and the Company’s remedial actions, please see Part II, Item 9A. Controls and Procedures of this Form 10-K, which disclosure is incorporated herein by reference.
There can be no assurance that our remediation efforts will be successful, that additional fraudulent activity has not occurred beyond the isolated activity identified by management and thoroughly investigated and confirmed by the Audit Committee or that the related promissory note will be collected in part or in full. If our remediation efforts are insufficient or are not completed in a timely manner, or if additional material weaknesses in our internal control over financial reporting are identified or occur in the future, our operating results could be harmed and we could fail to meet our financial reporting obligations, or our consolidated financial statements may contain material misstatements and we could be required to restate our financial results, which could materially and adversely affect our business, results of operations and financial condition, restrict our future access to the capital markets, require us to expend significant resources to correct the material weaknesses, subject us to fines, penalties or judgments, reduce the price of our common stock, harm our reputation or otherwise cause a decline in investor confidence in the accuracy and completeness of our reported financial information.
Risks
Related to Our Common Shares and Our Warrants
If
we are unablenot to regainin compliance with
the listing requirements of the Nasdaq Capital Market,Market in the future, our common stock may be delisted from
the Nasdaq Capital Market which could have
a material adverse effect on our financial condition and could make it difficult for you to
sell your shares.
During 2025, we were previously not in compliance with the annual meeting of shareholders threshold, but subsequently regained compliance within the permitted cure period, including by holding the required annual meeting on June 20, 2025. As a result, we are currently in compliance with applicable Nasdaq listing requirements.
We are currently not in compliance with the annual
meeting of shareholders threshold, however, have been granted an extension until June 30th 2025 to regain compliance. We shall
be hosting an annual meeting by such time, which will correct our non-compliance and enable our continued listing on Nasdaq and the requirement
that we should have held a 2024 annual meeting of shareholders.
InWe
are the event we docurrently not regainin compliance with Nasdaq’s stockholders’ equity requirement and expect to receive formal notification
thoseof requirements,non-compliance ourfrom securitiesNasdaq mayshortly after filing this Form 10-K. We will have 45 calendar days from the date the notice is delivered
from Nasdaq to provide to Nasdaq a compliance plan for regaining (and maintaining) compliance with the $2.5 million stockholders’
equity threshold. Acceptance of the plan is at Nasdaq’s discretion. If the Company’s plan is accepted, Nasdaq will grant
the Company an extension of up to 180 calendar days from the date the Company received the notice of deficiency. However, if the Company
does not then timely regain compliance, the stock will be delisted from Nasdaq.delisted. Delisting from the Nasdaq Capital Market may adversely affect our
ability ability
to raise additional financing through the public or private sale of equity securities, may significantly affect the ability of
investors investors
to trade our securities and may negatively affect the value and liquidity of our common stock. Delisting also could have other
negative negative
results, including the potential loss of employee confidence, the loss of institutional investors or interest in business development
opportunities. If we are delisted from Nasdaq and we are not able to list our common stock on another exchange, our common stock could
be quoted on the OTC Bulletin Board or in the “pink sheets.” As a result, we could face significant adverse consequences
including, among others:
There can be no assurance that we will be able to maintain compliance with all Nasdaq continued listing standards in the future. If we are unable to maintain such compliance, our securities may be delisted from Nasdaq. Delisting from the Nasdaq Capital Market may adversely affect our ability to raise additional financing through the public or private sale of equity securities, may significantly affect the ability of investors to trade our securities and may negatively affect the value and liquidity of our common stock. Delisting also could have other negative results, including the potential loss of employee confidence, the loss of institutional investors or interest in business development opportunities.
If we are delisted from Nasdaq and we are not able to list our common stock on another exchange, our common stock could be quoted on the OTC Bulletin Board or in the “pink sheets.” As a result, we could face significant adverse consequences including, among others:
There can be no assurance, however, that we will
be able to regain compliance with Nasdaq rules, and even if we do, there can be no assurance that we will be able to maintain compliance
with the continued listing requirements or that our common stock will not be delisted in the future. In addition, we may be unable to
meet other applicable listing requirements.
The
market prices of our common shares
and Unit A Warrants are likely to be highly volatile because of several factors, including a limited public float.
The
market prices of our common
shares and Unit A Warrants have experienced significant price and volume fluctuations and the prices of such securities are likely
to to
be highly volatile in the future. You may not be able to resell our common shares or Unit A Warrants following periods of volatility
because of the market’s
adverse reaction to volatility.
Any
of these factors could
have a significant and adverse impact on the market prices of our common shares and/or our Unit A Warrants.shares. In addition, the stock market
in general has at times experienced extreme volatility and rapid decline that has often been unrelated or disproportionate to the operating
performance of particular companies. These broad market fluctuations may adversely affect the trading prices of our common shares and/or
Unit A Warrants,shares, regardless
of our actual operating performance.
Our
common shares have in the past been
a “penny stock” under SEC rules,rules. and our Unit A Warrants may be subject to the “penny stock” rules in the future.
It may be more difficult to resell securities classified
as “penny stock.”
In
the past, our common shares
were a “penny stock” under applicable SEC rules (generally defined as non-exchange traded stock
with a per-share price below
US$5.00). While our common shares and Unit A Warrants are not currently considered “penny stock” because they are
listed listed
on The Nasdaq Capital Market, if we are unable to maintain that listing and our common shares and/or our Unit A Warrants are no longer
listed on The Nasdaq
Capital Market, unless we maintain a per-share price above $5.00, our common shares and/orwill Unit A Warrants will
be considered “penny stock.” These
rules impose additional sales practice requirements on broker-dealers that recommend the
purchase or sale of penny stocks to persons
other than those who qualify as “established customers” or “accredited
investors.” For example, broker-dealers
must determine the appropriateness for non-qualifying persons of investments in penny stocks.
Broker-dealers must also provide, prior
to a transaction in a penny stock not otherwise exempt from the rules, a standardized risk disclosure
document that provides information
about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the
customer with current bid and offer
quotations for the penny stock, disclose the compensation of the broker-dealer and its salesperson
in the transaction, furnish monthly
account statements showing the market value of each penny stock held in the customer’s account,
provide a special written determination
that the penny stock is a suitable investment for the purchaser, and receive the purchaser’s
written agreement to the transaction.
These
requirements may have
the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes
subject to the penny
stock rules. The additional burdens imposed upon broker dealers by such requirements may discourage broker-dealers
from effecting transactions
in our securities, which could severely limit the market price and liquidity of our securities. These requirements
may restrict the ability
of broker-dealers to sell our common shares or our warrants and may affect your ability to resell our common shares and our Unit A Warrants.shares.
For
these reasons, penny stocks
may have a limited market and, consequently, limited liquidity. We can give no assurance at what time, if
ever, our common shares or
our Unit A Warrants will not be classified as a “penny stock” in the future.
If the benefits of any proposed acquisition
do not meet the expectations
of investors, shareholders or financial analysts, the market price of our common shares and/or Unit A Warrants
maycould decline.
If
the benefits of any proposed
acquisition do not meet the expectations of investors or securities analysts, the market price of our common
shares and/or Unit A Warrants
prior to the closing of the proposed acquisition may decline. The market values of our common shares and/or Unit A Warrants at the time
of the proposed
acquisition may vary significantly from their prices on the date the acquisition target was identified.
In
addition, broad market
and industry factors may materially harm the market price of our common shares and/or Unit A Warrants irrespective of our operating performance.
The stock market in general has experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating
performance of the companies affected. The trading prices and valuations of these stocks, and of our securities, may not be predictable.
A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar
to us could depress the price of our common shares and/or Unit A Warrants regardless of our business, prospects, financial conditions
or results of operations.
A decline in the market price of our securities also could adversely affect our ability to issue additional
securities and our ability
to obtain additional financing in the future.
Holders of our warrants have no rights
as a common shareholder until they acquire our common shares.
Until you acquire our common
shares upon exercise of your warrants, you have no rights as a shareholder in respect of the common shares underlying such warrants.
Upon exercise of your warrants, you will be entitled to exercise the rights of a common shareholder only as to matters for which the
record date occurs after the exercise date.
Management's Discussion & Analysis (MD&A)
Removed heading “Impairment of goodwill and other intangible assets”
Removed heading “Intangible assets”
Removed heading “Deferred Revenue”
Removed heading “Functional currency”
Largest changes
“Impairment of goodwill and other intangible assets”see in full comparison
“We plan to increase our cash flow from our operations to address some of our liquidity concerns and are evaluating other strategic alternatives. However, to execute our business plan and implement our business strategy, we anticipate that we will need to obtain additional financing from time to time and may choose to raise additional funds through public or private equity or debt financings, a bank line of credit, borrowings from affiliates or other arrangements. We cannot be sure that any additional funding, if needed, will be available on terms favorable to us or at all. …”see in full comparison
“We are pursuing initiatives intended to improve cash flows from operations and continue to evaluate strategic and financing alternatives to strengthen liquidity. To execute the business plan and support growth initiatives, the Company may seek additional financing through equity or debt offerings, credit facilities, or other arrangements. There can be no assurance that such financing will be available on terms acceptable to the Company, or at all. …”see in full comparison
“Impairment of goodwill and other intangible assets was none for the year ended December 31, 2024, representing a decrease of $3,968,332 or 100% from $3,968,332 for the year ended December 31, 2023. The $3,698,332 impairment as of December 31, 2023 was related to the impairment of capitalized software from our HP contract and platform.”see in full comparison
“We are subject to the risks and uncertainties associated with a new business. We believe that our current resources and the expected revenues from operations will be insufficient to fund our planned operations for the next twelve months. …”see in full comparison
“We are subject to the risks and uncertainties common to emerging growth businesses. Management believes that current resources and expected operating revenues may not be sufficient to fund planned activities for the next twelve months. …”see in full comparison
Full comparison: every changed paragraph (39)
Our
customers mostly sports
teams (Professional and Collegiate),teams, venues (Arenas, Football Stadiums, Baseball Stadiums), fan engagement and sponsor activation platforms,
digital out-of-home media companies, and advertising agencies, which typically
use our products as part of their live events or as part
of an advertising campaign with the goal of engaging fans, increasing consented
first-party data, and increasing sales. At December 31,
2025, we had four active customers. At December 31, 2024, we had two active customers. At December 31, 2023, we had 16 active customers.
Our
products and games are
designed so that end users of our products could earn prizes by registering on our system and completing in-content challenges
like trivia,
polls, or casual mobile games. Players could use our system to play a variety of games and earn a wide range of prize types,
provided provided
by advertisers and sponsors. Our products, include our in-venue XEO and Filter Fan Cam (“FFC”) products for live events, and
our newstand-alone stand-alone
“Winfinite” product line that can be used by brands, advertising agencies, and content partners to reach
potential customers
outside of sports venues, on mobile devices.devices, as well as the “Winfinite” Games, which are customizable
web-based casual games. We also have an IP portfolio that could create future licensing and product development opportunities including
including our recently allowed Artificial Intelligence (“AI”) and Machine Learning (“ML”) series of patent claims.
With the acquisition of Xcite Interactive in June 2021, we acquired a number of key pieces of technology and relationships that have helped to drive our engagement and rewards business, including a live events fan engagement business that has partnered with professional sports franchises in the National Football League (“NFL”), the National Basketball Association (“NBA”), the National Hockey League (“NHL”) and others to increase audience engagement using interactive gaming functions like trivia, polling, and casual games that can be played alongside live experiences whether a player is at-home, in a restaurant, or in-venue at the event itself. Our largest customers in 2024 were the Texas Rangers and San Jose Sharks. For the year ended December 31, 2025, the Company’s largest customer was ASPIS, a significant shareholder and we continue to do business with the Texas Rangers.
We
offer nowa havesuite threeof principal
softwareproducts products.centered on “Winfinite” and FFC. Our eXtreme Engagement Online or “XEO” platform is designed primarily for in-venue main-board work in
stadiums and arenas. Our Filter Fan Cam (FFC) platform is an Augmented Reality filtering tool that can
be used for mobile and in-venue
applications. In addition, we have a stand-alone gaming and prizing product that we call “Winfinite,”
which allows brands,
media companies, and advertising agencies to reach out to customers directly on their mobile devices. We license
these threesoftware software
products to teams, ad agencies, and other content creators.
Operating Expenses.
We classify our operating expense as research and development, and selling, general and administrative. Personnel costs are the
primary component of each of these operating expense categories, which consist of cash-based personnel costs, such as salaries, benefits
and bonuses. Additionally, these categories include intangible amortization, amortization expense, interest expense, software costs,
professional fees and share-based compensation.
Our
revenues are derived from
three primary sources: software licensing, professional services and advertising. Revenue was $2,183,415 for
the year ended December 31, 2025, representing an increase of $2,126,127, or 3,711%, from $57,288 for the year ended December 31, 2024.
2024,The representingincrease acan decreasebe attributed to the recognition of $213,881, or 79%, from $271,169 for the yearASPIS endedlicense Decemberrevenue 31,and 2023.professional The decrease was primarily due
to a significant reduction in the number of clients from 16 active clients at December 31, 2023 to two active clients at December 31,
2024.services.
Cost of revenues was $16,446 for the year ended December 31, 2025, representing a decrease of $23,831, or 59%, from $40,277 for the year ended December 31, 2024. The decrease was due to the decrease in infrastructure needed for the Xcite Interactive customers.
Cost of revenues was $40,277
for the year ended December 31, 2024, representing a decrease of $62,790, or 61%, from $103,067 for the year ended December 31, 2023.
The decrease was primarily due to significant reductions in staff related to our company restructuring.
Selling, general and administrative was $4,280,214 for the year ended December 31, 2025, representing a decrease of $30,004, or 1%, from $4,310,218 for the year ended December 31, 2024. The decrease was primarily due to a reduction in professional fees. Selling, general and administrative for the year ended December 31, 2025, included Company funds which had been misappropriated. For more information about the fraudulent activity and a promissory note that was executed by the former Chief Financial Officer in connection therewith, please see Notes 11 and 12 to our consolidated financial statements for the year ended December 31, 2025.
Selling, general and administrative was $4,310,218 for the year ended
December 31, 2024, representing a decrease of $1,634,691, or 27%, from $5,944,909 for the year ended December 31, 2023. The decrease was
primarily due to a reduction in staffing levels, from 16 employees at December 31, 2023 to 6 employees at December 31, 2024.
Impairment of goodwill and other intangible
assets
Impairment of goodwill
and other intangible assets was none for the year ended December 31, 2024, representing a decrease of $3,968,332 or 100% from
$3,968,332 for the year ended December 31, 2023. The $3,698,332 impairment as of December 31, 2023 was related to the impairment of
capitalized software from our HP contract and platform.
Loss
from operations was $4,539,226
$2,161,310 for the year ended December 31, 2024,2025, representing a decrease of $6,313,148,$2,377,916, or 58%,52%, from $10,852,374$4,539,226 for
the year ended December 31,
2023. Decreases2024. Increase in salaries because of reduced staffing levelsrevenue resulted in the decrease in the loss.
Other income (expense) was an income of $18,173 for the year ended December 31, 2025, representing an increase of $29,557, or 260%, from expense of $(11,384) for the year ended December 31, 2024. The increase in income can be attributed to changes in foreign currency rates.
Other income (expense) was
an expense of $11,384 for the year ended December 31, 2024, representing a decrease of $351,601, or 103%, from income of $340,217 for
the year ended December 31, 2023. The decrease in income can be attributed to the $354,105 employee retention credit earned in 2023 with
no credit earned in 2024.
Income
tax expense was $24,226
for the year ended December 31, 2024, representing a decrease of 100% from no income tax expense$1,596 for the year ended December 31, 2023.2025, representing a decrease of $22,630 from income tax expense of $24,226 for
the year ended December 31, 2024. The increasedecrease in income tax can be attributed to taxes owed in our Canadian jurisdiction in 2024.
Since inception, the Company has incurred operating losses as it continues to invest in developing and commercializing its technology platform. For the years ended December 31, 2025 and 2024, we incurred net losses of approximately $2.1 million and $4.6 million, respectively. During these periods, operations were primarily financed through an initial public offering of common shares in January 2021 and subsequent equity and debt transactions, including warrant exercises and private placements. In October 2024, warrant holders exercised approximately $0.9 million of warrants, and in November and December 2024 the Company raised $2.5 million through convertible notes. Our cash and cash equivalents as of December 31, 2025 was $0.5 million. Our primary cash needs are for working capital requirements, capital expenditures and to fund our operations.
We are subject to the risks and uncertainties common to emerging growth businesses. Management believes that current resources and expected operating revenues may not be sufficient to fund planned activities for the next twelve months. The report of our independent registered public accounting firm on the Company’s consolidated financial statements for the year ended December 31, 2025 and 2024 included an explanatory paragraph noting that recurring operating losses, accumulated deficit, and negative operating cash flows raise substantial doubt about the Company’s ability to continue as a going concern within one year after the issuance of those financial statements.
We are pursuing initiatives intended to improve cash flows from operations and continue to evaluate strategic and financing alternatives to strengthen liquidity. To execute the business plan and support growth initiatives, the Company may seek additional financing through equity or debt offerings, credit facilities, or other arrangements. There can be no assurance that such financing will be available on terms acceptable to the Company, or at all. Any future equity or equity-linked financing could dilute existing stockholders and may affect the market price of the Company’s common shares, while debt financing, if obtained, could impose covenants or interest obligations. If sufficient funding is not secured when required, the Company may need to further align its operating expenditures with available resources, which could impact certain development programs or staffing levels. Management believes that disciplined cost control, continued customer engagement, and expansion into new markets may provide a foundation for improved liquidity over time; however, material uncertainties remain until additional financing or sustained positive cash flows are achieved.
In addition, as previously disclosed in the Company’s Form 12b-25 filed on April 1, 2026, in the first quarter of 2026, the Audit Committee of the Company’s Board of Directors conducted an internal investigation and determined that fraudulent activity involving the Company’s former Chief Financial Officer had occurred. A promissory note was executed in connection therewith; however, there can be no assurance that such note will be collected in part or full or at all. For more information about the fraudulent activity and promissory note, please see Notes 11 and 12 to our consolidated financial statements for the year ended December 31, 2025, which disclosure is incorporated herein by reference.
Overview
Since inception, we have
incurred significant operating losses. For the years ended December 31, 2024 and 2023, we incurred net losses of approximately $4.6 million
and $10.5 million, respectively. During such periods, we have financed our operations primarily through an initial public offering of
our common shares in January 2021 and subsequent public offerings, registered direct offerings, convertible debt, warrant exercises and
private placements. In October 2024 warrant holders exercised $0.9 million of warrants into common stock. Also, in November and December
2024 the Company raised $2.5 million of convertible debt. In February 2023, we completed a registered direct offering of our common shares
in which we received gross proceeds of $2.25 million and net proceeds of approximately $2.0 million. In October 2023, we completed a public
direct offering of our common shares in which we received gross proceeds of approximately $3.0 million and net proceeds of approximately
$2.5 million. In November 2023, we completed a private placement of our equity securities in which we received gross proceeds of $2.6
million. Throughout 2023, we received approximately $4.6 million in proceeds from warrant exercises. Our cash and cash equivalents as
of December 31, 2024 was $3.1 million. Our primary cash needs are for working capital requirements, capital expenditures and to fund our
operations.
We are subject to the risks
and uncertainties associated with a new business. We believe that our current resources and the expected revenues from operations will
be insufficient to fund our planned operations for the next twelve months. The report of our independent registered public accounting
firm on our consolidated financial statements for the year ended December 31, 2024 stated that our recurring losses from operations,
accumulated deficit as of December 31, 2024, inability to achieve positive cash flows from operations and inability to fund day to day
activities through operations indicates that a material uncertainty exists that may cast significant doubt on our ability to continue
as a going concern.
We plan to increase our cash
flow from our operations to address some of our liquidity concerns and are evaluating other strategic alternatives. However, to execute
our business plan and implement our business strategy, we anticipate that we will need to obtain additional financing from time to time
and may choose to raise additional funds through public or private equity or debt financings, a bank line of credit, borrowings from
affiliates or other arrangements. We cannot be sure that any additional funding, if needed, will be available on terms favorable to us
or at all. Furthermore, any additional capital raised through the sale of equity or equity-linked securities may dilute our current shareholders’
ownership in us and could also result in a decrease in the market price of our common shares. The terms of those securities issued by
us in future capital transactions may be more favorable to new investors and may include the issuance of warrants or other derivative
securities, which may have a further dilutive effect. Furthermore, any debt financing, if available, may subject us to restrictive covenants
and significant interest costs. There can be no assurance that we will be able to raise additional capital, when needed, to continue
operations in their current form. If we cannot raise needed funds, we might be forced to make substantial reductions in our operating
expenses, including reductions in our research and development expenses or headcount reductions, which could adversely affect our ability
to implement our business plan and ultimately our viability as a company.
Net cash used in operating
activities for the year ended December 31, 20242025 was $4,971,948$2,052,862 as compared to $5,582,139$4,971,948 for the year ended December 31, 2023.2024. The decrease
in cash used in operating activities was primarily attributable to a decrease in the net loss.loss of $2,144,733 and prepaids of $380,972 offset
by an increase of stock-based compensation of $430,428, an increase in accounts receivable of $836,000 and increase in accounts payable
of $116,471.
Net
cash used in investing
activities for the year ended December 31, 20242025 was none$609,000 as compared to $14,514$0 for the year ended December 31, 2023.
2024. The change in cash
flow used in investing activities was primarily attributable to aattributed significantto reductionmonies inspent payrollon capitalizeddeveloped fortechnology
attributed to the developmentCompany’s of
intangiblenew assetsproduct and proceeds of sale of equipment in the prior year.offerings.
Net
cash provided by financing
activities was $3,278,235none for the year ended December 31, 20242025 as compared to $9,045,578$3,278,235 for the year ended December
31, 2023.2024. The change
in cash flow provided by financing activities was mainly attributable to the decrease in proceeds we received from
the issuance of common
shares, exercise of warrantsshares and options, and repayments on notes payable.warrants. The Company raised $3,278,235 for the year ended December
31, 2024 from debt issuances and
warrant exercise compared to $11,693,973 attributed to equity and warrants issuances, net of offering
cost offset by repayment of $2,519,835 related party notes payable for the year ended December 31, 2023.exercises.
Intangible assets
Intangible assets acquired
separately are measured upon initial recognition at cost, which comprises the purchase price plus any costs directly attributable to
the preparation of the asset for its intended use. Intangible assets acquired through business combinations (Xcite Interactive) or asset
acquisitions are initially recognized at fair value as at the date of acquisition. After initial recognition, intangible assets are carried
at cost less accumulated amortization and any accumulated impairment charges. During the year ended December 31, 2023, the Company completed
an impairment analysis of its intangible assets and concluded the assets were impaired. As a result, the Company impaired the remaining
carrying value of the intangible assets in the amount of $3,968,332. No new intangible assets were capitalized during the year ended
December 31, 2024.
During the year ended December 31, 2025, the Company recognized $176,000 attributed to professional services.
We
recognize revenue when or
as the performance obligations in the contract are satisfied. For performance obligations that are fulfilled
at a point in time, revenue
is recognized at the fulfillment of the performance obligation. Since the IP is determined to be a functional
license, the value of the
grant of use is recognized in the first period of the contract term in which the license agreement is in force. Since the costs incurred
to satisfy the ASPIS technology performance obligations are incurred evenly throughout the year, the value of the technical support and
new improvements services are recognized throughout the contract period as these performance obligations are satisfied. For the year
ended December 31, 2024,2025, no$1,980,000 of revenue was recognized on our functional IP as the Technology Agreement with ASPIS
as the license had notbeen been
delivered to ASPIS during the year.
The Company invoices ASPIS on a monthly basis with 30 day payment terms. For the year ended December 31, 2025 the Company has collected $1,320,000, respectively, from ASPIS.
Deferred Revenue
Revenue recognition of sales
is recorded on a monthly basis upon delivery or as the services are provided. Cash received in advance for services are recorded as deferred
revenue based on the proportion of time remaining under the service arrangement as of the reporting date.
Convertible DebtIntangible
assets
Intangible assets consist of internally developed software. The Company amortizes such assets using the straight-line method over the expected useful life of the asset once. The Company evaluates the useful lives of these assets on an annual basis. If the estimate of an intangible asset’s remaining useful life is changed, the Company amortizes the remaining carrying value of the intangible asset prospectively over the revised remaining useful life. Intangible assets capitalized during the year ended December 31, 2025 was $609,000.
We may enter into negotiated short term convertible debt agreement
to provide bridge capital in between equity raises. Our convertible debt agreements include a debt discount and a common stock conversation
feature that may be exercised by the noteholder that is either at or out of the money. We evaluate the terms of convertible debt issue
prior to accepting such agreements to determine whether there are embedded derivative instruments, including embedded conversion options,
which are required to be bifurcated and accounted for separately as derivative financial instruments. We evaluate our convertible debt
in accordance with ASC 470-20, Debt with conversion and Other Options (“ASC 470-20”) and ASC 815-40, Contracts in Entity’s
Own Equity (“ASC 815-40”). Under ASC 815-40, to qualify for equity classification (or nonbifurcation, if embedded) the instrument
(or embedded feature) must be both (1) indexed to the issuer’s stock and (2) meet the requirements of equity classification guidance.
Functional currency
The functional currency for
each of our subsidiaries is the currency of the primary economic environment in which the respective entity operates. Such determination
involves certain judgements to identify the primary economic environment. We reconsider the functional currency of our subsidiaries if
there is a change in events and/or conditions which determine the primary economic environment.
What changed in the latest 10-Q
Risk Factors
Other than as set forth below, there have been no material changes to the risk factors set forth in the section titled “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on April 15, 2026 (our “Annual Report”) and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, filed with the SEC on May 15, 2026 (our “Q1 2026 Report”). Our business involves significant risks. You should carefully consider the risks and uncertainties described in our Annual Report and our Q1 2026 Report, together with all of the other information in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in our Annual Report. The risks and uncertainties described in our Annual Report and our Q1 2026 Report are not the only ones we face, and additional risk and uncertainties that we are unaware of or that we deem immaterial may also become important factors that adversely affect our business. The realization of any of these risks and uncertainties could have a material adverse effect on our reputation, business, financial condition, results of operations, growth and future prospects as well as our ability to accomplish our strategic objectives. In that event, the market price of our common shares could decline and you could lose part or all of your investment.
Removed heading “If we do not successfully raise additional capital, improve our operating cash flow, or complete a strategic transaction, our board of directors may decide to pursue a dissolution and liquidation of our company. In such an event, the amount of cash available for distribution to our stockholders will depend heavily on the timing of such liquidation as well as the amount of cash that must be reserved for commitments and contingent liabilities, as to which we can give you no assurance.”
Removed heading “If we fail to regain or thereafter do not maintain compliance with the continued listing requirements of Nasdaq, our common stock may be delisted.”
Largest changes
“If we fail to regain or thereafter do not maintain compliance with the continued listing requirements of Nasdaq, our common stock may be delisted.”see in full comparison
“Our common stock is currently listed on the Nasdaq Capital Market. To maintain that listing, we must satisfy minimum financial and other continued listing requirements and standards, including those relating to stockholders’ equity, market value of publicly held shares minimum bid price, and corporate governance requirements. There can be no assurance that we will regain compliance with the minimum stockholders’ equity requirement or continue to satisfy the other listing requirements. …”see in full comparison
“If we do not successfully raise additional capital, improve our operating cash flow, or complete a strategic transaction, our board of directors may decide to pursue a dissolution and liquidation of our company. In such an event, the amount of cash available for distribution to our stockholders will depend heavily on the timing of such liquidation as well as the amount of cash that must be reserved for commitments and contingent liabilities, as to which we can give you no assurance.”see in full comparison
“In addition, we may be subject to litigation or other claims related to a dissolution and liquidation of our company. If a dissolution and liquidation were to be pursued, our board of directors, in consultation with our advisors, would need to evaluate these matters and make a determination about a reasonable amount to reserve. Accordingly, holders of our common stock could lose all or a significant portion of their investment in the event of a liquidation, dissolution or winding up of our company. …”see in full comparison
“There can be no assurance that we will successfully raise additional capital, that we will improve our operating cash flow, or that we will be able to complete a strategic transaction. If none of those occur, our board of directors may decide to pursue a dissolution and liquidation of our company. …”see in full comparison
Other than as set forth below, there have been no material changes to the risk factors set forth in the section titled “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on April 15, 2026 (our “Annual Report”) and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, filed with the SEC on May 15, 2026 (our “Q1 2026 Report”). Our business involves significant risks. You should carefully consider the risks and uncertainties described in our Annual Report and our Q1 2026 Report, together with all of the other information in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in our Annual Report. The risks and uncertainties described in our Annual Report and our Q1 2026 Report are not the only ones we face, and additional risk and uncertainties that we are unaware of or that we deem immaterial may also become important factors that adversely affect our business. The realization of any of these risks and uncertainties could have a material adverse effect on our reputation, business, financial condition, results of operations, growth and future prospects as well as our ability to accomplish our strategic objectives. In that event, the market price of our common shares could decline and you could lose part or all of your investment.see in full comparison
Full comparison: every changed paragraph (6)
Other than as set forth below, there have been no material changes to the risk factors set forth in the section titled “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on April 15, 2026 (our “Annual Report”) and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, filed with the SEC on May 15, 2026 (our “Q1 2026 Report”). Our business involves significant risks. You should carefully consider the risks and uncertainties described in our Annual Report and our Q1 2026 Report, together with all of the other information in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in our Annual Report. The risks and uncertainties described in our Annual Report and our Q1 2026 Report are not the only ones we face, and additional risk and uncertainties that we are unaware of or that we deem immaterial may also become important factors that adversely affect our business. The realization of any of these risks and uncertainties could have a material adverse effect on our reputation, business, financial condition, results of operations, growth and future prospects as well as our ability to accomplish our strategic objectives. In that event, the market price of our common shares could decline and you could lose part or all of your investment.
If we do not successfully raise additional
capital, improve our operating cash flow, or complete a strategic transaction, our board of directors may decide to pursue a dissolution
and liquidation of our company. In such an event, the amount of cash available for distribution to our stockholders will depend heavily
on the timing of such liquidation as well as the amount of cash that must be reserved for commitments and contingent liabilities, as to
which we can give you no assurance.
There can be no assurance that we will successfully raise additional
capital, that we will improve our operating cash flow, or that we will be able to complete a strategic transaction. If none of those occur,
our board of directors may decide to pursue a dissolution and liquidation of our company. In such an event, the amount of cash available
for distribution to our stockholders will depend heavily on the timing of such decision and, ultimately, such liquidation, since the amount
of cash available for distribution continues to decrease as we fund our operations while pursuing a financing, improved operations, or
a strategic transaction. In addition, if our board of directors were to approve and recommend a dissolution and liquidation of our company,
under Delaware law, before a dissolved corporation may make any distribution to its stockholders, it must pay or make reasonable provision
to pay all of its claims and obligations, including all contingent, conditional or unmatured contractual claims known to the corporation.
As a result of this requirement, a portion of our assets would need to be reserved pending the resolution of such obligations.
In addition, we may be subject
to litigation or other claims related to a dissolution and liquidation of our company. If a dissolution and liquidation were to be pursued,
our board of directors, in consultation with our advisors, would need to evaluate these matters and make a determination about a reasonable
amount to reserve. Accordingly, holders of our common stock could lose all or a significant portion of their investment in the event of
a liquidation, dissolution or winding up of our company. A liquidation would be a lengthy and uncertain process with no assurance of any
value ever being returned to our stockholders.
If we fail to regain or thereafter do not
maintain compliance with the continued listing requirements of Nasdaq, our common stock may be delisted.
Our common stock is currently
listed on the Nasdaq Capital Market. To maintain that listing, we must satisfy minimum financial and other continued listing requirements
and standards, including those relating to stockholders’ equity, market value of publicly held shares minimum bid price, and corporate
governance requirements. There can be no assurance that we will regain compliance with the minimum stockholders’ equity requirement
or continue to satisfy the other listing requirements. If we fail to regain or maintain compliance with Nasdaq listing standards, our
common stock could be delisted, which could negatively impact the liquidity and market price of our securities, prevent analyst coverage,
decrease the ability of investors to trade our securities, and impair our ability to raise capital.
Management's Discussion & Analysis (MD&A)
New heading “Third party Revenue”
New heading “Related party Revenue”
New heading “Income from Operations”
New heading “Comparison of Results of Operations for the six month period ended June 30, 2026 and June 30, 2025”
New heading “Third party Revenue”
New heading “Related party Revenue”
New heading “Cost of revenues”
New heading “Research and development”
New heading “Selling, general and administrative”
Largest changes
“Comparison of Results of Operations for the six month period ended June 30, 2026 and June 30, 2025”see in full comparison
Full comparison: every changed paragraph (39)
Our customers are mostly sports
teams, venues (Arenas, Football Stadiums, Baseball Stadiums), fan engagement and sponsor activation platforms, digital out-of-home media
companies, and advertising agencies, which typically use our products as part of their live events or as part of an advertising campaign
with the goal of engaging fans, increasing consented first-party data, and increasing sales. At MarchJune 31,30, 2026 and December 31, 2025,
we had four active customers.
Our products and games are
designed so that end users could earn prizes by registering on our system and completing in-content challenges like trivia, polls, or
casual mobile games. Players could use our system to play a variety of games and earn a wide range of prize types, provided by advertisers
and sponsors. Our products,products include our in-venue Filter Fan Cam (“FFC”) products for live events, our stand-alone “Winfinite”
product line that can be used by brands, advertising agencies, and content partners to reach potential customers outside of sports venues,
on mobile devices, as well as the “Winfinite” Games, which are customizable web-based casual games. We also have an IP portfolio
that could create future licensing and product development opportunities including our recently allowed Artificial Intelligence (“AI”)
and Machine Learning (“ML”) series of patent claims.
Revenue. In
general, we recognize revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will
flow to us, where there is evidence of an arrangement, when the selling price is fixed or determinable, and when specific criteria have
been met or there are no significant remaining performance obligations for each of our activities as described below. Foreseeable losses,
if any, are recognized in the year or period in which the loss is determined.
We earn revenue through
the development and maintenance of custom-built software.
We recognize revenues received
from the development and maintenance of custom-built software and other professional services provided upon the satisfaction of our performance
obligation in an amount that reflects the consideration to which we expect to be entitled in exchange for those services. Performance
obligations can be satisfied either at a single point in time or over time. For those performance obligations that are satisfied at a
single point in time, the revenue is recognized at that time. For each performance obligation satisfied over time, we recognize revenue
by measuring the progress toward complete satisfaction of that performance obligation.
Our contracts with customers
may include multiple performance obligations. For these contracts, we account for individual performance obligations separately if they
are capable of being distinct within the context of the contract. Determining which performance obligations are considered distinct may
require significant judgment. Judgment is also required to determine the amount of revenue associated with each distinct performance
obligation.
Operating Expenses.
We classify our operating expense as research and development, and selling, general and administrative. Personnel costs are the
primary component of each of these operating expense categories, which consist of cash-based personnel costs, such as salaries, benefits
and bonuses. Additionally, these categories include professional fees and share-based compensation.
Comparison of Results of Operations for the Three-Month periods
ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025
The following table summarizes
our results of operations for the three-month periods ended MarchJune 31,30, 2026 and 2025:
Third party Revenue
Revenue was $6,821 for the three-month period ended June 30, 2026, representing an increase of $6,821, or 100%, from $0 for the three-month period ended June 30, 2025. The increase was the result of revenue earned from the Xcite business.
Related party Revenue
RevenueRelated party revenue was $17,300$1,485,000 for the
three-month period ended MarchJune 31,30, 2026, representing a decrease of $182,047,$495,000, or 91%,25%, from $199,347$1,980,000 for the three-month period ended March
31,June 30, 2025. The decrease was primarily due to one-timea consultingdecrease servicesin attributedlicense torevenue the ASPIS arrangement which accounted for approximately
$176,000 during the three months ended March 31, 2025.earned.
Cost of revenues was $0 for
the three-month period ended MarchJune 31,30, 2026, representing a decrease of $8,223$8,222 or 100%, from $8,223$8,222 for the three month period ended March
31,June 30, 2025. The decrease was primarily due to a change in revenue mix as the $17,300Company ofcancelling revenue was attributable to the Company’s
legacy Xcite business, which did not incurcontracts associated with its cost of revenues duringfor thefiscal period.2026.
Research and development
was $0 for the three month period ended MarchJune 31,30, 2026, representing a decrease of $6,149,$6,219, or 100%, from $6,149$6,219 for the three month period
ended MarchJune 31,30, 2025. The decrease was primarily due to a reduction in software costs.
Selling, general and administrative
was $835,995$897,548 for the three-month period ended MarchJune 31,30, 2026, representing a decrease of $521,741,$129,210, or 38%,13%, from $1,357,736$1,026,758 for the three
month period ended MarchJune 31,30, 2025. The decrease was primarily due to a decrease in administrative employees and stock compensation.
Income from Operations
Income from operations was $594,273 for the three month period ended June 30, 2026, representing a decrease of $344,528, or 37%, from $938,801 for the three month period ended June 30, 2025. The decrease was primarily the result of decrease in gross profit of $480,000 offset by a decrease in operating expenses of $135,000.
Comparison of Results of Operations for the six month period ended June 30, 2026 and June 30, 2025
The following table summarizes our results of operations for the six months ended June 30, 2026 and 2025:
Revenue
Third party Revenue
Revenue was $24,121 for the six-month period ended June 30, 2026, representing an increase of $773, or 3%, from $23,348 for the six-month period ended June 30, 2025. The increase was the result of revenue earned from the Xcite business.
Related party Revenue
Related party revenue was $1,485,000 for the six-month period ended June 30, 2026, representing a decrease of $671,000, or 31%, from $2,156,000 for the six-month period ended June 30, 2025.The decrease was primarily due to one-time consulting services attributed to the ASPIS arrangement which accounted for approximately $176,000 during the three months ended June 30, 2025 in addition to a decline in license revenue earned of $495,000.
Cost of revenues
Cost of revenues was $0 for the six month period ended June 30, 2026, representing a decrease of $16,446, or 100%, from $16,446 for the six month period ended June 30, 2025. The decrease was due to the decrease in infrastructure needed for Xcite Interactive.
Research and development
Research and development was $0 for the six month period ended June 30, 2026, representing a decrease of $12,368, or 100%, from $12,368 for the six month period ended June 30, 2025. The decrease was primarily due to significant reductions in staff related to our company restructuring in the prior year.
Selling, general and administrative
Selling, general and administrative was $1,733,543 for the six month period ended June 30, 2026, representing a decrease of $650,951, or 27%, from $2,384,494 for the six month period ended June 30, 2025. The decrease was primarily due to a decrease in payroll as the Company reduced head count and a decrease in professional fees and stock compensation.
Loss from operations was
$818,695 $224,422 for the three monthsix-month period ended MarchJune 31,30, 2026, representing a decrease of $354,066,$9,538, or 30%,4%, from $1,172,761$233,960 for the threesix-month month
period ended MarchJune 31,30, 2025. The decrease was primarily the result of decreased expenses and headcount offset by the decrease in revenue.
Since inception, the Company
has incurred operating losses as it continues to invest in developing and commercializing its technology platform. The companyCompany incurred
a net loss of $0.8$0.2 million for the threesix months ended MarchJune 31,30, 2026. For the years ended December 31, 2025 and 2024, we incurred net
losses of approximately $2.1 million and $4.6 million, respectively. During these periods, operations were primarily financed through
residual proceeds from the Company’s initial public offering of common shares in January 2021 and subsequent equity and debt transactions,
including warrant exercises and private placements. In October 2024, warrant holders exercised approximately $0.9 million of warrants,
and in November and December 2024 the Company raised $2.5 million through convertible notes.notes and another $1.7 million in June 2026 as a result of a common stock issuance. Our cash and cash equivalents as of March
31,June 30, 2026 was $0.4$1.4 million. Our primary cash needs are for working capital requirements, headcount, capital expenditures and to fund our
operations.
The Company and ASPIS entered into a Stock Purchase Agreement (the
“SPA”). Pursuant to the SPA, the Company will sellsold to ASPIS, and AspisASPIS will purchasepurchased for cash, a number of shares of Company
common stock, at a price, equal to $1,700,000 divided by 105% of the closing price of a share of Company common stock on the day preceding
consummation. The purchase price per share shall bewas 105% of such closing price. On May 15, 2026, the Company received notification from
ASPSIS that they wired $1,200,000 pursuant to the Stock Purchase Agreement; however, no shares had been issued under the SPA as of such
date. The Company expects to receive the remaining balance of the purchase price in the near future and all shares will be issued at that
time. Based on the Company’s historic and projected expenses and revenues, the Company expects the proceeds from the SPA to result
in the Company maintaining at least $2,500,000 in stockholders’ equity through at least December 31, 2026. On June 26, 2026, the Company consummated the transaction contemplated by its Stock Purchase Agreement with ASPIS dated April 15, 2026. Specifically, the Company issued 1,310,969 shares of Company common stock for total consideration of $1,700,000.
In addition, as disclosed
in Note 9, in the first quarter of 2026, the Audit Committee of the Company’s Board of Directors conducted an internal investigation
and determined that fraudulent activity involving the Company’s former Chief Financial Officer had occurred. A promissory note was
executed in connection therewith; however, there can be no assurance that such note will be collected in part or full or at all. As
of MayAugust 15,14, 2026, no monies have been repaid on the promissory note.
The following summarizes
the key components of our cash flows for the threesix month periods ended MarchJune 31,30, 2026 and 2025:
Net cash providedused byin operating
activities for the threesix month period ended MarchJune 31,30, 2026 was $143,986$331,203 as compared to cash used in operations of $641,445$1,508,972 for the three
six month period ended MarchJune 31,30, 2025. The decrease in cash used in operating activities was primarily attributable to alower decreasecash absorbed in the net
loss of $337,782, increase in collections of accounts receivable of $642,700$1,220,000 andoffset by an increase in accounts payable and accrued liabilities
of $340,807. These increases were offset by decreases in stock-based compensation of $344,524 and prepaid expenses of $191,334.$610,839.
Net cash used in investing
activities for the threesix months ended MarchJune 31,30, 2026 was $327,000$654,000 as compared to $0 for the threesix months ended MarchJune 31,30, 2025. The change
in cash flow used in investing activities was primarily attributable to monies spent on capitalized software development for technology
attributed to the Company’s new product offerings.
NoNet cash wasprovided used in or provided
by financing activities was $1,700,000 for the threesix months ended MarchJune 31,30, 2026 andcompared to $0 for the six months ended June 30, 2025, respectively. The increase was attributed to the sale of common stock to ASPIS.
VS insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
No Form 4 stock transactions in this period.
Well-known investors holding VS (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 34,177 | $44.1K | 0.0% | New position |