Breaking Down Versus Systems Inc. (VS) Financial Health: Key Insights for Investors

You're looking at Versus Systems Inc. (VS) and seeing a stock with a tiny market capitalization of just $7.5 million as of November 2025, but the recent financials tell a story of dramatic, albeit fragile, change. The direct takeaway is this: the company has engineered a massive top-line surge, but the underlying profitability is defintely still a question mark. For the nine months ended September 30, 2025, Versus Systems Inc. reported a significant revenue figure of $2.18 million, a huge jump largely driven by a single license agreement with a related party, ASPIS Cyber Technologies. However, digging into the Q3 2025 results shows they still clocked a net loss of $(972,013), which translates to a basic and diluted loss per share of $(0.17). So, we need to look past the headline revenue number and understand if this growth is sustainable, or if it's a one-time financial engineering feat that just buys them time.

Revenue Analysis

You're looking at Versus Systems Inc. (VS) and seeing a massive revenue spike, and honestly, you're right to be skeptical about what's driving it. The headline number is impressive, but the source of that revenue is what matters for long-term investors. The company's financial health in 2025 hinges on a significant one-time event, not yet a consistent, recurring revenue model.

For the nine months ended September 30, 2025, Versus Systems Inc. reported total sales of approximately $2.18 million, a huge jump from the $0.057 million reported for the same period in 2024. This translates to a trailing twelve months (TTM) year-over-year revenue growth of approximately 2,281.7%, which is an explosive, but highly concentrated, increase. That's a huge number, but it's not a trend yet.

Breakdown of Primary Revenue Sources

The primary revenue stream for Versus Systems Inc. has fundamentally shifted in 2025. The bulk of the reported revenue for the nine months ended September 30, 2025, was driven by a single, significant transaction: a license agreement with ASPIS Cyber Technologies, Inc. This is a related party transaction, so you need to treat it differently than revenue from a diverse, external customer base. The other key component is professional services.

• License Revenue: Primarily from the ASPIS Cyber Technologies, Inc. agreement, which contributed the majority of the $2.18 million in sales.
• Professional Services: This includes consulting services, largely related to the ASPIS arrangement. For example, in the first quarter of 2025, professional services revenue was approximately $176,000.
• Platform/Product Revenue: The company's core business-to-business (B2B) software tools-like the Filter Fan Cam (FFC) for Augmented Reality (AR) and Winfinite (a mobile gaming and prizing product)-contribute the remainder, but their impact is currently overshadowed by the license deal.

Segment Contribution and Significant Changes

The concentration of revenue is the biggest risk here. The massive year-over-year growth is almost entirely due to the ASPIS license, not a broad-based, organic increase in platform usage by sports teams, venues, and advertising agencies-Versus Systems Inc.'s traditional customer base.

Here's the quick math on the segment shift:

The XEO platform, once a principal software product for in-venue main-board work, is defintely not generating client revenue in 2025, which is a major operational shift. This suggests a pivot in their core product strategy, moving away from in-venue engagement toward the new licensing model and potential expansion into new markets like Brazil, which management is targeting for near-term revenue.

If you want to dive deeper into the implications of this shift, especially the gross margin improvement from $0.002 million in Q1 2024 to $0.191 million in Q1 2025, you should check out the full analysis in Breaking Down Versus Systems Inc. (VS) Financial Health: Key Insights for Investors.

Profitability Metrics

You want to know if Versus Systems Inc. (VS) is finally turning the corner on profitability. The short answer is: they are showing a major swing toward positive gross margins, but the bottom line is still deep in the red for the year-to-date, though it's a huge improvement. The critical factor is the one-time nature of their recent revenue.

For the nine months ended September 30, 2025, Versus Systems Inc. reported total revenue of $2.18 million. This revenue was almost entirely driven by a significant related-party license agreement, which is why the margins look so unusual. Here's the quick math on their core profitability ratios for the nine-month period:

• Gross Profit Margin: 99.08%
• Operating Profit Margin: -45.43%
• Net Profit Margin: -44.59%

Honestly, that 99.08% Gross Profit Margin is stellar-it means for every dollar of revenue, nearly a dollar is left after covering the direct costs of delivering the service. This is a sign of immense product scalability, which is what investors look for in a software company. But, as you can see, the losses pile up quickly once you factor in the rest of the business.

Gross vs. Net Profit: A Tale of Two Margins

The trend in profitability is a story of two very different periods in 2025. In Q2 2025 alone, Versus Systems Inc. actually reported a net income of $942,461 and an operating income of $938,801. This led to an incredible three-month Net Profit Margin of 47.60%. This dramatic shift was due to the recognition of $1,980,000 in related-party license revenue from ASPIS.

However, when you look at the full nine months, the overall Net Loss was still $(972,013). The positive Q2 was a significant event, but it didn't erase the losses from the rest of the year. Still, the six-month net loss improved dramatically to $(214,016), down from a much larger loss in the prior year, showing a clear reduction in the burn rate.

What this estimate hides is the high single counterparty risk, since the Q2 revenue was almost entirely from that one related-party license.

Industry Comparison and Operational Efficiency

When we compare Versus Systems Inc.'s margins to the broader Software and Ad-Tech industries, the contrast is stark, but the high gross margin is a major point of interest.

Versus Systems Inc.'s gross margin is technically superior to the industry average of 70% to 90%. This is defintely a testament to their low cost of revenue structure. The problem is the Operating and Net Margins, which are deeply negative, contrasting sharply with the S&P 500 Information Technology sector's Net Profit Margin of 27.7% in Q3 2025.

The negative margins show that the company's operating expenses-like Sales, General & Administrative (SG&A) and Research & Development (R&D)-are still too high relative to their current, non-recurring revenue base. To be fair, they are addressing this: SG&A expense fell to $1,026,758 in Q2 2025, which is a 29% year-over-year reduction, and R&D is sharply lower due to restructuring and cost controls. This focus on cost management is an actionable step, and it's what drove the improved net loss for the year-to-date. For a deeper look at the risks, you can read the full analysis at Breaking Down Versus Systems Inc. (VS) Financial Health: Key Insights for Investors.

Debt vs. Equity Structure

You want to know how Versus Systems Inc. (VS) funds its operations, and the short answer is: mostly through equity and a high-risk convertible note. The company's reliance on non-traditional funding instruments, especially a major debt-like maturity in late 2025, is the core of its financial leverage story.

Looking at the balance sheet for 2025, Versus Systems Inc. appears to have minimal traditional debt. As of the second quarter of 2025, the company's total liabilities were only about $34,190, which is an incredibly low figure for a public company. This suggests a near-zero long-term and short-term debt load in the conventional sense.

But here's the caveat: the true financial risk is the $2.5 million 10.0% Convertible Senior Promissory Note issued in October 2024, which was due in October 2025. This is a debt-like instrument that gives the holder the option to convert the principal and interest into common stock, or demand cash repayment upon maturity. That is a massive near-term obligation.

To get a real sense of the company's leverage-its Debt-to-Equity (D/E) ratio-we have to treat that convertible note as debt.

• Total Equity (Q3 2025): $3.07 million
• Primary Debt-Like Obligation: $2.5 million (Convertible Note)

Here's the quick math: Using the $3.07 million in Total Equity as of September 30, 2025, and the $2.5 million note, the effective D/E ratio is approximately 0.81. This means the company has 81 cents of debt for every dollar of equity.

That 0.81 ratio is significantly higher than the industry benchmark. For the Internet Content & Information sector, which is a good proxy for Versus Systems Inc., the average Debt-to-Equity ratio as of November 2025 is around 0.39. A ratio more than double the industry average flags a high-leverage position, especially for a company that has not achieved positive cash flow from operations and is facing a 'substantial doubt' about its ability to continue as a going concern.

Versus Systems Inc. defintely balances its funding by relying heavily on equity and equity-linked instruments like the convertible note, rather than traditional bank debt. This strategy avoids restrictive covenants of a bank loan, but it comes at the cost of significant shareholder dilution risk if the note converts, or a critical liquidity event if the note holder demands cash upon maturity. The full story is detailed further in Breaking Down Versus Systems Inc. (VS) Financial Health: Key Insights for Investors.

The company has no credit rating to speak of, which is typical for a small-cap firm relying on private placements and related-party financing, like the ASPIS Cyber Technologies funding agreement. The financing path is clear: raise more equity or convert existing debt to equity to survive.

Liquidity and Solvency

The liquidity position of Versus Systems Inc. (VS) is a classic two-sided coin: the raw ratio numbers look phenomenal, but the underlying cash flow reality is a significant concern. You need to look past the surface-level metrics to the fundamental cash generation ability of the business.

As of the third quarter of 2025, Versus Systems Inc. reported a Current Ratio of approximately 1,116.66 and a Quick Ratio of around 1,035.69. These figures, which measure the ability to cover short-term obligations with current assets (Current Ratio) and highly liquid assets (Quick Ratio), appear exceptionally strong. However, this is defintely a case where context is everything. The ratios are so high because Current Liabilities are extremely low, not because Current Assets are overwhelmingly large. Here's the quick math: with a Working Capital of $2,770,192 as of September 30, 2025, the Current Liabilities are only about $2,483, which is a tiny operational base for a publicly traded company.

Working Capital and Cash Flow Trends

The company's Working Capital-Current Assets minus Current Liabilities-was positive at $2,770,192 at the end of Q3 2025. This positive balance is a near-term strength, meaning the company has more than enough liquid assets to cover its immediate debts. Still, the trend in cash flow from operations tells a more cautionary tale. The business is not yet self-sustaining.

The cash flow statement for the nine months ended September 30, 2025, shows a clear need for external financing to keep the lights on:

• Operating Cash Flow: This was negative, showing a net cash outflow of -$1.48 million for the third quarter of 2025 alone. This consistent negative operating cash flow is the primary cause of the company's liquidity pressure.
• Investing Cash Flow: This was a minor cash outflow of -$0.30 million in Q3 2025, which is typical for a small technology company with minimal capital expenditures.
• Financing Cash Flow: The company relies on financing activities, such as issuing stock or debt, to fund its operations. While the Q3 2025 figure isn't explicitly detailed here, the historical trend shows that external capital raises are the lifeblood of the company, a pattern that must continue until they reach profitability.

The core issue is that Versus Systems Inc. has not achieved positive cash flow from operations and cannot finance day-to-day activities through its business model yet. This means the positive working capital is essentially being burned through to cover operational costs, not replenished by sales. If you want to understand the long-term strategic context for this, you should review their Mission Statement, Vision, & Core Values of Versus Systems Inc. (VS).

The Going Concern Warning: A Critical Liquidity Risk

The most critical piece of information for any investor is the explicit disclosure from management: recurring losses and limited operating cash flow raise substantial doubt about Versus Systems Inc.'s ability to continue as a going concern within one year. This is the financial analyst's equivalent of a severe weather warning.

The company's survival is dependent on two clear actions: attaining profitable operations or, more immediately, raising sufficient equity capital or borrowings. They are actively pursuing strategic options and partnerships, like the non-binding letter of intent with Drinkfinger Enterprises Ltd. in November 2025, but these are not guaranteed sources of cash. You must factor in the high probability of future share dilution if they successfully raise new capital to mitigate this risk.

Valuation Analysis

You're looking at Versus Systems Inc. (VS) and wondering if the market has it right, and the short answer is that the valuation metrics point to a stock priced for significant risk and a hopeful turnaround, which is why analysts are split. The current stock price of $1.47 as of November 21, 2025, sits near its 52-week low, reflecting a challenging year.

The core issue is profitability, which is why traditional valuation is tricky. Since January 1, 2025, the stock has fallen by about 32.0%, trading in a wide 52-week range between $1.39 and $3.79.

Is Versus Systems Inc. Overvalued or Undervalued?

When a company is in a growth-focused, pre-profitability phase like Versus Systems Inc., standard ratios like Price-to-Earnings (P/E) are less useful, but they still tell a story. The Trailing Twelve Months (TTM) P/E ratio as of November 2025 is -2.05, which is negative because the company is currently losing money.

Here's the quick look at the key valuation multiples:

• Price-to-Earnings (P/E): -2.05 (TTM, Nov 2025). A negative P/E is typical for a company with negative earnings, meaning it is not profitable.
• Price-to-Book (P/B): 0.63. This is a low number, suggesting the stock trades below its book value per share, which can sometimes signal a potentially undervalued asset, but often points to deeper business concerns.
• Enterprise Value-to-EBITDA (EV/EBITDA): Not Applicable (N/A). Since the company has negative EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), this ratio is not calculable in a meaningful way.

What this estimate hides is the Enterprise Value (EV) of $5.70 million against an expected adjusted EBITDA loss of $3.8 million for 2024, showing the market is assigning value based on future revenue potential, not current earnings.

Analyst Consensus and Dividends

The analyst community is cautious, which is understandable given the financial profile. The consensus rating is generally a mix of 'Hold' and 'Sell,' resulting in a 'Reduce' consensus from the limited coverage of Wall Street analysts.

The average consensus price target is $2.00, which still suggests a potential upside of about 33.8% from the current price.

This $2.00 target is a vote of confidence that the company can execute on its strategic initiatives, like the new licensing agreement and management changes, to drive revenue growth.

Finally, Versus Systems Inc. is a growth-stage software company, so it does not currently pay a dividend. The dividend yield and payout ratios are N/A.

For a deeper dive into the company's operational health, you should check out the full analysis at Breaking Down Versus Systems Inc. (VS) Financial Health: Key Insights for Investors.

Risk Factors

You're looking at Versus Systems Inc. (VS) and seeing some positive momentum-like the Q3 2025 nine-month sales hitting USD 2.18 million, a huge jump from the prior year-but you need to be a realist about the underlying risks. The core issue is simple: this is still a company with a history of recurring losses and negative operating cash flow since its inception, which is the definition of a going concern risk without securing more capital. That's the big one.

The operational and financial risks are tightly linked. For the nine months ended September 30, 2025, the Net Loss was still USD 0.827227 million, even with the revenue increase. This persistent unprofitability means the company must raise capital repeatedly, which brings us to the most immediate financial risk for investors: shareholder dilution.

• Capital Dilution: To fund operations and strategic growth, Versus Systems Inc. will likely issue more shares, which waters down the value of your existing stake.
• Revenue Concentration: A significant portion of the Q3 2025 revenue was driven by a license agreement with ASPIS Cyber Technologies, Inc., a related party. Honestly, relying heavily on one client, especially a related one, creates a single point of failure.
• Market Competition: The digital advertising and software sectors are brutally competitive. Versus Systems Inc. has to constantly innovate to justify its proprietary technology against deep-pocketed rivals.

Here's the quick math on the operational challenge: while the Q3 2025 operating loss of $(990,361) was an improvement year-over-year, it still means the core business is burning cash. They need to flip that negative to a positive operating income, and fast. You can dive deeper into the ownership structure and who is betting on this turnaround in Exploring Versus Systems Inc. (VS) Investor Profile: Who's Buying and Why?

Mitigation Strategies and Their Limits

To be fair, management is not sitting still. They are actively trying to mitigate these risks with clear strategic initiatives. The expansion into Brazil, targeting major sports franchises and leagues, is a concrete example of diversifying their revenue streams geographically. Also, their investment in new intellectual property focused on Artificial Intelligence (AI) and Machine Learning (ML) is a necessary step to stay competitive and reduce the risk of their current technology becoming obsolete.

But what this estimate hides is the execution risk. Launching into a new market like Brazil takes significant capital and time, and there's no guarantee of near-term revenue. Plus, the success of the new AI/ML products depends entirely on their ability to attract and retain top-tier engineering talent, which is defintely expensive.

The table below summarizes the key financial risk metrics from the most recent filing:

Your action here is to monitor the Q4 2025 report closely for a sustained reduction in the operating loss and clear, non-related-party revenue growth. If they can't show a path to operational break-even soon, the dilution risk becomes a certainty.

Growth Opportunities

You're looking at Versus Systems Inc. (VS) and wondering where the growth comes from, especially after a tough run. The direct takeaway is this: the company is banking on a sharp turnaround in its business-to-business Software-as-a-Service (B2B SaaS) model, specifically by integrating Artificial Intelligence (AI) and capitalizing on a new licensing deal to drive revenue. It's a high-risk, high-reward bet on product innovation.

The numbers for the first nine months of fiscal year 2025 show a significant jump from the previous year, which is the core of the bullish argument. For the nine months ended September 30, 2025, Versus Systems Inc. reported sales of $2.18 million, a massive increase from the prior year's low base. This suggests their strategic pivot is starting to gain traction, though the company is still operating at a net loss of $0.827227 million for that same period. The street's consensus rating is a cautious 'Hold,' with one analyst setting a 12-month price target of $2.0.

Here's the quick math: they are generating more revenue, but they are not profitable yet. That's the challenge.

Product Innovations and Market Expansion

The company's growth is tied to its core product suite, which focuses on interactive audience engagement through gamification. The key is moving beyond simple digital rewards to verifiable, traceable rewards using blockchain and Web3 principles.

• eXtreme Engagement Online: Platform for live events and sports, driving in-content challenges.
• Winfinite: Interactive advertising tool focused on customer acquisition and loyalty.
• AI Integration: A strategic push to enter the AI race, which could significantly enhance their engagement and targeting capabilities.

This focus positions Versus Systems Inc. to capture more of the growing digital advertising and interactive media market. They are trying to make the rewards themselves a more valuable, verifiable asset, which is a smart move in a crowded space.

Strategic Partnerships and Competitive Edge

A significant growth driver is their ability to land key partnerships and licensing agreements. A newly announced licensing agreement is expected to contribute positively to their financial health as they approach 2025. They also recently announced a partnership with Resolve Debt, aiming to take their gamification technology into new sectors.

Their competitive advantage boils down to their proprietary technology and B2B SaaS model. They offer a full suite of tools-including a proprietary reward wallet and ledger infrastructure-that allows brands, sports teams, and content creators to embed real-world prizes and rewards into digital experiences. This is a defintely unique value proposition in the engagement space.

What this estimate hides is the execution risk following recent significant management changes, including the appointment of Geoff Deller as the new CFO and Curtis Wolfe as the interim CEO, which are part of a broader restructuring. The success of the $2.18 million revenue run rate depends entirely on the new team's ability to scale these partnerships and control operational expenses.

For a deeper dive into the company's risks and valuation, check out our full report: Breaking Down Versus Systems Inc. (VS) Financial Health: Key Insights for Investors.