8-K: Versus Systems Secures $2.5 Million Investment and Technology License Agreement with ASPIS Cyber Technologies

Versus Systems has entered into a technology license and funding agreement with ASPIS Cyber Technologies, securing a $2.5 million investment and a licensing deal to help regain compliance with Nasdaq listing requirements.

Summary

• Versus Systems Inc. has entered into two agreements with ASPIS Cyber Technologies, an affiliate of their largest shareholder, Cronus Equity Capital Group.
• The first agreement is a Technology License and Software Development Agreement, where Versus will license its gamification and QR code technology to ASPIS for a monthly fee of $165,000 starting January 2025.
• The second agreement is a Business Funding Agreement, where ASPIS will invest $2.5 million in Versus Systems.
• This investment is intended to help Versus Systems regain compliance with Nasdaq's minimum shareholders' equity requirement of $2.5 million.
• The funding will be provided in two tranches: $500,000 initially and $2,000,000 by November 15, 2024.
• Upon shareholder approval, the investment will convert into units consisting of common shares and warrants, potentially giving ASPIS approximately 45.8% ownership of Versus Systems.
• The conversion rate will be the greater of a prior five-day volume weighted average price or $1.16 per share.
• The agreements are part of Versus Systems' plan to maintain compliance with Nasdaq listing rules until at least September 30, 2025.

Sentiment

Score: 7

Explanation: The document indicates a positive development with a significant investment and licensing agreement, but there are risks associated with shareholder dilution and Nasdaq compliance. The sentiment is cautiously optimistic.

Positives

• The $2.5 million investment provides crucial funding to help Versus Systems meet Nasdaq's minimum equity requirements.
• The technology license agreement provides a recurring revenue stream of $165,000 per month starting in January 2025.
• The partnership with ASPIS could lead to further development and utilization of Versus Systems' technology.
• The investment is expected to allow the company to maintain compliance with Nasdaq listing rules until at least September 30, 2025.

Negatives

• The conversion of the investment into shares could significantly dilute existing shareholders, with ASPIS potentially owning 45.8% of the company.
• The investment is contingent on shareholder approval, which introduces uncertainty.
• The company is reliant on ASPIS for additional funding if the initial investment is insufficient to meet Nasdaq requirements.
• The company is currently not in compliance with Nasdaq listing rules.

Risks

• There is a risk that Nasdaq may not accept the company's plan to regain compliance.
• If the plan is not accepted, the company's securities could be delisted from Nasdaq.
• Delisting could negatively impact the company's share liquidity, trading price, and ability to obtain financing.
• The company's success is dependent on the partnership with ASPIS and the development of the modified technology.
• There is a risk that the company may not realize the expected benefits and synergies from the partnership with ASPIS.
• The company's business strategy or plans could change, impacting the effectiveness of the agreements.

Future Outlook

The company plans to regain compliance with Nasdaq's minimum shareholders' equity requirement through the investment from ASPIS and expects to maintain compliance until at least September 30, 2025. The company also anticipates the development of modified technology with ASPIS.

Management Comments

• The company's plan is to regain compliance with Nasdaq's minimum shareholders equity rule.
• The company expects the investment documents to allow them to exceed the required amount and maintain it until at least September 30, 2025.

Industry Context

This announcement highlights the growing importance of cybersecurity and gamification technologies. The partnership between Versus Systems and ASPIS reflects a trend of companies seeking to leverage innovative technologies to enhance their offerings and address market needs. The deal also shows the importance of maintaining compliance with exchange listing requirements.

Comparison to Industry Standards

• The $2.5 million investment is relatively small compared to larger funding rounds in the tech industry, but it is significant for a company of Versus Systems' size and current financial situation.
• The monthly license fee of $165,000 is a positive recurring revenue stream, but its impact will depend on the overall scale of Versus Systems' operations.
• The potential 45.8% ownership stake for ASPIS is a significant level of control, which is not uncommon in distressed situations where a company needs a large capital injection.
• Compared to other companies seeking to regain compliance with Nasdaq listing rules, Versus Systems' plan is relatively straightforward, relying on a single large investment and a technology licensing agreement.
• Other companies in similar situations may explore a wider range of options, including asset sales, debt restructuring, or multiple smaller capital raises.

Related Party Transactions

• The agreements are with ASPIS Cyber Technologies, an affiliate of the company's largest shareholder, Cronus Equity Capital Group.
• Cronus Equity Capital Group's managing member is the Chairman and a shareholder of ASPIS.
• One of the company's directors, Luis Goldner, is a shareholder of ASPIS and serves on its board of directors.

Stakeholder Impact

• Shareholders may experience dilution due to the conversion of the investment into shares.
• The investment and licensing agreement could improve the company's financial stability and long-term prospects.
• Employees may benefit from the company's improved financial position and potential growth.
• Customers may see enhanced products and services as a result of the technology development.
• Creditors may have increased confidence in the company's ability to meet its obligations.

Next Steps

• The company needs to obtain shareholder approval for the conversion of the note and the redomiciling to Delaware.
• The company needs to receive the initial $500,000 investment from ASPIS.
• ASPIS needs to deliver the remaining $2,000,000 by November 15, 2024.
• The company and ASPIS will begin development of the modified technology.
• The company will file the agreements as exhibits to its next Quarterly Report on Form 10-Q.

Key Dates

Keywords

Versus Systems, ASPIS Cyber Technologies, Nasdaq compliance, technology license, investment, shareholder equity, convertible note, warrants, gamification, cybersecurity