Versus Systems Inc. (NASDAQ:VS) has entered into a significant agreement with ASPIS Cyber Technologies Inc., marking a strategic move for the technology company. On Monday, October 7, 2024, Versus Systems announced two separate agreements with ASPIS, a company specializing in cybersecurity for various sectors, including government and finance.
The first agreement, a Technology License and Software Development Agreement, effective as of October 4, 2024, grants ASPIS the right to use Versus Systems' gamification and QR code technology. In return, ASPIS will pay a monthly license fee of $165,000 starting January 2025 and cover any costs associated with modifying the technology for their specific use. The development of this modified technology is set to commence immediately.
The second agreement is a Business Funding Agreement, under which ASPIS will invest $2,500,000 into Versus Systems. This investment is part of Versus Systems' Compliance Plan submitted to The Nasdaq Capital Market to meet the minimum shareholders' equity requirement. The plan is designed to ensure that the company maintains the required equity amount until at least September 30, 2025.
Under the terms of the Funding Agreement, ASPIS will initially deliver $500,000 to Versus Systems, followed by an additional $2,000,000 by November 15, 2024. In exchange, Versus Systems will issue ASPIS a senior convertible promissory note that, upon shareholder approval, will automatically convert into units comprising common shares and warrants.
These warrants allow ASPIS to purchase additional shares at a set price, potentially increasing their stake in Versus Systems to approximately 45.8% of the outstanding common shares.
The agreements between Versus Systems and ASPIS reflect a significant investment and partnership, leveraging Versus Systems' technology in the cybersecurity industry while providing the company with necessary capital to meet Nasdaq's equity requirements. The successful execution of these agreements is expected to have a positive impact on Versus Systems' financial position and its ability to continue operations and growth.
In other recent news, Versus Systems Inc. made significant changes to its executive team, appointing Geoff Deller as the new Chief Financial Officer. Deller, previously the President and Chief Investment Officer of Orinoco Capital LLC, brings considerable financial and operational expertise to the company. This is part of Versus Systems' strategic efforts to support its growth initiatives and strengthen its executive team.
The company has faced substantial challenges recently, including a major business restructuring that resulted in the immediate resignation of several key figures, including CEO Matthew Pierce, CFO Craig Finster, and three board members. Curtis Wolfe has been named as the interim CEO.
In terms of financial performance, Versus Systems' first-quarter 2024 revenue was reported at $26,530, a significant decrease from the previous year's $158,000. The number of customers served also saw a reduction from 16 to just 5.
Analyst firm H.C. Wainwright has adjusted its price target for Versus Systems' shares twice, first increasing it to $2.00, then lowering it to $1.50. The firm acknowledges the inherent value in Versus Systems' technology and market opportunities but remains cautious due to the company's financial difficulties and decrease in customer accounts.
InvestingPro Insights
The recent agreements between Versus Systems Inc. (NASDAQ:VS) and ASPIS Cyber Technologies Inc. come at a critical time for VS, as reflected in the company's financial metrics and market performance. According to InvestingPro data, VS has a market capitalization of just $2.79 million, indicating its small-cap status. The company's revenue for the last twelve months as of Q2 2024 was only $0.11 million, with a significant revenue decline of 85.22% over the same period.
InvestingPro Tips highlight that VS is trading at a low Price / Book multiple of 0.31, which aligns with the company's current financial struggles and the need for additional funding. The stock's poor performance is evident, with InvestingPro data showing a one-year price total return of -70.61% as of the latest available date.
These financial metrics underscore the importance of the ASPIS agreements for Versus Systems' future. The $2.5 million investment from ASPIS could significantly improve VS's balance sheet and help meet Nasdaq's equity requirements. Additionally, the monthly license fee of $165,000 starting January 2025 could provide a steady revenue stream, potentially reversing the company's revenue decline.
Investors considering VS should note that InvestingPro offers 13 additional tips for this stock, providing a more comprehensive analysis of its investment potential. These insights could be particularly valuable given the company's current transitional phase and the potential impact of the ASPIS agreements on its future performance.
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