Versus Systems Receives NASDAQ Notification Regarding Minimum Stockholders’ Equity Deficiency

Rhea-AI Summary

Versus Systems (NASDAQ: VS) has received a notification from NASDAQ regarding a minimum stockholders' equity deficiency. The company's reported stockholders' equity of $1,797,764 as of June 30, 2024, falls below the required $2,500,000 for continued listing on the NASDAQ Capital Market. Versus Systems has until October 7, 2024, to submit a compliance plan. If accepted, NASDAQ may grant up to 180 calendar days to regain compliance. The company is developing a plan to increase stockholder equity and aims to file it by the deadline.

Versus Systems specializes in a proprietary in-game prizing and promotions engine, allowing game developers to offer real-world rewards in their games. The company is headquartered in Los Angeles, California.

Positive

• Opportunity to submit a compliance plan to NASDAQ
• Potential 180-day extension to regain compliance if plan is accepted
• Company actively developing strategies to increase stockholder equity

Negative

• Stockholders' equity ($1,797,764) below NASDAQ minimum requirement ($2,500,000)
• Risk of delisting from NASDAQ Capital Market
• Failure to meet alternative listing criteria (market value of listed securities or net income from continuing operations)

Insights

Financial Analyst

Versus Systems' notification from NASDAQ regarding minimum stockholders' equity deficiency is a significant red flag for investors. With reported equity of $1,797,764, falling short of the required $2,500,000, the company faces a critical compliance issue. This shortfall raises concerns about the firm's financial stability and future prospects.

The October 7 deadline to submit a compliance plan is tight, leaving options to raise capital quickly. Potential strategies might include equity offerings or asset sales, both of which could dilute existing shareholders or weaken the company's position. The market often reacts negatively to such news, potentially leading to increased selling pressure on the stock.

Investors should closely monitor the company's plan to address this issue, as failure to regain compliance could result in delisting, severely impacting stock liquidity and value. This situation underscores the importance of robust financial management in maintaining market listing requirements.

Legal Expert

The NASDAQ notification to Versus Systems regarding minimum stockholders' equity deficiency presents significant legal and regulatory challenges. This situation triggers several important legal considerations:

• The company must navigate complex securities regulations while formulating its compliance plan.
• Any plan to raise capital must adhere to SEC guidelines on public offerings or private placements.
• The company faces potential shareholder litigation risks if the stock price declines due to this news.
• Management must ensure timely and accurate disclosures to avoid any allegations of securities fraud.

The 180-day extension, if granted, provides a critical window for the company to address these issues. However, failure to meet NASDAQ requirements could lead to delisting, which would have severe legal implications for the company's status as a public entity and its obligations to shareholders.

Market Research Analyst

Versus Systems' NASDAQ compliance issue reflects broader challenges in the gaming and tech sectors. The company's proprietary in-game prizing and promotions engine operates in a highly competitive market where maintaining financial stability is crucial. This notification suggests potential underlying issues with revenue generation or cost management.

Market trends indicate increasing demand for in-game monetization solutions, but Versus Systems seems to be struggling to capitalize on this opportunity effectively. The company's ability to attract and retain game developers and publishers as clients may be impacted by this financial instability.

Investor sentiment towards small-cap tech companies, especially those with compliance issues, has been cautious in recent months. This news is likely to exacerbate negative perceptions, potentially leading to decreased investor interest and difficulties in raising capital. The company's response to this challenge will be important in determining its market position and long-term viability in the competitive gaming technology landscape.

VANCOUVER, British Columbia, Aug. 27, 2024 (GLOBE NEWSWIRE) -- Versus Systems, Inc. (NASDAQ: VS) (the “Company”) announces that it has received a letter from the listing qualifications department staff of the NASDAQ Stock Market (“NASDAQ”), notifying the Company that the stockholders’ equity of $1,797,764 as reported in the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2024 was below the minimum stockholders’ equity of $2,500,000. The minimum stockholders’ equity of $2,500,000 is required for continued listing on the NASDAQ Capital Market as set forth in NASDAQ listing rule 5550(b)(1), and the Company does not meet the alternatives of market value of listed securities or net income from continuing operations.

The Company has been provided until October 7, 2024, to submit a plan to regain compliance with the minimum stockholders’ equity standard. If the Company’s plan to regain compliance is accepted, NASDAQ may grant an extension of up to 180 calendar days from the date of the notification letter to evidence compliance with the minimum stockholders’ equity standard.

The Company is developing a plan with options to increase stockholder equity and regain compliance, with the goal of filing the plan with NASDAQ by the stated deadline. The Company will provide further updates as required.

About Versus Systems

Versus Systems, Inc. has developed a proprietary in-game prizing and promotions engine that allows game developers and publishers to offer real-world rewards inside their games. Players can choose from a variety of rewards that match their interests, including merchandise, events, and digital goods. Versus Systems is headquartered in Los Angeles, California.

For more information, please visit www.versussystems.com.

For media inquiries, please contact:

Cody Slach, Gateway Group, Inc.
949-574-3860
IR@versussystems.com or
press@versussystems.com

Forward-Looking Statements

This news release contains “forward-looking statements”. Statements in this news release which are not purely historical are forward-looking statements and include any statements regarding beliefs, plans, outlook, expectations or intentions regarding the future, including statements regarding the Company’s plans to regain compliance. It is important to note that actual outcomes and the Company’s actual results could differ materially from those in such forward-looking statements. Actual results could differ from those projected in any forward-looking statements due to numerous factors. Such factors include, among others: uncertainty whether the Company can come up with a plan to regain compliance or whether a plan, if any, to regain compliance submitted to Nasdaq will be accepted or if accepted, whether the Company will regain compliance with the minimum stockholders equity rule within the timelines required by Nasdaq, failing which, the Company’s securities will be delisted by Nasdaq; uncertainty whether the Company would appeal any delisting notice or whether any such appeal would be successful, failing which, the Company’s securities will be delisted by Nasdaq; the risk that delisting of the Company’s securities may have a material adverse effect on the Company’s share liquidity and trading price and on the Company’s ability to obtain financing and continue its business; and the risk of changes in business strategy or plans. Readers should also refer to the risk disclosures outlined in the Company’s quarterly reports on Form 10-Q, the Company’s annual reports on Form 10-K, and the Company’s other disclosure documents filed from time-to-time with the Securities and Exchange Commission at www.sec.gov and the Company’s interim and annual filings and other disclosure documents filed in Canada from time-to-time under the Company's profile on SEDAR+ at https://www.sedarplus.ca.

FAQ

What is the minimum stockholders' equity required by NASDAQ for Versus Systems (VS) to maintain its listing?

The minimum stockholders' equity required by NASDAQ for Versus Systems (VS) to maintain its listing on the NASDAQ Capital Market is $2,500,000.

When is the deadline for Versus Systems (VS) to submit a compliance plan to NASDAQ?

Versus Systems (VS) has until October 7, 2024, to submit a plan to regain compliance with the minimum stockholders' equity standard to NASDAQ.

What is Versus Systems' (VS) current stockholders' equity as of June 30, 2024?

Versus Systems' (VS) reported stockholders' equity as of June 30, 2024, is $1,797,764, which is below the NASDAQ minimum requirement.

What options does NASDAQ provide if Versus Systems' (VS) compliance plan is accepted?

If Versus Systems' (VS) plan to regain compliance is accepted, NASDAQ may grant an extension of up to 180 calendar days from the date of the notification letter to evidence compliance with the minimum stockholders' equity standard.